Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | OWENS-ILLINOIS GROUP INC |
Entity Central Index Key | 812,233 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 100 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED RESULTS
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS | ||||
Net sales | $ 1,712 | $ 1,566 | $ 5,060 | $ 4,530 |
Cost of goods sold | (1,376) | (1,290) | (4,063) | (3,712) |
Gross profit | 336 | 276 | 997 | 818 |
Selling and administrative expense | (121) | (109) | (375) | (351) |
Research, development and engineering expense | (16) | (15) | (48) | (46) |
Interest expense, net | (66) | (67) | (199) | (188) |
Equity earnings | 15 | 17 | 44 | 46 |
Other income (expense), net | 5 | (44) | (24) | (59) |
Earnings from continuing operations before income taxes | 153 | 58 | 395 | 220 |
Provision for income taxes | (36) | (33) | (93) | (73) |
Earnings (loss) from continuing operations | 117 | 25 | 302 | 147 |
Loss from discontinued operations | (3) | (1) | (6) | (3) |
Net earnings (loss) | 114 | 24 | 296 | 144 |
Net (earnings) attributable to noncontrolling interests | (6) | (7) | (16) | (16) |
Net earnings attributable to the Company | 108 | 17 | 280 | 128 |
Amounts attributable to the Company: | ||||
Earnings from continuing operations | 111 | 18 | 286 | 131 |
Loss from discontinued operations | (3) | (1) | (6) | (3) |
Net earnings | $ 108 | $ 17 | $ 280 | $ 128 |
CONDENSED CONSOLIDATED COMPREHE
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME | ||||
Net earnings | $ 114 | $ 24 | $ 296 | $ 144 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (79) | (265) | (93) | (499) |
Pension and other postretirement benefit adjustments, net of tax | 21 | 25 | 5 | 70 |
Change in fair value of derivative instruments, net of tax | (1) | (3) | 5 | (5) |
Other comprehensive income (loss) | (59) | (243) | (83) | (434) |
Total comprehensive income (loss) | 55 | (219) | 213 | (290) |
Comprehensive (income) loss attributable to noncontrolling interests | (4) | 1 | (6) | |
Comprehensive income (loss) attributable to the Company | $ 51 | $ (218) | $ 207 | $ (290) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||||||
Cash and cash equivalents | $ 294 | $ 399 | $ 270 | |||
Trade receivables, net of allowance of $32 million, $29 million, and $29 million at September 30, 2016, December 31, 2015 and September 30, 2015 | 857 | 562 | 753 | |||
Inventories | 1,057 | 1,007 | 1,023 | |||
Prepaid expenses and other current assets | 234 | 366 | 442 | |||
Total current assets | 2,442 | 2,334 | 2,488 | |||
Property, plant and equipment, net | 2,917 | 2,961 | 2,874 | |||
Goodwill | 2,534 | 2,489 | 2,797 | |||
Intangibles, net | 490 | 597 | 404 | |||
Other assets | 1,114 | 1,040 | 991 | |||
Total assets | 9,497 | 9,421 | 9,554 | |||
Current liabilities: | ||||||
Short-term loans and long-term debt due within one year | 262 | 228 | 250 | |||
Accounts payable | 1,059 | 1,212 | 1,004 | |||
Other liabilities | 582 | 552 | 527 | |||
Total current liabilities | 1,903 | 1,992 | 1,781 | |||
Long-term debt | 5,333 | 5,345 | 5,609 | |||
Other long-term liabilities | 973 | 988 | 908 | |||
Share owners' equity | 1,288 | $ 1,251 | 1,096 | 1,256 | $ 1,496 | $ 1,710 |
Total liabilities and share owners' equity | $ 9,497 | $ 9,421 | $ 9,554 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
Trade receivables allowance | $ 32 | $ 29 | $ 29 |
CONDENSED CONSOLIDATED CASH FLO
CONDENSED CONSOLIDATED CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net earnings | $ 296 | $ 144 |
Loss from discontinued operations | 6 | 3 |
Non-cash charges | ||
Depreciation and amortization | 372 | 296 |
Pension expense | 22 | 22 |
Restructuring, asset impairment and related charges | 19 | 57 |
Cash payments | ||
Pension contributions | (15) | (13) |
Cash paid for restructuring activities | (20) | (20) |
Change in components of working capital | (320) | (326) |
Other, net (a) | (89) | 1 |
Cash provided by continuing operating activities | 271 | 164 |
Cash utilized in discontinued operating activities | (6) | (3) |
Total cash provided by operating activities | 265 | 161 |
Cash flows from investing activities: | ||
Additions to property, plant and equipment | (310) | (299) |
Acquisitions, net of cash acquired | (45) | (2,342) |
Net cash proceeds related to sale of assets | 57 | 1 |
Net foreign exchange derivative activity | 16 | 2 |
Cash utilized in investing activities | (282) | (2,638) |
Cash flows from financing activities: | ||
Changes in borrowings, net | (31) | 2,522 |
Distributions to noncontrolling interests | (10) | (13) |
Distributions to parent | (40) | (157) |
Payment of finance fees | (3) | (88) |
Cash provided by (utilized in) financing activities | (84) | 2,264 |
Effect of exchange rate fluctuations on cash | (4) | (29) |
Decrease in cash | (105) | (242) |
Cash at beginning of period | 399 | 512 |
Cash at end of period | $ 294 | $ 270 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation. | |
Basis of Presentation | 1. Basis of Presentation The Company is a 100% owned subsidiary of Owens-Illinois, Inc. (“OI Inc.”). Although OI Inc. does not conduct any operations, it has substantial obligations related to outstanding indebtedness and asbestos-related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information | |
Segment Information | 2. Segment Information The Company has four reportable segments based on its geographic locations: Europe, North America, Latin America and Asia Pacific. These four segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations. Certain assets and activities not directly related to one of the regions or to glass manufacturing are reported with Retained corporate costs and other. These include licensing, equipment manufacturing, global engineering, and certain equity investments. Retained corporate costs and other also includes certain headquarters administrative and facilities costs and certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments. The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings from continuing operations before interest income, interest expense, and provision for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain retained corporate costs. The Company’s management uses segment operating profit, in combination with selected cash flow information, to evaluate performance and to allocate resources. Segment operating profit for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided. Financial information for the three and nine months ended September 30, 2016 and 2015 regarding the Company’s reportable segments is as follows: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Net sales: Europe $ $ $ $ North America Latin America Asia Pacific Reportable segment totals Other Net sales $ $ $ $ Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Segment operating profit: Europe $ $ $ $ North America Latin America Asia Pacific Reportable segment totals Items excluded from segment operating profit: Retained corporate costs and other Restructuring, asset impairment and other Strategic transaction costs Acquisition-related fair value inventory adjustments Interest expense, net Earnings from continuing operations before income taxes $ $ $ $ Financial information regarding the Company’s total assets is as follows: September 30, December 31, September 30, 2016 2015 2015 Total assets: Europe $ $ $ North America Latin America Asia Pacific Reportable segment totals Other Consolidated totals $ $ $ |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventories | |
Inventories | 3. Inventories Major classes of inventory at September 30, 2016, December 31, 2015 and September 30, 2015 are as follows: September 30, December 31, September 30, 2016 2015 2015 Finished goods $ $ $ Raw materials Operating supplies $ $ $ |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2016 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets at September 30, 2016, December 31, 2015 and September 30, 2015 are as follows: September 30, December 31, September 30, 2016 2015 2015 Prepaid expenses $ $ $ Value added taxes Other $ $ $ In conjunction with the Vitro Acquisition in September of 2015, part of the total consideration paid by the Company included a value added tax receivable, which is included above as of December 31, 2015 and September 30, 2015. In the third quarter of 2016, approximately $127 million of this receivable was collected by the Company. The remaining $6 million of this receivable is expected to be refunded to the Company within the next twelve months. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments | |
Derivative Instruments | 5. Derivative Instruments The Company has certain derivative assets and liabilities which consist of natural gas forwards and foreign exchange option and forward contracts. The Company uses an income approach to value these contracts. Natural gas forward rates and foreign exchange rates are the significant inputs into the valuation models. These inputs are observable in active markets over the terms of the instruments the Company holds, and accordingly, the Company classifies its derivative assets and liabilities as Level 2 in the hierarchy. The Company also evaluates counterparty risk in determining fair values. Commodity Forward Contracts Designated as Cash Flow Hedges In several regions, the Company enters into commodity forward contracts related to forecasted natural gas requirements, the objectives of which are to limit the effects of fluctuations in the future market price paid for natural gas and the related volatility in cash flows. In North America, the majority of its customer contracts contain provisions that pass the price of natural gas to its customers. In certain of these contracts, the customer has the option of fixing the natural gas price component for a specified period of time. To limit the effects of fluctuations in cash flows resulting from these customer contracts, the Company enters into commodity forward contracts related to forecasted natural gas requirements. In Asia Pacific, the Company implemented a hedging program in the first quarter of 2016, which included the execution of commodity forward contracts for certain contracted natural gas requirements. At September 30, 2016 and 2015, the Company had entered into commodity forward contracts covering approximately 12,400,000 MM BTUs and 6,300,000 MM BTUs, respectively. The Company accounts for the above forward contracts as cash flow hedges at September 30, 2016 and recognizes them on the balance sheet at fair value. The effective portion of changes in the fair value of a derivative that is designated as, and meets the required criteria for, a cash flow hedge is recorded in the Accumulated Other Comprehensive Income component of share owners’ equity (“OCI”) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. An unrecognized gain of $2 million at September 30, 2016, an unrecognized loss of $4 million at December 31, 2015 and an unrecognized gain of $2 million at September 30, 2015, respectively, related to the commodity forward contracts was included in Accumulated OCI, and will be reclassified into earnings in the period when the commodity forward contracts expire. Any material portion of the change in the fair value of a derivative designated as a cash flow hedge that is deemed to be ineffective is recognized in current earnings. The ineffectiveness related to these natural gas hedges for the three and nine months ended September 30, 2016 and 2015 was not material. The effect of the commodity forward contracts on the results of operations for the three months ended September 30, 2016 and 2015 is as follows: Amount of Gain Reclassified from Amount of Gain (Loss) Recognized in OCI on Accumulated OCI into Income Commodity Forward Contracts (reported in cost of goods sold) (Effective Portion) (Effective Portion) 2016 2015 2016 2015 $ $ $ — $ The effect of the commodity forward contracts on the results of operations for the nine months ended September 30, 2016 and 2015 is as follows: Amount of Gain Reclassified from Amount of Gain Recognized in OCI on Accumulated OCI into Income Commodity Forward Contracts (reported in cost of goods sold) (Effective Portion) (Effective Portion) 2016 2015 2016 2015 $ $ 2 $ — $ 6 Foreign Exchange Derivative Contracts and not Designated as Hedging Instruments The Company may enter into short-term forward exchange or option agreements to purchase foreign currencies at set rates in the future. These agreements are used to limit exposure to fluctuations in foreign currency exchange rates for significant planned purchases of fixed assets or commodities that are denominated in currencies other than the subsidiaries’ functional currency. The Company may also use foreign exchange agreements to offset the foreign currency risk for receivables and payables, including intercompany receivables, payables, and loans, not denominated in, or indexed to, their functional currencies. The Company records these short-term foreign exchange agreements on the balance sheet at fair value and changes in the fair value are recognized in current earnings. At September 30, 2016 and 2015, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $580 million and $600 million, respectively, related primarily to intercompany transactions and loans. The effect of the foreign exchange derivative contracts on the results of operations for the three months ended September 30, 2016 and 2015 is as follows: Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Recognized in Income on Foreign Exchange Contracts Foreign Exchange Contracts 2016 2015 Other expense $ $ The effect of the foreign exchange derivative contracts on the results of operations for the nine months ended September 30, 2016 and 2015 is as follows: Amount of Gain Location of Gain Recognized in Income on Recognized in Income on Foreign Exchange Contracts Foreign Exchange Contracts 2016 2015 Other expense $ $ Balance Sheet Classification The Company records the fair values of derivative financial instruments on the balance sheet as follows: (a) receivables if the instrument has a positive fair value and maturity within one year, (b) deposits, receivables, and other assets if the instrument has a positive fair value and maturity after one year, and (c) other accrued liabilities or other liabilities (current) if the instrument has a negative fair value and maturity within one year. The following table shows the amount and classification (as noted above) of the Company’s derivatives at September 30, 2016, December 31, 2015 and September 30, 2015: Fair Value Balance Sheet September 30, December 31, September 30, Location 2016 2015 2015 Asset derivatives: Derivatives designated as hedging instruments: Commodity forwards contracts a $ $ — $ — Derivatives not designated as hedging instruments: Foreign exchange derivative contracts a Total asset derivatives $ $ $ Liability derivatives: Derivatives designated as hedging instruments: Commodity forwards contracts c $ — $ $ Derivatives not designated as hedging instruments: Foreign exchange derivative contracts c Total liability derivatives $ $ $ |
