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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
OWENS-ILLINOIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9576 22-2781933
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) file number) Identification No.)
OWENS-ILLINOIS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-13061 34-1559348
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) file number) Identification No.)
One SeaGate, Toledo, Ohio 43666
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (419) 247-5000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, $.01 par value New York Stock Exchange
11% Senior Debentures due December 1, 2003 New York Stock Exchange
10-1/4% Senior Subordinated Notes due 1999 New York Stock Exchange
10-1/2% Senior Subordinated Notes due 2002 New York Stock Exchange
10% Senior Subordinated Notes due 2002 New York Stock Exchange
9-3/4% Senior subordinated Notes due 2004 New York Stock Exchange
9.95% Senior Subordinated Notes due 2004 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(Cover page 1 of 2 pages)
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Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports) and (2) have been subject
to such filing requirements for the past 90 days.
Yes x No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
The aggregate market value (based on the consolidated tape closing price
on February 29, 1996) of the voting stock beneficially held by non-affiliates
of Owens-Illinois, Inc. was approximately $1,351,770,000. For the sole
purpose of making this calculation, the term "non-affiliate" has been
interpreted to exclude directors and executive officers of the Company. Such
interpretation is not intended to be, and should not be construed to be, an
admission by Owens-Illinois, Inc. or such directors or executive officers of
the Company that such directors and executive officers of the Company are
"affiliates" of Owens-Illinois, Inc., as that term is defined under the
Securities Act of 1934.
The number of shares of Common Stock, $.01 par value, of Owens-Illinois,
Inc. outstanding as of February 29, 1996, was 120,129,973.
The number of shares of Common Stock, $.01 par value, of Owens-Illinois,
Group, Inc. outstanding as of February 29, 1996, was 100, all of which were
owned by Owens-Illinois, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
Part III Owens-Illinois, Inc. Proxy Statement for The Annual Meeting of
Share Owners To Be Held Wednesday, May 8, 1996 ("Proxy
Statement").
(Cover page 2 of 2 pages)
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TABLE OF CONTENTS
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PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . 11
ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS. . . . . . . . . . . . . . . . . . . . . . 12
EXECUTIVE OFFICERS OF THE REGISTRANTS. . . . . . . 13
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ITEM 5. MARKET FOR OWENS-ILLINOIS, INC.'S COMMON STOCK
AND RELATED SHARE OWNER MATTERS. . . . . . . . . . 16
ITEM 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . 28
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . 63
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANTS. . . . . . . . . . . . . . . . . . . . 64
ITEMS 11. EXECUTIVE COMPENSATION AND CERTAIN RELATIONSHIPS
and 13. AND RELATED TRANSACTIONS . . . . . . . . . . . . . 64
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . 64
PART IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ITEM 14.(a). EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES. . . . . . . . . . . . . . . . . . 65
ITEM 14.(b). REPORTS ON FORM 8-K. . . . . . . . . . . . . 70
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
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PART I
ITEM 1. BUSINESS
General Development of Business
Owens-Illinois, Inc. (the "Company"), through its subsidiaries, is the
successor to a business established in 1903. The Company is one of the
world's leading manufacturers of packaging products. Approximately one of
every two glass containers made worldwide is made by the Company, its
affiliates or licensees. In addition to being the largest manufacturer of
glass bottles and containers in the United States and other regions of the
world, the Company is a leading manufacturer of plastic containers, plastic
closures, plastic prescription containers, labels, and multipack plastic
carriers for beverage containers. Over the last few years, the Company has
made acquisitions or investments strategic to its core businesses and has
divested operations not achieving market leadership or other operating and
financial objectives.
During 1995, the Company continued implementation of its reengineering program
announced in February 1994. Implementation of the program has resulted in
reduced costs, improved manufacturing efficiency and productivity, and
enhanced customer service. This effort is a key part of the Company's
strategy to maintain leadership in glass and plastic packaging and to take
advantage of growth opportunities around the world.
In November 1995, the Company acquired 100% ownership of the largest glass
container manufacturers in Hungary, Estonia and Finland. Combined with the
Company's glass container operations in Poland, these acquisitions
significantly increase the Company's ability to serve emerging markets in
Eastern Europe. In January 1995, the Company also completed the transaction
to acquire a majority interest in Owens-BILT Limited, one of the leading glass
container manufacturers in India. In the past four years, the Company has
acquired controlling interests in eight glass container companies serving
emerging foreign markets and added ten companies to the worldwide network of
glass container manufacturers that are licensed to use the Company's
technology.
From December 1994 through mid-December 1995, the Company concluded settlement
agreements with certain reinsurers applicable to the Company's asbestos-
related personal injury claims. In late December 1995, the Company entered
into a settlement agreement involving all remaining insurance coverage issues
in the asbestos-related litigation. Pursuant to these settlement agreements,
the Company received payments of approximately $80 million in the fourth
quarter of 1994 and $107 million in 1995. In addition, the Company expects to
receive additional insurance proceeds in 1996 and future years under the
agreements. As a result of the settlement agreements, the Company recorded a
charge of $40 million and $100 million in the fourth quarter of 1995 and 1994,
respectively, to write down the asbestos insurance asset.
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The principal executive office of the Registrants is located at One SeaGate,
Toledo, Ohio 43666; the telephone number is (419) 247-5000.
Financial Information about Industry Segments
Information as to sales, operating profit, and identifiable assets by industry
segment is included on pages 60 - 62.
Narrative Description of Business
The Company has two industry segments: (1) Glass Containers and (2) Plastics
and Closures. Below is a description of these segments and information to the
extent material to understanding the Company's business taken as a whole.
The Company's former Specialized Glass segment consisted of Kimble Glass, Inc.
which manufactures both glass and plastic specialty packaging, scientific and
laboratory ware. As a result of the December 31, 1993 sale of 51% of Kimble,
the Company began to record its share of Kimble's results of operations on the
equity basis beginning in 1994.
Products and Services, Customers, Markets and Competitive Conditions, and
Methods of Distribution
GLASS CONTAINERS INDUSTRY SEGMENT
The Company is a leading manufacturer of glass containers throughout the
world. In addition to being the largest maker of glass containers in the
United States, the Company also is the leading manufacturer of glass packaging
in many regions of the world, including certain areas of Latin American and
Europe. Worldwide glass container sales represented 66%, 67% and 64% of the
Company's consolidated net sales for the years ended December 31, 1995, 1994,
and 1993, respectively. The Company believes that its internally developed
machines are significantly more efficient and productive than those used by
its competitors, making it the low-cost manufacturer and a recognized
technological leader in the industry.
The Company currently has technical assistance agreements with 36 different
companies in 36 countries. These agreements, which cover areas ranging from
manufacturing and engineering assistance to support in functions such as
marketing, sales, and administration, allow the Company to participate in the
worldwide growth of the glass container industry. The Company believes these
associations and its technical expertise will afford it opportunities to
participate in the glass business in regions of the world where the Company
does not currently have a presence.
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Products and Services
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Glass containers are produced in a wide range of sizes, shapes and colors for
beer, food, tea, fruit juice, soft drinks, liquor, wine, wine coolers and
pharmaceuticals. The Company has been a leader in product innovation,
introducing products including long neck nonreturnable beer bottles, and in
developing containers for teas, juices, food, soft drinks and wine coolers.
The Company's product development efforts in glass containers are aimed at
providing value added packaging systems to customers and consumers.
Product lines designed to complement glass containers include product
extensions related to single service packages for teas, juices and soft drinks
and innovative secondary packaging systems such as closures, carriers and
labeled containers.
Customers
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Brewers, food (which include juices and teas), liquor (i.e. distilled spirits)
and wine producers comprise the majority of industry demand for U.S. glass
containers. In addition to the just previously mentioned producers,
international glass container customers include soft drink bottlers. In the
regions where the Company has operations, it has leading positions within
these customer groups, as well as strong positions in smaller customer groups.
The Company believes its position gives it the ability to sustain market share
and take advantage of new opportunities and areas of growth within each
customer group.
Most glass production is sold to customers under arrangements with terms
varying from several months to several years which specify estimated
quantities to be shipped as a percentage of the customers' total annual
shipment requirements. Containers are typically scheduled for production in
response to customers' orders for their quarterly requirements.
Markets and Competitive Conditions
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The Company has glass container operations located in thirteen countries. The
principal markets for the Company's glass products are in the United States,
Latin America and Europe. The Company has the leading market share of the
glass segment of United States beer and food (including juices and teas)
packaging. Excluding E & J Gallo Winery Inc., which manufactures its own
containers, the Company believes it is the leading supplier of glass for wine
and wine coolers. Internationally, the Company is the leading producer of
glass containers in most of the geographic markets in which it is located.
The Company's glass products compete on the basis of quality, service and
price with other forms of rigid packaging, principally aluminum and steel cans
and plastic bottles, as well as glass containers produced by other large,
well-established manufacturers. The principal competitors producing glass
containers are Ball-Foster Glass Container Co., L.L.C., a joint venture of
Ball Corporation and Paris-based Saint-Gobain ("Ball-Foster"), and Anchor
Glass Container Corporation, a subsidiary of Vitro, Sociedad Anonima. The
principal competitors producing metal containers are American National Can
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Company (an affiliate of Silgan Corporation), Crown Cork & Seal Company, Inc.,
Reynolds Metals Company, and Ball Corporation. In the metal container market,
no one competitor is dominant. The principal competitors supplying plastic
containers are Crown Cork & Seal Company, Inc., and Johnson Controls, Inc. In
the plastic containers market, no one competitor is dominant.
Methods of Distribution
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Due to the significance of transportation costs and the importance of timely
delivery, manufacturing facilities are located close to customers. Most of
the Company's glass container products are shipped by common carrier to
customers within a 250-mile radius of a given production site. In addition to
glass container manufacturing facilities, the Company operates two sand plants
and three machine shops which manufacture high-productivity glass-making
machines.
Domestic Glass Operations
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The Company has an approximate 40% share of the glass container category of
the U.S. rigid packaging market. Domestically, the Company operates 21 glass
container manufacturing facilities, a sand plant and two machine shops which
manufacture high-productivity glass-making machines. Marketing under the
trade name Owens-Brockway, the Company's 1995 U.S. glass container sales were
substantially higher than the sales of its nearest U.S. glass container
competitor, Ball-Foster.
Unit shipments in the U.S. to brewers and food producers, including producers
of juices and teas, approximated 87%, 77% and 67% of the Company's total U.S.
glass container unit shipments for 1995, 1994 and 1993, respectively.
During 1995, total glass container industry shipments within the United States
rigid packaging market decreased approximately 6% from 1994 shipments. These
shipments declined throughout 1995 as a result of the continuing conversion of
soft drink containers from glass to plastic and lower demand for food
containers, including tea and juice bottles. Prior to 1995, glass container
shipments within the United States rigid packaging market had been relatively
constant for several years. The Company's share of the United States glass
container market has remained relatively constant during this time, at
approximately 40% market share. Overall, the Company expects glass
containers' share of the United States rigid packaging market to remain
relatively stable compared to 1995 levels and that the Company will maintain
its share of the glass container segment due in part to the Company's ongoing
improvement in operating efficiencies and its technological leadership.
The trend in the United States towards greater recycling of used containers
has also changed the Company's glass container business. In each of the last
several years, the Company has recycled substantial tonnage of glass
containers. The Company believes that the percentage of recycled glass used
could increase in the future as recycling becomes more widespread. Glass
recycling helps relieve the burden on the nation's landfills, while
significantly reducing the need for virgin materials. Recycling also results
in energy savings and reductions in air emissions. The Company also believes
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that, eventually, as recycled glass becomes more available, it may offer a
cost advantage over producing new glass. The Company has no technological
barriers to using all of the recycled glass it can reasonably expect to obtain
from public/private collection programs as long as such glass meets incoming
material quality standards.
International Glass Operations
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The Company has added to its international operations by acquiring glass
container companies with leading positions in growing markets, increasing the
capacity of selected foreign affiliates, and expanding the global network of
glass container companies that license the Company's technical assistance.
The Company has significant ownership positions in fifteen companies located
in twelve foreign countries and Puerto Rico. Most of the Company's
international glass affiliates are the leading container manufacturers in
their respective countries, producing a full line of containers for the soft
drink, beer, wine, liquor, food, drug and chemical industries. Some of these
companies also produce molds, mold parts, sand and feldspar, limestone,
machines and machine parts, rolled glass, sheet glass and glass tableware.
The Company's principal international glass affiliates are located in Latin
America, Eastern Europe and the United Kingdom.
Outside of the United States, unit shipments of glass containers have grown
substantially in recent years. International glass operations are benefiting
from increased privatization of industry, greater openness to foreign
investment, and global expansion programs by major customers. The lowering of
trade barriers has resulted in healthier economies, rising standards of
living, and growing demand for consumer products and quality packaging in
developing countries. The increasing demand for quality packaging products in
developing countries, where per capita glass container consumption is low, but
rising, continues to create growth opportunities. This is reinforced by the
fact that in many developing countries glass has a significant cost advantage
over plastic and metal containers. Technologies which have produced
productivity improvements in the Company's United States Glass Container
operations are also being applied to the operations of foreign affiliates.
The Company is continuing to pursue additional strategic alliances with
international partners whose markets are growing and whose manufacturing
operations can be enhanced by the Company's state-of-the-art technology and
equipment. Sales growth in countries where the Company does not have a direct
ownership position may also provide a benefit to the Company in the form of
royalties tied to sales volume of the Company's technical assistance
licensees.
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The Company's significant ownership positions in international glass
affiliates are summarized below:
Owens-Illinois
Company/Country Ownership
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Karhulan Lasi Oy, Finland 100.0%
Oroshaza Glass Manufacturing and Trading, Kft., Hungary 100.0
United Glass Ltd., United Kingdom 100.0
Centro Vidriero de Venezuela, C.A., Venezuela 100.0
Manufacturera de Vidrios Planos, C.A., Venezuela 100.0
Owens-Illinois de Venezuela, C.A., Venezuela 92.2
A/S Jarvakandi Klaas, Estonia 82.0
Owens-Illinois de Puerto Rico, Puerto Rico 80.0
Companhia Industrial Sao Paulo e Rio, Brazil 79.4
Vidrios Industriales, S.A., Peru 77.0
Cristaleria del Ecuador, S.A., Ecuador 65.3
Cristaleria Peldar, S.A., Colombia 57.4
Owens-BILT Limited, India 51.0
Fabrica Boliviana de Vidrios, S. A., Bolivia 50.0
Huta Szkla Jaroslaw S.A., Poland 45.1
PLASTICS AND CLOSURES INDUSTRY SEGMENT
The Company is a leading plastic container manufacturer in the United States.
The Company is the market leader in all plastic segments in which it competes
except for Hi-Cone, in which it is second. Plastic container sales
represented 16%, 17% and 16% of the Company's consolidated net sales for the
years ended December 31, 1995, 1994, and 1993, respectively. The Company's
Plastics and Closures segment operates under the Owens-Brockway trade name and
is comprised of four business units.
Plastic Products. This unit, with 22 factories, manufactures rigid, semi-
rigid, flexible and multi-layer plastic containers for a wide variety of uses,
including household products, personal care products, health care products,
chemicals and automotive products and food.
Closure and Specialty Products. This unit, with 10 manufacturing facilities,
develops and produces closures and closure systems which incorporate
functional features such as tamper evidence, child resistance and dispensing.
In addition, this unit's diverse product line includes trigger sprayers,
finger pumps, and lotion pumps, as well as metal closures and finger pumps for
the fragrance and cosmetic industry. In the United States, the Company has a
sole license for Alcoa's technology for compression molded, tamper evident,
thermoplastic closures. This unit also manufactures custom injection molded
products, such as deodorant cannisters and toothpaste dispensers.
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Prescription Products. The Company's Prescription Products unit manufactures
prescription containers. These products are sold primarily to drug
wholesalers, major drug chains and the government. Containers for
prescriptions include plastic and glass ovals, vials, rounds, squares and
ointment jars. The only other major producer of such prescription containers
is Kerr Group, Inc.
Label and Carrier Products. The broad line of labels produced by this unit
includes polyethylene labels for in-mold labeling (IML) and laminated labels
for beverage containers. Two proprietary carrier lines are also produced by
this unit, both of which are predominantly used as six-pack and four-pack
carriers for iced teas and other fruit drinks -- Hi-Cone (a registered
trademark of Illinois Tool Works Inc.) plastic carriers for cans and Contour-
Pak plastic carriers for bottles.
Markets. Major markets for these units include the household products,
personal care products, health care products, and food and beverage
industries.
The plastic segment of the rigid packaging market is competitive and
fragmented due to generally available technology, low costs of entry and
customer emphasis on low package cost. A large number of competitors exists
on both a national and regional basis. The Company competes by emphasizing
total package supply, diversified market positions, proprietary technology and
products, new package development, and packaging innovation. The Company is
one of two producers of the Hi-Cone multi-pack carrier (produced under a
license agreement with the only other producer, Illinois Tool Works Inc.), and
the only producer of the Contour-Pak carrier. The market for closures is
divided into various categories in which several suppliers compete for
business on the basis of price and product design.
The Company's strategy has been to compete in the segments of the plastic
packaging market where customers seek to use distinctive packaging to
differentiate their products among a growing array of choices offered to
consumers. The Company believes it is a leader in technology and development
of custom products and has a leading market position for such products. The
Company believes its plastic container and closure businesses have a
competitive advantage as a result of one of the shortest new product
development cycles in the industry, enabling the Company to provide superior
service in the service-sensitive custom plastic container market. The
Company's product innovations in plastic containers and closures include in-
mold labeling for custom molded bottles, Contour-Pak carriers for 4, 6 and 8-
pack applications, printed Contour-Pak carriers, multilayer structured bottles
containing post consumer recycled resin, Flex-Band and PlasTop tamper-
evident closures, Clic Loc child-resistant closures and Pharmacy Mate
reversible prescription container closures. The Company believes that unit
sales of closure products have benefited from the conversion of soft drink
closures from aluminum to plastic in the smaller 28mm size. That conversion
is essentially completed and the Company has recently introduced larger
compression molded closures for soft drink and sports drink applications.
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Recycling content legislation, which has been enacted in several states,
requires that a certain specified minimum percentage of recycled plastic be
included in new plastic products. The Company has met such legislated
standards in part due to its material and multilayer process technology.
The Company's Plastics and Closures segment currently has technical assistance
agreements with 19 companies in 12 countries. These agreements, which cover
areas ranging from manufacturing and engineering assistance to support in
functions such as marketing, sales, and administration, allow the Company to
participate in the worldwide growth of the plastic packaging industry.
ADDITIONAL INFORMATION
New Products
New products and numerous refinements of existing products are developed and
introduced in each segment every year. No single new product or refinement,
or group of new products and refinements, have been recently introduced or are
scheduled for introduction which required the investment of a material amount
of the Company's assets or which otherwise would be considered material.
Sources and Availability of Raw Materials
All of the raw materials the Company uses have historically been available in
adequate supply from multiple sources. However, for certain raw materials,
there may be temporary shortages due to weather or other factors, including
disruptions in supply caused by raw material transportation or production
delays; such shortages are not expected to have a material effect on the
Company's operations.
Patents and Licenses
The Company has a large number of patents which relate to a wide variety of
products and processes, has pending a substantial number of patent
applications, and is licensed under several patents of others. While in the
aggregate its patents are of material importance to its business, the Company
does not consider that any patent or group of patents relating to a particular
product or process is of material importance when judged from the standpoint
of any segment or its business as a whole.
Seasonality
Sales of particular products of the Glass Containers and Plastics and Closures
business segments such as beer and certain food containers are seasonal, with
shipments typically greater in the second and third quarters of the year.
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Working Capital
In general, the working capital practices followed by the Company are typical
of the businesses in which it operates. During the first and second quarters
of the year the accumulation of inventories of certain products in advance of
expected shipments reflects the seasonal nature of those businesses and may
require periodic borrowings.
Customers
Major customers exist for each of the Company's industry segments, and in each
industry segment the loss of a few of these customers might have a material
adverse effect on the segment. Major customers of the Company include such
companies as Philip Morris Companies Inc., Anheuser-Busch Companies, Inc.,
The Procter & Gamble Company, Unilever, N.V. and other leading companies which
manufacture and market a variety of consumer products.
Research and Development
Research and development constitutes an important part of the Company's
activities. Research and development expenditures for continuing operations
were $30.3 million, $31.8 million, and $23.1 million for 1995, 1994, and 1993,
respectively. Operating engineering expenditures were $24.5 million, $22.8
million, and $19.2 million for 1995, 1994, and 1993, respectively. In
addition to new product development, substantial portions of the technical
effort are devoted to increased process control, automatic inspection, and
automation. Also, there is continued emphasis on reduction in energy use per
unit of production. No material amount of money was spent on customer-
sponsored research activities during 1995, 1994, or 1993.
Environment
The Company's operations, in common with those of the industry generally, are
subject to numerous existing and proposed laws and governmental regulations
designed to protect the environment, particularly regarding plant wastes and
emissions and solid waste disposal. Capital expenditures for property, plant,
and equipment for environmental control activities were not material during
1995.
A number of states have enacted, or are considering, legislation to promote
curbside recycling and recycled content legislation as alternatives to
mandatory deposit laws. Although such legislation is not uniformly developed,
the Company believes that curbside recycling and recycling content legislation
could become more significant during the next five years.
Sales of non-refillable glass beverage bottles and other convenience packages
are affected by mandatory deposit laws and other types of restrictive
legislation. As of January 31, 1996, there are nine states with mandatory
deposit laws in effect.
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Plastic containers have also been the subject of legislation in various
states. The Company utilizes recycled plastic resin in its manufacturing
processes. During 1995 and 1994, many plastic containers for products other
than food, drugs, and cosmetics contained 25% post consumer resin. The
Company believes it is the industry leader in such technology.
Although the Company is unable to predict what legislation or regulations may
be adopted in the future with respect to environmental protection and waste
disposal, compliance with existing legislation and regulations has not had,
and is not expected to have, a material adverse effect on its capital
expenditures, results of operations, or competitive position.
Number of Employees
The Company's operations employed approximately 30,100 persons at December 31,
1995. A majority of these employees are hourly workers covered by collective
bargaining agreements, the principal one of which was renewed early in 1996
for three years. The Company considers its employee relations to be good.
The Company has not had any material labor disputes in the last five years,
and does not anticipate any material work stoppages in the near term.
Financial Information about Foreign and Domestic Operations and Export Sales
Information as to net sales, operating profit, and identifiable assets of the
Company's operating and geographic segments is included on pages 60 - 62.
Export sales, in the aggregate or by geographic area, were not material for
the years 1995, 1994, or 1993.
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ITEM 2. PROPERTIES
The principal manufacturing facilities and other material important physical
properties of the continuing operations of the Company at December 31, 1995
are listed below and grouped by industry segment. All properties shown are
owned in fee except where otherwise noted.
