<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File Number 1-1687
PPG INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0730780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One PPG Place, Pittsburgh, Pennsylvania 15272
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 434-3131
As of April 28, 1995, 206,188,018 shares of the Registrant's common stock, par
value $1.66-2/3 per share, were outstanding.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
=====================================
Index
Part I. Financial Information Page(s)
Item 1. Financial Statements:
Condensed Statement of Operations................................ 2
Condensed Balance Sheet.......................................... 3
Condensed Statement of Cash Flows................................ 4
Notes to Condensed Financial Statements.......................... 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8-11
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders....... 12
Item 6. Exhibits and Reports on Form 8-K.......................... 13
Signature............................................................ 14
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<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
PPG INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
Condensed Statement of Operations (Unaudited)
(Millions, except per share amounts)
<CAPTION>
Three Months Ended March 31
1995 1994
<S> <C> <C>
Net sales.................................... $1,740.8 $1,476.9
Cost of sales................................ 1,028.1 911.8
Gross profit............................... 712.7 565.1
Other expenses:
Selling, general and administrative........ 231.5 216.0
Depreciation............................... 80.0 78.5
Research and development................... 56.9 49.0
Interest................................... 20.5 21.8
Other charges.............................. 38.0 15.1
Total other expenses..................... 426.9 380.4
Other earnings............................... 73.1 24.9
Income before income taxes
and minority interest...................... 358.9 209.6
Income taxes................................. 136.4 83.8
Minority interest............................ 3.3 3.9
Net income................................... $ 219.2 $ 121.9
Earnings per share........................... $ 1.06 $ 0.57
Dividends per share.......................... $ 0.29 $ 0.27
Average shares outstanding................... 206.5 212.9
</TABLE>
The accompanying notes to the condensed financial statements are an integral
part of this statement.
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<PAGE>
PPG INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
Condensed Balance Sheet (Unaudited)
<CAPTION>
March 31 Dec. 31
1995 1994
(Millions)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.................. $ 73.2 $ 62.1
Receivables-net............................ 1,413.0 1,228.9
Inventories (Note 2)....................... 767.3 686.4
Other...................................... 197.6 190.8
Total current assets..................... 2,451.1 2,168.2
Property (less accumulated depreciation of
$3,251.6 million and $3,420.4 million)..... 2,758.9 2,742.3
Investments.................................. 192.2 277.4
Other assets................................. 745.8 706.0
Total.................................... $6,148.0 $5,893.9
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current
portion of long-term debt................ $ 382.2 $ 370.7
Accounts payable and accrued liabilities... 1,059.4 1,034.4
Income taxes............................... 134.7 19.4
Total current liabilities................ 1,576.3 1,424.5
Long-term debt............................... 655.5 773.4
Deferred income taxes........................ 303.7 302.7
Accumulated provisions....................... 278.2 260.5
Other postretirement benefits ............... 513.4 505.5
Minority interest............................ 74.3 70.3
Total liabilities........................ 3,401.4 3,336.9
Shareholders' equity:
Common stock............................... 484.3 484.3
Additional paid-in capital................. 69.2 67.5
Retained earnings.......................... 3,877.2 3,717.1
Treasury stock............................. (1,515.9) (1,488.6)
Unearned compensation...................... (172.9) (183.0)
Minimum pension liability adjustment....... (1.7) (1.7)
Currency translation adjustment............ 6.4 (38.6)
Total shareholders' equity............... 2,746.6 2,557.0
Total.................................... $6,148.0 $5,893.9
</TABLE>
The accompanying notes to the condensed financial statements are an integral
part of this statement.
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<PAGE>
PPG INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
Condensed Statement of Cash Flows (Unaudited)
<CAPTION>
Three Months Ended March 31
1995 1994
(Millions)
<S> <C> <C>
Cash from operating activities .............. $ 181.4 $ 83.5
Investing activities:
Capital spending.......................... (75.0) (86.1)
Reduction of investments.................. 98.7 --
Other..................................... 6.0 3.4
Cash from (used for) investing
activities......................... 29.7 (82.7)
Financing activities:
Net change in borrowings with
maturities of three months or less...... (78.9) 111.3
Proceeds from other short-term debt....... 10.9 15.6
Repayment of other short-term debt........ (35.0) (8.2)
Proceeds from long-term debt.............. 6.8 3.1
Repayment of long-term debt and capital
leases.................................. (25.8) (7.8)
Repayment of loans by employee stock
ownership plan.......................... 10.1 3.9
Purchase of treasury stock, net........... (29.8) (57.1)
Dividends paid............................ (59.8) (57.4)
Cash (used for) from
financing activities............... (201.5) 3.4
Effect of currency exchange rate changes
on cash and cash equivalents............... 1.5 .8
Net increase in cash
and cash equivalents....................... 11.1 5.0
Cash and cash equivalents,
beginning of period..... ................... 62.1 111.9
Cash and cash equivalents,
end of period.............................. $ 73.2 $ 116.9
</TABLE>
The accompanying notes to the condensed financial statements are an integral
part of this statement.