Restructuring Accruals
Restructuring Accruals | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring Accruals | |
Restructuring Accruals | 6. Restructuring Accruals Selected information related to the restructuring accruals for the three months ended September 30, 2016 and 2015 is as follows: Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at July 1, 2016 $ $ $ Net cash paid, principally severance and related benefits Other, including foreign exchange translation Balance at September 30, 2016 $ $ $ European Other Asset Asia Pacific Restructuring Total Optimization Restructuring Actions Restructuring Balance at July 1, 2015 $ $ $ $ Charges Write-down of assets to net realizable value Net cash paid, principally severance and related benefits Other, including foreign exchange translation Balance at September 30, 2015 $ $ $ $ Selected information related to the restructuring accruals for the nine months ended September 30, 2016 and 2015 is as follows: Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at January 1, 2016 $ $ $ Charges Write-down of assets to net realizable value Net cash paid, principally severance and related benefits Other, including foreign exchange translation Balance at September 30, 2016 $ $ $ European Other Asset Asia Pacific Restructuring Total Optimization Restructuring Actions Restructuring Balance at January 1, 2015 $ $ $ $ Charges Write-down of assets to net realizable value Net cash paid, principally severance and related benefits Other, including foreign exchange translation Balance at September 30, 2015 $ $ $ $ The Company’s decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the extent their carrying amounts exceeded fair value or fair value less cost to sell. The Company classified the significant assumptions used to determine the fair value of the impaired assets, which was not material, as Level 3 in the fair value hierarchy as set forth in the general accounting principles for fair value measurements. Asia Pacific Restructuring During the nine months ended September 30, 2016, the Company recorded charges of $1 million. These charges primarily represented other exit costs as part of the Company’s Asia Pacific Restructuring program. During the three and nine months ended September 30, 2015, the Company recorded charges of $5 million. These charges primarily represented the write-down of assets as part of the Company’s Asia Pacific Restructuring program. The Company has recorded total cumulative charges of $221 million under this program. Other Restructuring Actions During the nine months ended September 30, 2016, the Company recorded charges of $18 million. These charges primarily represented employee costs, write-down of assets, and other exit costs of $14 million for a plant closure in the first quarter of 2016 in Latin America, $3 million related to a previous plant closure in North America and $1 million related to other restructuring actions. During the three and nine months ended September 30, 2015, the Company recorded charges of $35 million and $52 million, respectively. For the nine months ended September 30, 2015, these charges primarily represented employee costs, write-down of assets, and other exit costs of $14 million for furnace closures in Latin America, $35 million of severance and other exit costs related to a plant closure in North America and $3 million related to other restructuring actions. |
Pension Benefit Plans
Pension Benefit Plans | 9 Months Ended |
Sep. 30, 2016 | |
Pension Benefit Plans. | |
Pension Benefit Plans | 7. Pension Benefit Plans The components of the net periodic pension cost for the three months ended September 30, 2016 and 2015 are as follows: U.S. Non-U.S. 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected asset return Amortization: Actuarial loss Net periodic pension cost $ $ $ $ The components of the net periodic pension cost for the nine months ended September 30, 2016 and 2015 are as follows: U.S. Non-U.S. 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected asset return Amortization: Actuarial loss Net periodic pension cost $ $ $ $ In March 2016, the Company remeasured the liability related to its hourly plan in the U.S. to reflect certain changes in future benefits. The remeasurement resulted in an increase to its pension liability of approximately $60 million and has been reflected in other comprehensive income. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes | |
Income Taxes | 8. Income Taxes The Company performs a quarterly review of the annual effective tax rate and makes changes if necessary based on new information or events. The estimated annual effective tax rate is forecasted quarterly using actual historical information and forward-looking estimates. The estimated annual effective tax rate may fluctuate due to changes in forecasted annual operating income; changes in the forecasted mix of earnings by country; changes to the valuation allowance for deferred tax assets (such changes would be recorded discretely in the quarter in which they occur); changes to actual or forecasted permanent book to tax differences (non-deductible expenses); impacts from future tax settlements with state, federal or foreign tax authorities (such changes would be recorded discretely in the quarter in which they occur); or impacts from tax law changes. To the extent such changes impact deferred tax assets/liabilities, these changes would generally be recorded discretely in the quarter in which they occur. Additionally, the annual effective tax rate differs from the statutory U.S. Federal tax rate of 35% primarily because of valuation allowances in some jurisdictions and varying non-U.S. tax rates. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt | |
Debt | 9. Debt The following table summarizes the long-term debt of the Company: September 30, December 31, September 30, 2016 2015 2015 Secured Credit Agreement: Revolving Credit Facility: Revolving Loans $ — $ — $ Term Loans: Term Loan A Term Loan A (€279 million at September 30, 2016) Term Loan B Senior Notes: 6.75%, due 2020 (€500 million) 4.875%, due 2021 (€330 million) 5.00%, due 2022 5.875%, due 2023 5.375%, due 2025 6.375%, due 2025 Payable to OI Inc. Capital Leases Other Total long-term debt Less amounts due within one year Long-term debt $ $ $ On April 22, 2015, certain of the Company’s subsidiaries entered into a Senior Secured Credit Facility (the “Agreement”), which amended and restated the previous credit agreement (the “Previous Agreement”). The proceeds from the Agreement were used to repay all outstanding amounts under the Previous Agreement and the 7.375% senior notes due 2016. In connection with the closing of the Vitro Acquisition on September 1, 2015 (see Note 15) the Company entered into Amendment No. 2 (“Amendment No. 2”) to the Agreement, which provided for additional incremental availability under the incremental dollar cap in the Agreement of up to $1,250 million. In addition, in connection with the closing of the Vitro Acquisition, on September 1, 2015, the Company entered into the First Incremental Amendment to the Agreement (the “Incremental Amendment”) pursuant to which the Company incurred $1,250 million of senior secured incremental term loan facilities, comprised of (i) a $675 million term loan A facility (the “incremental term loan A facility”) on substantially the same terms and conditions (including as to maturity) as the term loan A facility in the Agreement and (ii) a $575 million term loan B facility (the “incremental term loan B facility”) maturing seven years after the closing of the Vitro Acquisition using its incremental capacity under the Agreement. On February 3, 2016, the Company entered into Amendment No. 4 (“Amendment No. 4”) to the Agreement which provided for an increase in the maximum Total Leverage Ratio (which is calculated by dividing consolidated total debt, less cash and cash equivalents, by consolidated EBITDA, as defined in the Agreement) for purposes of the financial covenant in the Agreement to 5.0x for the fiscal quarters ending March 31, 2016, June 30, 2016 and September 30, 2016, 4.5x for the fiscal quarters ending December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, and stepping down to 4.0x for the fiscal quarter ending December 31, 2017 and each fiscal quarter thereafter. At September 30, 2016, the Agreement, as amended through Amendment No. 4 (the “Amended Agreement”), includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, a $1,575 million term loan A facility ($1,516 million net of debt issuance costs), and a €279 million term loan A facility ($303 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020. The Amended Agreement also includes a $575 million term loan B facility ($558 million net of debt issuance costs) with a final maturity date of September 1, 2022. At September 30, 2016, the Company had unused credit of $880 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at September 30, 2016 was 2.57%. The Amended Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain liens, make certain investments, become liable under contingent obligations in certain defined instances only, make restricted payments, make certain asset sales within guidelines and limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations. The Amended Agreement also contains one financial maintenance covenant, a Total Leverage Ratio, that requires the Company as of the last day of a fiscal quarter not to exceed the maximum levels set forth in Amendment No. 4 (as more particularly described above). The Total Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Total Leverage Ratio to exceed the specified maximum. Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement. In such an event, the Company could not request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable. If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of September 30, 2016, the Company was in compliance with all covenants and restrictions in the Amended Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions. The interest rates on borrowings under the Amended Agreement are, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Amended Agreement, plus an applicable margin. The applicable margin for the term loan A facility and the revolving credit facility is linked to the Company’s Total Leverage Ratio and ranges from 1.25% to 1.75% for Eurocurrency Rate loans and from 0.25% to 0.75% for Base Rate loans. In addition, a facility fee is payable on the revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Total Leverage Ratio. The applicable margin for the term loan B facility is 2.75% for Eurocurrency Rate loans and 1.75% for Base Rate loans. The incremental term loan B facility is subject to a LIBOR floor of 0.75%. Borrowings under the Amended Agreement are secured by substantially all of the assets, excluding real estate and certain other excluded assets, of certain of the Company’s domestic subsidiaries and certain foreign subsidiaries. Borrowings are also secured by a pledge of intercompany debt and equity investments in certain of the Company’s domestic subsidiaries and, in the case of foreign borrowings, of stock of certain foreign subsidiaries. All borrowings under the Amended Agreement are guaranteed by certain domestic subsidiaries of the Company for the term of the Amended Agreement. Also, in connection with the Vitro Acquisition, during August 2015, the Company issued senior notes with a face value of $700 million that bear interest at 5.875% and are due August 15, 2023 (the “Senior Notes due 2023”) and senior notes with a face value of $300 million that bear interest at 6.375% and are due August 15, 2025 (together with the Senior Notes due 2023, the “2015 Senior Notes”). The 2015 Senior Notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds from the 2015 Senior Notes, after deducting the debt discount and debt issuance costs, totaled approximately $972 million and were used to finance, in part, the Vitro Acquisition. The Company has a €185 million European accounts receivable securitization program, which extends through March 2019, subject to periodic renewal of backup credit lines. Information related to the Company’s accounts receivable securitization program is as follows: September 30, December 31, September 30, 2016 2015 2015 Balance (included in short-term loans) $ $ $ Weighted average interest rate % % % The carrying amounts reported for the accounts receivable securitization program, and certain long-term debt obligations subject to frequently redetermined interest rates, approximate fair value. Fair values for the Company’s significant fixed rate debt obligations are based on published market quotations, and are classified as Level 1 in the fair value hierarchy. Fair values at September 30, 2016 of the Company’s significant fixed rate debt obligations are as follows: Principal Indicated Amount Market Price Fair Value Senior Notes: 6.75%, due 2020 (€500 million) $ $ $ 4.875%, due 2021 (€330 million) 5.00%, due 2022 5.875%, due 2023 6.375%, due 2025 5.375%, due 2025 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Contingencies | |
