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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2018 or
March 31, 2019 or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 33-13061

OWENS-ILLINOIS GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware		34-1559348
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)


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

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

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

Indicate by check mark whether the registrant has submitted electronically 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 Owens-Illinois Group, Inc. outstanding as of ~~September~~March 3031, ~~2018~~2019 was 100.

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

The Condensed Consolidated Financial Statements of Owens-Illinois Group, Inc. (the “Company”) presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. All adjustments are of a normal recurring nature. Because the following unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(Dollars in millions)

(Unaudited)

Three months ended

~~Nine months ended~~

September 30,

March 31,

2018

2017

2018

2017

2019

2018

Net sales

1,~~734~~638

1,~~791~~736

~~5,242~~

~~5,157~~

Cost of goods sold

(1,~~410~~340)

(1,~~438~~417)

~~(4,253)~~

~~(4,143)~~

Gross profit

~~324~~298

~~353~~319

~~989~~

~~1,014~~

Selling and administrative expense

(115)

(~~120~~126)

~~(367)~~

~~(362)~~

Research, development and engineering expense

(1716)

(1516)

~~(50)~~

~~(46)~~

Interest expense, net

(6365)

(6362)

~~(199)~~

~~(204)~~

Equity earnings

2217

Other income (expense), net

20(10)

~~(5)~~3

~~(49)~~

~~(61)~~

Earnings from continuing operations before income taxes

~~168~~111

~~172~~135

~~381~~

~~396~~

Provision for income taxes

(4127)

(3732)

~~(95)~~

~~(65)~~

Earnings from continuing operations

~~127~~84

~~135~~103

~~286~~

~~331~~

Loss from discontinued operations

~~(2)~~—

~~(1)~~

~~(2)~~

Net earnings

~~127~~84

~~133~~103

~~285~~

~~329~~

Net earnings attributable to noncontrolling interests

(75)

~~(18)~~

~~(15)~~

Net earnings attributable to the Company

~~120~~79

~~126~~98

~~267~~

~~314~~

Amounts attributable to the Company:

Earnings from continuing operations

~~120~~79

~~128~~98

~~268~~

~~316~~

Loss from discontinued operations

—

~~(2)~~—

~~(1)~~

~~(2)~~

Net earnings

~~120~~79

~~126~~98

~~267~~

~~314~~

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME

(Dollars in millions)

(Unaudited)

	Three months ended				~~Nine months ended~~
	September 30,				September 30,
	March 31,
	2018		2017		2018		2017
	2019		2018
Net earnings	$	~~127~~84	$	~~133~~103	$	~~285~~	$	~~329~~
Other comprehensive income (loss):
Foreign currency translation adjustments		3249		10126		~~(110)~~		~~212~~
Pension and other postretirement benefit adjustments, net of tax		156		107		51		25
Change in fair value of derivative instruments, net of tax		~~(1)~~5		(5)		~~(7)~~		~~(10)~~
Other comprehensive income (loss)		46		20		(66)		227
Other comprehensive income		60		128
Total comprehensive income		~~173~~144		~~153~~231		~~219~~		~~556~~
Comprehensive income (loss) attributable to noncontrolling interests		1		(8)				(8)
Comprehensive income attributable to noncontrolling interests		(8)		(11)
Comprehensive income attributable to the Company	$	~~174~~136	$	~~145~~220	$	~~219~~	$	~~548~~

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(Unaudited)

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2018		2017		2017
	2019		2018		2018
Assets
Current assets:
Cash and cash equivalents	$	~~440~~326	$	~~492~~512	$	~~339~~418
Trade receivables, net of allowance of $35 million, $34 million, and $36 million at September 30, 2018, December 31, 2017 and September 30, 2017		992		663		1,028
Trade receivables, net of allowance of $34 million, $35 million, and $36 million at March 31, 2019, December 31, 2018 and March 31, 2018		939		549		1,045
Inventories		~~973~~1,038		1,~~036~~018		1,~~046~~065
Prepaid expenses and other current assets		~~259~~276		~~229~~278		~~254~~240
Total current assets		2,~~664~~579		2,~~420~~357		2,~~667~~768
Property, plant and equipment, net		3,~~044~~074		3,~~131~~085		3,~~036~~190
Goodwill		2,~~549~~507		2,~~590~~513		2,~~621~~649
Intangibles, net		~~422~~394		~~439~~400		~~473~~452
Other assets		1,~~261~~598		1,~~176~~344		1,~~202~~222
Total assets	$	910,~~940~~152	$	9,~~756~~699	$	910,~~999~~281
Liabilities and Share Owners' Equity
Liabilities and Share owners' equity
Current liabilities:
Accounts payable	$	1,~~048~~065	$	1,~~324~~321	$	1,~~087~~115
Short-term loans and long-term debt due within one year		~~152~~91		~~162~~160		~~243~~194
Other liabilities		~~604~~544		~~579~~566		~~617~~554
Other liabilities - discontinued operations		~~115~~		~~115~~-		115
Total current liabilities		1,~~919~~700		2,~~180~~047		21,~~062~~978
Long-term debt		5,~~487~~820		5,~~121~~181		5,~~378~~640
Other long-term liabilities		~~925~~1,090		~~946~~969		~~977~~969
Share owners' equity		1,~~609~~542		1,~~509~~502		1,~~582~~694
Total liabilities and share owners' equity	$	910,~~940~~152	$	9,~~756~~699	$	910,~~999~~281

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

(Unaudited)

	Nine months ended September 30,
	Three months ended March 31,
	2018		2017
	2019		2018
Cash flows from operating activities:
Net earnings	$	~~285~~84	$	~~329~~103
Loss from discontinued operations		1		2
Non-cash charges
Depreciation and amortization		~~384~~126		~~372~~131
Pension expense		258		2210
Restructuring, asset impairment and related charges		70		48
Cash payments
Pension contributions		(2611)		(2810)
Cash paid for restructuring activities		(2115)		(306)
Change in components of working capital		(~~545~~697)		(~~601~~622)
Other, net (a)		(3419)		~~(26)~~31
Cash provided by continuing operating activities		139		88
Cash utilized in operating activities		(524)		(363)
Cash utilized in discontinued operating activities		(1)		(2)
Total cash provided by operating activities		138		86
Cash flows from investing activities:
Cash payments for property, plant and equipment		(~~383~~121)		(~~292~~142)
Acquisitions, net of cash acquired		(48)		(37)
Contributions and advances to joint ventures		(15)		(26)
Net cash proceeds on disposal of assets		101		147
Cash utilized in continuing investing activities		(421)		(315)
Other, net				1
Cash provided by discontinued investing activities				115
Cash utilized in investing activities		(135)		(160)
Total cash utilized in investing activities		(421)		(200)
Cash flows from financing activities:
Changes in borrowings, net		~~413~~589		23488
Distributions to parent		(~~146~~120)		(5452)
Payment of finance fees		~~(13)~~		~~(23)~~
Distributions to noncontrolling interests		~~(9)~~		~~(9)~~
Cash provided by (utilized in) financing activities		245		(63)
Cash provided by financing activities		469		436
Effect of exchange rate fluctuations on cash		~~(14)~~4		2413
Change in cash		(52)		(153)
Decrease in cash		(186)		(74)
Cash at beginning of period		~~492~~512		492
Cash at end of period	$	~~440~~326	$	~~339~~418

(a)

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

See accompanying notes.

OWENS-ILLINOIS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions

1. Basis of Presentation

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

2. Segment Information

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

~~Certain~~The ~~assets~~Company’s ~~and~~measure ~~activities~~of ~~not~~profit ~~directly~~for ~~related~~its toreportable ~~one~~segments ofis ~~the~~segment ~~regions~~operating orprofit, towhich ~~glass~~is ~~manufacturing~~a ~~are~~non-GAAP ~~reported~~financial ~~with~~measure ~~Retained~~that ~~corporate~~consists ~~costs~~of ~~and~~consolidated ~~other. These~~earnings ~~include~~from ~~licensing,~~continuing ~~equipment~~operations ~~manufacturing~~before interest income, ~~global~~interest ~~engineering~~expense, and ~~certain~~provision ~~equity~~for ~~investments. Retained~~income ~~corporate~~taxes ~~costs~~ and ~~other~~excludes ~~also~~amounts ~~includes~~related to certain ~~headquarters~~items ~~administrative~~that ~~and~~management ~~facilities~~considers ~~costs~~not ~~and~~representative ~~certain~~of ~~incentive~~ongoing ~~compensation~~operations, ~~and~~as ~~other~~well ~~benefit~~as ~~plan~~certain retained corporate costs. The ~~that~~Company’s ~~are~~management ~~global~~uses segment operating profit, in ~~nature~~combination with net sales and ~~are~~selected ~~not~~cash ~~allocable~~flow information, to ~~the~~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.

~~The~~Financial ~~Company’s~~information ~~measure of profit~~ for ~~its~~the ~~reportable~~three ~~segments~~months isended ~~segment~~March ~~operating profit~~31, ~~which~~2019 ~~is a non-GAAP financial measure that consists of consolidated earnings from continuing operations before interest income, interest expense,~~ and ~~provision~~2018 ~~for~~regarding ~~income~~the ~~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~~is anas ~~allocation of some corporate expenses based on both a percentage of sales and direct billings based on the costs of specific services provided.~~follows:

Financial information for the three and nine months ended September 30, 2018 and 2017 regarding the Company’s reportable segments is as follows:


	Three months ended March 31,
	2019		2018
Net sales:
Americas	$	881	$	908
Europe		596		643
Asia Pacific		151		173
Reportable segment totals		1,628		1,724
Other		10		12
Net sales	$	1,638	$	1,736

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2018		2017		2018		2017
	2019		2018
Net sales:
Segment operating profit:
Americas	$	~~939~~113	$	~~963~~147	$	~~2,777~~	$	~~2,774~~
Europe		~~613~~79		~~624~~72		~~1,930~~		~~1,813~~
Asia Pacific		~~165~~8		~~188~~5		~~491~~		~~516~~
Reportable segment totals		~~1,717~~200		~~1,775~~224		~~5,198~~		~~5,103~~
Other		17		16		44		54
Items excluded from segment operating profit:
Net sales	$	1,734	$	1,791	$	5,242	$	5,157
Retained corporate costs and other		(24)		(27)
Interest expense, net		(65)		(62)
Earnings from continuing operations before income taxes	$	111	$	135

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Segment operating profit:
Americas	$	158	$	159	$	458	$	459
Europe		87		81		260		220
Asia Pacific		10		20		16		51
Reportable segment totals		255		260		734		730
Items excluded from segment operating profit:
Retained corporate costs and other		(24)		(25)		(81)		(81)
Restructuring, asset impairment and other						(73)		(49)
Interest expense, net		(63)		(63)		(199)		(204)
Earnings from continuing operations before income taxes	$	168	$	172	$	381	$	396

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

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2018		2017		2017
	2019		2018		2018
Total assets:
Americas	$	5,~~455~~621	$	5,~~411~~497	$	5,~~598~~637
Europe		3,~~220~~273		3,~~133~~036		3,~~140~~387
Asia Pacific		~~999~~1,012		~~1,001~~918		1,~~046~~056
Reportable segment totals		9,~~674~~906		9,~~545~~451		910,~~784~~080
Other		~~266~~246		~~211~~248		~~215~~201
Consolidated totals	$	910,~~940~~152	$	9,~~756~~699	$	910,~~999~~281

3. Revenue

On January 1, 2018, the Company adopted accounting standard ASC 606, Revenue from Contracts with Customers, and selected the modified retrospective transition method. The adoption of this new standard did not impact the Company’s consolidated results of operations or balance sheet and there was no cumulative effect of initially applying this new revenue standard to the opening balance of retained earnings.

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

For the three ~~and~~month ~~nine~~periods ~~months~~ ended ~~September~~March 3031, 2019 and March 31, 2018, the Company had no material bad debt expense and there were no material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet. For the three ~~and~~month ~~nine~~periods ~~months~~ ended ~~September~~March 3031, 2019 and March 31, 2018, revenue recognized from prior periods (for example, due to changes in transaction price) was not material.

The following tables for the three months ended March 31, 2019 and 2018 disaggregates the Company’s revenue by customer end use:


	Three months ended March 31, 2019
	Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	564	$	432	$	109	$	1,105
Food and other		180		103		25		308
Non-alcoholic beverages		137		61		17		215
Reportable segment totals	$	881	$	596	$	151	$	1,628
Other								10
Net sales							$	1,638


	Three months ended March 31, 2018
	Americas		Europe		Asia Pacific		Total

Alcoholic beverages (beer, wine, spirits)	$	576	$	471	$	127	$	1,174
Food and other		189		112		24		325
Non-alcoholic beverages		143		60		22		225
Reportable segment totals	$	908	$	643	$	173	$	1,724
Other								12
Net sales							$	1,736

The following table for three months ended September 30, 2018 disaggregates the Company’s revenue by customer end use:

	Three months ended September 30, 2018
	Americas		Europe		Asia Pacific		Total
Alcoholic beverages (beer, wine, spirits)	$	582	$	419	$	121	$	1,122
Food and other		209		127		24		360
Non-alcoholic beverages		148		67		20		235
Reportable segment totals	$	939	$	613	$	165	$	1,717
Other								17
Net sales							$	1,734

The following table for nine months ended September 30, 2018 disaggregates the Company’s revenue by customer end use:

	Nine months ended September 30, 2018
	Americas		Europe		Asia Pacific		Total
Alcoholic beverages (beer, wine, spirits)	$	1,743	$	1,383	$	361	$	3,487
Food and other		594		351		72		1,017
Non-alcoholic beverages		440		196		58		694
Reportable segment totals	$	2,777	$	1,930	$	491	$	5,198
Other								44
Net sales							$	5,242

4. Inventories

Major classes of inventory at ~~September~~March 3031, ~~2018~~2019, December 31, ~~2017~~2018 and ~~September~~March 3031, ~~2017~~2018 are as follows:

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2018		2017		2017
	2019		2018		2018
Finished goods	$	~~808~~868	$	~~873~~849	$	~~875~~901
Raw materials		~~119~~126		~~122~~125		~~129~~120
Operating supplies		4644		4144		4244
	$	~~973~~1,038	$	1,~~036~~018	$	1,~~046~~065

5. Derivative Instruments

The Company has certain derivative assets and liabilities, which consist of natural gas forwards, foreign exchange option and forward contracts, interest rate swaps and cross currency swaps. The valuation of these instruments is determined primarily using ~~widely~~the ~~accepted~~income ~~valuation techniques~~approach, including discounted cash flow analysis on the expected cash flows of each derivative ~~an income approach to value most of these contracts~~. Natural gas forward rates, ~~and~~ 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

InThe ~~several regions, the~~ Company enters into commodity forward contracts related to forecasted natural gas requirements, the objectives of which are to limit the effects of fluctuations in the future market price paid for natural gas and the related volatility in cash flows. In the Americas, some customer contracts contain provisions that pass the price of natural gas to the customer, which the customer has the option of fixing for a specified period of time. To limit the effects of fluctuations in cash flows resulting from these customer contracts, the Company enters into commodity forward contracts related to forecasted natural gas requirements. In Asia Pacific, the Company implemented a hedging program that included the execution of commodity forward contracts for certain contracted natural gas requirements. In total, the Company had entered into commodity forward contracts covering approximately 7,600,000 MM BTUs at September 30, 2018, 8,800,000 MM BTUs at December 31, 2017 and 9,300,000 MM BTUs at September 30, 2017, respectively.

The Company accounts for the above forward contracts as cash flow hedges and recognizes them on the Condensed Consolidated Balance Sheet at fair value. The effective portion of changes in the fair value of a derivative that is designated as, and meets the required criteria for, a cash flow hedge is recorded in the Accumulated Other Comprehensive Income component of share owners’ equity (“OCI”) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. An unrecognized ~~loss~~gain of $83 million at ~~September~~March 3031, ~~2018~~2019, an unrecognized gain of $31 million at December 31, ~~2017~~2018 and an unrecognized ~~loss~~gain of ~~less~~ ~~than~~ $14 million at ~~September~~March 3031, ~~2017~~2018 related to the commodity forward contracts ~~was~~were included in Accumulated OCI, and will be reclassified into earnings in the period when the commodity forward contracts expire. ~~Any~~ material portion of the change in the fair value of a derivative designated as a cash flow hedge that is deemed to be ineffective is recognized in current earnings. The ineffectiveness related to these natural gas hedges for the three and nine months ended September 30, 2018 and 2017 was not material.

~~The~~Foreign ~~effect~~Exchange ofDerivative ~~the~~Contracts ~~commodity~~Not ~~forward~~Designated ~~contracts on the results of operations for the three months ended September 30, 2018 and September 30, 2017 is~~ as ~~follows:~~Hedging Instruments

				Amount of Gain (Loss) Reclassified from
Amount of Gain (Loss) Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2018		2017		2018		2017
$	1	$	(1)	$	—	$	—

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.

The effect of the commodity forward contracts on the results of operations for the nine months ended September 30, 2018 and September 30, 2017 is as follows:

				Amount of Gain (Loss) Reclassified from
Amount of Gain Recognized in OCI on				Accumulated OCI into Income
Commodity Forward Contracts				(reported in cost of goods sold)
(Effective Portion)				(Effective Portion)
2018		2017		2018		2017
$	6	$	3	$	(1)	$	—

Foreign Exchange Derivative Contracts and not Designated as Hedging Instruments

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

At September 30, 2018, December 31, 2017 and September 30, 2017, the Company had outstanding foreign exchange and option agreements denominated in various currencies covering the equivalent of approximately $410 million, $460 million and $320 million, respectively, related primarily to intercompany transactions and loans.

