e11vk
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
11-K
ANNUAL
REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the plan year ended December 31, 2010 |
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-12084
A. Full title of the plan and the address of the plan, if different from that of the issuer
named below:
AMENDED AND RESTATED LIBBEY INC.
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
LIBBEY
INC.
300 Madison Ave.
Toledo, Ohio 43604
REQUIRED INFORMATION
Financial Statements and Exhibits as follows:
1. Financial statements
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Report of Independent Registered Public Accounting Firm |
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Statements of Net Assets Available for Benefits as of December 31, 2010, and December 31,
2009 |
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Statements of Changes in Net Assets Available for Benefits for years ended December 31,
2010 and December 31, 2009 |
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Notes to Financial Statements |
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Supplemental Schedule H, Line 4i Schedule of Assets (Held at End of Year) |
2. Exhibits
(23) |
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Consent of Independent Registered Public Accounting Firm |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator of the
Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: June 28, 2011 |
AMENDED AND RESTATED LIBBEY INC.
RETIREMENT SAVINGS PLAN
Libbey Inc.
Employee Benefits Committee
Plan Administrator
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By: |
/s/ Timothy T. Paige
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Timothy T. Paige |
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Chairman Employee Benefits Committee |
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By: |
/s/ Richard I. Reynolds
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Richard I. Reynolds |
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Executive Vice President and Chief Financial
Officer of Libbey Inc. |
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Financial Statements and
Supplemental Schedule
Amended and Restated Libbey Inc.
Retirement Savings Plan
Years Ended December 31, 2010 and 2009
With Report of Independent Registered Public Accounting Firm
Amended and Restated Libbey Inc.
Retirement Savings Plan
Financial Statements and Supplemental Schedule
Years Ended December 31, 2010 and 2009
Contents
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1 |
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Financial Statements |
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2 |
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3 |
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4 |
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Supplemental Schedule |
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18 |
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EX-23 |
Report of Independent Registered Public Accounting Firm
The Libbey Inc. Employee Benefits Committee
Amended and Restated Libbey Inc. Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of the Amended and
Restated Libbey Inc. Retirement Savings Plan (the Plan) as of December 31, 2010 and 2009, and the
related statements of changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plans management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Plans internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2010 and 2009, and the
changes in its net assets available for benefits for the years then ended, in conformity with U.S.
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2010, is presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department of Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plans management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Toledo, Ohio
June 28, 2011
1
Amended and Restated Libbey Inc.
Retirement Savings Plan
Statements of Net Assets Available for Benefits
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December 31 |
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2010 |
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2009 |
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Assets |
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Investments, at fair value (Note 4) |
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$ |
91,214,476 |
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$ |
71,700,824 |
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Notes receivable from participants (Note 6) |
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1,870,239 |
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1,566,079 |
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Employer contribution receivable |
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101 |
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86 |
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Participant contribution receivable |
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169 |
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144 |
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Net assets available for benefits, at fair value |
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93,084,985 |
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73,267,133 |
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Adjustment from fair value to contract value for
fully benefit-responsive investment contracts (Note 5) |
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191,979 |
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574,915 |
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Net assets available for benefits |
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$ |
93,276,964 |
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$ |
73,842,048 |
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See accompanying notes.
2
Amended and Restated Libbey Inc.
Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
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Year Ended December 31 |
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2010 |
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2009 |
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Additions |
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Investment income: |
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Interest and dividends |
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$ |
1,094,923 |
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$ |
889,942 |
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Contributions: |
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Participants |
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3,815,060 |
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3,287,355 |
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Employer |
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1,407,221 |
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413,947 |
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5,222,281 |
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3,701,302 |
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Net transfer from Libbey Inc. Supplemental
Retirement Plan |
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48,251 |
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Total additions |
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6,365,455 |
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4,591,244 |
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Deductions |
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Participant withdrawals or benefits
paid directly
to participants |
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(6,514,870 |
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(3,577,851 |
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Net transfer to Libbey Inc. Supplemental
Retirement Plan |
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(67,599 |
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Other |
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(20,823 |
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(6,725 |
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Total deductions |
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(6,535,693 |
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(3,652,175 |
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Net appreciation in fair value
of investments (Note 4) |
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19,605,153 |
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22,239,071 |
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Net increase |
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19,434,916 |
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23,178,140 |
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Net assets available for benefits: |
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Beginning of year |
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73,842,048 |
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50,663,908 |
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End of year |
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$ |
93,276,964 |
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$ |
73,842,048 |
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See accompanying notes.
