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 September 30, 1996 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 October 31, 1996, 183,365,258 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 SUBSIDIARIES
======================
Index
Part I. Financial Information Page(s)
Item 1. Financial Statements:
Condensed Statement of Income.................................... 2
Condensed Balance Sheet.......................................... 3
Condensed Statement of Cash Flows................................ 4
Notes to Condensed Financial Statements.......................... 5 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8 - 12
Part II. Other Information
Item 1. Legal Proceedings......................................... 13
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 Income (Unaudited)
(Millions, except per share amounts)
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales....................... $1,801.2 $1,724.1 $5,463.6 $5,335.3
Cost of sales................... 1,072.1 1,029.4 3,267.2 3,166.8
Gross profit.................. 729.1 694.7 2,196.4 2,168.5
Other expenses:
Selling, general and
administrative.............. 249.3 246.8 740.9 736.5
Depreciation.................. 85.3 83.2 251.9 246.1
Research and development...... 59.0 59.8 175.8 176.0
Interest...................... 25.8 21.2 72.4 62.4
Other charges................. 30.6 31.9 65.2 102.0
Total other expenses.......... 450.0 442.9 1,306.2 1,323.0
Other earnings.................. 38.2 28.3 94.4 150.4
Income before income taxes
and minority interest......... 317.3 280.1 984.6 995.9
Income taxes.................... 120.5 106.4 374.1 378.4
Minority interest............... 5.7 3.3 18.6 11.1
Net income...................... $ 191.1 $ 170.4 $ 591.9 $ 606.4
Earnings per share.............. $ 1.03 $ 0.85 $ 3.13 $ 2.97
Dividends per share............. $ 0.32 $ 0.30 $ 0.94 $ 0.88
Average shares outstanding...... 186.5 200.9 189.2 204.0
</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>
Sept. 30 Dec. 31
1996 1995
(Millions)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.................. $ 104.4 $ 105.6
Receivables-net............................ 1,278.6 1,245.1
Inventories (Note 2)....................... 779.1 737.5
Other...................................... 189.9 187.3
Total current assets..................... 2,352.0 2,275.5
Property (less accumulated depreciation of
$3,788.3 million and $3,629.2 million)..... 2,891.6 2,834.8
Investments.................................. 210.1 223.8
Other assets................................. 972.0 860.2
Total.................................... $6,425.7 $6,194.3
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current
portion of long-term debt................ $ 584.7 $ 485.3
Accounts payable and accrued liabilities... 1,071.4 1,103.5
Income taxes............................... 37.2 40.6
Total current liabilities................ 1,693.3 1,629.4
Long-term debt (Note 6)...................... 843.1 735.5
Deferred income taxes........................ 379.3 354.9
Accumulated provisions....................... 354.3 319.7
Other postretirement benefits ............... 518.6 517.4
Minority interest............................ 74.6 68.2
Total liabilities........................ 3,863.2 3,625.1
Shareholders' equity:
Common stock............................... 484.3 484.3
Additional paid-in capital................. 92.2 81.3
Retained earnings.......................... 4,665.5 4,249.0
Treasury stock............................. (2,469.1) (2,059.6)
Unearned compensation...................... (186.4) (179.2)
Minimum pension liability adjustment....... (10.6) (10.4)
Currency translation adjustment............ (13.4) 3.8
Total shareholders' equity............... 2,562.5 2,569.2
Total.................................... $6,425.7 $6,194.3
</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>
Nine Months Ended Sept. 30
1996 1995
(Millions)
<S> <C> <C>
Cash from operating activities............... $ 700.6 $ 731.6
Investing activities:
Capital spending.......................... (329.5) (284.2)
Reduction of investments.................. 14.3 129.1
Other..................................... 1.8 22.8
Cash used for investing activities... (313.4) (132.3)
Financing activities:
Net change in borrowings with
maturities of three months or less...... 185.5 (30.6)
Proceeds from other short-term debt....... 32.2 38.6
Repayment of other short-term debt........ (27.8) (55.8)
Proceeds from long-term debt.............. 158.6 118.3
Repayment of long-term debt............... (141.7) (40.3)
Loans to employee stock ownership plan.... (26.0) (25.0)
Repayment of loans by employee stock
ownership plan.......................... 20.0 20.1
Purchase of treasury stock, net........... (410.7) (388.3)
Dividends paid............................ (177.9) (180.1)
Cash used for financing activities... (387.8) (543.1)
Effect of currency exchange rate changes
on cash and cash equivalents............... (.6) --
Net (decrease) increase in cash
and cash equivalents....................... (1.2) 56.2
Cash and cash equivalents,
beginning of period........................ 105.6 62.1
Cash and cash equivalents,
end of period.............................. $ 104.4 $ 118.3
</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 Sept. 30, 1996, and the results of
their operations for the three- and nine-month periods ended Sept. 30,
1996 and 1995 and their cash flows for the nine-month periods ended
Sept. 30, 1996 and 1995. 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 Dec. 31, 1995.
The results of operations for the nine months ended Sept. 30, 1996 are
not necessarily indicative of the results to be expected for the full
year.
2. Inventories
Inventories at Sept. 30, 1996 and Dec. 31, 1995 are detailed below.
<TABLE>
<CAPTION>
Sept. 30 Dec. 31
1996 1995
(Millions)
<S> <C> <C>
Finished products and work in process............ $524.4 $504.5
Raw materials.................................... 137.5 120.5
Supplies......................................... 117.2 112.5
Total.......................................... $779.1 $737.5
</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 $205.2 million and $202.9 million higher at
Sept. 30, 1996 and Dec. 31, 1995, respectively.
3. Cash Flow Information
Cash payments for interest for the nine months ended Sept. 30, 1996 and
1995 were $74.0 million and $61.0 million, respectively. Cash payments
for income taxes for the nine months ended Sept. 30, 1996 and 1995 were
$328.5 million and $279.4 million, respectively.
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<PAGE>
4. Business Segment Information
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
1996 1995 1996 1995
(Millions)
<S> <C> <C> <C> <C>
Net Sales:
Coatings and Resins... $ 712 $ 669 $2,175 $2,110
Glass................. 678 655 2,066 2,014
Chemicals............. 412 400 1,223 1,211
Total............... $1,802 $1,724 $5,464 $5,335
Operating Income:
Coatings and Resins... $ 132 $ 91 $ 413 $ 363
Glass................. 114 114 347 404
Chemicals............. 97 90 296 286
Total............... 343 295 1,056 1,053
Interest expense - net..... (23) (18) (65) (54)
Other unallocated corporate
(expense) income - net... (2) 3 (6) (3)
Income before income taxes
and minority interest.... $ 318 $ 280 $ 985 $ 996
</TABLE>
5. Environmental Matters
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 Sept. 30, 1996 and Dec. 31, 1995, PPG
had reserves for environmental contingencies totaling $95 million and
$100 million, respectively. Charges against income for environmental
remediation costs for the nine months ended Sept. 30, 1996 and 1995 were
$22 million and $35 million, respectively. Related cash outlays
aggregated $27 million and $32 million for the nine months ended
Sept. 30, 1996 and 1995, respectively.
Management anticipates that the resolution of the Company's
environmental contingencies, which will occur over an extended period of
time, will not result in future annual charges against income that are
significantly greater than those recorded in 1995. 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.
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<PAGE>
In addition to the amounts currently reserved, the Company may be
subject to loss 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 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.
The Company's assessment of the potential impact of these environmental
contingencies is subject to considerable uncertainty due to the complex,
ongoing and evolving process of investigation and remediation, if
necessary, of such environmental contingencies.
