<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
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Common Stock--Par Value $1.66 2/3 New York Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
----- ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of January 31, 1996, 192,931,262 shares of the Registrant's common stock,
with a par value of $1.66 2/3 per share, were outstanding. As of that date, the
aggregate market value of common stock held by non-affiliates was $8,866
million.
DOCUMENTS INCORPORATED BY REFERENCE
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<CAPTION>
INCORPORATED BY
DOCUMENT REFERENCE IN PART NO.
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Portions of PPG Industries, Inc. Annual Report to Shareholders
for the year ended December 31, 1995................................................... I, II and IV
Portions of PPG Industries, Inc. Proxy Statement for its 1996
Annual Meeting of Shareholders......................................................... III
</TABLE>
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<PAGE>
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
------------------------
As used in this report, the terms "PPG," "Company," and "Registrant" mean PPG
Industries, Inc. and its subsidiaries, taken as a whole, unless the context
indicates otherwise.
------------------------
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business....................................................................................... 1
Item 2. Properties..................................................................................... 3
Item 3. Legal Proceedings.............................................................................. 3
Item 4. Submission of Matters to a Vote of Security Holders............................................ 3
Executive Officers of the Registrant........................................................... 4
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters...................... 5
Item 6. Selected Financial Data........................................................................ 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................ 5
Item 8. Financial Statements and Supplementary Data.................................................... 5
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................................................ 5
PART III
Item 10. Directors and Executive Officers of the Registrant............................................. 6
Item 11. Executive Compensation......................................................................... 6
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 6
Item 13. Certain Relationships and Related Transactions................................................. 6
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................... 7
Signatures................................................................................................... 8
</TABLE>
NOTE ON INCORPORATION BY REFERENCE
Throughout this report various information and data are incorporated by
reference to the Company's 1995 Annual Report to Shareholders (hereinafter
referred to as "the Annual Report to Shareholders"). Any reference in this
report to disclosures in the Annual Report to Shareholders shall constitute
incorporation by reference only of that specific information and data into this
Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
PPG Industries Inc., incorporated in Pennsylvania in 1883, is comprised of three
basic business segments: coatings and resins, glass and chemicals. Within these
business segments, PPG has followed a careful program of directing its resources
of people, capital and technology in selected areas where it enjoys positions of
leadership. Primary areas in which resources have been focused are automotive
original, refinish, industrial and architectural coatings; flat glass,
automotive original and replacement glass, aircraft transparencies,
continuous-strand fiber glass, and chlor-alkali and specialty chemicals. Each of
the business segments in which PPG is engaged is highly competitive. However,
the broad diversification of product lines and worldwide markets served tend to
minimize the impact on total sales and earnings of changes in demand for a
particular product line. Reference is made to "Business Segment Information" on
pages 26 and 27 of the Annual Report to Shareholders, which is incorporated
herein by reference, for financial information relating to business segments.
COATINGS AND RESINS
PPG is a major manufacturer of protective and decorative coatings. The coatings
industry is highly competitive and consists of a few large firms with global
presence, and many smaller firms serving local or regional markets. PPG competes
in its primary markets with the world's largest coatings companies, most of
which have operations in North America and Europe. Product development,
innovation, quality and customer service have been stressed by PPG and have been
significant factors in developing an important supplier position.
The coatings business involves the supply of protective and decorative finishes
for automotive original equipment, appliances, industrial equipment, and
packaging; factory finished aluminum extrusions and coils for architectural
uses, and other industrial and consumer products. In addition to supplying
finishes to the automotive original equipment market, PPG supplies automotive
refinishes to the aftermarket which are primarily sold through distributors. In
the automotive original and industrial portions of the coatings business, PPG
sells directly to a variety of manufacturing companies. Product performance,
technology, quality and customer service are major competitive factors. The
automotive original and industrial coatings are formulated specifically for the
customer's needs and application methods. PPG also manufactures adhesives and
sealants for the automotive industry and metal pretreatments for automotive and
industrial applications.
The architectural finishes business consists primarily of coatings used by
painting and maintenance contractors and by consumers for decoration and
maintenance. PPG's products are sold through independent distributors, paint
dealers, mass merchandisers and home centers. Price, quality and service are key
competitive factors in the architectural finishes market.
Coatings and resins' principal production facilities are concentrated in North
America and Europe. North American production facilities consist of fourteen
plants in the United States, one in Canada and two in Mexico. The three largest
facilities are the Cleveland, OH plant, which primarily produces automotive
original coatings; the Oak Creek, WI plant, which produces automotive original
and other industrial coatings; and the Delaware, OH plant, which primarily
produces automotive refinishes and certain industrial coatings. Outside North
America, PPG operates three plants in Spain; two plants in Italy, and one plant
each in China, England, France, Germany and Portugal. These plants produce a
variety of industrial coatings. PPG owns a 60 percent interest in a sales
operation in Hong Kong, 50 percent interests in operations in South Korea and
Japan, and minority interests in operations in Taiwan and Brazil. Additionally,
coatings and resins operates ten service centers in the United States and two
each in Canada and Mexico to provide just-in-time delivery and service to
selected automotive assembly plants. Nineteen training centers in the United
States, six in Europe, five in Asia and one in Canada are in operation. These
centers provide training for automotive aftermarket refinish customers. Also,
four automotive original application centers that provide testing facilities for
customer paint processes and new products are in operation. The average number
of persons employed by the coatings and resins segment during 1995 was 10,100.
GLASS
PPG is one of the major producers of flat glass, fabricated glass and
continuous-strand fiber glass in the world. PPG's major markets are automotive
original equipment, automotive replacement, residential and commercial
construction, aircraft transparencies, the furniture, marine and electronics
industries and other markets. Most glass products are sold directly to
manufacturing and construction companies, although in some instances products
are sold directly to independent distributors and through PPG distribution
outlets. Fiber glass products are sold directly to manufacturing companies and
independent distributors. PPG manufactures flat glass by the float process and
fiber glass by the continuous filament process.
The bases for competition are price, quality, technology, cost and customer
service. The Company competes with six other major producers of flat glass, six
other major producers of fabricated glass and two other major producers of fiber
glass throughout the world.
PPG's principal glass production facilities are concentrated in North America
and Europe. Fourteen plants
1
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operate in the United States, of which six produce flat glass, five produce
automotive glass, two produce fiber glass products and one produces aircraft
transparencies. A third plant is expected to begin producing fiber glass
products in March 1996. There are three plants in Canada, two of which produce
automotive glass and one produces flat glass. Four plants operate in Italy; one
manufactures automotive and flat glass, one produces automotive glass, one
produces flat glass, and another produces aircraft transparencies. Three plants
are located in France; one plant manufactures automotive and flat glass and two
plants produce automotive glass. One plant in England and one plant in the
Netherlands produce fiber glass. PPG owns equity interests in operations in
Canada, France, the Netherlands, the People's Republic of China, Taiwan, the
United States and Venezuela and a majority interest in a glass distribution
company in Japan. Additionally, glass has four satellite operations that provide
limited manufacturing and just-in-time service to selected automotive customer
locations. The average number of persons employed by the glass segment during
1995 was 15,700.
CHEMICALS
PPG is a major producer of chlor-alkali and specialty chemicals. The primary
chlor-alkali products are chlorine, caustic soda, vinyl chloride monomer,
chlorinated solvents and chlorinated benzenes. Most of these products are sold
directly to manufacturing companies in the chemical processing, rubber and
plastics, paper, minerals and metals, and water treatment industries. The
primary specialty chemical products are Transitions(registered trademark)
optical products; silica based compounds for the tire, shoe and battery
separator businesses; surfactants for food emulsification, sugar processing and
personal care products; CR-39 monomer for optical plastics; and phosgene
derivatives for the pharmaceutical, herbicide and fuel additives businesses.
PPG competes with six other major producers of chlor-alkali products. Price,
product availability, product quality and customer service are the key
competitive factors. In the specialty chemicals area, PPG's market share varies
greatly by business; product performance and technical service are the most
critical competitive factors.
PPG's chemical production facilities consist of nine plants in North America,
two plants each in Taiwan and the People's Republic of China, and one each in
Australia, France, Ireland and the Netherlands. The two largest facilities,
located in Lake Charles, LA and in Natrium, WV, primarily produce chlor-alkali
products. PPG owns equity interests in operations in Japan, Thailand and the
United States. The average number of persons employed by the chemicals segment
during 1995 was 4,600.
BUSINESS DIVESTED--BIOMEDICAL SYSTEMS DIVISION
The Company's Biomedical Systems Division was a manufacturer, supplier and
servicer of integrated medical systems for human health care on a worldwide
basis.
A decision was made in the fourth quarter of 1993 to divest the Biomedical
Systems Division. The sale of the medical electronics portion of this business
was completed by the end of the third quarter of 1994. With the sale of the
sensors business in January 1995, the divestiture of the Biomedical Systems
Division was completed.
RAW MATERIALS
The effective management of raw materials is important to PPG's continued
success. The Company's most significant raw materials are sand, soda ash,
energy, polyvinyl butyral and boron containing minerals in the glass segment;
titanium dioxide and epoxy resins in the coatings and resins segment, and energy
and ethylene in the chemicals segment. Most of the raw materials used in
production are purchased from outside sources, and the Company has made, and
will continue to make, supply arrangements to meet the planned operating
requirements for the future. For the significant raw material requirements
identified above, and other material, there is more than one source of supply.
RESEARCH AND DEVELOPMENT
Research and development costs, including depreciation of research facilities,
during 1995, 1994 and 1993 were $252 million, $233 million and $218 million,
respectively. Research and development facilities are maintained for each
business segment. Each of the facilities conducts research and development
involving new and improved products and processes, and additional process and
product development work is undertaken at many of the Company's manufacturing
plants. PPG owns and operates eight research and development facilities in the
United States and Europe.
PATENTS
PPG considers patent protection to be important from an overall standpoint. The
Company's business segments are not materially dependent upon any single patent
or group of related patents. PPG received $27 million, $25 million and $25
million from royalties and the sale of technical know-how during the years 1995,
1994 and 1993, respectively.
BACKLOG
In general, PPG does not manufacture its products against a backlog of orders;
production and inventory levels are geared primarily to projections of future
demand and the level of incoming orders.
2
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NON-U.S. OPERATIONS
Although PPG has a significant investment in non-U.S. operations, based upon the
extent and location of investments, management believes that the risk associated
with its international operations is not significantly greater than domestic
operations.
EMPLOYEES
The average number of persons employed worldwide by PPG during 1995 was 31,200.
ENVIRONMENTAL MATTERS
Like other companies, PPG is subject to the existing and evolving standards
relating to the protection of the environment. Capital expenditures for
environmental control projects were $25 million, $19 million and $29 million in
1995, 1994 and 1993, respectively. It is expected that expenditures for such
projects in 1996 will approximate $40 million with similar amounts of annual
expenditures expected in the near future. Although future capital expenditures
are difficult to estimate accurately because of constantly changing regulatory
standards, it can be anticipated that environmental control standards will
become increasingly stringent and costly.
PPG is negotiating with various government agencies concerning 72 National
Priority List ("NPL") and various other cleanup sites. While PPG is not
generally a major contributor of wastes to these sites, each potentially
responsible party or contributor may face agency assertions of joint and several
liability. Generally, however, a final allocation of costs is made based on
relative contributions of wastes to the site. There is a wide range of cost
estimates for cleanup of these sites, due largely to uncertainties as to the
nature and extent of their condition and the methods which may have to be
employed for their remediation. Additionally, remediation projects have been or
may be undertaken at certain of the Company's current and former plant sites.
The Company has established reserves for those sites where it is probable a
liability exists and the amount can be reasonably estimated. As of Dec. 31, 1995
and 1994, PPG had reserves for environmental contingencies totaling $100 million
and $90 million, respectively. Charges against income for environmental
remediation costs totaled $49 million in 1995, $36 million in 1994 and $23
million in 1993.
The Company's experience to date regarding environmental matters leads PPG to
believe that it will have continuing expenditures for compliance with provisions
regulating the protection of the environment and for present and future
remediation efforts at waste and plant sites. However, management anticipates
that such expenditures, which will occur over an extended period of time, will
not result in future annual charges 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,
is well positioned, relative to environmental matters, within the industries in
which it operates and the outcome of these environmental matters will not have a
material adverse effect on PPG's financial position or liquidity. See
Environmental Matters in Management's Discussion and Analysis for additional
information related to environmental matters.
ITEM 2. PROPERTIES
See "Item 1. Business" for information on PPG's production and fabrication
facilities.
Generally, the Company's plants are suitable and adequate for the purposes for
which they are intended, and overall have sufficient capacity to conduct
business in the upcoming year.
ITEM 3. LEGAL PROCEEDINGS
Securities and Exchange Commission regulations require the disclosure of any
environmental legal proceeding in which a governmental authority is a party and
which may reasonably be expected to involve monetary sanctions in excess of
$100,000. In this regard, on November 14, 1991, the Company received a penalty
notice from the Louisiana Department of Environmental Quality (DEQ) proposing a
penalty of $1,236,000 for alleged violations of hazardous waste regulations
relating to the Company's investigation of groundwater contamination at the
Company's Lake Charles, LA plant. The Company and DEQ reached a settlement of
this matter which resulted in a payment by PPG of $200,000.
Separately, the Company has voluntarily entered into an agreement with the EPA
to participate in the EPA's Toxic Substances Control Act Section 8(e) Compliance
Audit Program (the "Program"). Under the Program the Company conducted a
self-audit. On October 28, 1992, the Company submitted the first of two final
reports pursuant to the Program. Based on this submission, the Company would pay
$522,000 in stipulated penalties. To the Company's knowledge, the EPA has not
yet reviewed the report or issued any order as a result of the report. Under the
Program, the EPA has agreed that the combined potential civil penalties for both
final reports of the Company will not exceed $1,000,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
3
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EXECUTIVE OFFICERS OF THE REGISTRANT
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NAME AGE TITLE
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Jerry E. Dempsey (a) 63 Chairman of the Board and Chief Executive Officer since September 1993
Raymond W. LeBoeuf (b) 49 President and Chief Operating Officer since December 1995
Frank A. Archinaco (c) 52 Senior Vice President, Glass since December 1995
Russell L. Crane (d) 55 Senior Vice President, Human Resources and Administration since April 1994
Robert D. Duncan (e) 56 Executive Vice President since April 1994
Peter R. Heinze (f) 53 Senior Vice President, Chemicals since April 1994
William H. Hernandez (g) 47 Senior Vice President, Finance since January 1995
E. Kears Pollock (h) 55 Senior Vice President, Coatings and Resins since December 1995
Guy A. Zoghby (i) 61 Senior Vice President and General Counsel since April 1994
</TABLE>
(a) Mr. Dempsey was Senior Vice President of WMX Technologies, Inc., and
Chairman of Chemical Waste Management, Inc., prior to his present position.
(b) Mr. LeBoeuf was Executive Vice President, Vice President, Coatings and
Resins and Vice President, Finance prior to his present position.
(c) Mr. Archinaco was Vice President, Glass, Vice President, Automotive and
Aircraft Products and Vice President, Automotive OEM Products prior to his
present position.
(d) Mr. Crane was Vice President, Human Resources prior to his present
position.
(e) Mr. Duncan was Group Vice President, Glass prior to his present position.
(f) Dr. Heinze was Group Vice President, Chemicals of the Company and was
President of the Chemicals Division of BASF (U.S.) prior to his present
position.
(g) Mr. Hernandez was Vice President, Finance, Vice President and Controller
and Controller prior to his present position.
(h) Mr. Pollock was Vice President, Coatings and Resins and Vice President,
Automotive Products prior to his present position.
(i) Mr. Zoghby was Vice President and General Counsel prior to his present
position.
The executive officers of the Company are elected annually in April by the Board
of Directors.
4
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PART II
Information with respect to the following Items can be found on the indicated
pages of the Annual Report to Shareholders and is incorporated herein by
reference.
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Page(s)
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Stock Exchange Listings................................................................................................. 40
Quarterly Stock Information............................................................................................. 40
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is reported in the Eleven-Year Digest under the captions net sales, income before
accounting changes, cumulative effect of accounting changes, net income, earnings per share before accounting changes,
cumulative effect of accounting changes on earnings per share, earnings per share, dividends per share, total assets and
long-term debt for the years 1991 through 1995.......................................................................... 39
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis.................................................................................... 21-25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report............................................................................................ 17
Financial Statements:
Statement of Income for the years ended
December 31, 1995, 1994 and 1993................................................................................... 18
Balance Sheet, December 31, 1995 and 1994............................................................................. 19
Statement of Cash Flows for the years ended
December 31, 1995, 1994 and 1993................................................................................... 20
Notes to the Financial Statements..................................................................................... 28-37
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
5
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 regarding Directors is contained under the
caption "Election of Directors" in the Registrant's definitive Proxy Statement
for its 1996 Annual Meeting of Shareholders (the "Proxy Statement") which will
be filed with the Securities and Exchange Commission, pursuant to Regulation
14A, not later than 120 days after the end of the fiscal year, which information
under such caption is incorporated herein by reference.
The information required by Item 10 regarding Executive Officers is set forth in
Part I of this report under the caption "Executive Officers of the Registrant."
The information required by Item 405 of Regulation S-K is included under the
caption "Section 16(a) Reporting" in the Proxy Statement which information under
such caption is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is contained under the captions
"Compensation of Executive Officers" and "Election of Directors--Compensation of
Directors" in the Proxy Statement which information under such captions is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is contained under the caption "Voting
Securities" in the Proxy Statement which information under such caption is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is contained under the caption "Election of
Directors--Other Transactions" in the Proxy Statement which information under
such caption is incorporated herein by reference.
6
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Independent Auditors' Report (see Part II, Item 8
of this report (page 5) regarding incorporation by reference from the Annual
Report to Shareholders).
Financial Statement Schedules for years ended December 31, 1995, 1994 and
1993:
The following should be read in conjunction with the previously
referenced financial statements.
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Independent Auditors' Report......................................... 9
Schedule II--Valuation and Qualifying Accounts....................... 10
</TABLE>
All other schedules are omitted because they are not applicable.
(b) A Form 8-K was filed on October 20, 1995 and was reported as
such in our Form 10-Q for the quarter ended September 30, 1995.
The Company filed a Form 8-K on November 8, 1995, filing exhibits to
become, by way of incorporation by reference, exhibits to
Registration Statement No. 33-04983 on Form S-3. No financial
statements were filed.
(c) Exhibits:
(3) The Restated Articles of Incorporation as amended, were filed as
Exhibit 3 to the Registrant's Form 10-Q for the quarter ended
March 31, 1995, which exhibit is incorporated herein by reference.
(3.1) The bylaws, as amended through December 14, 1995.
(3.2) The bylaws, as amended through February 15, 1996.
(4) The Shareholders' Rights Plan was filed as Exhibit 4 on the
Registrant's Form 8-K, dated May 12, 1988, which exhibit
is incorporated herein by reference.
*(10) The Nonqualified Retirement Plan as amended, the Supplemental
Executive Retirement Plan II as amended and the Change
in Control Employment Agreement were filed as Exhibits 10.1,
10.2 and 10.5, respectively, to the Registrant's Form
10-Q for the quarter ended September 30, 1995. The 1984 Stock
Option Plan was filed as Exhibit 10 to the Registrant's
Form 10-Q for the quarter ended March 31, 1992. All exhibits
referred to in this paragraph (10) are incorporated by
reference.
*(10.1) Deferred Compensation Plan for Directors as amended through
December 14, 1995.
*(10.2) Directors' Common Stock Plan.
*(10.3) Deferred Compensation Plan.
*(10.4) Incentive Compensation and Deferred Income Plan for Key
Employees as amended through January 1, 1996.
(11) Computation of Earnings Per Share for the Five Years Ended
December 31, 1995.
(13) Company's 1995 Annual Report to Shareholders (except for the
pages and information therein expressly incorporated by
reference in this Form 10-K, the Annual Report to Shareholders
is provided solely for the information of the
Commission and is not to be deemed "filed" as part of the
Form 10-K).
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
(27) Financial Data Schedule.
* Items referred to in Exhibit (10) and incorporated by reference and Exhibits
(10.1), (10.2), (10.3) and (10.4) are either management contracts,
compensatory plans or arrangements required to be filed as an exhibit hereto
pursuant to Item 14(c) of Form 10-K.
7
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, on February 15, 1996.
PPG INDUSTRIES, INC.
(Registrant)
/s/ W. H. HERNANDEZ
By ...............................................
W. H. Hernandez, Senior Vice President, Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities indicated, on February 15, 1996.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ J. E. DEMPSEY
.................................... Director, Chairman of the Board and
J. E. Dempsey Chief Executive Officer
/s/ W. H. HERNANDEZ
.................................... Senior Vice President, Finance (Principal
W. H. Hernandez Financial and Accounting Officer)
E. B. Davis, Jr. Director
S. C. Gault Director
M. J. Hooper Director
A. J. Krowe Director
R. W. LeBoeuf Director /s/ W. H. HERNANDEZ
S. C. Mason Director By.................................
H. A. McInnes Director W. H. Hernandez, Attorney-in-Fact
R. Mehrabian Director
V. A. Sarni Director
D. G. Vice Director
D. R. Whitwam Director
</TABLE>
8
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of PPG Industries, Inc.:
We have audited the balance sheet of PPG Industries, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related
statements of income and cash flows for each of the three years in the
period ended December 31, 1995, and have issued our report thereon dated
January 18, 1996; such financial statements and report are included in
your 1995 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included financial statement schedule II,
Valuation and Qualifying Accounts, of PPG Industries, Inc. and
subsidiaries for the years ended December 31, 1995, 1994 and 1993. The
financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our
audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 18, 1996
9
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS(1) END OF YEAR
----------- ---------- ----------- ------------- -----------
(MILLIONS)
<S> <C> <C> <C> <C>
1995
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 26.5 $ 8.1 $ 6.4 $ 28.2
---------------------- =========== ========= ========= =========
1994
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 25.6 $ 12.6 $ 11.7 $ 26.5
---------------------- =========== ========= ========= =========
1993
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 33.0 $ 15.2 $ 22.6 $ 25.6
---------------------- ========== ========= ========= =========
</TABLE>
------------------------------------
(1) Notes and accounts receivable written off as uncollectible, net of
recoveries, changes attributable to foreign currency translation, and
activity related to businesses sold.
10
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PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Incorporated by Reference
- ----------------------------------------------------------------
<S> <C>
3 The Restated Articles Exhibit 3 - Form 10-Q for the quarter
of Incorporation ended March 31, 1995
4 The Shareholders' Rights Exhibit 4 - Form 8-K, dated May 12, 1988
Plan
10 The Nonqualified Retire- Exhibit 10.1 - Form 10-Q for the quarter
ment Plan ended September 30, 1995
10 The Supplemental Exhibit 10.2 - Form 10-Q for the quarter
Executive Retirement ended September 30, 1995
Plan II
10 Change in Control Exhibit 10.5 - Form 10-Q for the quarter
Employment Agreement ended September 30, 1995
10 1984 Stock Option Plan Exhibit 10 - Form 10-Q for the quarter
ended March 31, 1992
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description
- ------------------------------------------
<S> <C>
3.1 The By-Laws as amended through December 14, 1995
3.2 The By-Laws as amended through February 15, 1996
10.1 Deferred Compensation Plan for Directors as amended through
December 14, 1995
10.2 Directors' Common Stock Plan
10.3 Deferred Compensation Plan
10.4 Incentive Compensation and Deferred Income Plan for Key Employees
as amended through January 1, 1996
11 Computation of Earnings Per Share for the Five Years Ended
December 31, 1995
13 Company's 1995 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
27 Financial Data Schedule
</TABLE>
<PAGE>
Exhibit 3.1
BYLAWS
OF
PPG INDUSTRIES, INC.
(Incorporated under the Laws of the
Commonwealth of Pennsylvania)
______________________________________
December 14, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I -- MEETINGS OF SHAREHOLDERS
Section 1.1. Annual 1
Section 1.2. Business at Annual Meetings 1
Section 1.3. Special Meetings 1
Section 1.4. Business at Special Meetings 2
Section 1.5. Notice 2
Section 1.6. Quorum 2
Section 1.7. Voting 2
Section 1.8. Proxies; Appointment and Revocation 3
Section 1.9. Meeting Procedure 3
Section 1.10. Nominations of Director Candidates 4
ARTICLE II -- BOARD OF DIRECTORS
Section 2.1. Number, Classification and Removal;
Vacancies 4
Section 2.2. Qualifications and Powers 6
Section 2.3. Organizational Meeting 6
Section 2.4. Regular Meetings; Notice 6
Section 2.5. Special Meetings; Notice 6
Section 2.6. Quorum; Action 7
Section 2.7. Fees and Expenses 7
Section 2.8. Charitable Contributions 7
Section 2.9. Catastrophe 7
Section 2.10. Limitation of Liability 8
ARTICLE III -- COMMITTEES
Section 3.1. Standing Committees 8
(a) Audit Committee 8
(b) Nominating Committee. 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(c) Officers-Directors Compensation
Committee 9
Section 3.2. Other Committees 9
Section 3.3. Organization of and Action by Committees 10
ARTICLE IV -- OFFICERS
Section 4.1. Election 10
Section 4.2. Chairman 10
Section 4.3. Vice Chairman 10
Section 4.4. President 11
Section 4.5. Vice Presidents and Other Officers 11
Section 4.6. Secretary 11
Section 4.7. Treasurer 11
Section 4.8. Controller 12
Section 4.9. Vacancies 12
Section 4.10. Delegation of Duties 12
ARTICLE V --
MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS
Section 5.1. Borrowing 13
Section 5.2. Execution of Instruments 13
Section 5.3. Voting and Acting with Respect to Stock and
Other Securities Owned by the Corporation 13
VI -- INDEMNIFICATION
Section 6.1. Entitlement to Indemnification 14
Section 6.2. Advancement of Expenses 14
Section 6.3. Indemnification Procedure 15
Section 6.4. Partial Indemnification 16
Section 6.5. Insurance 16
Section 6.6. Agreements 16
Section 6.7. Miscellaneous 16
Section 6.8. Construction 17
Section 6.9. Effectiveness 17
Section 6.10. Amendment 17
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VII -- CAPITAL STOCK
Section 7.1. Share Certificates 17
Section 7.2. Transfer of Shares 18
Section 7.3. Holders of Record 18
Section 7.4. Replacement 19
ARTICLE VIII -- MISCELLANEOUS
Section 8.1. Description of Seal 19
Section 8.2. Fiscal Year 19
Section 8.3. Gender 19
Section 8.4. Adoption, Amendment or Repeal of Bylaws 19
</TABLE>
iii
<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 (iv) matters which are incidental or
germane to any of the foregoing.
Section 1.3. 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.
1
<PAGE>
Section 1.4. 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 1.5. 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 1.6. Quorum. A shareholders' meeting shall not be organized for
------------ -------
the transaction of business unless a quorum is present. At any meeting, the
presence in 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 1.7. 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
2
<PAGE>
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.
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 1.8. 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 1.9. 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.
3
<PAGE>
Section 1.10. Nominations of Director Candidates. Nominations for the
------------- -----------------------------------
election of directors at a meeting of shareholders may be made only (1) by the
Board of Directors or a committee appointed by the Board of Directors or (2) by
a holder of record of stock entitled to vote in the election of the directors to
be elected; but a nomination may be made by a shareholder only if written notice
of such nomination is received by the Secretary not later than (i) with respect
to an election to be held at an annual meeting of the shareholders, the date on
which a shareholder proposal would have to be submitted to the Corporation in
order to be set forth in the Corporation's proxy statement, as provided in the
applicable proxy rules of the Securities and Exchange Commission, and (ii) with
respect to an election to be held at a special meeting of the shareholders, the
close of business on the tenth day following the date on which notice of such
meeting is first given to shareholders. Each such notice 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 appear in person or by proxy at the meeting 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.
