10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12084

Libbey Inc.

(Exact name of registrant as specified in its charter)

Delaware	34-1559357
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

300 Madison Avenue, Toledo, Ohio 43604

(Address of principal executive offices) (Zip Code)

419-325-2100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o	Accelerated Filer þ	Non-Accelerated Filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value 19,853,533 shares at July 29, 2011.

TABLE OF CONTENTS

Item 1. Financial Statements	3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	4
CONDENSED CONSOLIDATED BALANCE SHEETS	6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9
1. Description of the Business	9
2. Significant Accounting Policies	9
3. Balance Sheet Details	12
4. Borrowings	13
5. Special Charges	17
6. Income Taxes	19
7. Pension and Non-pension Postretirement Benefits	19
8. Net Income per Share of Common Stock	21
9. Derivatives	22
10. Comprehensive Income	25
11. Condensed Consolidated Guarantor Financial Statements	25
12. Segments	33
13. Fair Value	34
14. Other income	35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3. Qualitative and Quantitative Disclosures about Market Risk	50
Item 4. Controls and Procedures	51
PART II — OTHER INFORMATION	51
Item 1A. Risk Factors	51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 5. Other Information	53
Item 6. Exhibits	54
EXHIBIT INDEX	54
SIGNATURES	57
EX-10.30
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements of Libbey Inc. and all majority-owned subsidiaries (collectively, Libbey or the Company) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Item 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and six month periods ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

3

LIBBEY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per-share amounts)

(unaudited)

	Three months ended June 30,
	2011			2010
Net sales	$	214,013		$	203,036
Freight billed to customers		838			420
Total revenues		214,851			203,456
Cost of sales		165,015			155,425
Gross profit		49,836			48,031
Selling, general and administrative expenses		25,224			24,719
Special charges		(100	)		156
Income from operations		24,712			23,156
Other income		3,064			1,656
Earnings before interest and income taxes		27,776			24,812
Interest expense		10,787			11,768
Income before income taxes		16,989			13,044
Provision for income taxes		1,583			3,477
Net income	$	15,406		$	9,567
Net income per share:
Basic:	$	0.77		$	0.59
Diluted:	$	0.74		$	0.47
Dividends per share	$	—		$	—

See accompanying notes

4

LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per-share amounts)

(unaudited)

	Six months ended June 30,
	2011			2010
Net sales	$	395,028		$	376,940
Freight billed to customers		1,249			854
Total revenues		396,277			377,794
Cost of sales		310,295			295,886
Gross profit		85,982			81,908
Selling, general and administrative expenses		50,626			47,543
Special charges		(49	)		388
Income from operations		35,405			33,977
(Loss) gain on redemption of debt		(2,803	)		56,792
Other income		6,070			893
Earnings before interest and income taxes		38,672			91,662
Interest expense		22,370			21,388
Income before income taxes		16,302			70,274
Provision for income taxes		1,897			5,297
Net income	$	14,405		$	64,977
Net income per share:
Basic:	$	0.72		$	3.98
Diluted:	$	0.69		$	3.21
Dividends per share	$	—		$	—

See accompanying notes

5

LIBBEY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share amounts)

	June 30, 2011			December 31, 2010
	(unaudited)
Assets:
Cash and cash equivalents	$	44,309		$	76,258
Accounts receivable — net		97,687			92,101
Inventories — net		168,197			148,146
Prepaid and other current assets		13,548			6,437
Total current assets		323,741			322,942
Pension asset		14,738			12,767
Purchased intangible assets — net		22,229			23,134
Goodwill		166,572			169,340
Derivative asset		3,356			2,589
Other assets		15,518			17,802
Total other assets		222,413			225,632
Property, plant and equipment — net		269,097			270,397
Total assets	$	815,251		$	818,971
Liabilities and Shareholders’ Equity:
Accounts payable	$	61,612		$	59,095
Salaries and wages		29,957			32,087
Accrued liabilities		58,352			51,211
Accrued special charges		202			768
Accrued income taxes		—			3,121
Pension liability (current portion)		6,132			2,330
Non-pension postretirement benefits (current portion)		5,017			5,017
Derivative liability		2,220			3,392
Long-term debt due within one year		3,393			3,142
Total current liabilities		166,885			160,163
Long-term debt		409,109			443,983
Pension liability		105,800			115,521
Non-pension postretirement benefits		67,910			67,737
Deferred income taxes		8,769			8,376
Other long-term liabilities		8,924			11,925
Total liabilities		767,397			807,705
Shareholders’ equity:
Common stock, par value $.01 per share, 50,000,000 shares authorized, 19,850,879 shares issued at June 30, 2011 and 19,682,506 at December 31, 2010		199			197
Capital in excess of par value (includes warrants of $1,034 based on 485,309 shares at June 30, 2011 and at December 31, 2010)		302,525			300,692
Retained deficit		(164,272	)		(178,677	)
Accumulated other comprehensive loss		(90,598	)		(110,946	)
Total shareholders’ equity		47,854			11,266
Total liabilities and shareholders’ equity	$	815,251		$	818,971

See accompanying notes

6

LIBBEY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Three months ended June 30,
	2011			2010
Operating activities:
Net income	$	15,406		$	9,567
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,027			10,568
(Gain) loss on asset sales		(3,436	)		185
Change in accounts receivable		(4,216	)		(7,096	)
Change in inventories		(4,331	)		(3,896	)
Change in accounts payable		1,339			5,190
Accrued interest and amortization of discounts, warrants and finance fees		9,479			10,585
Pension & non-pension postretirement benefits		(507	)		(134	)
Restructuring charges		(421	)		2,827
Accrued liabilities & prepaid expenses		9,476			6,843
Income taxes		(5,443	)		3,405
Share-based compensation expense		1,140			1,385
Other operating activities		401			(1,317	)
Net cash provided by operating activities		29,914			38,112
Investing activities:
Additions to property, plant and equipment		(9,892	)		(7,231	)
Net proceeds from sale of Traex		12,842			—
Proceeds from asset sales and other		597			—
Net cash provided by (used in) investing activities		3,547			(7,231	)
Financing activities:
Net (repayments) on ABL credit facility		(2,245	)		—
Other repayments		(49	)		(632	)
Stock options exercised		3			8
Debt issuance costs and other		(327	)		(1,463	)
Net cash (used in) financing activities		(2,618	)		(2,087	)
Effect of exchange rate fluctuations on cash		354			(648	)
Increase in cash		31,197			28,146
Cash at beginning of period		13,112			18,027
Cash at end of period	$	44,309		$	46,173
Supplemental disclosure of cash flows information:
Cash paid during the period for interest	$	1,139		$	1,123
Cash paid (refunded) during the period for income taxes	$	3,208		$	(232	)

See accompanying notes

7

LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)

(unaudited)

	Six months ended June 30,
	2011			2010
Operating activities:
Net income	$	14,405		$	64,977
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		21,908			20,954
(Gain) loss on asset sales		(6,796	)		265
Change in accounts receivable		(4,802	)		(13,612	)
Change in inventories		(19,072	)		(14,800	)
Change in accounts payable		672			788
Accrued interest and amortization of discounts, warrants and finance fees		826			15,791
Gain on redemption of new PIK notes		—			(70,193	)
Payment of interest on new PIK notes		—			(29,400	)
Call premium on senior notes and floating rate notes		1,203			8,415
Write-off of finance fees & discounts on senior notes, old ABL and floating rate notes		1,600			4,986
Pension & non-pension postretirement benefits		2,944			2,871
Restructuring charges		(566	)		2,396
Accrued liabilities & prepaid expenses		1,209			(2,464	)
Income taxes		(9,746	)		(239	)
Share-based compensation expense		1,967			1,831
Other operating activities		1,082			(619	)
Net cash provided by (used in) operating activities		6,834			(8,053	)
Investing activities:
Additions to property, plant and equipment		(18,398	)		(11,379	)
Net proceeds from sale of Traex		12,842			—
Call premium on senior notes and floating rate notes		(1,203	)		(8,415	)
Proceeds from asset sales and other		5,199			—
Net cash used in investing activities		(1,560	)		(19,794	)
Financing activities:
Net borrowings on ABL credit facility		2,105			—
Other repayments		(97	)		(91	)
Other borrowings		—			215
Floating rate note payments		—			(306,000	)
Senior note payments		(40,000	)		—
PIK note payment		—			(51,031	)
Proceeds from senior secured notes		—			392,328
Stock options exercised		478			8
Debt issuance costs and other		(443	)		(15,496	)
Net cash (used in) provided by financing activities		(37,957	)		19,933
Effect of exchange rate fluctuations on cash		734			(1,002	)
Decrease in cash		(31,949	)		(8,916	)
Cash at beginning of period		76,258			55,089
Cash at end of period	$	44,309		$	46,173
Supplemental disclosure of cash flows information:
Cash paid during the period for interest	$	21,310		$	6,140
Cash paid during the period for income taxes	$	7,688		$	4,702

Supplemental disclosure of non-cash financing activities:

During the first quarter of 2010, we redeemed our PIK notes, resulting in the recognition of a gain of $70.2 million. The gain was offset by $13.4 million of expenses related to the refinancing of the floating rate notes, resulting in a net gain of $56.8 million on the Condensed Consolidated Statement of Operations. See note 4 for further information on this transaction.

See accompanying notes

8

LIBBEY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands, except per share data
(unaudited)

1. Description of the Business

Libbey is the leading producer of glass tableware products in the Western Hemisphere, in addition to supplying key markets throughout the world. We produce glass tableware in five countries and sell to customers in over 100 countries. We have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere and are one of the largest glass tableware manufacturers in the world. We design and market an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware to a broad group of customers in the foodservice, retail and business-to-business markets. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands, Portugal, China and Mexico. Until April 28, 2011, we also owned and operated a plastics plant in Wisconsin. On April 28, 2011, we sold substantially all of the assets of our plastics subsidiary, Traex, to the Vollrath Company. See note 14 for further discussion of this transaction. In addition, we import products from overseas in order to complement our line of manufactured items. The combination of manufacturing and procurement allows us to compete in the global tableware market by offering an extensive product line at competitive prices.

Our website can be found at www.libbey.com. We make available, free of charge, at this website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of Securities Exchange Act of 1934, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, as well as amendments to those reports. These reports are made available on our website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission and can also be found at www.sec.gov.

Our shares are traded on the NYSE Amex exchange under the ticker symbol LBY.

2. Significant Accounting Policies

See our Form 10-K for the year ended December 31, 2010 for a description of significant accounting policies not listed below.

Basis of Presentation

The Condensed Consolidated Financial Statements include Libbey Inc. and its majority-owned subsidiaries (collectively, Libbey or the Company). Our fiscal year end is December 31^st. All material intercompany accounts and transactions have been eliminated. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from management’s estimates.

Condensed Consolidated Statements of Operations

Net sales in our Condensed Consolidated Statements of Operations include revenue earned when products are shipped and title and risk of loss have passed to the customer. Revenue is recorded net of returns, discounts and incentives offered to customers. Cost of sales includes cost to manufacture and/or purchase products, warehouse, shipping and delivery costs and other costs.

Foreign Currency Translation

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. The effect of exchange rate changes on transactions denominated in currencies other than the functional currency is recorded in other income.

9

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Financial Accounting Standards Board Accounting Standards Codification™ (FASB ASC) Topic 740, “Income Taxes,” requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which we conduct our operations or otherwise incur taxable income or losses. In the United States, China, the Netherlands and Portugal we have recorded valuation allowances against our deferred income tax assets.

Stock-Based Compensation Expense

We account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation — Stock Compensation,” and FASB ASC Topic 505-50, “Equity — Equity-Based Payments to Non-Employees”. Stock-based compensation cost is measured based on the fair value of the equity instruments issued. FASB ASC Topics 718 and 505-50 apply to all of our outstanding unvested stock-based payment awards. Stock-based compensation expense charged to the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2011 was $1.1 million and $1.9 million, respectively. Stock-based compensation expense charged to the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2010 was $1.4 million and $1.8 million, respectively.

New Accounting Standards

In December 2010, the FASB issued Accounting Standards Update 2010-28, “Intangibles — Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2010-28”). ASU 2010-28 addresses the decision process involved in testing for impairment of goodwill when the carrying value of a reporting unit is zero or less. The provisions of this update are effective for periods beginning after December 15, 2010. We do not expect the provisions of this update to have any impact on our Condensed Consolidated Financial Statements or on our process of testing for potential impairment of goodwill.

In December 2010, the FASB issued Accounting Standards Update 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2010-29”). ASU 2010-29 clarifies the extent to which pro forma historical information must be prepared and presented in comparative financial statements for periods following a merger or acquisition. The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. For Libbey, the required disclosures are effective for combinations with acquisition dates during or after 2011. The impact on our Condensed Consolidated Financial Statements will depend on the nature and timing of any potential future business combinations.

In May 2011, the FASB issued Accounting Standards Update 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 explains how to measure fair value and improves the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and IFRS. ASU 2011-04 does not require additional fair value measurements, and it is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The provisions of this update are effective for periods beginning after December 15, 2011. We do not expect the provisions of this update to have any impact on our Condensed Consolidated Financial Statements.

In June 2011, the FASB issued Accounting Standards Update 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires presentation of net income, other comprehensive income items and total comprehensive income to be in one continuous statement or two separate but consecutive statements. Other comprehensive income presentation in the statement of stockholders’ equity will no longer be permitted. This update is effective for periods beginning after December 15, 2011. Libbey will incorporate the required presentation changes in the Condensed Consolidated Financial

10

Statements in the first quarter 2012.

Reclassifications

Certain amounts in the prior year’s financial statements may have been reclassified to conform to the presentation used in the current period financial statements.

11

3. Balance Sheet Details

The following table provides detail of selected balance sheet items:

(dollars in thousands)	June 30, 2011		December 31, 2010
Accounts receivable:
Trade receivables	$	97,083	$	90,899
Other receivables		604		1,202
Total accounts receivable, less allowances of $5,320 and $5,518	$	97,687	$	92,101
Inventories:
Finished goods	$	151,717	$	132,169
Work in process		692		653
Raw materials		3,981		4,444
Repair parts		10,253		9,496
Operating supplies		1,554		1,384
Total inventories, less allowances of $4,934 and $4,658	$	168,197	$	148,146
Prepaid and other current assets:
Value added tax	$	2,136	$	1,332
Prepaid expenses		4,009		4,822
Refundable, deferred and prepaid income taxes		7,403		283
Total prepaid and other current assets	$	13,548	$	6,437
Other assets:
Deposits	$	928	$	904
Finance fees — net of amortization		10,827		13,012
Other assets		3,763		3,886
Total other assets	$	15,518	$	17,802
Accrued liabilities:
Accrued incentives	$	22,202	$	15,060
Workers compensation		9,352		9,608
Medical liabilities		3,494		3,785
Interest		12,891		14,416
Commissions payable		1,101		904
Other accrued liabilities		9,312		7,438
Total accrued liabilities	$	58,352	$	51,211
Other long-term liabilities:
Deferred liability	$	4,146	$	4,622
Other long-term liabilities		4,778		7,303
Total other long-term liabilities	$	8,924	$	11,925

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4. Borrowings

On March 25, 2011, Libbey Glass redeemed an aggregate principal amount of $40.0 million of its outstanding 10.0 percent Senior Secured Notes due 2015, on a pro rata basis in accordance with the terms of the New Notes Indenture. Pursuant to the terms of the New Notes Indenture, the redemption price for the Senior Secured Notes was 103.0 percent of the principal amount of the redeemed Senior Secured Notes, plus accrued and unpaid interest. At completion of the redemption, the aggregate principal amount of the Senior Secured Notes outstanding was $360.0 million. In conjunction with this redemption, we recorded $2.8 million of expense, representing $1.2 million of an early call premium and $1.6 million for the write off of a pro rata amount of financing fees and discounts.

On February 8, 2010, we completed the refinancing of substantially all of the existing indebtedness of our wholly-owned subsidiaries Libbey Glass and Libbey Europe B.V. The refinancing included:

• the entry into an amended and restated credit agreement with respect to our ABL Facility;

• the issuance of $400.0 million in aggregate principal amount of 10.0 percent Senior Secured Notes of Libbey Glass due 2015;

• the repurchase and cancellation of all of Libbey Glass’s then outstanding $306.0 million in aggregate principal amount of floating rate notes; and

• the redemption of all of Libbey Glass’s then outstanding $80.4 million in aggregate principal amount 16.0 percent PIK notes (New PIK Notes).

We used the proceeds of the offering of the Senior Secured Notes, together with cash on hand, to fund the repurchase of the floating rate notes, the redemption of the New PIK notes and to pay certain related fees and expenses. Upon completion of the refinancing, we recorded a gain of $71.7 million related to the redemption of the New PIK notes. $70.2 million of this gain was recorded in the three months ended March 31, 2010. This gain was partially offset by a $13.4 million write-off of bank fees, discounts and a call premium on the floating rate notes, resulting in a net gain of $58.3 million. $56.8 million of this net gain was recorded in the three months ended March 31, 2010, as shown on the Condensed Consolidated Statement of Operations.

Borrowings consist of the following:

					June 30,		December 31,
(dollars in thousands)	Interest Rate			Maturity Date	2011		2010
Borrowings under ABL facility	floating			April 29, 2016	$	2,159	$	—
Senior Secured Notes		10.00%	(1)	February 15, 2015		360,000		400,000
Promissory note		6.00	%	July, 2011 to September, 2016		1,210		1,307
RMB loan contract	floating			July, 2012 to January, 2014		38,675		37,925
BES Euro line	floating			December, 2011 to December, 2013		11,873		10,934
Total borrowings						413,917		450,166
Less — unamortized discount						4,988		6,307
Plus — Carrying value adjustment on debt related to the Interest Rate Agreement (1)						3,573		3,266
Total borrowings — net						412,502		447,125
Less — long term debt due within one year						3,393		3,142
Total long-term portion of borrowings — net					$	409,109	$	443,983

(1) See Interest Rate Agreements under “Senior Secured Notes” below and in note 9.

Amended and Restated ABL Credit Agreement

Pursuant to the refinancing, Libbey Glass and Libbey Europe entered into an Amended and Restated Credit Agreement, dated as of February 8, 2010 and amended on April 29, 2011 (ABL Facility), with a group of five financial institutions. The ABL Facility provides for borrowings of up to $100.0 million (reduced from $110.0 million per the amendment on April 29, 2011), subject to certain borrowing base limitations, reserves and outstanding letters of credit.

All borrowings under the ABL Facility are secured by:

• a first-priority security interest in substantially all of the existing and future real and personal property of Libbey Glass and its domestic subsidiaries (the “Credit Agreement Priority Collateral”);

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• a first-priority security interest in:

• 100 percent of the stock of Libbey Glass and 100 percent of the stock of substantially all of Libbey Glass’ present and future direct and indirect domestic subsidiaries;

• 100 percent of the non-voting stock of substantially all of Libbey Glass’ first-tier present and future foreign subsidiaries; and

• 65 percent of the voting stock of substantially all of Libbey Glass’ first-tier present and future foreign subsidiaries

• a first priority security interest in substantially all proceeds and products of the property and assets described above; and

• a second-priority security interest in substantially all of the owned real property, equipment and fixtures in the United States of Libbey Glass and its domestic subsidiaries, subject to certain exceptions and permitted liens (the “New Notes Priority Collateral”).

Additionally, borrowings by Libbey Europe under the ABL Facility are secured by:

• a first-priority lien on substantially all of the existing and future real and personal property of Libbey Europe and its Dutch subsidiaries; and

• a first-priority security interest in:

• 100 percent of the stock of Libbey Europe and 100 percent of the stock of substantially all of the Dutch subsidiaries; and

• 100 percent (or a lesser percentage in certain circumstances) of the outstanding stock issued by the first tier foreign subsidiaries of Libbey Europe and its Dutch subsidiaries.

Swingline borrowings are limited to $15.0 million, with swing line borrowings for Libbey Europe being limited to the US equivalent of $7.5 million. Loans comprising each CBFR (CB Floating Rate) Borrowing, including each Swingline Loan, bear interest at the CB Floating Rate plus the Applicable Rate, and euro-denominated swing line borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swing line rate, as defined in the ABL Facility. The Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining availability. The Applicable Rates for CBFR Loans and Eurocurrency Loans were 0.75 percent and 1.75 percent, respectively, at June 30, 2011. Libbey pays a quarterly Commitment Fee, as defined by the ABL Facility, on the total credit provided under the ABL Facility. The Commitment Fee was 0.375 percent at June 30, 2011. No compensating balances are required by the Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant, unless aggregate unused availability falls below $10.0 million. If our aggregate unused ABL availability were to fall below $10.0 million, the fixed charge coverage ratio requirement would be 1:10 to 1:00. Libbey Glass and Libbey Europe have the option to increase the ABL Facility by $10.0 million. Libbey Glass had no borrowings under the facility at June 30, 2011, while Libbey Europe had outstanding borrowings of $2.2 million at an interest rate of 3.51 percent. There were no Libbey Glass or Libbey Europe borrowings under the facility at December 31, 2010. Interest is payable on the last day of the interest period, which can range from one month to six months depending on the maturity of each individual borrowing on the facility.

The borrowing base under the ABL Facility is determined by a monthly analysis of the eligible accounts receivable and inventory. The borrowing base is the sum of (a) 85 percent of eligible accounts receivable and (b) the lesser of (i) 85 percent of the net orderly liquidation value (NOLV) of eligible inventory, (ii) 65 percent of eligible inventory, or (iii) $75.0 million.

The available total borrowing base is offset by ERISA, rent and tax reserves totaling $3.7 million and mark-to-market reserves for natural gas contracts of $1.2 million. The ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are applied against the $100.0 million limit. At June 30, 2011, we had $10.5 million in letters of credit outstanding under the ABL Facility. Remaining unused availability on the new ABL Facility was $69.3 million at June 30, 2011 compared to $65.2 million under the ABL Facility at December 31, 2010.

Senior Secured Notes

On February 8, 2010, Libbey Glass closed its offering of the $400.0 million Senior Secured Notes. The net proceeds of the offering of Senior Secured Notes were approximately $379.8 million, after the 1.918 percent original issue discount of $7.7 million, $10.0 million of commissions payable to the initial purchasers and $2.5 million of fees related to the offering. These fees will be amortized to interest expense over the life of the notes.

The Senior Secured Notes were issued pursuant to an Indenture, dated February 8, 2010 (the “New Notes Indenture”), between Libbey Glass, the Company, the domestic subsidiaries of Libbey Glass listed as guarantors therein (the “Subsidiary Guarantors” and together with the Company, the “Guarantors”), and The Bank of New York Mellon Trust Company, N.A., as trustee (the “New Notes Trustee”), and collateral agent. Under the terms of the New Notes Indenture, the Senior Secured Notes bear interest at a rate of

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10.0 percent per year and will mature on February 15, 2015. The New Notes Indenture contains covenants that restrict the ability of Libbey Glass and the Guarantors to, among other things:

• incur or guarantee additional indebtedness;

• pay dividends, make certain investments or other restricted payments;

• create liens;

• enter into affiliate transactions;

• merge or consolidate, or otherwise dispose of all or substantially all the assets of Libbey Glass and the Guarantors; and

• transfer or sell assets.

The New Notes Indenture provides for customary events of default. In the case of an event of default arising from bankruptcy or insolvency as defined in the New Notes Indenture, all outstanding Senior Secured Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs or is continuing, the New Notes Trustee or holders of at least 25 percent in aggregate principal amount of the then outstanding Senior Secured Notes may declare all the Senior Secured Notes to be due and payable immediately.

The Senior Secured Notes and the related guarantees under the New Notes Indenture are secured by (i) first priority liens on the New Notes Priority Collateral and (ii) second priority liens on the Credit Agreement Priority Collateral.

In connection with the sale of the Senior Secured Notes, Libbey Glass and the Guarantors entered into a registration rights agreement, dated February 8, 2010 (the “Registration Rights Agreement”), under which they agreed to make an offer to exchange the Senior Secured Notes and the related guarantees for registered, publicly tradable notes and guarantees that have substantially identical terms to the Senior Secured Notes and the related guarantees, and in certain limited circumstances, to file a shelf registration statement that would allow certain holders of Senior Secured Notes to resell their respective Senior Secured Notes to the public. On January 25, 2011, we exchanged $400.0 million aggregate principal amount of 10.0 percent Senior Secured Notes due 2015 for an equal principal amount of a new issue of 10.0 percent Senior Secured Notes due 2015, which have been registered under the Securities act of 1933, as amended.

Prior to August 15, 2012, we may redeem in the aggregate up to 35 percent of the original principal amount of Senior Secured Notes with the net cash proceeds of one or more equity offerings at a redemption price of 110 percent of the principal amount, provided that at least 65 percent of the original principal amount of the Senior Secured Notes must remain outstanding after each redemption and that each redemption occurs within 90 days of the closing of the equity offering. In addition, prior to August 15, 2012, but not more than once in any twelve-month period, we may redeem up to 10 percent of the Senior Secured Notes at a redemption price of 103 percent plus accrued and unpaid interest. The Senior Secured Notes are redeemable at our option, in whole or in part, at any time on or after August 15, 2012 at set redemption prices together with accrued and unpaid interest.

On March 25, 2011, Libbey Glass redeemed an aggregate principal amount of $40.0 million of its outstanding 10.0 percent Senior Secured Notes due 2015, in accordance with the terms of the New Notes Indenture. Pursuant to the terms of the New Notes Indenture, the redemption price for the Senior Secured Notes was 103.0 percent of the principal amount of the redeemed Senior Secured Notes, plus accrued and unpaid interest. At completion of the redemption, the aggregate principal amount of the Senior Secured Notes outstanding was $360.0 million. In conjunction with this redemption, we recorded $2.8 million of expense, representing $1.2 million of an early call premium and $1.6 million for the write off of a pro rata amount of financing fees and discounts.

We have an Interest Rate Agreement (Rate Agreement) in place with respect to $90.0 million of debt as a means to manage our fixed to variable interest rate ratio. The Rate Agreement effectively converts this portion of our long-term borrowings from fixed rate debt to variable rate debt. Prior to August 15, 2012, but not more than once in any twelve-month period, the counterparty may call up to 10 percent of the Rate Agreement at a call price of 103 percent. The Rate Agreement is callable at the counterparty’s option, in whole or in part, at anytime on or after August 15, 2012 at set call premiums. The variable interest rate for our borrowings related to the Rate Agreement at June 30, 2011, excluding applicable fees, is 7.55 percent. This Rate Agreement expires on February 15, 2015. Total remaining Senior Secured Notes not covered by the Rate Agreement have a fixed interest rate of 10.0 percent per year through February 15, 2015. If the counterparty to this Rate Agreement were to fail to perform, this Rate Agreement would no longer afford us a variable rate. However, we do not anticipate non-performance by the counterparty. The interest rate swap counterparty was rated AA-, as of June 30, 2011, by Standard and Poor’s.

The fair market value for the Rate Agreement at June 30, 2011 and December 31, 2010 was a $3.3 million asset and a $2.5 million asset, respectively. An adjustment of $3.6 million and $3.3 million was recorded to increase the carrying value of the related long-term

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debt as of June 30, 2011 and December 31, 2010, respectively. The net impact of $0.1 million expense and $0.5 million income, and $0.6 million income and $0.4 million income, is recorded in other income on the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2011 and June 30, 2010, respectively. See note 9 for further discussion. The fair value of the Rate Agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. We expect this agreement to expire as originally contracted.

Promissory Note

In September 2001, we issued a $2.7 million promissory note at an interest rate of 6.0 percent in connection with the purchase of our Laredo, Texas warehouse facility. At June 30, 2011, we had $1.2 million outstanding on the promissory note. Interest with respect to the promissory note is paid monthly.

Notes Payable

We have an overdraft line of credit for a maximum of €1.0 million. At June 30, 2011, there were no borrowings under the facility, which has an interest rate of 5.80 percent. Interest with respect to the note is paid monthly.

RMB Loan Contract

On January 23, 2006, Libbey Glassware (China) Co., Ltd. (Libbey China), an indirect wholly owned subsidiary of Libbey Inc., entered into an RMB Loan Contract (RMB Loan Contract) with China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (CCB). Pursuant to the RMB Loan Contract, CCB agreed to lend to Libbey China RMB 250.0 million, or the equivalent of approximately $38.7 million, for the construction of our production facility in China and the purchase of related equipment, materials and services. The loan has a term of eight years and bears interest at a variable rate as announced by the People’s Bank of China. As of the date of the initial advance under the Loan Contract, the annual interest rate was 5.51 percent, and as of June 30, 2011, the annual interest rate was 5.67 percent. As of June 30, 2011, the outstanding balance was RMB 250.0 million (approximately $38.7 million). Interest is payable quarterly. Payments of principal in the amount of RMB 30.0 million (approximately $4.6 million) and RMB 40.0 million (approximately $6.2 million) must be made on July 20, 2012, and December 20, 2012, respectively, and three payments of principal in the amount of RMB 60.0 million (approximately $9.3 million) each must be made on July 20, 2013, December 20, 2013, and January 20, 2014, respectively. The obligations of Libbey China are secured by a guarantee executed by Libbey Inc. for the benefit of CCB and a mortgage lien on the Libbey China facility.

BES Euro Line

In January 2007, Crisal entered into a seven year, €11.0 million line of credit (approximately $15.8 million) with Banco Espírito Santo, S.A. (BES). The $11.9 million outstanding at June 30, 2011 was the U.S. dollar equivalent of the €8.3 million outstanding under the line at an interest rate of 3.77 percent. Payment of principal in the amount of €2.2 million (approximately $3.2 million) is due in December 2011, payment of €2.8 million (approximately $4.0 million) is due in December 2012 and payment of €3.3 million (approximately $4.7 million) is due in December 2013. Interest with respect to the line is paid every six months.

Fair Value of Borrowings

The fair value of our debt has been calculated based on quoted market prices for the same or similar issues. Our $360.0 million Senior Secured Notes due February 15, 2015 had an estimated fair value of $388.8 million at June 30, 2011. The fair value of the remainder of our debt approximates carrying value at June 30, 2011 due to variable rates.

Capital Resources and Liquidity

Historically, cash flows generated from operations and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. As of June 30, 2011 we had $2.2 million outstanding under our ABL Facility, and we had $10.5 million of letters of credit issued under that facility. As a result, we had $69.3 million of unused availability remaining under the ABL Facility at June 30, 2011. In addition, we had $44.3 million of cash on hand at June 30, 2011.

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Based on our operating plans and current forecast expectations, we anticipate that our level of cash on hand, cash flows from operations and our borrowing capacity under our ABL Facility will provide sufficient cash availability to meet our ongoing liquidity needs.

5. Special Charges

Facility Closures

In December 2008, we announced that our Syracuse China manufacturing facility and our Mira Loma, California distribution center would be shut down in early to mid-2009 in order to reduce costs. The Syracuse China facility was closed on April 9, 2009 and the Mira Loma distribution center was closed on May 31, 2009. See Form 10-K for the year ended December 31, 2010 for further discussion.

We incurred no additional charges for the three months ended June 30, 2011. We incurred charges of approximately $0.1 million in the six months ended June 30, 2011 related to other costs net of building site clean-up adjustments in connection with the sale of the property in Syracuse, New York in March 2011. This amount was included in special charges on the Condensed Consolidated Statement of Operations in the Other Operations segment as detailed in the table below.

