UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10‑K/A

(Amendment No. 1)

(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 33-13061

OWENS-ILLINOIS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	34-1559348 (IRS Employer Identification No.)
One Michael Owens Way, Perrysburg, Ohio (Address of principal executive offices)	43551 (Zip Code)

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

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

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

Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No ☐

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 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 Act). Yes ☐ No ☒

The number of shares of common stock, $.01 par value of Owens-Illinois Group, Inc. outstanding as of January 31, 2018 was 100.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Owens-Illinois, Inc. Proxy Statement for The Annual Meeting of Share Owners To Be Held Thursday, May 10, 2018 (“Proxy Statement”) are incorporated by reference into Part III hereof.

The registrant, along with most of its direct and indirect wholly-owned subsidiaries, has guaranteed certain debt securities issued by one of its indirect wholly-owned subsidiaries, Owens-Brockway Glass Container Inc. (the “issuer”). The consolidating condensed financial statements of the registrant depicting separately the registrant, the issuer, the guarantor subsidiaries and the non-guarantor subsidiaries are presented in the notes to the registrant’s consolidated financial statements.

The registrant meets the conditions set forth in General Instructions I (1)(a) and (b) of Form 10-K and is therefore filing this Form with a partially reduced disclosure format which omits the information otherwise required by Item 10, 11, 12 and 13 as permitted under General Instructions I (2)(c) of Form 10-K.

Explanatory Note

This Amendment No. 1 (this “Amendment”) on Form 10-K/A amends the Annual Report on Form 10-K of Owens-Illinois Group, Inc. for the year ended December 31, 2017 as originally filed with the Securities and Exchange Commission on February 14, 2018 (the “Original Filing”) to correct an inadvertent omission from the text of the Report of Independent Registered Public Accounting Firm (the “Report”) included in Item 8. Specifically, certain information was omitted from “Basis for Opinion” in the Report. No other revisions to Item 8 have been made.

In addition, Owens-Illinois Group Inc.’s principal executive officer and principal financial officer have provided new certifications dated as of the date of this filing in connection with this Amendment (see Exhibits 31.1, 31.2, 32.1 and 32.2). The Exhibit Index has been updated to note that only these new certifications are being included with this Amendment.

Except as discussed above, this Amendment does not amend or otherwise update any other information in the Original Filing.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

		Page
Report of Independent Registered Public Accounting Firm		2
Consolidated Balance Sheets at December 31, 2017 and 2016		5 - 6
For the years ended December 31, 2017, 2016, and 2015:
Consolidated Results of Operations		3
Consolidated Comprehensive Income		4
Consolidated Share Owner’s Equity		7
Consolidated Cash Flows		8
Notes to Consolidated Financial Statements		9
Selected Quarterly Financial Data		53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Share Owner of
Owens‑Illinois Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Owens-Illinois Group, Inc. (the Company) as of December 31, 2017 and 2016, and the related consolidated statements of results of operations, comprehensive income, share owner’s equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.
Toledo, Ohio
February 14, 2018

Owens-Illinois Group, Inc.

CONSOLIDATED RESULTS OF OPERATIONS

Dollars in millions


Years ended December 31,	2017		2016		2015
Net sales	$	6,869	$	6,702	$	6,156
Cost of goods sold		(5,736)		(5,490)		(5,046)
Gross profit		1,133		1,212		1,110
Selling and administrative expense		(502)		(503)		(476)
Research, development and engineering expense		(60)		(65)		(64)
Interest expense, net		(268)		(272)		(251)
Equity earnings		77		60		60
Other expense, net		(105)		(76)		(95)
Earnings from continuing operations before income taxes		275		356		284
Provision for income taxes		(70)		(119)		(106)
Earnings from continuing operations		205		237		178
Loss from discontinued operations		(3)		(7)		(4)
Net earnings		202		230		174
Net (earnings) attributable to noncontrolling interests		(22)		(21)		(23)
Net earnings attributable to the Company	$	180	$	209	$	151

Amounts attributable to the Company:
Earnings from continuing operations	$	183	$	216	$	155
Loss from discontinued operations		(3)		(7)		(4)
Net earnings	$	180	$	209	$	151

See accompanying Notes to the Consolidated Financial Statements.

Owens-Illinois Group, Inc.