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:
4
<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.
5
<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
6
<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
7
<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 shall appoint the
------------ --------------------
members of the following standing committees:
(a) Audit Committee, comprised of independent, non-employee members of the
Board of Directors, which shall recommend to the Board of Directors the
independent
8
<PAGE>
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 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 and (iv) the persons to be appointed by the Board of Directors to
membership on the Policy and Planning Committee and the Operating Committee; 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 administer and interpret the
Incentive Compensation Plan for Key Employees, the Earnings Growth Plans, the
Stock Option Plans and such other of the compensation plans of the Corporation
as the Board of Directors may specify; fix the compensation and benefits (i) of
all officers of the Corporation serving as directors of the Corporation and (ii)
of 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 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.
9
<PAGE>
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 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.
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.
10
<PAGE>
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 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,
11
<PAGE>
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.
12
<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 Corporation,
with full power to vote and act on behalf of the Corporation with respect to
such stock and other securities.
13
<PAGE>
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 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
14
<PAGE>
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.
(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
15
<PAGE>
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 inure to the benefit of the
heirs and legal representatives of any person entitled to indemnification or
advancement of expenses under this Article.
16
<PAGE>
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 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
17
<PAGE>
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 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
18
<PAGE>
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.
19
<PAGE>
__________________________________
CERTIFICATE
-----------
I, Thomas L. Butera, Assistant Secretary of PPG Industries, Inc.,
----------------
a Pennsylvania corporation, hereby certify that the foregoing is a true and
correct copy of the bylaws of the Corporation.
Witness my hand and the corporate seal of the Corporation this 15th day of
----
February, 1996.
- --------------
/s/ Thomas L. Butera
-----------------------------
Assistant Secretary
20
<PAGE>
Exhibit 3.2
BYLAWS
OF
PPG INDUSTRIES, INC.
(Incorporated under the Laws of the
Commonwealth of Pennsylvania)
-------------------------------------
February 15, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I -- MEETINGS OF SHAREHOLDERS
Section 1.1. Annual 1
Section 1.2. Business at Annual Meetings 1
Section 1.3. Special Meetings 1
Section 1.4. Business at Special Meetings 2
Section 1.5. Notice 2
Section 1.6. Quorum 2
Section 1.7. Voting 2
Section 1.8. Proxies; Appointment and Revocation 3
Section 1.9. Meeting Procedure 3
Section 1.10. Nominations of Director Candidates 4
ARTICLE II -- BOARD OF DIRECTORS
Section 2.1. Number, Classification and Removal;
Vacancies 4
Section 2.2. Qualifications and Powers 6
Section 2.3. Organizational Meeting 6
Section 2.4. Regular Meetings; Notice 6
Section 2.5. Special Meetings; Notice 6
Section 2.6. Quorum; Action 7
Section 2.7. Fees and Expenses 7
Section 2.8. Charitable Contributions 7
Section 2.9. Catastrophe 7
Section 2.10. Limitation of Liability 8
ARTICLE III -- COMMITTEES
Section 3.1. Standing Committees 8
(a) Audit Committee 9
(b) Nominating and Governance Committee 9
i
<PAGE>
(c) Officers-Directors Compensation
Committee 9
Section 3.2. Other Committees 10
Section 3.3. Organization of and Action by Committees 10
ARTICLE IV -- OFFICERS
Section 4.1. Election 10
Section 4.2. Chairman 10
Section 4.3. Vice Chairman 11
Section 4.4. President 11
Section 4.5. Vice Presidents and Other Officers 11
Section 4.6. Secretary 11
Section 4.7. Treasurer 11
Section 4.8. Controller 12
Section 4.9. Vacancies 12
Section 4.10. Delegation of Duties 12
ARTICLE V --
MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS
Section 5.1. Borrowing 13
Section 5.2. Execution of Instruments 13
Section 5.3. Voting and Acting with Respect to Stock and
Other Securities Owned by the Corporation 13
VI -- INDEMNIFICATION
Section 6.1. Entitlement to Indemnification 14
Section 6.2. Advancement of Expenses 15
Section 6.3. Indemnification Procedure 15
Section 6.4. Partial Indemnification 16
Section 6.5. Insurance 16
Section 6.6. Agreements 16
Section 6.7. Miscellaneous 16
Section 6.8. Construction 17
Section 6.9. Effectiveness 17
Section 6.10. Amendment 17
ii
<PAGE>
ARTICLE VII -- CAPITAL STOCK
Section 7.1. Share Certificates 17
Section 7.2. Transfer of Shares 18
Section 7.3. Holders of Record 18
Section 7.4. Replacement 19
ARTICLE VIII -- MISCELLANEOUS
Section 8.1. Description of Seal 19
Section 8.2. Fiscal Year 19
Section 8.3. Gender 19
Section 8.4. Adoption, Amendment or Repeal of Bylaws 19
iii
<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 (iv) matters which are incidental or
germane to any of the foregoing.
Section 1.3. 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.
1
<PAGE>
Section 1.4. 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 1.5. 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 1.6. Quorum. A shareholders' meeting shall not be organized for
------------ -------
the transaction of business unless a quorum is present. At any meeting, the
presence in 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 1.7. 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
2
<PAGE>
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.
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 1.8. 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 1.9. 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.
3
<PAGE>
Section 1.10. Nominations of Director Candidates. Nominations for the
------------- -----------------------------------
election of directors at a meeting of shareholders may be made only (1) by the
Board of Directors or a committee appointed by the Board of Directors or (2) by
a holder of record of stock entitled to vote in the election of the directors to
be elected; but a nomination may be made by a shareholder only if written notice
of such nomination is received by the Secretary not later than (i) with respect
to an election to be held at an annual meeting of the shareholders, the date on
which a shareholder proposal would have to be submitted to the Corporation in
order to be set forth in the Corporation's proxy statement, as provided in the
applicable proxy rules of the Securities and Exchange Commission, and (ii) with
respect to an election to be held at a special meeting of the shareholders, the
close of business on the tenth day following the date on which notice of such
meeting is first given to shareholders. Each such notice 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 appear in person or by proxy at the meeting 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.
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:
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(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.
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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,
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facsimile 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
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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:
8
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(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.
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<PAGE>
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 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
10
<PAGE>
Chairman of the Board of Directors and be the Chief Executive Officer of the
Corporation for a period in excess of ten years.
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
11
<PAGE>
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 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
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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.
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,
13
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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 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.
14
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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 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
15
<PAGE>
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.
(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
16
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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 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
17
<PAGE>
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 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
18
<PAGE>
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 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
19
<PAGE>
action of the Board of Directors at any regular or special meeting,
subject to the power of the shareholders to change such action.
__________________________________
CERTIFICATE
-----------
I, Thomas L. Butera , Assistant Secretary of PPG Industries, Inc., a
----------------------
Pennsylvania corporation, hereby certify that the foregoing is a true and
correct copy of the bylaws of the Corporation.
Witness my hand and the corporate seal of the Corporation this 15th day of
----- --- --
February, 1996 .
- ----------------
/s/ Thomas L. Butera
--------------------------
Assistant Secretary
20
<PAGE>
Exhibit 10.1
PPG INDUSTRIES, INC.
--------------------
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
1. Purpose
-------
The purpose of the PPG Industries, Inc. Deferred Compensation Plan for
Directors (the "Plan") is to offer each non-employee member of the Board of
Directors of PPG Industries, Inc. (the "Corporation") the opportunity to
defer receipt of the compensation to be earned for services as a director of
the Corporation until after termination of service as a director.
2. Definitions
-----------
(a) "Account" or "Accounts" means one or more of the Stock Account or
the Capital Enhancement Account maintained for a Participant.
(b) "Beneficiary" means the person or entity designated by the
Participant or the Participant's legal representative as provided
under Section 7(b).
(c) "Capital Enhancement Account" means a bookkeeping account or
accounts maintained for a Participant who, for such period or periods
as the Committee may establish or permit, elects to defer to it all or
any part of his or her Compensation.
(d) "Committee" means the Officers-Directors Compensation Committee
(or any successor) of the Board of Directors of the Company.
(e) "Common Stock" means the common stock, par value $1.66 2/3 per
share, of the Corporation.
(f) "Common Stock Unit" means a hypothetical share of Common Stock.
<PAGE>
(g) "Compensation" means a Participant's retainer and meeting fees
earned for services as a director and as chairman or a member of a
committee of the Board of Directors.
(h) "Dividend Equivalents" means an additional number of Common Stock
Units the Corporation shall credit to each Stock Account as of each
dividend payment date declared with respect to the Corporation's
Common Stock. The additional number of Common Stock Units to be
credited to each Stock Account shall be equal to:
(1) the product of (i) the dividend per share of the Common Stock
which is payable as of the dividend payment date, multiplied by
(ii) the number of whole Common Stock Units credited to the Stock
Account as of the applicable dividend record date;
DIVIDED BY
----------
(2) the closing price of a share of the Common Stock on the
dividend payment date (or if such stock was not traded on that
date, on the next preceding date on which it was traded), as
reported in the New York Stock Exchange Composite Transactions.
(i) "Participant" means an eligible director who participates in the
Plan.
(j) "Stock Account" means a bookkeeping account maintained for a
Participant who elects to defer to it all or any part of his or her
Compensation and to which Common Stock Units and Dividend Equivalents
are credited.
3. Eligibility
-----------
All directors of the Corporation who are not at the time also serving as
salaried employees of the Corporation are eligible to participate in the
Plan.
4. Deferral of Compensation
------------------------
- 2 -
<PAGE>
(a) Each Participant shall have such Compensation as the Board of
Directors mandates deferred under the Plan and credited to the Stock
Account. In addition, each Participant may elect to have additional
Compensation deferred under the Plan and credited to the Stock Account
and/or, as permitted by the Committee, the Capital Enhancement
Account.
(b) Subject to any rules, regulations, procedures or resolutions
adopted by the Committee, an election to defer shall be made in
writing prior to the start of the calendar year for which it is to
become effective and shall be effective upon filing with the Secretary
of the Corporation, provided however that in the first calendar year
in which an individual becomes a director, an election to defer may be
made as to the remainder of such year, provided that the election is
filed with the Secretary within thirty (30) days of the individual's
appointment to the Board. Once deferral has been elected and filed
with the Secretary of the Corporation, it shall become irrevocable for
the next succeeding calendar year and, unless revoked in writing or
superseded by a new election effective for calendar years after the
year in which such revocation or new election is executed, shall
continue in effect for each calendar year thereafter.
(c) Deferred amounts shall be credited on the books of the Corporation
to an account in the name of the Participant on the same date that it
would otherwise be payable and shall thereafter be paid from the general
funds of the Corporation. No assets of the Corporation shall be
segregated or earmarked in respect to any amounts credited to the
Accounts of Participants and all such amounts shall constitute unsecured
contractual obligations of the Corporation.
(d) The number of Common Stock Units to be credited to the Stock
Account of a Participant shall be equal to the quotient obtained
by dividing the unpaid deferred amount to be credited to the
Stock Account by the closing price of a share of the Common
Stock on the date on which such deferred amount is credited on
the books of the Corporation (or if such stock was not traded on
that date, on the next preceding date on which it was traded), as
reported on the New York Stock Exchange Composite
Transactions. Dividend Equivalents shall be credited to each
- 3 -
<PAGE>
Stock Account as of each dividend payment date declared with
respect to the Corporation's Common Stock.
(e) Interest equivalents in respect to unpaid deferred amounts credited to
the Capital Enhancement Account shall be credited at the same interest
rate, and in the same manner, as interest equivalents are credited to
the Capital Enhancement Account under the PPG Industries, Inc. Incentive
Compensation and Deferred Income Plan for Key Employees; provided,
however, that (i) pre-retirement death benefits as a multiple of amounts
deferred thereunder and (ii) reduction of the rate of interest
equivalents in case of termination of service prior to age 62, shall not
apply to amounts deferred hereunder.
(f) The sum of each Participant's deferrals of Compensation under Section
4(a), to his Capital Enhancement Account shall be not less than such
minimum, and not more than such maximum, as the Committee shall specify.
5. Payment of Deferred Amounts
---------------------------
(a) Payments from the Stock Account and the Capital Enhancement
Account shall be made in the form of cash.
(b) Subject to Section 5(d) and Section 5(f), a Participant may elect
to have the amount deferred paid in from one to 15 annual installments
after he or she shall cease to be a director of the Corporation.
Such installment(s) shall commence upon or following
(i) a specified date;
(ii) an event certain;
(iii) the earlier of a specified date or an event certain.
Installments shall continue to be payable as soon as practicable
after the first day of January of each year thereafter.
Subject to Sections 5(d), 5(e) and 5(f), payment of deferred amounts
shall commence no later than January of the first calendar year which
is the later of:
- 4 -
<PAGE>
(i) the year following attainment of age seventy (or such other
age as may supersede the age referred to in Section 403(f)(3) of
Title 42 United States Code); or
(ii) the year following such Participant's retirement.
Where deferred amounts, interest equivalents and Dividend Equivalents
are payable in installments, the amount of each installment will be
calculated such as to provide approximately equal distributions over the
period designated. Notwithstanding the foregoing, no installment may be
in an amount less than $1,000, and, if and to the extent necessary,
installments shall be accelerated so as to provide for such minimum
installment(s). In calculating the amount of each installment, the
amount in the Participant's Stock Account shall be calculated by
multiplying the number of Common Stock Units in the Participant's Stock
Account on date of such payment by the average closing price of the
Common Stock in the New York Stock Exchange Composite Transactions for
the 5 trading days for which such price is available immediately
preceding the date of payment.
(c) Death or Disability
-------------------
(i) Subject to Section 5(f), in the event of the death or disability of
a Participant either while serving as a director of the Corporation
or prior to the commencement of any payments hereunder, any amount
due under the Plan shall be paid in a lump sum to the Participant's
beneficiary, or in the case of disability, to the Participant, as
soon as practicable after the death or disability.
(ii) Subject to Section 5(f), in the event of the death or disability of
a Participant on or after the commencement of installment payments,
in accordance with Section 5(b), payments shall continue to paid to
the Participant's beneficiary, or in the case of disability, to the
Participant, in accordance with the election made by the
Participant in accordance with Section 5(b); provided, however,
that the Secretary of the Committee shall have the power to
accelerate the payment of any installment(s) because of
- 5 -
<PAGE>
hardship or other circumstances deemed by him, in his discretion,
to warrant such acceleration.
(d) Payment Elections
-----------------
Any prior election as to the number of installments made by a
Participant who is serving as a director of the Corporation on February
19, 1992 shall be null and void.
Subject to Section 5(f), a Participant may elect the number and the
date or event for the commencement of installment payments in
accordance with the following:
(i) Such elections must be made at least six months and ten days
prior to the first payment date; and
(ii) In all cases, the elections must be made in the calendar
year preceding the first payment date.
(e) Notwithstanding any other provision of this Plan, the first
installment to a Participant shall not be paid until six months and
ten days after the Participant shall cease to be a director of the
Corporation.
(f) Notwithstanding any other provision of this Plan, any Participant
who, pursuant to any income tax laws to which he or she is subject,
would be immediately taxed on any Compensation that the Board of
Directors mandates shall be deferred may not elect the number and the
---
date or event for the commencement of payments under the Plan.
Instead, the payment of all benefits to such Participant (including
any Dividend Equivalents from the Plan) resulting from the mandatory
deferrals shall occur as a lump sum payment on the first business day
which is 6 months and 10 days after the Participant's last day as a
member of the Board. In the event of such Participant's death prior to
receipt of the benefits, the Participant's Beneficiary shall be paid the
benefits on the first business day which is 6 months and 10 days after
the Participant's last day as a member of the Board.
6. Change in Control
-----------------
- 6 -
<PAGE>
(a) Upon, or in reasonable anticipation of, a Change in Control (as defined
below), the Corporation shall immediately make a payment in cash to a
trustee on such terms as the Senior Vice President, Human Resources and
Administration, and the Senior Vice President, Finance, or either of
them, shall deem appropriate (including such terms as are appropriate to
cause such payment, if possible, not to be a taxable event to
Participants) of a sufficient amount to insure that Participants receive
the payment of all amounts as contemplated under the Plan.
(b) Except as regards Section 6(c)(v), the Committee shall have the duty and
the authority to make the determination as to whether a Change in
Control has occurred, or is reasonably to be anticipated, and,
concomitantly, to direct the making of the payment contemplated herein.
(c) A "Change in Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (x) the then
outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (y) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control: (a) any acquisition
directly from the Company, (b) any acquisition by the Company, (c)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (d) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(a), (b) and (c) of subsection (iii) of this Section 6(c); or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
- 7 -
<PAGE>
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (a) all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (b) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of
- 8 -
<PAGE>
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (c)
at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company; or
(v) A majority of the Board otherwise determines that a Change
in Control shall have occurred.
7. General Provisions
------------------
(a) Either the Board of Directors of the Corporation or the Committee
may modify or amend the Plan, in whole or in part, from time to time,
or terminate the Plan at any time, without the consent of any
Participant or Beneficiary of any Participant; provided, however, that
any modification, amendment or termination shall be of general
application to all Participants and Beneficiaries and shall not,
without the consent of the Participant or, in the event of his death,
the Participant's Beneficiary or estate adversely affect (i) any
amount theretofore deferred or credited to the Participant's
Account(s) or (ii) the right of the Participant to receive all amounts
theretofore credited to the Participant's Account(s), as of the date
of such modification, amendment or termination; and provided further
that any modification, amendment or termination that would materially
increase or accelerate the payment of any amount under the Plan shall
be approved by the Board of Directors. The Plan shall remain in
effect until terminated pursuant to this paragraph.
(b) No rights under the Plan may be transferred or assigned except that a
Participant may designate, in writing filed with the Secretary of the
Corporation, his spouse or children, a trustee or his or her executor or
executrix as Beneficiary to receive any
- 9 -
<PAGE>
unpaid amounts under the Plan after the death of the Participant. In the
absence of any such designation or in the event that the designated
person or entity shall not be in existence at the time a payment under
the Plan comes due, the Beneficiary of the Participant shall be the
Participant's legal representative.
(c) The Committee shall have full power to administer and interpret
the Plan and to adopt such rules, regulations, procedures and
resolutions consistent with the terms of the Plan as the Committee deems
necessary or advisable to carry out the terms of the Plan.
(d) The place of administration of the Plan shall be conclusively
deemed to be within the Commonwealth of Pennsylvania, and the
validity, construction, interpretation and administration of the Plan,
and of any determinations or decisions made thereunder, and the rights
of any and all persons having or claiming to have any interest therein
or thereunder, shall be governed by, and determined exclusively and
solely in accordance with, the internal laws of the Commonwealth of
Pennsylvania.
As Amended -- December 14, 1995
- 10 -
<PAGE>
Exhibit 10.2
PPG INDUSTRIES, INC.
DIRECTORS' COMMON STOCK PLAN
----------------------------
1. PURPOSE. The purpose of this Plan is to align the financial interests of
-------
the Company's shareholders with those of its Non-Employee Directors by
providing such Directors with compensation in the form of Company Common
Stock Equivalents.
2. DEFINITIONS.
-----------
"Account" means the account maintained for each Non-Employee Director to
which Common Stock Equivalents and Dividend Equivalents are credited.
"Annual Contribution" means the Common Stock Equivalents credited to an
Account each year under Section 4.1.
"Board" means the Board of Directors of the Company.
"Change in Control" has the same meaning as given to that term in the PPG
Industries, Inc. Deferred Compensation Plan for Directors, as such plan may
be amended from time to time.
"Committee" means the Officers-Directors Compensation Committee of the
Board.
"Common Stock" means the common stock, par value $1.66 2/3 per share, of
the Company.
"Common Stock Equivalent" means a hypothetical share of Common Stock.
"Company" means PPG Industries, Inc.
"Dividend Equivalent" means an additional number of Common Stock
Equivalents the Company shall credit to each Account as of each dividend
payment date declared with respect to the Company's Common Stock. The
additional number of Common Stock Equivalents to be credited to each
Account shall be equal to:
<PAGE>
(a) the product of (i) the dividend per share of the Common Stock
which is payable as of the dividend payment date, multiplied by
(ii) the number of whole Common Stock Equivalents credited to the
Account as of the applicable dividend record date;
DIVIDED BY
----------
(b) the closing price of a share of the Common Stock on the dividend
payment date (or if such stock was not traded on that date, on
the next preceding date on which it was traded), as reported in
the New York Stock Exchange Composite Transactions.
"Eligible Spouse" means the spouse who is legally married to a Participant
at the time of his or her death.
"Non-Employee Director" means a director of the Company who is not a
present or former employee of the Company or any of its subsidiaries.
"Participant" means a Non-Employee Director who has become eligible to
receive benefits under this Plan. A Non-Employee Director becomes a
Participant when he or she (1) resigns from the Board and (2) attains 70
years of age; provided however, that the Committee may waive the
requirement that the Participant attain 70 years of age.
"Plan" means the PPG Industries, Inc. Directors' Common Stock Plan.
"Retainer" means the base annual retainer fee paid to each Non-Employee
Director by the Company. It does not include committee retainer fees,
meeting attendance fees, committee chairperson's retainer fees or any other
compensation other than the base annual retainer fee.
"Service" means the period of time a Non-Employee Director serves on the
Board.
3. EFFECTIVE DATE. This Plan shall be effective on and after January 1, 1988.
--------------
2
<PAGE>
4. CREDITING ACCOUNTS.
------------------
4.1 Commencing in the year 1988, each year on the day following the Annual
Meeting of Shareholders of the Company, the Company shall credit the
Account of each Non-Employee Director who serves on the Board on that day
with the number of Common Stock Equivalents determined by dividing one-half
of such Director's Retainer by the average closing price of the Common
Stock in the New York Stock Exchange Composite Transactions during the 5
days for which such price is available immediately preceding such day of
crediting. No more than 10 such Annual Contributions shall be made to each
Account and the total number of such Annual Contributions to an Account
under this Section 4.1 plus the number which is multiplied by $10,000 to
determine the amount credited to the Account under Section 4.2 will not
exceed 10.
4.2 On the day following the 1988 Annual Meeting of Shareholders of the
Company, the Company shall credit the Account of each Non-Employee Director
who is age 61 or older on that date with the number of Common Stock
Equivalents determined by (1) multiplying $10,000 times his or her number
of full fiscal years of Service, but such number of full fiscal years of
Service shall not exceed the number determined by subtracting 60 from the
Non-Employee Director's age on the day immediately following the 1988
Annual Meeting of Shareholders and (2) then dividing that amount by the
average closing price of the Common Stock in the New York Stock Exchange
Composite Transactions during the 5 days for which such price is available
immediately preceding such day.
5. PAYMENTS OF BENEFITS.
--------------------
5.1 Only Participants or Eligible Spouses will receive benefits under this
Plan. Except as set forth in Section 5.4, the Account of a Non-Employee
Director will be forfeited if he or she does not become a Participant.
5.2 Benefits will be paid in annual installments each year on May 1 (or on
the next business day if May 1 is not a business day) commencing the
first May 1 the Participant is eligible to receive benefits; provided,
however, that the first payment to a Participant shall not be made until
6 months and 10 days after the Participant ceases to be a
Non-Employee Director. The number of annual installments paid to
3
<PAGE>
each Participant shall be equal to his or her number of full fiscal years
of Service, but shall not exceed 10 annual installments. The number of
Common Stock Equivalents attributable to each installment shall be equal to
the whole number obtained by dividing the number of Common Stock
Equivalents then credited to the Participant's Account by the number of
unpaid installments. Common Stock Equivalents with respect to which payment
has not yet occurred shall continue to be credited with Dividend
Equivalents. As of the date on which the last payment of benefits is made
to any Participant, the Company shall pay the Participant, in cash,
calculated in the manner described in Section 5.3, the net amount of any
remaining fractional Common Stock Equivalent.
5.3 Benefits shall be paid, in the discretion of the Committee, in the form of
Common Stock or cash; provided that, benefits paid to any Participant who
becomes eligible to receive benefits under this Plan on or after November
1, 1990, shall be paid only in cash. If paid in the form of cash, the
amount of each payment shall be calculated by multiplying the number of
Common Stock Equivalents attributable to such payment by the average
closing price of the Common Stock in the New York Stock Exchange Composite
Transactions for the 5 trading days for which such price is available
immediately preceding the date of payment.
5.4 If a Non-Employee Director dies prior to resigning, or after resigning from
the Board but before becoming eligible to receive benefits hereunder, he or
she shall be deemed to have become a Participant eligible to receive
benefits hereunder immediately prior to his or her death, and such benefits
shall be paid to the Participant's Eligible Spouse. If a Participant dies
after becoming eligible to receive benefits hereunder, but prior to
receiving all the benefits due him or her hereunder, such remaining
benefits shall be paid to the Participant's Eligible Spouse. Unpaid
benefits under this Plan will be forfeited in the event the Participant's
death and Participant's Eligible Spouse's death occur prior to the total
amount of benefits due hereunder having been paid.
6. CHANGES IN STOCK. In the event of any change in the outstanding
----------------
shares of the Common Stock, or in the number thereof, by reason of any
stock dividend or split, recapitalization, merger, consolidation,
exchange of shares or other similar change, a corresponding change will
4
<PAGE>
be made in the number of Common Stock Equivalents and Dividend Equivalents,
if any, credited to each Account, unless the Committee determines
otherwise.
7. ACCELERATION. The Committee, in its sole discretion, may accelerate the
------------
payment of benefits hereunder to any Participant or his or her Eligible
Spouse for reasons of changes in tax laws or in the event of a Change in
Control of the Company; provided that no payment of benefits may be
accelerated hereunder to any Participant or his or her Eligible Spouse if
such Participant was a director of the Company on or after November 1,
1990.
An exception is provided for any Non-Employee Director if any income tax
laws to which he or she is subject would cause him/her to be immediately
taxed on amounts credited under the Plan. Under this exception, the
requirement that age 70 be attained before a Non-Employee Director becomes
a Participant is automatically waived by the Committee. Additionally,
under this exception, the payment of all benefits under the Plan shall
occur on the first business day which is 6 months and 10 days after the
earlier of a Participant's resignation from the Board or death. In the
event of such Non-Employee Director's death, either while still an active
member of the Board or after resignation from the Board but before receipt
of payment from the Plan, payment shall be made to the Participant's
Eligible Spouse on the above referenced date.
8. CHANGE IN CONTROL. Upon, or in reasonable anticipation of, a Change in
-----------------
Control (as defined above), the Company shall immediately make a payment in
cash to a trustee on such terms as the Senior Vice President, Human
Resources, and Administration and the Senior Vice President, Finance, or
either of them, shall deem appropriate (including such terms as are
appropriate to cause such payment, if possible, not to be a taxable event
to Participants) of a sufficient amount to insure that Participants receive
the payment of all amounts as contemplated under the Plan.
9. GENERAL PROVISIONS. The entire cost of benefits and
------------------
administrative expenses for this Plan shall be paid by the Company.
This Plan is purely voluntary on the part of the Company. The
Company, by action of the Board or, except as limited by the Company's
bylaws, the Committee, may amend, suspend or terminate this Plan in
5
<PAGE>
whole or part at any time, but no such amendment, suspension or termination
shall adversely affect the rights of any Non-Employee Director or Eligible
Spouse of a deceased Non-Employee Director with respect to Common Stock
Equivalents and Dividend Equivalents credited prior to such amendment,
suspension or termination or Dividend Equivalents which would otherwise
have been credited in the future with respect to Common Stock Equivalents
credited prior to such amendment, suspension or termination.
