libbey inc. (lby)
Annual Report submitted under Section 13 or 15 (d)
Under section 13,15, the Securities Trading Act for the fiscal year ended 1934, December 31, 2018 (d)
1934 Securities Trading Act of Commission Document No. 1-12084 Libby. (
The exact name of the registrant specified in the articles of association)Delaware34-1559357(
State or other jurisdiction registered or organized)(
IRS employer identification number)
300 Madison Avenue, Toledo, Ohio (43604 (
Main executive office address)(Zip Code)419-325-2100(
Registrant phone number, including area code)
Securities registered under article 12 (b)
Title of the act: each class name of each exchange registered for common stock, $.
01 face value US securities registered under article 12 (g)
Key points of the act: if the registrant is healthy, it is not indicated by a check mark
Well-known experienced issuers as defined in Rule 405 of the Securities Act.
Yeso no reports indicate by check mark whether the registrant does not need to submit a report under Section 13 or section 15 (d)of the Act.
Yeso no indicate indicates whether the registrant (1)
All reports requested in Section 13 or 15 have been submitted (d)
Securities Trading Act of 1934 within the first 12 months (
Or a short period of time required for the registrant to submit such reports), and (2)
This filing requirement has been bound for the last 90 days.
Whether a check mark is used to indicate whether the registrant has electronically submitted each interactive data file requested under Rule 405 of the regulations --T (§232.
This Chapter 405)
Within the first 12 months (
Or within a shorter period of time when the registrant is required to submit such documents).
If the declaration of arrears is disclosed under section 405th of the regulations, it is not indicated by a check mark --K (§229.
This Chapter 405)
As the registrant is aware, it is not included here and will not be included in the final proxy or information statement referenced in Part 2 of this Form 10 --
K or any amendments to this form 10K.
O indicate whether the registrant is a large accelerated filer, non-accelerated filer by checking the mark
A smaller reporting company, or an emerging growth company.
See the definitions of \"large accelerated file manager\", \"Small Reporting Company\" and \"emerging growth company\" in Rule12b
2 of the Trading Act.
Big acceleration file
Emerging growth company oif is an emerging growth company that indicates by check mark whether the registrant chooses not to use the extended transition period to comply with any new or revised financial accounting standards provided under section 13 (a)
The Trading Act.
Indicate whether the registrant is a shell company by check mark (
Defined in Rule 12b-
2 parts of the transaction law).
Total market value (
Combined tape closing price based on June 30, 2018)
Non-beneficial voting stock
The registrant\'s affiliates are approximately $177,382,478.
For the sole purpose of this calculation, the term \"non-
Affiliate \"is interpreted as excluding the directors and executive officers of the registrant.
Such an explanation is not intended and should not be construed as the registrant or such director or executive officer acknowledging that any such person is a \"subsidiary\" of the registrant \", because the term is defined in accordance with the Securities Act of 1934.
Number of shares of common stock, $.
01 face value, 2019 of the unregistered registrants is 22,157,700.
Information required by documents 10, 11, 12, 13 and 14 contained by references-
K by reference to the proxy statement of the AGM to be held by the registrant on May 15, 2019 incorporated into Part ii of this agreement (
\"Proxy Statement \").
Some information required for PartII of this Form 10-
K is established according to the 2018 Annual Report (if any) submitted to shareholders by the registrar.
Report of the final accounts of the ContentsTABLE CONTENTSPART IPageItem. Business 1A.
Risk factor 1B.
Unresolved employee reviews 2.
Property item month.
Legal action 4.
The third part is the fifth mine safety disclosure.
Market for registrant common stock, related shareholder matters and issuer to purchase equity securities
Selected Financial Data Items 7.
Management\'s Discussion and Analysis of operating conditions and results
Qualitative and quantitative disclosure of market risks
Financial statements and supplementary data items 9.
Changes and disagreements with accountants on accounting and financial disclosure project 9A.
Control and procedure 9B.
Section IIIItem 10 of other information.
Project 11. Director, executive officer and corporate governance.
Item 12 of administrative compensation.
Secured ownership of certain beneficial owners and management and related shareholders.
Relationship with directors and related transactions.
Main accounting fees and services section IVItem 15.
Annex and schedule 16 to the financial statements. FORM 10-
This annual report on Form10-
K, including \"Management Discussion and Analysis of Financial Position and operational results\"
View the statement on future events and future results of safe ports established under the revised 1933 Securities Law and the revised 1934 securities exchange law.
Libbey wants to take advantage of the \"safe harbor\" provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based on current expectations, estimates, forecasts and forecasts, as well as the beliefs and assumptions of our management.
Words such as \"expectation\", \"goal\", \"belief\", \"intention\", \"possibility\", \"plan\", \"potential\", \"should, variations of the words \"will\", \"will\" and similar expressions are designed to identify these forward
Look at the report.
In addition, any other statements involving our future financial performance forecasts, our business expected growth and trends, and other descriptions of future events or situations are moving forward --
Look at the report.
What readers need to pay attention to is that these
Forward-looking statements are only predictions and are influenced by risks, uncertainties and assumptions that are difficult to predict.
Therefore, the actual results may differ materially and adversely from the results expressed in any forwarding
Look at the report.
We have no obligation to modify or update any forwarding-
Find reports for any reason. PART IItem 1.
Business Company. (
Libby or the company)
Leading the world in the design, production and sales of tableware and other products.
Our two factories in the United States and our factory in Mexico produce glass tableware and related products (Libbey Mexico)
Netherlands (Libbey Holland), Portugal (Portugal)and China (Libbey China).
We believe that our network of glass tableware manufacturing, distribution and service is the largest in the Western Hemisphere and the largest in the world.
We also purchase glass tableware, ceramic tableware, metal tableware, hollow tableware and service supplies worldwide.
We sell our products in more than 100 countries around the world.