We incurred additional charges of approximately $0.2 million and $0.5 million in the three months and six months ended June 30, 2010 related to these planned closures. Special charges of $0.2 million and $0.4 million were primarily related to employee termination and building site clean up costs in the three months and six months ended June 30, 2010, respectively. These amounts were included in special charges on the Condensed Consolidated Statement of Operations in the Glass Operations and Other Operations segment as detailed in the table below.

Other income on the Condensed Consolidated Statement of Operations included a charge of $0.1 million for the first six months of 2010 for the change in fair value of ineffective natural gas hedges related to our Syracuse China operation. This amount was included in the Other Operations segment.

The following table summarizes the facility closure charges in the second quarter of 2011 and 2010:

	Three months ended June 30, 2011						Three months ended June 30, 2010
	Glass		Other				Glass		Other
(dollars in thousands)	Operations		Operations		Total		Operations		Operations		Total
Building site clean-up & fixed asset write-down	$	—	$	—	$	—	$	—	$	156	$	156
Included in special charges		—		—		—		—		156		156
Total pretax charge	$	—	$	—	$	—	$	—	$	156	$	156

The following table summarizes the facility closure charges in the first six months of 2011 and 2010:

	Six months ended June 30, 2011								Six months ended June 30, 2010
	Glass		Other						Glass		Other
(dollars in thousands)	Operations		Operations			Total			Operations		Operations			Total
Employee termination cost & other	$	—	$	167		$	167		$	29	$	76		$	105
Building site clean-up & fixed asset write-down		—		(116	)		(116	)		—		283			283
Included in special charges		—		51			51			29		359			388
Ineffectiveness of natural gas hedge		—		—			—			—		(130	)		(130	)
Included in other (expense) income		—		—			—			—		(130	)		(130	)
Total pretax charge	$	—	$	51		$	51		$	29	$	489		$	518

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The following reflects the balance sheet activity related to the facility closure charge for the period ended June 30, 2011:

	Balances		Total			Cash			Inventory &					Balances at
	at December 31,		Charge to			(payments)			Fixed asset		Non-cash			June 30,
(dollars in thousands)	2010		Earnings			receipts			Write Downs		Utilization			2011
Building site clean-up & fixed asset write-down	$	151	$	(116	)	$	(5	)	$	21	$	(51	)	$	—
Employee termination cost & other		301		167			(314	)		—		(154	)		—
Total	$	452	$	51		$	(319	)	$	21	$	(205	)	$	—

The activities related to our closure of the Syracuse China manufacturing facility and our Mira Loma, California distribution center are complete. The following reflects the total cumulative expenses to date (incurred from the fourth quarter of 2008 through the Balance Sheet date) related to the facility closure activity:

	Glass		Other		Charges
(dollars in thousands)	Operations		Operations		To Date
Inventory write-down	$	192	$	10,541	$	10,733
Pension & postretirement welfare		—		4,448		4,448
Fixed asset depreciation		—		966		966
Included in cost of sales		192		15,955		16,147
Employee termination cost & other		548		6,149		6,697
Building site clean-up & fixed asset write-down		177		10,418		10,595
Included in special charges		725		16,567		17,292
Ineffectiveness of natural gas hedge		—		745		745
Included in other (income) expense		—		745		745
Total pretax charge to date	$	917	$	33,267	$	34,184

Fixed Asset and Inventory Write-down

In August 2010, we wrote down decorating assets in our Shreveport, Louisiana facility as a result of our decision to outsource our U.S. decorating business. See Form 10-K for the year ended December 31, 2010 for further discussion.

During the three months and six months ended June 30, 2011, we recorded a $0.1 million income adjustment to special charges in the Glass Operations segment.

The following reflects the balance sheet activity related to the fixed asset and inventory write-down charge as of June 30, 2011:

	Reserve											Reserve
	Balances at		Total			Cash			Inventory &			Balances at
	December 31,		Charge to			(payments)			Fixed asset			June 30,
(Dollars in thousands)	2010		Earnings			receipts			Write Downs			2011
Building site clean-up & fixed asset write-down	$	316	$	(57	)	$	(13	)	$	(44	)	$	202
Total	$	316	$	(57	)	$	(13	)	$	(44	)	$	202

The ending balance of $0.2 million at June 30, 2011 was included in accrued special charges on the Condensed Consolidated Balance Sheets; we expect this to result in cash payments during the remainder of 2011.

During the second quarter of 2010, we wrote down certain after-processing equipment within our Glass Operations segment. The non-cash charge of $2.7 million was included in cost of sales on the Condensed Consolidated Statement of Operations. During the second quarter of 2011, we received a $1.0 million credit from the supplier of this equipment. This was recorded in selling, general and administrative expense and other income on the Condensed Consolidated Statements of Operations.

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Summary of Total Special Charges

The following table summarizes the special charges mentioned above and their classifications in the Condensed Consolidated Statements of Operations:

	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2011			2010		2011			2010
Cost of sales	$	43		$	2,687	$	43		$	2,687
Selling general & administrative		(805	)		—		(805	)		—
Special charges (income)		(100	)		156		(49	)		388
Other (income) expense		(216	)		—		(216	)		130
Total (income) expense	$	(1,078	)	$	2,843	$	(1,027	)	$	3,205

6. Income Taxes

The Company’s effective tax rate differs from the United States statutory tax rate primarily due to valuation allowances, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions and tax planning structures. At June 30, 2011 and December 31, 2010 we had $1.3 million and $1.1 million, respectively, of gross unrecognized tax benefits, exclusive of interest and penalties.

FASB ASC 740-20, “Income Taxes — Intraperiod Tax Allocation”, requires that the provision for income taxes be allocated between continuing operations and other categories of earnings (such as discontinued operations or other comprehensive income) for each tax jurisdiction. In periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. There is no tax benefit included in our income tax provision for the three months and six months ended June 30, 2011. There was a $0.4 million tax benefit recorded for the three months and six months ended June 30, 2010. Depending upon the level of our future earnings and losses and their impact on other comprehensive income, it is possible that these tax adjustments may change or even reverse in future periods.

Further, our current and future provision for income taxes for 2011 is significantly impacted by valuation allowances. In the United States, China, the Netherlands and Portugal we have recorded valuation allowances against our deferred income tax assets. For the three months and six months ended June 30, 2011, we did not release any valuation allowance. During the first quarter of 2010, we reduced our valuation allowance by $1.1 million. The release of the valuation allowance in 2010 was related to net operating losses in Mexico that were utilized. In assessing the need for recording a valuation allowance we weigh all available positive and negative evidence. Examples of the evidence we consider are cumulative losses in recent years, losses expected in early future years, a history of potential tax benefits expiring unused, and whether there was an unusual, infrequent, or extraordinary item to be considered. We intend to maintain these allowances until it is more likely than not that the deferred income tax assets will be realized.

Total income tax payments for the three months ended June 30, 2011, were $4.6 million, including $3.2 million in cash and $1.4 million in credits or offsets. Total income tax payments for the three months ended June 30, 2010, were refunds of $0.1 million, including a refund of $0.2 million in cash and $0.1 million in credits or offsets. Total income tax payments for the six months ended June 30, 2011, were $11.2 million, including $7.7 million in cash and $3.5 million in credits or offsets. Total income tax payments for the six months ended June 30, 2010, were $5.5 million, including $4.7 million in cash and $0.8 million in credits or offsets.

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.

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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

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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.

8. Net Income per Share of Common Stock

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended June 30,				Six months Ended June 30,
(dollars in thousands, except earnings per share)	2011		2010		2011		2010
Numerators for earnings per share —
—Net income that is available to common shareholders	$	15,406	$	9,567	$	14,405	$	64,977
Denominator for basic earnings per share —
Weighted average shares outstanding		20,099,003		16,352,049		20,027,493		16,307,955
Effect of stock options and restricted stock units		627,566		535,143		642,300		430,018
Effect of warrants		134,877		3,553,443		142,577		3,506,553
Total effect of dilutive securities		762,443		4,088,586		784,877		3,936,571
Denominator for diluted earnings per share —
—Adjusted weighted average shares and assumed conversions		20,861,446		20,440,635		20,812,370		20,244,526
Basic earnings per share:	$	0.77	$	0.59	$	0.72	$	3.98
Diluted earnings per share:	$	0.74	$	0.47	$	0.69	$	3.21

In October 2009, we entered into a transaction with Merrill Lynch PCG, Inc. (the “Investor”) to exchange the existing 16.0 percent Old PIK Notes due in December 2011, for a combination of debt and equity securities (Exchange Transaction). As part of the Exchange Transaction, we issued warrants conveying the right to purchase, for $0.01 per share, 3,466,856 shares of Libbey Inc. common stock. These warrants were exercised and shares were issued in August 2010.

When applicable, diluted shares outstanding include the dilutive impact of warrants and restricted stock units. Diluted shares also include the impact of in-the-money employee stock options, which are calculated, based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the tax-effected proceeds that hypothetically would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares.

21

9. Derivatives

We utilize derivative financial instruments to hedge certain interest rate risks associated with our long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with transactions denominated in a currency other than the U.S. dollar. Most of these derivatives, except for certain natural gas contracts originally designated to hedge expected purchases at Syracuse China and the foreign currency contracts, qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings. All of these contracts were accounted for under FASB ASC 815 “Derivatives and Hedging.”

Fair Values

The following table provides the fair values of our derivative financial instruments for the periods presented:

	Asset Derivatives:
(dollars in thousands)	June 30, 2011			December 31, 2010
Derivatives designated as hedging	Balance Sheet	Fair		Balance Sheet	Fair
instruments under FASB ASC 815:	Location	Value		Location	Value
Interest rate contract	Derivative asset	$	3,334	Derivative asset	$	2,536
Natural gas contracts	Derivative asset		22	Derivative asset		53
Total designated		$	3,356		$	2,589
	Liability Derivatives:
(dollars in thousands)	June 30, 2011			December 31, 2010
Derivatives designated as hedging	Balance Sheet	Fair		Balance Sheet	Fair
instruments under FASB ASC 815:	Location	Value		Location	Value
Natural gas contracts	Derivative liability	$	1,679	Derivative liability	$	3,117
Total designated			1,679			3,117
Derivatives not designated as hedging instruments under FASB ASC 815:
Natural gas contracts	Derivative liability		64	Derivative liability		124
Currency contracts	Derivative liability		477	Derivative liability		151
Total undesignated			541			275
Total		$	2,220		$	3,392

Interest Rate Swaps as Fair Value Hedges

In the first quarter of 2010, we entered into an interest rate swap agreement with a notional amount of $100.0 million that is to mature in 2015. The swap was executed in order to convert a portion of the Senior Secured Note fixed rate debt into floating rate debt and maintain a capital structure containing appropriate amounts of fixed and floating rate debt. In August 2010, $10.0 million of the swap was called for a premium of $0.3 million. As of June 30, 2011 the notional amount of the interest rate swap agreement is $90.0 million.

Our fixed-to-floating interest rate swap is designated and qualifies as a fair value hedge. The change in the fair value of the derivative instrument related to the future cash flows (gain or loss on the derivative), as well as the offsetting change in the fair value of the hedged long-term debt attributable to the hedged risk are recognized in current earnings. We include the gain or loss on the hedged long-term debt in other income on the Condensed Consolidated Statements of Operations along with the offsetting loss or gain on the related interest rate swap.

22

Amount of gain (loss) recognized in other income

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2011			2010			2011			2010
Interest rate swap	$	(1,587	)	$	2,374		$	(2,231	)	$	1,489
Related long-term debt		1,443			(1,795	)		2,723			(1,073	)
Net impact on other income	$	(144	)	$	579		$	492		$	416

Commodity Future Contracts Designated as Cash Flow Hedges

We use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts and other derivatives is to limit the fluctuations in prices paid due to price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, up to eighteen months in the future. The fair values of these instruments are determined from market quotes. Certain of our natural gas futures contracts are now classified as ineffective, as the forecasted transactions are not probable of occurring due to the closure of our Syracuse China facility in April 2009. Under FASB ASC 815, “Derivatives and Hedging”, when the forecasted transactions of a hedging relationship become not probable of occurring, the gains or losses that have been classified in accumulated other comprehensive loss in prior periods for those contracts affected should be reclassified into earnings. We recognized immaterial amounts for both three month periods and an immaterial amount and $0.1 million for the six months ended June 30, 2011 and 2010, respectively, in other income on the Condensed Consolidated Statements of Operations relating to these contracts. As of June 30, 2011, we had commodity contracts for 2,370,000 million British Thermal Units (BTUs) of natural gas. At December 31, 2010, we had commodity contracts for 3,090,000 million BTUs of natural gas.

Most of our natural gas derivatives qualify and are designated as cash flow hedges (except certain contracts originally designated to expected purchases at Syracuse China) at June 30, 2011. Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses would be recorded to earnings immediately. Changes in the effective portion of the fair value of these hedges are recorded in other comprehensive income (loss). The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings. As the natural gas contracts mature, the accumulated gains (losses) for the respective contracts are reclassified from accumulated other comprehensive income to current expense in cost of sales in our Condensed Consolidated Statement of Operations. We paid additional cash of $1.2 million and $2.4 million in the three months ended June 30, 2011 and 2010, respectively, and $2.0 million and $3.1 million in the six months ended June 30, 2011 and 2010, respectively, due to the difference between the fixed unit rate of our natural gas contracts and the variable unit rate of our natural gas cost from suppliers. Based on our current valuation, we estimate that accumulated losses currently carried in accumulated other comprehensive loss that will be reclassified into earnings over the next twelve months will result in $1.7 million of expense in our Condensed Consolidated Statement of Operations.

Amount of derivative gain/(loss) recognized in OCI (effective portion)

	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2011			2010		2011			2010
Derivatives in Cash Flow Hedging relationships:
Natural gas contracts	$	(487	)	$	272	$	(636	)	$	(4,149	)
Total	$	(487	)	$	272	$	(636	)	$	(4,149	)

23

Gain / (loss) reclassified from Accumulated Other Comprehensive Loss
to Condensed Consolidated Statements of Operations (effective portion)

		Three months ended June 30,						Six months ended June 30,
(dollars in thousands)		2011			2010			2011			2010
Derivative:	Location:
Natural gas contracts	Cost of sales	$	(1,213	)	$	(2,357	)	$	(2,042	)	$	(3,116	)
Total impact on net (loss) income		$	(1,213	)	$	(2,357	)	$	(2,042	)	$	(3,116	)

The following table provides the impact on the Condensed Consolidated Statement of Operations from derivatives no longer designated as cash flow hedges, primarily related to the closure of our Syracuse China facility:

Gain (loss) recognized in income
(ineffective portion and amount excluded from effectiveness testing)

		Three months ended June 30,					Six months ended June 30,
(dollars in thousands)		2011			2010		2011			2010
Derivative:	Location:
Natural gas contracts	Other income	$	(4	)	$	29	$	(5	)	$	(101	)
Total		$	(4	)	$	29	$	(5	)	$	(101	)

Currency Contracts

Our foreign currency exposure arises from transactions denominated in a currency other than the U.S. dollar, primarily associated with our Canadian dollar denominated accounts receivable. The fair values of these instruments are determined from market quotes. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change. During 2010, we entered into a series of foreign currency contracts to sell Canadian dollars. As of June 30, 2011 and December 31, 2010 we had contracts for $15.1 million Canadian dollars and $18.7 million Canadian dollars, respectively.

Gains and losses for derivatives which were not designated as hedging instruments are recorded in current earnings as follows:

		Three months ended June 30,				Six months ended June 30,
(dollars in thousands)		2011		2010		2011			2010
Derivative:	Location:
Currency contracts	Other income	$	128	$	639	$	(326	)	$	639
Total		$	128	$	639	$	(326	)	$	639

We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate and natural gas hedges, as the counterparties are established financial institutions. The counterparty is rated AA- for the Interest Rate Agreement and BBB+ or better for the counterparties to the other derivative agreements as of June 30, 2011, by Standard and Poor’s.

24

10. Comprehensive Income

Components of comprehensive income (net of tax) are as follows:

	Three months ended					Six months ended
	June 30,					June 30,
(dollars in thousands)	2011		2010			2011		2010
Net income	$	15,406	$	9,567		$	14,405	$	64,977
Minimum pension and non-pension postretirement liability and intangible pension asset, net of tax		7,696		2,332			9,808		3,910
Effect of derivatives, net of tax		686		2,442			1,300		284
Effect of exchange rate fluctuations		2,644		(9,148	)		9,240		(15,662	)
Total comprehensive income	$	26,432	$	5,193		$	34,753	$	53,509

Accumulated other comprehensive loss (net of tax) is as follows:

							Minimum Pension
	Effect of						and Non-Pension			Total
	Exchange						Retirement Liability			Accumulated
	Rate			Cash Flow			and Intangible			Comprehensive
(dollars in thousands)	Fluctuation			Derivatives			Pension Asset			Loss
Balance on December 31, 2010	$	(2,661	)	$	(1,121	)	$	(107,164	)	$	(110,946	)
2011 change		9,240			1,455			10,132			20,827
Translation effect		—			(49	)		(545	)		(594	)
Tax effect		—			(106	)		221			115
Balance on June 30, 2011	$	6,579		$	179		$	(97,356	)	$	(90,598	)

11. Condensed Consolidated Guarantor Financial Statements

Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and the issuer of the Senior Secured Notes. The obligations of Libbey Glass under the Senior Secured Notes are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain indirect, 100 percent owned domestic subsidiaries of Libbey Inc., as described below. All are related parties that are included in the Condensed Consolidated Financial Statements for the three month and six month periods ended June 30, 2011 and June 30, 2010.

At June 30, 2011, December 31, 2010 and June 30, 2010, Libbey Inc.’s indirect, 100 percent owned domestic subsidiaries were Syracuse China Company, World Tableware Inc., LGA4 Corp., LGA3 Corp., The Drummond Glass Company, LGC Corp., Dane Holding Co. (known as Traex Company prior to April 28, 2011), Libbey.com LLC, LGFS Inc., and LGAC LLC (collectively, the “Subsidiary Guarantors”). The following tables contain Condensed Consolidating Financial Statements of (a) the parent, Libbey Inc., (b) the issuer, Libbey Glass, (c) the Subsidiary Guarantors, (d) the indirect subsidiaries of Libbey Inc. that are not Subsidiary Guarantors (collectively, “Non-Guarantor Subsidiaries”), (e) the consolidating elimination entries, and (f) the consolidated totals.

25

Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)

	Three months ended June 30, 2011
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net sales	$	—	$	104,355			20,431			107,408			(18,181	)	$	214,013
Freight billed to customers		—		203			376			259			—			838
Total revenues		—		104,558			20,807			107,667			(18,181	)		214,851
Cost of sales		—		80,588			14,968			87,640			(18,181	)		165,015
Gross profit		—		23,970			5,839			20,027			—			49,836
Selling, general and administrative expenses		—		13,655			2,143			9,426			—			25,224
Special charges		—		(100	)		—			—			—			(100	)
Income (loss) from operations		—		10,415			3,696			10,601			—			24,712
Other income (expense)		—		(222	)		3,320			(34	)		—			3,064
Earnings (loss) before interest and income taxes		—		10,193			7,016			10,567			—			27,776
Interest expense		—		7,897			—			2,890			—			10,787
Earnings (loss) before income taxes		—		2,296			7,016			7,677			—			16,989
Provision (benefit) for income taxes		—		1,252			(17	)		348			—			1,583
Net income (loss)		—		1,044			7,033			7,329			—			15,406
Equity in net income (loss) of subsidiaries		15,406		14,362			—			—			(29,768	)		—
Net income (loss)	$	15,406	$	15,406		$	7,033		$	7,329		$	(29,768	)	$	15,406

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see notes 5 and 14):

	Three months ended June 30, 2011
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations		Consolidated
Cost of sales	$	—	$	43		$	—		$	—		$	—	$	43
Selling, general and administrative expenses		—		(385	)		—			—			—		(385	)
Special charges		—		(100	)		—			—			—		(100	)
Other (income) expense		—		—			(3,321	)		(216	)		—		(3,537	)
Total pretax special items		—		(442	)		(3,321	)		(216	)		—		(3,979	)
Provision for income taxes		—		—			—			(922	)		—		(922	)
Special items net of tax	$	—	$	(442	)	$	(3,321	)	$	(1,138	)	$	—	$	(4,901	)

26

Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)

	Three months ended June 30, 2010
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries		Eliminations			Consolidated
Net sales	$	—	$	103,534		$	23,158		$	91,728	$	(15,384	)	$	203,036
Freight billed to customers		—		159			215			46		—			420
Total revenues		—		103,693			23,373			91,774		(15,384	)		203,456
Cost of sales		—		78,792			16,235			75,782		(15,384	)		155,425
Gross profit		—		24,901			7,138			15,992		—			48,031
Selling, general and administrative expenses		—		13,845			2,422			8,452		—			24,719
Special charges		—		—			156			—		—			156
Income (loss) from operations		—		11,056			4,560			7,540		—			23,156
Other income (expense)		—		399			6			1,251		—			1,656
Earnings (loss) before interest and income taxes		—		11,455			4,566			8,791		—			24,812
Interest expense		—		10,656			(6	)		1,118		—			11,768
Earnings (loss) before income taxes		—		799			4,572			7,673		—			13,044
Provision (benefit) for income taxes		—		(763	)		(86	)		4,326		—			3,477
Net income (loss)		—		1,562			4,658			3,347		—			9,567
Equity in net income (loss) of subsidiaries		9,567		8,005			—			—		(17,572	)		—
Net income (loss)	$	9,567	$	9,567		$	4,658		$	3,347	$	(17,572	)	$	9,567

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see note 5):

	Three months ended June 30, 2010
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries		Eliminations		Consolidated
Cost of sales	$	—	$	(945	)	$	—	$	2,687	$	—	$	1,742
Special charges		—		—			156		—		—		156
Other income (expense)		—		—			—		—		—		—
Total pretax special items	$	—	$	(945	)	$	156	$	2,687	$	—	$	1,898
Special items net of tax	$	—	$	(945	)	$	156	$	2,687	$	—	$	1,898

27

Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)

	Six months ended June 30, 2011
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated
Net sales	$	—	$	194,924			40,187		190,752		(30,835	)	$	395,028
Freight billed to customers		—		354			570		325		—			1,249
Total revenues		—		195,278			40,757		191,077		(30,835	)		396,277
Cost of sales		—		155,451			29,838		155,841		(30,835	)		310,295
Gross profit		—		39,827			10,919		35,236		—			85,982
Selling, general and administrative expenses		—		27,595			4,425		18,606		—			50,626
Special charges		—		(100	)		51		—		—			(49	)
Income (loss) from operations		—		12,332			6,443		16,630		—			35,405
Other income (expense)		—		(2,777	)		3,354		2,690		—			3,267
Earnings (loss) before interest and income taxes		—		9,555			9,797		19,320		—			38,672
Interest expense		—		16,690			—		5,680		—			22,370
Earnings (loss) before income taxes		—		(7,135	)		9,797		13,640		—			16,302
Provision (benefit) for income taxes		—		630			55		1,212		—			1,897
Net income (loss)		—		(7,765	)		9,742		12,428		—			14,405
Equity in net income (loss) of subsidiaries		14,405		22,170			—		—		(36,575	)		—
Net income (loss)	$	14,405	$	14,405		$	9,742	$	12,428	$	(36,575	)	$	14,405

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see notes 4, 5 and 14):

	Six months ended June 30, 2011
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations		Consolidated
Cost of sales	$	—	$	43		$	—		$	—		$	—	$	43
Selling, general and administrative expenses		—		(385	)		—			—			—		(385	)
Special charges		—		(100	)		51			—			—		(49	)
Other expense (income)		—		2,803			(3,321	)		(3,661	)		—		(4,179	)
Total pretax special items		—		2,361			(3,270	)		(3,661	)		—		(4,570	)
Special items net of tax	$	—	$	2,361		$	(3,270	)	$	(3,661	)	$	—	$	(4,570	)

28

(unaudited) Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)

	Six months ended June 30, 2010
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries		Eliminations			Consolidated
Net sales	$	—	$	189,697		$	42,720		$	172,795	$	(28,272	)	$	376,940
Freight billed to customers		—		325			429			100		—			854
Total revenues		—		190,022			43,149			172,895		(28,272	)		377,794
Cost of sales		—		150,348			30,342			143,468		(28,272	)		295,886
Gross profit		—		39,674			12,807			29,427		—			81,908
Selling, general and administrative expenses		—		26,251			4,588			16,704		—			47,543
Special charges		—		29			359			—		—			388
Income (loss) from operations		—		13,394			7,860			12,723		—			33,977
Other income (expense)		—		56,391			(142	)		1,436		—			57,685
Earnings (loss) before interest and income taxes		—		69,785			7,718			14,159		—			91,662
Interest expense		—		19,134			(6	)		2,260		—			21,388
Earnings (loss) before income taxes		—		50,651			7,724			11,899		—			70,274
Provision (benefit) for income taxes		—		(743	)		58			5,982		—			5,297
Net income (loss)		—		51,394			7,666			5,917		—			64,977
Equity in net income (loss) of subsidiaries		64,977		13,583			—			—		(78,560	)		—
Net income (loss)	$	64,977	$	64,977		$	7,666		$	5,917	$	(78,560	)	$	64,977

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see note 4 and 5):

	Six months ended June 30, 2010
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries		Eliminations		Consolidated
Cost of sales	$	—	$	(945	)	$	—	$	2,687	$	—	$	1,742
Special charges		—		29			359		—		—		388
Other expense (income)		—		(56,792	)		130		—		—		(56,662	)
Total pretax special items	$	—	$	(57,708	)	$	489	$	2,687	$	—	$	(54,532	)
Special items net of tax	$	—	$	(57,708	)	$	489	$	2,687	$	—	$	(54,532	)

29

Libbey Inc.
Condensed Consolidating Balance Sheets
(dollars in thousands)

	June 30, 2011 (unaudited)
	Libbey		Libbey				Non-
	Inc.		Glass		Subsidiary		Guarantor
	(Parent)		(Issuer)		Guarantors		Subsidiaries			Eliminations			Consolidated
Cash and equivalents	$	—	$	25,772		367		18,170		$	—		$	44,309
Accounts receivable — net		—		36,961		4,998		55,728			—			97,687
Inventories — net		—		58,272		19,439		90,486			—			168,197
Other current assets		—		18,160		3,421		14,314			(22,347	)		13,548
Total current assets		—		139,165		28,225		178,698			(22,347	)		323,741
Other non-current assets		—		18,510		8		34,233			(19,139	)		33,612
Investments in and advances to subsidiaries		47,854		349,797		207,256		(34,749	)		(570,158	)		—
Goodwill and purchased intangible assets — net		—		26,833		12,347		149,621			—			188,801
Total other assets		47,854		395,140		219,611		149,105			(589,297	)		222,413
Property, plant and equipment — net		—		69,140		391		199,566			—			269,097
Total assets	$	47,854	$	603,445	$	248,227	$	527,369		$	(611,644	)	$	815,251
Accounts payable	$	—	$	13,182		2,350		46,080					$	61,612
Accrued and other current liabilities		—		64,188		25,566		36,031			(23,905	)		101,880
Notes payable and long-term debt due within one year		—		227		—		3,166			—			3,393
Total current liabilities		—		77,597		27,916		85,277			(23,905	)		166,885
Long-term debt		—		359,568		—		49,541			—			409,109
Other long-term liabilities		—		138,201		14,194		56,589			(17,581	)		191,403
Total liabilities		—		575,366		42,110		191,407			(41,486	)		767,397
Total shareholders’ equity (deficit)		47,854		28,079		206,117		335,962			(570,158	)		47,854
Total liabilities and shareholders’ equity (deficit)	$	47,854	$	603,445	$	248,227	$	527,369		$	(611,644	)	$	815,251

	December 31, 2010
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries			Eliminations			Consolidated
Cash and equivalents	$	—	$	58,277			293		17,688			—		$	76,258
Accounts receivable — net		—		37,099			5,360		49,642			—			92,101
Inventories — net		—		52,398			19,902		75,846			—			148,146
Other current assets		—		(2,634	)		10,960		10,518			(12,407	)		6,437
Total current assets		—		145,140			36,515		153,694			(12,407	)		322,942
Other non-current assets				8,344			2,779		41,169			(19,134	)		33,158
Investments in and advances to subsidiaries		11,266		360,784			189,171		(32,151	)		(529,070	)		—
Goodwill and purchased intangible assets — net				26,833			15,761		149,880			—			192,474
Total other assets		11,266		395,961			207,711		158,898			(548,204	)		225,632
Property, plant and equipment — net		—		72,892			4,862		192,643			—			270,397
Total assets	$	11,266	$	613,993		$	249,088	$	505,235		$	(560,611	)	$	818,971
Accounts payable	$	—	$	13,514			2,926		42,655			—		$	59,095
Accrued and other current liabilities		—		48,092			27,811		34,430			(12,407	)		97,926
Notes payable and long-term debt due within one year		—		227			—		2,915			—			3,142
Total current liabilities		—		61,833			30,737		80,000			(12,407	)		160,163
Long-term debt		—		398,039			—		45,944			—			443,983
Other long-term liabilities		—		131,100			21,964		69,629			(19,134	)		203,559
Total liabilities		—		590,972			52,701		195,573			(31,541	)		807,705
Total shareholders’ equity (deficit)		11,266		23,021			196,387		309,662			(529,070	)		11,266
Total liabilities and shareholders’ equity (deficit)	$	11,266	$	613,993		$	249,088	$	505,235		$	(560,611	)	$	818,971

30

Libbey Inc.
Condensed Consolidating Statements of Cash Flows
(dollars in thousands)
(unaudited)

	Three months ended June 30, 2011
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	15,406		$	15,406		$	7,033		$	7,329		$	(29,768	)	$	15,406
Depreciation and amortization		—			3,767			61			7,199			—			11,027
Other operating activities		(15,406	)		13,791			(19,756	)		(4,916	)		29,768			3,481
Net cash provided by (used in) operating activities		—			32,964			(12,662	)		9,612			—			29,914
Additions to property, plant & equipment		—			(2,273	)		—			(7,619	)		—			(9,892	)
Other investing activities		—			33			12,842			564			—			13,439
Net cash (used in) investing activities		—			(2,240	)		12,842			(7,055	)		—			3,547
Net borrowings		—			(4,399	)		—			2,105			—			(2,294	)
Other financing activities		—			(324	)		—			—			—			(324	)
Net cash provided by (used in) financing activities		—			(4,723	)		—			2,105			—			(2,618	)
Exchange effect on cash		—			—			—			354			—			354
Increase (decrease) in cash		—			26,001			180			5,016			—			31,197
Cash at beginning of period		—			(229	)		187			13,154			—			13,112
Cash at end of period	$	—		$	25,772		$	367		$	18,170		$	—		$	44,309

	Three months ended June 30, 2010
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	9,567		$	9,567		$	4,658		$	3,347		$	(17,572	)	$	9,567
Depreciation and amortization		—			3,862			192			6,514			—			10,568
Other operating activities		(9,567	)		11,514			(4,860	)		3,318			17,572			17,977
Net cash provided by (used in) operating activities		—			24,943			(10	)		13,179			—			38,112
Additions to property, plant & equipment		—			(1,945	)		(14	)		(5,272	)		—			(7,231	)
Other investing activities		—			—			—			—			—			—
Net cash (used in) investing activities		—			(1,945	)		(14	)		(5,272	)		—			(7,231	)
Net borrowings		—			(46	)		—			(586	)		—			(632	)
Other financing activities		—			(1,455	)		—			—			—			(1,455	)
Net cash provided by (used in) financing activities		—			(1,501	)		—			(586	)		—			(2,087	)
Exchange effect on cash		—			—			—			(648	)		—			(648	)
Increase (decrease) in cash		—			21,497			(24	)		6,673			—			28,146
Cash at beginning of period		—			11,640			270			6,117			—			18,027
Cash at end of period	$	—		$	33,137		$	246		$	12,790		$	—		$	46,173

31

Libbey Inc.
Condensed Consolidating Statements of Cash Flows
(dollars in thousands)
(unaudited)

	Six months ended June 30, 2011
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	14,405		$	14,405		$	9,742		$	12,428		$	(36,575	)	$	14,405
Depreciation and amortization		—			7,575			259			14,074			—			21,908
Other operating activities		(14,405	)		(9,168	)		(23,266	)		(19,215	)		36,575			(29,479	)
Net cash provided by (used in) operating activities		—			12,812			(13,265	)		7,287			—			6,834
Additions to property, plant & equipment		—			(4,085	)		(3	)		(14,310	)		—			(18,398	)
Other investing activities		—			(1,170	)		13,342			4,666			—			16,838
Net cash (used in) investing activities		—			(5,255	)		13,339			(9,644	)		—			(1,560	)
Net borrowings		—			(40,097	)		—			2,105			—			(37,992	)
Other financing activities		—			35			—			—			—			35
Net cash provided by (used in) financing activities		—			(40,062	)		—			2,105			—			(37,957	)
Exchange effect on cash		—			—			—			734			—			734
Increase (decrease) in cash		—			(32,505	)		74			482			—			(31,949	)
Cash at beginning of period		—			58,277			293			17,688			—			76,258
Cash at end of period	$	—		$	25,772		$	367		$	18,170		$	—		$	44,309

	Six months ended June 30, 2010
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	64,977		$	64,977		$	7,666		$	5,917		$	(78,560	)	$	64,977
Depreciation and amortization		—			7,711			386			12,857			—			20,954
Other operating activities		(64,977	)		(85,196	)		(8,211	)		(14,160	)		78,560			(93,984	)
Net cash provided by (used in) operating activities		—			(12,508	)		(159	)		4,614			—			(8,053	)
Additions to property, plant & equipment		—			(3,044	)		(14	)		(8,321	)		—			(11,379	)
Other investing activities		—			(8,415	)		—			—			—			(8,415	)
Net cash (used in) investing activities		—			(11,459	)		(14	)		(8,321	)		—			(19,794	)
Net borrowings		—			35,206			—			215			—			35,421
Other financing activities		—			(15,488	)		—			—			—			(15,488	)
Net cash provided by (used in) financing activities		—			19,718			—			215			—			19,933
Exchange effect on cash		—			—			—			(1,002	)		—			(1,002	)
Increase (decrease) in cash		—			(4,249	)		(173	)		(4,494	)		—			(8,916	)
Cash at beginning of period		—			37,386			419			17,284			—			55,089
Cash at end of period	$	—		$	33,137		$	246		$	12,790		$	—		$	46,173

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12. Segments

We have revised our segment structure to reflect our reorganization from geographical regions to one global company. Under this new structure, we have two reportable segments: Glass Operations and Other Operations. The classifications are defined as follows:

Glass Operations — includes worldwide sales of glass tableware and other glass products from domestic and international subsidiaries.