Contingencies | 10. Contingencies Asbestos OI Inc. is a defendant in numerous lawsuits alleging bodily injury and death as a result of exposure to asbestos. From 1948 to 1958, one of OI Inc.’s former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based insulation material containing asbestos. OI Inc. sold its insulation business unit at the end of April 1958. The typical asbestos personal injury lawsuit alleges various theories of liability, including negligence, gross negligence and strict liability and seeks compensatory and, in some cases, punitive damages in various amounts (herein referred to as "asbestos claims"). As of September 30, 2016, OI Inc. has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 1,600 plaintiffs and claimants. Based on an analysis of the lawsuits pending as of December 31, 2015, approximately 82% of plaintiffs either do not specify the monetary damages sought, or in the case of court filings, claim an amount sufficient to invoke the jurisdictional minimum of the trial court. Approximately 11% of plaintiffs specifically plead damages above the jurisdictional minimum up to, and including, $15 million or less, and 7% of plaintiffs specifically plead damages greater than $15 million but less than or equal to $100 million. As indicated by the foregoing summary, current pleading practice permits considerable variation in the assertion of monetary damages. OI Inc.’s experience resolving hundreds of thousands of asbestos claims and lawsuits over an extended period demonstrates that the monetary relief alleged in a complaint bears little relevance to a claim’s merits or disposition value. Rather, the amount potentially recoverable is determined by such factors as the type and severity of the plaintiff’s asbestos disease, the plaintiff’s medical history and exposure to other disease-causing agents, the product identification evidence against OI Inc. and other co-defendants, the defenses available to OI Inc. and other co-defendants, the specific jurisdiction in which the claim is made, and the plaintiff’s firm representing the claimant. In addition to the pending claims set forth above, OI Inc. has claims-handling agreements in place with many plaintiffs’ counsel throughout the country. These agreements require evaluation and negotiation regarding whether particular claimants qualify under the criteria established by such agreements. The criteria for such claims include verification of a compensable illness and a reasonable probability of exposure to a product manufactured by OI Inc.'s former business unit during its manufacturing period ending in 1958. OI Inc. has also been a defendant in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants, co-defendants and property damage claimants. Based upon its past experience, OI Inc. believes that these categories of lawsuits and claims will not involve any material liability and they are not included in the above description of pending matters or in the following description of disposed matters. Since receiving its first asbestos claim, OI Inc. as of September 30, 2016, has disposed of the asbestos claims of approximately 397,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,300. OI Inc.’s asbestos indemnity payments have varied on a per claim basis, and are expected to continue to vary considerably over time. Asbestos-related cash payments for 2015, 2014 and 2013 were $138 million, $148 million, and $158 million, respectively. OI Inc.’s cash payments per claim disposed (inclusive of legal costs) were approximately $95,000, $81,000 and $93,000 for the years ended December 31, 2015, 2014 and 2013, respectively. As discussed above, OI Inc.’s objective is to achieve, where possible, resolution of asbestos claims pursuant to claims-handling agreements. Failure of claimants to meet certain medical and product exposure criteria in OI Inc.’s administrative claims handling agreements has generally reduced the number of claims that would otherwise have been received by OI Inc. in the tort system. In addition, certain court orders and legislative acts have reduced or eliminated the number of claims that OI Inc. otherwise would have received by OI Inc. in the tort system. These developments generally have had the effect of increasing OI Inc.’s per-claim average indemnity payment over time. Beginning with the initial liability of $975 million established in 1993, OI Inc. has accrued a total of approximately $4.9 billion through 2015, before insurance recoveries, for its asbestos-related liability. OI Inc.’s estimates of its liability have been significantly affected by, among other factors, the volatility of asbestos-related litigation in the United States, the significant number of co-defendants that have filed for bankruptcy, the inherent uncertainty of future disease incidence and claiming patterns against OI Inc., the significant expansion of the defendants that are now sued in this litigation, and the continuing changes in the extent to which these defendants participate in the resolution of cases in which OI Inc. is also a defendant. OI Inc. continues to monitor trends that may affect its ultimate liability and analyze the developments and variables likely to affect the resolution of pending and future asbestos claims against OI Inc.. The material components of OI Inc.’s accrued liability are determined by OI Inc. in connection with its annual comprehensive legal review and consist of the following estimates, to the extent it is probable that such liabilities have been incurred and can be reasonably estimated: (i) the liability for asbestos claims already asserted against OI Inc.; (ii) the liability for asbestos claims not yet asserted against OI Inc.; and (iii) the legal defense costs estimated to be incurred in connection with the claims already asserted and those claims OI Inc. believes will be asserted. As noted above, OI Inc. conducts a comprehensive legal review of its asbestos-related liabilities and costs annually in connection with finalizing and reporting its annual results of operations, unless significant changes in trends or new developments warrant an earlier review. As part of its annual comprehensive legal review, OI Inc. provides historical claims filing data to a third party with expertise in determining the impact of disease incidence and mortality on future filing trends to develop information to assist OI Inc. in estimating the total number of future claims to be filed. OI Inc. uses this estimate of total future claims, along with an estimation of disposition costs and related legal costs as inputs to develop its best estimate of probable liability. If the results of the annual comprehensive legal review indicate that the existing amount of the accrued liability is lower (higher) than its reasonably estimable asbestos-related costs, then OI Inc. will record an appropriate charge (credit) to OI Inc.’s results of operations to increase (decrease) the accrued liability. The significant assumptions underlying the material components of the OI Inc.’s accrual are: a) settlements will continue to be limited almost exclusively to claimants who were exposed to OI Inc.’s asbestos‑containing insulation prior to its exit from that business in 1958; b) claims will continue to be resolved primarily under OI Inc.’s administrative claims agreements or on terms comparable to those set forth in those agreements; c) the incidence of serious asbestos‑related disease cases and claiming patterns against OI Inc. for such cases do not change materially; d) OI Inc. is substantially able to defend itself successfully at trial and on appeal; e) the number and timing of additional co‑defendant bankruptcies do not change significantly the assets available to participate in the resolution of cases in which OI Inc. is a defendant; and f) co-defendants with substantial resources and assets continue to participate significantly in the resolution of future asbestos lawsuits and claims. OI Inc. revised its method for estimating its asbestos-related liabilities in connection with finalizing and reporting its restated results of operations for the year ended December 31, 2015 and 2014 and concluded that an accrual in the amount of $817 million and $939 million as of December 31, 2015 and 2014, respectively was required. These amounts have not been discounted for the time value of money. The application of the revised method also resulted in charges of $16 million, $46 million and $12 million for the years ending December 31, 2015, 2014 and 2013, respectively. OI Inc. believes it is reasonably possible that it will incur a loss for its asbestos-related liabilities in excess of the amount currently recognized, which is $817 million as of December 31, 2015. OI Inc. estimates that reasonably possible losses could be as high as $950 million. This estimate of additional reasonably possible loss reflects a legal judgment about the number and cost of potential future claims and legal costs. OI Inc. believes this estimate is consistent with the level of variability it has experienced when comparing actual results to recent near-term projections. However, it is also possible that the ultimate asbestos-related liability could be above this estimate. OI Inc. expects a significant majority of the total number of claims to be received in the next ten years. This timeframe appropriately reflects the mortality of current and expected claimants in light of OI Inc.’s sale of its insulation business unit in 1958. As noted above, OI Inc.’s asbestos-related liability is based on a projection of new claims that will eventually be filed against OI Inc. and the estimated average disposition cost of these claims and related legal costs. Changes in the significant assumptions noted above have the potential to impact these key factors, which are critical to the estimation of OI Inc.’s asbestos-related liability significantly. Other Matters The Company’s joint venture in China is involved in litigation with its partner regarding whether the joint venture should be dissolved. Following an ownership change with respect to the joint venture partner, the Company is now in discussions with the new partner to resolve the dispute. As a result, all legal actions are on hold. As of September 30, 2016, the Company’s equity investment in this joint venture was approximately $72 million. The Company intends to vigorously defend its position in this litigation, but is unable to predict the final outcome of the matter. On July 5, 2016, OI Inc. learned that the Enforcement Division of the SEC is conducting an investigation into certain accounting and control matters pertaining to the determination of its asbestos-related liabilities. On May 13, 2016, OI Inc. restated its consolidated financial statements for the years ended December 31, 2015, 2014 and 2013 in order to correct an error related to its method for estimating its future asbestos-related liabilities. OI Inc. is cooperating with the SEC’s investigation. At this time, OI Inc. is unable to predict the outcome of this matter or provide meaningful quantification of how the final resolution of this matter may impact its future consolidated financial statements, results of operations, or cash flows. Other litigation is pending against the Company, in many cases involving ordinary and routine claims incidental to the business of the Company and in others presenting allegations that are non-routine and involve compensatory, punitive or treble damage claims as well as other types of relief. The Company records a liability for such matters when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. Recorded amounts are reviewed and adjusted to reflect changes in the factors upon which the estimates are based, including additional information, negotiations, settlements and other events. |
Share Owners' Equity
Share Owners' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Share Owners' Equity | |
