UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒

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

For the quarterly period ended

March 31, ~~2020~~2021

☐

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

For the transition period from to

Commission file number 1-9576

O-I GLASS, INC.

(Exact name of registrant as specified in its charter)



Delaware		22-2781933
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)


One Michael Owens Way, Perrysburg, Ohio		43551
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (567) 336-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.01 par value	OI	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐
Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares of common stock, par value $.01, of O-I Glass, Inc. outstanding as of March 31, ~~2020~~2021 was ~~156,571,353.~~157,912,101.

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

The Condensed Consolidated Financial Statements of O-I Glass, Inc. (the “Company”) presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. All adjustments are of a normal recurring nature. Because the following unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The term “Company,” as used herein and unless otherwise stated or indicated by context, refers to Owens-Illinois, Inc. (“O-I”) prior to the Corporate Modernization (as defined in Note 10) and to O-I Glass, Inc. (“O-I Glass”) after the Corporate Modernization.

O-I GLASS, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(Dollars in millions, except per share amounts)
(Unaudited)


	Three months ended				Three months ended
	March 31,				March 31,
	2020		2019		2021		2020
Net sales	$	1,561	$	1,638	$	1,500	$	1,561
Cost of goods sold		(1,293)		(1,340)		(1,256)		(1,293)

Gross profit		268		298		244		268

Selling and administrative expense		(116)		(115)		(102)		(116)
Research, development and engineering expense		(16)		(16)		(18)		(16)
Interest expense, net		(53)		(65)		(51)		(53)
Equity earnings		15		19		18		15
Other expense, net		(17)		(10)		(156)		(17)

Earnings before income taxes		81		111
Earnings (loss) before income taxes						(65)		81
Provision for income taxes		(26)		(27)		(26)		(26)

Net earnings		55		84
Net earnings attributable to noncontrolling interests		(5)		(5)
Net earnings attributable to the Company	$	50	$	79
Net earnings (loss)						(91)		55
Net earnings attributable to non-controlling interests						(6)		(5)
Net earnings (loss) attributable to the Company					$	(97)	$	50

Basic earnings per share:
Net earnings attributable to the Company	$	0.32	$	0.51
Net earnings (loss) attributable to the Company					$	(0.62)	$	0.32
Weighted average shares outstanding (thousands)		156,081		154,361		157,571		156,081

Diluted earnings per share:
Net earnings attributable to the Company	$	0.32	$	0.51
Net earnings (loss) attributable to the Company					$	(0.62)	$	0.32
Weighted average diluted shares outstanding (thousands)		157,684		156,635		157,571		157,684

See accompanying notes.

O-I GLASS, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)

(Unaudited)


	Three months ended				Three months ended
	March 31,				March 31,
	2020		2019		2021		2020
Net earnings	$	55	$	84
Net earnings (loss)					$	(91)	$	55
Other comprehensive income (loss):
Foreign currency translation adjustments		(573)		49		(85)		(573)
Pension and other postretirement benefit adjustments, net of tax		31		6		20		31
Change in fair value of derivative instruments, net of tax		6		5		13		6
Other comprehensive income (loss)		(536)		60
Other comprehensive loss						(52)		(536)
Total comprehensive income (loss)		(481)		144		(143)		(481)
Comprehensive (income) loss attributable to noncontrolling interests		4		(8)
Comprehensive (income) loss attributable to non-controlling interests						(2)		4
Comprehensive income (loss) attributable to the Company	$	(477)	$	136	$	(145)	$	(477)

See accompanying notes.

O-I GLASS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(Unaudited)


	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2020		2019		2019		2021		2020		2020
Assets
Current assets:
Cash and cash equivalents	$	891	$	551	$	326	$	742	$	563	$	891
Trade receivables, net of allowance of $30 million, $32 million, and $34 million at March 31, 2020, December 31, 2019 and March 31, 2019		767		621		939
Trade receivables, net of allowance of $32 million, $33 million, and $30 million at March 31, 2021, December 31, 2020 and March 31, 2020								714		623		767
Inventories		1,047		1,045		1,038		827		841		1,047
Prepaid expenses and other current assets		257		271		276		203		270		257
Total current assets		2,962		2,488		2,579		2,486		2,297		2,962

Property, plant and equipment, net		2,987		3,273		3,074		2,791		2,907		2,987
Goodwill		1,773		1,934		2,507		1,880		1,951		1,773
Intangibles, net		312		371		394		310		325		312
Other assets		1,470		1,544		1,598		1,358		1,402		1,470
Total assets	$	9,504	$	9,610	$	10,152	$	8,825	$	8,882	$	9,504

Liabilities and Share owners’ equity
Current liabilities:
Accounts payable	$	1,025	$	1,276	$	1,065	$	998	$	1,126	$	1,025
Short-term loans and long-term debt due within one year		283		124		91		180		197		283
Current portion of asbestos-related liabilities						160
Other liabilities		516		595		544		524		575		516
Total current liabilities		1,824		1,995		1,860		1,702		1,898		1,824

Long-term debt		6,115		5,435		5,820		5,168		4,945		6,115
Asbestos-related liabilities				486		372
Paddock support agreement liability		471						625		471		471
Other long-term liabilities		1,018		1,130		1,090		1,068		1,167		1,018
Share owners' equity		76		564		1,010		262		401		76
Total liabilities and share owners' equity	$	9,504	$	9,610	$	10,152
Total liabilities and share owners’ equity							$	8,825	$	8,882	$	9,504

See accompanying notes.

O-I GLASS, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

(Unaudited)


	Three months ended March 31,				Three months ended March 31,
	2020		2019		2021		2020
Cash flows from operating activities:
Net earnings	$	55	$	84
Net earnings (loss)					$	(91)	$	55
Non-cash charges
Depreciation and amortization		126		126		115		126
Pension expense		9		8		8		9
Charge related to Paddock support agreement liability						154
Cash payments
Pension contributions		(13)		(11)		(18)		(13)
Asbestos-related payments				(71)
Cash paid for restructuring activities		(8)		(15)		(3)		(8)
Change in components of working capital		(461)		(697)		(229)		(461)
Other, net (a)		(23)		(19)		8		(23)
Cash utilized in operating activities		(315)		(595)		(56)		(315)
Cash flows from investing activities:
Cash payments for property, plant and equipment		(120)		(121)		(93)		(120)
Contributions and advances to joint ventures				(15)
Net cash proceeds on disposal of assets				1
Cash proceeds on disposal of other businesses and misc. assets						4
Cash proceeds on sale of ANZ businesses, net of transaction costs						58
Deconsolidation of Paddock		(47)						(47)
Other		2						2
Cash utilized in investing activities		(165)		(135)		(31)		(165)
Cash flows from financing activities:
Changes in borrowings, net		859		589		290		859
Issuance of common stock and other		(2)		(3)		(2)		(2)
Treasury shares repurchased				(38)
Dividends paid		(8)		(8)				(8)
Cash provided by financing activities		849		540		288		849
Effect of exchange rate fluctuations on cash		(29)		4		(22)		(29)
Increase (Decrease) in cash		340		(186)
Increase in cash						179		340
Cash at beginning of period		551		512		563		551
Cash at end of period	$	891	$	326	$	742	$	891

(a)	Other, net includes other non-cash charges plus other changes in non-current assets and liabilities.

See accompanying notes.

O-I GLASS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions, except per share amounts

1. Segment Information

~~The~~Historically, the Company ~~has~~had 3 reportable segments and 3 operating segments based on its geographic locations: the Americas, Europe and Asia Pacific. These 3 segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations. On July 31, 2020, the Company completed the sale of its Australia and New Zealand (“ANZ”) businesses, which comprised the majority of its businesses in the Asia Pacific region (approximately 85% of net sales in that region for the full year 2019), to Visy Industries Holdings Pty Ltd. (“Visy”). After the sale of the ANZ businesses, the remaining businesses in the Asia Pacific region do not meet the criteria of an individually reportable segment. For the three months ended March 31, 2020, the results of the Asia Pacific segment have been recast to reflect only the results of its ANZ businesses. For all historical periods discussed in this report, the sales and operating results of the other businesses that historically comprised the Asia Pacific segment, and that have been retained by the Company, have been reclassified to Other sales and Retained corporate costs and other, respectively. For asset reporting purposes, only the assets related to the ANZ businesses have been reported in the Asia Pacific segment, while the other businesses that historically comprised this segment and that have been retained by the Company have been reclassified to the Other assets line for all periods presented.

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.~~investments and the remaining businesses in the Asia Pacific region that do not meet the criteria of an individually reportable segment after the sale of the ANZ businesses. 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~~(loss) before interest income, interest expense, and ~~provision~~benefit (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. Segment operating profit is not a recognized term under U.S. GAAP and, therefore, does not purport to be an alternative to earnings (loss) before income taxes. Further, the Company's measure of segment operating profit may not be comparable to similarly titled measures of other companies.

Financial information for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 regarding the Company’s reportable segments is as follows:


	Three months ended March 31,				Three months ended March 31,
	2020		2019		2021		2020
Net sales:
Americas	$	831	$	881	$	837	$	831
Europe		576		596		639		576
Asia Pacific		145		151				123
Reportable segment totals		1,552		1,628		1,476		1,530
Other		9		10		24		31
Net sales	$	1,561	$	1,638	$	1,500	$	1,561

Three months ended March 31,

2020

2019

Segment operating profit:

Americas

$
103

$
113

Europe

61

79

Asia Pacific

5

8

Reportable segment totals

169

200

Items excluded from segment operating profit:

Retained corporate costs and other

(21)

(24)

Charge for deconsolidation of Paddock

(14)

Interest expense, net

(53)

(65)

Earnings before income taxes

$
81

$
111

~~Financial information regarding the Company’s total assets is as follows:~~

March 31,

December 31,

March 31,

2020

2019

2019

Total assets:

Americas

$
4,693

$
5,264

$
5,621

Europe

3,290

3,127

3,273

Asia Pacific

896

1,012

1,012

Reportable segment totals

8,879

9,403

9,906

Other

625

207

246

Consolidated totals

$
9,504

$
9,610

$
10,152


	Three months ended March 31,
	2021		2020
Segment operating profit:
Americas	$	100	$	103
Europe		75		61
Asia Pacific				12
Reportable segment totals		175		176
Items excluded from segment operating profit:
Retained corporate costs and other		(35)		(28)
Charge related to Paddock support agreement liability		(154)
Charge for deconsolidation of Paddock				(14)
Interest expense, net		(51)		(53)
Earnings (loss) before income taxes	$	(65)	$	81

Financial information regarding the Company’s total assets is as follows:


	March 31,		December 31,		March 31,
	2021		2020		2020
Total assets:
Americas	$	4,755	$	4,927	$	4,693
Europe		3,536		3,507		3,290
Asia Pacific						608

Reportable segment totals		8,291		8,434		8,591
Other		534		448		913
Consolidated totals	$	8,825	$	8,882	$	9,504

2. Revenue

Revenue is recognized at the point in time when obligations under the terms of the Company’s contracts and related purchase orders with its customers are satisfied. This occurs with the transfer of control of glass containers, which primarily takes place when products are shipped from the Company’s manufacturing or warehousing facilities to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimated provisions for rebates, discounts, returns and allowances. Sales, ~~value added,~~value-added, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. The Company’s payment terms are based on customary business practices and can vary by customer type. The term between invoicing and when payment is due is not significant. Also, the Company elected to account for shipping and handling costs as a fulfillment cost at the time of shipment.

For the three-month periods ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, the Company had no material bad debt expense, and there were no material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet. ~~For~~

Consistent with the disclosures in Note 1 related to the ANZ sale, Asia Pacific revenue for the three-month ~~periods~~period ended March 31, 2020, has been recast to reflect only the revenue of the ANZ businesses. The other businesses that comprised the Asia Pacific segment and ~~March 31, 2019, revenue recognized from prior periods (for example, due~~that have been retained by the Company have been reclassified to ~~changes in transaction price) was not material.~~the Other sales line.

The following tables for the three months ended March 31, 2021 and 2020 ~~and 2019 disaggregates~~disaggregate the Company’s revenue by customer end use:


	Three months ended March 31, 2020								Three months ended March 31, 2021
	Americas		Europe		Asia Pacific		Total		Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	508	$	411	$	101	$	1,020	$	502	$	477	$		$	979
Food and other		189		105		24		318		209		118				327
Non-alcoholic beverages		134		60		20		214		126		44				170
Reportable segment totals	$	831	$	576	$	145	$	1,552	$	837	$	639	$	—	$	1,476
Other								9								24
Net sales							$	1,561							$	1,500


	Three months ended March 31, 2019								Three months ended March 31, 2020
	Americas		Europe		Asia Pacific		Total		Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	564	$	432	$	109	$	1,105	$	508	$	411	$	96	$	1,015
Food and other		180		103		25		308		189		105		14		308
Non-alcoholic beverages		137		61		17		215		134		60		13		207
Reportable segment totals	$	881	$	596	$	151	$	1,628	$	831	$	576	$	123	$	1,530
Other								10								31
Net sales							$	1,638							$	1,561

3. Credit Losses

The Company is exposed to credit losses primarily through its sales of glass containers to customers. The Company’s trade receivables from customers are due within one year or less. The Company assesses each customer’s ability to pay for the glass containers ~~that~~ it sells to them by conducting a credit review. The credit review considers the expected billing exposure and timing for payment and the customer’s established credit rating or the Company’s assessment of the customer’s creditworthiness, based on an analysis of their financial statements when a credit rating is not available. The Company also considers contract terms and conditions, country and political risk, and business strategy in its evaluation. A credit limit is established for each customer based on the outcome of this review. The Company may require collateralized asset support or a prepayment to mitigate credit risk. The Company monitors its ongoing credit exposure through the active review of customer balances against contract terms and due dates, including timely account reconciliation, dispute resolution and payment confirmation. The Company may employ collection agencies and legal counsel to pursue the recovery of defaulted receivables.

At March 31, 2021 and March 30, 2020, the Company reported $714 million and $767 million of accounts receivable, respectively, net of allowances of $32 million and $30 ~~million.~~million, respectively. Changes in the allowance were not material for the three months ended March 31, 2021 and March 31, 2020.

4. Inventories

Major classes of inventory at March 31, ~~2020,~~2021, December 31, ~~2019~~2020 and March 31, ~~2019~~2020 are as follows:


	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2020		2019		2019		2021		2020		2020
Finished goods	$	884	$	872	$	868	$	672	$	675	$	884
Raw materials		121		128		126		119		129		121
Operating supplies		42		45		44		36		37		42
	$	1,047	$	1,045	$	1,038	$	827	$	841	$	1,047

5. Derivative Instruments

The Company has certain derivative assets and liabilities, which consist of ~~natural gas forwards,~~ foreign exchange option and forward contracts, interest rate swaps and cross-currency swaps. The valuation of these instruments is determined primarily using the income approach, including discounted cash flow analysis on the expected cash flows of each derivative. ~~Natural gas forward rates, foreign~~Foreign exchange rates and interest rates are the significant inputs into the valuation models. The Company also evaluates counterparty risk in determining fair values. 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. 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.

~~Commodity Forward Contracts Designated as Cash Flow Hedges~~

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.

