Libbey 10Q 2009 Q2 Quarterly report

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, 2009


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 o 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
(Do not check if a smaller reporting company)

Smaller reporting company o

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 15,152,473 shares at July 31, 2009.

TABLE OF CONTENTS


Item 1. Financial Statements			3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS			4
CONDENSED CONSOLIDATED BALANCE SHEETS			6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS			7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			9
1. Description of the Business			9
2. Significant Accounting Policies			9
3. Balance Sheet Details			13
4. Borrowings			14
5. Special Charges			17
6. Income Taxes			19
7. Pension and Non-pension Postretirement Benefits			19
8. Net Income (Loss) per Share of Common Stock			21
9. Derivatives			21
10. Comprehensive Income (Loss)			24
11. Condensed Consolidated Guarantor Financial Statements			24
12. Segments			33
13. Fair Value			34
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			35
Item 3. Qualitative and Quantitative Disclosures about Market Risk			46
Item 4. Controls and Procedures			47
PART II — OTHER INFORMATION			48
Item 1A. Risk Factors			48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 4. Submission of Matters to a Vote of Security Holders			52
Item 5. Other Information			52
Item 6. Exhibits			53
EXHIBIT INDEX			53
SIGNATURES			56
Certification
Certification
Certification
Certification
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-4.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements of Libbey Inc. and all majority-owned subsidiaries (collectively, Libbey or the Company) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Item 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

The balance sheet at December 31, 2008 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, 2008.

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


	Three months ended June 30,
	2009			2008
Net sales	$	195,826		$	224,828
Freight billed to customers		399			615

Total revenues		196,225			225,443
Cost of sales		161,942			183,275

Gross profit		34,283			42,168
Selling, general and administrative expenses		22,514			23,451
Special charges		278			—

Income from operations		11,491			18,717
Other income		2,758			586

Earnings before interest and income taxes		14,249			19,303
Interest expense		17,532			17,620

(Loss) income before income taxes		(3,283	)		1,683
(Benefit from) provison for income taxes		(5,947	)		3,802

Net income (loss)	$	2,664		$	(2,119	)


Net income (loss) per share:
Basic	$	0.18		$	(0.14	)

Diluted	$	0.18		$	(0.14	)

Dividends per share	$	—		$	0.025

See accompanying notes

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


	Six months ended June 30,
	2009			2008
Net sales	$	353,679		$	412,104
Freight billed to customers		744			1,283

Total revenues		354,423			413,387
Cost of sales		309,424			340,882

Gross profit		44,999			72,505
Selling, general and administrative expenses		44,888			44,310
Special charges		674			—

(Loss) income from operations		(563	)		28,195
Other income		2,721			1,339

Earnings before interest and income taxes		2,158			29,534
Interest expense		34,711			34,771

Loss before income taxes		(32,553	)		(5,237	)
(Benefit from) provision for income taxes		(7,324	)		359

Net loss	$	(25,229	)	$	(5,596	)


Net loss per share:
Basic	$	(1.70	)	$	(0.38	)

Diluted	$	(1.70	)	$	(0.38	)

Dividends per share	$	—		$	0.05

See accompanying notes

LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)


	June 30, 2009			December 31, 2008
	(unaudited)
Assets:

Cash and equivalents	$	24,082		$	13,304
Accounts receivable — net		91,252			76,072
Inventories — net		145,798			185,242
Prepaid and other current assets		12,397			17,167

Total current assets		273,529			291,785

Pension asset		9,640			9,351
Purchased intangible assets — net		25,430			26,121
Goodwill		164,795			166,736
Other assets		11,896			12,714

Total other assets		211,761			214,922
Property, plant and equipment — net		302,116			314,847

Total assets	$	787,406		$	821,554


Liabilities and Shareholders’ Equity:

Notes payable	$	1,336		$	3,284
Accounts payable		54,485			54,428
Salaries and wages		24,952			22,597
Accrued liabilities		43,474			39,675
Accrued special charges		2,140			4,248
Pension liability (current portion)		1,778			1,778
Non-pension postretirement benefits (current portion)		4,684			4,684
Derivative liability		14,008			17,936
Deferred income taxes		1,010			1,279
Long-term debt due within one year		9,987			1,117

Total current liabilities		157,854			151,026
Long-term debt		531,709			545,856
Pension liability		100,830			109,505
Non-pension postretirement benefits		58,537			57,197
Deferred income taxes		3,775			3,648
Other long-term liabilities		9,176			12,211

Total liabilities		861,881			879,443
Shareholders’ deficit:
Common stock, par value $.01 per share, 50,000,000 shares authorized, 18,697,630 shares issued at June 30, 2009 and at December 31, 2008		187			187
Capital in excess of par value (includes warrants of $1,034, based on 485,309 shares at June 30, 2009 and at December 31, 2008)		310,249			309,275
Treasury stock, at cost, 3,552,997 shares (3,967,486 shares in 2008)		(95,472	)		(106,411	)
Retained deficit		(180,606	)		(145,154	)
Accumulated other comprehensive loss		(108,833	)		(115,786	)

Total shareholders’ deficit		(74,475	)		(57,889	)

Total liabilities and shareholders’ deficit	$	787,406		$	821,554

See accompanying notes

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


	Three months ended June 30,
	2009			2008
Operating activities:
Net income (loss)	$	2,664		$	(2,119	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		10,518			11,238
Loss (gain) on asset sales		23			(117	)
Change in accounts receivable		(16,007	)		(17,230	)
Change in inventories		26,962			5,976
Change in accounts payable		2,156			3,986
Accrued interest and amortization of discounts, warrants and finance fees		(13,129	)		(13,785	)
Pay-in-kind note interest		11,916			10,216
Pension & non-pension postretirement benefits		194			(1,008	)
Restructuring charges		(2,301	)		—
Accrued liabilities & prepaid expenses		10,104			2,509
Accrued income taxes		(6,674	)		6,347
Other operating activities		(1,720	)		(933	)

Net cash provided by operating activities		24,706			5,080

Investing activities:
Additions to property, plant and equipment		(4,610	)		(8,260	)
Proceeds from asset sales and other		21			5

Net cash used in investing activities		(4,589	)		(8,255	)

Financing activities:
Net (repayments) borrowings on ABL credit facility activity		(10,803	)		14,314
Other repayments		(2,006	)		(400	)
Dividends		—			(365	)

Net cash (used in) provided by financing activities		(12,809	)		13,549

Effect of exchange rate fluctuations on cash		311			(93	)

Increase in cash		7,619			10,281
Cash at beginning of period		16,463			7,602

Cash at end of period	$	24,082		$	17,883


Supplemental disclosure of cash flows information:
Cash paid during the period for interest	$	18,867		$	20,249
Cash paid (refunded) during the period for income taxes	$	106		$	(376	)

See accompanying notes

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


	Six months ended June 30,
	2009			2008
Operating activities:
Net loss	$	(25,229	)	$	(5,596	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		22,246			22,534
Loss (gain) on asset sales		32			(124	)
Change in accounts receivable		(15,597	)		(17,460	)
Change in inventories		38,246			(5,044	)
Change in accounts payable		113			(5,912	)
Accrued interest and amortization of discounts, warrants and finance fees		1,551			1,960
Pay-in-kind note interest		11,916			10,216
Pension & non-pension postretirement benefits		3,165			(730	)
Restructuring charges		(751	)		—
Payable to Vitro		—			(19,575	)
Accrued liabilities & prepaid expenses		12,784			(2,565	)
Accrued income taxes		(8,637	)		761
Other operating activities		(749	)		(1,524	)

Net cash provided by (used in) operating activities		39,090			(23,059	)

Investing activities:
Additions to property, plant and equipment		(9,550	)		(17,612	)
Proceeds from asset sales and other		88			46

Net cash used in investing activities		(9,462	)		(17,566	)

Financing activities:
Net (repayments) borrowings on ABL credit facility activity		(16,689	)		23,382
Other repayments		(2,123	)		(873	)
Dividends		—			(729	)

Net cash (used in) provided by financing activities		(18,812	)		21,780

Effect of exchange rate fluctuations on cash		(38	)		189

Increase (decrease) in cash		10,778			(18,656	)
Cash at beginning of period		13,304			36,539

Cash at end of period	$	24,082		$	17,883


Supplemental disclosure of cash flows information:
Cash paid during the period for interest	$	20,003		$	21,290
Cash paid (refunded) during the period for income taxes	$	1,307		$	(395	)

See accompanying notes

LIBBEY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands, except per share data
(unaudited)

1. Description of the Business

Libbey is the leading producer of glass tableware products in the Western Hemisphere, in addition to supplying to key markets throughout the world. We produce glass tableware in five countries and sell to customers in over 100 countries. We have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere and are one of the largest glass tableware manufacturers in the world. We design and market an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware, and plastic items to a broad group of customers in the foodservice, retail and business-to-business markets. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands, Portugal, China and Mexico. We also own and operate a plastics plant in Wisconsin. Until April 9, 2009, we operated a ceramic dinnerware manufacturing facility in Syracuse, New York. 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 atwww.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 atwww.sec.gov.

Our shares are traded on the Over the Counter Bulletin Board (OTC BB) under the ticker symbol LYBI.OB.

2. Significant Accounting Policies

See our Form 10-K for the year ended December 31, 2008 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 (expense) 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. FAS No. 109, “Accounting for Income Taxes,” requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which we conduct our operations or otherwise incur taxable income or losses. In the United States and China, we have recorded a full valuation allowance against our deferred income tax assets. In addition, partial valuation allowances have been recorded in the Netherlands, Portugal and Mexico.

Stock-Based Compensation Expense

We account for stock-based compensation in accordance with SFAS No. 123-R, “Accounting for Stock-Based Compensation” (“SFAS No. 123-R”). Stock-based compensation cost is measured based on the fair value of the equity instruments issued. SFAS No. 123-R applies to all of our outstanding unvested stock-based payment awards as of January 1, 2006, and all prospective awards using the modified prospective transition method without restatement of prior periods. Stock-based compensation expense charged to the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2009 was $0.3 million and $1.1 million, respectively. The stock-based compensation expense charged to the Condensed Consolidated Statement of Operations for the three months and six months ended June 30, 2008 was $1.1 million and $2.1 million, respectively.

New Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”).SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosure about fair value measurements. This statement clarifies how to measure fair value as permitted under other accounting pronouncements but does not require any new fair value measurements. In February 2008, the FASB issued FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157” (“FSP157-2”), which delayed until January 1, 2009 the effective date of SFAS 157 for nonfinancial assets and liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis. In October 2008, the FASB issued FASB Staff Position 157-3, “Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active” (“FSP 157-3”), which clarifies the application of SFAS 157 as it relates to the valuation of financial assets in a market that is not active for those financial assets. FSP 157-3 was effective upon issuance. In April 2009, the FASB issued FASB Staff Position 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that are not Orderly” (“FSP 157-4”). This FSP provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 was effective for financial periods ending after June 15, 2009. We adopted SFAS 157 as of January 1, 2008, but had not applied it to non-recurring, nonfinancial assets and liabilities. The adoption of SFAS 157 and its related FSPs (FSP 157-2, FSP 157-3 and FSP 157-4) had no impact on our consolidated results of operations and financial condition. We adopted SFAS 157 for nonfinancial assets and liabilities as of January 1, 2009. The adoption of SFAS 157 for nonfinancial assets and liabilities did not have a material impact on our consolidated financial statements. See notes 4, 9 and 13 of the Condensed Consolidated Financial Statements for additional information.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”), which changes the accounting and reporting standards for the noncontrolling interests in a subsidiary in consolidated financial statements. SFAS 160 re-characterizes minority interests as noncontrolling interests and requires noncontrolling interests to be classified as a component of shareholders equity. We adopted SFAS 160 as of January 1, 2009. The adoption of SFAS 160 did not have any impact on our consolidated financial statements as we currently do not have any noncontrolling interests.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”), which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. SFAS 161 was effective for Libbey on January 1, 2009. Since SFAS 161 only requires additional disclosures, adoption of this statement did not have a

material impact on our consolidated financial statements. See note 9 of the Condensed Consolidated Financial Statements for additional information.

In April 2008, the FASB issued Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” FSP 142-3 was effective for Libbey on January 1, 2009. The adoption of FSP 142-3 did not have a material impact on our consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. The hierarchical guidance provided by SFAS 162 did not have a significant impact on our consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 was effective for Libbey on January 1, 2009. The adoption of EITF 07-5 did not have any impact on our consolidated financial statements.

In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP 03-6-1”). FSP 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of SFAS No. 128, “Earnings per Share.” FSP 03-6-1 was effective for Libbey on January 1, 2009, and requires that all prior period EPS data is adjusted retrospectively. The adoption of FSP 03-6-1 did not have a material impact on our consolidated financial statements.

In December 2008, the FASB issued FASB Staff Position 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP 132(R)-1”). FSP 132(R)-1 amends FASB Statement No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP 132(R)-1 is effective for financial statements issued for fiscal years ending after December 15, 2009. We are currently evaluating the potential impact of the adoption of FSP 132(R)-1.

In April 2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP 107-1”). FSP 107-1 amends FASB statement 107, “Disclosures about Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial information at interim reporting periods. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009. Since FSP 107-1 only requires additional disclosures, adoption of this statement did not have a material impact on our consolidated financial statements. See note 4 of the Condensed Consolidated Financial Statements for additional information.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009. In accordance with SFAS 165, we have evaluated and, as necessary, made changes to these unaudited condensed financial statements for the events through August 7, 2009, the date that the financial statements were issued. There were no subsequent events that provided evidence about the conditions existing at the balance sheet date.

In June 2009 the FASB issued SFAS No. 168, “TheFASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162” (“SFAS 168”). The objective of SFAS 168 is to replace SFAS 162 and to establish theFASB Accounting Standards Codification™(Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All previous existing accounting standards are superseded by the Codification as described in SFAS 168. All other accounting literature not included in the Codification is non-authoritative.

SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We do not expect the adoption of SFAS 168 to have a significant impact on our consolidated financial statements.

Reclassifications

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

3. Balance Sheet Details

The following table provides detail of selected balance sheet items:


(Dollars in thousands)	June 30, 2009		December 31, 2008

Accounts receivable:
Trade receivables	$	90,349	$	74,393
Other receivables		903		1,679

Total accounts receivable, less allowances of $8,397 and $10,479	$	91,252	$	76,072

Inventories:
Finished goods	$	128,336	$	163,817
Work in process		1,249		2,805
Raw materials		4,106		5,748
Repair parts		10,493		10,271
Operating supplies		1,614		2,601

Total inventories, less allowances of $4,040 and $6,582	$	145,798	$	185,242

Prepaid and other current assets:
Prepaid expenses	$	10,102	$	14,865
Refundable and prepaid income taxes		2,295		2,302

Total prepaid and other current assets	$	12,397	$	17,167

Other assets:
Finance fees — net of amortization	$	7,252	$	8,183
Other		4,644		4,531

Total other assets	$	11,896	$	12,714

Accrued liabilities:
Accrued incentives	$	19,357	$	12,760
Workers compensation		9,624		9,384
Medical liabilities		2,881		2,736
Interest		4,307		4,575
Commissions payable		981		1,135
Other		6,324		9,085

Total accrued liabilities	$	43,474	$	39,675

Other long-term liabilities:
Derivative liability	$	2,917	$	3,693
Deferred liability		1,269		1,566
Other		4,990		6,952

Total other long-term liabilities	$	9,176	$	12,211

4. Borrowings

On June 16, 2006, Libbey Glass Inc. issued $306.0 million aggregate principal amount of floating rate senior secured notes (Senior Notes) due June 1, 2011, and $102.0 million aggregate principal amount of senior subordinated secured pay-in-kind notes (PIK Notes), due December 1, 2011. Concurrently, Libbey Glass Inc. entered into a $150.0 million Asset Based Loan facility (ABL Facility) expiring December 16, 2010.

