Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2020shares | |
Cover page. | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Mar. 31, 2020 |
Entity File Number | 1-9576 |
Entity Registrant Name | O-I GLASS, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 22-2781933 |
Entity Address, Address Line One | One Michael Owens Way |
Entity Address, City or Town | Perrysburg |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 43551 |
City Area Code | 567 |
Local Phone Number | 336-5000 |
Title of 12(b) Security | Common Stock, $.01 par value |
Security Exchange Name | NYSE |
Trading Symbol | OI |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 156,571,353 |
Entity Central Index Key | 0000812074 |
Amendment Flag | false |
Document Fiscal Year Focus | 2020 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED RESULTS OF OPERATI
CONSOLIDATED RESULTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED RESULTS OF OPERATIONS | ||
Net sales | $ 1,561 | $ 1,638 |
Revenue, Product and Service [Extensible List] | Net sales | Net sales |
Cost of goods sold | $ (1,293) | $ (1,340) |
Gross profit | 268 | 298 |
Selling and administrative expense | (116) | (115) |
Research, development and engineering expense | (16) | (16) |
Interest expense, net | (53) | (65) |
Equity earnings | 15 | 19 |
Other expense, net | (17) | (10) |
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 |
Basic earnings per share: | ||
Net earnings attributable to the Company (in dollars per share) | $ 0.32 | $ 0.51 |
Weighted average shares outstanding (thousands) (in shares) | 156,081 | 154,361 |
Diluted earnings per share: | ||
Net earnings attributable to the Company (in dollars per share) | $ 0.32 | $ 0.51 |
Weighted average diluted shares outstanding (thousands) (in shares) | 157,684 | 156,635 |
CONSOLIDATED COMPREHENSIVE INCO
CONSOLIDATED COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED COMPREHENSIVE INCOME | ||
Net earnings | $ 55 | $ 84 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | (573) | 49 |
Pension and other postretirement benefit adjustments, net of tax | 31 | 6 |
Change in fair value of derivative instruments, net of tax | 6 | 5 |
Other comprehensive income (loss) | (536) | 60 |
Total comprehensive income (loss) | (481) | 144 |
Comprehensive (income) loss attributable to noncontrolling interests | 4 | (8) |
Comprehensive income (loss) attributable to the Company | $ (477) | $ 136 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Current assets: | |||
Cash and cash equivalents | $ 891 | $ 551 | $ 326 |
Trade receivables, net of allowances of $30 million, $32 million, and $34 million at March 31, 2020, December 31, 2019, and March 31, 2019 | 767 | 621 | 939 |
Inventories | 1,047 | 1,045 | 1,038 |
Prepaid expenses and other current assets | 257 | 271 | 276 |
Total current assets | 2,962 | 2,488 | 2,579 |
Property, plant and equipment, net | 2,987 | 3,273 | 3,074 |
Goodwill | 1,773 | 1,934 | 2,507 |
Intangibles, net | 312 | 371 | 394 |
Other assets | 1,470 | 1,544 | 1,598 |
Total assets | 9,504 | 9,610 | 10,152 |
Current liabilities: | |||
Accounts payable | 1,025 | 1,276 | 1,065 |
Short-term loans and long-term debt due within one year | 283 | 124 | 91 |
Current portion of asbestos-related liabilities | 160 | ||
Other liabilities | 516 | 595 | 544 |
Total current liabilities | 1,824 | 1,995 | 1,860 |
Long-term debt | 6,115 | 5,435 | 5,820 |
Asbestos-related liabilities | 486 | 372 | |
Paddock support agreement liability | 471 | ||
Other long-term liabilities | 1,018 | 1,130 | 1,090 |
Share owners' equity | 76 | 564 | 1,010 |
Total liabilities and share owners' equity | $ 9,504 | $ 9,610 | $ 10,152 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | |||
Trade receivables allowance | $ 30 | $ 32 | $ 34 |
CONDENSED CONSOLIDATED CASH FLO
CONDENSED CONSOLIDATED CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net earnings | $ 55 | $ 84 |
Non-cash charges | ||
Depreciation and amortization | 126 | 126 |
Pension expense | 9 | 8 |
Cash payments | ||
Pension contributions | (13) | (11) |
Asbestos-related payments | (71) | |
Cash paid for restructuring activities | (8) | (15) |
Change in components of working capital | (461) | (697) |
Other, net (a) | (23) | (19) |
Cash utilized in operating activities | (315) | (595) |
Cash flows from investing activities: | ||
Cash payments for property, plant and equipment | (120) | (121) |
Contributions and advances to joint ventures | (15) | |
Net cash proceeds on disposal of assets | 1 | |
Deconsolidation of Paddock | (47) | |
Other, net | 2 | |
Cash utilized in investing activities | (165) | (135) |
Cash flows from financing activities: | ||
Changes in borrowings, net | 859 | 589 |
Issuance of common stock and other | (2) | (3) |
Treasury shares repurchased | (38) | |
Dividend paid | (8) | (8) |
Cash provided by financing activities | 849 | 540 |
Effect of exchange rate fluctuations on cash | (29) | 4 |
Increase (Decrease) in cash | 340 | (186) |
Cash at beginning of period | 551 | 512 |
Cash at end of period | $ 891 | $ 326 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information | |
Segment Information | 1. Segment Information The Company has three reportable segments and three operating segments based on its geographic locations: Americas, Europe and Asia Pacific. These three segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations. Certain assets and activities not directly related to one of the regions or to glass manufacturing are reported with Retained corporate costs and other. These include licensing, equipment manufacturing, global engineering, and certain equity investments. Retained corporate costs and other also includes certain headquarters administrative and facilities costs and certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments. The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings from continuing operations before interest income, interest expense, and provision for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations, as well as certain retained corporate costs. The Company’s management uses segment operating profit, in combination with net sales and selected cash flow information, to evaluate performance and to allocate resources. Segment operating profit for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided. Segment operating profit is not a recognized term under U.S. GAAP and therefore does not purport to be an alternative to earnings 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 and 2019 regarding the Company’s reportable segments is as follows: 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, 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 |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Revenue | 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, 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 and March 31, 2019, 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 the three-month periods ended March 31, 2020 and March 31, 2019, revenue recognized from prior periods (for example, due to changes in transaction price) was not material. The following tables for the three months ended March 31, 2020 and 2019 disaggregates the Company’s revenue by customer end use: Three months ended March 31, 2020 Americas Europe Asia Pacific Total Alcoholic beverages (beer, wine, spirits) $ 508 $ 411 $ 101 $ 1,020 Food and other 189 105 24 318 Non-alcoholic beverages 134 60 20 214 Reportable segment totals $ 831 $ 576 $ 145 $ 1,552 Other 9 Net sales $ 1,561 Three months ended March 31, 2019 Americas Europe Asia Pacific Total Alcoholic beverages (beer, wine, spirits) $ 564 $ 432 $ 109 $ 1,105 Food and other 180 103 25 308 Non-alcoholic beverages 137 61 17 215 Reportable segment totals $ 881 $ 596 $ 151 $ 1,628 Other 10 Net sales $ 1,638 |