3
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements
December 31, 2010
1. Description of Plan
General
The Amended and Restated Libbey Inc. Retirement Savings Plan (the Plan) was adopted by Libbey Inc.
(the Company) for the benefit of eligible salary and non-union hourly employees. The Plan was
amended and restated on January 1, 2008.
The Plan is a defined contribution plan that provides eligible employees the opportunity to make
pretax and/or after-tax contributions, in specific percentages, within guidelines established by
the Libbey Inc. Employee Benefits Committee (the Committee). Participant contributions are limited
to 50% of their eligible wages and are immediately 100% vested. Contributions are allocated at
participants discretion among the various investment options from 1% to 100%, with no limit on the
number of options selected. A participant may elect to change the percentage of annual compensation
to be contributed, and any such changes shall be effective as soon as administratively feasible.
The benefit to which a participant is entitled is the benefit that can be provided from the value
of the participants account.
The Company contributes to the Plan on behalf of each participant an amount equal to 100% of the
participants first 1% of pretax contributions and 50% of the participants pretax contributions
from 2% to 6%, not to exceed 3.5% of the participants eligible compensation. Company matching
contributions are allocated to investments based on the participants deferral elections. Company
matching contributions are immediately 100% vested. The Plan automatically enrolls newly eligible
participants; however, participants can elect to opt out of automatic enrollment.
The Company suspended matching contributions under the Plan for salaried and non-union hourly
employees effective March 16, 2009. The matching contributions were reinstated effective December
1, 2009.
Within certain limitations, a participant may also transfer into the Plan a rollover contribution
from another qualified plan.
Participants may transfer existing fund balances among the various investment funds daily, with
some limitations.
4
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
The above information is intended as a general description of the Plans operating guidelines.
Reference should be made to the plan document for more specific provisions, including benefit
payments.
Plan Termination
Although the Company has not expressed any intent to do so, the Company has the right under the
Plan to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA). Upon termination, the entire interest of each participants account is distributed
to the participants.
Assets in Trust
For the years ended December 31, 2010 and 2009, all of the assets of the Plan were held by the
Trustee, JP Morgan Chase Bank.
Distributions of Benefits
Distribution of vested benefits may be made upon the occurrence of any one of the following:
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In-service withdrawal on or after attainment of age 59-1/2; |
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Disability (as defined in the Plan) of the participant; |
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Death of the participant; |
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Termination of employment; or |
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With respect to before-tax deferrals, hardship (as defined in the Plan). |
Benefits due upon death are generally paid in a lump sum or installments, depending on whether benefit distributions have already
begun. Death benefits are based on amounts in the participants accounts. Benefits due upon
termination, withdrawal, or disability are paid in a lump sum or installments, as applicable, and
are based on vested amounts in the participants accounts. Other withdrawal options and/or
forms of benefit payment may be available with respect to participants who were covered under
certain plans that were previously merged into the Plan.
5
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
2. Summary of Accounting Policies
Plan Expenses
Substantially all of the Plans administrative expenses are paid by the Company.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP) requires management to make estimates and assumptions that affect the reported
amounts in the financial statements and accompanying notes. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition
The Plans investments are stated at fair value. Shares of registered investment companies and
common stock are valued based on quoted market prices that represent the net asset value of shares
held by the Plan at year-end. Common collective trusts contain investments in equity and bond
funds, treasury notes, and bond contracts. The fair value of the participation units in common
collective trusts is based on quoted redemption values on the last business day of the Plans
year-end.
The Plan invests in fully benefit-responsive synthetic guaranteed investment contracts (synthetic
GICs) through the JP Morgan Stable Value Fund. Investment contracts held by a defined contribution
plan are required to be reported at fair value. However, contract value is the relevant measurement
attribute for that portion of the net assets available for benefits of a defined contribution plan
attributable to fully benefit-responsive investment contracts because contract value is the amount
participants would receive if they were to initiate permitted transactions under the terms of the
Plan. As required, the statements of net assets available for benefits present the fair value of
the fully benefit-responsive investment contracts and the adjustment
from fair value to contract value for fully benefit-responsive investment contracts. The underlying
investments of the synthetic GICs are valued at quoted redemption values on the last business day
of the Plans year-end. The fair value of the wrap contracts for the synthetic GICs is determined
by using the market approach, discounting methodology that incorporates the difference between
current market-level rates for contract-level wrap fees and the wrap fee being
6
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
2. Summary of Accounting Policies (continued)
charged. The difference is calculated as a dollar value and discounted by the prevailing
interpolated swap rate as of period-end. The contract value of the fully benefit-responsive
investment contracts represents contributions plus earnings, less participant withdrawals and
administrative expenses.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded
as earned. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plans
gains and losses on investments bought and sold as well as held during the year.