Borrowings consist of the following:


					June 30,		December 31,
(Dollars in thousands)	Interest Rate			Maturity Date	2009		2008

Borrowings under ABL facility	floating			December 16, 2010	$	16,858	$	34,538
Senior notes	floating (1)			June 1, 2011		306,000		306,000
PIK notes (2)		16.00	%	December 1, 2011		160,862		148,946
Promissory note		6.00	%	July, 2009 to September, 2016		1,580		1,666
Notes payable	floating			July, 2009		1,336		3,284
RMB loan contract	floating			July, 2012 to January, 2014		36,625		36,675
RMB working capital loan	floating			March, 2010		7,325		7,335
Obligations under capital leases	floating			May, 2009		—		302
BES Euro line	floating			January, 2010 to January, 2014		15,453		15,507
Other debt	floating			September, 2009		720		630

Total borrowings						546,759		554,883
Less — unamortized discounts and warrants						3,727		4,626

Total borrowings — net						543,032		550,257
Less — long term debt due within one year and notes payable						11,323		4,401

Total long-term portion of borrowings — net					$	531,709	$	545,856


(1)		See Interest Rate Protection Agreements below.

(2)		Additional PIK Notes were issued each June 1 and December 1, commencing on December 1, 2006, to pay semi-annual interest. During the first three years, interest was payable by the issuance of additional PIK Notes.

ABL Facility

The ABL Facility is with a group of six banks and provides for a revolving credit and swing line facility permitting borrowings for Libbey Glass and Libbey Europe up to an aggregate of $150.0 million, with Libbey Europe’s borrowings being limited to $75.0 million. Borrowings under the ABL Facility mature December 16, 2010. Swing line borrowings are limited to $15.0 million, with swing line borrowings for Libbey Europe being limited to€7.5 million. Loans comprising each CBFR (CB Floating Rate) Borrowing, including each Swingline Loan, bear interest at the CB Floating Rate plus the Applicable Rate, and euro-denominated swing line borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swing line rate, as defined in the ABL Facility. The Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining availability. The Applicable Rates for CBFR Loans and Eurocurrency Loans were 0.0 percent and 1.75 percent, respectively, at June 30, 2009. There were no Libbey Glass borrowings under the facility at June 30, 2009, while Libbey Europe had outstanding borrowings of $16.9 million at June 30, 2009, at an interest rate of 3.57 percent. Interest is payable on the last day of the interest period, which can range from one month to six months.

All borrowings under the ABL Facility are secured by a first priority security interest in (i) substantially all assets of (a) Libbey Glass and (b) substantially all of Libbey Glass’s present and future direct and indirect domestic subsidiaries, (ii) (a) 100 percent of the stock of Libbey Glass, (b) 100 percent of the stock of substantially all of Libbey Glass’s present and future direct and indirect domestic subsidiaries, (c) 100 percent of the non-voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries and (d) 65 percent of the voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries, and (iii) substantially all proceeds and products of the property and assets described in clauses (i) and (ii) of this sentence.

Additionally, borrowings by Libbey Europe under the ABL Facility are secured by a first priority security interest in (i) substantially all of the assets of Libbey Europe, the parent of Libbey Europe and certain of its subsidiaries, (ii) 100 percent of the stock of Libbey

Europe and certain subsidiaries of Libbey Europe, and (iii) substantially all proceeds and products of the property and assets described in clauses (i) and (ii) of this sentence.

Libbey pays a quarterly Commitment Fee, as defined by the ABL Facility, on the total credit provided under the Facility. The Commitment Fee varies depending on our aggregate availability. The Commitment Fee was 0.25 percent at June 30, 2009. No compensating balances are required by the Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant, unless aggregate unused availability falls below $15.0 million. If our aggregate unused ABL availability were to fall below $15.0 million, the fixed charge coverage ratio requirement would be 1:10 to 1:00. The fixed charge coverage ratio is defined as the ratio of earnings before interest, taxes, depreciation, amortization and minority interest (EBITDA) minus capital expenditures to fixed charges (EBITDA minus capital expenditures / fixed charges). Among the items included in the calculation of fixed charges are cash interest expense, scheduled principal payments on outstanding debt and capital lease obligations, taxes paid in cash, dividends paid in cash and required cash contributions to our pension plans in excess of expense.

The borrowing base under the ABL Facility is determined by a monthly analysis of the eligible accounts receivable, inventory and fixed assets. The borrowing base is the sum of (a) 85 percent of eligible accounts receivable, (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, and (c) the lesser of $25.0 million and the aggregate of (i) 75 percent of the NOLV of eligible equipment and (ii) 50 percent of the fair market value of eligible real property.

The available total borrowing base is offset by real estate and ERISA reserves totaling $8.2 million and mark-to-market reserves for natural gas and interest rate swaps of $11.9 million. The ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are applied against the $150.0 million limit. At June 30, 2009, we had $8.4 million in letters of credit outstanding under the ABL Facility. Remaining unused availability on the ABL Facility was $44.6 million at December 31, 2008, and $56.6 million at June 30, 2009.

Senior Notes

Libbey Glass and Libbey Inc. entered into a purchase agreement pursuant to which Libbey Glass agreed to sell $306.0 million aggregate principal amount of floating rate senior secured notes due June 1, 2011 to the initial purchasers named in a private placement. The net proceeds of these notes, after deducting a discount and the estimated expenses and fees, were approximately $289.8 million. On February 15, 2007, we exchanged $306.0 million aggregate principal amount of our floating rate senior secured notes due June 1, 2011, which have been registered under the Securities Act of 1933, as amended (Senior Notes), for the notes sold in the private placement. The Senior Notes bear interest at a rate equal to six-month LIBOR plus 7.0 percent and were offered at a discount of 2 percent of face value. Interest with respect to the Senior Notes is payable semiannually on June 1 and December 1. The interest rate was 8.26 percent at June 30, 2009. Neither the Senior Notes nor the indenture governing them contain financial covenants.

We have Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future income. The fixed interest rate for our borrowings related to the Rate Agreements at June 30, 2009, excluding applicable fees, is 5.24 percent per year and the total interest rate, including applicable fees, is 12.24 percent per year. These Rate Agreements expire on December 1, 2009. Total remaining Senior Notes not covered by the Rate Agreements have fluctuating interest rates with a weighted average rate of 8.26 percent per year at June 30, 2009. If the counterparties to these Rate Agreements were to fail to perform, these Rate Agreements would no longer protect us from interest rate fluctuations. However, we do not anticipate nonperformance by the counterparties. All interest rate swap counterparties were rated A+ or better, as of June 30, 2009, by Standard and Poor’s.

The fair market value for the Rate Agreements at June 30, 2009 was a $4.0 million liability. The fair values of the Rate Agreements are based on 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. We do not expect to cancel these agreements and expect them to expire as originally contracted.

The Senior Notes are guaranteed by Libbey Inc. and all of Libbey Glass’s existing and future domestic subsidiaries that guarantee any of Libbey Glass’s debt or debt of any subsidiary guarantor (see Note 11). The Senior Notes and related guarantees have the benefit of a second-priority lien, subject to permitted liens, on collateral consisting of substantially all the tangible and intangible assets of Libbey Glass and its domestic subsidiary guarantors that secure all of the indebtedness under Libbey Glass’s ABL Facility. The

Collateral does not include the assets of non-guarantor subsidiaries that secure the ABL Facility.

PIK Notes

Concurrently with the execution of the purchase agreement with respect to the Senior Notes, Libbey Glass and Libbey Inc. entered into a purchase agreement (Unit Purchase Agreement) pursuant to which Libbey Glass agreed to sell, to a purchaser named in the private placement, units consisting of $102.0 million aggregate principal amount 16 percent senior subordinated secured pay-in-kind notes due December 1, 2011 (PIK Notes) and detachable warrants to purchase 485,309 shares of Libbey Inc. common stock (Warrants) exercisable on or after June 16, 2006 and expiring on December 1, 2011. The warrant holders do not have voting rights. The net proceeds, after deducting a discount and estimated expenses and fees, were approximately $97.0 million. The proceeds were allocated between the Warrants and the underlying debt based on their respective fair values at the time of issuance. The amount allocated to the Warrants has been recorded in equity, with the offset recorded as a discount on the underlying debt. Each Warrant is exercisable at $11.25. The PIK Notes were offered at a discount of 2 percent of face value. Interest is payable semiannually on June 1 and December 1, but during the first three years interest was payable by issuance of additional PIK Notes. Interest on our PIK Notes will be payable in cash beginning December 1, 2009. At June 30, 2009, the total principal amount of PIK Notes was $160.9 million. Neither the PIK Notes nor the indenture governing them contain financial covenants.

The obligations of Libbey Glass under the PIK Notes are guaranteed by Libbey Inc. and all of Libbey Glass’s existing and future domestic subsidiaries that guarantee any of Libbey Glass’s debt or debt of any subsidiary guarantor (see Note 11). The PIK Notes and related guarantees are senior subordinated obligations of Libbey Glass and the guarantors of the PIK Notes and are entitled to the benefit of a third-priority lien, subject to permitted liens, on the collateral that secures the Senior Notes.

Promissory Note

In September 2001, we issued a $2.7 million promissory note in connection with the purchase of our Laredo, Texas warehouse facility. At June 30, 2009, we had $1.6 million outstanding on the promissory note. Interest with respect to the promissory note is paid monthly.

Notes Payable

We have overdraft lines of credit for a maximum of€2.3 million. The $1.3 million outstanding at June 30, 2009 was the U.S. dollar equivalent under the euro-based overdraft line, and the interest rate was 4.36 percent. Interest with respect to the note payable is paid monthly.

RMB Loan Contract

On January 23, 2006, Libbey Glassware (China) Co., Ltd. (Libbey China), an indirect wholly owned subsidiary of Libbey Inc., entered into an RMB Loan Contract (RMB Loan Contract) with China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (CCB). Pursuant to the RMB Loan Contract, CCB agreed to lend to Libbey China RMB 250.0 million, or the current equivalent of approximately $36.6 million, for the construction of our production facility in China and the purchase of related equipment, materials and services. The loan has a term of eight years and bears interest at a variable rate as announced by the People’s Bank of China. As of the date of the initial advance under the Loan Contract, the annual interest rate was 5.51 percent, and as of June 30, 2009, the annual interest rate was 6.19 percent. As of June 30, 2009, the outstanding balance was RMB 250.0 million (approximately $36.6 million). Interest is payable quarterly. Payments of principal in the amount of RMB 30.0 million (approximately $4.4 million) and RMB 40.0 million (approximately $5.8 million) must be made on July 20, 2012, and December 20, 2012, respectively, and three payments of principal in the amount of RMB 60.0 million (approximately $8.8 million) each must be made on July 20, 2013, December 20, 2013, and January 20, 2014, respectively. The obligations of Libbey China are secured by a guarantee executed by Libbey Inc. for the benefit of CCB.

RMB Working Capital Loan

In March 2007, Libbey China entered into a RMB 50.0 million working capital loan with China Construction Bank. The 3-year term loan has a principal payment at maturity on March 14, 2010, has a current interest rate of 5.40 percent, and is secured by a Libbey Inc. guarantee. At June 30, 2009, the U.S. dollar equivalent on the line was $7.3 million. Interest is payable quarterly.

Obligations Under Capital Leases

In prior periods, we had leased certain machinery and equipment under agreements that were classified as capital leases. These leases were assumed in the Crisal acquisition. The cost of the equipment under capital leases was included in the Condensed Consolidated Balance Sheet as property, plant and equipment, and the related depreciation expense was included in the Condensed Consolidated Statements of Operations.

There are no future minimum lease payments required under the capital leases as of June 30, 2009.

BES Euro Line

In January 2007, Crisal entered into a seven year,€11.0 million line of credit (approximately $15.5 million) with BANCO ESPÍRITO SANTO, S.A. (BES). The $15.5 million outstanding at June 30, 2009 was the U.S. dollar equivalent under the line at an interest rate of 3.77 percent. Payment of principal in the amount of€1.1 million (approximately $1.6 million) is due in January 2010, payment of€1.6 million (approximately $2.3 million) is due in January 2011, payment of€2.2 million (approximately $3.1 million) is due in January 2012, payment of€2.8 million (approximately $3.9 million) is due in January 2013 and payment of€3.3 million (approximately $4.6 million) is due in January 2014. Interest with respect to the line is paid every six months.

Other Debt

The other debt of $0.7 million primarily consists of government-subsidized loans for equipment purchases at Crisal.

Fair Value of Borrowings

The fair value of the Company’s debt has been calculated based on quoted market prices for the same or similar issues. Our floating rate $306.0 million Senior Notes due June, 2011 had an estimated fair value of $192.8 million at June 30, 2009. The $160.9 million PIK Notes have been held by a single holder since inception, and there is no active market from which a fair value could be derived. The value of the remainder of our debt approximates carrying value at June 30, 2009.

Capital Resources and Liquidity

Historically, cash flows generated from operations and our borrowing capacity under our ABL facility have allowed us to meet our cash requirements, including capital expenditures and working capital needs. Remaining unused availability on the ABL Facility was $56.6 million at June 30, 2009 and $44.6 million at December 31, 2008. In addition, our cash and cash equivalents balance of $24.1 million at June 30, 2009 is available for our short term operating needs. We were impacted by recessionary pressures in 2008, especially during the fourth quarter of the year, and the first half of 2009, and we anticipate that the global economic recession will continue throughout 2009 and perhaps beyond. In addition, interest on our PIK Notes will be payable in cash beginning December 1, 2009. We began taking a number of steps to enhance our liquidity in 2008, have continued with further steps in 2009 (including those announced in February, 2009), and have begun to see the benefits of these measures in our positive cash flow from operations for the first half of 2009. However, if cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or arrange additional debt financing. Global financial markets and economic conditions have been, and continue to be volatile. The credit and capital markets remain challenging. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and the current weak economic conditions, have made it difficult, and will likely continue to make it difficult, to obtain funding in future periods. If cash from operations and cash available from our ABL Facility are not sufficient to meet our needs, we cannot provide assurance that we will be able to obtain additional financing in sufficient amounts and/or on acceptable terms in the near future or when our debt obligations reach maturity. Our ABL Facility expires in December 2010, the Senior Notes expire in June 2011, and the PIK Notes expire in December 2011. Furthermore, because of the current price of our stock, we cannot anticipate that it would be desirable to sell additional equity, even if we were able to do so. However, based upon our operating plans and current forecast expectations (including expectations that the global economy will not deteriorate further) we anticipate that we will generate positive cash flow from operations and, if necessary, have sufficient cash availability from our ABL Facility to meet our ongoing liquidity needs.

