-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PwFcGsmjj9U8pGNV7WEfbnkF3VB57pdmJjvACTFiixrmys5YX8H3RPYkoKYoWmii 7wK4iB1+qe/oRGcUt48Emg== 0000950132-99-000439.txt : 19990503 0000950132-99-000439.hdr.sgml : 19990503 ACCESSION NUMBER: 0000950132-99-000439 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PPG INDUSTRIES INC CENTRAL INDEX KEY: 0000079879 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 250730780 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01687 FILM NUMBER: 99606474 BUSINESS ADDRESS: STREET 1: ONE PPG PL 40 EAST CITY: PITTSBURGH STATE: PA ZIP: 15272 BUSINESS PHONE: 4124343131 MAIL ADDRESS: STREET 1: ONE PPG PL 40 EAST CITY: PITTSBURGH STATE: PA ZIP: 15272 FORMER COMPANY: FORMER CONFORMED NAME: PITTSBURGH PLATE GLASS CO DATE OF NAME CHANGE: 19681219 10-Q 1 QUARTERLY REPORT UNDER SECTION 13 OR 15(D) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1999 Commission File Number 1-1687 -------------- ------ PPG INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Pennsylvania 25-0730780 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) One PPG Place, Pittsburgh, Pennsylvania 15272 (Address of principal executive offices) (Zip Code) (412) 434-3131 (Registrant's telephone number, including area code) As of March 31, 1999, 173,706,532 shares of the Registrant's common stock, par value $1.66-2/3 per share, were outstanding. Indicate by check mark whether the Registrant (1) has 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- PPG INDUSTRIES, INC. AND SUBSIDIARIES INDEX
PAGE(S) Part I. Financial Information Item 1. Financial Statements: Condensed Statement of Income.......................................... 2 Condensed Balance Sheet................................................ 3 Condensed Statement of Cash Flows...................................... 4 Notes to Condensed Financial Statements................................ 5-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................... 11-17 Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 17 Part II. Other Information Item 2. Change in Securities and Use of Proceeds........................ 18 Item 4. Submission of Matters to a Vote of Security Holders............. 18 Item 6. Exhibits and Reports on Form 8-K................................ 19 Signature................................................................... 20
-1- PART I. FINANCIAL INFORMATION Item 1. Financial Statements - ------------------------------ PPG INDUSTRIES, INC. AND SUBSIDIARIES Condensed Statement of Income (Unaudited) ----------------------------------------- (Millions, except per share amounts)
Three Months Ended March 31 ------------------------------------------- 1999 1998 --------------------- -------------------- Net sales......................................................... $1,803 $1,913 Cost of sales..................................................... 1,103 1,145 ------ ------ Gross profit................................................... 700 768 ------ ------ Other expenses (earnings): Selling, general and administrative............................ 286 263 Depreciation................................................... 91 89 Research and development....................................... 67 67 Interest....................................................... 26 30 Business divestitures and realignments (Note 3)........................................ 24 - Other charges.................................................. 21 18 Other earnings................................................. (23) (27) ------ ------ Total other expenses net.................................. 492 440 ------ ------ Income before income taxes and minority interest....................................................... 208 328 Income taxes...................................................... 79 126 Minority interest................................................. 6 10 ------ ------ Net income........................................................ $ 123 $ 192 ====== ====== Earnings per common share (Note 2)................................ $ 0.71 $ 1.08 ====== ====== Earnings per common share - assuming dilution (Note 2).............................................. $ 0.70 $ 1.07 ====== ====== Dividends per share............................................... $ 0.38 $ 0.34 ====== ======
The accompanying notes to the condensed financial statements are an integral part of this statement. -2- PPG INDUSTRIES, INC. AND SUBSIDIARIES Condensed Balance Sheet (Unaudited) -----------------------------------
March 31 Dec. 31 1999 1998 ------------------ ------------------ Assets (Millions) - ------ Current assets: Cash and cash equivalents...................................... $ 82 $ 128 Receivables-net................................................ 1,438 1,366 Inventories (Note 4)........................................... 948 917 Other.......................................................... 257 249 -------- -------- Total current assets....................................... 2,725 2,660 Property (less accumulated depreciation of $3,860 million and $3,834 million)............................. 2,874 2,905 Investments....................................................... 247 263 Goodwill (less accumulated amortization of $85 million and $84 million)................................... 586 576 Other assets...................................................... 1,003 983 -------- -------- Total...................................................... $ 7,435 $ 7,387 ======== ======== Liabilities and Shareholders' Equity - ------------------------------------ Current liabilities: Short-term borrowings and current portion of long-term debt.................................. $ 777 $ 637 Accounts payable and accrued liabilities....................... 1,202 1,264 Income taxes................................................... 66 11 -------- -------- Total current liabilities.................................. 2,045 1,912 Long-term debt.................................................... 1,066 1,081 Deferred income taxes............................................. 434 440 Accumulated provisions............................................ 448 444 Other postretirement benefits..................................... 548 543 -------- -------- Total liabilities.......................................... 4,541 4,420 -------- -------- Commitments and contingent liabilities (Note 8).................. Minority interest................................................. 97 87 -------- -------- Shareholders' equity: Common stock................................................... 484 484 Additional paid-in capital..................................... 106 105 Retained earnings.............................................. 5,849 5,791 Treasury stock................................................. (3,276) (3,198) Unearned compensation.......................................... (136) (149) Accumulated other comprehensive loss (Note 5).................. (230) (153) -------- -------- Total shareholders' equity................................. 2,797 2,880 -------- -------- Total...................................................... $ 7,435 $ 7,387 ======== ========
The accompanying notes to the condensed financial statements are an integral part of this statement. -3- PPG INDUSTRIES, INC. AND SUBSIDIARIES Condensed Statement of Cash Flows (Unaudited) ---------------------------------------------