CONSOLIDATED COMPREHENSIVE INCOME

Dollars in millions


Years ended December 31,	2017		2016		2015
Net earnings	$	202	$	230	$	174
Other comprehensive income (loss):
Foreign currency translation adjustments		70		(224)		(529)
Pension and other postretirement benefit adjustments, net of tax		289		52		(4)
Change in fair value of derivative instruments, net of tax		(8)		13		(6)
Other comprehensive income (loss)		351		(159)		(539)
Total comprehensive income (loss)		553		71		(365)
Comprehensive income attributable to noncontrolling interests		(27)		(17)		(7)
Comprehensive income (loss) attributable to the Company	$	526	$	54	$	(372)

See accompanying Notes to the Consolidated Financial Statements.

Owens-Illinois Group, Inc.

CONSOLIDATED BALANCE SHEETS

Dollars in millions


December 31,	2017		2016

Assets
Current assets:
Cash and cash equivalents	$	492	$	492
Trade receivables, net of allowances of $34 million and $32 million at December 31, 2017 and 2016, respectively		663		580
Inventories		1,036		983
Prepaid expenses and other current assets		229		199
Total current assets		2,420		2,254

Other assets:
Equity investments		525		433
Pension assets		49		40
Other assets		602		602
Intangibles		439		464
Goodwill		2,590		2,462
Total other assets		4,205		4,001

Property, plant and equipment:
Land, at cost		255		241
Buildings and equipment, at cost:
Buildings and building equipment		1,180		1,090
Factory machinery and equipment		5,015		4,496
Transportation, office and miscellaneous equipment		96		85
Construction in progress		303		238
		6,849		6,150
Less accumulated depreciation		3,718		3,270
Net property, plant and equipment		3,131		2,880
Total assets	$	9,756	$	9,135

See accompanying Notes to the Consolidated Financial Statements.

Owens-Illinois Group, Inc.

CONSOLIDATED BALANCE SHEETS (Continued)

Dollars in millions, except per share amounts


December 31,	2017		2016
Liabilities and Share Owner's Equity
Current liabilities:
Accounts payable	$	1,324	$	1,135
Salaries and wages		166		174
U.S. and foreign income taxes		35		58
Other accrued liabilities		378		383
Other liabilities - discontinued operations		115
Short-term loans		151		162
Long-term debt due within one year		11		33
Total current liabilities		2,180		1,945
Long-term debt		5,121		5,133
Deferred taxes		99		100
Pension benefits		471		552
Nonpension postretirement benefits		167		162
Other liabilities		209		188
Commitments and contingencies
Share owner's equity:
Share owner's equity of the Company:
Common stock, par value $.01 per share, 1,000 shares authorized, 100 shares issued
Other contributed capital		553		635
Retained earnings		2,622		2,442
Accumulated other comprehensive loss		(1,785)		(2,131)
Total share owner's equity of the Company		1,390		946
Noncontrolling interests		119		109
Total share owner's equity		1,509		1,055
Total liabilities and share owner's equity	$	9,756	$	9,135

See accompanying Notes to the Consolidated Financial Statements.

Owens-Illinois Group, Inc.

CONSOLIDATED SHARE OWNER’S EQUITY

Dollars in millions


	Share Owner's Equity of the Company
					Accumulated
	Other				Other
	Contributed		Retained		Comprehensive		Noncontrolling		Total Share
	Capital		Earnings		Loss		Interests		Owner's Equity
Balance on January 1, 2015	$	964		2,082		(1,453)		117		1,710
Net distribution to parent		(215)								(215)
Net earnings				151				23		174
Other comprehensive loss						(523)		(16)		(539)
Distributions to noncontrolling interests								(22)		(22)
Acquisitions of noncontrolling interests		(18)						6		(12)
Balance on December 31, 2015		731		2,233		(1,976)		108		1,096
Net distribution to parent		(96)								(96)
Net earnings				209				21		230
Other comprehensive loss						(155)		(4)		(159)
Distributions to noncontrolling interests								(16)		(16)
Balance on December 31, 2016		635		2,442		(2,131)		109		1,055
Net distribution to parent		(82)								(82)
Net earnings				180				22		202
Other comprehensive income						346		5		351
Distributions to noncontrolling interests								(17)		(17)
Balance on December 31, 2017	$	553	$	2,622	$	(1,785)	$	119	$	1,509

See accompanying Notes to the Consolidated Financial Statements.

Owens-Illinois Group, Inc.