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<PAGE>
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Financial Statements (Unaudited)
1. Financial Statements
The condensed financial statements included herein are unaudited. In the
opinion of management, these statements include all adjustments,
consisting only of normal, recurring adjustments, necessary for a fair
presentation of the financial position of PPG Industries, Inc. and
subsidiaries (the Company or PPG) at March 31, 1995, and the results of
their operations and their cash flows for the three months ended March
31, 1995 and 1994. These condensed financial statements should be read
in conjunction with the financial statements and notes thereto included
in PPG's Annual Report on Form 10-K for the year ended December 31, 1994.
The results of operations for the three months ended March 31, 1995 are
not necessarily indicative of the results to be expected for the full
year.
2. Inventories
Inventories at March 31, 1995 and December 31, 1994 are detailed below.
<TABLE>
<CAPTION>
March 31 Dec. 31
1995 1994
(Millions)
<S> <C> <C>
Finished products and work in process............. $522.9 $462.7
Raw materials..................................... 131.2 111.9
Supplies.......................................... 113.2 111.8
Total.......................................... $767.3 $686.4
</TABLE>
Most domestic and certain foreign inventories are valued using the last-
in, first-out method. If the first-in, first-out method had been used,
inventories would have been $210.9 million and $199.2 million higher at
March 31, 1995 and December 31, 1994 respectively.
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<PAGE>
3. Cash Flow Information
Cash payments for interest were $15.3 million and $18.6 million for the
three months ended March 31, 1995 and 1994, respectively. Net cash
payments for income taxes for the three months ended March 31, 1995 and
1994 were $22.5 million and $12.6 million, respectively.
4. Business Segment Information
<TABLE>
<CAPTION>
Three Months Ended March 31
1995 1994
(Millions)
<S> <C> <C>
Net sales:
Coatings and Resins $ 684 $ 621
Glass 661 568
Chemicals 396 288
Total $1,741 $1,477
Operating income:
Coatings and Resins $ 129 $ 124
Glass 155 76
Chemicals 93 36
Total operating income 377 236
Interest expense - net (18) (20)
Other unallocated
corporate expense - net -- (6)
Income before income taxes and
minority interest $ 359 $ 210
</TABLE>
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<PAGE>
5. 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 environmental studies and other
factors could alter this expectation. In management's opinion, the
Company operates in an environmentally sound manner and the outcome of
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 impact 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 March 31, 1995 and December 31, 1994,
PPG had environmental reserves totaling $89 million and $90 million,
respectively. Charges against income increasing these reserves for
environmental remediation costs for the three months ended March 31,
1995 and 1994 were $8 million and $1 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 current environmental 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 respect to certain waste sites, the financial condition of
any other potentially responsible parties also contributes to the
uncertainty of estimating PPG's final costs. Although contributors of
waste to sites involving other potentially responsible parties may face
governmental agency assertions of joint and several liability, in
general, final allocations of costs are made based on the relative
contributions of wastes to such sites. PPG is generally not a major
contributor to such sites. Although the unrecorded exposure to future
loss relates 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 contamination, if any, and the
remediation alternatives.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Performance Overview
Sales for the first quarter of 1995 and 1994 were $1.74 billion and $1.48
billion, respectively. The sales increase was attributable to higher prices,
particularly for our chlor-alkali and derivative, fiber glass, and flat glass
products, higher volumes in each of the business segments, and the favorable
effects of foreign currency translation.
The gross profit percentage increased to 40.9% from 38.3% in the prior year's
quarter. Contributing factors to the improvement were higher overall sales
prices and benefits from manufacturing efficiencies. The negative effects of
inflation partially offset these gains.
During the first quarter of 1995, a legal settlement regarding a glass
technology dispute with Pilkington plc of England resulted in a $24.2 million
after-tax gain ($0.12 per share).
Net income and earnings per share for the quarter were $219.2 million and
$1.06, respectively. In the first quarter of 1994, net income and earnings
per share were $121.9 million and $0.57, respectively. Current period income
was favorably impacted by the factors that contributed to the gross profit
percentage improvement, higher sales volumes, and increased other earnings
which were attributable to gains from legal settlements. Partially offsetting
these gains were higher income tax expense and increased other charges. The
majority of the increase in other charges was the result of a charge for a
legal dispute and higher environmental expenses.
Performance of Business Segments
Coatings and resins sales increased to $684 million from $621 million for the
first quarter of 1994. Operating earnings for the corresponding periods were
$129 million and $124 million, respectively. The increase in sales was
primarily attributable to higher volumes in the European automotive original
and worldwide industrial coatings product lines, the favorable effects of
translating European currencies, and stronger prices for our automotive
refinish products. Lower North American automotive refinish volume partially
offset these improvements. Operating earnings remained relatively flat as
volume and manufacturing efficiencies, combined with a gain from a settlement
of an industrial coatings dispute, were substantially offset by the negative
effects of inflation on raw material and overhead costs.
