Libbey 10Q 2015 Q2 Quarterly report

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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, 2015



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 21,843,851 shares at July 31, 2015.

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TABLE OF CONTENTS



Item 1. Financial Statements	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Comprehensive Income (Loss)	6
Condensed Consolidated Balance Sheets	7
Condensed Consolidated Statement of Shareholders' Equity	8
Condensed Consolidated Statements of Cash Flows	9
Notes to Condensed Consolidated Financial Statements	11
1. Description of the Business	11
2. Significant Accounting Policies	11
3. Balance Sheet Details	14
4. Borrowings	15
5. Restructuring Charges	18
6. Income Taxes	18
7. Pension and Non-pension Postretirement Benefits	19
8. Net Income (Loss) per Share of Common Stock	20
9. Derivatives	21
10. Comprehensive Income (Loss)	24
11. Segments	26
12. Fair Value	28
13. Other Income	28
14. Contingencies	29
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Qualitative and Quantitative Disclosures about Market Risk	43
Item 4. Controls and Procedures	44
PART II — OTHER INFORMATION	44
Item 1A. Risk Factors	44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6. Exhibits	45
EXHIBIT INDEX	46
SIGNATURES	49
EX-10.19
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

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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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

The balance sheet at December 31, 2014 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, 2014.

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Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands)

(unaudited)



	Three months ended June 30,
	2015		2014
Net sales	$	214,051	$	223,536
Freight billed to customers	735		893
Total revenues	214,786		224,429
Cost of sales	157,896		164,162
Gross profit	56,890		60,267
Selling, general and administrative expenses	36,390		30,726
Income from operations	20,500		29,541
Loss on redemption of debt	—		(47,191		)
Other income	846		322
Earnings (loss) before interest and income taxes	21,346		(17,328		)
Interest expense	4,538		5,486
Income (loss) before income taxes	16,808		(22,814		)
Provision for income taxes	2,414		2,354
Net income (loss)	$	14,394	$	(25,168	)

Net income (loss) per share:
Basic	$	0.66	$	(1.16	)
Diluted	$	0.65	$	(1.16	)
Dividends declared per share	$	0.11	$	—

See accompanying notes

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Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands)

(unaudited)




	Six months ended June 30,
	2015		2014
Net sales	$	401,416	$	405,117
Freight billed to customers	1,341		1,707
Total revenues	402,757		406,824
Cost of sales	303,372		314,218
Gross profit	99,385		92,606
Selling, general and administrative expenses	70,789		59,604
Income from operations	28,596		33,002
Loss on redemption of debt	—		(47,191		)
Other income	1,673		—
Earnings (loss) before interest and income taxes	30,269		(14,189		)
Interest expense	9,061		13,187
Income (loss) before income taxes	21,208		(27,376		)
Provision for income taxes	3,702		1,176
Net income (loss)	$	17,506	$	(28,552	)

Net income (loss) per share:
Basic	$	0.80	$	(1.32	)
Diluted	$	0.78	$	(1.32	)
Dividends declared per share	$	0.22	$	—

See accompanying notes

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Libbey Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)



	Three months ended June 30,					Six months ended June 30,
	2015		2014			2015			2014

Net income (loss)	$	14,394	$	(25,168	)	$	17,506		$	(28,552	)

Other comprehensive income (loss):
Pension and other postretirement benefit adjustments, net of tax	7,709		2,084			12,421			3,433
Change in fair value of derivative instruments, net of tax	572		(412		)	330			(274		)
Foreign currency translation adjustments	2,181		(785		)	(8,309		)	(1,373		)
Other comprehensive income, net of tax	10,462		887			4,442			1,786

Comprehensive income (loss)	$	24,856	$	(24,281	)	$	21,948		$	(26,766	)

See accompanying notes

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Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)



	June 30, 2015			December 31, 2014
	(unaudited)
ASSETS
Cash and cash equivalents	$	31,352		$	60,044
Accounts receivable — net	96,694			91,106
Inventories — net	193,728			169,828
Prepaid and other current assets	27,169			27,701
Total current assets	348,943			348,679
Pension asset	848			848
Purchased intangible assets — net	16,937			17,771
Goodwill	164,112			164,112
Deferred income taxes	5,521			5,566
Other assets	14,168			13,976
Total other assets	201,586			202,273
Property, plant and equipment — net	282,902			277,978
Total assets	$	833,431		$	828,930

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	68,865		$	82,485
Salaries and wages	29,630			29,035
Accrued liabilities	53,528			42,638
Accrued income taxes	1,103			2,010
Pension liability (current portion)	1,435			1,488
Non-pension postretirement benefits (current portion)	4,800			4,800
Derivative liability	2,296			2,653
Deferred income taxes	3,633			3,633
Long-term debt due within one year	4,577			7,658
Total current liabilities	169,867			176,400
Long-term debt	447,633			436,264
Pension liability	50,050			56,462
Non-pension postretirement benefits	60,442			63,301
Deferred income taxes	5,760			5,893
Other long-term liabilities	14,810			13,156
Total liabilities	748,562			751,476

Shareholders’ equity:
Common stock, par value $.01 per share, 50,000,000 shares authorized, 21,843,851 shares issued in 2015 (21,843,851 shares issued in 2014)	218			218
Capital in excess of par value	326,482			331,391
Treasury stock	(5,884		)	(1,060		)
Retained deficit	(101,942		)	(114,648		)
Accumulated other comprehensive loss	(134,005		)	(138,447		)
Total shareholders’ equity	84,869			77,454
Total liabilities and shareholders’ equity	$	833,431		$	828,930

See accompanying notes

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Libbey Inc.

Condensed Consolidated Statement of Shareholders' Equity

(dollars in thousands, except share amounts)

(unaudited)



	Common Stock Shares	Treasury Stock Shares		Common Stock Amount		Capital in Excess of Par Value			Treasury Stock Amount			Retained Deficit			Accumulated Other Comprehensive Loss (note 10)			Total

Balance December 31, 2014	21,843,851	34,985		$	218	$	331,391		$	(1,060	)	$	(114,648	)	$	(138,447	)	$	77,454

Net income												17,506						17,506
Other comprehensive income															4,442			4,442
Stock compensation expense						3,121												3,121
Dividends												(4,800		)				(4,800		)
Stock withheld for employee taxes						(588		)										(588		)
Stock issued		(300,601	)			(7,442		)	10,451									3,009
Purchase of treasury shares		412,473							(15,275		)							(15,275		)
Balance June 30, 2015	21,843,851	146,857		$	218	$	326,482		$	(5,884	)	$	(101,942	)	$	(134,005	)	$	84,869

See accompanying notes

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Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



	Three months ended June 30,
	2015			2014
Operating activities:
Net income (loss)	$	14,394		$	(25,168	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	10,469			10,592
Loss on asset sales and disposals	92			17
Change in accounts receivable	(1,802		)	(19,481		)
Change in inventories	(9,699		)	(8,168		)
Change in accounts payable	(5,002		)	6,667
Accrued interest and amortization of discounts and finance fees	390			(5,911		)
Call premium on senior notes	—			37,348
Write-off of finance fees on senior notes	—			9,086
Pension & non-pension postretirement benefits	895			1,397
Restructuring	—			(46		)
Accrued liabilities & prepaid expenses	14,978			4,647
Income taxes	422			(770		)
Share-based compensation expense	2,515			1,634
Other operating activities	90			(1,491		)
Net cash provided by (used in) operating activities	27,742			10,353

Investing activities:
Additions to property, plant and equipment	(16,577		)	(11,934		)
Proceeds from asset sales and other	2			—
Net cash used in investing activities	(16,575		)	(11,934		)

Financing activities:
Borrowings on ABL credit facility	30,400			21,300
Repayments on ABL credit facility	(20,500		)	(14,300		)
Other repayments	(12		)	(65		)
Other borrowings	—			1,964
Payments on 6.875% senior notes	—			(405,000		)
Proceeds from Term Loan B	—			438,900
Repayments on Term Loan B	(1,100		)	—
Call premium on senior notes	—			(37,348		)
Stock options exercised	1,141			1,786
Dividends	(2,398		)	—
Treasury shares purchased	(6,131		)	—
Debt issuance costs and other	—			(6,868		)
Net cash provided by (used in) financing activities	1,400			369

Effect of exchange rate fluctuations on cash	169			(52		)
Increase (decrease) in cash	12,736			(1,264		)

Cash at beginning of period	18,616			24,473
Cash at end of period	$	31,352		$	23,209

Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of capitalized interest	$	4,156		$	11,483
Cash paid during the period for income taxes	$	1,681		$	1,477

See accompanying notes

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Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)




	Six months ended June 30,
	2015			2014
Operating activities:
Net income (loss)	$	17,506		$	(28,552	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	20,653			21,268
Loss on asset sales and disposals	303			13
Change in accounts receivable	(7,449		)	(14,403		)
Change in inventories	(26,419		)	(19,363		)
Change in accounts payable	(7,341		)	1,352
Accrued interest and amortization of discounts and finance fees	602			1,345
Call premium on senior notes	—			37,348
Write-off of finance fees on senior notes	—			9,086
Pension & non-pension postretirement benefits	1,898			2,769
Restructuring	—			(289		)
Accrued liabilities & prepaid expenses	12,102			(7,722		)
Income taxes	(938		)	(3,923		)
Share-based compensation expense	4,644			2,637
Other operating activities	(1,055		)	(1,586		)
Net cash provided by (used in) operating activities	14,506			(20		)

Investing activities:
Additions to property, plant and equipment	(33,236		)	(21,835		)
Proceeds from furnace malfunction insurance recovery	—			2,350
Proceeds from asset sales and other	2			4
Net cash used in investing activities	(33,234		)	(19,481		)

Financing activities:
Borrowings on ABL credit facility	44,500			21,300
Repayments on ABL credit facility	(30,500		)	(14,300		)
Other repayments	(3,267		)	(115		)
Other borrowings	—			1,964
Payments on 6.875% senior notes	—			(405,000		)
Proceeds from Term Loan B	—			438,900
Repayments on Term Loan B	(2,200		)	—
Call premium on senior notes	—			(37,348		)
Stock options exercised	2,989			2,122
Dividends	(4,800		)	—
Treasury shares purchased	(15,275		)	—
Debt issuance costs and other	—			(6,868		)
Net cash provided by (used in) financing activities	(8,553		)	655

Effect of exchange rate fluctuations on cash	(1,411		)	(153		)
Increase (decrease) in cash	(28,692		)	(18,999		)

Cash at beginning of period	60,044			42,208
Cash at end of period	$	31,352		$	23,209

Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of capitalized interest	$	8,085		$	11,667
Cash paid during the period for income taxes	$	2,862		$	3,293

See accompanying notes

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Libbey Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)


1.	Description of the Business

Libbey is a leading global manufacturer and marketer of glass tableware products. We believe we have the largest manufacturing, distribution and service network among glass tableware manufacturers 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 design and market, under our Libbey^®, Crisa^®, Royal Leerdam^®, World^® Tableware, Syracuse^® China and Crisal Glass^® brand names (among others), an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware items for sale primarily in the foodservice, retail and business-to-business markets. Our sales force presents our products to the global marketplace in a coordinated fashion. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands (Libbey Holland), Portugal (Libbey Portugal), China (Libbey China) and Mexico (Libbey Mexico). 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 MKT exchange under the ticker symbol LBY.