As Amended 12/14/95
6
<PAGE>
Exhibit 10.3
PPG INDUSTRIES, INC.
DEFERRED COMPENSATION PLAN
Effective: January 1, 1996
<PAGE>
Table of Contents
-----------------
<TABLE>
<S> <C>
Section I .................... Definitions
Section II .................... Deferrals
Section III .................... Investment Options
Section IV .................... Savings Plan Restoration Contributions
Section V .................... Withdrawal Provisions
Section VI .................... Specific Provisions
Related to Benefits
Section VII .................... Administration and Claims
Section VIII .................... Amendment and Termination
Section IX .................... Miscellaneous
Section X .................... Change in Control
</TABLE>
-Page 1.1-
<PAGE>
SECTION I - DEFINITIONS
-----------------------
1.01 Account means all deferred Award amounts, all deferred Salary amounts
and all Restoration Contributions and earnings on each in a Participant's
account at any particular time.
1.02 Administrator means an officer or officers of the Company appointed
by the Committee, and any person(s) designated by such Administrator to
assist in the administration of the Plan.
1.03 Affiliate means any business entity, other than a Subsidiary
Corporation, in which PPG has an equity interest.
1.04 Award means a grant to a Participant under either the IC Plan or MAP
which such person may elect to defer. Awards to Participants may be made
in the form of cash ("cash component"), shares of PPG stock ("stock
component"), or a combination of both.
1.05 Beneficiary means the person or persons designated by a Participant
to receive benefits hereunder following the Participant's death, in
accordance with Section 6.02. For purposes of this Section 1.05, "person
or persons" is limited to an individual, a Trustee or a Participant's
estate.
1.06 Board means the Board of Directors of PPG Industries, Inc.
1.07 Code means the Internal Revenue Code of 1986, and amendments thereto.
1.08 Committee means the Officers-Directors Compensation Committee (or any
successor) of the Board.
1.09 Company or PPG means PPG Industries, Inc.
1.10 Conversion Formula means dividing an amount by the average of the
closing sale prices for PPG Stock reported on the New York Stock Exchange-
Composite Tape for the first five days during which the New York Stock
Exchange is open during the Plan Year immediately following the last day
of the Plan Year to which the Award relates.
1.11 Corporation means PPG and any Subsidiary Corporation and any
Affiliate designated by the Administrator as eligible to participate in
the Plan, and which, by proper authorization of the Board of Directors or
other governing body of such Subsidiary Corporation or Affiliate, elects
to participate in the Plan.
1.12 Disability means any long-term disability. The Administrator, in his
complete and sole discretion, shall determine a Participant's Disability;
provided, however, that a Participant who is approved to receive Long-Term
-Page 1.2-
<PAGE>
Disability benefits pursuant to the PPG Industries, Inc. Long-Term
Disability Plan shall be considered to have a Disability. The
Administrator may require that a Participant submit to an examination from
time to time, but no more often than annually, at the expense of the
Company, by a competent physician or medical clinic, selected by the
Administrator, to confirm Disability. On the basis of such medical
evidence, the determination of the Administrator as to whether or not a
condition of Disability exists or continues shall be conclusive.
1.13 Earnings Growth Plan means the PPG Industries, Inc. 1984 Earnings
Growth Plan.
1.14 Employee means any full-time or permanent part-time salaried employee
(including any officer) of the Corporation.
1.15 ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
1.16 Financial Hardship means an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence, as determined by the Administrator, in his
complete and sole discretion.
1.17 Former Participant means a Participant who becomes ineligible to
receive an Award but who continues to have an Account hereunder.
1.18 IC Plan means the PPG Industries, Inc. Incentive Compensation and
Deferred Income Plan for Key Employees.
1.19 Insider means a Participant who at any time within the prior six (6)
months was a person subject to Section 16 of the Securities Act of 1934.
1.20 Interest Account means a record-keeping account maintained for a
Participant who elects to defer all or part of an Award/Salary and/or
maintain all or part of a deferred Award/Salary in the form of cash.
-Page 1.3-
<PAGE>
1.21 Interest Rate means the rate of interest to be credited during a Plan
Year, as established prior to the beginning of the Plan Year. Such rate
shall be either the Declared Rate or the Minimum Rate, as provided in the
Plan.
Declared Rate - means the greatest of:
(a) the 90-day Treasury Bill yield plus 2.0 percentage points
(Established: for Plan Year 1996 - as of September 15, 1995 and
for Plan Years after 1996 - as of October 15 of the Plan Year
prior to the Plan Year in which the rate is to be effective); or
(b) the average of the month's end 10-year Treasury Note yield over
the previous 36 month period (as of the last business day of
September of the Plan Year prior to the Plan Year in which the
average rate is to be effective); or
(c) The Minimum Rate.
Minimum Rate - means the average of the daily closing yields during
October for the 10-year Treasury Note.
The Declared Rate and the Minimum Rate will be announced to
Participants prior to the beginning of the Plan Year to which such rates
apply.
1.22 MAP means the PPG Industries, Inc. Management Award and Deferred
Income Plan.
1.23 Participant means an Employee approved to participate in either the
IC Plan or MAP. As used herein, "Participants" may be used collectively to
include Retired Participants, Terminated Participants and Former
Participants.
1.24 Plan or DCP means the PPG Industries, Inc. Deferred Compensation
Plan.
1.25 Plan Year means the calendar year.
1.26 PPG Stock means Common Stock of the Company. Shares of PPG Stock
issued under the Plan may be either authorized but unissued shares or
issued shares acquired by the Company and held in its treasury.
1.27 PPG Stock Account means a record-keeping account maintained for a
Participant who elects to defer all or part of an Award/Salary and/or to
maintain all or part of a deferred Award/Salary in the form of Stock
Account Shares.
-Page 1.4-
<PAGE>
1.28 Restoration Contributions means contributions to a Participant's
Savings Plan Restoration Account in accordance with Section IV.
1.29 Retired Participant means a Participant who elects to maintain an
Account in the Plan after his/her Retirement Date.
1.30 Retirement Date means the first day of the month following a
Participant's termination of employment, provided such Participant is
eligible to receive a benefit from a retirement plan sponsored by the
Corporation on such date.
1.31 Salary means a Participant's monthly base salary from the Corporation
(excluding bonuses, commissions and other non-regular forms of
compensation) and including payments from the PPG Industries Salary
Continuance Plan, before reductions for deferrals under the Plan or under
any other Plan sponsored by the Corporation. In the case of Salary
Continuance, Salary deferral elections shall be applied to the actual
amount of Salary Continuance being paid.
1.32 Savings Plan means the PPG Industries Employee Savings Plan.
1.33 Savings Plan Election means the sum of the percentage the Participant
is contributing to the Savings Plan as Savings and as Elective Deferrals
not to exceed the percentage eligible for the Company match in the Savings
Plan.
1.34 Savings Plan Interest Account means a record-keeping account
maintained for a Participant who is eligible to receive Restoration
Contributions. The Interest Rate credited in the Savings Plan Interest
Account shall be the same as that credited to the Interest Account.
1.35 Savings Plan Matching Percentage means the percentage of the
Company's Matching Contributions for a Plan Year in the Savings Plan.
1.36 Savings Plan PPG Stock Account means a record-keeping account
maintained for a Participant who is eligible to receive Savings Plan
Restoration Contributions in accordance with Section IV, in the form of
Stock Account Shares.
1.37 Savings Plan Restoration Account means all Restoration Contributions
and earnings thereon in a Participant's Account at any particular time.
1.38 Stock Account Share means a record-keeping unit which is equivalent
to one share of PPG Stock.
1.39 Subsidiary means any corporation of which fifty percent (50%) or more of
the outstanding voting stock or voting power is owned, directly or
indirectly, by the Company and any partnership or other entity in which
the Company has a fifty percent (50%) or more ownership interest.
-Page 1.5-
<PAGE>
1.40 Terminated Participant means a Participant who maintains an Account
in the Plan following his/her termination of employment from the
Corporation.
1.41 Unscheduled Withdrawal means a distribution of all or a portion of a
Participant's Interest Account and/or PPG Stock Account requested by a
Participant, or a Beneficiary, if the Participant is deceased, in
accordance with Section 5.07.
-Page 1.6-
<PAGE>
SECTION II - DEFERRALS
----------------------
2.01 Deferral of Award
-----------------
(a) In accordance with the provisions of either the IC Plan or MAP,
whichever is applicable, the value of that portion of the cash
component of a deferred Award which the Participant has designated to
the Interest Account shall be credited to the Interest Account on the
day such deferral would otherwise have been paid to the Participant.
(b) In accordance with the provisions of either the IC Plan or MAP,
whichever is applicable, the value of:
(1) that portion of the cash component of a deferred Award which the
Participant has designated to the PPG Stock Account; and/or
(2) the value of the stock component of a deferred Award
shall be credited to the PPG Stock Account in the Participant's
Account on the day such deferral would otherwise have been paid to
the Participant.
(c) Subject to paragraph (e) below, all crediting elections pursuant
to this Section 2.01 are subject to the transfer provisions of Section
3.04
(d) Amounts credited to the PPG Stock Account shall be credited in
the form of whole and fractional Stock Account Shares determined
according to the Conversion Formula.
(e) Any amount designated by the Participant for in-service
withdrawal in accordance with either the IC Plan or MAP must be
credited to the Interest Account and is not subject to the transfer
provisions of Section 3.04.
2.02 Deferral of Salary
------------------
(a) Prior to the beginning of each quarter, a Participant may elect
to defer a percentage, in whole percentages only, of his/her Salary as
follows:
Minimum Deferral Maximum Deferral
---------------- ----------------
1% 50%
-Page 2.1-
<PAGE>
(b) Elections made pursuant to this Section 2.02 shall remain in
effect until the earlier of:
(1) The first day of the quarter following the quarter the
Participant rescinds or modifies the election; or
(2) The first day of the Plan Year following the Plan Year in which
the Participant becomes a Former Participant.
(c) Any election filed by a Participant pursuant to this Section
2.02 must be received by the Administrator on or before the last
business day of the quarter prior to the quarter in which such
election is to become effective. Deferred Salary shall be credited to
the Participant's Account on the first day of the month following the
month in which the deferral is made.
(d) A Participant is ineligible to defer or continue to have
deferred any Salary percentage during a quarter in which the
Participant's salary is subject to a garnishment, tax lien, child
support or any similar attachment to Salary.
(e) A Participant who becomes ineligible for Salary deferral, in
accordance with Paragraph (d) above, may thereafter resume Salary
deferral upon the discontinuance of the attachment to the Salary and
in accordance with the Salary election provisions of this Section
2.02.
2.02.01 Salary Deferral Crediting Elections
-----------------------------------
(a) At the time an election is made to defer Salary, the Participant
must also designate in whole percentages whether such amount is
to be credited to the Interest Account, the PPG Stock Account, or
a combination of both.
(b) A Salary deferral crediting election shall remain in effect
through an entire quarter. A Salary deferral crediting election
may be changed by a Participant for a subsequent quarter by
notification to the Administrator on or before the last business
day of the quarter, to be effective on the first day of the next
quarter.
(c) All crediting elections pursuant to this Section 2.02.01 are
subject to the transfer provisions of Section 3.04.
(d) The number of Stock Account Shares credited to the PPG Stock
Account shall be determined by the closing price for PPG Stock on
the last business day of the month in which the deferral is made.
-Page 2.2-
<PAGE>
SECTION III - DEFERRAL ACCOUNT OPTIONS
--------------------------------------
3.01 Interest Account
----------------
Except as otherwise provided in Sections 5.03 and 6.06, amounts
deferred to the Interest Account shall accrue interest equivalents at the
Declared Rate.
3.02 PPG Stock Account
-----------------
(a) Amounts credited to the PPG Stock Account shall be credited in
the form of Stock Account Shares.
(b) Participants shall not receive cash dividends or have voting or
other shareholders' rights as to Stock Account Shares; however, Stock
Account Shares shall accrue whole and fractional dividend equivalents,
in the form of additional Stock Account Shares, on the basis of the
closing sale price for PPG Stock, reported on the Composite Tape for
the day on which a dividend is paid, based on the number of whole
Stock Account Shares in the PPG Stock Account on the record date.
3.03 Transfers from IC Plan, MAP and/or the Earnings Growth Plan
-----------------------------------------------------------
(a) Any amount previously deferred under either the IC Plan or MAP,
which has not been withdrawn prior to January 1, 1996, shall be
transferred to the Participant's Account in this Plan effective
January 1, 1996. Amounts credited to the interest account under the
prior plan(s) shall be transferred to the Interest Account and amounts
credited to the PPG stock account under the prior plan(s) shall be
transferred to the PPG Stock Account.
(b) (1) Subject to subparagraph (2) below, any amount which a
Participant currently has in his/her account in the Earnings
Growth Plan shall be transferred to the Participant's Account in
this Plan effective January 1, 1996. Amounts credited to the
interest account in the Earnings Growth Plan shall be transferred
to the Interest Account, and amounts credited as earnings growth
shares in the Earnings Growth Plan shall be transferred to the
PPG Stock Account.
(2) Subparagraph (1) above shall not apply in the case of a
Participant who has filed a withdrawal election with respect to
his/her earnings growth account under the Earnings Growth Plan.
Such account shall remain in the Earnings Growth Plan and subject
to the provisions thereof.
-Page 3.1-
<PAGE>
3.04 Transfers
---------
(a) A Participant (excluding Insiders) who has a balance in his/her
Account, may elect to transfer some or all of his/her Account balance
between the PPG Stock Account and the Interest Account. Transfers
shall be subject to the following provisions:
(1) Participants must file a transfer request with the Administrator
on or before the last business day of a quarter, to be effective
on the first day of the next quarter.
(2) The number and value of Stock Account Shares shall be determined
by the closing price for PPG Stock on the last business day of the
quarter in which the election is received by the Administrator.
(b) Insiders are prohibited from making interaccount transfers.
-Page 3.2-
<PAGE>
SECTION IV - SAVINGS PLAN RESTORATION CONTRIBUTIONS
---------------------------------------------------
4.01 Restoration Contributions
-------------------------
Participants who are currently contributing to the Savings Plan may
be eligible to receive Restoration Contributions as follows:
(a) For Participants whose Salary exceeds the amount specified in
(S)401(a)(17) of the Code, Restoration Contributions shall equal the
sum of (1) and (2) below:
(1) Lesser of:
Excess Salary times Savings Plan Election times Savings Plan
Matching Percentage; or
Amount of monthly deferred Salary.
(2) If the difference between the Participant's Salary deferral and
Excess Salary ("Difference") is greater than zero:
Difference times Savings Plan Election times Savings Plan
Matching Percentage.
(b) For a Participant whose Salary equals or is less than the amount
specified in (S)401(a)(17) of the Code and such Participant elects to
defer Salary in accordance with Section 2.02, Restoration
Contributions shall equal the amount of the deferred Salary times the
Participant's Savings Plan Election times the Savings Plan Matching
Percentage.
(c) For purposes of this Section 4.01 Excess Salary means Salary
minus the amount specified in (S)401(a)(17) of the Code divided by 12.
4.02 Savings Plan Restoration Account
--------------------------------
(a) Restoration Contributions shall be credited monthly and shall be
maintained in the Savings Plan Restoration Account. The Savings Plan
Restoration Account shall consist of a Savings Plan Interest Account,
and a Savings Plan PPG Stock Account.
-Page 4.1-
<PAGE>
(b) Restoration Contributions shall be credited to the Savings Plan
PPG Stock Account and shall be credited in the form of Stock Account
Shares, the number of which shall be determined by using the closing
price for PPG Stock on the last business day of the month in which
such Restoration Contributions are made, and credited to the
Participant's Savings Plan Restoration Account on the first day of the
month following the month in which the Restoration Contributions are
made.
(c) Participants shall not receive cash dividends or have voting or
other shareholders' rights as to Stock Account Shares; however, Stock
Account Shares shall accrue whole and fractional dividend equivalents,
in the form of additional Stock Account Shares, on the basis of the
closing sale price for PPG Stock, reported on the Composite Tape for
the day on which a dividend is paid, based on the number of whole
Stock Account Shares in the Savings Plan PPG Stock Account on the
record date.
4.03 Vesting
-------
Restoration Contributions shall be 100% vested at the time such
Restoration Contributions are credited to a Participant's Account.
4.04 Transfers
---------
Restoration Contributions may be transferred to the Savings Plan
Interest Account, in accordance with Section 3.04, beginning the Plan Year
in which a Participant reaches his/her 55th birthday.
4.05 Withdrawal Provisions
---------------------
(a) The Savings Plan Restoration Account is not subject to
provisions of Sections 5.01, 5.06 or 5.07.
(b) At the time of a Participant's termination of employment,
including termination due to Retirement, Death and/or Disability, any
amount in the Savings Plan PPG Stock Account shall be transferred to
the PPG Stock Account and any amount in the Savings Plan Interest
Account shall be transferred to the Interest Account and shall be
subject to any election filed by the Participant or the Beneficiary,
in accordance with the provisions of Section 5.02, 5.03, 5.04 or 5.05.
-Page 4.2-
<PAGE>
SECTION V - WITHDRAWAL PROVISIONS
---------------------------------
5.01 Scheduled In-Service Withdrawals
--------------------------------
Except as otherwise provided in this Section V, payment of any amount
designated by a Participant for in-service withdrawal, in accordance with
provisions of either the IC Plan or MAP, whichever is applicable, shall be
made to the Participant in a lump sum as of the first day of the
quarter/year specified by the Participant.
5.02 Withdrawals at/after a Participant's Retirement Date
----------------------------------------------------
(a) A Participant may elect a payment schedule applicable to his/her
Account provided such election is filed with the Administrator:
(1) Prior to the Participant's Retirement Date; and
(2) In the year prior to the year the first payment is to be made
and, in all cases, at least six months/ten days prior to the time
the first payment is to be made.
(b) Participants may elect:
(1) One lump-sum payment; or
(2) Quarterly, semiannual or annual installments - to be made over a
period of years, up to a maximum period of 15 years; or
(3) A combination of (1) and (2).
(c) A Participant may delay the first payment for a period up to ten
years following his/her Retirement Date; provided, however, that, in
all cases, payments must begin no later than the year in which the
Participant's 75th birthday occurs.
(d) The payment schedule elected by the Participant shall apply to
his/her entire Account. Participants may designate the first day of
the quarter for the commencement of the payment schedule on an annual,
semiannual or quarterly basis.
-Page 5.1-
<PAGE>
Each installment payment shall be calculated by dividing the
Participant's account balance by the remaining number of installments
-(e.g.: Ten annual installments shall be paid: 1st installment =
----
1/10 of Account; 2nd installment = 1/9 of Account; 3rd installment =
1/8 of Account, etc.). If the installment payment is to be in the
form of PPG Stock, any stock increment shall be rounded down to the
nearest whole stock share. Any remaining stock increments shall
remain in the Account until subject to further payment.
(e) In the event a Participant fails to file a payment schedule
election with the Administrator prior to his/her Retirement Date,
his/her Account shall be paid in one lump sum in the year following
the year of such Retirement Date and shall be paid during the first
quarter of such year which is at least six months/ten days following
such Retirement Date.
(f) Payment schedules pursuant to this Section 5.02 shall supersede
any prior payment election(s) filed with the Administrator; and shall
become irrevocable on the Participant's Retirement Date.
(g) Any payment to an Insider pursuant to this Section 5.02 shall be
paid in cash.
5.03 Withdrawals following Termination
---------------------------------
(a) Except as provided in paragraph (e) below, a Participant may
elect when to receive a lump-sum payment of his/her Account balance
following his/her termination date provided such election is filed
with the Administrator no later than 30 days after such termination
date.
(b) Participants must specify the quarter/year that the lump-sum
payment is to be made; provided, however, that the Participant must
elect to receive the payment no later than the last quarter of the
year in which the fifth anniversary of his/her termination date
occurs. Payment must occur no earlier than the Plan Year after the
Plan Year of the Participant's termination and as of the first day of
the first quarter which is as least six (6) months and 10 days
following the Participant's termination.
(c) In the event a Participant fails to file a payment election with
the Administrator within the time provided in paragraph (a) above,
his/her Account shall be paid in one lump sum in the year following
the year of such termination date and shall be paid during the first
quarter in such year which is at least six months/ten days following
such termination date.
-Page 5.2-
<PAGE>
(d) The rate of interest credited in the Interest Account following
a Participant's termination date shall be at the Minimum Rate;
provided, however, that the Committee shall have the authority to
approve continuation of the Declared Rate, on a case-by-case basis.
(e) In the event the Administrator determines, in his sole
discretion, that a termination is "for cause," the Participant shall
have no election with respect to payment of his/her Account. Such
Participant shall receive his/her entire Account balance as of the
first day of the first quarter immediately following his/her
termination date.
(f) Payment schedules pursuant to this Section 5.03 shall supersede
any prior payment election(s) filed with the Administrator.
(g) Any payment to an Insider pursuant to this Section 5.03 shall be
paid in cash.
5.04 Withdrawals in the event of Disability
--------------------------------------
(a) In the event a Participant becomes disabled, he/she may elect a
payment schedule applicable to his/her Account provided such election
is filed with the Administrator within 30 days of the Administrator's
determination that such Participant has a Disability.
(b) Participants may elect:
(1) One lump-sum payment; or
(2) Quarterly, semiannual or annual installments - to be made over a
period of years, up to a maximum period of 15 years; or
(3) A combination of (1) and (2).
(c) A Participant may delay the first payment for a period of up to
ten years following the determination that he/she has a Disability;
provided, however, that, in all cases, payments must begin no later
than the year in which the Participant's 75th birthday occurs.
Payments must commence no earlier than the Plan Year following the
Plan Year in which the Participant is determined to have a Disability
and as of the first day of the first quarter which is at least six (6)
months and 10 days following the Administrator's determination that
such Participant has a Disability.
-Page 5.3-
<PAGE>
(d) The payment schedule elected by the Participant shall apply to
his/her entire Account. Participants may designate the first day of a
quarter for the commencement of the payment schedule on an annual,
semiannual or quarterly basis.
Each installment payment shall be the applicable fraction of the
Participant's Account balance -(e.g.: Ten annual installments shall
----
be paid: 1st installment = 1/10 of Account; 2nd installment = 1/9 of
Account; 3rd installment = 1/8 of Account, etc.). .). If the
installment payment is to be in the form of PPG Stock, any stock
increment shall be rounded down to the nearest whole stock share. Any
remaining stock increments shall remain in the Account until subject
to further payment.
(e) In the event a Participant fails to file a payment schedule
election with the Administrator within the period specified in
paragraph (a) above, his/her Account shall be paid in one lump sum in
the year following the year he/she incurs a Disability, and shall be
paid during the first quarter in such year which is at least six
months/ten days following such Disability date.
(f) Payment schedules pursuant to this Section 5.04 shall supersede
any prior payment election(s) filed with the Administrator; and shall
become irrevocable when filed in accordance with paragraph (a).
(g) Any withdrawal by an Insider pursuant to this Section 5.04 shall
be paid in cash.
5.05 Withdrawals following a Participant's death
-------------------------------------------
(a) Death prior to a Participant's Election Date
--------------------------------------------
In the event of a Participant's death prior to his/her Election
Date, the Participant's entire Account shall be paid to the
Participant's Beneficiary as soon as possible following the
Participant's death.
(b) Death on or after a Participant's Election Date
-----------------------------------------------
In the event of a Participant's death on or after his/her Election
Date, the Participant's Beneficiary may elect to receive the remaining
balance of the Participant's Account paid as a lump sum, or in
accordance with the payment schedule filed by the Participant.
Such election must be filed by the Beneficiary within 60-days
following the Participant's death. If no such election is made, the
balance in the Participant's Account shall be paid in a lump sum. Any
lump sum payment made in accordance with this paragraph shall be paid
-Page 5.4-
<PAGE>
in the Plan Year after the Plan Year of the Participant's death and as
of the first day of the first quarter which is at least six (6) months
and 10 days following the Participant's death.
(c) For purposes of this Section 5.05 "Election Date" means the date
on which the Participant's election schedule becomes irrevocable in
accordance with paragraph (f) of Section 5.02 or paragraph (f) of
Section 5.04.
5.06 Withdrawals upon finding of Financial Hardship
-----------------------------------------------
(a) Upon a finding that the Participant, or Beneficiary if the
Participant is deceased, has suffered a Financial Hardship, the
Administrator may, in his sole discretion, permit the acceleration of
a withdrawal under the Plan in an amount reasonably necessary to
alleviate such Financial Hardship.
(b) If the Administrator permits a withdrawal due to Financial
Hardship, the Participant shall cease Salary deferrals, if any, and
may not make any deferrals under the Plan, in the form of an Award or
Salary, until one entire Plan Year has elapsed following the Plan Year
in which such withdrawal is made.
(c) The Participant shall be required to exhaust all other sources
of funds, other than the Savings Plan, before the Administrator will
consider an accelerated withdrawal in accordance with this Section
5.06.
(d) A withdrawal pursuant to this Section 5.06 shall nullify any in-
service withdrawal election filed in accordance with Section 5.01.
(e) Notwithstanding any other provision of this Section 5.06, a
Participant who is an Insider or officer of PPG may withdraw funds
only from the Interest Account.
(f) Notwithstanding any other provision of this Section 5.06, funds
in the Savings Plan Restoration Account are not subject to withdrawal
due to Financial Hardship.
5.07 Unscheduled Withdrawals
-----------------------
(a) A Participant, or Beneficiary if the Participant is deceased,
may request an Unscheduled Withdrawal of all or a portion of the
Participant's Interest Account and/or PPG Stock Account. All such
payments shall be made in a single sum and shall be paid in cash.
-Page 5.5-
<PAGE>
An Insider or officer of PPG may request an Unscheduled Withdrawal
only from available funds in the Interest Account. A Participant, or
Beneficiary, may request not more than one (1) Unscheduled Withdrawal
in a Plan Year.
(b) An Unscheduled Withdrawal must be a minimum of 25% of the
Participant's Interest and PPG Stock Accounts.
(c) An election to withdraw 75% or more of the Participant's
Interest and Stock Accounts shall be deemed a request to withdraw the
entire Account balance in these two accounts.
(d) Prior to payment of any Unscheduled Withdrawal, a penalty of 10%
of the Unscheduled Withdrawal amount shall be withheld and forfeited
(or 5% if such Unscheduled Withdrawal is made during the Plan Year in
which a Change in Control occurs, or the Plan Year immediately
following such Change in Control) and the Participant shall cease
Salary deferrals, if any, effective on the date the withdrawal is paid
and may not make any deferrals under the Plan, in the form of an Award
or Salary, until one entire Plan Year has elapsed following the Plan
Year in which such Unscheduled Withdrawal is made.
(e) A withdrawal pursuant to this Section 5.07 shall nullify any
scheduled in-service withdrawal election filed in accordance with
Section 5.01.
5.08 Methods of Payment
------------------
(a) PPG Stock Account
-----------------
Except as provided in paragraph (a) of Section 5.07 and except for
Insiders, any payment from the PPG Stock Account shall be paid in the
form of PPG Stock.
Notwithstanding any other provision of this Plan, any payments to
any Insider shall be paid in the form of cash.
At the time of the final scheduled payment, if payments were
disbursed from the PPG Stock Account in shares of PPG Stock, any
remaining fractional shares of PPG Stock shall be converted to and
paid in cash.
(b) Interest Account
----------------
Payments from the Interest Account shall be made in cash.
-Page 5.6-
<PAGE>
(c) All payments to Participants, or their Beneficiaries, shall be
made on the first business day of a calendar quarter.
