Financial Information for Subsidiary Guarantors and Non-Guarantors

9 Months Ended

Sep. 30, 2014

Financial Information for Subsidiary Guarantors and Non-Guarantors

Financial Information for Subsidiary Guarantors and Non-Guarantors

17.  Financial Information for Subsidiary Guarantors and Non-Guarantors

The following presents condensed consolidating financial information for the Company, segregating:  (1) Owens-Illinois Group, Inc. (the “Parent”); (2) Owens-Brockway Glass Container Inc. (the “Issuer”); (3) those domestic subsidiaries that guarantee the 3.00% exchangeable notes and 7.375% senior notes of the Issuer (the “Guarantor Subsidiaries”); and (4) all other subsidiaries (the “Non-Guarantor Subsidiaries”).  The Guarantor Subsidiaries are 100% owned direct and indirect subsidiaries of the Parent and their guarantees are full, unconditional and joint and several.  The Parent is also a guarantor, and its guarantee is full, unconditional and joint and several.

Certain reclassifications have been made to conform all of the financial information to the financial presentation on a consolidated basis.  The principal eliminations relate to investments in subsidiaries and intercompany balances and transactions.

	September 30, 2014
							Non-
					Guarantor		Guarantor
	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
Cash and cash equivalents	$	—	$	—	$	39	$	225	$	—		$	264
Receivables			92				950					1,042
Inventories			230				882					1,112
Prepaid expenses			20		3		81		1			105
Total current assets	—		342		42		2,138		1			2,523
Investments in and advances to subsidiaries	2,325		2,716		84				(5,125		)	—
Property, plant and equipment, net			661		36		1,802					2,499
Goodwill			574		8		1,378					1,960
Other assets			117		151		909		(1		)	1,176
Total assets	$	2,325	$	4,410	$	321	$	6,227	$	(5,125	)	$	8,158
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	766	$	1	$	300	$	—		$	1,067
Accounts payable			168		28		830		1			1,027
Other liabilities			85		42		417					544
Total current liabilities	—		1,019		71		1,547		1			2,638
Long-term debt	250		932		11		1,242		(1		)	2,434
Other non-current liabilities			62		113		715		(3		)	887
Investments by and advances from parent			2,397		126		2,599		(5,122		)	—
Share owners’ equity	2,075						124					2,199
Total liabilities and share owners’ equity	$	2,325	$	4,410	$	321	$	6,227	$	(5,125	)	$	8,158

	December 31, 2013
							Non-
					Guarantor		Guarantor
	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
Cash and cash equivalents	$	—	$	—	$	27	$	356	$	—		$	383
Receivables			68				875					943
Inventories			203				914					1,117
Prepaid expenses			20		8		79					107
Total current assets	—		291		35		2,224		—			2,550
Investments in and advances to subsidiaries	2,154		2,656		161				(4,971		)	—
Property, plant and equipment, net			651		38		1,943					2,632
Goodwill			574		8		1,477					2,059
Other assets			121		131		926					1,178
Total assets	$	2,154	$	4,293	$	373	$	6,570	$	(4,971	)	$	8,419
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	—	$	322	$	—		$	322
Accounts payable			185		19		940					1,144
Other liabilities			108		48		482					638
Total current liabilities	—		293		67		1,744		—			2,104
Long-term debt	250		1,617		12		1,366					3,245
Other non-current liabilities			68		136		815					1,019
Investments by and advances from parent			2,315		158		2,498		(4,971		)	—
Share owners’ equity	1,904						147					2,051
Total liabilities and share owners’ equity	$	2,154	$	4,293	$	373	$	6,570	$	(4,971	)	$	8,419

	September 30, 2013
							Non-
					Guarantor		Guarantor
	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Balance Sheet
Current assets:
Cash and cash equivalents	$	—	$	—	$	2	$	217	$	—		$	219
Receivables			99				1,073					1,172
Inventories			194				984					1,178
Prepaid expenses			9		4		90					103
Total current assets	—		302		6		2,364		—			2,672
Investments in and advances to subsidiaries	1,813		3,302		1,208				(6,323		)	—
Property, plant and equipment, net			632		38		1,987					2,657
Goodwill			574		8		1,477					2,059
Other assets			123		84		877					1,084
Total assets	$	1,813	$	4,933	$	1,344	$	6,705	$	(6,323	)	$	8,472
Current liabilities :
Short-term loans and long-term debt due within one year	$	—	$	—	$	1	$	365	$	—		$	366
Accounts payable			163		12		814					989
Other liabilities			81		51		445					577
Total current liabilities	—		244		64		1,624		—			1,932
Long-term debt	250		1,658		12		1,378					3,298
Other non-current liabilities			17		580		915					1,512
Investments by and advances from parent			3,014		688		2,621		(6,323		)	—
Share owners’ equity	1,563						167					1,730
Total liabilities and share owners’ equity	$	1,813	$	4,933	$	1,344	$	6,705	$	(6,323	)	$	8,472

