<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
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, 1994 Commission File Number 1-1687
PPG INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
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)
</TABLE>
Registrant's telephone number, including area code: 412-434-3131
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
------------------- ----------------
<S> <C>
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
</TABLE>
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. [X]
As of January 31, 1995, 206,232,732 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 $7,234
million.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
Incorporated By
Document Reference In Part No.
-------- ---------------------
<S> <C>
Portions of PPG Industries, Inc. Annual Report to
Shareholders for the year ended December 31, 1994...................................... I, II and IV
Portions of PPG Industries, Inc. Proxy Statement
for its 1995 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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<C> <S> <C>
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 1994 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 26 and 27 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 packaging; 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 13 plants in
the United States, one in Canada and two 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 in Spain; two plants each in France and Italy, and one
plant each in England, Germany and Portugal. 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
Japan, and a minority interest in an operation in Taiwan. Additionally, coatings
and resins operates ten 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. Twenty training centers in the United States, five
in Europe, two in Asia and one in Canada are in operation. These centers provide
training for automotive aftermarket refinish customers. Also, four automotive
original application centers that provide testing facilities for customer paint
processes and new products are in operation. The average number of persons
employed by the coatings and resins segment during 1994 was 9,600.
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 six other major producers of flat glass, six
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
1
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plants operate in Italy; one manufactures automotive and flat glass, one
produces automotive 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 1994 was 15,400.
Chemicals
PPG is a major manufacturer of chlor-alkali and specialty chemicals. The primary
chlor-alkali and derivative products are chlorine, caustic soda, vinyl chloride
monomer, chlorinated solvents and chlorinated benzenes. Most of these products
are sold directly to manufacturing companies in the chemical processing, rubber
and plastics, paper, minerals and metals, and water treatment industries. The
primary specialty chemical products are silica based compounds for the tire,
shoe and battery separator businesses; surfactants for food emulsification,
sugar processing and personal care products; CR-39 monomer for optical plastics;
photochromic lens coatings for eyeglasses; and phosgene derivatives for the
pharmaceutical, herbicide and fuel additives businesses.
PPG competes with six other major producers of clor-alkali products. Price,
product availability, product quality and customer service are the key
competitive factors. In the specialty chemicals area, PPG's market share varies
greatly by business; product performance and technical service are the most
critical competitive factors.
PPG's chemical production facilities consist of nine plants in North America,
two plants each in Taiwan and the Peoples Republic of China, and one each in
France, the Netherlands and Ireland. The two largest facilities, located in Lake
Charles, LA and in Natrium, WV, primarily produce chlor-alkali and derivative
products. PPG owns equity interests in one company each in Japan, Thailand and
the United States. The average number of persons employed by the chemicals
segment during 1994 was 4,500.
Business Divested in 1994--Biomedical Systems Division
The Company's Biomedical Systems Division was a manufacturer, supplier and
servicer of integrated medical systems for human health care on a worldwide
basis. Major markets involved 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
provided products on either a global or regional basis. PPG sold directly to
hospital and clinical customers and through distributor organizations in
selected markets, and distributed selected original equipment products for other
manufacturers.
A decision was made in the fourth quarter of 1993 to divest the Biomedical
Systems Division. The sale of the medical electronics portion of this business
was completed by the end of the third quarter of 1994 and the sale of the
sensors business was completed in January 1995.
Two production facilities in Germany and one in the United States were sold
during 1994. One remaining plant in the United States related to the sensors
business existed at the end of 1994. This plant was sold as part of the sensors
business sale in January 1995. The average number of persons employed by the
Biomedical Systems Division during 1994 was 500.
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, polyvinyl butyral, colemanite and boric acid 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, $25
million and $27 million from royalties and the sale of technical know-how during
the years 1994, 1993 and 1992, respectively.
Research and Development
Research and development costs, including depreciation of research facilities,
during 1994, 1993 and 1992 were $233 million, $218 million and $221 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 eight 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 1994 was 30,800.
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 $19 million, $29 million and
$48 million in 1994, 1993 and 1992, respectively. It is projected that
expenditures for such projects in 1995 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. As of Dec. 31, 1994
and 1993, PPG had environmental reserves totaling $90 million. Charges against
income increasing environmental remediation reserves totaled approximately $30
million in 1994, $23 million in 1993 and $16 million in 1992. Cash outlays
against these reserves were approximately $30 million, $40 million and $58
million in 1994, 1993 and 1992, 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 anticipates
that such expenditures, which will occur over an extended period of time, will
not result in future annual charges to income that are significantly greater
than those recorded in recent years. It is possible, however, that
technological, regulatory and enforcement developments, the results of
environmental studies and other factors could alter this expectation. In
management's opinion, the Company operates in an environmentally sound manner,
is well positioned, relative to environmental matters, within the industries in
which it operates and the outcome of these environmental matters will not have a
material adverse effect on PPG's financial position or liquidity. To date,
compliance with federal, state and local requirements has not had a material
impact on PPG's financial position, results of operations or liquidity. See
Environmental Matters in Management's Discussion and Analysis for additional
information related to environmental matters.
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. To the Company's knowledge, 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 $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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Jerry E. Dempsey (a) 62 Chairman of the Board and Chief Executive Officer since September 1993
Russell L. Crane (b) 54 Senior Vice President, Human Resources and Administration since April 1994
Robert D. Duncan (c) 55 Executive Vice President since April 1994
Peter R. Heinze (d) 52 Senior Vice President, Chemicals since April 1994
William H. Hernandez (e) 46 Senior Vice President, Finance since January 1995
John J. Horgan (f) 52 Senior Vice President, Fiber Glass since April 1994
Raymond W. LeBoeuf (g) 48 Executive Vice President since April 1994
Guy A. Zoghby (h) 60 Senior Vice President and General Counsel since April 1994
</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) Mr. Crane was Vice President, Human Resources prior to his present
position.
(c) Mr. Duncan was Group Vice President, Glass prior to his present position.
(d) Dr. Heinze was Group Vice President, Chemicals of the Company and was
President of the Chemicals Division of BASF (U.S.) prior to his present
position.
(e) Mr. Hernandez was Vice President and Controller and Controller of the
Company and was Vice President, Finance and Planning and Chief Financial
Officer of Borg-Warner Automotive, Inc. prior to his present position.
(f) Mr. Horgan was Vice President, Fiber Glass Products and Vice President,
Administration prior to his present position.
(g) Mr. LeBoeuf was Vice President, Finance prior to his present position.
(h) Mr. Zoghby was Vice President and General Counsel 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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Page(s)
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Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
Stock Exchange Listings................................................................................... 40
Quarterly Stock Information............................................................................... 40
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 1990 through 1994............................................................................ 39
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis...................................................................... 21-25
Item 8. Financial Statements and Supplementary Data
Independent Auditors' Report.............................................................................. 17
Financial Statements:
Statement of Income for the years ended
December 31, 1994, 1993 and 1992..................................................................... 18
Balance Sheet, December 31, 1994 and 1993............................................................... 19
Statement of Cash Flows for the years ended
December 31, 1994, 1993 and 1992..................................................................... 20
Notes to the Financial Statements....................................................................... 28-37
</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 1995 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."
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.
6
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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 for years ended December 31, 1994, 1993 and
1992:
The following should be read in conjunction with the previously
referenced financial statements.
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Independent Auditors' Report........................................................................... 9
Schedule II--Valuation and Qualifying Accounts......................................................... 10
</TABLE>
All other schedules are omitted because they are not applicable.
(b) A Form 8-K was filed on October 21, 1994 and was reported as such in our
Form 10-Q for the quarter ended September 30, 1994.
(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 bylaws, 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) The Nonqualified Retirement Plan was filed as Exhibit 10.1 and
the Supplemental Executive Retirement Plan II was filed as
Exhibit 10.2 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. A Description of the Compensatory 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. All exhibits referred to in this paragraph (10) are
incorporated by reference.
*(10.1) Directors' Retirement Plan as amended through December 15, 1994.
*(10.2) Deferred Compensation Plan for Directors as amended through
December 15, 1994.
*(10.3) Incentive Compensation and Deferred Income Plan for Key Employees
as amended through February 15, 1995.
*(10.4) Description of the Compensatory Arrangement between Dr. Peter R.
Heinze and the Registrant.
(11) Computation of Earnings Per Share for the Five Years Ended
December 31, 1994.
(13) Company's 1994 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.
(27) Financial Data Schedule.
* Items referred to in Exhibit (10) and incorporated by reference and Exhibits
(10.1), (10.2), (10.3) and (10.4) are either management contracts,
compensatory plans or arrangements required to be filed as an exhibit hereto
pursuant to Item 14(c) of Form 10-K.
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 16, 1995.
PPG INDUSTRIES, INC.
(Registrant)
By /s/ W. H. Hernandez
...................................
W.H. Hernandez,
Senior 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 16, 1995.
Signature Capacity
--------- --------
/s/ J. E. Dempsey
.................................... Director, Chairman of the Board and
J. E. Dempsey Chief Executive Officer
/s/ W. H. Hernandez
.................................... Senior Vice President, Finance (Principal
W. H. Hernandez Financial and Accounting Officer)
E. B. Davis, Jr. Director
S. C. Gault Director
A. J. Krowe Director
S. C. Mason Director By /s/ W. H. Hernandez
H. A. McInnes Director ....................................
R. Mehrabian Director W. H. Hernandez, Attorney-in-Fact
V. A. Sarni Director
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, 1994 and 1993, and the related statements of income and cash
flows for each of the three years in the period ended December 31, 1994, and
have issued our report thereon dated January 19, 1995; such financial
statements and report are included in your 1994 Annual Report to Shareholders
and are incorporated herein by reference. Our audits also included financial
statement schedule II, Valuation and Qualifying Accounts, of PPG Industries,
Inc. and subsidiaries for the years ended December 31, 1994, 1993 and 1992. The
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 19, 1995
9
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PPG Industries, Inc. and Subsidiaries
Schedule II--Valuation and Qualifying Accounts
For the Years Ended December 31, 1994, 1993 and 1992
<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)
1994
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 25.6 $ 12.6 $ 11.7 $ 26.5
========= ========= ========= =========
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
========= ========= ========= =========
</TABLE>
------------------------------------
(1) Notes and accounts receivable written off as uncollectible, net of
recoveries, changes attributable to foreign currency translation, and
elimination of allowances related to businesses sold.
10
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PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
INDEX TO EXHIBITS
Exhibit Incorporated by Reference
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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 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 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 Description of Compensatory Exhibit 10 - Form 10-Q for the quarter
Arrangement between ended September 30, 1993
Jerry E. Dempsey and
the Registrant
<PAGE>
Exhibit Description
- ------- -----------
10.1 Directors' Retirement Plan as amended through December 15, 1994
10.2 Deferred Compensation Plan for Directors as amended through
December 15, 1994
10.3 Incentive Compensation and Deferred Income Plan for Key Employees
as amended through February 15, 1995
10.4 Description of Compensatory Arrangement between Dr. Peter R. Heinze
and the Registrant.
11 Computation of Earnings Per Share for the Five Years Ended
December 31, 1994
13 Company's 1994 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
27 Financial Data Schedule
<PAGE>
PPG INDUSTRIES, INC.
DIRECTORS' RETIREMENT PLAN
--------------------------
1. PURPOSE. The purpose of this Plan is to promote the interests of the
-------
Company and its shareholders by providing Non-Employee Directors with
retirement benefits to encourage them to continue to serve on the Board of
Directors.
2. DEFINITIONS.
-----------
"Account" means the account maintained for each Non-Employee Director to
which Common Stock Units and Dividend Equivalents are credited.
"Annual Contribution" means the Common Stock Units credited to an Account
each year under Section 4.1.
"Board" means the Board of Directors of the Company.
"Change in Control" has the same meaning as given to that term in the Rules
and Regulations adopted in connection with the PPG Industries, Inc.
Incentive Compensation and Deferred Income Plan for Key Employees, as they
may be amended from time to time.
"Committee" means the Officers-Directors Compensation Committee of the
Board.
"Common Stock" means the common stock, par value $1.66 2/3 per share, of the
Company.
"Common Stock Unit" means a hypothetical share of Common Stock.
"Company" means PPG Industries, Inc.
"Dividend Equivalent" means an additional number of Common Stock Units the
Company shall credit to each Account as of each dividend payment date
declared with respect to the Company's Common Stock. The additional number
of Common Stock Units to be credited to each Account shall be equal to:
(a) the product of (i) the dividend per share of the Common Stock
which is payable as of the dividend payment date, multiplied by
- 1 -
<PAGE>
(ii) the number of whole Common Stock Units credited to the
Account as of the applicable dividend record date;
DIVIDED BY
----------
(b) the closing price of a share of the Common Stock on the dividend
payment date (or if such stock was not traded on that date, on
the next preceding date on which it was traded), as reported in
the New York Stock Exchange Composite Transactions.
"Eligible Spouse" means the spouse who is legally married to a Participant
at the time of his or her death.
"Non-Employee Director" means a director of the Company who is not a present
or former employee of the Company or any of its subsidiaries.
"Normal Retirement Age" means 70 years of age.
"Participant" means a Non-Employee Director who has become eligible to
receive benefits under this Plan. A Non-Employee Director becomes a
Participant when he or she (1) retires from the Board and (2) attains
Normal Retirement Age; provided however, that the Committee may waive the
requirement that the Participant attain Normal Retirement Age.
"Plan" means the PPG Industries, Inc. Directors' Retirement Plan.
"Retainer" means the base annual retainer fee paid to each Non-Employee
Director by the Company. It does not include committee retainer fees,
meeting attendance fees, committee chairperson's retainer fees or any other
compensation other than the base annual retainer fee.
"Service" means the period of time a Non-Employee Director serves on the
Board.
3. EFFECTIVE DATE. This Plan shall be effective on and after January 1, 1988.
--------------
4. CREDITING ACCOUNTS.
------------------
4.1 Commencing in the year 1988, each year on the day following the Annual
Meeting of Shareholders of the Company, the Company shall credit the
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<PAGE>
Account of each Non-Employee Director who serves on the Board on that day
with the number of Common Stock Units determined by dividing one-half of
such Director's Retainer by the average closing price of the Common Stock
in the New York Stock Exchange Composite Transactions during the 5 days for
which such price is available immediately preceding such day of crediting.
No more than 10 such Annual Contributions shall be made to each Account and
the total number of such Annual Contributions to an Account under this
Section 4.1 plus the number which is multiplied by $10,000 to determine the
amount credited to the Account under Section 4.2 will not exceed 10.
4.2 On the day following the 1988 Annual Meeting of Shareholders of the
Company, the Company shall credit the Account of each Non-Employee
Director who is age 61 or older on that date with the number of Common
Stock Units determined by (1) multiplying $10,000 times his or her number
of full fiscal years of Service, but such number of full fiscal years of
Service shall not exceed the number determined by subtracting 60 from the
Non-Employee Director's age on the day immediately following the 1988
Annual Meeting of Shareholders and (2) then dividing that amount by the
average closing price of the Common Stock in the New York Stock Exchange
Composite Transactions during the 5 days for which such price is available
immediately preceding such day.
5. PAYMENTS OF BENEFITS.
--------------------
5.1 Only Participants or Eligible Spouses will receive benefits under this
Plan. Except as set forth in Section 5.4, the Account of a Non-Employee
Director will be forfeited if he or she does not become a Participant.
5.2 Benefits will be paid in annual installments each year on May 1 (or on the
next business day if May 1 is not a business day) commencing the first May
1 the Participant is eligible to receive benefits; provided, however, that
the first payment to a Participant shall not be made until 6 months and 10
days after the Participant ceases to be a Non-Employee Director. The
number of annual installments paid to each Participant shall be equal to
his or her number of full fiscal years of Service, but shall not exceed 10
annual installments. The number of Common Stock Units attributable to each
installment shall be equal to the whole number obtained by dividing the
number of Common Stock Units then credited to the Participant's Account by
the number of unpaid installments. Common Stock Units with respect to
which payment has not yet occurred shall continue to be credited with
Dividend Equivalents. As of the date on which the last payment of benefits
- 3 -
<PAGE>
is made to any Participant, the Company shall pay the Participant, in cash,
calculated in the manner described in Section 5.3, the net amount of any
remaining fractional Common Stock Unit.
5.3 Benefits shall be paid, in the discretion of the Committee, in the form of
Common Stock or cash; provided that, benefits paid to any Participant who
becomes eligible to receive benefits under this Plan on or after November
1, 1990, shall be paid only in cash. If paid in the form of cash, the
amount of each payment shall be calculated by multiplying the number of
Common Stock Units attributable to such payment by the average closing
price of the Common Stock in the New York Stock Exchange Composite
Transactions for the 5 trading days for which such price is available
immediately preceding the date of payment.
