<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 June 30, 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 July 27, 1995, 202,841,950 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
<PAGE>
PPG INDUSTRIES, INC.
AND CONSOLIDATED 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 - 12
Part II. Other Information
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 Six Months
Ended June 30 Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales....................... $1,870.4 $1,619.3 $3,611.2 $3,096.2
Cost of sales................... 1,109.3 987.9 2,137.4 1,899.7
Gross profit.................. 761.1 631.4 1,473.8 1,196.5
Other expenses:
Selling, general and
administrative.............. 258.2 223.4 489.7 439.5
Depreciation.................. 82.9 79.0 162.9 157.5
Research and development...... 59.3 54.5 116.2 103.4
Interest...................... 20.7 22.4 41.2 44.2
Business divestiture (Note 3). - 85.0 - 85.0
Other charges................. 32.1 28.5 70.1 43.6
Total other expenses.......... 453.2 492.8 880.1 873.2
Other earnings.................. 49.0 22.6 122.1 47.5
Income before income taxes
and minority interest......... 356.9 161.2 715.8 370.8
Income taxes.................... 135.6 60.9 272.0 144.7
Minority interest............... 4.5 4.1 7.8 8.0
Net income...................... $ 216.8 $ 96.2 $ 436.0 $ 218.1
Earnings per share.............. $ 1.06 $ 0.46 $ 2.12 $ 1.03
Dividends per share............. $ 0.29 $ 0.28 $ 0.58 $ 0.55
Average shares outstanding...... 205.2 212.4 205.8 212.7
</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>
June 30 Dec. 31
1995 1994
(Millions)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents................... $ 100.6 $ 62.1
Receivables-net............................. 1,402.6 1,228.9
Inventories (Note 2)........................ 760.4 686.4
Other....................................... 188.4 190.8
Total current assets...................... 2,452.0 2,168.2
Property (less accumulated depreciation of
$3,590.3 million and $3,420.4 million)...... 2,757.8 2,742.3
Investments................................... 200.1 277.4
Other assets.................................. 767.5 706.0
Total..................................... $6,177.4 $5,893.9
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current
portion of long-term debt................. $ 370.0 $ 370.7
Accounts payable and accrued liabilities.... 1,077.9 1,034.4
Income taxes................................ 64.8 19.4
Total current liabilities................. 1,512.7 1,424.5
Long-term debt................................ 652.8 773.4
Deferred income taxes......................... 317.4 302.7
Accumulated provisions........................ 290.6 260.5
Other postretirement benefits................. 511.4 505.5
Minority interest............................. 76.8 70.3
Total liabilities......................... 3,361.7 3,336.9
Shareholders' equity:
Common stock (Note 7)....................... 484.3 484.3
Additional paid-in capital.................. 70.0 67.5
Retained earnings........................... 4,036.9 3,717.1
Treasury stock.............................. (1,605.0) (1,488.6)
Unearned compensation....................... (192.2) (183.0)
Minimum pension liability adjustment........ (1.7) (1.7)
Currency translation adjustment............. 23.4 (38.6)
Total shareholders' equity................ 2,815.7 2,557.0
Total..................................... $6,177.4 $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>
Six Months Ended June 30
1995 1994
(Millions)
<S> <C> <C>
Cash from operating activities............... $ 462.2 $ 241.0
Investing activities:
Capital spending.......................... (164.5) (136.8)
Reduction of investments.................. 117.0 --
Other..................................... 13.0 9.0
Cash used for investing activities... (34.5) (127.8)
Financing activities:
Net change in borrowings with
maturities of three months or less...... (97.4) 9.3
Proceeds from other short-term debt....... 21.0 19.1
Repayment of other short-term debt........ (45.9) (12.6)
Proceeds from long-term debt.............. 8.1 3.8
Repayment of long-term debt............... (25.8) (18.7)
Loans to employee stock ownership plan.... (25.0) (11.0)
Repayment of loans by employee stock
ownership plan.......................... 15.7 9.3
Purchase of treasury stock, net........... (119.1) (56.7)
Dividends paid............................ (117.8) (116.9)
Cash used for financing activities... (386.2) (174.4)
Effect of currency exchange rate changes
on cash and cash equivalents............... (3.0) 1.8
Net increase (decrease) in cash
and cash equivalents....................... 38.5 (59.4)
Cash and cash equivalents,
beginning of period........................ 62.1 111.9
Cash and cash equivalents,
end of period.............................. $ 100.6 $ 52.5
</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
consolidated subsidiaries (the Company or PPG) at June 30, 1995, and the
results of their operations for the three- and six-month periods ended
June 30, 1995 and 1994 and their cash flows for the six-month periods
ended June 30, 1995 and 1994. These condensed financial statements
should be read in conjunction with the financial statements and notes
thereto incorporated by reference in PPG's Annual Report on Form 10-K
for the year ended December 31, 1994.
