Table of Contents

	

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, 2013
OR

		
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
Commission file number 1-12084
Libbey Inc.

	
 	
(Exact name of registrant as specified in its charter)

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

	
			
 	300 Madison Avenue, Toledo, Ohio 43604	 	
(Address of principal executive offices) (Zip Code)	
 	 	 	
 	419-325-2100	 	
(Registrant’s telephone number, including area code)	
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

								
Large Accelerated Filer	o	Accelerated Filer	þ	Non-Accelerated Filer	o	Smaller reporting company	o	
 	 	(Do not check if a smaller reporting company)	 	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value 21,236,031 shares at July 31, 2013.

					

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TABLE OF CONTENTS

	
		
Item 1. Financial Statements	3	
Condensed Consolidated Statements of Operations 	4	
Condensed Consolidated Statements of Comprehensive Income (Loss)	6	
Condensed Consolidated Balance Sheets 	7	
Condensed Consolidated Statements of Cash Flows	8	
Notes to Condensed Consolidated Financial Statements	10	
1. Description of the Business	10	
2. Significant Accounting Policies	10	
3. Balance Sheet Details	12	
4. Borrowings	13	
5. Restructuring Charges	16	
6. Income Taxes	17	
7. Pension and Non-pension Postretirement Benefits	18	
8. Net Income (Loss) per Share of Common Stock	20	
9. Derivatives	21	
10. Comprehensive Income (Loss)	24	
11. Condensed Consolidated Guarantor Financial Statements	25	
12. Segments	32	
13. Fair Value	34	
14. Other Income (Expense) 	34	
15. Contingencies	35	
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36	
Item 3. Qualitative and Quantitative Disclosures about Market Risk	48 	
Item 4. Controls and Procedures	49	
PART II — OTHER INFORMATION	49	
Item 1A. Risk Factors	49 	
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	49	
Item 5. Other Information	50	
Item 6. Exhibits	50	
EXHIBIT INDEX	51	
SIGNATURES	54	
 EX-3.2	 	
 EX-31.1	 	
 EX-31.2	 	
 EX-32.1	 	
 EX-32.2	 	
 EX-101 INSTANCE DOCUMENT	 	
 EX-101 SCHEMA DOCUMENT	 	
 EX-101 CALCULATION LINKBASE DOCUMENT	 	
 EX-101 LABELS LINKBASE DOCUMENT	 	
 EX-101 PRESENTATION LINKBASE DOCUMENT	 	
 EX-101 DEFINITION LINKBASE DOCUMENT	 	

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PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	

The accompanying unaudited Condensed Consolidated Financial Statements of Libbey Inc. and all majority-owned subsidiaries (collectively, Libbey or the Company) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Item 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and six month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The balance sheet at December 31, 2012 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, 2012 .

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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands)
(unaudited)

	
								
 	Three months ended June 30,	
 	2013	 	2012	
Net sales	$	209,904		 	$	209,247		
Freight billed to customers	771		 	759		
Total revenues	210,675		 	210,006		
Cost of sales	153,213		 	153,659		
Gross profit	57,462		 	56,347		
Selling, general and administrative expenses	29,635		 	27,378		
Special charges	(85	)	 	—		
Income from operations	27,912		 	28,969		
Loss on redemption of debt	(2,518	)	 	(31,075	)	
Other income (expense)	51		 	427		
Earnings (loss) before interest and income taxes	25,445		 	(1,679	)	
Interest expense	8,126		 	9,957		
Income (loss) before income taxes	17,319		 	(11,636	)	
Provision (benefit) for income taxes	4,883		 	(1,493	)	
Net income (loss)	$	12,436		 	$	(10,143	)	
 	 	 	 	
Net income (loss) per share:	 	 	 	
Basic	$	0.58		 	$	(0.49	)	
Diluted	$	0.57		 	$	(0.49	)	
Dividends per share	$	—		 	$	—		
See accompanying notes

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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands)
(unaudited)

	
								
 	Six months ended June 30,	
 	2013	 	2012	
Net sales	$	393,380		 	$	397,076		
Freight billed to customers	1,523		 	1,467		
Total revenues	394,903		 	398,543		
Cost of sales	295,209		 	299,140		
Gross profit	99,694		 	99,403		
Selling, general and administrative expenses	56,032		 	55,504		
Special charges	4,229		 	—		
Income from operations	39,433		 	43,899		
Loss on redemption of debt	(2,518	)	 	(31,075	)	
Other income (expense)	(384	)	 	(164	)	
Earnings (loss) before interest and income taxes	36,531		 	12,660		
Interest expense	16,561		 	20,365		
Income (loss) before income taxes	19,970		 	(7,705	)	
Provision (benefit) for income taxes	5,545		 	1,797		
Net income (loss)	$	14,425		 	$	(9,502	)	
 	 	 	 	
Net income (loss) per share:	 	 	 	
Basic	$	0.68		 	$	(0.46	)	
Diluted	$	0.66		 	$	(0.46	)	
Dividends per share	$	—		 	$	—		

See accompanying notes

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Libbey Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(dollars in thousands)
(unaudited)

	
																	
 	 	Three months ended June 30,	 	Six months ended June 30,	
 	 	2013	 	2012	 	2013	 	2012	
 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	12,436		 	$	(10,143	)	 	$	14,425		 	(9,502	)	
 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss):	 	 	 	 	 	 	 	 	
Pension and other postretirement benefit adjustments, net of tax	 	6,412		 	4,630		 	9,083		 	6,837		
Change in fair value of derivative instruments, net of tax	 	(509	)	 	2,009		 	536		 	1,477		
Foreign currency translation adjustments	 	2,335		 	(6,116	)	 	(590	)	 	(2,679	)	
Other comprehensive income (loss), net of tax	 	8,238		 	523		 	9,029		 	5,635		
 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	 	$	20,674		 	$	(9,620	)	 	$	23,454		 	$	(3,867	)	
See accompanying notes

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Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share amounts)

	
								
 	June 30, 2013	 	December 31, 2012	
 	(unaudited)	 	 	
ASSETS	 	 	 	
Cash and cash equivalents	$	10,544		 	$	67,208		
Accounts receivable — net	91,482		 	80,850		
Inventories — net	175,911		 	157,549		
Prepaid and other current assets	20,000		 	12,997		
Total current assets	297,937		 	318,604		
Pension asset	10,525		 	10,196		
Purchased intangible assets — net	19,623		 	20,222		
Goodwill	167,162		 	166,572		
Deferred income taxes	9,793		 	9,830		
Derivative asset	—		 	298		
Other assets	14,340		 	18,300		
Total other assets	221,443		 	225,418		
Property, plant and equipment — net	253,800		 	258,154		
Total assets	$	773,180		 	$	802,176		
 	 	 	 	
LIABILITIES AND SHAREHOLDERS' EQUITY	 	 	 	
Accounts payable	$	59,309		 	$	65,712		
Salaries and wages	28,316		 	41,405		
Accrued liabilities	46,182		 	42,863		
Accrued income taxes	—		 	2,282		
Pension liability (current portion)	602		 	613		
Non-pension postretirement benefits (current portion)	4,739		 	4,739		
Derivative liability	69		 	420		
Deferred income taxes	3,223		 	3,213		
Long-term debt due within one year	14,242		 	4,583		
Total current liabilities	156,682		 	165,830		
Long-term debt	415,506		 	461,884		
Pension liability	61,794		 	60,909		
Non-pension postretirement benefits	67,314		 	71,468		
Deferred income taxes	6,898		 	7,537		
Other long-term liabilities	12,104		 	10,072		
Total liabilities	720,298		 	777,700		
 	 	 	 	
Shareholders’ equity:	 	 	 	
Common stock, par value $.01 per share, 50,000,000 shares authorized, 21,146,434 shares issued at June 30, 2013 (20,835,489 shares issued in 2012)	211		 	209		
Capital in excess of par value	318,327		 	313,377		
Retained deficit	(133,645	)	 	(148,070	)	
Accumulated other comprehensive loss	(132,011	)	 	(141,040	)	
Total shareholders’ equity	52,882		 	24,476		
Total liabilities and shareholders’ equity	$	773,180		 	$	802,176		

See accompanying notes

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

								
 	Three months ended June 30,	
 	2013	 	2012	
Operating activities:	 	 	 	
Net income (loss)	$	12,436		 	$	(10,143	)	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	 	 	 	
Depreciation and amortization	11,623		 	10,288		
Loss on asset sales and disposals	31		 	168		
Change in accounts receivable	(4,836	)	 	(2,078	)	
Change in inventories	(7,857	)	 	(9,925	)	
Change in accounts payable	1,428		 	630		
Accrued interest and amortization of discounts and finance fees	(7,521	)	 	(279	)	
Call premium on senior notes	1,350		 	23,602		
Write-off of finance fee & discounts on senior notes and ABL	1,168		 	10,975		
Pension & non-pension postretirement benefits	1,504		 	(82,019	)	
Restructuring charges	(659	)	 	—		
Accrued liabilities & prepaid expenses	(793	)	 	7,308		
Income taxes	(2,553	)	 	(2,097	)	
Share-based compensation expense	1,485		 	1,138		
Other operating activities	2,579		 	11		
Net cash provided by (used in) operating activities	9,385		 	(52,421	)	
 	 	 	 	
Investing activities:	 	 	 	
Additions to property, plant and equipment	(10,889	)	 	(5,386	)	
Proceeds from asset sales and other	4		 	239		
Net cash used in investing activities	(10,885	)	 	(5,147	)	
 	 	 	 	
Financing activities:	 	 	 	
Borrowings on ABL credit facility	30,400		 	—		
Repayments on ABL credit facility	(20,600	)	 	—		
Other repayments	(55	)	 	(9,568	)	
Proceeds from (payments on) 6.875% senior notes	(45,000	)	 	450,000		
Payments on 10% senior notes	—		 	(360,000	)	
Call premium on senior notes	(1,350	)	 	(23,602	)	
Stock options exercised	2,511		 	12		
Debt issuance costs and other	—		 	(12,154	)	
Net cash provided by (used in) financing activities	(34,094	)	 	44,688		
 	 	 	 	
Effect of exchange rate fluctuations on cash	189		 	(361	)	
Increase (decrease) in cash	(35,405	)	 	(13,241	)	
 	 	 	 	
Cash at beginning of period	45,949		 	32,818		
Cash at end of period	$	10,544		 	$	19,577		
 	 	 	 	
Supplemental disclosure of cash flow information:	 	 	 	
Cash paid during the period for interest	$	15,560		 	$	10,494		
Cash paid during the period for income taxes	$	5,931		 	$	306		
See accompanying notes

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

								
 	Six months ended June 30,	
 	2013	 	2012	
Operating activities:	 	 	 	
Net income (loss)	$	14,425		 	$	(9,502	)	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	 	 	 	
Depreciation and amortization	22,397		 	20,824		
Loss on asset sales and disposals	33		 	167		
Change in accounts receivable	(10,879	)	 	(474	)	
Change in inventories	(18,492	)	 	(22,091	)	
Change in accounts payable	(6,317	)	 	(4,588	)	
Accrued interest and amortization of discounts and finance fees	610		 	(7,654	)	
Call premium on senior notes	1,350		 	23,602		
Write-off of finance fee & discounts on senior notes and ABL	1,168		 	10,975		
Pension & non-pension postretirement benefits	5,204		 	(82,579	)	
Restructuring charges	3,655		 	—		
Accrued liabilities & prepaid expenses	(16,585	)	 	(2,028	)	
Income taxes	(4,179	)	 	(120	)	
Share-based compensation expense	2,309		 	1,865		
Other operating activities	2,006		 	84		
Net cash provided by (used in) operating activities	(3,295	)	 	(71,519	)	
 	 	 	 	
Investing activities:	 	 	 	
Additions to property, plant and equipment	(19,771	)	 	(11,832	)	
Proceeds from asset sales and other	8		 	419		
Net cash used in investing activities	(19,763	)	 	(11,413	)	
 	 	 	 	
Financing activities:	 		 	 		
Borrowings on ABL credit facility	30,400		 	—		
Repayments on ABL credit facility	(20,600	)	 	—		
Other repayments	(114	)	 	(9,962	)	
Proceeds from (payments on) 6.875% senior notes	(45,000	)	 	450,000		
Payments on 10% senior notes	—		 	(360,000	)	
Call premium on senior notes	(1,350	)	 	(23,602	)	
Stock options exercised	3,048		 	40		
Debt issuance costs and other	—		 	(12,154	)	
Net cash provided by (used in) financing activities	(33,616	)	 	44,322		
 	 	 	 	
Effect of exchange rate fluctuations on cash	10		 	(104	)	
Increase (decrease) in cash	(56,664	)	 	(38,714	)	
 	 	 	 	
Cash at beginning of period	67,208		 	58,291		
Cash at end of period	$	10,544		 	$	19,577		
 	 	 	 	
Supplemental disclosure of cash flow information:	 	 	 	
Cash paid during the period for interest	$	15,848		 	$	28,225		
Cash paid during the period for income taxes	$	7,815		 	$	1,191		
See accompanying notes

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Libbey Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1.	Description of the Business	

Libbey is a leading global manufacturer and marketer of glass tableware products. We believe we have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere, in addition to supplying to key markets throughout the world. We produce glass tableware in five countries and sell to customers in over 100 countries. We design and market, under our Libbey ® , Crisa ® , Royal Leerdam ® , World ® Tableware, Syracuse ® China and Crisal Glass ® brand names (among others), an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware items for sale primarily in the foodservice, retail and business-to-business markets. Our sales force presents our products to the global marketplace in a coordinated fashion. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands (Libbey Holland), Portugal (Libbey Portugal), China (Libbey China) and Mexico (Libbey Mexico). In addition, we import products from overseas in order to complement our line of manufactured items. The combination of manufacturing and procurement allows us to compete in the global tableware market by offering an extensive product line at competitive prices.

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

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

2.	Significant Accounting Policies	

See our Form 10-K for the year ended December 31, 2012 for a description of significant accounting policies not listed below.

Basis of Presentation

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

Condensed Consolidated Statements of Operations

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

Foreign Currency Translation

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

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Financial Accounting Standards Board Accounting Standards Codification™ (FASB ASC) Topic 740, “Income Taxes,”

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requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which we conduct our operations or otherwise incur taxable income or losses. In the United States, Portugal and the Netherlands, we have recorded valuation allowances against our deferred income tax assets. See note 6 for further discussion.

Stock-Based Compensation Expense

We account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation — Stock Compensation,” and FASB ASC Topic 505-50, “Equity — Equity-Based Payments to Non-Employees”. Stock-based compensation cost is measured based on the fair value of the equity instruments issued. FASB ASC Topics 718 and 505-50 apply to all of our outstanding unvested stock-based payment awards. Stock-based compensation expense charged to the Condensed Consolidated Statements of Operations is as follows:

																	
 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	 	2013	 	2012	
Stock-based compensation expense	 	$	1,485		 	$	1,138		 	$	2,309		 	$	1,865		

New Accounting Standards

In February 2013, the FASB issued Accounting Standards Update 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (ASU 2013-02). ASU 2013-02 requires companies to present, either in a note or parenthetically on the face of the financial statements, the effect of amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. This update is effective for interim and annual reporting periods beginning after December 15, 2012. Required interim disclosures have been made in our Condensed Consolidated Financial Statements at June 30, 2013.

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3.	Balance Sheet Details	

The following table provides detail of selected balance sheet items:

								
(dollars in thousands)	June 30, 2013	 	December 31, 2012	
Accounts receivable:	 	 	 	
Trade receivables	$	90,189		 	$	79,624		
Other receivables	1,293		 	1,226		
Total accounts receivable, less allowances of $5,834 and $5,703	$	91,482		 	$	80,850		
 	 	 	 	
Inventories:	 	 	 	
Finished goods	$	157,364		 	$	139,888		
Work in process	1,660		 	1,188		
Raw materials	4,709		 	4,828		
Repair parts	10,589		 	10,283		
Operating supplies	1,589		 	1,362		
Total inventories, less allowances of $4,606 and $4,091	$	175,911		 	$	157,549		
 	 	 	 	
Prepaid and other current assets:	 	 	 	
Value added tax	$	7,062		 	$	3,850		
Prepaid expenses	6,744		 	5,036		
Deferred and prepaid income taxes	5,736		 	4,070		
Derivative asset	458		 	41		
Total prepaid and other current assets	$	20,000		 	$	12,997		
 	 	 	 	
Other assets:	 	 	 	
Deposits	$	880		 	$	936		
Finance fees — net of amortization	11,388		 	13,539		
Other assets	2,072		 	3,825		
Total other assets	$	14,340		 	$	18,300		
 	 	 	 	
Accrued liabilities:	 	 	 	
Accrued incentives	$	21,304		 	$	17,783		
Workers compensation	6,607		 	7,128		
Medical liabilities	3,790		 	3,537		
Interest	3,365		 	3,732		
Commissions payable	1,366		 	1,478		
Contingency liability	—		 	2,719		
Restructuring liability	1,523		 	—		
Other accrued liabilities	8,227		 	6,486		
Total accrued liabilities	$	46,182		 	$	42,863		
 	 	 	 	
Other long-term liabilities:	 	 	 	
Deferred liability	$	6,266		 	$	5,591		
Derivative liability	1,824		 	—		
Other long-term liabilities	4,014		 	4,481		
Total other long-term liabilities	$	12,104		 	$	10,072		

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4.	Borrowings	

Borrowings consist of the following:

											
(dollars in thousands)	Interest Rate	 	Maturity Date	June 30,
2013	 	December 31,
2012	
Borrowings under ABL Facility	floating	 	May 18, 2017	$	9,800		 	$	—		
Senior Secured Notes	6.875%	(1)	May 15, 2020	405,000		 	450,000		
Promissory Note	6.00%	 	July, 2013 to September, 2016	793		 	903		
RMB Loan Contract	floating	 	January, 2014	9,720		 	9,522		
BES Euro Line	floating	 	December, 2013	4,294		 	4,362		
AICEP Loan	0.00%	 	January, 2016 to July 30, 2018	1,243		 	1,272		
Total borrowings	 	 	 	430,850		 	466,059		
Plus — carrying value adjustment on debt related to the Interest Rate Agreement (1)	(1,102	)	 	408		
Total borrowings — net	 	 	 	429,748		 	466,467		
Less — long term debt due within one year	 	 	14,242		 	4,583		
Total long-term portion of borrowings — net	 	$	415,506		 	$	461,884		
_____________________________
		
(1)	See Interest Rate Agreement under “Senior Secured Notes” below and in note 9.	

Amended and Restated ABL Credit Agreement

Libbey Glass and Libbey Europe entered into an Amended and Restated Credit Agreement, dated as of February 8, 2010 and amended as of April 29, 2011 and May 18, 2012 (as amended, the ABL Facility), with a group of four financial institutions. The ABL Facility provides for borrowings of up to $100.0 million , subject to certain borrowing base limitations, reserves and outstanding letters of credit.