Three Months Ended ------------------------------------ March 31 ------------------------------------ 1999 1998 ------------------ ---------------- (Millions) Cash from operating activities.................................... $ 125 $ 219 ------ ------ Investing activities: Capital spending Additions to property and investments...................... (120) (108) Business acquisitions, net of cash balances acquired............................................... (89) (72) Reduction of investments....................................... 12 1 Other.......................................................... 11 1 ------ ------ Cash used for investing activities......................... (186) (178) ------ ------ Financing activities: Net change in borrowings with maturities of three months or less......................... 175 78 Proceeds from other short-term debt............................ 69 40 Repayment of other short-term debt............................. (68) (31) Proceeds from long-term debt................................... 1 4 Repayment of long-term debt.................................... (28) (32) Repayment of loans by employee stock ownership plan............................................. 13 13 Purchase of treasury stock, net................................ (79) (41) Dividends paid................................................. (66) (60) ------ ------ Cash provided by (used for) financing activities........... 17 (29) ------ ------ Effect of currency exchange rate changes on cash and cash equivalents................................... (2) - ------ ------ Net (decrease) increase in cash and cash equivalents.............. (46) 12 Cash and cash equivalents, beginning of period.................... 128 129 ------ ------ Cash and cash equivalents, end of period.......................... $ 82 $ 141 ====== ======
The accompanying notes to the condensed financial statements are an integral part of this statement. -4- PPG INDUSTRIES, INC. AND SUBSIDIARIES Notes to Condensed Financial Statements (Unaudited) --------------------------------------------------- 1. Financial Statements -------------------- The condensed financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the financial position of PPG Industries, Inc. and subsidiaries (the Company or PPG) at March 31, 1999 and the results of their operations and their cash flows for the three months ended March 31, 1999 and 1998. These condensed financial statements should be read in conjunction with the financial statements and notes thereto incorporated by reference in PPG's Annual Report on Form 10-K for the year ended December 31, 1998. The results of operations for the three months ended March 31, 1999 are not necessarily indicative of the results to be expected for the full year. 2. Earnings Per Common Share ------------------------- The following table reflects the earnings per share calculations for the three months ended March 31, 1999 and 1998.
Three Months Ended March 31 ----------------------------------------- (Millions, except per share amounts) 1999 1998 ------------------- -------------------- Earnings per common share Net income.............................................. $ 123 $ 192 ------ ------ Weighted average common shares outstanding........................................... 174.2 177.5 ------ ------ Earnings per common share............................... $ 0.71 $ 1.08 ====== ====== Earnings per common share- assuming dilution Net income.............................................. $ 123 $ 192 ------ ------ Weighted average common shares outstanding........................................... 174.2 177.5 Effect of dilutive securities: Stock options......................................... 0.4 0.9 Other stock compensation plans........................ 1.2 1.0 ------ ------ Potentially dilutive common shares...................... 1.6 1.9 ------ ------ Adjusted common shares outstanding........................................... 175.8 179.4 ------ ------ Earnings per common share- assuming dilution..................................... $ 0.70 $ 1.07 ====== ======
-5- 3. Acquisitions, Business Divestitures and Realignments ---------------------------------------------------- In January 1999, the Company completed the acquisition of the remaining portion of the global packaging coatings business formerly owned by Courtaulds plc from Akzo Nobel N.V. and completed the purchase of certain leased assets in connection with its 1998 acquisition of the technical coatings business of Orica Ltd. In February 1999, the Company acquired the commercial transport refinish coatings business of Sigma Coatings B.V., a subsidiary of Belgian refiner PetroFina S.A. The Company has completed preliminary purchase price allocations for these acquisitions and the operating activity associated with these acquisitions has been included in the Company's operations from the acquisition dates. The preliminary purchase price allocations are subject to adjustment in 1999 when finalized. In March 1999, the Company approved a restructuring plan associated with the integration of recent packaging coatings acquisitions, which resulted in a pre-tax charge of $24 million. The components of the plan included severance benefits for 182 employees and an estimated loss of $14 million on the disposal of a redundant European facility. As of March 31, 1999, $0.4 million of severance benefits had been paid under the plan. It is anticipated that the asset disposition and the payment of the remaining severance benefits will occur within a year. 4. Inventories ----------- Inventories at March 31, 1999 and December 31, 1998 are detailed below.
March 31 Dec. 31 1999 1998 ------------------- -------------------- (Millions) Finished products and work in process........................ $ 656 $ 638 Raw materials................................................ 187 174 Supplies..................................................... 105 105 ----- ----- Total.................................................... $ 948 $ 917 ===== =====
Most domestic and certain foreign inventories are valued using the last-in, first-out method. If the first-in, first-out method had been used, inventories would have been $170 million and $183 million higher at March 31, 1999 and December 31, 1998, respectively. -6- 5. Comprehensive Income -------------------- Total comprehensive income for the three months ended March 31, 1999 and 1998 was as follows:
Three Months Ended March 31 --------------------------- 1999 1998 ---- ---- (Millions) Net income................................................. $ 123 $ 192 ----- ----- Other comprehensive loss, net of tax: Currency translation adjustment......................... (71) (11) Minimum pension liability adjustment.................... (1) - Unrealized losses on marketable securities.............. (5) - ----- ----- (77) (11) ----- ----- Total comprehensive income........................... $ 46 $ 181 ===== =====
As of March 31, 1999 and December 31, 1998, accumulated other comprehensive loss, as reflected on the condensed balance sheet, was comprised of the following:
March 31 Dec. 31 1999 1998 -------------------- ------------------- (Millions) Currency translation adjustment................................... $ (193) $ (122) Minimum pension liability adjustment.............................. (32) (31) Unrealized losses on marketable securities........................ (5) - ------ ------ Accumulated other comprehensive loss............................ $ (230) $ (153) ====== ======
6. Cash Flow Information --------------------- Cash payments for interest were $20 million and $23 million for the three months ended March 31, 1999 and 1998, respectively. Net cash payments for income taxes for the three months ended March 31, 1999 and 1998 were $17 million and $44 million, respectively. -7- 7. Business Segment Information ---------------------------- Effective December 31, 1998, PPG adopted Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information." Segment operating income and other unallocated corporate (expense) income for the three months ended March 31, 1998 have been restated to conform with the current year presentation format.