An unrecognized loss of $2 million at March 31, 2020, an unrecognized gain of $1 million at December 31, 2019 and an unrecognized gain of $3 million at March 31, 2019 related to the commodity forward contracts were included in Accumulated other comprehensive income (“Accumulated OCI”), and will be reclassified into earnings in the period when the commodity forward contracts expire.

~~Foreign Exchange Derivative Contracts Not Designated as Hedging Instruments~~

Cash Flow Hedges of Foreign Exchange Risk

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 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 foreign exchange risk.

An unrecognized gain of $10 million at March 31, 2021, an unrecognized gain of $9 million at December 31, 2020 and an unrecognized loss of $4 million at March 31, 2020, ~~an unrecognized loss of less than $1 million at December 31, 2019 and an unrecognized loss of $11 million at March 31, 2019,~~ related to these cross-currency swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next ~~twelve~~12 months.

Interest Rate Swaps Designated as Fair Value Hedges

The Company enters into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. The Company’s fixed-to-variable interest rate swaps are 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.

Cash Flow Hedges of Interest Rate Risk

The Company enters into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments. These interest rate swap agreements were used to hedge the variable cash flows associated with variable-rate debt.

An unrecognized loss of less than $1 million at March 31, ~~2020, an unrecognized loss of $1 million at December 31, 2019 and~~2021, an unrecognized loss of less than $1 million at December 31, 2020 and an unrecognized loss of $1 million at March 31, ~~2019~~2020 related to these interest rate swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next ~~twelve~~12 months.

Net Investment Hedges

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in non-U.S. subsidiaries and uses cross-currency swaps to partially hedge this exposure.

~~An unrecognized gain~~Foreign Exchange Derivative Contracts Not Designated as Hedging Instruments

The Company uses 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 ~~$10 million at March 31, 2020, an unrecognized gain of $8 million at December 31, 2019~~fixed assets or commodities that are denominated in currencies other than the subsidiaries’ functional currency. The Company also uses foreign exchange agreements to offset the foreign currency risk for receivables and ~~an unrecognized gain of $7 million at March 31, 2019, related~~payables, including intercompany receivables, payables, and loans, not denominated in, or indexed to, ~~these net investment hedges, were included in Accumulated OCI, and will be reclassified into earnings within the next twelve months.~~their functional currencies.

Balance Sheet Classification

The following table shows the amount and classification (as noted above) of the Company’s derivatives at March 31, ~~2020,~~2021, December 31, ~~2019~~2020 and March 31, ~~2019:~~2020:

Fair Value of

Fair Value of

Hedge Assets

Hedge Liabilities

March 31,

December 31,

March 31,

March 31,

December 31,

March 31,


2020

2019

2019

2020

2019

2019
Derivatives designated as hedging instruments:












Commodity forward contracts (a)

$
—

$
1

$
3

$
2

$
—

$
—
Interest rate swaps - fair value hedges (b)

11

8

18

2

Cash flow hedges of foreign exchange risk (c)

66

25

18

4

21

4
Interest rate swaps - cash flow hedges (d)

2

1

1
Net investment hedges (e)

5

2

6

4
Total derivatives accounted for as hedges

$
82

$
36

$
45

$
8

$
24

$
9
Derivatives not designated as hedges:

Foreign exchange derivative contracts (f)

10

2

2

5

—

1
Total derivatives

$
92

$
38

$
47

$
13

$
24

$
10

Current

$
30

$
8

$
23

$
8

$
—

$
3
Noncurrent

62

30

24

5

24

7
Total derivatives

$
92

$
38

$
47

$
13

$
24

$
10


	Fair Value of						Fair Value of
	Hedge Assets						Hedge Liabilities
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2021		2020		2020		2021		2020		2020
Derivatives designated as hedging instruments:
Interest rate swaps - fair value hedges (a)		13		17		11
Cash flow hedges of foreign exchange risk (b)		8		6		66		67		115		4
Interest rate swaps - cash flow hedges (c)												2
Net investment hedges (d)		2		1		5		39		52
Total derivatives accounted for as hedges	$	23	$	24	$	82	$	106	$	167	$	6
Derivatives not designated as hedges:
Foreign exchange derivative contracts (e)		5		1		10		3		3		5
Total derivatives	$	28	$	25	$	92	$	109	$	170	$	11


Current	$	18	$	13	$	30	$	9	$	15	$	6
Noncurrent		10		12		62		100		155		5
Total derivatives	$	28	$	25	$	92	$	109	$	170	$	11

(a) The notional amounts of the commodity forward contracts were $12 million, $13 million and $20 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The maximum maturity dates were in 2020 for all three periods.

~~(b)~~(a) The notional amounts of the interest rate swaps designated as fair value hedges were €725 million at March 31, ~~2020,~~2021, December 31, ~~2019~~2020 and March 31, ~~2019, respectively.~~2020. The maximum maturity dates were in ~~2025 for March 31, 2020 and December 31, 2019 and~~ 2024 for ~~March 31, 2019.~~all three periods.

~~(c)~~(b) The notional amounts of the cash flow hedges of foreign exchange risk were $978 million at March 31, 2021, $978 million at December 31, 2020 and $1.424 billion at March 31, ~~2020 and December 31, 2019 and $797 million at March 31, 2019.~~2020. The maximum maturity dates were in 2023 for all three periods.

~~(d)~~(c) The notional amounts of the interest rate swaps designated as cash flow hedges were $0 at March 31, 2021, $0 at December 31, 2020 and $105 million at March 31, ~~2020 and December 31, 2019 and $180 million at March 31, 2019, respectively.~~2020. Maximum maturity dates were in 2020 for March 31, ~~2020 and December 31, 2019 and 2021 for March 31, 2019.~~2020.

~~(e)~~(d) The notional amounts of the net investment hedges were €311 million at March 31, 2021, €311 million at December 31, 2020 and €160 million at March 31, ~~2020, December 31, 2019 and March 31, 2019.~~2020. The maximum maturity dates were in 2027 for March 31, 2021 and December 31, 2020 and in 2020 for ~~all three periods.~~March 31, 2020.

~~(f)~~(e) The notional amounts of the foreign exchange derivative contracts were ~~$306~~$301 million, ~~$283~~$247 million and ~~$625~~$306 million at March 31, ~~2020,~~2021, December 31, ~~2019~~2020 and March 31, ~~2019,~~2020, respectively. The maximum maturity dates were in 2021 ~~2019, and 2019~~ for ~~March 31, 2020, December 31, 2019 and March 31, 2019, respectively.~~all three periods.


	Gain (Loss) Recognized in OCI (Effective Portion)				Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) (1)					Gain (Loss) Recognized in OCI (Effective Portion)				Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) (1)
	Three months ended March 31,				Three months ended March 31,					Three months ended March 31,				Three months ended March 31,
Derivatives designated as hedging instruments:	2020		2019		2020		2019			2021		2020		2021		2020
Cash Flow Hedges
Commodity forward contracts (a)	$	(3)	$	2	$	—	$	—
Cash flow hedges of foreign exchange risk (b)		(66)		7		60		(10)
Cash flow hedges of interest rate risk (c)
Cash flow hedges of foreign exchange risk (a)										$	48	$	66	$	49	$	60
Net Investment Hedges
Net Investment Hedges		(4)		5		2		(2)
	$	(73)	$	14	$	62	$	(12)
Net Investment Hedges (b)											15		4		1		2
										$	63	$	70	$	50	$	62

	Amount of Gain (Loss) Recognized in Other income (expense), net									Amount of Gain (Loss) Recognized in Other income (expense), net
	Three months ended March 31,									Three months ended March 31,
Derivatives not designated as hedges:	2020		2019							2021		2020
Foreign exchange derivative contracts	$	12	$	6						$	10	$	12

(1) Gains and losses reclassified from accumulated OCI and recognized in income are recorded to (a) cost of goods sold, (b) other expense, net or (c) interest expense, net.
(1) Gains and losses reclassified from accumulated OCI and recognized in income are recorded to (a) other expense, net or (b) interest expense, net.									(1) Gains and losses reclassified from accumulated OCI and recognized in income are recorded to (a) other expense, net or (b) interest expense, net.

6. Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is as follows:


	Employee		Other		Total		Employee		Other		Total
	Costs		Exit Costs		Restructuring		Costs		Exit Costs		Restructuring
Balance at January 1, 2020	$	32	$	13	$	45
Balance at January 1, 2021							$	38	$	7	$	45
Net cash paid, principally severance and related benefits		(8)				(8)		(3)				(3)
Other, including foreign exchange translation		(2)		(1)		(3)				1		1
Balance at March 31, 2020	$	22	$	12	$	34
Balance at March 31, 2021							$	35	$	8	$	43


	Employee		Other		Total		Employee		Other		Total
	Costs		Exit Costs		Restructuring		Costs		Exit Costs		Restructuring
Balance at January 1, 2019	$	47	$	22	$	69
Balance at January 1, 2020							$	32	$	13	$	45
Net cash paid, principally severance and related benefits		(13)		(2)		(15)		(8)				(8)
Other, including foreign exchange translation				(1)		(1)		(2)		(1)		(3)
Balance at March 31, 2019	$	34	$	19	$	53
Balance at March 31, 2020							$	22	$	12	$	34

When a decision is made to take restructuring actions, the Company manages and accounts for them programmatically apart from the on-going operations of the business. Information related to major programs is presented separately, while minor initiatives are presented on a combined basis. As of March 31, ~~2020~~2021 and ~~2019,~~2020, no major restructuring programs were in effect.

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company has paid severance and related benefits along with other exit costs that were associated with past restructuring actions. The Company expects that the majority of the

remaining cash expenditures related to the accrued employee and other ~~exit~~ costs will be paid out over the next several ~~years.~~years.

7. Pension Benefit Plans

The components of the net periodic pension cost for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 are as follows:

U.S.

Non-U.S.


2020

2019

2020

2019

Service cost

$
3

$
3

$
3

$
3

Interest cost

12

15

7

8

Expected asset return

(21)

(22)

(12)

(12)

Amortization of actuarial loss

14

10

3

3

Net periodic pension cost

$
8

$
6

$
1

$
2


	U.S.				Non-U.S.
	2021		2020		2021		2020
Service cost	$	3	$	3	$	3	$	3
Interest cost		10		12		5		7
Expected asset return		(21)		(21)		(11)		(12)
Amortization of actuarial loss		16		14		3		3
Net periodic pension cost	$	8	$	8	$	—	$	1

The components of pension expense, other than the service cost component, are included in Other expense, net on the Condensed Consolidated Results of Operations.

8. Income Taxes

The Company calculates its interim tax provision using the estimated annual effective tax rate (“EAETR”) methodology in accordance with ASC 740-270. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision. The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income or loss in each tax jurisdiction in which the Company operates. The tax effects of discrete items are recognized in the tax provision in the quarter they occur, in accordance with GAAP. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter can materially impact the reported effective tax rate. The Company’s annual effective tax rate may be affected by the mix of earnings in the U.S. and foreign jurisdictions, and such factors as changes in tax laws, tax rates or regulations, changes in business, changing interpretation of existing tax laws or regulations, the finalization of tax audits and reviews, as well as other factors. As such, there can be significant volatility in interim tax provisions. The annual effective tax rate differs from the statutory U.S. Federal tax rate of 21% primarily because of varying non-U.S. tax rates.

The Company is currently under examination in various tax jurisdictions, ~~in which it operates,~~ including Bolivia, Brazil, Canada, Colombia, France, Germany, Indonesia, Mexico and Peru. The years under examination range from 2004 through ~~2018.~~2019. The Company has received tax assessments in excess of established reserves. The Company is contesting these tax assessments, and will continue to do so, including pursuing all available remedies, such as appeals and litigation, if necessary. The Company believes that adequate provisions for all income tax uncertainties have been made. However, if tax assessments are settled against the Company at amounts in excess of established reserves, it could have a material impact toon the Company’s results of operations, financial position or cash flows.

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act is an emergency economic stimulus package in response to the coronavirus outbreak that provides numerous tax provisions and other stimulus measures. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Some international jurisdictions in which the Company operates have also enacted legislation to provide economic stimulus in response to the coronavirus outbreak. The Company anticipates it may benefit from the ability to defer U.S. social security payroll tax that would otherwise be required in 2020, the acceleration of alternative minimum tax credit refunds, and potentially other provisions within the CARES Act. In addition, the Company may benefit from the deferral of certain non-U.S. tax payments to a future period. The Company expects the CARES Act and international legislation will not have a material impact on the Company’s condensed consolidated financial statements.

9. Debt

The following table summarizes the long-term debt of the Company:

March 31,

December 31,

March 31,


2020

2019

2019

Secured Credit Agreement:

Revolving Credit Facility:

Revolving Loans

$
817

$
—

$
—

Term Loans:

Term Loan A

1,477

1,477

Previous Secured Credit Agreement:

Revolving Credit Facility:

Revolving Loans

553

Term Loans:

Term Loan A

897

Other secured debt

330

333

504

Senior Notes:

6.75%, due 2020 (€500 million)

560

4.875%, due 2021 (€118 million at March 31, 2020 and December 31, 2019 and €330 million at March 31, 2019)

130

132

369

5.00%, due 2022

497

497

497

4.00%, due 2023

307

307

307

5.875%, due 2023

689

689

688

3.125%, due 2024 (€725 million)

813

824

824

6.375%, due 2025

296

295

296

5.375%, due 2025

297

297

298

2.875%, due 2025 (€500 million)

543

552

Finance leases

84

70

43

Other

13

11

18

Total long-term debt

6,293

5,484

5,854

Less amounts due within one year

178

49

34

Long-term debt

$
6,115

$
5,435

$
5,820


	March 31,		December 31,			March 31,
	2021		2020			2020
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	292	$	—		$	817
Term Loans:
Term Loan A		1,068		1,067			1,477
Other secured debt		110		99			330
Senior Notes:
4.875%, due 2021 (€118 million at March 31, 2020)							130
5.00%, due 2022							497
4.00%, due 2023		308		307			307
5.875%, due 2023		692		692			689
3.125%, due 2024 (€725 million)		866		914			813
6.375%, due 2025		296		296			296
5.375%, due 2025		298		298	��		297
2.875%, due 2025 (€500 million)		579		607			543
6.625%, due 2027		692		692
Finance leases		102		108			84
Other		6		7			13
Total long-term debt		5,309		5,087			6,293
Less amounts due within one year		141		142			178
Long-term debt	$	5,168	$	4,945		$	6,115

The Company presents debt issuance costs in the balance sheet as a deduction of the carrying amount of the related debt liability.

On June 25, 2019, certain of the Company’s subsidiaries entered into a ~~new~~ Senior Secured Credit Facility Agreement (as amended by that certain Amendment No. 1 to the Third Amended and Restated Credit Agreement and Syndicated Facility Agreement dated as of December 13, 2019, and as further amended by that certain Amendment No. 2 to the Third Amended and Restated Credit Agreement and Syndicated Facility Agreement dated as of December 19, 2019, the “Agreement”), which amended and restated the previous credit agreement (the “Previous Agreement”). The proceeds from the Agreement were used to repay all outstanding amounts under the Previous Agreement.

