O-I Glass, Inc. /DE/ - Quarter Report: 2020 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒

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

For the quarterly period ended

June 30, 2020

☐

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

For the transition period from to

Commission file number 1-9576

O-I GLASS, INC.

(Exact name of registrant as specified in its charter)



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


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

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

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

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

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

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

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

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares of common stock, par value $.01, of O-I Glass, Inc. outstanding as of June 30, 2020 was 156,955,838.

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

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

The term “Company,” as used herein and unless otherwise stated or indicated by context, refers to Owens-Illinois, Inc. (“O-I”) prior to the Corporate Modernization (as defined in Note 11) and to O-I Glass, Inc. (“O-I Glass”) after the Corporate Modernization.

O-I GLASS, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

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


	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Net sales	$	1,418	$	1,756	$	2,979	$	3,393
Cost of goods sold		(1,255)		(1,420)		(2,548)		(2,760)

Gross profit		163		336		431		633

Selling and administrative expense		(97)		(116)		(213)		(231)
Research, development and engineering expense		(13)		(18)		(29)		(34)
Interest expense, net		(98)		(68)		(151)		(132)
Equity earnings		13		19		28		38
Other expense, net		(87)		(55)		(104)		(65)

Earnings (loss) from continuing operations before income taxes		(119)		98		(38)		209
Benefit (provision) for income taxes		18		(27)		(8)		(54)

Earnings (loss) from continuing operations		(101)		71		(46)		155
Loss from discontinued operations				(1)				(1)

Net earnings (loss)		(101)		70		(46)		154
Net earnings attributable to non-controlling interests				(5)		(5)		(10)
Net earnings (loss) attributable to the Company	$	(101)	$	65	$	(51)	$	144

Amounts attributable to the Company:
Earnings (loss) from continuing operations	$	(101)	$	66	$	(51)	$	145
Loss from discontinued operations				(1)				(1)
Net earnings (loss)	$	(101)	$	65	$	(51)	$	144

Basic earnings per share:
Net earnings (loss) from continuing operations attributable to the Company	$	(0.64)	$	0.42	$	(0.32)	$	0.94
Loss from discontinued operations								(0.01)
Net earnings (loss)	$	(0.64)	$	0.42	$	(0.32)	$	0.93

Weighted average shares outstanding (thousands)		156,790		155,338		156,435		154,852

Diluted earnings per share:
Net earnings (loss) from continuing operations attributable to the Company	$	(0.64)	$	0.42	$	(0.32)	$	0.93
Loss from discontinued operations								(0.01)
Net earnings (loss)	$	(0.64)	$	0.42	$	(0.32)	$	0.92

Weighted average diluted shares outstanding (thousands)		156,790		156,471		156,435		156,555

See accompanying notes.

O-I GLASS, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Net earnings (loss)	$	(101)	$	70	$	(46)	$	154
Other comprehensive income (loss):
Foreign currency translation adjustments		54		1		(519)		50
Pension and other postretirement benefit adjustments, net of tax		19		16		50		22
Change in fair value of derivative instruments, net of tax		(13)		(9)		(7)		(4)
Other comprehensive income (loss)		60		8		(476)		68
Total comprehensive income (loss)		(41)		78		(522)		222
Comprehensive (income) loss attributable to non-controlling interests		2		7		6		(1)
Comprehensive income (loss) attributable to the Company	$	(39)	$	85	$	(516)	$	221

See accompanying notes.

O-I GLASS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(Unaudited)


	June 30,		December 31,		June 30,
	2020		2019		2019
Assets
Current assets:
Cash and cash equivalents	$	1,067	$	551	$	371
Trade receivables, net of allowance of $30 million, $32 million, and $34 million at June 30, 2020, December 31, 2019 and June 30, 2019		696		621		1,275
Inventories		1,004		1,045		1,015
Prepaid expenses and other current assets		245		271		282
Total current assets		3,012		2,488		2,943

Property, plant and equipment, net		2,976		3,273		3,216
Goodwill		1,806		1,934		2,527
Intangibles, net		314		371		422
Other assets		1,471		1,544		1,615
Total assets	$	9,579	$	9,610	$	10,723

Liabilities and Share owners’ equity
Current liabilities:
Accounts payable	$	916	$	1,276	$	1,074
Short-term loans and long-term debt due within one year		404		124		96
Current portion of asbestos-related liabilities						135
Other liabilities		566		595		624
Total current liabilities		1,886		1,995		1,929

Long-term debt		6,103		5,435		6,235
Asbestos-related liabilities				486		364
Paddock support agreement liability		471
Other long-term liabilities		1,077		1,130		1,105
Share owners' equity		42		564		1,090
Total liabilities and share owners’ equity	$	9,579	$	9,610	$	10,723

See accompanying notes.

O-I GLASS, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

(Unaudited)


	Six months ended June 30,
	2020		2019
Cash flows from operating activities:
Net earnings (loss)	$	(46)	$	154
Loss from discontinued operations		—		1
Non-cash charges
Depreciation and amortization		247		253
Pension expense		20		16
Restructuring, asset impairment and related charges		67		32
Pension settlement charges		8		2
Cash payments
Pension contributions		(21)		(19)
Asbestos-related payments				(103)
Cash paid for restructuring activities		(22)		(29)
Change in components of working capital		(415)		(939)
Other, net (a)		28		(30)
Cash utilized in continuing operating activities		(134)		(662)
Cash utilized in discontinued operating activities				(1)
Total cash utilized in operating activities		(134)		(663)
Cash flows from investing activities:
Cash payments for property, plant and equipment		(189)		(233)
Acquisitions, net of cash acquired				(157)
Contributions and advances to joint ventures				(22)
Net cash proceeds on disposal of assets		2		1
Deconsolidation of Paddock		(47)
Other		1		1
Cash utilized in investing activities		(233)		(410)
Cash flows from financing activities:
Changes in borrowings, net		922		970
Payment of finance fees		(45)		(8)
Treasury shares repurchased				(38)
Dividends paid		(8)		(16)
Net cash proceeds for hedging activity		42		28
Distributions to non-controlling interests		(4)		(7)
Other, net		(3)		(3)
Cash provided by financing activities		904		926
Effect of exchange rate fluctuations on cash		(21)		6
Increase (Decrease) in cash		516		(141)
Cash at beginning of period		551		512
Cash at end of period	$	1,067	$	371

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

See accompanying notes.

O-I GLASS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions, except per share amounts

1. Segment Information

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

The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings (loss) from continuing operations before interest income, interest expense, and benefit (provision) for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations, as well as certain retained corporate costs. The Company’s management uses segment operating profit, in combination with net sales and selected cash flow information, to evaluate performance and to allocate resources. Segment operating profit for reportable segments includes an allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided. Segment operating profit is not a recognized term under U.S. GAAP, and therefore, does not purport to be an alternative to earnings (loss) before income taxes. Further, the Company's measure of segment operating profit may not be comparable to similarly titled measures of other companies.

Financial information for the three and six months ended June 30, 2020 and 2019 regarding the Company’s reportable segments is as follows:


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Net sales:
Americas	$	724	$	934	$	1,555	$	1,815
Europe		555		650		1,132		1,246
Asia Pacific		132		152		277		303
Reportable segment totals		1,411		1,736		2,964		3,364
Other		7		20		15		29
Net sales	$	1,418	$	1,756	$	2,979	$	3,393


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Segment operating profit:
Americas	$	52	$	144	$	155	$	257
Europe		42		90		103		169
Asia Pacific		1		2		6		10
Reportable segment totals		95		236		264		436
Items excluded from segment operating profit:
Retained corporate costs and other		(33)		(28)		(54)		(53)
Restructuring, asset impairment and other charges		(71)		(40)		(71)		(40)
Strategic transaction costs		(4)				(4)
Pension settlement charges		(8)		(2)		(8)		(2)
Charge for deconsolidation of Paddock						(14)
Interest expense, net		(98)		(68)		(151)		(132)
Earnings (loss) from continuing operations before income taxes	$	(119)	$	98	$	(38)	$	209

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


	June 30,		December 31,		June 30,
	2020		2019		2019
Total assets:
Americas	$	4,707	$	5,264	$	5,994
Europe		3,315		3,127		3,342
Asia Pacific		915		1,012		1,045

Reportable segment totals		8,937		9,403		10,381
Other		642		207		342
Consolidated totals	$	9,579	$	9,610	$	10,723

2. Revenue

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

For the three- and six-month periods ended June 30, 2020 and June 30, 2019, the Company had no material bad debt expense and there were no material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet.

The following tables for the three months ended June 30, 2020 and 2019 disaggregates the Company’s revenue by customer end use:


	Three months ended June 30, 2020
	Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	427	$	395	$	88	$	910
Food and other		198		117		30		345
Non-alcoholic beverages		99		43		14		156
Reportable segment totals	$	724	$	555	$	132	$	1,411
Other								7
Net sales							$	1,418


	Three months ended June 30, 2019
	Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	590	$	474	$	105	$	1,169
Food and other		191		109		29		329
Non-alcoholic beverages		153		67		18		238
Reportable segment totals	$	934	$	650	$	152	$	1,736
Other								20
Net sales							$	1,756

The following tables for the six months ended June 30, 2020 and 2019 disaggregates the Company’s revenue by customer end use:


	Six months ended June 30, 2020
	Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	935	$	806	$	189	$	1,930
Food and other		387		223		53		663
Non-alcoholic beverages		233		103		35		371
Reportable segment totals	$	1,555	$	1,132	$	277	$	2,964
Other								15
Net sales							$	2,979


	Six months ended June 30, 2019
	Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	1,153	$	907	$	214	$	2,274
Food and other		372		211		54		637
Non-alcoholic beverages		290		128		35		453
Reportable segment totals	$	1,815	$	1,246	$	303	$	3,364
Other								29
Net sales							$	3,393

3. Credit Losses

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

At June 30, 2020, the Company reported $696 million of accounts receivable, net of allowances of $30 million. Changes in the allowance were not material for the three or six months ended June 30, 2020.

4. Inventories

Major classes of inventory at June 30, 2020, December 31, 2019 and June 30, 2019 are as follows:


	June 30,		December 31,		June 30,
	2020		2019		2019
Finished goods	$	833	$	872	$	838
Raw materials		129		128		131
Operating supplies		42		45		46
	$	1,004	$	1,045	$	1,015

5. Goodwill

The Company had Goodwill of approximately $1.8 billion at June 30, 2020, which includes approximately $0.9 billion related to the Company’s Europe reporting unit (in the Europe segment), approximately $0.5 billion related to the Company’s Latin America reporting unit (in the Americas segment) and approximately $0.4 billion related to the Company’s North America reporting unit (in the Americas segment). The COVID-19 pandemic had a significant adverse impact on the Company’s business during the second quarter of 2020, resulting in a significant decline in revenue and earnings, along with a decline in the Company’s stock price and associated market capitalization. While there is uncertainty about the duration and extent of the impact of the pandemic, the Company expects there will be a negative impact to its future earnings and cash flows. The Company determined that the impact of COVID-19 was a triggering event that required the Company to perform a quantitative interim goodwill impairment test in the second quarter of 2020.

