UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 11-K

 

(Mark One)

 

xANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2019

 

OR

 

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

 

For the transition period from                      to                    

 

Commission file number 1-9576

 

A.Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

SEVENTH AMENDED AND RESTATED OWENS-ILLINOIS, INC.

LONG-TERM SAVINGS PLAN

 

B.Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

O-I GLASS, INC.

One Michael Owens Way

Perrysburg, Ohio  43551-2999

 

 

 

 

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Financial Statements

and Supplemental Schedule

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Years ended December 31, 2019 and 2018

with Report of Independent Registered Public Accounting Firm

 

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Financial Statements

and Supplemental Schedule

 

Years ended December 31, 2019 and 2018

 

Contents

 

Report of Independent Registered Public Accounting Firm   2
     
Financial Statements    
     
Statements of Net Assets Available for Benefits   3
     
Statements of Changes in Net Assets Available for Benefits   4
     
Notes to Financial Statements   5
     
Supplemental Schedule    
     
Schedule H, Line 4i-Schedule of Assets (Held at End of Year)   13

 

 

 

Report of Independent Registered Public Accounting Firm

 

To the Plan Participants and the Plan Administrator of the Seventh Amended and Restated Owens-Illinois, Inc. Long-Term Savings Plan

 

Opinion on the Financial Statements

 

We have audited the accompanying statements of net assets available for benefits of the Seventh Amended and Restated Owens-Illinois, Inc. Long-Term Savings Plan (the Plan) as of December 31, 2019 and 2018, and the related statements of changes in net assets available for benefits for the years ended December 31, 2019 and 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2019 and 2018, and the changes in its net assets available for benefits for the years ended December 31, 2019 and 2018, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

 

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Supplemental Schedule

 

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2019 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

 

/s/ Ernst & Young LLP

 

We have served as the Plan’s auditor since 1987.

 

Toledo, Ohio

June 25, 2020

 

2

 

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Statements of Net Assets Available for Benefits

 

   December 31, 
   2019   2018 
Assets:        
         
Interest in investments of the Trust  $238,370,412   $220,722,515 
           
Notes receivable from participants   14,077,185    13,916,511 
           
Net assets available for benefits  $252,447,597   $234,639,026 

 

The accompanying notes are an integral part of the financial statements.

 

3

 

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Statements of Changes in Net Assets Available for Benefits

 

   Year ended December 31, 
   2019   2018 
Interest in investment gain (loss) of the Trust  $29,315,719   $(18,342,318)
           
Contributions:          
Participant   15,777,807    15,946,361 
Employer   3,980,210    3,877,817 
           
Interest income due to notes receivable from participants   719,350    645,598 
Participant withdrawals   (30,673,363)   (28,989,016)
Plan to plan transfers   (1,131,970)   (538,786)
Administration fees   (179,204)   (139,032)
Other   22    (405)
           
Increase (decrease) in net assets available for benefits   17,808,571    (27,539,781)
           
Net assets available for benefits at beginning of year   234,639,026    262,178,807 
           
Net assets available for benefits at end of year  $252,447,597   $234,639,026 

 

The accompanying notes are an integral part of the financial statements.

 

4

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements

December 31, 2019

 

1. Plan Description

 

The Seventh Amended and Restated Owens-Illinois, Inc. Long-Term Savings Plan (the “Plan”) was adopted by O-I Glass, Inc. (the “Company”) for the benefit of eligible U.S. hourly employees of the Company and certain of its subsidiaries and affiliates.

 

On December 26 and 27, 2019, the Company implemented the Corporate Modernization (as defined below) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 26, 2019, among Owens-Illinois, Inc. (“O-I”), O-I Glass, Inc. (“O-I Glass”) and Paddock Enterprises, LLC (“Paddock”). The term “Company” as used herein and unless otherwise stated or indicated by context, refers to O-I prior to Corporate Modernization and to O-I Glass after Corporate Modernization.

 

The Corporate Modernization involved a series of transactions, which reorganized O-I into a new holding company structure (the “Corporate Modernization”). The Corporate Modernization was completed on December 27, 2019 and was effected through a merger pursuant to the Merger Agreement, dated as of December 26, 2019, by and among the Registrant, O-I and Paddock. As a result of the Corporate Modernization, O-I merged with an into Paddock, with Paddock continuing as the surviving entity and as a direct wholly owned subsidiary of the Company (the “Merger”). Upon the effectiveness of the Merger, each issued and outstanding share of common stock of O-I, par value $0.01 per share, held immediately prior to the Merger automatically converted into a right to receive an equivalent corresponding share of Common Stock having the same designations, rights, powers and preferences and the qualifications, limitations, and restrictions as the corresponding share of common stock of O-I being converted.