Three Months Ended March 31 ------------------------------------------ 1999 1998 -------------------- -------------------- (Millions) Net sales: Coatings (a)................................................ $ 912 $ 821 Glass....................................................... 557 687 Chemicals (b)............................................... 337 407 Intersegment net sales...................................... (3) (2) ------ ------ Total.................................................... $1,803 $1,913 ====== ====== Operating income: Coatings (c)................................................ $ 101 $ 127 Glass....................................................... 97 113 Chemicals................................................... 36 111 ------ ------ Total.................................................... 234 351 Interest expense - net........................................ (25) (27) Other unallocated corporate (expense) income - net............ (1) 4 ------ ------ Income before income taxes and minority interest........................................... $ 208 $ 328 ====== ======
(a) Includes intersegment net sales of $1 million for the three months ended March 31, 1999. (b) Includes intersegment net sales of $2 million for each of the three- month periods. (c) Includes for the three months ended March 31, 1999 a pre-tax restructuring charge of $24 million associated with the integration of recent packaging coatings acquisitions, including the disposal of a redundant European facility and work-force reductions. 8. Commitments and Contingent Liabilities -------------------------------------- PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial money damages are sought. These lawsuits and claims relate to product liability, contract, patent, environmental, antitrust and other matters arising out of the conduct of PPG's business. The Company has been named in a number of antitrust lawsuits alleging that PPG acted with competitors to fix prices and allocate markets for certain glass products. -8- These antitrust proceedings are in an early stage. PPG's lawsuits and claims against others include claims against insurers and other third parties with respect to actual and contingent losses related to environmental matters. Management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG will not have a material effect on PPG's consolidated financial position, results of operations or liquidity. It is PPG's policy to accrue expenses for environmental contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Reserves for environmental contingencies are exclusive of claims against third parties and are not discounted. As of March 31, 1999 and December 31, 1998, PPG had reserves for environmental contingencies totaling $90 million and $94 million, respectively. Pre-tax charges against income for environmental remediation costs for the three months ended March 31, 1999 and 1998 totaled $2 million and $3 million, respectively, and are included in "Other Charges" in the condensed statement of income. Cash outlays related to such charges for the three months ended March 31, 1999 and 1998 aggregated $6 million and $5 million, respectively. Management anticipates that the resolution of the Company's environmental contingencies, which will occur over an extended period of time, will not result in future annual charges against income that are significantly greater than those recorded in recent years. It is possible, however, that technological, regulatory and enforcement developments, the results of environmental studies and other factors could alter this expectation. In management's opinion, the Company operates in an environmentally sound manner and the outcome of the Company's environmental contingencies will not have a material effect on PPG's financial position or liquidity. In addition to the amounts currently reserved, the Company may be subject to loss contingencies related to environmental matters estimated to be as much as $200 million to $400 million, which range is unchanged from December 31, 1998. Such unreserved losses are reasonably possible but are not currently considered to be probable of occurrence. Although insurers and other third parties may cover a portion of these costs, to the extent they are incurred, any potential recovery is not included in this unreserved exposure to future loss. The Company's environmental contingencies are expected to be resolved over an extended period of time. Although the unreserved exposure to future loss relates to all sites, a significant portion of such exposure involves three operating plant sites. Initial remedial actions are occurring at these sites. Studies to determine the nature of the contamination are reaching completion and the need for additional remedial actions, if any, is presently being evaluated. The loss contingencies related to the remaining portion of such unreserved exposure include significant unresolved issues such as the nature and extent of contamination, if any, at sites and the methods that may have to be employed should remediation be required. With respect to certain waste sites, the financial condition of any other potentially responsible parties also contributes to the uncertainty of estimating PPG's final costs. Although contributors of waste to sites involving other potentially responsible parties may face governmental agency assertions of joint and several liability, in general, final allocations of costs are made based on the relative contributions of wastes to such sites. PPG is generally not a major contributor to such sites. -9- The impact of evolving programs, such as natural resource damage claims, industrial site reuse initiatives and state voluntary remediation programs, also adds to the present uncertainties with regard to the ultimate resolution of this unreserved exposure to future loss. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies. 9. Subsequent Event ---------------- On April 28, 1999, the Company agreed to acquire the global automotive refinish and industrial coatings businesses of Imperial Chemical Industries PLC, with the exception of the businesses in the Indian subcontinent, for 425 million British pounds sterling or approximately $684 million. The transaction is subject to regulatory approvals and the Company anticipates a closing date in the next few months for the businesses located in Europe and North and South America and later in 1999 for the businesses located in Asia. The 1998 sales of the businesses were approximately $459 million. The Company intends to use the purchase method of accounting to record the acquisition. The acquisition is expected to be funded through a combination of cash generated from operations and external funding sources. -10- Item 2. Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------ Results of Operations --------------------- Performance Overview Sales decreased 6% during the first quarter of 1999 to $1.80 billion from $1.91 billion in the first quarter of 1998. The overall sales decrease resulted from a 6% decline due to the absence of sales from our European flat and automotive glass businesses divested in July 1998 and a 4% decrease in sales associated primarily with significantly lower prices for our chlorine and caustic soda products. A 4% increase in volumes related principally to several acquisitions made in late 1998 and early 1999 within the coatings segment partially offset the lower overall sales. The gross profit percentage decreased in the first quarter of 1999 to 38.8% from 40.1% in the same quarter of 1998. The decline in the gross profit percentage resulted primarily from the combination of lower selling prices for our chlorine and caustic soda products and unfavorable sales mix changes across all of our operating segments. These unfavorable results were partially offset by ongoing improvements in manufacturing efficiencies in our glass and coatings segments and lower raw material and energy costs in our chemicals segment. Net income and earnings per common share, diluted, for the first quarter of 1999 were $123 million and $0.70, respectively, compared to $192 million and $1.07, respectively, for the first quarter of 1998. In addition to the factors that contributed to a lower gross margin percentage, first quarter 1999 net income was negatively impacted by a $20 million after-tax restructuring charge related to the integration of recent packaging coatings acquisitions, lower operating margins associated with recent acquisitions and the effects of the continued economic weakness in Brazil and Asia. These negative factors were offset in part by lower income tax expense due to a reduction in pre-tax earnings and a lower effective tax rate. Performance of Business Segments Coatings sales increased 11% to $911 million from $821 million in the same quarter of 1998. The substantial increase in sales volume in the first quarter of 1999 is attributable principally to worldwide acquisitions in the second half of 1998 and early 1999 and modest volume increases in our automotive original and industrial coatings businesses in North America. Operating income decreased to $101 million in the first quarter of 1999 from $127 million in the first quarter of 1998. The decrease in operating income is attributable to a $24 million pre-tax restructuring charge for disposal of a redundant European facility and work-force reductions related to the integration of recent packaging coatings acquisitions, unfavorable sales mix changes, principally for our automotive original coatings products in Europe, and the effects of the economic weakness in Brazil. These negative factors were offset in part by manufacturing efficiencies in our European automotive original and North American architectural businesses and lower selling, general and administrative expenses in our North American automotive original and industrial coatings businesses. Glass sales decreased 19% to $557 million in the first quarter of 1999 from $687 million in the same quarter of 1998. Sales declined 16% as a result of the divestiture of our European flat and automotive glass businesses in July 1998, 2% from lower worldwide sales volumes for our electronic and specialty fiber glass products and 2% principally from lower prices for our fiber glass reinforcement products due to the worldwide pricing effects of the recessionary Asian economies. These negative factors were partially offset by a 1% increase in sales volumes primarily related to our North American automotive original and replacement glass businesses. Operating income decreased to $97 million in the first quarter of 1999 from $113 million in the -11- same quarter of 1998. The combination of the absence of profits related to the European flat and automotive glass businesses, lower fiber glass sales volumes and pricing pressures discussed above and unfavorable sales mix changes in certain businesses was partially offset by manufacturing efficiencies in our automotive original and aircraft glass businesses. Chemicals sales decreased 17% to $335 million in the first quarter of 1999 from $405 million in the first quarter of 1998. Sales declined 17% as a result of lower selling prices for chlorine and caustic soda products, due in part to the worldwide pricing effects of the recessionary Asian economies and 3% due to lower volumes for optical products. These negative factors were partially offset by a 3% increase in volumes for our chlorine, caustic soda and other chlor-alkali products. Operating income decreased to $36 million in the first quarter of 1999 compared to $111 million in the same quarter of 1998. The significant reduction in selling prices for chlorine and caustic soda products and unfavorable sales mix changes were only slightly offset by lower raw material and energy costs. Other Factors The increase in short-term borrowings principally results from the issuance of commercial paper in the first quarter of 1999. Acquisitions, Business Divestitures and Realignments In January 1999, the Company completed the acquisition of the remaining portion of the global packaging coatings business formerly owned by Courtaulds plc from Akzo Nobel N.V. and completed the purchase of certain leased assets in connection with its 1998 acquisition of the technical coatings business of Orica Ltd. In February 1999, the Company acquired the commercial transport refinish coatings business of Sigma Coatings B.V., a subsidiary of Belgian refiner PetroFina S.A. The Company has completed preliminary purchase price allocations for these acquisitions and the operating activity associated with these acquisitions has been included in the Company's operations from the acquisition dates. The preliminary purchase price allocations are subject to adjustment in 1999 when finalized. In March 1999, the Company approved a restructuring plan associated with the integration of recent packaging coatings acquisitions, which resulted in a pre- tax charge of $24 million. The components of the plan included severance benefits for 182 employees and an estimated loss of $14 million on the disposal of a redundant European facility. As of March 31, 1999, $0.4 million of severance benefits had been paid under the plan. It is anticipated that the asset disposition and the payment of the remaining severance benefits will occur within a year. Conversion to the Euro On January 1, 1999, eleven of the member countries of the European Monetary Union converted from their sovereign currencies to a common currency, the euro. At that time, fixed conversion rates between the legacy currencies and the euro were set. The legacy currencies will remain legal tender from January 1, 1999 through July 1, 2002. Beginning January 1, 2002, euro-denominated currency will be issued. No later than July 1, 2002, the participating countries will withdraw all bills and coins so that their legacy currencies will no longer be considered legal tender. PPG has identified the significant issues that may result from the euro conversion and is addressing them. These issues include increased competitive pressures from greater price transparency, changes to information systems to accommodate various aspects of the new currency and exposure to market risk with respect to financial instruments. PPG does not -12- expect the impact on its operating results or financial condition from the conversion to be material. Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Management's Discussion and Analysis and other sections of this Form 10-Q contain forward- looking statements that reflect the Company's current views with respect to future events and financial performance. Forward-looking statements are identified by the use of the words "aim," "believe," "expect," "anticipate," "intend," "estimate" and other expressions that indicate future events and trends. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 8-K and 10-K reports to the Securities and Exchange Commission. Also, note the following cautionary statements. Many factors could cause actual results to differ materially from the Company's forward-looking statements. Among these factors are increasing price and product competition by foreign and domestic competitors, fluctuations in the cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, foreign exchange rates and fluctuations in those rates and the uncertainties regarding the Year 2000 problem discussed below. Further, one should understand that it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list, including the one here, should be considered to be a complete statement of all potential risks and uncertainties. Indeed, unlisted factors may present significant additional obstacles to the realization of forward-looking statements. The following discussion regarding Year 2000 issues, including the discussion of the timing and effectiveness of implementation and the estimated cost of the Company's Year 2000 efforts, contains forward-looking statements derived using various assumptions of future events. These forward-looking statements involve inherent risks and uncertainties and the actual results could differ materially from those contemplated by such statements. Factors that could cause material differences in results - many of which are outside the control of the Company - include, but are not limited to: . The Company's ability to locate and correct all relevant computer software. . The accuracy of representations by manufacturers of the Company's computer systems and software that their products are Year 2000 compliant. . The ability of the Company's suppliers, customers and other counterparties to identify and resolve their own Year 2000 obligations so as to allow them to continue normal business operations or furnish products, services or data to the Company without disruption. . The Company's ability to respond to unforeseen Year 2000 complications. -13- The consequences of material differences in the results as compared to those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Company's consolidated financial condition, operations or liquidity. Year 2000 Readiness Disclosure Background. Many existing information technology (IT) products and systems and non-IT products and systems containing embedded microchip processors, were originally programmed to represent any calendar dates by using six digits (for example, 12/31/99), as opposed to eight digits (for example, 12/31/1999). Accordingly, such products and systems may experience miscalculations, malfunctions or disruptions when attempting to process information containing dates that fall after December 31, 1999, or other dates that could cause computer malfunctions. These potential problems are collectively referred to as the "Year 2000" problem. State of Readiness. Recognizing the importance of Year 2000 issues, the Company has established a corporate-wide Year 2000 Steering Committee made up of certain senior executives of the Company. The Committee is responsible for overseeing the Company's efforts to assess and address the Year 2000 problem as it may affect the Company. The scope of the Company's efforts includes: (1) an assessment, and where needed a remediation, of both IT and non-IT elements of its business information, computing, telecommunications and process control systems; (2) an assessment, and remediation, as necessary, of equipment with embedded computer chips and (3) an evaluation of the Company's relationships with material third parties as they may be impacted by the Year 2000 problem. The phases of the Company's Year 2000 compliance plan are: (1) Internal Assessment - a detailed evaluation of the potential Year 2000 effects on the Company's IT and non-IT systems and on its equipment with embedded computer chips; (2) Remediation - corrective action including code enhancements, hardware and software upgrades, system replacements, vendor certification, equipment repair or replacement and other associated changes to achieve Year 2000 compliance; (3) Testing - the verification that remediation actions are effective; (4) Third- Party Evaluation - an evaluation of the Year 2000 readiness of key suppliers of goods and services and of key customers and (5) Contingency Planning - the development of detailed procedures to be put in place should the Company or key suppliers or customers experience a significant Year 2000 problem. These phases sometimes overlap. The assessment phase is complete with the exception of certain recently acquired businesses where the assessment phase is in progress and is expected to be completed by June 30, 1999. The remediation and testing efforts are well under way on all critical IT and non-IT systems and the Company presently anticipates that it will substantially complete remediation of such critical systems by June 30, 1999 and that remediation and testing of all remaining systems will be completed by December 31, 1999. Once systems undergo remediation, they are tested for Year 2000 compliance. For major systems, the testing process usually involves subjecting the remediated system to a simulated change of date from the year 1999 to the year 2000 using, in many cases, computer resources dedicated to that purpose so that normal computing activity is not interrupted or adversely affected by the testing. The Company is currently in the process of testing a number of the most critical IT and non-IT systems and expects to complete, in all material respects, testing of all internal systems prior to the year 2000. The Year 2000 Steering Committee will continue to review Year 2000 compliance efforts on an ongoing basis. -14- In the third-party evaluation phase, the Company has identified and contacted materially significant suppliers of goods or services in an effort to determine the state of readiness of these important third parties. Materially significant suppliers for this purpose are considered to be those from whom the Company purchases a significant dollar amount of goods or services and those who supply goods or services that are critical to uninterrupted production by the Company of its products, including those who are sole-source suppliers of important goods or services. Written assurances that these materially significant suppliers are progressing toward timely Year 2000 compliance have been received from approximately 95% of the Company's materially significant suppliers. The Company is also in the process of identifying and investigating the Year 2000 readiness of its materially significant customers. Materially significant customers for this purpose are considered to be those to whom the Company sells a significant dollar amount of goods. If materially significant suppliers or customers or a number of less substantial suppliers or customers do not convert their systems in a timely manner, or are themselves adversely affected by a lack of Year 2000 readiness on the part of their suppliers or customers, it could have a material adverse effect on the Company's operations, liquidity or consolidated financial condition. The Company believes that its continuing efforts to gain assurances of Year 2000 compliance from materially significant suppliers and its investigative efforts with respect to the readiness of materially significant customers will minimize these risks. Nonetheless, the actual readiness of these third parties is beyond the Company's control. Costs. The Company is using both internal and external resources to execute its Year 2000 compliance plan. The Company currently estimates the incremental cost of resolving the Year 2000 issue at approximately $20 to $25 million. The Company spent $7 million during 1998, representing the incremental cost of resolving the Year 2000 issue and anticipates the expenditure of an additional $13 to $18 million during 1999. Approximately 50% of the total Year 2000 costs are expected to be expended on equipment or software replacement and the remainder on remediation and testing of existing systems. All Year 2000 costs are expected to be funded from the Company's operating cash flow. The Company is expensing as incurred all costs related to the assessment, remediation and testing of the Year 2000 issue, unless new systems or equipment are purchased. In those instances, such costs are capitalized and charged to expense over the useful lives of those assets in accordance with the Company's existing policy. These cost estimates are based on currently available information and may be subject to change. Risks. If needed modifications and conversions of computer systems are not made on a timely basis by the Company or