When performing its test for goodwill impairment, the Company compares the business enterprise value (“BEV”) of each reporting unit to its carrying value. The BEV is computed based on estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. If the BEV is less than the carrying value for any reporting unit, then any excess of the carrying value over the BEV is recorded as an impairment loss. The calculations of the BEV of the Company’s reporting units were determined based on valuation techniques using the best available information, primarily discounted cash flow projections. The Company makes significant assumptions and estimates about the extent and timing of future cash flows. The outcome of the BEV calculations in the second quarter of 2020 indicated that the BEV of each of the Company’s reporting units exceeded its carrying amount; therefore, no impairment existed.

There can be no assurance that anticipated financial results will be achieved and the goodwill balances remain susceptible to future impairment charges. The goodwill related to the North America reporting unit is determined to have the greatest risk of future impairment charges given the narrow difference (approximately 2%) between the BEV and carrying value of this reporting unit as of the second quarter of 2020. The BEVs of the Company’s Europe and Latin America reporting units more substantially exceed their carrying values. If the Company’s projected future cash flows were lower, or if the assumed weighted average cost of capital were higher, the testing performed in the second quarter of 2020 may have indicated an impairment of the goodwill related to one or more of the Company’s reporting units. Any impairment charges that the Company may take in the future could be material to its consolidated results of operations and financial condition.

6. Derivative Instruments

The Company has certain derivative assets and liabilities, which consist of natural gas forwards, foreign exchange option and forward contracts, interest rate swaps and cross-currency swaps. The valuation of these instruments is determined primarily using the income approach, including discounted cash flow analysis on the expected cash flows of each derivative. Natural gas forward rates, foreign exchange rates and interest rates are the significant inputs into the valuation models. The Company also evaluates counterparty risk in determining fair values. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These inputs are observable in active markets over the terms of the instruments the Company holds, and, accordingly, the Company classifies its derivative assets and liabilities as Level 2 in the hierarchy.

Commodity Forward Contracts Designated as Cash Flow Hedges

The Company enters into commodity forward contracts related to forecasted natural gas requirements, the objectives of which are to limit the effects of fluctuations in the future market price paid for natural gas and the related volatility in cash flows.

An unrecognized loss of $1 million at June 30, 2020, an unrecognized gain of $1 million at December 31, 2019 and an unrecognized gain of $2 million at June 30, 2019 related to the commodity forward contracts were included in Accumulated other comprehensive income (“Accumulated OCI”), and will be reclassified into earnings in the period when the commodity forward contracts expire.

Foreign Exchange Derivative Contracts Not Designated as Hedging Instruments

The Company uses short-term forward exchange or option agreements to purchase foreign currencies at set rates in the future. These agreements are used to limit exposure to fluctuations in foreign currency exchange rates for significant planned purchases of fixed assets or commodities that are denominated in currencies other than the subsidiaries’ functional currency. The Company also uses foreign exchange agreements to offset the foreign currency risk for receivables and payables, including intercompany receivables, payables, and loans, not denominated in, or indexed to, their functional currencies.

Cash Flow Hedges of Foreign Exchange Risk

The Company has variable-interest rate borrowings denominated in currencies other than the functional currency of the borrowing subsidiaries. As a result, the Company is exposed to fluctuations in the currency of the borrowing against the subsidiaries’ functional currency. The Company uses derivatives to manage these exposures and designates these derivatives as cash flow hedges of foreign exchange risk.

An unrecognized loss of $10 million at June 30, 2020, an unrecognized loss of less than $1 million at December 31, 2019 and an unrecognized loss of $18 million at June 30, 2019, related to these cross-currency swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next 12 months.

Interest Rate Swaps Designated as Fair Value Hedges

The Company enters into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. The Company’s fixed-to-variable interest rate swaps are accounted for as fair value hedges. The relevant terms of the swap agreements match the corresponding terms of the notes, and therefore there is no hedge ineffectiveness. The Company recorded the net of the fair market values of the swaps as a long-term liability and short-term asset, along with a corresponding net decrease in the carrying value of the hedged debt.

Cash Flow Hedges of Interest Rate Risk

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

An unrecognized loss of less than $1 million at June 30, 2020, an unrecognized loss of $1 million at December 31, 2019 and an unrecognized loss of $1 million at June 30, 2019 related to these interest rate swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next 12 months.

Net Investment Hedges

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

An unrecognized gain of $1 million at June 30, 2020, an unrecognized gain of $8 million at December 31, 2019 and an unrecognized gain of $5 million at June 30, 2019, related to these net investment hedges, were included in Accumulated OCI, and will be reclassified into earnings within the next 12 months.

Balance Sheet Classification

The following table shows the amount and classification (as noted above) of the Company’s derivatives at June 30, 2020, December 31, 2019 and June 30, 2019:


	Fair Value of						Fair Value of
	Hedge Assets						Hedge Liabilities
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
	2020		2019		2019		2020		2019		2019
Derivatives designated as hedging instruments:
Commodity forward contracts (a)	$	—	$	1	$	2	$	1	$	—	$	1
Interest rate swaps - fair value hedges (b)		14		8		15				2
Cash flow hedges of foreign exchange risk (c)		18		25		20		55		21		30
Interest rate swaps - cash flow hedges (d)						1				1		2
Net investment hedges (e)		4		2		6		8				6
Total derivatives accounted for as hedges	$	36	$	36	$	44	$	64	$	24	$	39
Derivatives not designated as hedges:
Foreign exchange derivative contracts (f)		5		2		2		5				1
Total derivatives	$	41	$	38	$	46	$	69	$	24	$	40


Current	$	20	$	8	$	13	$	14	$	—	$	3
Noncurrent		21		30		33		55		24		37
Total derivatives	$	41	$	38	$	46	$	69	$	24	$	40

(a) The notional amounts of the commodity forward contracts were $11 million, $13 million and $19 million at June 30, 2020, December 31, 2019 and June 30, 2019, respectively. The maximum maturity dates were in 2020 for all three periods.

(b) The notional amounts of the interest rate swaps designated as fair value hedges were €725 million at June 30, 2020, December 31, 2019 and June 30, 2019. The maximum maturity dates were in 2025 for June 30, 2020 and December 31, 2019 and in 2024 for June 30, 2019.

(c) The notional amounts of the cash flow hedges of foreign exchange risk were $1.424 billion at June 30, 2020 and December 31, 2019 and $1.210 billion at June 30, 2019. The maximum maturity dates were in 2023 for all three periods.

(d) The notional amounts of the interest rate swaps designated as cash flow hedges were $105 million at June 30, 2020 and December 31, 2019 and $480 million at June 30, 2019. Maximum maturity dates were in 2020 for June 30, 2020 and December 31, 2019 and in 2021 for June 30, 2019.

(e) The notional amounts of the net investment hedges were €471 million at June 30, 2020 and €160 million at December 31, 2019 and June 30, 2019. The maximum maturity dates were in 2020 for all three periods.

(f) The notional amounts of the foreign exchange derivative contracts were $279 million, $283 million and $292 million at June 30, 2020, December 31, 2019 and June 30, 2019, respectively. The maximum maturity dates were in 2021 for June 30, 2020 and in 2019 for December 31, 2019 and June 30, 2019.


	Gain (Loss) Recognized in OCI (Effective Portion)				Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) (1)
	Three months ended June 30,				Three months ended June 30,
Derivatives designated as hedging instruments:	2020		2019		2020		2019
Cash Flow Hedges
Commodity forward contracts (a)	$	1	$	(1)	$	—	$	—
Cash flow hedges of foreign exchange risk (b)		(56)		(5)		(51)		2
Cash flow hedges of interest rate risk (c)				(1)		(1)
Net Investment Hedges
Net Investment Hedges (c)		(8)				2		2
	$	(63)	$	(7)	$	(50)	$	4

	Gain (Loss) Recognized in OCI (Effective Portion)				Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) (1)
	Six months ended June 30,				Six months ended June 30,
Derivatives designated as hedging instruments:	2020		2019		2020		2019
Cash Flow Hedges
Commodity forward contracts (a)	$	(2)	$	1	$	—	$	(1)
Cash flow hedges of foreign exchange risk (b)		10		2		9		12
Cash flow hedges of interest rate risk (c)				(1)		(1)
Net Investment Hedges
Net Investment Hedges (c)		(3)		5		3		3
	$	5	$	7	$	11	$	14

	Amount of Gain (Loss) Recognized in Other income (expense), net				Amount of Gain (Loss) Recognized in Other income (expense), net
	Three months ended June 30,				Six months ended June 30,
Derivatives not designated as hedges:	2020		2019		2020		2019
Foreign exchange derivative contracts	$	(2)	$	1	$	10	$	7

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

7. Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended June 30, 2020 and 2019 is as follows:


	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at April 1, 2020	$	22	$		$	12	$	34
Charges		21		40		6		67
Write-down of assets to net realizable value				(40)				(40)
Net cash paid, principally severance and related benefits		(13)				(1)		(14)
Balance at June 30, 2020	$	30	$	—	$	17	$	47


	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at April 1, 2019	$	34	$		$	19	$	53
Charges		27				5		32
Net cash paid, principally severance and related benefits		(11)				(3)		(14)
Other, including foreign exchange translation						(1)		(1)
Balance at June 30, 2019	$	50	$	—	$	20	$	70

Selected information related to the restructuring accruals for the six months ended June 30, 2020 and 2019 is as follows:


	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at January 1, 2020	$	32	$		$	13	$	45
Charges		21		40		6		67
Write-down of assets to net realizable value				(40)				(40)
Net cash paid, principally severance and related benefits		(21)				(1)		(22)
Other, including foreign exchange translation		(2)				(1)		(3)
Balance at June 30, 2020	$	30	$	—	$	17	$	47


	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at January 1, 2019	$	47	$		$	22	$	69
Charges		27				5		32
Net cash paid, principally severance and related benefits		(24)				(5)		(29)
Other, including foreign exchange translation						(2)		(2)
Balance at June 30, 2019	$	50	$	—	$	20	$	70

When a decision is made to take restructuring actions, the Company manages and accounts for them programmatically apart from the on-going operations of the business. Information related to major programs is presented separately, while minor initiatives are presented on a combined basis. As of June 30, 2020 and 2019, no major restructuring programs were in effect.

For the three and six months ended June 30, 2020, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges of $67 million. These charges consisted of employee costs, such as severance and benefit-related costs, write-down of assets and other exit costs primarily related to a plant closure in the Americas and to a reduction-in-force program as part of its selling, general and administrative expense reduction initiative to help simplify the organization and improve decision making and execution. These restructuring charges 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. For the three and six months ended June 30, 2020, these

charges were recorded to Other expense, net on the Condensed Consolidated Results of Operations. The Company expects that the majority of the remaining cash expenditures related to the accrued employee and other exit costs will be paid out over the next several years.

For the three and six months ended June 30, 2019, the Company implemented several discrete restructuring initiatives and recorded restructuring and other charges of $32 million. These charges consisted of employee costs such as severance and benefit related costs and other exit costs primarily related to a severance program for certain salaried employees at the Company’s corporate and Americas headquarters. These charges were recorded to Selling and administrative expense ($2 million) and Other expense, net ($30 million) on the Condensed Consolidated Results of Operations.

The Company’s decisions to curtail selected production capacity have resulted in write-downs of certain long-lived assets to the extent their carrying value exceeded fair value or fair value less cost to sell. The Company classified the assumptions used to determine the fair value of the impaired assets in the period that the measurement was taken as Level 3 (third-party appraisal) in the fair value hierarchy as set forth in the general accounting principles for fair value measurements. For the asset impairments recorded through June 30, 2020, the remaining carrying value of the impaired assets was approximately $1 million.