5.4 If a Non-Employee Director dies prior to retiring, or after retiring from
the Board but before becoming eligible to receive benefits hereunder, he or
she shall be deemed to have become a Participant eligible to receive
benefits hereunder immediately prior to his or her death, and such benefits
shall be paid to the Participant's Eligible Spouse. If a Participant dies
after becoming eligible to receive benefits hereunder, but prior to
receiving all the benefits due him or her hereunder, such remaining
benefits shall be paid to the Participant's Eligible Spouse. Unpaid
benefits under this Plan will be forfeited in the event the Participant's
death and Participant's Eligible Spouse's death occur prior to the total
amount of benefits due hereunder having been paid.
6. CHANGES IN STOCK. In the event of any change in the outstanding shares of
----------------
the Common Stock, or in the number thereof, by reason of any stock dividend
or split, recapitalization, merger, consolidation, exchange of shares or
other similar change, a corresponding change will be made in the number of
Common Stock Units and Dividend Equivalents, if any, credited to each
Account, unless the Committee determines otherwise.
7. ACCELERATION. The Committee, in its sole discretion, may accelerate the
------------
payment of benefits hereunder to any Participant or his or her Eligible
Spouse for reasons of changes in tax laws or in the event of a Change in
Control of the Company; provided that no payment of benefits may be
accelerated hereunder to any Participant or his or her Eligible Spouse if
such Participant was a director of the Company on or after November 1,
1990.
8. CHANGE IN CONTROL.
-----------------
- 4 -
<PAGE>
(a) Upon, or in reasonable anticipation of, a Change in Control (as
defined below), the Company shall immediately make a payment in
cash to a trustee on such terms as the Vice President, Human
Resources, and the Vice President, Finance, or either of them,
shall deem appropriate (including such terms as are appropriate
to cause such payment, if possible, not to be a taxable event to
Participants) of a sufficient amount to insure that Participants
receive the payment of all amounts as contemplated under the
Plan.
(b) Except as regards Section 8(c)(iv), the Committee shall have the
duty and the authority to make the determination as to whether a
Change in Control has occurred, or is reasonably to be
anticipated, and, concomitantly, to direct the making of the
payment contemplated herein.
(c) A "Change in Control" shall mean the occurrence of any of the
following events:
(i) a third person, including a "group" as such term is used
in Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Exchange Act"), becomes the beneficial owner,
directly or indirectly, of 20% or more of the combined
voting power of the Company's outstanding voting
securities ordinarily having the right to vote for the
election of directors of the Company unless such
acquisition of beneficial ownership is approved by a
majority of the Incumbent Board (as such term is defined
in Section 8(c)(ii);
(ii) individuals who constitute the Board of Directors of the
Company (the "Board") as of February 19, 1987 (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any person
becoming a director subsequent to such date whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of the directors comprising the Incumbent Board
(other than an election or nomination of an individual
whose initial assumption of office is in connection with
- 5 -
<PAGE>
an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member
of the Incumbent Board;
(iii) the shareholders of the Company approve a transaction
providing for (a) the merger, consolidation or other
combination of the Company with another corporation
(other than a wholly-owned subsidiary) where the Company
is not the surviving entity, (b) the sale of all or
substantially all of the assets of the Company, or (c)
the liquidation or dissolution of the Company; or
(iv) a majority of the Board otherwise determines that a
Change in Control shall have occurred.
9. GENERAL PROVISIONS. The entire cost of benefits and administrative
------------------
expenses for this Plan shall be paid by the Company. This Plan is purely
voluntary on the part of the Company. The Company, by action of the Board
or, except as limited by the Company's bylaws, the Committee, may amend,
suspend or terminate this Plan in whole or part at any time, but no such
amendment, suspension or termination shall adversely affect the rights of
any Non-Employee Director or Eligible Spouse of a deceased Non-Employee
Director with respect to Common Stock Units and Dividend Equivalents
credited prior to such amendment, suspension or termination or Dividend
Equivalents which would otherwise have been credited in the future with
respect to Common Stock Units credited prior to such amendment, suspension
or termination.
As Amended 12/15/94
- 6 -
<PAGE>
PPG INDUSTRIES, INC.
--------------------
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
1. Purpose
-------
The purpose of the PPG Industries, Inc. Deferred Compensation Plan for
Directors (the "Plan") is to offer each non-employee member of the Board of
Directors of PPG Industries, Inc. (the "Corporation") the opportunity to
defer receipt of the compensation to be earned for services as a director of
the Corporation until after termination of service as a director.
2. Definitions
-----------
(a) "Account" or "Accounts" means one or more of the Stock Account or the
Capital Enhancement Account maintained for a Participant.
(b) "Beneficiary" means the person or entity designated by the Participant
or the Participant's legal representative as provided under Section
7(b).
(c) "Capital Enhancement Account" means a bookkeeping account or accounts
maintained for a Participant who, for such period or periods as the
Committee may establish or permit, elects to defer to it all or any
part of his or her Compensation.
(d) "Committee" means the Officers-Directors Compensation Committee (or
any successor) of the Board of Directors of the Company.
(e) "Common Stock" means the common stock, par value $1.66 2/3 per share,
of the Corporation.
(f) "Common Stock Unit" means a hypothetical share of Common Stock.
(g) "Compensation" means a Participant's retainer and meeting fees earned
for services as a director and as chairman or a member of a committee
of the Board of Directors.
(h) "Dividend Equivalents" means an additional number of Common Stock
Units the Corporation shall credit to each Stock Account as of each
dividend payment date declared with respect to the Corporation's
Common Stock. The additional number of Common Stock Units to be
credited to each Stock Account shall be equal to:
- 1 -
<PAGE>
(1) the product of (i) the dividend per share of the Common Stock
which is payable as of the dividend payment date, multiplied by
(ii) the number of whole Common Stock Units credited to the Stock
Account as of the applicable dividend record date;
DIVIDED BY
----------
(2) the closing price of a share of the Common Stock on the dividend
payment date (or if such stock was not traded on that date, on
the next preceding date on which it was traded), as reported in
the New York Stock Exchange Composite Transactions.
(i) "Participant" means an eligible director who has elected to
participate in the Plan.
(j) "Stock Account" means a bookkeeping account maintained for a
Participant who elects to defer to it all or any part of his or her
Compensation and to which Common Stock Units and Dividend Equivalents
are credited.
3. Eligibility
-----------
All directors of the Corporation who are not at the time also serving as
salaried employees of the Corporation are eligible to participate in the
Plan.
4. Deferral of Compensation
------------------------
(a) Each Participant shall have such Compensation as the Board of
Directors mandates deferred under the Plan and credited to the Stock
Account. In addition, each Participant may elect to have additional
Compensation deferred under the Plan and credited to the Stock Account
and/or, as permitted by the Committee, the Capital Enhancement
Account.
(b) Subject to any rules, regulations, procedures or resolutions adopted
by the Committee, an election to defer shall be made in writing prior
to the start of the calendar year for which it is to become effective
and shall be effective upon filing with the Secretary of the
Corporation. Once deferral has been elected and filed with the
Secretary of the Corporation, it shall become irrevocable for the next
succeeding calendar year and, unless revoked in writing or superseded
by a new
- 2 -
<PAGE>
election effective for calendar years after the year in which such
revocation or new election is executed, shall continue in effect for
each calendar year thereafter.
(c) Deferred amounts shall be credited on the books of the Corporation to
an account in the name of the Participant on the same date that it
would otherwise be payable and shall thereafter be paid from the
general funds of the Corporation. No assets of the Corporation shall
be segregated or earmarked in respect to any amounts credited to the
Accounts of Participants and all such amounts shall constitute
unsecured contractual obligations of the Corporation.
(d) The number of Common Stock Units to be credited to the Stock Account
of a Participant shall be equal to the quotient obtained by dividing
the unpaid deferred amount to be credited to the Stock Account by the
closing price of a share of the Common Stock on the date on which such
deferred amount is credited on the books of the Corporation (or if
such stock was not traded on that date, on the next preceding date on
which it was traded), as reported on the New York Stock Exchange
Composite Transactions. Dividend Equivalents shall be credited to
each Stock Account as of each dividend payment date declared with
respect to the Corporation's Common Stock.
(e) Interest equivalents in respect to unpaid deferred amounts credited to
the Capital Enhancement Account shall be credited at the same interest
rate, and in the same manner, as interest equivalents are credited to
the Capital Enhancement Account under the PPG Industries, Inc.
Incentive Compensation and Deferred Income Plan for Key Employees;
provided, however, that (i) pre-retirement death benefits as a
multiple of amounts deferred thereunder and (ii) reduction of the rate
of interest equivalents in case of termination of service prior to age
62, shall not apply to amounts deferred hereunder.
(f) The sum of each Participant's deferrals of Compensation under Section
4(a), to his Capital Enhancement Account shall be not less than such
minimum, and not more than such maximum, as the Committee shall
specify.
- 3 -
<PAGE>
5. Payment of Deferred Amounts
---------------------------
(a) Payments from the Stock Account and the Capital Enhancement Account
shall be made in the form of cash.
(b) Subject to Section 5(d), a Participant may elect to have the amount
deferred paid in from one to 15 annual installments after he or she
shall cease to be a director of the Corporation.
Such installment(s) shall commence upon or following
(i) a specified date;
(ii) an event certain;
(iii) the earlier of a specified date or an event certain.
Installments shall continue to be payable as soon as practicable after
the first day of January of each year thereafter.
Subject to Sections 5(d) and 5(e), payment of deferred amounts shall
commence no later than January of the first calendar year which is the
later of:
(i) the year following attainment of age seventy (or such other
age as may supersede the age referred to in Section 403(f)(3)
of Title 42 United States Code); or
(ii) the year following such Participant's retirement.
Where deferred amounts, interest equivalents and Dividend Equivalents
are payable in installments, the amount of each installment will be
calculated such as to provide approximately equal distributions over
the period designated. Notwithstanding the foregoing, no installment
may be in an amount less than $1,000, and, if and to the extent
necessary, installments shall be accelerated so as to provide for such
minimum installment(s). In calculating the amount of each
installment, the amount in the Participant's Stock Account shall be
calculated by multiplying the number of Common Stock Units in the
Participant's Stock Account on date of such payment by the average
closing price of the Common Stock in the New York Stock Exchange
Composite Transactions for the 5 trading days for which such price is
available immediately preceding the date of payment.
- 4 -
<PAGE>
(c) Death or Disability
-------------------
(i) In the event of the death or disability of a Participant
either while serving as a director of the Corporation or prior
to the commencement of any payments hereunder, any amount due
under the Plan shall be paid in a lump sum to the
Participant's beneficiary, or in the case of disability, to
the Participant, as soon as practicable after the death or
disability.
(ii) In the event of the death or disability of a Participant on or
after the commencement of installment payments, in accordance
with Section 5(b), payments shall continue to paid to the
Participant's beneficiary, or in the case of disability, to
the Participant, in accordance with the election made by the
Participant in accordance with Section 5(b); provided,
however, that the Secretary of the Committee shall have the
power to accelerate the payment of any installment(s) because
of hardship or other circumstances deemed by him, in his
discretion, to warrant such acceleration.
(d) Payment Elections
-----------------
Any prior election as to the number of installments made by a
Participant who is serving as a director of the Corporation on
February 19, 1992 shall be null and void.
Participants may elect the number and the date or event for the
commencement of installment payments in accordance with the following:
(i) Such elections must be made at least six months and ten days
prior to the first payment date; and
(ii) In all cases, the elections must be made in the calendar year
preceding the first payment date.
(e) Notwithstanding any other provision of this Plan, the first
installment to a Participant shall not be paid until six months and
ten days after the Participant shall cease to be a director of the
Corporation.
- 5 -
<PAGE>
6. Change in Control
-----------------
(a) Upon, or in reasonable anticipation of, a Change in Control (as
defined below), the Corporation shall immediately make a payment in
cash to a trustee on such terms as the Vice President, Human Resources
and the Vice President, Finance, or either of them, shall deem
appropriate (including such terms as are appropriate to cause such
payment, if possible, not to be a taxable event to Participants) of a
sufficient amount to insure that Participants receive the payment of
all amounts as contemplated under the Plan.
(b) Except as regards Section 6(c)(iv), the Committee shall have the duty
and the authority to make the determination as to whether a Change in
Control has occurred, or is reasonably to be anticipated, and,
concomitantly, to direct the making of the payment contemplated
herein.
(c) A "Change in Control" shall mean the occurrence of any of the
following events:
(i) a third person, including a "group" as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act"), becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding voting securities ordinarily having
the right to vote for the election of directors of the
Corporation unless such acquisition of beneficial ownership is
approved by a majority of the Incumbent Board (as such term is
defined in Section 6(c)(ii);
(ii) individuals who constitute the Board of Directors of the
Corporation (the "Board") as of February 19, 1987 (the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a
director subsequent to such date whose election, or nomination
for election by the Corporation's shareholders, was approved
by a vote of at least a majority of the directors comprising
the Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Corporation,
- 6 -
<PAGE>
as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member
of the Incumbent Board;
(iii) the shareholders of the Corporation approve a transaction
providing for (a) the merger, consolidation or other
combination of the Corporation with another corporation (other
than a wholly-owned subsidiary) where the Corporation is not
the surviving entity, (b) the sale of all or substantially all
of the assets of the Corporation, or (c) the liquidation or
dissolution of the Corporation; or
(iv) a majority of the Board otherwise determines that a Change in
Control shall have occurred.
7. General Provisions
------------------
(a) Either the Board of Directors of the Corporation or the Committee may
modify or amend the Plan, in whole or in part, from time to time, or
terminate the Plan at any time, without the consent of any Participant
or Beneficiary of any Participant; provided, however, that any
modification, amendment or termination shall be of general application
to all Participants and Beneficiaries and shall not, without the
consent of the Participant or, in the event of his death, the
Participant's Beneficiary or estate adversely affect (i) any amount
theretofore deferred or credited to the Participant's Account(s) or
(ii) the right of the Participant to receive all amounts theretofore
credited to the Participant's Account(s), as of the date of such
modification, amendment or termination; and provided further that any
modification, amendment or termination that would materially increase
or accelerate the payment of any amount under the Plan shall be
approved by the Board of Directors. The Plan shall remain in effect
until terminated pursuant to this paragraph.
(b) No rights under the Plan may be transferred or assigned except that a
Participant may designate, in writing filed with the Secretary of the
Corporation, his spouse or children, a trustee or his or her executor
or executrix as Beneficiary to receive any unpaid amounts under the
Plan after the death of the Participant. In the absence of any such
designation or in the event that the designated person or entity shall
- 7 -
<PAGE>
not be in existence at the time a payment under the Plan comes due,
the Beneficiary of the Participant shall be the Participant's legal
representative.
(c) The Committee shall have full power to administer and interpret the
Plan and to adopt such rules, regulations, procedures and resolutions
consistent with the terms of the Plan as the Committee deems necessary
or advisable to carry but the terms of the Plan.
(d) The place of administration of the Plan shall be conclusively deemed
to be within the Commonwealth of Pennsylvania, and the validity,
construction, interpretation and administration of the Plan, and of
any determinations or decisions made thereunder, and the rights of any
and all persons having or claiming to have any interest therein or
thereunder, shall be governed by, and determined exclusively and
solely in accordance with, the internal laws of the Commonwealth of
Pennsylvania.
As Amended -- December 15, 1994
- 8 -
<PAGE>
Exhibit 10.3
PPG INDUSTRIES, INC.
INCENTIVE COMPENSATION AND DEFERRED
INCOME PLAN FOR KEY EMPLOYEES
-----------------------------
1. Purposes of the Plan
--------------------
The purposes of the PPG Industries, Inc. Incentive Compensation and Deferred
Income Plan for Key Employees (the "Plan") are to provide incentive to those
key employees of PPG Industries, Inc. (the "Company") and its Subsidiaries
who contribute the most to the growth and profitability of the Company and
its Subsidiaries and to encourage such key employees to continue as
employees of the Company and its Subsidiaries by making their compensation
competitive with compensation opportunities in competing industries.
2. Definitions
-----------
(a) "Administrator" means an officer or officers of the Company appointed
by the Committee to administer and interpret the Plan as to such
matters as the Committee may permit.
(b) "Award" means a grant of incentive compensation.
(c) "Beneficiary" means the spouse or children of a Participant, the
executor of a Participant's estate, or a trustee.