Other Operations — includes worldwide sales of ceramic dinnerware, metal tableware, hollowware and serveware and plastic items. Plastic items were sold through April 28, 2011.

Our measure of profit for our reportable segments is Segment Earnings before Interest and Taxes (EBIT) and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs. We use Segment EBIT, along with net sales and selected cash flow information, to evaluate performance and to allocate resources. Segment EBIT for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of services performed.

Certain activities not related to any particular reportable segment are reported within retained corporate costs. These costs include certain headquarter, administrative and facility costs, and other costs that are global in nature and are not allocable to the reporting segments. Corporate assets primarily include finance fees, capitalized software, and income tax assets.

The accounting policies of the reportable segments are the same as those described in note 2. We do not have any customers who represent 10 percent or more of total sales. Inter-segment sales are consummated at arm’s length and are reflected in eliminations below.

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	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2011			2010			2011			2010
Net Sales:
Glass Operations	$	194,487		$	180,815		$	356,540		$	335,959
Other Operations		19,690			22,376			38,851			41,250
Eliminations		(164	)		(155	)		(363	)		(269	)
Consolidated	$	214,013		$	203,036		$	395,028		$	376,940
Segment EBIT:
Glass Operations	$	29,973			31,188			47,364			46,614
Other Operations		3,762			4,754			6,641			8,239
Total Segment EBIT	$	33,735		$	35,942		$	54,005		$	54,853
Reconciliation of Segment EBIT to Net Income:
Segment EBIT	$	33,735		$	35,942		$	54,005		$	54,853
Retained corporate costs		(9,938	)		(9,232	)		(19,903	)		(17,723	)
(Loss) gain on redemption of debt (note 4)		—			—			(2,803	)		56,792
Gain on sale of Traex		3,321			—			3,321			—
Gain on sale of land (1)		—			—			3,445			—
Restructuring and other charges (note 5)		1,078			(2,843	)		1,027			(3,205	)
Other special income (charges) (2)		(420	)		945			(420	)		945
Interest expense		(10,787	)		(11,768	)		(22,370	)		(21,388	)
Income taxes		(1,583	)		(3,477	)		(1,897	)		(5,297	)
Net income	$	15,406		$	9,567		$	14,405		$	64,977
Depreciation & Amortization:
Glass Operations	$	10,531		$	10,025		$	20,780		$	19,869
Other Operations		54			184			246			371
Corporate		442			359			882			714
Consolidated	$	11,027		$	10,568		$	21,908		$	20,954
Capital Expenditures:
Glass Operations	$	9,347		$	6,962		$	17,769		$	10,801
Other Operations		—			14			3			14
Corporate		545			255			626			564
Consolidated	$	9,892		$	7,231		$	18,398		$	11,379

	June 30,		December 31,
(dollars in thousands)	2011		2010
Segment Assets:
Glass Operations	$	755,753	$	752,058
Other Operations		36,930		45,944
Corporate		22,568		20,969
Consolidated	$	815,251	$	818,971

(1)	Net gain on the sale of land at our Royal Leerdam facility.
(2)	For 2011 this represents CEO transition expenses and for 2010 this is an insurance claim recovery.

13. Fair Value

FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

34

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

• Level 3 — Unobservable inputs based on our own assumptions.

Asset / (Liability)	Fair Value at June 30, 2011										Fair Value at December 31, 2010
(dollars in thousands)	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Commodity futures natural gas contracts	$	—	$	(1,721	)	$	—	$	(1,721	)	$	—	$	(3,188	)	$	—	$	(3,188	)
Currency contracts		—		(477	)		—		(477	)		—		(151	)		—		(151	)
Interest rate agreements		—		3,334			—		3,334			—		2,536			—		2,536
Net derivative liability	$	—	$	1,136		$	—	$	1,136		$	—	$	(803	)	$	—	$	(803	)

The fair values of our commodity futures natural gas contracts and currency contracts are determined using observable market inputs. The fair value of our interest rate agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. Since these inputs are observable in active markets over the terms that the instruments are held, the derivatives are classified as Level 2 in the hierarchy. We also evaluate Company and counterparty risk in determining fair values. The total derivative position is recorded on the Condensed Consolidated Balance Sheets with $3.4 million in derivative asset and $2.2 million in derivative liability as of June 30, 2011. As of December 31, 2010, $2.6 million was recorded in derivative asset and $3.4 million in derivative liability on the Condensed Consolidated Balance Sheets.

The commodity futures natural gas contracts and interest rate agreements are hedges of either recorded assets or liabilities or anticipated transactions. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the above table.

14. Other Income

Items included in other income in the Condensed Consolidated Statements of Operations are as follows:

	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2011			2010		2011			2010
Gain on sale of land at Royal Leerdam	$	—			—		3,445			—
Gain on sale of Traex (1)		3,321			—		3,321			—
Loss on currency translation		(409	)		963		(1,575	)		433
Income (expense) on hedging activities		(148	)		608		487			315
Other non-operating income		300			85		392			145
Other income	$	3,064		$	1,656	$	6,070		$	893

(1) On April 28, 2011, substantially all of the assets of our Traex subsidiary (now known as Dane Holding Co.) were sold to the Vollrath Company for $12.8 million, resulting in a gain of $3.3 million.

35

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes thereto appearing elsewhere in this report and in our Annual Report filed with the Securities and Exchange Commission. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ from those anticipated in these forward-looking statements as a result of many factors. These factors are discussed in “Risk Factors” under Item 1A of “Part II — Other Information”.

Overview

Economic market conditions continued to be challenging during the first half of 2011. Our sales have improved compared to the same period last year. We have experienced solid net sales growth in our China and European sales regions. Our shipments to U.S. and Canadian foodservice glassware customers improved modestly. On March 25, 2011, we redeemed an aggregate principal amount of $40.0 million of our outstanding 10.0 percent Senior Secured Notes due 2015. See note 4 to the Condensed Consolidated Financial Statements for further discussion of this transaction. Effective the first quarter of 2011, we reorganized from geographical regions to one global company. Under this new structure, we have two operating segments: Glass Operations and Other Operations. These operating segments are defined as follows:

Glass Operations—includes worldwide sales of glass tableware and other glass operations from domestic and international subsidiaries.

Other Operations—includes worldwide sales of ceramic dinnerware, metal tableware, hollowware and serveware and plastic items. Plastic items were sold through April 28, 2011.

Beginning in 2011, when we discuss sales by region, it is based on our salesforce’s regional sales accountability. Prior year sales by location have been recomputed using our new definition.

Results of Operations — Second Quarter 2011 Compared with Second Quarter 2010

(dollars in thousands, except percentages and	Three months ended June 30,						Variance
per-share amounts)	2011			2010			In dollars			In percent
Net sales	$	214,013		$	203,036		$	10,977			5.4	%
Gross profit (2)	$	49,836		$	48,031		$	1,805			3.8	%
Gross profit margin		23.3	%		23.7	%
Income from operations (IFO) (2)(3)	$	24,712		$	23,156		$	1,556			6.7	%
IFO margin		11.5	%		11.4	%
Earnings before interest and income taxes (EBIT)(1)(2)(3)(4)	$	27,776		$	24,812		$	2,964			11.9	%
EBIT margin		13.0	%		12.2	%
Earnings before interest, taxes, depreciation and amortization (EBITDA)(1)(2)(3)(4)	$	38,803		$	35,380		$	3,423			9.7	%
EBITDA margin		18.1	%		17.4	%
Adjusted EBITDA(1)	$	34,824		$	37,278		$	(2,454	)		(6.6	)%
Adjusted EBITDA margin		16.3	%		18.4	%
Net income (2)(3)(4)	$	15,406		$	9,567		$	5,839			61.0	%
Net income margin		7.2	%		4.7	%
Diluted net income per share	$	0.74		$	0.47		$	0.27			57.4	%

(1)	We believe that EBIT, EBITDA and Adjusted EBITDA, non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. See Table 1 for a reconciliation of net income to EBIT, EBITDA and Adjusted EBITDA and a further discussion as to the reasons we believe these non-GAAP financial measures are useful.
(2)	The 2010 period includes a fixed asset write-down of $2.7 million related to after-processing equipment and a credit of $0.9 million related to an insurance claim recovery in our Glass Operations segment. (See note 5 to the Condensed Consolidated Financial Statements).

36

(3)

In addition to item (2) above, the 2011 period includes a restructuring credit of $0.1 million related to the closure of the decorating operations at our Shreveport manufacturing facility, CEO transition expenses of $0.4 million and an equipment credit from a supplier of $0.8 million. The 2010 period includes a charge of $0.2 million related to the closing of our Syracuse China manufacturing facility and our Mira Loma distribution center. (See note 5 to the Condensed Consolidated Financial Statements.)

(4)

In addition to item (3) above, the 2011 period includes a $3.3 million gain on the sale of substantially all of the assets of our Traex subsidiary and a $0.2 million equipment credit from a supplier. (See notes 5 and 14 to the Condensed Consolidated Financial Statements). 2010 includes a credit of $0.9 million related to an insurance claim recovery in 2010

Net Sales

For the quarter-ended June 30, 2011, net sales increased 5.4 percent to $214.0 million, compared to $203.0 million in the year-ago quarter. Excluding the impact of currency, net sales increased 1.9 percent. Net sales in the Glass Operations segment were $194.5 million, an increase of 7.6 percent (3.6 percent excluding the impact of currency on net sales), compared to $180.8 million in the second quarter of 2010. Primary contributors to the increased net sales were a 58.5 percent increase in net sales within our China sales region (51.0 percent excluding the impact of currency), a 28.6 percent increase in net sales within our European sales region (13.9 percent excluding the impact of currency), and a 10.6 percent increase in net sales within our International region (7.5 percent excluding the impact of currency), compared to the year-ago quarter. The 51.0 percent increase in our China sales region, excluding the impact of currency, is the result of our change in our go-to-market strategy in the domestic Chinese market to a multiple distributor model versus one master distributor. The increase in the European sales region, excluding the currency impact, is a result of increased shipments to customers, principally in the business to business market channel. The increase in the International sales region, excluding currency, is attributable to higher sales in various regions of the world, mainly in the retail market channel. Net sales within our Mexico region increased 5.5 percent although net sales were flat when the currency impact is excluded. Net sales to U.S. and Canadian foodservice glassware customers increased 1.3 percent, as shipments to foodservice customers were stronger in May and June following a weak April. Net sales to U.S. and Canadian retail customers decreased 3.8 percent during the second quarter of 2011 compared to an extremely strong second quarter of 2010 when retail net sales grew 13.5 percent. In the year-ago period, we had a pipeline fill of newly listed products to a major retailer; however in the second quarter of 2011, we experienced replacement sales at naturally lower volumes. Net sales in the Other Operations segment were $19.7 million, compared to $22.4 million in the prior-year quarter, a decrease of 12.0 percent. The decline in net sales in the Other Operations segment is attributable to a $3.1 million decline in net sales of Traex products compared to the prior-year quarter and a 2.7 percent decline in net sales to World Tableware customers, partially offset by a 16.8 percent increase in net sales of Syracuse China products as we had increased volume and a stronger mix of products sold. The decrease in net sales of Traex products in the second quarter of 2011 is a result of the sale of substantially all of the assets of our Traex subsidiary in late April 2011. The decline in net sales of Traex products accounted for more than the total $2.7 million decrease in net sales for Other Operations.

Gross Profit

For the quarter ended June 30, 2011, gross profit increased by $1.8 million, or 3.8 percent, to $49.8 million, compared to $48.0 million in the year-ago quarter. Gross profit as a percentage of net sales decreased to 23.3 percent, compared to 23.7 percent in the year-ago quarter. Excluding currency impact, the improvement in gross profit is attributable to increased production activity, which resulted in a $1.2 million benefit, net of cost increases inherent with higher activity levels and higher net sales of $1.5 million, and a favorable currency impact of $1.7 million, primarily due to the impact of changes in the value of the Euro and the Mexican peso. In 2010, gross profit was impacted by the $2.7 million write-down of certain after-processing equipment recorded in our Glass Operations segment, offset by a $0.9 million insurance claim recovery. Offsetting these favorable items for the second quarter 2011 were distribution cost increases of $0.6 million related to the higher level of sales, increased diesel fuel costs for freight and increases in direct materials (primarily packaging) of $2.7 million. In addition, we experienced lost production in Mexico due to a short-term raw material issue and lost production in Holland due to minor flooding. These two situations, which have been resolved, negatively impacted gross profit by approximately $1.0 million.

Income From Operations

Income from operations for the quarter ended June 30, 2011 increased $1.5 million, to $24.7 million, compared to $23.2 million in the year-ago quarter. Income from operations as a percentage of net sales was 11.5 percent in the second quarter of 2011, compared to 11.4 percent in the year-ago quarter. The improvement in income from operations is a result of higher gross profit (discussed above), offset by a $0.5 million increase in selling, general and administrative expenses resulting from the change in currency exchange rates.

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Earnings Before Interest and Income Taxes (EBIT)

EBIT for the quarter ended June 30, 2011 increased by $3.0 million, or 11.9 percent, to $27.8 million in 2011 from $24.8 million in 2010. EBIT as a percentage of net sales increased to 13.0 percent in the second quarter of 2011, compared to 12.2 percent in the year-ago quarter. Key contributors to the increase in EBIT compared to the year-ago quarter are the same as those discussed above under Income From Operations. In April 2011 we sold substantially all of the assets of our Traex subsidiary and recorded a gain in other income of $3.3 million. These factors were offset by a $1.4 million decline in other income versus the prior year quarter related to an unfavorable swing in foreign currency translation gains and a $0.8 million swing in unfavorable hedging expense.

Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)

EBITDA increased by $3.4 million in the second quarter of 2011, to $38.8 million, compared to $35.4 million in the year-ago quarter. As a percentage of net sales, EBITDA increased to 18.1 percent for the second quarter 2011, from 17.4 percent in the year-ago quarter. The key contributors to the increase in EBITDA were those factors discussed above under EBIT.

Adjusted EBITDA

Adjusted EBITDA decreased by $2.5 million in the second quarter of 2011, to $34.8 million, compared to $37.3 million in the year-ago quarter. As a percentage of net sales, Adjusted EBITDA was 16.3 percent for the second quarter 2011, compared to 18.4 percent in the year-ago quarter. The key contributors to the decrease in Adjusted EBITDA were those factors discussed above under EBITDA, the exclusion of a $3.3 million gain on the sale of substantially all of the assets of our Traex subsidiary, and the $1.0 million equipment credit in 2011. In 2010 we excluded from Adjusted EBITDA a $2.7 million write-down on certain after-processing equipment in our Glass Operations segment, partially offset by a $0.9 million insurance claim recovery.

Net Income and Diluted Net Income Per Share

We recorded net income of $15.4 million, or $0.74 per diluted share, in the second quarter of 2011, compared to $9.6 million, or $0.47 per diluted share, in the year-ago quarter. Net income as a percentage of net sales was 7.2 percent in the second quarter 2011, compared to 4.7 percent in the year-ago quarter. The improvement in net income and diluted net income per share is generally due to the factors discussed in EBIT above, a $1.0 million reduction in interest expense and a $1.9 million decrease in the provision for income taxes. The reduction in interest expense is the result of the $40.0 million debt repayment completed in March 2011. The effective tax rate was 9.3 percent for the quarter compared to 26.7 percent in the year-ago quarter. The effective tax rate fluctuates due to valuation allowances, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions and tax planning structures.

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Results of Operations — First Six Months 2011 Compared with First Six Months 2010

(dollars in thousands, except percentages and	Six months ended June 30,						Variance
per-share amounts)	2011			2010			In dollars			In percent
Net sales	$	395,028		$	376,940		$	18,088			4.8	%
Gross profit (2)	$	85,982		$	81,908		$	4,074			5.0	%
Gross profit margin		21.8	%		21.7	%
Income from operations (IFO)(2)(3)	$	35,405		$	33,977		$	1,428			4.2	%
IFO margin		9.0	%		9.0	%
Earnings before interest and income taxes (EBIT)(1)(2)(3)(4)	$	38,672		$	91,662		$	(52,990	)		(57.8	)%
EBIT margin		9.8	%		24.3	%
Earnings before interest, taxes, depreciation and amortization (EBITDA)(1)(2)(3)(4)	$	60,580		$	112,616		$	(52,036	)		(46.2	)%
EBITDA margin		15.3	%		29.9	%
Adjusted EBITDA(1)	$	56,010		$	58,084		$	(2,074	)		(3.6	)%
Adjusted EBITDA margin		14.2	%		15.4	%
Net income (2)(3)(4)	$	14,405		$	64,977		$	(50,572	)		(77.8	)%
Net income margin		3.6	%		17.2	%
Diluted net income per share	$	0.69		$	3.21		$	(2.52	)		(78.5	)%

(1)	We believe that EBIT, EBITDA and Adjusted EBITDA, non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. See Table 1 for a reconciliation of net income to EBIT, EBITDA and Adjusted EBITDA and a further discussion as to the reasons we believe these non-GAAP financial measures are useful.
(2)	2010 includes a fixed asset write-down of $2.7 million related to after-processing equipment and a credit of $0.9 million for an insurance claim recovery in our Glass Operations segment. (See note 5 to the Condensed Consolidated Financial Statements).
(3)	In addition to item (2) above, the 2011 period includes CEO transition expenses of $0.4 million, net of an equipment credit of $0.8 million. The 2010 period includes a restructuring charge of $0.4 million related to the closing of our Syracuse China manufacturing facility and our Mira Loma distribution center. (See note 5 to the Condensed Consolidated Financial Statements).
(4)	In addition to item (3) above, the 2011 period includes a gain of $3.3 million related to the gain on the sale of substantially all of the assets of our Traex subsidiary, income of $3.4 million related to the gain on the sale of land at our Royal Leerdam facility, a loss of $2.8 million related to the loss on redemption of $40.0 million of Senior Secured Notes and a equipment credit of $0.2 million. The 2010 period includes income of $56.8 million related to the gain on redemption of the New PIK Notes and restructuring charges of $0.1 million related to the closing of our Syracuse China manufacturing facility and our Mira Loma distribution center. (See notes 4, 5 and 14 to the Condensed Consolidated Financial Statements).

Net Sales

For the six months ended June 30, 2011, net sales increased 4.8 percent to $395.0 million, compared to $376.9 million in the year-ago period. Excluding the impact of currency, net sales increased 2.6 percent. Net sales in the Glass Operations segment were $356.5 million, an increase of 6.1 percent (3.7 percent excluding the impact of currency on net sales), compared to $336.0 million in the first six months of 2010. Primary contributors to the increased net sales included a 69.3 percent increase in net sales within our China sales region (62.3 percent excluding the impact of currency), a 14.4 percent increase in net sales within our European sales region (7.8 percent excluding the impact of currency), and a 17.9 percent increase in net sales within our International region (15.9 percent excluding the impact of currency), compared to the year-ago period. The 62.3 percent increase in our China sales region, excluding the impact of currency, is the result of our change in our go-to-market strategy in the domestic Chinese market to a multiple distributor model versus one master distributor. The increases, excluding the currency impact, in the European and International sales regions are the result of increased shipments to customers. Including the currency impact, net sales within our Mexico region were flat. Excluding the currency impact, net sales within our Mexico region declined 4.7 percent as a result of decreased sales within our business to business channel. Net sales to U.S. and Canadian foodservice glassware customers increased 1.1 percent, net sales to U.S. and Canadian retail customers increased 1.1 percent and net sales to U.S. and Canadian business to business customers increased 7.7 percent during the first six months of 2011 compared to the first six months of 2010. The 7.7 percent increase in U.S. and Canadian business to business is the result of increased shipments to those customers for various OEM uses. Net sales in the Other Operations segment were $38.9 million, compared to $41.3 million in the prior-year. The decline in net sales in the Other Operations segment is

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entirely attributable to a $3.3 million decrease in net sales of Traex products as a result of the sale of substantially all of the assets of our Traex subsidiary in late April 2011. Partially offsetting the decline in net sales of Traex products were a 5.9 percent increase in net sales of Syracuse China products, as we had increased volume and a stronger mix of products sold, and a 1.5 percent increase in net sales to World Tableware customers.

Gross Profit

For the six months ended June 30, 2011, gross profit increased by $4.1 million, or 5.0 percent, to $86.0 million, compared to $81.9 million in the year-ago period. Gross profit as a percentage of net sales increased to 21.8 percent, compared to 21.7 percent in the year-ago period. Excluding currency impact, the improvement in gross profit was attributable to higher net sales resulting in a $4.1 million impact. A favorable currency impact contributed another $2.0 million primarily due to the impact of changes in the value of the Euro and the Mexican peso. In 2010, gross profit was impacted by the $2.7 million write-down of certain after-processing equipment recorded in our Glass Operations segment, partially offset by a $0.9 million insurance claim recovery. Partially offsetting the favorable items for the six months in 2011 was the lost production we experienced in Mexico due to a short-term raw material issue and in Holland due to minor flooding. These two situations, which have been resolved, negatively impacted gross profit by approximately $1.0 million. In addition there was an increase in distribution cost of $1.4 million related to the higher level of sales and diesel fuel costs for freight and an increase in direct materials (primarily packaging) of $4.5 million, offset by a decrease in natural gas of $2.6 million.

Income From Operations

Income from operations for the six months ended June 30, 2011 increased $1.4 million, to $35.4 million, compared to $34.0 million in the year-ago period. Income from operations as a percentage of net sales was 9.0 percent in the first six months of both 2011 and 2010. The $1.4 million improvement in income from operations is a result of higher sales volume, as the gross profit margin (discussed above) was unchanged. Selling, general and administrative expenses increased $3.1 million for the 2011 period compared to the prior year. Of the increase in selling, general and administrative expense, $0.8 million is due to the impact of currency exchange rates, $1.5 million is attributable to higher labor and benefit costs and $0.4 million is attributable to CEO transition expenses.

Earnings Before Interest and Income Taxes (EBIT)

EBIT for the six months ended June 30, 2011 was $38.7 million compared to $91.7 million for the six months ended June 30, 2010. EBIT as a percentage of net sales decreased to 9.8 percent in the first six months of 2011, compared to 24.3 percent in the year-ago period. EBIT for the first six months of 2010 included a $56.8 million gain on redemption of debt, net of certain transaction expenses. See note 4 for a further discussion of this gain. Other income increased by $5.2 million in 2011 compared to 2010 due to the $3.3 million gain on the sale of substantially all of the assets of our Traex subsidiary and the $3.4 million gain on the sale of land at our Royal Leerdam facility located in the Netherlands. Partially offsetting these was a $2.0 million unfavorable swing in foreign currency translation.

Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)

EBITDA decreased by $52.0 million, or 46.2 percent, in the first six months of 2011, to $60.6 million, compared to $112.6 million in the year-ago period. As a percentage of net sales, EBITDA was 15.3 percent for the first six months of 2011, compared to 29.9 percent in the year-ago period. The key contributors to the decrease in EBITDA were those factors discussed above under EBIT.

Adjusted EBITDA

Adjusted EBITDA decreased by $2.1 million, or 3.6 percent, in the first six months of 2011, to $56.0 million, compared to $58.1 million in the year-ago period. As a percentage of net sales, Adjusted EBITDA was 14.2 percent for the first six months of 2011, compared to 15.4 percent in the year-ago period. The key contributors to the decrease in Adjusted EBITDA were those factors discussed above under EBITDA, and the exclusion of a $2.8 million loss on redemption of debt in 2011, a $3.4 million gain on the 2011 sale of land at our Royal Leerdam facility, a $3.3 million gain on the April 2011 sale of substantially all of the assets of our Traex subsidiary, an equipment credit of $1.0 million in 2011, $0.4 million of CEO transition expenses in 2011, a $56.8 million gain on redemption of debt in 2010, a $2.7 million fixed asset write down of after-processing equipment in our Glass Operations segment in 2010, a $0.9 million insurance claim recovery in 2010 and a $0.5 million facility closure charge in 2010.

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Net Income and Diluted Net Income Per Share

We recorded net income of $14.4 million, or $0.69 per diluted share, in the first six months of 2011, compared to net income of $65.0 million, or $3.21 per diluted share, in the year-ago period. Net income as a percentage of net sales was 3.6 percent in the first six months 2011, compared to 17.2 percent in the year-ago period. The reduction in net income and diluted net income per share is generally due to the factors discussed in EBIT above and a $1.0 million reduction in interest expense. The reduction in interest expense is driven by lower debt levels and the impact of the debt refinancing completed in February 2010. The lower debt levels in 2011 partially offset the change in interest rates. The effective tax rate was 11.6 percent for the current six month period compared to 7.5 percent in the year-ago period. The effective tax rate fluctuates due to valuation allowances, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions and tax planning structures.

Segment Results of Operations

	Three months ended												Six months ended
	June 30,						Variance						June 30,						Variance
(dollars in thousands)	2011			2010			In dollars			In percent			2011			2010			In dollars			In percent
Net Sales:
Glass Operations	$	194,487		$	180,815		$	13,672			7.6	%	$	356,540		$	335,959		$	20,581			6.1	%
Other Operations		19,690			22,376			(2,686	)		(12.0	)%		38,851			41,250			(2,399	)		(5.8	)%
Eliminations		(164	)		(155	)								(363	)		(269	)
Consolidated	$	214,013		$	203,036		$	10,977			5.4	%	$	395,028		$	376,940		$	18,088			4.8	%
Segment EBIT (1):
Glass Operations	$	29,973		$	31,188		$	(1,215	)		(3.9	)%	$	47,364		$	46,614		$	750			1.6	%
Other Operations		3,762			4,754			(992	)		(20.9	)%		6,641			8,239			(1,598	)		(19.4	)%
Total Segment EBIT	$	33,735		$	35,942		$	(2,207	)		(6.1	)%	$	54,005		$	54,853		$	(848	)		(1.5	)%
Segment EBIT Margin:
Glass Operations		15.4	%		17.2	%								13.3	%		13.9	%
Other Operations		19.1	%		21.2	%								17.1	%		20.0	%
Reconciliation of Segment EBIT to Net Income:
Segment EBIT	$	33,735		$	35,942								$	54,005		$	54,853
Retained corporate costs (2)		(9,938	)		(9,232	)								(19,903	)		(17,723	)
(Loss) gain on redemption of debt (note 4)		—			—									(2,803	)		56,792
Gain on sale of Traex		3,321			—									3,321			—
Gain on sale of land		—			—									3,445			—
Restructuring and other charges (note 5)		1,078			(2,843	)								1,027			(3,205	)
Other special income (charges)		(420	)		945									(420	)		945
Interest expense		(10,787	)		(11,768	)								(22,370	)		(21,388	)
Income taxes		(1,583	)		(3,477	)								(1,897	)		(5,297	)
Net income	$	15,406		$	9,567								$	14,405		$	64,977

(1)	Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs.
(2)	Retained corporate costs include certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.

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Segment Results of Operations – Second Quarter 2011 Compared to Second Quarter 2010

Glass Operations

For the quarter ended June 30, 2011, net sales increased 7.6 percent (3.6 percent excluding the impact of currency on net sales) to $194.5 million from $180.8 million in the year-ago quarter. Primary contributors to the increased net sales compared to the year-ago quarter included a 58.5 percent increase in net sales within our China sales region (51.0 percent excluding the impact of currency), a 28.6 percent increase in net sales within our European sales region (13.9 percent excluding the impact of currency), and a 10.6 percent increase in net sales within our International region (7.5 percent excluding the impact of currency). The 51.0 percent increase in net sales in our China sales region, excluding the impact of currency, is the result of our change in our go-to-market strategy in the domestic Chinese market to a multiple distributor model versus one master distributor. The increase in the European sales region, excluding the currency impact, is a result of increased shipments to customers, principally in the business to business market channel. The increase in the International sales region, excluding currency, is attributable to higher sales in various regions of the world, mainly in the retail market channel. Net sales within our Mexico region increased 5.5 percent although net sales within our Mexico sales region were flat excluding the currency impact. Net sales to U.S. and Canadian foodservice glassware customers increased 1.3 percent, as shipments to foodservice customers were stronger in May and June following a weak April. Net sales to U.S. and Canadian retail customers decreased 3.8 percent during the second quarter of 2011 compared to an extremely strong second quarter of 2010, when retail net sales grew 13.5 percent. In the year-ago period, we had a pipeline fill of newly listed products to a major retailer; however, in the second quarter of 2011, we experienced replacement sales which are naturally at lower volumes.