5. Special Charges

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

discussion. We incurred additional charges of approximately $0.2 million and $2.7 million in the three months and six months ended June 30, 2009, respectively, related to these planned closures. The Syracuse China facility was closed on April 9, 2009 and the Mira Loma distribution center was closed on May 31, 2009.

A charge of $1.1 million was incurred in the first quarter of 2009 to write down certain raw materials and work in process inventory that could not be converted to finished product. An immaterial amount of this inventory was subsequently sold in the second quarter of 2009, resulting in a reversal of this portion of the write-down. These amounts were included in cost of sales on the Condensed Consolidated Statement of Operations in the North American Other segment.

Additional depreciation expense of $0.7 million was recorded in the first quarter of 2009 to reflect the shorter remaining useful life of the assets. These amounts were included in cost of sales on the Condensed Consolidated Statement of Operations in the North American Other segment.

Special charges of $0.3 million and $0.7 million in the three months and six months ended June 30, 2009, respectively, included various legal, consulting and employee related costs. These amounts were included in special charges on the Condensed Consolidated Statement of Operations in the North American Other and North American Glass segments.

Other (expense) income on the Condensed Consolidated Statement of Operations included charges of $0.2 million in the six months ended June 30, 2009 for the change in fair value of ineffective natural gas hedges related to our Syracuse China operation. These amounts were included in the North American Other segment.

The following table summarizes the facility closure charges in the second quarter and first half of 2009:


	Three months ended June 30, 2009									Six months ended June 30, 2009
	North			North						North			North
	American			American						American			American
(Dollars in thousands)	Glass			Other			Total			Glass			Other			Total
Inventory write-down	$	1		$	(3	)	$	(2	)	$	1		$	1,115		$	1,116
Fixed asset depreciation		—			—			—			—			705			705

Included in cost of sales		1			(3	)		(2	)		1			1,820			1,821
Employee termination cost & other		(29	)		307			278			(27	)		658			631
Fixed asset write-down		—			—			—			—			43			43

Included in special charges		(29	)		307			278			(27	)		701			674
Ineffectiveness of natural gas hedge		—			43			43			—			(186	)		(186	)

Included in other (expense) income		—			43			43			—			(186	)		(186	)

Total pretax charge	$	(28	)	$	261		$	233		$	(26	)	$	2,707		$	2,681

The following reflects the balance sheet activity related to the facility closure charge for the six months ended June 30, 2009:


	Reserve													Reserve
	Balances		Total		Cash			Inventory &						Balances
	at December 31,		Charge to		Receipts			Fixed asset			Non-cash			at June 30,
(Dollars in thousands)	2008		Earnings		(Payments)			Write Downs			Utilization			2009

Inventory write-down	$	—	$	1,116	$	3		$	(1,119	)	$	—		$	—
Fixed asset depreciation		—		705		—			—			(705	)		—
Fixed asset write-down		—		43		—			(43	)		—			—
Employee termination cost & other		4,248		631		(2,739	)		—			—			2,140
Ineffectiveness of natural gas hedges		—		186		—			—			(186	)		—

Total	$	4,248	$	2,681	$	(2,736	)	$	(1,162	)	$	(891	)	$	2,140

The ending balance of $2.1 million at June 30, 2009 was included in accrued special charges on the Condensed Consolidated Balance

Sheets and we expect this to result in cash payments in 2009. The carrying value of this balance approximates its fair value.

The following reflects the total cumulative charges to date related to the facility closure activity:


	North		North			Total
	American		American			Charges
(Dollars in thousands)	Glass		Other			To Date

Inventory write-down	$	193	$	10,691		$	10,884
Pension & postretirement welfare		—		4,170			4,170
Fixed asset depreciation		—		966			966

Included in cost of sales		193		15,827			16,020
Employee termination cost & other		591		4,860			5,451
Fixed asset write-down		65		9,703			9,768

Included in special charges		656		14,563			15,219
Ineffectiveness of natural gas hedge		—		(569	)		(569	)

Included in other (expense) income		—		(569	)		(569	)

Total pretax charge	$	849	$	30,959		$	31,808

We expect the total charges for each of these activities to approximate the charges incurred to date.

6. Income Taxes

The Company’s effective tax rate differs from the United States statutory tax rate primarily due to changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws. At June 30, 2009 and December 31, 2008 we had $1.2 million and $2.3 million, respectively, of gross unrecognized tax benefits, exclusive of interest and penalties. The decrease of $1.1 million was primarily attributable to an income tax settlement during the second quarter, offset by additions based on tax positions related to the current year.

In addition, SFAS No. 109,Accounting for Income Taxesrequires that the provision for/(benefit from) income taxes be allocated between continuing operations and other categories of earnings (such as discontinued operations or other comprehensive income) for each tax jurisdiction. In periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. Included in our income tax provision are tax benefits of $3.6 million for the second quarter of 2009 and $3.9 million for the first six months of 2009 related to these intra-period allocations. Depending upon the level of our future earnings and losses and their impact on other comprehensive income, it is possible that these tax adjustments may change or even reverse in future periods.

Further, our current and future provision for (benefit from) income taxes for 2009 is significantly impacted by valuation allowances. In the United States and China, we have recorded a full valuation allowance against our deferred income tax assets. In addition, partial valuation allowances have been recorded in the Netherlands, Portugal and Mexico. In assessing the need for recording a valuation allowance we weigh all available positive and negative evidence. Examples of the evidence we consider are cumulative losses in recent years, losses expected in early future years, a history of potential tax benefits expiring unused, whether there was an unusual, infrequent, or extraordinary item to be considered. We intend to maintain these allowances until it is more likely than not that the deferred income tax assets will be realized.

7. Pension and Non-pension Postretirement Benefits

We have pension plans covering the majority of our employees. Benefits generally are based on compensation for salaried employees and job grade and length of service for hourly employees. Our policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. In addition, we have an unfunded supplemental employee retirement plan (SERP) that covers salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based

employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees. The non-U.S. pension plans cover the employees of our wholly owned subsidiaries Royal Leerdam and Crisa. The Crisa plan is not funded.

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


	U.S. Plans						Non-U.S. Plans						Total
Three months ended June 30,	2009			2008			2009			2008			2009			2008

Service cost	$	1,216		$	1,223		$	338		$	434		$	1,554		$	1,657
Interest cost		3,799			3,885			1,037			1,139			4,836			5,024
Expected return on plan assets		(4,275	)		(4,412	)		(633	)		(798	)		(4,908	)		(5,210	)
Amortization of unrecognized:
Prior service cost (gain)		561			610			(23	)		(17	)		538			593
Loss		118			305			94			56			212			361
Settlement charge		200			—			—			—			200			—

Pension expense	$	1,619		$	1,611		$	813		$	814		$	2,432		$	2,425


	U.S. Plans						Non-U.S. Plans						Total
Six months ended June 30,	2009			2008			2009			2008			2009			2008

Service cost	$	2,490		$	2,696		$	676		$	876		$	3,166		$	3,572
Interest cost		7,896			7,815			2,074			2,365			9,970			10,180
Expected return on plan assets		(8,801	)		(8,787	)		(1,265	)		(1,628	)		(10,066	)		(10,415	)
Amortization of unrecognized:
Prior service cost (gain)		1,121			1,195			(47	)		(35	)		1,074			1,160
Loss		435			659			188			147			623			806
Settlement		2,700			—			—			—			2,700			—

Pension expense	$	5,841		$	3,578		$	1,626		$	1,725		$	7,467		$	5,303

We incurred pension settlement charges of $0.2 million and $2.7 million during the three months and six months ended June 30, 2009, respectively. The pension settlement charges were triggered by excess lump sum distributions to retirees.

We provide certain retiree health care and life insurance benefits covering our U.S and Canadian salaried and non-union hourly employees hired before January 1, 2004 and a majority of our union hourly employees. 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. During the second quarter of 2008, we amended our U.S. non-pension postretirement plans to cover employees and retirees of Syracuse China previously covered under a multi-employer plan. This plan amendment was effective September 1, 2008. The non-U.S. non-pension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

The provision for our non-pension postretirement benefit expense consists of the following:


	U.S. Plans						Non-U.S. Plans						Total
Three months ended June 30,	2009			2008			2009			2008			2009			2008

Service cost	$	341		$	254		$	1		$	1		$	342		$	255
Interest cost		955			714			26			36			981			750
Amortization of unrecognized:
Prior service gain		(81	)		(95	)		—			—			(81	)		(95	)
Loss / (Gain)		177			71			(9	)		(1	)		168			70

Non-pension postretirement benefit expense	$	1,392		$	944		$	18		$	36		$	1,410		$	980


	U.S. Plans						Non-U.S. Plans						Total
Six months ended June 30,	2009			2008			2009			2008			2009			2008

Service cost	$	666		$	550		$	1		$	1		$	667		$	551
Interest cost		1,892			1,427			55			64			1,947			1,491
Amortization of unrecognized:
Prior service cost (gain)		(209	)		(231	)		—			—			(209	)		(231	)
Loss / (Gain)		382			119			(17	)		(16	)		365			103

Non-pension postretirement benefit expense	$	2,731		$	1,865		$	39		$	49		$	2,770		$	1,914

In 2009, we expect to utilize approximately $18.0 million to fund our pension plans and pay for non-pension postretirement benefits. Of that amount, $4.0 million and $8.1 million was utilized in the three months and six months ended June 30, 2009.

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

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


	Three Months Ended June 30,					Six months Ended June 30,
	2009		2008			2009			2008

Numerator for earnings per share — net income (loss ) that is available to common shareholders	$	2,664	$	(2,119	)	$	(25,229	)	$	(5,596	)

Denominator for basic earnings per share — weighted average shares outstanding		14,881,521		14,645,105			14,811,592			14,612,306

Effect of dilutive securities (1)		269,147		—			—			—

Denominator for diluted earnings per share — adjusted weighted average shares and assumed conversions		15,150,668		14,645,105			14,811,592			14,612,306

Basic earnings (loss) per share	$	0.18	$	(0.14	)	$	(1.70	)	$	(0.38	)

Diluted earnings (loss) per share	$	0.18	$	(0.14	)	$	(1.70	)	$	(0.38	)


(1)		The effect of employee stock options, warrants, restricted stock units and the employee stock purchase plan (ESPP) (243,236 shares for the six months ended June 30, 2009, and 285,799 and 330,641 shares for the three months and six months ended June 30, 2008, respectively),wasanti-dilutive and thus not included in the earnings per share calculation. These amounts would have been dilutive if not for the net loss.

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

9. Derivatives

We utilize derivative financial instruments to hedge certain interest rate risks associated with our long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with transactions denominated in a currency other than the U.S. dollar. Most of these derivatives, except for certain natural gas contracts originally designated to expected purchases at Syracuse China and the foreign currency contracts, qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. Changes in fair value of these hedges are recorded in Other Comprehensive Income (OCI). While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that the forecasted transactions will occur, the changes in the fair value of the derivatives used as hedges will be reflected in our earnings. All of these contracts were accounted for under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133).

We use Interest Rate Protection Agreements (Rate Agreements) to manage our exposure to variable interest rates. These Rate Agreements effectively convert a portion of our borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of

interest rate changes on future results. These instruments are valued using 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.

We also use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts and other derivatives is to limit the fluctuations in prices paid due to adverse price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, up to eighteen months in the future. The fair values of these instruments are determined from market quotes. Certain of our natural gas futures contracts are now classified as ineffective, as the forecasted transactions are not probable of occurring due to the closure of our Syracuse China facility in April 2009.

Our foreign currency exposure arises from transactions denominated in a currency other than the U.S. dollar, primarily associated with anticipated purchases of new equipment or net investment in a foreign operation. 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.

Notional Amounts

As of June 30, 2009, we had commodity contracts for 3,810,000 million British Thermal Units (BTUs) of natural gas. We also had Interest Rate Protection Agreements for $200.0 million of our variable rate debt, as discussed in Note 4. At December 31, 2008, we had Interest Rate Protection Agreements for $200.0 million of variable rate debt and commodity contracts for 5,280,000 million BTUs of natural gas. In January 2008, we entered into a series of foreign currency contracts to sell Canadian dollars. As of June 30, 2008, we had contracts for 4.5 million Canadian dollars. During April 2007, we entered into a foreign currency contract for 212.0 million pesos for a contractual payment due to Vitro in January 2008. As of December 31, 2008, all of these currency contracts had expired.

Fair Values

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

Liability Derivatives:

June 30, 2009

December 31, 2008

Balance

Sheet

Fair

Sheet

Fair

Location

Value

Location

Value

Derivatives designated as hedging instruments under SFAS 133:

Interest rate contracts

Derivative liability

4,030

Derivative liability

6,761

Natural gas contracts

Derivative liability

9,607

Derivative liability

10,908

Natural gas contracts

Other long term liability

2,817

Other long term liability

3,500

Total designated

16,454

21,169

Derivatives undesignated as hedging instruments under SFAS 133:

Interest rate contracts

Derivative liability

—

Derivative liability

—

Natural gas contracts

Derivative liability

371

Derivative liability

267

Natural gas contracts

Other long term liability

100

Other long term liability

193

Total undesignated

471

460

Total

16,925

21,629

Change in value of derivatives

Most of our derivatives qualify and are designated as cash flow hedges (except certain natural gas contracts originally designated to expected purchases at Syracuse China) at June 30, 2009. 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. The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings.


	Amount of derivative gain/(loss) recognized in OCI (effective portion)
	Three months ended June 30,					Six months ended June 30,
	2009			2008		2009			2008

Derivatives in Cash Flow Hedging relationships:
Interest rate contracts	$	1,433		$	3,745	$	2,929		$	(174	)
Natural gas contracts		(340	)		3,724		(6,761	)		7,986

Total	$	1,093		$	7,469	$	(3,832	)	$	7,812


		Gain / (loss) reclassified from Accumulated Other
		Comprehensive Income (loss) to income (effective portion)
		Three months ended June 30,					Six months ended June 30,
		2009			2008		2009			2008

Derivative:	Location:
Natural gas contracts	Cost of sales	$	(4,970	)	$	1,585	$	(8,744	)	$	453
Interest rate contracts	Interest expense		1,583			720		2,903			951

	Total impact on net income (loss)	$	(3,387	)	$	2,305	$	(5,841	)	$	1,404

Certain of our natural gas futures contracts are now classified as ineffective, as the forecasted transactions are not probable of occurring due to the closure of our Syracuse China facility in April 2009 as well as decreased production at some of our plants. As a result, we recorded a credit of $0.3 million in the three months ended June 30, 2009 and expense of $0.1 million in the six months ended June 30, 2009. Expenses reclassified from Accumulated Other Comprehensive Income to earnings during the three and six months ended June 30, 2009 were immaterial.

