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Owens-Illinois 10-Q 2015
oi_Current Folio_10Q

 

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, 2015

 

or

 

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

 

For the transition period from        to       

 

Commission file number 1-9576

 

Picture 1

 

OWENS-ILLINOIS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

22-2781933

(State or other jurisdiction of

 

(IRS Employer

incorporation or organization)

 

Identification No.)

 

 

 

 

 

One Michael Owens Way, Perrysburg, Ohio

 

43551

(Address of principal executive offices)

 

(Zip Code)

 

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

 

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

 

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

 

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

 

 

 

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

(Do not check if a

 

 

 

smaller reporting company)

 

 

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

 

The number of shares of common stock, par value $.01, of Owens-Illinois, Inc. outstanding as of September 30, 2015 was 160,837,783.

 

 

 


 

Part I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

The Condensed Consolidated Financial Statements of Owens-Illinois, Inc. (the “Company”) presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated.  All adjustments are of a normal recurring nature. Because the following unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

1


 

OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

(Dollars in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

    

September 30,

    

September 30,

 

 

    

2015

    

2014

    

2015

    

2014

 

Net sales

 

$

1,566

 

$

1,745

 

$

4,530

 

$

5,181

 

Cost of goods sold

 

 

(1,290)

 

 

(1,408)

 

 

(3,712)

 

 

(4,165)

 

Gross profit

 

 

276

 

 

337

 

 

818

 

 

1,016

 

Selling and administrative expense

 

 

(109)

 

 

(118)

 

 

(351)

 

 

(382)

 

Research, development and engineering expense

 

 

(15)

 

 

(15)

 

 

(46)

 

 

(47)

 

Interest expense, net

 

 

(67)

 

 

(53)

 

 

(188)

 

 

(161)

 

Equity earnings

 

 

17

 

 

13

 

 

46

 

 

48

 

Other expense, net

 

 

(44)

 

 

(73)

 

 

(59)

 

 

(70)

 

Earnings from continuing operations before income taxes

 

 

58

 

 

91

 

 

220

 

 

404

 

Provision for income taxes

 

 

(33)

 

 

(23)

 

 

(73)

 

 

(89)

 

Earnings from continuing operations

 

 

25

 

 

68

 

 

147

 

 

315

 

Loss from discontinued operations

 

 

(1)

 

 

(1)

 

 

(3)

 

 

(22)

 

Net earnings

 

 

24

 

 

67

 

 

144

 

 

293

 

Net earnings attributable to noncontrolling interests

 

 

(7)

 

 

(7)

 

 

(16)

 

 

(18)

 

Net earnings attributable to the Company

 

$

17

 

$

60

 

$

128

 

$

275

 

Amounts attributable to the Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

18

 

$

61

 

$

131

 

$

297

 

Loss from discontinued operations

 

 

(1)

 

 

(1)

 

 

(3)

 

 

(22)

 

Net earnings

 

$

17

 

$

60

 

$

128

 

$

275

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

0.11

 

$

0.37

 

$

0.81

 

$

1.80

 

Loss from discontinued operations

 

 

(0.01)

 

 

 —

 

 

(0.02)

 

 

(0.13)

 

Net earnings

 

$

0.10

 

$

0.37

 

$

0.79

 

$

1.67

 

Weighted average shares outstanding (thousands)

 

 

160,730

 

 

164,798

 

 

161,284

 

 

164,821

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

0.11

 

$

0.37

 

$

0.81

 

$

1.79

 

Loss from discontinued operations

 

 

(0.01)

 

 

 —

 

 

(0.02)

 

 

(0.13)

 

Net earnings

 

$

0.10

 

$

0.37

 

$

0.79

 

$

1.66

 

Weighted average diluted shares outstanding (thousands)

 

 

161,612

 

 

166,138

 

 

162,264

 

 

166,187

 

 

See accompanying notes.

2


 

OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2015

    

2014

    

2015

    

2014

 

Net earnings

 

$

24

 

$

67

 

$

144

 

$

293

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(265)

 

 

(219)

 

 

(499)

 

 

(138)

 

Pension and other postretirement benefit adjustments, net of tax

 

 

25

 

 

50

 

 

70

 

 

87

 

Change in fair value of derivative instruments

 

 

(3)

 

 

1

 

 

(5)

 

 

1

 

Other comprehensive loss

 

 

(243)

 

 

(168)

 

 

(434)

 

 

(50)

 

Total comprehensive income (loss)

 

 

(219)

 

 

(101)

 

 

(290)

 

 

243

 

Comprehensive income attributable to noncontrolling interests

 

 

1

 

 

(4)

 

 

 

 

 

(14)

 

Comprehensive income (loss) attributable to the Company

 

$

(218)

 

$

(105)

 

$

(290)

 

$

229

 

 

See accompanying notes.