Share Owners' Equity | 11. Share Owners’ Equity The activity in share owners’ equity for the three months ended September 30, 2016 and 2015 is as follows: Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance at July 1, 2016 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive loss Acquisitions of noncontrolling interests Balance on September 30, 2016 $ $ $ $ $ Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance at July 1, 2015 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive income (loss) Distributions to noncontrolling interests Balance on September 30, 2015 $ $ $ $ $ The activity in share owners’ equity for the nine months ended September 30, 2016 and 2015 is as follows: Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on January 1, 2016 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive loss Acquisitions of noncontrolling interest Balance on September 30, 2016 $ $ $ $ $ Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on January 1, 2015 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive loss Distributions to noncontrolling interests Acquisitions of noncontrolling interests Balance on September 30, 2015 $ $ $ $ $ |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2016 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | 12. Accumulated Other Comprehensive Loss The activity in accumulated other comprehensive loss for the three months ended September 30, 2016 and 2015 is as follows: Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on July 1, 2016 $ $ $ $ Change before reclassifications Amounts reclassified from accumulated other comprehensive income (a) (b) Translation effect Tax effect — Other comprehensive income (loss) attributable to the Company Balance on September 30, 2016 $ $ $ $ Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on July 1, 2015 $ $ $ $ Change before reclassifications Amounts reclassified from accumulated other comprehensive income (a) (b) Translation effect Tax effect — Other comprehensive income (loss) attributable to the Company Balance on September 30, 2015 $ $ $ $ (a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 5 for additional information). (b) Amount is included in the computation of net periodic pension cost (see Note 7 for additional information) and net postretirement benefit cost. The activity in accumulated other comprehensive loss for the nine months ended September 30, 2016 and 2015 is as follows: Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on January 1, 2016 $ $ $ $ Change before reclassifications Amounts reclassified from accumulated other comprehensive income (a) (b) Translation effect Tax effect Other comprehensive income (loss) attributable to the Company Balance on September 30, 2016 $ $ $ $ Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on January 1, 2015 $ $ $ $ Change before reclassifications Amounts reclassified from accumulated other comprehensive income (a) (b) Translation effect Tax effect Other comprehensive income (loss) attributable to the Company Balance on September 30, 2015 $ $ $ $ (a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 5 for additional information). (b) Amount is included in the computation of net periodic pension cost (see Note 7 for additional information) and net postretirement benefit cost. |
Other Expense (Income), net
Other Expense (Income), net | 9 Months Ended |
Sep. 30, 2016 | |
Other Expense (Income), net. | |
Other Expense (Income), net | 13. Other Expense (Income), net Other expense (income), net for the three and nine months ended September 30, 2016 and 2015 included the following: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Restructuring, asset impairment and related charges $ — $ $ $ Gain on sale of land in China Strategic transaction costs Foreign currency exchange loss (gain) Other expense (income) $ $ $ $ |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | 14. Supplemental Cash Flow Information Financial information regarding the Company’s supplemental cash flow information is as follows: Nine months ended September 30, 2016 2015 Interest paid in cash $ $ Income taxes paid in cash (all non-U.S.): The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. The amount of receivables sold by the Company was $240 million, $317 million and $336 million at September 30, 2016, December 31, 2015 and September 30, 2015, respectively. Any continuing involvement with the sold receivables is immaterial. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations | |
Business Combinations | 15. Business Combinations On September 1, 2015, the Company completed the Vitro Acquisition in a cash transaction valued at approximately $2.297 billion in cash, subject to a working capital adjustment and certain other adjustments. The Vitro Business in Mexico is the largest supplier of glass containers in that country manufacturing glass containers across multiple end uses, including food, soft drinks, beer, wine and spirits. The Vitro Acquisition included five food and beverage glass container plants in Mexico, a plant in Bolivia and a North American distribution business, and provided the Company with a competitive position in the glass packaging market in Mexico. The results of the Vitro Business have been included in the Company’s consolidated financial statements since September 1, 2015 and contributed approximately $606 million of incremental net sales and $123 million of incremental segment operating profit in the first nine months of 2016. Vitro’s food and beverage glass container operations in Mexico and Bolivia are included in the Latin American operating segment while its distribution business is included in the North American operating segment. The Company financed the Vitro Acquisition with the proceeds from a senior notes offering, cash on hand and the incremental term loan facilities (see Note 9). The total purchase price was allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values. The purchase agreement contained customary provisions for working capital adjustments, which the Company resolved with the seller in the first quarter of 2016. The Company completed the purchase price allocation process in the third quarter of 2016. The following table summarizes the fair value of the assets and liabilities assumed on September 1, 2015 and subsequent adjustments identified through the purchase price allocation process and recorded through the measurement period: September 1, 2015 Measurement Period Adjustments September 30, 2016 Cash $ $ — $ Other current assets Goodwill Customer list intangibles and other Net property, plant and equipment Total assets Current liabilities Long-term debt Long-term liabilities Net assets acquired $ $ — $ The fair value of the tangible assets was estimated utilizing income and market approaches, considering remaining useful life. The customer list intangible asset includes the Company’s established relationships with its customers and the ability of these customers to generate future economic profits for the Company. The value assigned to customer list intangibles is based on the present value of future earnings attributable to the asset group after recognition of required returns to other contributory assets. Recognized goodwill is attributable to the assembled workforce, expected synergies and other intangible assets that do not qualify for separate recognition. The Vitro Acquisition goodwill is not deductible for tax purposes. The balance sheet adjustments identified above did not result in any significant adjustments to the periods’ income statement. |
Pro Forma Information - Vitro A
Pro Forma Information - Vitro Acquisition | 9 Months Ended |
Sep. 30, 2016 | |
Pro Forma Information - Vitro Acquisition | |
Pro Forma Information - Vitro Acquisition | 16. Pro Forma Information – Vitro Acquisition Had the Vitro Acquisition, described in Note 15 and the related financing described in Note 9, occurred at the beginning of the period, unaudited pro forma consolidated net sales and earnings from continuing operations would have been as follows: Three Months Ended September 30, 2015 As Acquisition Financing Pro Forma Reported Adjustments Adjustments As Adjusted Net sales $ $ $ $ Earnings from continuing operations attributable to the Company $ $ $ $ Nine months ended September 30, 2015 As Acquisition Financing Pro Forma Reported Adjustments Adjustments As Adjusted Net sales $ $ $ $ Earnings from continuing operations attributable to the Company $ $ $ $ |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations | |
Discontinued Operations | 17. Discontinued Operations On April 4, 2016, the annulment committee formed by the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) ruled that a subsidiary of the Company is free to pursue the enforcement of a prior arbitration award against Venezuela. That award amounts to more than $485 million after including interest from the date of the expropriation by Venezuela (October 26, 2010). Venezuela’s application to annul the award is still pending, although the annulment proceedings were recently suspended because Venezuela has not paid its fees owed to ICSID. If the proceeding is stayed for non payment for a consecutive period in excess of six months, ICSID’s Secretary General could move that the committee discontinue the annulment proceeding altogether. The Company intends to take appropriate steps to vigorously enforce and collect the award, which is enforceable in approximately 150 member states that are party to the ICSID Convention. However, even with the lifting of the stay of enforcement, the Company recognizes that the collection of the award may present significant practical challenges. Because the award has yet to be satisfied and the annulment proceeding is pending, the Company is unable at this stage to reasonably predict the efforts that will be necessary to successfully enforce collection of the award, the amount of the award or the timing of any such collection efforts. Therefore, the Company has not recognized this award in its financial statements. A separate arbitration is pending with ICSID to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants. The loss from discontinued operations of $6 million and $3 million for the nine months ended September 30, 2016 and September 30 2015, respectively, relates to ongoing costs for the Venezuelan expropriation. |
New Accounting Pronouncement
New Accounting Pronouncement | 9 Months Ended |
Sep. 30, 2016 | |
New Accounting Pronouncement | |
New Accounting Pronouncement | 18. New Accounting Pronouncement Revenue from Contracts with Customers - In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers”, which delayed by one year the effective date of the new revenue recognition standard, which will be effective for the Company on January 1, 2018. The Company is currently evaluating the effect this standard will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method and is in the process of determining the effect of the standard on its ongoing financial reporting. Leases - In February 2016, the FASB issued ASU No. 2016-02, "Leases", which will require an entity to recognize lease-related assets and liabilities on their balance sheet. The amendments in this update are effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the effect this standard will have on its consolidated financial statements and related disclosures. Stock Compensation - In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which requires all excess tax benefits or deficiencies to be recognized as income tax expense or benefit in the income statement. In addition, excess tax benefits should be classified along with other income tax cash flows as an operating activity in the statement of cash flows. Application of the standard is required for the annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the impact the new standard will have on its condensed consolidated financial statements. |
Financial Information for Subsi
Financial Information for Subsidiary Guarantors and Non-Guarantors | 9 Months Ended |
Sep. 30, 2016 | |
Financial Information for Subsidiary Guarantors and Non-Guarantors Disclosure [Abstract] | |
