LIBBEY INC, 10-Q filed on 8/10/2020
Quarterly Report
v3.20.2
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2020
Jul. 31, 2020
Document Information [Line Items]    
Entity Registrant Name LIBBEY INC  
Entity Central Index Key 0000902274  
Trading Symbol lbyyq  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Interactive Data Current Yes  
Entity Common Stock, Shares Outstanding (in shares)   22,667,869
Entity Shell Company false  
Document Type 10-Q  
Document Period End Date Jun. 30, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Title of 12(b) Security Common Stock, $.01 par value  
v3.20.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenues $ 77,827 $ 206,969 $ 228,991 $ 382,618
Cost of sales 97,879 160,244 226,120 301,935
Gross profit (loss) (20,052) 46,725 2,871 80,683
Selling, general and administrative expenses 18,735 30,813 45,249 63,393
Asset impairments 46,881 38,535 46,881
Loss from operations (38,787) (30,969) (80,913) (29,591)
Other income (expense) (1,200) (620) (11,852) (2,204)
Loss before interest, reorganization items and income taxes (39,987) (31,589) (92,765) (31,795)
Interest expense 3,837 5,879 9,428 11,511
Reorganization items, net 39,527 39,527
Loss before income taxes (83,351) (37,468) (141,720) (43,306)
Provision for income taxes 443 6,299 20,822 5,003
Net loss $ (83,794) $ (43,767) $ (162,542) $ (48,309)
Basic (in dollars per share) $ (3.64) $ (1.95) $ (7.10) $ (2.16)
Diluted (in dollars per share) (3.64) (1.95) (7.10) (2.16)
Dividends declared per share (in dollars per share)
Product [Member]        
Revenues $ 77,532 $ 206,158 $ 228,053 $ 381,124
Shipping and Handling [Member]        
Revenues $ 295 $ 811 $ 938 $ 1,494
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Net loss $ (83,794) $ (43,767) $ (162,542) $ (48,309)
Other comprehensive income (loss):        
Pension and other post-retirement benefit adjustments, net of tax 248 1,510 5,098 2,287
Derivative instruments adjustments, net of tax 119 (4,830) 11,116 (7,884)
Foreign currency translation adjustments, net of tax 716 (271) (921) (297)
Other comprehensive income (loss), net of tax 1,083 (3,591) 15,293 (5,894)
Comprehensive income (loss) $ (82,711) $ (47,358) $ (147,249) $ (54,203)
v3.20.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
ASSETS    
Cash and cash equivalents $ 45,781 $ 48,918
Accounts receivable — net 53,069 81,307
Inventories — net 164,926 174,797
Prepaid and other current assets 17,768 17,683
Total current assets 281,544 322,705
Pension Asset 6,927 5,712
Purchased intangible assets — net 11,694 11,875
Goodwill 38,431
Deferred income taxes 24,747
Other assets 15,700 14,608
Operating lease right-of-use assets 67,941 54,686
Property, plant and equipment — net 222,871 233,923
Total assets 606,677 706,687
LIABILITIES AND SHAREHOLDERS' DEFICIT    
Accounts payable 45,503 79,262
Salaries and wages 21,552 30,188
Accrued liabilities 29,158 50,657
Accrued income taxes 1,118 382
Pension liability (current portion) 1,956 2,543
Non-pension post-retirement benefits (current portion) 3,812 3,817
Operating lease liabilities (current portion) 11,369 12,769
Short-term debt and long-term debt due within one year 161,404 16,124
Total current liabilities 275,872 195,742
Long-term debt 375,716
Pension liability 38,864 46,619
Non-pension post-retirement benefits 44,873 45,507
Noncurrent operating lease liabilities 62,654 48,323
Deferred income taxes 2,101 2,104
Other long-term liabilities 5,303 18,463
Total liabilities not subject to compromise 429,667 732,474
Liabilities subject to compromise 349,497
Total liabilities 779,164 732,474
Contingencies (note 16)
Shareholders’ deficit:    
Common stock, par value $.01 per share, 50,000,000 shares authorized, 22,667,869 shares issued in 2020 (22,360,125 shares issued in 2019) 227 224
Capital in excess of par value 338,941 338,395
Retained deficit (403,002) (240,460)
Accumulated other comprehensive loss (108,653) (123,946)
Total shareholders' deficit (172,487) (25,787)
Total liabilities and shareholders' deficit $ 606,677 $ 706,687
v3.20.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares
Jun. 30, 2020
Dec. 31, 2019
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 50,000,000 50,000,000
Common stock, shares issued (in shares) 22,667,869 22,360,125
v3.20.2
Condensed Consolidated Statements of Shareholders' Equity (Deficit) (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Balance (in shares) at Dec. 31, 2018 22,157,220        
Balance at Dec. 31, 2018 $ 222 $ 335,517 $ (171,441) $ (114,405) $ 49,893
Net loss (4,542) (4,542)
Other comprehensive income (loss) (2,303) (2,303)
Stock compensation expense 937 937
Stock withheld for employee taxes (317) (317)
Stock issued (in shares) 116,348        
Stock issued $ 1 (8) (7)
Balance (in shares) at Mar. 31, 2019 22,273,568        
Balance at Mar. 31, 2019 $ 223 336,129 (175,983) (116,708) 43,661
Balance (in shares) at Dec. 31, 2018 22,157,220        
Balance at Dec. 31, 2018 $ 222 335,517 (171,441) (114,405) 49,893
Net loss         (48,309)
Other comprehensive income (loss)       (5,894) (5,894)
Balance (in shares) at Jun. 30, 2019 22,347,086        
Balance at Jun. 30, 2019 $ 223 337,155 (219,750) (120,299) (2,671)
Balance (in shares) at Mar. 31, 2019 22,273,568        
Balance at Mar. 31, 2019 $ 223 336,129 (175,983) (116,708) 43,661
Net loss (43,767) (43,767)
Other comprehensive income (loss) (3,591) (3,591)
Stock compensation expense 1,117 1,117
Stock withheld for employee taxes (92) (92)
Stock issued (in shares) 73,518        
Stock issued 1 1
Balance (in shares) at Jun. 30, 2019 22,347,086        
Balance at Jun. 30, 2019 $ 223 337,155 (219,750) (120,299) (2,671)
Balance (in shares) at Dec. 31, 2019 22,360,125        
Balance at Dec. 31, 2019 $ 224 338,395 (240,460) (123,946) (25,787)
Net loss (78,748) (78,748)
Other comprehensive income (loss) 14,210 14,210
Stock compensation expense 569 569
Stock withheld for employee taxes (173) (173)
Stock issued (in shares) 244,454        
Stock issued $ 2 (2)
Balance (in shares) at Mar. 31, 2020 22,604,579        
Balance at Mar. 31, 2020 $ 226 338,789 (319,208) (109,736) (89,929)
Balance (in shares) at Dec. 31, 2019 22,360,125        
Balance at Dec. 31, 2019 $ 224 338,395 (240,460) (123,946) (25,787)
Net loss         (162,542)
Other comprehensive income (loss)       15,293 15,293
Balance (in shares) at Jun. 30, 2020 22,667,869        
Balance at Jun. 30, 2020 $ 227 338,941 (403,002) (108,653) (172,487)
Balance (in shares) at Mar. 31, 2020 22,604,579        
Balance at Mar. 31, 2020 $ 226 338,789 (319,208) (109,736) (89,929)
Net loss (83,794) (83,794)
Other comprehensive income (loss) 1,083 1,083
Stock compensation expense 161 161
Stock withheld for employee taxes (8) (8)
Stock issued (in shares) 63,290        
Stock issued $ 1 (1)
Balance (in shares) at Jun. 30, 2020 22,667,869        
Balance at Jun. 30, 2020 $ 227 $ 338,941 $ (403,002) $ (108,653) $ (172,487)
v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating activities:    
Net loss $ (162,542) $ (48,309)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation and amortization 17,534 19,922
Asset impairments 38,535 46,881
Loss on derivatives de-designated as hedging instruments 13,850
Reorganization items 21,648
Change in accounts receivable 25,028 (9,060)
Change in inventories 8,673 (10,593)
Change in accounts payable (8,128) 6,743
Accrued interest and amortization of discounts and finance fees 723 557
Pension & non-pension post-retirement benefits, net 1,069 (1,165)
Accrued liabilities & prepaid expenses (23,145) (2,768)
Income taxes 18,776 (2,483)
Cloud computing costs, net (558) (1,707)
Share-based compensation expense 696 1,935
Other operating activities (2,274) 799
Net cash provided by (used in) operating activities (50,115) 752
Investing activities:    
Cash paid for property, plant and equipment (8,474) (18,300)
Net cash used in investing activities (8,474) (18,300)
Financing activities:    
Borrowings on Prepetition ABL Credit Facility 53,000 73,871
Repayments on Prepetition ABL Credit Facility (21,500) (46,300)
Other borrowings 3,000
Other repayments (3,000)
Repayments on Term Loan B (1,100) (2,200)
DIP Term Loan borrowings - New Money 30,000
DIP debt financing costs (3,962)
Taxes paid on distribution of equity awards (181) (409)
Debt refinancing costs (1,350)
Other financing activities 1,313
Net cash provided by financing activities 56,220 24,962
Effect of exchange rate fluctuations on cash (768) (182)
Increase (decrease) in cash (3,137) 7,232
Cash & cash equivalents at beginning of period 48,918 25,066
Cash & cash equivalents at end of period 45,781 32,298
Supplemental disclosure of cash flow information:    
Cash paid during the period for interest, net of capitalized interest 9,141 10,602
Cash paid during the period for income taxes, net of refunds $ 923 $ 5,206
v3.20.2
Note 1 - Description of the Business and Basis of Presentation
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
1.
    Description of the Business and Basis of Presentation
 