Credit Losses
Credit Losses | 3 Months Ended |
Mar. 31, 2020 | |
Credit losses | |
Credit Losses | 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 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 recovery of defaulted receivables. At March 31, 2020, the Company reported $767 million of accounts receivable, net of allowances of $30 million. Changes in the allowance were not material for the three months ended March 31, 2020. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Inventories | 4. Inventories Major classes of inventory at March 31, 2020, December 31, 2019 and March 31, 2019 are as follows: March 31, December 31, March 31, 2020 2019 2019 Finished goods $ 884 $ 872 $ 868 Raw materials 121 128 126 Operating supplies 42 45 44 $ 1,047 $ 1,045 $ 1,038 |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments | |
Derivative Instruments | 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 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 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 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 payables, including intercompany receivables, payables, and loans, not denominated in, or indexed to, their functional currencies. 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 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 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 an unrecognized loss of less than $1 million at March 31, 2019 related to these interest rate swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next twelve 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 of $10 million at March 31, 2020, an unrecognized gain of $8 million at December 31, 2019 and an unrecognized gain of $7 million at March 31, 2019, related to these net investment hedges, were included in Accumulated OCI, and will be reclassified into earnings within the next twelve months. Balance Sheet Classification The following table shows the amount and classification (as noted above) of the Company’s derivatives at March 31, 2020, December 31, 2019 and March 31, 2019: 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 (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) The notional amounts of the interest rate swaps designated as fair value hedges were €725 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The maximum maturity dates were in 2025 for March 31, 2020 and December 31, 2019 and 2024 for March 31, 2019. (c) The notional amounts of the cash flow hedges of foreign exchange risk were $1.424 billion at March 31, 2020 and December 31, 2019 and $797 million at March 31, 2019. The maximum maturity dates were in 2023 for all three periods. (d) The notional amounts of the interest rate swaps designated as cash flow hedges were $105 million at March 31, 2020 and December 31, 2019 and $180 million at March 31, 2019, respectively. Maximum maturity dates were in 2020 for March 31, 2020 and December 31, 2019 and 2021 for March 31, 2019. (e) The notional amounts of the net investment hedges were €160 million at March 31, 2020, December 31, 2019 and March 31, 2019. The maximum maturity dates were in 2020 for all three periods. (f) The notional amounts of the foreign exchange derivative contracts were $306 million, $283 million and $625 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The maximum maturity dates were in 2021, 2019, and 2019 for March 31, 2020, December 31, 2019 and March 31, 2019, respectively. 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, Derivatives designated as hedging instruments: 2020 2019 2020 2019 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) Net Investment Hedges Net Investment Hedges (4) 5 2 (2) $ (73) $ 14 $ 62 $ (12) Amount of Gain (Loss) Recognized in Other income (expense), net Three months ended March 31, Derivatives not designated as hedges: 2020 2019 Foreign exchange derivative contracts $ 12 $ 6 (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. |
Restructuring Accruals
Restructuring Accruals | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring | |
Restructuring | 6 . Restructuring Accruals Selected information related to the restructuring accruals for the three months ended March 31, 2020 and 2019 is as follows: Employee Other Total Costs Exit Costs Restructuring Balance at January 1, 2020 $ 32 $ 13 $ 45 Net cash paid, principally severance and related benefits (8) (8) Other, including foreign exchange translation (2) (1) (3) Balance at March 31, 2020 $ 22 $ 12 $ 34 Employee Other Total Costs Exit Costs Restructuring Balance at January 1, 2019 $ 47 $ 22 $ 69 Net cash paid, principally severance and related benefits (13) (2) (15) Other, including foreign exchange translation (1) (1) Balance at March 31, 2019 $ 34 $ 19 $ 53 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 and 2019, no major restructuring programs were in effect. For the three months ended March 31, 2020 and 2019, 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. |
Pension Benefit Plans
Pension Benefit Plans | 3 Months Ended |
Mar. 31, 2020 | |
Pension Benefit Plans and Other Postretirement Benefits | |
Pension Benefit Plans and Other Postretirement Benefits | 7. Pension Benefit Plans The components of the net periodic pension cost for the three months ended March 31, 2020 and 2019 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 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | 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 and Peru. The years under examination range from 2004 through 2018. 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 to 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. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt | |
Debt | 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 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, the Agreement includes a million net of debt issuance costs). At March 31, 2020, the Company had unused credit of 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) 4.50 x 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 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, 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 for Base Rate Loans. In addition, a commitment fee is payable on the unused revolving credit facility commitments ranging from 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, the Company redeemed €250 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 % per annum and mature on February 15, 2025. 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 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 million aggregate principal amount of the Company’s outstanding 4.875% senior notes due 2021. In December 2019, subsidiaries of the Company completed consent solicitations 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. 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 of the Company’s significant fixed rate debt obligations are as follows: Principal Indicated Amount Market Price 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 4.00%, due 2023 310 95.00 295 3.125%, due 2024 (€725 million) 798 94.82 757 6.375%, due 2025 300 88.71 266 5.375%, due 2025 300 94.91 285 2.875%, due 2025 (€500 million) 551 93.20 513 |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Contingencies | |
Contingencies | 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 the Company’s glass-making operations, which remain under O-I Group. 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 in the ordinary course under court protection from 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 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 in the early stages, it is not possible to predict the form of the ultimate resolution or when an ultimate resolution might occur. 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 support agreement are to ensure that Paddock has the ability to fund the costs and expenses of managing the Chapter 11 process, ultimately settle 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. Following the Chapter 11 filing, 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 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, were derecognized from the Company’s consolidated financial statements on a prospective basis. Simultaneously, the Company recognized a liability related to the support agreement, as described above, of $471 million as required under applicable accounting standards, which may be subject to change based on the facts and circumstances of the Chapter 11 proceedings. Taken together, these transactions 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. Several risks and uncertainties related to Paddock’s Chapter 11 case could have a material adverse effect on the Company’s business, 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 costs of the Chapter 11 proceedings and the length of time necessary to resolve the case, either through settlement or various court proceedings, and the possibility that Paddock will be unsuccessful in attaining the desired relief under Chapter 11. 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 accepted for payment. The lack of uniform rules in lawsuit pleading practice, technical pleading requirement 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 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 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. 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 not been discounted for the time value of money. The Company’s comprehensive legal review resulted in a charge of $35 million 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 an 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. Other Matters 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. |
Share Owners' Equity
Share Owners' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Share Owners' Equity | |
Share Owners' Equity | 11. Share Owners’ Equity The activity in share owners’ equity for the three months ended March 31, 2020 and 2019 is as follows: 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) 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 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 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) March 31, December 31, March 31, 2020 2019 2019 Shares of common stock issued (including treasury shares) 189,210 188,447 188,348 Treasury shares 32,639 32,573 33,117 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | 12. Accumulated Other Comprehensive Loss The activity in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 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, 2019 $ (889) $ (18) $ (1,061) $ (1,968) Change before reclassifications 46 (2) (2) 42 Amounts reclassified from accumulated other comprehensive income (loss) 3 (a) 13 (b) 16 Translation effect 2 (5) (3) Tax effect 2 2 Other comprehensive income (loss) attributable to the Company 46 5 6 57 Balance on March 31, 2019 $ (843) $ (13) $ (1,055) $ (1,911) (a) Amount is included in Cost of goods sold and Other 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 benefit cost. |
Other Expense, net
Other Expense, net | 3 Months Ended |
Mar. 31, 2020 | |
Other Expense, net | |
Other Expense, net | 13. Other Expense, Net Other expense (income), net for the three months ended March 31, 2020 and 2019 included the following: Three months ended March 31, 2020 2019 Charge for deconsolidation of Paddock (see Note 10) $ 14 $ — Foreign currency exchange loss 3 Intangible amortization expense 10 10 Royalty income (4) (3) Other expense (income), net (3) — $ 17 $ 10 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Earnings Per Share | 14. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: Three months ended March 31, 2020 2019 Numerator: Net earnings attributable to the Company $ 50 $ 79 Denominator (in thousands): Denominator for basic earnings per share-weighted average shares outstanding 156,081 154,361 Effect of dilutive securities: Stock options and other 1,603 2,274 Denominator for diluted earnings per share-adjusted weighted average shares outstanding 157,684 156,635 Basic earnings per share: Net earnings attributable to the Company $ 0.32 $ 0.51 Diluted earnings per share: Net earnings attributable to the Company $ 0.32 $ 0.51 Options to purchase 2,533,717 and 1,496,298 weighted average shares of common stock, which were outstanding during the three months March 31, 2020 and 2019, respectively, were not included in the computation of diluted earnings per share because the options exercise price was greater than the average market price of the common shares. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | 15. Supplemental Cash Flow Information Income taxes paid (received) in cash were as follows: Three months ended March 31, 2020 2019 U.S. $ 2 $ (7) Non-U.S. 32 33 Total income taxes paid in cash $ 34 $ 26 Interest paid in cash for the three months ended March 31, 2020 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, December 31, 2019 and March 31, 2019, the amount of receivables sold by the Company was $429 million, $539 million and $303 million, respectively. For the three months ended March 31, 2020 and 2019, the Company reduced the use of its factoring programs compared to the most recent respective year-end periods and this resulted in a higher use of working capital, and corresponding decrease to cash from operating activities, of approximately $110 million and $297 million, respectively. |