The following table provides the impact on the Condensed Consolidated Statement of Operations from derivatives no longer designated as cash flow hedges:


		Gain (loss) recognized in income (ineffective portion)
		Three months ended June 30,				Six months ended June 30,
		2009		2008		2009			2008

Derivative:	Location:
Natural gas contracts	Other (expense) income	$	290	$	—	$	(109	)	$	—

Total		$	290	$	—	$	(109	)	$	—

As the natural gas contracts mature, the accumulated gains (losses) for the respective contracts are reclassified from accumulated other comprehensive income to current expense in cost of sales in our Condensed Consolidated Statement of Operations. Similarly, as fixed interest payments are made pursuant to the interest rate protection agreements, they are recorded together with the related receipt of variable interest receipts, the payment of contractual interest expense to the banks and the reclassification of accumulated gains (losses) from accumulated other comprehensive income related to the interest rate agreements. Based on our current valuation, we estimate that accumulated losses currently carried in accumulated other comprehensive income that will be reclassified into earnings over the next twelve months will result in $14.0 million of expense in our Condensed Consolidated Statement of Operations.

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


		Three months ended June 30,					Six months ended June 30,
		2009		2008			2009		2008

Derivative:	Location:
Currency contracts	Other (expense) income	$	—	$	(113	)	$	—	$	(283	)

		$	—	$	(113	)	$	—	$	(283	)

We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate and natural gas hedges, as the counterparties are established financial institutions. The counterparties are rated A+ or better for the Interest Rate Protection Agreements and BBB or better for the other derivative agreements as of June 30, 2009, by Standard and Poor’s.

10. Comprehensive Income (Loss)

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


	Three months ended					Six months ended
	June 30,					June 30,
	2009		2008			2009			2008

Net income (loss)	$	2,664	$	(2,119	)	$	(25,229	)	$	(5,596	)
Change in pension and nonpension postretirement liability (1)		5,436		(2,074	)		4,481			(3,131	)
Change in fair value of derivatives (2)		4,431		3,991			2,642			4,943
Exchange rate fluctuations		3,900		(95	)		(170	)		6,932

Total comprehensive income (loss)	$	16,431	$	(297	)	$	(18,276	)	$	3,148


(1) Net of the following tax amounts for the respective periods	$	(3,741	)	$	1,155		$	(6,316	)	$	1,561
(2) Net of the following tax amounts for the respective periods	$	(1,633	)	$	(1,893	)	$	(2,271	)	$	(2,416	)

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


	June 30,			December 31,
	2009			2008

Minimum pension liability and intangible pension asset	$	(98,926	)	$	(103,407	)
Derivatives		(13,968	)		(16,610	)
Exchange rate fluctuations		4,061			4,231

Balance at end of period	$	(108,833	)	$	(115,786	)

11. Condensed Consolidated Guarantor Financial Statements

Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and the issuer of the Senior Notes and the PIK Notes. The obligations of Libbey Glass under the Senior Notes and the PIK Notes are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain indirect, 100 percent owned domestic subsidiaries of Libbey Inc., as described below. All are related parties that are included in the Condensed Consolidated Financial Statements for the three month and six months periods ended June 30, 2009 and June 30, 2008.

At June 30, 2009, December 31, 2008 and June 30, 2008, Libbey Inc.’s indirect, 100 percent owned domestic subsidiaries were Syracuse China Company, World Tableware Inc., LGA4 Corp., LGA3 Corp., The Drummond Glass Company, LGC Corp., Traex Company, Libbey.com LLC, LGFS Inc., LGAC LLC and Crisa Industrial LLC (collectively, the “Subsidiary Guarantors”). The

following tables contain Condensed Consolidating Financial Statements of (a) the parent, Libbey Inc., (b) the issuer, Libbey Glass, (c) the Subsidiary Guarantors, (d) the indirect subsidiaries of Libbey Inc. that are not Subsidiary Guarantors (collectively, “Non-Guarantor Subsidiaries”), (e) the consolidating elimination entries, and (f) the consolidated totals.

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


Three months ended June 30, 2009
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated

Net sales	$	—	$	102,180		$	24,341		$	77,707		$	(8,402	)	$	195,826
Freight billed to customers		—		141			222			36			—			399

Total revenues		—		102,321			24,563			77,743			(8,402	)		196,225
Cost of sales		—		77,641			18,823			73,880			(8,402	)		161,942

Gross profit		—		24,680			5,740			3,863			—			34,283
Selling, general and administrative expenses		—		12,353			2,158			8,003			—			22,514
Special charges		—		(29	)		307			—			—			278

Income (loss) from operations		—		12,356			3,275			(4,140	)		—			11,491
Other income (expense)		—		2,248			129			381			—			2,758

Earnings (loss) before interest and income taxes		—		14,604			3,404			(3,759	)		—			14,249
Interest expense		—		16,017			—			1,515			—			17,532

Earnings (loss) before income taxes		—		(1,413	)		3,404			(5,274	)		—			(3,283	)
Provision (benefit) for income taxes		—		(4,623	)		(82	)		(1,242	)		—			(5,947	)

Net income (loss)		—		3,210			3,486			(4,032	)		—			2,664
Equity in net income (loss) of subsidiaries		2,664		(546	)		—			—			(2,118	)		—

Net income (loss)	$	2,664	$	2,664		$	3,486		$	(4,032	)	$	(2,118	)	$	2,664

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


Three months ended June 30, 2009
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries		Eliminations		Consolidated


Cost of sales	$	—	$	1		$	(3	)	$	—	$	—	$	(2	)
Special charges		—		(29	)		307			—		—		278
Other income (expense)		—		—			43			—		—		43

Total pretax special charges	$	—	$	(28	)	$	261		$	—	$	—	$	233

Special charges net of tax	$	—	$	(28	)	$	261		$	—	$	—	$	233

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


Three months ended June 30, 2008
	Libbey			Libbey					Non-
	Inc.			Glass			Subsidiary		Guarantor
	(Parent)			(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated

Net sales	$	—		$	107,328		$	30,120	$	100,728	$	(13,348	)	$	224,828
Freight billed to customers		—			195			308		112		—			615

Total revenues		—			107,523			30,428		100,840		(13,348	)		225,443
Cost of sales		—			85,313			23,769		87,541		(13,348	)		183,275

Gross profit		—			22,210			6,659		13,299		—			42,168
Selling, general and administrative expenses		—			12,466			3,099		7,886		—			23,451

Income (loss) from operations		—			9,744			3,560		5,413		—			18,717
Other income (expense)		—			(91	)		3		674		—			586

Earnings (loss) before interest and income taxes		—			9,653			3,563		6,087		—			19,303
Interest expense		—			15,834			1		1,785		—			17,620

Earnings (loss) before income taxes		—			(6,181	)		3,562		4,302		—			1,683
Provision (benefit) for income taxes		—			(26	)		—		3,828		—			3,802

Net income (loss)		—			(6,155	)		3,562		474		—			(2,119	)
Equity in net income (loss) of subsidiaries		(2,119	)		4,036			—		—		(1,917	)		—

Net income (loss)	$	(2,119	)	$	(2,119	)	$	3,562	$	474	$	(1,917	)	$	(2,119	)

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


Six months ended June 30, 2009
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated

Net sales	$	—		$	184,946		$	45,718		$	140,816		$	(17,801	)	$	353,679
Freight billed to customers		—			252			427			65			—			744

Total revenues		—			185,198			46,145			140,881			(17,801	)		354,423
Cost of sales		—			154,564			38,719			133,942			(17,801	)		309,424

Gross profit		—			30,634			7,426			6,939			—			44,999
Selling, general and administrative expenses		—			24,853			4,334			15,701			—			44,888
Special charges		—			(27	)		701			—			—			674

Income (loss) from operations		—			5,808			2,391			(8,762	)		—			(563	)
Other income (expense)		—			2,194			(133	)		660			—			2,721

Earnings (loss) before interest and income taxes		—			8,002			2,258			(8,102	)		—			2,158
Interest expense		—			31,905			—			2,806			—			34,711

Earnings (loss) before income taxes		—			(23,903	)		2,258			(10,908	)		—			(32,553	)
Provision (benefit) for income taxes		—			(5,710	)		254			(1,868	)		—			(7,324	)

Net income (loss)		—			(18,193	)		2,004			(9,040	)		—			(25,229	)
Equity in net income (loss) of subsidiaries		(25,229	)		(7,036	)		—			—			32,265			—

Net income (loss)	$	(25,229	)	$	(25,229	)	$	2,004		$	(9,040	)	$	32,265		$	(25,229	)

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


Six months ended June 30, 2009
	Libbey		Libbey						Non-
	Inc.		Glass			Subsidiary			Guarantor
	(Parent)		(Issuer)			Guarantors			Subsidiaries		Eliminations		Consolidated

Cost of sales	$	—	$	1		$	1,820		$	—	$	—	$	1,821
Special charges		—		(27	)		701			—		—		674
Other income (expense)		—		—			(186	)		—		—		(186	)

Total pretax special charges	$	—	$	(26	)	$	2,707		$	—	$	—	$	2,681

Special charges net of tax	$	—	$	(26	)	$	2,707		$	—	$	—	$	2,681

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


Six months ended June 30, 2008
	Libbey			Libbey					Non-
	Inc.			Glass			Subsidiary		Guarantor
	(Parent)			(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated

Net sales	$	—		$	197,315		$	56,703	$	184,783	$	(26,697	)	$	412,104
Freight billed to customers		—			367			611		305		—			1,283

Total revenues		—			197,682			57,314		185,088		(26,697	)		413,387
Cost of sales		—			165,088			44,419		158,072		(26,697	)		340,882

Gross profit		—			32,594			12,895		27,016		—			72,505
Selling, general and administrative expenses		—			23,309			5,708		15,293		—			44,310

Income (loss) from operations		—			9,285			7,187		11,723		—			28,195
Other income (expense)		—			242			41		1,056		—			1,339

Earnings (loss) before interest and income taxes		—			9,527			7,228		12,779		—			29,534
Interest expense		—			31,527			1		3,243		—			34,771

Earnings (loss) before income taxes		—			(22,000	)		7,227		9,536		—			(5,237	)
Provision (benefit) for income taxes		—			(346	)		563		142		—			359

Net income (loss)		—			(21,654	)		6,664		9,394		—			(5,596	)
Equity in net income (loss) of subsidiaries		(5,596	)		16,058			—		—		(10,462	)		—

Net income (loss)	$	(5,596	)	$	(5,596	)	$	6,664	$	9,394	$	(10,462	)	$	(5,596	)

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


June 30, 2009 (unaudited)
	Libbey			Libbey					Non-
	Inc.			Glass			Subsidiary		Guarantor
	(Parent)			(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated

Cash and equivalents	$	—		$	11,784		$	261	$	12,037	$	—		$	24,082
Accounts receivable — net		—			37,735			6,697		46,820		—			91,252
Inventories — net		—			40,187			20,761		84,850		—			145,798
Other current assets		—			12,316			10,758		9,385		(20,062	)		12,397

Total current assets		—			102,022			38,477		153,092		(20,062	)		273,529
Other non-current assets		—			11,162			—		10,374		—			21,536
Investments in and advances to subsidiaries		(74,475	)		422,233			269,516		128,545		(745,819	)		—
Goodwill and purchased intangible assets — net		—			26,833			15,775		147,617		—			190,225

Total other assets		(74,475	)		460,228			285,291		286,536		(745,819	)		211,761
Property, plant and equipment — net		—			84,067			6,301		211,748		—			302,116

Total assets	$	(74,475	)	$	646,317		$	330,069	$	651,376	$	(765,881	)	$	787,406

Accounts payable	$	—		$	11,012		$	2,688	$	40,785	$	—		$	54,485
Accrued and other current liabilities		—			69,302			23,226		19,580		(20,062	)		92,046
Notes payable and long-term debt due within one year		—			215			—		11,108		—			11,323

Total current liabilities		—			80,529			25,914		71,473		(20,062	)		157,854
Long-term debt		—			464,501			—		67,208		—			531,709
Other long-term liabilities		—			130,726			11,651		29,941		—			172,318

Total liabilities		—			675,756			37,565		168,622		(20,062	)		861,881
Total shareholders’ equity		(74,475	)		(29,439	)		292,504		482,754		(745,819	)		(74,475	)

Total liabilities and shareholders’ equity	$	(74,475	)	$	646,317		$	330,069	$	651,376	$	(765,881	)	$	787,406


December 31, 2008
	Libbey			Libbey					Non-
	Inc.			Glass			Subsidiary		Guarantor
	(Parent)			(Issuer)			Guarantors		Subsidiaries		Eliminations			Consolidated

Cash and equivalents	$	—		$	6,453		$	413	$	6,438	$	—		$	13,304
Accounts receivable — net		—			32,789			6,076		37,207		—			76,072
Inventories — net		—			58,924			26,892		99,426		—			185,242
Other current assets		—			4,731			316		12,120		—			17,167

Total current assets		—			102,897			33,697		155,191		—			291,785
Other non-current assets		—			9,462			43		12,560		—			22,065
Investments in and advances to subsidiaries		(57,889	)		406,812			272,761		143,459		(765,143	)		—
Goodwill and purchased intangible assets — net		—			28,216			15,780		148,861		—			192,857

Total other assets		(57,889	)		444,490			288,584		304,880		(765,143	)		214,922
Property, plant and equipment — net		—			88,628			7,697		218,522		—			314,847

Total assets	$	(57,889	)	$	636,015		$	329,978	$	678,593	$	(765,143	)	$	821,554

Accounts payable	$	—		$	9,370		$	2,794	$	42,264	$	—		$	54,428
Accrued and other current liabilities		—			36,589			19,700		35,908		—			92,197
Notes payable and long-term debt due within one year		—			215			—		4,186		—			4,401

Total current liabilities		—			46,174			22,494		82,358		—			151,026
Long-term debt		—			451,772			—		94,084		—			545,856
Other long-term liabilities		—			140,936			14,185		27,440		—			182,561

Total liabilities		—			638,882			36,679		203,882		—			879,443
Total shareholders’ equity		(57,889	)		(2,867	)		293,299		474,711		(765,143	)		(57,889	)

Total liabilities and shareholders’ equity	$	(57,889	)	$	636,015		$	329,978	$	678,593	$	(765,143	)	$	821,554

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


Three months ended June 30, 2009
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated

Net income (loss)	$	2,664		$	2,664		$	3,486		$	(4,032	)	$	(2,118	)	$	2,664
Depreciation and amortization		—			3,848			243			6,427			—			10,518
Other operating activities		(2,664	)		(1,880	)		(3,707	)		17,657			2,118			11,524

Net cash provided by (used in)
operating activities		—			4,632			22			20,052			—			24,706
Additions to property, plant & equipment		—			(1,997	)		(54	)		(2,559	)		—			(4,610	)
Other investing activities		—			21			—			—			—			21