Glass Containers Valera, Venezuela
Glass Container Plants
Atlanta, GA Machine Shops
Auburn, NY Brockway, PA
Brockway, PA Godfrey, IL
Charlotte, MI Manaus, Brazil
Chicago Heights, IL (1)
Clarion, PA (1) Sand Plants
Crenshaw, PA Ione, CA (2)
Danville, VA Devilla, United Kingdom
Lakeland, FL
Lapel, IN Flat Glass Plant
Los Angeles, CA La Victoria, Venezuela
Muskogee, OK (1)
Oakland, CA Plastics and Closures
Portland, OR Plastic Container Plants
Streator, IL Atlanta, GA
Toano, VA Baltimore, MD
Tracy, CA Belvidere, NJ
Volney, NY Charlotte, NC
Waco, TX Chicago, IL
Winston-Salem, NC Cincinnati, OH (1)
Zanesville, OH Edison, NJ
La Paz, Bolivia Findlay, OH (1), (2)
Rio de Janeiro, Brazil Florence, KY (1)
Sao Paulo, Brazil Greenville, SC
Envigado, Colombia Harrisonburg, VA
Zipaquira, Colombia Kansas City, MO (2)
Guayaquil, Ecuador La Mirada, CA (2)
Jarvakandi, Estonia Nashua, NH
Karhula, Finland Newburyport, MA
Oroshaza, Hungary Rossville, GA (2)
Pondicherry, India St. Louis, MO (2)
Pune, India Sullivan, IN
Rishikesh, India Vandalia, IL (1)
Callao, Peru Washington, NJ (2)
Jaroslaw, Poland Ryttyla, Finland
Vega Alta, Puerto Rico Mexico City, Mexico
St. Albans, United Kingdom
Alloa, United Kingdom Mold Shop
Harlow, United Kingdom Kansas City, MO (2)
Peasley, United Kingdom
Caracas, Venezuela Label and Carrier Products Plant
Guarenas, Venezuela Bardstown, KY (1)
Valencia, Venezuela
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Closure & Specialty Products Plants Corporate Facilities
Bridgeport, CT World Headquarters Building
Brookville, PA Toledo, OH (2)
Chattanooga, TN
Constantine, MI (1) Levis Development Park
El Paso, TX (2) Perrysburg, OH
Erie, PA
Hamlet, NC
Maumee, OH (2)
Waterbury, CT
Las Piedras, Puerto Rico
Prescription Products Plant
Berlin, OH (1)
- ---------------
(1) This facility is financed in whole or in part under tax-exempt financing
agreements.
(2) This facility is leased in whole or in part.
The Company believes that its facilities are well maintained and currently
adequate for its planned production requirements over the next three to five
years.
ITEM 3. LEGAL PROCEEDINGS
See the second through last paragraphs of the section entitled "Contingencies"
on pages 52 - 59.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the last quarter
of the fiscal year ended December 31, 1995.
12
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANTS
Set forth below are the names and the ages, positions, and offices held (as of
the date hereof), and a brief account of the business experience of each
executive officer. Each officer listed below holds the same position or
positions with Owens-Illinois Group, Inc. as he does with the Company.
Officers serve at the discretion of the Board of Directors.
Name and Age Position
- ------------ --------
Joseph H. Lemieux (65) . . . . . Chairman since 1991; Chief Executive
Officer since 1990; President and Chief
Operating Officer, 1986-1990; Director
since 1984. Member of Class III of the
Board of Directors of the Company, with a
term expiring in 1997.
Lee A. Wesselmann (60) . . . . . Senior Vice President and Chief Financial
Officer since 1988; Secretary, 1988-1990;
Vice President - Finance, 1988; Director
since 1988. Member of Class I of the
Board of Directors of the Company, with a
term expiring in 1998.
R. Scott Trumbull (47) . . . . . Executive Vice President, International
Operations since 1993; Vice President and
Director of Corporate Planning 1992-1993;
Vice President and General Manager of
Plastics and Closure Operations, 1986 -
1992.
Terry L. Wilkison (54) . . . . . Executive Vice President, Domestic
Packaging Operations since 1993; Vice
President and General Manager of
Plastics, Closures, and Prescription
Products 1992-1993; Vice President and
General Manager of Specialty Glass
Operations 1987-1992.
Thomas L. Young (52) . . . . . . Executive Vice President, Administration,
General Counsel and Secretary since 1993;
Vice President, General Counsel, General
Manager - Operations Administration and
Secretary 1992-1993; Vice President,
General Counsel and Secretary, 1990-1992;
Vice President and General Counsel -
Operations, 1988-1990.
13
<PAGE>
Name and Age Position
- ------------ --------
Russell C. Berkoben (54) . . . . Vice President and General Manager of
Plastic Operations since 1991; Vice
President and Plastic Container Business
Unit Manager, 1985-1991.
Gary R. Clinard (57) . . . . . . Vice President and General Manager of
International Operations since 1990; Vice
President of International Operations and
Technical Assistance, 1987-1990.
Larry A. Griffith (50) . . . . . Vice President since 1990; General
Manager of Kimble, 1992-1995; Vice
President of Corporate Staff and Director
of Corporate Planning, 1988-1990;
John L. Hodges (56). . . . . . . Vice President and General Manager of
Glass Container Operations since 1993;
Vice President of Glass Container Sales
and Marketing, 1991-1993; Vice President
and General Manager of Glass Container
Manufacturing, 1984-1991.
Dale W. Leidy (56) . . . . . . . Vice President and Technical Director -
Glass Container since 1993; Vice
President and General Manager of Glass
Container Manufacturing 1991-1993; Vice
President and Technical Director -
Packaging, 1990-1991; Vice President and
Director of Manufacturing and Engineering
of Plastic Products, 1989-1990; Vice
President and Director of Manufacturing
of Plastic Products, 1986-1989.
Michael D. McDaniel (47) . . . . Vice President and General Manager of
Closure and Specialty Products Operations
since 1991; Vice President and Director
of Manufacturing and Engineering of
Closure Operations, 1990-1991; Vice
President and Manufacturing Manager of
Closure Operations, 1985-1990.
Philip McWeeny (56). . . . . . . Vice President and General Counsel -
Corporate since 1988.
14
<PAGE>
Name and Age Position
- ------------ --------
Ronald H. Pfenning (47). . . . . Vice President of Glass Container Sales
and Marketing since 1993; Glass Container
Vice President and Industry Manager,
Food, 1992-1993; Glass Container Vice
President and Industry Manager, Brewing &
Liquor, 1989-1991.
B. Calvin Philips (54) . . . . . Vice President of International
Operations since 1990; Vice President and
General Manager of Closure and Specialty
Products, 1987-1990.
Robert A. Smith (54) . . . . . . Vice President and General Manager of
Glass Container Manufacturing since 1993;
Vice President and General Manager, West
Coast, 1990-1993; Vice President and Area
Manufacturing Manager, 1986-1990.
David G. Van Hooser (49) . . . . Vice President and General Manager of
Plastic Components Operations since 1994;
Vice President, Treasurer and
Comptroller, 1990-1994; Vice President
and Treasurer, 1988-1990.
15
<PAGE>
PART II
ITEM 5. MARKET FOR OWENS-ILLINOIS, INC.'S COMMON STOCK
AND RELATED SHARE OWNER MATTERS
The price range for the Company's Common Stock on the New York Stock Exchange,
as reported by National Association of Securities Dealers, was as follows:
1995 1994
------------------ ------------------
High Low High Low
------ ------ ------ ------
First Quarter 11-1/2 10-1/8 13-5/8 10-5/8
Second Quarter 13-1/2 10-7/8 13-3/8 10-3/8
Third Quarter 14-1/4 12-5/8 12-3/4 10-3/8
Fourth Quarter 14-3/4 12 12-1/4 10-1/4
On December 31, 1995, there were 1,242 common share owners of record. No
dividends have been declared or paid since the Company's initial public
offering in December 1991. For restrictions on payment of dividends on Common
Stock, see Restriction on Retained Earnings included on page 47.
16
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below relates to each of
the five years in the period ended December 31, 1995. Such data was derived
from the Consolidated Financial Statements, of which the most recent three
years are included elsewhere in this document and were audited by Ernst &
Young LLP, independent auditors, whose report with respect to the financial
statements appears elsewhere in this document. See Consolidated Financial
Statements -- Statement of Significant Accounting Policies and Financial
Review.
Years Ended December 31,
----------------------------------------------------
1995 1994 1993 1992 (b) 1991 (c)
-------- -------- -------- -------- --------
Consolidated operating (Dollar amounts in millions)
results (a):
Net sales. . . . . . $3,763.2 $3,567.3 $3,535.0 $3,392.6 $3,284.3
Other (d). . . . . . 117.8 85.6 127.1 81.6 83.3
-------- -------- -------- -------- --------
3,881.0 3,652.9 3,662.1 3,474.2 3,367.6
Costs and expenses:
Manufacturing, shipping
and delivery . . . 2,948.5 2,824.3 2,823.8 2,744.1 2,636.8
Research, engineering,
selling, administra-
tive and other (e) 322.9 379.1 842.8 260.3 223.6
-------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before interest
expense and items
below. . . . . . . 609.6 449.5 (4.5) 469.8 507.2
Interest expense . . 299.6 278.2 290.0 312.9 452.5
-------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before items
below. . . . . . . 310.0 171.3 (294.5) 156.9 54.7
Provision (credit)
for income taxes . 100.8 68.9 (113.1) 64.0 53.7
Minority share owners'
interests in
earnings of
subsidiaries . . . 40.1 24.1 19.4 14.6 11.8
-------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before extraordinary
items and cumulative
effect of accounting
changes. . . . . . 169.1 78.3 (200.8) 78.3 (10.8)
Net earnings of
discontinued
operations . . . . 1.4 18.4 3.8
17
<PAGE>
SELECTED FINANCIAL DATA -- continued
Years ended December 31,
----------------------------------------------------
1995 1994 1993 1992 (b) 1991 (c)
-------- -------- -------- -------- --------
(Dollar amounts in millions, except per share data)
Gain (loss) on sales of
discontinued operations,
net of applicable
income taxes . . . 217.0 (123.1)
Extraordinary charges
from early
extinguishment of
debt, net of
applicable income
taxes. . . . . . . (12.7) (31.5) (143.5)
Cumulative effect on
prior years of
changes in methods
of accounting for
income taxes and
postretirement
benefits, net
of applicable
income taxes (b) . (199.4)
-------- -------- -------- -------- --------
Net earnings (loss). $ 169.1 $ 78.3 $ 4.9 $ (134.2) $ (273.6)
======== ======== ======== ======== ========
Earnings (loss) per
share of common
stock:
Earnings (loss)
from continuing
operations before
extraordinary
items and cumula-
tive effect of
accounting changes $ 1.40 $ 0.64 $ (1.70) $ 0.66 $ (0.27)
Net earnings of
discontinued
operations . . . 0.01 0.15 0.09
Gain (loss) on sales
of discontinued
operations . . . 1.82 (3.07)
Extraordinary charges (0.10) (0.26) (3.58)
Cumulative effect of
accounting
changes (b). . . (1.68)
-------- -------- -------- -------- --------
Net earnings (loss). $ 1.40 $ 0.64 $ 0.03 $ (1.13) $ (6.83)
======== ======== ======== ======== ========
18
<PAGE>
SELECTED FINANCIAL DATA -- continued
Years Ended December 31,
----------------------------------------------------
1995 1994 1993 1992 (b) 1991 (c)
-------- -------- -------- -------- --------
Other data: (Dollar amounts in millions)
The following are included in the
results from continuing operations:
Depreciation . . . $ 188.3 $ 183.3 $ 180.0 $ 181.9 $ 154.0
Amortization of
excess cost and
intangibles. . . 44.8 45.2 40.8 38.6 36.3
Amortization of
deferred finance
fees (included
in interest
expense) . . . . 5.0 5.1 11.5 12.0 13.6
-------- -------- -------- -------- --------
$ 238.1 $ 233.6 $ 232.3 $ 232.5 $ 203.9
======== ======== ======== ======== ========
Weighted average
shares outstanding
(in thousands) . . 119,343 119,005 118,978 118,980 40,089
Balance sheet data (at end of period):
Working capital. . $ 328 $ 171 $ 234 $ 245 $ 195
Total assets . . . 5,439 5,318 4,901 5,151 4,399
Total debt . . . . 2,833 2,690 2,487 3,107 2,932
Share owners' equity 532 376 295 299 415
(a) Results of operations have been restated to reflect the effects of the
sale of the Libbey business, which was consummated on June 24, 1993, and
of the Health Care segment, which was consummated on October 24, 1991, as
discontinued operations.
(b) In the fourth quarter of 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," and
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," each as of January 1, 1992. The impact of the changes on
1992 earnings from continuing operations consists of an additional $39.2
million of non-cash expenses partially offset by additional deferred tax
credits of $26.3 million.
(c) The Company completed a recapitalization in the fourth quarter of 1991,
the effects of which are included in the Balance Sheet Data as of
December 31, 1991. Assuming the recapitalization had occurred at the
beginning of 1991, pro forma earnings from continuing operations for 1991
would have been $78.7 million, or $0.65 per share of common stock.
(d) Other revenues in 1993 includes gains of $46.1 million ($34.6 million
after tax) from divestitures.
19
<PAGE>
(e) In the fourth quarter of 1995, the Company recorded a charge of $40.0
million ($24.7 million after tax) to write down the asbestos insurance
asset and a net credit of $40.0 million ($24.7 million after tax)
primarily from the reduction of previously established restructuring
reserves. In the fourth quarter of 1994, the Company recorded a charge
of $100.0 million ($61.7 million after tax) to write down the asbestos
insurance asset. In the fourth quarter of 1993, the Company recorded
charges totaling $578.2 million ($357.0 million after tax) principally
for estimated uninsured future asbestos-related costs and costs
associated with its restructuring program.
20
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Comparison of 1995 with 1994
For the year ended December 31, 1995, the Company recorded net earnings of
$169.1 million compared to $78.3 million in 1994. Excluding the effects of
the 1994 unusual item discussed below, the Company's 1995 net earnings of
$169.1 million increased $29.1 million, or 20.8%, over 1994 earnings of $140.0
million. Consolidated segment operating profit was $565.5 million in 1995
compared to $508.2 million in 1994, excluding the unusual charge. The
increase was largely attributable to the Company's international glass
business which reported significantly increased unit shipments, dollar sales,
and operating profit in 1995. Interest expense, net of interest income,
increased $10.7 million due in part to debt assumed in connection with
acquisitions. The Company's annual effective tax rate for 1995 was 32.5%
compared to 39.5% for 1994 as adjusted for unusual items. The lower 1995 rate
is primarily the result of a higher mix of foreign earnings, which benefited
from lower effective tax rates in 1995. The increased foreign net earnings
also resulted in an increase in minority share owners' interests in earnings
of subsidiaries, principally in Brazil, Colombia, and Poland.
Capsule segment results (in millions of dollars) for 1995 and 1994 are as
follows (a):
- ----------------------------------------------------------------------------
Net sales to unaffiliated customers 1995 1994
- ----------------------------------------------------------------------------
Glass Containers $2,744.0 $2,590.1
Plastics and Closures 1,017.7 976.1
Other 1.5 1.1
- ----------------------------------------------------------------------------
Consolidated total $3,763.2 $3,567.3
============================================================================
- ----------------------------------------------------------------------------
Operating profit 1995 (b) 1994
- ----------------------------------------------------------------------------
Glass Containers $ 482.7 $ 393.0
Plastics and Closures 137.4 140.4
Eliminations and other retained costs (c) (54.6) (125.2)
- ----------------------------------------------------------------------------
Consolidated total $ 565.5 $ 408.2
============================================================================
(a) See Segment Information included on pages 60 - 62.
(b) Includes a charge of $40.0 million to write down the asbestos insurance
asset and a net credit of $40.0 million primarily from the reduction of
previously established restructuring reserves. These items increased
(decreased) operating profit as follows: Glass Containers, $45.1
21
<PAGE>
million; Plastics and Closures $(5.1) million; and other retained costs
$(40.0) million.
(c) Includes a charge of $100.0 million in 1994 to write down the asbestos
insurance asset.
Consolidated net sales for 1995 increased $195.9 million, or 5.5% over the
prior year. Net sales of the Glass Containers segment increased $153.9
million, or 5.9%, over 1994. Higher glass container unit shipments by foreign
affiliates and recently acquired glass container operations in Poland and
India accounted for the increase. Consistent with domestic glass industry
trends, the Company's 1995 domestic glass container unit shipments were
approximately 6% below 1994. These shipments declined throughout 1995 as a
result of the continuing conversion of soft drink containers from glass to
plastic. This conversion will also affect comparisons to prior year periods
throughout 1996. Higher shipments of glass containers to U.S. brewers as a
result of increased consumer demand for premium and specialty beers more than
offset lower demand for food containers, including iced tea and juice bottles.
In the Plastics and Closures segment, sales increased $41.6 million, or 4.3%,
over 1994. Higher unit pricing caused by higher resin costs and increased
volumes in the closure and prescription products businesses resulted in higher
reported sales. Higher unit shipments of closures and prescription containers
were offset by lower shipments of plastic containers, especially bottles used
for personal care and household products, due in part to the closing of two
plastic bottle manufacturing facilities in late 1994.
Consolidated operating profit for 1995 increased $57.3 million, or 11.3%, to
$565.5 million from 1994 operating profit of $508.2 million, excluding the
unusual 1994 fourth quarter charge. Consolidated operating profit was 15.0%
of net sales in 1995 compared to 14.2% in 1994, excluding the 1994 unusual
item. Consolidated operating expenses (consisting of selling and administra-
tive, engineering, and research and development expenses) as a percentage of
net sales decreased to 6.4% in 1995 from 7.0% in 1994. Operating profit of
the Glass Containers segment, exclusive of the 1995 unusual item discussed
below, was $437.6 million, an increase of $44.6 million, or 11.3%, over 1994.
Increased unit shipments at most foreign affiliates, improved market condi-
tions for the segment's Venezuelan operations, and higher margins at the
Colombian and United Kingdom operations resulted in higher U.S. dollar
operating profits. The economic effects of exchange and price controls
instituted in Venezuela in June 1994 and the December 1995 devaluation of the
bolivar negatively affected the 1995 operating profit. Similar programs and
controls instituted in prior years have had a temporary adverse effect on the
operating profit of the Company's foreign affiliates; the Company is not able
to project the magnitude or duration of such effects on future operating
results. The domestic glass container operations were adversely affected in
1995 by the significantly higher cost of corrugated boxes, which are used
extensively in packaging and shipping many of the Company's finished products.
Also, domestic glass container unit shipments were lower in 1995 due to the
continuing conversion of soft drink containers from glass to plastic, which
resulted in excess capacity in the industry and increased price competition.
Cost reductions and productivity improvements achieved throughout the Glass
Containers segment partially offset these effects. Operating profit of the
22
<PAGE>
Plastics and Closures segment, exclusive of the 1995 unusual item discussed
below, increased slightly to $142.5 million in 1995 from $140.4 million in
1994. The 1995 results benefited from increased unit shipments in both the
closures and prescription containers businesses along with productivity
improvements achieved in the plastic bottles business. These benefits were
partially offset by the effects of lower shipments and margins in the
segment's labels and carriers business as a result of higher raw material
costs, the soft drink conversion from glass to plastic, and the increasing
utilization by customers of other forms of carriers, such as fiberboard
cartons and shrink wrap packaging. Excluding the labels and carriers
business, the segment's operating profit was up approximately 11% over 1994.
Other retained costs, exclusive of the effects of unusual fourth quarter items
in both years as discussed below, were $14.6 million in 1995 compared to $25.2
million in 1994 reflecting lower employee benefit costs and higher net
financial services income.
In December 1995, the Company reached settlements involving all remaining
insurance coverage limits (81% of original limits) in the asbestos-related
litigation. As a result of the settlement agreements, the Company recorded a
charge of $40.0 million ($24.7 million after tax) in the fourth quarter of
1995 to write down the asbestos insurance asset to the approximate coverage
amounts expected to be received. For additional information, see Capital
Resources and Liquidity on page 27 and Contingencies on page 52.
In the fourth quarter of 1995, the Company also recorded an unusual net credit
of $40.0 million ($24.7 million after tax), related primarily to the Company's
restructuring program, the cost of which was originally estimated and recorded
in the fourth quarter of 1993. During 1994 and 1995, the Company completed a
number of the initiatives contemplated in the program. Some costs were lower
than originally estimated. Additionally, in response to changing business
conditions and obtaining additional business, some of the planned actions were
modified, eliminated, or are no longer anticipated. As a result of these
developments, the reserve was reduced by $45.1 million. Included in the net
credit of $40.0 million is a charge of $5.1 million for the restructuring of
the Company's labels and carriers business resulting from the conversion of
soft drinks from glass to plastic containers. This charge represents the
estimated severance and early retirement costs related to workforce reductions
and write downs of equipment and inventory.
In December 1994, the Company concluded a settlement with certain reinsurers
involved in the asbestos-related litigation representing approximately 19% of
coverage limits. As a result of the settlement agreement and certain other
considerations, including continuing delays in the resolution of the Company's
claims for insurance coverage, the Company recorded a charge of $100.0 million
($61.7 million after tax) in the fourth quarter of 1994 to write down the
asbestos insurance asset.
Comparison of 1994 with 1993
For the year ended December 31, 1994, the Company recorded net earnings from
continuing operations of $78.3 million compared with a loss of $200.8 million
in 1993. These results include an unusual fourth quarter charge in 1994 of
23
<PAGE>
$61.7 million and several unusual fourth quarter charges and gains in 1993
aggregating $322.4 million, which are discussed below. Excluding the effects
of the unusual items in both years, the Company reported 1994 earnings from
continuing operations of $140.0 million representing an increase of $18.4
million, or 15.1%, over 1993 earnings of $121.6 million. All major operations
reported increased unit shipments, dollar sales, and operating profit in 1994.
Improved operating results, particularly in the Glass Containers segment, and
reduced interest expense more than offset the absence of operating results
from the Specialized Glass segment and an increase in other retained costs.
The former Specialized Glass segment consisted of the Kimble pharmaceutical
and laboratory glassware business. As a result of the December 31, 1993 sale
of 51% of the Kimble business, the Company is recording its share of Kimble's
results of operations on an equity basis beginning in 1994.
Net earnings for 1994 were $78.3 million compared to $4.9 million in 1993.
The 1993 results include a net gain from the sale of the Libbey glass
tableware business and earnings from the discontinued Libbey business of
$217.0 million and $1.4 million, respectively. Extraordinary charges from the
early extinguishment of debt amounted to $12.7 million in 1993.
Capsule segment results (in millions of dollars) for 1994 and 1993 are as
follows (a):
- ----------------------------------------------------------------------------
Net sales to unaffiliated customers 1994 1993
- ----------------------------------------------------------------------------
Glass Containers $2,590.1 $2,427.3
Plastics and Closures 976.1 908.6
Specialized Glass 197.9
Other 1.1 1.2
- ----------------------------------------------------------------------------
Consolidated total $3,567.3 $3,535.0
============================================================================
- ----------------------------------------------------------------------------
Operating profit 1994 1993 (c)
- ----------------------------------------------------------------------------
Glass Containers $ 393.0 $ 117.4
Plastics and Closures 140.4 123.3
Specialized Glass 18.9
Eliminations and other retained costs (b) (125.2) (305.0)
- ----------------------------------------------------------------------------
Consolidated total $ 408.2 $ (45.4)
============================================================================
(a) See Segment Information included on pages 60 - 62.
(b) Includes a charge of $100.0 million in 1994 to write down the asbestos
insurance asset.
(c) Reflects the net reductions from unusual fourth quarter charges and gains
as follows: Glass Containers, $214.0 million; Plastics and Closures,
$16.0 million; Specialized Glass, $3.2 million; and other retained costs,
$298.9 million.
24
<PAGE>
Consolidated net sales for 1994 increased $230.2 million, or 6.9% over the
prior year, excluding the former Specialized Glass segment. Net sales of the
Glass Containers segment increased $162.8 million, or 6.7%, over 1993.
Domestic glass container unit shipments increased 4.8% compared to the prior
year. Increased sales of beer containers, partially due to the March 31, 1994
acquisition of a customer's glass container manufacturing facility, more than
offset lower soft drink container shipments. The Company believes the trend
of soft drink conversions from glass to plastic (polyethylene terephthalate or
PET) containers will continue; however, available capacity resulting from such
conversions will be used for the production of other containers experiencing
increased demand such as beer and iced tea. The Company's domestic glass
business also benefited from increased shipments of iced tea and juice
containers compared to prior year. Reported U.S. dollar sales of the
Company's international affiliates were up 14.4% reflecting improved economic
conditions in Brazil and higher unit shipments by the Company's Colombian and
United Kingdom affiliates. The economic effects of exchange and price
controls instituted in Venezuela in late June 1994 contributed to lower 1994
unit shipments by the Venezuelan affiliates compared to 1993. In the Plastics
and Closures segment, sales increased $67.5 million, or 7.4%, over 1993.