Libbey is a leading global manufacturer and marketer of glass tableware products. We produce glass tableware in
five
countries and sell to customers in over
100
countries. We design and market, under our Libbey
®
, Libbey Signature
®
, Master's Reserve
®
, Crisa
®
, Royal Leerdam
®
, World
®
Tableware, Syracuse
®
China and Crisal Glass
®
brand names (among others), an extensive line of high-quality glass tableware, ceramic dinnerware and metal flatware for sale primarily in the foodservice, retail and business-to-business channels of distribution. Our salesforce presents our tabletop products to the global marketplace in a coordinated fashion. We own and operate
two
glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in Mexico (Libbey Mexico), the Netherlands (Libbey Holland), Portugal (Libbey Portugal) and China (Libbey China). In addition, we import tabletop products from overseas in order to complement our line of manufactured items. The combination of manufacturing and procurement allows us to compete in the global tabletop market by offering an extensive product line at competitive prices.
 
Our website can be found at
www.libbey.com
. We make available, free of charge, at this website all of our reports filed or furnished pursuant to Section
13
(a) or
15
(d) of the Exchange Act, including our annual report on Form
10
-K, our quarterly reports on Form
10
-Q, our current reports on Form
8
-K, as well as amendments to those reports. These reports are made available on our website as soon as reasonably practicable after their filing with, or furnishing to, the U.S. Securities and Exchange Commission (the "SEC") and can also be found at
www.sec.gov
.
 
Basis of Presentation
 
The accompanying unaudited Condensed Consolidated Financial Statements of Libbey Inc. and its majority-owned subsidiaries (collectively, "Libbey" or the "Company") have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and with the instructions to Form
10
-Q and Item 
10
of Regulation S-
X.
Accordingly, they do
not
include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the
three
month and
six
month periods ended
June 30, 2020
, are
not
necessarily indicative of the results that
may
be expected for the year ending
December 31, 2020
.
 
The balance sheet at
December 31, 2019
, has been derived from the audited financial statements at that date but does
not
include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial information included herein should be read in conjunction with our Consolidated Financial Statements in Item
8
of our Form
10
-K for the year ended
December 31, 2019
.
 
As discussed further in note
2
, Bankruptcy Filing, on
June 1, 2020 (
the “Petition Date”), the Company and certain of its direct and indirect subsidiaries (collectively with the Company, the “Debtors”) filed a petition for reorganization in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) under Chapter
11
of the United States Bankruptcy Code (the “Bankruptcy Code”). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections
1107
(a) and
1108
of the Bankruptcy Code.
 
Ability to Continue as a
Going Concern
 
The Company's financial statements have been prepared under the assumption that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The Condensed Consolidated Financial Statements do
not
reflect any adjustments that might result from the outcome of our Chapter
11
proceedings. The risks and uncertainties surrounding the Chapter
11
Cases (as defined below), the events of default under our credit agreements, and the results of operations due to the spread of the coronavirus
2019
("COVID-
19"
) pandemic impacting the Company's business raise substantial doubt as to the Company's ability to continue as a going concern. Our ability to continue as a going concern is dependent upon, among other things, our ability to become profitable, maintain profitability and successfully implement our Chapter
11
plan of reorganization. As the progress of these plans and transactions is subject to approval of the Bankruptcy Court and, therefore,
not
within our control, successful reorganization and emergence from bankruptcy cannot be considered probable and such plans do
not
alleviate substantial doubt about our ability to continue as a going concern.
 
v3.20.2
Note 2 - Bankruptcy Filing
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Reorganization under Chapter 11 of US Bankruptcy Code Disclosure [Text Block]
2.
    Bankruptcy Filing
 
Chapter
11
Proceedings
 
On
June 1, 2020,
the Debtors filed voluntary petitions (“Bankruptcy Petitions”) for relief under Chapter
11
of the Bankruptcy Code (the “Chapter
11
Cases”) with the Bankruptcy Court. The Debtors' Chapter
11
Cases are being jointly administered under the caption
In re
Libbey Glass Inc.,
et al.
, Case
No.
20
-
11439
(LSS). Documents filed on the docket of, and other information related to, the Chapter
11
Cases are available free of charge online at https://cases.primeclerk.com/libbey.
 
The Debtors' filing of the Chapter
11
Cases constituted an event of default that accelerated the Debtor's obligations under the following debt instruments:
 
Amended and Restated Credit Agreement, dated as of
February 8, 2010 (
as amended, amended and restated or otherwise modified), among Libbey Glass, Libbey Europe B.V., a Netherlands corporation, the Company, the other subsidiaries of the Company party thereto, JPMorgan Chase Bank, N.A., as administrative agent with respect to the U.S. loans, J.P. Morgan Europe Limited, as administrative agent with respect to the Netherlands loans, the other titled agents party thereto and the lenders party thereto from time to time (the “Prepetition ABL Lenders”) (the “Prepetition ABL Credit Agreement”);
 
Credit Agreement, dated as of
April 9, 2014 (
as amended, amended and restated or otherwise modified), among Libbey Glass, the Company, the other subsidiaries of the Company party thereto, Cortland Capital Market Services LLC, as administrative agent (as successor to Citibank, N.A., in its capacities as administrative agent and collateral agent), and the lenders party thereto from time to time (the “Prepetition Term Loan B Credit Agreement”).
 
