The Company expects to record pretax restructuring and other charges of $24 million to $27 million, of which approximately $22 million to $25 million is expected to be recorded in 2004 and $2 million to $5 million is expected to be recorded in 2005. This would result in a cumulative after-tax charge of $16.1 million to $18.1 million, or between $1.17 and $1.32 per diluted share. The principal components of the charges include fixed asset write-downs, employee severance, pension and other post employment benefit curtailment charges, equipment relocation costs and other items. Annualized savings are expected to total $0.54 to $0.64 per diluted share. The City of Industry factory currently employs approximately 200 people. Libbey expects to continue to operate its full service distribution center in Mira Loma, California, which employs approximately 35 people. The capacity realignment is expected to result in a net reduction of approximately 140 employees, or approximately 3.7 percent of Libbey Inc.'s total employment worldwide.
In announcing the plan, John F. Meier, chairman and chief executive officer, said, "This capacity realignment should allow us to reduce our cost structure and improve our profitability. We expect that it could add $11 million to $13 million to our annual operating income starting in 2005, or 54 to 64 cents per diluted share after tax."
He added, "While the decision to close this facility was extremely difficult, increasing demands from customers and growing international competitive pressures require us to reduce costs and improve profit margins. The result of the capacity realignment and our strategic plans for international expansion will be a stronger, more competitive and more profitable Libbey."
Libbey Inc. Announces Plan to Realign Production Capacity and Further Expand Internationally
Libbey Inc. announced that it is realigning its production capacity in order to improve its cost structure. The plan calls for the closure of its manufacturing facility in City of Industry, California, in early 2005 and the realignment of production among its other glass manufacturing facilities.