	Three months ended September 30, 2014
										Non-
							Guarantor			Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Results of Operations
Net sales	$	—		$	495		$	1		$	1,249		$	—		$	1,745
Cost of goods sold				(420		)				(988		)				(1,408		)
Gross profit	—			75			1			261			—			337
Selling and administrative expense				(13		)	(21		)	(84		)				(118		)
Research, development, and engineering expense				(10		)				(5		)				(15		)
Net intercompany interest	5			(5		)										—
Interest expense, net	(5		)	(25		)				(23		)				(53		)
Equity earnings from subsidiaries	60			15									(75		)	—
Other equity earnings				4						9						13
Other expense, net				58			(1		)	(130		)				(73		)
Earnings (loss) from continuing operations before income taxes	60			99			(21		)	28			(75		)	91
Provision for income taxes				(1		)	(2		)	(20		)				(23		)
Earnings (loss) from continuing operations	60			98			(23		)	8			(75		)	68
Loss from discontinued operations										(1		)				(1		)
Net earnings (loss)	60			98			(23		)	7			(75		)	67
Net earnings attributable to noncontrolling interests										(7		)				(7		)
Net earnings (loss) attributable to the Company	$	60		$	98		$	(23	)	$	—		$	(75	)	$	60

	Three months ended September 30, 2014
									Non-
						Guarantor			Guarantor
	Parent			Issuer		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Comprehensive Income
Net earnings	$	60		$	98	$	(23	)	$	7		$	(75	)	$	67
Other comprehensive income (loss) attributable to the Company	(165		)	1					(187		)	186			(165		)
Other comprehensive income attributable to noncontrolling interests	––			––		––			(3		)	––			(3		)
Total comprehensive income (loss)	(105		)	99		(23		)	(183		)	111			(101		)
Net earnings attributable to noncontrolling interests	––			––		––			7			––			7
Comprehensive income (loss) attributable to the Company	$	(105	)	$	99	$	(23	)	$	(187	)	$	111		$	(105	)

	Three months ended September 30, 2013
										Non-
							Guarantor			Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Results of Operations
Net sales	$	—		$	497		$	1		$	1,286		$	—		$	1,784
Cost of goods sold				(416		)	7			(1,023		)				(1,432		)
Gross profit	—			81			8			263			—			352
Selling and administrative expense				(23		)	(8		)	(88		)				(119		)
Research, development, and engineering expense				(9		)				(6		)				(15		)
Net intercompany interest	5			(5		)										—
Interest expense, net	(5		)	(25		)	(1		)	(23		)				(54		)
Equity earnings from subsidiaries	130			76									(206		)	—
Other equity earnings				4						12						16
Other expense, net				58			1			(61		)				(2		)
Earnings (loss) from continuing operations before income taxes	130			157			—			97			(206		)	178
Provision for income taxes				(3		)				(37		)				(40		)
Earnings (loss) from continuing operations	130			154			—			60			(206		)	138
Loss from discontinued operations										(2		)				(2		)
Net earnings (loss)	130			154			—			58			(206		)	136
Net earnings attributable to noncontrolling interests										(6		)				(6		)
Net earnings (loss) attributable to the Company	$	130		$	154		$	—		$	52		$	(206	)	$	130

	Three months ended September 30, 2013
							Non-
					Guarantor		Guarantor
	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Comprehensive Income
Net earnings	$	130	$	154	$	––	$	58	$	(206	)	$	136
Other comprehensive income (loss) attributable to the Company	39						12		(12		)	39
Other comprehensive income attributable to noncontrolling interests	––		––		––		––		––			––
Total comprehensive income (loss)	169		154		––		70		(218		)	175
Net earnings attributable to noncontrolling interests	––		––		––		6		––			6
Comprehensive income (loss) attributable to the Company	$	169	$	154	$	––	$	64	$	(218	)	$	169