3


 

OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

    

2015

    

2014

    

2014

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

270

 

$

512

 

$

264

 

Receivables

 

 

1,108

 

 

744

 

 

1,042

 

Inventories

 

 

1,023

 

 

1,035

 

 

1,112

 

Prepaid expenses

 

 

87

 

 

80

 

 

105

 

Total current assets

 

 

2,488

 

 

2,371

 

 

2,523

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

2,874

 

 

2,445

 

 

2,499

 

Goodwill

 

 

2,797

 

 

1,893

 

 

1,960

 

Other assets

 

 

1,395

 

 

1,134

 

 

1,159

 

Total assets

 

$

9,554

 

$

7,843

 

$

8,141

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Share Owners' Equity

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Short-term loans and long-term debt due within one year

 

$

250

 

$

488

 

$

1,065

 

Current portion of asbestos-related liabilities

 

 

143

 

 

143

 

 

150

 

Accounts payable

 

 

1,004

 

 

1,137

 

 

1,027

 

Other liabilities

 

 

527

 

 

560

 

 

544

 

Total current liabilities

 

 

1,924

 

 

2,328

 

 

2,786

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

5,609

 

 

2,957

 

 

2,419

 

Asbestos-related liabilities

 

 

235

 

 

292

 

 

226

 

Other long-term liabilities

 

 

908

 

 

991

 

 

887

 

Share owners' equity

 

 

878

 

 

1,275

 

 

1,823

 

Total liabilities and share owners' equity

 

$

9,554

 

$

7,843

 

$

8,141

 

 

See accompanying notes.

4


 

OWENS-ILLINOIS, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

September 30,

 

 

    

2015

    

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net earnings

 

$

144

 

$

293

 

Loss from discontinued operations

 

 

3

 

 

22

 

Non-cash charges

 

 

 

 

 

 

 

Depreciation and amortization

 

 

296

 

 

342

 

Pension expense

 

 

22

 

 

38

 

Restructuring, asset impairment and related charges

 

 

57

 

 

79

 

Cash Payments

 

 

 

 

 

 

 

Pension contributions

 

 

(13)

 

 

(25)

 

Asbestos-related payments

 

 

(58)

 

 

(72)

 

Cash paid for restructuring activities

 

 

(20)

 

 

(45)

 

Change in components of working capital

 

 

(326)

 

 

(312)

 

Other, net (a)

 

 

1

 

 

(111)

 

Cash provided by continuing operating activities

 

 

106

 

 

209

 

Cash utilized in discontinued operating activities

 

 

(3)

 

 

(22)

 

Total cash provided by operating activities

 

 

103

 

 

187

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(299)

 

 

(290)

 

Acquisitions, net of cash acquired

 

 

(2,342)

 

 

 

 

Other, net

 

 

3

 

 

21

 

Cash utilized in investing activities

 

 

(2,638)

 

 

(269)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Changes in borrowings, net

 

 

2,522

 

 

17

 

Issuance of common stock

 

 

1

 

 

5

 

Treasury shares purchased

 

 

(100)

 

 

(12)

 

Distributions paid to noncontrolling interests

 

 

(13)

 

 

(37)

 

Payment of finance fees

 

 

(88)

 

 

 

 

Cash provided by (utilized in) financing activities

 

 

2,322

 

 

(27)

 

Effect of exchange rate fluctuations on cash

 

 

(29)

 

 

(10)

 

Decrease in cash

 

 

(242)

 

 

(119)

 

Cash at beginning of period

 

 

512

 

 

383

 

Cash at end of period

 

$

270

 

$

264

 

 


(a)

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

 

See accompanying notes.

5


 

OWENS-ILLINOIS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions, except per share amounts

 

1.  Segment Information

 

The Company has four reportable segments based on its geographic locations:  Europe, North America, Latin America and Asia Pacific.  In connection with the Company’s acquisition (the “Vitro Acquisition”) of the food and beverage glass container business of Vitro S.A.B. de C.V. and its subsidiaries as conducted in the United States, Mexico and Bolivia (the “Vitro Business”) on September 1, 2015 (see Note 15), the Company has renamed the former South America segment to the Latin America segment. This change in segment name was made to reflect the addition of the Mexican and Bolivian operations from the Vitro Acquisition into the former South America segment.  The acquired Vitro food and beverage glass container distribution business located in the United States is included in the North American operating segment.  These four segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations.  Certain assets and activities not directly related to one of the regions or to glass manufacturing are reported with Retained corporate costs and other.  These include licensing, equipment manufacturing, global engineering, and certain equity investments.  Retained corporate costs and other also includes certain headquarters administrative and facilities costs and certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments.