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<PAGE>
Glass sales increased to $661 million in the first quarter of 1995 from $568
million in the prior year's quarter. Operating income increased to $155
million from $76 million in the corresponding 1994 period. Higher sales
prices, principally for worldwide fiber glass and flat glass products, higher
volumes in most of the segment's major businesses, principally worldwide
automotive original and fiber glass, and the favorable effects of translating
European currencies contributed to the sales increase. Lower North American
automotive replacement glass volume partially offset these improvements.
Increased operating earnings were primarily the result of the factors that
contributed to the sales increase, manufacturing efficiencies, and the gain
from the legal settlement with Pilkington. The negative effects of inflation
and higher overhead costs partially offset these improvements.
Chemicals sales increased to $396 million from $288 million in the first
quarter of 1994. Operating earnings for the corresponding periods were $93
million and $36 million, respectively. The increase in sales was primarily
attributable to substantial price gains for chlor-alkali and derivative
products and volume improvements for most specialty and chlor-alkali
derivative products. The increase in operating earnings was attributable to
the factors that contributed to the sales increase combined with manufacturing
efficiencies. Partially offsetting these improvements were the negative
effects of inflation, particularly on ethylene costs, a charge for a legal
dispute, increased environmental expenses, and higher overhead costs.
Other Factors
The increase in income tax expense was principally due to significantly higher
pre-tax earnings. Partially offsetting this was a decrease in the effective
tax rate, primarily attributable to losses at certain European subsidiaries
for which we were unable to recognize any income tax benefit in 1994. The
increase in income taxes payable was principally the result of the timing of
estimated tax payments in the first quarter of 1995 versus the fourth quarter
of 1994.
The increase in accounts receivable was the result of higher sales in February
and March of 1995 as compared with those in November and December of 1994,
seasonal extended credit terms to certain customers, and the strengthening of
certain European currencies against the U.S. dollar. Also contributing to the
increase was the receivable from the legal settlement with Pilkington which
was collected in early April 1995.
Higher inventories were mainly due to a build-up in our coatings and resins
and glass segments to support anticipated stronger seasonal sales volumes and
the strengthening of certain European currencies against the U.S. dollar.
The decline in investments was principally due to a loan taken against the
cash surrender value of an investment in company-owned life insurance.
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<PAGE>
The decline in long-term debt was primarily attributable to a reclassification
of the portion of long-term notes maturing in the first quarter of 1996 to
current liabilities. Substantially offsetting this increase in such
liabilities was the repayment of certain short-term borrowings with cash
generated from operations.
PPG's Board of Directors approved a repurchase of ten million shares of PPG
common stock. The shares may be repurchased in open market or private
transactions and a timetable for the repurchase has not been established.
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 environmental studies and other factors could alter this
expectation. In management's opinion, the Company operates in an
environmentally sound manner and the outcome of 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 impact 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 March 31, 1995 and December 31, 1994, PPG had environmental
reserves totaling $89 million and $90 million, respectively. Charges against
income increasing these reserves for environmental remediation costs for the
three months ended March 31, 1995 and 1994 were $8 million and $1 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 current environmental 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 respect to certain waste sites, the
financial condition of any other potentially responsible parties also
contributes to the uncertainty of estimating PPG's final costs. Although
contributors of waste to sites involving other potentially responsible parties
may face governmental agency assertions of joint and several liability, in
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<PAGE>
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
relates 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 contamination, if any, and the remediation alternatives.
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
fluctuations. 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
currencies it reduces such exposure. The market value of the forward and
option contracts purchased and outstanding as of March 31, 1995, was not
material.
The Company manages its interest rate risk in order to balance its exposure
between 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 March 31, 1995 and
December 31, 1994, the notional principal amounts and fair values of interest
rate swaps held were immaterial.
PPG's policies do not permit active trading of currency or interest rate
derivatives.
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<PAGE>
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Registrant's Annual Meeting of Shareholders held on April 20, 1995 (the
"Annual Meeting"), the shareholders voted on the following matters with the
results shown below. There were no broker nonvotes with respect to any of
these matters.
1. On the matter of the election of three directors to serve for the terms
indicated in the proxy statement relating to the Annual Meeting, the vote
was as follows:
Nominees Votes For Votes Withheld
Erroll B. Davis, Jr. 165,162,896 1,273,235
Allen J. Krowe 165,463,474 972,657
Robert Mehrabian 165,379,252 1,056,879
Each of the nominees was therefore elected a director to serve for the
terms indicated in the proxy statement relating to the Annual Meeting.