2.	Significant Accounting Policies

See our Form 10-K for the year ended December 31, 2014 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,”

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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, Portugal and the Netherlands, we have recorded valuation allowances against our deferred income tax assets. See note 6 for further discussion.

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 Statements of Operations is as follows:



	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2015		2014		2015		2014
Stock-based compensation expense	$	2,515	$	1,634	$	4,644	$	2,637

Reclassifications

In note 11 Segments, the derivative amount in the prior year financial statements has been excluded from retained corporate costs to conform to the current year presentation.

New Accounting Standards

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue From Contracts With Customers" (ASU 2014-09), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. This update is effective for interim and annual reporting periods beginning after December 15, 2016; early adoption is not permitted. On July 9, 2015, the FASB approved a one-year deferral of the effective date from January 1, 2017 to January 1, 2018, but early adoption as of January 1, 2017 is permitted. We are currently assessing the impact that this standard will have on our Condensed Consolidated Financial Statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements-Going Concern" (ASU 2014-15), which establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. ASU 2014-15 also provides guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This update is effective for annual reporting periods ending after December 15, 2016 and for annual and interim periods thereafter; early adoption is permitted. We are currently evaluating the impact that this standard will have on our Condensed Consolidated Financial Statements.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" (ASU 2015-03), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This update is effective for interim and annual reporting periods beginning after December 15, 2015; early adoption is permitted. We are currently evaluating the impact that this standard will have on our Condensed Consolidated Financial Statements.

In May 2015, the FASB issued Accounting Standards Update 2015-07, "Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share (or its Equivalent)" (ASU 2015-07), which removes the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient provided by FASB ASC Topic 820, Fair Value Measurement. Disclosures about investments in certain entities that calculate net asset value per share are limited under ASU 2015-07 to those investments for which the entity has elected to estimate the fair value

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using the net asset value practical expedient. ASU 2015-07 is effective for entities for fiscal years beginning after December 15, 2015, with retrospective application to all periods presented. Early application is permitted. We are currently assessing the impact that this standard will have on our Condensed Consolidated Financial Statements.

In July 2015, the FASB issued Accounting Standards Update No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory" (ASU 2015-11), which requires that inventory be measured at the lower of its cost or the estimated sale price, minus the costs of completing the sale, which the FASB calls the net realizable value. This update is effective for interim and annual reporting periods beginning after December 15, 2016; early adoption is permitted. We are currently evaluating the impact that this standard will have on our Condensed Consolidated Financial Statements.

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3.	Balance Sheet Details

The following table provides detail of selected balance sheet items:



(dollars in thousands)	June 30, 2015		December 31, 2014
Accounts receivable:
Trade receivables	$	92,875	$	87,700
Other receivables	3,819		3,406
Total accounts receivable, less allowances of $6,767 and $5,586	$	96,694	$	91,106

Inventories:
Finished goods	$	174,941	$	151,698
Work in process	1,078		1,153
Raw materials	5,315		4,708
Repair parts	11,251		10,840
Operating supplies	1,143		1,429
Total inventories, less loss provisions of $3,876 and $4,370	$	193,728	$	169,828

Prepaid and other current assets
Value added tax	$	14,113	$	13,512
Prepaid expenses	6,111		6,947
Deferred income taxes	4,884		4,888
Prepaid income taxes	1,945		1,951
Derivative asset	116		403
Total prepaid and other current assets	$	27,169	$	27,701

Other assets:
Deposits	$	1,257	$	890
Finance fees — net of amortization	6,353		6,958
Other assets	6,558		6,128
Total other assets	$	14,168	$	13,976

Accrued liabilities:
Accrued incentives	$	27,516	$	17,648
Workers compensation	6,714		7,121
Medical liabilities	4,023		3,887
Interest	3,805		3,876
Commissions payable	1,152		1,068
Withholdings and other non-income tax accruals	3,783		3,078
Other accrued liabilities	6,535		5,960
Total accrued liabilities	$	53,528	$	42,638

Other long-term liabilities:
Deferred liability	$	8,447	$	8,081
Derivative liability	33		215
Environmental obligation (see note 14)	1,350		1,000
Other long-term liabilities	4,980		3,860
Total other long-term liabilities	$	14,810	$	13,156

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4.	Borrowings

On April 9, 2014, 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 $440.0 million in aggregate principal amount of Senior Secured Term Loan B facility of Libbey Glass due 2021 (Term Loan B); and


•	the repurchase and cancellation of all Libbey Glass's then outstanding $405.0 million in aggregate principal amount Senior Secured Notes ($360.0 million on April 9, 2014 and $45.0 million on May 9, 2014).

We used the proceeds of the Term Loan B, together with cash on hand and borrowings under the ABL Facility, to repurchase $360.0 million of the Senior Secured Notes, redeem the remaining $45.0 million of the Senior Secured Notes, and pay certain related fees and expenses.

The above transactions included charges of $37.3 million for an early call premium and $9.1 million for the write off of the remaining financing fees from the Senior Secured Notes. These charges were considered in the computation of the loss on redemption of debt in the second quarter of 2014.

Borrowings consist of the following:



(dollars in thousands)	Interest Rate	Maturity Date	June 30, 2015		December 31, 2014
Borrowings under ABL Facility	floating	April 9, 2019	$	14,000	$	—
Term Loan B	floating	April 9, 2021	435,600		437,800
RMB Working Capital Loan	6.78%	July, 2015	—		3,258
AICEP Loan	0.00%	January, 2016 to July 30, 2018	3,512		3,846
Total borrowings			453,112		444,904
Less — unamortized discount			902		982
Total borrowings — net			452,210		443,922
Less — long term debt due within one year			4,577		7,658
Total long-term portion of borrowings — net			$	447,633	$	436,264

Amended and Restated ABL Credit Agreement

Libbey Glass and Libbey Europe entered into an Amended and Restated Credit Agreement, dated as of February 8, 2010 and amended as of April 29, 2011, May 18, 2012 and April 9, 2014 (as amended, the ABL Facility), with a group of four financial institutions. The ABL Facility provides for borrowings of up to $100.0 million, 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 personal property of Libbey Glass and its domestic subsidiaries (ABL 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’s present and future direct and indirect domestic subsidiaries;


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


•	65 percent of the voting stock of substantially all of Libbey Glass’s 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 (Term Priority Collateral).

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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 swingline borrowings for Libbey Europe being limited to the U.S. 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 swingline borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swingline 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 0.50 percent and 1.50 percent, respectively, at June 30, 2015. 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 0.25 percent at June 30, 2015. No compensating balances are required by the ABL Facility. The ABL Facility 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 Facility availability were to fall below $10.0 million, the fixed charge coverage ratio requirement would be 1:00 to 1:00. Libbey Glass and Libbey Europe have the option to increase the ABL Facility by $25.0 million. There were borrowings of $14.0 million under the ABL Facility at June 30, 2015. There were no Libbey Glass or Libbey Europe borrowings under the ABL Facility at December 31, 2014. 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 ABL 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.

At June 30, 2015, the available total borrowing base is offset by a $0.3 million rent reserve and a $2.2 million mark-to-market reserve for natural gas contracts. The ABL Facility also provides for the issuance of up to $30.0 million of letters of credit, which are applied against the $100.0 million limit; at June 30, 2015, $6.6 million in letters of credit were outstanding. Remaining unused availability under the ABL Facility was $76.9 million at June 30, 2015, compared to $82.3 million at December 31, 2014.

Term Loan B and Senior Secured Notes

On April 9, 2014, Libbey Glass consummated its $440.0 million Term Loan B. The net proceeds of the Term Loan B were $438.9 million, after the 0.25 percent original issue discount of $1.1 million. The Term Loan B had related fees of approximately $6.7 million that will be amortized to interest expense over the life of the loan.

The Term Loan B is evidenced by a Senior Secured Credit Agreement, dated April 9, 2014 (Credit Agreement), between Libbey Glass, the Company, the domestic subsidiaries of Libbey Glass listed as guarantors therein (Subsidiary Guarantors and together with the Company, Guarantors), and the lenders. Under the terms of the Credit Agreement, aggregate principal of $1.1 million is due on the last business day of each quarter. The Term Loan B bears interest at the rate of LIBOR plus 3.0 percent, subject to a LIBOR "floor" of 0.75 percent. The interest rate was 3.75 percent per year at June 30, 2015, and will mature on April 9, 2021. We may voluntarily prepay, in whole or in part, the Term Loan B without premium or penalty but with accrued interest. Although the Credit Agreement does not contain financial covenants, the Credit Agreement contains other covenants that restrict the ability of Libbey Glass and the Guarantors to, among other things:


•	incur, assume 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 Credit Agreement provides for customary events of default. In the case of an event of default as defined in the Credit Agreement, all of the outstanding Term Loan B will become due and payable immediately without further action or notice.

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The Term Loan B and the related guarantees under the Credit Agreement are secured by (i) first priority liens on the Term Priority Collateral and (ii) second priority liens on the ABL Collateral.

We had an Interest Rate Agreement in place through May 9, 2014 with respect to $45.0 million of our Senior Secured Notes as a means to manage our fixed to variable interest rate ratio. The Interest Rate Agreement effectively converted this portion of our long-term borrowings from fixed rate debt to variable rate debt. The variable interest rate for our borrowings related to the Interest Rate Agreement at May 9, 2014, excluding applicable fees, was 5.5 percent. Total remaining Senior Secured Notes not covered by the Interest Rate Agreement had a fixed interest rate of 6.875 percent per year. We settled the swap at fair value, resulting in a payment of $1.1 million on May 13, 2014. Upon the redemption of the Senior Secured Notes in the second quarter of 2014, the unamortized balance of $0.8 million of the carrying value adjustment on debt related to the Interest Rate Agreement was recognized as expense in loss on redemption of debt on the Condensed Consolidated Statements of Operations. See note 9 for further discussion and the net impact recorded on the Condensed Consolidated Statements of Operations.

On April 1, 2015, we executed an interest rate swap on our Term Loan B as part of our risk management strategy to mitigate the risks involved with fluctuating interest rates. The interest rate swap will effectively convert $220.0 million of our Term Loan B debt from a variable interest rate to a 4.85 percent fixed interest rate, thus reducing the impact of interest rate changes on future income. The fixed rate swap will be effective January 2016 through January 2020. The interest rate swap is designated as a cash flow hedge and is accounted for under FASB ASC 815 "Derivatives and Hedging". See note 9 for further discussion on the interest rate swap.

RMB Working Capital Loan

On July 24, 2014, Libbey China entered into a RMB 20.0 million (approximately $3.3 million) working capital loan with China Construction Bank to cover seasonal working capital needs. The working capital loan was set to mature on July 23, 2015, and had a fixed interest rate of 6.78 percent, which was paid monthly. On March 4, 2015, Libbey China prepaid the working capital loan along with accrued and unpaid interest. This obligation was secured by a mortgage lien on the Libbey China facility.

AICEP Loan

In July 2012, Libbey Portugal entered into a loan agreement with Agencia para Investmento Comercio Externo de Portugal, EPE (AICEP), the Portuguese Agency for investment and external trade. The amount of the loan is €3.2 million (approximately $3.5 million) at June 30, 2015, and has an interest rate of 0.0 percent. Semi-annual installments of principal are due beginning in January 2016 through the maturity date in July 2018.

Notes Payable

We have an overdraft line of credit for a maximum of €1.0 million. At June 30, 2015, 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.

