Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2017shares | |
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, 2017 |
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 | 2,017 |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED RESULTS
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED RESULTS OF OPERATIONS | ||||
Net sales | $ 1,791 | $ 1,712 | $ 5,157 | $ 5,060 |
Cost of goods sold | (1,438) | (1,376) | (4,143) | (4,063) |
Gross profit | 353 | 336 | 1,014 | 997 |
Selling and administrative expense | (120) | (121) | (362) | (375) |
Research, development and engineering expense | (15) | (16) | (46) | (48) |
Interest expense, net | (63) | (66) | (204) | (199) |
Equity earnings | 22 | 15 | 55 | 44 |
Other income (expense), net | (5) | 5 | (61) | (24) |
Earnings from continuing operations before income taxes | 172 | 153 | 396 | 395 |
Provision for income taxes | (37) | (36) | (65) | (93) |
Earnings from continuing operations | 135 | 117 | 331 | 302 |
Loss from discontinued operations | (2) | (3) | (2) | (6) |
Net earnings | 133 | 114 | 329 | 296 |
Net earnings attributable to noncontrolling interests | (7) | (6) | (15) | (16) |
Net earnings attributable to the Company | 126 | 108 | 314 | 280 |
Amounts attributable to the Company: | ||||
Earnings from continuing operations | 128 | 111 | 316 | 286 |
Loss from discontinued operations | (2) | (3) | (2) | (6) |
Net earnings attributable to the Company | $ 126 | $ 108 | $ 314 | $ 280 |
CONDENSED CONSOLIDATED COMPREHE
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONSOLIDATED COMPREHENSIVE INCOME | ||||
Net earnings | $ 133 | $ 114 | $ 329 | $ 296 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 10 | (79) | 212 | (93) |
Pension and other postretirement benefit adjustments, net of tax | 10 | 21 | 25 | 5 |
Change in fair value of derivative instruments, net of tax | (1) | (10) | 5 | |
Other comprehensive income (loss) | 20 | (59) | 227 | (83) |
Total comprehensive income | 153 | 55 | 556 | 213 |
Comprehensive (income) attributable to noncontrolling interests | (8) | (4) | (8) | (6) |
Comprehensive income attributable to the Company | $ 145 | $ 51 | $ 548 | $ 207 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||||||
Cash and cash equivalents | $ 339 | $ 492 | $ 294 | |||
Trade receivables, net of allowance of $36 million, $32 million, and $32 million at September 30, 2017, December 31, 2016 and September 30, 2016 | 1,028 | 580 | 857 | |||
Inventories | 1,046 | 983 | 1,057 | |||
Prepaid expenses and other current assets | 254 | 199 | 234 | |||
Total current assets | 2,667 | 2,254 | 2,442 | |||
Property, plant and equipment, net | 3,036 | 2,880 | 2,917 | |||
Goodwill | 2,621 | 2,462 | 2,534 | |||
Intangibles, net | 473 | 464 | 490 | |||
Other assets | 1,202 | 1,075 | 1,114 | |||
Total assets | 9,999 | 9,135 | 9,497 | |||
Current liabilities: | ||||||
Short-term loans and long-term debt due within one year | 243 | 195 | 262 | |||
Accounts payable | 1,087 | 1,135 | 1,059 | |||
Other liabilities | 617 | 615 | 582 | |||
Other liabilities - discontinued operations | 115 | |||||
Total current liabilities | 2,062 | 1,945 | 1,903 | |||
Long-term debt | 5,378 | 5,133 | 5,333 | |||
Other long-term liabilities | 977 | 1,002 | 973 | |||
Share owners' equity | 1,582 | $ 1,445 | 1,055 | 1,288 | $ 1,251 | $ 1,096 |
Total liabilities and share owners' equity | $ 9,999 | $ 9,135 | $ 9,497 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
CONSOLIDATED BALANCE SHEETS | |||
Trade receivables allowance | $ 36 | $ 32 | $ 32 |
CONDENSED CONSOLIDATED CASH FLO
CONDENSED CONSOLIDATED CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net earnings | $ 329 | $ 296 |
Loss from discontinued operations | 2 | 6 |
Non-cash charges | ||
Depreciation and amortization | 372 | 372 |
Pension expense | 22 | 22 |
Restructuring, asset impairment and related charges | 48 | 19 |
Cash payments | ||
Pension contributions | (28) | (15) |
Cash paid for restructuring activities | (30) | (20) |
Change in components of working capital | (601) | (320) |
Other, net (a) | (26) | (89) |
Cash provided by continuing operating activities | 88 | 271 |
Cash utilized in discontinued operating activities | (2) | (6) |
Total cash provided by operating activities | 86 | 265 |
Cash flows from investing activities: | ||
Additions to property, plant and equipment | (292) | (310) |
Acquisitions, net of cash acquired | (37) | (45) |
Net foreign exchange derivative activity | 16 | |
Net cash proceeds related to the sale of assets | 14 | 57 |
Cash utilized in continuing investing activities | (315) | (282) |
Cash provided by discontinued investing activities | 115 | |
Total cash utilized in investing activities | (200) | (282) |
Cash flows from financing activities: | ||
Changes in borrowings, net | 23 | (31) |
Distributions to noncontrolling interests | (9) | (10) |
Distributions to parent | (54) | (40) |
Payment of finance fees | (23) | (3) |
Cash utilized in financing activities | (63) | (84) |
Effect of exchange rate fluctuations on cash | 24 | (4) |
Decrease in cash | (153) | (105) |
Cash at beginning of period | 492 | 399 |
Cash at end of period | $ 339 | $ 294 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 | |
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 net sales and 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. Intercompany sales in Latin America totaled $34 million and $97 million for the three and nine months ended September 30, 2017, respectively, and $36 million and $129 million for the three and nine months ended September 30, 2016, respectively. Financial information for the three and nine months ended September 30, 2017 and 2016 regarding the Company’s reportable segments is as follows: Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Net sales: Europe $ 624 $ 586 $ 1,813 $ 1,795 North America 551 578 1,651 1,709 Latin America 412 365 1,123 1,022 Asia Pacific 188 170 516 487 Reportable segment totals 1,775 1,699 5,103 5,013 Other 16 13 54 47 Net sales $ 1,791 $ 1,712 $ 5,157 $ 5,060 Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Segment operating profit: Europe $ 81 $ 64 $ 220 $ 192 North America 75 79 252 247 Latin America 84 74 207 194 Asia Pacific 20 20 51 48 Reportable segment totals 260 237 730 681 Items excluded from segment operating profit: Retained corporate costs and other (25) (18) (81) (75) Restructuring, asset impairment and other (49) (12) Interest expense, net (63) (66) (204) (199) Earnings from continuing operations before income taxes $ 172 $ 153 $ 396 $ 395 Financial information regarding the Company’s total assets is as follows: September 30, December 31, September 30, 2017 2016 2016 Total assets: Europe $ 3,140 $ 2,792 $ 2,972 North America 2,826 2,522 2,536 Latin America 2,772 2,537 2,629 Asia Pacific 1,046 926 1,025 Reportable segment totals 9,784 8,777 9,162 Other 215 358 335 Consolidated totals $ 9,999 $ 9,135 $ 9,497 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventories | |
Inventories | 3. Inventories Major classes of inventory at September 30, 2017, December 31, 2016 and September 30, 2016 are as follows: September 30, December 31, September 30, 2017 2016 2016 Finished goods $ 875 $ 827 $ 892 Raw materials 129 118 127 Operating supplies 42 38 38 $ 1,046 $ 983 $ 1,057 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017, December 31, 2016 and September 30, 2016 are as follows: September 30, December 31, September 30, 2017 2016 2016 Prepaid expenses $ 50 $ 50 $ 61 Value added taxes 44 46 42 Other 160 103 131 $ 254 $ 199 $ 234 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and 2016, the Company had entered into commodity forward contracts covering approximately 9,300,000 MM BTUs and 12,400,000 MM BTUs, respectively. The Company accounts for the above forward contracts as cash flow hedges at September 30, 2017 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 loss of less than $1 million at September 30, 2017, an unrecognized gain of $6 million at December 31, 2016 and an unrecognized gain of $2 million at September 30, 2016 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, 2017 and 2016 was not material. The effect of the commodity forward contracts on the results of operations for the three months ended September 30, 2017 and 2016 is as follows: Amount of Gain (Loss) Reclassified from Amount of (Loss) Recognized in OCI on Accumulated OCI into Income Commodity Forward Contracts (reported in cost of goods sold) (Effective Portion) (Effective Portion) 2017 2016 2017 2016 $ (1) $ (1) $ — $ — The effect of the commodity forward contracts on the results of operations for the nine months ended September 30, 2017 and 2016 is as follows: Amount of Gain (Loss) 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) 2017 2016 2017 2016 $ 3 $ 2 $ — $ — 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, 2017 and 2016, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $320 million and $580 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, 2017 and 2016 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 2017 2016 Other expense $ (2) $ 4 The effect of the foreign exchange derivative contracts on the results of operations for the nine months ended September 30, 2017 and 2016 is as follows: Amount of Gain Location of Gain Recognized in Income on Recognized in Income on Foreign Exchange Contracts Foreign Exchange Contracts 2017 2016 Other expense $ 4 $ 6 Hedges of Multiple Risks The Company has variable-interest rate borrowings denominated in currencies other than the functional currency of the borrowing subsidiaries. As a result, the Company is exposed to fluctuations in both the underlying variable interest rate and the currency of the borrowing against the subsidiaries’ functional currency. The Company uses derivatives to manage these exposures and designates these derivatives as cash flow hedges of both interest rate and foreign exchange risks. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges of both interest rate risk and foreign exchange risk is recorded in Accumulated OCI and is subsequently reclassified into earnings in the period for which the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings. During the second quarter of 2017, one of the Company’s Euro-functional subsidiaries entered into a cross-currency interest rate swap to manage its exposure to fluctuations in the variable interest rate and the U.S. dollar-Euro exchange rate arising from a U.S. dollar denominated borrowing. This swap involves exchanging fixed rate Euro interest payments for floating rate U.S. dollar interest receipts both of which will occur at the forward exchange rates in effect upon entering into the instrument. This instrument, which settled in the third quarter of 2017, had a pay fixed notional amount of €81 million and a receive notional amount of $90 million. Interest Rate Swaps Designated as Fair Value Hedges In the third quarter of 2017, the Company entered into a series of interest rate swap agreements with a total notional amount of €400 million that reach final maturity in 2024. The swaps were executed in order to maintain a capital structure containing appropriate amounts of fixed and floating-rate debt. The Company’s fixed-to-variable interest rate swaps were accounted for as fair value hedges. The relevant terms of the swap agreements match the corresponding terms of the notes and therefore there is no hedge ineffectiveness. The Company recorded the net of the fair market values of the swaps as a long-term liability and short-term asset along with a corresponding net decrease in the carrying value of the hedged debt. Under the swaps, the Company receives fixed rate interest amounts (equal to the interest on the corresponding hedged note) and pays interest at a six-month Euribor rate (set in arrears) plus a margin spread (see table below). The interest rate differential on each swap is recognized as an adjustment of interest expense during each six-month period over the term of the agreement. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company has determined that the majority of the inputs used to value these derivatives fall within Level 2 of the fair value hierarchy. The following selected information relates to fair value swaps at September 30, 2017: Amount Hedged Receive Rate Average Spread Senior Notes due 2024 € 400 3.125 % 2.5 % 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, (c) other accrued liabilities or other liabilities (current) if the instrument has a negative fair value and maturity within one year, and (d) other accrued liabilities or other liabilities if the instrument has a negative fair value and maturity after one year. The following table shows the amount and classification (as noted above) of the Company’s derivatives at September 30, 2017, December 31, 2016 and September 30, 2016: Fair Value Balance Sheet September 30, December 31, September 30, Location 2017 2016 2016 Asset derivatives: Derivatives designated as hedging instruments: Commodity futures contracts b $ 1 $ 6 $ 2 Interest rate swaps designated as fair value hedges a 2 Derivatives not designated as hedging instruments: Foreign exchange derivative contracts a 2 9 8 Total asset derivatives $ 5 $ 15 $ 10 Liability derivatives: Derivatives designated as hedging instruments: Commodity futures contracts c $ 1 $ — $ — Interest rate swaps designated as fair value hedges d 5 Derivatives not designated as hedging instruments: Foreign exchange derivative contracts c 3 5 2 Total liability derivatives $ 9 $ 5 $ 2 |