Segment EBIT decreased to $30.0 million for the quarter ended June 30, 2011, compared to $31.2 million for the year-ago quarter. Segment EBIT as a percentage of net sales decreased to 15.4 percent in the second quarter of 2011, compared to 17.2 percent in the year-ago quarter. The primary drivers for the decline include lost production in Mexico due to a short-term raw material issue, combined with lost production in Holland due to minor flooding. These two situations, which have been resolved, negatively impacted Segment EBIT during the second quarter by approximately $1.0 million. In addition, there were distribution cost increases of $0.5 million related to the higher level of sales and diesel fuel costs for freight and increases in direct materials (primarily packaging) of $1.5 million. Other income includes an unfavorable swing of $2.0 million primarily related to larger foreign currency translation losses versus the prior-year period and an unfavorable swing in hedging expense. Partially offsetting these declines was increased production activity resulting in a $0.4 million benefit, net of cost increases inherent with higher activity levels, a benefit of $2.9 million as a result of higher net sales and a favorable currency impact of $1.0 million from changes primarily in the value of the Euro and Mexican peso.

Other Operations

For the quarter ended June 30, 2011, net sales decreased 12.0 percent to $19.7 million from $22.4 million in the year-ago quarter. The decrease in net sales is primarily attributable to a $3.1 million reduction in net sales of Traex products, as a result of the sale of substantially all of the assets of our Traex subsidiary in April 2011, and a 2.7 percent decline in net sales to World Tableware customers, which more than offset a 16.8 percent increase in Syracuse China product sales from increased volume and a stronger mix of products sold.

Segment EBIT decreased by $1.0 million, or 20.9 percent, to $3.8 million for the second quarter of 2011, compared to $4.8 million in the year-ago quarter. Segment EBIT as a percentage of net sales decreased to 19.1 percent in the second quarter of 2011, compared to 21.2 percent in the year-ago quarter. The key contributor to the decreased Segment EBIT was the decrease in sales volume explained above offset by an increase in costs of purchased finished goods of $1.3 million.

Segment Results of Operations – First Six Months 2011 Compared to First Six Months 2010

Glass Operations

For the six months ended June 30, 2011, net sales increased 6.1 percent (3.7 percent excluding the impact of currency on sales), compared to $336.0 million in the first six months of 2010. Primary contributors to the increased net sales were a 69.3 percent increase in net sales within our China sales region (62.3 percent excluding the impact of currency), a 14.4 percent increase in net sales within our European sales region (7.8 percent excluding the impact of currency), and a 17.9 percent increase in net sales within our International region (15.9 percent excluding the impact of currency), compared to the year-ago period. The 62.3 percent increase in our China sales region, excluding the impact of currency, is the result of our change in our go-to-market strategy in the domestic Chinese market to a multiple distributor model versus one master distributor. The increases, excluding the currency impact, in the

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European and International sales regions are the result of increased shipments to customers. Net sales within our Mexico region were flat and, excluding the currency impact, decreased 4.7 percent compared to the prior-year period. The decline is the result of decreased sales within our business to business channel. Net sales to U.S. and Canadian foodservice glassware customers increased 1.1 percent, net sales to U.S. and Canadian retail customers increased 1.1 percent and net sales to U.S. and Canadian business to business customers increased 7.7 percent during the first six months of 2011 compared to the first six months of 2010. The 7.7 percent increase in net sales to U.S. and Canadian business to business customers is the result of increased shipments to those customers for various OEM uses.

Segment EBIT increased to $47.4 million for the first half of 2011, compared to $46.6 million for the year-ago period. Segment EBIT as a percentage of net sales decreased to 13.3 percent in the first half of 2011, compared to 13.9 percent in the year-ago period. The primary drivers of the $0.8 million increase in Segment EBIT were the impact of the $5.7 million increase in net sales, excluding the impact of currency, and a $1.2 million favorable currency impact, primarily from changes in value of the Mexican peso and the Euro, partially offset by slightly lower production activity, net of volume-related production and sales costs of $1.7 million, excluding the impact of currency. Other income includes an unfavorable swing of $2.5 million primarily related to larger foreign currency translation losses versus the prior-year period. In addition, we experienced lost production in Mexico due to a short-term raw material issue and lost production in Holland due to minor flooding. These two situations, which have been resolved, negatively impacted gross profit by approximately $1.0 million. The 2011 period also included increases in distribution costs of $1.6 million related to the higher level of sales and diesel fuel costs for freight and in direct materials (primarily packaging) of $3.4 million, offset by a decrease in natural gas of $2.5 million.

Other Operations

For the six months ended June 30, 2011, net sales decreased 5.8 percent to $38.9 million from $41.2 million in the year-ago quarter. The decrease in net sales is the result of a $3.3 million reduction in the net sales of Traex products, partially offset by a 1.5 percent increase in net sales to World Tableware customers and a 5.9 percent increase in net sales of Syracuse China product, as we had increased volume and a stronger mix of products sold. The reduction in net sales of Traex products in the first six months of 2011 is attributable to the sale in late April 2011 of substantially all of the assets of our Traex subsidiary.

Segment EBIT decreased by $1.6 million, or 19.4 percent, to $6.6 million for the six months ended June 30, 2011, compared to $8.2 million in the year-ago period. Segment EBIT as a percentage of net sales decreased to 17.1 percent in the six months ended June 30, 2011, compared to 20.0 percent in the year-ago period. The key contributor to the decreased Segment EBIT was the decrease in sales volume explained above offset by an increase in costs of purchased finished goods of $0.8 million.

Capital Resources and Liquidity

Balance Sheet and Cash Flows

Cash and Equivalents

At June 30, 2011 our cash balance was $44.3 million, a decrease of $32.0 million from $76.3 million at December 31, 2010. The decrease was primarily due to the cash interest payment made on our Senior Secured Notes in February, 2011 and the use of cash to redeem $40.0 million of Senior Secured Notes in March, 2011.

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Working Capital

The following table presents our working capital components:

(dollars in thousands, except percentages							Variance
and DSO, DIO, DPO and DWC)	June 30, 2011			December 31, 2010			In dollars		In percent
Accounts receivable — net	$	97,687		$	92,101		$	5,586		6.1	%
DSO (1)		44.0			42.0
Inventories — net	$	168,197		$	148,146		$	20,051		13.5	%
DIO (2)		75.8			67.6
Accounts payable	$	61,612		$	59,095		$	2,517		4.3	%
DPO (3)		27.8			27.0
Working capital (4)	$	204,272		$	181,152		$	23,120		12.8	%
DWC (5)		92.1			82.6
Percentage of net sales		25.2	%		22.6	%

DSO, DIO, DPO and DWC are calculated using the last twelve months net sales as the denominator and are based on a 365-day calendar year.

(1)	Days sales outstanding (DSO) measures the number of days it takes to turn receivables into cash.
(2)	Days inventory outstanding (DIO) measures the number of days it takes to turn inventory into cash.
(3)	Days payable outstanding (DPO) measures the number of days it takes to pay the balances of our accounts payable.
(4)	Working capital is defined as net accounts receivable plus net inventories less accounts payable. See Table 3 for the calculation of this non-GAAP financial measure and for further discussion as to the reasons we believe this non-GAAP financial measure is useful.
(5)	Days working capital (DWC) measures the number of days it takes to turn our working capital into cash.

Working capital (as defined above) was $204.3 million at June 30, 2011, an increase of $23.1 million from December 31, 2010. Included in this increase was a $5.5 million increase caused by currency exchange rates. Our working capital normally increases during the first half of the year due to the seasonality of our business. In particular, inventory normally increases to prepare for seasonally higher orders that typically exceed production levels in the later part of the year. This quarter, our increase is primarily due to higher inventories and accounts receivable, as we began to experience the effects of both higher sales and production levels. We also experienced a slight increase in accounts payable when compared to the end of 2010 due to higher production levels and capital expenditures. Our DSO also increased compared to the end of the year as increased collections will typically lag any increase in sales volume. As a result of the factors above, working capital as a percentage of net sales increased to 25.2 percent at June 30, 2011 from 22.6 percent at December 31, 2010. However, working capital as a percentage of net sales at June 30, 2011 is comparable to that of 25.1 percent at June 30, 2010.

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Borrowings

The following table presents our total borrowings:

			June 30,		December 31,
(dollars in thousands)	Interest Rate	Maturity Date	2011		2010
Borrowings under ABL facility	floating	April 29, 2016	$	2,159	$	—
Senior Secured Notes	10.00% (1)	February 15, 2015		360,000		400,000
Promissory note	6.00%	July, 2011 to September, 2016		1,210		1,307
RMB loan contract	floating	July, 2012 to January, 2014		38,675		37,925
BES Euro line	floating	December, 2011 to December, 2013		11,873		10,934
Total borrowings				413,917		450,166
Less — unamortized discount				4,988		6,307
Plus — Carrying value adjustment on debt related to the Interest Rate Agreement (1)				3,573		3,266
Total borrowings — net (2)			$	412,502	$	447,125

(1)	See “Derivatives” below and note 9 to the Condensed Consolidated Financial Statements.
(2)	The total borrowings — net include long-term debt due within one year and long-term debt as stated in our Condensed Consolidated Balance Sheets.

We had total borrowings of $413.9 million at June 30, 2011, compared to total borrowings of $450.2 million at December 31, 2010. The $36.3 million decrease in borrowings was the result of the March 25, 2011 $40.0 million redemption of Senior Secured Notes, offset by an increase in our borrowings under the ABL facility. The entire increase in the RMB loan contract and the BES Euro line from December 31, 2010 results from changes in exchange rates.

Of our total borrowings, $142.7 million, or approximately 34.5 percent, was subject to variable interest rates at June 30, 2011. A change of one percentage point in such rates would result in a change in interest expense of approximately $1.4 million on an annual basis.

Included in interest expense is the amortization of discounts, warrants and financing fees. These items amounted to $1.1 million and $1.2 million for the three months ended June 30, 2011 and 2010, respectively, and $2.3 million and $2.2 million for the six months ended June 30, 2011 and 2010, respectively.

Cash Flow

The following table presents key drivers to our free cash flow for the second quarter.

	Three months ended June 30,						Variance
(dollars in thousands, except percentages)	2011			2010			In dollars			In percent
Net cash provided by operating activities	$	29,914		$	38,112		$	(8,198	)		(21.5	)%
Capital expenditures		(9,892	)		(7,231	)		(2,661	)		(36.8	)%
Net proceeds from sale of Traex		12,842			—			12,842		NM
Proceeds from asset sales and other		597			—			597		NM
Free cash flow (1)	$	33,461		$	30,881		$	2,580			8.4	%

NM = not meaningful

(1)

We believe that Free cash flow [net cash provided by operating activities, less capital expenditures, plus proceeds from asset sales and the sale of Traex] is a useful metric for evaluating our financial performance, as it is a measure we use internally to assess performance. See Table 2 for a reconciliation of net cash provided by operating activities to Free cash flow and a further discussion as to the reasons we believe this non-GAAP financial measure is useful.

Our net cash provided by operating activities was $29.9 million in the second quarter of 2011, compared to net cash provided by operating activities of $38.1 million in the year-ago quarter, or a decrease of $8.2 million. The major factors impacting cash flow from operations were improvements of $5.8 million from net income, $2.9 million from changes in accounts receivable, offset by unfavorable cash flow impact of $8.8 million from changes in income tax accounts, $3.7 million in accounts payable change, and a

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$3.6 million gain on asset sales.

Our net cash provided by investing activities was $3.5 million in the second quarter of 2011, compared to a $7.2 million use of cash in the year-ago period, primarily as a result of the $12.8 million in net proceeds from the sale of substantially all of the assets of our Traex subsidiary in April 2011.

Net cash used in financing activities was $2.6 million in the second quarter of 2011, compared to $2.1 million in the year-ago quarter. During the second quarter of 2011, we utilized $2.2 million for repayments on our ABL credit facility, while there were no borrowings or repayments on this facility for the second quarter of 2010. There was $1.5 million of debt issuance costs in the second quarter 2010 compared to $0.3 million in the second quarter 2011.

Our free cash flow was $33.5 million during the second quarter of 2011, compared to $30.9 million in the year-ago quarter, an increase of $2.6 million. The primary contributors to this change were the $12.8 million in net proceeds from the sale of substantially all of the assets of our Traex subsidiary, offset by an $8.2 million decrease in cash provided by operating activities, as discussed above.

The following table presents key drivers to our free cash flow for the first six months.

	Six months ended June 30,						Variance
(dollars in thousands, except percentages)	2011			2010			In dollars			In percent
Net cash provided by (used in) operating activities	$	6,834		$	(8,053	)	$	14,887			184.9	%
Capital expenditures		(18,398	)		(11,379	)		(7,019	)		(61.7	)%
Net proceeds from sale of Traex		12,842			—			12,842		NM
Proceeds from asset sales and other		5,199			—			5,199		NM
Payment of interest on New PIK Notes		—			29,400			(29,400	)		(100.0	)%
Free cash flow (1)	$	6,477		$	9,968		$	(3,491	)		(35.0	)%

NM = not meaningful

(1)

We believe that Free cash flow [net cash provided by (used in) operating activities, less capital expenditures, plus proceeds from asset sales and the sale of Traex; further adjusted for payment of interest on New PIK Notes] is a useful metric for evaluating our financial performance, as it is a measure we use internally to assess performance. See Table 2 for a reconciliation of net cash provided by (used in) operating activities to Free cash flow and a further discussion as to the reasons we believe this non-GAAP financial measure is useful.

Our net cash provided by operating activities was $6.8 million in the first six months of 2011, compared to net cash used in operating activities of $(8.1) million in the year-ago period, or a increase of $14.9 million. The major factors impacting cash flow from operations were the $50.6 million reduction to net income, $15.0 million from changes in accrued interest and amortization of discounts, warrants and finance fees, $9.5 million from changes in the income tax accounts, $7.1 million change in (gain) loss on asset sales, offset by $89.0 million of items related to our debt refinancing and $4.4 million from the impact of increased working capital related to increased sales and production.

Our net cash used in investing activities decreased to $1.6 million in the first six months of 2011, compared to $19.8 million in the year-ago period, primarily as a result of the $12.8 million in net proceeds from the sale of substantially all of the assets of our Traex subsidiary in April 2011 and $5.2 million in proceeds from asset sales during the first six months of 2011 primarily related to the sale of land at our Royal Leerdam facility and the vacant property in Syracuse, New York, compared to no proceeds in the prior year period.

Net cash provided by (used in) financing activities was $(38.0) million in the first six months of 2011, compared to $19.9 million in the year-ago period. During the first half of 2011, we redeemed $40.0 million of Senior Secured Notes offset by $2.1 million of net borrowings on our ABL facility. During the first half of 2010, our proceeds from the Senior Secured Notes were more than offset by the repurchase of our floating rate notes, the redemption of the New PIK notes and payment of debt issuance costs.

Our Free cash flow was $6.5 million during the first six months of 2011, compared to $10.0 million in the year-ago period, a decrease of $3.5 million. The primary contributors to this change were the increase in cash flow from operating activities, which included payment of interest on the New PIK Notes in 2010, proceeds from asset sales and the sale of substantially all of the assets of our Traex subsidiary, as discussed above, all offset by a $7.0 million increase in capital expenditures in the current period.

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Derivatives

We have an Interest Rate Agreement (Rate Agreement) with respect to $90.0 million of debt in order to convert a portion of the Senior Secured Note fixed rate debt into floating rate debt and maintain a capital structure containing appropriate amounts of fixed and floating rate debt. The interest rate for our borrowings related to the Rate Agreement at June 30, 2011 is 7.55 percent per year. This Rate Agreement expires on February 15, 2015. Total remaining Senior Secured Notes not covered by the Rate Agreement have a fixed interest rate of 10.0 percent. If the counterparty to this Rate Agreement was to fail to perform, the Rate Agreement would no longer provide the desired results. However, we do not anticipate nonperformance by the counterparty. The counterparty was rated AA- as of June 30, 2011, by Standard and Poor’s.

The fair market value for the Rate Agreement at June 30, 2011, was a $3.3 million asset. The fair value of the Rate Agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. We do not expect to cancel this agreement and expect it to mature as originally contracted.

We also use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts is to reduce the effects of fluctuations and price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements up to eighteen months in the future. The fair values of these instruments are determined from market quotes. At June 30, 2011, we had commodity futures contracts for 2,370,000 million British Thermal Units (BTUs) of natural gas with a fair market value of a $(1.7) million liability. We have hedged a portion of our forecasted transactions through December 2012. At December 31, 2010, we had commodity futures contracts for 3,090,000 million BTUs of natural gas with a fair market value of a $(3.2) million liability. The counterparties for these derivatives were rated BBB+ or better as of June 30, 2010, by Standard & Poor’s.

Capital Resources and Liquidity

Historically, cash flows generated from operations and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. As of June 30, 2011 we had $2.2 million outstanding under our ABL Facility, and we had $10.5 million of letters of credit issued under that facility. As a result, we had $69.3 million of unused availability remaining under the ABL Facility at June 30, 2011. In addition, we had $44.3 million of cash on hand at June 30, 2011.

Based on our operating plans and current forecast expectations, we anticipate that our level of cash on hand, cash flows from operations and our borrowing capacity under our amended and restated ABL Facility will provide sufficient cash availability to meet our ongoing liquidity needs.

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Reconciliation of Non-GAAP Financial Measures

We sometimes refer to data derived from condensed consolidated financial information but not required by GAAP to be presented in financial statements. Certain of these data are considered “non-GAAP financial measures” under Securities and Exchange Commission (SEC) Regulation G. We believe that non-GAAP data provide investors with a more complete understanding of underlying results in our core business and trends. In addition, we use non-GAAP data internally to assess performance. Although we believe that the non-GAAP financial measures presented enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered an alternative to GAAP.

Table 1

Reconciliation of net income to EBIT, EBITDA	Three months ended						Six months ended
and Adjusted EBITDA	June 30,						June 30,
(dollars in thousands)	2011			2010			2011			2010
Net income	$	15,406		$	9,567		$	14,405		$	64,977
Add: Interest expense		10,787			11,768			22,370			21,388
Add: Provision for income taxes		1,583			3,477			1,897			5,297
Earnings before interest and income taxes (EBIT)		27,776			24,812			38,672			91,662
Add: Depreciation and amortization		11,027			10,568			21,908			20,954
Earnings before interest, taxes, deprecation and amortization (EBITDA)		38,803			35,380			60,580			112,616
Add: Special items before interest and taxes:
Loss (gain) on redemption of debt (see note 4) (1)		—			—			2,803			(56,792	)
Facility closure charges (see note 5) (2)		(57	)		156			(6	)		518
Gain on sale of land at our Royal Leerdam facility		—			—			(3,445	)		—
Gain on sale of Traex		(3,321	)		—			(3,321	)		—
Fixed asset write-down (see note 5)		(1,021	)		2,687			(1,021	)		2,687
Insurance claim recovery		—			(945	)		—			(945	)
CEO transistion expenses		420			—			420			—
Adjusted EBITDA	$	34,824		$	37,278		$	56,010		$	58,084

(1)

Loss (gain) on redemption of debt relates to the write-off of finance fees, discounts and a call premium on the redemption of $40.0 million of the Senior Secured Notes in March 2011 and the net gain recorded upon redeeming $80.4 million of New PIK Notes, repurchasing $306.0 million of floating rate notes and writing off finance fees, discounts and a call premium on the floating rate notes in February 2010.

(2)

Facility closure charges are related to the closure of our Syracuse, New York ceramic dinnerware manufacturing facility, our Mira Loma, California distribution center and the decorating operations at our Shreveport manufacturing facility.

We define EBIT as net income before interest expense and income taxes. The most directly comparable U.S. GAAP financial measure is net income.

We believe that EBIT is an important supplemental measure for investors in evaluating operating performance in that it provides insight into company profitability. Libbey’s senior management uses this measure internally to measure profitability. EBIT also allows for a measure of comparability to other companies with different capital and legal structures, which accordingly may be subject to different interest rates and effective tax rates.

The non-GAAP measure of EBIT does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. Because this is a material and recurring item, any measure that excludes it has a material limitation. EBIT may not be comparable to similarly titled measures reported by other companies.

We define EBITDA as net income before interest expense, income taxes, depreciation and amortization. The most directly comparable U.S. GAAP financial measure is net income.

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We believe that EBITDA is an important supplemental measure for investors in evaluating operating performance in that it provides insight into company profitability and cash flow. Libbey’s senior management uses this measure internally to measure profitability and to set performance targets for managers. It also has been used regularly as one of the means of publicly providing guidance on possible future results. EBITDA also allows for a measure of comparability to other companies with different capital and legal structures, which accordingly may be subject to different interest rates and effective tax rates, and to companies that may incur different depreciation and amortization expenses or impairment charges.

The non-GAAP measure of EBITDA does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. EBITDA also excludes depreciation and amortization expenses. Because these are material and recurring items, any measure that excludes them has a material limitation. EBITDA may not be comparable to similarly titled measures reported by other companies.

We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA internally to measure profitability and to set performance targets for managers.

Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:

• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

• Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and

• other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Table 2

Reconciliation of net cash provided by (used in)	Three months ended						Six months ended
operating activities to free cash flow	June 30,						June 30,
(dollars in thousands)	2011			2010			2011			2010
Net cash provided by (used in) operating activities	$	29,914		$	38,112		$	6,834		$	(8,053	)
Capital expenditures		(9,892	)		(7,231	)		(18,398	)		(11,379	)
Net proceeds from sale of Traex		12,842			—			12,842			—
Proceeds from asset sales and other		597			—			5,199			—
Payment of interest on New PIK Notes		—			—			—			29,400
Free cash flow	$	33,461		$	30,881		$	6,477		$	9,968

We define Free cash flow as net cash provided by (used in) operating activities less capital expenditures plus proceeds from asset sales and the sale of Traex; further adjusted for the payment of interest on the New PIK Notes. The most directly comparable U.S. GAAP financial measure is net cash provided by operating activities.

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We believe that Free cash flow is important supplemental information for investors in evaluating cash flow performance in that it provides insight into the cash flow available to fund such things as discretionary debt service, acquisitions and other strategic investment opportunities. It is a measure of performance we use to internally evaluate the overall performance of the business.

Free cash flow is used in conjunction with and in addition to results presented in accordance with U.S. GAAP. Free cash flow is neither intended to represent nor be an alternative to the measure of net cash provided by operating activities recorded under U.S. GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies.

Table 3

Reconciliation of working capital	June 30,		December 31,
(dollars in thousands)	2011		2010
Accounts receivable (net)	$	97,687	$	92,101
Plus: Inventories (net)		168,197		148,146
Less: Accounts payable		61,612		59,095
Working capital	$	204,272	$	181,152

We define working capital as net accounts receivable plus net inventories less accounts payable.

We believe that working capital is important supplemental information for investors in evaluating liquidity in that it provides insight into the availability of net current resources to fund our ongoing operations. Working capital is a measure used by management in internal evaluations of cash availability and operational performance.

Working capital is used in conjunction with and in addition to results presented in accordance with U.S. GAAP. Working capital is neither intended to represent nor be an alternative to any measure of liquidity and operational performance recorded under U.S. GAAP. Working capital may not be comparable to similarly titled measures reported by other companies.

Item 3. Qualitative and Quantitative Disclosures about Market Risk

Currency

We are exposed to market risks due to changes in currency values, although the majority of our revenues and expenses are denominated in the U.S. dollar. The currency market risks include devaluations and other major currency fluctuations relative to the U.S. dollar, Euro, RMB or Mexican peso that could reduce the cost competitiveness of our products compared to foreign competition.

Interest Rates

We have an Interest Rate Agreement (Rate Agreement) with respect to $90.0 million of debt in order to convert a portion of the Senior Secured Note fixed rate debt into floating rate debt and maintain a capital structure containing appropriate amounts of fixed and floating rate debt. The interest rate for our borrowings related to the Rate Agreement at June 30, 2011 is 7.55 percent per year. The Rate Agreement expires on February 15, 2015. Total remaining Senior Secured Notes not covered by the Rate Agreement have a fixed interest rate of 10.0 percent. If the counterparty to the Rate Agreement was to fail to perform, the Rate Agreement would no longer provide the desired results. However, we do not anticipate nonperformance by the counterparty. The counterparty was rated AA- as of June 30, 2011, by Standard and Poor’s.

Natural Gas

We are also exposed to market risks associated with changes in the price of natural gas. We use commodity futures contracts related to forecasted future North American natural gas requirements of our manufacturing operations. The objective of these futures contracts is to limit the fluctuations in prices paid and potential volatility in earnings or cash flows from price movements in the underlying natural gas commodity. We consider the forecasted natural gas requirements of our manufacturing operations in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements up to eighteen months in the future. For our natural gas requirements that are not hedged, we are subject to changes in the price of natural gas, which affect our earnings. If the counterparties to these futures contracts were to fail to perform, we would no longer be protected from natural gas fluctuations by the futures contracts. However, we do not anticipate nonperformance by these counterparties. All counterparties were rated BBB+ or

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better by Standard and Poor’s as of June 30, 2011.

Retirement Plans

We are exposed to market risks associated with changes in the various capital markets. Changes in long-term interest rates affect the discount rate that is used to measure our benefit obligations and related expense. Changes in the equity and debt securities markets affect the performance of our pension plans asset performance and related pension expense. Sensitivity to these key market risk factors is as follows:

• A change of 1.0 percent in the discount rate would change our total annual pension and nonpension postretirement expense by approximately $4.5 million.

• A change of 1.0 percent in the expected long-term rate of return on plan assets would change annual pension expense by approximately $2.4 million.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (the “Exchange Act”) reports are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in our controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

This document and supporting schedules contain statements that are not historical facts and constitute projections, forecasts or forward-looking statements. These forward-looking statements reflect only our best assessment at this time, and may be identified by the use of words or phrases such as “anticipate,” “believe,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” “would” or similar phrases. Such forward-looking statements involve risks and uncertainty; actual results may differ materially from such statements, and undue reliance should not be placed on such statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

Item 1A. Risk Factors

The following factors are the most significant factors that can impact period-to-period comparisons and may affect the future performance of our businesses. New risks may emerge, and management cannot predict those risks or estimate the extent to which they may affect our financial performance.

The following factors are the most significant factors that can impact period-to-period comparisons and may affect the future performance of our businesses. New risks may emerge, and management cannot predict those risks or estimate the extent to which they may affect our financial performance.

• Slowdowns in the retail, travel, restaurant and bar or entertainment industries, such as those caused by general economic downturns, terrorism or political or social unrest, health concerns or strikes or bankruptcies within those industries, could

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	reduce our revenues and production activity levels.
•	Our high level of debt, as well as incurrence of additional debt, may limit our operating flexibility, which could adversely affect our results of operations and financial condition.
•	International economic and political factors could affect demand for imports and exports, and our financial condition and results of operations could be adversely impacted as a result.
•	Fluctuation of the currencies in which we conduct operations could adversely affect our financial condition and results of operations or reduce the cost competitiveness of our products or those of our subsidiaries.
•	Our business requires us to maintain a large fixed-cost base that can affect our profitability.
•	We may not be able to achieve the international growth contemplated by our strategy.
•	We face intense competition and competitive pressures, which could adversely affect our results of operations and financial condition.
•	We conduct significant operations at our facility in Monterrey, Mexico, which could be materially adversely affected as a result of the increased levels of drug-related violence in that city.
•	We may not be able to renegotiate collective bargaining agreements successfully when they expire; organized strikes or work stoppages by unionized employees may have an adverse effect on our operating performance.
•	The inability to extend or refinance debt of our foreign subsidiaries, or the calling of that debt before scheduled maturity, could adversely impact our liquidity and financial condition.
•	Our cost-reduction projects may not result in anticipated savings in operating costs.
•	We are subject to risks associated with operating in foreign countries. These risks could adversely affect our results of operations and financial condition.
•	If we have a fair value impairment in a business segment, our net earnings and net worth could be materially and adversely affected by a write-down of goodwill, intangible assets or fixed assets.
•	A severe outbreak, epidemic or pandemic of the H1N1 virus or other contagious disease in a location where we have a facility could adversely impact our results of operations and financial condition.
•	We are subject to various environmental legal requirements and may be subject to new legal requirements in the future; these requirements could have a material adverse effect on our operations.
•	If we are unable to obtain raw materials or sourced products or utilities at favorable prices, or at all, our operating performance may be adversely affected.
•	Unexpected equipment failures may lead to production curtailments or shutdowns.
•	High levels of inflation and high interest rates in Mexico and China could adversely affect the operating results and cash flows of our operations there.
•	Charges related to our employee pension and postretirement welfare plans resulting from market risk and headcount realignment may adversely affect our results of operations and financial condition.
•	If our hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings.

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• If counterparties to our hedge agreements fail to perform, the hedge agreements would not protect us from fluctuations in certain commodity pricing.

• Our business may suffer if we do not retain our senior management.

• We rely on increasingly complex information systems for management of our manufacturing, distribution, sales and other functions. If our information systems fail to perform these functions adequately, or if we experience an interruption in their operation, our business and results of operations could suffer.

• We may not be able to effectively integrate future businesses we acquire or joint ventures we enter into.

• Our business requires significant capital investment and maintenance expenditures that we may be unable to fulfill.

• Natural gas, the principal fuel we use to manufacture our products, is subject to fluctuating prices; fluctuations in natural gas prices could adversely affect our results of operations and financial condition.

• If our investments in new technology and other capital expenditures do not yield expected returns, our results of operations could be reduced.

• Our failure to protect our intellectual property or prevail in any intellectual property litigation could materially and adversely affect our competitive position, reduce revenue or otherwise harm our business.

• Devaluation or depreciation of, or governmental conversion controls over, the foreign currencies in which we operate could affect our ability to convert the earnings of our foreign subsidiaries into U.S. dollars.

• Payment of severance or retirement benefits earlier than anticipated could strain our cash flow.

• We are involved in litigation from time to time in the ordinary course of business.

• Our products are subject to various health and safety requirements and may be subject to new health and safety requirements in the future; these requirements could have a material adverse effect on our operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer’s Purchases of Equity Securities

					Total Number of
					Shares Purchased as		Maximum Number of
					Part of Publicly		Shares that May Yet Be
	Total Number of		Average Price		Announced Plans or		Purchased Under the
Period	Shares Purchased		Paid per Share		Programs		Plans or Programs (1)
April 1 to April 30, 2011		—		—		—		1,000,000
May 1 to May 31, 2011		—		—		—		1,000,000
June 1 to June 30, 2011		—		—		—		1,000,000
Total		—		—		—		1,000,000

(1) We announced on December 10, 2002, that our Board of Directors authorized the purchase of up to 2,500,000 shares of our common stock in the open market and negotiated purchases. There is no expiration date for this plan. In 2003, 1,500,000 shares of our common stock were purchased for $38.9 million. No additional shares were purchased in the six months ended 2011, 2010, 2009, 2008, 2007, 2006, 2005 or 2004. Our ABL Facility and the indentures governing the Senior Secured Notes significantly restrict our ability to repurchase additional shares.

Item 5. Other Information

Until such time as our Board of Directors establishes a different frequency, we will, at each annual meeting of shareholders, submit to our shareholders for approval, on a non-binding, advisory basis, our executive compensation program, as described in the

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Compensation Discussion & Analysis and accompanying tables included in our proxy statement for the applicable annual meeting of shareholders.

