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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
September 30, 2017 or
March 31, 2018 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 33-13061

OWENS-ILLINOIS GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware		34-1559348
(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 Group, Inc. outstanding as of ~~September~~March 3031, ~~2017~~2018 was 100.

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

The Condensed Consolidated Financial Statements of Owens-Illinois Group, 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~~2017.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(Dollars in millions)

Three months ended

~~Nine months ended~~

September 30,

March 31,

2017

2016

2017

2016

2018

2017

Net sales

1,~~791~~736

1,~~712~~615

~~5,157~~

~~5,060~~

Cost of goods sold

(1,~~438~~417)

(1,~~376~~300)

~~(4,143)~~

~~(4,063)~~

Gross profit

~~353~~319

~~336~~315

~~1,014~~

~~997~~

Selling and administrative expense

(~~120~~126)

(~~121~~119)

~~(362)~~

~~(375)~~

Research, development and engineering expense

(1516)

(1615)

~~(46)~~

~~(48)~~

Interest expense, net

(6362)

(6678)

~~(204)~~

~~(199)~~

Equity earnings

2217

Other income (expense), net

~~(5)~~3

5(45)

~~(61)~~

~~(24)~~

Earnings from continuing operations before income taxes

~~172~~135

~~153~~73

~~396~~

~~395~~

Provision for income taxes

(3732)

(3620)

~~(65)~~

~~(93)~~

Earnings from continuing operations

~~135~~103

~~117~~53

~~331~~

~~302~~

Loss from discontinued operations

~~(2)~~

~~(3)~~

~~(2)~~

~~(6)~~

Net earnings

~~133~~103

~~114~~53

~~329~~

~~296~~

Net earnings attributable to noncontrolling interests

(75)

(64)

~~(15)~~

~~(16)~~

Net earnings attributable to the Company

~~126~~98

~~108~~49

~~314~~

~~280~~

Amounts attributable to the Company:

Earnings from continuing operations

~~128~~98

~~111~~49

~~316~~

~~286~~

Loss from discontinued operations

~~(2)~~

~~(3)~~

~~(2)~~

~~(6)~~

Net earnings

~~126~~98

~~108~~49

~~314~~

~~280~~

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME

(Dollars in millions)

	Three months ended				~~Nine months ended~~
	September 30,				September 30,
	March 31,
	2017		2016		2017		2016
	2018		2017
Net earnings	$	~~133~~103	$	~~114~~53	$	~~329~~	$	~~296~~
Other comprehensive income (loss):
Other comprehensive income:
Foreign currency translation adjustments		10126		~~(79)~~189		~~212~~		~~(93)~~
Pension and other postretirement benefit adjustments, net of tax		107		2111		25		5
Change in fair value of derivative instruments, net of tax		(5)		(16)		~~(10)~~		5
Other comprehensive income (loss):		20		(59)		227		(83)
Other comprehensive income		128		194
Total comprehensive income		~~153~~231		55247		~~556~~		~~213~~
Comprehensive income attributable to noncontrolling interests		(811)		(47)		~~(8)~~		~~(6)~~
Comprehensive income attributable to the Company	$	~~145~~220	$	51240	$	~~548~~	$	~~207~~

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2017		2016		2016
	2018		2017		2017
Assets
Current assets:
Cash and cash equivalents	$	~~339~~418	$	492	$	~~294~~312
Trade receivables, net of allowance of $36 million, $32 million, and $32 million at September 30, 2017, December 31, 2016 and September 30, 2016		1,028		580		857
Trade receivables, net of allowance of $36 million, $34 million, and $36 million at March 31, 2018, December 31, 2017 and March 31, 2017		1,045		663		844
Inventories		1,~~046~~065		~~983~~1,036		1,~~057~~051
Prepaid expenses and other current assets		~~254~~240		~~199~~229		~~234~~212
Total current assets		2,~~667~~768		2,~~254~~420		2,~~442~~419
Property, plant and equipment, net		3,~~036~~190		23,~~880~~131		2,~~917~~926
Goodwill		2,~~621~~649		2,~~462~~590		2,~~534~~524
Intangibles, net		~~473~~452		~~464~~439		~~490~~485
Other assets		1,~~202~~222		1,~~075~~176		1,~~114~~105
Total assets	$	910,~~999~~281	$	9,~~135~~756	$	9,~~497~~459
Liabilities and Share Owners' Equity
Current liabilities:
Short-term loans and long-term debt due within one year	$	~~243~~194	$	~~195~~162	$	~~262~~196
Accounts payable		1,~~087~~115		1,~~135~~324		1,~~059~~017
Other liabilities		~~617~~554		~~615~~579		~~582~~531
Other liabilities - discontinued operations		115		115
Total current liabilities		21,~~062~~978		12,~~945~~180		1,~~903~~744
Long-term debt		5,~~378~~640		5,~~133~~121		5,~~333~~431
Other long-term liabilities		~~977~~969		~~1,002~~946		~~973~~988
Share owners' equity		1,~~582~~694		1,~~055~~509		1,~~288~~296
Total liabilities and share owners' equity	$	910,~~999~~281	$	9,~~135~~756	$	9,~~497~~459

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

	Nine months ended September 30,
	Three months ended March 31,
	2017		2016
	2018		2017
Cash flows from operating activities:
Net earnings	$	~~329~~103	$	~~296~~53
Loss from discontinued operations		2—		6—
Non-cash charges
Depreciation and amortization		~~372~~131		~~372~~127
Pension expense		2210		227
Restructuring, asset impairment and related charges		48		1938
Cash payments
Pension contributions		(2810)		(1514)
Cash paid for restructuring activities		(306)		(208)
Change in components of working capital		(~~601~~622)		(~~320~~542)
Other, net (a)		~~(26)~~31		~~(89)~~14
Cash provided by continuing operating activities		88		271
Cash utilized in operating activities		(363)		(325)
Cash utilized in discontinued operating activities		(2)		(6)
Total cash provided by operating activities		86		265
Cash flows from investing activities:
Additions to property, plant and equipment		(~~292~~142)		(~~310~~98)
Acquisitions, net of cash acquired		(3726)		(4517)
Net foreign exchange derivative activity				16
Net cash proceeds on disposal of assets		7
Net cash proceeds related to the sale of assets		14		57
Other, net		1		1
Cash utilized in continuing investing activities		(315)		(282)
Cash utilized in investing activities		(160)		(114)
Cash provided by discontinued investing activities		115
Total cash utilized in investing activities		(200)		(282)
Cash flows from financing activities:
Changes in borrowings, net		23488		~~(31)~~273
Distributions to noncontrolling interests		(9)		(10)
Distributions to parent		(52)		(12)
Distributions to parent		(54)		(40)
Payment of finance fees				(19)
Payment of finance fees		(23)		(3)
Other				3
Cash utilized in financing activities		(63)		(84)
Cash provided by financing activities		436		245
Effect of exchange rate fluctuations on cash		2413		~~(4)~~14
Decrease in cash		(~~153~~74)		(~~105~~180)
Cash at beginning of period		492		~~399~~492
Cash at end of period	$	~~339~~418	$	~~294~~312

(a)

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

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions

1. Basis of Presentation

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

2. Segment Information

The Company has ~~four~~three reportable segments and three operating segments based on its geographic locations: ~~Europe~~Americas, ~~North America~~Europe, ~~Latin America~~ and Asia Pacific. These ~~four~~three segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations. ~~Certain~~As ~~assets~~previously disclosed, to better leverage its scale and ~~activities~~presence ~~not~~across ~~directly~~a ~~related~~larger togeography ~~one~~and market, the Company completed the consolidation of the ~~regions~~former orNorth toAmerica ~~glass~~and ~~manufacturing~~Latin ~~are~~America ~~reported~~segments ~~with~~into ~~Retained~~one ~~corporate~~segment, ~~costs~~named ~~and~~the ~~other~~Americas, effective January 1, 2018. ~~These~~The ~~include~~consolidation ~~licensing~~resulted in the leadership roles of the former North America and Latin America segments being combined into one position, ~~equipment~~President ~~manufacturing~~of the Americas, ~~global~~reporting ~~engineering~~to the Company’s chief operating decision maker (“CODM”), ~~and~~who ~~certain~~is ~~equity~~the ~~investments~~Company’s Chief Executive Officer. ~~Retained~~Beginning ~~corporate~~January ~~costs~~1, 2018, the CODM reviews the operating results at the Americas level to make resource allocation decisions and ~~other~~to assess performance. The consolidation also ~~includes~~resulted ~~certain~~in ~~headquarters~~the ~~administrative~~elimination ~~and~~of ~~facilities~~duplicative costs ~~and~~as certain ~~incentive~~functions ~~compensation~~of the former North America and ~~other~~Latin ~~benefit~~America ~~plan~~segments ~~costs~~were ~~that~~combined ~~are~~to ~~global~~simplify the management of the new Americas segment. For example, the Company consolidated its business shared service centers in ~~nature~~North America and ~~are~~Latin ~~not~~America ~~allocable~~into toone ~~the~~Americas ~~reportable~~shared ~~segments~~service center.

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.

~~Intercompany~~Financial ~~sales~~information ~~in Latin America totaled $34 million and $97 million~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017,~~2018 ~~respectively,~~ and ~~$36~~2017 ~~million~~regarding ~~and $129 million for~~ the ~~three~~Company’s ~~and~~reportable ~~nine~~segments ~~months~~is ~~ended~~as ~~September 30, 2016, respectively.~~follows:

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


	Three months ended March 31,
	2018		2017
Net sales:
Americas	$	908	$	869
Europe		643		554
Asia Pacific		173		173
Reportable segment totals		1,724		1,596
Other		12		19
Net sales	$	1,736	$	1,615

	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Net sales:
Europe	$	624	$	586	$	1,813	$	1,795
North America		551		578		1,651		1,709
Latin America		412		365		1,123		1,022
Asia Pacific		188		170		516		487
Reportable segment totals		1,775		1,699		5,103		5,013
Other		16		13		54		47
Net sales	$	1,791	$	1,712	$	5,157	$	5,060

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2017		2016		2017		2016
	2018		2017
Segment operating profit:
Europe	$	81	$	64	$	220	$	192
Americas	$	147	$	139
North America		75		79		252		247
Europe		72		59
Latin America		84		74		207		194
Asia Pacific		5		20
Asia Pacific		20		20		51		48
Reportable segment totals		224		218
Reportable segment totals		260		237		730		681
Items excluded from segment operating profit:
Items excluded from segment operating profit:
Retained corporate costs and other		(27)		(28)
Retained corporate costs and other		(25)		(18)		(81)		(75)
Restructuring, asset impairment and other				(39)
Restructuring, asset impairment and other						(49)		(12)
Interest expense, net		(62)		(78)
Interest expense, net		(63)		(66)		(204)		(199)
Earnings from continuing operations before income taxes	$	135	$	73
Earnings from continuing operations before income taxes	$	172	$	153	$	396	$	395

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

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2017		2016		2016
	2018		2017		2017
Total assets:
Europe	$	3,140	$	2,792	$	2,972
Americas	$	5,637	$	5,411	$	5,433
North America		2,826		2,522		2,536
Europe		3,387		3,133		2,858
Latin America		2,772		2,537		2,629
Asia Pacific		1,056		1,001		998
Asia Pacific		1,046		926		1,025
Reportable segment totals		10,080		9,545		9,289
Reportable segment totals		9,784		8,777		9,162
Other		201		211		170
Other		215		358		335
Consolidated totals	$	10,281	$	9,756	$	9,459
Consolidated totals	$	9,999	$	9,135	$	9,497

3. ~~Inventories~~ Revenue

~~Major~~On ~~classes~~January of1, ~~inventory~~2018, atthe ~~September~~Company ~~30,~~adopted ~~2017~~accounting standard ASC 606, ~~December~~Revenue 31from Contracts with Customers, ~~2016~~and selected the modified retrospective transition method. The adoption of this new standard did not impact the Company’s results of operations or balance sheet and ~~September~~there ~~30,~~was ~~2016~~no ~~are~~cumulative aseffect ~~follows:~~of initially applying this new revenue standard to the opening balance of retained earnings.

	September 30,		December 31,		September 30,
	2017		2016		2016
Finished goods	$	875	$	827	$	892
Raw materials		129		118		127
Operating supplies		42		38		38
	$	1,046	$	983	$	1,057

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

~~4. Prepaid~~For ~~Expenses~~the three months ended March 31, 2018, the Company had no material bad debt expense and ~~Other~~there ~~Current~~were ~~Assets~~no material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet. For the three months ended March 31, 2018, revenue recognized from prior periods (for example, due to changes in transaction price) was not material.

~~Prepaid~~The ~~expenses~~following ~~and~~table ~~other~~disaggregates ~~current~~the ~~assets~~Company’s atrevenue ~~September~~by ~~30,~~customer ~~2017,~~end ~~December 31, 2016 and September 30, 2016 are as follows~~use:

	September 30,		December 31,		September 30,
	Three months ended March 31, 2018
	2017		2016		2016
	Americas		Europe		Asia Pacific		Total
Prepaid expenses	$	50	$	50	$	61
Alcoholic beverages (beer, wine, spirits)	$	576	$	471	$	127	$	1,174
Value added taxes		44		46		42
Food and other		189		112		24		325
Other		160		103		131
Non-alcoholic beverages		143		60		22		225
	$	254	$	199	$	234
Reportable segment totals	$	908	$	643	$	173	$	1,724
Other								12
Net sales							$	1,736

4. Inventories

Major classes of inventory at March 31, 2018, December 31, 2017 and March 31, 2017 are as follows:


	March 31,		December 31,		March 31,
	2018		2017		2017
Finished goods	$	901	$	873	$	889
Raw materials		120		122		124
Operating supplies		44		41		38
	$	1,065	$	1,036	$	1,051

5. Derivative Instruments

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

Commodity Forward Contracts Designated as Cash Flow Hedges

In several regions, the Company enters into commodity forward contracts related to forecasted natural gas requirements, the objectives of which are to limit the effects of fluctuations in the future market price paid for natural gas and the related volatility in cash flows. In ~~North~~the ~~America~~Americas, ~~the~~some ~~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 inthat ~~the first quarter of 2016, which~~ included the execution of commodity forward contracts for certain contracted natural gas requirements. AtThe ~~September 30, 2017 and 2016, the~~ Company had entered into commodity forward contracts covering approximately 98,~~300~~600,000 MM BTUs at March 31, 2018, 8,800,000 MM BTUs at December 31, 2017 and 1211,~~400~~200,000 MM BTUs at March 31, ~~respectively~~2017.

The Company accounts for the above forward contracts as cash flow hedges at ~~September~~March 3031, ~~2017~~2018 and recognizes them on the ~~balance~~Condensed ~~sheet~~Consolidated 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~~gain of ~~less than~~ $14 million at ~~September~~March 3031, ~~2017~~2018, an unrecognized gain of $63 million at December 31, ~~2016~~2017 and an unrecognized gain of $21 million at ~~September~~March 3031, ~~2016~~2017 related to the commodity forward contracts was included in Accumulated OCI, and will be reclassified into earnings in the period when the commodity forward contracts expire. Any material portion of the change in the fair value of a derivative designated as a cash flow hedge that is deemed to be ineffective is recognized in current earnings. The ineffectiveness related to these natural gas hedges for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 was not material.

