UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12084

Libbey Inc.

300 Madison Avenue, Toledo, Ohio 43604

419-325-2100

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  (X)  No  (  )

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).              Yes  (X)  No  (  )

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 – 13,786,314 shares at October 29, 2004.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited condensed consolidated financial statements of Libbey Inc. and all wholly owned subsidiaries (Libbey or the Company) have been prepared in accordance with U.S. generally accepted accounting principles 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. generally accepted accounting principles 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 nine-month periods ended September 30, 2004, are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.

The balance sheet at December 31, 2003, 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. generally accepted accounting principles 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, 2003.

2

LIBBEY INC.

See accompanying notes

(1)		Net sales plus Freight billed to customers less Cost of sales
(2)		Gross profit plus Royalties and net technical assistance income less Selling, general and administrative expenses and Capacity realignment charge
(3)		Refer to Note 10 of the Notes to Condensed Consolidated Financial Statements

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LIBBEY INC.

See accompanying notes

(1)		Net sales plus Freight billed to customers less Cost of sales
(2)		Gross profit plus Royalties and net technical assistance income less Selling, general and administrative expenses and Capacity
realignment charge
(3)		Refer to Note 10 of the Notes to Condensed Consolidated Financial Statements

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LIBBEY INC.

See accompanying notes

5

LIBBEY INC.

See accompanying notes

6

LIBBEY INC.

See accompanying notes

7

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

See accompanying notes

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LIBBEY INC.

1. Notes Payable and Long-Term Debt

Long-term debt consists of the following:

The Company was in compliance with the covenants of all debt agreements as of September 30, 2004 and December 31, 2003.

Revolving Credit Facility

On June 24, 2004, the Company entered into an unsecured agreement for a Revolving Credit Agreement (Revolving Credit Agreement or Agreement) with Libbey Glass Inc. and Libbey Europe B.V., as borrowers. The Agreement is with a group of banks that provides for a Revolving Credit and Swing Line Facility (Facility) permitting borrowings up to an aggregate total of $250 million, maturing June 24, 2009. Swing Line borrowings are limited to $25 million. Swing Line US dollar borrowings bear interest calculated at the prime rate plus the Applicable Rate for Base Rate Loans as defined in the Agreement. Revolving Credit Agreement U.S. dollar borrowings bear interest at the Company’s option at either the prime rate plus the Applicable Rate for Base Rate Loans or a Eurodollar rate plus the Applicable Rate for Eurodollar Loans as defined in the Agreement. The Applicable Rates for Base Rate Loans and Eurodollar Loans vary depending on the Company’s performance against certain financial ratios. The Applicable Rates for Base Rate Loans and Eurodollar Loans were 0.30% and 1.20%, respectively, at September 30, 2004. The weighted average interest rate on these borrowings at September 30, 2004, was 3.3%.

Libbey Europe B.V. may have euro-denominated swing line or revolving borrowings under the Revolving Credit Agreement in an aggregate amount not to exceed the Offshore Currency Equivalent as defined in the Revolving Credit Agreement of $100 million. Offshore Currency Swing Line borrowings are currently limited to $15 million of the $25 million total Swing Line borrowings. Interest is calculated at the Offshore Currency Swing Line rate plus the Applicable Rate for Swing Line Loans in euros as defined in the Agreement. Revolving Offshore Currency Borrowings bear interest at the Offshore Currency Rate plus the Applicable Rate for Offshore Currency Rate Loans as defined in the Agreement. The Applicable Rates for Swing Line Loans in euros and Offshore Currency Rate Loans vary depending on the Company’s performance against certain financial ratios. The Applicable Rates for Swing Line Loans in euros and Offshore Currency Rate Loans were 1.70% and 1.20%, respectively, at September 30, 2004.

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The Company may also elect to borrow under a Negotiated Rate Loan alternative of the Facility at negotiated rates of interest up to a maximum of $125 million. The Facility also provides for the issuance of $30 million of letters of credit, with such usage applied against the $250 million limit. At September 30, 2004, the Company had $5.3 million in letters of credit outstanding under the Facility.

The Company pays a Facility Fee as defined by the Agreement on the total credit provided under the Facility. The Facility Fee varies depending on the Company’s performance against certain financial ratios. The Facility Fee was 0.30% at September 30, 2004.

No compensating balances are required by the Agreement. The Agreement does require the maintenance of certain financial ratios, restricts the incurrence of indebtedness and other contingent financial obligations, and restricts certain types of business activities and investments.

Senior Notes

On March 31, 2003, the Company issued $100 million of privately placed senior notes. Eighty million dollars of the notes have an average interest rate of 4.65% with an initial average maturity of 8.4 years and a remaining average maturity of 6.9 years. Twenty million dollars of the senior notes have a floating interest rate at a margin over the London Interbank Offer Rate (LIBOR) that is set quarterly. The floating interest rate at September 30, 2004, on the $20 million debt was 2.64%.

Interest Rate Protection Agreements

The Company has Interest Rate Protection Agreements (Rate Agreements) with respect to $50 million of debt as a means to manage its exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of the Company’s borrowings from variable rate debt to a fixed-rate basis, thus reducing the impact of interest rate changes on future income. The fixed interest rate for the Company’s borrowings related to the Rate Agreements at September 30, 2004, is 6.0% and the total interest rate, including applicable fees, is 7.5%. The average maturity of these Rate Agreements is 1.3 years at September 30, 2004. Total remaining debt not covered by the Rate Agreements has fluctuating interest rates with a weighted average rate of 3.7% at September 30, 2004. If the counterparts to these Rate Agreements fail to perform, the Company would no longer be protected from interest rate fluctuations by these Rate Agreements. However, the Company does not anticipate nonperformance by the counterparts.

2. Investments in Unconsolidated Affiliates

The Company is a 49% equity owner in Vitrocrisa Holding, S. de R.L. de C.V. and related Mexican companies (Vitrocrisa), which manufacture, market, and sell glass tableware (beverageware, plates, bowls, serveware, and accessories) and industrial glassware (coffee pots, blender jars, meter covers, glass covers for cooking ware, and lighting fixtures sold to original equipment manufacturers) and a 49% equity owner in Crisa Industrial, L.L.C., a distributor of industrial glassware for Vitrocrisa in the U.S. and Canada.

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Summarized combined financial information for the Company’s investments for 2004 and 2003, accounted for by the equity method under U.S. generally accepted accounting principles (U.S. GAAP), is as follows:

3. Cash Flow Information

Interest paid in cash was $1,805 and $2,552 for the third quarter of 2004 and 2003, respectively, and $8,848 and $7,270 for the first nine months of 2004 and 2003, respectively. Income taxes

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paid in cash were $118 and $2 for the third quarter of 2004 and 2003, respectively, and $1,428 and $5,385 for the first nine months of 2004 and 2003, respectively.

4. Net Income per Share of Common Stock

Basic net income per share of common stock is computed using the weighted average number of shares of common stock outstanding. Diluted net income per share of common stock is computed using the weighted average number of shares of common stock outstanding and includes common share equivalents.

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