Pension and Non-pension Postretirement Benefits

3 Months Ended

Mar. 31, 2013

Compensation and Retirement Disclosure [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 certain 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 at Toledo after September 30, 2010). Effective January 1, 2013, we ceased annual company contribution credits to the cash balance accounts in our Libbey U.S. Salaried Pension Plan and SERP. 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 March 31,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2013			2012			2013			2012			2013			2012
Service cost	$	1,278		$	1,555		$	722		$	442		$	2,000		$	1,997
Interest cost	3,481			4,019			1,256			1,256			4,737			5,275
Expected return on plan assets	(5,599		)	(4,485		)	(481		)	(607		)	(6,080		)	(5,092		)
Amortization of unrecognized:
Prior service cost	293			521			62			66			355			587
Loss	2,087			1,801			238			135			2,325			1,936
Settlement charge	—			420			—			—			—			420
Pension expense	$	1,540		$	3,831		$	1,797		$	1,292		$	3,337		$	5,123

During the first three months of 2012, we incurred pension settlement charges totaling $0.4 million. The pension settlement charges were triggered by excess lump sum distributions, which required us to record unrecognized gains and losses in our pension plan accounts. We have contributed $0.7 million of cash into our pension plans for the three months ended March 31, 2013. Pension contributions for the remainder of 2013 are estimated to be $5.7 million.

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 ended our existing healthcare benefit for salaried retirees age 65 and older and are now providing a Retiree Health Reimbursement Arrangement (RHRA) that supports retirees in purchasing a Medicare plan that meets their needs. Also effective January 1, 2013, we reduced the maximum life insurance benefit for salaried retirees to $10,000. 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 March 31,	U.S. Plans				Non-U.S. Plans					Total
(dollars in thousands)	2013		2012		2013			2012		2013		2012
Service cost	$	392	$	368	$	—		$	—	$	392	$	368
Interest cost	701		857		23			26		724		883
Amortization of unrecognized:
Prior service cost	34		105		—			—		34		105
Loss / (gain)	291		229		(1		)	—		290		229
Non-pension postretirement benefit expense	$	1,418	$	1,559	$	22		$	26	$	1,440	$	1,585

Our 2013 estimate of non-pension cash payments is $4.7 million, and we have paid $1.0 million for the three months ended March 31, 2013.