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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993 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 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
One PPG Place, Pittsburgh, Pennsylvania 15272
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: 412 - 434-3131
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock--Par Value $1.66 2/3 New York Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
NOTE: The Common Stock of the Registrant is also listed on the
Tokyo Stock Exchange.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of January 31, 1994, 106,489,041 shares of the Registrant's common stock,
with a par value of $1.66 2/3 per share, were outstanding. As of that date, the
aggregate market value of common stock held by non-affiliates was $6,608
million.
DOCUMENTS INCORPORATED BY REFERENCE
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INCORPORATED BY
DOCUMENT REFERENCE IN PART NO.
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Portions of PPG Industries, Inc. Annual Report to Shareholders
for the year ended December 31, 1993............................ I, II and IV
Portions of PPG Industries, Inc. Proxy Statement for its 1994
Annual Meeting of Shareholders.................................. III
</TABLE>
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PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
------------------------
As used in this report, the terms "PPG," "Company," and "Registrant" mean PPG
Industries, Inc. and its subsidiaries, taken as a whole, unless the context
indicates otherwise.
------------------------
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business....................................................................................... 1
Item 2. Properties..................................................................................... 3
Item 3. Legal Proceedings.............................................................................. 3
Item 4. Submission of Matters to a Vote of Security Holders............................................ 3
Executive Officers of the Registrant........................................................... 4
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters...................... 5
Item 6. Selected Financial Data........................................................................ 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................ 5
Item 8. Financial Statements and Supplementary Data.................................................... 5
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................................................ 5
PART III
Item 10. Directors and Executive Officers of the Registrant............................................. 6
Item 11. Executive Compensation......................................................................... 6
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 6
Item 13. Certain Relationships and Related Transactions................................................. 6
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................... 7
Signatures................................................................................................... 8
</TABLE>
NOTE ON INCORPORATION BY REFERENCE
Throughout this report various information and data are incorporated by
reference to the Company's 1993 Annual Report to Shareholders (hereinafter
referred to as "the Annual Report to Shareholders"). Any reference in this
report to disclosures in the Annual Report to Shareholders shall constitute
incorporation by reference only of that specific information and data into this
Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
PPG Industries Inc., incorporated in Pennsylvania in 1883, is comprised of three
basic business segments: coatings and resins, glass and chemicals. Within these
business segments, PPG has followed a careful program of directing its resources
of people, capital and technology in selected areas where it enjoys positions of
leadership. Primary areas in which resources have been focused are automotive,
industrial and architectural coatings, flat glass, automotive original and
replacement glass, aircraft transparencies, continuous strand fiber glass, and
industrial and specialty chemicals. Each of the business segments in which PPG
is engaged is highly competitive. However, the broad diversification of product
lines and worldwide markets served tend to minimize the impact of changes in
demand for a particular product line on total sales and earnings. Reference is
made to "Business Segment Information" on pages 20 and 21 of the Annual Report
to Shareholders, which is incorporated herein by reference, for financial
information relating to business segments.
COATINGS AND RESINS
PPG is a major manufacturer of protective and decorative coatings. The coatings
industry is highly competitive and consists of a few large firms with global
presence, and many smaller firms serving local or regional markets. PPG competes
in its primary markets with the world's largest coatings companies, most of
which have operations in North America and Europe. Product development,
innovation, quality and customer service have been stressed by PPG and have been
significant factors in developing an important supplier position.
The industrial portion of the coatings business involves the supply of
protective and decorative finishes for autos, appliances, industrial equipment,
and containers; factory finished aluminum extrusions and coils for architectural
uses; and other industrial and consumer products. In addition to the supply of
finishes to the automotive original equipment market, PPG supplies automotive
refinishes to the aftermarket which are primarily sold through distributors. In
the industrial portion of the coatings business, PPG sells directly to a variety
of manufacturing companies. Product performance, quality and customer service
are major competitive factors. The industrial coatings are formulated
specifically for the customer's needs and application methods. PPG also
manufactures adhesives and sealants for the auto industry and metal
pretreatments for auto and industrial applications.
The architectural finishes business consists primarily of coatings used by
painting and maintenance contractors and by consumers for decoration and
maintenance. PPG's products are sold through independent distributors, paint
dealers, mass merchandisers and home centers. Price, quality and service are key
competitive factors in the architectural finishes market.
Coatings and resins' principal production facilities are concentrated in North
America and Europe. North American production facilities consist of 14 plants in
the United States, one in Canada and one in Mexico. The three largest facilities
are the Cleveland, OH plant, which primarily produces automotive original
coatings; the Oak Creek, WI plant, which produces automotive original and other
industrial coatings; and the Delaware, OH plant, which primarily produces
automotive refinishes and certain industrial coatings. Outside North America,
PPG operates three plants each in Italy and Spain; two plants in France and one
plant each in England and Germany. These plants produce a variety of industrial
and architectural coatings. PPG owns a 60 percent interest in a sales operation
in Hong Kong, 50 percent interests in operations in South Korea and in Japan,
and a minority interest in an operation in Taiwan. Additionally, coatings and
resins operates 11 service centers in the United States, two in Canada and one
in Mexico to provide just-in-time delivery and service to selected automotive
assembly plants. The average number of persons employed by the coatings and
resins segment during 1993 was 9,400.
GLASS
PPG is one of the major producers of flat glass, fabricated glass and continuous
strand fiber glass in the world. PPG's major markets are automotive original
equipment, automotive replacement, residential and commercial construction,
aircraft transparencies, the furniture, marine and electronics industries and
other markets. Most glass products are sold directly to manufacturing and
construction companies, although in some instances products are sold directly to
independent distributors and through PPG distribution outlets. Fiber glass
products are sold directly to manufacturing companies and independent
distributors. PPG manufactures flat glass by the float process and fiber glass
by the continuous filament process.
The bases for competition are price, quality, technology, cost and customer
service. The Company competes with five other major producers of flat glass,
five other major producers of fabricated glass and two other major producers of
fiber glass throughout the world.
PPG's principal glass production facilities are concentrated in North America
and Europe. Fourteen plants operate in the United States, of which six produce
flat glass, five produce automotive glass, two produce fiber glass products and
one produces aircraft transparencies. There are three plants in Canada, two of
which produce automotive glass and one produces flat glass. Four plants operate
in Italy; one manufactures automotive and flat glass, one produces automotive
1
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glass, one produces flat glass, and another produces aircraft transparencies.
Three plants are located in France; one plant manufactures automotive and flat
glass and two plants produce automotive glass. One plant in England and one
plant in the Netherlands produce fiber glass. PPG owns equity interests in
operations in the United States, Canada, France, the People's Republic of China,
Taiwan and Venezuela and a majority interest in a glass distribution company in
Japan. The average number of persons employed by the glass segment during 1993
was 15,800.
CHEMICALS
Major chlor-alkali products of PPG's chemicals business are chlorine, caustic
soda, vinyl chloride monomer, chlorinated solvents, and chlorinated benzenes.
Major specialty chemicals are silicas-based compounds for the tire, shoe and
battery separator businesses; surfactants used for food emulsification, sugar
processing, and personal care products; CR-39 monomer for optical plastics;
photochromic lenses; calcium hypochlorite used for water treatment, primarily
swimming pool applications; and phosgene derivatives for the pharmaceutical,
herbicide and fuel additives businesses.
PPG is a major producer of those chlor-alkali chemicals it manufactures. Most of
the chemicals are sold directly to other manufacturing companies in the chemical
processing, rubber and plastics, paper, minerals and metals, and water treatment
industries. Price, availability and quality of product and customer services are
competitive factors for chlor-alkali chemical products. In the specialty
chemicals area, PPG's market share varies greatly and product performance and
technical service are important competitive factors.
PPG's chemical production facilities consist of ten plants in North America, two
plants in Taiwan, and one each in France, the Netherlands and the People's
Republic of China. The two largest facilities are the Lake Charles, LA and
Natrium, WV plants which primarily produce chlor-alkali products and
derivatives. PPG owns equity interests in one company each in Japan and in
Thailand, and two in the United States. The average number of persons employed
by the chemicals segment during 1993 was 4,300.
BUSINESS TO BE DIVESTED IN 1994--BIOMEDICAL SYSTEMS DIVISION
The Biomedical Systems Division is a manufacturer, supplier and servicer of
integrated medical systems for human health care on a worldwide basis. Major
markets involve cardiopulmonary applications, including cardiac catheterization,
electrocardiographs and related equipment for diagnosis of cardiovascular
diseases, patient monitoring systems and sensors for both vital signs and
respiratory monitoring functions. A large number of competitors provide products
on either a global or regional basis. PPG sells directly to hospital and
clinical customers and through distributor organizations in selected markets,
and distributes selected original equipment products for other manufacturers.
Product performance, quality and technical service capability are major
competitive factors.
A decision was made in the fourth quarter of 1993 to divest the Company's
Biomedical Systems Division. PPG expects the sale of the medical electronics
portion of this business to be completed by the end of the first quarter of
1994. The remaining sensors business is expected to be sold by the end of 1994.
Production facilities include two plants in the United States and two in
Germany. The average number of persons employed by the Biomedical Systems
Division during 1993 was 1,300.
RAW MATERIALS
The effective management of raw materials is important to PPG's continued
success. The Company's most significant raw materials are sand, soda ash, energy
and polyvinyl butyral in the glass segment, titanium dioxide and epoxy resins in
the coatings and resins segment, and energy and ethylene in the chemicals
segment. Most of the raw materials used in production are purchased from outside
sources, and the Company has made, and will continue to make, supply
arrangements to meet the planned operating requirements for the future. For the
significant raw material requirements identified above, and other material,
there is more than one source of supply.
PATENTS
Although PPG considers patent protection to be important from an overall
standpoint, the Company's business segments are not materially dependent upon
any single patent or group of related patents. PPG received $25 million, $27
million and $30 million from royalties and the sale of technical know-how during
the years 1993, 1992 and 1991, respectively.
RESEARCH AND DEVELOPMENT
Research and development costs, including depreciation of research facilities,
during 1993, 1992 and 1991 were $218 million, $221 million and $240 million,
respectively. Research and development facilities are maintained for each
business segment. Each of the facilities conducts research and development
involving new and improved products and processes, and additional process and
product development work is undertaken at many of the Company's manufacturing
plants. PPG owns and operates 11 research and development facilities in the
United States and Europe.
BACKLOG
In general, PPG does not manufacture its products against a backlog of orders;
production and inventory
2
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levels are geared primarily to projections of future demand and the level of
incoming orders.
NON-U.S. OPERATIONS
Although PPG has a significant investment in non-U.S. operations, based upon the
extent and location of investments, management believes that the risk associated
with its international operations is not significantly greater than domestic
operations.
EMPLOYEES
The average number of persons employed by PPG during 1993 was 31,400.
ENVIRONMENTAL MATTERS
Like other companies, PPG is subject to the existing and evolving standards
relating to the protection of the environment. Capital expenditures for
environmental control projects were approximately $29 million, $48 million, and
$18 million in 1993, 1992 and 1991, respectively. It is projected that
expenditures for such projects in 1994 will approximate $40 million with similar
amounts of annual expenditures expected in the near future. Although future
capital expenditures are difficult to forecast accurately because of constantly
changing regulatory standards, it can be anticipated that environmental control
standards will become increasingly stringent and costly.
PPG is negotiating with various government agencies concerning 75 National
Priority List ("NPL") and various other cleanup sites. While PPG is not
generally a major contributor of wastes to these sites, each potentially
responsible party or contributor may face agency assertions of joint and several
liability. Generally, however, a final allocation of costs is made based on
relative contributions of wastes to the site. There is a wide range of cost
estimates for cleanup of these sites, due largely to uncertainties as to the
nature and extent of their condition and the methods which may have to be
employed for their remediation. Additionally, remediation projects have been or
may be undertaken at certain of the Company's current and former plant sites.
The Company has established reserves for those sites where it is probable a
liability exists and the amount can be reasonably estimated. Reserve balances
were $90 million and $107 million at December 31, 1993 and 1992, respectively.
Charges against income increasing environmental remediation reserves totaled
approximately $23 million in 1993, $16 million in 1992 and $23 million in 1991.
Cash outlays against these reserves were approximately $40 million, $58 million
and $48 million in 1993, 1992 and 1991, respectively.
The Company's experience to date regarding environmental matters leads PPG to
believe that it will have continuing expenditures for compliance with provisions
regulating the protection of the environment and for present and future
remediation efforts at waste and plant sites. However, management believes such
expenditures will not have a material adverse effect on the financial position,
operating earnings or liquidity of the Company and its subsidiaries as a whole.
In management's opinion, the Company operates in an environmentally sound manner
and is well positioned, relative to environmental matters, within the industries
in which it operates.
ITEM 2. PROPERTIES
See "Item 1. Business" for information on PPG's production and fabrication
facilities.
Generally, the Company's plants are suitable and adequate for the purposes for
which they are intended, and overall have sufficient capacity to conduct
business in the upcoming year.
ITEM 3. LEGAL PROCEEDINGS
Securities and Exchange Commission regulations require the disclosure of any
environmental legal proceeding in which a governmental authority is a party and
which may reasonably be expected to involve monetary sanctions in excess of
$100,000. In this regard, on November 14, 1991, the Company received a penalty
notice from the Louisiana Department of Environmental Quality (DEQ) proposing a
penalty of $1,236,000 for alleged violations of hazardous waste regulations
relating to the Company's investigation of groundwater contamination at the
Company's Lake Charles, LA plant. The Company has filed an appeal of the
proposed penalty and negotiations with the DEQ continue.
Separately, the Company has voluntarily entered into an agreement with the EPA
to participate in the EPA's Toxic Substances Control Act Section 8(e) Compliance
Audit Program (the "Program"). Under the Program the Company conducted a
self-audit. On October 28, 1992, the Company submitted the first of two final
reports pursuant to the Program. Based on this submission, the Company would pay
$522,000 in stipulated penalties. The EPA has not yet reviewed the report or
issued any order as a result of the report. Under the Program, the EPA has
agreed that the combined potential civil penalties for both final reports of the
Company will not exceed a cap of $1,000,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
3
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EXECUTIVE OFFICERS OF THE REGISTRANT
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NAME AGE TITLE
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<S> <C> <C>
Jerry E. Dempsey (a) 61 Chairman of the Board and Chief Executive Officer since September 1993
Robert D. Duncan 54 Group Vice President, Glass since June 1987
Peter R. Heinze (b) 51 Group Vice President, Chemicals since August 1992
John J. Horgan (c) 51 Vice President, Fiber Glass Products since December 1991
Raymond W. LeBoeuf 47 Vice President, Finance since September 1988
Richard M. Rompala (d) 47 Group Vice President, Coatings and Resins since January 1992
Guy A. Zoghby 59 Vice President and General Counsel since August 1987
</TABLE>
(a) Mr. Dempsey was Senior Vice President of WMX Technologies, Inc., and
Chairman of Chemical Waste Management, Inc., prior to his present position.