Fair Value of Borrowings

The fair value of our debt has been calculated based on quoted market prices (Level 2 in the fair value hierarchy) for the same or similar issues. The $435.6 million outstanding on the Term Loan B had an estimated fair value of $435.1 million at June 30, 2015 and $430.1 million at December 31, 2014. The fair value of the remainder of our debt at June 30, 2015 approximates carrying value due to variable rate on the borrowings under the ABL facility and other immaterial debt. The fair value of the remainder of our debt at December 31, 2014 approximates carrying value due to the short term nature of the RMB Working Capital Loan and other immaterial debt.

Capital Resources and Liquidity

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5.	Restructuring Charges

Capacity Realignment

In February 2013, we announced plans to discontinue production of certain glassware in North America and reduce manufacturing capacity at our Shreveport, Louisiana, manufacturing facility. As a result, on May 30, 2013, we ceased production of certain glassware in North America, discontinued the use of a furnace at our Shreveport, Louisiana, manufacturing plant and began relocating a portion of the production from the idled furnace to our Toledo, Ohio, and Monterrey, Mexico, locations. These activities were all within the Americas segment and were completed by March 31, 2014. For the six months ended June 30, 2014, we recorded a pretax charge of $1.0 million related to other restructuring expenses. See Form 10-K for the year ended December 31, 2014 for further discussion.


6.	Income Taxes

For interim tax reporting, we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded from the annualized effective tax rate. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

Our effective tax rate was 17.5 percent for the six months ended June 30, 2015, compared to (4.3) percent for the six months ended June 30, 2014. Our effective tax rate differs from the United States statutory tax rate primarily due to valuation allowances, earnings in countries with differing statutory tax rates, foreign withholding tax, accruals related to uncertain tax positions, and tax planning structures. At June 30, 2015 and December 31, 2014, we had $0.1 million and $0.4 million, respectively, of gross unrecognized tax benefits, exclusive of interest and penalties. Tax benefits, exclusive of interest and penalties, of $0.1 million and $0.3 million were recorded in our income tax provision for the three months and the six months ended June 30, 2015, respectively, due to expirations of statutes of limitations. During the three months and the six months ended June 30, 2014, we recorded tax benefits, exclusive of interest and penalties, of $0.1 million and $0.6 million, respectively.

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. For 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 were no such tax benefits recorded in our income tax provision for the three months and the six months ended June 30, 2015, respectively. Tax benefits of $1.0 million and $1.6 million were recorded in our income tax provision for the three months and six months ended June 30, 2014, respectively.

In the U.S., the Netherlands and Portugal, we have recorded either full or partial valuation allowances against our deferred income tax assets. We review the need for valuation allowances on a quarterly basis in order to assess the likelihood of the realization of our deferred tax assets. In assessing the need for recording or reversing 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, prudent and feasible tax planning strategies that could be implemented, and whether there were unusual, infrequent or extraordinary items to be considered.

At June 30, 2015, we continued to record full valuation allowances in the U.S. and the Netherlands of approximately $56.0 million and $10.0 million, respectively. While we have experienced some positive trends recently with our improved financial performance, management continues to conclude that the negative evidence outweighs the positive. If operations in the U.S. generate profits and taxable income throughout 2015 and expectations are for continued profitability for 2016 and beyond, we may have sufficient evidence to release all or a portion of our valuation allowances.

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7.	Pension and Non-pension Postretirement Benefits

We have pension plans covering the majority of our employees. Benefits generally are based on compensation and service for salaried employees and job grade and length of service for hourly employees. Our policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. In addition, we have an unfunded supplemental employee retirement plan (SERP) that covers certain salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Effective January 1, 2013, we ceased annual company contribution credits to the cash balance accounts in our Libbey U.S. Salaried Pension Plan and SERP. The non-U.S. pension plans cover the employees of our wholly owned subsidiaries in the Netherlands and Mexico. The plan in Mexico is primarily unfunded.

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)	2015			2014			2015			2014			2015			2014
Service cost	$	1,022		$	807		$	762		$	579		$	1,784		$	1,386
Interest cost	3,649			3,819			1,107			1,422			4,756			5,241
Expected return on plan assets	(5,668		)	(5,585		)	(638		)	(624		)	(6,306		)	(6,209		)
Amortization of unrecognized:
Prior service cost	105			264			(61		)	58			44			322
Loss	1,759			787			409			259			2,168			1,046
Pension expense	$	867		$	92		$	1,579		$	1,694		$	2,446		$	1,786

Six months ended June 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2015			2014			2015			2014			2015			2014
Service cost	$	2,183		$	1,832		$	1,510		$	1,157		$	3,693		$	2,989
Interest cost	7,358			7,689			2,210			2,846			9,568			10,535
Expected return on plan assets	(11,330		)	(11,193		)	(1,236		)	(1,256		)	(12,566		)	(12,449		)
Amortization of unrecognized:
Prior service cost	209			529			(125		)	115			84			644
Loss	3,645			2,029			815			517			4,460			2,546
Pension expense	$	2,065		$	886		$	3,174		$	3,379		$	5,239		$	4,265

We have contributed $1.3 million and $2.7 million of cash into our pension plans for the three and six months ended June 30, 2015, respectively. Pension contributions for the remainder of 2015 are estimated to be $2.0 million.

We provide certain retiree health care and life insurance benefits covering our U.S and Canadian salaried employees hired before January 1, 2004 and a majority of our union hourly employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. 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 unfunded.

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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)	2015		2014		2015			2014		2015		2014
Service cost	$	145	$	251	$	1		$	1	$	146	$	252
Interest cost	609		710		10			29		619		739
Amortization of unrecognized:
Prior service cost	35		35		—			—		35		35
Loss / (gain)	100		67		(24		)	—		76		67
Non-pension postretirement benefit expense	$	889	$	1,063	$	(13	)	$	30	$	876	$	1,093

Six months ended June 30,	U.S. Plans				Non-U.S. Plans					Total
(dollars in thousands)	2015		2014		2015			2014		2015		2014
Service cost	$	427	$	503	$	1		$	1	$	428	$	504
Interest cost	1,269		1,420		29			56		1,298		1,476
Amortization of unrecognized:
Prior service cost	70		70		—			—		70		70
Loss / (gain)	296		134		(24		)	—		272		134
Non-pension postretirement benefit expense	$	2,062	$	2,127	$	6		$	57	$	2,068	$	2,184

Our 2015 estimate of non-pension cash payments is $5.1 million, and we have paid $0.7 million and $1.6 million for the three and six months ended June 30, 2015, respectively.


8.	Net Income (Loss) per Share of Common Stock

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



	Three months ended June 30,					Six months ended June 30,
(dollars in thousands, except earnings per share)	2015		2014			2015		2014
Numerators for earnings per share:
Net income (loss) that is available to common shareholders	$	14,394	$	(25,168	)	$	17,506	$	(28,552	)

Denominator for basic earnings per share:
Weighted average shares outstanding	21,775,280		21,672,844			21,826,566		21,600,125

Denominator for diluted earnings per share:
Effect of stock options and restricted stock units	458,746		—			478,309		—
Adjusted weighted average shares and assumed conversions	22,234,026		21,672,844			22,304,875		21,600,125

Basic earnings (loss) per share	$	0.66	$	(1.16	)	$	0.80	$	(1.32	)

Diluted earnings (loss) per share	$	0.65	$	(1.16	)	$	0.78	$	(1.32	)

Shares excluded from diluted earnings (loss) per share due to:
Net loss position (excluded from denominator)	—		490,706			—		465,577
Inclusion would have been anti-dilutive (excluded from calculation)	87,164		182,850			84,046		130,165

When applicable, diluted shares outstanding includes the dilutive impact of restricted stock units. Diluted shares also include the impact of eligible 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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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. These derivatives, except for the foreign currency contracts and the natural gas contracts used in our Mexican manufacturing facilities, 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 (as is the case for natural gas contracts used in our Mexico manufacturing facility) 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, 2015			December 31, 2014
Derivatives not designated as hedging instruments under FASB ASC 815:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Currency contracts	Prepaid and other current assets	$	116	Prepaid and other current assets	$	403
Total undesignated		116			403
Total		$	116		$	403

	Liability Derivatives:
(dollars in thousands)	June 30, 2015			December 31, 2014
Derivatives designated as hedging instruments under FASB ASC 815:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Natural gas contracts	Derivative liability - current	$	1,077	Derivative liability - current	$	1,222
Natural gas contracts	Other long-term liabilities	4		Other long-term liabilities	103
Interest rate contract	Other long-term liabilities	11		Other long-term liabilities	—
Total designated		1,092			1,325
Derivatives not designated as hedging instruments under FASB ASC 815:
Natural gas contracts	Derivative liability - current	1,219		Derivative liability - current	1,431
Natural gas contracts	Other long-term liabilities	18		Other long-term liabilities	112
Total undesignated		1,237			1,543
Total		$	2,329		$	2,868

Commodity Futures Contracts

We use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts 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. As of June 30, 2015, we had commodity contracts for 2,850,000 million British Thermal Units (BTUs) of natural gas. At December 31, 2014, we had commodity contracts for 3,850,000 million BTUs of natural gas.

All of our derivatives for natural gas in the U.S. qualify and are designated as cash flow hedges at June 30, 2015. 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

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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 loss to current expense in cost of sales in our Condensed Consolidated Statement of Operations.

In the three and six months ended June 30, 2015, we recognized a gain of $0.5 million and $0.4 million, respectively, in other income in the Condensed Consolidated Statements of Operations related to the marked-to-market change in our de-designated Mexico natural gas derivatives. These natural gas derivatives were de-designated in the fourth quarter of 2014 due to ineffectiveness created by changes in the natural gas price resulting from a fluctuating surcharge initiated by the Mexican government on the price of natural gas. As instructed under FASB ASC 815 "Derivatives and Hedging", all marked-to-market changes on these derivatives are being reflected in current earnings. The accumulated balance in other comprehensive income (loss) for these de-designated contracts will remain until the hedging contracts are utilized or expire. Since we have not elected hedge accounting for any new Mexico natural gas contracts entered into beginning October 1, 2014, all marked-to-market changes on these derivatives are being reflected in other income in current earnings. We recognized a gain of $0.1 million and a loss of $(0.2) million in other income in the three and six months ended June 30, 2015, respectively, related to the contracts where hedge accounting was not elected. Going forward, we do not intend to designate our Mexican natural gas contracts as cash flow hedges.

We received (paid) additional cash of $(1.0) million and $0.3 million in the three months ended June 30, 2015 and June 30, 2014, respectively, and $(2.2) million and $0.8 million in the six months ended June 30, 2015 and June 30, 2014, 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 $1.2 million of loss in our Condensed Consolidated Statements of Operations.

The following table provides a summary of the effective portion of derivative gain (loss) recognized in other comprehensive income (loss):



	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2015		2014			2015			2014
Derivatives in Cash Flow Hedging relationships:
Natural gas contracts	$	53	$	(124	)	$	(776	)	$	506
Total	$	53	$	(124	)	$	(776	)	$	506

The following table provides a summary of the effective portion of derivative gain (loss) reclassified from accumulated other comprehensive income (loss) to the Condensed Consolidated Statements of Operations:



		Three months ended June 30,					Six months ended June 30,
(dollars in thousands)		2015			2014		2015			2014
Derivative:	Location:
Natural gas contracts	Cost of sales	$	(484	)	$	349	$	(1,020	)	$	814
Total impact on net income (loss)		$	(484	)	$	349	$	(1,020	)	$	814

The ineffective portion of derivative loss related to the de-designated Mexico contracts reclassified from accumulated other comprehensive loss to cost of sales in the Condensed Consolidated Statements of Operations was immaterial.