Net cash (used in) investing activities		—			(1,976	)		(54	)		(2,559	)		—			(4,589	)
Net borrowings		—			(79	)		—			(12,730	)		—			(12,809	)
Other financing activities		—			—			—			—			—			—

Net cash provided by (used in) financing activities		—			(79	)		—			(12,730	)		—			(12,809	)
Exchange effect on cash		—			—			—			311			—			311

Increase (decrease) in cash		—			2,577			(32	)		5,074			—			7,619
Cash at beginning of period		—			9,207			293			6,963			—			16,463

Cash at end of period	$	—		$	11,784		$	261		$	12,037		$	—		$	24,082


Three months ended June 30, 2008
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated

Net income (loss)	$	(2,119	)	$	(2,119	)	$	3,562		$	474		$	(1,917	)	$	(2,119	)
Depreciation and amortization		—			3,638			754			6,846			—			11,238
Other operating activities		2,119			6,347			(3,801	)		(10,621	)		1,917			(4,039	)

Net cash provided by (used in)
operating activities		—			7,866			515			(3,301	)		—			5,080
Additions to property, plant & equipment		—			(2,670	)		(240	)		(5,350	)		—			(8,260	)
Other investing activities		—			5			—			—			—			5


Net cash (used in) investing activities		—			(2,665	)		(240	)		(5,350	)		—			(8,255	)
Net borrowings		—			4,221			—			9,693			—			13,914
Other financing activities		—			(365	)		—			—			—			(365	)

Net cash provided by (used in) financing activities		—			3,856			—			9,693			—			13,549
Exchange effect on cash		—			—			—			(93	)		—			(93	)

Increase (decrease) in cash		—			9,057			275			949			—			10,281
Cash at beginning of period		—			363			1,041			6,198			—			7,602

Cash at end of period	$	—		$	9,420		$	1,316		$	7,147		$	—		$	17,883

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


Six months ended June 30, 2009
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated

Net income (loss)	$	(25,229	)	$	(25,229	)	$	2,004		$	(9,040	)	$	32,265		$	(25,229	)
Depreciation and amortization		—			7,776			1,586			12,884			—			22,246
Other operating activities		25,229			26,139			(3,528	)		26,498			(32,265	)		42,073

Net cash provided by (used in) operating activities		—			8,686			62			30,342			—			39,090
Additions to property, plant & equipment		—			(3,361	)		(214	)		(5,975	)		—			(9,550	)
Other investing activities		—			88			—			—			—			88


Net cash (used in) investing activities		—			(3,273	)		(214	)		(5,975	)		—			(9,462	)
Net borrowings		—			(82	)		—			(18,730	)		—			(18,812	)
Other financing activities		—			—			—			—			—			—

Net cash provided by (used in) financing activities		—			(82	)		—			(18,730	)		—			(18,812	)
Exchange effect on cash		—			—			—			(38	)		—			(38	)

Increase (decrease) in cash		—			5,331			(152	)		5,599			—			10,778
Cash at beginning of period		—			6,453			413			6,438			—			13,304

Cash at end of period	$	—		$	11,784		$	261		$	12,037		$	—		$	24,082


Six months ended June 30, 2008
	Libbey			Libbey						Non-
	Inc.			Glass			Subsidiary			Guarantor
	(Parent)			(Issuer)			Guarantors			Subsidiaries			Eliminations			Consolidated

Net income (loss)	$	(5,596	)	$	(5,596	)	$	6,664		$	9,394		$	(10,462	)	$	(5,596	)
Depreciation and amortization		—			7,520			1,510			13,504			—			22,534
Other operating activities		5,596			(10,800	)		(7,035	)		(38,220	)		10,462			(39,997	)

Net cash provided by (used in) operating activities		—			(8,876	)		1,139			(15,322	)		—			(23,059	)
Additions to property, plant & equipment		—			(5,990	)		(355	)		(11,267	)		—			(17,612	)
Other investing activities		—			46			—			—			—			46


Net cash (used in) investing activities		—			(5,944	)		(355	)		(11,267	)		—			(17,566	)
Net borrowings		—			4,135			—			18,374			—			22,509
Other financing activities		—			(729	)		—			—			—			(729	)

Net cash provided by (used in) financing activities		—			3,406			—			18,374			—			21,780
Exchange effect on cash		—			—			—			189			—			189

Increase (decrease) in cash		—			(11,414	)		784			(8,026	)		—			(18,656	)
Cash at beginning of period		—			20,834			532			15,173			—			36,539

Cash at end of period	$	—		$	9,420		$	1,316		$	7,147		$	—		$	17,883

12. Segments

Our segments are described as follows:

•		North American Glass—includes sales of glass tableware from subsidiaries throughout the United States, Canada and Mexico.

•		North American Other—includes sales of ceramic dinnerware; metal tableware, hollowware and serveware; and plastic items from subsidiaries in the United States.

•		International—includes worldwide sales of glass tableware from subsidiaries outside the United States, Canada and Mexico.

Some operating segments were aggregated to arrive at the disclosed reportable segments. The accounting policies of the segments are the same as those described in Note 2 of the Notes to Condensed Consolidated Financial Statements. We do not have any customers who represent 10 percent or more of total net sales. We evaluate the performance of our segments based upon net sales and Earnings Before Interest and Taxes (EBIT). Intersegment sales are consummated at arm’s length and are reflected in eliminations in the table below.


	Three months ended June 30,						Six months ended June 30,
	2009			2008			2009			2008

Net Sales:
North American Glass	$	137,744		$	155,013		$	246,487		$	282,490
North American Other		24,341			30,120			45,718			56,703
International		34,533			41,765			63,384			78,152
Eliminations		(792	)		(2,070	)		(1,910	)		(5,241	)

Consolidated	$	195,826		$	224,828		$	353,679		$	412,104

EBIT:
North American Glass	$	11,758		$	14,938		$	3,133		$	22,010
North American Other		3,430			3,641			2,310			7,459
International		(939	)		724			(3,285	)		65

Consolidated	$	14,249		$	19,303		$	2,158		$	29,534

Special Charges:
North American Glass	$	(28	)	$	—		$	(26	)	$	—
North American Other		261			—			2,707			—
International		—			—			—			—

Consolidated	$	233		$	—		$	2,681		$	—

Depreciation & Amortization:
North American Glass	$	6,336		$	6,425		$	12,783		$	12,978
North American Other		243			755			1,586			1,511
International		3,939			4,058			7,877			8,045

Consolidated	$	10,518		$	11,238		$	22,246		$	22,534

Capital Expenditures:
North American Glass	$	2,622		$	4,983		$	5,141		$	10,692
North American Other		54			241			214			356
International		1,934			3,036			4,195			6,564

Consolidated	$	4,610		$	8,260		$	9,550		$	17,612

Reconciliation of EBIT to Net Income (Loss):
Segment EBIT	$	14,249		$	19,303		$	2,158		$	29,534
Interest Expense		(17,532	)		(17,620	)		(34,711	)		(34,771	)
Benefit from (provision for) Income Taxes		5,947			(3,802	)		7,324			(359	)

Net Income (Loss)	$	2,664		$	(2,119	)	$	(25,229	)	$	(5,596	)

13. Fair Value

We adopted SFAS 157 as of January 1, 2008, but we had not applied the statement to non-recurring, nonfinancial assets and liabilities. We adopted SFAS 157 for nonrecurring, nonfinancial assets and liabilities as of January 1, 2009. The adoption of SFAS 157 had no impact on our fair value measurements. SFAS 157 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. SFAS 157 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

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

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

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


	Fair Value at June 30, 2009										Fair Value at December 31, 2008
	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total


Commodity futures natural gas contracts	$	—	$	(12,895	)	$	—	$	(12,895	)	$	—	$	(14,868	)	$	—	$	(14,868	)
Interest rate protection agreements		—		(4,030	)		—		(4,030	)		—		(6,761	)		—		(6,761	)

Total derivative liability	$	—	$	(16,925	)	$	—	$	(16,925	)	$	—	$	(21,629	)	$	—	$	(21,629	)

The fair values of our interest rate protection agreements are based on 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. The fair values of our commodity futures natural gas contracts are determined using observable market inputs. Since these inputs are observable in active markets over the terms that the instruments are held, the derivatives are classified as Level 2 in the hierarchy. We also evaluate Company and counterparty risk in determining fair values. The total derivative liability is recorded on the Condensed Consolidated Balance Sheets with $14.0 million in derivative liability and $2.9 million in other long-term liabilities as of June 30, 2009. As of December 31, 2008 $17.9 million was recorded in derivative liability and $3.7 million in other long-term liabilities.

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

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

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

Overview

Market conditions continue to be challenging. While comparisons to the record setting sales performance of the second quarter and first half of 2008 are dramatic, we have begun to see the results of our cash flow enhancements outlined on February 11, 2009. We have reduced capital spending, reduced production levels in response to the reduced demand in our markets, reduced our overall costs and reduced our investment in inventories during the first half of the year, a period which historically has seen a buildup of inventories in anticipation of normally higher sales in the second half of the year. The decreased production levels have caused pressure on our margins as certain fixed costs could not be reduced to the same extent as sales, but we have placed a higher priority on liquidity in the near term. We continue to see improvements in the trend of our retail business; however, at this time we expect that the eventual recovery of our other markets will occur slowly. We will continue to monitor our customer markets, and as the economy stabilizes we are prepared to adjust production levels accordingly, which should lead to improved profitability as the margin pressures described above begin to reverse.

Results of Operations — Second Quarter 2009 Compared with Second Quarter 2008


	Three months ended June 30,						Variance
(Dollars in thousands, except percentages and per-share amounts)	2009(2)			2008			In dollars			In percent

Net sales	$	195,826		$	224,828		$	(29,002	)		(12.9	)%
Gross profit	$	34,283		$	42,168		$	(7,885	)		(18.7	)%
Gross profit margin		17.5	%		18.8	%
Income from operations (IFO)	$	11,491		$	18,717		$	(7,226	)		(38.6	)%
IFO margin		5.9	%		8.3	%
Earnings before interest and income taxes (EBIT)(1)	$	14,249		$	19,303		$	(5,054	)		(26.2	)%
EBIT margin		7.3	%		8.6	%
Earnings before interest, taxes, depreciation and
amortization (EBITDA)(1)	$	24,767		$	30,541		$	(5,774	)		(18.9	)%
EBITDA margin		12.6	%		13.6	%
Net income (loss)	$	2,664		$	(2,119	)	$	4,783			225.7	%
Net income (loss) margin		1.4	%		(0.9	)%
Diluted net income (loss) per share	$	0.18		$	(0.14	)	$	0.32			228.6	%


(1)		We believe that EBIT and EBITDA, non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. See Table 1 for a reconciliation of net loss to EBIT and EBITDA and a further discussion as to the reasons we believe these non-GAAP financial measures are useful.

(2)		Includes pre-tax special charges of $0.2 million related to the closing of our Syracuse China manufacturing facility and our Mira Loma distribution center. (See note 5 to the Condensed Consolidated Financial Statements).

Net Sales

For the quarter ended June 30, 2009, net sales decreased 12.9 percent to $195.8 million from record second quarter sales of $224.8 million in the year-ago quarter. North American Glass net shipments decreased 11.1 percent to $137.7 million from $155.0 million in the year-ago quarter. The decrease in sales was primarily attributable to a 27.9 percent decrease in shipments to Crisa customers (15.1 percent excluding the currency impact of the Mexican peso.) In addition, a 7.1 percent decline in shipments to U.S and Canadian foodservice customers was offset by a 6.9 percent increase in shipments to U.S. retail glassware customers. North American Other net

sales decreased 19.2 percent due to a decline in shipments of World Tableware, Syracuse China and Traex products. International net sales decreased 17.3 percent compared to the year-ago quarter as a 4.6% increase in shipments to Libbey China customers was offset by unfavorable currency impact in Europe, which caused slightly more than half of the overall decline due to the weaker euro when compared to the U.S. dollar. Excluding the currency impact, International sales decreased 7.9 percent, as shipments to Royal Leerdam and Crisal glassware customers declined when compared to the prior year period.

Gross Profit

For the quarter ended June 30, 2009, gross profit decreased by $7.9 million, or 18.7 percent, to $34.3 million, compared to $42.2 million in the year-ago quarter. Gross profit as a percentage of net sales decreased to 17.5 percent, compared to 18.8 percent in the year-ago quarter. The unfavorable mix and lower level of net sales, particularly in Mexico, resulted in $3.7 million of the decline in gross profit, and lower production activity offset by reduced manufacturing costs contributed another $3.3 million to the decrease as a significant portion of these expenses are fixed, and could not be reduced to the same extent as net sales. Also, an unfavorable currency impact resulted in $6.8 million of the decline in gross profit. These unfavorable items were offset by a reduction of $5.0 million in our distribution costs.

Income From Operations

Income from operations for the quarter ended June 30, 2009 decreased $7.2 million, to $11.5 million, compared to $18.7 million in the year-ago quarter. Income from operations as a percentage of net sales decreased to 5.9 percent in the second quarter 2009, compared to 8.3 percent in the year-ago quarter. The decline in income from operations is a result of lower gross profit and gross profit margin (discussed above), and a $0.3 million special charge related to the Syracuse China shutdown, offset by a decrease of $1.4 million in selling, general and administrative expenses. The $1.4 million decrease in selling, general and administrative expenses was caused primarily by a favorable currency impact of $1.2 million.

Earnings Before Interest and Income Taxes (EBIT)

Earnings before Interest and Income Taxes (EBIT) decreased by $5.1 million, from $19.3 million in 2008, to $14.2 million in 2009. EBIT as a percentage of net sales decreased to 7.3 percent in the second quarter 2009, compared to 8.6 percent in the year-ago quarter. Key contributors to the decrease in EBIT compared to the year-ago quarter are the same as those discussed above under Income From Operations, offset by a favorable swing in foreign currency translation versus the prior year quarter of approximately $1.6 million.

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

EBITDA decreased by 18.9 percent to $24.8 million in the second quarter of 2009 from $30.5 million in the year-ago quarter. As a percentage of net sales, EBITDA was 12.6 percent for the second quarter 2009, compared to 13.6 percent in the year-ago quarter. The key contributors to the decrease in EBITDA were those factors discussed above under Earnings before Interest and Income Taxes (EBIT). In addition, EBITDA does not include the benefit of a $0.7 million decrease in depreciation and amortization expenses, approximately half of which is due to the shutdown of our Syracuse China operations, with the remainder being due to our lower rate of capital spending.

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

We recorded net income of $2.7 million, or $0.18 per diluted share, in the second quarter 2009, compared to a net loss of $(2.1) million, or $(0.14) per diluted share, in the year-ago quarter. Net income (loss) as a percentage of net sales was 1.4 percent in the second quarter 2009, compared to (0.9) percent in the year-ago quarter. The effective tax rate provided a 181.1 percent benefit for the quarter compared to a 225.9 percent expense in the year-ago quarter, due primarily to a $3.6 million tax benefit related to the required intra-period tax allocation between loss from operations and other comprehensive income in the U.S. in the current quarter and a $1.5 million benefit related to adjustments in tax reserves due to the completion of a U.S. federal income tax examination, both recorded in the current quarter. The Company’s effective tax rate also changed from the year-ago quarter as a result of valuation allowances in the United States, the Netherlands, and Portugal. Further, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws have also impacted the effective tax rate, and could cause more volatility in the future.