Our extensive range of desktop and other products is available worldwide in Libbey®Signed by Libby®Master\'s Reserve®The World®Cutlery, Syracuse®Crisa China®Royal Leerdam Hotel®Glass®And other brands mainly in catering, retail and businessto-
Consolidated financial statements for segmentation and geographic information.
Originally founded in 1818, Libbey is a New England Glass Company.
The company moved to Toledo, Ohio in 1888 and was incorporated in Delaware in 1987.
Our rich heritage now spans 200.
Our website can be found on www. libbey. com.
We provide free of charge on this website all reports submitted or provided under section 13 (a)or 15(d)
The Securities Trading Act of 1934, including our Annual Report on Form10
Our quarterly report on Form10
Q and our Current Report on Form8
And amendments to these reports.
These reports, after being submitted to the Securities and Exchange Commission or provided to the Securities and Exchange Commission, are available on our website as soon as reasonably practicable, and can also be found on www. sec. gov.
Our stock is traded in New York securities, so the stock code LBY is traded.
Our strategic focus is on the following three key areas that we believe are critical to achieving sustainable profitable growth across all our segments: profitable growth including innovative new products and world-class e-commerce
Excellence through the best operationsin-
First-class service, improve the utilization rate of our global network, extend the life of assets, and continuously improve;
Develop our talents and culture to the level we need to create sustainable value.
In order to improve our ability to drive growth through innovation, we have strengthened our marketing organization to enhance market insight and build and improve our ability to develop new products. In the U. S.
We believe that we have a competitive advantage, including leading market share and the bestin-
Top notch catering, retail and business servicesto-
We hope to expand these advantages by enhancing customer focus and introducing differentiated new products while seeking to increase the share of existing product categories such as ceramic and metal products, and to attend a wider range of food and beverage venues than in history as we entered medical insurance began in August 2018.
We are also recognized food service providers in Latin America;
Europe, Middle East and Africa (EMEA);
And Asia Pacific.
We expect these areas to benefit from our enhanced customer focus, new products and adjacent relationships tailored to increase our share.
We invested heavily in 2017 to build new capabilities to support e-commerce
Our retail channel business in the USS.
At 2018, we built our internal electronics
This allows us to scale our business at a lower cost.
In addition, we are expanding our e-commerce system.
Business platforms and capabilities for certain European countries and support our customers in other channels.
Finally, we are implementing new internal processes and new enterprise resource planning systems to streamline business processes and improve capabilities in many functional areas.
In 2018, our comprehensive manufacturing footprint in the Netherlands and the new furnace both provided operational benefits and reduced energy consumption.
In Latin America, we have successfully increased our mitigation capacity on existing production lines to meet our growing needs in this area and to increase the use of existing assets.
Similarly, in order to better adapt to market demand, we have replaced existing production lines with new production capacity in the United States.
As a glass manufacturer, we have a capital
Intensive business, our investment in the stove is long-termterm in nature.
Over time, we will continue to seek opportunities to optimize our manufacturing footprint globally to serve profitable sectors in our market.
We intend to continue to invest in technologies that can extend the life of certain assets in order to improve overall returns.
As we seek to become one of the most innovative desktop companies, our mission is to become more market-oriented.
In 2019, we intend to continue to create momentum for our growth and operational and organizational excellence strategies.
Our products include glassware products produced by us in six major manufacturing factories around the world, as well as glass tableware, ceramic products, metal products and other desktop products we purchase worldwide.
Glass tableware products include products such as wine glasses, stem utensils, mugs, bowls, vases, salt and pepper bottles, wine glasses, jars, candle holders, etc.
Other glass products include tableware, bakers, hand-made glass tableware and components sold to the manufacturer of the original equipment, such as mixer tanks and mixing bowls (OEMs).
We also offer a wide range of ceramic tableware products.
Dishes, bowls, plates, cups, pans and other desktop accessories are included.
In addition, we offer a wide range of metal cutlery including knives, forks, spoons and service utensils, as well as service trays, purchase and other metal desktop accessories.
We have invested in proprietary ClearFire in recent years. ®We are located in the technical factory of shiffport, Luiz Anna state, producing advanced glass tableware suitable for advanced catering, home and consumer use.
We sell these products in the food service channel under the reserve of the owner. ®Brands and retail under Libbey signature®Brand.
We have developed a complete advanced desktop product called art collection. ™The goal is to provide services to premium dining venues and event venues on the catering service channel.
Combined with the reserves of our owners®Our main table brand glassware™Fine desktop products for tablets and other leading brands purchased through the following exclusive distribution agreements: Spiegelau®And Nachtmann®Glassware and service products in the United StatesS.
Catering service channel
Mirror®It is famous for its exquisite dry products and other beverage varieties.
Nachtmann®A variety of high-end service supplies, decorative supplies, hundreds of supplies and drinking utensils are provided to meet the needs of finer dining places.
Schenwald tableware products in the United StatesS. and Canada.
Schenwald is one of the world\'s leading high-tech suppliers
Provide porcelain and bone porcelain for catering services.
Scandinavian VIVA in Scandinavia®Provide High
Designed in Denmark and handmade in China.
, As of Scandinavian Peninsula®The series includes teapot, CUP, tea tray and infusers featuring shock combination-
Glass, stainless steel and porcelain.
August of 2018 we for medical health industry launched the new of intuitive tableware series.
This new range of products is characterized by products from a variety of suppliers designed to meet the special needs of healthcare institutions.
We believe that through our regional market segmentation organization, we can better understand and meet the needs of our customers.
4 Content table in the United StatesS.
And Canada, the customers of our tableware products include more than 350 traditional and network
Food service distributors located in the United States and Canada and around the world mainly sell to restaurants, bars, hotels and other food service places.
In terms of retail, we sell to mass merchants, department stores and pure play electronic products.
National retail chain enterprises and professional household goods stores.