CONSOLIDATED CASH FLOWS

Dollars in millions


Years ended December 31,	2017		2016		2015
Operating activities:
Net earnings	$	202	$	230	$	174
Loss from discontinued operations		3		7		4
Non-cash charges (credits):
Depreciation		387		375		323
Amortization of intangibles and other deferred items		101		103		86
Amortization of finance fees and debt discount		13		13		15
Deferred tax provision (benefit)		(12)		(4)		12
Pension expense		29		31		31
Restructuring, asset impairment and related charges		72		98		63
Pension settlement charges		218		98
Impairment of equity investment				25
Gain on China land sale				(71)
Acquisition-related fair value inventory adjustments						22
Acquisition-related fair value intangible adjustments						10
Pension contributions		(31)		(38)		(17)
Cash paid for restructuring activities		(62)		(24)		(38)
Change in components of working capital		(89)		90		88
Other		3		(50)		(23)
Cash provided by continuing operating activities		834		883		750
Cash utilized in discontinued operating activities		(3)		(7)		(4)
Total cash provided by operating activities		831		876		746
Investing activities:
Cash payments for property, plant, and equipment		(441)		(454)		(402)
Acquisitions, net of cash acquired		(39)		(56)		(2,351)
Net cash proceeds related to sale of assets and other		14		85		1
Net foreign exchange derivative activity				8		4
Cash utilized in continuing investing activities		(466)		(417)		(2,748)
Cash provided by discontinued investing activities		115
Total cash utilized in investing activities		(351)		(417)		(2,748)
Financing activities:
Additions to long-term debt		1,458		1,235		4,538
Repayments of long-term debt		(1,764)		(1,453)		(2,321)
Increase (decrease) in short-term loans		(36)		10		51
Payment of finance fees		(28)		(9)		(90)
Other		(6)
Distributions paid to noncontrolling interests		(17)		(16)		(22)
Distribution to parent		(109)		(120)		(237)
Cash provided by (utilized in) financing activities		(502)		(353)		1,919
Effect of exchange rate fluctuations on cash		22		(13)		(30)
Increase (decrease) in cash		—		93		(113)
Cash and cash equivalents at beginning of period		492		399		512
Cash and cash equivalents at end of period	$	492	$	492	$	399

See accompanying Notes to the Consolidated Financial Statements.

Owens‑Illinois Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tabular data dollars in millions

1. Significant Accounting Policies

Basis of Consolidated Statements The consolidated financial statements of Owens-Illinois Group, Inc. (the “Company”) include the accounts of its subsidiaries. Newly acquired subsidiaries have been included in the consolidated financial statements from dates of acquisition.

The Company uses the equity method of accounting for investments in which it has a significant ownership interest, generally 20% to 50%. Other investments are accounted for at cost. The Company monitors other than temporary declines in fair value and records reductions in carrying values when appropriate.

Relationship with Owens-Illinois, Inc. The Company is a 100% - owned subsidiary of Owens-Illinois, Inc. (“OI Inc.”). Although OI Inc. does not conduct any operations, it has substantial obligations related to asbestos‑related payments. OI Inc. relies primarily on distributions from its direct and indirect subsidiaries to meet these obligations.

For federal and certain state income tax purposes, the taxable income of the Company is included in the consolidated tax returns of OI Inc. and income taxes are allocated to the Company on a basis consistent with separate returns.

Nature of Operations The Company is a leading manufacturer of glass container products. The Company’s principal product lines are glass containers for the food and beverage industries. The Company has glass container operations located in 23 countries. The principal markets and operations for the Company’s products are in Europe, North America, Latin America and Asia Pacific.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, at which time the Company would revise its estimates accordingly.

Foreign Currency Translation The assets and liabilities of non-U.S. subsidiaries are translated into U.S. dollars at year-end exchange rates. Any related translation adjustments are recorded in accumulated other comprehensive income in share owner’s equity.

Revenue Recognition The Company recognizes sales, net of estimated discounts and allowances, when the title to the products and risk of loss are transferred to customers. Provisions for rebates to customers are provided in the same period that the related sales are recorded.

Shipping and Handling Costs Shipping and handling costs are included with cost of goods sold in the Consolidated Results of Operations.

Stock-Based Compensation The Company participates in OI Inc.’s stock-based compensation plans consisting of stock option grants and restricted share awards. Costs resulting from all share-based compensation plans are required to be recognized in the financial statements. A public entity is required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the required service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the required service.

Cash The Company defines “cash” as cash and time deposits with maturities of three months or less when purchased. Outstanding checks in excess of funds on deposit are included in accounts payable.

Accounts Receivable Receivables are stated at amounts estimated by management to be the net realizable value. The Company charges off accounts receivable when it becomes apparent based upon age or customer circumstances that amounts will not be collected.

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

Allowance for Doubtful Accounts The allowance for doubtful accounts is established through charges to the provision for bad debts. The Company evaluates the adequacy of the allowance for doubtful accounts on a periodic basis. The evaluation includes historical trends in collections and write-offs, management’s judgment of the probability of collecting accounts and management’s evaluation of business risk.