The effect of the commodity forward contracts on the results of operations for the three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~March 31, 2017 is as follows:

				Amount of Gain (Loss) Reclassified from
				Amount of gain (loss) Reclassified from
Amount of (Loss) Recognized in OCI on				Accumulated OCI into Income
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
2018		2017		2018		2017
$	(1)	$	~~(1)~~6	$	—	$	—

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

				Amount of Gain (Loss) Reclassified from
Amount of Gain Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2017		2016		2017		2016
$	3	$	2	$	—	$	—

Foreign Exchange Derivative Contracts and not Designated as Hedging Instruments

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

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

At ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $~~320~~350 million and $~~580~~340 million, respectively, related primarily to intercompany transactions and loans.

The effect of the foreign exchange derivative contracts on the results of operations for the three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~March 31, 2017 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~~2018		~~2016~~2017
Other expense	$	(2)	$	4
Other expense, net	$	—	$	—

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

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

Hedges of Multiple Risks

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

During the ~~second~~fourth quarter of 2017, one of the Company’s Euro-functional subsidiaries entered into a series of cross-currency interest rate ~~swap~~swaps to manage its exposure to fluctuations in the ~~variable interest rate and the~~ Euro-U.S. dollar~~-Euro~~ exchange rate arising from a U.S. dollar denominated borrowing. ~~This~~ These ~~swap~~swaps ~~involves~~involve exchanging fixed rate Euro interest payments for ~~floating~~fixed rate U.S. dollar interest receipts, both of which will occur at the forward exchange rates in effect upon entering into the instrument. ~~This~~An ~~instrument~~unrecognized loss of $6 million at March 31, ~~which~~2018 ~~settled~~and an unrecognized loss of less than $1 million at December 31, 2017, related to these cross-currency interest rate swaps, were included in Accumulated OCI, and will be reclassified into earnings within the ~~third~~next ~~quarter~~twelve ofmonths. ~~2017~~These instruments, ~~had~~in the aggregate, have a pay fixed notional amount of €81263 million and a receive notional amount of $90310 million and reach final maturity in 2023. There was no ineffectiveness related to these cross-currency interest rate swaps for the three months ended March 31, 2018.

The effect of the cross-currency interest rate swaps on the results of operations for the three months ended March 31, 2018 is as follows:


		Amount of gain (loss) Reclassified from
Amount of gain (loss) Recognized in OCI on		Accumulated OCI into Income
Hedges of Multiple Risks		(reported in Other expense, net)
(Effective Portion)		(Effective Portion)
$	(13)	$	(8)

Interest Rate Swaps Designated as Fair Value Hedges

InDuring ~~the third quarter of~~ 2017, the Company entered into a series of interest rate swap agreements with a total notional amount of €~~400~~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.

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

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

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

The following selected information relates to fair value swaps at ~~September~~March 3031, ~~2017~~2018:

	Amount Hedged				Receive Rate			Average Spread
Senior Notes due 2024	€	~~400~~725			3.125	%		2.56	%

Balance Sheet Classification

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

The following table shows the amount and classification (as noted above) of the Company’s derivatives at ~~September~~March 3031, ~~2017~~2018, December 31, ~~2016~~2017 and ~~September~~March 3031, ~~2016~~2017:

	Fair Value
	Balance Sheet	~~September~~March 3031,		December 31,		~~September~~March 3031,
	Location	~~2017~~2018		~~2016~~2017		~~2016~~2017
Asset derivatives:
Asset Derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	b	$	14	$	63	$	2
Interest rate swaps designated as fair value hedges	a		24		6
Hedges of multiple risks designated as cash flow hedges	a		6		4
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	a		24		94		85
Total asset derivatives		$	518	$	1517	$	107
Liability derivatives:
Liability Derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	c	$	1—	$	—	$	—1
Interest rate swaps designated as fair value hedges	d		515		13
Hedges of multiple risks designated as cash flow hedges	d		26		10
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	cd		31		51		2
Total liability derivatives		$	942	$	524	$	23

6. Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 is as follows:

	Other
	Total
	Restructuring
	Actions
Balance at January 1, 2018	$	85
Balance at July 1, 2017	$	111
Net cash paid, principally severance and related benefits		(6)
Net cash paid, principally severance and related benefits		(14)
Other, including foreign exchange translation		1
Balance at September 30, 2017	$	98
Balance at March 31, 2018	$	80

			Other
	Total
	Asia Pacific		Restructuring		Total
	Restructuring
	Restructuring		Actions		Restructuring
Balance at January 1, 2017	$	85
Balance at July 1, 2016	$	6	$	28	$	34
Charges		38
Net cash paid, principally severance and related benefits		(1)		(2)		(3)
Write-down of assets to net realizable value		(9)
Other, including foreign exchange translation				(2)		(2)
Net cash paid, principally severance and related benefits		(8)
Balance at September 30, 2016	$	5	$	24	$	29
Other, including foreign exchange translation		(2)
Balance at March 31, 2017	$	104

~~Selected~~The ~~information~~Company’s ~~related~~decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the ~~restructuring~~extent ~~accruals~~their ~~for~~carrying amounts exceeded fair value or fair value less cost to sell. The Company classified the ~~nine~~significant ~~months~~assumptions ~~ended~~used ~~September~~to ~~30,~~determine ~~2017~~the ~~and~~fair ~~2016~~value isof the impaired assets as ~~follows:~~Level 3 in the fair value hierarchy as set forth in the general accounting principles for fair value measurements.

		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		(30)
Other, including foreign exchange translation		4
Balance at September 30, 2017	$	98

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 are presented separately while minor initiatives are presented on a combined basis. As of March 31, 2018 and 2017, no major restructuring programs were in effect.

			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		(2)		(18)		(20)
Other, including foreign exchange translation		(1)		(5)		(6)
Balance at September 30, 2016	$	5	$	24	$	29

In the three months ended March 31, 2017, the Company implemented a number of minor restructuring initiatives and recorded restructuring, asset impairment and other charges of $38 million. These charges primarily consisted of employee costs, write-down of assets, and other exit costs in the following regions: Americas ($25 million) and Europe ($13 million). The restructuring charges recorded in the first quarter of 2017 were discrete actions and 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 2017 in the Americas and European regions primarily relate to capacity curtailments. The Company plans to reallocate the products produced at these facilities 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.

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

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

Asia Pacific Restructuring

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

Other Restructuring Actions

During the three and nine months ended September 30, 2017, the Company recorded restructuring, asset impairment and other charges of $0 million and $48 million, respectively. For the nine months ended September 30, 2017, these charges primarily consist of employee costs, write-down of assets, and other exit costs in the following regions: Latin America ($33 million), Europe ($13 million) and North America ($2 million). Except for the charges recorded in Europe, the other discrete restructuring charges recorded in 2017 are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The Company has recorded total cumulative charges of $54 million related to a plant closure in Europe and does not expect to execute any further significant actions related to this facility. The restructuring charges recorded in 2017 in the Latin American and European regions primarily relate to capacity curtailments and products produced at those facilities have, in large part, been reallocated to others in their respective regions. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2018.

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

7. Pension Benefit Plans

The components of the net periodic pension cost for the three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 are as follows:

	U.S.				Non-U.S.
	2017		2016		2017		2016
	2018		2017		2018		2017
Service cost	$	4	$	34	$	4	$	4
Interest cost		2015		2320		118		1211
Expected asset return		(3325)		(3733)		(1813)		(1918)
Amortization:
Actuarial loss		1413		1614		54		5
Net periodic pension cost	$	57	$	5	$	23	$	2

1312

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

	U.S.				Non-U.S.
	2017		2016		2017		2016
Service cost	$	11	$	11	$	12	$	13
Interest cost		59		72		33		38
Expected asset return		(98)		(113)		(54)		(61)
Amortization:
Actuarial loss		44		47		15		15
Net periodic pension cost	$	16	$	17	$	6	$	5

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

8. Income Taxes

The Company ~~performs~~calculates aits ~~quarterly~~interim ~~review~~tax ofprovision using the estimated annual effective tax rate ~~and~~(“EAETR”) ~~makes~~methodology ~~changes~~in ifaccordance ~~necessary~~with ~~based~~ASC on740-270. ~~new~~The ~~information~~EAETR oris ~~events~~applied to the year-to-date ordinary income, exclusive of discrete items. The ~~estimated~~tax ~~annual~~effect ~~effective~~of ~~tax~~discrete ~~rate~~items isare ~~forecasted~~then ~~quarterly~~included ~~using~~to ~~actual~~arrive ~~historical~~at ~~information~~the ~~and~~total ~~forward-looking~~reported ~~estimates~~interim tax provision. The ~~estimated~~determination ~~annual~~of ~~effective~~the ~~tax~~EAETR ~~rate~~is ~~may~~based ~~fluctuate~~upon ~~due~~a tonumber ~~changes~~of inestimates, ~~forecasted~~including the estimated annual ~~operating~~pretax ordinary income; ~~changes~~or loss in each tax jurisdiction in which the ~~forecasted~~Company ~~mix~~operates. The tax effects of ~~earnings~~discrete byitems ~~country;~~are ~~changes~~recognized toin the ~~valuation~~tax ~~allowance~~provision ~~for~~in ~~deferred~~the ~~tax~~quarter ~~assets~~they ~~(such~~occur ~~changes~~in ~~would~~accordance bewith ~~recorded~~GAAP. ~~discretely~~Depending inon various factors such as the ~~quarter~~item’s significance in ~~which~~relation ~~they~~to ~~occur);~~total ~~changes~~income toand ~~actual~~the orrate ~~forecasted~~of ~~permanent~~tax ~~book~~applicable in the jurisdiction to ~~tax~~which ~~differences~~it ~~(non-deductible~~relates, ~~expenses);~~discrete ~~impacts~~items ~~from~~in ~~future~~any ~~tax~~quarter ~~settlements~~can ~~with~~materially ~~state,~~impact ~~federal~~the orreported ~~foreign~~effective tax ~~authorities~~rate. ~~(such~~The ~~changes~~Company’s ~~would~~annual effective tax rate may be ~~recorded~~affected ~~discretely~~by the mix of earnings in the ~~quarter~~U.S. inand ~~which~~foreign ~~they~~jurisdictions ~~occur);~~and orsuch ~~impacts~~factors ~~from~~as changes in tax ~~law~~laws, tax rates or regulations, changes. Toin ~~the~~business, ~~extent~~changing ~~such~~interpretation ~~changes~~of ~~impact~~existing ~~deferred~~tax laws or regulations, the finalization of tax ~~assets/liabilities~~audits and reviews, ~~these~~as ~~changes~~well ~~would~~as ~~generally~~other befactors. ~~recorded~~As ~~discretely~~such, inthere ~~the~~can ~~quarter~~be significant volatility in ~~which~~interim ~~they~~tax ~~occur~~provisions. ~~Additionally,~~ ~~the~~The annual effective tax rate differs from the statutory U.S. Federal tax rate of 3521% ~~primarily~~for ~~because~~2018 ofand ~~valuation~~35% ~~allowances~~for in2017 ~~some~~primarily ~~jurisdictions~~because ~~and~~of varying non-U.S. tax rates, asand ~~well~~valuation asallowances ~~the tax accruals reversed~~ in ~~the~~some ~~second~~jurisdictions, ~~quarter of 2017 due to the resolution of a previous tax matter with a foreign tax authority~~respectively.

The ~~Company~~Tax isCuts ~~currently~~and ~~under~~Jobs ~~examination~~Act in(the ~~various~~“Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax ~~jurisdictions~~rate infrom ~~which~~35% itto ~~operates~~21%, ~~including~~requires ~~Argentina,~~companies ~~Bolivia,~~to ~~Brazil,~~pay ~~China,~~a ~~Canada,~~one-time ~~Colombia,~~transition ~~the~~tax ~~Czech~~on ~~Republic,~~earnings ~~France,~~of ~~Germany,~~certain ~~Indonesia,~~foreign subsidiaries that were previously tax deferred and ~~Spain~~creates new taxes on certain foreign sourced earnings. The ~~years~~Company ~~under~~is ~~examination~~applying ~~range~~the ~~from~~guidance ~~2006~~in ~~through~~Staff ~~2015~~Accounting Bulletin No. ~~The~~118, ~~Company~~Income ~~has~~Tax ~~received~~Accounting ~~income~~Implications ~~tax~~of ~~assessments~~the inTax ~~excess~~Cut and Jobs Act, when accounting for the enactment-date effects of ~~established~~the ~~reserves~~Act. ~~The~~At March 31, 2018, the Company ~~believes~~has ~~that~~not ~~adequate~~completed ~~provisions~~its accounting for ~~all~~the ~~income~~ tax ~~uncertainties~~effects ~~have~~of ~~been~~the ~~made.~~Act; ~~However~~however, ifit ~~income~~has made reasonable estimates of the tax ~~assessments~~effects. ~~are~~During ~~settled~~the ~~against~~three months ended March 31, 2018, the Company athas not recorded any adjustments to the provisional amounts inrecorded ~~excess~~at December 31, 2017 related to the remeasurement of ~~established~~its ~~reserves,~~deferred itbalances ~~could~~and ~~have~~the aone-time ~~material~~transition ~~impact~~tax. In all cases, the Company is continuing to make and refine its calculations as additional analysis is completed. In addition, the Company’s ~~results~~estimates may also be affected as it gains a more thorough understanding of ~~operations,~~the ~~financial~~tax ~~position~~law orand ~~cash~~certain ~~flows~~aspects of the Act are clarified by the taxing authorities.

14The Act subjects a U.S. shareholder to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. At December 31, 2017, the Company elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred. The Company has made sufficient progress in its calculation to reasonably estimate the tax expense related to GILTI for the year ended December 31, 2018 and included it in the estimated annual effective tax rate. The impact of GILTI resulted in no incremental tax expense for the quarter ended March 31, 2018 due to net operating loss carryforwards, foreign tax credits and a full valuation allowance on U.S. net deferred tax assets. The Company will continue to refine its calculations, which may result in changes to the expected impact for 2018.

The Company maintains its assertion on a provisional basis that it intends to continue to indefinitely reinvest the gross book-tax differences in its non-U.S. consolidated subsidiaries. However, the Company records deferred foreign taxes on gross book-tax basis differences to the extent of foreign distributable reserves for certain foreign subsidiaries. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis differences in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable.

The Company is currently under examination in various tax jurisdictions in which it operates, including Bolivia, Brazil, Canada, China, Colombia, France, Germany, and Indonesia. The years under examination range from 2004 through 2015. The Company has received tax assessments in excess of established reserves for uncertain tax positions. The Company is contesting these tax assessments, and will continue to do so, including pursuing all available remedies such as appeals and litigation, if necessary. The Company believes that adequate provisions for all income tax uncertainties have been made. However, if 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.

9. Debt

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

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2017		2016		2016
	2018		2017		2017
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	~~200~~462	$	—	$	285
Term Loans:
Term Loan A		1,~~202~~149		1,~~395~~148		1,~~516~~370
Term Loan A (€279 million)		308		282		303
Term Loan A (€279 million at March 31, 2017)						284
Term Loan B						558
Senior Notes:
6.75%, due 2020 (€500 million)		~~586~~613		~~523~~594		~~557~~530
4.875%, due 2021 (€330 million)		~~386~~404		~~345~~392		~~367~~350
5.00%, due 2022		496		~~495~~496		495
5.875%, due 2023		684		682		681
4.00%, due 2023		305		305
3.125%, due 2024 (€725 million at September 30, 2017 and €500 million at December 31, 2016)		840		520
5.875%, due 2023		686		685		683
6.375%, due 2025		295		294		294
3.125%, due 2024 (€725 million at March 31, 2018)		872		849		763
5.375%, due 2025		297		297		296
6.375%, due 2025		295		295		294
Payable to OI Inc.		22		250		250
5.375%, due 2025		297		297		297
Capital Leases		54		57		62
Payable to OI Inc.						22
Other		56		26		30
Capital Leases		53		54		56
Total long-term debt		5,426		5,166		5,409
Other		19		17		26
Less amounts due within one year		48		33		76
Total long-term debt		5,651		5,132		5,455
Long-term debt	$	5,378	$	5,133	$	5,333
Less amounts due within one year		11		11		24
Long-term debt	$	5,640	$	5,121	$	5,431

On April 22, 2015, the Company entered into a Senior Secured Credit Facility, which subsequently has been amended several times with the most recent amendment being entered into on September 28, 2017 (the “Amended Agreement”).