(b) Dr. Heinze was President of the Chemical Division of BASF (U.S.) prior to
his present position.
(c) Mr. Horgan was Vice President, Administration prior to his present position.
(d) Mr. Rompala was Group Vice President, Chemicals prior to his present
position.
The executive officers of the Company are elected annually in April by the Board
of Directors.
4
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PART II
Information with respect to the following Items can be found on the indicated
pages of the Annual Report to Shareholders and is incorporated herein by
reference.
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Stock Exchange Listings.......................................................... 33
Quarterly Stock Information...................................................... 33
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is reported in the Eleven-Year Digest under
the captions net sales, income before accounting changes, cumulative effect of
accounting changes, net income, earnings per share before accounting changes,
cumulative effect of accounting changes on earnings per share, earnings per
share, dividends per share, total assets, and long-term debt and lease
obligations for the years 1989 through 1993...................................... 32
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's Discussion and Analysis............................................. 18-19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report..................................................... 14
Financial Statements:
Statement of Income for the years ended
December 31, 1993, 1992 and 1991............................................ 15
Balance Sheet, December 31, 1993 and 1992...................................... 16
Statement of Cash Flows for the years ended
December 31, 1993, 1992 and 1991............................................ 17
Notes to the Financial Statements.............................................. 22-30
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
5
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 regarding Directors is contained under the
caption "Election of Directors" in the Registrant's definitive Proxy Statement
for its 1994 Annual Meeting of Shareholders (the "Proxy Statement") which will
be filed with the Securities and Exchange Commission, pursuant to Regulation
14A, not later than 120 days after the end of the fiscal year, which information
under such caption is incorporated herein by reference.
The information required by Item 10 regarding Executive Officers is set forth in
Part I of this report under the caption "Executive Officers of the Registrant."
The information required by Item 405 of Regulation S-K is set forth in the Proxy
Statement under the caption "Reporting of Securities Transactions," which
information under such caption is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is contained under the captions
"Compensation of Executive Officers" and "Election of Directors--Compensation of
Directors" in the Proxy Statement which information under such captions is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is contained under the caption "Voting
Securities" in the Proxy Statement which information under such caption is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is contained under the caption "Election of
Directors--Other Transactions" in the Proxy Statement which information under
such caption is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Independent Auditors' Report (see Part II, Item 8
of this report (page 5) regarding incorporation by reference from the Annual
Report to Shareholders).
Financial Statement Schedules (all applicable for years ended December 31,
1993, 1992 and 1991):
The following should be read in conjunction with the previously
referenced financial statements.
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PAGE
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Independent Auditors' Report........................................... 9
V-- Property, Plant and Equipment................................ 10
VI-- Accumulated Depreciation of Property, Plant and Equipment.... 11
VIII-- Valuation and Qualifying Accounts............................ 12
IX-- Short-Term Borrowings........................................ 13
X-- Supplementary Earnings Information........................... 14
</TABLE>
All other schedules are omitted because they are not applicable.
(b) There have been no reports filed on Form 8-K during the last quarter of the
period covered by this report.
(c) Exhibits:
(3) The Restated Articles of Incorporation as amended, were filed as
Exhibit 3 to the Registrant's Form 10-K for the year ended December
31, 1990, which exhibit is incorporated herein by reference. The
By-Laws, as amended through February 21, 1991, were filed as Exhibit
3.1 to the Registrant's Form 10-K for the year ended December 31,
1990, which exhibit is incorporated herein by reference.
(4) The Shareholders' Rights Plan was filed as Exhibit 4 on the
Registrant's Form 8-K, dated May 12, 1988, which exhibit is
incorporated herein by reference.
(10) A Description of the Employment Arrangement between Mr. Jerry E.
Dempsey and the Registrant was filed as Exhibit 10 to the Registrant's
Form 10-Q for the quarter ended September 30, 1993. The Nonqualified
Retirement Plan was filed as Exhibit 10.1, the Supplemental Executive
Retirement Plan II was filed as Exhibit 10.2, the Directors'
Retirement Plan was filed as Exhibit 10.3, and the Deferred
Compensation Plan for Directors was filed as Exhibit 10.4 to the
Registrant's Form 10-K for the year ended December 31, 1992. The 1984
Earnings Growth Plan is contained in Exhibit A to the Registrant's
definitive Proxy Statement dated March 2, 1984; the 1984 Stock Option
Plan was filed as Exhibit 10 to the Registrant's Form 10-Q for the
quarter ended March 31, 1992; the form of Employment Agreement the
Registrant has entered into with its Executive Officers providing for
the continued employment of such persons for a period of two years
following a change in control of the Registrant was filed as
Exhibit 10 to the Registrant's Form 8-K dated April 10, 1987; and the
Incentive Compensation and Deferred Income Plan for Key Employees is
contained in Exhibit A to the Registrant's definitive Proxy Statement
dated March 14, 1980. All exhibits referred to in this paragraph (10)
are incorporated by reference.
(11) Computation of Earnings Per Share for the Five Years Ended December
31, 1993.
(13) Company's 1993 Annual Report to Shareholders (except for the pages and
information therein expressly incorporated by reference in this Form
10-K, the Annual Report to Shareholders is provided solely for the
information of the Commission and is not to be deemed "filed" as part
of the Form 10-K).
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
7
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on February 17, 1994.
PPG INDUSTRIES, INC.
(Registrant)
/s/ R. W. LEBOEUF
By ............................................
R. W. LeBoeuf, Vice President, Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities indicated, on February 17, 1994.
SIGNATURE CAPACITY
--------- --------
/s/ J. E. DEMPSEY
.................................... Director, Chairman of the Board and
J. E. Dempsey Chief Executive Officer
/s/ R. W. LEBOEUF
.................................... Vice President, Finance (Principal
R. W. LeBoeuf Financial and Accounting Officer)
L. J. Fjeldstad Director
S. C. Gault Director
A. J. Krowe Director
S. C. Mason Director /s/ R. W. LEBOEUF
H. A. McInnes Director By .........................
R. Mehrabian Director R. W. LeBoeuf,
V. A. Sarni Director Attorney-in-Fact
D. G. Vice Director
D. R. Whitwam Director
8
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of PPG Industries, Inc.:
We have audited the balance sheet of PPG Industries, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the related statements of income and cash flows
for each of the three years in the period ended December 31, 1993, and have
issued our report thereon dated January 20, 1994; such financial statements and
report are included in your 1993 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the financial
statement schedules of PPG Industries, Inc. and subsidiaries, listed in Item
14(a). These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
DELOITTE & TOUCHE
Pittsburgh, Pennsylvania
January 20, 1994
9
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PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING ADDITIONS BALANCE AT
CLASSIFICATION OF YEAR AT COST(1) RETIREMENTS OTHER(3) END OF YEAR
-------------- ---------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
(MILLIONS)
1993
Land $ 112.3 $ 14.1 $ (3.0) $ (5.5) $ 117.9
Land improvements 161.5 6.6 (6.1) (4.0) 158.0
Buildings 1,142.8 16.0 (43.5) (19.2) 1,096.1
Machinery and equipment 4,357.4 227.5 (187.5) (72.9) 4,324.5
Other 235.0 25.6 (19.5) (4.7) 236.4
Construction in progress 148.7 (36.4)(2) -- (3.3) 109.0
----------- ----------- ------------ --------- ------------
Total $ 6,157.7 $ 253.4 $ (259.6) $ (109.6) $ 6,041.9
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1992
Land $ 119.2 $ .5 $ -- $ (7.4) $ 112.3
Land improvements 162.6 6.0 (.3) (6.8) 161.5
Buildings 1,164.1 25.2 (7.3) (39.2) 1,142.8
Machinery and equipment 4,397.1 199.1 (107.6) (131.2) 4,357.4
Other 237.9 20.8 (15.5) (8.2) 235.0
Construction in progress 131.5 27.3(2) -- (10.1) 148.7
----------- ----------- ------------ --------- ------------
Total $ 6,212.4 $ 278.9 $ (130.7) $ (202.9) $ 6,157.7
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1991
Land $ 118.9 $ 3.9 $ (2.8) $ (.8) $ 119.2
Land improvements 155.4 8.3 (2.0) .9 162.6
Buildings 1,120.9 58.9 (20.6) 4.9 1,164.1
Machinery and equipment 4,136.4 300.0 (117.4) 78.1(4) 4,397.1
Other 226.4 26.4 (15.2) .3 237.9
Construction in progress 237.0 (98.7)(2) -- (6.8) 131.5
----------- ----------- ------------ --------- ------------
Total $ 5,995.0 $ 298.8 $ (158.0) $ 76.6 $ 6,212.4
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
</TABLE>
------------------------------------
(1) The additions to the property accounts during the year generally represent
construction and acquisitions, including capitalized leases, in the normal
program of expansion and replacement due to retirements.
(2) Represents net change.
(3) Represents changes primarily attributable to foreign currency translation
and, in 1991, the accounting change detailed in note (4).
(4) Includes an $85 million increase for the effect of the change in accounting
for glass and fiber glass melting facilities.
Note: Depreciation was computed by the straight-line method based on the
following useful lives:
<TABLE>
<S> <C>
Land improvements 5-25 years
Buildings 15-50 years
Machinery and equipment 2-32 years
Other 2-15 years
</TABLE>
10
<PAGE>
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
CLASSIFICATION OF YEAR EXPENSES RETIREMENTS OTHER(1) END OF YEAR
-------------- ---------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
(MILLIONS)
1993
Land improvements $ 93.9 $ 7.1 $ (4.7) $ (2.1) $ 94.2
Buildings 466.8 38.3 (35.9) (8.1) 461.1
Machinery and equipment 2,468.4 259.6 (153.5) (38.4) 2,536.1
Other 157.1 26.1 (16.9) (3.1) 163.2
----------- ----------- ------------ --------- ------------
Total $ 3,186.2 $ 331.1 $ (211.0) $ (51.7) $ 3,254.6
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1992
Land improvements $ 89.7 $ 7.6 $ (.1) $ (3.3) $ 93.9
Buildings 445.2 38.6 (4.4) (12.6) 466.8
Machinery and equipment 2,344.3 277.9 (103.0) (50.8) 2,468.4
Other 150.0 27.4 (14.9) (5.4) 157.1
----------- ----------- ------------ --------- ------------
Total $ 3,029.2 $ 351.5 $ (122.4) $ (72.1) $ 3,186.2
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1991
Land improvements $ 82.3 $ 8.5 $ (1.6) $ .5 $ 89.7
Buildings 410.9 45.6 (13.5) 2.2 445.2
Machinery and equipment 2,112.5 269.5 (103.9) 66.2(2) 2,344.3
Other 134.2 27.6 (12.1) .3 150.0
----------- ----------- ------------ --------- ------------
Total $ 2,739.9 $ 351.2 $ (131.1) $ 69.2 $ 3,029.2
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
</TABLE>
------------------------------------
(1) Represents changes primarily attributable to foreign currency translation
and, in 1991, the changes detailed in note (2).
(2) Includes a $42 million increase for the write-downs to reflect the decline
in value of various glass segment fixed assets and a $21 million increase
for the effect of the change in accounting for glass and fiber glass melting
facilities.
11
<PAGE>
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS(1) END OF YEAR
----------- ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
(MILLIONS)
1993
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 33.0 $ 15.2 $ 22.6 $ 25.6
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
1992
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 35.1 $ 16.6 $ 18.7 $ 33.0
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
1991
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 33.1 $ 18.5 $ 16.5 $ 35.1
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
</TABLE>
------------------------------------
(1) Notes and accounts receivable written off as uncollectible, net of
recoveries and changes attributable to foreign currency translation.
12
<PAGE>
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE IX--SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
END OF YEAR DURING THE YEAR
------------------------ --------------------------------------
WEIGHTED
WEIGHTED MAXIMUM AVERAGE AVERAGE
AVERAGE AMOUNT AMOUNT INTEREST
CATEGORY BALANCE INTEREST RATE OUTSTANDING(1) OUTSTANDING(2) RATE(3)
-------- ------- ------------- -------------- -------------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
1993
Notes payable to banks $ 151.0 6.4% $ 270.6 $ 239.8 7.8%
Commercial paper 173.9 3.5% $ 271.3 $ 211.0 4.2%
---------
Total $ 324.9
---------
---------
1992
Notes payable to banks $ 193.0 8.1% $ 206.7 $ 159.7 10.7%
Commercial paper 141.1 5.7% $ 185.3 $ 116.0 6.0%
---------
Total $ 334.1
---------
---------
1991
Notes payable to banks $ 130.8 10.9% $ 174.9 $ 133.1 10.9%
Commercial paper 118.8 6.1% $ 432.4 $ 249.6 7.6%
---------
Total $ 249.6
---------
---------
</TABLE>
------------------------------------
(1) The amounts for notes payable to banks and commercial paper represent the
greater of the amounts payable at any individual month-end or the maximum
weighted average amount outstanding for any month.
(2) The average amount outstanding for notes payable to banks and commercial
paper was computed by dividing the sum of the daily principal balances by
365.
(3) The weighted average interest rate during the year was computed by dividing
the actual interest expense by average short-term debt outstanding.