(d) "Capital Enhancement Account" means a bookkeeping account or accounts
maintained for a Participant who, for such period or periods as the
Committee may establish or permit, elects to defer all or any part of
an Award in the form of cash or Salary as provided in Sections 6 and 7,
and/or elects to transfer all or any portion of his Interest Account
and unrestricted parts of his PPG Stock Account as provided in Section
8.
(e) "Committee" means the Officers-Directors Compensation Committee (or any
successor) of the Board of Directors of the Company.
(f) "Conversion Formula" means dividing an amount by the average of the
closing sale prices for PPG Stock reported on the New York Stock
Exchange-Composite Tape for the first five days during which the New
York Stock Exchange is open next following the last day of the year to
which the Award from which the amount to be converted relates.
<PAGE>
(g) "Employee" means any full-time employee (including any officer) of the
Company or any of its Subsidiaries.
(h) "Interest Account" means a bookkeeping account maintained for a
Participant who elects to defer all or any part of an Award in the form
of cash as provided in Section 6.
(i) "Participant" means an Employee selected or approved to receive an
Award.
(j) "Pre-tax Earnings" means the consolidated earnings of the Company and
its consolidated Subsidiaries and equity affiliates before the
deduction of income taxes, minority interest and the amount to be set
aside in the Reserve as provided in Section 4. The Reserve shall not
be adjusted for any restatements of prior years' earnings.
(k) "PPG Stock" means the Common Stock of the Company.
(l) "PPG Stock Account" means a bookkeeping account maintained for a
Participant who elects to defer all or any part of an Award in the form
of shares of PPG Stock as provided in Section 6.
(m) "Reserve" means the aggregate of the amounts available for the making
of Awards as provided in Section 4.
(n) "Salary" means the regular base salary to be paid to a Participant by
the Company or a Subsidiary.
(o) "Stock Account Share" means a bookkeeping unit which is equivalent to
one share of PPG Stock.
(p) "Subsidiary" means any corporation, fifty percent (50%) or more of the
outstanding voting stock or voting power of which is owned, directly or
indirectly, by the Company and any partnership or other entity in which
the Company has a fifty percent (50%) or more ownership interest.
3. Administration of the Plan
--------------------------
The Committee shall have full power to administer and interpret the Plan and
to adopt such rules and regulations consistent with the terms of the Plan as
it deems necessary or advisable in order to carry out the provisions of the
Plan. The Committee may appoint an Administrator of the Plan and delegate
-2-
<PAGE>
to such Administrator power to administer and interpret the Plan as to such
matters as the Committee may permit. The administration and interpretation
of the Plan by the Committee, or an Administrator acting as to such matters
as the Committee may permit, and any Awards made by the Committee under the
Plan shall be conclusive and binding on all persons, including the Company,
its shareholders and Participants. No member of the Committee shall be
eligible to participate in the Plan.
4. The Reserve
-----------
For the purpose of establishing a Reserve, an amount shall be set aside each
year to be calculated as follows: (1) multiply consolidated shareholders'
equity as of the beginning of the year by 12%; (2) subtract the result of
step (1) from Pre-tax Earnings for the year; (3) multiply the result of step
2 by 5%. In no event, however, may the amount set aside exceed 20% of the
cash dividends paid on PPG Stock during the year. Shareholders' equity
shall be exclusive of the aggregate par or stated value of preferred stock
outstanding, if any, and of any unpaid cumulative dividends thereon.
The Reserve shall be reduced by the amount of all Awards, including any
deferred amounts, first from the amount, if any, set aside for the year to
which the Awards relate and then from the amounts which have been in the
Reserve for the longest period of time. Unawarded amounts set aside prior
to the fourth preceding year shall be automatically released from the
Reserve and returned to income. The Reserve shall not be reduced by
interest or dividend equivalents on deferred amounts, dividends paid on
restricted shares, negative amounts resulting from the calculation of the
amount to be set aside each year, or the expenses of administering the Plan.
5. Awards
------
The Committee shall determine or approve (a) the Participants, (b) the
maximum amount of all Awards to all Participants, and (c) the amount and the
form of the Award to each Participant. The Committee may delegate to
another person or persons the authority to determine (a) Participants, other
than Participants who are subject to Section 16 of the Securities Exchange
Act of 1934, and (b) the amount of Awards to such Participants not subject
to Section 16. Awards may be made only from the Reserve. The Committee is
under no obligation, however, to make Awards, or, if Awards are made, to
award the total amount set aside in the Reserve each year. Awards may be
made in the form of cash, shares of PPG Stock, or a combination of both. If
all or any part of an Award is made in the form of shares of PPG Stock, the
number of such shares, unless specified, shall be determined by applying the
Conversion Formula to the amount awarded in the form of such shares.
-3-
<PAGE>
Fractional shares shall be paid in the form of cash. If the number of such
shares is specified, the Reserve shall be reduced on account of such shares
by an amount determined by applying the Conversion Formula in reverse. As
to shares of PPG Stock which constitute all or any part of an Award, the
Committee may impose such restrictions concerning their transferability
and/or such provisions concerning their forfeitability as are provided for
in Section 12. Except for deferrals as provided for in Section 6, the
payment of Awards shall be made to Participants not later than the end of
the first calendar quarter following the end of the year to which the Awards
relate.
The Committee may, not later than the last day of the year to which the
Awards relate, make an allocation (on the basis of estimates of the amount
to be set aside in the Reserve for such year and unawarded amounts in the
Reserve) to a group of Employees without determining the amounts to be
allocated to individuals in such group and such allocation shall create a
legal obligation upon the Company to pay such amount to the individuals
comprising such group.
6. Deferral of Awards
------------------
At such times as the Committee or, if permitted by the Committee, an
Administrator, may prescribe, each prospective Participant, or such
prospective Participants as the Committee deems appropriate, may be given an
opportunity to make an irrevocable election to (a) defer the payment of all
or any part of an Award which may be made to him, (b) designate whether such
deferred amount is to be credited to the Interest Account, the PPG Stock
Account, or a combination of both, or, if permitted by the Committee and
subject to the limits of Section 10, the Capital Enhancement Account, except
that deferrals of an Award, or a portion of an Award, made in the form of
shares of PPG Stock may be credited only to the PPG Stock Account (subject
to such subsequent transfer as may be permitted by the Committee), and (c)
specify whether such deferred amount is to be paid in a lump sum or in
installments (and, if in installments, specify the number and intervals of
installments), the date on which such lump sum is to be paid or such
installments are to commence, and the alternatives, if any, to such
specifications. The Committee or, if permitted by the Committee, an
Administrator, may adopt such rules and regulations governing such
deferrals, designations and specifications as it deems appropriate.
Deferred amounts credited to the Interest Account shall accrue interest
equivalents at such rates as the Committee shall, from time to time, deem
appropriate.
Deferred amounts credited to the PPG Stock Account shall be credited in the
form of Stock Account Shares, the number of which shall be determined by
applying the Conversion Formula to such amounts. Participants shall not
receive cash dividends or have voting or other shareholders' rights as to
-4-
<PAGE>
Stock Account Shares. Stock Account Shares, however, shall accrue whole and
fractional dividend equivalents, in the form of additional Stock Account
Shares, on the basis of the closing sale price for PPG Stock reported on the
Composite Tape for the day on which a dividend is paid.
Deferred amounts credited to a Participant's Capital Enhancement Account
shall accrue interest equivalents at such rates as the Committee shall, from
time to time, deem appropriate.
Payments from the Interest Account and the Capital Enhancement Account shall
be made in the form of cash and payments from the PPG Stock Account shall be
made, as to whole Stock Account Shares, in the form of shares of PPG Stock
on the basis of one share for each whole Stock Account Share and, as to
fractional Stock Account Shares, in the form of cash.
7. Deferrals of Salary to Capital Enhancement Account
--------------------------------------------------
Subject to the limits of Section 10, each prospective Participant, or such
prospective Participant as the Committee deems appropriate, may be given an
opportunity to make an irrevocable election to (a) defer payment of all or
any part of Salary, to be credited to the Capital Enhancement Account, and
(b) specify whether such deferred amount is to be paid in a lump sum or in
installments (and, if in installments, specify the number and intervals),
the date on which such lump sum is to be paid or such installments are to
commence, and the alternatives, if any, to such specifications. The
Committee or, if permitted by the Committee, an Administrator, may adopt
such rules and regulations governing such deferrals and specifications as it
deems appropriate.
Interest equivalents shall be credited on amounts of Salary deferred to the
Capital Enhancement Account at the same rate as on amounts of Awards
deferred or transferred to the Capital Enhancement Account under Section 6
or Section 8, respectively. Payments from the Capital Enhancement Account
shall be made in the form of cash.
8. Transfers of Prior Deferrals
----------------------------
Subject to the limits of Section 10, and except that in no event may all or
any part of an Award made in the form of shares of PPG Stock be transferred,
transfers of deferred amounts may be made as may be permitted by the
Committee.
-5-
<PAGE>
9. Pre-Retirement Death Benefit
----------------------------
If a Participant dies prior to retirement, the Company shall pay to his
designated Beneficiary a death benefit equal to the sum of the Participant's
Interest Account, PPG Stock Account, and either (a) the Participant's
accumulated Capital Enhancement Account balance (if any), or (b) if it is a
greater amount (and at the time of his enrollment in the Capital Enhancement
Account the Participant provides evidence of his insurability, and the
Participant dies prior to age 65) the amount which is a multiple of the
amounts (or certain amounts as specified, or permitted to be specified, by
the Committee) deferred (if any, and not including interest equivalents
credited to the Account) by the Participant and credited to the Capital
Enhancement Account, in accordance with a table of death benefit multiples
adopted by the Committee or, if permitted by the Committee, an
Administrator, from time to time.
10. Limits on Capital Enhancement Account
-------------------------------------
The sum of each Participant's deferrals of Awards under Section 6, deferrals
of Salary under Section 7, and transfer of prior deferrals under Section 8,
to the Capital Enhancement Account shall be not less than such minimum, and
not more than such maximum, as the Committee or, if permitted by the
Committee, an Administrator, shall specify in rules and regulations.
11. General Provisions for All Deferrals
------------------------------------
Each Participant may designate a Beneficiary to receive payments due under
the Plan in the event of such Participant's death. In the absence of such a
designation or if such Beneficiary does not survive the Participant,
payments due under the Plan shall be made to such Participant's estate. No
Beneficiary shall be entitled to any payment to which the Participant would
not have been entitled. Except as provided herein, no interest or right of
any person under the Plan shall be subject to attachment, execution,
garnishment or any other legal, equitable or other process, and no person
shall have any power to encumber, sell, alienate, or otherwise dispose of
any interest or right such person may have under the Plan, prior to actual
payment to and receipt thereby by such person, nor shall the Administrator
recognize any assignment in derogation of the foregoing. The preceding
sentence does not apply (a) to the extent of a designation of a Beneficiary,
or (b) in the absence of such a designation or if such Beneficiary does not
survive the Participant, to a transfer by will or under the laws of descent
and distribution or (c) to the extent that a Participant's interest under
the Plan is alienated pursuant to a "Qualified Domestic Relations Order"
(QDRO) as defined in (Section)414(p) or any successor section of the
Internal Revenue Code. The Administrator is authorized to adopt such
procedural and
-6-
<PAGE>
substantive rules and to take such procedural and substantive actions as the
Administrator may deem necessary or advisable to provide for the payment of
amounts from the Plan to an Alternate Payee as provided in a QDRO. Such
rules and actions shall be consistent with the principal purposes of the
Plan, as set forth in the provisions of the Plan, but shall not be limited
by the express provisions of the Plan except as may be necessary to preserve
the exemption for securities issued in connection with the Plan from Section
16(b) of the Securities Exchange Act of 1934 under rules promulgated by the
Securities and Exchange Commission.
No assets of the Company or any of its Subsidiaries shall be segregated
with respect to any deferred amounts and all such amounts shall constitute
unsecured contractual obligations of the Company and its Subsidiaries.
In the event of any change in the outstanding shares of PPG Stock, or in
the number thereof, by reason of any stock dividend or split,
recapitalization, reorganization, merger, consolidation, combination, sale
of assets, exchange of shares, spin-off or similar change, unless the
Committee shall determine otherwise, a corresponding change shall be made
in the Stock Account Shares, or the number thereof, credited to a
Participant (including those attributable to dividend equivalents), and any
such change shall be conclusive and binding for all purposes.
12. Restricted Shares of PPG Stock
------------------------------
The Committee may, on such terms as it deems appropriate, restrict the
transferability of all or any number of such shares as constitute all or any
part of an Award to installments over periods not exceeding five years
and/or provide for the forfeitability of all or any number of such shares
over a period not exceeding five years. During the period of restriction as
to transferability and/or provision as to forfeitability, Participants shall
receive dividends and have voting and other shareholders' rights as to such
shares.
13. Change in Control
-----------------
Notwithstanding any other provision of the Plan, the Committee shall provide
that upon the occurrence of specified contingent events related to a change
in control of the Company (a) Awards as to a period of time of less than a
full year may be made on such basis as the Committee may prescribe, and then
paid to a trustee or otherwise in such form and on such terms as the
Committee may prescribe or permit and (b) all deferred amounts credited to
the PPG Stock Account shall be converted to cash on such basis as the
Committee may prescribe and then, together with an amount representing all
deferred amounts credited to the Capital Enhancement Account and the
-7-
<PAGE>
Interest Account, paid to a trustee or otherwise in such form and on such
terms as the Committee may prescribe or permit.
14. Miscellaneous Provisions
------------------------
(a) Neither the Plan nor any action taken thereunder shall be construed as
giving any Participant or prospective Participant any right to be
retained in the employ of the Company or a Subsidiary, or as giving a
Participant any right to continue to be granted Awards.
(b) The expenses of administering the Plan shall be borne, and the interest
and dividend equivalents paid by, the Company.
(c) Shares of PPG Stock issued under the Plan may be either authorized but
unissued shares or issued shares acquired by the Company and held in
its treasury.
(d) The Plan shall be construed under the internal substantive laws of the
Commonwealth of Pennsylvania.
15. Amendment, Suspension and Termination
-------------------------------------
Either the Board of Directors or the Committee may amend, suspend, or
terminate the Plan, whole or in part, at any time, but no amendment may,
without shareholder approval, increase the percentage of Pre-tax Earnings to
be set aside in the Reserve each year or extend the period of time after
which unawarded amounts are automatically released from the Reserve and
returned to income.
16. Effective Date
--------------
The Plan, as amended and restated herein, shall be effective as of October
14, 1987.
As Amended 02/15/95
-8-
<PAGE>
Exhibit 10.4
Written Description of Compensatory Arrangement
-----------------------------------------------
Between PPG Industries, Inc. and Peter R. Heinze
------------------------------------------------
Mr. Peter R. Heinze, Senior Vice President, Chemicals, of PPG Industries,
Inc. ("PPG") was employed by PPG beginning August 1, 1992. His compensation
arrangement upon hire was the same as that of other similarly situated
employees, with the following additional provisions:
1. He received an option grant of 7,500 shares under the PPG Industries, Inc.
1984 Stock Option Plan at an exercise price equal to the fair market value
of the stock on August 3, 1992. Such options became exerciseable on August
3, 1993. As provided under the 1984 Stock Option Plan, the number of shares
subject to such options was doubled and the exercise price was halved in
1994 to give effect to a 2-for-1 split of PPG Common Stock.
2. Upon employment, he was granted 3,500 shares of PPG Common Stock. As a
result of a 2-for-1 split of PPG Common Stock in 1994, those 3,500 shares
doubled to 7,000 shares effective June 10, 1994. The shares are restricted
and may not be sold or transferred by him until August 1, 1995. In
addition, if his employment by PPG is terminated for any reason before
August 1, 1995, he will retain only a proportionate amount of such shares.
The proportion to be retained would equal the ratio that the number of whole
months of his employment by PPG bears to 36 months. If his employment is
terminated before August 1, 1995, he will forfeit (and immediately transfer
to PPG) the amount of such shares which he is not entitled to retain
according to the above formula. The shares were awarded to him under an
Employee Recruiting Program approved by the Board of Directors of PPG on
February 21, 1991 that allows for the award of shares of Common Stock, or
cash, or a combination of both, to newly-hired employees of PPG to attract
those individuals to PPG.
3. If his employment is terminated by PPG prior to August 1, 1995, except for
cause, his base salary and target bonus under the Incentive Compensation Plan
would be continued on a monthly basis for two years following separation.
Such monthly payment would be reduced by any earnings from employment
obtained during the same two-year period.
