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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 3, 1994
Owens-Illinois, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9576 22-2781933
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
Owens-Illinois Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 33-13061 34-1559348
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
One SeaGate, Toledo, Ohio 43666
(Address of principal executive offices) (Zip code)
Registrants' telephone number,
including area code: 419-247-5000
Exhibit Index -- Page 4
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Item 5. Other Events.
On February 3, 1994, Owens-Illinois, Inc. issued a
press release announcing charges for restructuring and asbestos
claims in the fourth quarter of 1993. The press release is set
forth as Exhibit 99 hereto.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99 - Owens-Illinois press release dated Febru-
ary 3, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned thereunto duly autho-
rized.
OWENS-ILLINOIS, INC.
OWENS-ILLINOIS GROUP, INC.
By (David G. Van Hooser)
----------------------
David G. Van Hooser
Vice President, Treasurer
and Comptroller
(Principal Accounting Officer)
Dated: February 3, 1994
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EXHIBIT INDEX
Exhibit
Number Exhibit Page
99 Owens-Illinois press release dated 5
February 3, 1994
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Owens-Illinois Announces Charges For Restructuring, Asbestos
Claims
Toledo, Ohio, February 3, 1994 -- Owens-Illinois, Inc.,
(NYSE: OI) today announced that it will take pre-tax charges
totalling $575 million in the fourth quarter of 1993, including
$250 million principally for the estimated costs of a
restructuring program and $325 million for estimated uninsured
future asbestos-related costs. The charges will reduce net
earnings by $355 million, or $2.98 per share.
Joseph H. Lemieux, Owens-Illinois chairman and chief
executive officer, said, "The decision to take these charges was
made after detailed analysis and careful consideration. We are
confident that these are positive steps that will enhance the
company's future earnings and financial condition."
Restructuring Program
The restructuring program is designed to reduce costs,
dramatically improve manufacturing efficiency and productivity,
and enhance customer service. "This program is a key part of our
strategy to maintain leadership in glass and plastic packaging
and to take advantage of growth opportunities around the world.
It reflects a commitment throughout our company to be the
undisputed leader in customer satisfaction, quality, and cost,"
Mr. Lemieux said.
When implementation is complete, the plan is expected to
result in annual pre-tax savings of $75 million or more. Savings
will begin in 1994 and increase in subsequent years. The
restructuring program is the outgrowth of a comprehensive re-
engineering study completed in the fourth quarter. The one-time
restructuring charge includes severance and early retirement
costs, and costs to streamline factory operations.
The restructuring program is expected to reduce the
company's U.S. work force by about 10 percent. The reductions
will be made possible by improving manufacturing productivity and
quality, simplifying the plant management organization, and
consolidating administrative responsibilities.
Asbestos Claims
The $325 million charge for asbestos costs represents the
company's estimate of the uninsured cost of future claims related
to a high-temperature insulation material produced by one of the
company's former business units, which was sold in 1958.
As reported previously, the company's strategy to resolve a
number of cases through group settlements, including many in
jurisdictions where settlement costs tend to be high, has
resulted in increased spending and commitments to spend, while
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reducing the case backlog significantly. Since Owens-Illinois
began to make insurance co-payments and subsequently exhausted
previously available insurance, the company has spent $283
million and committed to spend an additional $168 million on
asbestos cases that have been resolved. The company expects that
the total of $451 million spent or committed to date will be
covered by insurance that is currently the subject of litigation.
Since receiving its first asbestos bodily injury lawsuit,
the company has disposed of 143,000 cases, including 31,000 in
1993. The number of cases pending against the company has been
reduced from a high of 92,000 in 1991 to 43,000 as of December
31, 1993.
"This action is intended to resolve the issue of any
uninsured asbestos liability," said Thomas L. Young, Owens-
Illinois executive vice president and general counsel. "Although
the cost of some settlements has been higher than expected, we
have cut our case backlog in half and significantly reduced our
exposure to high-cost claims. We will continue to pursue our
strategy to settle cases on an acceptable basis while trying
cases only when an appropriate settlement cannot be reached or is
not warranted."
Owens-Illinois believes, as it always has, that the ultimate
asbestos-related contingent liability is difficult to estimate
with certainty. The $325 million charge for the estimated
uninsured asbestos costs was taken in response to recent trends
and developments and was determined by analyzing a number of
variables. Among other things, the company has disposed of
70,000 claims in the past two years, representing almost half of
all the cases disposed of since the initial cases were resolved
15 years ago. These recent claim dispositions have expanded the
company's data base. The company also has had increasing success
in establishing administrative procedures to handle legitimate
future claims at pre-determined amounts. The company has just
completed its first full year of operating with a meaningful
number of such administrative claims procedures in place. In
addition, the company has seen a reduction in the number of new
filings claiming significant exposure to its asbestos-containing
insulation products, apparently due at least in part to the 36
years that have elapsed since its exit from that business in
1958. The company's estimate was affected by a number of other
developments that have occurred recently with respect to
asbestos-related litigation, not only against Owens-Illinois but
against other companies, including the generally lower percentage
of legitimate claims of serious illness or impairment among newly
filed cases.
The estimate includes the expectation of a substantial
amount of insurance coverage, principally from insurance polices
from various companies for the years 1977 through 1983. In the
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event any portion of this coverage is not available, an
additional charge may be required.
The company's estimate is consistent with recently issued
accounting guidelines regarding contingent liabilities, which
will become effective in the first quarter of 1994.
A lawsuit in which Owens-Illinois is seeking coverage under
insurance policies for asbestos-related lawsuits and claims is
currently pending in New Jersey. Five of the 10 major issues
involved in the lawsuit have now been decided in favor of Owens-
Illinois at the New Jersey Supreme Court level. The remaining
issues, all of which were previously decided in favor of Owens-
Illinois at the trial court level, are expected to be resolved by
the second half of 1995. A favorable resolution of the remaining
issues in this case would provide the company in excess of $600
million of coverage for personal injury lawsuits and claims.
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