13
<PAGE>
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY EARNINGS INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
CHARGED TO
COSTS AND
EXPENSES
-----------
<S> <C>
(MILLIONS)
1993
Maintenance and repairs $ 367.5
----------
----------
Taxes other than payroll and income taxes $ 81.0
----------
----------
Advertising costs $ 69.2
----------
----------
1992
Maintenance and repairs $ 373.4
----------
----------
Taxes other than payroll and income taxes $ 80.6
----------
----------
Advertising costs $ 63.0
----------
----------
1991
Maintenance and repairs $ 366.6
----------
----------
Taxes other than payroll and income taxes $ 74.6
----------
----------
Advertising costs $ 70.7
----------
----------
</TABLE>
14
<PAGE>
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Incorporated by Reference
- ------- -------------------------
<S> <C> <C>
3 The Restated Articles Exhibit 3 - Form 10-K for the year ended
of Incorporation December 31, 1990
3 The By-Laws Exhibit 3.1 - Form 10-K for the year ended
December 31, 1990
4 The Shareholders' Rights Exhibit 4 - Form 8-K, dated May 12, 1988
Plan
10 Description of Employment Exhibit 10 - Form 10-Q for the quarter
Arrangement between ended September 30, 1993
Jerry E. Dempsey and
the Registrant
10 The Nonqualified Retire- Exhibit 10.1 - Form 10-K for the year ended
ment Plan December 31, 1992
10 The Supplemental Exhibit 10.2 - Form 10-K for the year ended
Executive Retirement December 31, 1992
Plan II
10 The Directors' Retirement Exhibit 10.3 - Form 10-K for the year ended
Plan December 31, 1992
10 The Deferred Compensation Exhibit 10.4 - Form 10-K for the year ended
Plan for Directors December 31, 1992
10 1984 Earnings Growth Plan Exhibit A - Proxy Statement, dated
March 2, 1984
10 1984 Stock Option Plan Exhibit 10 - Form 10-Q for the quarter
ended March 31, 1992
10 Form of Employment Exhibit 10 - Form 8-K, dated April 10, 1987
Agreement
10 Incentive Compensation Exhibit A - Proxy Statement dated
and Deferred Income March 14, 1980
Plan for Key Employees
</TABLE>
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
11 Computation of Earnings Per Share for the Five Years Ended
December 31, 1993
13 Company's 1993 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
</TABLE>
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Income before cumulative
effect of changes in methods
of accounting............... $295.0 $319.4 $201.4 $474.8 $465.2
Cumulative effect on prior
years of changes in methods
of accounting:
Other postretirement
benefits................ (357.1) -- -- -- --
Postemployment benefits... (6.1) -- -- -- --
Income taxes.............. 90.4 -- -- -- --
Major repairs to glass
and fiber glass
melting facilities...... -- -- 74.8 -- --
------ ------ ------ ------ ------
Net income.................... $ 22.2 $319.4 $276.2 $474.8 $465.2
====== ====== ====== ====== ======
Weighted average number of
shares of common stock
outstanding................. 106.3 106.1 106.2 107.2 111.3
====== ====== ====== ====== ======
Weighted average number of
shares of common stock
outstanding and common
stock equivalents........... 107.2 106.8 106.7 107.6 111.7
====== ====== ====== ====== ======
Primary earnings per share:
Income before cumulative
effect of changes in
methods of accounting..... $ 2.78 $ 3.01 $ 1.90 $ 4.43 $ 4.18
Cumulative effect on
prior years of changes in
methods of accounting:
Other postretirement
benefits............... (3.36) -- -- -- --
Postemployment benefits.. (.06) -- -- -- --
Income taxes............. 0.85 -- -- -- --
Major repairs to glass
and fiber glass
melting facilities..... -- -- 0.70 -- --
------ ------ ------ ------ ------
Earnings per share........... $ 0.21 $ 3.01 $ 2.60 $ 4.43 $ 4.18
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
(Continued)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fully diluted earnings
per share:
Income before cumulative
effect of changes in
methods of accounting..... $ 2.75 $ 2.99 $ 1.89 $ 4.41 $ 4.16
Cumulative effect on prior
years of changes in
methods of accounting:
Other postretirement
benefits.............. (3.33) -- -- -- --
Postemployment benefits. (.05) -- -- -- --
Income taxes............ 0.84 -- -- -- --
Major repairs to glass
and fiber glass
melting facilities.... -- -- 0.70 -- --
------ ------ ------ ------ ------
Earnings per share.......... $ 0.21 $ 2.99 $ 2.59 $ 4.41 $ 4.16
====== ====== ====== ====== ======
</TABLE>
NOTES:
The common stock equivalents consist of the shares reserved for issuance under
PPG's stock option plan and deferred under PPG's incentive compensation,
management award, earnings growth and directors' retirement plans.
The fully diluted earnings per share calculations are submitted in accordance
with Regulation S-K item 601(b)(11) although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because they result in dilution of less than
three percent.
All amounts are in millions except per share data.
<PAGE>
EXHIBIT 13
FINANCIAL AND OPERATING REVIEW
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of PPG Industries, Inc.:
We have audited the accompanying balance sheet of PPG Industries, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related statements of
income and cash flows for each of the three years in the period ended December
31, 1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of PPG Industries, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, effective January 1, 1993,
the Company changed its methods of accounting for income taxes, postretirement
benefits other than pensions and postemployment benefits. Also as discussed in
Note 2 to the financial statements, as of January 1, 1991, the Company changed
its method of accounting for the costs of rebuilding glass and fiber glass
melting facilities.
DELOITTE & TOUCHE
Pittsburgh, Pennsylvania
January 20, 1994
MANAGEMENT STATEMENT
Responsibility for Preparation of the Financial Statements
The management of PPG Industries, Inc. is responsible for the preparation of
the financial statements included in this Annual Report.
To ensure the reliability of financial data, PPG has established, and
maintains, an internal control system. We believe the internal controls in use
give reasonable assurance that financial reports do not contain any material
misstatement.
We believe that the financial statements and related notes in this report are
accurate in all material respects, and that they were prepared according to
generally accepted accounting principles.
We believe, further, that the other financial information contained in this
Annual Report is consistent with the financial statements.
JERRY E. DEMPSEY
Chairman of the Board
and Chief Executive Officer
RAYMOND W. LEBOEUF
Vice President, Finance
14 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
STATEMENT OF INCOME
<TABLE>
<CAPTION>
For the Year
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
(Millions, except per share amounts) 1993 1992 1991
- -------------------------------------------------------------------------------
Net sales $5,753.9 $5,813.9 $5,672.6
- -------------------------------------------------------------------------------
Cost of sales 3,633.3 3,694.8 3,676.1
- -------------------------------------------------------------------------------
Gross profit 2,120.6 2,119.1 1,996.5
- -------------------------------------------------------------------------------
Other expenses
Selling, general and administrative 871.7 879.8 858.5
-----------------------------------------------------------------------------
Depreciation 331.1 351.5 351.2
-----------------------------------------------------------------------------
Research and development--net (See Note 14) 201.2 203.0 220.4
-----------------------------------------------------------------------------
Interest 103.1 141.0 153.4
-----------------------------------------------------------------------------
Business divestitures and realignments (See
Note 3) 126.4 10.4 84.3
-----------------------------------------------------------------------------
Other charges 80.0 112.0 91.1
- -------------------------------------------------------------------------------
Total other expenses 1,713.5 1,697.7 1,758.9
- -------------------------------------------------------------------------------
Other earnings (See Note 13) 137.0 120.4 115.9
- -------------------------------------------------------------------------------
Income before income taxes and minority interest 544.1 541.8 353.5
- -------------------------------------------------------------------------------
Income taxes (See Note 7) 236.2 218.4 146.7
- -------------------------------------------------------------------------------
Minority interest 12.9 4.0 5.4
- -------------------------------------------------------------------------------
Income before cumulative effect of accounting
changes 295.0 319.4 201.4
- -------------------------------------------------------------------------------
Cumulative effect of accounting changes (See
Note 2)
Other postretirement and postemployment
benefits, net of income taxes of $231.9
million (363.2) -- --
-----------------------------------------------------------------------------
Income taxes 90.4 -- --
-----------------------------------------------------------------------------
Major repairs to glass and fiber glass melting
facilities, net of income taxes
of $47.8 million -- -- 74.8
- -------------------------------------------------------------------------------
Net income $ 22.2 $ 319.4 $ 276.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Earnings per share
Income before cumulative effect of accounting
changes $ 2.78 $ 3.01 $ 1.90
- -------------------------------------------------------------------------------
Cumulative effect of accounting changes
Other postretirement and postemployment
benefits (3.42) -- --
-----------------------------------------------------------------------------
Income taxes .85 -- --
-----------------------------------------------------------------------------
Major repairs to glass and fiber glass melting
facilities -- -- .70
- -------------------------------------------------------------------------------
Earnings per share $ .21 $ 3.01 $ 2.60
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Average shares outstanding 106.3 106.1 106.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
PPG INDUSTRIES, INC. 15
<PAGE>
BALANCE SHEET
<TABLE>
<CAPTION>
December 31
- -----------------------------------------------------------------------------
<S> <C> <C>
(Millions) 1993 1992
- -----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 111.9 $ 61.4
---------------------------------------------------------------------------
Receivables (See Note 4) 996.7 1,023.4
---------------------------------------------------------------------------
Inventories (See Note 4) 683.3 742.3
---------------------------------------------------------------------------
Deferred income taxes (See Note 7) 147.4 49.9
---------------------------------------------------------------------------
Other 86.6 73.8
- -----------------------------------------------------------------------------
Total current assets 2,025.9 1,950.8
- -----------------------------------------------------------------------------
Property (See Note 4) 6,041.9 6,157.7
- -----------------------------------------------------------------------------
Less accumulated depreciation 3,254.6 3,186.2
- -----------------------------------------------------------------------------
Property--net 2,787.3 2,971.5
- -----------------------------------------------------------------------------
Investments 264.5 233.6
- -----------------------------------------------------------------------------
Other assets 573.8 505.8
- -----------------------------------------------------------------------------
Total $ 5,651.5 $ 5,661.7
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt and current portion of long-term debt
(See Note 5) $ 351.4 $ 429.2
---------------------------------------------------------------------------
Accounts payable and accrued liabilities (See Note 4) 921.2 809.0
---------------------------------------------------------------------------
Income taxes (See Note 7) 4.7 9.6
---------------------------------------------------------------------------
Obligations under capital leases (See Note 8) 3.7 5.2
- -----------------------------------------------------------------------------
Total current liabilities 1,281.0 1,253.0
- -----------------------------------------------------------------------------
Long-term debt (See Note 5) 743.9 870.6
- -----------------------------------------------------------------------------
Obligations under capital leases (See Note 8) 30.1 34.7
- -----------------------------------------------------------------------------
Deferred income taxes (See Note 7) 268.6 441.9
- -----------------------------------------------------------------------------
Accrued pensions (See Note 9) 74.9 105.7
- -----------------------------------------------------------------------------
Other postretirement and postemployment benefits (See
Note 9) 530.6 --
- -----------------------------------------------------------------------------
Other 197.4 196.6
- -----------------------------------------------------------------------------
Minority interest 51.9 60.3
- -----------------------------------------------------------------------------
Total liabilities 3,178.4 2,962.8
- -----------------------------------------------------------------------------
Shareholders' equity (See Note 6)
Common stock 242.1 242.1
---------------------------------------------------------------------------
Additional paid-in capital 297.5 232.8
---------------------------------------------------------------------------
Retained earnings 3,436.8 3,631.8
---------------------------------------------------------------------------
Treasury stock, at cost (1,224.7) (1,200.3)
---------------------------------------------------------------------------
Unearned compensation (182.5) (202.2)
---------------------------------------------------------------------------
Minimum pension liability adjustment (36.1) (4.3)
---------------------------------------------------------------------------
Currency translation adjustment (60.0) (1.0)
- -----------------------------------------------------------------------------
Total shareholders' equity 2,473.1 2,698.9
- -----------------------------------------------------------------------------
Total $ 5,651.5 $ 5,661.7
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
Shares outstanding were 106,840,848 and 106,134,687 at Dec. 31, 1993 and 1992,
respectively.
Certain amounts in the 1992 balance sheet have been reclassified to be
consistent with the 1993 presentation.
The accompanying notes to the financial statements are an integral part of this
statement.
16 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
(Millions) 1993 1992 1991
- -------------------------------------------------------------------------------
Cash from operations
Net income $ 22.2 $ 319.4 $ 276.2
- -------------------------------------------------------------------------------
Adjustments to reconcile to cash from operations
Cumulative effect of accounting changes (See
Note 2) 272.8 -- (74.8)
-----------------------------------------------------------------------------
Depreciation and amortization 350.2 373.2 372.8
-----------------------------------------------------------------------------
Business divestitures and realignments 126.4 10.4 84.3
-----------------------------------------------------------------------------
Increase in receivables (33.7) (41.2) (10.8)
-----------------------------------------------------------------------------
Decrease in inventories 27.4 85.1 55.1
-----------------------------------------------------------------------------
Increase (decrease) in accounts payable, accrued
liabilities and income
taxes payable 2.5 (56.1) (165.3)
-----------------------------------------------------------------------------
Net change in other noncurrent assets and
liabilities 57.4 (74.2) (81.0)
-----------------------------------------------------------------------------
Other--net (84.5) 53.6 22.4
- -------------------------------------------------------------------------------
Cash from operations 740.7 670.2 478.9
- -------------------------------------------------------------------------------
Investing activities
Capital spending
Additions to property and investments (257.6) (282.3) (331.0)
-----------------------------------------------------------------------------
Business acquisitions, net of cash balances
acquired (35.8) (.7) (4.4)
- -------------------------------------------------------------------------------
Proceeds from business divestitures 4.9 -- 17.8
- -------------------------------------------------------------------------------
Reductions of property and investments 52.0 26.9 42.7
- -------------------------------------------------------------------------------
Cash used for investing activities (236.5) (256.1) (274.9)
- -------------------------------------------------------------------------------
Financing activities
Net change in borrowings with maturities of three
months or less (3.5) 81.9 (66.9)
- -------------------------------------------------------------------------------
Proceeds from other short-term debt 19.3 38.8 19.0
- -------------------------------------------------------------------------------
Repayment of other short-term debt (8.5) (10.0) (17.3)
- -------------------------------------------------------------------------------
Proceeds from long-term debt 9.3 10.7 299.7
- -------------------------------------------------------------------------------
Repayment of long-term debt and capital leases (199.4) (312.3) (289.2)
- -------------------------------------------------------------------------------
Repayment of loans by employee stock ownership plan 19.7 16.4 15.8
- -------------------------------------------------------------------------------
Purchase of treasury stock (81.2) (26.6) (15.2)
- -------------------------------------------------------------------------------
Issuance of treasury stock 13.2 11.7 9.8
- -------------------------------------------------------------------------------
Dividends paid (220.8) (199.6) (182.6)
- -------------------------------------------------------------------------------
Cash used for financing activities (451.9) (389.0) (226.9)
- -------------------------------------------------------------------------------
Effect of currency exchange rate changes on cash
and cash equivalents (1.8) (1.3) 1.2
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 50.5 23.8 (21.7)
- -------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 61.4 37.6 59.3
- -------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 111.9 $ 61.4 $ 37.6
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
PPG INDUSTRIES, INC. 17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
PERFORMANCE IN 1993 COMPARED WITH 1992
Overall Performance
Our 1993 and 1992 sales were both $5.8 billion. Higher sales volumes from each
of our business segments were offset by the negative effects of currency
translation, lower prices in the chemicals and glass segments, and the absence
of sales from businesses divested or to be divested in the Biomedicals Systems
Division and glass segment.
PPG's gross profit percentage increased to 37% from 36% for the prior year.
Lower manufacturing costs and sales mix gains, offset in part by the
unfavorable effects of inflation and lower overall sales prices, contributed to
the improvement.
Net income for 1993 was $22 million, or $0.21 per share, after a net charge of
$273 million, or $2.57 per share, for three accounting changes (see Note 2 to
the financial statements). Excluding the one-time net charge for the accounting
changes, earnings were $295 million, or $2.78 per share.