Results of Operations — First Six Months 2009 Compared with First Six Months 2008


	Six months ended June 30,						Variance
(Dollars in thousands, except percentages and per-share amounts)	2009(2)			2008			In dollars			In percent

Net sales	$	353,679		$	412,104		$	(58,425	)		(14.2	)%
Gross profit	$	44,999		$	72,505		$	(27,506	)		(37.9	)%
Gross profit margin		12.7	%		17.6	%
(Loss) income from operations (IFO)	$	(563	)	$	28,195		$	(28,758	)		(102.0	)%
IFO margin		(0.2	)%		6.8	%
Earnings before interest and income taxes (EBIT)(1)	$	2,158		$	29,534		$	(27,376	)		(92.7	)%
EBIT margin		0.6	%		7.2	%
Earnings before interest, taxes, depreciation and
amortization (EBITDA)(1)	$	24,404		$	52,068		$	(27,664	)		(53.1	)%
EBITDA margin		6.9	%		12.6	%
Net loss	$	(25,229	)	$	(5,596	)	$	(19,633	)		(350.8	)%
Net income margin		(7.1	)%		(1.4	)%
Diluted net loss per share	$	(1.70	)	$	(0.38	)	$	(1.32	)		(347.4	)%


(1)		We believe that EBIT and EBITDA, non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. See Table 1 for a reconciliation of net loss to EBIT and EBITDA and a further discussion as to the reasons we believe these non-GAAP financial measures are useful.

(2)		Includes pre-tax special charges of $2.7 million related to the closing of our Syracuse China manufacturing facility and our Mira Loma distribution center. (See note 5 to the Condensed Consolidated Financial Statements).

Net Sales

For the six months ended June 30, 2009, net sales decreased 14.2 percent to $353.7 million from sales of $412.1 million in the year-ago period. North American Glass net sales decreased 12.7 percent, due primarily to a decrease of 28.5 percent in shipments to Crisa customers and a decline of 5.9 percent in shipments to U.S. and Canadian foodservice glassware customers. Approximately 13.0 percent, or nearly half of the 28.5 percent reduction at Crisa, was related to the devaluation of the Mexican peso. Due in part to a strong second quarter, our U.S. Retail sales were nearly equal to the record sales levels of the first half of last year. North American Other net sales decreased 19.4 percent due to a decline in shipments of World Tableware, Syracuse China and Traex products. International net sales decreased 18.9 percent compared to the year-ago period, including 9.5 percent due to unfavorable currency impact which resulted primarily from the declining strength of the euro when compared to the U.S. dollar. Excluding the currency impact, International sales decreased 9.4 percent, as shipments to Royal Leerdam and Crisal glassware customers declined when compared to the prior year period.

Gross Profit

For the six months ended June 30, 2009, gross profit decreased by $27.5 million, or 37.9 percent, to $45.0 million, compared to $72.5 million in the year-ago period. Gross profit as a percentage of net sales decreased to 12.7 percent, compared to 17.6 percent in the year-ago period. The unfavorable mix and lower level of net sales, particularly in the U.S., resulted in $9.2 million of the decline in gross profit, and lower production activity offset by reduced manufacturing costs contributed another $14.0 million to the decrease, as a significant portion of these expenses are fixed and could not be reduced to the same extent as net sales. Also, an unfavorable currency impact resulted in $11.8 million of the decline in gross profit. Additional depreciation expense of $0.7 million was recorded to reflect the shorter remaining useful life of the assets and an additional $1.1 million of manufacturing cost was recorded for an inventory write-down related to the closure of our Syracuse China facility. See note 5 for more discussion about these charges. These unfavorable items were offset by a reduction of $7.9 million in our distribution costs.

(Loss) Income From Operations

(Loss) Income from operations for the six months ended June 30, 2009 decreased $28.8 million, to a loss of $(0.6) million, compared to income of $28.2 million in the year-ago period. (Loss) Income from operations as a percentage of net sales decreased to (0.2) percent in the first half of 2009, compared to 6.8 percent in the year-ago period. The decline in income from operations is a result of lower gross profit (discussed above), combined with slightly higher selling, general and administrative expenses and a $0.7 million special charge related to the Syracuse China shutdown. The $0.6 million increase in selling, general and administrative expenses was caused by a $2.7 million pension settlement charge arising from lump sum payments to retirees during the first six months of 2009 and

the 2008 reversal of $1.3 million related to favorable rulings in connection with an outstanding dispute regarding a warehouse lease in Mexico. These increases in selling general and administrative expenses were offset by favorable currency impact of $2.1 million and a decrease in commission expense of $1.3 million.

Earnings Before Interest and Income Taxes (EBIT)

Earnings before Interest and Income Taxes (EBIT) decreased by $27.4 million, from $29.5 million in 2008 to $2.2 million in 2009. EBIT as a percentage of net sales decreased to 0.6 percent in the first half of 2009, compared to 7.2 percent in the year-ago period. Key contributors to the decrease in EBIT compared to the year-ago period are the same as those discussed above under (Loss) Income From Operations offset by a favorable swing in foreign currency translation versus the prior year period of approximately $0.9 million.

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

EBITDA decreased by 53.1 percent to $24.4 million in the first half of 2009 from income of $52.1 million in the year-ago period. As a percentage of net sales, EBITDA was 6.9 percent for the first half of 2009, compared to 12.6 percent in the year-ago period. The key contributors to the decrease in EBITDA were those factors discussed above under Earnings before Interest and Income Taxes (EBIT). In addition, EBITDA does not include the benefit of a $0.3 million decrease in depreciation and amortization expenses.

Net Loss and Diluted Net Loss Per Share

We recorded a net loss of $(25.2) million, or $(1.70) per diluted share, in the first six months of 2009, compared to a net loss of $(5.6) million, or $(0.38) per diluted share, in the year-ago period. Net loss as a percentage of net sales was (7.1) percent in the first half of 2009, compared to (1.4) percent in the year-ago period. In addition, the effective tax rate was 22.5 percent for the period compared to negative 6.9 percent in the year-ago period, due primarily to a $3.9 million tax benefit related to the required intra-period tax allocation between loss from operations and other comprehensive income in the U.S. in the first six months of 2009 and a $1.5 million benefit related to adjustments in tax reserves due to the completion of a U.S. federal income tax examination. The Company’s effective tax rate changed from the year-ago quarter also as a result of valuation allowances in the United States, the Netherlands, and Portugal. Further, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws have also impacted the effective tax rate.

Segment Results of Operations


	Three months ended												Six months ended
	June 30,						Variance						June 30,						Variance

(Dollars in thousands)	2009			2008			In dollars			In percent			2009			2008			In dollars			In percent

Net Sales:
North American Glass	$	137,744		$	155,013		$	(17,269	)		(11.1	)%	$	246,487		$	282,490		$	(36,003	)		(12.7	)%
North American Other		24,341			30,120			(5,779	)		(19.2	)%		45,718			56,703			(10,985	)		(19.4	)%
International		34,533			41,765			(7,232	)		(17.3	)%		63,384			78,152			(14,768	)		(18.9	)%
Eliminations		(792	)		(2,070	)								(1,910	)		(5,241	)

Consolidated	$	195,826		$	224,828		$	(29,002	)		(12.9	)%	$	353,679		$	412,104		$	(58,425	)		(14.2	)%

EBIT:
North American Glass	$	11,758		$	14,938		$	(3,180	)		(21.3	)%	$	3,133		$	22,010		$	(18,877	)		(85.8	)%
North American Other		3,430			3,641			(211	)		(5.8	)%		2,310			7,459			(5,149	)		(69.0	)%
International		(939	)		724			(1,663	)		(229.7	)%		(3,285	)		65			(3,350	)	NM

Consolidated	$	14,249		$	19,303		$	(5,054	)		(26.2	)%	$	2,158		$	29,534		$	(27,376	)		(92.7	)%

EBIT Margin:
North American Glass		8.5	%		9.6	%								1.3	%		7.8	%
North American Other		14.1	%		12.1	%								5.1	%		13.2	%
International		(2.7	)%		1.7	%								(5.2	)%		0.1	%
Consolidated		7.3	%		8.6	%								0.6	%		7.2	%

Special charges:
North American Glass	$	(28	)	$	—		$	(28	)		100.0	%	$	(26	)	$	—		$	(26	)		100.0	%
North American Other		261			—			261			100.0	%		2,707			—			2,707			100.0	%
International		—			—			—		NM				—			—			—		NM

Consolidated	$	233		$	—		$	233			100.0	%	$	2,681		$	—		$	2,681			100.0	%

Segment Results of Operations — Second Quarter 2009 Compared to Second Quarter 2008

North American Glass

For the quarter ended June 30, 2009, net sales decreased 11.1 percent to $137.7 million from $155.0 million in the year-ago quarter. Of the decrease in net sales, approximately 10.8 percent was attributable to decreased shipments to Crisa’s customers and 4.3 percent was attributable to decreased shipments to U.S. and Canadian foodservice glassware customers offset by a 1.3 percent increase in sales to U.S. and Canadian retail glassware customers. Of the 10.8 percent attributable to decreased shipments of Crisa product, 5.0 percent is related to an unfavorable currency impact.

EBIT decreased to $11.8 million for the second quarter 2009, compared to $14.9 million for the year-ago quarter. EBIT as a percentage of net sales decreased to 8.5 percent in the second quarter 2009, compared to 9.6 percent in the year-ago quarter. The key factors in the decline in EBIT compared to the year-ago quarter were $1.2 million due to the decreased production activity offset by lower manufacturing costs, $1.7 million due to an unfavorable sales mix and an unfavorable currency impact from the devaluation of the Mexican peso of $5.4 million. The factors contributing to the decrease in EBIT were partially offset by decreases of $3.9 million in distribution costs, an improvement of $1.4 million primarily due to favorable foreign currency translation gains.

North American Other

For the quarter ended June 30, 2009, net sales declined 19.2 percent to $24.3 million from $30.1 million in the year-ago quarter. Components of the total decrease in net sales were declines of approximately 11.3 percent in shipments of Syracuse China products, approximately 5.5 percent in shipments of Traex products and approximately 4.0 percent in shipments of World Tableware products.

EBIT declined by $0.2 million for the second quarter of 2009, compared to the year-ago quarter. EBIT as a percentage of net sales increased to 14.1 percent in the second quarter of 2009, compared to 12.1 percent in the year-ago quarter due to lower production and purchasing levels in the segment. The key contributors to the decreased EBIT were decreased sales, which caused an unfavorable $3.8

million impact. This was offset by decreases of $1.2 million in manufacturing costs, $1.1 million in distribution costs and $0.9 million in SG&A expenses. These reductions in costs were primarily the result of the April 2009 closure of our Syracuse China facility.

International

For the quarter ended June 30, 2009, net sales decreased 17.3 percent to $34.5 million from $41.8 million in the year-ago quarter. Of the total decrease in net sales, 10.6 percent was related to the currency impact of a weaker euro. The majority of the remaining decrease in net sales was related to decreased shipments to Royal Leerdam and Crisal customers, while sales to customers of Libbey China were essentially flat as a component of the total International comparison.

EBIT declined by $1.7 million for the second quarter of 2009, to $(0.9) million from $0.7 million in the year-ago quarter. EBIT as a percentage of net sales decreased to (2.7) percent in the second quarter 2009, compared to 1.7 percent in the year-ago quarter. Decreased net sales and production activity offset by lower manufacturing costs were responsible for $0.5 million and $1.2 million of the EBIT decline, respectively. In addition, EBIT was negatively affected by an unfavorable currency impact from the euro of $0.4 million. These factors were offset by a $0.4 million increase in other income related to a government grant.

Segment Results of Operations — First Six Months 2009 Compared to First Six Months 2008

North American Glass

For the six months ended June 30, 2009, net sales decreased 12.7 percent to $246.5 million from $282.5 million in the year-ago period. Of the total decrease in net sales, approximately 11.0 percent was attributable to decreased shipments to Crisa’s customers and 3.8 percent was attributable to decreased shipments to U.S. and Canadian foodservice glassware customers. The U.S. retail channel delivered sales essentially equal to the all-time record retail sales performance during the first six months of 2008. Of the 11.0 percent attributable to decreased shipments of Crisa product, 5.0 percent is related to an unfavorable currency impact.

EBIT decreased to $3.1 million for the first half of 2009, compared to $22.0 million for the year-ago period. EBIT as a percentage of net sales decreased to 1.3 percent in the first half of 2009, compared to 7.8 percent in the year-ago period. The key factors in the decline in EBIT compared to the year-ago period were $9.0 million due to the decreased production activity offset by lower manufacturing costs, $5.7 million due to an unfavorable sales mix and an unfavorable currency impact on EBIT from the devaluation of the Mexican peso of $9.1 million. In addition, EBIT was negatively impacted by a $3.3 million increase in selling, general and administrative expense, which in turn was caused primarily by a $2.7 million pension settlement charge arising from lump sum payments to retirees during the first six months of 2009 and a one-time reversal of $1.3 million in the first quarter of 2008 related to favorable rulings in connection with an outstanding dispute regarding a warehouse lease in Mexico, offset by decreases of $0.9 million in commission expense. The factors contributing to the decrease in EBIT were partially offset by decreases of $6.5 million in distribution costs and favorable currency translation gains of $1.5 million in other income when compared to the prior year period.

North American Other

For the six months ended June 30, 2009, net sales declined 19.4 percent to $45.7 million from $56.7 million in the year-ago period. Components of the total decrease in net sales were declines of approximately 8.1 percent in shipments of Syracuse China products, approximately 6.9 percent in shipments of World Tableware products and approximately 4.8 percent in shipments of Traex products.

EBIT declined by $5.1 million for the first half of 2009, compared to the year-ago period. EBIT as a percentage of net sales decreased to 5.1 percent in the first half of 2009, compared to 13.2 percent in the year-ago period. The key contributor to the decreased EBIT was decreased sales, which had an unfavorable $8.1 million impact. Production costs included a $0.7 million special charge due to additional depreciation expenses recorded to reflect the shorter remaining useful life of the assets at our Syracuse China facility and a $1.1 million write-down of raw materials and work in process inventory also related to the shut down of our Syracuse China facility. This was offset by decreases of $1.2 million in other production costs and purchased product, $1.4 million in distribution costs, and a decrease of $1.2 million in SG&A expenses, driven by lower selling and marketing expenses.

International

For the six months ended June 30, 2009, net sales decreased 18.9 percent to $63.4 million from $78.2 million in the year-ago period. Of the total decrease in net sales, 10.6 percent was related to the currency impact of a weaker euro. The majority of the remaining decrease in net sales was related to decreased shipments to Royal Leerdam and Crisal customers, while sales to customers of Libbey

China were essentially flat as a component of the total International comparison.