The effect of the foreign exchange derivative contracts on the results of operations for the three months ended September 30, 2018 and September 30, 2017 is as follows:

	Amount of Gain (Loss)
Location of Gain (Loss)	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2018		2017
Other expense, net	$	—	$	(2)

The effect of the foreign exchange derivative contracts on the results of operations for the nine months ended September 30, 2018 and September 30, 2017 is as follows:

	Amount of Gain (Loss)
Location of Gain (Loss)	Recognized in Income on
Recognized in Income on	Foreign Exchange Contracts
Foreign Exchange Contracts	2018		2017
Other expense, net	$	(1)	$	4

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. ~~For~~ these derivatives designated as cash flow hedges of foreign exchange risk the gain or loss on the derivative is recorded in Accumulated OCI and is subsequently reclassified into earnings in the period for which the hedged forecasted transaction affects earnings. If there is an ineffective portion of the change in fair value of the derivative it is recognized directly in earnings.

During the ~~fourth~~first quarter of ~~2017~~2019, one of the Company’s Euro-functional subsidiaries entered into a ~~series of~~ cross-currency ~~swaps~~swap tothat ~~manage~~has ~~its~~a ~~exposure~~pay tofixed ~~fluctuations~~notional inamount ~~the~~of ~~Euro-U.S.~~€184 ~~dollar~~million ~~exchange~~and ~~rate~~a ~~arising~~receive ~~from~~notional aamount ~~U.S.~~of ~~dollar~~$210 ~~denominated borrowing~~million. ~~These~~ ~~swaps~~The ~~involve~~swap ~~exchanging~~reaches ~~fixed~~maturity ~~rate~~in ~~Euro~~the ~~interest~~fourth ~~payments~~quarter ~~for~~of ~~fixed rate U~~2019.S. ~~dollar~~During ~~interest receipts~~2018, ~~both~~two of ~~which~~the ~~will~~Company’s ~~occur~~subsidiaries, ata ~~the~~New ~~forward~~Zealand ~~exchange~~dollar ~~rates~~functional incurrency ~~effect~~subsidiary ~~upon~~and ~~entering~~an ~~into~~Australian ~~the~~dollar ~~instrument.~~functional Ancurrency ~~unrecognized~~subsidiary, ~~loss~~entered ofinto $9a ~~million~~series atof ~~September~~cross-currency ~~30,~~swaps ~~2018~~to ~~and~~U.S. andollar ~~unrecognized~~instruments ~~loss~~with ofa ~~less~~fixed ~~than~~notional amount of $1109 million atand ~~December~~$168 31million, ~~2017,~~respectively. ~~related~~They toreach ~~these~~final ~~cross-currency~~maturity ~~swaps, were included~~ in ~~Accumulated~~2022. ~~OCI~~During 2017, ~~and~~one ~~will~~of bethe ~~reclassified~~Company’s ~~into~~Euro-functional ~~earnings~~subsidiaries ~~within~~entered ~~the~~into ~~next~~a ~~twelve~~series ~~months.~~of ~~These~~cross-currency ~~instruments,~~swaps inthat ~~the aggregate,~~ have a pay fixed notional amount of €263 million and a receive notional amount of $310 million. They reach final maturity in 2023. ~~There was no ineffectiveness related to these cross-currency interest rate swaps for the three and nine months ended September 30, 2018.~~

During the second quarter of 2018, two of the Company’s subsidiaries, a New Zealand dollar (“NZD”) functional currency subsidiary and an Australian dollar (“AUD”) functional currency subsidiary, entered into a series of cross-currency swaps to manage its exposure to fluctuations in the NZD-U.S. dollar exchange rate and the AUD-U.S. dollar exchange rate arising from U.S. dollar denominated borrowings. These swaps involve exchanging floating rate U.S. dollar interest receipts for fixed rate NZD and AUD interest payments, both of which will occur at the forward exchange rates in effect upon entering into the instrument. An unrecognized loss of $3 million at September 30, 2018 related to these cross-currency swaps, was included in Accumulated OCI, and will be reclassified into earnings within the next twelve months. The NZD to U.S. dollar instruments, in the aggregate, have a pay fixed notional amount of NZD $161 million and a receive notional amount of $110 million. They reach final maturity in 2022. The AUD to U.S. dollar instruments, in the aggregate, have a pay fixed notional amount of AUD $231 million and a receive notional amount of $170 million. They reach final maturity in 2022. There was no ineffectiveness related to these cross-currency swaps for the three and nine months ended September 30, 2018.9

An unrecognized loss of $11 million at March 31, 2019, an unrecognized loss of $9 million at December 31, 2018 and an unrecognized loss of $6 million at March 31, 2018, related to these cross-currency swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next twelve months.

The effect of the cash flow hedges of foreign exchange risk on the results of operations for the three months ended September 30, 2018 is as follows:

		Amount of Gain (Loss) Reclassified from
Amount of Gain (Loss) Recognized in OCI on		Accumulated OCI into Income
Cash Hedges of Foreign Exchange Risk		(reported in Other expense, net)
(Effective Portion)		(Effective Portion)
$	7	$	(9)

The effect of the cash flow hedges of foreign exchange risk on the results of operations for the nine months ended September 30, 2018 is as follows:

		Amount of Gain (Loss) Reclassified from
Amount of Gain (Loss) Recognized in OCI on		Accumulated OCI into Income
Cash Hedges of Foreign Exchange Risk		(reported in Other expense, net)
(Effective Portion)		(Effective Portion)
$	8	$	1

Interest Rate Swaps Designated as Fair Value Hedges

~~During~~The ~~2017, the~~ Company ~~entered~~enters into interest rate swaps in order to maintain a ~~series~~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 ~~with~~match athe ~~total~~corresponding ~~notional~~terms ~~amount~~ of ~~€725~~the ~~million~~notes ~~that~~and ~~reach~~therefore ~~final~~there ~~maturity~~is inno ~~2024~~hedge ineffectiveness. The ~~swaps~~Company ~~were~~recorded ~~executed~~the innet ~~order~~of tothe ~~maintain~~fair amarket ~~capital~~values ~~structure~~of ~~containing~~the ~~appropriate~~swaps ~~amounts~~as ofa ~~fixed~~long-term liability and ~~floating~~short-~~rate~~term asset, along with a corresponding net decrease in the carrying value of the hedged debt.

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

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

The following selected information relates to fair value swaps at September 30, 2018:

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

Cash Flow Hedges of Interest Rate Risk

~~During~~The ~~the third quarter of 2018, the~~ Company ~~entered~~enters into ~~a series of~~ interest rate ~~swap agreements with a total notional amount of $180 million. These interest rate~~ swaps ~~reach final maturity~~ in ~~2020.~~order ~~The Company’s objectives in using interest rate derivatives are~~ to ~~manage~~maintain ~~its~~a ~~exposure~~capital tostructure ~~interest~~containing ~~rate~~targeted ~~movements.~~amounts Toof ~~accomplish~~fixed ~~this~~and ~~objective, the Company uses interest~~ floating-rate ~~swaps~~debt asand ~~part~~manage ~~of its~~ interest rate risk ~~management strategy~~. 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.

~~Under~~An ~~the~~unrecognized ~~swaps,~~loss ~~the~~of ~~Company~~less ~~pays~~than ~~fixed~~$1 ~~rate~~million ~~interest~~at ~~and~~year ~~receives~~ended ~~floating~~March ~~rate~~31, ~~interest~~2019 ~~amounts~~and atan aunrecognized ~~one~~loss ~~month~~of ~~Libor~~less ~~rate~~than ~~plus~~$1 amillion ~~margin~~at ~~spread~~year ofended ~~1.25%.~~December ~~The~~31, ~~interest~~2018, ~~rate~~related ~~differential~~to onthese ~~each~~interest ~~swap~~rate isswaps, ~~recognized~~was asincluded anin ~~adjustment~~Accumulated ofOCI, ~~interest~~and ~~expense~~will ~~during~~be ~~each~~reclassified ~~monthly~~into ~~period~~earnings ~~over~~within the ~~term~~next oftwelve ~~the agreement~~months.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. An unrecognized gain of less than $1 million at September 30, 2018 related to these interest rate swaps, was included in Accumulated OCI, and will be reclassified into earnings within the next twelve months. For the three months ended September 30, 2018 there was a loss of less than $1 million recorded into Accumulated OCI and a gain of less than $1 million reclassified from Accumulated OCI into interest expense.

Net Investment Hedges

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in non-U.S. subsidiaries. ~~The~~and ~~Company~~ uses cross currency swaps to partially hedge ~~its~~this exposure ~~to changes in foreign exchange rates on certain of these investments~~. During the third quarter of 2018, the Company entered into a series of cross currency swap agreements with a pay notional amount of €154 million and a receive notional amount is $180 million that reach final maturity in 2020. These cross-currency swaps involve the receipt of USD fixed rate amounts from a counterparty in exchange for the Company making Euro fixed payments over the life of the agreement. For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in Accumulated Other Comprehensive Income as part of the cumulative translation adjustment. Amounts are reclassified out of Accumulated Other Comprehensive Income into earnings when the hedged net investment is either sold or substantially liquidated. For the three months ended September 30, 2018 there was a loss of less than $1 million recorded into Accumulated OCI.

Balance Sheet Classification

The ~~Company~~following ~~records~~table ~~the~~shows ~~fair values of derivative financial instruments on~~ the ~~balance~~amount ~~sheet~~and classification (as ~~follows:~~noted (aabove) ~~receivables~~of if the ~~instrument~~Company’s ~~has~~derivatives aat ~~positive~~March ~~fair value and maturity within one year~~31, ~~(b) deposits~~2019, ~~receivables,~~December ~~and other assets if the instrument has a positive fair value and maturity after one year~~31, ~~(c)~~2018 ~~other accrued liabilities or other liabilities (current) if the instrument has a negative fair value~~ and ~~maturity~~March ~~within one year~~31, ~~and (d) other accrued liabilities or other liabilities if the instrument has a negative fair value and maturity after one year.~~2018:

The following table shows the amount and classification (as noted above) of the Company’s derivatives at September 30, 2018, December 31, 2017 and September 30, 2017:


	Fair Value of						Fair Value of
	Hedge Assets						Hedge Liabilities
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2019		2018		2018		2019		2018		2018
Derivatives designated as hedging instruments:
Commodity forward contracts (a)	$	3	$	1	$	4	$	-	$	-	$	-
Interest rate swaps - fair value hedges (b)		18		6		4				1		15
Cash flow hedges of foreign exchange risk (c)		18		10		6		4		1		26
Interest rate swaps - cash flow hedges (d)								1
Net investment hedges (e)		6		6		4		4		8		1
Total derivatives accounted for as hedges	$	45	$	23	$	18	$	9	$	10	$	42
Derivatives not designated as hedges:
Foreign exchange derivative contracts (f)		2		2				1		2
Total derivatives	$	47	$	25	$	18	$	10	$	12	$	42


Current	$	23	$	19	$	14	$	3	$	3	$	-
Noncurrent		24		6		4		7		9		42
Total derivatives	$	47	$	25	$	18	$	10	$	12	$	42
________________________________

	Fair Value
	Current Balance	September 30,		December 31,		September 30,
	Sheet Location	2018		2017		2017
Asset Derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	b	$	8	$	3	$	1
Interest rate swaps designated as fair value hedges	a		4		6		2
Cash flow hedges of foreign exchange risk	a		11		4
Net investment hedges	a		5
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	a		2		4		2
Total asset derivatives		$	30	$	17	$	5
Liability Derivatives:
Derivatives designated as hedging instruments:
Commodity futures contracts	c	$	—	$	—	$	1
Interest rate swaps designated as fair value hedges	d		11		13		5
Cash flow hedges of foreign exchange risk	d		12		10
Net investment hedges	d		5
Derivatives not designated as hedging instruments:
Foreign exchange derivative contracts	c		1		1		3
Total liability derivatives		$	29	$	24	$	9

(a) The notional amounts of the commodity forward contracts were $20 million, $21 million and $31 million at March 31, 2019, December 31, 2018 and March 31, 2018, respectively. The maximum maturity dates were in 2020 for all three periods.

1310

(b) The notional amounts of the interest rate swaps designated as fair value hedges were €725 million at March 31, 2019, December 31, 2018 and March 31, 2018, respectively. The maximum maturity dates were in 2024 for all three periods.

(c) The notional amounts of the cash flow hedges of foreign exchange risk were $797 million, $587 million and $310 million at March 31, 2019, December 31, 2018 and March 31, 2018, respectively. 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 $180 million and maximum maturity dates were 2020 at March 31, 2019 and December 31, 2018.

(e) The notional amounts of the net investment hedges were €160 million and maximum maturity dates were 2020 at March 31, 2019 and December 31, 2018.

(f) The notional amounts of the foreign exchange derivative contracts were $625 million, $470 million and $350 million and maximum maturity dates were 2019, 2019, and 2018 at March 31, 2019, December 31, 2018 and March 31, 2018, respectively.


	Gain (Loss) Recognized in OCI (Effective Portion)				Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) (1)
	March 31,		March 31,		March 31,		March 31,
Derivatives designated as hedging instruments:	2019		2018		2019		2018
Cash Flow Hedges
Commodity forward contracts (a)	$	2	$	1	$	—	$	—
Cash flow hedges of foreign exchange risk (b)		7		(13)		(10)		(8)
Cash flow hedges of interest rate risk (c)
Net Investment Hedges
Net Investment Hedges		5				(2)
	$	14	$	(12)	$	(12)	$	(8)

	Amount of Gain (Loss) Recognized in Other income (expense), net
	March 31,		March 31,
Derivatives not designated as hedges:	2019		2018
Foreign exchange derivative contracts	$	6	$	—

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

6. Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 is as follows:

	Employee		~~Asset~~Other		~~Other~~Total		~~Total~~
	Costs		~~Impairment~~Exit Costs		~~Exit Costs~~Restructuring		~~Restructuring~~
Balance at July 1, 2018	$	71	$		$	16	$	87
Balance at January 1, 2019	$	47	$	22	$	69
Net cash paid, principally severance and related benefits		(813)		(2)		(115)		~~(9)~~
Other, including foreign exchange translation		~~(1)~~		(1)		(21)		~~(3)~~
Balance at September 30, 2018	$	62	$	—	$	13	$	75
Balance at March 31, 2019	$	34	$	19	$	53

	Employee		~~Asset~~Other		~~Other~~Total		~~Total~~
	Costs		~~Impairment~~Exit Costs		~~Exit Costs~~Restructuring		~~Restructuring~~
Balance at July 1, 2017	$	94	$		$	17	$	111
Balance at January 1, 2018	$	52	$	33	$	85
Net cash paid, principally severance and related benefits		(115)		(1)		(36)		~~(14)~~
Other, including foreign exchange translation		1				1		1
Balance at September 30, 2017	$	84	$	—	$	14	$	98
Balance at March 31, 2018	$	48	$	32	$	80

~~Selected information related to the restructuring accruals for the nine months ended September 30, 2018 and 2017 is as follows:~~11

	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at January 1, 2018	$	67	$		$	18	$	85
Charges		15		53		2		70
Write-down of assets to net realizable value				(53)				(53)
Net cash paid, principally severance and related benefits		(18)				(3)		(21)
Other, including foreign exchange translation		(2)				(4)		(6)
Balance at September 30, 2018	$	62	$	—	$	13	$	75

In the past several years, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges associated with those actions. These charges consisted of employee costs, write-down of assets and other exit costs primarily related to plant and furnace closures in the Americas region. 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 months ended March 31, 2019 and 2018, the Company has paid severance and related benefits that were associated with the past restructuring actions. The Company expects that the majority of the remaining cash expenditures related to the accrued employee costs will be paid out over the next several years.

	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at January 1, 2017	$	67	$		$	18	$	85
Charges		34		9		5		48
Write-down of assets to net realizable value				(9)				(9)
Net cash paid, principally severance and related benefits		(21)				(9)		(30)
Other, including foreign exchange translation		4						4
Balance at September 30, 2017	$	84	$	—	$	14	$	98

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 are presented separately while minor initiatives are presented on a combined basis. As of September 30, 2018 and 2017, no major restructuring programs were in effect.

For the nine months ended September 30, 2018, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges of $70 million. These charges consisted of employee costs, write-down of assets, and other exit costs primarily related to a plant closure in the Americas region. 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. These restructuring charges primarily relate to capacity curtailments and the Company plans to reallocate the products produced at these facilities to other facilities. These charges were recorded to Cost of goods sold ($5 million) and Other expense, net ($65 million) on the Condensed Consolidated Results of Operations. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2019. No restructuring initiatives were implemented in the three months ended September 30, 2018.

For the nine months ended September 30, 2017, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges of $48 million. These charges primarily consisted of employee costs, write-down of assets, and other exit costs in the following regions: Americas ($35 million) and Europe ($13 million). The restructuring charges recorded were discrete actions and are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The restructuring charges recorded in the Americas and European regions primarily relate to capacity curtailments. The Company plans to reallocate the products produced at these facilities to others in their respective regions. 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 above charges will be paid out by the end of 2018. No restructuring initiatives were implemented in the three months ended September 30, 2017.

The Company’s decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the extent their carrying amounts exceeded fair value or fair value less cost to sell. The Company classified the significant assumptions used to determine the fair value of the impaired assets as Level 3 (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 September 30, 2018 and September 30, 2017, the remaining carrying value of the impaired assets was approximately $3 million and $0, respectively.