New Accounting Pronouncement
New Accounting Pronouncement | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncement | |
New Accounting Pronouncement | 16. New Accounting Pronouncement Credit Losses - Disclosure Requirements for Fair Value Measurement - Disclosure Requirements for Defined Benefit Plans |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations | |
Business Combinations | 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 three 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, 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 no pro forma financial information is presented. |
COVID-19 Impacts
COVID-19 Impacts | 3 Months Ended |
Mar. 31, 2020 | |
COVID-19 Impacts | |
COVID-19 Impacts | 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 pandemic, which will negatively impact its business and results of operations for the second quarter of 2020 and likely beyond. The extent to which the Company’s operations will be impacted by the global pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the global pandemic and actions by government authorities to contain the global pandemic or treat its impact, among other things. Future changes in the Company’s cost of capital, expected cash flows, or other factors as a result of the above may cause the Company’s long-lived assets including goodwill to be impaired, resulting in a non-cash charge against results of operations to write down long-lived assets including goodwill for the amount of the impairment. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information | |
Net sales for the Company's reportable segments | 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 |
Segment operating profit (loss) for the Company's reportable segments | 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 |
Total assets for the Company's reportable segments | 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 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Schedule of disaggregation of revenue by customer end use | Three months ended March 31, 2020 Americas Europe Asia Pacific Total Alcoholic beverages (beer, wine, spirits) $ 508 $ 411 $ 101 $ 1,020 Food and other 189 105 24 318 Non-alcoholic beverages 134 60 20 214 Reportable segment totals $ 831 $ 576 $ 145 $ 1,552 Other 9 Net sales $ 1,561 Three months ended March 31, 2019 Americas Europe Asia Pacific Total Alcoholic beverages (beer, wine, spirits) $ 564 $ 432 $ 109 $ 1,105 Food and other 180 103 25 308 Non-alcoholic beverages 137 61 17 215 Reportable segment totals $ 881 $ 596 $ 151 $ 1,628 Other 10 Net sales $ 1,638 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Major classes of inventory | March 31, December 31, March 31, 2020 2019 2019 Finished goods $ 884 $ 872 $ 868 Raw materials 121 128 126 Operating supplies 42 45 44 $ 1,047 $ 1,045 $ 1,038 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments | |
Balance Sheet Classification of derivative instruments | 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 (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) The notional amounts of the interest rate swaps designated as fair value hedges were €725 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The maximum maturity dates were in 2025 for March 31, 2020 and December 31, 2019 and 2024 for March 31, 2019. (c) The notional amounts of the cash flow hedges of foreign exchange risk were $1.424 billion at March 31, 2020 and December 31, 2019 and $797 million at March 31, 2019. The maximum maturity dates were in 2023 for all three periods. (d) The notional amounts of the interest rate swaps designated as cash flow hedges were $105 million at March 31, 2020 and December 31, 2019 and $180 million at March 31, 2019, respectively. Maximum maturity dates were in 2020 for March 31, 2020 and December 31, 2019 and 2021 for March 31, 2019. (e) The notional amounts of the net investment hedges were €160 million at March 31, 2020, December 31, 2019 and March 31, 2019. The maximum maturity dates were in 2020 for all three periods. (f) The notional amounts of the foreign exchange derivative contracts were $306 million, $283 million and $625 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The maximum maturity dates were in 2021, 2019, and 2019 for March 31, 2020, December 31, 2019 and March 31, 2019, respectively. |
Effects of derivative instruments on the results of operations | 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, Derivatives designated as hedging instruments: 2020 2019 2020 2019 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) Net Investment Hedges Net Investment Hedges (4) 5 2 (2) $ (73) $ 14 $ 62 $ (12) Amount of Gain (Loss) Recognized in Other income (expense), net Three months ended March 31, Derivatives not designated as hedges: 2020 2019 Foreign exchange derivative contracts $ 12 $ 6 (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. |
Restructuring Accruals (Tables)
Restructuring Accruals (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring | |
Selected information related to the restructuring accruals | Selected information related to the restructuring accruals for the three months ended March 31, 2020 and 2019 is as follows: Employee Other Total Costs Exit Costs Restructuring Balance at January 1, 2020 $ 32 $ 13 $ 45 Net cash paid, principally severance and related benefits (8) (8) Other, including foreign exchange translation (2) (1) (3) Balance at March 31, 2020 $ 22 $ 12 $ 34 Employee Other Total Costs Exit Costs Restructuring Balance at January 1, 2019 $ 47 $ 22 $ 69 Net cash paid, principally severance and related benefits (13) (2) (15) Other, including foreign exchange translation (1) (1) Balance at March 31, 2019 $ 34 $ 19 $ 53 |
Pension Benefit Plans (Tables)
Pension Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Pension Benefit Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Components of net periodic pension cost | The components of the net periodic pension cost for the three months ended March 31, 2020 and 2019 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 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt | |
Long-term Debt | 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 |
Fair values of the Company's significant fixed rate debt obligations | Principal Indicated Amount Market Price 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 4.00%, due 2023 310 95.00 295 3.125%, due 2024 (€725 million) 798 94.82 757 6.375%, due 2025 300 88.71 266 5.375%, due 2025 300 94.91 285 2.875%, due 2025 (€500 million) 551 93.20 513 |
Share Owners' Equity (Tables)
Share Owners' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share Owners' Equity | |
Activity in share owner's equity | The activity in share owners’ equity for the three months ended March 31, 2020 and 2019 is as follows: 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) 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 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 |
Schedule of shares outstanding | Shares Outstanding (in thousands) March 31, December 31, March 31, 2020 2019 2019 Shares of common stock issued (including treasury shares) 189,210 188,447 188,348 Treasury shares 32,639 32,573 33,117 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) | |
Component of accumulated other comprehensive loss | 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, 2019 $ (889) $ (18) $ (1,061) $ (1,968) Change before reclassifications 46 (2) (2) 42 Amounts reclassified from accumulated other comprehensive income (loss) 3 (a) 13 (b) 16 Translation effect 2 (5) (3) Tax effect 2 2 Other comprehensive income (loss) attributable to the Company 46 5 6 57 Balance on March 31, 2019 $ (843) $ (13) $ (1,055) $ (1,911) (a) Amount is included in Cost of goods sold and Other 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 benefit cost. |
Other Expense, net (Tables)
Other Expense, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Expense, net | |
Schedule of other expense (income), net | Three months ended March 31, 2020 2019 Charge for deconsolidation of Paddock (see Note 10) $ 14 $ — Foreign currency exchange loss 3 Intangible amortization expense 10 10 Royalty income (4) (3) Other expense (income), net (3) — $ 17 $ 10 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | Three months ended March 31, 2020 2019 Numerator: Net earnings attributable to the Company $ 50 $ 79 Denominator (in thousands): Denominator for basic earnings per share-weighted average shares outstanding 156,081 154,361 Effect of dilutive securities: Stock options and other 1,603 2,274 Denominator for diluted earnings per share-adjusted weighted average shares outstanding 157,684 156,635 Basic earnings per share: Net earnings attributable to the Company $ 0.32 $ 0.51 Diluted earnings per share: Net earnings attributable to the Company $ 0.32 $ 0.51 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Supplemental Cash Flow Information | |
Income taxes paid (received) in cash | Three months ended March 31, 2020 2019 U.S. $ 2 $ (7) Non-U.S. 32 33 Total income taxes paid in cash $ 34 $ 26 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations | |
Schedule of preliminary estimates of fair value of the assets and liabilities | June 28, 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 |
Segment Information - Reportabl
Segment Information - Reportable Segments (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information | |||
Number of reportable segments | segment | 3 | ||
Number of operating segments | segment | 3 | ||
Net sales: | |||
Net sales | $ 1,561 | $ 1,638 | |
Segment operating profit: | |||
Segment operating profit | 169 | 200 | |
Items excluded from segment operating profit: | |||
Retained corporate costs and other charges | (21) | (24) | |
Charge for deconsolidation of Paddock | (14) | ||
Charge for asbestos related costs | $ (35) | ||
Interest expense, net | (53) | (65) | |
Earnings from continuing operations before income taxes | |||
Earnings before income taxes | 81 | 111 | |
Reportable Segment Totals | |||
Net sales: | |||
Net sales | 1,552 | 1,628 | |
Americas | |||
Net sales: | |||
Net sales | 831 | 881 | |
Segment operating profit: | |||
Segment operating profit | 103 | 113 | |
Europe | |||
Net sales: | |||
Net sales | 576 | 596 | |
Segment operating profit: | |||
Segment operating profit | 61 | 79 | |
Asia Pacific | |||
Net sales: | |||
Net sales | 145 | 151 | |
Segment operating profit: | |||
Segment operating profit | 5 | 8 | |
Other | |||
Net sales: | |||
Net sales | $ 9 | $ 10 |
Segment Information - Total Ass
Segment Information - Total Assets (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Assets | |||
Total assets: | $ 9,504 | $ 9,610 | $ 10,152 |
Reportable Segment Totals | |||
Assets | |||
Total assets: | 8,879 | 9,403 | 9,906 |
Americas | |||
Assets | |||
Total assets: | 4,693 | 5,264 | 5,621 |
Europe | |||
Assets | |||
Total assets: | 3,290 | 3,127 | 3,273 |
Asia Pacific | |||
Assets | |||
Total assets: | 896 | 1,012 | 1,012 |
Other | |||
Assets | |||
Total assets: | $ 625 | $ 207 | $ 246 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue | ||
Net sales | $ 1,561 | $ 1,638 |
Reportable Segment Totals | ||
Disaggregation of Revenue | ||
Net sales | 1,552 | 1,628 |
Americas | ||
Disaggregation of Revenue | ||
Net sales | 831 | 881 |
Europe | ||
Disaggregation of Revenue | ||
Net sales | 576 | 596 |
Asia Pacific | ||
Disaggregation of Revenue | ||
Net sales | 145 | 151 |
Other | ||
Disaggregation of Revenue | ||
Net sales | 9 | 10 |
Alcoholic beverages (beer, wine, spirits) | ||
Disaggregation of Revenue | ||
Net sales | 1,020 | 1,105 |
Alcoholic beverages (beer, wine, spirits) | Americas | ||
Disaggregation of Revenue | ||
Net sales | 508 | 564 |
Alcoholic beverages (beer, wine, spirits) | Europe | ||
Disaggregation of Revenue | ||
Net sales | 411 | 432 |
Alcoholic beverages (beer, wine, spirits) | Asia Pacific | ||
Disaggregation of Revenue | ||
Net sales | 101 | 109 |
Food and other | ||
Disaggregation of Revenue | ||
Net sales | 318 | 308 |
Food and other | Americas | ||
Disaggregation of Revenue | ||
Net sales | 189 | 180 |
Food and other | Europe | ||
Disaggregation of Revenue | ||
Net sales | 105 | 103 |
Food and other | Asia Pacific | ||
Disaggregation of Revenue | ||
Net sales | 24 | 25 |
Non-alcoholic beverages | ||
Disaggregation of Revenue | ||
Net sales | 214 | 215 |
Non-alcoholic beverages | Americas | ||
Disaggregation of Revenue | ||
Net sales | 134 | 137 |
Non-alcoholic beverages | Europe | ||
Disaggregation of Revenue | ||
Net sales | 60 | 61 |
Non-alcoholic beverages | Asia Pacific | ||
Disaggregation of Revenue | ||
Net sales | $ 20 | $ 17 |
Credit Losses (Details)