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income before cumulative
effect of changes in methods
of accounting............... $514.6 $295.0 $319.4 $201.4 $474.8
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.................. $514.6 $ 22.2 $319.4 $276.2 $474.8
------ ------ ------ ------ ------
Weighted average number of
shares of common stock
outstanding............... 211.9 212.6 212.2 212.4 214.4
------ ------ ------ ------ ------
Weighted average number of
shares of common stock
outstanding and common
stock equivalents......... 213.4 214.4 213.6 213.4 215.2
------ ------ ------ ------ ------
Primary earnings per share:
Income before cumulative
effect of changes in
methods of accounting.... $ 2.43 $ 1.39 $ 1.51 $ 0.95 $ 2.22
Cumulative effect on
prior years of changes in
methods of accounting:
Other postretirement
benefits.............. -- (1.68) -- -- --
Postemployment benefits. -- (0.03) -- -- --
Income taxes............ -- 0.42 -- -- --
Major repairs to glass
and fiber glass
melting facilities.... -- -- -- 0.35 --
------ ------ ------ ------ ------
Earnings per share.......... $ 2.43 $ 0.10 $ 1.51 $ 1.30 $ 2.22
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
(Continued)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Fully diluted earnings
per share:
Income before cumulative
effect of changes in
methods of accounting..... $ 2.41 $ 1.38 $ 1.50 $ 0.94 $ 2.21
Cumulative effect on prior
years of changes in
methods of accounting:
Other postretirement
benefits................ -- (1.67) -- -- --
Postemployment benefits.. -- (0.03) -- -- --
Income taxes............. -- 0.42 -- -- --
Major repairs to glass
and fiber glass
melting facilities...... -- -- -- 0.35 --
------ ------ ------ ------ ------
Earnings per share......... $ 2.41 $ 0.10 $ 1.50 $ 1.29 $ 2.21
====== ====== ====== ====== ======
</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, and earnings growth 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>
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 sub-
sidiaries as of December 31, 1994 and 1993, and the related statements of in-
come and cash flows for each of the three years in the period ended December
31, 1994. 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 stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting 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 pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, such financial statements present fairly, in all material re-
spects, the financial position of PPG Industries, Inc. and subsidiaries as of
December 31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994 in con-
formity 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.
Deloitte & Touche LLP
Pittsburgh, Pennsylvania January 19, 1995
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 main-
tains, an internal control system. We believe the internal controls in use give
reasonable assurance that financial reports do not contain any material mis-
statement.
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 An-
nual Report is consistent with the financial statements.
Jerry E. Dempsey
Chairman of the Board and Chief Executive Officer
William H. Hernandez
Senior Vice President, Finance
<PAGE>
Statement of Income
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year
- ------------------------------------------------------------------------------
(Millions, except per share amounts) 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $6,331.2 $5,753.9 $5,813.9
- ------------------------------------------------------------------------------
Cost of sales 3,865.5 3,633.3 3,694.8
- ------------------------------------------------------------------------------
Gross profit 2,465.7 2,120.6 2,119.1
- ------------------------------------------------------------------------------
Other expenses
Selling, general and administrative 919.0 871.7 879.8
----------------------------------------------------------------------------
Depreciation 317.5 331.1 351.5
----------------------------------------------------------------------------
Research and development--net (See Note 14) 218.1 201.2 203.0
----------------------------------------------------------------------------
Interest 86.1 103.1 141.0
----------------------------------------------------------------------------
Business divestitures and realignments (See
Note 6) 85.0 126.4 10.4
----------------------------------------------------------------------------
Other charges 113.8 80.0 112.0
- ------------------------------------------------------------------------------
Total other expenses 1,739.5 1,713.5 1,697.7
- ------------------------------------------------------------------------------
Other earnings (See Note 13) 129.5 137.0 120.4
- ------------------------------------------------------------------------------
Income before income taxes and minority interest 855.7 544.1 541.8
- ------------------------------------------------------------------------------
Income taxes (See Note 7) 325.2 236.2 218.4
- ------------------------------------------------------------------------------
Minority interest 15.9 12.9 4.0
- ------------------------------------------------------------------------------
Income before cumulative effect of accounting
changes 514.6 295.0 319.4
- ------------------------------------------------------------------------------
Cumulative effect of accounting changes (See Note 2)
Other postretirement and postemployment bene-
fits, net of income taxes of $231.9 million -- (363.2) --
----------------------------------------------------------------------------
Income taxes -- 90.4 --
- ------------------------------------------------------------------------------
Net income $ 514.6 $ 22.2 $ 319.4
==============================================================================
Earnings per share (See Note 5)
Income before cumulative effect of accounting
changes $ 2.43 $ 1.39 $ 1.51
- ------------------------------------------------------------------------------
Cumulative effect of accounting changes
Other postretirement and postemployment bene-
fits -- (1.71) --
----------------------------------------------------------------------------
Income taxes -- .42 --
- ------------------------------------------------------------------------------
Earnings per share $ 2.43 $ .10 $ 1.51
==============================================================================
Average shares outstanding (See Note 5) 211.9 212.6 212.2
==============================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
Balance Sheet
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31
- ------------------------------------------------------------------------------
(Millions) 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 62.1 $ 111.9
----------------------------------------------------------------------------
Receivables (See Note 3) 1,228.9 996.7
----------------------------------------------------------------------------
Inventories (See Note 3) 686.4 683.3
----------------------------------------------------------------------------
Deferred income taxes (See Note 7) 117.4 147.4
----------------------------------------------------------------------------
Other 73.4 86.6
- ------------------------------------------------------------------------------
Total current assets 2,168.2 2,025.9
- ------------------------------------------------------------------------------
Property (See Note 3) 6,162.7 6,041.9
- ------------------------------------------------------------------------------
Less accumulated depreciation 3,420.4 3,254.6
- ------------------------------------------------------------------------------
Property--net 2,742.3 2,787.3
- ------------------------------------------------------------------------------
Investments 277.4 264.5
- ------------------------------------------------------------------------------
Other assets 706.0 573.8
- ------------------------------------------------------------------------------
Total $ 5,893.9 $5,651.5
==============================================================================
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt and current portion of long-term debt
(See Note 4) $ 369.4 $ 351.4
----------------------------------------------------------------------------
Accounts payable and accrued liabilities (See Note 3) 1,034.4 921.2
----------------------------------------------------------------------------
Income taxes (See Note 7) 19.4 4.7
----------------------------------------------------------------------------
Obligations under capital leases (See Note 8) 1.3 3.7
- ------------------------------------------------------------------------------
Total current liabilities 1,424.5 1,281.0
- ------------------------------------------------------------------------------
Long-term debt (See Note 4) 745.0 743.9
- ------------------------------------------------------------------------------
Obligations under capital leases (See Note 8) 28.4 30.1
- ------------------------------------------------------------------------------
Deferred income taxes (See Note 7) 302.7 268.6
- ------------------------------------------------------------------------------
Accrued pensions (See Note 9) 62.4 74.9
- ------------------------------------------------------------------------------
Other postretirement benefits (See Note 9) 505.5 520.4
- ------------------------------------------------------------------------------
Other liabilities 198.1 207.6
- ------------------------------------------------------------------------------
Minority interest 70.3 51.9
- ------------------------------------------------------------------------------
Total liabilities 3,336.9 3,178.4
- ------------------------------------------------------------------------------
Shareholders' equity (See Note 5)
Common stock 484.3 242.1
----------------------------------------------------------------------------
Additional paid-in capital 67.5 297.5
----------------------------------------------------------------------------
Retained earnings 3,717.1 3,436.8
----------------------------------------------------------------------------
Treasury stock, at cost (1,488.6) (1,224.7)
----------------------------------------------------------------------------
Unearned compensation (183.0) (182.5)
----------------------------------------------------------------------------
Minimum pension liability adjustment (1.7) (36.1)
----------------------------------------------------------------------------
Currency translation adjustment (38.6) (60.0)
- ------------------------------------------------------------------------------
Total shareholders' equity 2,557.0 2,473.1
- ------------------------------------------------------------------------------
Total $ 5,893.9 $5,651.5
==============================================================================
</TABLE>
Shares outstanding were 206,987,769 and 106,840,848 at Dec. 31, 1994 and 1993,
respectively (see Note 5).
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
Statement of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year
- --------------------------------------------------------------------------------
(Millions) 1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 514.6 $ 22.2 $ 319.4
- --------------------------------------------------------------------------------
Adjustments to reconcile to cash from operations
Cumulative effect of accounting changes (See
Note 2) -- 272.8 --
------------------------------------------------------------------------------
Depreciation and amortization 335.2 350.2 373.2
------------------------------------------------------------------------------
Business divestitures and realignments 85.0 126.4 10.4
------------------------------------------------------------------------------
Increase in receivables (263.7) (33.7) (41.2)
------------------------------------------------------------------------------
(Increase) decrease in inventories (25.6) 27.4 85.1
------------------------------------------------------------------------------
Increase (decrease) in accounts payable, accrued
liabilities and income taxes payable 123.0 2.5 (56.1)
------------------------------------------------------------------------------
Net change in other noncurrent assets and
liabilities 81.6 57.4 (74.2)
------------------------------------------------------------------------------
Other--net (159.0) (84.5) 53.6
- --------------------------------------------------------------------------------
Cash from operating activities 691.1 740.7 670.2
- --------------------------------------------------------------------------------
Investing activities
Capital spending
Additions to property and investments (321.8) (257.6) (282.3)
------------------------------------------------------------------------------
Business acquisitions, net of cash balances
acquired (33.9) (35.8) (.7)
- --------------------------------------------------------------------------------
Proceeds from business divestitures 28.5 4.9 --
- --------------------------------------------------------------------------------
Reductions of property and investments 81.8 52.0 26.9
- --------------------------------------------------------------------------------
Cash used for investing activities (245.4) (236.5) (256.1)
- --------------------------------------------------------------------------------
Financing activities
Net change in borrowings with maturities of three
months or less (5.7) (3.5) 81.9
- --------------------------------------------------------------------------------
Proceeds from other short-term debt 44.1 19.3 38.8
- --------------------------------------------------------------------------------
Repayment of other short-term debt (27.3) (8.5) (10.0)
- --------------------------------------------------------------------------------
Proceeds from long-term debt 23.2 9.3 10.7
- --------------------------------------------------------------------------------
Repayment of long-term debt and capital leases (33.0) (199.4) (312.3)
- --------------------------------------------------------------------------------
Loans to employee stock ownership plan (22.0) -- --
- --------------------------------------------------------------------------------
Repayment of loans by employee stock ownership plan 21.5 19.7 16.4
- --------------------------------------------------------------------------------
Purchase of treasury stock (280.0) (81.2) (26.6)
- --------------------------------------------------------------------------------
Issuance of treasury stock 19.4 13.2 11.7
- --------------------------------------------------------------------------------
Dividends paid (237.8) (220.8) (199.6)
- --------------------------------------------------------------------------------
Cash used for financing activities (497.6) (451.9) (389.0)
- --------------------------------------------------------------------------------
Effect of currency exchange rate changes on cash
and cash equivalents 2.1 (1.8) (1.3)
- --------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (49.8) 50.5 23.8
- --------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 111.9 61.4 37.6
- --------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 62.1 $ 111.9 $ 61.4
================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
Management's Discussion and Analysis
- -------------------------------------------------------------------------------
Performance in 1994 Compared with 1993
Overall Performance
Our 1994 sales totaled $6.3 billion, up from the prior year's $5.8 billion.
The gain was attributable to higher sales volumes, including sales from the
January 1994 acquisition of Akzo's European automotive original coatings busi-
ness, combined with marginally higher overall prices from each of our seg-
ments. Partially offsetting these increases was the absence of sales from the
Biomedical Systems Division and from certain glass businesses that were di-
vested or discontinued.
PPG's gross profit percentage increased to 39% from 37% for the prior year.
Sales mix gains, lower manufacturing costs, benefits from substantially di-
vested and discontinued businesses, and slightly higher prices contributed to
the improvement. These gains were partially offset by the effects of infla-
tion.
Net income for 1994 of $515 million increased significantly from $22 million
in the prior year, while earnings per share increased to $2.43 from $0.10 in
1993. The prior year's net income included a net charge of $273 million ($1.29
per share) for three accounting changes (see Note 2 to the financial state-
ments). Also included were business divestiture and realignment after-tax
charges of $96 million ($0.45 per share). Our 1994 earnings were favorably af-
fected by the same factors as our sales volume and gross profit percentage im-
provements and by lower interest expense. Partially offsetting these gains
were higher income tax expense, primarily because of increased pre-tax income
and a second-quarter after-tax charge of $52 million ($0.24 per share) related
to divestiture of the Biomedical Systems Division (see Business Divestitures
and Realignments on page 23). Also partially offsetting the gains were in-
creased research and development costs and environmental expenses. Excluding
the effects, for both years, of business divestiture and realignment charges
and, for 1993, of accounting changes, earnings per share increased $0.83 from
1993.
Results of Business Segments
Coatings and resins sales increased to $2.6 billion from $2.3 billion in 1993.
Operating income for the corresponding periods was $497 million and $414 mil-
lion, respectively. Contributing to the sales increase were higher volumes in
each of the segment's major product lines, sales from the January 1994 acqui-
sition of the Akzo coatings business, higher prices for worldwide automotive
refinish coatings and the July 1994 acquisition of an automotive paint
spray-booth business from Nalco. Partially offsetting these gains were lower
prices for North American automotive original products and the negative effects
of translating Canadian currencies. The increase in operating income was
principally attributable to the higher overall sales volumes, benefits from
manufacturing efficiencies and the absence of business divestiture and
realignment charges. Higher overhead costs, the unfavorable effects of
inflation and the negative effects of Canadian currency translation partly
offset these improvements.
Glass sales increased to $2.4 billion from $2.2 billion in 1993 while operat-
ing income increased to $315 million from $122 million. Higher volumes in each
of the segment's major businesses and higher prices for North American flat,
automotive replacement and fiber glass products contributed to the sales in-
crease. The absence of sales from divested and discontinued businesses and re-
duced prices for worldwide automotive original products partially offset these
improvements. The operating income improvement was primarily attributable to
the absence of $78 million of business divestiture and realignment charges re-
corded in the prior year (see Business Divestitures and Realignments on page
23), the factors that contributed to the sales increase, benefits from manu-
facturing efficiencies and the absence of operating losses from certain di-
vested or discontinued businesses. The negative effects of inflation partially
offset these gains.
Chemicals sales increased to $1.3 billion from $1.2 billion in 1993 while op-
erating income increased to $227 million from $133 million. The increase in
sales was primarily attributable to higher volumes in each of the segment's
businesses and higher prices for certain chlorine derivatives. The increase in
operating income was principally the result of the factors that contributed to
the sales increases, manufacturing efficiencies and gains from disposition of
a minority stake in a foreign chemical business and the segment's polymer ad-
ditives business, as well as the absence of business divestiture and realign-
ment charges. The negative effects of inflation, particularly on ethylene
costs, partially offset these improvements.
Included in the "other" segment's 1994 operating losses was an $85 million
second-quarter charge related to the divestment of the Biomedical Systems Di-
vision. The 1993 operating loss also included a charge totaling $38 million
related to this planned divestiture as well as operating losses for the year.
(See Business Divestitures and Realignments on page 23.)
Other Significant Factors
The increase in research and development expense-net was primarily
attributable to incremental expenses associated with the Akzo coatings
business acquired in January 1994, partially offset by the absence of expenses
from certain divested businesses.
The decline in interest expense was primarily due to lower overall average
short-term borrowings during 1994 versus 1993.
The increase in "other" charges was principally the result of higher environ-
mental expenses, charges incurred for the relocation of an administrative of-
fice and losses from the retirement of certain property.
<PAGE>
Management's Discussion and Analysis
- --------------------------------------------------------------------------------
The increase in other unallocated corporate expense-net was principally due to
the absence of the gain on the sale of our interest in an insurance company
that was realized in 1993, an increase in our charitable contribution to the
PPG Foundation and a minor charge related to the effect of the Mexican peso de-
valuation.
Income tax expense increased to $325 million from $236 million in 1993, princi-
pally as a result of the significant increase in pre-tax income, partially off-
set by a decrease in the effective tax rate, which was primarily attributable
to reduced losses at certain of our foreign operations in 1994 (see Note 7 to
the financial statements).
The increase in accounts receivable was principally the result of higher sales
in the fourth quarter of 1994 as compared with sales in the same period in
1993.
The increase in other assets was primarily the result of contributions to cer-
tain of the Company's pension plans in 1994.