Inventory Valuation Inventories are valued at the lower of average costs or market.

Goodwill Goodwill represents the excess of cost over fair value of net assets of businesses acquired. Goodwill is evaluated annually, as of October 1, for impairment or more frequently if an impairment indicator exists.

Intangible Assets and Other Long-Lived Assets Intangible assets are amortized over the expected useful life of the asset. Amortization expense directly attributed to the manufacturing of the Company’s products is included in cost of goods sold. Amortization expense related to non-manufacturing activities is included in selling and administrative and other. The Company evaluates the recoverability of intangible assets and other long-lived assets based on undiscounted projected cash flows, excluding interest and taxes, when factors indicate that impairment may exist. If impairment exists, the asset is written down to fair value.

Property, Plant and Equipment Property, plant and equipment (“PP&E”) is carried at cost and includes expenditures for new facilities and equipment and those costs which substantially increase the useful lives or capacity of existing PP&E. In general, depreciation is computed using the straight-line method and recorded over the estimated useful life of the asset. Factory machinery and equipment is depreciated over periods ranging from 5 to 25 years with the majority of such assets (principally glass-melting furnaces and forming machines) depreciated over 7 to 15 years. Buildings and building equipment are depreciated over periods ranging from 10 to 50 years. Depreciation expense directly attributed to the manufacturing of the Company’s products is included in cost of goods sold. Depreciation expense related to non-manufacturing activities is included in selling and administrative. Depreciation expense includes the amortization of assets recorded under capital leases. Maintenance and repairs are expensed as incurred. Costs assigned to PP&E of acquired businesses are based on estimated fair values at the date of acquisition. The Company evaluates the recoverability of PP&E based on undiscounted projected cash flows, excluding interest and taxes, when factors indicate that impairment may exist. If impairment exists, the asset is written down to fair value.

Derivative Instruments The Company uses currency swaps, interest rate swaps, forward exchange contracts, options and commodity forward contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity market volatility. Derivative financial instruments are included on the balance sheet at fair value. When appropriate, derivative instruments are designated as and are effective as hedges, in accordance with accounting principles generally accepted in the United States. If the underlying hedged transaction ceases to exist, all changes in fair value of the related derivatives that have not been settled are recognized in current earnings. The Company does not enter into derivative financial instruments for trading purposes and is not a party to leveraged derivatives. Cash flows from forward exchange contracts not designated as hedges are classified as an investing activity and cash flows from commodity forward contracts are classified as operating activities. Cash flows of currency swaps and interest rate swap contracts are classified within the cash flow statement based on the nature of the underlying cash flows.

Fair Value Measurements Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Generally accepted accounting principles defines a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs for which there is little or no market data, which requires the Company to develop assumptions.

The carrying amounts reported for cash and short-term loans approximate fair value. In addition, carrying amounts approximate fair value for certain long-term debt obligations subject to frequently redetermined interest rates. Fair values for the Company’s significant fixed rate debt obligations are generally based on published market quotations.

The Company’s derivative assets and liabilities consist of natural gas forwards and foreign exchange option and forward contracts. The Company uses an income approach to valuing 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.

Reclassifications Certain reclassifications of prior years’ data have been made to conform to the current year presentation.

New Accounting Standards

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, and therefore will be effective for the Company on January 1, 2018. The Company is nearing the completion of its implementation process, which included 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. 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. The Company 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, Operating Leases, as of December 31, 2017, the Company had minimum lease commitments under non-cancellable operating leases totaling $258 million. The Company has begun the implementation of new software to manage its leases in accordance with this new accounting standard.

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

Stock Compensation - In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which requires all excess tax benefits or deficiencies to be recognized as income tax expense or benefit in the income statement. In addition, excess tax benefits should be classified along with other income tax cash flows as an operating activity in the statement of cash flows. Application of the standard is required for the annual and interim periods beginning after December 15, 2016. The Company adopted this standard in the first quarter of 2017. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

Credit Losses - In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. The new guidance is effective for the Company on January 1, 2020. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

Goodwill - In January 2017, the FASB issued ASU No. 2017-05, “Simplifying the Accounting for Goodwill Impairment” which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, but not exceeding the carrying amount of goodwill. Application of the standard will be applied prospectively and is effective for calendar year-end filers in 2020, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company elected to early adopt this standard in the fourth quarter of 2017. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

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 consolidated financial statements, except for the reclassification in the Consolidated Results of Operations of prior period pension settlement charges from the Cost of goods sold and Selling and administrative expense accounts into the Other expenses, net account.