Credit Losses (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Credit losses | |||
Accounts receivable, net | $ 767 | $ 621 | $ 939 |
Allowance for doubtful accounts | $ 30 | $ 32 | $ 34 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Inventories | |||
Finished goods | $ 884 | $ 872 | $ 868 |
Raw materials | 121 | 128 | 126 |
Operating supplies | 42 | 45 | 44 |
Inventories | $ 1,047 | $ 1,045 | $ 1,038 |
Derivative Instruments - Deriva
Derivative Instruments - Derivatives and Hedges (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Commodity forward contracts | Cash Flow Hedges | |||
Derivatives and Hedges | |||
Unrecognized (loss) gain included in Accumulated OCI | $ (2) | $ 1 | $ 3 |
Cross-currency swap | Cash Flow Hedges | |||
Derivatives and Hedges | |||
Unrecognized (loss) gain included in Accumulated OCI | (4) | (1) | (11) |
Interest rate swaps | Cash Flow Hedges | Maximum | |||
Derivatives and Hedges | |||
Unrecognized (loss) gain included in Accumulated OCI | (1) | (1) | (1) |
Interest rate swaps | Net investment hedges | |||
Derivatives and Hedges | |||
Unrecognized (loss) gain included in Accumulated OCI | $ 10 | $ 8 | $ 7 |
Derivative Instruments - Balanc
Derivative Instruments - Balance Sheet Classification (Details) € in Millions, $ in Millions | Mar. 31, 2020EUR (€) | Mar. 31, 2020USD ($) | Dec. 31, 2019EUR (€) | Dec. 31, 2019USD ($) | Mar. 31, 2019EUR (€) | Mar. 31, 2019USD ($) |
Derivatives, Fair Value | ||||||
Total asset derivatives | $ 92 | $ 38 | $ 47 | |||
Total liability derivatives | 13 | 24 | 10 | |||
Current derivative asset | 30 | 8 | 23 | |||
Current derivative liability | 8 | 3 | ||||
Noncurrent derivative asset | 62 | 30 | 24 | |||
Noncurrent derivative liability | 5 | 24 | 7 | |||
Derivatives designated as hedging instruments | ||||||
Derivatives, Fair Value | ||||||
Total asset derivatives | 82 | 36 | 45 | |||
Total liability derivatives | 8 | 24 | 9 | |||
Derivatives designated as hedging instruments | Commodity forward contracts | ||||||
Derivatives, Fair Value | ||||||
Notional amount | 12 | 13 | 20 | |||
Total asset derivatives | 1 | 3 | ||||
Total liability derivatives | 2 | |||||
Derivatives designated as hedging instruments | Interest rate swaps - fair value hedges | ||||||
Derivatives, Fair Value | ||||||
Notional amount | € | € 725 | € 725 | € 725 | |||
Total asset derivatives | 11 | 8 | 18 | |||
Total liability derivatives | 2 | |||||
Derivatives designated as hedging instruments | Interest rate swaps - cash flow hedges | ||||||
Derivatives, Fair Value | ||||||
Notional amount | 105 | 105 | 180 | |||
Total liability derivatives | 2 | 1 | 1 | |||
Derivatives designated as hedging instruments | Cash flow hedges of foreign exchange risk | ||||||
Derivatives, Fair Value | ||||||
Notional amount | 1,424 | 1,424 | 797 | |||
Total asset derivatives | 66 | 25 | 18 | |||
Total liability derivatives | 4 | 21 | 4 | |||
Derivatives designated as hedging instruments | Net investment hedges | ||||||
Derivatives, Fair Value | ||||||
Notional amount | € | € 160 | € 160 | ||||
Total asset derivatives | 5 | 2 | 6 | |||
Total liability derivatives | 4 | |||||
Derivatives not designated as hedging instruments | Foreign exchange contracts | ||||||
Derivatives, Fair Value | ||||||
Notional amount | 306 | 283 | 625 | |||
Total asset derivatives | 10 | $ 2 | 2 | |||
Total liability derivatives | $ 5 | $ 1 |
Derivative Instruments - Effect
Derivative Instruments - Effects of Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivatives not designated as hedging instruments | Foreign exchange contracts | ||
Derivatives and Hedges | ||
Amount of Gain (Loss) Recognized in Other income (expense), net | $ 12 | $ 6 |
Derivatives designated as hedging instruments | ||
Derivatives and Hedges | ||
Gain (Loss) Recognized in OCI (Effective Portion) | (73) | 14 |
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | 62 | (12) |
Derivatives designated as hedging instruments | Net Investment Hedges | ||
Derivatives and Hedges | ||
Gain (Loss) Recognized in OCI (Effective Portion) | (4) | 5 |
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | 2 | (2) |
Derivatives designated as hedging instruments | Commodity forward contracts | Cash Flow Hedges | Cost of goods sold | ||
Derivatives and Hedges | ||
Gain (Loss) Recognized in OCI (Effective Portion) | (3) | 2 |
Derivatives designated as hedging instruments | Foreign exchange risk | Cash Flow Hedges | Other expense, net | ||
Derivatives and Hedges | ||
Gain (Loss) Recognized in OCI (Effective Portion) | (66) | 7 |
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 60 | $ (10) |
Restructuring Accruals (Details
Restructuring Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring accrual | ||
Beginning balance, restructuring reserve | $ 45 | $ 69 |
Net cash paid, principally severance and related benefits | (8) | (15) |
Other, including foreign exchange translation | (3) | (1) |
Ending balance, restructuring reserve | 34 | 53 |
Employee Costs | ||
Restructuring accrual | ||
Beginning balance, restructuring reserve | 32 | 47 |
Net cash paid, principally severance and related benefits | (8) | (13) |
Other, including foreign exchange translation | (2) | |
Ending balance, restructuring reserve | 22 | 34 |
Other Exit Costs | ||
Restructuring accrual | ||
Beginning balance, restructuring reserve | 13 | 22 |
Net cash paid, principally severance and related benefits | (2) | |
Other, including foreign exchange translation | (1) | (1) |
Ending balance, restructuring reserve | $ 12 | $ 19 |
Pension Benefit Plans (Details)
Pension Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
U.S. | ||
Components of net periodic pension cost | ||
Service cost | $ 3 | $ 3 |
Interest cost | 12 | 15 |
Expected asset return | (21) | (22) |
Amortization: | ||
Amortization of actuarial loss | 14 | 10 |
Net periodic pension cost | 8 | 6 |
Non-U.S. | ||
Components of net periodic pension cost | ||
Service cost | 3 | 3 |
Interest cost | 7 | 8 |
Expected asset return | (12) | (12) |
Amortization: | ||
Amortization of actuarial loss | 3 | 3 |
Net periodic pension cost | $ 1 | $ 2 |
Debt (Details)
Debt (Details) $ / shares in Units, € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | ||||||||
Nov. 30, 2019EUR (€) | Mar. 31, 2020USD ($)itemagreement$ / shares | Dec. 31, 2021item | Jun. 30, 2021item | Mar. 31, 2020EUR (€)item | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | Jul. 31, 2019EUR (€) | Mar. 31, 2019USD ($) | Mar. 31, 2019EUR (€) | |
Debt Instrument | ||||||||||
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 | |||||||
Number financial maintenance covenants | agreement | 1 | |||||||||
Maximum Leverage Ratio may increase | item | 0.5 | |||||||||
Short-term loans and long-term debt due within one year | $ 283 | 124 | 91 | |||||||
Maximum | ||||||||||