7. Pension Benefit Plans

The components of the net periodic pension cost for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 are as follows:

	U.S.				Non-U.S.
	2018		2017		2018		2017
	2019		2018		2019		2018
Service cost	$	43	$	4	$	43	$	4
Interest cost		15		2015		78		118
Expected asset return		(2522)		(3325)		(1312)		(1813)
Amortization of Actuarial loss		13		14		3		5
Amortization of actuarial loss		10		13		3		4
Net periodic pension cost	$	76	$	57	$	12	$	23

~~The components of the net periodic pension cost for the nine months ended September 30, 2018 and 2017 are as follows:~~8. Leases

	U.S.				Non-U.S.
	2018		2017		2018		2017
Service cost	$	11	$	11	$	11	$	12
Interest cost		45		59		23		33
Expected asset return		(74)		(98)		(40)		(54)
Amortization of Actuarial loss		39		44		10		15
Net periodic pension cost	$	21	$	16	$	4	$	6

In the first quarter of 2019, the Company adopted ASC 842, Leases, and selected the modified retrospective transition as of the effective date of January 1, 2019 (the effective date method). Under the effective date method, financial results reported in periods prior to 2019 are unchanged.

15The Company determines if an arrangement is a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

8The Company uses an estimated incremental borrowing rate at the lease commencement date to determine the present value of lease payments. ~~Income~~ ~~Taxes~~The Company’s incremental borrowing rate reflects a fully secured rate based on recent debt issuances, the credit rating of the Company, changes in currency, repayment timing of the lease, as well as publicly available data for instruments with similar characteristics when calculating incremental borrowing rates.

~~The~~Certain ~~Company~~lease ~~calculates~~agreements ~~its~~include ~~interim~~terms ~~tax~~with ~~provision~~options ~~using~~to extend the ~~estimated~~lease, ~~annual~~however ~~effective~~none ~~tax~~of ~~rate~~these ~~(“EAETR”)~~have ~~methodology~~been recognized in ~~accordance~~the ~~with~~Company’s ~~ASC 740~~right-~~270.~~of-use ~~The~~assets ~~EAETR~~or islease ~~applied~~liabilities tosince ~~the~~those ~~year-to-date~~options ~~ordinary~~were ~~income,~~not ~~exclusive~~reasonably ofcertain ~~discrete~~to ~~items~~be exercised. Leases ~~The~~with ~~tax~~a ~~effect~~term of ~~discrete~~12 ~~items~~months ~~are~~or ~~then~~less ~~included~~are tonot ~~arrive~~recorded aton the ~~total~~balance ~~reported~~sheet ~~interim~~and ~~tax~~lease ~~provision.~~expense ~~The~~for ~~determination~~these ofleases ~~the EAETR~~ is ~~based~~recognized ~~upon~~on a ~~number~~straight-line ofbasis ~~estimates,~~over ~~including~~ the ~~estimated~~lease ~~annual~~term. ~~pretax~~The ~~ordinary~~Company’s ~~income~~lease oragreements ~~loss~~include inlease ~~each~~payments ~~tax~~that ~~jurisdiction~~are inlargely ~~which~~fixed, ~~the~~do ~~Company~~not ~~operates.~~contain ~~The~~material ~~tax~~residual ~~effects~~value ofguarantees ~~discrete~~or ~~items~~variable ~~are~~lease ~~recognized~~payments inand ~~the~~no ~~tax~~lease ~~provision~~transactions inwith ~~the~~related ~~quarter~~parties. ~~they~~For ~~occur.~~the ~~Depending~~three onmonths ~~various~~ended ~~factors~~March ~~such~~31, as2019, the ~~item~~Company’s ~~significance~~lease incosts ~~relation~~associated towith ~~total~~leases ~~income~~with ~~and~~terms ~~the~~less ~~rate~~than of12 ~~tax~~months ~~applicable~~or invariable ~~the~~lease ~~jurisdiction~~costs towere ~~which~~immaterial. Certain itleases ~~relates,~~include ~~discrete~~options ~~items~~to inpurchase ~~any quarter can materially impact~~ the ~~reported~~leased ~~effective tax rate~~property. The ~~Company’s~~depreciable ~~annual~~life ~~effective tax rate may be affected by the mix~~ of ~~earnings~~assets ~~in the U.S.~~ and ~~foreign~~leasehold ~~jurisdictions~~improvements ~~and~~are ~~such~~limited ~~factors~~by asthe ~~changes~~lease ~~in tax laws~~term, ~~tax~~unless ~~rates~~there oris ~~regulations,~~a ~~changes~~transfer ~~in business, changing interpretation~~ of ~~existing~~title ~~tax laws~~ or ~~regulations,~~purchase ~~the~~option ~~finalization~~reasonably certain of ~~tax audits and reviews, as well as other factors~~exercise. The AsCompany’s ~~such,~~leases ~~there~~do ~~can~~not becontain ~~significant~~restrictions ~~volatility~~or incovenants ~~interim~~that ~~tax~~restrict ~~provisions.~~the ~~The~~Company ~~annual effective tax rate differs~~ from ~~the~~incurring ~~statutory~~other ~~U.S.~~financial ~~Federal tax rate of 21% for 2018 and 35% for 2017 primarily because of varying non-U~~obligations.~~S. tax rates and valuation allowances in some jurisdictions, respectively.~~

The ~~Tax~~Company ~~Cuts~~leases ~~and Jobs Act (the “Act”) was enacted on December 22~~warehouses, ~~2017.~~office ~~The~~buildings Act reduces the U.S. federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and ~~creates~~equipment ~~new~~under ~~taxes~~both onoperating ~~certain foreign sourced earnings. The Company is applying the guidance in Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cut~~ and ~~Jobs~~finance ~~Act~~lease ~~when accounting for the enactment-date effects of the Act~~arrangements. Information At September 30, 2018, the Company has not completed its accounting for the tax effects of the Act; however, it has made reasonable estimates of the tax effects. During the three and nine months ended September 30, 2018, the Company has not recorded any adjustments to the provisional amounts recorded at December 31, 2017 related to ~~the~~leases remeasurement of its deferred balances. During the three months ended September 30, 2018, the Company refined its estimate of the provisional amount of the one-time transition tax. At December 31, 2017, the Company originally recorded a provisional amount for its one-time transition tax of $331 million, which was expected to be substantially offset by available foreign tax credits resulting in a provisional net tax expense of $2 million, primarily attributable to state taxes. Upon further analyses of certain aspects of the Act and refinement of its calculations during the three months ended September 30, 2018, the Company decreased its provisional amount of transition tax by $17 million, to $314 million. This resulted in no change to income tax expense due to the impact of foreign tax credits. Therefore, the provisional net tax expense is ~~approximately $2 million, primarily attributable to state taxes. In all cases, the Company is continuing to make and refine its federal and state calculations~~ as additional analysis is completed. In addition, the Company’s estimates may also be affected as it gains a more thorough understanding of the Act and certain aspects of the Act are clarified by the taxing authorities.follows:

The Act subjects a U.S. shareholder to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. At December 31, 2017, the Company elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred. The Company has made sufficient progress in its calculation to reasonably estimate the tax expense related to GILTI for the year ended December 31, 2018 and included it in the EAETR. The impact of GILTI resulted in no incremental tax expense for the three and nine months ended September 30, 2018 due to net operating loss carryforwards, foreign tax credits and a full valuation allowance on U.S. net deferred tax assets. The Company will continue to refine its calculations, which may result in changes to the expected impact for 2018.


		Three months ended
		March 31,
		2019
Lease cost
Finance lease cost:

The Company maintains its assertion on a provisional basis that it intends to continue to indefinitely reinvest the gross book-tax differences in its foreign consolidated subsidiaries. However, the Company records deferred foreign taxes on gross book-tax basis differences to the extent of foreign distributable reserves for certain foreign subsidiaries. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis differences in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable.12

The Company is currently under examination in various tax jurisdictions in which it operates, including Bolivia, Brazil, Canada, China, Colombia, France, Germany, and Indonesia. The years under examination range from 2004 through 2015. The Company has received tax assessments in excess of established reserves for uncertain tax positions. The Company is contesting these tax assessments, and will continue to do so, including pursuing all available remedies such as appeals and litigation, if necessary. The Company believes that adequate provisions for all income tax uncertainties have been made. However, if income tax assessments are settled against the Company at amounts in excess of established reserves, it could have a material impact on the Company’s results of operations, financial position or cash

Amortization of right-of-use assets (included in Cost of goods sold and Selling and administrative expense)	$	2
Interest on lease liabilities (included in Interest expense, net)		1
Operating lease cost (included in Cost of goods sold and Selling and administrative expense)		20
Total lease cost	$	23

Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	20
Operating cash flows from finance leases		1
Financing cash flows from finance leases		2
Right-of-use assets obtained in exchange for new operating lease liabilities		5




	March 31, 2019
Supplemental balance sheet information
Operating leases:
Operating lease right-of-use assets (included in Other assets)	$	199

Current operating lease liabilities (included in Other current liabilities)		61
Noncurrent operating lease liabilities (included in Other long-term liabilities)		138
Total operating lease liabilities	$	199

Finance leases:
Property, plant and equipment	$	74
Accumulated amortization		(27)
Property, plant and equipment, net		47

Current finance lease liabilities (included in Long-term debt due within one year)		6
Noncurrent finance lease liabilities (included in Long-term debt)		37
Total finance lease liabilities	$	43

Weighted-average remaining lease term (in years):
Operating leases		5.1
Finance leases		7.2
Weighted-average discount rate:
Operating leases		3.9	%
Finance leases		5.2	%

flows.


Maturity of lease liabilities		Operating leases		Finance leases
2019	$	52	$	8
2020		55		8
2021		35		8
2022		27		6
2023		18		6
2024 and thereafter		31		17
Total lease payments		218		53
Less: imputed interest		(19)		(10)
Total lease obligations	$	199	$	43

~~9. Debt~~13

Minimum payments related to leases not yet commenced as of March 31, 2019

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 effect 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, China, Colombia, France, Germany, Indonesia, and Italy. The years under examination range from 2004 through 2017. 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 on the Company’s results of operations, financial position or cash flows.

10. Debt

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

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2018		2017		2017
	2019		2018		2018
Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans	$	~~335~~553	$	—	$	—
Term Loans:
Term Loan A		~~908~~897		897
Previous Secured Credit Agreement:
Revolving Credit Facility:
Revolving Loans						~~200~~462
Term Loans:
Term Loan A				~~1,148~~		1,~~202~~149
Term Loan A (€279 million)						308
Other secured debt		504		404
Other secured debt		329
Senior Notes:
6.75%, due 2020 (€500 million)		~~580~~560		~~594~~570		~~586~~613
4.875%, due 2021 (€330 million)		~~382~~369		~~392~~376		~~386~~404
5.00%, due 2022		497		~~496~~497		496
4.00%, due 2023		~~306~~307		~~305~~306		305
5.875%, due 2023		~~687~~688		~~685~~688		~~684~~686
3.125%, due 2024 (€725 million)		~~828~~824		~~849~~825		~~840~~872
6.375%, due 2025		~~295~~296		295		295
5.375%, due 2025		~~297~~298		297		297
Payable to OI Inc.						22
Finance Leases		43		45		53
Capital Leases		48		54		54
Other		18		14		19
Other		16		17		56
Total long-term debt		5,854		5,214		5,651
Total long-term debt		5,508		5,132		5,426
Less amounts due within one year		34		33		11
Less amounts due within one year		21		11		48
Long-term debt	$	5,820	$	5,181	$	5,640
Long-term debt	$	5,487	$	5,121	$	5,378

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

On June 27, 2018, certain of the Company’s subsidiaries entered into a new Senior Secured Credit Facility (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 Company recorded $11 million of additional interest charges for the write-off of unamortized fees in the second quarter of 2018.

The Agreement provides for up to $1.910 billion of borrowings pursuant to term loans and revolving credit facilities. The term loans mature, and the revolving credit facilities terminate, in June 2023. At ~~September~~March 3031, ~~2018~~2019, the Agreement includes a $300 million revolving credit facility, a $700 million multicurrency revolving credit facility, and a $910 million term loan A facility ($~~908~~897 million net of debt issuance costs). At ~~September~~March 3031, ~~2018~~2019, the Company had unused credit of $~~653~~434 million available under the Agreement. The weighted average interest rate on borrowings outstanding under the Agreement at ~~September~~March 3031, ~~2018~~2019 was 3.4088%.

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.

17 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 4.5x calculated by dividing consolidated total debt, less cash and cash equivalents, by Consolidated EBITDA, as defined 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. 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

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 4.5x calculated by dividing consolidated total debt, less cash and cash equivalents, by Consolidated EBITDA, as defined 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. 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. 15

~~Failure~~Ratio to ~~comply~~exceed ~~with these covenants and other customary restrictions could result in an event of default under~~ the ~~Agreement. In~~specified 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 payablemaximum. 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 a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of September 30, 2018, 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.

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 a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of March 31, 2019, 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 ~~March~~order ~~2017,~~to ~~the~~maintain ~~Company~~a ~~expanded~~capital ~~its~~structure ~~borrowings~~containing ~~under~~appropriate ~~the~~amounts ~~Senior Notes due 2024 by issuing €225 million~~ of ~~additional~~fixed ~~notes that bear interest at 3.125%~~ and ~~are~~floating-rate ~~due November 15~~debt, ~~2024. The~~the ~~notes~~Company ~~were~~has ~~issued~~entered ~~via~~into a ~~private~~series ~~placement and are guaranteed by certain~~ of ~~the~~interest ~~Company‘s~~rate ~~domestic~~swap ~~subsidiaries~~agreements. ~~The~~ ~~net~~These ~~proceeds,~~interest ~~after~~rate ~~deducting~~swap ~~debt~~agreements ~~issuance~~were ~~costs,~~accounted ~~totaled~~for ~~approximately~~as ~~$237~~either ~~million~~fair ~~and~~value ~~were~~hedges ~~used~~or tocash ~~repay~~flow ahedges ~~portion~~(see ofNote ~~the Company’s revolving credit facility~~4).

During March 2017, OI Inc. purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018. In November 2017, the remaining $22 million of the 7.80% Senior Debentures were repurchased by OI Inc., the indenture relating thereto was discharged, and all collateral and guarantees thereunder were released. In 2017, the Company recorded $18 million of additional interest charges for note repurchase premiums and the write-off of unamortized finance fees related to these actions.

During December 2017, the Company issued senior notes with a face value of $310 million that bear interest at 4.00% and are due March 15, 2023. The notes were issued via a private placement and are guaranteed by certain of the Company‘s domestic subsidiaries. The net proceeds, after deducting debt issuance costs, totaled approximately $305 million and were used to repay a portion of the term loan A facility under the Amended Agreement.

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

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

1816

In the third quarter of 2018, the Company terminated a €185 million European accounts receivable securitization program.

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 ~~September~~March 3031, ~~2018~~2019 of the Company’s significant fixed rate debt obligations are as follows:

	Principal		Indicated
	Amount		Market Price		Fair Value
Senior Notes:
6.75%, due 2020 (€500 million)	$	~~582~~562	$	~~113~~109.1050	$	~~658~~615
4.875%, due 2021 (€330 million)		~~384~~371		~~111~~109.0509		~~426~~405
5.00%, due 2022		500		~~100~~102.9364		~~505~~513
5.875%, due 2023		700		~~103~~104.0888		~~722~~734
4.00%, due 2023		310		95105.5736		~~296~~327
3.125%, due 2024 (€725 million)		~~844~~814		~~103~~98.4051		~~873~~802
6.375%, due 2025		300		~~103~~105.88		~~312~~318
5.375%, due 2025		300		98101.9097		~~297~~306

1011. Contingencies

Asbestos

~~OI Inc. is a defendant in numerous lawsuits alleging bodily injury and death as a result of exposure to asbestos.~~ From 1948 to 1958, one of OI Inc.’'s former business units commercially produced and sold approximately $40 million of a high-temperature, calcium-silicate based pipe and block insulation material containing asbestos. OI Inc. sold its insulation business unit atin ~~the~~April ~~end~~1958. OI Inc. receives claims from individuals alleging bodily injury and death as a result of ~~April~~exposure ~~1958~~to asbestos from this product (“Asbestos Claims”). ~~The~~Some ~~typical~~Asbestos ~~asbestos~~Claims are brought as personal injury ~~lawsuit~~lawsuits ~~alleges~~that typically allege various theories of liability, including negligence, gross negligence and strict liability and ~~seeks~~seek compensatory and, in some cases, punitive damages ~~in various amounts (herein referred to as "asbestos claims")~~.