The results of operations for the six months ended June 30, 1995
are not necessarily indicative of the results to be expected for the full
year.
2. Inventories
Inventories at June 30, 1995, and December 31, 1994, are detailed
below.
<TABLE>
<CAPTION>
June 30 Dec. 31
1995 1994
(Millions)
<S> <C> <C>
Finished products and work in process............ $513.7 $462.7
Raw materials.................................... 132.5 111.9
Supplies......................................... 114.2 111.8
Total.......................................... $760.4 $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 $212.5 million and $199.2 million
higher at June 30, 1995 and December 31, 1994, respectively.
3. Business Divestiture
PPG's operating results reflect the impact of the Company's programs to
divest businesses and activities not meeting strategic or performance
objectives. The 1994 charge pertains to the divestiture of the
Biomedical Systems Division. Refer to Management's Discussion and
Analysis of Financial Condition and Results of Operations for further
details regarding this charge.
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<PAGE>
4. Cash Flow Information
Cash payments for interest for the six months ended June 30, 1995 and
1994 were $45.9 million and $49.9 million, respectively. Cash payments
for income taxes for the six months ended June 30, 1995 and 1994 were
$186.5 million and $143.9 million, respectively.
5. Business Segment Information
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1995 1994 1995 1994
(Millions)
<S> <C> <C> <C> <C>
Net Sales:
Coatings and Resins $ 757 $ 695 $1,441 $1,316
Glass 698 617 1,359 1,185
Chemicals 415 307 811 595
Total $1,870 $1,619 $3,611 $3,096
Operating Income (Loss):
Coatings and Resins $ 143 $ 143 $ 272 $ 267
Glass 135 93 290 169
Chemicals 103 35 196 71
Other (1) - (85) - (85)
Total operating
income 381 186 758 422
Interest expense - net (18) (20) (36) (40)
Other unallocated corporate
expense - net (6) (5) (6) (11)
Income before income taxes
and minority interest $ 357 $ 161 $ 716 $ 371
</TABLE>
(1) Loss in 1994 represents the charge to divest the
Biomedical Systems Division (see Note 3).
6. 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
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<PAGE>
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 June 30, 1995 and December 31, 1994, PPG
had environmental reserves totaling $92 million and $90 million,
respectively. Charges against income for environmental remediation
costs for the six month periods ended June 30, 1995 and 1994 were
$21 million and $13 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.
7. Common Stock
On April 20, 1995, the Company's Restated Articles of Incorporation were
amended to increase the number of authorized shares of common stock from
300 million to 600 million.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Performance in the Second Quarter of 1995 Compared to the Second Quarter of
1994
Performance Overview
Sales for the second quarter of 1995 and 1994 were $1.87 billion and $1.62
billion, respectively. The sales increase was attributable to higher prices
in all product lines, 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 40.7% from 39.0% in the prior year's
quarter primarily due to higher sales prices in all business segments. The
negative effects of inflation partially offset these gains.