The following table provides a summary of the gain (loss) recognized in other income in the Condensed Consolidated Statements of Operations from our natural gas contracts:



	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2015		2014		2015			2014
De-designated contracts	$	508	$	—	$	404		$	—
Contracts where hedge accounting was not elected	58		—		(237		)	—
Total	$	566	$	—	$	167		$	—

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Interest Rate Swap

On April 1, 2015, we executed an interest rate swap on our Term Loan B as part of our risk management strategy to mitigate the risks involved with fluctuating interest rates. The interest rate swap will effectively convert $220.0 million of our Term Loan B debt from a variable interest rate to a 4.85 percent fixed interest rate, thus reducing the impact of interest rate changes on future income. The fixed rate swap will be effective January 2016 through January 2020. This interest rate swap is valued using the the market standard methodology of netting the discounted expected future variable cash receipts and the discounted future fixed cash payments. The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves.

Our interest rate swap qualifies and is designated as a cash flow hedge at June 30, 2015 and accounted for under FASB ASC 815 "Derivatives and Hedging". 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, if any, of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.

The following table provides a summary of the effective portion of derivative gain (loss) recognized in other comprehensive income (loss):



	Three months ended June 30,					Six months ended June 30,
(dollars in thousands)	2015			2014		2015			2014
Derivatives in Cash Flow Hedging relationships:
Interest Rate Swap	$	(11	)	$	—	$	(11	)	$	—
Total	$	(11	)	$	—	$	(11	)	$	—

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. We enter into a series of foreign currency contracts to sell Canadian dollars. At June 30, 2015 and December 31, 2014, we had C$6.5 million and C$6.3 million in foreign currency contracts, respectively. 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.

Gains (losses) on derivatives that 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)		2015			2014			2015			2014
Derivative:	Location:
Currency contracts	Other income	$	(361	)	$	(187	)	$	(287	)	$	(187	)
Total		$	(361	)	$	(187	)	$	(287	)	$	(187	)

We do not believe we are exposed to more than a nominal amount of credit risk in our natural gas hedges, interest rate swap and currency contracts as the counterparties are established financial institutions. The counterparties for the derivative agreements are rated BBB+ or better as of June 30, 2015, by Standard and Poor’s.

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10.	Accumulated Comprehensive Income (Loss)

Accumulated other comprehensive loss, net of tax, is as follows:



Three months ended June 30, 2015 (dollars in thousands)	Foreign Currency Translation			Derivative Instruments			Pension and Other Postretirement Benefits			Total Accumulated Comprehensive Loss
Balance on March 31, 2015	$	(19,652	)	$	(867	)	$	(123,948	)	$	(144,467	)

Other comprehensive income (loss)	2,181			42			5,394			7,617
Currency impact	—			—			122			122

Amounts reclassified from accumulated other comprehensive income (loss):
Amortization of actuarial loss ⁽¹⁾	—			—			2,244			2,244
Amortization of prior service cost ⁽¹⁾	—			—			79			79
Cost of sales	—			552			—			552
Current-period other comprehensive income (loss)	2,181			594			7,839			10,614
Tax effect	—			(22		)	(130		)	(152		)
Balance on June 30, 2015	$	(17,471	)	$	(295	)	$	(116,239	)	$	(134,005	)

Six months ended June 30, 2015 (dollars in thousands)	Foreign Currency Translation			Derivative Instruments			Pension and Other Postretirement Benefits			Total Accumulated Comprehensive Loss
Balance on December 31, 2014	$	(9,162	)	$	(625	)	$	(128,660	)	$	(138,447	)

Other comprehensive income (loss)	(8,309		)	(787		)	5,394			(3,702		)
Currency impact	—			—			2,413			2,413

Amounts reclassified from accumulated other comprehensive income (loss):
Amortization of actuarial loss ⁽¹⁾	—			—			4,732			4,732
Amortization of prior service cost ⁽¹⁾	—			—			154			154
Cost of sales	—			1,159			—			1,159
Current-period other comprehensive income (loss)	(8,309		)	372			12,693			4,756
Tax effect	—			(42		)	(272		)	(314		)
Balance on June 30, 2015	$	(17,471	)	$	(295	)	$	(116,239	)	$	(134,005	)

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Three months ended June 30, 2014 (dollars in thousands)	Foreign Currency Translation			Derivative Instruments			Pension and Other Postretirement Benefits			Total Accumulated Comprehensive Loss
Balance on March 31, 2014	$	3,966		$	1,359		$	(77,586	)	$	(72,261	)

Other comprehensive income (loss)	(785		)	(124		)	1,292			383
Currency impact	—			—			297			297

Amounts reclassified from accumulated other comprehensive income (loss):
Amortization of actuarial loss ⁽¹⁾	—			—			1,113			1,113
Amortization of prior service cost ⁽¹⁾	—			—			357			357
Cost of sales	—			(349		)	—			(349		)
Current-period other comprehensive income (loss)	(785		)	(473		)	3,059			1,801
Tax effect	—			61			(975		)	(914		)
Balance on June 30, 2014	$	3,181		$	947		$	(75,502	)	$	(71,374	)

Six months ended June 30, 2014 (dollars in thousands)	Foreign Currency Translation			Derivative Instruments			Pension and Other Postretirement Benefits			Total Accumulated Comprehensive Loss
Balance on December 31, 2013	$	4,554		$	1,221		$	(78,935	)	$	(73,160	)

Other comprehensive income (loss)	(1,373		)	506			1,292			425
Currency impact	—			—			310			310

Amounts reclassified from accumulated other comprehensive income (loss):
Amortization of actuarial loss ⁽¹⁾	—			—			2,680			2,680
Amortization of prior service cost ⁽¹⁾	—			—			714			714
Cost of sales	—			(814		)	—			(814		)
Current-period other comprehensive income (loss)	(1,373		)	(308		)	4,996			3,315
Tax effect	—			34			(1,563		)	(1,529		)
Balance on June 30, 2014	$	3,181		$	947		$	(75,502	)	$	(71,374	)

___________________________

(1) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost within the cost of sales and selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

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11.	Segments

Our reporting segments align with our regionally focused organizational structure, which we believe enables us to better serve customers across the globe. Under this structure, we report financial results for the Americas; Europe, the Middle East and Africa (EMEA); U.S. Sourcing; and Other. In addition, sales and segment EBIT reflect end market reporting pursuant to which sales and related costs are included in segment EBIT based on the geographical destination of the sale. Our three reportable segments are defined below. Our operating segment that does not meet the criteria to be a reportable segment is disclosed as Other.

Americas—includes sales of manufactured and sourced glass tableware having an end market destination in North and South America.

EMEA—includes sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.

U.S. Sourcing—includes U.S. sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.

Other —includes sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific.

Our measure of profit for our reportable segments is Segment Earnings before Interest and Taxes (Segment EBIT) and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs and other allocations that are not considered by management when evaluating performance. 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 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.

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 at end market reporting below.

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	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2015			2014			2015			2014
Net Sales:
Americas	$	149,491		$	154,450		$	277,863		$	276,375
EMEA	32,126			39,331			60,635			73,729
U.S. Sourcing	22,558			21,396			43,957			39,130
Other	9,876			8,359			18,961			15,883
Consolidated	$	214,051		$	223,536		$	401,416		$	405,117

Segment EBIT:
Americas	$	28,557		$	32,986		$	44,880		$	47,975
EMEA	1,786			1,910			1,020			2,163
U.S. Sourcing	1,761			2,301			3,386			3,169
Other	1,076			869			2,946			1,314
Total Segment EBIT	$	33,180		$	38,066		$	52,232		$	54,621

Reconciliation of Segment EBIT to Net Income (Loss):
Segment EBIT	$	33,180		$	38,066		$	52,232		$	54,621
Retained corporate costs	(9,162		)	(7,627		)	(18,657		)	(14,822		)
Loss on redemption of debt (note 4)	—			(47,191		)	—			(47,191		)
Furnace malfunction (note 14)	—			(576		)	—			(5,882		)
Environmental Obligation (note 14)	(223		)	—			(223		)	—
Reorganization charges⁽¹⁾	(3,015		)	—			(3,015		)	—
Restructuring charges (note 5)	—			—			—			(985		)
Derivatives ⁽²⁾	566			—			167			70
Executive retirement	—			—			(235		)	—
Interest expense	(4,538		)	(5,486		)	(9,061		)	(13,187		)
Income taxes	(2,414		)	(2,354		)	(3,702		)	(1,176		)
Net income (loss)	$	14,394		$	(25,168	)	$	17,506		$	(28,552	)

Depreciation & Amortization:
Americas	$	6,411		$	5,851		$	12,482		$	11,810
EMEA	2,137			2,738			4,314			5,364
U.S. Sourcing	6			7			12			14
Other	1,481			1,628			2,972			3,272
Corporate	434			368			873			808
Consolidated	$	10,469		$	10,592		$	20,653		$	21,268

Capital Expenditures:
Americas	$	14,260		$	9,663		$	28,778		$	16,795
EMEA	1,338			1,717			2,775			3,278
U.S. Sourcing	—			—			—			—
Other	357			320			540			892
Corporate	622			234			1,143			870
Consolidated	$	16,577		$	11,934		$	33,236		$	21,835

⁽¹⁾Management reorganization to support our growth strategy.

⁽²⁾Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap, as well as, mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.

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12.	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 that 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.



	Fair Value at										Fair Value at
Asset / (Liability) (dollars in thousands)	June 30, 2015										December 31, 2014
Asset / (Liability) (dollars in thousands)	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Commodity futures natural gas contracts	$	—	$	(2,318	)	$	—	$	(2,318	)	$	—	$	(2,868	)	$	—	$	(2,868	)
Currency contracts	—		116			—		116			—		403			—		403
Interest rate agreement	—		(11		)	—		(11		)	—		—			—		—
Net derivative asset (liability)	$	—	$	(2,213	)	$	—	$	(2,213	)	$	—	$	(2,465	)	$	—	$	(2,465	)

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 payments and the discounted future variable cash receipts. The variable cash receipts 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 commodity futures natural gas contracts, interest rate agreement and currency contracts 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.

The total derivative position is recorded on the Condensed Consolidated Balance Sheets as follows:



Asset / (Liability) (dollars in thousands)	June 30, 2015			December 31, 2014
Prepaid and other current assets	$	116		$	403
Derivative liability	(2,296		)	(2,653		)
Other long-term liabilities	(33		)	(215		)
Net derivative asset (liability)	$	(2,213	)	$	(2,465	)


13.	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)	2015			2014			2015		2014
Gain (loss) on currency translation	$	347		$	(356	)	$	1,462	$	(631	)
Hedge ineffectiveness	566			—			167		70
Other non-operating income (expense)	(67		)	678			44		561
Other income	$	846		$	322		$	1,673	$	—

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14.	Contingencies

Legal Proceedings

From time to time, we are identified as a "potentially responsible party" (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and/or similar state laws that impose liability without regard to fault for costs and damages relating to the investigation and clean-up of contamination resulting from releases or threatened releases of hazardous substances. We are also subject to similar laws in some of the countries where our facilities are located. Our environmental, health, and safety department monitors compliance with applicable laws on a global basis.