Increased sales for all business units combined with additional sales reported
by the segment's Mexican affiliate, acquired near the end of the third quarter
of 1993, accounted for the increase. The plastic bottles and closures
businesses benefited from strong demand by makers of personal care and health
care products.
Consolidated operating profit for 1994, excluding the unusual fourth quarter
items in both 1994 and 1993 discussed separately below, and excluding the
former Specialized Glass segment, increased $43.6 million, or 9.4%, to $508.2
million from $464.6 million in 1993. Consolidated operating profit, excluding
the unusual items and the former Specialized Glass segment was 14.2% of net
sales in 1994 compared to 13.9% in 1993. Consolidated operating expenses as a
percentage of net sales increased to 7.0% in 1994 from 6.4% in 1993 as a
result of higher spending in selected areas to streamline operations and
increased research and development expenditures. Operating profit of the
Glass Containers segment, exclusive of unusual items, increased $61.6 million,
or 18.6%. Approximately two-thirds of the increase was attributable to the
domestic glass business as increased shipments of beer, iced tea, and juice
containers combined with improvements in machine and labor productivity more
than offset continuing lower sales of soft drink containers. Higher combined
U.S. dollar operating profit of the segment's international glass business
resulted from generally increased unit shipments and higher margins,
particularly at the Brazilian and Colombian affiliates. The economic effects
of exchange and price controls instituted in Venezuela in June 1994 negatively
affected the 1994 operating profit. Similar programs and controls instituted
in prior years have had a temporary adverse effect on the operating profit of
the Company's affiliates; however, the Company is not able to project the
magnitude or duration of such effects on future operating results. Operating
profit of the Plastics and Closures segment, exclusive of unusual items,
increased slightly to $140.4 million in 1994 from $139.3 million in 1993. The
benefit of increased unit shipments for both the plastic bottles and closures
businesses was offset by lower margins in the labels and carriers business as
a result of lower unit shipments of glass container soft drink labels and
25
<PAGE>
carriers, and lower unit selling prices for some plastic bottle product lines.
The segment's operations in Mexico have been, and will continue to be,
adversely affected by the devaluation of the peso; however, the amount is not
expected to be material in relation to segment operating profit. Other
retained costs, exclusive of the effects of the unusual items, were $25.2
million in 1994 compared to $6.1 million in 1993 reflecting expenses incurred
in 1994 associated with the comprehensive reengineering initiated by the
Company in 1993 and changes in other retained costs, principally as a result
of previous divestitures.
In December 1994, the Company concluded a settlement with certain reinsurers
involved in the asbestos-related litigation representing approximately 19% of
coverage limits. Pursuant to the settlement agreement, the Company received
payments of approximately $80 million in 1994 and approximately $20 million in
the first quarter of 1995, representing approximately 78.5 percent of policy
limits. As a result of the settlement agreement and certain other
considerations, including continuing delays in the resolution of the Company's
claims for insurance coverage, the Company recorded a charge of $100 million
($61.7 million after tax) in the fourth quarter of 1994 to write down the
asbestos insurance asset. For additional information, see Capital Resources
and Liquidity on page 27 and Contingencies on page 52.
In the fourth quarter of 1993, the Company recorded several unusual charges
and gains as part of continuing operations. Gains from the sales of the
Company's remaining interest in the television glass business and the sale of
a 51% interest in its Kimble laboratory and pharmaceutical glassware business
amounted to $46.1 million pretax ($34.6 million after tax). The Company also
recorded charges totaling $578.2 million pretax ($357.0 million after tax),
comprised of pretax charges of $325 million ($200.7 million after tax) for
estimated uninsured future asbestos-related costs and $253.2 million ($156.3
million after tax) principally for costs related to the Company's
restructuring program.
During 1994 the Company began implementing its comprehensive restructuring
program to reduce costs. Specific actions taken in 1994 include an
approximate 10% domestic work force reduction, the shutdown of a glass
manufacturing facility, and the shutdown of two plastic manufacturing plants.
The severance and early retirement costs of the work force reduction and
expected write down to realizable value of production and other factory
equipment to be eliminated as a result of restructuring initiatives were
estimated to be approximately $165 million and $30 million, respectively, at
December 31, 1993. As a result of modifications of the restructuring program
throughout 1994, the Company estimated that the aggregate severance and early
retirement costs would approximate $90 million, while the costs to write down
production and other factory equipment and to realign productive capacity,
mainly as a result of manufacturing efficiency and productivity improvements
experienced or expected to result from the restructuring program, would
approximate $105 million. While implementation of the program will continue
over the next several years, the Company expects that actions taken in 1994
will favorably affect operating profit beginning in 1995.
26
<PAGE>
Capital Resources and Liquidity
The Company's total debt at December 31, 1995 was $2.83 billion compared to
$2.69 billion at December 31, 1994.
At December 31, 1995, the Company had available credit totaling $1 billion
under the Bank Credit Agreement expiring in December 1998, of which $322.0
million had not been utilized. At December 31, 1994, the Company had $400.2
million of credit which had not been utilized under the Agreement. The
increased utilization during 1995 resulted from capital expenditures, acquisi-
tions, and asbestos-related payments, partially offset by cash provided by
operations, including cash received for settlement of a portion of the
insurance asset for asbestos-related costs. Cash provided by operating
activities was $252.6 million in 1995 compared to $227.4 million in 1994.
Capital expenditures for property, plant and equipment were $283.6 million in
1995 and $286.0 million in 1994. During the years ended December 31, 1995 and
1994, cash expenditures related to the fourth quarter 1993 restructuring
charge were approximately $30 million for each of those years. Future cash
expenditures associated with this charge are not expected to be material.
In the twelve-month period commencing January 1, 1996, the Company anticipates
that cash flow from its operations and from utilization of available credit
under the Bank Credit Agreement will be sufficient to fund its operating and
seasonal working capital needs, debt service and other obligations. The
Company faces additional demands upon its liquidity for asbestos-related
payments. The Company has entered into group settlement agreements which
include settlement amounts payable in 1996 and later years. As of December
31, 1995, such deferred payment amounts were approximately $130.1 million.
The foregoing amount does not include spending commitments with respect to
lawsuits and claims pending against the Company as of December 31, 1995.
Based on the Company's expectations regarding favorable trends which should
lower its aggregate payments for lawsuits and claims and its expectation of
the collection of its insurance coverage and reimbursement for such lawsuits,
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, and the resolution of presently
pending and anticipated future lawsuits and claims associated with asbestos,
will not have a material adverse effect upon the Company's liquidity on a
short-term or long-term basis.
From December 1994 through mid-December 1995, the Company concluded settlement
agreements with certain reinsurers involved in the asbestos-related
litigation. In late December 1995, the Company entered into a settlement
agreement involving all remaining insurance coverage issues in the asbestos-
related litigation. Pursuant to these settlement agreements, the Company
received payments of approximately $80 million in the fourth quarter of 1994
and $107 million in 1995. In addition, the Company expects to receive
additional insurance proceeds in 1996 and future years under the agreements.
The Company has and will use the settlement proceeds, when received, to reduce
bank debt incurred in paying claims.
27
<PAGE>
Over the term of the Bank Credit Agreement ending in December 1998, the
Company expects that the utilization of available credit thereunder, combined
with cash flows from operations, will be sufficient to fund its operating and
seasonal working capital needs, debt service including relatively modest
scheduled principal payments, and other obligations. Beyond that, based upon
current levels of operations and anticipated growth, the Company anticipates
that it will have to refinance existing indebtedness, sell assets and/or
otherwise raise funds in either the private or public markets to make all of
the principal payments when due under its outstanding debt securities,
beginning with principal payments due in 1999 under the 10-1/4% Senior
Subordinated Notes. There can be no assurance that the Company will be able
to refinance existing indebtedness or otherwise raise funds in a timely manner
or that the proceeds therefrom will be sufficient to make all such principal
payments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
----
Report of Independent Auditors 29
Consolidated Balance Sheets at December 31, 1995 and 1994 32-33
For the years ended December 31, 1995, 1994, and 1993:
Consolidated Results of Operations 30-31
Consolidated Share Owners' Equity 34
Consolidated Cash Flows 35-36
Statement of Significant Accounting Policies 37-38
Financial Review 39-62
Selected Quarterly Financial Data 63
28
<PAGE>
- ------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
The Board of Directors and Share Owners
Owens-Illinois, Inc.
We have audited the accompanying consolidated balance sheets of Owens-
Illinois, Inc. as of December 31, 1995 and 1994, and the related consolidated
statements of results of operations, share owners' equity, and cash flows for
each of the three years in the period ended December 31, 1995. Our audits
also included the financial statement schedule listed in the Index at Item
14.(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Owens-Illinois,
Inc. at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Toledo, Ohio
February 2, 1996
29
<PAGE>
- ---------------------------------------------------------------------------
CONSOLIDATED RESULTS OF OPERATIONS Owens-Illinois, Inc.
Millions of dollars, except per share amounts
Years ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------
Revenues:
Net sales $3,763.2 $3,567.3 $3,535.0
Royalties and net technical assistance 26.8 29.1 29.2
Equity earnings 14.4 22.3 25.3
Interest 29.7 19.0 15.6
Other 46.9 15.2 57.0
- ---------------------------------------------------------------------------
3,881.0 3,652.9 3,662.1
Costs and expenses:
Manufacturing, shipping, and delivery 2,948.5 2,824.3 2,823.8
Research and development 30.3 31.8 23.1
Engineering 24.5 22.8 19.2
Selling and administrative 187.8 193.5 182.9
Interest 299.6 278.2 290.0
Other 80.3 131.0 617.6
- ---------------------------------------------------------------------------
3,571.0 3,481.6 3,956.6
- ---------------------------------------------------------------------------
Earnings (loss) from continuing operations
before items below 310.0 171.3 (294.5)
Provision (credit) for income taxes 100.8 68.9 (113.1)
- ---------------------------------------------------------------------------
209.2 102.4 (181.4)
Minority share owners' interests
in earnings of subsidiaries 40.1 24.1 19.4
- ---------------------------------------------------------------------------
Earnings (loss) from continuing operations
before extraordinary items 169.1 78.3 (200.8)
Net earnings of discontinued
operations 1.4
Gain on sale of discontinued
operations, net of applicable income
taxes 217.0
- ---------------------------------------------------------------------------
Earnings before extraordinary items 169.1 78.3 17.6
Extraordinary charges from early
extinguishment of debt, net of applicable
income taxes (12.7)
- ---------------------------------------------------------------------------
Net earnings $ 169.1 $ 78.3 $ 4.9
===========================================================================
30
<PAGE>
- ---------------------------------------------------------------------------
CONSOLIDATED RESULTS OF OPERATIONS Owens-Illinois, Inc. -- Continued
Millions of dollars, except per share amounts
Years ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------
Earnings per share of common stock:
Earnings (loss) from continuing
operations before extraordinary
items $ 1.40 $ 0.64 $ (1.70)
Net earnings of discontinued
operations 0.01
Gain on sale of
discontinued operations 1.82
- ---------------------------------------------------------------------------
Earnings before extraordinary
items 1.40 0.64 0.13
Extraordinary charges (0.10)
- ---------------------------------------------------------------------------
Net earnings $ 1.40 $ 0.64 $ 0.03
===========================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
31
<PAGE>
- -----------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS Owens-Illinois, Inc.
Millions of dollars, except share amounts
December 31, 1995 1994
- -----------------------------------------------------------------------------
Assets
Current assets:
Cash, including time deposits of $58.9
($56.8 in 1994) $ 109.4 $ 109.4
Short-term investments, at cost which
approximates market 52.5 32.2
Receivables, less allowances of $39.7
($38.7 in 1994) for losses and discounts 423.9 415.5
Inventories 502.2 477.1
Prepaid expenses 128.8 64.9
- -----------------------------------------------------------------------------
Total current assets 1,216.8 1,099.1
Investments and other assets:
Domestic investments and advances 22.7 26.7
Foreign investments and advances 61.4 65.2
Repair parts inventories 156.3 137.7
Prepaid pension 615.7 597.9
Insurance for asbestos-related costs 323.5 470.1
Deposits, receivables, and other assets 234.1 235.0
Excess of purchase cost over net assets
acquired, net of accumulated amortization
of $262.0 ($230.6 in 1994) 1,023.9 1,049.4
- -----------------------------------------------------------------------------
Total investments and other assets 2,437.6 2,582.0
Property, plant, and equipment:
Land, at cost 101.3 103.4
Buildings and equipment, at cost:
Buildings and building equipment 475.1 459.2
Factory machinery and equipment 2,306.1 2,041.0
Transportation, office, and miscellaneous equipment 77.8 58.1
Construction in progress 126.9 156.7
- -----------------------------------------------------------------------------
3,087.2 2,818.4
Less accumulated depreciation 1,302.4 1,181.9
- -----------------------------------------------------------------------------
Net property, plant, and equipment 1,784.8 1,636.5
- -----------------------------------------------------------------------------
Total assets $5,439.2 $5,317.6
=============================================================================
32
<PAGE>
- -----------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS Owens-Illinois, Inc. (continued)
Millions of dollars, except share amounts
December 31, 1995 1994
- -----------------------------------------------------------------------------
Liabilities and Share Owners' Equity
Current liabilities:
Short-term loans $ 52.6 $ 44.3
Accounts payable 289.5 280.3
Salaries and wages 83.9 84.8
U.S. and foreign income taxes 26.8 20.8
Current portion of asbestos-related liabilities 145.0 145.0
Other accrued liabilities 268.2 332.1
Long-term debt due within one year 22.9 20.7
- -----------------------------------------------------------------------------
Total current liabilities 888.9 928.0
Long-term debt 2,757.7 2,624.7
Deferred taxes 133.4 47.0
Nonpension postretirement benefits 389.1 405.4
Asbestos-related liabilities 235.4 404.4
Other liabilities 335.3 407.0
Commitments and contingencies
Minority share owners' interests 167.5 125.2
Share owners' equity:
Preferred stock 21.9 26.3
Common stock, par value $.01 per share, 250,000,000
shares authorized, 119,966,191 shares outstanding
(119,079,496 in 1994) 1.2 1.2
Capital in excess of par value 1,042.8 1,034.6
Deficit (449.3) (618.4)
Cumulative foreign currency translation adjustment (84.7) (67.8)
- -----------------------------------------------------------------------------
Total share owners' equity 531.9 375.9
- -----------------------------------------------------------------------------
Total liabilities and share owners' equity $5,439.2 $5,317.6
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
33
<PAGE>
- -----------------------------------------------------------------------------
CONSOLIDATED SHARE OWNERS' EQUITY Owens-Illinois, Inc.
Millions of dollars
Years ended December 31, 1995 1994 1993
- -----------------------------------------------------------------------------
Preferred stock
Balance at beginning of year $ 26.3 $ 26.3 $ 26.3
Exchange of Series A preferred stock
for common stock (4.4)
- -----------------------------------------------------------------------------
Balance at end of year 21.9 26.3 26.3
=============================================================================
Common stock
Balance at beginning of year 1.2 1.2 1.2
Exchange of Series A preferred stock
for common stock
Issuance of common stock
- -----------------------------------------------------------------------------
Balance at end of year 1.2 1.2 1.2
=============================================================================
Capital in excess of par value
Balance at beginning of year 1,034.6 1,033.9 1,034.0
Exchange of Series A preferred stock
for common stock 4.4
Issuance of common stock 3.8 .7
Purchase of common stock (.1)
- -----------------------------------------------------------------------------
Balance at end of year 1,042.8 1,034.6 1,033.9
=============================================================================
Deficit
Balance at beginning of year (618.4) (696.7) (701.6)
Net earnings 169.1 78.3 4.9
- -----------------------------------------------------------------------------
Balance at end of year (449.3) (618.4) (696.7)
=============================================================================
Cumulative foreign currency
translation adjustment
Balance at beginning of year (67.8) (69.9) (61.3)
Net change for the year (16.9) 2.1 (8.6)
- -----------------------------------------------------------------------------
Balance at end of year (84.7) (67.8) (69.9)
=============================================================================
Total share owners' equity $ 531.9 $ 375.9 $ 294.8
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
34
<PAGE>
- -----------------------------------------------------------------------------
CONSOLIDATED CASH FLOWS Owens-Illinois, Inc.
Millions of dollars
Years ended December 31, 1995 1994 1993
- -----------------------------------------------------------------------------
Operating activities:
Earnings (loss) from continuing
operations before extraordinary
items $ 169.1 $ 78.3 $(200.8)
Non-cash charges (credits):
Depreciation 188.3 183.3 180.0
Amortization of deferred costs 49.8 50.3 52.3
Asbestos-related insurance 40.0 100.0
Uninsured asbestos-related costs 325.0
Restructuring and other costs (40.0) 253.2
Gains on sales of interests in Kimble
and television glass businesses (46.1)
Deferred tax provision (credit) 48.7 30.2 (145.6)
Other (33.7) (25.4) (8.1)
Dividends from equity affiliates 3.7 4.4 5.6
Change in non-current operating assets (33.4) (14.7) 25.7
Asbestos-related payments (169.0) (142.7) (136.2)
Asbestos-related insurance proceeds 106.6 79.9
Reduction of non-current liabilities (17.5) (77.5) (55.1)
Change in components of working capital (60.0) (38.7) (10.9)
- -----------------------------------------------------------------------------
Cash provided by continuing operating
activities 252.6 227.4 239.0
Cash utilized in discontinued operating
activities (7.3)
- -----------------------------------------------------------------------------
Cash provided by operating activities 252.6 227.4 231.7
Investing activities:
Additions to property, plant and equipment (283.6) (286.0) (266.2)
Acquisitions (58.8) (47.1) (34.0)
Net cash proceeds from divestitures 8.1 13.4 727.3
Other (.3) 2.1
- -----------------------------------------------------------------------------
Cash provided by (utilized in) investing
activities (334.3) (320.0) 429.2
35
<PAGE>
- -----------------------------------------------------------------------------
CONSOLIDATED CASH FLOWS Owens-Illinois, Inc. (continued)
Millions of dollars
Years ended December 31, 1995 1994 1993
- -----------------------------------------------------------------------------
Financing activities:
Additions to long-term debt $164.3 $ 513.7 $ 107.0
Repayments of long-term debt (81.8) (336.8) (712.1)
Decrease in short-term loans (5.3) (4.0) (13.7)
Issuance of subsidiaries' stock 4.3
Payment of finance fees and debt retirement
costs (1.2) (14.9)
Issuance of common stock 3.8 .7
- -----------------------------------------------------------------------------
Cash provided by (utilized in)
financing activities 81.0 176.7 (633.7)
Effect of exchange rate fluctuations on cash .7 (41.8) (41.2)
- -----------------------------------------------------------------------------
Increase (decrease) in cash 0.0 42.3 (14.0)
Cash at beginning of year 109.4 67.1 81.1
- -----------------------------------------------------------------------------
Cash at end of year $109.4 $ 109.4 $ 67.1
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
36
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Basis of Consolidated Statements. The consolidated financial statements of
Owens-Illinois, Inc. ("Company") include the accounts of its wholly-owned
direct subsidiary, Owens-Illinois Group, Inc. ("Group"), and all other major
subsidiaries. Substantially all the assets of the Company are represented by
its investment in and receivables from Group.
Newly acquired subsidiaries have been included in the consolidated financial
statements from dates of acquisition.
Consolidated foreign subsidiaries are principally reported on the basis of
fiscal years ending November 30.
The Company uses the equity method of accounting for investments in which it
has a significant ownership interest, generally 20% to 50%. Other investments
are accounted for at cost.
Nature of Operations. The Company is a leading manufacturer of glass
container and plastic packaging products operating in two industry segments.
The Company's principal product lines in the Glass Containers industry segment
are glass containers for the food and beverage industries. The Company's
principal product lines in the Plastics and Closures industry segment include
plastic containers, plastic closures, plastic prescription containers, labels,
and multipack plastic carriers for beverage containers. Sales of the Glass
Containers industry segment were 73% of the Company's 1995 consolidated sales.
The Company has glass container operations located in thirteen countries,
while the plastics and closures operations are predominantly located in the
United States. The principal markets and operations for the Company's glass
products are in the United States, Latin America and Europe. Major markets
for the plastics and closures products include the United States household
products, personal care products, health care products, and food and beverage
industries.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management of the Company to
make estimates and assumptions that affect certain amounts reported in the
financial statements and accompanying notes. Actual results may differ from
those estimates, at which time the Company would revise its estimates
accordingly. For further information on certain of the Company's significant
estimates, see Contingencies on page 52.
Cash. The Company defines "cash" as cash and time deposits with maturities of
three months or less when purchased.
Fair Values of Financial Instruments. The carrying amounts reported for cash,
short-term investments and short-term loans approximate fair value. In
addition, carrying amounts approximate fair value for certain long-term debt
obligations subject to frequently redetermined interest rates. Fair values
37
<PAGE>
for the Company's significant fixed rate debt obligations are generally based
on published market quotations. The Company is not a party to any significant
derivative financial instruments.
Inventory Valuation. The Company uses the last-in, first-out (LIFO) cost
method of inventory valuation for most domestic inventories. Other
inventories are valued at the lower of standard costs (which approximate
average costs), average costs, or market.
Excess of Purchase Cost over Net Assets Acquired. The excess of purchase cost
over net assets acquired is being amortized over 40 years. The Company
evaluates the recoverability of long-lived assets based on undiscounted
projected cash flows, excluding interest and taxes, when factors indicate that
an impairment may exist.
Property, Plant, and Equipment. In general, depreciation is computed using
the straight-line method.
Income Taxes on Undistributed Earnings. In general, the Company plans to
continue to invest in the business the undistributed earnings of foreign
subsidiaries and corporate joint ventures accounted for by the equity method.
Accordingly, taxes are provided only on that amount of undistributed earnings
in excess of planned reinvestments.
Foreign Currency Translation. The assets and liabilities of certain
affiliates and associates are translated at current exchange rates and any
related translation adjustments are recorded directly in share owners' equity.
Certain of the Company's major affiliates which are located in Brazil,
Venezuela and Poland operate in "highly inflationary" economies. In such
cases, certain assets of these affiliates are translated at historical
exchange rates and all translation adjustments are reflected in the statements
of Consolidated Results of Operations.
Earnings Per Share of Common Stock. Earnings per share of common stock is
computed using weighted average shares of common stock outstanding
(119,343,048 shares for 1995, 119,004,785 shares for 1994, and 118,978,327
shares for 1993) after deducting dividend requirements for preferred stock.
Incremental shares applicable to outstanding stock options and exchangeable
preferred stock are not included in the calculation as they would not
materially affect the reported amounts.
38
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
Tabular data in millions of dollars, except share and per share amounts
- --------------------------------------------------------------------------------
Changes in Components of Working Capital Related to Operations. Changes in
the components of working capital related to operations (net of the effects
related to acquisitions and divestitures) were as follows:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Decrease (increase) in current assets:
Short-term investments $ (5.5) $ (1.5) $ (3.4)
Receivables 21.0 (71.3) (10.9)
Inventories 8.4 6.9 (17.3)
Prepaid expenses (8.9) (6.0) 3.9
Increase (decrease) in current liabilities:
Accounts payable and accrued liabilities (76.6) 26.7 5.0
Salaries and wages .2 4.8 1.2
U.S. and foreign income taxes 1.4 1.7 (6.0)
- ----------------------------------------------------------------------------
$(60.0) $(38.7) $(27.5)
============================================================================
Continuing operations $(60.0) $(38.7) $(10.9)
Discontinued operations (16.6)
- ----------------------------------------------------------------------------
$(60.0) $(38.7) $(27.5)
============================================================================
Inventories. Major classes of inventory are as follows:
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
Finished goods $381.4 $377.4
Work in process 3.2 4.2
Raw materials 80.3 73.0
Operating supplies 37.3 22.5
- ----------------------------------------------------------------------------
$502.2 $477.1
============================================================================
If the inventories which are valued on the LIFO method had been valued at
standard or average costs, which approximate current costs, consolidated
inventories would be higher than reported by $21.0 million and $19.6 million
at December 31, 1995 and 1994, respectively.