its materially significant suppliers or customers, the Company could be affected by business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Company's consolidated financial condition, operations or liquidity. Although not anticipated, the most reasonably likely worst-case scenario of failure by the Company or its key suppliers or customers to resolve the Year 2000 issue would be a short-term slowdown or cessation of manufacturing operations at one or more of the Company's facilities and a short-term inability on the part of the Company to process orders and billings in a timely manner and to deliver product to customers. Contingency Planning. While the Company continues to focus on solutions for Year 2000 issues and expects to be Year 2000 compliant in a timely manner, the Company is in the process of developing contingency plans. Such plans will set forth the Company's responses -15- should the Company or materially significant third parties with which it has relationships not achieve Year 2000 compliance in a timely manner. The Company expects to finalize its contingency plans by June 30, 1999. Accounting Standards In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is effective for fiscal years beginning after June 15, 1999. The Company is currently evaluating the prospective impact of this standard on its financial position and results of operations. Commitments and Contingent Liabilities, including Environmental Matters PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial money damages are sought. These lawsuits and claims relate to product liability, contract, patent, environmental, antitrust and other matters arising out of the conduct of PPG's business. The Company has been named in a number of antitrust lawsuits alleging that PPG acted with competitors to fix prices and allocate markets for certain glass products. These antitrust proceedings are in an early stage. PPG's lawsuits and claims against others include claims against insurers and other third parties with respect to actual and contingent losses related to environmental matters. Management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG will not have a material effect on PPG's consolidated financial position, results of operations or liquidity. It is PPG's policy to accrue expenses for environmental contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Reserves for environmental contingencies are exclusive of claims against third parties and are not discounted. As of March 31, 1999 and December 31, 1998, PPG had reserves for environmental contingencies totaling $90 million and $94 million, respectively. Pre-tax charges against income for environmental remediation costs for the three months ended March 31, 1999 and 1998 totaled $2 million and $3 million, respectively, and are included in "Other Charges" in the condensed statement of income. Cash outlays related to such charges for the three months ended March 31, 1999 and 1998 aggregated $6 million and $5 million, respectively. Management anticipates that the resolution of the Company's environmental contingencies, which will occur over an extended period of time, will not result in future annual charges against income that are significantly greater than those recorded in recent years. It is possible, however, that technological, regulatory and enforcement developments, the results of environmental studies and other factors could alter this expectation. In management's opinion, the Company operates in an environmentally sound manner and the outcome of the Company's environmental contingencies will not have a material effect on PPG's financial position or liquidity. In addition to the amounts currently reserved, the Company may be subject to loss contingencies related to environmental matters estimated to be as much as $200 million to $400 million, which range is unchanged from December 31, 1998. Such unreserved losses are reasonably possible but are not currently considered to be probable of occurrence. Although insurers and other third parties may cover a portion of these costs, to the extent they are incurred, any potential recovery is not included in this unreserved exposure to future loss. The Company's environmental contingencies are expected to be resolved over an extended period of time. -16- Although the unreserved exposure to future loss relates to all sites, a significant portion of such exposure involves three operating plant sites. Initial remedial actions are occurring at these sites. Studies to determine the nature of the contamination are reaching completion and the need for additional remedial actions, if any, is presently being evaluated. The loss contingencies related to the remaining portion of such unreserved exposure include significant unresolved issues such as the nature and extent of contamination, if any, at sites and the methods that may have to be employed should remediation be required. With respect to certain waste sites, the financial condition of any other potentially responsible parties also contributes to the uncertainty of estimating PPG's final costs. Although contributors of waste to sites involving other potentially responsible parties may face governmental agency assertions of joint and several liability, in general, final allocations of costs are made based on the relative contributions of wastes to such sites. PPG is generally not a major contributor to such sites. The impact of evolving programs, such as natural resource damage claims, industrial site reuse initiatives and state voluntary remediation programs, also adds to the present uncertainties with regard to the ultimate resolution of this unreserved exposure to future loss. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies. Subsequent Event On April 28, 1999, the Company agreed to acquire the global automotive refinish and industrial coatings businesses of Imperial Chemical Industries PLC, with the exception of the businesses in the Indian subcontinent, for 425 million British pounds sterling or approximately $684 million. The transaction is subject to regulatory approvals and the Company anticipates a closing date in the next few months for the businesses located in Europe and North and South America and later in 1999 for the businesses located in Asia. The 1998 sales of the businesses were approximately $459 million. The Company intends to use the purchase method of accounting to record the acquisition. The acquisition is expected to be funded through a combination of cash generated from operations and external funding sources. Item 3. Quantitative and Qualitative Disclosures About Market Risk - ------------------------------------------------------------------- There were no material changes in the Company's exposure to market risk from December 31, 1998. -17- PART II. OTHER INFORMATION Item 2. Change in Securities and Use of Proceeds - ------------------------------------------------- Directors who are not also Officers of the Company receive Common Stock Equivalents pursuant to the Deferred Compensation Plan for Directors and the Directors' Common Stock Plan. Common Stock Equivalents are hypothetical shares of Common Stock having a value on any given date equal to the value of a share of Common Stock. Common Stock Equivalents earn dividend equivalents that are converted into additional Common Stock Equivalents but carry no voting rights or other rights of a holder of Common Stock. The Common Stock Equivalents credited to Directors under both plans are exempt from registration under Section 4(2) of the Securities Act of 1933 as private offerings made only to Directors of the Company in accordance with the provisions of the plans. Under the Company's Deferred Compensation Plan for Directors, each Director must defer receipt of such compensation as the Board mandates. Currently, the Board mandates deferral of one-third