5.09 Small Account Provision
-----------------------
(a) Each scheduled withdrawal must equal a minimum of $2,000.
(b) If the remaining balance in a Participant's Account is less than
$2,000, the Administrator may, at his discretion, distribute the
remainder of the Account.
-Page 5.7-
<PAGE>
SECTION VI - SPECIFIC PROVISIONS
--------------------------------
RELATED TO BENEFITS
-------------------
6.01 Nonassignability
----------------
(a) Except as provided in paragraph (b) below and in Section 6.02,
no person shall have any power to encumber, sell, alienate, or
otherwise dispose of his/her interest under the Plan prior to actual
payment to and receipt thereof by such person; nor shall the
Administrator recognize any assignment in derogation of the foregoing.
No interest hereunder of any person shall be subject to attachment,
execution, garnishment or any other legal, equitable, or other
process.
(b) Paragraph (a) above shall not apply to the extent that a
Participant's interest under the Plan is alienated pursuant to a
"Qualified Domestic Relations Order" ("QDRO") as defined in (S)414(p)
of the Code.
(1) The Administrator is authorized to adopt such procedural and
substantive rules and to take such procedural and substantive
actions as the Administrator may deem necessary or advisable to
provide for the payment of amounts from the Plan to an Alternate
Payee as provided in a QDRO. Such rules and actions shall be
consistent with the principal purposes of the Plan.
(2) Under no circumstances may the Administrator accept an order as
a QDRO following a Participant's death.
(3) An Alternate Payee may not establish an account in the Plan.
All amounts taken from a Participant's Account, as provided in a
QDRO, must be distributed as soon as possible following the
acceptance of an order as a QDRO.
(4) In the sole discretion of the Administrator, a Participant's
scheduled withdrawal or otherwise requested withdrawal may be
delayed for a period, not to exceed six months, if the
Administrator has notice that part or all of the Participant's
Account may be subject to alienation pursuant to a QDRO.
-Page 6.1-
<PAGE>
6.02 Beneficiary Designation
-----------------------
(a) The Participant shall have the right, at any time and from time
to time, to designate any person(s) as Beneficiary. The designation
of a Beneficiary shall be effective on the date it is received by the
Administrator, provided the Participant is alive on such date.
(b) Each time a Participant submits a new Beneficiary designation
form to the Administrator, such designation shall cancel all prior
designations.
(c) In the case of a Participant who does not have a valid
Beneficiary designation on file at the time of his/her death, or in
the case the designated Beneficiary predeceases the Participant, the
entire balance in the Participant's Account shall be paid as soon as
possible to the Participant's estate.
(d) Any Beneficiary designated by the Participant under the IC Plan
or MAP filed before January 1, 1996, shall remain in effect for this
Plan, until a new Beneficiary designation form is filed in accordance
with this Section 6.02, on or after January 1, 1996.
6.03 Limited Right to Assets of the Corporation
------------------------------------------
The Benefits paid under the Plan shall be paid from the general
funds of the Company, and the Participants and any Beneficiary shall be no
more than unsecured general creditors of the Company with no special or
prior right to any assets of the Company for payment of any obligations
hereunder.
6.04 Protective Provisions
---------------------
The Participant or Beneficiary shall cooperate with the
Administrator by furnishing any and all information requested by the
Administrator in order to facilitate the payment of benefits hereunder. If
a Participant refuses to cooperate, he/she may be deemed ineligible to
receive a distribution and/or ineligible to continue to actively
participate in the Plan.
6.05 Withholding
-----------
The Participant or Beneficiary shall make appropriate arrangements
with the Administrator for satisfaction of any federal, state or local
income tax withholding requirements and Social Security or other employee
tax requirements applicable to the payment of benefits under the Plan. If
no other arrangements are made, the Administrator may provide for such
withholding and tax payments by any means he deems appropriate, in his
sole discretion.
-Page 6.2-
<PAGE>
6.06 Forfeiture Provision
--------------------
In the event the Company becomes aware that a Participant is engaged
or employed as a business owner, employee, or consultant in any activity
which is in competition with any line of business of the Corporation, or
has engaged in any activity otherwise determined to be detrimental to the
Company, the Administrative Subcommittee may:
(a) Terminate such Participant's participation in the Plan, and
distribute the entire amount in the Participant's Account in a lump
sum;
(b) Recalculate all earnings in the Account as though all
investments had been invested in the Interest Account and accruing
interest at the Minimum Rate;
(c) Both (a) and (b) above; or
(d) Apply any other diminution or forfeiture of benefits, which is
specifically approved by the Administrative Subcommittee.
For purposes of this Section 6.06, the Administrative Subcommittee
shall consist of the Senior Vice President, Human Resources and
Administration, the Director, Compensation and Benefits, and a
representative of the Law Department, as appointed by the General Counsel
of PPG. The Administrative Subcommittee shall report all of its activities
to the Committee.
-Page 6.3-
<PAGE>
SECTION VII - ADMINISTRATION & CLAIMS
-------------------------------------
7.01 Administration
--------------
(a) The Administrator shall administer the Plan and interpret,
construe and apply its provisions in accordance with its terms. The
Administrator shall have the complete authority to:
(1) Determine eligibility for benefits;
(2) Construe the terms of the Plan; and
(3) Control and manage the operation of the Plan.
(b) The Administrator shall have the authority to establish rules
for the administration and interpretation of the Plan and the
transaction of its business. The determination of the Administrator
as to any disputed question shall be conclusive. All actions,
decisions and interpretations of the Administrator shall be performed
in a uniform and nondiscriminatory manner.
(c) The Administrator may employ counsel and other agents and may
procure such clerical, accounting and other services as the
Administrator may require in carrying out the provisions of the Plan.
(d) The Administrator shall not receive any compensation from the
Plan for his services.
(e) The Corporation shall indemnify and save harmless the
Administrator against all expenses and liabilities arising out of the
Administrator's service as such, excepting only expenses and
liabilities arising from the Administrator's own gross negligence or
willful misconduct, as determined by the Committee.
7.02 Claims
------
(a) Every person receiving or claiming benefits under the Plan shall
be conclusively presumed to be mentally and physically competent and
of age. If the Administrator determines that such person is mentally
or physically incompetent or is a minor, payment shall be made to the
legally appointed guardian, conservator, or other person who has been
appointed by a court of competent jurisdiction to care for the estate
of such person, provided that proper proof of such appointment is
furnished in a form and manner suitable to the Administrator. Any
payment made under the provisions of the paragraph (a) shall be a
-Page 7.1-
<PAGE>
complete discharge of any liability therefor under the Plan. The
Administrator shall not be required to see to the proper application
of any such payment.
(b) Claims Procedure
----------------
Claims for benefits by a Participant or Beneficiary shall be filed,
in writing, with the Administrator. If the Administrator denies the
claim, in whole or in part, the Administrator shall furnish a written
notice to the claimant setting forth a statement of the specific
reasons for the denial of the claim, references to the specific
provisions of the Plan on which the denial is based, a description of
any additional material or information necessary to perfect the claim
and an explanation of why such material or information is necessary,
and an explanation of the review procedure. Such notice shall be
written in a way calculated to be understandable by the claimant.
The written notice from the Administrator shall be furnished to the
claimant within ninety (90) days following the date on which the claim
was filed, except that if special circumstances require an extension
of time, the Administrator shall notify the claimant of this need
within such 90-day period. Such notice shall inform the claimant the
nature of the circumstances necessitating the need for additional time
and the date by which the claimant will be furnished with the decision
regarding the claim. Such extension may provide for up to an
additional 90 days.
(c) Review Procedure
----------------
Within sixty (60) days of the date the Administrator denies a claim,
in whole or in part, the claimant, or his/her authorized
representative, may request that the decision be reviewed. Such
request shall be in writing, shall be filed with the Administrator,
and shall contain the following information:
(1) The date on which the denial was received by the claimant;
(2) The date on which the claimant's request for review was filed
with the Administrator;
(3) The specific portions of the denial which the claimant requests
the Administrator to review;
(4) A statement setting forth the basis on which the claimant
believes that a review of the decision is required;
-Page 7.2-
<PAGE>
(5) Any written material which the claimant desires the
Administrator to take into consideration in reviewing the claim.
The Administrator shall afford the claimant, or his/her authorized
representative, an opportunity to review documents pertinent to the
claim, and shall conduct a full and fair review of the claim and its
denial. The Administrator's decision on such review shall be
furnished to the claimant in writing, and shall be written in a manner
calculated to be understandable to the claimant. Such decision shall
include a statement of the specific reason(s) for the decision,
including references to the specific provision(s) of the Plan relied
upon.
The written notice from the Administrator shall be furnished to the
claimant within sixty (60) days following the date on which the
request for review was received by the Administrator, except that if
special circumstances require an extension of time, the Administrator
shall notify the claimant of this need within such 60-day period.
Such notice shall inform the claimant the nature of the circumstances
necessitating the need for additional time and the date by which the
claimant will be furnished with the decision regarding the claim.
Such extension may provide for up to an additional 60 days.
-Page 7.3-
<PAGE>
SECTION VIII - AMENDMENT AND TERMINATION
----------------------------------------
8.01 Amendment of the Plan
---------------------
Except as provided in Section X, the Committee may amend the Plan, in
whole or in part, at any time; however, except as provided in Section X,
no such amendment may decrease the amount of benefit currently accrued in
Participants' Accounts.
Except as provided in Section X, the Administrator shall have the
authority to adopt amendments to the Plan, in whole or in part, at any
time, necessary for the implementation and/or administration of the Plan,
which will not result in a material change to the Plan. Moreover, except
as provided in Section X, no such amendment by the Administrator may
decrease the amount of benefit currently accrued in Participants'
Accounts.
8.02 Termination of the Plan
-----------------------
Except as provided in Section X, the Committee may terminate the
Plan at any time. Upon a termination pursuant to this Section 8.02, the
Committee has the sole discretion to determine distribution schedules for
any or all Accounts, notwithstanding a Participant's previous distribution
schedule.
8.03 Constructive Receipt
--------------------
In the event the Administrator determines that amounts deferred
under the Plan have been constructively received by Participants and must
be recognized as income for federal income tax purposes, distributions
shall be made to Participants, as determined by the Administrator. The
determination of the Administrator under this Section 8.03 shall be
binding and conclusive.
-Page 8.1-
<PAGE>
SECTION IX - MISCELLANEOUS
--------------------------
9.01 Successors of the Company
-------------------------
The rights and obligations of the Company under the Plan shall inure
to the benefit of, and shall be binding upon, the successors and assigns
of the Company.
9.02 ERISA Plan
----------
The Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for "a select group of management
or highly compensated employees" within the meaning of Sections 201, 301
and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title
I of ERISA.
9.03 Trust
-----
The Company shall be responsible for the payment of all benefits under the
Plan. Except as otherwise required by Section X, the Company, at its
discretion, may establish one or more grantor trusts for the purpose of
providing for payment of benefits under the Plan. Such trust(s) may be
irrevocable, but the assets thereof shall be subject to the claims of the
Company's creditors. Benefits paid to the Participant from any such trust
shall be considered paid by the Company for purposes of meeting the
obligations of the Company under the Plan.
9.04 Employment Not Guaranteed
-------------------------
Nothing contained in the Plan nor any action taken hereunder shall
be construed as a contract of employment or as giving any Participant any
right to continued employment with the Corporation.
9.05 Gender, Singular and Plural
---------------------------
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, as the identity of the person(s) requires.
As the context may require, the singular may be read as the plural and the
plural as the singular.
9.06 Headings
--------
The headings of the Sections, subsections and paragraphs of the Plan
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
-Page 9.1-
<PAGE>
9.07 Validity
--------
If any provision of the Plan is held invalid, void or unenforceable,
the same shall not affect, in any respect, the validity of any other
provision(s) of the Plan.
9.08 Waiver of Breach
----------------
The waiver by the Company of any breach of any provision of the Plan
by a Participant or Beneficiary shall not operate or be construed as a
waiver of any subsequent breach.
9.09 Applicable Law
--------------
The Plan is intended to conform and be governed by ERISA. In any
case where ERISA does not apply, the Plan shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
9.10 Notice
------
Any notice required or permitted to be given to the Administrator
under the Plan shall be sufficient if in writing and either hand-
delivered, or sent by first class mail to the principal office of the
Company at One PPG Place, Pittsburgh, PA 15272, directed to the attention
of the Administrator. Such notice shall be deemed given as of the date of
delivery.
-Page 9.2-
<PAGE>
SECTION X - CHANGE IN CONTROL
-----------------------------
10.01 Payments to a Trustee
---------------------
Upon, or in reasonable anticipation of, a Change in Control, as defined
in Section 10.02 below, the Senior Vice President, Human Resources and
Administration and the Senior Vice President, Finance, or either of them
or their successor, shall cause an amount, as they deem appropriate, to
be paid to a trustee on such terms as they shall deem appropriate
(including such terms as are appropriate to cause such payment not to be
a taxable event to Participants, if possible, and to cause such Awards to
be distributable to Participants in accordance with elections filed with
the Administrator). Such amount shall be paid in cash and shall be
sufficient, at a minimum, to equal to all deferred amounts credited to
the Interest Account, the Savings Plan Interest Account, the PPG Stock
Account and the Savings Plan PPG Stock Account. Amounts in the PPG Stock
Account and the Savings Plan PPG Stock Account, shall be converted to
cash on the basis of the fair market value of PPG Stock on the date of
the occurrence of the Change in Control, or, if higher, within 30 days of
such date.
10.02 Definition: Change in Control
------------------------------
A "Change in Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities").
For purposes of this subsection (a) the following acquisitions shall
not constitute a Change in Control:
Any acquisition directly from the Company;
Any acquisition by the Company;
Any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled
by the Company; or
-Page 10.1-
<PAGE>
Any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of paragraph (c) of this
Section 10.02.
(b) Individuals who, as of September 20, 1995, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to such date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination:
(i) All or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be;
(ii) No Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
-Page 10.2-
<PAGE>
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination; and
(iii) At least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or
(e) A majority of the Board otherwise determines that a Change in
Control shall have occurred.
-Page 10.3-
<PAGE>
Exhibit 10.4
PPG INDUSTRIES, INC.
INCENTIVE COMPENSATION
AND
DEFERRED INCOME PLAN
FOR
KEY EMPLOYEES
Effective: February 15, 1995
As Amended Thru: January 1, 1996
<PAGE>
Table of Contents
-----------------
Section I Definitions
Section II Awards
Section III Capital Enhancement
Account
Section IV Withdrawal Provisions
Section V Specific Provisions Related
to Benefits
Section VI Administration & Claims
Section VII Amendment & Termination
Section VIII Miscellaneous
Section IX Change in Control
i
<PAGE>
SECTION I - DEFINITIONS
-----------------------
1.01 Administrator means an officer or officers of the Company appointed
by the Committee, and any person(s) designated by such Administrator to
assist in the administration of the Plan.
1.02 Award means a grant of incentive compensation.
1.03 Beneficiary means the person or persons designated by a Participant to
receive benefits hereunder following the Participant's death, in
accordance with section 5.02; provided, however, in the event a
Participant fails to designate a Beneficiary in accordance with Section
5.02, his/her Beneficiary shall be the Beneficiary designated under the
Deferred Compensation Plan. For purposes of this Section 1.05, "person or
persons" is limited to an individual, a Trustee or a Participant's estate.
1.04 Board means the Board of Directors of PPG Industries, Inc.
1.05 Capital Enhancement Account or Account means a bookkeeping account or
accounts maintained for a Participant who, for such period or periods as
the Committee may establish or permit, elects to defer all or any part of
an Award in the form of cash or Salary, as provided in Section 3.01.
1.06 CEA-1 means all funds contributed to the Capital Enhancement Account
during the period August 1, 1985 thru July 31, 1986, and earnings thereon.
1.07 CEA-2 means all funds contributed to the Capital Enhancement Account
during the period November 1, 1987 thru December 31, 1988, and earnings
thereon.
1.08 CEBC means the Compensation and Employee Benefits Committee of the
Company.
1.09 Code means the Internal Revenue Code of 1986, as amended.
1.10 Committee means the Officers-Directors Compensation Committee, as
further defined in Section 6.01, (or any successor) of the Board.
1.09 Company or PPG means PPG Industries, Inc.
-Page 1.1-
<PAGE>
1.10 Conversion Formula means dividing an amount by the average of the
closing sale prices for PPG Stock reported on the New York Stock Exchange-
Composite Tape for the first five days during which the New York Stock
Exchange is open during the Plan Year immediately following the last day
of the Plan Year to which the Award relates.
-Page 1.2-
<PAGE>
1.11 Corporation means PPG and any Subsidiary Corporation designated by
the Committee as eligible to participate in the Plan, and which, by proper
authorization of the Board of Directors or other governing body of such
Subsidiary Corporation, elects to participate in the Plan.
1.12 Deferred Compensation Plan means the PPG Industries, Inc. Deferred
Compensation Plan.
1.13 Disability means any long-term disability. The Administrator, in his
complete and sole discretion, shall determine a Participant's Disability;
provided, however, that a Participant who is approved to receive Long-Term
Disability benefits pursuant to the PPG Industries, Inc. Long-Term
Disability Plan shall be considered to have a Disability. The
Administrator may require that a Participant submit to an examination from
time to time, but no more often than annually, at the expense of the
Company, by a competent physician or medical clinic, selected by the
Administrator, to confirm Disability. On the basis of such medical
evidence, the determination of the Administrator as to whether or not a
condition of Disability exists or continues shall be conclusive.
1.14 Employee means any full-time, or permanent part-time employee
(including any officer) of the Corporation.
1.15 ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
1.16 Financial Hardship means an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence, as determined by the Administrator, in his
complete and sole discretion.
1.17 Former Participant means a Participant who becomes ineligible to
receive an Award but who continues to have an Account hereunder.
1.18 Minimum Rate - means the average of the daily closing yields during
November of 10-year Treasury Notes.
1.19 Participant means an Employee who is approved by the CEBC, or the
Committee, as appropriate, to participate. Participants shall be limited
to key Employees of the Corporation who contribute the most to the growth
and profitability of the Company.
-Page 1.3-
<PAGE>
1.20 Plan Year means the calendar year.
-Page 1.4-
<PAGE>
1.21 Pre-tax Earnings means the consolidated earnings of the Company and its
consolidated Subsidiaries and equity affiliates before the deduction of
income taxes, minority interest and the amount to be set aside in the
Reserve as provided in Section 2.01. The Reserve shall not be adjusted for
any restatements of prior years' earnings.
1.22 PPG Stock means Common Stock of the Company.
1.23 Reserve means the aggregate of the amounts available for the making
of Awards as provided in Section 2.01.
1.24 Retired Participant means a Participant who elects to maintain an
Account in the Plan after his/her Retirement Date.
1.25 Salary means the regular base salary to be paid to a Participant by
the Corporation.
1.26 Subsidiary means any corporation of which fifty percent (50%) or more of
the outstanding voting stock or voting power is owned, directly or
indirectly, by the Company and any partnership or other entity in which
the Company has a fifty percent (50%) or more ownership interest.
1.27 Terminated Participant means a Participant who maintains an Account
in the Plan following his/her termination of employment from the
Corporation.
-Page 1.5-
<PAGE>
SECTION II - AWARDS
-------------------
2.01 The Reserve
-----------
(a) For purposes of establishing a Reserve, an amount shall be set aside
each year to be calculated as follows:
(1) Multiply consolidated shareholders' equity as of the beginning of
the year by 12%;
(2) Subtract the result of (1) above from Pre-tax Earnings for the
year;
(3) Multiply the result of (2) above by 5%.
(b) In no event, may the amount set aside exceed 20% of the cash dividends
paid on PPG Stock during the year.
(c) For purposes of subparagraph (a)(1) above, "shareholders' equity"
shall be exclusive of the aggregate par or stated value of preferred
stock outstanding, if any, and of any unpaid cumulative dividends
thereon.
(d) The Reserve shall be reduced by the amount of all Awards, including
any deferred amounts, first from the amount, if any, set aside for the
year to which the Awards relate, and then from the amounts which have
been in the Reserve for the longest period of time.
(e) Unawarded amounts set aside prior to the fourth preceding year shall
be automatically released from the Reserve and returned to income.
(f) The Reserve shall not be reduced by interest or dividend equivalents
on deferred amounts, dividends paid on restricted shares, negative
amounts resulting from the calculation of the amount to be set aside
each year, or the expenses of administering the Plan.
(g) Not later than the last day of the year to which the Awards relate,
the Committee may make an allocation (on the basis of estimates of the
amount to be set aside in the Reserve for such year and unawarded
amounts in the Reserve) to a group of Employees without determining
the amounts to be allocated to
-Page 2.1-
<PAGE>
individuals in such group and such allocation shall create a legal
obligation upon the Company to pay such amount to the individuals
comprising such group.
-Page 2.2-
<PAGE>
2.02 Awards
------
(a) The Committee shall determine or approve:
(1) The Participants;
(2) The maximum amount of all Awards to all Participants; and
(3) The amount and the form of the Award to each Participant.
(b) The Committee may delegate to another person(s) the authority to
determine:
(1) The Participants, other than Participants who are subject to
Section 16 of the Securities Exchange Act of 1934; and
(2) The amount of Awards to such Participants.
(c) Awards may be made only from the Reserve; provided, however, that the
Committee is under no obligation to make Awards; or, if Awards are
made, to award the total amount set aside in the Reserve each year.
(d) Awards may be made in the form of cash, shares of PPG Stock, or a
combination of both.
2.03 Payment of Awards
-----------------
(a) Awards to Participants will be made in the form of cash
("cash component"), shares of PPG Stock ("stock component"), or a
combination of both, as the Committee may determine.
(b) If all or any part of an Award is made in the form of shares
of PPG Stock, the number of such shares shall be determined by
applying the Conversion Formula. Fractional shares shall be paid in
cash.
If the number of such shares is specified, the Reserve shall
be reduced on account of such shares by an amount determined by
applying the Conversion Formula in reverse.
-Page 2.3-
<PAGE>
As to shares of PPG Stock which constitute all or any part
of an Award, the Committee may impose such restrictions concerning
their transferability and/or their forfeitability as are provided for
in Section 5.05.
(c) Payment of Awards shall be made to Participants not later
than March 15 of the year following the end of the year to which the
Awards relate.
2.04 Deferral of Awards
------------------
(a) Prior to the beginning of each Plan Year, a Participant
may elect to defer a percentage, in whole percentages only, of his/her
Award, as follows:
Minimum Deferral Maximum Deferral
---------------- ----------------
Cash component 10% 100%
Stock component 100% 100%
(b) Except as otherwise provided in paragraph (c) below, all
elections pursuant to this Section 2.04 must be filed with the
Administrator no later than the last day of the Plan Year prior to the
Plan Year to which an Award relates; and such election shall become
irrevocable as of the first day of the Plan Year to which it relates.
(c) Employees who are approved to participate during a Plan Year,
may make an election in accordance with this Section 2.04 within the
30-day period following notice to the Participant that he/she has been
approved.
(d) Amounts deferred in accordance with this section 2.04 shall
be credited to the Participant's account in the Deferred Compensation
Plan and shall be subject to the provisions of the Deferred
Compensation Plan.
(e) Amounts deferred in accordance with this Plan prior to
January 1, 1996, which have not been withdrawn by January 1, 1996,
shall be transferred to the Deferred Compensation Plan, in accordance
with the provisions of such Plan.
2.04.01 Investment Elections
--------------------
-Page 2.4-
<PAGE>
(a) At the time an election is made to defer all or a portion of the
cash component of a Award, the Participant must also designate
whether such amount is to be credited to the Interest Account, the
PPG Stock Account, or a combination of both in the Deferred
Compensation Plan.
(b) At the time an election is made to defer the stock component of an
Award, such deferral shall be credited to the PPG Stock Account in
the Deferred Compensation Plan.
(c) Amounts credited to the PPG Stock Account in the
Deferred Compensation Plan shall be credited in the form of
whole and fractional Stock Account Shares determined according
to the Conversion Formula.
2.04.02 In-Service Withdrawal Elections
-------------------------------
(a) Subject to the provisions of this Section 2.04.02, at the time an
election is made to defer all or a portion of the cash component of
an Award, a Participant may designate all or a portion of the cash
component of such deferred amount, not including any earnings
thereon, to be paid during a specified quarter/year.
(b) Withdrawal elections made pursuant to this Section may not specify
a year which is any sooner than the fourth Plan Year after the Plan
Year in which the deferred amount is credited to the Participant's
Account.
(c) Any amount subject to withdrawal pursuant to this
Section, must be invested in the Interest Account in the
Deferred Compensation Plan.
(d) Any election made in accordance with this
subsection 2.04.02 shall be irrevocable.
-Page 2.5-
<PAGE>
SECTION III - CAPITAL ENHANCEMENT ACCOUNT
-----------------------------------------
3.01 Deferrals of Salary to Capital Enhancement Account
--------------------------------------------------
(a) Subject to any minimum/maximum limits established by the
Committee, each prospective Participant, or such prospective
Participant as the Committee deems appropriate, may be given an
opportunity to make an election to defer payment of all or any part of
his/her Salary and/or Award, to be credited to the Capital Enhancement
Account.
(b) (1) Subject to subparagraph (2) below, interest equivalents shall be
credited on amounts deferred to the Capital Enhancement Account
as follows:
CEA-1 CEA-2
----- -----
Minimum Rate 0% - 1987
plus 5% 10% - 1988
13% - 1989
15% - 1990
17% - 1991 and
thereafter
(2) Except as otherwise provided in subparagraph (3)
below, when a Participant's employment terminates, including
retirement, prior to age 62, interest equivalents shall be
recalculated at the Minimum Rate for both CEA-1 and CEA-2, for
the total period such amounts were invested in the Capital
Enhancement Account, unless the Committee, in its sole
discretion, specifically determines such Participant is entitled
to the interest rate described in subparagraph (1) above.
(3) In the case of a Participant whose termination of
employment prior to age 62 is the result of a divestiture, such
Participant shall be entitled to the interest rate described in
subparagraph (1) above.
(c) Designations to credit a deferred amount to the Capital
Enhancement Account shall be made in such terms on such bases as the
Administrator may prescribe.
-Page 3.1-
<PAGE>
3.02 Payment of Deferrals from the Capital Enhancement Account
---------------------------------------------------------
Payments from the Capital Enhancement Account shall be made in
cash.
3.03 Pre-Retirement Death Benefit
----------------------------
If a Participant dies prior to retirement, the Company shall pay
a pre-retirement death benefit to such Participant's Beneficiary equal to:
(a) For a Participant who had a balance in his/her CEA-2 account
at the time of death, the balance in the CEA-2 account; and
(b) For Participants who had a balance in his/her CEA-1 account
at the time of death, and who provided evidence of insurability at the
time of enrollment in CEA-1, the pre-retirement death benefit shall be
equal the greater of:
(1) The CEA-1 account balance; or
(2) The original amount deferred into the CEA-1 account
(not including interest equivalents credited thereon) times the
applicable factor in the following TABLE:
TABLE
-----
Attained Age on
August 1, 1985 Factor
--------------- ------
44 and under 15
45 to 54 9
55 and older 8
-Page 3.2-
<PAGE>
SECTION IV - WITHDRAWAL PROVISIONS
----------------------------------
4.01 Withdrawals at/after a Participant's Retirement Date
----------------------------------------------------
(a) A Participant may elect a payment schedule applicable to
his/her Account provided such election is filed with the
Administrator:
(1) Prior to the Participant's Retirement Date; and
(2) In the year prior to the year the first payment is
to be made and, in all cases, at least six months/ten days prior
to the time the first payment is to be made.