AsPredominantly, ofhowever, ~~September~~Asbestos ~~30,~~Claims ~~2018,~~are presented to OI Inc. ~~has~~under ~~determined~~administrative ~~that~~claims-handling itagreements, iswhich aOI ~~named~~Inc. ~~defendant~~has in ~~asbestos~~place ~~lawsuits~~with ~~and~~many ~~claims~~plaintiffs’ ~~involving~~counsel ~~approximately~~throughout ~~1,065~~the ~~plaintiffs~~country ~~and~~(“Administrative ~~claimants~~Claims”). ~~Based~~ onAdministrative anClaims ~~analysis~~require ofevaluation ~~the~~and ~~lawsuits~~negotiation ~~pending~~regarding aswhether ofparticular ~~December~~claimants ~~31,~~qualify ~~2017,~~under ~~approximately~~the ~~89%~~criteria ofestablished ~~plaintiffs~~by ~~either~~the dorelated ~~not~~claims-handling ~~specify~~agreements. ~~the~~The ~~monetary~~criteria ~~damages~~for ~~sought,~~Administrative orClaims ininclude ~~the~~verification ~~case~~ of ~~court~~a ~~filings,~~compensable ~~claim~~illness anand ~~amount~~a ~~sufficient~~reasonable toprobability ~~invoke~~of ~~the~~exposure ~~jurisdictional~~to ~~minimum~~a ofproduct ~~the~~manufactured ~~trial~~by ~~court~~OI Inc. ~~Approximately~~’s 8%former ofbusiness ~~plaintiffs~~unit ~~specifically~~during ~~plead~~its ~~damages~~manufacturing ~~above~~period ~~the~~ending ~~jurisdictional~~in ~~minimum~~1958. Plaintiffs’ upcounsel topresent, and ~~including,~~OI ~~$15~~Inc. ~~million or less~~negotiates, ~~and~~Administrative 3%Claims ofunder ~~plaintiffs~~these ~~specifically~~various ~~plead~~agreements ~~damages~~in ~~greater~~differing ~~than~~quantities, ~~$15~~at ~~million~~different ~~but~~times, ~~less~~and ~~than~~under ora ~~equal~~variety toof ~~$100 million~~conditions.

As ~~indicated~~of byMarch ~~the~~31, ~~foregoing summary~~2019, ~~current pleading practice permits considerable variation in the assertion of monetary damages.~~ OI Inc.’s ~~experience~~had ~~resolving~~approximately ~~hundreds~~1,070 ~~of thousands of~~ asbestos ~~claims and~~ lawsuits ~~over~~pending. anThese ~~extended~~pending ~~period~~lawsuits ~~demonstrates~~do ~~that~~not ~~the~~include ~~monetary~~an ~~relief~~estimate ~~alleged~~of inpotential aAdministrative ~~complaint~~Claims ~~bears~~that ~~little~~may ~~relevance~~be topresented under a ~~claim’s~~claims-handling ~~merits~~agreement ordue ~~disposition~~to ~~value. Rather,~~ the ~~amount~~uncertainties ~~potentially~~around ~~recoverable~~presentation ~~is determined by such factors as the type and severity of the plaintiff’s asbestos disease~~timing, ~~the plaintiff’s medical history and exposure to other disease-causing agents~~quantities, ~~the~~or ~~product~~qualification ~~identification~~rates. ~~evidence against~~ OI Inc. ~~and~~considers ~~other~~Administrative ~~co-defendants,~~Claims ~~the defenses available~~ to OIbe ~~Inc.~~filed and ~~other~~disposed ~~co-defendants,~~when ~~the~~they ~~specific~~are ~~jurisdiction~~accepted infor ~~which the claim is made, and the plaintiff’s firm representing the claimant~~payment.

InThe ~~addition~~lack toof ~~the~~uniform ~~pending~~rules ~~claims~~in ~~set~~lawsuit ~~forth~~pleading ~~above~~practice, OItechnical ~~Inc.~~pleading ~~has~~requirements ~~claims-handling~~in ~~agreements~~some injurisdictions, ~~place~~local ~~with~~rules, ~~many~~and ~~plaintiffs’~~other ~~counsel~~factors ~~throughout~~cause considerable variation in the ~~country~~specific amounts of monetary damages asserted. ~~These~~ ~~agreements~~In ~~require~~OI ~~evaluation~~Inc.’s ~~and~~experience, ~~negotiation~~the ~~regarding~~monetary ~~whether~~relief ~~particular~~alleged ~~claimants~~in ~~qualify~~a ~~under~~lawsuit ~~the~~bears ~~criteria~~little ~~established~~relationship byto ~~such~~an ~~agreements.~~Asbestos ~~The~~Claim’s ~~criteria~~merits ~~for~~or ~~such~~its ~~claims~~disposition ~~include~~value. Rather, ~~verification~~several ofvariables, aincluding ~~compensable~~but ~~illness~~not ~~and~~limited ato, ~~reasonable~~the ~~probability~~type and severity of the asbestos disease, medical history, and exposure to aother disease-causing agents; the product ~~manufactured~~identification byevidence against OI Inc.'s ~~former~~and ~~business~~other ~~unit~~co-defendants; ~~during~~the ~~its~~defenses ~~manufacturing~~available ~~period~~to ~~ending~~OI Inc. and other co-defendants; the specific jurisdiction in ~~1958~~which the claim is made; the applicable law; and the law firm representing the claimant, affect the value.

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

19 Since receiving its first Asbestos Claim, as of March 31, 2019, OI Inc. in the aggregate has disposed of approximately 400,600 Asbestos Claims at an average indemnity payment of approximately $10,000 per claim. OI Inc.’s asbestos indemnity payments have varied on a per-claim basis and are expected to continue to vary considerably over time.

Since receiving its first asbestos claim, OI Inc. as of September 30, 2018, has disposed of asbestos claims of approximately 399,800 plaintiffs and claimants at an average indemnity payment per claim of approximately $9,700. OI Inc.’s asbestos indemnity payments have varied on a per claim basis, and are expected to continue to vary considerably over time. Asbestos-related cash payments for 2017, 2016 and 2015 were $110 million, $125 million and $138 million, respectively. OI Inc.’s cash payments per claim disposed (inclusive of legal costs) were approximately $83,000, $71,000, and $95,000 for the years ended December 31, 2017, 2016 and 2015, respectively.17

AsAsbestos-related ~~discussed~~cash ~~above,~~payments OIfor ~~Inc.’s objective is to achieve~~2018, ~~where possible~~2017, ~~resolution~~and of2016 ~~asbestos~~were ~~claims~~$105 ~~pursuant~~million, to$110 ~~claims-handling~~million, ~~agreements. Failure of claimants to meet certain medical~~ and ~~product~~$125 ~~exposure~~million, ~~criteria in~~ respectively. OI Inc.’s ~~administrative~~cash ~~claims~~payments ~~handling~~per ~~agreements~~claim ~~has~~disposed ~~generally~~(inclusive ~~reduced the number~~ of ~~claims~~legal ~~that~~costs) ~~would~~were ~~otherwise~~approximately ~~have~~$86,000, ~~been~~$83,000 ~~received~~and by$71,000 OIfor ~~Inc. in~~ the ~~tort~~years ~~system.~~ended InDecember ~~addition~~31, ~~certain~~2018, ~~court~~2017, ~~orders~~ and ~~legislative~~2016, ~~acts have reduced or eliminated the number of claims that OI Inc~~respectively. ~~otherwise would have received by OI Inc. in the tort system. These developments generally have had the effect of increasing OI Inc.’s per-claim average indemnity payment over time.~~

~~Beginning~~OI ~~with~~Inc.’s ~~the~~objective ~~initial~~is ~~liability~~to ofachieve, ~~$975~~where ~~million~~possible, ~~established~~resolution inof ~~1993,~~Asbestos OIClaims ~~Inc.~~pursuant ~~has~~to ~~accrued~~claims-handling aagreements. ~~total~~Failure of ~~approximately~~claimants ~~$4.9~~to ~~billion~~meet ~~through~~certain ~~September~~medical ~~30,~~and ~~2018,~~product ~~before~~exposure ~~insurance~~criteria ~~recoveries,~~in ~~for~~claims-handling ~~its~~agreements ~~asbestos-related~~generally ~~liability. OI~~has ~~Inc.’s~~reduced ~~estimates~~the number of ~~its~~claims ~~liability~~that would otherwise have been ~~significantly~~received ~~affected~~ by, ~~among~~OI ~~other~~Inc. ~~factors,~~in the ~~volatility~~tort ofsystem. In ~~asbestos-related~~addition, ~~litigation~~changes in ~~the~~jurisdictional ~~United States~~dynamics, ~~the~~legislative ~~significant~~acts, ~~number~~asbestos ofdocket ~~co-defendants~~management ~~that~~and ~~have~~procedures, ~~filed~~the ~~for~~substantive ~~bankruptcy~~law, the ~~inherent~~co-defendant ~~uncertainty~~pool, ofand ~~future~~other ~~disease~~external ~~incidence~~factors ~~and~~have ~~claiming~~affected ~~patterns~~lawsuit ~~against~~volume, OIclaim ~~Inc.~~volume, ~~the~~qualification ~~significant~~rates, ~~expansion~~claim ~~of the defendants that are now sued in this litigation~~values, and ~~the~~related ~~continuing~~matters. ~~changes~~Collectively, ~~in the extent to which~~ these ~~defendants~~variables ~~participate~~generally inhave had the ~~resolution~~effect of ~~cases~~increasing ~~in which~~ OI Inc.’s isper-claim ~~also~~average aindemnity ~~defendant~~payment over time.

OIBeginning ~~Inc.~~with ~~continues~~the toinitial ~~monitor~~liability ~~trends~~of ~~that~~$975 ~~may~~million ~~affect~~established ~~its~~in ~~ultimate~~1993, ~~liability~~OI ~~and~~Inc. ~~analyze~~has ~~the~~accrued ~~developments~~a ~~and~~total ~~variables~~of ~~likely~~approximately to$5.0 ~~affect~~billion ~~the~~through ~~resolution~~March of31, ~~pending~~2019, ~~and~~before ~~future~~insurance ~~asbestos~~recoveries, ~~claims~~for ~~against~~its OIasbestos-related ~~Inc~~liability. ~~The material components of~~ OI Inc.’s ~~total~~estimates ~~accrued~~of its liability ~~are~~have ~~determined~~been bysignificantly OIaffected ~~Inc.~~by, inamong ~~connection~~other ~~with~~factors, ~~its~~the ~~annual~~volatility ~~comprehensive~~of ~~legal~~asbestos-related ~~review~~litigation ~~and~~in ~~consist of~~ the ~~following~~United ~~estimates~~States, to the ~~extent~~significant itnumber isof ~~probable~~co-defendants that ~~such~~have ~~liabilities~~filed ~~have~~for ~~been~~bankruptcy, ~~incurred~~changes ~~and~~in ~~can~~mortality berates, ~~reasonably~~the ~~estimated:~~inherent ~~(i)~~uncertainty ~~the~~of ~~liability~~future ~~for~~disease ~~asbestos~~incidence ~~claims~~and ~~already~~claiming ~~asserted~~patterns against OI Inc.;, ~~(ii)~~the significant expansion of the ~~liability~~types ~~for~~of ~~asbestos~~defendants ~~claims~~that ~~not~~are ~~yet~~now ~~asserted~~sued ~~against~~in OIthis ~~Inc.;~~litigation, and ~~(iii)~~ the ~~legal~~continuing ~~defense~~changes ~~costs~~in ~~estimated~~the extent to bewhich ~~incurred~~these indefendants ~~connection~~participate ~~with~~in the ~~claims~~resolution ~~already~~of ~~asserted~~cases ~~and~~in ~~those~~which ~~claims~~ OI Inc. ~~believes~~is ~~will~~also bea ~~asserted~~defendant.

~~As noted above,~~ OI Inc. ~~conducts~~continues ato ~~comprehensive~~monitor ~~legal~~trends ~~review~~that ofmay affect its ~~asbestos-related~~ultimate ~~liabilities~~liability and ~~costs~~analyze ~~annually~~the indevelopments ~~connection~~and ~~with~~variables ~~finalizing~~likely ~~and~~to ~~reporting~~affect ~~its~~the ~~annual~~resolution ~~results~~ of ~~operations,~~Asbestos ~~unless~~Claims ~~significant~~against ~~changes~~OI ~~in trends or new developments warrant an earlier review~~Inc. AsThe ~~part~~material components of ~~its annual comprehensive legal review,~~ OI Inc.’s ~~provides~~total ~~historical~~accrued ~~claims~~liability ~~filing~~are ~~data~~determined toby ~~a third party with expertise in determining the impact of disease incidence and mortality on future filing trends to develop information to assist~~ OI Inc. in ~~estimating~~connection ~~the~~with ~~total~~its ~~number~~annual ofcomprehensive ~~future~~legal ~~claims~~review toand beconsist ~~filed. OI~~of ~~Inc.~~the ~~uses~~following ~~this~~estimates, ~~estimate~~to ofthe ~~total~~extent ~~future~~it ~~claims,~~is ~~along~~probable ~~with~~that ansuch ~~estimation~~liabilities ofhave ~~disposition~~been ~~costs~~incurred and ~~related~~can ~~legal~~be ~~costs~~reasonably asestimated: ~~inputs~~(i) tothe ~~develop~~liability ~~its~~for ~~best~~Asbestos ~~estimate~~Claims ofalready ~~its~~asserted ~~total~~against ~~probable~~OI ~~liability~~Inc.; If(ii) the ~~results~~liability offor ~~the~~Asbestos ~~annual~~Claims ~~comprehensive~~not ~~legal~~yet ~~review~~asserted ~~indicate~~against ~~that~~OI ~~the~~Inc.; ~~existing~~and ~~amount~~(iii) of the ~~accrued~~legal ~~liability~~defense iscosts ~~lower~~estimated ~~(higher)~~to ~~than~~be ~~its~~incurred ~~reasonably~~in ~~estimable~~connection ~~asbestos-related~~with ~~costs,~~the ~~then~~Asbestos OIClaims ~~Inc.~~already ~~will~~asserted ~~record~~and anthose ~~appropriate~~Asbestos ~~charge~~Claims ~~(credit) to~~ OI Inc.’s ~~results~~believes ofwill ~~operations~~be ~~to increase (decrease) the accrued liability~~asserted.

~~The~~OI Inc. conducts 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 ~~assumptions~~changes ~~underlying~~in trends or new developments warrant an earlier review. As part of its annual comprehensive legal review, OI Inc. provides historical Asbestos Claims’ data to a third party with expertise in determining the ~~material~~impact ~~components~~of disease incidence and mortality on future filing trends to develop information to assist OI Inc. in estimating the total number of future Asbestos Claims likely to be asserted against OI Inc. OI Inc. uses 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 indicate that the existing amount of the accrued liability is lower (higher) than its reasonably estimable asbestos-related costs, then OI Inc. will record an appropriate charge (credit) to OI Inc.’s ~~accrual~~results ~~are:~~of operations to increase (decrease) the accrued liability.

a) The ~~settlements~~significant ~~will~~assumptions ~~continue~~underlying tothe bematerial ~~limited~~components ~~almost~~of ~~exclusively to claimants who were exposed to~~ OI Inc.’s ~~asbestos‑containing~~accrual ~~insulation prior to its exit from that business in 1958;~~are:

b a) settlements ~~claims~~ will continue to be ~~resolved~~limited ~~primarily~~almost ~~under~~exclusively OIto ~~Inc.’s~~claimants ~~administrative~~who ~~claims~~were ~~agreements~~exposed orto onthe ~~terms~~Company’s ~~comparable~~asbestos containing insulation prior to ~~those~~its ~~set~~exit ~~forth~~from inthat ~~those~~business ~~agreements~~in 1958;

c b) Asbestos ~~the~~Claims ~~incidence~~will ofcontinue ~~serious~~to ~~asbestos‑related~~be ~~disease~~resolved ~~cases~~primarily ~~and~~under ~~claiming~~the ~~patterns~~Company’s ~~against~~administrative OIclaims-handling ~~Inc.~~agreements ~~for~~or ~~such~~on ~~cases~~terms docomparable ~~not~~to ~~change~~those ~~materially~~set forth in those agreements;

d c) the OIincidence ~~Inc.~~of isserious ~~substantially~~asbestos-related ~~able~~disease tocases ~~defend~~and ~~itself~~claiming ~~successfully~~patterns atagainst ~~trial~~the ~~and~~Company onfor ~~appeal~~such cases do not change materially;

e d) the ~~number~~Company ~~and~~is ~~timing~~substantially ofable ~~additional co‑defendant bankruptcies do not change significantly the assets available~~ to ~~participate~~defend initself ~~the~~successfully ~~resolution~~at oftrial ~~cases~~and inon ~~which OI Inc. is a defendant~~appeal; ~~and~~

f e) the number and timing of additional co-~~defendants~~defendant ~~with~~bankruptcies ~~substantial~~do ~~resources~~not ~~and~~change significantly the assets ~~continue~~available to participate ~~significantly~~ in the resolution of ~~future~~cases ~~asbestos~~in ~~lawsuits~~which ~~and~~the ~~claims.~~Company is a defendant; and

20f) co-defendants with substantial resources and assets continue to participate significantly in the resolution of future Asbestos Claims.

