<SEC-DOCUMENT>0001104659-12-048457.txt : 20120816
<SEC-HEADER>0001104659-12-048457.hdr.sgml : 20120816
<ACCEPTANCE-DATETIME>20120711131526
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001104659-12-048457
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20120711

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			OWENS ILLINOIS INC /DE/
		CENTRAL INDEX KEY:			0000812074
		STANDARD INDUSTRIAL CLASSIFICATION:	GLASS CONTAINERS [3221]
		IRS NUMBER:				222781933
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		ONE MICHAEL OWENS WAY
		CITY:			PERRYSBURG
		STATE:			OH
		ZIP:			43551-2999
		BUSINESS PHONE:		5673365000

	MAIL ADDRESS:	
		STREET 1:		ONE MICHAEL OWENS WAY
		CITY:			PERRYSBURG
		STATE:			OH
		ZIP:			43551-2999

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	OWENS-ILLINOIS INC /DE/
		DATE OF NAME CHANGE:	20100601

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	OWENS ILLINOIS INC /DE/
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	OWENS ILLINOIS HOLDINGS CORP
		DATE OF NAME CHANGE:	19870512
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">FOIA CONFIDENTIAL TREATMENT REQUESTED BY OWENS-ILLINOIS,&nbsp;INC. PURSUANT TO RULE 83</font></b></p>
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<p style="margin:0in 0in .0001pt;"><font size="1" face="Arial" style="font-size:7.5pt;">Owens-Illinois, Inc.<br>   One Michael Owens Way<br>   Perrysburg, Ohio 43551-2999<br>   +1 567 336 5000 tel<br>   +1 567 336 8262 fax<br>   www.o-i.com</font></p>    </td>   </tr>  </table>
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<p style="line-height:11.0pt;margin:0in .55in .0001pt 0in;"><font size="2" face="Arial" style="font-size:10.0pt;">July&nbsp;11,   2012</font></p>    </td>   </tr>  </table>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><b><u><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">VIA EDGAR CORRESPONDENCE</font></u></b></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Rufus Decker</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Accounting Branch Chief</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Division of Corporation Finance</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Securities and Exchange Commission</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">100 F Street, N.E.</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Washington, D.C. 20549</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;text-indent:.5in;"><font size="2" face="Arial" style="font-size:10.0pt;">Re:&#160;&#160;&#160;&#160;&#160;&#160; Owens-Illinois,&nbsp;Inc.</font></p>
<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Arial" style="font-size:10.0pt;">Form&nbsp;10-K for the Year Ended December&nbsp;31, 2011</font></p>
<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Arial" style="font-size:10.0pt;">Filed February&nbsp;9, 2012</font></p>
<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Arial" style="font-size:10.0pt;">Form&nbsp;10-Q for the Quarter Ended March&nbsp;31, 2012</font></p>
<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Arial" style="font-size:10.0pt;">Filed April&nbsp;26, 2012</font></p>
<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Arial" style="font-size:10.0pt;">Response dated June&nbsp;15, 2012</font></p>
<p style="margin:0in 0in .0001pt;text-indent:1.0in;"><font size="2" face="Arial" style="font-size:10.0pt;">File No.&nbsp;1-9576</font></p>
<p style="margin:0in 0in .0001pt;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Dear Mr.&nbsp;Decker:</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">The Company is in receipt of the Staff&#146;s letter, dated June&nbsp;26, 2012, with respect to the above-referenced Annual Report on Form&nbsp;10-K and Periodic Report on Form&nbsp;10-Q.&#160; The Staff&#146;s comments are set forth below in bold, followed by the Company&#146;s response to each comment.</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><b><u><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">Form&nbsp;10-K for the Year Ended December&nbsp;31, 2011</font></u></b></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><b><u><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">Item 7 &#150; Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations, page&nbsp;26</font></u></b></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><b><u><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">Critical Accounting Estimates, page&nbsp;43</font></u></b></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><b><u><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">Goodwill, page&nbsp;45</font></u></b></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;text-align:justify;text-indent:-.25in;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">1.</font></b><b><font size="1" style="font-size:3.0pt;font-weight:bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">We have reviewed your response to prior comment two from our letter dated June&nbsp;1, 2012.&#160; You have elected to aggregate the components of the South America segment and the Asia Pacific segment based upon the similar nature of their products, services, production processes, customers, methods of distribution and the manner in which you operate your business.&#160; However, based on your response and the reports you provided, it is not clear how you determined that that all the components of your South America segment and Asia Pacific segment are economically similar on a quantitative basis.&#160; Please further clarify how you</font></b></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">CONFIDENTIAL TREATMENT REQUESTED BY OWENS-ILLINOIS,&nbsp;INC.</font></b></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">FOIA CONFIDENTIAL TREATMENT REQUESTED BY OWENS-ILLINOIS,&nbsp;INC. PURSUANT TO RULE 83</font></b></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Rufus Decker</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Securities and Exchange Commission</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">July&nbsp;11, 2012</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Page&nbsp;</font><font size="2" face="Arial" style="font-size:10.0pt;">2<a name="PB_2_073806_5335"></a></font></p>
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<p style="margin:0in 0in .0001pt .75in;text-align:justify;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">determined that the components of these segments are economically similar.&#160; In providing your analysis, ensure that you more fully address the apparent disparate gross profit margins among the components in each of your reporting units and why, notwithstanding these disparate profit margins, you believe the components are economically similar.&#160; In addition, please confirm that the 2012 budget numbers for each component are still realistic, based upon the first quarter of 2012 actual results.</font></b></p>