Net income and earnings per share for the 1995 quarter were $216.8 million and
$1.06, respectively. In the second quarter of 1994, net income and earnings
per share were $96.2 million and $0.46, respectively, which included a $52
million ($0.24 per share) after-tax charge to divest the Biomedicals Systems
Division. Current period net income was favorably impacted by the factors
that contributed to the gross profit percentage improvement, higher sales
volumes, the absence of the business divestiture charge, and increased other
earnings which were attributable to gains from legal settlements. Partially
offsetting these gains was higher income tax expense.
Performance of Business Segments
Coatings and resins sales increased to $757 million from $695 million in the
second quarter of 1994. Operating earnings for both periods were
$143 million. The increase in sales was primarily attributable to higher
volumes in all European product lines, particularly automotive products, the
favorable effects of translating European currencies, higher volumes for North
American architectural coatings, and stronger prices worldwide for our
automotive refinish products. The effect of lower North American automotive
refinish volume partially offset these improvements. Despite higher sales,
operating earnings remained flat as the favorable effects of volume
improvements and manufacturing efficiencies, combined with a gain from a legal
settlement, were offset by the negative effects of inflation, particularly on
raw material costs.
Glass sales increased to $698 million in the second quarter of 1995 from $617
million in the prior year's quarter. Operating income increased to $135
million from $93 million in the corresponding 1994 period. Contributing to
the sales increase were higher sales prices, principally for worldwide flat
glass and fiber glass products and North American automotive replacement
glass, the favorable effects of translating European currencies, and higher
fiber glass volume. The effect of 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, partially offset by the negative effects of inflation.
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<PAGE>
Chemicals sales increased to $415 million from $307 million in the second
quarter of 1994. Operating earnings for the corresponding periods were $103
million and $35 million, respectively. The increase in sales was primarily
attributable to substantial price gains for chlor-alkali and derivative
products and higher volumes for Transitions optical lenses. The increase in
operating earnings was attributable to the factors that contributed to the
sales increase, partially offset by the negative effects of inflation,
particularly on ethylene costs, and higher overhead costs.
The "other" segment's 1994 operating loss represents the charge to divest the
Biomedical Systems Division.
Performance in the First Six Months of 1995 Compared to the First Six Months
of 1994
Performance Overview
Sales for the first six months of 1995 and 1994 were $3.61 billion and $3.10
billion, respectively. The sales increase was attributable to higher prices
in all product lines, 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 40.8% from 38.6% in the prior year
primarily due to higher sales prices in all business segments. The negative
effects of inflation partially offset these gains.
Net income and earnings per share for the current year period were $436.0
million and $2.12, respectively, which included a $24.2 million after-tax gain
($0.12 per share) from a legal settlement of a glass technology dispute with
Pilkington plc of England. In the prior year period, net income and earnings
per share were $218.1 million and $1.03, respectively, including a $52 million
($0.24 per share) after-tax charge to divest the Biomedical Systems Division.
Current period earnings were favorably impacted by the factors that
contributed to the gross profit percentage improvement, higher sales volumes,
the absence of the business divestiture charge, and increased other earnings
which were attributable to several gains from legal settlements. Partially
offsetting these items 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 expense.
Performance of Business Segments
Coatings and resins sales increased to $1.44 billion from $1.32 billion in the
first six months of 1994. Operating earnings for the corresponding periods
were $272 million and $267 million, respectively. Contributing to the sales
increase were higher volumes in all European product lines, particularly
automotive products, the favorable effects of translating European currencies,
higher volumes in North American industrial and architectural coatings, and
stronger prices in our automotive refinish products. The effect of lower
North American automotive refinish volume partially offset these improvements.
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<PAGE>
Despite higher sales, operating earnings remained relatively flat as the
effects of higher volumes, combined with gains from legal settlements, were
substantially offset by the negative effects of inflation, particularly on raw
material costs.
Glass sales increased to $1.36 billion in the sixth-month period ended June
30, 1995, from $1.19 billion in the prior year period. Operating income
increased to $290 million from $169 million in the corresponding 1994 period.