For the years ended December 31, ~~2017~~2018 and ~~2016~~2017, OI Inc. concluded that accruals in the amounts of $~~582~~602 million and $~~692~~582 million, respectively, were required. These amounts have not been discounted for the time value of money. OI ~~Inc.’s comprehensive legal reviews resulted in charges of $0 million, $0 million and $16 million for the years ended December 31, 2017, 2016 and 2015, respectively.~~

OI Inc. believes it is reasonably possible that it will incur a loss for its asbestos-related liabilities in excess of the amount currently recognized, which was $582 million as of December 31, 2017. OI Inc. estimated that reasonably possible losses could result in asbestos-related liabilities as high as $725 million. This estimate of additional reasonably possible loss reflects a qualitative legal judgment regarding the nature of contingencies that could impact future claims and legal costs, which include, but are not limited to, successful attempts by plaintiffs to challenge existing legal barriers to liability, enact plaintiff-oriented liability or damage-related legislation, establish new theories of liability, revive long-dormant inventories of non-mesothelioma cases, or leverage changing jurisdictional dynamics and a changing litigation environment to increase the volume of cases or claims presented or per-claim values. However, it is also possible that the ultimate amount of asbestos-related liabilities could be above this estimate.18

OI Inc.’s ~~expects~~comprehensive alegal ~~significant~~reviews ~~majority~~resulted ofin ~~the~~charges ~~total number~~ of ~~claims~~$125 tomillion, be$0 ~~received~~million inand ~~the~~$0 ~~next~~million ~~ten~~for the years~~. This~~ ~~timeframe~~ended ~~appropriately~~December ~~reflects~~31, ~~the~~2018, ~~mortality~~2017 ~~of current~~ and ~~expected~~2016, ~~claimants~~respectively. As inpreviously ~~light~~disclosed, of OI Inc.’s ~~sale~~anticipated ofthat adjustments to its ~~insulation~~asbestos-related ~~business~~accruals ~~unit~~were inpossible ~~1958.~~given Asthe OIinherent ~~Inc~~uncertainties involved in asbestos litigation.’s In ~~potential~~the ~~claimants~~fourth ~~continues~~quarter toof ~~age~~2018, ~~this~~OI ~~may~~Inc. ~~introduce~~determined ~~increased~~that ~~year-over-year~~it ~~variability~~was ~~into~~advantageous ~~the~~to ~~annual~~accelerate ~~quantity~~the disposition of certain claims ~~presented~~in tolight ~~and~~of ~~disposed~~additional byinformation OI Inc. ~~This~~ ~~increased~~obtained ~~variability,~~about ~~jurisdictional~~higher ~~dynamics,~~estimated afuture ~~changing~~claim ~~litigation~~volumes ~~environment,~~and values in certain of the ~~size~~affected discrete streams of potential liability. Factors impacting the ~~remaining~~increased ~~pool~~likelihood of ~~claimants~~these additional losses included changes in the law, ~~and~~procedure, the ~~expected~~expansion ~~increase~~of judicial resources in ~~mortality~~certain ~~over~~jurisdictions, ~~the~~and ~~next~~renewed ~~ten~~attention ~~years~~to ~~may~~dockets ~~present~~of non-mesothelioma cases. OI Inc. ~~with~~also ~~the~~obtained ~~opportunity~~new toinformation ~~accelerate~~about ~~disposition~~other ofAsbestos ~~discrete~~Claims, ~~parts~~which had the effect of reducing its ~~claimant~~asbestos-related ~~pool~~liability. ~~These~~ ~~influences~~The ~~may~~combined ~~create~~effect ~~increased~~of ~~variability~~these items resulted in ~~the~~a ~~annual~~change ~~cash~~in ~~payments~~estimate ~~year~~of OI Inc.’s asbestos-~~over-year~~related liability.

AsOI ~~noted~~Inc. ~~above~~believes that it is reasonably possible that it will incur a loss for its asbestos-related liabilities in excess of the amount currently recognized, which was $602 million as of December 31, 2018. OI Inc.’s estimated that reasonably possible losses could result in asbestos-related ~~liability~~liabilities isof ~~based~~approximately on$722 amillion. This ~~projection~~estimate of ~~new~~additional ~~claims~~reasonably ~~that~~possible ~~will~~loss ~~eventually~~reflects bea ~~filed~~qualitative ~~against~~judgment OIregarding ~~Inc.~~the ~~and~~nature ~~the~~of ~~estimated~~contingencies ~~average~~that ~~disposition~~could ~~cost~~impact offuture ~~these~~Asbestos ~~claims~~Claims and ~~related~~ legal costs., ~~Changes~~which ininclude, ~~these~~but ~~projections~~are not limited to, ~~and~~successful ~~estimates~~attempts by plaintiffs to challenge existing legal barriers to entry, asenact ~~well~~plaintiff-oriented asprocedural ~~changes~~rules inor ~~the~~liability ~~significant~~or ~~assumptions~~damage-related ~~noted~~legislation, ~~above~~establish new theories of liability, ~~have~~revive ~~the~~long-dormant ~~potential~~inventories toof ~~significantly~~non-mesothelioma ~~impact~~cases, or leverage changing jurisdictional dynamics and a changing litigation environment to increase the ~~estimation~~volume of OIAsbestos ~~Inc~~Claims presented or per-claim indemnity values.’s However, it is also possible that the ultimate amount of asbestos-related ~~liability~~liabilities could be above this estimate.

OI Inc. expects a significant majority of the total number of Asbestos Claims to be received in the next five to seven years. This timeframe appropriately reflects the mortality of current and expected claimants in light of OI Inc.’s sale of its insulation business unit in 1958. OI Inc. may continue to experience increased year-over-year variability with regard to the annual quantity of Asbestos Claims presented to and disposed by OI Inc. This increased variability, jurisdictional dynamics, a changing litigation environment, the size of the remaining pool of claimants, and the expected increase in mortality over the next five to seven years may present OI Inc. with further opportunities to accelerate disposition of discrete parts of its claimant pool. These influences may create increased variability in the annual cash payments year-over-year.

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

Other Matters

On July 5, 2016, OI Inc. learned that the Enforcement Division of the Securities and Exchange Commission (“SEC”) was conducting an investigation into certain accounting and control matters pertaining to the determination of its asbestos-related liabilities. On May 13, 2016, OI Inc. restated its consolidated financial statements for the years ended December 31, 2015, 2014 and 2013 in order to correct an error related to its method for estimating its future asbestos-related liabilities.

On May 11, 2018, the SEC informed OI Inc. that it concluded its investigation, and, based on information it had as of that date, it did not intend to recommend an enforcement action against OI Inc.

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

2119

1112. Share Owners’ Equity

The activity in share owners’ equity for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 is as follows:

	Share Owners’ Equity of the Company
					Accumulated
	Other				Other		Non-		Total Share
	Contributed		Retained		Comprehensive		controlling		Owners'
	Capital		Earnings		Loss		Interests		Equity
Balance on July 1, 2018	$	452	$	2,770	$	(1,888)	$	121	$	1,455
Balance on January 1, 2019	$	311	$	3,004	$	(1,927)	$	114	$	1,502
Net distribution to parent		(18104)								(18104)
Net earnings				~~120~~79				75		~~127~~84
Other comprehensive income (loss)						54		(9)		45
Other comprehensive income						57		3		60
Balance on September 30, 2018	$	434	$	2,890	$	(1,834)	$	119	$	1,609
Balance on March 31, 2019	$	207	$	3,083	$	(1,870)	$	122	$	1,542

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

~~The~~13. Accumulated ~~activity~~Other inComprehensive ~~share owners’ equity for the nine months ended September 30, 2018 and 2017 is as follows:~~Loss

	Share Owners’ Equity of the Company
					Accumulated
	Other				Other		Non-		Total Share
	Contributed		Retained		Comprehensive		controlling		Owners'
	Capital		Earnings		Loss		Interests		Equity
Balance on January 1, 2018	$	553	$	2,623	$	(1,786)	$	119	$	1,509
Net distribution to parent		(119)								(119)
Net earnings				267				18		285
Other comprehensive loss						(48)		(18)		(66)
Balance on September 30, 2018	$	434	$	2,890	$	(1,834)	$	119	$	1,609

The activity in accumulated other comprehensive loss for the three months ended March 31, 2019 and 2018 is as follows:

	Share Owners’ Equity of the Company
									Total
						~~Accumulated~~			Accumulated
	Other					Other			Non-		Total Share
	Net Effect of		Change in Certain						Other
	Contributed		Retained			Comprehensive			controlling		Owners'
	Exchange Rate		Derivative			Employee			Comprehensive
	Capital		Earnings			Loss			Interests		Equity
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2017	$	635	$	2,442		$	(2,131)		$	109	$	1,055
Balance on January 1, 2019	$	(889)	$	(11)		$	(1,027)		$	(1,927)
Net distribution to parent		(29)										(29)
Change before reclassifications		46		(2)			(2)			42
Net earnings				314						15		329
Amounts reclassified from accumulated other comprehensive income				3	(a)		13	(b)		16
Other comprehensive income (loss)							234			(7)		227
Translation effect				2			(5)			(3)
Balance on September 30, 2017	$	606	$	2,756		$	(1,897)		$	117	$	1,582
Tax effect				2						2
Other comprehensive income attributable to the Company		46		5			6			57
Balance on March 31, 2019	$	(843)	$	(6)		$	(1,021)		$	(1,870)


									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on January 1, 2018	$	(723)	$	(5)		$	(1,057)		$	(1,785)
Change before reclassifications		120					(4)			116
Amounts reclassified from accumulated other comprehensive income (loss)				(4)	(a)		17	(b)		13
Translation effect				(1)			(6)			(7)
Tax effect										—
Other comprehensive income attributable to the Company		120		(5)			7			122
Balance on March 31, 2018	$	(603)	$	(10)		$	(1,050)		$	(1,663)

2220

12. Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the three months ended September 30, 2018 and 2017 is as follows:

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on July 1, 2018	$	(856)	$	(11)		$	(1,021)		$	(1,888)
Change before reclassifications		40		(11)			(1)			28
Amounts reclassified from accumulated other comprehensive income				9	(a)		16	(b)		25
Translation effect				1						1
Tax effect										—
Other comprehensive income (loss) attributable to the Company		40		(1)			15			54
Balance on September 30, 2018	$	(816)	$	(12)		$	(1,006)		$	(1,834)

									Total
									Accumulated
	Net Effect of		Change in Certain						Other
	Exchange Rate		Derivative			Employee			Comprehensive
	Fluctuations		Instruments			Benefit Plans			Loss
Balance on July 1, 2017	$	(578)	$	(7)		$	(1,331)		$	(1,916)
Change before reclassifications		9					(2)			7
Amounts reclassified from accumulated other comprehensive income					(a)		19	(b)		19
Translation effect							(7)			(7)
Tax effect										—
Other comprehensive income attributable to the Company		9		—			10			19
Balance on September 30, 2017	$	(569)	$	(7)		$	(1,321)		$	(1,897)

(a)

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

(b)

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

2314. Other Expense (Income), net

~~The~~Other ~~activity~~expense in(income), ~~accumulated~~net ~~other comprehensive loss~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 isincluded asthe ~~follows~~following:

									Total
	Three months ended March 31,
									Accumulated
	2019		2018
	Net Effect of		Change in Certain						Other
Foreign currency exchange loss	$	3		2
	Exchange Rate		Derivative			Employee			Comprehensive
Intangible amortization expense		10		10
	Fluctuations		Instruments			Benefit Plans			Loss
Royalty income		(3)		(3)
Balance on January 1, 2018	$	(724)	$	(5)		$	(1,057)		$	(1,786)
Other expense (income), net				(12)
Change before reclassifications		(92)		(7)			(8)			(107)
	$	10	$	(3)
Amounts reclassified from accumulated other comprehensive income					(a)		49	(b)		49
Translation effect							10			10
Tax effect										—
Other comprehensive income (loss) attributable to the Company		(92)		(7)			51			(48)
Balance on September 30, 2018	$	(816)	$	(12)		$	(1,006)		$	(1,834)

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

15. Supplemental Cash Flow Information

~~(a)~~ Income ~~Amount~~taxes ispaid ~~included~~(received) in ~~Cost~~cash ofwere ~~goods~~as ~~sold and Other expense, net on the Condensed Consolidated Results of Operations (see Note 5 for additional information).~~follows:

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


	Three months ended March 31,
	2019		2018
U.S.	$	(7)	$	3
Non-U.S.		33		31
Total income taxes paid in cash	$	26	$	34

~~13. Other~~Interest ~~Expense~~paid ~~(Income)~~in cash for the three months ended March 31, ~~net~~2019 and 2018 was $70 million and $69 million, respectively.

~~Other~~The ~~expense~~Company ~~(income)~~uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At March 31, ~~net~~2019, ~~for~~December ~~the~~31, ~~three~~2018 and ~~nine~~March ~~months~~31, ~~ended~~2018, ~~September~~the 30amount of receivables sold by the Company was $303 million, ~~2018~~$600 million and ~~2017~~$216 ~~included~~million, respectively. Any continuing involvement with the ~~following:~~sold receivables is immaterial.

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Restructuring, asset impairment and other charges	$	—	$	—	$	68	$	49
Foreign currency exchange loss		4		3		6		3
Intangible amortization expense		10		11		30		31
Royalty income		(3)		(4)		(9)		(11)
Non-income tax gain		(13)				(13)
Other income (including gains on asset sales), net		(18)		(5)		(33)		(11)
	$	(20)	$	5	$	49	$	61

16. Discontinued Operations

24On 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.

14On July 31, 2017, OIEG sold its right, title and interest in amounts due under the Award to an Ireland-domiciled investment fund. ~~Supplemental~~Under the terms of the sale, OIEG received a payment, in cash, at closing equal to $115 million (the “Cash ~~Flow~~Payment”). OIEG ~~Information~~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.

~~Income~~OIEG’s ~~taxes~~interest ~~paid~~in any amounts received in ~~cash~~the ~~were~~future asfrom ~~follows:~~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.

	Nine months ended September 30,
	2018		2017
U.S.	$	9	$	7
Non-U.S.		87		113
Total income taxes paid in cash		96		120

Interest paid in cash for the nine months ended September 30, 2018 and 2017 was $188 million and $209 million, respectively. Cash interest for the nine months ended September 30, 2017 included $16 million for note repurchase premiums related to debt that was repaid prior to its maturity.

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. At September 30, 2018 and September 30, 2017, the amount of receivables sold by the Company was $289 million and $145 million, respectively. Any continuing involvement with the sold receivables is immaterial.

15. Discontinued Operations

On April 4, 2016, the annulment committee formed by the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) ruled that OI European Group B.V. (“OIEG”), a subsidiary of the Company, is free to pursue the enforcement of a prior arbitration award (the “Award”) against Venezuela. As of September 30, 2018, that Award amounts to more than $500 million, including reimbursement of expenses and accrued interest. Venezuela’s application to annul the Award was heard by an ad hoc committee of the ICSID in September 2017, but no decision has been rendered yet.

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

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

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

As a result of ~~September~~the 30favorable ruling by an ICSID ad hoc committee rejecting Venezuela’s request to annul the OIEG Award, ~~2018~~and thereby concluding those annulment proceedings, the Company ~~deferred~~recognized ~~the~~a $115 million gain ~~contingency~~from ondiscontinued operations in the ~~sale~~fourth quarter of ~~its~~2018. The ~~rights~~Loss infrom ~~amounts~~discontinued ~~due~~operations, ~~under~~which primarily reflects the ~~Award~~ongoing ~~pending~~costs for the adVenezuelan ~~hoc~~expropriation, ~~committee~~was ofless ~~the~~than ~~ICSID~~$1 ~~rendering~~million ~~its~~for ~~decision~~each ~~regarding~~of ~~Venezuela’s~~the ~~application~~three tomonth ~~annul~~periods ~~the~~ended ~~Award~~March 31, 2019 and 2018.

2517. New Accounting Pronouncement

~~The~~Leases ~~loss~~- ~~from~~On ~~discontinued~~January ~~operations~~1, ~~was~~2019, ~~less~~the ~~than~~Company $1adopted ~~million~~ASU ~~and~~No. $12016-02, ~~million~~“Leases”. Under ~~for~~this guidance, lessees are required to recognize on the ~~three~~balance sheet a lease liability and ~~nine~~a ~~months~~right-of-use ~~ended~~asset ~~September~~for ~~30,~~all ~~2018~~leases, ~~respectively,~~with ~~and~~the $2exception ~~million~~of ~~and~~short-term leases. The adoption of ASU No. 2016-02 had a significant impact on the Company’s consolidated balance sheet due to the recognition of approximately $2214 million ~~for~~of ~~the~~lease ~~three~~liabilities ~~and~~with ~~nine~~corresponding ~~months~~right-of-use ~~ended~~assets ~~September~~for ~~30,~~operating ~~2017,~~leases ~~respectively,~~as ~~related~~of toJanuary ~~ongoing~~1, ~~costs~~2019. The adoption of ASU No. 2016-02 had no material impact on the ~~Venezuelan~~Company’s ~~expropriation~~retained earnings, consolidated results of operations or consolidated cash flows.

16The Company elected the package of practical expedients relating to the identification, classification and initial direct costs of leases commencing before the effective date, and the transitional practical expedient for the treatment of existing land easements; however, the Company did not elect the hindsight transitional practical expedient. The Company has also elected the practical expedient to not account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the nonlease components (e.g., common-area maintenance costs). ~~New~~See ~~Accounting~~Note ~~Pronouncement~~8, Leases, for additional information.

Revenue from Contracts with Customers - In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. On January 1, 2018, the Company adopted this accounting standard. See Note 3, Revenue, for additional information.

Leases - In February 2016, the FASB issued ASU No. 2016-02, “Leases” Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee's obligation to make lease payments arising from a lease, and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for the Company on January 1, 2019. ASU No. 2016-02 and is required to be applied using the modified retrospective approach for all leases existing as of the effective date. The Company expects to adopt this guidance using the additional, optional transition method, the package of transitional practical expedients relating to the identification, classification and initial direct costs of leases commencing before the effective date of ASU No. 2016-02, and the transitional practical expedient for the treatment of existing land easements; however, the Company does not expect to elect the hindsight transitional practical expedient. The Company anticipates the new guidance will significantly impact its consolidated financial statements as the Company has a significant number of leases. As of December 31, 2017, the Company had minimum lease commitments under non-cancellable operating leases totaling $258 million. The Company formed an implementation team, commenced identification of its lease population and has begun the implementation of new software to manage its leases in accordance with this new accounting standard.