In addition, in business-to-
Business channels, we sell to a variety of customers, including companies that use glass in candles, flowers and other OEM applications.
In Latin America, we sell to retail customers including mass merchants and wholesale distributors;
A variety of businessto-
Commercial customers who use glass products in promotions, catalogues, candles, food packaging and various OEM uses;
And food service dealers.
At EMEA, we sell glass tableware to retailers, distributors and decorators serving retail, catering and businessto-
Commercial channels for promotional and resale purposes, including large brewery and winery decor products with company logo.
We also sell glass tableware products in Asia Pacific mainly to distributors and wholesalers.
None of our customers account for 10% or more of our sales, although the loss of any of our major customers can have a meaningful impact on us.
The market that competes for our products is very competitive in all our geographical areas.
Our competitors include other glass tableware manufacturers, including large multinational companies such as Arc International (
A French company)and Paşabahçe (
A holding company in Turkey, a Turkish company)
Oneida group (a U. S. company)
Anhui Deli glassware Co. , Ltd. , Ltd. (
A Chinese company)
Ramico, S. A. -VICRILA (
A Spanish company)
As well as various other manufacturers in Europe, Asia Pacific and the Americas;
Ceramic tableware and metal products manufacturers around the world, including Homer Laughlin, Oneida group, Steelite, etc;
And various purchasing or marketing companies.
In addition, other products such as plastic and melamine compete with our glass and ceramic desktop products.
Our main competitive advantage is our installation base, customer service, price, product quality, new product development, brand, responsiveness, delivery time and product variety.
In the first half of 2018, we experienced an improvement in the global demand profile in the second half of 2017.
However, due to the reluctance of many customers for a normal year, demand in our global market declined in 2018.
As in the past, end the purchase into stock.
In addition, driven by a handful of competitors selling products to the US, we have experienced extraordinary competitive pricing pressuresS.
Very large discount food service market.
We also believe that there is still a large industry overcapacity for glass tableware manufacturers. In the U. S.
The relative strength of the dollar against other world currencies has increased the convenience of foreign manufacturers selling products to the United States. S.
Sales, marketing and distribution account for 2018 of our sales of approximately North American customers (U. S.
Canada and Mexico)
We account for about 24 of our customers in other countries.
Our products are sold in more than 100 countries around the world.
We hire our own sales team to visit customers and distributors.
In addition, we occasionally retain the services of the manufacturer\'s representative agency to help sell our products.
We have marketing staff at the company headquarters in Toledo, Ohio, as well as in Mexico, Portugal, the Netherlands and China.
We operate distribution centers in or near each manufacturing plant (
See properties below \").
In addition, we operate a distribution center in Laredo, Texas and West Chicago, Illinois, and we work with third.
Third party logistics providers serving directly for part of usto-consumer e-
Our warehouse and distribution center is strategically located to enable us to supply large quantities of products to our customers in a timely and cost-effective mannerAn effective Foundation.
Most of our sales are in the catering, retail and business areas. to-
Business channels will be further detailed below.
According to our estimates, food services have a leading market share in U. S. glass tableware salesS.
And the Canadian food service channel, which makes us one of the world\'s leading suppliers of glass tableware.
Most of our desktop products are sold through the network of food service dealers.
Our strong network of caterers
The home sales team covers a wide range of restaurants, bars, hotels and other tourist and tourist venues.
We\'re starting to see some end-users turning to the Web --
Basic Distribution of replacement products after original installation.
In 2018, we expanded our target market to include the healthcare industry with a special focus on the elderly population in the industry.
The main customers in the retail channel include mass merchants, specialty household goods stores and pure play electronic products.
Business retailers and value
Retailers for the United StatesS.
On a global scale.
According to Beverageware Consumer Tracking Service data from bevergroup, management estimates that we remain ahead of the US marketS.
Retail Market for glass drinks.
We believe that we have established good relationships with major retailers, especially those in the US. S.
Canada, Latin America and Europe, the Middle East and Africa have enabled us to successfully launch differentiated new retail products to increase our share and profitability.
We also run direct sales stores in the United States. S.
Mexico and Portugal, and sales through internet retailers. Business-to-
We provide glass tableware for enterprisesto-
Business channels for distribution.
Products our customers sell in the business-to-
Business channels in the United StatesS.
Canada and Latin America include beverage companies and custom decoration companies for glassware for promotion and resale.
In addition, the sales of our products in the businessto-
Business channels in the United StatesS.
Canada includes sales of candle and flower application products, as well as mixer tanks in Latin America.
Craft industry and food-
The packaging company is also one of our businesses. to-
The customer is a business glassware.
Our customers in Europeto-
Business channels include marketers who decorate our glassware with company logos and resell these products to large breweries and wineries that redistribute and resell glassware for promotional purposes.
Seasonal your sales and operating income tend to be stronger in the last three quarters of each year, and weaker in the first quarter of each year, mainly due to the impact of consumer buying patterns and production activities.
This seasonal model resulted in higher accounts receivable in the second half and lower in the first half.
We usually set up inventory in the first half of the year in order to provide the best customer service and timely delivery in the second half of the year, which is a higher demand period for orders that may exceed the short term
We also build inventory for our customers during the planned shutdown or maintenance period, as well as maintain the appropriate safety stock level for our items mainly from the Asia Pacific region, so a longer lead time is required.
Accounts payable generally fluctuate little on a seasonal basis.
Although there is little publicly available information about competitors, we believe that our experience in working capital is generally consistent with the experience in the industry as a whole.
We currently own and operate three glass tableware manufacturing plants in North America, two of which are located in the United States (
One in Toledo, Ohio, and one in shrifport, Anna, Louis)
One of them is located in Monterey, Mexico.
In Europe, we own and operate two glass tableware manufacturers, Leerdam in the Netherlands and Marinha Grande in Portugal.