EBIT declined by $3.4 million for the first half of 2009 to $(3.3) million, compared to $0.1 million in the year-ago period. EBIT as a percentage of net sales decreased to (5.2) percent in the first half of 2009, compared to 0.1 percent in the year-ago period. Decreased net sales and production activity offset by lower manufacturing costs were responsible for $0.3 million and $2.3 million of the EBIT decline, respectively, as we lowered production levels in response to lower sales and to manage inventory levels. In addition, EBIT was negatively impacted by an unfavorable currency impact from the euro of $0.6 million.

Capital Resources and Liquidity

Balance Sheet and Cash Flows

Cash and Equivalents

At June 30, 2009, our cash balance was $24.1 million, an increase of $10.8 million from $13.3 million at December 31, 2008. The increase was primarily due to an increase in our free cash flow offset by payments on our ABL facility.

Working Capital

The following table presents our working capital components:


(Dollars in thousands, except percentages							Variance
and DSO, DIO, DPO and DWC)	June 30, 2009			December 31, 2008			In dollars			In percent


Accounts receivable — net	$	91,252		$	76,072		$	15,180			20.0	%
DSO (1)		44.3			34.3
Inventories — net	$	145,798		$	185,242		$	(39,444	)		(21.3	)%
DIO (2)		70.8			83.5
Accounts payable	$	54,485		$	54,428		$	57			0.1	%
DPO (3)		26.5			24.5
Working capital (4)	$	182,565		$	206,886		$	(24,321	)		(11.8	)%
DWC (5)		88.6			93.3
Percentage of net sales		24.3	%		25.5	%


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

(1)		Days sales outstanding (DSO) measures the number of days it takes to turn receivables into cash.

(2)		Days inventory outstanding (DIO) measures the number of days it takes to turn inventory into cash.

(3)		Days payable outstanding (DPO) measures the number of days it takes to pay the balances of our accounts payable.

(4)		Working capital is defined as net accounts receivable plus net inventories less accounts payable. See Table 3 for the calculation of this non-GAAP financial measure and for further discussion as to the reasons we believe this non-GAAP financial measure is useful.

(5)		Days working capital (DWC) measures the number of days it takes to turn our working capital into cash.

Working capital (as defined above) was $182.6 million at June 30, 2009, a decrease of $24.3 million from December 31, 2008. This decrease is due primarily to lower inventories, which resulted from our continued focus on our cash management efforts to increase cash flow through reductions in working capital, and lower production activity. Partially offsetting our lower inventories is an increase in accounts receivable, resulting from our second quarter sales increase. Working capital as a percentage of net sales decreased from 25.5 percent from December 31, 2008 to 24.3 percent at June 30, 2009.

Borrowings

The following table presents our total borrowings:


					June 30,		December 31,
(Dollars in thousands)	Interest Rate			Maturity Date	2009		2008

Borrowings under ABL facility	floating			December 16, 2010	$	16,858	$	34,538
Senior notes	floating (1)			June 1, 2011		306,000		306,000
PIK notes (2)		16.00	%	December 1, 2011		160,862		148,946
Promissory note		6.00	%	July, 2009 to September, 2016		1,580		1,666
Notes payable	floating			July, 2009		1,336		3,284
RMB loan contract	floating			July, 2012 to January, 2014		36,625		36,675
RMB working capital loan	floating			March, 2010		7,325		7,335
Obligations under capital leases	floating			May, 2009		—		302
BES Euro line	floating			January, 2010 to January, 2014		15,453		15,507
Other debt	floating			September, 2009		720		630

Total borrowings						546,759		554,883
Less — unamortized discounts and warrants						3,727		4,626

Total borrowings — net (3)					$	543,032	$	550,257


(1)		See “Derivatives” below and note 9 to the Condensed Consolidated Financial Statements.

(2)		Additional PIK Notes were issued each June 1 and December 1, commencing on December 1, 2006, to pay semi-annual interest. During the first three years, interest was payable by the issuance of additional PIK Notes.

(3)		The total borrowings—net include notes payable, long-term debt due within one year and long-term debt as stated in our Condensed Consolidated Balance Sheets.

We had total borrowings of $546.8 million at June 30, 2009, compared to total borrowings of $554.9 million at December 31, 2008. The $8.1 million decrease in borrowings was primarily the result of the repayment of borrowings under our ABL facility, offset by an increase in our PIK Notes.

Of our total indebtedness, $184.3 million, approximately 33.7 percent, is subject to fluctuating interest rates at June 30, 2009. A change of one percentage point in such rates would result in a change in interest expense of approximately $1.8 million on an annual basis.

Included in interest expense is the amortization of discounts, warrants and financing fees. These items amounted to $1.2 million and $2.5 million for the three months and six months ended June 30, 2009, respectively, and $1.3 million and $2.6 million for the three months and six months ended June 30, respectively.

Cash Flow

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


	Three months ended June 30,						Variance
(Dollars in thousands, except percentages)	2009			2008			In dollars		In percent

Net cash provided by operating activities	$	24,706		$	5,080		$	19,626		386.3	%
Capital expenditures		(4,610	)		(8,260	)		3,650		44.2	%
Proceeds from asset sales and other		21			5			16		320.0	%

Free cash flow(1)	$	20,117		$	(3,175	)	$	23,292		733.6	%


(1)		We believe that Free Cash Flow [net cash provided by (used in) operating activities, less capital expenditures, plus proceeds from assets sales and other] is a useful metric for evaluating our financial performance, as it is a measure we use internally to assess performance. See Table 2 for a reconciliation of net cash provided by (used in) operating activities to free cash flow and a further


		discussion as to the reasons we believe this non-GAAP financial measure is useful.

Our net cash provided by operating activities was $24.7 million in the second quarter of 2009, compared to net cash provided by operating activities of $5.1 million in the year-ago quarter, or an improvement of $19.6 million. The major factors impacting cash flow from operations were a $20.4 million improvement in working capital performance compared to the prior year quarter, as cash flow improvements of $21.0 million from inventory and $1.2 million from accounts receivable were more than enough to offset the unfavorable swing of $1.8 million in cash flow from accounts payable, reflecting our efforts to improve liquidity during the current economic downturn. The cash generated from these cash flow improvements was utilized to pay down debt and increase our cash balance.

Our net cash used in investing activities decreased to $4.6 million in the second quarter of 2009, compared to $8.3 million in the year-ago period, primarily as a result of decreased capital expenditures in our North American Glass and International segments.

Net cash used in financing activities was $12.8 million in the second quarter of 2009, compared to net cash provided by financing activities of $13.5 million in the year-ago quarter, or a swing of $26.4 million. During the second quarter of 2008, we utilized $14.3 million more of our capacity on the ABL Facility to fund our operating needs, while we made $10.8 million of repayments on that facility in the second quarter of 2009.

Our free cash flow was $20.1 million during the second quarter 2009, compared to a use of cash of $3.2 million in the year-ago quarter, an improvement of $23.3 million. The primary contributor to this change was the improvement in cash flow from operations and reduced capital expenditures in the current period, as discussed above.

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


	Six months ended June 30,						Variance
(Dollars in thousands, except percentages)	2009			2008			In dollars		In percent

Net cash provided by (used in) operating activities	$	39,090		$	(23,059	)	$	62,149		269.5	%
Capital expenditures		(9,550	)		(17,612	)		8,062		45.8	%
Proceeds from asset sales and other		88			46			42		91.3	%

Free cash flow(1)	$	29,628		$	(40,625	)	$	70,253		172.9	%


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

Our net cash provided by operating activities was $39.1 million in the first half of 2009, compared to net cash used by operating activities of $23.1 million in the year-ago period, or an improvement of $62.2 million. The major factors impacting cash flow from operations were a $51.2 million improvement in working capital performance compared to the prior year period as cash flow improvements of $43.3 million from inventory, $6.0 million from accounts payable and $1.9 million from accounts receivable reflected our efforts to improve liquidity during the current economic downturn. Further improvement in net cash provided by operating activities is the result of the final $19.6 million payment to Vitro made in 2008 related to the 2006 Crisa acquisition. These improvements were offset by cash required to fund our losses in the current period and pay down debt.

Our net cash used in investing activities decreased to $9.5 million in the first half of 2009, compared to $17.6 million in the year-ago period, primarily as a result of decreased capital expenditures in our North American Glass and International segments.

Net cash used in financing activities was $18.8 million in the first half of 2009, compared to net cash provided by financing activities of $21.8 million in the year-ago period, or a swing of $40.6 million. During the first half of 2008, we utilized $23.4 million more of our capacity on the ABL Facility to fund our operating needs, while we made $16.7 million of repayments on that facility in the first half of 2009.

Our free cash flow was $29.6 million during the first half 2009, compared to a use of cash of $40.6 million in the year-ago period, an improvement of $70.3 million. The primary contributor to this change was the improvement in cash flow from operations and reduced capital expenditures in the current period.

Derivatives

We have Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future income. The fixed interest rate for our borrowings related to the Rate Agreements at June 30, 2009, excluding applicable fees, is 5.24 percent per year and the total interest rate, including applicable fees, is 12.24 percent per year. These Rate Agreements expire on December 1, 2009. Total remaining Senior Notes not covered by the Rate Agreements have fluctuating interest rates with a weighted average rate of 8.26 percent per year at June 30, 2009. If the counterparties to these Rate Agreements were to fail to perform, these Rate Agreements would no longer protect us from interest rate fluctuations. However, we do not anticipate nonperformance by the counterparties. All counterparties were rated A+ or better as of June 30, 2009, by Standard and Poor’s.

The fair market value for the Rate Agreements at June 30, 2009, was a $(4.0) million liability. At December 31, 2008, the fair market value of these Rate Agreements was a $(6.8) million liability. The fair value of the Rate Agreements is based on 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. We do not expect to cancel these agreements and expect them to mature as originally contracted.

We also use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts is to reduce the effects of fluctuations and adverse 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 is determined from market quotes. At June 30, 2009, we had commodity futures contracts for 3,810,000 million British Thermal Units (BTUs) of natural gas with a fair market value of a $(12.9) million liability. We have hedged approximately 40 percent of forecasted transactions through December 2010. At December 31, 2008, we had commodity futures contracts for 5,280,000 million BTUs of natural gas with a fair market value of a $(14.9) million liability. The counterparties for these derivatives were rated BBB or better as of June 30, 2009, by Standard & Poor’s.

Capital Resources and Liquidity

Historically, cash flows generated from operations and our borrowing capacity under our ABL facility have allowed us to meet our cash requirements, including capital expenditures and working capital needs. Remaining unused availability on the ABL Facility was $56.6 million at June 30, 2009 and $44.6 million at December 31, 2008. In addition, our cash and cash equivalents balance of $24.1 million at June 30, 2009 is available for our short term financing needs. We were impacted by recessionary pressures in 2008, especially during the fourth quarter of the year, and the first half of 2009, and we anticipate that the global economic recession will continue throughout 2009 and perhaps beyond. In addition, interest on our PIK Notes will be payable in cash beginning December 1, 2009. We began taking a number of steps to enhance our liquidity in 2008 and have continued with further steps in 2009 (including those announced in February, 2009). These initiatives were expected to result in cash flow improvements in the range of $46 million to $50 million for 2009. These initiatives have been implemented, and we are beginning to see the results in our cash flow. These amounts included a reduction of $22 million to $24 million in capital expenditures. We are on course to achieve the higher end of that range, as our capital expenditures are currently expected to reach $20 million for the year, compared to the $45.7 million spent in 2008. However, if cash generated from operations is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or arrange additional debt financing. Global financial markets and economic conditions have been, and continue to be volatile. The credit and capital markets remain challenging. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and the current weak economic conditions, have made it difficult, and will likely continue to make it difficult, to obtain funding in future periods. If cash from operations and cash available from our ABL Facility are not sufficient to meet our needs, we cannot provide assurance that we will be able to obtain additional financing in sufficient amounts and/or on acceptable terms in the near future or when our debt obligations reach maturity. Our ABL Facility expires in December 2010, the Senior Notes expire in June 2011, and the PIK Notes expire in December 2011. Furthermore, because of the current price of our stock, we cannot anticipate that it would be desirable to sell additional equity, even if we were able to do so. However, based upon our operating plans and current forecast expectations (including expectations that the global economy will not deteriorate further) we anticipate that we will generate positive cash flow from operations and, if necessary, have sufficient cash availability from our ABL Facility to meet our ongoing liquidity needs.

Reconciliation of Non-GAAP Financial Measures

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

Table 1


	Three months ended						Six months ended
Reconciliation of net income (loss) to EBIT and EBITDA	June 30,						June 30,
(Dollars in thousands)	2009			2008			2009			2008

Net income (loss)	$	2,664		$	(2,119	)	$	(25,229	)	$	(5,596	)
Add: Interest expense		17,532			17,620			34,711			34,771
Add: (Benefit from) provision for income taxes		(5,947	)		3,802			(7,324	)		359

Earnings before interest and income taxes (EBIT)		14,249			19,303			2,158			29,534
Add: Depreciation and amortization		10,518			11,238			22,246			22,534

Earnings before interest, taxes, deprecation and amortization (EBITDA)	$	24,767		$	30,541		$	24,404		$	52,068

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.

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

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

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

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

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

Table 2


Reconciliation of net cash provided by
(used in) operating	Three months ended						Six months ended
activities to free cash flow	June 30,						June 30,
(Dollars in thousands)	2009			2008			2009			2008

Net cash provided by (used in) operating activities	$	24,706		$	5,080		$	39,090		$	(23,059	)
Capital expenditures		(4,610	)		(8,260	)		(9,550	)		(17,612	)
Proceeds from asset sales and other		21			5			88			46

Free cash flow	$	20,117		$	(3,175	)	$	29,628		$	(40,625	)

We define free cash flow as net cash provided by (used in) operating activities less capital expenditures adjusted for proceeds from asset sales and other. The most directly comparable U.S. GAAP financial measure is net cash provided by (used in) operating activities.

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 isameasure 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.

Table 3


Reconciliation of working capital	June 30,		December 31,
(Dollars in thousands)	2009		2008

Accounts receivable (net)	$	91,252	$	76,072
Plus: Inventories (net)		145,798		185,242
Less: Accounts payable		54,485		54,428

Working capital	$	182,565	$	206,886

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

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

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

Item 3. Qualitative and Quantitative Disclosures about Market Risk

Currency

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

Interest Rates

We are exposed to market risks associated with changes in interest rates on our floating debt and have entered into Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate

debt, thus reducing the impact of interest rate changes on future income. We had $184.3 million of debt subject to fluctuating interest rates at June 30, 2009. A change of one percentage point in such rates would result in a change in interest expense of approximately $1.8 million on an annual basis. If the counterparties to these Rate Agreements were to fail to perform, we would no longer be protected from interest rate fluctuations by these Rate Agreements. However, we do not anticipate nonperformance by the counterparties. All interest rate swap counterparties were rated A+ or better as of June 30, 2009, by Standard and Poor’s.