At ~~September~~March 3031, ~~2017~~2018, the Amended Agreement includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, and a $1,575 million term loan A facility ($1,~~202~~149 million net of debt issuance costs), ~~and a €279 million term loan A facility ($308 million net of debt issuance costs),~~ each of which has a final maturity date of April 22, 2020. At ~~September~~March 3031, ~~2017~~2018, the Company had unused credit of $~~652~~412 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at ~~September~~March 3031, ~~2017~~2018 was 2.5798%.

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 (excluding ordinary course revolver borrowings, except to the extent such borrowings existed at the prior year end, and non-recourse factoring or securitization debt), less cash and cash equivalents ~~(“Net Indebtedness”)~~, by consolidated EBITDA, as defined in the Amended Agreement. The Total Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Total Leverage Ratio to exceed the specified maximum of ~~(i)~~ 4.~~5x for the fiscal quarter ending September 30, 2017, and (ii) 4.~~0x for the ~~fourth~~first fiscal quarter ending ~~December~~March 31, ~~2017~~2018 and each fiscal quarter thereafter.

OnFailure ~~September~~to ~~28,~~comply ~~2017~~with these covenants and restrictions could result in an event of default under the Amended Agreement. In such an event, the Company ~~entered~~would ~~into~~be ~~Amendment~~unable ~~No.~~to 5request ~~(“Amendment~~borrowings ~~No.~~under ~~5”)~~the torevolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable. ~~Amendment~~If ~~No.~~an 5event ~~changes~~of default occurs under the ~~calculation~~Amended ofAgreement and the ~~Total~~lenders ~~Leverage~~cause ~~Ratio~~all byof ~~excluding~~the ~~from~~outstanding debt obligations under the ~~calculation~~Amended ofAgreement ~~Net~~to ~~Indebtedness~~become ~~ordinary~~due ~~course~~and ~~revolver~~payable, ~~borrowings~~this ~~(except~~would toresult ~~the~~in ~~extent~~a ~~such~~default ~~borrowings~~under ~~existed~~a atnumber ~~the~~of ~~prior~~other ~~year~~outstanding ~~end)~~debt securities and ~~non-recourse~~could ~~factoring~~lead orto ~~securitization~~an acceleration of obligations related to these debt.

1514

Failure to comply with these covenants and restrictions could result in an event of default under the Amended Agreement. In such an event, the Company would be unable to request borrowings under the revolving facility, and all amounts outstanding under the Amended Agreement, together with accrued interest, could then be declared immediately due and payable. If an event of default occurs under the Amended Agreement and the lenders cause all of the outstanding debt obligations under the Amended Agreement to become due and payable, this would result in a default under a number of other outstanding debt securities ~~and could lead to an acceleration of obligations related to these debt securities~~. As of ~~September~~March 3031, ~~2017~~2018, 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~~In ~~August~~March ~~2015~~2017, the Company ~~issued~~expanded ~~senior~~its ~~notes~~borrowings ~~with~~under ~~a face value of $700 million that bear interest at 5.875% and are due August 15, 2023 (~~the “Senior Notes due ~~2023”)~~2024 ~~and~~by ~~senior~~issuing ~~notes~~€225 ~~with~~million ~~a face value~~ of ~~$300~~additional ~~million~~notes that bear interest at 63.~~375~~125% and are due ~~August~~November 15, ~~2025 (together with the Senior Notes due 2023, the “2015 Senior Notes”)~~2024. The ~~2015~~notes ~~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~~237 million and were used to repay a portion of the Company’s revolving credit facility.

During ~~November~~March ~~2016~~2017, OI ~~the~~Inc. ~~Company~~purchased ~~issued~~in ~~senior notes with~~ a ~~face~~tender ~~value~~offer ofapproximately ~~€500~~$228 million ~~that~~aggregate ~~bear~~principal ~~interest~~amount atof 3its 7.~~125~~80% ~~and are due November 15, 2024 (the “~~Senior ~~Notes~~Debentures due ~~2024”)~~in 2018. ~~The~~In ~~notes~~November ~~were~~2017, ~~issued~~the ~~via~~remaining a$22 ~~private~~million ~~placement and are guaranteed by certain~~ of the ~~Company‘s domestic subsidiaries~~7. ~~The~~80% ~~net~~Senior ~~proceeds,~~Debentures ~~after~~were ~~deducting~~repurchased ~~debt~~by ~~issuance~~OI ~~costs~~Inc., ~~totaled~~the ~~approximately~~indenture ~~$520~~relating ~~million~~thereto ~~and~~was ~~were~~discharged, ~~used~~and toall ~~repay~~collateral ~~the~~and ~~term~~guarantees ~~loan~~thereunder Bwere ~~facility under the Amended Agreement~~released. In ~~March~~ 2017, the Company ~~expanded~~recorded ~~its~~$18 ~~borrowings under the Senior Notes due 2024 by issuing €225~~ million of additional ~~notes that bear~~ interest atcharges ~~3.125%~~for ~~and~~note ~~are~~repurchase ~~due~~premiums ~~November 15, 2024. The notes were issued via a private placement~~ and ~~are~~the ~~guaranteed~~write-off ~~by certain~~ of ~~the~~unamortized ~~Company‘s~~finance ~~domestic~~fees ~~subsidiaries. The~~related ~~net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used~~ to ~~repay~~these ~~a portion of the Company’s revolving credit facility~~actions.

InDuring ~~March~~December 2017, OIthe ~~Inc.~~Company ~~purchased~~issued insenior notes with a ~~tender~~face ~~offer~~value ~~approximately~~of $~~228~~310 million ~~aggregate~~that ~~principal~~bear ~~amount~~interest ofat ~~its 7~~4.8000% ~~Senior~~and ~~Debentures~~are due inMarch ~~2018~~15, 2023. ~~Approximately~~The ~~$22~~notes ~~million~~were ofissued ~~the~~via ~~Senior~~a ~~Debentures~~private ~~remain~~placement ~~outstanding~~and asare guaranteed by certain of ~~September~~the ~~30,~~Company‘s ~~2017~~domestic subsidiaries. The Asnet ~~part~~proceeds, ofafter ~~the~~deducting ~~tender~~debt ~~offer~~issuance costs, ~~the~~totaled ~~Company~~approximately ~~recorded~~ $17305 million ofand ~~additional~~were ~~interest~~used ~~charges~~to ~~for~~repay ~~note~~a ~~repurchase~~portion ~~premiums~~of ~~and~~ the ~~related~~term ~~write-off~~loan ofA ~~unamortized~~facility ~~finance~~under ~~fees in~~ the ~~first~~Amended ~~quarter of 2017~~Agreement.

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

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

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

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

	September 30,			December 31,			September 30,
	March 31,			December 31,			March 31,
	2017			2016			2016
	2018			2017			2017
Balance (included in short-term loans)	$	~~170~~144		$	~~152~~133		$	~~158~~148
Weighted average interest rate		01.6501	%		0.7476	%		0.6788	%

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

~~Fair values at September 30, 2017 of the Company’s significant fixed rate debt obligations are as follows:~~15

	Principal		Indicated
	Amount		Market Price		Fair Value
Senior Notes:
6.75%, due 2020 (€500 million)	$	589	$	118.38	$	697
4.875%, due 2021 (€330 million)		389		113.85		443
5.00%, due 2022		500		105.80		529
5.875%, due 2023		700		110.65		775
3.125%, due 2024 (€725 million)		854		103.38		883
6.375%, due 2025		300		113.10		339
5.375%, due 2025		300		106.98		321

Fair values at March 31, 2018 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)	$	616	$	114.41	$	704
4.875%, due 2021 (€330 million)		406		110.78		450
5.00%, due 2022		500		101.50		508
5.875%, due 2023		700		103.89		727
4.00%, due 2023		310		95.53		296
3.125%, due 2024 (€725 million)		893		101.91		910
6.375%, due 2025		300		107.60		323
5.375%, due 2025		300		101.40		304

10. Contingencies

Asbestos

OI Inc. is a defendant in numerous lawsuits alleging bodily injury and death as a result of exposure to asbestos. From 1948 to 1958, one of OI Inc.’s former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based pipe and block insulation material containing asbestos. OI Inc. sold its insulation business unit at the end of April 1958. The typical asbestos personal injury lawsuit alleges various theories of liability, including negligence, gross negligence and strict liability and seeks compensatory and, in some cases, punitive damages in various amounts (herein referred to as "asbestos claims").

As of ~~September~~March 3031, ~~2017~~2018, OI Inc. has determined that it is a named defendant in asbestos lawsuits and claims involving approximately 1,~~400~~270 plaintiffs and claimants. Based on an analysis of the lawsuits pending as of December 31, ~~2016~~2017, approximately 8889% 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 98% of plaintiffs specifically plead damages above the jurisdictional minimum up to, and including, $15 million or less, and 3% of plaintiffs specifically plead damages greater than $15 million but less than or equal to $100 million.

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

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

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

17Since receiving its first asbestos claim, OI Inc. as of March 31, 2018, has disposed of asbestos claims of approximately 399,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,600. OI Inc.’s asbestos indemnity payments have varied on a per claim basis, and are expected to continue to vary considerably over time. Asbestos-related cash payments for 2017, 2016 and 2015 were $110 million, $125 million and $138 million, respectively. OI Inc.’s cash payments per claim disposed (inclusive of legal costs) were approximately $83,000, $71,000, and $95,000 for the years ended December 31, 2017, 2016 and 2015, respectively.

~~description of pending matters or in the following description of disposed matters.~~ 16

Since receiving its first asbestos claim, OI Inc. as of September 30, 2017, has disposed of asbestos claims of approximately 399,000 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,500. OI Inc.’s asbestos indemnity payments have varied on a per claim basis, and are expected to continue to vary considerably over time. Asbestos-related cash payments for 2016, 2015 and 2014 were $125 million, $138 million and $148 million, respectively. OI Inc.’s cash payments per claim disposed (inclusive of legal costs) were approximately $71,000, $95,000, and $81,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

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

Beginning with the initial liability of $975 million established in 1993, OI Inc. has accrued a total of approximately $4.9 billion through ~~September~~March 3031, ~~2017~~2018, before insurance recoveries, for its asbestos-related liability. OI Inc.’s estimates of its liability have been significantly affected by, among other factors, the volatility of asbestos-related litigation in the United States, the significant number of co-defendants that have filed for bankruptcy, the inherent uncertainty of future disease incidence and claiming patterns against OI Inc., the significant expansion of the defendants that are now sued in this litigation, and the continuing changes in the extent to which these defendants participate in the resolution of cases in which OI Inc. is also a defendant.

OI Inc. continues to monitor trends that may affect its ultimate liability and analyze the developments and variables likely to affect the resolution of pending and future asbestos claims against OI Inc. The material components of OI Inc.’s total accrued liability are determined by OI Inc. in connection with its annual comprehensive legal review and consist of the following estimates, to the extent it is probable that such liabilities have been incurred and can be reasonably estimated: (i) the liability for asbestos claims already asserted against OI Inc.; (ii) the liability for asbestos claims not yet asserted against OI Inc.; and (iii) the legal defense costs estimated to be incurred in connection with the claims already asserted and those claims OI Inc. believes will be asserted.

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

The significant assumptions underlying the material components of the OI Inc.’s accrual are:

settlements will continue to be limited almost exclusively to claimants who were exposed to OI Inc.’s asbestos‑containing insulation prior to its exit from that business in 1958;

claims will continue to be resolved primarily under OI Inc.’s administrative claims agreements or on terms comparable to those set forth in those agreements;

the incidence of serious asbestos‑related disease cases and claiming patterns against OI Inc. for such cases do not change materially;

OI Inc. is substantially able to defend itself successfully at trial and on appeal;

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

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

18For the years ended December 31, 2017 and 2016, OI Inc. concluded that accruals in the amounts of $582 million and $692 million, respectively, were required. These amounts have not been discounted for the time value of money. OI Inc.’s comprehensive legal reviews resulted in charges of $0 million, $0 million and $16 million for the years ended December 31, 2017, 2016 and 2015, respectively.

~~future~~ OI Inc. believes it is reasonably possible that it will incur a loss for its asbestos-related ~~lawsuits~~liabilities ~~and~~in ~~claims~~excess of the amount currently recognized, which was $582 million as of December 31, 2017. OI Inc. estimated that reasonably possible

For the years ended December 31, 2016 and 2015, OI Inc. concluded that accruals in the amount of $692 million and $817 million, respectively, were required. These amounts have not been discounted for the time value of money. OI Inc.’s comprehensive legal reviews resulted in charges of $0 million, $16 million and $46 million for the years ending December 31, 2016, 2015 and 2014, respectively. 17

OIlosses ~~Inc.~~could ~~believes~~result itin ~~is reasonably possible that it will incur a loss for its~~ asbestos-related liabilities inup ~~excess~~to ~~of the amount currently recognized, which is~~ $~~692~~725 million ~~as of December 31, 2016~~. ~~OI Inc. estimates that reasonably possible losses could be as high as $825 million.~~ This estimate of additional reasonably possible loss reflects a qualitative legal judgment ~~about~~regarding the ~~number~~nature ~~and~~of ~~cost~~contingencies ofthat ~~potential~~could impact future claims and legal costs., OIwhich ~~Inc.~~include, ~~believes~~but ~~this~~are ~~estimate~~not islimited ~~consistent~~to, ~~with~~successful ~~the~~attempts ~~level~~by ofplaintiffs ~~variability~~to itchallenge ~~has~~existing ~~experienced~~legal ~~when~~barriers ~~comparing~~to ~~actual~~liability, ~~results~~enact toplaintiff-oriented ~~recent~~liability ~~near~~or damage-~~term~~related ~~projections~~legislation, establish new theories of liability, or revive long-dormant inventories of non-mesothelioma cases. However, it is also possible that the ultimate amount of asbestos-related ~~liability~~liabilities could be above this estimate.