(b) Participants may elect:
(1) One lump-sum payment; or
(2) Quarterly, semiannual or annual installments - to
be made over a period of up to a maximum of ten years.
(c) A Participant may delay the first payment; provided, however,
that, in all cases, payments must be completed no later than the month
preceding the month in which the Participant's 75th birthday occurs.
(d) The payment schedule elected by the Participant shall apply
to his/her entire Account.
Annual installments shall be each year on the first of the
month selected by the Participant as the month for such payments to
commence.
Semiannual installments shall be paid twice each year with
the first yearly payment paid the first of the month selected by the
Participant as the month for such payments to commence, and the second
yearly payment paid the first of the month which is six month later.
Quarterly installments shall be paid four times each year
with the first yearly payment paid the first of the month selected by
the Participant as the month for such payments to commence,
-Page 4.1-
<PAGE>
and the second, third and fourth payments following with three month
between each such payment.
-Page 4.2-
<PAGE>
Each installment payment shall be calculated by dividing the
Participant's account balance, increased by the projected rate of
interest to be earned during the period of the payment schedule, by
the remaining number of installments -(e.g.: Ten annual installments
----
shall be paid: 1st installment = 1/10 of Account as adjusted; 2nd
installment = 1/9; 3rd installment = 1/8, etc.).
(e) In the event a Participant fails to file a payment schedule
election with the Administrator prior to his/her Retirement Date,
his/her Account shall be paid in one lump sum in the year following
the year of such Retirement Date and shall be paid during the first
month in such year which is at least six months/ten days following
such Retirement Date.
4.02 Withdrawals following Termination
---------------------------------
Participants shall receive their entire Account balance, paid in
a lump sum as soon as possible following their termination of employment.
4.03 Withdrawals in the event of Disability
--------------------------------------
(a) In the event a Participant becomes disabled, he/she shall
receive payments in accordance with the election filed with the
Administrator at the time the deferral election was filed.
(b) As provided in such election, the Participant shall receive:
(1) One lump-sum payment; or
(2) Quarterly, semiannual or annual installments - to
be made over a period of up to a maximum of ten years.
(c) The payment schedule elected by the Participant shall apply
to his/her entire Account.
Annual installments shall be each year on the first of the
month selected by the Participant as the month for such payments to
commence.
Semiannual installments shall be paid twice each year with
the first yearly payment paid the first of the month selected by the
Participant as the month for such payments to commence, and the
second yearly payment paid the first of the month which is six month
later.
-Page 4.3-
<PAGE>
Quarterly installments shall be paid four times each year
with the first yearly payment paid the first of the month selected by
the Participant as the month for such payments to commence, and the
second, third and fourth payments following with three months between
each such payment.
Each installment payment shall be calculated by dividing the
Participant's account balance, increased by the projected rate of
interest to be earned during the period of the payment schedule, by
the remaining number of installments -(e.g.: Ten annual installments
----
shall be paid: 1st installment = 1/10 of Account as adjusted; 2nd
installment = 1/9; 3rd installment = 1/8, etc.).
4.04 Withdrawals following a Participant's death
-------------------------------------------
(a) Death prior to the Participant's Payment Election
-------------------------------------------------
In the event of a Participant's death prior to the time
he/she files an irrevocable payment election in accordance with
section 4.01 or 4.03, the Participant's entire Account shall be paid
to the Participant's Beneficiary as soon as possible following the
Participant's death.
(b) Death on or after a Participant's Payment Election
--------------------------------------------------
In the event of a Participant's death on or after the time
he/she files an irrevocable payment election in accordance with
section 4.01 or 4.03, the Participant's Beneficiary shall receive the
remaining balance of the Participant's Account in accordance with the
payment schedule filed by the Participant.
4.05 Withdrawals upon finding of Financial Hardship
-----------------------------------------------
(a) Upon a finding that the Participant, or Beneficiary if the
Participant is deceased, has suffered a Financial Hardship, the
Administrator may, in his sole discretion, permit the acceleration of
a withdrawal under the Plan in an amount reasonably necessary to
alleviate such Financial Hardship.
(b) The Participant shall be required to exhaust all our sources
of funds, other than the PPG Savings Plan, before the Administrator
will consider an accelerated withdrawal in accordance with this
section 4.05.
-Page 4.4-
<PAGE>
4.06 Small Account Provision
-----------------------
(a) Each scheduled withdrawal must equal a minimum of $5,000, or
100 shares of PPG Stock.
(b) If the remaining balance in a Participant's Account is less
than $5,000, or 100 shares of PPG Stock, the Administrator may, at his
discretion, distribute the remainder of the Account.
-Page 4.5-
<PAGE>
SECTION V SPECIFIC PROVISIONS
-----------------------------
RELATED TO BENEFITS
-------------------
5.01 Nonassignability
----------------
(a) Except as provided in paragraph (b) below and in section
5.02, no person shall have any power to encumber, sell, alienate, or
otherwise dispose of his/her interest under the Plan prior to actual
payment to and receipt thereof by such person; nor shall the
Administrator recognize any assignment in derogation of the foregoing.
No interest hereunder of any person shall be subject to attachment,
execution, garnishment or any other legal, equitable, or other
process.
(b) Paragraph (a) above shall not apply to the extent that a
Participant's interest under the Plan is alienated pursuant to a
"Qualified Domestic Relations Order" ("QDRO") as defined in (S)414(p)
of the Code.
(1) The administrator is authorized to adopt such
procedural and substantive rules and to take such procedural and
substantive actions as the Administrator may deem necessary or
advisable to provide for the payment of amounts from the Plan to
an Alternate Payee as provided in a QDRO. Such rules and actions
shall be consistent with the principal purposes of the Plan.
(2) Under no circumstances may the Administrator accept
an order as a QDRO following a Participant's death.
(3) An Alternate Payee may not establish an account in
the Plan. All amounts taken from a Participant's Account, as
provided in a QDRO, must be distributed as soon as possible
following the acceptance of an order as a QDRO.
(4) In the sole discretion of the Administrator, a
Participant's scheduled withdrawal or otherwise requested
withdrawal may be delayed for a period, not to exceed six months,
if the Administrator has notice that part or all of the
Participant's Account may be subject to alienation pursuant to a
QDRO.
-Page 5.1-
<PAGE>
5.02 Beneficiary Designation
-----------------------
(a) The Participant shall have the right, at any time, to
designate any person(s) as Beneficiary. The designation of a
Beneficiary shall be effective on the date it is received by the
Administrator, provided the Participant is alive on such date.
(b) Each time a Participant submits a new Beneficiary designation
form to the Administrator, such designation shall cancel all prior
designations.
(c) In the case of a Participant who does not have a valid
Beneficiary designation on file at the time of his/her death, or in
the case the designated Beneficiary predeceases the Participant, the
entire balance in the Participant's Capital Enhancement Account shall
be paid as soon as possible to the Participant's estate.
5.03 Limited Right to Assets of the Corporation
------------------------------------------
The Benefits paid under the Plan shall be paid from the general
funds of the Company, and the Participants and any Beneficiary shall be no
more than unsecured general creditors of the Company with no special or
prior right to any assets of the Company for payment of any obligations
hereunder.
5.04 Protective Provisions
---------------------
The Participant or Beneficiary shall cooperate with the Administrator by
furnishing any and all information requested by the Administrator in order
to facilitate the payment of benefits hereunder. If a Participant refuses
to cooperate, he/she may be deemed ineligible to receive a distribution
and/or ineligible to continue to actively participate in the Plan.
5.05 Restricted Shares of PPG Stock
------------------------------
(a) The Committee may, on such terms as it deems appropriate,
restrict the transferability of all or any number of such shares as
constitute all or any part of an Award to installments over periods
not exceeding five years and/or provide for the forfeitability of all
or any number of such shares over a period not exceeding five years.
During the period of restriction as to transferability and/or
provision as to forfeitability, Participants
-Page 5.2-
<PAGE>
shall receive dividends and have voting and other shareholders'
rights as to such shares.
-Page 5.3-
<PAGE>
(b) No restriction on the transferability and/or provisions as to
the forfeitability of any shares of PPG Stock may be imposed so as to
obtain beyond the normal retirement date of the Participant awarded
such shares. Further, all restrictions on the transferability and/or
provisions as to the forfeitability of any shares of PPG Stock shall
be such as to terminate in the event of death, total and permanent
disability or early retirement, upon the occurrence of a Change in
Control, or upon the occurrence of the commencement of a tender offer
or an exchange offer.
(c) Any restrictions on the transferability and/or provisions as
to the forfeitability of any shares of PPG Stock shall be reflected in
a legend imprinted on the certificate(s) representing such shares.
5.06 The shares of PPG Stock delivered under the Plan may be either authorized
but unissued shares or issued shares acquired by the Company and held in
its Treasury.
5.07 Withholding
-----------
The Participant or Beneficiary shall make appropriate arrangements with
the Administrator for satisfaction of any federal, state or local income
tax withholding requirements and Social Security or other employee tax
requirements applicable to the payment of benefits under the Plan. If no
other arrangements are made, the Administrator may provide for such
withholding and tax payments by any means he deems appropriate, in his
sole discretion.
5.08 Forfeiture Provision
--------------------
In the event the Company becomes aware that a Participant is engaged or
employed as a business owner, employee, or consultant in any activity
which is in competition with any line of business of the Corporation, or
has engaged in any activity otherwise determined to be detrimental to the
Company, the Administrative Subcommittee may:
(a) Terminate such Participant's participation in the Plan, and
distribute the entire amount in the Participant's Account in a lump
sum;
(b) Recalculate all earnings in the Account as though all
investments had been accruing interest at the Minimum Rate for the
total period such amounts were credited in the Account;
-Page 5.4-
<PAGE>
(c) Apply both (a) and (b) above; or
(d) Apply any other diminution or forfeiture of benefits. which
is specifically approved by the Administrative Subcommittee.
For purposes of this Section 5.08, the Administrative Subcommittee
shall consist of the Senior Vice President, Human Resources and
Administration, the Director, Compensation and Benefits, and a
representative of the Law Department, as appointed by the General
Counsel of PPG. The Administrative Subcommittee shall report all of
its activities to the Committee.
-Page 5.5-
<PAGE>
SECTION VI ADMINISTRATION & CLAIMS
----------------------------------
6.01 Administration
--------------
(a) The Committee shall be comprised of at least three members of
the Board, none of whom shall, at the time of exercising discretion in
administering the Plan, be eligible, or have been eligible at any time
within one year, for selection as a person, to whom stock may be
allocated or to whom stock options or stock appreciation rights may be
granted pursuant to the Plan or any other plan of the Company or any
of its affiliates entitling Participants therein to acquire stock,
stock options or stock appreciation rights of the Company or any of
its affiliates.
The Committee, for purposes of administering the Plan, shall
meet and act as necessary to determine or approve the maximum amount
of Awards to all Participants, the form of Awards to Participants and
the amount of Awards to Participants subject to Section 16 of the
Securities Exchange Act of 1934 and such other Participants as the
Committee deems appropriate.
(b) The Administrator shall administer the Plan and interpret,
construe and apply its provisions in accordance with its terms. The
Administrator shall have the complete authority to:
(1) Determine eligibility for benefits;
(2) Construe the terms of the Plan; and
(3) Control and manage the operation of the Plan.
(c) The Administrator shall have the authority to establish rules
for the administration and interpretation of the Plan and the
transaction of its business. The determination of the Administrator
as to any disputed question shall be conclusive. All actions,
decisions and interpretations of the Administrator shall be performed
in a uniform and nondiscriminatory manner.
(d) The Administrator may employ counsel and other agents and may
procure such clerical, accounting and other services as the
Administrator may require in carrying out the provisions of the Plan.
-Page 6.1-
<PAGE>
(e) The Administrator shall not receive any compensation from the
Plan for his services.
(f) The Corporation shall indemnify and save harmless the
Administrator against all expenses and liabilities arising out of the
Administrator's service as such, excepting only expenses and
liabilities arising from the Administrator's own gross negligence or
willful misconduct, as determined by the Committee.
6.02 Claims
------
(a) Every person receiving or claiming benefits under the Plan
shall be conclusively presumed to be mentally and physically competent
and of age. If the Administrator determines that such person is
mentally or physically incompetent or is a minor, payment shall be
made to the legally appointed guardian, conservator, or other person
who has been appointed by a court of competent jurisdiction to care
for the estate of such person, provided that proper proof of such
appointment is furnished in a form and manner suitable to the
Administrator. Any payment made under the provisions of the paragraph
(a) shall be a complete discharge of any liability therefor under the
Plan. The Administrator shall not be required to see to the proper
application of any such payment.
(b) Claims Procedure
----------------
Claims for benefits by a Participant or Beneficiary shall be
filed, in writing, with the Administrator. If the Administrator
denies the claim, in whole or in part, the Administrator shall furnish
a written notice to the claimant setting forth a statement of the
specific reasons for the denial of the claim, references to the
specific provisions of the Plan on which the denial is based, a
description of any additional material or information necessary to
perfect the claim and an explanation of why such material or
information is necessary, and an explanation of the review procedure.
Such notice shall be written in a way calculated to be understandable
by the claimant.
The written notice from the Administrator shall be furnished
to the claimant within ninety (90) days following the date on which
the claim was filed, except that if special circumstances require an
extension of time, the Administrator shall notify the claimant of this
need within such 90-day period. Such notice shall inform the claimant
the nature of the circumstances necessitating the
-Page 6.2-
<PAGE>
need for additional time and the date by which the claimant will be
furnished with the decision regarding the claim. Such extension may
provide for up to an additional 90 days.
-Page 6.3-
<PAGE>
(c) Review Procedure
----------------
Within sixty (60) days of the date the Administrator denies
a claim, in whole or in part, the claimant, or his/her authorized
representative, may request that the decision be reviewed. Such
request shall be in writing, shall be filed with the Administrator,
and shall contain the following information:
(1) The date on which the denial was received by the
claimant;
(2) The date on which the claimant's request for review
was filed with the Administrator;
(3) The specific portions of the denial which the
claimant requests the Administrator to review;
(4) A statement setting forth the basis on which the
claimant believes that a review of the decision is required;
(5) Any written material which the claimant desires the
Administrator to take into consideration in reviewing the claim.
The Administrator shall afford the claimant, or his/her
authorized representative, an opportunity to review documents
pertinent to the claim, and shall conduct a full and fair review of
the claim and its denial. The Administrator's decision on such review
shall be furnished to the claimant in writing, and shall be written in
a manner calculated to be understandable to the claimant. Such
decision shall include a statement of the specific reason(s) for the
decision, including references to the specific provision(s) of the
Plan relied upon.
The written notice from the Administrator shall be furnished
to the claimant within sixty (60) days following the date on which the
request for review was received by the Administrator, except that if
special circumstances require an extension of time, the Administrator
shall notify the claimant of this need within such 60-day period.
Such notice shall inform the claimant the nature of the circumstances
necessitating the need for additional time and the date by which the
claimant will be furnished with the decision regarding the claim.
Such extension may provide for up to an additional 60 days.
-Page 6.4-
<PAGE>
SECTION VII AMENDMENT AND TERMINATION
-------------------------------------
7.01 Amendment of the Plan
---------------------
(a) Except as provided in paragraph (b) below, the Board or the
Committee may amend the Plan, in whole or in part, at any time.
(b) The Plan shall not be amended, without shareholder approval,
so as to increase the percentage of Pre-tax Earnings to be set aside
in the Reserve each year or extend the period of time after which
unawarded amounts are automatically released from the Reserve and
returned to income.
7.02 Termination of the Plan
-----------------------
The Board or the Committee may terminate the Plan at any time.
Upon a termination pursuant to this Section 7.02, the Committee has the
sole discretion to determine distribution schedules for any or all
Accounts, notwithstanding a Participant's previous distribution schedule.
7.03 Company Action.
---------------
The Company's power to amend or terminate the Plan shall be
exercisable by the Board or by the Committee, or by any individual
authorized by the Board to exercise such powers.
7.04 Constructive Receipt
--------------------
In the event the Administrator determines that amounts deferred
under the Plan have been constructively received by Participants and must
be recognized as income for federal income tax purposes, distributions
shall be made to Participants, as determined by the Administrator. The
determination of the Administrator under this section 7.04 shall be
binding and conclusive.
-Page 7.1-
<PAGE>
SECTION VIII MISCELLANEOUS
--------------------------
8.01 Successors of the Company
-------------------------
The rights and obligations of the Company under the Plan shall
inure to the benefit of, and shall be binding upon, the successors and
assigns of the Company.
8.02 ERISA Plan
----------
The Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for "a select group of management
or highly compensated employees" within the meaning of Sections 201, 301
and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title
I of ERISA.
8.03 Trust
-----
The Company shall be responsible for the payment of all benefits under the
Plan. At its discretion, the Company may establish one or more grantor
trusts for the purpose of providing for payment of benefits under the
Plan. Such trust(s) may be irrevocable, but the assets thereof shall be
subject to the claims of the Company's creditors. Benefits paid to the
Participant from any such trust shall be considered paid by the Company
for purposes of meeting the obligations of the Company under the Plan.
8.04 Employment Not Guaranteed
-------------------------
Nothing contained in the Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any Participant any
right to continued employment with the Corporation.
8.05 Gender, Singular and Plural
---------------------------
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, as the identity of the person(s) requires.
As the context may require, the singular may be read as the plural and the
plural as the singular.
8.06 Headings
--------
-Page 8.1-
<PAGE>
The headings of the Sections, subsections and paragraphs of the Plan are
for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
8.07 Validity
--------
If any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect, the validity of
any other provision(s) of the Plan.
8.08 Waiver of Breach
----------------
The waiver by the Company of any breach of any provision of the Plan by a
Participant or Beneficiary shall not operate or be construed as a waiver
of any subsequent breach.
8.09 Applicable Law
--------------
The Plan is intended to conform and be governed by ERISA. In any
case where ERISA does not apply, the Plan shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
8.10 Notice
------
Any notice required or permitted to be given to the Administrator under
the Plan shall be sufficient if in writing and either hand-delivered, or
sent by first class mail to the principal office of the Company at One PPG
Place, Pittsburgh, PA 15272, directed to the attention of the
Administrator. Such notice shall be deemed given as of the date of
delivery.
-Page 8.2-
<PAGE>
SECTION IX CHANGE IN CONTROL
----------------------------
9.01 Change in Control
-----------------
(a) Upon, or in reasonable anticipation of, a Change in Control
(as defined in section 9.02):
(1) Awards in the form of cash shall be made for the
year during which the Change in Control occurs, and then paid
immediately to a trustee on such terms as the Senior Vice
President, Human Resources and Administration and the Senior Vice
President, Finance, or either of them, or their successors, shall
deem appropriate (including such terms as are appropriate to
cause such payment, if possible, not to be a taxable event to
Participants) in order to cause the Awards so paid to be paid
either not later than the end of the first calendar quarter
following the end of the year to which the Awards relate or on a
deferred basis in accordance with the elections of Participants
then in effect as to the timing of the receipt of Awards for such
year.
(2) Participants who are eligible to receive an Award
for the Plan Year in which a Change in Control occurs shall be
eligible to receive an Award for the Plan Year following the
Change in Control.
(3) The amount of the Award payable to each Participant
shall be:
one-half of the regular Award if the Change in Control
occurs during the first six months of the year; or
the full regular Award, if the Change in Control occurs
during the second six months of the year
either calculated at a rating of 12 for all performance
categories.
(4) All deferred amounts credited to the Capital
Enhancement Account shall be paid immediately to a trustee on
such terms as the Senior Vice President, Human Resources and
Administration and the Senior Vice President, Finance, or either
of them, or their
-Page 9.1-
<PAGE>
successors shall deem appropriate (including
such terms as are appropriate to cause such payment, if possible,
not to be a taxable event to Participants) in order to give
effect to the elections of Participants with respect to the
timing of the receipt of such deferred amounts.
(b) By way of example of the operation of paragraph (a) above:
If the Change in Control occurred on August 1 of a Plan
Year, a Participant in a position with 1000 total points and an
incentive award value of $1.75 per point would receive an Award of no
less than $21,000 calculated as follows: 1000 x 1.75 x 12 = $21,000.
If the Change in Control occurred on April 1 of a Plan Year,
such Participant would receive $10,500.
If the Plan were to be continued to the end of the year, and
performance exceeded the 12 rating, a higher Award would be paid.
(c) Notwithstanding any other provision of this section, if an
Award ultimately made for such Plan Year is greater than the Award
made pursuant to this section, the Participant shall be entitled to
the difference between such Awards.
If the Participant has elected his/her Award to be deferred,
payment of such difference shall be made to a trustee in accordance
with the provisions set forth in subparagraph (a)(4) above.
(d) For purposes of this section, the fair market value of a
share of PPG Stock on any date shall be the closing sale price as
reported for such date (or, if no price is reported for such date, for
the next preceding date for which a price is reported) on the New York
Stock Exchange-Composite Tape.
9.02 Definition: Change in Control
------------------------------
A "Change in Control" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of
-Page 9.2-
<PAGE>
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities").
-Page 9.3-
<PAGE>
For purposes of this subsection (a) the following
acquisitions shall not constitute a Change in Control:
Any acquisition directly from the Company;
Any acquisition by the Company;
Any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or
Any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of paragraph (c) of
this section 9.02.
(b) Individuals who, as of September 20, 1995, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to such date whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination:
(i) All or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
-Page 9.4-
<PAGE>
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be;
(ii) No Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Business
Combination; and
(iii) At least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or
(e) A majority of the Board otherwise determines that a Change in
Control shall have occurred.
-Page 9.5-
<PAGE>
Exhibit 11
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income before cumulative
effect of changes in methods
of accounting............... $767.6 $514.6 $295.0 $319.4 $201.4
Cumulative effect on prior
years of changes in methods
of accounting:
Other postretirement
benefits.................. -- -- (357.1) -- --
Postemployment benefits.... -- -- (6.1) -- --
Income taxes............... -- -- 90.4 -- --
Major repairs to glass
and fiber glass
melting facilities........ -- -- -- -- 74.8
------ ------ ------ ------ ------
Net income.................. $767.6 $514.6 $ 22.2 $319.4 $276.2
====== ====== ====== ====== ======
Weighted average number of
shares of common stock
outstanding............... 202.0 211.9 212.6 212.2 212.4
====== ====== ====== ====== ======
Weighted average number of
shares of common stock
outstanding and common
stock equivalents......... 204.2 213.4 214.4 213.6 213.4
====== ====== ====== ====== ======
Primary earnings per share:
Income before cumulative
effect of changes in
methods of accounting...... $ 3.80 $ 2.43 $ 1.39 $ 1.51 $ 0.95
Cumulative effect on
prior years of changes in
methods of accounting:
Other postretirement
benefits................. -- -- (1.68) -- --
Postemployment benefits... -- -- (0.03) -- --
Income taxes.............. -- -- 0.42 -- --
Major repairs to glass
and fiber glass
melting facilities....... -- -- -- -- 0.35
------ ------ ------ ------ ------
Earnings per share.......... $ 3.80 $ 2.43 $ 0.10 $ 1.51 $ 1.30
====== ====== ====== ====== ======
</TABLE>
<PAGE>
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1995
(Continued)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Fully diluted earnings
per share:
Income before cumulative
effect of changes in
methods of accounting..... $ 3.76 $ 2.41 $ 1.38 $ 1.50 $ 0.94
Cumulative effect on prior
years of changes in
methods of accounting:
Other postretirement
benefits.............. -- -- (1.67) -- --
Postemployment benefits. -- -- (0.03) -- --
Income taxes............ -- -- 0.42 -- --
Major repairs to glass
and fiber glass
melting facilities.... -- -- -- -- 0.35
------ ------ ------ ------ ------
Earnings per share.......... $ 3.76 $ 2.41 $ 0.10 $ 1.50 $ 1.29
====== ====== ====== ====== ======
</TABLE>
NOTES:
The common stock equivalents consist of the shares reserved for issuance under
PPG's stock option plan and deferred under PPG's incentive compensation,
management award and earnings growth plans.
The fully diluted earnings per share calculations are submitted in accordance
with Regulation S-K item 601(b)(11) although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because they result in dilution of less than
three percent.
All amounts are in millions except per share data.
<PAGE>
Exhibit 13
FINANCIAL AND OPERATING REVIEW
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
PPG Industries, Inc.:
We have audited the accompanying balance sheet of PPG Industries, Inc. and sub-
sidiaries as of December 31, 1995 and 1994, and the related statements of in-
come and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, such financial statements present fairly, in all material re-
spects, the financial position of PPG Industries, Inc. and subsidiaries as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in con-
formity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, effective January 1, 1993,
the Company changed its methods of accounting for income taxes, postretirement
benefits other than pensions and postemployment benefits.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 18, 1996
MANAGEMENT STATEMENT
Responsibility for Preparation of the Financial Statements
The management of PPG Industries, Inc. is responsible for the preparation of
the financial statements included in this Annual Report.
To ensure the reliability of financial data, PPG has established, and main-
tains, an internal control system. We believe the internal controls in use give
reasonable assurance that financial reports do not contain any material mis-
statement.
We believe that the financial statements and related notes in this report are
accurate in all material respects, and that they were prepared according to
generally accepted accounting principles. The financial statements include
amounts that are based on best estimates and judgments of management.
We believe, further, that the other financial information contained in this
Annual Report is consistent with the financial statements.