Item 6. Exhibits

Exhibits: The exhibits listed in the accompanying “Exhibit Index” are filed as part of this report.

EXHIBIT INDEX

Exhibit
Number	Description
3.1	Restated Certificate of Incorporation of Libbey Inc. (filed as Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
3.2	Amended and Restated By-Laws of Libbey Inc. (filed as Exhibit 3.2 to Libbey Inc.’s Current Report on Form 8-K filed August 1, 2011, and incorporated herein by reference).
4.1	Warrant, issued June 16, 2006. (filed as Exhibit 4.7 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
4.2	Amended and Restated Registration Rights Agreement, dated October 29, 2009, among Libbey Inc. and Merrill Lynch PCG, Inc. (filed as Exhibit 4.4 to Registrant’s Form 8-K filed October 29, 2009 and incorporated herein by reference).
4.3	Amendment and Restated Credit Agreement, dated February 8, 2010, among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, Libbey Inc., as a loan guarantor, the other loan parties party thereto as guarantors, JPMorgan Chase Bank, N.A., as administrative agent with respect to the U.S. loans, J.P. Morgan Europe Limited, as administrative agent with respect to the Netherlands loans, Bank of America, N.A. and Barclays Capital, as Co-Syndication Agents, Wells Fargo Capital Finance, LLC, as Documentation Agent and the other lenders and agents party thereto (filed as Exhibit 4.1 to Libbey Inc.’s Current Report on Form 8-K filed on February 12, 2010 and incorporated herein by reference).
4.4	New Notes Indenture, dated February 8, 2010, among Libbey Glass Inc., Libbey Inc., the domestic subsidiaries of Libbey Glass Inc. listed as guarantors therein, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as Exhibit 4.2 to Libbey Inc.’s Current Report on Form 8-K filed on February 12, 2010 and incorporated herein by reference).
4.5	Registration Rights Agreement, dated February 8, 2010, among Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of Libbey Glass Inc. listed as guarantors (filed as Exhibit 4.4 to Libbey Inc.’s Current Report on Form 8-K filed on February 12, 2010 and incorporated herein by reference).
4.6	Intercreditor Agreement, dated February 8, 2010, among Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of Libbey Glass Inc. listed as guarantors (filed as Exhibit 4.5 to Libbey Inc.’s Current Report on Form 8-K filed on February 12, 2010 and incorporated herein by reference).
4.7	Amendment No. 2 to the Amended and Restated Credit Agreement dated as of April 29, 2011 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on May 3, 2011 and incorporated herein by reference).
10.1	Pension and Savings Plan Agreement dated as of June 17, 1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.4 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
10.2	Cross-Indemnity Agreement dated as of June 24, 1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.5 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
10.3	Libbey Inc. Guarantee dated as of October 10, 1995 in favor of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China Company of Canada Ltd. guaranteeing certain obligations of LG Acquisition Corp. and Libbey Canada Inc. under the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.17 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).
10.4	Susquehanna Pfaltzgraff Co. Guarantee dated as of October 10, 1995 in favor of LG Acquisition Corp. and Libbey Canada Inc. guaranteeing certain obligations of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China Company of Canada, Ltd. under the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.18 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).
10.5	First Amended and Restated Libbey Inc. Executive Savings Plan (filed as Exhibit 10.23 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference).
10.6	Form of Non-Qualified Stock Option Agreement between Libbey Inc. and certain key employees participating in The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.69 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).

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Exhibit
Number	Description
10.7	The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.67 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
10.8	Stock Promissory Sale and Purchase Agreement between VAA — Vista Alegre Atlantis SGPS, SA and Libbey Europe B.V. dated January 10, 2005 (filed as Exhibit 10.76 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).
10.9	RMB Loan Contract between Libbey Glassware (China) Company Limited and China Construction Bank Corporation Langfang Economic Development Area Sub-branch entered into January 23, 2006 (filed as exhibit 10.75 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.10	Guarantee Contract executed by Libbey Inc. for the benefit of China Construction Bank Corporation Langfang Economic Development Area Sub-branch (filed as exhibit 10.76 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
10.11	Guaranty, dated May 31, 2006, executed by Libbey Inc. in favor of Fondo Stiva S.A. de C.V. (filed as exhibit 10.2 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
10.12	Guaranty Agreement, dated June 16, 2006, executed by Libbey Inc. in favor of Vitro, S.A. de C.V. (filed as exhibit 10.3 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
10.13	Libbey Inc. Amended and Restated Deferred Compensation Plan for Outside Directors (incorporated by reference to Exhibit 10.61 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
10.14	2009 Director Deferred Compensation Plan (filed as Exhibit 10.51 to Libbey Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference).
10.15	Executive Deferred Compensation Plan (filed as Exhibit 10.52 to Libbey Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference).
10.16	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and John F. Meier (filed as exhibit 10.29 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.17	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and Richard I. Reynolds (filed as exhibit 10.30 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.18	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and Gregory T. Geswein (filed as exhibit 10.31 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.19	Form of Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and the respective executive officers identified on Appendix 1 thereto (filed as exhibit 10.32 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.20	Amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and John F. Meier (filed as exhibit 10.33 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.21	Form of amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and the respective executive officers identified on Appendix 1 thereto (filed as exhibit 10.34 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.22	Form of amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and the respective individuals identified on Appendix 1 thereto (filed as exhibit 10.35 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.23	Form of Amended and Restated Indemnity Agreement dated as of December 31, 2008 between Libbey Inc. and the respective officers identified on Appendix 1 thereto (filed as exhibit 10.36 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.24	Form of Amended and Restated Indemnity Agreement dated as of December 31, 2008 between Libbey Inc. and the respective outside directors identified on Appendix 1 thereto (filed as exhibit 10.37 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.25	Amended and Restated Libbey Inc. Supplemental Retirement Benefit Plan effective December 31, 2008 (filed as exhibit 10.38 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.26	Amendment to the First Amended and Restated Libbey Inc. Executive Savings Plan effective December 31, 2008 (filed as exhibit 10.39 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
10.27	Employment Agreement dated as of January 1, 2010 between Libbey Inc. and Roberto B. Rubio (filed as exhibit 10.39 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference).

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Exhibit
Number	Description
10.28	Change in control agreement dated as of January 1, 2010 between Libbey Inc. and Roberto B. Rubio (filed as exhibit 10.40 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference).
10.29	Amended and Restated 2006 Omnibus Incentive Plan of Libbey Inc. (filed as Exhibit 10.29 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and incorporated herein by reference).
10.30	Employment Agreement dated as of June 22, 2011 between Libbey Inc. and Stephanie A. Streeter.
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein).
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein).
32.1	Chief Executive Officer Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 (filed herein).
32.2	Chief Financial Officer Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 (filed herein).
101	Financial statements from the quarterly report on Form 10-Q of Libbey Inc. for the quarter ended June 30, 2011, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LIBBEY INC.
Date: August 5, 2011	By /s/ Richard I. Reynolds
	Richard I. Reynolds,
	Executive Vice President, Chief Financial Officer

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EX-10.30

Exhibit 10.30

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, dated as of June 22, 2011, between LIBBEY INC., a Delaware corporation (the “Company”), and Stephanie A. Streeter (the “Executive”).

     WHEREAS, the Company and the Executive would like to enter into an employment arrangement;

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to provide as follows:

     1. Term of Agreement.

     (a) Term. The term of this Agreement shall commence on July 1, 2011 and shall continue through June 30, 2014. Commencing on July 1, 2014 and each July 1 thereafter, the term of this Agreement shall be extended automatically for one additional year unless, on or before March 1, 2014, or March 1 of any subsequent year, either party gives written notice to the other party that the party giving notice does not wish to extend this Agreement beyond the expiration of the then-current term. For example, if the Company does not desire to renew this Agreement for the one-year period commencing on July 1, 2014, the Company must, on or before March 1, 2014, give written notice to the Executive that the Company does not wish to extend the term of this Agreement. The Company’s employment of the Executive under this Agreement shall continue until terminated as provided in Section 1(b) or Section 4.

     (b) Effect of Nonrenewal. If either party notifies the other that it does not desire to renew this Agreement as provided in Section 1(a), then the Executive’s employment shall end on June 30 of the then current term except as otherwise provided below. If the Company notifies the Executive that it does not wish to renew the term of this Agreement, the Company’s notice may also provide that the Company wishes to continue the Executive’s employment as its Chief Executive Officer, but wishes to renegotiate the terms of employment. If the Company so notifies the Executive, the parties shall negotiate in good faith the terms of the Executive’s continued employment. If the parties have been unable to agree in writing to the terms of the Executive’s continued employment by April 1 of the current term, the Executive may notify the Company in writing by such date that she is willing to extend the term of this Agreement for an additional year. If the Company does not notify the Executive in writing by June 30 of the current term that it has accepted the Executive’s offer to extend the term of the Agreement for an additional year, then the Executive’s employment shall end on such June 30. If either (i) the Company does not notify the Executive that it wishes to renegotiate the terms of the Executive’s continued employment as Chief Executive Officer, or (ii) the parties are unable to agree to the terms of continued employment, the Executive notifies the Company that she is willing to extend the term of the Agreement by an additional year, and the Company fails to accept such offer, and in the case of either (i) or (ii), last day of the term is prior to Executive’s sixty-fifth birthday, then the Executive shall be treated as having been terminated by the Company without Cause for all purposes of this Agreement, and any other agreement that defines termination without Cause by reference to this Agreement.

     2. Position and Duties.

          (a) Position. The Executive hereby agrees to serve as the CEO-Elect until July 31, 2011 and as the Chief Executive Officer of the Company commencing August 1, 2011 and to perform all duties assigned by the Company and to possess the authority commensurate with her position. Effective August 1, 2011, the Executive shall have the duties, responsibility and authority customary for chief executive officers of corporations comparable in size to the Company in the United States, and shall report directly to the Board of Directors of the Company (the “Board”). The Executive shall devote her best efforts to the performance of services to the Company in accordance with the terms of this Agreement and as the Company reasonably may request. The Company shall nominate the Executive for election as a member of the Board, and all other officers of the Company shall report to the Executive or as the Executive may direct and shall be responsible for such functions as assigned to them by the Executive.

          (b) Other Activities. While employed pursuant to this Agreement, the Executive shall not, other than in the performance of duties inherent in, and in furtherance of, the business of the Company, engage in any other business or commercial activity as an employee, consultant, or in any other capacity,

whether or not any compensation is received therefore. Nothing in the preceding sentence shall prevent the Executive from (i) making and managing personal investments, (ii) engaging in community and/or charitable activities, including without limitation service as a director, trustee or officer of an educational, welfare, social, religious or civic organization or charity, (iii) serving as a trustee or director or similar position of a for profit corporation or business enterprise, but for only two such for profit corporations or business enterprises (in addition to the Company) at any one time, or (iv) engaging in such other activities as are approved in writing by the Board. The Executive shall refrain, however, from engaging in any of the acts described in clauses (i) — (iv) of the preceding sentence to the extent that they singly or in the aggregate interfere with the proper performance of the Executive’s duties and responsibilities to the Company or are inconsistent with Section 9.

     3. Compensation. In consideration of the performance of her duties under this Agreement, the Executive shall be entitled to receive the base salary, bonus and benefits set forth on Schedule 1, which Schedule is hereby incorporated into, and shall be considered part of, this Agreement. All amounts payable to the Executive under this Section 3 shall be paid in accordance with the Company’s benefit plans and programs and regular payroll practices (e.g., timing of payments and standard employee deductions, such as income and employment tax withholdings, medical benefit contributions and parking fees, among others). No additional compensation shall be payable to the Executive by reason of the number of hours worked or any hours worked on Saturdays, Sundays or holidays, by reason of special responsibilities assumed (whether on behalf of the Company or any of its subsidiaries or affiliates), special projects completed, or otherwise. The Executive’s compensation shall be reviewed by the Board or the Compensation Committee of the Board (the “Compensation Committee”) annually for possible merit increases and other changes as such reviewing body deems appropriate.

     4. Termination of Employment. Either party may terminate the Executive’s employment under this Agreement at any time and for any reason, without advance notice, as set forth below:

          (a) Termination for Cause. The Company may at any time terminate the Executive for Cause, as hereinafter provided, and shall thereafter have no further obligations to the Executive except as otherwise provided in this Agreement. Without waiving any rights the Company may have hereunder or otherwise, the Company expressly reserves its rights to proceed against the Executive for damages in connection with any claim or cause of action that the Company may have arising out of or related to the Executive’s employment hereunder. “Cause” means (i) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive issues a Notice of Termination for Good Reason (as defined in Section 4(d)) to substantially perform the Executive’s duties, after the Board delivers to the Executive a written demand for substantial performance that specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the Executive’s willful and continued failure (other than as a result of incapacity due to physical or mental illness or after the Executive’s issuance of a Notice of Termination for Good Reason) to substantially follow and comply with the specific and lawful directives of the Board, as reasonably determined by the Board, after the Board delivers to the Executive a written demand that specifically identifies the manner in which the Board believes that the Executive has not substantially followed or complied with the directives of the Board, (iii) the Executive’s commission of an act of fraud or dishonesty that results in a material adverse effect to the Company or the Executive’s commission of an act in material violation of the Company’s code of ethics as in effect from time to time, or (iv) the Executive’s willful engagement in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. For purposes of this Section 4(a), no act, or failure to act, shall be deemed “willful” unless the Executive’s commission of the act or failure to act is not in good faith, and the Executive’s failure to achieve any performance targets established by the Board shall not in itself be considered a willful failure to substantially perform the Executive’s duties or to follow and comply with the directives of the Board. In any event, the Company may not terminate the Executive for Cause unless and until the Company has delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (not counting the Executive) at a meeting of the Board (after reasonable notice to the Executive, an opportunity for the Executive, together with counsel, to be heard before the Board), finding, in the Board’s good faith opinion, that the Executive engaged in any of the conduct set forth above in clauses (i) through (iv) of the definition of “Cause” and specifying in reasonable detail the particulars of the conduct at issue.

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          (b) Death. If the Executive is employed by the Company pursuant to this Agreement at the time of the Executive’s death, then the Executive’s employment shall be terminated automatically concurrently with her death.

          (c) Permanent Disability. The Company may terminate the Executive’s employment due to the Executive’s Permanent Disability. For purposes of this Agreement, “Permanent Disability” means any incapacity due to physical or mental illness as a result of which the Executive is absent from the full-time performance of her duties with the Company for six consecutive months and does not return to the full-time performance of her duties within 30 days after the Company gives Notice of Termination to the Executive.

          (d) Termination Without Cause or For Good Reason. The Company may terminate the Executive’s employment without Cause. The Executive may terminate her employment for “Good Reason” (other than on account of death or Permanent Disability). For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events without the Executive’s consent:

     (i) There is a material diminution in the Executive’s authority, duties, or responsibilities. including without limitation the Executive ceasing to be the Chief Executive Officer of the Company reporting directly to the Board;

     (ii) The Executive’s base salary is reduced;

     (iii) The Executive’s incentive compensation opportunity is reduced by a percentage greater than that applicable to all other executive officers;

     (iv) There is a reduction or elimination of an executive benefit or an employee benefit and the reduction is not applicable to all other officers in the same or similar manner;

     (v) The Executive at any time fails to be elected as a member of the Board; or

     (vi) There is a material breach of this Agreement by the Company and the Company does not remedy it prior to the expiration of 30 days after receipt of written notice of the breach given by the Executive to the Company.

If the Executive does not deliver to the Board, within 90 days after the date on which the Executive knew or should have known of the Good Reason event, written notice specifying in reasonable detail the particulars giving rise to the Good Reason event, the Executive shall be deemed conclusively to have waived that particular Good Reason event (but not any subsequent Good Reason event) even if the Executive’s failure to give timely notice of the Good Reason event is a result of the Executive’s incapacity due to physical or mental illness. In all events, the Company will be given a 30-day period to cure or remedy the condition giving rise to the Executive’s notice.

          (e) Termination by Resignation or Retirement. The Executive may at any time resign or retire, other than for Good Reason, by Notice of Termination to the Company. For purposes of this Agreement, “retirement” shall mean the Executive’s resignation, other than for Good Reason, at any time after attaining the age of 65.

          (f) Notice of Termination. A party who purports to terminate the Executive’s employment (other than as a result of death) shall provide to the other party Notice of Termination in accordance with the other provisions of this Section 4. “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement upon which the terminating party is relying and that sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

          (g) Date of Termination, Etc. “Date of Termination” means the date on which the Executive’s employment with the Company is terminated. Notwithstanding any other provision of this Agreement to the contrary, if the Executive incurs a termination of employment that is not a “separation from service” within the meaning of Section 409A of the Code, the Executive’s right to all amounts payable upon such termination of employment pursuant to Section 5 shall vest on the Date of Termination, but payment of any amount that is subject to Section 409A shall be deferred until the Executive has incurred a separation from service (or, if required by Section 5(e), six months thereafter).

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     5. Compensation upon Termination.

          (a) Accrued Benefits. Upon termination of employment for any reason, the Executive shall be entitled to timely receive (i) her base salary earned through the Date of Termination, (ii) any earned but unpaid vacation pay as of the Date of Termination, (iii) reimbursement of any expenses properly incurred prior to the Date of Termination in accordance with the Company’s policy on business expense reimbursement, (iv) any amount or benefits to which the Executive is entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefit plan or other benefit plan or employment policy maintained by the Company in accordance with the terms of such plan, policy or arrangement, and (v) except in the case of a termination for Cause, any incentive compensation earned but not yet paid for a performance period ended prior to the Date of Termination at the time it would otherwise have been paid but for the termination (the “Accrued Benefits”).

          (b) Death or Permanent Disability. If the Executive’s employment with the Company is terminated by reason of the Executive’s death or Permanent Disability, the Executive’s estate or the Executive, as the case may be, shall be entitled to the following, :

     (i) the Accrued Benefits;

     (ii) Payment of the Executive’s incentive compensation under all plans in effect at the Date of Termination paid at target but prorated over the period of each applicable plan through the Date of Termination, paid not later than thirty days after the Date of Termination; and

     (iii) If the Executive has received any equity compensation that remains unvested as of the date on which Notice of Termination is given, a pro rata portion of the award for the period in which the Date of Termination occurs will vest immediately as of the Date of Termination.

          (c) Termination Without Cause or for Good Reason. If (1) the Company terminates the Executive’s employment without Cause or the Executive terminates her employment for Good Reason, or (2) the Executive is treated as having been terminated without Cause pursuant to Section 1(b), the Executive shall be entitled to the following:

     (i) the Accrued Benefits;

     (ii) With respect to the Executive’s annual incentive compensation opportunity during the year in which the Date of Termination occurs, payment of a prorated amount, based on actual performance for the year; provided, however, that any individual performance goals that are based upon subjective or discretionary determinations of the Company will not be subject to the exercise of any discretion provided in any such plan for the reduction of incentive compensation, and the Company will not otherwise use any discretion provided in such plan to reduce the Executive’s incentive compensation except for discretionary determinations with respect to Company factors that are applied to all employees receiving similar incentive opportunities. The amount payable pursuant to this clause shall be paid, subject to Section 5(e), between January 1 and March 15 of the year following the year in which the Date of Termination occurs;

     (iii) If the Executive is eligible to receive any “performance-based” long term incentive compensation awards as of the date on which Notice of Termination is given, payment of the applicable incentive compensation awards actually earned for each performance cycle during which the Date of Termination occurs but prorated through the Date of Termination; provided, however, that any individual performance goals that are based upon subjective or discretionary determinations of the Company will not be subject to the exercise of any discretion provided in any such plan for the reduction of incentive compensation, and the Company will not otherwise use any discretion provided in such plan to reduce the Executive’s incentive compensation except for discretionary determinations with respect to Company factors that are applied to all employees receiving similar incentive compensation opportunities. The amount required to be paid pursuant to this clause (iii) shall be paid, subject to Section 5(e), between January 1 and March 15 of the year following the end of each applicable performance cycle;

     (iv) If the Executive has received any equity compensation, which remains subject to time vesting requirements on the Date of Termination, and if the Date of Termination is a day other than June 30, a portion of the award that would have otherwise vested after the Date of Termination but

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on or prior to the next June 30 following the Date of Termination shall vest immediately as of the Date of Termination;

     (v) Payment equal to two times the sum of (A) Executive’s annual base salary at the rate in effect on the date on which Notice of Termination is given (but without regard to any reduction in base salary that constituted, or would have constituted, Good Reason) and (B) the greater of (1) the Executive’s target annual incentive compensation opportunity at the time the Notice of Termination is given (but without regard to any reduction in incentive compensation opportunities that constituted, or would have constituted, Good Reason) or (2) the average of the last two years’ annual incentive compensation amounts actually paid to the Executive. The amount required to be paid pursuant to this clause (v) shall be paid, subject to Section 5(e), in regular installments over a 24 month period consistent with the Company’s payroll practices, commencing on the first payroll date following the Date of Termination; provided, however, that in the event that the six-month payment delay described in Section 5(e) is applicable, then no payments shall be made through the six-month period following the Date of Termination, and a catch-up payment, representing the payments that would have been made during such six month period shall be made at the beginning of the seventh month following the Date of Termination, and the remaining installments shall commence with the first payroll date in such seventh month. If the Executive dies prior to the end of such 24 month period, the remaining unpaid installments shall be paid to the Executive’s estate in a lump sum not more than 30 days following the date of death. Each installment payable pursuant to this clause (v) shall be considered a separate “payment” for purposes of Code Section 409A.

     (vi) Executive level outplacement services paid for by the Company to the provider of such services selected by the Executive in an amount not to exceed $75,000; provided that such services are received by Executive prior to the last day of the second taxable year of the Executive following the taxable year of the Executive in which the “separation from service” occurred; and

     (vii) Continuation of the Executive’s medical, prescription drug, dental and life insurance benefits (collectively, “Insurance Benefits”) for a period of 18 months following the Date of Termination or until such earlier time as the Executive receives medical or life insurance coverage through a future employer. Executive shall continue to pay the employee portion of costs for the continued Insurance Benefits on a monthly basis.

          (d) Termination Without Cause or For Good Reason in Connection with a Change in Control. In addition to the benefits set forth under Section 5(c), (1) in the event that the termination without Cause (including an expiration of the term of the Agreement that is treated as a termination without Cause pursuant to Section 1(b)) or for Good Reason occurs within two years following a Change in Control (as hereinafter defined) or (2) in the event that a Change in Control occurs within six months following (A) a termination by the Company without Cause (including an expiration of the term of the Agreement that is treated as a termination without Cause pursuant to Section 1(b)), or (B) a termination by the Executive for Good Reason, the following will apply:

     (i) The payments provided for under Section 5(c)(v) will be equal to two and one-half times, rather than two times, the sum of (A) plus (B) as provided in the first sentence in Section 5(c)(v), and the sum of all such payments shall be paid in a lump sum within five days after the later of the Date of Termination or the Change in Control; provided, however, that if the Company, in its sole discretion, determines that the Change in Control does not constitute a “change in control event” as defined in Code Section 409A, then all such payments that the Company determines either (A) are not “Section 409A Payments” (as defined in Section 5(e)) or (B) that exceed the amount that would have been paid had the termination not occurred in connection with a Change in Control, shall be paid in a lump sum and the remaining installments shall be paid at the time they would have been paid had the termination not occurred in connection with a Change in Control (or, if earlier, not more than five days after a change in control event, as defined in Section 409A, occurs).

     (ii) In lieu of the vesting provided for under Section 5(c)(iv), in the event of a termination by the Company without Cause, termination by the Executive for Good Reason, or the Company’s election not to renew the term of the Agreement following a Change in Control, any equity compensation awards outstanding at the Date of Termination and subject to time vesting

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requirements that were outstanding but not yet vested as of the Date of Termination will become fully vested as of the Date of Termination. In the event a Change in Control occurs within six months following a termination by the Company without Cause, termination by the Executive for Good Reason, or the Agreement expires by reason of the Company’s election not to renew the term of the Agreement pursuant to Section 1, any equity compensation awards subject to time vesting requirements that were outstanding but not yet vested as of the Date of Termination and which did not become vested pursuant to Section 5(c)(iv) will become vested as of the date of the Change in Control.

     (iii) For purposes of this Agreement, a Change in Control shall be deemed to occur if:

     (A) any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. For purposes of this Agreement, the term “Person” is used as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the term “Person” shall not include the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. For purposes of this Agreement, the term “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act;

     (B) during any period of two consecutive years (not including any period prior to the execution of this Agreement), Continuing Directors (as defined below) cease for any reason to constitute at least a majority of the Board. The term “Continuing Directors” means (i) individuals who were members of the Board at the beginning of the two-year period referred to above and (ii) any individuals elected to the Board, after the beginning of the two-year period referred to above, by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. Notwithstanding the immediately preceding sentence, an individual who is elected to the Board after the beginning of the two-year period shall not be deemed a Continuing Director if the individual was designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 5(d)(iii)(A), (C) or (D);

     (C) the consummation of a merger or consolidation of the Company with any other corporation (or other entity), other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than two-thirds of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after the merger or consolidation; or

     (D) the consummation of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

          (e) Payments. Payment of benefits under Section 5(b) in the event of death is subject to reasonable evidence of authority to act for the decedent’s estate. Payment of benefits under clauses (ii) and (iii) of Section 5(b) in the event of Permanent Disability and payment of benefits under clauses (ii), (iii), (iv), (v), (vi) and (vii) of Section 5(c) and under clause 5(d) is conditioned on the release provided under Section 5(f) becoming effective. Except as otherwise provided in this Agreement, all payments under this Agreement shall be subject to applicable withholdings. Notwithstanding any provisions of this Section 5 to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) on the Executive’s Date of Termination, amounts

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that otherwise would be payable, pursuant to clauses (ii) and (iii) of Section 5(b) (other than by reason of death), clauses (ii), (iii), (iv), and (v) of Section 5(c) or under Section 5(d), to the extent that such amounts constitute deferred compensation subject to Section 409A of the Code (the “Section 409A Payments”) during the six-month period immediately following the Date of Termination will instead be paid or made available on the earlier of (i) the first day of the seventh month following the Executive’s Date of Termination and (ii) the Executive’s death. For purposes of this Agreement, all amounts payable pursuant to clauses (ii) and (iii) of Section 5(b) (other than by reason of death), clauses (ii), (iii), (iv) and (v) of Section 5(c) or Section 5(d) shall be considered 409A Payments except to the extent that the Company, in its sole discretion, determines that such amounts satisfy an exception to Section 409A, including the exception for short-term deferrals set forth in Treasury Regulation §1.409A-1(b)(4) and the exception for certain separation pay plans set forth in Treasury Regulation §1.409A-1(b)(9)(iii), which shall be applied to all installments commencing with the first installment that does not qualify as a short-term deferral until the limitation on such separation pay plans is reached. In connection with the Company’s determination as set forth in the preceding sentence, the Executive may furnish the Company with a tax opinion or other evidence that an exception applies but the Company shall not be bound by any such opinion or evidence.

     (f) Release. Payment of any amount to and the provision of any benefits to, or on behalf of, the Executive pursuant to any of clauses (ii) and (iii) of Section 5(b) in the event of Permanent Disability or clauses (ii), (iii), (iv), (v), (vi) and (vii) of Section 5(c) or Section 5(d) and Executive’s acceptance of such amounts shall be conditioned on the Executive’s execution and delivery to the Company, no later than 60 days after the Date of Termination, of a general waiver and release of claims in the form attached hereto as Exhibit A or in such other form substantially similar to Exhibit A as the Company may reasonably request to provide a complete release of all claims and causes of action the Executive or the Executive’s estate may have against the Company, except claims and causes of action arising out of, or related to, the obligations of the Company pursuant to this Agreement (including without limitation Section 11(h)) and Claims (as defined in Exhibit A) for vested benefits under any pension plan, retirement plan and savings plan, or other employee benefit plan, rights under any Equity Compensation plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law. No amount that is conditioned upon the execution of such release shall be paid until the release has been executed and delivered to the Company and the seven-day revocation period provided therein has expired without revocation of the release, and all amounts that would otherwise have been paid prior to such date shall be paid on the first day following the expiration of such revocation period, in a lump sum without interest, provided that if the sixty-eighth day following the Date of Termination occurs in a year that is after the year that includes the Date of Termination, then such amounts shall be paid no earlier than the first day of the later year.

     (g) No Mitigation or Offset for Benefits. There shall be no offset to any compensation or other benefits otherwise payable to, or on behalf of, the Executive pursuant to the terms of Section 5 as a result of the receipt by Executive of any pension, retirement or other benefit payments (including, but not limited to, accrued vacation) except as provided by Section 11(n). The Executive shall not be required to seek or accept other employment, or otherwise to mitigate damages, as a condition to the receive of any compensation or other benefits pursuant to this Section 5.

     6. Termination Obligations.

          (a) The Executive hereby acknowledges and agrees that all personal property and equipment furnished to or prepared by the Executive in the course of or incident to the Executive’s employment by the Company belongs to the Company and shall be promptly returned to the Company upon termination of the employment. “Personal property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), and all other proprietary information relating to the business of the Company or any affiliate. Following termination of employment, the Executive will not retain any written or other tangible material containing any proprietary information or Confidential Information (as defined below) of the Company or any affiliate of the Company.

          (b) Upon termination of the employment, the Executive shall be deemed to have resigned from all offices and directorships then held with the Company or any affiliate of the Company.

          (c) The rights and obligations of the parties under this Agreement, including without

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limitation the Executive’s obligations and/or agreements under Sections 6, 7, 8, 9, 10 and 11 and the Executive’s right to payments of all amounts provided in Section 5 and her right to indemnification and insurance coverage pursuant to Section 11(h), shall survive termination of the employment and the expiration of this Agreement, to the extent necessary to enable to parties to enforce their rights hereunder.

          (d) Any reference to the Company in this Section 6 shall include the Company and any entity that owns, is owned by or is under common ownership with the Company (an “Affiliate”).

     7. Records and Confidential Data.

          (a) The Executive acknowledges that in connection with the performance of her duties during the term of this Agreement, the Company will make available to the Executive, or the Executive will have access to, certain Confidential Information (as defined below) of the Company. The Executive acknowledges and agrees that any and all Confidential Information learned or obtained by the Executive during the course of her employment by the Company or otherwise, whether developed by the Executive alone or in conjunction with others or otherwise, shall be and is the property of the Company.

          (b) The Executive shall keep all Confidential Information confidential and will not use such Confidential Information other than in connection with the Executive’s discharge of her duties hereunder. The Executive will safeguard the Confidential Information from unauthorized disclosure. This covenant is not intended to, and does not limit in any way, any of the Executive’s duties or obligations to the Company under statutory or common law not to disclose or to make personal use of the Confidential Information or trade secrets.

          (c) Following the Executive’s termination hereunder, as soon as possible after the Company’s written request, the Executive will return to the Company all written Confidential Information that has been provided to the Executive, and the Executive will destroy all copies of any analyses, compilations, studies or other documents prepared by the Executive or for the Executive’s use containing or reflecting any Confidential Information. Within ten business days of the receipt of such request by the Executive, the Executive shall, upon written request of the Company, deliver to the Company a notarized document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 7(c).

