Libbey, Inc. 11-K
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
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the plan year ended December 31, 2005 |
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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
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A. |
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Full title of the plan and the address of the plan, if different from that of
the issuer named below: |
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LIBBEY INC. SUPPLEMENTAL RETIREMENT PLAN |
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Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office: |
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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, 2005, and
December 31, 2004 |
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Statements of Changes in Net Assets Available for Benefits for years ended
December 31, 2005 and December 31, 2004 |
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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
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(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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LIBBEY INC.
SUPPLEMENTAL RETIREMENT PLAN |
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Dated: June 29, 2006
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Libbey Inc.
Employee Benefits Committee
Plan Administrator |
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By:
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/s/ Timothy T. Paige |
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Timothy T. Paige
Chairman
Employee Benefits Committee |
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By:
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/s/ Scott M. Sellick |
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Scott M. Sellick
Vice President and Chief Financial
Officer of Libbey Inc. and
Member of Employee Benefits Committee |
Financial Statements and
Supplemental Schedule
Libbey Inc. Supplemental Retirement Plan
Years Ended December 31, 2005 and 2004
With Report of Independent Registered Public Accounting Firm
Libbey Inc. Supplemental Retirement Plan
Financial Statements and Supplemental Schedule
Years Ended December 31, 2005 and 2004
Contents
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1 |
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Audited Financial Statements |
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3 |
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9 |
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Report of Independent Registered Public Accounting Firm
The Libbey Inc. Employee Benefits Committee
Libbey Inc. Supplemental Retirement Plan
We have audited the accompanying statements of net assets available for benefits of the Libbey Inc.
Supplemental Retirement Plan as of December 31, 2005 and 2004, 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 Plan’s 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 Plan’s 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 Plan’s 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, 2005 and 2004, 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, 2005, is presented for the purpose of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department for Labor’s Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan’s 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 26, 2006
1
Libbey Inc. Supplemental Retirement Plan
Statements of Net Assets Available for Benefits
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December 31 |
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2005 |
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2004 |
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Assets |
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Investments (Note 3) |
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$ |
30,092,131 |
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$ |
31,171,210 |
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Contribution receivables: |
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Employer |
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19,954 |
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— |
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Participants |
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111,753 |
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59,725 |
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Net assets available for benefits |
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$ |
30,223,838 |
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$ |
31,230,935 |
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See accompanying notes.
2
Libbey Inc. Supplemental Retirement Plan
Statements of Changes in Net Assets Available for Benefits
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Years Ended December 31 |
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2005 |
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2004 |
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Additions |
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Investment income: |
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Net depreciation in fair
value of investments (Note 3) |
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$ |
(2,884,353 |
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$ |
(308,010 |
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Interest and dividends |
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314,305 |
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287,800 |
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(2,570,048 |
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(20,210 |
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Contributions: |
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Participants |
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3,005,608 |
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3,133,331 |
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Employer |
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1,038,643 |
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1,183,157 |
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4,044,251 |
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4,316,488 |
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1,474,203 |
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4,296,278 |
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Deductions |
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Participant withdrawals or benefits paid directly
to participants |
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(2,208,321 |
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(1,610,272 |
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Net transfer to Libbey Inc. Retirement Savings Plan |
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(229,157 |
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(230,701 |
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Other |
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(43,822 |
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(43,147 |
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Net decrease (increase) |
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(1,007,097 |
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2,412,158 |
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Net assets available for benefits: |
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Beginning of year |
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31,230,935 |
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28,818,777 |
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End of year |
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$ |
30,223,838 |
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$ |
31,230,935 |
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See accompanying notes.
3
Libbey Inc. Supplemental Retirement Plan
Notes to Financial Statements
December 31, 2005
1. Description of Plan
General
The Libbey Inc. Supplemental Retirement Plan (the Plan) was adopted by Libbey Inc. (the Company)
for the benefit of eligible hourly employees.
The Plan is a defined contribution plan which provides eligible employees, upon completion of a
probationary period, 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 25% of the eligible compensation and are 100%
vested immediately. Contributions may be divided at the participant’s 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 participant’s account.
The Company contributes to the Plan on behalf of each participant an amount equal to fifty percent
(50%) of the participant’s contributions, not to exceed three percent (3%) of the participant’s
eligible compensation. Company matching contributions are invested in the Libbey Company Stock
Fund, and may be immediately re-directed by the participant. Company matching contributions are
immediately 100% vested.
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.
The above information is intended as a general description of the Plan’s operating guidelines.
Reference should be made to the Plan document for more specific provisions, including benefit
payments.
4
Libbey Inc. Supplemental Retirement Plan
Notes to Financial Statements
1. Description of Plan (continued)
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject to the provisions of
Employee Retirement Income Security Act of 1974 (ERISA). Upon termination, the entire interest of
each participant’s account is distributed to the participants.
Trusteed Assets
For the years ended December 31, 2005 and 2004, all of the assets of the Plan were held by the
Trustee, JP Morgan Chase Bank.
2. Summary of Accounting Policies
Investment Valuation and Income Recognition
Investments in the four Harbor Funds, two JP Morgan Funds, five American Century Investment Funds,
the AIM Small Cap Growth Fund, the Barclays Equity Index Fund, the Dodge & Cox Stock Fund, the
American Funds Growth Fund of America, and the funds holding Company common stock recorded at fair
value based on their respective quoted market values at year end. The synthetic Guaranteed
Investment Contracts (GIC’s) are valued at contract value. The participant loans are valued at
their outstanding balances, which approximate fair value. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles 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.
Plan Expenses
Substantially all Plan administrative expenses are paid by the Company.