Derivatives and Hedging - In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging Activities” which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. Application of the standard is required for annual periods beginning after December 15, 2018. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

2. Segment Information

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

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments.

Beginning in the first quarter of 2017, equity earnings related to the Company’s joint-venture with Constellation Brands in Mexico were recorded in the North America region. In prior years, equity earnings from this joint-venture were recorded in Retained corporate costs and other as it was mostly in construction mode.

Beginning in the first quarter of 2018, to better leverage its scale and presence across a larger geography and market, and to reduce administrative costs, the Company merged the North America and Latin America segments into one segment named the Americas. This change in segment reporting for the Americas is aligned with the Company’s internal approach to managing, reporting, and evaluating performance of this region.

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

Financial information regarding the Company’s reportable segments is as follows:


	2017		2016		2015
Net sales:
Europe	$	2,375	$	2,300	$	2,324
North America		2,160		2,220		2,039
Latin America		1,551		1,432		1,064
Asia Pacific		714		684		671
Reportable segment totals		6,800		6,636		6,098
Other		69		66		58
Net sales	$	6,869	$	6,702	$	6,156


	2017		2016		2015
Segment operating profit:
Europe	$	263	$	237	$	209
North America		318		299		265
Latin America		296		269		183
Asia Pacific		65		77		83
Reportable segment totals		942		882		740
Items excluded from segment operating profit:
Retained corporate costs and other		(104)		(98)		(70)
Pension settlement charges		(218)		(98)
Restructuring, asset impairment and other charges		(77)		(129)		(80)
Gain on China land sale				71
Strategic transaction costs						(23)
Acquisition-related fair value inventory adjustments						(22)
Acquisition-related fair value intangible adjustments						(10)
Interest expense, net		(268)		(272)		(251)
Earnings from continuing operations before income taxes	$	275	$	356	$	284

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions


									Reportable		Retained
			North		Latin		Asia		Segment		Corp Costs		Consolidated
	Europe		America		America		Pacific		Totals		and Other		Totals
Total assets:
2017	$	3,133	$	2,794	$	2,617	$	1,001	$	9,545	$	211	$	9,756
2016		2,792		2,522		2,537		926		8,777		358		9,135
2015		2,902		2,500		2,807		917		9,126		295		9,421
Equity investments:
2017	$	95	$	259	$	—	$	114	$	468	$	57	$	525
2016		78		21				117		216		217		433
2015		78		22				145		245		164		409
Equity earnings:
2017	$	18	$	41	$	—	$	—	$	59	$	18	$	77
2016		15		12				4		31		29		60
2015		16		19				7		42		18		60
Capital expenditures:
2017	$	152	$	106	$	127	$	55	$	440	$	1	$	441
2016		163		108		123		59		453		1		454
2015		164		97		89		50		400		2		402
Depreciation and amortization expense:
2017	$	125	$	134	$	176	$	43	$	478	$	10	$	488
2016		118		139		173		37		467		11		478
2015		120		128		107		40		395		14		409

The Company’s net property, plant and equipment by geographic segment are as follows:


	U.S.		Non-U.S.		Total
2017	$	757	$	2,374	$	3,131
2016		749		2,131		2,880
2015		736		2,225		2,961

The Company’s net sales by geographic segment are as follows:


	U.S.		Non-U.S.		Total
2017	$	2,072	$	4,797	$	6,869
2016		2,124		4,578		6,702
2015		1,939		4,217		6,156

Intercompany sales in Latin America totaled $150 million, $179 million and $101 for the years ended December 31, 2017, 2016, and 2015, respectively.

For only the year ended December 31, 2015, operations outside the U.S. that accounted for more than 10% of consolidated net sales were in France.

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

3. Inventories

Major classes of inventory are as follows:


	2017		2016
Finished goods	$	873	$	827
Raw materials		122		118
Operating supplies		41		38
	$	1,036	$	983

4. Equity Investments

At December 31, 2017 the Company’s ownership percentage in affiliates include:


	O-I Ownership
Affiliates	Percentage		Business Type
BJC O-I Glass Pte. Ltd.	50	%	Glass container manufacturer
CO Vidrieria SARL ("COV")	50	%	Glass container manufacturer
Rocky Mountain Bottle Company	50	%	Glass container manufacturer
Tata Chemical (Soda Ash) Partners	25	%	Soda ash supplier
Vetrerie Meridionali SpA ("VeMe")	50	%	Glass container manufacturer
Vetri Speciali SpA	50	%	Specialty glass manufacturer