Due to the Chapter
11
Cases, the lenders' ability to exercise certain remedies against the Debtors under their respective credit agreements was automatically stayed as of the Petition Date. Contemporaneous with the filing of the Chapter
11
Cases on the Petition Date, the Prepetition ABL Lenders agreed to forbear from exercising their rights and remedies under the Prepetition ABL Credit Agreement against the subsidiaries of the Company organized in the Netherlands party thereto.
 
Operation and Implications of the Chapter
11
Cases
 
The Debtors are authorized to continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. As debtors-in-possession under the Bankruptcy Code, the Debtors
may
not
engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. 
 
The Company's financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to comply with the financial and other covenants contained in the debtor-in-possession financing (the “DIP Financing”) described in note
5
, the development of, and the Bankruptcy Court's approval of, a Chapter
11
plan of reorganization and our ability to successfully implement a restructuring transaction and Chapter
11
 plan of reorganization and obtain new financing, among other factors. Such conditions raise substantial doubt as to the Company's ability to continue as a going concern.
 
The Company cannot predict the ultimate outcome of the Chapter
11
Cases. As a result of the Chapter
11
Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession under Chapter
11,
the Debtors
may
sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to restrictions contained in the DIP Financing and applicable orders of the Bankruptcy Court), for amounts other than those reflected in the Company's financial statements. Further, any restructuring plan
may
impact the amounts and classifications of assets and liabilities reported in our Condensed Consolidated Financial Statements.
 
Financing during the Chapter
11
Cases
 
For details on financing during the Chapter
11
Cases, see note
5
, Borrowings, for discussion of the DIP Financing, which provides up to
$160
million, exclusive of a portion of prepetition term loans to be rolled up in accordance with the terms of the DIP Term Loan (as defined below), in senior secured, super-priority financing, subject to the terms, conditions, and priorities set forth in the applicable definitive documentation and orders of the Bankruptcy Court.
 
Significant Bankruptcy Court Actions
 
On
June 2, 2020
and
July 2, 2020,
the Bankruptcy Court held
first
and
second
day hearings of the Chapter
11
Cases, and the Bankruptcy Court issued certain interim and final orders related to the Debtors' business. These orders authorized the Debtors to, among other things, enter into the DIP Financing (described in note
5
), pay certain prepetition employee and retiree expenses and benefits, use their existing cash management system, maintain and administer certain customer programs, pay certain critical and foreign vendors and pay certain prepetition taxes and related fees. These orders are significant because they allow us to operate our businesses in the normal course.
 
NYSE American Listing Status
 
 
The Company's common stock (the “Common Stock”) was previously traded on the NYSE American LLC (the “NYSE American”) exchange under the symbol “LBY.” On
June 1, 2020,
the staff of NYSE Regulation, Inc. (“NYSE Regulation”) suspended trading of the Common Stock on the NYSE American and notified the Company that NYSE Regulation would file a delisting application with the SEC to delist the Common Stock from the NYSE American. NYSE Regulation filed such delisting application on Form
25
on
June 
10,
2020,
and the delisting was effective
10
days thereafter. Our Common Stock began trading on the OTC Pink marketplace under the symbol “LBYYQ” on
June 2, 2020.
The Company can provide
no
assurance that the Common Stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of the Common Stock on this market, whether the trading volume of the Common Stock will be sufficient to provide for an efficient trading market or whether quotes for the Common Stock will continue on this market in the future. The transition to over-the-counter markets will
not
affect the Company's business operations or its SEC reporting requirements and does
not
conflict with or cause an event of default under any of the Company's material debt or other agreements. Trading prices for the Company's securities
may
bear little or
no
relationship to the actual recovery, if any, by the holders of the Company's equity securities as a result of the Chapter
11
Cases. The Company expects that its equity holders will experience a complete loss on their investment, depending on the outcome of the Chapter
11
Cases.
 
Financial Reporting in Reorganization 
 
Effective on
June 
1,
2020,
the Company began to apply ASC,
No.
 
852,
“Reorganizations,” which is applicable to companies under Chapter
11
bankruptcy protection. It requires the financial statements for periods subsequent to the Chapter
11
filing to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Expenses, realized gains and losses, and provisions for losses that are directly associated with reorganization proceedings must be reported separately as reorganization items, net in the Condensed Consolidated Statements of Operations. In addition, the balance sheet must distinguish Debtor prepetition liabilities subject to compromise (“LSTC”) from liabilities of non-Debtor entities, prepetition liabilities that are
not
subject to compromise and from post-petition liabilities in the accompanying Condensed Consolidated Balance Sheet. LSTC are prepetition obligations that are
not
fully secured and have at least a possibility of
not
being repaid at the full claim amount. Where there is uncertainty about whether a secured claim will be paid or impaired pursuant to the Chapter
11
Cases, the Company has classified the entire amount of the claim as a LSTC.
 
Liabilities Subject to Compromise  
 
As a result of filing the Bankruptcy Petitions, the payment of prepetition liabilities is generally subject to compromise pursuant to a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. Although payment of prepetition claims generally is
not
permitted, the Bankruptcy Court granted the Debtors authority to pay certain prepetition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of the Debtors' business and assets. Among other things, the Bankruptcy Court authorized, but did
not
require, the Debtors to pay certain prepetition claims relating to employee wages and benefits, taxes, critical vendors and debt.
 
Prepetition liabilities that are subject to compromise are required to be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they
may
be settled for different amounts. The amounts classified as LSTC
may
be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determination of secured status of certain claims, the determination as to the value of any collateral securing claims, proof of claims or other events. The following table presents LSTC as reported in the Condensed Consolidated Balance Sheet at 
June 
30,
2020:
 
(dollars in thousands)
 
June 30, 2020
 
Debt
  $
317,931
 
Accounts payable
   
27,973
 
Pension liabilities
   
164
 
Accrued liabilities
(1)
   
2,283
 
Other long-term liabilities
   
1,146
 
Liabilities subject to compromise
  $
349,497
 
_________________________
(
1
)
Includes
$0.8
million of pre-petition term loan accrued interest.
 
Reorganization Items, net  
 
Reorganization items, net represent amounts incurred as a direct result of the Bankruptcy and are comprised of the following for the quarter ended
June 30, 2020: 
 
(dollars in thousands)
 
Three months ended June 30, 2020
 
Legal & professional fees
  $
20,369
 
Termination of derivatives
   
9,374
 
Write-off prepetition debt finance fees, discounts and PIK fees
   
4,675
 
DIP financing fees
   
3,962
 
Other
   
1,147
 
Total
  $
39,527
 
 
Cash paid for reorganization items during the
three
months ended
June 30, 2020
was
$18.0
million.
v3.20.2
Note 3 - Significant Accounting Policies
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
3.
    Significant Accounting Policies
 
Cloud Computing Arrangements
 
 
At
June 30, 2020
 and 
December 31, 2019
, the net book value of our implementation costs for hosted cloud computing arrangements included $
0.3
 million in prepaid and other current assets for both periods, as well as $
7.3
 million and
$6.5
million, respectively, in other assets on the Condensed Consolidated Balance Sheets. Amortization expense for the 
three
and
six
-month periods
 ended
June 30, 2020
 and
2019
 was immaterial.
 
Stock-Based Compensation Expense
 
Stock-based compensation expense charged to the Condensed Consolidated Statements of Operations is as follows:
 
   
Three months ended June 30,
   
Six months ended June 30,
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
 
Stock-based compensation expense
  $
162
    $
993
    $
696
    $
1,935
 
 
New Accounting Standards
 
Each change to U.S. GAAP is established by the Financial Accounting Standards Board (“FASB”) in the form of an Accounting Standards Update (“ASU”) to the FASB's Accounting Standards Codification (“ASC”). We consider the applicability and impact of all ASUs. ASUs
not
listed below were assessed and either were determined to be
not
applicable or are expected to have minimal impact on the Company's Condensed Consolidated Financial Statements.
 