2. On the matter of the election of Deloitte & Touche LLP as auditors for
the Registrant for the year 1995, the vote was as follows:
For: 165,216,165 Against: 742,080 Abstain: 630,366
Therefore, Deloitte & Touche LLP were elected auditors for the Registrant
for 1995.
3. On the matter of a proposal to amend the Restated Articles of
Incorporation of the Registrant to increase the number of authorized
shares of common stock from 300 million to 600 million shares, the vote
was as follows:
For: 149,817,396 Against: 15,324,190 Abstain: 1,447,025
Therefore, the Restated Articles of Incorporation of the Registrant were
amended to increase the number of authorized shares of common stock from
300 million to 600 million.
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<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(i) Restated Articles of Incorporation as amended through April
20, 1995
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Form 8-K on April 7, 1995, dated April 4, 1995,
attaching a press release. The release indicated that the glass
technology dispute with Pilkington plc of England had been settled.
Both companies dismissed all actions on the basis of no finding of
fault on either side. Pilkington plc is to pay PPG $50 million,
being reimbursement of $36 million paid by PPG to Pilkington after
an earlier litigation and a contribution toward balancing of legal
costs. This settlement eliminates all existing claims between PPG
and Pilkington and those companies agreed generally not to file any
future claims against each other, or their subsidiaries or
licensees, concerning float-process technology for making flat
glass.
The Company filed a Form 8-K on April 24, 1995, dated April 20,
1995. The report indicated that on April 20, 1995 the Board of
Directors approved the repurchase of ten million shares of the
Company's outstanding common stock, par value $1.66 2/3 per share.
The shares may be repurchased in open market or private
transactions and a timetable was not established for the
repurchase.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PPG INDUSTRIES, INC.
(Registrant)
Date: May l, 1995 /s/W. H. Hernandez
W. H. Hernandez
Senior Vice President, Finance
(Principal Financial and
Accounting Officer and
Duly Authorized Officer)
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<PAGE>
PPG INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
No. Description
(3)(i) Restated Articles of Incorporation as amended through April 20, 1995
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
RESTATED
ARTICLES OF INCORPORATION
AS AMENDED
OF
PPG INDUSTRIES, INC.
__________________________
FIRST. The name of the corporation is PPG Industries, Inc.
SECOND. The location and post office address of its registered
office in the Commonwealth of Pennsylvania is One PPG Place,
Pittsburgh, Pennsylvania 15272.
THIRD. The purpose or purposes of the corporation, which exists
under the Business Corporation Law of 1933, as amended, are:
(a) To manufacture, buy, sell, install, and deal in goods,
wares, and merchandise of all descriptions;
(b) To mine, contract, quarry, drill, or bore for, produce, buy,
and sell coal, limestone, sand, clay, gypsum, oil, ores,
mineral salt, natural gas (sales to be made at the mouth of
the well and at wholesale only), and other minerals and
mineral substances;
(c) To engage in building construction, as contractor or
otherwise; and
(d) To engage in research, engineering, and developmental work.
The corporation shall also have unlimited power to engage in and
to do any lawful act concerning any or all lawful business for which
corporations may be incorporated under the Business Corporation Law of
1933, as amended.
FOURTH. The term of its existence is perpetual.
FIFTH. 5.1 The aggregate number of shares of all classes of
capital stock which the corporation shall have authority to issue is
610,000,000, of which 10,000,000 shares shall be Preferred Stock,
without par value, issuable in one or more series and 600,000,000
shares shall be Common Stock, par value $1.66 2/3 per share.
5.2 The Board of Directors is hereby expressly authorized, at
any time or from time to time, to divide any or all of the shares of
Preferred Stock into one or more series, and in the resolution or
resolutions establishing a particular series, before issuance of any
<PAGE>
of the shares thereof, to fix and determine the number of shares and
the designation of such series, so as to distinguish it from the
shares of all other series and classes, and to fix and determine the
preferences, voting rights, qualifications, privileges, limitations,
options, conversion rights, restrictions and other special or relative
rights of the Preferred Stock or of such series, to the fullest extent
now or hereafter permitted by the laws of the Commonwealth of
Pennsylvania, including, but not limited to, the variations between
different series in the following respects:
(a) the distinctive designation of such series and the number of
shares which shall constitute such series, which number may
be increased or decreased (but not below the number of
shares thereof then outstanding) from time to time by the
Board of Directors;
(b) the annual dividend rate for such series, and the date or
dates from which dividends shall commence to accrue;
(c) the price or prices at which, and the terms and conditions
on which, the shares of such series may be made redeemable;
(d) the purchase or sinking fund provisions, if any, for the
purchase or redemption of shares of such series;
(e) the preferential amount or amounts payable upon shares of
such series in the event of the liquidation, dissolution or
winding up of the corporation;
(f) the voting rights, if any, of shares of such series;
(g) the terms and conditions, if any, upon which shares of such
series may be converted and the class or classes or series
of shares of the corporation or other securities into which
such shares may be converted;
(h) the relative seniority, parity or junior rank of such series
as to dividends or assets with respect to any other classes
or series of stock then or thereafter to be issued; and
(i) such other terms, qualifications, privileges, limitations,
options, restrictions, and special or relative rights and
preferences, if any, of shares of such series as the Board
of Directors may, at the time of such resolution or
resolutions, lawfully fix and determine under the laws of
the Commonwealth of Pennsylvania.