Inventories which are valued at the lower of standard costs (which approximate
average costs), average costs, or market at December 31, 1995 and 1994 were
approximately $185.2 million and $125.7 million, respectively.
39
<PAGE>
Investments. Domestic and foreign investments and advances relate principally
to equity associates. Summarized information pertaining to the Company's
equity associates follows:
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
At end of year:
Equity in undistributed earnings:
Foreign $ 55.4 $ 50.8
Domestic 8.4 10.8
- ----------------------------------------------------------------------------
Total $ 63.8 $ 61.6
============================================================================
Equity in cumulative translation adjustment $(15.0) $(14.1)
============================================================================
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
For the year:
Equity in earnings:
Foreign $10.1 $12.8 $15.8
Domestic 4.3 9.5 9.5
- ----------------------------------------------------------------------------
Total $14.4 $22.3 $25.3
============================================================================
Dividends received:
Foreign $ 3.7 $ 2.9 $ 4.8
Domestic 1.5 .8
- ----------------------------------------------------------------------------
Total $ 3.7 $ 4.4 $ 5.6
============================================================================
Summarized combined financial information for equity associates is as follows:
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
At end of year:
Current assets $423.4 $378.8
Non-current assets 441.8 427.2
- ----------------------------------------------------------------------------
Total assets 865.2 806.0
- ----------------------------------------------------------------------------
Current liabilities 205.3 192.3
Other liabilities and deferred items 358.6 316.6
- ----------------------------------------------------------------------------
Total liabilities and deferred items 563.9 508.9
- ----------------------------------------------------------------------------
Net assets $301.3 $297.1
============================================================================
40
<PAGE>
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
For the year:
Net sales $1,099.0 $1,018.6 $1,003.5
============================================================================
Gross profit $ 178.4 $ 199.3 $ 201.3
============================================================================
Net earnings $ 56.0 $ 62.2 $ 67.8
============================================================================
On January 1, 1995, the Company consolidated the operations of its affiliates
in Poland and Bolivia. Results of the Polish affiliate for 1994 and balance
sheet data at December 31, 1994 are included above. Results of the Bolivian
affiliate for 1994 and 1993 and balance sheet data at December 31, 1994 are
also included above.
During the fourth quarter of 1993, the Company sold the remaining 50% interest
in the television glass business, the results of which are included above
through the date of sale. On December 31, 1993, the Company sold 51% of its
Kimble business. Results of the Kimble business for 1995 and 1994 and balance
sheet data at December 31, 1995 and 1994, are included above.
At December 31, 1995, the Company's equity in the undistributed earnings of
foreign subsidiaries for which income taxes had not been provided approximated
$213 million. It is not practicable to estimate the U.S. and foreign tax
which would be payable should these earnings be distributed.
Discontinued Operations. On June 24, 1993, the Company and Group completed
the sale of all the issued and outstanding shares of stock of Group's wholly
owned subsidiary, Libbey Inc. ("Libbey"), through an underwritten initial
public offering. Libbey operated the glass tableware business of the Company,
which is presented as a discontinued operation in the accompanying financial
statements. Proceeds from the sale amounted to approximately $445 million.
The gain on the sale of the Libbey business amounted to $270.5 million, less
applicable income taxes of $53.5 million. Applicable income taxes have been
reduced by the previously unrecognized benefit of a capital loss carryover.
41
<PAGE>
Summary results of operations information for the Libbey business is as
follows:
Period ended
June 18, 1993
- -----------------------------------------------------------------------------
Total revenues $118.1
Costs and expenses 97.9
- -----------------------------------------------------------------------------
Earnings before interest and taxes 20.2
Interest expense 17.7
- -----------------------------------------------------------------------------
Earnings before income taxes 2.5
Provision for income taxes 1.1
- -----------------------------------------------------------------------------
Net earnings $ 1.4
=============================================================================
Interest expense allocated to discontinued operations is based on the
indebtedness expected to be repaid with the proceeds from the sale of the
Libbey business at applicable interest rates in effect during the period.
Other Accrued Liabilities. At December 31, 1995 and 1994, other accrued
liabilities include accruals for interest, consisting principally of interest
accrued on domestic obligations of $40.7 million and $39.6 million,
respectively.
Short-Term Borrowings. At December 31, 1995 and 1994, the weighted average
interest rate on outstanding short-term borrowings was 14.0% and 20.7%,
respectively. The relatively high weighted average interest rates are
reflective of the generally higher short-term borrowing costs incurred by most
of the Company's Latin American affiliates.
Long-Term Debt. The following table summarizes the long-term debt of the
Company at December 31, 1995 and 1994:
- -----------------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------------
Bank Credit Agreement:
Revolving Loans $ 549.4 $ 450.3
Bid Rate Loans 61.0 65.0
Senior Debentures, 11%, due 1999 to 2003 1,000.0 1,000.0
Senior Subordinated Notes:
10-1/4%, due 1999 250.0 250.0
10-1/2%, due 2002 150.0 150.0
10%, due 2002 250.0 250.0
9-3/4%, due 2004 200.0 200.0
9.95%, due 2004 100.0 100.0
Other 220.2 180.1
- -----------------------------------------------------------------------------
2,780.6 2,645.4
Less amounts due within one year 22.9 20.7
- -----------------------------------------------------------------------------
Long-term debt $2,757.7 $2,624.7
=============================================================================
42
<PAGE>
The Company has an agreement with a group of banks ("Bank Credit Agreement" or
"Agreement") which provides Revolving Loan Commitments under which the Company
may borrow up to $1 billion through December 1998. The Agreement includes
Swing Line and Overdraft Account facilities providing for aggregate borrowings
up to $50 million which reduce the amount available for borrowing under the
Revolving Loan Commitments. In addition, the terms of the Bank Credit
Agreement permit the Company to request Bid Rate Loans from banks
participating in the Agreement and to issue Commercial Paper notes to other
purchasers. Borrowings outstanding under Bid Rate Loans and Commercial Paper
notes are limited to $450 million in the aggregate and reduce the amount
available for borrowing under the Revolving Loan Commitments. The Revolving
Loan Commitments also provide for the issuance of letters of credit totaling
up to $300 million.
At December 31, 1995, the Company had unused credit available under the Bank
Credit Agreement of $322.0 million.
Revolving loans bear interest, at the Company's option, at the prime rate or a
Eurodollar deposit-based rate plus a margin linked to published ratings of the
Company's senior debt instruments. The margin is currently .875% and is
limited to a range of .625% to 1%. Swing Line and Overdraft Account loans
bear interest at the prime rate minus the commitment fee percentage, defined
below. The weighted average interest rate on borrowings outstanding under the
Bank Credit Agreement at December 31, 1995, was 6.78%. While no compensating
balances are required by the Agreement, the Company must pay a commitment fee
on the excess of the Revolving Loan Commitments over the aggregate amount of
Revolving Loans outstanding. The commitment fee, currently .375%, is subject
to reduction to .25%, also based on changes in published ratings.
The capital stock and intercompany debt obligations of most of the Company's
domestic subsidiaries are pledged as collateral for borrowings under the
Agreement and certain other obligations. While these pledges do not directly
encumber the operating assets owned by these subsidiaries, the Agreement
restricts the creation of liens on them. The Agreement also requires the
maintenance of certain financial ratios, restricts the incurrence of
indebtedness and other contingent financial obligations, and restricts certain
types of business activities and investments.
The Senior Debentures rank pari passu with the obligations of the Company
under the Bank Credit Agreement and other senior indebtedness, and senior in
right of payment to all existing and future subordinated debt of the Company.
The Senior Debentures are guaranteed on a senior basis by Group and most of
the Company's domestic subsidiaries and secured by a pledge of the capital
stock of, and intercompany indebtedness of, Group and such subsidiaries.
Annual maturities for all of the Company's long-term debt through 2000 are as
follows: 1996, $22.9 million; 1997, $49.6 million; 1998, $633.3 million;
1999, $463.9 million; and 2000, $229.5 million.
Interest paid in cash aggregated $283.1 million for 1995, $259.1 million for
1994, and $284.2 million for 1993.
43
<PAGE>
Fair values at December 31, 1995, of the Company's significant fixed rate debt
obligations are as follows:
- -----------------------------------------------------------------------------
Indicated
Principal Market
Amount Price Fair Value
- -----------------------------------------------------------------------------
11% Senior Debentures $1,000.0 113 $1,130.0
Senior Subordinated Notes:
10-1/4% 250.0 104 260.0
10-1/2% 150.0 106-7/8 160.3
10% 250.0 104-5/8 261.6
9-3/4% 200.0 105-3/8 210.8
9.95% 100.0 106 106.0
- -----------------------------------------------------------------------------
Operating Leases. Rent expense attributable to all operating leases was $58.5
million in 1995, $53.4 million in 1994, and $54.2 million in 1993. Contingent
rental expense was not significant in any period presented. Minimum future
rentals under operating leases are as follows: 1996, $31.7 million; 1997,
$29.4 million; 1998, $26.5 million; 1999, $23.5 million; 2000, $18.0 million;
and 2001 and thereafter, $95.1 million.
Foreign Currency Translation. Aggregate foreign currency exchange losses
included in other costs and expenses were $10.1 million in 1995, $53.9 million
in 1994, and $16.1 million in 1993, and resulted principally from translation
of the balance sheets of certain of the Company's major affiliates which are
located in Brazil and Venezuela. Earnings on time deposits and short-term
investments in those countries typically include an inflationary component,
which has substantially offset the exchange losses in those years.
Changes in the cumulative foreign currency translation adjustment were as
follows:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Balance at beginning of year $(67.8) $(69.9) $(61.3)
Net effect of exchange rate
fluctuations (17.2) 1.6 (10.8)
Previous adjustments eliminated
in divestitures (.3)
Deferred income taxes .3 .5 2.5
- ----------------------------------------------------------------------------
Balance at end of year $(84.7) $(67.8) $(69.9)
============================================================================
The net effect of exchange rate fluctuations generally reflects changes in the
relative strength of the U.S. dollar against major foreign currencies between
the beginning and end of the year.
44
<PAGE>
Income Taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities at
December 31, 1995 and 1994 are as follows:
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
Deferred tax assets:
Accrued postretirement benefits $138.4 $143.2
Asbestos-related liabilities 133.2 192.3
Other accrued liabilities 111.6 167.8
U.S. Federal tax loss carryovers 104.3 107.4
Other 79.9 55.5
- ----------------------------------------------------------------------------
Total deferred tax assets 567.4 666.2
Deferred tax liabilities:
Prepaid pension costs 216.2 208.1
Property, plant and equipment 193.0 186.1
Insurance for asbestos-related costs 95.2 164.5
Inventory 38.8 45.6
Receivables and other assets 20.6 19.6
Other 31.2 37.8
- ----------------------------------------------------------------------------
Total deferred tax liabilities 595.0 661.7
- ----------------------------------------------------------------------------
Net deferred tax assets (liabilities) $(27.6) $ 4.5
============================================================================
Deferred taxes are included in the Consolidated Balance Sheets at December 31,
1995 and 1994 as follows:
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
Prepaid expenses $ 105.8 $ 51.5
Deferred tax liabilities (133.4) (47.0)
- ----------------------------------------------------------------------------
Net deferred tax assets (liabilities) $ (27.6) $ 4.5
============================================================================
45
<PAGE>
The provision for income taxes consists of the following:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Current:
U.S. federal $ 1.5
State .8 $ 2.9 $ 2.0
Foreign 49.8 35.8 31.6
- ----------------------------------------------------------------------------
52.1 38.7 33.6
- ----------------------------------------------------------------------------
Deferred:
U.S. federal 34.7 22.7 (120.8)
State 6.6 1.1 (17.0)
Foreign 7.4 6.4 (7.8)
- ----------------------------------------------------------------------------
48.7 30.2 (145.6)
- ----------------------------------------------------------------------------
Total:
U.S. federal 36.2 22.7 (120.8)
State 7.4 4.0 (15.0)
Foreign 57.2 42.2 23.8
- ----------------------------------------------------------------------------
$100.8 $ 68.9 $(112.0)
============================================================================
The provision for income taxes has been
allocated as follows:
Continuing operations $100.8 $ 68.9 $(113.1)
Discontinued operations 1.1
- ----------------------------------------------------------------------------
$100.8 $ 68.9 $(112.0)
============================================================================
The provision for income taxes was calculated based on the following
components of earnings (loss) before income taxes and extraordinary items:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Continuing operations:
Domestic $100.2 $ 32.4 $(411.6)
Foreign 209.8 138.9 117.1
Discontinued operations 2.5
- ----------------------------------------------------------------------------
$310.0 $171.3 $(292.0)
============================================================================
Income taxes paid (refunded) in cash were as follows:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Domestic $ 3.1 $ (6.5) $ 1.0
Foreign 35.5 20.2 18.5
- ----------------------------------------------------------------------------
$ 38.6 $ 13.7 $ 19.5
============================================================================
46
<PAGE>
A reconciliation of the provision for income taxes based on the statutory U.S.
federal tax rate of 35% to the provision for income taxes is as follows:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Pretax earnings (loss) at statutory
U.S. Federal tax rate $108.5 $60.0 $(102.2)
Increase (decrease) in provision for
income taxes due to:
Amortization of goodwill 10.5 11.5 11.0
State taxes, net of federal benefit 4.8 2.6 (9.7)
Foreign earnings at different rates (4.9) 2.5 (1.6)
Nontaxable foreign earnings (5.3)
Foreign sales corporation and possession
tax credits (5.3) (1.5) (0.9)
Research and development credits (1.0) (1.8)
Equity earnings (2.1) (3.1) (2.6)
Divestitures (8.3)
Adjustment for enacted change in tax rate 2.4
Other items (4.4) (1.3) (0.1)
- ----------------------------------------------------------------------------
Provision (credit) for income taxes $100.8 $68.9 $(112.0)
============================================================================
Effective tax rate 32.5% 40.2% 38.4%
============================================================================
For U.S. Federal income tax purposes, approximately $298 million of net
operating loss is available as a carryover at December 31, 1995. Carryovers
of the net operating loss expire beginning in 2004. For financial reporting
purposes, a valuation reserve was established as of January 1, 1992 for $70
million of the capital loss carryover. The valuation reserve was eliminated
in 1993, thereby reducing the tax provision that otherwise would have been
required on the gain on the sale of the Libbey business.
Additionally, alternative minimum tax credits and research and development
credits of approximately $16 million and $3 million, respectively, are
available to offset future U.S. federal income tax. The alternative minimum
tax credits do not expire while carryovers of the research and development
credits expire beginning in 2009.
Restriction on Retained Earnings. Under the terms of the Bank Credit
Agreement and the various Indentures related to the Company's senior and
subordinated notes and debentures (see Long-Term Debt), the Company may not
pay dividends with respect to its Preferred or Common Stock and is restricted
in the number of shares of its Common Stock which can be redeemed.
47
<PAGE>
Preferred Stock. Preferred shares, $.01 par value, $7.00 cumulative dividend,
issuable in series, at December 31, 1995 and 1994, were as follows:
Number of Shares
- -----------------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------------
Series A Exchangeable
Authorized 75,000 75,000
Issued 65,625 65,625
Outstanding 22,397 65,625
Series B Exchangeable
Authorized 75,000 75,000
Issued and outstanding 65,625 65,625
Series C Exchangeable
Authorized 150,000 150,000
Issued and outstanding 131,250 131,250
The preferred shares, all of which were issued October 30, 1992, are
exchangeable for a number of common shares determined by multiplying the total
number of exchangeable shares being exchanged by the sum of $100 plus all
dividends accumulated and unpaid on each share being exchanged and dividing
such amount by the last reported sales price of common shares on the New York
Stock Exchange at the close of business on the business day next preceding the
day of exchange. The shares are exchangeable at the option of the owners as
follows: Series A, from and after the third anniversary of the date of
issuance; Series B, from and after the fifth anniversary of the date of
issuance; and Series C, from and after the sixth anniversary of the date of
issuance. Dividends accumulated and unpaid were approximately $4.8 million
and $4.0 million at December 31, 1995 and 1994, respectively.
Holders of the preferred shares have no voting rights, except on actions which
would affect their rights to exchange shares for common shares, or on actions
to increase the authorized number of exchangeable shares.
Restrictions on Transfer of Assets. The governments and national banking
systems of certain countries in which the Company has consolidated foreign
affiliates impose various restrictions on the payment of dividends and
transfer of funds out of those countries. Additionally, provisions of credit
agreements entered into by certain foreign affiliates presently restrict the
payment of dividends. The estimated U.S. dollar value of the foreign net
assets included in the Consolidated Balance Sheets that are restricted in some
manner as to transfer to the Company was approximately $140 million at
December 31, 1995.
Stock Options. Nonqualified options to purchase shares of common stock of the
Company are outstanding under the Stock Option Plan for Key Employees as
amended and restated effective December 18, 1991 and the Stock Option Plan for
Directors of Owens-Illinois, Inc. as amended effective May 12, 1994.
48
<PAGE>
All options have been granted at prices equal to the market price on the date
granted. Accordingly, the Company recognizes no compensation expense related
to these options in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees." In October, 1995, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," which
encourages, but does not require, expense recognition for stock-based awards
based on their estimated fair value on the date of grant. The Company
presently intends to continue to account for stock-based awards under the
provisions of APB No. 25.
Stock option activity is as follows:
- ----------------------------------------------------------------------------
Shares
Under
Option Price Range
- ----------------------------------------------------------------------------
Outstanding at December 31, 1993 4,912,696 $ 5.00-$12.50
Granted 571,673 11.00- 12.63
Exercised (106,169) 5.00
Canceled (63,800) 11.50- 12.50
- ----------------------------------------------------------------------------
Outstanding at December 31, 1994 5,314,400 5.00- 12.63
Granted 528,450 13.25
Exercised (470,900) 5.00- 11.00
Canceled (40,750) 11.00- 12.50
- ----------------------------------------------------------------------------
Outstanding at December 31, 1995 5,331,200 $ 5.00-$13.25
============================================================================
- ----------------------------------------------------------------------------
1995 1994
- ----------------------------------------------------------------------------
At end of year:
Shares reserved for option grants 1,574,640 2,062,340
============================================================================
Share options exercisable 3,272,761 3,497,772
============================================================================
Price range of options exercisable $5.00-$13.25 $5.00-$12.50
============================================================================
Pension Benefit Plans. Net credits to continuing operations for all of the
Company's pension plans and certain deferred compensation arrangements
amounted to $31.5 million in 1995, $28.2 million in 1994, and $26.7 million in
1993.
The Company has pension plans covering substantially all domestic employees.
Benefits generally are based on compensation for salaried employees and on
length of service for hourly employees. The Company's policy is to fund
domestic pension plans such that sufficient assets will be available to meet
future benefit requirements.
49
<PAGE>
The following tables relate to the Company's principal domestic pension plans.
The funded status at year-end was as follows:
- --------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $1,651.9 $1,471.9
Nonvested 104.2 88.5
- --------------------------------------------------------------------------
Accumulated benefit obligation 1,756.1 1,560.4
Effect of assumed benefit increases 143.1 112.2
- --------------------------------------------------------------------------
Projected benefit obligation 1,899.2 1,672.6
Plan assets at fair value 2,357.9 2,040.2
- --------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 458.7 367.6
Unrecognized prior service cost 34.3 37.4
Unrecognized net loss 122.7 192.9
- --------------------------------------------------------------------------
Prepaid pension $ 615.7 $ 597.9
==========================================================================
The components of the net pension credit for the year were as follows:
- --------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------
Service cost (benefits earned
during the period) $ 19.7 $ 27.3 $ 30.8
Interest cost on projected
benefit obligation 137.4 133.1 150.5
Actual return on plan assets (504.3) 21.8 (356.6)
Net amortization and deferral 300.9 (223.6) 139.4
- --------------------------------------------------------------------------
$ (46.3) $ (41.4) $ (35.9)
==========================================================================
The actuarial present value of benefit obligations is based on a discount rate
of 7.25% for 1995 and 8.50% for 1994. Future benefits are assumed to increase
in a manner consistent with past experience of the plans, which, to the extent
benefits are based on compensation, includes assumed salary increases on a
scale of 5% for 1995 and 1994. The expected long-term rate of return on
assets was 10% for 1995, 1994, and 1993. Amortization included in net pension
credits is based on the average remaining service of employees. Plan assets
include marketable equity securities which, at December 31, 1995, included
19,099,647 shares of the Company's common stock, government and corporate debt
securities, real estate and commingled funds. During 1995 and 1993, the
Company transferred $22.0 million and $30.0 million, respectively, of pension
plan assets to a special trust for the purpose of funding qualified current
retiree health liabilities.
50
<PAGE>
Postretirement Benefits Other Than Pensions. The Company provides certain
retiree health care and life insurance benefits covering substantially all
U.S. salaried and certain hourly employees. Employees are generally eligible
for benefits upon retirement and completion of a specified number of years of
creditable service.
The components of the net postretirement benefit cost for the year were as
follows:
- -----------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
Service cost (benefits earned during
the period) $ 1.6 $ 2.1 $ 5.1
Interest cost on accumulated
postretirement benefit obligation 23.5 21.9 26.7
Amortization (13.7) (13.3) (15.8)
- -----------------------------------------------------------------------------
Net postretirement benefit cost $ 11.4 $ 10.7 $ 16.0
=============================================================================
The components of the accumulated postretirement benefit obligation and
amounts accrued at year-end were as follows:
- -----------------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees and dependents $264.4 $248.2
Eligible active employees 17.1 12.8
Other active employees 30.5 28.0
- -----------------------------------------------------------------------------
312.0 289.0
Unamortized prior service credit 114.4 128.1
Unrecognized net loss (37.3) (11.7)
- -----------------------------------------------------------------------------
Nonpension postretirement benefits $389.1 $405.4
=============================================================================
Assumed health care cost inflation was based on a rate of 8.50% in 1995 and
9.00% in 1994, declining ratably to an ultimate rate of 6.00%. A one
percentage point increase in these rates would have increased the accumulated
postretirement benefit obligation at December 31, 1995 by $12.6 million and
increased the net postretirement benefit cost for 1995 by $1.2 million. The
assumed discount rates used in determining the accumulated postretirement
benefit obligation were 7.25% and 8.50% at December 31, 1995 and 1994,
respectively. Amortization included in net postretirement benefit cost is
based on the average remaining service of employees.
Benefits provided by the Company for certain of the hourly retirees are
determined by collective bargaining. Most other domestic hourly retirees
receive health and life insurance benefits from a multiemployer trust
established by collective bargaining. Payments to the trust as required by
the bargaining agreements are based upon specified amounts per hour worked and
were $7.1 million in 1995, $7.5 million in 1994, and $7.3 million in 1993.
Postretirement health and life benefits for retirees of foreign affiliates are
51
<PAGE>
generally provided through the national health care programs of the countries
in which the affiliates are located.
Other Revenues. Other revenues for the year ended December 31, 1993, includes
gains totaling $46.1 million (approximately $34.6 million after tax) from the
fourth quarter sales of the remaining 50% interest in the television glass
business and of 51% of the Kimble business.
Other Costs and Expenses. Other costs and expenses for the year ended
December 31, 1995, includes $40 million to write down the asbestos insurance
asset and a net credit of $40 million primarily from the reduction of
previously established restructuring reserves. Other costs and expenses for
the year ended December 31, 1994, includes $100 million to write down the
asbestos insurance asset. Other costs and expenses for the year ended
December 31, 1993, includes $325 million for estimated uninsured future
asbestos-related costs and charges totaling $253.2 million, principally for
costs related to a restructuring program and including approximately $50
million for costs related to a December 1993 plant shutdown and an increase in
estimated future fees and indemnification costs related to various
environmental and legal matters.
Extraordinary Charges. As a result of the repayment of certain debt
obligations prior to their scheduled maturities, the Company recorded
extraordinary charges of $20.3 million for the write-off of unamortized
finance fees and redemption premiums, less applicable income taxes of $7.6
million, in 1993.