Restructuring Accruals
Restructuring Accruals | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring Accruals | |
Restructuring Accruals | 6. Restructuring Accruals Selected information related to the restructuring accruals for the three months ended September 30, 2017 and 2016 is as follows: Other Restructuring Actions Balance at July 1, 2017 $ 111 Net cash paid, principally severance and related benefits (14) Other, including foreign exchange translation 1 Balance at September 30, 2017 $ 98 Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at July 1, 2016 $ 6 $ 28 $ 34 Net cash paid, principally severance and related benefits (1) (2) (3) Other, including foreign exchange translation (2) Balance at September 30, 2016 $ 5 $ 24 $ 29 Selected information related to the restructuring accruals for the nine months ended September 30, 2017 and 2016 is as follows: Other Restructuring Actions Balance at January 1, 2017 $ 85 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, 2017 $ Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at January 1, 2016 $ 7 $ 36 $ 43 Charges 19 Write-down of assets to net realizable value (7) Net cash paid, principally severance and related benefits (20) Other, including foreign exchange translation (6) Balance at September 30, 2016 $ 5 $ 24 $ 29 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. When a decision is made to take these actions, the Company manages and accounts for them separately from the on-going operations of the business. Information related to major programs (as in the case of the Asia Pacific Restructuring program above) are presented separately. Minor initiatives and discrete restructuring actions are presented on a combined basis as Other Restructuring Actions. When charges related to major programs are completed, remaining accrual balances are classified within Other Restructuring Actions. 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. The Company recorded total cumulative charges of $224 million and does not expect to execute any further actions under this program. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018. Beginning in 2017, the Asia Pacific Restructuring program was considered substantially complete and the remaining accrual balance was reclassified into Other Restructuring Actions. Other Restructuring Actions During the three and nine months ended September 30, 2017, the Company recorded restructuring, asset impairment and other charges of $0 million and $48 million, respectively. For the nine months ended September 30, 2017, these charges primarily consist of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($33 million), Europe ($13 million) and North America ($2 million). Except for the charges recorded in Europe, the other discrete restructuring charges recorded in 2017 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The Company has recorded total cumulative charges of $54 million related to a plant closure in Europe and does not expect to execute any further significant actions related to this facility. The restructuring charges recorded in 2017 in the Latin American and European regions primarily relate to capacity curtailments and products produced at those facilities have, in large part, been reallocated to others in their respective regions. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018. During the three and nine months ended September 30, 2016, the Company recorded restructuring, asset impairment and other charges of $0 and $18 million, respectively. These charges were primarily related to restructuring in the Latin America region. 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. The discrete restructuring charges recorded in the first quarter of 2016 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The restructuring charges recorded in the first quarter of 2016 in the Latin American region primarily relate to a capacity curtailment. The Company reallocated the products produced at this facility to others in the region. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2017. |
Pension Benefit Plans
Pension Benefit Plans | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and 2016 are as follows: U.S. Non-U.S. 2017 2016 2017 2016 Service cost $ 4 $ 3 $ 4 $ 4 Interest cost 20 23 11 12 Expected asset return (33) (37) (18) (19) Amortization: Actuarial loss 14 16 5 5 Net periodic pension cost $ 5 $ 5 $ 2 $ 2 The components of the net periodic pension cost for the nine months ended September 30, 2017 and 2016 are as follows: U.S. Non-U.S. 2017 2016 2017 2016 Service cost $ 11 $ 11 $ 12 $ 13 Interest cost 59 72 33 38 Expected asset return (98) (113) (54) (61) Amortization: Actuarial loss 44 47 15 15 Net periodic pension cost $ 16 $ 17 $ 6 $ 5 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, 2017 | |
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, as well as the tax accruals reversed in the second quarter of 2017 due to the resolution of a previous tax matter with a foreign tax authority. The Company is currently under examination in various tax jurisdictions in which it operates, including Argentina, Bolivia, Brazil, China, Canada, Colombia, the Czech Republic, France, Germany, Indonesia, and Spain. The years under examination range from 2006 through 2015. The Company has received income tax assessments in excess of established reserves. The Company believes that adequate provisions for all income tax uncertainties have been made. However, if income tax assessments are settled against the Company at amounts in excess of established reserves, it could have a material impact to the Company’s results of operations, financial position or cash flows. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Debt | 9. Debt The following table summarizes the long-term debt of the Company: September 30, December 31, September 30, 2017 2016 2016 Secured Credit Agreement: Revolving Credit Facility: Revolving Loans $ 200 $ — $ Term Loans: Term Loan A 1,202 1,395 1,516 Term Loan A (€279 million) 308 282 303 Term Loan B 558 Senior Notes: 6.75%, due 2020 (€500 million) 586 523 557 4.875%, due 2021 (€330 million) 386 345 367 5.00%, due 2022 496 495 495 5.875%, due 2023 684 682 681 3.125%, due 2024 (€725 million at September 30, 2017 and €500 million at December 31, 2016) 840 520 6.375%, due 2025 295 294 294 5.375%, due 2025 297 297 296 Payable to OI Inc. 22 250 250 Capital Leases 54 57 62 Other 56 26 30 Total long-term debt 5,426 5,166 5,409 Less amounts due within one year 48 33 76 Long-term debt $ 5,378 $ 5,133 $ 5,333 On April 22, 2015, the Company entered into a Senior Secured Credit Facility, which subsequently has been amended several times with the most recent amendment being entered into on September 28, 2017 (the “Amended Agreement”). At September 30, 2017, 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 ($1,202 million net of debt issuance costs), and a €279 million term loan A facility ($308 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020. At September 30, 2017, the Company had unused credit of $652 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at September 30, 2017 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 covenant, a Total Leverage Ratio that requires the Company not to exceed a ratio calculated by dividing consolidated total debt, less cash and cash equivalents (“Net Indebtedness”), by consolidated EBITDA, as defined in the Amended Agreement. 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 of (i) 4.5x for the fiscal quarter ending September 30, 2017, and (ii) 4.0x for the fourth fiscal quarter ending December 31, 2017 and each fiscal quarter thereafter. On September 28, 2017, the Company entered into Amendment No. 5 (“Amendment No. 5”) to the Amended Agreement. Amendment No. 5 changes the calculation of the Total Leverage Ratio by excluding from the calculation of Net Indebtedness ordinary course revolver borrowings (except to the extent such borrowings existed at the prior year end) and non-recourse factoring or securitization debt. 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 would be unable to 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, 2017, 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. 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. 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. During November 2016, the Company issued senior notes with a face value of €500 million that bear interest at 3.125% and are due November 15, 2024 (the “Senior Notes due 2024”). The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $520 million and were used to repay the term loan B facility under the Amended Agreement. In March 2017, the Company expanded its borrowings under the Senior Notes due 2024 by issuing €225 million of additional notes that bear interest at 3.125% and are due November 15, 2024. The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used to repay a portion of the Company’s revolving credit facility. In March 2017, OI Inc. purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018. Approximately $22 million of the Senior Debentures remain outstanding as of September 30, 2017. As part of the tender offer, the Company recorded $17 million of additional interest charges for note repurchase premiums and the related write-off of unamortized finance fees in the first quarter of 2017. The Company assesses its capital raising and refinancing needs on an ongoing basis and may enter into additional credit facilities and seek to issue equity and/or debt securities in the domestic and international capital markets if market conditions are favorable. Also, depending on market conditions, the Company may elect to repurchase portions of its debt securities in the open market. 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, 2017 2016 2016 Balance (included in short-term loans) $ 170 $ 152 $ 158 Weighted average interest rate 0.65 % 0.74 % 0.67 % 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, 2017 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) $ 589 $ 118.38 $ 697 4.875%, due 2021 (€330 million) 389 113.85 443 5.00%, due 2022 500 105.80 529 5.875%, due 2023 700 110.65 775 3.125%, due 2024 (€725 million) 854 103.38 883 6.375%, due 2025 300 113.10 339 5.375%, due 2025 300 106.98 321 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017, OI Inc. has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 1,400 plaintiffs and claimants. Based on an analysis of the lawsuits pending as of December 31, 2016, approximately 88% 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 9% of plaintiffs specifically plead damages above the jurisdictional minimum up to, and including, $15 million or less, and 3% 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, 2017, has disposed of asbestos claims of approximately 399,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,500. 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 2016, 2015 and 2014 were $125 million, $138 million and $148 million, respectively. OI Inc.’s cash payments per claim disposed (inclusive of legal costs) were approximately $71,000, $95,000, and $81,000 for the years ended December 31, 2016, 2015 and 2014, 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 September 30, 2017, 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 total 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 total 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. For the years ended December 31, 2016 and 2015, OI Inc. concluded that accruals in the amount of $692 million and $817 million, respectively, were required. These amounts have not been discounted for the time value of money. OI Inc.’s comprehensive legal reviews resulted in charges of $0 million, $16 million and $46 million for the years ending December 31, 2016, 2015 and 2014, 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 $692 million as of December 31, 2016. OI Inc. estimates that reasonably possible losses could be as high as $825 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 On July 5, 2016, OI Inc. learned that the Enforcement Division of the Securities and Exchange Commission (“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, 2017 | |