Summarized information pertaining to the Company’s equity affiliates follows:


	2017		2016		2015
Equity in earnings:
Non-U.S.	$	45	$	19	$	23
U.S.		32		41		37
Total	$	77	$	60	$	60
Dividends received	$	48	$	38	$	53

Summarized combined financial information for equity affiliates is as follows (unaudited):


	2017		2016
At end of year:
Current assets	$	466	$	425
Non-current assets		1,021		779
Total assets		1,487		1,204
Current liabilities		232		190
Other liabilities and deferred items		198		145
Total liabilities and deferred items		430		335
Net assets	$	1,057	$	869


	2017		2016		2015
For the year:
Net sales	$	883	$	755	$	719
Gross profit	$	242	$	182	$	193
Net earnings	$	165	$	145	$	139

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

Based on an evaluation of each of the Company’s equity investments for the three years ending December 31, 2017, no investments exceeded the significant subsidiary thresholds per Rule 3-09 of Regulation S-X. As such, separate financial statements for the Company’s equity investments are not required to be filed.

The Company made purchases of approximately $180 million and $176 million from equity affiliates in 2017 and 2016, respectively, and owed approximately $90 million and $76 million to equity affiliates as of December 31, 2017 and 2016, respectively.

There is a difference of approximately $10 million as of December 31, 2017, between the amount at which certain investments are carried and the amount of underlying equity in net assets. The portion of the difference related to inventory or amortizable assets is amortized as a reduction of the equity earnings. The remaining difference is considered goodwill.

5. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2017, 2016, and 2015 are as follows:


			North		Latin
	Europe		America		America		Other		Total
Balance as of January 1, 2015	$	926	$	723	$	239	$	5	$	1,893
Acquisition related adjustments				316		480				796
Translation effects		(86)		(19)		(95)				(200)
Balance as of December 31, 2015		840		1,020		624		5		2,489
Acquisition related adjustments				15		26				41
Translation effects		(32)		3		(39)				(68)
Balance as of December 31, 2016		808		1,038		611		5		2,462
Translation effects		105		8		15				128
Balance as of December 31, 2017	$	913	$	1,046	$	626	$	5	$	2,590

The acquisition related adjustments in 2016 and 2015 primarily relate to the Vitro Acquisition (see Note 18).

Goodwill for the Asia Pacific segment is $0 and net of accumulated impairment losses of $1,135 million as of December 31, 2017, 2016, and 2015.

Goodwill is tested for impairment annually as of October 1 (or more frequently if impairment indicators arise) by comparing the business enterprise value (“BEV”) of each reporting unit with its carrying value. The BEV is computed based on estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. If the BEV is less than the carrying value for any reporting unit, then any excess of the BEV of the goodwill over the carrying value will be recorded as an impairment loss. The calculations of the BEV are based on significant unobservable inputs, such as price trends, customer demand, material costs, discount rates and asset replacement costs, and are classified as Level 3 in the fair value hierarchy.

During the fourth quarter of 2017, the Company completed its annual impairment testing and determined that no impairment existed.

Intangible assets

Customer list intangible assets are amortized using the accelerated amortization method over their 20 year lives. Net intangible asset values were $439 million and $464 million for the years ended December 31, 2017 and 2016, respectively. Amortization expense for intangible assets was $41 million, $39 million and $21 million for the years ended December 31, 2017, 2016, and 2015, respectively. Estimated amortization related to intangible

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

assets through 2022 is as follows: 2018, $44 million; 2019, $42 million; 2020, $41 million; 2021, $39 million; and 2022, $36 million. No impairment existed on these assets at December 31, 2017.

The Company has determined that the fair value measurements related to the customer list intangibles are based on significant unobservable inputs and are classified as Level 3 in the fair value hierarchy.

6. Other Assets

Other assets (noncurrent) consist of the following at December 31, 2017 and 2016:


	2017		2016
Deferred tax assets	$	194	$	185
Deferred returnable packaging costs		119		115
Repair part inventories		106		107
Capitalized software		82		85
Value added taxes		24		22
Other		77		88
	$	602	$	602

Capitalized software includes costs related to the acquisition and development of internal-use software. These costs are amortized over the estimated useful life of the software. Amortization expense for capitalized software was $12 million, $13 million and $19 million for 2017, 2016, and 2015, respectively. Estimated amortization related to capitalized software through 2022 is as follows: 2018, $13 million; 2019, $14 million; 2020, $13 million; 2021, $12 million and 2022, $11 million.