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

~~Statement~~Income ofTaxes ~~Cash Flows~~ - In ~~August~~January ~~2016~~2018, the FASB issued ASU ~~No. 2016~~2018-1502, “~~Classification~~Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain ~~Cash~~Tax ~~Receipts~~Effects ~~and~~from ~~Cash~~Accumulated ~~Payments~~Other Comprehensive Income,” which ~~was~~gives ~~intended~~entities the option to ~~reduce~~reclassify ~~diversity~~to inretained ~~practice~~earnings onthe ~~how~~tax ~~certain~~effects ~~transactions~~resulting ~~are~~from ~~classified~~the U.S. Tax Cuts and Jobs Act (the “Act”) related to items in Accumulated other comprehensive income (“AOCI”) that the ~~statement~~FASB ofrefers ~~cash~~to ~~flows~~as having been stranded in AOCI. ~~Application~~The new guidance may be applied retrospectively to each period in which the effect of the ~~standard~~Act is ~~required~~recognized in the period of adoption. The Company must adopt this guidance for ~~annual~~fiscal ~~periods~~years beginning after December 15, ~~2017~~2018 and interim periods within those fiscal years. The Company adopted this standard in the first quarter of ~~2018~~2019. The ~~adoption~~Company ofhas ~~this~~not ~~standard~~elected ~~did~~to ~~not~~reclassify ~~have~~income atax ~~material~~effects ~~impact~~of on the ~~Company’s~~Act ~~condensed~~from ~~consolidated~~AOCI ~~financial~~to ~~statements~~retained earnings.

Compensation - Retirement Benefits - In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which requires the service cost component to be presented with other employee compensation costs in operating income within the income statement while the other components will be reported separately outside of operations. Application of the standard is required for annual periods beginning after December 15, 2017. The Company adopted this standard in the first quarter of 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements, except for in the Consolidated Results of Operations for the prior periods in which there were pension settlement charges. These prior period pension settlement charges were reclassed from the Cost of goods sold and Selling and administrative expense lines into the Other income (expense), net line.

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

Income Taxes - In January 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which gives entities the option to reclassify to retained earnings the tax effects resulting from the Act related to items in AOCI that the FASB refers to as having been stranded in AOCI. The new guidance may be applied retrospectively to each period in which the effect of the Act is recognized in the period of adoption. The Company must adopt this guidance for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for periods for which financial statements have not yet been issued or made available for issuance, including the period the Act was enacted. The guidance, when adopted, will require new disclosures regarding a company’s accounting policy for releasing the tax effects in AOCI and permit a company the option to reclassify to retained earnings the tax effects resulting from the Act that are stranded in AOCI. The Company is currently evaluating how to apply the new guidance and has not determined whether it will elect to reclassify stranded amounts, if any. The adoption of ASU 2018-02 is not expected to have a material effect on the Company’s consolidated financial statements.

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 is currently evaluating the impact that the adoption of this guidance will have on its 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.

2722

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

The Company’s measure of profit for its reportable segments is segment operating profit, which consists of consolidated earnings from continuing operations before interest income, interest expense, and provision for income taxes and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain retained corporate costs. The segment data presented below is prepared in accordance with general accounting principles for segment reporting. The lines titled “reportable segment totals” in both net sales and segment operating profit, however, are non-GAAP measures when presented outside of the financial statement footnotes. Management has included reportable segment totals below to facilitate the discussion and analysis of financial condition and results of operations and believes this information allows the board of directors, management, investors and analysts to better understand the Company’s financial performance. The Company’s management uses segment operating profit, in combination with net sales and selected cash flow information, to evaluate performance and to allocate resources. 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.

AsFinancial ~~previously~~information ~~disclosed,~~for tothe ~~better~~three ~~leverage~~months ~~its~~ended ~~scale~~March ~~and presence across a larger geography and market~~31, ~~the~~2019 ~~Company completed the consolidation of the former North America~~ and ~~Latin America segments into one segment, named the Americas, effective January 1,~~ 2018~~. The~~ ~~consolidation~~regarding ~~resulted in~~ the ~~leadership roles of the former North America and Latin America segments being combined into one position, President of the Americas, reporting to the~~ Company’s ~~chief~~reportable ~~operating~~segments ~~decision maker (“CODM”), who~~ is the Company’s Chief Executive Officer. Beginning January 1, 2018, the CODM reviews the operating results at the Americas level to make resource allocation decisions and to assess performance. The consolidation also resulted in the elimination of duplicative costs as ~~certain~~follows ~~functions~~(dollars of the former North America and Latin America segments were combined to simplify the management of the new Americas segment. For example, the Company consolidated its business shared service centers in ~~North America and Latin America into one Americas shared service center.~~millions):

Financial information for the three and nine months ended September 30, 2018 and 2017 regarding the Company’s reportable segments is as follows (dollars in millions):


	Three months ended
	March 31,
	2019		2018
Net Sales:
Americas	$	881	$	908
Europe		596		643
Asia Pacific		151		173
Reportable segment totals		1,628		1,724
Other		10		12
Net Sales	$	1,638	$	1,736

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Net Sales:
Americas	$	939	$	963	$	2,777	$	2,774
Europe		613		624		1,930		1,813
Asia Pacific		165		188		491		516
Reportable segment totals		1,717		1,775		5,198		5,103
Other		17		16		44		54
Net Sales	$	1,734	$	1,791	$	5,242	$	5,157


	Three months ended
	March 31,
	2019		2018
Segment operating profit:
Americas	$	113	$	147
Europe		79		72
Asia Pacific		8		5
Reportable segment totals		200		224
Items excluded from segment operating profit:
Retained corporate costs and other		(24)		(27)
Interest expense, net		(65)		(62)
Earnings from continuing operations before income taxes		111		135
Provision for income taxes		(27)		(32)
Earnings from continuing operations		84		103
Loss from discontinued operations
Net earnings		84		103
Net (earnings) attributable to noncontrolling interests		(5)		(5)
Net earnings attributable to the Company	$	79	$	98
Net earnings from continuing operations attributable to the Company	$	79	$	98

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Segment operating profit:
Americas	$	158	$	159	$	458	$	459
Europe		87		81		260		220
Asia Pacific		10		20		16		51
Reportable segment totals		255		260		734		730
Items excluded from segment operating profit:
Retained corporate costs and other		(24)		(25)		(81)		(81)
Restructuring, asset impairment and other charges						(73)		(49)
Interest expense, net		(63)		(63)		(199)		(204)
Earnings from continuing operations before income taxes		168		172		381		396
Provision for income taxes		(41)		(37)		(95)		(65)
Earnings from continuing operations		127		135		286		331
Loss from discontinued operations				(2)		(1)		(2)
Net earnings		127		133		285		329
Net (earnings) attributable to noncontrolling interests		(7)		(7)		(18)		(15)
Net earnings attributable to the Company	$	120	$	126	$	267	$	314
Net earnings from continuing operations attributable to the Company	$	120	$	128	$	268	$	316

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

Executive Overview — Quarters ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018

~~Third~~First Quarter ~~2018~~2019 Highlights

· Net sales in the ~~third~~first quarter of ~~2018~~2019 were 3%down ~~lower~~nearly ~~than~~6% from the same quarter in ~~2017~~2018, primarily due to the unfavorable effects of changes in foreign currency exchange rates and lower ~~shipments~~volumes, partially offset by higher prices.

· Segment operating profit for reportable segments was down 2nearly 11% in the ~~third~~first quarter of ~~2018~~2019 compared to the ~~third~~first quarter of ~~2017~~2018. Higher segment profit in Europe and Asia Pacific was more than offset by lower segment profit in ~~Asia~~the ~~Pacific~~Americas.

~~Net~~· ~~sales~~On ~~for~~April 1, 2019, the ~~third~~Company ~~quarter~~entered ofinto ~~2018~~a ~~were~~definitive agreement to acquire a four furnace glass plant located near Mexico City, Mexico for approximately $57188 million, ~~lower~~subject ~~than~~to ~~the~~customary ~~third~~closing ~~quarter~~conditions, ofincluding ~~the~~competition ~~prior~~authority ~~year~~approval, ~~primarily~~and ~~due~~is expected to close in the ~~unfavorable~~second ~~effect~~half of ~~changes~~2019. inThis ~~foreign~~plant ~~currency~~produces ~~exchange~~glass ~~rates~~containers ~~and~~for ~~lower~~Grupo ~~shipments~~Modelo brands, ~~partially~~which ~~offset~~include byCorona, ~~higher~~Modelo ~~prices~~Especial and Pacifico.

~~Earnings~~Net ~~from~~sales ~~continuing~~for ~~operations~~the ~~before~~first ~~income~~quarter ~~taxes~~of 2019 were $498 million lower inthan the ~~third~~first quarter of ~~2018 than~~ the prior year ~~quarter,~~ primarily due to ~~lower sales and~~ the unfavorable effect of changes in foreign currency exchange rates. ~~Segment~~and ~~operating profit for reportable segments for the third quarter of 2018 was $5 million~~ lower ~~than~~sales ~~the~~volumes, ~~third~~partially ~~quarter of the prior year. Higher segment profit in Europe was~~ offset by ~~lower~~higher ~~segment profit in Asia Pacific~~prices.

~~Net~~Earnings ~~interest~~from ~~expense~~continuing operations before income taxes were $24 million lower in the first quarter of 2019 than the prior year quarter, primarily due to lower segment operating profit. Segment operating profit for reportable segments for the ~~third~~first quarter of ~~2018~~2019 was ~~comparable~~$24 tomillion lower than the ~~third~~first quarter of ~~2017~~the prior year. The decrease was largely due to the unfavorable effect of changes in foreign currency, lower sales volumes and higher operating costs, partially offset by higher selling prices. Higher segment profit in Europe and Asia Pacific was more than offset by lower segment profit in the Americas.

~~For~~Net ~~the~~interest ~~third~~expense ~~quarter~~for ~~of 2018,~~ the ~~Company~~first ~~recorded~~quarter ~~net~~of ~~earnings~~2019 ~~from~~increased ~~continuing~~$3 ~~operations~~million ~~attributable~~compared to the ~~Company~~first quarter of ~~$120~~2018, ~~million~~primarily ~~compared~~due to ~~$128~~higher ~~million~~debt inbalances throughout the ~~third~~ quarter ~~of 2017~~.

29For the first quarter of 2019, the Company recorded net earnings from continuing operations attributable to the Company of $79 million compared to $98 million in the first quarter of 2018.

~~Results of Operations — Third Quarter of 2018 compared with Third Quarter of 2017~~24

Results of Operations — First Quarter of 2019 compared with First Quarter of 2018

Net Sales

The Company’s net sales in the ~~third~~first quarter of ~~2018~~2019 were $1,~~734~~638 million compared with $1,~~791~~736 million for the ~~third~~first quarter of ~~2017~~2018, a decrease of $5798 million, or 3nearly 6%. Unfavorable foreign currency exchange rates, ~~primarily~~decreased ~~due~~sales toby a$97 ~~weaker~~million ~~Brazilian~~in ~~Real,~~the ~~Mexican~~first ~~Peso,~~quarter ~~Australian~~of ~~Dollar~~2019 ~~and~~compared ~~New~~to ~~Zealand~~the ~~Dollar,~~prior ~~decreased~~year ~~sales~~quarter byas ~~$60~~the ~~million~~U.S. indollar ~~the~~strengthened ~~third~~against ~~quarter~~all of ~~2018~~the ~~compared~~significant tolocal currencies that impact the ~~prior~~Company. Higher ~~year~~selling prices increased net sales by $42 million in the quarter. Total glass container shipments, in tonnes, were down approximately 2.5% ~~lower~~ in the ~~third~~first quarter of ~~2018~~2019 ~~than~~compared to the prior year quarter. Sales volume and mix decreased net sales by $3841 million. ~~Higher selling prices increased net sales by $40 million in the quarter.~~

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

Reportable segment net sales - 2017			$	1,775
Reportable segment net sales - 2018			$	1,724
Price	$	4042
Sales volume and mix		(3841)
Effects of changing foreign currency rates		(6097)
Total effect on reportable segment net sales				(5896)
Reportable segment net sales - 2018			$	1,717
Reportable segment net sales - 2019			$	1,628

Americas: Net sales in the Americas in the ~~third~~first quarter of ~~2018~~2019 were $~~939~~881 million compared with $~~963~~908 million for the ~~third~~first quarter of ~~2017~~2018, a decrease of $2427 million, or 23%. Higher selling prices increased net sales by $3227 million in the ~~third~~first quarter of ~~2018~~2019. Total glass container shipments in the region were down ~~approximately~~nearly 2% in the ~~third~~first quarter of ~~2018~~2019 compared to the prior year quarter, driven primarily by lower shipments to alcoholic beverage customers. Year over year shipments in Brazil, Mexico and Peru were strong in the first quarter. In the U.S., ~~owing~~sales volumes were primarily impacted by lower shipments to ~~the~~alcoholic beverage customers, largely due to ongoing trends in beer shipments and the transfer of ~~beer~~ production to the Company’s joint venture with Constellation Brands. ~~Partially~~ ~~offsetting this were higher shipments in nearly every other country in the region.~~ Overall, lower shipments ~~and changes~~ in ~~mix in~~ the region decreased net sales by $1521 million in the ~~third~~first quarter of ~~2018~~2019. The unfavorable effects of foreign currency exchange rate changes decreased net sales $4133 million in the ~~third~~first quarter of ~~2018~~2019 compared to ~~2017 as the Brazilian Real and Mexican Peso weakened in relation to the U~~2018.S. ~~dollar.~~

Europe: Net sales in Europe in the ~~third~~first quarter of ~~2018~~2019 were $~~613~~596 million compared with $~~624~~643 million for the ~~third~~first quarter of ~~2017~~2018, a decrease of $1147 million, or 27%. Unfavorable foreign currency exchange rates impacted the region by approximately $551 million in the ~~third~~first quarter of ~~2018~~2019 as the Euro weakened in relation to the U.S. dollar. ~~Lower~~Glass ~~shipments to alcoholic beverage customers, which included the impact from a weak grape harvest in the prior year, and lower shipments to food customers drove total glass~~ container shipments in the ~~third~~first quarter of ~~2018~~2019 were down by approximately 2.5% compared to the ~~prior~~first ~~year~~ quarter~~. This~~ ~~resulted~~of 2018, primarily driven by capacity constraints, resulting in $1311 million of lower net sales. Selling prices in Europe increased net sales by $715 million in the ~~third~~first quarter of ~~2018~~2019 compared to the same period in the prior year.

Asia Pacific: Net sales in Asia Pacific in the ~~third~~first quarter of ~~2018~~2019 were $~~165~~151 million compared with $~~188~~173 million for the ~~third~~first quarter of ~~2017~~2018, a decrease of $2322 million, or 1213%. ~~Lower~~Glass container shipments, ~~primarily to alcoholic beverage customers~~ in ~~Australia,~~the ~~reduced~~first ~~glass~~quarter ~~container~~of ~~shipments~~2019 inwere ~~the~~down ~~region by~~ nearly 46%, inprimarily ~~the~~driven ~~third~~by ~~quarter~~lower ofshipments ~~2018 compared~~ to ~~the~~alcoholic ~~prior~~beverage ~~year~~customers ~~period, resulting~~ in aAustralia ~~$10~~as ~~million~~they ~~decline~~rebalanced totheir ~~net~~supply ~~sales~~chains. ~~Unfavorable~~ ~~foreign~~This ~~currency~~resulted ~~exchange~~in ~~rates~~$9 ~~impacted~~million ~~the~~of ~~region~~lower bynet ~~approximately~~sales ~~$14 million~~ in the ~~third~~first quarter of ~~2018~~2019 ascompared to the ~~Australian~~prior ~~Dollar~~year ~~and~~quarter. ~~New~~The ~~Zealand~~unfavorable ~~Dollar~~effects ~~weakened~~of inforeign ~~relation~~currency toexchange ~~the~~rate ~~U.S.~~changes ~~dollar. Slightly~~in ~~higher~~the ~~selling~~current ~~prices~~year ~~increased~~quarter decreased net sales by $113 million in the ~~current~~first quarter of 2019.

Earnings from Continuing Operations before Income Taxes and Segment Operating Profit

Earnings from continuing operations before income taxes were $~~168~~111 million in the ~~third~~first quarter of ~~2018~~2019 compared to $~~172~~135 million in the ~~third~~first quarter of ~~2017~~2018, a decrease of $424 million, or 218%. This decrease was ~~primarily~~largely ~~related~~due to ~~lower sales and~~ the unfavorable effect of changes in foreign currency, ~~exchange~~lower ~~rates~~sales volumes and higher operating costs, partially offset by higher selling prices.

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 12 to the Condensed Consolidated Financial Statements.

30Segment operating profit of reportable segments in the first quarter of 2019 was $200 million compared to $224 million for the first quarter of 2018, a decrease of $24 million, or 11%. This decrease was largely due to the unfavorable effect of changes in foreign currency, lower sales volumes and higher operating costs, partially offset by higher selling prices.