New Accounting Standards -
Not
Yet Adopted
 
In
June 2016,
the FASB issued ASU
2016
-
13,
Financial Instruments - Credit Losses
(Topic
326
):
Measurement of Credit Losses on Financial Instruments
. This standard introduces a new approach to estimating credit losses on certain types of financial instruments, including trade receivables, and modifies the impairment model for available-for-sale debt securities. ASU
2016
-
13
is effective for fiscal years beginning after
December 15, 2019,
including interim periods within those fiscal years, with early applica
tion permitted. In
October
of
2019,
the FASB approved a delayed effective date for Smaller Reporting Company filers; thus, our effective date is now for fiscal years beginning after
December 15, 2022,
including interim periods within those fiscal years.
 Although we are still evaluating the impact of this standard, we believe it will
not
have a material impact on our Condensed Consolidated Financial Statements.
 
In
December 2019,
the FASB issued ASU
2019
-
12,
 
Income Taxes 
(Topic
740
): 
Simplifying the Accounting for Income Taxes
. This standard simplifies the accounting for income taxes by removing certain exceptions in Topic
740
 and simplifying other areas. ASU
2019
-
12
 is effective for fiscal years beginning after
December 15, 2020,
including interim periods within those fiscal years. If early adoption is elected, all amendments must be adopted in the same period. We are currently assessing the impact that this standard will have on our Condensed Consolidated Financial Statements.
v3.20.2
Note 4 - Balance Sheet Details
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Supplemental Balance Sheet Disclosures [Text Block]
4.
    Balance Sheet Details

The following table provides detail of selected balance sheet items:
 
(dollars in thousands)
 
June 30, 2020
   
December 31, 2019
 
Accounts receivable:
     
 
     
 
Trade receivables   $
51,941
    $
79,829
 
Other receivables    
1,128
     
1,478
 
Total accounts receivable, less allowances of $7,176 and $10,803   $
53,069
    $
81,307
 
                 
Inventories:
     
 
     
 
Finished goods   $
147,474
    $
157,348
 
Work in process    
1,483
     
1,183
 
Raw materials    
3,875
     
4,008
 
Repair parts    
10,143
     
10,254
 
Operating supplies    
1,951
     
2,004
 
Total inventories, less loss provisions of $8,432 and $7,750   $
164,926
    $
174,797
 
                 
Accrued liabilities:
     
 
     
 
Accrued incentives   $
11,753
    $
24,337
 
Other accrued liabilities    
17,405
     
26,320
 
Total accrued liabilities   $
29,158
    $
50,657
 
 
During the
second
quarter of
2020,
Libbey Mexico entered into an agreement with a financial institution whereby certain accounts payable, originally due between
April 1
and
June 30, 2020,
were extended
120
days. As of
June 30, 2020,
$7.0
million was extended for an upfront interest fee (totaling
$0.2
million during the
second
quarter
2020
). The
$7.0
million is included in accounts payable on the Condensed Consolidated Balance Sheet at
June 30, 2020.
 
v3.20.2
Note 5 - Borrowings
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Debt Disclosure [Text Block]
5.
    Borrowings
 
Debt
 
Borrowings consist of the following:
   
 
 
 
 
June 30,
   
December 31,
 
(dollars in thousands)
 
Interest Rate
(1)
 
Maturity Date 
(2)
 
2020
   
2019
 
Prepetition ABL Credit Facility
 
LIBOR + 3.5%
 
January 9, 2021
  $
39,352
    $
17,386
 
DIP ABL Credit Facility  
LIBOR + 3.5%
 
November 28, 2020
   
9,554
     
 
DIP Term Loan - new money  
LIBOR + 11.0%
 
November 28, 2020
   
30,000
     
 
Roll-up Term Loan B  
LIBOR + 1.0% + 2.0% PIK
 
November 28, 2020
   
60,093
     
 
Prepetition Term Loan B
(3)
 
LIBOR + 3.0%
 
April 9, 2021
   
317,931
     
375,800
 
Terminated Swap Obligations  
LIBOR + 4.5%
 
November 28, 2020
   
22,405
     
 
Total borrowings
   
479,335
     
393,186
 
Less — unamortized discount and finance fees
   
     
1,346
 
Total borrowings — net
   
479,335
     
391,840
 
Less amounts included in liabilities subject to compromise
   
317,931
     
 
Total borrowings not subject to compromise
   
161,404
     
391,840
 
Less — short-term debt and long-term debt due within one year
   
161,404
     
16,124
 
Total long-term portion of borrowings — net
  $
    $
375,716
 
________________________
(
1
)
 
All LIBOR borrowings have a 
1.0
 percent floor.
(
2
)
 
The filing of our Bankruptcy Petitions constituted an event of default with respect to our Prepetition Term Loan B and Prepetition ABL Credit Facility.
(
3
)
 
Reclassified to liabilities subject to compromise at
June 30, 2020
.
    
Non-cash financing activities
 
During
June 2020,
the following non-cash financing activities occurred:
 
 
DIP ABL Credit Facility borrowings of
$9.6
million reduced the Prepetition ABL Credit Facility by
$9.6
million.
 
The Terminated Swap Obligations of
$22.4
million were reclassed from accrued liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheet.
 
Roll-up Term Loan B borrowings of
$60.0
million reduced the Prepetition Term Loan B by
$60.0
million.
 
 Debtor-in-Possession Credit Facilities
 
On
June 2, 2020
and
July 2, 2020,
the Bankruptcy Court approved
first
-day and final orders authorizing new debtor-in-possession financing consisting of a senior secured asset based revolving credit facility (the “DIP ABL Credit Facility”) and a senior secured super-priority multi-draw term loan facility (the “DIP Term Loan”) and, together with the DIP ABL Credit Facility, (the “DIP Facilities”).
 
The DIP ABL
Credit
Facility
 
On
June 3, 2020,
Libbey Glass Inc. and Libbey Europe B.V., as borrowers (the “ABL Borrowers”), entered into the Debtor-In-Possession Credit Agreement (the “DIP ABL Credit Agreement”) with the guarantors party thereto, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent. The lenders under the DIP ABL Credit Agreement are the same as the existing lenders under the Prepetition ABL Credit Agreement.
 
The DIP ABL Credit Facility provides for a secured debtor-in-possession revolving credit facility in an aggregate principal amount of up to
$100.0
million, subject to a borrowing base comprised of certain inventory and accounts receivables, largely consistent with the borrowing base under the Prepetition ABL Credit Facility. The DIP ABL Credit Facility also provides for the issuance of up to
$15.0
million of letters of credit that, when outstanding, along with other reserves are applied against the borrowing limit.
 
At 
June 30, 2020,
we had 
$39.4
 million of outstanding borrowings under the Prepetition ABL Credit Facility, 
$9.6
 million outstanding under the DIP ABL Credit Facility,
$9.7
 million of outstanding letters of credit and
$22.8
million of reserves. Remaining unused availability under the DIP ABL Credit Facility was a deficit of
$0.3
million at 
June 30, 2020,
however, prior to submission of the monthly compliance certificate on
July 20, 2020,
a
$0.4
million repayment was made, bringing the compliance certificate unused availability to
$0.1
million, compared to
$68.2
million, under the Prepetition ABL Credit Facility, at 
December 31, 2019.  
 
As a result of the filing of the Chapter
11
Cases, all derivative contracts were terminated. Those Terminated Swap Obligations (as defined in the DIP ABL Credit Agreement) remain outstanding; however, such amounts do
not
reduce the borrowing capacity of the DIP ABL Credit Facility.
 