Financial Information for Subsidiary Guarantors and Non-Guarantors | 19. Financial Information for Subsidiary Guarantors and Non-Guarantors The following presents condensed consolidating financial information for the Company, segregating: (1) Owens-Illinois Group, Inc. (the “Parent”); (2) Owens-Brockway Glass Container Inc. (the “Issuer”); (3) those domestic subsidiaries that guarantee the 5.00% senior notes, the 5.875% senior notes, the 5.375% senior notes, and the 6.375% senior notes of the Issuer (the “Guarantor Subsidiaries”); and (4) all other subsidiaries (the “Non-Guarantor Subsidiaries”). The Guarantor Subsidiaries are 100% owned direct and indirect subsidiaries of the Parent and their guarantees are full, unconditional and joint and several. The Parent is also a guarantor, and its guarantee is full, unconditional and joint and several. Certain reclassifications have been made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminations relate to investments in subsidiaries and intercompany balances and transactions. September 30, 2016 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ $ $ $ $ Trade receivables, net Inventories Prepaid expenses and other current assets Total current assets — — Investments in and advances to subsidiaries — Goodwill Intangibles, net Other assets Property, plant and equipment, net Total assets $ $ $ $ $ $ Current liabilities: Accounts payable and accrued liabilities $ $ $ $ $ $ Short-term loans and long-term debt due within one year Other liabilities Total current liabilities — — Long-term debt Other long-term liabilities Investments by and advances from parent — Total share owner's equity of the Company Noncontrolling interests Total liabilities and share owners’ equity $ $ $ $ $ $ December 31, 2015 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ $ $ — $ Trade receivables, net Inventories Prepaid expenses and other current assets Total current assets — — Investments in and advances to subsidiaries — Goodwill Intangibles, net Other assets Property, plant and equipment, net Total assets $ $ $ $ $ $ Current liabilities: Accounts payable and accrued liabilities $ — $ $ $ $ — $ Short-term loans and long-term debt due within one year Other liabilities Total current liabilities — — Long-term debt Other long-term liabilities Investments by and advances from parent — Total share owner's equity of the Company Noncontrolling interests Total liabilities and share owners’ equity $ $ $ $ $ $ September 30, 2015 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ $ $ $ Trade receivables, net Inventories Prepaid expenses and other current assets Total current assets — — Investments in and advances to subsidiaries — Goodwill Intangibles, net Other assets Property, plant and equipment, net Total assets $ $ $ $ $ $ Current liabilities: Short-term loans and long-term debt due within one year $ — $ $ $ $ $ Accounts payable and accrued liabilities Other liabilities Total current liabilities — Long-term debt Other long-term liabilities Investments by and advances from parent — Total share owner's equity of the Company Noncontrolling interests Total liabilities and share owners’ equity $ $ $ $ $ $ Three months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit — Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes — Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Three months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Three months ended September 30, 2015 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit — Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Three months ended September 30, 2015 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit — — Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2015 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2015 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2016 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — $ $ $ — $ Cash utilized in investing activities (66) (1) (215) Cash provided by (utilized in) financing activities Effect of exchange rate change on cash (4) Net change in cash — — — Cash at beginning of period Cash at end of period $ — $ — $ $ $ — $ Nine months ended September 30, 2015 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — $ $ $ $ $ Cash utilized in investing activities Cash provided by financing activities Effect of exchange rate change on cash Net change in cash — — — Cash at beginning of period Cash at end of period $ — $ — $ $ $ — $ |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information | |
Net sales for the Company's reportable segments | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Net sales: Europe $ $ $ $ North America Latin America Asia Pacific Reportable segment totals Other Net sales $ $ $ $ |
Segment operating profit (loss) for the Company's reportable segments | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Segment operating profit: Europe $ $ $ $ North America Latin America Asia Pacific Reportable segment totals Items excluded from segment operating profit: Retained corporate costs and other Restructuring, asset impairment and other Strategic transaction costs Acquisition-related fair value inventory adjustments Interest expense, net Earnings from continuing operations before income taxes $ $ $ $ |
Total assets for the Company's reportable segments | September 30, December 31, September 30, 2016 2015 2015 Total assets: Europe $ $ $ North America Latin America Asia Pacific Reportable segment totals Other Consolidated totals $ $ $ |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventories | |
Major classes of inventory | September 30, December 31, September 30, 2016 2015 2015 Finished goods $ $ $ Raw materials Operating supplies $ $ $ |
Prepaid Expenses and Other Cu28
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Prepaid Expenses and Other Current Assets | |
Schedule of Prepaid expenses and other current assets | September 30, December 31, September 30, 2016 2015 2015 Prepaid expenses $ $ $ Value added taxes Other $ $ $ |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments | |
Effect of commodity futures contracts designated as cash flow hedges on the results of operations | The effect of the commodity forward contracts on the results of operations for the three months ended September 30, 2016 and 2015 is as follows: Amount of Gain Reclassified from Amount of Gain (Loss) Recognized in OCI on Accumulated OCI into Income Commodity Forward Contracts (reported in cost of goods sold) (Effective Portion) (Effective Portion) 2016 2015 2016 2015 $ $ $ — $ The effect of the commodity forward contracts on the results of operations for the nine months ended September 30, 2016 and 2015 is as follows: Amount of Gain Reclassified from Amount of Gain Recognized in OCI on Accumulated OCI into Income Commodity Forward Contracts (reported in cost of goods sold) (Effective Portion) (Effective Portion) 2016 2015 2016 2015 $ $ 2 $ — $ 6 |
Effect of the forward exchange contracts not designated as hedging instruments on the results of operations | The effect of the foreign exchange derivative contracts on the results of operations for the three months ended September 30, 2016 and 2015 is as follows: Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Recognized in Income on Foreign Exchange Contracts Foreign Exchange Contracts 2016 2015 Other expense $ $ The effect of the foreign exchange derivative contracts on the results of operations for the nine months ended September 30, 2016 and 2015 is as follows: Amount of Gain Location of Gain Recognized in Income on Recognized in Income on Foreign Exchange Contracts Foreign Exchange Contracts 2016 2015 Other expense $ $ |
Balance Sheet Classification of derivative instruments | Fair Value Balance Sheet September 30, December 31, September 30, Location 2016 2015 2015 Asset derivatives: Derivatives designated as hedging instruments: Commodity forwards contracts a $ $ — $ — Derivatives not designated as hedging instruments: Foreign exchange derivative contracts a Total asset derivatives $ $ $ Liability derivatives: Derivatives designated as hedging instruments: Commodity forwards contracts c $ — $ $ Derivatives not designated as hedging instruments: Foreign exchange derivative contracts c Total liability derivatives $ $ $ |
Restructuring Accruals (Tables)
Restructuring Accruals (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring Accruals | |
Selected information related to the restructuring accruals | Selected information related to the restructuring accruals for the three months ended September 30, 2016 and 2015 is as follows: Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at July 1, 2016 $ $ $ Net cash paid, principally severance and related benefits Other, including foreign exchange translation Balance at September 30, 2016 $ $ $ European Other Asset Asia Pacific Restructuring Total Optimization Restructuring Actions Restructuring Balance at July 1, 2015 $ $ $ $ Charges Write-down of assets to net realizable value Net cash paid, principally severance and related benefits Other, including foreign exchange translation Balance at September 30, 2015 $ $ $ $ |
Pension Benefit Plans (Tables)
Pension Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Pension Benefit Plans. | |
Components of net periodic pension cost | U.S. Non-U.S. 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected asset return Amortization: Actuarial loss Net periodic pension cost $ $ $ $ |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt | |
Long-term Debt | September 30, December 31, September 30, 2016 2015 2015 Secured Credit Agreement: Revolving Credit Facility: Revolving Loans $ — $ — $ Term Loans: Term Loan A Term Loan A (€279 million at September 30, 2016) Term Loan B Senior Notes: 6.75%, due 2020 (€500 million) 4.875%, due 2021 (€330 million) 5.00%, due 2022 5.875%, due 2023 5.375%, due 2025 6.375%, due 2025 Payable to OI Inc. Capital Leases Other Total long-term debt Less amounts due within one year Long-term debt $ $ $ |
Information related to accounts receivable securitization program | September 30, December 31, September 30, 2016 2015 2015 Balance (included in short-term loans) $ $ $ Weighted average interest rate % % % |
Fair values of the Company's significant fixed rate debt obligations | Principal Indicated Amount Market Price Fair Value Senior Notes: 6.75%, due 2020 (€500 million) $ $ $ 4.875%, due 2021 (€330 million) 5.00%, due 2022 5.875%, due 2023 6.375%, due 2025 5.375%, due 2025 |
Share Owners' Equity (Tables)
Share Owners' Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Share Owners' Equity | |
Activity in share owners' equity | The activity in share owners’ equity for the three months ended September 30, 2016 and 2015 is as follows: Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance at July 1, 2016 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive loss Acquisitions of noncontrolling interests Balance on September 30, 2016 $ $ $ $ $ Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance at July 1, 2015 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive income (loss) Distributions to noncontrolling interests Balance on September 30, 2015 $ $ $ $ $ The activity in share owners’ equity for the nine months ended September 30, 2016 and 2015 is as follows: Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on January 1, 2016 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive loss Acquisitions of noncontrolling interest Balance on September 30, 2016 $ $ $ $ $ Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on January 1, 2015 $ $ $ $ $ Net distribution to parent Net earnings Other comprehensive loss Distributions to noncontrolling interests Acquisitions of noncontrolling interests Balance on September 30, 2015 $ $ $ $ $ |
Other Expense (Income), net (Ta
Other Expense (Income), net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Other Expense (Income), net. | |
Schedule of other expense (income), net | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Restructuring, asset impairment and related charges $ — $ $ $ Gain on sale of land in China Strategic transaction costs Foreign currency exchange loss (gain) Other expense (income) $ $ $ $ |
Supplemental Cash Flow Inform35
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | Nine months ended September 30, 2016 2015 Interest paid in cash $ $ Income taxes paid in cash (all non-U.S.): |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations | |
Schedule of preliminary estimates of fair value of the assets and liabilities | September 1, 2015 Measurement Period Adjustments September 30, 2016 Cash $ $ — $ Other current assets Goodwill Customer list intangibles and other Net property, plant and equipment Total assets Current liabilities Long-term debt Long-term liabilities Net assets acquired $ $ — $ |
Pro Forma Information - Vitro37
Pro Forma Information - Vitro Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Pro Forma Information - Vitro Acquisition | |
Schedule of pro-forma information | Three Months Ended September 30, 2015 As Acquisition Financing Pro Forma Reported Adjustments Adjustments As Adjusted Net sales $ $ $ $ Earnings from continuing operations attributable to the Company $ $ $ $ Nine months ended September 30, 2015 As Acquisition Financing Pro Forma Reported Adjustments Adjustments As Adjusted Net sales $ $ $ $ Earnings from continuing operations attributable to the Company $ $ $ $ |
Financial Information for Sub38
Financial Information for Subsidiary Guarantors and Non-Guarantors (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Financial Information for Subsidiary Guarantors and Non-Guarantors Disclosure [Abstract] | |
Balance Sheet | September 30, 2016 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ $ $ $ $ Trade receivables, net Inventories Prepaid expenses and other current assets Total current assets — — Investments in and advances to subsidiaries — Goodwill Intangibles, net Other assets Property, plant and equipment, net Total assets $ $ $ $ $ $ Current liabilities: Accounts payable and accrued liabilities $ $ $ $ $ $ Short-term loans and long-term debt due within one year Other liabilities Total current liabilities — — Long-term debt Other long-term liabilities Investments by and advances from parent — Total share owner's equity of the Company Noncontrolling interests Total liabilities and share owners’ equity $ $ $ $ $ $ December 31, 2015 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ $ $ — $ Trade receivables, net Inventories Prepaid expenses and other current assets Total current assets — — Investments in and advances to subsidiaries — Goodwill Intangibles, net Other assets Property, plant and equipment, net Total assets $ $ $ $ $ $ Current liabilities: Accounts payable and accrued liabilities $ — $ $ $ $ — $ Short-term loans and long-term debt due within one year Other liabilities Total current liabilities — — Long-term debt Other long-term liabilities Investments by and advances from parent — Total share owner's equity of the Company Noncontrolling interests Total liabilities and share owners’ equity $ $ $ $ $ $ September 30, 2015 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ $ $ $ Trade receivables, net Inventories Prepaid expenses and other current assets Total current assets — — Investments in and advances to subsidiaries — Goodwill Intangibles, net Other assets Property, plant and equipment, net Total assets $ $ $ $ $ $ Current liabilities: Short-term loans and long-term debt due within one year $ — $ $ $ $ $ Accounts payable and accrued liabilities Other liabilities Total current liabilities — Long-term debt Other long-term liabilities Investments by and advances from parent — Total share owner's equity of the Company Noncontrolling interests Total liabilities and share owners’ equity $ $ $ $ $ $ |