Contributing to the sales increase were higher sales prices, principally for
worldwide fiber glass and flat glass products, higher volumes in most of the
segment's major businesses, principally worldwide fiber glass and automotive
original, and the favorable effects of translating European currencies. The
effect of lower volume in North American automotive replacement glass
partially offset these improvements. Increased operating earnings were
primarily the result of the factors that contributed to the sales increase and
the gain from the first quarter legal settlement with Pilkington. The
negative effects of inflation and higher overhead costs partially offset these
improvements.
Chemicals sales increased to $811 million from $595 million for the six-month
period ended June 30, 1995. Operating income increased to $196 million from
$71 million for the corresponding prior year period. The increase in sales
was primarily attributable to substantial price gains for chlor-alkali and
derivative products and volume improvements for specialty products,
particularly Transitions optical lenses. The increase in operating earnings
was attributable to the factors that contributed to the sales increase.
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.
The "other" segment's 1994 operating loss represents the charge to divest the
Biomedical Systems Division.
Other Factors
The increase in income tax expense was principally due to significantly higher
pre-tax earnings.
The increase in accounts receivable was the result of higher sales in May and
June 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.
Higher inventories were mainly due to a build-up in our coatings and resins
segment, primarily in Europe, to support stronger sales volumes. Also
contributing to the increase was 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.
A pension plan contribution was the main factor contributing to the increase
in other assets.
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<PAGE>
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 June 30, 1995 and December 31, 1994, PPG had environmental
reserves totaling $92 million and $90 million, respectively. Charges against
income for environmental remediation costs for the six month periods ended
June 30, 1995 and 1994 were $21 million and $13 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>
Business Divestiture
PPG's operating results reflect the impact of the Company's programs to divest
businesses and activities not meeting strategic or performance objectives.
The 1994 charge pertains to the divestiture of the Biomedicals System
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
reflects the general decline in health-care and related markets. Also, a $13
million charge was taken for additional operating losses anticipated because
of extension of the expected disposal date as well as actual operating losses
exceeding those originally estimated. With the sale of the sensors business
in January 1995, the divestiture of the Biomedical Systems Division is
complete.
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 June 30, 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 June 30, 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 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Settlement Agreement
(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: July 31, 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
(10) Settlement Agreement
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
EXHIBIT 10
SETTLEMENT AGREEMENT
THIS SETTLEMENT AND RELEASE AGREEMENT is entered into this 10th day
of February, 1995, by and between PPG Industries, Inc. ("PPG") and John J.
Horgan ("Horgan").
WHEREAS, PPG and Horgan have discussed the terms and conditions under which
Horgan's employment with PPG will be terminated;
AND WHEREAS, the parties wish to set forth their complete Agreement and Mutual
Release of Claims as such are related in any fashion to Horgan's employment
with and/or termination from PPG.
NOW, THEREFORE, the parties agree as follows:
1. Horgan shall continue to serve as Senior Vice President, Fiber Glass
from January through June, 1995.
2. Effective July 1, 1995, Horgan shall be reassigned to a senior
corporate position, and will remain in that position through December 31, 1995.
3. Horgan shall receive a base salary of $300,000 and a guaranteed bonus
of $200,000, for a total of $500,000 for 1995; provided, however, that PPG
shall have the right to terminate Horgan's employment at anytime for cause.
4. (a) Effective January 1, 1996, Horgan shall be placed on
administrative leave, and will remain on leave through January 31, 1998.
<PAGE>
(b) Horgan shall receive an annual base pay of $300,000 during 1996,
$200,000 during 1997, and $10,000 for the month of January, 1998.
Such payments shall be made on a regular monthly payroll basis;
provided, however, that PPG shall have the right to terminate Horgan's
leave in the event Horgan obtains any type of employment, including
consulting, during the period of administrative leave which is adverse to
PPG. The parties agree that PPG shall have the right to determine
whether or not any employment activity of Horgan's is adverse; but such
determination shall be reasonable under the circumstances.
