<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5,1997
LIBBEY INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12084 34-1559357
(State of Incorporation) (Commission File Number) (IRS Employer
identification No.)
300 Madison Avenue
Toledo, Ohio 43604
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 325-2100
Page 1 of 3
<PAGE> 2
ITEM 5. OTHER EVENTS
- --------------------
Libbey Inc. (the "Company") issued a prospectus supplement dated
November 5, 1997 for a public offering of 2 million shares of common
stock at a price of $37.875 per share under the Company's $100 million
effective shelf registration of June 19, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(c) Exhibit No. Description
----------- -----------
1 Underwriting Agreement by and between
the Company and Bear, Stearns & Co.
Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc.
99 Prospectus supplement dated November 5,
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIBBEY INC.
-----------
Registrant
Date: 11/7/97 /s/ Kenneth G. Wilkes
------------------------ ---------------------------
Kenneth G. Wilkes
Vice President, Chief Financial Officer
and Treasurer
<PAGE> 3
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1 Underwriting Agreement by and between
the Company and Bear, Stearns & Co.
Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc.
99 Prospectus supplement dated November 5,
1997.
<PAGE> 1
2,000,000 Shares of Common Stock
LIBBEY INC.
UNDERWRITING AGREEMENT
----------------------
November 5, 1997
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
SALOMON BROTHERS INC
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, N.Y. 10167
Dear Sirs:
Libbey Inc., a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 2,000,000 shares (the "Firm Shares")
of its common stock, par value $.01 per share (the "Common Stock"), and, for the
sole purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, up to an additional 300,000 shares
(the "Additional Shares") of Common Stock. The Firm Shares and any Additional
Shares purchased by the Underwriters are referred to herein as the "Shares". The
Shares are more fully described in the Registration Statement referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-3 (No. 333-28735), for the
registration of the Shares under the Securities Act
<PAGE> 2
2
of 1933, as amended (the "Act"), and the offering of the Shares from time to
time in accordance with Rule 415 under the Act. Such registration statement,
including the prospectus, financial statements and schedules, exhibits and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A
or Rule 434 of the Rules and Regulations of the Commission under the Act (the
"Regulations"), is herein called the "Registration Statement" and the
prospectus, including any prospectus supplement, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, is herein called the
"Prospectus". If the Company has filed an abbreviated registration statement to
register an additional number of Shares pursuant to Rule 462(b) under the Act
(the "Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall include such Rule 462 Registration Statement. The
term "preliminary prospectus" as used herein means a preliminary prospectus,
including any preliminary prospectus supplement, used in connection with the
offer of the Shares prior to the date hereof that omits information with respect
to the Shares and the offering permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A. Any reference herein
to the Registration Statement, any preliminary prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") on or before the effective
date of the Registration Statement, the date of such preliminary prospectus or
the date of the Prospectus, as the case may be, and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include (i) the filing of any document under the Exchange Act after the
effective date of the Registration Statement, the date of such preliminary
prospectus or the date of the Prospectus, as the case may be, which is
incorporated therein by reference and (ii) any such document so filed.
(b) The Registration Statement (including the Rule 462
Registration Statement, if any, which became effective upon filing) has been
declared effective by the Commission; no stop order suspending the effectiveness
of the Registration Statement is in effect and no proceedings for such purpose
are pending before or threatened by the Commission; and any required filing of
the preliminary prospectus pursuant to Rule 424(b) of the Regulations has been
made in accordance with Rule 424(b).
(c) At the time of the effectiveness of the Registration
Statement or the effectiveness of any post-effective amendment to the
Registration Statement (or, if an annual report on Form 10-K has been filed by
the Company subsequent to the effective date of the Registration Statement, then
at the time of the most recent such filing), when the Prospectus is first filed
with the Commission (whether filed pursuant to Rule 424(b) or Rule 434 of the
Regulations), when any supplement to or amendment of the Prospectus is filed
with the Commission, when any document filed under the Exchange Act is filed and
at the Closing Date and the Additional Closing Date, if any, (each as
hereinafter respectively defined), the Registration Statement and the Prospectus
and any amendments thereof and supplements thereto complied or will comply in
all material respects with the applicable provisions of the Act and the
Regulations and the Exchange Act and the respective rules and regulations
thereunder and does
<PAGE> 3
3
not or will not contain an untrue statement of a material fact and does not or
will not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of the Prospectus,
in light of the circumstances under which they were made, not misleading. When
any related preliminary prospectus was first filed with the Commission (whether
filed pursuant to Rule 424(a) or 424(b)(2) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and the Exchange Act and the respective rules and regulations
thereunder and did not contain an untrue statement of a material fact and did
not omit to state any material fact required to be stated therein or necessary
in order to make the statements therein in light of the circumstances under
which they were made not misleading. No representation or warranty is made in
this subsection (c), however, with respect to any information contained in or
omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through you as herein stated
expressly for use in connection with the preparation thereof. If Rule 434 is
used, the Company will comply with the requirements of Rule 434.
(d) Ernst & Young LLP, who have certified the financial
statements and supporting schedules of the Company included or incorporated by
reference in the Registration Statement, are independent public accountants as
required by the Act and the Regulations. Deloitte & Touche LLP, who have
certified the audited financial statements and supporting schedules of Crisa
Corporation and WorldCrisa Corporation and Deloitte & Touche (Mexico), who have
certified the audited financial statements of Vitrocrisa, S.A. de C.V.
(collectively, the "Vitro Entities"), incorporated by reference in the
Registration Statement, are independent public accountants as required by the
Act and the Regulations.
(e) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as set forth
in the Registration Statement and the Prospectus, there has been no material
adverse change or any development involving a prospective material adverse
change in the condition (financial or other) or results of operations of the
Company and its subsidiaries taken as a whole, or the interests and businesses
acquired in the Vitro Transactions (as defined in the Prospectus), in each case
whether or not arising from transactions in the ordinary course of business (a
"Material Adverse Change"); and since the date of the latest balance sheet
presented in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus.
(f) This Underwriting Agreement (this "Agreement") and the
transactions contemplated herein have been duly and validly authorized by the
Company and this Agreement has been duly and validly executed and delivered by
the Company.
<PAGE> 4
4
(g) Neither the Company nor any of its subsidiaries is in
violation of its certificate of incorporation or by-laws, or in default in the
performance or observation of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of its subsidiaries is a party or
to which any of such corporations may be bound other than any such violation or
default that would not have a material adverse effect on the condition
(financial or other) or results of operations of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"), and the execution,
delivery and performance by the Company of its obligations under this Agreement
and the consummation of the transactions contemplated hereby do not and will not
(i) conflict with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any agreement, instrument, franchise,
license or permit to which the Company or any of its subsidiaries is a party or
by which any of such corporations or their respective properties or assets may
be bound, (ii) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any of its subsidiaries or (iii)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets, other than, with respect to clause (i) or
(iii), any such conflict, breach, violation or default which would not have a
Material Adverse Effect. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties or
assets is required for the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby, including the
issuance, sale and delivery of the Shares to be issued, sold and delivered by
the Company hereunder, except the registration under the Act of the Shares and
such consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters.
(h) All of the outstanding shares of capital stock of the
Company are duly authorized and validly issued, fully paid and nonassessable and
were not issued and are not now in violation of or subject to any preemptive
rights. The Shares have been duly authorized and, when issued, delivered and
sold in accordance with this Agreement against payment of the consideration set
forth herein, will be validly issued, fully paid and nonassessable, and will not
have been issued in violation of or be subject to any preemptive rights. The
Company had, at June 30, 1997, an authorized and outstanding capitalization as
set forth in the Registration Statement and the Prospectus. The Common Stock,
the Firm Shares and the Additional Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties
<PAGE> 5
5
(owned, leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or be in
good standing which will not have a Material Adverse Effect. Each of the Company
and its subsidiaries (i) has all requisite power and authority to own lease and
operate its properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and (ii) has all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus, except to the extent that the failure to so
possess will not have a Material Adverse Effect, and no such consent, approval,
authorization, order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus.
(j) Except as described in the Registration Statement and
Prospectus, there is no litigation or governmental proceeding to which the
Company or any of its subsidiaries is a party or to which any property of the
Company or any of its subsidiaries is subject or which is pending or, to the
knowledge of the Company, contemplated against the Company or any of its
subsidiaries which might result in a Material Adverse Change or which is
required to be disclosed in the Registration Statement and the Prospectus; and
there are no contracts or documents of the Company which are required to be
filed as exhibits to the Registration Statement by the Act or by the Regulations
which have not been so filed.
(k) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares or any action resulting in a violation of Regulation M
under the Exchange Act.
(l) The financial statements, including the notes thereto, and
supporting schedules included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the financial position of the
Company and, to the knowledge of the Company, the Vitro Entities, as of the
dates indicated and the results of its operations for the periods specified;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and the supporting schedules included
or incorporated by reference in the Registration Statement present fairly the
information required to be stated therein.
(m) The pro forma financial statements contained in the
preliminary prospectus and the Prospectus under the heading "Unaudited Pro Forma
Consolidated Financial Information" have been prepared on a basis consistent
with the historical statements referred to in clause (l) above, except for the
pro forma adjustments specified therein, and (A) include all material
adjustments to the historical financial data required by Rule 11-02 of
Regulation S-X necessary to reflect the Vitro Transactions (as defined in the
Prospectus), (B) give effect to the assumptions made on a reasonable basis, (C)
present fairly in all material respects in accordance with generally accepted
accounting principles consistently applied throughout such periods, the
<PAGE> 6
6
historical and proposed transactions contemplated by the preliminary prospectus
and the Prospectus and (D) comply in all material respects with the requirements
of Rules 11-01 and 11-02 of Regulation S-X; and the other pro forma financial
information and pro forma financial data set forth in the Prospectus under the
caption "Summary Pro Forma Financial Data" are derived from such financial
statements.
(n) No holder of securities of the Company or any of its
subsidiaries has any rights, not effectively satisfied or waived, to the
registration of securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Shares
contemplated hereby.
(o) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended.
(p) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(q) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied or will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission under the Exchange Act, and, when read together
with the other information in the Prospectus, at the time the Registration
Statement and any amendments thereto became or become effective and at the
Closing Date, did not or will not contain an untrue statement of a material fact
and will not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(r) No labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is imminent that
would reasonably be expected to have a Material Adverse Effect; and the Company
is not aware of any existing or imminent labor disturbance by the employees of
any of the principal suppliers, manufacturers or contractors for the Company and
its subsidiaries which would reasonably be expected to result in any Material
Adverse Effect.
(s) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "intellectual
property") presently employed by them in connection with the business now
operated by them, except where the failure to own or possess or have the ability
to acquire any such intellectual property would not have a Material Adverse
Effect, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in any Material Adverse Effect.
<PAGE> 7
7
(t) The Company and its subsidiaries have good title to all
properties owned by them, free and clear of all liens, encumbrances and defects
except (i) as do not materially interfere with the use made and proposed to be
made of such properties, (ii) as set forth in the Registration Statement
(including the Notes to the financial statements referred to in clause (l)
above, incorporated by reference therein) or (iii) as would not reasonably be
expected to have a Material Adverse Effect.
(u) Except as disclosed in the Registration Statement and the
Prospectus, the Company and its subsidiaries are in material compliance with all
applicable existing federal, state, local and foreign laws and regulations
relating to protection of human health or the environment or imposing liability
or standards of conduct concerning any Hazardous Material (as hereinafter
defined) ("Environmental Laws"), except, in each case, where such noncompliance,
singly or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or
contaminant or hazardous, dangerous, or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental Law.
(v) There is no alleged liability, or to the best knowledge
and information of the Company, potential liability, (including, without
limitation, alleged or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) of the Company or any of its subsidiaries
arising out of, based on or resulting from (i) the presence or release into the
environment of any Hazardous Material at any location, whether or not owned by
the Company or any of its subsidiaries or (ii) any violation or alleged
violation of any Environmental Law, (x) which alleged or potential liability is
required to be disclosed in the Registration Statement, other than as disclosed
therein, or (y) which alleged or potential liability, singly or in the
aggregate, would have a Material Adverse Effect.
(w) The Shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
(x) The Shares are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the Exchange
Act.
(y) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
2. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to
<PAGE> 8
8
sell to the Underwriters and the Underwriters, severally and not jointly, agree
to purchase from the Company, at a purchase price per share of $36.170, the
number of Firm Shares set forth opposite the respective names of the
Underwriters in Schedule I hereto plus any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Simpson Thacher
& Bartlett, 425 Lexington Avenue, New York, New York 10017, or at such other
place as shall be agreed upon by you and the Company, at 10:00 A.M. on the third
or fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the determination of the initial public offering price of
the Shares, or such other time not later than ten business days after such date
as shall be agreed upon by you and the Company (such time and date of payment
and delivery being herein called the "Closing Date"). Payment shall be made to
the Company by wire transfer in same day funds, against delivery to you for the
respective accounts of the Underwriters of certificates for the Firm Shares to
be purchased by them. Certificates for the Firm Shares shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Closing Date. The Company
will permit you to examine and package such certificates for delivery at least
one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 300,000 Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by you to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
PROVIDED, HOWEVER, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Additional Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
<PAGE> 9
9
Payment for the Additional Shares shall be made by wire
transfer in same day funds at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, or such other location as may be
mutually acceptable, upon delivery of the certificates for the Additional Shares
to you for the respective accounts of the Underwriters.
3. OFFERING. Upon your authorization of the release of the
Firm Shares, the Underwriters propose to offer the Shares for sale to the public
upon the terms set forth in the Prospectus.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Underwriters that:
(a) The Company will file the Prospectus pursuant to Rule
424(b) or Rule 434 within the prescribed time period and will provide evidence
satisfactory to you of such timely filing. If the Company elects to rely on Rule
434, the Company will prepare and file a term sheet that complies with the
requirements of Rule 434. If the Company elects to rely on Rule 462(b), the
Company will file a Rule 462(b) Registration Statement with the Commission by
10:00 P.M., Washington, D.C. time, on the date of this Agreement, and the
Company will at the time of filing either pay to the Commission the filing fee
for the Rule 462(b) Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the Securities Act and
such Rule 462(b) Registration Statement shall have become effective by 10:00
P.M., Washington, D.C. time, on the date of this Agreement.
The Company will notify you immediately (and, if requested by
you, will confirm such notice in writing) (i) when any amendment to the
Registration Statement becomes effective, (ii) of any request by the Commission
for any amendment of or supplement to the Registration Statement or the
Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement, the preliminary prospectus or the Prospectus, (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, (v) of the receipt
of any comments from the Commission, and (vi) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for that purpose. If the Commission shall propose or enter a stop
order at any time, the Company will make every reasonable effort to prevent the
issuance of any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the preliminary
prospectus or the Prospectus (including the prospectus required to be filed
pursuant to Rule 424(b) or Rule 434) that differs from the prospectus on file at
the time of the effectiveness of the Registration Statement before or after the
effective date of the Registration Statement or file any document under the
Exchange Act if such document would be deemed to be incorporated by reference
into the Prospectus to which you shall reasonably object in writing after being
timely furnished in advance a copy thereof.
<PAGE> 10
10
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a result
of which the preliminary prospectus or the Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company, include
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or if it
shall be necessary at any time to amend or supplement the preliminary prospectus
or the Prospectus or Registration Statement to comply with the Act or the
Regulations, or to file under the Exchange Act so as to comply therewith any
document incorporated by reference in the Registration Statement or the
preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, the Company will notify you promptly and prepare and file
with the Commission an appropriate amendment or supplement (in form and
substance satisfactory to you) which will correct such statement or omission or
which will effect such compliance and will use its best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you three signed
copies of the Registration Statement, including exhibits and all documents
incorporated by reference therein and all amendments thereto, and the Company
will promptly deliver to each of the Underwriters such number of copies of any
preliminary prospectus, the Prospectus, the Registration Statement, all
amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto, without exhibits, as you may reasonably
request.
(d) The Company will endeavor in good faith, in cooperation
with you, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the securities laws
relating to the offering or sale of the Shares of such jurisdictions as you may
reasonably designate and to maintain such qualification in effect for so long as
required for the distribution thereof; except that in no event shall the Company
be obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process or to subject itself to taxation
as doing business in any jurisdiction.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act) to its security holders and to you as soon
as practicable, but not later than 45 days after the end of its fiscal quarter
in which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 90 days from the date of the
Prospectus, the Company will not, directly or indirectly, without your prior
written consent, issue, sell, offer or agree to sell, contract to sell, grant
any option to purchase, make a short sale, or otherwise dispose of or engage in
any hedging or other transaction that is designed or reasonably expected to lead
to a disposition of (or announce any such offer, sale, grant of an option to
purchase or other transaction relating to) any shares of Common Stock, any
option or warrant to purchase shares of Common Stock or any securities
convertible into, exercisable for or exchangeable for
<PAGE> 11
11
shares of Common Stock, and the Company will obtain the undertaking of each of
its executive officers and directors not to engage in any of the aforementioned
transactions on their own behalf (except with respect to any shares of Common
Stock under such executive officer's 401(k) Plans), other than (i) the Company's
sale of Shares hereunder, (ii) any options, and any shares of Common Stock
issued upon the exercise of any such options, granted under the Company's Stock
Option Plan and (iii) any shares of Common Stock contributed by the Company to,
or distributed under, the Company's 401(k) Plans.
(g) During a period of three years from the effective date of
the Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its reasonable best efforts to cause
the Shares to be listed on the New York Stock Exchange.
(j) The Company, during the period when the Prospectus is
required to be delivered under the Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act within the time periods required by the Exchange Act and
the rules and regulations thereunder.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed and all amendments thereof
(including all exhibits thereto), any preliminary prospectus, the Prospectus and
any amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), the underwriting documents
(including this Agreement) and all other documents related to the public
offering of the Shares (including those supplied to the Underwriters in
quantities as hereinabove stated); (ii) the issuance, transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon; (iii) the qualification of the Shares under state or foreign securities
or Blue Sky laws, including the costs of printing and mailing a preliminary and
final "Blue Sky Survey" and the fees of counsel for the Underwriters and such
counsel's disbursements in relation thereto; (iv) listing the Shares on the New
York Stock Exchange; (v) filing fees of the Commission; (vi) the cost of
printing certificates representing the Shares; and (vii) the cost and charges of
any transfer agent or registrar.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company herein contained, as of the date
hereof and as of the Closing Date (for purposes of this Section 6
<PAGE> 12
12
"Closing Date" shall refer to the Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished
to you or to Simpson Thacher & Bartlett ("Underwriters' Counsel") pursuant to
this Section 6 of any misstatement or omission, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
in a timely fashion in accordance with Section 4(a) hereof; and, at or prior to
the Closing Date, no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued and no
proceedings therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date you shall have received the opinion of
Latham & Watkins, counsel for the Company, dated the Closing Date addressed to
the Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware. The Company has all requisite corporate power
and authority to own, lease, license and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus.
(ii) The Company has authorized, issued and outstanding
capital stock as set forth in the Registration Statement and the
Prospectus under "Description of Capital Stock". All of the outstanding
shares of capital stock of the Company are duly authorized and validly
issued, fully paid and nonassessable. The Shares to be delivered on the
Closing Date have been duly authorized and, when delivered by the
Company in accordance with this Agreement against payment of the
consideration set forth herein, will be validly issued, fully paid and
nonassessable and, to the best of such counsel's knowledge, free of
preemptive rights. The statements contained in the Prospectus under the
caption "Description of Capital Stock," insofar as they purport to
constitute summaries of the terms of the Common Stock, constitute
accurate summaries in all material respects.
(iii) This Agreement has been duly authorized, executed
and delivered by the Company.
(iv) The execution, delivery by the Company of, and the
issuance and sale of the Shares by the Company pursuant to, this
Agreement do not and will not violate or conflict with any provision of
the certificate of incorporation or by-laws of the Company or any
applicable federal law or administrative regulation of the United
States, or any provision of the General Corporation Law of the State of
Delaware, or, to the best knowledge of such counsel, any judgment,
decree or order, of any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets. To such
counsel's knowledge, no consent, approval, authorization, order,
registration, filing, qualification,
<PAGE> 13
13
license or permit of or with any court or any public, governmental, or
regulatory agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby, except for
(1) such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters (as to which such counsel need express no opinion) and (2)
such as have been made or obtained under the Act.
(v) The Registration Statement and the Prospectus
(excluding the documents incorporated therein by reference) and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and other financial data included or
incorporated by reference therein, as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations for registration statements
on Form S-3.
(vi) The Registration Statement is effective under the
Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings
therefor have been initiated or threatened by the Commission and all
filings required by Rule 424(b) of the Regulations have been made.
(vii) The Company is not an "investment company", as such
term is defined in the Investment Company Act of 1940, as amended.
(viii) No holder of any securities of the Company has any
rights under the Company's certificate of incorporation or by-laws or,
to the best of such counsel's knowledge, under any contract, not
effectively satisfied or waived, to the registration of securities of
the Company because of the filing of the Registration Statement or
otherwise in connection with the sale of the Shares contemplated
hereby.
(ix) In addition, such opinion shall also contain a
statement that although such counsel has not undertaken to determine
independently the accuracy and completeness of the statements contained
in the Registration Statement and Prospectus and takes no
responsibility therefor, except with respect to paragraph (ii) above,
of this Section 6(b), such counsel has participated in conferences with
officers and representatives of the Company, representatives of the
independent public accountants for the Company and the Underwriters at
which the contents of the Prospectus and related matters were discussed
and, no facts have come to the attention of such counsel which would
lead such counsel to believe that either the Registration Statement at
the time it became effective (including the information deemed to be
part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b) or Rule 434, if applicable), or any amendment
thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus as
of its date (or any amendment thereof or supplement thereto made prior
to the
<PAGE> 14
14
Closing Date as of the date of such amendment or supplement) and as of
the Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules and
other financial data included or incorporated by reference therein) in
each case after excluding any statement in any such document which does
not constitute part of the Registration Statement or the Prospectus as
amended or supplemented pursuant to Rule 412 of Regulation C under the
Act and after substituting therefor any statement modifying or
superseding such excluded statement.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent they deem proper, on certificates of responsible officers
of the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel, and need not express any opinion with regard to the laws
of any jurisdiction other than the federal law of the United States and the
General Corporation Law of the State of Delaware.
(c) At the Closing Date you shall have received the opinion of
Arthur H. Smith, Vice President, General Counsel and Secretary of the Company,
dated the Closing Date addressed to the Underwriters and in substance
satisfactory to the Underwriters' counsel, to the effect that:
(i) The Company is duly qualified and in good standing
as a foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will not in
the aggregate have a Material Adverse Effect.
(ii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with all
requisite corporate power and authority to own, lease, license and
operate its property and conduct its business as described in the
Registration Statement and the Prospectus and is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which
the character or location of its properties (owned, leased or licensed)
or the nature of conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good
standing which will not in the aggregate have a Material Adverse
Effect. All of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued,
fully paid and nonassessable and was not issued in violation of
preemptive rights, and all of the issued and outstanding capital stock
of such subsidiaries has been duly and validly issued, fully paid and
nonassessable and was not issued in violation of preemptive rights, and
is owned of record by the Company, directly, and is free and clear of
any material security
<PAGE> 15
15
interest, mortgage, pledge, lien, encumbrance, claim, restriction on
transfer, shareholders' agreement, voting trust or other defect of
title whatsoever.