Results of Operations | Three months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit — Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes — Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Three months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Three months ended September 30, 2015 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit — Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Three months ended September 30, 2015 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit — — Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2015 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ $ $ Cost of goods sold Gross profit Research, engineering, selling, administrative and other Net intercompany interest — Interest expense, net Equity earnings from subsidiaries — Other equity earnings Other expense, net Earnings (loss) from continuing operations before income taxes Provision for income taxes Earnings (loss) from continuing operations Loss from discontinued operations Net earnings (loss) Net earnings attributable to noncontrolling interests Net earnings (loss) attributable to the Company $ $ $ $ $ $ Nine months ended September 30, 2015 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ $ $ $ $ $ Other comprehensive income (loss) Total comprehensive income (loss) Comprehensive income attributable to noncontrolling interests Comprehensive income (loss) attributable to the Company $ $ $ $ $ $ |
Cash Flows | Nine months ended September 30, 2016 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — $ $ $ — $ Cash utilized in investing activities (66) (1) (215) Cash provided by (utilized in) financing activities Effect of exchange rate change on cash (4) Net change in cash — — — Cash at beginning of period Cash at end of period $ — $ — $ $ $ — $ Nine months ended September 30, 2015 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — $ $ $ $ $ Cash utilized in investing activities Cash provided by financing activities Effect of exchange rate change on cash Net change in cash — — — Cash at beginning of period Cash at end of period $ — $ — $ $ $ — $ |
Basis of Presentation (Details)
Basis of Presentation (Details) | Sep. 30, 2016 |
Basis of Presentation. | |
Owens-Illinois, Inc.'s ownership percentage in the Company | 100.00% |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | |
Segment Reporting Information | ||||
Number of reportable segments | item | 4 | |||
Net sales: | ||||
Net sales | $ 1,712 | $ 1,566 | $ 5,060 | $ 4,530 |
Items excluded from segment operating profit: | ||||
Retained corporate costs and other | (18) | (10) | (75) | (49) |
Restructuring, asset impairment and other | (41) | (12) | (68) | |
Strategic transaction costs | (13) | (19) | ||
Acquisition-related fair value inventory adjustments | (10) | (10) | ||
Interest expense, net | ||||
Interest expense, net | (66) | (67) | (199) | (188) |
Earnings from continuing operations before income taxes | ||||
Earnings from continuing operations before income taxes | 153 | 58 | 395 | 220 |
Reportable Segment Totals | ||||
Net sales: | ||||
Net sales | 1,699 | 1,552 | 5,013 | 4,484 |
Segment Operating Profit: | ||||
Segment operating profit | 237 | 199 | 681 | 554 |
Europe | ||||
Net sales: | ||||
Net sales | 586 | 605 | 1,795 | 1,809 |
Segment Operating Profit: | ||||
Segment operating profit | 64 | 68 | 192 | 181 |
North America | ||||
Net sales: | ||||
Net sales | 578 | 520 | 1,709 | 1,520 |
Segment Operating Profit: | ||||
Segment operating profit | 79 | 61 | 247 | 214 |
Latin America | ||||
Net sales: | ||||
Net sales | 365 | 265 | 1,022 | 677 |
Segment Operating Profit: | ||||
Segment operating profit | 74 | 51 | 194 | 108 |
Asia Pacific | ||||
Net sales: | ||||
Net sales | 170 | 162 | 487 | 478 |
Segment Operating Profit: | ||||
Segment operating profit | 20 | 19 | 48 | 51 |
Other | ||||
Net sales: | ||||
Net sales | $ 13 | $ 14 | $ 47 | $ 46 |
Segment Information - Total Ass
Segment Information - Total Assets (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Assets | |||
Total assets: | $ 9,497 | $ 9,421 | $ 9,554 |
Reportable Segment Totals | |||
Assets | |||
Total assets: | 9,162 | 9,126 | 9,249 |
Europe | |||
Assets | |||
Total assets: | 2,972 | 2,902 | 3,030 |
North America | |||
Assets | |||
Total assets: | 2,536 | 2,500 | 2,028 |
Latin America | |||
Assets | |||
Total assets: | 2,629 | 2,807 | 3,297 |
Asia Pacific | |||
Assets | |||
Total assets: | 1,025 | 917 | 894 |
Other | |||
Assets | |||
Total assets: | $ 335 | $ 295 | $ 305 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Inventories | |||
Finished goods | $ 892 | $ 858 | $ 873 |
Raw materials | 127 | 113 | 114 |
Operating supplies | 38 | 36 | 36 |
Inventories | $ 1,057 | $ 1,007 | $ 1,023 |
Prepaid Expenses and Other Cu43
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2015 | Sep. 30, 2015 | |
Prepaid expenses and other current assets: | ||||
Prepaid expenses | $ 61 | $ 52 | $ 50 | |
Value added taxes | 42 | 195 | 224 | |
Other | 131 | 119 | 168 | |
Prepaid expenses and other current assets | 234 | $ 366 | $ 442 | |
Vitro Acquisition | ||||
Prepaid expenses and other current assets: | ||||
Receivable collected | $ 127 | |||
Amount of value added tax receivable | $ 6 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)MMBTU | Sep. 30, 2015USD ($)MMBTU | Sep. 30, 2016USD ($)MMBTU | Sep. 30, 2015USD ($)MMBTU | Dec. 31, 2015USD ($) | |
Commodity forward contracts | Cash Flow Hedges | |||||
Derivatives and Hedges | |||||
Coverage of commodity forward contracts (in MM BTUs) | MMBTU | 12,400,000 | 6,300,000 | 12,400,000 | 6,300,000 | |
Unrecognized gain (loss) included in Accumulated OCI | $ 2 | $ 2 | $ 2 | $ 2 | $ (4) |
Commodity forward contracts gain (loss) recognized in OCI | (1) | 2 | 2 | 2 | |
Commodity forward contracts gain (loss) reclassified from accumulated OCI into income | 4 | 6 | |||
Foreign exchange derivative contracts | Derivatives not designated as hedging instruments | Other expense | |||||
Derivatives and Hedges | |||||
Foreign exchange contracts gain (loss) recognized in income | 4 | (4) | |||
Foreign exchange derivative contracts. | Derivatives not designated as hedging instruments | |||||
Derivatives and Hedges | |||||
Forward exchange contracts in various currencies | $ 580 | $ 600 | 580 | 600 | |
Foreign exchange derivative contracts. | Derivatives not designated as hedging instruments | Other expense | |||||
Derivatives and Hedges | |||||
Foreign exchange contracts gain (loss) recognized in income | $ 6 | $ 2 |
Derivative Instruments - Design
Derivative Instruments - Designation (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Derivatives, Fair Value | |||
Total asset derivatives | $ 10 | $ 14 | $ 16 |
Total liability derivatives | 2 | 5 | 6 |
Derivatives designated as hedging instruments | Commodity forward contracts | Other assets | |||
Derivatives, Fair Value | |||
Total asset derivatives | 2 | ||
Derivatives designated as hedging instruments | Commodity forward contracts | Other liabilities (current) | |||
Derivatives, Fair Value | |||
Total liability derivatives | 3 | 2 | |
Derivatives not designated as hedging instruments | Foreign exchange derivative contracts. | Other assets | |||
Derivatives, Fair Value | |||
Total asset derivatives | 8 | 14 | 16 |
Derivatives not designated as hedging instruments | Foreign exchange derivative contracts. | Other liabilities (current) | |||
Derivatives, Fair Value | |||
Total liability derivatives | $ 2 | $ 2 | $ 4 |
Restructuring Accruals (Details
Restructuring Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Restructuring accrual | ||||
Beginning balance, restructuring reserve | $ 34 | $ 52 | $ 43 | $ 60 |
Charges | 35 | 19 | 57 | |
Write-down of assets to net realizable value | (19) | (7) | (30) | |
Net cash paid, principally severance and related benefits | (3) | (5) | (20) | (20) |
Other, including foreign exchange translation | (2) | (1) | (6) | (5) |
Ending balance, restructuring reserve | 29 | 62 | 29 | 62 |
European Asset Optimization | ||||
Restructuring accrual | ||||
Beginning balance, restructuring reserve | 11 | 12 | ||
Other, including foreign exchange translation | (1) | |||
Ending balance, restructuring reserve | 11 | 11 | ||
Asia Pacific Restructuring | ||||
Restructuring accrual | ||||
Beginning balance, restructuring reserve | 6 | 8 | 7 | 12 |
Charges | 1 | 5 | ||
Write-down of assets to net realizable value | (4) | |||
Net cash paid, principally severance and related benefits | (1) | (1) | (2) | (5) |
Other, including foreign exchange translation | (1) | (1) | ||
Ending balance, restructuring reserve | 5 | 7 | 5 | 7 |
Restructuring, Additional Information | ||||
Cumulative employee costs and asset impairments | 221 | |||
Other Restructuring Actions | ||||
Restructuring accrual | ||||
Beginning balance, restructuring reserve | 28 | 33 | 36 | 36 |
Charges | 35 | 18 | 52 | |
Write-down of assets to net realizable value | (19) | (7) | (26) | |
Net cash paid, principally severance and related benefits | (2) | (4) | (18) | (15) |
Other, including foreign exchange translation | (2) | (1) | (5) | (3) |
Ending balance, restructuring reserve | $ 24 | $ 44 | 24 | 44 |
Restructuring, Additional Information | ||||
Other restructuring costs | 1 | 3 | ||
Other Restructuring Actions | Latin America | ||||
Restructuring, Additional Information | ||||
Employee costs, asset impairments and other exit costs | 14 | 14 | ||
Other Restructuring Actions | North America | ||||
Restructuring, Additional Information | ||||
Employee and other exit costs | $ 3 | $ 35 |
Pension Benefit Plans (Details)
Pension Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
U.S Pension Plans | ||||
Components of the net pension expense and postretirement benefit cost | ||||
Service cost | $ 3 | $ 6 | $ 11 | $ 18 |
Interest cost | 23 | 24 | 72 | 72 |
Expected asset return | (37) | (42) | (113) | (126) |
Amortization: | ||||
Actuarial loss | 16 | 17 | 47 | 55 |
Net periodic pension cost | 5 | 5 | 17 | 19 |
Increase in pension liability | 60 | |||
Non-U.S. Pension Plans | ||||
Components of the net pension expense and postretirement benefit cost | ||||
Service cost | 4 | 5 | 13 | 14 |
Interest cost | 12 | 15 | 38 | 39 |
Expected asset return | (19) | (23) | (61) | (65) |
Amortization: | ||||
Actuarial loss | 5 | 5 | 15 | 15 |
Net periodic pension cost | $ 2 | $ 2 | $ 5 | $ 3 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes | |
Statutory U.S. Federal tax rate (as a percent) | 35.00% |
Debt (Details)
Debt (Details) $ / shares in Units, € in Millions, $ in Millions | Sep. 01, 2015USD ($) | Sep. 30, 2016EUR (€) | Sep. 30, 2016USD ($)$ / shares | Feb. 03, 2016 | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Apr. 22, 2015 |
Debt Instrument | |||||||
Total long-term debt | $ 5,409 | $ 5,413 | $ 5,666 | ||||
Less amounts due within one year | 76 | 68 | 57 | ||||
Long-term debt | 5,333 | 5,345 | 5,609 | ||||
Short-term loans and long-term debt due within one year | 262 | 228 | 250 | ||||
Vitro Acquisition | |||||||
Debt Instrument | |||||||
Net proceeds, after deducting debt issuance costs | $ 972 | ||||||
The Agreement, Senior Secured Credit Facility | |||||||
Debt Instrument | |||||||
Unused Credit | $ 880 | ||||||
Weighted Average Interest Rate (as a percent) | 2.57% | 2.57% | |||||
Leverage ratio, period one | 5.00% | ||||||
Leverage ratio, period two | 4.50% | ||||||
Leverage ratio, period three | 4.00% | ||||||
The Agreement, Senior Secured Credit Facility | Vitro Acquisition | |||||||
Debt Instrument | |||||||
Face Value | $ 1,250 | ||||||
Senior Secured Credit Agreement | Minimum | |||||||
Debt Instrument | |||||||
Interest rate margin, Eurocurrency Rate loans (as a percent) | 1.25% | 1.25% | |||||
Interest rate margin, Base Rate loans (as a percent) | 0.25% | ||||||
Senior Secured Credit Agreement | Maximum | |||||||
Debt Instrument | |||||||
Interest rate margin, Eurocurrency Rate loans (as a percent) | 1.75% | 1.75% | |||||
Interest rate margin, Base Rate loans (as a percent) | 0.75% | ||||||
Revolving Loans | |||||||
Debt Instrument | |||||||
Total long-term debt | 220 | ||||||
Term Loan A | |||||||
Debt Instrument | |||||||
Total long-term debt | $ 1,516 | 1,546 | 1,546 | ||||
Face Value | 1,575 | ||||||
Term Loan A (279 million EUR at September 30, 2016) | |||||||
Debt Instrument | |||||||
Total long-term debt | € 279 | 303 | 301 | 309 | |||
Term Loan B (USD tranche) | |||||||
Debt Instrument | |||||||
Total long-term debt | 558 | 563 | 563 | ||||