6. Long-term Debt
On May 24, 1996, the Company issued $150 million of callable 7 3/8%
notes which are due June 1, 2016.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Performance in the Third Quarter of 1996 Compared to the Third Quarter of 1995
Performance Overview
Sales for the third quarter of 1996 and 1995 were $1.80 billion and $1.72
billion, respectively. Sales increased as a result of improved volumes in
each of our business segments, sales from several minor acquisitions, and
higher sales prices in our coatings and resins segment. Lower sales prices in
our chemical and glass segments, the absence of sales from our divested
European architectural coatings business and sodium chlorate business, and the
unfavorable effects of foreign currency translation partially offset these
improvements.
The gross profit percentage increased to 40.5% from 40.3% in the prior year's
quarter primarily as a result of the benefits of improved manufacturing
efficiencies partially offset by lower overall sales prices. Also offsetting
the improvement was the negative overall effect of inflation as the benefits
in our coatings and resins segment, principally as a result of lower raw
material costs, were more than offset by the unfavorable impacts in our glass
and chemicals segments.
Net income and earnings per share for the third quarter of 1996 were $191.1
million and $1.03, respectively. In the third quarter of 1995, net income and
earnings per share were $170.4 million and $0.85, respectively. Current
quarter net income was favorably impacted by higher overall sales volumes, the
factors that contributed to the gross profit percentage improvement, higher
other earnings which increased primarily as a result of a recovery of certain
past insurance costs and lower environmental expense. Partially offsetting
these improvements were higher income tax expense, charges in our coatings and
resins and glass segments to further improve productivity in certain European
operations, and higher interest expense. Additionally, the favorable impact
of ongoing overhead cost reduction actions were more than offset by the
negative effects of inflation. Reduced average shares outstanding, due to
repurchases of PPG's common stock by the Company, favorably impacted earnings
per share in the current quarter.
Performance of Business Segments
Coatings and resins sales increased to $712 million from $669 million in 1995.
Operating income for the same periods was $132 million and $91 million,
respectively. Sales increased as a result of improved volumes in North
America, higher sales prices in most of the segment's major businesses, and
sales from several minor acquisitions. The absence of sales from our European
architectural coatings business divested in the fourth quarter of 1995
partially offset these improvements. The increase in operating income was the
result of the factors that contributed to the sales increase, lower raw
material costs primarily in Europe, improved manufacturing efficiencies, and
reduced overhead costs. Partially offsetting these improvements were the
negative effects of inflation on overhead costs and charges to further improve
productivity in certain European operations.
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<PAGE>
Glass sales increased to $678 million in the third quarter of 1996 from $655
million in the prior year's quarter. Operating income for the third quarter
of 1996 and 1995 remained flat at $114 million. Sales increased as a result
of increased North American volumes in all major product lines and higher
North American fiber glass and automotive replacement glass sales prices.
Partially offsetting these improvements were lower worldwide flat glass
prices, lower European fiber glass prices, and the unfavorable effects of
foreign currency translation. Operating income remained flat as the benefits
of increased volumes, improved manufacturing efficiencies, and reduced
overhead costs were offset by lower overall sales prices, particularly for our
flat glass products, the negative effects of inflation on our costs, and a
charge to further improve productivity in a European operation.
Chemicals sales increased to $412 million in the third quarter of 1996 from
$400 million in the prior year's quarter. Operating income increased to $97
million from $90 million for the corresponding 1995 period. Contributing to
the sales increase were volume improvements in all of the segment's major
businesses, particularly specialty products, partially offset by lower prices
for chlor-alkali products and the absence of sales from our sodium chlorate
business divested late in the fourth quarter of 1995. The increase in
operating income was attributable to the factors that contributed to the
overall sales increase, improved manufacturing efficiencies, the absence of a
non-recurring freight charge in 1995, and lower environmental expense,
partially offset by the negative effects of inflation on our costs.
Performance in the First Nine Months of 1996 Compared to the First Nine Months
of 1995
Performance Overview
Sales for the first nine months of 1996 and 1995 were $5.46 billion and $5.34
billion, respectively. Sales increased as a result of improved volumes in each
of our business segments, higher sales prices in our coatings and resins
segment, and sales from several minor acquisitions. The absence of sales from
our divested European architectural coatings business and sodium chlorate
business, lower sales prices for our chemicals and glass segments, and the
unfavorable effects of foreign currency translation partially offset these
improvements.
The gross profit percentage decreased to 40.2% from 40.6% in the prior year
period due to the negative effects of inflation and lower overall sales
prices, only partially offset by the benefits of improved manufacturing
efficiencies.
Net income and earnings per share for the current year period were $591.9
million and $3.13, respectively. In the prior year period, net income and
earnings per share were $606.4 million and $2.97, 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. Current period net
income was unfavorably impacted by lower other earnings, the factors that
contributed to the gross profit percentage decrease described above, increased
interest expense, and higher minority interest due to increased earnings from
our majority-owned subsidiary, Transitions Optical, Inc. Other earnings
declined due to gains from legal settlements in the prior period and lower
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<PAGE>
earnings from equity affiliates, partially offset by the recovery of certain
past insurance costs. These negative factors were partially offset by higher
overall sales volumes and decreased other charges. The decline in other
charges was due to a 1995 charge for a legal dispute and lower environmental
expense, partially offset by charges in our coatings and resins and glass
segments to improve productivity in certain European operations.
Additionally, the favorable impact of ongoing overhead cost reduction actions
were more than offset by the negative effects of inflation. Reduced average
shares outstanding, due to repurchases of PPG's common stock by the Company,
favorably impacted earnings per share in the current period.
Performance of Business Segments
Coatings and resins sales increased to $2.18 billion in the first nine months
of 1996 from $2.11 billion in the prior year period. Operating income for the
corresponding periods increased to $413 million from $363 million in the
corresponding 1995 period. Sales increased as a result of improved volumes in
North America, higher sales prices in most of the segment's major businesses,
and sales from several minor acquisitions. The absence of sales from our
European architectural coatings business divested in the fourth quarter of
1995 and lower automotive refinish volumes partially offset these
improvements. The increase in operating income was the result of the factors
that contributed to the sales increase, improved manufacturing efficiencies,
reduced overhead costs, and lower raw material costs, partially offset by the
negative effects of inflation on overhead costs. Operating income in the 1995
period also included two gains from legal settlements.
Glass sales increased to $2.07 billion in the nine-month period ended
September 30, 1996, from $2.01 billion in the prior year period. Operating
income decreased to $347 million from $404 million in the corresponding 1995
period. Sales increased as a result of the benefits of improved volumes in
North America and higher fiber glass sales prices. Partially offsetting these
improvements were lower worldwide flat glass prices particularly in Europe,
lower European volumes, and the unfavorable effects of foreign currency
translation. Operating income in the first nine months of 1995 included the
gain from the legal settlement with Pilkington. Also contributing to the
decline in operating income were lower sales prices for our flat glass
products and the negative effects of inflation. Increased fiber glass sales
prices, increased overall volumes, improved manufacturing efficiencies, and
lower overhead costs only partially offset these negative factors.
Chemicals sales totaled $1.22 billion in the nine-month period ended September
30, 1996 compared to $1.21 billion in the prior year period. Operating income
increased to $296 million from $286 million in the corresponding 1995 period.
Sales remained relatively flat as the benefits of volume improvements in most
of the segment's major businesses, particularly Transitions (registered
trademark) optical lenses and silica products, were offset by lower prices
for chlor-alkali products, the absence of sales from our sodium chlorate
business divested late in the fourth quarter of 1995, and the unfavorable
effects of foreign currency translation. Operating income in the first nine
months of 1995 included a charge for a legal dispute and a non-recurring
freight charge. Also contributing to the increase in operating income were
the factors that contributed to the sales change, lower environmental expense,
and improved manufacturing efficiencies. Increased overhead costs and the
negative effects of inflation partially offset these improvements.
