Pension and Non-pension Postretirement Benefits

6 Months Ended

Jun. 30, 2011

Pension and Non-pension Postretirement Benefits [Abstract]

Pension and Non-pension Postretirement Benefits

7. 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 Royal Leerdam and Crisa. The Crisa plan is not funded.

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

Three months ended June 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2011			2010			2011			2010			2011			2010
Service cost	$	1,314		$	1,450		$	457		$	405		$	1,771		$	1,855
Interest cost		3,940			4,061			1,361			1,083			5,301			5,144
Expected return on plan assets		(4,259	)		(4,186	)		(625	)		(518	)		(4,884	)		(4,704	)
Amortization of unrecognized:
Prior service cost		541			582			90			32			631			614
Loss		1,112			978			134			109			1,246			1,087
Pension expense	$	2,648		$	2,885		$	1,417		$	1,111		$	4,065		$	3,996

Six months ended June 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2011			2010			2011			2010			2011			2010
Service cost	$	2,746		$	2,900		$	885		$	801		$	3,631		$	3,701
Interest cost		8,028			8,122			2,621			2,245			10,649			10,367
Expected return on plan assets		(8,572	)		(8,372	)		(1,190	)		(1,183	)		(9,762	)		(9,555	)
Amortization of unrecognized:
Prior service cost		1,082			1,164			172			62			1,254			1,226
Loss		2,330			1,956			260			210			2,590			2,166
Pension expense	$	5,614		$	5,770		$	2,748		$	2,135		$	8,362		$	7,905

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 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 June 30,	U.S. Plans					Non-U.S. Plans						Total
(dollars in thousands)	2011		2010			2011			2010			2011		2010
Service cost	$	306	$	389		$	1		$	1		$	307	$	390
Interest cost		891		918			33			31			924		949
Amortization of unrecognized:
Prior service gain		106		(2	)		—			—			106		(2	)
Loss / (Gain)		264		236			(4	)		(6	)		260		230
Non-pension postretirement benefit expense	$	1,567	$	1,541		$	30		$	26		$	1,597	$	1,567

Six months ended June 30,	U.S. Plans					Non-U.S. Plans						Total
(dollars in thousands)	2011		2010			2011			2010			2011		2010
Service cost	$	679	$	778		$	1		$	1		$	680	$	779
Interest cost		1,816		1,836			62			62			1,878		1,898
Amortization of unrecognized:
Prior service gain		211		(4	)		—			—			211		(4	)
Loss / (Gain)		554		472			(8	)		(13	)		546		459
Non-pension postretirement benefit expense	$	3,260	$	3,082		$	55		$	50		$	3,315	$	3,132

In 2011, we expect to utilize approximately $31.5 million in cash to fund our pension plans and pay for non-pension postretirement benefits. Of that amount, $6.7 million and $10.2 million of cash were utilized in the three months and six months ended June 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 which could impact our accounting for retiree medical benefits in future periods. Based on the analysis to date, the impact of provisions in the Acts which 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.