All borrowings under the ABL Facility are secured by:
		
•	a first-priority security interest in substantially all of the existing and future personal property of Libbey Glass and its domestic subsidiaries (Credit Agreement Priority Collateral);	
		
•	a first-priority security interest in:	
		
•	100 percent of the stock of Libbey Glass and 100 percent of the stock of substantially all of Libbey Glass’s present and future direct and indirect domestic subsidiaries;	
		
•	100 percent of the non-voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries; and	
		
•	65 percent of the voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries	
		
•	a first priority security interest in substantially all proceeds and products of the property and assets described above; and	
		
•	a second-priority security interest in substantially all of the owned real property, equipment and fixtures in the United States of Libbey Glass and its domestic subsidiaries, subject to certain exceptions and permitted liens (Notes Priority Collateral).	

Additionally, borrowings by Libbey Europe under the ABL Facility are secured by:
		
•	a first-priority lien on substantially all of the existing and future real and personal property of Libbey Europe and its Dutch subsidiaries; and	
		
•	a first-priority security interest in:	
		
•	100 percent of the stock of Libbey Europe and 100 percent of the stock of substantially all of the Dutch subsidiaries; and	
		
•	100 percent (or a lesser percentage in certain circumstances) of the outstanding stock issued by the first-tier foreign subsidiaries of Libbey Europe and its Dutch subsidiaries.	

Swingline borrowings are limited to $15.0 million , with swingline borrowings for Libbey Europe being limited to the US equivalent of $7.5 million . Loans comprising each CBFR (CB Floating Rate) Borrowing, including each Swingline Loan, bear interest at the CB Floating Rate plus the Applicable Rate, and euro-denominated swingline borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swingline rate, as defined in the ABL Facility. The Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining availability. The Applicable Rates for CBFR Loans and

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Eurocurrency Loans were 0.50 percent  and 1.50 percent , respectively, at June 30, 2013 . Libbey pays a quarterly Commitment Fee, as defined by the ABL Facility, on the total credit provided under the ABL Facility. The Commitment Fee was 0.375 percent at June 30, 2013 . No compensating balances are required by the Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant, unless aggregate unused availability falls below $10.0 million . If our aggregate unused ABL availability were to fall below $10.0 million , the fixed charge coverage ratio requirement would be 1 :00 to 1:00. Libbey Glass and Libbey Europe have the option to increase the ABL Facility by $25.0 million . There were borrowings of $9.8 million under the facility at June 30, 2013 . There were no Libbey Glass or Libbey Europe borrowings under the facility at December 31, 2012 . Interest is payable on the last day of the interest period, which can range from one month to six months depending on the maturity of each individual borrowing on the facility.

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

The available total borrowing base is offset by rent reserves totaling $0.7 million and natural gas reserves totaling $0.1 million as of June 30, 2013 . The ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are applied against the $100.0 million limit. At June 30, 2013 , we had $8.7 million in letters of credit outstanding under the ABL Facility. Remaining unused availability under the ABL Facility was $68.8 million  at June 30, 2013 , compared to $68.6 million under the ABL Facility at December 31, 2012 .

Senior Secured Notes

On May 18, 2012, Libbey Glass closed its offering of the $450.0 million Senior Secured Notes. The notes offering was issued at par and had related fees of approximately $13.2 million . These fees will be amortized to interest expense over the life of the notes.

The Senior Secured Notes were issued pursuant to an Indenture, dated May 18, 2012 (Notes Indenture), between Libbey Glass, the Company, the domestic subsidiaries of Libbey Glass listed as guarantors therein (Subsidiary Guarantors and together with the Company, Guarantors), and The Bank of New York Mellon Trust Company, N.A., as trustee (Notes Trustee) and collateral agent. Under the terms of the Notes Indenture, the Senior Secured Notes bear interest at a rate of 6.875 percent per year and will mature on May 15, 2020 . Although the Notes Indenture does not contain financial covenants, the Notes Indenture contains other covenants that restrict the ability of Libbey Glass and the Guarantors to, among other things:

•	incur, assume or guarantee additional indebtedness;	
		
•	pay dividends, make certain investments or other restricted payments;	
		
•	create liens;	
		
•	enter into affiliate transactions;	
		
•	merge or consolidate, or otherwise dispose of all or substantially all the assets of Libbey Glass and the Guarantors; and	
		
•	transfer or sell assets.	

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

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

Prior to May 15, 2015, we may redeem in the aggregate up to 35 percent of the Senior Secured Notes with the net cash proceeds of one or more equity offerings at a redemption price of 106.875 percent of the principal amount, provided that at least 65 percent of the original principal amount of the Senior Secured Notes must remain outstanding after each redemption and that each redemption occurs within 90 days of the closing of the equity offering. In addition, prior to May 15, 2015, but not more than once in any twelve -month period, we may redeem up to 10 percent of the Senior Secured Notes at a redemption price of 103 percent plus accrued and unpaid interest. The Senior Secured Notes are redeemable at our option, in whole or in part, at any time on or after May 15, 2015 at set redemption prices together with accrued and unpaid interest.

On May 7, 2013, Libbey Glass redeemed an aggregate principal amount of $45.0 million of the Senior Secured Notes in accordance with the terms of the Notes Indenture. Pursuant to the terms of the Notes Indenture, the redemption price for the

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Senior Secured Notes was 103 percent of the principal amount of the redeemed Senior Secured Notes, plus accrued and unpaid interest. At completion of the redemption, the aggregate principal amount of the Senior Secured Notes outstanding was $405.0 million . In conjunction with this redemption, we recorded $2.5 million of expense, representing $1.3 million for an early call premium and $1.2 million for the write off of a pro rata amount of financing fees.

For the three and six months ended June 30, 2012, loss on redemption of debt included charges of $23.6 million for an early call premium and $11.0 million for the write off of the remaining financing fees and discounts from the former Senior Secured Notes.

We had an Interest Rate Agreement (Old Rate Agreement) in place through April 18, 2012 with respect to $80.0 million of our former Senior Secured Notes as a means to manage our fixed to variable interest rate ratio. The Old Rate Agreement effectively converted this portion of our long-term borrowings from fixed rate debt to variable rate debt. The variable interest rate for our borrowings related to the Old Rate Agreement at April 18, 2012, excluding applicable fees, was 7.79 percent . Total remaining Senior Secured Notes not covered by the Old Rate Agreement had a fixed interest rate of 10.0 percent  per year. On April 18, 2012, the swap was called at fair value. We received proceeds of $3.6 million . During the second quarter of 2012, $0.1 million of the carrying value adjustment on debt related to the Old Rate Agreement was amortized into interest expense. Upon the refinancing of the former Senior Secured Notes, the remaining unamortized balance of $3.5 million of the carrying value adjustment on debt related to the Old Rate Agreement was recognized as a gain in the loss on redemption of debt on the Condensed Consolidated Statements of Operations.

On June 18, 2012, we entered into an Interest Rate Agreement (New Rate Agreement) with respect to $45.0 million of our Senior Secured Notes as a means to manage our fixed to variable interest rate ratio. The New Rate Agreement effectively converts this portion of our long-term borrowings from fixed rate debt to variable rate debt. Prior to May 15, 2015, but not more than once in any twelve -month period, the counterparty may call up to 10 percent of the New Rate Agreement at a call price of 103 percent . The New Rate Agreement is callable at the counterparty’s option, in whole or in part, at any time on or after May 15, 2015 at set call premiums. The variable interest rate for our borrowings related to the New Rate Agreement at June 30, 2013 , excluding applicable fees, is 5.5 percent . The New Rate Agreement expires on May 15, 2020. Total remaining Senior Secured Notes not covered by the New Rate Agreement have a fixed interest rate of 6.875 percent per year through May 15, 2020. If the counterparty to this New Rate Agreement were to fail to perform, this New Rate Agreement would no longer afford us a variable rate. However, we do not anticipate non-performance by the counterparty. The interest rate swap counterparty was rated A+ , as of June 30, 2013 , by Standard and Poor’s.

The fair market value and related carrying value adjustment are as follows:

								
(dollars in thousands)	June 30, 2013	 	December 31, 2012	
Fair market value of Rate Agreements - asset (liability)	$	(1,781	)	 	$	298		
Adjustment to increase (decrease) carrying value of the related long-term debt	$	(1,102	)	 	$	408		
The net impact recorded on the Condensed Consolidated Statements of Operations is as follows:

																	
 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	 	2013	 	2012	
Income (expense) on hedging activities in other income (expense)	 	$	(347	)	 	$	(173	)	 	$	(569	)	 	$	246		
Income on hedging activities in loss on redemption of debt	 	$	—		 	$	3,502		 	$	—		 	$	3,502		

The fair value of the Old and New Rate Agreements are based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. See note 9 for further discussion.

Promissory Note

In September 2001, we issued a $2.7 million promissory note at an interest rate of 6.0 percent in connection with the purchase of our Laredo, Texas warehouse facility. At June 30, 2013 , we had $0.8 million outstanding on the promissory note. Principal and interest with respect to the promissory note are paid monthly.

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Notes Payable

We have an overdraft line of credit for a maximum of €1.0 million . At June 30, 2013 , there were no borrowings under the facility, which has an interest rate of 5.80 percent . Interest with respect to the note is paid monthly.

RMB Loan Contract

On January 23, 2006, Libbey Glassware (China) Co., Ltd. (Libbey China), an indirect wholly owned subsidiary of Libbey Inc., entered into an RMB Loan Contract (RMB Loan Contract) with China Construction Bank Corporation Langfang Economic Development Area Sub-Branch (CCB). Pursuant to the RMB Loan Contract, CCB agreed to lend to Libbey China RMB 250.0 million , or the equivalent of approximately $40.5 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, 2013 , the annual interest rate was 5.90 percent . As of June 30, 2013 , the outstanding balance was RMB 60.0 million (approximately $9.7 million ) which is due on January 20, 2014. Interest is payable quarterly. The obligations of Libbey China are secured by a guarantee executed by Libbey Inc. for the benefit of CCB and a mortgage lien on the Libbey China facility.

BES Euro Line

In January 2007, Crisal (Libbey Portugal) entered into a seven -year €11.0 million line of credit (approximately $14.3 million ) with Banco Espírito Santo, S.A. (BES). The $4.3 million outstanding at June 30, 2013 , was the U.S. dollar equivalent of the €3.3 million outstanding under the line at an interest rate of 5.32 percent . Payment of principal in the amount of €3.3 million (approximately $4.3 million ) is due in December 2013. Interest with respect to the line is paid semi-annually.

AICEP Loan

In July 2012, Libbey Portugal entered into a loan agreement with Agencia para Investmento Comercio Externo de Portugal, EPE (AICEP), the Portuguese Agency for investment and external trade. The amount of the loan is €1.0 million (approximately $1.2 million ) and has an interest rate of 0.0 percent . Semi-annual installments of principal are due beginning in January 2016 through the maturity date of July 2018.

Fair Value of Borrowings

The fair value of our debt has been calculated based on quoted market prices (Level 1 in the fair value hierarchy) for the same or similar issues. Our $405.0 million Senior Secured Notes had an estimated fair value of $423.2 million at June 30, 2013 . At December 31, 2012 , the $450.0 million outstanding Senior Secured Notes had an estimated fair value of $488.3 million . The fair value of the remainder of our debt approximates carrying value at June 30, 2013 and December 31, 2012 due to variable rates.

Capital Resources and Liquidity

Historically, cash flows generated from operations, cash on hand and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. At June 30, 2013 we had $9.8 million borrowings under our ABL Facility and $8.7 million of letters of credit issued under that facility. As a result, we had $68.8 million  of unused availability remaining under the ABL Facility at June 30, 2013 . In addition, we had $10.5 million of cash on hand at June 30, 2013 .

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

5.	Restructuring Charges	

Capacity Realignment

In February 2013, we announced our plans to discontinue production of certain glassware in North America and reduce manufacturing capacity at our Shreveport, Louisiana manufacturing facility. As a result, on May 30, 2013, we ceased production of certain glassware in North America, discontinued the use of a furnace at our Shreveport, Louisiana

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manufacturing plant and began relocating a portion of the production from the idled furnace to our Toledo, Ohio and Monterrey, Mexico locations. These activities are all within the Americas segment and are expected to be completed by the end of the first quarter of 2014. In connection with this plan, we expect to incur pretax charges in the range of approximately $8.0 million to $10.0 million . This estimate consists of: (i) up to $4.0 million in fixed asset impairment charges, (ii) up to $2.0 million in severance and other employee related costs and (iii) up to $4.0 million in production transfer expenses. We expect approximately $5.5 million of the pretax charge to result in cash expenditures, most of which is expected to be paid throughout the remainder of 2013. For the three and six months ended June 30, 2013, we recorded a pretax charge of $1.0 million and $5.9 million respectively, which included employee termination costs, fixed asset impairment charges and depreciation expense. Employee termination costs include severance, medical benefits and outplacement services for the terminated employees. The write-down of fixed assets is to adjust certain machinery and equipment to the estimated fair market value.

The following table summarizes the pretax charge incurred for the three and six months ended June 30, 2013:

								
(dollars in thousands)	Three months ended June 30, 2013	 	Six months ended June 30, 2013	
Accelerated depreciation	$	1,133		 	$	1,699		
Included in cost of sales	1,133		 	1,699		
Employee termination cost & other	(412	)	 	1,910		
Fixed asset write-down	—		 	1,992		
Production transfer expenses	327		 	327		
Included in special charges	(85	)	 	4,229		
Total pretax charge	$	1,048		 	$	5,928		

The following is the capacity realignment reserve activity for the six months ended June 30, 2013:

																				
(dollars in thousands)	Reserve
Balance at
January 1, 2013	 	Total
Charge to Earnings	 	Cash
(payments) receipts	 	Non-cash Utilization	 	Reserve
Balance at
June 30, 2013	
Accelerated depreciation	$	—		 	$	1,699		 	$	—		 	$	(1,699	)	 	$	—		
Employee termination cost & other	—		 	1,910		 	(387	)	 	—		 	1,523		
Fixed asset write-down	—		 	1,992		 	—		 	(1,992	)	 	—		
Production transfer expenses	—		 	327		 	(327	)	 	—		 	—		
Total	$	—		 	$	5,928		 	$	(714	)	 	$	(3,691	)	 	$	1,523		

6.	Income Taxes	

Our effective tax rate was 27.8 percent for the six months ended June 30, 2013, compared to (23.3) percent for the six months ended June 30, 2012. Our effective tax rate differs from the United States statutory tax rate primarily due to valuation allowances, earnings in countries with differing statutory tax rates, accruals related to uncertain tax positions and tax planning structures. At June 30, 2013 and December 31, 2012 , we had $1.0 million and $1.5 million , respectively, of gross unrecognized tax benefits, exclusive of interest and penalties. During the three months ended June 30, 2013, we recorded no additional income tax benefit. During the six months ended June 30, 2013, we recorded an income tax benefit, exclusive of interest and penalties, of $0.5 million due to the reversal of an accrual for an uncertain tax position that expired under the statute of limitations.

FASB ASC 740-20, "Income Taxes - Intraperiod Tax Allocation," requires that the provision for income taxes be allocated between continuing operations and other categories of earnings (such as discontinued operations or other comprehensive income) for each tax jurisdiction. In periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. A tax benefit of $4.2 million was recorded in our income tax provision for the three months and six months ended June 30, 2012. There was no similar benefit recorded for the three months and six months ended June 30, 2013.

Our current and future provision for income taxes for 2013 is impacted by valuation allowances. In the United States, the Netherlands and Portugal, we have recorded valuation allowances against our deferred income tax assets. We did not change our conclusion related to entities with a recorded valuation allowance for the six months ended June 30, 2013, or the six months

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ended June 30, 2012. In assessing the need for recording or releasing a valuation allowance, we weigh all available positive and negative evidence. Examples of the evidence we consider are cumulative losses in recent years, losses expected in early future years, a history of potential tax benefits expiring unused, prudent and feasible tax planning strategies that could be implemented, and whether there was an unusual, infrequent or extraordinary item to be considered. Based on our analysis of all available evidence, we intend to maintain these allowances until it is more likely than not that the deferred income tax assets will be realized. We will continue to monitor and assess the need for these allowances quarterly in each jurisdiction.

Income tax payments consisted of the following:

																
 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	
Total income tax payments, net of refunds	$	7,270		 	$	1,122		 	$	9,539		 	$	2,615		
Less: credits or offsets	1,339		 	816		 	1,724		 	1,424		
Cash paid, net	$	5,931		 	$	306		 	$	7,815		 	$	1,191		

Cash paid for income taxes has increased for the three and six months ended June 30, 2013 due to net operating loss carryforwards being fully utilized in 2012 in China and timing of payments in Mexico.

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 certain salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Effective January 1, 2013, we ceased annual company contribution credits to the cash balance accounts in our Libbey U.S. Salaried Pension Plan and SERP. The non-U.S. pension plans cover the employees of our wholly owned subsidiaries in the Netherlands and Mexico. The plan in Mexico is not funded.

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

																								
Three months ended June 30,	U.S. Plans	 	Non-U.S. Plans	 	Total	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	 	2013	 	2012	
Service cost	$	1,092		 	$	1,370		 	$	686		 	$	548		 	$	1,778		 	$	1,918		
Interest cost	3,501		 	3,827		 	1,195		 	1,178		 	4,696		 	5,005		
Expected return on plan assets	(5,605	)	 	(4,461	)	 	(496	)	 	(583	)	 	(6,101	)	 	(5,044	)	
Amortization of unrecognized:	 	 	 	 	 	 	 	 	 	 	 	
Prior service cost	293		 	522		 	60		 	62		 	353		 	584		
Loss	2,263		 	1,719		 	215		 	124		 	2,478		 	1,843		
Settlement charge	715		 	37		 	—		 	—		 	715		 	37		
Pension expense	$	2,259		 	$	3,014		 	$	1,660		 	$	1,329		 	$	3,919		 	$	4,343		
 	 	 	 	 	 	 	 	 	 	 	 	
Six months ended June 30,	U.S. Plans	 	Non-U.S. Plans	 	Total	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	 	2013	 	2012	
Service cost	$	2,370		 	$	2,925		 	$	1,408		 	$	990		 	$	3,778		 	$	3,915		
Interest cost	6,982		 	7,846		 	2,451		 	2,434		 	9,433		 	10,280		
Expected return on plan assets	(11,204	)	 	(8,946	)	 	(977	)	 	(1,190	)	 	(12,181	)	 	(10,136	)	
Amortization of unrecognized:	 	 	 	 	 	 	 	 	 	 	 	
Prior service cost	586		 	1,043		 	122		 	128		 	708		 	1,171		
Loss	4,350		 	3,520		 	453		 	259		 	4,803		 	3,779		
Settlement charge	715		 	457		 	—		 	—		 	715		 	457		
Pension expense	$	3,799		 	$	6,845		 	$	3,457		 	$	2,621		 	$	7,256		 	$	9,466		

During the second quarter of 2013 and the first half of 2012, we incurred pension settlement charges totaling $0.7 million and $0.5 million , respectively. The pension settlement charges were triggered by excess lump sum distributions, which required us to record unrecognized gains and losses in our pension plan accounts. We have contributed $2.1 million and $2.8 million of cash into our pension plans for the three and six months ended June 30, 2013 , respectively. Pension contributions for the remainder of 2013 are estimated to be $3.6 million .