The Agreement provides for up to $3.0 billion of borrowings pursuant to term loans and revolving credit facilities. The term loans mature, and the revolving credit facilities terminate in June 2024. At March 31, ~~2020,~~2021, the Agreement includes a $300 million revolving credit facility, a $1.2 billion multicurrency revolving credit facility, and a $1.5 billion term loan A facility ($~~1,477~~1,068 million outstanding balance at March 31, 2021, net of debt issuance ~~costs)~~costs). At March 31, ~~2020,~~2021, the Company had unused credit of $~~673~~1,194 million available under the Agreement. The weighted average interest rate on borrowings outstanding under the Agreement at March 31, ~~2020~~2021 was ~~2.28%~~1.59%.

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 Agreement also contains 1 financial maintenance covenant, a Total Leverage Ratio (the “Leverage Ratio”), that requires the Company not to exceed a ratio of 5.0x calculated by dividing consolidated total debt, less cash and cash equivalents, by Consolidated EBITDA, with such Leverage Ratio decreasing to (a) 4.75x for the quarter ending June 30, 2021 and (b) 4.50x for the quarter ending December 31, 2021 and thereafter, as defined and described in the Agreement.

The maximum Leverage Ratio is subject to an increase of 0.5x for (i) any fiscal quarter during which certain qualifying acquisitions (as specified in the Agreement) are consummated and (ii) the following three fiscal quarters, provided that the Leverage Ratio shall not exceed 5.0x. The 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 Leverage Ratio to exceed the specified maximum.

Failure to comply with these covenants and other customary restrictions could result in an event of default under the Agreement. In such an event, the Company could not request borrowings under the revolving facilities, and all amounts outstanding under the Agreement, together with accrued interest, could then be declared immediately due and payable. Upon the occurrence and for the duration of a payment event of default, an additional default interest rate equal to 2.0% per annum will apply to all overdue obligations under the Agreement. If an event of default occurs under the Agreement and the lenders cause all of the outstanding debt obligations under the Agreement to become due and payable, this would result in a default under the indentures governing the Company’s outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of March 31, ~~2020,~~2021, the Company was in compliance with all covenants and restrictions in the Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Agreement will not be adversely affected by the covenants and restrictions.

The Leverage Ratio also determines pricing under the Agreement. The interest rate on borrowings under the Agreement is, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Agreement, plus an applicable margin. The applicable margin is linked to the Leverage Ratio. The margins range from 1.00% to 1.50% for Eurocurrency Loans and from 0.00% to 0.50% for Base Rate Loans. In addition, a commitment fee is payable on the unused revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Leverage Ratio.

Obligations under the 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. Such obligations 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 obligations, of stock of certain foreign subsidiaries. All obligations under the Agreement are guaranteed by certain domestic subsidiaries of the Company, and certain foreign obligations under the Agreement are guaranteed by certain foreign subsidiaries of the Company.

In ~~July 2019,~~May 2020, the Company ~~redeemed €250~~issued $700 million aggregate principal amount of ~~its outstanding 6.75% senior notes due 2020. The redemption was funded with cash on hand and revolver borrowings.~~

~~In November 2019, the Company issued €500 million aggregate principal amount of new~~ senior notes. The ~~new~~ senior notes bear interest at a rate of ~~2.875~~6.625% per annum and mature on ~~February 15, 2025.~~May 13, 2027. The ~~new~~ senior 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 ~~€492~~$690 million and were used to redeem the remaining ~~€250 million aggregate principal amount of the Company’s outstanding 6.75% senior notes due 2020 and approximately €212~~$130 million aggregate principal amount of the Company’s outstanding 4.875% senior notes due ~~2021.~~2021, approximately $419 million aggregate principal amount of the Company’s outstanding 5.00% senior notes due 2022 and approximately $105 million of other secured borrowings. The Company recorded approximately $38 million of additional interest charges for note repurchase premiums and write-off of unamortized finance fees related to these redemptions.

In ~~December 2019, subsidiaries~~August 2020, the Company redeemed the remaining $81 million aggregate principal amount of the Company’s outstanding 5.00% senior notes due 2022. The Company ~~completed consent solicitations~~recorded approximately $6 million of additional interest charges for note repurchase premiums and write-off of unamortized finance fees related to amend and waive certain provisions of the indentures governing certain of their senior notes. On December 11, 2019, those subsidiaries entered into supplemental indentures reflecting the amendments and waivers, which were obtained to facilitate the implementation of the Corporate Modernization.this redemption.

In order to maintain a capital structure containing appropriate amounts of fixed and floating-rate debt, the Company has entered into a series of interest rate swap agreements. These interest rate swap agreements were accounted for as either fair value hedges or cash flow hedges (see Note 5 for more information).

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 carrying amounts reported for 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 March 31, ~~2020~~2021 of the Company’s significant fixed rate debt obligations are as follows:


	Principal		Indicated				Principal		Indicated Market
	Amount		Market Price		Fair Value		Amount		Price Per $		Fair Value
Senior Notes:
4.875%, due 2021 (€118 million)		130		99.96		130
5.00%, due 2022		500		100.96		505
5.875%, due 2023		700		91.81		643	$	700	$	107.18	$	750
4.00%, due 2023		310		95.00		295		310		102.87		319
3.125%, due 2024 (€725 million)		798		94.82		757		849		103.62		880
6.375%, due 2025		300		88.71		266		300		111.61		335
5.375%, due 2025		300		94.91		285		300		105.69		317
2.875%, due 2025 (€500 million)		551		93.20		513		585		101.27		592
6.625%, due 2027								700		108.75		761

10. Contingencies

Asbestos

From 1948 to 1958, one of the Company's former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based pipe and block insulation material containing asbestos. The Company sold its insulation business unit in April 1958. The Company historically received claims from individuals alleging bodily injury and death as a result of exposure to asbestos from this product (“Asbestos Claims”). Some Asbestos Claims were brought as personal injury lawsuits that typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and, in some cases, punitive damages.

Predominantly, however, Asbestos Claims were historically presented to the Company under administrative claims-handling agreements, which the Company had in place with many plaintiffs’ counsel throughout the country (“Administrative Claims”). Administrative Claims required evaluation and negotiation regarding whether particular claimants qualify under the criteria established by the related claims-handling agreements. The criteria for Administrative Claims included verification of a compensable illness and a reasonable probability of exposure to a product manufactured by the Company's former business unit during its manufacturing period ending in 1958. Plaintiffs’ counsel presented, and the Company negotiated, Administrative Claims under these various agreements in differing quantities, at different times, and under a variety of conditions.

On December 26 and 27, 2019, the Company implemented the Corporate Modernization, ~~(“Corporate Modernization”),~~ whereby O-I Glass became the new parent entity with Owens-Illinois Group, Inc. (“O-I Group”) and Paddock Enterprises LLC (“Paddock”) as direct, wholly owned subsidiaries, with Paddock as the successor-by-merger to O-I. The Company’s legacy asbestos-related liabilities remained within Paddock, ~~structurally separating them from~~with the Company’s glass-making operations ~~which remain~~remaining under O-I Group. As part of the Corporate Modernization transactions, O-I Glass entered into a support agreement with Paddock that requires O-I Glass to provide funding to Paddock for all permitted uses, subject to the terms of the support agreement. The key objectives of the Paddock support agreement are to ensure that Paddock has the ability to fund the costs and expenses of managing the Chapter 11 process, and ultimately settle Asbestos Claims through the establishment of a trust as described below and fund certain other liabilities.

On January 6, 2020 (the “Petition Date”), Paddock voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware to equitably and finally resolve all of its current and future asbestos-related claims. O-I Glass and O-I Group were not included in the Chapter 11 filing. As a result of the initiation of the Chapter 11 proceeding, Paddock ~~now operates~~continues to operate in the ordinary course ~~under~~and with court protection from ~~asbestos claims~~Asbestos Claims by operation of the automatic stay in Paddock’s Chapter 11 filing, which stays ongoing litigation and submission of claims against Paddock as of the Petition Date and defers the payment of Paddock’s outstanding

obligations on account of settled or otherwise determined lawsuits and claims. The bankruptcy process is expected to provide a centralized forum to resolve presently pending and anticipated future lawsuits and claims associated with asbestos. Paddock’s ultimate goal in its Chapter 11 case is to confirm a plan of reorganization under ~~Section~~section 524(g) of the Bankruptcy Code and utilize this specialized provision to establish a trust that will address all current and future

asbestos-related ~~claims. Because the Chapter 11 proceedings are~~claims and that, in ~~the early stages, it is not possible to predict the form~~exchange for funding of the ~~ultimate resolution~~ trust by the Company and/or ~~when an ultimate resolution might occur.~~

~~As part~~its subsidiaries, will provide permanent injunctive relief, protecting the Company, each of the Corporate Modernization transactions, O-I Glass entered into a support agreement with Paddock that requires O-I Glass to provide funding to Paddock for all permitted uses, subject to the terms of the support agreement. The key objectives of the support agreement are to ensure that Paddock has the ability to fund the costsits current and ~~expenses of managing the Chapter 11 process, ultimately settle~~former affiliates and certain other related parties (the “Company Protected Parties”) from any Asbestos Claims through the establishment of a trust as described above and fund certain other liabilities including applicable taxes. The ultimate amount that may be required to fund the trust in connection with a confirmed Chapter 11 plan of reorganization cannot be estimated with certainty.based on products manufactured, sold, used, and/or distributed by Owens-Illinois, Inc.

Following the Chapter 11 filing, the activities of Paddock ~~are now~~became subject to review and oversight by the bankruptcy court. As a result, the Company no longer has exclusive control over Paddock’s activities during the Chapter 11 proceedings. Therefore, Paddock was deconsolidated as of the Petition Date, and its assets and liabilities, which primarily included $47 million of cash, the legacy asbestos-related liabilities, as well as certain other assets and liabilities as of the Petition Date, were derecognized from the Company’s consolidated financial statements on a prospective basis. Simultaneously, the Company recognized a liability related to the Paddock support agreement, as described above, of $471 million as required under applicable accounting ~~standards, which may be subject to change based on the facts~~standards. The deconsolidation and ~~circumstances of the Chapter 11 proceedings. Taken together, these transactions~~Paddock support agreement resulted in a loss of approximately $14 million, which was reflected as a charge in the Company’s first quarter 2020 operating results. Additionally, the deconsolidation resulted in an investing outflow of $47 million in the Company’s first quarter 2020 consolidated cash flows.

On February 23, 2021, Paddock and O-I Glass commenced a court-approved mediation process regarding the terms of a potential consensual plan of reorganization pursuant to section 524(g) of the Bankruptcy Code with the Official Committee of Asbestos Personal Injury Claimants (the “ACC” or “Asbestos Claimants’ Committee”) appointed in the Paddock Chapter 11 case as the representative of current Paddock asbestos claimants, and the Legal Representative of Future Asbestos Claimants (the “FCR” or “Future Claimants’ Representative”) appointed in the Paddock Chapter 11 case as the representative of future Paddock asbestos claimants. On April 26, 2021, the Company announced that Paddock, the ACC and FCR reached an agreement in principle, supported by O-I Glass, by accepting a proposal from the mediators setting forth total consideration to fund a trust created under section 524(g) of the Bankruptcy Code upon the effective date of a consensual plan of reorganization for Paddock.

This agreement in principle, which is subject to definitive documentation and satisfaction of certain conditions, will resolve the potential liability of Paddock and the Company Protected Parties for pending and future personal injury claims related to exposure to asbestos-containing products that were allegedly manufactured, distributed, used and/or sold by Owens-Illinois, Inc. Under the Chapter 11 plan that will implement the agreement in principle, an asbestos settlement trust (the “Paddock Trust”) created pursuant to the provisions of section 524(g) of the U.S. Bankruptcy Code will be established and, on the effective date of the Chapter 11 plan, will be funded with $610 million in total consideration (“Settlement Consideration”). In exchange for the Settlement Consideration, each of the Company Protected Parties is expected to receive the benefit of a release from Paddock, and Paddock and the Company Protected Parties will receive the benefit of an injunction under Section 524(g) of the Bankruptcy Code channeling Asbestos Claims to the Paddock Trust and permanently enjoining the assertion of Asbestos Claims against Paddock and the Company Protected Parties.

The agreement in principle is subject, among other things, to the negotiation and filing of a Chapter 11 plan of reorganization for Paddock incorporating the terms of such agreement (the “Plan”), acceptance of the Plan by at least 75% of Paddock’s current asbestos claimants voting on such Plan, and confirmation of the Plan by the Bankruptcy Court and approval of the injunction in favor of Paddock and the Company Protected Parties by the United States District Court for the District of Delaware (“District Court”). On the effective date of the Plan, the Settlement Consideration will be provided and Asbestos Claims against Paddock and the Company Protected Parties will be permanently enjoined.

In connection with the agreement in principle, the Company has recorded a charge of $154 million related to its potential liability under the Paddock support agreement as a recognizable subsequent event in the Company’s consolidated results of operations for the quarter ended March 31, 2021, primarily related to an increase to Paddock’s asbestos reserve estimate in consideration for the channeling injunction to be included in Paddock’s Plan protecting Company Protected Parties from Asbestos Claims, as well as certain other adjustments to Paddock’s assets and liabilities, including estimated professional fees and expenses to be incurred in confirming and implementing the Plan.

Several risks and uncertainties remain related to Paddock’s Chapter 11 case that could have a material adverse effect on the Company’s business, consolidated financial condition, results of operations and cash flows, including the ultimate amounts necessary to fund any trust established pursuant to Section 524(g) of the Bankruptcy Code, the potential for the Company’s asbestos-related exposure to extend beyond Paddock based on corporate veil piercing efforts or other claims by asbestos plaintiffs, the

total costs of the Chapter 11 ~~proceedings~~proceeding, and the length of time necessary to ~~resolve the case, either through settlement or various court proceedings,~~confirm a Plan, and the possibility that Paddock will be unsuccessful in ~~attaining~~confirming such Plan or that such Plan does not ultimately become effective. The Paddock support agreement liability of $625 million recorded on the ~~desired relief~~Company’s March 31, 2021 condensed consolidated balance sheet as required under ~~Chapter 11.~~applicable accounting standards is the Company’s best estimate based on the facts and circumstances that exist at the Form 10-Q filing date. These risk factors are discussed further in Part II Item 1A–“Risk Factors.”

As noted above, the Company previously recognized a liability related to the Paddock support agreement, as described above, of $471 million as required under applicable accounting standards. That liability was based on the following analysis. Prior to the Petition Date, the Company knew of approximately 850 asbestos lawsuits pending. This figure does not include an estimate of potential Administrative Claims that could have been presented under a claims-handling agreement due to the uncertainties around presentation timing, quantities, or qualification rates. The Company historically considered Administrative Claims to be filed and disposed of when they ~~are~~were accepted for payment.

The lack of uniform rules in lawsuit pleading practice, technical pleading ~~requirement~~requirements in some jurisdictions, local rules, and other factors caused considerable variation in the specific amounts of monetary damages asserted in lawsuits brought prior to the Petition Date. In the Company’s experience, the monetary relief alleged in a lawsuit bore little relationship to an Asbestos Claim’s merits or its disposition value. Rather, several variables, including but not limited to, the type and severity of the asbestos disease, medical history, and exposure to other disease-causing agents; the product identification evidence against the Company and other co-defendants; the defenses available to the Company and other co-defendants; the specific jurisdiction in which the claim was made; the applicable law; and the law firm representing the claimant, affected the value.