Company Stock Fund
The Plan invests in common stock of the Company through its Company Stock Fund. The Company Stock
Fund may also hold cash or other short-term securities, although these are expected to be a small
percentage of the fund. Dividends paid or deemed paid from this fund shall constitute applicable
dividends per the Internal Revenue Service (IRS) Code (the Code).
Each participant is entitled to exercise voting rights attributable to the shares allocated to
their account and is notified by the Company prior to the time that such rights may be exercised.
The Trustee is not permitted to vote any allocated shares for which instructions have not been
given by a participant. The Trustee votes any unallocated shares in the same proportion as those
shares that were allocated, unless the Committee directs the Trustee otherwise. Participants have
the same voting rights in the event of a tender or exchange offer.
Notes Receivable from Participants
Notes receivable from participants represent participant loans that are recorded at their unpaid
principal balance plus any accrued but unpaid interest. Interest income on notes receivable from
participants is recorded when it is earned. Related fees are recorded as administrative expenses
and are expensed when they are incurred. No allowance for credit losses has been recorded as of
December 31, 2010 or 2009. If a participant ceases to make loan repayments and the plan
administrator deems the participant loan to be a distribution, the participant loan balance is
reduced and a benefit payment is recorded.
7
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
2. Summary of Accounting Policies (continued)
New Accounting Standards
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) 2010-06, Improving Disclosures About Fair Value Measurements. ASU 2010-06 amended Accounting
Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, to clarify certain
existing fair value disclosures and to require a number of additional disclosures. The guidance in
ASU 2010-06 clarified that disclosures should be presented separately for each class of assets
and liabilities measured at fair value and provided guidance on how to determine the appropriate
classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirement for
entities to disclose information about both the valuation techniques and inputs used in estimating
Level 2 and Level 3 fair value measurements. In addition, ASU 2010-06 introduced new requirements
to disclose the amounts (on a gross basis) and reasons for any significant transfers between Levels
1, 2, and 3 of the fair value hierarchy and to present information regarding the purchases, sales,
issuances, and settlements of Level 3 assets and liabilities on a gross basis. With the exception
of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed
until 2011, the guidance in ASU 2010-06 becomes effective for reporting periods beginning after
December 15, 2009. The Plan has adopted all applicable provisions of ASU 2010-06 in its financial
statements.
In September 2010, the FASB issued ASU 2010-25, Reporting Loans to Participants by Defined
Contribution Pension Plans. ASU 2010-25 requires participant loans to be measured at their unpaid
principal balance, plus any accrued but unpaid interest, and classified as notes receivable from
participants. Previously, loans were measured at fair value and classified as investments. ASU
2010-25 is effective for fiscal years ending after December 15, 2010, and is required to be applied
retrospectively. Adoption of ASU 2010-25 did not change the value of participant loans from the
amount previously reported as of December 31, 2009. Participant loans have been reclassified to
notes receivable from participants as of December 31, 2009.
8
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
2. Summary of Accounting Policies (continued)
In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurements and
Disclosure Requirements in U.S. GAAP and IFRSs. ASU 2011-04 amended ASC 820 to converge the fair
value measurement guidance in U.S. GAAP and international financial reporting standards (IFRS).
Some of the amendments clarify the application of existing fair value measurement requirements,
while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires
additional fair value disclosures. The amendments are to be applied prospectively and are effective for annual
periods beginning after December 15, 2011. Plan management is currently evaluating the effect that
the provisions of ASU 2011-04 will have on the Plans financial statements.