Results for 1993 include business divestiture and realignment charges of $126
million ($0.91 per share) and an after-tax gain of $17 million ($0.16 per
share) from the sale of an interest in an insurance company. Results were
impacted by higher overall sales volumes, lower interest expense and the
factors contributing to the higher gross profit percentage.
Prior year net income and per share amounts were $319 million and $3.01 per
share, respectively. Included in these results was a charge for a glass
technology dispute, which reduced earnings per share by $0.21, and business
divestiture and realignment charges of $10 million, or $0.06 per share.
Results of Business Segments
Coatings and resins sales were $2.3 billion for both 1993 and 1992. Operating
income for the respective periods was $419 million and $368 million. Higher
volumes for North American automotive original products, refinish and
industrial coatings and higher prices for worldwide automotive refinish
coatings were offset by the negative effects of translating European currencies
and lower volumes for most of the segment's European businesses. The increase
in operating income was attributable to higher sales volumes, improved sales
mix, higher refinish coatings prices, manufacturing efficiencies, and lower raw
material and overhead costs. The negative effects of inflation and European
currency translation partially offset these improvements.
Glass sales were $2.2 billion for 1993 and 1992, while operating income
increased to $200 million from $119 million in 1992. Sales were favorably
impacted by higher volumes for most of the segment's North American businesses
and higher prices for North American automotive replacement and flat glass.
These gains were offset by the negative effects of translating European
currencies, lower prices for North American automotive original and fiber glass
products and most European businesses. The absence of sales from divested
businesses also reduced total sales. The increase in operating income was
primarily attributable to higher sales volumes, lower manufacturing costs and
the absence of the prior year charge for an award in the glass technology
dispute. Lower overall sales prices and the unfavorable effects of inflation
partially offset these improvements.
Chemicals sales increased to $1.2 billion from $1.1 billion in 1992, while
operating income declined to $138 million from $185 million. Contributing to
the sales increase were higher volumes for Transitions (registered trademark)
optical lenses and other specialty chemical products and higher prices for
chlorine and most chlorine derivative products. The increases were partially
offset by significantly lower caustic soda prices, lower volumes for most
chlorine derivative products and lower specialty chemical prices. The decline
in operating income was principally due to the lower overall sales prices and
the unfavorable effects of inflation, particularly on natural gas costs. Higher
overall sales volumes and improved manufacturing efficiencies partially offset
these declines.
Other Significant Factors
The decline in interest expense is primarily due to lower average borrowings
during 1993 versus 1992 and lower average interest rates in 1993.
The decline in other charges was primarily due to the absence of the prior
year's charge for a glass technology dispute.
The increase in other earnings and other unallocated corporate income-net was
principally due to the gain on the sale of our interest in the insurance
company.
Income tax expense increased to $236 million from $218 million in 1992,
principally as a result of an increase in the effective tax rate (see Note 7 to
the financial statements).
Included in 1993 results is the cumulative effect to Jan. 1, 1993, of the
adoption of Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"; SFAS
No. 109, "Accounting for Income Taxes," and SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 106 requires accrual basis
accounting for retiree medical and life insurance benefits over the employees'
active years of service. Its adoption resulted in an after-tax charge of $357.1
million, or $3.36 per share. SFAS No. 109, which requires an asset and
liability approach to accounting for income taxes, resulted in a one-time gain
of $90.4 million, or $0.85 per share. SFAS No. 112 requires an accrual method
of recognizing the cost of postemployment benefits, such as disability,
severance and workers' compensation benefits. Its adoption resulted in an
after-tax charge of $6.1 million, or $0.06 per share. The adoption of the new
accounting standards will not affect the Company's cash flows and the ongoing
effect of such standards did not significantly impact 1993's net income. (Refer
to Note 2, Changes in Methods of Accounting, for further details regarding the
three accounting changes.)
PPG received in late July a $28 million judgment in a jury trial against
Textron, Inc., and its subsidiary, Avco Corporation, for infringing PPG's
patent on a fire-protective coating. The defendants have filed an appeal in
this matter. The financial statements do not include any gain related to this
matter.
The Company's experience to date regarding environmental matters leads PPG to
believe that it will have continuing expenditures for compliance with
provisions regulating the protection of the environment and for present and
future remediation efforts at waste and plant sites. Although the amount of any
such future costs is uncertain, management believes they will not have a
material effect on PPG's consolidated financial position, results of
operations, liquidity or competitive position. In management's opinion, the
Company operates in an environmentally sound manner and is well positioned,
relative to environmental matters, within the industries in which it operates.
PERFORMANCE IN 1992 COMPARED WITH 1991
Overall Performance
Our 1992 sales totaled $5.8 billion, up from the prior year's $5.7 billion.
Higher sales volumes for the coatings and resins and chemicals segments,
including sales from the prior year acquisition of ICI Canada's automotive
original coatings business, higher prices in the coatings and resins segment,
and the favorable effect of translating European currencies, contributed to the
sales improvement. Lower prices in the glass and chemicals segments partially
offset these improvements.
18 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net income of $319 million increased from $276 million in the prior year,
while earnings per share increased to $3.01 from $2.60. Excluding the effects of
business divestitures and realignments in both periods and a 1991 accounting
change (see Note 2 to the financial statements), earnings per share increased
$0.71 from the prior year. Higher sales and reduced manufacturing and research
and development costs, reflecting operating efficiencies and productivity
gains, contributed to the improvement. Partially offsetting these improvements
were the negative effects of inflation and a charge recorded for an award to a
competitor in a glass technology dispute (which reduced earnings per share
$0.21).
The gross profit percentage increased to 36% from 35% for the prior year.
Lower manufacturing costs, partially offset by the negative effects of
inflation and lower sales prices, contributed to the improvement.
Results of Business Segments
Coatings and resins sales increased to $2.3 billion from $2.2 billion in 1991,
while operating income increased to $368 million from $257 million in the prior
year. Higher volumes in North American auto original coatings, including sales
from the June 1991 acquisition of ICI Canada's automotive original coatings
business, and worldwide industrial coatings contributed to the increase. Higher
prices in most of the segment's major product lines and the favorable effect of
translating European currencies also contributed to the sales improvement.
Declines in volumes for United States trade and European automotive original
and refinish coatings partly offset these improvements. The increase in
operating income was primarily attributable to higher sales prices and lower
overhead and material costs.
Glass sales of $2.2 billion were down slightly from the prior year while
operating income decreased to $119 million from $125 million. Positively
impacting sales were higher volumes for North American flat glass, worldwide
fiber glass reinforcements and worldwide auto replacement glass. The favorable
effect of translating European currencies also increased sales. Lower prices
for worldwide flat glass, fiber glass reinforcement products and North American
auto replacement glass, and lower volumes for European flat glass, worldwide
fiber glass textile products and automotive original glass, were offsetting
factors.
Contributing to the operating income decline were the unfavorable glass
technology award, lower overall sales prices and the negative effects of
inflation. Lower manufacturing and overhead costs significantly offset these
negative factors.
Chemicals sales of $1.1 billion in 1992 were comparable to the prior year
while operating income decreased to $185 million from $195 million. The level
sales were attributable to higher volumes for performance chemicals, certain
chlorine derivatives, and Transitions (registered trademark) optical lenses and
the favorable effect of translating Asia-Pacific currencies, which were offset
by price declines for chlorine and caustic soda. The decline in operating income
was attributable to lower sales prices and the negative effects of inflation,
partially offset by lower manufacturing and overhead costs.
Other Significant Factors
Other charges increased $21 million to $112 million in 1992, which was
primarily attributable to the unfavorable glass technology award.
Income tax expense increased to $218 million from $147 million in 1991,
primarily as a result of increased pretax earnings.
BUSINESS DIVESTITURES AND REALIGNMENTS
PPG's results for 1993, 1992 and 1991 reflect the impact of our programs to
divest or realign certain businesses not meeting strategic and performance
objectives. These programs resulted in pretax charges of $126 million, $10
million and $84 million in 1993, 1992 and 1991, respectively. The expense
impact of the 1993 actions is expected to be recovered through improved pretax
earnings in less than three years. Operating income amounts discussed above do
not include the impact of these programs. Refer to footnote 2 to the Business
Segment Information for information concerning the impact of these programs on
industry segment operating income.
IMPACT OF INFLATION
PPG's financial statements are prepared on a historical cost basis, which does
not completely account for the effects of inflation. Since the cost of most of
the Company's inventories is determined using the last-in, first-out (LIFO)
method, the cost of sales reported in the financial statements approximates
current costs.
In 1993, 1992 and 1991, our operating results were negatively impacted as
increased production costs, resulting from inflation, were not fully recovered
through price increases. While inflationary pressure on cost is expected to
continue, we anticipate that actions already initiated to improve operating
efficiencies and reduce overhead costs in each of our business units, as well
as increases in selling prices for certain products, will partially offset the
negative impact of inflation on 1994 operating income.
FINANCIAL RESOURCES, CAPITAL SPENDING
Over the past three years, we continued to have sufficient financial resources
to meet operating requirements, to fund our capital spending and stock
repurchase programs, and to pay increased dividends to shareholders. Cash from
operations was $741 million in 1993, $670 million in 1992 and $479 million in
1991. Dividends paid to shareholders in 1993 totaled $221 million, up from $200
million in 1992 and $183 million in 1991.
The decrease in long-term debt in 1993 was principally due to the repayment of
$112 million of European and $58 million of Canadian obligations, ultimately
with cash from operations.
Affecting long-term debt during 1992 was the refinancing or early redemption
of approximately $140 million of fixed rate debt, $15 million of fixed rate
industrial development bonds and $37 million of variable rate industrial
development bonds with short-term variable rate debt or cash from operations.
Also, $78 million in New Zealand dollar debt that matured in December 1992 was
refinanced with commercial paper.
Capital spending in 1993 totaled $293 million, compared with $283 million in
1992 and $335 million in 1991. This spending related to modernization and
productivity improvements, expansion of existing businesses, environmental
control projects and, in 1993, 1992 and 1991, business acquisitions totaling
$36 million, $1 million and $4 million, respectively. Capital spending of a
similar nature, excluding any for major acquisitions, is expected to total
about $350 million during 1994.
The ratio of total debt, including capital leases, to total debt and equity
was 31% at Dec. 31, 1993, compared with 33% at Dec. 31, 1992. Cash from
operations and the Company's debt capacity are expected to continue to be
sufficient to fund capital spending, dividend payments and operating
requirements.
See Note 5, Debt and Bank Credit Agreements, for details regarding our use and
availability of committed and uncommitted lines of credit.
PPG INDUSTRIES, INC. 19
<PAGE>
BUSINESS SEGMENT INFORMATION
<TABLE>
- ------------------------------------------------
<CAPTION>
(Millions) 1993 1992 1991
- ------------------------------------------------
<S> <C> <C> <C>
INDUSTRY SEGMENTS
Net sales
Coatings and Resins $2,314 $2,319 $2,185
----------------------------------------------
Glass 2,165 2,168 2,186
----------------------------------------------
Chemicals 1,150 1,112 1,100
----------------------------------------------
Other 125 215 202
- ------------------------------------------------
Total $5,754 $5,814 $5,673
- ------------------------------------------------
- ------------------------------------------------
Operating income
Coatings and Resins $ 419 $ 368 $ 257
----------------------------------------------
Glass 200 119 125
----------------------------------------------
Chemicals 138 185 195
----------------------------------------------
Other(/1/) (11) -- (9)
----------------------------------------------
Business divestitures
and realignments(/2/) (88) (10) (83)
- ------------------------------------------------
Total 658 662 485
- ------------------------------------------------
Interest--net (88) (124) (131)
----------------------------------------------
Other unallocated
corporate income--net 12 4 1
----------------------------------------------
Business divestitures
and realignments--
corporate(/2/) (38) -- (1)
- ------------------------------------------------
Income before income
taxes and minority
interest $ 544 $ 542 $ 354
- ------------------------------------------------
- ------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Coatings
and
(Millions) Resins Glass Chemicals Other (/1/) Corporate Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993
Segment assets(/3/) $1,476 $1,939 $1,092 $372 $773 $5,652
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 78 $ 165 $ 83 $ 15 $ 9 $ 350
- ---------------------------------------------------------------------------
Capital spending $ 91 $ 95 $ 73 $ 6 $ 28 $ 293
- ---------------------------------------------------------------------------
1992
Segment assets(/3/) $1,488 $2,153 $1,076 $400 $545 $5,662
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 83 $ 176 $ 83 $ 19 $ 12 $ 373
- ---------------------------------------------------------------------------
Capital spending $ 85 $ 108 $ 70 $ 6 $ 14 $ 283
- ---------------------------------------------------------------------------
1991
Segment assets(/3/) $1,612 $2,374 $1,076 $459 $535 $6,056
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 79 $ 180 $ 81 $ 21 $ 12 $ 373
- ---------------------------------------------------------------------------
Capital spending $ 92 $ 137 $ 63 $ 12 $ 31 $ 335
- ---------------------------------------------------------------------------
</TABLE>
(continued on next page)
20 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
BUSINESS SEGMENT INFORMATION
<TABLE>
- ---------------------------------------------------------------------------
<CAPTION>
(Millions) 1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
GEOGRAPHIC SEGMENTS
Net sales
United States $3,924 $3,730 $3,624
-------------------------------------------------------------------------
Europe 1,254 1,528 1,497
-------------------------------------------------------------------------
Canada 423 410 408
-------------------------------------------------------------------------
Other 153 146 144
- ---------------------------------------------------------------------------
Total $5,754 $5,814 $5,673
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Operating income
United States $ 635 $ 518 $ 391
-------------------------------------------------------------------------
Europe 37 91 121
-------------------------------------------------------------------------
Canada 49 38 27
-------------------------------------------------------------------------
Other 25 25 29
-------------------------------------------------------------------------
Business divestitures and realignments (/2/) (88) (10) (83)
- ---------------------------------------------------------------------------
Total 658 662 485
- ---------------------------------------------------------------------------
Interest--net (88) (124) (131)
-------------------------------------------------------------------------
Other unallocated corporate expenses--net 12 4 1
-------------------------------------------------------------------------
Business divestitures and realignments--corporate
(/2/) (38) -- (1)
- ---------------------------------------------------------------------------
Income before income taxes and minority interest $544 $ 542 $ 354
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Segment assets (/3/)
United States $3,154 $3,283 $3,463
-------------------------------------------------------------------------
Europe 1,307 1,422 1,614
-------------------------------------------------------------------------
Canada 275 291 322
-------------------------------------------------------------------------
Other 143 121 122
-------------------------------------------------------------------------
Corporate 773 545 535
- ---------------------------------------------------------------------------
Total $5,652 $5,662 $6,056
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
(/1/)"Other" includes the results of the Company's Biomedical Systems Division
for 1991, 1992 and the first nine months of 1993 and its real estate
activities for all years.