In 1993 PPG received 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 sought to overturn the judgment. In No-
vember 1994, Avco's motion for judgment notwithstanding the verdict and a new
trial was denied by the court. Avco has now appealed to the United States Court
of Appeals for the Federal Circuit. The financial statements do not include any
gain related to this matter.
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 trans-
lation, lower prices in the chemicals and glass segments, and the absence of
sales from businesses divested or being divested in the Biomedical Systems Di-
vision and glass segment.
PPG's gross profit percentage increased to 37% from 36% in 1992. Lower manufac-
turing 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 $0.10 per share, after a net charge of
$273 million, or $1.29 per share, for accounting changes (see Note 2 to the fi-
nancial statements). Excluding that one-time net charge, earnings were $295
million, or $1.39 per share.
Results for 1993 included after-tax business divestiture and realignment
charges of $96 million ($0.45 per share) and an after-tax gain of $17 million
($0.08 per share) from the sale of an interest in an insurance company. Results
were affected by higher overall sales volumes, lower interest expense and the
factors contributing to the higher gross profit percentage.
Our 1992 net income was $319 million, or $1.51 per share. Included in this re-
sult was a charge for a glass technology dispute, which reduced earnings by
$0.10 per share, and business divestiture and realignment charges of $10 mil-
lion, or $0.03 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 $414 million and $359 million. Higher
volumes for North American automotive original products, refinish and indus-
trial 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, lower raw material
and overhead costs, and lower business divestiture and realignment charges. The
negative effects of inflation and European currency translation partially off-
set these improvements.
Glass sales were $2.2 billion for 1993 and 1992, while operating income in-
creased to $122 million from $119 million in 1992. Sales for 1993 were favor-
ably affected by higher volumes for most of the segment's North American busi-
nesses 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 busi-
nesses also reduced 1993 total sales. Operating income in 1993 benefited from
higher sales volumes, lower manufacturing costs and the absence of the prior
year charge for an award in the glass technology dispute. Business divestiture
and realignment charges totaling $78 million (see Business Divestitures and
Realignments on page 23), lower overall sales prices and the unfavorable ef-
fects of inflation substantially offset these improvements.
Chemicals sales increased to $1.2 billion in 1993 from $1.1 billion in 1992,
while operating income declined to $133 million from $185 million. Contributing
to the sales increase were higher volumes for Transitions (registered trade-
mark) 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 in 1993 was principally due to the lower overall sales prices,
the unfavorable effects of inflation, particularly on natural gas costs, and
business divestiture and realignment charges. Higher overall sales volumes and
improved manufacturing efficiencies partially offset these declines.
<PAGE>
Management's Discussion and Analysis
- --------------------------------------------------------------------------------
Other Significant Factors
The decline in interest expense was primarily due to lower average borrowings
during 1993 versus 1992 and lower average interest rates in 1993.
The decline in other charges in 1993 was primarily due to the absence of the
1992 charge for a glass technology dispute.
The 1993 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 in 1993 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 was the cumulative effect to Jan. 1, 1993, of the
adoption of Statement of Financial Accounting Standards (SFAS) No. 106, "Em-
ployers' 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 million,
or $1.68 per share. SFAS No. 109, which requires an asset and liability ap-
proach to accounting for income taxes, resulted in a one-time gain of $90 mil-
lion, or $0.42 per share. SFAS No. 112 requires an accrual method of recogniz-
ing the cost of postemployment benefits, such as disability, severance and
workers' compensation benefits. Its adoption resulted in an after-tax charge of
$6 million, or $0.03 per share. The adoption of the new accounting standards
did not affect the Company's cash flows and the ongoing effect of such stan-
dards did not significantly affect 1993's net income. (See Note 2, Changes in
Methods of Accounting, for further details.)
Environmental Matters
Management of the Company anticipates that the resolution of the environmental
contingencies discussed below, which will occur over an extended period of
time, will not result in future annual charges to income that are significantly
greater than those recorded in recent years. It is possible, however, that
technological, regulatory and enforcement developments, the results of environ-
mental studies and other factors could alter this expectation. In management's
opinion, the Company operates in an environmentally sound manner and the out-
come of these environmental matters will not have a material effect on PPG's
financial position or liquidity. To date, compliance with federal, state and
local requirements has not had a material effect on PPG's financial position,
results of operations or liquidity.
It is PPG's policy to accrue expenses for environmental contingencies when it
is probable that a liability exists and the amount of loss can be reasonably
estimated. As of Dec. 31, 1994 and 1993, PPG had environmental reserves total-
ing $90 million. Charges against income increasing these reserves for environ-
mental remediation costs in 1994, 1993 and 1992 were $30 million, $23 million
and $16 million, respectively.
In addition to the amounts accrued, the Company may be subject to contingencies
related to environmental matters estimated at the high end to be as much as
$200 million to $400 million. Such aggregate losses are reasonably possible but
not currently considered to be probable of occurrence. The Company's environ-
mental contingencies are expected to be resolved over a period of 20 years or
more. These loss contingencies include significant unresolved issues such as
the nature and extent of contamination, if any, at sites and the methods that
may have to be employed should remediation be required. Although insurance may
cover a portion of these costs, to the extent they are incurred, any potential
recovery is not included in this unrecorded exposure to future loss. With re-
spect to certain waste sites, the financial condition of any other potentially
responsible parties also contributes to the uncertainty of estimating PPG's fi-
nal costs. Although contributors of waste to sites involving other potentially
responsible parties may face governmental agency assertions of joint and sev-
eral liability, in general, final allocations of costs are made based on the
relative contributions of wastes to such sites. PPG is generally not a major
contributor to such sites. Although the unrecorded exposure to future loss re-
lates to all sites, a significant portion of such unrecorded exposure involves
three operating plant sites and one closed plant site. Two of the sites are in
the early stages of study, while the remaining two are further into the study
phase. All four sites require additional study to assess the magnitude of con-
tamination, if any, and the remediation alternatives.
Business Divestitures and Realignments
In 1994, 1993 and 1992, PPG's results reflect the impact of the Company's con-
tinuing programs to divest or realign businesses and activities not meeting
strategic or performance objectives. These programs resulted in pre-tax charges
of $85 million, $126 million and $10 million in 1994, 1993 and 1992, respec-
tively. The 1994 charge pertains to the divestiture of the Biomedical Systems
Division. The majority of the charge was comprised of the reversal of a $60
million gain originally anticipated from divestiture of the division's sensors
business at the time the decision was made to dispose of the division and re-
flects the general decline in health-care and related markets. Also, a $13 mil-
lion charge was taken for additional operating losses anticipated because of
extension of the expected disposal date as well as actual operating losses ex-
ceeding those originally estimated. With the sale of the sensors business in
January 1995, the divestiture of the Biomedical Systems Division is complete.
Sales proceeds received in 1994 consisted of $18 million in cash plus $14 mil-
lion in securities and
<PAGE>
Management's Discussion and Analysis
- --------------------------------------------------------------------------------
receivables. The remaining cash flow impact from these activities is not ex-
pected to be significant.
The Company's $126 million business divestiture and realignment charges in 1993
consisted of $78 million related to the glass segment, $38 million to the "oth-
er" segment, involving the Biomedical Systems Division, and $5 million each to
the coatings and resins and the chemicals segments.
Of the glass segment's charges, approximately $71 million related to the
shutdown of two manufacturing facilities, discontinuation of the commercial
products business and disposition of the architectural metals business. One of
the manufacturing facilities, which had previously been temporarily idled, was
permanently closed because manage- ment concluded that the market for its
products would not support operation of the facility. Management also decided
to close the second facility because of the segment's overcapacity for the
plant's products, and operating earnings could be increased through the
reallocation of its production to more efficient facilities. The decision to
exit the commercial products business was due principally to its disappointing
operating performance. The architectural metals business was sold because it
was not a core operation of the glass segment and it also experienced
unfavorable operating results.
Since the Company's acquisition of the Biomedical Systems Division, it had con-
sistently reported disappointing operating results. Moreover, this business had
not blended well with PPG's other major segments and proved to be difficult to
manage under the continually changing business environment in which it operat-
ed. As a result, management decided to divest the division early in the fourth
quarter of 1993 and recorded a charge of $38 million in that quarter. The
charge was principally based on anticipated sales proceeds from the divestiture
of the sensors and medical electronics businesses of approximately $65 million
and $50 million, respectively. Such amounts resulted in an estimated net loss
of $5 million. In addition, $30 million of operating losses anticipated through
the expected disposal date were accrued.
In addition to the components of the Biomedical Systems Division provision
given above, significant components of the 1993 business divestiture and re-
alignment charges included charges for the retirement or write-off of operating
assets with net book values of approximately $31 million, severance and benefit
costs of $17 million, incremental workers' compensation accruals of $10 mil-
lion, environmental accruals of $9 million, anticipated future operating losses
of $6 million through the expected disposal dates for the commercial products
and architectural metals businesses, and charges of approximately $2 million
for the disposition of operating assets (net of anticipated sales proceeds of
$16 million).
To a large extent the charges recorded in 1994 and 1993 are expected to be re-
covered in the future through the absence of historical operating losses for
the Biomedical Systems Division. Such operating losses were approximately $61
million, $13 million and $23 million for 1993, 1992 and 1991, respectively. In
addition, the elimination of various operating costs should increase future an-
nual operating earnings by approximately $10 million.
With the exception of the 1994 charge related to the divestiture of the Biomed-
ical Systems Division, there have not been significant changes in the Company's
plans for implementing business divestiture and realignment programs undertaken
in prior years. The Company does not anticipate significant business divesti-
ture and realignment charges in the near future.
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 1994, 1993 and 1992, our operating results were negatively affected as in-
creased 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 ef-
ficiencies and reduce overhead costs in each of our business units, as well as
increases in selling prices for certain products, will offset, for the Company
as a whole, the negative impact of inflation on 1995 operating income.
<PAGE>
Management's Discussion and Analysis
- --------------------------------------------------------------------------------
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 repur-
chase programs, and to pay increased dividends to shareholders. Cash from oper-
ating activities was $691 million in 1994, $741 million in 1993 and $670 mil-
lion in 1992. Dividends paid to shareholders in 1994 totaled $238 million, up
from $221 million in 1993 and $200 million in 1992.
In October 1994, PPG initiated a 6.5-million-share stock repurchase program.
The purchase of treasury stock has been financed principally by cash from oper-
ations. As of Dec. 31, 1994, approximately 5.7 million shares had been repur-
chased under this program at a cost of $211 million. The total cost of the pro-
gram, which was completed in January 1995, was $242 million.
Long-term debt was reduced in 1993 by 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 indus-
trial 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 1994 totaled $356 million, compared with $293 million in
1993 and $283 million in 1992. This spending related to modernization and pro-
ductivity improvements, expansion of existing businesses, environmental control
projects and, in 1994, 1993 and 1992, business acquisitions totaling $34 mil-
lion, $36 million and $1 million, respectively. Capital spending of a similar
nature, excluding any for major acquisitions, is expected to total about $450
million during 1995.
The ratio of total debt, including capital leases, to total debt and equity was
31% at both Dec. 31, 1994 and 1993. 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 4, Debt and Bank Credit Agreements, for details regarding our use and
availability of committed and uncommitted lines of credit.
Foreign Currency and Interest Rate Risk
As a multinational company, PPG manages its transaction exposure to foreign
currency risk to minimize the volatility of cash flows caused by currency fluc-
tuations. The Company manages its foreign currency exposures principally
through the purchase of forward and option contracts. It does not manage its
exposure to translation gains and losses; however, by borrowing in local cur-
rencies it reduces such exposure. The market value of the forward and option
contracts purchased and outstanding as of Dec. 31, 1994, was not material.
The Company manages its interest rate risk in order to balance its exposure be-
tween fixed and variable rates while attempting to minimize its interest costs.
PPG principally manages its interest rate risk by retiring and issuing debt
from time to time. To a limited extent, PPG manages its interest rate risk
through the purchase of interest rate swaps. As of Dec. 31, 1994 and 1993, the
notional principal amounts and fair values of interest rate swaps held were im-
material.
PPG's policies do not permit active trading of currency or interest rate deriv-
atives.
<PAGE>
Business Segment Information
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Millions) 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industry Segments
Net sales
Coatings and Resins $2,647 $2,314 $2,319
-------------------------------------------------------------------------------------------------------------------------------
Glass 2,388 2,165 2,168
-------------------------------------------------------------------------------------------------------------------------------
Chemicals 1,296 1,150 1,112
-------------------------------------------------------------------------------------------------------------------------------
Other -- 125 215
- ------------------------------------------------------------------------------------------------------------------------------------
Total $6,331 $5,754 $5,814
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)(/1/)
Coatings and Resins $ 497 $ 414 $ 359
-------------------------------------------------------------------------------------------------------------------------------
Glass 315 122 119
-------------------------------------------------------------------------------------------------------------------------------
Chemicals 227 133 185
-------------------------------------------------------------------------------------------------------------------------------
Other(/2/) (78) (49) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 961 620 662
- ------------------------------------------------------------------------------------------------------------------------------------
Interest--net (77) (88) (124)
-------------------------------------------------------------------------------------------------------------------------------
Other unallocated corporate (expenses) income--net (28) 12 4
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and minority interest $ 856 $ 544 $ 542
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Coatings
and
(Millions) Resins Glass Chemicals Other (/2/) Corporate Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994
Segment assets(/3/) $1,662 $2,010 $1,117 $187 $918 $5,894
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 77 $ 159 $ 84 $ 8 $ 7 $ 335
- ---------------------------------------------------------------------------
Capital spending $ 128 $ 119 $ 72 $ 1 $ 36 $ 356
- ---------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------
</TABLE>
(continued on next page)
<PAGE>
Business Segment Information
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(Millions) 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Geographic Segments
Net sales
United States $4,332 $3,924 $3,730
-------------------------------------------------------------------------
Europe 1,405 1,254 1,528
-------------------------------------------------------------------------
Canada 413 423 410
-------------------------------------------------------------------------
Other 181 153 146
- ---------------------------------------------------------------------------
Total $6,331 $5,754 $5,814
===========================================================================
Operating income (loss)(/1/)
United States $ 771 $ 562 $ 520
-------------------------------------------------------------------------
Europe 88 (12) 83
-------------------------------------------------------------------------
Canada 72 45 34
-------------------------------------------------------------------------
Other 30 25 25
- ---------------------------------------------------------------------------
Total 961 620 662
- ---------------------------------------------------------------------------
Interest--net (77) (88) (124)
-------------------------------------------------------------------------
Other unallocated corporate (expenses) income--net (28) 12 4
- ---------------------------------------------------------------------------
Income before income taxes and minority interest $ 856 $ 544 $ 542
===========================================================================
Segment assets(/3/)
United States $3,137 $3,154 $3,283
-------------------------------------------------------------------------
Europe 1,424 1,307 1,422
-------------------------------------------------------------------------
Canada 261 275 291
-------------------------------------------------------------------------
Other 154 143 121
-------------------------------------------------------------------------
Corporate 918 773 545
- ---------------------------------------------------------------------------
Total $5,894 $5,652 $5,662
===========================================================================
</TABLE>
Certain amounts in the 1993 and 1992 segment information have been
reclassified to be consistent with the 1994 presentation.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Industry Segments Geographic Segments
Coatings and Resins $497 $419 $368 United States $855 $635 $518
- ----------------------------------------------------------------------------------------------------------------------------
Glass 315 200 119 Europe 89 37 91
- ----------------------------------------------------------------------------------------------------------------------------
Chemicals 227 138 185 Canada 72 49 38
- ----------------------------------------------------------------------------------------------------------------------------
Other 7 (11) -- Other 30 25 25
- ----------------------------------------------------------------------------------------------------------------------------
Business divestitures and realignments (85) (126) (10) Business divestitures and realignments (85) (126) (10)
- ----------------------------------------------------------------------------------------------------------------------------
Total $961 $ 620 $662 Total $961 $ 620 $662
============================================================================================================================
</TABLE>
(/1/) Business segment operating income (loss) exclusive of pretax charges from
business divestitures and realignments, with the aggregate of such charges
shown separately, is as follows (in millions):
(/2/) "Other" includes the Company's Biomedical Systems Division and real estate
business.
(/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.
<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. Trans-
actions 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 Ac-
counting 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 actu-
arial cost method for defined benefit plans. Unrecognized prior service costs
are amortized over periods ranging from six to 16 years. Amortization of unrec-
ognized gains and losses is included in income over the estimated future serv-
ice 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 aver-
age or standard factory costs, which approximate actual costs, excluding cer-
tain 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.