JERRY E. DEMPSEY
Chairman of the Board
and Chief Executive Officer
WILLIAM H. HERNANDEZ
Senior Vice President, Finance
<PAGE>
STATEMENT OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year
- ------------------------------------------------------------------------------
(Millions, except per share amounts) 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $7,057.7 $6,331.2 $5,753.9
- ------------------------------------------------------------------------------
Cost of sales 4,212.1 3,865.5 3,633.3
- ------------------------------------------------------------------------------
Gross profit 2,845.6 2,465.7 2,120.6
- ------------------------------------------------------------------------------
Other expenses
Selling, general and administrative 977.1 919.0 871.7
----------------------------------------------------------------------------
Depreciation 331.5 317.5 331.1
----------------------------------------------------------------------------
Research and development--net (See Note 13) 236.4 218.1 201.2
----------------------------------------------------------------------------
Interest 84.6 86.1 103.1
----------------------------------------------------------------------------
Business divestitures and realignments (See
Note 6) -- 85.0 126.4
----------------------------------------------------------------------------
Other charges 142.2 113.8 80.0
- ------------------------------------------------------------------------------
Total other expenses 1,771.8 1,739.5 1,713.5
- ------------------------------------------------------------------------------
Other earnings (See Note 12) 188.5 129.5 137.0
- ------------------------------------------------------------------------------
Income before income taxes and minority interest 1,262.3 855.7 544.1
- ------------------------------------------------------------------------------
Income taxes (See Note 7) 479.7 325.2 236.2
- ------------------------------------------------------------------------------
Minority interest 15.0 15.9 12.9
- ------------------------------------------------------------------------------
Income before cumulative effect of accounting
changes 767.6 514.6 295.0
- ------------------------------------------------------------------------------
Cumulative effect of accounting changes (See
Note 2)
Other postretirement and postemployment bene-
fits, net of
income taxes of $231.9 -- -- (363.2)
----------------------------------------------------------------------------
Income taxes -- -- 90.4
- ------------------------------------------------------------------------------
Net income $ 767.6 $ 514.6 $ 22.2
==============================================================================
Earnings per share
Income before cumulative effect of accounting
changes $ 3.80 $ 2.43 $ 1.39
- ------------------------------------------------------------------------------
Cumulative effect of accounting changes
Other postretirement and postemployment bene-
fits -- -- (1.71)
----------------------------------------------------------------------------
Income taxes -- -- .42
- ------------------------------------------------------------------------------
Earnings per share $ 3.80 $ 2.43 $ .10
==============================================================================
Average shares outstanding 202.0 211.9 212.6
==============================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31
- -------------------------------------------------------------------------------
(Millions) 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 105.6 $ 62.1
-----------------------------------------------------------------------------
Receivables (See Note 3) 1,245.1 1,228.9
-----------------------------------------------------------------------------
Inventories (See Note 3) 737.5 686.4
-----------------------------------------------------------------------------
Deferred income taxes (See Note 7) 119.5 117.4
-----------------------------------------------------------------------------
Other 67.8 73.4
- -------------------------------------------------------------------------------
Total current assets 2,275.5 2,168.2
- -------------------------------------------------------------------------------
Property (See Note 3) 6,464.0 6,162.7
- -------------------------------------------------------------------------------
Less accumulated depreciation 3,629.2 3,420.4
- -------------------------------------------------------------------------------
Property--net 2,834.8 2,742.3
- -------------------------------------------------------------------------------
Investments 223.8 277.4
- -------------------------------------------------------------------------------
Other assets (See Note 8) 860.2 706.0
- -------------------------------------------------------------------------------
Total $ 6,194.3 $ 5,893.9
===============================================================================
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt and current portion of long-term debt
(See Note 4) $ 485.3 $ 370.7
-----------------------------------------------------------------------------
Accounts payable and accrued liabilities (See Note 3) 1,103.5 1,034.4
-----------------------------------------------------------------------------
Income taxes (See Note 7) 40.6 19.4
- -------------------------------------------------------------------------------
Total current liabilities 1,629.4 1,424.5
- -------------------------------------------------------------------------------
Long-term debt (See Note 4) 735.5 773.4
- -------------------------------------------------------------------------------
Deferred income taxes (See Note 7) 354.9 302.7
- -------------------------------------------------------------------------------
Accrued pensions (See Note 8) 91.1 62.4
- -------------------------------------------------------------------------------
Other postretirement benefits (See Note 8) 517.4 505.5
- -------------------------------------------------------------------------------
Other liabilities 228.6 198.1
- -------------------------------------------------------------------------------
Minority interest 68.2 70.3
- -------------------------------------------------------------------------------
Total liabilities 3,625.1 3,336.9
- -------------------------------------------------------------------------------
Shareholders' equity (See Note 5)
Common stock 484.3 484.3
-----------------------------------------------------------------------------
Additional paid-in capital 81.3 67.5
-----------------------------------------------------------------------------
Retained earnings 4,249.0 3,717.1
-----------------------------------------------------------------------------
Treasury stock, at cost (2,059.6) (1,488.6)
-----------------------------------------------------------------------------
Unearned compensation (179.2) (183.0)
-----------------------------------------------------------------------------
Minimum pension liability adjustment (10.4) (1.7)
-----------------------------------------------------------------------------
Currency translation adjustment 3.8 (38.6)
- -------------------------------------------------------------------------------
Total shareholders' equity 2,569.2 2,557.0
- -------------------------------------------------------------------------------
Total $ 6,194.3 $ 5,893.9
===============================================================================
</TABLE>
Shares outstanding were 194,198,546 and 206,987,769 at Dec. 31, 1995 and 1994,
respectively.
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year
- --------------------------------------------------------------------------------
(Millions) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 767.6 $ 514.6 $ 22.2
- --------------------------------------------------------------------------------
Adjustments to reconcile to cash from operations
Cumulative effect of accounting changes (See
Note 2) -- -- 272.8
------------------------------------------------------------------------------
Depreciation and amortization 351.6 335.2 350.2
------------------------------------------------------------------------------
Business divestitures and realignments -- 85.0 126.4
------------------------------------------------------------------------------
Increase in receivables (29.0) (263.7) (33.7)
------------------------------------------------------------------------------
(Increase) decrease in inventories (47.1) (25.6) 27.4
------------------------------------------------------------------------------
Increase in accounts payable, accrued liabilities
and
income taxes payable 75.8 123.0 2.5
------------------------------------------------------------------------------
Change in other noncurrent assets and liabilities
and other-net (46.9) (77.4) (27.1)
- --------------------------------------------------------------------------------
Cash from operating activities 1,072.0 691.1 740.7
- --------------------------------------------------------------------------------
Investing activities
Capital spending
Additions to property and investments (447.8) (321.8) (257.6)
------------------------------------------------------------------------------
Business acquisitions, net of cash balances ac-
quired (6.6) (33.9) (35.8)
- --------------------------------------------------------------------------------
Proceeds from business divestitures 59.9 28.5 4.9
- --------------------------------------------------------------------------------
Reductions of property and investments 119.0 81.8 52.0
- --------------------------------------------------------------------------------
Cash used for investing activities (275.5) (245.4) (236.5)
- --------------------------------------------------------------------------------
Financing activities
Net change in borrowings with maturities of three
months or less 13.3 (5.7) (3.5)
- --------------------------------------------------------------------------------
Proceeds from other short-term debt 48.3 44.1 19.3
- --------------------------------------------------------------------------------
Repayment of other short-term debt (66.0) (27.3) (8.5)
- --------------------------------------------------------------------------------
Proceeds from long-term debt 118.1 23.2 9.3
- --------------------------------------------------------------------------------
Repayment of long-term debt (50.9) (33.0) (199.4)
- --------------------------------------------------------------------------------
Loans to employee stock ownership plan (25.0) (22.0) --
- --------------------------------------------------------------------------------
Repayment of loans by employee stock ownership plan 28.8 21.5 19.7
- --------------------------------------------------------------------------------
Purchase of treasury stock (588.0) (280.0) (81.2)
- --------------------------------------------------------------------------------
Issuance of treasury stock 7.4 19.4 13.2
- --------------------------------------------------------------------------------
Dividends paid (238.9) (237.8) (220.8)
- --------------------------------------------------------------------------------
Cash used for financing activities (752.9) (497.6) (451.9)
- --------------------------------------------------------------------------------
Effect of currency exchange rate changes on cash
and cash equivalents (.1) 2.1 (1.8)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equiva-
lents 43.5 (49.8) 50.5
- --------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 62.1 111.9 61.4
- --------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 105.6 $ 62.1 $ 111.9
================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
PERFORMANCE IN 1995 COMPARED WITH 1994
Overall Performance
Sales in 1995 totaled $7.1 billion, up from the prior year's $6.3 billion. The
majority of the sales increase was attributable to higher overall prices, par-
ticularly for our chlor-alkali, fiber glass and flat glass products. Also con-
tributing to the sales increase were higher volumes from each of our business
segments, combined with the favorable effects of foreign currency translation.
PPG's gross profit percentage increased to 40% in 1995 from 39% in 1994, pri-
marily as a result of the higher sales prices in all segments. Partially off-
setting the price increases was the negative effects of inflation, particularly
on raw material costs.
Net income of $768 million in 1995 increased from $515 million in 1994, while
earnings per share rose to $3.80 from $2.43 in 1994. Included in 1995's net in-
come was an after-tax gain of $24 million ($0.12 per share) from a legal set-
tlement of a glass technology dispute with Pilkington plc of England. Net in-
come in 1994 included an after-tax charge of $52 million ($0.24 per share)
related to the divestiture of our Biomedical Systems Division. Our 1995 earn-
ings were affected favorably by the same factors that contributed to our sales
and gross profit percentage improvements. Gains from several legal settlements,
the most significant of which was the settlement with Pilkington, higher earn-
ings from equity affiliates and the absence of significant business divestiture
charges also contributed to the increase. Partially offsetting these improve-
ments were higher selling, general and administrative, and research and devel-
opment expenses as well as increased other charges and income tax expense. The
increase in selling, general and administrative expenses was primarily attrib-
utable to the unfavorable impacts of inflation, foreign currency translation
and increased advertising costs. However, selling, general and administrative
expenses as a percentage of sales declined to 13.8% in 1995 from 14.5% in 1994,
reflecting, in part, the effects of continued cost management. The increase in
other charges was principally attributable to settlement of a legal dispute and
higher environmental expenses. While the effective tax rate for both 1995 and
1994 was 38%, income tax expense increased as a result of higher pretax
earnings.
The increase in earnings per share was attributable to the factors that re-
sulted in the increase in net income, combined with the impact on average
shares outstanding of repurchasing approximately 13.6 million shares of our
common stock during 1995.
Results of Business Segments
Coatings and resins sales increased to $2.8 billion from $2.6 billion in 1994.
Operating income for 1995 was $469 million compared with $497 million for 1994.
Contributing to the sales increase were higher volumes in most European product
lines, particularly automotive original products, stronger prices in all prod-
uct lines and the favorable effect of translating European currencies. The ef-
fect of lower North American automotive refinish volume partially offset these
improvements. Operating income declined because of the negative effects of in-
flation, particularly on raw material costs, unfavorable sales mix changes, a
charge to improve productivity in our European operations and a loss on the
sale of our European architectural coatings business. These negative factors
were only partially offset by higher sales prices, increased volumes, gains
from legal settlements and improved manufacturing efficiencies.
Glass sales increased to $2.7 billion from $2.4 billion in 1994, while operat-
ing income increased to $479 million from $315 million. Contributing to the
sales increase were higher prices, principally for worldwide fiber glass and
flat glass products and North American automotive replacement glass products,
higher volumes in most of the segment's major businesses, principally fiber
glass and automotive original glass products, and the favorable effects of
translating European currencies. The effect of lower volume in North American
automotive replacement glass products partially offset these improvements. The
significant improvement in operating income resulted from the factors that con-
tributed to the sales increase and the gain from the legal settlement with
Pilkington. The negative effects of inflation on our costs partially offset
these improvements.
Chemicals sales increased to $1.6 billion from $1.3 billion in 1994, and oper-
ating income increased to $383 million from $227 million. The increase in sales
was primarily attributable to substantial price gains for chlor-alkali products
and volume improvements for specialty products, particularly
Transitions(registered trademark) optical lenses. The substantial increase in
operating income was a result of the factors that contributed to the sales
increases. Partially offsetting these improvements were increased
environmental expenses and a charge for a legal settlement. The negative
effects of inflation, particularly on ethylene costs, and higher selling,
general and administrative expenses due, in part, to additional investments in
Transitions(registered trademark) advertising also partially offset these
improvements. In addition, 1994 operating income included a gain from
disposition of our investment in a foreign chemical business.
The other segment's operating loss in 1994 represents the charge to divest the
Biomedical Systems Division (see Business Divestitures and Realignments on page
24).
Other Significant Factors
The increase in other unallocated corporate income-net in 1995 was principally
attributable to higher earnings from our equity affiliates combined with a de-
crease in foreign currency transaction losses.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Outlook
In 1996 PPG expects to face a challenging economic environment, characterized
by moderate global growth. Furthermore, recent signs point to economic soften-
ing, particularly in the North American automotive industry and in Western Eu-
rope in general. Because of PPG's broad diversification, changes in demand for
a particular product line or in a particular geographic area tend to have mini-
mal impact on total sales and earnings. As a result, PPG is more favorably po-
sitioned to withstand negative economic conditions than during similar periods
in the past. Nevertheless, a sharp reduction in economic activity could ad-
versely affect the Company's future financial performance.
Accounting Standard
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensa-
tion." The statement is required to be applied to our 1996 financial state-
ments. The new standard defines a fair value method of accounting for stock op-
tions under which compensation cost would be measured at the grant date based
on the fair value of the award and recognized over the service period.
Pursuant to the new standard, companies are encouraged, but not required, to
adopt the fair value method of accounting for employee stock-based transac-
tions. Companies are permitted to continue to account for such transactions un-
der Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," but would be required to disclose, in a note to the financial
statements, pro forma net income and pro forma earnings per share as if the
company had applied the new fair value method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption. PPG has not
yet determined if it will elect to change to the fair value method, nor has it
determined the impact the new standard would have on net income and earnings
per share should it elect to make such a change. Adoption of the new standard
would have no effect on the Company's cash flows.
PERFORMANCE IN 1994 COMPARED WITH 1993
Overall Performance
Our 1994 sales totaled $6.3 billion, up from 1993's $5.8 billion. The increase
was attributable to higher sales volumes, including sales from the January 1994
acquisition of Akzo Nobel's European automotive original coatings business,
combined with marginally higher overall prices from each of our segments. Par-
tially offsetting these increases was the absence of sales from the Biomedical
Systems Division and from certain glass businesses that were divested or dis-
continued.
PPG's gross profit percentage increased to 39% from 37% in 1993. Sales mix
gains, lower manufacturing costs, benefits from substantially divested and dis-
continued businesses, and slightly higher sales prices contributed to the im-
provement. These gains were partially offset by the effects of inflation.
Net income for 1994 of $515 million increased significantly from $22 million
in 1993, while earnings per share increased to $2.43 from $0.10 in 1993. Net
income for 1993 included a net charge of $273 million ($1.29 per share) for
three accounting changes (see Note 2 to the financial statements). Also in-
cluded were business divestiture and realignment after-tax charges of $96 mil-
lion ($0.45 per share). Our 1994 earnings were favorably affected by the same
factors as our sales volume and gross profit percentage improvements and by
lower interest expense. Partially offsetting these gains were higher income tax
expense, primarily because of increased pre-tax income and an after-tax charge
of $52 million ($0.24 per share) related to divestiture of the Biomedical Sys-
tems Division (see Business Divestitures and Realignments on page 24). Also
partially offsetting the gains were increased research and development costs
and environmental expenses. Excluding the effects, for both years, of business
divestiture and realignment charges and, for 1993, of accounting changes, earn-
ings per share increased $0.83 from 1993.
Results of Business Segments
Coatings and resins sales increased to $2.6 billion from $2.3 billion in 1993.
Operating income for the corresponding periods was $497 million and $414 mil-
lion, respectively. Contributing to the sales increase were higher volumes in
each of the segment's major product lines, sales from the January 1994 acquisi-
tion of the Akzo Nobel coatings business, higher prices for worldwide automo-
tive refinish coatings and the July 1994 acquisition of an automotive paint
spray-booth business from Nalco Chemical Company. Partially offsetting these
gains were lower prices for North American automotive original products and the
negative effects of translating Canadian currencies. The increase in operating
income was principally attributable to the higher overall sales volumes, bene-
fits from manufacturing efficiencies and the absence of business divestiture
and realignment charges. Higher overhead costs, the unfavorable effects of in-
flation and Canadian currency translation partly offset these improvements.
Glass sales increased to $2.4 billion from $2.2 billion in 1993 while operat-
ing income increased to $315 million from $122 million. Higher volumes in each
of the segment's major businesses and higher prices for North American flat,
automotive replacement and fiber glass products contributed to the sales in-
crease. The absence of sales from divested and discontinued businesses and re-
duced prices for worldwide automotive original products partially offset these
improvements. The
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
operating income improvement was primarily attributable to the absence of $78
million of business divestiture and realignment charges recorded in 1993 (see
Business Divestitures and Realignments on page 24), the factors that contrib-
uted to the sales increase, benefits from manufacturing efficiencies and the
absence of operating losses from certain divested or discontinued businesses.
The negative effects of inflation partially offset these gains.
Chemicals sales increased to $1.3 billion from $1.2 billion in 1993 while op-
erating income increased to $227 million from $133 million. The increase in
sales was primarily attributable to higher volumes in each of the segment's
businesses and higher prices for certain chlorine products. The increase in op-
erating income was principally the result of the factors that contributed to
the sales increases, manufacturing efficiencies and gains from dispositions of
our investment in a foreign chemical business and the segment's polymer addi-
tives business, as well as the absence of business divestiture and realignment
charges. The negative effects of inflation, particularly on ethylene costs,
partially offset these improvements.
The other segment's 1994 operating loss resulted from an $85 million charge
for the divestment of the Biomedical Systems Division. The 1993 operating loss
is comprised of a $38 million charge for this planned divestiture as well as
operating losses of the division for the year. (See Business Divestitures and
Realignments on page 24.)
Other Significant Factors
The increase in research and development expense-net was primarily attributable
to higher expenses in Europe associated with the global automotive original
coatings business, partially offset by the absence of expenses from certain
divested businesses.
The decline in interest expense was primarily due to lower overall average
short-term borrowings during 1994 versus 1993.
The increase in other charges was principally the result of higher environmen-
tal expenses, charges incurred for the relocation of an administrative office
and losses from the retirement of certain property.
The increase in other unallocated corporate expense-net was principally due to
the absence of the gain on the sale of our interest in an insurance company
that was realized in
1993, an increase in our charitable contribution to the PPG Foundation and a
minor charge related to the effect of the Mexican peso devaluation.
Income tax expense increased to $325 million from $236 million in 1993, prin-
cipally as a result of the significant increase in pre-tax income, partially
offset by a decrease in the effective tax rate, which was primarily attribut-
able to reduced losses at certain of our foreign operations in 1994 (see Note 7
to the financial statements).
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 Dec. 31, 1995 and 1994, PPG had reserves for environmental
contingencies totaling $100 million and $90 million, respectively. Charges
against income for environmental remediation costs in 1995, 1994 and 1993 to-
taled $49 million, $36 million and $23 million, respectively. Related cash out-
lays aggregated $39 million, $36 million and $40 million in 1995, 1994 and
1993, respectively.
Management anticipates that the resolution of the Company's environmental con-
tingencies, 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 op-
erates in an environmentally sound manner and the outcome of these environmen-
tal matters will not have a material effect on PPG's financial position or li-
quidity.
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 rea-
sonably possible but are 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 unre-
solved 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 in-
volving other potentially responsible parties may face governmental agency as-
sertions 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 signif-
icant 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 re-
quire additional study to assess the magnitude of contamination, if any, and
the remediation alternatives.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
The Company's assessment of the potential impact of these environmental con-
tingencies is subject to considerable uncertainty due to the complex, ongoing
and evolving process of investigation and remediation, if necessary, of such
environmental contingencies.
BUSINESS DIVESTITURES AND REALIGNMENTS
PPG's results reflect the impact of the Company's continuing programs to divest
or realign businesses and activities not meeting strategic or performance ob-
jectives. In 1995 the impact of business divestitures and realignments was not
significant.
These programs resulted in pre-tax charges of $85 million and $126 million in
1994 and 1993, respectively. The 1994 charge pertained to the divestiture of
the Biomedical Systems Division. Approximately $60 million of the charge re-
lated to a reduction of the proceeds expected to be received upon divestiture
of the division's sensors business, reflecting the general decline in health-
care and related markets. A $13 million charge also 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 Bio-
medical Systems Division was completed.
The Company's $126 million business divestiture and realignment charges in
1993 consisted of $78 million related to the glass segment, $38 million to the
other segment, involving the Biomedical Systems Division, and $5 million each
to the coatings and resins and the chemicals segments.
Of the glass segment's charges, approximately $71 million related to the
shutdown of two manufacturing facilities, discontinuation of the commercial
products business and disposition of the architectural metals business. One of
the manufacturing facilities, which had previously been temporarily idled, was
permanently closed because management concluded that the market for its
products would not support operation of the facility. Management also decided
to close the second facility because of the segment's overcapacity for the
plant's products, and operating earnings could be increased through the
reallocation of its production to more efficient facilities. The decision to
exit the commercial products business was due principally to its disappointing
operating performance. The architectural metals business was
sold because it was not a core operation of the glass segment and it also
experienced unfavorable operating results.
Since the Company's acquisition of the Biomedical Systems Division, it had
consistently reported disappointing operating results. Moreover, this business
had not blended well with PPG's other major segments and proved to be difficult
to manage under the continually changing business environment in which it oper-
ated. As a result, management decided to divest
the division in the fourth quarter of 1993 and recorded a charge of $38 million
in that quarter. The charge was principally based on anticipated sales proceeds
from the divestiture of the sensors and medical electronics businesses of ap-
proximately $65 million and $50 million, respectively. Such amounts resulted in
an estimated net loss of $5 million. In addition, $30 million of operating
losses anticipated through the expected disposal date were accrued.
In addition to the components of the Biomedical Systems Division provision
given above, significant components of the 1993 business divestiture and re-
alignment charges included charges for the retirement or write-off of operating
assets with net book values of approximately $31 million, severance and benefit
costs of $17 million, incremental workers' compensation accruals of $10 mil-
lion, environmental accruals of $9 million, anticipated future operating losses
of $6 million through the expected disposal dates for the commercial products
and architectural metals businesses, and charges of approximately $2 million
for the disposition of operating assets (net of anticipated sales proceeds of
$16 million).
To a large extent the charges recorded in 1994 and 1993 are expected to be re-
covered in the future through the absence of historical operating losses for
the Biomedical Systems Division. Such operating losses were approximately $61
million, $13 million and $23 million for 1993, 1992 and 1991, respectively.
With the exception of the 1994 charge related to the divestiture of the Bio-
medical Systems Division, there have not been significant changes in the
Company's plans for implementing business divestiture and realignment programs
undertaken in prior years.
IMPACT OF INFLATION
PPG's financial statements are prepared on a historical cost basis, which does
not completely account for the effects of inflation. Since the cost of most of
the Company's inventories is determined using the last-in, first-out (LIFO)
method, the cost of sales reported in the financial statements approximates
current costs.
In 1995 the negative effects of inflation on our costs were more than offset,
for the Company as a whole, by price increases and improved operating efficien-
cies. In 1994 and 1993, our operating results were negatively affected as in-
creased production costs, resulting from inflation, were not fully recovered
through price increases. While inflationary pressure on costs is expected to
continue, we anticipate that actions already initiated to improve operating ef-
ficiencies and reduce overhead costs in each of our business units, as well as
increases in selling prices for certain products, will partially offset the
negative impact of inflation on 1996 operating income.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
FINANCIAL RESOURCES, CAPITAL SPENDING
Over the past three years, we continued to have sufficient financial resources
to meet operating requirements, to fund our capital spending, share repurchase
programs and pension contributions, and to pay increased dividends to share-
holders. Cash from operating activities was $1,072 million in 1995, $691 mil-
lion in 1994 and $741 million in 1993. Dividends paid to shareholders in 1995
totaled $239 million, up from $238 million in 1994 and $221 million in 1993.
Contributions to U.S. pension plans totaled $146 million, $139 million and $134
million in 1995, 1994 and 1993, respectively.
During 1995, PPG repurchased approximately 13.5 million shares of common stock
at a cost of $585 million under three separate share repurchase programs. A
6.5-million-share repurchase program initiated in October 1994 was completed in
January 1995. Additionally, PPG initiated two 10-million-share repurchase pro-
grams in 1995. The first program, which was completed at a cost of $434 mil-
lion, began in April 1995 and was completed in October 1995. The second program
was initiated in October 1995 and, as of Dec. 31, 1995, 2.7 million shares of
common stock had been repurchased thereunder at a cost of $121 million. The re-
purchase of common stock during 1995 was financed principally by cash from op-
erations.
In 1995 long-term debt was increased principally by the issuance of $100 mil-
lion of non-callable 6 7/8% notes partially offset by scheduled debt repay-
ments. Long-term debt was reduced in 1993 principally by the repayment of $112
million of European and $58 million of Canadian obligations.
Capital spending in 1995 totaled $454 million, compared with $356 million in
1994 and $293 million in 1993. This spending related to modernization and pro-
ductivity improvements, expansion of existing businesses, environmental control
projects and, in 1995, 1994 and 1993, business acquisitions totaling $7 mil-
lion, $34 million and $36 million, respectively. Additionally, a 1995 acquisi-
tion was financed through issuance of treasury stock with a market value ap-
proximating $15 million. Capital spending of a similar nature, excluding any
for major acquisitions, is expected to total about $500 million during 1996.
The ratio of total debt, including capital leases, to total debt and equity
was 32% and 31% at Dec. 31, 1995 and 1994, respectively. Cash from operations
and the Company's debt capacity are expected to continue to be sufficient to
fund capital spending, dividend payments, share repurchases and operating re-
quirements.
See Note 4, Debt and Bank Credit Agreements and Leases, for details regarding
our use and availability of committed and uncommitted lines of credit. In addi-
tion to our lines of credit, the Company may issue up to $600 million aggregate
principal amount of debt securities under shelf registration statements filed
with the Securities and Exchange Commission.
FOREIGN CURRENCY, INTEREST RATE AND COMMODITY PRICE RISK
As a multinational company, PPG manages its transaction exposure to foreign
currency risk to minimize the volatility of cash flows caused by currency fluc-
tuations. The Company manages its foreign currency transaction exposures prin-
cipally through the purchase of forward and option contracts. It does not man-
age 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 Dec. 31, 1995 and 1994, 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 Dec. 31, 1995 and 1994, 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 fluc-
tuations in prices for natural gas. The fair value of such swap contracts pur-
chased and outstanding as of Dec. 31, 1995 and 1994, was not material.
PPG's policies do not permit active trading of, or speculation in, derivative
instruments.
<PAGE>
BUSINESS SEGMENT INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(Millions) 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
INDUSTRY SEGMENTS
Net sales
Coatings and Resins $2,812 $2,647 $2,314
-------------------------------------------------------------------------
Glass 2,651 2,388 2,165
-------------------------------------------------------------------------
Chemicals 1,595 1,296 1,150
-------------------------------------------------------------------------
Other(/2/) -- -- 125
- ---------------------------------------------------------------------------
Total $7,058 $6,331 $5,754
===========================================================================
Operating income (loss)(/1/)
Coatings and Resins $ 469 $ 497 $ 414
- ---------------------------------------------------------------------------
Glass 479 315 122
- ---------------------------------------------------------------------------
Chemicals 383 227 133
- ---------------------------------------------------------------------------
Other(/2/) -- (85) (61)
- ---------------------------------------------------------------------------
Total 1,331 954 608
- ---------------------------------------------------------------------------
Interest--net (74) (77) (88)
- ---------------------------------------------------------------------------
Other unallocated corporate income (expenses)--net 5 (21) 24
- ---------------------------------------------------------------------------
Income before income taxes and minority interest $1,262 $ 856 $ 544
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
Coatings
and
(Millions) Resins Glass Chemicals Other (/2/) Corporate Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995
Segment assets(/3/) $1,723 $2,128 $1,129 $ -- $1,214 $6,194
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 84 $ 167 $ 86 $ -- $ 15 $ 352
- ---------------------------------------------------------------------------
Capital spending $ 125 $ 222 $ 83 $ -- $ 24 $ 454
- ---------------------------------------------------------------------------
1994
Segment assets(/3/) $1,662 $2,010 $1,117 $ 5 $1,100 $5,894
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 77 $ 159 $ 84 $ -- $ 15 $ 335
- ---------------------------------------------------------------------------
Capital spending $ 128 $ 119 $ 72 $ 1 $ 36 $ 356
- ---------------------------------------------------------------------------
1993
Segment assets(/3/) $1,476 $1,939 $1,092 $184 $ 961 $5,652
- ---------------------------------------------------------------------------
Depreciation and
amortization $ 78 $ 165 $ 83 $ 8 $ 16 $ 350
- ---------------------------------------------------------------------------
Capital spending $ 91 $ 95 $ 73 $ 6 $ 28 $ 293
- ---------------------------------------------------------------------------
</TABLE>
(continued on next page)
<PAGE>
BUSINESS SEGMENT INFORMATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(Millions) 1995 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
GEOGRAPHIC SEGMENTS
Net sales
United States $4,702 $4,332 $3,924
- ----------------------------------------------------------------------------
Europe 1,712 1,405 1,254
- ----------------------------------------------------------------------------
Canada 431 413 423
- ----------------------------------------------------------------------------
Other 213 181 153
- ----------------------------------------------------------------------------
Total $7,058 $6,331 $5,754
============================================================================
Operating income (loss)(/1/)
United States $1,058 $ 767 $ 552
- ----------------------------------------------------------------------------
Europe 153 88 (12)
- ----------------------------------------------------------------------------
Canada 96 72 45
- ----------------------------------------------------------------------------
Other 24 27 23
- ----------------------------------------------------------------------------
Total 1,331 954 608
- ----------------------------------------------------------------------------
Interest--net (74) (77) (88)
- ----------------------------------------------------------------------------
Other unallocated corporate income (expenses)--net 5 (21) 24
- ----------------------------------------------------------------------------
Income before income taxes and minority interest $1,262 $ 856 $ 544
============================================================================
Segment assets(/3/)
United States $2,994 $2,955 $2,966
- ----------------------------------------------------------------------------
Europe 1,519 1,424 1,307
- ----------------------------------------------------------------------------
Canada 274 261 275
- ----------------------------------------------------------------------------
Other 193 154 143
- ----------------------------------------------------------------------------
Corporate 1,214 1,100 961
- ----------------------------------------------------------------------------
Total $6,194 $5,894 $5,652
============================================================================
</TABLE>
Certain amounts in the 1994 and 1993 segment information have been
reclassified to be consistent with the 1995 presentation.