In Asia, we own and operate a glass tableware production factory in Langfang, China.
The manufacture of our tableware products includes the use of automated processes and technologies, as well as manual production.
We have designed a lot of glass tableware production machinery and continuously improved to integrate into the technological progress.
We are confident that our production machinery and equipment will continue to meet our needs in the foreseeable future, but we will continue to invest to further improve our products. Improve production efficiency and reduce costs.
Our glass tableware products are generally one of two manufacturing methods, usually called \"blowing\" or \"pressing \".
In some cases of stemware, we can use a combination of these methods.
Most of our wine glasses, drying utensils and other glass tableware products are \"blown\", which means that they are produced by using compressed air to form a molten glass in the mold.
Our other glass tableware products and the stems of certain drying tools are \"pressed\", which means that they are produced by pressing the molten glass into the desired product shape.
To help with the manufacturing process, we employ a team of engineers whose duties include efforts to improve and upgrade our manufacturing facilities, equipment and processes.
In addition, they provide the engineering needed to make new products and implement a large number of innovative changes in the design, size and shape of our products.
For more information, see research and development below \".
Ceramic tableware, metal tableware and hollow tableware mainly from the Asia-Pacific region.
The raw materials are mainly sand, lime, soda ash, corrugated packaging and pigment.
Historically, these materials can be adequately supplied from multiple sources.
However, due to weather or other factors, there may be a temporary shortage of certain materials, including supply disruptions caused by material transportation or production delays.
This shortage does not and is not expected to have a significant adverse impact on our operations in the future.
Natural gas and electricity are the main energy sources in our production process, and the cyclical changes in these utility prices have and may continue to have an impact on our profitability.
Historically, we have used natural gas hedging in part of the expected purchase to partially mitigate this impact in North America and Europe.
Due to the cost of diesel and truck transport capacity, the freight charges for our materials will also fluctuate, and this change may affect our income and cash flow.
Our R & D efforts focus on developing new, differentiated and innovative products to meet the needs of our customers and consumers.
Our product development work starts with consumer insights and we have been investing in strengthening those capabilities.
Our focus is on improving product quality, developing innovative consumer solutions and products, improving profitability of our business, safety and risk mitigation technologies through research and development, including neighboring technologies.
We will continue to invest in strategic R & D projects to further enhance our competitive capabilities in our core business.
In addition, our core competencies include excellence in our glass engineering and the world
Development technology of class manufacturing.
In addition to collaborative research by external consultants and universities in the field of science, we have hired a team of engineers to conduct research and development.
According to market research and survey, we believe that our trademarks and trademarks, as well as the shape and style of our products, are highly recognized by consumers and are valuable assets.
We think, Libby®Signed by Libby®Master\'s Reserve®Grand master Hotel Syracuse®China, world®Crisa cutlery®Royal Leerdam Hotel®And glass®Trademarks and trademarks are essential to our business.
We have a number of patents related to various products and processes.
However, we do not believe that any patent or patent group related to a particular product or process is critical to our entire business.
Environmental pollution operations, like general industrial operations, are subject to many existing laws and government regulations aimed at protecting the environment, especially in the case of plant waste, the discharge of contaminated sites and the disposal and repair of solid waste.
We believe that we are materially compliant with applicable environmental laws and we do not know that any regulatory initiatives we expect will have a significant impact on our products or operations.
View risk factors-
We are subject to various environmental legal requirements and may be subject to new legal requirements in the future;
These requirements may have a significant adverse impact on our operations.
\"For environmental information, please see\" unexpected events \"17 of consolidated financial statements contained in Part II of this year\'s report item 8 for information on the environment for more information on the environment
Although we continue to revise our manufacturing processes and technologies in order to reduce emissions and improve energy efficiency, the capital expenditure of real estate, factories and equipment dedicated to environmental control purposes are not materials for the period 2018 or 2017 and are not expected to be materials in 2019.
We hired 6, 083 people in December 31, 2018.
About 69% of our employees are employed outside the United States. S.
The salaries of most of our employees are paid hourly and paid by collective bargaining agreements.
The total number of employees of collective bargaining agreements due within one year is about 59% of Libbey\'s total labor force.
Our collective bargaining agreement with union employees in the Netherlands is scheduled to expire on June 30, 2019;
Our collective bargaining agreement with union employees in Toledo, Ohio is scheduled to expire on September 30, 2019;
Our collective bargaining agreement with our union employees in shiffport, Luiz Anna state is scheduled to expire on December 15, 2020.
According to our collective bargaining agreement for union employees in Mexico, we negotiate wages every year and benefits every other year.
In Portugal and China, we have not entered into a written collective bargaining agreement with union employees;
However, consultations were held with the union on various issues, including annual negotiations on wages.
We believe that our relationship with our employees is good. Item 1A.
Risk factors the following are the most important factors affecting the yearto-
Year-on-year comparisons may affect the future performance of our business.
New risks may arise and management cannot predict them or estimate the extent to which they affect our financial performance.
Risks associated with declining market conditions or trend changes in the retail, tourism, restaurants, bar and entertainment industries and retail and catering distribution channels may have a negative impact on our product needs.
Our business relies on business and personal discretionary spending in the retail, tourism, restaurant and bar or entertainment industries.
During the general recession or during periods of uncertain economic conditions, discretionary spending by business and individuals may decline.
In addition, the tightening and other regulatory measures taken by some governments may cause consumers in some markets to reduce or delay spending.
Consumer spending may also be reduced or delayed due to credit crunch, negative financial news, rising fuel and energy costs, rising tax and medical costs, and/or falling revenue or asset value.
In addition, spending on travel, restaurants and bars or the entertainment industry may decline after the terrorist incident, and during geopolitical conflicts, travelers are concerned about security issues, during bad weather or during periods of travel or entertainment that may involve health-
Risk of serious epidemic, epidemic or infectious diseases.