Debt Instrument | ||||||||||
Leverage Ratio | item | 5 | 5 | ||||||||
Maximum Borrowing Capacity | $ 3,000 | |||||||||
Maximum | Forecast | ||||||||||
Debt Instrument | ||||||||||
Leverage Ratio | item | 4.50 | 4.75 | ||||||||
Secured Credit Agreement | ||||||||||
Debt Instrument | ||||||||||
Unused Credit | $ 673 | |||||||||
Weighted average interest rate (as a percent) | 2.28% | 2.28% | ||||||||
Secured Credit Agreement | Minimum | ||||||||||
Debt Instrument | ||||||||||
Interest rate margin, Eurocurrency Rate loans (as a percent) | 1.00% | 1.00% | ||||||||
Interest rate margin, Base Rate loans (as a percent) | 0.00% | |||||||||
Secured Credit Agreement | Maximum | ||||||||||
Debt Instrument | ||||||||||
Interest rate margin, Eurocurrency Rate loans (as a percent) | 1.50% | 1.50% | ||||||||
Interest rate margin, Base Rate loans (as a percent) | 0.50% | |||||||||
Revolving Loans | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 817 | |||||||||
Revolving Loans | Prior Agreement | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | 553 | |||||||||
Term Loan A | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | 1,477 | 1,477 | ||||||||
Face Value | 1,500 | |||||||||
Net proceeds, after deducting debt issuance costs | 1,477 | |||||||||
Term Loan A | Prior Agreement | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | 897 | |||||||||
Other secured debt | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 330 | 333 | 504 | |||||||
Senior Notes 6.75%, due 2020 (500 million EUR) | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | € 500 | 560 | ||||||||
Interest rate, stated percentage | 6.75% | 6.75% | 6.75% | 6.75% | ||||||
Debt redeemed | € | € 250 | € 250 | ||||||||
Senior Notes 4.875%, due 2021 (118 million EUR at March 31, 2020, 118 million EUR at December 31, 2019 and 330 million EUR at March 31, 2019) | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 130 | € 118 | 132 | € 118 | 369 | € 330 | ||||
Interest rate, stated percentage | 4.875% | 4.875% | 4.875% | |||||||
Debt redeemed | € | € 212 | |||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 130 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 99.96 | |||||||||
Fair Value | $ 130 | |||||||||
Senior Notes 5.00%, due 2022 | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 497 | 497 | 497 | |||||||
Interest rate, stated percentage | 5.00% | 5.00% | ||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 500 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 100.96 | |||||||||
Fair Value | $ 505 | |||||||||
Senior Notes 4.00%, due 2023 | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 307 | 307 | 307 | |||||||
Interest rate, stated percentage | 4.00% | 4.00% | ||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 310 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 95 | |||||||||
Fair Value | $ 295 | |||||||||
Senior Notes 5.875%, due 2023 | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 689 | 689 | 688 | |||||||
Interest rate, stated percentage | 5.875% | 5.875% | ||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 700 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 91.81 | |||||||||
Fair Value | $ 643 | |||||||||
Senior Notes 3.125%, due 2024 (725 million EUR) | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 813 | € 725 | 824 | € 725 | 824 | € 725 | ||||
Interest rate, stated percentage | 3.125% | 3.125% | ||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 798 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 94.82 | |||||||||
Fair Value | $ 757 | |||||||||
Senior Notes 6.375%, due 2025 | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 296 | 295 | 296 | |||||||
Interest rate, stated percentage | 6.375% | 6.375% | ||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 300 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 88.71 | |||||||||
Fair Value | $ 266 | |||||||||
Senior Notes, 5.375% due 2025 | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 297 | 297 | 298 | |||||||
Interest rate, stated percentage | 5.375% | 5.375% | ||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 300 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 94.91 | |||||||||
Fair Value | $ 285 | |||||||||
Senior Notes 2.875%, due 2025 (500 million EUR) | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | € 500 | $ 543 | € 500 | 552 | ||||||
Interest rate, stated percentage | 2.875% | 2.875% | 2.875% | |||||||
Net proceeds, after deducting debt issuance costs | € | € 492 | |||||||||
Fair values of fixed rate debt obligations | ||||||||||
Principal Amount | $ 551 | |||||||||
Indicated Market Price (in dollars per share) | $ / shares | $ 93.20 | |||||||||
Fair Value | $ 513 | |||||||||
Finance leases | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | 84 | 70 | 43 | |||||||
Other | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | 13 | $ 11 | $ 18 | |||||||
Revolving Credit Facility | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 300 | |||||||||
Additional default interest rate per annum applied to all obligations owed under the Agreement | 2.00% | |||||||||
Revolving Credit Facility | Minimum | ||||||||||
Debt Instrument | ||||||||||
Facility fee payable (as a percent) | 0.20% | |||||||||
Revolving Credit Facility | Maximum | ||||||||||
Debt Instrument | ||||||||||
Facility fee payable (as a percent) | 0.30% | |||||||||
Multicurrency Revolving Credit Facility | ||||||||||
Debt Instrument | ||||||||||
Total long-term debt | $ 1,200 |
Contingencies - Asbestos (Detai
Contingencies - Asbestos (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020USD ($)lawsuit | Dec. 31, 2019USD ($) | Jan. 06, 2020USD ($) | Dec. 31, 1993USD ($) | |
Loss contingencies | ||||
Sale of goods containing asbestos from 1948 to 1958 | $ 40,000,000 | |||
Liability From Deconsolidation | 471,000,000 | |||
Charge for deconsolidation of Paddock | (14,000,000) | |||
Deconsolidation investing outflow | $ 47,000,000 | |||
Approximate number of claims disposed | lawsuit | 401,200 | |||
Number of pending plaintiffs and claimants | lawsuit | 850 | |||
Average indemnity payment per claim | $ 10,200 | |||
Asbestos-related cash payments | $ 151,000,000 | |||
Cash payments per claim disposed including legal costs | 129,000 | |||
Asbestos-related liability, total amount accrued beginning in 1993 through current reporting period before insurance recoveries | 5,000,000,000 | $ 975,000,000 | ||
Accrual of asbestos related liability | 486,000,000 | |||
Asbestos related charges | $ 35,000,000 | |||
Paddock | ||||
Loss contingencies | ||||
Cash | $ 47,000,000 | |||
Liability From Deconsolidation | $ 471,000,000 | |||
Charge for deconsolidation of Paddock | (14,000,000) | |||
Deconsolidation investing outflow | $ 47,000,000 |
Share Owners' Equity (Details)