We provide certain retiree health care and life insurance benefits covering our U.S and Canadian salaried and non-union hourly employees hired before January 1, 2004 and a majority of our union hourly employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Effective January 1, 2013, we ended our existing healthcare benefit for salaried retirees age 65 and older and are now providing a Retiree Health Reimbursement Arrangement (RHRA) that supports retirees in purchasing a Medicare plan that meets their needs. Also effective January 1, 2013, we reduced the maximum life insurance benefit for salaried retirees to $10,000 . Benefits for most hourly retirees are determined by collective bargaining. The U.S. non-pension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey (excluding those mentioned above). The non-U.S. non-pension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

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

																								
Three months ended June 30,	U.S. Plans	 	Non-U.S. Plans	 	Total	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	 	2013	 	2012	
Service cost	$	203		 	$	367		 	$	1		 	$	1		 	$	204		 	$	368		
Interest cost	610		 	856		 	31		 	26		 	641		 	882		
Amortization of unrecognized:	 	 	 	 	 	 	 	 	 	 	 	
Prior service cost	36		 	106		 	—		 	—		 	36		 	106		
Loss / (gain)	138		 	229		 	1		 	(1	)	 	139		 	228		
Non-pension postretirement benefit expense	$	987		 	$	1,558		 	$	33		 	$	26		 	$	1,020		 	$	1,584		
 	 	 	 	 	 	 	 	 	 	 	 	
Six months ended June 30,	U.S. Plans	 	Non-U.S. Plans	 	Total	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	 	2013	 	2012	
Service cost	$	595		 	$	735		 	$	1		 	$	1		 	$	596		 	$	736		
Interest cost	1,311		 	1,713		 	54		 	52		 	1,365		 	1,765		
Amortization of unrecognized:	 	 	 	 	 	 	 	 	 	 	 	
Prior service cost	70		 	211		 	—		 	—		 	70		 	211		
Loss / (gain)	429		 	458		 	—		 	(1	)	 	429		 	457		
Non-pension postretirement benefit expense	$	2,405		 	$	3,117		 	$	55		 	$	52		 	$	2,460		 	$	3,169		

Our 2013 estimate of non-pension cash payments is $4.7 million , and we have paid $1.2 million and $2.2 million for the three and six months ended June 30, 2013 , respectively.

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

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

																
 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands, except earnings per share)	2013	 	2012	 	2013	 	2012	
Numerators for earnings per share:	 	 	 	 	 	 	 	
Net income (loss) that is available to common shareholders	$	12,436		 	$	(10,143	)	 	$	14,425		 	$	(9,502	)	
 	 	 	 	 	 	 	 	
Denominator for basic earnings per share:	 	 	 	 	 	 	 	
Weighted average shares outstanding	21,288,897		 	20,837,843		 	21,202,411		 	20,803,629		
 	 	 	 	 	 	 	 	
Denominator for diluted earnings per share:	 	 	 	 	 	 	 	
Effect of stock options and restricted stock units (1)	654,388		 	—		 	504,622		 	—		
Adjusted weighted average shares and assumed conversions	21,943,285		 	20,837,843		 	21,707,033		 	20,803,629		
 	 	 	 	 	 	 	 	
Basic earnings (loss) per share	$	0.58		 	$	(0.49	)	 	$	0.68		 	$	(0.46	)	
 	 	 	 	 	 	 	 	
Diluted earnings (loss) per share	$	0.57		 	$	(0.49	)	 	$	0.66		 	$	(0.46	)	

(1) The effect of employee stock options and restricted stock units, 437,680 and 424,483 shares for the three months and six months ended June 30, 2012, respectively, were anti-dilutive and thus not included in the earnings per share calculation. This amount would have been dilutive if not for the net loss.

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

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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 the foreign currency contracts, qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings. All of these contracts were accounted for under FASB ASC 815 “Derivatives and Hedging.”

Fair Values

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

													
 	 	Asset Derivatives:	
(dollars in thousands)	 	June 30, 2013	 	December 31, 2012	
Derivatives designated as hedging
instruments under FASB ASC 815:	 	Balance Sheet Location	 	Fair Value	 	Balance Sheet Location	 	Fair Value	
Interest rate contract	 	Derivative asset	 	$	—		 	Derivative asset	 	$	298		
Total designated	 	 	 	—		 	 	 	298		
Derivatives not designated as hedging
instruments under FASB ASC 815:	 	 	 	 	 	 	 	 	
Currency contracts	 	Prepaid and other current assets	 	458		 	Prepaid and other current assets	 	41		
Total undesignated	 	 	 	458		 	 	 	41		
Total	 	 	 	$	458		 	 	 	$	339		
 	 	 	 	 	 	 	 	 	
 	 	Liability Derivatives:	
(dollars in thousands)	 	June 30, 2013	 	December 31, 2012	
Derivatives designated as hedging
instruments under FASB ASC 815:	 	Balance Sheet Location	 	Fair Value	 	Balance Sheet Location	 	Fair Value	
Natural gas contracts	 	Derivative liability	 	$	69		 	Derivative liability	 	$	420		
Natural gas contracts	 	Other long-term liabilities	 	43		 	Other long-term liabilities	 	—		
Interest rate contract	 	Other long-term liabilities	 	1,781		 	Other long-term liabilities	 	—		
Total designated	 	 	 	1,893		 	 	 	420		
Total	 	 	 	$	1,893		 	 	 	$	420		

Interest Rate Swaps as Fair Value Hedges

On June 18, 2012, we entered into an interest rate swap agreement (New Rate Agreement) with a notional amount of $45.0 million that is to mature in 2020. The New Rate Agreement was executed in order to convert a portion of the Senior Secured Notes fixed rate debt into floating rate debt and maintain a capital structure containing fixed and floating rate debt.

Upon the refinancing of the former Senior Secured Notes, the remaining unamortized balance of the carrying value adjustment on debt related to the Old Rate Agreement was recognized as a gain in the loss on redemption of debt on the Condensed Consolidated Statements of Operations, refer to the Borrowings footnote for further discussion.

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

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The following table provides a summary of the gain (loss) recognized on the Condensed Consolidated Statements of Operations:

																	
 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	 	2013	 	2012	
Interest rate swap	 	$	(1,723	)	 	$	(352	)	 	$	(2,079	)	 	$	(339	)	
Related long-term debt	 	1,376		 	3,681		 	1,510		 	4,087		
Net impact	 	$	(347	)	 	$	3,329		 	$	(569	)	 	$	3,748		

The gain or loss on the hedged long-term debt netted with the offsetting gain or loss on the related interest rate swap was recorded on the Condensed Consolidated Statements of Operations as follows:

																	
 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	 	2013	 	2012	
Loss on redemption of debt	 	$	—		 	$	3,502		 	$	—		 	$	3,502		
Other income (expense)	 	(347	)	 	(173	)	 	(569	)	 	246		
Net impact	 	$	(347	)	 	$	3,329		 	$	(569	)	 	$	3,748		

Commodity Futures Contracts Designated as Cash Flow Hedges

We use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts and other derivatives is to limit the fluctuations in prices paid due to price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, up to eighteen months in the future. The fair values of these instruments are determined from market quotes. As of June 30, 2013 , we had commodity contracts for 1,550,000  million British Thermal Units (BTUs) of natural gas. At December 31, 2012 , we had commodity contracts for 2,400,000  million BTUs of natural gas.

All of our natural gas derivatives qualify and are designated as cash flow hedges at June 30, 2013 . Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses would be recorded to earnings immediately. Changes in the effective portion of the fair value of these hedges are recorded in other comprehensive income (loss). The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings. As the natural gas contracts mature, the accumulated gains (losses) for the respective contracts are reclassified from accumulated other comprehensive loss to current expense in cost of sales in our Condensed Consolidated Statements of Operations. We recognized in the three and six months ended June 30, 2013 $0.3 million of ineffectiveness in Other Income (Expense) in the Condensed Consolidated Statements of Operations for certain contracts at our Mexico facility. This ineffectiveness was related to a change in pricing caused by the Mexican government instituting a fixed surcharge. The ineffectiveness is not expected to continue so we have continued to consider the contracts effective as appropriate under FASB ASC 815 "Derivatives and Hedging." We paid (received) additional cash of $(0.3) million and $1.7 million in the three months ended June 30, 2013 and 2012 , respectively, and a nil amount and $3.2 million in the six months ended June 30, 2013 and 2012, respectively, due to the difference between the fixed unit rate of our natural gas contracts and the variable unit rate of our natural gas cost from suppliers. Based on our current valuation, we estimate that accumulated losses currently carried in accumulated other comprehensive loss that will be reclassified into earnings over the next twelve months will result in $0.1 million of loss in our Condensed Consolidated Statements of Operations.

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

																	
 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	 	2013	 	2012	
Derivatives in Cash Flow Hedging relationships:	 	 	 	 	 	 	 	 	
Natural gas contracts	 	$	(377	)	 	$	586		 	$	590		 	$	(1,518	)	
Total	 	$	(377	)	 	$	586		 	$	590		 	$	(1,518	)	

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

																		
 	 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	 	2013	 	2012	 	2013	 	2012	
Derivative:	Location:	 	 	 	 	 	 	 	 	
Natural gas contracts	Cost of sales	 	$	252		 	$	(1,736	)	 	$	6		 	$	(3,196	)	
Total impact on net income (loss)	 	 	$	252		 	$	(1,736	)	 	$	6		 	$	(3,196	)	

Currency Contracts

Our foreign currency exposure arises from transactions denominated in a currency other than the U.S. dollar primarily associated with our Canadian dollar denominated accounts receivable. We enter into a series of foreign currency contracts to sell Canadian dollars. As of June 30, 2013 and December 31, 2012 , we had contracts for C$7.9 million and C$14.8 million , respectively. The fair values of these instruments are determined from market quotes. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change.

Gains (losses) for derivatives that were not designated as hedging instruments are recorded in current earnings as follows:

																		
 	 	 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	 	 	2013	 	2012	 	2013	 	2012	
Derivative:	Location:	 	 		 	 		 	 		 	 		
Currency contracts	Other income (expense)	 	$	166		 	$	132		 	$	417		 	$	(30	)	
Total	 	 	$	166		 	$	132		 	$	417		 	$	(30	)	

We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate swap, natural gas hedges and currency contracts as the counterparties are established financial institutions. The counterparty for the New Rate Agreement is rated A+ and the counterparties for the other derivative agreements are rated BBB+ or better as of June 30, 2013 , by Standard and Poor’s.

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10.	Comprehensive Income (Loss)	

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

																	
Three months ended June 30, 2013
(dollars in thousands)	 	Foreign Currency Translation	 	Derivative Instruments	 	Pension and Other Postretirement Benefits	 	Total
Accumulated
Comprehensive Loss	
Balance on March 31, 2013	 	$	(4,566	)	 	$	1,534		 	$	(137,217	)	 	$	(140,249	)	
 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	 	2,335		 	(377	)	 	3,059		 	5,017		
Currency impact	 	—		 	—		 	307		 	307		
 	 	 	 	 	 	 	 	 	
Amounts reclassified from accumulated other comprehensive income (loss):	 	 	 	 	 	 	 	 	
    Amortization of actuarial loss (1)	 	—		 	—		 	2,600		 	2,600		
    Amortization of prior service cost (1)	 	—		 	—		 	369		 	369		
    Amortization of transition obligation (1)	 	—		 	—		 	21		 	21		
    Cost of sales	 	—		 	(252	)	 	—		 	(252	)	
Current-period other comprehensive income (loss)	 	2,335		 	(629	)	 	6,356		 	8,062		
Tax effect	 	—		 	120		 	56		 	176		
Balance on June 30, 2013	 	$	(2,231	)	 	$	1,025		 	$	(130,805	)	 	$	(132,011	)	
 	 	 	 	 	 	 	 	 	
Six months ended June 30, 2013
(dollars in thousands)	 	Foreign Currency Translation	 	Derivative Instruments	 	Pension and Other Postretirement Benefits	 	Total
Accumulated
Comprehensive Loss	
Balance on December 31, 2012	 	$	(1,641	)	 	$	489		 	$	(139,888	)	 	$	(141,040	)	
 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss)	 	(590	)	 	590		 	3,059		 	3,059		
Currency impact	 	—		 	—		 	(45	)	 	(45	)	
 	 	 	 	 	 	 	 	 	
Amounts reclassified from accumulated other comprehensive income (loss):	 	 	 	 	 	 	 	 	
    Amortization of actuarial loss (1)	 	—		 	—		 	5,200		 	5,200		
    Amortization of prior service cost (1)	 	—		 	—		 	738		 	738		
    Amortization of transition obligation  (1)	 	—		 	—		 	42		 	42		
    Cost of sales	 	—		 	(6	)	 	—		 	(6	)	
Current-period other comprehensive income (loss)	 	(590	)	 	584		 	8,994		 	8,988		
Tax effect	 	—		 	(48	)	 	89		 	41		
Balance on June 30, 2013	 	$	(2,231	)	 	$	1,025		 	$	(130,805	)	 	$	(132,011	)	
___________________________
(1) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost within the cost of sales and selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

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11.	Condensed Consolidated Guarantor Financial Statements	

Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and is the issuer of the Senior Secured Notes. The obligations of Libbey Glass under the Senior Secured Notes are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain indirect, 100 percent owned domestic subsidiaries of Libbey Inc., as described below. All are related parties that are included in the Condensed Consolidated Financial Statements for the three months and six months ended June 30, 2013 and June 30, 2012 .

At June 30, 2013 , December 31, 2012 and June 30, 2012 , 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., Libbey.com LLC, LGFS Inc., and LGAC LLC (collectively, 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.

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Libbey Inc.
Condensed Consolidating Statements of Comprehensive Income (Loss)
(unaudited)

																								
 	Three months ended June 30, 2013	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net sales	$	—		 	$	101,406		 	$	22,056		 	$	99,492		 	$	(13,050	)	 	$	209,904		
Freight billed to customers	—		 	132		 	194		 	445		 	—		 	771		
Total revenues	—		 	101,538		 	22,250		 	99,937		 	(13,050	)	 	210,675		
Cost of sales	—		 	66,605		 	16,140		 	83,518		 	(13,050	)	 	153,213		
Gross profit	—		 	34,933		 	6,110		 	16,419		 	—		 	57,462		
Selling, general and administrative expenses	—		 	18,188		 	2,484		 	8,963		 	—		 	29,635		
Special charges	—		 	(85	)	 	—		 	—		 	—		 	(85	)	
Income (loss) from operations	—		 	16,830		 	3,626		 	7,456		 	—		 	27,912		
Other income (expense)	—		 	(2,506	)	 	(3	)	 	42		 	—		 	(2,467	)	
Earnings (loss) before interest and income taxes	—		 	14,324		 	3,623		 	7,498		 	—		 	25,445		
Interest expense	—		 	5,996		 	—		 	2,130		 	—		 	8,126		
Income (loss) before income taxes	—		 	8,328		 	3,623		 	5,368		 	—		 	17,319		
Provision (benefit) for income taxes	—		 	1,519		 	147		 	3,217		 	—		 	4,883		
Net income (loss)	—		 	6,809		 	3,476		 	2,151		 	—		 	12,436		
Equity in net income (loss) of subsidiaries	12,436		 	5,627		 	—		 	—		 	(18,063	)	 	—		
Net income (loss)	$	12,436		 	$	12,436		 	$	3,476		 	$	2,151		 	$	(18,063	)	 	$	12,436		
 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	$	20,674		 	$	20,674		 	$	3,303		 	$	4,352		 	$	(28,329	)	 	$	20,674		

																								
 	Three months ended June 30, 2012	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net sales	$	—		 	$	109,697		 	$	19,765		 	$	96,850		 	$	(17,065	)	 	$	209,247		
Freight billed to customers	—		 	130		 	191		 	438		 	—		 	759		
Total revenues	—		 	109,827		 	19,956		 	97,288		 	(17,065	)	 	210,006		
Cost of sales	—		 	75,608		 	14,342		 	80,774		 	(17,065	)	 	153,659		
Gross profit	—		 	34,219		 	5,614		 	16,514		 	—		 	56,347		
Selling, general and administrative expenses	—		 	17,482		 	1,886		 	8,010		 	—		 	27,378		
Special charges	—		 	—		 	—		 	—		 	—		 	—		
Income (loss) from operations	—		 	16,737		 	3,728		 	8,504		 	—		 	28,969		
Other income (expense)	—		 	(31,259	)	 	(19	)	 	630		 	—		 	(30,648	)	
Earnings (loss) before interest and income taxes	—		 	(14,522	)	 	3,709		 	9,134		 	—		 	(1,679	)	
Interest expense	—		 	7,681		 	—		 	2,276		 	—		 	9,957		
Income (loss) before income taxes	—		 	(22,203	)	 	3,709		 	6,858		 	—		 	(11,636	)	
Provision (benefit) for income taxes	—		 	(2,661	)	 	131		 	1,037		 	—		 	(1,493	)	
Net income (loss)	—		 	(19,542	)	 	3,578		 	5,821		 	—		 	(10,143	)	
Equity in net income (loss) of subsidiaries	(10,143	)	 	9,399		 	—		 	—		 	744		 	—		
Net income (loss)	$	(10,143	)	 	$	(10,143	)	 	$	3,578		 	$	5,821		 	$	744		 	$	(10,143	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	$	(9,620	)	 	$	(9,620	)	 	$	3,818		 	$	832		 	$	4,970		 	$	(9,620	)	

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Libbey Inc.
Condensed Consolidating Statements of Comprehensive Income (Loss)
(unaudited)

