10-Q

mple

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended

June 30, 2017

or

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

For the transition period from        to       

Commission file number 1-9576

OWENS-ILLINOIS, INC.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐ (Do not check if a smaller reporting company)
Smaller reporting company ☐	Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

The number of shares of common stock, par value $.01, of Owens-Illinois, Inc. outstanding as of June 30, 2017 was 162,875,946.

Part I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

The Condensed Consolidated Financial Statements of Owens-Illinois, Inc. (the “Company”) presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated.  All adjustments are of a normal recurring nature. Because the following unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

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OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(Dollars in millions, except per share amounts)

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Net sales	$	1,751	$	1,760	$	3,366	$	3,348
Cost of goods sold		(1,405)		(1,418)		(2,705)		(2,687)
Gross profit		346		342		661		661
Selling and administrative expense		(123)		(126)		(242)		(254)
Research, development and engineering expense		(16)		(16)		(31)		(32)
Interest expense, net		(62)		(67)		(141)		(133)
Equity earnings		18		15		33		29
Other expense, net		(11)		(7)		(56)		(29)
Earnings from continuing operations before income taxes		152		141		224		242
Provision for income taxes		(9)		(30)		(28)		(57)
Earnings from continuing operations		143		111		196		185
Loss from discontinued operations				(2)				(3)
Net earnings		143		109		196		182
Net earnings attributable to noncontrolling interests		(3)		(4)		(8)		(10)
Net earnings attributable to the Company	$	140	$	105	$	188	$	172
Amounts attributable to the Company:
Earnings from continuing operations	$	140	$	107	$	188	$	175
Loss from discontinued operations				(2)				(3)
Net earnings	$	140	$	105	$	188	$	172
Basic earnings per share:
Earnings from continuing operations	$	0.86	$	0.66	$	1.16	$	1.08
Loss from discontinued operations				(0.01)				(0.02)
Net earnings	$	0.86	$	0.65	$	1.16	$	1.06
Weighted averages shares outstanding (thousands)		162,716		161,945		162,553		161,574
Diluted earnings per share:
Earnings from continuing operations	$	0.85	$	0.65	$	1.15	$	1.07
Loss from discontinued operations				(0.01)				(0.02)
Net earnings	$	0.85	$	0.64	$	1.15	$	1.05
Weighted average diluted shares outstanding (thousands)		164,482		162,820		164,162		162,307

See accompanying notes.

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OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME

(Dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Net earnings	$	143	$	109	$	196	$	182
Other comprehensive income (loss):
Foreign currency translation adjustments		14		(108)		202		(14)
Pension and other postretirement benefit adjustments, net of tax		4		26		15		(16)
Change in fair value of derivative instruments, net of tax		(4)		8		(10)		6
Other comprehensive income (loss)		14		(74)		207		(24)
Total comprehensive income (loss)		157		35		403		158
Comprehensive (income) loss attributable to noncontrolling interests		7		8				(2)
Comprehensive income attributable to the Company	$	164	$	43	$	403	$	156

See accompanying notes.

3

OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

	June 30,		December 31,		June 30,
	2017		2016		2016
Assets
Current assets:
Cash and cash equivalents	$	335	$	492	$	334
Trade receivables, net of allowance of $35 million, $32 million, and $31 million at June 30, 2017, December 31, 2016 and June 30, 2016		956		580		831
Inventories		1,049		983		1,051
Prepaid expenses and other current assets		214		199		358
Total current assets		2,554		2,254		2,574
Property, plant and equipment, net		2,996		2,880		2,932
Goodwill		2,588		2,462		2,536
Intangibles, net		486		464		517
Other assets		1,156		1,075		1,108
Total assets	$	9,780	$	9,135	$	9,667
Liabilities and Share Owners' Equity
Current liabilities:
Short-term loans and long-term debt due within one year	$	271	$	195	$	305
Current portion of asbestos-related liabilities		115		115		130
Accounts payable		1,065		1,135		1,042
Other liabilities		564		615		518
Total current liabilities		2,015		2,060		1,995
Long-term debt		5,471		5,133		5,549
Asbestos-related liabilities		551		577		663
Other long-term liabilities		964		1,002		1,002
Share owners' equity		779		363		458
Total liabilities and share owners' equity	$	9,780	$	9,135	$	9,667

See accompanying notes.

4

OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

	Six months ended June 30,
	2017		2016
Cash flows from operating activities:
Net earnings	$	196	$	182
Loss from discontinued operations				3
Non-cash charges
Depreciation and amortization		245		250
Pension expense		15		15
Restructuring, asset impairment and related charges		48		19
Cash payments
Pension contributions		(20)		(9)
Asbestos-related payments		(26)		(24)
Cash paid for restructuring activities		(16)		(17)
Change in components of working capital		(585)		(491)
Other, net (a)		(13)		(35)
Cash utilized in continuing operating activities		(156)		(107)
Cash utilized in discontinued operating activities				(3)
Total cash utilized in operating activities		(156)		(110)
Cash flows from investing activities:
Additions to property, plant and equipment		(186)		(207)
Acquisitions, net of cash acquired		(27)		(31)
Net foreign exchange derivative activity		2		14
Net cash proceeds related to the sale of assets		6		34
Cash utilized in investing activities		(205)		(190)
Cash flows from financing activities:
Changes in borrowings, net		215		246
Issuance of common stock and other				5
Distributions to noncontrolling interests		(9)		(10)
Payment of finance fees		(21)		(3)
Cash provided by financing activities		185		238
Effect of exchange rate fluctuations on cash		19		(3)
Decrease in cash		(157)		(65)
Cash at beginning of period		492		399
Cash at end of period	$	335	$	334

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

See accompanying notes.

5

OWENS-ILLINOIS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions, except per share amounts

1.  Segment Information

The Company has four reportable segments based on its geographic locations:  Europe, North America, Latin America and Asia Pacific.  These four segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations.  Certain assets and activities not directly related to one of the regions or to glass manufacturing are reported with Retained corporate costs and other.  These include licensing, equipment manufacturing, global engineering, and certain equity investments.  Retained corporate costs and other also includes certain headquarters administrative and facilities costs and certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments.

The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings from continuing operations before interest income, interest expense, and provision for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain retained corporate costs.  The Company’s management uses segment operating profit, in combination with selected cash flow information, to evaluate performance and to allocate resources.  Segment operating profit for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided.

Intercompany sales in Latin America totaled $30 million and $63 million for the three and six months ended June 30, 2017, respectively, and $43 million and $93 million for the three and six months ended June 30, 2016, respectively.

Financial information for the three and six months ended June 30, 2017 and 2016 regarding the Company’s reportable segments is as follows:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Net sales:
Europe	$	635	$	646	$	1,189	$	1,209
North America		572		599		1,100		1,131
Latin America		370		345		711		657
Asia Pacific		155		158		328		317
Reportable segment totals		1,732		1,748		3,328		3,314
Other		19		12		38		34
Net sales	$	1,751	$	1,760	$	3,366	$	3,348

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	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Segment operating profit:
Europe	$	80	$	73	$	139	$	128
North America		92		92		177		168
Latin America		69		57		123		120
Asia Pacific		11		11		31		28
Reportable segment totals		252		233		470		444
Items excluded from segment operating profit:
Retained corporate costs and other		(28)		(25)		(56)		(57)
Restructuring, asset impairment and other		(10)				(49)		(12)
Interest expense, net		(62)		(67)		(141)		(133)
Earnings from continuing operations before income taxes	$	152	$	141	$	224	$	242

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

		June 30,		December 31,		June 30,
		2017		2016		2016
Total assets:
Europe	$	3,074	$	2,792	$	2,977
North America		2,781		2,522		2,562
Latin America		2,730		2,537		2,798
Asia Pacific		987		926		981
Reportable segment totals		9,572		8,777		9,318
Other		208		358		349
Consolidated totals	$	9,780	$	9,135	$	9,667

2.  Inventories

Major classes of inventory at June 30, 2017, December 31, 2016 and June 30, 2016 are as follows:

	June 30,		December 31,		June 30,
	2017		2016		2016
Finished goods	$	879	$	827	$	892
Raw materials		130		118		121
Operating supplies		40		38		38
	$	1,049	$	983	$	1,051

3.  Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at June 30, 2017, December 31, 2016 and June 30, 2016 are as follows:

	June 30,		December 31,		June 30,
	2017		2016		2016
Prepaid expenses	$	61	$	50	$	70
Value added taxes		39		46		172
Other		114		103		116
	$	214	$	199	$	358

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4.  Derivative Instruments

The Company has certain derivative assets and liabilities which consist of natural gas forwards and foreign exchange option and forward contracts. The Company uses an income approach to value these contracts.  Natural gas forward rates and foreign exchange rates are the significant inputs into the valuation models.  These inputs are observable in active markets over the terms of the instruments the Company holds, and accordingly, the Company classifies its derivative assets and liabilities as Level 2 in the hierarchy.  The Company also evaluates counterparty risk in determining fair values.

Commodity Forward Contracts Designated as Cash Flow Hedges

In several regions, the Company enters into commodity forward contracts related to forecasted natural gas requirements, the objectives of which are to limit the effects of fluctuations in the future market price paid for natural gas and the related volatility in cash flows.  In North America, the majority of its customer contracts contain provisions that pass the price of natural gas to its customers.  In certain of these contracts, the customer has the option of fixing the natural gas price component for a specified period of time.  To limit the effects of fluctuations in cash flows resulting from these customer contracts, the Company enters into commodity forward contracts related to forecasted natural gas requirements.  In Asia Pacific, the Company implemented a hedging program in the first quarter of 2016, which included the execution of commodity forward contracts for certain contracted natural gas requirements.  At June 30, 2017 and 2016, the Company had entered into commodity forward contracts covering approximately 9,800,000 MM BTUs and 11,300,000 MM BTUs, respectively.

The Company accounts for the above forward contracts as cash flow hedges at June 30, 2017 and recognizes them on the balance sheet at fair value.  The effective portion of changes in the fair value of a derivative that is designated as, and meets the required criteria for, a cash flow hedge is recorded in the Accumulated Other Comprehensive Income component of share owners’ equity (“OCI”) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings.  An unrecognized loss of $1 million at June 30, 2017, an unrecognized gain of $6 million at December 31, 2016 and an unrecognized gain of $3 million at June 30, 2016 related to the commodity forward contracts was included in Accumulated OCI, and will be reclassified into earnings in the period when the commodity forward contracts expire.  Any material portion of the change in the fair value of a derivative designated as a cash flow hedge that is deemed to be ineffective is recognized in current earnings.  The ineffectiveness related to these natural gas hedges for the three and six months ended June 30, 2017 and 2016 was not material.

The effect of the commodity forward contracts on the results of operations for the three months ended June 30, 2017 and 2016 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain (Loss) Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	(2)	$	7	$	—	$	(2)

The effect of the commodity forward contracts on the results of operations for the six months ended June 30, 2017 and 2016 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	4	$	3	$	—	$	—

Foreign Exchange Derivative Contracts and not Designated as Hedging Instruments

The Company may enter into short-term forward exchange or option agreements to purchase foreign currencies at set rates in the future. These agreements are used to limit exposure to fluctuations in foreign currency exchange rates for significant planned purchases of fixed assets or commodities that are denominated in currencies other than the subsidiaries’ functional currency. The Company may also use foreign exchange agreements to offset the foreign

8

currency risk for receivables and payables, including intercompany receivables, payables, and loans, not denominated in, or indexed to, their functional currencies. The Company records these short-term foreign exchange agreements on the balance sheet at fair value and changes in the fair value are recognized in current earnings.

At June 30, 2017 and 2016, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $340 million and $524 million, respectively, related primarily to intercompany transactions and loans.

The effect of the foreign exchange derivative contracts on the results of operations for the three months ended June 30, 2017 and 2016 is as follows:

	Amount of Gain (Loss)
Location of Gain (Loss)	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016
Other expense	$	4	$	(1)

The effect of the foreign exchange derivative contracts on the results of operations for the six months ended June 30, 2017 and 2016 is as follows:

	Amount of Gain
Location of Gain	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016
Other expense	$	6	$	4

Hedges of Multiple Risks

The Company has variable-interest rate borrowings denominated in currencies other than the functional currency of the borrowing subsidiaries. As a result, the Company is exposed to fluctuations in both the underlying variable interest rate and the currency of the borrowing against the subsidiaries’ functional currency.  The Company uses derivatives to manage these exposures and designates these derivatives as cash flow hedges of both interest rate and foreign exchange risks.  The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges of both interest rate risk and foreign exchange risk is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period for which the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings.

During the second quarter of 2017, one of the Company’s Euro-functional subsidiaries entered into a cross-currency interest rate swap to manage its exposure to fluctuations in the variable interest rate and the U.S. dollar-Euro exchange rate arising from a U.S. dollar denominated borrowing.  This swap involves exchanging fixed rate Euro interest payments for floating rate U.S. dollar interest receipts both of which will occur at the forward exchange rates in effect upon entering into the instrument. This instrument, expected to settle in the third quarter of 2017, has a pay fixed notional amount of €81 million and a receive notional amount of $90 million.

Balance Sheet Classification

The Company records the fair values of derivative financial instruments on the balance sheet as follows: (a) receivables if the instrument has a positive fair value and maturity within one year, (b) deposits, receivables, and other assets if the instrument has a positive fair value and maturity after one year, and (c) other accrued liabilities or other liabilities (current) if the instrument has a negative fair value and maturity within one year.

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The following table shows the amount and classification (as noted above) of the Company’s derivatives at June 30, 2017, December 31, 2016 and June 30, 2016:

	Fair Value
	Balance Sheet	June 30,		December 31,		June 30,
	Location	2017		2016		2016
Asset derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	a	$	—	$	6	$	3
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	a		2		9		6
Total asset derivatives		$	2	$	15	$	9
Liability derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	c	$	1	$	—	$	—
Hedges of multiple risks	c		3
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	c		3		5		3
Total liability derivatives		$	7	$	5	$	3

5.  Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended June 30, 2017 and 2016 is as follows:

	Other
	Restructuring
	Actions
Balance at April 1, 2017	$	104
Charges		10
Write-down of assets to net realizable value
Net cash paid, principally severance and related benefits		(8)
Other, including foreign exchange translation		5
Balance at June 30, 2017	$	111

			Other
	Asia Pacific		Restructuring		Total
	Restructuring		Actions		Restructuring
Balance at April 1, 2016	$	6	$	34	$	40
Net cash paid, principally severance and related benefits				(4)		(4)
Other, including foreign exchange translation				(2)		(2)
Balance at June 30, 2016	$	6	$	28	$	34

Selected information related to the restructuring accruals for the six months ended June 30, 2017 and 2016 is as follows:

	Other
	Restructuring
	Actions
Balance at January 1, 2017	$	85
Charges		48
Write-down of assets to net realizable value		(9)
Net cash paid, principally severance and related benefits		(16)
Other, including foreign exchange translation		3
Balance at June 30, 2017	$	111

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			Other
	Asia Pacific		Restructuring		Total
	Restructuring		Actions		Restructuring
Balance at January 1, 2016	$	7	$	36	$	43
Charges		1		18		19
Write-down of assets to net realizable value				(7)		(7)
Net cash paid, principally severance and related benefits		(1)		(16)		(17)
Other, including foreign exchange translation		(1)		(3)		(4)
Balance at June 30, 2016	$	6	$	28	$	34

The Company’s decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the extent their carrying amounts exceeded fair value or fair value less cost to sell.  The Company classified the significant assumptions used to determine the fair value of the impaired assets, which was not material, as Level 3 in the fair value hierarchy as set forth in the general accounting principles for fair value measurements.

When a decision is made to take these actions, the Company manages and accounts for them separately from the on-going operations of the business. Information related to major programs (as in the case of the Asia Pacific Restructuring program above) are presented separately. Minor initiatives and discrete restructuring actions are presented on a combined basis as Other Restructuring Actions. When charges related to major programs are completed, remaining accrual balances are classified within Other Restructuring Actions.

Asia Pacific Restructuring

During the six months ended June 30, 2016, the Company recorded charges of $1 million. These charges primarily represented other exit costs as part of the Company’s Asia Pacific Restructuring program. The Company recorded total cumulative charges of $224 million and does not expect to execute any further actions under this program. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018. Beginning in 2017, the Asia Pacific Restructuring program was considered substantially complete and the remaining accrual balance was reclassified into Other Restructuring Actions.

Other Restructuring Actions

During the three and six months ended June 30, 2017, the Company recorded restructuring, asset impairment and other charges of $10 million and $48 million, respectively. For the six months ended June 30, 2017, these charges primarily consist of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($33 million), Europe ($13 million) and North America ($2 million). Except for the charges recorded in Europe, the other discrete restructuring charges recorded in 2017 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The Company has recorded total cumulative charges of $54 million related to a plant closure in Europe and does not expect to execute any further significant actions related to this facility.  The restructuring charges recorded in 2017 in the Latin American and European regions primarily relate to capacity curtailments and products produced at those facilities have, in large part, been reallocated to others in their respective regions. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018.

During the three and six months ended June 30, 2016, the Company recorded restructuring, asset impairment and other charges of $0 and $18 million, respectively. These charges were primarily related to restructuring in the Latin America region.  These charges primarily represented employee costs, write-down of assets, and other exit costs of $14 million for a plant closure in the first quarter of 2016 in Latin America, $3 million related to a previous plant closure in North America and $1 million related to other restructuring actions. The discrete restructuring charges recorded in the first quarter of 2016 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred.The restructuring charges recorded in the first quarter of 2016 in the Latin American region primarily relate to a capacity curtailment. The Company reallocated the products produced at this facility to others in the region. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2017. 

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6.  Pension Benefit Plans

The components of the net periodic pension cost for the three months ended June 30, 2017 and 2016 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	4	$	4	$	4	$	5
Interest cost		20		25		11		13
Expected asset return		(33)		(38)		(18)		(21)
Amortization:
Actuarial loss		15		16		5		5
Net periodic pension cost	$	6	$	7	$	2	$	2

The components of the net periodic pension cost for the six months ended June 30, 2017 and 2016 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	8	$	8	$	8	$	9
Interest cost		40		49		22		26
Expected asset return		(66)		(76)		(36)		(42)
Amortization:
Actuarial loss		29		31		10		10
Net periodic pension cost	$	11	$	12	$	4	$	3

In March 2016, the Company remeasured the liability related to its hourly plan in the U.S. to reflect certain changes in future benefits. The remeasurement resulted in an increase to its pension liability of approximately $60 million and has been reflected in other comprehensive income.

7.  Income Taxes

The Company performs a quarterly review of the annual effective tax rate and makes changes if necessary based on new information or events. The estimated annual effective tax rate is forecasted quarterly using actual historical information and forward-looking estimates. The estimated annual effective tax rate may fluctuate due to changes in forecasted annual operating income; changes in the forecasted mix of earnings by country; changes to the valuation allowance for deferred tax assets (such changes would be recorded discretely in the quarter in which they occur); changes to actual or forecasted permanent book to tax differences (non-deductible expenses); impacts from future tax settlements with state, federal or foreign tax authorities (such changes would be recorded discretely in the quarter in which they occur); or impacts from tax law changes. To the extent such changes impact deferred tax assets/liabilities, these changes would generally be recorded discretely in the quarter in which they occur.  Additionally, the annual effective tax rate differs from the statutory U.S. Federal tax rate of 35% primarily because of valuation allowances in some jurisdictions and varying non-U.S. tax rates, as well as the tax accruals reversed in the second quarter of 2017 due to the resolution of a previous tax matter with a foreign tax authority.

The Company is currently under examination in various tax jurisdictions in which it operates, including Argentina, Bolivia, Brazil, China, Canada, Colombia, Czech, Ecuador, France, Germany, and Indonesia. The years under examination range from 2006 through 2015. The Company has received income tax assessments in excess of established reserves. The Company believes that adequate provisions for all income tax uncertainties have been made. However, if income tax assessments are settled against the Company at amounts in excess of established reserves, it could have a material impact to the Company’s results of operations, financial position or cash flows.

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8.  Debt

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

	June 30,		December 31,		June 30,
	2017		2016		2016
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	209	$	—	$	203
Term Loans:
Term Loan A		1,370		1,395		1,525
Term Loan A (€279 million)		303		282		301
Term Loan B						558
Senior Notes:
6.75%, due 2020 (€500 million)		569		523		551
4.875%, due 2021 (€330 million)		375		345		363
5.00%, due 2022		496		495		494
5.875%, due 2023		684		682		681
3.125%, due 2024 (€725 million at June 30, 2017 and €500 million at December 31, 2016)		819		520
5.375%, due 2025		297		297		296
6.375%, due 2025		294		294		294
Senior Debentures:
7.80%, due 2018		22		250		250
Capital Leases		58		57		63
Other		22		26		32
Total long-term debt		5,518		5,166		5,611
Less amounts due within one year		47		33		62
Long-term debt	$	5,471	$	5,133	$	5,549

On April 22, 2015, the Company entered into a Senior Secured Credit Facility, which subsequently has been amended several times with the most recent amendment being entered into on February 3, 2016 (the “Amended Agreement”).

At June 30, 2017, the Amended Agreement includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, a $1,575 million term loan A facility ($1,370 million net of debt issuance costs), and a €279 million term loan A facility ($303 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020.  At June 30, 2017, the Company had unused credit of $675 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at June 30, 2017 was 2.64%.

The Amended Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain liens, make certain investments, become liable under contingent obligations in certain defined instances only, make restricted payments, make certain asset sales within guidelines and limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations.

The Amended Agreement also contains one financial covenant, a Total Leverage Ratio that requires the Company not to exceed a ratio calculated by dividing consolidated total debt, less cash and cash equivalents, by consolidated EBITDA, as defined in the Amended Agreement. The Total Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Total Leverage Ratio to exceed the specified maximum of (i) 4.5x for the two fiscal quarters ending June 30, 2017 and September 30, 2017, and (ii) 4.0x for the fourth fiscal quarter ending December 31, 2017 and each fiscal quarter thereafter.

Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement.  In such an event, the Company would be unable to request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately

13

due and payable.  If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities.  As of June 30, 2017, the Company was in compliance with all covenants and restrictions in the Amended Agreement.  In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions.

The interest rates on borrowings under the Amended Agreement are, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Amended Agreement, plus an applicable margin.  The applicable margin for the term loan A facility and the revolving credit facility is linked to the Company’s Total Leverage Ratio and ranges from 1.25% to 1.75% for Eurocurrency Rate loans and from 0.25% to 0.75% for Base Rate loans.  In addition, a facility fee is payable on the revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Total Leverage Ratio.

Borrowings under the Amended Agreement are secured by substantially all of the assets, excluding real estate and certain other excluded assets, of certain of the Company’s domestic subsidiaries and certain foreign subsidiaries.  Borrowings are also secured by a pledge of intercompany debt and equity investments in certain of the Company’s domestic subsidiaries and, in the case of foreign borrowings, of stock of certain foreign subsidiaries.  All borrowings under the Amended Agreement are guaranteed by certain domestic subsidiaries of the Company.

During August 2015, the Company issued senior notes with a face value of $700 million that bear interest at 5.875% and are due August 15, 2023 (the “Senior Notes due 2023”) and senior notes with a face value of $300 million that bear interest at 6.375% and are due August 15, 2025 (together with the Senior Notes due 2023, the “2015 Senior Notes”).  The 2015 Senior Notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds from the 2015 Senior Notes, after deducting the debt discount and debt issuance costs, totaled approximately $972 million.

During November 2016, the Company issued senior notes with a face value of €500 million that bear interest at 3.125% and are due November 15, 2024 (the “Senior Notes due 2024”).  The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds, after deducting debt issuance costs, totaled approximately $520 million and were used to repay the term loan B facility under the Amended Agreement.  In March 2017, the Company expanded its borrowings under the Senior Notes due 2024 by issuing €225 million of additional notes that bear interest at 3.125% and are due November 15, 2024.  The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used to repay a portion of the Company’s revolving credit facility. 

In March 2017, the Company purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018.  Approximately $22 million of the Senior Debentures remain outstanding as of June 30, 2017. As part of the tender offer, the Company recorded $17 million of additional interest charges for note repurchase premiums and the related write-off of unamortized finance fees in the first quarter of 2017.

The Company assesses its capital raising and refinancing needs on an ongoing basis and may enter into additional credit facilities and seek to issue equity and/or debt securities in the domestic and international capital markets if market conditions are favorable. Also, depending on market conditions, the Company may elect to repurchase portions of its debt securities in the open market.

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The Company has a €185 million European accounts receivable securitization program, which extends through March 2019, subject to periodic renewal of backup credit lines.