Certain advances under the DIP ABL Credit Facility include the repayment (or deemed repayment) of certain Prepetition ABL Credit Facility obligations with a corresponding dollar-for-dollar increase in the DIP ABL Credit Facility and the assumption or deemed re-issuance of Letters of Credit, Banking Services Obligations and Swap Obligations (as each term is defined in the Prepetition ABL Credit Agreement). The DIP ABL Credit Agreement requires that all other proceeds or advances under the DIP ABL Credit Facility be used only for ordinary course general corporate and working capital purposes, costs of administration of the Chapter
11
Cases, certain professional fees and fees and expenses relating to the DIP Facilities, in each case, in accordance with a cash flow budget that will be updated periodically, subject to certain permitted variances.
 
As of
June 30, 2020,
$9.6
million had been deemed repaid on the Prepetition ABL Credit Facility and re-borrowed under the DIP ABL Credit Facility. Upon approval of the final orders, the remainder of the outstanding Prepetition ABL Credit Facility was deemed fully repaid and was re-borrowed under the DIP ABL Credit Facility.  
 
Loans under the DIP ABL Credit Facility bear interest, at the option of the ABL Borrowers, of either (
1
) the Adjusted LIBO Rate (as defined in the DIP ABL Credit Agreement), subject to a
1.00
percent floor, plus
3.50
percent per annum or (
2
) the CB Floating Rate (as defined in the DIP ABL Credit Agreement) plus
2.50
percent per annum. Terminated Swap Obligations (as defined in the DIP ABL Credit Agreement) bear interest, at the option of the ABL Borrowers of either (i) the Adjusted LIBO Rate, subject to a
1.00
percent floor, plus
4.50
percent per annum or (ii) the CB Floating Rate plus
3.50
percent per annum. The DIP ABL Credit Facility matures on the earliest of (a) the date that is
one hundred eighty
(
180
) days after the Petition Date, (b) the consummation of a sale of all or substantially all of the Debtors' assets, (c) if the Final Financing Order (as defined in the DIP ABL Credit Agreement) has
not
been entered, the date that is
thirty-five
(
35
) days after the Petition Date (or such later date to which the deadline for the entry of the Final Financing Order
may
be extended), (d) the effective date of a reorganization plan, (e) the maturity date (as defined in the DIP Term Loan Agreement) or (f) any earlier date on which the borrowings are permanently reduced to
zero
or otherwise terminated pursuant to the terms of the DIP ABL Credit Agreement.
 
The DIP ABL Credit Facility is secured by:
 
 
a senior lien on Prepetition ABL Priority Collateral (as defined in the Interim Order);
 
a priority lien on
100
percent of the equity of the foreign subsidiaries;
 
a priority lien on certain foreign collateral; and
 
a junior lien on Prepetition Term Loan Priority Collateral (as defined in the Interim Order).
 
DIP Term Loan
 
On
June 3, 2020,
the Company, Libbey Glass Inc., as borrower, the other Debtors, the other guarantors party thereto, Cortland Capital Market Services LLC, as administrative agent and collateral agent, and the lenders party thereto from time to time entered into the Superpriority Secured Debtor-In-Possession Credit Agreement (the “DIP Term Loan Credit Agreement” and, together with the DIP ABL Credit Agreement, the “DIP Credit Agreements”). The lenders under the DIP Term Loan Credit Agreement are certain lenders under the Prepetition Term Loan B Credit Agreement.
 
The DIP Term Loan is a multi-draw senior secured debtor-in-possession facility comprised of
$60.0
million in new money term loans and a “roll-up” of outstanding prepetition term loan obligations of an aggregate amount of
$60.0
million. A draw in the principal amount of
$30.0
million was made available upon entry of the interim order by the Bankruptcy Court (the “Interim Order”) on
June 3, 2020,
with the remaining
$30
million made available upon entry of a final order by the Bankruptcy Court (the “Final Order”) on
July 2, 2020.  
 
Borrowings under the DIP Term Loan were used to pay a portion of the Prepetition ABL Credit Facility, accrued interest and fees and other general operating expenses, as approved by the Bankruptcy Court.
$3.6
million related to debt issuance costs and fees was expensed in reorganization items, net.
 
At 
June 30, 2020,
we had 
$30.0
million of incremental borrowings outstanding and 
$60.1
million outstanding related to the Roll-up Term Loan B which includes
$0.1
million of paid-in-kind ("PIK") interest.
 
The DIP Term Loan bears interest at a percentage per annum equal to: (i) for Eurocurrency Rate Loans, the Eurocurrency Rate (as defined in the DIP Term Loan Credit Agreement), subject to a
1.00
percent floor, plus
11.00
percent and (ii) for Base Rate Loans, the Base Rate (as defined in the DIP Term Loan Credit Agreement), subject to a
2.00
percent floor, plus
10.00
percent. The Roll-Up Loans (as defined in the DIP Term Loan Credit Agreement) bear interest at a percentage per annum equal to: (i) for Eurocurrency Rate Loans, (A) the Eurocurrency Rate, subject to a
1.00
percent floor, plus
1.00
percent payable in cash plus (B)
2.00
percent PIK and (ii) for Base Rate Loans, (A) the Base Rate, subject to a
2.00
percent floor, plus
0.00
percent payable in cash plus (B)
2.00
percent PIK.
 
The DIP Term Loan matures on the earliest of (i)
thirty-five
(
35
) days following the Petition Date, or such later date as agreed to by the Required Lenders (as defined in the DIP Term Loan Credit Agreement) if the Final Order shall
not
have been entered by such date, (ii) the effective date of any Chapter
11
reorganization plan of any Debtor, (iii) the date on which all or substantially all of the assets of the Debtors are sold in a sale under a Chapter
11
plan or pursuant to Section
363
of the Bankruptcy Code, (iv)
one hundred eighty
(
180
) days following the Petition Date, and (v) the date that all loans shall become due and payable in full in accordance with the terms of the DIP Term Loan Credit Agreement.    
 
The DIP Term Loan is secured by:
 
 
a senior lien on the Prepetition Term Loan B Priority Collateral (as defined in the Interim Order);
 
a junior lien on
100
percent of the equity in the foreign subsidiaries;
 
a junior lien on certain foreign collateral; and
 
a junior lien on the Prepetition ABL Priority Collateral (as defined in the Interim Order).
 
The DIP Facilities
 
The DIP Facilities contain customary representations, warranties and covenants that are typical and customary for debtor-in-possession facilities of this type, including, but
not
limited to specified restrictions on indebtedness, liens, guarantee obligations, mergers, acquisitions, consolidations, liquidations and dissolutions, sales of assets, leases, payment of dividends and other restricted payments, voluntary payments of other indebtedness, investments, loans and advances, transactions with affiliates, and compliance with case milestones. The DIP Credit Agreements also contain customary events of default, including as a result of certain events occurring in the Chapter
11
Cases. 
 
On
June 3, 2020,
the Bankruptcy Court approved an Interim Order authorizing the Debtors to pay certain fees related to the DIP Facilities in accordance with the applicable commitment and fee letters.
 
These DIP Facilities, coupled with our normal operating cash flows, are providing liquidity to support operations and our continued service of customers and end users during the court-supervised process.
 
The foregoing summaries of the DIP Facilities do
not
purport to be complete descriptions and are qualified in their entirety by reference to the complete text of both the DIP Term Loan Credit Agreement and the DIP ABL Credit Agreement, which were filed with a Current Report on Form
8
-K on
June 9, 2020, 
as Exhibit
4.1
 and Exhibit
4.2,
respectively, and incorporated herein by reference.
 