Share Owners' Equity | |
Share Owners' Equity | 11. Share Owners’ Equity The activity in share owners’ equity for the three months ended September 30, 2017 and 2016 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 July 1, 2017 $ 622 $ 2,630 $ (1,916) $ 109 $ 1,445 Net distribution to parent (16) (16) Net earnings 126 7 133 Other comprehensive income 19 1 20 Balance on September 30, 2017 $ 606 $ 2,756 $ (1,897) $ 117 $ 1,582 Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on July 1, 2016 $ 728 $ 2,405 $ (1,992) $ 110 $ 1,251 Net distribution to parent (17) (17) Net earnings 108 6 114 Other comprehensive loss (57) (2) (59) Acquisitions of noncontrolling interests (1) (1) Balance on September 30, 2016 $ 710 $ 2,513 $ (2,049) $ 114 $ 1,288 l The activity in share owners’ equity for the nine months ended September 30, 2017 and 2016 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, 2017 $ 635 $ 2,442 $ (2,131) $ 109 $ 1,055 Net distribution to parent (29) (29) Net earnings 314 15 329 Other comprehensive income (loss) 234 (7) 227 Balance on September 30, 2017 $ 606 $ 2,756 $ (1,897) $ 117 $ 1,582 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 $ 731 $ 2,233 $ (1,976) $ 108 $ 1,096 Net distribution to parent (20) (20) Net earnings 280 16 296 Other comprehensive loss (73) (10) (83) Acquisitions of noncontrolling interests (1) (1) Balance on September 30, 2016 $ 710 $ 2,513 $ (2,049) $ 114 $ 1,288 l |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and 2016 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, 2017 $ (578) $ (7) $ (1,331) $ (1,916) Change before reclassifications 9 (2) 7 Amounts reclassified from accumulated other comprehensive income (a) 19 (b) 19 Translation effect (7) (7) Other comprehensive income attributable to the Company 9 — 10 19 Balance on September 30, 2017 $ (569) $ (7) $ (1,321) $ (1,897) Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on July 1, 2016 $ (574) $ (4) $ (1,414) $ (1,992) Change before reclassifications (77) (77) Amounts reclassified from accumulated other comprehensive income (1) (a) 26 (b) 25 Translation effect (5) (5) Other comprehensive income (loss) attributable to the Company (77) (1) 21 (57) Balance on September 30, 2016 $ (651) $ (5) $ (1,393) $ (2,049) (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, 2017 and 2016 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, 2017 $ (788) $ 3 $ (1,346) $ (2,131) Change before reclassifications 219 (12) 207 Amounts reclassified from accumulated other comprehensive income (10) (a) 58 (b) 48 Translation effect (21) (21) Other comprehensive income (loss) attributable to the Company 219 (10) 25 234 Balance on September 30, 2017 $ (569) $ (7) $ (1,321) $ (1,897) Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on January 1, 2016 $ (568) $ (10) $ (1,398) $ (1,976) Change before reclassifications (83) (83) Amounts reclassified from accumulated other comprehensive income 4 (a) (2) (b) 2 Translation effect 6 6 Tax effect 1 1 2 Other comprehensive income (loss) attributable to the Company (83) 5 5 (73) Balance on September 30, 2016 $ (651) $ (5) $ (1,393) $ (2,049) (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, 2017 | |
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, 2017 and 2016 included the following: Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Restructuring, asset impairment and other charges $ $ $ 49 $ 19 Gain on sale of land in China (7) Foreign currency exchange loss 3 2 3 6 Intangible amortization expense 11 10 31 30 Royalty income (4) (4) (11) (9) Other income (5) (13) (11) (15) $ 5 $ (5) $ 61 $ 24 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 2016 Interest paid in cash $ 209 $ 214 Income taxes paid in cash (all non-U.S.) 120 93 Cash interest for the nine months ended September 30, 2017 includes $16 million of note repurchase premiums related to debt that was repaid prior to its maturity. The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At September 30, 2017 and September 30, 2016, the amount of receivables sold by the Company was $145 million and $240 million, respectively. Any continuing involvement with the sold receivables is immaterial. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations | |
Discontinued Operations | 15. 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 OI European Group B.V. (“OIEG”), a subsidiary of the Company, is free to pursue the enforcement of a prior arbitration award (the “Award”) against Venezuela. As of September 30, 2017, that Award amounts to more than $500 million, including reimbursement of expenses and accrued interest. Venezuela’s application to annul the Award was heard by an ad hoc committee of the ICSID in September 2017, but no decision has been rendered yet. On July 31, 2017, OIEG sold its right, title and interest in amounts due under the Award to an Ireland-domiciled investment fund. Under the terms of the sale, OIEG received a payment, in cash, at closing equal to $115 million (the “Cash Payment”). OIEG may also receive additional payments in the future (“Deferred Amounts”) calculated based on the total compensation that is received from Venezuela as a result of collection efforts or as settlement of the Award with Venezuela. In the event that the Award is partially or completely annulled by the ICSID ad hoc annulment committee, OIEG may be required to repay to the purchaser up to the entire amount of the Cash Payment based on a formula tied to the amount of the Award (if any) that is annulled. In addition, OIEG’s right to receive any Deferred Amounts is subject to the limitations described below. OIEG’s interest in any amounts received in the future from Venezuela in respect of the Award is limited to a percentage of such recovery after taking into account reimbursement of the Cash Payment to the purchaser and reimbursement of legal fees and expenses incurred by the Company and the purchaser. OIEG’s percentage of such recovery will also be reduced over time. Because the Award has yet to be satisfied, the annulment proceeding is pending, and the ability to successfully enforce the Award in countries that are party to the ICSID Convention is subject to significant challenges, the Company is unable to reasonably predict the amount of recoveries from the Award, if any, to which the Company may be entitled in the future. Any future amounts that the Company may receive from the Award are highly speculative and the timing of any such future payments, if any, is highly uncertain. As such, there can be no assurance that the Company will receive any future payments under the Award beyond the Cash Payment. Except as noted above in connection with the annulment proceeding that is pending before the ICSID ad hoc committee, the Cash Payment is not subject to any forfeiture or future adjustment. A separate arbitration involving other subsidiaries of the Company is pending before ICSID to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants. As of September 30, 2017, the Company deferred the gain contingency on the sale of its rights in amounts due under the Award pending the ad hoc committee of the ICSID rendering its decision regarding Venezuela’s application to annul the Award. The loss from discontinued operations of $2 million and $6 million for the nine months ended September 30, 2017 and September 30, 2016, respectively, relates to ongoing costs for the Venezuelan expropriation. |
New Accounting Pronouncement
New Accounting Pronouncement | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncement | |
New Accounting Pronouncement | 16. 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 has started an implementation process, including a review of customer contracts, to evaluate the effect this standard will have on its consolidated financial statements and related disclosures. At this time, the Company does not expect that the implementation of this standard in 2018 will have a significant impact on the timing in which it recognizes revenue. While the Company continues to assess the potential impacts of the new standard, the Company does not currently expect the adoption of the new standard to have a material impact on consolidated net income or the consolidated balance sheet. The standard requires new substantial disclosures and the Company continues to evaluate these requirements. The Company plans to select the modified retrospective transition method upon adoption effective January 1, 2018. Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases”. Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee's obligation to make lease payments arising from a lease, and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for the Company on January 1, 2019. ASU No. 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU No. 2016-02 will have on the Company’s consolidated financial statements, and anticipates the new guidance will significantly impact its consolidated financial statements as the Company has a significant number of leases. As further described in Note 16 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company had minimum lease commitments under non-cancellable operating leases totaling $205 million as of December 31, 2016. Compensation – Retirement Benefits - In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which requires the service cost component to be presented with other employee compensation costs in operating income within the income statement while the other components will be reported separately outside of operations. Application of the standard is required for annual periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements. Derivatives and Hedging – In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging Activities” which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. Application of the standard is required for annual periods beginning after December 15, 2018. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements. |
Financial Information for Subsi
Financial Information for Subsidiary Guarantors and Non-Guarantors | 9 Months Ended |
Sep. 30, 2017 | |
Financial Information for Subsidiary Guarantors and Non-Guarantors | |
Financial Information for Subsidiary Guarantors and Non-Guarantors | 17. 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, 2017 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ 66 $ 273 $ — $ 339 Trade receivables, net 126 21 881 1,028 Inventories 194 27 825 1,046 Prepaid expenses and other current assets 19 15 220 254 Total current assets — 339 129 2,199 — 2,667 Investments in and advances to subsidiaries 1,487 3,006 1,248 (5,741) — Property, plant and equipment, net 717 4 2,315 3,036 Goodwill 582 332 1,707 2,621 Intangibles, net 473 473 Other assets 107 225 871 (1) 1,202 Total assets $ 1,487 $ 4,751 $ 1,938 $ 7,565 $ (5,742) $ 9,999 Current liabilities: Short-term loans and long-term debt due within one year $ 22 $ 1 $ $ 220 $ — $ 243 Accounts payable 172 18 897 1,087 Other liabilities 106 57 454 617 Other liabilities - discontinued operations 115 Total current liabilities 22 279 75 1,686 — 2,062 Long-term debt 2,981 2,397 5,378 Other long-term liabilities 4 376 597 977 Investments by and advances from parent 1,487 1,487 2,768 (5,742) — Total share owner's equity of the Company 1,465 1,465 Noncontrolling interests 117 117 Total liabilities and share owners’ equity $ 1,487 $ 4,751 $ 1,938 $ 7,565 $ (5,742) $ 9,999 December 31, 2016 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ 33 $ 459 $ — $ 492 Trade receivables, net 64 14 502 580 Inventories 202 27 754 983 Prepaid expenses and other current assets 27 16 156 199 Total current assets — 293 90 1,871 — 2,254 Investments in and advances to subsidiaries 1,196 2,980 1,028 (5,204) — Property, plant and equipment, net 721 6 2,153 2,880 Goodwill 582 332 1,548 2,462 Intangibles, net 464 464 Other assets 111 237 727 1,075 Total assets $ 1,196 $ 4,687 $ 1,693 $ 6,763 $ (5,204) $ 9,135 Current liabilities: Short-term loans and long-term debt due within one year $ $ 12 $ $ 183 $ $ 195 Accounts payable 177 22 936 1,135 Other liabilities 129 68 418 615 Total current liabilities — 318 90 1,537 — 1,945 Long-term debt 250 3,163 1,720 5,133 Other long-term liabilities 11 408 583 1,002 Investments by and advances from parent 1,195 1,195 2,814 (5,204) — Total share owner's equity of the Company 946 946 Noncontrolling interests 109 109 Total liabilities and share owners’ equity $ 1,196 $ 4,687 $ 1,693 $ 6,763 $ (5,204) $ 9,135 September 30, 2016 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ $ 15 $ 279 $ — $ 294 Trade receivables, net 86 21 750 857 Inventories 198 30 829 1,057 Prepaid expenses and other current assets 22 10 202 234 Total current assets — 306 76 2,060 — 2,442 Investments in and advances to subsidiaries 1,424 4,295 1,250 (6,969) — Property, plant and equipment, net 698 5 2,214 2,917 Goodwill 582 331 1,621 2,534 Intangibles, net 490 490 Other assets 123 243 748 1,114 Total assets $ 1,424 $ 6,004 $ 1,905 $ 7,133 $ (6,969) $ 9,497 Current liabilities: Short-term loans and long-term debt due within one year $ — $ 55 $ — 207 $ — $ 262 Accounts payable 179 18 862 1,059 Other liabilities 111 52 419 582 Total current liabilities — 345 70 1,488 — 1,903 Long-term debt 250 3,799 1,284 5,333 Other long-term liabilities 8 412 553 973 Investments by and advances from parent 1,852 1,423 3,694 (6,969) — Total share owner's equity of the Company 1,174 1,174 Noncontrolling interests 114 114 Total liabilities and share owners’ equity $ 1,424 $ 6,004 $ 1,905 $ 7,133 $ (6,969) $ 9,497 Three months ended September 30, 2017 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 485 $ 64 $ 1,282 $ (40) $ 1,791 Cost of goods sold (412) (49) (1,017) 40 (1,438) Gross profit — 73 15 265 — 353 Research, engineering, selling, administrative and other (26) (24) (84) (1) (135) Net intercompany interest 1 (1) — — Interest expense, net (1) (37) (1) (24) (63) Equity earnings from subsidiaries 171 122 (293) — Other equity earnings 3 19 22 Other expense, net 43 (4) (44) (5) Earnings from continuing operations before income taxes 171 177 (14) 132 (294) 172 Provision for income taxes (1) — (35) (1) (37) Earnings from continuing operations 171 176 (14) 97 (295) 135 Loss from discontinued operations (2) (2) Net earnings 171 176 (14) 95 (295) 133 Net earnings attributable to noncontrolling interests (7) (7) Net earnings (loss) attributable to the Company $ 171 $ 176 $ (14) $ 88 $ (295) $ 126 Three months ended September 30, 2017 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 171 $ 176 $ (14) $ 95 $ (295) $ 133 Other comprehensive income 20 9 (9) 20 Total comprehensive income (loss) 191 176 (14) 104 (304) 153 Comprehensive income attributable to noncontrolling interests (8) (8) Comprehensive income (loss) attributable to the Company $ 191 $ 176 $ (14) $ 96 $ (304) $ 145 Three months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 498 $ 73 $ 1,181 $ (40) $ 1,712 Cost of goods sold (414) (58) (943) 39 (1,376) Gross profit — 84 15 238 (1) 336 Research, engineering, selling, administrative and other (29) (20) (88) (137) Net intercompany interest 5 (4) (1) — Interest expense, net (5) (44) (17) (66) Equity earnings from subsidiaries 108 88 (196) — Other equity earnings 3 12 15 Other expense, net 38 (4) (29) 5 Earnings (loss) from continuing operations before income taxes 108 136 (9) 115 (197) 153 Provision for income taxes — (36) (36) Earnings (loss) from continuing operations 108 136 (9) 79 (197) 117 Loss from discontinued operations (3) (3) Net earnings (loss) 108 136 (9) 76 (197) 114 Net earnings attributable to noncontrolling interests (6) (6) Net earnings (loss) attributable to the Company $ 108 $ 136 $ (9) $ 70 $ (197) $ 108 Three months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 108 $ 136 $ (9) $ 76 $ (197) $ 114 Other comprehensive income (loss) (59) (1) (79) 80 (59) Total comprehensive income (loss) 49 135 (9) (3) (117) 55 Comprehensive income attributable to noncontrolling interests (4) (4) Comprehensive income (loss) attributable to the Company $ 49 $ 135 $ (9) $ (7) $ (117) $ 51 Nine months ended September 30, 2017 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 1,446 $ 199 $ 3,626 $ (114) $ 5,157 Cost of goods sold (1,204) (147) (2,906) 114 (4,143) Gross profit — 242 52 720 — 1,014 Research, engineering, selling, administrative and other (83) (78) (247) (408) Net intercompany interest 22 (23) 1 — Interest expense, net (22) (114) (1) (67) (204) Equity earnings from subsidiaries 314 276 (590) — Other equity earnings 10 45 55 Other expense, net 110 (5) (166) (61) Earnings (loss) from continuing operations before income taxes 314 418 (32) 286 (590) 396 Provision for income taxes (5) (2) (58) (65) Earnings (loss) from continuing operations 314 413 (34) 228 (590) 331 Loss from discontinued operations (2) (2) Net earnings (loss) 314 413 (34) 226 (590) 329 Net earnings attributable to noncontrolling interests (15) (15) Net earnings (loss) attributable to the Company $ 314 $ 413 $ (34) $ 211 $ (590) $ 314 Nine months ended September 30, 2017 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 314 $ 413 $ (34) $ 226 $ (590) $ 329 Other comprehensive income (loss) 227 (7) 186 (179) 227 Total comprehensive income (loss) 541 406 (34) 412 (769) 556 Comprehensive income attributable to noncontrolling interests (8) (8) Comprehensive income (loss) attributable to the Company $ 541 $ 406 $ (34) $ 404 $ (769) $ 548 Nine months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 1,469 $ 217 $ 3,509 $ (135) $ 5,060 Cost of goods sold (1,215) (172) (2,811) 135 (4,063) Gross profit — 254 45 698 — 997 Research, engineering, selling, administrative and other (89) (76) (258) (423) Net intercompany interest 15 (15) — Interest expense, net (15) (133) (51) (199) Equity earnings from subsidiaries 280 255 (535) — Other equity earnings 8 36 44 Other expense, net 98 (13) (109) (24) Earnings (loss) from continuing operations before income taxes 280 378 (44) 316 (535) 395 Provision for income taxes (4) (89) (93) Earnings (loss) from continuing operations 280 374 (44) 227 (535) 302 Loss from discontinued operations (6) (6) Net earnings (loss) 280 374 (44) 221 (535) 296 Net earnings attributable to noncontrolling interests (16) (16) Net earnings (loss) attributable to the Company $ 280 $ 374 $ (44) $ 205 $ (535) $ 280 Nine months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 280 $ 374 $ (44) $ 221 $ (535) $ 296 Other comprehensive income (loss) (83) 4 (70) 66 (83) Total comprehensive income (loss) 197 378 (44) 151 (469) 213 Comprehensive income attributable to noncontrolling interests (6) (6) Comprehensive income (loss) attributable to the Company $ 197 $ 378 $ (44) $ 145 $ (469) $ 207 Nine months ended September 30, 2017 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — 282 $ 35 $ (231) $ — $ 86 Cash utilized in investing activities (82) (118) (200) Cash utilized in (provided) by financing activities (200) 137 (63) Effect of exchange rate change on cash 24 24 Net change in cash — — 35 (188) — (153) Cash at beginning of period 33 459 492 Cash at end of period $ — $ — $ 68 $ 271 $ — $ 339 Nine months ended September 30, 2016 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — 108 $ 10 $ 147 $ $ 265 Cash utilized in investing activities (66) (1) (215) (282) Cash provided by (utilized in) financing activities (42) (42) (84) — Effect of exchange rate change on cash (4) (4) Net change in cash — — 9 (114) — (105) Cash at beginning of period 6 393 399 Cash at end of period $ — $ — $ 15 $ 279 $ — $ 294 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information | |
Net sales for the Company's reportable segments | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Net sales: Europe $ 624 $ 586 $ 1,813 $ 1,795 North America 551 578 1,651 1,709 Latin America 412 365 1,123 1,022 Asia Pacific 188 170 516 487 Reportable segment totals 1,775 1,699 5,103 5,013 Other 16 13 54 47 Net sales $ 1,791 $ 1,712 $ 5,157 $ 5,060 |
Segment operating profit (loss) for the Company's reportable segments | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Segment operating profit: Europe $ 81 $ 64 $ 220 $ 192 North America 75 79 252 247 Latin America 84 74 207 194 Asia Pacific 20 20 51 48 Reportable segment totals 260 237 730 681 Items excluded from segment operating profit: Retained corporate costs and other (25) (18) (81) (75) Restructuring, asset impairment and other (49) (12) Interest expense, net (63) (66) (204) (199) Earnings from continuing operations before income taxes $ 172 $ 153 $ 396 $ 395 |
Total assets for the Company's reportable segments | September 30, December 31, September 30, 2017 2016 2016 Total assets: Europe $ 3,140 $ 2,792 $ 2,972 North America 2,826 2,522 2,536 Latin America 2,772 2,537 2,629 Asia Pacific 1,046 926 1,025 Reportable segment totals 9,784 8,777 9,162 Other 215 358 335 Consolidated totals $ 9,999 $ 9,135 $ 9,497 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventories | |
Major classes of inventory | September 30, December 31, September 30, 2017 2016 2016 Finished goods $ 875 $ 827 $ 892 Raw materials 129 118 127 Operating supplies 42 38 38 $ 1,046 $ 983 $ 1,057 |
Prepaid Expenses and Other Cu26
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | September 30, December 31, September 30, 2017 2016 2016 Prepaid expenses $ 50 $ 50 $ 61 Value added taxes 44 46 42 Other 160 103 131 $ 254 $ 199 $ 234 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments | |
Effect of commodity forward 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, 2017 and 2016 is as follows: Amount of Gain (Loss) Reclassified from Amount of (Loss) Recognized in OCI on Accumulated OCI into Income Commodity Forward Contracts (reported in cost of goods sold) (Effective Portion) (Effective Portion) 2017 2016 2017 2016 $ (1) $ (1) $ — $ — The effect of the commodity forward contracts on the results of operations for the nine months ended September 30, 2017 and 2016 is as follows: Amount of Gain (Loss) 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) 2017 2016 2017 2016 $ 3 $ 2 $ — $ — |
Effect of the foreign 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, 2017 and 2016 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 2017 2016 Other expense $ (2) $ 4 The effect of the foreign exchange derivative contracts on the results of operations for the nine months ended September 30, 2017 and 2016 is as follows: Amount of Gain Location of Gain Recognized in Income on Recognized in Income on Foreign Exchange Contracts Foreign Exchange Contracts 2017 2016 Other expense $ 4 $ 6 |
Schedule of selected information relating to fair value swaps | Amount Hedged Receive Rate Average Spread Senior Notes due 2024 € 400 3.125 % 2.5 % |
Balance Sheet Classification of derivative instruments | Fair Value Balance Sheet September 30, December 31, September 30, Location 2017 2016 2016 Asset derivatives: Derivatives designated as hedging instruments: Commodity futures contracts b $ 1 $ 6 $ 2 Interest rate swaps designated as fair value hedges a 2 Derivatives not designated as hedging instruments: Foreign exchange derivative contracts a 2 9 8 Total asset derivatives $ 5 $ 15 $ 10 Liability derivatives: Derivatives designated as hedging instruments: Commodity futures contracts c $ 1 $ — $ — Interest rate swaps designated as fair value hedges d 5 Derivatives not designated as hedging instruments: Foreign exchange derivative contracts c 3 5 2 Total liability derivatives $ 9 $ 5 $ 2 |
Restructuring Accruals (Tables)
Restructuring Accruals (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring Accruals | |
Selected information related to the restructuring accruals | Selected information related to the restructuring accruals for the three months ended September 30, 2017 and 2016 is as follows: Other Restructuring Actions Balance at July 1, 2017 $ 111 Net cash paid, principally severance and related benefits (14) Other, including foreign exchange translation 1 Balance at September 30, 2017 $ 98 Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at July 1, 2016 $ 6 $ 28 $ 34 Net cash paid, principally severance and related benefits (1) (2) (3) Other, including foreign exchange translation (2) Balance at September 30, 2016 $ 5 $ 24 $ 29 Selected information related to the restructuring accruals for the nine months ended September 30, 2017 and 2016 is as follows: Other Restructuring Actions Balance at January 1, 2017 $ 85 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, 2017 $ Other Asia Pacific Restructuring Total Restructuring Actions Restructuring Balance at January 1, 2016 $ 7 $ 36 $ 43 Charges 19 Write-down of assets to net realizable value (7) Net cash paid, principally severance and related benefits (20) Other, including foreign exchange translation (6) Balance at September 30, 2016 $ 5 $ 24 $ 29 |
Pension Benefit Plans (Tables)
Pension Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Pension Benefit Plans | |
