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Nonpension Postretirement Benefits
 12 Months Ended
Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]  
Nonpension Postretirement Benefits
Nonpension Postretirement Benefits

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 union hourly employees (excluding employees hired at Shreveport after 2008 and 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. Effective January 1, 2013, we are ending our existing healthcare benefit for salaried retirees age 65 and older and will instead provide a Retiree Health Reimbursement Arrangement (RHRA) that supports retirees in purchasing a Medicare plan that meets their needs. Also effective January 1, 2013, we are reducing the maximum life insurance benefit for salaried retirees to $10,000. Benefits for most hourly retirees are determined by collective bargaining. The U.S. nonpension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey. The non-U.S. nonpension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

Effect on Operations

The provision for our nonpension postretirement benefit expense consists of the following:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Service cost (benefits earned during the period)
 
$
1,470

 
$
1,359

 
$
1,360

 
$
2

 
$
2

 
$
1

 
$
1,472

 
$
1,361

 
$
1,361

Interest cost on projected benefit obligation
 
3,426

 
3,632

 
3,617

 
104

 
122

 
124

 
3,530

 
3,754

 
3,741

Amortization of unrecognized:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior service cost
 
422

 
422

 
290

 
—

 
—

 
—

 
422

 
422

 
290

Loss (gain)
 
916

 
1,107

 
1,028

 
(1
)
 
(17
)
 
(29
)
 
915

 
1,090

 
999

Nonpension postretirement benefit expense
 
$
6,234

 
$
6,520

 
$
6,295

 
$
105

 
$
107

 
$
96

 
$
6,339

 
$
6,627

 
$
6,391



Actuarial Assumptions

The discount rate used to determine the accumulated postretirement benefit obligation was:
 
U.S. Plans
 
Non-U.S. Plans
 
2012
 
2011
 
2012
 
2011
Discount rate
3.85
%
 
4.91
%
 
3.71
%
 
3.97
%

The discount rate used to determine net postretirement benefit cost was:
 
U.S. Plans
 
Non-U.S. Plans
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Discount rate
4.91
%
 
5.34
%
 
5.54
%
 
3.97
%
 
4.86
%
 
5.42
%


The weighted average assumed health care cost trend rates at December 31 were as follows:
 
U.S. Plans
 
Non-U.S. Plans
 
2012
 
2011
 
2012
 
2011
Initial health care trend
7.00
%
 
7.25
%
 
7.00
%
 
7.25
%
Ultimate health care trend
5.00
%
 
5.00
%
 
5.00
%
 
5.00
%
Years to reach ultimate trend rate
8

 
9

 
8

 
9



We use various actuarial assumptions, including the discount rate and the expected trend in health care costs, to estimate the costs and benefit obligations for our retiree health plan. The discount rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical benefits at our December 31 measurement date to establish the discount rate. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year.

The health care cost trend rate represents our expected annual rates of change in the cost of health care benefits. The trend rate noted above represents a forward projection of health care costs as of the measurement date.

Sensitivity to changes in key assumptions is as follows:

•
A 1.0 percent change in the health care trend rate would not have a material impact upon the nonpension postretirement expense.

•A 1.0 percent change in the discount rate would change the nonpension postretirement expense by $0.4 million.

Accumulated Postretirement Benefit Obligation
The components of our nonpension postretirement benefit obligation are as follows:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Change in accumulated nonpension postretirement benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation, beginning of year
 
$
70,541

 
$
70,181

 
$
2,676

 
$
2,573

 
$
73,217

 
$
72,754

Service Cost
 
1,470

 
1,359

 
2

 
2

 
1,472

 
1,361

Interest cost
 
3,426

 
3,632

 
104

 
122

 
3,530

 
3,754

Plan participants' contributions
 
1,307

 
1,419

 
—

 
—

 
1,307

 
1,419

ERRP to be used to reduce retiree contribution
 
76

 
25

 
—

 
—

 
76

 
25

Plan amendments
 
(2,672
)
 
—

 
—

 
—

 
(2,672
)
 
—

Actuarial (gain) loss
 
3,682

 
(1,555
)
 
(28
)
 
149

 
3,654

 
(1,406
)
Exchange rate fluctuations
 
—

 
—

 
61

 
(53
)
 
61

 
(53
)
Benefits paid
 
(4,307
)
 
(4,520
)
 
(131
)
 
(117
)
 
(4,438
)
 
(4,637
)
Benefit obligation, end of year
 
$
73,523

 
$
70,541

 
$
2,684

 
$
2,676

 
$
76,207

 
$
73,217

 
 
 
 
 
 
 
 
 
 
 
 
 
Funded status and accrued benefit cost
 
$
(73,523
)
 
$
(70,541
)
 
$
(2,684
)
 
$
(2,676
)
 
$
(76,207
)
 
$
(73,217
)


The net accrued postretirement benefit liability at December 31 of the respective year-ends were included in the Consolidated Balance Sheets as follows:
December 31,
(dollars in thousands)
 
2012
 
2011
Current liability
 
$
4,739

 
$
4,721

Long-term liability
 
71,468

 
68,496

Total accrued postretirement benefit liability
 
$
76,207

 
$
73,217



The pre-tax amounts recognized in accumulated other comprehensive loss as of December 31, 2012 and 2011, are as follows:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Net actuarial loss (gain)
 
$
20,087

 
$
17,254

 
$
(316
)
 
$
(284
)
 
$
19,771

 
$
16,970

Prior service cost
 
(904
)
 
2,190

 
—

 
—

 
(904
)
 
2,190

Total cost (credit)
 
$
19,183

 
$
19,444

 
$
(316
)
 
$
(284
)
 
$
18,867

 
$
19,160



The pre-tax amounts in accumulated other comprehensive loss of December 31, 2012, that are expected to be recognized as a credit to net periodic benefit cost during 2013 are as follows:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
Net actuarial loss (gain)
 
$
1,155

 
$
(4
)
 
$
1,151

Prior service cost
 
140

 
—

 
140

Total cost (credit)
 
$
1,295

 
$
(4
)
 
$
1,291



Nonpension postretirement benefit payments net of estimated future Medicare Part D subsidy payments and future retiree contributions, are anticipated to be paid as follows:
Fiscal Year
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
2013
 
$
4,527

 
$
212

 
$
4,739

2014
 
$
4,930

 
$
215

 
$
5,145

2015
 
$
5,175

 
$
214

 
$
5,389

2016
 
$
5,395

 
$
212

 
$
5,607

2017
 
$
5,628

 
$
210

 
$
5,838

2018-2022
 
$
26,485

 
$
934

 
$
27,419