(iii) The execution, delivery by the Company of, and the
issuance and sale of the Shares by the Company pursuant to, this
Agreement do not and will not conflict with or result in a breach of
any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to, any agreement, instrument, franchise,
license or permit to which the Company or any of its subsidiaries is a
party or by which any of such corporations or their respective
properties or assets may be bound and which is listed or referred to in
Item 10 of the exhibits to the quarterly report of the Company on Form
10-Q for the quarter ended June 30, 1997.
(iv) To the best of such counsel's knowledge, after due
inquiry, there is no litigation or governmental or other action, suit,
proceeding or investigation before any court or before or by any
public, regulatory or governmental agency or body pending or threatened
against, or involving the properties or business of, the Company or any
of its subsidiaries, which is of a character required to be disclosed
in the Registration Statement and the Prospectus which has not been
properly disclosed therein; to the best of such counsel's knowledge,
there are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments that are required to be described or
referred to in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required.
(v) In addition, such opinion shall also contain a
statement that although such counsel has not undertaken to determine
independently the accuracy and completeness of the statements contained
in the Registration Statement and Prospectus and takes no
responsibility therefor, such counsel has participated in conferences
with officers and representatives of the Company, representatives of
the independent public accountants for the Company and the Underwriters
at which the contents of the Prospectus and related matters were
discussed and, no facts have come to the attention of such counsel
which would lead such counsel to believe that either the Registration
Statement at the time it became effective (including the information
deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable), or
any amendment thereof made prior to the Closing Date as of the date of
such amendment, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus as of its date (or any amendment thereof or supplement
thereto made prior to the Closing Date as of the date of such amendment
or supplement) and as of the Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need
express no belief or opinion
<PAGE> 16
16
with respect to the financial statements and schedules and other
financial data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent they deem proper, on certificates of responsible officers
of the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel, and need not express any opinion with regard to the laws
of any jurisdiction other than the federal law of the United States, the laws of
the state of Ohio and the General Corporation Law of the State of Delaware.
(d) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and the
Underwriters shall have received from said Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as you may reasonably require, and the Company shall have furnished to
Underwriters' Counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of the Company, dated
the Closing Date to the effect that (i) the condition set forth in subsection
(a) of this Section 6 has been satisfied, (ii) as of the date hereof and as of
the Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company and its
subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any Material
Adverse Change, except in each case as described in or contemplated by the
Prospectus.
(f) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter, from Ernst & Young LLP, independent
auditors for the Company, dated, respectively, as of the date of this Agreement
and as of the Closing Date addressed to the Underwriters and in form and
substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the financial statements and schedules of the Company
incorporated by reference in the Registration Statement and the Prospectus and
covered by their opinion therein comply as to form in all material respects with
the applicable accounting requirements of the Act and the Exchange Act and the
applicable published rules and regulations of the Commission thereunder; (iii)
on the basis of procedures consisting of a reading of the latest available
unaudited interim consolidated financial statements
<PAGE> 17
17
of the Company, and its subsidiaries, a reading of the minutes of meetings and
consents of the shareholders and boards of directors of the Company and its
subsidiaries and the committees of such boards subsequent to December 31, 1996,
inquiries of officers and other employees of the Company and its subsidiaries
who have responsibility for financial and accounting matters of the Company and
its subsidiaries with respect to transactions and events subsequent to December
31, 1996 and other specified procedures and inquiries to a date not more than
five days prior to the date of such letter, nothing has come to their attention
that would cause them to believe that: (A) the unaudited consolidated financial
statements and schedules of the Company incorporated by reference in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and, if
applicable, the Exchange Act and the applicable published rules and regulations
of the Commission thereunder or that such unaudited consolidated financial
statements are not fairly presented in conformity with generally accepted
accounting principles except to the extent certain footnote disclosures have
been omitted in accordance with applicable rules of the Commission under the
Exchange Act applied on a basis substantially consistent with that of the
audited consolidated financial statements incorporated by reference in the
Registration Statement and the Prospectus; (B) with respect to the period
subsequent to June 30, 1997 there were, as of the date of the most recent
available monthly consolidated financial statements of the Company and its
subsidiaries, if any, and as of a specified date not more than five days prior
to the date of such letter, any changes in the capital stock or long-term
indebtedness of the Company or any decrease in the net current assets or
stockholders' equity of the Company, in each case as compared with the amounts
shown in the most recent balance sheet presented in the Registration Statement
and the Prospectus, except for changes or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur or which are
set forth in such letter; (C) that during the period from June 30, 1997 to the
date of the most recent available monthly consolidated financial statements of
the Company and its subsidiaries, if any, and to a specified date not more than
five days prior to the date of such letter, there was any decrease, as compared
with the corresponding period in the prior fiscal year, in total revenues, or
total or per share net income, except for decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur or which are
set forth in such letter; or (D) any unaudited pro forma consolidated financial
statements included or incorporated by reference in the Prospectus do not comply
as to form in all material respects with the applicable accounting requirements
of the Act and the Regulations or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements; and (iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other financial
information pertaining to the Company and its subsidiaries set forth in the
Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company and its subsidiaries or from schedules
furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries, and other appropriate procedures specified by
you set forth in such letter, and found them to be in agreement.
<PAGE> 18
18
(g) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter from Deloitte & Touche LLP, independent
public accountants for World Crisa Corporation and Crisa Corporation
(collectively, "Crisa"), dated, as of the date of this Agreement addressed to
the Underwriters and in form and substance satisfactory to you, to the effect
that: (i) they are independent certified public accountants with respect to
Crisa within the meaning of the Act and the Regulations; (ii) stating that, in
their opinion, the financial statements and schedules of Crisa incorporated by
reference in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the applicable
published rules and regulations of the Commission thereunder; (iii) on the basis
of procedures consisting of a reading of the latest available unaudited interim
consolidated financial statements of Crisa, a reading of the minutes of meetings
and consents of the shareholders and boards of directors of Crisa and the
committees of such boards subsequent to December 31, 1996, inquiries of officers
and other employees of Crisa who have responsibility for financial and
accounting matters of Crisa with respect to transactions and events subsequent
to December 31, 1996 and other specified procedures and inquiries to August 29,
1997, nothing has come to their attention that would cause them to believe that:
the unaudited consolidated financial statements and schedules of Crisa
incorporated by reference in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the applicable accounting
requirements of the Act and, if applicable, the Exchange Act and the applicable
published rules and regulations of the Commission thereunder or that such
unaudited consolidated financial statements are not fairly presented in
conformity with generally accepted accounting principles except to the extent
certain footnote disclosures have been omitted in accordance with applicable
rules of the Commission under the Exchange Act applied on a basis substantially
consistent with that of the audited consolidated financial statements
incorporated by reference in the Registration Statement and the Prospectus; and
(iv) stating that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, and other financial information pertaining
to Crisa set forth in the Registration Statement and the Prospectus, which have
been specified by you prior to the date of this Agreement, to the extent that
such amounts, numbers, percentages, and information may be derived from the
general accounting and financial records of Crisa or from schedules furnished by
Crisa, and excluding any questions requiring an interpretation by legal counsel,
with the results obtained from the application of specified readings, inquiries,
and other appropriate procedures specified by you set forth in such letter, and
found them to be in agreement.
(h) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter from Deloitte & Touche (Mexico),
independent public accountants for Vitrocrisa, S.A. de C.V. ("Vitro"), dated, as
of the date of this Agreement and as of the Closing Date addressed to the
Underwriters and in form and substance satisfactory to you, to the effect that:
(i) they are independent certified public accountants with respect to Vitro
within the meaning of the Act and the Regulations; (ii) stating that, in their
opinion, the financial statements and schedules of Vitro incorporated by
reference in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the applicable
published rules and regulations of the Commission thereunder; (iii) on the basis
of procedures
<PAGE> 19
19
consisting of a reading of the latest available unaudited interim consolidated
financial statements of Vitro, a reading of the minutes of meetings and consents
of the shareholders and boards of directors of Vitro and the committees of such
boards subsequent to December 31, 1996, inquiries of officers and other
employees of Vitro who have responsibility for financial and accounting matters
of Vitro with respect to transactions and events subsequent to December 31, 1996
and other specified procedures and inquiries to a date not more than five days
prior to the date of such letter, nothing has come to their attention that would
cause them to believe that: (A) the unaudited consolidated financial statements
and schedules of Vitro incorporated by reference in the Registration Statement
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and, if applicable, the Exchange
Act and the applicable published rules and regulations of the Commission
thereunder or that such unaudited consolidated financial statements are not
fairly presented in conformity with generally accepted accounting principles
except to the extent certain footnote disclosures have been omitted in
accordance with applicable rules of the Commission under the Exchange Act
applied on a basis substantially consistent with that of the audited
consolidated financial statements incorporated by reference in the Registration
Statement and the Prospectus; (B) with respect to the period subsequent to June
30, 1997 there were, as of the date of the most recent available monthly
consolidated financial statements of Vitro Entities, if any, any changes in the
capital stock or long-term indebtedness of Vitro or any decrease in the net
current assets or stockholders' equity of Vitro, in each case as compared with
the amounts shown in the most recent balance sheet presented in the Registration
Statement and the Prospectus, except for changes or decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in such letter or (C) that during the period from June 30,
1997 to the date of the most recent available monthly consolidated financial
statements of Vitro, if any, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or total or
per share net income, except for decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set forth in
such letter; and (iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other financial
information pertaining to Vitro set forth in the Registration Statement and the
Prospectus, which have been specified by you prior to the date of this
Agreement, to the extent that such amounts, numbers, percentages, and
information may be derived from the general accounting and financial records of
Vitro or from schedules furnished by Vitro, and excluding any questions
requiring an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
specified by you set forth in such letter, and found them to be in agreement.
(i) Prior to the Closing Date the Company shall have furnished
to you such further information, certificates and documents as you may
reasonably request.
(j) You shall have received from each person who is a director
or executive officer of the Company an agreement to the effect that (except with
respect to any shares of Common Stock under such executive officer's 401(k)
Plans) such person will not, directly or indirectly, without your prior written
consent, sell, offer or agree to sell, contract to sell, grant any option to
purchase, make a short sale, or otherwise dispose of or engage in any hedging or
other transaction that is designed or reasonably expected to lead to a
disposition of (or announce
<PAGE> 20
20
any such offer, sale, grant of an option to purchase, or other disposition or
transaction relating to) any shares of Common Stock, any option or warrant to
purchase shares of Common Stock or any securities convertible into, exercisable
for or exchangeable or exercisable for shares of Common Stock, for a period of
90 days after the date of the Prospectus.
(k) At the Closing Date, the Shares shall have been approved
for listing on the New York Stock Exchange, upon notice of issuance.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but limited to attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
you expressly for use therein; AND PROVIDED, FURTHER, that as to any preliminary
prospectus this indemnity shall not inure to the benefit of any Underwriter, its
officers or employees or any person controlling such Underwriter on account of
any loss, claim, damage, liability or action arising from the sale of the Shares
to any person by that Underwriter if that Underwriter failed to send or give a
copy of the Prospectus, as the same may be amended or supplemented, to that
person within the time required by the Act, and the untrue statement or alleged
untrue statement of a material fact or
<PAGE> 21
21
omission or alleged omission of a material fact in such preliminary prospectus
was corrected in the Prospectus, unless such failure resulted from
non-compliance by the Company with Section 4(c). For purposes of the last
proviso to the immediately preceding sentence, the term "Prospectus" shall not
be deemed to include the documents incorporated by reference therein, and no
Underwriter shall be obligated to send or give any supplement or amendment to
any document incorporated by reference in any preliminary prospectus or the
Prospectus to any person other than a person to whom such Underwriter had
delivered such incorporated document or documents in response to a written
request therefor. This indemnity agreement will be in addition to any liability
which the Company may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through you
expressly for use therein; PROVIDED, HOWEVER, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and in the third and seventh paragraphs under the caption "Underwriting" in
the Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for use in the registration statement
relating to the Shares as originally filed or in any amendment thereof, any
related preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but
<PAGE> 22
22
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; PROVIDED, HOWEVER, that such consent was not unreasonably withheld. No
indemnifying party shall without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any claim or action in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim or action.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Underwriters in connection
<PAGE> 23
23
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8
and the preceding sentence, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
--------------------------
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number
<PAGE> 24
24
of Firm Shares or Additional Shares which the Underwriters have agreed to
purchase hereunder, then such Firm Shares or Additional Shares to which the
default relates shall be purchased by the non-defaulting Underwriters in
proportion to the respective proportions which the numbers of Firm Shares set
forth opposite their respective names in Schedule I hereto bear to the aggregate
number of Firm Shares set forth opposite the names of the non-defaulting
Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
you or the Company shall have the right to postpone the Closing Date or
Additional Closing Date, as the case may be for a period, not exceeding five
business days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion
of Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All
representations and warranties, covenants and agreements of the Underwriters and
the Company contained in this Agreement, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
<PAGE> 25
25
(a) This Agreement shall become effective upon the execution
of this Agreement. Until this Agreement becomes effective as aforesaid, it may
be terminated by the Company by notifying you or by you notifying the Company.
Notwithstanding the foregoing, the provisions of this Section 11 and of Sections
1, 5, 7 and 8 hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at
any time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional Closing Date,
as the case may be, if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on the New York or American Stock Exchanges shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges by the New York or American Stock
Exchanges or by order of the Commission or any other governmental authority
having jurisdiction; or (C) if a banking moratorium has been declared by a state
or federal authority or if any new restriction materially adversely affecting
the distribution of the Firm Shares or the Additional Shares, as the case may
be, shall have become effective; or (D) (i) if the United States becomes engaged
in hostilities or there is an escalation of hostilities involving the United
States or there is a declaration of a national emergency or war by the United
States or (ii) if there shall have been such change in political, financial or
economic conditions if the effect of any such event in (i) or (ii) as in your
judgment makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel),
reasonably incurred by the Underwriters in connection herewith.
12. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, Stearns & Co. Inc., 245 Park Avenue,
New York, N.Y. 10167, Attention: James B. Nish; if sent to the Company, shall be
mailed, delivered, or telegraphed and confirmed in writing to the Company, 300
Madison Avenue, Toledo, Ohio 43604, Attention: Kenneth Wilkes.
<PAGE> 26
26
13. PARTIES. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Underwriters and the Company and the
controlling persons, directors, officers, employees and agents referred to in
Sections 7 and 8, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE> 27
27
If the foregoing correctly sets forth the understanding
between you and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
LIBBEY INC.
By: /s/ Kenneth G. Wilkes
-------------------------------
Accepted as of the date first above written
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
SALOMON BROTHERS INC
By Bear, Stearns & Co. Inc.
By /s/ James B. Nish
-----------------------
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
<PAGE> 28
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
- ------------------- ----------------------
Bear, Stearns & Co. Inc............................. 586,700
Merrill Lynch, Pierce, Fenner &
Smith Incorporated......................... 586,650
Salomon Brothers Inc................................ 586,650
BT Alex. Brown Incorporated......................... 30,000
Dresdner Kleinwort Benson North America LLC......... 30,000
A.G. Edwards & Sons, Inc............................ 30,000
J.P. Morgan Securities Inc.......................... 30,000
Morgan Stanley & Co. Incorporated................... 30,000
NationsBanc Montgomery Securities, Inc.............. 30,000
Societe Generale Securities Corporation............. 30,000
Blackford Securities Corp........................... 30,000
---------
Total....................................... 2,000,000
=========
<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 19, 1997)
2,000,000 SHARES
LIBBEY LOGO
COMMON STOCK
All of the shares of Common Stock offered hereby (the "Offering") are being
sold by Libbey Inc. ("Libbey" or the "Company"). The Common Stock is listed on
The New York Stock Exchange (the "NYSE") under the symbol "LBY." On November 5,
1997, the last reported sale price of the Common Stock on the NYSE was $37 7/8
per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===============================================================================================
UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND TO THE
THE PUBLIC COMMISSIONS(1) COMPANY(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................. $37.875 $1.705 $36.170
- -----------------------------------------------------------------------------------------------
Total(3).............................. $75,750,000 $3,410,000 $72,340,000
===============================================================================================
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting offering expenses payable by the Company estimated at
$600,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 300,000 additional shares of Common Stock on the same terms and
conditions set forth above, to cover over-allotments, if any. If all such
shares are purchased by the Underwriters, the total Price to the Public,
Underwriting Discounts and Commissions and Proceeds to the Company will be
$87,112,500, $3,921,500 and $83,191,000, respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered subject to prior sale, when, as and
if delivered and accepted by the Underwriters and subject to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
said offer and to reject offers in whole or in part. It is expected that
delivery of the Common Stock will be made on or about November 12, 1997 at the
offices of Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
The date of this Prospectus Supplement is November 5, 1997
<PAGE> 2
IT'S ABOUT GROWTH...
'93
In June 1993, Libbey, the leading producer of glass tableware in North America,
becomes a public company (NYSE:LBY) through an initial public offering.
Concurrently, Libbey acquires the only machine-made glass manufacturer in
Canada, Libbey Canada Inc. The acquisition allows Libbey to further penetrate
the Canadian glass tableware market and broaden its product capabilities.
[PHOTO]
'95
Libbey expands in the foodservice industry in October 1995 with the acquisition
of Syracuse China, a high quality manufacturer of ceramic dinnerware and
accessories and a leader in the foodservice industry.
[PHOTO]
'97
Libbey announces an agreement to become a joint venture partner in Vitrocrisa,
the largest glass tableware manufacturer in Mexico. A related distribution
agreement allows Libbey to distribute Vitrocrisa glass tableware products in the
U.S. and Canada and further expands Libbey's product assortment.
In addition, Libbey purchases World Tableware, a major supplier of
flatware, dinnerware and other tabletop products to the foodservice industry
in the United States.
[PHOTO]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS AND THE
IMPOSITION OF PENALTY BIDS. SEE "UNDERWRITING."
S-2
<PAGE> 3
... LEAD
The August 1997 acquisition of World Tableware expanded Libbey's product line
to include an assortment of metalware.
[PHOTO]
Syracuse China has introduced approximately 125 new products since its
acquisition by Libbey.
[PHOTO]
INDUSTRIAL AND PREMIUM
- - Products for the Candle, Floral, and Incentive Markets
- - Specializing in Unique, Innovative Shapes and Decorations
- - Offering Product Design, Packaging, and Application Expertise
[PHOTO]
Libbey, as the exclusive distributor of Vitrocrisa's glass tableware products
in the United States and Canada, will expand its selection of glass tableware
to new product categories, including glass bakeware.
[PHOTO]
<PAGE> 4
ERSHIP...
FOODSERVICE
- - The Tabletop Glassware Market Leader
- - An Expanding Tabletop Product Portfolio; Glassware, Dinnerware,
Flatware, Accessories
- - Industry-Leading Sales Support and Distribution Network
[PHOTO]
World Tableware is a major provider of metal flatware to the foodservice
industry in the United States.
[PHOTO]
RETAIL
- - The Market Share Leader in Glass Beverageware
- - Highest Unaided Brand Awareness in Glassware with U.S. Consumers
- - Serving Specialty Housewares Retailers, Department Stores and Mass Merchants
[PHOTO]
<PAGE> 5
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including the consolidated financial statements of the Company, the
notes thereto, and the other financial data contained elsewhere or incorporated
by reference in this Prospectus Supplement and the accompanying Prospectus.
Prospective investors are urged to read this Prospectus Supplement, the
accompanying Prospectus and the other information incorporated herein in their
entirety. Unless otherwise indicated, all information in this Prospectus
Supplement and the accompanying Prospectus assumes no exercise of the
Underwriters' over-allotment option relating to the Offering. All references to
"Libbey" or the "Company" shall mean Libbey Inc. and its consolidated
subsidiaries, unless the context indicates otherwise, and all references to
"Latin America" shall mean Mexico, South America and Central America, excluding
the Caribbean Islands.
THE COMPANY
Libbey is the leading producer of glass tableware in the U.S. and Canada.
The Company is also a major supplier of other tabletop products to the
foodservice industry in the U.S. The Company's products are sold to a broad
range of foodservice, retail, industrial and premium customers and are exported
to more than 100 countries. The Company designs, manufactures and markets, under
the Libbey(R) brand name, an extensive line of high-quality, machine-made glass
beverageware and other glass tableware, including plates, bowls, serveware and
accessories. The Company maintains over 2,000 glass tableware stock keeping
units ("SKUs"), representing over 900 basic product items, sizes and shapes.
Libbey is also a leading producer of ceramic dinnerware for the U.S. foodservice
industry as a result of the Company's October 1995 acquisition of Syracuse
China. In addition, the Company provides technical assistance to a number of
foreign glass tableware manufacturers. For 1996, the Company had total revenues
of $400.4 million and net income of $32.5 million.
The Company, according to management estimates, has a 64% share of glass
tableware sales to the foodservice industry in the U.S. and a 70% share in
Canada. The foodservice industry, which represents the Company's most
significant customer group, includes restaurants, bars, hotels, schools,
airlines, cruise ships, casinos, healthcare and catering operations. The
foodservice industry is principally comprised of four categories: food,
beverage, equipment and supply-related items. The Company is considered a major
supplier of supply-related items. Supply-related items represent an important
source of recurring revenue since the Company believes over 90% of all glass
tableware sales and over 70% of all ceramic dinnerware sales to foodservice
establishments are for replacements when items are broken, lost or stolen.
Growth in the foodservice industry is being driven by favorable demographic
trends, including an increase in dining outside of the home and increased travel
and entertainment spending.
The Company is the leading supplier of glass beverageware to the retail
industry in the U.S. The Company's retail customers include traditional
department stores, specialty housewares stores, mass merchants and supermarkets.
Sales to retail customers have increased since 1993 as a result of an enhanced
new product development program that has capitalized on the strength of the
Libbey brand name among consumers. In particular, the Company has been
successful in growing its sales to targeted department and specialty housewares
stores.
The Company is a major supplier of glassware to industrial customers. The
Company defines its industrial products as glassware that is designed for candle
and liquor gift packaging, floral purposes, lighting applications and other end
uses. The Company's industrial sales have grown since 1993 primarily due to an
increase in the popularity of candles and, more specifically, the use of glass
containers in specialty candle packaging and displays, as well as increased
demand for liquor gift sets and flower vases.
The Company is among the leaders in providing glass tableware used for
promotional programs, and it pursues these opportunities selectively based on
production availability and profit opportunities. The Company defines its
premium sales as glass tableware sold for use as incentives with marketing and
promotional programs including continuity programs. Customers in the premium
area include major gasoline retailers, fast-food restaurant chains and
supermarket chains.
S-3
<PAGE> 6
Libbey exports its products through independent agents and distributors to
over 100 countries throughout the world, competing in the glass tableware
markets of Latin America, Asia and Europe. The Company considers its sales to
export customers to be an important growth area. Export sales typically are
related to foodservice and retail applications and have grown significantly
since 1988, at a 16.2% compound annual growth rate.
The Company believes it is well-positioned to accelerate sales growth and
further penetrate key markets through innovative product development, expanded
sales coverage internationally and the acquisition of companies with
complementary products. Consistent with this strategy, the Company completed the
Vitro Transactions in August 1997, which are expected to enhance the Company's
leadership position in glass tableware, expand the Company's product offering
and increase the Company's market penetration in Latin America. See "-- Recent
Developments."