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<PAGE>
Other Factors
Pension plan contributions were the main factors contributing to the increase
in other assets.
The increase in short-term borrowings and current portion of long-term debt
was principally due to borrowings used to fund a portion of our repurchases of
PPG common stock partially offset by scheduled debt repayments.
The increase in long-term debt was principally due to the issuance of $150
million of callable 7 3/8% notes in May 1996.
Accounting Standard
As noted in our Annual Report on Form 10-K for the year ended Dec. 31, 1995,
the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
123), in October 1995 which encourages, but does not require, a fair value
method of accounting for employee stock-based transactions. PPG has decided
to adopt only the disclosure provisions of SFAS 123 and, accordingly, there is
no impact on the Company's financial position, results of operations or cash
flows as a result of SFAS 123.
Environmental Matters
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 Sept. 30, 1996 and Dec. 31, 1995, PPG had reserves for
environmental contingencies totaling $95 million and $100 million,
respectively. Charges against income for environmental remediation costs for
the nine months ended Sept. 30, 1996 and 1995 were $22 million and
$35 million, respectively. Related cash outlays aggregated $27 million and
$32 million for the nine months ended Sept. 30, 1996 and 1995, respectively.
Management anticipates that the resolution of the Company's environmental
contingencies, which will occur over an extended period of time, will not
result in future annual charges against income that are significantly greater
than those recorded in 1995. 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.
In addition to the amounts currently reserved, the Company may be subject to
loss 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 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
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<PAGE>
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.
The Company's assessment of the potential impact of these environmental
contingencies is subject to considerable uncertainty due to the complex,
ongoing and evolving process of investigation and remediation, if necessary,
of such environmental contingencies.
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 transaction exposures
principally through the purchase of forward and option contracts. It does not
hedge its exposure to translation gains and losses; however, by borrowing in
local currencies it reduces such exposure. The fair value of the forward and
option contracts purchased and outstanding as of Sept. 30, 1996 and Dec. 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 Sept. 30, 1996 and
Dec. 31, 1995, the notional principal amount and fair value of interest rate
swaps held were not material.
The Company also uses commodity swap contracts to reduce its exposure to
fluctuations in prices for natural gas. The fair value of such swap contracts
purchased and outstanding as of Sept. 30, 1996 and Dec. 31, 1995, was not
material.
PPG's policies do not permit active trading of, or speculation in, derivative
instruments.
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<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company has voluntarily entered into an agreement with the EPA to
participate in the EPA's Toxic Substances Control Act Section 8(e) Compliance
Audit Program (the "Program"). Under the Program the Company conducted a
self-audit. On October 28, 1992, the Company submitted the first of two final
reports pursuant to the first of two phases of the Program as it then existed.
In May 1996, the EPA eliminated the second phase of the Program. A Consent
Agreement and Consent Order (CA/CO) settling the first phase was signed by the
Company in September 1996. Under the settlement, the Company will pay
$522,000 within thirty days of its receipt of the executed CA/CO from the EPA.
Payment of this previously accrued amount is expected to occur in the fourth
quarter of 1996, closing this matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(ii) The Bylaws of PPG Industries, Inc. as amended through
October 17, 1996
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed on July 23, 1996 and was so reported
in our Form 10-Q for the quarter ended June 30, 1996. The report
indicated that on July 18, 1996 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: November 6, 1996 /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)(ii) The Bylaws of PPG Industries, Inc.
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
BYLAWS
OF
PPG INDUSTRIES, INC.
(Incorporated under the Laws of the
Commonwealth of Pennsylvania)
______________________________________
October 17, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I -- MEETINGS OF SHAREHOLDERS
Section 1.1. Annual Meetings 1
Section 1.2. Business at Annual Meetings 1
Section 1.3. Nominations of Director Candidates 1
Section 1.4. Other Matters Brought by Shareholders 2
Section 1.5. Special Meetings 3
Section 1.6. Business at Special Meetings 3
Section 1.7. Notice 3
Section 1.8. Quorum 3
Section 1.9. Voting 4
Section 1.10. Proxies; Appointment and Revocation 5
Section 1.11. Meeting Procedure 5
ARTICLE II -- BOARD OF DIRECTORS
Section 2.1. Number, Classification and Removal;
Vacancies 5
Section 2.2. Qualifications and Powers 7
Section 2.3. Organizational Meeting 7
Section 2.4. Regular Meetings; Notice 7
Section 2.5. Special Meetings; Notice 7
Section 2.6. Quorum; Action 8
Section 2.7. Fees and Expenses 8
Section 2.8. Charitable Contributions 8
Section 2.9. Catastrophe 8
Section 2.10. Limitation of Liability 9
ARTICLE III -- COMMITTEES
Section 3.1. Standing Committees 9
(a) Audit Committee 10
(b) Nominating and Governance Committee 10
<PAGE>
(c) Officers-Directors Compensation
Committee 10
Section 3.2. Other Committees 10
Section 3.3. Organization of and Action by Committees 10
ARTICLE IV -- OFFICERS
Section 4.1. Election 11
Section 4.2. Chairman 11
Section 4.3. Vice Chairman 12
Section 4.4. President 12
Section 4.5. Vice Presidents and Other Officers 12
Section 4.6. Secretary 12
Section 4.7. Treasurer 12
Section 4.8. Controller 13
Section 4.9. Vacancies 13
Section 4.10. Delegation of Duties 13
ARTICLE V --
MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS
Section 5.1. Borrowing 14
Section 5.2. Execution of Instruments 14
Section 5.3. Voting and Acting with Respect to Stock and
Other Securities Owned by the Corporation 14
VI -- INDEMNIFICATION
Section 6.1. Entitlement to Indemnification 15
Section 6.2. Advancement of Expenses 15
Section 6.3. Indemnification Procedure 16
Section 6.4. Partial Indemnification 17
Section 6.5. Insurance 17
Section 6.6. Agreements 17
Section 6.7. Miscellaneous 17
Section 6.8. Construction 18
Section 6.9. Effectiveness 18
Section 6.10. Amendment 18
<PAGE>
ARTICLE VII -- CAPITAL STOCK
Section 7.1. Share Certificates 18
Section 7.2. Transfer of Shares 19
Section 7.3. Holders of Record 19
Section 7.4. Replacement 20
ARTICLE VIII -- MISCELLANEOUS
Section 8.1. Description of Seal 20
Section 8.2. Fiscal Year 20
Section 8.3. Gender 20
Section 8.4. Adoption, Amendment or Repeal of Bylaws 20
<PAGE>
BYLAWS
OF
PPG INDUSTRIES, INC.
(Incorporated under the Laws of the Commonwealth of Pennsylvania)
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.1. Annual Meetings. An annual meeting of the shareholders
shall be held each year on such day as the Board of Directors of the
Corporation (the "Board of Directors") may designate, or, if not so
designated, on the third Thursday in April if not a legal holiday, and if a
legal holiday, then on the next business day following. Annual meetings shall
be held at the registered office of the Corporation, or at such other places,
within or without the Commonwealth of Pennsylvania, as may be designated by
the Board of Directors.
