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2016-02-08

Owens-Illinois, Inc.: O-I REPORTS FULL YEAR AND FOURTH QUARTER 2015 RESULTS; Improving operations on stable volumes plus acquisition benefits drive strong 2015

FOR IMMEDIATE RELEASE

O-I REPORTS FULL YEAR AND FOURTH QUARTER 2015 RESULTS

Improving operations on stable volumes plus acquisition benefits drive strong
free cash flow generation and earnings in constant currency in 2015;
Strategic initiatives expected to improve financial performance in 2016

PERRYSBURG, Ohio (Feb. 8, 2016)
- Owens-Illinois, Inc. (NYSE: OI) today reported financial results for the
full year and fourth quarter ending December 31, 2015.

* For full year 2015, the Company recorded a loss from continuing operations
of $0.44 per share (diluted). Excluding certain items management considers
not representative of ongoing operations, adjusted earnings[1]were $2.00
per share, in line with management guidance. These results compared with
$2.07 per share in 2014 on a constant currency basis. The Company's charge
in 2015 for asbestos-related costs[2]covers a four year period of estimated
asbestos claims not yet asserted against the Company versus the three year
period used in the prior year.
* Fourth quarter 2015 adjusted earnings were $0.40 per share, compared with
$0.32 per share in the same period of 2014 on a constant currency basis.
* O-I generated $210 million of free cash flow[3] for the full year 2015,
modestly exceeding management guidance. This is on par with prior year free
cash flow in constant currency, which was the Company's second highest year
on record.
* Global volumes for 2015 were up 3 percent compared to the prior year .
Excluding the acquisition of Vitro's food and beverage business (the
acquired business) volumes were on par with 2014. On a global basis,
volumes of wine, spirits, food and non-alcoholic beverages all grew
year-on-year. While global beer volumes fell 1 percent, driven by a decline
in mainstream beer, shipments into craft and premium beer continue to
expand.
* The integration of the acquired business continues to progress well as
evidenced by strong business performance to date and its contribution to
free cash flow generation in the fourth quarter. The construction of the
new furnace in Monterrey was finished by the end of 2015 and the
realization of synergies has begun, with early savings in procurement.
* Segment operating profit declined $168 million for the year, or $27 million
on a constant currency basis. Segment operating profit in constant currency
improved over the prior year for all regions except for Europe which faced
pricing pressure and lower productivity. The acquired business contributed
$46 million of segment operating profit since the transaction closed on
September 1, 2015.
* The Company's leverage ratio was 4.0x at year-end 2015 , an improvement
from 4.2x at the end of the third quarter of 2015.
* In 2016, the Company expects to deliver higher earnings and cash flow
mainly driven by higher segment operating profit . A djusted earnings for
full year 2016 are expected to be in the range of $2.10 to $2.25. Free cash
flow generation in 2016 is expected to be approximately $280 million ,
using year-end 2015 foreign exchange rates. The priority for the Company's
free cash flow continues to be debt reduction.

CEO Andres Lopez stated, "We are pleased to deliver earnings and cash flow in
line with our guidance for the quarter and we continue to execute upon
initiatives to improve performance. Our work to date has already begun to
deliver tangible benefits as evidenced by more consistent production as the
year progressed. North America has recovered exceptionally well through the
year and we will leverage our learnings to improve performance in Europe. We
continue to successfully integrate the Vitro food and beverage acquisition,
which is already positively impacting segment profitability.

"Looking ahead, we expect that trends in the majority of our end markets will
remain stable in 2016 and O-I will increasingly benefit from our growing
exposure to U.S. beer imports and the Mexican domestic market," Lopez added.
"While we recognize continued external uncertainties, such as economic
conditions in Brazil and price dynamics in Europe, we are pressing hard on
key initiatives that will increase profitability in 2016, including:
maximizing the value of the acquired business; improving our end-to-end
supply chain performance; and reducing costs through increasing
organizational effectiveness and spending discipline. We expect to deliver
higher earnings and cash flow in 2016 while continuing to prioritize
deleveraging our balance sheet."

Fourth Quarter 2015

Net sales in the fourth quarter of 2015 were $1.6 billion, up $23 million from
the prior year fourth quarter. For net sales of reportable segments, the
stronger U.S. dollar led to unfavorable currency translation of approximately
$200 million in net sales, or about a 13 percent decline. Price was
essentially flat on a global basis, with higher prices in Latin America
largely offset by lower prices in the other regions. The acquired business
contributed $197 million in net sales.