																								
 	Six months ended June 30, 2013	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net sales	$	—		 	$	188,336		 	$	40,416		 	$	188,871		 	$	(24,243	)	 	$	393,380		
Freight billed to customers	—		 	231		 	428		 	864		 	—		 	1,523		
Total revenues	—		 	188,567		 	40,844		 	189,735		 	(24,243	)	 	394,903		
Cost of sales	—		 	129,205		 	30,500		 	159,747		 	(24,243	)	 	295,209		
Gross profit	—		 	59,362		 	10,344		 	29,988		 	—		 	99,694		
Selling, general and administrative expenses	—		 	33,245		 	5,153		 	17,634		 	—		 	56,032		
Special charges	—		 	4,229		 	—		 	—		 	—		 	4,229		
Income (loss) from operations	—		 	21,888		 	5,191		 	12,354		 	—		 	39,433		
Other income (expense)	—		 	(2,507	)	 	(12	)	 	(383	)	 	—		 	(2,902	)	
Earnings (loss) before interest and income taxes	—		 	19,381		 	5,179		 	11,971		 	—		 	36,531		
Interest expense	—		 	12,416		 	—		 	4,145		 	—		 	16,561		
Income (loss) before income taxes	—		 	6,965		 	5,179		 	7,826		 	—		 	19,970		
Provision (benefit) for income taxes	—		 	700		 	149		 	4,696		 	—		 	5,545		
Net income (loss)	—		 	6,265		 	5,030		 	3,130		 	—		 	14,425		
Equity in net income (loss) of subsidiaries	14,425		 	8,160		 	—		 	—		 	(22,585	)	 	—		
Net income (loss)	$	14,425		 	$	14,425		 	$	5,030		 	$	3,130		 	$	(22,585	)	 	$	14,425		
 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	$	23,454		 	$	23,454		 	$	4,999		 	$	2,800		 	$	(31,253	)	 	$	23,454		

																								
 	Six months ended June 30, 2012	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net sales	$	—		 	$	203,177		 	$	37,210		 	$	190,009		 	$	(33,320	)	 	$	397,076		
Freight billed to customers	—		 	296		 	374		 	797		 	—		 	1,467		
Total revenues	—		 	203,473		 	37,584		 	190,806		 	(33,320	)	 	398,543		
Cost of sales	—		 	149,919		 	27,355		 	155,186		 	(33,320	)	 	299,140		
Gross profit	—		 	53,554		 	10,229		 	35,620		 	—		 	99,403		
Selling, general and administrative expenses	—		 	35,424		 	3,402		 	16,678		 	—		 	55,504		
Special charges	—		 	—		 	—		 	—		 	—		 	—		
Income (loss) from operations	—		 	18,130		 	6,827		 	18,942		 	—		 	43,899		
Other income (expense)	—		 	(30,962	)	 	(7	)	 	(270	)	 	—		 	(31,239	)	
Earnings (loss) before interest and income taxes	—		 	(12,832	)	 	6,820		 	18,672		 	—		 	12,660		
Interest expense	—		 	15,874		 	—		 	4,491		 	—		 	20,365		
Income (loss) before income taxes	—		 	(28,706	)	 	6,820		 	14,181		 	—		 	(7,705	)	
Provision (benefit) for income taxes	—		 	(2,436	)	 	131		 	4,102		 	—		 	1,797		
Net income (loss)	—		 	(26,270	)	 	6,689		 	10,079		 	—		 	(9,502	)	
Equity in net income (loss) of subsidiaries	(9,502	)	 	16,768		 	—		 	—		 	(7,266	)	 	—		
Net income (loss)	$	(9,502	)	 	$	(9,502	)	 	$	6,689		 	$	10,079		 	$	(7,266	)	 	$	(9,502	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss)	$	(3,867	)	 	$	(3,867	)	 	$	7,053		 	$	7,876		 	$	(11,062	)	 	$	(3,867	)	

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Libbey Inc.
Condensed Consolidating Balance Sheet

	

 	June 30, 2013 (unaudited)	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Cash and equivalents	$	—		 	$	(3,568	)	 	$	55		 	$	14,057		 	$	—		 	$	10,544		
Accounts receivable — net	—		 	38,630		 	5,607		 	47,245		 	—		 	91,482		
Inventories — net	—		 	65,687		 	21,299		 	88,925		 	—		 	175,911		
Other current assets	—		 	19,420		 	1,212		 	16,732		 	(17,364	)	 	20,000		
Total current assets	—		 	120,169		 	28,173		 	166,959		 	(17,364	)	 	297,937		
Other non-current assets	—		 	18,203		 	—		 	20,645		 	(4,190	)	 	34,658		
Investments in and advances to subsidiaries	52,882		 	394,048		 	195,294		 	(44,054	)	 	(598,170	)	 	—		
Goodwill and purchased intangible assets — net	—		 	27,423		 	12,347		 	147,015		 	—		 	186,785		
Total other assets	52,882		 	439,674		 	207,641		 	123,606		 	(602,360	)	 	221,443		
Property, plant and equipment — net	—		 	65,801		 	296		 	187,703		 	—		 	253,800		
Total assets	$	52,882		 	$	625,644		 	$	236,110		 	$	478,268		 	$	(619,724	)	 	$	773,180		
 	 	 	 	 	 	 	 	 	 	 	 	
Accounts payable	$	—		 	$	11,939		 	$	2,798		 	$	44,572		 	$	—		 	$	59,309		
Accrued and other current liabilities	—		 	50,911		 	21,482		 	27,653		 	(16,915	)	 	83,131		
Notes payable and long-term debt due within one year	—		 	228		 	—		 	14,014		 	—		 	14,242		
Total current liabilities	—		 	63,078		 	24,280		 	86,239		 	(16,915	)	 	156,682		
Long-term debt	—		 	414,264		 	—		 	1,242		 	—		 	415,506		
Other long-term liabilities	—		 	92,289		 	9,638		 	50,373		 	(4,190	)	 	148,110		
Total liabilities	—		 	569,631		 	33,918		 	137,854		 	(21,105	)	 	720,298		
Total shareholders’ equity (deficit)	52,882		 	56,013		 	202,192		 	340,414		 	(598,619	)	 	52,882		
Total liabilities and shareholders’ equity (deficit)	$	52,882		 	$	625,644		 	$	236,110		 	$	478,268		 	$	(619,724	)	 	$	773,180		

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Libbey Inc.
Condensed Consolidating Balance Sheet

	
																								
 	December 31, 2012	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Cash and equivalents	$	—		 	$	43,558		 	$	70		 	$	23,580		 	$	—		 	$	67,208		
Accounts receivable — net	—		 	33,987		 	3,560		 	43,303		 	—		 	80,850		
Inventories — net	—		 	52,627		 	18,477		 	86,445		 	—		 	157,549		
Other current assets	—		 	17,931		 	810		 	10,446		 	(16,190	)	 	12,997		
Total current assets	—		 	148,103		 	22,917		 	163,774		 	(16,190	)	 	318,604		
Other non-current assets	—		 	22,373		 	54		 	20,387		 	(4,190	)	 	38,624		
Investments in and advances to subsidiaries	24,476		 	384,414		 	194,316		 	(35,962	)	 	(567,244	)	 	—		
Goodwill and purchased intangible assets — net	—		 	26,833		 	12,347		 	147,614		 	—		 	186,794		
Total other assets	24,476		 	433,620		 	206,717		 	132,039		 	(571,434	)	 	225,418		
Property, plant and equipment — net	—		 	72,780		 	298		 	185,076		 	—		 	258,154		
Total assets	$	24,476		 	$	654,503		 	$	229,932		 	$	480,889		 	$	(587,624	)	 	$	802,176		
 	 	 	 	 	 	 	 	 	 	 	 	
Accounts payable	$	—		 	$	15,339		 	$	2,854		 	$	47,519		 	$	—		 	$	65,712		
Accrued and other current liabilities	—		 	63,674		 	20,194		 	27,857		 	(16,190	)	 	95,535		
Notes payable and long-term debt due within one year	—		 	221		 	—		 	4,362		 	—		 	4,583		
Total current liabilities	—		 	79,234		 	23,048		 	79,738		 	(16,190	)	 	165,830		
Long-term debt	—		 	451,090		 	—		 	10,794		 	—		 	461,884		
Other long-term liabilities	—		 	94,434		 	9,691		 	50,051		 	(4,190	)	 	149,986		
Total liabilities	—		 	624,758		 	32,739		 	140,583		 	(20,380	)	 	777,700		
Total shareholders’ equity (deficit)	24,476		 	29,745		 	197,193		 	340,306		 	(567,244	)	 	24,476		
Total liabilities and shareholders’ equity (deficit)	$	24,476		 	$	654,503		 	$	229,932		 	$	480,889		 	$	(587,624	)	 	$	802,176		

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

	
																								
 	Three months ended June 30, 2013	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net income (loss)	$	12,436		 	$	12,436		 	$	3,476		 	$	2,151		 	$	(18,063	)	 	$	12,436		
Depreciation and amortization	—		 	4,611		 	16		 	6,996		 	—		 	11,623		
Other operating activities	(12,436	)	 	(13,590	)	 	(3,499	)	 	(3,212	)	 	18,063		 	(14,674	)	
Net cash provided by (used in) operating activities	—		 	3,457		 	(7	)	 	5,935		 	—		 	9,385		
Additions to property, plant & equipment	—		 	(2,065	)	 	(31	)	 	(8,793	)	 	—		 	(10,889	)	
Other investing activities	—		 	—		 	—		 	4		 	—		 	4		
Net cash (used in) investing activities	—		 	(2,065	)	 	(31	)	 	(8,789	)	 	—		 	(10,885	)	
Net borrowings (repayments)	—		 	(35,255	)	 	—		 	—		 	—		 	(35,255	)	
Other financing activities	—		 	1,161		 	—		 	—		 	—		 	1,161		
Net cash provided by (used in) financing activities	—		 	(34,094	)	 	—		 	—		 	—		 	(34,094	)	
Exchange effect on cash	—		 	—		 	—		 	189		 	—		 	189		
Increase (decrease) in cash	—		 	(32,702	)	 	(38	)	 	(2,665	)	 	—		 	(35,405	)	
Cash at beginning of period	—		 	29,134		 	93		 	16,722		 	—		 	45,949		
Cash at end of period	$	—		 	$	(3,568	)	 	$	55		 	$	14,057		 	$	—		 	$	10,544		

	
																								
 	Three months ended June 30, 2012	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net income (loss)	$	(10,143	)	 	$	(10,143	)	 	$	3,578		 	$	5,821		 	$	744		 	$	(10,143	)	
Depreciation and amortization	—		 	3,469		 	18		 	6,801		 	—		 	10,288		
Other operating activities	10,143		 	(56,501	)	 	(3,687	)	 	(1,777	)	 	(744	)	 	(52,566	)	
Net cash provided by (used in) operating activities	—		 	(63,175	)	 	(91	)	 	10,845		 	—		 	(52,421	)	
Additions to property, plant & equipment	—		 	(1,133	)	 	—		 	(4,253	)	 	—		 	(5,386	)	
Other investing activities	—		 	—		 	—		 	239		 	—		 	239		
Net cash (used in) investing activities	—		 	(1,133	)	 	—		 	(4,014	)	 	—		 	(5,147	)	
Net borrowings (repayments)	—		 	89,949		 	—		 	(9,517	)	 	—		 	80,432		
Other financing activities	—		 	(35,744	)	 	—		 	—		 	—		 	(35,744	)	
Net cash provided by (used in) financing activities	—		 	54,205		 	—		 	(9,517	)	 	—		 	44,688		
Exchange effect on cash	—		 	—		 	—		 	(361	)	 	—		 	(361	)	
Increase (decrease) in cash	—		 	(10,103	)	 	(91	)	 	(3,047	)	 	—		 	(13,241	)	
Cash at beginning of period	—		 	9,892		 	157		 	22,769		 	—		 	32,818		
Cash at end of period	$	—		 	$	(211	)	 	$	66		 	$	19,722		 	$	—		 	$	19,577		

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

	
																								
 	Six months ended June 30, 2013	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net income (loss)	$	14,425		 	$	14,425		 	$	5,030		 	$	3,130		 	$	(22,585	)	 	$	14,425		
Depreciation and amortization	—		 	8,725		 	33		 	13,639		 	—		 	22,397		
Other operating activities	(14,425	)	 	(32,597	)	 	(5,047	)	 	(10,633	)	 	22,585		 	(40,117	)	
Net cash provided by (used in) operating activities	—		 	(9,447	)	 	16		 	6,136		 	—		 	(3,295	)	
Additions to property, plant & equipment	—		 	(4,069	)	 	(31	)	 	(15,671	)	 	—		 	(19,771	)	
Other investing activities	—		 	1		 	—		 	7		 	—		 	8		
Net cash (used in) investing activities	—		 	(4,068	)	 	(31	)	 	(15,664	)	 	—		 	(19,763	)	
Net borrowings (repayments)	—		 	(35,309	)	 	—		 	(5	)	 	—		 	(35,314	)	
Other financing activities			 	1,698		 	—		 	—		 	—		 	1,698		
Net cash provided by (used in) financing activities	—		 	(33,611	)	 	—		 	(5	)	 	—		 	(33,616	)	
Exchange effect on cash	—		 	—		 	—		 	10		 	—		 	10		
Increase (decrease) in cash	—		 	(47,126	)	 	(15	)	 	(9,523	)	 	—		 	(56,664	)	
Cash at beginning of period	—		 	43,558		 	70		 	23,580		 	—		 	67,208		
Cash at end of period	$	—		 	$	(3,568	)	 	$	55		 	$	14,057		 	$	—		 	$	10,544		

	
																								
 	Six months ended June 30, 2012	
(dollars in thousands)	Libbey
Inc.
(Parent)	 	Libbey
Glass
(Issuer)	 	Subsidiary
Guarantors	 	Non-
Guarantor
Subsidiaries	 	Eliminations	 	Consolidated	
Net income (loss)	$	(9,502	)	 	$	(9,502	)	 	$	6,689		 	$	10,079		 	$	(7,266	)	 	$	(9,502	)	
Depreciation and amortization	—		 	7,007		 	37		 	13,780		 	—		 	20,824		
Other operating activities	9,502		 	(86,833	)	 	(6,815	)	 	(5,961	)	 	7,266		 	(82,841	)	
Net cash provided by (used in) operating activities	—		 	(89,328	)	 	(89	)	 	17,898		 	—		 	(71,519	)	
Additions to property, plant & equipment	—		 	(4,314	)	 	—		 	(7,518	)	 	—		 	(11,832	)	
Other investing activities	—		 	—		 	—		 	419		 	—		 	419		
Net cash (used in) investing activities	—		 	(4,314	)	 	—		 	(7,099	)	 	—		 	(11,413	)	
Net borrowings (repayments)	—		 	89,898		 	—		 	(9,860	)	 	—		 	80,038		
Other financing activities	—		 	(35,716	)	 	—		 	—		 	—		 	(35,716	)	
Net cash provided by (used in) financing activities	—		 	54,182		 	—		 	(9,860	)	 	—		 	44,322		
Exchange effect on cash	—		 	—		 	—		 	(104	)	 	—		 	(104	)	
Increase (decrease) in cash	—		 	(39,460	)	 	(89	)	 	835		 	—		 	(38,714	)	
Cash at beginning of period	—		 	39,249		 	155		 	18,887		 	—		 	58,291		
Cash at end of period	$	—		 	$	(211	)	 	$	66		 	$	19,722		 	$	—		 	$	19,577		

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12.	Segments	

Effective January 1, 2013, we revised our reporting segments to align with our previously announced regionally focused organizational structure which we believe enables us to better serve customers across the globe. Under this structure, we now report financial results for the Americas; Europe, the Middle East and Africa (EMEA); and Other. In addition, sales and segment EBIT reflect end market reporting pursuant to which sales and related costs are included in segment EBIT based on the geographical destination of the sale. The revised segment results do not affect any previously reported consolidated financial results. Our two reportable segments are defined below. Our operating segments that do not meet the criteria for reportable segments are disclosed as Other.

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

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

Other —includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific and worldwide sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.

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

Certain activities not related to any particular reportable segment are reported within retained corporate costs. These costs include certain headquarter, administrative and facility costs, and other costs that are global in nature and are not allocable to the reporting segments.

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

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 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	
Net Sales:	 	 	 	 	 	 	 	
Americas	$	141,815		 	$	148,584		 	$	265,350		 	$	278,259		
EMEA	37,981		 	33,723		 	72,223		 	64,515		
Other	30,108		 	26,940		 	55,807		 	54,302		
Consolidated	$	209,904		 	$	209,247		 	$	393,380		 	$	397,076		
 	 	 	 	 	 	 	 	
Segment EBIT:	 	 	 	 	 	 	 	
Americas	$	32,498		 	$	31,014		 	$	50,650		 	$	46,688		
EMEA	569		 	302		 	(914	)	 	(278	)	
Other	4,367		 	5,508		 	8,164		 	10,633		
Total Segment EBIT	$	37,434		 	$	36,824		 	$	57,900		 	$	57,043		
 	 	 	 	 	 	 	 	
Reconciliation of Segment EBIT to Net Income (Loss):	 	 	 	 	 	 	 	
Segment EBIT	$	37,434		 	$	36,824		 	$	57,900		 	$	57,043		
Retained corporate costs	(5,927	)	 	(7,428	)	 	(10,427	)	 	(13,308	)	
Loss on redemption of debt (note 4)	(2,518	)	 	(31,075	)	 	(2,518	)	 	(31,075	)	
Pension settlement charge	(715	)	 	—		 	(715	)	 	—		
Restructuring charges (note 5)	(1,048	)	 	—		 	(5,928	)	 	—		
Abandoned property (note 15)	(1,781	)	 	—		 	(1,781	)	 	—		
Interest expense	(8,126	)	 	(9,957	)	 	(16,561	)	 	(20,365	)	
Income taxes	(4,883	)	 	1,493		 	(5,545	)	 	(1,797	)	
Net income (loss)	$	12,436		 	$	(10,143	)	 	$	14,425		 	$	(9,502	)	
 	 	 	 	 	 	 	 	
Depreciation & Amortization:	 	 	 	 	 	 	 	
Americas	$	7,321		 	$	6,021		 	$	13,849		 	$	12,203		
EMEA	2,507		 	2,466		 	4,993		 	5,014		
Other	1,407		 	1,414		 	2,790		 	2,831		
Corporate	388		 	387		 	765		 	776		
Consolidated	$	11,623		 	$	10,288		 	$	22,397		 	$	20,824		
 	 	 	 	 	 	 	 	
Capital Expenditures:	 	 	 	 	 	 	 	
Americas	$	7,034		 	$	3,259		 	$	13,909		 	$	8,423		
EMEA	1,745		 	1,301		 	3,041		 	2,018		
Other	1,320		 	510		 	1,655		 	1,023		
Corporate	790		 	316		 	1,166		 	368		
Consolidated	$	10,889		 	$	5,386		 	$	19,771		 	$	11,832		

	
								
(dollars in thousands)	June 30, 2013	 	December 31, 2012	
Segment Assets (1) :	 	 	 	
Americas	$	172,032		 	$	150,923		
EMEA	47,881		 	49,981		
Other	47,480		 	37,495		
Consolidated	$	267,393		 	$	238,399		
______________________________
(1) Segment assets are defined as net accounts receivable plus net inventory.

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13.	Fair Value	

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

•	Level 1 — Quoted prices in active markets for identical assets or liabilities.	
		
•	Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.	
		
•	Level 3 — Unobservable inputs based on our own assumptions.	