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

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

Other Matters

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

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

1918

11. Share Owners’ Equity

The activity in share owners’ equity for the three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 is as follows:

	Share Owners’ Equity of the Company
					Accumulated
	Other				Other		Non-		Total Share
	Contributed		Retained		Comprehensive		controlling		Owners'
	Capital		Earnings		Loss		Interests		Equity
Balance on July 1, 2017	$	622	$	2,630	$	(1,916)	$	109	$	1,445
Balance on January 1, 2018	$	553	$	2,622	$	(1,785)	$	119	$	1,509
Net distribution to parent		(1646)								(1646)
Net earnings				~~126~~98				75		~~133~~103
Other comprehensive income						19122		16		20128
Balance on September 30, 2017	$	606	$	2,756	$	(1,897)	$	117	$	1,582
Balance on March 31, 2018	$	507	$	2,720	$	(1,663)	$	130	$	1,694

	Share Owners’ Equity of the Company
					Accumulated
	Other				Other		Non-		Total Share
	Contributed		Retained		Comprehensive		controlling		Owners'
	Capital		Earnings		Loss		Interests		Equity
Balance on July 1, 2016	$	728	$	2,405	$	(1,992)	$	110	$	1,251
Balance on January 1, 2017	$	635	$	2,442	$	(2,131)	$	109	$	1,055
Net distribution to parent		(176)								(176)
Net earnings				~~108~~49				64		~~114~~53
Other comprehensive loss						(57)		(2)		(59)
Other comprehensive income						191		3		194
Acquisitions of noncontrolling interests		(1)								(1)
Balance on March 31, 2017	$	629	$	2,491	$	(1,940)	$	116	$	1,296
Balance on September 30, 2016	$	710	$	2,513	$	(2,049)	$	114	$	1,288

The activity in share owners’ equity for the nine months ended September 30, 2017 and 2016 is as follows:

	Share Owners’ Equity of the Company
					Accumulated
	Other				Other		Non-		Total Share
	Contributed		Retained		Comprehensive		controlling		Owners'
	Capital		Earnings		Loss		Interests		Equity
Balance on January 1, 2017	$	635	$	2,442	$	(2,131)	$	109	$	1,055
Net distribution to parent		(29)								(29)
Net earnings				314				15		329
Other comprehensive income (loss)						234		(7)		227
Balance on September 30, 2017	$	606	$	2,756	$	(1,897)	$	117	$	1,582

	Share Owners’ Equity of the Company
					Accumulated
	Other				Other		Non-		Total Share
	Contributed		Retained		Comprehensive		controlling		Owners'
	Capital		Earnings		Loss		Interests		Equity
Balance on January 1, 2016	$	731	$	2,233	$	(1,976)	$	108	$	1,096
Net distribution to parent		(20)								(20)
Net earnings				280				16		296
Other comprehensive loss						(73)		(10)		(83)
Acquisitions of noncontrolling interests		(1)								(1)
Balance on September 30, 2016	$	710	$	2,513	$	(2,049)	$	114	$	1,288

12. Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on July 1, 2017	$	(578)	$	(7)		$	(1,331)		$	(1,916)
Balance on January 1, 2018	$	(723)	$	(5)		$	(1,057)		$	(1,785)
Change before reclassifications		9120					(24)			7116
Amounts reclassified from accumulated other comprehensive income				(4)	(a)		1917	(b)		1913
Translation effect				(1)			(76)			(7)
Other comprehensive income attributable to the Company		9120		—(5)			107			19122
Balance on September 30, 2017	$	(569)	$	(7)		$	(1,321)		$	(1,897)
Balance on March 31, 2018	$	(603)	$	(10)		$	(1,050)		$	(1,663)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on July 1, 2016	$	(574)	$	(4)		$	(1,414)		$	(1,992)
Change before reclassifications		(77)								(77)
Amounts reclassified from accumulated other comprehensive income				(1)	(a)		26	(b)		25
Translation effect							(5)			(5)
Other comprehensive income (loss) attributable to the Company		(77)		(1)			21			(57)
Balance on September 30, 2016	$	(651)	$	(5)		$	(1,393)		$	(2,049)


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2017	$	(788)	$	3		$	(1,346)		$	(2,131)
Change before reclassifications		186					(12)			174
Amounts reclassified from accumulated other comprehensive income				(6)	(a)		19	(b)		13
Translation effect							4			4
Other comprehensive income attributable to the Company		186		(6)			11			191
Balance on March 31, 2017	$	(602)	$	(3)		$	(1,335)		$	(1,940)

(a)

Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 5 for additional information).

(b)

Amount is included in the computation of net periodic pension cost (see Note 7 for additional information) and net postretirement benefit cost.

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

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2017	$	(788)	$	3		$	(1,346)		$	(2,131)
Change before reclassifications		219					(12)			207
Amounts reclassified from accumulated other comprehensive income				(10)	(a)		58	(b)		48
Translation effect							(21)			(21)
Other comprehensive income (loss) attributable to the Company		219		(10)			25			234
Balance on September 30, 2017	$	(569)	$	(7)		$	(1,321)		$	(1,897)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2016	$	(568)	$	(10)		$	(1,398)		$	(1,976)
Change before reclassifications		(83)								(83)
Amounts reclassified from accumulated other comprehensive income				4	(a)		(2)	(b)		2
Translation effect							6			6
Tax effect				1			1			2
Other comprehensive income (loss) attributable to the Company		(83)		5			5			(73)
Balance on September 30, 2016	$	(651)	$	(5)		$	(1,393)		$	(2,049)

(a) Amount is included in Cost of goods sold on the Condensed Consolidated Results of Operations (see Note 5 for additional information).

(b) Amount is included in the computation of net periodic pension cost (see Note 7 for additional information) and net postretirement benefit cost.

13. Other Expense (Income), net

Other expense (income), net for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 included the following:

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2017		2016		2017		2016
	2018		2017
Restructuring, asset impairment and other charges	$	—	$	39	$	49	$	19
Gain on sale of land in China								(7)
Foreign currency exchange (gain) loss		2		(1)
Foreign currency exchange loss		3		2		3		6
Intangible amortization expense		10		10
Intangible amortization expense		11		10		31		30
Royalty income		(3)		(4)
Royalty income		(4)		(4)		(11)		(9)
Other (income)/expense		(12)		1
Other income		(5)		(13)		(11)		(15)
	$	(3)	$	45
	$	5	$	(5)	$	61	$	24

14. Supplemental Cash Flow Information

~~Financial~~Income ~~information~~taxes ~~regarding~~paid ~~the~~in ~~Company’s supplemental~~ cash ~~flow~~were ~~information is~~ as follows:

	Nine months ended September 30,
	Three months ended March 31,
	2017		2016
	2018		2017
Interest paid in cash	$	209	$	214
U.S.	$	3	$	3
Income taxes paid in cash (all non-U.S.)		120		93
Non-U.S.		31		30
Total income taxes paid in cash		34		33

Interest paid in cash for the three months ended March 31, 2018 and 2017 was $88 million and $98 million, respectively. Cash interest for the ~~nine~~three months ended ~~September~~March 3031, 2017 ~~includes~~included $16 million of note repurchase premiums related to debt that was repaid prior to its maturity.

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At ~~September~~March 3031, ~~2017~~2018 and ~~September~~March 3031, ~~2016~~2017, the amount of receivables sold by the Company was $~~145~~216 million and $~~240~~202 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 ~~September~~March 3031, ~~2017~~2018, that Award amounts to more than $500 million, including reimbursement of expenses and accrued interest. Venezuela’s application to annul the Award was heard by an ad hoc committee of the ICSID in September 2017, but no decision has been rendered yet.

2220

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 iswas ~~pending~~initiated ~~before~~in ~~ICSID~~2012 to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants. However, on November 13, 2017, ICSID issued an award that dismissed this arbitration on jurisdiction grounds. In March 2018, the Company submitted to ICSID an application to annul the November 13, 2017 award.

As of ~~September~~March 3031, ~~2017~~2018, the Company deferred the gain contingency on the sale of its rights in amounts due under the Award pending the ad hoc committee of the ICSID rendering its decision regarding Venezuela’s application to annul the Award. The loss from discontinued operations of $2 million and $6 million for the nine months ended September 30, 2017 and September 30, 2016, respectively, relates to ongoing costs for the Venezuelan expropriation.

The loss from discontinued operations was less than $1 million for the three months ended March 31, 2018 and March 31, 2017 and related to ongoing costs of 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. InOn 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~~adopted ~~not expect that the implementation of~~ this ~~standard~~accounting ~~in 2018 will have a significant impact on the timing in which it recognizes revenue~~standard. ~~While~~See ~~the~~Note ~~Company~~3, ~~continues to assess the potential impacts of the new standard~~Revenue, ~~the~~for ~~Company~~additional ~~does not currently expect the adoption of the new standard to have a material impact on consolidated net income or the consolidated balance sheet~~information. ~~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~~that ~~adoption~~the isCompany ~~permitted~~plans to elect. The Company isanticipates ~~currently~~the ~~evaluating~~new ~~the~~guidance ~~effects~~will ~~that~~significantly impact its consolidated financial statements as the ~~adoption~~Company ofhas ~~ASU~~a Nosignificant number of leases. ~~2016-02~~As ~~will~~of ~~have~~December on31, 2017, the Company’s ~~consolidated~~had ~~financial~~minimum ~~statements~~lease commitments under non-cancellable operating leases totaling $258 million. The Company formed an implementation team, commenced identification of its lease population and ~~anticipates~~has begun the ~~new~~implementation ~~guidance~~of ~~will~~new ~~significantly~~software ~~impact~~to manage its ~~consolidated~~leases ~~financial~~in ~~statements~~accordance aswith this new accounting standard.

2321

Credit Losses - In June 2016, the ~~Company~~FASB ~~has~~issued aASU ~~significant~~No. ~~number~~2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of ~~leases.~~Credit AsLosses ~~further~~on ~~described~~Financial inInstruments. ~~Note~~This 16guidance inrequires the ~~Company’s~~measurement ~~Annual~~of ~~Report~~all onexpected ~~Form 10-K~~credit losses for financial assets held at the ~~year~~reporting ~~ended~~date ~~December 31,~~based ~~2016~~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 ~~had~~on ~~minimum~~January ~~lease~~1, ~~commitments~~2020. ~~under~~Early ~~non-cancellable~~adoption ~~operating~~is ~~leases~~permitted ~~totaling~~for ~~$205~~fiscal ~~million~~years, asand ofinterim periods within those fiscal years, beginning after December 3115, ~~2016~~2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

~~Compensation –~~Statement ~~Retirement~~of ~~Benefits~~Cash Flows - In ~~March~~August ~~2017~~2016, the FASB issued ASU No. ~~2017~~2016-0715, “~~Improving~~Classification ~~the Presentation~~ of ~~Net~~Certain ~~Periodic~~Cash ~~Pension~~Receipts ~~Cost~~ and ~~Net~~Cash ~~Periodic Postretirement Benefit Cost~~Payments” which ~~requires~~was ~~the~~intended ~~service~~to ~~cost~~reduce ~~component~~diversity toin bepractice ~~presented~~on ~~with~~how ~~other~~certain ~~employee~~transactions ~~compensation~~are ~~costs~~classified in ~~operating income within~~ the ~~income~~ statement ~~while the other components will be reported separately outside~~ of ~~operations~~cash flows. Application of the standard is required for annual periods beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018. The adoption of this standard isdid not ~~expected to~~ have a material impact on the Company’s condensed consolidated financial statements.

~~Derivatives~~Compensation ~~and~~- ~~Hedging~~Retirement –Benefits - In ~~August~~March 2017, the FASB issued ASU No. 2017-1207, “~~Targeted~~Improving ~~Improvements~~the toPresentation ~~Accounting~~of ~~for~~Net ~~Hedging~~Periodic ~~Activities~~Pension Cost and Net Periodic Postretirement Benefit Cost” which ~~improves~~requires the ~~financial~~service ~~reporting~~cost ofcomponent ~~hedging~~to ~~relationships~~be topresented ~~better~~with ~~portray~~other employee compensation costs in operating income within the ~~economic~~income ~~results~~statement ofwhile anthe ~~entity’s~~other ~~risk~~components ~~management~~will ~~activities~~be inreported ~~its~~separately ~~financial~~outside ~~statements~~of operations. Application of the standard is required for annual periods beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018. The adoption of this standard isdid not ~~expected to~~ have a material impact on the Company’s condensed consolidated financial statements, except for in the Consolidated Results of Operations for the prior periods in which there were pension settlement charges. These prior period pension settlement charges will be reclassed from the Cost of goods sold and Selling and administrative expense lines into the Other expenses, net line.

17Derivatives and Hedging - In August 2017, the FASB issued ASU No. ~~Financial~~ ~~Information~~2017-12, “Targeted Improvements to Accounting for ~~Subsidiary~~Hedging ~~Guarantors~~Activities” ~~and~~which ~~Non-Guarantors~~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 Company adopted this standard in the first quarter of 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

~~The~~Income ~~following~~Taxes ~~presents~~- ~~condensed~~In ~~consolidating~~January ~~financial~~2018, ~~information~~the ~~for~~FASB ~~the~~issued ~~Company~~ASU 2018-02, ~~segregating:~~ Income Statement – Reporting Comprehensive Income (1Topic 220): ~~Owens-Illinois~~Reclassification ~~Group~~of Certain Tax Effects from Accumulated Other Comprehensive Income, ~~Inc.~~which (gives entities the ~~“Parent”);~~option ~~(2)~~to ~~Owens-Brockway~~reclassify ~~Glass~~to ~~Container~~retained ~~Inc.~~earnings (the ~~“Issuer”);~~tax ~~(3)~~effects ~~those~~resulting ~~domestic~~from ~~subsidiaries~~the ~~that~~Act ~~guarantee~~related to items in AOCI that the 5FASB refers to as having been stranded in AOCI.~~00%~~ ~~senior~~The ~~notes,~~new guidance may be applied retrospectively to each period in which the ~~5.875%~~effect ~~senior~~of ~~notes,~~the Act is recognized in the 5period of adoption.~~375%~~ ~~senior~~The ~~notes~~Company must adopt this guidance for fiscal years beginning after December 15, 2018 and ~~the~~interim 6periods within those fiscal years.~~375%~~ ~~senior~~Early ~~notes~~adoption ofis ~~the~~permitted ~~Issuer~~for ~~(the~~periods ~~“Guarantor~~for ~~Subsidiaries”);~~which ~~and~~financial ~~(4)~~statements ~~all~~have ~~other~~not ~~subsidiaries~~yet (been issued or made available for issuance, including the ~~“Non-Guarantor~~period ~~Subsidiaries”)~~the Act was enacted. The ~~Guarantor~~guidance, ~~Subsidiaries~~when ~~are~~adopted, ~~100%~~will ~~owned~~require ~~direct~~new ~~and~~disclosures ~~indirect~~regarding ~~subsidiaries~~a ofcompany’s accounting policy for releasing the ~~Parent~~tax effects in AOCI and ~~their~~permit ~~guarantees~~a ~~are~~company ~~full,~~the ~~unconditional~~option ~~and~~to ~~joint~~reclassify ~~and~~to ~~several~~retained earnings the tax effects resulting from the Act that are stranded in AOCI. The ~~Parent~~Company is ~~also~~currently aevaluating ~~guarantor,~~how to apply the new guidance and ~~its~~has ~~guarantee~~not isdetermined ~~full~~whether it will elect to reclassify stranded amounts, ~~unconditional~~if ~~and~~any. ~~joint~~The ~~and~~adoption ~~several~~of ASU 2018-02 is not expected to have a material effect on the Company’s consolidated financial statements.