8. Pension Benefit Plans

The components of the net periodic pension cost for the three months ended June 30, 2020 and 2019 are as follows:


	U.S.				Non-U.S.
	2020		2019		2020		2019
Service cost	$	3	$	3	$	4	$	3
Interest cost		13		15		6		7
Expected asset return		(20)		(22)		(12)		(11)
Amortization of actuarial loss		14		10		3		3
Net periodic pension cost	$	10	$	6	$	1	$	2

The components of the net periodic pension cost for the six months ended June 30, 2020 and 2019 are as follows:


	U.S.				Non-U.S.
	2020		2019		2020		2019
Service cost	$	6	$	6	$	7	$	6
Interest cost		25		30		13		15
Expected asset return		(41)		(44)		(24)		(22)
Amortization of actuarial loss		28		20		6		5
Net periodic pension cost	$	18	$	12	$	2	$	4

In addition to the above, the Company settled a portion of its pension obligations in Canada and recorded pension settlement charges of $8 million for the three and six months ended June 30, 2020, respectively.

9. Income Taxes

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

and reviews, as well as other factors. As such, there can be significant volatility in interim tax provisions. The annual effective tax rate differs from the statutory U.S. Federal tax rate of 21% primarily because of varying non-U.S. tax rates.

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

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act into law. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic that provides numerous tax provisions and other stimulus measures. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Some international jurisdictions in which the Company operates have also enacted legislation to provide economic stimulus in response to the COVID-19 pandemic. The Company anticipates it will benefit from the ability to defer U.S. social security payroll tax that would otherwise be required in 2020, the acceleration of alternative minimum tax credit refunds, and potentially other provisions within the CARES Act. In addition, the Company may benefit from the deferral of certain non-U.S. tax payments to a future period. The Company expects the CARES Act and international legislation will not have a material impact on the Company’s condensed consolidated financial statements. The Company will continue to monitor and assess the impact the CARES Act and similar legislation in other countries may have on financial results.

10. Debt

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


	June 30,		December 31,		June 30,
	2020		2019		2019
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	823	$	—	$	389
Term Loans:
Term Loan A		1,477		1,477		1,496
Other secured debt		225		333		454
Senior Notes:
6.75%, due 2020 (€500 million)						567
4.875%, due 2021 (€0 million at June 30, 2020, €118 million December 31, 2019 and €330 million at June 30, 2019)				132		374
5.00%, due 2022		81		497		497
4.00%, due 2023		307		307		307
5.875%, due 2023		690		689		689
3.125%, due 2024 (€725 million)		835		824		845
6.375%, due 2025		296		295		296
5.375%, due 2025		297		297		298
2.875%, due 2025 (€500 million)		554		552
6.625%, due 2027		691
Finance leases		88		70		41
Other		12		11		12
Total long-term debt		6,376		5,484		6,265
Less amounts due within one year		273		49		30
Long-term debt	$	6,103	$	5,435	$	6,235

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

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

The Agreement provides for up to $3.0 billion of borrowings pursuant to term loans and revolving credit facilities. The term loans mature, and the revolving credit facilities terminate in June 2024. At June 30, 2020, the Agreement includes a $300 million revolving credit facility, a $1.2 billion multicurrency revolving credit facility, and a $1.5 billion term loan A facility ($1,477 million net of debt issuance costs). At June 30, 2020, the Company had unused credit of $667 million available under the Agreement. The weighted average interest rate on borrowings outstanding under the Agreement at June 30, 2020 was 1.64%.

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

equivalents, by Consolidated EBITDA, with such Leverage Ratio decreasing to (a) 4.75x for the quarter ending June 30, 2021 and (b) 4.50x for the quarter ending December 31, 2021 and thereafter, as defined and described in the Agreement. The maximum Leverage Ratio is subject to an increase of 0.5x for (i) any fiscal quarter during which certain qualifying acquisitions (as specified in the Agreement) are consummated and (ii) the following three fiscal quarters, provided that the Leverage Ratio shall not exceed 5.0x. The Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Leverage Ratio to exceed the specified maximum.

Failure to comply with these covenants and other customary restrictions could result in an event of default under the Agreement. In such an event, the Company could not request borrowings under the revolving facilities, and all amounts outstanding under the Agreement, together with accrued interest, could then be declared immediately due and payable. Upon the occurrence and for the duration of a payment event of default, an additional default interest rate equal to 2.0% per annum will apply to all overdue obligations under the Agreement. If an event of default occurs under the Agreement and the lenders cause all of the outstanding debt obligations under the Agreement to become due and payable, this would result in a default under the indentures governing the Company’s outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of June 30, 2020, the Company was in compliance with all covenants and restrictions in the Agreement. In addition, the Company believes that it will remain in compliance and that its ability to borrow funds under the Agreement will not be adversely affected by the covenants and restrictions.

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

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

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

In November 2019, the Company issued €500 million aggregate principal amount of senior notes. The senior notes bear interest at a rate of 2.875% per annum and mature on February 15, 2025. The senior notes were issued via a private placement and are guaranteed by certain of the Company’s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately €492 million and were used to redeem the remaining €250 million aggregate principal amount of the Company’s outstanding 6.75% senior notes due 2020 and €212 million aggregate principal amount of the Company’s outstanding 4.875% senior notes due 2021.

In December 2019, subsidiaries of the Company completed consent solicitations to amend and waive certain provisions of the indentures governing certain of their senior notes. On December 11, 2019, those subsidiaries entered into supplemental indentures reflecting the amendments and waivers, which were obtained to facilitate the implementation of the Corporate Modernization.

In May 2020, the Company issued $700 million aggregate principal amount of new senior notes. The new senior notes bear interest at a rate of 6.625% per annum and mature on May 13, 2027. The new senior notes were issued via a private placement and are guaranteed by certain of the Company’s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $690 million and were used to redeem the remaining $130 million aggregate principal amount of the Company’s outstanding 4.875% senior notes due 2021, approximately $419 million aggregate principal amount of the Company’s outstanding 5.00% senior notes due 2022 and approximately $105 million of other secured borrowings. The Company recorded approximately $38 million of additional interest charges for note

repurchase premiums and write-off of unamortized finance fees related to the senior notes redemptions for the three and six months ended June 30, 2020, respectively.

In order to maintain a capital structure containing appropriate amounts of fixed and floating-rate debt, the Company has entered into a series of interest rate swap agreements. These interest rate swap agreements were accounted for as either fair value hedges or cash flow hedges (see Note 6 for more information).

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

The carrying amounts reported for certain long-term debt obligations subject to frequently redetermined interest rates approximate fair value. Fair values for the Company’s significant fixed rate debt obligations are based on published market quotations, and are classified as Level 1 in the fair value hierarchy. Fair values at June 30, 2020 of the Company’s significant fixed rate debt obligations are as follows:


	Principal		Indicated Market
	Amount		Price Per $		Fair Value
Senior Notes:
5.00%, due 2022	$	81	$	100.35	$	81
4.00%, due 2023		310		98.61		306
5.875%, due 2023		700		103.07		722
3.125%, due 2024 (€725 million)		815		98.74		804
6.375%, due 2025		300		104.61		314
5.375%, due 2025		300		100.39		301
2.875%, due 2025 (€500 million)		562		96.92		545
6.625%, due 2027		700		104.15		729

11. Contingencies

Asbestos

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

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

On December 26 and 27, 2019, the Company implemented the Corporate Modernization (“Corporate Modernization”), whereby O-I Glass became the new parent entity with Owens-Illinois Group, Inc. (“O-I Group”) and Paddock Enterprises, LLC (“Paddock”) as direct, wholly owned subsidiaries, with Paddock as the successor-by-merger to O-I. The Company’s legacy asbestos-related liabilities remained within Paddock, structurally separating them from the Company’s glass-making operations, which remain under O-I Group.

On January 6, 2020 (the “Petition Date”), Paddock voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware to equitably and finally resolve all of its current and future asbestos-related claims. O-I Glass and O-I Group were not included in the Chapter 11 filing. As a result of the

initiation of the Chapter 11 proceeding, Paddock now operates in the ordinary course under court protection from asbestos claims by operation of the automatic stay in Paddock’s Chapter 11 filing, which stays ongoing litigation and submission of claims against Paddock as of the Petition Date and defers the payment of Paddock’s outstanding obligations on account of settled or otherwise determined lawsuits and claims. The bankruptcy process is expected to provide a centralized forum to resolve presently pending and anticipated future lawsuits and claims associated with asbestos. Paddock’s ultimate goal in its Chapter 11 case is to confirm a plan of reorganization under Section 524(g) of the Bankruptcy Code and utilize this specialized provision to establish a trust that will address all current and future asbestos-related claims. Because the Chapter 11 proceedings are in the early stages, it is not possible to predict the form of the ultimate resolution or when an ultimate resolution might occur.

As part of the Corporate Modernization transactions, O-I Glass entered into a support agreement with Paddock that requires O-I Glass to provide funding to Paddock for all permitted uses, subject to the terms of the support agreement. The key objectives of the support agreement are to ensure that Paddock has the ability to fund the costs and expenses of managing the Chapter 11 process, ultimately settle Asbestos Claims through the establishment of a trust as described above and fund certain other liabilities including applicable taxes. The ultimate amount that may be required to fund the trust in connection with a confirmed Chapter 11 plan of reorganization cannot be estimated with certainty.

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

Several risks and uncertainties related to Paddock’s Chapter 11 case could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows, including the ultimate amounts necessary to fund any trust established pursuant to Section 524(g) of the Bankruptcy Code, the potential for the Company’s asbestos-related exposure to extend beyond Paddock based on corporate veil piercing efforts or other claims by asbestos plaintiffs, the costs of the Chapter 11 proceedings and the length of time necessary to resolve the case, either through settlement or various court proceedings, and the possibility that Paddock will be unsuccessful in attaining the desired relief under Chapter 11.

Prior to the Petition Date, the Company knew of approximately 850 asbestos lawsuits pending. This figure does not include an estimate of potential Administrative Claims that could have been presented under a claims-handling agreement due to the uncertainties around presentation timing, quantities, or qualification rates. The Company historically considered Administrative Claims to be filed and disposed of when they are accepted for payment.

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

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

From receipt of its first Asbestos Claim to the Petition Date, the Company in the aggregate disposed of approximately 401,200 Asbestos Claims at an average indemnity payment of approximately $10,200 per claim. The

Company’s asbestos indemnity payments varied on a per-claim basis. Asbestos-related cash payments for 2019 were $151 million and the Company’s cash payments per claim disposed (inclusive of legal costs) were approximately $129,000 for the year ended December 31, 2019.

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

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

Prior to the Petition Date, the Company continually monitored trends that could affect its ultimate liability and analyzed the developments and variables likely to affect the resolution of Asbestos Claims. The material components of the Company’s total accrued liability were determined by the Company in connection with its annual comprehensive legal review and consisted of the following estimates, to the extent it was probable that such liabilities had been incurred and could be reasonably estimated: (i) the liability for Asbestos Claims already asserted against the Company; (ii) the liability for Asbestos Claims not yet asserted against the Company; and (iii) the legal defense costs estimated to be incurred in connection with the Asbestos Claims already asserted and those Asbestos Claims the Company believed would be asserted.