On October 30, 2009, the United States Environmental Protection Agency ("U.S. EPA") designated Syracuse China Company ("Syracuse China"), our wholly-owned subsidiary, as one of eight PRPs with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site located near the ceramic dinnerware manufacturing facility that Syracuse China operated from 1995 to 2009 in Syracuse, New York. As a PRP, we may be required to pay a share of the costs of investigation and remediation of the Lower Ley Creek sub-site.

U.S. EPA has completed its Remedial Investigation (RI), Feasibility Study (FS), Risk Assessment (RA) and Proposed Remedial Action Plan (PRAP). U.S. EPA issued its Record of Decision (RoD) on September 30, 2014. The RoD indicates that U.S. EPA's estimate of the undiscounted cost of remediation ranges between approximately $17.0 million (assuming local disposal of contaminated sediments is feasible) and approximately $24.8 million (assuming local disposal is not feasible). However, the RoD acknowledges that the final cost of the cleanup will depend upon the actual volume of contaminated material, the degree to which it is contaminated, and where the excavated soil and sediment is properly disposed. In connection with the General Motors Corporation bankruptcy, U.S. EPA recovered $22.0 million from Motors Liquidation Company (MLC), the successor to General Motors Corporation. If the cleanup costs do not exceed the amount recovered by U.S. EPA from MLC, Syracuse China may suffer no loss. If, and to the extent the cleanup costs exceed the amount recovered by U.S. EPA from MLC, it is not yet known whether other PRPs will be added to the current group of PRPs or how any excess costs may be allocated among the PRPs.

To the extent that Syracuse China has a liability with respect to the Lower Ley Creek sub-site and to the extent the liability arose prior to our 1995 acquisition of the Syracuse China assets, the liability would be subject to the indemnification provisions contained in the Asset Purchase Agreement between the Company and The Pfaltzgraff Co. (now known as TPC-York, Inc. ("TPC York")) and certain of its subsidiaries. Accordingly, Syracuse China has notified TPC York of its claim for indemnification under the Asset Purchase Agreement.

In connection with the above proceedings, an estimated environmental liability of $1.4 million and $1.0 million has been recorded in other long term liabilities and a recoverable amount of $0.8 million and $0.7 million have been recorded in other long term assets in the Condensed Consolidated Balance Sheets at June 30, 2015 and December 31, 2014, respectively. Expense of $0.2 million has been recorded in cost of sales in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015. Although we cannot predict the ultimate outcome of this proceeding, we believe that it will not have a material adverse impact on our financial condition, results of operations or liquidity.

Insurance claim

In September of 2013, Libbey had a furnace malfunction at our manufacturing facility in Toledo, Ohio, resulting in an insurance claim with the final settlement received in the fourth quarter of 2014. In conjunction with the final settlement notification received, $2.0 million was re-classed in the first quarter 2014 Condensed Consolidated Statement of Cash Flows from proceeds from furnace malfunction insurance recovery within investing activities to operating activities, as this represented business interruption recovery. See Form 10-K for the year ended December 31, 2014 for further discussion.

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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. Our risk factors are set forth in Part I, Item 1A. “Risk Factors” in our 2014 Annual Report on Form 10-K for the year ended December 31, 2014.

Overview

During the second quarter of 2015, we continued to operate in a very competitive environment in a dynamic global economy where we have experienced the impact of slower economic growth and the strengthening of the US dollar. The pressures on retailers, restaurants and consumer durables companies experienced in 2014 around the globe have continued through the first half of 2015. Given the sensitive dynamics in this kind of market environment, we have been keeping a keen eye on competitive behaviors in our industry, and we continue to believe that overall behavior is normalizing toward more healthy competition. We view this positively and believe that Libbey will continue to outcompete in our industry and continue winning market share.

U.S. restaurant traffic continued to decline in the second quarter of 2015 compared to the second quarter of 2014. This was the fourth consecutive quarter we have observed a decline in U.S. restaurant traffic. The U.S. also saw an unanticipated drop in retail traffic in the second quarter of 2015 as reported by the National Retail Federation. Consumers were preferring to pocket gas savings and tax refunds rather than spend. The Mexican economy continues to advance at a slow pace following volatility in the peso exchange rate, tax reform, as well as government spending cuts announced at the beginning of 2015, which have dampened consumer confidence. The European economy is negatively impacted by the devaluation of the euro, the geopolitical situation between Europe and Russia, the Greek financial crisis and the fear of deflation. In China, the rate of economic growth within the consumer segment continues to be weak.

Our net sales for the quarter of $214.1 million were 4.2 percent lower than the prior year quarter, or 1.4 percent higher on a constant currency basis. Net sales were negatively impacted by a number of factors, including foreign currency, lower-than-expected retail and business-to-business sales especially in Latin America, due to much lower retail traffic than expected and an inconsistent global economic backdrop. Despite the continued decline in U.S. restaurant traffic, we experienced growth in the second quarter of 2015 of 4.3 percent (6.5 percent excluding the impact of currency) in our core foodservice business. Even with the drop in U.S. retail traffic in the second quarter of 2015, our U.S. and Canada retail sales grew 1.2 percent on a constant currency basis compared to the prior year period. In fact, net sales were up in the U.S. and Canada in all three market channels: foodservice, retail and business-to-business. Given the growth we realized in the first half of 2015, we continue to believe that our Own the Moment initiatives are not only helping us win share in the market, they are also helping us overcome economic headwinds.

In January 2015, we announced our Own the Moment strategy. Driving consumer insights to action is the centerpiece of our Own the Moment strategy. In the Americas and U.S. Sourcing, we will focus on and invest in driving profitable growth and building on our positions of strength. In our EMEA and Asia Pacific regions, we will drive efficiencies and pursue targeted investments to maximize returns. In all of our regions with the consumer as the focal point, we will grow and leverage our brands, provide our customers with the best value and solutions via consumer and market driven innovation and product development, build excellence across our supply chain, enhance all of our commercial capabilities and invest in information technology. We also are investing in the development of key capabilities and talent to enable our Own the Moment strategy, including through a management reorganization to support our growth strategy that began in the second quarter of 2015 and will continue through the balance of the year.

To reinforce our leadership in key market channels throughout the world, we continue to make substantial investments in new products, and expand our commercial brands and capabilities as part of this new strategy. On July 6, 2015, we announced the launch of our new Perfect Signature™ product line into retail markets later this year. This announcement represents the unveiling of the approximately $30.0 million investment in new glass technology at our Shreveport, Louisiana manufacturing facility. Manufacturing of our unique ClearFire™ glassware is anticipated to reach full production during the fourth quarter of 2015. We also expect to launch in select retail and foodservice markets during the fourth quarter, with a broader roll out to the retail, foodservice and business-to-business channels planned for 2016.

Our Own the Moment strategy is also driven by a balanced capital allocation strategy that includes an $0.11 per share quarterly dividend, a share repurchase program (our current authorization is 1.5 million shares) and reinvestment in the business. Since

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the inception of our repurchase program in December of 2014, we have repurchased over 447,400 shares of our stock at an average purchase price of approximately $36.51 per share, most of which happened in the first half of 2015. We expect to repurchase the remaining 1.1 million shares under our current authorization by year-end 2017.

Our three reportable segments are defined below. Our operating segment that does not meet the criteria to be a reportable segment is disclosed as Other.

Americas—includes sales of manufactured and sourced glass tableware having an end market destination in North and South America.

EMEA —includes sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.

U.S. Sourcing—includes U.S. sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.

Other —includes sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific.

Results of Operations

The following table presents key results of our operations for the three and six months ended June 30, 2015 and 2014:



	Three months ended June 30,						Six months ended June 30,
(dollars in thousands, except percentages and per-share amounts)	2015			2014			2015			2014
Net sales	$	214,051		$	223,536		$	401,416		$	405,117
Gross profit ⁽²⁾	$	56,890		$	60,267		$	99,385		$	92,606
Gross profit margin	26.6		%	27.0		%	24.8		%	22.9		%
Income from operations (IFO) ⁽²⁾⁽³⁾	$	20,500		$	29,541		$	28,596		$	33,002
IFO margin	9.6		%	13.2		%	7.1		%	8.1		%
Earnings (loss) before interest and income taxes (EBIT)^(1)(2)(3)(4)	$	21,346		$	(17,328	)	$	30,269		$	(14,189	)
EBIT margin	10.0		%	(7.8		)%	7.5		%	(3.5		)%
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)^(1)(2)(3)(4)	$	31,815		$	(6,736	)	$	50,922		$	7,079
EBITDA margin	14.9		%	(3.0		)%	12.7		%	1.7		%
Adjusted EBITDA⁽¹⁾	$	34,487		$	41,031		$	54,228		$	61,067
Adjusted EBITDA margin	16.1		%	18.4		%	13.5		%	15.1		%
Net income (loss)^(2)(3)(4)	$	14,394		$	(25,168	)	$	17,506		$	(28,552	)
Net income (loss) margin	6.7		%	(11.3		)%	4.4		%	(7.0		)%
Diluted net income (loss) per share	$	0.65		$	(1.16	)	$	0.78		$	(1.32	)

__________________________________

(1)

We believe that EBIT, EBITDA and Adjusted EBITDA, all non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. For a reconciliation from net income (loss) to EBIT, EBITDA, and Adjusted EBITDA, see the "Adjusted EBITDA" section below in the Discussion of Second Quarter 2015 Compared to Second Quarter 2014 and the Discussion of First Six Months 2015 Compared to First Six Months 2014 and the reasons we believe these non-GAAP financial measures are useful.

(2)

The three and six month periods ended June 30, 2015 include $0.2 million in charges for our assessment of an environmental obligation related to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site. The three and six month periods ended June 30, 2014 include $0.6 million and $5.9 million, respectively, for the loss of production at our Toledo, Ohio, manufacturing facility due to a furnace malfunction; and the six month period ended June 30, 2014 includes $1.0 million of charges related to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, facility.


(3)	In addition to item (2) above, the three and six month periods ended June 30, 2015 include $3.0 million of reorganization charges to support our growth strategy; and the six month period ended June 30, 2015 includes $0.2 million for a non-cash executive retirement compensation charge.

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(4)

In addition to item (3) above, the three and six month periods ended June 30, 2015 include $0.6 million and $0.2 million of income, respectively, related to derivatives. The three and six month periods ended June 30, 2014 include a loss of $47.2 million related to the write-off of unamortized finance fees and call premium payments on the $405.0 million senior notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap. The six months ended June 30, 2014 includes $0.1 million of income related to derivatives. (See notes 4 and 9 to the Condensed Consolidated Financial Statements.)

Discussion of Second Quarter 2015 Compared to Second Quarter 2014

Net Sales

For the quarter ended June 30, 2015, net sales decreased 4.2 percent to $214.1 million, compared to $223.5 million in the year-ago quarter. When adjusted to exclude the currency impact, net sales increased by 1.4 percent. The decrease in net sales was attributable to decreased sales of $12.2 million in the Americas and EMEA, partially offset by the increased net sales in U.S. Sourcing by 5.4 percent and Other by 18.2 percent.