(1) Business segment operating income (loss) exclusive of pretax charges from
business divestitures and realignments, with the aggregate of such charges
shown separately, is as follows (in millions):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------- -------------------------------------------------------------
1995 1994 1993 1995 1994 1993
- ---------------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
Industry Segments Geographic Segments
Coatings and Resins $ 469 $497 $ 419 United States $1,058 $851 $ 625
- ---------------------------------------------------------------- -------------------------------------------------------------
Glass 479 315 200 Europe 153 89 37
- ---------------------------------------------------------------- -------------------------------------------------------------
Chemicals 383 227 138 Canada 96 72 49
- ---------------------------------------------------------------- -------------------------------------------------------------
Other -- -- (23) Other 24 27 23
- ---------------------------------------------------------------- -------------------------------------------------------------
Business divestitures and realignments -- (85) (126) Business divestitures and realignments -- (85) (126)
- ---------------------------------------------------------------- -------------------------------------------------------------
Total $1,331 $954 $ 608 Total $1,331 $954 $ 608
================================================================ =============================================================
</TABLE>
(2) Other represents the Company's Biomedical Systems Division.
(3) Segment assets are the total assets used in the operation of each business
segment. Corporate assets are principally cash and cash equivalents,
investments, income tax assets, the Company's headquarters building and
prepaid pensions.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of PPG Industries,
Inc. (PPG or the Company) and all significant subsidiaries, U.S. and non-U.S.,
of which we own more than 50% of the voting stock. Investments in companies of
which we own 20% to 50% of the voting stock are carried at equity, and our
share of the earnings or losses of such equity affiliates is included in the
statement of income. Transactions between PPG and its subsidiaries are elimi-
nated in consolidation.
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements,
as well as the reported amounts of income and expenses during the reporting pe-
riod. Actual results could differ from those estimates.
Foreign currency translation
For all significant non-U.S. operations, the functional currency is the local
currency. Assets and liabilities of those operations are translated into U.S.
dollars using year-end exchange rates; income and expenses are translated using
the average exchange rates for the reporting period. Translation adjustments
are deferred as a separate component of shareholders' equity.
Inventories
Most U.S. and certain non-U.S. inventories are stated at cost, using the last-
in, first-out (LIFO) method, which does not exceed market. Other inventories
are stated at the lower of cost or market. We determine cost using either aver-
age or standard factory costs, which approximate actual costs, excluding cer-
tain fixed costs such as depreciation and property taxes.
Property
Property is recorded at cost. We compute depreciation by the straight-line
method based on the estimated useful lives of depreciable assets. Additional
expense is recorded when facilities or equipment are subject to abnormal eco-
nomic conditions or obsolescence. Significant improvements that add to produc-
tive capacity or extend the lives of properties are capitalized. Costs for re-
pairs and maintenance are charged to expense as incurred. When property is
retired or otherwise disposed of, the cost and related depreciation are removed
from the accounts and any related gains or losses are included in income. Amor-
tization of the cost of capitalized leased assets is included in depreciation
expense. Adoption of Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived As-
sets to Be Disposed Of," resulted in no impact on net income.
Employee Stock Ownership Plan
We account for our employee stock ownership plan (ESOP) in accordance with
Statement of Position (SOP) No. 93-6 for PPG common stock purchased after Dec.
31, 1992 (new ESOP shares). As permitted by SOP No. 93-6, shares purchased
prior to Dec. 31, 1992 (old ESOP shares) continue to be accounted for in accor-
dance with SOP No. 76-3. ESOP shares are released and allocated to participants
based upon debt service paid during the year on loans used by the ESOP to pur-
chase the shares. Unearned compensation, reflected as a reduction of sharehold-
ers' equity, principally represents the unpaid balance of such ESOP loans. Div-
idends received by the ESOP are used to pay debt service.
For old ESOP shares, compensation expense is equal to amounts contributed, or
committed to be contributed, to the ESOP by the Company less the ESOP interest
expense element of such contributions. Dividends on old ESOP shares are de-
ducted from retained earnings. Old ESOP shares are considered to be outstanding
in computing earnings per share.
For new ESOP shares, compensation expense is equal to the Company's matching
contribution (see Note 9). Dividends on released new ESOP shares are deducted
from retained earnings, and dividends on unreleased shares are reported as a
reduction of debt or accrued interest. Only new ESOP shares that have been re-
leased are considered outstanding in computing earnings per share.
Cash equivalents
Cash equivalents are highly liquid investments (valued at cost, which approxi-
mates fair value) acquired with an original maturity of three months or less.
Derivative instruments
Derivative financial instruments are used to hedge the Company's foreign cur-
rency and interest rate exposures. Income and expense are recorded in the same
caption as that arising from the related asset or liability being hedged. Pre-
miums paid on option contracts are amortized over the lives of the contracts.
Gains and losses related to hedges of firm commitments are deferred and recog-
nized over the expected remaining lives of the related assets and liabilities.
Unrealized gains and losses from option contracts that hedge anticipated trans-
actions are also deferred and recognized in income in the same period as the
hedged transactions. Unrealized gains and losses from forward contracts that
hedge anticipated transactions are not deferred.
The Company also uses commodity swap contracts to reduce its exposure to fluc-
tuations in prices for natural gas.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
Gains and losses on these contracts are deferred and recognized in income in
the same period as the hedged transactions.
The fair value of derivative instruments as of Dec. 31, 1995 and 1994, was not
material. The Company does not enter into derivative transactions for specula-
tive purposes and therefore holds no derivative instruments for trading purpos-
es.
2. CHANGES IN METHODS OF ACCOUNTING
In 1993 the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This standard requires accrual,
during the years that the employee renders the necessary services, of the ex-
pected cost of providing postretirement benefits to an employee and the employ-
ee's covered dependents. Previously, the Company recognized these costs as ben-
efits were paid. PPG elected to recognize immediately the cumulative effect of
this accounting change, which resulted in an after-tax charge as of Jan. 1,
1993, of $357.1 million (including $6.4 million for an equity affiliate). The
incremental after-tax impact of accruing the cost of these postretirement bene-
fits for 1993 was not material.
The Company also adopted SFAS No. 109, "Accounting for Income Taxes," in 1993.
This standard requires an asset and liability approach to accounting for income
taxes. Deferred income tax liabilities and assets reflect the tax effects of
(1) temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes
and (2) operating loss and tax credit carryforwards. Deferred income tax as-
sets, such as benefits related to net operating loss carryforwards, are recog-
nized to the extent that realization of such benefits is more likely than not.
Changes in enacted tax rates or laws result in adjustments to the recorded de-
ferred income tax assets and liabilities in the period in which the tax law is
enacted.
The $90.4 million cumulative effect of this accounting change as of Jan. 1,
1993, was credited to income in 1993. The effect of the accounting change on
1993 net income, exclusive of the cumulative effect as of Jan. 1, 1993, was not
material. Previously, the Company applied the deferral method specified in Ac-
counting Principles Board Opinion No. 11 to provide for deferred income taxes
with respect to timing differences between the recognition of income and ex-
pense items for financial reporting purposes and income tax purposes.
In 1993 the Company also adopted the provisions of SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This standard requires an accrual
method of recognizing the cost of postemployment benefits, such as disability,
severance and workers' compensation benefits. Since the Company previously ac-
counted for most of these benefits on an accrual basis, the cumulative after-
tax charge of the accounting change as of Jan. 1, 1993, was only $6.1 million.
The incremental after-tax impact of accruing the cost of these benefits for
1993 was not material.
3. BALANCE SHEET DETAIL
<TABLE>
<CAPTION>
December 31
- -------------------------------------------------------------
(Millions) 1995 1994
- -------------------------------------------------------------
<S> <C> <C>
Receivables
Customers $1,187.6 $1,170.1
-----------------------------------------------------------
Other 85.7 85.3
-----------------------------------------------------------
Allowance for doubtful accounts (28.2) (26.5)
- -------------------------------------------------------------
Total $1,245.1 $1,228.9
=============================================================
Inventories(/1/)
Finished products and work in process $ 504.5 $ 462.7
-----------------------------------------------------------
Raw materials 120.5 111.9
-----------------------------------------------------------
Supplies 112.5 111.8
- -------------------------------------------------------------
Total $ 737.5 $ 686.4
=============================================================
Property(/2/)
Land and land improvements $ 288.4 $ 280.7
-----------------------------------------------------------
Buildings 1,129.8 1,102.8
-----------------------------------------------------------
Machinery and equipment 4,618.0 4,402.3
-----------------------------------------------------------
Other 233.0 226.7
-----------------------------------------------------------
Construction in progress 194.8 150.2
- -------------------------------------------------------------
Total $6,464.0 $6,162.7
=============================================================
Accounts payable and accrued liabilities
Trade creditors $ 583.4 $ 517.8
-----------------------------------------------------------
Accrued payroll 224.9 199.9
-----------------------------------------------------------
Other postretirement and pension
benefits 57.8 59.1
-----------------------------------------------------------
Other 237.4 257.6
- -------------------------------------------------------------
Total $1,103.5 $1,034.4
=============================================================
</TABLE>
(1) Inventories valued using the LIFO method comprised 72% and 76% of total
gross inventory values at Dec. 31, 1995 and 1994, respectively. If the
first-in, first-out method of inventory valuation had been used,
inventories would have been $202.9 million and $199.2 million higher at
Dec. 31, 1995 and 1994, respectively.
(2) Interest capitalized in 1995, 1994 and 1993 was $8.6 million, $5.3 million
and $6.0 million, respectively.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
4. DEBT AND BANK CREDIT AGREEMENTS AND LEASES
<TABLE>
<CAPTION>
December 31
- ---------------------------------------------------------------------------
(Millions) 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
9.3% notes, due 1999 $122.6 $122.6
- ---------------------------------------------------------------------------
6.9% non-callable debentures, due 2005 100.0 --
- ---------------------------------------------------------------------------
9.0% non-callable debentures, due 2021 148.0 148.0
- ---------------------------------------------------------------------------
ESOP notes(/1/)
Weighted average 8.4% fixed-rate notes 146.0 151.0
-------------------------------------------------------------------------
Variable-rate notes, weighted average 4.7% at Dec. 31, 1995 120.3 123.0
- ---------------------------------------------------------------------------
Various other debt, weighted average 5.5% 48.9 55.5
- ---------------------------------------------------------------------------
Non-U.S. subsidiary borrowings
12.7% notes, maturing 1996 to 1999 69.2 84.7
-------------------------------------------------------------------------
Fixed-rate notes, weighted average
8.5% at Dec. 31, 1995, maturing 1996
to 1998 17.1 18.7
-------------------------------------------------------------------------
Various other debt, weighted average
8.1% at Dec. 31, 1995 78.7 72.8
- ---------------------------------------------------------------------------
Capital lease obligations 28.7 29.7
- ---------------------------------------------------------------------------
Total 879.5 806.0
- ---------------------------------------------------------------------------
Less payments due within one year 144.0 32.6
- ---------------------------------------------------------------------------
Long-term debt $735.5 $773.4
===========================================================================
</TABLE>
(1) See Note 9 discussing ESOP borrowings. Fixed-rate notes of $75 million and
variable-rate notes of $22 million mature, with bullet payments, in 1996.
The remaining fixed- and variable-rate notes mature in 2009 and require
annual payments from 1996 to 2008.
Aggregate maturities during the next five years are (in millions) $144.0 in
1996, $53.2 in 1997, $54.9 in 1998, $169.6 in 1999 and $31.8 in 2000.
The Company has revolving credit agreements with credit lines totaling $565
million. Of these credit lines, $550 million will expire in December 1999 and
require payment of annual fees equal to nine basis points on the unused portion
of the lines. These lines support our commercial paper programs in the United
States, Canada and the Netherlands. The remaining $15 million will expire in
September 1996 and require payment of annual fees equal to 12.5 basis points on
the unused portion of the line. PPG may cancel all or part of these credit
agreements at any time without penalty or premium. At Dec. 31, 1995, we had
used $6 million of these lines of credit.
Our non-U.S. operations have uncommitted lines of credit totaling $476 mil-
lion, of which $181 million was used at Dec. 31, 1995. There are no commitment
fees for these lines of credit, and they may be canceled at any time. Addition-
ally, our non-U.S. operations have two committed credit agreements totaling $46
million, including an agreement as to which $40 million expires in June 1997
and does not involve the payment of a fee. The other agreement expires in Sep-
tember 1996 and requires the payment of a fee of 12.5 basis points on the un-
used portion of the line of credit. At Dec. 31, 1995, we had used $6 million of
these committed credit lines.
In addition to our lines of credit, the Company may issue up to $600 million
aggregate principal amount of debt securities under shelf registration state-
ments filed with the Securities and Exchange Commission.
PPG is in compliance with the restrictive covenants under its various credit
agreements, loan agreements and indentures.
The Dec. 31, 1995 and 1994, balances for "Short-term debt and current portion
of long-term debt" include, respectively, $96 million and $141 million of
commercial paper and $245 million and $197 million of short-term notes. The
weighted average interest rates of short-term borrowings as of Dec. 31, 1995
and 1994, were 7.1% and 6.3%, respectively.
Interest payments in 1995, 1994 and 1993 totaled $91 million, $93 million and
$112 million, respectively.
Rental expense for operating leases was $67 million in 1995 and $60 million
each in 1994 and 1993. Minimum lease commitments for operating leases that have
initial or remaining lease terms in excess of one year at Dec. 31, 1995, are
(in millions) $30.6 in 1996, $21.3 in 1997, $12.6 in 1998, $8.7 in 1999, $6.0
in 2000 and $19.1 thereafter.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
5. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Minimum
Additional Treasury Stock Unearned Pension
Shares Par Paid-In Retained Compensation Liability
(Dollars in Millions) Issued Value Capital Earnings Shares Cost (See Note 9) Adjustment
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JAN. 1,
1993 145,286,534 $242.1 $ 232.8 $3,631.8 (39,151,847) $(1,200.3) $(202.2) $ (4.3)
- -------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 22.2 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends -- -- -- (220.8) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- -- (1,133,300) (81.2) -- --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury stock -- -- 60.8 -- 1,839,461 56.8 -- --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP -- -- -- -- -- -- 19.7 --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Other -- -- 3.9 3.6 -- -- -- (31.8)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31, 1993 145,286,534 242.1 297.5 3,436.8 (38,445,686) (1,224.7) (182.5) (36.1)
- -------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 514.6 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends -- -- -- (237.8) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Two-for-one stock split in
the form of a 100%
stock distribution 145,286,534 242.2 (242.2) -- (39,019,886) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock(/1/) -- -- -- -- (6,578,700) (280.0) -- --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury stock(/1/) -- -- 6.3 -- 609,849 16.1 -- --
- -------------------------------------------------------------------------------------------------------------------------
ESOP loans -- -- -- -- -- -- (22.0) --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP -- -- -- -- -- -- 21.5 --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Other -- -- 5.9 3.5 -- -- -- 34.4
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31, 1994 290,573,068 484.3 67.5 3,717.1 (83,434,423) (1,488.6) (183.0) (1.7)
- -------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 767.6 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash dividends -- -- -- (238.9) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock -- -- -- -- (13,582,300) (588.0) -- --
- -------------------------------------------------------------------------------------------------------------------------
Issuance of treasury stock -- -- 7.8 -- 893,622 17.0 -- --
- -------------------------------------------------------------------------------------------------------------------------
ESOP loans -- -- -- -- -- -- (25.0) --
- -------------------------------------------------------------------------------------------------------------------------
Repayment of loans by ESOP -- -- -- -- -- -- 28.8 --
- -------------------------------------------------------------------------------------------------------------------------
Translation adjustments -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Other -- -- 6.0 3.2 -- -- -- (8.7)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE, DEC. 31, 1995 290,573,068 $484.3 $ 81.3 $4,249.0 (96,123,101) $(2,059.6) $(179.2) $(10.4)
=========================================================================================================================
<CAPTION>
Currency
Translation
(Dollars in Millions) Adjustment
- ---------------------------------------
<S> <C>
BALANCE, JAN. 1, 1993 $ (1.0)
- ---------------------------------------
Net income --
- ---------------------------------------
Cash dividends --
- ---------------------------------------
Purchase of treasury stock --
- ---------------------------------------
Issuance of treasury stock --
- ---------------------------------------
Repayment of loans by ESOP --
- ---------------------------------------
Translation adjustments (59.0)
- ---------------------------------------
Other --
- ---------------------------------------
BALANCE, DEC. 31, 1993 (60.0)
- ---------------------------------------
Net income --
- ---------------------------------------
Cash dividends --
- ---------------------------------------
Two-for-one stock split
in the form of a 100%
stock distribution --
- ---------------------------------------
Purchase of treasury stock(/1/) --
- ---------------------------------------
Issuance of treasury stock(/1/) --
- ---------------------------------------
ESOP loans --
- ---------------------------------------
Repayment of loans by ESOP --
- ---------------------------------------
Translation adjustments 21.4
- ---------------------------------------
Other --
- ---------------------------------------
BALANCE, DEC. 31, 1994 (38.6)
- ---------------------------------------
Net income --
- ---------------------------------------
Cash dividends --
- ---------------------------------------
Purchase of treasury stock --
- ---------------------------------------
Issuance of treasury stock --
- ---------------------------------------
ESOP loans --
- ---------------------------------------
Repayment of loans by ESOP --
- ---------------------------------------
Translation adjustments 42.4
- ---------------------------------------
Other --
- ---------------------------------------
BALANCE, DEC. 31, 1995 $ 3.8
=======================================
</TABLE>
(1) Treasury stock share amounts from Jan. 1, 1994, to the date of the 100%
stock distribution are on a pre-split basis. Shares purchased and issued in 1994
on a post-split basis were 7,457,400 and 914,349 respectively.
A class of 10 million shares of preferred stock, without par value, is autho-
rized but unissued. Common stock has a par value of $1.66 2/3 per share and 600
million shares are authorized. Shares outstanding at Dec. 31, 1995 and 1994,
exclude unreleased new ESOP shares (see Note 9).
PPG has a Shareholders' Rights Plan, under which each share of the Company's
outstanding common stock has an associated preferred share purchase right. The
rights are exercisable only under certain circumstances and allow holders of
such rights to purchase common stock of PPG or an acquiring company at a dis-
counted price, which generally would be 50% of the respective stocks' current
fair market value.
Per share cash dividends paid were $1.18 in 1995 and, after giving effect to
the 1994 two-for-one stock split in the form of a 100% stock distribution,
$1.12 in 1994 and $1.04 in 1993.
6. BUSINESS DIVESTITURES AND REALIGNMENTS
PPG's results reflect the impact of the Company's continuing programs to divest
or realign certain businesses and activities not meeting strategic and perfor-
mance objectives. In 1995 the impact of business divestitures and realignments
was not significant.
During 1994 and 1993, these programs included the closing, idling, relocation,
downsizing or sale of certain businesses or facilities and write-downs for de-
clines in the value of property.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
These actions resulted in net pre-tax charges of $85.0 million and $126.4 mil-
lion in 1994 and 1993, respectively.
The 1994 charge pertained to the divestiture of the Biomedical Systems Divi-
sion. With the sale of the sensors business in January 1995, the divestiture of
the Biomedical Systems Division was completed. In addition to a $38 million
charge related to the plan for the divestiture of the Biomedical Systems Divi-
sion, the charges for 1993 involved further streamlining in our glass segment,
including costs associated with selected plant closings, permanent shutdowns of
inactive facilities and disposition of a commercial construction fabrication
operation. The 1993 charges also included costs for streamlining our European
coatings and resins operations. Refer to the Business Divestitures and
Realignments section in Management's Discussion and Analysis for further de-
tails regarding these charges.
7. INCOME TAXES
As described in Note 2, the Company changed its method of accounting for income
taxes effective Jan. 1, 1993, from the deferred method to the liability method
required by SFAS No. 109.
The following is a reconciliation of the statutory U.S. corporate federal in-
come tax rate to the effective income tax rate.
<TABLE>
<CAPTION>
Percent of
Pre-tax Income
- ---------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal income tax rate 35.0% 35.0% 35.0%
- ---------------------------------------------------------------------
Changes in tax rate resulting from:
Taxes on non-U.S. earnings and related tax credits .3 (.1) 5.1
-------------------------------------------------------------------
State and local taxes--U.S. 3.3 3.5 4.9
-------------------------------------------------------------------
Other (.6) (.4) (1.6)
- ---------------------------------------------------------------------
Effective income tax rate 38.0% 38.0% 43.4%
=====================================================================
</TABLE>
The reduction in the 1994 effective tax rate, as compared to 1993, was primar-
ily attributable to higher losses incurred at our European subsidiaries in 1993
(primarily related to the Biomedical Systems Division), for which we were un-
able to record any income tax benefit. The 1993 effective tax rate was abnor-
mally high as a result of the effect of these European losses (with no corre-
sponding tax benefit realized), partially offset by the benefits from
utilization of net operating loss (NOL) carryforwards for a domestic subsidiary
as well as a change under SFAS No. 109 regarding recognition of tax benefits
related to our ESOP.
At Dec. 31, 1995, subsidiaries of the Company had available NOL carryforwards
of approximately $231.5 million for income tax purposes, of which $228.0 mil-
lion have an indefinite expiration and $3.5 million expire in the year 2000.
The following table gives details of income tax expense in the statement of
income. A portion of these taxes will be payable within one year and is there-
fore shown below as "Current income taxes," while the balance is shown as "De-
ferred income taxes."
<TABLE>
<CAPTION>
- --------------------------------------------
(Millions) 1995 1994 1993
- --------------------------------------------
<S> <C> <C> <C>
Current income taxes
U.S. federal $275.4 $206.3 $131.0
------------------------------------------
Non-U.S. 65.9 33.3 31.9
------------------------------------------
State and local--U.S. 64.7 45.2 31.4
- --------------------------------------------
Total current 406.0 284.8 194.3
- --------------------------------------------
Deferred income taxes
U.S. federal 37.5 13.9 26.2
------------------------------------------
Non-U.S. 33.5 24.9 11.8
------------------------------------------
State and local--U.S. 2.7 1.6 3.9
- --------------------------------------------
Total deferred 73.7 40.4 41.9
- --------------------------------------------
Total $479.7 $325.2 $236.2
============================================
</TABLE>
Net deferred income tax assets and liabilities as of Dec. 31, 1995 and 1994,
are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
(Millions) 1995 1994
- -------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets related to
Employee benefits $ 314.3 $ 278.0
-----------------------------------------------------------
Environmental 38.0 27.1
-----------------------------------------------------------
Business divestitures and realignments 5.1 32.1
-----------------------------------------------------------
NOL and tax credit carryforwards 106.9 126.6
-----------------------------------------------------------
Inventories 34.4 25.7
-----------------------------------------------------------
Property 27.4 18.6
-----------------------------------------------------------
Other 34.5 81.7
-----------------------------------------------------------
Valuation allowance (86.2) (97.7)
- -------------------------------------------------------------
Total 474.4 492.1
- -------------------------------------------------------------
Deferred income tax liabilities related to
Property 469.7 460.0
-----------------------------------------------------------
Employee benefits 184.6 115.8
-----------------------------------------------------------
Other 51.0 76.8
- -------------------------------------------------------------
Total 705.3 652.6
- -------------------------------------------------------------
Deferred income tax liabilities--net $(230.9) $(160.5)
=============================================================
</TABLE>
The majority of the NOL carryforwards relate to operations of subsidiaries in
countries permitting indefinite carryforward of losses. Generally, the valua-
tion allowance has been established for these carryforwards because the ability
to utilize them is uncertain.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
Income (loss) before income taxes resulting from non-U.S. operations for 1995,
1994 and 1993 was $257.3 million, $126.7 million and $(.8) million, respective-
ly.
No deferred U.S. income taxes have been provided on certain undistributed
earnings of non-U.S. subsidiaries, which have been reinvested indefinitely,
and, which amounted to $462 million and $371 million at Dec. 31, 1995 and 1994,
respectively. It is not practicable to determine the deferred tax liability on
these earnings.
The Internal Revenue Service has examined our U.S. federal income tax returns
through 1988, and we have paid all tax claims.
Income tax payments in 1995, 1994 and 1993 totaled $358 million, $254 million
and $210 million, respectively.
8. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Pension benefits
We have noncontributory defined benefit pension plans that cover certain em-
ployees worldwide. Benefits under these plans are based on years of service and
salaries or on stated amounts for each year of service. Our funding policy for
all plans is consistent with applicable governmental requirements. We provide
for obligations for all plans by depositing funds with trustees, by purchasing
insurance policies or by recording financial statement accruals. Pension plan
assets held in trust consist of fixed-income investments and equity securities.
Net periodic pension cost includes the following components:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
(Millions) 1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned during the year $ 23.2 $ 29.1 $ 24.4
- -------------------------------------------------------------------------
Interest cost on projected benefit obligation 121.9 114.0 115.0
- -------------------------------------------------------------------------
Return on assets
Actual (gain) loss (326.5) 13.0 (154.6)
-----------------------------------------------------------------------
Deferred gain (loss) 173.4 (160.2) 19.4
- -------------------------------------------------------------------------
Net amortization 12.5 13.8 4.0
- -------------------------------------------------------------------------
Net periodic pension cost $ 4.5 $ 9.7 $ 8.2
=========================================================================
</TABLE>
In the determination of net periodic pension cost, the assumed weighted-aver-
age long-term rates of return on plan assets were 10.9% for 1995 and 1994 and
$11.8% for 1993. Unrecognized prior service costs are amortized over periods
ranging from six to 16 years.
The following table sets forth the combined funded status and amounts recog-
nized in our balance sheet.
<TABLE>
<CAPTION>
December 31
- -------------------------------------------------------------------------------
(Millions) 1995 1994
- -------------------------------------------------------------------------------
Plan ABO Plan ABO
Assets Exceeds Assets Exceeds
Exceed Plan Exceed Plan
ABO Assets ABO Assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of the
estimated pension benefits to
be paid in the future
Vested benefit obligation $1,526.0 $ 65.0 $1,165.4 $ 45.5
- -------------------------------------------------------------------------------
Nonvested benefit obligation 72.5 18.1 56.9 20.0
- -------------------------------------------------------------------------------
Accumulated benefit obligation (ABO) 1,598.5 83.1 1,222.3 65.5
- -------------------------------------------------------------------------------
Effect of projected future salary
increases 151.8 17.4 91.2 15.4
- -------------------------------------------------------------------------------
Projected benefit obligation (PBO) 1,750.3 100.5 1,313.5 80.9
- -------------------------------------------------------------------------------
Plan assets at fair value 1,730.7 1.8 1,390.8 1.2
- -------------------------------------------------------------------------------
PBO in excess of (less than) plan assets 19.6 98.7 (77.3) 79.7
- -------------------------------------------------------------------------------
Unamortized net asset (liability) at date
of adoption 43.9 (11.8) 54.3 (14.0)
- -------------------------------------------------------------------------------
Unrecognized net loss (482.6) (16.4) (274.6) (2.9)
- -------------------------------------------------------------------------------
Unrecognized prior service cost (61.1) (2.2) (19.4) (2.5)
- -------------------------------------------------------------------------------
Minimum liability -- 22.8 -- 9.7
- -------------------------------------------------------------------------------
(Prepaid) accrued
pensions-- net(/1/) $ (480.2) $91.1 $ (317.0) $ 70.0
===============================================================================
</TABLE>
(1) As of Dec. 31, 1995 and 1994, the prepaid pension amounts are included in
Other assets in the balance sheet.