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

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

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

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

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

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

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

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

For the year ended December 31, 2019, the Company concluded that an accrual in the amount of $486 million was required under applicable accounting standards. This amount has not been discounted for the time value of money. The Company’s comprehensive legal review resulted in a charge of $35 million the year ended December 31, 2019. As previously disclosed, the Company anticipated that adjustments to its asbestos-related accruals were possible given the inherent uncertainties involved in asbestos litigation. In the fourth quarter of 2019, this charge was primarily due to an increase in the estimated average disposition cost per claim (including related legal costs), driven primarily by a changing litigation environment more favorable to plaintiffs, and a decrease in the estimated number of claims likely to be asserted against the Company in the future that was less than the decrease expected by the Company.

Other Matters

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

12. Share Owners’ Equity

The activity in share owners’ equity for the three months ended June 30, 2020 and 2019 is as follows:

The activity in share owners’ equity for the three months ended June 30, 2020 and 2019 is as follows:
	Share Owners’ Equity of the Company
									Accumulated
			Capital in						Other		Non-		Total Share
	Common		Excess of		Treasury		Retained		Comprehensive		controlling		Owners'
	Stock		Par Value		Stock		Earnings (Loss)		Loss		Interests		Equity
Balance on April 1, 2020	$	2		3,128		(730)		(47)		(2,370)		93	$	76
Reissuance of common stock (0.3 million shares)				(4)		7								3
Stock compensation (0.1 million shares)				4										4
Net loss								(101)						(101)
Other comprehensive income (loss)										62		(2)		60
Balance on June 30, 2020	$	2	$	3,128	$	(723)	$	(148)	$	(2,308)	$	91	$	42


	Share Owners’ Equity of the Company
									Accumulated
			Capital in						Other		Non-		Total Share
	Common		Excess of		Treasury		Retained		Comprehensive		controlling		Owners'
	Stock		Par Value		Stock		Earnings		Loss		Interests		Equity
Balance on April 1, 2019	$	2		3,130		(745)		412		(1,911)		122	$	1,010
Reissuance of common stock (0.1 million shares)						3								3
Stock compensation (0.5 million shares)				6										6
Net earnings								65				5		70
Other comprehensive income (loss)										20		(12)		8
Dividends declared								(7)						(7)
Balance on June 30, 2019	$	2	$	3,136	$	(742)	$	470	$	(1,891)	$	115	$	1,090

The activity in share owners’ equity for the six months ended June 30, 2020 and 2019 is as follows:


	Share Owners’ Equity of the Company
									Accumulated
			Capital in						Other		Non-		Total Share
	Common		Excess of		Treasury		Retained		Comprehensive		controlling		Owners'
	Stock		Par Value		Stock		Earnings (Loss)		Loss		Interests		Equity
Balance on January 1, 2020	$	2		3,130		(733)		(89)		(1,843)		97	$	564
Reissuance of common stock (0.5 million shares)				(7)		12								5
Stock compensation (0.8 million shares)				5										5
Net earnings (loss)								(51)				5		(46)
Other comprehensive loss										(465)		(11)		(476)
Dividends declared								(8)						(8)
Other						(2)								(2)
Balance on June 30, 2020	$	2	$	3,128	$	(723)	$	(148)	$	(2,308)	$	91	$	42


	Share Owners’ Equity of the Company
									Accumulated
			Capital in						Other		Non-		Total Share
	Common		Excess of		Treasury		Retained		Comprehensive		controlling		Owners'
	Stock		Par Value		Stock		Earnings		Loss		Interests		Equity
Balance on January 1, 2019	$	2		3,124		(705)		333		(1,968)		114	$	900
Issuance of common stock (0.1 million shares)				2										2
Reissuance of common stock (0.2 million shares)				(1)		6								5
Treasury shares purchased (2.1 million shares)						(38)								(38)
Stock compensation (1.7 million shares)				11										11
Net earnings								144				10		154
Other comprehensive income (loss)										77		(9)		68
Dividends declared								(7)						(7)
Other						(5)								(5)
Balance on June 30, 2019	$	2	$	3,136	$	(742)	$	470	$	(1,891)	$	115	$	1,090

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


	Shares Outstanding (in thousands)
	June 30,	December 31,	June 30,
	2020	2019	2019

Shares of common stock issued (including treasury shares)	189,294	188,447	188,435

Treasury shares	32,338	32,573	32,978

13. Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the three months ended June 30, 2020 and 2019 is as follows:


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2020	$	(1,377)	$	(8)		$	(985)		$	(2,370)
Change before reclassifications		56		35			7			98
Amounts reclassified from accumulated other comprehensive income (loss)				(50)	(a)		17	(b)		(33)
Translation effect				1			(3)			(2)
Tax effect				1			(2)			(1)
Other comprehensive income (loss) attributable to the Company		56		(13)			19			62
Balance on June 30, 2020	$	(1,321)	$	(21)		$	(966)		$	(2,308)


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on April 1, 2019	$	(843)	$	(13)		$	(1,055)		$	(1,911)
Change before reclassifications		13		(14)						(1)
Amounts reclassified from accumulated other comprehensive income (loss)				4	(a)		12	(b)		16
Translation effect				1			4			5
Tax effect										—
Other comprehensive income (loss) attributable to the Company		13		(9)			16			20
Balance on June 30, 2019	$	(830)	$	(22)		$	(1,039)		$	(1,891)

(a)	Amount is included in Cost of goods sold and Other expense, net on the Condensed Consolidated Results of Operations (see Note 6 for additional information).

(b)	Amount is included in the computation of net periodic pension cost (see Note 8 for additional information) and net postretirement benefit cost.

The activity in accumulated other comprehensive loss for the six months ended June 30, 2020 and 2019 is as follows:


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2020	$	(813)	$	(14)		$	(1,016)		$	(1,843)
Change before reclassifications		(508)		(17)			5			(520)
Amounts reclassified from accumulated other comprehensive income (loss)				11	(a)		34	(b)		45
Translation effect							13			13
Tax effect				(1)			(2)			(3)
Other comprehensive income (loss) attributable to the Company		(508)		(7)			50			(465)
Balance on June 30, 2020	$	(1,321)	$	(21)		$	(966)		$	(2,308)


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2019	$	(889)	$	(18)		$	(1,061)		$	(1,968)
Change before reclassifications		59		(24)			(2)			33
Amounts reclassified from accumulated other comprehensive income (loss)				14	(a)		25	(b)		39
Translation effect				3			(1)			2
Tax effect				3						3
Other comprehensive income (loss) attributable to the Company		59		(4)			22			77
Balance on June 30, 2019	$	(830)	$	(22)		$	(1,039)		$	(1,891)

(a)	Amount is included in Cost of goods sold and Other expense, net on the Condensed Consolidated Results of Operations (see Note 6 for additional information).

(b)	Amount is included in the computation of net periodic pension cost (see Note 8 for additional information) and net postretirement benefit cost.

14. Other Expense, Net

Other expense, net for the three and six months ended June 30, 2020 and 2019 included the following:


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Restructuring, asset impairment and other charges	$	71	$	38	$	71	$	38
Pension settlement charges		8		2		8		2
Intangible amortization expense		5		10		15		20
Strategic transaction costs		4				4
Foreign currency exchange loss		1				1		3
Royalty income		(2)		(4)		(6)		(7)
Charge for deconsolidation of Paddock (see Note 11)						14
Other expense (income), net				9		(3)		9
	$	87	$	55	$	104	$	65

15. Earnings Per Share

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


	Three months ended June 30,
	2020		2019
Numerator:
Net earnings (loss) attributable to the Company	$	(101)	$	65
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		156,790		155,338
Effect of dilutive securities:
Stock options and other				1,133
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		156,790		156,471
Basic earnings (loss) per share:
Net earnings (loss) from continuing operations attributable to the Company	$	(0.64)	$	0.42
Loss from discontinued operations
Net earnings (loss)	$	(0.64)	$	0.42
Diluted earnings (loss) per share:
Net earnings (loss) from continuing operations attributable to the Company	$	(0.64)	$	0.42
Loss from discontinued operations
Net earnings (loss)	$	(0.64)	$	0.42

Options to purchase 3,751,691 and 1,603,692 weighted average shares of common stock, which were outstanding during the three months ended June 30, 2020 and 2019, respectively, were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the common shares. For the three months ended June 30, 2020, diluted earnings per share of common stock was equal to basic earnings per share of common stock due to the loss from continuing operations.


	Six months ended June 30,
	2020		2019
Numerator:
Net earnings (loss) attributable to the Company	$	(51)	$	144
Denominator (in thousands):
Denominator for basic earnings per share-weighted average shares outstanding		156,435		154,852
Effect of dilutive securities:
Stock options and other				1,703
Denominator for diluted earnings per share-adjusted weighted average shares outstanding		156,435		156,555
Basic earnings (loss) per share:
Net earnings (loss) from continuing operations attributable to the Company	$	(0.32)	$	0.94
Loss from discontinued operations				(0.01)
Net earnings (loss)	$	(0.32)	$	0.93
Diluted earnings (loss) per share:
Net earnings (loss) from continuing operations attributable to the Company	$	(0.32)	$	0.93
Loss from discontinued operations				(0.01)
Net earnings (loss)	$	(0.32)	$	0.92

Options to purchase 3,142,704 and 1,549,995 weighted average shares of common stock, which were outstanding during the six months ended June 30, 2020 and 2019, respectively, were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the common shares. For the six months ended June 30, 2020, diluted earnings per share of common stock was equal to basic earnings per share of common stock due to the loss from continuing operations.

16. Supplemental Cash Flow Information

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


	Six months ended June 30,
	2020		2019
U.S.	$	(1)	$	(3)
Non-U.S.		40		61
Total income taxes paid in cash	$	39	$	58

Interest paid, including note repurchase premiums, in cash for the six months ended June 30, 2020 and 2019 was $139 million and $128 million, respectively. Cash interest for the six months ended June 30, 2020 included $36 million of note repurchase premiums.

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At June 30, 2020, December 31, 2019 and June 30, 2019, the amount of receivables sold by the Company was $437 million, $539 million and $173 million, respectively. For the six months ended June 30, 2020 and 2019, the Company reduced the use of its factoring programs compared to the most recent respective year-end periods and this resulted in a higher use of working capital, and a corresponding decrease to cash from operating activities, of approximately $102 million and $427 million, respectively.

17. New Accounting Pronouncement

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

Disclosure Requirements for Fair Value Measurement - In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” which modifies the fair value disclosure requirements. Application of the standard is required for annual periods beginning after December 15, 2019. The Company adopted this standard in the first quarter of 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

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

Effects of Reference Rate Reform on Financial Reporting - In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which allows for elective contract modification guidance for contracts or other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform. Application of the standard can be adopted for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

18. Business Combinations

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

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

The total purchase price was allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values and was completed during the second quarter of 2020. The following table summarizes the final estimates of fair value of the assets acquired and liabilities assumed on June 28, 2019 and subsequent adjustments identified through the purchase price allocation process and recorded through the measurement period:


		June 28, 2019		Measurement Period Adjustments		June 30, 2020
Accounts receivable	$	42	$	(1)	$	41
Inventory		17				17
Goodwill				20		20
Intangibles		35		(32)		3
Net property, plant and equipment		129		33		162
Total assets acquired		223		20		243
Accounts payable		25		3		28
Accrued liabilities		3		(1)		2
Deferred tax liabilities				25		25
Net assets acquired	$	195	$	(7)	$	188

This acquisition did not meet the thresholds for a significant acquisition and therefore no pro forma financial information is presented.