Information related to the Company’s accounts receivable securitization program is as follows:

	June 30,			December 31,			June 30,
	2017			2016			2016
Balance (included in short-term loans)	$	182		$	152		$	173
Weighted average interest rate		0.74	%		0.74	%		0.70	%

The carrying amounts reported for the accounts receivable securitization program, and certain long-term debt obligations subject to frequently redetermined interest rates, approximate fair value.  Fair values for the Company’s significant fixed rate debt obligations are based on published market quotations, and are classified as Level 1 in the fair value hierarchy.

Fair values at June 30, 2017 of the Company’s significant fixed rate debt obligations are as follows:

	Principal		Indicated
	Amount		Market Price		Fair Value
Senior Notes:
6.75%, due 2020 (€500 million)	$	572	$	119.06	$	681
4.875%, due 2021 (€330 million)		377		114.02		430
5.00%, due 2022		500		105.45		527
5.875%, due 2023		700		110.21		771
3.125%, due 2024 (€725 million)		829		101.66		843
6.375%, due 2025		300		111.73		335
5.375%, due 2025		300		106.23		319
Senior Debentures:
7.80%, due 2018		22		105.02		23

9.  Contingencies

Asbestos

The Company is a defendant in numerous lawsuits alleging bodily injury and death as a result of exposure to 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 insulation material containing asbestos.  The Company sold its insulation business unit at the end of April 1958.  The typical asbestos personal injury lawsuit alleges various theories of liability, including negligence, gross negligence and strict liability and seeks compensatory and, in some cases, punitive damages in various amounts (herein referred to as "asbestos claims").

As of June 30, 2017, the Company has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 1,400 plaintiffs and claimants.  Based on an analysis of the lawsuits pending as of December 31, 2016, approximately 88% of plaintiffs either do not specify the monetary damages sought, or in the case of court filings, claim an amount sufficient to invoke the jurisdictional minimum of the trial court.  Approximately 9% of plaintiffs specifically plead damages above the jurisdictional minimum up to, and including, $15 million or less, and 3% of plaintiffs specifically plead damages greater than $15 million but less than or equal to $100 million.

As indicated by the foregoing summary, current pleading practice permits considerable variation in the assertion of monetary damages.  The Company’s experience resolving hundreds of thousands of asbestos claims and lawsuits over an extended period demonstrates that the monetary relief alleged in a complaint bears little relevance to a claim’s merits or disposition value.  Rather, the amount potentially recoverable is determined by such factors as the type and severity of the plaintiff’s asbestos disease, the plaintiff’s medical history and exposure to other disease-causing agents, the product identification evidence against the Company and other co-defendants, the defenses available to the Company and other co-defendants, the specific jurisdiction in which the claim is made, and the plaintiff’s firm representing the claimant.

In addition to the pending claims set forth above, the Company has claims-handling agreements in place with many plaintiffs’ counsel throughout the country.  These agreements require evaluation and negotiation regarding whether particular claimants qualify under the criteria established by such agreements. The criteria for such claims include

15

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. 

The Company has also been a defendant in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants, co-defendants and property damage claimants.  Based upon its past experience, the Company believes that these categories of lawsuits and claims will not involve any material liability and they are not included in the above description of pending matters or in the following description of disposed matters.

Since receiving its first asbestos claim, the Company as of June 30, 2017, has disposed of asbestos claims of approximately 398,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,500.  The Company’s asbestos indemnity payments have varied on a per claim basis, and are expected to continue to vary considerably over time.  Asbestos-related cash payments for 2016, 2015 and 2014 were $125 million, $138 million, and $148 million, respectively.  The Company’s cash payments per claim disposed (inclusive of legal costs) were approximately $71,000, $95,000, and $81,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

As discussed above, the Company’s objective is to achieve, where possible, resolution of asbestos claims pursuant to claims-handling agreements.  Failure of claimants to meet certain medical and product exposure criteria in the Company’s administrative claims handling agreements has generally reduced the number of claims that would otherwise have been received by the Company in the tort system. In addition, certain court orders and legislative acts have reduced or eliminated the number of claims that the Company otherwise would have received by the Company in the tort system.  These developments generally have had the effect of increasing the Company’s per-claim average indemnity payment over time. 

Beginning with the initial liability of $975 million established in 1993, the Company has accrued a total of approximately $4.9 billion through June 30, 2017, before insurance recoveries, for its asbestos-related liability.  The Company’s estimates of its liability have been significantly affected by, among other factors, the volatility of asbestos-related litigation in the United States, the significant number of co-defendants that have filed for bankruptcy, the inherent uncertainty of future disease incidence and claiming patterns against the Company, the significant expansion of the defendants that are now sued in this litigation, and the continuing changes in the extent to which these defendants participate in the resolution of cases in which the Company is also a defendant.

The Company continues to monitor trends that may affect its ultimate liability and analyze the developments and variables likely to affect the resolution of pending and future asbestos claims against the Company.  The material components of the Company’s total accrued liability are determined by the Company in connection with its annual comprehensive legal review and consist of the following estimates, to the extent it is probable that such liabilities have been incurred and can be reasonably estimated: (i) the liability for asbestos claims already asserted against 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 claims already asserted and those claims the Company believes will be asserted.

As noted above, the Company conducts a comprehensive legal review of its asbestos-related liabilities and costs annually in connection with finalizing and reporting its annual results of operations, unless significant changes in trends or new developments warrant an earlier review.  As part of its annual comprehensive legal review, the Company provides historical claims filing data to a third party with expertise in determining the impact of disease incidence and mortality on future filing trends to develop information to assist the Company in estimating the total number of future claims to be filed.  The Company uses this estimate of total future claims, along with an estimation of disposition costs and related legal costs as inputs to develop its best estimate of total probable liability. If the results of the annual comprehensive legal review indicate that the existing amount of the accrued liability is lower (higher) than its reasonably estimable asbestos-related costs, then the Company will record an appropriate charge (credit) to the Company’s results of operations to increase (decrease) the accrued liability.

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

a) settlements will 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) claims will continue to be resolved primarily under the Company’s administrative claims agreements or on terms comparable to those set forth in those agreements;

c) the incidence of serious asbestos‑related disease cases and claiming patterns against the Company for such cases do not change materially;

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

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

f) co-defendants with substantial resources and assets continue to participate significantly in the resolution of future asbestos lawsuits and claims.

For the years ended December 31, 2016 and 2015, the Company concluded that accruals in the amount of $692 million and $817 million, respectively, were required. These amounts have not been discounted for the time value of money. The Company’s comprehensive legal reviews resulted in charges of $0 million, $16 million and $46 million for the years ending December 31, 2016, 2015 and 2014, respectively.

The Company believes it is reasonably possible that it will incur a loss for its asbestos-related liabilities in excess of the amount currently recognized, which is $692 million as of December 31, 2016.  The Company estimates that reasonably possible losses could be as high as $825 million.  This estimate of additional reasonably possible loss reflects a legal judgment about the number and cost of potential future claims and legal costs. The Company believes this estimate is consistent with the level of variability it has experienced when comparing actual results to recent near-term projections. However, it is also possible that the ultimate asbestos-related liability could be above this estimate.

The Company expects a significant majority of the total number of claims to be received in the next ten years.  This timeframe appropriately reflects the mortality of current and expected claimants in light of the Company’s sale of its insulation business unit in 1958.

As noted above, the Company’s asbestos-related liability is based on a projection of new claims that will eventually be filed against the Company and the estimated average disposition cost of these claims and related legal costs. Changes in the significant assumptions noted above have the potential to impact these key factors, which are critical to the estimation of the Company’s asbestos-related liability significantly.

Other Matters

On July 5, 2016, the Company learned that the Enforcement Division of the SEC is conducting an investigation into certain accounting and control matters pertaining to the Company’s determination of its asbestos-related liabilities.  On May 13, 2016, the Company restated its consolidated financial statements for the years ended December 31, 2015, 2014 and 2013 in order to correct an error related to the Company’s method for estimating its future asbestos-related liabilities. The Company is cooperating with the SEC’s investigation.  At this time, the Company is unable to predict the outcome of this matter or provide meaningful quantification of how the final resolution of this matter may impact its future consolidated financial statements, results of operations, or cash flows.

Other litigation is pending against the Company, in many cases involving ordinary and routine claims incidental to the business of the Company and in others presenting allegations that are non-routine and involve compensatory, punitive or treble damage claims as well as other types of relief.  The Company records a liability for such matters when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated.  Recorded amounts are reviewed and adjusted to reflect changes in the factors upon which the estimates are based, including additional information, negotiations, settlements and other events.

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10.  Share Owners’ Equity

The activity in share owners’ equity for the three months ended June 30, 2017 and 2016 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		Interests		Equity
Balance on April 1, 2017	$	2	$	3,083	$	(557)	$	(48)	$	(1,981)	$	116	$	615
Reissuance of common stock (101,687 shares)						2								2
Stock compensation				5										5
Net earnings								140				3		143
Other comprehensive income (loss)										24		(10)		14
Balance on June 30, 2017	$	2	$	3,088	$	(555)	$	92	$	(1,957)	$	109	$	779

	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 April 1, 2016	$	2	$	3,074	$	(569)	$	(238)	$	(1,971)	$	118	$	416
Reissuance of common stock (49,234 shares)						3								3
Stock compensation				4										4
Net earnings								105				4		109
Other comprehensive income (loss)										(62)		(12)		(74)
Balance on June 30, 2016	$	2	$	3,078	$	(566)	$	(133)	$	(2,033)	$	110	$	458

The activity in share owners’ equity for the six months ended June 30, 2017 and 2016 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		Interests		Equity
Balance on January 1, 2017	$	2	$	3,080	$	(560)		(96)	$	(2,172)	$	109	$	363
Reissuance of common stock (201,165 shares)						5								5
Stock compensation				8										8
Net earnings								188				8		196
Other comprehensive income (loss)										215		(8)		207
Balance on June 30, 2017	$	2	$	3,088	$	(555)	$	92	$	(1,957)	$	109	$	779

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	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, 2016	$	2	$	3,064	$	(573)	$	(305)	$	(2,017)	$	108	$	279
Issuance of common stock (504,635 shares)				5										5
Reissuance of common stock (183,836 shares)						7								7
Stock compensation				9										9
Net earnings								172				10		182
Other comprehensive loss										(16)		(8)		(24)
Balance on June 30, 2016	$	2	$	3,078	$	(566)	$	(133)	$	(2,033)	$	110	$	458

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)
	June 30,	December 31,	June 30,
	2017	2016	2016
Shares of common stock issued (including treasury shares)	185,692	185,355	185,417
Treasury shares	22,816	23,017	23,335

11.  Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the three months ended June 30, 2017 and 2016 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2017	$	(602)	$	(10)		$	(1,369)		$	(1,981)
Change before reclassifications		24					(6)			18
Amounts reclassified from accumulated other comprehensive income				(4)	(a)		20	(b)		16
Translation effect							(10)			(10)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		24		(4)			4			24
Balance on June 30, 2017	$	(578)	$	(14)		$	(1,365)		$	(1,957)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2016	$	(478)	$	(19)		$	(1,474)		$	(1,971)
Change before reclassifications		(96)								(96)
Amounts reclassified from accumulated other comprehensive income				7	(a)		15	(b)		22

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Translation effect						10		10
Tax effect				1		1		2
Other comprehensive income (loss) attributable to the Company		(96)		8		26		(62)
Balance on June 30, 2016	$	(574)	$	(11)	$	(1,448)	$	(2,033)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 4 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 6 for additional information) and net postretirement benefit cost.

The activity in accumulated other comprehensive loss for the six months ended June 30, 2017 and 2016 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2017	$	(788)	$	(4)		$	(1,380)		$	(2,172)
Change before reclassifications		210					(10)			200
Amounts reclassified from accumulated other comprehensive income				(10)	(a)		39	(b)		29
Translation effect							(14)			(14)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		210		(10)			15			215
Balance on June 30, 2017	$	(578)	$	(14)		$	(1,365)		$	(1,957)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2016	$	(568)	$	(17)		$	(1,432)		$	(2,017)
Change before reclassifications		(6)								(6)
Amounts reclassified from accumulated other comprehensive income				5	(a)		(28)	(b)		(23)
Translation effect							11			11
Tax effect				1			1			2
Other comprehensive income (loss) attributable to the Company		(6)		6			(16)			(16)
Balance on June 30, 2016	$	(574)	$	(11)		$	(1,448)		$	(2,033)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 4 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 6 for additional information) and net postretirement benefit cost.

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12.  Other Expense (Income), net

Other expense (income), net for the three and six months ended June 30, 2017 and 2016 included the following:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Restructuring, asset impairment and other charges	$	10	$	—	$	49	$	19
Gain on sale of land in China								(7)
Foreign currency exchange loss (gain)		(1)		1				4
Intangible amortization expense		10		9		20		20
Royalty income		(3)		(3)		(7)		(5)
Other expense (income)		(5)				(6)		(2)
	$	11	$	7	$	56	$	29

13.  Earnings Per Share

The following tables set forth the computation of basic and diluted earnings per share:

	Three months ended June 30,
	2017		2016
Numerator:
Net earnings attributable to the Company	$	140	$	105
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		162,716		161,945
Effect of dilutive securities:
Stock options and other		1,766		875
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		164,482		162,820
Basic earnings per share:
Earnings from continuing operations	$	0.86	$	0.66
Loss from discontinued operations				(0.01)
Net earnings	$	0.86	$	0.65
Diluted earnings per share:
Earnings from continuing operations	$	0.85	$	0.65
Loss from discontinued operations				(0.01)
Net earnings	$	0.85	$	0.64

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Options to purchase 1,617,748 and 2,939,441 weighted average shares of common stock which were outstanding during the three months ended June 30, 2017 and 2016, 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.

	Six months ended June 30,
	2017		2016
Numerator:
Net earnings attributable to the Company	$	188	$	172
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		162,553		161,574
Effect of dilutive securities:
Stock options and other		1,609		733
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		164,162		162,307
Basic earnings per share:
Earnings from continuing operations	$	1.16	$	1.08
Loss from discontinued operations				(0.02)
Net earnings	$	1.16	$	1.06
Diluted earnings per share:
Earnings from continuing operations	$	1.15	$	1.07
Loss from discontinued operations				(0.02)
Net earnings	$	1.15	$	1.05

Options to purchase 1,912,832 and 2,955,064 weighted average shares of common stock which were outstanding during the six months ended June 30, 2017 and 2016, 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.

14.  Supplemental Cash Flow Information

Financial information regarding the Company’s supplemental cash flow information is as follows:

	Six months ended June 30,
	2017		2016
Interest paid in cash	$	145	$	136
Income taxes paid in cash (all non-U.S.)		89		75

Cash interest for the six months ended June 30, 2017 includes $16 million of note repurchase premiums related to debt that was repaid prior to its maturity.

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At June 30, 2017 and June 30, 2016, the amount of receivables sold by the Company was $205 million and $300 million, respectively. Any continuing involvement with the sold receivables is immaterial.

15.  Discontinued Operations

On April 4, 2016, the annulment committee formed by the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) ruled that OI European Group B.V. (“OIEG”), a subsidiary of the Company, is free to pursue the enforcement of a prior arbitration award (the “Award”) against Venezuela. As of June 30, 2017, that Award amounts to more than $500 million, including reimbursement of expenses and accrued interest.  Venezuela’s application to annul the Award is still pending before an ad hoc committee of the ICSID and a hearing with respect to such application is currently scheduled for September 26-27, 2017. 

On July 31, 2017, OIEG sold its right, title and interest in amounts due under the Award to an Ireland-domiciled investment fund.  Under the terms of the sale, OIEG received a payment, in cash, at closing equal to $115 million (the “Cash Payment”).  OIEG may also receive additional payments in the future (“Deferred Amounts”) calculated based on the total compensation that is received from Venezuela as a result of collection efforts or as settlement of the Award with Venezuela.  In the event that the Award is partially or completely annulled by the ICSID ad hoc annulment committee,

22

OIEG may be required to repay to the purchaser up to the entire amount of the Cash Payment based on a formula tied to the amount of the Award (if any) that is annulled.  In addition, OIEG’s right to receive any Deferred Amounts is subject to the limitations described below.

OIEG’s interest in any amounts received in the future from Venezuela in respect of the Award is limited to a percentage of such recovery after taking into account reimbursement of the Cash Payment to the purchaser and reimbursement of legal fees and expenses incurred by the Company and the purchaser. OIEG’s percentage of such recovery will also be reduced over time.  Because the Award has yet to be satisfied, the annulment proceeding is pending, and the ability to successfully enforce the Award in countries that are party to the ICSID Convention is subject to significant challenges, the Company is unable to reasonably predict the amount of recoveries from the Award, if any,  to which the Company may be entitled in the future.  Any future amounts that the Company may receive from the Award are highly speculative and the timing of any such future payments, if any, is highly uncertain.  As such, there can be no assurance that the Company will receive any future payments under the Award beyond the Cash Payment.  Except as noted above in connection with the annulment proceeding that is pending before the ICSID ad hoc committee, the Cash Payment is not subject to any forfeiture or future adjustment.

A separate arbitration involving other subsidiaries of the Company is pending before ICSID to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants.

For the three and six month periods ending June 30, 2017, the Company has not given recognition to the transaction above in its financial statements. The loss from discontinued operations of less than $1 million and $3 million for the six months ended June 30, 2017 and June 30, 2016, respectively, relates to ongoing costs for the Venezuelan expropriation.

16.  New Accounting Pronouncement

Revenue from Contracts with Customers - In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers”, which delayed by one year the effective date of the new revenue recognition standard, which will be effective for the Company on January 1, 2018. The Company has started an implementation process, including a review of customer contracts, to evaluate the effect this standard will have on its consolidated financial statements and related disclosures.  At this time, the Company does not expect that the implementation of this standard in 2018 will have a significant impact on the timing in which it recognizes revenue.  While the Company continues to assess the potential impacts of the new standard, the Company does not currently expect the adoption of the new standard to have a material impact on consolidated net income or the consolidated balance sheet. The standard requires new substantial disclosures and the Company continues to evaluate these requirements. The Company plans to select the modified retrospective transition method upon adoption effective January 1, 2018.

Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases”. Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee's obligation to make lease payments arising from a lease, and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for the Company on January 1, 2019. ASU No. 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU No. 2016-02 will have on the Company’s consolidated financial statements, and anticipates the new guidance will significantly impact its consolidated financial statements as the Company has a significant number of leases. As further described in Note 16 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company had minimum lease commitments under non-cancellable operating leases totaling $205 million as of December 31, 2016.

23

Compensation– Retirement Benefits - In March 2017, the FASB issued ASU No. 2017-07,“Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which requires the service cost component to be presented with other employee compensation costs in operating income within the income statement while the other components will be reported separately outside of operations. Application of the standard is required for annual periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.

17.  Financial Information for Subsidiary Guarantors and Non-Guarantors

The following presents condensed consolidating financial information for the Company, segregating:  (1) Owens-Illinois, Inc., the issuer of senior debentures (the “Parent”); (2) the two subsidiaries which have guaranteed the senior debentures on a subordinated basis (the “Guarantor Subsidiaries”); and (3) all other subsidiaries (the “Non-Guarantor Subsidiaries”).  The Guarantor Subsidiaries are 100% owned direct and indirect subsidiaries of the Company and their guarantees are full, unconditional and joint and several.  They have no operations and function only as intermediate holding companies. 

Certain reclassifications have been made to conform all of the financial information to the financial presentation on a consolidated basis.  The principal eliminations relate to investments in subsidiaries and intercompany balances and transactions.

24

	June 30, 2017
			Guarantor		Non-Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	335	$	—	$	335
Trade receivables, net						956				956
Inventories						1,049				1,049
Prepaid expenses and other current assets						214				214
Total current assets		—		—		2,554		—		2,554
Investments in and advances to subsidiaries		1,358		1,336		—		(2,694)		—
Property, plant and equipment, net						2,996				2,996
Goodwill						2,588				2,588
Intangibles, net						486				486
Other assets						1,156				1,156
Total assets	$	1,358	$	1,336	$	9,780	$	(2,694)	$	9,780
Current liabilities :
Short-term loans and long-term debt due within one year	$	22	$	—	$	271	$	(22)	$	271
Current portion of asbestos liability		115				—				115
Accounts payable						1,065				1,065
Other liabilities						564		—		564
Total current liabilities		137		—		1,900		(22)		2,015
Long-term debt						5,471		—		5,471
Asbestos-related liabilities		551								551
Other long-term liabilities						964				964
Share owners’ equity		670		1,336		1,336		(2,672)		670
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,358	$	1,336	$	9,780	$	(2,694)	$	9,780

25

	December 31, 2016
					Non-
			Guarantor		Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	492	$	—	$	492
Trade receivables, net						580				580
Inventories						983				983
Prepaid expenses and other current assets						199				199
Total current assets		—		—		2,254		—		2,254
Investments in and advances to subsidiaries		1,198		946				(2,144)		—
Property, plant and equipment, net						2,880				2,880
Goodwill						2,462				2,462
Intangibles, net						464				464
Other assets						1,075				1,075
Total assets	$	1,198	$	946	$	9,135	$	(2,144)	$	9,135
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	195	$	—	$	195
Current portion of asbestos liability		115								115
Accounts payable						1,135				1,135
Other liabilities		2				615		(2)		615
Total current liabilities		117		—		1,945		(2)		2,060
Long-term debt		250				5,133		(250)		5,133
Asbestos-related liabilities		577								577
Other long-term liabilities						1,002				1,002
Share owners’ equity		254		946		946		(1,892)		254
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,198	$	946	$	9,135	$	(2,144)	$	9,135

26

	June 30, 2016
					Non-
			Guarantor		Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	334	$	—	$	334
Trade receivables, net						831				831
Inventories						1,051				1,051
Prepaid expenses and other current assets						358				358
Total current assets		—		—		2,574		—		2,574
Investments in and advances to subsidiaries		1,394		1,142				(2,536)		—
Property, plant and equipment, net						2,932				2,932
Goodwill						2,536				2,536
Intangibles, net						517				517
Other assets						1,108				1,108
Total assets	$	1,394	$	1,142	$	9,667	$	(2,536)	$	9,667
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	305	$	—	$	305
Current portion of asbestos liability		130								130
Accounts payable						1,042				1,042
Other liabilities		2				518		(2)		518
Total current liabilities		132		—		1,865		(2)		1,995
Long-term debt		250				5,549		(250)		5,549
Asbestos-related liabilities		663								663
Other long-term liabilities						1,002				1,002
Share owners’ equity		349		1,142		1,142		(2,284)		349
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,394	$	1,142	$	9,667	$	(2,536)	$	9,667

27

	Three months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	1,751	$	—	$	1,751
Cost of goods sold						(1,405)				(1,405)
Gross profit		—		—		346		—		346
Selling and administrative expense						(123)				(123)
Research, development and engineering expense						(16)				(16)
Net intercompany interest										—
Interest expense, net						(62)				(62)
Equity earnings from subsidiaries		143		143				(286)		—
Other equity earnings						18				18
Other expense, net						(11)				(11)
Earnings before income taxes		143		143		152		(286)		152
Provision for income taxes						(9)				(9)
Earnings from continuing operations		143		143		143		(286)		143
Loss from discontinued operations										—
Net earnings		143		143		143		(286)		143
Net (earnings) attributable to noncontrolling interests						(3)				(3)
Net earnings attributable to the Company	$	143	$	143	$	140	$	(286)	$	140

	Three months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	143	$	143	$	143	$	(286)	$	143
Other comprehensive income (loss), net		20		20		14		(40)		14
Total comprehensive loss		163		163		157		(326)		157
Comprehensive income attributable to noncontrolling interests						7				7
Comprehensive income attributable to the Company	$	163	$	163	$	164	$	(326)	$	164

28

	Three months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	1,760	$	—	$	1,760
Cost of goods sold						(1,418)				(1,418)
Gross profit		—		—		342		—		342
Selling and administrative expense						(126)				(126)
Research, development and engineering expense						(16)				(16)
Net intercompany interest		5				(5)				—
Interest expense, net		(5)				(62)				(67)
Equity earnings from subsidiaries		105		105				(210)		—
Other equity earnings						15				15
Other expense, net						(7)				(7)
Earnings before income taxes		105		105		141		(210)		141
Provision for income taxes						(30)				(30)
Earnings from continuing operations		105		105		111		(210)		111
Loss from discontinued operations						(2)				(2)
Net earnings		105		105		109		(210)		109
Net (earnings) attributable to noncontrolling interests						(4)				(4)
Net earnings attributable to the Company	$	105	$	105	$	105	$	(210)	$	105

	Three months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	105	$	105	$	109	$	(210)	$	109
Other comprehensive income (loss), net		(66)		(66)		(74)		132		(74)
Total comprehensive loss		39		39		35		(78)		35
Comprehensive income attributable to noncontrolling interests						8				8
Comprehensive loss attributable to the Company	$	39	$	39	$	43	$	(78)	$	43

29

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	3,366	$	—	$	3,366
Cost of goods sold						(2,705)				(2,705)
Gross profit		—		—		661		—		661
Selling and administrative expense						(242)				(242)
Research, development and engineering expense						(31)				(31)
Net intercompany interest		21				(21)				—
Interest expense, net		(21)				(120)				(141)
Equity earnings from subsidiaries		192		192				(384)		—
Other equity earnings						33				33
Other expense, net						(56)				(56)
Earnings before income taxes		192		192		224		(384)		224
Provision for income taxes						(28)				(28)
Earnings from continuing operations		192		192		196		(384)		196
Loss from discontinued operations										—
Net earnings		192		192		196		(384)		196
Net (earnings) attributable to noncontrolling interests						(8)				(8)
Net earnings attributable to the Company	$	192	$	192	$	188	$	(384)	$	188

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	192	$	192	$	196	$	(384)	$	196
Other comprehensive income (loss), net		207		207		207		(414)		207
Total comprehensive income (loss)		399		399		403		(798)		403
Comprehensive income attributable to noncontrolling interests										—
Comprehensive income (loss) attributable to the Company	$	399	$	399	$	403	$	(798)	$	403

30

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	3,348	$	—	$	3,348
Cost of goods sold						(2,687)				(2,687)
Gross profit		—		—		661		—		661
Selling and administrative expense						(254)				(254)
Research, development and engineering expense						(32)				(32)
Net intercompany interest		10				(10)				—
Interest expense, net		(10)				(123)				(133)
Equity earnings from subsidiaries		172		172				(344)		—
Other equity earnings						29				29
Other expense, net						(29)				(29)
Earnings before income taxes		172		172		242		(344)		242
Provision for income taxes						(57)				(57)
Earnings from continuing operations		172		172		185		(344)		185
Loss from discontinued operations						(3)				(3)
Net earnings		172		172		182		(344)		182
Net (earnings) attributable to noncontrolling interests						(10)				(10)
Net earnings attributable to the Company	$	172	$	172	$	172	$	(344)	$	172

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	172	$	172	$	182	$	(344)	$	182
Other comprehensive income (loss), net		(26)		(26)		(24)		52		(24)
Total comprehensive loss		146		146		158		(292)		158
Comprehensive income attributable to noncontrolling interests						(2)				(2)
Comprehensive income (loss) attributable to the Company	$	146	$	146	$	156	$	(292)	$	156

31

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Cash Flows	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash utilized in operating activities	$	(26)	$	—		(130)	$	—	$	(156)
Cash utilized in investing activities						(205)				(205)
Cash provided by financing activities		26				159				185
Effect of exchange rate change on cash						19				19
Net change in cash		—		—		(157)		—		(157)
Cash at beginning of period						492				492
Cash at end of period	$	—	$	—	$	335	$	—	$	335

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Cash Flows	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash utilized in operating activities	$	(24)	$	—	$	(86)	$	—	$	(110)
Cash utilized in investing activities						(190)				(190)
Cash provided by financing activities		24				214				238
Effect of exchange rate change on cash						(3)				(3)
Net change in cash		—		—		(65)		—		(65)
Cash at beginning of period						399				399
Cash at end of period	$	—	$	—	$	334	$	—	$	334

32

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

The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings from continuing operations 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 segment data presented below is prepared in accordance with general accounting principles for segment reporting.  The lines titled “reportable segment totals” in both net sales and segment operating profit, however, are non-GAAP measures when presented outside of the financial statement footnotes.  Management has included reportable segment totals below to facilitate the discussion and analysis of financial condition and results of operations and believes this information allows the board of directors, management, investors and analysts to better understand the Company’s financial performance.  The Company’s management uses segment operating profit, in combination with net sales and selected cash flow information, to evaluate performance and to allocate resources.