Changes in trends, including those affecting the restaurant and bar industries, may also have a negative impact on our product needs.
For example, from full dining
Restaurants serving meals to restaurants
Restaurants and restaurants available (
Combination of grocery stores and restaurants)
Dining from restaurant chain to local-
The trend of self-owned restaurants, as well as delivery of meals and meals, may lead to reduced demand for our products from food service distribution channels.
In addition, changes in consumer and customer buying preferences may adversely affect the demand and profitability of our products.
For example, consumer buying preferences continue to shift from buying in physical storesand-
Mortar shop purchased online.
Similarly, in food service distribution channels, end users of products such as our bars and restaurants are increasingly inclined to bypass traditional food service dealers and switch to online purchases, especially when they try to supplement products that were originally purchased through traditional food service distributors.
We launched our electronics.
Business capabilities in the mid-market
2017 in response to the changing purchasing preferences of consumers in distribution retail channels, we want to expand our e-commerce channels
Commercial capacity of food service distribution channels in 2019.
However, these changes in purchasing preferences may exceed ourdeveloping e-
Also, if our brick-and-
Our retail customers and traditional distribution partners for catering services
Business ability is a threat, not an opportunity to expand your business. The demand for our products comes from bricks. and-
It may adversely affect physical retail customers and traditional catering distributors.
Failure to meet the needs of new products can adversely affect our ability to compete effectively and grow our business.
Our strategy depends to a certain extent on the timing and market acceptance of new product listings, as well as our ability to constantly update new product channels and bring these products to market.
This capability may be adversely affected by difficulties or delays in product development, such as the inability to identify viable new products, the inability to obtain adequate intellectual property protection and market acceptance of new products, and difficult or longer. than-
Expected lead time for purchasing products.
There is no guarantee that new products are commercially successful or profitable.
The inability to develop new or expanded content tables for existing customer relationships can adversely affect our ability to grow our business.
Our ability to grow our business depends to a certain extent on our ability to develop new customer relationships and expand our relationships with existing customers.
In the food service distribution channel, our ability to develop new customer relationships and expand relationships with existing customers may be adversely affected by the trend of integration of food service distributors.
Non-development and expansion of this relationship may have a significant adverse effect on our business, operational results and financial position.
Changing industry and market conditions may determine the strategic decision to restructure some business units and stop other business units.
These decisions may require us to document significant restructuring costs.
On February 18, 2019, the board of directors of Libbey approved a plan to seek strategic alternatives to our business in China (PRC)
Including selling or closing our manufacturing and distribution facilities in Langfang, China.
Due to the current level of uncertainty surrounding the final course of action, we are currently unable to estimate the amount or scope of any costs associated with the planned strategic review.
For more information on these potential expenses, see seenote 20, a follow-up event for our consolidated financial statements.
In addition, we have recorded restructuring costs in the past related to involuntary employee turnover, various facilities abandonment and various other restructuring activities.
We constantly evaluate ways to reduce operating costs through new restructuring opportunities, including more effective use of our assets, labor and operating facilities.
In addition, the changing industry and market environment may determine the strategic decision to restructure some business units and stop other business units.
Therefore, with the recession and the expansion of global business, we have the potential to take the risk of significant restructuring costs in the future.
We are faced with intense competition and competitive pressure, which may adversely affect our product needs, operational results and financial conditions.
Our business is highly competitive and the main competitive factor is the breadth of customer service, price, product quality, new product development, brand, delivery time and product supply.
The advantage or disadvantage of any of these competitive factors may be sufficient to cause the customer to consider changing the type of product we sell to the supplier.
Competitors include other glass tableware manufacturers including large multinational companies such as Arc International (
A French company)
As well as many manufacturers in Europe, Asia Pacific and America;
Manufacturers of various ceramic tableware and metal products around the world;
And various purchasing or marketing companies.
In addition, other products such as plastic and melamine compete with our glass tableware and ceramic tableware products.
The demand for our products may be adversely affected by the increased competitive pressure caused by foreign subsidies to our competitors in these countries;
National and international boycott and embargo against other countries or the United StatesS.
Import and/or export;
Increase or increase non-tariff rates
Tariff trade barriers applicable to China\'s products imported from abroad;
Lower tariffs on US importsS.
Products of foreign competitors;
And other changes in international agreements that improve access to the United StatesS.
The market of our competitors.
In addition, cost-
The competitive power of our products may be adversely affected by inflationary pressure, which leads us to increase the price of our products in order to maintain the profitability of our products.
In this regard, some of our competitors may have more financial and capital resources than we do and continue to invest heavily to improve production efficiency.
Competitors may have adopted more advanced technology in the manufacturing process, including more advanced automation technology.
Our labor and energy costs may also be higher than some foreign producers of glass cutlery. The cost-
Compared with foreign competition, the competition of our products may also be reduced due to the large fluctuations in the value of the euro, Mexican peso, RMB, which we call \"RMB\", or Canadian dollar relative to the United States. S.
Dollars and other major currencies.
For example, if the United StatesS.
The dollar has appreciated against the euro, the Mexican peso or the renminbi, and the purchasing power of these currencies will actually decrease compared to the United States. S.
The dollar makes our AmericaS. -
Compared with the products of local competitors, the manufacturing products of the euro area, Mexico and China are more expensive, and the products made by our foreign competitors in these places are more expensive.
Compete with our America. S. -
Our Mexican pension and the United StatesS. and non-U. S. post-
No funds for retirement benefits plan;
In the future, our level of funding in the United StatesS.
Pension plans may fall and our pension spending may increase significantly.
We do not have funding and under Mexican law we do not have an obligation to fund our Mexican pension plan.
As at December 31, 2018, the Mexican pension plan had projected an unfunded amount of $30 for pension obligations. 0 million.
Also, although we have closed our participation in the United States. S.