(/2/)Pretax gains (charges) from business divestitures and realignments related
to the following segments:
<TABLE>
------------------------------------------- -------------------------------------
<CAPTION>
1993 1992 1991 1993 1992 1991
------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Industry Segments Geographic Segments
Coatings and Resins $ (5) $ (9) $(13) United States $ (75) $ 2 $(80)
-------------------------------------- ----------------------------------
Glass (78) -- (68) Europe (9) (8) (4)
-------------------------------------- ----------------------------------
Chemicals (5) -- (2) Canada (4) (4) 1
-------------------------------------- ----------------------------------
Other -- (1) -- Corporate (38) -- (1)
-------------------------------------- -------------------------------------
Corporate (38) -- (1) Total $(126) $(10) $(84)
------------------------------------------- -------------------------------------
-------------------------------------
Total $(126) $(10) $(84)
-------------------------------------------
-------------------------------------------
</TABLE>
(/3/)Segment assets are the total assets used in the operation of each business
segment. Corporate assets are principally cash and cash equivalents,
investments, income tax assets and prepaid pensions.
PPG INDUSTRIES, INC. 21
<PAGE>
NOTES
1. SUMMARY OF ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of PPG Industries,
Inc., and all significant subsidiaries, U.S. and non-U.S., of which we own more
than 50% of the voting stock. Investments in companies of which we own 20% to
50% of the voting stock are carried at equity, and our share of the earnings or
losses of such equity affiliates is included in the statement of income.
Transactions between PPG Industries, Inc., and its subsidiaries are eliminated
in consolidation.
Foreign currency translation
For all significant non-U.S. operations, the functional currency is the local
currency. Assets and liabilities of those operations are translated into U.S.
dollars using year-end exchange rates; income and expenses are translated using
the average exchange rates for the reporting period. Translation adjustments
are deferred as a separate component of shareholders' equity.
Postretirement defined benefits
We determine cost for our pension plans according to Statement of Financial
Accounting Standards (SFAS) No. 87 and for our other postretirement benefit
plans according to SFAS No. 106. (See Note 2.) We use the projected unit
credit actuarial cost method for defined benefit plans. Unrecognized prior
service costs are amortized over periods ranging from six to 16 years.
Amortization of unrecognized gains and losses is included in income over the
estimated future service periods of active employees.
Inventories
Most U.S. and certain non-U.S. inventories are stated at cost, using the last-
in, first-out (LIFO) method, which does not exceed market. Other inventories
are stated at the lower of cost or market. We determine cost using either
average or standard factory costs, which approximate actual costs, excluding
certain fixed costs such as depreciation and property taxes.
Property
Property is recorded at cost. We compute depreciation by the straight-line
method based on the estimated useful lives of depreciable assets. Additional
expense is recorded when facilities or equipment are subject to abnormal eco-
nomic conditions or obsolescence. Significant improvements that add to produc-
tive capacity or extend the lives of properties are capitalized. Costs for re-
pairs and maintenance are charged to expense as incurred. When property is
retired or otherwise disposed of, the cost and related depreciation are removed
from the accounts and any related gains or losses are included in income.
Cash equivalents
For purposes of the statement of cash flows, cash equivalents are time
deposits or short-term investments (valued at cost, which approximates market
value) acquired with an original maturity of three months or less.
2. CHANGES IN METHODS OF ACCOUNTING
Effective Jan. 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This standard
requires accrual, during the years that the employee renders the necessary
services, of the expected cost of providing postretirement benefits to an
employee and the employee's covered dependents. The Company's previous practice
was to recognize these costs as benefits were paid. PPG elected to recognize
immediately the cumulative effect of this accounting change, which resulted in
an after-tax charge of $357.1 million (including $6.4 million for an equity
affiliate). The incremental after-tax impact of accruing the cost of these
postretirement benefits for 1993 was not material.
The Company also adopted SFAS No. 109, "Accounting for Income Taxes,"
effective Jan. 1, 1993. This standard requires an asset and liability approach
to accounting for income taxes. Deferred income tax liabilities and assets
reflect the tax effects of (1) temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes and (2) operating loss and tax credit
carryforwards. Deferred income tax assets, such as benefits related to net
operating loss carryforwards, are recognized to the extent that realization of
such benefits is more likely than not. Changes in enacted tax rates or laws
result in adjustments to the recorded deferred income tax assets and
liabilities in the period that the tax law is enacted.
The $90.4 million cumulative effect of this accounting change as of Jan. 1,
1993, has been credited to income in 1993. The effect of the accounting change
on 1993 net income, exclusive of the cumulative effect as of Jan. 1, 1993, was
not material. Previously, the Company applied the deferral method specified in
Accounting Principles Board Opinion No. 11 to provide for deferred income taxes
with respect to timing differences between the recognition of income and
expense items for financial reporting purposes and income tax purposes.
Effective Jan. 1, 1993, the Company adopted the provisions of SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." This standard requires an
accrual method of recognizing the cost of postemployment benefits, such as
disability, severance and workers' compensation benefits. Since the Company
previously accounted for most of these benefits on an accrual basis, the
cumulative after-tax charge as of Jan. 1, 1993, of the accounting change was
only $6.1 million. The incremental after-tax impact of accruing the cost of
these benefits for 1993 was not material.
Effective Jan. 1, 1991, PPG adopted the capital method of accounting for the
cost of rebuilding glass and fiber glass melting facilities. Under this method,
costs are capitalized when incurred and depreciated over the estimated useful
lives of the rebuilt facilities. Previously, the Company had established a
liability for the estimated cost of major repairs to its glass and fiber glass
melting facilities through charges against earnings prior to the major repairs.
It had become increasingly more difficult to estimate the costs of future
repairs because of greater variability in the nature of and in the period
between each major repair as a result of our continual efforts to modify and
enhance our glass and fiber glass making processes. The change to the capital
method for these costs was made because it did
22 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
NOTES
not require estimating the cost of future repairs, nor the period over which
future repairs should be accrued and, as a result, provided for a better
matching of expenses with revenue. The change in method also achieved an
accounting treatment consistent with that of most of our major competitors. The
$74.8 million cumulative after-tax effect of this change as of Jan. 1, 1991,
was included in 1991 net income. The effect of the accounting change on 1991
net income, exclusive of such cumulative effect, was not material.
3. ACQUISITIONS, DIVESTITURES AND BUSINESS REALIGNMENTS
In 1993 we acquired the 20% minority interest in Industrie Vernici Italiane
S.p.A., a coatings and resins subsidiary in Italy, for $34 million.
During 1993, 1992 and 1991, we undertook programs to divest or realign certain
businesses and activities not meeting strategic and performance objectives. The
programs included the closing, idling, relocation, downsizing or sale of
certain businesses or facilities and write-downs for declines in the value of
property. These actions resulted in net pretax charges of $126.4 million, $10.4
million and $84.3 million in 1993, 1992 and 1991, respectively.
Included in the 1993 actions was the Company's decision to divest its
Biomedical Systems Division, which resulted in a pretax charge of $38 million.
Sale of the medical electronics portion of this business is expected to be
completed by the end of the first quarter of 1994. The remaining sensors
business is expected to be sold by the end of 1994. As of Dec. 31, 1993, the
assets and liabilities associated with this division were approximately $190
million and $85 million, respectively.
In 1991 we sold one of our French flat glass installation, fabricating and
distribution businesses, our European aviation coatings business, and our
United States printing inks business.
4. BALANCE SHEET DETAIL
<TABLE>
<S> <C> <C>
December 31
- ---------------------------------------------------------------
(Millions) 1993 1992
- ---------------------------------------------------------------
Receivables
Customers $ 935.4 $ 952.7
-------------------------------------------------------------
Other 86.9 103.7
-------------------------------------------------------------
Allowance for doubtful accounts (25.6) (33.0)
- ---------------------------------------------------------------
Total $ 996.7 $1,023.4
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Inventories (/1/)
Finished products and work in process $ 451.8 $ 495.8
-------------------------------------------------------------
Raw materials 117.5 126.1
-------------------------------------------------------------
Supplies 114.0 120.4
- ---------------------------------------------------------------
Total $ 683.3 $ 742.3
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Property (/2/)
Land and land improvements $ 275.9 $ 273.8
-------------------------------------------------------------
Buildings 1,096.1 1,142.8
-------------------------------------------------------------
Machinery and equipment 4,324.5 4,357.4
-------------------------------------------------------------
Other 236.4 235.0
-------------------------------------------------------------
Construction in progress 109.0 148.7
- ---------------------------------------------------------------
Total $6,041.9 $6,157.7
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Accounts payable and accrued liabilities
Trade creditors $ 436.0 $ 447.0
-------------------------------------------------------------
Accrued payroll 163.8 161.6
-------------------------------------------------------------
Other postretirement and pension benefits 52.9 6.3
-------------------------------------------------------------
Business realignments 62.7 38.6
-------------------------------------------------------------
Other 205.8 155.5
- ---------------------------------------------------------------
Total $ 921.2 $ 809.0
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>
(/1/)Inventories valued using the last-in, first-out (LIFO) method comprised 75%
and 73% of total gross inventory values at Dec. 31, 1993 and 1992,
respectively. If the first-in, first-out (FIFO) method of inventory
valuation had been used, inventories would have been $210.1 million and
$209.6 million higher at Dec. 31, 1993 and 1992, respectively.
(/2/)Interest capitalized in 1993, 1992 and 1991 was $6.0 million, $7.4 million
and $15.3 million, respectively.
PPG INDUSTRIES, INC. 23
<PAGE>
NOTES
5. DEBT AND BANK CREDIT AGREEMENTS
<TABLE>
<S> <C> <C>
December 31
- -----------------------------------------------------------------------------
(Millions) 1993 1992
- -----------------------------------------------------------------------------
9.3% notes, due 1999 $122.6 $122.6
- -----------------------------------------------------------------------------
9% non-callable debentures, due 2021 148.0 148.0
- -----------------------------------------------------------------------------
ESOP notes (/1/)
Weighted average 8.5% fixed rate notes 151.0 151.0
---------------------------------------------------------------------------
Variable rate notes, 2.71% at Dec. 31, 1993 123.0 123.0
- -----------------------------------------------------------------------------
Various other debt, weighted average 4.20% 57.8 58.9
- -----------------------------------------------------------------------------
Non-U.S. subsidiary borrowings
12.65% notes, maturing 1994 to 1999 92.7 106.2
---------------------------------------------------------------------------
9.03% notes, due 1993 (10.06% effective
yield to maturity) -- 58.0
---------------------------------------------------------------------------
9% borrowings, maturing 1993 -- 11.0
---------------------------------------------------------------------------
Fixed rate notes, weighted average 8.33% at Dec. 31, 1993,
maturing 1994 to 1998 19.3 26.7
---------------------------------------------------------------------------
Variable rate notes, weighted average 8.73% at Dec. 31, 1992,
maturing 1994 to 1998 -- 100.6
---------------------------------------------------------------------------
Various other debt, weighted average 8.73% at Dec. 31, 1993 56.0 59.7
- -----------------------------------------------------------------------------
Total 770.4 965.7
- -----------------------------------------------------------------------------
Less payments due within one year 26.5 95.1
- -----------------------------------------------------------------------------
Long-term debt $743.9 $870.6
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
(/1/)See Note 10 discussing ESOP borrowings. $75 million of the fixed rate notes
and $22 million of the variable rate notes mature, with bullet payments, in
1996. The remaining fixed and variable rate notes mature in 2009 and
require annual payments from 1995 to 2008.
A five-year maturity schedule is as follows (in millions):
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------
$26.5 $44.8 $140.1 $45.4 $48.0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has revolving credit agreements totaling $565 million, of which
$275 million will expire each in December 1994 and December 1997. The remaining
$15 million will expire in September 1994. Of these lines, $550 million support
our commercial paper programs in the United States, Canada and the Netherlands.
These committed credit agreements require payment of annual fees that range
from 8 to 12.5 basis points on the unused portion of the line of credit. PPG
may cancel all or part of these credit agreements at any time without penalty
or premium. At Dec. 31, 1993, we had used $12 million of these lines of credit.
Additionally, our non-U.S. operations have uncommitted lines of credit
totaling $486 million, of which $79 million was used at Dec. 31, 1993. There
are no commitment fees for these lines of credit, and they may be canceled at
any time.
In addition to our lines of credit, the Company may issue up to $200 million
aggregate principal amount of debt securities under a shelf registration
statement filed with the Securities and Exchange Commission.
PPG is in compliance with the restrictive covenants under its various credit
agreements, loan agreements and indentures.
The Dec. 31, 1993 and 1992, balances for "short-term debt and current portion
of long-term debt" include, respectively, $174 million and $141 million of
commercial paper and $151 million and $193 million of short-term notes payable
to banks.
Interest payments in 1993, 1992 and 1991 totaled $112 million, $154 million
and $163 million, respectively.
24 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
NOTES
6. SHAREHOLDERS' EQUITY
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Common Stock Treasury Stock Minimum
Additional Unearned Pension Currency
Shares Par Paid-In Retained Compensation Liability Translation
(Dollars in Millions) Issued Value Capital Earnings Shares Cost (See Note 10) Adjustment Adjustment
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JAN. 1,
1991 145,286,534 $242.1 $226.6 $3,397.7 (39,246,272) $(1,183.3) $(234.4) -- $ 97.8
- --------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 276.2 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Cash dividends
($1.72 per share) -- -- -- (182.6) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- -- (285,728) (15.2) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Issuance of
treasury stock -- -- 2.9 -- 415,119 12.5 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Repayment of loans
by ESOP -- -- -- -- -- -- 15.8 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Translation
adjustments -- -- -- -- -- -- -- -- (9.1)
- --------------------------------------------------------------------------------------------------------------------------------
Other -- -- -- 9.8 -- -- -- $(2.3) --
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31,
1991 145,286,534 242.1 229.5 3,501.1 (39,116,881) (1,186.0) (218.6) (2.3) 88.7
- --------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 319.4 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Cash dividends
($1.88 per share) -- -- -- (199.6) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- -- (455,316) (27.0) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Issuance of
treasury stock -- -- 3.3 -- 420,350 12.7 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Repayment of loans
by ESOP -- -- -- -- -- -- 16.4 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Translation
adjustments -- -- -- -- -- -- -- -- (89.7)
- --------------------------------------------------------------------------------------------------------------------------------
Other -- -- -- 10.9 -- -- -- (2.0) --
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31,
1992 145,286,534 242.1 232.8 3,631.8 (39,151,847) (1,200.3) (202.2) (4.3) (1.0)
- --------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 22.2 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Cash dividends
($2.08 per share) -- -- -- (220.8) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- (1,133,300) (81.2) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Issuance of
treasury stock -- -- 60.8 -- 1,839,461 56.8 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Repayment of loans
by ESOP -- -- -- -- -- -- 19.7 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Translation
adjustments -- -- -- -- -- -- -- -- (59.0)
- --------------------------------------------------------------------------------------------------------------------------------
Other -- -- 3.9 3.6 -- -- -- (31.8) --
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31,
1993 145,286,534 $242.1 $297.5 $3,436.8 (38,445,686) $(1,224.7) $(182.5) $(36.1) $(60.0)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A class of 10 million shares of preferred stock, without par value, is
authorized but unissued. Common stock has a par value of $1.66 2/3 per share
and 300 million shares are authorized.