Face Value | $ 575 | ||||||
Term Loan B (USD tranche) | The Agreement, Senior Secured Credit Facility | |||||||
Debt Instrument | |||||||
Interest rate margin, Eurocurrency Rate loans (as a percent) | 2.75% | 2.75% | |||||
Interest rate margin, Base Rate loans (as a percent) | 1.75% | ||||||
Senior Notes 7.375%, due 2016 | The Previous Agreement | |||||||
Debt Instrument | |||||||
Interest rate, stated percentage | 7.375% | ||||||
Senior Notes 6.75%, due 2020 (500 million EUR) | |||||||
Debt Instrument | |||||||
Total long-term debt | € 500 | $ 557 | 542 | 557 | |||
Interest rate, stated percentage | 6.75% | 6.75% | |||||
Principal Amount | $ 561 | ||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 120.37 | ||||||
Fair Value | $ 675 | ||||||
Senior Notes 4.875%, due 2021 (330 million EUR) | |||||||
Debt Instrument | |||||||
Total long-term debt | € 330 | $ 367 | 357 | 367 | |||
Interest rate, stated percentage | 4.875% | 4.875% | |||||
Principal Amount | $ 370 | ||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 114.45 | ||||||
Fair Value | $ 423 | ||||||
Senior Notes 5.00%, due 2022 | |||||||
Debt Instrument | |||||||
Total long-term debt | $ 495 | 494 | 494 | ||||
Interest rate, stated percentage | 5.00% | 5.00% | |||||
Principal Amount | $ 500 | ||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 106.31 | ||||||
Fair Value | $ 532 | ||||||
Senior Notes 5.875%, due 2023 | |||||||
Debt Instrument | |||||||
Total long-term debt | $ 681 | 680 | 679 | ||||
Interest rate, stated percentage | 5.875% | 5.875% | |||||
Principal Amount | $ 700 | ||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 107.75 | ||||||
Fair Value | $ 754 | ||||||
Senior Notes 5.875%, due 2023 | Vitro Acquisition | |||||||
Debt Instrument | |||||||
Interest rate, stated percentage | 5.875% | ||||||
Face Value | $ 700 | ||||||
Senior Notes 5.375%, due 2025 | |||||||
Debt Instrument | |||||||
Total long-term debt | $ 296 | 296 | 296 | ||||
Interest rate, stated percentage | 5.375% | 5.375% | |||||
Principal Amount | $ 300 | ||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 111 | ||||||
Fair Value | $ 333 | ||||||
Senior Notes 6.375%, due 2025 | |||||||
Debt Instrument | |||||||
Total long-term debt | $ 294 | 293 | 293 | ||||
Interest rate, stated percentage | 6.375% | 6.375% | |||||
Principal Amount | $ 300 | ||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 104.75 | ||||||
Fair Value | $ 314 | ||||||
Senior Notes 6.375%, due 2025 | Vitro Acquisition | |||||||
Debt Instrument | |||||||
Interest rate, stated percentage | 6.375% | ||||||
Face Value | $ 300 | ||||||
Payable to OI Inc. | |||||||
Debt Instrument | |||||||
Total long-term debt | 250 | 250 | 250 | ||||
Capital leases | |||||||
Debt Instrument | |||||||
Total long-term debt | 62 | 62 | 60 | ||||
Other | |||||||
Debt Instrument | |||||||
Total long-term debt | 30 | 29 | 32 | ||||
Senior Secured Incremental Term Loan Facility | Vitro Acquisition | |||||||
Debt Instrument | |||||||
Face Value | $ 1,250 | ||||||
Maturity period after the closing of acquisition | 7 years | ||||||
Incremental Secured Term Loan A Facility | Vitro Acquisition | |||||||
Debt Instrument | |||||||
Face Value | $ 675 | ||||||
Incremental Secured Term Loan B Facility | |||||||
Debt Instrument | |||||||
Libor Floor Interest Rate | 0.75 | ||||||
Incremental Secured Term Loan B Facility | Vitro Acquisition | |||||||
Debt Instrument | |||||||
Face Value | $ 575 | ||||||
Revolving Credit Facility | The Agreement, Senior Secured Credit Facility | |||||||
Debt Instrument | |||||||
Total long-term debt | 300 | ||||||
Revolving Credit Facility | Minimum | |||||||
Debt Instrument | |||||||
Facility fee payable (as a percent) | 0.20% | ||||||
Revolving Credit Facility | Maximum | |||||||
Debt Instrument | |||||||
Facility fee payable (as a percent) | 0.30% | ||||||
Multicurrency Revolving Credit Facility | The Agreement, Senior Secured Credit Facility | |||||||
Debt Instrument | |||||||
Total long-term debt | 600 | ||||||
Accounts Receivable Securitization Program | |||||||
Debt Instrument | |||||||
Short-term loans and long-term debt due within one year | $ 158 | $ 158 | $ 173 | ||||
Weighted average interest rate, short-term Debt (as a percent) | 0.67% | 0.67% | 1.21% | 1.11% | |||
European Accounts Receivable Securitization Program | |||||||
Debt Instrument | |||||||
Maximum Borrowing Capacity | € | € 185 |
Contingencies - Asbestos (Detai
Contingencies - Asbestos (Details) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 1993USD ($) | |
Asbestos | |||||
Sale of goods containing asbestos from 1948 to 1958 | $ 40,000,000 | ||||
OI Inc. | |||||
Asbestos | |||||
Number of pending plaintiffs and claimants | item | 1,600 | ||||
Approximate number of claims disposed of to date | item | 397,000 | ||||
Average indemnity payment per claim | $ 9,300 | ||||
Payments for Asbestos-Related Liabilities | $ 138,000,000 | $ 148,000,000 | $ 158,000,000 | ||
Cash payments per claim disposed including legal costs | 95,000 | 81,000 | 93,000 | ||
Asbestos-related liability, total amount accrued beginning in 1993 through 2015 before insurance recoveries | 4,900,000,000 | $ 975,000,000 | |||
Accrual of asbestos related liabilty | 817,000,000 | 939,000,000 | |||
Asbestos related charges | 16,000,000 | $ 46,000,000 | $ 12,000,000 | ||
Period for number of claims to be received | 10 years | ||||
OI Inc. | Maximum | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | $ 950,000,000 | ||||
Damages unspecified or sufficient to invoke jurisdictional minimum | OI Inc. | |||||
Asbestos | |||||
Percentage of asbestos plaintiffs, approximate percentage | 82.00% | ||||
Damages of $15 million or less | OI Inc. | |||||
Asbestos | |||||
Percentage of asbestos plaintiffs, approximate percentage | 11.00% | ||||
Damages of $15 million or less | OI Inc. | Maximum | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | $ 15,000,000 | ||||
Damages greater than $15 million but less than $100 million | OI Inc. | |||||
Asbestos | |||||
Percentage of asbestos plaintiffs, approximate percentage | 7.00% | ||||
Damages greater than $15 million but less than $100 million | OI Inc. | Minimum | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | $ 15,000,000 | ||||
Damages greater than $15 million but less than $100 million | OI Inc. | Maximum | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | $ 100,000,000 |
Contingencies - Other Matters (
Contingencies - Other Matters (Details) $ in Millions | Sep. 30, 2016USD ($) |
Joint venture in China | |
Asbestos | |
Equity Method Investments | $ 72 |
Share Owners' Equity (Details)
Share Owners' Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Increase (Decrease) in Share Owners' Equity | ||||
Balance | $ 1,251 | $ 1,496 | $ 1,096 | $ 1,710 |
Net distribution to parent | (17) | (20) | (20) | (139) |
Net earnings | 114 | 24 | 296 | 144 |
Other comprehensive income (loss) | (59) | (243) | (83) | (434) |
Distributions to noncontrolling interests | (1) | (13) | ||
Acquisitions of noncontrolling interests | (1) | (1) | (12) | |
Balance | 1,288 | 1,256 | 1,288 | 1,256 |
Other Contributed Capital | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | 728 | 827 | 731 | 964 |
Net distribution to parent | (17) | (20) | (20) | (139) |
Acquisitions of noncontrolling interests | (1) | (1) | (18) | |
Balance | 710 | 807 | 710 | 807 |
Retained Earnings | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | 2,405 | 2,193 | 2,233 | 2,082 |
Net earnings | 108 | 17 | 280 | 128 |
Balance | 2,513 | 2,210 | 2,513 | 2,210 |
Accumulated Other Comprehensive Loss. | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | (1,992) | (1,636) | (1,976) | (1,453) |
Other comprehensive income (loss) | (57) | (235) | (73) | (418) |
Balance | (2,049) | (1,871) | (2,049) | (1,871) |
Noncontrolling Interests | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | 110 | 112 | 108 | 117 |
Net earnings | 6 | 7 | 16 | 16 |
Other comprehensive income (loss) | (2) | (8) | (10) | (16) |
Distributions to noncontrolling interests | (1) | (13) | ||
Acquisitions of noncontrolling interests | 6 | |||
Balance | $ 114 | $ 110 | $ 114 | $ 110 |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | $ 1,251 | $ 1,496 | $ 1,096 | $ 1,710 |
Balance | 1,288 | 1,256 | 1,288 | 1,256 |
Net Effect of Exchange Rate Fluctuations | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (574) | (281) | (568) | (55) |
Change before reclassifications | (77) | (257) | (83) | (483) |
Other comprehensive income (loss) attributable to the Company | (77) | (257) | (83) | (483) |
Balance | (651) | (538) | (651) | (538) |
Change in Certain Derivative Instruments | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (4) | (6) | (10) | (4) |
Amounts reclassified from accumulated other comprehensive income | (1) | (2) | 4 | (4) |
Tax effect | (1) | 1 | (1) | |
Other comprehensive income (loss) attributable to the Company | (1) | (3) | 5 | (5) |
Balance | (5) | (9) | (5) | (9) |
Employee Benefit Plans | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (1,414) | (1,349) | (1,398) | (1,394) |
Amounts reclassified from accumulated other comprehensive income | 26 | 20 | (2) | 58 |
Translation effect | (5) | 4 | 6 | 10 |
Tax effect | 1 | 1 | 2 | |
Other comprehensive income (loss) attributable to the Company | 21 | 25 | 5 | 70 |
Balance | (1,393) | (1,324) | (1,393) | (1,324) |
Accumulated Other Comprehensive Loss. | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (1,992) | (1,636) | (1,976) | (1,453) |
Change before reclassifications | (77) | (257) | (83) | (483) |
Amounts reclassified from accumulated other comprehensive income | 25 | 18 | 2 | 54 |
Translation effect | (5) | 4 | 6 | 10 |
Tax effect | 2 | 1 | ||
Other comprehensive income (loss) attributable to the Company | (57) | (235) | (73) | (418) |
Balance | $ (2,049) | $ (1,871) | $ (2,049) | $ (1,871) |
Other Expense (Income), net (De
Other Expense (Income), net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Other Expense (Income), net. | ||||
Restructuring Costs and Asset Impairment Charges | $ 35 | $ 19 | $ 57 | |
Gain on sale of land in China | (7) | |||
Strategic transaction costs | 13 | 19 | ||
Foreign currency exchange loss (gain) | $ 2 | (2) | 6 | (10) |
Other expense (income) | (7) | (2) | 6 | (7) |
Other Expense (Income), net | $ (5) | $ 44 | $ 24 | $ 59 |
Supplemental Cash Flow Inform55
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | |||
Interest paid in cash | $ 214 | $ 192 | |
Income taxes paid in cash (all non-US) | 93 | 93 | |
Amount of receivables sold | $ 240 | $ 336 | $ 317 |
Business Combinations (Details)
Business Combinations (Details) $ in Millions | Sep. 01, 2015USD ($)item | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Business Combinations | ||||||
Net sales | $ 1,712 | $ 1,566 | $ 5,060 | $ 4,530 | ||
Gross profit | 336 | 276 | 997 | 818 | ||
Fair values of the assets and liabilities assumed | ||||||
Goodwill | 2,534 | $ 2,797 | 2,534 | $ 2,797 | $ 2,489 | |
Vitro Acquisition | ||||||
Business Combinations | ||||||
Total consideration | $ 2,297 | |||||
Number of plants acquired | item | 5 | |||||
Net sales | 606 | |||||
Gross profit | 123 | |||||
Fair values of the assets and liabilities assumed | ||||||
Cash | $ 17 | 17 | 17 | |||
Other current assets | 344 | 334 | 334 | |||
Goodwill | 1,073 | 837 | 837 | |||
Customer list intangibles | 406 | 608 | 608 | |||
Net property, plant, and equipment | 597 | 645 | 645 | |||
Total assets | 2,437 | 2,441 | 2,441 | |||
Current liabilities | 93 | 86 | 86 | |||
Long-term debt | 11 | 11 | 11 | |||
Long-term liabilities | 36 | 47 | 47 | |||
Net assets acquired | $ 2,297 | 2,297 | 2,297 | |||
Vitro Acquisition | As Adjusted | ||||||
Fair values of the assets and liabilities assumed | ||||||
Other current assets | (10) | (10) | ||||
Goodwill | (236) | (236) | ||||
Customer list intangibles | 202 | 202 | ||||
Net property, plant, and equipment | 48 | 48 | ||||
Total assets | 4 | 4 | ||||
Current liabilities | (7) | (7) | ||||
Long-term liabilities | $ 11 | $ 11 |
Pro Forma Information - Vitro57
Pro Forma Information - Vitro Acquisition (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Business Combinations, Pro Forma | ||
Net sales | $ 1,709 | $ 5,104 |
Earnings from continuing operations attributable to the Company | 25 | 164 |
As Reported | ||
Business Combinations, Pro Forma | ||
Net sales | 1,566 | 4,530 |
Earnings from continuing operations attributable to the Company | 18 | 131 |
Acquisition Adjustments | ||
Business Combinations, Pro Forma | ||
Net sales | 143 | 574 |
Earnings from continuing operations attributable to the Company | 18 | 79 |
Financing Adjustments | ||
Business Combinations, Pro Forma | ||
Earnings from continuing operations attributable to the Company | $ (11) | $ (46) |
Discontinued Operations (Detail
Discontinued Operations (Details) $ in Millions | Apr. 04, 2016USD ($)Plantitem | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Subsidiaries | |||||
Loss from discontinued operations | $ (3) | $ (1) | $ (6) | $ (3) | |
Disposed Venezuelan Subsidiaries | |||||
Subsidiaries | |||||
Number of ICSID member states in which award is enforceable | item | 150 | ||||
Expropriated plants | Plant | 2 | ||||
Disposed Venezuelan Subsidiaries | Minimum | |||||
Subsidiaries | |||||
Litigation settlement amount | $ 485 | ||||
Disposed Venezuelan Subsidiaries | Discontinued Operations, Disposed of by Means Other than Sale | |||||