Unless otherwise provided in a resolution or resolutions establishing
any particular series, the aggregate number of authorized shares of
<PAGE>
Preferred Stock may be increased by an amendment of the Restated
Articles approved solely by a majority vote of the outstanding shares
of Common Stock (or solely with a lesser vote of the Common Stock, or
solely by action of the Board of Directors, if permitted by law at the
time).
All shares of any one series shall be alike in every particular,
except with respect to the accrual of dividends prior to the date of
issuance.
Attached hereto as Exhibit A and incorporated herein by reference
is a statement of the designation and number of shares and of the
voting rights, preferences, limitations and special rights, if any, of
the first series of the Preferred Stock, as previously determined by a
resolution adopted by the Board of Directors pursuant to this
Section 5.2.
5.3 Except for and subject to those rights expressly granted to
the holders of Preferred Stock or any series thereof by resolution or
resolutions adopted by the Board of Directors pursuant to Section 5.2
of this Article Fifth and except as may be provided by the laws of the
Commonwealth of Pennsylvania, the holders of Common Stock shall have
exclusively all other rights of shareholders.
5.4(a) No holder of Common Stock or of any other class of stock
of the corporation shall be entitled as such, as a matter of right, to
subscribe for or purchase any part of any new or additional issue of
stock of any class or of securities convertible into any stock of any
class, whether now or hereafter authorized and whether issued for cash
or other consideration or by way of dividend, and the corporation may
issue shares, option rights or securities having option or conversion
rights without first offering them to shareholders of any class.
(b) The holders of Common Stock shall have the right of
cumulative voting in all elections of directors.
SIXTH. 6.1 The business and affairs of the corporation shall be
managed by a Board of Directors comprised as follows:
(a) The Board of Directors shall consist of not less than 9 nor
more than 17 persons, the exact number to be fixed from time
to time by the Board of Directors pursuant to a resolution
adopted by a majority vote of the directors then in office;
(b) Directors shall, from and after the annual meeting of
shareholders held in 1987, continue to be classified with
respect to the time for which they shall severally hold
office by dividing them into 3 classes, as nearly equal in
number as possible. At such meeting and at each succeeding
<PAGE>
annual meeting of shareholders, the class of directors then
being elected shall be elected to hold office for a term of
3 years. Each director shall hold office for the term for
which elected and until his or her successor shall have been
elected and qualified;
(c) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, any class of
directors, or the entire Board of Directors, may be removed
from office by shareholder vote at any time, with or without
assigning any cause, but only if shareholders entitled to
cast at least 80% of the votes which all shareholders would
be entitled to cast at an annual election of directors or of
such class of directors shall vote in favor of such removal;
provided, however, that no individual director shall be
removed (unless the entire Board of Directors or any class
of directors be removed) in case the votes cast against such
removal would be sufficient, if voted cumulatively for such
director, to elect him or her to the class of directors of
which he or she is a member; and
(d) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, vacancies in the Board of
Directors, including vacancies resulting from an increase in
the number of directors, shall be filled only by a majority
vote of the remaining directors then in office, though less
than a quorum, except that vacancies resulting from removal
from office by a vote of the shareholders may be filled by
the shareholders at the same meeting at which such removal
occurs. All directors elected to fill vacancies shall hold
office for a term expiring at the annual meeting of
shareholders at which the term of the class to which they
have been elected expires. No decrease in the number of
directors constituting the Board of Directors shall shorten
the term of any incumbent director.
6.2 Notwithstanding any other provisions of law, the Restated
Articles or the Bylaws of the corporation, the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding
shares of capital stock of the corporation entitled to vote in an
annual election of directors, voting together as a single class, shall
be required to amend or repeal, or to adopt any provision inconsistent
with, this Article Sixth.
SEVENTH. 7.1 A higher than majority shareholder vote for
certain Business Combinations shall be required as follows (all
capitalized terms being used as subsequently defined herein):
<PAGE>
(a) In addition to any affirmative vote required by law or the
Restated Articles, and except as otherwise expressly
provided in Section 7.2 of this Article Seventh:
(1) any merger or consolidation of the corporation or any
Subsidiary with (A) any Interested Shareholder or with (B)
any other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation
would be, an Affiliate or Associate of an Interested
Shareholder;
(2) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder of any
assets of the corporation or any Subsidiary having an
aggregate Fair Market Value of $10,000,000 or more;
(3) the issuance or sale by the corporation or any
Subsidiary (in one transaction or a series of transactions)
of any securities of the corporation or any Subsidiary to
any Interested Shareholder or any Affiliate or Associate of
any Interested Shareholder in exchange for cash, securities
or other consideration (or a combination thereof) having an
aggregate Fair Market Value of $10,000,000 or more;
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or
on behalf of any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder; or
(5) any reclassification of securities (including any
reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity
securities or securities convertible into equity securities
of the corporation or any Subsidiary which is directly or
indirectly owned by any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of
the voting power of the then outstanding shares of capital stock of
the corporation entitled to vote in an annual election of directors
(the "Voting Stock"), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no
<PAGE>
vote may be required, or that a lesser percentage may be specified, by
law or in any agreement with any national securities exchange or
otherwise.