7. 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 2016, which included the execution of commodity forward contracts for certain contracted natural gas requirements. At December 31, 2017 and 2016, the Company had entered into commodity forward contracts covering approximately 8,800,000 MM BTUs and 12,300,000 MM BTUs, respectively.

The Company accounts for the above forward contracts as cash flow hedges at December 31, 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 gain of $3 million at December 31, 2017 and an unrecognized gain of $6 million at December 31,

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

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 year ended December 31, 2017 and 2016 was not material.

The effect of the commodity forward contracts on the results of operations for the years ended December 31, 2017, 2016, and 2015 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		2015		2017		2016		2015
$	6	$	7	$	(4)	$	—	$	—	$	(1)

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 December 31, 2017 and 2016, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $460 million and $490 million, respectively, related primarily to intercompany transactions and loans.

The effect of the foreign exchange derivative contracts on the results of operations for the years ended December 31, 2017, 2016, and 2015 is as follows:


	Amount of Gain (Loss)
Location of Gain (Loss)	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2017		2016		2015
Other expense, net	$	10	$	6	$	10

Hedges of Multiple Risks

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

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

Euro exchange rate arising from a U.S. dollar denominated borrowing. This swap involves exchanging fixed rate Euro interest payments for floating rate U.S. dollar interest receipts both of which will occur at the forward exchange rates in effect upon entering into the instrument. This instrument, which settled in the third quarter of 2017, had a pay fixed notional amount of €81 million and a receive floating notional amount of $90 million. There was no ineffectiveness related to these cross-currency interest rate swaps for the year ended December 31, 2017.

During the fourth quarter of 2017, one of the Company’s Euro-functional subsidiaries entered into a series of cross-currency interest rate swaps to manage its exposure to fluctuations in the Euro-U.S dollar exchange rate arising from a U.S. dollar denominated borrowing. These swaps involve exchanging fixed rate Euro interest payments for fixed rate U.S. dollar interest receipts both of which will occur at the forward exchange rates in effect upon entering into the instrument. An unrecognized loss of less than $1 million at December 31, 2017 related to these cross-currency interest rate swaps was included in Accumulated OCI, and will be reclassified into earnings within the next twelve months. These instruments, in the aggregate, have a pay fixed notional amount of €263 million and a receive notional amount of $310 million and reach final maturity in 2023. There was no ineffectiveness related to these cross-currency interest rate swaps for the year ended December 31, 2017.

Interest Rate Swaps Designated as Fair Value Hedges

During the third and fourth quarters of 2017, the Company entered into a series of interest rate swap agreements with a total notional amount of €725 million that reach final maturity in 2024. The swaps were executed in order to maintain a capital structure containing appropriate amounts of fixed and floating-rate debt and to reduce net interest payments and expense in the near-term.

The Company’s fixed-to-variable interest rate swaps were accounted for as fair value hedges. The relevant terms of the swap agreements match the corresponding terms of the notes and therefore there is no hedge ineffectiveness. The Company recorded the net of the fair market values of the swaps as a long-term liability and short-term asset along with a corresponding net decrease in the carrying value of the hedged debt.

Under the swaps, the Company receives fixed rate interest amounts (equal to the interest on the corresponding hedged note) and pays interest at a six-month Euribor rate (set in arrears) plus a margin spread (see table below). The interest rate differential on each swap is recognized as an adjustment of interest expense during each six-month period over the term of the agreement.

The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company has determined that the majority of the inputs used to value these derivatives fall within Level 2 of the fair value hierarchy.

The following selected information relates to fair value swaps at December 31, 2017:


	Amount Hedged		Receive Rate		Average Spread
Senior Notes due 2024	€	725	3.125	%	2.6	%

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

Balance Sheet Classification

The Company records the fair values of derivative financial instruments on the balance sheet as follows: (a) receivables if the instrument has a positive fair value and maturity within one year, (b) deposits, receivables, and other assets if the instrument has a positive fair value and maturity after one year, (c) other accrued liabilities or other liabilities (current) if the instrument has a negative fair value and maturity within one year, and (d) other accrued liabilities or other liabilities if the instrument has a negative fair value and maturity after one year. The following table shows the amount and classification (as noted above) of the Company’s derivatives as of December 31, 2017 and 2016:


	Fair Value
	Balance Sheet
	Location	2017		2016
Asset Derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	b	$	3	$	6
Interest rate swaps designated as fair value hedges	a		6
Hedges of multiple risks designated as cash flow hedges	a		4
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	a	$	4	$	9
Total asset derivatives		$	17	$	15
Liability Derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	c	$	—	$	—
Interest rate swaps designated as fair value hedges	d		13
Hedges of multiple risks designated as cash flow hedges	d		10
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	d		1		5
Total liability derivatives		$	24	$	5

8. Restructuring Accruals, Asset Impairments and Other Costs Related to Closed Facilities

The Company continually reviews its manufacturing footprint and operating cost structure and may decide to close operations or reduce headcount to gain efficiencies, integrate acquired operations, reduce future expenses and other market factors. The Company incurs costs associated with these actions including employee severance and benefits, other exit costs such as those related to contract terminations, and asset impairment charges. The Company also may incur other costs related to closed facilities including environmental remediation, clean up, dismantling and preparation for sale or other disposition.