The Company's principal offices are located at 300 Madison Avenue, Toledo,
Ohio 43604, and its telephone number is (419) 325-2100. The Company was
incorporated in Delaware in 1987 and is the ultimate successor to a business
originally founded in 1818 as the New England Glass Company and acquired by a
predecessor to Owens-Illinois, Inc. in 1935. The Company has been publicly owned
since 1993, prior to which it was a wholly-owned subsidiary of Owens-Illinois,
Inc.
COMPETITIVE STRENGTHS
Industry Leadership, Largest Installed Base. The Company has the leading
position in glass tableware sales to foodservice customers in the U.S. and
Canada. As a result of the Company's leadership position and long operating
history, Libbey has the largest installed base of glass tableware at foodservice
establishments, generating an important source of recurring revenue and
representing a significant competitive advantage. Through its Syracuse China and
World Tableware subsidiaries, the Company is also an established provider of
ceramic dinnerware and metal flatware to the foodservice industry. See
"-- Recent Developments".
Strong Brand Name Recognition. The Libbey(R) name is one of the most
recognized brand names in consumer housewares in the U.S. According to a 1996
National Family Opinion Poll, the Company has the highest unaided brand
awareness in its glassware category, at 41%. In the foodservice industry, the
Company's Libbey(R) and Syracuse China(R) brand names have an established
reputation for quality. The brand names associated with the Vitro Transactions,
including Crisa, Amsilco, World Tableware and Ultima, are also well-recognized
in the marketplace. See "-- Recent Developments."
Broad Product Offering. Known as America's Glassmaker, Libbey maintains
over 2,000 glass tableware SKUs in one of the most extensive product portfolios
in the U.S. and Canadian glass tableware industries. The Company has expanded
its product portfolio to include ceramic dinnerware through complementary
acquisitions, including the acquisition of Syracuse China. The Vitro
Transactions further broaden the Company's product offering with new glass
tableware, flatware, holloware and dinnerware product lines. See "-- Recent
Developments."
Largest Manufacturing and Distribution Network. The Company's four glass
tableware manufacturing facilities (three in the U.S. and one in Canada) and
extensive sales and distribution network represent the largest manufacturing and
distribution network in the U.S. and Canadian glass tableware industries,
enabling the Company to provide a high level of service to end-users for glass
tableware. Libbey's manufacturing process is highly automated, and the Company
continuously refines its production machinery to incorporate technology
advancements. Approximately 90% of the Company's foodservice product sales are
made to its industry-leading independent distributor network, which has
approximately 500 distributors located throughout the U.S. and Canada.
Largest Direct Sales Force. The Company maintains the largest sales force
and customer service support staff for glass tableware and ceramic dinnerware
sold to the foodservice industry. Libbey's extensive use of a direct sales force
to market its products is unique among glass tableware and ceramic dinnerware
companies and provides opportunities for the Company to complement the sales
efforts of its distributors and influence the buying behavior of major
end-users.
S-4
<PAGE> 7
Successful Complementary Acquisitions. The Company has successfully
completed strategic acquisitions of businesses with complementary product lines
in new and existing markets with similar distribution channels and the potential
for margin improvement. In June 1993, the Company acquired the operating assets
of Libbey-St. Clair, now Libbey Canada, the only manufacturer of glass tableware
in Canada. In October 1995, Libbey completed the acquisition of Syracuse China,
resulting in the Company becoming a leading manufacturer of high-quality ceramic
dinnerware to the U.S. foodservice industry. Most recently, in August 1997,
Libbey completed the Vitro Transactions which are expected to enhance the
Company's leadership position in glass tableware, offer sales growth
opportunities with an assortment of complementary new products and expand the
Company's international presence, particularly in Latin America. See "-- Recent
Developments."
BUSINESS STRATEGY
The Company's business strategy is to: (i) capitalize on its leading
position in glass tableware sales to the foodservice industry by selling an
increasing number of foodservice supply-related products; (ii) expand its
international presence; (iii) increase its presence in profitable segments of
retail and industrial applications for its products; and (iv) improve the cost
efficiency of its manufacturing and distribution capabilities. The primary
components of this strategy are as follows.
Expand Product Offering to the Foodservice Industry. The Company intends
to accelerate its sales growth and improve its profits through the acquisition
of complementary supply-related product lines and continued introduction of
innovative products. Libbey's acquisitions of Syracuse China and World Tableware
have significantly expanded the Company's product offering to the foodservice
industry to include ceramic dinnerware and metal flatware and holloware. The
Company intends to use its leading market position with its foodservice
customers and distribution advantages to increase the sales and profit potential
of these acquired businesses.
The Company regularly introduces new products to meet changing consumer
preferences. For example, in glass tableware, the Company has responded to the
growth in beer consumption, particularly micro-brewed beers, by introducing 25
new beer mugs and glasses over the last three years. Since its acquisition by
Libbey in 1995, Syracuse China has introduced approximately 125 new ceramic
dinnerware products to its foodservice customers such as colored dinnerware,
large-size platters and unique styles of plates. These new products capitalize
on and further contribute to the Company's position as a preferred supplier to
the foodservice industry.
Expand International Presence. The Company seeks to expand its
international presence through increased exports, equity investments, including
majority ownership interests, in foreign glass tableware operations in growing
markets and continued technical assistance to foreign glass tableware
manufacturers. Libbey exports its glass tableware products through independent
agents and distributors to over 100 countries throughout the world and currently
has technical assistance agreements with thirteen different companies covering
operations in eleven countries. As part of the Vitro Transactions, Vitrocrisa,
the largest manufacturer of glass tableware in Mexico, is now the exclusive
distributor of Libbey's glass tableware products in Latin America. It is
contemplated that Vitrocrisa will become the exclusive distributor of the
Company's ceramic dinnerware and metal flatware products in Latin America. See
"-- Recent Developments."
Strengthen Presence in Retail and Industrial Applications. The Company
intends to increase its retail and industrial sales through a comprehensive new
product development program and expanded marketing and sales programs. The
Company actively monitors culinary and lifestyle trends, continually adjusts its
product offering to satisfy consumer preferences and maintains targeted
advertising and promotional programs. Each year since 1993, the Company has
developed and introduced over 50 new glass shapes and sizes, many of which are
directed to retail and industrial applications. This new product development
focus has contributed to the Company increasing its presence in the more
attractive department and specialty housewares segments of retail. Once limited
to only foodservice applications, the Company now sells Syracuse China ceramic
dinnerware products to retail and industrial customers by utilizing Syracuse
China's high quality reputation and unique products.
S-5
<PAGE> 8
Focus on Re-engineering and Cost Saving Initiatives. The Company is
pursuing cost reductions and increased production efficiencies of existing and
acquired operations. In late 1994, Libbey began implementing a significant
re-engineering program in its glass tableware operations designed to increase
asset utilization, enhance production efficiencies and flexibility, streamline
administrative functions and improve overall customer service. As a result of
these initiatives, the Company believes it will achieve meaningful increases in
its manufacturing efficiency and reductions in its cost structure over time. In
addition, the Company believes opportunities exist to improve the cost structure
of Syracuse China and World Tableware over time through improved utilization of
operational synergies.
Pursue Strategic Acquisitions. The Company is committed to pursuing
strategic acquisitions to increase its product offering of supply-related items
for the foodservice industry, enter new markets and expand its international
presence. The Company's acquisitions of Libbey Canada and Syracuse China and the
Vitro Transactions have provided the Company opportunities to establish growing
positions with domestic and international foodservice and retail users of glass
tableware, ceramic dinnerware and metal flatware.
RECENT DEVELOPMENTS
Vitro Transactions
On August 29, 1997, the Company completed a series of transactions with
Vitro (collectively, the "Vitro Transactions") for a cash purchase price of
approximately $100 million and the assumption of certain liabilities, financed
through borrowings under the Bank Credit Agreement. The primary components of
the Vitro Transactions included the Company becoming: (i) a 49% equity owner in
Vitrocrisa; (ii) the exclusive distributor of Vitrocrisa's glass tableware
products in the U.S. and Canada and Vitrocrisa becoming the exclusive
distributor of Libbey glass tableware products in Latin America; (iii) the owner
of substantially all of the assets and certain liabilities of the business
formerly known as WorldCrisa, renamed World Tableware; and (iv) the owner of a
49% interest in the business of Crisa Industrial, L.L.C., which distributes
industrial glassware in the U.S. and Canada for Vitrocrisa. As a result of the
Vitro Transactions, the Company consolidates the financial results of World
Tableware and includes in its financial results sales of Vitrocrisa's glass
tableware in the U.S. and Canada pursuant to the distribution agreement
described above. World Tableware and the glass tableware business of Vitrocrisa
in the U.S. and Canada had combined revenues of $59.2 million in 1996. In
addition, the Company includes in its financial results 49% of the net earnings
of Vitrocrisa and Crisa Industrial, L.L.C. All references to "Vitro" shall mean
Vitro S.A., a multinational company based in Monterrey, Mexico. All references
to "Vitrocrisa" shall mean Vitrocrisa, S.A. de C.V., a joint venture between
Libbey and Vitro that was formerly a wholly-owned subsidiary of Vitro.
Vitrocrisa produces glass tableware and industrial glassware. All references to
"World Tableware" shall mean the importer and provider of tabletop products,
including ceramic dinnerware and metal flatware and holloware products, based in
Dallas, Texas, formerly known as WorldCrisa and the assets of which were
acquired by Libbey in the Vitro Transactions.
Vitrocrisa is the market leader in glass tableware in Mexico, serving
foodservice, retail, industrial and premium customers, with an estimated 72%
share. Vitrocrisa is also a major producer of industrial glassware products,
including coffee pots, blender jars and meter covers, for original equipment
manufacturers. Over the last three years, Vitrocrisa has implemented a
wide-ranging re-engineering program that has contributed to improved
profitability and customer service. For the six month period ended June 30,
1997, Vitrocrisa's operating income grew 31.8% to Ps145.6 million in constant
pesos (or approximately $18.2 million assuming an exchange rate of 8 pesos per
dollar) as compared to the year-ago period and operating income as a percent of
sales increased to 22.1% as compared to 16.9% in the year-ago period. The
distribution agreement with Vitrocrisa provides the Company with an extensive
and distinct product offering including glass bakeware, handmade glass tableware
and popular, moderately priced glass tableware.
As the exclusive U.S. and Canadian distributor of glass tableware
manufactured by Vitrocrisa, the Company expects to be able to accelerate the
growth of Vitrocrisa products sold in the U.S. and Canada by leveraging its
existing distribution channels, customer relationships and strong market
position with an expanded product line. In addition, the Company expects to
increase its sales by supplying Vitrocrisa with Libbey glass tableware, Syracuse
China dinnerware and World Tableware tabletop products to be distributed
S-6
<PAGE> 9
in Latin America, thereby expanding the Company's international presence and
creating a larger installed base of products in foreign markets.
World Tableware is a leading importer and marketer of metal flatware and
holloware products to the U.S. foodservice industry. In addition, it provides a
wide assortment of ceramic dinnerware. The World Tableware acquisition provides
the Company with: (i) an increasing number of foodservice supply-related
products that complement its existing product line; (ii) a position as a major
supplier of metal flatware to foodservice customers; (iii) a broad selection of
ceramic dinnerware at various selling prices to complement the Company's
Syracuse China products; (iv) an expanded customer base; and (v) the opportunity
to sell metal flatware and holloware and an expanded ceramic dinnerware offering
to the Company's retail, industrial, premium and export customers. The Company
expects to increase sales by leveraging its sales force to market Libbey,
Syracuse China and World Tableware products to existing and new customers and
improve the profitability of World Tableware by realizing certain operating
synergies, including the elimination of redundant operating expenses.
Third Quarter Financial Results
On October 20, 1997, the Company announced financial results for the third
quarter of 1997. Total revenues for the three months ended September 30, 1997
increased 10.2% to $105.4 million, from $95.6 million for the comparable period
in 1996, primarily due to increases in glassware sales and the effects of the
Vitro Transactions. Total revenues for the nine months ended September 30, 1997
were $289.4 million, compared to $284.6 million for the comparable period in
1996, reflecting an improved sales mix from the elimination of low margin
business. Net income for the three months ended September 30, 1997 increased
15.8% to $11.6 million, or $0.74 per share, from $10.0 million, or $0.65 per
share, for the comparable period in 1996. Net income for the nine months ended
September 30, 1997 increased 16.4% to $26.3 million, or $1.69 per share, from
$22.6 million, or $1.47 per share, for the comparable period in 1996.
THE OFFERING
Common Stock offered....... 2,000,000 shares.
Common Stock outstanding
after the Offering (1)..... 17,232,391 shares.
NYSE Symbol................ LBY
Use of Proceeds............ The net proceeds from the Offering will be used to
repay certain indebtedness outstanding under the
unsecured credit agreement among Libbey Glass Inc.,
Libbey Canada Inc. and the lenders named therein
(the "Bank Credit Agreement"). See "Use of
Proceeds."
Dividend Policy............ The Company pays a regular quarterly cash dividend
of $.075 per share, or $.30 per year. See "Price
Range of Common Stock and Dividend Policy."
- ---------------
(1) Based on 15,232,391 shares of Common Stock outstanding as of October 15,
1997. Excludes, at October 15, 1997, approximately 1,134,329 shares of
Common Stock issuable pursuant to immediately exercisable stock options.
S-7
<PAGE> 10
SUMMARY HISTORICAL FINANCIAL DATA
The selected consolidated financial data presented below for each of the
three years in the period ended December 31, 1996 have been derived from the
Company's Consolidated Financial Statements which were audited by Ernst & Young
LLP, independent auditors. The selected consolidated financial data for the six
months ended June 30, 1996 and 1997 were derived from the unaudited consolidated
financial statements of the Company, which in the opinion of management, reflect
all adjustments necessary, which consist only of normal recurring adjustments,
for a fair presentation of the interim period financial data. The results for
the six months are not necessarily indicative of the results to be expected for
the full year. The data set forth are qualified in their entirety by, and should
be read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein and the Company's
Consolidated Financial Statements, notes thereto and other financial and
statistical information incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------- ---------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Total revenues.................... $335,880 $360,082 $400,354 $189,037 $184,053
Earnings before interest and
income taxes................... 58,993 63,683 68,498 28,830 30,971
Interest expense-net.............. 13,797 13,974 14,962 7,932 6,744
Net income........................ 26,687 30,024 32,550 12,643 14,778
Per share data(1):
Net income..................... $ 1.78 $ 1.97 $ 2.12 $ 0.82 $ 0.95
Dividends paid................. 0.30 0.30 0.30 0.15 0.15
Weighted average shares
outstanding(1)................. 15,000 15,268 15,352 15,345 15,537
OTHER INFORMATION
Depreciation and amortization..... $ 16,276 $ 18,158 $ 21,485 $ 11,223 $ 11,163
Capital expenditures.............. 17,361 20,198 15,386 6,355 6,861
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
---------------------------------- ---------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets...................... $255,981 $321,815 $315,733 $326,370 $339,281
Working capital(2)................ 41,263 74,795 65,823 79,350 97,514
Total debt........................ 213,999 248,721 207,376 239,620 221,315
Total shareholders' equity........ (73,073) (47,116) (18,447) (36,581) (3,611)
</TABLE>
- ---------------
(1) Includes common share equivalents.
(2) Excludes short-term debt.
S-8
<PAGE> 11
SUMMARY PRO FORMA FINANCIAL DATA
The unaudited pro forma information presented below was derived from the
unaudited pro forma consolidated financial statements and notes thereto (the
"Pro Forma Statements") included in this Prospectus Supplement under "Unaudited
Pro Forma Consolidated Financial Information." See "-- Recent Developments" and
"Selected Consolidated Financial Data."
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
<S> <C> <C>
PRO FORMA OPERATING RESULTS(1)
As Adjusted for the Vitro Transactions
Total revenues........................................ $ 460,419 $214,361
Earnings before interest and income taxes............. 75,964 35,478
Interest expense-net.................................. 21,184 9,855
Net income............................................ 32,528 15,412
Net income per share(2)............................... $ 2.12 $ 0.99
As Further Adjusted for the Offering(3)
Net income............................................ $ 34,986 $ 16,657
Net income per share(2)............................... $ 2.02 $ 0.95
BALANCE SHEET DATA
Total assets.......................................... $452,176
Working capital(4).................................... 110,527
Total debt............................................ 255,373
Total shareholders' equity............................ 65,389
</TABLE>
- ---------------
(1) For an explanation of pro forma adjustments and amounts, see "Notes to
Unaudited Pro Forma Consolidated Financial Information."
(2) Includes common share equivalents.
(3) The Offering includes 2,000,000 shares at an assumed offering price of $37
per share.
(4) Excludes short-term debt.
S-9
<PAGE> 12
USE OF PROCEEDS
The Company will use the net proceeds from the Offering to repay certain
indebtedness outstanding under the Bank Credit Agreement. Outstanding borrowings
under the Bank Credit Agreement, which terminates on May 1, 2002, bear interest
of 6.11% as of September 30, 1997.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the NYSE under the symbol "LBY." The
following table sets forth, for each of the quarterly periods indicated, the
high and low closing sale prices of the Common Stock as reported on the NYSE.
<TABLE>
<CAPTION>
YEAR HIGH LOW
------------------------------------------------------------ ---- ----
<S> <C> <C>
1995
First Quarter............................................... $19 1/8 $14 1/2
Second Quarter.............................................. 20 7/8 18 1/2
Third Quarter............................................... 24 1/4 20 5/8
Fourth Quarter.............................................. 23 5/8 20 1/4
1996
First Quarter............................................... $23 3/8 $19 3/4
Second Quarter.............................................. 27 3/4 21 1/4
Third Quarter............................................... 28 1/4 25 1/2
Fourth Quarter.............................................. 27 7/8 23 5/8
1997
First Quarter............................................... $33 1/4 $27
Second Quarter.............................................. 35 3/8 29
Third Quarter............................................... 39 33 7/16
Fourth Quarter (through November 5, 1997)................... 38 3/8 36 1/16
</TABLE>
The Company pays a regular quarterly cash dividend of $.075 per share, or
$.30 per year. The declaration of future dividends is within the discretion of
the Board of Directors of the Company and will depend upon, among other things,
business conditions, earnings and the financial condition of the Company. The
Bank Credit Agreement limits the Company's ability to declare and pay dividends.
Future indentures and loan facilities, if any, obtained by the Company may also
prohibit or restrict the ability of the Company to pay dividends and make
distributions to its stockholders. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Capital Resources and
Liquidity."
S-10
<PAGE> 13
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1997 and as adjusted to give effect to the Vitro
Transactions and the Offering. The table should be read in conjunction with the
Consolidated Financial Statements of the Company, the notes thereto and the
other financial data contained elsewhere or incorporated by reference in this
Prospectus Supplement and the accompanying Prospectus. See "Use of Proceeds,"
"Unaudited Pro Forma Consolidated Financial Information," "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
AT JUNE 30, 1997
---------------------------------
ACTUAL AS ADJUSTED(1)
-------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Notes payable................................................. $ 20,000 $ 20,000
Long-term debt:
Bank Credit Facility(2)....................................... 201,315 235,373
Total shareholders' equity:
Common Stock, par value $.01 per share; 50,000,000 shares
authorized
15,176,621 shares issued and outstanding (actual).......... 152
17,176,621 shares issued and outstanding (as adjusted)..... 172
Capital in excess of par value................................ 194,289 263,269
Deficit....................................................... (197,855) (197,855)
Cumulative foreign currency translation adjustment............ (197) (197)
-------- --------
Total shareholders' equity................................. (3,611) 65,389
-------- --------
Total capitalization.................................. $217,704 $320,762
======== ========
</TABLE>
- ---------------
(1) For an explanation of pro forma adjustments and amounts, see "Notes to
Unaudited Pro Forma Consolidated Financial Information."
(2) In conjunction with the Vitro Transactions the Company amended its Bank
Credit Agreement on April 24, 1997 to increase the maximum borrowings from
$300 million to $380 million and extended the termination date to May 1,
2002 from October 1, 1999. In addition, the borrowing rates under certain
circumstances are lower than the prior facility and financial covenants and
restrictions have been modified.
S-11
<PAGE> 14
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The Unaudited Pro Forma Consolidated Financial Information is based on the
historical financial statements of the Company, Vitrocrisa, Crisa Corporation
("Crisa") and WorldCrisa Corporation ("World Tableware") adjusted to give effect
to: (i) the Vitro Transactions; and (ii) the issuance of 2,000,000 shares of
Common Stock in the Offering at an assumed offering price of $37 per share and
the application of the net proceeds thereof. The financial information of
Vitrocrisa, Crisa and World Tableware ("Acquired Businesses") has been presented
on a combined basis based upon the form of the transaction. Accordingly, World
Tableware and the retail business of Crisa in the U.S. and Canada have been
presented on a combined basis. The retail business of Crisa accounts for
substantially all of the glass tableware sales of Vitrocrisa in the U.S. and
Canada. The 49% investment interests of the Company in Vitrocrisa and Crisa
Industrial, L.L.C. have been accounted for in accordance with the equity method
of accounting. The Unaudited Pro Forma Consolidated Statements of Income for the
year ended December 31, 1996 and six months ended June 30, 1997 give effect to
the Vitro Transactions and the Offering as if they had occurred on January 1,
1996. The Pro Forma Unaudited Consolidated Balance Sheet gives effect to the
Vitro Transactions and the Offering as if they had occurred on June 30, 1997.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable.
The acquisition was accounted for under the purchase method of accounting.
The total purchase price for the acquisition has been allocated to tangible and
identifiable intangible assets and liabilities based upon management's estimates
of their fair value. The allocation of the purchase price for the acquisition is
subject to revision when additional information concerning asset and liability
valuation is obtained. In management's opinion, the asset and liability
valuation for the acquisition will not be materially different from the pro
forma information presented. For purposes of presenting pro forma results, no
changes in revenues have been made to reflect the results of any modification to
operations that might have been made had the acquisition been consummated at the
beginning of 1996.
THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ARE PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED TO BE INDICATIVE OF THE
COMPANY'S CONSOLIDATED FINANCIAL POSITION OR RESULTS OF OPERATIONS HAD SUCH
EVENTS BEEN CONSUMMATED ON THE DATES ASSUMED. THE COMPANY'S ACTUAL CONSOLIDATED
FINANCIAL POSITION AND RESULTS OF OPERATIONS IN FUTURE PERIODS WILL BE AFFECTED
BY VARIOUS FACTORS, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, INCLUDING
FLUCTUATIONS IN THE COMPANY'S EARNINGS AND INCREASES IN THE NUMBER OF
OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK. THE PRO FORMA FINANCIAL
STATEMENTS DO NOT, THEREFORE, PROJECT THE COMPANY'S FINANCIAL POSITION OR
RESULTS OF OPERATIONS FOR ANY FUTURE DATE OR PERIOD.
The Unaudited Pro Forma Consolidated Financial Information and accompanying
notes should be read in conjunction with the Consolidated Financial Statements
and accompanying notes of the Company, the Financial Statements and accompanying
notes of Vitrocrisa and the Combined Financial Statements and accompanying notes
of WorldCrisa Corporation and Crisa Corporation incorporated herein by
reference.