Segment operating profit of reportable segments in the third quarter of 2018 was $255 million compared to $260 million for the third quarter of 2017, a decrease of $5 million, or 2%. Prices modestly outpaced operating costs in the third quarter of 2018, but this was more than offset by lower sales and the unfavorable effect of changes in foreign currency exchange rates. 25

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

Reportable segment operating profit - 2017			$	260
Reportable segment operating profit - 2018			$	224
Price	$	4042
Sales volume and mix		(79)
Operating costs		(2945)
Effects of changing foreign currency rates		(912)
Total net effect on reportable segment operating profit				(524)
Reportable segment operating profit - 2018			$	255
Reportable segment operating profit - 2019			$	200

Americas: Segment operating profit in the Americas in the ~~third~~first quarter of ~~2018~~2019 was $~~158~~113 million compared with $~~159~~147 million in the ~~third~~first quarter of ~~2017~~2018, a decrease of $134 million, or 123%. The decrease in sales volume discussed above ~~reduced~~decreased segment operating profit in the current year quarter by $13 million. Higher selling prices increased segment operating profit by $27 million in the current year quarter compared to the prior year quarter. Segment operating profit was ~~also~~ impacted by $3955 million of higher operating costs in the ~~third~~first quarter of ~~2018~~2019 than the same quarter in the prior year, driven by cost inflation and ~~higher transportation~~ costs ~~due~~incurred to ~~freight~~add ~~rate~~production ~~inflation.~~capacity ~~This~~at ~~was~~several ~~partially~~plants. Segment ~~offset~~operating byprofit ~~a $13 million gain recorded~~ in the ~~third~~region ~~quarter~~was ofalso ~~2018~~impacted ~~based~~by on$4 amillion ~~favorable~~of ~~court~~lower ~~ruling~~insurance gains in ~~Brazil, which will allow~~ the ~~region~~first toquarter ~~recover~~of ~~revenue~~2019 ~~tax~~than ~~paid~~ in ~~previous~~the ~~years~~prior year. In ~~addition~~Partially offsetting this, the region’s previous restructuring actions have reduced operating costs by approximately $38 million in the ~~third~~first quarter of ~~2018~~2019, ~~and were~~ in line with management’s expectations. The effects of foreign currency exchange rates decreased segment operating profit by $97 million in the current year quarter, which included a $42 million impact from the ~~impact of~~ highly-inflationary basis of accounting in the region’s ~~operations~~operation in Argentina. ~~Selling prices were $32 million higher in the current year quarter compared to the prior year quarter.~~

Europe: Segment operating profit in Europe in the ~~third~~first quarter of ~~2018~~2019 was $8779 million compared with $8172 million in the ~~third~~first quarter of ~~2017~~2018, an increase of $67 million, or 710%. ~~Selling~~ ~~prices~~The ~~were~~decrease $7in ~~million~~sales ~~higher~~volume discussed above decreased segment operating profit in the current year quarter ~~compared~~by to$3 ~~the~~million. ~~prior~~The ~~year~~effects ~~quarter~~of ~~and~~foreign ~~more~~currency ~~than~~exchange ~~offset~~rates ~~cost~~decreased ~~inflation. Segment~~segment operating profit by $5 million in the ~~third~~current year quarter. ofHigher ~~2018~~selling ~~improved~~prices ~~due~~increased tosegment ~~approximately~~operating profit by $115 million ofin ~~lower~~the ~~operating~~current ~~costs~~quarter compared to the ~~same~~prior ~~period~~year inquarter. ~~the~~Overall, ~~prior~~operating ~~year. Despite~~costs in the ~~nonoccurrence~~first quarter of an2019 ~~energy~~were ~~credit~~comparable ~~from~~to athe ~~local~~same ~~government~~period ~~entity~~ in the ~~current~~prior year ~~quarter,~~but ~~the~~included ~~region~~two ~~was~~offsetting items. ~~able~~The toimpact ~~largely~~of ~~offset~~cost ~~this~~inflation ~~with~~and aother ~~gain~~costs ~~related~~increased tothe anregion’s ~~asset~~operating ~~sale. Also,~~costs ~~the~~by ~~prior~~approximately ~~year~~$11 ~~permanent~~million ~~footprint adjustment~~ in the ~~region~~first ~~contributed~~quarter toof ~~lower~~2019 ~~operating~~compared ~~costs~~to ~~and~~the ~~were~~same period in ~~line~~the ~~with~~prior ~~management’s~~year. This ~~expectations~~was ~~when~~offset ~~the~~by ~~restructuring~~an ~~activities~~energy ~~were~~credit ~~initiated.~~from ~~The~~a ~~decrease~~local ingovernment ~~sales~~entity ~~volume~~of ~~discussed~~approximately ~~above~~$11 ~~reduced~~million ~~segment~~that ~~operating~~had ~~profit~~been byrecorded $3in ~~million.~~the ~~The~~second ~~effects~~quarter of ~~foreign~~the ~~currency~~prior ~~exchange~~year. In ~~rates~~the ~~increased~~future, ~~segment~~the ~~operating~~region ~~profit~~expects byto $1receive ~~million~~this inenergy ~~the~~credit ~~current~~ratably throughout the year ~~quarter~~rather than at one-time.

Asia Pacific: Segment operating profit in Asia Pacific in the ~~third~~first quarter of ~~2018~~2019 was $108 million compared with $205 million in the ~~third~~first quarter of ~~2017~~2018, aan ~~decrease~~increase of $103 million, or 5060%. AsThe ~~planned,~~decrease ~~asset improvement projects~~ in ~~the~~sales ~~region~~volume ~~drove~~discussed ~~operating~~above ~~costs~~reduced ~~higher and decreased~~ segment operating profit by $73 million. inThe ~~the~~region ~~quarter~~experienced ~~compared~~approximately to$10 ~~the~~million ~~prior~~of ~~year~~lower ~~quarter.~~operating ~~These~~costs, ~~projects~~which ~~have~~benefited ~~now~~segment ~~been~~operating ~~completed. The~~income, ~~decrease~~ in ~~sales~~the ~~discussed~~first ~~above~~quarter ~~reduced~~of ~~segment~~2019 ~~operating~~compared ~~profit~~to bythe $3prior ~~million.~~year ~~Higher~~quarter ~~selling~~due ~~prices~~to ~~increased~~fewer ~~segment~~asset ~~operating~~improvement ~~profit~~projects in the ~~third~~current year quarter. In ofaddition, ~~2018~~the byregion $1was ~~million.~~impacted ~~The~~by ~~effects~~the nonoccurrence of ~~foreign~~a ~~currency~~$4 ~~exchange~~million ~~rates~~gain ~~decreased~~related ~~segment~~to ~~operating~~a ~~profit~~land bysale $1that ~~million~~was recorded in the ~~current~~first ~~year~~ quarter of 2018.

Interest Expense, Net

Net interest expense for the ~~third~~first quarter of ~~2018~~2019 was $6365 million compared with $6362 million for the ~~third~~first quarter of ~~2017.~~2018 and increased due to higher debt balances throughout the quarter.

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the three months ended ~~September~~March 3031, ~~2018~~2019 was 24.43% compared with 2123.57% for the three months ended ~~September~~March 3031, ~~2017~~2018. The effective tax rate for the ~~third~~first quarter of ~~2018~~2019 was higher than the ~~same~~first ~~period~~quarter inof ~~the~~2018 ~~prior year~~due, ~~primarily~~in ~~due~~part, to the geographic mix of earnings ~~in the U~~.~~S. and foreign jurisdictions in 2018 compared to 2017.~~

The Company expects that the full year effective tax rate for 2019 will range between approximately 23% and 25% (excluding the tax on items that management considers not representative of ongoing operations).

Net Earnings from Continuing Operations Attributable to the Company

For the ~~third~~first quarter of ~~2018~~2019, the Company recorded ~~net~~ earnings from continuing operations attributable to the Company of ~~$120 million compared to $128 million in the third quarter of 2017.~~

~~Executive Overview — Nine Months ended September 30, 2018 and 2017~~26

~~2018~~$79 ~~Highlights~~million compared to $98 million in the first quarter of 2018.

· The Company combined the North America and Latin America segments into one segment, named the Americas, to better leverage its scale and presence across a larger geography and market, and to reduce costs.

· Net sales in the first nine months of 2018 were up nearly 2% from the same period in 2017, primarily due to higher prices and the favorable effects of changes in foreign currency exchange rates.

· Segment operating profit for reportable segments was up slightly in the first nine months of 2018 compared to the same period in 2017. Higher segment profit in Europe more than offset lower segment profit in Asia Pacific.

· The Company entered into a new $1.91 billion senior secured credit facility with a final maturity date of June 2023.

Net sales for the first nine months of 2018 were $85 million higher than the same period in the prior year primarily due to the favorable effect of changes in foreign currency exchange rates and higher prices.

Earnings from continuing operations before income taxes were $15 million lower in the first nine months of 2018 than the same period in 2017, primarily due to an increase in charges related to restructuring activities. Segment operating profit for reportable segments for the first nine months of 2018 was $4 million higher than the same period in the prior year. The increase was largely attributable to higher selling prices slightly outpacing higher costs. Higher segment profit in Europe more than offset lower segment profit in Asia Pacific.

Net interest expense for the first nine months of 2018 decreased $5 million compared to the same period in 2017. The decrease was primarily due to lower note repurchase premiums and write offs of deferred finance fees recorded in the first nine months of 2018 than the same period in 2017.

Net earnings from continuing operations attributable to the Company for the first nine months of 2018 was $268 million compared with $316 million in the first nine months of 2017.

Earnings in 2018 and 2017 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	2018		2017
Restructuring, asset impairment and other charges	$	(73)	$	(49)
Note repurchase premiums and write-off of finance fees		(11)		(17)
Tax benefit recorded for certain tax adjustments				20
Net tax benefit for income tax on items above		9		12
Net impact of noncontrolling interests on items above				4
Total	$	(75)	$	(30)

Results of Operations — First nine months of 2018 compared with first nine months of 2017

Net Sales

The Company’s net sales in the first nine months of 2018 were $5,242 million compared with $5,157 million for the first nine months of 2017, an increase of $85 million, or 2%. Favorable foreign currency exchange rates, primarily due to a stronger Euro, increased sales by $54 million in the first nine months of 2018 compared to the prior year period. Higher selling prices also increased net sales by $98 million in 2018. Total glass container shipments, in tonnes, were approximately 1% lower in the first nine months of 2018 compared to the prior year period. Sales volume and mix decreased net sales by $57 million.

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

Americas: Net sales in the Americas in the first nine months of 2018 were $2,777 million compared with $2,774 million for the same period in 2017, an increase of $3 million, or less than 1%. Higher selling prices increased net sales by $76 million in 2018. Total glass container shipments in the region were comparable in the first nine months of 2018 to the same prior in the prior year with higher shipments to food customers offset by lower shipments to alcoholic beverage customers. Year over year shipments in Brazil were also strong in the first nine months of 2018. In the U.S., solid year over year growth in shipments to food customers in the first nine months of 2018 were more than offset by a decline in shipments to alcoholic beverage customers, owing to the ongoing trends in beer shipments and the transfer of beer production to the Company’s joint venture with Constellation Brands. Overall, the change in sales mix in the region decreased net sales by $21 million in the first nine months of 2018. The effects of foreign currency exchange rate changes decreased net sales $52 million in the first nine months of 2018 compared to 2017, primarily due to the weakening of the Brazilian Real and the Mexican Peso in relation to the U.S. dollar.

Europe: Net sales in Europe in the first nine months of 2018 were $1,930 million compared with $1,813 million for the same period in 2017, an increase of $117 million, or 6%. The effects of foreign currency exchange rates increased net sales in the region by approximately $117 million in the first nine months of 2018 as the Euro strengthened in relation to the U.S. dollar. Glass container shipments in the first nine months of 2018 were down approximately 1% compared to the first nine months of 2017, resulting in $17 million of lower net sales. Selling prices in Europe increased net sales by $17 million in the first nine months of 2018 compared to the same period in the prior year.

Asia Pacific: Net sales in Asia Pacific in the first nine months of 2018 were $491 million compared with $516 million for the same period of 2017, a decrease of $25 million, or 5%. Glass container shipments in the first nine months of 2018 were down 3% compared to the first nine months of 2017, primarily driven by lower shipments to alcoholic beverage customers in Australia, resulting in $19 million of lower net sales. Slightly higher selling prices increased net sales by $5 million in 2018. The unfavorable effects of foreign currency exchange rate changes decreased net sales by $11 million as the Australian Dollar and New Zealand Dollar weakened in relation to the U.S. dollar.

Earnings from Continuing Operations before Income Taxes and Segment Operating Profit

Earnings from continuing operations before income taxes were $381 million in the first nine months of 2018 compared to $396 million in the first nine months of 2017, a decrease of $15 million, or 4%. This decrease was primarily due to an increase in charges related to restructuring activities.

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

Segment operating profit of reportable segments in the first nine months of 2018 was $734 million compared to $730 million for the first nine months of 2017, an increase of $4 million, or less than 1%. The increase was largely attributable to higher selling prices slightly outpacing higher costs. Higher segment profit in Europe more than offset lower segment profit in Asia Pacific.

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

Reportable segment operating profit - 2017			$	730
Price	$	98
Sales volume and mix		(6)
Operating costs		(89)
Effects of changing foreign currency rates		1
Total net effect on reportable segment operating profit				4
Reportable segment operating profit - 2018			$	734

Americas: Segment operating profit in the Americas in the first nine months of 2018 was $458 million compared with $459 million in the first nine months of 2017, a decrease of $1 million, or less than 1%. The change in sales volume and mix discussed above improved segment operating profit in the current year quarter by $4 million. Selling prices were $76 million higher in the current year period compared to the prior year. Segment operating profit was impacted by $91 million of higher operating costs in the first nine months of 2018 than the same period in the prior year, driven by cost inflation, a temporary transportation strike in Brazil, a raw material batch disruption issue at a plant in Mexico, and higher transportation costs due to freight rate inflation. The region also benefitted from $10 million of insurance proceeds in the first nine months of 2018. In addition, the region recorded a $13 million gain in the first nine months of 2018 based on a favorable court ruling in Brazil, which will allow the region to recover revenue tax paid in previous years. The region’s previous restructuring actions have reduced operating costs by approximately $3 million in the first nine months of 2018 and were in line with management’s expectations. The effects of foreign currency exchange rates decreased segment operating profit by $16 million in the first nine months, which included $4 million from the impact of highly-inflationary basis of accounting in the region’s operations in Argentina.

Europe: Segment operating profit in Europe in the first nine months of 2018 was $260 million compared with $220 million in the first nine months of 2017, an increase of $40 million, or 18%. The effects of foreign currency exchange rates increased segment operating profit by $17 million in the current year period. Selling prices were $17 million higher in 2018 compared to the prior year period. Segment operating profit in the first nine months of 2018 improved due to approximately $10 million of lower operating costs compared to the same period in the prior year due. Lower production volumes in the region were partially offset by a gain related to an asset sale. In addition, the prior year permanent footprint adjustment in the region contributed to lower operating costs in the first nine months of 2018 and were in line with management’s expectations when the restructuring activities were initiated. The change in sales volume and mix described above reduced segment operating profit by $4 million.

Asia Pacific: Segment operating profit in Asia Pacific in the first nine months of 2018 was $16 million compared with $51 million in the first nine months of 2017, a decrease of $35 million, or 69%. As planned, asset improvement projects in the region drove operating costs higher and decreased segment operating profit by $34 million in the first nine months of 2018 compared to the same period in the prior year. These projects have now been completed in the region. The decrease in sales volume discussed above reduced segment operating profit by $6 million. Higher selling prices increased segment operating profit in the first nine months of 2018 by $5 million.

Interest Expense, Net

Net interest expense for the first nine months of 2018 was $199 million compared with $204 million for the first nine months of 2017. Net interest expense included $11 and $17 million in the first nine months of 2018 and 2017, respectively, for note repurchase premiums and the write off of deferred finance fees that were related to debt that was repaid prior to its maturity. Exclusive of these items, net interest expense was comparable in the first nine months of 2018 to the same period in the prior year.

Provision for Income Taxes

The Company’s effective tax rate from continuing operations for the nine months ended September 30, 2018 was 24.9% compared with 16.4% for the nine months ended September 30, 2017. The effective tax rate for the first nine months of 2018 was higher than the same period in 2017 due to the nonoccurrence of a resolution of a tax matter in 2017 that resulted in approximately $26 million of tax accruals reversed.

The Company expects that the full year effective tax rate for 2018 will range between approximately 22% and 23% (excluding the tax on items that management considers not representative of ongoing operations).

Net Earnings from Continuing Operations Attributable to the Company

For the first nine months of 2018, the Company recorded net earnings from continuing operations attributable to the Company of $268 million compared to $316 million in the first nine months of 2017. Earnings in 2018 and 2017 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	2018		2017
Restructuring, asset impairment and other charges	$	(73)	$	(49)
Note repurchase premiums and write-off of finance fees		(11)		(17)
Tax benefit recorded for certain tax adjustments				20
Net tax benefit for income tax on items above		9		12
Net impact of noncontrolling interests on items above				4
Total	$	(75)	$	(30)

Items excluded from Reportable Segment Totals

Retained Corporate Costs and Other

Retained corporate costs and other for the ~~third~~first quarter of ~~2018~~2019 were $24 million ~~and~~compared ~~comparable~~ with ~~the~~ $2527 million recorded in the ~~third~~first quarter of ~~2017~~2018. ~~For~~ ~~the~~These ~~first nine months of 2018, retained corporate~~ costs ~~and other~~ were ~~$81~~lower ~~million~~in ~~compared~~2019 ~~with~~primarily ~~$81~~due ~~million~~to ~~for~~management ~~the~~incentive ~~same~~compensation ~~period in 2017~~expense.

