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“For our customers, we expect to minimize the effects of this decision by continuing to service the North American foodservice dinnerware market with imported dinnerware under both the Syracuse China and World Tableware brands,” said John F. Meier, chairman and chief executive officer. “While considerable efforts have been made at Syracuse China to reduce costs, the operations continue to fall short of our strategic expectations. This restructuring of Syracuse China will improve Libbey's competitiveness in 2009 and beyond.”
Libbey also announced that it expects its sales and EBITDA (excluding any one-time charges) for the fourth quarter ending December 31, 2008, to be significantly lower than its previous guidance of $210.0 million to $220.0 million in sales, and EBITDA of $20.5 million to $23.5 million.
“The recent and dramatic slowdown in the foodservice and retail channels, weaknesses in the Mexican peso and declining consumer confidence in all markets are expected to contribute to reduced results during the fourth quarter,” said Meier. “While sales were close to expectations through October they deteriorated quickly in November. We are being impacted by current economic conditions, but we are confident that we are maintaining our market share in our core North American glassware markets. Given the lack of visibility in these markets, we are unable to estimate fourth quarter sales and EBITDA with the desired degree of accuracy at this time.”
In another action to reduce costs, Libbey plans to close its Mira Loma, Calif., glassware distribution center, which employs approximately 30 people, in May 2009 and not renew its lease that expires in June 2009. Customers who are currently serviced by the Mira Loma facility will be serviced by one of Libbey's other North American distribution centers. The company is currently assessing the associated special charges as a result of these closures, the majority of which the company expects to be non-cash and to be recorded in the fourth quarter of 2008.
Libbey previously announced that it has identified $20.0 million to $23.0 million of cash flow enhancements that it expects to achieve in 2009. These include a number of cost- reduction initiatives throughout the company, led by capital expenditure reductions of $12.0 million to $14.0 million. The closures of the Syracuse China and Mira Loma facilities were not included in the $20.0 to $23.0 million of previously announced cash flow enhancements and are expected to add an additional $4.0 million to $5.0 million to cash flow on an annual basis, excluding any one-time special charges.
Visit www.libbey.com for additional information.