Contingencies. The Company was contingently liable at December 31, 1995,
under guarantees of loans and lease obligations related to certain divested
businesses, equity associates and other third parties in the principal amount
of $29.8 million.
The Company is one of a number of defendants (typically 10 to 20) in a
substantial number of lawsuits filed in numerous state and federal courts by
persons alleging bodily injury (including death) as a result of exposure to
dust from asbestos fibers. From 1948 to 1958, one of the Company's former
business units commercially produced and sold a high-temperature, clay-based
insulating material containing asbestos. The insulation material was used in
limited industrial applications such as shipyards, power plants and chemical
plants. During its ten years in the high-temperature insulation business, the
Company's aggregate sales of insulation material containing asbestos were less
than $40 million. The Company exited the insulation business in April 1958.
The traditional asbestos personal injury lawsuits and claims relating to such
production and sale of asbestos material typically allege various theories of
liability, including negligence, gross negligence and strict liability and
seek compensatory and punitive damages in various amounts (herein referred to
as "asbestos claims"). As of December 31, 1995, the Company estimates that it
is a named defendant in asbestos claims involving approximately 19,000
plaintiffs and claimants.
52
<PAGE>
The following table shows the approximate number of plaintiffs and claimants
involved in asbestos claims pending at the beginning of, disposed of and filed
during, and pending at the end of, each of the years listed (eliminating
duplicate filings):
1995 1994 1993
------ ------ ------
Pending at beginning of year 27,000 35,000 51,000
Disposed 23,000 20,000 30,000
Filed 15,000 12,000 14,000
------ ------ ------
Pending at end of year 19,000 27,000 35,000
====== ====== ======
Since receiving its first asbestos claim, the Company, as of December 31,
1995, has disposed of the asbestos claims of approximately 187,000 plaintiffs
and claimants at an average indemnity payment per claim of approximately
$3,900. Certain of these dispositions have included deferred payment amounts
payable over periods ranging from one to seven years; such amounts are
included in the foregoing average indemnity payment per claim. The Company
believes the increased 1995 filings were in part attributable to the efforts
of claimants attempting to avoid the impact of various federal and state "tort
reform" legislative proposals.
The Company's indemnity payments for these claims have varied on a per claim
basis, and are expected to continue to vary considerably over time. They are
affected by a multitude of factors, including the type and severity of the
disease sustained by the claimant; the occupation of the claimant; the extent
of the claimant's exposure to asbestos-containing insulation products
manufactured or sold by the Company; the extent of the claimant's exposure to
asbestos-containing products manufactured or sold by other producers; the
number and financial resources of other producer defendants; the jurisdiction
of suit; the presence or absence of other possible causes of the claimant's
illness; the availability of legal defenses such as the statute of limitations
or state of the art; and whether the claim was resolved on an individual basis
or as part of a group settlement.
Total indemnity, claim disposition and litigation payments and expenses in
asbestos claims and related proceedings may also be affected by (i) settlement
and judgment payments by other defendants (which may take the form of a
judgment credit for such settlements), (ii) claims or cross-claims by other
asbestos manufacturers or suppliers seeking indemnity or contribution from the
Company, and (iii) the Company's claims or cross-claims for contribution or
indemnity from other asbestos manufacturers, suppliers or related parties.
Because the scope and extent of all such contribution and indemnity claims
vary considerably according to factual circumstances and applicable law, the
Company is unable to estimate the precise extent to which such contribution or
indemnity claims may affect the Company's total indemnity, claim disposition
and litigation payments and expenses, but the Company nonetheless believes
that the probable effect of all such claims or cross-claims against the
Company will not be material.
53
<PAGE>
The Company is also one of a number of defendants (typically 30 to 90) in
separate bodily injury lawsuits involving approximately 12,000 plaintiffs who
allege that they are or were maritime workers. On March 31, 1995, a class
action against the Company was filed in Common Pleas Court in Cuyahoga County,
Ohio which purports to consist of all maritime claimants alleging exposure to
the Company's asbestos-containing insulation products. The Company believes
that class action treatment of such maritime claims is inappropriate and,
accordingly, intends to oppose class certification in this suit. These
maritime plaintiffs, who are all represented by the same attorney, primarily
allege so-called "in-place" exposure to asbestos-containing products while
serving aboard merchant marine vessels. Such cases as a group appear to
involve significantly less serious disease compared to traditional filings and
the vast majority may not involve any medical condition attributable to
exposure to the Company's product. Since 1988, approximately 8,000 such
lawsuits filed by the same attorney have been dismissed by various courts for
procedural deficiencies. Many of these cases have been refiled in other
courts and are included with the above total of bodily injury lawsuits
involving maritime workers. One thousand of these cases dismissed were "with
prejudice," and many of the other dismissals involved the same claimants in
duplicate or repetitive suit filings. In view of these factors, the Company
presently believes that the probable ultimate disposition of these maritime
claims will not involve any material additional indemnity liability and does
not include them in the description herein of asbestos claims or in the total
number of pending asbestos claims set forth in the table above.
The Company is also one of a number of defendants (typically 15 to 30) in a
number of lawsuits and claims, some of which are class actions, brought by or
on behalf of public or private property owners, alleging damages as a result
of the presence of asbestos-containing insulation in various properties.
These lawsuits typically assert multiple theories of liability, including
negligence, breach of warranty and strict liability, and seek various forms of
monetary and equitable relief, including compensatory and punitive monetary
damages, restitution and removal of asbestos-containing material. As of
December 31, 1995, the Company was a named defendant in 17 such pending
property damage lawsuits and claims, one of which is a class action, which are
not included in the total number of pending asbestos claims set forth in the
table above.
The asbestos claims, including both compensatory and punitive damage claims,
against the Company and the other defendants in the bodily injury and property
damage lawsuits and the other claims referred to above exceed several billion
dollars in the aggregate. Additionally, since 1982 a number of former
producers and/or miners of asbestos or asbestos-containing products which were
or would be co-defendants with the Company in the bodily injury lawsuits and
claims and/or in the property damage lawsuits and claims have filed for
reorganization under Chapter 11 of the United States Bankruptcy Code ("Co-
Defendant Bankruptcies"). Pending lawsuits have been stayed as to all but one
of these entities, but continue against the Company and the other defendants.
Also, the trust created by the Manville Chapter 11 Reorganization Plan and
charged with the responsibility for resolving asbestos bodily injury claims
against Manville was found to be a limited fund by the United States District
Court for the Eastern District of New York and virtually all proceedings
54
<PAGE>
against the trust have been stayed. A mandatory settlement class was
certified against the trust resolving all claims by both plaintiffs and co-
defendants; however, the United States Court of Appeals for the Second Circuit
reversed the decision approving the settlement and remanded the case for
further proceedings. In 1994, the District Court approved a settlement fund
intended to partially reimburse co-defendants, including the Company, for
verdicts and judgments entered against such companies from August 1992 to the
date of the settlement.
In July 1991, the Judicial Panel on Multidistrict Litigation consolidated in
the Eastern District of Pennsylvania virtually all of the federal cases for
possible coordinated and aggregate disposition and other processing techniques
(the "MDL Case"). Included in the MDL Case is a case in the Eastern District
of Texas where a petition had been filed to certify a nationwide litigation
class action with respect to all asbestos-related bodily injury claims pending
in the United States both in federal and state court. The Company believes
that such a nationwide litigation class action is not supported by the
existing case law. The number of plaintiffs in the cases pending in the MDL
Case in which the Company is a defendant is included in the reported pending
plaintiffs and claimants. In 1992, the court entered an order severing and
retaining any claims for punitive damages in cases remanded for trial of the
compensatory damage claims. The court, through various administrative orders,
is giving priority to claims involving malignancies and serious asbestosis
both in terms of settlement activity and in terms of remand for trial where a
settlement with all defendants is not possible.
In addition, in January 1993, in an action in which the Company was not a
party, a class action complaint, an answer and a stipulation of settlement of
such class action complaint were filed contemporaneously in the United States
District Court for the Eastern District of Pennsylvania. The lawsuit and
settlement are between a proposed class of persons occupationally or
secondarily exposed to asbestos but who did not have bodily injury suits
pending as of January 15, 1993, and a group of 20 companies who manufactured
or sold asbestos products and whose asbestos claims are managed by the Center
for Claims Resolution. The Company and a number of other former producers of
asbestos-containing products are not members of the Center for Claims
Resolution. The proposed settlement, negotiated between the member companies
and class counsel, seeks to create an administrative mechanism to process
future asbestos-related claims against such companies. Under the proposed
settlement, in order to receive compensation, claimants would be required to
satisfy objective medical and product exposure criteria. The class action and
proposed settlement raise a number of novel and complex issues, including the
potential impact of the proposed settlement on the Company's contribution and
settlement credit rights. The trial court has resolved some, but not all of
those issues in ruling on the fairness of the proposed settlement to personal
injury claimants. Several of the trial court's rulings are currently before
the United States Court of Appeals for the Third Circuit pursuant to an
interlocutory appeal. In August 1993, another of the Company's co-defendants,
Fibreboard Corporation, filed an action, which was thereafter certified by the
District Court as a mandatory settlement class of all future asbestos-related
claims. This action was integrally related to separate settlements by this
co-defendant of all of its non-future asbestos claims and of its insurance
55
<PAGE>
coverage claims against its insurers. That settlement has been finally
approved at the trial court level and is on appeal to the United States Court
of Appeals for the Fifth Circuit.
The precise impact on the Company of the Co-Defendant Bankruptcies and other
proceedings mentioned above is not determinable. These filings and
proceedings have created a substantial number of unprecedented and complex
issues. However, the Company believes the Co-Defendant Bankruptcies probably
have adversely affected the Company's share of the total liability to
plaintiffs in previously settled or otherwise determined lawsuits and claims
and also may adversely affect the Company's share of the total liability to
plaintiffs in the future. Additionally, the Company believes that the
dissemination of the class notices in the Center for Claims Resolution and
Fibreboard Corporation class actions described above may have increased the
number of claims and lawsuits against the Company or accelerated the filing of
such claims.
In April 1986, the Company and Aetna Life & Casualty Company ("Aetna") agreed
to a final settlement fully resolving asbestos bodily injury and property
damage insurance coverage litigation between them (which followed the entry of
partial summary judgment in favor of the Company in such litigation). The
Company has processed claims which have effectively exhausted its coverage
under the Aetna agreement. In 1984, the Company initiated similar litigation
in New Jersey against the Company's insurers, agents and related parties for
the years 1977 through 1985 in which the Company sought damages and a
declaration of coverage for both asbestos bodily injury and property damage
claims under insurance policies in effect during those years (Owens-Illinois,
Inc. v. United Insurance Co., et al, Superior Court of New Jersey, Middlesex
County, November 30, 1984). The total coverage sought in this litigation
before deducting the settlements described below and giving consideration to
reinsurer insolvencies and, in the Company's opinion, applicable to both
bodily injury and property damage was $670 million. In April 1990, the
Company obtained summary judgment for the coverage sought in this litigation
and Owens Insurance Limited ("OIL"), an affiliate of the Company and one of
the defendant insurers, in turn, obtained summary judgment under certain
reinsurance contracts. The defendants appealed the summary judgment granted
to the Company and in April 1993, the New Jersey Superior Court, Appellate
Division affirmed the trial court on all policy interpretation issues but
remanded for trial certain other issues. All parties petitioned the New
Jersey Supreme Court for review.
In December 1994, the New Jersey Supreme Court issued its decision upholding
the Appellate Division decision in favor of the Company's position on one
issue, but reversing and remanding a second issue to the trial court for
further proceedings.
Shortly before the issuance of the New Jersey Supreme Court decision, the
Company partially settled its coverage claim against OIL to the extent of
reinsurance provided to OIL by certain reinsurance companies representing
approximately 19% of total United Insurance coverage limits. The settlements
resulted in payments totalling approximately $100 million. Subsequently, the
Company reached separate settlements with various other reinsurers, and with
56
<PAGE>
OIL to the extent of reinsurance provided by such settling reinsurance
companies. Such settlements confirmed approximately $140 million of
additional coverage for the Company's asbestos-related losses. These
settlements also included all of the reinsurers who had continued to
participate actively as litigating parties in the United Insurance case.
In November 1995, before all the settlements described above were finalized, a
reinsurer of OIL during the years affected by the United Insurance case
brought a separate suit against OIL seeking a declaratory judgment that it had
no reinsurance obligation to OIL due to alleged OIL fraud and also to OIL not
having joined non-party reinsurers as parties in the United Insurance case
(Employer's Mutual vs Owens-Insurance Limited, Superior Court of New Jersey,
Morris County, December 1995). The Company was not a named party to this
cause of action but was subsequently joined in it as a necessary party
defendant.
Following the settlements described above, OIL, through its independent
counsel, advised the Company that in view of the number and terms of the prior
reinsurer settlements, and further in view of the inclusion in such
settlements of all the reinsurers who had previously been participating as
litigating parties in the United Insurance case, OIL's independent directors
had authorized OIL's counsel to pursue settlement negotiations with the
Company. Negotiations thereafter took place between representatives of the
Company and OIL's counsel. The negotiation was also aided by the involvement
of three professional mediators who had been involved in several of the
earlier reinsurer settlements. A settlement agreement (the "OIL Settlement")
was ultimately reached, and endorsed by all the mediators and approved by
OIL's independent directors, calling for the payment of remaining non-settled
reinsurance at 78.5% of applicable reinsurance limits, increasing to 81% and
accruing interest at 10% for any amounts not paid at the 78.5% level within 45
days after receipt of notice from OIL of the OIL Settlement.
In December 1995, the presiding judge in the United Insurance case entered a
Consent Judgment settling the United Insurance case as to all remaining issues
and all parties with the single exception of a broker malpractice claim
asserted by the Company, which remains pending. In the Consent Judgment
Order, the presiding judge specifically found that the OIL Settlement is a
good faith and non-collusive settlement and that it is fair and reasonable as
to OIL and all of OIL's non-settling reinsurers.
Subsequent to the entry of the Consent Judgment Order described above, OIL
gave notice of the OIL Settlement to all nonsettling reinsurers affected by
the United Insurance case, informing all such reinsurers of the terms of the
OIL Settlement and demanding timely payment from such reinsurers pursuant to
such terms. Certain previously nonsettling reinsurers made the payments
called for under the OIL Settlement or otherwise settled their obligations
thereunder. Other nonsettling reinsurers, possibly due to the pendency of the
Employers Mutual case described above, did not, however, make the payments
called for under the OIL Settlement by the date specified therein.
As a result of payments and commitments that have been made by reinsurers in
early 1996 pursuant to the OIL Settlement and the earlier settlement
57
<PAGE>
agreements described above and certain other available insurance, the Company
has to date confirmed coverage for its asbestos-related costs of approximately
$284 million. Of the total amount confirmed to date, $186.5 million had been
received through December 31, 1995; approximately $33 million was received in
early 1996; and the balance of approximately $64.5 million will be received
throughout 1996 and the next several years. The insurance asset for asbestos-
related costs of $323.5 million at December 31, 1995 included the confirmed
amounts of $33 million received in early 1996 and the approximately $64.5
million which will be received later. The remainder of the insurance asset of
approximately $226 million relates principally to the reinsurers who have not
yet paid their reinsurance obligations under the OIL Settlement.
The Company believes, based on the rulings of the trial court, the Appellate
Division and the New Jersey Supreme Court, as well as its understanding of the
facts and legal precedents (including specifically the legal precedent
requiring that reinsurers "follow the fortunes" of and adhere to any good
faith, fair and reasonable settlement entered into by the primary carrier
which such reinsurers had agreed to reinsure) and based on advice of counsel,
McCarter & English, that it is probable substantial additional payments will
be received to cover the Company's asbestos-related claim losses, in addition
to the amounts already received or to be received as a result of the
settlements described above.
As a result of Chapter 11 filings, the recent class action filings, and the
continuing efforts in various federal and state courts to resolve asbestos
lawsuits and claims in nontraditional manners, as well as the continued
filings of new lawsuits and claims, the Company believes that its ultimate
asbestos-related contingent liability (i.e., its indemnity or other claim
disposition costs plus related litigation expenses) is difficult to estimate
with certainty. However, the Company has continually monitored the trends of
matters which may affect its ultimate liability and continually analyzes the
trends, developments and variables affecting or likely to affect the
resolution of pending and future asbestos claims against the Company.
Based on the trends and developments and their effect on the Company's ability
to estimate probable costs of pending and likely future asbestos-related
claims, the higher than expected costs of disposing of claims in certain
jurisdictions, and taking into account the expected reimbursement principally
as a result of the United Insurance case, the Company determined in 1993 that
it will likely have probable asbestos-related liabilities and costs which
exceed its probable asbestos-related insurance reimbursement in the
approximate amount of $325 million. Accordingly, the Company recorded a
charge of such amount against its Consolidated Results of Operations for the
fourth quarter of 1993 and established a reserve for probable asbestos-related
liabilities and costs of $975 million and recorded an insurance asset of $650
million, which amount was principally based on the Company's expected recovery
and reimbursement in the United Insurance case. In December 1994, as a result
of the settlements described above and other relevant factors including the
status of the United Insurance litigation at that time, the Company further
determined that the $650 million insurance asset should be reduced by $100
million (in addition to the approximately $100 million of insurance proceeds
received as a result of the December 1994 settlements described above). The
58
<PAGE>
Company recorded a charge of $100 million in 1994 to reflect this lower
insurance asset valuation. Additionally, as a result of the OIL Settlement
and analysis of various factors related thereto, the Company has determined
that this asset should be reduced further by $40 million (in addition to the
approximately $140 million of insurance proceeds received or to be received as
a result of the 1995 settlements described above). As a consequence, the
Company recorded a pretax charge of $40 million in the fourth quarter of 1995
to reflect this lower valuation.
Since first establishing the reserve for probable asbestos-related liabilities
and costs, the Company has charged all such payments to the reserve.
Accordingly, the amounts of such payments anticipated by this reserve have not
and are not expected to be reflected in the Company's Consolidated Results of
Operations. In addition to payments made to date, the Company has entered
into group settlement agreements which included settlement amounts payable in
1996 and later. As of December 31, 1995, such deferred payment amounts were
approximately $130.1 million. The Company intends to charge such deferred
payment amounts to the reserve when they are paid by the Company. None of the
payments or deferred payment obligations described above represented a
spending commitment with respect to lawsuits and claims pending against the
Company as of December 31, 1995.
Based on all the factors and matters relating to the Company's asbestos-
related litigation and claims, the Company believes that its asbestos-related
costs and liabilities will not exceed by a material amount the sum of the
available insurance reimbursement the Company believes it has and will have
principally as a result of the United Insurance case, and the OIL Settlement
of that case, as described above, and the amount of such charges described in
the second preceding paragraph.
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 nonroutine and involve compensatory,
punitive or treble damage claims as well as other types of relief. The
ultimate legal and financial liability of the Company in respect to the
lawsuits and proceedings referred to above, in addition to other pending
litigation, cannot be estimated with certainty. However, the Company
believes, based on its examination and review of such matters and experience
to date, that such ultimate liability will not be material in relation to the
Company's Consolidated Financial Statements.
59
<PAGE>
Segment Information.
The Company had three industry segments: Glass Containers, Plastics and
Closures, and Specialized Glass. As reported herein, the Specialized Glass
segment consists only of the Kimble laboratory and pharmaceutical glassware
business in which a 51% interest was sold December 31, 1993. Amounts related
to the Company's glass tableware business have been reclassified from the
Specialized Glass segment to discontinued operations as a result of the June
1993 sale of Libbey.
Operating profit includes an allocation of corporate expenses based on both a
percentage of sales and direct billings based on the costs of specific
services provided.
Transfers between segments and geographic areas are not significant. In
arriving at the consolidated totals for segments and geographic areas,
eliminations are made as follows: as to sales and transfers, intersegment and
intergeographic sales and transfers are eliminated; as to operating profit and
identifiable assets, eliminations primarily relate to unrealized profit in
inventory.
Financial information regarding the Company's geographic segments is as
follows:
- ----------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
Sales to unaffiliated customers:
United States $2,702.8 $2,773.9 $2,865.3
Other Western Hemisphere 636.7 510.0 413.6
Europe and Asia 423.7 283.4 256.1
- ----------------------------------------------------------------------------
Consolidated total $3,763.2 $3,567.3 $3,535.0
============================================================================
Operating profit:
United States (a) $ 419.5 $ 394.8 $ 137.3
Other Western Hemisphere 151.6 114.0 98.4
Europe and Asia 50.4 26.0 23.9
Eliminations .1 (.8)
- ----------------------------------------------------------------------------
Combined segment total $ 621.6 $ 534.0 $ 259.6
============================================================================
Identifiable assets:
United States $2,952.6 $2,944.8 $2,893.0
Other Western Hemisphere 697.4 590.6 428.1
Europe and Asia 525.5 306.2 256.0
Eliminations (1.3) (1.3)
- ----------------------------------------------------------------------------
Combined segment total $4,174.2 $3,840.3 $3,577.1
============================================================================
(a) Operating profit for the United States geographic segment includes
charges in 1993 totaling $233.2 million principally related to a
restructuring program and a net credit of $40.0 million in 1995 primarily
related to an adjustment of such charge.
60
<PAGE>
Financial information regarding the Company's worldwide industry segments is
as follows:
- ----------------------------------------------------------------------------
1995 (b) 1994 (c) 1993 (d)
- ----------------------------------------------------------------------------
Sales to unaffiliated customers (a):
Glass Containers $2,744.0 $2,590.1 $2,427.3
Plastics and Closures 1,017.7 976.1 908.6
Specialized Glass 197.9
Other 1.5 1.1 1.2
- ----------------------------------------------------------------------------
Consolidated total $3,763.2 $3,567.3 $3,535.0
============================================================================
Operating profit:
Glass Containers $ 482.7 $ 393.0 $ 117.4
Plastics and Closures 137.4 140.4 123.3
Specialized Glass 18.9
Eliminations 1.5 .6
- ----------------------------------------------------------------------------
Combined segment total 621.6 534.0 259.6
Other retained costs (56.1) (125.8) (305.0)
- ----------------------------------------------------------------------------
Consolidated total 565.5 408.2 (45.4)
Equity earnings 14.4 22.3 25.3
Interest expense (net) (269.9) (259.2) (274.4)
- ----------------------------------------------------------------------------
310.0 171.3 (294.5)
Reconciliation to earnings (loss) from
continuing operations before
extraordinary items:
Credit (provision) for income taxes (100.8) (68.9) 113.1
Minority share owners' interests (40.1) (24.1) (19.4)
- ----------------------------------------------------------------------------
Earnings (loss) from continuing
operations before extraordinary
items $ 169.1 $ 78.3 $ (200.8)
============================================================================
(a) Sales of similar products which contributed 10% or more of consolidated
net sales for 1995, 1994, and 1993, and their percentage contribution in
each year, respectively, are glass containers with 66%, 67%, and 64%; and
plastic containers with 16%, 17%, and 16%. In 1995, sales by both the
Glass Containers and Plastics and Closures industry segments to one
customer aggregated approximately 11% of consolidated total sales.
(b) Operating profit for 1995 includes a charge of $40.0 million to write
down the asbestos insurance asset and a net credit of $40.0 million
primarily from the reduction of previously established restructuring
reserves. These items increased (decreased) operating profit as follows:
Glass Containers, $45.1 million; Plastics and Closures, $(5.1) million;
and other retained costs, $(40.0) million.
(c) Other retained costs for 1994 includes a charge of $100.0 million to
write down the asbestos insurance asset.
61
<PAGE>
(d) Operating profit for 1993 includes charges of $325.0 million for
estimated uninsured future asbestos-related costs, charges totaling
$253.2 million principally related to a restructuring program, and gains
totaling $46.1 million from the sale of the remaining 50% interest in the
television glass business and 51% of the Kimble business. These items
decreased operating profit as follows: Glass Containers, $214.0 million,
Plastics and Closures, $16.0 million, Specialized Glass, $3.2 million,
and other retained costs, $298.9 million.