Natural Gas

We are also exposed to market risks associated with changes in the price of natural gas. We use commodity futures contracts related to forecasted future North American natural gas requirements of our manufacturing operations. The objective of these futures contracts is to limit the fluctuations in prices paid and potential losses in earnings or cash flows from adverse price movements in the underlying natural gas commodity. We consider the forecasted natural gas requirements of our manufacturing operations in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements up to eighteen months in the future. For our natural gas requirements that are not hedged, we are subject to changes in the price of natural gas, which affect our earnings. If the counterparties to these futures contracts were to fail to perform, we would no longer be protected from natural gas fluctuations by the futures contracts. However, we do not anticipate nonperformance by these counterparties. All counterparties were rated BBB or better by Standard and Poor’s as of June 30, 2009.

Retirement Plans

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

	•		A change of 1 percent in the discount rate would change our total annual expense by approximately $1.9 million.

	•		A change of 1 percent in the expected long-term rate of return on plan assets would change annual pension expense by approximately $2.2 million.

Item 4. Controls and Procedures

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

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

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

PART II — OTHER INFORMATION

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

Item 1A. Risk Factors

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

	•		Our cost-reduction projects may not result in anticipated savings in operating costs.

	•		Slowdowns in the retail, travel, restaurant and bar, or entertainment industries, such as those caused by general economic downturns, terrorism, health concerns or strikes or bankruptcies within those industries, could reduce our revenues and production activity levels.

	•		If we have a fair value impairment in a business segment, net earnings and net worth could be materially adversely affected by a write down of goodwill or intangible assets.

	•		We face intense competition and competitive pressures that could adversely affect our results of operations and financial condition.

	•		International economic and political factors could affect demand for imports and exports, and our financial condition and results of operations could be adversely impacted as a result.

	•		We may not be able to effectively integrate future businesses we acquire.

	•		We may not be able to achieve the international growth contemplated by our strategic plan.

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

	•		If we are unable to obtain sourced products or materials at favorable prices, our operating performance may be adversely affected.

	•		Charges related to our employee pension and postretirement welfare plans resulting from market risk and headcount realignment may adversely affect our results of operations and financial condition.

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

	•		Our business requires us to maintain a large fixed cost base that can affect our profitability.

	•		Unexpected equipment failures may lead to production curtailments or shutdowns.

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

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

	•		We may not be able to renegotiate collective bargaining agreements successfully when they expire; organized strikes or work

stoppages by unionized employees may have an adverse effect on our operating performance.

	•		We are subject to risks associated with operating in foreign countries. These risks could adversely affect our results of operations and financial condition.

	•		High levels of inflation and high interest rates in Mexico could adversely affect the operating results and cash flows of Crisa.

	•		Fluctuation of the currencies in which we conduct operations could adversely affect our financial condition and results of operations.

	•		Fluctuations in the value of the foreign currencies in which we operate relative to the U.S. dollar could reduce the cost competitiveness of our products or those of our subsidiaries.

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

	•		If our hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings.

	•		We are subject to various environmental legal requirements and may be subject to new legal requirements in the future; these requirements could have a material adverse effect on our operations.

	•		We received notice from the New York Stock Exchange (NYSE) that our stock was delisted before the start of trading on April 20, 2009. Our shares are now traded on the Over the Counter Bulletin Board (OTC BB). There can be no assurance that we may be able to regain our listing on the NYSE or any other exchange.

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

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

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

	•		We may face a risk when we return to the market to refinance our debt as a result of the February, 2009 downgrade of the Company’s debt by Moody’s Investor Service.

The following risk factor has been modified in response to an SEC comment:

	•		Our high level of debt, as well as incurrence of additional debt, may limit our operating flexibility, which could adversely affect our results of operations and financial condition and prevent us from fulfilling our obligations.

			We have a high degree of financial leverage. As of June 30, 2009, we had $543.0 million of debt outstanding, net of discounts and warrants. Of that amount:

	•		approximately $16.9 million consisted of debt under our ABL Facility, which is secured by a first-priority lien on our assets;

	•		approximately $306.0 million consisted of the Senior Secured Notes, which are secured by a second-priority lien on our collateral;

	•		approximately $160.9 million consisted of the PIK Notes, which are secured by a third-priority lien on our collateral;

	•		RMB 250 million (approximately $36.6 million) consisted of a loan made by China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (“CCBC”), the entire proceeds of which we used to finance the construction of our Greenfield manufacturing facility in China that began operations in early 2007;

	•		RMB 50 million (approximately $7.3 million) consisted of a loan, which is fully drawn, made by

CCBC to finance the working capital needs of our China facility; and

•

11 million euro (approximately $15.5 million) consisted of a loan, which is fully drawn, made by Banco Espirito Santo, S.A. (“BES Euro Line”) to finance operational improvements associated with our Portuguese operations.

Our ABL Facility provides for borrowings up to $150.0 million by Libbey Glass and Libbey Europe B.V. (a non-guarantor subsidiary). As a result of borrowing base limitations, the remaining unused availability under the ABL Facility at June 30, 2009 was $56.6 million.

Since we issued the PIK Notes in 2006, interest has been payable semi-annually through the issuance of additional PIK Notes. Commencing December 1, 2009, interest on the PIK Notes will be payable semi-annually in cash. The semi-annual cash interest payment that we are obligated to make on the PIK Notes on December 1, 2009 is approximately $12.9 million.

Our loan agreements, including our agreements governing the ABL Facility, the indenture governing the Senior Secured Notes and the indenture governing the PIK Notes, require us to comply with certain covenants. For example, our ABL Facility requires us to maintain a minimum fixed charge coverage ratio if the remaining unused availability under our ABL Facility is less than $15.0 million.

Although the respective indentures governing the Senior Secured Notes and the PIK Notes do not contain financial covenants, they do contain other covenants that limit our operational and financial flexibility, such as by limiting the additional indebtedness that we may incur, limiting certain business activities, investments and payments, and limiting our ability to dispose of certain assets.

Our agreements governing the ABL Facility, the Senior Secured Notes and the PIK Notes limit the additional indebtedness that we may incur, but we are permitted, subject to certain limitations, to incur additional debt in the future.

Our high degree of leverage, as well as the incurrence of additional debt, could have important consequences for our business, such as:

	•		making it more difficult for us to satisfy our financial obligations, including with respect to the Senior Secured Notes and the PIK Notes;

	•		limiting our ability to make capital investments in order to expand our business;

	•		limiting our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development, debt service requirements, acquisitions or other purposes;

	•		limiting our ability to invest operating cash flow in our business and future business opportunities, because we use a substantial portion of these funds to service debt and because our covenants restrict the amount of our investments; and

	•		limiting our ability to withstand business and economic downturns and/or place us at a competitive disadvantage compared to our competitors that have less debt, because of the high percentage of our operating cash flow that is dedicated to servicing our debt.

Although we have taken a number of steps to enhance our liquidity to date in 2009 (including those announced in February 2009), if cash generated from operations is insufficient to satisfy our liquidity requirements, if we cannot service our debt or if we fail to meet our covenants, we could have substantial liquidity problems. In those circumstances, we might have to sell assets, delay planned investments, obtain additional equity capital or restructure our debt. Global financial markets and economic conditions have been, and continue to be volatile. The credit and capital markets remain challenging. These issues may make it difficult to obtain funding in future periods. If cash from operations and cash available from our ABL Facility are not sufficient to meet our needs, including our obligation to pay the cash interest on the PIK Notes that is payable on December 1, 2009, we cannot assure you that we will be able to obtain additional financing in sufficient amounts and/or on acceptable terms in the future or when our ABL Facility matures in December 2010. Furthermore, because of the current price of our stock, we cannot anticipate that it would be desirable to sell additional equity, even if we were able to do so.

In addition, our failure to comply with the covenants contained in our loan agreements could result in an event of default that, if not cured or waived, could result in the acceleration of all of our indebtedness.

For further information concerning our borrowings, see “Management’s Discussion and Analysis; Capital Resources and Liquidity — Borrowings” and Note 4 to our Consolidated Financial Statements.

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

Issuers Purchases of Equity Securities


					Total Number of
					Shares Purchased as		Maximum Number of
					Part of Publicly		Shares that May Yet Be
	Total Number of		Average Price		Announced Plans or		Purchased Under the
Period	Shares Purchased		Paid per Share		Programs		Plans or Programs (1)

April 1 to April 30, 2009		—		—		—		1,000,000
May 1 to May 31, 2009		—		—		—		1,000,000
June 1 to June 30, 2009		—		—		—		1,000,000

Total		—		—		—		1,000,000


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

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of the Shareholders of the Company was held on May 7, 2009. At the meeting, action was taken with respect to the following matters:

(a) Jean-René Gougelet, John F. Meier and Carol B. Moerdyk were reelected as directors of the Company. Each will serve for a term of 3 years or until his successor is elected. The terms of office of William A. Foley, Deborah G. Miller, Terence P. Stewart, Carlos V. Duno, Peter C. McC. Howell, Richard I. Reynolds and John C. Orr continued after the meeting.

(b) The appointment of Ernst & Young LLP as our independent auditors for the fiscal year ending December 31, 2009 was ratified.

The following table sets forth the tabulation of votes with respect to each of the matters described above:


	Shares		Shares		Shares		Abstentions /
	Voted For		Voted Against		Withheld		Broker Non-Votes

a. Election of Directors
Jean-René Gougelet		10,612,791		—		577,120		—
John F. Meier		10,238,979		—		950,932		—
Carol B. Moerdyk		10,587,160		—		602,751		—
b. Ratification of auditors		10,882,675		251,503				55,733

Item 5. Other Information

(b)

There has been no material change to the procedures by which security holders may recommend nominees to the Company’s board of directors.

Item 6. Exhibits

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

EXHIBIT INDEX


Exhibit
Number		Description
	3.1	Restated Certificate of Incorporation of Libbey Inc. (filed as Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	3.2	Amended and Restated By-Laws of Libbey Inc. (filed as Exhibit 3.01 to Registrant’s Form 8-K filed February 7, 2005 and incorporated herein by reference).
	4.1	Credit Agreement, dated June 16, 2006, among Libbey Glass Inc. and Libbey Europe B.V., Libbey Inc., the other loan parties party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, LaSalle Bank Midwest National Association, Wells Fargo Foothill, LLC, Fifth Third Bank, and J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Arranger. (filed as Exhibit 4.1 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference. The schedules to such Credit Agreement are filed herein).
	4.2	Indenture, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the Subsidiary Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee. (filed as Exhibit 4.5 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.3	Form of Floating Rate Senior Secured Note due 2011. (filed as Exhibit 4.4 to Libbey Glass Inc.’s Registration Statement on Form S-4; File No. 333-139358).
	4.4	Registration Rights Agreement, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the Subsidiary Guarantors party thereto and the Initial Purchasers named therein. (filed as Exhibit 4.4 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.5	Indenture, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the Subsidiary Guarantors party thereto and Merrill Lynch PCG, Inc. (filed as Exhibit 4.5 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.6	Form of 16% Senior Subordinated Secured Pay-in-Kind Note due 2011. (filed as Exhibit 4.6 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.7	Warrant, issued June 16, 2006. (filed as Exhibit 4.7 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.8	Registration Rights Agreement, dated June 16, 2006, among Libbey Inc. and Merrill Lynch PCG, Inc. (filed as Exhibit 4.8 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.9	Intercreditor Agreement, dated June 16, 2006, among Libbey Glass Inc., JPMorgan Chase Bank, N.A., The Bank of New York Trust Company, N.A., Merrill Lynch PCG, Inc. and the Loan Parties party thereto. (filed as Exhibit 4.9 to Registrant’s Form 8-K filed June 21, 2006 and incorporated herein by reference).
	4.10	Amendment and Waiver, dated November 7, 2008, among Libbey Glass Inc. and Libbey Europe B.V., Libbey Inc., the other loan parties thereto, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, Bank of America, N.A. (f/k/a LaSalle Bank Midwest National Association), Wells Fargo Foothill, LLC, Fifth Third Bank, and J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Arranger (filed as Exhibit 4.10 to Libbey Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference).
	10.1	Pension and Savings Plan Agreement dated as of June 17, 1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.4 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	10.2	Cross-Indemnity Agreement dated as of June 24, 1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.5 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).
	10.3	The Amended and Restated Libbey Inc. Stock Option Plan for Key Employees (filed as Exhibit 10.14 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference).
	10.4	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).
	10.5	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


Exhibit
Number		Description
		incorporated herein by reference).
	10.6	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).
	10.7	Form of Non-Qualified Stock Option Agreement between Libbey Inc. and certain key employees participating in The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.69 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).
	10.8	The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.67 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
	10.9	Stock Promissory Sale and Purchase Agreement between VAA — Vista Alegre Atlantis SGPS, SA and Libbey Europe B.V. dated January 10, 2005 (filed as Exhibit 10.76 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).
	10.10	RMB Loan Contract between Libbey Glassware (China) Company Limited and China Construction Bank Corporation Langfang Economic Development Area Sub-branch entered into January 23, 2006 (filed as exhibit 10.75 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	10.11	Guarantee Contract executed by Libbey Inc. for the benefit of China Construction Bank Corporation Langfang Economic Development Area Sub-branch (filed as exhibit 10.76 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	10.12	Guaranty, dated May 31, 2006, executed by Libbey Inc. in favor of Fondo Stiva S.A. de C.V. (filed as exhibit 10.2 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.13	Guaranty Agreement, dated June 16, 2006, executed by Libbey Inc. in favor of Vitro, S.A. de C.V. (filed as exhibit 10.3 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.14	Transition Services Agreement, dated June 16, 2006, among Crisa Libbey S.A. de C.V., Vitrocrisa Holding, S. de R.L. de C.V., Vitrocrisa S. de R.L. de C.V., Vitrocrisa Comercial, S. de R.L. de C.V., Crisa Industrial, L.L.C. and Vitro S.A. de C.V. (filed as exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference).
	10.15	2006 Omnibus Incentive Plan of Libbey Inc. (filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and incorporated herein by reference).
	10.16	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).
	10.17	Form of Registered Global Floating Rate Senior Secured Note, Series B, due 2011 (filed as exhibit 10.55 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2006 and incorporated herein by reference).
	10.18	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).
	10.19	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).
	10.20	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and John F. Meier (filed as exhibit 10.29 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.21	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and Richard I. Reynolds (filed as exhibit 10.30 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.22	Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and Gregory T. Geswein (filed as exhibit 10.31 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.23	Form of Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and the respective executive officers identified on Appendix 1 thereto (filed as exhibit 10.32 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.24	Amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and John F. Meier (filed as exhibit 10.33 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.25	Form of amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and the respective executive officers identified on Appendix 1 thereto (filed as exhibit 10.34 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.26	Form of amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc. and the respective individuals identified on Appendix 1 thereto (filed as exhibit 10.35 to Libbey Inc.’s Annual Report on Form 10-


Exhibit
Number		Description
		K for the year ended December 31, 2008 and incorporated herein by reference).
	10.27	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).
	10.28	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).
	10.29	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).
	10.30	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).
	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).

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 7, 2009	By	/s/ Gregory T. Geswein
		Gregory T. Geswein,
		Vice President, Chief Financial Officer

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Libbey (LBY) 10-Q2009 Q2 Quarterly report

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