	Three months ended June 30,
(dollars in thousands)	2015		2014
Americas	$	149,491	$	154,450
EMEA	32,126		39,331
U.S. Sourcing	22,558		21,396
Other	9,876		8,359
Consolidated	$	214,051	$	223,536

Net Sales — Americas

Net sales in the Americas were $149.5 million, compared to $154.5 million in the second quarter of 2014, a decrease of 3.2 percent (an increase of 0.3 percent excluding currency fluctuation). The retail and business-to-business channels were negatively impacted by the devaluation of the peso and volume resulting in a net sales decrease of 7.4 percent and 6.7 percent, respectively (a decrease of 2.5 percent and 2.3 percent excluding the impact of currency, respectively). While net sales increased in the U.S. and Canada in all three market channels, the primary drivers of sales decline in retail and business-to-business was within Latin America from the devaluation of the peso, the impact of the weak economy on consumer spending, lower retail traffic and lower than expected candle sales in Latin America due to a temporary shortage of paraffin, a key raw material input. The foodservice channel had a favorable mix and higher volume leading to sales growth of 4.4 percent (an increase of 5.6 percent excluding the impact of currency).

Net Sales — EMEA

Net sales in EMEA were $32.1 million, compared to $39.3 million in the second quarter of 2014, a decrease of 18.3 percent (an increase of 0.2 percent excluding currency fluctuation). The sales decrease was primarily due to the devaluation of the euro. Our strategy does not anticipate significant revenue growth in our EMEA segment. We are focused on opportunities to expand margins in a challenging economic environment.

Net Sales — U.S. Sourcing

Net sales in U.S. Sourcing were $22.6 million, compared to $21.4 million in the second quarter of 2014, an increase of 5.4 percent. The increase in sales resulted from increased shipments to a variety of customers in our foodservice channel. This is the fourteenth consecutive quarter of increased sales in this U.S. focused foodservice segment.

Gross Profit

Gross profit decreased to $56.9 million in the second quarter of 2015, compared to $60.3 million in the prior year quarter. Gross profit as a percentage of net sales decreased to 26.6 percent in the second quarter of 2015, compared to 27.0 percent in the prior year period. The primary drivers of the $3.4 million decrease in gross profit were a negative currency impact of $4.4 million primarily related to the Mexican peso, ramp-up costs associated with our new glass technology of $1.9 million, and an increase in healthcare costs of $1.3 million. These were partially offset by a favorable sales impact of $1.6 million, favorable utility pricing of $1.6 million, and non-recurring 2014 expenses of $0.6 million related to the furnace malfunction.

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Income From Operations

Income from operations for the quarter ended June 30, 2015 decreased $9.0 million, to $20.5 million, compared to $29.5 million in the prior year quarter. Income from operations as a percentage of net sales was 9.6 percent for the quarter ended June 30, 2015, compared to 13.2 percent in the prior year quarter. The decrease in income from operations is the result of the decrease in gross profit of $3.4 million (discussed above) and the increase in selling, general and administrative expense of $5.7 million, primarily the result of $3.0 million of reorganization charges to support our growth strategy, $2.4 million of growth investments, and $0.9 million of additional share-based expense due to the increase in stock price. The growth investments include the development of new products, expanded marketing and selling capabilities, to support our Own the Moment strategies.

Earnings Before Interest and Income Taxes (EBIT)

EBIT for the quarter ended June 30, 2015 increased by $38.7 million to $21.3 million from $(17.3) million in the second quarter of 2014. EBIT as a percentage of net sales increased to 10.0 percent in the second quarter of 2015, compared to (7.8) percent in the prior year quarter. The $38.7 million increase in EBIT compared to the second quarter of 2014 is primarily attributable to the non-recurrence of the $47.2 million loss on redemption of debt in 2014, partially offset by the decline in income from operations in the second quarter of 2015 (discussed above).

Segment EBIT

The following table summarizes Segment EBIT⁽¹⁾ by operating segments:



	Three months ended June 30,
(dollars in thousands)	2015		2014
Americas	$	28,557	$	32,986
EMEA	$	1,786	$	1,910
U.S. Sourcing	$	1,761	$	2,301

____________________________________

(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 and other allocations that are not considered by management when evaluating performance. See note 11 to the Condensed Consolidated Financial Statements for a reconciliation of Segment EBIT to net income (loss).

Segment EBIT — Americas

Segment EBIT was $28.6 million in the second quarter of 2015, compared to $33.0 million in the second quarter of 2014, a decrease of 13.4 percent. Segment EBIT as a percentage of net sales for the Americas was 19.1 percent in the second quarter of 2015, compared to 21.4 percent in the prior year period. The $4.4 million decrease in Segment EBIT was driven primarily by a $2.9 million unfavorable currency impact, $1.9 million related to our ramp-up costs associated with our new glass technology, $1.3 million in increased healthcare costs, and $1.1 million of growth investments. These unfavorable items were partially offset by a favorable sales impact of $1.2 million and utility pricing of $1.5 million.

Segment EBIT — EMEA

Segment EBIT decreased to $1.8 million in the second quarter of 2015, compared to $1.9 million in the second quarter of 2014. Segment EBIT as a percentage of net sales for EMEA decreased to 5.6 percent in the second quarter of 2015, compared to 4.9 percent in the prior-year period. The primary drivers of the $0.1 million decrease in Segment EBIT were an unfavorable currency impact of $0.3 million and growth investments of $0.3 million, primarily offset by a favorable sales impact of $0.4 million.

Segment EBIT — U.S. Sourcing

Segment EBIT was $1.8 million in the second quarter of 2015, compared to $2.3 million in the second quarter of 2014. Segment EBIT as a percentage of net sales for U.S. Sourcing was 7.8 percent in the second quarter of 2015, compared to 10.8 percent in the prior-year period. The primary drivers of the $0.5 million decrease in Segment EBIT were an inventory reserve adjustment of $0.4 million and lower pricing due to customer mix during the quarter compared to the year ago quarter.

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

EBITDA increased by $38.6 million in the second quarter of 2015, to $31.8 million, compared to $(6.7) million in the year-ago quarter. As a percentage of net sales, EBITDA increased to 14.9 percent in the second quarter of 2015, from (3.0) percent in the year-ago quarter. The key contributors to the increase in EBITDA were those factors discussed above under Earnings Before Interest and Income Taxes (EBIT).

Adjusted EBITDA

Adjusted EBITDA decreased by $6.5 million in the second quarter of 2015, to $34.5 million, compared to $41.0 million in the second quarter of 2014. As a percentage of net sales, Adjusted EBITDA was 16.1 percent for the second quarter of 2015, 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 Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) and the elimination of the special items noted below in the reconciliation of net income (loss) to EBIT, EBITDA and Adjusted EBITDA.



	Three months ended June 30,
(dollars in thousands)	2015			2014
Net income (loss)	$	14,394		$	(25,168	)
Add: Interest expense	4,538			5,486
Add: Provision for income taxes	2,414			2,354
Earnings (loss) before interest and income taxes (EBIT)	21,346			(17,328		)
Add: Depreciation and amortization	10,469			10,592
Earnings (loss) before interest, taxes, deprecation and amortization (EBITDA)	31,815			(6,736		)
Add: Special items before interest and taxes:
Loss on redemption of debt (see note 4)⁽¹⁾	—			47,191
Furnace malfunction (see note 14) ⁽²⁾	—			576
Environmental obligation (see note 14) ⁽³⁾	223			—
Reorganization charges ⁽⁴⁾	3,015			—
Derivatives ⁽⁵⁾	(566		)	—
Adjusted EBITDA	$	34,487		$	41,031

__________________________________


(1)	Loss on redemption of debt for the three months ended June 30, 2014 includes a loss of $47.2 million related to the write-off of unamortized finance fees and call premium payments on the $405.0 million Senior Secured Notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap.


(2)	Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.


(3)	Environmental obligation relates to our assessment of Syracuse China Company as a potentially responsible party with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site.


(4)	Management reorganization to support our growth strategy.


(5)	Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap, as well as, mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.

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 certain 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.

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

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.

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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 (loss) before interest expense, income taxes, depreciation and amortization. The most directly comparable U.S. GAAP financial measure is net income (loss).

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. 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.

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.

Net Income (Loss) and Diluted Net Income (Loss) Per Share

We recorded net income of $14.4 million, or $0.65 per diluted share, in the second quarter of 2015, compared to a net loss of $(25.2) million, or $(1.16) per diluted share, in the year-ago quarter. Net income (loss) as a percentage of net sales was 6.7 percent in the second quarter of 2015, compared to (11.3) percent in the year-ago quarter. The increase in net income and diluted net income per share is due to the factors discussed in Earnings Before Interest and Income Taxes (EBIT) above and a $0.9 million reduction in interest expense. The decrease in interest expense is primarily driven by lower interest rates as a result of the debt refinancing completed in the second quarter of 2014. The effective tax rate was 14.4 percent for the second quarter of 2015, compared to (10.3) percent in the year-ago quarter. The effective tax rate was generally influenced by foreign earnings with differing statutory tax rates, foreign withholding tax, accruals related to uncertain tax positions, and other activity in jurisdictions with recorded valuation allowances.

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Discussion of First Six Months 2015 Compared to First Six Months 2014

Net Sales

For the six months ended June 30, 2015, net sales decreased 0.9 percent to $401.4 million, compared to $405.1 million in the year-ago period. When adjusted for the impact of currency, net sales increased by 4.5 percent. The decrease in net sales was attributable to decreased sales in the EMEA segment, partially offset by increased sales in the Americas, U.S. Sourcing and Other segments.



	Six months ended June 30,
(dollars in thousands)	2015		2014
Americas	$	277,863	$	276,375
EMEA	60,635		73,729
U.S. Sourcing	43,957		39,130
Other	18,961		15,883
Consolidated	$	401,416	$	405,117

Net Sales — Americas

Net sales in the Americas were $277.9 million in the first six months of 2015 compared to $276.4 million in the first six months of 2014, an increase of 0.5 percent (a 3.7 percent increase excluding the impact of currency). The primary contributor was a 4.4 percent increase in sales in our foodservice market channel (a 5.5 percent increase excluding currency fluctuation) due to stronger volume and favorable price and mix compared to the prior year period. Partially offsetting this was a decrease in our retail and business-to-business channels of 2.1 percent and 0.4 percent, respectively (an increase of 2.3 percent and 3.6 percent, respectively, excluding the impact of currency), due to the devaluation of the peso and lower volumes.

Net Sales — EMEA

Net sales in EMEA were $60.6 million in the first six months of 2015, compared to $73.7 million in the first six months of 2014, a decrease of 17.8 percent (flat compared to the prior year period excluding the impact of currency). The sales decrease was due to the devaluation of the euro.

Net Sales — U.S. Sourcing

Net sales in U.S. Sourcing were $44.0 million in the first six months of 2015, compared to $39.1 million in the first six months of 2014, an increase of 12.3 percent. The increase in sales resulted from increased shipments to a variety of customers in our foodservice channel.

Gross Profit

Gross profit increased to $99.4 million in the first six months of 2015, compared to $92.6 million in the prior year period. Gross profit as a percentage of net sales increased to 24.8 percent in the six months ended June 30, 2015 compared to 22.9 percent in the prior year period. The primary drivers of the $6.8 million increase in gross profit were the impact of increased sales of $8.9 million, non-repeating 2014 expenses of $5.9 million related to the furnace malfunction and $1.0 million of restructuring charges, lower natural gas and electricity pricing of $2.9 million, and the non-repeating impact of severe winter weather in early 2014 of $1.3 million. Partially offsetting these factors were an unfavorable currency impact of $6.9 million, ramp-up costs associated with our new glass technology of $1.9 million, an earlier than planned furnace repair in the first quarter 2015 of $1.2 million, and higher healthcare, pension and nonpension post-retirement benefits and workers compensation expense of $1.6 million, $1.3 million and $0.8 million, respectively.