 

In connection with the Corporate Modernization, on December 26, 2019, O-I Glass and Paddock entered into an Assignment and Assumptions Agreement , pursuant to which the Company assumed (including sponsorship of) the Plan from O-I.

 

The Plan’s investments are held in the Owens-Illinois, Inc. Master Savings Trust (the “Trust”) administered by the O-I Glass, Inc. Employee Benefits Committee (the “Committee”). The Plan’s Trustee is John Hancock (the “Trustee”) and recordkeeping is managed by John Hancock (the “Recordkeeper”), along with the assets of another defined contribution plan of the Company.

 

The Plan is a defined contribution plan which provides eligible employees, upon completion of a probationary period, the opportunity to make pretax and/or after-tax contributions, in specific percentages, within guidelines established by the Company. Participant contributions are immediately fully vested and may be divided at the participant’s discretion among the various investment options from 1% to 100%, with no limit on the number of options selected. A participant may elect to change the percentage of compensation to be contributed each pay period; any such changes shall be effective on the next pay period.

 

Each participant’s account is credited with the participant’s contributions and the Company’s matching contributions and allocations of plan earnings, and is charged with an allocation of administrative expenses. Plan earnings are allocated based on the participant’s share of net earnings or losses of their respective elected investment options. Allocations of plan administrative expenses are based on the participant’s account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

5

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019

 

Based on the facility in which the participant is employed, the Company contributes a matching amount of the participant’s pretax contributions not to exceed 2% or 5% of the participant’s compensation or amounts based on a stipulated rate per hour. For participants at certain Company facilities, the Company contributes an additional Employer Base Contribution to the Plan of 3% of the participant’s compensation. All Company contributions are specified by various labor contracts and are immediately fully vested. Company contributions may be invested in the O-I Glass, Inc. Company Stock Fund, however, participants are allowed to transfer Company contributions from the Company Stock Fund at any time. Company contributions not invested in the O-I Glass, Inc. Company stock fund are invested in accordance with the participant’s current choice of investment options. All contributions are subject to certain limitations of the Internal Revenue Code (the “Code”).

 

The Plan invests in common stock of the Company through its Company Stock Fund. The Company Stock Fund may also hold cash or other short-term securities, although these are expected to be a small percentage of the fund. The Company has implemented a dividend pass through election for its participants.

 

Each participant is entitled to exercise voting rights attributable to the shares allocated to their account and is notified by the Company prior to the time that such rights may be exercised. The trustee is not permitted to vote any allocated shares for which instructions have not been given by a participant. The Trustee votes any unallocated shares in the same proportion as those shares that were allocated, unless the Committee directs the trustee otherwise. Participants have the same voting rights in the event of a tender or exchange offer.

 

Within certain limitations, a participant may also transfer into the Plan a rollover contribution or other assets from another qualified plan.

 

With certain exceptions, participants may transfer existing fund balances among the various investment funds daily. Transfers into the Company Stock Fund will not be permitted until 90 days after the last transfer out. There are no restrictions on the frequency of transfers out of the Company Stock Fund.

 

Upon separation from service with the Company due to death, disability, retirement or termination, a participant may elect to receive either a lump sum or may elect installment payments on a monthly basis. The benefit to which a participant is entitled is the benefit that can be provided from the vested value of the participant’s account. In-service withdrawals are available in certain limited circumstances, as defined by the Plan. Hardship withdrawals are allowed for participants incurring an immediate and heavy financial need, as defined by the Plan. Hardship withdrawals are strictly regulated by the Internal Revenue Service (“IRS”) and a participant must exhaust all available loan options and available distributions prior to requesting a hardship withdrawal.

 

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and applicable collective bargaining agreements.

 

The information above is intended as a general description of the Plan’s operating guidelines.  Reference should be made to the Plan document for more specific provisions.