- -----------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
Identifiable assets:
Glass Containers $2,880.6 $2,628.1 $2,372.9
Plastics and Closures 1,295.0 1,215.1 1,207.0
Eliminations (1.4) (2.9) (2.8)
- -----------------------------------------------------------------------------
Combined segment total 4,174.2 3,840.3 3,577.1
Investments in and advances
to associates 84.1 91.9 102.5
Corporate and other
retained assets 1,180.9 1,385.4 1,221.8
- -----------------------------------------------------------------------------
Total $5,439.2 $5,317.6 $4,901.4
=============================================================================
Property, plant and equipment
- -- capital expenditures:
Glass Containers $ 209.0 $ 174.6 $ 153.1
Plastics and Closures 67.8 110.9 100.3
Specialized Glass 8.8
- -----------------------------------------------------------------------------
Combined segment total 276.8 285.5 262.2
Corporate and other
retained assets 6.8 .5 .7
Discontinued operations 3.3
- -----------------------------------------------------------------------------
Total $ 283.6 $ 286.0 $ 266.2
=============================================================================
Property, plant and equipment
- -- depreciation:
Glass Containers $ 125.5 $ 117.9 $ 110.9
Plastics and Closures 59.2 62.2 54.9
Specialized Glass 10.6
- -----------------------------------------------------------------------------
Combined segment total 184.7 180.1 176.4
Corporate and other
retained assets 3.6 3.2 3.6
Discontinued operations 7.3
- -----------------------------------------------------------------------------
Total $ 188.3 $ 183.3 $ 187.3
=============================================================================
62
<PAGE>
Selected Quarterly Financial Data (unaudited). The following tables present
selected financial data by quarter for the years ended December 31, 1995 and
1994:
- ----------------------------------------------------------------------------
1995 (a)
- ----------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ----------------------------------------------------------------------------
Net sales $923.6 $985.0 $962.2 $892.4 $3,763.2
============================================================================
Gross profit $191.7 $232.0 $214.3 $176.7 $ 814.7
============================================================================
Net earnings $ 33.3 $ 59.0 $ 56.1 $ 20.7 $ 169.1
============================================================================
Net earnings per share
of common stock $ 0.28 $ 0.49 $ 0.46 $ 0.17 $ 1.40
============================================================================
(a) In the fourth quarter of 1995, the Company recorded a charge of $40.0
million to write down the asbestos insurance asset and a net credit of
$40.0 million primarily from the reduction of previously established
restructuring reserves. The net aftertax amounts of each of these
offsetting items was $24.7 million, or $0.21 per share.
- ----------------------------------------------------------------------------
1994 (a)
- ----------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ----------------------------------------------------------------------------
Net sales $839.2 $915.4 $927.9 $884.8 $3,567.3
============================================================================
Gross profit $165.1 $202.2 $205.8 $169.9 $ 743.0
============================================================================
Net earnings (loss) $ 28.1 $ 51.4 $ 46.4 $(47.6) $ 78.3
============================================================================
Net earnings (loss) per
share of common stock $ 0.23 $ 0.43 $ 0.39 $(0.41) $ 0.64
============================================================================
(a) In the fourth quarter of 1994, the Company recorded a charge of $100.0
million to write down the asbestos insurance asset. The net aftertax
amount of this charge was $61.7 million, or $0.52 per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
63
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
Information with respect to non-officer directors is included in the Proxy
Statement in the section entitled "Election of Directors" and such information
is incorporated herein by reference.
Information with respect to executive officers is included herein on pages
13 - 15.
ITEMS 11. EXECUTIVE COMPENSATION AND CERTAIN RELATIONSHIPS AND RELATED
and 13. TRANSACTIONS
The section entitled "Director and Executive Compensation and Other
Information," exclusive of the subsections entitled "Board Compensation
Committee Report on Executive Compensation" and "Performance Graph," which is
included in the Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Security Ownership of Certain Beneficial Owners and
Management" which is included in the Proxy Statement is incorporated herein by
reference.
64
<PAGE>
PART IV
ITEM 14.(a). EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Index of Financial Statements and Financial Statement Schedules Covered by
Report of Independent Auditors.
Page
----
Report of Independent Auditors 29
Consolidated Balance Sheets at December 31, 1995 and 1994 32-33
For the years ended December 31, 1995, 1994 and 1993
Consolidated Results of Operations 30-31
Consolidated Share Owners' Equity 34
Consolidated Cash Flows 35-36
Statement of Significant Accounting Policies 37-38
Financial Review 39-62
Financial Statement Schedule Schedule Page
---------------------------- -------------
For the years ended December 31, 1995, 1994, and 1993:
II - Valuation and Qualifying Accounts (Consolidated) S-1
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule.
65
<PAGE>
EXHIBIT INDEX
S-K Item 601
No. Document
- ------------ --------
3.1 -- Restated Certificate of Incorporation of Owens-Illinois, Inc.
(filed as Exhibit 3.1 to the Registrants' Registration
Statement, File No. 33-43224, and incorporated herein by
reference).
3.2 -- By-laws of Owens-Illinois, Inc., as amended (filed as Exhibit
3.2 to the Registrants' Registration Statement, File No. 33-
43224, and incorporated herein by reference).
3.3 -- Certificate of Incorporation of Owens-Illinois Group, Inc., as
amended (filed as Exhibit 3.4 to the Registrants' Registration
Statement, File No. 33-13061, and incorporated herein by refer-
ence).
3.4 -- By-laws of Owens-Illinois Group, Inc. (filed as Exhibit 3.5 to
the Registrants' Registration Statement, File No. 33-13061, and
incorporated herein by reference).
3.5 -- Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred
Stock and Qualifications, Limitations and Restrictions Thereof
of Series A Exchangeable Preferred Stock, Series B Exchangeable
Preferred Stock and Series C Exchangeable Preferred Stock of
Owens-Illinois, Inc., dated October 30, 1992 (filed as Exhibit
3.5 to the Registrants' Annual Report on Form 10-K for the year
ended December 31, 1992, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
4.1 -- Note, dated March 17, 1987, to OII Holdings Corporation issued
by OII Group, Inc., as amended (filed as Exhibit 4.44 to the
Registration Statement, File No. 33-43224, of Owens-Illinois,
Inc., and incorporated herein by reference).
4.2 -- Indenture, dated as of December 15, 1991, among Owens-Illinois,
Inc., Owens-Illinois Group, Inc., and The Bank of New York
related to Senior Debentures of Owens-Illinois, Inc. (filed as
Exhibit 4.32 to the Registrants' Registration Statement, File
No. 33-34825, and incorporated herein by reference).
4.3 -- Group Exchange Guaranty, dated as of July 10, 1992, by Owens-
Illinois Group, Inc., in favor of the Trustee (filed as Exhibit
4.1 to the Registrants' Current Report on Form 8-K dated as of
July 15, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.4 -- Subsidiary Guaranty, dated as of July 10, 1992, by the
Subsidiaries in favor of the Trustee (filed as Exhibit 4.2 to
the Registrants' Current Report on Form 8-K dated as of July
15, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.5 -- Contribution Agreement, dated as of July 10, 1992, by and among
the Company, Owens-Illinois Group, Inc., and the Subsidiaries
(filed as Exhibit 4.3 to the Registrants' Current Report on
Form 8-K dated as of July 15, 1992, File nos. 1-9576 and 33-
13061, and incorporated herein by reference).
<PAGE>
S-K Item 601
No. Document
- ------------ --------
4.6 -- Acknowledgment Regarding Additional Secured Debt, dated as of
July 10, 1992, by the Pledgors (filed as Exhibit 4.4 to the
Registrants' Current Report on Form 8-K dated as of July 15,
1992, File nos. 1-9576 and 33-13061, and incorporated herein by
reference).
4.7 -- Acknowledgment to Intercreditor Agreement, dated as of July 9,
1992, by the Trustee and the Pledgors (filed as Exhibit 4.5 to
the Registrants' Current Report on Form 8-K dated as of July
15, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.8 -- Indenture, dated as of April 1, 1992, between the Company and
Harris Trust and Savings Bank under which the Company has
issued its 10-1/4% Senior Subordinated Notes due April 1, 1999;
10% Senior Subordinated Notes due August 1, 2002; 10-1/2%
Senior Subordinated Notes due June 15, 2002; and 9-3/4% Senior
Subordinated Notes due August 15, 2004 (filed as Exhibit 4(a)
to the Registrants' Current Report on Form 8-K dated as of
March 27, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.9 -- First Supplemental Indenture, dated as of September 28, 1992,
between the Company and Harris Trust and Savings Bank (filed as
Exhibit 4(a) to the Registrants' Current Report on Form 8-K
dated as of October 1, 1992, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
4.10 -- Form of Indenture dated September 28, 1992, Shelf Registration
for up to $200 million of Senior Subordinated Debt Securities
between the Company and Harris Trust and Savings Bank, under
which the Company has issued its 9.95% Senior Subordinated
Notes due October 15, 2004 (filed as Exhibit 4.2 to the
Registrants' Registration Statement, File no. 33-51982, and
incorporated herein by reference).
4.11 -- Refinancing Credit Agreement, dated as of December 15, 1993,
among Owens-Illinois, Inc., the lenders listed therein,
including those named as lead managers and co-agents and
Bankers Trust Company including exhibits thereto (filed as
Exhibit 4.11 to the Registrants' Annual Report on Form 10-K for
the year ended December 31, 1993, File nos. 1-9576 and 33-
13061, and incorporated herein by reference).
10.1 -- Lease Agreement, dated as of May 21, 1980, between Owens-
Illinois, Inc. and Leyden Associates Limited Partnership (filed
as Exhibit 5 to the Registrants' Registration Statement, File
No. 2-68022, and incorporated herein by reference).
10.2 -- Owens-Illinois Supplemental Retirement Benefit Plan, dated as
of October 1, 1991 (filed as Exhibit 3.5 to the Registrants'
Annual Report on Form 10-K for the year ended December 31,
1992, File nos. 1-9576 and 33-13061, and incorporated herein by
reference).
67
<PAGE>
S-K Item 601
No. Document
- ------------ --------
10.3 * -- First Amendment to Owens-Illinois, Inc. Supplemental Retirement
Benefit Plan (filed as Exhibit 10.19 to the Registrants' Annual
Report on Form 10-K for the year ended December 31, 1993, File
nos. 1-9576 and 33-13061, and incorporated herein by
reference).
10.4 * -- Second Amendment to Owens-Illinois, Inc. Supplemental
Ratirement Benefit Plan (filed herewith).
10.5 * -- Written description of the Owens-Illinois Senior Executive Life
Insurance Plan (filed as Exhibit 3.5 to the Registrants' Annual
Report on Form 10-K for the year ended December 31, 1992, File
nos. 1-9576 and 33-13061, and incorporated herein by
reference).
10.6 * -- Form of Employment Agreement between Owens-Illinois, Inc. and
various Employees (filed as Exhibit 10(m) to the Registrants'
Annual Report on Form 10-K for the year ended December 31,
1987, File nos. 1-9576 and 33-13061, and incorporated herein by
reference).
10.7 * -- Form of Non-Qualified Stock Option Agreement between Owens-
Illinois, Inc. and various Employees (filed as Exhibit 10(1) to
the Registrants' Annual Report on Form 10-K for the year ended
December 31, 1987, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
10.8 * -- Form of Subscription Agreement between Owens-Illinois, Inc. and
various Purchasers (filed as Exhibit 10(k) to the Registrants'
Annual Report on Form 10-K for the year ended December 31,
1987, File nos. 1-9576 and 33-13061, and incorporated herein by
reference).
10.9 * -- Stock Option Plan for Directors of Owens-Illinois, Inc. (filed
as Exhibit 4.3 to Registrants' Form S-8, File no. 33-57141, and
incorporated herein by reference).
10.10 * -- First Amendment to Stock Option Plan for Directors of Owens-
Illinois, Inc. (filed herewith).
10.11 * -- Form of Non-Qualified Stock Option Agreement for Stock Option
Plan for Directors of Owens-Illinois, Inc. for use under the
Plan (filed as Exhibit 4.4 to Registrants' Form S-8, File no.
33-57141, and incorporated herein by reference).
10.12 * -- Second Amended and Restated Stock Option Plan for Key Employees
of Owens-Illinois, Inc. (filed as Exhibit 10.20 to the
Registrants' Annual Report on Form 10-K for the year ended
December 31, 1994, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
10.13 * -- First Amendment to Second Amended and Restated Stock Option
Plan for Key Employees of Owens-Illinois, Inc. (filed
herewith).
68
<PAGE>
S-K Item 601
No. Document
- ------------ --------
10.14 * -- Form of Non-Qualified Stock Option Agreement for Amended and
Restated Stock Option Plan for Key Employees of Owens-Illinois,
Inc. for use under the Plan (filed as Exhibit 10.21 to the
Registrants' Annual Report on Form 10-K for the year ended
December 31, 1994, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
10.15 * -- Form of First Amendment to Subscription Agreement between
Owens-Illinois, Inc. and Robert J. Lanigan (filed as Exhibit
10.19 to the Registrants' Annual Report on Form 10-K for the
year ended December 31, 1990, File nos. 1-9576 and 33-13061,
and incorporated herein by reference).
10.16 * -- Form of Non-Qualified Stock Option Agreement between Owens-
Illinois, Inc., and Robert J. Lanigan (filed as Exhibit 10.21
to the Registrants' Annual Report on Form 10-K for the
year ended December 31, 1990, File nos. 1-9576 and 33-13061,
and incorporated herein by reference).
10.17 * -- Form of First Amendment to Non-Qualified Stock Option Agreement
between Owens-Illinois, Inc. and Robert J. Lanigan (filed as
Exhibit 10.20 to the Registrants' Annual Report on Form 10-K
for the year ended December 31, 1990, File nos. 1-9576 and 33-
13061, and incorporated herein by reference).
10.18 * -- Amended and Restated Owens-Illinois, Inc. Senior Management
Incentive Plan (filed as Exhibit 10.15 to the Registrants'
Annual Report on Form 10-K for the year ended December 31,
1993, File nos. 1-9576 and 33-13061, and incorporated herein by
reference).
10.19 * -- First Amendment to Amended and Restated Owens-Illinois, Inc.
Senior Management Incentive Plan (filed herewith).
10.20 * -- Amended and Restated Owens-Illinois, Inc. Performance Award
Plan (filed as Exhibit 10.16 to the Registrants' Annual Report
on Form 10-K for the year ended December 31, 1993, File nos. 1-
9576 and 33-13061, and incorporated herein by reference).
10.21 * -- Owens-Illinois, Inc. Corporate Officers Deferred Compensation
Plan (filed as Exhibit 10.17 to the Registrants' Annual Report
on Form 10-K for the year ended December 31, 1993, File nos. 1-
9576 and 33-13061, and incorporated herein by reference).
10.22 * -- First Amendment to Owens-Illinois, Inc. Corporate Officers
Deferred Compensation Plan (filed herewith).
10.23 * -- Owens-Illinois, Inc. Executive Savings Plan (filed as Exhibit
10.18 to the Registrants' Annual Report on Form 10-K for the
year ended December 31, 1993, File nos. 1-9576 and 33-13061,
and incorporated herein by reference).
10.24 * -- First Amendment to Owens-Illinois, Inc. Executive Savings Plan
(filed herewith).
10.25 * -- Second Amendment to Owens-Illinois, Inc. Executive Savings Plan
(filed herewith).
10.26 * -- Owens-Illinois, Inc. Directors Deferred Compensation Plan
(filed herewith).
69
<PAGE>
S-K Item 601
No. Document
- ------------ --------
10.27 * -- First Amendment to Owens-Illinois, Inc. Directors Deferred
Compensation Plan (filed herewith).
21 -- Subsidiaries of the Registrants (filed herewith).
23.1 -- Consent of Independent Auditors (filed herewith).
23.2 -- Consent of McCarter & English (filed herewith).
24 -- Owens-Illinois, Inc. and Owens-Illinois Group, Inc. Power of
Attorney (filed herewith).
27 -- Financial Data Schedule (filed herewith).
* Indicates a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to Item 14(c).
- -------------
ITEM 14.(b). REPORTS ON FORM 8-K
On December 21, 1995, the Registrants filed a Form 8-K with the Commission
with a press release dated December 21, 1995, announcing settlements totaling
$400 million in the Company's asbestos insurance litigation. No other reports
on Form 8-K were filed by the Registrants during the last quarter of 1995.
70
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 authorized.
OWENS-ILLINOIS, INC.
OWENS-ILLINOIS GROUP, INC.
(Registrants)
By/s/ Thomas L. Young
-------------------------------
Thomas L. Young
Executive Vice President --
Administration, General Counsel
and Secretary
Date: March 29, 1996
71
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Owens-
Illinois, Inc. and Owens-Illinois Group, Inc. and in the capacities and on the
dates indicated.
Signature Title
--------- -----
Edward A. Gilhuly Director
James H. Greene, Jr. Director
Henry R. Kravis Director
Robert J. Lanigan Chairman Emeritus of the Board of Directors; Director
Joseph H. Lemieux Chairman of the Board of Directors and Chief Executive
Officer (Principal Executive Officer); Director
Robert I. MacDonnell Director
John J. McMackin, Jr. Director
Michael W. Michelson Director
George R. Roberts Director
Lee A. Wesselmann Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer); Director
By/s/ Thomas L. Young
-------------------
Thomas L. Young
Attorney-in-fact
Date: March 29, 1996
72
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULE
Financial Statement Schedule of Owens-Illinois, Inc. and Subsidiaries:
For the years ended December 31, 1995, 1994, and 1993:
PAGE
----
II -- Valuation and Qualifying Accounts (Consolidated) . . . . . . . S-1
<PAGE>
OWENS-ILLINOIS, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS (CONSOLIDATED)
Years ended December 31, 1995, 1994, and 1993
(Millions of Dollars)
Reserves deducted from assets in the balance sheets:
Allowances for losses and discounts on receivables
- --------------------------------------------------
Additions
------------------
Balance at Charged to Balance
beginning costs and Deductions at end of
of period expenses Other (Note 1) period
---------------------------------------------------------
1995 . . . . . . . $ 38.7 $ 32.4 $ 0.0 $ 31.4 $ 39.7
======= ======= ======= ======= =======
1994 . . . . . . . $ 31.3 $ 32.4 $ 0.0 $ 25.0 $ 38.7
======= ======= ======= ======= =======
1993 . . . . . . . $ 31.4 $ 23.0 $ 0.0 $ 23.1 $ 31.3
======= ======= ======= ======= =======
(1) Deductions from allowances for losses and discounts on receivables
represent uncollectible notes and accounts written off.
S-1
<PAGE>
Exhibit 10.4
SECOND AMENDMENT TO
OWENS-ILLINOIS SUPPLEMENTAL RETIREMENT BENEFIT PLAN
Pursuant to authority reserved and duly delegated to the Compensation
Committee (the "Committee") of the Board of Directors of Owens-Illinois, Inc.
(the "Company") under the Owens-Illinois Supplemental Retirement Benefit Plan
(the "Plan"), the Committee hereby amends the Plan as follows:
1. Article II of the Plan is amended by the addition thereto of new
Sections 2.04 and 2.05, to read, respectively, as follows:
Section 2.04 - As used in this Plan, the term "Executive
Compensation Committee" means a committee comprised of the Company's
Chief Financial Officer, the Company's General Counsel, and the
Company's Director of Compensation and Benefits. In the event of a
vacancy in any one or more of such offices or positions within the
Company, any corresponding vacancy on the Executive Compensation
Committee shall be filled by the officer or employee of the Company
who succeeds to the duties of such vacant office or position or by
another officer or employee of the Company designated by the Board.
Section 2.05 - As used in this Plan, the term "Specified Rate"
means an annual interest rate equal from time to time to the average
annual yield on domestic corporate bonds of Moody's A-rated
companies (as most recently reported in the Survey of Current
Business published by the United States Department of Commerce or a
successor publication) or such other annual interest rate as the
Board may at any time and from time to time specify prospectively
for purposes of the Plan; provided, however, that no such action
taken by the Board after the date on which notice of an installment
payment election (or of the modification of any such previous
election) is given pursuant to Section 4.03(c) hereof shall operate
to reduce the rate of interest on the unpaid balance of the benefit
payable pursuant to such election (or modification) to less than the
rate which would have been in effect hereunder in the absence of
such action by the Board.
2. Section 4.02 of the Plan is amended to read, in its entirety, as
follows:
Section 4.02 - Upon the death of an Eligible Employee, except
to the extent otherwise provided under or pursuant to Section
4.03(e) hereof, a survivor or death benefit shall be payable to the
spouse or other Beneficiary of such Eligible Employee in an amount
equal to the excess of (i) the amount of comparable benefit which
would have been payable under the Salary Plan at the time of his or
her death if the limitations, exclusions, and curtailments referred
to in Sections 3.01 and 3.02 hereof were not applicable to the
1
<PAGE>
Salary Plan, over (ii) the amount of any such comparable benefit
actually payable under the Salary Plan.
3. Section 4.03 of the Plan is amended to read, in its entirety, as
follows:
Section 4.03 - (a) The date (hereinafter referred to as the
"payment date") on which payment of any retirement, survivor, or
death benefit will be made or commenced under this Plan shall be
substantially the same, allowing for differences in administrative
procedures, as the date on which payment of such benefit would have
been made or commenced under the Salary Plan. The person or persons
to whom any such benefit is payable under this Plan shall, except to
the extent otherwise provided under or pursuant to Section 4.03(e)
hereof, be identical to the person or persons to whom such benefit
would have been payable under the Salary Plan. All elections,
designations, and determinations with respect to the time at which
and person or persons to whom benefits are to be paid under this
Plan, but not including any election under Section 4.03(b)(4) hereof
as to the form of payment or any designation of a beneficiary or
beneficiaries under Section 4.03(e) hereof, shall be made as and
when made under the Salary Plan.
(b) The form in which any retirement, survivor, or
death benefit is payable under this Plan shall be as follows:
(1) If the retirement, death, or other termina-
tion of employment of the Eligible Employee with respect
to whom any such benefit is payable occurred before
January 1, 1989, the form of payment under this Plan
shall be as permitted or required by the Pre-1989 Owens-
Illinois, Inc. Excess Benefit Plan and Supplemental
Benefit Plan as both such Plans (the "Pre-1989 Plans")
were restated effective January 1, 1989;
(2) If the retirement, death, or other termina-
tion of employment of the Eligible Employee with respect
to whom any such benefit is payable occurred on or after
January 1, 1989 but before September 1, 1990, the form
of payment under this Plan shall be as permitted or
required by the Owens-Illinois, Inc. Excess Benefit Plan
and Supplemental Benefit Plan, both of which Plans (the
"1989 Plans") became effective January 1, 1989;
(3) If the retirement, death, or other termina-
tion of employment of the Eligible Employee with respect
to whom any such benefit is payable occurred on or after
September 1, 1990 but before March 1, 1996, such benefit
shall be paid in a lump-sum amount equal to the present
value of such benefit, determined in accordance with the
Salary Plan, on its payment date; or
2
<PAGE>
(4) If the retirement, death, or other termina-
tion of employment of the Eligible Employee with respect
to whom any such benefit is payable occurs on or after
March 1, 1996, such benefit shall be paid in a lump-sum
amount equal to the present value of such benefit,
determined in accordance with the Salary Plan, on its
payment date unless an election of an installment form
of payment is in effect on such payment date in accor-
dance with Section 4.03(c) hereof, in which event such
benefit shall be paid in the installment form so
elected.