The Company was also a defendant in other Asbestos Claims involving maritime workers, medical monitoring, co-defendants’ third-party actions, and property damage allegations. Based upon its experience, the Company assessed that these categories of Asbestos Claims would not involve any material liability. Therefore, they were not included in the description of pending or disposed matters.

From receipt of its first Asbestos Claim to the Petition Date, the Company in the aggregate disposed of approximately 401,200 Asbestos Claims at an average indemnity payment of approximately $10,200 per claim. The Company’s asbestos indemnity payments varied on a per-claim basis. Asbestos-related cash payments for 2019 were $151 million and the Company’s cash payments per claim disposed (inclusive of legal costs) were approximately $129,000 for the year ended December 31, 2019.

Prior to the Petition Date, the Company’s objective was historically 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 claims-handling agreements generally reduced the number of claims that would otherwise have been received by the Company in the tort system. In addition, changes in jurisdictional dynamics, legislative acts, asbestos docket management and procedures, the substantive law, the co-defendant pool, and other external factors affected lawsuit volume, claim volume, qualification rates, claim values, and related matters. Collectively, these variables generally had the effect of increasing the Company’s per-claim average indemnity payment over time.

Beginning with the initial liability of $975 million established in 1993, the Company has accrued a total of approximately $5.0 billion through just prior to the Petition Date, before insurance recoveries, for its asbestos-related liability. The Company’s estimates of its liability were significantly affected by, among other factors, the volatility of asbestos-related litigation in the United States, the significant number of co-defendants that filed for bankruptcy, changes in mortality rates, the inherent uncertainty of future disease incidence and claiming patterns against the Company, the significant expansion of the types of defendants sued in this litigation, and changes in the extent to which such defendants participated in the resolution of cases in which the Company was also a defendant.

Prior to the Petition Date, the Company continually monitored trends that could affect its ultimate liability and analyzed the developments and variables likely to affect the resolution of Asbestos Claims. The material components of the Company’s total accrued liability were determined by the Company in connection with its annual comprehensive legal review and consisted of the following estimates, to the extent it was probable that such liabilities had been incurred

and could be reasonably estimated: (i) the liability for Asbestos Claims already asserted against the Company; (ii) the liability for Asbestos Claims not yet asserted against the Company; and (iii) the legal defense costs estimated to be incurred in connection with the Asbestos Claims already asserted and those Asbestos Claims the Company believed would be asserted.

Through December 31, 2019, the Company historically conducted an annual comprehensive legal review of its asbestos-related liabilities and costs in connection with finalizing and reporting its annual consolidated results of operations, unless significant changes in trends or new developments ~~have~~ warranted an earlier review. As part of its annual comprehensive legal review, the Company provided historical Asbestos Claims 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 the Company in estimating the total number of future Asbestos Claims likely to be asserted against the Company. The Company used this estimate, along with an estimation of disposition costs and related legal costs, as inputs to develop its best estimate of its total probable liability. If the results of the annual comprehensive legal review indicated that the existing amount of the accrued liability was lower (higher) than its reasonably estimable asbestos-related costs, then the Company recorded an appropriate charge (credit) to the Company’s results of operations to increase (decrease) the accrued liability.

The significant assumptions underlying the material components of the Company’s accrual historically were:

a) ~~settlements would continue to be limited almost exclusively to claimants who were exposed to the Company’s asbestos containing insulation prior to its exit from that business in 1958;~~

~~b) Asbestos Claims would continue to be resolved primarily under the Company’s administrative claims-handling 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 the Company for such cases would not change materially, including claiming pattern changes driven by changes in the law, procedure, or expansion of judicial resources in jurisdictions where the Company settles Asbestos Claims;

~~d) the Company would be substantially able to defend itself successfully at trial and on appeal;~~

~~e) the number and timing of additional co-defendant bankruptcies would not change significantly the assets available to participate in the resolution of cases in which the Company is a defendant; and~~

~~f) co-defendants with substantial resources and assets would continue to participate significantly in the resolution of future Asbestos Claims.~~

settlements would continue to be limited almost exclusively to claimants who were exposed to the Company’s asbestos containing insulation prior to its exit from that business in 1958;

Asbestos Claims would continue to be resolved primarily under the Company’s administrative claims-handling agreements or on terms comparable to those set forth in those agreements;

the incidence of serious asbestos-related disease cases and claiming patterns against the Company for such cases would not change materially, including claiming pattern changes driven by changes in the law, procedure, or expansion of judicial resources in jurisdictions where the Company settled Asbestos Claims;

the Company would be substantially able to defend itself successfully at trial and on appeal;

the number and timing of additional co-defendant bankruptcies would not change significantly the assets available to participate in the resolution of cases in which the Company is a defendant; and

co-defendants with substantial resources and assets would continue to participate significantly in the resolution of future Asbestos Claims.

For the year ended December 31, 2019, the Company concluded that an accrual in the amount of $486 million was required under applicable accounting standards. This amount ~~has~~was not ~~been~~ discounted for the time value of money. The Company’s comprehensive legal review resulted in a charge of ~~$35~~$35 million for the year ended December 31, 2019. As

previously disclosed, the Company anticipated that adjustments to its asbestos-related accruals were possible given the inherent uncertainties involved in asbestos litigation. In the fourth quarter of 2019, this charge was primarily due to an increase in the estimated average disposition cost per claim (including related legal costs), driven primarily by a changing litigation environment more favorable to plaintiffs, and ana decrease in the estimated number of claims likely to be asserted against the Company in the future that was less than the decrease expected by the ~~company.~~

Company.

Other Matters

In February 2021, severe weather conditions swept across the southern United States, curtailing access to natural gas and electricity for several of the Company’s facilities. While the situation was most acute in Texas, access to natural gas in Mexico was also significantly impacted as Texas supplies natural gas to the country. The Company has been notified by energy providers in both the United States and Mexico that it may be assessed surcharges for usage or excess usage of electricity and natural gas during this period. Although most of these surcharges have not yet been formally assessed, the Company believes that these costs are probable and reasonably estimable and therefore has accrued $20

million as of March 31, 2021, which is based on the best information available at this time. The Company believes that it is reasonably possible that it could incur losses for this matter that materially differ from the $20 million accrued as of March 31, 2021, including amounts in excess of the amount currently recognized. However, given the lack of information available from regulators, suppliers and state and federal authorities, the Company is unable to make an estimate of the possible loss or range of losses at this time.

Other litigation is pending against the Company, in some 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.

11. Share Owners’ Equity

The activity in share owners’ equity for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is as follows:


	Share Owners’ Equity of the Company														Share Owners’ Equity of the Company
									Accumulated														Accumulated
			Capital in						Other		Non-		Total Share				Capital in					Retained	Other		Non-		Total Share
	Common		Excess of		Treasury		Retained		Comprehensive		controlling		Owners'		Common		Excess of		Treasury		Earnings		Comprehensive		controlling		Owners'
	Stock		Par Value		Stock		Earnings (Loss)		Loss		Interests		Equity		Stock		Par Value		Stock		(Loss)		Loss		Interests		Equity
Balance on January 1, 2020	$	2		3,130		(733)		(89)		(1,843)		97	$	564
Balance on January 1, 2021															$	2	$	3,129		(714)	$	152	$	(2,272)	$	104	$	401
Reissuance of common stock (0.2 million shares)				(3)		5								2				(2)		4								2
Stock compensation (0.8 million shares)				1										1
Net earnings								50				5		55
Stock compensation (0.3 million shares)																		4										4
Net earnings (loss)																						(97)				6		(91)
Other comprehensive loss										(527)		(9)		(536)										(48)		(4)		(52)
Dividends declared								(8)		��				(8)
Other						(2)								(2)				19		(2)		(19)						(2)
Balance on March 31, 2020	$	2	$	3,128	$	(730)	$	(47)	$	(2,370)	$	93	$	76
Balance on March 31, 2021															$	2	$	3,150	$	(712)	$	36	$	(2,320)	$	106	$	262

Share Owners’ Equity of the Company










Accumulated




Capital in

Other

Non-

Total Share

Common

Excess of

Treasury

Retained

Comprehensive

controlling

Owners'


Stock

Par Value

Stock

Earnings

Loss

Interests

Equity

Balance on January 1, 2019

$
2

3,124

(705)

333

(1,968)

114

$
900

Reissuance of common stock (0.1 million shares)

2

3

5

Treasury shares purchased (2.1 million shares)

(38)

(38)

Stock compensation (0.5 million shares)

4

4

Net earnings

79

5

84

Other comprehensive income (loss)

57

3

60

Other

(5)

(5)

Balance on March 31, 2019

$
2

$
3,130

$
(745)

$
412

$
(1,911)

$
122

$
1,010


	Share Owners’ Equity of the Company
									Accumulated
			Capital in				Retained		Other		Non-		Total Share
	Common		Excess of		Treasury		Earnings		Comprehensive		controlling		Owners'
	Stock		Par Value		Stock		(Loss)		Loss		Interests		Equity
Balance on January 1, 2020	$	2	$	3,130	$	(733)	$	(89)	$	(1,843)	$	97	$	564
Reissuance of common stock (0.2 million shares)				(3)		5								2
Stock compensation (0.8 million shares)				1										1
Net earnings								50				5		55
Other comprehensive loss										(527)		(9)		(536)
Dividends declared								(8)						(8)
Other						(2)								(2)
Balance on March 31, 2020	$	2	$	3,128	$	(730)	$	(47)	$	(2,370)	$	93	$	76

1819

The Company has 250,000,000 shares of common stock authorized with a par value of $.01 per share. Shares outstanding are as follows:


	Shares Outstanding (in thousands)			Shares Outstanding (in thousands)
	March 31,	December 31,	March 31,	March 31,	December 31,	March 31,
	2020	2019	2019	2021	2020	2020

Shares of common stock issued (including treasury shares)	189,210	188,447	188,348	189,796	189,305	189,210

Treasury shares	32,639	32,573	33,117	31,884	31,911	32,639

12. Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 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, 2020

$
(813)

$
(14)

$
(1,016)

$
(1,843)

Change before reclassifications

(564)

(2)

(2)

(568)

Amounts reclassified from accumulated other comprehensive income (loss)

11
(a)

17
(b)

28

Translation effect

(1)

16

15

Tax effect

(2)

(2)

Other comprehensive income (loss) attributable to the Company

(564)

6

31

(527)

Balance on March 31, 2020

$
(1,377)

$
(8)

$
(985)

$
(2,370)


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2021	$	(1,229)	$	(60)		$	(983)		$	(2,272)
Change before reclassifications		(81)		63			3			(15)
Amounts reclassified from accumulated other comprehensive loss				(50)	(a)		19	(b)		(31)
Translation effect							(2)			(2)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		(81)		13			20			(48)
Balance on March 31, 2021	$	(1,310)	$	(47)		$	(963)		$	(2,320)


									Total										Total
									Accumulated										Accumulated
	Net Effect of		Change in Certain						Other		Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive		Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss		Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2019	$	(889)	$	(18)		$	(1,061)		$	(1,968)
Balance on January 1, 2020											$	(813)	$	(14)		$	(1,016)		$	(1,843)
Change before reclassifications		46		(2)			(2)			42		(564)		(2)			(2)			(568)
Amounts reclassified from accumulated other comprehensive income (loss)				3	(a)		13	(b)		16
Amounts reclassified from accumulated other comprehensive loss														11	(a)		17	(b)		28
Translation effect				2			(5)			(3)				(1)			16			15
Tax effect				2						2				(2)						(2)
Other comprehensive income (loss) attributable to the Company		46		5			6			57		(564)		6			31			(527)
Balance on March 31, 2019	$	(843)	$	(13)		$	(1,055)		$	(1,911)
Balance on March 31, 2020											$	(1,377)	$	(8)		$	(985)		$	(2,370)

(a)	Amount is ~~included in Cost of goods sold~~recorded to Other expense, net and ~~Other~~interest expense, net 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~~post-retirement benefit cost.

1920

13. Other Expense, Net

Other expense, ~~(income),~~ net for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 included the following:


	Three months ended March 31,				Three months ended March 31,
	2020		2019		2021		2020
Charge related to Paddock support agreement liability (see Note 10)					$	(154)	$	—
Charge for deconsolidation of Paddock (see Note 10)	$	14	$	—				(14)
Intangible amortization expense						(9)		(10)
Foreign currency exchange loss				3		(2)
Intangible amortization expense		10		10
Royalty income		(4)		(3)		5		4
Other expense (income), net		(3)		—
Other income, net						4		3
	$	17	$	10	$	(156)	$	(17)

14. Earnings Per Share

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


	Three months ended March 31,				Three months ended March 31,
	2020		2019		2021		2020
Numerator:
Net earnings attributable to the Company	$	50	$	79
Net earnings (loss) attributable to the Company					$	(97)	$	50
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		156,081		154,361		157,571		156,081
Effect of dilutive securities:
Stock options and other		1,603		2,274				1,603
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		157,684		156,635		157,571		157,684
Basic earnings per share:
Net earnings attributable to the Company	$	0.32	$	0.51
Net earnings (loss) attributable to the Company					$	(0.62)	$	0.32
Diluted earnings per share:
Net earnings attributable to the Company	$	0.32	$	0.51
Net earnings (loss) attributable to the Company					$	(0.62)	$	0.32

~~Options to purchase~~The diluted earnings per share computation for the three months ended March 31, 2021 and 2020, respectively, excludes 1,890,075 and 2,533,717 ~~and 1,496,298~~ weighted average shares of common stock due to their antidilutive effect, which includes options to purchase, unvested restricted stock units and performance vested restricted share units. Options to purchase shares were ~~outstanding during the three months March 31, 2020 and 2019, respectively, were not included in the computation of diluted earnings per share~~excluded because the exercise prices of the options ~~exercise price was~~were greater than the average market price of the common shares. For the three months ended March 31, 2021, diluted earnings per share of common stock was equal to basic earnings per share of common stock due to the net loss attributable to the Company.

15. Supplemental Cash Flow Information

Income taxes paid ~~(received)~~ in cash were as follows:


	Three months ended March 31,				Three months ended March 31,
	2020		2019		2021		2020
U.S.	$	2	$	(7)	$	—	$	2
Non-U.S.		32		33		10		32
Total income taxes paid in cash	$	34	$	26	$	10	$	34

Interest paid in cash for the three months ended March 31, 2021 and 2020 was $49 million and ~~2019 was~~ $58 million, ~~and $70 million,~~ respectively.

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At March 31, ~~2020,~~2021, December 31, ~~2019~~2020 and March 31, ~~2019,~~2020, the amount of receivables sold

by the Company was $444 million, $436 million and $429 million, ~~$539~~respectively. These amounts included $186 million, $176 million and ~~$303~~$120 million ~~respectively.~~ at March 31, 2021, December 31, 2020, and March 31, 2020, respectively, for trade receivable amounts factored under supply chain financing programs linked to commercial arrangements with key customers. For the three months ended March 31, 2021 and 2020, ~~and 2019,~~ the ~~Company reduced the~~Company’s use of its factoring programs ~~compared to the most recent respective year-end periods and this~~ resulted in an increase of $8 million to cash from operating activities and a ~~higher use of working capital, and corresponding~~$110 million decrease to cash from operating activities, ~~of approximately $110 million and $297~~ ~~million,~~ respectively.