<p style="margin:0in 0in .0001pt .75in;text-indent:-.25in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">Response: The Company acknowledges that some short-term disparity does exist in the gross profit margins of the components in the South America and Asia Pacific segments.&#160; The gross profit margins in each country can fluctuate year to year differently than the other countries in the segment due to a number of factors, including:</font></p>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">production downtime, primarily   stemming from furnace rebuilds at particular locations;</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">differences in operational   efficiencies caused by the number of mold and/or color changes, employee   turnover, local availability of cullet (recycled glass) and age of equipment;</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:1.0pt;">&nbsp;</font></p>    </td>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">freight costs due to decisions   made by the Company as to where to source product for its customers (for   example, the Company made the decision to support some of the growth in its   Brazil business by shipping glass from its plants in other countries in South   America, resulting in lower margins because of the additional freight costs);</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">decisions made by the Company to   temporarily idle certain furnaces and/or glass forming machine lines in order   to control inventory levels in the segment;</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">the impact of natural disasters   (for example, the Company&#146;s operations in Australia were impacted in 2011 by   severe flooding); and</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:1.0pt;">&nbsp;</font></p>    </td>
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<p style="margin:0in 0in .0001pt;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">short-term   supply/demand imbalances resulting from decisions made by the Company or its   competitors to increase or decrease capacity or make changes to customer   pricing.</font></p>    </td>   </tr>  </table>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">The Company believes that these factors, among others, are responsible for the short-term disparity in profit margins among the components of the South America and Asia Pacific segments, as well as the year-to-year fluctuation in the margin by country.&#160; The Company also believes that these factors are short-term in nature and would impact each country similarly over the long-term.&#160; For this reason, the Company focused its quantitative analysis on the average gross margin over the last five years for each country.&#160; This is consistent with the guidance in ASC 280-10-50-11 which states &#147;similar long-term average gross margins &#133;would be expected if their economic characteristics were similar.&#148;</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">The Company believes that the 2012 budget numbers for each component are realistic and within the range of expectations developed during the budgeting process, with the exceptions of [*] and [*] which are now expected to have [*] margins than budgeted for 2012 (but still [*] than the 2011 actual results). The results of one annual period, however, are not necessarily indicative of long-term performance for the reasons discussed above.&#160; Also for these reasons, the results of individual quarters are not necessarily indicative of long-term performance, nor are quarterly results necessarily indicative of annual performance due to the seasonality of the business.</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">In South America, the Company&#146;s operations in [*], have almost identical average margins ([*]% and [*]%, respectively) over the last five years.&#160; The Company believes the average margins in these countries are representative of the long-term margins in the region.&#160; [*] and [*] have [*] average margins ([*]% and [*]%, respectively) due to [*] in those countries; however, the margins in those countries have been [*] since 2010, and the Company expects that these margins will approach the long-term margins of the region as [*].&#160; [*] currently has [*] margins as a result of [*]; however, the Company expects that [*] margins will approach the long-term margins of the region after [*].</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">CONFIDENTIAL TREATMENT REQUESTED BY OWENS-ILLINOIS,&nbsp;INC.</font></b></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">FOIA CONFIDENTIAL TREATMENT REQUESTED BY OWENS-ILLINOIS,&nbsp;INC. PURSUANT TO RULE 83</font></b></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Rufus Decker</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Securities and Exchange Commission</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">July&nbsp;11, 2012</font></p>
<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Page&nbsp;</font><font size="2" face="Arial" style="font-size:10.0pt;">3<a name="PB_3_074234_2897"></a></font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">In Asia Pacific, the Company&#146;s operations in [*], have very similar average margins ([*]%, [*]% and [*]%, respectively) over the last five years.&#160; The Company believes the average margins in these countries are representative of the long-term margins in the region.&#160; [*] currently has [*] margins as a result of [*] in this country.&#160; In addition, the current operations in [*] were [*] impacted by the [*].&#160; As the [*], the Company expects that [*] margins will approach the long-term margins of the region.</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">ASC 350-20-55-6 states that &#147;evaluating whether two components have similar economic characteristics is a matter of judgment&#148; and the &#147;assessment should be more qualitative than quantitative.&#148;&#160; The Company believes that the average margins of the components within the South America segment and the Asia Pacific segment are similar, and any apparent disparity is only short-term in nature and not indicative of expected long-term performance.&#160; In addition, the Company believes that when this quantitative assessment is taken into consideration along with the qualitative similarities discussed in the prior response, it is clear that the components within the South America segment and the Asia Pacific segment are economically similar, and that they should be aggregated into single reporting units for each segment according to the guidance in ASC 350 and ASC 280.</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p style="margin:0in 0in .0001pt .75in;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Arial" style="font-size:10.0pt;">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*</font></p>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Please contact Scott C. Herlihy at (202) 637-2277 of Latham&nbsp;&amp; Watkins LLP to discuss this response.</font></p>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Very truly yours,</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">/s/ Stephen P. Bramlage,&nbsp;Jr.</font></p>    </td>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Stephen P. Bramlage,&nbsp;Jr.</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">Senior Vice President and Chief   Financial Officer</font></p>    </td>   </tr>
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<p style="margin:0in 0in .0001pt;"><font size="2" face="Arial" style="font-size:10.0pt;">cc: Scott C. Herlihy,   Latham&nbsp;&amp; Watkins LLP</font></p>    </td>
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<p style="margin:0in 0in .0001pt;text-align:justify;"><font size="2" face="Arial" style="font-size:10.0pt;">[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.</font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Arial" style="font-size:10.0pt;">&nbsp;</font></p>
<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Arial" style="font-size:10.0pt;font-weight:bold;">CONFIDENTIAL TREATMENT REQUESTED BY OWENS-ILLINOIS,&nbsp;INC.</font></b></p>
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