Section 1.2. Business at Annual Meetings. The business at each annual
meeting of the shareholders shall include: (a) a review of the business of
the preceding year; (b) the election of directors; and (c) such other business
as may properly be brought before the meeting. No business may be transacted
at any annual meeting other than (i) matters referred to in the notice of the
meeting or any supplement thereto, (ii) matters otherwise properly brought
before the meeting by or at the direction of the Board of Directors, (iii)
matters properly brought before the meeting by one or more shareholders, but
only in accordance and upon compliance with the provisions of the proxy rules
of the Securities and Exchange commission and the notice provisions of
Sections 1.3 and 1.4 of these bylaws and (iv) matters which are incidental or
germane to any of the foregoing.
Section 1.3. Nominations of Director Candidates. Nominations for the
election of directors at a meeting of shareholders may be made only (a) by the
Board of Directors or a committee appointed by the Board of Directors or (b)
by a holder of record of stock entitled to vote in the election of the
directors to be elected; but a nomination (other than a nomination to fill a
vacancy resulting from removal from office by a vote of the shareholders under
Article Sixth of the Restated Articles of Incorporation) may be made
<PAGE>
by a shareholder only if written notice of such nomination is given, either by
personal delivery or by United States mail, postage prepaid, to the Secretary
and has been received by the Secretary at the principal executive offices of
the Corporation not later than (i) with respect to an election to be held at
an annual meeting of shareholders held on the third Thursday in April, 90 days
prior to such annual meeting and (ii) with respect to an election to be held
at an annual meeting of shareholders held on a date other than the third
Thursday in April or an election to be held at a special meeting of the
shareholders, the close of business on the tenth day following the date of the
first public disclosure of the date of such meeting. For purposes of this
Section 1.3, the first public disclosure of the date of any special meeting of
shareholders or any annual meeting of shareholders held on a date other than
the third Thursday in April shall be when disclosure of such meeting date is
first made in a filing made by the Corporation with the Securities and
Exchange Commission, in any notice given to the New York Stock Exchange, or in
a news release reported by the Dow Jones News Service, Reuters, Bloomberg,
Associated Press or comparable national news service. Each notice of
nomination from a shareholder shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the shareholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and intends to be
present at the meeting in person or by proxy to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (d) such other information
regarding each nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated by the
Board of Directors; and (e) the written consent of each nominee, signed by
such nominee, to serve as a director of the Corporation if so elected. The
presiding officer of the meeting may refuse to acknowledge the nomination of
any person by a shareholder not made in compliance with the foregoing
procedure.
Section 1.4. Other Matters Brought by Shareholders. For business other
than nominations of director candidates properly brought before an annual
meeting by a shareholder pursuant to clause (c) of Section 1.2 of these
bylaws, the shareholder must give timely notice thereof in writing to the
Secretary and such business must otherwise be a proper matter for shareholder
action. To be timely, a shareholder's notice shall be given, either by
personal delivery or by United States mail, postage prepaid, to the Secretary
and received by the Secretary at the principal executive officers of the
Corporation not later than 90 days prior to such annual meeting, provided
that, if such
<PAGE>
annual meeting is held on a date other than the third Thursday
in April, such written notice must be given within ten days after the first
public disclosure of the date of such meeting. For purposes of this Section
1.4, the first public disclosure of the date of any annual meeting of
shareholders held on a date other than the third Thursday in April shall be
when disclosure of such meeting date is first made in a filing by the
Corporation with Securities and Exchange Commission, in any notice given to
the New York Stock Exchange, or in a news release reported by the Dow Jones
News Service, Reuters, Bloomberg, Associated Press or comparable national news
service. Such shareholder's notice shall set forth (a) as to each matter a
brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such shareholder; (b) the beneficial owner, if
any, on whose behalf the notice is given and a specific representation that
the shareholder intends to be present at the meeting in person or by proxy to
present and speak as to such business; and (c) as to the shareholder giving
the notice and the beneficial owner, if any, on whose behalf the notice is
given (i) the name and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and
number of shares of the Corporation which are owned beneficially and of record
by such shareholder and such beneficial owner. The presiding officer of the
meeting may refuse to permit any business to be brought before an annual
meeting by a shareholder without compliance with the procedure set forth in
this Section 1.4.
Section 1.5. Special Meetings. Special meetings of the shareholders may
be called at any time, for the purpose or purposes set forth in the call, by
the Board of Directors or by the Chairman of the Board of Directors. Special
meetings shall be held at the registered office of the Corporation, or at such
other places, within or without the Commonwealth of Pennsylvania, as may be
designated by the Board of Directors or the Chairman of the Board of
Directors.
Section 1.6. Business at Special Meetings. No business may be
transacted at any special meeting of the shareholders other than matters
referred to in the notice of the meeting or any supplement thereto and matters
which are incidental or germane thereto.
Section 1.7. Notice. Written notice specifying the place, date and time
and the general nature of business to be transacted at each meeting of the
shareholders shall be given by the Secretary to each shareholder of record
entitled to vote at such meeting.
Section 1.8. Quorum. A shareholders' meeting shall not be organized for
the transaction of business unless a quorum is present. At any meeting, the
presence in
<PAGE>
person or by proxy of shareholders entitled to cast the minimum
number of votes required by law to constitute a quorum on a particular matter
in the absence of a bylaw to the contrary, or if no such number is required by
law, at least a majority of the votes which all shareholders are entitled to
cast on such matter, shall be necessary and sufficient to organize a meeting
for the purpose of considering such matter. Notwithstanding the withdrawal of
enough shareholders to leave less than the number of votes required by the
preceding sentence, the shareholders who continue to be present at a duly
organized meeting shall constitute a quorum in order to continue to do
business until adjournment. If a meeting cannot be organized because a quorum
has not attended, those present in person or by proxy may by majority vote
adjourn the meeting to such time and place as they may determine, and it shall
not be necessary to give notice of such adjourned meeting or the business to
be transacted at such meeting to any shareholder other than by announcement at
the meeting at which such adjournment is taken, unless the Board of Directors
fixes a new record date for the adjourned meeting.
Section 1.9. Voting. The voting at all meetings of the shareholders may
be by voice; but any qualified voter may demand a stock vote, whereupon (i)
with respect to any matter specifically set forth in the notice of meeting,
such stock vote shall be taken by ballot, and (ii) in the case of any other
vote, such stock vote may be taken by ballot, by show of hands, or any other
manner selected by the presiding officer. If the vote is taken by ballot,
each ballot shall state the name of the shareholder voting and the number of
shares voted by him, and if such ballot be cast by proxy, it shall state the
name of the proxy voting and the number of shares voted by him as proxy. Each
shareholder shall be entitled to one vote for each share having voting power
registered in his name on the books of the Corporation as of the record date
for the determination of the shareholders entitled to vote at the meeting, and
it may be voted by the shareholder or his duly authorized proxy. When a stock
vote is demanded, all questions shall be decided by a vote of shareholders
present, in person or by proxy, entitled to cast at least a majority of the
votes which all shareholders present and voting (excluding abstentions) are
entitled to cast on the particular matter, unless otherwise especially
provided in these bylaws, in the
Restated Articles of Incorporation, as amended from time to time (the
"Restated Articles of Incorporation"), or by law, and except that in the case
of privileged, subsidiary or incidental motions or questions involving the
convenience of the shareholders present, the presiding officer may call for a
per capita vote, either by voice or by show of hands. Where a proxy or
proxies represent the holders of shares entitled to cast in aggregate a
sufficient number of votes to adopt a particular resolution, the vote of such
proxy or proxies may, in the discretion of the presiding officer, constitute
action by the shareholders.
<PAGE>
A complete list of the shareholders entitled to vote at any meeting of
shareholders, arranged in alphabetical order with the address of and the
number of shares held by each, shall be prepared by the Secretary and shall be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. In lieu of the making of a list, the Corporation may make the
information therein available at the meeting by any other means.