16. New Accounting Pronouncement

~~Credit Losses -~~ ~~Effective January 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement~~Effects of ~~Credit Losses~~Reference Rate Reform on Financial Instruments,” using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. The adoption of ASU No. 2016-13 had 0 cumulative effect adjustment as of January 1,Reporting - In March 2020, ~~and no material impact on the Company’s consolidated balance sheet, consolidated results of operations or consolidated cash flows. See Note 3 for additional information.~~

~~Disclosure Requirements for Fair Value Measurement -~~ ~~In August 2018,~~ the FASB issued ASU No. ~~2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” which modifies the fair value disclosure requirements. Application~~2020-04, “Reference Rate Reform (Topic 848): Facilitation of the ~~standard~~Effects of Reference Rate Reform on Financial Reporting,” which allows for elective contract modification guidance for contracts or other transactions that reference LIBOR or a reference rate that is ~~required for annual periods beginning after December 15, 2019.~~expected to be discontinued as a result of reference rate reform. The Company adopted ~~this standard in the first quarter of~~ASU No. 2020-04 effective July 1, 2020. The adoption of this ~~standard did not have a material~~ASU had no impact on the Company’s condensed consolidated ~~financial statements.~~

~~Disclosure Requirements for Defined Benefit Plans~~ - In August 2018, the FASB issued ASU No. 2018-14, “Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” which modifies the defined benefit plan disclosure requirements. Applicationbalance sheet, results of the standard is required for annual periods beginning after December 15, 2020. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.operations or cash flows.

17. ~~Business Combinations~~

On June 28, 2019, the Company completed the acquisition of Nueva Fábrica Nacional de Vidrio, S. de R.L. de C.V. (“Nueva Fanal”) from Grupo Modelo, an affiliate of Anheuser-Busch InBev SA/NV for a total purchase price of approximately $188 million. The Company financed this acquisition with debt. The Nueva Fanal facility is located near Mexico City, Mexico. Currently, this plant has 3 furnaces to produce and supply approximately 240,000 tons of glass containers annually for Grupo Modelo brands, such as Corona, for local and global export markets. This acquisition increases the Company’s presence in the Mexican glass packaging market.

Nueva Fanal’s operating results are included in the Company’s Consolidated Financial Statements from the acquisition date as part of the Americas segment. The acquisition qualifies as a business combination and will be accounted for using the acquisition method of accounting.

The total purchase price will be allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values. The aggregate purchase price was preliminarily allocated to the Company’s balance sheet as of March 31, 2020, and has not yet been finalized because the Company has not yet completed the valuation of the acquired property, plant and equipment and the related depreciation periods. The Company expects that the purchase price allocation process will be completed no later than the second quarter of 2020. The following table summarizes the preliminary estimates of fair value of the assets acquired and liabilities assumed on June 28, 2019 and subsequent adjustments identified through the ongoing purchase price allocation process and recorded through the measurement period:

June 28,
2019

Measurement Period Adjustments

March 31, 2020
Accounts receivable

$
42

$
—

$
42
Inventory

17

17
Goodwill

18

18
Intangibles

35

(32)

3
Net property, plant and equipment

129

32

161
Total assets acquired

223

18

241
Accounts payable

25

1

26
Accrued liabilities

3

(1)

2
Deferred tax liabilities

25

25
Net assets acquired

$
195

$
(7)

$
188

~~This acquisition did not meet the thresholds for a significant acquisition and therefore 0 pro forma financial information is presented.~~

~~18.~~ COVID-19 Impacts

On March 11, 2020, the World Health Organization characterized ~~the outbreak of the coronavirus disease, known as~~ COVID-19 as a global pandemic and recommended containment and mitigation measures. The Company is actively monitoring the impact of the ~~coronavirus global~~COVID-19 pandemic, which ~~will~~negatively impacted its business in 2020 and the first quarter of 2021 and may negatively impact its business and results of operations ~~for~~in the ~~second quarter~~future.

The preparation of ~~2020~~Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and ~~likely beyond.~~assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates particularly as it relates to estimates reliant on forecasts and other assumptions reasonably available to the Company and the uncertain future impacts of the COVID-19 pandemic and related economic disruptions. The extent to which the COVID-19 pandemic and related economic disruptions impact the Company’s ~~operations will be impacted by the global pandemic~~business and financial results will depend ~~largely~~ on future developments ~~which are highly uncertain~~including, but not limited to, the continued spread, duration and ~~cannot be accurately predicted, including new information which may emerge concerning the~~ severity of the ~~global pandemic~~COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks after the initial outbreak has subsided; the actions taken by ~~government authorities~~the U.S. and foreign governments to contain the ~~global~~COVID-19 pandemic, ~~or treat~~address its impact ~~among~~or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other ~~things.~~sustained adverse market event; the impact of the developments described above on its customers and suppliers; and how quickly and to what extent normal economic and operating conditions can resume. The accounting matters assessed included, but were not limited to:

~~Future changes~~• allowance for doubtful accounts and credit losses

• carrying value of inventory; and

• the carrying value of goodwill and other long-lived assets.

There was not a material impact to the above estimates in the Company’s ~~cost~~Condensed Consolidated Financial Statements for the three month periods ended March 31, 2021 or March 31, 2020. The Company’s future assessment of ~~capital, expected cash flows, or~~the magnitude and duration of the COVID-19 pandemic, as well as other factors, ~~as a~~could result ofin material changes to the ~~above may cause~~estimates and material impacts to the Company’s ~~long-lived assets including goodwill to be impaired, resulting~~Condensed Consolidated Financial Statements in ~~a non-cash charge against results of operations to write down long-lived assets including goodwill for the amount of the impairment.~~future reporting periods.

18. Divestitures

On July 31, 2020, the Company completed the sale of its ANZ businesses to Visy, an unaffiliated

company. Gross proceeds approximated AUD $947 million (including a related sale-leaseback agreement which

approximated AUD $214 million) or approximately USD $677 million. Approximately 95% of those proceeds

were received at the time of closing, and the remaining balance of approximately $58 million was received in the first quarter of 2021. In 2020, the Company recognized a net gain (including costs directly attributable to the sale of ANZ and subject to post-closing adjustments) on the divestiture of approximately $275 million, which was reported on the Other income (expense), net line in the Consolidated Results of Operations. In addition, at closing, certain subsidiaries of the Company entered into certain ancillary agreements with Visy and the ANZ businesses in respect of the provision of certain transitional and technical services to the ANZ businesses.

In January 2021, the Company completed the sale of its plant in Argentina. Gross proceeds are approximately $10 million and the gain on the sale was not material.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings ~~from continuing operations~~(loss) before interest income, interest expense, and provision (benefit) 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 segment data presented below is prepared in accordance with general accounting principles for segment reporting. The lines titled “reportable segment totals” in both net sales and segment operating profit, however, are non-GAAP measures when presented outside of the financial statement footnotes. Management has included reportable segment totals below to facilitate the discussion and analysis of financial condition and results of operations and believes this information allows the ~~board~~Board of ~~directors,~~Directors, management, investors and analysts to better understand the Company’s financial performance. 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 is not, however, intended as an alternative measure of operating results as determined in accordance with U.S. GAAP and is not necessarily comparable to similarly titled measures used by other companies.

In March 2020, the World Health Organization categorized ~~the novel coronavirus (“COVID-19”)~~COVID-19 as a pandemic, and it continues to spread throughout the United States and other countries across the world. To limit the spread of COVID-19, governments have taken various actions, including the issuance of stay-at-home orders and social distancing guidelines. As a result, many businesses have adjusted, reduced or suspended operating activities, either due to requirements under government orders or as a result of a reduction in demand for many products from direct or ultimate customers. Fortunately, the manufacture of glass containers has been largely viewed as essential to the important food and beverage value chain in the countries in which the Company operates.However, the Company is still impacted by ~~the~~ broader supply chain issues and, in some cases, certain end use categories that it serves are not deemed essential. While ~~most of~~ the Company’s plants ~~are operating~~continued to operate as essential businesses, some plants ~~have~~ suspended operations or cut back on ~~operating levels and~~ shifts ~~and additional~~for a portion of 2020 due to government actions to address COVID-19. Additional suspensions and cutbacks may occur as the impacts from COVID-19 and related responses continue to develop.

The following discussion describes the Company’s consolidated results of operations for the three months ended March 31, ~~2020. While the recent outbreak of~~2021. The COVID-19 ~~primarily~~pandemic impacted the Company’s shipment and production levels in ~~the latter part of~~2020 and the first quarter of ~~2020,~~2021, and the Company is actively monitoring the continued impact of the ~~coronavirus outbreak,~~pandemic, which ~~will~~could negatively impact its business, results of operations, cash flows and financial position beyond the first quarter of 2021.

On July 31, 2020, the Company completed the sale of its Australia and New Zealand (“ANZ”) businesses, which comprised the majority of the Asia Pacific region (approximately 85% of net sales for the ~~second quarter~~full year 2019), to Visy Industries Holdings Pty Ltd. After the sale of the ANZ businesses, the remaining businesses in the Asia Pacific region do not meet the criteria of an individually reportable segment. For the 2020 results presented below, the results for the Asia Pacific reportable segment reflect only the results of the ANZ businesses. The sales and ~~likely beyond. The~~operating results of the other businesses that historically comprised the Asia Pacific segment, and that have been retained by the Company, ~~has summarized its current operating conditions~~have been reclassified to Other sales and ~~actions taken to mitigate the impact of COVID-19 below.~~Retained corporate costs and other, respectively.

Financial information for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 regarding the Company’s reportable segments is as follows (dollars in millions):

Three months ended

March 31,


2020

2019

Net Sales:

Americas

$
831

$
881

Europe

576

596

Asia Pacific

145

151

Reportable segment totals

1,552

1,628

Other

9

10

Net Sales

$
1,561

$
1,638


	Three months ended
	March 31,
	2021		2020
Net Sales:
Americas	$	837	$	831
Europe		639		576
Asia Pacific				123
Reportable segment totals		1,476		1,530
Other		24		31
Net Sales	$	1,500	$	1,561

2324

Three months ended

March 31,

2020

2019
Segment operating profit:

Americas

$
103

$
113
Europe

61

79
Asia Pacific

5

8
Reportable segment totals

169

200
Items excluded from segment operating profit:

Retained corporate costs and other

(21)

(24)
Charge for deconsolidation of Paddock

(14)

Interest expense, net

(53)

(65)
Earnings before income taxes

81

111
Provision for income taxes

(26)

(27)
Net Earnings

55

84
Net earnings attributable to noncontrolling interests

(5)

(5)
Net earnings attributable to the Company

$
50

$
79


	Three months ended
	March 31,
	2021		2020
Segment operating profit:
Americas	$	100	$	103
Europe		75		61
Asia Pacific				12
Reportable segment totals		175		176
Items excluded from segment operating profit:
Retained corporate costs and other		(35)		(28)
Charge related to Paddock support agreement liability		(154)
Charge for deconsolidation of Paddock				(14)
Interest expense, net		(51)		(53)
Earnings (loss) before income taxes		(65)		81
Provision for income taxes		(26)		(26)
Net earnings (loss)		(91)		55
Net earnings attributable to noncontrolling interests		(6)		(5)
Net earnings (loss) attributable to the Company	$	(97)	$	50

Note: All amounts excluded from reportable segment totals are discussed in the following applicable sections.

Executive Overview — Quarters ended March 31, ~~2020~~2021 and ~~2019~~2020

First Quarter ~~2020~~2021 Highlights

●

Net sales in the first quarter of ~~2020~~2021 were down ~~nearly 5%~~approximately 4% from the same quarter in ~~2019,~~2020, primarily due to the ~~unfavorable~~sale of the Company’s ANZ businesses in 2020, continued impacts from COVID-19 and the impact of severe weather in the Americas. Sales were positively impacted by the favorable effects of changes in foreign currency exchange rates ~~and lower volumes, partially offset by incremental sales from the Nueva Fanal acquisition in mid-2019~~ and higher prices.

●

Segment operating profit for reportable segments was down ~~nearly 16%~~slightly in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily due to the ~~unfavorable effects~~sale of ~~changes~~the ANZ businesses, the impact of COVID-19 and the severe weather in ~~foreign currency, lower sales volumes and higher operating costs, driven by~~ the ~~nonoccurrence of energy credits and incentives recorded in 2019, partially~~Americas. These impacts were mostly offset by ~~higher net selling prices~~strong operating performance, cost management and ~~the positive impact from the Company’s turnaround initiatives.~~margin enhancement activities.

●

On ~~January 6, 2020 (the “Petition Date”~~April 26, 2021, the Company announced that its subsidiary, Paddock Enterprises LLC (“Paddock”), ~~Paddock voluntarily filed for relief~~had reached an agreement in principle to accept the terms of a mediator’s proposal regarding a consensual plan of reorganization under ~~Chapter 11 of~~ the Bankruptcy ~~Code~~Code. The agreement in principle provides for total consideration of $610 million to ~~equitably~~fund a trust on the effective date of a plan of reorganization, subject to definitive documentation and ~~finally resolve all~~satisfaction of certain conditions. The Company has recorded a charge of $154 million related to its ~~current and future asbestos-related claims.~~potential liability under the Paddock support agreement during the first fiscal quarter of 2021 primarily related to an increase to Paddock’s asbestos reserve estimate in consideration for the channeling injunction to be included in Paddock’s Plan protecting O-I Glass and ~~O-I Group were not included in the Chapter 11 filing. Following the Chapter 11 filing, Paddock became subject to review and oversight by the bankruptcy court.~~ ~~As a result, the Company no longer has exclusive control over Paddock’s activities during the bankruptcy proceedings. Therefore, Paddock was deconsolidated and~~ its ~~assets and liabilities were derecognized~~affiliates from the Company’s consolidated financial statements as of the Petition Date. Simultaneously, the Company recognized a $471 million liability related to its support agreement with Paddock. Taken together, these transactions resulted in a loss of approximately $14 million, which was recorded as a charge in the first quarter of 2020.

●

In light of COVID-19, for the time being the Company has halted the strategic review of its Australia and New Zealand (“ANZ”) business and will continue to run the operations which are performing well. As market conditions stabilize, the Company will reevaluate alternatives for ANZ. The Company’s tactical divestiture program continues to advance, but at a slower than anticipated pace.

●

While demand was stable for most of the first quarter, shipment and production levels did decline in several markets in late March reflecting the impact of COVID-19. The Company has temporarily curtailed some capacity to adapt to revised customer demand and comply with governmental public health decrees in certain countries. The Company has summarized its current operating conditions and its actions to mitigate the impact of COVID-19 below.Asbestos Claims.

Net sales for the first quarter of ~~2020~~2021 were ~~$77~~$61 million lower than the first quarter of the prior year primarily due to the ~~unfavorable effect~~sale of the Company’s ANZ businesses on July 31, 2020, continued impacts from COVID-19 and the impact of severe weather in the Americas. Sales were positively impacted by the favorable effects of changes in foreign currency exchange rates and ~~lower sales volumes, partially offset by incremental sales from Nueva Fanal and~~ higher prices.