          (d) For the purposes of this Agreement, “Confidential Information” shall mean all confidential and proprietary information of the Company, including, without limitation, the Company’s marketing strategies, pricing policies or characteristics, customers and customer information, product or product specifications, designs, software systems, cost of equipment, customer lists, business or business prospects, plans, proposals, codes, marketing studies, research, reports, investigations, public relations methods, or other information of similar character. For purposes of this Agreement, the Confidential Information shall not include and the Executive’s obligations under this Section 7 shall not extend to (i) information which is available in the public domain, (ii) information obtained by the Executive from third persons (other than employees of the Company or its affiliates) not under agreement to maintain the confidentiality of the same and (iii) information that is required to be disclosed by law or legal process (provided that the Executive give the Company notice of such disclosure requirement and cooperate with the Company in connection with any action by the Company to seek a protective order or confidential treatment for such information).

          (e) Any reference to the Company in this Section 7 shall include the Company and its Affiliates.

     8. Assignment of Inventions.

          (a) Definition of Inventions. “Inventions” mean discoveries, developments concepts, ideas, methods, designs, improvements, inventions, formulas, processes, techniques, programs, know-how and data, whether or not patentable or registerable under copyright or similar statutes, except any of the foregoing that (i) is not related to the business of the Company or the Company’s actual or demonstrable research or development, (ii) does not involve the use of any equipment, supplies, facility or Confidential Information of the Company, (iii) was developed entirely on the Executive’s own time, and (iv) does not result from any work performed by the Executive for the Company.

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          (b) Assignment. The Executive agrees to and hereby does assign to the Company, without further consideration, all of her right, title and interest in any and all Inventions the Executive may make during the term hereof.

          (c) Duty to Disclose and Assist. The Executive agrees to promptly disclose in writing all Inventions to the Company, and to provide all assistance reasonably requested by the Company in the preservation of the Company’s interests in the Inventions including obtaining patents in any country throughout the world. Such services will be without additional compensation if the Executive is then employed by the Company and for reasonable compensation and subject to her reasonable availability if she is not. If the Company cannot, after reasonable effort, secure the Executive’s signature on any document or documents needed to apply for or prosecute any patent, copyright, or other right or protection relating to an Invention, whether because of her physical or mental incapacity or for any other reason whatsoever, the Executive hereby irrevocably designates and appoints the Company and its duly authorized Officers and agents as her agent and attorney-in-fact, to act for and on her behalf and in her name and stead for the purpose of executing and filing any such application or applications and taking all other lawfully permitted actions to further the prosecution and issuance of patents, copyrights, or similar protections thereon, with the same legal force and effect as if executed by the Executive.

          (d) Ownership of Copyrights. The Executive agrees that any work prepared for the Company which is eligible for United States copyright protection or protection under the Universal Copyright Convention or other such laws or protections including, but not limited to, the Berne Copyright Convention and/or the Buenos Aires Copyright Convention shall be a work made for hire and ownership of all copyrights (including all renewals and extensions) therein shall vest in the Company. If any such work is deemed not to be a work made for hire for any reason, the Executive hereby grants, transfers and assigns all right, title and interest in such work and all copyrights in such work and all renewals and extensions thereof to the Company, and agrees to provide all assistance reasonably requested by the Company in the establishment, preservation and enforcement of the Company’s copyright in such work, such assistance to be provided at the Company’s expense but without any additional compensation to the Executive. The Executive hereby agrees to and does hereby waive the enforcement of all moral rights with respect to the work developed or produced hereunder, including without limitation any and all rights of identification of authorship and any and all rights of approval, restriction or limitation on use or subsequent modifications.

          (e) Litigation. The Executive agrees to render assistance and cooperation to the Company at its request regarding any matter, dispute or controversy with which the Company may become involved and of which the Executive has or may have reason to have knowledge, information or expertise. Such services will be without additional compensation if the Executive is then employed by the Company and for reasonable compensation and subject to her reasonable availability if she is not, but in either event the Company shall reimburse the Executive for all expenses reasonably incurred by the Executive.

          (f) Construction. Any reference to the Company in this Section 8 shall include the Company and its Affiliates.

     9. Additional Covenants.

          (a) Non-Interference with Customer Accounts. Executive covenants and agrees that (i) during employment and (ii) for a period of 24 months commencing on the Date of Termination, except as may be required by Executive’s employment by the Company, Executive shall not directly or indirectly, personally or on behalf of any other person, business, corporation, or entity, contact or do business with any customer of the Company with respect to any product, business activity or service which is competitive with any product, business, activity or service of the type sold or provided by the Company.

          (b) Non-Competition. In consideration of and in connection with the benefits provided to the Executive under this Agreement and in order to protect the goodwill of the Company, the Executive hereby agrees that if the Executive’s employment is terminated, then, unless the Company otherwise agrees in writing, for a period of 24 months commencing on the Date of Termination, the Executive shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with any entity engaged in a business which sells, in competition with the Company and its affiliates, the same type of products as sold by the Company, including without limitation glass tableware, ceramic dinnerware, metal

9

flatware and plastic supplies to the foodservice industry other than as a shareholder or beneficial owner owning five percent or less of the outstanding securities of a public company. Without limiting the foregoing, currently the following business operations among others sell, in competition with the Company and its affiliates, the same type of products as sold by the Company and its affiliates: Anchor Hocking; Arc International and its affiliate Cardinal International, Inc.; Oneida Ltd.; and any glass tableware manufacturer, seller or importer for Bormioli Rocco Casa SpA, for the Kedaung group of companies of Indonesia or for the Sisecam group of companies of Turkey including Pasabahce.

          (c) No Diversion. The Executive covenants and agrees that in addition to the other Covenants set forth in this Section 9, (i) during her employment and (ii) for a period of 24 months following her Date of Termination, Executive shall not divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business opportunities of the Company (e.g., joint ventures, other business combinations, investment opportunities, potential investors in the Company, and other similar opportunities) of which the Executive became aware as a result of her employment with the Company.

          (d) Non-Recruitment. The Executive acknowledges that the Company has invested substantial time and effort in assembling its present workforce. Accordingly, the Executive covenants and agrees that during employment and for period of 24 months commencing on the Date of Termination, the Executive shall not either for the Executive’s own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly entice, solicit, attempt to solicit, or seek to induce or influence any Officer or employee of the Company to leave her employment with the Company or to offer employment to any person who on or during the six month period immediately preceding the date of such solicitation or offer was an employee of the Company; provided, however, that this Section 9(d) shall not be deemed to be breached with respect to an employee or former employee of the Company who responds to a general advertisement seeking employment or who otherwise initiates contact for the purpose of seeking employment.

          (e) Non-Disparagement. Executive covenants and agrees that during the Executive’s employment and after the Date of Termination, Executive shall not induce or incite claims of discrimination, wrongful discharge, or any other claims against the Company or any of its directors, Officers, employees or equity holders, by any other persons, executives or entities, and the Executive shall not undertake any harassing or disparaging conduct directed at the Company or any of its directors, Officers, employees or equity holders, other than such statements made as part of testimony compelled by law or legal process. In addition, the Company covenants and agrees that during the Executive’s employment and after the Date of Termination, neither the Company nor any of its officers, directors, or the officers or directors of its affiliates, shall undertake any harassing or disparaging conduct directed at the Executive, other than such statements made as part of testimony compelled by law or legal process.

          (f) Remedies. The parties acknowledge that should either party violate any of the covenants contained in Sections 6, 7, 8 or 9 hereof (collectively, the “Covenants”), it would be difficult to determine the resulting damages to the other party and, in addition to any other remedies it may have, the party complaining of the violation of a Covenant shall be entitled to (i) temporary injunctive relief without being required to post a bond, (ii) permanent injunctive relief without the necessity of proving actual damage and (iii) suspension of all benefits otherwise payable to or for the account of the Executive under Sections 5(b)(ii) or (iii) in the event of Permanent Disability or Sections 5(c)(ii), (iii), (iv), (v), (vi), or (vii) or 5(d) following the violation, provided that if it shall subsequently be determined by an arbitrator or a court of competent jurisdiction that the Executive did not violate such Covenant, all payment previously suspended shall be paid in full. The party that is determined to have violated a Covenant shall be liable to pay all costs including reasonable attorneys’ fees which the other party may incur in enforcing or defending, to any extent, these Covenants, whether or not litigation is actually commenced and including litigation of any appeal taken or defended by such party, where the party succeeds in enforcing any part of these Covenants. Each party may elect to seek one or more of these remedies at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case does not restrict a party from seeking any remedies in another situation. Such action by a party shall not constitute a waiver of any of its rights.

          (g) Severability and Modification of any Unenforceable Covenant. It is the parties’ intent that each of the Covenants be read and interpreted with every reasonable inference given to its

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enforceability. However, it is also the parties’ intent that if any term, provision or condition of the Covenants is held to be invalid, void or unenforceable, the remainder of the provisions thereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Finally, it is also the parties’ intent that if it is determined any of the Covenants are unenforceable because of over breadth, then the covenants shall be modified so as to make it reasonable and enforceable under the prevailing circumstances.

          (h) Tolling. If the Executive breaches any Covenant, the running of the period of restriction shall be automatically tolled and suspended for the amount of time that the breach continues, and shall automatically recommence when the breach is remedied so that the Company shall receive the benefit of the Executive’s compliance with the Covenants. This paragraph shall not apply to any period for which the Company is awarded and receives actual monetary damages for breach by the Executive of a Covenant with respect to which this paragraph applies.

          (i) Construction. Any reference to the Company in this Section 9 shall include the Company and its affiliates.

     10. No Assignment. This Agreement and the rights and duties hereunder are personal to the Executive and shall not be assigned, delegated, transferred, pledged or sold by the Executive without the prior written consent of the Company. The Executive hereby acknowledges and agrees that the Company may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder (a) to an affiliate of the Company or (b) to any third party in connection with (i) the sale of all or substantially all of the assets of the Company or (ii) a stock purchase, merger, or consolidation involving the Company; provided that if the Agreement is assigned to an affiliate of the Company pursuant to Section 10(a) the Company shall continue to guarantee performance by such affiliate of all obligations of the Company hereunder. This Agreement shall inure to the benefit of and be enforceable by the parties hereto, and their respective heirs, personal representatives, successors and assigns.

     11. Miscellaneous Provisions.

          (a) Payment of Taxes. Except as specifically provided for in this Agreement, to the extent that any taxes become payable by the Executive by virtue of any payments made or benefits conferred by the Company, the Company shall not be liable to pay or obligated to reimburse the Executive for any such taxes or to make any adjustment under this Agreement. Any payments otherwise due under this Agreement to the Executive, including, but not limited to, the base salary and any incentive compensation shall be reduced by any required withholding for federal, state and/or local taxes and other appropriate payroll deductions.

          (b) Notices. All notices and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as properly given or made (i) if delivered personally or (ii) after the expiration of five days from the date upon which such notice was mailed from within the United States by certified mail, return receipt requested, postage prepaid, (iii) upon receipt by prepaid telegram or facsimile transmission (with written confirmation of receipt) or (iv) after the expiration of the second business day following deposit with an overnight delivery service. All notices given or made pursuant hereto shall be so given or made to the parties at the following addresses:

If to the Executive: To the most recent address set forth on the Company’s payroll records.

If to the Company:

Libbey Inc.

300 Madison Avenue

P.O. Box 10060

Toledo, Ohio 43604

Facsimile: (419) 325-2585

Attention: Secretary

The address of any party hereto may be changed by a notice in writing given in accordance with the provisions hereof.

          (c) Severability. If any provision of this Agreement is held by a court of competent

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jurisdiction to be invalid, illegal or unenforceable, such provision shall be severed and enforced to the extent possible or modified in such a way as to make it enforceable, and the invalidity, illegality or unenforceability thereof shall not affect the validity, legality or enforceability of the remaining provisions of this Agreement.

          (d) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio applicable to contracts executed in and to be performed entirely within that state, except with respect to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Agreement, and as to those matters, the law of the jurisdiction under which the respective entity derives its powers shall govern. The parties irrevocably agree that all actions to enforce an arbitrator’s decision pursuant to Section 11(l) shall be instituted and litigated only in federal, state or local courts sitting in Toledo, Ohio and each of such parties hereby consents to the exclusive jurisdiction and venue of such court and waives any objection based on forum non conveniens.

          (e) Waiver of Jury Trial. The parties hereby waive, release and relinquish any and all rights they may have to a trial by jury with RESPECT to any actions TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT TO SECTION 11(l).

          (f) Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.

          (g) Entire Understanding. This Agreement including all Exhibits and Recitals hereto which are incorporated herein by this reference, together with the other agreements and documents being executed and delivered concurrently herewith by the Executive, the Company and certain of its affiliates, constitute the entire understanding among all of the parties hereto and supersedes any prior understandings and agreements, written or oral, among them respecting the subject matter within. In the event of any discrepancy between the terms of this Agreement and any policy or plan of the Company, the terms of this Agreement shall govern and control. Without limiting the generality of the foregoing, any agreement evidencing any equity or long term incentive grant to the Executive shall provide for vesting on termination of employment that is consistent with Section 5, and shall define the terms “Cause” and “Good Reason” in a manner that is consistent with this Agreement, and the determination of the reason for the Executive’s termination shall be made in accordance with Section 11(l) of this Agreement, without regard to any provision of any such agreement or the plan pursuant to which any such grant is made that the determinations made by the Company’s Compensation Committee or any other body are final and binding.

          (h) Indemnification and Insurance. At all times during the term of the Executive’s employment, and following the termination of employment for any reason, the Company agrees to indemnify and hold Executive harmless to the fullest extent permitted by law, with respect to any acts or omissions committed or claimed to have been committed by Executive within the scope of her employment, and for the costs (including fees and disbursements of counsel) incurred by Executive in defending against any such claims, which costs shall be advanced to Executive as incurred subject to a requirement that Executive repay such costs if it is subsequently determined by a court of competent jurisdiction that she was not entitled to indemnification. In connection therewith, Executive shall be entitled to the protection of all insurance policies (including directors and officers liability, fiduciary liability, and employment practices liability policies), that the Company may maintain for the benefit of the Company’s directors and officers in that regard, both during the term of employment and thereafter, at the level applicable to the Company’s most senior officers. The Executive’s rights to indemnification and insurance coverage set forth in this    Section 11(h) shall be in addition to, and not in lieu of, any such rights that the Executive may have under the Company’s by-laws or otherwise.

          (i) Pronouns and Headings. As used herein, all pronouns shall include the masculine, feminine, neuter, singular and plural thereof wherever the context and facts require such construction. The headings, titles and subtitles herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof.

          (j) Amendment. Except as set forth in Sections 9(g) and 11(c) above, this Agreement shall not be changed or amended unless in writing and signed by both the Executive and the Chairman of the Board of Directors or unless amended by the Company in any manner provided that the rights and benefits of the Executive shall not be diminished by any amendment made by the Company without the Executive’s written consent to such amendment.

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          (k) Advice of Counsel. The Executive acknowledges (i) that she has consulted with or has had the opportunity to consult with independent counsel of her own choice concerning this Agreement and has been advised to do so by the Company, and (ii) that she has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on her own judgment.

          (l) Arbitration. Notwithstanding anything herein to the contrary, in the event that there shall be a dispute among the parties arising out of or relating to this Agreement, or the breach thereof, the parties agree that such dispute shall be resolved by final and binding arbitration in Toledo, Ohio, administered by the American Arbitration Association (the “AAA”), in accordance with AAA’s Employment ADR Rules. There shall be a single arbitrator, selected in accordance with AAA rules, who shall be currently licensed to practice law in a State in the United States. The arbitrator’s decision shall be final and binding upon the parties, and may be entered and enforced in any court of competent jurisdiction by either of the parties. The arbitrator shall have the power to grant temporary, preliminary and permanent relief, including without limitation, injunctive relief and specific performance. The arbitrator’s fees and expenses shall be paid by the Company.

          (m) Attorney’s Fees. If the Executive prevails in any arbitration or other proceeding, including without limitation any proceeding to enforce an arbitration award, any legal action and any appeal in connection with this Agreement, the Company shall reimburse the Executive reasonable attorneys’ fees and other costs within a reasonable time after the same are incurred in addition to any other relief to which the Executive may be entitled.

          (n) Coordination with Deferred Compensation Plans. If and to the extent that the Executive has elected, pursuant to the Executive Deferred Compensation Plan or any other non-qualified deferred compensation plan (such plans being referred to as “deferred compensation plans”), to defer receipt of any of compensation, the terms of the applicable deferred compensation plan shall govern as to the events upon which compensation that is subject to a deferral election is distributed to the Executive and the timing of any such distribution. However, the terms of this Agreement shall govern as to whether (and, if so, the extent to which) amounts that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

          (p) Compliance with Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code. This Agreement will be administered in a manner consistent with this intent. References to Section 409A of the Code will include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

          IN WITNESS WHEREOF, this Agreement has been executed as of the date and year first above written.

LIBBEY INC.
By:	/s/ Susan A. Kovach
	Name:	Susan A. Kovach
	Title:	Vice President, General Counsel and Secretary
EXECUTIVE
/s/ Stephanie A. Streeter
Name: Stephanie A. Streeter

13

SCHEDULE 1

1.	Base salary of the Executive $700,000, subject to annual review (commencing in 2012). The base salary, as in effect from time to time, may not be reduced without the Executive’s consent.
2.	Within 30 days after commencement of employment, the Executive shall receive an initial equity grant comprised of Restricted Stock Units (“RSUs”) having an economic value, as of the date of grant, equal to $350,000 and non-qualified stock options (“NQSOs”) having an economic value, as of the date of grant, equal to $350,000. The number of RSUs and NQSOs to be granted will be determined by dividing the economic value set forth above by (a) in the case of the RSUs, the average closing price of Libbey Inc. common stock over a period of 60 consecutive trading days ending on the grant date and (b) in the case of the NQSOs, by the Black Scholes value on the grant date. Each award will vest in four equal annual installments on June 30 of each year commencing with 2012.
3.	The Executive shall be eligible to participate in the following benefit plans and programs of the Company:

a.	The annual performance incentive compensation plan for corporate officers (currently the “Senior Management Incentive Plan”). The target percentage for an Executive’s participation shall be not less than 90% of annual base salary, and the plan shall provide for payment in excess of the target percentage for superior performance. Notwithstanding the foregoing, the Company will pay the Executive pro rata annual performance incentive compensation for 2011, in an amount no less than $315,000.
b.	Participation in the cash component of the Libbey Inc. Long Term Incentive Plan for 2010-12 and 2011-13 performance cycles, in each case on a pro rata basis. Pro rated target opportunity for 2010-2012 performance cycle is $252,000 and prorated target for 2011-2013 performance cycle is $418,320.
c.	Beginning in 2012, participation in the Libbey Inc. Long Term Incentive Plan (or any substitute plan) and participation in the 2006 Omnibus Incentive Plan of Libbey Inc. (or any substitute plan) with components and weighting determined by the Compensation Committee. The target percentage for the Executive’s participation shall be not less than 180% of base salary, as determined on January 1 of each year.
d.	Libbey Inc. Retirement Savings Plan.
e.	Financial Investment and Estate Planning Counseling not to exceed $10,000 per year, and Tax Counseling and Return Preparation Services not to exceed $15,000 per year.
f.	Executive Physical.
g.	Car service in accordance with the Company’s policy.
h.	Executive Deferred Compensation Plan.
i.	Such other benefit plans and arrangements as the Company provides, from time to time, to salaried employees generally.

4.

The Executive shall receive relocation services as set forth in the Libbey Inc. Relocation Policy, provided however that in lieu of the temporary living expense benefits provided in the policy, the Company will provide the Executive with a stipend of $5,000 per month for temporary living expenses and commuting expenses for the Executive or her family between Toledo and Wisconsin, for a period ending on the earlier of the Executive’s relocation to a permanent residence in the Toledo area or June 30, 2012. In addition, in the event the Executive’s primary residence in Wisconsin is sold for less than $871,000, the Company will pay the Executive the difference between $871,000 and the sale price.

5.

The Company shall pay one-half of the Executive’s reasonable attorney’s fees incurred in the negotiation and preparation of this Agreement and collateral agreements in an amount not to exceed $10,000.

14

EXHIBIT A
GENERAL RELEASE AND WAIVER OF CLAIMS

     The undersigned, ___resident of the State of __(“Releasor”), in accordance with and pursuant to the terms of Section 5(f) of the Employment Agreement (the “Agreement”), dated as of June __, 2011, between Libbey Inc., a Delaware corporation (the “Company”), and Releasor, and the consideration therein provided, except as set forth herein, hereby remises, releases and forever discharges and covenants not to sue, and by these presents does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns (Releasor and such persons referred to herein, collectively, as the “Releasing Parties”) hereby remise, release and forever discharge and covenant not to sue the Company and its affiliates and the respective Officers, directors, employees, equity holders, agent and representatives of each of them and all of their respective successor and assigns (each a “Released Party” and collectively, the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of action, suits, promises, damages, judgments, executions, claims and demands, of any nature whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had, or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever, against the Released Parties, and each of them, from the beginning of time to the date hereof;

     (i) arising from Releasor’s employment, compensation, commissions, deferred compensation plans, insurance, stock ownership, stock options, employee benefits, and other terms and conditions of employment or employment practices of the Company under federal, state or local law or regulation, including, but not limited to the Employee Retirement Income Security Act of 1974, as amended;

     (ii) relating to the termination of Releasor’s employment or the circumstances surrounding thereof based on any contract, tort, whistleblower, personal injury, retaliatory, wrongful discharge or any other theory under any federal, state or local constitution, law, regulation, common law or otherwise; (iii) relating to payment of any attorneys’ fees incurred by Releasor; and

     (iii) based on any alleged discrimination on the basis of race, color, religion, sex, age, national origin, handicap, disability or another category protected by any federal, state or local law or regulation, including, but not limited to, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Fair Labor Standards Act, the Older Workers Benefit Protection Act of 1990, or Executive Order 11246 (as any of these laws or orders may have been amended) or any other similar federal, state or local labor, employment or anti-discriminatory laws.

     Notwithstanding any other provision of this General Release and Waiver of Claims, Releasor does not release or waive Releasor’s rights and Claims against the Company arising out of, or related to, the obligations of the Company pursuant to the Agreement or otherwise (including, but not limited to, Releasor’s right to indemnification), Claims for Releasor’s vested benefits under any pension plan, retirement plan and savings plan, or other employee benefit plan, rights under any equity participation plan and stock purchase plan and rights to continuation of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

     Releasor represents and warrants on behalf of the Releasing Parties that there has been, and there will be, no assignment or other transfer of any right or interest in any Claims which Releasor has or may have against the Released Parties, and Releasor hereby agrees to indemnify and hold each Released Party harmless from any Claims, costs, expenses and attorney’s fees directly or indirectly incurred by any of the Released Parties as a result of any person asserting any right or interest pursuant to his, her or its assignment or transfer of any such right or interest.

     Releasor agrees that if any Releasing Party hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based upon, or relating to any of the Claims released hereunder, or in any manner asserts against any Released Party any of the Claims released hereunder, then Releasor will pay to such Released Party, in addition to any all damages and compensation, direct or indirect, all attorney’s fees incurred in defending or otherwise responding to such suit or Claims.

     Releasor acknowledges that (i) Releasor has received the advice of legal counsel in connection with this General Release and Waiver of Claims, (ii) Releasor has read and understands that this is a General Release and Waiver of Claims, and (iii) Releasor it intends to be legally bound by the same.

15

     Releasor acknowledges that Releasor has been given the opportunity to consider this Release for 21 days and has been encouraged and given the opportunity to consult with legal counsel of Releasor’s choosing before signing it. Releasor understands that Releasor shall have seven days from the date on which Releasor executes this General Release and Waiver of Claims (as indicated by the date below his signature) to revoke Releasor’s signature and agreement to be bound hereby by providing written notice of revocation to the Company within such seven-day period. Releasor further understands and acknowledges this Release shall become effective, if not sooner revoked, on the eighth day after the execution hereof by Releasor (the “Effective Date”).

     IN WITNESS WHEREOF, the Company and the Releasor have executed and delivered this General Release and Waiver of Claims on behalf of the Released Parties and Releasing Parties, respectively, as of the day and year set forth below.

Dated: _________, 20__.

RELEASOR:
Name:
LIBBEY INC.:
By:
	Name:

16

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephanie A. Streeter, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Libbey Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2011	By	/s/ Stephanie A. Streeter
		Stephanie A. Streeter,
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Richard I. Reynolds, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Libbey Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2011	By	/s/ Richard I. Reynolds
		Richard I. Reynolds,
		Executive Vice President, Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer

     Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Libbey Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

     (i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

     (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 5, 2011	/s/ Stephanie A. Streeter
	Stephanie A. Streeter
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer

     Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Libbey Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

     (i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

     (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 5, 2011	/s/ Richard I. Reynolds
	Richard I. Reynolds
	Executive Vice President, Chief Financial Officer

XML



Condensed Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Assets:
Cash and cash equivalents	$ 44,309	$ 76,258
Accounts receivable - net	97,687	92,101
Inventories - net	168,197	148,146
Prepaid and other current assets	13,548	6,437
Total current assets	323,741	322,942
Pension asset	14,738	12,767
Purchased intangible assets - net	22,229	23,134
Goodwill	166,572	169,340
Derivative asset	3,356	2,589
Other assets	15,518	17,802
Total other assets	222,413	225,632
Property, plant and equipment - net	269,097	270,397
Total assets	815,251	818,971
Liabilities and Shareholders' Equity:
Accounts payable	61,612	59,095
Salaries and wages	29,957	32,087
Accrued liabilities	58,352	51,211
Accrued special charges	202	768
Accrued income taxes	0	3,121
Pension liability (current portion)	6,132	2,330
Non-pension postretirement benefits (current portion)	5,017	5,017
Derivative liability	2,220	3,392
Long-term debt due within one year	3,393	3,142
Total current liabilities	166,885	160,163
Long-term debt	409,109	443,983
Pension liability	105,800	115,521
Non-pension postretirement benefits	67,910	67,737
Deferred income taxes	8,769	8,376
Other long-term liabilities	8,924	11,925
Total liabilities	767,397	807,705
Shareholders' equity:
Common stock, par value $.01 per share, 50,000,000 shares authorized, 19,850,879 shares issued at June 30, 2011 and 19,682,506 at December 31, 2010	199	197
Capital in excess of par value (includes warrants of $1,034 based on 485,309 shares at June 30, 2011 and at December 31, 2010)	302,525	300,692
Retained deficit	(164,272)	(178,677)
Accumulated other comprehensive loss	(90,598)	(110,946)
Total shareholders' equity	47,854	11,266
Total liabilities and shareholders' equity	$ 815,251	$ 818,971

XML



Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
Shareholders' equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	19,850,879	19,682,506
Capital in excess of par value, amount received on warrants issued	$ 1,034	$ 1,034
Capital in excess of par value, warrants based shares	485,309	485,309

XML



Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2011	Jul. 29, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	LIBBEY INC
Entity Central Index Key	0000902274
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 202,506,432
Entity Common Stock, Shares Outstanding		19,853,533

XML



Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

6. Income Taxes

The Company’s effective tax rate differs from the United States statutory tax rate primarily due to valuation allowances, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions and tax planning structures. At June 30, 2011 and December 31, 2010 we had $1.3 million and $1.1 million, respectively, of gross unrecognized tax benefits, exclusive of interest and penalties.

FASB ASC 740-20, “Income Taxes — Intraperiod Tax Allocation”, requires that the provision for income taxes be allocated between continuing operations and other categories of earnings (such as discontinued operations or other comprehensive income) for each tax jurisdiction. In periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. There is no tax benefit included in our income tax provision for the three months and six months ended June 30, 2011. There was a $0.4 million tax benefit recorded for the three months and six months ended June 30, 2010. Depending upon the level of our future earnings and losses and their impact on other comprehensive income, it is possible that these tax adjustments may change or even reverse in future periods.

Further, our current and future provision for income taxes for 2011 is significantly impacted by valuation allowances. In the United States, China, the Netherlands and Portugal we have recorded valuation allowances against our deferred income tax assets. For the three months and six months ended June 30, 2011, we did not release any valuation allowance. During the first quarter of 2010, we reduced our valuation allowance by $1.1 million. The release of the valuation allowance in 2010 was related to net operating losses in Mexico that were utilized. In assessing the need for recording a valuation allowance we weigh all available positive and negative evidence. Examples of the evidence we consider are cumulative losses in recent years, losses expected in early future years, a history of potential tax benefits expiring unused, and whether there was an unusual, infrequent, or extraordinary item to be considered. We intend to maintain these allowances until it is more likely than not that the deferred income tax assets will be realized.

Total income tax payments for the three months ended June 30, 2011, were $4.6 million, including $3.2 million in cash and $1.4 million in credits or offsets. Total income tax payments for the three months ended June 30, 2010, were refunds of $0.1 million, including a refund of $0.2 million in cash and $0.1 million in credits or offsets. Total income tax payments for the six months ended June 30, 2011, were $11.2 million, including $7.7 million in cash and $3.5 million in credits or offsets. Total income tax payments for the six months ended June 30, 2010, were $5.5 million, including $4.7 million in cash and $0.8 million in credits or offsets.

XML



Condensed Consolidated Guarantor Financial Statements

6 Months Ended

Jun. 30, 2011

Condensed Consolidated Guarantor Financial Statements [Abstract]

Condensed Consolidated Guarantor Financial Statements

11. Condensed Consolidated Guarantor Financial Statements

Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and the issuer of the Senior Secured Notes. The obligations of Libbey Glass under the Senior Secured Notes are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain indirect, 100 percent owned domestic subsidiaries of Libbey Inc., as described below. All are related parties that are included in the Condensed Consolidated Financial Statements for the three month and six month periods ended June 30, 2011 and June 30, 2010.

At June 30, 2011, December 31, 2010 and June 30, 2010, Libbey Inc.’s indirect, 100 percent owned domestic subsidiaries were Syracuse China Company, World Tableware Inc., LGA4 Corp., LGA3 Corp., The Drummond Glass Company, LGC Corp., Dane Holding Co. (known as Traex Company prior to April 28, 2011), Libbey.com LLC, LGFS Inc., and LGAC LLC (collectively, the “Subsidiary Guarantors”). The following tables contain Condensed Consolidating Financial Statements of (a) the parent, Libbey Inc., (b) the issuer, Libbey Glass, (c) the Subsidiary Guarantors, (d) the indirect subsidiaries of Libbey Inc. that are not Subsidiary Guarantors (collectively, “Non-Guarantor Subsidiaries”), (e) the consolidating elimination entries, and (f) the consolidated totals.

Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)

	Three months ended June 30, 2011
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net sales	$	—	$	104,355			20,431			107,408			(18,181	)	$	214,013
Freight billed to customers		—		203			376			259			—			838
Total revenues		—		104,558			20,807			107,667			(18,181	)		214,851
Cost of sales		—		80,588			14,968			87,640			(18,181	)		165,015
Gross profit		—		23,970			5,839			20,027			—			49,836
Selling, general and administrative expenses		—		13,655			2,143			9,426			—			25,224
Special charges		—		(100	)		—			—			—			(100	)
Income (loss) from operations		—		10,415			3,696			10,601			—			24,712
Other income (expense)		—		(222	)		3,320			(34	)		—			3,064
Earnings (loss) before interest and income taxes		—		10,193			7,016			10,567			—			27,776
Interest expense		—		7,897			—			2,890			—			10,787
Earnings (loss) before income taxes		—		2,296			7,016			7,677			—			16,989
Provision (benefit) for income taxes		—		1,252			(17	)		348			—			1,583
Net income (loss)		—		1,044			7,033			7,329			—			15,406
Equity in net income (loss) of subsidiaries		15,406		14,362			—			—			(29,768	)		—
Net income (loss)	$	15,406	$	15,406		$	7,033		$	7,329		$	(29,768	)	$	15,406

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see notes 5 and 14):

	Three months ended June 30, 2011
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations		Consolidated
Cost of sales	$	—	$	43		$	—		$	—		$	—	$	43
Selling, general and administrative expenses		—		(385	)		—			—			—		(385	)
Special charges		—		(100	)		—			—			—		(100	)
Other (income) expense		—		—			(3,321	)		(216	)		—		(3,537	)
Total pretax special items		—		(442	)		(3,321	)		(216	)		—		(3,979	)
Provision for income taxes		—		—			—			(922	)		—		(922	)
Special items net of tax	$	—	$	(442	)	$	(3,321	)	$	(1,138	)	$	—	$	(4,901	)

Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)

	Three months ended June 30, 2010
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries		Eliminations			Consolidated
Net sales	$	—	$	103,534		$	23,158		$	91,728	$	(15,384	)	$	203,036
Freight billed to customers		—		159			215			46		—			420
Total revenues		—		103,693			23,373			91,774		(15,384	)		203,456
Cost of sales		—		78,792			16,235			75,782		(15,384	)		155,425
Gross profit		—		24,901			7,138			15,992		—			48,031
Selling, general and administrative expenses		—		13,845			2,422			8,452		—			24,719
Special charges		—		—			156			—		—			156
Income (loss) from operations		—		11,056			4,560			7,540		—			23,156
Other income (expense)		—		399			6			1,251		—			1,656
Earnings (loss) before interest and income taxes		—		11,455			4,566			8,791		—			24,812
Interest expense		—		10,656			(6	)		1,118		—			11,768
Earnings (loss) before income taxes		—		799			4,572			7,673		—			13,044
Provision (benefit) for income taxes		—		(763	)		(86	)		4,326		—			3,477
Net income (loss)		—		1,562			4,658			3,347		—			9,567
Equity in net income (loss) of subsidiaries		9,567		8,005			—			—		(17,572	)		—
Net income (loss)	$	9,567	$	9,567		$	4,658		$	3,347	$	(17,572	)	$	9,567

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see note 5):

	Three months ended June 30, 2010
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries		Eliminations		Consolidated
Cost of sales	$	—	$	(945	)	$	—	$	2,687	$	—	$	1,742
Special charges		—		—			156		—		—		156
Other income (expense)		—		—			—		—		—		—
Total pretax special items	$	—	$	(945	)	$	156	$	2,687	$	—	$	1,898
Special items net of tax	$	—	$	(945	)	$	156	$	2,687	$	—	$	1,898

Condensed Consolidating Statement of Operations
(dollars in thousands)

	Six months ended June 30, 2011
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated
Net sales	$	—	$	194,924			40,187		190,752		(30,835	)	$	395,028
Freight billed to customers		—		354			570		325		—			1,249
Total revenues		—		195,278			40,757		191,077		(30,835	)		396,277
Cost of sales		—		155,451			29,838		155,841		(30,835	)		310,295
Gross profit		—		39,827			10,919		35,236		—			85,982
Selling, general and administrative expenses		—		27,595			4,425		18,606		—			50,626
Special charges		—		(100	)		51		—		—			(49	)
Income (loss) from operations		—		12,332			6,443		16,630		—			35,405
Other income (expense)		—		(2,777	)		3,354		2,690		—			3,267
Earnings (loss) before interest and income taxes		—		9,555			9,797		19,320		—			38,672
Interest expense		—		16,690			—		5,680		—			22,370
Earnings (loss) before income taxes		—		(7,135	)		9,797		13,640		—			16,302
Provision (benefit) for income taxes		—		630			55		1,212		—			1,897
Net income (loss)		—		(7,765	)		9,742		12,428		—			14,405
Equity in net income (loss) of subsidiaries		14,405		22,170			—		—		(36,575	)		—
Net income (loss)	$	14,405	$	14,405		$	9,742	$	12,428	$	(36,575	)	$	14,405

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see notes 4, 5 and 14):

	Six months ended June 30, 2011
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations		Consolidated
Cost of sales	$	—	$	43		$	—		$	—		$	—	$	43
Selling, general and administrative expenses		—		(385	)		—			—			—		(385	)
Special charges		—		(100	)		51			—			—		(49	)
Other expense (income)		—		2,803			(3,321	)		(3,661	)		—		(4,179	)
Total pretax special items		—		2,361			(3,270	)		(3,661	)		—		(4,570	)
Special items net of tax	$	—	$	2,361		$	(3,270	)	$	(3,661	)	$	—	$	(4,570	)

Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)

	Six months ended June 30, 2010
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries		Eliminations			Consolidated
Net sales	$	—	$	189,697		$	42,720		$	172,795	$	(28,272	)	$	376,940
Freight billed to customers		—		325			429			100		—			854
Total revenues		—		190,022			43,149			172,895		(28,272	)		377,794
Cost of sales		—		150,348			30,342			143,468		(28,272	)		295,886
Gross profit		—		39,674			12,807			29,427		—			81,908
Selling, general and administrative expenses		—		26,251			4,588			16,704		—			47,543
Special charges		—		29			359			—		—			388
Income (loss) from operations		—		13,394			7,860			12,723		—			33,977
Other income (expense)		—		56,391			(142	)		1,436		—			57,685
Earnings (loss) before interest and income taxes		—		69,785			7,718			14,159		—			91,662
Interest expense		—		19,134			(6	)		2,260		—			21,388
Earnings (loss) before income taxes		—		50,651			7,724			11,899		—			70,274
Provision (benefit) for income taxes		—		(743	)		58			5,982		—			5,297
Net income (loss)		—		51,394			7,666			5,917		—			64,977
Equity in net income (loss) of subsidiaries		64,977		13,583			—			—		(78,560	)		—
Net income (loss)	$	64,977	$	64,977		$	7,666		$	5,917	$	(78,560	)	$	64,977

The following represents the total special items included in the above Condensed Consolidated Statement of Operations (see note 4 and 5):

	Six months ended June 30, 2010
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries		Eliminations		Consolidated
Cost of sales	$	—	$	(945	)	$	—	$	2,687	$	—	$	1,742
Special charges		—		29			359		—		—		388
Other expense (income)		—		(56,792	)		130		—		—		(56,662	)
Total pretax special items	$	—	$	(57,708	)	$	489	$	2,687	$	—	$	(54,532	)
Special items net of tax	$	—	$	(57,708	)	$	489	$	2,687	$	—	$	(54,532	)

Condensed Consolidating Balance Sheets
(dollars in thousands)

	June 30, 2011 (unaudited)
	Libbey		Libbey				Non-
	Inc.		Glass		Subsidiary		Guarantor
	(Parent)		(Issuer)		Guarantors		Subsidiaries			Eliminations			Consolidated
Cash and equivalents	$	—	$	25,772		367		18,170		$	—		$	44,309
Accounts receivable — net		—		36,961		4,998		55,728			—			97,687
Inventories — net		—		58,272		19,439		90,486			—			168,197
Other current assets		—		18,160		3,421		14,314			(22,347	)		13,548
Total current assets		—		139,165		28,225		178,698			(22,347	)		323,741
Other non-current assets		—		18,510		8		34,233			(19,139	)		33,612
Investments in and advances to subsidiaries		47,854		349,797		207,256		(34,749	)		(570,158	)		—
Goodwill and purchased intangible assets — net		—		26,833		12,347		149,621			—			188,801
Total other assets		47,854		395,140		219,611		149,105			(589,297	)		222,413
Property, plant and equipment — net		—		69,140		391		199,566			—			269,097
Total assets	$	47,854	$	603,445	$	248,227	$	527,369		$	(611,644	)	$	815,251
Accounts payable	$	—	$	13,182		2,350		46,080					$	61,612
Accrued and other current liabilities		—		64,188		25,566		36,031			(23,905	)		101,880
Notes payable and long-term debt due within one year		—		227		—		3,166			—			3,393
Total current liabilities		—		77,597		27,916		85,277			(23,905	)		166,885
Long-term debt		—		359,568		—		49,541			—			409,109
Other long-term liabilities		—		138,201		14,194		56,589			(17,581	)		191,403
Total liabilities		—		575,366		42,110		191,407			(41,486	)		767,397
Total shareholders’ equity (deficit)		47,854		28,079		206,117		335,962			(570,158	)		47,854
Total liabilities and shareholders’ equity (deficit)	$	47,854	$	603,445	$	248,227	$	527,369		$	(611,644	)	$	815,251

	December 31, 2010
	Libbey		Libbey					Non-
	Inc.		Glass			Subsidiary		Guarantor
	(Parent)		(Issuer)			Guarantors		Subsidiaries			Eliminations			Consolidated
Cash and equivalents	$	—	$	58,277			293		17,688			—		$	76,258
Accounts receivable — net		—		37,099			5,360		49,642			—			92,101
Inventories — net		—		52,398			19,902		75,846			—			148,146
Other current assets		—		(2,634	)		10,960		10,518			(12,407	)		6,437
Total current assets		—		145,140			36,515		153,694			(12,407	)		322,942
Other non-current assets				8,344			2,779		41,169			(19,134	)		33,158
Investments in and advances to subsidiaries		11,266		360,784			189,171		(32,151	)		(529,070	)		—
Goodwill and purchased intangible assets — net				26,833			15,761		149,880			—			192,474
Total other assets		11,266		395,961			207,711		158,898			(548,204	)		225,632
Property, plant and equipment — net		—		72,892			4,862		192,643			—			270,397
Total assets	$	11,266	$	613,993		$	249,088	$	505,235		$	(560,611	)	$	818,971
Accounts payable	$	—	$	13,514			2,926		42,655			—		$	59,095
Accrued and other current liabilities		—		48,092			27,811		34,430			(12,407	)		97,926
Notes payable and long-term debt due within one year		—		227			—		2,915			—			3,142
Total current liabilities		—		61,833			30,737		80,000			(12,407	)		160,163
Long-term debt		—		398,039			—		45,944			—			443,983
Other long-term liabilities		—		131,100			21,964		69,629			(19,134	)		203,559
Total liabilities		—		590,972			52,701		195,573			(31,541	)		807,705
Total shareholders’ equity (deficit)		11,266		23,021			196,387		309,662			(529,070	)		11,266
Total liabilities and shareholders’ equity (deficit)	$	11,266	$	613,993		$	249,088	$	505,235		$	(560,611	)	$	818,971

Condensed Consolidating Statements of Cash Flows
(dollars in thousands)
(unaudited)

	Three months ended June 30, 2011
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	15,406		$	15,406		$	7,033		$	7,329		$	(29,768	)	$	15,406
Depreciation and amortization		—			3,767			61			7,199			—			11,027
Other operating activities		(15,406	)		13,791			(19,756	)		(4,916	)		29,768			3,481
Net cash provided by (used in) operating activities		—			32,964			(12,662	)		9,612			—			29,914
Additions to property, plant & equipment		—			(2,273	)		—			(7,619	)		—			(9,892	)
Other investing activities		—			33			12,842			564			—			13,439
Net cash (used in) investing activities		—			(2,240	)		12,842			(7,055	)		—			3,547
Net borrowings		—			(4,399	)		—			2,105			—			(2,294	)
Other financing activities		—			(324	)		—			—			—			(324	)
Net cash provided by (used in) financing activities		—			(4,723	)		—			2,105			—			(2,618	)
Exchange effect on cash		—			—			—			354			—			354
Increase (decrease) in cash		—			26,001			180			5,016			—			31,197
Cash at beginning of period		—			(229	)		187			13,154			—			13,112
Cash at end of period	$	—		$	25,772		$	367		$	18,170		$	—		$	44,309

	Three months ended June 30, 2010
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	9,567		$	9,567		$	4,658		$	3,347		$	(17,572	)	$	9,567
Depreciation and amortization		—			3,862			192			6,514			—			10,568
Other operating activities		(9,567	)		11,514			(4,860	)		3,318			17,572			17,977
Net cash provided by (used in) operating activities		—			24,943			(10	)		13,179			—			38,112
Additions to property, plant & equipment		—			(1,945	)		(14	)		(5,272	)		—			(7,231	)
Other investing activities		—			—			—			—			—			—
Net cash (used in) investing activities		—			(1,945	)		(14	)		(5,272	)		—			(7,231	)
Net borrowings		—			(46	)		—			(586	)		—			(632	)
Other financing activities		—			(1,455	)		—			—			—			(1,455	)
Net cash provided by (used in) financing activities		—			(1,501	)		—			(586	)		—			(2,087	)
Exchange effect on cash		—			—			—			(648	)		—			(648	)
Increase (decrease) in cash		—			21,497			(24	)		6,673			—			28,146
Cash at beginning of period		—			11,640			270			6,117			—			18,027
Cash at end of period	$	—		$	33,137		$	246		$	12,790		$	—		$	46,173

Condensed Consolidating Statements of Cash Flows
(dollars in thousands)
(unaudited)

	Six months ended June 30, 2011
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	14,405		$	14,405		$	9,742		$	12,428		$	(36,575	)	$	14,405
Depreciation and amortization		—			7,575			259			14,074			—			21,908
Other operating activities		(14,405	)		(9,168	)		(23,266	)		(19,215	)		36,575			(29,479	)
Net cash provided by (used in) operating activities		—			12,812			(13,265	)		7,287			—			6,834
Additions to property, plant & equipment		—			(4,085	)		(3	)		(14,310	)		—			(18,398	)
Other investing activities		—			(1,170	)		13,342			4,666			—			16,838
Net cash (used in) investing activities		—			(5,255	)		13,339			(9,644	)		—			(1,560	)
Net borrowings		—			(40,097	)		—			2,105			—			(37,992	)
Other financing activities		—			35			—			—			—			35
Net cash provided by (used in) financing activities		—			(40,062	)		—			2,105			—			(37,957	)
Exchange effect on cash		—			—			—			734			—			734
Increase (decrease) in cash		—			(32,505	)		74			482			—			(31,949	)
Cash at beginning of period		—			58,277			293			17,688			—			76,258
Cash at end of period	$	—		$	25,772		$	367		$	18,170		$	—		$	44,309

	Six months ended June 30, 2010
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	64,977		$	64,977		$	7,666		$	5,917		$	(78,560	)	$	64,977
Depreciation and amortization		—			7,711			386			12,857			—			20,954
Other operating activities		(64,977	)		(85,196	)		(8,211	)		(14,160	)		78,560			(93,984	)
Net cash provided by (used in) operating activities		—			(12,508	)		(159	)		4,614			—			(8,053	)
Additions to property, plant & equipment		—			(3,044	)		(14	)		(8,321	)		—			(11,379	)
Other investing activities		—			(8,415	)		—			—			—			(8,415	)
Net cash (used in) investing activities		—			(11,459	)		(14	)		(8,321	)		—			(19,794	)
Net borrowings		—			35,206			—			215			—			35,421
Other financing activities		—			(15,488	)		—			—			—			(15,488	)
Net cash provided by (used in) financing activities		—			19,718			—			215			—			19,933
Exchange effect on cash		—			—			—			(1,002	)		—			(1,002	)
Increase (decrease) in cash		—			(4,249	)		(173	)		(4,494	)		—			(8,916	)
Cash at beginning of period		—			37,386			419			17,284			—			55,089
Cash at end of period	$	—		$	33,137		$	246		$	12,790		$	—		$	46,173

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Significant Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

See our Form 10-K for the year ended December 31, 2010 for a description of significant accounting policies not listed below.

Basis of Presentation

The Condensed Consolidated Financial Statements include Libbey Inc. and its majority-owned subsidiaries (collectively, Libbey or the Company). Our fiscal year end is December 31^st. All material intercompany accounts and transactions have been eliminated. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from management’s estimates.

Condensed Consolidated Statements of Operations

Net sales in our Condensed Consolidated Statements of Operations include revenue earned when products are shipped and title and risk of loss have passed to the customer. Revenue is recorded net of returns, discounts and incentives offered to customers. Cost of sales includes cost to manufacture and/or purchase products, warehouse, shipping and delivery costs and other costs.

Foreign Currency Translation

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. The effect of exchange rate changes on transactions denominated in currencies other than the functional currency is recorded in other income.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Financial Accounting Standards Board Accounting Standards Codification™ (FASB ASC) Topic 740, “Income Taxes,” requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which we conduct our operations or otherwise incur taxable income or losses. In the United States, China, the Netherlands and Portugal we have recorded valuation allowances against our deferred income tax assets.

Stock-Based Compensation Expense

We account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation — Stock Compensation,” and FASB ASC Topic 505-50, “Equity — Equity-Based Payments to Non-Employees”. Stock-based compensation cost is measured based on the fair value of the equity instruments issued. FASB ASC Topics 718 and 505-50 apply to all of our outstanding unvested stock-based payment awards. Stock-based compensation expense charged to the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2011 was $1.1 million and $1.9 million, respectively. Stock-based compensation expense charged to the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2010 was $1.4 million and $1.8 million, respectively.

New Accounting Standards

In December 2010, the FASB issued Accounting Standards Update 2010-28, “Intangibles — Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2010-28”). ASU 2010-28 addresses the decision process involved in testing for impairment of goodwill when the carrying value of a reporting unit is zero or less. The provisions of this update are effective for periods beginning after December 15, 2010. We do not expect the provisions of this update to have any impact on our Condensed Consolidated Financial Statements or on our process of testing for potential impairment of goodwill.

In December 2010, the FASB issued Accounting Standards Update 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2010-29”). ASU 2010-29 clarifies the extent to which pro forma historical information must be prepared and presented in comparative financial statements for periods following a merger or acquisition. The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. For Libbey, the required disclosures are effective for combinations with acquisition dates during or after 2011. The impact on our Condensed Consolidated Financial Statements will depend on the nature and timing of any potential future business combinations.

In May 2011, the FASB issued Accounting Standards Update 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 explains how to measure fair value and improves the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and IFRS. ASU 2011-04 does not require additional fair value measurements, and it is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The provisions of this update are effective for periods beginning after December 15, 2011. We do not expect the provisions of this update to have any impact on our Condensed Consolidated Financial Statements.

In June 2011, the FASB issued Accounting Standards Update 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires presentation of net income, other comprehensive income items and total comprehensive income to be in one continuous statement or two separate but consecutive statements. Other comprehensive income presentation in the statement of stockholders’ equity will no longer be permitted. This update is effective for periods beginning after December 15, 2011. Libbey will incorporate the required presentation changes in the Condensed Consolidated Financial Statements in the first quarter 2012.

Reclassifications

Certain amounts in the prior year’s financial statements may have been reclassified to conform to the presentation used in the current period financial statements.

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Net Income per Share of Common Stock

6 Months Ended

Jun. 30, 2011

Net Income per Share of Common Stock [Abstract]

Net Income per Share of Common Stock

8. Net Income per Share of Common Stock

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended June 30,				Six months Ended June 30,
(dollars in thousands, except earnings per share)	2011		2010		2011		2010
Numerators for earnings per share —
—Net income that is available to common shareholders	$	15,406	$	9,567	$	14,405	$	64,977
Denominator for basic earnings per share —
Weighted average shares outstanding		20,099,003		16,352,049		20,027,493		16,307,955
Effect of stock options and restricted stock units		627,566		535,143		642,300		430,018
Effect of warrants		134,877		3,553,443		142,577		3,506,553
Total effect of dilutive securities		762,443		4,088,586		784,877		3,936,571
Denominator for diluted earnings per share —
—Adjusted weighted average shares and assumed conversions		20,861,446		20,440,635		20,812,370		20,244,526
Basic earnings per share:	$	0.77	$	0.59	$	0.72	$	3.98
Diluted earnings per share:	$	0.74	$	0.47	$	0.69	$	3.21

In October 2009, we entered into a transaction with Merrill Lynch PCG, Inc. (the “Investor”) to exchange the existing 16.0 percent Old PIK Notes due in December 2011, for a combination of debt and equity securities (Exchange Transaction). As part of the Exchange Transaction, we issued warrants conveying the right to purchase, for $0.01 per share, 3,466,856 shares of Libbey Inc. common stock. These warrants were exercised and shares were issued in August 2010.

When applicable, diluted shares outstanding include the dilutive impact of warrants and restricted stock units. Diluted shares also include the impact of in-the-money employee stock options, which are calculated, based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the tax-effected proceeds that hypothetically would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares.

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Fair Value

6 Months Ended

Jun. 30, 2011

Fair Value [Abstract]

Fair Value

13. Fair Value

FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

• Level 3 — Unobservable inputs based on our own assumptions.

Asset / (Liability)	Fair Value at June 30, 2011										Fair Value at December 31, 2010
(dollars in thousands)	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Commodity futures natural gas contracts	$	—	$	(1,721	)	$	—	$	(1,721	)	$	—	$	(3,188	)	$	—	$	(3,188	)
Currency contracts		—		(477	)		—		(477	)		—		(151	)		—		(151	)
Interest rate agreements		—		3,334			—		3,334			—		2,536			—		2,536
Net derivative liability	$	—	$	1,136		$	—	$	1,136		$	—	$	(803	)	$	—	$	(803	)

The fair values of our commodity futures natural gas contracts and currency contracts are determined using observable market inputs. The fair value of our interest rate agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. Since these inputs are observable in active markets over the terms that the instruments are held, the derivatives are classified as Level 2 in the hierarchy. We also evaluate Company and counterparty risk in determining fair values. The total derivative position is recorded on the Condensed Consolidated Balance Sheets with $3.4 million in derivative asset and $2.2 million in derivative liability as of June 30, 2011. As of December 31, 2010, $2.6 million was recorded in derivative asset and $3.4 million in derivative liability on the Condensed Consolidated Balance Sheets.

The commodity futures natural gas contracts and interest rate agreements are hedges of either recorded assets or liabilities or anticipated transactions. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the above table.

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Derivatives

6 Months Ended

Jun. 30, 2011

Derivatives [Abstract]

Derivatives

9. Derivatives

We utilize derivative financial instruments to hedge certain interest rate risks associated with our long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with transactions denominated in a currency other than the U.S. dollar. Most of these derivatives, except for certain natural gas contracts originally designated to hedge expected purchases at Syracuse China and the foreign currency contracts, qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings. All of these contracts were accounted for under FASB ASC 815 “Derivatives and Hedging.”

Fair Values

The following table provides the fair values of our derivative financial instruments for the periods presented:

	Asset Derivatives:
(dollars in thousands)	June 30, 2011			December 31, 2010
Derivatives designated as hedging	Balance Sheet	Fair		Balance Sheet	Fair
instruments under FASB ASC 815:	Location	Value		Location	Value
Interest rate contract	Derivative asset	$	3,334	Derivative asset	$	2,536
Natural gas contracts	Derivative asset		22	Derivative asset		53
Total designated		$	3,356		$	2,589
	Liability Derivatives:
(dollars in thousands)	June 30, 2011			December 31, 2010
Derivatives designated as hedging	Balance Sheet	Fair		Balance Sheet	Fair
instruments under FASB ASC 815:	Location	Value		Location	Value
Natural gas contracts	Derivative liability	$	1,679	Derivative liability	$	3,117
Total designated			1,679			3,117
Derivatives not designated as hedging instruments under FASB ASC 815:
Natural gas contracts	Derivative liability		64	Derivative liability		124
Currency contracts	Derivative liability		477	Derivative liability		151
Total undesignated			541			275
Total		$	2,220		$	3,392

Interest Rate Swaps as Fair Value Hedges

In the first quarter of 2010, we entered into an interest rate swap agreement with a notional amount of $100.0 million that is to mature in 2015. The swap was executed in order to convert a portion of the Senior Secured Note fixed rate debt into floating rate debt and maintain a capital structure containing appropriate amounts of fixed and floating rate debt. In August 2010, $10.0 million of the swap was called for a premium of $0.3 million. As of June 30, 2011 the notional amount of the interest rate swap agreement is $90.0 million.

Our fixed-to-floating interest rate swap is designated and qualifies as a fair value hedge. The change in the fair value of the derivative instrument related to the future cash flows (gain or loss on the derivative), as well as the offsetting change in the fair value of the hedged long-term debt attributable to the hedged risk are recognized in current earnings. We include the gain or loss on the hedged long-term debt in other income on the Condensed Consolidated Statements of Operations along with the offsetting loss or gain on the related interest rate swap.

Amount of gain (loss) recognized in other income

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2011			2010			2011			2010
Interest rate swap	$	(1,587	)	$	2,374		$	(2,231	)	$	1,489
Related long-term debt		1,443			(1,795	)		2,723			(1,073	)
Net impact on other income	$	(144	)	$	579		$	492		$	416

Commodity Future Contracts Designated as Cash Flow Hedges

We use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts and other derivatives is to limit the fluctuations in prices paid due to price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, up to eighteen months in the future. The fair values of these instruments are determined from market quotes. Certain of our natural gas futures contracts are now classified as ineffective, as the forecasted transactions are not probable of occurring due to the closure of our Syracuse China facility in April 2009. Under FASB ASC 815, “Derivatives and Hedging”, when the forecasted transactions of a hedging relationship become not probable of occurring, the gains or losses that have been classified in accumulated other comprehensive loss in prior periods for those contracts affected should be reclassified into earnings. We recognized immaterial amounts for both three month periods and an immaterial amount and $0.1 million for the six months ended June 30, 2011 and 2010, respectively, in other income on the Condensed Consolidated Statements of Operations relating to these contracts. As of June 30, 2011, we had commodity contracts for 2,370,000 million British Thermal Units (BTUs) of natural gas. At December 31, 2010, we had commodity contracts for 3,090,000 million BTUs of natural gas.

Most of our natural gas derivatives qualify and are designated as cash flow hedges (except certain contracts originally designated to expected purchases at Syracuse China) at June 30, 2011. Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses would be recorded to earnings immediately. Changes in the effective portion of the fair value of these hedges are recorded in other comprehensive income (loss). The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings. As the natural gas contracts mature, the accumulated gains (losses) for the respective contracts are reclassified from accumulated other comprehensive income to current expense in cost of sales in our Condensed Consolidated Statement of Operations. We paid additional cash of $1.2 million and $2.4 million in the three months ended June 30, 2011 and 2010, respectively, and $2.0 million and $3.1 million in the six months ended June 30, 2011 and 2010, respectively, due to the difference between the fixed unit rate of our natural gas contracts and the variable unit rate of our natural gas cost from suppliers. Based on our current valuation, we estimate that accumulated losses currently carried in accumulated other comprehensive loss that will be reclassified into earnings over the next twelve months will result in $1.7 million of expense in our Condensed Consolidated Statement of Operations.

Amount of derivative gain/(loss) recognized in OCI (effective portion)

	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2011			2010		2011			2010
Derivatives in Cash Flow Hedging relationships:
Natural gas contracts	$	(487	)	$	272	$	(636	)	$	(4,149	)
Total	$	(487	)	$	272	$	(636	)	$	(4,149	)

Gain / (loss) reclassified from Accumulated Other Comprehensive Loss
to Condensed Consolidated Statements of Operations (effective portion)

		Three months ended June 30,						Six months ended June 30,
(dollars in thousands)		2011			2010			2011			2010
Derivative:	Location:
Natural gas contracts	Cost of sales	$	(1,213	)	$	(2,357	)	$	(2,042	)	$	(3,116	)
Total impact on net (loss) income		$	(1,213	)	$	(2,357	)	$	(2,042	)	$	(3,116	)

The following table provides the impact on the Condensed Consolidated Statement of Operations from derivatives no longer designated as cash flow hedges, primarily related to the closure of our Syracuse China facility:

Gain (loss) recognized in income
(ineffective portion and amount excluded from effectiveness testing)

		Three months ended June 30,					Six months ended June 30,
(dollars in thousands)		2011			2010		2011			2010
Derivative:	Location:
Natural gas contracts	Other income	$	(4	)	$	29	$	(5	)	$	(101	)
Total		$	(4	)	$	29	$	(5	)	$	(101	)

Currency Contracts

Our foreign currency exposure arises from transactions denominated in a currency other than the U.S. dollar, primarily associated with our Canadian dollar denominated accounts receivable. The fair values of these instruments are determined from market quotes. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change. During 2010, we entered into a series of foreign currency contracts to sell Canadian dollars. As of June 30, 2011 and December 31, 2010 we had contracts for $15.1 million Canadian dollars and $18.7 million Canadian dollars, respectively.

Gains and losses for derivatives which were not designated as hedging instruments are recorded in current earnings as follows:

		Three months ended June 30,				Six months ended June 30,
(dollars in thousands)		2011		2010		2011			2010
Derivative:	Location:
Currency contracts	Other income	$	128	$	639	$	(326	)	$	639
Total		$	128	$	639	$	(326	)	$	639

We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate and natural gas hedges, as the counterparties are established financial institutions. The counterparty is rated AA- for the Interest Rate Agreement and BBB+ or better for the counterparties to the other derivative agreements as of June 30, 2011, by Standard and Poor’s.

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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.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2010
Condensed Consolidated Statements of Cash Flows [Abstract]
Gross gain on redemption of PIK notes	$ 70,193,000
Expenses related to redemption of PIK notes	13,400,000
Gain on redemption of PIK notes, net of expenses	$ 56,792,000

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Balance Sheet Details

6 Months Ended

Jun. 30, 2011

Balance Sheet Details [Abstract]

Balance Sheet Details

3. Balance Sheet Details

The following table provides detail of selected balance sheet items:

(dollars in thousands)	June 30, 2011		December 31, 2010
Accounts receivable:
Trade receivables	$	97,083	$	90,899
Other receivables		604		1,202
Total accounts receivable, less allowances of $5,320 and $5,518	$	97,687	$	92,101
Inventories:
Finished goods	$	151,717	$	132,169
Work in process		692		653
Raw materials		3,981		4,444
Repair parts		10,253		9,496
Operating supplies		1,554		1,384
Total inventories, less allowances of $4,934 and $4,658	$	168,197	$	148,146
Prepaid and other current assets:
Value added tax	$	2,136	$	1,332
Prepaid expenses		4,009		4,822
Refundable, deferred and prepaid income taxes		7,403		283
Total prepaid and other current assets	$	13,548	$	6,437
Other assets:
Deposits	$	928	$	904
Finance fees — net of amortization		10,827		13,012
Other assets		3,763		3,886
Total other assets	$	15,518	$	17,802
Accrued liabilities:
Accrued incentives	$	22,202	$	15,060
Workers compensation		9,352		9,608
Medical liabilities		3,494		3,785
Interest		12,891		14,416
Commissions payable		1,101		904
Other accrued liabilities		9,312		7,438
Total accrued liabilities	$	58,352	$	51,211
Other long-term liabilities:
Deferred liability	$	4,146	$	4,622
Other long-term liabilities		4,778		7,303
Total other long-term liabilities	$	8,924	$	11,925

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Borrowings

6 Months Ended

Jun. 30, 2011

Borrowings [Abstract]

Borrowings

4. Borrowings

On March 25, 2011, Libbey Glass redeemed an aggregate principal amount of $40.0 million of its outstanding 10.0 percent Senior Secured Notes due 2015, on a pro rata basis in accordance with the terms of the New Notes Indenture. Pursuant to the terms of the New Notes Indenture, the redemption price for the Senior Secured Notes was 103.0 percent of the principal amount of the redeemed Senior Secured Notes, plus accrued and unpaid interest. At completion of the redemption, the aggregate principal amount of the Senior Secured Notes outstanding was $360.0 million. In conjunction with this redemption, we recorded $2.8 million of expense, representing $1.2 million of an early call premium and $1.6 million for the write off of a pro rata amount of financing fees and discounts.