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.22

	September 30, 2017
							Non-
					Guarantor		Guarantor
Balance Sheet	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	66	$	273	$	—	$	339
Trade receivables, net				126		21		881				1,028
Inventories				194		27		825				1,046
Prepaid expenses and other current assets				19		15		220				254
Total current assets		—		339		129		2,199		—		2,667
Investments in and advances to subsidiaries		1,487		3,006		1,248				(5,741)		—
Property, plant and equipment, net				717		4		2,315				3,036
Goodwill				582		332		1,707				2,621
Intangibles, net								473				473
Other assets				107		225		871		(1)		1,202
Total assets	$	1,487	$	4,751	$	1,938	$	7,565	$	(5,742)	$	9,999
Current liabilities:
Short-term loans and long-term debt due within one year	$	22	$	1	$		$	220	$	—	$	243
Accounts payable				172		18		897				1,087
Other liabilities				106		57		454				617
Other liabilities - discontinued operations								115				115
Total current liabilities		22		279		75		1,686		—		2,062
Long-term debt				2,981				2,397				5,378
Other long-term liabilities				4		376		597				977
Investments by and advances from parent				1,487		1,487		2,768		(5,742)		—
Total share owner's equity of the Company		1,465										1,465
Noncontrolling interests								117				117
Total liabilities and share owners’ equity	$	1,487	$	4,751	$	1,938	$	7,565	$	(5,742)	$	9,999

	December 31, 2016
							Non-
					Guarantor		Guarantor
Balance Sheet	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$	—	$	33	$	459	$	—	$	492
Trade receivables, net				64		14		502				580
Inventories				202		27		754				983
Prepaid expenses and other current assets				27		16		156				199
Total current assets		—		293		90		1,871		—		2,254
Investments in and advances to subsidiaries		1,196		2,980		1,028				(5,204)		—
Property, plant and equipment, net				721		6		2,153				2,880
Goodwill				582		332		1,548				2,462
Intangibles, net								464				464
Other assets				111		237		727				1,075
Total assets	$	1,196	$	4,687	$	1,693	$	6,763	$	(5,204)	$	9,135
Current liabilities:
Short-term loans and long-term debt due within one year	$		$	12	$		$	183	$		$	195
Accounts payable				177		22		936				1,135
Other liabilities				129		68		418				615
Total current liabilities		—		318		90		1,537		—		1,945
Long-term debt		250		3,163				1,720				5,133
Other long-term liabilities				11		408		583				1,002
Investments by and advances from parent				1,195		1,195		2,814		(5,204)		—
Total share owner's equity of the Company		946										946
Noncontrolling interests								109				109
Total liabilities and share owners’ equity	$	1,196	$	4,687	$	1,693	$	6,763	$	(5,204)	$	9,135

	September 30, 2016
							Non-
					Guarantor		Guarantor
Balance Sheet	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Current assets:
Cash and cash equivalents	$	—	$		$	15	$	279	$	—	$	294
Trade receivables, net				86		21		750				857
Inventories				198		30		829				1,057
Prepaid expenses and other current assets				22		10		202				234
Total current assets		—		306		76		2,060		—		2,442
Investments in and advances to subsidiaries		1,424		4,295		1,250				(6,969)		—
Property, plant and equipment, net				698		5		2,214				2,917
Goodwill				582		331		1,621				2,534
Intangibles, net								490				490
Other assets				123		243		748				1,114
Total assets	$	1,424	$	6,004	$	1,905	$	7,133	$	(6,969)	$	9,497
Current liabilities:
Short-term loans and long-term debt due within one year	$	—	$	55	$	—		207	$	—	$	262
Accounts payable				179		18		862				1,059
Other liabilities				111		52		419				582
Total current liabilities		—		345		70		1,488		—		1,903
Long-term debt		250		3,799				1,284				5,333
Other long-term liabilities				8		412		553				973
Investments by and advances from parent				1,852		1,423		3,694		(6,969)		—
Total share owner's equity of the Company		1,174										1,174
Noncontrolling interests								114				114
Total liabilities and share owners’ equity	$	1,424	$	6,004	$	1,905	$	7,133	$	(6,969)	$	9,497

	Three months ended September 30, 2017
							Non-
					Guarantor		Guarantor
Results of Operations	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	485	$	64	$	1,282	$	(40)	$	1,791
Cost of goods sold				(412)		(49)		(1,017)		40		(1,438)
Gross profit		—		73		15		265		—		353
Research, engineering, selling, administrative and other				(26)		(24)		(84)		(1)		(135)
Net intercompany interest		1		(1)				—				—
Interest expense, net		(1)		(37)		(1)		(24)				(63)
Equity earnings from subsidiaries		171		122						(293)		—
Other equity earnings				3				19				22
Other expense, net				43		(4)		(44)				(5)
Earnings from continuing operations before income taxes		171		177		(14)		132		(294)		172
Provision for income taxes				(1)		—		(35)		(1)		(37)
Earnings from continuing operations		171		176		(14)		97		(295)		135
Loss from discontinued operations								(2)				(2)
Net earnings		171		176		(14)		95		(295)		133
Net earnings attributable to noncontrolling interests								(7)				(7)
Net earnings (loss) attributable to the Company	$	171	$	176	$	(14)	$	88	$	(295)	$	126

	Three months ended September 30, 2017
							Non-
					Guarantor		Guarantor
Comprehensive Income	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings (loss)	$	171	$	176	$	(14)	$	95	$	(295)	$	133
Other comprehensive income		20						9		(9)		20
Total comprehensive income (loss)		191		176		(14)		104		(304)		153
Comprehensive income attributable to noncontrolling interests								(8)				(8)
Comprehensive income (loss) attributable to the Company	$	191	$	176	$	(14)	$	96	$	(304)	$	145

	Three months ended September 30, 2016
							Non-
					Guarantor		Guarantor
Results of Operations	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	498	$	73	$	1,181	$	(40)	$	1,712
Cost of goods sold				(414)		(58)		(943)		39		(1,376)
Gross profit		—		84		15		238		(1)		336
Research, engineering, selling, administrative and other				(29)		(20)		(88)				(137)
Net intercompany interest		5		(4)				(1)				—
Interest expense, net		(5)		(44)				(17)				(66)
Equity earnings from subsidiaries		108		88						(196)		—
Other equity earnings				3				12				15
Other expense, net				38		(4)		(29)				5
Earnings (loss) from continuing operations before income taxes		108		136		(9)		115		(197)		153
Provision for income taxes				—				(36)				(36)
Earnings (loss) from continuing operations		108		136		(9)		79		(197)		117
Loss from discontinued operations								(3)				(3)
Net earnings (loss)		108		136		(9)		76		(197)		114
Net earnings attributable to noncontrolling interests								(6)				(6)
Net earnings (loss) attributable to the Company	$	108	$	136	$	(9)	$	70	$	(197)	$	108

	Three months ended September 30, 2016
							Non-
					Guarantor		Guarantor
Comprehensive Income	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings (loss)	$	108	$	136	$	(9)	$	76	$	(197)	$	114
Other comprehensive income (loss)		(59)		(1)				(79)		80		(59)
Total comprehensive income (loss)		49		135		(9)		(3)		(117)		55
Comprehensive income attributable to noncontrolling interests								(4)				(4)
Comprehensive income (loss) attributable to the Company	$	49	$	135	$	(9)	$	(7)	$	(117)	$	51

	Nine months ended September 30, 2017
							Non-
					Guarantor		Guarantor
Results of Operations	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	1,446	$	199	$	3,626	$	(114)	$	5,157
Cost of goods sold				(1,204)		(147)		(2,906)		114		(4,143)
Gross profit		—		242		52		720		—		1,014
Research, engineering, selling, administrative and other				(83)		(78)		(247)				(408)
Net intercompany interest		22		(23)				1				—
Interest expense, net		(22)		(114)		(1)		(67)				(204)
Equity earnings from subsidiaries		314		276						(590)		—
Other equity earnings				10				45				55
Other expense, net				110		(5)		(166)				(61)
Earnings (loss) from continuing operations before income taxes		314		418		(32)		286		(590)		396
Provision for income taxes				(5)		(2)		(58)				(65)
Earnings (loss) from continuing operations		314		413		(34)		228		(590)		331
Loss from discontinued operations								(2)				(2)
Net earnings (loss)		314		413		(34)		226		(590)		329
Net earnings attributable to noncontrolling interests								(15)				(15)
Net earnings (loss) attributable to the Company	$	314	$	413	$	(34)	$	211	$	(590)	$	314

	Nine months ended September 30, 2017
							Non-
					Guarantor		Guarantor
Comprehensive Income	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings (loss)	$	314	$	413	$	(34)	$	226	$	(590)	$	329
Other comprehensive income (loss)		227		(7)				186		(179)		227
Total comprehensive income (loss)		541		406		(34)		412		(769)		556
Comprehensive income attributable to noncontrolling interests								(8)				(8)
Comprehensive income (loss) attributable to the Company	$	541	$	406	$	(34)	$	404	$	(769)	$	548

	Nine months ended September 30, 2016
							Non-
					Guarantor		Guarantor
Results of Operations	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	1,469	$	217	$	3,509	$	(135)	$	5,060
Cost of goods sold				(1,215)		(172)		(2,811)		135		(4,063)
Gross profit		—		254		45		698		—		997
Research, engineering, selling, administrative and other				(89)		(76)		(258)				(423)
Net intercompany interest		15		(15)								—
Interest expense, net		(15)		(133)				(51)				(199)
Equity earnings from subsidiaries		280		255						(535)		—
Other equity earnings				8				36				44
Other expense, net				98		(13)		(109)				(24)
Earnings (loss) from continuing operations before income taxes		280		378		(44)		316		(535)		395
Provision for income taxes				(4)				(89)				(93)
Earnings (loss) from continuing operations		280		374		(44)		227		(535)		302
Loss from discontinued operations								(6)				(6)
Net earnings (loss)		280		374		(44)		221		(535)		296
Net earnings attributable to noncontrolling interests								(16)				(16)
Net earnings (loss) attributable to the Company	$	280	$	374	$	(44)	$	205	$	(535)	$	280

	Nine months ended September 30, 2016
							Non-
					Guarantor		Guarantor
Comprehensive Income	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net earnings (loss)	$	280	$	374	$	(44)	$	221	$	(535)	$	296
Other comprehensive income (loss)		(83)		4				(70)		66		(83)
Total comprehensive income (loss)		197		378		(44)		151		(469)		213
Comprehensive income attributable to noncontrolling interests								(6)				(6)
Comprehensive income (loss) attributable to the Company	$	197	$	378	$	(44)	$	145	$	(469)	$	207

	Nine months ended September 30, 2017
							Non-
					Guarantor		Guarantor
Cash Flows	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash provided by (utilized in) operating activities	$	—		282	$	35	$	(231)	$	—	$	86
Cash utilized in investing activities				(82)				(118)				(200)
Cash utilized in (provided) by financing activities				(200)				137				(63)
Effect of exchange rate change on cash								24				24
Net change in cash		—		—		35		(188)		—		(153)
Cash at beginning of period						33		459				492
Cash at end of period	$	—	$	—	$	68	$	271	$	—	$	339

	Nine months ended September 30, 2016
							Non-
					Guarantor		Guarantor
Cash Flows	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Cash provided by (utilized in) operating activities	$	—		108	$	10	$	147	$		$	265
Cash utilized in investing activities				(66)		(1)		(215)				(282)
Cash provided by (utilized in) financing activities				(42)				(42)				(84)
												—
Effect of exchange rate change on cash								(4)				(4)
Net change in cash		—		—		9		(114)		—		(105)
Cash at beginning of period						6		393				399
Cash at end of period	$	—	$	—	$	15	$	279	$	—	$	294

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~~As ~~information~~previously ~~for~~disclosed, to better leverage its scale and presence across a larger geography and market, the ~~three~~Company completed the consolidation of the former North America and ~~nine~~Latin ~~months~~America ~~ended~~segments ~~September~~into 30one segment, ~~2017~~named the Americas, effective January 1, 2018. The consolidation resulted in the leadership roles of the former North America and ~~2016~~Latin ~~regarding~~America segments being combined into one position, President of the Americas, reporting to the Company’s ~~reportable~~chief ~~segments~~operating decision maker (“CODM”), who is the Company’s Chief Executive Officer. Beginning January 1, 2018, the CODM reviews the operating results at the Americas level to make resource allocation decisions and to assess performance. The consolidation also resulted in the elimination of duplicative costs as ~~follows~~certain ~~(dollars~~functions of the former North America and Latin America segments were combined to simplify the management of the new Americas segment. For example, the Company consolidated its business shared service centers in ~~millions):~~North America and Latin America into one Americas shared service center.

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Net Sales:
Europe	$	624	$	586	$	1,813	$	1,795
North America		551		578		1,651		1,709
Latin America		412		365		1,123		1,022
Asia Pacific		188		170		516		487
Reportable segment totals		1,775		1,699		5,103		5,013
Other		16		13		54		47
Net Sales	$	1,791	$	1,712	$	5,157	$	5,060

Financial information for the three months ended March 31, 2018 and 2017 regarding the Company’s reportable segments is as follows (dollars in millions):


	Three months ended
	March 31,
	2018		2017
Net Sales:
Americas	$	908	$	869
Europe		643		554
Asia Pacific		173		173
Reportable segment totals		1,724		1,596
Other		12		19
Net Sales	$	1,736	$	1,615

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Segment operating profit:
Europe	$	81	$	64	$	220	$	192
North America		75		79		252		247
Latin America		84		74		207		194
Asia Pacific		20		20		51		48
Reportable segment totals		260		237		730		681
Items excluded from segment operating profit:
Retained corporate costs and other		(25)		(18)		(81)		(75)
Restructuring, asset impairment and other charges		—		—		(49)		(12)
Interest expense, net		(63)		(66)		(204)		(199)
Earnings from continuing operations before income taxes		172		153		396		395
Provision for income taxes		(37)		(36)		(65)		(93)
Earnings from continuing operations		135		117		331		302
Loss from discontinued operations		(2)		(3)		(2)		(6)
Net earnings		133		114		329		296
Net (earnings) attributable to noncontrolling interests		(7)		(6)		(15)		(16)
Net earnings attributable to the Company	$	126	$	108	$	314	$	280
Net earnings from continuing operations attributable to the Company	$	128	$	111	$	316	$	286


	Three months ended
	March 31,
	2018		2017
Segment operating profit:
Americas	$	147	$	139
Europe		72		59
Asia Pacific		5		20
Reportable segment totals		224		218
Items excluded from segment operating profit:
Retained corporate costs and other		(27)		(28)
Restructuring, asset impairment and other charges				(39)
Interest expense, net		(62)		(78)
Earnings from continuing operations before income taxes		135		73
Provision for income taxes		(32)		(20)
Earnings from continuing operations		103		53
Loss from discontinued operations
Net earnings		103		53
Net (earnings) attributable to noncontrolling interests		(5)		(4)
Net earnings attributable to the Company	$	98	$	49
Net earnings from continuing operations attributable to the Company	$	98	$	49

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

Executive Overview — Quarters ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017

~~Third~~First Quarter ~~2017~~2018 Highlights

· ~~Net~~The ~~sales~~Company incombined the ~~third~~North ~~quarter~~America ofand ~~2017~~Latin ~~were~~America upsegments ~~nearly~~into 5%one ~~compared~~segment, tonamed the ~~prior~~Americas, ~~year~~to ~~quarter,~~better ~~primarily~~leverage ~~due~~its toscale ~~the~~and ~~favorable~~presence ~~effect~~across ofa ~~changes~~larger ingeography ~~foreign~~and ~~currency~~market, and ~~higher~~to ~~prices.~~reduce costs

· ~~Earnings~~Net ~~from~~sales ~~continuing~~in ~~operations~~the ~~before~~first ~~income~~quarter ~~taxes~~of 2018 were up 12nearly 8% infrom the ~~third~~same quarter ofin 2017, ~~compared~~primarily due to the ~~prior~~favorable ~~year~~effects ~~quarter,~~of ~~driven~~changes byin ~~higher~~foreign ~~segment~~currency ~~operating~~exchange ~~profit~~rates ~~in the European~~ and ~~Latin~~higher ~~American regions.~~prices

· ~~Received~~Segment ~~$115~~operating ~~million~~profit ~~from~~for ~~selling~~reportable segments was up 3% in the ~~Company’s~~first ~~right,~~quarter ~~title~~of ~~and~~2018 ~~interest~~compared to the first quarter of 2017. Higher segment profit in ~~amounts~~the ~~due~~Americas ~~under~~and aEurope ~~prior~~more ~~arbitration~~than ~~award~~offset ~~against~~lower ~~Venezuela~~segment profit in Asia Pacific.

