Last10K.com

Oi Glass, Inc. (OI) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, March 31, 2021

Owens Illinois Inc

CIK: 812074 Ticker: OI

 

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

For more information, contact:

Chris Manuel

Vice President of Investor Relations

567-336-2600

Chris.Manuel@o-i.com

 

O-I GLASS REPORTS FIRST QUARTER 2021 RESULTS

 

Performance was consistent with original guidance despite significant impact of severe weather

 

PERRYSBURG, Ohio (April 28, 2021)

– O-I Glass, Inc. (“O-I”) (NYSE: OI) today reported financial results for the first quarter ended March 31, 2021.

 

“O-I’s first quarter business performance was strong and consistent with our original guidance. This was accomplished despite the significant impact of severe weather that disrupted operations in Texas, Oklahoma and Mexico. Aside from this temporary event, business trends were favorable. Excluding the effect of recent divestitures, sales volume was consistent with last year despite the impact of severe weather and COVID-19 related restrictions. Favorable trends accelerated as the quarter progressed. Furthermore, continued strong operating performance and the company’s margin enhancement initiatives offset the impact of severe weather. First quarter cash flow trends were favorable considering typical business seasonality reflecting our continued focus on working capital management,” said Andres Lopez, CEO.

 

“We continue to take bold actions to improve O-I’s business fundamentals. Following a very successful startup, our first full-scale commercial MAGMA production line is now operational and the team is conducting the necessary tests to validate this revolutionary technology. In addition, we recently announced a $75 million investment to further expand a facility in the Andean market where demand for glass containers exceeds current capacity. Also, as part of its margin enhancement initiatives, O-I has formed a strategic partnership with Accenture to manage its global shared service center activity that is expected to increase capability, improve agility and reduce future SG&A costs. Finally, as announced on Monday, our Paddock Enterprises, LLC subsidiary reached an agreement in principle to accept the terms of a mediator’s proposal regarding a consensual plan of reorganization under the Bankruptcy Code. The agreement provides for total consideration of $610 million to fund a trust on the effective date of a plan of reorganization, subject to definitive documentation and satisfaction of certain conditions. This represents a major milestone as we seek a fair and final resolution to legacy asbestos-related liabilities. All of these actions are consistent with our strategy to increase shareholder value.”

 

“I believe the company is at an important inflection point as we advance our bold plan to change O-I’s business fundamentals. Reflecting our efforts to increase stability and agility, we have demonstrated a step change in our resilience as well as ability to consistently perform and deliver on our commitments. At the same time, we are removing the constraints of the past including legacy asbestos liabilities while moving forward with breakthrough innovations like MAGMA. We expect these and other key strategic actions will usher in a new period of prosperity for O-I,” concluded Lopez.

 


The following information was filed by Owens Illinois Inc (OI) on Wednesday, April 28, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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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

March 31, 2021

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

Graphic

O-I GLASS, INC.

(Exact name of registrant as specified in its charter)

Delaware

22-2781933

(State or other jurisdiction of

(IRS Employer

incorporation or organization)

Identification No.)

One Michael Owens Way, Perrysburg, Ohio

43551

(Address of principal executive offices)

(Zip Code)

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

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

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $.01 par value

OI

New York Stock Exchange

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

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The number of shares of common stock, par value $.01, of O-I Glass, Inc. outstanding as of March 31, 2021 was 157,912,101.

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

The Condensed Consolidated Financial Statements of O-I Glass, Inc. (the “Company”) presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. All adjustments are of a normal recurring nature. Because the following unaudited condensed consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The term “Company,” as used herein and unless otherwise stated or indicated by context, refers to Owens-Illinois, Inc. (“O-I”) prior to the Corporate Modernization (as defined in Note 10) and to O-I Glass, Inc. (“O-I Glass”) after the Corporate Modernization.

1

O-I GLASS, INC.