S-12
<PAGE> 15
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
ACTUAL
-----------------------
ACQUIRED PRO
COMPANY BUSINESSES ADJUSTMENTS FORMA
-------- ---------- ----------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Net sales.................................. $182,433 $ 29,916 $ (108)(c) $212,241
Royalties and net technical assistance..... 1,620 500(h) 2,120
-------- ------- ------- --------
Total revenues..................... 184,053 29,916 392 214,361
Costs and expenses:
Cost of sales.............................. 128,669 20,328 (30)(c) 149,298
331(j)
Selling, general and administrative
expenses................................ 24,457 7,511 126(a) 30,034
(723)(b)
(478)(c)
(392)(d)
(467)(e)
-------- ------- ------- --------
Total costs and expenses........... 153,126 27,839 (1,633) 179,332
-------- ------- ------- --------
Income from operations....................... 30,927 2,077 2,025 35,029
Other income(expense):
Equity earnings............................ 3,923 (1,031)(a) 398
(315)(i)
(2,179)(l)
Other-net.................................. 44 (177) 184(c) 51
-------- ------- ------- --------
Earnings before interest and income taxes.... 30,971 5,823 (1,316) 35,478
Interest expense-net......................... (6,744) (751) (2,360)(f) (9,855)
-------- ------- ------- --------
Income before income taxes................... 24,227 5,072 (3,676) 25,623
Provision for income taxes................... 9,449 120 642(g) 10,211
-------- ------- ------- --------
Net income................................... $ 14,778 $ 4,952 $(4,318) $ 15,412
======== ======= ======= ========
Net income per share......................... $ 0.95 $ 0.99
======== ========
Weighted average shares outstanding including
common share equivalents................... 15,537 15,537
======== ========
As further adjusted for the Offering:
Net income................................. $ 1,245(m) $ 16,657
======= ========
Net income per share....................... $ 0.95
========
Weighted average shares outstanding
including common share equivalents...... 17,537
========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information
S-13
<PAGE> 16
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ACTUAL
-----------------------
ACQUIRED
COMPANY BUSINESSES ADJUSTMENTS PRO FORMA
-------- ---------- ----------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Net sales.................................. $397,656 $ 59,239 $ (174)(c) $ 456,721
Royalties and net technical assistance..... 2,698 1,000(h) 3,698
-------- -------- ------- --------
Total revenues..................... 400,354 59,239 826 460,419
Costs and expenses:
Cost of sales.............................. 288,538 45,531 (639)(c) 333,663
233(j)
Selling, general and administrative
expenses................................ 44,620 14,311 74(a) 52,303
(2,420)(b)
(2,491)(c)
(836)(d)
(955)(e)
-------- -------- ------- --------
Total costs and expenses........... 333,158 59,842 (7,034) 385,966
-------- -------- ------- --------
Income from operations....................... 67,196 (603) 7,860 74,453
Other income(expense):
Equity earnings............................ 6,587 (2,063)(a) (35)
83(c)
(630)(i)
(4,012)(l)
Other-net.................................. 1,302 (148) 392(c) 1,546
-------- -------- ------- --------
Earnings before interest and income taxes.... 68,498 5,836 1,630 75,964
Interest expense-net......................... (14,962) (1,575) (4,647)(f) (21,184)
-------- -------- ------- --------
Income before income taxes................... 53,536 4,261 (3,017) 54,780
Provision for income taxes................... 20,986 11 1,255(g) 22,252
-------- -------- ------- --------
Net income................................... $ 32,550 $ 4,250 $(4,272) $ 32,528
======== ======== ======= ========
Net income per share......................... $ 2.12 $ 2.12
======== ========
Weighted average shares outstanding including
common share equivalents................... 15,352 15,352
======== ========
As further adjusted for the Offering:
Net income................................. $ 2,458(m) $ 34,986
======= ========
Net income per share....................... $ 2.02
========
Weighted average shares outstanding
including common share equivalents...... 17,352
========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information
S-14
<PAGE> 17
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
<TABLE>
<CAPTION>
ACTUAL
------------------------
ACQUIRED
COMPANY BUSINESSES ADJUSTMENTS PRO FORMA
--------- ---------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash...................................... $ 3,750 $ 2(c) $ 3,752
Accounts receivable, net.................. 49,992 $ 11,496 (5,371)(c) 56,117
Inventories............................... 94,435 22,766 (5,840)(c) 111,061
(300)(k)
Other current assets...................... 5,328 243 (146)(c) 5,425
--------- --------- --------- ---------
Total current assets.............. 153,505 34,505 (11,655) 176,355
Other assets
Investments............................... 80,475 80,475
Other assets.............................. 32,451 381 (247)(c) 32,585
Goodwill.................................. 37,131 8,239 774(c) 46,476
332(k)
--------- --------- --------- ---------
Total other assets................ 69,582 89,095 859 159,536
Net property, plant and equipment........... 116,194 378 (37)(c) 116,285
(250)(k)
--------- --------- --------- ---------
Total assets................................ $ 339,281 $ 123,978 $ (11,083) $ 452,176
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable............................. $ 20,000 $ 16,958 $ (9,650)(c) $ 20,000
(7,308)(k)
Accounts payable.......................... 14,878 6,499 1,428(c) 22,805
Accrued liabilities....................... 26,529 4,553 (2,643)(c) 28,439
Other current liabilities................. 14,584 14,584
--------- --------- --------- ---------
Total current liabilities......... 75,991 28,010 (18,173) 85,828
Long-term debt.............................. 201,315 80,475 22,583(k) 235,373
(69,000)(m)
Deferred taxes and other liabilities........ 13,134 13,134
Nonpension retirement benefits.............. 52,452 52,452
Shareholders' equity:
Common stock, par value $.01 per share,
50,000,000 shares authorized,
15,176,121 shares issued and
outstanding (17,176,121 as adjusted)... 152 2,040 (2,040)(k) 172
20(m)
Capital in excess of par value............ 194,289 26,142 (26,142)(k) 263,269
68,980(m)
Deficit................................... (197,855) (12,689) 12,689(k) (197,855)
Cumulative foreign currency translation
adjustment............................. (197) (197)
--------- --------- --------- ---------
Total shareholders' equity.................. (3,611) 15,493 53,507 65,389
--------- --------- --------- ---------
Total liabilities and shareholders'
equity.................................... $ 339,281 $ 123,978 $ (11,083) $ 452,176
========= ========= ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information
S-15
<PAGE> 18
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(a) To reflect the net increase in amortization of goodwill related to the
Vitro Transactions.
(b) To adjust for personnel expenses related to employees not retained by
Libbey at the date of the acquisition as per the acquisition agreement.
(c) To adjust for revenue and expenses related to and elimination of certain
assets and liabilities of World Tableware and Crisa not acquired. Items
consist primarily of amounts relating to contracted services, leases,
income taxes, intercompany amounts, and an outlet store.
(d) To adjust for the elimination of the administrative fees charged to World
Tableware and Crisa by Vitrocrisa as per the acquisition agreement.
(e) To adjust for the termination of commissions related to sales
representation agreements and royalty agreements for the sale of glassware
as a result of the acquisition of World Tableware as per the acquisition
agreement.
(f) To reflect the increase in interest expense with respect to borrowings
incurred in connection with the Vitro Transactions in the principal amount
of $103,700,000 at an assumed average annual interest rate of 6%.
(g) To adjust the provision for income taxes as a result of the acquisition.
(h) To adjust for the $1,000,000 annual technical assistance fee to be paid to
Libbey from Vitrocrisa as per the acquisition agreement.
(i) To adjust for the elimination of the administrative fee paid by World
Tableware and Crisa to Vitrocrisa (see note d) and the net payment for
technical assistance fee as per the acquisition agreement.
(j) To adjust for transfer pricing as per the acquisition agreement for retail
sales from Crisa to Libbey.
(k) To record the acquisition by Libbey including purchase price adjustments
resulting from the acquisition estimated fair market values as of June 30,
1997.
(l) To adjust equity earnings for purchase price fair market value adjustments
as of January 1, 1996.
(m) To decrease long-term debt by the assumed net proceeds of $69 million from
the Offering with a corresponding increase in shareholders' equity and to
decrease interest expense based on annual average interest rate of 6% net of
an increase in the provision for income taxes.
S-16
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for each of the
three years in the period ended December 31, 1996 have been derived from the
Company's Consolidated Financial Statements which were audited by Ernst & Young
LLP, independent auditors. The selected consolidated financial data for the six
months ended June 30, 1996 and 1997 were derived from the unaudited consolidated
financial statements of the Company, which in the opinion of management, reflect
all adjustments necessary, which consist only of normal recurring adjustments,
for a fair presentation of the interim period financial data. The results for
the six months are not necessarily indicative of the results to be expected for
the full year. The data set forth are qualified in their entirety by, and should
be read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein and the Company's
Consolidated Financial Statements, notes thereto and other financial and
statistical information incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------- ---------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales......................... $333,988 $357,546 $397,656 $187,805 $182,433
Royalties and net technical
assistance income.............. 1,892 2,536 2,698 1,232 1,620
-------- -------- -------- -------- --------
Total revenues.................... 335,880 360,082 400,354 189,037 184,053
Cost of sales..................... 238,885 257,945 288,538 137,864 128,669
Selling, general and
administrative expenses........ 37,772 38,953 44,620 23,102 24,457
-------- -------- -------- -------- --------
Income from operations............ 59,223 63,184 67,196 28,071 30,927
Other income (expense)............ (230) 499 1,302 759 44
-------- -------- -------- -------- --------
Earnings before interest and
income taxes................... 58,993 63,683 68,498 28,830 30,971
Interest expense-net.............. 13,797 13,974 14,962 7,932 6,744
-------- -------- -------- -------- --------
Income before income taxes........ 45,196 49,709 53,536 20,898 24,227
Provision for income taxes........ 18,509 19,685 20,986 8,255 9,449
-------- -------- -------- -------- --------
Net income........................ $ 26,687 $ 30,024 $ 32,550 $ 12,643 $ 14,778
======== ======== ======== ======== ========
Per share data(1):
Net income..................... $ 1.78 $ 1.97 $ 2.12 $ 0.82 $ 0.95
Dividends paid................. 0.30 0.30 0.30 0.15 0.15
OTHER INFORMATION
Depreciation and amortization..... $ 16,276 $ 18,158 $ 21,485 $ 11,223 $ 11,163
Capital expenditures.............. 17,361 20,198 15,386 6,355 6,861
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
---------------------------------- ---------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets...................... $255,981 $321,815 $315,733 $326,370 $339,281
Working capital(2)................ 41,263 74,795 65,823 79,350 97,514
Total debt........................ 213,999 248,721 207,376 239,620 221,315
Total shareholders' equity........ (73,073) (47,116) (18,447) (36,581) (3,611)
</TABLE>
- ---------------
(1) Includes common share equivalents.
(2) Excludes short-term debt.
S-17
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Libbey is the leading producer of glass tableware in the U.S. and Canada.
The Company is also a major supplier of other tabletop products to the
foodservice industry in the U.S. The Company's products are sold to a broad
range of foodservice, retail and industrial and premium customers and are
exported to more than 100 countries. The Company maintains over 2,000 glass
tableware SKUs available for sale, representing over 900 basic product items,
sizes and shapes. Libbey is also a leading producer of ceramic dinnerware for
the U.S. foodservice industry as a result of the Company's 1995 acquisition of
Syracuse China. In addition, the Company provides technical assistance to a
number of foreign glass tableware manufacturers. For 1996, the Company had total
revenues of $400.4 million, including $26.9 million of export sales, and net
income of $32.5 million.
The foodservice industry is Libbey's most significant customer group and
represents an important source of recurring revenue for the Company. Given the
Company's leadership position and long operating history, Libbey has the largest
installed base of glass tableware at foodservice establishments. Libbey
estimates that over 90% of all glass tableware sales to the foodservice industry
are for replacements when glass tableware is either broken, lost or stolen.
Foodservice establishments prefer a consistent "look" on the tabletop and are
reluctant to incur the high cost of changing glassware styles.
As part of its growth strategy since its IPO, Libbey has enhanced its
market leadership, expanded its market share and added complementary product
lines through strategic acquisitions and continued new product development. In
June 1993, the Company acquired the operating assets of Libbey-St. Clair (now
Libbey Canada), the only glass tableware manufacturer in Canada. In October
1995, the Company acquired Syracuse China, a leading manufacturer of
high-quality ceramic dinnerware to the U.S. foodservice industry. In addition to
strategic acquisitions, sales growth and profit improvement have benefited from
the Company's development and introduction of over 50 new glass tableware
products per year since 1993.
From late-1994 to 1996, Libbey implemented a significant re-engineering
program to improve long-term competitiveness by improving asset utilization,
increasing manufacturing and product development flexibility, streamlining
administrative functions and enhancing customer service. The operational
benefits of the re-engineering program will be realized in 1997 and beyond.
Libbey's re-engineering program is expected to improve the Company's information
systems, improve inventory management, increase manufacturing efficiencies and
provide for further reductions in the Company's cost structure.
On August 29, 1997, the Company completed the Vitro Transactions for a cash
purchase price of approximately $100 million and the assumption of certain
liabilities, financed through borrowings under the Bank Credit Agreement. The
primary components of the Vitro Transactions included the Company becoming: (i)
a 49% equity owner in Vitrocrisa; (ii) the exclusive distributor of Vitrocrisa's
glass tableware products in the U.S. and Canada and Vitrocrisa becoming the
exclusive distributor of Libbey glass tableware products in Latin America; (iii)
the owner of substantially all of the assets and certain liabilities of the
business formerly known as WorldCrisa, renamed World Tableware; and (iv) the
owner of a 49% interest in the business of Crisa Industrial, L.L.C. which
distributes industrial glassware in the U.S. and Canada for Vitrocrisa. As a
result of the Vitro Transactions, the Company consolidates the financial results
of World Tableware and includes in its financial results sales of Vitrocrisa's
glass tableware in the U.S. and Canada pursuant to the distribution agreement
described above. World Tableware and the glass tableware business of Vitrocrisa
in the U.S. and Canada had combined revenues of $59.2 million in 1996. In
addition, the Company includes in its financial results 49% of the net earnings
of Vitrocrisa and Crisa Industrial, L.L.C.
Between 1994 and 1996, Vitro undertook a series of restructuring
initiatives at Vitrocrisa aimed at reducing costs and improving product mix.
These initiatives included reducing its salaried workforce, improving
administrative and manufacturing efficiencies and re-aligning its sales effort.
As a result of these initiatives, Vitrocrisa's operating profits have increased
significantly. Vitrocrisa's operating income for the six month period ended June
30, 1997 grew 31.8% to Ps145.6 million in constant pesos (or approximately
S-18
<PAGE> 21
$18.2 million assuming an exchange rate of 8 pesos per dollar) as compared to
the year-ago period and operating income as a percent of sales increased to
22.1% as compared to 16.9% in the year-ago period.
World Tableware and the Vitrocrisa U.S. and Canadian glass tableware
business represent an additional opportunity for Libbey to increase sales by
expanding into new markets and achieve further cost savings by leveraging the
Company's industry leading distribution network. In addition, Libbey will
selectively use its extensive sales and marketing resources to enhance market
penetration of these products while reducing sales and distribution costs.
RESULTS OF OPERATIONS
Comparison Of First Six Months 1997 With First Six Months 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Net sales.............................................. $182,433 $187,805
Gross profit........................................... $ 53,764 $ 49,941
As a percentage of sales............................... 29.5% 26.6%
Income from operations................................. $ 30,927 $ 28,071
As a percentage of sales............................... 17.0% 14.9%
Net income............................................. $ 14,778 $ 12,643
</TABLE>
Net sales for the first six months of 1997 of $182.4 million decreased 2.9%
from the net sales of $187.8 million reported in the comparable period in 1996.
The decrease is due primarily to lower net sales to the Company's industrial and
retail markets in the U.S. as the Company chose to eliminate certain sales which
typically had experienced low or negative operating profit margins. Export sales
were down 4.8%, decreasing to $13.6 million from $14.3 million in the year-ago
period primarily due to a large premium order in the first quarter of 1996 which
did not repeat in 1997.
Gross profit increased 7.7% to $53.8 million in the first six months of
1997 from $49.9 million in the first six months of 1996, and increased as a
percentage of sales to 29.5% from 26.6%. Profit margins improved as a result of
an improved mix of sales to more profitable products related to the termination
of certain sales with low profit margins. In addition, lower expenses and higher
efficiency performance in the Company's glassware facilities contributed to
higher gross profit.
Income from operations increased 10.2% to $30.9 million from $28.1 million
in the year-ago period. Operating income as a percentage of sales increased to
17.0% from 14.9% in the comparable year-ago period. A higher gross profit
percentage more than offset higher selling, general and administrative expense,
principally associated with higher marketing and sales management expenses.
Net income increased by $2.1 million due to items mentioned above, plus a
reduction in the Company's effective tax rate from 39.5% to 39.0%, principally
due to lower state income taxes, and decreased interest expense resulting from
lower debt levels.
Years Ended December 31, 1996, December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales.................................. $397,656 $357,546 $333,988
Gross profit............................... $109,118 $ 99,601 $ 95,103
As a percentage of sales................... 27.4% 27.9% 28.5%
Income from operations..................... $ 67,196 $ 63,184 $ 59,223
As a percentage of sales................... 16.9% 17.7% 17.7%
Net income................................. $ 32,550 $ 30,024 $ 26,687
</TABLE>
S-19
<PAGE> 22
Management is not aware of any events or uncertainties that are likely to
have a material impact on prospective results of operations or financial
condition. The Company historically has been able to adjust its prices to offset
most of the effect of inflation, which has not had a significant effect on its
operations.
Comparison of 1996 With 1995
Net sales for 1996 of $397.7 million were 11.2% higher than the net sales
of $357.5 million reported in 1995. Contributing to the increase were greater
sales at the Company's Canadian operations; higher sales to foodservice markets
in the U.S.; significant increases in unit shipments to industrial customers and
the inclusion of sales of Syracuse China for twelve months in 1996 compared with
less than three months in 1995. Over one-half of the Company's sales increase is
attributable to the inclusion of sales of Syracuse China for a full year in
1996. The remainder of the increase is due to higher unit volume offsetting
lower average unit selling prices. Libbey's export sales increased slightly to
$26.9 million in 1996 from $26.0 million in 1995.
Gross profit increased 9.6% to $109.1 million in 1996 from $99.6 million in
1995 and declined as a percentage of sales to 27.4% from 27.9% over this same
period. Gross margins primarily were affected by product mix, with greater sales
of lower-margin items in the industrial and export markets and the inclusion of
Syracuse China. In addition, higher energy costs of approximately 30%,
principally due to increased prices, and increased compensation costs, including
the effects of the Company's new Goalsharing program, were factors.
Income from operations increased 6.3% to $67.2 million in 1996 from $63.2
million in 1995 and decreased as a percentage of net sales to 16.9% from 17.7%.
The income from operations margin in 1996 was adversely affected by a lower
gross profit margin and the inclusion of Syracuse China. Consultant fees
associated with the Company's re-engineering initiative totaled $1.0 million.
The Company expects to incur no material consultant expenditures relating to the
re-engineering initiative in 1997. Management is targeting improvements in
Libbey's cost structure through the elimination of waste and redundancies and
more responsive customer service as a result of this initiative and expects
these and other benefits to generate savings in 1997. In addition, the Company
expects continued improvement in working capital utilization.
Net income increased 8.4% to $32.5 million in 1996 from $30.0 million in
1995. The increase is principally attributable to higher revenues and operating
profits and a reduction in the Company's effective tax rate from 39.6% to 39.2%,
principally due to lower state income taxes, offset by increased interest
expense due to additional debt associated with the Syracuse China acquisition in
October 1995.
Comparison of 1995 With 1994
Net sales for 1995 of $357.5 million were 7.1% higher than the net sales of
$334.0 million reported in 1994. Contributing to the increase were greater sales
at the Company's Canadian operations, higher sales to foodservice markets in the
U.S., significant increases in unit shipments to industrial customers and the
inclusion of sales of Syracuse China since October 10, 1995. A strong travel and
entertainment industry in the U.S., growth in the use of Libbey products by
dinnerware and candle companies and continued expansion of the Company's market
position in Canada were major contributors to the sales growth. These
improvements offset a decline in unit volume sold to retail channels of
distribution, particularly mass merchants, due to sluggish market conditions
generally experienced in the sale of consumer housewares in the U.S. The
popularity of candles packed in glass vessels along with the appeal of the
Company's production and servicing capabilities contributed to the growth in
industrial sales. Approximately one-third of the Company's sales increase is
attributable to the inclusion of sales of Syracuse China since the October 10,
1995 acquisition by Libbey. The remainder of the increase is primarily due to
higher average unit selling prices, with improved sales mix a major contributing
factor to the increase. Libbey's export sales decreased slightly to $26.0
million in 1995 from $26.7 million in 1994, principally due to promotional
glassware programs in 1994 associated with the World Cup Soccer Championships,
which were not expected to repeat.
Gross profit increased 4.7% to $99.6 million in 1995 from $95.1 million in
1994 and declined as a percentage of sales to 27.9% from 28.5% over this same
period. Higher prices for corrugated materials, increased group insurance and
workers' compensation costs and consultant fees and related expenses
S-20
<PAGE> 23
associated with the re-engineering of the Company's manufacturing facilities
were major contributors to the gross profit margin decline. Gross profit margins
also were negatively affected by lower fixed cost absorption in the fourth
quarter due to lower production levels and a partial shutdown for approximately
one week due to a work stoppage at the Company's Toledo, Ohio facility. These
costs more than offset improved sales mix and the inclusion of the gross profits
of Syracuse China since October 10, 1995, the gross profit margin of which was
higher than the Company average.
Income from operations increased 6.7% to $63.2 million in 1995 from $59.2
million in 1994 and remained constant as a percentage of net sales at 17.7%. The
income from operations margin in 1995 was adversely affected by lower gross
profit margins but was positively influenced by lower selling, general and
administrative costs. The reduced selling, general and administrative expenses
as a percentage of sales is the result of lower marketing expenses due to
certain efficiencies and the timing of production of certain marketing
materials. Lower selling expenses are partially due to efficiencies in selling
and the effect of lower sales in select markets. The Company's re-engineering
initiative, Project Alpha, involves analyzing and making changes to processes
involved in the development, manufacture and sale of the Company's products.
Approximately $2.3 million in expenses were associated with Project Alpha in
1995. Management is targeting improvements in Libbey's cost structure through
the elimination of redundancies and more responsive customer service.
Net income increased 12.5% to $30.0 million in 1995 from $26.7 million in
1994. The increase is principally attributable to higher income from operations,
slower growth in interest expense due to lower interest rates and a reduction in
the Company's effective tax rate to 39.6% from 41.0%, primarily as a result of
lower state taxes.