(b) The term "Business Combination" as used in this Article
Seventh shall mean any transaction which is referred to in
any one or more of clauses (1) through (5) of paragraph (a)
of Section 7.1 of this Article Seventh.
7.2 The provisions of Section 7.1 of this Article Seventh shall
not be applicable to any Business Combination, and such Business
Combination shall require only such affirmative vote (if any) as is
required by law, any other provision of the Restated Articles or any
agreement with any national securities exchange, if all of the
conditions specified in either of the following paragraphs (a) or (b)
are met:
(a) The Business Combination shall have been approved by a
majority of the Continuing Directors; or
(b) All of the following six conditions shall have been met:
(1) The transaction constituting the Business Combination
shall provide for a consideration to be received by holders
of Common Stock in exchange for their stock, and the
aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination of
consideration other than cash to be received per share by
holders of Common Stock in such Business Combination shall
be at least equal to the highest of the following:
(A) (if applicable) the highest per share price
(including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid in order
to acquire any shares of Common Stock
beneficially owned by the Interested Shareholder
which were acquired (i) within the two-year
period immediately prior to the first public
announcement of the proposed Business Combination
(the "Announcement Date") or (ii) in the
transaction in which it became an Interested
Shareholder, whichever is higher;
(B) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which
the Interested Shareholder became an Interested
Shareholder (the "Determination Date"), whichever
is higher; and
<PAGE>
(C) (if applicable) the price per share equal to the
Fair Market Value per share of Common Stock
determined pursuant to clause (B) immediately
preceding, multiplied by the ratio of (i) the
highest per share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid in order to acquire any
shares of Common Stock beneficially owned by the
Interested Shareholder which were acquired within
the two-year period immediately prior to the
Announcement Date to (ii) the Fair Market Value
per share of Common Stock on the first day in
such two-year period on which the Interested
Shareholder beneficially owned any shares of
Common Stock.
(2) If the transaction constituting the Business
Combination shall provide for a consideration to be received
by holders of any class of outstanding Voting Stock other
than Common Stock and other than Institutional Voting Stock,
the aggregate amount of the cash and the Fair Market Value
as of the date of the consummation of the Business
Combination of consideration other than cash to be received
per share by holders of shares of such Voting Stock shall be
at least equal to the highest of the following (it being
intended that the requirements of this clause (b)(2) shall
be required to be met with respect to every class of
outstanding Voting Stock (other than Institutional Voting
Stock), whether or not the Interested Shareholder
beneficially owns any shares of a particular class of Voting
Stock):
(A) (if applicable) the highest per share price
(including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid in order
to acquire any shares of such class of Voting
Stock beneficially owned by the Interested
Shareholder which were acquired (i) within the
two-year period immediately prior to the
Announcement Date or (ii) in the transaction in
which it became an Interested Shareholder,
whichever is higher;
(B) (if applicable) the highest preferential amount
per share to which the holders of shares of such
class of Voting Stock are entitled in the event
of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation;
<PAGE>
(C) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(D) (if applicable) the price per share equal to the
Fair Market Value per share of such class of
Voting Stock determined pursuant to clause (C)
immediately preceding, multiplied by the ratio of
(i) the highest per share price (including any
brokerage commissions, transfer taxes and
soliciting dealers' fees) paid in order to
acquire any shares of such class of Voting Stock
beneficially owned by the Interested Shareholder
which were acquired within the two-year period
immediately prior to the Announcement Date to
(ii) the Fair Market Value per share of such
class of Voting Stock on the first day in such
two-year period on which the Interested
Shareholder beneficially owned any shares of such
class of Voting Stock.
(3) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as was
previously paid in order to acquire shares of such class of
Voting Stock which are beneficially owned by the Interested
Shareholder. If the Interested Shareholder beneficially
owns shares of any class of Voting Stock which were acquired
with varying forms of consideration, the form of
consideration to be received by holders of such class of
Voting Stock shall be either cash or the form used to
acquire the largest number of shares of such class of Voting
Stock beneficially owned by it.