19. COVID-19 Impacts

On March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic and recommended containment and mitigation measures. The Company is actively monitoring the impact of the global COVID-19 pandemic, which negatively impacted the first and second quarters of 2020 and will negatively impact its business and results of operations for the third and fourth quarters of 2020 and likely beyond.

The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates particularly as it relates to estimates reliant on forecasts and other assumptions reasonably available to the Company and the uncertain future impacts of the COVID-19 pandemic and related economic disruptions. The extent to which the COVID-19 pandemic and related economic disruptions impact the Company’s business and financial results will depend on future developments including, but not limited to, the continued spread, duration and severity of the COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks after the initial outbreak has subsided; the actions taken by the U.S. and foreign governments to contain the COVID-19 pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; the impact of the developments

described above on our customers and suppliers; and how quickly and to what extent normal economic and operating conditions can resume. The accounting matters assessed included, but were not limited to:

• allowance for doubtful accounts and credit losses

• carrying value of inventory; and

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

There was not a material impact to the above estimates in the Company’s Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material changes to the estimates and material impacts to the Company’s Condensed Consolidated Financial Statements in future reporting periods.

20. Subsequent Events

On July 31, 2020, the Company completed the sale of its Australia and New Zealand (“ANZ”) businesses to Visy Industries Holdings Pty Ltd. Gross proceeds approximated AUD $947 million (including a related sale-leaseback agreement which approximated AUD $214 million) or approximately USD $677 million. Approximately 95 percent of proceeds were received at time of closing and the remaining balance will be paid within 12 months of closing without conditions precedent. Net proceeds will be principally used to reduce debt.

The proceeds from the disposal of the Company’s ANZ businesses are expected to exceed the net carrying amount of the relevant assets and liabilities.

As of June 30, 2020, the ANZ businesses and their associated assets and liabilities did not meet the criteria for presentation as held for sale. Accordingly, the assets and liabilities attributable to the ANZ businesses are included in the Company’s Condensed Consolidated Balance Sheet and the operations of the ANZ businesses are included in the Company’s Asia Pacific region for segment reporting purposes (Note 1). The pretax profits from the ANZ businesses have been consolidated in the Company’s Condensed Consolidated Results of Operations and were approximately $6 million and $13 million for the six months ended June 30, 2020 and June 30, 2019, respectively. The major classes of assets and liabilities attributable to ANZ as of June 30, 2020 are included in the Company’s Condensed Consolidated Balance Sheet as follows:


		June 30, 2020
Cash and cash equivalents	$	45
Trade receivables, net		56
Inventories and other		154
Property, plant and equipment, net		266
Other assets		119
Accounts payable and other liabilities		(109)
Other long-term liabilities		(83)
Net assets		448
Accumulated other comprehensive income		123
	$	571

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 (loss) from continuing operations before interest income, interest expense, and provision (benefit) for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain retained corporate costs. The segment data presented below is prepared in accordance with general accounting principles for segment reporting. The lines titled “reportable segment totals” in both net sales and segment operating profit, however, are non-GAAP measures when presented outside of the financial statement footnotes. Management has included reportable segment totals below to facilitate the discussion and analysis of financial condition and results of operations and believes this information allows the board 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. Segment operating profit is not, however, intended as an alternative measure of operating results as determined in accordance with U.S. GAAP and is not necessarily comparable to similarly titled measures used by other companies.

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

The following discussion describes the Company’s results of operations for the three and six months ended June 30, 2020. The COVID-19 pandemic primarily impacted the Company’s shipment and production levels in the latter part of the first quarter and all of the second quarter of 2020, and the Company is actively monitoring the impact of the coronavirus outbreak, which is expected to negatively impact its business, results of operations, cash flows and financial position for the remainder of 2020 and likely beyond. The Company has summarized its current operating conditions and actions taken to mitigate the impact of COVID-19 below.

Financial information for the three and six months ended June 30, 2020 and 2019 regarding the Company’s reportable segments is as follows (dollars in millions):


	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Net Sales:
Americas	$	724	$	934	$	1,555	$	1,815
Europe		555		650		1,132		1,246
Asia Pacific		132		152		277		303
Reportable segment totals		1,411		1,736		2,964		3,364
Other		7		20		15		29
Net Sales	$	1,418	$	1,756	$	2,979	$	3,393


	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Segment operating profit:
Americas	$	52	$	144	$	155	$	257
Europe		42		90		103		169
Asia Pacific		1		2		6		10
Reportable segment totals		95		236		264		436
Items excluded from segment operating profit:
Retained corporate costs and other		(33)		(28)		(54)		(53)
Restructuring, asset impairment and other charges		(71)		(40)		(71)		(40)
Strategic transaction costs		(4)				(4)
Pension settlement charges		(8)		(2)		(8)		(2)
Charge for deconsolidation of Paddock						(14)
Interest expense, net		(98)		(68)		(151)		(132)
Earnings (loss) from continuing operations before income taxes		(119)		98		(38)		209
Benefit (provision) for income taxes		18		(27)		(8)		(54)
Earnings (loss) from continuing operations		(101)		71		(46)		155
Loss from discontinued operations				(1)				(1)
Net earnings (loss)		(101)		70		(46)		154
Net earnings attributable to noncontrolling interests				(5)		(5)		(10)
Net earnings (loss) attributable to the Company	$	(101)	$	65	$	(51)	$	144
Net earnings (loss) from continuing operations attributable to the Company	$	(101)	$	66	$	(51)	$	145

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

Executive Overview — Quarters ended June 30, 2020 and 2019

Second Quarter 2020 Highlights

●

Net sales in the second quarter of 2020 were down approximately 19% from the same quarter in 2019, primarily due to lower volumes due to COVID-19 and the unfavorable effects of changes in foreign currency exchange rates, partially offset by incremental sales from the Nueva Fanal acquisition in mid-2019 and higher prices.

●

Segment operating profit for reportable segments was down nearly 60% in the second quarter of 2020 compared to the second quarter of 2019, primarily due to lower sales volumes and higher operating costs driven by lower production levels to comply with government decrees to manage the pandemic, as well as the Company’s effort to align supply with lower demand and manage inventory. Segment operating profit was also impacted by the unfavorable effects of changes in foreign currency, partially offset by higher net selling prices and the positive impact from the Company’s turnaround initiatives and cost control measures.

●

As markets started to reopen, June 2020 sales volumes were down approximately 3% from June 2019, which compared favorably to the approximate 18% decline in April and May 2020. The Company has summarized its current operating conditions and its actions to mitigate the impact of COVID-19 below.

●

The Company issued $700 million of senior notes at an interest rate of 6.625% to repay upcoming debt maturities.

●

On July 31, 2020, the Company completed the previously announced sale of its Australia and New Zealand businesses and used the proceeds to reduce debt.

Net sales for the second quarter of 2020 were $338 million lower than the second quarter of the prior year primarily due to lower sales volumes due to COVID-19 and the unfavorable effect of changes in foreign currency exchange rates, partially offset by incremental sales from Nueva Fanal and higher prices.

Earnings from continuing operations before income taxes were $217 million lower in the second quarter of 2020 than the prior year quarter, primarily due to lower segment operating profit and higher charges for restructuring activities

and note repurchase premiums. Segment operating profit for reportable segments for the second quarter of 2020 was $141 million lower than the second quarter of the prior year. The decrease was largely due to lower sales volumes and higher operating costs as a result of COVID-19 and the unfavorable effects of changes in foreign currency, partially offset by higher net selling prices and the positive impact from the Company’s turnaround initiatives and cost control measures.

Net interest expense for the second quarter of 2020 increased $30 million compared to the second quarter of 2019. Net interest expense included $38 million and $2 million for note repurchase premiums, third party fees and the write-off of deferred finance fees in the second quarter of 2020 and 2019, respectively, that related to debt that was repaid prior to its maturity.

For the second quarter of 2020, the Company recorded a loss from continuing operations attributable to the Company of $101 million, or $0.64 per share, compared to earnings of $66 million, or $0.42 per share (diluted), in the second quarter of 2019. Earnings (loss) in both periods included items that management considered not representative of ongoing operations. These items decreased earnings attributable to the Company by $102 million, or $0.65 per share, in the second quarter of 2020 and decreased earnings attributable to the Company by $42 million, or $0.27 per share, in the second quarter of 2019.

Results of Operations — Second Quarter of 2020 compared with Second Quarter of 2019

Net Sales

The Company’s net sales in the second quarter of 2020 were $1,418 million compared with $1,756 million for the second quarter of 2019, a decrease of $338 million, or approximately 19%. Total glass container shipments, in tonnes, were down approximately 15% in the second quarter of 2020 compared to the prior year quarter. Excluding the impact of the Nueva Fanal acquisition, total glass container shipments, in tonnes, were down approximately 16% in the second quarter of 2020 compared to the same period in the prior year and were primarily driven by the impacts of COVID-19. As markets started to reopen, June 2020 sales volumes were down approximately 3% from June 2019, which compared favorably to the approximate 18% decline in April and May 2020. The net impact of lower organic sales more than offset the additional sales from the Nueva Fanal acquisition and resulted in a $255 million net reduction to net sales in the second quarter of 2020 compared to the same period in the prior year. Unfavorable foreign currency exchange rates decreased sales by $88 million in the second quarter of 2020 compared to the prior year quarter as the U.S. dollar strengthened against all of the significant local currencies that impact the Company. Higher selling prices increased net sales by $18 million in the quarter.

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


Reportable segment net sales - 2019			$	1,736
Price	$	18
Sales volume and mix		(255)
Effects of changing foreign currency rates		(88)
Total effect on reportable segment net sales				(325)
Reportable segment net sales - 2020			$	1,411

Americas: Net sales in the Americas in the second quarter of 2020 were $724 million compared with $934 million for the second quarter of 2019, a decrease of $210 million, or approximately 22%. Total glass container shipments in the region were down approximately 18% in the second quarter of 2020 compared to the prior year quarter, but this decline narrowed in June 2020 with shipments down approximately 8% compared to June 2019 as markets started to reopen. Excluding the impact of the Nueva Fanal acquisition in mid-2019, total glass container shipments were down approximately 19% in the second quarter of 2020 compared to the same period in the prior year, driven primarily by lower shipments to alcoholic beverage customers in the U.S. largely due to ongoing trends in beer shipments and due to a decline in organic sales volumes linked to COVID-19. The net impact of lower organic sales more than offset the additional sales from the Nueva Fanal acquisition and resulted in a $150 million reduction to net sales in the second quarter of 2020 compared to the same period in 2019. The unfavorable effects of foreign currency exchange rate changes decreased net sales $66 million in the second quarter of 2020 compared to 2019. Higher selling prices increased net sales by $6 million in the second quarter of 2020.