5
Libbey Inc. Supplemental Retirement Plan
Notes to Financial Statements
3. Investments
Investments that represent 5% or more of fair value of the Plan’s net assets are as follows:
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December 31 |
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2005 |
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2004 |
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Libbey Common Stock* |
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$ |
4,348,249 |
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$ |
8,307,527 |
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JP Morgan Stable Value* |
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4,941,507 |
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4,420,204 |
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Harbor Capital Appreciation fund* |
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3,658,158 |
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3,134,649 |
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Harbor International Fund* |
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3,862,326 |
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2,994,028 |
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Participant Loans* |
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2,758,317 |
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2,921,441 |
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Harbor Bond Fund* |
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2,074,513 |
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2,102,247 |
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Harbor Large Capital Value Fund* |
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1,545,370 |
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The fund is sponsored by the Plan Trustee or represents a party in interest. |
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Less than 5% of fair value of Plan’s net assets. |
During 2005 and 2004, the Plan’s investments (including investments bought, sold, as well as held
during the year) (depreciated) appreciated in fair value as determined by quoted market prices as
follows:
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December 31 |
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2005 |
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2004 |
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Common stock |
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$ |
(4,759,370 |
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$ |
(2,009,252 |
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Mutual funds |
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1,875,017 |
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1,701,242 |
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$ |
(2,884,353 |
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$ |
(308,010 |
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6
Libbey Inc. Supplemental Retirement Plan
Notes to Financial Statements
4. Synthetic Guaranteed Investment Contracts
During 2005 and 2004, the Plan had investments in synthetic guaranteed investment contracts. The
account is credited with earnings on the underlying investments and is reported at contract value
in accordance with Statement of Position 94-4, Reporting of Investment Contracts Held by Health and
Welfare Benefit Plans and Defined Contribution Pension Plans. Contract value represents
contributions made under the contract, plus earnings, less participant withdrawals. Participants
may ordinarily direct the withdrawal or transfer of all of a portion of their investment at
contract value. The crediting interest rate on the contract is reset on a quarterly basis. As of
December 31, 2005 and 2004, these contracts had a contract value of $4,941,507 and $4,420,204,
respectively. The fair market value was $4,860,585 and $4,521,015 as of December 31, 2005 and 2004,
respectively. The crediting interest rate on these investments was 5.38% and 4.72% at December 31,
2005 and 2004, respectively. The average yield on these investments was 5.17% and 4.72% for the
years ended December 31, 2005 and 2004, respectively.
In December 2005, the Financial Accounting Standards Board issued Staff Position Nos. AAG INV-1 and
SOP 94-4-1 (FSP), which require that all investments held by an investment company be reported at
fair value, even though contract value is the relevant measurement attribute for the portion of net
assets attributable to fully benefit-responsive investment contracts. The FSP will be adopted by
the Company and the Plan effective December 31, 2006, with retroactive application to all prior
periods presented. The Company and the Plan do not believe that the adoption of Staff Position Nos.
AAG INV-1 and SOP 94-4-1 will have a material impact on the Statement of Net Assets Available for
Benefits.
5. Loan Fund
The Plan permits a participant to borrow a portion of their existing account balance. Loans are
made subject to certain conditions and limitations specified in the Plan document and are repaid in
weekly installments, including interest, over periods of between one and ten years. 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
participant’s behalf in accordance with their current choice of investment options.
7
Libbey Inc. Supplemental Retirement Plan
Notes to Financial Statements
6. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service (IRS) dated February
27, 2004, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the
Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination
by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity
with the Code to maintain its qualification. The Plan administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and, therefore, believes that
the Plan, as amended, is qualified and the related trust is tax exempt.
7. 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 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.
8
Libbey Inc. Supplemental Retirement Plan
EIN #34-1559357 Plan #002
Schedule H, Line 4i — Schedule of Assets
(Held at End of Year)
December 31, 2005
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Description of Investment, |
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| Identity of Issue, Borrower, |
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Including Maturity Date, Par or |
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Current |
| Lessor or Similar Party |
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Maturity Value Rate of Interest, |
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Value |
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Mutual funds: |
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*JP Morgan |
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500,551 shares of Public Bonds |
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$ |
4,757,739 |
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7,083 shares of Government Securities |
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7,083 |
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95,763 shares of Liquidity Fund |
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95,763 |
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*Harbor |
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112,802 shares of Capital Appreciation Fund |
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3,658,158 |
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78,775 shares of International Fund |
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3,862,326 |
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178,530 shares of Bond Fund |
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2,074,513 |
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90,904 shares of Large Capital Value Fund |
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1,545,370 |
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AIM |
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52,714 shares of Small Cap Growth |
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1,450,167 |
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American Century Investments |
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131,717 shares of Strategic Moderate |
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887,775 |
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91,902 shares of Small Capital Value |
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885,937 |
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42,553 shares of Equity Income |
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332,761 |
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54,351 shares of Strategic Conservative |
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298,930 |
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32,723 shares of Strategic Aggressive |
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257,529 |
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Barclay’s |
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20,851 shares of Equity Index Fund |
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786,279 |
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Dodge & Cox |
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6,858 shares of Stock Fund |
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941,038 |
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American Funds |
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19,552 shares of Growth Fund of America |
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603,372 |
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Common stock: |
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*Libbey Inc. |
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425,463 shares of Common Stock |
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4,348,249 |
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Money market funds: |
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*JP Morgan |
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459,903 units, 100% US Treasury |
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459,903 |
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Synthetic wrapper value |
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Synthetic Guaranteed Investment Contract |
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80,922 |
* Participant loans |
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5.0% to 10.5% |
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2,758,317 |
Total investments |
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$ |
30,092,131 |
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| * |
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Indicates a party in interest to the Plan. |
9