Components of net periodic pension cost | The components of the net periodic pension cost for the three months ended September 30, 2017 and 2016 are as follows: U.S. Non-U.S. 2017 2016 2017 2016 Service cost $ 4 $ 3 $ 4 $ 4 Interest cost 20 23 11 12 Expected asset return (33) (37) (18) (19) Amortization: Actuarial loss 14 16 5 5 Net periodic pension cost $ 5 $ 5 $ 2 $ 2 The components of the net periodic pension cost for the nine months ended September 30, 2017 and 2016 are as follows: U.S. Non-U.S. 2017 2016 2017 2016 Service cost $ 11 $ 11 $ 12 $ 13 Interest cost 59 72 33 38 Expected asset return (98) (113) (54) (61) Amortization: Actuarial loss 44 47 15 15 Net periodic pension cost $ 16 $ 17 $ 6 $ 5 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Long-term debt | September 30, December 31, September 30, 2017 2016 2016 Secured Credit Agreement: Revolving Credit Facility: Revolving Loans $ 200 $ — $ Term Loans: Term Loan A 1,202 1,395 1,516 Term Loan A (€279 million) 308 282 303 Term Loan B 558 Senior Notes: 6.75%, due 2020 (€500 million) 586 523 557 4.875%, due 2021 (€330 million) 386 345 367 5.00%, due 2022 496 495 495 5.875%, due 2023 684 682 681 3.125%, due 2024 (€725 million at September 30, 2017 and €500 million at December 31, 2016) 840 520 6.375%, due 2025 295 294 294 5.375%, due 2025 297 297 296 Payable to OI Inc. 22 250 250 Capital Leases 54 57 62 Other 56 26 30 Total long-term debt 5,426 5,166 5,409 Less amounts due within one year 48 33 76 Long-term debt $ 5,378 $ 5,133 $ 5,333 |
Information related to accounts receivable securitization program | September 30, December 31, September 30, 2017 2016 2016 Balance (included in short-term loans) $ 170 $ 152 $ 158 Weighted average interest rate 0.65 % 0.74 % 0.67 % |
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) $ 589 $ 118.38 $ 697 4.875%, due 2021 (€330 million) 389 113.85 443 5.00%, due 2022 500 105.80 529 5.875%, due 2023 700 110.65 775 3.125%, due 2024 (€725 million) 854 103.38 883 6.375%, due 2025 300 113.10 339 5.375%, due 2025 300 106.98 321 |
Share Owners' Equity (Tables)
Share Owners' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Share Owners' Equity | |
Activity in share owners' equity | Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on July 1, 2017 $ 622 $ 2,630 $ (1,916) $ 109 $ 1,445 Net distribution to parent (16) (16) Net earnings 126 7 133 Other comprehensive income 19 1 20 Balance on September 30, 2017 $ 606 $ 2,756 $ (1,897) $ 117 $ 1,582 Share Owners’ Equity of the Company Accumulated Other Other Non- Total Share Contributed Retained Comprehensive controlling Owners' Capital Earnings Loss Interests Equity Balance on July 1, 2016 $ 728 $ 2,405 $ (1,992) $ 110 $ 1,251 Net distribution to parent (17) (17) Net earnings 108 6 114 Other comprehensive loss (57) (2) (59) Acquisitions of noncontrolling interests (1) (1) Balance on September 30, 2016 $ 710 $ 2,513 $ (2,049) $ 114 $ 1,288 l The activity in share owners’ equity for the nine months ended September 30, 2017 and 2016 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, 2017 $ 635 $ 2,442 $ (2,131) $ 109 $ 1,055 Net distribution to parent (29) (29) Net earnings 314 15 329 Other comprehensive income (loss) 234 (7) 227 Balance on September 30, 2017 $ 606 $ 2,756 $ (1,897) $ 117 $ 1,582 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 $ 731 $ 2,233 $ (1,976) $ 108 $ 1,096 Net distribution to parent (20) (20) Net earnings 280 16 296 Other comprehensive loss (73) (10) (83) Acquisitions of noncontrolling interests (1) (1) Balance on September 30, 2016 $ 710 $ 2,513 $ (2,049) $ 114 $ 1,288 |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accumulated Other Comprehensive Loss | |
Schedule of activity in accumulated other comprehensive loss | The activity in accumulated other comprehensive loss for the three months ended September 30, 2017 and 2016 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, 2017 $ (578) $ (7) $ (1,331) $ (1,916) Change before reclassifications 9 (2) 7 Amounts reclassified from accumulated other comprehensive income (a) 19 (b) 19 Translation effect (7) (7) Other comprehensive income attributable to the Company 9 — 10 19 Balance on September 30, 2017 $ (569) $ (7) $ (1,321) $ (1,897) Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on July 1, 2016 $ (574) $ (4) $ (1,414) $ (1,992) Change before reclassifications (77) (77) Amounts reclassified from accumulated other comprehensive income (1) (a) 26 (b) 25 Translation effect (5) (5) Other comprehensive income (loss) attributable to the Company (77) (1) 21 (57) Balance on September 30, 2016 $ (651) $ (5) $ (1,393) $ (2,049) (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, 2017 and 2016 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, 2017 $ (788) $ 3 $ (1,346) $ (2,131) Change before reclassifications 219 (12) 207 Amounts reclassified from accumulated other comprehensive income (10) (a) 58 (b) 48 Translation effect (21) (21) Other comprehensive income (loss) attributable to the Company 219 (10) 25 234 Balance on September 30, 2017 $ (569) $ (7) $ (1,321) $ (1,897) Total Accumulated Net Effect of Change in Certain Other Exchange Rate Derivative Employee Comprehensive Fluctuations Instruments Benefit Plans Loss Balance on January 1, 2016 $ (568) $ (10) $ (1,398) $ (1,976) Change before reclassifications (83) (83) Amounts reclassified from accumulated other comprehensive income 4 (a) (2) (b) 2 Translation effect 6 6 Tax effect 1 1 2 Other comprehensive income (loss) attributable to the Company (83) 5 5 (73) Balance on September 30, 2016 $ (651) $ (5) $ (1,393) $ (2,049) (a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 5 for additional information). 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 (Ta
Other Expense (Income), net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Expense (Income), net | |
Schedule of other expense (income), net | Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Restructuring, asset impairment and other charges $ $ $ 49 $ 19 Gain on sale of land in China (7) Foreign currency exchange loss 3 2 3 6 Intangible amortization expense 11 10 31 30 Royalty income (4) (4) (11) (9) Other income (5) (13) (11) (15) $ 5 $ (5) $ 61 $ 24 |
Supplemental Cash Flow Inform34
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | Nine months ended September 30, 2017 2016 Interest paid in cash $ 209 $ 214 Income taxes paid in cash (all non-U.S.) 120 93 |
Financial Information for Sub35
Financial Information for Subsidiary Guarantors and Non-Guarantors (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Financial Information for Subsidiary Guarantors and Non-Guarantors | |
Balance Sheet | September 30, 2017 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ 66 $ 273 $ — $ 339 Trade receivables, net 126 21 881 1,028 Inventories 194 27 825 1,046 Prepaid expenses and other current assets 19 15 220 254 Total current assets — 339 129 2,199 — 2,667 Investments in and advances to subsidiaries 1,487 3,006 1,248 (5,741) — Property, plant and equipment, net 717 4 2,315 3,036 Goodwill 582 332 1,707 2,621 Intangibles, net 473 473 Other assets 107 225 871 (1) 1,202 Total assets $ 1,487 $ 4,751 $ 1,938 $ 7,565 $ (5,742) $ 9,999 Current liabilities: Short-term loans and long-term debt due within one year $ 22 $ 1 $ $ 220 $ — $ 243 Accounts payable 172 18 897 1,087 Other liabilities 106 57 454 617 Other liabilities - discontinued operations 115 Total current liabilities 22 279 75 1,686 — 2,062 Long-term debt 2,981 2,397 5,378 Other long-term liabilities 4 376 597 977 Investments by and advances from parent 1,487 1,487 2,768 (5,742) — Total share owner's equity of the Company 1,465 1,465 Noncontrolling interests 117 117 Total liabilities and share owners’ equity $ 1,487 $ 4,751 $ 1,938 $ 7,565 $ (5,742) $ 9,999 December 31, 2016 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ — $ 33 $ 459 $ — $ 492 Trade receivables, net 64 14 502 580 Inventories 202 27 754 983 Prepaid expenses and other current assets 27 16 156 199 Total current assets — 293 90 1,871 — 2,254 Investments in and advances to subsidiaries 1,196 2,980 1,028 (5,204) — Property, plant and equipment, net 721 6 2,153 2,880 Goodwill 582 332 1,548 2,462 Intangibles, net 464 464 Other assets 111 237 727 1,075 Total assets $ 1,196 $ 4,687 $ 1,693 $ 6,763 $ (5,204) $ 9,135 Current liabilities: Short-term loans and long-term debt due within one year $ $ 12 $ $ 183 $ $ 195 Accounts payable 177 22 936 1,135 Other liabilities 129 68 418 615 Total current liabilities — 318 90 1,537 — 1,945 Long-term debt 250 3,163 1,720 5,133 Other long-term liabilities 11 408 583 1,002 Investments by and advances from parent 1,195 1,195 2,814 (5,204) — Total share owner's equity of the Company 946 946 Noncontrolling interests 109 109 Total liabilities and share owners’ equity $ 1,196 $ 4,687 $ 1,693 $ 6,763 $ (5,204) $ 9,135 September 30, 2016 Non- Guarantor Guarantor Balance Sheet Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Current assets: Cash and cash equivalents $ — $ $ 15 $ 279 $ — $ 294 Trade receivables, net 86 21 750 857 Inventories 198 30 829 1,057 Prepaid expenses and other current assets 22 10 202 234 Total current assets — 306 76 2,060 — 2,442 Investments in and advances to subsidiaries 1,424 4,295 1,250 (6,969) — Property, plant and equipment, net 698 5 2,214 2,917 Goodwill 582 331 1,621 2,534 Intangibles, net 490 490 Other assets 123 243 748 1,114 Total assets $ 1,424 $ 6,004 $ 1,905 $ 7,133 $ (6,969) $ 9,497 Current liabilities: Short-term loans and long-term debt due within one year $ — $ 55 $ — 207 $ — $ 262 Accounts payable 179 18 862 1,059 Other liabilities 111 52 419 582 Total current liabilities — 345 70 1,488 — 1,903 Long-term debt 250 3,799 1,284 5,333 Other long-term liabilities 8 412 553 973 Investments by and advances from parent 1,852 1,423 3,694 (6,969) — Total share owner's equity of the Company 1,174 1,174 Noncontrolling interests 114 114 Total liabilities and share owners’ equity $ 1,424 $ 6,004 $ 1,905 $ 7,133 $ (6,969) $ 9,497 |
Results of Operations | Three months ended September 30, 2017 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 485 $ 64 $ 1,282 $ (40) $ 1,791 Cost of goods sold (412) (49) (1,017) 40 (1,438) Gross profit — 73 15 265 — 353 Research, engineering, selling, administrative and other (26) (24) (84) (1) (135) Net intercompany interest 1 (1) — — Interest expense, net (1) (37) (1) (24) (63) Equity earnings from subsidiaries 171 122 (293) — Other equity earnings 3 19 22 Other expense, net 43 (4) (44) (5) Earnings from continuing operations before income taxes 171 177 (14) 132 (294) 172 Provision for income taxes (1) — (35) (1) (37) Earnings from continuing operations 171 176 (14) 97 (295) 135 Loss from discontinued operations (2) (2) Net earnings 171 176 (14) 95 (295) 133 Net earnings attributable to noncontrolling interests (7) (7) Net earnings (loss) attributable to the Company $ 171 $ 176 $ (14) $ 88 $ (295) $ 126 Three months ended September 30, 2017 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 171 $ 176 $ (14) $ 95 $ (295) $ 133 Other comprehensive income 20 9 (9) 20 Total comprehensive income (loss) 191 176 (14) 104 (304) 153 Comprehensive income attributable to noncontrolling interests (8) (8) Comprehensive income (loss) attributable to the Company $ 191 $ 176 $ (14) $ 96 $ (304) $ 145 Three months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 498 $ 73 $ 1,181 $ (40) $ 1,712 Cost of goods sold (414) (58) (943) 39 (1,376) Gross profit — 84 15 238 (1) 336 Research, engineering, selling, administrative and other (29) (20) (88) (137) Net intercompany interest 5 (4) (1) — Interest expense, net (5) (44) (17) (66) Equity earnings from subsidiaries 108 88 (196) — Other equity earnings 3 12 15 Other expense, net 38 (4) (29) 5 Earnings (loss) from continuing operations before income taxes 108 136 (9) 115 (197) 153 Provision for income taxes — (36) (36) Earnings (loss) from continuing operations 108 136 (9) 79 (197) 117 Loss from discontinued operations (3) (3) Net earnings (loss) 108 136 (9) 76 (197) 114 Net earnings attributable to noncontrolling interests (6) (6) Net earnings (loss) attributable to the Company $ 108 $ 136 $ (9) $ 70 $ (197) $ 108 Three months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 108 $ 136 $ (9) $ 76 $ (197) $ 114 Other comprehensive income (loss) (59) (1) (79) 80 (59) Total comprehensive income (loss) 49 135 (9) (3) (117) 55 Comprehensive income attributable to noncontrolling interests (4) (4) Comprehensive income (loss) attributable to the Company $ 49 $ 135 $ (9) $ (7) $ (117) $ 51 Nine months ended September 30, 2017 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 1,446 $ 199 $ 3,626 $ (114) $ 5,157 Cost of goods sold (1,204) (147) (2,906) 114 (4,143) Gross profit — 242 52 720 — 1,014 Research, engineering, selling, administrative and other (83) (78) (247) (408) Net intercompany interest 22 (23) 1 — Interest expense, net (22) (114) (1) (67) (204) Equity earnings from subsidiaries 314 276 (590) — Other equity earnings 10 45 55 Other expense, net 110 (5) (166) (61) Earnings (loss) from continuing operations before income taxes 314 418 (32) 286 (590) 396 Provision for income taxes (5) (2) (58) (65) Earnings (loss) from continuing operations 314 413 (34) 228 (590) 331 Loss from discontinued operations (2) (2) Net earnings (loss) 314 413 (34) 226 (590) 329 Net earnings attributable to noncontrolling interests (15) (15) Net earnings (loss) attributable to the Company $ 314 $ 413 $ (34) $ 211 $ (590) $ 314 Nine months ended September 30, 2017 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 314 $ 413 $ (34) $ 226 $ (590) $ 329 Other comprehensive income (loss) 227 (7) 186 (179) 227 Total comprehensive income (loss) 541 406 (34) 412 (769) 556 Comprehensive income attributable to noncontrolling interests (8) (8) Comprehensive income (loss) attributable to the Company $ 541 $ 406 $ (34) $ 404 $ (769) $ 548 Nine months ended September 30, 2016 Non- Guarantor Guarantor Results of Operations Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 1,469 $ 217 $ 3,509 $ (135) $ 5,060 Cost of goods sold (1,215) (172) (2,811) 135 (4,063) Gross profit — 254 45 698 — 997 Research, engineering, selling, administrative and other (89) (76) (258) (423) Net intercompany interest 15 (15) — Interest expense, net (15) (133) (51) (199) Equity earnings from subsidiaries 280 255 (535) — Other equity earnings 8 36 44 Other expense, net 98 (13) (109) (24) Earnings (loss) from continuing operations before income taxes 280 378 (44) 316 (535) 395 Provision for income taxes (4) (89) (93) Earnings (loss) from continuing operations 280 374 (44) 227 (535) 302 Loss from discontinued operations (6) (6) Net earnings (loss) 280 374 (44) 221 (535) 296 Net earnings attributable to noncontrolling interests (16) (16) Net earnings (loss) attributable to the Company $ 280 $ 374 $ (44) $ 205 $ (535) $ 280 Nine months ended September 30, 2016 Non- Guarantor Guarantor Comprehensive Income Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Net earnings (loss) $ 280 $ 374 $ (44) $ 221 $ (535) $ 296 Other comprehensive income (loss) (83) 4 (70) 66 (83) Total comprehensive income (loss) 197 378 (44) 151 (469) 213 Comprehensive income attributable to noncontrolling interests (6) (6) Comprehensive income (loss) attributable to the Company $ 197 $ 378 $ (44) $ 145 $ (469) $ 207 |
Cash Flows | Nine months ended September 30, 2017 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — 282 $ 35 $ (231) $ — $ 86 Cash utilized in investing activities (82) (118) (200) Cash utilized in (provided) by financing activities (200) 137 (63) Effect of exchange rate change on cash 24 24 Net change in cash — — 35 (188) — (153) Cash at beginning of period 33 459 492 Cash at end of period $ — $ — $ 68 $ 271 $ — $ 339 Nine months ended September 30, 2016 Non- Guarantor Guarantor Cash Flows Parent Issuer Subsidiaries Subsidiaries Eliminations Consolidated Cash provided by (utilized in) operating activities $ — 108 $ 10 $ 147 $ $ 265 Cash utilized in investing activities (66) (1) (215) (282) Cash provided by (utilized in) financing activities (42) (42) (84) — Effect of exchange rate change on cash (4) (4) Net change in cash — — 9 (114) — (105) Cash at beginning of period 6 393 399 Cash at end of period $ — $ — $ 15 $ 279 $ — $ 294 |
Basis of Presentation (Details)
Basis of Presentation (Details) | Sep. 30, 2017 |
Basis of Presentation | |
Owens-Illinois, Inc.'s ownership percentage in the Company | 100.00% |
Segment Information - Reportabl
Segment Information - Reportable Segments (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | |
Segment Reporting Information | ||||
Number of reportable segments | item | 4 | |||
Net sales: | ||||
Net sales | $ 1,791 | $ 1,712 | $ 5,157 | $ 5,060 |
Items excluded from segment operating profit: | ||||
Retained corporate costs and other | (25) | (18) | (81) | (75) |
Restructuring, asset impairment and other | (49) | (12) | ||
Interest expense, net | ||||
Interest expense, net | (63) | (66) | (204) | (199) |
Earnings from continuing operations before income taxes | ||||
Earnings from continuing operations before income taxes | 172 | 153 | 396 | 395 |
Reportable Segment Totals | ||||
Net sales: | ||||
Net sales | 1,775 | 1,699 | 5,103 | 5,013 |
Segment Operating Profit: | ||||
Segment operating profit | 260 | 237 | 730 | 681 |
Europe | ||||
Net sales: | ||||
Net sales | 624 | 586 | 1,813 | 1,795 |
Segment Operating Profit: | ||||
Segment operating profit | 81 | 64 | 220 | 192 |
North America | ||||
Net sales: | ||||
Net sales | 551 | 578 | 1,651 | 1,709 |
Segment Operating Profit: | ||||
Segment operating profit | 75 | 79 | 252 | 247 |
Latin America | ||||
Net sales: | ||||
Net sales | 412 | 365 | 1,123 | 1,022 |
Segment Operating Profit: | ||||
Segment operating profit | 84 | 74 | 207 | 194 |
Latin America | Intercompany sales | ||||
Net sales: | ||||
Net sales | 34 | 97 | 36 | 129 |
Asia Pacific | ||||
Net sales: | ||||
Net sales | 188 | 170 | 516 | 487 |
Segment Operating Profit: | ||||
Segment operating profit | 20 | 20 | 51 | 48 |
Other | ||||
Net sales: | ||||
Net sales | $ 16 | $ 13 | $ 54 | $ 47 |
Segment Information - Total Ass
Segment Information - Total Assets (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Assets | |||
Total assets: | $ 9,999 | $ 9,135 | $ 9,497 |
Reportable Segment Totals | |||
Assets | |||
Total assets: | 9,784 | 8,777 | 9,162 |
Europe | |||
Assets | |||
Total assets: | 3,140 | 2,792 | 2,972 |
North America | |||
Assets | |||
Total assets: | 2,826 | 2,522 | 2,536 |
Latin America | |||
Assets | |||
Total assets: | 2,772 | 2,537 | 2,629 |
Asia Pacific | |||
Assets | |||
Total assets: | 1,046 | 926 | 1,025 |
Other | |||
Assets | |||
Total assets: | $ 215 | $ 358 | $ 335 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Inventories | |||
Finished goods | $ 875 | $ 827 | $ 892 |
Raw materials | 129 | 118 | 127 |
Operating supplies | 42 | 38 | 38 |
Inventories | $ 1,046 | $ 983 | $ 1,057 |
Prepaid Expenses and Other Cu40
Prepaid Expenses and Other Current Assets - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Prepaid expenses and other current assets: | |||
Prepaid expenses | $ 50 | $ 50 | $ 61 |
Value added taxes | 44 | 46 | 42 |
Other | 160 | 103 | 131 |
Prepaid expenses and other current assets | $ 254 | $ 199 | $ 234 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)MMBTU | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)MMBTU | Sep. 30, 2017EUR (€)MMBTU | Sep. 30, 2017USD ($)MMBTU | Mar. 31, 2017 | Dec. 31, 2016USD ($) | Nov. 30, 2016 | |
Derivatives and Hedges | |||||||||
Derivative, Amount of Hedged Item | € | € 400 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.125% | 3.125% | |||||||
Senior Notes 3.125%, due 2024 (725 million EUR at June 30, 2017 and 500 million EUR at December 31, 2016) | |||||||||
Derivatives and Hedges | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.125% | 3.125% | 3.125% | 3.125% | 3.125% | ||||
Derivative, Average Basis Spread on Variable Rate | 2.50% | 2.50% | |||||||
Commodity futures contracts | Cash Flow Hedges | |||||||||
Derivatives and Hedges | |||||||||
Coverage of commodity forward contracts (in MM BTUs) | MMBTU | 12,400,000 | 12,400,000 | 9,300,000 | 9,300,000 | |||||
Commodity forward contracts gain (loss) recognized in OCI | $ (1) | $ (1) | $ 3 | $ 2 | |||||
Commodity forwards contracts | Cash Flow Hedges | |||||||||
Derivatives and Hedges | |||||||||
Unrecognized gain (loss) included in Accumulated OCI | 2 | 2 | $ (1) | $ 6 | |||||
Foreign exchange contracts | Derivatives not designated as hedging instruments | Other expense | |||||||||
Derivatives and Hedges | |||||||||
Foreign exchange contracts gain (loss) recognized in income | $ (2) | 4 | $ 4 | 6 | |||||
Forward exchange contracts | Derivatives not designated as hedging instruments | |||||||||
Derivatives and Hedges | |||||||||
Notional amount | $ 580 | $ 580 | 320 | ||||||
Cross-currency interest rate swap | Cash Flow Hedges | |||||||||
Derivatives and Hedges | |||||||||
Notional amount | € 81 | $ 90 | |||||||
Interest rate swaps | Derivatives designated as hedging instruments | |||||||||
Derivatives and Hedges | |||||||||
Notional amount | € | € 400 |
Derivative Instruments - Design
Derivative Instruments - Designation (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Derivatives, Fair Value | |||
Total asset derivatives | $ 5 | $ 15 | $ 10 |
Total liability derivatives | 9 | 5 | 2 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Receivables | |||
Derivatives, Fair Value | |||
Total asset derivatives | 2 | 9 | 8 |
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other liabilities (current) | |||
Derivatives, Fair Value | |||
Total liability derivatives | 3 | 5 | 2 |
Derivatives not designated as hedging instruments | Interest rate swaps | Receivables | |||
Derivatives, Fair Value | |||
Total asset derivatives | 2 | ||
Derivatives designated as hedging instruments | Commodity futures contracts | Receivables | |||
Derivatives, Fair Value | |||
Total asset derivatives | 1 | $ 6 | $ 2 |
Derivatives designated as hedging instruments | Commodity futures contracts | Other liabilities (current) | |||
Derivatives, Fair Value | |||
Total liability derivatives | 1 | ||
Derivatives designated as hedging instruments | Interest rate swaps | Other liabilities (noncurrent) | |||
Derivatives, Fair Value | |||
Total liability derivatives | $ 5 |
Restructuring Accruals (Details
Restructuring Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring accrual | ||||
Beginning balance, restructuring reserve | $ 34 | $ 43 | ||
Charges | $ 48 | 19 | ||
Write-down of assets to net realizable value | (7) | |||
Net cash paid, principally severance and related benefits | (3) | (30) | (20) | |
Other, including foreign exchange translation | (2) | (6) | ||
Ending balance, restructuring reserve | 29 | 29 | ||
Asia Pacific Restructuring | ||||
Restructuring accrual | ||||
Beginning balance, restructuring reserve | 6 | 7 | ||
Charges | 1 | |||
Net cash paid, principally severance and related benefits | (1) | (2) | ||
Other, including foreign exchange translation | (1) | |||
Ending balance, restructuring reserve | 5 | 5 | ||
Restructuring, Additional Information | ||||
Cumulative employee costs and asset impairments | 224 | |||
Other Restructuring Actions | ||||
Restructuring accrual | ||||
Beginning balance, restructuring reserve | $ 111 | 28 | 85 | 36 |
Charges | 48 | 18 | ||
Write-down of assets to net realizable value | (9) | (7) | ||
Net cash paid, principally severance and related benefits | (14) | (2) | (30) | (18) |
Other, including foreign exchange translation | 1 | (2) | 4 | (5) |
Ending balance, restructuring reserve | $ 98 | $ 24 | 98 | 24 |
Restructuring, Additional Information | ||||
Other restructuring costs | 1 | |||
Other Restructuring Actions | Latin America | ||||
Restructuring, Additional Information | ||||
Employee costs, asset impairments and other exit costs | 33 | 14 | ||
Other Restructuring Actions | Europe | ||||
Restructuring, Additional Information | ||||
Cumulative plant closure costs | 54 | |||
Employee costs, asset impairments and other exit costs | 13 | |||
Other Restructuring Actions | North America | ||||
Restructuring, Additional Information | ||||
Employee costs, asset impairments and other exit costs | $ 2 | $ 3 |
Pension Benefit Plans (Details)
Pension Benefit Plans (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
U.S Pension Plans | |||||
Components of the net pension expense and postretirement benefit cost | |||||
Service cost | $ 4 | $ 3 | $ 11 | $ 11 | |
Interest cost | 20 | 23 | 59 | 72 | |
Expected asset return | (33) | (37) | (98) | (113) | |
Amortization: | |||||
Actuarial loss | 14 | 16 | 44 | 47 | |
Net periodic pension cost | 5 | 5 | 16 | 17 | |
Increase in pension liability | $ 60 | ||||
Non-U.S. Pension Plans | |||||
Components of the net pension expense and postretirement benefit cost | |||||
Service cost | 4 | 4 | 12 | 13 | |
Interest cost | 11 | 12 | 33 | 38 | |
Expected asset return | (18) | (19) | (54) | (61) | |
Amortization: | |||||
Actuarial loss | 5 | 5 | 15 | 15 | |
Net periodic pension cost | $ 2 | $ 2 | $ 6 | $ 5 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Statutory U.S. Federal tax rate (as a percent) | 35.00% |
Debt - Long-term Debt Summary (
Debt - Long-term Debt Summary (Details) $ / shares in Units, € in Millions, $ in Millions | Sep. 01, 2015USD ($) | Mar. 31, 2017USD ($) | Nov. 30, 2016USD ($) | Sep. 30, 2017USD ($)agreement | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($)$ / shares | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | Nov. 30, 2016EUR (€) | Sep. 30, 2016USD ($) | Aug. 31, 2015USD ($) |