Europe: Net sales in Europe in the second quarter of 2020 were $555 million compared with $650 million for the second quarter of 2019, a decrease of $95 million, or nearly 15%. Glass container shipments in the second quarter of 2020 were down approximately 14% compared to the second quarter of 2019, primarily driven by lower shipments to alcoholic beverage customers due to COVID-19, resulting in $92 million of lower net sales. With the reopening of markets in the latter part of the second quarter, shipment levels were up approximately 3% in June 2020 compared to June 2019. Unfavorable foreign currency exchange rates impacted the region by approximately $15 million in the second quarter of 2020 as the Euro weakened in relation to the U.S. dollar. Selling prices in Europe increased net sales by $12 million in the second quarter of 2020.

Asia Pacific: Net sales in Asia Pacific in the second quarter of 2020 were $132 million compared with $152 million for the second quarter of 2019, a decrease of $20 million, or 13%. Glass container shipments in the second quarter of 2020 were down approximately 8% due to COVID-19. This resulted in $13 million of lower net sales in the second quarter of 2020 compared to the prior year quarter. The unfavorable effects of foreign currency exchange rate changes in the current year quarter decreased net sales by $7 million.

Earnings (Loss) from Continuing Operations before Income Taxes and Segment Operating Profit

Loss from continuing operations before income taxes was $119 million in the second quarter of 2020 compared to earnings from continuing operations before income taxes of $98 million in the second quarter of 2019, a decrease of $217 million. This decrease was largely due to lower segment operating profit and higher restructuring charges and note repurchase premiums.

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

Segment operating profit of reportable segments in the second quarter of 2020 was $95 million compared to $236 million for the second quarter of 2019, a decrease of $141 million, or 60%. This decrease was largely due to lower sales volumes and higher operating costs as a result of production levels declining approximately 20% reflecting required curtailment to comply with government decrees to manage the pandemic, as well as the Company’s effort to align supply with lower demand and manage inventory. Segment operating profit also declined due to the unfavorable effects of changes in foreign currency, partially offset by higher net selling prices and the positive impact from the Company’s turnaround initiatives and cost control measures.

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


Reportable segment operating profit - 2019			$	236
Net price (net of cost inflation)	$	1
Sales volume and mix		(84)
Operating costs		(52)
Effects of changing foreign currency rates		(6)
Total net effect on reportable segment operating profit				(141)
Reportable segment operating profit - 2020			$	95

Americas: Segment operating profit in the Americas in the second quarter of 2020 was $52 million compared with $144 million in the second quarter of 2019, a decrease of $92 million, or 64%. The impact of lower organic sales volumes discussed above resulted in a $59 million reduction to segment operating profit in the second quarter of 2020 compared to the same period in the prior year. The effects of foreign currency exchange rates decreased segment operating profit by $4 million in the current year quarter. Despite improved operating performance, production downtime to comply with government decrees to manage the pandemic, including disruptive lock downs in Mexico and the Andean countries, as well as the Company’s effort to align supply with lower demand and manage inventory, increased operating costs and decreased segment operating profit by $24 million in the second quarter. Cost inflation more than offset higher selling prices resulting in a net $5 million decrease to segment operating profit in the current year quarter.

Europe: Segment operating profit in Europe in the second quarter of 2020 was $42 million compared with $90 million in the second quarter of 2019, a decrease of $48 million, or 53%. The change in sales volume discussed above decreased segment operating profit in the current year quarter by $22 million. The effects of foreign currency exchange rates decreased segment operating profit by $3 million in the current year quarter. Despite favorable operating performance, the region’s operating costs in the second quarter of 2020 were approximately $32 million higher driven by temporary downtime associated with COVID-19, which decreased segment operating profit in the current year quarter compared to the prior year quarter. Higher net selling prices (net of cost inflation) increased segment operating profit by $9 million in the current quarter compared to the prior year quarter.

Asia Pacific: Segment operating profit in Asia Pacific in the second quarter of 2020 was $1 million compared with $2 million in the second quarter of 2019, a decrease of $1 million, or 50%. The decrease in sales volume discussed above reduced segment operating profit by $3 million. Lower net selling prices (net of cost inflation) decreased segment operating profit by $3 million. The region also experienced approximately $4 million of lower operating costs, which improved segment operating profit, in the second quarter of 2020 compared to the prior year quarter due to improved factory performance. The effects of foreign currency exchange rates increased segment operating profit by $1 million in the current year quarter.

Interest Expense, Net

Net interest expense for the second quarter of 2020 was $98 million compared with $68 million for the second quarter of 2019. Net interest expense included $38 million and $2 million in the second quarter of 2020 and 2019, respectively, for note repurchase premiums, third party fees 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 decreased $6 million in the second quarter of 2020 compared to the prior year quarter due to the lower cost of debt as a result of refinancing activities in the prior year.

Provision (Benefit) for Income Taxes

The Company’s effective tax rate from continuing operations for the three months ended June 30, 2020 was a benefit of 15.1% compared with a provision of 27.6% for the three months ended June 30, 2019. The effective tax rate for the second quarter of 2020 was lower than the second quarter of 2019 due primarily to certain charges recorded in the second quarter of 2020 whereby no tax benefit was recorded, the geographic mix of earnings, interest expense deductibility limits in certain markets and withholding taxes.

Net Earnings (Loss) Attributable to the Company

For the second quarter of 2020, the Company recorded a loss from continuing operations attributable to the Company of $101 million, or $0.64 per share (diluted), compared to earnings from continuing operations attributable to the Company of $66 million, or $0.42 per share (diluted), in the second quarter of 2019. Earnings in 2020 and 2019 included items that management considered not representative of ongoing operations as set forth in the following table (dollars in millions):


	Net Earnings		Net Earnings
	Increase		Increase
	(Decrease)		(Decrease)
Description	2020		2019
Restructuring, asset impairment, pension settlement and other charges	$	(71)	$	(40)
Strategic transaction costs		(4)
Pension settlement charges		(8)		(2)
Charges for note repurchase premiums and write-off of finance fees		(38)		(2)
Net tax benefit for income tax on items above		19		2
Total	$	(102)	$	(42)

Executive Overview — Six Months ended June 30, 2020 and 2019

2020 Highlights

●

Net sales in the first six months of 2020 were down approximately 12% from the same period in 2019, primarily due to lower volumes due to COVID-19 and the unfavorable effects of changes in foreign currency exchange rates, partially offset by incremental sales from the Nueva Fanal acquisition in mid-2019 and higher prices.

●

Segment operating profit for reportable segments was down approximately 39% in the first half of 2020 compared to the same period in 2019, primarily due to lower sales volumes and higher operating costs as a result of COVID-19 and the unfavorable effects of changes in foreign currency, partially offset by higher net selling prices and the positive impact from the Company’s turnaround initiatives and cost control measures.

●

On January 6, 2020 (the “Petition Date”), Paddock voluntarily filed for relief under Chapter 11 of the Bankruptcy Code to equitably and finally resolve all of its current and future asbestos-related claims. O-I Glass and O-I Group were not included in the Chapter 11 filing. Following the Chapter 11 filing, Paddock became subject to review and oversight by the bankruptcy court. As a result, the Company no longer has exclusive control over Paddock’s activities during the bankruptcy proceedings. Therefore, Paddock was deconsolidated and its assets and liabilities were derecognized from the Company’s consolidated financial statements as of the Petition Date. Simultaneously, the Company recognized a $471 million liability related to its support agreement with Paddock. Taken together, these transactions resulted in a loss of approximately $14 million, which was recorded as a charge in the first quarter of 2020.

●

The Company issued $700 million of senior notes at an interest rate of 6.625% to repay upcoming debt maturities.

●

On July 31, 2020, the Company completed the previously announced sale of its Australia and New Zealand businesses and used the proceeds to reduce debt.

Net sales for the first six months of 2020 were $414 million lower than the same period in the prior year primarily due to lower sales volumes driven by COVID-19 and the unfavorable effects of changes in foreign currency exchange rates, partially offset by incremental sales from the Nueva Fanal acquisition in mid-2019 and higher prices.

Earnings from continuing operations before income taxes were $247 million lower in the first six months of 2020 than in the same period in the prior year, primarily due to lower segment operating profit and higher restructuring charges and note repurchase premiums. Segment operating profit for reportable segments for the first six months of 2020 was $172 million lower than the same period in the prior year. The decrease was largely due to lower sales volumes and higher operating costs as a result of COVID-19 and the unfavorable effects of changes in foreign currency, partially offset by higher net selling prices and the positive impact from the Company’s turnaround initiatives.

Net interest expense for the first half of 2020 increased $19 million compared to the same period in 2019. Net interest expense included $38 million and $2 million for note repurchase premiums, the write-off of deferred finance fees and third party fees in the first six months of 2020 and 2019, respectively, that related to debt that was repaid prior to its maturity.

For the first six months of 2020, the Company recorded a loss from continuing operations attributable to the Company of $51 million, or $0.32 per share, compared to earnings from continuing operations attributable to the Company of $145 million, or $0.93 per share (diluted), in the first six months of 2019. Earnings (Loss) in the first six months of 2020 and the first six months of 2019 included items that management considered not representative of ongoing operations. These items decreased earnings attributable to the Company by $116 million, or $0.74 per share, in the first six months of 2020 and decreased net earnings attributable to the Company by $42 million, or $0.27 per share, in the first six months of 2019.

Results of Operations — First six months of 2020 compared with first six months of 2019

Net Sales

The Company’s net sales in the first six months of 2020 were $2,979 million compared with $3,393 million for the first six months of 2019, a decrease of $414 million, or approximately 12%. Unfavorable foreign currency exchange rates decreased sales by $162 million in the first six months of 2020 compared to the prior year period as the U.S. dollar strengthened against the Australian dollar, Brazilian real, Colombian peso and the Euro. Total glass container shipments, in tonnes, were approximately 8% lower in the first half of 2020 compared to the prior year period. Sales volume and mix decreased net sales by $275 million. Higher selling prices increased net sales by $37 million in 2020.

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


Reportable segment net sales - 2019			$	3,364
Price	$	37
Sales volume and mix		(275)
Effects of changing foreign currency rates		(162)
Total effect on reportable segment net sales				(400)
Reportable segment net sales - 2020			$	2,964

Americas: Net sales in the Americas in the first six months of 2020 were $1,555 million compared with $1,815 million in the same period in 2019, a decrease of $260 million, or 14%. Total glass container shipments in the region were down approximately 10% in the first six months of 2020 compared to the prior year period, driven primarily by lower shipments to alcoholic beverage customers in the U.S. largely due to ongoing trends in beer shipments, and due to a decline in organic sales volumes linked to COVID-19. The net impact of lower organic sales more than offset the additional sales from the Nueva Fanal acquisition and resulted in a $165 million reduction to net sales in the first half of 2020 compared to the same period in 2019. The unfavorable effects of foreign currency exchange rate changes decreased net sales $107 million in the first six months of 2020 compared to 2019. Higher selling prices increased net sales by $12 million in the first half of 2020.

Europe: Net sales in Europe in the first six months of 2020 were $1,132 million compared with $1,246 million for the same period in 2019, a decrease of $114 million, or 9%. Glass container shipments in the first six months of 2020 were down approximately 9% compared to the same period in 2019, primarily driven by COVID-19, resulting in $104 million of lower net sales. Unfavorable foreign currency exchange rates impacted the region by approximately $34 million in the first six months of 2020 as the Euro weakened in relation to the U.S. dollar. Selling prices in Europe increased net sales by $24 million in the first half of 2020 compared to the same period in the prior year.