Prepetition Term Loan B
 
As of
June 30, 2020,
the outstanding balance of the Prepetition Term Loan B was
$317.9
 million, excluding the
$60.0
million Roll-up Term Loan B. The Prepetition Term Loan B is classified as liabilities subject to compromise at
June 30, 2020.
For the period ended
June 30, 2020,
contractual post-petition related interest expense of
$1.0
million related to the Prepetition Term Loan B has
not
been recorded in the financial statements. 
 
Terminated Swap Obligations
 
The filing of the Chapter
11
Cases resulted in the termination of all our derivative contracts. As a result, the outstanding amounts to our counterparties were included in the DIP Facilities, accruing interest at LIBOR plus
4.50
percent. The Terminated Swap Obligations are fully secured and subject to the same terms and maturity as the DIP Facilities.
 
Libbey Mexico Line of Credit
 
On
June 17, 2019,
Crisa Libbey Mexico S. de R.L. de C.V. entered into a
$3.0
million working capital line of credit with Banco Santander Mexico to cover seasonal working capital needs, guaranteed by its parent company, Libbey Mexico, S. de R.L. de C.V. The line of credit had a floating interest rate of LIBOR plus
3.20
percent and was repaid and terminated on
June 2, 2020.
 
v3.20.2
Note 6 - Income Taxes
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
6.
    Income Taxes
 
For interim tax reporting, we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded from the annualized effective tax rate. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.
 
Our effective tax rate was (
14.7
) percent for the
six
months ended
June 30, 2020
, compared to (
11.6
) percent for the
six
months ended
June 30, 2019
. Our effective tax rate for the
six
months ended
June 30, 2020
, was negative because the Company recorded positive tax expense despite incurring an overall pretax loss. This occurred because the Company recorded valuation allowances against the deferred tax assets in all of the jurisdictions in which it operates. These valuation allowances resulted from management's conclusion that the Company is
not
more likely than
not
to realize future tax benefits from deferred tax assets due to management's opinion that there is substantial doubt that the Company will be able to continue as a going concern within
one
year of the date of the financial statements.
 
The Company and its subsidiaries are subject to examination by various countries' tax authorities. These examinations
may
lead to proposed or assessed adjustments to our taxes. We believe that our tax reserves related to uncertain tax positions are adequate at this time.
v3.20.2
Note 7 - Pension and Non-pension Post-retirement Benefits
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Retirement Benefits [Text Block]
7.
    Pension and Non-pension Post-retirement Benefits
 
The components of our net pension expense, including the SERP (supplemental employee retirement plan), are as follows:
 
Three months ended June 30,
 
U.S. Plans
   
Non-U.S. Plans
   
Total
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
   
2020
   
2019
 
Service cost
  $
859
    $
783
    $
314
    $
260
    $
1,173
    $
1,043
 
Interest cost
   
2,953
     
3,382
     
712
     
772
     
3,665
     
4,154
 
Expected return on plan assets
   
(5,165
)    
(5,193
)    
     
     
(5,165
)    
(5,193
)
Amortization of unrecognized:
                                               
Prior service (credit)
   
     
     
(41
)    
(51
)    
(41
)    
(51
)
Actuarial loss
   
1,856
     
1,088
     
194
     
105
     
2,050
     
1,193
 
Pension expense
  $
503
    $
60
    $
1,179
    $
1,086
    $
1,682
    $
1,146
 
 
Six months ended June 30,
 
U.S. Plans
   
Non-U.S. Plans
   
Total
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
   
2020
   
2019
 
Service cost
  $
1,717
    $
1,566
    $
686
    $
519
    $
2,403
    $
2,085
 
Interest cost
   
5,905
     
6,764
     
1,553
     
1,541
     
7,458
     
8,305
 
Expected return on plan assets
   
(10,329
)    
(10,386
)    
     
     
(10,329
)    
(10,386
)
Amortization of unrecognized:
                                               
Prior service (credit)
   
     
     
(90
)    
(101
)    
(90
)    
(101
)
Actuarial loss
   
3,713
     
2,175
     
422
     
208
     
4,135
     
2,383
 
Pension expense
  $
1,006
    $
119
    $
2,571
    $
2,167
    $
3,577
    $
2,286
 
 
We have contributed $
0.5
 million and $
1.5
 million of cash to our pension plans for the
three
months and
six
months ended
June 30, 2020
, respectively. Pension contributions for the remainder of
2020
are estimated to be $
1.2
 million.
 
The provision for our non-pension, post-retirement, benefit expense consists of the following:
 
Three months ended June 30,
 
U.S. Plans
   
Non-U.S. Plans
   
Total
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
   
2020
   
2019
 
Service cost
  $
110
    $
112
    $
    $
    $
110
    $
112
 
Interest cost
   
395
     
449
     
7
     
9
     
402
     
458
 
Amortization of unrecognized:
                                               
Prior service (credit)
   
(70
)    
(71
)    
     
     
(70
)    
(71
)
Actuarial (gain)
   
(61
)    
(106
)    
(18
)    
(19
)    
(79
)    
(125
)
Non-pension post-retirement benefit expense
  $
374
    $
384
    $
(11
)   $
(10
)   $
363
    $
374
 
 
Six months ended June 30,
 
U.S. Plans
   
Non-U.S. Plans
   
Total
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
   
2020
   
2019
 
Service cost
  $
220
    $
222
    $
    $
    $
220
    $
222
 
Interest cost
   
791
     
918
     
14
     
18
     
805
     
936
 
Amortization of unrecognized:
                                               
Prior service (credit)
   
(141
)    
(141
)    
     
     
(141
)    
(141
)
Actuarial (gain)
   
(123
)    
(188
)    
(37
)    
(37
)    
(160
)    
(225
)
Non-pension post-retirement benefit expense
  $
747
    $
811
    $
(23
)   $
(19
)   $
724
    $
792
 
 
Our
2020
estimate of non-pension cash payments is $
3.9
 million, of which we have paid $
1.1
 million and $
1.9
 million for the
three
months and
six
months ended
June 30, 2020
, respectively.
 
v3.20.2
Note 8 - Net Loss Per Share of Common Stock
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Earnings Per Share [Text Block]
8.
    Net Loss per Share of Common Stock
 
The following table sets forth the computation of basic and diluted loss per share:
 
   
Three months ended June 30,
   
Six months ended June 30,
 
(dollars in thousands, except earnings per share)
 
2020
   
2019
   
2020
   
2019
 
Numerator for earnings per share:
     
 
     
 
     
 
     
 
Net loss that is available to common shareholders
  $
(83,794
)   $
(43,767
)   $
(162,542
)   $
(48,309
)
                                 
Denominator for basic earnings per share:
     
 
     
 
     
 
     
 
Weighted average shares outstanding
   
22,995,463
     
22,400,246
     
22,907,791
     
22,331,786
 
                                 
Denominator for diluted earnings per share:
     
 
     
 
     
 
     
 
Effect of stock options and restricted stock units
   
     
     
     
 
Adjusted weighted average shares and assumed conversions
   
22,995,463
     
22,400,246
     
22,907,791
     
22,331,786
 
                                 
Basic loss per share
  $
(3.64
)   $
(1.95
)   $
(7.10
)   $
(2.16
)
                                 
Diluted loss per share
  $
(3.64
)   $
(1.95
)   $
(7.10
)   $
(2.16
)
                                 
Anti-dilutive shares excluded from computation of diluted loss per share
   
2,323,370
     
1,939,290
     
2,047,320
     
1,700,192
 
 
When applicable, diluted shares outstanding is calculated using the weighted-average number of common shares outstanding plus the dilutive effects of equity-based compensation outstanding during the period using the treasury stock method.
v3.20.2
Note 9 - Derivatives
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
9.
    Derivatives
 
Prior to filing the Chapter
11
Cases, we utilized derivative financial instruments to hedge certain interest rate risks associated with our long-term debt and commodity price risks associated with forecasted future natural gas requirements. Prior to
March 31, 2020,
these derivatives qualified for hedge accounting since the hedges were highly effective, and we designated and documented contemporaneously the hedging relationships involving these derivative instruments. Due to the Company's credit risk profile and changes in the probability of the forecasted transactions being hedged, we concluded we
no
longer met the criteria for the application of hedge accounting as of
March 31, 2020.
As a result, amounts related to the hedging relationship previously recorded in AOCI were reclassified to earnings. In addition, the filing of the Chapter
11
Cases resulted in the termination of all our derivative contracts.
 