Global sales volume increased by nearly 14 percent compared to prior year
fourth quarter. Excluding the acquired business, global shipments were 2
percent higher year over year. Shipments in Asia Pacific increased 7 percent
driven by improving wine exports from Australia. Europe sales volume was on
par with the prior year quarter as lower beer shipments were offset by higher
shipments in all other categories.

North America sales volume, excluding the acquired business, improved more
than 2 percent year over year led by stronger wine, spirits and beer
shipments. Latin America sales volume, excluding the acquired business, was
flat to prior year as strong sales volume in the Andean region offset
continued weakness in Brazil. Including the acquired business, fourth quarter
sales volumes improved in North America by 11 percent and in Latin America by
55 percent.

Segment operating profit was $186 million in the fourth quarter, $6 million
higher than prior year. On a constant currency basis, segment operating
profit was up $40 million. The acquired business contributed $32 million of
segment operating profit. Excluding the acquired business, improved segment
operating profit in North America and Asia Pacific were mostly offset by
lower operating profit in Europe and the Latin America legacy business.

Segment operating profit in North America improved $25 million, almost
doubling the profit of the prior year fourth quarter. North America benefited
from higher production volumes and much more integrated end-to-end supply
chain management. In the prior year fourth quarter, profitability suffered
from sub-optimal sales planning and supply chain management which caused the
region to significantly curtail production. The acquired business boosted
North America profits by $3 million in the quarter.

In Asia Pacific, segment operating profit, excluding the impact of foreign
currency, increased $7 million, or about 28 percent year over year. This was
mainly due to higher sales and production volume, as well as the benefit of
insurance proceeds related to storm damage in Australia that occurred in
2014.

Latin America's segment operating profit increased $3 million, or $23 million
on a constant currency basis, compared with the prior year fourth quarter.
The acquired business provided $29 million of segment operating profit. This
is more than the unfavorable currency translation effect, the key headwind
impacting Latin America.

Europe reported a $25 million decline in segment operating profit, with more
than 35 percent of the decrease caused by devaluation of the Euro. Average
selling prices in Europe were approximately 1 percent lower year over year,
similar to the trend of the full year. Europe had higher operating costs in
the quarter, primarily due to lower productivity. Exiting the year 2015,
productivity had begun to improve.

The acquired business' underlying operations continue to perform well in terms
of sales, margin and operating profit. The construction of the new furnace in
Monterrey - built primarily to supply beer bottles to Constellation Brands,
Inc. - was complete by the end of 2015 and is expected to be at full output
by the end of the first quarter of 2016. The integration team is on track to
deliver on the Company's synergy target; early gains are being realized in
raw material cost savings.

The preliminary valuation of tangible and intangible assets related to the
acquired business is higher than original estimates, which were based on
benchmarks of rigid packaging transactions. The impact of incremental
depreciation and amortization to annual earnings is approximately 8 cents per
share; as a non-cash charge, it will have no impact on cash flow generation.

In the fourth quarter, the Company conducted its annual comprehensive legal
review of asbestos-related liabilities. Based on this review, the Company has
determined that it was able to reasonably estimate probable losses for
asbestos claims not yet asserted against the Company for a period of four
years versus the previous three year estimate. Therefore, the Company's
charge for 2015 is for a period one year longer than the accrual period
determined as reasonably estimable in the annual comprehensive legal reviews
conducted since 2003.

In the fourth quarter, the Company recorded a charge of $225 million to
increase its accrued liability for asbestos-related costs. This charge is
equivalent to an average annual charge of $112.5 million, which is
substantially lower than the $135 million charge recorded in 2014.

Full Year 2015

Global sales volumes increased 3 percent in 2015 due to the acquired business.
Excluding the acquired business, volumes were on par with 2014. Shipments in
Europe and North America were modestly higher. Asia Pacific volumes declined
low single digits as the planned contraction of sales volume in China was
partially offset by favorable beer and wine volumes in Australia in the
second half of the year. In Latin America, sales were down low single digits,
driven entirely by Brazil.

Full year net sales were $6.2 billion, down $628 million from 2014. Adverse
currency translation due to the stronger U.S. dollar caused an $881 million
decline in net sales of reportable segments, or 13 percent. The acquired
business contributed $258 million in sales.

Prices were slightly higher on a global basis. In Latin America, price gains
largely reflected cost inflation in the region. Prices were lower in North
America due to energy-pass-throughs and modest concessions to secure
long-term contracts. In Europe, prices were impacted by competitive pricing
dynamics in Southern Europe as well as the impact of modest concessions to
secure long-term contracts.

Segment operating profit was $740 million in 2015, compared with $90...

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