~~Earnings~~Loss before income taxes ~~were $30~~was $65 million ~~lower~~ in the first quarter of ~~2020 than~~2021 compared to $81 million of earnings in the prior year ~~quarter,~~quarter. This decrease was primarily due to ~~lower segment operating profit and a~~the charge ~~associated with~~recorded in the ~~deconsolidation~~first quarter of ~~Paddock following its Chapter 11 filing, partially offset by lower net interest expense.~~2021 related to the support agreement liability for Paddock. Segment operating profit for reportable segments for the first quarter of ~~2020~~2021 was ~~$31~~$1 million lower than the first quarter of the prior year. The decrease was largely due to the ~~unfavorable effect~~sale of ~~changes~~the ANZ businesses in ~~foreign currency exchange rates, lower sales volumes~~2020, the impact of COVID-19 and ~~higher operating costs primarily due to~~severe weather in the ~~nonoccurrence of energy credits and incentives recorded in 2019,~~Americas. These impacts were partially offset by ~~higher net selling prices~~strong operating performance, cost management and ~~the positive impact from the Company’s turnaround initiatives.~~margin enhancement activities.

Net interest expense for the first quarter of ~~2020~~2021 decreased ~~$12~~$2 million compared to the first quarter of ~~2019,~~2020, primarily due to ~~the~~ lower ~~cost of~~ debt ~~as a result of refinancing activities~~levels in ~~the prior year.~~2021.

For the first quarter of ~~2020,~~2021, the Company recorded a net loss attributable to the Company of $97 million, or $0.62 per share, compared to net earnings attributable to the Company of $50 million, or $0.32 per share (diluted), ~~compared to $79 million, or $0.51 per share (diluted),~~ in the first quarter of ~~2019.~~2020. As discussed below, the loss in the first quarter of 2021 included a $154 million charge, or approximately $0.97 per share, related to the Paddock support agreement liability and in the first quarter of 2020 earnings included a $14 million charge, or approximately $0.09 per share, related to the Paddock deconsolidation, both of which management considered not representative of ongoing operations.

Results of Operations — First Quarter of ~~2020~~2021 compared with First Quarter of ~~2019~~2020

Net Sales

The Company’s net sales in the first quarter of ~~2020~~2021 were ~~$1,561~~$1,500 million compared with ~~$1,638~~$1,561 million for the first quarter of ~~2019,~~2020, a decrease of ~~$77~~$61 million, or ~~nearly 5%~~approximately 4%. ~~Unfavorable foreign currency exchange rates decreased sales by $75~~Total glass container shipments, in tons, were down approximately 8%, or approximately $127 million, in the first quarter of ~~2020~~2021 compared to the prior year quarter, asprimarily driven by the sale of the Company’s ANZ businesses on July 31, 2020 and the sale of the Company’s plant in Argentina in January 2021. Excluding the divested businesses, glass container shipments increased slightly and a change in mix benefited sales by approximately $10 million in the first quarter of 2021 compared to the same period in 2020 despite the impact of severe weather in the Americas and COVID-19. Favorable foreign currency exchange rates increased sales by $35 million in the first quarter of 2021 compared to the prior year quarter, driven by the U.S. dollar ~~strengthened~~weakening against ~~all of~~ the ~~significant local currencies that impact the Company.~~Euro. Higher selling prices increased net sales by ~~$19~~$28 million in the quarter. ~~Total glass container shipments, in tonnes,~~Other sales were ~~down~~ approximately ~~0.8%~~$7 million lower in the first quarter of 2020 compared to the prior year quarter. Sales volumes in the first quarter reflected the net effect of an estimated 1.7% decline due to COVID-19, an estimated 1.1% decline in organic sales volumes and a 2% benefit from Nueva Fanal. Excluding the impact of the Nueva Fanal acquisition, total glass container shipments, in tonnes, were down approximately 3% in the first quarter of 2020 compared to2021 than the same period in the prior year ~~and were primarily~~ driven by lower ~~alcoholic beverage shipments in the Americas and due~~machine parts sales to COVID-19. The net impact of lower organic sales more than offset the additional sales from the Nueva Fanal acquisition and resulted in a $20 million net reduction to net sales in the first quarter of 2020 compared to the same period in the prior year.third parties.

The change in net sales of reportable segments can be summarized as follows (dollars in millions):

Reportable segment net sales - 2019

$
1,628

Price

$
19

Sales volume and mix

(20)

Effects of changing foreign currency rates

(75)

Total effect on reportable segment net sales

(76)

Reportable segment net sales - 2020

$
1,552


Reportable segment net sales - 2020			$	1,530
Price	$	28
Sales volume and mix		10
Effects of changing foreign currency rates		35
Divestitures		(127)
Total effect on reportable segment net sales				(54)
Reportable segment net sales - 2021			$	1,476

Americas: Net sales in the Americas in the first quarter of ~~2020~~2021 were ~~$831~~$837 million compared ~~with $881~~to $831 million for the first quarter of ~~2019, a decrease~~2020, an increase of ~~$50~~$6 million, or ~~nearly 6%~~approximately 1%. Total glass container shipments in the region were down approximately 2% in the first quarter of 2021 compared to the prior year quarter, primarily due to the impact of severe weather that affected Texas, Oklahoma and Mexico and the divestiture of a plant in Argentina in January 2021. Excluding the divestiture, glass container shipments were down approximately 1% in the first quarter of 2021. The divestiture in Argentina reduced sales by $4 million and the lower organic shipments reduced net sales by approximately $3 million in the first quarter of 2021 compared to the same period in 2020. The unfavorable effects of foreign currency exchange rate changes decreased net sales ~~$41~~by $13 million in the first quarter of ~~2020~~2021 compared to ~~2019. Total glass container shipments~~2020 as the U.S. dollar strengthened in relation to the Brazilian real, the Mexican peso and the Colombian peso. Selling prices in the region were down approximately 1% in the first quarter of 2020 compared to the prior year quarter. Excluding the impact of the Nueva Fanal acquisition in mid-2019 in the region, total glass container shipments were down approximately 5.4% in the first quarter of 2020 compared to the same period in the prior year, driven primarily by lower shipments to alcoholic beverage customers in the U.S. largely due to ongoing trends in beer shipments, and due to a decline in organic sales volumes linked to COVID-19. The net impact of lower organic sales more than offset the additional sales from the Nueva Fanal acquisition and resulted in a $15 million reduction to net sales in the first quarter of 2020 compared to the same period in 2019. Higher selling prices increased net sales by $6$26 million in the first quarter of ~~2020.~~2021.

Europe: Net sales in Europe in the first quarter of ~~2020~~2021 were ~~$576~~$639 million compared ~~with $596~~to $576 million for the first quarter of ~~2019, a decrease~~2020, an increase of ~~$20~~$63 million, or 3%nearly 11%. ~~Unfavorable foreign currency exchange rates impacted~~Despite the impact of COVID-19 lockdowns in the region, by

~~approximately $20 million in the first quarter of 2020 as the Euro weakened in relation to the U.S. dollar. Glass~~glass container shipments in the first quarter of ~~2020~~2021 were ~~down approximately~~up 2% compared to the first quarter of ~~2019, primarily driven by lower shipments to alcoholic beverage customers due to COVID-19,~~2020, resulting in ~~$12~~$13 million of ~~lower~~higher net sales. Favorable foreign currency exchange rates increased the region’s net sales by approximately $48 million in the first quarter of 2021 as the Euro strengthened in relation to the U.S. dollar. Selling prices in Europe increased net sales by ~~$12~~$2 million in the first quarter of ~~2020 compared to the same period in the prior year.~~2021.

Asia Pacific: Net sales in Asia Pacific in the first quarter of ~~2020~~2021 were ~~$145 million~~$0 compared ~~with $151~~to $123 million for the first quarter of ~~2019,~~2020, a decrease of $6$123 million, ~~or 4%. The unfavorable effects~~due to the sale of ~~foreign currency exchange rate changes~~the ANZ businesses in the current year quarter decreased net sales by $14 million. Glass container shipments in the first quarter of 2020 were up nearly 7%, primarily driven by higher shipments to non-alcoholic beverage and food and other customers in Australia and China. This resulted in $7 million of higher net sales in the first quarter of 2020 compared to the prior year quarter. Higher selling prices increased net sales by $1 million in the firstthird quarter of 2020.

Earnings (loss) before Income Taxes and Segment Operating Profit

~~Earnings~~Loss before income taxes ~~were~~was $65 million in the first quarter of 2021 compared to earnings before income taxes of $81 million in the first quarter of 2020, ~~compared to $111 million in the first quarter of 2019,~~ a decrease of ~~$30 million, or 27%.~~$146 million. This decrease was largely due to ~~lower segment operating profit and~~ a $154 million charge ~~associated with~~recorded in the ~~deconsolidation~~first quarter of 2021 related to the Paddock ~~following its Chapter 11 filing, partially offset by lower net interest expense.~~support agreement liability.

~~Operating~~Segment operating profit of the reportable segments includes an allocation of some corporate expenses based on a percentage of sales and direct billings based on the costs of specific services provided. Unallocated corporate expenses and certain other expenses not directly related to the reportable segments’ operations are included in Retained corporate costs and other. For further information, see Segment Information included in Note 1 to the Condensed Consolidated Financial Statements.

Segment operating profit of reportable segments in the first quarter of ~~2020~~2021 was ~~$169~~$175 million, compared to ~~$200~~$176 million for the first quarter of ~~2019,~~2020, a decrease of ~~$31~~$1 million, or ~~16%~~less than 1%. This decrease was largely due to the ~~unfavorable effect~~sale of ~~changes~~the ANZ businesses in ~~foreign currency exchange rates, lower sales volumes~~2020, the impact of COVID-19 and ~~higher operating costs primarily due to~~ the ~~nonoccurrence of energy credits and incentives recorded~~severe weather in ~~2019, partially~~the Americas. These impacts were mostly offset by ~~higher net selling prices (net of~~strong operating performance, cost ~~inflation)~~management and ~~the positive impact from the Company’s turnaround initiatives.~~margin enhancement activities.

The change in segment operating profit of reportable segments can be summarized as follows (dollars in millions):

Reportable segment operating profit - 2019

$
200

Net price (net of cost inflation)

$
3

Sales volume and mix

(12)

Operating costs

(9)

Effects of changing foreign currency rates

(13)

Total net effect on reportable segment operating profit

(31)

Reportable segment operating profit - 2020

$
169


Reportable segment operating profit - 2020			$	176
Net price (net of cost inflation)	$	(20)
Sales volume and mix		2
Operating costs		19
Effects of changing foreign currency rates		10
Divestitures		(12)
Total net effect on reportable segment operating profit				(1)
Reportable segment operating profit - 2021			$	175

Americas: Segment operating profit in the Americas in the first quarter of ~~2020~~2021 was ~~$103~~$100 million compared ~~with $113~~to $103 million in the first quarter of ~~2019,~~2020, a decrease of ~~$10~~$3 million, or 9%3%. The impact of ~~a change in mix and~~ lower organic sales ~~volumes~~ discussed above more than offset the additional segment operating profit from the Nueva Fanal facility acquired in 2019 and resulted in a $10 million net reduction to segment operating profit in the first quarter of 2020 compared to the same period in the prior year. The effects of foreign currency exchange rates decreased segment operating profit by ~~$6 million in~~$1 million. Cost inflation, which was elevated due to the ~~current year quarter. Improved operating performance in the region reduced operating costs~~impact of higher natural gas and ~~increased segment operating profit by $12 million in the first quarter and were driven by the Company’s turnaround initiatives. Cost inflation~~electricity rates as a result of severe weather, more than offset higher selling prices resulting in a net $6$17 million decrease to segment operating profit in the current year quarter.

Operating costs in the first quarter of 2021 were $11 million lower than the same period in the prior year, which improved segment operating profit. Included within these operating costs were benefits from the region’s margin expansion initiatives, which more than offset the significant impact of severe weather that swept across Mexico and the southern United States and resulted in production downtime, unplanned repairs and higher outbound freight costs. The effects of foreign currency exchange rates increased segment operating profit by $4 million in the current year quarter.

Included in the above discussion of the factors impacting the region’s results, the Company estimates that segment operating profit in the Americas was negatively impacted by approximately $40 million from severe weather in the first quarter of 2021, which includes approximately $20 million accrued as of March 31, 2021 for surcharges for usage or excess usage of electricity and natural gas during the period of severe weather, as well as the estimated impacts of higher energy costs, lost production downtime, lost sales, and the cost of incremental repairs. Also, the region’s closure of a plant in the second quarter of 2020 did not have a material impact on its profitability this quarter, and significant savings are not expected in future quarters, but the closure is expected to avoid anticipated losses from this plant in the future. The outcome of this plant closure is in-line with management’s expectations.

Europe: Segment operating profit in Europe in the first quarter of ~~2020~~2021 was ~~$61~~$75 million compared ~~with $79~~to $61 million in the first quarter of ~~2019, a decrease~~2020, an increase of ~~$18~~$14 million, or 23%. The ~~change in sales volume~~impact of higher shipments discussed above ~~decreased~~increased segment operating profit ~~in the current year quarter~~ by $3 million. The effects of foreign currency exchange rates ~~decreased~~increased segment operating profit by $4$6 million in the current year quarter. ~~The~~Benefits from margin expansion initiatives and cost control measures reduced the region’s operating costs ~~in the first~~

~~quarter of 2020 were approximately $9 million higher, which decreased~~and increased segment operating profit ~~than~~by approximately $8 million in the first quarter of 2021 compared to the same period in the prior year due to more furnace repair activity. Also, the region’s operating costs were impacted by the nonoccurrence of approximately $15 million of energy credits and incentives from government entities that were recorded in the first quarter of 2019. Higheryear. Lower net selling prices (net of cost inflation) ~~increased~~decreased segment operating profit by ~~$13~~$3 million in the current quarter compared to the prior year quarter.

Asia Pacific: Segment operating profit in Asia Pacific in the first quarter of ~~2020~~2021 was ~~$5 million~~$0 compared ~~with $8~~to $12 million in the first quarter of ~~2019,~~2020, a decrease of $3$12 million, ~~or 38%. The effects~~due to the sale of ~~foreign currency exchange rates decreased segment operating profit by $3 million~~the ANZ businesses in the current year quarter. The increase in sales volume discussed above benefitted segment operating profit by $1 million. Lower net selling prices (net of cost inflation) decreased segment operating profit by $4 million. The region also experienced approximately $3 million of lower operating costs, which improved segment operating income, in the firstthird quarter of ~~2020 compared to the prior year quarter due to improved factory performance.~~2020.

Interest Expense, Net

Net interest expense for the first quarter of ~~2020~~2021 was ~~$53~~$51 million compared ~~with $65~~to $53 million for the first quarter of ~~2019 and decreased~~2020. This decrease was primarily due to ~~the~~ lower ~~cost of~~ debt ~~as a result of refinancing activities~~levels in ~~the prior year.~~2021.