(4) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination: (A) except as approved by a majority
of the Continuing Directors, there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any
outstanding Preferred Stock; (B) there shall have been (i)
no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by a majority of
the Continuing Directors, and (ii) an increase in such
annual rate of dividends (as necessary to prevent any such
reduction) in the event of any reclassification (including
any reverse stock split), recapitalization, reorganization
or any similar transaction which has the effect of reducing
<PAGE>
the number of outstanding shares of the Common Stock, unless
the failure so to increase such annual rate is approved by a
majority of the Continuing Directors; and (C) such
Interested Shareholder shall not have become the beneficial
owner of any additional shares of Voting Stock except as
part of the transaction in which it became an Interested
Shareholder.
(5) After such Interested Shareholder has become an
Interested Shareholder, such Interested Shareholder shall
not have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
corporation, whether in anticipation of or in connection
with such Business Combination or otherwise.
(6) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall
be mailed to public shareholders of the corporation at least
30 days prior to the consummation of such Business
Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or
subsequent provisions).
7.3 For the purposes of this Article Seventh:
(a) A "person" shall mean any individual, firm,
corporation or other entity.
(b) "Interested Shareholder" at any particular time shall
mean any person (other than the corporation or any
Subsidiary) who or which:
(1) is at such time the beneficial owner, directly or
indirectly, of more than 20% of the voting power of
the outstanding Voting Stock;
(2) is at such time a director of the corporation and
at any time within the two-year period immediately
prior to such time was the beneficial owner, directly
or indirectly, of more than 20% of the voting power of
the then outstanding Voting Stock; or
(3) is at such time an assignee of or has otherwise
succeeded to the beneficial ownership of any shares of
<PAGE>
Voting Stock which were at any time within the two-
year period immediately prior to such time
beneficially owned by any Interested Shareholder, if
such assignment or succession shall have occurred in
the course of a transaction or series of transactions
not involving a public offering within the meaning of
the Securities Act of 1933.
(c) A person shall be a "beneficial owner" of any shares
of Voting Stock:
(1) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly;
(2) which such person or any of its Affiliates or
Associates has (A) the right to acquire (whether or
not such right is exercisable immediately) pursuant to
any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or
understanding; or
(3) which are beneficially owned, directly or
indirectly, by any other person with which such person
or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of
any shares of Voting Stock.
(d) For the purposes of determining whether a person is an
Interested Shareholder pursuant to paragraph (b) of
this Section 7.3, the number of shares of Voting Stock
deemed to be outstanding shall include shares deemed
owned by an Interested Shareholder through application
of paragraph (c) of this Section 7.3 but shall not
include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise.
(e) "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on February 17,
1983 (the term "registrant" in said Rule 12b-2 meaning
in this case the corporation).
<PAGE>
(f) "Subsidiary" means any corporation of which a majority
of any class of equity security is owned, directly or
indirectly, by the corporation; provided, however,
that for the purposes of the definition of Interested
Shareholder set forth in paragraph (b) of this Section
7.3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of
equity security is owned, directly or indirectly, by
the corporation.
(g) "Continuing Director" means any member of the Board of
Directors of the corporation who is unaffiliated with,
and not a representative of, the Interested
Shareholder and was a member of the Board of Directors
prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of
a Continuing Director who is unaffiliated with, and
not a representative of, the Interested Shareholder
and is recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the
Board of Directors.
(h) "Fair Market Value" means: (1) in the case of stock,
the highest closing sale price during the 30-day
period immediately preceding the date in question of a
share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not
quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities
exchange registered under the Securities Act of 1934
on which such stock is listed, or, if such stock is
not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock
during the 30-day period preceding the date in
question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any
system then in use, or if no such quotations are
available, the fair market value on the date in
question of a share of such stock as determined by the
Board of Directors in good faith; and (2) in the case
of property other than cash or stock, the fair market
value of such property on the date in question as
determined by the Board of Directors in good faith.
(i) "Institutional Voting Stock" shall mean any class of
Voting Stock which was issued to and continues to be
held solely by one or more insurance companies,
pension funds, commercial banks, savings banks or
<PAGE>
similar financial institutions or institutional
investors.
(j) In the event of any Business Combination in which the
corporation survives, the phrase "consideration other
than cash to be received" as used in paragraph (b) of
Section 7.2 of this Article Seventh shall include the
shares of Common Stock and/or the shares of any other
class of outstanding Voting Stock retained by the
holders of such shares.
7.4 The Board of Directors shall have the power and duty to
determine for the purposes of this Article Seventh, on the basis of
information known to them after reasonable inquiry, (a) whether a
person is an Interested Shareholder, (b) the number of shares of
Voting Stock beneficially owned by any person, (c) whether a person is
an Affiliate or Associate of another, (d) whether a class of Voting
Stock is Institutional Voting Stock and (e) whether the assets which
are the subject of any Business Combination have, or the consideration
to be received for the issuance or transfer of securities by the
corporation or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of $10,000,000 or more. Any such
determination made in good faith shall be binding and conclusive on
all parties.