Net sales for the ~~third~~first quarter of ~~2017~~2018 were $79121 million higher than the ~~third~~first quarter of the prior year primarily due to the favorable effect of changes in foreign currency exchange rates and higher prices.

Earnings from continuing operations before income taxes were $1962 million higher in the ~~third~~first quarter of ~~2017~~2018 than the prior year quarter, primarily due to the nonoccurrence of charges related to restructuring activities, note repurchase premiums and write-off of finance fees in the first quarter of 2018 compared to $56 million of such charges recorded in the first quarter of 2017, as well as higher segment operating profit. Segment operating profit for reportable segments for the ~~third~~first quarter of ~~2017~~2018 was $236 million higher than the ~~third~~first quarter of the prior year. The increase was largely attributable to higher selling prices and the favorable effect of changes in foreign currency. All regions other than ~~North~~Asia ~~America~~Pacific posted ~~flat or~~ higher segment operating profit in the ~~third~~first quarter of ~~2017~~2018 compared to the same period in the prior year.

Net interest expense for the ~~third~~first quarter of ~~2017~~2018 decreased $316 million compared to the ~~third~~first quarter of ~~2016~~2017. The decrease was primarily due to ~~deleveraging~~$17 million of note repurchase premiums and ~~refinancing~~the ~~actions~~write ~~taken~~off ~~since~~of deferred finance fees recorded in the ~~third~~first quarter of ~~2016~~2017 that were related to debt that was repaid prior to its maturity. No note repurchase premiums or write offs of deferred finance fees were recorded in the first quarter of 2018 since no debt was repaid.

~~For the third quarter of 2017, the Company recorded earnings from continuing operations attributable to the Company of $128 million compared to $111 million in the third quarter of 2016.~~24

34For the first quarter of 2018, the Company recorded net earnings from continuing operations attributable to the Company of $98 million, compared to $49 million, in the first quarter of 2017. Earnings for the first three months in 2017 included items that management considered not representative of ongoing operations as set forth in the following table (dollars in millions).

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


	Net Earnings
	Increase
	(Decrease)
Description	2017
Restructuring, asset impairment and other charges	$	(39)
Note repurchase premiums and write-off of finance fees		(17)
Net tax benefit for income tax on items above		9
Net impact of noncontrolling interests on items above		1
Total	$	(46)

Results of Operations — First Quarter of 2018 compared with First Quarter of 2017

Net Sales

The Company’s net sales in the ~~third~~first quarter of ~~2017~~2018 were $1,~~791~~736 million compared with $1,~~712~~615 million for the ~~third~~first quarter of ~~2016~~2017, an increase of $79121 million, or ~~approximately~~nearly 58%. Favorable foreign currency exchange rates, primarily due to a stronger Euro ~~and Mexican peso~~, increased sales by $5399 million in the ~~third~~first quarter of ~~2017~~2018 compared to the prior year quarter. Higher selling prices also increased net sales by $2428 million in the quarter. Total glass container shipments, in tonnes, were upcomparable ~~slightly~~ in the ~~third~~first quarter of ~~2017~~2018 ~~compared~~ to the prior year quarter. ~~and~~Sales ~~were~~volume ~~largely driven by the Latin American~~ and ~~Asia~~mix ~~Pacific~~increased ~~regions,~~net ~~partially~~sales ~~offset~~ by ~~lower shipments in North America. Slightly higher shipments in the third quarter of 2017 were offset by a negative sales mix, resulting in~~ $1 million ~~of lower net sales~~.

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

Reportable segment net sales - 2016			$	1,699
Reportable segment net sales - 2017			$	1,596
Price	$	2428
Sales volume and mix		(1)
Effects of changing foreign currency rates		5399
Total effect on reportable segment net sales				76128
Reportable segment net sales - 2017			$	1,775
Reportable segment net sales - 2018			$	1,724

~~Europe~~Americas: Net sales in ~~Europe~~the Americas in the ~~third~~first quarter of ~~2017~~2018 were $~~624~~908 million compared with $~~586~~869 million for the ~~third~~first quarter of ~~2016~~2017, an increase of $3839 million, or 64%. ~~Favorable~~Higher ~~foreign~~selling ~~currency~~prices ~~exchange~~increased ~~rates~~net ~~impacted~~sales ~~the region~~ by ~~approximately~~ $3322 million in the ~~third~~first quarter of ~~2017~~2018. Total asglass ~~the~~container ~~Euro~~shipments ~~strengthened~~ in ~~relation to~~ the ~~U.S.~~region ~~dollar.~~were ~~Glass~~up ~~container~~nearly ~~shipments~~2% in the ~~third~~first quarter of ~~2017~~2018 ~~were flat~~ compared to the ~~third~~prior year quarter, ofdriven ~~2016~~primarily ~~with~~by ~~strong~~higher shipments to ~~spirits~~food and ~~wine~~alcoholic beverage customers. ~~offset~~Year byover ~~lower~~year shipments in Brazil were also strong in the first quarter. In the U.S., solid year over year growth in shipments to food and ~~beer~~non-alcoholic beverage customers. ~~Accordingly,~~in athe ~~favorable~~first ~~sales~~quarter ~~mix~~were ~~resulted~~more than offset by a decline in $5shipments ~~million~~to ofalcoholic ~~higher~~beverage ~~sales~~customers, which is largely due to ongoing trends in megabeer. ~~Selling~~Overall, ~~prices~~higher shipments in ~~Europe~~the ~~were~~region ~~comparable~~increased net sales by $9 million in the ~~third~~first quarter of ~~2017~~2018. toThe ~~the~~favorable ~~same~~effects ~~period~~of foreign currency exchange rate changes increased net sales $8 million in the ~~prior~~first ~~year~~quarter of 2018 compared to 2017.

~~North America~~Europe: Net sales in ~~North~~Europe ~~America~~ in the ~~third~~first quarter of ~~2017~~2018 were $~~551~~643 million compared with $~~578~~554 million for the ~~third~~first quarter of ~~2016~~2017, aan ~~decrease~~increase of $2789 million, or 516%. ~~Total~~Favorable ~~glass~~foreign ~~container~~currency ~~shipments~~exchange inrates impacted the region ~~were~~by ~~down~~approximately 5%$87 million in the ~~third~~first quarter of ~~2017~~2018 ~~compared~~as to the ~~third~~Euro ~~quarter~~strengthened ofin ~~2016,~~relation ~~driven primarily by lower sales~~ to ~~beer~~the ~~customers~~U.S. ~~and~~dollar. ~~unfavorably~~Glass ~~impacted~~container byshipments ~~weather-related events~~ in the ~~latter~~first ~~part~~quarter of ~~the~~2018 ~~quarter.~~were ~~These~~nearly ~~lower~~flat ~~shipments~~compared ~~and~~to anthe ~~unfavorable~~first ~~sales~~quarter ~~mix~~of ~~resulted~~2017, resulting in $351 million of lower ~~sales~~net ~~in the third quarter of 2017~~sales. ~~The~~Selling ~~favorable~~prices ~~effects~~in ofEurope ~~foreign currency exchange rate changes~~ increased net sales by $13 million in the ~~third~~first quarter of ~~2017~~2018 compared to ~~2016.~~the ~~Slightly~~same ~~higher~~period ~~selling prices increased net sales by $7 million~~ in the ~~third~~prior ~~quarter of 2017~~year.

~~Latin~~Asia ~~America~~Pacific: Net sales in ~~Latin~~Asia ~~America~~Pacific in the ~~third~~first quarter of ~~2017~~2018 were $~~412~~173 million compared with $~~365~~173 million for the ~~third~~first quarter of ~~2016, an increase of $47 million, or 13%~~2017. ~~Strong~~Net ~~shipments~~sales ~~to beer and spirits customers, especially~~ in ~~Brazil~~the ~~and~~region ~~Mexico,~~were ~~contributed to a~~ $7% ~~increase~~million inlower ~~total glass container shipments~~ in the ~~region~~first ~~in the third~~ quarter of ~~2017~~2018 compared to the same quarter in the prior year, ~~and~~primarily ~~this~~driven ~~increased~~by ~~sales~~the bytiming ~~$20~~of ~~million~~returnable float replenishment in Southeast Asia. ~~Higher~~Slightly ~~pricing~~higher selling prices increased net sales by $133 million in the current quarter. The favorable effects of foreign currency exchange rate changes ~~increased net sales by $14 million~~ in the ~~third~~current year quarter ofincreased ~~2017~~net ~~compared~~sales toby ~~2016,~~$4 ~~principally due to the strengthening of the Mexican peso in relation to the U~~million.~~S. dollar.~~

Asia Pacific: Net sales in Asia Pacific in the third quarter of 2017 were $188 million compared with $170 million for the third quarter of 2016, an increase of $18 million, or 11%. Glass container shipments were up 4% in the third quarter of 2017 compared to the same period in the prior year, primarily due to higher shipments to beer customers in Australia, and this contributed to $9 million of higher sales in the quarter. 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 $5 million.25

Earnings from Continuing Operations before Income Taxes and Segment Operating Profit

Earnings from continuing operations before income taxes were $~~172~~135 million in the ~~third~~first quarter of ~~2017~~2018 compared to $~~153~~73 million in the ~~third~~first quarter of ~~2016~~2017, an increase of $1962 million, or 1285%. This increase was primarily related to the nonoccurrence of charges related to restructuring activities, note repurchase premiums and write-off of finance fees in the first quarter of 2018 compared to $56 million of such charges recorded in the first quarter of 2017, as well as higher segment operating profit.

35Operating 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 2 to the Condensed Consolidated Financial Statements.

Segment operating profit of reportable segments in the first quarter of 2018 was $224 million compared to $218 million for the first quarter of 2017, an increase of $6 million, or 3%. The increase was largely attributable to higher ~~segment~~selling prices and favorable foreign currency effects. Higher operating ~~profit~~costs in the first quarter of 2018 partially offset these gains and were driven by inflation, lower production volumes and higher spend due to increased asset repair activities.

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 third quarter of 2017 was $260 million compared to $237 million for the third quarter of 2016, an increase of $23 million, or 10%. The increase was largely attributable to higher selling prices and favorable foreign currency effects, partially offset by higher operating costs.

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

Reportable segment operating profit - 2016			$	237
Reportable segment operating profit - 2017			$	218
Price	$	2428
Sales volume and mix		~~(1)~~3
Operating costs		(633)
Effects of changing foreign currency rates		68
Total net effect on reportable segment operating profit				236
Reportable segment operating profit - 2017			$	260
Reportable segment operating profit - 2018			$	224

~~Europe~~Americas: Segment operating profit in ~~Europe~~the Americas in the ~~third~~first quarter of ~~2017~~2018 was $81147 million compared with $64139 million in the ~~third~~first quarter of ~~2016~~2017, an increase of $178 million, or 276%. ~~Operating~~The ~~costs~~increase in sales volume discussed above improved segment operating profit in the current year quarter by $5 million. Selling prices were $1222 million ~~lower~~higher in the ~~third~~current year quarter ofcompared ~~2017~~to ~~than~~ the prior year quarter. ~~due~~Segment tooperating ~~cost~~profit ~~savings~~was ~~initiatives~~impacted ~~and~~by ~~the~~$24 ~~receipt~~million of anhigher ~~energy~~operating ~~credit~~costs ~~from~~in athe ~~local~~first ~~government~~quarter ~~entity~~of ~~that~~2018 ~~was~~than ~~received in~~ the ~~fourth~~same quarter ofin the prior year., ~~The~~driven ~~net~~by ~~impact~~cost ofinflation ~~sales~~but ~~volume~~partially ~~and~~offset ~~mix~~by ~~discussed~~logistics ~~above~~cost ~~increased~~reductions. The ~~segment~~region ~~operating~~also ~~profit~~benefitted byfrom $17 million of insurance proceeds in the first quarter of 2018. The effects of foreign currency exchange rates ~~increased~~decreased segment operating profit by $42 million in the current year quarter.

~~North America~~Europe: Segment operating profit in ~~North~~Europe ~~America~~ in the ~~third~~first quarter of ~~2017~~2018 was $7572 million compared with $7959 million in the ~~third~~first quarter of ~~2016~~2017, aan ~~decrease~~increase of $413 million, or 522%. The ~~decrease~~effects inof ~~sales~~foreign ~~volume~~currency ~~discussed~~exchange ~~above~~rates ~~decreased~~increased segment operating profit by $10 million in the current year quarter ~~by $9 million~~. Selling prices were $73 million higher in the current quarter compared to the prior year quarter. ~~Operating~~Manufacturing costs in the ~~third~~region ~~quarter~~also ofbenefited ~~2017 were $1 million higher than the same quarter~~ in the ~~prior year and this reduced segment operating profit. Higher cost inflation in the~~ quarter ~~was~~due ~~partially~~to ~~offset by cost reductions, as well as higher equity earnings from~~ the ~~Company’s~~permanent ~~joint~~footprint ~~venture~~adjustment ~~with~~made ~~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,~~year ~~equity earnings from this joint venture were recorded in retained corporate costs~~ and ~~other~~cost asreductions, ~~the~~offset ~~joint venture was mostly in construction mode. The effects of foreign currency exchange rates decreased segment operating profit~~ by $1asset ~~million~~repair ~~in the current year quarter~~activities.

~~Latin~~Asia ~~America~~Pacific: Segment operating profit in ~~Latin~~Asia ~~America~~Pacific in the ~~third~~first quarter of ~~2017~~2018 was $845 million compared with $7420 million in the ~~third~~first quarter of ~~2016~~2017, ana ~~increase~~decrease of $1015 million, or 1475%. ~~Higher~~As ~~selling~~planned, ~~prices~~asset ~~increased~~improvement ~~segment~~projects ~~operating~~underway ~~profit~~ in the ~~current~~region ~~year~~drove ~~quarter~~operating bycosts ~~$13~~higher ~~million.~~and ~~The~~decreased ~~increase~~segment inoperating ~~sales~~profit ~~volume~~by ~~discussed~~$20 ~~above~~million ~~increased~~in ~~segment~~the ~~operating~~quarter ~~profit~~compared byto $5the ~~million~~prior year quarter. ~~Segment~~These ~~operating~~projects ~~profit~~will ~~was~~continue ~~impacted~~into bythe ~~$11~~second ~~million~~quarter of ~~higher~~2018 ~~operating~~and ~~costs~~will result in ~~the~~lower ~~quarter~~segment ~~due~~operating toprofit ~~cost~~in ~~inflation~~the ~~and~~region than the ~~nonoccurrence~~same ofperiod ~~gains~~in on2017. ~~non-strategic~~The ~~asset~~decrease in sales ~~recorded~~volume indiscussed ~~the~~above ~~prior~~reduced ~~year~~segment ~~quarter.~~operating ~~The~~profit ~~effects~~by of$2 ~~foreign~~million. ~~currency~~Higher ~~exchange~~selling ~~rates~~prices increased segment operating profit in the first quarter of 2018 by $3 million. inIn addition, the ~~current~~region ~~year~~recorded $4 million of gain related to a land sale in the first quarter of 2018.