Provision for Income Taxes

The Company’s effective tax rate from ~~continuing~~ operations for the three months ended March 31, ~~2020~~2021 was ~~32.1%~~(40.0%) compared ~~with 24.3%~~to 32.1% for the three months ended March 31, ~~2019.~~2020. The effective tax rate for the first quarter of ~~2020 was higher than~~2021 differed from the first quarter of ~~2019~~2020 primarily due ~~primarily~~ to athe charge ~~recorded as a result~~related to the Paddock support agreement liability in the first quarter of ~~the deconsolidation of Paddock, the geographic mix of earnings and recent regulatory changes in certain markets.~~2021.

Net Earnings (Loss) Attributable to the Company

Forward Looking Operational and Financial Impacts from the COVID-19 Pandemic

●

~~Reflecting~~The Company expects full year 2021 sales shipment growth to be 3 to 4% (in tons) compared to 2020 (excluding the ~~challenges~~impact of divestitures), representing a partial volume recovery to 2019 levels. Likewise, the Company expects continued benefits from its initiatives to expand margins. These incremental savings should more than offset the headwind from the temporary cost reduction efforts that were put in place in 2020 to mitigate the impact of the COVID-19 pandemic ~~month-to-date shipments through late April 2020 were down mid to high teens (in percentages) from the same period~~and that will not repeat in the prior year, which includes the impact of temporary stoppage requirements in Mexico and the Andean countries. In April 2020, demand was down sharply in the first half of the month but the trend improved over the second half of the month. Excluding the markets impacted by temporary stoppage requirements like Mexico and the Andean countries, global demand was down less than 10 percent during the last two weeks of April. The Company does not believe these rates reflect true demand patterns given the current level of market and supply chain disruptions as well as inventory corrections.~~The Company expects that shipment levels will normalize as markets reopen.~~2021.

●

Total committed liquidity, including cash-on-hand as well as undrawn availability on committed lines of credit, remained strong through April 2020. The Company intends to maintain its liquidity at or above $1.25 billion at each quarter end of 2020.

●

In response to the unprecedented nature of the pandemic, the Company is taking a number of preemptive measures to reduce costs and preserve the Company’s financial flexibility. Cash generation is the top financial priority and the Company is taking actions to quickly align supply with evolving demand trends as well as closely managing working capital levels. 2020 capital expenditures should approximate $300 million or lower. In addition to an expanded SG&A reduction initiative, the Company is initiating a program to temporarily reduce salaries for certain executive officers, including the CEO, and Board fees payable to non-employee members of the Board and director nominees by up to 25 percent during 2020. The amount of these reductions will generally be repaid in or about January 2021, and no later than March 15, 2021, subject to certain conditions, including the attainment of financial and/or other Company performance goals. The Company will also defer salaries for certain other salaried employees up to 15 percent during 2020, with deferred amounts generally being repaid with interest in or about January 2021, and no later than March 15, 2021. Salary deferrals, reductions and repayment terms will

be subject to compliance with applicable local law. Furthermore, the Company is suspending its dividend and is pausing the share repurchase program. The status of these efforts will be reviewed regularly, but the Company anticipates these measures will continue ~~through 2020.~~

●

~~Despite headwinds from the pandemic, the Company continues~~ to focus on long-term value creation, including ~~its turnaround initiatives, footprint optimization efforts,~~advancing the MAGMA ~~deployment and resolution of legacy asbestos liabilities. In light of COVID-19, for the time being~~deployment. Also, the Company has ~~halted the strategic review~~completed approximately 75% of its ~~Australia~~divestiture program with proceeds used to reduce debt and ~~New Zealand (“ANZ”) business and~~improve financial flexibility. Finally, the Company will continue to ~~run~~advance the ~~operations~~Paddock Chapter 11 process to document and finalize the terms of a plan of reorganization pursuant to section 524(g) of the Bankruptcy Code, consistent with the agreement in principle announced on April 26, 2021, which ~~are performing well. As market conditions stabilize, the Company will reevaluate alternatives for ANZ. The Company’s tactical divestiture program continues~~is expected to ~~advance, but at~~achieve a ~~slower than anticipated pace.~~final, certain and equitable resolution of its legacy asbestos-related claims liabilities.

●

Cash provided by operating activities is expected to approximate $615 million or higher in 2021. This outlook assumes the continued suspension of all asbestos-related claims payments, pending confirmation and effectiveness of a plan of reorganization for Paddock. In addition, capital expenditures in 2021 are expected to be approximately $375 million.

●

The Company iswill continue to actively ~~monitoring~~monitor the impact of the COVID-19 ~~outbreak, which will negatively impact its business and results of operations for the second quarter of 2020 and likely beyond.~~pandemic. The extent to which the Company’s operations will be impacted by the ~~outbreak~~pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information ~~which~~that may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact, among other things.

Items ~~excluded~~Excluded from Reportable Segment Totals

Retained Corporate Costs and Other

After the sale of the ANZ businesses, the remaining businesses in the Asia Pacific region do not meet the criteria of an individually reportable segment. Starting on August 1, 2020 and for the historical periods, the operating results of the other businesses that were historically included in the Asia Pacific segment and that have been retained by the Company have been reclassified to Retained corporate costs and other. The results of these entities were not significant for the three month periods ended March 31, 2021 or March 31, 2020.

Retained corporate costs and other for the first quarter of ~~2020~~2021 were ~~$21~~$35 million compared ~~with $24~~to $28 million ~~recorded~~for the first quarter of 2020. These costs were higher in the first quarter of ~~2019. These costs were lower in 2020 primarily~~2021 due to ~~efforts~~additional research and development expenses related to ~~reduce costs~~MAGMA, higher marketing expense for the Company’s glass advocacy campaign and ~~gains realized on certain hedges, partially offset by~~higher expense related to the ~~nonoccurrence~~change in position of ~~equity earnings from a soda ash joint venture that was sold by the Company in the fourth quarter of 2019.~~foreign currency derivatives.

Charge for Paddock Support Agreement Liability

On April 26, 2021, the Company announced that its subsidiary, Paddock Enterprises LLC (“Paddock”), had reached an agreement in principle to accept the terms of a mediator’s proposal regarding a consensual plan of reorganization under the Bankruptcy Code. The agreement in principle provides for total consideration of $610 million to fund a trust on the effective date of a plan of reorganization, subject to definitive documentation and satisfaction of certain conditions. The Company has recorded a charge of $154 million related to its potential liability under the Paddock support agreement during the first fiscal quarter of 2021 primarily related to an increase to Paddock’s asbestos reserve estimate in consideration for the channeling injunction to be included in Paddock’s Plan protecting O-I Glass and its affiliates from Asbestos Claims.

See Note 10 to the Condensed Consolidated Financial Statements for further information.

Charge for Deconsolidation of Paddock

Following its Chapter 11 filing in January 2020, the activities of Paddock are now subject to review and oversight by the bankruptcy court. As a result, the Company no longer has exclusive control over Paddock’s activities during the bankruptcy proceedings. Therefore, Paddock was deconsolidated as of the Petition Date, and its assets and liabilities, which primarily included $47 million of cash, the legacy asbestos-related liabilities, as well as certain other assets and liabilities, were derecognized from the Company’s consolidated financial statements. Simultaneously, the Company recognized a liability related to the support agreement of $471 million, based on the accrual required under applicable accounting standards. Taken together, these transactions resulted in a loss of approximately $14 million, which was recorded as a charge in the first quarter of 2020.

See Note 10 to the Condensed Consolidated Financial Statements for further information.

Discontinued Operations

On December 6, 2018, an ad hoc committee for the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) rejected the request by the Bolivarian Republic of Venezuela (“Venezuela”) to annul the award issued by an ICSID tribunal in favor of OI European Group B.V. (“OIEG”) related to the 2010 expropriation of OIEG’s majority interest in two plants in Venezuela (the “Award”). The annulment proceeding with respect to the Award is now concluded.

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. 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 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.

A separate arbitration involving two other subsidiaries of the Company -- Fabrica de Vidrios Los Andes, C.A.(“Favianca”), and Owens-Illinois de Venezuela, C.A. (“OIDV”) -- was initiated in 2012 to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants. However, on November 13, 2017, ICSID issued an award that dismissed this arbitration on jurisdiction grounds. In March 2018, OIDV and Favianca submitted to ICSID an application to annul the November 13, 2017 award; on November 22, 2019, OIDV and Favianca’s request to annul the award was rejected by an ICSID ad hoc committee. The two subsidiaries are evaluating potential next steps.

For ~~each of~~ the three-month periods ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, the Company did not incur any significant losses from discontinued operations.

Capital Resources and Liquidity

The Agreement provides for up to $3.0 billion of borrowings pursuant to term loans and revolving credit facilities. The term loans mature, and the revolving credit facilities terminate in June 2024. At March 31, ~~2020,~~2021, the Agreement includes a $300 million revolving credit facility, a $1.2 billion multicurrency revolving credit facility, and a $1.5 billion term loan A facility ($~~1,477~~ 1,068 million outstanding balance at March 31, 2021, net of debt issuance ~~costs)~~costs). At March 31, ~~2020,~~2021, the Company had unused credit of ~~$673~~$1,194 million available under the Agreement. The weighted average interest rate on borrowings outstanding under the Agreement at March 31, ~~2020~~2021 was ~~2.28%~~1.59%.

The Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain indebtedness and 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 Agreement also contains one financial maintenance covenant, a Total Leverage Ratio (the “Leverage Ratio”), that requires the Company not to exceed a ratio of 5.0x calculated by dividing consolidated total debt, less cash and cash equivalents, by Consolidated EBITDA, with such Leverage Ratio decreasing to (a) 4.75x for the quarter ending June 30, 2021 and (b) 4.50x for the quarter ending December 31, 2021 and thereafter, as defined and described in the Agreement. The maximum Leverage Ratio is subject to an increase of 0.5x for (i) any fiscal quarter during which certain qualifying acquisitions (as specified in the Agreement) are consummated and (ii) the following three fiscal quarters, provided that the Leverage Ratio shall not exceed 5.0x. The 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 Leverage Ratio to exceed the specified maximum.

Upon the occurrence and for the duration of a payment event of default, an additional default interest rate equal to 2.0% per annum will apply to all overdue obligations under the Agreement. If an event of default occurs under the Agreement and the lenders cause all of the outstanding debt obligations under the Agreement to become due and payable, this would result in a default under the ~~indenture~~indentures governing the Company’s outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of March 31, ~~2020,~~2021, the Company was in compliance with

all covenants and restrictions in the Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Agreement will not be adversely affected by the covenants and restrictions.

~~In November 2019, the Company issued €500 million aggregate principal amount of new~~ senior notes. The ~~new~~ senior notes bear interest at a rate of ~~2.875%~~6.625% per annum and mature on ~~February 15, 2025.~~May 13, 2027. The ~~new~~ senior 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 ~~€492~~$690 million and were used to redeem the remaining ~~€250 million aggregate principal amount of the Company’s outstanding 6.75% senior notes due 2020 and approximately €212~~$130 million aggregate principal amount of the Company’s outstanding 4.875% senior notes due ~~2021.~~2021, approximately $419 million aggregate principal amount of the Company’s outstanding 5.00% senior notes due 2022 and approximately $105 million of other secured borrowings. The Company recorded approximately $38 million of additional interest charges for note repurchase premiums and write-off of unamortized finance fees related to these redemptions.

Cash Flows

Operating activities: Cash utilized by ~~continuing~~ operating activities was ~~$315~~$56 million for the three months ended March 31, ~~2020,~~2021, compared to ~~$595~~$315 million utilized for the three months ended March 31, ~~2019.~~2020. The decrease in cash utilized by operating activities in the first ~~quarter~~three months of ~~2020~~2021 was primarily due to a lower use of cash from working capital than in the ~~staying~~same period in 2020. In the first quarter of both 2021 and 2020, all asbestos-related payments were stayed as a result of Paddock’s Chapter 11 filing in early January ~~2020 and lower working capital levels than in the same period in 2019, partially offset by lower net earnings.~~2020. See Note 10 to the Condensed Consolidated Financial Statements for additional information on Paddock.

Working capital was a use of cash of ~~$461~~$229 million in the first three months of ~~2020~~2021, compared to a use of cash of ~~$697~~$461 million in the same period in ~~2019.~~2020. The primary ~~reasons~~reason for the lower use of cash from working capital in the first ~~quarter~~three months of 2021 was due to lower accounts receivable and inventory levels. For the three months ended March 31,

2021 and 2020, the Company’s use of its accounts receivable factoring programs resulted in an increase of $8 million to cash from operating activities and a $110 million decrease to cash from operating activities, respectively. Excluding the impact of accounts receivable factoring, the Company’s days sales outstanding were slightly lower as of March 31, 2021 compared to March 31, 2020, which also contributed to a lower use of cash from working capital. Inventory levels also declined as the Company reduced production levels to align with lower sales demand throughout the pandemic and this resulted in approximately $59 million of a lower use of cash from working capital in the first three months of 2021 compared to the same period in the prior year. In addition, the Company experienced a $31 million increase in cash provided by other operating items for the first three months of 2021 compared to the same period in the prior year, ~~was due to accounts receivable and accounts payable activity. As~~which included the impact of March 31, 2020 and 2019, the Company reduced its level of accounts receivable factoring compared to the most recent respective year-end periods and this led to a use of working capital in both the first quarter of 2020 and 2019. The reduction in accounts receivable factoring compared to the most recent year end period was approximately $187 million

less in the first quarter of 2020 than in 2019 and this contributed to a lower use of working capital in the 2020 period. Also, due to the timing of payments, the Company’s accounts payable balances did not decline as significantly in the first quarter of 2020 as they did in the first quarter of 2019, and this resulted in a lower use of cash in the first quarter of 2020.higher dividends received from equity investments.

Investing activities: Cash utilized inby investing activities was ~~$165~~$31 million for the three months ended March 31, ~~2020,~~2021, compared to ~~$135~~$165 million utilized for the three months ended March 31, ~~2019.~~2020. Capital spending for property, plant and equipment was ~~$120~~$93 million during the first three months of ~~2020~~2021, compared to ~~$121~~$120 million in the same period in ~~2019. Contributions~~2020. The Company estimates that its full year 2021 capital expenditures should be approximately $375 million.

On July 31, 2020, the Company completed the sale of its ANZ businesses to Visy. Approximately 95% of proceeds were received at time of closing and ~~advances to joint ventures were $0 and $15~~the remaining balance of $58 million was received by the Company in the first ~~three months~~quarter of ~~2020 and 2019, respectively. No significant contributions are planned to~~2021. The Company also received approximately $4 million from the ~~Company’s joint ventures~~sale of its plant in ~~2020.~~ Argentina in the first quarter of 2021.

Following the Chapter 11 filing in January 2020, the activities of Paddock are now subject to review and oversight by the bankruptcy court. As a result, the Company no longer has exclusive control over Paddock’s activities during the bankruptcy proceedings. Therefore, Paddock was deconsolidated and its assets and liabilities were derecognized from the Company’s financial statements, which resulted in an investing outflow of $47 million in the Company’s first quarter of 2020 condensed consolidated cash flows. See Note 10 to the Condensed Consolidated Financial Statements for more information.

In response to the COVID-19 pandemic, the Company is taking a number of measures to reduce costs and preserve its financial flexibility. The Company estimates that its full year 2020 capital expenditures should be approximately $300 million or lower.