Asia Pacific: Net sales in Asia Pacific in the first six months of 2020 were $277 million compared with $303 million for the same period in 2019, a decrease of $26 million, or 9%. Glass container shipments in the first six months of 2020 were down approximately 1% compared with the same period in the prior year, resulting in $6 million of lower sales in the first half of 2020 compared to the same period in the prior year. The effects of foreign currency exchange rate changes in the current year period decreased net sales by $21 million. Selling prices in the region increased net sales by $1 million in the first half of 2020 compared to the same period in the prior year.

Earnings (Loss) from Continuing Operations before Income Taxes and Segment Operating Profit

Loss from continuing operations before income taxes was $38 million in the first half of 2020 compared to $209 million of earnings from continuing operations before income taxes in the first half of 2019, a decrease of $247 million. This decrease was primarily due to lower segment operating profit, and higher restructuring charges and note repurchase premiums.

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

Segment operating profit of reportable segments in the first half of 2020 was $264 million compared to $436 million for the first half of 2019, a decrease of $172 million, or 39%. The decrease was largely due to lower sales

volumes and higher operating costs as a result of COVID-19 and the unfavorable effects of changes in foreign currency, partially offset by higher net selling prices and the positive impact from the Company’s turnaround initiatives.

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


Reportable segment operating profit - 2019			$	436
Net price (net of cost inflation)	$	4
Sales volume and mix		(96)
Operating costs		(61)
Effects of changing foreign currency rates		(19)
Total net effect on reportable segment operating profit				(172)
Reportable segment operating profit - 2020			$	264

Americas: Segment operating profit in the Americas in the first six months of 2020 was $155 million compared with $257 million in the same period in 2019, a decrease of $102 million, or 40%. The decrease in sales volume discussed above decreased segment operating profit in the first half of 2020 by $69 million. The effects of foreign currency exchange rates decreased segment operating profit by $10 million in the first half of 2020. Temporary downtime due to the impacts of COVID-19 drove operating costs higher and decreased segment operating profit by $12 million in the first half of 2020. Cost inflation more than offset higher selling prices resulting in a net $11 million decrease to segment operating profit in the current year period.

Europe: Segment operating profit in Europe in the first half of 2020 was $103 million compared with $169 million in the same period in 2019, a decrease of $66 million, or 39%. The decrease in sales volume discussed above decreased segment operating profit in the first half of 2020 by $25 million. The region’s operating costs in the first half of 2020 were approximately $56 million higher driven by temporary downtime associated with COVID-19, which decreased segment operating profit compared to the same period in the prior year. Higher net selling prices (net of cost inflation) increased segment operating profit by $22 million in the current quarter compared to the prior year quarter. The effects of foreign currency exchange rates decreased segment operating profit by $7 million in the first six months of 2020.

Asia Pacific: Segment operating profit in Asia Pacific in the first half of 2020 was $6 million compared with $10 million in the first half of 2019, a decrease of $4 million, or 40%. The change in sales mix discussed above reduced segment operating profit by $2 million. Cost inflation more than offset higher selling prices resulting in a net $7 million decrease to segment operating profit in the first six months of 2020. The effects of foreign currency exchange rates decreased segment operating profit by $2 million in the first six months of 2020. The region experienced approximately $7 million of lower operating costs, which benefited segment operating profit, in the first half of 2020 compared to the same period in the prior year due to fewer asset improvement projects in 2020.

Interest Expense, Net

Net interest expense for the first six months of 2020 was $151 million compared with $132 million for the first six months of 2019. Net interest expense included $38 million and $2 million in the first half of 2020 and 2019, respectively, for the write-off of deferred finance fees and third party fees that were related to debt that was repaid prior to its maturity. Exclusive of these items, net interest expense decreased $17 million in the first six months of 2020 compared to the same period in the prior year due to the lower cost of debt as a result of refinancing activities in the prior year.

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the six months ended June 30, 2020 was -21.1% compared with 25.8% for the six months ended June 30, 2019. The effective tax rate for the first six months of 2020 differed from the first six months of 2019 due primarily to certain charges recorded in the first six months of 2020 whereby no tax benefit was recorded, the geographic mix of earnings, interest expense deductibility limits in certain markets and withholding taxes.

Net Earnings (Loss) from Continuing Operations Attributable to the Company

For the first six months of 2020, the Company recorded a net loss from continuing operations attributable to the Company of $51 million, or $0.32 per share, compared to earnings from continuing operations attributable to the Company of $145 million, or $0.93 per share (diluted), in the first six months of 2019. Earnings in the first six months of

2020 and 2019 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	2020		2019
Restructuring, asset impairment and other charges	$	(71)	$	(40)
Strategic transaction costs		(4)
Pension settlement charges		(8)		(2)
Charge for deconsolidation of Paddock		(14)
Charges for note repurchase premiums and write-off of finance fees		(38)		(2)
Net tax benefit for income tax on items above		19		2
Total	$	(116)	$	(42)

Forward Looking Operational and Financial Impacts from COVID-19

●

Month-to-date shipments in July 2020 were up approximately 2% compared to July 2019. Based on sales trends through July, the Company’s full year 2020 sales volume outlook is a 4% to 7% decline compared to the prior year. The Company expects that third quarter 2020 sales volumes should be approximately flat to down slightly compared to the third quarter of 2019. The outlook for both the full year and third quarter shipments has been normalized for the sale of ANZ as of July 31, 2020.

●

The Company continues to operate under a set of capital allocation guiding principles amid the pandemic. First, the Company intends to maximize its cash flow. To support this, the Company will align supply with demand and limit capital spending to normal maintenance investment and MAGMA. Second, the Company intends to preserve its strong liquidity supported by positive cash flow. Total committed liquidity, including cash-on-hand as well as undrawn availability on committed lines of credit, remained strong through July 2020. The Company intends to maintain its liquidity at or above $1.25 billion at each quarter end of 2020. Third, the Company intends to manage its net debt (total debt less cash) to be at or below 2019 levels by year-end 2020.

●

Despite headwinds from the pandemic, the Company continues to focus on long-term value creation including its turnaround initiatives, footprint optimization efforts, divestiture of its Australia and New Zealand operations, MAGMA deployment and resolution of legacy asbestos liabilities.

●

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

Items excluded from Reportable Segment Totals

Retained Corporate Costs and Other

Retained corporate costs and other for the second quarter of 2020 were $33 million compared with $28 million recorded in the second quarter of 2019. These costs were higher in 2020 primarily due to the nonoccurrence of equity earnings from a soda ash joint venture that was sold by the Company in the fourth quarter of 2019, partially offset by efforts to reduce costs. Retained corporate costs and other for the six months ended June 30, 2020 were $54 million compared with $53 million recorded in the same period in 2019.

Restructuring, Asset Impairment and Other Charges

For the three and six months ended June 30, 2020, the Company recorded charges totaling $71 million for restructuring, asset impairment and other charges. These charges reflect $23 million of employee costs, such as

severance, benefit-related costs and other exit costs primarily related to a reduction in force program for certain salaried employees and a plant closure in the Americas. These charges also reflect approximately $48 million of other charges, primarily relating to asset impairment charges related to these restructuring actions. The Company expects that the majority of the remaining cash expenditures related to the accrued employee and other exit costs will be paid out over the next several years.

For the three and six months ended June 30, 2019, the Company recorded charges totaling $40 million for restructuring, asset impairment and other charges. These charges reflect $27 million of employee costs, such as severance, benefit-related costs and other exit costs primarily related to a severance program for certain salaried employees at the Company’s corporate and Americas headquarters and a furnace closure in the Americas. These charges also reflect approximately $13 million of other charges.

Strategic Transaction Costs

For the three and six months ended June 30, 2020, the Company recorded charges totaling $4 million for strategic transaction costs, which relate to activities that are aimed at exploring options to maximize investor value, focused on aligning the Company’s business with demand trends, improving the Company’s operating efficiency, cost structure and working capital management. These activities are ongoing and may result in tactical divestitures, corporate transactions or similar actions, and could cause the Company to incur restructuring, impairment, disposal or other related charges in future periods.

Pension Settlement Charges

For the three and six months ended June 30, 2020, the Company settled a portion of its pension obligations in Canada and recorded approximately $8 million of pension settlement charges. The Company recorded $2 million of pension settlement charges for the three and six months ended June 30, 2019.

Charge for Paddock Deconsolidation

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

See Note 11 to the Condensed Consolidated Financial Statements for further information.

Discontinued Operations

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

On July 31, 2017, OIEG sold its right, title and interest in amounts due under the Award to an Ireland-domiciled investment fund. Under the terms of the sale, OIEG received a payment, in cash, at closing equal to $115 million (the “Cash Payment”). OIEG may also receive additional payments in the future (“Deferred Amounts”) calculated based on the total compensation that is received from Venezuela as a result of collection efforts or as settlement of the Award with Venezuela. OIEG’s right to receive any Deferred Amounts is subject to the limitations described below.

OIEG’s interest in any amounts received in the future from Venezuela in respect of the Award is limited to a percentage of such recovery after taking into account reimbursement of the Cash Payment to the purchaser and reimbursement of legal fees and expenses incurred by the Company and the purchaser. OIEG’s percentage of such

recovery will also be reduced over time. Because the Award has yet to be satisfied and the ability to successfully enforce the Award in countries that are party to the ICSID Convention is subject to significant challenges, the Company is unable to reasonably predict the amount of recoveries from the Award, if any, to which the Company may be entitled in the future. Any future amounts that the Company may receive from the Award are highly speculative and the timing of any such future payments, if any, is highly uncertain. As such, there can be no assurance that the Company will receive any future payments under the Award beyond the Cash Payment.

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

For each of the three and six-month periods ended June 30, 2020 and June 30, 2019, the Company incurred $0 and $1 million of losses from discontinued operations, respectively.

Strategic Portfolio and Operations Review

In the second quarter of 2020, the Company advanced its strategic review of its business portfolio and operating structure. This review is aimed at exploring options to maximize investor value, focused on aligning the Company’s business with demand trends, improving the Company’s operating efficiency, cost structure and working capital management, while ensuring the Company remains well-positioned to address its legacy liabilities. The review is ongoing and may result in tactical divestitures, corporate transactions or similar actions, and could cause the Company to incur restructuring, impairment, disposal or other related charges in future periods.

Capital Resources and Liquidity

The Agreement provides for up to $3.0 billion of borrowings pursuant to term loans and revolving credit facilities. The term loans mature, and the revolving credit facilities terminate, in June 2024. At June 30, 2020, the Agreement includes a $300 million revolving credit facility, a $1.2 billion multicurrency revolving credit facility, and a $1.5 billion term loan A facility ($1,477 million net of debt issuance costs). At June 30, 2020, the Company had unused credit of $667 million available under the Agreement. The weighted average interest rate on borrowings outstanding under the Agreement at June 30, 2020 was 1.64%.

The Agreement also contains one financial maintenance covenant, a Total Leverage Ratio (the “Leverage Ratio”), that requires the Company not to exceed a ratio of 5.0x calculated by dividing consolidated total debt, less cash and cash equivalents, by Consolidated EBITDA, with such Leverage Ratio decreasing to (a) 4.75x for the quarter ending June 30, 2021 and (b) 4.50x for the quarter ending December 31, 2021 and thereafter, as defined and described in the Agreement. The maximum Leverage Ratio is subject to an increase of 0.5x for (i) any fiscal quarter during which certain qualifying

acquisitions (as specified in the Agreement) are consummated and (ii) the following three fiscal quarters, provided that the Leverage Ratio shall not exceed 5.0x. The Leverage Ratio could restrict the ability of the Company to undertake additional financing or acquisitions to the extent that such financing or acquisitions would cause the Leverage Ratio to exceed the specified maximum.