PPG has a Shareholders' Rights Plan, under which each share of the Company's
outstanding common stock has an associated preferred share purchase right. The
rights are exercisable only under certain circumstances and allow holders of
such rights to purchase common stock of PPG or an acquiring company at a
discounted price, which generally would be 50% of the respective stocks'
current fair market value.
7. INCOME TAXES
As described in Note 2, the Company changed its method of accounting for
income taxes in 1993 from the deferred method to the liability method required
by SFAS No. 109. As permitted under the new standard, prior years' financial
statements were not restated.
The following is a reconciliation of the statutory U.S. corporate federal
income tax rate to the effective income tax rate.
<TABLE>
<CAPTION>
Percent of
Pretax Income
- ------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------
<S> <C> <C> <C>
U.S. federal income tax rate 35.0% 34.0% 34.0%
- ------------------------------------------------------
Changes in tax rate resulting from:
Taxes on non-U.S. earnings and
related tax credits 5.1 .8 4.0
----------------------------------------------------
State and local taxes--U.S. 4.9 4.7 3.5
----------------------------------------------------
Other (1.6) .8 --
----------------------------------------------------
Effective income tax rate 43.4% 40.3% 41.5%
- ------------------------------------------------------
- ------------------------------------------------------
</TABLE>
PPG INDUSTRIES, INC. 25
<PAGE>
NOTES
The increase in the effective tax rate in 1993 was principally the result of
increased losses incurred at European subsidiaries (primarily related to the
Biomedical Systems Division), for which we were unable to record any income tax
benefit. Partially offsetting this negative impact were the benefits from
utilization of net operating loss (NOL) carryforwards for a domestic subsidiary
as well as a change under SFAS No. 109 regarding recognition of tax benefits
related to our ESOP. Taxes on non-U.S. earnings had a reduced effect in 1992 on
our effective tax rate as a result of a greater proportion of the Company's
pretax income occurring in the U.S. The greater impact in 1991 was primarily
the result of losses incurred at several European subsidiaries for which we
were unable to record any income tax benefit. At Dec. 31, 1993, subsidiaries of
the Company had available NOL carryforwards of approximately $270 million for
income tax purposes along with approximately $3 million of tax credit
carryforwards. The NOL carryforwards generally have an indefinite expiration
and the tax credits expire by 1996.
The following table gives details of income tax expense in the statement of
income. A portion of these taxes will be payable within one year and is
therefore shown below as "Current income taxes," while the balance is shown as
"Deferred income taxes."
<TABLE>
- ----------------------------------------------
<CAPTION>
(Millions) 1993 1992 1991
- ----------------------------------------------
<S> <C> <C> <C>
Current income taxes
U.S. federal $131.0 $120.4 $ 57.8
--------------------------------------------
Non-U.S. 31.9 42.9 62.0
--------------------------------------------
State and local--U.S. 31.4 36.2 18.5
- ----------------------------------------------
Total current 194.3 199.5 138.3
- ----------------------------------------------
Deferred income taxes
U.S. federal 26.2 23.1 11.6
--------------------------------------------
Non-U.S. 11.8 (4.2) (3.2)
--------------------------------------------
State and local--U.S. 3.9 -- --
- ----------------------------------------------
Total deferred 41.9 18.9 8.4
- ----------------------------------------------
Total $236.2 $218.4 $146.7
- ----------------------------------------------
- ----------------------------------------------
</TABLE>
Net deferred income tax assets and liabilities as of Dec. 31, 1993, including
the effects of adopting SFAS No. 106, are as follows (in millions):
<TABLE>
- -----------------------------------------------------
<S> <C>
Deferred income tax assets
Employee benefits $ 284.4
---------------------------------------------------
Environmental 27.0
---------------------------------------------------
Business realignments 41.8
---------------------------------------------------
NOL and tax credit carryforwards 109.9
---------------------------------------------------
Inventories 29.7
---------------------------------------------------
Other 58.7
---------------------------------------------------
Valuation allowance (83.3)
- -----------------------------------------------------
Total 468.2
- -----------------------------------------------------
Deferred income tax liabilities
Property 457.2
---------------------------------------------------
Employee benefits 33.5
---------------------------------------------------
Other 85.9
- -----------------------------------------------------
Total 576.6
- -----------------------------------------------------
Deferred income tax liabilities--net $(108.4)
- -----------------------------------------------------
Classification in the balance sheet
Current deferred income tax assets $ 147.4
---------------------------------------------------
Other assets 23.5
---------------------------------------------------
Accounts payable and accrued liabilities (10.7)
---------------------------------------------------
Noncurrent deferred income tax liabilities (268.6)
- -----------------------------------------------------
Deferred income tax liabilities--net $(108.4)
- -----------------------------------------------------
- -----------------------------------------------------
</TABLE>
The NOL carryforwards relate primarily to operations of subsidiaries in
countries permitting indefinite carryforward of losses. Generally, the
valuation allowance has been established for these carryforwards because the
ability to utilize them is uncertain. During 1993, the valuation allowance
increased by $36 million, primarily due to losses from operations of certain
non-U.S. subsidiaries, net of the utilization of NOL carryforwards of a
domestic subsidiary.
Under the previous income tax accounting rules, deferred income taxes were
provided for significant timing differences in the recognition of revenue and
expense for income tax and financial statement purposes. The source of these
timing differences and the tax effect of each were:
<TABLE>
- ------------------------------------------------
<CAPTION>
(Millions) 1992 1991
- ------------------------------------------------
<S> <C> <C>
U.S.--net effect of timing
differences
Depreciation $ (17.0) $ (2.5)
----------------------------------------------
Business realignments 5.6 (16.6)
----------------------------------------------
Employee benefits 5.9 6.1
----------------------------------------------
Environmental 9.3 4.4
----------------------------------------------
Other 19.3 20.2
----------------------------------------------
Non-U.S.--net effect of timing
differences
Depreciation 2.0 2.1
----------------------------------------------
Other (6.2) (5.3)
- ------------------------------------------------
Total $ 18.9 $ 8.4
- ------------------------------------------------
- ------------------------------------------------
</TABLE>
Income (loss) before income taxes resulting from non-U.S. operations for 1993,
1992 and 1991 were $(.8) million, $77.2 million and $132.5 million,
respectively.
No deferred U.S. income taxes have been provided on certain undistributed
earnings of consolidated non-U.S. subsidiaries that have
26 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
NOTES
been reinvested indefinitely and amounted to $304 million at Dec. 31, 1993. It
is not practicable to determine the deferred tax liability on these earnings.
The Internal Revenue Service has examined our U.S. federal income tax returns
through 1985, and we have paid all tax claims.
Income tax payments in 1993, 1992 and 1991 totaled $210 million, $142 million
and $231 million, respectively.
8. LEASE ARRANGEMENTS AND RENT EXPENSE
We use assets leased under arrangements that qualify as capital leases. The
amortization of the cost of these leased assets is included in depreciation
expense in the statement of income. Leases that do not qualify as capital
leases are classified as operating leases. Rental expense for operating leases
was $60.3 million in 1993, $59.4 million in 1992 and $58.5 million in 1991.
The following table sets forth minimum lease commitments at Dec. 31, 1993, for
capital and operating leases that have initial or remaining lease terms in
excess of one year.
<TABLE>
<CAPTION>
Capital Operating
(Millions) Leases Leases
- ---------------------------------------------------------------
<S> <C> <C>
Year ending December 31
1994 $ 6.7 $30.2
-------------------------------------------------------------
1995 3.4 23.7
-------------------------------------------------------------
1996 2.6 13.9
-------------------------------------------------------------
1997 2.5 9.2
-------------------------------------------------------------
1998 5.0 3.3
-------------------------------------------------------------
After 1998 30.6 15.3
- ---------------------------------------------------------------
Total minimum lease payments 50.8 $95.6
- ---------------------------------------------------------------
-------
Less estimated executory costs (.3)
- ----------------------------------------------------
Net minimum lease payments 50.5
- ----------------------------------------------------
Less amount representing interest (16.7)
- ----------------------------------------------------
Present value of net minimum lease payments $33.8
- ----------------------------------------------------
- ----------------------------------------------------
</TABLE>
9. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Pension Benefits
We have noncontributory defined benefit pension plans that cover certain
employees worldwide. Benefits under these plans are based on years of service
and salaries or on stated amounts for each year of service. Our funding policy
for all plans is consistent with applicable governmental requirements. We
provide for obligations for all plans by depositing funds with trustees, by
purchasing insurance policies or by recording financial statement accruals.
Pension plan assets held in trust consist of fixed income investments and
equity securities.
Net periodic pension cost (credit) includes the following components:
<TABLE>
- ------------------------------------------------------------------------
<CAPTION>
(Millions) 1993 1992 1991
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned during the year $ 24.4 $ 23.7 $ 21.5
- ------------------------------------------------------------------------
Interest cost on projected benefit obligation 115.0 112.0 107.8
- ------------------------------------------------------------------------
Return on assets
Actual (154.6) (69.5) (223.0)
----------------------------------------------------------------------
Deferred gain (loss) 19.4 (68.0) 98.6
- ------------------------------------------------------------------------
Net amortization 4.0 .6 (1.3)
- ------------------------------------------------------------------------
Net periodic pension cost (credit) $ 8.2 $ (1.2) $ 3.6
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
In the determination of net periodic pension cost (credit), the assumed
weighted-average long-term rate of return on plan assets was 12% for 1993, 1992
and 1991.
The following table sets forth the combined funded status and amounts
recognized in our balance sheet.
<TABLE>
<CAPTION>
December 31
- ------------------------------------------------------------------------------
(Millions) 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Plan ABO Plan ABO
Assets Exceeds Assets Exceeds
Exceed Plan Exceed Plan
ABO Assets ABO Assets
- ------------------------------------------------------------------------------
Present value of the estimated
pension benefits to be
paid in the future
Vested benefit obligation $(1,064.8) $(300.4) $(116.6) $(1,088.4)
- ------------------------------------------------------------------------------
Nonvested benefit obligation (36.4) (42.9) (11.0) (55.4)
- ------------------------------------------------------------------------------
Accumulated benefit obligation (ABO) (1,101.2) (343.3) (127.6) (1,143.8)
- ------------------------------------------------------------------------------
Effect of projected future salary
increases (129.8) (27.4) (26.2) (103.7)
- ------------------------------------------------------------------------------
Projected benefit obligation (PBO) (1,231.0) (370.7) (153.8) (1,247.5)
- ------------------------------------------------------------------------------
Amount of assets available for
benefits
Plan assets at fair value 1,159.0 204.7 170.0 1,014.9
- ------------------------------------------------------------------------------
(Prepaid) accrued pensions--net (138.8) 130.0 (39.8) 107.6
- ------------------------------------------------------------------------------
Total assets 1,020.2 334.7 130.2 1,122.5
- ------------------------------------------------------------------------------
Assets less than PBO* $ (210.8) $ (36.0) $ (23.6) $ (125.0)
- ------------------------------------------------------------------------------
*Comprised of
Unamortized net asset (liability) at
date of adoption $ 52.3 $ (5.1) $ 13.6 $ 41.4
- ------------------------------------------------------------------------------
Unrecognized net loss (271.2) (76.7) (31.7) (174.7)
- ------------------------------------------------------------------------------
Unrecognized prior service cost (10.8) (13.8) (5.7) (19.2)
- ------------------------------------------------------------------------------
Minimum liability 18.9 59.6 .2 27.5
- ------------------------------------------------------------------------------
Assets less than PBO $ (210.8) $ (36.0) $ (23.6) $ (125.0)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
We determined the projected benefit obligation using weighted-average discount
rates of 7.5% at Dec. 31, 1993, and 8.6% at Dec. 31, 1992. For those plans that
provide benefits based on salaries in the final years of employment, the
assumed long-term rate of increase in salaries was 5.3% at Dec. 31, 1993, and
5.6% at Dec. 31, 1992. The accrued pension liability, reflected in the balance
sheet, included $4.0 million and $4.4 million at Dec. 31, 1993 and 1992,
respectively, for defined contribution plans.
Pension cost, which includes costs for defined contribution plans and multi-
employer defined benefit pension plans in addition to the net periodic pension
cost shown above, was $14.4 million, $2.7 million and $8.8 million in 1993,
1992 and 1991, respectively.
PPG INDUSTRIES, INC. 27
<PAGE>
NOTES
In November 1993, the Company contributed 1,450,021 shares of PPG stock to
certain qualified U.S. pension plan trusts. The shares had a fair market value
on the date of transfer of approximately $101.9 million ($70.25 per share). As
of Dec. 31, 1993, the U.S. defined benefit pension plans held 1,456,221 shares
of PPG stock, with a cost of $102.2 million and a market value of $110.5
million.
Other Postretirement Benefits
PPG sponsors defined benefit plans that provide medical and life insurance
benefits to nearly all of its retired employees in the U.S. and certain retired
employees in Canada. These plans also cover the employees' spouse and
dependents. The U.S. plans cap the cost of postretirement medical benefits at
1996 levels for most current retirees and certain future retirees covered by
bargaining plans, as well as current and future retirees covered by
nonbargaining plans. Salaried and certain wage employees hired after Jan. 31,
1993, will not be entitled to such postretirement medical benefits. Many of our
plans include cost sharing provisions, such as co-insurance and deductibles,
and require participant contributions based upon elected coverage. The plans
also coordinate benefits with Medicare for those employees who are age 65 and
older. Life insurance benefits for retirees covered by nonbargaining plans are
calculated at approximately 50% of the retirees' final base pay. For most
bargaining units the benefits are based upon negotiated flat dollar amounts.
Our Canadian plans provide postretirement medical and life insurance benefits
that supplement benefits provided and paid for under the Canadian health care
system. The Company's postretirement medical and life insurance plans are
unfunded.