Financing activities: Cash provided by financing activities was ~~$849~~$288 million for the three months ended March 31, ~~2020,~~2021, compared to ~~$540~~$849 million of cash provided by financing activities for the three months ended March 31, ~~2019.~~2020. The ~~increase~~decrease in cash provided by financing activities was primarily due to ~~higher~~lower net borrowings in the first quarter of ~~2020.~~2021. In March 2020, the ~~company~~Company borrowed approximately $600 million on its $1.5 billion revolving credit facility to bolster cash-on-hand as a proactive measure to ensure financial ~~flexibility.~~ flexibility at the onset of the COVID-19 pandemic. The Company did not borrow at the same level in the first quarter of 2021.

The Company paid $8 million in dividends in ~~each of~~ the first ~~quarters~~quarter of 2020 and ~~2019. Through~~did not pay any dividends in the first ~~three months ended March 31, 2020 and 2019, the Company had repurchased $0 and approximately $38 million~~quarter of ~~the Company’s stock.~~2021. In response to the COVID-19 pandemic, the Company ~~has~~ suspended its dividend after the first quarter of 2020 and has ~~paused share repurchases~~no plans to reinstate it at this time. ~~The status of these efforts will be reviewed regularly, but the Company anticipates these measures will continue through 2020.~~

The Company anticipates that cash flows from its operations and from utilization of credit available under the Agreement will be sufficient to fund its operating and seasonal working capital needs, debt service and other obligations on a short-term ~~(twelve~~(12 months) and long-term basis. However, as the Company cannot predict the duration or scope of the COVID-19 pandemic and its impact on its customers and suppliers, the negative financial impact to the Company’s results cannot be reasonably estimated, but could be material. The Company is actively managing the business to maintain cash flow and it has significant liquidity. The Company believes that these factors will allow it to meet its anticipated funding requirements. The Company anticipates that cash flows in ~~2020~~2021 will continue to benefit from the operation of the automatic stay in Paddock’s Chapter 11 filing, which stays ongoing litigation and submission of claims and defers payment in connection with asbestos-related ~~liabilities.~~liabilities until a plan of reorganization is confirmed and becomes effective.

Critical Accounting Estimates

The Company’s analysis and discussion of its financial condition and results of operations are based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. The Company evaluates these estimates and assumptions on an ongoing basis. Estimates and assumptions are based on historical and other factors believed to be

reasonable under the circumstances at the time the financial statements are issued. The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those assumed, may differ from estimates.

The impact of, and any associated risks related to, estimates and assumptions are discussed within Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as in the Notes to the Condensed Consolidated Financial Statements, if applicable, where estimates and assumptions affect the Company’s reported and expected financial results.

There have been no other material changes in critical accounting estimates at March 31, ~~2020~~2021 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Forward-Looking Statements

This document contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933. Forward-looking statements reflect the Company's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward-looking statements.

It is possible that the Company’s future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) the risk that the proposed plan of reorganization may not be approved by the bankruptcy court or that other conditions necessary to implement the agreement in principle may not be satisfied, (2) the actions and decisions of participants in the bankruptcy proceeding, and the actions and decisions of third parties, including regulators, that may have an interest in the bankruptcy proceedings, (3) the terms and conditions of any reorganization plan that may ultimately be approved by the bankruptcy court, (4) delays in the confirmation or consummation of a plan of reorganization due to factors beyond the Company’s and Paddock’s control, (5) risks with respect to the receipt of the consents necessary to effect the reorganization, (6) risks inherent in, and potentially adverse developments related to, the bankruptcy proceeding, that could adversely affect the company and the company’s liquidity or results of operations, (7) the impact of the COVID-19 pandemic and the various governmental, industry and consumer actions related thereto, (8) the Company’s ability to obtain the benefits it anticipates from the Corporate Modernization, (2) risks inherent in, and potentially adverse developments related to, the Chapter 11 bankruptcy proceeding involving Paddock, that could adversely affect the Company and the Company’s liquidity or results of operations, including the impact of deconsolidating Paddock from the Company’s financials, risks from asbestos-related claimant representatives asserting claims against the Company and potential for litigation and payment demands against the Company by such representatives and other third parties, (3) the amount that will be necessary to fully and finally resolve all of Paddock’s asbestos-related claims and the Company’s obligations to make payments to resolve such claims under the terms of its support agreement with Paddock, (4)(9) the Company’s ability to manage its cost structure, including its success in implementing restructuring or other plans aimed at improving the Company’s operating efficiency and working capital management, achieving cost savings, and remaining well-positioned to address the Company’s legacy liabilities, ~~(5)~~(10) the Company’s ability to acquire or divest businesses, acquire and expand plants, integrate operations of acquired businesses and achieve expected benefits from acquisitions, divestitures or expansions, ~~(6)~~(11) the Company’s ability to achieve its strategic plan, ~~(7)~~(12) the Company’s ability to improve its glass melting technology, known as the MAGMA program, (13) foreign currency fluctuations relative to the U.S. dollar, ~~(8)~~(14) changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to refinance debt on favorable terms, ~~(9)~~(15) the general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to Brexit, economic and social conditions, disruptions in the supply chain, competitive pricing pressures, inflation or deflation, changes in tax rates and laws, natural disasters and weather, ~~(10)~~ ~~the impact of COVID-19 and the various governmental, industry and consumer actions related thereto, (11)~~(16) the Company’s ability to generate sufficient future cash flows to ensure the Company’s goodwill is not impaired, ~~(12)~~(17) consumer preferences for alternative forms of packaging, ~~(13)~~(18) cost and availability of raw materials, labor, energy and transportation, ~~(14)~~(19) consolidation among competitors and customers, ~~(15)~~(20) unanticipated expenditures with respect to data privacy, environmental, safety and health laws, ~~(16)~~(21) unanticipated operational disruptions, including higher capital spending, ~~(17)~~(22) the Company’s ability to further develop its sales, marketing and product development capabilities, ~~(18)~~(23) the failure of the Company’s joint venture partners to meet their obligations or commit additional capital to the joint venture, ~~(19)~~(24) the ability of the Company and the third parties on which it relies for information technology system support to prevent and detect security breaches related to cybersecurity and data privacy, ~~(20)~~(25) changes in U.S. trade policies, and the other risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and any subsequently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or the Company’s other filings with the Securities and Exchange Commission.

It is not possible to foresee or identify all such factors. Any forward-looking statements in this document are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. Forward-looking statements are not a guarantee of future performance and actual results or developments may differ materially from expectations. While the Company continually reviews trends and uncertainties affecting the Company's results of operations and financial condition, the Company does not assume any obligation to update or supplement any particular forward-looking statements contained in this document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in market risk at March 31, ~~2020~~2021 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, the Company has investments in certain unconsolidated entities. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those maintained with respect to its consolidated subsidiaries.

As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of March 31, ~~2020.~~2021.

As required by Rule 13a-15(d) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of any change in the Company’s internal ~~controls~~control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal ~~controls~~control over financial reporting. There have been no changes in the Company’s internal ~~controls~~control over financial reporting during the fiscal quarter ended March 31, ~~2020~~2021 that have materially affected, or are reasonably likely to material affect, the Company’s internal ~~controls~~control over financial reporting. Although the Company has modified its workplace practices globally due to the COVID-19 pandemic, resulting in most of its administrative employees working remotely, this has not materially affected its internal control over financial reporting. The Company is continually monitoring and assessing the COVID-19 situation on its internal controls to minimize the impact on their design and operating effectiveness.

3334

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

SEC regulations require the Company to disclose certain information about environmental proceedings if the Company reasonably believes that such proceedings may result in monetary sanctions above a stated threshold. The Company uses a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required. No such environmental proceedings were pending or contemplated as of March 31, 2021.

For further information on legal proceedings, see Note 10 to the Condensed Consolidated Financial Statements, “Contingencies,” that is included in Part I of this Quarterly Report and incorporated herein by reference.

Item 1A. Risk Factors.

Other than below, there have been no material changes in risk factors at March 31, ~~2020~~2021 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The resolution of asbestos claims pursuant to Paddock’s recently announced agreement-in-principle is subject to a number of risks and uncertainties that may prevent or delay implementation of the resolution of these claims on the terms set forth in such agreement-in-principle.

On April 26, 2021, the Company announced that its subsidiary, Paddock Enterprises LLC (“Paddock”) reached an agreement in principle to accept the terms of a mediator’s proposal regarding a consensual plan of reorganization under the Bankruptcy Code. The ~~novel coronavirus (COVID-19) has resulted, and may likely continue~~agreement in principle provides for total consideration of $610 million to ~~result in material adverse effects~~fund a trust on the ~~Company’s business, financial position, liquidity, results~~effective date of ~~operations~~a plan of reorganization, subject to definitive documentation and ~~cash flows.~~

satisfaction of certain conditions. The ~~COVID-19 pandemic,~~agreement in principle was reached with both the Future Claimants’ Representative and the ~~various governmental, industry and consumer actions related thereto, have had, and may likely continue~~Asbestos Claimants’ Committee, who agreed to ~~have, negative impacts~~support a plan of reorganization for Paddock that incorporates the settlement (the “Plan”). The Plan will require the approval by at least 75% of asbestos claimants voting on the ~~Company’s business. These impacts include, without limitation, significant volatility or decreases in~~Plan and be subject to approval by the ~~demand for~~Bankruptcy Court and the ~~Company’s products, changes in customer~~District Court. If approved and ~~consumer behavior~~consummated, the Plan would permanently resolve all current and ~~preferences, disruptions in or closures~~future asbestos claims against Paddock, and would protect all of O-I Glass and its subsidiaries from those claims, under Section 524(g) of the Company’s manufacturing operations or those of its customers and suppliers, disruptions within the Company’s supply chain, limitations on the Company’s employees’ ability to work and travel, potential financial difficulties of customers and suppliers, significant changes in economic or political conditions, and related financial and commodity volatility, including volatility in raw material and other input costs.U.S. Bankruptcy Code.

~~In addition, future changes in the Company’s cost of capital, expected cash flows, or other factors as a result~~The confirmation and consummation of the ~~above may cause~~Plan, and accordingly the ~~Company’s long-lived assets including goodwill~~final resolution of asbestos claims against Paddock in accordance with the Plan, are subject to ~~be impaired, resulting in~~ a ~~non-cash charge against results~~number of ~~operations to write down long-lived assets including goodwill for the amount of the impairment.~~

~~To the extent the COVID-19 pandemic adversely affects the Company’s business~~risks and ~~financial results, it may also~~uncertainties, which could have the effect of ~~heightening many~~delaying or preventing the confirmation and consummation of the ~~other risks described~~Plan, increasing the Company’s costs in ~~Item 1A, “Risk Factors”~~connection with effecting the settlement and the consummation of the ~~Company’s annual report on Form 10-K for~~Plan or reducing the year ended December 31, 2019 and any subsequently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or the Company’s other filings with the Securities and Exchange Commission., such as those relatingbenefit related to the ~~Company’s ability to service its indebtedness;~~consummation of the ~~restrictions placed~~Plan. In light of these risks and uncertainties, the Company cannot provide assurance that the Plan, as contemplated by the agreement in principle, will be consummated on the time schedule that the Company ~~under its existing indebtedness; fluctuations in foreign exchange rates; international operations; changes in consumer demand;~~anticipates or at all, or if consummated that the ~~global economic environment; operational disruptions;~~Company will recognize all benefits from the ~~availability~~consummation of the Plan that the Company anticipates. These risks and ~~cost of raw materials; reliance on key management and personnel; joint ventures; cybersecurity and data privacy; and goodwill; among others.~~uncertainties include:

Despite the Company’s efforts to manage the impacts, the degree to which COVID-19 and related actions will ultimately impact the Company’s business, financial position, liquidity, results of operations and cash flows will depend on factors that are beyond its control, highly uncertain and cannot be predicted, including the duration, spread and severity of the outbreak, the various legislation and other responses taken in the United States and other countries to contain COVID-19 and mitigate its public health effects, the impact on the U.S. and global economies and demand for the Company’s products, and how quickly and to what extent normal economic and operating conditions resume.

●

the risk that the parties to the settlement are unable to agree upon the final plan documents, including the Plan, to effectuate the settlement;

●

the risk that the Plan is not approved by a favorable vote of 75% of the holders of asbestos claims voting on the Plan;

●

the risk that the Plan is not approved by the Bankruptcy Court or the District Court and that orders so approving the Plan and issuing the protective injunctions do not become final; and

●

risks and uncertainties if any interested parties object to the Plan or appeal any order issued by the Bankruptcy Court or District Court approving the Plan, which objections and appeals, even if favorably resolved, may delay the consummation of the Plan and increase the Company’s costs in connection with the agreement-in-principle and related proceedings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not purchase any shares of its common stock for the three months ended March 31, ~~2020. The Company has $380 million remaining for repurchases pursuant to authorization by its~~2021. In February 2021, the Company’s Board of Directors ~~in January 2018 to purchase up to $400~~authorized a $150 million ~~of the Company's common stock along with an authorization by its Board of Directors in November 2018 to purchase an additional $313 million of~~anti-dilutive share repurchase program for the Company’s common ~~stock.~~stock that the Company intends to use to offset stock-based compensation provided to the Company’s directors, officers and employees. This authorization supersedes and replaces any prior repurchase authorizations.

Item 6. Exhibits.



Exhibit 10.1	Form of Employee Restricted Stock Unit Agreement for use under the Owens-Illinois, Inc. Amended and Restated 2017 Incentive Award Plan.

Exhibit 10.2	Form of Employee Performance Stock Unit Agreement for use under the Owens-Illinois, Inc. Amended and Restated 2017 Incentive Award Plan.

Exhibit 31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.

Exhibit 32.2*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.

Exhibit 101	Financial statements from the Quarterly Report on Form 10-Q of O-I Glass, Inc. for the quarter ended March 31, ~~2020, were~~2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Results of Operations, (ii) the Condensed Consolidated Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

Exhibit 104	Cover Page Interactive Data file (formatted as ~~Inline XBRL~~iXBRL and contained in Exhibit 101).

*	This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

3536

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		O-I GLASS, INC.


Date	April ~~29, 2020~~30, 2021	By	/s/ John A. Haudrich
			John A. Haudrich
			Senior Vice President and Chief Financial Officer

3637


		June 28, 2019		Measurement Period Adjustments		March 31, 2020
Accounts receivable	$	42	$	—	$	42
Inventory		17				17
Goodwill				18		18
Intangibles		35		(32)		3
Net property, plant and equipment		129		32		161
Total assets acquired		223		18		241
Accounts payable		25		1		26
Accrued liabilities		3		(1)		2
Deferred tax liabilities				25		25
Net assets acquired	$	195	$	(7)	$	188


	Three months ended
	March 31,
	2020		2019
Net Sales:
Americas	$	831	$	881
Europe		576		596
Asia Pacific		145		151
Reportable segment totals		1,552		1,628
Other		9		10
Net Sales	$	1,561	$	1,638


Reportable segment net sales - 2019			$	1,628
Price	$	19
Sales volume and mix		(20)
Effects of changing foreign currency rates		(75)
Total effect on reportable segment net sales				(76)
Reportable segment net sales - 2020			$	1,552