Debt Instrument | |||||||||||||
Total long-term debt | $ 5,426 | $ 5,166 | $ 5,409 | ||||||||||
Less amounts due within one year | 48 | 33 | 76 | ||||||||||
Long-term debt | $ 5,378 | 5,133 | 5,333 | ||||||||||
Interest rate, stated percentage | 3.125% | 3.125% | |||||||||||
Net proceeds, after deducting debt issuance costs | $ 972 | ||||||||||||
Short-term loans and long-term debt due within one year | $ 243 | 195 | 262 | ||||||||||
The Agreement, Senior Secured Credit Facility | |||||||||||||
Debt Instrument | |||||||||||||
Unused Credit | $ 652 | ||||||||||||
Weighted average interest rate, short-term debt (as a percent) | 2.57% | 2.57% | |||||||||||
Leverage ratio, period one | 4.50% | 4.50% | |||||||||||
Leverage ratio, period two | 4.00% | 4.00% | |||||||||||
Number financial maintenance covenants | agreement | 1 | ||||||||||||
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% | ||||||||||||
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 | $ 200 | ||||||||||||
Term Loan A | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | 1,202 | 1,395 | 1,516 | ||||||||||
Face Value | 1,575 | ||||||||||||
Net proceeds, after deducting debt issuance costs | $ 1,202 | ||||||||||||
Term Loan A (279 million EUR) | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | € 279 | 308 | 282 | 303 | |||||||||
Net proceeds, after deducting debt issuance costs | $ 308 | ||||||||||||
Term Loan B | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | 558 | ||||||||||||
Senior Notes 6.75%, due 2020 (500 million EUR) | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | € 500 | $ 586 | 523 | 557 | |||||||||
Interest rate, stated percentage | 6.75% | 6.75% | |||||||||||
Principal Amount | $ 589 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 118.38 | ||||||||||||
Fair Value | $ 697 | ||||||||||||
Senior Notes 4.875%, due 2021 (330 million EUR) | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | € 330 | $ 386 | 345 | 367 | |||||||||
Interest rate, stated percentage | 4.875% | 4.875% | |||||||||||
Principal Amount | $ 389 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 113.85 | ||||||||||||
Fair Value | $ 443 | ||||||||||||
Senior Notes 5.375%, due 2025 | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | $ 295 | 294 | 294 | ||||||||||
Interest rate, stated percentage | 5.375% | 5.375% | |||||||||||
Principal Amount | $ 300 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 113.10 | ||||||||||||
Fair Value | $ 339 | ||||||||||||
Senior Notes 5.875%, due 2023 | |||||||||||||
Debt Instrument | |||||||||||||
Interest rate, stated percentage | 5.875% | 5.875% | 5.875% | ||||||||||
Face Value | $ 700 | ||||||||||||
Senior Notes 3.125%, due 2024 (725 million EUR at June 30, 2017 and 500 million EUR at December 31, 2016) | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | € 725 | $ 840 | € 500 | $ 520 | |||||||||
Interest rate, stated percentage | 3.125% | 3.125% | 3.125% | 3.125% | 3.125% | 3.125% | 3.125% | ||||||
Face Value | € | € 225 | € 500 | |||||||||||
Net proceeds, after deducting debt issuance costs | $ 237 | $ 520 | |||||||||||
Principal Amount | $ 854 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 103.38 | ||||||||||||
Fair Value | $ 883 | ||||||||||||
Senior Notes 6.375%, due 2025 | |||||||||||||
Debt Instrument | |||||||||||||
Interest rate, stated percentage | 6.375% | 6.375% | |||||||||||
Senior Notes 5.00%, due 2022 | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | $ 496 | $ 495 | 495 | ||||||||||
Interest rate, stated percentage | 5.00% | 5.00% | |||||||||||
Principal Amount | $ 500 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 105.80 | ||||||||||||
Fair Value | $ 529 | ||||||||||||
Senior Notes 5.875%, due 2023 | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | $ 684 | 682 | 681 | ||||||||||
Interest rate, stated percentage | 5.875% | 5.875% | |||||||||||
Principal Amount | $ 700 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 110.65 | ||||||||||||
Fair Value | $ 775 | ||||||||||||
Senior Notes 6.375%, due 2025 | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | 297 | 297 | 296 | ||||||||||
Interest rate, stated percentage | 6.375% | ||||||||||||
Face Value | $ 300 | ||||||||||||
Principal Amount | $ 300 | ||||||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 106.98 | ||||||||||||
Fair Value | $ 321 | ||||||||||||
Senior Notes 5.375% due 2025 | |||||||||||||
Debt Instrument | |||||||||||||
Interest rate, stated percentage | 5.375% | 5.375% | |||||||||||
Capital leases | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | $ 54 | 57 | 62 | ||||||||||
Other debt | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | 56 | 26 | 30 | ||||||||||
Revolving Credit Facility | |||||||||||||
Debt Instrument | |||||||||||||
Face Value | 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 | |||||||||||||
Debt Instrument | |||||||||||||
Face Value | 600 | ||||||||||||
Accounts Receivable Securitization Program | |||||||||||||
Debt Instrument | |||||||||||||
Short-term loans and long-term debt due within one year | $ 170 | $ 152 | $ 158 | ||||||||||
Weighted average interest rate, short-term debt (as a percent) | 0.65% | 0.65% | 0.74% | 0.74% | 0.67% | ||||||||
European Accounts Receivable Securitization Program | |||||||||||||
Debt Instrument | |||||||||||||
Maximum Borrowing Capacity | € | € 185 | ||||||||||||
Payable to OI Inc. | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | $ 22 | $ 250 | $ 250 | ||||||||||
Senior Debentures 7.80%, due 2018 | |||||||||||||
Debt Instrument | |||||||||||||
Total long-term debt | $ 22 | ||||||||||||
Interest rate, stated percentage | 7.80% | 7.80% | |||||||||||
Face Value | $ 228 | ||||||||||||
Interest charges for note repurchase premiums and related write-off of unamortized finance fees | $ 17 |
Contingencies - Asbestos (Detai
Contingencies - Asbestos (Details) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | 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 | 1,400 | ||||
Approximate number of claims disposed of to date | item | 399,000 | ||||
Average indemnity payment per claim | $ 9,500 | ||||
Payments for Asbestos-Related Liabilities | $ 125,000,000 | $ 138,000,000 | $ 148,000,000 | ||
Asbestos-related liability, total amount accrued beginning in 1993 through 2016 before insurance recoveries | $ 4,900,000,000 | $ 975,000,000 | |||
Asbestos related charges | 0 | 16,000,000 | 46,000,000 | ||
Cash payments per claim disposed including legal costs | 71,000 | 95,000 | $ 81,000 | ||
Accrual of asbestos related liabilty | $ 692,000,000 | $ 817,000,000 | |||
Period for number of claims to be received | 10 years | ||||
Damages unspecified or sufficient to invoke jurisdictional minimum | OI Inc. | |||||
Asbestos | |||||
Percentage of asbestos plaintiffs, approximate percentage | 88.00% | ||||
Damages of $15 million or less | OI Inc. | |||||
Asbestos | |||||
Percentage of asbestos plaintiffs, approximate percentage | 9.00% | ||||
Damages greater than $15 million but less than $100 million | OI Inc. | |||||
Asbestos | |||||
Percentage of asbestos plaintiffs, approximate percentage | 3.00% | ||||
Minimum | Damages greater than $15 million but less than $100 million | OI Inc. | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | $ 15,000,000 | ||||
Maximum | OI Inc. | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | 825,000,000 | ||||
Maximum | Damages of $15 million or less | OI Inc. | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | 15,000,000 | ||||
Maximum | Damages greater than $15 million but less than $100 million | OI Inc. | |||||
Asbestos | |||||
Estimated amount of income-tax assessment including penalties and interest | $ 100,000,000 |
Share Owners' Equity (Details)
Share Owners' Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Increase (Decrease) in Share Owners' Equity | ||||
Balance | $ 1,445 | $ 1,251 | $ 1,055 | $ 1,096 |
Net distribution to parent | (16) | (17) | (29) | (20) |
Net earnings | 133 | 114 | 329 | 296 |
Other comprehensive income (loss) | 20 | (59) | 227 | (83) |
Acquisitions of noncontrolling interests | (1) | (1) | ||
Balance | 1,582 | 1,288 | 1,582 | 1,288 |
Other Contributed Capital | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | 622 | 728 | 635 | 731 |
Net distribution to parent | (16) | (17) | (29) | (20) |
Acquisitions of noncontrolling interests | (1) | (1) | ||
Balance | 606 | 710 | 606 | 710 |
Retained Earnings (Loss) | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | 2,630 | 2,405 | 2,442 | 2,233 |
Net earnings | 126 | 108 | 314 | 280 |
Balance | 2,756 | 2,513 | 2,756 | 2,513 |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | (1,916) | (1,992) | (2,131) | (1,976) |
Other comprehensive income (loss) | 19 | (57) | 234 | (73) |
Balance | (1,897) | (2,049) | (1,897) | (2,049) |
Non-controlling Interests | ||||
Increase (Decrease) in Share Owners' Equity | ||||
Balance | 109 | 110 | 109 | 108 |
Net earnings | 7 | 6 | 15 | 16 |
Other comprehensive income (loss) | 1 | (2) | (7) | (10) |
Balance | $ 117 | $ 114 | $ 117 | $ 114 |
Accumulated Other Comprehensi49
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | $ 1,445 | $ 1,251 | $ 1,055 | $ 1,096 |
Other comprehensive income (loss) | 20 | (59) | 227 | (83) |
Balance | 1,582 | 1,288 | 1,582 | 1,288 |
Net Effect of Exchange Rate Fluctuations | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (578) | (574) | (788) | (568) |
Change before reclassifications | 9 | (77) | 219 | (83) |
Other comprehensive income (loss) | 9 | (77) | 219 | (83) |
Balance | (569) | (651) | (569) | (651) |
Change in Certain Derivative Instruments | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (7) | (4) | 3 | (10) |
Amounts reclassified from accumulated other comprehensive income | (1) | (10) | 4 | |
Tax effect | 1 | |||
Other comprehensive income (loss) | (1) | (10) | 5 | |
Balance | (7) | (5) | (7) | (5) |
Employee Benefit Plans | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (1,331) | (1,414) | (1,346) | (1,398) |
Change before reclassifications | (2) | (12) | ||
Amounts reclassified from accumulated other comprehensive income | 19 | 26 | 58 | (2) |
Translation effect | (7) | (5) | (21) | 6 |
Tax effect | 1 | |||
Other comprehensive income (loss) | 10 | 21 | 25 | 5 |
Balance | (1,321) | (1,393) | (1,321) | (1,393) |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||||
Balance | (1,916) | (1,992) | (2,131) | (1,976) |
Change before reclassifications | 7 | (77) | 207 | (83) |
Amounts reclassified from accumulated other comprehensive income | 19 | 25 | 48 | 2 |
Translation effect | (7) | (5) | (21) | 6 |
Tax effect | 2 | |||
Other comprehensive income (loss) | 19 | (57) | 234 | (73) |
Balance | $ (1,897) | $ (2,049) | $ (1,897) | $ (2,049) |
Other Expense (Income), net (De
Other Expense (Income), net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Other Expense (Income), net | ||||
Restructuring, asset impairment and other charges | $ 49 | $ 19 | ||
Gain on sale of land in China | (7) | |||
Foreign currency exchange loss (gain) | $ 3 | $ 2 | 3 | 6 |
Intangible amortization expense | 11 | 10 | 31 | 30 |
Royalty income | (4) | (4) | (11) | (9) |
Other income | (5) | (13) | (11) | (15) |
Other Expense (Income), net | $ 5 | $ (5) | $ 61 | $ 24 |
Supplemental Cash Flow Inform51
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Supplemental Cash Flow Information [Abstract] | ||
Interest paid in cash | $ 209 | $ 214 |
Income taxes paid in cash (all non-US) | 120 | 93 |
Interest paid for note repurchase premiums related to debt repaid prior to maturity | 16 | |
Amount of receivables sold | $ 145 | $ 240 |
Discontinued Operations (Detail
Discontinued Operations (Details) $ in Millions | Jul. 31, 2017USD ($) | Apr. 04, 2017Plant | Apr. 04, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) |
Subsidiaries | |||||||
Loss from discontinued operations | $ (2) | $ (3) | $ (2) | $ (6) | |||
OI European Group B.V. (“OIEG”) | |||||||
Subsidiaries | |||||||
Litigation settlement amount | $ 115 | ||||||
Minimum | OI European Group B.V. (“OIEG”) | |||||||
Subsidiaries | |||||||
Litigation settlement amount | $ 500 | ||||||
Disposed Venezuelan Subsidiaries | |||||||
Subsidiaries | |||||||
Expropriated plants | Plant | 2 | ||||||
Disposed Venezuelan Subsidiaries | Discontinued Operations, Disposed of by Means Other than Sale | Maximum | |||||||
Subsidiaries | |||||||
Loss from discontinued operations | $ (2) | $ (6) |
New Accounting Pronouncement (D
New Accounting Pronouncement (Details) $ in Millions | Dec. 31, 2016USD ($) |
New Accounting Pronouncement | |
Minimum lease commitments under non-cancellable operating leases | $ 205 |
Financial Information for Sub54