Income From Operations

Income from operations for the six months ended June 30, 2015 decreased $4.4 million, to $28.6 million, compared to $33.0 million in the prior year period. Income from operations as a percentage of net sales was 7.1 percent for the six months ended June 30, 2015, compared to 8.1 percent in the prior-year period. The decrease in income from operations is the result of $5.4 million of investments in our Own the Moment growth initiatives, $3.0 million of reorganization charges to support our growth strategy, $2.1 million of additional share-based expense due to the increase in our stock price, and $0.5 million of higher

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healthcare expense. Partially offsetting these unfavorable factors was the increase in gross profit of $6.8 million, which includes among other items a $6.9 million unfavorable currency impact (discussed above).

Earnings Before Interest and Income Taxes (EBIT)

EBIT for the six months ended June 30, 2015 increased by $44.5 million to $30.3 million from $(14.2) million in the first six months of 2014. EBIT as a percentage of net sales increased to 7.5 percent in the first six months of 2015, compared to (3.5) percent in the prior year period. The increase in EBIT results from the non-repeating 2014 charges of $47.2 million for the loss on redemption of debt and $2.1 million favorable change on currency translation included in other income, partially offset by the decrease in income from operations (discussed above).

Segment EBIT

The following table summarizes Segment EBIT⁽¹⁾ by operating segments:



	Six months ended June 30,
(dollars in thousands)	2015		2014
Americas	$	44,880	$	47,975
EMEA	$	1,020	$	2,163
U.S. Sourcing	$	3,386	$	3,169

____________________________________

(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 and other allocations that are not considered by management when evaluating performance. See note 11 to the Condensed Consolidated Financial Statements for reconciliation of Segment EBIT to net income (loss).

Segment EBIT — Americas

Segment EBIT decreased to $44.9 million in the first six months of 2015, compared to $48.0 million in the first six months of 2014. Segment EBIT as a percentage of net sales decreased to 16.2 percent for the six months ended June 30, 2015, compared to 17.4 percent in the prior year six month period. The primary drivers of the $3.1 million Segment EBIT decrease were an unfavorable $4.4 million currency impact mainly due to the Mexican peso, $2.6 million in growth initiatives in support of the Own the Moment strategy, $1.9 million related to ramp-up costs associated with our new glass technology, a $1.7 million increase in healthcare costs, $1.2 million for an earlier than planned furnace repair completed in the first quarter 2015, an $0.8 million increase in workers compensation expense, and an $0.8 million increase in pension and nonpension expense. Partially offsetting these factors were a favorable sales impact of $6.4 million, lower pricing on natural gas and electricity of $2.8 million and a translation gain of $2.1 million.

Segment EBIT — EMEA

Segment EBIT decreased by $1.1 million to $1.0 million for the first six months of 2015, compared to $2.2 million in the prior year period. Segment EBIT as a percentage of net sales decreased to 1.7 percent for the six months ended June 30, 2015, compared to 2.9 percent in the prior year six month period. The primary drivers of the $1.1 million decrease in Segment EBIT were $0.6 million in growth initiatives to support our strategy, an increase in pension expense of $0.4 million and an unfavorable currency impact of $0.2 million.

Segment EBIT — U.S. Sourcing

Segment EBIT increased to $3.4 million for the first six months of 2015, compared to $3.2 million in the prior year period. Segment EBIT as a percentage of net sales for U.S. Sourcing decreased to 7.7 percent for the first six months of 2015, compared to 8.1 percent in the prior-year period. The primary driver of the $0.2 million increase in Segment EBIT was the impact of increased sales volume in the foodservice channel.

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

EBITDA increased by $43.8 million in the first six months of 2015, to $50.9 million, compared to $7.1 million in the year-ago period. As a percentage of net sales, EBITDA increased to 12.7 percent in the first six months of 2015, from 1.7 percent in the year ago period. The key contributors to the increase in EBITDA were those factors discussed above under Earnings Before Interest and Income Taxes (EBIT), including the $47.2 million loss on redemption of debt in 2014, which was the largest driver.

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Adjusted EBITDA

Adjusted EBITDA decreased by $6.8 million in the first six months of 2015, to $54.2 million, compared to $61.1 million in the first six months of 2014. As a percentage of net sales, Adjusted EBITDA was 13.5 percent for the first six months of 2015, compared to 15.1 percent in the year ago period. The key contributors to the decrease in Adjusted EBITDA were those factors discussed above under Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) and the elimination of the special items noted below in the reconciliation of net income (loss) to EBIT, EBITDA and Adjusted EBITDA.



	Six months ended June 30,
(dollars in thousands)	2015			2014
Net income (loss)	$	17,506		$	(28,552	)
Add: Interest expense	9,061			13,187
Add: Provision for income taxes	3,702			1,176
Earnings (loss) before interest and income taxes (EBIT)	30,269			(14,189		)
Add: Depreciation and amortization	20,653			21,268
Earnings before interest, taxes, deprecation and amortization (EBITDA)	50,922			7,079
Add: Special items before interest and taxes:
Loss on redemption of debt (see note 4)⁽¹⁾	—			47,191
Furnace malfunction (see note 14) ⁽²⁾	—			5,882
Derivatives ⁽³⁾	(167		)	(70		)
Executive retirement	235			—
Environmental obligation (see note 14) ⁽⁴⁾	223			—
Reorganization charges ⁽⁵⁾	3,015			—
Restructuring charges (see note 5) ⁽⁶⁾	—			985
Adjusted EBITDA	$	54,228		$	61,067

____________________________________


(1)	Loss on redemption of debt for the six months ended June 30, 2014 includes a loss of $47.2 million related to the write-off of unamortized finance fees and call premium payments on the $405.0 million Senior Secured Notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap.


(2)	Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.


(3)	Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap, as well as, mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.


(4)	Environmental obligation relates to our assessment of Syracuse China Company as a potentially responsible party with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site.


(5)	Management reorganization to support our growth strategy.


(6)	Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, facility.

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 SEC Regulation G. We believe that certain 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. For our definition of these non-GAAP measures and certain limitations, see the Adjusted EBITDA section in the Discussion of Second Quarter 2015 Compared with Second Quarter 2014 above.

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Net Income (Loss) and Diluted Net Income (Loss) Per Share

We recorded net income of $17.5 million, or $0.78 per diluted share, in the first six months of 2015, compared to a net loss of $(28.6) million, or $(1.32) per diluted share, in the year ago period. Net income (loss) as a percentage of net sales was 4.4 percent in the first six months of 2015, compared to (7.0) percent in the first six months of 2014. The increase in net income and diluted net income per share is generally due to the factors discussed in Earnings Before Interest and Income Taxes (EBIT) above, including the $47.2 million loss on redemption of debt in 2014, a $4.1 million reduction in interest expense and a $2.5 million increase in the provision for income taxes. The decrease in interest expense is primarily driven by a lower interest rate from the debt refinancing completed in the second quarter of 2014. The effective tax rate was 17.5 percent for the first six months of 2015, compared to (4.3) percent in year-ago period. The effective tax rate was generally influenced by foreign earnings with differing statutory tax rates, foreign withholding tax, accruals related to uncertain tax positions, intra-period tax allocation and other activity in jurisdictions with recorded valuation allowances.

Outlook

For the second half of 2015, we expect net sales growth on a constant currency basis to be at the low end of the range of 5.0 percent to 6.0 percent. Given currency volatility, the year-over-year weakening of the euro and the peso against the dollar, this will translate to reported revenue essentially flat for the full year 2015 in comparison with the prior year.

We expect Adjusted EBITDA margins to be approximately 15.0 percent for the full year 2015. Adjusted EBITDA, a non-GAAP financial measure, is a useful metric for evaluating our financial performance. For a reconciliation from net income (loss) to Adjusted EBITDA, see the "Adjusted EBITDA" section above in the Discussion of Second Quarter 2015 Compared to Second Quarter 2014 and the reasons we believe this non-GAAP financial measure is useful.

We expect capital expenditures for the full year 2015 of $55.0 million to $60.0 million, which includes $16.0 million to $17.0 million related to investments in new glass technology.

We expect working capital (defined as net accounts receivable plus net inventories less accounts payable) to increase by 2.0 percent to 3.0 percent, or $4.0 million to $6.0 million.

Capital Resources and Liquidity

Historically, cash flows generated from operations, cash on hand and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. At June 30, 2015, we had $14.0 million borrowed under our ABL Facility and we had $6.6 million in letters of credit issued under that facility. As a result, we had $76.9 million of unused availability under the ABL Facility at June 30, 2015. In addition, we had $31.4 million of cash on hand at June 30, 2015, compared to $60.0 million of cash on hand at December 31, 2014. Of our total cash on hand at June 30, 2015 and December 31, 2014, $24.3 million and $33.7 million, respectively, were held in foreign subsidiaries. A portion of this cash can be repatriated primarily through the repayment of intercompany loans without creating additional income tax expense. For further information regarding potential dividends from our non-U.S. subsidiaries, see note 8, Income Taxes, in our 2014 Annual Report on Form 10-K for the year ended December 31, 2014.

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.

Balance Sheet and Cash Flows

Cash and Equivalents

See the cash flow section below for a discussion of our cash balance.

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Working Capital

The following table presents our working capital components:



(dollars in thousands, except percentages and DSO, DIO, DPO and DWC)	June 30, 2015			December 31, 2014
Accounts receivable — net	$	96,694		$	91,106
DSO⁽¹⁾	41.6			39.0
Inventories — net	$	193,728		$	169,828
DIO⁽²⁾	83.3			72.7
Accounts payable	$	68,865		$	82,485
DPO⁽³⁾	29.6			35.3
Working capital⁽⁴⁾	$	221,557		$	178,449
DWC⁽⁵⁾	95.3			76.4
Percentage of net sales	26.1		%	20.9		%

___________________________________________________


(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 below 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.

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

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.

Working capital (as defined above) was $221.6 million at June 30, 2015, an increase of $43.1 million from December 31, 2014. 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. Our increase is primarily due to additional inventories resulting from seasonality, increased accounts receivable related to timing of collections, and lower accounts payable. The impact of currency (primarily driven by the euro and peso) decreased total working capital by $5.8 million at June 30, 2015, in comparison to December 31, 2014. As a result of the factors above, working capital as a percentage of the last twelve-month net sales increased to 26.1 percent at June 30, 2015 from 20.9 percent at December 31, 2014, but was only slightly higher compared to 25.0 percent for the period ended June 30, 2014.

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Borrowings

The following table presents our total borrowings:



(dollars in thousands)	Interest Rate	Maturity Date		June 30, 2015		December 31, 2014
Borrowings under ABL Facility	floating	April 9, 2019		$	14,000	$	—
Term Loan B	floating	April 9, 2021	��	435,600		437,800
RMB Working Capital Loan	6.78%	July, 2015		—		3,258
AICEP Loan	0.00%	January, 2016 to July 30, 2018		3,512		3,846
Total borrowings				453,112		444,904
Less — unamortized discount				902		982
Total borrowings — net⁽¹⁾				$	452,210	$	443,922

____________________________________


(1)	The total borrowings — net includes long-term debt due within one year and long-term debt as stated in our Condensed Consolidated Balance Sheets.

We had total borrowings of $453.1 million and $444.9 million at June 30, 2015 and December 31, 2014, respectively. Of our total borrowings, $449.6 million, or approximately 99.2 percent, were subject to variable interest rates at June 30, 2015. A change of one percentage point in such rates would result in a change in interest expense of approximately $4.5 million on an annual basis.