On February 8, 2010, we completed the refinancing of substantially all of the existing indebtedness of our wholly-owned subsidiaries Libbey Glass and Libbey Europe B.V. The refinancing included:

• the entry into an amended and restated credit agreement with respect to our ABL Facility;

• the issuance of $400.0 million in aggregate principal amount of 10.0 percent Senior Secured Notes of Libbey Glass due 2015;

• the repurchase and cancellation of all of Libbey Glass’s then outstanding $306.0 million in aggregate principal amount of floating rate notes; and

• the redemption of all of Libbey Glass’s then outstanding $80.4 million in aggregate principal amount 16.0 percent PIK notes (New PIK Notes).

We used the proceeds of the offering of the Senior Secured Notes, together with cash on hand, to fund the repurchase of the floating rate notes, the redemption of the New PIK notes and to pay certain related fees and expenses. Upon completion of the refinancing, we recorded a gain of $71.7 million related to the redemption of the New PIK notes. $70.2 million of this gain was recorded in the three months ended March 31, 2010. This gain was partially offset by a $13.4 million write-off of bank fees, discounts and a call premium on the floating rate notes, resulting in a net gain of $58.3 million. $56.8 million of this net gain was recorded in the three months ended March 31, 2010, as shown on the Condensed Consolidated Statement of Operations.

Borrowings consist of the following:

					June 30,		December 31,
(dollars in thousands)	Interest Rate			Maturity Date	2011		2010
Borrowings under ABL facility	floating			April 29, 2016	$	2,159	$	—
Senior Secured Notes		10.00%	(1)	February 15, 2015		360,000		400,000
Promissory note		6.00	%	July, 2011 to September, 2016		1,210		1,307
RMB loan contract	floating			July, 2012 to January, 2014		38,675		37,925
BES Euro line	floating			December, 2011 to December, 2013		11,873		10,934
Total borrowings						413,917		450,166
Less — unamortized discount						4,988		6,307
Plus — Carrying value adjustment on debt related to the Interest Rate Agreement (1)						3,573		3,266
Total borrowings — net						412,502		447,125
Less — long term debt due within one year						3,393		3,142
Total long-term portion of borrowings — net					$	409,109	$	443,983

(1) See Interest Rate Agreements under “Senior Secured Notes” below and in note 9.

Amended and Restated ABL Credit Agreement

Pursuant to the refinancing, Libbey Glass and Libbey Europe entered into an Amended and Restated Credit Agreement, dated as of February 8, 2010 and amended on April 29, 2011 (ABL Facility), with a group of five financial institutions. The ABL Facility provides for borrowings of up to $100.0 million (reduced from $110.0 million per the amendment on April 29, 2011), subject to certain borrowing base limitations, reserves and outstanding letters of credit.

All borrowings under the ABL Facility are secured by:

• a first-priority security interest in substantially all of the existing and future real and personal property of Libbey Glass and its domestic subsidiaries (the “Credit Agreement Priority Collateral”);

• a first-priority security interest in:

• 100 percent of the stock of Libbey Glass and 100 percent of the stock of substantially all of Libbey Glass’ present and future direct and indirect domestic subsidiaries;

• 100 percent of the non-voting stock of substantially all of Libbey Glass’ first-tier present and future foreign subsidiaries; and

• 65 percent of the voting stock of substantially all of Libbey Glass’ first-tier present and future foreign subsidiaries

• a first priority security interest in substantially all proceeds and products of the property and assets described above; and

• a second-priority security interest in substantially all of the owned real property, equipment and fixtures in the United States of Libbey Glass and its domestic subsidiaries, subject to certain exceptions and permitted liens (the “New Notes Priority Collateral”).

Additionally, borrowings by Libbey Europe under the ABL Facility are secured by:

• a first-priority lien on substantially all of the existing and future real and personal property of Libbey Europe and its Dutch subsidiaries; and

• a first-priority security interest in:

• 100 percent of the stock of Libbey Europe and 100 percent of the stock of substantially all of the Dutch subsidiaries; and

• 100 percent (or a lesser percentage in certain circumstances) of the outstanding stock issued by the first tier foreign subsidiaries of Libbey Europe and its Dutch subsidiaries.

Swingline borrowings are limited to $15.0 million, with swing line borrowings for Libbey Europe being limited to the US equivalent of $7.5 million. Loans comprising each CBFR (CB Floating Rate) Borrowing, including each Swingline Loan, bear interest at the CB Floating Rate plus the Applicable Rate, and euro-denominated swing line borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swing line rate, as defined in the ABL Facility. The Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining availability. The Applicable Rates for CBFR Loans and Eurocurrency Loans were 0.75 percent and 1.75 percent, respectively, at June 30, 2011. Libbey pays a quarterly Commitment Fee, as defined by the ABL Facility, on the total credit provided under the ABL Facility. The Commitment Fee was 0.375 percent at June 30, 2011. No compensating balances are required by the Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant, unless aggregate unused availability falls below $10.0 million. If our aggregate unused ABL availability were to fall below $10.0 million, the fixed charge coverage ratio requirement would be 1:10 to 1:00. Libbey Glass and Libbey Europe have the option to increase the ABL Facility by $10.0 million. Libbey Glass had no borrowings under the facility at June 30, 2011, while Libbey Europe had outstanding borrowings of $2.2 million at an interest rate of 3.51 percent. There were no Libbey Glass or Libbey Europe borrowings under the facility at December 31, 2010. Interest is payable on the last day of the interest period, which can range from one month to six months depending on the maturity of each individual borrowing on the facility.

The borrowing base under the ABL Facility is determined by a monthly analysis of the eligible accounts receivable and inventory. The borrowing base is the sum of (a) 85 percent of eligible accounts receivable and (b) the lesser of (i) 85 percent of the net orderly liquidation value (NOLV) of eligible inventory, (ii) 65 percent of eligible inventory, or (iii) $75.0 million.

The available total borrowing base is offset by ERISA, rent and tax reserves totaling $3.7 million and mark-to-market reserves for natural gas contracts of $1.2 million. The ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are applied against the $100.0 million limit. At June 30, 2011, we had $10.5 million in letters of credit outstanding under the ABL Facility. Remaining unused availability on the new ABL Facility was $69.3 million at June 30, 2011 compared to $65.2 million under the ABL Facility at December 31, 2010.

Senior Secured Notes

On February 8, 2010, Libbey Glass closed its offering of the $400.0 million Senior Secured Notes. The net proceeds of the offering of Senior Secured Notes were approximately $379.8 million, after the 1.918 percent original issue discount of $7.7 million, $10.0 million of commissions payable to the initial purchasers and $2.5 million of fees related to the offering. These fees will be amortized to interest expense over the life of the notes.

The Senior Secured Notes were issued pursuant to an Indenture, dated February 8, 2010 (the “New Notes Indenture”), between Libbey Glass, the Company, the domestic subsidiaries of Libbey Glass listed as guarantors therein (the “Subsidiary Guarantors” and together with the Company, the “Guarantors”), and The Bank of New York Mellon Trust Company, N.A., as trustee (the “New Notes Trustee”), and collateral agent. Under the terms of the New Notes Indenture, the Senior Secured Notes bear interest at a rate of 10.0 percent per year and will mature on February 15, 2015. The New Notes Indenture contains covenants that restrict the ability of Libbey Glass and the Guarantors to, among other things:

• incur or guarantee additional indebtedness;

• pay dividends, make certain investments or other restricted payments;

• create liens;

• enter into affiliate transactions;

• merge or consolidate, or otherwise dispose of all or substantially all the assets of Libbey Glass and the Guarantors; and

• transfer or sell assets.

The New Notes Indenture provides for customary events of default. In the case of an event of default arising from bankruptcy or insolvency as defined in the New Notes Indenture, all outstanding Senior Secured Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs or is continuing, the New Notes Trustee or holders of at least 25 percent in aggregate principal amount of the then outstanding Senior Secured Notes may declare all the Senior Secured Notes to be due and payable immediately.

The Senior Secured Notes and the related guarantees under the New Notes Indenture are secured by (i) first priority liens on the New Notes Priority Collateral and (ii) second priority liens on the Credit Agreement Priority Collateral.

In connection with the sale of the Senior Secured Notes, Libbey Glass and the Guarantors entered into a registration rights agreement, dated February 8, 2010 (the “Registration Rights Agreement”), under which they agreed to make an offer to exchange the Senior Secured Notes and the related guarantees for registered, publicly tradable notes and guarantees that have substantially identical terms to the Senior Secured Notes and the related guarantees, and in certain limited circumstances, to file a shelf registration statement that would allow certain holders of Senior Secured Notes to resell their respective Senior Secured Notes to the public. On January 25, 2011, we exchanged $400.0 million aggregate principal amount of 10.0 percent Senior Secured Notes due 2015 for an equal principal amount of a new issue of 10.0 percent Senior Secured Notes due 2015, which have been registered under the Securities act of 1933, as amended.

Prior to August 15, 2012, we may redeem in the aggregate up to 35 percent of the original principal amount of Senior Secured Notes with the net cash proceeds of one or more equity offerings at a redemption price of 110 percent of the principal amount, provided that at least 65 percent of the original principal amount of the Senior Secured Notes must remain outstanding after each redemption and that each redemption occurs within 90 days of the closing of the equity offering. In addition, prior to August 15, 2012, but not more than once in any twelve-month period, we may redeem up to 10 percent of the Senior Secured Notes at a redemption price of 103 percent plus accrued and unpaid interest. The Senior Secured Notes are redeemable at our option, in whole or in part, at any time on or after August 15, 2012 at set redemption prices together with accrued and unpaid interest.

On March 25, 2011, Libbey Glass redeemed an aggregate principal amount of $40.0 million of its outstanding 10.0 percent Senior Secured Notes due 2015, in accordance with the terms of the New Notes Indenture. Pursuant to the terms of the New Notes Indenture, the redemption price for the Senior Secured Notes was 103.0 percent of the principal amount of the redeemed Senior Secured Notes, plus accrued and unpaid interest. At completion of the redemption, the aggregate principal amount of the Senior Secured Notes outstanding was $360.0 million. In conjunction with this redemption, we recorded $2.8 million of expense, representing $1.2 million of an early call premium and $1.6 million for the write off of a pro rata amount of financing fees and discounts.

We have an Interest Rate Agreement (Rate Agreement) in place with respect to $90.0 million of debt as a means to manage our fixed to variable interest rate ratio. The Rate Agreement effectively converts this portion of our long-term borrowings from fixed rate debt to variable rate debt. Prior to August 15, 2012, but not more than once in any twelve-month period, the counterparty may call up to 10 percent of the Rate Agreement at a call price of 103 percent. The Rate Agreement is callable at the counterparty’s option, in whole or in part, at anytime on or after August 15, 2012 at set call premiums. The variable interest rate for our borrowings related to the Rate Agreement at June 30, 2011, excluding applicable fees, is 7.55 percent. This Rate Agreement expires on February 15, 2015. Total remaining Senior Secured Notes not covered by the Rate Agreement have a fixed interest rate of 10.0 percent per year through February 15, 2015. If the counterparty to this Rate Agreement were to fail to perform, this Rate Agreement would no longer afford us a variable rate. However, we do not anticipate non-performance by the counterparty. The interest rate swap counterparty was rated AA-, as of June 30, 2011, by Standard and Poor’s.

The fair market value for the Rate Agreement at June 30, 2011 and December 31, 2010 was a $3.3 million asset and a $2.5 million asset, respectively. An adjustment of $3.6 million and $3.3 million was recorded to increase the carrying value of the related long-term debt as of June 30, 2011 and December 31, 2010, respectively. The net impact of $0.1 million expense and $0.5 million income, and $0.6 million income and $0.4 million income, is recorded in other income on the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2011 and June 30, 2010, respectively. See note 9 for further discussion. The fair value of the Rate Agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. We expect this agreement to expire as originally contracted.

Promissory Note

In September 2001, we issued a $2.7 million promissory note at an interest rate of 6.0 percent in connection with the purchase of our Laredo, Texas warehouse facility. At June 30, 2011, we had $1.2 million outstanding on the promissory note. Interest with respect to the promissory note is paid monthly.

Notes Payable

We have an overdraft line of credit for a maximum of €1.0 million. At June 30, 2011, there were no borrowings under the facility, which has an interest rate of 5.80 percent. Interest with respect to the note is paid monthly.

RMB Loan Contract

On January 23, 2006, Libbey Glassware (China) Co., Ltd. (Libbey China), an indirect wholly owned subsidiary of Libbey Inc., entered into an RMB Loan Contract (RMB Loan Contract) with China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (CCB). Pursuant to the RMB Loan Contract, CCB agreed to lend to Libbey China RMB 250.0 million, or the equivalent of approximately $38.7 million, for the construction of our production facility in China and the purchase of related equipment, materials and services. The loan has a term of eight years and bears interest at a variable rate as announced by the People’s Bank of China. As of the date of the initial advance under the Loan Contract, the annual interest rate was 5.51 percent, and as of June 30, 2011, the annual interest rate was 5.67 percent. As of June 30, 2011, the outstanding balance was RMB 250.0 million (approximately $38.7 million). Interest is payable quarterly. Payments of principal in the amount of RMB 30.0 million (approximately $4.6 million) and RMB 40.0 million (approximately $6.2 million) must be made on July 20, 2012, and December 20, 2012, respectively, and three payments of principal in the amount of RMB 60.0 million (approximately $9.3 million) each must be made on July 20, 2013, December 20, 2013, and January 20, 2014, respectively. The obligations of Libbey China are secured by a guarantee executed by Libbey Inc. for the benefit of CCB and a mortgage lien on the Libbey China facility.

BES Euro Line

In January 2007, Crisal entered into a seven year, €11.0 million line of credit (approximately $15.8 million) with Banco Espírito Santo, S.A. (BES). The $11.9 million outstanding at June 30, 2011 was the U.S. dollar equivalent of the €8.3 million outstanding under the line at an interest rate of 3.77 percent. Payment of principal in the amount of €2.2 million (approximately $3.2 million) is due in December 2011, payment of €2.8 million (approximately $4.0 million) is due in December 2012 and payment of €3.3 million (approximately $4.7 million) is due in December 2013. Interest with respect to the line is paid every six months.

Fair Value of Borrowings

The fair value of our debt has been calculated based on quoted market prices for the same or similar issues. Our $360.0 million Senior Secured Notes due February 15, 2015 had an estimated fair value of $388.8 million at June 30, 2011. The fair value of the remainder of our debt approximates carrying value at June 30, 2011 due to variable rates.

Capital Resources and Liquidity

Historically, cash flows generated from operations and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. As of June 30, 2011 we had $2.2 million outstanding under our ABL Facility, and we had $10.5 million of letters of credit issued under that facility. As a result, we had $69.3 million of unused availability remaining under the ABL Facility at June 30, 2011. In addition, we had $44.3 million of cash on hand at June 30, 2011.

Based on our operating plans and current forecast expectations, we anticipate that our level of cash on hand, cash flows from operations and our borrowing capacity under our ABL Facility will provide sufficient cash availability to meet our ongoing liquidity needs.

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Segments

6 Months Ended

Jun. 30, 2011

Segments [Abstract]

Segments

12. Segments

We have revised our segment structure to reflect our reorganization from geographical regions to one global company. Under this new structure, we have two reportable segments: Glass Operations and Other Operations. The classifications are defined as follows:

Glass Operations — includes worldwide sales of glass tableware and other glass products from domestic and international subsidiaries.

Other Operations — includes worldwide sales of ceramic dinnerware, metal tableware, hollowware and serveware and plastic items. Plastic items were sold through April 28, 2011.

Our measure of profit for our reportable segments is Segment Earnings before Interest and Taxes (EBIT) and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs. We use Segment EBIT, along with net sales and selected cash flow information, to evaluate performance and to allocate resources. Segment EBIT for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of services performed.

Certain activities not related to any particular reportable segment are reported within retained corporate costs. These costs include certain headquarter, administrative and facility costs, and other costs that are global in nature and are not allocable to the reporting segments. Corporate assets primarily include finance fees, capitalized software, and income tax assets.

The accounting policies of the reportable segments are the same as those described in note 2. We do not have any customers who represent 10 percent or more of total sales. Inter-segment sales are consummated at arm’s length and are reflected in eliminations below.

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2011			2010			2011			2010
Net Sales:
Glass Operations	$	194,487		$	180,815		$	356,540		$	335,959
Other Operations		19,690			22,376			38,851			41,250
Eliminations		(164	)		(155	)		(363	)		(269	)
Consolidated	$	214,013		$	203,036		$	395,028		$	376,940
Segment EBIT:
Glass Operations	$	29,973			31,188			47,364			46,614
Other Operations		3,762			4,754			6,641			8,239
Total Segment EBIT	$	33,735		$	35,942		$	54,005		$	54,853
Reconciliation of Segment EBIT to Net Income:
Segment EBIT	$	33,735		$	35,942		$	54,005		$	54,853
Retained corporate costs		(9,938	)		(9,232	)		(19,903	)		(17,723	)
(Loss) gain on redemption of debt (note 4)		—			—			(2,803	)		56,792
Gain on sale of Traex		3,321			—			3,321			—
Gain on sale of land (1)		—			—			3,445			—
Restructuring and other charges (note 5)		1,078			(2,843	)		1,027			(3,205	)
Other special income (charges) (2)		(420	)		945			(420	)		945
Interest expense		(10,787	)		(11,768	)		(22,370	)		(21,388	)
Income taxes		(1,583	)		(3,477	)		(1,897	)		(5,297	)
Net income	$	15,406		$	9,567		$	14,405		$	64,977
Depreciation & Amortization:
Glass Operations	$	10,531		$	10,025		$	20,780		$	19,869
Other Operations		54			184			246			371
Corporate		442			359			882			714
Consolidated	$	11,027		$	10,568		$	21,908		$	20,954
Capital Expenditures:
Glass Operations	$	9,347		$	6,962		$	17,769		$	10,801
Other Operations		—			14			3			14
Corporate		545			255			626			564
Consolidated	$	9,892		$	7,231		$	18,398		$	11,379

	June 30,		December 31,
(dollars in thousands)	2011		2010
Segment Assets:
Glass Operations	$	755,753	$	752,058
Other Operations		36,930		45,944
Corporate		22,568		20,969
Consolidated	$	815,251	$	818,971

(1)	Net gain on the sale of land at our Royal Leerdam facility.
(2)	For 2011 this represents CEO transition expenses and for 2010 this is an insurance claim recovery.

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Special Charges

6 Months Ended

Jun. 30, 2011

Special Charges [Abstract]

Special Charges

5. Special Charges

Facility Closures

In December 2008, we announced that our Syracuse China manufacturing facility and our Mira Loma, California distribution center would be shut down in early to mid-2009 in order to reduce costs. The Syracuse China facility was closed on April 9, 2009 and the Mira Loma distribution center was closed on May 31, 2009. See Form 10-K for the year ended December 31, 2010 for further discussion.

We incurred no additional charges for the three months ended June 30, 2011. We incurred charges of approximately $0.1 million in the six months ended June 30, 2011 related to other costs net of building site clean-up adjustments in connection with the sale of the property in Syracuse, New York in March 2011. This amount was included in special charges on the Condensed Consolidated Statement of Operations in the Other Operations segment as detailed in the table below.

We incurred additional charges of approximately $0.2 million and $0.5 million in the three months and six months ended June 30, 2010 related to these planned closures. Special charges of $0.2 million and $0.4 million were primarily related to employee termination and building site clean up costs in the three months and six months ended June 30, 2010, respectively. These amounts were included in special charges on the Condensed Consolidated Statement of Operations in the Glass Operations and Other Operations segment as detailed in the table below.

Other income on the Condensed Consolidated Statement of Operations included a charge of $0.1 million for the first six months of 2010 for the change in fair value of ineffective natural gas hedges related to our Syracuse China operation. This amount was included in the Other Operations segment.

The following table summarizes the facility closure charges in the second quarter of 2011 and 2010:

	Three months ended June 30, 2011						Three months ended June 30, 2010
	Glass		Other				Glass		Other
(dollars in thousands)	Operations		Operations		Total		Operations		Operations		Total
Building site clean-up & fixed asset write-down	$	—	$	—	$	—	$	—	$	156	$	156
Included in special charges		—		—		—		—		156		156
Total pretax charge	$	—	$	—	$	—	$	—	$	156	$	156

The following table summarizes the facility closure charges in the first six months of 2011 and 2010:

	Six months ended June 30, 2011								Six months ended June 30, 2010
	Glass		Other						Glass		Other
(dollars in thousands)	Operations		Operations			Total			Operations		Operations			Total
Employee termination cost & other	$	—	$	167		$	167		$	29	$	76		$	105
Building site clean-up & fixed asset write-down		—		(116	)		(116	)		—		283			283
Included in special charges		—		51			51			29		359			388
Ineffectiveness of natural gas hedge		—		—			—			—		(130	)		(130	)
Included in other (expense) income		—		—			—			—		(130	)		(130	)
Total pretax charge	$	—	$	51		$	51		$	29	$	489		$	518

The following reflects the balance sheet activity related to the facility closure charge for the period ended June 30, 2011:

	Balances		Total			Cash			Inventory &					Balances at
	at December 31,		Charge to			(payments)			Fixed asset		Non-cash			June 30,
(dollars in thousands)	2010		Earnings			receipts			Write Downs		Utilization			2011
Building site clean-up & fixed asset write-down	$	151	$	(116	)	$	(5	)	$	21	$	(51	)	$	—
Employee termination cost & other		301		167			(314	)		—		(154	)		—
Total	$	452	$	51		$	(319	)	$	21	$	(205	)	$	—

The activities related to our closure of the Syracuse China manufacturing facility and our Mira Loma, California distribution center are complete. The following reflects the total cumulative expenses to date (incurred from the fourth quarter of 2008 through the Balance Sheet date) related to the facility closure activity:

	Glass		Other		Charges
(dollars in thousands)	Operations		Operations		To Date
Inventory write-down	$	192	$	10,541	$	10,733
Pension & postretirement welfare		—		4,448		4,448
Fixed asset depreciation		—		966		966
Included in cost of sales		192		15,955		16,147
Employee termination cost & other		548		6,149		6,697
Building site clean-up & fixed asset write-down		177		10,418		10,595
Included in special charges		725		16,567		17,292
Ineffectiveness of natural gas hedge		—		745		745
Included in other (income) expense		—		745		745
Total pretax charge to date	$	917	$	33,267	$	34,184

Fixed Asset and Inventory Write-down

In August 2010, we wrote down decorating assets in our Shreveport, Louisiana facility as a result of our decision to outsource our U.S. decorating business. See Form 10-K for the year ended December 31, 2010 for further discussion.

During the three months and six months ended June 30, 2011, we recorded a $0.1 million income adjustment to special charges in the Glass Operations segment.

The following reflects the balance sheet activity related to the fixed asset and inventory write-down charge as of June 30, 2011:

	Reserve											Reserve
	Balances at		Total			Cash			Inventory &			Balances at
	December 31,		Charge to			(payments)			Fixed asset			June 30,
(Dollars in thousands)	2010		Earnings			receipts			Write Downs			2011
Building site clean-up & fixed asset write-down	$	316	$	(57	)	$	(13	)	$	(44	)	$	202
Total	$	316	$	(57	)	$	(13	)	$	(44	)	$	202

The ending balance of $0.2 million at June 30, 2011 was included in accrued special charges on the Condensed Consolidated Balance Sheets; we expect this to result in cash payments during the remainder of 2011.

During the second quarter of 2010, we wrote down certain after-processing equipment within our Glass Operations segment. The non-cash charge of $2.7 million was included in cost of sales on the Condensed Consolidated Statement of Operations. During the second quarter of 2011, we received a $1.0 million credit from the supplier of this equipment. This was recorded in selling, general and administrative expense and other income on the Condensed Consolidated Statements of Operations.

Summary of Total Special Charges

The following table summarizes the special charges mentioned above and their classifications in the Condensed Consolidated Statements of Operations:

	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2011			2010		2011			2010
Cost of sales	$	43		$	2,687	$	43		$	2,687
Selling general & administrative		(805	)		—		(805	)		—
Special charges (income)		(100	)		156		(49	)		388
Other (income) expense		(216	)		—		(216	)		130
Total (income) expense	$	(1,078	)	$	2,843	$	(1,027	)	$	3,205

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Operating activities:
Net income	$ 15,406	$ 9,567	$ 14,405	$ 64,977
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	11,027	10,568	21,908	20,954
(Gain) loss on asset sales	(3,436)	185	(6,796)	265
Change in accounts receivable	(4,216)	(7,096)	(4,802)	(13,612)
Change in inventories	(4,331)	(3,896)	(19,072)	(14,800)
Change in accounts payable	1,339	5,190	672	788
Accrued interest and amortization of discounts, warrants and finance fees	9,479	10,585	826	15,791
Gain on redemption of new PIK notes				(70,193)
Payment of interest on new PIK notes				(29,400)
Call premium on senior notes and floating rate notes			1,203	8,415
Write-off of finance fees & discounts on senior notes, old ABL and floating rate notes			1,600	4,986
Pension & non-pension postretirement benefits	(507)	(134)	2,944	2,871
Restructuring charges	(421)	2,827	(566)	2,396
Accrued liabilities & prepaid expenses	9,476	6,843	1,209	(2,464)
Income taxes	(5,443)	3,405	(9,746)	(239)
Share-based compensation expense	1,140	1,385	1,967	1,831
Other operating activities	401	(1,317)	1,082	(619)
Net cash provided by (Used in) operating activities	29,914	38,112	6,834	(8,053)
Investing activities:
Additions to property, plant and equipment	(9,892)	(7,231)	(18,398)	(11,379)
Net proceeds from sale of Traex	12,842		12,842
Call premium on senior notes and floating rate notes			(1,203)	(8,415)
Proceeds from asset sales and other	597		5,199
Net cash provided by (used in) investing activities	3,547	(7,231)	(1,560)	(19,794)
Financing activities:
Net (repayments) borrowings on ABL credit facility	(2,245)		2,105
Other repayments	(49)	(632)	(97)	(91)
Other borrowings				215
PIK note payment				(51,031)
Proceeds from senior secured notes				392,328
Stock options exercised	3	8	478	8
Debt issuance costs and other	(327)	(1,463)	(443)	(15,496)
Net cash (used in) financing activities	(2,618)	(2,087)	(37,957)	19,933
Effect of exchange rate fluctuations on cash	354	(648)	734	(1,002)
Increase (Decrease) in cash	31,197	28,146	(31,949)	(8,916)
Cash at beginning of period	13,112	18,027	76,258	55,089
Cash at end of period	44,309	46,173	44,309	46,173
Supplemental disclosure of cash flows information:
Cash paid during the period for interest	1,139	1,123	21,310	6,140
Cash paid (refunded) during the period for income taxes	3,208	(232)	7,688	4,702
Floating rate note payments
Note payments				(306,000)
Senior note payments
Note payments			$ (40,000)

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Description of the Business

6 Months Ended

Jun. 30, 2011

Description of the Business [Abstract]

Description of the Business

1. Description of the Business

Libbey is the leading producer of glass tableware products in the Western Hemisphere, in addition to supplying key markets throughout the world. We produce glass tableware in five countries and sell to customers in over 100 countries. We have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere and are one of the largest glass tableware manufacturers in the world. We design and market an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware to a broad group of customers in the foodservice, retail and business-to-business markets. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands, Portugal, China and Mexico. Until April 28, 2011, we also owned and operated a plastics plant in Wisconsin. On April 28, 2011, we sold substantially all of the assets of our plastics subsidiary, Traex, to the Vollrath Company. See note 14 for further discussion of this transaction. In addition, we import products from overseas in order to complement our line of manufactured items. The combination of manufacturing and procurement allows us to compete in the global tableware market by offering an extensive product line at competitive prices.

Our website can be found at www.libbey.com. We make available, free of charge, at this website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of Securities Exchange Act of 1934, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, as well as amendments to those reports. These reports are made available on our website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission and can also be found at www.sec.gov.

Our shares are traded on the NYSE Amex exchange under the ticker symbol LBY.

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Comprehensive Income

6 Months Ended

Jun. 30, 2011

Comprehensive Income [Abstract]

Comprehensive Income

10. Comprehensive Income

Components of comprehensive income (net of tax) are as follows:

	Three months ended					Six months ended
	June 30,					June 30,
(dollars in thousands)	2011		2010			2011		2010
Net income	$	15,406	$	9,567		$	14,405	$	64,977
Minimum pension and non-pension postretirement liability and intangible pension asset, net of tax		7,696		2,332			9,808		3,910
Effect of derivatives, net of tax		686		2,442			1,300		284
Effect of exchange rate fluctuations		2,644		(9,148	)		9,240		(15,662	)
Total comprehensive income	$	26,432	$	5,193		$	34,753	$	53,509

Accumulated other comprehensive loss (net of tax) is as follows:

							Minimum Pension
	Effect of						and Non-Pension			Total
	Exchange						Retirement Liability			Accumulated
	Rate			Cash Flow			and Intangible			Comprehensive
(dollars in thousands)	Fluctuation			Derivatives			Pension Asset			Loss
Balance on December 31, 2010	$	(2,661	)	$	(1,121	)	$	(107,164	)	$	(110,946	)
2011 change		9,240			1,455			10,132			20,827
Translation effect		—			(49	)		(545	)		(594	)
Tax effect		—			(106	)		221			115
Balance on June 30, 2011	$	6,579		$	179		$	(97,356	)	$	(90,598	)

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Other Income

6 Months Ended

Jun. 30, 2011

Other Income [Abstract]

Other Income

14. Other Income

Items included in other income in the Condensed Consolidated Statements of Operations are as follows:

	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2011			2010		2011			2010
Gain on sale of land at Royal Leerdam	$	—			—		3,445			—
Gain on sale of Traex (1)		3,321			—		3,321			—
Loss on currency translation		(409	)		963		(1,575	)		433
Income (expense) on hedging activities		(148	)		608		487			315
Other non-operating income		300			85		392			145
Other income	$	3,064		$	1,656	$	6,070		$	893

(1) On April 28, 2011, substantially all of the assets of our Traex subsidiary (now known as Dane Holding Co.) were sold to the Vollrath Company for $12.8 million, resulting in a gain of $3.3 million.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements of Operations [Abstract]
Net sales	$ 214,013	$ 203,036	$ 395,028	$ 376,940
Freight billed to customers	838	420	1,249	854
Total revenues	214,851	203,456	396,277	377,794
Cost of sales	165,015	155,425	310,295	295,886
Gross profit	49,836	48,031	85,982	81,908
Selling, general and administrative expenses	25,224	24,719	50,626	47,543
Special charges	(100)	156	(49)	388
Income from operations	24,712	23,156	35,405	33,977
(Loss) gain on redemption of debt			(2,803)	56,792
Other income	3,064	1,656	6,070	893
Earnings before interest and income taxes	27,776	24,812	38,672	91,662
Interest expense	10,787	11,768	22,370	21,388
Income before income taxes	16,989	13,044	16,302	70,274
Provision for income taxes	1,583	3,477	1,897	5,297
Net income	$ 15,406	$ 9,567	$ 14,405	$ 64,977
Net income per share:
Basic:	$ 0.77	$ 0.59	$ 0.72	$ 3.98
Diluted:	$ 0.74	$ 0.47	$ 0.69	$ 3.21
Dividends per share	$ 0	$ 0	$ 0	$ 0