Financial information for the three and six months ended June 30, 2017 and 2016 regarding the Company’s reportable segments is as follows (dollars in millions):

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Net Sales:
Europe	$	635	$	646	$	1,189	$	1,209
North America		572		599		1,100		1,131
Latin America		370		345		711		657
Asia Pacific		155		158		328		317
Reportable segment totals		1,732		1,748		3,328		3,314
Other		19		12		38		34
Net Sales	$	1,751	$	1,760	$	3,366	$	3,348

33

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Segment operating profit:
Europe	$	80	$	73	$	139	$	128
North America		92		92		177		168
Latin America		69		57		123		120
Asia Pacific		11		11		31		28
Reportable segment totals		252		233		470		444
Items excluded from segment operating profit:
Retained corporate costs and other		(28)		(25)		(56)		(57)
Restructuring, asset impairment and other charges		(10)				(49)		(12)
Interest expense, net		(62)		(67)		(141)		(133)
Earnings from continuing operations before income taxes		152		141		224		242
Provision for income taxes		(9)		(30)		(28)		(57)
Earnings from continuing operations		143		111		196		185
Loss from discontinued operations				(2)				(3)
Net earnings		143		109		196		182
Net (earnings) attributable to noncontrolling interests		(3)		(4)		(8)		(10)
Net earnings attributable to the Company	$	140	$	105	$	188	$	172
Net earnings from continuing operations attributable to the Company	$	140	$	107	$	188	$	175

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

Executive Overview — Quarters ended June 30, 2017 and 2016

Second Quarter 2017 Highlights

· Net sales in the second quarter of 2017 were down slightly compared to the prior year quarter. Higher year-over-year net sales in Latin America were offset by lower sales in the other regions.

· Earnings from continuing operations before income taxes were up 8% in the second quarter of 2017 compared to the second quarter of 2016, driven by higher segment operating profit in the Latin American and European regions.

· The provision for income taxes was lower than the prior year primarily due to the resolution of a tax matter that resulted in approximately $26 million of tax accruals to be reversed in the second quarter of 2017.

Net sales for the second quarter of 2017 were $9 million lower than the second quarter of the prior year primarily due to lower shipments in the North American and Asia Pacific regions and the unfavorable effect of changes in foreign currency exchange rates, partially offset by slightly higher prices and higher shipments in Latin America.

Earnings from continuing operations before income taxes were $11 million higher in the second quarter of 2017 than the prior year quarter, primarily due to higher segment operating profit. Segment operating profit for reportable segments for the second quarter of 2017 was $19 million higher than the second quarter of the prior year. The increase was largely attributable to lower operating costs and slightly higher selling prices, partially offset by slightly lower sales volumes. All regions posted flat or higher segment operating profit in the second quarter of 2017 compared to the same period in the prior year.

Net interest expense for the second quarter of 2017 decreased $5 million compared to the second quarter of 2016.  The decrease was primarily due to deleveraging and refinancing actions taken since the second quarter of 2016. 

For the second quarter of 2017, the Company recorded earnings from continuing operations attributable to the Company of $140 million, or $0.85 per share (diluted), compared to $107 million, or $0.65 per share (diluted), in the second quarter of 2016. Earnings in the second quarter of 2017 included items that management considered not representative of

34

ongoing operations.  These items increased net earnings attributable to the Company by $17 million, or $0.10 per share in the second quarter of 2017 as set forth in the following table (dollars in millions).

	Net Earnings
	Increase
	(Decrease)
Description	2017
Restructuring, asset impairment and other charges	$	(10)
Tax benefit recorded for certain tax adjustments		20
Net tax benefit for income tax on items above		4
Net impact of noncontrolling interests on items above		3
Total	$	17

Results of Operations — Second Quarter of 2017 compared with Second Quarter of 2016

Net Sales

The Company’s net sales in the second quarter of 2017 were $1,751 million compared with $1,760 million for the second quarter of 2016, a decrease of $9 million, or less than 1%. Total glass container shipments, in tonnes, were down approximately 1% in the second quarter of 2017 compared to the prior year quarter and were largely driven by the North American and Asia Pacific regions, partially offset by higher shipments in the Latin American region. The second quarter of 2017 had several fewer shipping days than the prior year quarter and this contributed to approximately $28 million of lower sales for the Company. Unfavorable foreign currency exchange rates, primarily due to a weaker Mexican Peso and British pound, impacted sales by $5 million in the second quarter of 2017 compared to the second quarter of 2016. Slightly higher selling prices increased net sales by $17 million in the quarter. 

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

Reportable segment net sales - 2016			$	1,748
Price	$	17
Sales volume and mix		(28)
Effects of changing foreign currency rates		(5)
Total effect on reportable segment net sales				(16)
Reportable segment net sales - 2017			$	1,732

Europe:  Net sales in Europe in the second quarter of 2017 were $635 million compared with $646 million for the second quarter of 2016, a decrease of $11 million, or 2%. Unfavorable foreign currency exchange rates impacted the region by approximately $4 million in the second quarter of 2017 as the British pound weakened in relation to the U.S. dollar. Glass container shipments in the second quarter of 2017 were flat compared to the second quarter of 2016 with strong shipments to beer customers offset by lower shipments to wine, spirits and food customers. However, an unfavorable sales mix resulted in $4 million of lower sales. As a result of the pass through of 2016 cost deflation to customers under contractual price adjustment formulas, selling prices in Europe were $3 million lower in the second quarter compared to the same period in the prior year.   

North America:  Net sales in North America in the second quarter of 2017 were $572 million compared with $599 million for the second quarter of 2016, a decrease of $27 million, or 5%. Total glass container shipments in the region were down nearly 4% in the second quarter of 2017 compared to the second quarter of 2016, driven primarily by lower sales to beer customers, fewer number of shipping days and lower sales of returnable bottles in Canada. These lower shipments and an unfavorable sales mix resulted in $32 million of lower sales in the second quarter of 2017. The unfavorable effects of foreign currency exchange rate changes decreased net sales $2 million in the second quarter of 2017 compared to 2016. Slightly higher selling prices increased net sales by $7 million in the second quarter of 2017.

Latin America:  Net sales in Latin America in the second quarter of 2017 were $370 million compared with $345 million for the second quarter of 2016, an increase of $25 million, or 7%. Strong shipments to beer and spirits customers,

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especially in Mexico, and a slight increase in year-over-year shipments in Brazil offset slightly lower shipments in the Andean countries. Total glass container shipments in the region were up 3% in the second quarter of 2017 compared to the same quarter in the prior year and this increased sales by $17 million. Higher pricing increased net sales by $9 million in the current quarter. The unfavorable effects of foreign currency exchange rate changes decreased net sales by $1 million in the second quarter of 2017 compared to 2016, principally due to the weakening of the Mexican peso in relation to the U.S. dollar.

Asia Pacific:  Net sales in Asia Pacific in the second quarter of 2017 were $155 million compared with $158 million for the second quarter of 2016, a decrease of $3 million, or 2%. Glass container shipments were down 9% in the second quarter of 2017 compared to the same period in the prior year, primarily due to lower domestic shipments in China, and this contributed to $9 million of lower sales in the quarter. The region continues to export production in China to support higher sales in the mature markets, which in turn, led to lower domestic sales in China. Slightly higher selling prices increased net sales by $4 million in the current quarter. The favorable effects of foreign currency exchange rate changes in the current year quarter increased net sales by $2 million.

Earnings from Continuing Operations before Income Taxes and Segment Operating Profit

Earnings from continuing operations before income taxes were $152 million in the second quarter of 2017 compared to $141 million in the second quarter of 2016, an increase of $11 million, or 8%. This increase was primarily related to higher segment operating profit.

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

Segment operating profit of reportable segments in the second quarter of 2017 was $252 million compared to $233 million for the second quarter of 2016, an increase of $19 million, or 8%. The increase was largely attributable to lower operating costs and slightly higher selling prices, partially offset by lower sales volumes.

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

Reportable segment operating profit - 2016			$	233
Price	$	17
Sales volume and mix		(7)
Operating costs		9
Effects of changing foreign currency rates		—
Total net effect on reportable segment operating profit				19
Reportable segment operating profit - 2017			$	252

Europe:  Segment operating profit in Europe in the second quarter of 2017 was $80 million compared with $73 million in the second quarter of 2016, an increase of $7 million, or 10%. Operating costs were $10 million lower in the second quarter of 2017 than the prior year quarter due to cost savings initiatives and higher production volumes. Lower selling prices decreased segment operating profit in the second quarter of 2017 by $3 million and was comparable to the change in cost inflation in the quarter. The net impact of sales volume and mix discussed above decreased segment operating profit by $1 million. The effects of foreign currency exchange rates increased segment operating profit by $1 million in the current year quarter.

North America:  Segment operating profit in North America in the second quarter of 2017 was $92 million compared with $92 million in the second quarter of 2016. The decrease in sales volume discussed above decreased segment operating profit in the current year quarter by $7 million. Selling prices were $7 million higher in the current quarter compared to the prior year quarter. Operating costs in the second quarter of 2017 were $5 million higher than the same quarter in the prior year and this reduced segment operating profit. Higher cost inflation in the quarter was partially

36

offset by logistics cost reductions, as well as higher equity earnings from the Company’s joint venture with Constellation Brands in Mexico. Beginning in the first quarter of 2017, equity earnings from this joint-venture were recorded in the North American region. In prior years, equity earnings from this joint venture were recorded in retained corporate costs and other as the joint venture was mostly in construction mode. In addition, approximately $5 million in gains related to non-strategic asset sales were recognized by the region in the second quarter of 2017.    

Latin America:  Segment operating profit in Latin America in the second quarter of 2017 was $69 million compared with $57 million in the second quarter of 2016, an increase of $12 million, or 21%. Higher selling prices increased segment operating profit in the current year quarter $9 million. The increase in sales volume discussed above increased segment operating profit by $3 million.  The impact of higher cost inflation in the region was fully offset by cost savings achieved in the quarter.

Asia Pacific:  Segment operating profit in Asia Pacific in the second quarter of 2017 was $11 million compared with $11 million in the second quarter of 2016. Higher selling prices increased segment operating profit in the second quarter of 2017 by $4 million. The decrease in sales volume discussed above impacted segment operating profit by $2 million.  Despite higher production levels and cost containment efforts, cost inflation in the region drove operating costs slightly higher and decreased segment operating profit by $1 million in the quarter. The  effects of foreign currency exchange rate changes decreased segment operating profit by $1 million. 

Interest Expense, Net

Net interest expense for the second quarter of 2017 was $62 million compared with $67 million for the second quarter of 2016.  Net interest expense decreased $5 million in the second quarter of 2017 compared to the same quarter in the prior year due to deleveraging and refinancing actions taken since the second quarter of 2016. 

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the three months ended June 30, 2017 was 5.9% compared with 21.3% for the three months ended June 30, 2016.  The effective tax rate for the second quarter of 2017 was lower than the same period in the prior year primarily due to the resolution of a tax matter that resulted in approximately $26 million of tax accruals reversed in the second quarter of 2017.

Earnings from Continuing Operations Attributable to the Company

For the second quarter of 2017, the Company recorded earnings from continuing operations attributable to the Company of $140 million, or $0.85 per share (diluted), compared to $107 million, or $0.65 per share (diluted), in the second quarter of 2016. Earnings in the second quarter of 2017 included items that management considered not representative of ongoing operations.  These items increased net earnings attributable to the Company by $17 million, or $0.10 per share in the second quarter of 2017 as set forth in the following table (dollars in millions).

	Net Earnings
	Increase
	(Decrease)
Description	2017
Restructuring, asset impairment and other charges	$	(10)
Tax benefit recorded for certain tax adjustments		20
Net tax benefit for income tax on items above		4
Net impact of noncontrolling interests on items above		3
Total	$	17

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Executive Overview – Six Months ended June 30, 2017 and 2016 

2017 Highlights

· Net sales in the first half of 2017 were higher compared to the prior year period, driven by higher shipments in Latin America and Europe, as well as slightly higher prices.

· Earnings from continuing operations before income taxes decreased 7% in the first six months of 2017 compared to the prior year period, driven by higher restructuring, asset impairment and other charges, as well as higher charges related to debt redeemed, partially offset by higher segment operating profit.

· Completed a tender offer to purchase approximately $228 million, or 91%, of the Company’s outstanding 7.80% Senior Debentures due in 2018

· Issued €225 million of 3.125% senior notes due in 2024

· The provision for income taxes was lower than the prior year primarily due to the resolution of a tax matter that resulted in approximately $26 million of tax accruals to be reversed in the second quarter of 2017.

Net sales for the first six months of 2017 were $18 million higher than the same period in the prior year primarily due to higher pricing and sales volumes, partially offset by the unfavorable effect of changes in foreign currency exchange rates.

Earnings from continuing operations decreased $18 million than the same period in the prior year primarily due to higher restructuring, asset impairment and other charges, as well as higher charges related to debt redeemed, partially offset by higher segment operating profit. Segment operating profit for reportable segments for the first six months of 2017 was $26 million higher than the same period in the prior year. In the first six months of 2017, all four regions’ segment operating profit exceeded their prior year amounts.

Net interest expense for the first six months of 2017 was $141 million compared with $133 million for the first six months of 2016. Interest expense for 2017 included $17 million due to note repurchase premiums and the write-off of finance fees related to debt redeemed in the first quarter of 2017.  Exclusive of these items, net interest expense decreased $9 million in the current year period primarily due to deleveraging and refinancing actions.

Net earnings from continuing operations attributable to the Company for the first six months of 2017 was $188 million, or $1.15 per share (diluted), compared with $175 million, or $1.07 per share (diluted), for the first six months of 2016. Earnings in 2017 and 2016 included items that management considered not representative of ongoing operations as set forth in the following table (dollars in millions). 

	Net Earnings
	Increase
	(Decrease)
Description	2017		2016
Restructuring, asset impairment and other charges	$	(49)	$	(19)
Gain on China land compensation				7
Note repurchase premiums and write-off of finance fees		(17)
Tax benefit recorded for certain tax adjustments		20
Net tax benefit for income tax on items above		12		4
Net impact of noncontrolling interests on items above		4		(2)
Total	$	(30)	$	(10)

Results of Operations – First six months of 2017 compared with first six months of 2016

Net Sales

The Company’s net sales in the first six months of 2017 were $3,366 million compared with $3,348 million for the first six months of 2016, an increase of $18 million. Total glass container shipments, in tonnes, were up approximately 1% in

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the first six months of 2017 compared to the same period in the prior year. However, an unfavorable mix resulted in approximately $2 million of lower sales. Unfavorable foreign currency exchange rates, primarily due to a weaker Euro, Mexican peso, and British pound, impacted sales by $11 million in the first half of 2017 compared to the same period in 2016. Slightly higher selling prices benefited net sales by $27 million in 2017. 

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

Reportable segment net sales - 2016			$	3,314
Price	$	27
Sales volume and mix		(2)
Effects of changing foreign currency rates		(11)
Total effect on reportable segment net sales				14
Reportable segment net sales - 2017			$	3,328

Europe:  Net sales in Europe in the first six months of 2017 were $1,189 million compared with $1,209 million for the first six months of 2016, a decrease of $20 million, or 2%. Unfavorable foreign currency exchange rate decreased net sales by $28 million, as the Euro and British pound weakened in relation to the U.S. dollar. Net sales were benefited in the first six months of 2017 by a 2% increase in glass container shipments driven by higher shipments to beer customers. This increased net sales by $19 million compared to the prior year period. As a result of the pass through of 2016 cost deflation to customers under contractual price adjustment formulas, selling prices in Europe were $11 million lower in the first six months of 2017 compared to the same period in the prior year.   

North America:  Net sales in North America in the first six months of 2017 were $1,100 million compared with $1,131 million for the first six months of 2016, a decrease of $31 million, or 3%. Slightly higher selling prices increased net sales by $15 million in the first six months of 2017. However, lower shipments and an unfavorable sales mix resulted in $45 million of lower sales. This impact to sales mix was due to several customers converting a portion of their glass shipments from carton packaging to bulk shipments. Total glass container shipments in the region were 2% lower in the first six months of 2017 compared to the same period in 2016, driven by lower shipments to beer customers. The effects of foreign currency exchange rate changes decreased net sales $1 million in the first six months of 2017 compared to the same period in 2016.

Latin America:  Net sales in Latin America in the first six months of 2017 were $711 million compared with $657 million for the first six months of 2016, an increase of $54 million, or 8%. Strong shipments in Mexico offset lower shipments in the other countries in the region. Total glass container shipments in the region were up 4% in the first six months of 2017 compared to the same period in the prior year and this increased sales by $26 million. The favorable effects of foreign currency exchange rate changes increased net sales $10 million in the first half of 2017, principally due to a strengthening of the Brazilian real and Colombian peso in relation to the U.S. dollar. Higher pricing increased net sales by $18 million in the first six months of 2017.

Asia Pacific:  Net sales in Asia Pacific in the first six months of 2017 were $328 million compared with $317 million for the first six months of 2016, an increase of $11 million, or 3%. The favorable effects of foreign currency exchange rate changes during the first six months of 2017, primarily due to the strengthening of the Australian dollar and New Zealand dollar in relation to the U.S. dollar, increased net sales by $8 million. Glass container shipments were down 4% in the first half of 2017, primarily due to lower shipments in China, and this contributed to $2 million of lower sales in 2017. The region continues to export production in China to support higher sales in the mature markets, which in turn, led to lower domestic sales in China. Slightly higher selling prices also increased net sales by $5 million in the first six months 2017.

Earnings from Continuing Operations before Income Taxes and Segment Operating Profit

Earnings from continuing operations were $224 million in the first six months of 2017 compared with $242 million for the same period in 2016, a decrease of $18 million, or 7%. This decrease was primarily related to higher restructuring, asset impairment and other charges, as well as higher charges related to debt redeemed in the first quarter of 2017, partially offset by higher segment operating profit.

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Operating profit of the 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. Unallocated corporate expenses and certain other expenses not directly related to the reportable segments’ operations are included in Retained corporate costs and other. For further information, see Segment Information included in Note 1 to the Condensed Consolidated Financial Statements.

Segment operating profit of reportable segments in the first six months of 2017 was $470 million compared with $444 million for the first six months of 2016, an increase of $26 million, or 6%. The increase was largely attributable to higher selling prices, partially offset by the unfavorable effect of changes in foreign currency exchange rates.

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

Reportable segment operating profit - 2016			$	444
Price	$	27
Sales volume and mix		1
Operating costs		—
Effects of changing foreign currency rates		(2)
Total net effect on reportable segment operating profit				26
Reportable segment operating profit - 2017			$	470

Europe:  Segment operating profit in Europe in the first six months of 2017 was $139 million compared with $128 million in the first six months of 2016, an increase of $11 million, or 9%. The increase in sales volume discussed above improved segment operating profit by $4 million. Operating costs were $20 million lower in the first six months of 2017 than the prior year period due to logistics savings and other cost reductions. Lower selling prices decreased segment operating profit in the first six months of 2017 by $11 million. The unfavorable effects of foreign currency exchange rates decreased segment operating profit by $2 million in 2017.

North America:  Segment operating profit in North America in the first six months of 2017 was $177 million compared with $168 million in the first six months of 2016, an increase of $9 million, or 5%. Selling prices were $15 million higher in the first six months of 2017 compared to the same period in the prior year. In addition, approximately $5 million in gains related to non-strategic asset sales were recognized by the region in the second quarter of 2017. The unfavorable sales mix and lower shipments discussed above decreased segment operating profit by $9 million. Operating costs in the first six months of 2017 were slightly higher than the same period in the prior year and this reduced segment operating profit by $2 million. Higher cost inflation during this period was partially offset by logistics cost reductions, as well as higher equity earnings from the Company’s joint venture with Constellation Brands in Mexico. Beginning in the first quarter of 2017, equity earnings from this joint-venture were recorded in the North American region. In prior years, equity earnings from this joint venture were recorded in retained corporate costs and other as the joint venture was mostly in construction mode.

Latin America:  Segment operating profit in Latin America in the first six months of 2017 was $123 million compared with $120 million in the first six months of 2016, an increase of $3 million, or 3%. Segment operating profit was impacted by $22 million of higher operating costs, primarily due to substantial cost inflation throughout the region. Partially offsetting these declines were higher selling prices that increased segment operating profit in the first six months of 2017 by $18 million. The increase in sales volume discussed above increased segment operating profit by $7 million. 

Asia Pacific:  Segment operating profit in Asia Pacific in the first six months of 2017 was $31 million compared with $28 million in the first six months of 2016, an increase of $3 million, or 11%. Higher selling prices increased segment operating profit in the first six months of 2017 by $5 million. The decrease in sales volume discussed above reduced segment operating profit by $1 million.  Slightly higher operating costs also reduced segment operating profit by $1 million.

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Interest Expense, Net

Net interest expense for the first six months of 2017 was $141 million compared with $133 million for the first six months of 2016. Interest expense for 2017 included $17 million due to note repurchase premiums and the write-off of finance fees related to debt redeemed in the first quarter of 2017.  Exclusive of these items, net interest expense decreased $9 million in the current year period primarily due to deleveraging and refinancing actions.