 

6

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019

 

2. Summary of Significant Accounting Policies

 

Basis of Accounting

 

The accompanying financial statements have been prepared on the accrual basis of accounting.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

Notes Receivable from Participants

 

Notes receivable from participants are loans of a portion of the participants’ existing account balance that the Plan permits participants to borrow. Loans are made subject to certain conditions and limitations specified in the Plan and are repaid in weekly installments, including interest.  The Plan allows active participants to only have three loans (only one of which can be used to purchase the participant’s primary residence) outstanding at any time. The minimum amount allowed by the Plan for a loan is $500 and the maximum loan amount available to a participant is determined by their account balance. The Plan allows a participant to borrow up to the lesser of (i) 50% of their account balance or (ii) $50,000. The maximum term of loans is five years, with the exception of home loans for the purchase of a primary residence, for which the maximum term is ten years.  Participants’ loans are collateralized by their account balances.  The rate at which loans bear interest is established at the inception of the borrowing, based on the prime rate then being charged by the Trustee plus 1%.  Repayments of loans, including the interest portion thereof, are reinvested on the participants’ behalf in accordance with their current choice of investment options.  Participants are charged a transaction fee for each new loan initiated.  The amount of the fee is $50 for a nonresidential loan and $100 for a residential loan.  The fee is deducted from the participant’s account when the loan is processed.  Notes receivable from participants are valued at their unpaid principal balances plus accrued interest. Interest income on notes receivable from participants is recorded when earned.

 

Basis of Presentation and Plan Investments

 

The accompanying financial statements reflect the Plan’s total interest in the net assets and transactions of the Trust as allocated by the Recordkeeper and any such other investments and transactions related solely to the Plan. Net assets, as well as earnings and losses, of the Trust are allocated to the Plan based on the sum of the individual accounts of the Plan’s participants. The Trust also invests in the common stock of the Company. These transactions qualify as party-in-interest transactions; however, they are exempt from the prohibited transaction rules under ERISA.

 

7

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019

 

The following tables present the net assets of the Trust and the Plan’s interest in the Trust:

 

    December 31, 2019  
    Trust Balances     Plan’s Interest in
Trust Balances
 
Mutual fund investments   $ 462,765,851     $ 175,557,238  
Pooled separate account     65,775,394       34,800,383  
Common stock     53,157,150       28,007,179  
Total net investments at fair value   $ 581,698,395     $ 238,364,800  
Add: Other assets     5,612       5,612  
Total net assets   $ 581,704,007     $ 238,370,412  
                 
Plan’s interest as a percentage of the Trust             41 %

 

   December 31, 2018 
   Trust Balances   Plan’s Interest in
Trust Balances
 
Mutual fund investments  $388,660,887   $152,114,547 
Pooled separate account   75,405,132    39,022,262 
Common stock   56,631,688    29,585,706 
Total net assets at fair value  $520,697,707   $220,722,515 
           
Plan’s interest as a percentage of the Trust        42%

 

The investment income (loss) of the Trust are as follows:

 

   Year Ended December 31, 
   2019   2018 
Interest and dividends  $10,271,054   $8,499,682 
Net appreciation (depreciation) in fair value of investments   74,352,471    (52,459,890)
Total income (loss)  $84,623,525   $(43,960,208)
           
Plan’s interest in investment income (loss) of the Trust  $29,315,719   $(18,342,318)

 

Investment Valuation and Income Recognition

 

Investments held by the Trust are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). See Note 3 for further discussion and disclosures related to fair value measurements.

 

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded as earned. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

 

8

 

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019

 

Tax Status

 

The Plan has received a determination letter from the IRS dated October 16, 2014, stating that the Plan is qualified under Section 401(a) of the Code and therefore the related trust is tax-exempt. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualified status. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and therefore, believes the Plan, as amended, is qualified and the related trust is tax exempt.

 

Accounting principles generally accepted in the United States require plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. Plan management has analyzed the tax positions taken by the Plan, and has concluded that there are no uncertain positions taken or expected to be taken. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

 

Plan Expenses

 

Plan expenses are paid by either the Plan or the Company, as provided by the Plan’s provisions.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes and supplemental schedule.  Actual results could differ from those estimates and assumptions.