Employee Stock Ownership Plan
We account for our employee stock ownership plan (ESOP) in accordance with
Statement of Position (SOP) No. 93-6 for PPG common stock purchased after Dec.
31, 1992 (new ESOP shares). As permitted by SOP No. 93-6, shares purchased
prior to Dec. 31, 1992 (old ESOP shares), continue to be accounted for in ac-
cordance with SOP No. 76-3. ESOP shares are released to participants based upon
the proportion of debt service paid during the year on loans used by the ESOP
to purchase the shares. Unearned compensation, reflected as a reduction of
shareholders' equity, principally represents the unpaid balance of such ESOP
loans. Dividends received by the ESOP are used to pay debt service.
For old ESOP shares, compensation expense is equal to amounts contributed, or
committed to be contributed, to the ESOP by the Company less the ESOP interest
expense element of such contributions. Dividends on old ESOP shares are de-
ducted from retained earnings. Old ESOP shares are considered to be outstanding
in computing earnings per share.
For new ESOP shares, compensation expense is equal to the Company's matching
contribution (see Note 10). Dividends on allocated new ESOP shares are deducted
from retained earnings, and dividends on unallocated shares are reported as a
reduction of debt or accrued interest. Only new ESOP shares that have been al-
located are considered outstanding in computing earnings per share.
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) ac-
quired with an original maturity of three months or less.
Derivative financial instruments
Derivative financial instruments are used to hedge the Company's foreign cur-
rency and interest rate exposures. Income and expense are recorded in the same
category as the offsetting amount that relates to the asset or liability being
hedged. Premiums paid on option contracts are amortized over the lives of the
contracts.
Gains and losses related to hedges of existing assets and liabilities are de-
ferred and recognized over the expected remaining lives of the related assets
and liabilities. Unrealized gains and losses from option contracts that hedge
anticipated transactions are also deferred and recognized in income in the same
period as the hedged transactions. Unrealized gains and losses from forward
contracts that hedge anticipated transactions are not deferred. The market val-
ues of derivative financial instruments as of Dec. 31, 1994 and 1993, were im-
material.
No derivative financial instruments are held for trading purposes.
<PAGE>
Notes
- --------------------------------------------------------------------------------
2. Changes in Methods of Accounting
In 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 ex-
pected cost of providing postretirement benefits to an employee and the employ-
ee's covered dependents. Previously the Company recognized these costs as bene-
fits were paid. PPG elected to recognize immediately the cumulative effect of
this accounting change, which resulted in an after-tax charge as of Jan. 1,
1993, of $357.1 million (including $6.4 million for an equity affiliate). The
incremental after-tax impact of accruing the cost of these postretirement bene-
fits for 1993 was not material.
The Company also adopted SFAS No. 109, "Accounting for Income Taxes," in 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 as-
sets, such as benefits related to net operating loss carryforwards, are recog-
nized 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 de-
ferred income tax assets and liabilities in the period in which the tax law is
enacted.
The $90.4 million cumulative effect of this accounting change as of Jan. 1,
1993, was 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 Ac-
counting Principles Board Opinion No. 11 to provide for deferred income taxes
with respect to timing differences between the recognition of income and ex-
pense items for financial reporting purposes and income tax purposes.
In 1993 the Company also 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 ac-
counted for most of these benefits on an accrual basis, the cumulative after-
tax charge of the accounting change as of Jan. 1, 1993, was only $6.1 million.
The incremental after-tax impact of accruing the cost of these benefits for
1993 was not material.
3. Balance Sheet Detail
<TABLE>
<CAPTION>
December 31
- ------------------------------------------------------------
(Millions) 1994 1993
- ------------------------------------------------------------
<S> <C> <C>
Receivables
Customers $1,170.1 $ 935.4
----------------------------------------------------------
Other 85.3 86.9
----------------------------------------------------------
Allowance for doubtful accounts (26.5) (25.6)
- ------------------------------------------------------------
Total $1,228.9 $ 996.7
============================================================
Inventories(/1/)
Finished products and work in process $ 462.7 $ 451.8
----------------------------------------------------------
Raw materials 111.9 117.5
----------------------------------------------------------
Supplies 111.8 114.0
- ------------------------------------------------------------
Total $ 686.4 $ 683.3
============================================================
Property(/2/)
Land and land improvements $ 280.7 $ 275.9
----------------------------------------------------------
Buildings 1,102.8 1,096.1
----------------------------------------------------------
Machinery and equipment 4,402.3 4,324.5
----------------------------------------------------------
Other 226.7 236.4
----------------------------------------------------------
Construction in progress 150.2 109.0
- ------------------------------------------------------------
Total $6,162.7 $6,041.9
============================================================
Accounts payable and accrued liabilities
Trade creditors $ 517.8 $ 436.0
----------------------------------------------------------
Accrued payroll 199.9 163.8
----------------------------------------------------------
Other postretirement and pension
benefits 59.1 52.9
----------------------------------------------------------
Business divestitures and
realignments 35.4 62.7
----------------------------------------------------------
Other 222.2 205.8
- ------------------------------------------------------------
Total $1,034.4 $ 921.2
============================================================
</TABLE>
(/1/) Inventories valued using the last-in, first-out (LIFO) method comprised
76% and 75% of total gross inventory values at Dec. 31, 1994 and 1993,
respectively. If the first-in, first-out (FIFO) method of inventory
valuation had been used, inventories would have been $199.2 million and
$210.1 million higher at Dec. 31, 1994 and 1993, respectively.
(/2/) Interest capitalized in 1994, 1993 and 1992 was $5.3 million, $6.0 million
and $7.4 million, respectively.
<PAGE>
Notes
- --------------------------------------------------------------------------------
4. Debt and Bank Credit Agreements
<TABLE>
<CAPTION>
December 31
- --------------------------------------------------------
(Millions) 1994 1993
- --------------------------------------------------------
<S> <C> <C>
9.3% notes, due 1999 $122.6 $122.6
- --------------------------------------------------------
9.0% non-callable debentures, due 2021 148.0 148.0
- --------------------------------------------------------
ESOP notes(/1/)
Weighted average 8.4% fixed rate notes 151.0 151.0
------------------------------------------------------
Variable rate notes, 4.1% at
Dec. 31, 1994 123.0 123.0
- --------------------------------------------------------
Various other debt, weighted average 5.5% 55.5 57.8
- --------------------------------------------------------
Non-U.S. subsidiary borrowings
12.7% notes, maturing 1995 to 1999 84.7 92.7
------------------------------------------------------
Fixed rate notes, weighted average
8.4% at Dec. 31, 1994, maturing 1995
to 1998 18.7 19.3
------------------------------------------------------
Various other debt, weighted average
9.1% at Dec. 31, 1994 72.8 56.0
- --------------------------------------------------------
Total 776.3 770.4
- --------------------------------------------------------
Less payments due within one year 31.3 26.5
- --------------------------------------------------------
Long-term debt $745.0 $743.9
========================================================
</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>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$31.3 $162.7 $50.8 $52.1 $160.6
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has revolving credit agreements with credit lines totaling $565
million. Of these credit lines, $550 million will expire in December 1999 and
require payment of annual fees equal to nine basis points on the unused portion
of the lines. These lines support our commercial paper programs in the United
States, Canada and the Netherlands. The remaining $15 million will expire in
September 1996 and require payment of annual fees equal to 12.5 basis points on
the unused portion of the lines. PPG may cancel all or part of these credit
agreements at any time without penalty or premium. At Dec. 31, 1994, we had
used $10 million of these lines of credit.
Our non-U.S. operations have uncommitted lines of credit totaling $448 million,
of which $101 million was used at Dec. 31, 1994. There are no commitment fees
for these lines of credit, and they may be canceled at any time. Additionally,
our non-U.S. operations have two committed credit agreements totaling $46 mil-
lion, including an agreement as to which $40 million expires in July 1996 and
does not involve the payment of a fee. The other agreement expires in September
1996 and requires the payment of a fee of 12.5 basis points on the unused por-
tion of the line of credit. At Dec. 31, 1994, we had used $30 million of these
committed credit lines.
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 state-
ment 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, 1994 and 1993, balances for "Short-term debt and current portion
of long-term debt" include, respectively, $141 million and $174 million of
commercial paper and $197 million and $151 million of short-term notes payable
to banks. The weighted average interest rates of short-term borrowings as of
Dec. 31, 1994 and 1993, were 6.3% and 4.8%, respectively.
Interest payments in 1994, 1993 and 1992 totaled $93 million, $112 million and
$154 million, respectively.
<PAGE>
Notes
- --------------------------------------------------------------------------------
5. Shareholders' Equity
<TABLE>
<CAPTION>
Common Stock Minimum
Additional Treasury Stock Unearned Pension
Shares Par Paid-In Retained Compensation Liability
(Dollars in Millions) Issued Value Capital Earnings Shares Cost (See Note 10) Adjustment
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, Jan. 1, 1992 145,286,534 $242.1 $ 229.5 $3,501.1 (39,116,881) $(1,186.0) $(218.6) $ (2.3)
- -------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 319.4 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends -- -- -- (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 -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
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)
- -------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 22.2 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends -- -- -- (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 -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
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)
- -------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 514.6 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends -- -- -- (237.8) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Two-for-one stock split
in the form of a 100%
stock distribution 145,286,534 242.2 (242.2) -- (39,019,886) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock(/1/) -- -- -- -- (6,578,700) (280.0) -- --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury
stock(/1/) -- -- 6.3 -- 609,849 16.1 -- --
- -------------------------------------------------------------------------------------------------------------------------
ESOP loans -- -- -- -- -- -- (22.0) --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP -- -- -- -- -- -- 21.5 --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Other -- -- 5.9 3.5 -- -- -- 34.4
- -------------------------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1994 290,573,068 $484.3 $ 67.5 $3,717.1 (83,434,423) $(1,488.6) $(183.0) $ (1.7)
=========================================================================================================================
<CAPTION>
Currency
Translation
(Dollars in Millions) Adjustment
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Balance, Jan. 1, 1992 $ 88.7
- -------------------------------------------------------------------------------------------------------------------------
Net income --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury stock --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments (89.7)
- -------------------------------------------------------------------------------------------------------------------------
Other --
- -------------------------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1992 (1.0)
- -------------------------------------------------------------------------------------------------------------------------
Net income --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury stock --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments (59.0)
- -------------------------------------------------------------------------------------------------------------------------
Other --
- -------------------------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1993 (60.0)
- -------------------------------------------------------------------------------------------------------------------------
Net income --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends --
- -------------------------------------------------------------------------------------------------------------------------
Two-for-one stock split
in the form of a 100%
stock distribution --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock(/1/) --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury stock(/1/) --
- -------------------------------------------------------------------------------------------------------------------------
ESOP loans --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments 21.4
- -------------------------------------------------------------------------------------------------------------------------
Other --
- -------------------------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1994 $(38.6)
=========================================================================================================================
</TABLE>
(/1/) Treasury stock share amounts from Jan. 1, 1994 to the date of the 100%
stock distribution are on a pre-split basis. Shares purchased and issued
in 1994 on a post-split basis were 7,457,400 and 914,349, respectively.
A class of 10 million shares of preferred stock, without par value, is autho-
rized but unissued. Common stock has a par value of $1.66 2/3 per share and 300
million shares are authorized. Shares outstanding at Dec. 31, 1994, excludes
150,876 unallocated new ESOP shares (see Note 10).
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 dis-
counted price, which generally would be 50% of the respective stocks' current
fair market value.
On April 21, 1994, the board of directors approved a two-for-one stock split in
the form of a 100% stock distribution. The distribution was made on June 10,
1994, to shareholders of record as of May 10, 1994. Per share and share data
(except for shares in the table above and on the balance sheet) give retroac-
tive effect to the stock split. Per share cash dividends of $1.12, $1.04 and
$0.94 were paid in 1994, 1993 and 1992, respectively.
<PAGE>
Notes
- --------------------------------------------------------------------------------
6. Business Divestitures and Realignments
During 1994, 1993 and 1992, 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 cer-
tain businesses or facilities and write-downs for declines in the value of
property. These actions resulted in net pre-tax charges of $85 million, $126.4
million, and $10.4 million in 1994, 1993 and 1992, respectively.
The 1994 charge pertains to the divestiture of the Biomedical Systems Division.
With the sale of the sensors business in January 1995, the divestiture of the
Biomedical Systems Division is complete. In addition to a $38 million charge
related to the plan for the divestiture of the Biomedical Systems Division, the
charges for 1993 involved further streamlining in our glass segment, including
costs associated with selected plant closings, permanent shutdowns of inactive
facilities and disposition of a commercial construction fabrication operation.
The 1993 charges also included costs for streamlining our European coatings and
resins operations. Refer to the Business Divestitures and Realignments section
in Management's Discussion and Analysis for further details regarding these
charges.
7. Income Taxes
As described in Note 2, the Company changed its method of accounting for income
taxes effective Jan. 1, 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 in-
come tax rate to the effective income tax rate.
<TABLE>
<CAPTION>
Percent of
Pre-tax Income
- -----------------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal income tax rate 35.0% 35.0% 34.0%
- -----------------------------------------------------------------------
Changes in tax rate resulting from:
Taxes on non-U.S. earnings and related tax credits (.1) 5.1 .8
---------------------------------------------------------------------
State and local taxes--U.S. 3.5 4.9 4.7
---------------------------------------------------------------------
Other (.4) (1.6) .8
- -----------------------------------------------------------------------
Effective income tax rate 38.0% 43.4% 40.3%
=======================================================================
</TABLE>
The reduction in the 1994 effective tax rate, as compared to 1993, was primar-
ily attributable to higher losses incurred at our European subsidiaries in 1993
(primarily related to the Biomedical Systems Division), for which we were un-
able to record any income tax benefit. The change in the 1993 effective tax
rate, as compared to 1992, was principally due to these European losses (with
no corresponding tax benefit realized), partially offset by 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.
At Dec. 31, 1994, subsidiaries of the Company had available NOL carryforwards
of approximately $297 million for income tax purposes along with approximately
$.6 million of tax credit carryforwards. Of these NOL carryforwards, $230 mil-
lion have an indefinite expiration and $67 million expire from 1995 through
2002. The tax credits have an indefinite period of expiration.
The following table gives details of income tax expense in the statement of in-
come. 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) 1994 1993 1992
- --------------------------------------------
<S> <C> <C> <C>
Current income taxes
U.S. federal $206.3 $131.0 $120.4
------------------------------------------
Non-U.S. 33.3 31.9 42.9
------------------------------------------
State and local--U.S. 45.2 31.4 36.2
- --------------------------------------------
Total current 284.8 194.3 199.5
- --------------------------------------------
Deferred income taxes
U.S. federal 13.9 26.2 23.1
------------------------------------------
Non-U.S. 24.9 11.8 (4.2)
------------------------------------------
State and local--U.S. 1.6 3.9 --
- --------------------------------------------
Total deferred 40.4 41.9 18.9
- --------------------------------------------
Total $325.2 $236.2 $218.4
============================================
</TABLE>
<PAGE>
Notes
- --------------------------------------------------------------------------------
Net deferred income tax assets and liabilities as of Dec. 31, 1994 and 1993,
are as follows:
<TABLE>
- ----------------------------------------------------------
<CAPTION>
(Millions) 1994 1993
- ----------------------------------------------------------
<S> <C> <C>
Deferred income tax assets
Employee benefits $ 278.0 $ 284.4
--------------------------------------------------------
Environmental 27.1 27.0
--------------------------------------------------------
Business divestitures and realignments 32.1 41.8
--------------------------------------------------------
NOL and tax credit carryforwards 126.6 109.9
--------------------------------------------------------
Inventories 25.7 29.7
--------------------------------------------------------
Property 18.6 --
--------------------------------------------------------
Other 81.7 58.7
--------------------------------------------------------
Valuation allowance (97.7) (83.3)
- ----------------------------------------------------------
Total 492.1 468.2
- ----------------------------------------------------------
Deferred income tax liabilities
Property 460.0 457.2
--------------------------------------------------------
Employee benefits 115.8 33.5
--------------------------------------------------------
Other 76.8 85.9
- ----------------------------------------------------------
Total 652.6 576.6
- ----------------------------------------------------------
Deferred income tax liabilities--net $(160.5) $(108.4)
==========================================================
</TABLE>
The majority of the NOL carryforwards relate to operations of subsidiaries in
countries permitting indefinite carryforward of losses. Generally, the valua-
tion allowance has been established for these carryforwards because the ability
to utilize them is uncertain.