(c) An Eligible Employee to whom Section 4.03(b)(4)
hereof applies may elect, by written notice to and, if required as
hereinafter provided, with the consent of the Executive Compensation
Committee, to have the lump-sum present value of such benefit on its
payment date paid in any specified number, not to exceed 15, of
substantially equal annual installments commencing on or after such
payment date, together with interest on the unpaid balance thereof
at the Specified Rate, compounded monthly. Any such Eligible
Employee who has made such an election may, before the payment date
of such benefit, revoke or modify such election by subsequent
written notice to and, if required as hereinafter provided, with the
consent of the Executive Compensation Committee. An Eligible
Employee's election under this Section 4.03(c), and any subsequent
revocation or modification thereof, will be effective without the
consent of the Executive Compensation Committee if made at least 12
months before the payment date of such benefit and in no event later
than September 30 of the preceding calendar year. If made thereaf-
ter, then such election (or any revocation or modification thereof)
will be subject to the consent of the Executive Compensation
Committee pursuant to Section 4.03(d) hereof, except that an
Eligible Employee's initial election under this Section 4.03(c) will
be effective without the consent of the Executive Compensation
Committee if made no later than one (1) month after the later of (i)
the date of adoption of the Second Amendment to the Plan or (ii) the
effective date of such Amendment.
(d) The Executive Compensation Committee shall grant or
deny its consent to an election under Section 4.03(c) hereof, if
required, or to a revocation or modification of any such election,
if required, as soon as administratively practicable after its
receipt of written notice thereof and shall promptly notify the
Eligible Employee of its action with respect thereto. In granting
or denying such consent the Executive Compensation Committee shall
consider and take into account the form in which benefits are
payable with respect to the Eligible Employee under the Salary Plan
and under any other applicable Company plan or arrangement; the
interests of the Eligible Employee and of other Eligible Employees;
the effect of such election (or of such revocation or modification
of a previous election) on the Company's current and projected
future financial condition in the context of other similar elections
3
<PAGE>
under this Plan and all other Company plans or arrangements for the
benefit of its employees; and such other factors and circumstances
as the Executive Compensation Committee, in its discretion, deems
relevant. All actions of the Executive Compensation Committee shall
be taken by majority vote at a meeting or by majority approval in
writing in lieu of a meeting and shall be final and binding on all
parties interested therein.
(e) In the event of the death of an Eligible Employee
with respect to whom an installment payment election is in effect
under Section 4.03(c) hereof after his payment date but before all
of the installments so elected plus interest have been paid to him
in full, all of the remaining unpaid installments, including accrued
interest to the date of payment, shall be paid, as and when due
under such election, to the beneficiary or beneficiaries named by
such Eligible Employee in a written designation filed with the
Executive Compensation Committee (or, in the absence of such a
designation, to his estate).
4. The last sentence of Section 5.03 of the Plan is amended to read as
follows:
Each benefit which becomes fixed, fully vested, and nonforfeitable
pursuant to this Section 5.03 shall be paid on its payment date, as
provided in Section 4.03(a) hereof, in a lump-sum amount equal to
the present value of such benefit on such payment date unless an
election of an installment form of payment, in accordance with
Section 4.03(c) hereof, was in effect on the date of such actual or
constructive termination of the Plan and remains in effect, without
subsequent modification, on such payment date, in which event such
benefit shall be paid in the installment form so elected.
5. This Second Amendment shall be effective on or as of March 1, 1996.
In all other respects the Plan shall remain in full force and effect as
originally adopted effective October 1, 1991 and as heretofore amended by the
First Amendment thereto effective as of December 1, 1993.
IN WITNESS WHEREOF, the Committee has caused this Second Amendment to be
executed by a duly authorized officer of the Company as of the 15th day of
January, 1996.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
4
<PAGE>
Exhibit 10.10
FIRST AMENDMENT
TO
STOCK OPTION PLAN
FOR DIRECTORS OF OWENS-ILLINOIS, INC.
Pursuant to the authority reserved to the Committee (the "Committee") of
the Board of Directors of Owens-Illinois, Inc. (the "Company") appointed to
administer the Stock Option Plan for Directors of Owens-Illinois, Inc. (the
"Plan") under Section 7.2 of the Plan, the Committee hereby amends the Plan as
follows:
1. Article I of the Plan is amended by the addition thereto of a new
Section 1.17, to read, in its entirety, as follows:
Section 1.17 - Transferable Option
"Transferable Option" means an Option which by its
terms, as determined by the Committee and set forth in the applica-
ble Option Agreement (or an amendment thereto), may be transferred
by the Optionee, in writing and with written notice thereof to the
Committee, by gift, without the receipt of any consideration, (i) to
such Optionee's spouse; (ii) to any child or more remote lineal
descendant of such Optionee or to the spouse of any such child or
more remote lineal descendant; or (iii) to any trust, custodianship,
or other similar fiduciary relationship maintained for the benefit
of any one or more of such persons, but is otherwise nontransferable
except by will or the applicable laws of descent and distribution.
2. Article I of the Plan is further amended by the addition thereto of a
new Section 1.18, to read, in its entirety, as follows:
Section 1.18 - Transferee
"Transferee" shall mean any person or entity to whom or
to which an Optionee has transferred a Transferable Option.
3. Section 3.2(a)(iii) of the Plan is amended to read, in its entirety,
as follows:
(iii) Determine the terms and conditions of such
Options, consistent with the Plan, including, but not limited to
such terms and conditions as may be required in order to make an
Option a Transferable Option.
1
<PAGE>
4. Section 4.1 of the Plan is amended by the addition thereto of the
following:
Stock Option Agreements evidencing Transferable Options shall
contain (or may be amended to contain) such terms and conditions as
may be necessary to meet the definition of a Transferable Option
under Section 1.17 hereof.
5. Section 5.1 of the Plan is amended to read, in its entirety, as
follows:
Section 5.1 - Persons Eligible to Exercise
During the lifetime of the Optionee, only he or his
Transferee, if any, may exercise an Option (or any portion thereof)
granted to him. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option
Agreement, be exercised by his Transferee, if any, or by his
personal representative or any other person empowered to do so under
the deceased Optionee's will or under the then applicable laws of
descent and distribution. All of the terms and conditions of any
Option in the hands of the Optionee during his lifetime shall be and
remain fully applicable and binding on his Transferee, if any, and
on any other person who may become eligible to exercise such Option.
6. Section 7.1 of the Plan is amended to read, in its entirety, as
follows:
Section 7.1 - Options Not Transferable
No Option or interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the
Optionee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encum-
brance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing
in this Section 7.1 shall prevent any transfer of a Transferable
Option in accordance with its terms or any transfer by will or by
the applicable laws of descent and distribution.
7. This First Amendment shall be effective on or as of March 1, 1996. In
all other respects the Plan shall remain in full force and effect as originally
adopted.
2
<PAGE>
IN WITNESS WHEREOF, the Committee has caused this First Amendment to be
executed by a duly authorized officer of the Company as of the 15th day of
January, 1996.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
3
<PAGE>
Exhibit 10.13
FIRST AMENDMENT
TO
SECOND AMENDED AND RESTATED STOCK OPTION PLAN
FOR KEY EMPLOYEES OF OWENS-ILLINOIS, INC.
Pursuant to the authority reserved to the Compensation Committee (the
"Committee") of the Board of Directors of Owens-Illinois, Inc. (the "Company")
under Section 7.2 of the Second Amended and Restated Stock Option Plan for Key
Employees of Owens-Illinois, Inc. (the "Plan"), the Committee hereby amends the
Plan as follows:
1. Article I of the Plan is amended by the addition thereto of a new
Section 1.23, to read, in its entirety, as follows:
Section 1.23 - Transferable Option
"Transferable Option" means a Non-Qualified Option which
by its terms, as determined by the Committee and set forth in the
applicable Option Agreement (or an amendment thereto), may be
transferred by the Optionee, in writing and with written notice
thereof to the Committee, by gift, without the receipt of any
consideration, (i) to such Optionee's spouse; (ii) to any child or
more remote lineal descendant of such Optionee or to the spouse of
any such child or more remote lineal descendant; or (iii) to any
trust, custodianship, or other similar fiduciary relationship main-
tained for the benefit of any one or more of such persons, but is
otherwise nontransferable except by will or the applicable laws of
descent and distribution.
2. Article I of the Plan is further amended by the addition thereto of a
new Section 1.24, to read, in its entirety, as follows:
Section 1.24 - Transferee
"Transferee" shall mean any person or entity to whom or
to which an Optionee has transferred a Transferable Option.
3. Section 3.3(a)(iii) of the Plan is amended to read, in its entirety,
as follows:
(iii) Determine the terms and conditions of such
Options, consistent with the Plan, including, but not limited to:
(A) such terms and conditions as may be required
in order for such Options to qualify as performance-
1
<PAGE>
based compensation as described in Section 162(m)(4)(C)
of the Code if the Committee determines that such
Options should so qualify; and/or
(B) such terms and conditions as may be required
in order to make a Non-Qualified Option a Transferable
Option.
4. Section 4.1 of the Plan is amended by the addition thereto of the
following:
Stock Option Agreements evidencing Transferable Options shall
contain (or may be amended to contain) such terms and conditions as
may be necessary to meet the definition of a Transferable Option
under Section 1.23 hereof.
5. Section 5.1 of the Plan is amended to read, in its entirety, as
follows:
Section 5.1 - Persons Eligible to Exercise
During the lifetime of the Optionee, only he or his
Transferee, if any, may exercise an Option (or any portion thereof)
granted to him. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option
Agreement, be exercised by his Transferee, if any, or by his
personal representative or any other person empowered to do so under
the deceased Optionee's will or under the then applicable laws of
descent and distribution. All of the terms and conditions of any
Option in the hands of the Optionee during his lifetime shall be and
remain fully applicable and binding on his Transferee, if any, and
on any other person who may become eligible to exercise such Option.
6. Section 7.1 of the Plan is amended to read, in its entirety, as
follows:
Section 7.1 - Options Not Transferable
No Option or interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the
Optionee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encum-
brance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing
in this Section 7.1 shall prevent any transfer of a Transferable
2
<PAGE>
Option in accordance with its terms or any transfer by will or by
the applicable laws of descent and distribution.
7. This First Amendment shall be effective on or as of March 1, 1996. In
all other respects the Plan shall remain in full force and effect as originally
adopted.
IN WITNESS WHEREOF, the Committee has caused this First Amendment to be
executed by a duly authorized officer of the Company as of the 15th day of
January, 1996.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
3
<PAGE>
Exhibit 10.19
FIRST AMENDMENT TO AMENDED AND RESTATED
OWENS-ILLINOIS, INC. SENIOR MANAGEMENT INCENTIVE PLAN
Pursuant to the authority reserved to the Board of Directors (the
"Board") of Owens-Illinois, Inc. (the "Company") under paragraph 10 of the
Amended and Restated Owens-Illinois, Inc. Senior Management Incentive Plan (the
"Plan"), the Board hereby amends the Plan as follows:
1. Paragraph 8.2 of the Plan is amended to read as follows:
8.2 If the Company's Operating Results are less than 90
percent, none of the Discretionary or Company Performance
Component will be paid as Annual Bonuses. If the Company's
Operating Results are exactly 90 percent, 50 percent of the
Performance Component will be paid, and up to 50 percent of
the Discretionary Component may be paid, as Annual Bonuses.
For each percentage point by which the Company's Operating
Results exceed 90 percent but not 95 percent, an additional 3-
1/3 percent of the Performance Component will be paid, and up
to an additional 3-1/3 percent of the Discretionary Component
may be paid, as Annual Bonuses, up to 66-2/3 percent. For
each percentage point by which the Company's Operating Results
exceed 95 percent but not 105 percent, an additional 6-2/3
percent of the Performance Component will be paid, and up to
an additional 6-2/3 percent of the Discretionary Component may
be paid, as Annual Bonuses, up to 133-1/3 percent. For each
percentage point by which the Company's Operating Results
exceed 105 percent but not 110 percent, an additional 3-1/3
percent of the Performance Component will be paid, and up to
an additional 3-1/3 percent of the Discretionary Component may
be paid, as Annual Bonuses, up to 150 percent. No more than
150 percent of the Discretionary Component or Company Perfor-
mance Component shall be paid as Annual Bonuses, regardless of
the level of the Company's Operating Results.
2. Paragraph 8.4 of the Plan is amended to read as follows:
8.4 To the extent payable in accordance with paragraph 8.2
hereof, and subject to the last sentence of this paragraph
8.4, the Discretionary Component of the Bonus Pool shall be
paid to Executives as Annual Bonuses in the discretion of the
CEO or, in the case of the CEO's Annual Bonus, in the discre-
tion of the Board. In exercising such discretion, the CEO or
the Board may take into consideration, in addition to the
Company's or a Unit's Operating Results as defined for
purposes of this Plan, the extent of an Executive's contribu-
tions to the Company's other financial and non-financial
objectives, such as quality of service and products, customer
1
<PAGE>
satisfaction, adherence to or furtherance of the Company's
legal and ethical policies, product development, market share,
improvement in financial indicators of the Company's success
other than RONA, and effective response to adverse economic
conditions or to unforeseen adverse events beyond the control
of the Company or a Unit. The aggregate amount of the
Discretionary Components of the Annual Bonuses payable to all
Executives for any year shall not exceed the maximum percent-
age of the Discretionary Component of the Bonus Pool which,
under paragraph 8.2 hereof, may be payable for such year, and
the total amount of the Annual Bonus payable to an Executive
for any year shall not exceed by more than 10 percent the
maximum percentage of such Executive's Target Bonus which,
under paragraphs 8.2 and 8.3 hereof, may be payable for such
year.
3. This First Amendment shall be effective as of January 1, 1993.
In all other respects the Plan shall remain in full force and effect as
originally adopted effective January 1, 1993.
IN WITNESS WHEREOF, the Board has caused this First Amendment to be
executed by a duly authorized officer of the Company as of the 31st day of
December, 1993.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
2
<PAGE>
Exhibit 10.22
FIRST AMENDMENT TO OWENS-ILLINOIS, INC.
CORPORATE OFFICERS DEFERRED COMPENSATION PLAN
Pursuant to authority reserved and duly delegated to the Compensation
Committee (the "Committee") of the Board of Directors of Owens-Illinois, Inc.
(the "Company") under the Owens-Illinois, Inc. Corporate Officers Deferred
Compensation Plan (the "Plan"), the Committee hereby amends the Plan as follows:
1. Section 2 of the Plan is amended by the addition thereto of the
following new definition:
"Executive Compensation Committee" means a committee comprised
of the Company's Chief Financial Officer, the Company's
General Counsel, and the Company's Director of Compensation
and Benefits. In the event of a vacancy in any one or more of
such offices or positions within the Company, any
corresponding vacancy on the Executive Compensation Committee
shall be filled by the officer or employee of the Company who
succeeds to the duties of such vacant office or position or by
another officer or employee of the Company designated by the
Board.
2. Section 6.1 of the Plan is amended to read, in its entirety, as follow:
All amounts deferred under the Plan shall be credited by the
Company, as of the date such amounts would otherwise be
payable to the Officer in the absence of a Deferral Election,
to the Officer's Account, and shall, until paid or distributed
in full, accrue interest, compounded monthly, at an annual
rate equal from time to time to the average annual yield on
domestic corporate bonds of Moody's A-rated companies (as most
recently reported in the Survey of Current Business published
by the United States Department of Commerce or a successor
publication) or at such other rate as the Board may at any
time and from time to time designate prospectively; provided,
however, that no such action taken by the Board after the date
of an installment payment election (or of the modification of
any such previous election) pursuant to Section 7 hereof shall
operate to reduce the rate of interest on the unpaid balance
of the amount payable pursuant to such election (or modifica-
tion) to less than the rate which would have been in effect
hereunder in the absence of such action by the Board.
1
<PAGE>
3. Section 7 of the Plan is amended to read, in its entirety, as follows:
7. PAYMENT OF ACCOUNT BALANCES.
7.1 The entire amount credited to an Officer's Account,
including accrued interest to the date of payment, shall
become payable upon termination of the Officer's employment
with the Company for any reason. Amounts so payable shall be
paid to the Officer in cash in a lump sum or, if and to the
extent the Officer has so elected in writing:
(a) at or before the time of his Deferral
Elections; or
(b) thereafter, but only with the consent of
the Executive Compensation Committee pursuant to
Section 7.5 hereof, except that an Officer's
initial election under this Section 7.1(b) will
be effective without the consent of the Executive
Compensation Committee if made no later than one
(1) month after the later of (i) the date of
adoption of the First Amendment to the Plan or
(ii) the effective date of such Amendment,
in such number, not to exceed 15, of equal annual installments
as the Officer has so elected plus interest on the unpaid
balance at the rate from time to time called for under Section
6.1 of the Plan.
7.2 In the event of an Officer's death before or after his
termination of employment with the Company but before his
Account plus interest has been paid to him in full, the entire
amount then credited to his Account, including accrued
interest to the date of payment, shall be paid, to the benefi-
ciary or beneficiaries named by him in a written designation
filed with the Company (or, in the absence of such a designa-
tion, to his estate), in cash in a lump sum or, if and to the
extent the Officer has made an election of installment pay-
ments under Section 7.1 hereof, in accordance with such
election.
7.3 All payments hereunder shall be made or commenced as
soon as practicable after an Officer's termination of employ-
ment but in no event later than March 31 of the following
year.
7.4 An Officer with respect to whom any amount first becomes
payable under this Plan on or after March 1, 1996 may revoke
or modify any previous election under Section 7.1 hereof by
subsequent written notice to and, if required as hereinafter
provided, with the consent of the Executive Compensation
2
<PAGE>
Committee. Any such revocation or modification of a previous
election will be effective without the consent of the Execu-
tive Compensation Committee only to the extent that it applies
to amounts credited to the electing Officer's Account there-
after. Any such revocation or modification applicable to any
other portion of his Account will be subject to the consent of
the Executive Compensation Committee pursuant to Section 7.5
hereof.
7.5 The Executive Compensation Committee shall grant or deny
its consent to an election under Section 7.1(b) hereof, if
required, or to a revocation or modification of a previous
election under Section 7.4, if required, as soon as
administratively practicable after its receipt of written
notice thereof and shall promptly notify the Officer of its
action with respect thereto. In granting or denying such
consent the Executive Compensation Committee shall consider
and take into account the form in which benefits are payable
with respect to the Officer under any other applicable Company
plan or arrangement; the interests of the Officer and/or his
beneficiary or beneficiaries and of other Officers and/or
their beneficiaries; the effect of such election (or of such
revocation or modification of a previous election) on the Com-
pany's current and projected future financial condition in the
context of other similar elections under this Plan and all
other Company plans or arrangements for the benefit of its em-
ployees; and such other factors and circumstances as the
Executive Compensation Committee, in its discretion, deems
relevant. All actions of the Executive Compensation Committee
shall be taken by majority vote at a meeting or by majority
approval in writing in lieu of a meeting and shall be final
and binding on all parties interested therein.
4. This First Amendment shall be effective on or as of March 1, 1996. In
all other respects the Plan shall remain in full force and effect as originally
adopted effective December 31, 1993.
IN WITNESS WHEREOF, the Committee has caused this First Amendment to be
executed by a duly authorized officer of the Company as of the 15th day of
January, 1996.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
3
<PAGE>
Exhibit 10.24
FIRST AMENDMENT TO
OWENS-ILLINOIS, INC. EXECUTIVE SAVINGS PLAN
Pursuant to authority reserved and duly delegated to the Compensation
Committee (the "Committee") of the Board of Directors of Owens-Illinois, Inc.
(the "Company") under the Owens-Illinois, Inc. Executive Savings Plan (the
"Plan"), the Committee hereby amends the Plan as follows:
1. Section 5.3 of the Plan is amended to read, in its entirety, as
follows:
5.3 The Company shall post a Matching Credit to the
Matching Account of each Executive who has made a
Deferral Election under Section 5.1 in an amount equal
to 50 percent of the amount of such Deferral Election,
up to a maximum annual Matching Credit equal to the
excess of (a) four percent of the Executive's Current
Compensation or, if less, $10,000, over (b) the amount
of the annual "Company Matching Contribution" made on
his behalf under (and as defined in) SPASP.
2. This First Amendment shall be effective as of January 1, 1995. In all
other respects the Plan shall remain in full force and effect as originally
adopted effective December 31, 1993.
IN WITNESS WHEREOF, the Committee has caused this First Amendment to be
executed by a duly authorized officer of the Company this 30th day of
June, 1995.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
1
<PAGE>
Exhibit 10.25
SECOND AMENDMENT TO
OWENS-ILLINOIS, INC. EXECUTIVE SAVINGS PLAN
Pursuant to authority reserved and duly delegated to the Compensation
Committee (the "Committee") of the Board of Directors of Owens-Illinois, Inc.
(the "Company") under the Owens-Illinois, Inc. Executive Savings Plan (the
"Plan"), the Committee hereby amends the Plan as follows:
1. Section 2 of the Plan is amended by the addition thereto of the
following new definition:
"Executive Compensation Committee" means a committee comprised
of the Company's Chief Financial Officer, the Company's
General Counsel, and the Company's Director of Compensation
and Benefits. In the event of a vacancy in any one or more of
such offices or positions within the Company, any correspond-
ing vacancy on the Executive Compensation Committee shall be
filled by the officer or employee of the Company who succeeds
to the duties of such vacant office or position or by another
officer or employee of the Company designated by the Board.
2. The last sentence of Section 6.1 of the Plan is amended to read as
follow:
All such amounts so credited to an Executive's Deferral and
Matching Accounts shall, until paid or distributed in full,
accrue interest, compounded monthly, at an annual rate equal
from time to time to the average annual yield on domestic
corporate bonds of Moody's A-rated companies (as most recently
reported in the Survey of Current Business published by the
United States Department of Commerce or a successor publi-
cation) or at such other rate as the Board may at any time and
from time to time designate prospectively; provided, however,
that no such action taken by the Board after the date on which
notice of an installment payment election (or of the modifica-
tion of any such previous election) is given pursuant to
Section 7.5 hereof shall operate to reduce the rate of
interest on the unpaid balance of the amount payable pursuant
to such election (or modification) to less than the rate which
would have been in effect hereunder in the absence of such
action by the Board.
3. Section 7.2 of the Plan is amended to read, in its entirety, as
follows:
7.2 The entire amount credited to an Executive's Accounts,
including accrued interest to the date of payment, shall
become payable upon termination of the Executive's employment
with the Company by reason of his death, total and permanent
1
<PAGE>
disability, normal or early retirement pursuant to any
retirement plan sponsored by the Company, or any other reason.
Amounts so payable before March 1, 1996 shall be paid to the
Executive in cash in a lump sum as soon as practicable after
such termination of employment, but in no event later than
March 31 of the following year. Amounts so payable on or
after March 1, 1996 shall be paid to the Executive in cash in
a lump sum as soon as practicable after such termination of
employment, but in no event later than March 31 of the follow-
ing year, unless an election of an installment form of payment
is in effect as provided in Section 7.5 hereof, in which event
such amount shall be paid in the installment form so elected.
4. A new Section 7.5 is added to the Plan, to read, in its entirety, as
follows:
7.5 An Executive with respect to whom any amount becomes
payable under this Plan on or after March 1, 1996 may elect,
by written notice to and, if required as hereinafter provided,
with the consent of the Executive Compensation Committee, to
have such amount or any part thereof paid in any specified
number, not to exceed 15, of substantially equal annual in-
stallments commencing as soon as practicable after the Execu-
tive's termination of employment, but in no event later than
March 31 of the following year, together with interest on the
unpaid balance thereof at the rate determined under Section
6.1 hereof. Any such Executive who has made such an election
may revoke or modify such election by subsequent written
notice to and, if required as hereinafter provided, with the
consent of the Executive Compensation Committee. An Execu-
tive's election under this Section 7.5, or any revocation or
modification of a previous election, will be effective without
the consent of the Executive Compensation Committee only to
the extent that it applies to amounts credited to his Accounts
thereafter. Any election, or any revocation or modification
of a previous election, applicable to any other portion of his
Accounts, will be subject to the consent of the Executive
Compensation Committee pursuant to Section 7.6 hereof, except
that an Executive's initial election under this Section 7.5
will be effective without the consent of the Executive
Compensation Committee if made no later than one (1) month
after the later of (i) the date of adoption of the Second
Amendment to the Plan or (ii) the effective date of such
Amendment.