Subsidiaries | |||||
Loss from discontinued operations | $ (6) | $ (3) |
Financial Information for Sub59
Financial Information for Subsidiary Guarantors and Non-Guarantors (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Instrument | |
Ownership percentage in Guarantor Subsidiaries | 100.00% |
Senior Notes 5.00%, due 2022 | |
Debt Instrument | |
Interest rate, stated percentage | 5.00% |
Senior Notes 5.875%, due 2023 | |
Debt Instrument | |
Interest rate, stated percentage | 5.875% |
Senior Notes 5.375%, due 2025 | |
Debt Instrument | |
Interest rate, stated percentage | 5.375% |
Senior Notes 6.375%, due 2025 | |
Debt Instrument | |
Interest rate, stated percentage | 6.375% |
Financial Information for Sub60
Financial Information for Subsidiary Guarantors and Non-Guarantors - Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Current assets: | |||
Cash and cash equivalents | $ 294 | $ 399 | $ 270 |
Trade receivables, net | 857 | 562 | 753 |
Inventories | 1,057 | 1,007 | 1,023 |
Prepaid expenses and other expenses | 234 | 366 | 442 |
Total current assets | 2,442 | 2,334 | 2,488 |
Goodwill | 2,534 | 2,489 | 2,797 |
Intangibles, net | 490 | 597 | 404 |
Other assets | 1,114 | 1,040 | 991 |
Property, plant and equipment, net | 2,917 | 2,961 | 2,874 |
Total assets | 9,497 | 9,421 | 9,554 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 1,059 | 1,212 | 1,004 |
Short-term loans and long-term debt due within one year | 262 | 228 | 250 |
Other liabilities | 582 | 552 | 527 |
Total current liabilities | 1,903 | 1,992 | 1,781 |
Long-term debt | 5,333 | 5,345 | 5,609 |
Other long-term liabilities | 973 | 988 | 908 |
Total share owners' equity of the Company | 1,174 | 988 | 1,146 |
Noncontrolling interests | 114 | 108 | 110 |
Total liabilities and share owners' equity | 9,497 | 9,421 | 9,554 |
Parent | |||
Current assets: | |||
Investments in and advances to subsidiaries | 1,424 | 1,239 | 1,395 |
Total assets | 1,424 | 1,239 | 1,395 |
Current liabilities: | |||
Long-term debt | 250 | 250 | 250 |
Total share owners' equity of the Company | 1,174 | 989 | 1,145 |
Total liabilities and share owners' equity | 1,424 | 1,239 | 1,395 |
Issuer | |||
Current assets: | |||
Trade receivables, net | 86 | 55 | 76 |
Inventories | 198 | 205 | 190 |
Prepaid expenses and other expenses | 22 | 25 | 30 |
Total current assets | 306 | 285 | 296 |
Investments in and advances to subsidiaries | 4,295 | 3,775 | 1,119 |
Goodwill | 582 | 581 | 54 |
Other assets | 123 | 123 | 519 |
Property, plant and equipment, net | 698 | 703 | 852 |
Total assets | 6,004 | 5,467 | 2,840 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 179 | 184 | 197 |
Short-term loans and long-term debt due within one year | 55 | 50 | 41 |
Other liabilities | 111 | 139 | 126 |
Total current liabilities | 345 | 373 | 364 |
Long-term debt | 3,799 | 3,839 | 4,069 |
Other long-term liabilities | 8 | 16 | 59 |
Investments by and advances from parent | 1,852 | 1,239 | (1,652) |
Total liabilities and share owners' equity | 6,004 | 5,467 | 2,840 |
Guarantor Subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 15 | 6 | 15 |
Trade receivables, net | 21 | 15 | 14 |
Inventories | 30 | 35 | 48 |
Prepaid expenses and other expenses | 10 | 13 | 16 |
Total current assets | 76 | 69 | 93 |
Investments in and advances to subsidiaries | 1,250 | 1,002 | 1,651 |
Goodwill | 331 | 317 | 9 |
Other assets | 243 | 267 | 74 |
Property, plant and equipment, net | 5 | 8 | 7 |
Total assets | 1,905 | 1,663 | 1,834 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 18 | 18 | 28 |
Other liabilities | 52 | 35 | 50 |
Total current liabilities | 70 | 53 | 78 |
Other long-term liabilities | 412 | 371 | 297 |
Investments by and advances from parent | 1,423 | 1,239 | 1,459 |
Total liabilities and share owners' equity | 1,905 | 1,663 | 1,834 |
Non-Guarantor Subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 279 | 393 | 254 |
Trade receivables, net | 750 | 492 | 662 |
Inventories | 829 | 767 | 785 |
Prepaid expenses and other expenses | 202 | 328 | 398 |
Total current assets | 2,060 | 1,980 | 2,099 |
Goodwill | 1,621 | 1,591 | 2,734 |
Intangibles, net | 490 | 597 | 404 |
Other assets | 748 | 650 | 397 |
Property, plant and equipment, net | 2,214 | 2,250 | 2,015 |
Total assets | 7,133 | 7,068 | 7,649 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 862 | 1,010 | 779 |
Short-term loans and long-term debt due within one year | 207 | 178 | 209 |
Other liabilities | 419 | 378 | 352 |
Total current liabilities | 1,488 | 1,566 | 1,340 |
Long-term debt | 1,284 | 1,256 | 1,290 |
Other long-term liabilities | 553 | 600 | 552 |
Investments by and advances from parent | 3,694 | 3,538 | 4,357 |
Noncontrolling interests | 114 | 108 | 110 |
Total liabilities and share owners' equity | 7,133 | 7,068 | 7,649 |
Eliminations | |||
Current assets: | |||
Cash and cash equivalents | 1 | ||
Trade receivables, net | 1 | ||
Prepaid expenses and other expenses | (2) | ||
Investments in and advances to subsidiaries | (6,969) | (6,016) | (4,165) |
Other assets | 1 | ||
Total assets | (6,969) | (6,016) | (4,164) |
Current liabilities: | |||
Other liabilities | (1) | ||
Total current liabilities | (1) | ||
Other long-term liabilities | 1 | ||
Investments by and advances from parent | (6,969) | (6,016) | (4,164) |
Total share owners' equity of the Company | (1) | 1 | |
Total liabilities and share owners' equity | $ (6,969) | $ (6,016) | $ (4,164) |
Financial Information for Sub61
Financial Information for Subsidiary Guarantors and Non-Guarantors - Results of Operations and Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Results of Operations | ||||
Net sales | $ 1,712 | $ 1,566 | $ 5,060 | $ 4,530 |
Cost of goods sold | (1,376) | (1,290) | (4,063) | (3,712) |
Gross Profit | 336 | 276 | 997 | 818 |
Research, engineering, selling, administrative, and other | (137) | (124) | (423) | (397) |
Interest expense, net | (66) | (67) | (199) | (188) |
Other equity earnings | 15 | 17 | 44 | 46 |
Other expense, net | 5 | (44) | (24) | (59) |
Earnings (loss) from continuing operations before income taxes | 153 | 58 | 395 | 220 |
Provision for income taxes | (36) | (33) | (93) | (73) |
Earnings (loss) from continuing operations | 117 | 25 | 302 | 147 |
Loss from discontinued operations | (3) | (1) | (6) | (3) |
Net earnings (loss) | 114 | 24 | 296 | 144 |
Net (earnings) attributable to noncontrolling interests | (6) | (7) | (16) | (16) |
Net earnings attributable to the Company | 108 | 17 | 280 | 128 |
Comprehensive Income | ||||
Net earnings (loss) | 114 | 24 | 296 | 144 |
Other comprehensive income (loss) | (59) | (243) | (83) | (434) |
Total comprehensive income (loss) | 55 | (219) | 213 | (290) |
Comprehensive income attributable to noncontrolling interests | (4) | 1 | (6) | |
Comprehensive income (loss) attributable to the Company | 51 | (218) | 207 | (290) |
Parent | ||||
Results of Operations | ||||
Net intercompany interest | 5 | 5 | 15 | 15 |
Interest expense, net | (5) | (5) | (15) | (15) |
Equity earnings from subsidiaries | 108 | 17 | 280 | 128 |
Earnings (loss) from continuing operations before income taxes | 108 | 17 | 280 | 128 |
Earnings (loss) from continuing operations | 108 | 17 | 280 | 128 |
Net earnings (loss) | 108 | 17 | 280 | 128 |
Net earnings attributable to the Company | 108 | 17 | 280 | 128 |
Comprehensive Income | ||||
Net earnings (loss) | 108 | 17 | 280 | 128 |
Other comprehensive income (loss) | (59) | (226) | (83) | (418) |
Total comprehensive income (loss) | 49 | (209) | 197 | (290) |
Comprehensive income (loss) attributable to the Company | 49 | (209) | 197 | (290) |
Issuer | ||||
Results of Operations | ||||
Net sales | 498 | 482 | 1,469 | 1,452 |
Cost of goods sold | (414) | (421) | (1,215) | (1,223) |
Gross Profit | 84 | 61 | 254 | 229 |
Research, engineering, selling, administrative, and other | (29) | (29) | (89) | (100) |
Net intercompany interest | (4) | (5) | (15) | (16) |
Interest expense, net | (44) | (45) | (133) | (123) |
Equity earnings from subsidiaries | 88 | 56 | 255 | 148 |
Other equity earnings | 3 | 5 | 8 | 15 |
Other expense, net | 38 | 10 | 98 | 78 |
Earnings (loss) from continuing operations before income taxes | 136 | 53 | 378 | 231 |
Provision for income taxes | (1) | (4) | (5) | |
Earnings (loss) from continuing operations | 136 | 52 | 374 | 226 |
Net earnings (loss) | 136 | 52 | 374 | 226 |
Net earnings attributable to the Company | 136 | 52 | 374 | 226 |
Comprehensive Income | ||||
Net earnings (loss) | 136 | 52 | 374 | 226 |
Other comprehensive income (loss) | (1) | (2) | 4 | (3) |
Total comprehensive income (loss) | 135 | 50 | 378 | 223 |
Comprehensive income (loss) attributable to the Company | 135 | 50 | 378 | 223 |
Guarantor Subsidiaries | ||||
Results of Operations | ||||
Net sales | 73 | 18 | 217 | 19 |
Cost of goods sold | (58) | (13) | (172) | (9) |
Gross Profit | 15 | 5 | 45 | 10 |
Research, engineering, selling, administrative, and other | (20) | (15) | (76) | (62) |
Interest expense, net | (1) | |||
Other expense, net | (4) | (14) | (13) | (20) |
Earnings (loss) from continuing operations before income taxes | (9) | (24) | (44) | (73) |
Provision for income taxes | (3) | |||
Earnings (loss) from continuing operations | (9) | (24) | (44) | (76) |
Net earnings (loss) | (9) | (24) | (44) | (76) |
Net earnings attributable to the Company | (9) | (24) | (44) | (76) |
Comprehensive Income | ||||
Net earnings (loss) | (9) | (24) | (44) | (76) |
Total comprehensive income (loss) | (9) | (24) | (44) | (76) |
Comprehensive income (loss) attributable to the Company | (9) | (24) | (44) | (76) |
Non-Guarantor Subsidiaries | ||||
Results of Operations | ||||
Net sales | 1,181 | 1,082 | 3,509 | 3,076 |
Cost of goods sold | (943) | (870) | (2,811) | (2,496) |
Gross Profit | 238 | 212 | 698 | 580 |
Research, engineering, selling, administrative, and other | (88) | (81) | (258) | (235) |
Net intercompany interest | (1) | 1 | ||
Interest expense, net | (17) | (17) | (51) | (49) |
Other equity earnings | 12 | 12 | 36 | 31 |
Other expense, net | (29) | (40) | (109) | (118) |
Earnings (loss) from continuing operations before income taxes | 115 | 86 | 316 | 210 |
Provision for income taxes | (36) | (32) | (89) | (65) |
Earnings (loss) from continuing operations | 79 | 54 | 227 | 145 |
Loss from discontinued operations | (3) | (1) | (6) | (3) |
Net earnings (loss) | 76 | 53 | 221 | 142 |
Net (earnings) attributable to noncontrolling interests | (6) | (7) | (16) | (16) |
Net earnings attributable to the Company | 70 | 46 | 205 | 126 |
Comprehensive Income | ||||
Net earnings (loss) | 76 | 53 | 221 | 142 |
Other comprehensive income (loss) | (79) | (261) | (70) | (489) |
Total comprehensive income (loss) | (3) | (208) | 151 | (347) |
Comprehensive income attributable to noncontrolling interests | (4) | 1 | (6) | |
Comprehensive income (loss) attributable to the Company | (7) | (207) | 145 | (347) |
Eliminations | ||||
Results of Operations | ||||
Net sales | (40) | (16) | (135) | (17) |
Cost of goods sold | 39 | 14 | 135 | 16 |
Gross Profit | (1) | (2) | (1) | |
Research, engineering, selling, administrative, and other | 1 | |||
Equity earnings from subsidiaries | (196) | (73) | (535) | (276) |
Other expense, net | 1 | |||
Earnings (loss) from continuing operations before income taxes | (197) | (74) | (535) | (276) |
Earnings (loss) from continuing operations | (197) | (74) | (535) | (276) |
Net earnings (loss) | (197) | (74) | (535) | (276) |
Net earnings attributable to the Company | (197) | (74) | (535) | (276) |
Comprehensive Income | ||||
Net earnings (loss) | (197) | (74) | (535) | (276) |
Other comprehensive income (loss) | 80 | 246 | 66 | 476 |
Total comprehensive income (loss) | (117) | 172 | (469) | 200 |
Comprehensive income (loss) attributable to the Company | $ (117) | $ 172 | $ (469) | $ 200 |
Financial Information for Sub62
Financial Information for Subsidiary Guarantors and Non-Guarantors - Cash Flows (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows | ||
Cash provided by (utilized in) operating activities | $ 265 | $ 161 |
Cash utilized in investing activities | (282) | (2,638) |
Cash provided by (utilized in) financing activities | (84) | 2,264 |
Effect of exchange rate on cash | (4) | (29) |
Net change in cash | (105) | (242) |
Cash at beginning of period | 399 | 512 |
Cash at end of period | 294 | 270 |
Issuer | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | 108 | 72 |
Cash utilized in investing activities | (66) | (2,393) |
Cash provided by (utilized in) financing activities | (42) | 2,321 |
Guarantor Subsidiaries | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | 10 | 143 |
Cash utilized in investing activities | (1) | (1) |
Cash provided by (utilized in) financing activities | (157) | |
Net change in cash | 9 | (15) |
Cash at beginning of period | 6 | 29 |
Cash at end of period | 15 | 14 |
Non-Guarantor Subsidiaries | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | 147 | (74) |
Cash utilized in investing activities | (215) | (2,525) |
Cash provided by (utilized in) financing activities | (42) | 2,401 |
Effect of exchange rate on cash | (4) | (29) |
Net change in cash | (114) | (227) |
Cash at beginning of period | 393 | 483 |
Cash at end of period | $ 279 | 256 |
Eliminations | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | 20 | |
Cash utilized in investing activities | 2,281 | |
Cash provided by (utilized in) financing activities | $ (2,301) |