Under the previous income tax accounting rules, deferred income taxes were pro-
vided for significant timing differences in the recognition of revenue and ex-
pense for income tax and financial statement purposes. The source of these tim-
ing differences and the tax effect of each in 1992 were as follows:
<TABLE>
- ------------------------------------------------
<CAPTION>
(Millions)
- ------------------------------------------------
<S> <C>
U.S.--net effect of timing differences
Depreciation $(17.0)
----------------------------------------------
Business divestitures and realignments 5.6
----------------------------------------------
Employee benefits 5.9
----------------------------------------------
Environmental 9.3
----------------------------------------------
Other 19.3
----------------------------------------------
Non-U.S.--net effect of timing differences
Depreciation 2.0
----------------------------------------------
Other (6.2)
- ------------------------------------------------
Total $ 18.9
================================================
</TABLE>
Income (loss) before income taxes resulting from non-U.S. operations for 1994,
1993 and 1992 was $126.7 million, $(.8) million and $77.2 million,
respectively.
No deferred U.S. income taxes have been provided on certain undistributed earn-
ings of consolidated non-U.S. subsidiaries that have been reinvested indefi-
nitely, and amounted to $371 million and $304 million at Dec. 31, 1994 and
1993, respectively. It is not practicable to determine the deferred tax liabil-
ity on these earnings.
The Internal Revenue Service has examined our U.S. federal income tax returns
through 1988, and we have paid all tax claims.
Income tax payments in 1994, 1993 and 1992 totaled $254 million, $210 million
and $142 million, respectively.
8. Lease Arrangements and Rent Expense
We use assets leased under arrangements that qualify as capital leases. The am-
ortization of the cost of these leased assets is included in depreciation ex-
pense in the statement of income. Leases that do not qualify as capital leases
are classified as operating leases. Rental expense for operating leases was
$59.9 million in 1994, $60.3 million in 1993 and $59.4 million in 1992.
The following table sets forth minimum lease commitments at Dec. 31, 1994, 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
1995 $ 3.2 $30.3
--------------------------------------------------------------
1996 2.7 21.0
--------------------------------------------------------------
1997 2.6 13.3
--------------------------------------------------------------
1998 4.8 10.4
--------------------------------------------------------------
1999 6.4 5.6
--------------------------------------------------------------
After 1999 25.1 15.0
- ----------------------------------------------------------------
Total minimum lease payments 44.8 $95.6
- -------------------------------------------------------=========
Less estimated executory costs (.1)
- -----------------------------------------------------
Net minimum lease payments 44.7
- -----------------------------------------------------
Less amount representing interest (15.0)
- -----------------------------------------------------
Present value of net minimum lease payments $29.7
=====================================================
</TABLE>
9. Pensions and Other Postretirement Benefits
Pension benefits
We have noncontributory defined benefit pension plans that cover certain em-
ployees 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.
<PAGE>
Notes
- --------------------------------------------------------------------------------
Net periodic pension cost (credit) includes the following components:
<TABLE>
- ------------------------------------------------------------------------
<CAPTION>
(Millions) 1994 1993 1992
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned during the year $ 29.1 $ 24.4 $ 23.7
- ------------------------------------------------------------------------
Interest cost on projected benefit obligation 114.0 115.0 112.0
- ------------------------------------------------------------------------
Return on assets
Actual 13.0 (154.6) (69.5)
----------------------------------------------------------------------
Deferred (loss) gain (160.2) 19.4 (68.0)
- ------------------------------------------------------------------------
Net amortization 13.8 4.0 .6
- ------------------------------------------------------------------------
Net periodic pension cost (credit) $ 9.7 $ 8.2 $ (1.2)
========================================================================
</TABLE>
In the determination of net periodic pension cost (credit), the assumed weight-
ed-average long-term rates of return on plan assets for 1994, 1993 and 1992
were 10.9%, 11.8% and 12.0%, respectively.
The following table sets forth the combined funded status and amounts recog-
nized in our balance sheet.
<TABLE>
<CAPTION>
December 31
- -----------------------------------------------------------------------------
(Millions) 1994 1993
- -----------------------------------------------------------------------------
Plan ABO Plan ABO
Assets Exceeds Assets Exceeds
Exceed Plan Exceed Plan
ABO Assets ABO Assets
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Present value of the estimated
pension benefits to be
paid in the future
Vested benefit obligation $(1,165.4) $(45.5) $(1,064.8) $(300.4)
- -----------------------------------------------------------------------------
Nonvested benefit obligation (56.9) (20.0) (36.4) (42.9)
- -----------------------------------------------------------------------------
Accumulated benefit obligation (ABO) (1,222.3) (65.5) (1,101.2) (343.3)
- -----------------------------------------------------------------------------
Effect of projected future salary
increases (91.2) (15.4) (129.8) (27.4)
- -----------------------------------------------------------------------------
Projected benefit obligation (PBO) (1,313.5) (80.9) (1,231.0) (370.7)
- -----------------------------------------------------------------------------
Amount of assets available for
benefits
Plan assets at fair value 1,390.8 1.2 1,159.0 204.7
- -----------------------------------------------------------------------------
(Prepaid) accrued pensions--net (317.0) 70.0 (138.8) 130.0
- -----------------------------------------------------------------------------
Total assets 1,073.8 71.2 1,020.2 334.7
- -----------------------------------------------------------------------------
Assets less than PBO* $ (239.7) $ (9.7) $ (210.8) $ (36.0)
- -----------------------------------------------------------------------------
*Comprised of
Unamortized net asset (liability) at
date of adoption $ 54.3 $(14.0) $ 52.3 $ (5.1)
- -----------------------------------------------------------------------------
Unrecognized net loss (274.6) (2.9) (271.2) (76.7)
- -----------------------------------------------------------------------------
Unrecognized prior service cost (19.4) (2.5) (10.8) (13.8)
- -----------------------------------------------------------------------------
Minimum liability -- 9.7 18.9 59.6
- -----------------------------------------------------------------------------
Assets less than PBO $ (239.7) $ (9.7) $ (210.8) $ (36.0)
=============================================================================
</TABLE>
We determined the projected benefit obligation using weighted-average discount
rates of 8.8% at Dec. 31, 1994, and 7.5% at Dec. 31, 1993. For those plans that
provide benefits based on salaries in the final years of employment, the as-
sumed long-term rate of increase in salaries was 4.5% at Dec. 31, 1994, and
5.3% at Dec. 31, 1993. The accrued pension liability, reflected in the balance
sheet, included $4.1 million and $4.0 million at Dec. 31, 1994 and 1993, re-
spectively, for defined contribution plans.
Pension cost, which includes costs for defined contribution plans and multi-em-
ployer defined benefit pension plans in addition to the net periodic pension
cost shown above, was $13.2 million, $14.4 million and $2.7 million in 1994,
1993 and 1992, respectively.
In November 1993, the Company contributed 2,900,042 shares of PPG stock to cer-
tain qualified U.S. pension plan trusts. The shares had aggregate fair market
values of $101.9 million and $107.7 million on the date of transfer and as of
Dec. 31, 1994, respectively.
Other postretirement benefits
PPG sponsors defined benefit plans that provide medical and life insurance ben-
efits to nearly all of its retired employees in the United States and certain
retired employees in Canada. These plans also cover the employees' spouse and
dependents. At Dec. 31, 1994, the U.S. plans had provisions that capped the
cost of postretirement medical benefits at 1996 levels for most current retir-
ees and certain future retirees covered by bargaining plans, as well as current
and future retirees covered by nonbargaining plans. In January 1995, the cap
for such benefits for future retirees covered by nonbargaining plans and most
current retirees was deferred to 2003. Salaried and certain wage employees
hired after Jan. 31, 1993, will not be entitled to postretirement medical bene-
fits. Many of our plans include cost sharing provisions, such as co-insurance
and deductibles, and require participant contributions based upon elected cov-
erage. The plans also coordinate benefits with Medicare for those employees who
are 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 years ended Dec. 31, 1994
and 1993, includes the following components:
<PAGE>
Notes
- --------------------------------------------------------------------------------
<TABLE>
- ---------------------------------------------------------------------------
<CAPTION>
(Millions) 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Service cost--benefits earned during the year $ 5.4 $ 6.5
- ---------------------------------------------------------------------------
Interest cost on accumulated postretirement benefit obligation 40.4 44.4
- ---------------------------------------------------------------------------
Other (8.0) (3.1)
- ---------------------------------------------------------------------------
Net periodic postretirement benefit cost $37.8 $47.8
===========================================================================
</TABLE>
Net periodic postretirement benefit cost is expected to increase approximately
$22 million in 1995 as a result of deferring the cap to the year 2003.
The accumulated postretirement benefit obligation of our plans and the liabil-
ity recognized in the balance sheet as of Dec. 31, 1994 and 1993, were as fol-
lows:
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
(Millions) 1994 1993
- -------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO)
Retirees $352.1 401.9
- -------------------------------------------------------------------
Fully eligible active plan participants 55.7 76.2
- -------------------------------------------------------------------
Other active plan participants 74.9 120.2
- -------------------------------------------------------------------
APBO 482.7 598.3
- -------------------------------------------------------------------
Unrecognized prior service cost 50.4 20.5
- -------------------------------------------------------------------
Unrecognized net gain (loss) 25.1 (51.8)
- -------------------------------------------------------------------
Other postretirement benefit liability $558.2 $567.0
===================================================================
</TABLE>
The accumulated postretirement benefit obligation increased approximately $100
million in January 1995 as a result of delaying the cap to 2003.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.8% at Dec. 31, 1994, and 7.5% at Dec.
31, 1993. The assumed health care cost trend rate for 1995 is 8.0% and declines
ratably over 13 years to 4% thereafter. If these trend rates were increased by
one percentage point per year, the accumulated postretirement benefit obliga-
tion and the aggregate of the service and interest cost components of the net
periodic postretirement benefit cost would increase by approximately 2% and
5%, respectively.
The cash basis expense recognized for these benefits in 1992 was $44 million.
10. Employee Stock Ownership Plan
Our employee stock ownership plan (ESOP) covers substantially all U. S. employ-
ees. The Company makes matching contributions to the ESOP based upon partici-
pant's savings, subject to certain limitations, and a matching percentage based
upon our return on average equity for the previous year.
In 1989 and 1990, the ESOP purchased 13,400,334 shares of PPG common stock (old
ESOP shares) from the Company and on the open market. In 1994 the ESOP pur-
chased 560,197 shares of PPG common stock (new ESOP shares) on the open market.
The ESOP financed these purchases through a combination of borrowings guar-
anteed by PPG and borrowings directly from PPG. Borrowings from third-parties
to finance these purchases are included in debt on our balance sheet.
Compensation (credit) expense related to the ESOP for 1994, 1993 and 1992 to-
taled $(1.4) million, $(.1) million and $.1 million, respectively. Interest ex-
pense totaled $10 million, $11 million and $13 million for 1994, 1993 and 1992,
respectively. Dividends on PPG shares held by the ESOP, to service ESOP debt,
totaled $31 million, $25 million and $27 million for 1994, 1993 and 1992, re-
spectively. The fair value of unallocated new ESOP shares at Dec. 31, 1994, was
$5.6 million. Shares held by the ESOP as of Dec. 31, 1994 and 1993, were as
follows:
<TABLE>
- --------------------------------------------------------------------
<CAPTION>
1994 1993
- --------------------------------------------------------------------
Old Shares New Shares Old Shares
- --------------------------------------------------------------------
<S> <C> <C> <C>
Allocated shares 5,854,945 241,294 5,292,656
- --------------------------------------------------------------------
Shares released for allocation 10,895 168,027 107,542
- --------------------------------------------------------------------
Unallocated shares 7,534,494 150,876 8,000,136
- --------------------------------------------------------------------
Total 13,400,334 560,197 13,400,334
====================================================================
</TABLE>
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 pur-
chased 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.
The following table summarizes stock option activity for the three years ended
Dec. 31, 1994.
<TABLE>
<CAPTION>
Number of Per share
options option price
- ----------------------------------------------------
<S> <C> <C>
Outstanding, Jan. 1, 1992 2,648,670 $ 9.19-27.25
- ----------------------------------------------------
Granted 2,510,840 29.38-33.81
--------------------------------------------------
Exercised (900,056) 9.19-27.25
--------------------------------------------------
Terminated (10,200) 19.75-29.38
- ----------------------------------------------------
Outstanding, Dec. 31, 1992 4,249,254 9.19-33.81
- ----------------------------------------------------
Granted 1,818,924 31.63-37.75
--------------------------------------------------
Exercised (1,007,486) 9.19-33.81
--------------------------------------------------
Terminated (16,000) 29.38-33.00
- ----------------------------------------------------
Outstanding, Dec. 31, 1993 5,044,692 9.19-37.75
- ----------------------------------------------------
Granted 1,989,592 34.25-41.63
--------------------------------------------------
Exercised (1,488,173) 9.19-37.88
--------------------------------------------------
Terminated (108,200) 29.38-39.00
- ----------------------------------------------------
Outstanding, Dec. 31, 1994 5,437,911 $ 9.19-41.63
- ----------------------------------------------------
- ----------------------------------------------------
Exercisable, Dec. 31, 1994 3,767,024 $ 9.19-40.25
====================================================
</TABLE>
<PAGE>
Notes
- --------------------------------------------------------------------------------
Shares available for future grants were 2,382,348 and 2,126,924 at Dec. 31,
1994 and 1993, 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.
Management of the Company anticipates that the resolution of the environmental
contingencies discussed below, which will occur over an extended period of
time, will not result in future annual charges to income that are significantly
greater than those recorded in recent years. It is possible, however, that
technological, regulatory and enforcement developments, the results of environ-
mental studies and other factors could alter this expectation. In management's
opinion, the Company operates in an environmentally sound manner and the out-
come of these environmental matters will not have a material effect on PPG's
financial position or liquidity. To date, compliance with federal, state and
local requirements has not had a material effect on PPG's financial position,
results of operations or liquidity.
It is PPG's policy to accrue expenses for environmental contingencies when it
is probable that a liability exists and the amount of loss can be reasonably
estimated. As of Dec. 31, 1994 and 1993, PPG had environmental reserves
totaling $90 million. Charges against income increasing these reserves for
environmental remediation costs in 1994, 1993 and 1992 were $30 million, $23
million and $16 million, respectively.
In addition to the amounts accrued, the Company may be subject to contingencies
related to environmental matters estimated at the high end to be as much as
$200 million to $400 million. Such aggregate losses are reasonably possible but
not currently considered to be probable of occurrence. The Company's environ-
mental contingencies are expected to be resolved over a period of 20 years or
more. These loss contingencies include significant unresolved issues such as
the nature and extent of contamination, if any, at sites and the methods that
may have to be employed should remediation be required. Although insurance may
cover a portion of these costs, to the extent they are incurred, any potential
recovery is not included in this unrecorded exposure to future loss. With re-
spect to certain waste sites, the financial condition of any other potentially
responsible parties also contributes to the uncertainty of estimating PPG's fi-
nal costs. Although contributors of waste to sites involving other potentially
responsible parties may face governmental agency assertions of joint and sev-
eral liability, in general, final allocations of costs are made based on the
relative contributions of wastes to such sites. PPG is generally not a major
contributor to such sites. Although the unrecorded exposure to future loss re-
lates to all sites, a significant portion of such unrecorded exposure involves
three operating plant sites and one closed plant site. Two of the sites are in
the early stages of study, while the remaining two are further into the study
phase. All four sites require additional study to assess the magnitude of con-
tamination, if any, and the remediation alternatives.
13. Other Earnings
<TABLE>
- ------------------------------------------------------------------
<CAPTION>
(Millions) 1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 9.3 $ 15.2 $ 16.9
- ------------------------------------------------------------------
Royalty income 25.0 25.3 26.9
- ------------------------------------------------------------------
Share of net earnings in equity affiliates 19.6 17.3 19.0
- ------------------------------------------------------------------
Gain from sale of investments 26.8 27.8 --
- ------------------------------------------------------------------
Other 48.8 51.4 57.6
- ------------------------------------------------------------------
Total $129.5 $137.0 $120.4
==================================================================
</TABLE>
Undistributed earnings of equity affiliates were $74.6 million and $78.7 mil-
lion at Dec. 31, 1994 and 1993, respectively. Dividends received from equity
affiliates were $15.5 million, $9.7 million and $7.8 million in 1994, 1993 and
1992, respectively.