	Nine months ended September 30, 2014
										Non-
							Guarantor			Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Results of Operations
Net sales	$	—		$	1,457		$	2		$	3,722		$	—		$	5,181
Cost of goods sold				(1,225		)				(2,940		)				(4,165		)
Gross profit	—			232			2			782			—			1,016
Selling and administrative expense				(60		)	(70		)	(252		)				(382		)
Research, development, and engineering expense				(30		)				(17		)				(47		)
Net intercompany interest	15			(16		)				1						—
Interest expense, net	(15		)	(75		)	(1		)	(70		)				(161		)
Equity earnings from subsidiaries	275			207									(482		)	—
Other equity earnings				13						35						48
Other income (expense), net				135			(8		)	(197		)				(70		)
Earnings (loss) from continuing operations before income taxes	275			406			(77		)	282			(482		)	404
Provision for income taxes				(7		)	(3		)	(79		)				(89		)
Earnings (loss) from continuing operations	275			399			(80		)	203			(482		)	315
Loss from discontinued operations										(22		)				(22		)
Net earnings (loss)	275			399			(80		)	181			(482		)	293
Net earnings attributable to noncontrolling interests										(18		)				(18		)
Net earnings (loss) attributable to the Company	$	275		$	399		$	(80	)	$	163		$	(482	)	$	275

	Nine months ended September 30, 2014
									Non-
						Guarantor			Guarantor
	Parent			Issuer		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Comprehensive Income
Net earnings	$	275		$	399	$	(80	)	$	181		$	(482	)	$	293
Other comprehensive income (loss) attributable to the Company	(46		)	1					(116		)	115			(46		)
Other comprehensive income attributable to noncontrolling interests	––			––		––			(4		)	––			(4		)
Total comprehensive income (loss)	229			400		(80		)	61			(367		)	243
Net earnings attributable to noncontrolling interests	––			––		––			18			––			18
Comprehensive income (loss) attributable to the Company	$	229		$	400	$	(80	)	$	47		$	(367	)	$	229

	Nine months ended September 30, 2013
										Non-
							Guarantor			Guarantor
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Results of Operations
Net sales	$	—		$	1,433		$	2		$	3,771		$	—		$	5,206
Cost of goods sold				(1,161		)	(17		)	(2,988		)				(4,166		)
Gross profit	—			272			(15		)	783			—			1,040
Selling and administrative expense				(57		)	(55		)	(265		)				(377		)
Research, development, and engineering expense				(26		)				(19		)				(45		)
Net intercompany interest	15			(15		)										—
Interest expense, net	(15		)	(82		)	(1		)	(80		)				(178		)
Equity earnings from subsidiaries	331			192									(523		)	—
Other equity earnings				12						37						49
Other income (expense), net				156			(3		)	(170		)				(17		)
Earnings (loss) from continuing operations before income taxes	331			452			(74		)	286			(523		)	472
Provision for income taxes				(7		)	(1		)	(102		)				(110		)
Earnings (loss) from continuing operations	331			445			(75		)	184			(523		)	362
Loss from discontinued operations										(15		)				(15		)
Net earnings (loss)	331			445			(75		)	169			(523		)	347
Net earnings attributable to noncontrolling interests										(16		)				(16		)
Net earnings (loss) attributable to the Company	$	331		$	445		$	(75	)	$	153		$	(523	)	$	331

	Nine months ended September 30, 2013
									Non-
						Guarantor			Guarantor
	Parent			Issuer		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Comprehensive Income
Net earnings	$	331		$	445	$	(75	)	$	169		$	(523	)	$	347
Other comprehensive income (loss) attributable to the Company	(14		)						(94		)	94			(14		)
Other comprehensive income attributable to noncontrolling interests	––			––		––			(6		)	––			(6		)
Total comprehensive income (loss)	317			445		(75		)	69			(429		)	327
Net earnings attributable to noncontrolling interests	––			––		––			16			––			16
Comprehensive income (loss) attributable to the Company	$	317		$	445	$	(75	)	$	59		$	(429	)	$	317

	Nine months ended September 30, 2014
									Non-
						Guarantor			Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash Flows
Cash provided by (used in) operating activities	$	—	$	21		$	14		$	224		$	—	$	259
Cash used in investing activities			(66		)	(1		)	(200		)			(267		)
Cash provided by (used in) financing activities	—		45			(1		)	(145		)			(101		)
Effect of exchange rate change on cash									(10		)			(10		)
Net change in cash	—		—			12			(131		)	—		(119		)
Cash at beginning of period						27			356					383
Cash at end of period	$	—	$	—		$	39		$	225		$	—	$	264

	Nine months ended September 30, 2013
									Non-
						Guarantor			Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash Flows
Cash provided by (used in) operating activities	$	—	$	192		$	17		$	141		$	—	$	350
Cash used in investing activities	—		(75		)	—			(174		)	—		(249		)
Cash provided by (used in) financing activities	—		(117		)	(25		)	(164		)	—		(306		)
Effect of exchange rate change on cash									(7		)			(7		)
Net change in cash	—		—			(8		)	(204		)	—		(212		)
Cash at beginning of period						10			421					431
Cash at end of period	$	—	$	—		$	2		$	217		$	—	$	219