	
																																
 	Fair Value at	 	Fair Value at	
Asset / (Liability)
(dollars in thousands)	June 30, 2013	 	December 31, 2012	
	Level 1	 	Level 2	 	Level 3	 	Total	 	Level 1	 	Level 2	 	Level 3	 	Total	
Commodity futures natural gas contracts	$	—		 	$	(112	)	 	$	—		 	$	(112	)	 	$	—		 	$	(420	)	 	$	—		 	$	(420	)	
Currency contracts	—		 	458		 	—		 	458		 	—		 	41		 	—		 	41		
Interest rate agreement	—		 	(1,781	)	 	—		 	(1,781	)	 	—		 	298		 	—		 	298		
Net derivative asset (liability)	$	—		 	$	(1,435	)	 	$	—		 	$	(1,435	)	 	$	—		 	$	(81	)	 	$	—		 	$	(81	)	

The fair values of our commodity futures natural gas contracts and currency contracts are determined using observable market inputs. The fair value of our interest rate agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. Since these inputs are observable in active markets over the terms that the instruments are held, the derivatives are classified as Level 2 in the hierarchy. We also evaluate Company and counterparty risk in determining fair values. The commodity futures natural gas contracts, interest rate agreements and currency contracts are hedges of either recorded assets or liabilities or anticipated transactions. Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the above table.

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

									
Asset / (Liability)
(dollars in thousands)	 	June 30, 2013	 	December 31, 2012	
Prepaid and other current assets	 	$	458		 	$	41		
Derivative asset	 	—		 	298		
Derivative liability	 	(69	)	 	(420	)	
Other long-term liabilities	 	(1,824	)	 	—		
Net derivative asset (liability)	 	$	(1,435	)	 	$	(81	)	

14.	Other Income (Expense)	

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

																
 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	
Gain (loss) on currency translation	$	481		 	$	578		 	$	198		 	$	(391	)	
Hedge ineffectiveness	(623	)	 	(189	)	 	(845	)	 	230		
Other non-operating income (expense)	193		 	38		 	263		 	(3	)	
Other income (expense)	$	51		 	$	427		 	$	(384	)	 	$	(164	)	

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Table of Contents

15.	Contingencies	

We have completed an unclaimed property audit. The property subject to review in this audit process generally included unclaimed wages, vendor payments and customer refunds. State escheat laws generally require entities to report and remit abandoned and unclaimed property. Failure to timely report and remit the property can result in assessments that include interest and penalties, in addition to the payment of the escheat liability itself. At the completion of the audit in the three months ended June 30, 2013, we paid $4.5 million , which resulted in additional expense of $1.8 million in selling, general and administrative expenses on the Condensed Consolidated Statement of Operations. $2.7 million of expense was recorded in the third quarter of 2011 and accrued at December 31, 2012.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes thereto appearing elsewhere in this report and in our Annual Report filed with the Securities and Exchange Commission. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ from those anticipated in these forward-looking statements as a result of many factors. Our risk factors are set forth in Part I, Item 1A. “Risk Factors” in our 2012 Annual Report on Form 10-K for the year ended December 31, 2012.

Overview

While the Mexican economy appears to have stabilized, the other economies in which we operate continued to be challenging during the second quarter of 2013 and we expect them to remain as such for the balance of the year. The U.S. economy experienced the negative effects of the increased 2.0 percent FICA tax, sequestration and generally uncertain economic environment and unfavorable weather during the first half of 2013. The European economy remains soft, and the rate of economic growth has slowed considerably in China as compared to the first half of 2012. As a result of these factors, our net sales were flat for the second quarter and declined 0.9 percent in the first half of 2013 as compared to the 2012 periods. Despite these conditions and our underutilized capacity in the Americas during the second quarter related to our production realignment and a significant furnace rebuild, we grew our US and Canada foodservice market channel 1.8 percent and saw increased volume in every other region overall and achieved an all-time record for quarterly Adjusted EBITDA of $42.0 million. This improvement of 5.8 percent over $39.7 million in the second quarter of 2012 was a result of our commitment to improving our cost structure while leveraging our leadership positions in key lines of business and strengthening our balance sheet.

Strengthening our balance sheet remains a high priority. We redeemed $45.0 million of our Senior Secured Notes on May 7, 2013. As of June 30, 2013, we had available capacity of $68.8 million under our ABL credit facility, with $9.8 million outstanding under our ABL Facility and $10.5 million in cash on hand.

We continue to successfully implement "Libbey 2015", our comprehensive business strategy launched in the second half of 2012 to improve our financial position and our ability to compete effectively in the market today and into the future. Libbey 2015 is centered on reducing our costs and boosting efficiency, reinforcing our leadership position in key channels, accelerating growth in the Asia Pacific region and reducing our liabilities and the working capital required to operate the core business. In February 2013, we announced our plans to discontinue production of certain glassware in North America and reduce manufacturing capacity at our Shreveport, Louisiana manufacturing facility. On May 30, 2013 we commenced the activities we announced in February and are currently in the process of relocating a portion of the production from Shreveport, Louisiana to our Toledo, Ohio and Monterrey, Mexico locations. These activities are all within the Americas segment and are expected to be completed by the end of the first quarter of 2014. In connection with this plan, we expect to incur a pretax charge in the range of approximately $8.0 million to $10.0 million . Of that amount, we recorded a pretax charge of $1.0 million and $5.9 million for the three and six months ended June 30, 2013, respectively, which included employee termination costs, fixed asset impairment charges and depreciation expense. (See note 5 to the Condensed Consolidated Financial Statements for a further discussion.)

Effective January 1, 2013, we revised our reporting segments to align with our previously announced regionally focused organizational structure which we believe enables us to better serve customers across the globe. Under this structure, we now report financial results for the Americas; Europe, the Middle East and Africa (EMEA); and Other. In addition, sales and segment EBIT reflect end market reporting pursuant to which sales and related costs are included in segment EBIT based on the geographical destination of the sale. The revised segment results do not affect any previously reported consolidated financial results. Our two reportable segments are defined below. Our operating segments that do not meet the criteria for reportable segments are disclosed as Other.

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

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

Other —includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific and worldwide sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.

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Results of Operations

The following table presents key results of our operations for the three and six months ended June 30, 2013 and 2012:

																
 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands, except percentages and per-share amounts)	2013	 	2012	 	2013	 	2012	
Net sales	$	209,904		 	$	209,247		 	$	393,380		 	$	397,076		
Gross profit  (2)	$	57,462		 	$	56,347		 	$	99,694		 	$	99,403		
Gross profit margin	27.4	%	 	26.9	 %	 	25.3	%	 	25.0	 %	
Income from operations (IFO) (3)	$	27,912		 	$	28,969		 	$	39,433		 	$	43,899		
IFO margin	13.3	%	 	13.8	 %	 	10.0	%	 	11.1	 %	
Earnings (loss) before interest and income taxes(EBIT) (1)(2)(3)(4)	$	25,445		 	$	(1,679	)	 	$	36,531		 	$	12,660		
EBIT margin	12.1	%	 	(0.8	)%	 	9.3	%	 	3.2	 %	
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) (1)(3)(4)	$	37,068		 	$	8,609		 	$	58,928		 	$	33,484		
EBITDA margin	17.7	%	 	4.1	 %	 	15.0	%	 	8.4	 %	
Adjusted EBITDA (1)	$	41,997		 	$	39,684		 	$	68,171		 	$	64,559		
Adjusted EBITDA margin	20.0	%	 	19.0	 %	 	17.3	%	 	16.3	 %	
Net income (loss) (2)(3)(4)	$	12,436		 	$	(10,143	)	 	$	14,425		 	$	(9,502	)	
Net income (loss) margin	5.9	%	 	(4.8	)%	 	3.7	%	 	(2.4	)%	
Diluted net income (loss) per share	$	0.57		 	$	(0.49	)	 	$	0.66		 	$	(0.46	)	
__________________________________
		
(1)	We believe that EBIT, EBITDA and Adjusted EBITDA, all non-GAAP financial measures, are useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance. For a reconciliation from net income (loss) to EBIT, EBITDA, and Adjusted EBITDA, see the "Adjusted EBITDA" section below in the Discussion of Second Quarter 2013 Compared to Second Quarter 2012 and the Discussion of First Six Months 2013 Compared to First Six Months 2012 and the reasons we believe these non-GAAP financial measures are useful.	
		
(2)	The three and six month periods ended June 30, 2013 include $1.1 million and $1.7 million, respectively, of accelerated depreciation on fixed assets that were impaired from discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility. (See note 5 to the Condensed Consolidated Financial Statements.)	
		
(3)	In addition to item (2) above, the three and six month periods ended June 30, 2013 include ($0.1) million and $4.2 million, respectively, in charges related to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility; $1.8 million for abandoned property charges; and $0.7 million of pension settlement charges. (See notes 5, 7 and 15 to the Condensed Consolidated Financial Statements.)	
		
(4)	In addition to item (3) above, the three and six month periods ended June 30, 2013 include a loss of $2.5 million related to the redemption of $45.0 million of Senior Secured Notes in May 2013. The three and six month periods ended June 30, 2012 include $31.1 million for the write-off of unamortized finance fees and discounts and call premium payments on the ABL Facility and $360.0 million of former Senior Secured Notes redeemed in May and June 2012, partially offset by the write-off of the debt carrying value adjustment related to the termination of the $80.0 million interest rate swap. (See note 4 to the Condensed Consolidated Financial Statements.)	

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Discussion of Second Quarter 2013 Compared to Second Quarter 2012
Net Sales
For the quarter ended June 30, 2013 , net sales increased 0.3 percent to $209.9 million , compared to $209.2 million in the year-ago quarter. When adjusted for currency impact, net sales were down 1.1 percent. The increase in net sales was attributable to increased sales of $4.3 million and $3.2 million in EMEA and Other, respectively, offset by a $6.8 million decrease in the Americas.

									
 	 	Three months ended June 30,	
(dollars in thousands)	 	2013	 	2012	
Americas	 	$	141,815		 	$	148,584		
EMEA	 	37,981		 	33,723		
Other	 	30,108		 	26,940		
Consolidated	 	$	209,904		 	$	209,247		

Net Sales — Americas

Net sales in the Americas were $141.8 million , compared to $148.6 million in the second quarter of 2012, a decrease of 4.6 percent (a decrease of 6.1 percent excluding currency fluctuation). The primary contributor was a 7.8 percent decrease in sales within our US and Canadian end market due to weaker retail and business to business sales resulting from mixed point of sale retail results at many major retailers, discontinued items from our realignment of production and weaker volume in the scented candles and floral product lines of our business to business market channel, partially offset by a 1.8 percent increase in shipments to US and Canada foodservice customers. The overall US and Canadian decline was partially offset by a 3.5 percent increase in sales to customers within our Mexican and Latin American end market driven by foodservice and retail sales resulting from increased volume of product sold.

Net Sales — EMEA

Net sales in EMEA were $38.0 million , compared to $33.7 million in the second quarter of 2012, an increase of 12.6 percent (an increase of 10.9 percent excluding currency fluctuation). The primary contributor to the increased net sales was increased shipments to EMEA customers as we aggressively pursued business in Europe.

Gross Profit

Gross profit increased to an all-time record of $57.5 million in the second quarter of 2013, compared to $56.3 million in the prior year quarter. Gross profit as a percentage of net sales increased to 27.4 percent in the second quarter of 2013, compared to 26.9 percent in the prior year period. The primary drivers of the $1.1 million gross profit increase were $3.9 million of favorable labor and benefits, a favorable currency impact of $2.5 million, a favorable sales volume and mix of $1.8 million, favorable repairs and maintenance of $1.2 million, and favorable electricity of $1.0 million. Partially offsetting these was $6.6 million attributable to decreased production activity net of volume-related production costs due to a slower than anticipated start up of a significant furnace rebuild, relocation of production as part of our re-alignment, and loss of production due to a power failure, $1.1 million for accelerated depreciation related to the realignment of capacity in the Americas, $0.8 million for direct materials, and $0.7 million for natural gas.

Income From Operations

Income from operations for the quarter ended June 30, 2013 decreased $1.1 million, to $27.9 million , compared to $29.0 million in the prior year quarter. Income from operations as a percentage of net sales was 13.3 percent for the quarter ended June 30, 2013, compared to 13.8 percent in the prior year quarter. The decrease in income from operations is the result of a $1.8 million charge related to abandoned property and $0.7 million related to a pension settlement charge. Partially offsetting these were the $1.1 million increase in gross profit (discussed above), a favorable $0.9 million in labor and benefit expenses as a result of the cost reduction activities taken in the second half of 2012 and a favorable $0.3 million in legal and professional fees.

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Earnings (Loss) Before Interest and Income Taxes (EBIT)

EBIT for the quarter ended June 30, 2013 increased by $27.1 million, to $25.4 million from $(1.7) million in the second quarter of 2012. EBIT as a percentage of net sales increased to 12.1 percent in the second quarter of 2013, compared to (0.8) percent in the prior year quarter. The increase in EBIT is a result of the second quarter of 2012 including $31.1 million for loss on redemption of debt, as compared to $2.5 million in the second quarter of 2013, partially offset by the decrease in income from operations (discussed above).

Segment EBIT

The following table summarizes the change in Segment EBIT (1) by reportable segments:

									
 	 	Three months ended June 30,	
(dollars in thousands)	 	Americas	 	EMEA	
Segment EBIT, June 30, 2012	 	$	31,014		 	$	302		
Sales, excluding currency	 	(172	)	 	924		
Manufacturing and distribution	 	(942	)	 	(455	)	
Selling, general, administrative and other income/expense	 	161		 	(190	)	
Effects of changing foreign currency rates	 	2,437		 	(12	)	
Segment EBIT, June 30, 2013	 	$	32,498		 	$	569		
____________________________________
		
(1)	Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs. See note 12 to the Condensed Consolidated Financial Statements for reconciliation of Segment EBIT to net income (loss).	

Segment EBIT — Americas

Segment EBIT increased to $32.5 million in the second quarter of 2013, compared to $31.0 million in the second quarter of 2012. Segment EBIT as a percentage of net sales for the Americas increased to 22.9 percent in the second quarter of 2013, compared to 20.9 percent in the prior year period. The primary drivers of the $1.5 million Segment EBIT increase were $3.0 million of favorable labor and benefits, a favorable currency impact of $2.4 million, favorable repairs and maintenance of $1.7 million, and favorable selling, general, administrative and other income (expense) of $0.4 million. Partially offsetting these was $5.9 million attributable to decreased production activity net of volume-related production costs due to a slower than anticipated start up of a significant furnace rebuild, relocation of production as part of our re-alignment, and loss of production due to a power failure.

Segment EBIT — EMEA

Segment EBIT increased to $0.6 million in the second quarter of 2013, compared to $0.3 million in the second quarter of 2012. Segment EBIT as a percentage of net sales for EMEA increased to 1.5 percent in the second quarter of 2013, compared to 0.9 percent in the prior-year period. The primary driver of the $0.3 million increase in Segment EBIT was a favorable sales volume and mix.

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

EBITDA increased by $28.5 million in the second quarter 2013, to $37.1 million, compared to $8.6 million in the year-ago quarter. As a percentage of net sales, EBITDA increased to 17.7 percent in the second quarter of 2013, from 4.1 percent in the year-ago quarter. The key contributors to the increase in EBITDA were those factors discussed above under Earnings (Loss) Before Interest and Income Taxes (EBIT) and $1.1 million of accelerated depreciation on certain fixed assets included in the capacity realignment.

Adjusted EBITDA

Adjusted EBITDA increased by $2.3 million in the second quarter of 2013, to $42.0 million , compared to $39.7 million in the second quarter of 2012. As a percentage of net sales, Adjusted EBITDA was 20.0 percent for the second quarter of 2013, compared to 19.0 percent in the year-ago quarter. The key contributors to the increase in Adjusted EBITDA were those factors

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discussed above under Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) and the elimination of the special items noted below, in the reconciliation of net income (loss) to EBIT, EBITDA and Adjusted EBITDA.

									
 	 	Three months ended June 30,	
(dollars in thousands)	 	2013	 	2012	
Net income (loss)	 	$	12,436		 	$	(10,143	)	
Add: Interest expense	 	8,126		 	9,957		
Add: Provision (benefit) provision for income taxes	 	4,883		 	(1,493	)	
Earnings (loss) before interest and income taxes (EBIT)	 	25,445		 	(1,679	)	
Add: Depreciation and amortization	 	11,623		 	10,288		
Earnings before interest, taxes, deprecation and amortization (EBITDA)	 	37,068		 	8,609		
Add: Special items before interest and taxes:	 	 	 	 	
Loss on redemption of debt (see note 4)  (1)	 	2,518		 	31,075		
Pension Settlement (see note 7)	 	715		 	—		
Abandoned property (see note 15)	 	1,781		 	—		
Restructuring charges (see note 5) (2)	 	1,048		 	—		
Less: Accelerated depreciation expense included in special items and also in depreciation and amortization above	 	(1,133	)	 	—		
Adjusted EBITDA	 	$	41,997		 	$	39,684		
__________________________________
		
(1)	Loss on redemption of debt for the three months ended June 2013 includes the write-off of unamortized finance fees and call premium payments on the $45.0 million Senior Secured Notes redeemed in May 2013. Loss on redemption of debt for the three months ended June 2012 includes the write-off of unamortized finance fees and discounts and call premium payments on the ABL Facility and $360.0 million former Senior Secured Notes redeemed in May and June 2012, partially offset by the write-off of the debt carrying value adjustment related to the termination of the $80.0 million interest rate swap.	
		
(2)	Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility.	

We sometimes refer to data derived from condensed consolidated financial information but not required by GAAP to be presented in financial statements. Certain of these data are considered “non-GAAP financial measures” under Securities and Exchange Commission (SEC) Regulation G. We believe that certain non-GAAP data provide investors with a more complete understanding of underlying results in our core business and trends. In addition, we use non-GAAP data internally to assess performance. Although we believe that the non-GAAP financial measures presented enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered an alternative to GAAP.
We define EBIT as net income (loss) before interest expense and income taxes. The most directly comparable U.S. GAAP financial measure is net income (loss).
We believe that EBIT is an important supplemental measure for investors in evaluating operating performance in that it provides insight into company profitability. Libbey’s senior management uses this measure internally to measure profitability. EBIT also allows for a measure of comparability to other companies with different capital and legal structures, which accordingly may be subject to different interest rates and effective tax rates.
The non-GAAP measure of EBIT does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. Because this is a material and recurring item, any measure that excludes it has a material limitation. EBIT may not be comparable to similarly titled measures reported by other companies.
We define EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization. The most directly comparable U.S. GAAP financial measure is net income (loss).
We believe that EBITDA is an important supplemental measure for investors in evaluating operating performance in that it provides insight into company profitability and cash flow. Libbey’s senior management uses this measure internally to measure profitability. EBITDA also allows for a measure of comparability to other companies with different capital and legal structures, which accordingly may be subject to different interest rates and effective tax rates, and to companies that may incur different depreciation and amortization expenses or impairment charges.