Section 1.10. Proxies; Appointment and Revocation. Every shareholder
entitled to vote at a meeting of the shareholders or to express consent or
dissent to corporate action in writing without a meeting may authorize another
person or persons, but not more than three, to act for him by proxy. Every
proxy shall be executed in writing (including telegram, cable or radiogram,
telex, TWX, facsimile transmission or similar transmission), by the
shareholder or by his duly authorized attorney-in-fact, and filed with the
Secretary.
Section 1.11. Meeting Procedure. At all meetings of shareholders, the
Chairman of the Board of Directors shall preside, but in his absence, the
presiding officer shall be designated by the Board of Directors, or if not so
designated, selected by the shareholders present. The Secretary shall take
the minutes of the meeting, but in the absence of the Secretary or an
Assistant Secretary, the presiding officer shall designate any person to take
the minutes of the meeting. The presiding officer of any meeting shall
determine the order of business and the procedure at the meeting, including
such regulation of the conduct of discussion as seems to him in order. The
conduct of meetings shall be governed by accepted corporate practice (not
Roberts' Rules), the fundamental rule being that all who are entitled to take
part shall be treated with fairness and good faith.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. Number, Classification and Removal; Vacancies.
Article Sixth of the Restated Articles of Incorporation reads as follows:
"SIXTH. 6.1 The business and affairs of the corporation shall be
managed by a Board of Directors comprised as follows:
<PAGE>
(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 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.
<PAGE>
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."
Section 2.2. Qualifications and Powers. No person shall be elected a
director unless such person owns at least 100 shares of Common Stock of the
Corporation. In addition to the powers and authority expressly conferred upon
it by these bylaws and the Restated Articles of Incorporation, the Board of
Directors may exercise all such powers of the Corporation and do all such
lawful acts and things in the management of the Corporation as are not, by
these bylaws, by the Restated Articles of Incorporation, or by law directed or
required to be exercised or done by the shareholders.
Section 2.3. Organizational Meeting. The first regular meeting of each
newly-elected Board of Directors shall be held immediately following the
annual meeting of the shareholders, and no notice of such meeting shall be
necessary in order legally to constitute the meeting, provided that a quorum
of the Board of Directors shall be present. At such meeting the Board of
Directors shall organize itself, and may elect officers, appoint members of
standing committees and transact any other business.
Section 2.4. Regular Meetings; Notice. Regular meetings of the Board of
Directors shall be held at such time and place as shall be designated by the
Board of Directors from time to time. Notice of such regular meetings of the
Board of Directors shall not be required to be given, except as otherwise
expressly required in these bylaws or by law. However, whenever the time or
place of regular meetings shall be initially fixed or changed, notice of such
action shall be given to each director not participating in such action. Any
business may be transacted at any regular meeting.
Section 2.5. Special Meetings; Notice. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board of Directors
or, in his absence or during his inability to act, by the Vice Chairman of the
Board of Directors or, in the absence or during the inability of either to
act, by the President, or by any four directors of the Corporation, by giving
notice to the Secretary. Notice of every special meeting of the Board of
Directors stating the place, day and hour thereof shall be given by the
Secretary to each director by being mailed by first class at least five days,
or express mail or sent by courier service at least three days, or sent by
telex, TWX, telegram, facsimile
<PAGE>
transmission or similar transmission or given
personally or by telephone at least 24 hours, before the time at which the
meeting is to be held. Any business may be transacted at any special meeting.
Section 2.6. Quorum; Action. A meeting of the Board of Directors shall
not be organized for the transaction of business unless a quorum is present.
At any meeting, a majority of the directors then in office shall be necessary
and sufficient to organize the meeting. A meeting at which a quorum is not
present may be adjourned from time to time by a majority vote of those present
to such time and place as they may determine, and it shall not be necessary to
give notice of such adjourned meeting or the business to be transacted thereat
other than by announcement at the meeting at which such adjournment is taken.
Notwithstanding the withdrawal of enough directors to leave less than a
majority, the directors who continue to be present at a duly organized meeting
shall constitute a quorum in order to continue to do business. Unless
otherwise provided in these bylaws, in the Restated Articles of Incorporation
or by law, the acts of a majority of the directors present and voting
(excluding abstentions) at a duly organized meeting shall be the acts of the
Board of Directors. The yeas and nays shall be taken and recorded in the
minutes at the request of any director present at a meeting.
Section 2.7. Fees and Expenses. The Board of Directors shall fix the
compensation of each director (except for those directors who are officers of
the Corporation, whose compensation is to be fixed by the Officers-Directors
Compensation Committee) including, without limitation: (a) a fixed annual
fee; and (b) a fixed sum for attendance at any meeting of the Board of
Directors or any committee. Directors shall be reimbursed for the expenses of
attendance at any meeting of the Board of Directors or any committee.
Section 2.8. Charitable Contributions. The Board of Directors may
authorize contributions out of the income of the Corporation for the public
welfare or for religious, charitable, scientific, or educational purposes.
Section 2.9. Catastrophe. Notwithstanding any other provisions of law,
the Restated Articles of Incorporation or these bylaws, during any emergency
period caused by a national catastrophe or local disaster, a majority of the
surviving members (or the sole survivor) of the Board of Directors who have
not been rendered incapable of acting because of incapacity or the difficulty
of communication or transportation to the place of meeting, shall constitute a
quorum for the sole purpose of electing directors to fill such emergency
vacancies or to reduce the size of the full Board of Directors or both; and a
majority of the directors (or the sole survivor) present at such a meeting may
take such
<PAGE>
action. Directors so elected shall serve until such absent
directors are able to attend meetings or until the shareholders act to elect
directors for such purpose. During such an emergency period, if the Board of
Directors and the Policy and Planning Committee are unable to or fail to meet,
any action appropriate to the circumstances may be taken by such officers of
the Corporation as may be present and able. Questions as to the existence of
a national catastrophe or local disaster and the number of surviving members
capable of acting shall be conclusively determined at the time by the
directors or the officers so acting.
Section 2.10. Limitation of Liability. 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 Section 2.10 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 Section 2.10 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
this Section 2.10, 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, 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.
ARTICLE III
COMMITTEES
Section 3.1. Standing Committees. The Board of Directors, upon the
recommendation of the Nominating and Governance Committee, shall appoint the
members of the following standing committees:
<PAGE>
(a) Audit Committee, comprised of independent, non-employee members of
the Board of Directors, which shall recommend to the Board of Directors the
independent public accountants to be appointed or elected annually; review
with the independent public accountants and the internal auditors the scope
and plan of their respective future audit programs and their respective
reports and recommendations concerning audit findings; meet with the officers
of the Corporation and separately with the independent public accountants and
with the internal auditors to review audits, annual financial statements prior
to their release, accounting and financial controls and compliance with
appropriate codes of conduct; report on its meetings to the Board of Directors
together with its comments and recommendations; and have such other powers and
perform such other duties as the Board of Directors may specify.
(b) Nominating and Governance Committee, comprised of non-employee
members of the Board of Directors, which shall recommend to the Board of
Directors (i) the persons to be nominated by the Board of Directors to stand
for election as directors at the annual meeting of the shareholders, (ii) the
person or persons to be elected by the Board of Directors to fill any vacancy
or vacancies in the Board of Directors, (iii) the persons to be elected by the
Board of Directors to the offices of the Chairman of the Board of Directors,
Vice Chairman of the Board of Directors, President and any office which would
cause such person to be an executive officer (as defined under the Securities
Exchange Act of 1934) of the Corporation, (iv) the persons to be appointed by
the Board of Directors to membership on the Policy and Planning Committee and
the Operating Committee, (v) actions to be taken regarding the structure,
organization and functioning of the Board of Directors and (vi) the directors
to be appointed to serve as members, and as chairmen, of the standing and
other committees established by the Board of Directors; and have such other
powers and perform such other duties as the Board of Directors may specify.