Fair Values
 
The following table provides the fair values of our derivative financial instruments for the periods presented:
 
   
 
   
Fair Value of Derivative Liabilities
 
(dollars in thousands)
 
Balance Sheet Location
   
June 30, 2020
     
December 31, 2019
 
Derivatives designated as hedging instruments:                    
Interest rate swaps
 
Accrued liabilities
  $
    $
2,931
 
Interest rate swaps
 
Other long-term liabilities
   
     
11,632
 
Natural gas contracts
 
Accrued liabilities
   
     
836
 
Natural gas contracts
 
Other long-term liabilities
   
     
3
 
Total derivative liabilities
 
 
  $
    $
15,402
 
 
The following table presents cash settlements (paid) received related to the below derivatives:
 
   
Three months ended June 30,
   
Six months ended June 30,
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
 
Natural gas contracts
  $
(298
)   $
(65
)   $
(915
)   $
63
 
Interest rate swaps
   
(790
)    
347
     
(1,319
)    
691
 
Total
  $
(1,088
)   $
282
    $
(2,234
)   $
754
 
 
The following table provides a summary of the impacts of derivative gain (loss) on the Condensed Consolidated Statements of Operations and other comprehensive income (OCI):
 
 
 
 
Three months ended June 30,
   
Six months ended June 30,
 
(dollars in thousands)
Location
 
2020
   
2019
   
2020
   
2019
 
Derivative gain (loss) recognized into OCI:
       
 
     
 
     
 
     
 
Natural gas contracts
OCI
  $
    $
(1,106
)   $
(199
)   $
(1,143
)
Interest rate swaps
OCI
   
     
(4,987
)    
1,273
     
(8,465
)
Total
  $
    $
(6,093
)   $
1,074
    $
(9,608
)
                                   
Derivative gain (loss) reclassified from accumulated OCI to current earnings:
       
 
     
 
     
 
     
 
Natural gas contracts
Cost of Sales
  $
    $
(65
)   $
(617
)   $
63
 
Interest rate swaps
Interest expense
   
     
335
     
(788
)    
690
 
Total
  $
    $
270
    $
(1,405
)   $
753
 
                                   
Derivatives de-designated as hedging instruments:
                                 
Gain (loss) recognized in current earnings
       
 
     
 
     
 
     
 
Interest rate swaps
Other Income (expense)
  $
(836
)   $
    $
(13,338
)   $
 
Natural gas contracts
Other Income (expense)
   
(91
)    
     
(512
)    
 
Interest rate swaps
Reorganization items, net
   
(9,115
)    
     
(9,115
)    
 
Natural gas contracts
Reorganization items, net
   
(259
)    
     
(259
)    
 
Total
  $
(10,301
)   $
    $
(23,224
)   $
 
 
Natural Gas Contracts
 
Prior to the Chapter
11
Cases, which resulted in the termination of all our derivative contracts, we used natural gas swap contracts related to forecasted future North American natural gas requirements. The objective of these commodity contracts was to limit the fluctuations in prices paid due to price movements in the underlying commodity. We considered our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combined the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from
40
percent to
70
percent of our anticipated requirements,
18
months in the future, or more, depending on market conditions. The fair values of these instruments were determined from market quotes.
 
The following table presents the notional amount of our natural gas derivatives on the Condensed Consolidated Balance Sheets:
 
   
 
 
Notional Amounts
 
Derivative Types
 
Unit of Measure
 
June 30, 2020
 
December 31, 2019
 
Natural gas contracts
 
Millions of British Thermal Units (MMBTUs)
 
0
   
2,460,000
 
 
Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is
no
longer probable to occur, and any previously deferred gains or losses would be recorded to earnings immediately. At
March 31, 2020,
we evaluated our natural gas hedging relationships and, based on the Company's credit risk, concluded that it was
no
longer probable that we had an effective hedging relationship. As a result, amounts previously deferred in AOCI were reclassified to earnings, resulting in
$0.4
 million of expense recognized in other income (expense) at
March 31, 2020.
Just prior to the reclass out of AOCI on
March 31, 2020,
we recorded a credit valuation adjustment of
$0.5
 million which reduced the derivative liability for the natural gas contracts. With the Chapter
11
Cases and termination of derivative contracts on
June 1, 2020,
the derivative liability associated with our gas contracts required a
$0.3
million adjustment to increase the derivative liability to the termination value as it became fully secured in the Bankruptcy Petitions. This expense was recorded in reorganization items, net on the Condensed Consolidated Statements of Operations. See note
2
, Bankruptcy Filing, and note
15
, Other Income (Expense).
 
Interest Rate Swaps
 
The table below lists the interest rate swaps we executed as part of our risk management strategy to mitigate the risks associated with the fluctuating interest rates under our Prepetition Term Loan B. Prior to
March 31, 2020,
the interest rate swaps effectively converted a portion of our Prepetition Term Loan B debt from a variable interest rate to a fixed interest rate, thus reducing the impact of interest rate changes on future income. The filing of the Chapter
11
Cases resulted in the termination of all our derivative contracts.
 
Swap execution date
 
Effective date
 
Expiration date
 
Notional amount
 
Fixed swap rate
April 1, 2015
 
January 11, 2016
 
January 9, 2020
 
$220.0 million
   
4.85
%
September 24, 2018
 
January 9, 2020
 
January 9, 2025
(2)
 
$200.0 million
   
6.19
%
(1)
________________________
(
1
)
Includes a LIBOR portion that was fixed at
3.19
percent plus the credit spread.
(
2
)
Terminated on
June 1, 2020
upon the filing of the Chapter
11
Cases.
 
Our interest rate swaps were valued using the market standard methodology of netting discounted expected future variable cash receipts, the discounted future fixed cash payments, and credit risk of both the counterparties and the Company. The variable cash receipts were based on an expectation of future interest rates derived from observed market interest rate forward curves.
 