(c) During the period of administrative leave:
With the exception of PPG's Salary Continuance Plan, Long-Term
Disability Plan and Supplemental Long-Term Disability Plan, Horgan
shall be eligible to participate in PPG's Employee Benefit Plans, in
accordance with the provisions of such plans as they apply to active
salaried employees; and
Payments made in accordance with paragraphs 3 and 4(b) above shall be
deemed to include any payments which might be due under PPG's
Vacation Policy.
(d) In the event of Horgan's death prior to February 1, 1998:
Payments described in paragraphs 3 and 4(b) above shall cease with the
payment due for the month in which Horgan's death occurs and any
unpaid amounts shall be forfeited; and
<PAGE>
Survivor benefits shall be payable in accordance with the provisions of
PPG's Employee Benefit Plans; provided, however, that in all cases, life
insurance benefits shall be determined by using a base salary of
$300,000. In addition, PPG shall guarantee that the amount of the
survivor annuity payable as the Active Employees' Pension Surviving
Spouse Benefit shall equal a minimum of $7,000/month. Such monthly
annuity may be commenced as early as February 1, 1998.
5. (a) Horgan shall retire effective February 1, 1998. PPG agrees to
provide a total pension benefit of $10,000/month, payable as a straight-life
annuity. Horgan shall have the opportunity to elect any of the Joint and
Survivor Options available under the PPG Industries, Inc. Retirement
Income Plan at any time, and from time to time, within the 90-day
period immediately preceding his benefit commencement date.
Examples of the effect of such elections are attached hereto.
(b) Horgan shall be eligible for retiree benefits in accordance with the
provisions of PPG's Employee Benefit Plans as such apply to retired
salaried employees.
6. In the event PPG terminates Horgan's employment for cause, as described
in paragraph 3, or in the event PPG terminates Horgan's administrative leave,
as described in paragraph 4(b), no further payments of any kind shall be due
under this contract and Horgan shall be entitled to benefits, if any, under
the Employee Benefit Plans sponsored by PPG solely in accordance with the
provisions of such plans.
<PAGE>
7. Horgan agrees to abide by the provisions of the Employee Agreement
dated August 14, 1975, a copy of which is attached as Exhibit A, and which
forms a part of this Agreement, prohibiting him from divulging trade secrets
and other proprietary information to any third party whether or not an
employer. To the extent not covered in said Employee Agreement or in item 5
hereof, Horgan further agrees that, for a period of two years from the date
of this Agreement, Horgan will not: (a) disclose, reveal or otherwise share
with any competitor of PPG, any proprietary, technological, market, operating,
or financial strategy information which is unpublished; or (b) form any
business where such information would be used by him in any manner.
Notwithstanding (a) above, Horgan may, as necessary, comment generally
on successes achieved by the business unit under his direction, on
the basis described in Exhibit B.
8. Horgan agrees to waive any claim to employment beyond that described
herein with PPG or any of its subsidiaries and, further, agrees that as a
specific consideration hereof, he will not seek future employment with PPG
or any of its subsidiaries.
9. For and in consideration of the mutual terms expressed herein, PPG, for
itself, its affiliates, predecessors, successors, assigns, directors,
officers, shareholders, agents and/or employees, does hereby release,
relieve and forever discharge Horgan of and from any and all claims, demands,
actions, causes of action of whatever nature, kind or character, which it
may have by reason of or based upon Horgan's employment with PPG.
<PAGE>
PPG does not release or waive rights or claims that may arise after the
date this Agreement is executed.