CAPITAL RESOURCES AND LIQUIDITY
The Company had total debt of $221.3 million at June 30, 1997, compared to
$207.4 million at December 31, 1996. The increase in debt from December 31, 1996
is due to increased working capital requirements historically experienced during
this period. Inventories at June 30, 1997 were $18.1 million higher than at
December 31, 1996 principally due to the seasonal nature of the Company's
business. The Company had additional capacity at June 30, 1997 under the Bank
Credit Agreement of $173.7 million. At June 30, 1997, the Company had entered
into interest rate protection agreements with respect to $150.0 million of debt
under the Bank Credit Agreement. The average interest rate for the Company's
borrowings related to the interest rate protection agreements was 5.69% with an
average maturity of 1.5 years at June 30, 1997. Of Libbey's outstanding
indebtedness, $71.2 million was subject to fluctuating interest rates at June
30, 1997. A change of one percentage point in such rates would result in a
change in interest expense of approximately $.7 million on an annual basis. As a
result of the Vitro Transactions, the Company amended its Bank Credit Agreement
on April 24, 1997 to increase the maximum borrowings from $300 million to $380
million and extend the termination date to May 1, 2002 from October 1, 1999. As
of September 30, 1997, borrowings under the Bank Credit Agreement totalled
approximately $310 million. The Company will use the net proceeds of the
Offering to repay indebtedness under the Bank Credit Agreement. See "Use of
Proceeds."
The Company is not aware of any trends, demands, commitments, or
uncertainties which will result or which are reasonably likely to result in a
material change in Libbey's liquidity. The Company believes that its cash from
operations and available borrowings under the Bank Credit Agreement will be
sufficient to fund its operating requirements, capital expenditures and all
other obligations (including debt service and dividends) throughout the
remaining term of the Bank Credit Agreement. In addition, the Company
anticipates refinancing the Bank Credit Agreement at or prior to the termination
date of May 1, 2002 to meet the Company's longer term funding requirements.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128 "Earnings Per Share" (FAS 128), No. 129 "Disclosure
of Information about Capital Structure" (FAS 129), No. 130 "Reporting
Comprehensive Income" (FAS 130) and No. 131 "Disclosure about Segments of an
Enterprise and Related Information" (FAS 131). FAS 128, 129 and 130 are not
anticipated
S-21
<PAGE> 24
to have a material effect on the Company. The Company has not determined the
impact of FAS 131, which will be applicable to the Company for the year ended
December 31, 1998.
FORWARD LOOKING STATEMENTS
This Prospectus Supplement contains forward looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are
indicated by words or phrases such as "anticipate," "estimate," "project,"
"expect," "intend," "management believes," "target," "the Company believes" and
similar words or phrases. Such statements are based on current expectations and
are subject to certain risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated or projected. Important factors potentially affecting performance
include devaluations and other major currency fluctuations relative to the U.S.
dollar, the inability to achieve re-engineering related savings and profit
improvements at targeted levels, or within the intended time periods, inability
to achieve targeted efficiencies at Syracuse China and World Tableware,
significant increases in interest rates and the per unit costs of natural gas,
corrugated packaging, and other purchased materials, major slowdowns in the
retail, travel or entertainment industries, whether the Company completes
significant acquisitions, and whether such acquisitions can operate profitably.
S-22
<PAGE> 25
BUSINESS
GENERAL
Libbey is the leading producer of glass tableware in the U.S. and Canada.
The Company is also a major supplier of other tabletop products to the
foodservice industry in the U.S. The Company's products are sold to a broad
range of foodservice, retail, industrial and premium customers and are exported
to more than 100 countries. The Company designs, manufactures and markets, under
the Libbey brand name, an extensive line of high-quality, machine-made glass
beverageware and other glass tableware, including plates, bowls, serveware and
accessories. The Company maintains over 2,000 glass tableware SKUs, representing
over 900 basic product items, sizes and shapes. Libbey is also a leading
producer of ceramic dinnerware for the U.S. foodservice industry as a result of
the Company's October 1995 acquisition of Syracuse China. In addition, the
Company provides technical assistance to a number of foreign glass tableware
manufacturers. In 1996, the Company had total revenues of $400.4 million and net
income of $32.5 million.
The Company, according to management estimates, has a 64% share of glass
tableware sales to the foodservice industry in the U.S. and a 70% share in
Canada. The foodservice industry, which represents the Company's most
significant customer group, includes restaurants, bars, hotels, schools,
airlines, cruise ships, casinos, healthcare and catering operations. The
foodservice industry is principally comprised of four categories: food,
beverage, equipment and supply-related items. The Company is considered a major
supplier of supply-related items. Supply-related items represent an important
source of recurring revenue since the Company believes over 90% of all glass
tableware sales and over 70% of all ceramic dinnerware sales to foodservice
establishments are for replacements when items are broken, lost or stolen.
Growth in the foodservice industry is being driven by favorable demographic
trends, including an increase in dining outside of the home and increased travel
and entertainment spending.
The Company is the leading supplier of glass beverageware to the retail
industry in the U.S. The Company's retail customers include traditional
department stores, specialty housewares stores, mass merchants and supermarkets.
Sales to retail customers have increased since 1993 as a result of an enhanced
new product development program that has capitalized on the strength of the
Libbey brand name among consumers. In particular, the Company has been
successful in growing its sales to targeted department and specialty housewares
stores.
The Company is a major supplier of glassware to industrial customers. The
Company defines its industrial products as glassware that is designed for candle
and liquor gift packaging, floral purposes, lighting applications and other end
uses. The Company's industrial sales have grown since 1993 primarily due to an
increase in the popularity of candles and, more specifically, the use of glass
containers in specialty candle packaging and displays, as well as increased
demand for liquor gift sets and flower vases. The Company is among the market
leaders in providing glassware used for promotional programs, and it pursues
these opportunities selectively based on production availability and profit
opportunities. The Company defines its premium sales as glassware sold for use
as incentives with marketing and promotional programs including continuity
programs. Customers in the premium market include major gasoline retailers,
fast-food restaurant chains and supermarket chains.
Libbey exports its products through independent agents and distributors to
over 100 countries throughout the world, competing in the glass tableware
markets of Latin America, Asia and Europe. The Company considers its sales to
export customers to be an important growth area. Export sales typically are
related to foodservice and retail applications and have grown significantly
since 1988, at a 16.2% compound annual growth rate.
The Company believes it is well-positioned to accelerate sales growth and
further penetrate key markets through innovative product development, expanded
sales coverage internationally and the acquisition of companies with
complementary products. Consistent with this strategy, the Company completed the
Vitro Transactions in August 1997, which are expected to enhance the Company's
leadership position in glass tableware, expand the Company's product offering
and increase the Company's market penetration in Latin America. See "-- Recent
Developments."
S-23
<PAGE> 26
COMPETITIVE STRENGTHS
Industry Leadership, Largest Installed Base. The Company has the leading
position in glass tableware sales to foodservice customers in the U.S. and
Canada. As a result of the Company's leadership position and long operating
history, Libbey has the largest installed base of glass tableware at foodservice
establishments, generating an important source of recurring revenue and
representing a significant competitive advantage. Through its Syracuse China and
World Tableware subsidiaries, the Company is also an established provider of
ceramic dinnerware and metal flatware to the foodservice industry.
Strong Brand Name Recognition. The Libbey(R) name is one of the most
recognized brand names in consumer housewares in the U.S. According to a 1996
National Family Opinion Poll, the Company has the highest unaided brand
awareness in its glassware category, at 41%. In the foodservice industry, the
Company's Libbey(R) and Syracuse China(R) brand names have an established
reputation for quality. The brand names associated with the Vitro Transactions,
including Crisa, Amsilco, World Tableware and Ultima, are also well-recognized
in the marketplace. See "-- Recent Developments."
Broad Product Offering. Known as America's Glassmaker, Libbey maintains
over 2,000 glass tableware SKUs in one of the most extensive product portfolios
in the U.S. and Canadian glass tableware industries. The Company has expanded
its product portfolio to include ceramic dinnerware through complementary
acquisitions, including the acquisition of Syracuse China. The Vitro
Transactions further broaden the Company's product offering with new glass
tableware, flatware, holloware and dinnerware product lines. See "-- Recent
Developments."
Largest Manufacturing and Distribution Network. The Company's four glass
tableware manufacturing facilities (three in the U.S. and one in Canada) and
extensive sales and distribution network represent the largest manufacturing and
distribution network in the U.S. and Canadian glass tableware industries,
enabling the Company to provide a high level of service to end-users for glass
tableware. Libbey's manufacturing process is highly automated, and the Company
continuously refines its production machinery to incorporate technology
advancements. Approximately 90% of the Company's foodservice product sales are
made to its industry-leading independent distributor network, which has
approximately 500 distributors located throughout the U.S. and Canada.
Largest Direct Sales Force. The Company maintains the largest sales force
and customer service support staff for glass tableware and ceramic dinnerware
sold to the foodservice industry. Libbey's extensive use of a direct sales force
to market its products is unique among glass tableware and ceramic dinnerware
companies and provides opportunities for the Company to complement the sales
efforts of its distributors and influence the buying behavior of major
end-users.
Successful Complementary Acquisitions. The Company has successfully
completed strategic acquisitions of businesses with complementary product lines
in new and existing markets with similar distribution channels and the potential
for margin improvement. In June 1993, the Company acquired the operating assets
of Libbey-St. Clair, now Libbey Canada, the only manufacturer of glass tableware
in Canada. In October 1995, Libbey completed the acquisition of Syracuse China,
resulting in the Company becoming a leading manufacturer of high-quality ceramic
dinnerware to the U.S. foodservice industry. Most recently, in August 1997,
Libbey completed the Vitro Transactions which are expected to enhance the
Company's leadership position in glass tableware, offer sales growth
opportunities with an assortment of complementary new products and expand the
Company's international presence, particularly in Latin America. See "-- Recent
Developments."
BUSINESS STRATEGY
The Company's business strategy is to: (i) capitalize on its leading
position in glass tableware sales to the foodservice industry by selling an
increasing number of foodservice supply-related products; (ii) expand its
international presence; (iii) increase its presence in profitable segments of
retail and industrial applications for
S-24
<PAGE> 27
its products; and (iv) improve the cost efficiency of its manufacturing and
distribution capabilities. The primary components of this strategy are as
follows.
Expand Product Offering to the Foodservice Industry. The Company intends
to accelerate its sales growth and improve its profits through the acquisition
of complementary supply-related product lines and continued introduction of
innovative products. Libbey's acquisitions of Syracuse China and World Tableware
have significantly expanded the Company's product offering to the foodservice
industry to include ceramic dinnerware and metal flatware and holloware. The
Company intends to use its leading market position with its foodservice
customers and distribution advantages to increase the sales and profit potential
of these acquired businesses.
The Company regularly introduces new products to meet changing consumer
preferences. For example, in glass tableware, the Company has responded to the
growth in beer consumption, particularly micro-brewed beers, by introducing 25
new beer mugs and glasses over the last three years. Since its acquisition by
Libbey in 1995, Syracuse China has introduced approximately 125 new ceramic
dinnerware products to its foodservice customers such as colored dinnerware,
large-size platters and unique styles of plates. These new products capitalize
on and further contribute to the Company's position as a preferred supplier to
the foodservice industry.
Expand International Presence. The Company seeks to expand its
international presence through increased exports, equity investments, including
majority ownership interests, in foreign glass tableware operations in growing
markets and continued technical assistance to foreign glass tableware
manufacturers. Libbey exports its glass tableware products through independent
agents and distributors to over 100 countries throughout the world and currently
has technical assistance agreements with thirteen different companies covering
operations in eleven countries. As part of the Vitro Transactions, Vitrocrisa,
the largest manufacturer of glass tableware in Mexico, is now the exclusive
distributor of Libbey's glass tableware products in Latin America. It is
contemplated that Vitrocrisa will become the exclusive distributor of the
Company's ceramic dinnerware and metal flatware products in Latin America. See
"-- Recent Developments."
Strengthen Presence in Retail and Industrial Applications. The Company
intends to increase its retail and industrial sales through a comprehensive new
product development program and expanded marketing and sales programs. The
Company actively monitors culinary and lifestyle trends, continually adjusts its
product offering to satisfy consumer preferences and maintains targeted
advertising and promotional programs. Each year since 1993, the Company has
developed and introduced over 50 new glass shapes and sizes, many of which are
directed to retail and industrial applications. This new product development
focus has contributed to the Company increasing its presence in the more
attractive department and specialty housewares segments of retail. Once limited
to only foodservice applications, the Company now sells Syracuse China ceramic
dinnerware products to retail and industrial customers by utilizing Syracuse
China's high quality reputation and unique products.
Focus on Re-engineering and Cost Saving Initiatives. The Company is
pursuing cost reductions and increased production efficiencies of existing and
acquired operations. In late 1994, Libbey began implementing a significant
re-engineering program in its glass tableware operations designed to increase
asset utilization, enhance production efficiencies and flexibility, streamline
administrative functions and improve overall customer service. As a result of
these initiatives, the Company believes it will achieve meaningful increases in
its manufacturing efficiency and reductions in its cost structure over time. In
addition, the Company believes opportunities exist to improve the cost structure
of Syracuse China and World Tableware over time through improved utilization of
operational synergies.
Pursue Strategic Acquisitions. The Company is committed to pursuing
strategic acquisitions to increase its product offering of supply-related items
for the foodservice industry, enter new markets and expand its international
presence. The Company's acquisitions of Libbey Canada and Syracuse China and the
Vitro Transactions have provided the Company opportunities to establish growing
positions with domestic and international foodservice and retail users of glass
tableware, ceramic dinnerware and metal flatware.
S-25
<PAGE> 28
RECENT DEVELOPMENTS
On August 29, 1997, the Company completed the Vitro Transactions for a cash
purchase price of approximately $100 million and the assumption of certain
liabilities, financed through borrowings under the Bank Credit Agreement. The
primary components of the Vitro Transactions included the Company becoming: (i)
a 49% equity owner in Vitrocrisa; (ii) the exclusive distributor of Vitrocrisa's
glass tableware products in the U.S. and Canada and Vitrocrisa becoming the
exclusive distributor of Libbey glass tableware products in Latin America; (iii)
the owner of substantially all of the assets and certain liabilities of the
business formerly known as WorldCrisa, renamed World Tableware; and (iv) the
owner of a 49% interest in the business of Crisa Industrial, L.L.C., which
distributes industrial glassware in the U.S. and Canada for Vitrocrisa. As a
result of the Vitro Transactions, the Company consolidates the financial results
of World Tableware and includes in its financial results sales of Vitrocrisa's
glass tableware in the U.S. and Canada pursuant to the distribution agreement
described above. World Tableware and the glass tableware business of Vitrocrisa
in the U.S. and Canada had combined revenues of $59.2 million in 1996. In
addition, the Company includes in its financial results 49% of the net earnings
of Vitrocrisa and Crisa Industrial, L.L.C.
Vitrocrisa is the market leader in glass tableware in Mexico, serving
foodservice, retail, industrial and premium customers, with an estimated 72%
share. Vitrocrisa is also a major producer of industrial glassware products,
including coffee pots, blender jars and meter covers, for original equipment
manufacturers. Over the last three years, Vitrocrisa has implemented a
wide-ranging re-engineering program that has contributed to improved
profitability and customer service. For the six month period ended June 30,
1997, Vitrocrisa's operating income grew 31.8% to Ps145.6 million in constant
pesos (or approximately $18.2 million assuming an exchange rate of 8 pesos per
dollar) as compared to the year-ago period and operating income as a percent of
sales increased to 22.1% as compared to 16.9% in the year-ago period. The
distribution agreement with Vitrocrisa provides the Company with an extensive
and distinct product offering including glass bakeware, handmade glass tableware
and popular, moderately priced glass tableware.
Libbey's joint venture partner in Vitrocrisa is Vitro, a multinational
company based in Monterrey, Mexico with 1996 sales of Ps17.6 billion (or
approximately $2.2 billion assuming an exchange rate of 8 pesos per dollar).
Vitro manufactures glass and plastic containers, architectural and "float" glass
for buildings and industrial applications, windshields for the automotive
industry and a variety of other products.
Vitrocrisa operates two plants in Monterrey and employs approximately 4,200
workers and management staff. The plants produce machine-made and hand-made
glassware that is exported to over 60 countries. In addition, Vitrocrisa
distributes many Vitro-related consumer products in Mexico through its own
distribution company, Proveedor del Hogar. Distribution of Vitrocrisa's products
in the U.S. and Canada has historically been managed by Crisa Corporation, based
in Dallas, Texas and owned by Vitro since 1984.
As the exclusive U.S. and Canadian distributor of glass tableware
manufactured by Vitrocrisa, the Company expects to be able to accelerate the
growth of Vitrocrisa products sold in the U.S. and Canada by leveraging its
existing distribution channels, customer relationships and strong market
position with an expanded product line. In addition, the Company expects to
increase its sales by supplying Vitrocrisa with Libbey glass tableware, Syracuse
China dinnerware and World Tableware tabletop products to be distributed in
Latin America, thereby expanding the Company's international presence and
creating a larger installed base of products in foreign markets.
World Tableware is a leading importer and marketer of metal flatware and
holloware products to the U.S. foodservice industry. In addition, it provides a
wide assortment of ceramic dinnerware. The World Tableware acquisition provides
the Company with: (i) an increasing number of foodservice supply-related
products that complement its existing product line; (ii) a position as a major
supplier of metal flatware to foodservice customers; (iii) a broad selection of
ceramic dinnerware at various selling prices to complement the Company's
Syracuse China products; (iv) an expanded customer base; and (v) the opportunity
to sell metal flatware and holloware and an expanded ceramic dinnerware offering
to the Company's retail, industrial, premium and export customers. The Company
expects to increase sales by leveraging its sales force to market Libbey,
Syracuse China and World Tableware products to existing and new customers and
improve the profitability of World Tableware by realizing certain operating
synergies, including the elimination of redundant operating expenses.
S-26
<PAGE> 29
World Tableware was founded in 1847 as the International Silver Company
("ISCO") in Hartford, Connecticut. In 1972, ISCO's Hotel and Restaurant Sales
Division was incorporated as World Tableware and its sales and distribution were
separated from ISCO. In early 1995, Vitro became the 100% owner of World
Tableware and changed the name to WorldCrisa. In conjunction with the Vitro
Transactions, Libbey has changed the name to World Tableware. World Tableware
currently employs a staff of approximately 60 people involved in the
procurement, marketing and sales of tabletop products for the foodservice
industry.
PRODUCTS
Libbey's products consist of glass tableware, including glass beverageware,
specialized glass bottles, ceramic dinnerware and metal flatware and holloware.
The Company's glass beverageware includes tumblers, stemware and, to a lesser
extent, mugs. The Company's other glass tableware products include plates,
bowls, ashtrays, bud vases, salt and pepper shakers, canisters, candle holders
and various other items.
The Company has over 2,000 glass tableware SKUs available for sale,
representing over 900 basic product sizes or shapes, which are produced in
different colors and packaged individually or in various multipack combinations
and sets. Each year, the Company develops and introduces many new glass shapes
and sizes, including over 50 per year since 1993, which the Company believes
makes it one of the most innovative suppliers in the glass tableware industry.
In addition, the Company's product portfolio each year includes hundreds of
newly decorated designs made for specific customer needs and specifications. The
Company defines the U.S. glass tableware market to include glass beverageware,
ovenware, cookware, dinnerware, serveware, floral items, items used for
specialized packaging, specialized bottles, handmade glassware and lead crystal
valued at less than $5 per piece.
Vitrocrisa's product assortment includes, in addition to the product types
produced by Libbey, glass bakeware and hand-made glass tableware, which are new
product categories the Company will offer primarily to retail customers. In
addition, Vitrocrisa products include glass coffee pots, blender jars, meter
covers and other industrial glassware sold principally to original equipment
manufacturers.
Through its Syracuse China and World Tableware subsidiaries, the Company
sells a wide-range of ceramic dinnerware products. These include plates, bowls,
platters, cups, saucers and other tabletop accessories.
Through its World Tableware subsidiary, the Company sells an extensive
selection of metal flatware, include knives, forks, spoons and serving utensils.
In addition, World Tableware sells metal holloware, which includes serving
trays, chaffing dishes, pitchers and other metal tabletop accessories.
FOODSERVICE
Libbey has, according to management estimates, approximately 64% of the
market for glass tableware products in the U.S. foodservice industry, which
includes restaurant, bar and institutional customers. The Company's foodservice
market share in Canada is estimated by management at 70%. Sales to foodservice
customers represent approximately one-half of Libbey's sales. Approximately 90%
of the Company's glass tableware sales to foodservice end-users are made through
a network of approximately 500 independent foodservice distributors. The
distributors, in turn, sell to a wide variety of foodservice establishments,
including national and regional hotel chains, national restaurant chains,
individually owned bars and restaurants and casinos. Some of the Company's
foodservice sales are made directly to selected end-user segments, including
airlines and breweries.
Syracuse China and World Tableware are recognized as long established
suppliers of high quality ceramic dinnerware and flatware, respectively. They
are both among the leading suppliers of their respective product categories to
the foodservice industry.
Libbey's sales force and distributor network sell the Company's products to
foodservice establishments utilizing the Company's comprehensive product
catalogues. The Company annually prints and distributes approximately 400,000
copies of its catalogues. Libbey's sales force throughout the U.S. and Canada
works closely with the distributors to promote the Company's products and to
provide direct assistance to
S-27
<PAGE> 30
foodservice establishments in determining their glass tableware and ceramic
dinnerware needs. In addition, the Company advertises its products extensively
in trade publications.
Foodservice customers require timely delivery of a broad range of items,
and the Company believes that its leading position in the foodservice industry
is the result, in part, of the breadth of its product offerings, its four
strategically located (geographically) glass tableware manufacturing facilities
and related distribution centers and its extensive sales and service network. In
addition, the Company consistently adds to its product offerings to meet
changing consumer preferences and help end-user foodservice establishments grow
sales.
The Company has the largest manufacturing, distribution, sales force and
service network among U.S. and Canadian glass tableware manufacturers. The
Company's installed base of products at foodservice establishments provides the
Company with a source of recurring sales. Once a restaurant, bar or other
foodservice customer has invested in a selected glass tableware or ceramic
dinnerware pattern, it is likely to continue to purchase that pattern in order
to maintain style consistency and also to avoid the cost associated with
changing patterns. Moreover, as glass tableware or ceramic dinnerware chips or
breaks, the establishment typically orders replacement pieces of the same style,
due to the relatively small expense of maintaining style integrity. An example
of the Company's presence in this market is the continued use of its Embassy
line of glassware, which was originally introduced in 1967 and which continues
to be purchased by most of the Company's approximately 500 independent
foodservice distributors.
Each of the Company's five largest foodservice distributor accounts in the
U.S. has been a Libbey account for at least five years.
The Company's position in the foodservice industry has been enhanced
through the acquisition of World Tableware. The World Tableware acquisition
provides the Company with: (i) an increasing number of foodservice
supply-related products that complement its existing product line; (ii) a
position as a major supplier of metal flatware and holloware to foodservice
customers; (iii) a broad selection of ceramic dinnerware at various selling
prices to complement the Company's Syracuse China products; (iv) an expanded
customer base; and (v) the opportunity to sell flatware, holloware and an
expanded dinnerware offering to the Company's retail, industrial, premium and
export customers. The Company expects to increase sales by leveraging its sales
force to market Libbey, Syracuse China and World Tableware products to existing
and new customers and improve the profitability of World Tableware by realizing
certain operating synergies, including the elimination of redundant operating
expenses.