Asia Pacific: Segment operating profit in Asia Pacific in the third quarter of 2017 was $20 million compared with $20 million in the third quarter of 2016. Higher selling prices increased segment operating profit in the third quarter of 2017 by $4 million. The increase in sales volume discussed above increased segment operating profit by $2 million. Despite higher production levels and cost containment efforts, cost inflation and higher supply chain costs, partially related to servicing increased sales, in the region drove operating costs higher and decreased segment operating profit by $10 million in the quarter. Also, in the third quarter of 2017, the region recorded a gain of $4 million related to a land sale.

Interest Expense, Net

Net interest expense for the ~~third~~first quarter of ~~2017~~2018 was $6362 million compared with $6678 million for the ~~third~~first quarter of ~~2016~~2017. ~~This~~Net ~~decrease in net~~ interest expense ~~was~~included ~~due~~$0 ~~to deleveraging~~ and ~~refinancing~~$17 ~~actions~~million ~~taken~~in ~~since~~ the ~~third~~first quarter of ~~2016.~~ 2018 and 2017, respectively, for note repurchase

premiums and the write off of deferred finance fees that were related to debt that was repaid prior to its maturity. Exclusive of these items, net interest expense increased $1 million in the first quarter of 2018 compared to the same quarter in the prior year due to higher interest rates on the Company’s variable debt and a stronger Euro.

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the three months ended ~~September~~March 3031, ~~2017~~2018 was 2123.57% compared with 2327.54% for the three months ended ~~September~~March 3031, ~~2016~~2017. The effective tax rate for the ~~third~~first quarter of 2017 was ~~lower~~higher than the ~~same~~first ~~period~~quarter inof ~~the prior year~~2018, in part, due to the ~~lower~~impact ~~full~~of ~~year~~several ~~effective~~charges that management considered not representative of ongoing operations, including charges for note repurchase premiums and the write-off of finance fees, for which no tax ~~rate~~benefit was recorded in the first quarter of 2017 ~~compared~~due to ~~2016~~the Company’s valuation allowance recorded in the U.S.

The Company expects that the full year effective tax rate for 2018 will range between approximately 23% and 25% (excluding the tax on items that management considers not representative of ongoing operations).

Earnings from Continuing Operations Attributable to the Company

For the ~~third~~first quarter of ~~2017~~2018, the Company recorded earnings from continuing operations attributable to the Company of $~~128~~98 million, compared to $~~111~~49 million, in the ~~third~~first quarter of ~~2016~~2017. Earnings in the first quarter of 2017 included items that management considered not representative of ongoing operations. These items decreased earnings attributable to the company by $46 million in the first quarter of 2017 as set forth in the following table (dollars in millions):

Executive Overview – Nine Months ended September 30, 2017 and 2016


	Net Earnings
	Increase
	(Decrease)
Description	2017
Restructuring, asset impairment and other charges	$	(39)
Note repurchase premiums and write-off of finance fees		(17)
Net tax benefit for income tax on items above		9
Net impact of noncontrolling interests on items above		1
Total	$	(46)

~~2017~~Items ~~Highlights~~excluded from Reportable Segment Totals

· Net sales in the first nine months of 2017 were 2% higher compared to the prior year period, driven by higher prices and the favorable effects of changes in foreign currency exchange rates.

· 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 2017.

· Received $115 million from selling the Company’s right, title and interest in amounts due under a prior arbitration award against Venezuela.

Net sales for the first nine months of 2017 were $97 million higher than the same period in the prior year primarily due to higher pricing and the favorable effect of changes in foreign currency exchange rates.

Earnings from continuing operations before income taxes were $396 million in the first nine months of 2017 compared to $395 million in the same period in the prior year, an increase of $1 million, or less than 1%. This increase was impacted by higher segment operating profit, mostly offset by higher restructuring, asset impairment and other charges and higher charges related to debt redeemed in the 2017 period. Segment operating profit for reportable segments for the first nine months of 2017 was $49 million higher than the same period in the prior year with all four regions’ segment operating profit exceeded their prior year amounts.

Net interest expense for the first nine months of 2017 was $204 million compared with $199 million for the first nine 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 $12 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 nine months of 2017 was $316 million compared with $286 million for the first nine 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 nine months of 2017 compared with first nine months of 2016

Net Sales

The Company’s net sales in the first nine months of 2017 were $5,157 million compared with $5,060 million for the first nine months of 2016, an increase of $97 million, or 2%. Favorable foreign currency exchange rates, primarily due to a stronger Euro, Brazilian real, Colombian peso, Australian dollar and New Zealand dollar, increased sales by $42 million in the first nine months of 2017 compared to the same period in 2016. Higher selling prices benefited net sales by $51 million in 2017. Total glass container shipments, in tonnes, were up approximately 1% in the first nine months of 2017 compared to the same period in the prior year. However, an unfavorable mix resulted in approximately $3 million of lower sales.

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

Reportable segment net sales - 2016			$	5,013
Price	$	51
Sales volume and mix		(3)
Effects of changing foreign currency rates		42
Total effect on reportable segment net sales				90
Reportable segment net sales - 2017			$	5,103

Europe: Net sales in Europe in the first nine months of 2017 were $1,813 million compared with $1,795 million for the first nine months of 2016, an increase of $18 million, or 1%. Net sales were benefited in the first nine months of 2017 by a 1% increase in glass container shipments driven by higher shipments to beer customers. This increased net sales by $24 million compared to the prior year period. Favorable foreign currency exchange rate increased net sales by $5 million, as the Euro strengthened in relation to the U.S. dollar. 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 nine months of 2017 compared to the same period in the prior year.

North America: Net sales in North America in the first nine months of 2017 were $1,651 million compared with $1,709 million for the first nine months of 2016, a decrease of $58 million, or 3%. Slightly higher selling prices increased net sales by $22 million in the first nine months of 2017. However, lower shipments and an unfavorable sales mix resulted in $80 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 3% lower in the first nine months of 2017 compared to the same period in 2016, driven by lower shipments to beer customers.

Latin America: Net sales in Latin America in the first nine months of 2017 were $1,123 million compared with $1,022 million for the first nine months of 2016, an increase of $101 million, or 10%. Strong shipments in Mexico and slightly higher shipments in Brazil offset slightly lower shipments in the other countries in the region. Total glass container shipments in the region were up 5% in the first nine months of 2017 compared to the same period in the prior year and this increased sales by $46 million. The favorable effects of foreign currency exchange rate changes increased net sales $24 million in the first nine months 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 $31 million in the first nine months of 2017.

Asia Pacific: Net sales in Asia Pacific in the first nine months of 2017 were $516 million compared with $487 million for the first nine months of 2016, an increase of $29 million, or 6%. The favorable effects of foreign currency exchange rate changes during the first nine 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 $13 million. Glass container shipments were down 1% in the first nine months of 2017; however, a favorable sales mix contributed to $7 million of higher sales in 2017. Slightly higher selling prices also increased net sales by $9 million in the first nine months 2017.

Earnings from Continuing Operations before Income Taxes and Segment Operating Profit

Earnings from continuing operations before income taxes were $396 million in the first nine months of 2017 compared with $395 million for the same period in 2016, an increase of $1 million, or less than 1%. This increase was impacted by higher segment operating profit, mostly offset by higher restructuring, asset impairment and other charges and higher charges related to debt redeemed in the 2017 period.

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 nine months of 2017 was $730 million compared with $681 million for the first nine months of 2016, an increase of $49 million, or 7%. The increase was largely attributable to higher selling prices and the favorable 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			$	681
Price	$	51
Sales volume and mix		—
Operating costs		(6)
Effects of changing foreign currency rates		4
Total net effect on reportable segment operating profit				49
Reportable segment operating profit - 2017			$	730

Europe: Segment operating profit in Europe in the first nine months of 2017 was $220 million compared with $192 million in the first nine months of 2016, an increase of $28 million, or 15%. Operating costs were $32 million lower in the first nine months of 2017 than the prior year period due to cost savings initiatives and the receipt of an energy credit from a local government entity that was received in the fourth quarter of the prior year. The increase in sales volume discussed above improved segment operating profit by $5 million. Lower selling prices decreased segment operating profit in the first nine months of 2017 by $11 million. The favorable effects of foreign currency exchange rates increased segment operating profit by $2 million in 2017.

North America: Segment operating profit in North America in the first nine months of 2017 was $252 million compared with $247 million in the first nine months of 2016, an increase of $5 million, or 2%. Selling prices were $22 million higher in the first nine 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 first nine months of 2017. The unfavorable sales mix and lower shipments discussed above decreased segment operating profit by $18 million. Operating costs in the first nine months of 2017 were slightly higher than the same period in the prior year and this reduced segment operating profit by $3 million. Higher cost inflation during this period was partially offset by cost reductions and 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. The unfavorable effects of foreign currency exchange rates decreased segment operating profit by $1 million in 2017.

Latin America: Segment operating profit in Latin America in the first nine months of 2017 was $207 million compared with $194 million in the first nine months of 2016, an increase of $13 million, or 7%. Segment operating profit was impacted by $33 million of higher operating costs, primarily due to substantial cost inflation and the nonoccurrence of gains on non-strategic asset sales recorded in the prior year. Partially offsetting these declines were higher selling prices that increased segment operating profit in the first nine months of 2017 by $31 million. The increase in sales volume discussed above increased segment operating profit by $12 million. The favorable effects of foreign currency exchange rates increased segment operating profit by $3 million in 2017.

Asia Pacific: Segment operating profit in Asia Pacific in the first nine months of 2017 was $51 million compared with $48 million in the first nine months of 2016, an increase of $3 million, or 6%. Higher selling prices increased segment operating profit in the first nine months of 2017 by $9 million. The change in sales volume and mix discussed above increased segment operating profit by $1 million. Despite higher production levels and cost containment efforts, cost inflation and higher supply chain costs, partially related to servicing increased sales, in the region drove operating costs higher and decreased segment operating profit by $11 million. Also, in the first nine months of 2017, the region recorded $4 million of gain related to a land sale.

Interest Expense, Net

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the nine months ended September 30, 2017 was 16.4% compared with 23.5% for the nine months ended September 30, 2016. The effective tax rate for the first nine months 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 22% (excluding items that management considers not representative of ongoing operations).

Earnings from Continuing Operations Attributable to the Company

For the first nine months of 2017, the Company recorded earnings from continuing operations attributable to the Company of $316 million compared $286 million in the first nine 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 ~~third~~first quarter of ~~2017~~2018 were $2527 million and ~~higher~~comparable ~~compared~~ with the $1828 million recorded in the ~~third~~first quarter of ~~2016, primarily due to higher management incentive expense~~2017. ~~For the first nine~~

months of 2017, retained corporate costs and other were $81 million compared with $75 million for the same period in 2016, primarily due to lower equity earnings.

Restructuring, Asset Impairments and Other Charges

~~During~~In the three ~~and nine~~ months ended ~~September~~March 3031, 2017, the Company implemented a number of minor restructuring initiatives and recorded restructuring, asset impairment and other charges of $039 million ~~and $49 million, respectively~~. These charges primarily ~~consist~~consisted of employee costs, write-down of assets, and other exit costs in the following regions: ~~Latin~~Americas ~~America~~ ($3326 million), and Europe ($13 million) ~~and North America ($3 million)~~. ~~Except~~The ~~for~~restructuring ~~the~~ charges recorded in ~~Europe,~~ the ~~other~~first ~~discrete~~quarter ~~restructuring~~of ~~charges~~2017 ~~recorded~~were indiscrete ~~2017~~actions and are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The ~~Company~~restructuring ~~has~~charges recorded ~~total cumulative charges of $54 million related to a plant closure~~ in ~~Europe~~the ~~and~~first ~~does~~quarter ~~not~~of ~~expect to execute any further significant actions related to this facility. The restructuring charges recorded in~~ 2017 in the ~~Latin~~Americas ~~American~~ and European regions primarily relate to capacity curtailments. ~~and~~The ~~products~~Company ~~produced~~plans atto ~~those~~reallocate ~~facilities~~the ~~have,~~products inproduced ~~large~~at ~~part,~~these ~~been~~facilities ~~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~~See ~~the~~Note ~~three~~6 and nine months ended September 30, 2016, the Company recorded restructuring, asset impairment and other charges of $0 million 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~~Condensed ~~quarter~~Consolidated ofFinancial ~~2016~~Statements ~~are expected to approximate the total cumulative costs~~ for ~~those actions as no significant~~ additional ~~costs are expected to be incurred~~information. 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.~~27

Pension Settlement Charges

In the fourth quarter of 2017, the Company intends to settle certain liabilities associated with its pension plans in the United States and Canada. These settlements are expected to result in non-cash charges in excess of $100 million in the fourth quarter of 2017.

Discontinued Operations

41A separate arbitration involving other subsidiaries of the Company was initiated in 2012 to obtain compensation primarily for third-party minority shareholders’ lost interests in the two expropriated plants. However, on November 13, 2017, ICSID issued an award that dismissed this arbitration on jurisdiction grounds. In March 2018, the Company submitted to ICSID an application to annul the November 13, 2017 award.

~~legal~~ As ~~fees and expenses incurred by the Company and the purchaser. OIEG’s percentage~~ of ~~such~~March ~~recovery will also be reduced over time. Because the Award has yet to be satisfied~~31, ~~the annulment proceeding is pending~~2018, ~~and~~ the ~~ability~~Company todeferred ~~successfully enforce~~ the ~~Award~~gain incontingency ~~countries~~on ~~that are party to~~ the ~~ICSID~~sale ~~Convention is subject to significant challenges, the Company is unable to reasonably predict the amount~~ of ~~recoveries~~its ~~from~~rights ~~the Award, if any, to which the Company may be entitled~~ in ~~the future. Any future~~ amounts ~~that~~due 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, of the ~~Cash~~ICSID ~~Payment~~rendering isits ~~not~~decision ~~subject~~regarding toVenezuela’s ~~any~~application ~~forfeiture~~to orannul ~~future~~the ~~adjustment~~Award.

AThe ~~separate~~loss ~~arbitration~~from ~~involving~~discontinued ~~other~~operations ~~subsidiaries~~was ofless than $1 million for the ~~Company~~three ismonths ~~pending~~ended ~~before~~March ~~ICSID~~31, to2018 ~~obtain~~and ~~compensation~~March ~~primarily~~31, ~~for~~2017 ~~third-party~~and ~~minority~~related ~~shareholders’~~to ~~lost~~ongoing ~~interests~~costs inof the ~~two~~Venezuelan ~~expropriated plants~~expropriation.

As of September 30, 2017, the Company deferred the gain contingency on the sale of its rights in amounts due under the Award pending the ad hoc committee of the ICSID rendering its decision regarding Venezuela’s application to annul the Award. The loss from discontinued operations of $2 million and $6 million for the nine months ended September 30, 2017 and September 30, 2016, respectively, relates to ongoing costs for the Venezuelan expropriation.

Capital Resources and Liquidity

At ~~September~~March 3031, ~~2017~~2018, the Amended Agreement includes a $300 million revolving credit facility, a $600 million multicurrency revolving credit facility, and a $1,575 million term loan A facility ($1,~~202~~149 million net of debt issuance costs), ~~and a €279 million term loan A facility ($308 million net of debt issuance costs),~~ each of which has a final maturity date of April 22, 2020. At ~~September~~March 3031, ~~2017~~2018, the Company had unused credit of $~~655~~412 million available under the Amended Agreement. The weighted average interest rate on borrowings outstanding under the Amended Agreement at ~~September~~March 3031, ~~2017~~2018 was 2.5798%.