 

Risk and Uncertainties

 

The Plan invests in various investment securities.  Investment securities are exposed to various risks such as interest rate, market and credit risks.  Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

 

New Accounting Standards

 

In February 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting, (ASU 2017-06). ASU 2017-06 requires a plan to present its interest in a master trust and the change in that interest as separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. It also requires a plan to disclose the master trust’s investments and other assets and liabilities, as well as the dollar amount of its interest in these balances. ASU 2017-06 eliminates the requirement for a health and welfare plan to provide investment disclosures for 401(h) account assets. ASU 2017-06 is effective for entities for fiscal years beginning after December 15, 2018, with retrospective application to all periods presented. The Plan has adopted this standard in 2019. The adoption of this standard did not have a material impact on the Plan’s financial statements. See Basis of Presentation and Plan Investments within Note 2 for additional disclosure related to this standard. 

 

9

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019

 

 

3. Fair Value Measurements

 

Generally accepted accounting principles (“GAAP”) define fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.  GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs for which there is little or no market data, which requires the Company to develop assumptions.

 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

The following is a description of the valuation techniques and inputs used for each general type of assets measured at fair value:

 

Common stock: Consists of the Company’s stock valued using quoted market prices on the last business day of the year.

 

Mutual Funds: The shares of mutual funds are valued at quoted market prices, which represent the net asset value (“NAV”) of shares held by the Plan at year-end.

 

Pooled separate account: The pooled separate account is valued at the NAV provided by the administrator of the fund.

 

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while the Trust believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

10

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019

 

The following table sets forth by level, within the fair value hierarchy, the Trust’s assets at fair value:

  

   December 31, 2019 
   Level 1   Level 2   Level 3   Total 
Common stock  $53,157,150   $   $   $53,157,150 
Pooled separate account   65,775,394            65,775,394 
Mutual funds   462,765,851            462,765,851 
                     
Total assets at fair value  $581,698,395   $   $   $581,698,395 

 

   December 31, 2018 
   Level 1   Level 2   Level 3   Total 
Common stock  $56,631,688   $   $   $56,631,688 
Pooled separate account   75,405,132            75,405,132 
Mutual funds   388,660,887            388,660,887 
                     
Total assets at fair value  $520,697,707   $   $   $520,697,707 

 

11

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Notes to Financial Statements — Continued

December 31, 2019 

4. Differences Between Financial Statements and Form 5500

 

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

 

   Year Ended December 31, 
   2019   2018 
Net assets available for benefits per the financial statements  $252,447,597   $234,639,026 
Deduct: Defaulted loans   (571,309)   (920,194)
           
Net assets available for benefits per the Form 5500  $251,876,288   $233,718,832 

 

The following is a reconciliation of increase in net assets per the financial statement to the net income per the Form 5500 for the year ended December 31, 2019:

 

Increase in net assets per the Financial Statements  $17,808,571 
Defaulted loans in prior year   920,194 
Defaulted loans in current year   (571,309)
      
Net income per the Form 5500  $18,157,456 

 

 

5. COVID-19 Impacts

 

Subsequent to December 31, 2019, the COVID-19 pandemic has resulted in substantial volatility in the global financial markets. As a result, the Plan’s investments have incurred a significant decline in their fair value since December 31, 2019. Because the value of the Plan’s investments have and will fluctuate in response to changing market conditions, the amount of future losses, if any, that will be recognized in subsequent periods, cannot be determined.

 

12

 

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Employer Identification No. 22-2781933

Plan No. 017

 

Schedule H, Line 4i-Schedule of Assets (Held at End of Year)

 

December 31, 2019

 

   Shares or    
   Principal  Fair 
Description  Amount  Value 
*Notes receivable from participants  Interest rates ranging from 4.25% to 9.25%, various maturity dates  $14,077,185 

 

*Party-in-interest

 

13

 

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the O-I Glass, Inc. Employee Benefits Committee, which administers the employee benefit plans, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: June 25, 2020 By: O-I Glass, Inc.
    Employee Benefits Committee
     
     
  By: /s/ Anna M. Boris
    Anna M. Boris
    Member of the Employee Benefits Committee

 

14

 

Exhibit 23

 

Seventh Amended and Restated Owens-Illinois, Inc.

Long-Term Savings Plan

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-232954 and 333-236546) pertaining to the Seventh Amended and Restated Owens-Illinois, Inc. Long Term Savings Plan of our report dated June 25, 2020, with respect to the financial statements and schedule of the Seventh Amended and Restated Owens-Illinois, Inc. Long Term Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2019.

 

/s/ Ernst & Young LLP

 

Toledo, Ohio

June 25, 2020