(c) Officers-Directors Compensation Committee, comprised of non-employee
members of the Board of Directors, which shall approve, adopt, administer,
interpret, amend, suspend or terminate the compensation plans of the
Corporation applicable to, and fix the compensation and benefits of, (i) all
officers of the Corporation serving as directors of the Corporation and (ii)
all executive officers (as defined under the Securities Exchange Act of 1934)
of the Corporation; and have such other powers and perform such other duties
as the Board of Directors may specify.
Section 3.2. Other Committees. The Board of Directors shall establish a
Policy and Planning Committee and an Operating Committee and may establish
such other
<PAGE>
committees as it may deem appropriate, all of which committees
shall have such powers and perform such duties as the Board of Directors may
specify and have such membership, which may or may not include directors, as
the Board of Directors may appoint.
Section 3.3. Organization of and Action by Committees. All committee
members appointed by the Board of Directors shall serve at the pleasure of the
Board of Directors. All committees shall determine their own organization,
procedures and times and places of meeting, unless otherwise directed by the
Board of Directors. Any action taken by any committee shall be subject to
alteration or revocation by the Board of Directors; provided, however, that
third parties shall not be prejudiced by such alteration or revocation.
ARTICLE IV
OFFICERS
Section 4.1. Election. The Board of Directors shall elect a Chairman of
the Board of Directors, a Secretary and a Treasurer. In addition, the Board
of Directors may elect a Vice Chairman of the Board of Directors, President
and Controller, or any one or more of them, and may elect one or more Vice
Presidents or other officers. Each officer elected by the Board of Directors
shall serve until the next organizational meeting of the Board of Directors
and until his successor, if any, shall have been elected, unless his
resignation or removal shall expressly be effective earlier. Each officer
appointed by the Policy and Planning Committee shall serve until his
successor, if any, shall have been appointed, unless his resignation or
removal shall expressly be effective earlier. Any officer of the Corporation
may be removed by the Board of Directors with or without cause.
Section 4.2. Chairman. The Chairman of the Board of Directors shall be
the chief executive officer of the Corporation and shall have general control
and direction of the business of the Corporation. He shall preside at all
meetings of shareholders and directors and shall have such other powers and
perform such other duties as the Board of Directors may specify. The Chairman
of the Board of Directors shall be an ex officio member, without the right to
vote, of the Audit, Nominating and Governance and Officers-Directors
Compensation Committees. No person shall hold the position of Chairman of the
Board of Directors and be the Chief Executive Officer of the Corporation for a
period in excess of ten years.
<PAGE>
Section 4.3. Vice Chairman. The Vice Chairman of the Board of Directors
shall have such powers and perform such duties as the Board of Directors or
the Chairman of the Board of Directors may specify.
Section 4.4. President. The President shall have such powers and
perform such duties as the Board of Directors or the Chairman of the Board of
Directors may specify. If the office of President is vacant, the Chairman of
the Board of Directors shall have all of the powers and perform all acts
incident to the office of the President.
Section 4.5. Vice Presidents and Other Officers. The Vice Presidents
and other officers elected by the Board of Directors shall have such powers
and perform such duties as the Board of Directors, the Chairman of the Board
of Directors, the Vice Chairman of the Board of Directors or the President may
specify. In the absence of the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors and the President, or during their
inability to act, such Vice Presidents and other officers may exercise,
subject to the control of the Board of Directors, the powers and duties of the
Chairman of the Board of Directors, the Vice Chairman of the Board of
Directors and the President. The Vice Presidents and other officers appointed
by the Policy and Planning Committee shall have such powers and perform such
duties as the Policy and Planning Committee or any officers to whom they
report, directly or indirectly, may specify.
Section 4.6. Secretary. The Secretary shall attend all meetings of the
shareholders and of the Board of Directors and shall keep careful records of
all such meetings, the proceedings of which shall be transcribed into the
minute book of the Corporation over his signature. He shall have custody of
the corporate seal and of all books, documents, and papers of the Corporation
committed to his charge. He shall cause all notices to be given to
shareholders and to directors of the Corporation as may be required by law or
these bylaws. He shall make such reports, have such other powers and perform
such other duties as are authorized or required by law or the Board of
Directors may specify. The Secretary may delegate to one or more Assistant
Secretaries any of his powers and duties. In the absence of the Secretary or
during his inability to act, his powers and duties shall be performed by one
or more Assistant Secretaries.
Section 4.7. Treasurer. The Treasurer shall have the custody and care
of, and shall manage and invest, all the money, securities, and funds of the
Corporation. To the extent not invested in stocks, bonds or other securities,
the Treasurer shall deposit the money and funds of the Corporation in such
bank or banks or depositories as the Board of
<PAGE>
Directors may designate,
provided that the Board of Directors may delegate to the Treasurer, subject to
such limitations as it may from time to time prescribe, the power to designate
such bank or banks or depositories. Under the direction of the Board of
Directors, the Treasurer shall pay out and dispose of all drafts, notes,
checks, warrants, and orders for the payment of money; render such statements
to the Board of Directors as it shall require; and have such other powers and
perform such other duties as the Board of Directors may specify or which are
authorized or required of the Treasurer by law. The Treasurer may delegate
any of his powers and duties to one or more Assistant Treasurers and, if
authorized by the Board of Directors, any officer or agent of the Corporation.
If required by the Board of Directors, the Treasurer and any Assistant
Treasurer shall give bond for the faithful discharge of his duties in such
amount as may be fixed by the Board of Directors and with such surety as may
be approved by the Board of Directors. In the absence of the Treasurer or
during his inability to act, his powers and duties shall be performed by one
or more Assistant Treasurers.
Section 4.8. Controller. The Controller shall keep or cause to be kept
all books of account and accounting records of the Corporation. He shall
periodically render to the Board of Directors financial statements and reports
covering the results of the operations of the Corporation. Subject to the
control of the Board of Directors, he shall determine all accounting policies
and procedures, including, without limiting the generality of the foregoing,
matters relating to depreciation, depletion, valuation of inventories, the
method of creating reserves and accruals, and the establishment of the value
of land, buildings, equipment, securities and other assets and shall perform
all other acts authorized or required of the Controller by law and shall have
such other powers and perform such other duties as the Board of Directors may
specify. The Controller may delegate to one or more Assistant Controllers any
of his powers and duties. In the absence of the Controller or during his
inability to act, his powers and duties shall be performed by one or more
Assistant Controllers. If the office of Controller is vacant, his duties
shall be performed by the officer designated by the Board of Directors.
Section 4.9. Vacancies. Vacancy in any office or position by reason of
death, resignation, removal, disqualification or any other cause, shall be
filled in the manner provided in this ARTICLE IV for regular election or
appointment to such office.
Section 4.10. Delegation of Duties. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board of Directors may delegate for the
time being the powers and duties, or any of them, of such officer to any other
officer or director or other person whom it may select.
<PAGE>
ARTICLE V
MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS
Section 5.1. Borrowing. No officer, agent or employee of the
Corporation shall have any power or authority to borrow money on its behalf,
to guarantee or pledge its credit, or to mortgage or pledge any of its real or
personal property, except within the scope and to the extent of such authority
as may be delegated by the Board of Directors. Authority may be granted by
the Board of Directors for any of the above purposes and may be general or
limited to specific instances.