10. For and in consideration of the mutual terms expressed herein, Horgan,
for himself, his heirs, family, executors, administrators, representatives
or assigns, does hereby release, relieve and forever discharge PPG, its
employees, their heirs and estates, officers, directors, shareholders, agents,
affiliates, predecessors, successors and assigns from all claims and/or causes
of action, known or unknown, which Horgan may have or claim to have against
PPG arising from or during his employment with PPG or as a result of his
termination of employment, as contemplated herein; and Horgan agrees not to
assert any such claims or causes of action against PPG. This Release and
Waiver includes, but is not limited to, claims arising under federal, state or
local laws prohibiting employment discrimination (specifically included are
those claims under the Age Discrimination in Employment Act, as amended) or
claims growing out of any legal restrictions on PPG's right to terminate its
employees. Horgan does not release or waive rights or claims that may arise
after the date this Agreement is executed.
11. Horgan has carefully read and fully understands the provisions of this
Agreement, including the Release and Waiver of claims, and Horgan
acknowledges having at least twenty-one (21) days to consider this Agreement,
the release and waiver of rights, and to consult with an attorney prior to
<PAGE>
executing this Agreement. Horgan acknowledges that his Agreement was
provided for his review on February 10, 1995.
The parties also understand that Horgan shall have seven (7) days following the
execution of this Agreement to revoke it. Accordingly, this Agreement shall
become effective on the eighth day following the date of execution. If Horgan
chooses to revoke this Agreement, he shall notify Russell L. Crane, Senior Vice
President, Human Resources and Administration, in writing of his revocation.
12. PPG and Horgan agree that they and their counsel shall maintain the
terms of this Agreement in complete confidentiality. To that end, Horgan shall
not discuss the financial terms of this Agreement with anyone other than
members of his immediate family and such professional advisors as he may from
time to time engage for the purpose of assisting him in making decisions
concerning career, taxes or legal matters. PPG may disclose the facts and
terms of this Agreement to its officers, directors, employees, agents,
attorneys and professional advisors as may be necessary for the conduct of its
business. PPG and Horgan agree to hold persons to whom the fact and terms of
this Agreement are disclosed to the same terms of confidentiality as apply to
PPG and Horgan.
13. This Agreement is made and entered into in the Commonwealth of
Pennsylvania and shall, in all respects, be interpreted, enforced and governed
under the laws of said Commonwealth.
14. Should any provision of this Agreement be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of
the remaining parts, terms or provisions of it shall not be affected thereby
and said
<PAGE>
illegal or invalid part, term or provision shall be deemed not to be a part of
this Agreement.
15. This Agreement sets forth the entire agreement between Horgan and PPG
and fully supersedes any and all prior agreements or understandings between
them pertaining to the subject matter hereof.
16. This Agreement may be modified or amended only by the written
agreement of Horgan and PPG.
READ THIS DOCUMENT CAREFULLY AS IT INCLUDES
A GENERAL RELEASE AND WAIVER OF KNOWN AND
UNKNOWN CLAIMS.
/s/ John J. Horgan /s/ Guy A. Zoghby
John J. Horgan Witness
February 15,1995
PPG Industries, Inc. ATTEST:
By: /s/ Robert D. Duncan /s/ Russell L. Crane
Robert D. Duncan Witness
February 10,1995
<PAGE>
EXHIBIT A
EMPLOYEE'S AGREEMENT
In consideration of my employment and/or continued employment by PPG
INDUSTRIES, Inc. or its subsidiaries (hereinafter referred as "the Company"),
in a capacity in which I may receive or contribute to confidential information
concerning the technology and trade secrets on which the Company's business
depends, I acknowledge and agree that:
Any inventions, discoveries and suggestions that are related to the
business of the Company that are made or conceived by me, either solely or
jointly with others, while in the employ of the Company, whether during working
hours or not, shall be and remain the sole property of the Company, whether or
not patentable; and I will communicate promptly and do hereby assign to the
Company all such inventions, discoveries and improvements;
During and after the period of my employment I will execute all documents
and will assist the Company in every proper way, without compensation other
than my salary, but at the Company's expense, to obtain and enforce patents for
such inventions in any and in all countries;
I will not disclose to any person without the Company's written consent,
either during or subsequent to my employment, any of the Company's trade
secrets or other confidential information;
I will not improperly disclose to the Company, nor induce the Company to
use, any trade secrets or other confidential information belonging to others;
Upon cessation of my employment with the Company I will deliver to the
Company all records of any nature related to the company business including all
copies thereof; and
This agreement shall be binding upon my heirs, legal representatives and
assigns.