RETAIL
Libbey is the leading supplier of glass beverageware sold to retailers in
the U.S. Using the broader category of glass tableware, Libbey ranks third. The
Company began producing and selling a limited assortment of glass serveware in
1994. As of December 31, 1996, Libbey did not offer bakeware or hand-made glass
tableware products to the retail industry; however, Vitrocrisa does offer these
products to the retail industry.
While in the past the Company has sold its beverageware and other glass
tabletop accessories principally to mass merchants and discount stores, in
recent years the Company has been able to increase its total sales by increasing
its sales to traditional department stores and specialty housewares stores. With
this expanded retail representation, the Company is better positioned to
successfully introduce profitable new products. In addition, Libbey operates
factory outlets through its wholly-owned subsidiary, The Drummond Glass Company.
Retail store buyers tend to make large purchase decisions with longer lead
time than do the Company's foodservice customers. Such decisions are made on the
basis of a variety of product characteristics, including product quality, design
features and price. Thus, in initially competing for a new retail program, the
Company generally competes against a larger group of competitors, including
foreign manufacturers, than in the foodservice market.
The Company believes that its competitive position in the retail industry
is enhanced by its ability to respond quickly to new orders and its ability to
assist retail customers during the life of the program through
S-28
<PAGE> 31
inventory management and control and on-line ordering to satisfy their delivery
requirements. In this regard, the Company has effectively utilized the retail
industry's equivalent of just-in-time product delivery, through an interactive
electronic data interchange ("EDI") program it has implemented with many retail
customers. EDI, by using universal product codes ("UPC") and computers, allows
the Company to track and respond to certain customers' inventory needs on a
continuous basis.
The Company believes that its success in retail is also the result of
perceived value of its products, Libbey brand name recognition, a wide selection
of colored glassware, innovative product design, availability of open stock
items, made-to-order design capabilities and custom packaging. The Company
believes that, with fourteen colors, it offers among the widest selection of
colored glass tableware in the world. This assortment of colored glass tableware
has been a contributing factor to the growth in sales with department stores and
specialty housewares retailers. The Company's sales to retail customers,
including department stores and specialty housewares stores, has also improved
recently due to the introduction of new Syracuse China ceramic dinnerware
products.
Libbey's extensive product line also enables it to target the needs of
different retail stores based on price, product design and packaging, focusing
on individual customer characteristics. For example, products bearing the Libbey
brand name are sold throughout the retail industry, while the Company's
"FunDamentals" collection is targeted toward traditional department stores and
specialty housewares stores that utilize "private label" packaging. Similarly,
some of the Company's retail products are packaged in four-piece cartons and are
aimed at meeting a limited replacement or purchase need, while others are
packaged in multi-piece sets which appeal to first-time purchasers, gift
shoppers and customers updating their entire collection of glass tableware.
INDUSTRIAL
Libbey is one of the leading suppliers of industrial market glassware in
the U.S., according to management estimates. Industrial customers use glassware
for candle and liquor gift packaging, floral purposes and lighting applications.
The craft industries and gourmet food packing companies are also industrial
consumers of glassware. The Company believes that its success with industrial
customers is based upon its extensive manufacturing and distribution network,
which enables it to provide superior service, and its broad product offering,
which allows Libbey to meet its customers' desire for differentiated glassware
products. The production capabilities and broad product portfolio of Vitrocrisa
will enable the Company to expand its product offering for its industrial
customers.
PREMIUM
Libbey is one of the leading suppliers of premium market glassware in the
U.S., according to management estimates. Premium users include major gasoline
retailers and fast-food restaurant chains which use glassware as incentives or
premiums. The Company believes that its success with premium customers is
dependent upon custom design, varied production capabilities, and the ability to
produce large quantities of product in a short period of time. Because of its
manufacturing and distribution strengths in these areas, Libbey is able to
create and produce specific design patterns in large quantities to meet the
customer's unique needs. In recent years, many of the large purchases by premium
users of the Company's products have been for the incentive promotions run by
companies such as Coca-Cola, Arby's, Long John Silver's Seafood Shoppes and
Shell Oil.
The Company's premium market also includes the sale of glass tableware to
supermarket chains for continuity programs. In 1996, the Company sold glass
tableware through continuity programs to over 4,800 supermarkets in the U.S.
Since the majority of premium sales are tied to promotions and therefore
have a limited life, the demand for these products varies from year to year, and
the customer base is dynamic and somewhat unpredictable. Demand historically has
tended to be countercyclical. The Company attempts to use the long production
runs usually associated with such orders to balance seasonal swings and
available capacity with Libbey's core foodservice, retail and industrial
requirements.
S-29
<PAGE> 32
INTERNATIONAL EXPANSION AND EXPORT SALES
In June 1993, the Company acquired the operating assets of Libbey-St.
Clair, the only manufacturer of glass tableware in Canada. Libbey-St. Clair, now
Libbey Canada, supplies foodservice, retail, industrial and premium users in
Canada. In addition, Libbey Canada manufactures specialized glass bottles and
containers for food and beverage packaging and as decorative bottles for retail
sale, and fuse plugs. The Company also completed the Vitro Transactions on
August 29, 1997. See "-- Recent Developments." The Company is considering
further international expansion through the establishment of additional
foreign-based operations.
Libbey exports its products through independent agents and distributors to
over 100 countries throughout the world, competing in the glass tableware
markets of Latin America, Asia and Europe. Through its export operation, the
Company sells Libbey glassware to foodservice, retail, industrial and premium
customers internationally.
Export sales represent approximately 6.8% of 1996 sales, a relatively small
part of the Company's business. Since 1988, however, export sales have increased
at a 16.2% compound annual growth rate. The Company believes that export sales
represent a significant growth opportunity for the future.
The Company currently has technical assistance agreements with companies
covering operations in eleven countries. These agreements, which cover areas
ranging from manufacturing and engineering assistance to support in functions
such as marketing, sales and administration, allow the Company to participate in
the worldwide growth of the glass tableware industry and to keep abreast of
potential sales and marketing opportunities in those countries. During 1996, the
Company's technical assistance agreements produced royalties of $2.7 million.
The Company also sells machinery, primarily glass-forming machinery, to certain
parties with which it has technical assistance agreements.
SALES AND MARKETING
The Company has its own sales representatives located strategically
throughout the U.S. and Canada who call on customers and distributors.
Approximately 90% of the Company's glass tableware sales to foodservice
end-users are made through approximately 500 independent distributors, who serve
a vital function in the distribution of the Company's products and with whom the
Company works closely in connection with marketing and selling efforts. Most of
the Company's retail, industrial and premium sales are made directly by the
Company's sales force.
Libbey also has a marketing staff located at its corporate headquarters in
Toledo, Ohio engaged in developing strategies relating to product development,
pricing, distribution, advertising and sales promotion.
GLASSWARE MANUFACTURING AND DISTRIBUTION
Libbey owns and operates three glass tableware manufacturing plants in the
U.S. located in Toledo, Ohio; Shreveport, Louisiana; and City of Industry,
California. The Company also operates a glass tableware manufacturing plant in
Wallaceburg, Ontario, Canada. The Company owns and operates a ceramic dinnerware
plant in Syracuse, New York. The Company operates distribution centers located
at or near each of its manufacturing facilities. In addition, the Company
operates distribution centers for its Vitrocrisa-supplied products in Laredo,
Texas and World Tableware products near Chicago, Illinois.
The glass tableware manufacturing facilities and distribution centers are
strategically located (geographically) to enable the Company to supply
significant quantities of its product to virtually all of its customers in a
short period of time. Libbey is the only glass tableware producer operating more
than two manufacturing facilities in the U.S. and Canada. The Company maintains
a broad range of glass tableware inventory at all four glass tableware
distribution centers.
The manufacture of the Company's glass tableware products involves the use
of automated processes and technologies. Much of the Company's glass tableware
production machinery was designed by the Company and has evolved and been
continuously refined to incorporate technology advancements. Beginning in 1989,
the Company began converting its glass-forming machines to an internally
designed and proprietary computer-
S-30
<PAGE> 33
controlled manufacturing technology which improves the efficiency of the
manufacturing process and permits faster manufacturing line changes. This
conversion process will continue based on cost effectiveness and capacity
utilization requirements. In addition, the Company has installed robotics
technology in certain of its labor-intensive manufacturing processes. During the
seven year period 1990 through 1996, the Company has spent in excess of $20
million on these and other cost reducing technologies, and the Company's
manufacturing performance has improved significantly. The Company believes that
its production machinery and equipment are adequate for its needs in the
foreseeable future.
The Company's glass tableware products are generally produced using one of
two manufacturing methods or, in the case of certain stemware, a combination of
such methods. Most of the Company's tumblers and stemware and certain other
glass tableware products are produced by forming molten glass in molds with the
use of compressed air and are known as "blown" glass products. The Company's
other glass tableware products and the stems of certain of its stemware are
"pressware" products which are produced by pressing molten glass into the
desired product shape.
The Company employs a team of engineers whose responsibilities include
continuing efforts to improve and upgrade the Company's manufacturing
facilities, equipment and processes. In addition, they provide engineering
required to manufacture new products and to implement the large number of
innovative changes continuously being made to the Company's product designs,
sizes and shapes.
All of the raw materials used by the Company, principally sand, lime, soda
ash and clay, have historically been available in adequate supply from multiple
sources. However, for certain raw materials, there may be temporary shortages
due to weather or other factors, including disruptions in supply caused by raw
material transportation or production delays. Such shortages have not previously
had and are not expected to have a material adverse effect on the Company's
operations in the future.
CUSTOMERS
The customers for the Company's products include approximately 500
foodservice distributors and direct purchasers in the restaurant, bar and
institutional foodservice market. In addition, the Company sells to mass
merchants, department stores, national retail chains, specialty housewares
stores, supermarkets and industrial companies and others who use the Company's
products for promotional and other private uses. No single customer or group of
customers accounts for 10% or more of the Company's sales, although the loss of
any of the Company's major customers could have a material adverse effect on the
Company. The Company's premium customers tend to be more unpredictable from year
to year and the Company is less dependent on such business than it is on
foodservice, retail and industrial sales. But in some years premium customers
have been among the Company's largest ten customers.
COMPETITORS
The Company's business is highly competitive, with the principal
competitive factors being price, brand name, product quality, delivery time and
customer service. Principal competitors in the domestic glass tableware market
are Anchor Hocking (a unit of Newell Co.), a supplier of glass beverageware and
one of the leading suppliers of glass bakeware to retail markets in the U.S.;
Durand International, a private French company, which the Company believes is
the second leading supplier of glass beverageware in the U.S.; and Indiana Glass
Company (a unit of Lancaster Colony Corporation), which participates in various
aspects of the U.S. market. The principal competitors in the U.S. ceramic
dinnerware market are Homer Laughlin (a private U.S. company) and Buffalo China
(a unit of Oneida, Ltd.). Syracuse China competes almost exclusively in the
foodservice market but has recently increased its focus on the retail market.
Some of the Company's competitors have substantially greater financial and other
resources than the Company.
In recent years, Libbey has experienced increasing competition from foreign
manufacturers, including Durand International (France) and Kedaung (Indonesia),
principally in the retail industry. The Company's joint-venture investment in,
and distribution agreement with, Vitrocrisa are expected to enhance the
Company's ability to compete against foreign competitors. See "-- Recent
Developments."
S-31
<PAGE> 34
PATENTS, TRADEMARKS AND LICENSES
Based upon market research and market surveys, the Company believes its
Libbey trade name enjoys a high degree of consumer recognition and is a valuable
asset. The Company believes that the Libbey, Syracuse China and World Tableware
trade names are material to its business.
The Company has rights under a number of patents which relate to a variety
of products and processes. The Company does not consider that any patent or
group of patents relating to a particular product or process is of material
importance to its business as a whole.
SEASONALITY
Due primarily to the impact of consumer buying patterns, particularly
during the year-end holiday season, the Company's sales tend to be strongest in
the fourth quarter and weakest in the first quarter of each year. As a
consequence, typically 40% to 45% of the Company's sales occur in the first half
of each year and 55% to 60% occur in the second half of the year.
ENVIRONMENTAL MATTERS
The Company's operations, in common with those of the industry generally,
are subject to numerous existing and proposed laws and governmental regulations
designed to protect the environment, particularly regarding plant wastes and
emissions and solid waste disposal, and the Company has shipped, and continues
to ship, waste materials for off-site disposal. Although the Company is not
named as a potentially responsible party in any superfund matters pending prior
to June 24, 1993, the date of the Company's initial public offering and
separation from Owens-Illinois, Owens-Illinois has been named as a potentially
responsible party or other participant in connection with certain waste disposal
sites to which the Company may also have shipped wastes and bear some
responsibility, and Owens-Illinois has agreed to defend the Company in
connection with any such matters identified and pending as of June 24, 1993 and
to indemnify it against any resulting costs and liabilities from such matters in
excess of $3 million. The Company believes that if it is necessary to draw upon
this indemnification, collection is probable. Since the date of the Company's
initial public offering, the Company has been named a potentially responsible
party at two sites in Toledo, Ohio, along with 46 other potentially responsible
parties, including Owens-Illinois, and one additional site in Michigan, all of
which the Company has agreed to settle for immaterial amounts. In addition, as
further described below, the Company's Syracuse China subsidiary has been named
a potentially responsible party with respect to certain property adjoining its
plant.
Through its Syracuse China subsidiary, the Company acquired on October 10,
1995 from The Pfaltzgraff Co. and certain of its subsidiaries the assets
operated as Syracuse China. The Pfaltzgraff Co. entered into an order of consent
effective November 1, 1994 with the New York State Department of Environmental
Conservation (NYSDEC) which requires Pfaltzgraff to prepare a Remedial
Investigation and Feasibility Study (RI/FS) to develop a remedial action plan
for a site in Syracuse, New York (which includes among other items a landfill
and wastewater and sludge ponds and adjacent wetlands located on the property
purchased by Syracuse China Company) and to remediate the site. As part of the
Asset Purchase Agreement, the Syracuse China Company agreed to share a part of
the remediation and related expense up to a maximum of fifty percent of such
costs with a maximum limit for Syracuse China Company of $1,350,000.
Notwithstanding the foregoing, Syracuse China Company is not a party to the
decree. The RI/FS is complete and has been submitted to the NYSDEC for public
comments and selection of a plan of remediation. In addition, Syracuse China
Company has been named a potentially responsible party with respect to certain
property adjoining its plant which has been designated a sub-site of a superfund
site. The Company believes that any contamination of such site was caused by and
will be remediated by other parties at no cost to Syracuse China. In any event,
any expense with respect to such site for which Syracuse China may be deemed
responsible would likely be shared with Pfaltzgraff pursuant to the Asset
Purchase Agreement.
The Company regularly reviews the facts and circumstances of the various
environmental matters affecting the Company, including those which are covered
by indemnification. Although not free of uncertainties, the Company believes
that its share of the remediation costs at the various sites, based upon the
S-32
<PAGE> 35
number of parties involved at the sites and the estimated cost of undisputed
work necessary for remediation based upon known technology and the experience of
others, will not be material to the Company. There can be no assurance, however,
that the Company's future expenditures in such regard will not have a material
adverse effect on the Company's financial position or results of operations.
In addition, occasionally the federal government and various state
authorities have investigated possible health issues that may arise from the use
of lead or other ingredients in enamels such as those used by the Company on the
exterior surface of its decorated products. Capital expenditures for property,
plant and equipment for environmental control activities were not material
during 1996. The Company believes that it is in material compliance with all
federal, state and local environmental laws, and the Company is not aware of any
regulatory initiatives that would be expected to have a material effect on the
Company's products or operations.
LEGAL PROCEEDINGS
The Company is involved in various legal proceedings arising in the
ordinary course of its business. The Company is not engaged in any legal
proceedings which would be deemed to be material to the Company.
NUMBER OF EMPLOYEES
The Company employed approximately 4,150 persons at December 31, 1996. A
majority of the glass tableware employees are U.S.-based hourly workers covered
by six collective bargaining agreements which were entered into in 1995 and
expire at various times during the fourth quarter of 1998. Canada-based workers
are covered by two collective bargaining agreements which expire July 1999. The
Syracuse China hourly employees are covered by a collective bargaining agreement
which expires in March 1999. The Company considers its employee relations to be
good. The Company experienced a three week work stoppage at its Wallaceburg,
Ontario facility in July-August 1996 the results of which did not have a
material adverse effect on the Company.
S-33
<PAGE> 36
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company, their ages as of
October 15, 1997 and their positions with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------- --- -----------------------------------------------------
<S> <C> <C>
John F. Meier................... 50 Chairman of the Board and Chief Executive Officer
Richard I. Reynolds............. 51 Executive Vice President, Chief Operating Officer and
Director
L. Frederick Ashton............. 56 Vice President, General Sales Manager
Daniel P. Ibele................. 37 Vice President, Marketing and Specialty Operations
Timothy T. Paige................ 40 Vice President and Director of Human Resources
Arthur H. Smith................. 62 Vice President, General Counsel and Secretary
Kenneth G. Wilkes............... 40 Vice President, Chief Financial Officer and Treasurer
John A. Zarb.................... 46 Vice President and Chief Information Officer
William A. Foley................ 50 Director
Peter C. McC. Howell............ 47 Director
Gary L. Moreau.................. 43 Director
Terence P. Stewart.............. 49 Director
Terry L. Wilkison............... 56 Director
</TABLE>
Mr. Meier has served as Chairman of the Board and Chief Executive Officer
of the Company since June 1993. Prior to June 1993, Mr. Meier was Executive Vice
President and General Manager of the Company. Mr. Meier has been with the
Company since September 1970. Mr. Meier also serves as a director of Cooper Tire
& Rubber Co.
Mr. Reynolds has served as Executive Vice President and Chief Operating
Officer of the Company since November 1995. From June 1993 to November 1995, Mr.
Reynolds was Vice President and Chief Financial Officer of the Company. Prior to
June 1993, Mr. Reynolds was Vice President, Director of Finance and
Administration of the Company. Mr. Reynolds has been with the Company since
February 1970.
Mr. Ashton has served as Vice President, General Sales Manager of the
Company since November 1990. Mr. Ashton has been with the Company since March
1970.
Mr. Ibele has been Vice President, Corporate Marketing and Specialty
Operations since September 1997. Previously, Mr. Ibele was Vice President and
Director of Marketing at Libbey since 1995. Since joining Libbey in 1983, Mr.
Ibele has held various marketing and sales positions.
Mr. Paige has been Vice President and Director of Human Resources of the
Company since January 1997. From May 1995 to January 1997, Mr. Paige was
Director of Human Resources of the Company. Prior to joining the Company, Mr.
Paige was employed by Frito-Lay Inc. in Human Resources management positions.
Mr. Smith has served as Vice President and General Counsel of the Company
since June 1993 and as Secretary of the Company since March 1987. Mr. Smith has
been involved in the Company's legal affairs since 1975.
Mr. Wilkes has been Vice President, Chief Financial Officer and Treasurer
of the Company since November 1995. From August 1993 to November 1995, Mr.
Wilkes was Vice President and Treasurer of the Company. Prior to joining the
Company, Mr. Wilkes was a Senior Corporate Banker - Vice President of The First
National Bank of Chicago.
S-34
<PAGE> 37
Mr. Zarb has been Vice President and Chief Information Officer of the
Company since April 1996. Prior to joining the Company, Mr. Zarb was employed by
Allied Signal Inc. in information technology senior management positions in
Europe and the U.S.
Mr. Foley has been a director of the Company since September 1994. Mr.
Foley has been Chairman of the Board, President and Chief Executive Officer of
Lesco, Inc. since October 1994. From July 1993 to October 1994, he was President
and Chief Executive Officer of Lesco, Inc. Prior to July 1993, he was President
and Chief Executive Officer of Imperial Wall Coverings. Mr. Foley is also a
director of Alltrista Corporation.
Mr. Howell has been a director of the Company since October 1993. Mr.
Howell was Chairman and Chief Executive Officer of Signature Brands, Inc.
(formerly known as Mr. Coffee, inc.) from August 1994 until August 1997.
Previously, Mr. Howell was President, Chief Executive Officer and a director of
Mr. Coffee, inc.
Mr. Moreau has been a director of the Company since September 1996. Mr.
Moreau is President and Chief Executive Officer of Lionel LLC, a position he has
held since January 1996. Previously, Mr. Moreau served as President and Chief
Operating Officer of Oneida Ltd. Mr. Moreau is also a director of GSW, Inc.
Mr. Stewart has been a director of the Company since October 1997. Mr.
Stewart is the Managing Partner of Stewart and Stewart, a Washington D.C.-based
law firm specializing in trade and international law issues, where he has worked
since 1976.
Mr. Wilkison has been a director of the Company since 1987. Mr. Wilkison
has been Executive Vice President of Owens-Illinois, Inc. with responsibilities
for its West Coast operations since November 1996. From May 1993 to November
1996, he was Executive Vice President, Domestic Packaging Operations of
Owens-Illinois. He was Vice President and General Manager of Plastics, Closures
and Prescription Products of Owens-Illinois from 1992 to May 1993.
S-35
<PAGE> 38
OWNERSHIP OF COMMON STOCK
The following table sets forth information as of June 30, 1997 with respect
to any person known to the Company to be the beneficial owner of more than five
percent of its Common Stock based upon Schedule 13F filings reviewed by the
Company and as of October 15, 1997 with respect to (i) each of the Company's
directors, (ii) all directors and executive officers of the Company as a group
and (iii) shares held by the trustee of the Company's Stock Purchase and
Retirement Savings Plan, Stock Purchase and Supplemental Retirement Plan and
Long-Term Savings Plan and Trust. An asterisk indicates ownership of less than
one percent of the outstanding stock. The information in the table does not give
effect to the Offering.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIALLY OWNED PERCENT
BENEFICIAL OWNER (1) & (2) OF CLASS
----------------------------------------------------------- ------------------ --------
<S> <C> <C>
The Capital Group Companies, Inc.(3)....................... 1,341,000 8.84
333 South Hope Street
Los Angeles, CA 90071
FMR Corp.(4)............................................... 767,300 5.06
82 Devonshire Street
Boston, MA 02109
Key Trust Company of Ohio, N.A.(5)......................... 942,199 6.19
4900 Tiedeman Road
Brooklyn, Ohio 44144
Liberty Investment Management, Inc.(6)..................... 1,204,900 7.94
2502 Rocky Point Drive, Suite 500
Tampa, FL 33607
Neuberger & Berman, LLC(7)................................. 1,172,900 7.73
605 Third Avenue
New York, NY 10158
William A. Foley........................................... 500 *
Peter C. McC. Howell(8).................................... 1,500 *
John F. Meier(9)........................................... 192,487 1.25
Gary L. Moreau............................................. 500 *
Richard I. Reynolds........................................ 165,922 1.08
Terry L. Wilkison.......................................... 2,000 *
Directors and executive officers as a group (12 persons)... 716,051 4.53
</TABLE>
- ---------------
(1) For purposes of this table, a person or group of persons is deemed to have
beneficial ownership of any shares as of a given date which such person has
the right to acquire within 60 days after such date. For purposes of
computing the percentage of outstanding shares held by each person or group
of persons named above on a given date, any security which such person has
the right to acquire within 60 days of such date is deemed outstanding, but
is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. The information includes all currently
exercisable options and options exercisable within sixty days after October
15, 1997 granted to executive officers. The number of shares beneficially
owned includes shares subject to options as follows: Mr. Meier -- 160,653;
Mr. Reynolds -- 133,938; and all directors and executive officers as a group
574,255.