The net periodic postretirement benefit cost for the year ended Dec. 31, 1993,
includes the following components (in millions):
<TABLE>
- ----------------------------------------------------------------------
<S> <C>
Service cost--benefits earned during the year $ 6.5
- ----------------------------------------------------------------------
Interest cost on accumulated postretirement benefit obligation 44.4
- ----------------------------------------------------------------------
Other (3.1)
- ----------------------------------------------------------------------
Net periodic postretirement benefit cost $47.8
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
</TABLE>
The accumulated postretirement benefit obligation of our plans and the
liability recognized in the balance sheet as of Dec. 31, 1993, were as follows
(in millions):
<TABLE>
- -------------------------------------------------------------
<S> <C>
Accumulated postretirement benefit obligation (APBO)
Retirees $120.2
----------------------------------------------------------
Fully eligible active plan participants 76.2
----------------------------------------------------------
Other active plan participants 401.9
----------------------------------------------------------
APBO 598.3
----------------------------------------------------------
Unrecognized prior service cost 20.5
----------------------------------------------------------
Unrecognized net loss (51.8)
----------------------------------------------------------
Other postretirement benefit liability $567.0
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5%. The assumed health care cost trend
rate for 1994 is 11.5% and declines ratably over 14 years to 5% thereafter. If
these trend rates were increased by one percentage point per year, the
accumulated postretirement benefit obligation and the aggregate of the service
and interest cost components of the net periodic postretirement benefit cost
would increase by approximately 1% and 4%, respectively.
The cash basis expense recognized for these benefits in 1992 and 1991 was $44
million and $39 million, respectively.
10. EMPLOYEE STOCK OWNERSHIP PLAN
Our employee stock ownership plan (ESOP) covers substantially all U.S.
employees. Company matching contributions to the ESOP are based on a
participant's savings, subject to certain limitations, and a matching
percentage based upon our return on average equity for the previous year.
In January 1989, we sold six million shares of treasury stock to the ESOP at
$42 per share. The financing of this transaction along with additional loans to
the ESOP totaling $30 million was either guaranteed by or borrowed directly
from PPG. ESOP borrowings are reflected as debt on our balance sheet.
The ESOP has repaid $100 million of the loans to PPG, resulting in loans
payable by the ESOP totaling $182 million at Dec. 31, 1993. A corresponding
amount representing unearned compensation is reflected as a reduction of
shareholders' equity. Future Company contributions and dividends on PPG shares
held by the ESOP will be used to service the debt of the ESOP.
Contributions committed to be paid to the ESOP are reported as compensation or
interest expense. Compensation (credit) expense related to the ESOP for 1993,
1992 and 1991 totaled $(.1) million, $.1 million and $19.4 million,
respectively. Interest expense totaled $11 million, $13 million and $16 million
for 1993, 1992 and 1991, respectively. Dividends on Company shares held by the
ESOP, used for ESOP debt service, totaled $25 million, $27 million and $25
million for 1993, 1992 and 1991, respectively.
11. STOCK OPTION PLAN
Under PPG's stock option plan, certain employees of the Company have been
granted stock options. The price at which shares of common stock may be
purchased upon the exercise of an option may not be less than the fair market
value of the shares on the date the option was granted. Options are exercisable
beginning from six to 12 months after issuance.
28 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
NOTES
The following table summarizes stock option activity for the years ended Dec.
31, 1991, 1992 and 1993.
<TABLE>
<CAPTION>
Per share
Number of option
options price
- ---------------------------------------------------
<S> <C> <C>
Outstanding, Jan. 1, 1991 1,205,189 $18.38-48.25
- ---------------------------------------------------
Granted 447,800 54.50
-------------------------------------------------
Exercised (308,154) 18.38-43.63
-------------------------------------------------
Terminated (20,500) 18.38-54.50
- ---------------------------------------------------
Outstanding, Dec. 31, 1991 1,324,335 18.38-54.50
- ---------------------------------------------------
Granted 1,255,420 58.75-67.63
-------------------------------------------------
Exercised (450,028) 18.38-54.50
-------------------------------------------------
Terminated (5,100) 39.50-58.75
- ---------------------------------------------------
Outstanding, Dec. 31, 1992 2,124,627 18.38-67.63
- ---------------------------------------------------
Granted 909,462 63.25-75.50
-------------------------------------------------
Exercised (503,743) 18.38-67.63
-------------------------------------------------
Terminated (8,000) 58.75-66.00
- ---------------------------------------------------
Outstanding, Dec. 31, 1993 2,522,346 $18.38-75.50
- ---------------------------------------------------
- ---------------------------------------------------
Exercisable, Dec. 31, 1993 1,648,978 $18.38-74.63
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
Shares available for future grants were 1,063,462 and 903,577 at Dec. 31, 1993
and 1992, respectively.
12. COMMITMENTS AND CONTINGENT LIABILITIES
PPG is involved in a number of lawsuits and claims, both actual and potential,
including some which it has asserted against others, in which substantial money
damages are sought. Management believes that the outcome of such lawsuits and
claims, in the aggregate, will not have a material effect on PPG's consolidated
financial position, results of operations or liquidity.
Like other companies, PPG is subject to the existing and evolving standards
relating to the protection of the environment. PPG is negotiating with various
government agencies and other parties concerning various waste sites.
Additionally, remediation projects have been or may be undertaken at certain of
the Company's current and former plant sites. There is a wide range of cost
estimates for cleanup of these sites, due largely to uncertainties as to the
nature and extent of their condition, the determination of the Company's
liability, if any, in proportion to that of other parties, the extent to which
such costs are recoverable from insurance, and the methods that may have to be
employed for their remediation. We established reserves, totaling approximately
$90 million at Dec. 31, 1993, and $107 million at Dec. 31, 1992, for those
sites where it was probable a liability existed and the amount could be
reasonably estimated. Charges against income for environmental remediation
projects totaled approximately $23 million in 1993, $16 million in 1992 and $23
million in 1991. In management's opinion, the Company operates in an
environmentally sound manner and the outcome of these environmental matters
will not have a material effect on PPG's consolidated financial position,
results of operations or liquidity.
13. OTHER EARNINGS
<TABLE>
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
(Millions) 1993 1992 1991
- ---------------------------------------------------------------------------
Interest income $ 15.2 $ 16.9 $ 22.8
- ---------------------------------------------------------------------------
Royalty income 25.3 26.9 29.8
- ---------------------------------------------------------------------------
Share of net earnings in equity affiliates 17.3 19.0 9.8
- ---------------------------------------------------------------------------
Gain from sale of an interest in an insurance company 27.8 -- --
- ---------------------------------------------------------------------------
Other 51.4 57.6 53.5
- ---------------------------------------------------------------------------
Total $137.0 $120.4 $115.9
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
Undistributed earnings of equity affiliates were $78.7 million and $67.8
million at Dec. 31, 1993 and 1992, respectively. Dividends received from equity
affiliates were $9.7 million, $7.8 million and $9.5 million in 1993, 1992 and
1991, respectively.
14. RESEARCH AND DEVELOPMENT
<TABLE>
- -----------------------------------------------------
<S> <C> <C> <C>
(Millions) 1993 1992 1991
- -----------------------------------------------------
Research and development--total $217.6 $221.4 $240.3
- -----------------------------------------------------
Less depreciation 16.4 18.4 19.9
- -----------------------------------------------------
Research and development--net $201.2 $203.0 $220.4
- -----------------------------------------------------
- -----------------------------------------------------
</TABLE>
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
- --------------------------------------------------------------------------------------
<CAPTION>
Income Before
Cumulative Effect of
Accounting Changes Net (Loss)
Net Gross -------------------- (Loss) Earnings
<S> <C> <C> <C> <C> <C> <C>
Sales Profit Amount Income Per
(Millions) (Millions) (Millions) Per Share (Millions) Share
- --------------------------------------------------------------------------------------
1993 quarter ended
March 31 (/1/) $1,446.7 $ 532.7 $110.1 $1.04 $(162.7) $(1.53)
- --------------------------------------------------------------------------------------
June 30 1,523.6 557.8 106.2 1.00 106.2 1.00
- --------------------------------------------------------------------------------------
September 30 (/2/) 1,405.4 520.5 24.8 .23 24.8 .23
- --------------------------------------------------------------------------------------
December 31 (/3/) 1,378.2 509.6 53.9 .51 53.9 .51
- --------------------------------------------------------------------------------------
Total $5,753.9 $2,120.6 $295.0 $2.78 $ 22.2 $ .21
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
1992 quarter ended
March 31 $1,446.7 $ 535.4 $ 78.8 $ .74 $ 78.8 $ .74
- --------------------------------------------------------------------------------------
June 30 1,513.1 571.7 106.7 1.01 106.7 1.01
- --------------------------------------------------------------------------------------
September 30 1,440.8 518.9 66.0 .62 66.0 .62
- --------------------------------------------------------------------------------------
December 31 1,413.3 493.1 67.9 .64 67.9 .64
- --------------------------------------------------------------------------------------
Total $5,813.9 $2,119.1 $319.4 $3.01 $ 319.4 $ 3.01
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
(/1/)See Note 2, Changes in Methods of Accounting, for information regarding the
effect of accounting changes as of Jan. 1, 1993, including the adoption of
SFAS No. 112 in the fourth quarter.
(/2/)Third quarter earnings were reduced by a pretax charge for business
divestitures and realignments of $87.0 million, or $0.49 per share.
(/3/)Fourth quarter earnings were reduced by a pretax charge for business
divestitures and realignments of $38.0 million, or $0.42 per share.
Excluding the effects of this charge, we decreased our estimate of the
annual effective tax rate by two percentage points which increased fourth
quarter earnings per share by 11 cents.
PPG INDUSTRIES, INC. 29
<PAGE>
NOTES
16. FINANCIAL INSTRUMENTS
Included in PPG's financial instrument portfolio are cash and marketable
securities, Company-owned life insurance, deferred compensation liabilities and
short- and long-term debt instruments. The most significant instrument, long-
term debt, had carrying and fair values totaling $770 million and $850 million,
respectively, at Dec. 31, 1993. The corresponding amounts at Dec. 31, 1992,
were $966 million and $1.0 billion, respectively. The carrying values of the
other instruments approximated their fair values.
The fair values of the instruments were based upon quoted market prices of the
same or similar instruments or on the rates available to the Company for
instruments of the same remaining maturities.
17. BUSINESS SEGMENT INFORMATION
Refer to pages 20 and 21 for information on our business segments for 1993,
1992 and 1991.
OFFICER CHANGES
In September 1993, Jerry E. Dempsey succeeded Vincent A. Sarni, who retired,
as chairman of the board and chief executive officer. Mr. Dempsey had been
senior vice president and a member of the board of WMX Technologies, Inc., and
chairman of Chemical Waste Management, Inc., a publicly traded company in
which WMX Technologies is a majority shareholder. Before joining WMX
Technologies in 1984, he had been president and chief operating officer of
Borg-Warner Corp., a firm he served for 28 years.
During the year, as well, Roderick I. A. Watters, who had been vice president,
marketing, automotive products, Coatings & Resins Group, became vice president,
automotive products, Europe, for the group.
In January 1994, Charles E. Bunch was elected vice president, architectural
finishes, Coatings & Resins Group. Mr. Bunch continues as general manager of
that function.
Also in January 1994, William H. Hernandez was elected vice president and
controller; David R. Wallis, vice president, corporate development, and Richard
Zahren, vice president, purchasing and distribution. Mr. Hernandez had been
controller and Messrs. Wallis and Zahren had been directors of their functions.
30 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
CORPORATE DIRECTORY
DIRECTORS
JERRY E. DEMPSEY
Chairman of the Board and Chief Executive Officer, PPG Industries, Inc.
*+LUCIE J. FJELDSTAD President, Fjeldstad International
*+STANLEY C. GAULT
Chairman of the Board and Chief Executive Officer, The Goodyear Tire & Rubber
Company
*++ALLEN J. KROWE
Vice Chairman and Chief Financial Officer, Texaco Inc.
+++STEVEN C. MASON
Chairman and Chief Executive Officer, The Mead Corporation
+++HAROLD A. MCINNES
Retired Chairman of the Board and Chief Executive Officer, AMP Incorporated
*++ROBERT MEHRABIAN
President, Carnegie Mellon University
VINCENT A. SARNI
Retired Chairman of the Board and Chief Executive Officer, PPG Industries,
Inc.
*+DAVID G. VICE
Retired Vice Chairman, Products and Technology, Northern Telecom Limited
+++DAVID R. WHITWAM
Chairman and Chief Executive Officer, Whirlpool Corporation
*Audit Committee
+Officers-Directors Compensation Committee
++Nominating Committee
MANAGEMENT COMMITTEE
JERRY E. DEMPSEY
Chairman of the Board and Chief Executive Officer
ROBERT D. DUNCAN
Group Vice President, Glass
PETER R. HEINZE
Group Vice President, Chemicals
JOHN J. HORGAN
Vice President, Fiber Glass Products
RAYMOND W. LEBOEUF
Vice President, Finance
RICHARD M. ROMPALA
Group Vice President, Coatings & Resins
GUY A. ZOGHBY
Vice President and General Counsel
COATINGS & RESINS GROUP
CHARLES E. BUNCH
Vice President, Architectural Finishes
THOMAS A. CRAIG
Vice President, Automotive Refinish
NEIL H. FRICK
Vice President, Research and Development
ERNEST A. HAHN
Vice President, Industrial Coatings
KEN KURAHASHI
Vice President, Coatings & Resins, PPG Industries Asia/Pacific, Ltd.;
President, PPG Japan
E. KEARS POLLOCK
Vice President, Automotive Products
AREND W. D. VOS
Vice President, Coatings & Resins, Europe
RODERICK I. A. WATTERS
Vice President, Automotive Products, Europe
CORPORATE FUNCTIONS
L. BLAINE BOSWELL
President, PPG Europe
PARITOSH M. CHAKRABARTI
Vice President, Science and Technology
JAMES W. CRAIG
President, PPG Canada Inc.
RUSSELL L. CRANE
Vice President, Human Resources
WILLIAM H. HERNANDEZ
Vice President and Controller
H. KENNEDY LINGE
Treasurer
JOHN MAAGHUL
President, PPG Industries Asia/Pacific Ltd.; Vice President, Glass, Asia/Pacific
EDWARD J. MAZESKI, JR.