Section 5.2. Execution of Instruments. All properly authorized notes,
bonds, drafts, acceptances, checks, endorsements (other than for deposit),
guarantees, and all evidences of indebtedness of the Corporation whatsoever,
and all deeds, mortgages, contracts and other instruments requiring execution
by the Corporation may be signed by the Chairman of the Board of Directors,
the Vice Chairman of the Board of Directors, the President, any Vice President
or the Treasurer; and authority to sign any such instruments, which may be
general or confined to specific instances, may be conferred by the Board of
Directors upon any other person or persons, subject to such requirements as to
countersignature or other conditions, as the Board of Directors may from time
to time determine. Facsimile signatures may be used on checks, notes, bonds
or other instruments. Any person having authority to sign on behalf of the
Corporation may delegate, from time to time, by instrument in writing, all or
any part of such authority to any person or persons if authorized so to do by
the Board of Directors. Unless otherwise delegated, the Board of Directors
retains the authority to approve any and all transactions entered into on
behalf of the Corporation.
Section 5.3. Voting and Acting with Respect to Stock and Other
Securities Owned by the Corporation. The Chairman of the Board of Directors,
the Vice Chairman of the Board of Directors, the President, any Vice President
or the Treasurer of the Corporation shall have the power and authority to vote
and act with respect to all stock and other securities in any other
corporation owned by this Corporation, unless the Board of Directors confers
such authority, which may be general or confined to specific instances, upon
some other officer or person. Any person so authorized shall have the power
to appoint an attorney or attorneys, with general power of substitution, as
proxies for the
<PAGE>
Corporation, with full power to vote and act on behalf of the
Corporation with respect to such stock and other securities.
ARTICLE VI
INDEMNIFICATION
Section 6.1. Entitlement to Indemnification. The Corporation shall, to
the extent that a determination of entitlement is made pursuant to, or to the
extent that entitlement to indemnification is otherwise accorded by, this
Article, indemnify every person who was or is a director, officer or employee
of the Corporation (hereinafter referred to as the "Indemnitee") who was or is
involved in any manner (including, without limitation, as a party or a
witness), or is threatened to be made so involved, in any threatened, pending
or completed investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative (including without limitation, any
investigation, claim, action, suit or proceeding by or in the right of the
Corporation) by reason of the fact that the Indemnitee is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity (such investigation, claim, action, suit
or proceeding hereinafter being referred to as a "Proceeding"), against any
expenses and any liability actually and in good faith paid or incurred by such
person in connection with such Proceeding; provided, that indemnification may
be made with respect to a Proceeding brought by an Indemnitee against the
Corporation only as provided in the last sentence of this Section 6.1. As
used in this Article, the term "expenses" shall include fees and expenses of
counsel and all other expenses (except any liability) and the term "liability"
shall include amounts of judgments, fines or penalties and amounts paid in
settlement. Indemnification may be made under this Article for expenses
incurred in connection with any Proceeding brought by an Indemnitee against
the Corporation only if (1) the Proceeding is a claim for indemnification
under this Article or otherwise, (2) the Indemnitee is successful in whole or
in part in the Proceeding for which expenses are claimed, or (3) the
indemnification for expenses is included in a settlement of, or is awarded by
a court in, a Proceeding to which the Corporation is a party.
Section 6.2. Advancement of Expenses. All expenses incurred in good
faith by or on behalf of the Indemnitee with respect to any Proceeding shall,
upon written request
<PAGE>
submitted to the Secretary of the Corporation, be
advanced to the Indemnitee by the Corporation prior to final disposition of
such Proceeding, subject to any obligation which may be imposed by law or by
provision in the Articles, bylaws, an agreement or otherwise to repay the
Corporation in certain events.
Section 6.3. Indemnification Procedure.
(a) To obtain indemnification under this Article, an Indemnitee shall
submit to the Secretary of the Corporation a written request, including such
supporting documentation as is reasonably available to the Indemnitee and
reasonably necessary to the making of a determination of whether and to what
extent the Indemnitee is entitled to indemnification. The Secretary of the
Corporation shall promptly thereupon advise the General Counsel in writing of
such request.
(b) The Indemnitee's entitlement to indemnification shall be determined
by a Referee (selected as hereinafter provided) in a written opinion. The
Referee shall find the Indemnitee entitled to indemnification unless the
Referee finds that the Indemnitee's conduct was such that, if so found by a
court, indemnification would be prohibited by Pennsylvania law.
(c) "Referee" means an attorney with substantial expertise in corporate
law who neither presently is, nor in the past five years has been, retained to
represent: (i) the Corporation or the Indemnitee, or an affiliate of either
of them, in any matter material to either such party, except to act as a
Referee in similar proceedings, or (ii) any other party to the Proceeding
giving rise to a claim for indemnification under this Article. The
Corporation's General Counsel, if Disinterested (as hereinafter defined), or
if not, the Corporation's senior officer who is Disinterested, shall propose a
Referee. The Secretary of the Corporation shall notify the Indemnitee of the
name of the Referee proposed, whose appointment shall become final unless the
Indemnitee, within 10 days of such notice, reasonably objects to such Referee
as not being qualified, independent or unbiased. If the Corporation and the
Indemnitee cannot agree on the selection of a Referee, or if the Corporation
fails to propose a Referee, within 45 days of the submission of a written
request for indemnification, the Referee shall be selected by the American
Arbitration Association. The General Counsel or a senior officer shall be
deemed Disinterested if not a party to the Proceeding and not alleged in the
pleadings as to the Proceeding to have participated in the action, or
participated in the failure to act, which is the basis for the relief sought
in the Proceeding.
<PAGE>
(d) Notwithstanding any other provision of this Article, to the extent
that there has been a determination by a court as to the conduct of an
Indemnitee such that indemnification would not be prohibited by Pennsylvania
law, or if an Indemnitee would be entitled by Pennsylvania law to
indemnification, the Indemnitee shall be entitled to indemnification
hereunder.
(e) A determination under this Section 6.3 shall be conclusive and
binding on the Company but not on the Indemnitee.
Section 6.4. Partial Indemnification. If an Indemnitee is entitled
under any provision of this Article to indemnification by the Corporation of a
portion, but not all, of the expenses or liability resulting from a
Proceeding, the Corporation shall nevertheless indemnify the Indemnitee for
the portion thereof to which the Indemnitee is entitled.
Section 6.5. Insurance. The Corporation may purchase and maintain
insurance to protect itself and any Indemnitee against expenses and liability
asserted or incurred by any Indemnitee in connection with any Proceeding,
whether or not the Corporation would have the power to indemnify such person
against such expense or liability by law, under an agreement or under this
Article. The Corporation may create a trust fund, grant a security interest
or use other means (including, without limitation, a letter of credit) to
ensure the payment of such amounts as may be necessary to effect
indemnification.
Section 6.6. Agreements. The Corporation may enter into agreements with
any director, officer or employee of the Corporation, which agreements may
grant rights to the Indemnitee or create obligations of the Corporation in
furtherance of, different from, or in addition to, but not in limitation of,
those provided in this Article, without shareholder approval of any such
agreement. Without limitation of the foregoing, the Corporation may obligate
itself (1) to maintain insurance on behalf of the Indemnitee against certain
expenses and liabilities and (2) to contribute to expenses and liabilities
incurred by the Indemnitee in accordance with the application of relevant
equitable considerations to the relative benefits to, and the relative fault
of, the Corporation.