(2) The table includes the number of equivalent shares of Common Stock that all
executive officers as a group held in the Libbey Stock Purchase and
Retirement Savings Plan as of October 15, 1997.
(3) The Schedule 13F filing reviewed by the Company of The Capital Group
Companies, Inc. indicates that it and its subsidiaries are the beneficial
owners of 1,341,000 shares of Common Stock with dispositive power with
respect to 1,341,000 shares of Common Stock which were owned by various
institutional investors and sole voting power with respect to 1,193,000
shares of Common Stock.
S-36
<PAGE> 39
(4) The Schedule 13F filing reviewed by the Company of FMR Corp. indicates that
it and certain affiliated funds are the beneficial owners of 767,300 shares
of Common Stock with dispositive power with respect to the 767,300 shares of
Common Stock. The power to vote the shares owned directly by the funds
resides with the funds' respective Boards of Trustees.
(5) Key Trust Company of Ohio, N.A., as trustee of the Company's Stock Purchase
and Retirement Savings Plan is the beneficial owner of 815,598 shares of
Common Stock; as trustee of the Company's Stock Purchase and Supplemental
Retirement Plan is the beneficial owner of 126,493 shares of Common Stock;
and as trustee of the Company's Long-Term Savings Plan and Trust is the
beneficial owner of 108 shares of Common Stock. These plans are defined
contribution plans for the Company's employees, each of whom has the right
to instruct the trustee as to the manner in which the equivalent shares of
the Company in his or her account in the Plans are to be voted.
(6) The Schedule 13F filing reviewed by the Company of Liberty Investment
Management, Inc. indicates that it is the beneficial owner of 1,204,900
shares of Common Stock with sole dispositive power with respect to 1,204,900
shares of Common Stock and sole voting power with respect to 413,500 shares
of Common Stock.
(7) The Schedule 13F filing reviewed by the Company of Neuberger & Berman, LLC
indicates that it, Neuberger & Berman, LLC -- Institutional Asset Management
Division and Neuberger & Berman Management Incorporated, collectively, are
the beneficial owner of 1,172,900 shares of Common Stock. Neuberger &
Berman, LLC has sole dispositive power with respect to 486,300 shares of
Common Stock. Neuberger & Berman, LLC -- Institutional Asset Management
Division has sole dispositive power and sole voting power with respect to
552,500 shares of Common Stock. Neuberger & Berman Management Incorporated
has sole dispositive power with respect to 134,100 shares of Common Stock.
(8) Includes 750 shares of Common Stock held by family members of Mr. Howell.
Mr. Howell disclaims any beneficial interest in such shares.
(9) Includes 8,406 shares of Common Stock held by family members of Mr. Meier.
Mr. Meier disclaims any beneficial interest in such shares.
S-37
<PAGE> 40
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), the Underwriters named below, for whom Bear, Stearns
& Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc are acting as representatives (the "Representatives"), have
severally agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase from the Company the number of shares of
Common Stock set forth opposite their respective names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Bear, Stearns & Co. Inc. ................................................. 586,700
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................. 586,650
Salomon Brothers Inc ..................................................... 586,650
BT Alex. Brown Incorporated............................................... 30,000
Dresdner Kleinwort Benson North America LLC............................... 30,000
A.G. Edwards & Sons, Inc.................................................. 30,000
J.P. Morgan Securities Inc................................................ 30,000
Morgan Stanley & Co. Incorporated......................................... 30,000
NationsBanc Montgomery Securities, Inc.................................... 30,000
Societe Generale Securities Corporation................................... 30,000
Blackford Securities Corp................................................. 30,000
---------
Total........................................................... 2,000,000
=========
</TABLE>
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters have agreed to purchase all of the shares of Common Stock being
sold pursuant to the Underwriting Agreement if any are purchased (other than
shares of Common Stock covered by the over-allotment option described below).
The Representatives have advised the Company that the Underwriters propose
to offer the Common Stock to the public initially at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain dealers
at such price less a concession of not more than $1.02 per share, of which $0.10
may be reallowed to other dealers. After the initial offering, the public
offering price and other selling terms may be changed by the Representatives.
The Common Stock is offered subject to receipt and acceptance by the
Underwriters and to certain other conditions, including the right to reject
orders in whole or in part.
The Company has granted the Underwriters an option, exercisable during the
30-day period after the date of this Prospectus Supplement, to purchase up to
300,000 additional shares of Common Stock at the initial public offering price,
less the underwriting discount, set forth on the cover page of this Prospectus
Supplement, solely to cover overallotments, if any. To the extent that the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase such additional shares in
approximately the same proportion as set forth in the above table.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act, or will contribute to payments the Underwriters may be required
to make in respect thereof.
The Company and the directors and executive officers of the Company have
agreed that, subject to certain exceptions set forth in the Underwriting
Agreement, they will not, directly or indirectly, issue, sell, offer or agree to
sell, contract to sell, grant an option to purchase, make a short sale or
otherwise dispose of or engage in any hedging or other transaction that is
designed or reasonably expected to lead to a disposition of (or announce any
offer, sale, grant of an option to purchase, or other disposition or transaction
relating to) any shares of Common Stock, any option or warrant to purchase
shares of Common Stock, or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock, for a period of 90 days after the date
of this Prospectus Supplement without the prior written consent of the
Representatives.
S-38
<PAGE> 41
In order to facilitate the Offering, certain persons participating in the
Offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the Common Stock during and after the Offering. Specifically, the
Underwriters may over-allot or otherwise create a short position in the Common
Stock for their own account by selling more shares of Common Stock than have
been sold to them by the Company. The Underwriters may elect to cover any such
short position by purchasing shares of Common Stock in the open market or by
exercising the over-allotment option granted to the Underwriters. In addition,
such persons may stabilize or maintain the price of the Common Stock by bidding
for or purchasing shares of Common Stock in the open market and may impose
penalty bids, under which selling concessions allowed to syndicate members or
other broker-dealers participating in the Offering are reclaimed if shares of
Common Stock previously distributed in the Offering are repurchased in
connection with stabilization transactions or otherwise. The effect of these
transactions may be to stabilize or maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The imposition of a penalty bid may also affect the price of the Common Stock to
the extent that it discourages resales thereof. No representation is made as to
the magnitude or effect of any such stabilization or other transactions. Such
transactions may be effected on the New York Stock Exchange or otherwise and, if
commenced, may be discontinued at any time.
This Offering is being made pursuant to the provisions of Section
2710(c)(8) of the Conduct Rules of the National Association of Securities
Dealers, Inc.
In the ordinary course of their respective businesses, certain of the
Underwriters or their affiliates have engaged, and in the future may engage, in
investment banking and commercial banking transactions with the Company. Bear,
Stearns & Co. Inc. served as financial advisor and agent for the Company in
connection with the Vitro Transactions for which it received a customary fee.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock will be passed upon
for the Company by Arthur H. Smith, General Counsel and Secretary of the Company
(who owns 31,806 shares of Common Stock and 126,424 shares of Common Stock
subject to options) and by Latham & Watkins, Chicago, Illinois, and for the
Underwriters by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York.
EXPERTS
The financial statements of Vitrocrisa, S.A. de C.V., and the combined
financial statements of WorldCrisa Corporation and Crisa Corporation appearing
in the Company's Current Report on Form 8-K/A dated October 17, 1997, have been
audited by Deloitte & Touche (Mexico) and Deloitte & Touche LLP, respectively,
independent auditors, as set forth in their reports included therein (the
reports on the Combined Financial Statements of WorldCrisa and Crisa Corporation
express an unqualified opinion and include an explanatory paragraph referring to
a change in the method of capitalizing costs included in inventory) and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
S-39
<PAGE> 42
LIBBEY INC.
DEBT SECURITIES
COMMON STOCK
------------------------
Libbey Inc. (the "Company"), directly or through agents, dealers, or
underwriters designated from time to time, may offer, issue and sell, in one or
more series or issuances, up to $100,000,000 in the aggregate of (a) secured or
unsecured debt securities (the "Debt Securities") of the Company, in one or more
series, which may be either senior debt securities (the "Senior Debt
Securities"), senior subordinated debt securities (the "Senior Subordinated Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities") and (b) shares of common stock of the Company, par value $.01 per
share (the "Common Stock"), or any combination of the foregoing, either
individually or as units consisting of one or more of the foregoing, each on
terms to be determined at the time of sale. The Debt Securities may be issued as
exchangeable and/or convertible Debt Securities exchangeable for or convertible
into shares of Common Stock. The Debt Securities and the Common Stock are
collectively referred to herein as the "Securities." When a particular series of
Securities is offered, a supplement to this Prospectus (each a "Prospectus
Supplement") will be delivered with this Prospectus. The Prospectus Supplement
will set forth the terms of the offering and sale of the offered Securities.
Except as described more fully herein or as set forth in the Prospectus
Supplement relating to any offered Debt Securities, the Indenture will not
provide holders of Debt Securities protection in the event of a highly-leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company which could adversely affect holders of Debt Securities.
See "Description of Debt Securities -- Consolidation, Merger and Sale of
Assets."
The Company's Common Stock is traded on The New York Stock Exchange under
the symbol LBY. Any Common Stock sold pursuant to a Prospectus Supplement will
be listed on The New York Stock Exchange. On June 5, 1997, the last reported
sale price of the Common Stock on The New York Stock Exchange was $33.50 per
share. The Company has not yet determined whether any of the Debt Securities
offered hereby will be listed on any exchange or over-the-counter market. If the
Company decides to seek listing of any such Securities, the Prospectus
Supplement relating thereto will disclose such exchange or market.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. The Company reserves the sole right to accept, and together with its
agents, from time to time, to reject in whole or in part any proposed purchase
of Securities to be made directly or through agents. If agents of the Company or
any dealers or underwriters are involved in the sale of the Securities in
respect of which this Prospectus is being delivered, the names of such agents,
dealers or underwriters and any applicable commissions or discounts will be set
forth in or may be calculated from the Prospectus Supplement with respect to
such Securities. See "Plan of Distribution" for possible indemnification
arrangements with agents, dealers and underwriters.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
The date of this Prospectus is June 19, 1997.
<PAGE> 43
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, part of which has been omitted in accordance with the
rules and regulations of the Commission. For further information about the
Company and the Securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof and otherwise
incorporated therein. Statements made in this Prospectus as to the contents of
any agreement or other document referred to herein are qualified by reference to
the copy of such agreement or other document filed as an Exhibit to the
Registration Statement or such other document, each such statement being
qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Commission. The Registration Statement, including the exhibits thereto, as
well as such reports, proxy statements and other information filed by the
Company with the Commission, can be inspected, without charge, and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington D.C., 20549; 7 World Trade Center, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov.,
that contains reports, proxy and other information regarding registrants that
file electronically with the Commission and certain of the Company's filings are
available at such web site. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Reports and other information
concerning the Company can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated by reference in this Prospectus:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(2) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(3) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on June 16, 1993;
(4) the description of the Preferred Stock Purchase Rights contained
in the Company's Registration Statement on Form 8-A filed on January 20,
1995; and
(5) all other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and before the termination of the offering, which shall be
deemed to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus may not be used to consummate sales of offered securities
unless accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular offered Securities
in any jurisdiction shall not constitute an offer in the jurisdiction of any
other securities covered by this Prospectus.
2
<PAGE> 44
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon request, a copy of
any documents incorporated into this Prospectus by reference (other than
exhibits incorporated by reference into such document unless such exhibits are
specifically incorporated by reference therein). Requests for documents should
be submitted to the Corporate Secretary, Libbey Inc., 300 Madison Avenue,
Toledo, Ohio 43604, telephone (419) 325-2100. The information relating to the
Company contained in this Prospectus does not purport to be comprehensive and
should be read together with the information contained in the documents
incorporated or deemed to be incorporated by reference herein.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including any documents that are incorporated by reference
as set forth in "Information Incorporated by Reference," contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such statements are indicated by words
or phrases such as "anticipate," "estimate," "projects," "management believes,"
"the Company believes" and similar words or phrases. Such statements are subject
to certain risks, uncertainties or assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. Risks relating to the Company's operations are more fully set
forth in Exhibit 99 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, which is incorporated by reference herein.
THE COMPANY
Libbey is the leading producer of glass tableware in North America, based
on sales and unit volume. The Company designs, manufactures and markets,
primarily under the well-recognized LIBBEY(R) brand name, an extensive line of
high quality, machine-made glass beverageware and other glass tableware
including plates, bowls and ashtrays, which it sells to the foodservice
industry, retail stores, industrial and premium users. Known in the marketplace
as America's Glassmaker(TM) the Company has one of the most extensive product
portfolios in the domestic glass tableware industry with over 2,000 SKUs. In
addition, through its October 1995 acquisition of Syracuse China, the Company is
also a leading provider of ceramic dinnerware to the foodservice industry in the
United States.
The principal office of the Company is located at 300 Madison Avenue,
Toledo, Ohio 43604, telephone: (419) 325-2100.
RECENT DEVELOPMENTS
On March 10, 1997, the Company entered into a letter of intent with Vitro
S.A., a leading glass manufacturer in Mexico, for an agreement whereby the
Company will become a joint venture partner in Vitro S.A.'s glassware business
and acquire its WorldCrisa subsidiary in the United States (the "Proposed
Transaction"). The Proposed Transaction will have a cash purchase price of
approximately $100 million, payable by the Company, and includes (i) the Company
becoming a 49% equity holder in Vitrocrisa, Vitro S.A.'s currently wholly-owned
glass tableware and industrial glassware manufacturing subsidiary, (ii)
establishing reciprocal distribution agreements whereby the Company will
distribute Vitrocrisa glass tableware products sold into the United States and
Canada, and Vitrocrisa will distribute Libbey glass tableware products in
Mexico, Central and South America, and (iii) the Company's purchase of the
business known as WorldCrisa, a supplier of flatware, dinnerware and other
tabletop products to the foodservice industry in the United States and Canada.
Completion of the Proposed Transaction remains subject to performance of final
due diligence, the negotiation and signing of definitive agreements, Board
approvals of the respective companies and regulatory clearance. The Company
expects the Proposed Transaction to close in July, 1997.
3
<PAGE> 45
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company anticipates that any net proceeds would be used for general corporate
purposes, which may include but are not limited to working capital, capital
expenditures and acquisitions or the repayment or refinancing of indebtedness of
the Company, including indebtedness outstanding under the unsecured credit
agreement among the Company, its Canadian subsidiary and the lenders named
therein (the "Bank Credit Agreement"). The factors which the Company will
consider in any refinancing will include the number of shares of Common Stock
and/or the amount and characteristics of any Debt Securities issued and may
include, among others, the impact of such refinancing on the Company's
liquidity, debt-to-capital ratio and earnings per share. When a particular
series of Securities is offered, the Prospectus Supplement relating thereto will
set forth the Company's intended use for the net proceeds received from the sale
of such Securities. Pending the application of the net proceeds, the Company
expects to invest such proceeds in short-term, interest-bearing instruments or
other investment-grade securities or to reduce indebtedness under its Bank
Credit Agreement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated.
<TABLE>
<CAPTION>
FISCAL QUARTER FISCAL YEAR
ENDED MARCH 31, ENDED DECEMBER 31,
--------------- ----------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (a)... 3.1 2.4 4.2 4.2 3.9 2.3 1.5
</TABLE>
- ---------------
(a) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed
charges include interest and amortization of debt expense and that portion
of rentals representative of an interest factor.
4
<PAGE> 46
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement,
and the extent, if any, to which such general provisions do not apply to the
Debt Securities so offered, will be described in the Prospectus Supplement
relating to such Debt Securities.
Debt Securities may be issued from time to time in series under an
indenture, and one or more indentures supplemental thereto (collectively, the
"Indenture"), between the Company and a trustee to be identified in the
applicable Prospectus Supplement (the "Trustee"). The terms of the Debt
Securities will include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (the "TIA") as in
effect on the date of the Indenture. The Debt Securities will be subject to all
such terms, and potential purchasers of the Debt Securities are referred to the
Indenture and the TIA for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein of
certain terms used below. A copy of the proposed form of Indenture has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. As used under this caption, unless the context otherwise requires,
"Offered Debt Securities" shall mean the Debt Securities offered by this
Prospectus and the accompanying Prospectus Supplement.
GENERAL
The Indenture will provide for the issuance of Debt Securities in series
and will not limit the principal amount of Debt Securities which may be issued
thereunder. In addition, except as may be provided in the Prospectus Supplement
relating to such Debt Securities, the Indenture will not limit the amount of
additional indebtedness the Company may incur.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Offered Debt Securities in respect
of which this Prospectus is being delivered: (1) the title of the Offered Debt
Securities; (2) whether the Offered Debt Securities are Senior Debt Securities,
Senior Subordinated Debt Securities or Subordinated Debt Securities or any
combination thereof; (3) any limit upon the aggregate principal amount of the
Offered Debt Securities; (4) the price or prices at which the Offered Debt
Securities will be issued; (5) the date or dates on which the principal of the
Offered Debt Securities is payable; (6) the rate or rates (which may be fixed or
variable) at which the Offered Debt Securities will bear interest, if any, or
the manner in which such rate or rates are determined; (7) the date or dates
from which any such interest will accrue, the interest payment dates on which
any such interest on the Offered Debt Securities will be payable and the record
dates for the determination of holders to whom such interest is payable; (8) the
place or places where the principal of and any interest on the Offered Debt
Securities will be payable; (9) the obligation of the Company, if any, to
redeem, repurchase or repay the Offered Debt Securities in whole or in part
pursuant to any sinking fund or analogous provisions or at the option of the
holders and the price or prices at which and the period or periods within which
and the terms and conditions upon which the Offered Debt Securities shall be
redeemed, repurchased or repaid pursuant to such obligation; (10) the
denominations in which any Offered Debt Securities will be issuable, if other
than denominations of U.S. $1,000 and any integral multiple thereof; (11) if
other than the principal amount thereof, the portion of the principal amount of
the Offered Debt Securities of the series which will be payable upon declaration
of the acceleration of the maturity thereof; (12) any addition to or change in
the covenants which apply to the Offered Debt Securities; (13) any Events of
Default with respect to the Offered Debt Securities, if not otherwise set forth
under "Events of Default"; (14) whether the Offered Debt Securities will be
issued in whole or in part in global form, the terms and conditions, if any,
upon which such global Offered Debt Securities may be exchanged in whole or in
part for other individual securities, and the depositary for the Offered Debt
Securities; (15) the nature and terms of the security for any secured Offered
Debt Securities; and (16) any other terms of the Offered Debt Securities which
terms shall not be inconsistent with the provisions of the Indenture.
5
<PAGE> 47
Debt Securities may be issued at a discount from their principal amount
("Original Issue Discount Securities"). Federal income tax considerations and
other special considerations applicable to any such Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Debt Securities may be issued in bearer form, with or without coupons.
Federal income tax considerations and other special considerations applicable to
bearer securities will be described in the applicable Prospectus Supplement.
STATUS OF DEBT SECURITIES
The Senior Debt Securities will rank pari passu with all other unsecured
and unsubordinated indebtedness of the Company.
The obligations of the Company pursuant to Senior Subordinated Debt
Securities will be subordinate in right of payment, to the extent and in the
manner set forth in the Indenture, to all Senior Indebtedness of the Company.
With respect to any series of Senior Subordinated Debt Securities, "Senior
Indebtedness" of the Company will be defined to mean the principal of, and
premium, if any, and any interest (including interest accruing subsequent to the
commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) and all other monetary obligations of every kind or nature
due on or in connection with (a) all indebtedness of the Company whether
heretofore or hereafter incurred (i) for borrowed money or (ii) in connection
with the acquisition by the Company or a subsidiary of the Company of assets
other than in the ordinary course of business, for the payment of which the
Company is liable directly or indirectly by guarantee, letter of credit,
obligation to purchase or acquire or otherwise, or the payment of which is
secured by a lien, charge or encumbrance on assets acquired by the Company, (b)
amendments, modifications, renewals, extensions and deferrals of any such
indebtedness, and (c) any indebtedness issued in exchange for any such
indebtedness (clauses (a) through (c) hereof being collectively referred to
herein as "Debt"); provided, however, that the following will not constitute
Senior Indebtedness with respect to Senior Subordinated Debt Securities: (1) any
Debt as to which, in the instrument evidencing such Debt or pursuant to which
such Debt was issued, it is expressly provided that such Debt is subordinate in
right of payment to all Debt of the Company not expressly subordinated to such
Debt; (2) any Debt which by its terms refers explicitly to the Senior
Subordinated Debt Securities and states that such Debt shall not be senior in
right of payment; and (3) any Debt of the Company in respect of the Senior
Subordinated Debt Securities or any Subordinated Debt Securities.
The obligations of the Company pursuant to Subordinated Debt Securities
will be subordinate in right of payment to all Senior Indebtedness of the
Company and to any Senior Subordinated Debt Securities; provided, however, that
the following will not constitute Senior Indebtedness with respect to
Subordinated Debt Securities: (1) any Debt as to which, in the instrument
evidencing such Debt or pursuant to which such Debt was issued, it is expressly
provided that such Debt is subordinate in right of payment to all Debt of the
Company not expressly subordinated to such Debt; and (2) any Debt of the Company
in respect of Subordinated Debt Securities and any Debt which by its terms
refers explicitly to the Subordinated Debt Securities and states that such Debt
shall not be senior in right of payment.
No payment pursuant to the Senior Subordinated Debt Securities or the
Subordinated Debt Securities, as the case may be, may be made unless all amounts
of principal, premium, if any, and interest then due on all applicable Senior
Indebtedness of the Company shall have been paid in full or if there shall have
occurred and be continuing beyond any applicable grace period a default in any
payment with respect to any such Senior Indebtedness, or if there shall have
occurred any event of default with respect to any such Senior Indebtedness
permitting the holders thereof to accelerate the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default. However,
the Company may make payments pursuant to the Senior Subordinated Debt
Securities or the Subordinated Debt Securities, as the case may be, if a default
in payment or an event of default with respect to the Senior Indebtedness
permitting the holder thereof to accelerate the maturity thereof has occurred
and is continuing and judicial proceedings with respect thereto have not been
commenced within a certain number of days of such default in payment or event of
default. Upon any distribution of the assets of the Company upon dissolution,
winding-up, liquidation or reorganization, the
6
<PAGE> 48
holders of Senior Indebtedness of the Company will be entitled to receive
payment in full of principal, premium, if any, and interest (including interest
accruing subsequent to the commencement of any proceeding for the bankruptcy or
reorganization of the Company under any applicable bankruptcy, insolvency or
similar law now or hereafter in effect) before any payment is made on the Senior
Subordinated Debt Securities or Subordinated Debt Securities, as applicable. By
reason of such subordination, in the event of insolvency of the Company, holders
of Senior Indebtedness of the Company may receive more, ratably, and holders of
the Senior Subordinated Debt Securities or Subordinated Debt Securities, as
applicable, having a claim pursuant to the Senior Subordinated Debt Securities
or Subordinated Debt Securities, as applicable, may receive less, ratably, than
the other creditors of the Company. Such subordination will not prevent the
occurrence of any event of default (an "Event of Default") in respect of the
Senior Subordinated Debt Securities or the Subordinated Debt Securities.