Share Owners' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Increase (Decrease) in Share Owners' Equity | |||
Balance | $ 564 | $ 900 | |
Reissuance of common stock | $ 2 | $ 5 | |
Reissuance of common stock (in shares) | 200,000 | 100,000 | |
Treasury shares purchased | $ (38) | ||
Treasury shares purchased (in shares) | 2,100,000 | ||
Stock compensation | $ 1 | $ 4 | |
Stock compensation (in shares) | 800,000 | 500,000 | |
Net earnings | $ 55 | $ 84 | |
Other comprehensive income (loss) | (536) | 60 | |
Dividends declared | (8) | ||
Other | (2) | (5) | |
Balance | $ 76 | $ 1,010 | |
Authorization of common stock | |||
Common stock, shares authorized | 250,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | ||
Shares of common stock issued (including treasury shares) | 189,210,000 | 188,348,000 | 188,447,000 |
Treasury stock, shares | 32,639,000 | 33,117,000 | 32,573,000 |
Common Stock | |||
Increase (Decrease) in Share Owners' Equity | |||
Balance | $ 2 | $ 2 | |
Balance | 2 | 2 | |
Capital in Excess of Par Value | |||
Increase (Decrease) in Share Owners' Equity | |||
Balance | 3,130 | 3,124 | |
Reissuance of common stock | (3) | 2 | |
Stock compensation | 1 | 4 | |
Balance | 3,128 | 3,130 | |
Treasury Stock | |||
Increase (Decrease) in Share Owners' Equity | |||
Balance | (733) | (705) | |
Reissuance of common stock | 5 | 3 | |
Treasury shares purchased | (38) | ||
Other | (2) | (5) | |
Balance | (730) | (745) | |
Retained Earnings (accumulated deficit) | |||
Increase (Decrease) in Share Owners' Equity | |||
Balance | (89) | 333 | |
Net earnings | 50 | 79 | |
Dividends declared | (8) | ||
Balance | (47) | 412 | |
Accumulated Other Comprehensive Loss. | |||
Increase (Decrease) in Share Owners' Equity | |||
Balance | (1,843) | (1,968) | |
Other comprehensive income (loss) | (527) | 57 | |
Balance | (2,370) | (1,911) | |
Non-controlling Interests | |||
Increase (Decrease) in Share Owners' Equity | |||
Balance | 97 | 114 | |
Net earnings | 5 | 5 | |
Other comprehensive income (loss) | (9) | 3 | |
Balance | $ 93 | $ 122 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||
Other comprehensive income (loss) | $ (536) | $ 60 |
Net Effect of Exchange Rate Fluctuations | ||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance at beginning of the period | (813) | (889) |
Change before reclassifications | (564) | 46 |
Other comprehensive income (loss) | (564) | 46 |
Balance at end of the period | (1,377) | (843) |
Change in Certain Derivative Instruments | ||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance at beginning of the period | (14) | (18) |
Change before reclassifications | (2) | (2) |
Amounts reclassified from accumulated other comprehensive income | 11 | 3 |
Translation effect | (1) | 2 |
Tax effect | (2) | 2 |
Other comprehensive income (loss) | 6 | 5 |
Balance at end of the period | (8) | (13) |
Employee Benefit Plans | ||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance at beginning of the period | (1,016) | (1,061) |
Change before reclassifications | (2) | (2) |
Amounts reclassified from accumulated other comprehensive income | 17 | 13 |
Translation effect | 16 | (5) |
Other comprehensive income (loss) | 31 | 6 |
Balance at end of the period | (985) | (1,055) |
Accumulated Other Comprehensive Loss. | ||
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax | ||
Balance at beginning of the period | (1,843) | (1,968) |
Change before reclassifications | (568) | 42 |
Amounts reclassified from accumulated other comprehensive income | 28 | 16 |
Translation effect | 15 | (3) |
Tax effect | (2) | 2 |
Other comprehensive income (loss) | (527) | 57 |
Balance at end of the period | $ (2,370) | $ (1,911) |
Other Expense, net (Details)
Other Expense, net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other Expense, net | ||
Charge for deconsolidation of Paddock | $ 14 | |
Foreign currency exchange loss | $ 3 | |
Intangible amortization expense | 10 | 10 |
Royalty income | (4) | (3) |
Other expense (income), net | (3) | |
Other expense, net | $ 17 | $ 10 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net earnings attributable to the Company | $ 50 | $ 79 |
Denominator (in thousands): | ||
Denominator for basic earnings per share - weighted average shares outstanding (in shares) | 156,081,000 | 154,361,000 |
Effect of dilutive securities: | ||
Stock options and other (in shares) | 1,603,000 | 2,274,000 |
Denominator for diluted earnings per share - adjusted weighted average shares outstanding (in shares) | 157,684,000 | 156,635,000 |
Basic earnings per share: | ||
Net earnings attributable to the Company (in dollars per share) | $ 0.32 | $ 0.51 |
Diluted earnings per share: | ||
Net earnings attributable to the Company (in dollars per share) | $ 0.32 | $ 0.51 |
Weighted average shares of common stock attributable to options not included in diluted earnings per share (in shares) | 2,533,717 | 1,496,298 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income taxes paid | $ 34 | $ 26 | |
Interest paid in cash | 58 | 70 | |
Amount of receivables sold | 429 | 303 | $ 539 |
Change in cash from operating activities from factoring program | 110 | 297 | |
U.S. | |||
Income taxes paid | 2 | (7) | |
Non-U.S. | |||
Income taxes paid | $ 32 | $ 33 |
New Accounting Pronouncement (D
New Accounting Pronouncement (Details) | Mar. 31, 2020USD ($) |
ASU 2016-13 Financial Instruments - Credit Losses | |
Cumulative effect | $ 0 |
Business Combinations (Details)
Business Combinations (Details) - Nueva Fbrica Nacional de Vidrio, S. de R.L. de C.V. ("Nueva Fanal") $ in Millions | Jun. 28, 2019USD ($)PlantT |
Measurement period adjustments | |
Cash paid for acquisition | $ 188 |
Number of furnaces in the Nueva Fanal facility | Plant | 3 |
Tonnage of glass containers produced by Nueva Fbrica Nacional de Vidrio, S. de R.L. de C.V. ("Nueva Fanal") | T | 240,000 |
Pro forma financial information | $ 0 |
Business Combinations - Subsequ
Business Combinations - Subsequent Adjustments (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Jun. 28, 2019 |
Adjustment | ||
Fair values of the assets and liabilities assumed | ||
Goodwill | $ 18 | |
Intangibles | (32) | |
Net property, plant, and equipment | 32 | |
Total assets acquired | 18 | |
Accounts payable | 1 | |
Accrued liabilities | (1) | |
Deferred tax liabilities | 25 | |
Net assets acquired | (7) | |
Nueva Fbrica Nacional de Vidrio, S. de R.L. de C.V. ("Nueva Fanal") | ||
Fair values of the assets and liabilities assumed | ||
Accounts receivable | 42 | $ 42 |
Inventory | 17 | 17 |
Goodwill | 18 | |
Intangibles | 3 | 35 |
Net property, plant, and equipment | 161 | 129 |
Total assets acquired | 241 | 223 |
Accounts payable | 26 | 25 |
Accrued liabilities | 2 | 3 |
Deferred tax liabilities | 25 | |
Net assets acquired | $ 188 | $ 195 |