Vice President and Secretary
DAVID W. SMITH
Vice President, Information Technology
DAVID R. WALLIS
Vice President, Corporate Development
RICHARD ZAHREN
Vice President, Purchasing and Distribution
GLASS GROUP
FRANK A. ARCHINACO
Vice President, Automotive and Aircraft Products
JOSEPH CAFARO
Vice President, Flat Glass Products
STANLEY C. DEGREVE
Vice President, Operations, Fiber Glass Products
GARY W. WEBER
Vice President, Technology
CHEMICALS GROUP
DONALD W. BOGUS
Vice President, Specialty Chemicals
RAE R. BURTON
Vice President, Chlor-Alkali and Derivatives
JOHN M. WILKINS
Vice President, Asia/Pacific
PPG INDUSTRIES, INC. 31
<PAGE>
ELEVEN-YEAR DIGEST
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF INCOME
Net sales 5,754 5,814 5,673 6,021 5,734 5,617 5,183 4,687 4,346 4,242 3,682
- ------------------------------------------------------------------------------------------------------------
Gross profit (%) 36.9 36.4 35.2 37.8 37.1 39.2 37.8 37.2 35.9 34.1 32.8
- ------------------------------------------------------------------------------------------------------------
Income before income
taxes 531 538 348 767 749 779 637 553 537 527 376
- ------------------------------------------------------------------------------------------------------------
Income taxes 236 218 147 292 284 311 260 236 234 224 143
- ------------------------------------------------------------------------------------------------------------
Income before accounting
changes 295 319 201 475 465 468 377 316 303 303 233
- ------------------------------------------------------------------------------------------------------------
Cumulative effect of
accounting changes
(/1/) (273) -- 75 -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Net income 22 319 276 475 465 468 377 316 303 303 233
- ------------------------------------------------------------------------------------------------------------
Average equity (/2/) 2,530/2,749 2,701 2,577 2,407 2,220 2,121 2,089 1,838 1,913 1,931 1,777
- ------------------------------------------------------------------------------------------------------------
Return on average equity
(%) (/2/) .9/10.7 11.8 10.7 19.7 21.0 22.1 18.1 17.2 15.8 15.7 13.1
- ------------------------------------------------------------------------------------------------------------
Earnings per share
before accounting
changes 2.78 3.01 1.90 4.43 4.18 4.26 3.19 2.66 2.27 2.16 1.67
- ------------------------------------------------------------------------------------------------------------
Cumulative effect of
accounting changes on
earnings per share (2.57) -- 0.70 -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Earnings per share .21 3.01 2.60 4.43 4.18 4.26 3.19 2.66 2.27 2.16 1.67
- ------------------------------------------------------------------------------------------------------------
Average number of shares 106.3 106.1 106.2 107.2 111.3 109.8 118.2 118.9 133.4 139.9 139.4
- ------------------------------------------------------------------------------------------------------------
Dividends 221 200 183 176 165 141 132 112 110 98 86
- ------------------------------------------------------------------------------------------------------------
Per share 2.08 1.88 1.72 1.64 1.48 1.28 1.11 .94 .82 .70 .62
- ------------------------------------------------------------------------------------------------------------
BALANCE SHEET
Current assets 2,026 1,951 2,173 2,217 2,056 1,899 1,844 1,616 1,370 1,332 1,225
- ------------------------------------------------------------------------------------------------------------
Current liabilities 1,281 1,253 1,341 1,471 1,338 1,264 1,295 976 824 773 738
- ------------------------------------------------------------------------------------------------------------
Working capital 745 698 833 746 718 635 549 640 546 559 487
- ------------------------------------------------------------------------------------------------------------
Property (net) 2,787 2,972 3,183 3,255 3,007 2,758 2,685 2,661 2,479 2,257 2,200
- ------------------------------------------------------------------------------------------------------------
Total assets 5,652 5,662 6,056 6,108 5,645 5,154 5,008 4,641 4,084 3,797 3,615
- ------------------------------------------------------------------------------------------------------------
Long-term debt and lease
obligations 774 905 1,190 1,210 1,198 892 917 1,018 1,000 496 568
- ------------------------------------------------------------------------------------------------------------
Shareholders' equity 2,473 2,699 2,655 2,547 2,282 2,243 2,044 1,978 1,705 2,015 1,846
- ------------------------------------------------------------------------------------------------------------
Per share 23.15 25.43 25.00 24.01 20.98 20.47 18.43 16.56 14.39 14.41 13.21
- ------------------------------------------------------------------------------------------------------------
OTHER DATA
Capital spending 293 283 335 567 671 410 479 497 452 315 450
- ------------------------------------------------------------------------------------------------------------
Depreciation expense 331 352 351 324 292 274 266 242 214 206 185
- ------------------------------------------------------------------------------------------------------------
Quoted market price
High 76 1/4 68 3/8 59 3/8 55 1/4 46 46 7/8 53 1/2 38 3/4 25 5/8 19 18 5/8
----------------------------------------------------------------------------------------------------------
Low 59 3/8 50 41 1/2 34 1/2 37 31 1/4 27 1/2 22 1/2 16 3/8 12 3/8 12 1/2
----------------------------------------------------------------------------------------------------------
Year-end 75 7/8 65 7/8 50 1/2 47 39 3/4 40 3/8 33 1/8 36 3/8 25 1/2 16 3/8 17 3/8
----------------------------------------------------------------------------------------------------------
Price/earnings ratio
(/3/)
High 27 23 31 12 11 11 17 15 11 9 11
----------------------------------------------------------------------------------------------------------
Low 21 17 22 8 9 7 9 8 7 6 8
----------------------------------------------------------------------------------------------------------
Average number of
employees 31,400 32,300 33,700 35,100 35,500 36,300 36,800 36,500 37,500 37,700 37,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
All amounts are in millions of dollars except per share data and number of
employees.
All data was adjusted to reflect the two-for-one stock splits payable on March
12, 1987, and on Sept. 12, 1983.
(/1/)The 1993 changes in methods of accounting relate to the adoption of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions"; SFAS No. 109, "Accounting for Income Taxes," and SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." The 1991 change in
the method of accounting relates to the cost of rebuilding glass and fiber
glass melting facilities. The effect of all the changes on net income in
the years of change, exclusive of the cumulative effect to Jan. 1 of the
year of change, and the pro forma effect on individual prior years' net
income, was not material.
(/2/)Average equity and return on average equity for 1993 were calculated and
presented inclusive and exclusive of the cumulative effect of the
accounting changes.
(/3/)The 1993 and 1991 price/earnings ratios were calculated and presented
exclusive of the cumulative effect of the accounting changes.
32 PPG INDUSTRIES, INC.
<PAGE>
1993 ANNUAL REPORT
PPG SHAREHOLDER INFORMATION
WORLD HEADQUARTERS
One PPG Place
Pittsburgh, PA 15272, U.S.A.
Phone (412) 434-3131
ANNUAL MEETING
Thursday, April 21, 1994, 2:00 p.m.
Westin William Penn Hotel
William Penn Place
Pittsburgh, PA 15230
TRANSFER AGENT & REGISTRAR
Chemical Bank
Securityholder Relations
Box 24935
Church Street Station
New York, NY 10249
PPG-dedicated phone 1-800-648-8160
Shareholders with specific questions regarding dividend checks, transfer or
replacement of stock certificates or dividend tax information should contact
Chemical Bank--the dividend paying agent, dividend reinvestment agent, transfer
agent and registrar for PPG at the above address. Or, shareholders may contact
PPG Shareholder Relations, 40N, PPG Industries, One PPG Place, Pittsburgh, PA
15272; phone (412) 434-3312.
PUBLICATIONS AVAILABLE TO SHAREHOLDERS
Copies of the following publications will be furnished without charge upon
written request to Corporate Communications, 7W, PPG Industries, One PPG Place,
Pittsburgh, PA 15272.
FORM 10-K--the Company's Annual Report filed with the Securities and Exchange
Commission.
QUARTERLY REPORT--a review of PPG's quarterly financial performance, mailed to
shareholders in February, May, August and November.
BLUEPRINT FOR THE FUTURE--a booklet summarizing PPG's mission, values, strategy
and goals.
PPG WORLDWIDE CODE OF ETHICS--an employee guide to corporate conduct policies,
including those concerning personal conduct, relationships with customers,
suppliers and competitors, protection of corporate assets, responsibilities to
the public, and PPG as a global organization.
PPG'S ENVIRONMENT, HEALTH AND SAFETY POLICY--a brochure describing the
Company's commitment, worldwide, to manufacturing, selling and distributing
products in a manner that is safe and healthful for its employees, neighbors
and customers, and that protects the environment.
PPG'S ENVIRONMENT, HEALTH AND SAFETY ANNUAL REPORT--a report of progress during
the year with respect to the Company's environment, health and safety
commitment.
PPG'S RESPONSIBLE CARE COMMITMENT--a brochure outlining the Company's voluntary
activities under the Responsible Care initiative of the Chemical Manufacturers
Association for safe and ethical management of chemicals.
DIVIDEND INFORMATION
PPG has paid uninterrupted dividends since 1899. The latest quarterly dividend
of 54 cents per share, voted by the board of directors on Jan. 20, 1994,
results in an annual dividend rate of $2.16 per share.
STOCK EXCHANGE LISTINGS
PPG common stock is traded on the New York, Pacific, Philadelphia and Tokyo
stock exchanges (symbol: PPG).
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
PPG's Dividend Reinvestment and Stock Purchase Plan is offered as a service and
convenience to shareholders. The Plan provides for the automatic reinvestment
of dividends in shares of PPG stock. Share- holders also may purchase addi-
tional stock through cash contributions to the Plan.
A prospectus fully describing the Plan and authorization forms for
participation are available from the Company at the address shown under
"Investor Relations."
INVESTOR RELATIONS
General information about PPG common stock, debt and the Dividend Reinvestment
and Stock Purchase Plan may be obtained from Douglas B. Atkinson, Director of
Investor Relations. Phone (412) 434-2120, or write Director, Investor
Relations, 40N, PPG Industries, One PPG Place, Pittsburgh, PA 15272.
QUARTERLY STOCK MARKET PRICE
<TABLE>
<CAPTION>
1993 1992
- --------------------------------------------------------
Quarter
Ended High Low Close High Low Close
- --------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31 $69 7/8 $59 3/8 $67 7/8 $61 7/8 $50 $59 3/4
- --------------------------------------------------------
June 30 75 3/4 65 1/2 65 1/2 68 1/4 55 65 1/2
- --------------------------------------------------------
Sept. 30 71 3/4 64 1/2 65 1/4 68 3/8 58 1/4 58 5/8
- --------------------------------------------------------
Dec. 31 76 1/4 64 3/4 75 7/8 66 3/8 53 1/2 65 7/8
- --------------------------------------------------------
</TABLE>
The number of holders of record of PPG common stock as ofJan. 31, 1994, was
33,909, as shown on the records of the Company's transfer agent.
DIVIDENDS
<TABLE>
<CAPTION>
1993 1992
- --------------------------------------------
Month of Amount Per Amount Per
Payment (Millions) Share (Millions) Share
- --------------------------------------------
<S> <C> <C> <C> <C>
March $ 53.0 $ .50 $ 48.9 $ .46
- --------------------------------------------
June 53.2 .50 48.8 .46
- --------------------------------------------
September 57.3 .54 48.8 .46
- --------------------------------------------
December 57.3 .54 53.1 .50
- --------------------------------------------
Total $220.8 $2.08 $199.6 $1.88
- --------------------------------------------
- --------------------------------------------
</TABLE>
PPG INDUSTRIES, INC. 33
<PAGE>
Exhibit 21
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
SUBSIDIARIES OF THE REGISTRANT
The Registrant is PPG Industries, Inc. There are no subsidiaries for which
separate financial statements are filed or included in group financial
statements filed for unconsolidated subsidiaries. Significant subsidiaries
included in the 1993 consolidated financial statements of the Company are:
<TABLE>
<CAPTION>
Percentage of
Voting Power
<S> <C>
Domestic:
Eighty-Three/One Hundred, Inc. - Delaware.............. 100.00%
Market View, Inc. - Delaware........................... 100.00
PPG Architectural Finishes, Inc. - Delaware............ 100.00
PPG Industries International, Inc. - Delaware.......... 100.00
PPG Industries Securities, Inc......................... 100.00
Transitions Optical, Inc. - Delaware................... 51.00
Canadian:
PPG Canada Inc......................................... 100.00
European:
Ampaspace S.r.l. - Italy............................... 80.00
Hellige Gesellschaft m.b.H. - Austria.................. 100.00
PPG Hellige GmbH - Germany............................. 100.00
PPG Hellige S.A. - France.............................. 100.00
PPG Hellige S.p.A. - Italy............................. 100.00
PPG Iberica, S.A. - Spain.............................. 60.00
PPG Industries (Deutschland) GmbH - Germany............ 100.00
PPG Industries Fiber Glass B.V. - The Netherlands...... 100.00
PPG Industries France - France......................... 98.00
PPG Industries Glass S.A. - France..................... 100.00
PPG Industries Italia S.r.l. - Italy................... 100.00
PPG Industries (U.K.) Limited - England................ 100.00
PPG Ouvrie, SA - France................................ 100.00
VB Glas GmbH - Germany................................. 100.00
Subsidiaries in other areas:
PPG - Feng Tai, Limited - Hong Kong.................... 55.00
PPG Industries Asia/Pacific Ltd. - Japan............... 100.00
PPG Industries de Mexico, S.A. de C.V. - Mexico........ 100.00
PPG Industries Export Sales Corporation - U.S. Virgin
Islands.............................................. 100.00
PPG Industries Taiwan Ltd. - Taiwan.................... 55.00
Taiwan Chlorine Industries Ltd. - Taiwan............... 60.00
</TABLE>
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to Registration Statement No. 2-62328 on Form S-3, in Registration Statement No.
33-04983 on Form S-3, in Registration Statement No. 33-23350 on Form S-8, in
Registration Statement No. 33-50294 on Form S-8, and in Registration Statement
No. 33-50400 on Form S-8 of our reports dated January 20, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of PPG Industries,
Inc. for the year ended December 31, 1993.
DELOITTE & TOUCHE
February 17, 1994
Pittsburgh, Pennsylvania
<PAGE>
EXHIBIT 24
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Lucie J. Fjeldstad, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, R. W. LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1993, to be filed
with the Securities and Exchange Commission, Washington, DC,.
WITNESS my hand this 17th day of February 1994.
/s/ Lucie J. Fjeldstad
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Stanley C. Gault, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, R. W. LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1993, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ Stanley C. Gault
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Allen J. Krowe, a Director of PPG Industries, Inc. (the "Corporation"),
a Pennsylvania corporation, hereby constitute and appoint J. E. Dempsey, R. W.
LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1993, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ Allen J. Krowe
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Steven C. Mason, a Director of PPG Industries, Inc. (the "Corporation"),
a Pennsylvania corporation, hereby constitute and appoint J. E. Dempsey, R. W.
LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1993, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ Steven C. Mason
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Harold A. McInnes, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, R. W. LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1993, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ Harold A. McInnes
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Robert Mehrabian, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, R. W. LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1993, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ Robert Mehrabian
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, Vincent A. Sarni, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, R. W. LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1993, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ Vincent A. Sarni
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, David G. Vice, a Director of PPG Industries, Inc. (the "Corporation"), a
Pennsylvania corporation, hereby constitute and appoint J. E. Dempsey, R. W.
LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1993, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ David G. Vice
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
(10-K)
I, David R. Whitwam, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, R. W. LeBoeuf and E. Mazeski, Jr., or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1993, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 17th day of February 1994.
/s/ David R. Whitwam