of each payment of the basic annual retainer of each Director. Each Director may also elect to defer the receipt of (1) an additional one-third of each payment of the basic annual retainer, (2) all of the basic annual retainer, or (3) all compensation. All deferred payments are held in the form of Common Stock Equivalents. Payments out of the deferred accounts are made in the form of Common Stock of the Company (and cash as to any fractional Common Stock Equivalent). In the first quarter of 1999, the Directors, as a group, were credited with 5,236 Common Stock Equivalents under this Plan. The values of the Common Stock Equivalents, when credited, ranged from $51.25 to $53.75. Under the Directors' Common Stock Plan, each Director who neither is nor was an employee of the Company is credited annually with Common Stock Equivalents worth one-half of the Director's basic annual retainer. Upon termination of service and attaining 70 years of age, the Common Stock Equivalents held in a Director's account are converted to and paid in Common Stock of the Company (and cash as to any fractional Common Stock Equivalent). In the first quarter of 1999, the Directors, as a group, received 261 Common Stock Equivalents under this Plan. The value of each Common Stock Equivalent, when credited, was $53.13. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ At the Company's Annual Meeting of Shareholders held on April 15, 1999 (the Annual Meeting), the shareholders voted on the election of three directors to serve for the terms indicated in the proxy statement relating to the Annual Meeting. The vote was as follows:
Nominees Votes For Votes Withheld -------- --------- -------------- Michele J. Hooper 138,072,446 2,648,932 Raymond W. LeBoeuf 137,957,972 2,763,406 David G. Vice 138,165,669 2,555,709
There were no broker non-votes with respect to this matter. Each of the nominees was elected to serve as a director for the terms indicated in the proxy statement relating to the Annual Meeting. -18- Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits (10) Directors' Common Stock Plan. (12) Computation of Ratio of Earnings to Fixed Charges. (27) Financial Data Schedule. (b) Reports on Form 8-K (1) The Company did not file any reports on Form 8-K during the three months ended March 31, 1999. -19- SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PPG INDUSTRIES, INC. --------------------------------------- (Registrant) Date: April 30, 1999 By /s/ W. H. Hernandez --------------------------------------- W. H. Hernandez Senior Vice President, Finance (Principal Financial and Accounting Officer and Duly Authorized Officer) -20- PPG INDUSTRIES, INC. AND SUBSIDIARIES ------------------------------------- INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- (10) Directors' Common Stock Plan. (12) Computation of Ratio of Earnings to Fixed Charges. (27) Financial Data Schedule. EX-10 2 DIRECTORS' COMMON STOCK PLAN Exhibit 10 PPG INDUSTRIES, INC. DIRECTORS' COMMON STOCK PLAN ---------------------------- 1. PURPOSE. The purpose of this Plan is to align the financial interests of ------- the Company's shareholders with those of its Non-Employee Directors by providing such Directors with compensation in the form of Company Common Stock. 2. DEFINITIONS. ----------- "Account" means the account maintained for each Non-Employee Director to which Common Stock Equivalents and Dividend Equivalents are credited. "Annual Contribution" means the Common Stock Equivalents credited to an Account each year under Section 4.1. "Board" means the Board of Directors of the Company. "Change in Control" has the same meaning as given to that term in the PPG Industries, Inc. Deferred Compensation Plan for Directors, as such plan may be amended from time to time. "Committee" means the Officers-Directors Compensation Committee of the Board. "Common Stock" means the common stock, par value $1.66 2/3 per share, of the Company. "Common Stock Equivalent" means a hypothetical share of Common Stock. "Company" means PPG Industries, Inc. "Dividend Equivalent" means an additional number of Common Stock Equivalents the Company shall credit to each Account as of each dividend payment date declared with respect to the Company's Common Stock. The additional number of Common Stock Equivalents to be credited to each Account shall be equal to: (a) the product of (i) the dividend per share of the Common Stock which is payable as of the dividend payment date, multiplied by (ii) the number of whole Common Stock Equivalents credited to the Account as of the applicable dividend record date; DIVIDED BY ---------- (b) the closing price of a share of the Common Stock on the dividend payment date (or if such stock was not traded on that date, on the next preceding date on which it was traded), as reported in the New York Stock Exchange Composite Transactions. "Eligible Spouse" means the spouse who is legally married to a Participant at the time of his or her death. "Non-Employee Director" means a director of the Company who is not a present or former employee of the Company or any of its subsidiaries. "Participant" means a Non-Employee Director who has become eligible to receive benefits under this Plan. A Non-Employee Director becomes a Participant when he or she (1) resigns from the Board and (2) attains 70 years of age; provided however, that the Committee may waive the requirement that the Participant attain 70 years of age. "Plan" means the PPG Industries, Inc. Directors' Common Stock Plan. "Retainer" means the base annual retainer fee paid to each Non-Employee Director by the Company. It does not include committee retainer fees, meeting attendance fees, committee chairperson's retainer fees or any other compensation other than the base annual retainer fee. "Service" means the period of time a Non-Employee Director serves on the Board. 3. EFFECTIVE DATE. This Plan shall be effective on and after January 1, 1988. -------------- 2 4. CREDITING ACCOUNTS. ------------------ 4.1 Each year on the day following the Annual Meeting of Shareholders of the Company, the Company shall credit the Account of each Non-Employee Director who serves on the Board on that day with the number of Common Stock Equivalents determined by dividing one-half of such Director's Retainer by the average closing price of the Common Stock in the New York Stock Exchange Composite Transactions during the 5 days for which such price is available immediately preceding such day of crediting. The Account of any person who ceases to be a Director prior to April 16, 1999, shall be credited with no more than 10 such Annual Contributions and the total number of such Annual Contributions made to his or her Account under this Section 4.1 plus the number which is multiplied by $10,000 to determine the amount credited to the Account under Section 4.2 will not exceed 10. Any Non-Employee Director who is a Director of the Company on or after April 16, 1999 and whose total number of Annual Contributions was limited to 10 under the Plan in effect prior to April 16, 1999, shall have credited to his or her Account such additional Annual Contributions and Dividend Equivalents as are necessary so that such Account is credited with the number of Common Stock Equivalents it would have had credited if such limitation had never existed. 4.2 On the day following the 1988 Annual Meeting of Shareholders of the Company, the Company shall credit the Account of each Non-Employee Director who is age 61 or older on that date with the number of Common Stock Equivalents determined by (1) multiplying $10,000 times his or her number of full fiscal years of Service, but such number of full fiscal years of Service shall not exceed the number determined by subtracting 60 from the Non-Employee Director's age on the day immediately following the 1988 Annual Meeting of Shareholders and (2) then dividing that amount by the average closing price of the Common Stock in the New York Stock Exchange Composite Transactions during the 5 days for which such price is available immediately preceding such day. 3 5. PAYMENTS OF BENEFITS. -------------------- 5.1 Only Participants or Eligible Spouses will receive benefits under this Plan. Except as set forth in Section 5.4, the Account of a Non-Employee Director will be forfeited if he or she does not become a Participant. 