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the six months ended June 30, 2017 was 12.5% compared with 23.6% for the six months ended June 30, 2016.  The effective tax rate for the first half of 2017 was lower than the same period in the prior year primarily due to the resolution of a tax matter that resulted in approximately $26 million of tax accruals reversed in the second quarter of 2017.

The Company expects that the full year effective tax rate for 2017 will be approximately 23% (excluding items that management considers not representative of ongoing operations).

Earnings from Continuing Operations Attributable to the Company

For the first six months of 2017, the Company recorded earnings from continuing operations attributable to the Company of $188 million, or $1.15 per share (diluted), compared $175 million, or $1.07 per share (diluted), in the first six months of 2016. Earnings in 2017 and 2016 included items that management considered not representative of ongoing operations as set forth in the following table (dollars in millions). 

	Net Earnings
	Increase
	(Decrease)
Description	2017		2016
Restructuring, asset impairment and other charges	$	(49)	$	(19)
Gain on China land compensation				7
Note repurchase premiums and write-off of finance fees		(17)
Tax benefit recorded for certain tax adjustments		20
Net tax benefit for income tax on items above		12		4
Net impact of noncontrolling interests on items above		4		(2)
Total	$	(30)	$	(10)

Items Excluded from Reportable Segment Totals

Retained Corporate Costs and Other

Retained corporate costs and other for the second quarter of 2017 were $28 million and modestly higher compared with the $25 million recorded in the second quarter of 2016 due to lower equity earnings.  For the first six months of 2017, retained corporate costs and other were $56 million compared with $57 million for the same period in 2016.

Restructuring, Asset Impairments and Other Charges

During the three and six months ended June 30, 2017, the Company recorded restructuring, asset impairment and other charges of $10 million and $49 million, respectively. For the six months ended June 30, 2017, these charges primarily consist of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($33 million), Europe ($13 million) and North America ($3 million). Except for the charges recorded in Europe, the other discrete restructuring charges recorded in 2017 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The Company has recorded total cumulative charges of $54 million related to a plant closure in Europe and does not expect to execute any further significant actions related to this facility.  The restructuring charges recorded in 2017 in the Latin American and European regions primarily relate to capacity curtailments and products produced at those facilities have, in large part, been reallocated to others in their

41

respective regions. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018.

During the three and six months ended June 30, 2016, the Company recorded restructuring, asset impairment and other charges of $0 and $19 million, respectively. These charges primarily represented employee costs, write-down of assets, and other exit costs of $14 million for a plant closure in the first quarter of 2016 in Latin America, $3 million related to a previous plant closure in North America, $1 million in Asia Pacific and $1 million related to other restructuring actions. The discrete restructuring charges recorded in the first quarter of 2016 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred.The restructuring charges recorded in the first quarter of 2016 in the Latin American region primarily relate to a capacity curtailment. The Company reallocated the products produced at this facility to others in the region. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2017. Partially offsetting the restructuring charges in the first quarter of 2016 was a $7 million gain related to compensation received for land that the Company was required to return to the Chinese government.

See Note 5 to the Condensed Consolidated Financial Statements for additional information.

Discontinued Operations

On April 4, 2016, the annulment committee formed by the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) ruled that OI European Group B.V. (“OIEG”), a subsidiary of the Company, is free to pursue the enforcement of a prior arbitration award (the “Award”) against Venezuela. As of June 30, 2017, that Award amounts to more than $500 million, including reimbursement of expenses and accrued interest.  Venezuela’s application to annul the Award is still pending before an ad hoc committee of the ICSID and a hearing with respect to such application is currently scheduled for September 26-27, 2017. 

On July 31, 2017, OIEG sold its right, title and interest in amounts due under the Award to an Ireland-domiciled investment fund.  Under the terms of the sale, OIEG received a payment, in cash, at closing equal to $115 million (the “Cash Payment”).  OIEG may also receive additional payments in the future (“Deferred Amounts”) calculated based on the total compensation that is received from Venezuela as a result of collection efforts or as settlement of the Award with Venezuela.  In the event that the Award is partially or completely annulled by the ICSID ad hoc annulment committee, OIEG may be required to repay to the purchaser up to the entire amount of the Cash Payment based on a formula tied to the amount of the Award (if any) that is annulled.  In addition, OIEG’s right to receive any Deferred Amounts is subject to the limitations described below.

OIEG’s interest in any amounts received in the future from Venezuela in respect of the Award is limited to a percentage of such recovery after taking into account reimbursement of the Cash Payment to the purchaser and reimbursement of legal fees and expenses incurred by the Company and the purchaser. OIEG’s percentage of such recovery will also be reduced over time.  Because the Award has yet to be satisfied, the annulment proceeding is pending, and the ability to successfully enforce the Award in countries that are party to the ICSID Convention is subject to significant challenges, the Company is unable to reasonably predict the amount of recoveries from the Award, if any,  to which the Company may be entitled in the future.  Any future amounts that the Company may receive from the Award are highly speculative and the timing of any such future payments, if any, is highly uncertain.  As such, there can be no assurance that the Company will receive any future payments under the Award beyond the Cash Payment.  Except as noted above in connection with the annulment proceeding that is pending before the ICSID ad hoc committee, the Cash Payment is not subject to any forfeiture or future adjustment.

A separate arbitration involving other subsidiaries of the Company is pending before ICSID to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants.

For the three and six month periods ending June 30, 2017, the Company has not given recognition to the transaction above in its financial statements. The loss from discontinued operations of less than $1 million and $3 million for the six months ended June 30, 2017 and June 30, 2016, respectively, relates to ongoing costs for the Venezuelan expropriation.

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Capital Resources and Liquidity

On April 22, 2015, the Company entered into a Senior Secured Credit Facility, which subsequently has been amended several times with the most recent amendment being entered into on February 3, 2016 (the “Amended Agreement”).

At June 30, 2017, the Amended Agreement includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, a $1,575 million term loan A facility ($1,370 million net of debt issuance costs), and a €279 million term loan A facility ($303 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020.  At June 30, 2017, the Company had unused credit of $675 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at June 30, 2017 was 2.64%.

The Amended Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain liens, make certain investments, become liable under contingent obligations in certain defined instances only, make restricted payments, make certain asset sales within guidelines and limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations.

The Amended Agreement also contains one financial covenant, a Total Leverage Ratio that requires the Company not to exceed a ratio calculated by dividing consolidated total debt, less cash and cash equivalents, by consolidated EBITDA, as defined in the Amended Agreement. The Total Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Total Leverage Ratio to exceed the specified maximum of (i) 4.5x for the two fiscal quarters ending June 30, 2017 and September 30, 2017, and (ii) 4.0x for the fourth fiscal quarter ending December 31, 2017 and each fiscal quarter thereafter.

Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement.  In such an event, the Company would be unable to request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable.  If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities.  As of June 30, 2017, the Company was in compliance with all covenants and restrictions in the Amended Agreement.  In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions.

The interest rates on borrowings under the Amended Agreement are, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Amended Agreement, plus an applicable margin.  The applicable margin for the term loan A facility and the revolving credit facility is linked to the Company’s Total Leverage Ratio and ranges from 1.25% to 1.75% for Eurocurrency Rate loans and from 0.25% to 0.75% for Base Rate loans.  In addition, a facility fee is payable on the revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Total Leverage Ratio.

Borrowings under the Amended Agreement are secured by substantially all of the assets, excluding real estate and certain other excluded assets, of certain of the Company’s domestic subsidiaries and certain foreign subsidiaries.  Borrowings are also secured by a pledge of intercompany debt and equity investments in certain of the Company’s domestic subsidiaries and, in the case of foreign borrowings, of stock of certain foreign subsidiaries.  All borrowings under the Amended Agreement are guaranteed by certain domestic subsidiaries of the Company.

During August 2015, the Company issued senior notes with a face value of $700 million that bear interest at 5.875% and are due August 15, 2023 (the “Senior Notes due 2023”) and senior notes with a face value of $300 million that bear interest at 6.375% and are due August 15, 2025 (together with the Senior Notes due 2023, the “2015 Senior Notes”).  The 2015 Senior Notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds from the 2015 Senior Notes, after deducting the debt discount and debt issuance costs, totaled approximately $972 million.

During November 2016, the Company issued senior notes with a face value of €500 million that bear interest at 3.125% and are due November 15, 2024 (the “Senior Notes due 2024”).  The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds, after deducting debt issuance costs, totaled approximately $520 million and were used to repay the term loan B facility under the Amended Agreement.  In

43

March 2017, the Company expanded its borrowings under the Senior Notes due 2024 by issuing €225 million of additional notes that bear interest at 3.125% and are due November 15, 2024.  The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used to repay a portion of the Company’s revolving credit facility. 

In March 2017, the Company purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018.  Approximately $22 million of the Senior Debentures remain outstanding as of June 30, 2017. As part of the tender offer, the Company recorded $17 million of additional interest charges for note repurchase premiums and the related write-off of unamortized finance fees in the first quarter of 2017.

The Company assesses its capital raising and refinancing needs on an ongoing basis and may enter into additional credit facilities and seek to issue equity and/or debt securities in the domestic and international capital markets if market conditions are favorable. Also, depending on market conditions, the Company may elect to repurchase portions of its debt securities in the open market.

The Company has a €185 million European accounts receivable securitization program, which extends through March 2019, subject to periodic renewal of backup credit lines.

Information related to the Company’s accounts receivable securitization program is as follows:

	June 30,			December 31,			June 30,
	2017			2016			2016
Balance (included in short-term loans)	$	182		$	152		$	173
Weighted average interest rate		0.74	%		0.74	%		0.70	%

Cash Flows

Operating activities:  Cash utilized in continuing operating activities was $156 million for the six months ended June 30, 2017, compared to $107 million for the six months ended June 30, 2016. The increase in cash utilized in continuing operating activities in the first half of 2017 was primarily due to an increase in working capital of $585 million compared to an increase in working capital of $491 million in the same period in 2016.The increase in working capital was mainly due to higher accounts receivable during the first six months of 2017. Partially offsetting this were higher net earnings and higher non-cash charges, such as restructuring, asset impairment and related charges, in the first six months of 2017.

Investing activities:  Cash utilized in investing activities was $205 million for the six months ended June 30, 2017, compared to $190 million for the six months ended June 30, 2016. Capital spending for property, plant and equipment was $186 million during the first six months of 2017 and $207 million in the same period in 2016. Acquisition activities were $27 million and $31 million in the first six months of 2017 and 2016, respectively, and were primarily related to contributions made to the Company’s investment in a joint venture in Nava, Mexico. 

Financing activities:  Cash provided by financing activities was $185 million for the six months ended June 30, 2017, compared to $238 million for the six months ended June 30, 2016. The decrease in cash provided by financing activities was primarily due to lower net borrowings and the payment of $21 million of finance fees in the first six months of 2017, principally related to note repurchase premiums associated with the tender offer to purchase the 2018 Senior Debentures.

The Company anticipates that cash flows from its operations and from utilization of credit available under the Agreement will be sufficient to fund its operating and seasonal working capital needs, debt service and other obligations on a short-term (twelve-months) and long-term basis.  Based on the Company's expectations regarding future payments for lawsuits and claims and also based on the Company's expected operating cash flow, the Company believes that the payment of any deferred amounts of previously settled or otherwise determined lawsuits and claims, and the resolution of presently pending and anticipated future lawsuits and claims associated with asbestos, will not have a material adverse effect upon the Company's liquidity on a short-term or long-term basis.

44

Critical Accounting Estimates

The Company’s analysis and discussion of its financial condition and results of operations are based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities.  The Company evaluates these estimates and assumptions on an ongoing basis.  Estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances at the time the financial statements are issued.  The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources.  Actual results, under conditions and circumstances different from those assumed, may differ from estimates.

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

There have been no other material changes in critical accounting estimates at June 30, 2017 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Forward-Looking Statements

This document contains "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933. Forward-looking statements reflect the Company's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward-looking statements. It is possible the Company's future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) the Company’s ability to realize expected growth opportunities, cost savings and synergies from the Vitro Acquisition, (2) foreign currency fluctuations relative to the U.S. dollar, (3) changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to refinance debt at favorable terms, (4) the general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to economic and social conditions, disruptions in capital markets, disruptions in the supply chain, competitive pricing pressures, inflation or deflation, and changes in tax rates and laws, (5) the Company’s ability to generate sufficient future cash flows to ensure the Company’s goodwill is not impaired, (6) consumer preferences for alternative forms of packaging, (7) cost and availability of raw materials, labor, energy and transportation, (8) the Company’s ability to manage its cost structure, including its success in implementing restructuring plans and achieving cost savings, (9) consolidation among competitors and customers, (10) the Company’s ability to acquire businesses and expand plants, integrate operations of acquired businesses and achieve expected synergies, (11) unanticipated expenditures with respect to environmental, safety and health laws, (12) the Company’s ability to further develop its sales, marketing and product development capabilities, (13) the Company’s ability to prevent and detect cybersecurity threats against its information technology systems, (14) the Company’s ability to accurately estimate its total asbestos-related liability or to control the timing and occurrence of events related to asbestos-related claims, (15) changes in U.S. trade policies, (16) the Company’s ability to achieve its strategic plan, and the other risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and any subsequently filed Quarterly Report on Form 10-Q. It is not possible to foresee or identify all such factors. Any forward-looking statements in this document are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. Forward-looking statements are not a guarantee of future performance and actual results or developments may differ materially from expectations. While the Company continually reviews trends and uncertainties affecting the Company's results of operations and financial condition, the Company does not assume any obligation to update or supplement any particular forward-looking statements contained in thisdocument.

45

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

There have been no material changes in market risk at June 30, 2017 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Item 4.  Controls and Procedures.

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

As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2017.

As required by Rule 13a-15(d) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of any change in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.  There have been no changes in the Company’s internal controls over financial reporting during the fiscal quarter ended June 30, 2017 that have materially affected, or are reasonably likely to material affect, the Company’s internal controls over financial reporting.

46

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings.

For further information on legal proceedings, see Note 9 to the Condensed Consolidated Financial Statements, “Contingencies,” that is included in Part I of this Quarterly Report and incorporated herein by reference.

Item 1A.  Risk Factors.

There have been no material changes in risk factors at June 30, 2017 from those described in the Company’s

Annual Report on Form 10-K for the year ended December 31, 2016.

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

The Company did not purchase any shares of its common stock for the three and six months ended June 30, 2017. The Company has $380 million remaining for repurchases pursuant to authorization by its Board of Directors in October 2014 to purchase up to $500 million of the Company’s common stock until December 31, 2017. 

47

Item 6.  Exhibits.

Exhibit 3.1	Owens-Illinois, Inc. Fourth Amended and Restated By-Laws (filed as Exhibit 3.1 to Owens-Illinois, Inc.’s Form 8-K filed July 13, 2017, File No. 1-9576, and incorporated herein by reference).
Exhibit 10.1	Owens-Illinois, Inc. 2017 Incentive Award Plan (filed as Appendix B to Owens-Illinois, Inc.’s Definitive Proxy Statement on Schedule 14A filed March 30, 2017, File No. 1-9576, and incorporated herein by reference).
Exhibit 12	Computation of Ratio of Earnings to Fixed Charges.
Exhibit 31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1*	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
Exhibit 32.2*	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
Exhibit 101	Financial statements from the Quarterly Report on Form 10-Q of Owens-Illinois, Inc. for the quarter ended June 30, 2017, formatted in XBRL: (i) the Condensed Consolidated Results of Operations, (ii) the Condensed Consolidated Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

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

48

SIGNATURES

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

		OWENS-ILLINOIS, INC.
Date	August 1, 2017	By	/s/ Jan A. Bertsch
			Jan A. Bertsch
			Senior Vice President and Chief Financial Officer

49

EX-12

EXHIBIT 12

OWENS-ILLINOIS, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in millions)

	Six months ended June 30
	2017		2016
Earnings from continuing operations before income taxes	$	224	$	242
Less: Equity earnings		(33)		(29)
Add: Total fixed charges deducted from earnings		148		139
Dividends received from equity investees		24		23
Earnings available for payment of fixed charges	$	363	$	375
Fixed charges
Interest expense	$	146	$	136
Portion of operating lease rental deemed to be interest		2		3
Total fixed charges deducted from earnings and fixed charges	$	148	$	139
Ratio of earnings to fixed charges		2.5		2.7

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Andres A. Lopez, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Owens-Illinois, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 1, 2017	/s/ Andres A. Lopez
		Andres A. Lopez
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Jan A. Bertsch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Owens-Illinois, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 1, 2017	/s/ Jan A. Bertsch
		Jan A. Bertsch
		Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Owens-Illinois, Inc. (the “Company”) hereby certifies that to such officer’s knowledge:

(i) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 1, 2017	/s/ Andres A. Lopez
	Andres A. Lopez
	President and Chief Executive Officer (Principal Executive Officer)
	Owens-Illinois, Inc.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Owens-Illinois, Inc. (the “Company”) hereby certifies that to such officer’s knowledge:

(i) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30,  2017 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 1, 2017	/s/ Jan A. Bertsch
	Jan A. Bertsch
	Senior Vice President and Chief Financial Officer
	Owens-Illinois, Inc.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2017 shares
Document and Entity Information
Entity Registrant Name	OWENS ILLINOIS INC /DE/
Entity Central Index Key	0000812074
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	162,875,946
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

XML

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
Net sales	$ 1,751	$ 1,760	$ 3,366	$ 3,348
Cost of goods sold	(1,405)	(1,418)	(2,705)	(2,687)
Gross profit	346	342	661	661
Selling and administrative expense	(123)	(126)	(242)	(254)
Research, development and engineering expense	(16)	(16)	(31)	(32)
Interest expense, net	(62)	(67)	(141)	(133)
Equity earnings	18	15	33	29
Other expense, net	(11)	(7)	(56)	(29)
Earnings from continuing operations before income taxes	152	141	224	242
Provision for income taxes	(9)	(30)	(28)	(57)
Earnings from continuing operations	143	111	196	185
Loss from discontinued operations		(2)		(3)
Net earnings	143	109	196	182
Net earnings attributable to noncontrolling interests	(3)	(4)	(8)	(10)
Net earnings attributable to the Company	140	105	188	172
Amounts attributable to the Company:
Earnings from continuing operations	140	107	188	175
Loss from discontinued operations		(2)		(3)
Net earnings attributable to the Company	$ 140	$ 105	$ 188	$ 172
Basic earnings per share:
Earnings from continuing operations (in dollars per share)	$ 0.86	$ 0.66	$ 1.16	$ 1.08
Loss from discontinued operations (in dollars per share)		(0.01)		(0.02)
Net earnings (in dollars per share)	$ 0.86	$ 0.65	$ 1.16	$ 1.06
Weighted average shares outstanding (thousands) (in shares)	162,716	161,945	162,553	161,574
Diluted earnings per share:
Earnings from continuing operations (in dollars per share)	$ 0.85	$ 0.65	$ 1.15	$ 1.07
Loss from discontinued operations (in dollars per share)		(0.01)		(0.02)
Net earnings (in dollars per share)	$ 0.85	$ 0.64	$ 1.15	$ 1.05
Weighted average diluted shares outstanding (thousands) (in shares)	164,482	162,820	164,162	162,307

XML

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME
Net earnings	$ 143	$ 109	$ 196	$ 182
Other comprehensive income (loss):
Foreign currency translation adjustments	14	(108)	202	(14)
Pension and other postretirement benefit adjustments, net of tax	4	26	15	(16)
Change in fair value of derivative instruments, net of tax	(4)	8	(10)	6
Other comprehensive income (loss)	14	(74)	207	(24)
Total comprehensive income (loss)	157	35	403	158
Comprehensive (income) loss attributable to noncontrolling interests	7	8		(2)
Comprehensive income attributable to the Company	$ 164	$ 43	$ 403	$ 156

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 335	$ 492	$ 334
Trade receivables, net of allowance of $35 million, $32 million, and $31 million at June 30, 2017, December 31, 2016 and June 30, 2016	956	580	831
Inventories	1,049	983	1,051
Prepaid expenses and other current assets	214	199	358
Total current assets	2,554	2,254	2,574
Property, plant and equipment, net	2,996	2,880	2,932
Goodwill	2,588	2,462	2,536
Intangibles, net	486	464	517
Other assets	1,156	1,075	1,108
Total assets	9,780	9,135	9,667
Current liabilities:
Short-term loans and long-term debt due within one year	271	195	305
Current portion of asbestos-related liabilities	115	115	130
Accounts payable	1,065	1,135	1,042
Other liabilities	564	615	518
Total current liabilities	2,015	2,060	1,995
Long-term debt	5,471	5,133	5,549
Asbestos-related liabilities	551	577	663
Other long-term liabilities	964	1,002	1,002
Share owners' equity	779	363	458	$ 416	$ 279
Total liabilities and share owners' equity	$ 9,780	$ 9,135	$ 9,667

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
CONSOLIDATED BALANCE SHEETS
Trade receivables allowance	$ 35	$ 32	$ 31

XML

CONDENSED CONSOLIDATED CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net earnings	$ 196	$ 182
Loss from discontinued operations		3
Non-cash charges
Depreciation and amortization	245	250
Pension expense	15	15
Restructuring, asset impairment and related charges	48	19
Cash payments
Pension contributions	(20)	(9)
Asbestos-related payments	(26)	(24)
Cash paid for restructuring activities	(16)	(17)
Change in components of working capital	(585)	(491)
Other, net (a)	(13)	(35)
Cash utilized in continuing operating activities	(156)	(107)
Cash utilized in discontinued operating activities		(3)
Total cash utilized in operating activities	(156)	(110)
Cash flows from investing activities:
Additions to property, plant and equipment	(186)	(207)
Acquisitions, net of cash acquired	(27)	(31)
Net foreign exchange derivative activity	2	14
Net cash proceeds related to sale of assets	6	34
Cash utilized in investing activities	(205)	(190)
Cash flows from financing activities:
Changes in borrowings, net	215	246
Issuance of common stock and other		5
Distributions to noncontrolling interests	(9)	(10)
Payment of finance fees	(21)	(3)
Cash provided by financing activities	185	238
Effect of exchange rate fluctuations on cash	19	(3)
Decrease in cash	(157)	(65)
Cash at beginning of period	492	399
Cash at end of period	$ 335	$ 334

XML

Segment Information

6 Months Ended

Jun. 30, 2017

Segment Information

Segment Information

1.  Segment Information

The Company has four reportable segments based on its geographic locations:  Europe, North America, Latin America and Asia Pacific.  These four segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations.  Certain assets and activities not directly related to one of the regions or to glass manufacturing are reported with Retained corporate costs and other.  These include licensing, equipment manufacturing, global engineering, and certain equity investments.  Retained corporate costs and other also includes certain headquarters administrative and facilities costs and certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments.

The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings from continuing operations before interest income, interest expense, and provision for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain retained corporate costs.  The Company’s management uses segment operating profit, in combination with selected cash flow information, to evaluate performance and to allocate resources.  Segment operating profit for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided.

Intercompany sales in Latin America totaled $30 million and $63 million for the three and six months ended June 30, 2017, respectively, and $43 million and $93 million for the three and six months ended June 30, 2016, respectively.

Financial information for the three and six months ended June 30, 2017 and 2016 regarding the Company’s reportable segments is as follows:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Net sales:
Europe	$	635	$	646	$	1,189	$	1,209
North America		572		599		1,100		1,131
Latin America		370		345		711		657
Asia Pacific		155		158		328		317
Reportable segment totals		1,732		1,748		3,328		3,314
Other		19		12		38		34
Net sales	$	1,751	$	1,760	$	3,366	$	3,348

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Segment operating profit:
Europe	$	80	$	73	$	139	$	128
North America		92		92		177		168
Latin America		69		57		123		120
Asia Pacific		11		11		31		28
Reportable segment totals		252		233		470		444
Items excluded from segment operating profit:
Retained corporate costs and other		(28)		(25)		(56)		(57)
Restructuring, asset impairment and other		(10)				(49)		(12)
Interest expense, net		(62)		(67)		(141)		(133)
Earnings from continuing operations before income taxes	$	152	$	141	$	224	$	242

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

		June 30,		December 31,		June 30,
		2017		2016		2016
Total assets:
Europe	$	3,074	$	2,792	$	2,977
North America		2,781		2,522		2,562
Latin America		2,730		2,537		2,798
Asia Pacific		987		926		981
Reportable segment totals		9,572		8,777		9,318
Other		208		358		349
Consolidated totals	$	9,780	$	9,135	$	9,667

XML

Inventories

6 Months Ended

Jun. 30, 2017

Inventories

Inventories

2.  Inventories

Major classes of inventory at June 30, 2017, December 31, 2016 and June 30, 2016 are as follows:

	June 30,		December 31,		June 30,
	2017		2016		2016
Finished goods	$	879	$	827	$	892
Raw materials		130		118		121
Operating supplies		40		38		38
	$	1,049	$	983	$	1,051

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Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2017

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

3.  Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at June 30, 2017, December 31, 2016 and June 30, 2016 are as follows:

	June 30,		December 31,		June 30,
	2017		2016		2016
Prepaid expenses	$	61	$	50	$	70
Value added taxes		39		46		172
Other		114		103		116
	$	214	$	199	$	358

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Derivative Instruments

6 Months Ended

Jun. 30, 2017

Derivative Instruments

Derivative Instruments

4.  Derivative Instruments

The Company has certain derivative assets and liabilities which consist of natural gas forwards and foreign exchange option and forward contracts. The Company uses an income approach to value these contracts.  Natural gas forward rates and foreign exchange rates are the significant inputs into the valuation models.  These inputs are observable in active markets over the terms of the instruments the Company holds, and accordingly, the Company classifies its derivative assets and liabilities as Level 2 in the hierarchy.  The Company also evaluates counterparty risk in determining fair values.