3. Fair Value Measurements
In accordance with ASC 820, assets and liabilities measured at fair value are categorized into the
following fair value hierarchy:
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Level 1 Fair value is based on unadjusted quoted prices for identical assets or
liabilities in an active market that the Plan has the ability to access at the measurement
date. |
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Level 2 Fair value is based on quoted prices in markets that are not active, quoted
prices for similar assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for substantially the full term
of the asset or liability. |
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Level 3 Fair value is based on prices or valuation techniques that require inputs
that are both significant to the fair value measurement and unobservable. These inputs
reflect managements judgment about the assumptions that a market participant would use in
pricing the investment and are based on the best available information, some of which may
be internally developed. |
9
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
3. |
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Fair Value Measurements (continued) |
Investments Measured at Fair Value on a Recurring Basis
Investments measured at fair value on a recurring basis consisted of the following types of
instruments as of December 31, 2010 and 2009 (Level 1, 2, and 3 inputs are defined above):
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Fair Value Measurements |
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Using Input Type |
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December 31, 2010 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Investments: |
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Registered
investment companies:
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US equity funds |
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$ |
31,770,841 |
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$ |
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$ |
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$ |
31,770,841 |
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International equity |
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10,375,519 |
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10,375,519 |
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Fixed income |
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10,565,436 |
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10,565,436 |
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Common stock
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22,839,616 |
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22,839,616 |
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Common/collective
trusts (a)
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15,663,064 |
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15,663,064 |
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Total investments
measured at fair value
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$ |
75,551,412 |
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$ |
15,663,064 |
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$ |
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$ |
91,214,476 |
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Fair Value Measurements |
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Using Input Type |
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December 31, 2009 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Investments: |
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Registered
investment companies: |
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US equity funds |
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$ |
29,524,038 |
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$ |
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$ |
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$ |
29,524,038 |
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International equity |
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8,981,743 |
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8,981,743 |
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Fixed income |
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8,294,110 |
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8,294,110 |
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Common stock |
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15,162,610 |
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15,162,610 |
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Common/collective
trusts (a) |
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9,720,290 |
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9,720,290 |
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U.S. Treasuries |
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18,033 |
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18,033 |
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Total investments
measured at fair value |
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$ |
61,980,534 |
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$ |
9,720,290 |
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$ |
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$ |
71,700,824 |
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10
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
3. Fair Value Measurements (continued)
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(a) |
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This category includes a common/collective trust fund that is designed to deliver
safety and stability by preserving principal and accumulating earnings. This fund is
primarily invested in synthetic GICs and a common collective trust. Participant-directed
redemptions have no restrictions; however, the Plan is required to provide a 30-day
redemption notice to liquidate its entire share in the fund. The fair value of the
synthetic GICs has been estimated based on the fair value of the underlying investment
contracts in the fund as reported by the issuer of the fund. The fair value differs from
the contract value. As previously discussed in Note 2, contract value is the relevant
measurement attributable to fully benefit-responsive investment contracts because contract
value is the amount participants would receive if they were to initiate permitted
transactions under the terms of the Plan. The fair value of the common collective trusts
has been determined based on the fair value of the underlying investments of the fund as of
the measurement date. |
The Plans valuation methodologies used to measure the fair values of investments with registered
investment companies, common stock, and U.S. Treasuries were derived from quoted market prices, as
all of these equity instruments have active markets. The common collective trusts are not available
on an exchange or open market; however, the fair value is determined based on the underlying
investments (primarily debt and equity securities, as well as mortgage-backed securities) that are
traded on an exchange and active market.