5.2 Benefits will be paid in the form of Common Stock (and cash for any remaining partial shares of Common Stock as described below) in annual installments each year on May 1 (or on the next business day if May 1 is not a business day) commencing the first May 1 the Participant is eligible to receive benefits; provided, however, that the first payment to a Participant shall not be made until 6 months and 10 days after the Participant ceases to be a Non-Employee Director. The number of annual installments paid to each Participant shall be equal to his or her number of full fiscal years of Service, but shall not exceed 10 annual installments. The number of shares of Common Stock attributable to each installment shall be equal to the whole number obtained by dividing the number of Common Stock Equivalents then credited to the Participant's Account by the number of unpaid installments. Common Stock Equivalents with respect to which payment has not yet occurred shall continue to be credited with Dividend Equivalents. As of the date on which the last payment of benefits is made to any Participant, the Company shall pay the Participant, in cash, the value of any remaining fractional Common Stock Equivalent based on the closing sale price of the Common Stock on the New York Stock Exchange Composite Transactions on the last date for which such price is available prior to the payment date. Notwithstanding the foregoing, payments from the account of any Participant who ceased to be director of the Company before August 15, 1996 shall continue to be paid in the manner provided by the Plan as effective on August 15, 1996. 5.3 If a Non-Employee Director dies prior to resigning, or after resigning from the Board but before becoming eligible to receive benefits hereunder, he or she shall be deemed to have become a Participant eligible to receive benefits hereunder immediately prior to his or her death, and such benefits shall be paid to the Participant's Eligible Spouse. If a Participant dies after becoming eligible to receive benefits hereunder, but prior to receiving all the benefits due him or her hereunder, such remaining benefits shall 4 be paid to the Participant's Eligible Spouse. Unpaid benefits under this Plan will be forfeited in the event the Participant's death and Participant's Eligible Spouse's death occur prior to the total amount of benefits due hereunder having been paid. 6. CHANGES IN STOCK. In the event of any change in the outstanding shares of ---------------- the Common Stock, or in the number thereof, by reason of any stock dividend or split, recapitalization, merger, consolidation, exchange of shares or other similar change, a corresponding change will be made in the number of Common Stock Equivalents and Dividend Equivalents, if any, credited to each Account, unless the Committee determines otherwise. 7. ACCELERATION. The Committee, in its sole discretion, may accelerate the ------------ payment of benefits hereunder to any Participant or his or her Eligible Spouse for reasons of changes in tax laws or in the event of a Change in Control of the Company; provided that no payment of benefits may be accelerated hereunder to any Participant or his or her Eligible Spouse if such Participant was a director of the Company on or after November 1, 1990. An exception is provided for any Non-Employee Director if any income tax laws to which he or she is subject would cause him/her to be immediately taxed on amounts credited under the Plan. Under this exception, the requirement that age 70 be attained before a Non-Employee Director becomes a Participant is automatically waived by the Committee. Additionally, under this exception, the payment of all benefits under the Plan shall occur on the first business day which is 6 months and 10 days after the earlier of a Participant's resignation from the Board or death. In the event of such Non-Employee Director's death, either while still an active member of the Board or after resignation from the Board but before receipt of payment from the Plan, payment shall be made to the Participant's Eligible Spouse on the above referenced date. 8. CHANGE IN CONTROL. Upon, or in reasonable anticipation of, a Change in ----------------- Control (as defined above), the Company shall immediately make a payment in cash to a trustee on such terms as the Senior Vice President, Human Resources, and Administration and the Senior Vice President, Finance, or either of them, shall deem appropriate (including such terms as are appropriate to 5 cause such payment, if possible, not to be a taxable event to Participants) of a sufficient amount to insure that Participants receive the payment of all amounts as contemplated under the Plan. 9. GENERAL PROVISIONS. The entire cost of benefits and administrative ------------------ expenses for this Plan shall be paid by the Company. This Plan is purely voluntary on the part of the Company. The Company, by action of the Board or, except as limited by the Company's bylaws, the Committee, may amend, suspend or terminate this Plan in whole or part at any time, but no such amendment, suspension or termination shall adversely affect the rights of any Non-Employee Director or Eligible Spouse of a deceased Non-Employee Director with respect to Common Stock Equivalents and Dividend Equivalents credited prior to such amendment, suspension or termination or Dividend Equivalents which would otherwise have been credited in the future with respect to Common Stock Equivalents credited prior to such amendment, suspension or termination. As Amended April 15, 1999 6 EX-12 3 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12 ----------
PPG INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES Computation of Ratio Of Earnings to Fixed Charges (Dollars in Millions) Year Ended December 31 Three Months --------------------------------------------- Ended 1994 1995 1996 1997 1998 March 31, 1999 ---- ---- ---- ---- ---- -------------- Earnings: Earnings before income taxes $ 840 $ 1,247 $ 1,215 $ 1,149 $ 1,267 $ 202 Plus: Fixed charges exclusive of capitalized interest 108 113 124 136 139 34 Amortization of capitalized interest 11 12 13 13 12 3 Adjustments for equity affiliates and minority interest (2) (4) (3) 0 (2) (1) -------------------------------------------------------------- Total $ 957 $ 1,368 $ 1,349 $ 1,298 $ 1,416 $ 238 ============================================================== Fixed Charges: Interest expense including amortization of debt discount/premium and debt expense $ 88 $ 91 $ 102 $ 113 $ 114 $ 27 Rentals - portion representative of interest 20 22 22 23 25 7 -------------------------------------------------------------- Fixed charges exclusive of capitalized interest 108 113 124 136 139 34 Capitalized interest 5 9 12 10 9 3 -------------------------------------------------------------- Total $ 113 $ 122 $ 136 $ 146 $ 148 $ 37 ============================================================== Ratio of earnings to fixed charges 8.4 11.3 9.9 8.9 9.6 6.4 ==============================================================
EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PPG INDUSTRIES, INC., MARCH 31, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 82 0 1,438 0 948 2,725 6,734 3,860 7,435 2,045 1,066 0 0 484 2,313 7,435 1,803 1,803 1,103 1,103 203 0 26 208 79 0 0 0 0 123 0.71 0.70
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