Commodity Forward Contracts Designated as Cash Flow Hedges

In several regions, the Company enters into commodity forward contracts related to forecasted natural gas requirements, the objectives of which are to limit the effects of fluctuations in the future market price paid for natural gas and the related volatility in cash flows.  In North America, the majority of its customer contracts contain provisions that pass the price of natural gas to its customers.  In certain of these contracts, the customer has the option of fixing the natural gas price component for a specified period of time.  To limit the effects of fluctuations in cash flows resulting from these customer contracts, the Company enters into commodity forward contracts related to forecasted natural gas requirements.  In Asia Pacific, the Company implemented a hedging program in the first quarter of 2016, which included the execution of commodity forward contracts for certain contracted natural gas requirements.  At June 30, 2017 and 2016, the Company had entered into commodity forward contracts covering approximately 9,800,000 MM BTUs and 11,300,000 MM BTUs, respectively.

The Company accounts for the above forward contracts as cash flow hedges at June 30, 2017 and recognizes them on the balance sheet at fair value.  The effective portion of changes in the fair value of a derivative that is designated as, and meets the required criteria for, a cash flow hedge is recorded in the Accumulated Other Comprehensive Income component of share owners’ equity (“OCI”) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings.  An unrecognized loss of $1 million at June 30, 2017, an unrecognized gain of $6 million at December 31, 2016 and an unrecognized gain of $3 million at June 30, 2016 related to the commodity forward contracts was included in Accumulated OCI, and will be reclassified into earnings in the period when the commodity forward contracts expire.  Any material portion of the change in the fair value of a derivative designated as a cash flow hedge that is deemed to be ineffective is recognized in current earnings.  The ineffectiveness related to these natural gas hedges for the three and six months ended June 30, 2017 and 2016 was not material.

The effect of the commodity forward contracts on the results of operations for the three months ended June 30, 2017 and 2016 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain (Loss) Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	(2)	$	7	$	—	$	(2)

The effect of the commodity forward contracts on the results of operations for the six months ended June 30, 2017 and 2016 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	4	$	3	$	—	$	—

Foreign Exchange Derivative Contracts and not Designated as Hedging Instruments

The Company may enter into short-term forward exchange or option agreements to purchase foreign currencies at set rates in the future. These agreements are used to limit exposure to fluctuations in foreign currency exchange rates for significant planned purchases of fixed assets or commodities that are denominated in currencies other than the subsidiaries’ functional currency. The Company may also use foreign exchange agreements to offset the foreign currency risk for receivables and payables, including intercompany receivables, payables, and loans, not denominated in, or indexed to, their functional currencies. The Company records these short-term foreign exchange agreements on the balance sheet at fair value and changes in the fair value are recognized in current earnings.

At June 30, 2017 and 2016, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $340 million and $524 million, respectively, related primarily to intercompany transactions and loans.

The effect of the foreign exchange derivative contracts on the results of operations for the three months ended June 30, 2017 and 2016 is as follows:

	Amount of Gain (Loss)
Location of Gain (Loss)	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016
Other expense	$	4	$	(1)

The effect of the foreign exchange derivative contracts on the results of operations for the six months ended June 30, 2017 and 2016 is as follows:

	Amount of Gain
Location of Gain	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016
Other expense	$	6	$	4

Hedges of Multiple Risks

The Company has variable-interest rate borrowings denominated in currencies other than the functional currency of the borrowing subsidiaries. As a result, the Company is exposed to fluctuations in both the underlying variable interest rate and the currency of the borrowing against the subsidiaries’ functional currency.  The Company uses derivatives to manage these exposures and designates these derivatives as cash flow hedges of both interest rate and foreign exchange risks.  The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges of both interest rate risk and foreign exchange risk is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period for which the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings.

During the second quarter of 2017, one of the Company’s Euro-functional subsidiaries entered into a cross-currency interest rate swap to manage its exposure to fluctuations in the variable interest rate and the U.S. dollar-Euro exchange rate arising from a U.S. dollar denominated borrowing.  This swap involves exchanging fixed rate Euro interest payments for floating rate U.S. dollar interest receipts both of which will occur at the forward exchange rates in effect upon entering into the instrument. This instrument, expected to settle in the third quarter of 2017, has a pay fixed notional amount of €81 million and a receive notional amount of $90 million.

Balance Sheet Classification

The Company records the fair values of derivative financial instruments on the balance sheet as follows: (a) receivables if the instrument has a positive fair value and maturity within one year, (b) deposits, receivables, and other assets if the instrument has a positive fair value and maturity after one year, and (c) other accrued liabilities or other liabilities (current) if the instrument has a negative fair value and maturity within one year.

The following table shows the amount and classification (as noted above) of the Company’s derivatives at June 30, 2017, December 31, 2016 and June 30, 2016:

	Fair Value
	Balance Sheet	June 30,		December 31,		June 30,
	Location	2017		2016		2016
Asset derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	a	$	—	$	6	$	3
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	a		2		9		6
Total asset derivatives		$	2	$	15	$	9
Liability derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	c	$	1	$	—	$	—
Hedges of multiple risks	c		3
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	c		3		5		3
Total liability derivatives		$	7	$	5	$	3

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Restructuring Accruals

6 Months Ended

Jun. 30, 2017

Restructuring Accruals

Restructuring Accruals

5.  Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended June 30, 2017 and 2016 is as follows:

	Other
	Restructuring
	Actions
Balance at April 1, 2017	$	104
Charges		10
Write-down of assets to net realizable value
Net cash paid, principally severance and related benefits		(8)
Other, including foreign exchange translation		5
Balance at June 30, 2017	$	111

			Other
	Asia Pacific		Restructuring		Total
	Restructuring		Actions		Restructuring
Balance at April 1, 2016	$	6	$	34	$	40
Net cash paid, principally severance and related benefits				(4)		(4)
Other, including foreign exchange translation				(2)		(2)
Balance at June 30, 2016	$	6	$	28	$	34

Selected information related to the restructuring accruals for the six months ended June 30, 2017 and 2016 is as follows:

	Other
	Restructuring
	Actions
Balance at January 1, 2017	$	85
Charges		48
Write-down of assets to net realizable value		(9)
Net cash paid, principally severance and related benefits		(16)
Other, including foreign exchange translation		3
Balance at June 30, 2017	$	111

			Other
	Asia Pacific		Restructuring		Total
	Restructuring		Actions		Restructuring
Balance at January 1, 2016	$	7	$	36	$	43
Charges		1		18		19
Write-down of assets to net realizable value				(7)		(7)
Net cash paid, principally severance and related benefits		(1)		(16)		(17)
Other, including foreign exchange translation		(1)		(3)		(4)
Balance at June 30, 2016	$	6	$	28	$	34

The Company’s decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the extent their carrying amounts exceeded fair value or fair value less cost to sell.  The Company classified the significant assumptions used to determine the fair value of the impaired assets, which was not material, as Level 3 in the fair value hierarchy as set forth in the general accounting principles for fair value measurements.

When a decision is made to take these actions, the Company manages and accounts for them separately from the on-going operations of the business. Information related to major programs (as in the case of the Asia Pacific Restructuring program above) are presented separately. Minor initiatives and discrete restructuring actions are presented on a combined basis as Other Restructuring Actions. When charges related to major programs are completed, remaining accrual balances are classified within Other Restructuring Actions.

Asia Pacific Restructuring

During the six months ended June 30, 2016, the Company recorded charges of $1 million. These charges primarily represented other exit costs as part of the Company’s Asia Pacific Restructuring program. The Company recorded total cumulative charges of $224 million and does not expect to execute any further actions under this program. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018. Beginning in 2017, the Asia Pacific Restructuring program was considered substantially complete and the remaining accrual balance was reclassified into Other Restructuring Actions.

Other Restructuring Actions

During the three and six months ended June 30, 2017, the Company recorded restructuring, asset impairment and other charges of $10 million and $48 million, respectively. For the six months ended June 30, 2017, these charges primarily consist of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($33 million), Europe ($13 million) and North America ($2 million). Except for the charges recorded in Europe, the other discrete restructuring charges recorded in 2017 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The Company has recorded total cumulative charges of $54 million related to a plant closure in Europe and does not expect to execute any further significant actions related to this facility.  The restructuring charges recorded in 2017 in the Latin American and European regions primarily relate to capacity curtailments and products produced at those facilities have, in large part, been reallocated to others in their respective regions. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018.

During the three and six months ended June 30, 2016, the Company recorded restructuring, asset impairment and other charges of $0 and $18 million, respectively. These charges were primarily related to restructuring in the Latin America region.  These charges primarily represented employee costs, write-down of assets, and other exit costs of $14 million for a plant closure in the first quarter of 2016 in Latin America, $3 million related to a previous plant closure in North America and $1 million related to other restructuring actions. The discrete restructuring charges recorded in the first quarter of 2016 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred.The restructuring charges recorded in the first quarter of 2016 in the Latin American region primarily relate to a capacity curtailment. The Company reallocated the products produced at this facility to others in the region. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2017. 

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Pension Benefit Plans

6 Months Ended

Jun. 30, 2017

Pension Benefit Plans.

Pension Benefit Plans

6.  Pension Benefit Plans

The components of the net periodic pension cost for the three months ended June 30, 2017 and 2016 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	4	$	4	$	4	$	5
Interest cost		20		25		11		13
Expected asset return		(33)		(38)		(18)		(21)
Amortization:
Actuarial loss		15		16		5		5
Net periodic pension cost	$	6	$	7	$	2	$	2

The components of the net periodic pension cost for the six months ended June 30, 2017 and 2016 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	8	$	8	$	8	$	9
Interest cost		40		49		22		26
Expected asset return		(66)		(76)		(36)		(42)
Amortization:
Actuarial loss		29		31		10		10
Net periodic pension cost	$	11	$	12	$	4	$	3

In March 2016, the Company remeasured the liability related to its hourly plan in the U.S. to reflect certain changes in future benefits. The remeasurement resulted in an increase to its pension liability of approximately $60 million and has been reflected in other comprehensive income.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Taxes

Income Taxes

7.  Income Taxes

The Company performs a quarterly review of the annual effective tax rate and makes changes if necessary based on new information or events. The estimated annual effective tax rate is forecasted quarterly using actual historical information and forward-looking estimates. The estimated annual effective tax rate may fluctuate due to changes in forecasted annual operating income; changes in the forecasted mix of earnings by country; changes to the valuation allowance for deferred tax assets (such changes would be recorded discretely in the quarter in which they occur); changes to actual or forecasted permanent book to tax differences (non-deductible expenses); impacts from future tax settlements with state, federal or foreign tax authorities (such changes would be recorded discretely in the quarter in which they occur); or impacts from tax law changes. To the extent such changes impact deferred tax assets/liabilities, these changes would generally be recorded discretely in the quarter in which they occur.  Additionally, the annual effective tax rate differs from the statutory U.S. Federal tax rate of 35% primarily because of valuation allowances in some jurisdictions and varying non-U.S. tax rates, as well as the tax accruals reversed in the second quarter of 2017 due to the resolution of a previous tax matter with a foreign tax authority.

The Company is currently under examination in various tax jurisdictions in which it operates, including Argentina, Bolivia, Brazil, China, Canada, Colombia, Czech, Ecuador, France, Germany, and Indonesia. The years under examination range from 2006 through 2015. The Company has received income tax assessments in excess of established reserves. The Company believes that adequate provisions for all income tax uncertainties have been made. However, if income tax assessments are settled against the Company at amounts in excess of established reserves, it could have a material impact to the Company’s results of operations, financial position or cash flows.

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Debt

6 Months Ended

Jun. 30, 2017

Debt

Debt

8.  Debt

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

	June 30,		December 31,		June 30,
	2017		2016		2016
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	209	$	—	$	203
Term Loans:
Term Loan A		1,370		1,395		1,525
Term Loan A (€279 million)		303		282		301
Term Loan B						558
Senior Notes:
6.75%, due 2020 (€500 million)		569		523		551
4.875%, due 2021 (€330 million)		375		345		363
5.00%, due 2022		496		495		494
5.875%, due 2023		684		682		681
3.125%, due 2024 (€725 million at June 30, 2017 and €500 million at December 31, 2016)		819		520
5.375%, due 2025		297		297		296
6.375%, due 2025		294		294		294
Senior Debentures:
7.80%, due 2018		22		250		250
Capital Leases		58		57		63
Other		22		26		32
Total long-term debt		5,518		5,166		5,611
Less amounts due within one year		47		33		62
Long-term debt	$	5,471	$	5,133	$	5,549

On April 22, 2015, the Company entered into a Senior Secured Credit Facility, which subsequently has been amended several times with the most recent amendment being entered into on February 3, 2016 (the “Amended Agreement”).

At June 30, 2017, the Amended Agreement includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, a $1,575 million term loan A facility ($1,370 million net of debt issuance costs), and a €279 million term loan A facility ($303 million net of debt issuance costs), each of which has a final maturity date of April 22, 2020.  At June 30, 2017, the Company had unused credit of $675 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at June 30, 2017 was 2.64%.

The Amended Agreement contains various covenants that restrict, among other things and subject to certain exceptions, the ability of the Company to incur certain liens, make certain investments, become liable under contingent obligations in certain defined instances only, make restricted payments, make certain asset sales within guidelines and limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations.

The Amended Agreement also contains one financial covenant, a Total Leverage Ratio that requires the Company not to exceed a ratio calculated by dividing consolidated total debt, less cash and cash equivalents, by consolidated EBITDA, as defined in the Amended Agreement. The Total Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Total Leverage Ratio to exceed the specified maximum of (i) 4.5x for the two fiscal quarters ending June 30, 2017 and September 30, 2017, and (ii) 4.0x for the fourth fiscal quarter ending December 31, 2017 and each fiscal quarter thereafter.

Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement.  In such an event, the Company would be unable to request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable.  If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities.  As of June 30, 2017, the Company was in compliance with all covenants and restrictions in the Amended Agreement.  In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions.

The interest rates on borrowings under the Amended Agreement are, at the Company’s option, the Base Rate or the Eurocurrency Rate, as defined in the Amended Agreement, plus an applicable margin.  The applicable margin for the term loan A facility and the revolving credit facility is linked to the Company’s Total Leverage Ratio and ranges from 1.25% to 1.75% for Eurocurrency Rate loans and from 0.25% to 0.75% for Base Rate loans.  In addition, a facility fee is payable on the revolving credit facility commitments ranging from 0.20% to 0.30% per annum linked to the Total Leverage Ratio.

Borrowings under the Amended Agreement are secured by substantially all of the assets, excluding real estate and certain other excluded assets, of certain of the Company’s domestic subsidiaries and certain foreign subsidiaries.  Borrowings are also secured by a pledge of intercompany debt and equity investments in certain of the Company’s domestic subsidiaries and, in the case of foreign borrowings, of stock of certain foreign subsidiaries.  All borrowings under the Amended Agreement are guaranteed by certain domestic subsidiaries of the Company.

During August 2015, the Company issued senior notes with a face value of $700 million that bear interest at 5.875% and are due August 15, 2023 (the “Senior Notes due 2023”) and senior notes with a face value of $300 million that bear interest at 6.375% and are due August 15, 2025 (together with the Senior Notes due 2023, the “2015 Senior Notes”).  The 2015 Senior Notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds from the 2015 Senior Notes, after deducting the debt discount and debt issuance costs, totaled approximately $972 million.

During November 2016, the Company issued senior notes with a face value of €500 million that bear interest at 3.125% and are due November 15, 2024 (the “Senior Notes due 2024”).  The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds, after deducting debt issuance costs, totaled approximately $520 million and were used to repay the term loan B facility under the Amended Agreement.  In March 2017, the Company expanded its borrowings under the Senior Notes due 2024 by issuing €225 million of additional notes that bear interest at 3.125% and are due November 15, 2024.  The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries.  The net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used to repay a portion of the Company’s revolving credit facility. 

In March 2017, the Company purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018.  Approximately $22 million of the Senior Debentures remain outstanding as of June 30, 2017. As part of the tender offer, the Company recorded $17 million of additional interest charges for note repurchase premiums and the related write-off of unamortized finance fees in the first quarter of 2017.

The Company assesses its capital raising and refinancing needs on an ongoing basis and may enter into additional credit facilities and seek to issue equity and/or debt securities in the domestic and international capital markets if market conditions are favorable. Also, depending on market conditions, the Company may elect to repurchase portions of its debt securities in the open market.

The Company has a €185 million European accounts receivable securitization program, which extends through March 2019, subject to periodic renewal of backup credit lines.

Information related to the Company’s accounts receivable securitization program is as follows:

	June 30,			December 31,			June 30,
	2017			2016			2016
Balance (included in short-term loans)	$	182		$	152		$	173
Weighted average interest rate		0.74	%		0.74	%		0.70	%

The carrying amounts reported for the accounts receivable securitization program, and certain long-term debt obligations subject to frequently redetermined interest rates, approximate fair value.  Fair values for the Company’s significant fixed rate debt obligations are based on published market quotations, and are classified as Level 1 in the fair value hierarchy.

Fair values at June 30, 2017 of the Company’s significant fixed rate debt obligations are as follows:

	Principal		Indicated
	Amount		Market Price		Fair Value
Senior Notes:
6.75%, due 2020 (€500 million)	$	572	$	119.06	$	681
4.875%, due 2021 (€330 million)		377		114.02		430
5.00%, due 2022		500		105.45		527
5.875%, due 2023		700		110.21		771
3.125%, due 2024 (€725 million)		829		101.66		843
6.375%, due 2025		300		111.73		335
5.375%, due 2025		300		106.23		319
Senior Debentures:
7.80%, due 2018		22		105.02		23

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Contingencies

6 Months Ended

Jun. 30, 2017

Contingencies

Contingencies

9.  Contingencies

Asbestos

The Company is a defendant in numerous lawsuits alleging bodily injury and death as a result of exposure to 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 insulation material containing asbestos.  The Company sold its insulation business unit at the end of April 1958.  The typical asbestos personal injury lawsuit alleges various theories of liability, including negligence, gross negligence and strict liability and seeks compensatory and, in some cases, punitive damages in various amounts (herein referred to as "asbestos claims").

As of June 30, 2017, the Company has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 1,400 plaintiffs and claimants.  Based on an analysis of the lawsuits pending as of December 31, 2016, approximately 88% of plaintiffs either do not specify the monetary damages sought, or in the case of court filings, claim an amount sufficient to invoke the jurisdictional minimum of the trial court.  Approximately 9% of plaintiffs specifically plead damages above the jurisdictional minimum up to, and including, $15 million or less, and 3% of plaintiffs specifically plead damages greater than $15 million but less than or equal to $100 million.

As indicated by the foregoing summary, current pleading practice permits considerable variation in the assertion of monetary damages.  The Company’s experience resolving hundreds of thousands of asbestos claims and lawsuits over an extended period demonstrates that the monetary relief alleged in a complaint bears little relevance to a claim’s merits or disposition value.  Rather, the amount potentially recoverable is determined by such factors as the type and severity of the plaintiff’s asbestos disease, the plaintiff’s medical history and exposure to other disease-causing agents, the product identification evidence against the Company and other co-defendants, the defenses available to the Company and other co-defendants, the specific jurisdiction in which the claim is made, and the plaintiff’s firm representing the claimant.

In addition to the pending claims set forth above, the Company has claims-handling agreements in place with many plaintiffs’ counsel throughout the country.  These agreements require evaluation and negotiation regarding whether particular claimants qualify under the criteria established by such agreements. The criteria for such claims include verification of a compensable illness and a reasonable probability of exposure to a product manufactured by the Company's former business unit during its manufacturing period ending in 1958. 

The Company has also been a defendant in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants, co-defendants and property damage claimants.  Based upon its past experience, the Company believes that these categories of lawsuits and claims will not involve any material liability and they are not included in the above description of pending matters or in the following description of disposed matters.

Since receiving its first asbestos claim, the Company as of June 30, 2017, has disposed of asbestos claims of approximately 398,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,500.  The Company’s asbestos indemnity payments have varied on a per claim basis, and are expected to continue to vary considerably over time.  Asbestos-related cash payments for 2016, 2015 and 2014 were $125 million, $138 million, and $148 million, respectively.  The Company’s cash payments per claim disposed (inclusive of legal costs) were approximately $71,000,  $95,000,  and $81,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

As discussed above, the Company’s objective is to achieve, where possible, resolution of asbestos claims pursuant to claims-handling agreements.  Failure of claimants to meet certain medical and product exposure criteria in the Company’s administrative claims handling agreements has generally reduced the number of claims that would otherwise have been received by the Company in the tort system. In addition, certain court orders and legislative acts have reduced or eliminated the number of claims that the Company otherwise would have received by the Company in the tort system.  These developments generally have had the effect of increasing the Company’s per-claim average indemnity payment over time. 

Beginning with the initial liability of $975 million established in 1993, the Company has accrued a total of approximately $4.9 billion through June 30, 2017, before insurance recoveries, for its asbestos-related liability.  The Company’s estimates of its liability have been significantly affected by, among other factors, the volatility of asbestos-related litigation in the United States, the significant number of co-defendants that have filed for bankruptcy, the inherent uncertainty of future disease incidence and claiming patterns against the Company, the significant expansion of the defendants that are now sued in this litigation, and the continuing changes in the extent to which these defendants participate in the resolution of cases in which the Company is also a defendant.

The Company continues to monitor trends that may affect its ultimate liability and analyze the developments and variables likely to affect the resolution of pending and future asbestos claims against the Company.  The material components of the Company’s total accrued liability are determined by the Company in connection with its annual comprehensive legal review and consist of the following estimates, to the extent it is probable that such liabilities have been incurred and can be reasonably estimated: (i) the liability for asbestos claims already asserted against 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 claims already asserted and those claims the Company believes will be asserted.

As noted above, the Company conducts a comprehensive legal review of its asbestos-related liabilities and costs annually in connection with finalizing and reporting its annual results of operations, unless significant changes in trends or new developments warrant an earlier review.  As part of its annual comprehensive legal review, the Company provides historical claims filing data to a third party with expertise in determining the impact of disease incidence and mortality on future filing trends to develop information to assist the Company in estimating the total number of future claims to be filed.  The Company uses this estimate of total future claims, along with an estimation of disposition costs and related legal costs as inputs to develop its best estimate of total probable liability. If the results of the annual comprehensive legal review indicate that the existing amount of the accrued liability is lower (higher) than its reasonably estimable asbestos-related costs, then the Company will record 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 are:

a) settlements will 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) claims will continue to be resolved primarily under the Company’s administrative claims agreements or on terms comparable to those set forth in those agreements;

c) the incidence of serious asbestos‑related disease cases and claiming patterns against the Company for such cases do not change materially;

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

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

f) co-defendants with substantial resources and assets continue to participate significantly in the resolution of future asbestos lawsuits and claims.

For the years ended December 31, 2016 and 2015, the Company concluded that accruals in the amount of $692 million and $817 million, respectively, were required. These amounts have not been discounted for the time value of money. The Company’s comprehensive legal reviews resulted in charges of $0 million, $16 million and $46 million for the years ending December 31, 2016, 2015 and 2014, respectively.

The Company believes it is reasonably possible that it will incur a loss for its asbestos-related liabilities in excess of the amount currently recognized, which is $692 million as of December 31, 2016.  The Company estimates that reasonably possible losses could be as high as $825 million.  This estimate of additional reasonably possible loss reflects a legal judgment about the number and cost of potential future claims and legal costs. The Company believes this estimate is consistent with the level of variability it has experienced when comparing actual results to recent near-term projections. However, it is also possible that the ultimate asbestos-related liability could be above this estimate.

The Company expects a significant majority of the total number of claims to be received in the next ten years.  This timeframe appropriately reflects the mortality of current and expected claimants in light of the Company’s sale of its insulation business unit in 1958.