Pension and post
Retirement benefits program, many of our employees are involved, and many of our former employees are entitled to American benefitsS. and non-U. S.
Fixed benefits pension plan and post
Retirement benefits program
Related to our employee pensions and positions
Retirement benefits program, we are faced with market risks related to various changes in the capital market.
The regular rate affects the discount rate used to measure our debt and related expenses.
Our total pension
All US retirement benefits including pension settlement feesS. and non-U. S. plans was$7. $0 million and $7.
The financial year ended December 31, 2018 and 2017 was 4 million per cent, respectively.
We expect the total amount of our pension
Retirement benefits for all AmericansS. and non-U. S. plans to be $6. 2019 2 million
Fluctuations in the capital market affect the performance of our pension plan assets and related pension expenditures.
Discussion on sensitivity to changes in key assumptions with our pensions and other post-retirement
Retirement plan, see \"Management Discussion and Analysis of the financial position and results of operations --
Important accounting estimates.
Interest rates or a decline in the value of the U. S. securities marketS.
Pension plans or certain other changes may significantly reduce the funding status of these plans and affect the level and time of our pension expenses and the minimum required contributions to the plan as set out in applicable law.
Natural gas and electricity are the main fuel for our production products, and price fluctuations may adversely affect our operating results and financial conditions.
Natural gas and electricity are the main sources of energy in most of our production processes.
Our time is not long.
Regular contracts for natural gas.
In addition, the price of electricity for a long time
The term contract for electricity may be variable.
Therefore, our natural gas and electricity costs are affected by market variables and price fluctuations.
Therefore, our operating results are closely related to the cost of natural gas and electricity.
We take advantage of natural gas exchange contracts at manufacturing facilities in North America, where our goal is to hedge between 40 and 70% of the expected natural gas demand.
With regard to our international facilities, we use fixed facilities
The price contract for our part of gas demand.
In some of the countries we operate, including China, we have the ability to establish a fixed
Pricing contracts or natural gas swap contracts for fixed natural gas prices are limited. We spent $53.
$5 million and $49.
The annual gas and electricity prices as at December 31, 2018 and 2017 were 3 million per cent, respectively.
We cannot predict how much gas or electricity prices will rise in the future.
If we are unable to offset increases in natural gas or electricity prices, such as passing on costs to customers, these increases may adversely affect our profit margins and operational performance.
The market price of our common stock may fluctuate.
Due to many factors, the market price of our common stock may be subject to wide fluctuations, many of which are beyond our control.
These factors include the market situation in the industry we operate, as well as the general economic and market conditions such as the economic downturn;
The seasonal nature of our business operations;
The general situation of China\'s securities market and the company\'s stock market in the industry;
Volume of transactions;
Sales of people who hold a large number of our common shares; short selling;
Actual or expected changes in our operating results and cash flow;
Actual or expected changes in our revenue relative to our competitors;
Changes in Financial estimates of securities analysts;
Government legislation or regulations;
Currency and exchange rate fluctuations.
Operational risk if we are unable to successfully renegotiate when the collective bargaining agreement expires, an organized strike or stoppage by union employees may adversely affect our operational performance.
We are the party to the collective bargaining agreement that covers most of our manufacturing employees.
The agreement with union employees in the Netherlands is scheduled to expire on June 30, 2019;
The agreement with union employees in Toledo, Ohio, is scheduled to expire on September 30, 2019;
The agreement with our union employees in shiffport, Luiz Anna state is scheduled to expire on December 15, 2020.
According to our collective bargaining agreement for union employees in Mexico, we negotiate wages every year and benefits every other year.
In Portugal and China, we have not reached a written collective bargaining agreement with union employees, but we have negotiated with the union on various issues, including annual wage negotiations.
Without a break in Labor, we may not be able to successfully negotiate a new collective bargaining agreement.
If any of our union employees participate in a strike or shutdown while negotiating an existing collective bargaining agreement (
As happened in Toledo, Ohio in 2016)
Alternatively, if we are unable to negotiate an acceptable agreement with union employees in a timely manner in the future, we may experience a serious disruption to our operations.
If we stop work and we choose to hire alternative workers, we may increase the cost.
In addition, due to an increase in wages or benefits paid to union members after signing a new agreement with the Union, we may experience an increase in operating costs.
Due to the preparation of production interruption, such as increasing production and inventory, we may also experience inefficient operation.
Finally, companies that rely on raw materials, transportation or other services may be affected by labor difficulties.
These factors and any such disruption or difficulty may adversely affect our operating performance and financial position.
In addition, we rely on the cooperation of our employees who are essentially trade unions to implement and adopt our productivity plans that are critical to our ability to improve productivity.
The impact of strikes and other deceleration may adversely affect the extent and speed of our adoption of the optimization objectives.
If we are unable to increase production or achieve operational efficiency, the profitability of our business may be significantly adversely affected.
In order to ensure that our products and their prices remain competitive, we may not be able to successfully increase the production of manufacturing facilities or obtain the necessary operational efficiency.
Unexpected equipment failures may result in a shutdown or shutdown.
Our manufacturing process depends on the key glass.
Production equipment such as furnaces, forming machines and lehrs.
Due to an unexpected failure, accident, natural disaster or other force majeure event, the equipment may cause downtime.
In the future, due to these failures or events, we may go through the period of factory shutdown or production reduction.
Unexpected disruption of our production capacity can adversely affect our productivity and operational results during the affected period.
If we can\'t get enough energy at peak demand, we may also face a shutdown.
The loss of service to key personnel can have a significant adverse impact on our business.
Our continued success depends to a large extent on our ability to attract and retain key managers, as well as on the number of technical, operational and sales and marketing personnel.
Losing key members of some of our key executives or operators, or failing to attract or retain other key individuals, can have a significant adverse impact on us.
We rely on increasingly sophisticated information systems to manage our manufacturing, distribution, sales and other functions.