5. A new Section 7.6 is added to the Plan, to read, in its entirety, as
follows:
7.6 The Executive Compensation Committee shall grant or deny
its consent to an election under Section 7.5 hereof, if
required, or to a revocation or modification of any such
2
<PAGE>
election, if required, as soon as administratively practicable
after its receipt of written notice thereof and shall promptly
notify the Executive of its action with respect thereto. In
granting or denying such consent the Executive Compensation
Committee shall consider and take into account the form in
which benefits are payable with respect to the Executive under
SPASP and under any other applicable Company plan or arrange-
ment; the interests of the Executive and/or his beneficiary or
beneficiaries and of other Executives and/or their beneficia-
ries; the effect of such election (or of such revocation or
modification of a previous election) on the Company's current
and projected future financial condition in the context of
other similar elections under this Plan and all other Company
plans or arrangements for the benefit of its employees; and
such other factors and circumstances as the Executive Compen-
sation Committee, in its discretion, deems relevant. All
actions of the Executive Compensation Committee shall be taken
by majority vote at a meeting or by majority approval in
writing in lieu of a meeting and shall be final and binding on
all parties interested therein.
6. This Second Amendment shall be effective on or as of March 1, 1996.
In all other respects the Plan shall remain in full force and effect as
originally adopted effective December 31, 1993.
IN WITNESS WHEREOF, the Committee has caused this Second Amendment to be
executed by a duly authorized officer of the Company as of the 15th day of
January, 1996.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
3
<PAGE>
Exhibit 10.26
OWENS-ILLINOIS, INC.
DIRECTORS DEFERRED COMPENSATION PLAN
1. PURPOSE.
The purpose of this Owens-Illinois, Inc. Directors Deferred Compensation
Plan is to permit certain members of the Board of Directors of Owens-
Illinois, Inc. to elect to defer receipt of all or part of their compensa-
tion.
2. DEFINITIONS. As used herein:
"Account" means a deferred compensation memorandum account established and
maintained on the books of the Company to reflect a Director's interest in
the Plan;
"Board" means the Board of Directors of the Company;
"CEO" means the Chief Executive Officer of the Company;
"Committee" means a committee, composed of officers and directors of the
Company who are not eligible to participate in the Plan, appointed by the
Board to administer the Plan;
"Company" means Owens-Illinois, Inc., a Delaware corporation;
"Compensation" means any fees (including meeting attendance fees) and/or
other form of current cash remuneration for services rendered to or on
behalf of the Company by a Director solely in his capacity as such;
"Deferral Election" means an election made by a Director pursuant to and
in accordance with Section 5 of the Plan;
"Director" means a member of the Board eligible to participate in the Plan
pursuant and in accordance with to Section 4 of the Plan;
"Early Distribution Date" shall mean the date specified in an Early
Distribution Election.
"Early Distribution Election" means an election made by a Director
pursuant to and in accordance with Section 6 of the Plan.
"Plan" means this Owens-Illinois, Inc. Directors Deferred Compensation
Plan, as from time to time in effect; and
Words of the masculine gender include correlative words of the feminine
and neuter genders and vice versa, and words denoting the singular include
the plural and vice versa.
1
<PAGE>
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The administrative
powers of the Committee shall include the powers to interpret the Plan and
to exercise full and complete discretion to adopt, modify, and/or rescind
(or to authorize the CEO to adopt, modify, and/or rescind) any rules,
determinations, policies, or procedures deemed necessary or appropriate
for the maintenance and administration of the Plan.
4. ELIGIBILITY AND PARTICIPATION.
Any member of the Board who is not an employee of the Company shall be
eligible to participate in this Plan.
5. DEFERRAL ELECTIONS.
5.1 Each Director may elect from time to time, by written notice to the
CEO, to defer his receipt, subject to the provisions of the Plan, of all
or any specified part, up to and including 100 percent, of his Compensa-
tion to be earned thereafter.
5.2 Each Deferral Election shall be made before the first day of the
calendar year or other fiscal period for which the Compensation to which
it applies is to be earned and shall be irrevocable with respect to the
electing Director's Compensation for such year or other fiscal period. A
Director may elect prospectively to change the rate of or revoke his
Deferral Election with respect to his Compensation to be earned for any
future year or other fiscal period at such times and with such frequency
as may be permitted pursuant to rules and procedures of uniform applica-
tion adopted by the Committee. Until so changed or revoked, such a
Deferral Election shall remain in effect with respect to all Compensation
earned by the Director after the date thereof.
5.3 Notwithstanding the foregoing provisions of this Section 5, a
Director may make a Deferral Election with respect to all or any specified
part of any unpaid Compensation by written notice to the CEO given within
one month after the date on which this Plan is initially adopted or, if
later, within one month after the date on which such Director first
becomes eligible to participate in this Plan.
6. EARLY DISTRIBUTION ELECTION.
Prior to the first day of a calendar year or other fiscal period for which
a Director is making or has made a Deferral Election, such Director may
elect to have such amounts become payable on the first day of the third
calendar year following the calendar year or other fiscal period for which
such amounts were deferred, or on the first day of any subsequent calendar
year, as specified by the Participant (the "Early Distribution Date"). A
Director who has made such an Early Distribution Election may elect to
defer the payment of the amounts subject to such Early Distribution
Election until the termination of the Directors' membership on the Board
2
<PAGE>
pursuant to Section 8; provided, however, that such election must be made
before the first day of the calendar year immediately preceding the
calendar year of the Early Distribution Date specified in such Early
Distribution Election. All amounts payable pursuant to an Early Distri-
bution Election shall be paid to the Director in cash in a lump sum as
soon as practicable after the Early Distribution Date set forth in such
election but in no event later than the March 31 following such Early
Distribution Date.
7. ACCOUNTS.
7.1 All amounts deferred under the Plan shall be credited by the
Company, as of the date such amounts would otherwise be payable to the
Director in the absence of a Deferral Election, to the Director's Account
and shall, until paid or distributed in full, accrue interest, compounded
monthly, at an annual rate equal from time to time to the average annual
yield on domestic corporate bonds of Moody's A-rated companies (as most
recently reported in the Survey of Current Business published by the
United States Department of Commerce or a successor publication) or at
such other rate as the Committee may at any time and from time to time
designate prospectively.
7.2 The Company shall be under no duty to segregate or set aside any
amount credited to any Account from the general assets of the Company, but
the Committee may, in its discretion, direct the establishment of any
trusteed, insured, or other payment arrangement from which the Company's
obligations as to a Director under the Plan may be paid. No Director,
beneficiary, estate, or other person claiming through or under a Director
shall have any legal or beneficial property interest whatsoever in any
assets of the Company or in any such payment arrangement which may be
established at the direction of the Committee except as may be expressly
provided by such payment arrangement. Neither the establishment of an
Account nor the crediting of any amounts thereto nor the establishment of
any payment arrangement (except as may be expressly provided by such
payment arrangement) shall be deemed to create a trust of any kind, any
fiduciary relationship between the Company and any person, or any
collateral security for the Company's obligations under the Plan. To the
extent that a Director or any other person acquires a right to receive any
payment from the Company under this Plan, such right shall be no greater
than that of any other unsecured general creditor of the Company. The
Company shall provide to each Director who has made any Deferral Election,
at least annually, a statement of his Account balance.
8. PAYMENT OF ACCOUNT BALANCES.
The entire amount credited to a Director's Account, including accrued
interest to the date of payment and including any amounts deferred
pursuant to Section 6, shall become payable upon termination of the
Director's membership on the Board for any reason. Amounts so payable
shall be paid to the Director in cash in a lump sum or, if and to the
extent the Director has so elected in writing at the time of his Deferral
3
<PAGE>
Elections, in such number, not to exceed 15, of equal annual installments
as the Director has so elected plus interest on the unpaid balance at the
rate from time to time called for under Section 7.1 of the Plan. In the
event of a Director's death before his Account plus interest has been paid
to him in full, the entire amount then credited to his Account, including
accrued interest to the date of payment, shall be paid in cash in a lump
sum to the beneficiary or beneficiaries named by him in a written
designation filed with the Company (or, in the absence of such a
designation, to his estate). All payments hereunder shall be made or
commenced as soon as practicable after a Director's termination of Board
membership but in no event later than March 31 of the following year.
9. AMENDMENT AND TERMINATION OF THE PLAN.
The Board or the Committee may at any time and from time to time amend,
suspend, or terminate the Plan in whole or in part; provided, however,
that no such amendment, suspension, or termination may, without the
consent of any Director affected thereby, have any adverse retroactive
effect on the rights of any such Director (or any person claiming through
or under him) under the Plan unless required by applicable law.
10. MISCELLANEOUS.
10.1 At the request of a Director for whom an Account has been estab-
lished hereunder or on its own initiative, the Committee may, at any time
and in its sole and unlimited discretion, accelerate the payment of all or
any part of a Director's Account balance.
10.2 Nothing in the Plan shall confer on any Director any right to
continue as a member of the Board.
10.3 Rights under the Plan shall not be assignable or transferable or
subject to encumbrance or charge of any nature, other than by designation
of beneficiary to take effect at death or, in the absence of such designa-
tion, by will or the laws of descent and distribution.
10.4 The Plan shall be binding on and inure to the benefit of the
Company, each Director, and every person claiming through or under a
Director, and their respective heirs, successors, and assigns.
10.5 Deferral Elections under the Plan are intended to defer Directors'
recognition of income, for income tax purposes under the Internal Revenue
Code of 1986, as amended, until their actual receipt of payments from
their Accounts. The Plan shall be interpreted and administered in a
manner consistent with such intent.
10.6 This Plan shall be effective on and after its date of execution.
4
<PAGE>
IN WITNESS WHEREOF, the Board has caused this Plan to be executed by a
duly authorized officer of the Company as of the 31st day of December, 1993.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------------
Executive Vice President
Attest:
/s/ James W. Baehren
- -------------------------
Assistant Secretary
5
<PAGE>
Exhibit 10.27
FIRST AMENDMENT TO OWENS-ILLINOIS, INC.
DIRECTORS DEFERRED COMPENSATION PLAN
Pursuant to the authority reserved to the Committee (the "Committee") of
the Board of Directors of Owens-Illinois, Inc. (the "Company") appointed to
administer the Owens-Illinois, Inc. Directors Deferred Compensation Plan (the
"Plan") under Section 8 of the Plan, the Committee hereby amends the Plan as
follows:
1. Section 2 of the Plan is amended by the addition thereto of the
following new definition:
"Executive Compensation Committee" means a committee comprised
of the Company's Chief Financial Officer, the Company's
General Counsel, and the Company's Director of Compensation
and Benefits. In the event of a vacancy in any one or more of
such offices or positions within the Company, any
corresponding vacancy on the Executive Compensation Committee
shall be filled by the officer or employee of the Company who
succeeds to the duties of such vacant office or position or by
another officer or employee of the Company designated by the
Board.
2. Section 6.1 of the Plan is amended to read, in its entirety, as follow:
All amounts deferred under the Plan shall be credited by the
Company, as of the date such amounts would otherwise be
payable to the Director in the absence of a Deferral Election,
to the Director's Account, and shall, until paid or distrib-
uted in full, accrue interest, compounded monthly, at an
annual rate equal from time to time to the average annual
yield on domestic corporate bonds of Moody's A-rated companies
(as most recently reported in the Survey of Current Business
published by the United States Department of Commerce or a
successor publication) or at such other rate as the Board may
at any time and from time to time designate prospectively;
provided, however, that no such action taken by the Board
after the date of an installment payment election (or of the
modification of any such previous election) pursuant to
Section 7 hereof shall operate to reduce the rate of interest
on the unpaid balance of the amount payable pursuant to such
election (or modification) to less than the rate which would
have been in effect hereunder in the absence of such action by
the Board.
1
<PAGE>
3. Section 7 of the Plan is amended to read, in its entirety, as follows:
7. PAYMENT OF ACCOUNT BALANCES.
7.1 The entire amount credited to a Director's Account,
including accrued interest to the date of payment, shall
become payable upon termination of the Director's membership
on the Board for any reason. Amounts so payable shall be paid
to the Director in cash in a lump sum or, if and to the extent
the Director has so elected in writing:
(a) at or before the time of his Deferral
Elections; or
(b) thereafter, but only with the consent of
the Executive Compensation Committee pursuant to
Section 7.5 hereof, except that a Director's
initial election under this Section 7.1(b) will
be effective without the consent of the Executive
Compensation Committee if made no later than one
(1) month after the later of (i) the date of
adoption of the First Amendment to the Plan or
(ii) the effective date of such Amendment,
in such number, not to exceed 15, of equal annual installments
as the Director has so elected plus interest on the unpaid
balance at the rate from time to time called for under Section
6.1 of the Plan.
7.2 In the event of a Director's death before or after his
termination of Board membership but before his Account plus
interest has been paid to him in full, the entire amount then
credited to his Account, including accrued interest to the
date of payment, shall be paid, to the beneficiary or
beneficiaries named by him in a written designation filed with
the Company (or, in the absence of such a designation, to his
estate), in cash in a lump sum or, if and to the extent the
Director has made an election of installment payments under
Section 7.1 hereof, in accordance with such election.
7.3 All payments hereunder shall be made or commenced as
soon as practicable after a Director's termination of Board
membership but in no event later than March 31 of the follow-
ing year.
7.4 A Director with respect to whom any amount first becomes
payable under this Plan on or after March 1, 1996 may revoke
or modify any previous election under Section 7.1 hereof by
subsequent written notice to and, if required as hereinafter
provided, with the consent of the Executive Compensation
Committee. Any such revocation or modification of a previous
2
<PAGE>
election will be effective without the consent of the Execu-
tive Compensation Committee only to the extent that it applies
to amounts credited to the electing Director's Account there-
after. Any such revocation or modification applicable to any
other portion of his Account will be subject to the consent of
the Executive Compensation Committee pursuant to Section 7.5
hereof.
7.5 The Executive Compensation Committee shall grant or deny
its consent to an election under Section 7.1(b) hereof, if
required, or to a revocation or modification of a previous
election under Section 7.4, if required, as soon as
administratively practicable after its receipt of written
notice thereof and shall promptly notify the Director of its
action with respect thereto. In granting or denying such
consent the Executive Compensation Committee shall consider
and take into account the form in which benefits, if any, are
payable with respect to the Director under any other
applicable Company plan or arrangement; the interests of the
Director and/or his beneficiary or beneficiaries and of other
Directors and/or their beneficiaries; the effect of such
election (or of such revocation or modification of a previous
election) on the Company's current and projected future finan-
cial condition in the context of other similar elections under
this Plan and all other Company plans or arrangements for the
benefit of its Directors and/or employees; and such other
factors and circumstances as the Executive Compensation
Committee, in its discretion, deems relevant. All actions of
the Executive Compensation Committee shall be taken by
majority vote at a meeting or by majority approval in writing
in lieu of a meeting and shall be final and binding on all
parties interested therein.
4. This First Amendment shall be effective on or as of March 1, 1996. In
all other respects the Plan shall remain in full force and effect as originally
adopted effective December 31, 1993.
IN WITNESS WHEREOF, the Committee has caused this First Amendment to be
executed by a duly authorized officer of the Company as of the 15th day of
January, 1996.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
--------------------
Vice President
Attest:
/s/ James W. Baehren
- ------------------------
Assistant Secretary
3
<PAGE>
EXHIBIT 21
OWENS-ILLINOIS, INC.
SUBSIDIARIES OF THE REGISTRANTS
The Registrants had the following subsidiaries at December 31, 1995 (subsid-
iaries are indented following their respective parent companies):
State/Country of Incorporation
Name or Organization
- ---- ------------------------------
OI Health Care Holding Corp. Delaware
OI General Finance Inc. Delaware
OI Closure FTS Inc. Delaware
Specialty Packaging Licensing Company Limited Delaware
Owens-Illinois Closure Inc. Delaware
Product Design & Engineering, Inc. Minnesota
Specialty Packaging Products de Mexico, S.A.
de C.V. Mexico
OI Plastic Products FTS Inc. Delaware
Owens-Illinois Prescription Products Inc. Delaware
OI Medical Inc. Delaware
Owens-BriGam Medical Company Delaware
Owens-Brockway Plastic Products Inc. Delaware
Owens-Illinois Labels Inc. Delaware
Owens-Illinois Specialty Products Puerto Rico, Inc. Delaware
OI Regioplast STS Inc. Delaware
Regioplast S.A. de C.V. Mexico
OI General FTS Inc. Delaware
OI Castalia STS Inc. Delaware
OI Levis Park STS Inc. Delaware
OI AID STS Inc. Delaware
OI UMI STS Inc. Delaware
Universal Materials, Inc. Ohio
OI MVCURC STS Inc. Delaware
Maumee Valley Community Urban
Redevelopment Corporation Ohio
Owens-Illinois General Inc. Delaware
Owens Insurance, Ltd. Bermuda
OI Holding Company, Inc. Ohio
Owens-Illinois Foreign Sales Corp. Virgin Islands
Harbor Capital Advisors, Inc. Delaware
HCA Securities, Inc. Delaware
Harbor Transfer, Inc. Delaware
E-1
<PAGE>
Subsidiaries of the Registrants (continued)
State/Country of Incorporation
Name or Organization
- ---- ------------------------------
Owens-Brockway Packaging, Inc. Delaware
OI Ione STS Inc. Delaware
Owens-Brockway Glass Container Inc. Delaware
Brockway Realty Inc. Pennsylvania
Brockway Research Inc. Delaware
Seagate, Inc. Ohio
OIB Produvisa Inc. Delaware
OI Consol STS Inc. Delaware
OI Puerto Rico STS Inc. Delaware
Owens-Illinois de Puerto Rico Ohio
OI Venezuela STS Inc. Delaware
Owens Brockway Venezuelan Holding Venezuela
Centro Vidriero de Venezuela, C.A. Venezuela
Manufacturera de Vidrios Planos, C.A. Venezuela
Owens-Illinois de Venezuela, C.A. Venezuela
Fabrica de Vidrio Los Andes, C.A. Venezuela
Owens-Illinois Ventas, S.A. Venezuela
OI Peldar STS Inc. Delaware
Cristaleria Peldar, S.A. Colombia
OI Ecuador STS Inc. Delaware
Cristaleria del Ecuador, S.A. Ecuador
OI Peru STS Inc. Delaware
Vidrios Industriales S.A. Peru
Bolivian Investments, Inc. Delaware
Fabrica Boliviana de Vidrios S.A. Bolivia
OI Brazil Inc. Delaware
Owens-Illinois International B. V. Netherlands
Sao Raimundo Administracao, Participacoes
e Representacoes, Limitada Brazil
Companhia Industrial Sao Paulo e Rio Brazil
OI Finnish Holdings Oy Finland
Ryttylan Muovi Oy Finland
Karhulan Lasi Oy Finland
A/S Jarvakandi Klaas Estonia
OI Machineworks Inc. Delaware
O-I Europe (Machinery and Distribution) Limited United Kingdom
OI Overseas Management Company Limited Delaware
United Glass Group Ltd. United Kingdom
United Glass, Limited United Kingdom
OI Poland Inc. Delaware
Huta Szkla Jaroslaw S.A. Poland
OI Hungary Inc. Delaware
Oroshaza Glass Manufacturing and Trading Kft. Hungary
OI India Inc. Delaware
Owens-BILT Limited India
E-2
<PAGE>
EXHIBIT 23.1
OWENS-ILLINOIS, INC.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Selected Financial
Data."
We also consent to the incorporation by reference in the Registration State-
ment (Form S-3 No. 33-51982) of Owens-Illinois, Inc. and in the related
Prospectus, in the Registration Statements (Forms S-8 Nos. 33-43559 and 33-
57139) pertaining to the Amended and Restated Owens-Illinois, Inc. Stock
Purchase and Savings Program; the Amended and Restated Owens-Illinois, Inc.,
Non-Union Retirement and Savings Plan; the Amended and Restated Owens-Illi-
nois, Inc. Supplemental Retirement Plan; and the Amended and Restated Owens-
Illinois, Inc. Long-Term Savings Plan, in the Registration Statement (Form S-8
No. 33-44252) pertaining to the Amended and Restated Stock Option Plan for Key
Employees of Owens-Illinois, Inc., and in the Registration Statement (Form S-8
No. 33-57141) pertaining to the Stock Option Plan for Directors of Owens-
Illinois, Inc. of our report dated February 2, 1996 with respect to the
consolidated financial statements and schedule of Owens-Illinois, Inc.,
included in this Annual Report (Form 10-K) for the year ended December 31,
1995.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Toledo, Ohio
March 28, 1996
E-3
<PAGE>
EXHIBIT 23.2
OWENS-ILLINOIS, INC.
CONSENT OF MCCARTER & ENGLISH
March 26, 1996
Ladies and Gentlemen:
We consent to the incorporation by reference in this Annual Report on
Form 10-K of Owens-Illinois, Inc. and Owens-Illinois Group, Inc. for the
year ended December 31, 1995, of the reference to our firm under the caption
"Legal Proceedings."
Very truly yours,
/s/McCarter & English
---------------------
McCarter & English
<PAGE>
EXHIBIT 24
OWENS-ILLINOIS, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That each individual whose
signature appears below hereby consents to and appoints Thomas L. Young, Lee
A. Wesselmann, or either of them, individually, as his true and lawful
attorney-in-fact and agent with all power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign the 1995 Annual
Report on Form 10-K of Owens-Illinois, Inc. and Owens-Illinois Group, Inc.,
both corporations organized and existing under the laws of the State of
Delaware, and any and all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission pursuant to the requirements of the
Securities and Exchange Act of 1934, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the same as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date set opposite his name.
Signature Title Date
- --------- ----- --------
Joseph H. Lemieux Chairman of the Board of 3/29/96
- ------------------------- Directors and Chief Executive --------
Joseph H. Lemieux Officer (Principal Executive
Officer); Director
Lee A. Wesselmann Senior Vice President 3/29/96
- ------------------------- and Chief Financial Officer --------
Lee A. Wesselmann (Principal Financial and
Accounting Officer); Director
Robert J. Lanigan Chairman Emeritus of 3/29/96
- ------------------------- the Board of Directors; --------
Robert J. Lanigan Director
Director
- ------------------------- --------
Robert J. Dineen
Edward A. Gilhuly Director 3/29/96
- ------------------------- --------
Edward A. Gilhuly
James H. Greene, Jr. Director 3/29/96
- ------------------------- --------
James H. Greene, Jr.
<PAGE>
Signature Title Date
- --------- ----- --------
Henry R. Kravis Director 3/29/96
- ------------------------- --------
Henry R. Kravis
Robert I. MacDonnell Director 3/29/96
- ------------------------- --------
Robert I. MacDonnell
John J. McMackin, Jr. Director 3/29/96
- ------------------------- --------
John J. McMackin, Jr.
Michael W. Michelson Director 3/29/96
- ------------------------- --------
Michael W. Michelson
George R. Roberts Director 3/29/96
- ------------------------- --------
George R. Roberts
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
December 31, 1995 consolidated balance sheet, and the consolidated results
of operations for the year then ended and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 161,900,000
<SECURITIES> 0
<RECEIVABLES> 423,900,000
<ALLOWANCES> 39,700,000
<INVENTORY> 502,200,000
<CURRENT-ASSETS> 1,216,800,000
<PP&E> 3,087,200,000
<DEPRECIATION> 1,302,400,000
<TOTAL-ASSETS> 5,439,200,000
<CURRENT-LIABILITIES> 888,900,000
<BONDS> 2,780,600,000
0
21,900,000
<COMMON> 1,200,000
<OTHER-SE> 508,800,000
<TOTAL-LIABILITY-AND-EQUITY> 5,439,200,000
<SALES> 3,763,200,000
<TOTAL-REVENUES> 3,881,000,000
<CGS> 2,948,500,000
<TOTAL-COSTS> 2,948,500,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 32,400,000
<INTEREST-EXPENSE> 299,600,000
<INCOME-PRETAX> 310,000,000
<INCOME-TAX> 100,800,000
<INCOME-CONTINUING> 169,100,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 169,100,000
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.40
</TABLE>