As noted above, the Company’s asbestos-related liability is based on a projection of new claims that will eventually be filed against the Company and the estimated average disposition cost of these claims and related legal costs. Changes in the significant assumptions noted above have the potential to impact these key factors, which are critical to the estimation of the Company’s asbestos-related liability significantly.

Other Matters

On July 5, 2016, the Company learned that the Enforcement Division of the SEC is conducting an investigation into certain accounting and control matters pertaining to the Company’s determination of its asbestos-related liabilities.  On May 13, 2016, the Company restated its consolidated financial statements for the years ended December 31, 2015, 2014 and 2013 in order to correct an error related to the Company’s method for estimating its future asbestos-related liabilities. The Company is cooperating with the SEC’s investigation.  At this time, the Company is unable to predict the outcome of this matter or provide meaningful quantification of how the final resolution of this matter may impact its future consolidated financial statements, results of operations, or cash flows.

Other litigation is pending against the Company, in many cases involving ordinary and routine claims incidental to the business of the Company and in others presenting allegations that are non-routine and involve compensatory, punitive or treble damage claims as well as other types of relief.  The Company records a liability for such matters when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated.  Recorded amounts are reviewed and adjusted to reflect changes in the factors upon which the estimates are based, including additional information, negotiations, settlements and other events.

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Share Owners' Equity

6 Months Ended

Jun. 30, 2017

Share Owners' Equity

Share Owners' Equity

10.  Share Owners’ Equity

The activity in share owners’ equity for the three months ended June 30, 2017 and 2016 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		Interests		Equity
Balance on April 1, 2017	$	2	$	3,083	$	(557)	$	(48)	$	(1,981)	$	116	$	615
Reissuance of common stock (101,687 shares)						2								2
Stock compensation				5										5
Net earnings								140				3		143
Other comprehensive income (loss)										24		(10)		14
Balance on June 30, 2017	$	2	$	3,088	$	(555)	$	92	$	(1,957)	$	109	$	779

	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 April 1, 2016	$	2	$	3,074	$	(569)	$	(238)	$	(1,971)	$	118	$	416
Reissuance of common stock (49,234 shares)						3								3
Stock compensation				4										4
Net earnings								105				4		109
Other comprehensive income (loss)										(62)		(12)		(74)
Balance on June 30, 2016	$	2	$	3,078	$	(566)	$	(133)	$	(2,033)	$	110	$	458

The activity in share owners’ equity for the six months ended June 30, 2017 and 2016 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		Interests		Equity
Balance on January 1, 2017	$	2	$	3,080	$	(560)		(96)	$	(2,172)	$	109	$	363
Reissuance of common stock (201,165 shares)						5								5
Stock compensation				8										8
Net earnings								188				8		196
Other comprehensive income (loss)										215		(8)		207
Balance on June 30, 2017	$	2	$	3,088	$	(555)	$	92	$	(1,957)	$	109	$	779

	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, 2016	$	2	$	3,064	$	(573)	$	(305)	$	(2,017)	$	108	$	279
Issuance of common stock (504,635 shares)				5										5
Reissuance of common stock (183,836 shares)						7								7
Stock compensation				9										9
Net earnings								172				10		182
Other comprehensive loss										(16)		(8)		(24)
Balance on June 30, 2016	$	2	$	3,078	$	(566)	$	(133)	$	(2,033)	$	110	$	458

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)
	June 30,	December 31,	June 30,
	2017	2016	2016
Shares of common stock issued (including treasury shares)	185,692	185,355	185,417
Treasury shares	22,816	23,017	23,335

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

11.  Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the three months ended June 30, 2017 and 2016 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2017	$	(602)	$	(10)		$	(1,369)		$	(1,981)
Change before reclassifications		24					(6)			18
Amounts reclassified from accumulated other comprehensive income				(4)	(a)		20	(b)		16
Translation effect							(10)			(10)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		24		(4)			4			24
Balance on June 30, 2017	$	(578)	$	(14)		$	(1,365)		$	(1,957)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2016	$	(478)	$	(19)		$	(1,474)		$	(1,971)
Change before reclassifications		(96)								(96)
Amounts reclassified from accumulated other comprehensive income				7	(a)		15	(b)		22
Translation effect							10			10
Tax effect				1			1			2
Other comprehensive income (loss) attributable to the Company		(96)		8			26			(62)
Balance on June 30, 2016	$	(574)	$	(11)		$	(1,448)		$	(2,033)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 4 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 6 for additional information) and net postretirement benefit cost.

The activity in accumulated other comprehensive loss for the six months ended June 30, 2017 and 2016 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2017	$	(788)	$	(4)		$	(1,380)		$	(2,172)
Change before reclassifications		210					(10)			200
Amounts reclassified from accumulated other comprehensive income				(10)	(a)		39	(b)		29
Translation effect							(14)			(14)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		210		(10)			15			215
Balance on June 30, 2017	$	(578)	$	(14)		$	(1,365)		$	(1,957)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2016	$	(568)	$	(17)		$	(1,432)		$	(2,017)
Change before reclassifications		(6)								(6)
Amounts reclassified from accumulated other comprehensive income				5	(a)		(28)	(b)		(23)
Translation effect							11			11
Tax effect				1			1			2
Other comprehensive income (loss) attributable to the Company		(6)		6			(16)			(16)
Balance on June 30, 2016	$	(574)	$	(11)		$	(1,448)		$	(2,033)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 4 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 6 for additional information) and net postretirement benefit cost.

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Other Expense (Income), net

6 Months Ended

Jun. 30, 2017

Other Expense (Income), net

Other Expense (Income), net

12.  Other Expense (Income), net

Other expense (income), net for the three and six months ended June 30, 2017 and 2016 included the following:

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Restructuring, asset impairment and other charges	$	10	$	—	$	49	$	19
Gain on sale of land in China								(7)
Foreign currency exchange loss (gain)		(1)		1				4
Intangible amortization expense		10		9		20		20
Royalty income		(3)		(3)		(7)		(5)
Other expense (income)		(5)				(6)		(2)
	$	11	$	7	$	56	$	29

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Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share

Earnings Per Share

13.  Earnings Per Share

The following tables set forth the computation of basic and diluted earnings per share:

	Three months ended June 30,
	2017		2016
Numerator:
Net earnings attributable to the Company	$	140	$	105
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		162,716		161,945
Effect of dilutive securities:
Stock options and other		1,766		875
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		164,482		162,820
Basic earnings per share:
Earnings from continuing operations	$	0.86	$	0.66
Loss from discontinued operations				(0.01)
Net earnings	$	0.86	$	0.65
Diluted earnings per share:
Earnings from continuing operations	$	0.85	$	0.65
Loss from discontinued operations				(0.01)
Net earnings	$	0.85	$	0.64

Options to purchase 1,617,748 and 2,939,441 weighted average shares of common stock which were outstanding during the three months ended June 30, 2017 and 2016, 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.

	Six months ended June 30,
	2017		2016
Numerator:
Net earnings attributable to the Company	$	188	$	172
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		162,553		161,574
Effect of dilutive securities:
Stock options and other		1,609		733
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		164,162		162,307
Basic earnings per share:
Earnings from continuing operations	$	1.16	$	1.08
Loss from discontinued operations				(0.02)
Net earnings	$	1.16	$	1.06
Diluted earnings per share:
Earnings from continuing operations	$	1.15	$	1.07
Loss from discontinued operations				(0.02)
Net earnings	$	1.15	$	1.05

Options to purchase 1,912,832 and 2,955,064 weighted average shares of common stock which were outstanding during the six months ended June 30, 2017 and 2016, 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.

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2017

Supplemental Cash Flow Information

Supplemental Cash Flow Information

14.  Supplemental Cash Flow Information

Financial information regarding the Company’s supplemental cash flow information is as follows:

	Six months ended June 30,
	2017		2016
Interest paid in cash	$	145	$	136
Income taxes paid in cash (all non-U.S.)		89		75

Cash interest for the six months ended June 30, 2017 includes $16 million of note repurchase premiums related to debt that was repaid prior to its maturity.

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At June 30, 2017 and June 30, 2016, the amount of receivables sold by the Company was $205 million and $300 million, respectively. Any continuing involvement with the sold receivables is immaterial.

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Discontinued Operations

6 Months Ended

Jun. 30, 2017

Discontinued Operations

Discontinued Operations

15.  Discontinued Operations

On April 4, 2016, the annulment committee formed by the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) ruled that OI European Group B.V. (“OIEG”), a subsidiary of the Company, is free to pursue the enforcement of a prior arbitration award (the “Award”) against Venezuela. As of June 30, 2017, that Award amounts to more than $500 million, including reimbursement of expenses and accrued interest.  Venezuela’s application to annul the Award is still pending before an ad hoc committee of the ICSID and a hearing with respect to such application is currently scheduled for September 26-27, 2017. 

On July 31, 2017, OIEG sold its right, title and interest in amounts due under the Award to an Ireland-domiciled investment fund.  Under the terms of the sale, OIEG received a payment, in cash, at closing equal to $115 million (the “Cash Payment”).  OIEG may also receive additional payments in the future (“Deferred Amounts”) calculated based on the total compensation that is received from Venezuela as a result of collection efforts or as settlement of the Award with Venezuela.  In the event that the Award is partially or completely annulled by the ICSID ad hoc annulment committee, OIEG may be required to repay to the purchaser up to the entire amount of the Cash Payment based on a formula tied to the amount of the Award (if any) that is annulled.  In addition, OIEG’s right to receive any Deferred Amounts is subject to the limitations described below.

OIEG’s interest in any amounts received in the future from Venezuela in respect of the Award is limited to a percentage of such recovery after taking into account reimbursement of the Cash Payment to the purchaser and reimbursement of legal fees and expenses incurred by the Company and the purchaser. OIEG’s percentage of such recovery will also be reduced over time.  Because the Award has yet to be satisfied, the annulment proceeding is pending, and the ability to successfully enforce the Award in countries that are party to the ICSID Convention is subject to significant challenges, the Company is unable to reasonably predict the amount of recoveries from the Award, if any,  to which the Company may be entitled in the future.  Any future amounts that the Company may receive from the Award are highly speculative and the timing of any such future payments, if any, is highly uncertain.  As such, there can be no assurance that the Company will receive any future payments under the Award beyond the Cash Payment.  Except as noted above in connection with the annulment proceeding that is pending before the ICSID ad hoc committee, the Cash Payment is not subject to any forfeiture or future adjustment.

A separate arbitration involving other subsidiaries of the Company is pending before ICSID to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants.

For the three and six month periods ending June 30, 2017, the Company has not given recognition to the transaction above in its financial statements. The loss from discontinued operations of less than $1 million and $3 million for the six months ended June 30, 2017 and June 30, 2016, respectively, relates to ongoing costs for the Venezuelan expropriation.

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New Accounting Pronouncement

6 Months Ended

Jun. 30, 2017

New Accounting Pronouncement

New Accounting Pronouncement

16.  New Accounting Pronouncement

Revenue from Contracts with Customers - In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers”, which delayed by one year the effective date of the new revenue recognition standard, which will be effective for the Company on January 1, 2018. The Company has started an implementation process, including a review of customer contracts, to evaluate the effect this standard will have on its consolidated financial statements and related disclosures.  At this time, the Company does not expect that the implementation of this standard in 2018 will have a significant impact on the timing in which it recognizes revenue.  While the Company continues to assess the potential impacts of the new standard, the Company does not currently expect the adoption of the new standard to have a material impact on consolidated net income or the consolidated balance sheet. The standard requires new substantial disclosures and the Company continues to evaluate these requirements. The Company plans to select the modified retrospective transition method upon adoption effective January 1, 2018.

Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases”. Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee's obligation to make lease payments arising from a lease, and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for the Company on January 1, 2019. ASU No. 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU No. 2016-02 will have on the Company’s consolidated financial statements, and anticipates the new guidance will significantly impact its consolidated financial statements as the Company has a significant number of leases. As further described in Note 16 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company had minimum lease commitments under non-cancellable operating leases totaling $205 million as of December 31, 2016.

Compensation– Retirement Benefits - In March 2017, the FASB issued ASU No. 2017-07,“Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which requires the service cost component to be presented with other employee compensation costs in operating income within the income statement while the other components will be reported separately outside of operations. Application of the standard is required for annual periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.

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Financial Information for Subsidiary Guarantors and Non-Guarantors

6 Months Ended

Jun. 30, 2017

Financial Information for Subsidiary Guarantors and Non-Guarantors

Financial Information for Subsidiary Guarantors and Non-Guarantors

17.  Financial Information for Subsidiary Guarantors and Non-Guarantors

The following presents condensed consolidating financial information for the Company, segregating:  (1) Owens-Illinois, Inc., the issuer of senior debentures (the “Parent”); (2) the two subsidiaries which have guaranteed the senior debentures on a subordinated basis (the “Guarantor Subsidiaries”); and (3) all other subsidiaries (the “Non-Guarantor Subsidiaries”).  The Guarantor Subsidiaries are 100% owned direct and indirect subsidiaries of the Company and their guarantees are full, unconditional and joint and several.  They have no operations and function only as intermediate holding companies. 

Certain reclassifications have been made to conform all of the financial information to the financial presentation on a consolidated basis.  The principal eliminations relate to investments in subsidiaries and intercompany balances and transactions.

	June 30, 2017
			Guarantor		Non-Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	335	$	—	$	335
Trade receivables, net						956				956
Inventories						1,049				1,049
Prepaid expenses and other current assets						214				214
Total current assets		—		—		2,554		—		2,554
Investments in and advances to subsidiaries		1,358		1,336		—		(2,694)		—
Property, plant and equipment, net						2,996				2,996
Goodwill						2,588				2,588
Intangibles, net						486				486
Other assets						1,156				1,156
Total assets	$	1,358	$	1,336	$	9,780	$	(2,694)	$	9,780
Current liabilities :
Short-term loans and long-term debt due within one year	$	22	$	—	$	271	$	(22)	$	271
Current portion of asbestos liability		115				—				115
Accounts payable						1,065				1,065
Other liabilities						564		—		564
Total current liabilities		137		—		1,900		(22)		2,015
Long-term debt						5,471		—		5,471
Asbestos-related liabilities		551								551
Other long-term liabilities						964				964
Share owners’ equity		670		1,336		1,336		(2,672)		670
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,358	$	1,336	$	9,780	$	(2,694)	$	9,780

	December 31, 2016
					Non-
			Guarantor		Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	492	$	—	$	492
Trade receivables, net						580				580
Inventories						983				983
Prepaid expenses and other current assets						199				199
Total current assets		—		—		2,254		—		2,254
Investments in and advances to subsidiaries		1,198		946				(2,144)		—
Property, plant and equipment, net						2,880				2,880
Goodwill						2,462				2,462
Intangibles, net						464				464
Other assets						1,075				1,075
Total assets	$	1,198	$	946	$	9,135	$	(2,144)	$	9,135
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	195	$	—	$	195
Current portion of asbestos liability		115								115
Accounts payable						1,135				1,135
Other liabilities		2				615		(2)		615
Total current liabilities		117		—		1,945		(2)		2,060
Long-term debt		250				5,133		(250)		5,133
Asbestos-related liabilities		577								577
Other long-term liabilities						1,002				1,002
Share owners’ equity		254		946		946		(1,892)		254
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,198	$	946	$	9,135	$	(2,144)	$	9,135

	June 30, 2016
					Non-
			Guarantor		Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	334	$	—	$	334
Trade receivables, net						831				831
Inventories						1,051				1,051
Prepaid expenses and other current assets						358				358
Total current assets		—		—		2,574		—		2,574
Investments in and advances to subsidiaries		1,394		1,142				(2,536)		—
Property, plant and equipment, net						2,932				2,932
Goodwill						2,536				2,536
Intangibles, net						517				517
Other assets						1,108				1,108
Total assets	$	1,394	$	1,142	$	9,667	$	(2,536)	$	9,667
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	305	$	—	$	305
Current portion of asbestos liability		130								130
Accounts payable						1,042				1,042
Other liabilities		2				518		(2)		518
Total current liabilities		132		—		1,865		(2)		1,995
Long-term debt		250				5,549		(250)		5,549
Asbestos-related liabilities		663								663
Other long-term liabilities						1,002				1,002
Share owners’ equity		349		1,142		1,142		(2,284)		349
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,394	$	1,142	$	9,667	$	(2,536)	$	9,667

	Three months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	1,751	$	—	$	1,751
Cost of goods sold						(1,405)				(1,405)
Gross profit		—		—		346		—		346
Selling and administrative expense						(123)				(123)
Research, development and engineering expense						(16)				(16)
Net intercompany interest										—
Interest expense, net						(62)				(62)
Equity earnings from subsidiaries		143		143				(286)		—
Other equity earnings						18				18
Other expense, net						(11)				(11)
Earnings before income taxes		143		143		152		(286)		152
Provision for income taxes						(9)				(9)
Earnings from continuing operations		143		143		143		(286)		143
Loss from discontinued operations										—
Net earnings		143		143		143		(286)		143
Net (earnings) attributable to noncontrolling interests						(3)				(3)
Net earnings attributable to the Company	$	143	$	143	$	140	$	(286)	$	140

	Three months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	143	$	143	$	143	$	(286)	$	143
Other comprehensive income (loss), net		20		20		14		(40)		14
Total comprehensive loss		163		163		157		(326)		157
Comprehensive income attributable to noncontrolling interests						7				7
Comprehensive income attributable to the Company	$	163	$	163	$	164	$	(326)	$	164

	Three months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	1,760	$	—	$	1,760
Cost of goods sold						(1,418)				(1,418)
Gross profit		—		—		342		—		342
Selling and administrative expense						(126)				(126)
Research, development and engineering expense						(16)				(16)
Net intercompany interest		5				(5)				—
Interest expense, net		(5)				(62)				(67)
Equity earnings from subsidiaries		105		105				(210)		—
Other equity earnings						15				15
Other expense, net						(7)				(7)
Earnings before income taxes		105		105		141		(210)		141
Provision for income taxes						(30)				(30)
Earnings from continuing operations		105		105		111		(210)		111
Loss from discontinued operations						(2)				(2)
Net earnings		105		105		109		(210)		109
Net (earnings) attributable to noncontrolling interests						(4)				(4)
Net earnings attributable to the Company	$	105	$	105	$	105	$	(210)	$	105

	Three months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	105	$	105	$	109	$	(210)	$	109
Other comprehensive income (loss), net		(66)		(66)		(74)		132		(74)
Total comprehensive loss		39		39		35		(78)		35
Comprehensive income attributable to noncontrolling interests						8				8
Comprehensive loss attributable to the Company	$	39	$	39	$	43	$	(78)	$	43

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	3,366	$	—	$	3,366
Cost of goods sold						(2,705)				(2,705)
Gross profit		—		—		661		—		661
Selling and administrative expense						(242)				(242)
Research, development and engineering expense						(31)				(31)
Net intercompany interest		21				(21)				—
Interest expense, net		(21)				(120)				(141)
Equity earnings from subsidiaries		192		192				(384)		—
Other equity earnings						33				33
Other expense, net						(56)				(56)
Earnings before income taxes		192		192		224		(384)		224
Provision for income taxes						(28)				(28)
Earnings from continuing operations		192		192		196		(384)		196
Loss from discontinued operations										—
Net earnings		192		192		196		(384)		196
Net (earnings) attributable to noncontrolling interests						(8)				(8)
Net earnings attributable to the Company	$	192	$	192	$	188	$	(384)	$	188

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	192	$	192	$	196	$	(384)	$	196
Other comprehensive income (loss), net		207		207		207		(414)		207
Total comprehensive income (loss)		399		399		403		(798)		403
Comprehensive income attributable to noncontrolling interests										—
Comprehensive income (loss) attributable to the Company	$	399	$	399	$	403	$	(798)	$	403

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	3,348	$	—	$	3,348
Cost of goods sold						(2,687)				(2,687)
Gross profit		—		—		661		—		661
Selling and administrative expense						(254)				(254)
Research, development and engineering expense						(32)				(32)
Net intercompany interest		10				(10)				—
Interest expense, net		(10)				(123)				(133)
Equity earnings from subsidiaries		172		172				(344)		—
Other equity earnings						29				29
Other expense, net						(29)				(29)
Earnings before income taxes		172		172		242		(344)		242
Provision for income taxes						(57)				(57)
Earnings from continuing operations		172		172		185		(344)		185
Loss from discontinued operations						(3)				(3)
Net earnings		172		172		182		(344)		182
Net (earnings) attributable to noncontrolling interests						(10)				(10)
Net earnings attributable to the Company	$	172	$	172	$	172	$	(344)	$	172

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	172	$	172	$	182	$	(344)	$	182
Other comprehensive income (loss), net		(26)		(26)		(24)		52		(24)
Total comprehensive loss		146		146		158		(292)		158
Comprehensive income attributable to noncontrolling interests						(2)				(2)
Comprehensive income (loss) attributable to the Company	$	146	$	146	$	156	$	(292)	$	156

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Cash Flows	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash utilized in operating activities	$	(26)	$	—		(130)	$	—	$	(156)
Cash utilized in investing activities						(205)				(205)
Cash provided by financing activities		26				159				185
Effect of exchange rate change on cash						19				19
Net change in cash		—		—		(157)		—		(157)
Cash at beginning of period						492				492
Cash at end of period	$	—	$	—	$	335	$	—	$	335

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Cash Flows	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash utilized in operating activities	$	(24)	$	—	$	(86)	$	—	$	(110)
Cash utilized in investing activities						(190)				(190)
Cash provided by financing activities		24				214				238
Effect of exchange rate change on cash						(3)				(3)
Net change in cash		—		—		(65)		—		(65)
Cash at beginning of period						399				399
Cash at end of period	$	—	$	—	$	334	$	—	$	334

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Information

Net sales for the Company's reportable segments

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Net sales:
Europe	$	635	$	646	$	1,189	$	1,209
North America		572		599		1,100		1,131
Latin America		370		345		711		657
Asia Pacific		155		158		328		317
Reportable segment totals		1,732		1,748		3,328		3,314
Other		19		12		38		34
Net sales	$	1,751	$	1,760	$	3,366	$	3,348

Segment operating profit (loss) for the Company's reportable segments

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Segment operating profit:
Europe	$	80	$	73	$	139	$	128
North America		92		92		177		168
Latin America		69		57		123		120
Asia Pacific		11		11		31		28
Reportable segment totals		252		233		470		444
Items excluded from segment operating profit:
Retained corporate costs and other		(28)		(25)		(56)		(57)
Restructuring, asset impairment and other		(10)				(49)		(12)
Interest expense, net		(62)		(67)		(141)		(133)
Earnings from continuing operations before income taxes	$	152	$	141	$	224	$	242

Total assets for the Company's reportable segments

		June 30,		December 31,		June 30,
		2017		2016		2016
Total assets:
Europe	$	3,074	$	2,792	$	2,977
North America		2,781		2,522		2,562
Latin America		2,730		2,537		2,798
Asia Pacific		987		926		981
Reportable segment totals		9,572		8,777		9,318
Other		208		358		349
Consolidated totals	$	9,780	$	9,135	$	9,667

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Inventories (Tables)

6 Months Ended

Jun. 30, 2017

Inventories

Major classes of inventory

	June 30,		December 31,		June 30,
	2017		2016		2016
Finished goods	$	879	$	827	$	892
Raw materials		130		118		121
Operating supplies		40		38		38
	$	1,049	$	983	$	1,051

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Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2017

Prepaid Expenses and Other Current Assets

Schedule of Prepaid expenses and other current assets

	June 30,		December 31,		June 30,
	2017		2016		2016
Prepaid expenses	$	61	$	50	$	70
Value added taxes		39		46		172
Other		114		103		116
	$	214	$	199	$	358

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments

Effect of commodity forward contracts designated as cash flow hedges on the results of operations

The effect of the commodity forward contracts on the results of operations for the three months ended June 30, 2017 and 2016 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain (Loss) Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	(2)	$	7	$	—	$	(2)

The effect of the commodity forward contracts on the results of operations for the six months ended June 30, 2017 and 2016 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	4	$	3	$	—	$	—

Effect of the foreign exchange contracts not designated as hedging instruments on the results of operations

The effect of the foreign exchange derivative contracts on the results of operations for the three months ended June 30, 2017 and 2016 is as follows:

	Amount of Gain (Loss)
Location of Gain (Loss)	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016
Other expense	$	4	$	(1)

The effect of the foreign exchange derivative contracts on the results of operations for the six months ended June 30, 2017 and 2016 is as follows:

	Amount of Gain
Location of Gain	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016
Other expense	$	6	$	4

Balance Sheet Classification of derivative instruments

	Fair Value
	Balance Sheet	June 30,		December 31,		June 30,
	Location	2017		2016		2016
Asset derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	a	$	—	$	6	$	3
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	a		2		9		6
Total asset derivatives		$	2	$	15	$	9
Liability derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	c	$	1	$	—	$	—
Hedges of multiple risks	c		3
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	c		3		5		3
Total liability derivatives		$	7	$	5	$	3

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Restructuring Accruals (Tables)

6 Months Ended

Jun. 30, 2017

Restructuring Accruals

Selected information related to the restructuring accruals

Selected information related to the restructuring accruals for the three months ended June 30, 2017 and 2016 is as follows:

	Other
	Restructuring
	Actions
Balance at April 1, 2017	$	104
Charges		10
Write-down of assets to net realizable value
Net cash paid, principally severance and related benefits		(8)
Other, including foreign exchange translation		5
Balance at June 30, 2017	$	111

			Other
	Asia Pacific		Restructuring		Total
	Restructuring		Actions		Restructuring
Balance at April 1, 2016	$	6	$	34	$	40
Net cash paid, principally severance and related benefits				(4)		(4)
Other, including foreign exchange translation				(2)		(2)
Balance at June 30, 2016	$	6	$	28	$	34

Selected information related to the restructuring accruals for the six months ended June 30, 2017 and 2016 is as follows:

	Other
	Restructuring
	Actions
Balance at January 1, 2017	$	85
Charges		48
Write-down of assets to net realizable value		(9)
Net cash paid, principally severance and related benefits		(16)
Other, including foreign exchange translation		3
Balance at June 30, 2017	$	111

			Other
	Asia Pacific		Restructuring		Total
	Restructuring		Actions		Restructuring
Balance at January 1, 2016	$	7	$	36	$	43
Charges		1		18		19
Write-down of assets to net realizable value				(7)		(7)
Net cash paid, principally severance and related benefits		(1)		(16)		(17)
Other, including foreign exchange translation		(1)		(3)		(4)
Balance at June 30, 2016	$	6	$	28	$	34

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Pension Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2017

Pension Benefit Plans.