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The non-GAAP measure of EBITDA does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. EBITDA also excludes depreciation and amortization expenses. Because these are material and recurring items, any measure that excludes them has a material limitation. EBITDA may not be comparable to similarly titled measures reported by other companies.
We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA internally to measure profitability and to set performance targets for managers.
Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:

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

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

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

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

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

•	Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.	
Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

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

We recorded net income of $12.4 million , or $0.57 per diluted share, in the second quarter of 2013, compared to a net (loss) of $(10.1) million , or ($0.49) per diluted share, in the year-ago quarter. Net income (loss) as a percentage of net sales was 5.9 percent in the second quarter of 2013, compared to (4.8) percent in the year-ago quarter. The increase in net income (loss) and diluted net income (loss) per share is due to the factors discussed in Earnings (Loss) Before Interest and Income Taxes (EBIT) above and a $1.8 million reduction in interest expense, partially offset by a $6.4 million increase in the provision for income taxes. The reduction in interest expense is primarily the result of lower interest rates resulting from our May 2012 refinancing. The effective tax rate was an expense of 28.2 percent for the second quarter of 2013, compared to a benefit of 12.8 percent in year-ago quarter. The effective tax rate was influenced by jurisdictions with recorded valuation allowances and changes in the mix of earnings in countries with differing statutory tax rates.

Discussion of First Six Months 2013 Compared to First Six Months 2012

Net Sales

For the six months ended June 30, 2013, net sales decreased 0.9 percent to $393.4 million , compared to $397.1 million in the year-ago period. The decrease in net sales was attributable to decreased sales in the Americas, offset by increased sales in EMEA.

									
 	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	
Americas	 	$	265,350		 	$	278,259		
EMEA	 	72,223		 	64,515		
Other	 	55,807		 	54,302		
Consolidated	 	$	393,380		 	$	397,076		

Net Sales — Americas

Net sales in the Americas were $265.4 million in the first six months of 2013 compared to $278.3 million in the first six months of 2012, a decrease of 4.6 percent (a 5.7 percent decrease excluding the impact of currency). The primary contributor was an 8.1 percent decrease in sales within our US and Canadian market due to unfavorable weather, the increased 2.0 percent FICA

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tax, retail and business to business sales resulting from mixed point of sale retail results at many major retailers, discontinued items from our realignment of production and weaker volume in the scented candles and floral product lines of our business to business market channel. Partially offsetting this was a 4.0 percent increase (a 0.5 percent increase excluding the impact of currency) in sales to customers within our Mexican and Latin American end market driven by foodservice and retail sales resulting from increased shipments and a more favorable mix of product sold.

Net Sales — EMEA

Net sales in EMEA were $72.2 million in the first six months of 2013 compared to $64.5 million in the first six months of 2012, an increase of 11.9 percent (10.7 percent excluding the impact of currency). The primary contributor to the increased net sales was increased shipments to EMEA customers.
  
Gross Profit

Gross profit increased to $99.7 million in the first six months of 2013, compared to $99.4 million in the prior year period. Gross profit as a percentage of net sales remained flat as compared to the prior year period. The primary drivers of the $0.3 million gross profit increase were $5.7 million of favorable labor and benefits, a favorable currency impact of $3.6 million, a favorable sales volume and mix of $1.4 million, favorable repairs and maintenance of $3.3 million, and favorable electricity of $0.7 million. Partially offsetting these was $12.1 million attributable to decreased production activity net of volume-related production costs due to a significant furnace rebuild and its slower than anticipated start up, relocation of production as part of our re-alignment, loss of production due to a power failure, and $1.7 million for accelerated depreciation related to the realignment of capacity in the Americas.

Income From Operations

Income from operations for the six months ended June 30, 2013 decreased $4.5 million, to $39.4 million , compared to $43.9 million in the prior year period. Income from operations as a percentage of net sales was 10.0 percent for the six months ended June 30, 2013, compared to 11.1 percent in the prior-year period. The decrease in income from operations is the result of gross profit remaining flat (discussed above), a $4.2 million charge related to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility and a $0.5 million increase in selling, general and administrative expenses. The increase in selling, general and administrative expense is attributable to $1.8 million of abandoned property expense and $0.7 million of pension settlement charges, offset by $2.5 million of favorable labor and benefit expenses as a result of the cost reduction activities taken in the second half of 2012.

Earnings Before Interest and Income Taxes (EBIT)

EBIT for the six months ended June 30, 2013 increased by $23.9 million to $36.5 million from $12.7 million in the first six months of 2012. EBIT as a percentage of net sales increased to 9.3 percent in the first six months of 2013, compared to 3.2 percent in the prior year period. The increase in EBIT is a result of the $28.6 million decrease in loss on redemption of debt, partially offset by a decrease in income from operations (discussed above).

Segment EBIT

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

									
 	 	Six months ended June 30,	
(dollars in thousands)	 	Americas	 	EMEA	
Segment EBIT, June 30, 2012	 	$	46,688		 	$	(278	)	
Sales, excluding currency	 	115		 	1,213		
Manufacturing and distribution	 	(1,663	)	 	(1,495	)	
Selling, general, administrative and other income/expense	 	1,841			(287	)	
Effects of changing foreign currency rates	 	3,669		 	(67	)	
Segment EBIT, June 30, 2013	 	$	50,650		 	$	(914	)	
____________________________________
		
(1)	Segment EBIT represents earnings (loss) before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs. See note 12 to the Condensed Consolidated Financial Statements for reconciliation of Segment EBIT to net income (loss).	

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Segment EBIT — Americas

Segment EBIT increased to $50.7 million in the first six months of 2013, compared to $46.7 million in the first six months of 2012. Segment EBIT as a percentage of net sales increased to 19.1 percent in the first six months of 2013, compared to 16.8 percent in the prior year period. The primary drivers of the $4.0 million Segment EBIT increase were $4.5 million of favorable labor and benefits, a favorable currency impact of $3.7 million, favorable repairs and maintenance of $3.6 million, favorable electricity of $0.8 million, favorable rent expense of $0.4 million, and $1.8 million favorable impact from changes in selling, general, administrative and other income (expense). Partially offsetting these was $11.0 million attributable to decreased production activity net of volume-related production costs due to a significant furnace rebuild and its subsequent slower than anticipated start up, relocation of production as part of our re-alignment, and loss of production due to a power failure.

Segment EBIT — EMEA

Segment EBIT decreased by $0.6 million to ($0.9) million for the first six months of 2013, compared to ($0.3) million in the prior year period. Segment EBIT as a percentage of net sales decreased to (1.3) percent for the six months ended June 30, 2013, compared to (0.4) percent in the prior year six month period. The primary driver of the $0.6 million decrease in Segment EBIT was the impact of actions taken relative to our Libbey 2015 Strategy to improve cash generation in Europe.

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

EBITDA increased by $25.4 million in the first six months of 2013, to $58.9 million , compared to $33.5 million in the year-ago period. As a percentage of net sales, EBITDA increased to 15.0 percent in the first six months of 2013, from 8.4 percent in the year ago period. The key contributors to the increase in EBITDA were those factors discussed above under Earnings Before Interest and Income Taxes (EBIT) and $1.7 million of accelerated depreciation on certain fixed assets included in the capacity realignment.

Adjusted EBITDA

Adjusted EBITDA increased by $3.6 million in the first six months of 2013, to $68.2 million , compared to $64.6 million in the first six months of 2012. As a percentage of net sales, Adjusted EBITDA was 17.3 percent for the first six months of 2013, compared to 16.3 percent in the year ago period. The key contributors to the increase in Adjusted EBITDA were those factors discussed above under Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) and the elimination of the special items noted below in the reconciliation of net income (loss) to EBIT, EBITDA and Adjusted EBITDA.

									
 	 	Six months ended June 30,	
(dollars in thousands)	 	2013	 	2012	
Net income (loss)	 	$	14,425		 	$	(9,502	)	
Add: Interest expense	 	16,561		 	20,365		
Add: Provision for income taxes	 	5,545		 	1,797		
Earnings before interest and income taxes (EBIT)	 	36,531		 	12,660		
Add: Depreciation and amortization	 	22,397		 	20,824		
Earnings before interest, taxes, deprecation and amortization (EBITDA)	 	58,928		 	33,484		
Add: Special items before interest and taxes:	 	 	 	 	
Loss on redemption of debt (see note 4)  (1)	 	2,518		 	31,075		
Pension Settlement (see note 7)	 	715		 	—		
Abandoned property (see note 15)	 	1,781		 	—		
Restructuring charges (see note 5) (2)	 	5,928		 	—		
Less: Accelerated depreciation expense included in special items and also in depreciation and amortization above	 	(1,699	)	 	—		
Adjusted EBITDA	 	$	68,171		 	$	64,559		
____________________________________
		
(1)	Loss on redemption of debt for the six months ended June 2013 includes the write-off of unamortized finance fees and call premium payments on the $45.0 million Senior Secured Notes redeemed in May 2013. Loss on redemption of debt for the six months ended June 2012 includes the write-off of unamortized finance fees and discounts and call premium payments on the ABL Facility and $360.0 million former Senior Secured Notes redeemed in May and June 2012,	

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partially offset by the write-off of the debt carrying value adjustment related to the termination of the $80.0 million interest rate swap.
		
(2)	Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility.	

We sometimes refer to data derived from condensed consolidated financial information but not required by GAAP to be presented in financial statements. Certain of these data are considered “non-GAAP financial measures” under SEC Regulation G. We believe that certain non-GAAP data provide investors with a more complete understanding of underlying results in our core business and trends. In addition, we use non-GAAP data internally to assess performance. Although we believe that the non-GAAP financial measures presented enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered an alternative to GAAP. For our definition of these non-GAAP measures and certain limitations, see the Adjusted EBITDA section in the Discussion of Second Quarter 2013 Compared with Second Quarter 2012 above.

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

We recorded net income of $14.4 million , or $0.66 per diluted share, in the first six months of 2013, compared to a net (loss) of $(9.5) million , or $(0.46) per diluted share, in the year ago period. Net income as a percentage of net sales was 3.7 percent in the first six months of 2013, compared to (2.4) percent in the first six months of 2012. The increase in net income and diluted net income per share is generally due to the factors discussed in Earnings Before Interest and Income Taxes (EBIT) above, a $3.8 million reduction in interest expense, partially offset by a $3.7 million increase in the provision for income taxes. The reduction in interest expense is primarily the result of lower interest rates on the Senior Secured Notes. The effective tax rate was 27.8 percent for the first six months of 2013, compared to a negative 23.3 percent in year-ago period. The effective tax rate was influenced by jurisdictions with recorded valuation allowances, changes in the mix of earnings in countries with differing statutory tax rates and changes in accruals related to uncertain tax positions.

Capital Resources and Liquidity

Historically, cash flows generated from operations, cash on hand and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. At June 30, 2013 , we had $9.8 million outstanding under our ABL Facility and we had $8.7 million  of letters of credit issued under that facility. As a result, we had $68.8 million  of unused availability remaining under the ABL Facility at June 30, 2013 . In addition, we had $10.5 million of cash on hand at June 30, 2013 .

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

On May 7, 2013, Libbey Glass Inc. redeemed an aggregate principal amount of $45.0 million of our outstanding Senior Secured Notes due 2020. We funded this redemption using cash on hand and borrowings under our ABL Facility.

Balance Sheet and Cash Flows

Cash and Equivalents

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

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Working Capital

The following table presents our working capital components:

									
(dollars in thousands, except percentages and DSO, DIO, DPO and DWC)	 	June 30, 2013	 	December 31, 2012	
Accounts receivable — net	 	$	91,482		 	$	80,850		
DSO  (1)	 	40.6		 	35.8		
Inventories — net	 	$	175,911		 	$	157,549		
DIO  (2)	 	78.1		 	69.7		
Accounts payable	 	$	59,309		 	$	65,712		
DPO  (3)	 	26.3		 	29.1		
Working capital  (4)	 	$	208,084		 	$	172,687		
DWC  (5)	 	92.4		 	76.4		
Percentage of net sales	 	25.3	%	 	20.9	%	
___________________________________________________
		
(1)	Days sales outstanding (DSO) measures the number of days it takes to turn receivables into cash.	
		
(2)	Days inventory outstanding (DIO) measures the number of days it takes to turn inventory into cash.	
		
(3)	Days payable outstanding (DPO) measures the number of days it takes to pay the balances of our accounts payable.	
		
(4)	Working capital is defined as net accounts receivable plus net inventories less accounts payable. See below for further discussion as to the reasons we believe this non-GAAP financial measure is useful.	
		
(5)	Days working capital (DWC) measures the number of days it takes to turn our working capital into cash.	
DSO, DIO, DPO and DWC are calculated using the last twelve months' net sales as the denominator and are based on a 365-day year.
We believe that working capital is important supplemental information for investors in evaluating liquidity in that it provides insight into the availability of net current resources to fund our ongoing operations. Working capital is a measure used by management in internal evaluations of cash availability and operational performance.
Working capital is used in conjunction with and in addition to results presented in accordance with U.S. GAAP. Working capital is neither intended to represent nor be an alternative to any measure of liquidity and operational performance recorded under U.S. GAAP. Working capital may not be comparable to similarly titled measures reported by other companies.

Working capital (as defined above) was $208.1 million at June 30, 2013 , an increase of $35.4 million from December 31, 2012. Our working capital normally increases during the first half of the year due to the seasonality of our business. In particular, inventory normally increases to prepare for seasonally higher orders that typically exceed production levels in the later part of the year. Our increase is primarily due to additional inventories resulting from seasonality and building inventory to service our customers during the re-alignment of the Americas production capacity and for upcoming furnace rebuilds and maintenance activities. The impact of currency decreased total working capital by $0.2 million at June 30, 2013, primarily driven by the euro, with a partial offset by the Mexican peso. As a result of the factors above, working capital as a percentage of last twelve-month net sales increased to 25.3 percent at June 30, 2013 from 20.9 percent at December 31, 2012, but was comparable to the 24.5 percent for the period ended June 30, 2012.

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Borrowings

The following table presents our total borrowings:

												
(dollars in thousands)	Interest Rate	 	Maturity Date	 	June 30, 2013	 	December 31, 2012	
Borrowings under ABL Facility	floating	 	May 18, 2017	 	$	9,800		 	$	—		
Senior Secured Notes	6.875%	(1)	May 15, 2020	 	405,000		 	450,000		
Promissory Note	6.00%	 	July, 2013 to September, 2016	 	793		 	903		
RMB Loan Contract	floating	 	January, 2014	 	9,720		 	9,522		
BES Euro Line	floating	 	December, 2013	 	4,294		 	4,362		
AICEP Loan	0.00%	 	January, 2016 to July 30, 2018	 	1,243		 	1,272		
Total borrowings	 	 	 	 	430,850		 	466,059		
Plus — carrying value adjustment on debt related to the Interest Rate Agreement (1)	 	(1,102	)	 	408		
Total borrowings — net  (2)	 	 	 	 	$	429,748		 	$	466,467		
____________________________________
		
(1)	See “Derivatives” below and notes 4 and 9 to the Condensed Consolidated Financial Statements.	
		
(2)	The total borrowings — net includes long-term debt due within one year and long-term debt as stated in our Condensed Consolidated Balance Sheets.	

We had total borrowings of $430.9 million and $466.1 million at June 30, 2013 and December 31, 2012 , respectively.

Of our total borrowings, $68.8 million, or approximately 16.0 percent, was subject to variable interest rates at June 30, 2013 . A change of one percentage point in such rates would result in a change in interest expense of approximately $0.7 million on an annual basis.

Included in interest expense is the amortization of discounts and financing fees. These items amounted to $0.5 million and $0.3 million for the three months ended June 30, 2013 and 2012, respectively, and $0.9 million and $1.4 million for the six months ended June 30, 2013 and 2012, respectively.

Cash Flow

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

																
 	Three months ended June 30,	 	Six months ended June 30,	
(dollars in thousands)	2013	 	2012	 	2013	 	2012	
Net cash provided by (used in) operating activities	$	9,385		 	$	(52,421	)	 	$	(3,295	)	 	$	(71,519	)	
Capital expenditures	(10,889	)	 	(5,386	)	 	(19,771	)	 	(11,832	)	
Proceeds from asset sales and other	4		 	239		 	8		 	419		
Free Cash Flow   (1)	$	(1,500	)	 	$	(57,568	)	 	$	(23,058	)	 	$	(82,932	)	
________________________________________
		
(1)	We define Free Cash Flow as net cash provided by (used in) operating activities less capital expenditures plus 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 is a measure of performance we use to internally evaluate the overall performance of the business.
Free Cash Flow is used in conjunction with and in addition to results presented in accordance with U.S. GAAP. Free Cash Flow is neither intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities recorded under U.S. GAAP. Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

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Discussion of Second Quarter 2013 vs. Second Quarter 2012 Cash Flow

Our net cash provided by (used in) operating activities was $9.4 million in the second quarter 2013 compared to $(52.4) million in the second quarter of 2012 an improvement of $61.8 million. The major factors impacting cash flow from operations was the favorable cash flow of $83.6 million in reduced pension and non-pension postretirement payments, which included a $79.7 million contribution to the U.S. pension plans in 2012. Partially offsetting this was an unfavorable cash flow impact of income tax payments of $5.6 million, interest payments of $5.6 million, abandoned property payments of $4.5 million, prepaid expenses of $2.5 million, and 2012 interest rate swap proceeds of $3.6 million.

Our net cash used in investing activities was $(10.9) million and $(5.1) million in the second quarter of 2013 and 2012, respectively, primarily representing capital expenditures.

Net cash used in financing activities was ($34.1) million in the second quarter of 2013, compared to net cash provided by financing activities of $44.7 million in the year-ago quarter. Second quarter 2013 reflects senior note payments of $45.0 million, offset by $9.8 million in the net borrowings on the ABL credit facility. Second quarter 2012 reflects senior note proceeds of $450.0 million, offset by former senior note payments of $360.0 million, call premium payments of $23.6 million, debt issuance costs of $12.2 million, and other debt payments of $9.6 million.

Our Free Cash Flow was $(1.5) million during the second quarter of 2013, compared to $(57.6) million in the year-ago quarter, an improvement of $56.1 million. The primary contributors to this change were the $61.8 million favorable cash flow impact from operating activities in the current period, as discussed above, offset by an additional $5.5 million in capital expenditures.

Discussion of First Six Months 2013 vs. First Six Months 2012 Cash Flow

Our net cash used in operating activities was $(3.3) million and $(71.5) million in the first six months of 2013 and 2012, respectively, an increase of $68.2 million. The major factors impacting cash flow from operations was the favorable cash flow of $91.1 million in reduced pension and non-pension postretirement payments, which included a $79.7 million contribution to the U.S. pension plans in 2012, and $12.4 million in reduced interest payments. Partially offsetting this was an unfavorable cash flow impact of working capital of $8.5 million, labor related payments of $6.2 million, income tax payments of $6.6 million, abandoned property payments of $4.5 million, prepaid expenses of $4.1 million, and 2012 interest rate swap proceeds of $3.6 million.