11
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
4. Investments
Investments whose fair value represents 5% or more of the fair value of the Plans net assets are
as follows:
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December 31 |
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2010 |
|
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2009 |
|
|
|
|
Libbey Common Stock* |
|
$ |
22,839,616 |
|
|
$ |
15,162,610 |
|
Harbor International Fund* |
|
|
10,375,519 |
|
|
|
8,981,743 |
|
JP Morgan Intermediate Bond Fund* |
|
|
8,916,120 |
|
|
|
7,951,021 |
|
Harbor Bond Fund* |
|
|
7,245,347 |
|
|
|
6,235,085 |
|
Dodge & Cox Stock Fund |
|
|
5,447,446 |
|
|
|
4,616,240 |
|
Harbor Capital Appreciation Fund* |
|
|
5,109,434 |
|
|
|
5,157,541 |
|
|
|
|
* |
|
The fund is sponsored by the Plan Trustee or represents a party-in-interest. |
During 2010 and 2009, the Plans investments (including investments bought, sold, as well as held
during the year) appreciated in fair value as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
2010 |
|
2009 |
|
|
|
Registered investment companies
|
|
$ |
4,810,345 |
|
|
$ |
9,081,857 |
|
Common/collective trusts
|
|
|
608,639 |
|
|
|
474,666 |
|
Common stock
|
|
|
14,186,169 |
|
|
|
12,682,548 |
|
|
|
|
|
|
$ |
19,605,153 |
|
|
$ |
22,239,071 |
|
|
|
|
12
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
5. Synthetic Guaranteed Investment Contracts
The Plan invests in synthetic GICs, which are wrap contracts paired with an underlying portfolio of
investments owned by the Plan, of high-quality, intermediate term, fixed income securities. The
Plan purchases wrapper contracts from financial services institutions. Synthetic GICs credit a
stated interest rate for a specified period of time. Investment gains and losses are amortized over
the expected duration through the calculation of the interest rate applicable to the Plan on a
prospective basis. Synthetic GICs provide for a variable crediting rate, which typically resets at
least quarterly, and the issuer of the wrap contract provides assurance that future adjustments to
the crediting rate cannot result in a crediting rate less than zero. The crediting rate is
primarily based on the current yield to maturity of the covered investments, plus or minus
amortization of the difference between the market value and contract value of the covered
investments over the duration of the covered investments at the time of computation. The crediting
rate is most affected by the change in the annual effective yield to maturity of the underlying
securities, but is also affected by the difference between the contract value and the market value
of the covered investments. This difference is amortized over the duration of the covered
investments. Depending on the change in duration from reset period to reset period, the magnitude
of the impact to the crediting rate of the contract to market difference is heightened or lessened.
The crediting rate can be adjusted periodically and is usually adjusted either monthly or
quarterly, but in no event is the crediting rate less than zero percent. The underlying investments
in the synthetic GICs include U.S. Treasury notes, JP Morgan Liquidity Fund, and JP Morgan
Intermediate Bond Fund.
Certain events limit the ability of the Plan to transact at contract value with the insurance
company and the financial institution issuer. Such events include (1) amendments to the plan
documents (including complete or partial plan termination or merger with another plan), (2) changes
to the Plans prohibition on competing investment options or deletion of equity wash provisions,
(3) bankruptcy of the plan sponsor or other plan sponsor events (for example, divestitures or
spin-offs of a subsidiary) that cause a significant withdrawal from the Plan, or (4) the failure of
the trust to qualify for exemption from federal income taxes or any required prohibited transaction
exemption under ERISA. The plan administrator does not believe that the occurrence of any such
events that would limit the Plans ability to transact at contract value with participants is
probable.
13
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
5. Synthetic Guaranteed Investment Contracts (continued)
Wrap contracts are evergreen contracts that contain termination provisions. Wrap agreements permit
the funds investment manager to terminate upon notice at any time at market value and provide for
automatic termination of the wrap contract if the contract value or market value of the contract
equals zero. The issuer is not excused from paying the excess contract value when the market value
equals zero. Wrap contracts permit the issuer to terminate at market value and provide that the
fund may elect to convert such termination to an amortized election that effectively will immunize
the fund, intending to result in contract value equaling market value of the underlying assets by
such termination date. If an event of default occurs and is not cured, the nondefaulting party may
terminate the contract. The following may cause the Plan to be in default:
|
|
|
A breach of material obligation under the contract |
|
|
|
|
A material misrepresentation |
|
|
|
|
A material amendment to the plan agreement |
The issuer may be in default if it breaches a material obligation under the investment
contract, makes a material misrepresentation, has a decline in its long-term credit rating below a
threshold set forth in the contract, or is acquired or reorganized and the successor issuer does
not satisfy the investment or credit guidelines applicable to issuers. If, in the event of default
of an issuer, the Plan was unable to obtain a replacement investment contract, withdrawing
participants may experience losses if the value of the Plans assets no longer covered by the
contract is below contract value. The Plan may seek to add additional issuers over time to
diversify the Plans exposure to such risk, but there is no assurance that the Plan may be able to
do so. The combination of the default of an issuer and an inability to obtain a replacement
agreement could render the Plan unable to achieve its objective of maintaining a stable contract
value. The terms of an investment contract generally provide for settlement of payments only upon
termination of the contract or total liquidation of the covered investments. Generally, payments
will be made pro rata, based on the percentage of investments covered by each issuer. Contract
termination occurs whenever the contract value or market value of the covered investments reaches
zero or upon certain events of default. If the contract terminates due to issuer default (other
than a default occurring because of a decline in its rating), the issuer will generally be required
to pay to the Plan the
excess, if any, of contract value over market value on the date of termination. If a
14
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
5. Synthetic Guaranteed Investment Contracts (continued)
synthetic GIC terminates due to a decline in the ratings of the issuer, the issuer may be required
to pay to the Plan the cost of acquiring a replacement contract (that is, replacement cost) within
the meaning of the contract. If the contract terminates when the market value equals zero, the
issuer will pay the excess of contract value over market value to the Plan to the extent necessary
for the Plan to satisfy outstanding contract value withdrawal requests. Contract termination also
may occur by either party upon election and notice.