Components of net periodic pension cost (income) and net periodic postretirement (benefit) cost

The components of the net periodic pension cost for the three months ended June 30, 2017 and 2016 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	4	$	4	$	4	$	5
Interest cost		20		25		11		13
Expected asset return		(33)		(38)		(18)		(21)
Amortization:
Actuarial loss		15		16		5		5
Net periodic pension cost	$	6	$	7	$	2	$	2

The components of the net periodic pension cost for the six months ended June 30, 2017 and 2016 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	8	$	8	$	8	$	9
Interest cost		40		49		22		26
Expected asset return		(66)		(76)		(36)		(42)
Amortization:
Actuarial loss		29		31		10		10
Net periodic pension cost	$	11	$	12	$	4	$	3

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Debt (Tables)

6 Months Ended

Jun. 30, 2017

Debt

Long-term Debt

	June 30,		December 31,		June 30,
	2017		2016		2016
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	209	$	—	$	203
Term Loans:
Term Loan A		1,370		1,395		1,525
Term Loan A (€279 million)		303		282		301
Term Loan B						558
Senior Notes:
6.75%, due 2020 (€500 million)		569		523		551
4.875%, due 2021 (€330 million)		375		345		363
5.00%, due 2022		496		495		494
5.875%, due 2023		684		682		681
3.125%, due 2024 (€725 million at June 30, 2017 and €500 million at December 31, 2016)		819		520
5.375%, due 2025		297		297		296
6.375%, due 2025		294		294		294
Senior Debentures:
7.80%, due 2018		22		250		250
Capital Leases		58		57		63
Other		22		26		32
Total long-term debt		5,518		5,166		5,611
Less amounts due within one year		47		33		62
Long-term debt	$	5,471	$	5,133	$	5,549

Information related to accounts receivable securitization program

	June 30,			December 31,			June 30,
	2017			2016			2016
Balance (included in short-term loans)	$	182		$	152		$	173
Weighted average interest rate		0.74	%		0.74	%		0.70	%

Fair values of the Company's significant fixed rate debt obligations

Fair values at June 30, 2017 of the Company’s significant fixed rate debt obligations are as follows:

	Principal		Indicated
	Amount		Market Price		Fair Value
Senior Notes:
6.75%, due 2020 (€500 million)	$	572	$	119.06	$	681
4.875%, due 2021 (€330 million)		377		114.02		430
5.00%, due 2022		500		105.45		527
5.875%, due 2023		700		110.21		771
3.125%, due 2024 (€725 million)		829		101.66		843
6.375%, due 2025		300		111.73		335
5.375%, due 2025		300		106.23		319
Senior Debentures:
7.80%, due 2018		22		105.02		23

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Share Owners' Equity (Tables)

6 Months Ended

Jun. 30, 2017

Share Owners' Equity

Activity in share owner's equity

The activity in share owners’ equity for the three months ended June 30, 2017 and 2016 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		Interests		Equity
Balance on April 1, 2017	$	2	$	3,083	$	(557)	$	(48)	$	(1,981)	$	116	$	615
Reissuance of common stock (101,687 shares)						2								2
Stock compensation				5										5
Net earnings								140				3		143
Other comprehensive income (loss)										24		(10)		14
Balance on June 30, 2017	$	2	$	3,088	$	(555)	$	92	$	(1,957)	$	109	$	779

	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 April 1, 2016	$	2	$	3,074	$	(569)	$	(238)	$	(1,971)	$	118	$	416
Reissuance of common stock (49,234 shares)						3								3
Stock compensation				4										4
Net earnings								105				4		109
Other comprehensive income (loss)										(62)		(12)		(74)
Balance on June 30, 2016	$	2	$	3,078	$	(566)	$	(133)	$	(2,033)	$	110	$	458

The activity in share owners’ equity for the six months ended June 30, 2017 and 2016 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		Interests		Equity
Balance on January 1, 2017	$	2	$	3,080	$	(560)		(96)	$	(2,172)	$	109	$	363
Reissuance of common stock (201,165 shares)						5								5
Stock compensation				8										8
Net earnings								188				8		196
Other comprehensive income (loss)										215		(8)		207
Balance on June 30, 2017	$	2	$	3,088	$	(555)	$	92	$	(1,957)	$	109	$	779

	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, 2016	$	2	$	3,064	$	(573)	$	(305)	$	(2,017)	$	108	$	279
Issuance of common stock (504,635 shares)				5										5
Reissuance of common stock (183,836 shares)						7								7
Stock compensation				9										9
Net earnings								172				10		182
Other comprehensive loss										(16)		(8)		(24)
Balance on June 30, 2016	$	2	$	3,078	$	(566)	$	(133)	$	(2,033)	$	110	$	458

Schedule of shares outstanding

	Shares Outstanding (in thousands)
	June 30,	December 31,	June 30,
	2017	2016	2016
Shares of common stock issued (including treasury shares)	185,692	185,355	185,417
Treasury shares	22,816	23,017	23,335

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Loss

Component of accumulated other comprehensive loss

The activity in accumulated other comprehensive loss for the three months ended June 30, 2017 and 2016 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2017	$	(602)	$	(10)		$	(1,369)		$	(1,981)
Change before reclassifications		24					(6)			18
Amounts reclassified from accumulated other comprehensive income				(4)	(a)		20	(b)		16
Translation effect							(10)			(10)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		24		(4)			4			24
Balance on June 30, 2017	$	(578)	$	(14)		$	(1,365)		$	(1,957)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2016	$	(478)	$	(19)		$	(1,474)		$	(1,971)
Change before reclassifications		(96)								(96)
Amounts reclassified from accumulated other comprehensive income				7	(a)		15	(b)		22
Translation effect							10			10
Tax effect				1			1			2
Other comprehensive income (loss) attributable to the Company		(96)		8			26			(62)
Balance on June 30, 2016	$	(574)	$	(11)		$	(1,448)		$	(2,033)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 4 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 6 for additional information) and net postretirement benefit cost.

The activity in accumulated other comprehensive loss for the six months ended June 30, 2017 and 2016 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2017	$	(788)	$	(4)		$	(1,380)		$	(2,172)
Change before reclassifications		210					(10)			200
Amounts reclassified from accumulated other comprehensive income				(10)	(a)		39	(b)		29
Translation effect							(14)			(14)
Tax effect										—
Other comprehensive income (loss) attributable to the Company		210		(10)			15			215
Balance on June 30, 2017	$	(578)	$	(14)		$	(1,365)		$	(1,957)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2016	$	(568)	$	(17)		$	(1,432)		$	(2,017)
Change before reclassifications		(6)								(6)
Amounts reclassified from accumulated other comprehensive income				5	(a)		(28)	(b)		(23)
Translation effect							11			11
Tax effect				1			1			2
Other comprehensive income (loss) attributable to the Company		(6)		6			(16)			(16)
Balance on June 30, 2016	$	(574)	$	(11)		$	(1,448)		$	(2,033)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 4 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 6 for additional information) and net postretirement benefit cost.

XML

Other Expense (Income), net (Tables)

6 Months Ended

Jun. 30, 2017

Other Expense (Income), net

Schedule of other expense (income), net

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Restructuring, asset impairment and other charges	$	10	$	—	$	49	$	19
Gain on sale of land in China								(7)
Foreign currency exchange loss (gain)		(1)		1				4
Intangible amortization expense		10		9		20		20
Royalty income		(3)		(3)		(7)		(5)
Other expense (income)		(5)				(6)		(2)
	$	11	$	7	$	56	$	29

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share

Computation of basic and diluted earnings per share

	Three months ended June 30,
	2017		2016
Numerator:
Net earnings attributable to the Company	$	140	$	105
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		162,716		161,945
Effect of dilutive securities:
Stock options and other		1,766		875
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		164,482		162,820
Basic earnings per share:
Earnings from continuing operations	$	0.86	$	0.66
Loss from discontinued operations				(0.01)
Net earnings	$	0.86	$	0.65
Diluted earnings per share:
Earnings from continuing operations	$	0.85	$	0.65
Loss from discontinued operations				(0.01)
Net earnings	$	0.85	$	0.64

	Six months ended June 30,
	2017		2016
Numerator:
Net earnings attributable to the Company	$	188	$	172
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		162,553		161,574
Effect of dilutive securities:
Stock options and other		1,609		733
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		164,162		162,307
Basic earnings per share:
Earnings from continuing operations	$	1.16	$	1.08
Loss from discontinued operations				(0.02)
Net earnings	$	1.16	$	1.06
Diluted earnings per share:
Earnings from continuing operations	$	1.15	$	1.07
Loss from discontinued operations				(0.02)
Net earnings	$	1.15	$	1.05

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Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2017

Supplemental Cash Flow Information

Supplemental cash flow information

	Six months ended June 30,
	2017		2016
Interest paid in cash	$	145	$	136
Income taxes paid in cash (all non-U.S.)		89		75

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Financial Information for Subsidiary Guarantors and Non-Guarantors (Tables)

6 Months Ended

Jun. 30, 2017

Financial Information for Subsidiary Guarantors and Non-Guarantors

Balance Sheet

	June 30, 2017
			Guarantor		Non-Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	335	$	—	$	335
Trade receivables, net						956				956
Inventories						1,049				1,049
Prepaid expenses and other current assets						214				214
Total current assets		—		—		2,554		—		2,554
Investments in and advances to subsidiaries		1,358		1,336		—		(2,694)		—
Property, plant and equipment, net						2,996				2,996
Goodwill						2,588				2,588
Intangibles, net						486				486
Other assets						1,156				1,156
Total assets	$	1,358	$	1,336	$	9,780	$	(2,694)	$	9,780
Current liabilities :
Short-term loans and long-term debt due within one year	$	22	$	—	$	271	$	(22)	$	271
Current portion of asbestos liability		115				—				115
Accounts payable						1,065				1,065
Other liabilities						564		—		564
Total current liabilities		137		—		1,900		(22)		2,015
Long-term debt						5,471		—		5,471
Asbestos-related liabilities		551								551
Other long-term liabilities						964				964
Share owners’ equity		670		1,336		1,336		(2,672)		670
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,358	$	1,336	$	9,780	$	(2,694)	$	9,780

	December 31, 2016
					Non-
			Guarantor		Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	492	$	—	$	492
Trade receivables, net						580				580
Inventories						983				983
Prepaid expenses and other current assets						199				199
Total current assets		—		—		2,254		—		2,254
Investments in and advances to subsidiaries		1,198		946				(2,144)		—
Property, plant and equipment, net						2,880				2,880
Goodwill						2,462				2,462
Intangibles, net						464				464
Other assets						1,075				1,075
Total assets	$	1,198	$	946	$	9,135	$	(2,144)	$	9,135
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	195	$	—	$	195
Current portion of asbestos liability		115								115
Accounts payable						1,135				1,135
Other liabilities		2				615		(2)		615
Total current liabilities		117		—		1,945		(2)		2,060
Long-term debt		250				5,133		(250)		5,133
Asbestos-related liabilities		577								577
Other long-term liabilities						1,002				1,002
Share owners’ equity		254		946		946		(1,892)		254
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,198	$	946	$	9,135	$	(2,144)	$	9,135

	June 30, 2016
					Non-
			Guarantor		Guarantor
Balance Sheet	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	334	$	—	$	334
Trade receivables, net						831				831
Inventories						1,051				1,051
Prepaid expenses and other current assets						358				358
Total current assets		—		—		2,574		—		2,574
Investments in and advances to subsidiaries		1,394		1,142				(2,536)		—
Property, plant and equipment, net						2,932				2,932
Goodwill						2,536				2,536
Intangibles, net						517				517
Other assets						1,108				1,108
Total assets	$	1,394	$	1,142	$	9,667	$	(2,536)	$	9,667
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	305	$	—	$	305
Current portion of asbestos liability		130								130
Accounts payable						1,042				1,042
Other liabilities		2				518		(2)		518
Total current liabilities		132		—		1,865		(2)		1,995
Long-term debt		250				5,549		(250)		5,549
Asbestos-related liabilities		663								663
Other long-term liabilities						1,002				1,002
Share owners’ equity		349		1,142		1,142		(2,284)		349
Noncontrolling interests						109				109
Total liabilities and share owners’ equity	$	1,394	$	1,142	$	9,667	$	(2,536)	$	9,667

Results of Operations and Comprehensive Income

	Three months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	1,751	$	—	$	1,751
Cost of goods sold						(1,405)				(1,405)
Gross profit		—		—		346		—		346
Selling and administrative expense						(123)				(123)
Research, development and engineering expense						(16)				(16)
Net intercompany interest										—
Interest expense, net						(62)				(62)
Equity earnings from subsidiaries		143		143				(286)		—
Other equity earnings						18				18
Other expense, net						(11)				(11)
Earnings before income taxes		143		143		152		(286)		152
Provision for income taxes						(9)				(9)
Earnings from continuing operations		143		143		143		(286)		143
Loss from discontinued operations										—
Net earnings		143		143		143		(286)		143
Net (earnings) attributable to noncontrolling interests						(3)				(3)
Net earnings attributable to the Company	$	143	$	143	$	140	$	(286)	$	140

	Three months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	143	$	143	$	143	$	(286)	$	143
Other comprehensive income (loss), net		20		20		14		(40)		14
Total comprehensive loss		163		163		157		(326)		157
Comprehensive income attributable to noncontrolling interests						7				7
Comprehensive income attributable to the Company	$	163	$	163	$	164	$	(326)	$	164

	Three months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	1,760	$	—	$	1,760
Cost of goods sold						(1,418)				(1,418)
Gross profit		—		—		342		—		342
Selling and administrative expense						(126)				(126)
Research, development and engineering expense						(16)				(16)
Net intercompany interest		5				(5)				—
Interest expense, net		(5)				(62)				(67)
Equity earnings from subsidiaries		105		105				(210)		—
Other equity earnings						15				15
Other expense, net						(7)				(7)
Earnings before income taxes		105		105		141		(210)		141
Provision for income taxes						(30)				(30)
Earnings from continuing operations		105		105		111		(210)		111
Loss from discontinued operations						(2)				(2)
Net earnings		105		105		109		(210)		109
Net (earnings) attributable to noncontrolling interests						(4)				(4)
Net earnings attributable to the Company	$	105	$	105	$	105	$	(210)	$	105

	Three months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	105	$	105	$	109	$	(210)	$	109
Other comprehensive income (loss), net		(66)		(66)		(74)		132		(74)
Total comprehensive loss		39		39		35		(78)		35
Comprehensive income attributable to noncontrolling interests						8				8
Comprehensive loss attributable to the Company	$	39	$	39	$	43	$	(78)	$	43

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	3,366	$	—	$	3,366
Cost of goods sold						(2,705)				(2,705)
Gross profit		—		—		661		—		661
Selling and administrative expense						(242)				(242)
Research, development and engineering expense						(31)				(31)
Net intercompany interest		21				(21)				—
Interest expense, net		(21)				(120)				(141)
Equity earnings from subsidiaries		192		192				(384)		—
Other equity earnings						33				33
Other expense, net						(56)				(56)
Earnings before income taxes		192		192		224		(384)		224
Provision for income taxes						(28)				(28)
Earnings from continuing operations		192		192		196		(384)		196
Loss from discontinued operations										—
Net earnings		192		192		196		(384)		196
Net (earnings) attributable to noncontrolling interests						(8)				(8)
Net earnings attributable to the Company	$	192	$	192	$	188	$	(384)	$	188

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	192	$	192	$	196	$	(384)	$	196
Other comprehensive income (loss), net		207		207		207		(414)		207
Total comprehensive income (loss)		399		399		403		(798)		403
Comprehensive income attributable to noncontrolling interests										—
Comprehensive income (loss) attributable to the Company	$	399	$	399	$	403	$	(798)	$	403

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Results of Operations	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	—	$	3,348	$	—	$	3,348
Cost of goods sold						(2,687)				(2,687)
Gross profit		—		—		661		—		661
Selling and administrative expense						(254)				(254)
Research, development and engineering expense						(32)				(32)
Net intercompany interest		10				(10)				—
Interest expense, net		(10)				(123)				(133)
Equity earnings from subsidiaries		172		172				(344)		—
Other equity earnings						29				29
Other expense, net						(29)				(29)
Earnings before income taxes		172		172		242		(344)		242
Provision for income taxes						(57)				(57)
Earnings from continuing operations		172		172		185		(344)		185
Loss from discontinued operations						(3)				(3)
Net earnings		172		172		182		(344)		182
Net (earnings) attributable to noncontrolling interests						(10)				(10)
Net earnings attributable to the Company	$	172	$	172	$	172	$	(344)	$	172

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Comprehensive Income	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings	$	172	$	172	$	182	$	(344)	$	182
Other comprehensive income (loss), net		(26)		(26)		(24)		52		(24)
Total comprehensive loss		146		146		158		(292)		158
Comprehensive income attributable to noncontrolling interests						(2)				(2)
Comprehensive income (loss) attributable to the Company	$	146	$	146	$	156	$	(292)	$	156

Cash Flows

	Six months ended June 30, 2017
					Non-
			Guarantor		Guarantor
Cash Flows	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash utilized in operating activities	$	(26)	$	—		(130)	$	—	$	(156)
Cash utilized in investing activities						(205)				(205)
Cash provided by financing activities		26				159				185
Effect of exchange rate change on cash						19				19
Net change in cash		—		—		(157)		—		(157)
Cash at beginning of period						492				492
Cash at end of period	$	—	$	—	$	335	$	—	$	335

	Six months ended June 30, 2016
					Non-
			Guarantor		Guarantor
Cash Flows	Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash utilized in operating activities	$	(24)	$	—	$	(86)	$	—	$	(110)
Cash utilized in investing activities						(190)				(190)
Cash provided by financing activities		24				214				238
Effect of exchange rate change on cash						(3)				(3)
Net change in cash		—		—		(65)		—		(65)
Cash at beginning of period						399				399
Cash at end of period	$	—	$	—	$	334	$	—	$	334

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Segment Information - Reportable Segments (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) item	Jun. 30, 2016 USD ($)
Segment Reporting Information
Number of reportable segments | item			4
Net sales:
Net sales	$ 1,751	$ 1,760	$ 3,366	$ 3,348
Items excluded from Segment Operating Profit:
Retained corporate costs and other	(28)	(25)	(56)	(57)
Restructuring, asset impairment and other	(10)		(49)	(12)
Interest expense, net
Interest expense, net	(62)	(67)	(141)	(133)
Earnings from continuing operations before income taxes
Earnings from continuing operations before income taxes	152	141	224	242
Reportable Segment Totals
Net sales:
Net sales	1,732	1,748	3,328	3,314
Segment operating profit:
Segment operating profit	252	233	470	444
Europe
Net sales:
Net sales	635	646	1,189	1,209
Segment operating profit:
Segment operating profit	80	73	139	128
North America
Net sales:
Net sales	572	599	1,100	1,131
Segment operating profit:
Segment operating profit	92	92	177	168
Latin America
Net sales:
Net sales	370	345	711	657
Segment operating profit:
Segment operating profit	69	57	123	120
Latin America | Intercompany sales
Net sales:
Net sales	30	43	63	93
Asia Pacific
Net sales:
Net sales	155	158	328	317
Segment operating profit:
Segment operating profit	11	11	31	28
Other
Net sales:
Net sales	$ 19	$ 12	$ 38	$ 34

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Segment Information - Total Assets (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Assets
Total assets:	$ 9,780	$ 9,135	$ 9,667
Reportable Segment Totals
Assets
Total assets:	9,572	8,777	9,318
Europe
Assets
Total assets:	3,074	2,792	2,977
North America
Assets
Total assets:	2,781	2,522	2,562
Latin America
Assets
Total assets:	2,730	2,537	2,798
Asia Pacific
Assets
Total assets:	987	926	981
Other
Assets
Total assets:	$ 208	$ 358	$ 349

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Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Inventories
Finished goods	$ 879	$ 827	$ 892
Raw materials	130	118	121
Operating supplies	40	38	38
Inventories	$ 1,049	$ 983	$ 1,051

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Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Prepaid expenses and other current assets:
Prepaid expenses	$ 61	$ 50	$ 70
Value added taxes	39	46	172
Other	114	103	116
Prepaid expenses and other current assets	$ 214	$ 199	$ 358

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Derivative Instruments - Derivatives and Hedges (Details) € in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($) MMBTU	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($) MMBTU	Jun. 30, 2017 EUR (€) MMBTU	Jun. 30, 2017 USD ($) MMBTU	Dec. 31, 2016 USD ($)
Commodity futures contracts | Cash Flow Hedges
Derivatives and Hedges
Coverage of commodity forward contracts (in MM BTUs) | MMBTU		11,300,000		11,300,000	9,800,000	9,800,000
Unrecognized (loss) gain included in Accumulated OCI		$ 3		$ 3		$ (1)	$ 6
Commodity forward contracts gain (loss) recognized in OCI	$ (2)	7	$ 4	3
Commodity forward contracts gain (loss) reclassified from accumulated OCI into income		(2)
Foreign exchange contracts | Derivatives not designated as hedging instruments | Other Expense
Derivatives and Hedges
Foreign exchange contracts gain (loss) recognized in income	$ 4	(1)	$ 6	4
Forward exchange contracts | Derivatives not designated as hedging instruments
Derivatives and Hedges
Notional amount		$ 524		$ 524		340
Cross-currency interest rate swap | Cash Flow Hedges
Derivatives and Hedges
Notional amount					€ 81	$ 90

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Derivative Instruments - Balance Sheet Classification (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Derivatives, Fair Value
Total asset derivatives	$ 2	$ 15	$ 9
Total liability derivatives	7	5	3
Derivatives not designated as hedging instruments | Foreign exchange contracts | Other assets.
Derivatives, Fair Value
Total asset derivatives	2	9	6
Derivatives not designated as hedging instruments | Forward exchange contracts | Other liabilities (current)
Derivatives, Fair Value
Total liability derivatives	3	5	3
Derivatives designated as hedging instruments | Commodity futures contracts | Other assets.
Derivatives, Fair Value
Total asset derivatives		$ 6	$ 3
Derivatives designated as hedging instruments | Commodity futures contracts | Other liabilities (current)
Derivatives, Fair Value
Total liability derivatives	1
Derivatives designated as hedging instruments | Cross-currency interest rate swap | Other liabilities (current)
Derivatives, Fair Value
Total liability derivatives	$ 3