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

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

Three months ended

March 31,

2021

    

2020

    

 

Net sales

$

1,500

$

1,561

Cost of goods sold

 

(1,256)

 

(1,293)

Gross profit

244

268

Selling and administrative expense

(102)

(116)

Research, development and engineering expense

(18)

(16)

Interest expense, net

(51)

(53)

Equity earnings

18

15

Other expense, net

(156)

(17)

Earnings (loss) before income taxes

 

(65)

 

81

Provision for income taxes

(26)

(26)

Net earnings (loss)

 

(91)

 

55

Net earnings attributable to non-controlling interests

(6)

(5)

Net earnings (loss) attributable to the Company

$

(97)

$

50

Basic earnings per share:

Net earnings (loss) attributable to the Company

$

(0.62)

$

0.32

Weighted average shares outstanding (thousands)

157,571

156,081

Diluted earnings per share:

Net earnings (loss) attributable to the Company

$

(0.62)

$

0.32

Weighted average diluted shares outstanding (thousands)

157,571

157,684

See accompanying notes.

2

O-I GLASS, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)

(Unaudited)

Three months ended

March 31,

    

2021

    

2020

    

 

Net earnings (loss)

$

(91)

$

55

Other comprehensive income (loss):

Foreign currency translation adjustments

(85)

(573)

Pension and other postretirement benefit adjustments, net of tax

20

31

Change in fair value of derivative instruments, net of tax

13

6

Other comprehensive loss

(52)

(536)

Total comprehensive income (loss)

(143)

(481)

Comprehensive (income) loss attributable to non-controlling interests

(2)

4

Comprehensive income (loss) attributable to the Company

$

(145)

$

(477)

See accompanying notes.

3

O-I GLASS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

(Unaudited)

March 31,

December 31,

March 31,

2021

2020

2020

Assets

Current assets:

Cash and cash equivalents

$

742

$

563

$

891

Trade receivables, net of allowance of $32 million, $33 million, and $30 million at March 31, 2021, December 31, 2020 and March 31, 2020

 

714

 

623

 

767

Inventories

 

827

 

841

 

1,047

Prepaid expenses and other current assets

 

203

 

270

 

257

Total current assets

 

2,486

 

2,297

 

2,962

Property, plant and equipment, net

2,791

2,907

2,987

Goodwill

1,880

1,951

1,773

Intangibles, net

310

325

312

Other assets

1,358

1,402

1,470

Total assets

$

8,825

$

8,882

$

9,504

Liabilities and Share owners’ equity

Current liabilities:

Accounts payable

$

998

$

1,126

$

1,025

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

180

197

283

Other liabilities

524

575

516

Total current liabilities

 

1,702

 

1,898

 

1,824

Long-term debt

5,168

4,945

6,115

Paddock support agreement liability

625

471

471

Other long-term liabilities

1,068

1,167

1,018

Share owners' equity

262

401

76

Total liabilities and share owners’ equity

$

8,825

$

8,882

$

9,504

See accompanying notes.

4

O-I GLASS, INC.

CONDENSED CONSOLIDATED CASH FLOWS

(Dollars in millions)

(Unaudited)

Three months ended March 31,

    

2021

    

2020

 

 

Cash flows from operating activities:

Net earnings (loss)

$

(91)

$

55

Non-cash charges

Depreciation and amortization

 

115

126

Pension expense

 

8

9

Charge related to Paddock support agreement liability

 

154

Cash payments

Pension contributions

 

(18)

(13)

Cash paid for restructuring activities

 

(3)

(8)

Change in components of working capital

 

(229)

(461)

Other, net (a)

8

(23)

Cash utilized in operating activities

 

(56)

 

(315)

Cash flows from investing activities:

Cash payments for property, plant and equipment

 

(93)

(120)

Cash proceeds on disposal of other businesses and misc. assets

4

Cash proceeds on sale of ANZ businesses, net of transaction costs

58

Deconsolidation of Paddock

(47)

Other

2

Cash utilized in investing activities

 

(31)

 

(165)

Cash flows from financing activities:

Changes in borrowings, net

290

859

Issuance of common stock and other

(2)

(2)

Dividends paid

(8)

Cash provided by financing activities

 

288

 

849

Effect of exchange rate fluctuations on cash

 

(22)

(29)

Increase in cash

 

179

 

340

Cash at beginning of period

 

563

551

Cash at end of period

$

742

$

891

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

See accompanying notes.