As described in Note 2, because the synthetic GICs are fully benefit-responsive, contract value is
the relevant measurement attribute for that portion of the net assets available for benefits
attributable to the synthetic GICs. Participants may ordinarily direct the withdrawal or transfer
of all or a portion of their investment at contract value.
|
|
|
|
|
|
|
|
|
Average Yields for Synthetic GICs |
|
2010 |
|
|
2009 |
|
|
Based on actual earnings |
|
|
2.74 |
% |
|
|
4.24 |
% |
Based on interest rate credited to participants |
|
|
1.66 |
% |
|
|
1.81 |
% |
6. Notes Receivable from Participants
The Plan permits participants to borrow up to a maximum of $50,000, or 50%, of their investment
balance once their investment balance reaches $1,000. Loans are made subject to certain conditions
and limitations specified in the plan document and are repaid in semimonthly, biweekly, or weekly
installments, including interest, over periods of between one to five years or up to 10 years for
the purchase of a primary residence. A participant is entitled to a maximum of two loans; however,
the loans must be 12 months apart. Participant loans are collateralized by their account balances.
The rate at which loans bear interest is established at the inception of the borrowing, based on
the prime rate then being charged by the Trustee plus 1%. Repayments of loans, including the
interest portion thereof, are reinvested on the participants behalf in accordance with their
current choice of investment options. If a participant terminates employment from the Company, the
loan must be paid in full otherwise it will be treated as a distribution to the participant after
90 days.
15
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
7. Income Tax Status
The Plan has received a determination letter from the IRS dated May 22, 2009, stating that the Plan
is qualified under Section 401(a) of the Code and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code
to maintain its qualified status. The plan administrator believes the Plan is being operated in
compliance with the applicable requirements of the Code and, therefore, believes that the Plan is
qualified and the related trust is tax-exempt.
United States GAAP requires plan management to evaluate uncertain tax positions taken by the
Plan. The financial statement effects of a tax position are recognized when the position is more
likely than not, based on the technical merits, to be sustained upon examination by the IRS. The
plan administrator has analyzed the tax positions taken by the Plan and has concluded that as of
December 31, 2010, there are no uncertain tax positions taken or expected to be taken. The Plan has
recognized no interest or penalties related to uncertain tax positions. The Plan is subject to
routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods
in progress. The plan administrator believes that it is no longer subject to income tax
examinations for years prior to 2007.
8. Related-Party Transactions
Certain plan investments are shares of mutual funds managed by the Trustee, JP Morgan Chase Bank,
and shares of mutual funds managed by Harbor Capital Advisors, the investment advisors of various
defined benefit pension plans of the Company. The investments in mutual funds managed by JP Morgan
Chase Bank and Harbor Capital Advisors qualify as party-in-interest transactions. There have been
no known prohibited transactions with a party-in-interest.
9. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various
risks such as interest rate, market, and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes in the value of
investment securities will occur in the near term and that such changes could materially affect
participants account balances and the amounts reported in the statements of net assets available
for benefits.
16
Amended and Restated Libbey Inc.
Retirement Savings Plan
Notes to Financial Statements (continued)
10. Reconciliation Between Financial Statements and Form 5500
The accompanying financial statements present fully benefit-responsive contracts at contract value.
The Form 5500 requires fully benefit-responsive investment contracts to be reported at fair value.
Therefore, the adjustment from fair value to contract value for fully benefit-responsive investment
contracts represents a reconciling item.