Our net cash used in investing activities was $(19.8) million and $(11.4) million in the first six months of 2013 and 2012, respectively, primarily representing capital expenditures.

Net cash (used in) provided by financing activities was $(33.6) million in the first six months of 2013, compared to $44.3 million in the year-ago period. The first half of 2013 reflects senior note payments of $45.0 million and call premium payments of $1.4 million, offset by $9.8 million in the net borrowings on the ABL credit facility and stock options exercised of $3.0 million. The first half of 2012 reflects senior note proceeds of $450.0 million, offset by former senior note payments of $360.0 million, call premium payments of $23.6 million, debt issuance costs of $12.2 million, and other debt payments of $10.0 million.

Our Free Cash Flow was $(23.1) million during the first six months of 2013, compared to $(82.9) million in the first six months of 2012, an increase of $59.9 million. The primary contributors to this change were the $68.2 million favorable cash flow impact from operating activities in the six month period, as discussed above, offset by an additional $7.9 million in capital expenditures.

Derivatives

We had an Interest Rate Agreement (Old Rate Agreement) in place through April 18, 2012 with respect to $80.0 million of our former Senior Secured Notes as a means to manage our fixed to variable interest rate ratio. On April 18, 2012, we called the Old Rate Agreement at fair value and received proceeds of $3.6 million.

On June 18, 2012, we entered into an Interest Rate Agreement (New Rate Agreement) with a notional amount of $45.0 million that is to mature in 2020. The New Rate Agreement was executed in order to convert a portion of the Senior Secured Notes fixed rate debt into floating rate debt and maintain a capital structure containing fixed and floating rate debt. Prior to May 15, 2015, but not more than once in any twelve-month period, the counterparty may call up to 10 percent of the New Rate Agreement at a call price of 103 percent. The New Rate Agreement is callable at the counterparty’s option, in whole or in part, at any time on or after May 15, 2015 at set call premiums. The variable interest rate for our borrowings related to the New Rate

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Agreement at June 30, 2013, excluding applicable fees, is 5.5 percent . This New Rate Agreement expires on May 15, 2020. Total remaining Senior Secured Notes not covered by the New Rate Agreement have a fixed interest rate of 6.875 percent per year through May 15, 2020. If the counterparty to this New Rate Agreement were to fail to perform, this New Rate Agreement would no longer afford us a variable rate. However, we do not anticipate non-performance by the counterparty. The interest rate swap counterparty was rated A+, as of June 30, 2013, by Standard and Poor’s.

The fair market value for the New Rate Agreement at June 30, 2013, was a $1.8 million liability. The fair market value of the New Rate Agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves.

We also use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts is to reduce the effects of fluctuations and price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements up to eighteen months in the future. The fair values of these instruments are determined from market quotes. At June 30, 2013, we had commodity futures contracts for 1,550,000 million British Thermal Units (BTUs) of natural gas with a fair market value of a $0.1 million liability. We have hedged a portion of our forecasted transactions through December 2014. At December 31, 2012, we had commodity futures contracts for 2,400,000 million BTUs of natural gas with a fair market value of a $(0.4) million liability. The counterparties for these derivatives were rated BBB+ or better as of June 30, 2013, by Standard & Poor’s.

Item 3.	Qualitative and Quantitative Disclosures about Market Risk	

Currency

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

Interest Rates

We have an Interest Rate Agreement (New Rate Agreement) with respect to $45.0 million of debt in order to convert a portion of the Senior Secured Notes fixed rate debt into floating rate debt and maintain a capital structure containing fixed and floating rate debt. The interest rate for our borrowings related to the New Rate Agreement at June 30, 2013 is 5.5 percent per year. The New Rate Agreement expires on May 15, 2020. Total remaining Senior Secured Notes not covered by the New Rate Agreement have a fixed interest rate of 6.875 percent . If the counterparty to the New Rate Agreement were to fail to perform, the New Rate Agreement would no longer provide the desired results. However, we do not anticipate nonperformance by the counterparty. The counterparty was rated A+ as of June 30, 2013 by Standard and Poor’s.

Natural Gas

We are exposed to market risks associated with changes in the price of natural gas. We use commodity futures contracts related to forecasted future natural gas requirements of our manufacturing operations in North America. The objective of these futures contracts is to limit the fluctuations in prices paid and potential volatility in earnings or cash flows from price movements in the underlying natural gas commodity. We consider the forecasted natural gas requirements of our manufacturing operations in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements up to six quarters in the future. For our natural gas requirements that are not hedged, 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, 2013 .

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

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securities markets affect our pension plans' asset performance and related pension expense. Sensitivity to these key market risk factors is as follows:
		
•	A change of 1.0 percent in the discount rate would change our total annual pension and nonpension postretirement expense by approximately $4.5 million.	
		
•	A change of 1.0 percent in the expected long-term rate of return on plan assets would change annual pension expense by approximately $3.4 million.	

Item 4.	Controls and Procedures	

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

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

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

PART II — OTHER INFORMATION

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

Item 1A. Risk Factors

Our risk factors are set forth in Part I, Item 1A. "Risk Factors" in our 2012 Annual Report on Form 10-K.

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

Issuer’s Purchases of Equity Securities

												
Period	Total Number of Shares Purchased	 	Average Price Paid per Share	 	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	 	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs  (1)	
April 1 to April 30, 2013	—		 	—		 	—		 	1,000,000		
May 1 to May 31, 2013	—		 	—		 	—		 	1,000,000		
June 1 to June 30, 2013	—		 	—		 	—		 	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 from	

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2004 through the six months ended June 30, 2013. Our ABL Facility and the indentures governing the Senior Secured Notes significantly restrict our ability to repurchase additional shares.

Item 5. Other Information

Effective August 7, 2013, our Board of Directors approved the Amended and Restated By-Laws attached as Exhibit 3.2 to this Form 10-Q. The following is a brief summary of the material changes effected by the Amended and Restated By-Laws:

•	Pursuant to Article II, Sections 9, 10 and 11, we have established new advance notice deadlines and other procedures and information requirements for our stockholders to nominate directors or to propose other business to be conducted at our annual meeting of shareholders so that we can ensure:	

◦	the orderly operations of meetings and conduct of corporate business; and	
		
◦	that we and our stockholders have adequate time and information to evaluate and respond to stockholder proposals.	

Under the new By-Laws, (i) in most cases, shareholder proposals (including director nominations) must be submitted no less than 90 or no more than 120 days prior to the first anniversary of the preceding year's annual meeting, (ii) shareholders nominating directors or making other proposals must (a) agree to appear in person (or send a proxy to appear) at the annual meeting, (b) disclose certain information regarding their share ownership and other interests with respect to the Company and (c) otherwise comply with the new procedural and disclosure requirements set forth in the Amended and Restated By-Laws.

•	Pursuant to Article II, Section 11, we have also clarified that members of our board of directors may serve on the boards of directors of no more than three (3) other public companies and that members of the audit committee of the board of directors must serve on the audit committees of no more than two (2) other public companies.	

•	Pursuant to Article III, Section 13, we have clarified that the chairman of our board of directors serves in a non-executive role by virtue of being chairman and is not otherwise an executive or officer of the Company unless the chairman is also our chief executive officer.	

•	Pursuant to the new Section 8 to Article VI, we have specified that the Court of Chancery of the State of Delaware (or the federal district court for the District of Delaware or other Delaware State courts if the Court of Chancery does not have jurisdiction) shall be the sole and exclusive forum for proceedings which, among other things, are brought on behalf of the Company, claim breaches of fiduciary duties, arise under the Company's governing documents or the Delaware General Corporations Law, challenge the validity of the Company's governing documents or are governed by the internal affairs doctrine.	

The foregoing description of the amendments to our By-Laws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated By-Laws, a copy of which is attached hereto as Exhibit 3.2.

Item 6.	Exhibits	

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

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EXHIBIT INDEX	
S-K Item
601 No.	 	Document	
3.1	 	Restated Certificate of Incorporation of Libbey Inc. (filed as Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference).	
 	 	 	
3.2	 	Amended and Restated By-Laws of Libbey Inc.	
 	 	 	
3.3	 	Certificate of Incorporation of Libbey Glass Inc. (filed as Exhibit 3.3 to Libbey Glass Inc.’s Form S-4 (Reg No. 333-139358) filed December 14, 2006, and incorporated herein by reference).	
 	 	 	
3.4	 	Amended and Restated By-Laws of Libbey Glass Inc. (filed as Exhibit 3.4 to Libbey Glass Inc.’s Form S-4 (Reg No. 333-139358) filed December 14, 2006, and incorporated herein by reference).	
 	 	 	
4.1	 	Amended and Restated Registration Rights Agreement, dated October 29, 2009, among Libbey Inc. and Merrill Lynch PCG, Inc. (filed as Exhibit 4.4 to Registrant’s Form 8-K filed October 29, 2009 and incorporated herein by reference).	
 	 	 	
4.2	 	Amended and Restated Credit Agreement, dated February 8, 2010, among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, Libbey Inc., as a loan guarantor, the other loan parties party thereto as guarantors, JPMorgan Chase Bank, N.A., as administrative agent with respect to the U.S. loans, J.P. Morgan Europe Limited, as administrative agent with respect to the Netherlands loans, Bank of America, N.A. and Barclays Capital, as Co-Syndication Agents, Wells Fargo Capital Finance, LLC, as Documentation Agent and the other lenders and agents party thereto (filed as Exhibit 4.1 to Libbey Inc.’s Current Report on Form 8-K filed on February 12, 2010 and incorporated herein by reference).	
 	 	 	
4.3	 	Amendment No. 1 to Amended and Restated Credit Agreement dated as of January 14, 2011 among Libbey Glass Inc. and Libbey Europe B.V. as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.6 to Libbey Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).	
 	 	 	
4.4	 	Amendment No. 2 to the Amended and Restated Credit Agreement dated as of April 29, 2011 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on May 3, 2011 and incorporated herein by reference).	
 	 	 	
4.5	 	Amendment No. 3 to Amended and Restated Credit Agreement dated as of September 14, 2011 among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.8 to Libbey Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).	
 	 	 	
4.6	 	Amendment No. 4 to Amended and Restated Credit Agreement dated as of May 18, 2012 among Libbey Glass Inc. and Libbey Europe B.V., as borrowers, the other loan parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders with respect to the U.S. loans, and J.P. Morgan Europe Limited, as Administrative Agent for the Lenders with respect to the Netherlands loans (filed as Exhibit 4.1 to Libbey Inc.'s Current Report on Form 8-K filed on May 18, 2012 and incorporated herein by reference).	
 	 	 	
4.7	 	Indenture, dated May 18, 2012, among Libbey Glass Inc., Libbey Inc., the domestic subsidiaries of Libbey Glass Inc. listed as guarantors therein, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (filed as Exhibit 4.2 to Libbey Inc.’s Current Report on Form 8-K filed on May 18, 2012 and incorporated herein by reference).	
 	 	 	
4.8	 	Registration Rights Agreement, dated May 18, 2012, among Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of Libbey Glass Inc. listed as guarantors (filed as Exhibit 4.4 to Libbey Inc.’s Current Report on Form 8-K filed on May 18, 2012 and incorporated herein by reference).	
 	 	 	
4.9	 	Intercreditor Agreement, dated May 18, 2012, among Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of Libbey Glass Inc. listed as guarantors (filed as Exhibit 4.5 to Libbey Inc.’s Current Report on Form 8-K filed on May 18, 2012 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).	

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S-K Item
601 No.	 	Document	
10.3	 	Libbey Inc. Guarantee dated as of October 10, 1995 in favor of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China Company of Canada Ltd. guaranteeing certain obligations of LG Acquisition Corp. and Libbey Canada Inc. under the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.17 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).	
 	 	 	
10.4	 	Susquehanna Pfaltzgraff Co. Guarantee dated as of October 10, 1995 in favor of LG Acquisition Corp. and Libbey Canada Inc. guaranteeing certain obligations of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China Company of Canada, Ltd. under the Asset Purchase Agreement for the Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.18 to Libbey Inc.’s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by reference).	
 	 	 	
10.5	 	First Amended and Restated Libbey Inc. Executive Savings Plan (filed as Exhibit 10.23 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference).	
 	 	 	
10.6	 	Form of Non-Qualified Stock Option Agreement between Libbey Inc. and certain key employees participating in The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.69 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).	
 	 	 	
10.7	 	The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.67 to Libbey Inc.’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).	
 	 	 	
10.8	 	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).	
 	 	 	
10.9	 	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).	
 	 	 	
10.1	 	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).	
 	 	 	
10.11	 	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).	
 	 	 	
10.12	 	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).	
 	 	 	
10.13	 	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).	
 	 	 	
10.14	 	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).	
 	 	 	
10.15	 	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).	
 	 	 	
10.16	 	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).	
	 	 	
10.17	 	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).	
 	 	 	
10.18	 	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).	

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Table of Contents

	
			
S-K Item
601 No.	 	 	
	 	Document	
10.19	 	Amended and Restated 2006 Omnibus Incentive Plan of Libbey Inc. (filed as Exhibit 10.29 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and incorporated herein by reference).	
 	 	 	
10.20	 	Employment Agreement dated as of June 22, 2011 between Libbey Inc. and Stephanie A. Streeter (filed as Exhibit 10.30 to Libbey Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 and incorporated herein by reference).	
 	 	 	
10.21	 	Form of Employment Agreement dated as of October 31, 2011 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on November 3, 2011 and incorporated herein by reference) (as to each of Kenneth A. Boerger, Daniel P. Ibele, Timothy T. Paige and Roberto B Rubio).	
 	 	 	
10.22	 	Form of Employment Agreement dated as of October 31, 2011 (filed as Exhibit 10.2 to Libbey Inc.’s Current Report on Form 8-K filed on November 3, 2011 and incorporated herein by reference) (as to each of Richard I. Reynolds and Susan A. Kovach).	
 	 	 	
10.23	 	Form of Indemnity Agreement dated as of February 7, 2012 between Libbey Inc. and Stephanie A. Streeter (filed as Exhibit 10.25 to Libbey Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).	
 	 	 	
10.24	 	Form of Change in Control Agreement dated as of August 1, 2012 (filed as Exhibit 10.1 to Libbey Inc.’s Current Report on Form 8-K filed on July 19, 2012 and incorporated herein by reference) (as to Sherry Buck).	
 	 	 	
10.25	 	Executive Severance Compensation Policy dated as of August 1, 2012 (filed as Exhibit 10.2 to Libbey Inc.’s Current Report on Form 8-K filed on July 19, 2012 and incorporated herein by reference).	
 	 	 	
31.1	 	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein).	
 	 	 	
31.2	 	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein).	
 	 	 	
32.1	 	Chief Executive Officer Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 (filed herein).	
 	 	 	
32.2	 	Chief Financial Officer Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 (filed herein).	
 	 	 	
101.INS	 	XBRL Instance Document	
101.SCH	 	XBRL Taxonomy Extension Schema Document	
101.DEF	 	XBRL Taxonomy Extension Definition Linkbase Document	
101.CAL	 	XBRL Taxonomy Extension Calculation Linkbase Document	
101.LAB	 	XBRL Taxonomy Extension Label Linkbase Document	
101.PRE	 	XBRL Taxonomy Extension Presentation Linkbase Document	

53

Table of Contents

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 9, 2013	by:	/s/ Sherry L. Buck	 	
 	 	 	Sherry L. Buck	 	
 	 	 	Vice President, Chief Financial Officer 	 	

54

 

AMENDED AND RESTATED BY-LAWS
OF
LIBBEY INC.

(adopted June 15, 1993;
amended and restated February 1, 2005,
February 8, 2011 and August 7, 2013)

ARTICLE I
OFFICES
Section 1 .
The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2 .
The Corporation may also have offices at such other places both within and without the State of Delaware as from time to time the board of directors may determine or the business of the Corporation may require.
BOOKS AND RECORDS
Section 3 .
The books and records of the Corporation may be kept at the Corporation's headquarters in Toledo, Ohio or at such other locations outside the State of Delaware as may from time to time be designated by the board of directors.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1 .
All meetings of the stockholders shall be held at any place within or without the State of Delaware as shall be designated from time to time by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the principal executive office of the Corporation.
Section 2 .
An annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. At each annual meeting, subject to the procedures set forth in these By-Laws, directors shall be elected and any other proper business may be transacted.
Section 3 .
A majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders, the holders of which are present in person or represented by proxy, shall constitute a quorum for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation, or by these By-Laws. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment. If, however, such quorum shall not be present or represented at any meeting of the stockholders, a majority of the voting stock represented in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat.
Section 4 .
When a quorum is present at any meeting, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, other than (i) the election of directors, which is governed by Article III, Section 1 of these By-Laws, and (ii) any other question or matter that, by express provision of law, or the Certificate of Incorporation, or by these By-Laws, requires a different vote, in which case such question shall be governed and controlled by such express provision.
Section 5 .
At each meeting of the stockholders, each stockholder having the right to vote may vote in person or may authorize another person or persons to act for him by proxy in a manner permitted by Section 212 of the General Corporation Law of Delaware. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient

2

in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the secretary of the Corporation a revocation of the proxy or a new proxy bearing a later date.
Section 6 .
Special meetings of the stockholders, for any purpose, or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called at any time only by the request of the board of directors, or by a majority of the members of the board of directors, or by a committee of the board of directors which has been duly designated by the board of directors and whose powers and authority as provided in a resolution of the board of directors or these By-Laws, include the power to call such meetings. Such request shall state the purpose or purposes of the proposed meeting. Special meetings of stockholders of the Corporation may not be called by another person or persons. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 7 .
Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given, which notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. The written notice of any meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. Meetings may be held without notice if all stockholders entitled to vote are present (except as otherwise provided by law), or if notice is waived by those not present. Any previously scheduled meeting of the stockholders may be postponed and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the board of directors upon public notice given prior to the time previously scheduled for such meeting of stockholders.
Section 8 .
The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting or (ii) during ordinary business hours at the principal place of business of the corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders required by this Section 8, or to vote in person or by proxy at any meeting of stockholders.
ADVANCE NOTICE OF BUSINESS TO BE BROUGHT BEFORE A MEETING
Section 9 .
(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in a notice of meeting given by or at the direction of the board of directors, (ii) if not specified in a notice of meeting, otherwise brought before the meeting by the board of directors or the Chairman of the board of directors or (iii) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 9 and at the time of the meeting, (2) is entitled to vote at the meeting, and (3) has complied with this Section 9 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. For purposes of this Section 9, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be, if such proposing stockholder is (i) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (ii) a corporation or a limited liability company, any officer or person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or

3

person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (iii) a trust, any trustee of such trust. Stockholders seeking to nominate persons for election to the board of directors must comply with Section 10 and Section 11 and this Section 9 shall not be applicable to nominations except as expressly provided in Section 10 and Section 11.