Restructuring, Asset Impairments and Other Charges

For the nine months ended September 30, 2018, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges of $73 million. These charges consisted of employee costs, write-down of assets, and other exit costs primarily related to a plant closure in the Americas region. 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. These restructuring charges primarily relate to capacity curtailments and the Company plans to reallocate the products produced at these facilities to other facilities. These charges were recorded to Cost of goods sold ($5 million) and Other expense, net ($68 million) on the Condensed Consolidated Results of Operations. The Company expects that the majority of the remaining cash expenditures related to the above charges will be paid out by the end of 2019. No restructuring initiatives were implemented in the three months ended September 30, 2018.

For the nine months ended September 30, 2017, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges of $49 million. These charges primarily consisted of employee costs, write-down of assets, and other exit costs in the following regions: Americas ($36 million) and Europe ($13 million). The restructuring charges recorded were discrete actions and are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. The restructuring charges recorded in the Americas and European regions primarily relate to capacity curtailments. The Company plans to reallocate the products produced at these facilities to others in their respective regions. 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 above charges will be paid out by the end of 2018. No restructuring initiatives were implemented in the three months ended September 30, 2017.

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

Discontinued Operations

On ~~April~~December 46, ~~2016~~2018, ~~the~~an ~~annulment~~ad hoc committee ~~formed~~for by the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) ~~ruled~~rejected ~~that~~the OIrequest ~~European~~by ~~Group~~the ~~B.V.~~Bolivarian Republic of Venezuela (“~~OIEG~~Venezuela”), ato ~~subsidiary~~annul of the ~~Company,~~award isissued ~~free~~by toan ~~pursue~~ICSID ~~the~~tribunal ~~enforcement~~in favor of aOI ~~prior~~European ~~arbitration~~Group ~~award~~B.V. (~~the~~ “~~Award~~OIEG”) ~~against~~related ~~Venezuela. As of September 30, 2018, that Award amounts~~ to ~~more~~the ~~than~~2010 ~~$500~~expropriation ~~million, including reimbursement~~ of ~~expenses~~OIEG’s ~~and~~majority ~~accrued~~ interest. ~~Venezuela’s~~in ~~application~~two toplants ~~annul~~in Venezuela (the “Award”). The ~~was~~annulment ~~heard~~proceeding bywith anrespect adto ~~hoc committee of~~ the ~~ICSID~~Award inis ~~September~~now ~~2017, but no decision has been rendered yet~~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. ~~In the event that the Award is partially or completely annulled by the ICSID ad hoc annulment committee,~~ OIEG ~~may be required to repay to the purchaser up to the entire amount of the Cash Payment based on a formula tied to the amount of the Award (if any) that is annulled. In addition, OIEG~~’s right to receive any Deferred Amounts is subject to the limitations described below.

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

The loss from discontinued operations was less than $1 million and $1 million for the three and nine months ended September 30, 2018, respectively, and $2 million and $2 million for the three and nine months ended September 30, 2017, respectively, related to ongoing costs of the Venezuelan expropriation.

Capital Resources and Liquidity

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.~~

limits, engage in certain affiliate transactions, participate in sale and leaseback financing arrangements, alter its fundamental business, and amend certain subordinated debt obligations.

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 a number of other outstanding debt securities and could lead to an acceleration of obligations related to these debt securities. As of ~~September~~March 3031, ~~2018~~2019, 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.

In ~~March~~order ~~2017,~~to ~~the~~maintain ~~Company~~a ~~expanded~~capital ~~its~~structure ~~borrowings~~containing ~~under~~appropriate ~~the~~amounts ~~Senior Notes due 2024 by issuing €225 million~~ of ~~additional~~fixed ~~notes that bear interest at 3.125%~~ and ~~are~~floating-rate ~~due November 15~~debt, ~~2024. The~~the ~~notes~~Company ~~were~~has ~~issued~~entered ~~via~~into a ~~private~~series ~~placement~~of ~~and~~interest ~~are~~rate ~~guaranteed~~swap byagreements. ~~certain~~These ofinterest ~~the~~rate ~~Company‘s~~swap ~~domestic~~agreements ~~subsidiaries. The~~were ~~net~~accounted ~~proceeds,~~for ~~after~~as ~~deducting~~either ~~debt~~fair ~~issuance~~value ~~costs,~~hedges ~~totaled~~or ~~approximately~~cash ~~$237~~flow ~~million~~hedges ~~and~~(see ~~were~~Note ~~used~~5 to ~~repay a portion of~~ the ~~Company’s~~Condensed ~~revolving~~Consolidated ~~credit~~Financial ~~facility~~Statements).

During March 2017, the Company purchased in a tender offer approximately $228 million aggregate principal amount of its 7.80% Senior Debentures due in 2018. In November 2017, the remaining $22 million of the 7.80% Senior Debentures were repurchased by the Company, the indenture relating thereto was discharged, and all collateral and guarantees thereunder were released. In 2017, the Company recorded $18 million of additional interest charges for note repurchase premiums and the write-off of unamortized finance fees related to these actions.

~~In the third quarter of 2018, the Company terminated a €185 million European accounts receivable securitization program.~~ 28

Cash Flows

Operating activities: Cash ~~provided~~utilized by continuing operating activities was $~~139~~524 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019, compared to $88363 million utilized for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018. The increase in cash utilized by operating activities in the first three months ended March 31, 2019 was primarily due to lower net earnings, higher cash paid for restructuring payments and higher working capital levels than in the same period in 2018. Working capital was a use of cash of $~~545~~697 million in the ~~2018~~first ~~period~~three months of 2019 compared to a use of cash of $~~601~~622 million in the same period in ~~2017~~2018. The primary reasons for the higher use of working capital ~~for the first nine months of 2018~~ were higher accounts receivable balances and lower accounts payable balances than at year end ~~2017~~2018. As of ~~September~~March 3031, 2019 and 2018, the Company reduced its level of accounts receivable factoring compared to ~~year~~the ~~end~~most ~~2017~~recent respective year periods and this led to a use of working capital ~~through~~in both the ~~third~~first quarter of 2019 and 2018. The reduction in accounts receivable factoring compared to the most recent year end period was approximately $60 million more in the first quarter of 2019 than in 2018 and this contributed to a higher use of working capital in the 2019 period. Also, the Company has ~~experienced~~continued to experience higher year over year sales levels in several countries, such as Brazil, Peru and Mexico, and lower sales levels in the U.S.~~, year over year.~~ This change in the Company’s sales mix has impacted its receivables as longer payment terms are more common outside the U.S. Together, the impact of less factoring and a higher mix of sales outside the U.S. have negatively impacted the Company’s operating cash flows in the first ~~nine~~three months of ~~2018~~2019. In addition, the Company’s accounts payable balances have declined as a significant amount of capital projects that were in process at year-end 2017 and in the early part of 2018 have been completed and paid. Net earnings were lower for the first nine months of 2018 compared to the same period in the prior year, but were mostly offset by higher non-cash charges, such as restructuring, depreciation and pension expense. Cash payments for restructuring activities were $9 million lower in the first nine months of 2018 than in the first nine months of 2017.

~~Investing activities:~~ Cash ~~utilized~~payments infor ~~investing~~restructuring activities ~~was~~were $~~421~~15 million ~~for~~in the ~~nine~~first three months ~~ended~~of ~~September~~2019 ~~30, 2018,~~ compared to $~~315~~6 million ~~for~~in the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30~~2018, ~~2017.~~driven ~~Capital~~higher ~~spending~~in ~~for~~2019 ~~property~~by several restructuring projects in the Americas region. In addition, ~~plant~~the ~~and~~Company ~~equipment~~utilized ~~was~~approximately $~~383~~19 million ~~during~~of cash for other operating items in the first ~~nine~~quarter ~~months~~ of ~~2018~~2019 compared to $~~292~~31 million inof ~~the~~cash ~~same~~provided ~~period~~by inother ~~2017.~~items ~~Capital spending increased~~ in the first ~~nine~~quarter ~~months~~ of 2018. This change was due, in part, to the ~~payment~~nonoccurrence of a ~~higher~~dividend ~~level~~paid ofto ~~vendor~~the ~~invoices~~Company ~~accrued~~by ata joint venture investment in the ~~end~~first quarter of ~~2017,~~2018 assince ~~well~~the asjoint aventure ~~higher~~is ~~level~~utilizing ofits ~~project~~cash ~~activity~~for ina ~~the~~major ~~Asia~~project ~~Pacific~~that ~~region~~is ~~throughout~~currently ~~2018~~underway.

~~Acquisition~~Investing activities: Cash ~~were~~utilized ~~$48~~in ~~million~~investing ~~and~~activities was $37135 million infor the ~~first~~three ~~nine~~ months ofended ~~2018~~March ~~and 2017~~31, ~~respectively~~2019, ~~and~~compared ~~were primarily related~~ to ~~contributions~~$160 ~~made~~million toutilized for the ~~Company’s~~three ~~investment~~months inended aMarch ~~joint~~31, ~~venture with Constellation Brands (“Constellation”) in Mexico~~2018. InCapital ~~October~~spending ~~2017~~for property, ~~the~~plant ~~Company~~and ~~signed~~equipment anwas ~~agreement~~$121 tomillion ~~expand~~during ~~this~~the ~~joint~~first ~~venture.~~three Tomonths ~~meet~~of ~~rising~~2019 ~~demand~~compared ~~from~~to ~~Constellation’s~~$142 ~~adjacent~~million ~~brewery,~~in the ~~newly-expanded~~same ~~relationship~~period ~~provides~~in ~~for~~2018. ~~the~~Capital ~~addition~~spending ofdecreased ain ~~fifth furnace, which is expected to be operational by~~ the ~~end~~first quarter of 2019. ~~This~~due ~~capacity~~to ~~expansion,~~lower ~~which~~project isactivity ~~estimated~~in tothe ~~cost~~Asia ~~approximately~~Pacific ~~$140 million~~region, ~~will~~as bewell ~~financed~~as bydue ~~equal~~to ~~contributions~~lower ~~from~~payments ~~both~~of ~~partners~~vendor ~~throughout~~invoices ~~2018~~accrued ~~and~~at ~~2019.~~the ~~The~~end ~~term~~ of ~~the~~2018 ~~joint~~than ~~venture~~were ~~agreement~~accrued ~~was~~at ~~also~~the ~~extended~~end ~~for~~of ~~ten additional years, to 2034~~2017.

~~Also,~~Contributions and advances to joint ventures were $15 million and $26 million in the ~~third~~first ~~quarter~~three months of ~~2017~~2019 and 2018, arespectively. On ~~subsidiary~~April of1, 2019, the Company ~~received~~entered ~~$115~~into ~~million~~a ~~from~~definitive ~~selling~~agreement ~~its~~to ~~right,~~acquire ~~title~~Nueva ~~and~~Fábrica ~~interest~~Nacional inde ~~amounts~~Vidrio, ~~due~~S. ~~under~~de R.L. de C.V., a ~~prior~~glass ~~arbitration~~packaging ~~award~~facility ~~against~~located ~~Venezuela~~near ~~related~~Mexico toCity, Mexico, from Grupo Modelo, a ~~discontinued~~wholly ~~operation~~owned affiliate of Anheuser-Busch InBev SA/NV. ~~See~~Currently, ~~Note~~this 15plant has four furnaces to ~~the~~produce ~~Consolidated~~and ~~Financial~~supply ~~Statements~~glass containers annually for ~~additional~~Grupo ~~information~~Modelo brands, which include Corona, Modelo Especial and Pacifico. The acquisition is a cash transaction valued at approximately $188 million, subject to customary closing conditions, including competition authority approval, and is expected to close in the second half of 2019.

38Financing activities: Cash provided by financing activities was $469 million for the three months ended March 31, 2019, compared to $436 million for the three months ended March 31, 2018. The increase in cash provided by financing activities was primarily due to higher net borrowings in the first quarter of 2019. Partially offsetting this were higher distributions to parent, which were $120 million in 2019, compared to $52 million in 2018.

~~Financing~~The ~~activities: Cash~~Company ~~provided~~anticipates bythat ~~financing~~cash ~~activities~~flows ~~was~~from ~~$245~~its ~~million~~operations ~~for~~and ~~the~~from ~~nine~~utilization ~~months ended September 30, 2018, compared to cash utilized~~ of ~~$63~~credit ~~million~~available ~~for~~under the ~~nine~~Agreement ~~months~~will ~~ended~~be ~~September~~sufficient ~~30, 2017. The increase in cash provided by financing activities was primarily due~~ to ~~higher~~fund ~~net~~its ~~borrowings~~operating ~~in the first nine months of 2018~~ and aseasonal ~~decrease~~working incapital ~~finance~~needs, ~~fees paid for~~ debt ~~issuances~~service inand ~~2018,~~other ~~partially~~obligations ~~offset~~on bya ~~higher~~short-term ~~distributions~~(twelve-months) toand ~~parent.~~long-term basis.

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

Critical Accounting Estimates

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

form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those assumed, may differ from estimates.

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

There have been no other material changes in critical accounting estimates at ~~September~~March 3031, ~~2018~~2019 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

Forward-Looking Statements

This document contains "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933. Forward-looking statements reflect the Company's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward-looking statements. It is possible the Company's future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) foreign currency fluctuations relative to the U.S. dollar, (2) changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to refinance debt at favorable terms, (3) the general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to Brexit, economic and social conditions, disruptions in the supply chain, competitive pricing pressures, inflation or deflation, and changes in tax rates and laws, (4) the Company’s ability to generate sufficient future cash flows to ensure the Company’s goodwill is not impaired, (5) consumer preferences for alternative forms of packaging, (6) cost and availability of raw materials, labor, energy and transportation, (7) the Company’s ability to manage its cost structure, including its success in implementing restructuring plans and achieving cost savings, (8) consolidation among competitors and customers, (9) the Company’s ability to acquire businesses and expand plants, integrate operations of acquired businesses and achieve expected synergies, (10) unanticipated expenditures with respect to data privacy, environmental, safety and health laws, (11) unanticipated operational disruptions, including higher capital spending, (12) the Company’s ability to further develop its sales, marketing and product development capabilities, (13) the failure of the Company’s joint venture partners to meet their obligations or commit additional capital to the joint venture, (14) the ability of the Company’s ~~ability~~and the third parties on which it relies for information technology system support to prevent and detect ~~cybersecurity~~security ~~threats~~breaches ~~against~~related ~~its~~to ~~information~~cybersecurity ~~technology~~and ~~systems~~data privacy, (15) changes in U.S. trade policies, (16) the Company’s ability to achieve its strategic plan, and the other risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and any subsequently filed Quarterly Report on Form 10-Q. It is not possible to foresee or identify all such factors. Any forward-looking statements in this document are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. Forward-looking statements are not a guarantee of future performance and actual results or developments may differ materially from expectations. While the Company continually reviews trends and uncertainties affecting the Company's results of operations and financial condition, the Company does not assume any obligation to update or supplement any particular forward-looking statements contained in this document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in market risk at ~~September~~March 3031, ~~2018~~2019 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

Item 4. Controls and Procedures.

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

As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of September 30~~, 2018.~~

Ascertain ~~required~~unconsolidated byentities. As ~~Rule 13a-15(d) of~~ the ~~Exchange Act, the~~ Company ~~carried~~does ~~out~~not ancontrol ~~evaluation,~~or ~~under~~manage ~~the~~these ~~supervision and with the participation of management~~entities, ~~including~~ its ~~Chief~~disclosure ~~Executive~~controls ~~Officer~~ and ~~Chief~~procedures ~~Financial~~with ~~Officer,~~respect ~~of any change in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely~~ to ~~materially~~such ~~affect,~~entities ~~the~~are ~~Company’s~~necessarily ~~internal~~substantially ~~controls~~more ~~over~~limited ~~financial~~than ~~reporting. There~~those ~~have~~maintained ~~been~~with norespect ~~changes in the Company’s internal controls over financial reporting during the fiscal quarter ended September 30, 2018 that have materially affected, or are reasonably likely~~ to ~~material~~its ~~affect,~~consolidated ~~the Company’s internal controls over financial reporting~~subsidiaries.

41As 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 March 31, 2019.

As required by Rule 13a-15(d) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of any change in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting. There have been no changes in the Company’s internal controls over financial reporting during the fiscal quarter ended March 31, 2019 that have materially affected, or are reasonably likely to material affect, the Company’s internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

For further information on legal proceedings, see Note 1011 to the Condensed Consolidated Financial Statements, “Contingencies,” that is included in Part I of this Quarterly Report and incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes in risk factors at ~~September~~March 3031, ~~2018~~2019 from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

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Item 6. Exhibits.

Exhibit 12		Computation of Ratio of Earnings to Fixed Charges.
Exhibit 31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
Exhibit 32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
Exhibit 101		Financial statements from the Quarterly Report on Form 10-Q of Owens-Illinois Group, Inc. for the quarter ended ~~September~~March 3031, ~~2018~~2019, formatted in XBRL: (i) the Condensed Consolidated Results of Operations, (ii) the Condensed Consolidated Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

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

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SIGNATURES

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

		OWENS-ILLINOIS GROUP, INC.
Date	~~October~~May 312, ~~2018~~2019	By	/s/ ~~Jan~~John A. ~~Bertsch~~Haudrich
			Jan A. Bertsch
			John A. Haudrich
			President and Chief Financial Officer
			Director, President and Chief Financial Officer

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Reportable segment net sales - 2017

Sales volume and mix

Effects of changing foreign currency rates

Total effect on reportable segment net sales

Reportable segment net sales - 2018

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