The Company accounts for restructuring and other costs under applicable provisions of generally accepted accounting principles. Charges for employee severance and related benefits are generally accrued based on contractual arrangements with employees or their representatives. Other exit costs are accrued based on the estimated cost to settle related contractual arrangements. Estimated environmental remediation costs are accrued when specific claims have been received or are probable of being received.

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 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 programmatically apart from the on-going operations of the business. Information related to major programs is

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

presented separately while minor initiatives are presented on a combined basis. As of December 31, 2017 and 2016, no major restructuring programs were in effect.

In 2017, the Company implemented a number of minor restructuring initiatives and recorded restructuring, asset impairment and other charges of $72 million. These charges primarily consisted of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($45 million), Europe ($19 million), North America ($4 million) and Asia Pacific ($4 million). The restructuring charges recorded in 2017 were discrete actions and are expected to approximate the total cumulative cost for those actions as no significant additional costs are expected to be incurred. As part of the total restructuring charges recorded in Europe in 2016 and 2017, the Company has recorded total cumulative charges of $56 million related to a plant closure in this region 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 2019.

In 2016, the Company implemented a number of minor restructuring initiatives and the Company recorded restructuring, asset impairment and other charges of $98 million. These charges primarily consisted of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($18 million), Europe ($48 million), North America ($4 million), Asia Pacific ($4 million) and other corporate restructuring actions ($24 million). Except for the charges recorded in Europe, the other discrete restructuring charges recorded in 2016 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 $47 million related to a plant closure in Europe. These restructuring charges primarily relate to several capacity curtailments and the Company reallocated the products produced at these facility to others in the region.

The following table presents information related to restructuring, asset impairment and other costs related to closed facilities from January 1, 2016 through December 31, 2017:



	Total
	Restructuring
Balance at January 1, 2016	$	43
Charges		98
Write-down of assets to net realizable value		(28)
Net cash paid, principally severance and related benefits		(24)
Other, including foreign exchange translation		(4)
Balance at December 31, 2016		85
Charges		72
Write-down of assets to net realizable value		(11)
Net cash paid, principally severance and related benefits		(62)
Other, including foreign exchange translation		1
Balance at December 31, 2017	$	85

The restructuring accrual balance represents the Company’s estimates of the remaining future cash amounts to be paid related to the actions noted above. As of December 31, 2017, the Company’s estimates include approximately $65 million for employee benefits costs, $19 million for environmental remediation costs, and $1 million for other exit costs.

Owens‑Illinois Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Tabular data dollars in millions

9. Pension Benefit Plans and Other Postretirement Benefits

Pension Benefit Plans

The Company has defined benefit pension plans covering a substantial number of employees located in the United States and several other non-U.S. jurisdictions. Benefits generally are based on compensation for salaried employees and on length of service for hourly employees. The Company’s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. The Company’s defined benefit pension plans use a December 31 measurement date.

The changes in the pension benefit obligations for the year are as follows:


	U.S.				Non-U.S.
	2017		2016		2017		2016
Obligations at beginning of year	$	1,956	$	2,190	$	1,235	$	1,210
Change in benefit obligations:
Service cost		14		15		15		16
Interest cost		78		90		40		44
Actuarial (gain) loss, including the effect of change in discount rates		123		36		(15)		160
Curtailment, settlement, and plan amendment		(393)		(200)		(171)
Participant contributions						1		2
Benefit payments		(128)		(175)		(60)		(71)
Other								3
Foreign currency translation						103		(129)
Net change in benefit obligations		(306)		(234)		(87)		25
Obligations at end of year	$	1,650	$	1,956	$	1,148	$	1,235

The changes in the fair value of the pension plans’ assets for the year are as follows:


	U.S.				Non-U.S.
	2017		2016		2017		2016
Fair value at beginning of year	$	1,654	$	1,909	$	1,011	$	1,012
Change in fair value:

OWENS-ILLINOIS GROUP INC 10-K/A