Included in interest expense is the amortization of discounts and financing fees. These items amounted to $0.4 million and $0.3 million for the three months ended June 30, 2015 and 2014, respectively, and $0.7 million for both of the six month periods ended June 30, 2015 and 2014.

Cash Flow

The following table presents key drivers to our free cash flow for the periods presented.



	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2015			2014			2015			2014
Net cash provided by (used in) operating activities	$	27,742		$	10,353		$	14,506		$	(20	)
Capital expenditures⁽²⁾	(16,577		)	(11,934		)	(33,236		)	(21,835		)
Proceeds from furnace malfunction insurance recovery	—			—			—			2,350
Proceeds from asset sales and other	2			—			2			4
Free Cash Flow⁽¹⁾	$	11,167		$	(1,581	)	$	(18,728	)	$	(19,501	)

________________________________________


(1)	We define Free Cash Flow as net cash provided by (used in) operating activities less capital expenditures plus proceeds from furnace malfunction insurance recovery and proceeds from asset sales and other. The most directly comparable U.S. GAAP financial measure is net cash provided by (used in) operating activities.


(2)	Capital expenditures for the three and six months ended June 30, 2015 includes $5.6 million and $3.6 million, respectively, for capital expenditures paid in the current period but incurred in a prior period.

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 (used in) operating activities recorded under U.S. GAAP. Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

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Discussion of Second Quarter 2015 vs. Second Quarter 2014 Cash Flow

Our net cash provided by operating activities was $27.7 million in the second quarter of 2015, compared to $10.4 million in the second quarter of 2014, an increase of $17.4 million. Contributing to the increase in cash flow from operations were lower interest payments of $7.3 million, a favorable change in working capital of $4.5 million (accounts receivable, inventories, and accounts payable) and lower prepaid assets of $5.6 million primarily from the reduction of prepaid value added tax.

Our net cash used in investing activities was ($16.6) million and ($11.9) million in the second quarter of 2015 and 2014, respectively, primarily representing capital expenditures.

Net cash provided by financing activities was $1.4 million in the second quarter of 2015, compared to $0.4 million in the year-ago quarter. Second quarter 2015 reflects the purchase of treasury shares of ($6.1) million, a quarterly Term Loan B payment of ($1.1) million and dividends of ($2.4) million. These were offset by the net proceeds drawn on the ABL Facility of $9.9 million and proceeds from stock option exercises of $1.1 million. The second quarter 2014 reflects the impact of the refinancing of the Senior Secured Notes to the Term Loan B of ($10.3) million offset by the net proceeds drawn on the ABL Facility of $7.0 million, other borrowings of $2.0 million and proceeds from stock option exercises of $1.8 million.

Our Free Cash Flow was $11.2 million during the second quarter of 2015, compared to ($1.6) million in the year-ago quarter, an increase of $12.8 million. The primary contributor to this change was the favorable cash flow impact in the current period of $17.4 million from operating activities, partially offset by additional investing activities of ($4.6) million, as discussed above.

Discussion of First Six Months 2015 vs. First Six Months 2014 Cash Flow

Our net cash provided by operating activities was $14.5 million and approximately zero in the first six months of 2015 and 2014, respectively, an increase of $14.5 million. Favorably impacting cash flow from operations were a favorable change in accrued liabilities and prepaid expenses of $19.8 million (primarily from accrued customer incentives and prepaid value added tax) and lower interest payments of $3.6 million. Partially offsetting these factors was an unfavorable change in working capital of $8.8 million (accounts receivable, inventories, and accounts payable).

Our net cash used in investing activities was ($33.2) million in the first six months of 2015 primarily representing capital expenditures. Our net cash used in investing activities was ($19.5) million in the first six months of 2014 which represented capital expenditures offset by $2.4 million of proceeds from the furnace malfunction insurance recovery.

Net cash provided by (used in) financing activities was ($8.6) million in the first six months of 2015, compared to $0.7 million in the year-ago period. The first half of 2015 reflects the purchase of treasury shares of ($15.3) million, dividends of ($4.8) million, Term Loan B payments of ($2.2) million, and other debt repayments of ($3.3) million. These were partially offset by the net proceeds drawn on the ABL Facility of $14.0 million and proceeds from stock option exercises of $3.0 million. The first half of 2014 reflects the impact of the Senior Secured Notes refinanced to the Term Loan B of ($10.3) million, partially offset by the net proceeds drawn on the ABL Facility of $7.0 million, other borrowings of $2.0 million and proceeds from stock option exercises of $2.1 million.

Our Free Cash Flow was ($18.7) million during the first six months of 2015, compared to ($19.5) million in the first six months of 2014, a favorable change of $0.8 million. The primary contributors to this change were the $14.5 million favorable cash flow impact from operating activities in the current period, offset by a ($13.8) million unfavorable cash flow impact from investing activities, as discussed above.

Derivatives

We 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, 2015, we had commodity futures contracts for 2,850,000 million British Thermal Units (BTUs) of natural gas with a fair market value of a $2.3 million liability. We have hedged a portion of our forecasted transactions through December 2016. At December 31, 2014, we had commodity futures contracts for 3,850,000 million BTUs of natural gas with a fair market value of a $2.9 million liability. The counterparties for these derivatives were rated BBB+ or better as of June 30, 2015, by Standard & Poor’s.

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We have an interest rate swap agreement with respect to $220.0 million of debt in order to convert a portion of our floating rate Term Loan B debt into fixed rate debt and to fix a series of our future interest payments. The interest rate swap has an effective date of January 11, 2016, matures on January 9, 2020 and maintains a fixed interest rate of 4.85 percent when including the credit spread. At June 30, 2015, the Term Loan B debt held a floating interest rate of 3.75 percent. If the counterparty to the interest rate swap agreement were to fail to perform, the interest rate swap would no longer provide the desired results. However, we do not anticipate nonperformance by the counterparty. The counterparty was rated A+ as of June 30, 2015.

The fair market value of our interest rate agreement is based on the market standard methodology of netting the discounted expected future fixed cash payments and the discounted future variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves. The fair market value of the interest rate agreement at June 30, 2015 is an immaterial liability.

Income Taxes


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, Canadian dollar, euro, RMB and Mexican peso that could reduce the cost competitiveness of our products compared to foreign competition.

Interest Rates

We are exposed to market risks associated with changes in interest rates on our debt. We had $449.6 million of debt subject to variable interest rates at June 30, 2015. A change of one percentage point in such rates would result in a change in interest expense of approximately $4.5 million on an annual basis.

Natural Gas

We are exposed to market risks associated with changes in the price of natural gas. We use commodity futures contracts related to forecasted future natural gas requirements of our manufacturing operations in North America. 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 six quarters in the future. For our natural gas requirements that are not hedged or have been de-designated, 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

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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 better by Standard and Poor’s as of June 30, 2015.

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 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 $5.5 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 $3.9 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,” “target,” “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

Our risk factors are set forth in Part I, Item 1A. "Risk Factors" in our 2014 Annual Report on Form 10-K.

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

Issuer’s Purchases of Equity Securities



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs⁽¹⁾
April 1 to April 30, 2015	61,333	$39.75	61,333	1,144,277
May 1 to May 31, 2015	64,463	$40.53	64,463	1,079,814
June 1 to June 30, 2015	27,272	$39.63	27,272	1,052,542
Total	153,068	$40.05	153,068	1,052,542

__________________________________

(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. No additional shares were purchased from 2004 through 2013. In 2014, we repurchased 34,985 shares in the open market for $1.1 million. In January 2015, our board of Directors increased the current stock repurchase authorization by an additional 500,000 shares. During the first half of 2015, we repurchased 412,473 shares in the open market for $15.3 million.


Item 6.	Exhibits

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

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EXHIBIT INDEX
S-K Item 601 No.		Document
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 Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and incorporated herein by reference).

3.3		Certificate of Incorporation of Libbey Glass Inc. (filed as Exhibit 3.3 to Libbey Glass Inc.’s Form S-4 (Reg No. 333-139358) filed December 14, 2006, and incorporated herein by reference).

3.4		Amended and Restated By-Laws of Libbey Glass Inc. (filed as Exhibit 3.4 to Libbey Glass Inc.’s Form S-4 (Reg No. 333-139358) filed December 14, 2006, and incorporated herein by reference).

4.1		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).

4.2		Amended 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).

4.3		Amendment No. 1 to Amended and Restated Credit Agreement dated as of January 14, 2011 among Libbey Glass Inc. and Libbey Europe B.V. as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.6 to Libbey Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).

4.4		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).

4.5		Amendment No. 3 to Amended and Restated Credit Agreement dated as of September 14, 2011 among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.8 to Libbey Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).

4.6		Amendment No. 4 to Amended and Restated Credit Agreement dated as of May 18, 2012 among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.1 to Libbey Inc.'s Current Report on Form 8-K filed on May 18, 2012 and incorporated herein by reference).

4.7		Amendment No. 5 to Amended and Restated Credit Agreement dated as of April 9, 2014 among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.1 to Libbey Inc.'s Current Report on Form 8-K filed on April 9, 2014 and incorporated herein by reference).

4.8		Term Loan B Credit Facility, dated April 9, 2014, among Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of Libbey Glass Inc. (filed as Exhibit 4.2 to Libbey Inc.’s Current Report on Form 8-K filed on April 9, 2014 and incorporated herein by reference).

4.9		Intercreditor Agreement, dated April 9, 2014, among Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of Libbey Glass Inc. (filed as Exhibit 4.3 to Libbey Inc.’s Current Report on Form 8-K filed on April 9, 2014 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).

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S-K Item 601 No.		Document
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		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).

10.7		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).

10.8		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).

10.9		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).

10.10		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).

10.11		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).

10.12		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).

10.13		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).

10.14		Employment Agreement dated as of June 22, 2011 between Libbey Inc. and Stephanie A. Streeter (filed as Exhibit 10.30 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 and incorporated herein by reference).

10.15		Form of Employment Agreement dated as of October 31, 2011 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on November 3, 2011 and incorporated herein by reference) (as to each of Kenneth A. Boerger, Daniel P. Ibele and Timothy T. Paige).

10.16		Form of Employment Agreement dated as of October 31, 2011 (filed as Exhibit 10.2 to Libbey Inc.’s Current Report on Form 8-K filed on November 3, 2011 and incorporated herein by reference) (as to Susan A. Kovach).

10.17		Form of Indemnity Agreement dated as of February 7, 2012 between Libbey Inc. and Stephanie A. Streeter (filed as Exhibit 10.25 to Libbey Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).

10.18		Form of Change in Control Agreement dated as of August 1, 2012 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on July 19, 2012 and incorporated herein by reference) (as to Sherry Buck, Annunciata Cerioli, Anthony W. Gardner, Jr., Salvador Minarro Villalobos and James White).

10.19		Executive Severance Compensation Policy revised effective May 11, 2015.

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S-K Item 601 No.
S-K Item 601 No.		Document
10.20		CEO Retention Award Agreement dated as of December 16, 2013 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on December 18, 2013 and incorporated herein by reference).

10.21		Agreement and General Release dated as of October 23, 2014 between Libbey Inc., Libbey Glass Inc. and Daniel P. Ibele. (filed as Exhibit 10.25 to Libbey Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 and incorporated herein by reference).

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.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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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, 2015	by:	/s/ Sherry L. Buck
			Sherry L. Buck
			Vice President, Chief Financial Officer

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Libbey (LBY) 10-Q2015 Q2 Quarterly report

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