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

In May 2020, the Company issued $700 million aggregate principal amount of new senior notes. The new senior notes bear interest at a rate of 6.625% per annum and mature on May 13, 2027. The new senior notes were issued via a private placement and are guaranteed by certain of the Company’s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $690 million and were used to redeem the remaining approximately $130 million aggregate principal amount of the Company’s outstanding 4.875% senior notes due 2021, approximately $417 million aggregate principal amount of the Company’s outstanding 5.00% senior notes due 2022 and approximately $105 million of other secured borrowings. The Company recorded approximately $38 million of additional interest charges for note repurchase premiums and write-off of unamortized finance fees related to the senior notes redemptions for the three and six months ended June 30, 2020, respectively.

Cash Flows

Operating activities: Cash utilized in continuing operating activities was $134 million for the six months ended June 30, 2020, compared to $662 million utilized for the six months ended June 30, 2019. The decrease in cash utilized in continuing operating activities in the first half of 2020 was primarily due to the staying of all asbestos-related payments as a result of Paddock’s Chapter 11 filing in early January 2020 and lower working capital levels than in the same period in 2019, partially offset by lower net earnings. See Note 11 to the Condensed Consolidated Financial Statements for additional information on Paddock.

Working capital was a use of cash of $415 million in the first six months of 2020 compared to a use of cash of $939 million in the same period in 2019. The primary reason for the lower use of working capital in the first half of 2020 compared to the same period in the prior year was due to accounts receivable. As of June 30, 2020 and 2019, the Company reduced its level of accounts receivable factoring compared to the most recent respective year-end periods and this led to a use of working capital in the first half of 2020 and 2019. However, the reduction in accounts receivable factoring compared to the most recent year-end period was approximately $325 million less in the first six months of 2020 than in the same period in 2019 and this contributed to a lower use of working capital in the 2020 period. Also, due to lower sales in the first half of 2020 due to COVID-19, the Company’s accounts receivable balances declined and this resulted in an approximate $220 million lower use of cash in the first half of 2020 than in the same period in 2019. Excluding the impact of accounts receivable factoring, the Company’s days sales outstanding are slightly lower as of June 30, 2020 compared with June 30, 2019, which has contributed to a lower use of working capital.

Investing activities: Cash utilized in investing activities was $233 million for the six months ended June 30, 2020, compared to $410 million utilized for the six months ended June 30, 2019. Capital spending for property, plant and equipment was $189 million during the first six months of 2020 compared to $233 million in the same period in 2019. Cash paid for acquisitions was $0 and $157 million for the first six months ended June 30, 2020 and 2019, respectively. On June 28, 2019, the Company completed its acquisition of Nueva Fábrica Nacional de Vidrio, S. de R.L. de C.V., a four furnace glass plant located near Mexico City, Mexico, from Grupo Modelo, a wholly owned affiliate of Anheuser-Busch InBev SA/NV. Contributions and advances to joint ventures were $0 and $22 million in the first six months of 2020 and 2019, respectively. No significant contributions are planned to the Company’s joint ventures in 2020. Following the Chapter 11 filing in January 2020, the activities of Paddock are now subject to review and oversight by the bankruptcy court. As a result, the Company no longer has exclusive control over Paddock’s activities during the bankruptcy proceedings. Therefore, Paddock was deconsolidated and its assets and liabilities were derecognized from the Company’s financial statements, which resulted in an investing outflow of $47 million in the Company’s first half 2020 condensed consolidated cash flows. See Note 11 to the Condensed Consolidated Financial Statements for more information.

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

Financing activities: Cash provided by financing activities was $904 million for the six months ended June 30, 2020, compared to $926 million for the six months ended June 30, 2019. In March 2020, the Company borrowed approximately $600 million on its $1.5 billion revolving credit facility to bolster cash-on-hand as a proactive measure to ensure financial flexibility. As a result of financing activities, the Company paid finance fees of $45 million and $8 million for the six months ended June 30, 2020 and 2019, respectively. Also, the Company received approximately $42 million and $28 million in proceeds related to hedging activity in the first six months of 2020 and 2019, respectively.

The Company paid $8 million and $16 million in dividends in the first half of 2020 and 2019, respectively. Through the first six months ended June 30, 2020 and 2019, the Company had repurchased $0 and approximately $38 million, respectively, of the Company’s stock. In response to the COVID-19 pandemic, the Company has suspended its quarterly dividend and has paused share repurchases at this time. The status of these efforts will be reviewed regularly, but the Company anticipates these measures will continue through 2020.

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

Critical Accounting Estimates

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

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

There have been no other material changes in critical accounting estimates at June 30, 2020 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Forward-Looking Statements

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

It is possible that the Company’s future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) the Company’s ability to obtain the benefits it anticipates from the Corporate Modernization, (2) risks inherent in, and potentially adverse developments related to, the Chapter 11 bankruptcy proceeding involving Paddock, that could adversely affect the Company and the Company’s liquidity or results of operations, including the impact of deconsolidating Paddock from the Company’s financials, risks from asbestos-related claimant representatives asserting claims against the Company and potential for litigation and payment demands against the Company by such representatives and other third parties, (3) the amount that will be necessary to

fully and finally resolve all of Paddock’s asbestos-related claims and the Company’s obligations to make payments to resolve such claims under the terms of its support agreement with Paddock, (4) the Company’s ability to manage its cost structure, including its success in implementing restructuring or other plans aimed at improving the Company’s operating efficiency and working capital management, achieving cost savings, and remaining well-positioned to address the Company’s legacy liabilities, (5) the Company’s ability to acquire or divest businesses, acquire and expand plants, integrate operations of acquired businesses and achieve expected benefits from acquisitions, divestitures or expansions, (6) the Company’s ability to achieve its strategic plan, (7) foreign currency fluctuations relative to the U.S. dollar, (8) changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to refinance debt on favorable terms, (9) the general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to Brexit, economic and social conditions, disruptions in the supply chain, competitive pricing pressures, inflation or deflation, changes in tax rates and laws, natural disasters and weather, (10) the impact of COVID-19 and the various governmental, industry and consumer actions related thereto, (11) the Company’s ability to generate sufficient future cash flows to ensure the Company’s goodwill is not impaired, (12) consumer preferences for alternative forms of packaging, (13) cost and availability of raw materials, labor, energy and transportation, (14) consolidation among competitors and customers, (15) unanticipated expenditures with respect to data privacy, environmental, safety and health laws, (16) unanticipated operational disruptions, including higher capital spending, (17) the Company’s ability to further develop its sales, marketing and product development capabilities, (18) the failure of the Company’s joint venture partners to meet their obligations or commit additional capital to the joint venture, (19) the ability of the Company and the third parties on which it relies for information technology system support to prevent and detect security breaches related to cybersecurity and data privacy, (20) changes in U.S. trade policies, and the other risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and any subsequently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or the Company’s other filings with the Securities and Exchange Commission.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in market risk at June 30, 2020 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

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 June 30, 2020.

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 control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to material affect, the Company’s internal control over financial reporting. Although the Company has modified its workplace practices globally due to the COVID-19 pandemic, resulting in most of its administrative employees working remotely, this has not materially affected its internal control over financial reporting. The Company is continually monitoring and assessing the COVID-19 situation on its internal controls to minimize the impact on their design and operating effectiveness.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

For further information on legal proceedings, see Note 11 to the Condensed Consolidated Financial Statements, “Contingencies,” that is included in Part I of this Quarterly Report and incorporated herein by reference.

Item 1A. Risk Factors.

Other than below, there have been no material changes in risk factors at June 30, 2020 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

COVID-19 has resulted, and may likely continue to result in material adverse effects on the Company's business, financial position, liquidity, results of operations and cash flows.

The COVID-19 pandemic, and the various governmental, industry and consumer actions related thereto, have had, and may likely continue to have, negative impacts on the Company's business. These impacts include, without limitation, significant volatility or decreases in the demand for the Company's products, changes in customer and consumer behavior and preferences, disruptions in or closures of the Company's manufacturing operations or those of its customers and suppliers, disruptions within the Company's supply chain, limitations on the Company's employees' ability to work and travel, potential financial difficulties of customers and suppliers, significant changes in economic or political conditions, and related financial and commodity volatility, including volatility in raw material and other input costs.

In addition, future changes in the Company's cost of capital, expected cash flows, or other factors as a result of the above may cause the Company's long-lived assets, including goodwill, to be impaired, resulting in a non-cash charge against results of operations to write-down long-lived assets including goodwill for the amount of the impairment. For example, if the Company’s assumed weighted average cost of capital were one-half percentage point higher, the testing performed in the second quarter of 2020 would have indicated a goodwill impairment of approximately $70 million related to the Company’s North American reporting unit. Alternatively, if the Company’s perpetuity growth rate, which would impact projected future cash flows, were one-half percentage point lower, the testing performed in the second quarter of 2020 would have indicated a goodwill impairment of approximately $40 million related to the Company’s North American reporting unit.

The COVID-19 pandemic may also have the effect of heightening many of the other risks described in Item 1A, "Risk Factors" of the Company's annual report on Form 10-K for the year ended December 31, 2019 and any subsequently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or other filings with the Securities and Exchange Commission, such as those relating to the Company's ability to service its indebtedness; the restrictions placed on the Company under its existing indebtedness; fluctuations in foreign exchange rates; international operations; changes in consumer demand; the global economic environment; operational disruptions; the availability and cost of raw materials; reliance on key management and personnel; joint ventures; cybersecurity and data privacy; and goodwill; among others.

The degree to which COVID-19 and related actions will ultimately impact the Company's business, financial position, liquidity, results of operations and cash flows will depend on factors that are beyond its control, highly uncertain and cannot be predicted, including, but not limited to the continued spread, duration and severity of the COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks after the initial outbreak has subsided; the actions taken by the U.S. and foreign governments to contain the COVID-19 pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; the impact of the developments described above on the Company’s customers and suppliers; and how quickly and to what extent normal economic and operating conditions can resume.

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

The Company did not purchase any shares of its common stock for the three months ended June 30, 2020. The Company has $380 million remaining for repurchases pursuant to authorization by its Board of Directors in January 2018 to purchase up to $400 million of the Company's common stock along with an authorization by its Board of Directors in November 2018 to purchase an additional $313 million of the Company’s common stock.

Item 6. Exhibits.




Exhibit 4.1	Indenture, dated as of May 13, 2020, by and among Owens-Brockway Glass Container Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to O-I Glass, Inc.’s Form 8-K dated May 13, 2020, File No. 1-9576, and incorporated herein by reference).

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

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

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

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

Exhibit 101	Financial statements from the Quarterly Report on Form 10-Q of O-I Glass, Inc. for the quarter ended June 30, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Results of Operations, (ii) the Condensed Consolidated Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

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

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

SIGNATURES

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


		O-I GLASS, INC.


Date	August 5, 2020	By	/s/ John A. Haudrich
			John A. Haudrich
			Senior Vice President and Chief Financial Officer