Financial Information for Subsidiary Guarantors and Non-Guarantors - Debt Instrument Information (Details) | 9 Months Ended | |
Sep. 30, 2017 | Aug. 31, 2015 | |
Debt Instrument | ||
Interest rate, stated percentage | 3.125% | |
Ownership percentage in Guarantor Subsidiaries | 100.00% | |
Senior Notes 5.875%, due 2023 | ||
Debt Instrument | ||
Interest rate, stated percentage | 5.875% | 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 Sub55
Financial Information for Subsidiary Guarantors and Non-Guarantors - Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Current assets: | |||
Cash and cash equivalents | $ 339 | $ 492 | $ 294 |
Trade receivables, net | 1,028 | 580 | 857 |
Inventories | 1,046 | 983 | 1,057 |
Prepaid expenses and other expenses | 254 | 199 | 234 |
Total current assets | 2,667 | 2,254 | 2,442 |
Property, plant and equipment, net | 3,036 | 2,880 | 2,917 |
Goodwill | 2,621 | 2,462 | 2,534 |
Intangibles, net | 473 | 464 | 490 |
Other assets | 1,202 | 1,075 | 1,114 |
Total assets | 9,999 | 9,135 | 9,497 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 1,087 | 1,135 | 1,059 |
Short-term loans and long-term debt due within one year | 243 | 195 | 262 |
Other liabilities | 617 | 615 | 582 |
Other liabilities - discontinued operations | 115 | ||
Total current liabilities | 2,062 | 1,945 | 1,903 |
Long-term debt | 5,378 | 5,133 | 5,333 |
Other long-term liabilities | 977 | 1,002 | 973 |
Total share owners' equity of the Company | 1,465 | 946 | 1,174 |
Noncontrolling interests | 117 | 109 | 114 |
Total liabilities and share owners' equity | 9,999 | 9,135 | 9,497 |
Parent | |||
Current assets: | |||
Investments in and advances to subsidiaries | 1,487 | 1,196 | 1,424 |
Total assets | 1,487 | 1,196 | 1,424 |
Current liabilities: | |||
Short-term loans and long-term debt due within one year | 22 | ||
Total current liabilities | 22 | ||
Long-term debt | 250 | 250 | |
Total share owners' equity of the Company | 1,465 | 946 | 1,174 |
Total liabilities and share owners' equity | 1,487 | 1,196 | 1,424 |
Issuer | |||
Current assets: | |||
Trade receivables, net | 126 | 64 | 86 |
Inventories | 194 | 202 | 198 |
Prepaid expenses and other expenses | 19 | 27 | 22 |
Total current assets | 339 | 293 | 306 |
Investments in and advances to subsidiaries | 3,006 | 2,980 | 4,295 |
Property, plant and equipment, net | 717 | 721 | 698 |
Goodwill | 582 | 582 | 582 |
Other assets | 107 | 111 | 123 |
Total assets | 4,751 | 4,687 | 6,004 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 172 | 177 | 179 |
Short-term loans and long-term debt due within one year | 1 | 12 | 55 |
Other liabilities | 106 | 129 | 111 |
Total current liabilities | 279 | 318 | 345 |
Long-term debt | 2,981 | 3,163 | 3,799 |
Other long-term liabilities | 4 | 11 | 8 |
Investments by and advances from parent | 1,487 | 1,195 | 1,852 |
Total liabilities and share owners' equity | 4,751 | 4,687 | 6,004 |
Guarantor Subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 66 | 33 | 15 |
Trade receivables, net | 21 | 14 | 21 |
Inventories | 27 | 27 | 30 |
Prepaid expenses and other expenses | 15 | 16 | 10 |
Total current assets | 129 | 90 | 76 |
Investments in and advances to subsidiaries | 1,248 | 1,028 | 1,250 |
Property, plant and equipment, net | 4 | 6 | 5 |
Goodwill | 332 | 332 | 331 |
Other assets | 225 | 237 | 243 |
Total assets | 1,938 | 1,693 | 1,905 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 18 | 22 | 18 |
Other liabilities | 57 | 68 | 52 |
Total current liabilities | 75 | 90 | 70 |
Other long-term liabilities | 376 | 408 | 412 |
Investments by and advances from parent | 1,487 | 1,195 | 1,423 |
Total liabilities and share owners' equity | 1,938 | 1,693 | 1,905 |
Non-Guarantor Subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 273 | 459 | 279 |
Trade receivables, net | 881 | 502 | 750 |
Inventories | 825 | 754 | 829 |
Prepaid expenses and other expenses | 220 | 156 | 202 |
Total current assets | 2,199 | 1,871 | 2,060 |
Property, plant and equipment, net | 2,315 | 2,153 | 2,214 |
Goodwill | 1,707 | 1,548 | 1,621 |
Intangibles, net | 473 | 464 | 490 |
Other assets | 871 | 727 | 748 |
Total assets | 7,565 | 6,763 | 7,133 |
Current liabilities: | |||
Accounts payable and accrued liabilities | 897 | 936 | 862 |
Short-term loans and long-term debt due within one year | 220 | 183 | 207 |
Other liabilities | 454 | 418 | 419 |
Other liabilities - discontinued operations | 115 | ||
Total current liabilities | 1,686 | 1,537 | 1,488 |
Long-term debt | 2,397 | 1,720 | 1,284 |
Other long-term liabilities | 597 | 583 | 553 |
Investments by and advances from parent | 2,768 | 2,814 | 3,694 |
Noncontrolling interests | 117 | 109 | 114 |
Total liabilities and share owners' equity | 7,565 | 6,763 | 7,133 |
Eliminations | |||
Current assets: | |||
Investments in and advances to subsidiaries | (5,741) | (5,204) | (6,969) |
Other assets | (1) | ||
Total assets | (5,742) | (5,204) | (6,969) |
Current liabilities: | |||
Investments by and advances from parent | (5,742) | (5,204) | (6,969) |
Total liabilities and share owners' equity | $ (5,742) | $ (5,204) | $ (6,969) |
Financial Information for Sub56
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Results of Operations | ||||
Net sales | $ 1,791 | $ 1,712 | $ 5,157 | $ 5,060 |
Cost of goods sold | (1,438) | (1,376) | (4,143) | (4,063) |
Gross profit | 353 | 336 | 1,014 | 997 |
Research, engineering, selling, administrative and other | (135) | (137) | (408) | (423) |
Interest expense, net | (63) | (66) | (204) | (199) |
Other equity earnings | 22 | 15 | 55 | 44 |
Other expense, net | (5) | 5 | (61) | (24) |
Earnings (loss) from continuing operations before income taxes | 172 | 153 | 396 | 395 |
Provision for income taxes | (37) | (36) | (65) | (93) |
Earnings from continuing operations | 135 | 117 | 331 | 302 |
Loss from discontinued operations | (2) | (3) | (2) | (6) |
Net earnings | 133 | 114 | 329 | 296 |
Net earnings attributable to noncontrolling interests | (7) | (6) | (15) | (16) |
Net earnings attributable to the Company | 126 | 108 | 314 | 280 |
Comprehensive Income | ||||
Net earnings | 133 | 114 | 329 | 296 |
Other comprehensive income (loss) | 20 | (59) | 227 | (83) |
Total comprehensive income | 153 | 55 | 556 | 213 |
Comprehensive income attributable to noncontrolling interests | (8) | (4) | (8) | (6) |
Comprehensive income attributable to the Company | 145 | 51 | 548 | 207 |
Parent | ||||
Results of Operations | ||||
Net intercompany interest | 1 | 5 | 22 | 15 |
Interest expense, net | (1) | (5) | (22) | (15) |
Equity earnings from subsidiaries | 171 | 108 | 314 | 280 |
Earnings (loss) from continuing operations before income taxes | 171 | 108 | 314 | 280 |
Earnings from continuing operations | 171 | 108 | 314 | 280 |
Net earnings | 171 | 108 | 314 | 280 |
Net earnings attributable to the Company | 171 | 108 | 314 | 280 |
Comprehensive Income | ||||
Net earnings | 171 | 108 | 314 | 280 |
Other comprehensive income (loss) | 20 | (59) | 227 | (83) |
Total comprehensive income | 191 | 49 | 541 | 197 |
Comprehensive income attributable to the Company | 191 | 49 | 541 | 197 |
Issuer | ||||
Results of Operations | ||||
Net sales | 485 | 498 | 1,446 | 1,469 |
Cost of goods sold | (412) | (414) | (1,204) | (1,215) |
Gross profit | 73 | 84 | 242 | 254 |
Research, engineering, selling, administrative and other | (26) | (29) | (83) | (89) |
Net intercompany interest | (1) | (4) | (23) | (15) |
Interest expense, net | (37) | (44) | (114) | (133) |
Equity earnings from subsidiaries | 122 | 88 | 276 | 255 |
Other equity earnings | 3 | 3 | 10 | 8 |
Other expense, net | 43 | 38 | 110 | 98 |
Earnings (loss) from continuing operations before income taxes | 177 | 136 | 418 | 378 |
Provision for income taxes | (1) | (5) | (4) | |
Earnings from continuing operations | 176 | 136 | 413 | 374 |
Net earnings | 176 | 136 | 413 | 374 |
Net earnings attributable to the Company | 176 | 136 | 413 | 374 |
Comprehensive Income | ||||
Net earnings | 176 | 136 | 413 | 374 |
Other comprehensive income (loss) | (1) | (7) | 4 | |
Total comprehensive income | 176 | 135 | 406 | 378 |
Comprehensive income attributable to the Company | 176 | 135 | 406 | 378 |
Guarantor Subsidiaries | ||||
Results of Operations | ||||
Net sales | 64 | 73 | 199 | 217 |
Cost of goods sold | (49) | (58) | (147) | (172) |
Gross profit | 15 | 15 | 52 | 45 |
Research, engineering, selling, administrative and other | (24) | (20) | (78) | (76) |
Interest expense, net | (1) | (1) | ||
Other expense, net | (4) | (4) | (5) | (13) |
Earnings (loss) from continuing operations before income taxes | (14) | (9) | (32) | (44) |
Provision for income taxes | (2) | |||
Earnings from continuing operations | (14) | (9) | (34) | (44) |
Net earnings | (14) | (9) | (34) | (44) |
Net earnings attributable to the Company | (14) | (9) | (34) | (44) |
Comprehensive Income | ||||
Net earnings | (14) | (9) | (34) | (44) |
Total comprehensive income | (14) | (9) | (34) | (44) |
Comprehensive income attributable to the Company | (14) | (9) | (34) | (44) |
Non-Guarantor Subsidiaries | ||||
Results of Operations | ||||
Net sales | 1,282 | 1,181 | 3,626 | 3,509 |
Cost of goods sold | (1,017) | (943) | (2,906) | (2,811) |
Gross profit | 265 | 238 | 720 | 698 |
Research, engineering, selling, administrative and other | (84) | (88) | (247) | (258) |
Net intercompany interest | (1) | 1 | ||
Interest expense, net | (24) | (17) | (67) | (51) |
Other equity earnings | 19 | 12 | 45 | 36 |
Other expense, net | (44) | (29) | (166) | (109) |
Earnings (loss) from continuing operations before income taxes | 132 | 115 | 286 | 316 |
Provision for income taxes | (35) | (36) | (58) | (89) |
Earnings from continuing operations | 97 | 79 | 228 | 227 |
Loss from discontinued operations | (2) | (3) | (2) | (6) |
Net earnings | 95 | 76 | 226 | 221 |
Net earnings attributable to noncontrolling interests | (7) | (6) | (15) | (16) |
Net earnings attributable to the Company | 88 | 70 | 211 | 205 |
Comprehensive Income | ||||
Net earnings | 95 | 76 | 226 | 221 |
Other comprehensive income (loss) | 9 | (79) | 186 | (70) |
Total comprehensive income | 104 | (3) | 412 | 151 |
Comprehensive income attributable to noncontrolling interests | (8) | (4) | (8) | (6) |
Comprehensive income attributable to the Company | 96 | (7) | 404 | 145 |
Eliminations | ||||
Results of Operations | ||||
Net sales | (40) | (40) | (114) | (135) |
Cost of goods sold | 40 | 39 | 114 | 135 |
Gross profit | (1) | |||
Research, engineering, selling, administrative and other | (1) | |||
Equity earnings from subsidiaries | (293) | (196) | (590) | (535) |
Earnings (loss) from continuing operations before income taxes | (294) | (197) | (590) | (535) |
Provision for income taxes | (1) | |||
Earnings from continuing operations | (295) | (197) | (590) | (535) |
Net earnings | (295) | (197) | (590) | (535) |
Net earnings attributable to the Company | (295) | (197) | (590) | (535) |
Comprehensive Income | ||||
Net earnings | (295) | (197) | (590) | (535) |
Other comprehensive income (loss) | (9) | 80 | (179) | 66 |
Total comprehensive income | (304) | (117) | (769) | (469) |
Comprehensive income attributable to the Company | $ (304) | $ (117) | $ (769) | $ (469) |
Financial Information for Sub57
Financial Information for Subsidiary Guarantors and Non-Guarantors - Cash Flows (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows | ||
Cash provided by (utilized in) operating activities | $ 86 | $ 265 |
Cash utilized in discontinued operating activities | (2) | (6) |
Cash utilized in investing activities | (315) | (282) |
Cash utilized in investing activities | (200) | (282) |
Cash provided by discontinued investing activity | 115 | |
Cash provided by financing activities | (63) | (84) |
Effect of exchange rate change on cash | 24 | (4) |
Decrease in cash | (153) | (105) |
Cash at beginning of period | 492 | 399 |
Cash at end of period | 339 | 294 |
Issuer | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | 282 | 108 |
Cash utilized in investing activities | (82) | (66) |
Cash provided by financing activities | (200) | (42) |
Guarantor Subsidiaries | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | 35 | 10 |
Cash utilized in investing activities | (1) | |
Decrease in cash | 35 | 9 |
Cash at beginning of period | 33 | 6 |
Cash at end of period | 68 | 15 |
Non-Guarantor Subsidiaries | ||
Cash Flows | ||
Cash provided by (utilized in) operating activities | (231) | 147 |
Cash utilized in investing activities | (118) | (215) |
Cash provided by financing activities | 137 | (42) |
Effect of exchange rate change on cash | 24 | (4) |
Decrease in cash | (188) | (114) |
Cash at beginning of period | 459 | 393 |
Cash at end of period | $ 271 | $ 279 |