 

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

 

Financial information for the three and nine months ended September 30, 2015 and 2014 regarding the Company’s reportable segments is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended  September 30,

    

Nine months ended

September 30,

 

 

 

2015

    

2014

    

2015

    

2014

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

$

605

 

$

709

 

$

1,809

 

$

2,205

 

North America

 

 

520

 

 

517

 

 

1,520

 

 

1,543

 

Latin America

 

 

265

 

 

313

 

 

677

 

 

826

 

Asia Pacific

 

 

162

 

 

197

 

 

478

 

 

584

 

Reportable segment totals

 

 

1,552

 

 

1,736

 

 

4,484

 

 

5,158

 

Other

 

 

14

 

 

9

 

 

46

 

 

23

 

Net sales

 

$

1,566

 

$

1,745

 

$

4,530

 

$

5,181

 

 

 

6


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

September 30,

 

Nine months ended

September 30,

 

 

    

2015

    

2014

    

2015

    

2014

 

Segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

$

68

 

$

104

 

$

181

 

$

300

 

North America

 

 

61

 

 

66

 

 

214

 

 

214

 

Latin America

 

 

51

 

 

61

 

 

108

 

 

155

 

Asia Pacific

 

 

19

 

 

17

 

 

51

 

 

59

 

Reportable segment totals

 

 

199

 

 

248

 

 

554

 

 

728

 

Items excluded from segment operating profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained corporate costs and other

 

 

(10)

 

 

(20)

 

 

(49)

 

 

(79)

 

Restructuring, asset impairment and other charges

 

 

(41)

 

 

(84)

 

 

(68)

 

 

(84)

 

Strategic transaction costs

 

 

(13)

 

 

 

 

 

(19)

 

 

 

 

Acquisition-related fair value inventory adjustments

 

 

(10)

 

 

 

 

 

(10)

 

 

 

 

Interest expense, net

 

 

(67)

 

 

(53)

 

 

(188)

 

 

(161)

 

Earnings from continuing operations before income taxes

 

$

58

 

$

91

 

$

220

 

$

404

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

    

2015

    

2014

    

2014

 

Total assets:

 

 

 

 

 

 

 

 

 

 

Europe

 

$

3,030

 

$

3,214

 

$

3,405

 

North America

 

 

2,028

 

 

1,971

 

 

2,030

 

Latin America

 

 

3,297

 

 

1,300

 

 

1,358

 

Asia Pacific

 

 

894

 

 

1,018

 

 

1,042

 

 

 

 

 

 

 

 

 

 

 

 

Reportable segment totals

 

 

9,249

 

 

7,503

 

 

7,835

 

Other

 

 

305

 

 

340

 

 

306

 

Consolidated totals

 

$

9,554

 

$

7,843

 

$

8,141

 

 

 

2.  Receivables

 

Receivables consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

 

    

2015

    

2014

    

2014

 

 

Trade accounts receivable

 

$

782

 

$

583

 

$

887

 

 

Less: allowances for doubtful accounts and discounts

 

 

29

 

 

34

 

 

37

 

 

Net trade receivables

 

 

753

 

 

549

 

 

850

 

 

Other receivables

 

 

355

 

 

195

 

 

192

 

 

 

 

$

1,108

 

$

744

 

$

1,042

 

 

 

In conjunction with the Vitro Acquisition, the Company remitted approximately $147 million related to value added taxes owed as a result of certain internal restructuring transactions undertaken by Vitro, S.A.B. de C.V. related to the closing of the Vitro Acquisition. This amount is included in “Other receivables” above and is expected to be refunded to the Company in approximately twelve months.

 

7


 

The Company uses various factoring programs to sell certain receivables to financial institutions as part of managing its cash flows. The amount of receivables sold by the Company was $336 million, $276 million, and $209 million at September 30, 2015, December 31, 2014, and September 30, 2014, respectively. Any continuing involvement with the sold receivables is immaterial. 

 

3.  Inventories

 

Major classes of inventory are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

 

    

2015

    

2014

    

2014

 

 

Finished goods

 

$

873

 

$

884

 

$

954

 

 

Raw materials

 

 

114

 

 

110

 

 

116

 

 

Operating supplies

 

 

36

 

 

41

 

 

42

 

 

 

 

$

1,023

 

$

1,035

 

$

1,112

 

 

 

 

4.  Derivative Instruments

 

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

 

Commodity Forward Contracts Designated as Cash Flow Hedges

 

In North America, 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. The Company continually evaluates the natural gas market and related price risk and periodically enters into commodity forward contracts in order to hedge a portion of its usage requirements. The majority of the sales volume in North America is tied to customer contracts that contain provisions that pass the price of natural gas to the customer.  In certain of these contracts, the customer has the option of fixing the natural gas price component for a specified period of time.    At September 30, 2015 and 2014, the Company had entered into commodity forward contracts covering approximately 6,300,000 MM BTUs and 1,800,000 MM BTUs, respectively, primarily related to customer requests to lock the price of natural gas.