A reconciliation of net assets available for benefits per the financial statements to the Form 5500
is as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
Net assets available for benefits per the
financial statements |
|
$ |
93,276,964 |
|
|
$ |
73,842,048 |
|
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts |
|
|
(191,979 |
) |
|
|
(574,915 |
) |
|
|
|
Net assets available for benefits per the Form 5500 |
|
$ |
93,084,985 |
|
|
$ |
73,267,133 |
|
|
|
|
The following is a reconciliation of the net increase in assets available for benefits per the
financial statements to the Form 5500:
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
2010 |
|
2009 |
|
|
|
Net increase in assets available for
benefits per the financial statements
|
|
$ |
19,434,916 |
|
|
$ |
23,178,140 |
|
Adjustment from fair value to contract
value for fully benefit-responsive
investment contracts
|
|
|
382,936 |
|
|
|
616,168 |
|
|
|
|
Total net income and transfers of
assets per the Form 5500
|
|
$ |
19,817,852 |
|
|
$ |
23,794,308 |
|
|
|
|
17
Supplemental Schedule
Amended and Restated Libbey Inc.
Retirement Savings Plan
EIN 34-1559357 Plan #001
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
December 31, 2010
|
|
|
|
|
|
|
|
|
Description of Investment, Including |
|
|
Identity of Issue, Borrower, |
|
Maturity Date, Par, or Maturity |
|
Current |
Lessor, or Similar Party |
|
Value Rate of Interest |
|
Value |
|
|
|
|
|
|
|
Registered investment companies: |
|
|
|
|
|
|
American Century Investments |
|
393,568 shares of Small Capital Value |
|
$ |
3,546,112 |
|
|
|
278,746 shares of Equity Income |
|
|
2,009,826 |
|
Harbor* |
|
172,925 shares of International Fund |
|
|
10,375,519 |
|
|
|
598,275 shares of Bond Fund |
|
|
7,245,347 |
|
|
|
140,562 shares of Capital Appreciation Fund |
|
|
5,109,434 |
|
|
|
339,599 shares of Large Capital Value Fund |
|
|
2,584,353 |
|
AIM |
|
138,201 shares of Small Cap Growth |
|
|
3,951,174 |
|
Dodge & Cox |
|
50,552 shares of Stock Fund |
|
|
5,447,446 |
|
Fidelity |
|
13,782 shares of Freedom 2010 |
|
|
187,303 |
|
|
|
61,180 shares of Freedom 2015 |
|
|
693,782 |
|
|
|
105,766 shares of Freedom 2020 |
|
|
1,458,517 |
|
|
|
122,773 shares of Freedom 2025 |
|
|
1,414,342 |
|
|
|
60,052 shares of Freedom 2030 |
|
|
826,920 |
|
|
|
34,959 shares of Freedom 2035 |
|
|
400,984 |
|
|
|
41,080 shares of Freedom 2040 |
|
|
329,053 |
|
|
|
22,965 shares of Freedom 2045 |
|
|
217,934 |
|
|
|
16,534 shares of Freedom 2050 |
|
|
155,090 |
|
|
|
21,046 shares of Freedom Income |
|
|
236,990 |
|
American Funds |
|
104,418 shares of Growth Fund of America |
|
|
3,178,499 |
|
JP Morgan* |
|
3,320,089 units, 100% U.S. Treasury Money Market |
|
|
3,320,089 |
|
|
|
23,082 units of Cash Investment Fund |
|
|
23,082 |
|
|
|
|
|
|
|
|
Common collective trusts: |
|
|
|
|
|
|
JP Morgan* |
|
Liquidity Fund |
|
|
2,269,408 |
|
JP Morgan* |
|
Intermediate Bond Fund |
|
|
8,916,120 |
|
BlackRock |
|
106,128 shares of Equity Index Fund |
|
|
4,477,536 |
|
Common stock: |
|
|
|
|
|
|
Libbey Inc.* |
|
1,476,381 shares of common stock |
|
|
22,839,616 |
|
|
|
|
|
|
|
|
Total investments |
|
|
|
|
91,214,476 |
|
|
|
|
|
|
|
|
Participant Loans* |
|
Interest rates ranging from 4.25% to 10.5% with latest maturity date of September 10, 2020 |
|
|
1,870,239 |
|
|
|
|
|
|
|
|
Net Total Assets |
|
|
|
|
93,084,715 |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Indicates a party-in-interest to the Plan. |
18