OnFailure ~~September~~to ~~28,~~comply ~~2017~~with these covenants and restrictions could result in an event of default under the Amended Agreement. In such an event, the Company ~~entered~~would ~~into~~be ~~Amendment~~unable ~~No.~~to 5request ~~(“Amendment~~borrowings ~~No.~~under ~~5”)~~the torevolving facility, and all amounts outstanding under the Amended Agreement., ~~Amendment~~together Nowith accrued interest, could then be declared immediately due and payable. If 5an ~~changes~~event of default occurs under the ~~calculation~~Amended ofAgreement and the ~~Total~~lenders ~~Leverage~~cause ~~Ratio~~all byof ~~excluding~~the ~~from~~outstanding debt obligations under the ~~calculation~~Amended Agreement to become due and payable, this would result in a default under a number of ~~Net~~other ~~Indebtedness~~outstanding ~~ordinary~~debt ~~course~~securities ~~revolver~~and ~~borrowings~~could ~~(except~~lead to an acceleration of obligations related to these debt securities. As of March 31, 2018, the ~~extent~~Company ~~such~~was ~~borrowings~~in ~~existed~~compliance atwith all covenants and restrictions in the ~~prior~~Amended ~~year~~Agreement. In ~~end)~~addition, the Company believes that it will remain in compliance and ~~non-recourse~~that ~~factoring~~its orability ~~securitization~~to ~~debt~~borrow funds under the Amended Agreement will not be adversely affected by the covenants and restrictions.

~~Failure~~The tointerest ~~comply~~rates ~~with~~on ~~these~~borrowings ~~covenants and restrictions could result in an event of default~~ under the Amended Agreement~~. In~~ ~~such an event~~are, at the Company’s ~~would~~option, bethe ~~unable~~Base toRate ~~request~~or ~~borrowings under~~ the ~~revolving~~Eurocurrency ~~facility~~Rate, ~~and~~as ~~all~~defined ~~amounts~~in ~~outstanding under~~ the Amended Agreement, ~~together~~plus ~~with~~an ~~accrued~~applicable ~~interest, could then be declared immediately due and payable~~margin. IfThe anapplicable ~~event~~margin offor ~~default~~the ~~occurs~~term ~~under~~loan ~~the~~A ~~Amended~~facility ~~Agreement~~ and the ~~lenders~~revolving ~~cause~~credit ~~all~~facility ofis ~~the~~linked ~~outstanding~~to ~~debt obligations under~~ the ~~Amended~~Company’s ~~Agreement~~Total toLeverage ~~become~~Ratio ~~due~~ and ~~payable,~~ranges ~~this~~from ~~would~~1.25% ~~result~~to in1.75% afor ~~default~~Eurocurrency ~~under~~Rate aloans ~~number of other outstanding debt securities~~ and ~~could~~from ~~lead~~0.25% to ~~an acceleration of obligations related to these debt securities~~0. As75% offor ~~September~~Base ~~30,~~Rate ~~2017, the Company was in compliance with all covenants and restrictions in the Amended Agreement~~loans. In addition, ~~the~~a ~~Company~~facility ~~believes~~fee ~~that~~is itpayable ~~will~~on ~~remain~~the inrevolving ~~compliance~~credit ~~and~~facility ~~that~~commitments ~~its~~ranging ~~ability~~from 0.20% to ~~borrow~~0.30% ~~funds~~per ~~under~~annum ~~the~~linked ~~Amended~~to ~~Agreement will not be adversely affected by~~ the ~~covenants~~Total ~~and~~Leverage ~~restrictions~~Ratio.

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.

During ~~November~~March ~~2016~~2017, ~~the~~OI ~~Company~~Inc. ~~issued~~purchased ~~senior~~in ~~notes with~~ a ~~face~~tender ~~value~~offer ofapproximately ~~€500~~$228 million ~~that~~aggregate ~~bear~~principal ~~interest~~amount atof 3its 7.~~125~~80% ~~and are due November 15, 2024 (the “~~Senior ~~Notes~~Debentures due ~~2024”)~~in 2018. ~~The~~In ~~notes~~November ~~were~~2017, ~~issued~~the ~~via~~remaining a$22 ~~private~~million ~~placement and are guaranteed by certain~~ of the ~~Company‘s domestic subsidiaries~~7. ~~The~~80% ~~net~~Senior ~~proceeds,~~Debentures ~~after~~were ~~deducting~~repurchased ~~debt~~by ~~issuance~~OI ~~costs~~Inc., ~~totaled~~the ~~approximately~~indenture ~~$520~~relating ~~million~~thereto ~~and~~was ~~were~~discharged, ~~used~~and toall ~~repay~~collateral ~~the~~and ~~term~~guarantees ~~loan~~thereunder Bwere ~~facility under the Amended Agreement~~released. In ~~March~~ 2017, the Company ~~expanded~~recorded ~~its~~$18 ~~borrowings under the Senior Notes due 2024 by issuing €225~~ million of additional ~~notes that bear~~ interest atcharges ~~3.125%~~for ~~and~~note ~~are~~repurchase ~~due~~premiums ~~November 15, 2024. The notes were issued via a private placement~~ and ~~are~~the ~~guaranteed~~write-off ~~by certain~~ of ~~the~~unamortized ~~Company‘s~~finance ~~domestic~~fees ~~subsidiaries. The~~related ~~net proceeds, after deducting debt issuance costs, totaled approximately $237 million and were used~~ to ~~repay~~these ~~a portion of the Company’s revolving credit facility~~actions.

InDuring ~~March~~December 2017, the Company ~~purchased~~issued insenior notes with a ~~tender~~face ~~offer~~value ~~approximately~~of $~~228~~310 million ~~aggregate~~that ~~principal~~bear ~~amount~~interest ofat ~~its 7~~4.8000% ~~Senior~~and ~~Debentures~~are due inMarch ~~2018~~15, 2023. ~~Approximately~~The ~~$22~~notes ~~million~~were ofissued ~~the~~via ~~Senior~~a ~~Debentures~~private ~~remain~~placement ~~outstanding~~and asare guaranteed by certain of ~~September~~the ~~30,~~Company‘s ~~2017~~domestic subsidiaries. The Asnet ~~part~~proceeds, ofafter ~~the~~deducting ~~tender~~debt ~~offer~~issuance costs, ~~the~~totaled ~~Company~~approximately ~~recorded~~ $17305 million ofand ~~additional~~were ~~interest~~used ~~charges~~to ~~for~~repay ~~note~~a ~~repurchase~~portion ~~premiums~~of ~~and~~ the ~~related~~term ~~write-off~~loan ofA ~~unamortized~~facility ~~finance~~under ~~fees in~~ the ~~first~~Amended ~~quarter of 2017~~Agreement.

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

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

	September 30,			December 31,			September 30,
	March 31,			December 31,			March 31,
	2017			2016			2016
	2018			2017			2017
Balance (included in short-term loans)	$	~~170~~144		$	~~152~~133		$	~~158~~148
Weighted average interest rate		01.6501	%		0.7476	%		0.6788	%

Cash Flows

Operating activities: Cash ~~provided~~utilized byin ~~continuing~~ operating activities was $88363 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018, compared to $~~271~~325 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017. The ~~decrease~~increase in cash ~~provided~~utilized by ~~continuing~~ operating activities in the first ~~nine~~three months of ~~2017~~2018 was primarily due to an increase in working capital of $~~601~~622 million in the ~~2017~~2018 period compared to an increase in working capital of $~~320~~542 million in the same period in ~~2016~~2017. This increase was ~~mainly~~primarily due to ~~the nonoccurrence of~~ a ~~refund~~larger ~~the~~decline ~~Company received~~ in ~~the third quarter of 2016 on value added taxes previously paid in conjunction with an acquisition, as well as higher~~ accounts ~~receivable~~payable during the first ~~nine~~three months of ~~2017~~2018 asthan the ~~Company~~same ~~sold~~period ~~fewer~~in ~~receivables~~the ~~through~~prior ~~its factoring programs~~year. Partially offsetting this were higher net earnings and ~~higher~~lower ~~non-~~cash ~~charges,~~payments ~~such~~for aspension ~~restructuring,~~contributions ~~asset impairment~~ and ~~related~~restructuring ~~charges,~~activities in the first ~~nine~~three months of ~~2017~~2018.

Investing activities: Cash utilized in ~~continuing~~ investing activities was $~~315~~160 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018, compared to $~~282~~114 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017. Capital spending for property, plant and equipment was $142 million during the first three months of 2018 compared to $98 million in the same period in 2017. Capital spending was higher in the first quarter of 2018 due to the payment of a higher level of vendor invoices accrued at the end of 2017, as well as a higher level of project activity in the Asia Pacific region.

43Acquisition activities were $26 million and $17 million in the first three months of 2018 and 2017, respectively, and were primarily related to contributions made to the Company’s investment in a joint venture with Constellation Brands (“Constellation”) in Mexico. In October 2017, the Company signed an agreement to expand this joint venture. To meet rising demand from Constellation’s adjacent brewery, the newly-expanded relationship provides for the addition of a fifth furnace, which is expected to be operational by the end of 2019. This capacity expansion, which is estimated to cost approximately $140 million, will be financed by equal contributions from both partners throughout 2018 and 2019. The term of the joint venture agreement was also extended for ten additional years, to 2034.

~~property,~~ Financing ~~plant~~activities: Cash ~~and~~provided ~~equipment~~by financing activities was $~~292~~436 million ~~during~~for the ~~first~~three ~~nine~~ months ofended ~~2017~~March ~~and~~31, ~~$310~~2018, ~~million~~compared into ~~the same period in 2016. Acquisition activities were~~ $37245 million ~~and~~for ~~$45 million in~~ the ~~first~~three ~~nine~~ months ofended ~~2017~~March ~~and 2016~~31, ~~respectively,~~2017. ~~and~~The ~~were~~increase ~~primarily~~in ~~related~~cash toprovided ~~contributions~~by ~~made~~financing toactivities ~~the~~was ~~Company’s~~primarily ~~investment~~due into ahigher ~~joint~~net ~~venture~~borrowings in ~~Nava, Mexico. During~~ the first ~~nine~~quarter ~~months~~ of ~~2017,~~2018 ~~the~~and ~~Company received $14 million in net proceeds from~~ the ~~disposal~~nonoccurrence of ~~assets compared to~~ $5719 million of ~~proceeds~~finance ~~in the same period in the prior year. In 2016~~fees, ~~these~~which ~~proceeds~~were ~~included~~paid ~~the sale of land use rights~~ in ~~China that did not repeat in 2017. Also, in~~ the ~~third~~first quarter of 2017~~, a subsidiary of the Company received $115 million from selling its right, title and interest in amounts due under a prior arbitration award against Venezuela related to a discontinued operation~~. ~~See Note 15 to the Condensed Consolidated Financial Statements for additional information.~~

InThe ~~late~~Company ~~October~~anticipates ~~2017,~~that cash flows from its operations and from utilization of credit available under the ~~Company~~Agreement ~~signed~~will anbe ~~agreement~~sufficient to ~~expand~~fund its ~~joint~~operating ~~venture~~and ~~with~~seasonal ~~Constellation.~~working Tocapital ~~meet~~needs, ~~rising~~debt ~~demand~~service ~~from~~and ~~Constellation’s~~other ~~adjacent~~obligations ~~brewery,~~on ~~the~~a ~~newly~~short-~~expanded~~term ~~relationship~~(twelve-months) ~~provides~~and ~~for~~long-term basis. Based on the ~~addition~~Company's ofexpectations aregarding ~~fifth~~future ~~furnace,~~payments ~~which~~for islawsuits ~~expected~~and toclaims beand ~~operational~~also bybased on the ~~end~~Company's ofexpected ~~2019.~~operating ~~This~~cash ~~capacity expansion~~flow, ~~which~~the isCompany ~~estimated~~believes tothat ~~cost~~the ~~approximately~~payment ~~$140~~of ~~million,~~any ~~will~~deferred beamounts ~~financed~~of bypreviously ~~equal~~settled ~~contributions~~or ~~from~~otherwise ~~both~~determined ~~partners~~lawsuits ~~throughout~~and ~~2018~~claims, and ~~2019.~~the ~~The~~resolution ~~term~~ of ~~the~~presently ~~joint~~pending ~~venture~~and ~~agreement~~anticipated ~~was~~future ~~also~~lawsuits, ~~extended~~will ~~for~~not ~~ten~~have ~~additional~~a ~~years,~~material toadverse ~~2034.~~effect upon the Company's liquidity on a short-term or long-term basis.

~~Financing activities: Cash utilized by financing activities was $63 million for the nine months ended September~~ 30, 2017, compared to $84 million for the nine months ended September 30, 2016. The decrease in cash utilized by financing activities was primarily due to higher net borrowings, partially offset by the payment of $23 million of finance fees in the first nine 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.

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 ~~September~~March 3031, ~~2017~~2018 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

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) foreign currency fluctuations relative to the U.S. dollar, (2) changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to refinance debt at favorable terms, (3) 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 the supply chain, competitive pricing pressures, inflation or deflation, and changes in tax rates and laws, (4) the Company’s ability to generate sufficient future cash flows to ensure the Company’s goodwill is not impaired, (5) consumer preferences for alternative forms of packaging, (6) cost and availability of raw materials, labor, energy and transportation, (7) the Company’s ability to manage its cost structure, including its success in implementing restructuring plans and achieving cost savings, (8) consolidation among competitors and customers, (9) the Company’s ability to acquire businesses and expand plants, integrate operations of acquired businesses and achieve expected synergies, (10) unanticipated expenditures with respect to environmental, safety and health laws, (11) unanticipated operational disruptions, including higher capital spending, (12) the Company’s ability to further develop its sales, marketing and product development capabilities, (13) the failure of the Company’s joint venture partners to meet their obligations or commit additional capital to the joint venture, (14) the Company’s ability to prevent and detect cybersecurity threats against its information technology systems, (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, 2017 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 this document.

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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) changes in U.S. trade policies, (15) 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 this document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in market risk at ~~September~~March 3031, ~~2017~~2018 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

Item 4. Controls and Procedures.

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

As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of ~~September~~March 3031, ~~2017~~2018.

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 ~~September~~March 3031, ~~2017~~2018 that have materially affected, or are reasonably likely to material affect, the Company’s internal controls over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

There have been no material changes in risk factors at ~~September~~March 3031, ~~2017~~2018 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

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Item 6. Exhibits.

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 4.1		Amendment No. 5, dated September 28, 2017, in respect of the Amended and Restated Credit Agreement and Syndicated Facility Agreement, dated April 22, 2015, by and among the Borrowers named therein, Owens-Illinois General Inc., as Borrowers’ Agent, Deutsche Bank AG, New York Branch, as Administrative Agent, and the other Agents, Arrangers and Lenders named therein (filed as Exhibit 4.1 to Owens-Illinois, Inc.’s Form 8-K filed September 29, 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 Group, Inc. for the quarter ended ~~September~~March 3031, ~~2017~~2018, 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.

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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 GROUP, INC.
Date	~~October~~April 24, ~~2017~~2018	By	/s/ Jan A. Bertsch
			Jan A. Bertsch
			President and Chief Financial Officer

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