If our information system does not fully perform these functions, or if we encounter an interruption in our operation, our business and operational results may be affected.
All major businesses, including manufacturing, distribution, sales and accounting, rely on our complex information systems, including but not limited to our enterprise resource planning (ERP)system.
Our information systems are vulnerable to damage or disruption by earthquakes, fires, floods, hurricanes and other natural disasters;
Power failure, computer system failure, Internet and telecom or data network failure;
A hacker, computer virus, or software vulnerability.
We started implementing the new ERP system in 2018.
Any damage to our information system, including our new ERP system, major disruptions or failures in operation, can undermine our business;
Resulting in reduced sales, increased indirect costs, excess inventory and shortage of products;
Adversely affect our operations, financial performance and condition.
We have taken significant steps to mitigate the potential impact of these risks, but there is no guarantee that these procedures will be fully successful.
In addition, although we take steps to protect the security of our management information systems, including our computer systems, intranet and internet sites, e-mail and other telecom and data networks, the security measures we implement may not be effective and our systems may be vulnerable to theft, loss, disruption and disruption from some potential sources and events, includes unauthorized access or security violations and cyber attacks.
If our reputation, brand and financial condition are adversely affected due to major network events or other reasons, our operations will be disturbed or shut down;
The theft or disclosure of our confidential, proprietary information;
Data is manipulated or destroyed;
We incur fees or are required to pay fines for stolen customers, employees or other confidential information;
We must invest a lot of resources to repair the system or strengthen the protection of network security;
Otherwise, we will bear significant litigation or other costs.
Severe outbreaks, epidemics, or infectious diseases in places where we have facilities may adversely affect our operations and financial conditions.
Our facilities may be affected by certain public health issues, including epidemics, epidemics and other infectious diseases.
If there is a serious epidemic in places where we have facilities, it may adversely affect our operations and financial situation.
We may not be able to effectively integrate the future business we acquire or the joint venture we enter.
Any future acquisitions we may make or joint ventures we may enter are subject to various risks and uncertainties, including: inability to effectively integrate operations, products, technology and personnel of the acquired company (
Some of them may be distributed in different geographical regions)
Achieve expected synergies;
Potential disruption of existing business and shift of management attentionto-day operations;
Uniform standards, controls, procedures and policies cannot be maintained and defective standards, controls, procedures and policies cannot be corrected, including internal controls and procedures sufficient to meet the regulatory requirements of US listed companiesS. ;
The occurrence of unexpected or debt at the time of acquisition;
Failure to obtain necessary transitional services such as management services and information technology services;
Need or obligation to divestiture part of the acquired company;
And potential damage to the relationship with the customer.
In addition, we cannot guarantee that the integration and integration of newly acquired enterprises or joint ventures will achieve any expected cost savings and operational synergies.
Failure to integrate and consolidate operations and improve operational efficiency in newly acquired enterprises or joint ventures may have a significant adverse impact on our business, financial position and operational results.
Debt levels may limit our operational and financial flexibility.
We have $400 as of December 31.
1 million total outstanding debt.
While our ABL financing credit agreement and term loan B advanced secured credit agreement generally do not contain financial covenants, the credit agreement contains other covenants that limit our operational and financial flexibility, such: limit the additional debt we may bear;
Certain business activities, investments and payments are limited, and the ability to dispose of certain assets is limited.
These contracts may limit our ability to engage in activities that we have been engaged in for a long time.
In addition, our debt levels may: limit our ability to withstand business and recession, and/or put us at a competitive disadvantage compared to our less indebted competitors, because we are committed to the high proportion of operating cash flow to repay our debts;
To expand our business and limit our ability to invest in capital;
Limit our ability to invest in operating cash flows in business and future business opportunities, because we use a large part of these funds to pay off our debts, and our contracts limit the amount of our investment;
Limits our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development, debt servicing requirements, acquisitions or other purposes;
Making it more difficult for us to meet our financial obligations;
Limit our ability to pay dividends;
Limits our ability to attract and retain talent.
If the cash generated by the operation is not sufficient to meet our liquidity requirements, we may have a lot of liquidity issues if we are unable to repay the debt, or if we fail to fulfill our covenants.
In this case, we may not be able to buy back the shares, we may be forced to sell the assets, postpone the planned investment, obtain additional equity or restructure the debt.
Depending on the circumstances at the time, we may not be able to complete any of these operations on favorable conditions or at all.
In addition, our failure to comply with the covenants contained in the loan agreement may result in a breach of contract, which, if not corrected or waived, may result in an acceleration of all our debts.
Our variable interest rate debt puts us at risk of interest rates, which can lead to a significant increase in our debt service obligations.
The variable borrowing rate under our advanced secured term loan B puts us at risk of interest rates.
Although we have achieved common interests
Interest rate swaps to determine the interest rate of our part of the senior secured term loan B, and if the interest rate goes up, even if the amount of the loan remains the same, our debt obligation to the variable interest rate debt increases.
Therefore, our net income and cash flow will decrease.
The uncertainty of the LIBOR calculation process and the potential gradual withdrawal of LIBOR after 2021 may adversely affect the market value of our current or future debt, including under our ABL financing credit agreement and our term loan B senior secured credit agreement.
July 27, 2017, United StatesK.
The Financial Conduct Authority announced its intention to stop persuading or forcing banks to submit LIBOR interest rates after 2021.
As a result, LIBOR may be discontinued by 2021.
While there is no consensus on what interest rates or rates may become an acceptable alternative to LIBOR, the alternative reference rate committee is a steering committee composed of the US central bank. S.
Selected financial market participants and the Federal Reserve Bank of New York began to announce the guaranteed overnight financing interest rate on May 2018 (“SOFR”)
As an alternative to LIBOR.
SOFR is a broad measure of the cost of overnight cash lending in the United States. S.