5

O-I GLASS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tabular data dollars in millions, except per share amounts

1. Segment Information

Historically, the Company had three reportable segments and three operating segments based on its geographic locations: the Americas, Europe and Asia Pacific. These three segments are aligned with the Company’s internal approach to managing, reporting, and evaluating performance of its global glass operations. On July 31, 2020, the Company completed the sale of its Australia and New Zealand (“ANZ”) businesses, which comprised the majority of its businesses in the Asia Pacific region (approximately 85% of net sales in that region for the full year 2019), to Visy Industries Holdings Pty Ltd. (“Visy”).  After the sale of the ANZ businesses, the remaining businesses in the Asia Pacific region do not meet the criteria of an individually reportable segment. For the three months ended March 31, 2020, the results of the Asia Pacific segment have been recast to reflect only the results of its ANZ businesses. For all historical periods discussed in this report, the sales and operating results of the other businesses that historically comprised the Asia Pacific segment, and that have been retained by the Company, have been reclassified to Other sales and Retained corporate costs and other, respectively. For asset reporting purposes, only the assets related to the ANZ businesses have been reported in the Asia Pacific segment, while the other businesses that historically comprised this segment and that have been retained by the Company have been reclassified to the Other assets line for all periods presented.

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, certain equity investments and the remaining businesses in the Asia Pacific region that do not meet the criteria of an individually reportable segment after the sale of the ANZ businesses. Retained corporate costs and other also includes certain headquarters administrative and facilities costs and certain incentive compensation and other benefit plan costs that are global in nature and are not allocable to the reportable segments.

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

Financial information for the three months ended March 31, 2021 and 2020 regarding the Company’s reportable segments is as follows:

    

Three months ended March 31,

2021

 

2020

 

Net sales:

Americas

$

837

$

831

Europe

 

639

576

Asia Pacific

 

123

Reportable segment totals

 

1,476

 

1,530

Other

24

31

Net sales

$

1,500

$

1,561

6

Three months ended March 31,

    

2021

    

2020

 

Segment operating profit:

Americas

$

100

$

103

Europe

 

75

 

61

Asia Pacific

 

 

12

Reportable segment totals

 

175

 

176

Items excluded from segment operating profit:

Retained corporate costs and other

(35)

(28)

Charge related to Paddock support agreement liability

(154)

Charge for deconsolidation of Paddock

(14)

Interest expense, net

(51)

(53)

Earnings (loss) before income taxes

$

(65)

$

81

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

March 31,

December 31,

March 31,

    

2021

2020

2020

Total assets:

Americas

 

$

4,755

 

$

4,927

 

$

4,693

Europe

 

3,536

 

3,507

 

3,290

Asia Pacific

 

 

 

608

Reportable segment totals

 

8,291

 

8,434

 

8,591

Other

 

534

448

913

Consolidated totals

 

$

8,825

 

$

8,882

 

$

9,504

2. Revenue

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

For the three-month periods ended March 31, 2021 and March 31, 2020, 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.

Consistent with the disclosures in Note 1 related to the ANZ sale, Asia Pacific revenue for the three-month period ended March 31, 2020, has been recast to reflect only the revenue of the ANZ businesses. The other businesses that comprised the Asia Pacific segment and that have been retained by the Company have been reclassified to the Other sales line.

7

The following tables for the three months ended March 31, 2021 and 2020 disaggregate the Company’s revenue by customer end use:

Three months ended March 31, 2021

    

Americas

Europe

Asia Pacific

Total

Alcoholic beverages (beer, wine, spirits)

 

$

502

 

$

477

 

$

$

979

Food and other

 

209

 

118

 

 

327

Non-alcoholic beverages

 

126

 

44

 

 

170

Reportable segment totals

$

837

$

639

$

$

1,476

Other

 

24

Net sales

 

$

1,500

Three months ended March 31, 2020

    

Americas

Europe

Asia Pacific

Total

Alcoholic beverages (beer, wine, spirits)

 

$

508

$

411

$

96

$

1,015

Food and other

 

189

105

14

 

308

Non-alcoholic beverages

 

134

60

13

 

207

Reportable segment totals

$

831

$

576

$

123

$

1,530

Other

 

31

Net sales

 

$

1,561


3. Credit Losses

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

At March 31, 2021 and March 30, 2020, the Company reported $714 million and $767 million of accounts receivable, respectively, net of allowances of $32 million and $30 million, respectively. Changes in the allowance were not material for the three months ended March 31, 2021 and March 31, 2020.