7.5 Nothing contained in this Article Seventh shall be construed
to relieve any Interested Shareholder from any fiduciary obligation
imposed by law.
7.6 Notwithstanding any other provisions of law, the Restated
Articles or the Bylaws of the corporation, the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding
shares of Voting Stock, voting together as a single class, shall be
required to amend or repeal, or to adopt any provision inconsistent
with, this Article Seventh.
EIGHTH. To the fullest extent that the laws of the Commonwealth
of Pennsylvania, as in effect on January 27, 1987, or as thereafter
amended, permit the elimination or limitation of the liability of
directors, no director of the corporation shall be personally liable
for monetary damages as such for any action taken, or any failure to
take any action, as a director. This Article Eighth shall not apply
to any actions filed prior to January 27, 1987, nor to any breach of
performance of duty or any failure of performance of duty by any
director occurring prior to January 27, 1987. The provisions of this
Article Eighth shall be deemed to be a contract with each director of
the corporation who serves as such at any time while such provisions
are in effect, and each such director shall be deemed to be serving as
such in reliance on such provisions. Any amendment to or repeal of
<PAGE>
this Article Eighth, or adoption of any other Article or Bylaw of the
corporation, which has the effect of increasing director liability
shall require the affirmative vote of at least 80% of the voting power
of the then outstanding shares of capital stock of the corporation
entitled to vote in an annual election of directors, voting together
as a single class. Any such amendment or repeal, or other Article or
Bylaw, shall operate prospectively only and shall not have effect with
respect to any action taken, or any failure to act, by a director
prior thereto.
<PAGE>
Exhibit A
Statement of the designation and
number of shares and of the voting
rights, preferences, limitations and
special rights, if any, of the first
series of the Preferred Stock
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting
the Series A Preferred Stock shall be 1,500,000. Such number of
shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants
or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, par value $1.66-2/3 per share (the
"Common Stock"), of the Corporation, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares
<PAGE>
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more
than 50 days prior to the date fixed for the payment thereof.
(D) The annual dividend on the Series A Preferred Stock shall
be equal to the sum of the quarterly dividends in each year.
<PAGE>
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation, and such holders shall have the right
to cumulative voting in all elections of Directors. In the event the
Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Statement creating a series of Preferred Stock or any similar stock,
or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of shareholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
<PAGE>
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock subject
to the conditions and restrictions on issuance set forth herein, in
the Restated Articles of Incorporation, as amended, or in any other
Statement creating a series of Preferred Stock or any similar stock or
as otherwise required by law.
<PAGE>
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of shares of Common Stock, or (2) to the holders
of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the provision in clause (1) of
the preceding sentence shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
<PAGE>
each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Fractional Shares. The Corporation may issue
fractions and certificates representing fractions of a share of Series
A Preferred Stock in integral multiples of 1/100th of a share of
Series A Preferred Stock, or in lieu thereof, at the election of the
Board of Directors of the Corporation at the time of the first issue
of any shares of Series A Preferred Stock, evidence such fractions by
depositary receipts, pursuant to an appropriate agreement between the
Corporation and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they
would be entitled as beneficial owners of shares of Series A Preferred
Stock. In the event that fractional shares of Series A Preferred
Stock are issued, the holders thereof shall have all the rights
provided herein for holders of full shares of Series A Preferred Stock
in the proportion which such fraction bears to a full share.
Section 10. Amendment. The Restated Articles of
Incorporation, as amended, of the Corporation shall not be amended in
any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of
two-thirds of the outstanding shares of Series A Preferred Stock,
voting together as a single class.
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
Computation of Earnings Per Share
<CAPTION>
Three Months Ended March 31
1995 1994
<S> <C> <C>
Net income.................................... $ 219.2 $ 121.9
Weighted average number of shares
of common stock outstanding................. 206.5 212.9
Weighted average number of shares
of common stock outstanding and common
stock equivalents........................... 209.2 215.9
Primary earnings per share.................... $ 1.06 $ 0.57
Fully diluted earnings per share.............. $ 1.05 $ 0.56
</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 it results in dilution of less
than three percent.
All amounts are in millions except per share data.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 73
<SECURITIES> 0
<RECEIVABLES> 1,413
<ALLOWANCES> 0
<INVENTORY> 767
<CURRENT-ASSETS> 2,451
<PP&E> 6,011
<DEPRECIATION> 3,252
<TOTAL-ASSETS> 6,148
<CURRENT-LIABILITIES> 1,576
<BONDS> 656
0
0
<COMMON> 484
<OTHER-SE> 2,263
<TOTAL-LIABILITY-AND-EQUITY> 6,148
<SALES> 1,741
<TOTAL-REVENUES> 1,741
<CGS> 1,028
<TOTAL-COSTS> 1,028
<OTHER-EXPENSES> 175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 359
<INCOME-TAX> 136
<INCOME-CONTINUING> 219
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 219
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