Bond repurchase market
At this point, it is not possible to predict whether the SOFR or other reference rates will become a recognized alternative to LIBOR.
The way and impact of this shift may have a significant adverse effect on LIBOR\'s trading market
Based on securities, including our term loan B advanced secured credit agreement, as well as the applicable interest rate for our current or future debt and the amount of interest paid, including our ABL financing credit agreement and our term loan B senior secured credit agreement.
If we are unable to control or pass on the increase in the cost of key inputs to our customers, including the cost of raw materials, purchased products, utilities, packaging and shipping, the profitability of our business can be significantly adversely affected.
Sand, soda ash, lime and corrugated packaging materials are the main materials for our products.
We also rely heavily on gas, electricity, water and other utilities.
In addition, we also obtain glass tableware, ceramic tableware, metal tableware and hollow tableware from third parties.
The increase in the cost of these goods or products may be due to inflationary pressures, as well as temporary shortages due to supply disruptions caused by weather, transportation, production delays or other factors.
If we encounter a shortage of goods or purchased products, we may be forced to purchase from other suppliers, and we may not be able to do so under conditions as favourable as our current terms, or can\'t do that at all.
In addition, the cost of the United StatesS. dollar-
Pricing procurement (
Including raw materials)
For our business in the euro area, Mexico and China may increase due to the appreciation of the United States. S.
The dollar is against the euro, the Mexican peso or the renminbi.
If we are unsuccessful in managing costs or passing cost increases to our customers by raising prices, our financial position and operating results may be materially adversely affected.
If we are unable to fully absorb the high level of fixed costs associated with our business, the profitability of our business may be significantly adversely affected.
The high fixed cost of operating a glass production plant encourages a high level of production, even during periods of reduced demand, which can lead to excess inventory levels and increase the pressure on profit margins.
In addition, a large part of our sales, administrative and general expenses are fixed costs that will neither increase with the increase in sales nor decrease proportionally.
Our profitability depends to a certain extent on our ability to spread fixed costs to more and more products. if we reduce productivity, our unit costs will increase, it has a negative impact on our gross profit margin.
Reduced demand or the need to reduce inventory can lead to capacity adjustments, thereby reducing our ability to absorb fixed costs, and therefore may have a significant impact on our profitability.
We are at risk of inventory.
We found it slow.
Move and obsolete inventory and estimate the appropriate loss reserve accordingly.
We cannot guarantee that additional inventory costs will not be incurred.
These expenses may have a significant adverse effect on our financial position and operating results.
Fluctuations in our operating currency may adversely affect our financial position, operating results and cash flow.
The currency of our report is the United States. S. dollar.
A large part of our net sales, costs, assets and liabilities are denominated in currencies other than the United States. S.
The US dollar is mainly Euro, Mexican peso, RMB and Canadian dollar.
In our consolidated financial statements, we translate the financial results of the local currency into the US currency. S.
The United States dollar is calculated based on the current exchange rate for the period under review.
In strengthening AmericaS.
US dollars, reported revenue and revenue for our international business will decrease as local currency will be converted into less US dollarsS. dollars.
This can have a significant adverse effect on our financial position, operating results and cash flow.
In addition, the change of this value relative to the United StatesS.
The US dollar, among the various currencies in which we conduct business, including the euro, the Mexican peso and the RMB, may result in our non-U. S. subsidiaries.
Our credit rating downgrade may have a negative impact on us.
Our credit rating is important to our cost of capital.
Major debt rating agencies usually assess our debt based on a number of factors, including our financial strength and business risks, as well as the transparency of rating agencies and the timeliness of financial reporting.
On November 6, 2017, Standard & Poor\'s downgraded our company\'s credit rating from B to B and lowered the issue-
The grade rating of the regular loan B we got from BB-
B, in each case, the outlook is stable and the revised recovery rating is from 2 to 3.
On the same day, Moody\'s Investor Services downgraded our corporate home rating and term loan B from B1 to b2.
A further downgrade of our debt rating may result in an increase in interest and other expenses for future borrowings.
A downgrade of our debt rating may also limit our access to the capital market.
If we have Impairment of assets in a business unit, our net income and net worth may be affected in writing
Decline in goodwill, intangible assets or fixed assets.
We have recorded a large amount of goodwill, which is part of the fair value of the cost over the net assets of the acquisition business;
Other identifiable intangible assets such as trademarks and trade names;
Impairment of goodwill, identifiable intangible assets or fixed assets may, among other things, be caused by deterioration of our performance, adverse market conditions, adverse changes in applicable laws or regulations, includes changes in activities that restrict or affect products sold in our business, as well as various other factors. Under U. S.
GAAP, we need to charge any impairment amount to operating income immediately.
We conduct impairment analysis related to goodwill and other indefinite Intangible assets at least once a year.
This analysis requires our management to make significant judgments and estimates, primarily on expected financial performance, expected growth rates and discount rates, identify similar companies with comparable business factors, and evaluate comparable multiples.
Taking into account our future financial plan, we determine the expected financial performance and growth rate based on the forecasts developed internally.
Based on our analysis of the weighted average cost of capital of comparable companies, taking into account market assumptions obtained from independent sources, we estimate the discount rate used.
We have identified similar companies whose business factors such as size, growth, profitability, risk and return on investment are comparable.
We found the most relevant comparable multiples of Libbey.
The estimates used by our management in the analysis may be significantly affected by factors such as specific industry conditions, changes in operating cash flow and changes in growth trends.
In addition, the assumptions used by our management are the best estimates made by management based on the expected results and market conditions on the date of testing.
When the annual impairment analysis is completed, significant changes in these key assumptions may result in impairment indicators.
Whenever an event or a change in circumstances indicates that the book value of these assets may not be recovered, we assess whether there may be impairment in our fixed assets.
If goodwill, other identifiable intangible assets or fixed assets are damaged, we are still at risk of future financial statements.