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Restructuring Accruals (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Restructuring accrual
Beginning balance, restructuring reserve		$ 40		$ 43
Charges			$ 48	19
Write-down of assets to net realizable value				(7)
Net cash paid, principally severance and related benefits		(4)	(16)	(17)
Other, including foreign exchange translation		(2)		(4)
Ending balance, restructuring reserve		34		34
Asia Pacific Restructuring
Restructuring accrual
Beginning balance, restructuring reserve		6		7
Charges				1
Net cash paid, principally severance and related benefits				(1)
Other, including foreign exchange translation				(1)
Ending balance, restructuring reserve		6		6
Restructuring, Additional Information
Cumulative employee costs and asset impairments				224
Other Restructuring Actions
Restructuring accrual
Beginning balance, restructuring reserve	$ 104	34	85	36
Charges	10		48	18
Write-down of assets to net realizable value			(9)	(7)
Net cash paid, principally severance and related benefits	(8)	(4)	(16)	(16)
Other, including foreign exchange translation	5	(2)	3	(3)
Ending balance, restructuring reserve	$ 111	$ 28	111	28
Restructuring, Additional Information
Other restructuring costs				1
Other Restructuring Actions | Latin America
Restructuring, Additional Information
Employee costs, asset impairments and other exit costs			33	14
Other Restructuring Actions | Europe
Restructuring, Additional Information
Cumulative plant closure costs			54
Employee costs, asset impairments and other exit costs			13
Other Restructuring Actions | North America
Restructuring, Additional Information
Employee costs, asset impairments and other exit costs			$ 2
Employee and other exit costs				$ 3

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Pension Benefit Plans (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
U.S Pension Plans
Components of net periodic pension cost
Service cost		$ 4	$ 4	$ 8	$ 8
Interest cost		20	25	40	49
Expected asset return		(33)	(38)	(66)	(76)
Amortization:
Actuarial loss		15	16	29	31
Net periodic pension cost		6	7	11	12
Increase in pension liability	$ 60
Non-U.S. Pension Plans
Components of net periodic pension cost
Service cost		4	5	8	9
Interest cost		11	13	22	26
Expected asset return		(18)	(21)	(36)	(42)
Amortization:
Actuarial loss		5	5	10	10
Net periodic pension cost		$ 2	$ 2	$ 4	$ 3

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Income Taxes (Details)	6 Months Ended
	Jun. 30, 2017
Income Taxes
Statutory U.S. Federal tax rate (as a percent)	35.00%

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Debt (Details) $ / shares in Units, € in Millions, $ in Millions	1 Months Ended			6 Months Ended
	Mar. 31, 2017 USD ($)	Nov. 30, 2016 USD ($)	Aug. 31, 2015 USD ($)	Jun. 30, 2017 USD ($) item	Jun. 30, 2017 EUR (€)	Jun. 30, 2017 USD ($) $ / shares	Dec. 31, 2016 EUR (€)	Dec. 31, 2016 USD ($)	Nov. 30, 2016 EUR (€)	Jun. 30, 2016 USD ($)	Feb. 03, 2016
Debt Instrument
Total long-term debt						$ 5,518		$ 5,166		$ 5,611
Less amounts due within one year						47		33		62
Long-term debt						5,471		5,133		5,549
Accounts receivable securitization
Short-term loans and long-term debt due within one year						271		195		305
Fair values of fixed rate debt obligations
Interest charges for note repurchase premiums and related write-off of unamortized finance fees	$ 17
New Agreement
Debt Instrument
Leverage ratio, period one											4.50%
Leverage ratio, period two											4.00%
Unused Credit						$ 675
Number financial maintenance covenants | item				1
Accounts receivable securitization
Weighted average interest rate, short-term debt (as a percent)					2.64%	2.64%
Revolving Loans
Debt Instrument
Total long-term debt						$ 209				203
Term Loan A
Debt Instrument
Total long-term debt						1,370		1,395		1,525
Face Value						1,575
Net proceeds, after deducting debt issuance costs				$ 1,370
Term Loan A (€279 million)
Debt Instrument
Total long-term debt					€ 279	303		282		301
Net proceeds, after deducting debt issuance costs				$ 303
Term Loan B
Debt Instrument
Total long-term debt										558
Senior Notes 6.75%, due 2020 (500 million EUR)
Debt Instrument
Total long-term debt					€ 500	$ 569		523		551
Interest rate, stated percentage					6.75%	6.75%
Fair values of fixed rate debt obligations
Principal Amount						$ 572
Indicated Market Price (in dollars per share) | $ / shares						$ 119.06
Fair Value						$ 681
Senior Notes 4.875%, due 2021 (330 million EUR)
Debt Instrument
Total long-term debt					€ 330	$ 375		345		363
Interest rate, stated percentage					4.875%	4.875%
Fair values of fixed rate debt obligations
Principal Amount						$ 377
Indicated Market Price (in dollars per share) | $ / shares						$ 114.02
Fair Value						$ 430
Senior Notes 5.00%, due 2022
Debt Instrument
Total long-term debt						$ 496		495		494
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						$ 105.45
Fair Value						$ 527
Senior Notes 5.875% due 2023
Debt Instrument
Total long-term debt						$ 684		682		681
Interest rate, stated percentage			5.875%		5.875%	5.875%
Face Value			$ 700
Fair values of fixed rate debt obligations
Principal Amount						$ 700
Indicated Market Price (in dollars per share) | $ / shares						$ 110.21
Fair Value						$ 771
3.125%, due 2024 (725 million EUR at June 30, 2017 and 500 million EUR at December 31, 2016)
Debt Instrument
Total long-term debt					€ 725	$ 819	€ 500	520
Interest rate, stated percentage	3.125%				3.125%	3.125%			3.125%
Face Value | €					€ 225				€ 500
Net proceeds, after deducting debt issuance costs	$ 237	$ 520
Fair values of fixed rate debt obligations
Principal Amount						$ 829
Indicated Market Price (in dollars per share) | $ / shares						$ 101.66
Fair Value						$ 843
Senior Notes, 5.375% due 2025
Debt Instrument
Total long-term debt						$ 297		297		296
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						$ 106.23
Fair Value						$ 319
Senior Notes 6.375%, due 2025
Debt Instrument
Total long-term debt						$ 294		294		294
Interest rate, stated percentage			6.375%		6.375%	6.375%
Face Value			$ 300
Net proceeds, after deducting debt issuance costs			$ 972
Fair values of fixed rate debt obligations
Principal Amount						$ 300
Indicated Market Price (in dollars per share) | $ / shares						$ 111.73
Fair Value						$ 335
Senior Debentures 7.80%, due 2018
Debt Instrument
Total long-term debt						22		250		250
Long-term debt						$ 22
Interest rate, stated percentage					7.80%	7.80%
Face Value	$ 228
Fair values of fixed rate debt obligations
Principal Amount						$ 22
Indicated Market Price (in dollars per share) | $ / shares						$ 105.02
Fair Value						$ 23
Capital leases
Debt Instrument
Total long-term debt						58		57		63
Other debt
Debt Instrument
Total long-term debt						22		26		32
Revolving Credit Facility | New Agreement
Debt Instrument
Total long-term debt						300
Multicurrency Revolving Credit Facility | New Agreement
Debt Instrument
Total long-term debt						600
Accounts Receivable Securitization Program
Accounts receivable securitization
Short-term loans and long-term debt due within one year						$ 182		$ 152		$ 173
Weighted average interest rate, short-term debt (as a percent)					0.74%	0.74%	0.74%	0.74%		0.70%
European Accounts Receivable Securitization Program
Accounts receivable securitization
Maximum Borrowing Capacity | €					€ 185
Parent
Debt Instrument
Long-term debt								$ 250		$ 250
Accounts receivable securitization
Short-term loans and long-term debt due within one year						$ 22
Minimum | Secured Credit Agreement
Debt Instrument
Interest rate margin, Eurocurrency Rate loans (as a percent)					1.25%	1.25%
Interest rate margin, Base Rate loans (as a percent)				0.25%
Minimum | Revolving Credit Facility
Debt Instrument
Facility fee payable (as a percent)				0.20%
Maximum | Secured Credit Agreement
Debt Instrument
Interest rate margin, Eurocurrency Rate loans (as a percent)					1.75%	1.75%
Interest rate margin, Base Rate loans (as a percent)				0.75%
Maximum | Revolving Credit Facility
Debt Instrument
Facility fee payable (as a percent)				0.30%

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Contingencies - Asbestos (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($) item	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 1993 USD ($)
Asbestos
Sale of goods containing asbestos from 1948 to 1958	$ 40,000,000
Number of pending plaintiffs and claimants | item	1,400
Period in which significant majority of claims to be received	10 years
Approximate number of claims disposed of to date | item	398,000
Average indemnity payment per claim	$ 9,500
Payments for Asbestos-Related Liabilities	26,000,000	$ 24,000,000	$ 125,000,000	$ 138,000,000	$ 148,000,000
Cash payments per claim disposed including legal costs			71,000	95,000	81,000
Asbestos-related liability, total amount accrued beginning in 1993 through 2016 before insurance recoveries	$ 4,900,000,000					$ 975,000,000
Accrual of asbestos related liability			692,000,000	817,000,000
Asbestos related charges			0	$ 16,000,000	$ 46,000,000
Maximum
Asbestos
Loss contingency, plaintiffs damages			$ 825,000,000
Damages unspecified or sufficient to invoke jurisdictional minimum
Asbestos
Percentage of asbestos plaintiffs, approximate percentage			88.00%
Damages of $15 million or less
Asbestos
Percentage of asbestos plaintiffs, approximate percentage			9.00%
Damages of $15 million or less | Minimum
Asbestos
Loss contingency, plaintiffs damages			$ 15,000,000
Damages greater than $15 million but less than $100 million
Asbestos
Percentage of asbestos plaintiffs, approximate percentage			3.00%
Damages greater than $15 million but less than $100 million | Minimum
Asbestos
Loss contingency, plaintiffs damages			$ 15,000,000
Damages greater than $15 million but less than $100 million | Maximum
Asbestos
Loss contingency, plaintiffs damages			$ 100,000,000

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Share Owners' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Increase (Decrease) in Share Owners' Equity
Balance		$ 416	$ 363	$ 279
Issuance of common stock				$ 5
Issuance of common stock (in shares)				504,635
Reissuance of common stock		$ 3	$ 5	$ 7
Reissuance of common stock (in shares)	101,687	49,234	201,165	183,836
Stock compensation		$ 4	$ 8	$ 9
Net earnings	$ 143	109	196	182
Other comprehensive income (loss)		(74)	207	(24)
Balance	$ 779	$ 458	$ 779	$ 458
Common Stock, Number of Shares, Par Value and Other Disclosures
Common stock, shares authorized	250,000,000		250,000,000
Common stock, par value (in dollars per share)	$ 0.01		$ 0.01
Shares of common stock issued (including treasury shares)	185,692,000	185,417,000	185,692,000	185,417,000	185,355,000
Treasury stock, shares	22,816,000	23,335,000	22,816,000	23,335,000	23,017,000
Common Stock
Increase (Decrease) in Share Owners' Equity
Balance	$ 2	$ 2	$ 2	$ 2
Balance	2	2	2	2
Capital in Excess of Par Value
Increase (Decrease) in Share Owners' Equity
Balance	3,083	3,074	3,080	3,064
Issuance of common stock				5
Stock compensation	5	4	8	9
Balance	3,088	3,078	3,088	3,078
Treasury Stock
Increase (Decrease) in Share Owners' Equity
Balance	(557)	(569)	(560)	(573)
Reissuance of common stock	2	3	5	7
Balance	(555)	(566)	(555)	(566)
Retained Earnings (Loss)
Increase (Decrease) in Share Owners' Equity
Balance	(48)	(238)	(96)	(305)
Net earnings	140	105	188	172
Balance	92	(133)	92	(133)
Accumulated Other Comprehensive Loss.
Increase (Decrease) in Share Owners' Equity
Balance	(1,981)	(1,971)	(2,172)	(2,017)
Other comprehensive income (loss)	24	(62)	215	(16)
Balance	(1,957)	(2,033)	(1,957)	(2,033)
Non-controlling Interests
Increase (Decrease) in Share Owners' Equity
Balance	116	118	109	108
Net earnings	3	4	8	10
Other comprehensive income (loss)	(10)	(12)	(8)	(8)
Balance	$ 109	$ 110	$ 109	$ 110

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax
Balance		$ 416	$ 363	$ 279
Other comprehensive income (loss)	$ 14	(74)	207	(24)
Balance	779	458	779	458
Net Effect of Exchange Rate Fluctuations
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax
Balance	(602)	(478)	(788)	(568)
Change before reclassifications	24	(96)	210	(6)
Other comprehensive income (loss)	24	(96)	210	(6)
Balance	(578)	(574)	(578)	(574)
Change in Certain Derivative Instruments
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax
Balance	(10)	(19)	(4)	(17)
Amounts reclassified from accumulated other comprehensive income	(4)	7	(10)	5
Tax effect		1		1
Other comprehensive income (loss)	(4)	8	(10)	6
Balance	(14)	(11)	(14)	(11)
Employee Benefit Plans
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax
Balance	(1,369)	(1,474)	(1,380)	(1,432)
Change before reclassifications	(6)		(10)
Amounts reclassified from accumulated other comprehensive income	20	15	39	(28)
Translation effect	(10)	10	(14)	11
Tax effect		1		1
Other comprehensive income (loss)	4	26	15	(16)
Balance	(1,365)	(1,448)	(1,365)	(1,448)
Accumulated Other Comprehensive Loss.
Increase (Decrease) Accumulated Other Comprehensive Loss, Net of Tax
Balance	(1,981)	(1,971)	(2,172)	(2,017)
Change before reclassifications	18	(96)	200	(6)
Amounts reclassified from accumulated other comprehensive income	16	22	29	(23)
Translation effect	(10)	10	(14)	11
Tax effect		2		2
Other comprehensive income (loss)	24	(62)	215	(16)
Balance	$ (1,957)	$ (2,033)	$ (1,957)	$ (2,033)

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Other Expense (Income), net (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Expense (Income), net
Restructuring, asset impairment and other charges	$ 10		$ 49	$ 19
Gain on sale of land in China				(7)
Foreign currency exchange loss (gain)	(1)	$ 1		4
Intangible amortization expense	10	9	20	20
Royalty income	(3)	(3)	(7)	(5)
Other expense (income)	(5)		(6)	(2)
Other Expense (Income), net	$ 11	$ 7	$ 56	$ 29

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator:
Net earnings attributable to the Company	$ 140	$ 105	$ 188	$ 172
Denominator (in thousands):
Denominator for basic earnings per share - weighted average shares outstanding (in shares)	162,716,000	161,945,000	162,553,000	161,574,000
Effect of dilutive securities:
Stock options and other (in shares)	1,766,000	875,000	1,609,000	733,000
Denominator for diluted earnings per share - adjusted weighted average shares outstanding (in shares)	164,482,000	162,820,000	164,162,000	162,307,000
Basic earnings per share:
Earnings from continuing operations (in dollars per share)	$ 0.86	$ 0.66	$ 1.16	$ 1.08
Loss from discontinued operations (in dollars per share)		(0.01)		(0.02)
Net earnings (in dollars per share)	0.86	0.65	1.16	1.06
Diluted earnings per share:
Earnings from continuing operations (in dollars per share)	0.85	0.65	1.15	1.07
Loss from discontinued operations (in dollars per share)		(0.01)		(0.02)
Net earnings (in dollars per share)	$ 0.85	$ 0.64	$ 1.15	$ 1.05
Weighted average shares of common stock attributable to options not included in diluted earnings per share (in shares)	1,617,748	2,939,441	1,912,832	2,955,064

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Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Cash Flow Information
Interest paid in cash	$ 145	$ 136
Income taxes paid in cash (all non-US)	89	75
Interest paid for note repurchase premiums related to debt repaid prior to maturity	16
Amount of receivables sold	$ 205	$ 300

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Discontinued Operations (Details) $ in Millions			3 Months Ended	6 Months Ended
	Jul. 31, 2017 USD ($)	Apr. 04, 2016 Plant	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)
Subsidiaries
Loss from discontinued operations			$ (2)		$ (3)
OI European Group B.V. (“OIEG”)
Subsidiaries
Litigation Settlement, Amount	$ 115
Minimum | OI European Group B.V. (“OIEG”)
Subsidiaries
Litigation Settlement, Amount				$ 500
Disposed Venezuelan subsidiaries
Subsidiaries
Expropriated plants | Plant		2
Disposed Venezuelan subsidiaries | Maximum | Discontinued Operations, Disposed of by Means Other than Sale
Subsidiaries
Loss from discontinued operations				$ (1)	$ (3)

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New Accounting Pronouncement (Details) $ in Millions	Dec. 31, 2016 USD ($)
New Accounting Pronouncement
Minimum lease commitments under non-cancellable operating leases	$ 205

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Financial Information for Subsidiary Guarantors and Non-Guarantors - Balance Sheet (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($) item	Dec. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)
Financial Information for Subsidiary Guarantors and Non Guarantors
Number of subsidiaries that have guaranteed the notes | item	2
Ownership percentage in Guarantor Subsidiaries	100.00%
Current assets:
Cash and cash equivalents	$ 335	$ 492	$ 334
Trade receivables, net	956	580	831
Inventories	1,049	983	1,051
Prepaid expenses and other current assets	214	199	358
Total current assets	2,554	2,254	2,574
Property, plant and equipment, net	2,996	2,880	2,932
Goodwill	2,588	2,462	2,536
Intangibles, net	486	464	517
Other assets	1,156	1,075	1,108
Total assets	9,780	9,135	9,667
Current liabilities:
Short-term loans and long-term debt due within one year	271	195	305
Current portion of asbestos liability	115	115	130
Accounts payable	1,065	1,135	1,042
Other liabilities	564	615	518
Total current liabilities	2,015	2,060	1,995
Long-term debt	5,471	5,133	5,549
Asbestos-related liabilities	551	577	663
Other long-term liabilities	964	1,002	1,002
Share owners’ equity	670	254	349
Noncontrolling interests	109	109	109
Total liabilities and share owners' equity	9,780	9,135	9,667
Eliminations
Current assets:
Investments in and advances to subsidiaries	(2,694)	(2,144)	(2,536)
Total assets	(2,694)	(2,144)	(2,536)
Current liabilities:
Short-term loans and long-term debt due within one year	(22)
Other liabilities		(2)	(2)
Total current liabilities	(22)	(2)	(2)
Long-term debt		(250)	(250)
Share owners’ equity	(2,672)	(1,892)	(2,284)
Total liabilities and share owners' equity	(2,694)	(2,144)	(2,536)
Parent
Current assets:
Investments in and advances to subsidiaries	1,358	1,198	1,394
Total assets	1,358	1,198	1,394
Current liabilities:
Short-term loans and long-term debt due within one year	22
Current portion of asbestos liability	115	115	130
Other liabilities		2	2
Total current liabilities	137	117	132
Long-term debt		250	250
Asbestos-related liabilities	551	577	663
Share owners’ equity	670	254	349
Total liabilities and share owners' equity	1,358	1,198	1,394
Guarantor Subsidiaries
Current assets:
Investments in and advances to subsidiaries	1,336	946	1,142
Total assets	1,336	946	1,142
Current liabilities:
Share owners’ equity	1,336	946	1,142
Total liabilities and share owners' equity	1,336	946	1,142
Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	335	492	334
Trade receivables, net	956	580	831
Inventories	1,049	983	1,051
Prepaid expenses and other current assets	214	199	358
Total current assets	2,554	2,254	2,574
Property, plant and equipment, net	2,996	2,880	2,932
Goodwill	2,588	2,462	2,536
Intangibles, net	486	464	517
Other assets	1,156	1,075	1,108
Total assets	9,780	9,135	9,667
Current liabilities:
Short-term loans and long-term debt due within one year	271	195	305
Accounts payable	1,065	1,135	1,042
Other liabilities	564	615	518
Total current liabilities	1,900	1,945	1,865
Long-term debt	5,471	5,133	5,549
Other long-term liabilities	964	1,002	1,002
Share owners’ equity	1,336	946	1,142
Noncontrolling interests	109	109	109
Total liabilities and share owners' equity	$ 9,780	$ 9,135	$ 9,667

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Financial Information for Subsidiary Guarantors and Non-Guarantors - Results of Operations and Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Results of Operations
Net sales	$ 1,751	$ 1,760	$ 3,366	$ 3,348
Cost of goods sold	(1,405)	(1,418)	(2,705)	(2,687)
Gross profit	346	342	661	661
Selling and administrative expense	(123)	(126)	(242)	(254)
Research, development and engineering expense	(16)	(16)	(31)	(32)
Interest expense, net	(62)	(67)	(141)	(133)
Other equity earnings	18	15	33	29
Other expense, net	(11)	(7)	(56)	(29)
Earnings from continuing operations before income taxes	152	141	224	242
Provision for income taxes	(9)	(30)	(28)	(57)
Earnings from continuing operations	143	111	196	185
Loss from discontinued operations		(2)		(3)
Net earnings	143	109	196	182
Net (earnings) attributable to noncontrolling interests	(3)	(4)	(8)	(10)
Net earnings attributable to the Company	140	105	188	172
Comprehensive Income
Net earnings	143	109	196	182
Other comprehensive income (loss), net	14	(74)	207	(24)
Total comprehensive income (loss)	157	35	403	158
Comprehensive income (loss) attributable to noncontrolling interests	7	8		(2)
Comprehensive income attributable to the Company	164	43	403	156
Parent
Results of Operations
Net intercompany interest		5	21	10
Interest expense, net		(5)	(21)	(10)
Equity earnings from subsidiaries	143	105	192	172
Earnings from continuing operations before income taxes	143	105	192	172
Earnings from continuing operations	143	105	192	172
Net earnings	143	105	192	172
Net earnings attributable to the Company	143	105	192	172
Comprehensive Income
Net earnings	143	105	192	172
Other comprehensive income (loss), net	20	(66)	207	(26)
Total comprehensive income (loss)	163	39	399	146
Comprehensive income attributable to the Company	163	39	399	146
Guarantor Subsidiaries
Results of Operations
Equity earnings from subsidiaries	143	105	192	172
Earnings from continuing operations before income taxes	143	105	192	172
Earnings from continuing operations	143	105	192	172
Net earnings	143	105	192	172
Net earnings attributable to the Company	143	105	192	172
Comprehensive Income
Net earnings	143	105	192	172
Other comprehensive income (loss), net	20	(66)	207	(26)
Total comprehensive income (loss)	163	39	399	146
Comprehensive income attributable to the Company	163	39	399	146
Non-Guarantor Subsidiaries
Results of Operations
Net sales	1,751	1,760	3,366	3,348
Cost of goods sold	(1,405)	(1,418)	(2,705)	(2,687)
Gross profit	346	342	661	661
Selling and administrative expense	(123)	(126)	(242)	(254)
Research, development and engineering expense	(16)	(16)	(31)	(32)
Net intercompany interest		(5)	(21)	(10)
Interest expense, net	(62)	(62)	(120)	(123)
Other equity earnings	18	15	33	29
Other expense, net	(11)	(7)	(56)	(29)
Earnings from continuing operations before income taxes	152	141	224	242
Provision for income taxes	(9)	(30)	(28)	(57)
Earnings from continuing operations	143	111	196	185
Loss from discontinued operations		(2)		(3)
Net earnings	143	109	196	182
Net (earnings) attributable to noncontrolling interests	(3)	(4)	(8)	(10)
Net earnings attributable to the Company	140	105	188	172
Comprehensive Income
Net earnings	143	109	196	182
Other comprehensive income (loss), net	14	(74)	207	(24)
Total comprehensive income (loss)	157	35	403	158
Comprehensive income (loss) attributable to noncontrolling interests	7	8		(2)
Comprehensive income attributable to the Company	164	43	403	156
Eliminations
Results of Operations
Equity earnings from subsidiaries	(286)	(210)	(384)	(344)
Earnings from continuing operations before income taxes	(286)	(210)	(384)	(344)
Earnings from continuing operations	(286)	(210)	(384)	(344)
Net earnings	(286)	(210)	(384)	(344)
Net earnings attributable to the Company	(286)	(210)	(384)	(344)
Comprehensive Income
Net earnings	(286)	(210)	(384)	(344)
Other comprehensive income (loss), net	(40)	132	(414)	52
Total comprehensive income (loss)	(326)	(78)	(798)	(292)
Comprehensive income attributable to the Company	$ (326)	$ (78)	$ (798)	$ (292)

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Financial Information for Subsidiary Guarantors and Non-Guarantors - Cash Flows (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash Flows
Cash provided by (utilized in) operating activities	$ (156)	$ (110)
Cash utilized in investing activities	(205)	(190)
Cash provided by (utilized in) financing activities	185	238
Effect of exchange rate change on cash	19	(3)
Decrease in cash	(157)	(65)
Cash at beginning of period	492	399
Cash at end of period	335	334
Parent
Cash Flows
Cash provided by (utilized in) operating activities	(26)	(24)
Cash provided by (utilized in) financing activities	26	24
Non-Guarantor Subsidiaries
Cash Flows
Cash provided by (utilized in) operating activities	(130)	(86)
Cash utilized in investing activities	(205)	(190)
Cash provided by (utilized in) financing activities	159	214
Effect of exchange rate change on cash	19	(3)
Decrease in cash	(157)	(65)
Cash at beginning of period	492	399
Cash at end of period	$ 335	$ 334