Pension and Non-pension Postretirement Benefits

9 Months Ended

Sep. 30, 2011

Pension and Non-pension Postretirement Benefits [Abstract]

Pension and Non-pension Postretirement Benefits

Pension and Non-pension Postretirement Benefits

We have pension plans covering the majority of our employees. Benefits generally are based on compensation for salaried employees and job grade and length of service for hourly employees. Our policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. In addition, we have an unfunded supplemental employee retirement plan (SERP) that covers salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees (excluding employees hired at Shreveport after 2008 and employees hired at Toledo after September 30, 2010). The non-U.S. pension plans cover the employees of our wholly owned subsidiaries in the Netherlands and Mexico. The plan in Mexico is not funded.

The components of our net pension expense, including the SERP, are as follows:

Three months ended September 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2011			2010			2011			2010			2011			2010
Service cost	$	1,372		$	1,106		$	390		$	383		$	1,762		$	1,489
Interest cost	4,014			3,800			1,190			1,103			5,204			4,903
Expected return on plan assets	(4,307		)	(4,141		)	(566		)	(612		)	(4,873		)	(4,753		)
Amortization of unrecognized:
Prior service cost	540			582			77			30			617			612
Loss	1,166			760			113			98			1,279			858
Pension expense	$	2,785		$	2,107		$	1,204		$	1,002		$	3,989		$	3,109

Nine months ended September 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2011			2010			2011			2010			2011			2010
Service cost	$	4,118		$	4,006		$	1,275		$	1,184		$	5,393		$	5,190
Interest cost	12,042			11,922			3,811			3,348			15,853			15,270
Expected return on plan assets	(12,879		)	(12,513		)	(1,756		)	(1,795		)	(14,635		)	(14,308		)
Amortization of unrecognized:
Prior service cost	1,622			1,746			249			92			1,871			1,838
Loss	3,496			2,716			373			308			3,869			3,024
Pension expense	$	8,399		$	7,877		$	3,952		$	3,137		$	12,351		$	11,014

We provide certain retiree health care and life insurance benefits covering our U.S and Canadian salaried and non-union hourly employees hired before January 1, 2004 and a majority of our U.S. union hourly employees (excluding employees hired at Shreveport after 2008 and employees hired at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Benefits for most hourly retirees are determined by collective bargaining. The U.S. non-pension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey (excluding those mentioned above). The non-U.S. non-pension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

The provision for our non-pension postretirement benefit expense consists of the following:

Three months ended September 30,	U.S. Plans				Non-U.S. Plans						Total
(dollars in thousands)	2011		2010		2011			2010			2011		2010
Service cost	$	340	$	242	$	—		$	—		$	340	$	242
Interest cost	908		877		30			30			938		907
Amortization of unrecognized:
Prior service gain	105		296		—			—			105		296
Loss / (gain)	277		299		(5		)	(8		)	272		291
Non-pension postretirement benefit expense	$	1,630	$	1,714	$	25		$	22		$	1,655	$	1,736

Nine months ended September 30,	U.S. Plans				Non-U.S. Plans						Total
(dollars in thousands)	2011		2010		2011			2010			2011		2010
Service cost	$	1,019	$	1,020	$	1		$	1		$	1,020	$	1,021
Interest cost	2,724		2,713		92			92			2,816		2,805
Amortization of unrecognized:
Prior service gain	316		292		—			—			316		292
Loss / (gain)	831		771		(13		)	(21		)	818		750
Non-pension postretirement benefit expense	$	4,890	$	4,796	$	80		$	72		$	4,970	$	4,868

In 2011, we expect to utilize approximately $31.7 million in cash to fund our pension plans and pay for non-pension postretirement benefits. Of that amount, $14.4 million and $24.6 million of cash were utilized in the three months and nine months ended September 30, 2011, respectively.

In March 2010, the Patient Protection and Affordable Care Act and the Health Care Education and Affordability Reconciliation Act (the Acts) were signed into law. The Acts contain provisions that could impact our accounting for retiree medical benefits in future periods. Based on the analysis to date, the impact of provisions in the Acts that are reasonably determinable is not expected to have a material impact on our postretirement benefit plans. We will continue to assess the provisions of the Acts and may consider plan amendments and design changes in future periods to better align these plans with the provisions of the Acts.