4. Inventories

Major classes of inventory at March 31, 2021, December 31, 2020 and March 31, 2020 are as follows:

March 31,

December 31,

March 31,

    

2021

    

2020

    

2020

    

 

Finished goods

$

672

$

675

$

884

Raw materials

 

119

 

129

 

121

Operating supplies

 

36

 

37

 

42

$

827

$

841

$

1,047

8

5. Derivative Instruments

The Company has certain derivative assets and liabilities, which consist of foreign exchange option and forward contracts, interest rate swaps and cross-currency swaps. The valuation of these instruments is determined primarily using the income approach, including discounted cash flow analysis on the expected cash flows of each derivative. 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.

Cash Flow Hedges of Foreign Exchange Risk

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

An unrecognized gain of $10 million at March 31, 2021, an unrecognized gain of $9 million at December 31, 2020 and an unrecognized loss of $4 million at March 31, 2020, related to these cross-currency swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next 12 months.

Interest Rate Swaps Designated as Fair Value Hedges

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

Cash Flow Hedges of Interest Rate Risk

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

An unrecognized loss of less than $1 million at March 31, 2021, an unrecognized loss of less than $1 million at December 31, 2020 and an unrecognized loss of $1 million at March 31, 2020 related to these interest rate swaps, were included in Accumulated OCI, and will be reclassified into earnings within the next 12 months.

Net Investment Hedges

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

Foreign Exchange Derivative Contracts Not Designated as Hedging Instruments

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

9

Balance Sheet Classification

The following table shows the amount and classification (as noted above) of the Company’s derivatives at March 31, 2021, December 31, 2020 and March 31, 2020:

Fair Value of

Fair Value of

Hedge Assets

Hedge Liabilities

March 31,

December 31,

March 31,

March 31,

December 31,

March 31,

    

2021

    

2020

    

2020

    

2021

    

2020

    

2020

Derivatives designated as hedging instruments:

    

    

    

    

    

    

Interest rate swaps - fair value hedges (a)

13

17

11

Cash flow hedges of foreign exchange risk (b)

8

6

66

67

115

4

Interest rate swaps - cash flow hedges (c)

2

Net investment hedges (d)

2

1

5

39

52

Total derivatives accounted for as hedges

$

23

$

24

$

82

$

106

$

167

$

6

Derivatives not designated as hedges:

Foreign exchange derivative contracts (e)

5

1

10

3

3

5

Total derivatives

$

28

$

25

$

92

$

109

$

170

$

11

Current

$

18

$

13

$

30

$

9

$

15

$

6

Noncurrent

10

12

62

100

155

5

Total derivatives

$

28

$

25

$

92

$

109

$

170

$

11

(a) The notional amounts of the interest rate swaps designated as fair value hedges were €725 million at March 31, 2021, December 31, 2020 and March 31, 2020. The maximum maturity dates were in 2024 for all three periods.

(b) The notional amounts of the cash flow hedges of foreign exchange risk were $978 million at March 31, 2021, $978 million at December 31, 2020 and $1.424 billion at March 31, 2020. The maximum maturity dates were in 2023 for all three periods.

(c) The notional amounts of the interest rate swaps designated as cash flow hedges were $0 at March 31, 2021, $0 at December 31, 2020 and $105 million at March 31, 2020. Maximum maturity dates were in 2020 for March 31, 2020.

(d) The notional amounts of the net investment hedges were €311 million at March 31, 2021, €311 million at December 31, 2020 and €160 million at March 31, 2020. The maximum maturity dates were in 2027 for March 31, 2021 and December 31, 2020 and in 2020 for March 31, 2020.

(e) The notional amounts of the foreign exchange derivative contracts were $301 million, $247 million and $306 million at March 31, 2021, December 31, 2020 and March 31, 2020, respectively. The maximum maturity dates were in 2021 for all three periods.