14. Research and Development
<TABLE>
- -------------------------------------------------------
<CAPTION>
(Millions) 1994 1993 1992
- -------------------------------------------------------
<S> <C> <C> <C>
Research and development--total $233.4 $217.6 $221.4
- -------------------------------------------------------
Less depreciation 15.3 16.4 18.4
- -------------------------------------------------------
Research and development--net $218.1 $201.2 $203.0
=======================================================
</TABLE>
<PAGE>
Notes Officer Changes
- --------------------------------------------------------------------------------
15. Quarterly Financial Information (unaudited)
- --------------------------------------
<TABLE>
<CAPTION>
Income Before
Cumulative Effect of
Accounting Changes Net Earnings
Net Gross ---------------------- Income (Loss)
Sales Profit Amount Per (Loss) Per
(Millions) (Millions) (Millions) Share (Millions) Share
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 quarter ended
March 31 $1,476.9 $ 565.1 $121.9 $ .57 $ 121.9 $ .57
- -----------------------------------------------------------------------------------
June 30(/1/) 1,619.3 631.4 96.2 .46 96.2 .46
- -----------------------------------------------------------------------------------
September 30 1,575.3 613.2 145.5 .68 145.5 .68
- -----------------------------------------------------------------------------------
December 31 1,659.7 656.0 151.0 .72 151.0 .72
- -----------------------------------------------------------------------------------
Total $6,331.2 $2,465.7 $514.6 $2.43 $ 514.6 $2.43
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
1993 quarter ended
March 31(/2/) $1,446.7 $ 532.7 $110.1 $ .52 $(162.7) $(.77)
- -----------------------------------------------------------------------------------
June 30 1,523.6 557.8 106.2 .50 106.2 .50
- -----------------------------------------------------------------------------------
September 30(/3/) 1,405.4 520.5 24.8 .12 24.8 .12
- -----------------------------------------------------------------------------------
December 31(/4/) 1,378.2 509.6 53.9 .25 53.9 .25
- -----------------------------------------------------------------------------------
Total $5,753.9 $2,120.6 $295.0 $1.39 $ 22.2 $ .10
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
(/1/) Second-quarter 1994 earnings were reduced by a pre-tax charge for business
divestitures and realignments of $85.0 million, or $0.24 per share.
(/2/) See Note 2, Changes in Methods of Accounting, for information regarding
the effect of accounting changes as of Jan. 1, 1993.
(/3/) Third-quarter 1993 earnings were reduced by a pre-tax charge for business
divestitures and realignments of $87.0 million, or $0.24 per share.
(/4/) Fourth-quarter 1993 earnings were reduced by a pre-tax charge for business
divestitures and realignments of $38.0 million, or $0.21 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 1993 earnings per share by $0.06.
16. Financial Instruments
Included in PPG's financial instrument portfolio are cash and marketable secu-
rities, Company-owned life insurance and short- and long-term debt instruments.
The most significant instrument, long-term debt, had carrying and fair values
totaling $776 million and $790 million, respectively, at Dec. 31, 1994. The
corresponding amounts at Dec. 31, 1993, were $770 million and $850 million, re-
spectively. 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 in-
struments of the same remaining maturities.
17. Business Segment Information
Refer to pages 26 and 27 for information on our business segments for 1994,
1993 and 1992.
During 1994, Robert D. Duncan, formerly group vice president, Glass, and
Raymond W. LeBoeuf, formerly vice president, finance, were elected executive
vice presidents. They were named concurrently to the newly created Office of
the Chief Executive to accompany Board Chairman Jerry E. Dempsey. At the same
time, Russell L. Crane, vice president, human resources, was elected senior
vice president, human resources and administration, and Peter R. Heinze, John
J. Horgan and Guy A. Zoghby were elevated from vice presidents to senior vice
presidents of their respective functions.
In early 1995, William H. Hernandez, formerly vice president and controller,
was elected senior vice president, finance. Dan W. Kiener, who had been
assistant controller, was named controller.
Additionally, during 1994, Thomas M. Von Lehman, formerly director of corporate
planning, was named vice president of purchasing and distribution. Also, L.
Blaine Boswell, who had been president of PPG Europe, was elected to the newly
created post of vice president of public affairs. Later in the year, upon the
retirement of Edward J. Mazeski, Jr., H. Kennedy Linge, who had been treasurer,
was elected secretary of the Company.
In January 1995, Gary W. Weber was elected vice president, science and
technology. He had been vice president of technology for Glass.
In the operating units, in early 1995, E. Kears Pollock was named vice
president, Coatings & Resins, with operational responsibility for the business.
Richard Zahren succeeded him as vice president, automotive products, Coatings &
Resins. Mr. Zahren had been vice president of operations, automotive products,
and, prior to that, vice president of purchasing and distribution.
In 1994 James W. Craig was appointed president of PPG Europe and vice president
of Coatings & Resins, Europe. Margaret H. McGrath succeeded him as president of
PPG Canada and vice president of Coatings & Resins, Canada. Arend W. D. Vos,
formerly vice president, Coatings & Resins, Europe, was named vice president,
Coatings & Resins. He was relocated to Tokyo in anticipation of the future
retirement of Ken Kurahashi, vice president, Coatings & Resins, PPG
Asia/Pacific, and president of PPG Japan.
Also in 1994, Frank A. Archinaco was named vice president, Glass. He had been
vice president of automotive and aircraft glass products. Michael A. Ludlow,
who had been general manager of automotive replacement glass, became vice
president of automotive glass OEM products.
<PAGE>
Corporate Directory
- --------------------------------------------------------------------------------
Directors
Erroll B. Davis, Jr.
President and Chief Executive Officer, WPL Holdings, Inc.
Jerry E. Dempsey
Chairman of the Boardand Chief Executive Officer, PPG Industries, Inc.
*+Lucie J. Fjeldstad President, Video Systems, Tektronix Inc.
*+Stanley C. Gault
Chairman of the Boardand Chief ExecutiveOfficer, The GoodyearTire & Rubber
Company
*++Allen J. Krowe
Vice Chairman, Texaco Inc.
+++Steven C. Mason
Chairman and ChiefExecutive 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
Office of the Chief Executive
Jerry E. Dempsey
Chairman of the Board and Chief Executive Officer
Robert D. Duncan
Executive Vice President
Raymond W. LeBoeuf
Executive Vice President
Other Management Committee Members
Russell L. Crane
Senior Vice President, Human Resources and Administration
Peter R. Heinze
Senior Vice President, Chemicals
William H. Hernandez
Senior Vice President, Finance
John J. Horgan
Senior Vice President, Fiber Glass
Guy A. Zoghby
Senior Vice President andGeneral Counsel
Coatings & Resins
E. Kears Pollock
Vice President,Coatings & Resins
Charles E. Bunch
Vice President,Architectural Finishes
Thomas A. Craig
Vice President,Refinish Products
Neil H. Frick
Vice President,Research and Development
Ernest A. Hahn
Vice President,Industrial Coatings
Ken Kurahashi
Vice President, Coatings & Resins, PPG Asia/Pacific; President, PPG Japan
Arend W. D. Vos
Vice President,Coatings & Resins, Asia/Pacific
Roderick I. A. Watters
Vice President, Automotive Products, Europe
Richard Zahren
Vice President, Automotive Products
Glass
Frank A. Archinaco
Vice President, Glass
Stanley C. DeGreve
Vice President, Operations, Fiber Glass
Michael A. Ludlow
Vice President, Automotive, OEM Products
Chemicals
Donald W. Bogus
Vice President,Specialty Chemicals
Rae R. Burton
Vice President, Chlor-Alkali and Derivatives
John M. Wilkins
Vice President, Chemicals, Asia/Pacific
Corporate Functions
L. Blaine Boswell
Vice President, Public Affairs
James W. Craig
President, PPG Europe; Vice President, Coatings & Resins, Europe
Dan W. Kiener
Controller
H. Kennedy Linge
Secretary
John Maaghul
President, PPG Asia/Pacific;Vice President, Glass, Asia/Pacific
Margaret H. McGrath
President, PPG Canada; Vice President, Coatings & Resins, Canada
David W. Smith
Vice President, Information Technology
Thomas M. Von Lehman
Vice President, Purchasing and Distribution
David R. Wallis
Vice President, Corporate Development
Gary W. Weber
Vice President, Science and Technology
<PAGE>
Eleven-Year Digest
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Net sales 6,331 5,754 5,814 5,673 6,021 5,734 5,617 5,183 4,687 4,346 4,242
- ----------------------------------------------------------------------------------------------------------------------------
Gross profit (%) 38.9 36.9 36.4 35.2 37.8 37.1 39.2 37.8 37.2 35.9 34.1
- ----------------------------------------------------------------------------------------------------------------------------
Income before income
taxes 840 531 538 348 767 749 779 637 553 537 527
- ----------------------------------------------------------------------------------------------------------------------------
Income taxes 325 236 218 147 292 284 311 260 236 234 224
- ----------------------------------------------------------------------------------------------------------------------------
Income before accounting
changes 515 295 319 201 475 465 468 377 316 303 303
- ----------------------------------------------------------------------------------------------------------------------------
Cumulative effect of
accounting
changes(/1/) -- (273) -- 75 -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net income 515 22 319 276 475 465 468 377 316 303 303
- ----------------------------------------------------------------------------------------------------------------------------
Average equity(/2/) 2,562 2,530/2,749 2,701 2,577 2,407 2,220 2,121 2,089 1,838 1,913 1,931
- ----------------------------------------------------------------------------------------------------------------------------
Return on average equity
(%)(/2/) 20.1 .9/10.7 11.8 10.7 19.7 21.0 22.1 18.1 17.2 15.8 15.7
- ----------------------------------------------------------------------------------------------------------------------------
Earnings per share
before accounting
changes 2.43 1.39 1.51 .95 2.22 2.09 2.13 1.60 1.33 1.13 1.08
- ----------------------------------------------------------------------------------------------------------------------------
Cumulative effect of
accounting changes on
earnings per share -- (1.29) -- .35 -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Earnings per share 2.43 .10 1.51 1.30 2.22 2.09 2.13 1.60 1.33 1.13 1.08
- ----------------------------------------------------------------------------------------------------------------------------
Average number of shares 211.9 212.6 212.2 212.4 214.4 222.6 219.6 236.4 237.8 266.8 279.8
- ----------------------------------------------------------------------------------------------------------------------------
Dividends 238 221 200 183 176 165 141 132 112 110 98
- ----------------------------------------------------------------------------------------------------------------------------
Per share 1.12 1.04 .94 .86 .82 .74 .64 .56 .47 .41 .35
- ----------------------------------------------------------------------------------------------------------------------------
Balance Sheet
Current assets 2,168 2,026 1,951 2,173 2,217 2,056 1,899 1,844 1,616 1,370 1,332
- ----------------------------------------------------------------------------------------------------------------------------
Current liabilities 1,425 1,281 1,253 1,341 1,471 1,338 1,264 1,295 976 824 773
- ----------------------------------------------------------------------------------------------------------------------------
Working capital 743 745 698 833 746 718 635 549 640 546 559
- ----------------------------------------------------------------------------------------------------------------------------
Property (net) 2,742 2,787 2,972 3,183 3,255 3,007 2,758 2,685 2,661 2,479 2,257
- ----------------------------------------------------------------------------------------------------------------------------
Total assets 5,894 5,652 5,662 6,056 6,108 5,645 5,154 5,008 4,641 4,084 3,797
- ----------------------------------------------------------------------------------------------------------------------------
Long-term debt and lease
obligations 773 774 905 1,190 1,210 1,198 892 917 1,018 1,000 496
- ----------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 2,557 2,473 2,699 2,655 2,547 2,282 2,243 2,044 1,978 1,705 2,015
- ----------------------------------------------------------------------------------------------------------------------------
Per share 12.35 11.57 12.71 12.50 12.01 10.49 10.24 9.22 8.28 7.19 7.20
- ----------------------------------------------------------------------------------------------------------------------------
Other Data
Capital spending 356 293 283 335 567 671 410 479 497 452 315
- ----------------------------------------------------------------------------------------------------------------------------
Depreciation expense 318 331 352 351 324 292 274 266 242 214 206
- ----------------------------------------------------------------------------------------------------------------------------
Quoted market price
High 42 1/8 38 1/8 34 1/8 29 5/8 27 5/8 23 23 3/8 26 3/4 19 3/8 12 3/4 9 1/2
--------------------------------------------------------------------------------------------------------------------------
Low 33 3/4 29 5/8 25 20 3/4 17 1/4 18 1/2 15 5/8 13 3/4 11 1/4 8 1/8 6 1/8
--------------------------------------------------------------------------------------------------------------------------
Year-end 37 1/8 37 7/8 32 7/8 25 1/4 23 1/2 19 7/8 20 1/8 16 1/2 18 1/8 12 3/4 8 1/8
--------------------------------------------------------------------------------------------------------------------------
Price/earnings
ratio(/3/)
High 17 27 23 31 12 11 11 17 15 11 9
--------------------------------------------------------------------------------------------------------------------------
Low 14 21 17 22 8 9 7 9 8 7 6
--------------------------------------------------------------------------------------------------------------------------
Average number of
employees 30,800 31,400 32,300 33,700 35,100 35,500 36,300 36,800 36,500 37,500 37,700
- ----------------------------------------------------------------------------------------------------------------------------
</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 June
10, 1994, and on March 12, 1987.
(/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.
<PAGE>
PPG Shareholder Information
- --------------------------------------------------------------------------------
World HeadquartersOne PPG PlacePittsburgh, PA 15272, U.S.A.
Phone (412) 434-3131
Annual Meeting
Thursday, April 20, 1995, 2:00 p.m. Pittsburgh Hilton and Towers Gateway Center
Pittsburgh, PA 15222
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 (Registered Trademark) Commitment--a brochure outlining
the Company's voluntary activities under the Responsible Care (Registered
Trademark) 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 29 cents per share, voted by the board of directors on Jan. 19, 1995,
results in an annual dividend rate of $1.16 per share.
Stock Exchange Listings
PPG common stock is traded on the New York, Pacific and Philadelphia 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. Shareholders also may purchase additional
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 of Investor
Relations, 40N, PPG Industries, One PPG Place, Pittsburgh, PA 15272.
Quarterly Stock Market Price(/1/)
<TABLE>
<CAPTION>
1994 1993
- --------------------------------------------------------------
Quarter Ended High Low Close High Low Close
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31 $40 3/8 $36 3/8 $37 1/8 $34 7/8 $29 5/8 $33 7/8
- --------------------------------------------------------------
June 30 39 1/2 34 5/8 37 1/2 37 7/8 32 3/4 32 3/4
- --------------------------------------------------------------
Sept. 30 42 1/8 37 5/8 39 5/8 35 7/8 32 1/4 32 5/8
- --------------------------------------------------------------
Dec. 31 41 1/2 33 3/4 37 1/8 38 1/8 32 3/8 37 7/8
- --------------------------------------------------------------
</TABLE>
The number of holders of record of PPG common stock as ofJan. 31, 1995, was
33,352, as shown on the records of the Company's transfer agent.
Dividends(/1/)
<TABLE>
<CAPTION>
1994 1993
- --------------------------------------------
Month of Amount Per Amount Per
Payment (Millions) Share (Millions) Share
- --------------------------------------------
<S> <C> <C> <C> <C>
March $ 57.4 $ .27 $ 53.0 $ .25
- --------------------------------------------
June 59.5 .28 53.2 .25
- --------------------------------------------
September 59.5 .28 57.3 .27
- --------------------------------------------
December 61.4 .29 57.3 .27
- --------------------------------------------
Total $237.8 $1.12 $220.8 $1.04
- --------------------------------------------
- --------------------------------------------
</TABLE>
(/1/) Data was adjusted to reflect the two-for-one stock split payable on June
10, 1994.
<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 1994 consolidated financial statements of the Company are:
Percentage of
Voting Power
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
LYNX Services from PPG, L.L.C.......................... 80.00
Canadian:
PPG Canada Inc......................................... 100.00
European:
Ampaspace S.r.l. - Italy............................... 80.00
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
PPG Industries Chemicals B.V........................... 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
<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. 33-50400 on Form S-8, and in Registration Statement
No. 33-53235 on Form S-8 of our reports dated January 19, 1995, appearing in and
incorporated by reference in this Annual Report on Form 10-K of PPG Industries,
Inc. for the year ended December 31, 1994.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
February 16, 1995
<PAGE>
Exhibit 24
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Erroll B. Davis, Jr., a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/s/ Erroll B. Davis, Jr.
________________________
<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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H.
Hernandez and H. K. Linge, 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, 1994, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/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, W. H. Hernandez and H. K. Linge, 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, 1994, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 16th day of February 1995.
/s/ David R. Whitwam
_________________________
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