Section 6.7. Miscellaneous. The entitlement to indemnification and
advancement of expenses provided for in this Article (1) shall be a contract
right, (2) shall not be exclusive of any other rights to which an Indemnitee
may otherwise be entitled under any Article, bylaw, agreement, vote of
shareholders or directors or otherwise, (3) shall continue as to a person who
has ceased to be a director, officer or employee and (4) shall
<PAGE>
inure to the
benefit of the heirs and legal representatives of any person entitled to
indemnification or advancement of expenses under this Article.
Section 6.8. Construction. If any provision of this Article shall be
held to be invalid, illegal or unenforceable for any reason (1) such provision
shall be invalid, illegal or unenforceable only to the extent of such
prohibition and the validity, legality and enforceability of the remaining
provisions of this Article shall not in any way be affected or impaired
thereby, and (2) to the fullest extent possible, the remaining provisions of
this Article shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 6.9. Effectiveness. This Article shall apply to every
Proceeding other than a Proceeding filed prior to January 27, 1987, except
that it shall not apply to the extent that Pennsylvania law does not permit
its application to any breach of performance of duty or any failure of
performance of duty by an Indemnitee occurring prior to January 27, 1987.
Section 6.10. Amendment. This Article may be amended or repealed at any
time in the future by vote of the directors without shareholder approval;
provided, that any amendment or repeal, or adoption of any Article of the
Restated Articles or any other bylaw of the Corporation, which has the effect
of limiting the rights granted to directors under this Article, 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
amendment or repeal, or such Article or other bylaw, limiting the rights
granted under this Article shall operate prospectively only, and shall not
limit in any way the indemnification provided for herein with respect to any
action taken, or failure to act, by an Indemnitee prior thereto.
ARTICLE VII
CAPITAL STOCK
Section 7.1. Share Certificates. Every holder of fully-paid stock of
the Corporation shall be entitled to a certificate or certificates, to be in
such form as the Board of Directors may from time to time prescribe, and
signed (in facsimile or otherwise, as permitted by law) by the Chairman of the
Board of Directors, the Vice Chairman of the Board of
<PAGE>
Directors, the President
or any Vice President and also by the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer, which certificate or
certificates shall represent and certify the number of shares of stock owned
by such holder. In case any officer, transfer agent or registrar who has
signed (in facsimile or otherwise, as permitted by law) any share certificate
shall cease to be such officer, transfer agent or registrar before the
certificate is issued, it may be issued by the Corporation with the same
effect as if the officer, transfer agent or registrar had not ceased to be
such at the date of its issue. The Board of Directors may authorize the
issuance of certificates for fractional shares or, in lieu thereof, scrip or
other evidence of ownership, which may (or may not) as determined by the Board
of Directors entitle the holder thereof to voting, dividends or other rights
of shareholders.
Section 7.2. Transfer of Shares. Transfers of shares of stock of the
Corporation shall be made on the books of the Corporation only upon surrender
to the Corporation of the certificate or certificates for such shares properly
endorsed by the shareholder or by his assignee, agent or legal representative,
who shall furnish proper evidence of assignment, authority or legal
succession, or by the agent of one of the foregoing thereunto duly authorized
by an instrument duly executed and filed with the Corporation in accordance
with regular commercial practice.
Section 7.3. Holders of Record. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock of the Corporation
as the holder and owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in any share on
the part of any person other than the registered holder thereof, whether or
not it shall have express or other notice thereof, except as expressly
provided by law. The Board of Directors may fix a record date, within any
applicable limits imposed by law or the Restated Articles of Incorporation,
for the determination of shareholders for any purpose, including meetings,
payment of dividends, allotment of rights and reclassification, conversion or
exchange of shares. The Board of Directors may adopt a procedure whereby a
shareholder of the Corporation may certify in writing to the Corporation that
all or a portion of the shares registered in the name of the shareholder are
held for the account of a specified person or persons. The resolution of the
Board of Directors adopting such a procedure may set forth: (1) the
classification of shareholder who may certify; (2) the purpose or purposes for
which the certification may be made; (3) the form of certification and
information to be contained therein; (4) if the certification is with respect
to a record date, the time after the record date within which the
certification must be received by the Corporation; and (5) such other
provisions with respect to the procedure as are deemed necessary or desirable.
Upon receipt by the
<PAGE>
Corporation of a certification complying with the
procedure, the persons specified in the certification shall be deemed, for the
purposes set forth in the certification, to be the holders of record of the
number of shares specified in place of the shareholder making the
certification.
Section 7.4. Replacement. Each duly appointed transfer agent and
registrar of the Corporation may issue and register, respectively, from time
to time, without further action or approval by or on behalf of the
Corporation, new certificates of stock of the Corporation to replace
certificates claimed to have been lost, stolen, or destroyed, upon receipt by
the transfer agent of an Affidavit of Loss and Bond of Indemnity in such
amount and upon such terms as may be required by the transfer agent to protect
the Corporation, the transfer agent and registrar against all loss, cost or
damage arising from the issuance of such new certificates, provided that a
Bond of Indemnity shall not be required where not more than five shares of
stock are involved.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Description of Seal. The corporate seal of the Corporation
shall be inscribed with the name of the Corporation, and the words "Corporate
Seal," and may be used by causing it or a facsimile thereof to be impressed or
affixed or in any manner reproduced.
Section 8.2. Fiscal Year. The fiscal year of the Corporation shall be
the calendar year.
Section 8.3. Gender. In these bylaws, words used in the masculine
gender shall include the feminine.
Section 8.4. Adoption, Amendment or Repeal of Bylaws. Except as
otherwise provided by law, in the Restated Articles of Incorporation or in
these bylaws, new or additional bylaws may be adopted and these bylaws may be
amended or repealed by action of the Board of Directors at any regular or
special meeting, subject to the power of the shareholders to change such
action.
Exhibit 11
PPG INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
Computation of Earnings Per Share
<CAPTION>
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income.................... $ 191.1 $170.4 $ 591.9 $ 606.4
Weighted average number of
shares of common stock
outstanding................. 186.5 200.9 189.2 204.0
Weighted average number of
shares of common stock
outstanding and common
stock equivalents.......... 188.5 203.2 191.2 206.4
Primary earnings per share.... $ 1.03 $ 0.85 $ 3.13 $ 2.97
Fully diluted earnings
per share................... $ 1.02 $ 0.84 $ 3.10 $ 2.94
</TABLE>
NOTES:
The common stock equivalents consist of the shares reserved for issuance under
PPG's stock option plan and deferred under PPG's deferred compensation and
earnings growth plans.
The fully diluted earnings per share calculations are submitted in accordance
with Regulation S-K item 601(b)(11) although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because they result in dilution of less
than three percent.
All amounts are in millions except per share data.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. $
<S> <C>
<PERIOD-TYPE> 9-MOS
<EXCHANGE-RATE> 1
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 104
<SECURITIES> 0
<RECEIVABLES> 1,279
<ALLOWANCES> 0
<INVENTORY> 779
<CURRENT-ASSETS> 2,352
<PP&E> 6,680
<DEPRECIATION> 3,788
<TOTAL-ASSETS> 6,426
<CURRENT-LIABILITIES> 1,693
<BONDS> 843
0
0
<COMMON> 484
<OTHER-SE> 2,078
<TOTAL-LIABILITY-AND-EQUITY> 6,426
<SALES> 5,464
<TOTAL-REVENUES> 5,464
<CGS> 3,267
<TOTAL-COSTS> 3,267
<OTHER-EXPENSES> 493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72
<INCOME-PRETAX> 985
<INCOME-TAX> 374
<INCOME-CONTINUING> 592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 592
<EPS-PRIMARY> 3.13
<EPS-DILUTED> 3.13
</TABLE>