10

Gain (Loss) Recognized in OCI
(Effective Portion)

Gain (Loss) Reclassified from
Accumulated OCI into Income

(Effective Portion) (1)

Three months ended March 31,

Three months ended March 31,

Derivatives designated as hedging instruments:

 

2021

2020

2021

2020

Cash Flow Hedges

    

    

  

  

    

    

Cash flow hedges of foreign exchange risk (a)

$

48

$

66

$

49

$

60

Net Investment Hedges

Net Investment Hedges (b)

15

4

1

2

$

63

$

70

$

50

$

62

Amount of Gain (Loss)
Recognized in Other income
(expense), net

Three months ended March 31,

Derivatives not designated as hedges:

 

2021

2020

Foreign exchange derivative contracts

    

$

10

    

$

12

    

    

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

6. Restructuring Accruals

Selected information related to the restructuring accruals for the three months ended March 31, 2021 and 2020 is as follows:

Employee

Other

Total

    

Costs

    

Exit Costs

    

Restructuring

Balance at January 1, 2021

$

38

$

7

$

45

Net cash paid, principally severance and related benefits

 

(3)

 

(3)

Other, including foreign exchange translation

 

1

 

1

Balance at March 31, 2021

$

35

$

8

$

43

Employee

Other

Total

    

Costs

    

Exit Costs

    

Restructuring

Balance at January 1, 2020

$

32

$

13

$

45

Net cash paid, principally severance and related benefits

 

(8)

 

(8)

Other, including foreign exchange translation

 

(2)

(1)

 

(3)

Balance at March 31, 2020

$

22

$

12

$

34

When a decision is made to take restructuring actions, the Company manages and accounts for them programmatically apart from the on-going operations of the business. Information related to major programs is presented separately, while minor initiatives are presented on a combined basis. As of March 31, 2021 and 2020, no major restructuring programs were in effect.

For the three months ended March 31, 2021 and 2020, the Company has paid severance and related benefits along with other exit costs that were associated with past restructuring actions. The Company expects that the majority of the remaining cash expenditures related to the accrued employee and other costs will be paid out over the next several years.

11

7. Pension Benefit Plans

The components of the net periodic pension cost for the three months ended March 31, 2021 and 2020 are as follows:

U.S.

Non-U.S.

 

    

2021

    

2020

    

2021

    

2020

 

Service cost

$

3

$

3

$

3

$

3

Interest cost

 

10

 

12

 

5

 

7

Expected asset return

(21)

(21)

(11)

(12)

Amortization of actuarial loss

16

14

3

3

Net periodic pension cost

$

8

$

8

$

$

1

The components of pension expense, other than the service cost component, are included in Other expense, net on the Condensed Consolidated Results of Operations.

8. Income Taxes

The Company calculates its interim tax provision using the estimated annual effective tax rate (“EAETR”) methodology in accordance with ASC 740-270. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision. The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income or loss in each tax jurisdiction in which the Company operates. The tax effects of discrete items are recognized in the tax provision in the quarter they occur, in accordance with GAAP. Depending on various factors, such as the item’s significance in relation to total income and the rate of tax applicable in the jurisdiction to which it relates, discrete items in any quarter can materially impact the reported effective tax rate. The Company’s annual effective tax rate may be affected by the mix of earnings in the U.S. and foreign jurisdictions, and such factors as changes in tax laws, tax rates or regulations, changes in business, changing interpretation of existing tax laws or regulations, the finalization of tax audits and reviews, as well as other factors. As such, there can be significant volatility in interim tax provisions. The annual effective tax rate differs from the statutory U.S. Federal tax rate of 21% primarily because of varying non-U.S. tax rates.

The Company is currently under examination in various tax jurisdictions, including Bolivia, Brazil, Canada, Colombia, France, Germany, Indonesia, Mexico and Peru. The years under examination range from 2004 through 2019. 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.

12

9. Debt

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

March 31,

December 31,

March 31,

    

2021

    

2020

    

2020

Secured Credit Agreement:

Revolving Credit Facility:

Revolving Loans

$

292

$

$

817

Term Loans:

Term Loan A

1,068

1,067

1,477

Other secured debt

110

99

330

Senior Notes:

4.875%, due 2021 (€118 million at March 31, 2020)

 

130

5.00%, due 2022