(b) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 9. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year's annual meeting; provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.

(c) To be in proper form for purposes of this Section 9, a stockholder's notice to the secretary shall set forth:

(i) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation's books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

(ii) As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a‑1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person's business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any affiliate of the Corporation and (F) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (F) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these By-Laws on behalf of a beneficial owner; and

4

(iii) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration), and (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder(s) or persons(s) who have a right to acquire beneficial ownership at any time in the future of the shares of any class or series of the Corporation or any other person or entity (including their names) in connection with the proposal of such business by such stockholder; and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this paragraph (iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these By-Laws on behalf of a beneficial owner.

For purposes of this Section 9, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation or associate (within the meaning of Rule 12b-2 under the Exchange Act for purposes of these By-Laws) of such stockholder or beneficial owner.
(d) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 9 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

(e) Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 9. The person presiding at the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 9, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(f) This Section 9 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation's proxy statement. In addition to the requirements of this Section 9 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 9 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(g) For purposes of these By-Laws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

NOTICE OF NOMINATIONS FOR ELECTION TO THE BOARD OF DIRECTORS
Section 10 .
(a) Nominations of any person for election to the board of directors at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the direction of the board of directors, including by any committee or persons authorized to do so by the board of directors or these By-Laws, or (ii) by a stockholder present in person (A) who was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section

5

10 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 10 and Section 11 as to such notice and nomination. For purposes of this Section 10, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such stockholder, appear at such meeting. A “qualified representative” of such proposing stockholder shall be, if such proposing stockholder is (x) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (iii) a trust, any trustee of such trust. The foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the board of directors at an annual meeting or special meeting.

(b) Without qualification, for a stockholder to make any nomination of a person or persons for election to the board of directors at an annual meeting, the stockholder must (i) provide Timely Notice (as defined in Section 9) thereof in writing and in proper form to the secretary of the Corporation, (ii) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 10 and Section 11 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 10 and Section 11. Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling a special meeting, then for a stockholder to make any nomination of a person or persons for election to the board of directors at a special meeting, the stockholder must (i) provide timely notice thereof in writing and in proper form to the secretary of the Corporation at the principal executive offices of the Corporation, (ii) provide the information with respect to such stockholder and its candidate for nomination as required by this Section 10 and Section 11 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 10. To be timely, a stockholder's notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 9) of the date of such special meeting was first made. In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder's notice as described above.

(c) To be in proper form for purposes of this Section 10, a stockholder's notice to the secretary shall set forth:

(i) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 9(c)(i), except that for purposes of this Section 10 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 9(c)(i));

(ii) As to each Nominating Person, any Disclosable Interests (as defined in Section 9(c)(ii), except that for purposes of this Section 10 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 9(c)(ii) and the disclosure with respect to the business to be brought before the meeting in Section 9(c)(ii) shall be made with respect to the election of directors at the meeting); and

(iii) As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder's notice pursuant to this Section 10 and Section 11 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate's written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), and (D) a completed and signed questionnaire, representation and agreement as provided in Section 11(a).

For purposes of this Section 10, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the

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notice of the nomination proposed to be made at the meeting is made, and (iii) any associate of such stockholder or beneficial owner or any other participant in such solicitation.
(d) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 10 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

(e) In addition to the requirements of this Section 10 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

Section 11 .
(a) To be eligible to be a candidate for election as a director of the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 10 and:

(i) the candidate for nomination, whether nominated by the board of directors or by a stockholder of record, must have previously delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the board of directors), to the secretary at the principal executive offices of the Corporation, (A) a completed written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (B) a written representation and agreement (in form provided by the Corporation) that such candidate for nomination (1) has disclosed to the Corporation any and all agreements, arrangements or other understandings with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director and (2) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person's term in office as a director (and, if requested by any candidate for nomination, the secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect); and

(ii) must serve on the boards of directors of no more than three (3) other public companies and members of the audit committee of the board of directors must serve on the audit committees of no more than two (2) other public companies.

(b) The board of directors may also require any proposed candidate for nomination as a Director to furnish such other information as may reasonably be requested by the board of directors in writing prior to the meeting of stockholders at which such candidate's nomination is to be acted upon in order for the board of directors to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation's Corporate Governance Guidelines.

(c)    No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate's name in nomination has complied with Section 10 and this Section 11, as applicable. the person presiding at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with Section 10 and this Section 11, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots case for the nominee in question) shall be void and of no force or effect.
(d)    Notwithstanding anything in these By-Laws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with this Section 11.

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DIRECTOR ELECTION POLICY
Section 12 .
(a) It is a policy of the Board that in an uncontested election of directors, any nominee for election as a director who fails to receive the vote required by Section 1 of Article III of these By-Laws (the "Requisite Vote") is expected to tender his or her resignation to the Board promptly following the certification of the results for such election.

(b) The Nominating and Governance Committee shall consider each resignation tendered under this policy and recommend to the Board whether to accept or reject it. The Board will act on each tendered resignation, taking into account the Nominating and Governance Committee's recommendation, within 90 days following the certification of the election results. The Nominating and Governance Committee in making its recommendation, and the Board in making its determination, may consider any factors or other information that it considers appropriate, including, without limitation, the reasons (if any) given by stockholders as to why they withheld their votes, the qualifications of the tendering director and his or her contributions to the Board, The Board will promptly disclose (1) its decision whether to accept or reject each tendered resignation and (2) if applicable, the reasons for rejecting any tendered resignation, in a press release to be disseminated in the manner the Company's press releases are typically distributed.

(c) Any director who tenders his or her resignation pursuant to this policy shall not participate in the Nominating and Governance Committee recommendation or Board determination regarding whether to accept or reject his or her tendered resignation. If, however, each member of the Nominating and Governance Committee failed to receive the Requisite Vote at the same election, then the Board shall create a committee comprised solely of independent directors who did not fail to receive the Requisite Vote to consider the tendered resignations and recommend to the Board whether or not to accept them. Further, if the only directors who did not fail to receive the Requisite Vote in the same election constitute three or fewer directors, all directors may participate in the Board determination regarding whether or not to accept the tendered resignations.

(d) If a director's resignation tendered under this policy is rejected by the Board, such director will continue to serve for the remainder of his or her term and until his or her successor is duly elected and qualified, or until his or her death, resignation, retirement or removal.

(e) If a director's tendered resignation is accepted by the Board, then the Board, in its sole discretion, may fill any resulting vacancy or may decrease the size of the Board in each case pursuant to the applicable provisions of these By-Laws.

(f) The Board shall consider as candidates for nomination for election or re-election to the Board, or to fill vacancies and new directorships on the Board, only those individuals who agree to tender, promptly following their election, re-election or appointment, an irrevocable resignation that will be effective upon (1) the director's failure to receive the Requisite Vote in his or her election as a director and (2) the acceptance of such tendered resignation by the Board.

(g) The Board will have the exclusive power and authority to administer and interpret this policy and to make all determinations deemed necessary or advisable for the administration of this provision, including any determination as to whether any election of directors is contested. All such actions, interpretations and determinations that are done or made by the Board in good faith will be final, conclusive and binding.

(h) All proxies must be filed with the secretary of the Corporation at the beginning of each meeting in order to be counted in any vote at the meeting. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the Corporation on the record date set by the board of directors as provided in Article V, Section 6 hereof.

INSPECTORS OF ELECTIONS
Section 13 .
The corporation may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock

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of the corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspectors' count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.
OPENING AND CLOSING THE POLLS
Section 14 .
The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The board of directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the board of directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the board of directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the board of directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

ARTICLE III
DIRECTORS
Section 1 .
The board of directors shall consist of a minimum of one (1) and a maximum of eleven (11) directors. The number of directors shall be fixed or changed from time to time, within the minimum and maximum, by the then appointed directors. The directors need not be stockholders. Except as provided in Section 12 of Article II, (i) in an uncontested election of directors, each director shall be elected by the vote of the majority of the votes cast with respect to such director's election, and (ii) in a contested election of directors, the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at such meeting and entitled to vote on the election of directors. For purposes of this Section 1, (x) a majority of the votes cast means that the number of shares voted “for” a director's election must exceed the number of votes cast “against” or “withheld” from such director's election, (y) neither abstentions nor broker non-votes will be deemed to be votes “for,” “against” or “withheld” from a director's election, and (z) the Board will have the exclusive power and authority to determine whether any election of directors is a contested election. Each director elected shall hold office until his successor is elected and qualified or until his death, retirement, resignation or removal. Except as may otherwise be provided pursuant to Article IV of the Certificate of Incorporation with respect to any rights of holders of preferred stock, a director may be removed without cause either by (i) a majority vote of the directors then in office (including for purposes of calculating the number of directors then in office the director subject to such removal vote), or (ii) the affirmative vote of the stockholders holding at least 80% of the capital stock entitled to vote for the election of directors.
Section 2 .
Except as may otherwise be provided pursuant to Article IV of the Certificate of Incorporation with respect to any rights of holders of preferred stock to elect additional directors, should a vacancy in the board of directors occur or be created (whether arising through death, retirement, resignation or removal or through an increase in the number of authorized directors), such vacancy shall be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the board of directors may exist. A director so elected to fill a vacancy shall serve for the remainder of the term of the class to which he was elected.

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Section 3 .
The property and business of the Corporation shall be managed by or under the direction of its board of directors. In addition to the powers and authorities by these By-Laws expressly conferred upon them, the board of directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4 .
The directors may hold their meetings and have one or more offices, and keep the books of the corporation outside of the State of Delaware.
Section 5 .
Regular meetings of the board of directors may be held without notice at such time and place as shall from time to time be determined by the board.
Section 6 .
Special meetings of the board of directors may be called by the president or chief executive officer on twenty-four hours' notice to each director, either personally or by regular mail, electronic mail or by telegram; special meetings shall be called by the president, chief executive officer or the secretary in like manner and on like notice on the written request of two directors unless the board of directors consists of only one director; in which case special meetings shall be called by the president, chief executive officer or secretary in like manner or on like notice on the written request of the sole director.
Section 7 .
At all meetings of the board of directors a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the directors present at any meeting at which there is a quorum, shall be the act of the board of directors, except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these By-Laws. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. If only one director is authorized, such sole director shall constitute a quorum.
Section 8 .
Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board of directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board of directors or committee.
Section 9 .
Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 10 .
The board of directors may, by resolution passed by a majority of the whole board of directors, designate one or more committees, each such committee to consist of one or more of the directors of the corporation. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the board of directors, shall have and may exercise all the powers

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and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these By-Laws; and, unless the resolution, these By-Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a Certificate of Ownership and Merger.
Section 11 .
Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 12 .
Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefore. Members of special or standing committees may be allowed like compensation for attending committee meetings.
CHAIRMAN OF THE BOARD
Section 13 .
The chairman of the board, if such an individual be elected, shall, if present, preside at all meetings of the board of directors and shall exercise and perform such other powers and duties as may be from time to time assigned to him or her by the board of directors or prescribed by these By-Laws. The chairman of the board may also be the chief executive officer of the Corporation, but if the chairman of the board is not the chief executive officer of the Corporation, then the chairman of the board shall not be an officer of the Corporation, unless otherwise designated as such by the board of directors.
INDEMNIFICATION
Section 14 .
The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 16, the Corporation shall be required to indemnify a Covered Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized in the specific case by the board of directors of the Corporation.
Section 15 .
The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys' fees) reasonably incurred by a Covered Person in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under these By-Laws or otherwise.

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Section 16 .
If a claim for indemnification (following the final disposition of such action, suit or proceeding) or advancement of expenses under this these By-Laws is not paid in full within thirty days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law.
Section 17 .
The rights conferred on any Covered Person by these By-Laws shall not be exclusive of any other rights that such Covered Person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise.
Section 18 .
The Corporation's obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
Section 19 .
Any repeal or modification of any of Sections 14 through 18 of this Article III shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification.
Section 20 .
These By-Laws shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.

ARTICLE IV

OFFICERS
Section 1 .
The officers of the Corporation shall be chosen by the board of directors and shall include a chief executive officer, vice president and a secretary. The Corporation may also have at the discretion of the board of directors such other officers as are desired, including additional vice presidents, one or more assistant secretaries, a treasurer, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article IV. In the event there are two or more vice presidents, then one or more may be designated as executive vice president, senior vice president, vice president marketing, or other similar or dissimilar title. At the time of the election of officers, the directors may by resolution determine the order of their rank. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these By-Laws otherwise provide.
Section 2 .
The board of directors, at its first meeting after each annual meeting of stockholders, shall choose the officers of the Corporation.
Section 3 .
The board of directors may appoint such other officers and agents, as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors.
Section 4 .
The salaries of all officers and agents of the Corporation shall be fixed by the board of directors.

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Section 5 .
The officers of the Corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the board of directors may be removed at any time, either with or without cause, by the board of directors. If the office of any officer or officers becomes vacant for any reason, the vacancy may be filled by the board of directors.
CHIEF EXECUTIVE OFFICER
Section 6 .
Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the chief executive officer shall, subject to the control of the board of directors, have general supervision, direction and control of the business and officers of the Corporation. He shall be an ex-officio member of all committees and shall have the general powers and duties of management usually vested in the office of chief executive officer of corporations, and shall have such other powers and duties as may be prescribed by the board of directors or these By-Laws.
VICE PRESIDENTS
Section 7 .
In the absence or disability of the chief executive officer, the vice presidents in order of their rank as fixed by the board of directors, or if not ranked, the vice president designated by the board of directors, shall perform all the duties of the president, and when so acting shall have all the powers of and be subject to all the restrictions upon the president. The vice presidents shall have such other duties as from time to time may be prescribed for them, respectively, by the board of directors.
SECRETARY AND ASSISTANT SECRETARIES
Section 8 .
The secretary shall record the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose; and shall perform like duties for the standing committees when required by the board of directors. He shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or these By-Laws. He shall keep in safe custody the seal of the Corporation, and affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature or by the signature of an assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.
Section 9 .
The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, or if there be no such determination, the assistant secretary designated by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
TREASURER AND ASSISTANT TREASURERS
Section 10 .
The treasurer, if such an officer is elected, shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys, and other valuable effects in the name and to the credit of the Corporation, in such depositories as may be designated by the board of directors. He shall disburse the funds of the Corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the Corporation. If required by the board of directors, he shall give the Corporation a bond, in such sum and with such surety or sureties as shall be satisfactory to the board of directors, for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

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Section 11 .
The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, or if there be no such determination, the assistant treasurer designated by the board of directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
Section 12 .
Unless otherwise provided by resolution adopted by the board of directors, the chief executive officer, the president or any vice president may from time to time appoint an attorney or attorneys or agent or agents of the corporation, in the name and on behalf of the corporation, to cast the votes which the corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the corporation, at meetings of the holders of the stock or other securities of such other corporation or other entity, or to consent in writing, in the name of the corporation as such holder, to any action by such other corporation or other entity, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consents, and may execute or cause to be executed in the name and on behalf of the corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he or she may deem necessary or proper. Any of the rights set forth in this Section 12 which may be delegated to an attorney or agent may also be exercised directly by the chief executive officer, the president or any vice president.
ARTICLE V
CERTIFICATES OF STOCK
Section 1 .
Every holder of stock of the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the chief executive officer, or a vice president, and by the secretary or an assistant secretary, or the treasurer or an assistant treasurer of the Corporation, certifying the number of shares represented by the certificate owned by such stockholder in the Corporation.
Section 2 .
Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
Section 3 .
If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder whoso requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
LOST, STOLEN OR DESTROYED CERTIFICATES
Section 4 .
The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

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TRANSFERS OF STOCK
Section 5 .
Upon surrender to the Corporation, or the transfer agent of the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 6 .
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders, or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix a record date that does not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and that is not more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 7 .
The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.
ARTICLE VI
GENERAL PROVISIONS
DIVIDENDS
Section 1 .
Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.
Section 2 .
Before payment of any dividend there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation, and the directors may abolish any such reserve.
CHECKS
Section 3 .
All checks or demands for money and notes of the Corporation shall be signed by such officer or officers of the board of directors may from time to time designate.
FISCAL YEAR
Section 4 .
The fiscal year of the Corporation shall be fixed by resolution of the board of directors.

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CORPORATE SEAL
Section 5 .
The corporate seal shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Delaware”. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
NOTICES
Section 6 .
Whenever, under the provisions of the Certificate of Incorporation or of these By-Laws or as required by law, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.
Section 7 .
Whenever any notice is required to be given by law or under the provisions of the Certificate of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
FORUM SELECTION
Section 8 .
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or to the Corporation's stockholders, (c) any action arising pursuant to any provision of the Delaware General Corporation Law or the Corporation's Certificate of Incorporation or these By-laws (as either may be amended from time to time), (d) any action to interpret, apply, enforce or determine the validity of the Company's Certificate of Incorporation or these By-laws or (e) any action asserting a claim against the Corporation governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of, and to have consented to, the provisions of this Section 8.

ARTICLE VII
AMENDMENTS
Section 1 .
These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the Certificate of Incorporation, subject to the requirements of Article II of these By-Laws, at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting; provided, however, that, notwithstanding any other provisions of these By-Laws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the stock required by law, the Certificate of Incorporation or these By-Laws, the affirmative vote of the holders of at least 80 percent of the voting power of the then outstanding voting stock, voting together as a single class, shall be required in order for stockholders to alter, amend or repeal any provision of these By-Laws or to adopt any additional bylaw.

16

EXHIBIT 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Stephanie A. Streeter, certify that:
		
1.	I have reviewed this quarterly report on Form 10-Q of Libbey Inc.;	
		
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
		
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
		
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
		
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
		
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
		
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
		
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
		
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
		
a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
		
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

	
				
Date:	August 9, 2013	By: 	/s/ Stephanie A. Streeter  	
 	 	 	Stephanie A. Streeter	
 	 	 	Chief Executive Officer 	

EXHIBIT 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Sherry L. Buck, certify that:
		
1.	I have reviewed this quarterly report on Form 10-Q of Libbey Inc.;	
		
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
		
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
		
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
		
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
		
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
		
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
		
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
		
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
		
a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
		
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

	
				
Date:	August 9, 2013	By:	/s/ Sherry L. Buck	
 	 	 	Sherry L. Buck	
 	 	 	Vice President, Chief Financial Officer	

EXHIBIT 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Libbey Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	
				
Date:	August 9, 2013	By: 	/s/ Stephanie A. Streeter  	
 	 	 	Stephanie A. Streeter	
 	 	 	Chief Executive Officer 	

EXHIBIT 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Libbey Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	
				
Date:	August 9, 2013	By: 	/s/ Sherry L. Buck	
 	 	 	Sherry L. Buck	
 	 	 	Vice President, Chief Financial Officer