If the Company offers Debt Securities, the applicable Prospectus Supplement
will set forth the aggregate amount of outstanding indebtedness, if any, as of
the most recent practicable date that by the terms of such Debt Securities would
be senior to such Debt Securities. The applicable Prospectus Supplement will
also set forth any limitation on the issuance by the Company of any additional
senior indebtedness.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged
for or converted into shares of Common Stock will be set forth in the Prospectus
Supplement relating thereto.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, payment
of principal, premium, if any, and any interest on the Debt Securities will be
payable, and the exchange of and the transfer of Debt Securities will be
registerable, at the office of the Trustee or at any other office or agency
maintained by the Company for such purpose subject to the limitations of the
Indenture. Unless otherwise indicated in the applicable Prospectus Supplement,
the Debt Securities will be issued in denominations of U.S. $1,000 or integral
multiples thereof. No service charge will be made for any registration of
transfer or exchange of the Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities (the "Global Securities") that will be deposited with a
Depositary or its nominee identified in the applicable Prospectus Supplement. In
such a case, one or more Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding Debt Securities of the series to be represented by such Global
Security or Securities. Each Global Security will be deposited with such
Depositary or nominee or a custodian therefor and will bear a legend regarding
the restrictions on exchanges and registration of transfer thereof referred to
below and any such other matters as may be provided for pursuant to the
applicable Indenture.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be transferred to, or registered or
exchanged for Debt Securities registered in the name of, any person or entity
other than the Depositary for such Global Security or any nominee of such
Depositary, and no such transfer may be registered, unless (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as such
as required by the applicable Indenture and, in either case, the Company fails
to appoint a successor Depositary within 90 days after such event, (ii) the
Company executes and delivers to the Trustee an order that such Global Security
shall be so transferable, registrable and exchangeable, and such transfers shall
be registrable, or (iii) there shall exist such circumstances, if any, as may be
described in the applicable Prospectus Supplement. All Debt Securities issued in
exchange for a Global Security or any portion thereof will be registered in such
names as the Depositary may direct.
7
<PAGE> 49
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in such Global Security will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial interests
by participants in such Global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by persons that hold through participants will
be shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in certificated form. The foregoing
limitations and such laws may impair the ability to transfer beneficial
interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certified form and will not be
considered the holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture. If the
Company requests any action of holders or if an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a holder
is entitled to give or take under the Indenture, the Depositary will authorize
the participants to give such notice or take such action, and participants would
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Notwithstanding any other provisions to the contrary in the Indenture, the
rights of the beneficial owners of the Debt Securities to receive payment of the
principal and premium, if any, of and interest on such Debt Securities, on or
after the respective due dates expressed in such Debt Securities, or to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
beneficial owners.
Principal of and any interest on a Global Security will be payable in the
manner described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its property or assets to any person unless (a) the Company is the surviving
corporation or the entity or the person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia; (b) the entity or person
formed by or surviving any such consolidation or
8
<PAGE> 50
merger (if other than the Company) or the entity or person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Debt Securities and
the Indenture; and (c) immediately prior to and after the transaction no Default
(as defined in the Indenture) or Event of Default exists.
Except as may be described in a Prospectus Supplement applicable to a
particular series of Debt Securities, there are no covenants or other provisions
in the Indenture providing for a put or increased interest or otherwise that
would afford holders of Debt Securities additional protection in the event of a
recapitalization transaction, a change of control of the Company or a highly
leveraged transaction.
CERTAIN OTHER COVENANTS
Unless otherwise indicated in this Prospectus or a Prospectus Supplement,
the Debt Securities will not have the benefit of any covenants that limit or
restrict the Company's business or operations, the pledging of the Company's
assets or the incurrence of indebtedness by the Company.
With respect to any series of Senior Subordinated Debt Securities, the
Company will agree not to issue Debt which is, expressly by its terms,
subordinated in right of payment to any other Debt of the Company and which is
not expressly made pari passu with, or subordinate and junior in right of
payment to, the Senior Subordinated Debt Securities.
The applicable Prospectus Supplement will describe any material covenants
in respect of a series of Debt Securities. Other than the covenants of the
Company included in the Indenture as described above or as described in the
applicable Prospectus Supplement, the Indenture will not provide holders of Debt
Securities protection in the event of a highly-leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company which could adversely affect holders of Debt Securities.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will constitute Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of any Debt Security
of that series when due and payable at maturity, upon redemption or otherwise;
(b) failure to pay any interest on any Debt Security of that series when due,
and the Default continues for 60 days; (c) an Event of Default, as defined in
the Debt Securities of that series, occurs and is continuing, or the Company
fails to comply with any of its other agreements in the Debt Securities of that
series or in the Indenture with respect to that series and the Default continues
for the period and after the notice provided therein (and described below); and
(d) certain events of bankruptcy, insolvency or reorganization. A Default under
clause (c) above is not an Event of Default with respect to a particular series
of Debt Securities until the Trustee or the holders of at least 50% in principal
amount of the then outstanding Debt Securities of that series notify the Company
of the Default and the Company does not cure the Default within 60 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
If an Event of Default with respect to outstanding Debt Securities of any
series (other than an Event or Default relating to certain events of bankruptcy,
insolvency or reorganization) shall occur and be continuing, either the Trustee
or the holders of at least 50% in principal amount of the outstanding Debt
Securities of that series by notice, as provided in the Indenture, may declare
the unpaid principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities, such lesser amount as may be specified in
the terms of that series) of, and any accrued and unpaid interest on, all Debt
Securities of that series to be due and payable immediately. However, at any
time after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on such acceleration
has been obtained, the holders of a majority in principal amount of the
outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. For information as to waiver of defaults,
see "Modification and Waiver" below.
9
<PAGE> 51
The Indenture will provide that, subject to the duty of the Trustee during
an Event of Default to act with the required standard of care, the Trustee will
be under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the holders, unless
such holders shall have offered to the Trustee reasonable security or indemnity.
Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the holders of a majority in principal amount of
the outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Debt Securities of that series.
The Company will be required to furnish to the Trustee under the Indenture
annually a statement as to the performance by the Company of its obligations
under that Indenture and as to any default in such performance.
MODIFICATION AND WAIVER
Subject to certain exceptions, the Company and the Trustee may amend the
Indenture or the Debt Securities with the written consent of the holders of a
majority in principal amount of the then outstanding Debt Securities of each
series affected by the amendment with each series voting as a separate class.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series may also waive compliance in a particular instance by
the Company with any provision of the Indenture with respect to the Debt
Securities of that series; provided, however, that without the consent of each
holder of Debt Securities of such series affected, an amendment or waiver may
not (i) reduce the percentage of the principal amount of Debt Securities whose
holders must consent to an amendment or waiver; (ii) reduce the rate or change
the time for payment of interest on any Debt Security (including default
interest); (iii) reduce the principal of or premium, if any, or change the fixed
maturity of any Debt Security, or reduce the amount of, or postpone the date
fixed for, redemption or the payment of any sinking fund or analogous obligation
with respect thereto; (iv) make any Debt Security payable in currency other than
that stated in the Debt Security; (v) make any change in the provisions
concerning waivers of Default or Events of Default by holders or the rights of
holders to recover the principal of, premium, if any, or interest on, any Debt
Security; (vi) waive a default in the payment of the principal of, or interest
on, any Debt Security, except as otherwise provided in the Indenture or (vii)
reduce the principal amount of Original Issue Discount Securities payable upon
acceleration of the maturity thereof. The Company and the Trustee may amend the
Indenture or the Debt Securities without notice to or the consent of any holder
of a Debt Security: (i) to cure any ambiguity, defect or inconsistency; (ii) to
comply with the Indenture's provisions with respect to successor corporations;
(iii) to comply with any requirements of the Commission in connection with the
qualification of the Indenture under the TIA; (iv) to provide for Debt
Securities in addition to or in place of certificated Debt Securities; (v) to
add to, change or eliminate any of the provisions of the Indenture in respect of
one of more series of Debt Securities, provided, however, that any such
addition, change or elimination (A) shall neither (1) apply to any Debt Security
of any series created prior to the execution of such amendment and entitled to
the benefit of such provision, nor (2) modify the rights of a holder of any such
Debt Security with respect to such provision, or (B) shall become effective only
when there is no outstanding Debt Security of any series created prior to such
amendment and entitled to the benefit of such provision; (vi) to make any change
that does not adversely affect in any material respect the interest of any
holder; or (vii) to establish additional series of Debt Securities as permitted
by the Indenture.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series, by notice to the Trustee, may waive an existing
Default or Event of Default and its consequences except a Default or Event of
Default in the payment of the principal of, or any interest on, any Debt
Security with respect to the Debt Securities of that series; provided, however,
that the holders of a majority in principal amount of the outstanding Debt
Securities of any series may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration.
10
<PAGE> 52
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
Legal Defeasance. Unless otherwise specified in the applicable Prospectus
Supplement, the Indenture will provide that the Company may be discharged from
any and all obligations in respect of the Debt Securities of any series (except
for certain obligations to register the transfer or exchange of Debt Securities
of such series, to replace stolen, lost or mutilated Debt Securities of such
series, and to maintain paying agencies and certain provisions relating to the
treatment of funds held by paying agents) on the 91st day after the date of the
deposit with the Trustee, in trust, of cash and/or U.S. government obligations,
that, through the payment of interest and principal in respect thereof in
accordance with their terms, will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent public accountants to pay
and discharge each installment of principal (and premium, if any) and interest,
if any, on and any mandatory sinking fund payments in respect of the Debt
Securities of such series on the stated maturity of such payments in accordance
with the terms of the Indenture and such Debt Securities. Such discharge may
occur only if, among other things, the Company has received from, or there has
been published by, the United States Internal Revenue Service a ruling, or,
since the date of execution of the Indenture, there has been a change in the
applicable United States federal income tax law, in either case to the effect
that holders of the Debt Securities of such series will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to United States federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had not
occurred.
Defeasance of Certain Covenants. Unless otherwise specified in the
applicable Prospectus Supplement, the Indenture will provide that unless
otherwise provided by the terms of the applicable series of Debt Securities,
upon compliance with certain conditions, on the 91st day after the date of
deposit referred to below, the Company may omit to comply with the restrictive
covenants contained in the Indenture, as well as any additional covenants
contained in a supplement to the Indenture, a Board Resolution or an Officers'
Certificate delivered pursuant thereto. The conditions include: the deposit with
the Trustee of cash and/or U.S. government obligations, that, through the
payment of interest and principal in respect thereof in accordance with their
terms, will provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent public accountants to pay principal, premium, if
any, and interest, if any, on and any mandatory sinking fund payments in respect
of the Debt Securities of such series on the stated maturity of such payments in
accordance with the terms of the Indenture and such Debt Securities; and the
delivery to the Trustee of an opinion of counsel to the effect that the holders
of the Debt Securities of such series will not recognize income, gain or loss
for United States federal income tax purposes as a result of such deposit and
related covenant defeasance and will be subject to United States federal income
tax in the same amount and in the same manner and at the same times as would
have been the case if such deposit and related covenant defeasance had not
occurred.
Defeasance and Events of Default. In the event the Company exercises its
option to omit compliance with certain covenants of the Indenture with respect
to any series of Debt Securities and the Debt Securities of such series are
declared due and payable because of the occurrence of any Event of Default, the
amount of cash and/or U.S. government obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Debt Securities of such series at
the time of their stated maturity but may not be sufficient to pay amounts due
on the Debt Securities of such series at the time of the acceleration resulting
from such Event of Default. However, the Company will remain liable for such
payments.
REGARDING THE TRUSTEES
The Trustee with respect to any series of Debt Securities will be
identified in the Prospectus Supplement relating to such Debt Securities. The
Indenture and provisions of the TIA incorporated by reference therein contain
certain limitations on the rights of the Trustee, should it become a creditor of
the Company, to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim, as security or
otherwise. The Trustee and its affiliates may engage in, and will be permitted
to continue to engage
11
<PAGE> 53
in, other transactions with the Company and its affiliates; provided, however,
that if it acquires any conflicting interest (as defined in the TIA), it must
eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee. The TIA and the Indenture provide that in case an Event of Default
shall occur (and be continuing), the Trustee will be required, in the exercise
of its rights and powers, to use the degree of care and skill of a prudent man
in the conduct of his own affairs. Subject to such provision, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of the Debt Securities issued
thereunder, unless they have offered to the Trustee indemnity satisfactory to
it.
DESCRIPTION OF CAPITAL STOCK
Pursuant to the Company's Restated Certificate of Incorporation (the
"Certificate"), the Company is authorized to issue an aggregate of 55,000,000
shares of stock, consisting of 50,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock"). At
June 5, 1997, there were 15,160,621 shares of Common Stock outstanding and no
shares of Preferred Stock outstanding. In addition, 200,000 shares of Preferred
Stock have been authorized and reserved for issuance in connection with the
Rights described below.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters voted upon by stockholders, and, except as described
below, a majority vote is required for all action to be taken by stockholders.
Holders of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors of the Company on the Common Stock out of
funds legally available therefore, subject to the dividend rights of any
Preferred Stock that may be issued. The declaration and payment of dividends are
restricted by the provisions of the Company's Bank Credit Agreement. In the
event of a liquidation, dissolution or winding-up of the Company, the holders of
Common Stock are entitled to share equally and ratably in the assets of the
Company, if any, remaining after the payment of all debts and liabilities of the
Company and the liquidation preference of any outstanding Preferred Stock. The
holders of Common Stock have no preemptive rights, cumulative voting rights, or
rights to convert shares of Common Stock into any other securities, and the
Common Stock is not subject to any redemption or sinking fund provisions.
The Certificate also provides for a classified Board of Directors
consisting of three classes as nearly equal in size as practicable. Each class
holds office until the third annual meeting for election of directors following
the election of such class. No director may be removed except upon a vote of a
majority of the Board of Directors or upon a vote of 80% of the stockholders,
and the provisions of the Certificate relating to the classified Board may be
amended only upon a vote of the holders of at least 80% of the outstanding
shares of Common Stock.
The Certificate provides that except under certain circumstances, directors
of the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duties as a director. That
provision does not exonerate the directors from liability under federal
securities laws, and has no effect on any nonmonetary remedies that may be
available to the Company or its stockholders. The Certificate and the By-laws of
the Company provide for indemnification of the officers and directors of the
Company to the full extent permitted by applicable law.
The Common Stock is listed on the New York Stock Exchange. The transfer
agent and registrar for the Common Stock is The Bank of New York.
SECTION 203 OF THE DELAWARE LAW
The Company is subject to Section 203 of the Delaware General Corporation
Law, which generally prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested
12
<PAGE> 54
stockholder" for a period of three years after the time of the transaction in
which the person became an interested stockholder, unless (i) prior to such
time, the board of directors of the corporation approved the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owns at least 85% of the outstanding voting stock, or (iii) at or
subsequent to such time the business combination is approved by the board of
directors and by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the interested stockholder. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. An "interested stockholder" is
a person who, together with affiliates and associates, owns (or within three
years, did own) 15% or more of the corporation's voting stock.
PREFERRED STOCK PURCHASE RIGHTS
Each share of Common Stock includes one preferred stock purchase right (the
"Rights"), which are associated with and trade with the Common Stock. Each Right
entitles the registered holder thereof, after the Rights become exercisable and
until January 4, 2005 (or the earlier redemption, exchange or termination of the
Rights), to purchase from the Company one one-hundredth (1/100th) of a share of
Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), at a price of $55 per one one-hundredth (1/100th) of a
Preferred Share, subject to certain antidilution adjustments (the "Purchase
Price"). The Rights are represented by the Common Stock certificates and do not
become exercisable or transferable apart from the Common Stock until the earlier
to occur of (i) ten (10) days following a public announcement that a Person or
group of affiliated or associated Persons has become an Acquiring Person (a
Person or group of affiliated or associated Persons who has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the Common
Stock), or (ii) ten (10) days after a Person or group commences, or announces an
intention to commence, a tender or exchange offer, the consummation of which
would result in the beneficial ownership by a Person or group of 20% or more of
the Common Stock (the earlier of (i) and (ii) being called the "Distribution
Date"). The Board of Directors has the power, under certain circumstances, to
postpone the Distribution Date. Separate certificates representing the Rights
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date. The Rights will first become exercisable on
the Distribution Date, unless earlier redeemed or exchanged, and may then begin
trading separately from the Common Stock. The Rights will at no time have any
voting rights.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled to a minimum preferential quarterly dividend payment of $1.00 per share
but will be entitled to an aggregate dividend of 100 times the dividend, if any,
declared per share of Common Stock. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100 per share but will be entitled to an aggregate payment of 100
times the payment made per share of Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each Preferred Share will be entitled to receive 100 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions. Because of the nature of the Preferred Shares'
dividend, liquidation and voting rights, the value of one one-hundredth of a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that a Person becomes an Acquiring Person (except pursuant to
certain cash offers for all outstanding shares of Common Stock approved by the
Board of Directors of the Company) or if the Company were the surviving
corporation in a merger with an Acquiring Person or any affiliate or associate
of an Acquiring Person and the shares of Common Stock were not changed or
exchanged, each holder of a Right, other than Rights that are or were acquired
or beneficially owned by the Acquiring Person (which Rights will thereafter be
void), will thereafter have the right to receive upon the exercise thereof at
the then current Purchase Price of the Right, that number of shares of Common
Stock having a market value of two times the then current Purchase Price of one
Right. With certain exceptions, in the event that, following the time that a
Person has become an Acquiring Person, the Company were acquired in a merger or
other business combination transaction or more than 50% of its assets or earning
power were sold, proper provision shall be made so that each holder of a Right
shall thereafter have the right to receive, upon the exercise thereof at the
13
<PAGE> 55
then current Purchase Price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction would have a
market value of two times the then current Purchase Price of one Right.
At any time after a Person becomes an Acquiring Person and prior to the
acquisition by such Acquiring Person of 50% or more of the then outstanding
shares of Common Stock, the Board of Directors may cause the Company to acquire
the Rights (other than Rights owned by an Acquiring Person which have become
void), in whole or in part, in exchange for that number of shares of Common
Stock having an aggregate value equal to the Spread (the excess of the value of
the shares of Common Stock issuable upon exercise of a Right after a Person
becomes an Acquiring Person over the Purchase Price) per Right (subject to
adjustment).
The Rights may be redeemed in whole, but not in part, at a price of $.001
per Right (the "Redemption Price") by the Board of Directors at any time prior
to the close of business on the tenth day following the first date of public
announcement that a Person or group has become an Acquiring Person. The Board of
Directors has the power, under certain circumstances, to extend the ten-day
redemption period. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem or to lengthen or shorten the redemption
period shall require the concurrence of a majority of the continuing directors.
Immediately upon the action of the Board of Directors of the Company electing to
redeem the Rights, the Company shall make an announcement thereof, and upon such
election, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The Rights will expire on January 4, 2005 (unless earlier redeemed,
exchanged or terminated). The Bank of New York is the Rights Agent.
14
<PAGE> 56
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them and may also sell the Securities to investors directly
or through agents. Any such underwriter, or agent involved in the offer and sale
of Securities will be named in the applicable Prospectus Supplement. The Company
has reserved the right to sell or exchange Securities directly to investors on
its own behalf in those jurisdictions where and in such manner as it is
authorized to do so.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. Sales of Common Stock offered
hereby may be effected from time to time in one or more transactions on the New
York Stock Exchange or in negotiated transactions or a combination of such
methods. The Company may also, from time to time, authorize dealers, acting as
the Company's agents, to offer and sell Securities upon the terms and conditions
as are set forth in the applicable Prospectus Supplement. In connection with the
sale of Securities, underwriters may receive compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of the Securities for whom they may act as agent.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agent. Any such underwriter, dealer or agent will be identified, and any such
compensation received from the Company will be described, in the Prospectus
Supplement. Unless otherwise indicated in a Prospectus Supplement, an agent will
be acting on a best efforts basis and a dealer will purchase Securities as a
principal, and may then resell such Securities at varying prices to be
determined by the dealer.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set forth
in the applicable Prospectus Supplement. Dealers and agents participating in the
distribution of Securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them on resale of
the Securities may be deemed to be underwriting discounts and commissions.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act, and to
reimbursement by the Company for certain expenses.
To facilitate an offering of a series of Securities, certain persons
participating in the offering may engage in transactions that stabilize,
maintain, or otherwise affect the price of the Securities. This may include
over-allotments or short sales of the Securities, which involves the sale by
persons participating in the offering of more Securities than have been sold to
them by the Company. In such circumstances, such persons would cover such
over-allotments or short positions by purchasing in the open market or by
exercising the over-allotment option granted to such persons. In addition, such
persons may stabilize or maintain the price of the Securities by bidding for or
purchasing Securities in the open market or by imposing penalty bids, whereby
selling concessions allowed to dealers participating in any such offering may be
reclaimed if Securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may be to stabilize
or maintain the market price of the Securities at a level above that which might
otherwise prevail in the open market. Such transactions, if commenced, may be
discontinued at any time.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with and perform services for the Company in the ordinary
course of business, including refinancing of the Company's indebtedness. See
"Use of Proceeds."
15
<PAGE> 57
LEGAL MATTERS
Certain legal matters with respect to the Securities offered hereby will be
passed upon for the Company by Latham & Watkins, Chicago, Illinois. Certain
legal matters will be passed upon for any agents or underwriters by counsel for
such agents or underwriters identified in the applicable Prospectus Supplement.
Such persons do not have the power to vote or dispose of such shares of Common
Stock.
EXPERTS
The consolidated financial statements of Libbey Inc. appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1996, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
16
<PAGE> 58
... & INTERNATIONAL EXPANSION
[LOGO-FULL PAGE MAP]
Worldwide Exporting to
Technical Over 100
Assistance Countries
Service
Agreements
Libbey Canada Acquisition '93
Libbey. The
Leading Libbey Inc. '95 Syracuse China
Producer of Acquisition
Glass Table-
ware in North
America
World Tableware
Acquisition '97
Vitrocrisa S.A. Joint Venture '97
<PAGE> 59
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF
WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary........... S-3
Use of Proceeds......................... S-10
Price Range of Common Stock and Dividend
Policy................................ S-10
Capitalization.......................... S-11
Unaudited Pro Forma Consolidated
Financial Information................. S-12
Selected Consolidated Financial Data.... S-17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ S-18
Business................................ S-23
Management.............................. S-34
Ownership of Common Stock............... S-36
Underwriting............................ S-38
Legal Matters........................... S-39
Experts................................. S-39
PROSPECTUS
Available Information................... 2
Information Incorporated by Reference... 2
Disclosure Regarding Forward-Looking
Statements............................ 3
The Company............................. 3
Recent Developments..................... 3
Use of Proceeds......................... 4
Ratio of Earnings to Fixed Charges...... 4
Description of Debt Securities.......... 5
Description of Capital Stock............ 12
Plan of Distribution.................... 15
Legal Matters........................... 16
Experts................................. 16
</TABLE>
======================================================
======================================================
2,000,000 SHARES
LIBBEY LOGO
COMMON STOCK
------------------------
PROSPECTUS
SUPPLEMENT
------------------------
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
November 5, 1997
======================================================