 

The Company accounts for the above forward contracts as cash flow hedges at September 30, 2015 and recognizes them on the balance sheet at fair value.  The effective portion of changes in the fair value of a derivative that is designated as, and meets the required criteria for, a cash flow hedge is recorded in the Accumulated Other Comprehensive Income component of share owners’ equity (“OCI”) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings.  Unrecognized gains of $2 million and  $1 million at September 30, 2015 and 2014, respectively, related to the commodity forward contracts was included in Accumulated OCI, and will be reclassified into earnings over the next twelve to twenty-four months.  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, 2015 and 2014 was not material.

 

8


 

The effect of the commodity forward contracts on the results of operations for the three months ended September 30, 2015 and 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of Gain 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)

 

2015

    

2014

    

2015

    

2014

 

$

 2

 

$

 1

 

$

 4

 

$

 —

 

 

The effect of the commodity forward contracts on the results of operations for the nine months ended September 30, 2015 and 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of Gain 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)

 

2015

    

2014

    

2015

    

2014

 

$

 2

 

$

 3

 

$

 6

 

$

 2

 

 

Forward Exchange Derivative Contracts 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. Subsidiaries may also use forward 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 forward exchange agreements on the balance sheet at fair value and changes in the fair value are recognized in current earnings.

 

At September 30, 2015 and 2014, various subsidiaries of the Company had outstanding forward exchange and option agreements denominated in various currencies covering the equivalent of approximately $600 million and $520 million, respectively, related primarily to intercompany transactions and loans.

 

The effect of the forward exchange derivative contracts on the results of operations for the three months ended September 30, 2015 and 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

Amount of Gain (Loss)

 

Location of Gain (Loss)

 

Recognized in Income on

 

Recognized in Income on

 

Forward Exchange Contracts

 

Forward Exchange Contracts

 

2015

 

2014

 

Other expense

    

$

(4)

    

$

 1

 

 

9


 

The effect of the forward exchange derivative contracts on the results of operations for the nine months ended September 30, 2015 and 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

Amount of Gain

 

Location of Gain 

 

Recognized in Income on

 

Recognized in Income on

 

Forward Exchange Contracts

 

Forward Exchange Contracts

 

2015

 

2014

 

Other expense

    

$

 2

 

$

 

 

Balance Sheet Classification

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

 

 

Balance Sheet

 

September 30,

 

December 31,

 

September 30,

 

 

    

Location

    

2015

    

2014

    

2014

 

Asset Derivatives:

    

    

    

 

    

    

 

    

 

 

    

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts

 

a

 

$

16

 

$

10

 

$

10

 

Total asset derivatives

 

 

 

 

16

 

 

10

 

 

10

 

Liability Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

Commodity futures contracts

 

c

 

$

2

 

$

 —

 

$

 —

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts

 

c

 

 

4

 

 

4

 

 

6

 

Total liability derivatives

 

 

 

$

6

 

$

4

 

$

6

 

 

 

5.  Restructuring Accruals

 

Selected information related to the restructuring accruals for the three months ended September 30, 2015 and 2014 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

European

    

 

 

    

Other

    

 

 

 

 

 

Asset

 

Asia Pacific

 

Restructuring

 

Total

 

 

    

Optimization

    

Restructuring

    

Actions

    

Restructuring

 

Balance at July 1, 2015

 

$

11

 

$

8

 

$

33

 

$

52

 

Charges

 

 

 

 

 

 

 

 

35

 

 

35

 

Write-down of assets to net realizable value

 

 

 

 

 

 

 

 

(19)

 

 

(19)

 

Net cash paid, principally severance and related benefits

 

 

 

 

 

(1)

 

 

(4)

 

 

(5)

 

Other, including foreign exchange translation

 

 

 

 

 

 

 

 

(1)

 

 

(1)

 

Balance at September 30, 2015

 

$

11

 

$

7

 

$

44

 

$

62

 

 

 

10


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

European

 

 

 

 

Other

 

 

 

 

 

 

Asset

 

Asia Pacific

 

Restructuring

 

Total

 

 

    

Optimization

    

Restructuring

    

Actions

    

Restructuring

 

Balance at July 1, 2014

 

$

20

 

$

3

 

$

42

 

$

65

 

Charges

 

 

1

 

 

73

 

 

5

 

 

79

 

Write-down of assets to net realizable value

 

 

 

 

 

(46)

 

 

 

 

 

(46)

 

Net cash paid, principally severance and related benefits

 

 

(3)

 

 

(2)

 

 

(2)