At
March 31, 2020,
our remaining interest rate swaps
no
longer qualified to be designated as a cash flow hedge under FASB ASC
815,
“Derivatives and Hedging.” Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is
no
longer probable to occur, and any previously deferred gains or losses are recorded to earnings immediately. Due to the Company's credit risk profile and changes in the probability of the forecasted transactions
no
longer occurring, we concluded we
no
longer met the criteria for the application of hedge accounting as of
March 31, 2020.
As a result, amounts previously deferred in AOCI were reclassified to earnings, resulting in
$12.5
million of expense recognized in other income (expense) at
March 31, 2020.
Just prior to the reclass out of AOCI on
March 31, 2020,
we recorded a credit valuation adjustment of
$9.2
million which reduced the derivative liability for the interest rate swaps. With the Chapter
11
Cases and termination of derivative contracts on
June 1, 2020,
the derivative liability associated with our swaps required a
$9.1
million adjustment to increase the derivative liability to the termination value, as it became fully secured in the Petitions. This expense was recorded in reorganization items, net on the Condensed Consolidated Statements of Operations. See note
2
, Bankruptcy Filing, and note
15
, Other Income (Expense).
 
v3.20.2
Note 10 - Accumulated Other Comprehensive Income (Loss)
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Comprehensive Income (Loss) Note [Text Block]
10.
    Accumulated Other Comprehensive Income (Loss)
 
Accumulated other comprehensive income (loss) (AOCI), net of tax, is as follows:
 
Three months ended June 30, 2020 (dollars in thousands)
 
Foreign Currency Translation
   
Derivative Instruments
   
Pension and Other Post-retirement Benefits
 
 
 
Accumulated Other Comprehensive Loss
 
Balance on March 31, 2020
  $
(26,784
)   $
(435
)   $
(82,517
)
 
  $
(109,736
)
                                   
Amounts recognized into AOCI
   
716
     
     
 
 
   
716
 
Currency impact
   
     
     
454
 
 
   
454
 
Amounts reclassified from AOCI
   
     
     
1,860
 
(2)
   
1,860
 
Tax effect
   
     
119
     
(2,066
)
 
   
(1,947
)
Other comprehensive income (loss), net of tax
   
716
     
119
     
248
 
 
   
1,083
 
Balance on June 30, 2020
  $
(26,068
)   $
(316
)   $
(82,269
)
 
  $
(108,653
)
 
Six months ended June 30, 2020 (dollars in thousands)
 
Foreign Currency Translation
     
Derivative Instruments
 
 
 
Pension and Other Post-retirement Benefits
 
 
 
Accumulated Other Comprehensive Loss
 
Balance on December 31, 2019
   
$ (25,147)
       
$ (11,432)
 
 
   
$ (87,367)
 
 
   
$ (123,946
)
                                       
Amounts recognized into AOCI
   
(921)
       
1,074
 
 
   
 
 
   
153
 
Currency impact
   
       
 
 
   
2,707
 
 
   
2,707
 
Amounts reclassified from AOCI
   
       
1,405
 
(1)
   
3,744
 
(2)
   
5,149
 
Amounts reclassified from AOCI for derivatives de-designated    
       
12,923
 
(3)
   
 
 
   
12,923
 
Tax effect
   
       
(4,286
)
 
   
(1,353
)
 
   
(5,639
)
Other comprehensive income (loss), net of tax
   
(921)
       
11,116
 
 
   
5,098
 
 
   
15,293
 
Balance on June 30, 2020
  $
(26,068)
      $
(316
)
 
  $
(82,269
)
 
  $
(108,653
)
 
Three months ended June 30, 2019 (dollars in thousands)
 
Foreign Currency Translation
     
Derivative Instruments
 
 
 
Pension and Other Post-retirement Benefits
 
 
 
Accumulated Other Comprehensive Loss
 
Balance on March 31, 2019
  $
(23,266
)     $
(5,920
)
 
  $
(87,522
)
 
  $
(116,708
)
                                       
Amounts recognized into AOCI
   
(533
)      
(6,093
)
 
   
1,148
 
 
   
(5,478
)
Currency impact
   
       
 
 
   
(84
)
 
   
(84
)
Amounts reclassified from AOCI
   
       
(270
)
(1)
   
945
 
(2)
   
675
 
Tax effect
   
262
       
1,533
 
 
   
(499
)
 
   
1,296
 
Other comprehensive income (loss), net of tax
   
(271
)      
(4,830
)
 
   
1,510
 
 
   
(3,591
)
Balance on June 30, 2019
  $
(23,537
)     $
(10,750
)
 
  $
(86,012
)
 
  $
(120,299
)
 
Six months ended June 30, 2019 (dollars in thousands)
 
Foreign Currency Translation
   
Derivative Instruments
 
 
 
Pension and Other Post-retirement Benefits
 
 
 
Accumulated Other Comprehensive Loss
 
Balance on December 31, 2018
   
$ (23,240
)    
$ (2,866
)
 
   
$ (88,299)
 
 
   
$ (114,405
)
                                     
Amounts recognized into AOCI
   
(289
)    
(9,608)
 
 
   
1,148
 
 
   
(8,749
)
Currency impact
   
     
 
 
   
(50
)
 
   
(50)
 
Amounts reclassified from AOCI
   
     
(753
)
(1)
   
1,915
 
(2)
   
1,162
 
Tax effect
   
(8
)    
2,477
 
 
   
(726
)
 
   
1,743
 
Other comprehensive income (loss), net of tax
   
(297
)    
(7,884
)
 
   
2,287
 
 
   
(5,894
)
Balance on June 30, 2019
  $
(23,537
)   $
(10,750
)
 
  $
(86,012
)
 
  $
(120,299
)
_________________________
(
1
)
 
We reclassified natural gas contracts through cost of sales and the interest rate swaps through interest expense on the Condensed Consolidated Statements of Operations. See note
9
 for additional information.
(
2
)
 
We reclassified the net pension and non-pension post-retirement benefits amortization and settlement charges through other income (expense) on the Condensed Consolidated Statements of Operations. See note
7
 for additional information.
(
3
)
Libbey de-designated the interest rate swaps and natural gas swaps as of
March 31, 2020,
as the transactions were
no
longer probable of occurring. Amounts were reclassified to other income (expense). See note
9
for additional information.
v3.20.2
Note 11 - Segments
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
11.
    Segments
 
Our segments are U.S. and Canada; Latin America; Europe, the Middle East and Africa ("EMEA"); and Other. Segment results are based primarily on the geographical destination of the sale. Our
three
reportable segments are defined below. Our operating segment that does
not
meet the criteria to be a reportable segment is disclosed as Other.
 
U.S. & Canada—includes sales of manufactured glassware products and sourced tableware having an end-market destination in the U.S and Canada, excluding glass products for Original Equipment Manufacturers ("OEM"), which remain in the Latin America segment.
 
Latin America—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Latin America, as well as glass products for OEMs regardless of end–market destination.
 
EMEA—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Europe, the Middle East and Africa.
 
Other—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Asia Pacific.
 
Our measure of profit for our reportable segments is Segment Earnings Before Interest and Taxes ("Segment EBIT") and excludes amounts related to certain items we consider
not
representative of ongoing operations as well as certain retained corporate costs and other allocations that are
not
considered by management when evaluating performance. Segment EBIT also includes an allocation of manufacturing costs for inventory produced at a Libbey facility that is located in a region other than the end market in which the inventory is sold. This allocation can fluctuate from year to year based on the relative demands for products produced in regions other than the end markets in which they are sold. We use Segment EBIT, along with net sales and selected cash flow information, to evaluate performance and to allocate resources. Segment EBIT for reportable segments includes an allocation of some corporate expenses based on the costs of services performed.
 
Certain activities
not
related to any particular reportable segment are reported within retained corporate costs. These costs include certain headquarter, administrative and facility costs, and other costs that are global in nature and are
not
allocable to the reporting segments.
 
The accounting policies of the reportable segments are the same as those for the Company. We do
not
have any customers who represent
10
 percent or more of total sales. Inter-segment sales are consummated at arm's length and are reflected at end-market reporting below.
 
   
Three months ended June 30,
   
Six months ended June 30,
 
(dollars in thousands)
 
2020
   
2019
   
2020
   
2019
 
Net Sales:
     
 
     
 
     
 
     
 
U.S. & Canada
  $
42,688
    $
128,897
    $
138,564
    $
238,803
 
Latin America
   
19,841
     
38,208
     
46,484
     
68,609
 
EMEA
   
12,096
     
32,678
     
37,376
     
60,720
 
Other
   
2,907
     
6,375
     
5,629
&nb