As a matter of records, I attach hereto a complete list of all unpatented
inventions which I have made or conceived prior to my employment and which I
desire to exclude from this agreement.
Signed as of August 15, 1975
/s/ John J. Horgan
(SIGNATURE)
John J. Horgan
(TYPE OR PRINT NAME)
Corporate Law Department - G.O.
(DIVISION AND LOCATION)
WITNESS:
/s/ Margaret A. Deringer
<PAGE>
<TABLE>
EXAMPLE OF STRAIGHT-LIFE ANNUITY VS VARIOUS JOINT & SURVIVOR OPTIONS
<CAPTION>
BENEFIT J&S RETIREE J&S JOINT ANNUITANT
OPTION AMOUNT FACTOR BENEFIT % BENEFIT
<S> <C> <C> <C> <C> <C>
STRAIGHT-LIFE $10,000 N/A $10,000 0% -0-
25% J&S 10,000 .951 9,510 25% $2,377.50
50% J&S 10,000 .907 9,070 50% 4,535.00
75% J&S 10,000 .867 8,670 75% 6,502.50
100% J&S 10,000 .830 8,300 100% 8,300.00
</TABLE>
<PAGE>
Exhibit B
February 17, 1995
Mr. John J. Horgan
Senior Vice President, Fiber Glass
33 North
Dear John:
This will confirm our several discussions concerning your
freedom to describe the fiber glass business unit and its
achievements in resumes you may prepare and to persons with whom
you may need to discuss your PPG career and accomplishments. As
you know, generalized information specific to the fiber glass
business unit is provided to various analysts even though we
regard it as an integral part of the Glass segment. Attached are
examples of some of the data recently used. There will be no
problem with your using such data. In addition, use of
comparative data such as percent increase in earnings, percent
reduction in costs, and percent revenue growth are all acceptable
as is the rough size of the total business as a percent of
overall Glass Group. You may also describe the business within
the range of analysts' estimates but shall not affirm the details
in such estimates.
I believe these clarifications will meet your needs. If
not, it is always possible to review any data you wish to use in
advance of its publication.
Sincerely,
/s/ Guy A. Zoghby
Guy A. Zoghby
GAS:vlc
Attachments: Security Analysts Meeting, October 21, 1993
Security Analysts Meeting, July 24, 1994
Security Analysts Meeting, October 27, 1994
<PAGE>
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
Computation of Earnings Per Share
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income.................... $ 216.8 $ 96.2 $ 436.0 $ 218.1
Weighted average number of
shares of common stock
outstanding................. 205.2 212.4 205.8 212.7
Weighted average number of
shares of common stock
outstanding and common
stock equivalents.......... 207.2 214.0 207.8 214.3
Primary earnings per share.... $ 1.06 $ 0.46 $ 2.12 $ 1.03
Fully diluted earnings
per share................... $ 1.05 $ 0.45 $ 2.10 $ 1.02
</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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 101
<SECURITIES> 0
<RECEIVABLES> 1,403
<ALLOWANCES> 0
<INVENTORY> 760
<CURRENT-ASSETS> 2,452
<PP&E> 6,348
<DEPRECIATION> 3,590
<TOTAL-ASSETS> 6,177
<CURRENT-LIABILITIES> 1,513
<BONDS> 653
0
0
<COMMON> 484
<OTHER-SE> 2,332
<TOTAL-LIABILITY-AND-EQUITY> 6,177
<SALES> 3,611
<TOTAL-REVENUES> 3,611
<CGS> 2,137
<TOTAL-COSTS> 2,137
<OTHER-EXPENSES> 349
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 716
<INCOME-TAX> 272
<INCOME-CONTINUING> 436
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 436
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 2.12
</TABLE>