We determined the projected benefit obligation using weighted average discount
rates of 6.9% at Dec. 31, 1995, and 8.8% at Dec. 31, 1994, which change in-
creased the PBO. For those plans that provide benefits based on salaries in the
final years of employment, the assumed long-term rate of increase in salaries
was 4.7% at Dec. 31, 1995, and 4.5% at Dec. 31, 1994. The accrued pension lia-
bility, reflected in the balance sheet, included $4.9 million and $4.1 million
at Dec. 31, 1995 and 1994, respectively, for defined contribution plans.
Pension cost, which includes costs for defined contribution plans, multi-em-
ployer defined benefit pension plans and the net periodic pension cost shown
above, was $7.5 million, $13.2 million and $14.4 million in 1995, 1994 and
1993, respectively.
<PAGE>
NOTES
- --------------------------------------------------------------------------------
In November 1993, the Company contributed 2,900,042 shares of PPG stock with a
fair market value of $101.9 million to certain qualified U.S. pension plan
trusts. As of both Dec. 31, 1995 and 1994, approximately 8% of plan assets at
fair value were held in PPG common stock.
Other postretirement benefits
PPG sponsors defined benefit plans that provide medical and life insurance ben-
efits to nearly all of its retired employees in the United States and certain
retired employees in Canada. These plans also cover the employees' spouse and
dependents. At Dec. 31, 1995, the U.S. plans had provisions that capped the
cost of postretirement medical benefits at 2003 levels for most current retir-
ees and certain future retirees covered by bargaining plans, as well as current
and future retirees covered by nonbargaining plans. Salaried and certain wage
employees hired after Jan. 31, 1993, will not be entitled to postretirement
medical benefits. Many of our plans include cost sharing provisions, such as
co-insurance and deductibles, and require participant contributions based upon
elected coverage. The plans also coordinate benefits with Medicare for those
employees who are 65 and older or transfers the health care risk to Medicare
health maintenance organizations. Life insurance benefits for retirees covered
by nonbargaining plans are calculated at approximately 50% of the retirees' fi-
nal base pay or 25% of retirees' final base pay plus a monthly survivor income
benefit. For most bargaining units the benefits are based upon negotiated flat
dollar amounts. Our Canadian plans provide postretirement medical and life in-
surance benefits that supplement benefits provided and paid for under the Cana-
dian health care system. The Company's postretirement medical and life insur-
ance plans are unfunded.
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
(Millions) 1995 1994 1993
<S> <C> <C> <C>
- ------------------------------------------------------------------------
Service cost--benefits earned during the year $ 5.0 $ 5.4 $ 6.5
- ------------------------------------------------------------------------
Interest cost on accumulated postretirement benefit
obligation 46.1 40.4 44.4
- ------------------------------------------------------------------------
Other 4.6 (8.0) (3.1)
- ------------------------------------------------------------------------
Net periodic postretirement benefit cost $55.7 $37.8 $47.8
========================================================================
</TABLE>
Net periodic postretirement benefit cost increased approximately $19 million
in 1995 as a result of deferring the cap on benefits from 1996 to 2003. In ad-
dition to the net periodic postretirement benefit cost shown above, $1.0 mil-
lion, $1.3 million and $.7 million of multi-employer costs were incurred in
1995, 1994 and 1993, respectively.
The accumulated postretirement benefit obligation of our plans and the liabil-
ity recognized in the balance sheet as of Dec. 31, 1995 and 1994, were as fol-
lows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
(Millions) 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------
Accumulated postretirement benefit obligation (APBO)
Retirees $482.4 $352.1
- --------------------------------------------------------------------
Fully eligible active plan participants 89.3 55.7
- --------------------------------------------------------------------
Other active plan participants 105.0 74.9
- --------------------------------------------------------------------
APBO 676.7 482.7
- --------------------------------------------------------------------
Unrecognized prior service (cost) gain (29.1) 50.4
- --------------------------------------------------------------------
Unrecognized net (loss) gain (79.8) 25.1
- --------------------------------------------------------------------
Other postretirement benefit liability $567.8 $558.2
====================================================================
</TABLE>
The APBO increased approximately $91 million in January 1995 as a result of
deferring the cap on benefits from 1996 to 2003.
The weighted average discount rate used in determining the APBO was 6.8% at
Dec. 31, 1995, and 8.8% at Dec. 31, 1994, which change increased the APBO. The
assumed health care cost trend rate was 8.0% for 1995 and 7.7% for 1996, de-
clining ratably to 4.0% by the year 2007. If these trend rates were increased
by one percentage point per year, the APBO and the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost would
increase by approximately 5.7% and 6.1%, respectively.
9. EMPLOYEE STOCK OWNERSHIP PLAN
Our employee stock ownership plan (ESOP) covers substantially all U. S. employ-
ees. The Company makes matching contributions to the ESOP based upon partici-
pant's savings, subject to certain limitations, and a matching percentage based
upon our return on average equity for the previous year.
In 1989 and 1990, the ESOP purchased 13,400,334 shares of PPG common stock
(old ESOP shares) from the Company and on the open market. The ESOP purchased
631,748 and 560,197 shares of PPG common stock (new ESOP shares) on the open
market in 1995 and 1994, respectively. The ESOP financed these purchases
through a combination of borrowings guaranteed by PPG and borrowings directly
from PPG. Borrowings from third-parties to finance these purchases are included
in debt in our balance sheet (see Note 4).
Compensation expense (credit) related to the ESOP for 1995, 1994 and 1993 to-
taled $18.0 million, $(1.4) million and $(.1) million, respectively. Interest
expense totaled $12 million, $10 million and $11 million for 1995, 1994 and
1993, respectively. Dividends on PPG shares held by the ESOP, to service
<PAGE>
NOTES
- --------------------------------------------------------------------------------
ESOP debt, totaled $34 million, $31 million and $25 million for 1995, 1994 and
1993, respectively. The fair value of unreleased new ESOP shares at Dec. 31,
1995 and 1994, was $11.5 million and $5.6 million, respectively. Shares held by
the ESOP as of Dec. 31, 1995 and 1994, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------
Old Shares New Shares Old Shares New Shares
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Allocated shares 6,388,020 722,343 5,854,945 241,294
- ---------------------------------------------------------------------------
Shares released for allocation 10,720 218,181 10,895 168,027
- ---------------------------------------------------------------------------
Unreleased shares 7,001,594 251,421 7,534,494 150,876
- ---------------------------------------------------------------------------
Total 13,400,334 1,191,945 13,400,334 560,197
===========================================================================
</TABLE>
10. STOCK OPTION PLAN
Under PPG's stock option plan, certain employees of the Company have been
granted stock options. The price at which shares of common stock may be pur-
chased upon the exercise of an option may not be less than the fair market
value of the shares on the date the option was granted. Options are exercisable
beginning from six to 12 months after issuance.
The following table summarizes stock option activity for the three years ended
Dec. 31, 1995.
<TABLE>
<CAPTION>
Number of Per share
options option price
- ----------------------------------------------------
<S> <C> <C>
Outstanding, Jan. 1, 1993 4,249,254 $ 9.19-33.81
- ----------------------------------------------------
Granted 1,818,924 31.63-37.75
--------------------------------------------------
Exercised (1,007,486) 9.19-33.81
--------------------------------------------------
Terminated (16,000) 29.38-33.00
- ----------------------------------------------------
Outstanding, Dec. 31, 1993 5,044,692 9.19-37.75
- ----------------------------------------------------
Granted 1,989,592 34.25-41.63
--------------------------------------------------
Exercised (1,488,173) 9.19-37.88
--------------------------------------------------
Terminated (108,200) 29.38-39.00
- ----------------------------------------------------
Outstanding, Dec. 31, 1994 5,437,911 9.19-41.63
- ----------------------------------------------------
Granted 2,323,990 35.13-47.75
--------------------------------------------------
Exercised (1,316,206) 9.19-41.75
--------------------------------------------------
Terminated (38,612) 33.00-39.75
- ----------------------------------------------------
Outstanding, Dec. 31, 1995 6,407,083 $14.34-47.75
====================================================
Exercisable, Dec. 31, 1995 4,554,300 $14.34-42.88
====================================================
</TABLE>
Shares available for future grants were 2,168,356 and 2,382,348 at Dec. 31,
1995 and 1994, respectively.
Refer to Management's Discussion and Analysis for information about SFAS No.
123, "Accounting for Stock-Based Compensation."
11. COMMITMENTS AND CONTINGENT LIABILITIES
PPG is involved in a number of lawsuits and claims, both actual and potential,
including some which it has asserted against others, in which substantial money
damages are sought. Management believes that the outcome of such lawsuits and
claims, in the aggregate, will not have a material effect on PPG's consolidated
financial position, results of operations or liquidity.
It is PPG's policy to accrue expenses for environmental contingencies when it
is probable that a liability exists and the amount of loss can be reasonably
estimated. As of Dec. 31, 1995 and 1994, PPG had reserves for environmental
contingencies totaling $100 million and $90 million, respectively. Charges
against income for environmental remediation costs in 1995, 1994 and 1993 to-
taled $49 million, $36 million and $23 million, respectively. Related cash out-
lays aggregated $39 million, $36 million and $40 million in 1995, 1994 and
1993, respectively.
Management anticipates that the resolution of the Company's environmental con-
tingencies, 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 op-
erates in an environmentally sound manner and the outcome of these environmen-
tal matters will not have a material effect on PPG's financial position or li-
quidity.
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 rea-
sonably possible but are 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 unre-
solved 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 in-
volving other poten-
<PAGE>
NOTES
- --------------------------------------------------------------------------------
tially 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 re-
lates to all sites, a significant portion of such unrecorded exposure involves
three operating plant sites and one closed plant site. Two of the sites are in
the early stages of study, while the remaining two are further into the study
phase. All four sites require additional study to assess the magnitude of con-
tamination, if any, and the remediation alternatives.
The Company's assessment of the potential impact of these environmental con-
tingencies is subject to considerable uncertainty due to the complex, ongoing
and evolving process of investigation and remediation, if necessary, of such
environmental contingencies.
12. OTHER EARNINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
(Millions) 1995 1994 1993
<S> <C> <C> <C>
- ----------------------------------------------------------------
Interest income $ 10.6 $ 9.3 $ 15.2
- ----------------------------------------------------------------
Royalty income 26.9 25.0 25.3
- ----------------------------------------------------------------
Share of net earnings in equity affiliates 31.0 19.6 17.3
- ----------------------------------------------------------------
Gain on sale of businesses 7.1 26.8 27.8
- ----------------------------------------------------------------
Other 112.9 48.8 51.4
- ----------------------------------------------------------------
Total $188.5 $129.5 $137.0
================================================================
</TABLE>
In 1995 Other includes gains on legal settlements, the most significant of
which related to a glass technology dispute with Pilkington plc of England.
PPG's share of undistributed earnings of equity affiliates were $87.1 million
and $74.6 million at Dec. 31, 1995 and 1994, respectively. Dividends received
from equity affiliates were $14.2 million, $15.5 million and $9.7 million in
1995, 1994 and 1993, respectively.
13. RESEARCH AND DEVELOPMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------
(Millions) 1995 1994 1993
<S> <C> <C> <C>
- -----------------------------------------------------
Research and development--total $252.1 $233.4 $217.6
- -----------------------------------------------------
Less depreciation 15.7 15.3 16.4
- -----------------------------------------------------
Research and development--net $236.4 $218.1 $201.2
=====================================================
</TABLE>
14. ADVERTISING COSTS
Advertising costs are expensed as incurred and totaled $79.3 million, $62.5
million and $69.2 million in 1995, 1994 and 1993, respectively.
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Net Gross Net Earnings
Sales Profit Income Per
(Millions) (Millions) (Millions) Share
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 quarter ended
March 31 $1,740.8 $ 712.7 $219.2 $1.06
- ----------------------------------------------------------
June 30 1,870.4 761.1 216.8 1.06
- ----------------------------------------------------------
September 30 1,724.1 694.7 170.4 .85
- ----------------------------------------------------------
December 31 1,722.4 677.1 161.2 .83
- ----------------------------------------------------------
Total $7,057.7 $2,845.6 $767.6 $3.80
==========================================================
1994 quarter ended
March 31 $1,476.9 $ 565.1 $121.9 $ .57
- ----------------------------------------------------------
June 30(/1/) 1,619.3 631.4 96.2 .46
- ----------------------------------------------------------
September 30 1,575.3 613.2 145.5 .68
- ----------------------------------------------------------
December 31 1,659.7 656.0 151.0 .72
- ----------------------------------------------------------
Total $6,331.2 $2,465.7 $514.6 $2.43
==========================================================
</TABLE>
(1) Second-quarter 1994 earnings were reduced by a pre-tax charge for business
divestitures and realignments of $85.0 million, or $0.24 per share.
<PAGE>
NOTES OFFICER CHANGES
- --------------------------------------------------------------------------------
16. FINANCIAL INSTRUMENTS
Included in PPG's financial instrument portfolio are cash and cash equivalents,
Company-owned life insurance, derivative financial instruments and short- and
long-term debt instruments. The most significant instrument, long-term debt
(excluding capital lease obligations), had carrying and fair values totaling
$851 million and $923 million, respectively, at Dec. 31, 1995. The correspond-
ing amounts at Dec. 31, 1994, were $776 million and $790 million, respectively.
The fair values of the other instruments approximated their carrying values.
The fair values of the debt instruments were based upon quoted market prices
of the same or similar instruments or on the rates available to the Company for
instruments of the same remaining maturities.
17. BUSINESS SEGMENT INFORMATION AND NATURE OF OPERATIONS
Refer to pages 26 and 27 for information on our business segments for 1995,
1994 and 1993. Production facilities and markets for the coatings and resins
and glass businesses are predominantly in North America and Europe while the
chemicals business operates primarily in North America. Additional information
concerning the nature of our operations is included in the Major Products and
Major Uses sections of PPG's Business Array on page 7.
In December 1995, Raymond W. LeBoeuf, formerly executive vice president, was
elected president and chief operating officer, and was elected to PPG's board
of directors. In addition, Frank A. Archinaco, vice president, glass, and E.
Kears Pollock, vice president, coatings and resins, were elected senior vice
presidents of their respective functions.
Robert D. Duncan, executive vice president, announced his intention to retire
on May 1, 1996.
Replacing the Office of the Chief Executive and Management Committee were the
Policy and Planning Committee and the Operating Committee.
Earlier in the year, Charles E. Bunch became vice president, fiber glass,
succeeding John J. Horgan, senior vice president of that function, who resigned
from the Company. Mr. Bunch had been vice president, architectural finishes.
Gerald W. Gruber, who had been director of research and development, chemicals,
was named vice president, research and development, coatings and resins. He
succeeded Neil H. Frick upon his retirement.
In addition, Dan W. Kiener, formerly controller, was elected treasurer, and
David B. Navikas joined the Company as controller.
In January 1996, David C. Cannon, Jr., formerly associate general counsel, was
elected to the newly created post of vice president, environment, health and
safety. The new office unifies fully PPG's environmental law section and the
regulatory functions of the corporate environment, health and safety
department.
<PAGE>
CORPORATE DIRECTORY
- -------------------------------------------------------------------------------
DIRECTORS
*ERROLL B. DAVIS, JR.
President and Chief Executive Officer, WPL Holdings, Inc.
JERRY E. DEMPSEY
Chairman of the Board and Chief Executive Officer, PPG Industries, Inc.
*+STANLEY C. GAULT
Chairman of the Board and Chief Executive Officer, The Goodyear Tire & Rubber
Company
MICHELE J. HOOPER
Vice President, Caremark International
*++ALLEN J. KROWE
Vice Chairman, Texaco Inc.
RAYMOND W. LEBOEUF
President and Chief Operating Officer, PPG Industries, Inc.
+++STEVEN C. MASON
Chairman of the Board and Chief Executive Officer, Mead Corporation
+++HAROLD A. MCINNES
Retired Chairman of the Board and Chief Executive Officer, AMP Incorporated
*++ROBERT MEHRABIAN
President, Carnegie Mellon University
VINCENT A. SARNI
Retired Chairman of the Board and Chief Executive Officer, PPG Industries,
Inc.
*+DAVID G. VICE
Retired Vice Chairman, Products and Technology, Northern Telecom Limited
+++DAVID R. WHITWAM
Chairman of the Board and Chief Executive Officer, Whirlpool Corporation
*Audit Committee
+Officers-Directors Compensation Committee
++Nominating Committee
POLICY AND PLANNING COMMITTEE
JERRY E. DEMPSEY, CHAIRMAN
Chairman of the Board and Chief Executive Officer
RUSSELL L. CRANE
Senior Vice President, Human Resources and Administration
ROBERT D. DUNCAN
Executive Vice President
WILLIAM H. HERNANDEZ
Senior Vice President, Finance
RAYMOND W. LEBOEUF
President and Chief Operating Officer
GUY A. ZOGHBY
Senior Vice President and General Counsel
OPERATING COMMITTEE
RAYMOND W. LEBOEUF,
CHAIRMAN President and Chief Operating Officer
FRANK A. ARCHINACO
Senior Vice President, Glass
CHARLES E. BUNCH
Vice President, Fiber Glass
PETER R. HEINZE
Senior Vice President, Chemicals
E. KEARS POLLOCK
Senior Vice President, Coatings & Resins
GARY W. WEBER
Vice President, Science and Technology
COATINGS & RESINS
THOMAS A. CRAIG
Vice President, Refinish Products
GERALD W. GRUBER
Vice President, Research and Development
ERNEST A. HAHN
Vice President, Industrial Coatings
KEN KURAHASHI
Vice President, Coatings & Resins, PPG Asia/Pacific; President, PPG Japan
AREND W. D. VOS
Vice President, Coatings & Resins, Asia/Pacific
RODERICK I. A. WATTERS
Vice President, Automotive Products, Europe
RICHARD ZAHREN
Vice President, Automotive Products
GLASS
STANLEY C. DEGREVE
Vice President, Operations Fiber Glass
MICHAEL A. LUDLOW
Vice President, Automotive OEM Products
CHEMICALS
DONALD W. BOGUS
Vice President, Specialty Chemicals
RAE R. BURTON
Vice President, Chlor-Alkali and Derivatives
JOHN M. WILKINS
Vice President, Chemicals, Asia/Pacific
CORPORATE FUNCTIONS
L. BLAINE BOSWELL
Vice President, Public Affairs
DAVID C. CANNON, JR.
Vice President, Environment, Health and Safety
JAMES W. CRAIG
President, PPG Europe; Vice President, Coatings & Resins, Europe
DAN W. KIENER
Treasurer
H. KENNEDY LINGE
Secretary
JOHN MAAGHUL
President, PPG Asia/Pacific; Vice President, Glass, Asia/Pacific
MARGARET H. MCGRATH
President, PPG Canada; Vice President, Coatings & Resins, Canada
DAVID B. NAVIKAS
Controller
DAVID W. SMITH
Vice President, Information Technology
THOMAS M. VON LEHMAN
Vice President, Purchasing and Distribution
DAVID R. WALLIS
Vice President, Corporate Development
<PAGE>
ELEVEN-YEAR DIGEST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF INCOME
Net sales 7,058 6,331 5,754 5,814 5,673 6,021 5,734 5,617 5,183 4,687 4,346
- ------------------------------------------------------------------------------------------------------------
Gross profit (%) 40.3 38.9 36.9 36.4 35.2 37.8 37.1 39.2 37.8 37.2 35.9
- ------------------------------------------------------------------------------------------------------------
Income before income
taxes 1,247 840 531 538 348 767 749 779 637 553 537
- ------------------------------------------------------------------------------------------------------------
Income taxes 480 325 236 218 147 292 284 311 260 236 234
- ------------------------------------------------------------------------------------------------------------
Income before accounting
changes 768 515 295 319 201 475 465 468 377 316 303
- ------------------------------------------------------------------------------------------------------------
Cumulative effect of
accounting changes(/1/) -- -- (273) -- 75 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Net income 768 515 22 319 276 475 465 468 377 316 303
- ------------------------------------------------------------------------------------------------------------
Average equity(/2/) 2,666 2,562 2,530/2,749 2,701 2,577 2,407 2,220 2,121 2,089 1,838 1,913
- ------------------------------------------------------------------------------------------------------------
Return on average equity
(%)(/2/) 28.8 20.1 .9/10.7 11.8 10.7 19.7 21.0 22.1 18.1 17.2 15.8
- ------------------------------------------------------------------------------------------------------------
Earnings per share
before accounting
changes 3.80 2.43 1.39 1.51 .95 2.22 2.09 2.13 1.60 1.33 1.13
- ------------------------------------------------------------------------------------------------------------
Cumulative effect of
accounting
changes on earnings per
share -- -- (1.29) -- .35 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Earnings per share 3.80 2.43 .10 1.51 1.30 2.22 2.09 2.13 1.60 1.33 1.13
- ------------------------------------------------------------------------------------------------------------
Average number of shares 202.0 211.9 212.6 212.2 212.4 214.4 222.6 219.6 236.4 237.8 266.8
- ------------------------------------------------------------------------------------------------------------
Dividends 239 238 221 200 183 176 165 141 132 112 110
- ------------------------------------------------------------------------------------------------------------
Per share 1.18 1.12 1.04 .94 .86 .82 .74 .64 .56 .47 .41
- ------------------------------------------------------------------------------------------------------------
BALANCE SHEET
Current assets 2,275 2,168 2,026 1,951 2,173 2,217 2,056 1,899 1,844 1,616 1,370
- ------------------------------------------------------------------------------------------------------------
Current liabilities 1,629 1,425 1,281 1,253 1,341 1,471 1,338 1,264 1,295 976 824
- ------------------------------------------------------------------------------------------------------------
Working capital 646 743 745 698 832 746 718 635 549 640 546
- ------------------------------------------------------------------------------------------------------------
Property (net) 2,835 2,742 2,787 2,972 3,183 3,255 3,007 2,758 2,685 2,661 2,479
- ------------------------------------------------------------------------------------------------------------
Total assets 6,194 5,894 5,652 5,662 6,056 6,108 5,645 5,154 5,008 4,641 4,084
- ------------------------------------------------------------------------------------------------------------
Long-term debt 736 773 774 905 1,190 1,210 1,198 892 917 1,018 1,000
- ------------------------------------------------------------------------------------------------------------
Shareholders' equity 2,569 2,557 2,473 2,699 2,655 2,547 2,282 2,243 2,044 1,978 1,705
- ------------------------------------------------------------------------------------------------------------
Per share 13.23 12.35 11.57 12.71 12.50 12.01 10.49 10.24 9.22 8.28 7.19
- ------------------------------------------------------------------------------------------------------------
OTHER DATA
Capital spending 454 356 293 283 335 567 671 410 479 497 452
- ------------------------------------------------------------------------------------------------------------
Depreciation expense 332 318 331 352 351 324 292 274 266 242 214
- ------------------------------------------------------------------------------------------------------------
Quoted market price
High 47 7/8 42 1/8 38 1/8 34 1/8 29 5/8 27 5/8 23 23 3/8 26 3/4 19 3/8 12 3/4
----------------------------------------------------------------------------------------------------------
Low 34 7/8 33 3/4 29 5/8 25 20 3/4 17 1/4 18 1/2 15 5/8 13 3/4 11 1/4 8 1/8
----------------------------------------------------------------------------------------------------------
Year-end 45 3/4 37 1/8 37 7/8 32 7/8 25 1/4 23 1/2 19 7/8 20 1/8 16 1/2 18 1/8 12 3/4
----------------------------------------------------------------------------------------------------------
Price/earnings
ratio(/3/)
High 13 17 27 23 31 12 11 11 17 15 11
----------------------------------------------------------------------------------------------------------
Low 9 14 21 17 22 8 9 7 9 8 7
----------------------------------------------------------------------------------------------------------
Average number of
employees 31,200 30,800 31,400 32,300 33,700 35,100 35,500 36,300 36,800 36,500 37,500
- ------------------------------------------------------------------------------------------------------------
</TABLE>
All amounts are in millions of dollars except per share data and number of
employees.
All data was adjusted to reflect the two-for-one stock splits payable on June
10, 1994, and on March 12, 1987.
(1) The 1993 changes in methods of accounting relate to the adoption of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions"; SFAS No. 109, "Accounting for Income Taxes," and SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." The 1991 change in the
method of accounting relates to the cost of rebuilding glass and fiber
glass melting facilities. The effect of all the changes on net income in
the years of change, exclusive of the cumulative effect to Jan. 1 of the
year of change and the pro forma effect on individual prior years' net
income, was not material.
(2) Average equity and return on average equity for 1993 were calculated and
presented inclusive and exclusive of the cumulative effect of the
accounting changes.
(3) Price/earnings ratios were calculated based on high and low market prices
during the year and the respective years' earnings per share. The 1993 and
1991 ratios were calculated and presented exclusive of the cumulative
effect of the accounting changes.
<PAGE>
PPG SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
WORLD HEADQUARTERS One PPG Place Pittsburgh, PA 15272, U.S.A.
Phone (412) 434-3131 Internet: http://www.ppg.com
ANNUAL MEETING
Thursday, April 18, 1996, 2:00 p.m. Pittsburgh Hilton and Towers Gateway Center
Pittsburgh, PA 15222
TRANSFER AGENT & REGISTRAR
Chemical Mellon Shareholder Services, LLC Overpeck Centre 85 Challenger Road
Richfield Park, NJ 07660
PPG-dedicated phone 1-800-648-8160
Shareholders with specific questions regarding dividend checks, transfer or
replacement of stock certificates or dividend tax information should contact
Chemical Mellon Shareholder Services--the dividend paying agent, dividend
reinvestment agent, transfer agent and registrar for PPG at the above address.
Or, shareholders may contact PPG Shareholder Relations, 40N, PPG Industries,
One PPG Place, Pittsburgh, PA 15272; phone (412) 434-3312.
PUBLICATIONS AVAILABLE TO SHAREHOLDERS
Copies of the following publications will be furnished without charge upon
written request to Corporate Communications, 7W, PPG Industries, One PPG Place,
Pittsburgh, PA 15272.
FORM 10-K--the Company's Annual Report filed with the Securities and Exchange
Commission.
QUARTERLY REPORT--a review of PPG's quarterly financial performance, mailed to
shareholders in May, August and November.
BLUEPRINT FOR THE FUTURE--a booklet summarizing PPG's mission, values, strategy
and goals.
PPG WORLDWIDE CODE OF ETHICS--an employee guide to corporate conduct policies,
including those concerning personal conduct, relationships with customers,
suppliers and competitors, protection of corporate assets, responsibilities to
the public, and PPG as a global organization.
PPG'S ENVIRONMENT, HEALTH AND SAFETY POLICY--a brochure describing the
Company's commitment, worldwide, to manufacturing, selling and distributing
products in a manner that is safe and healthful for its employees, neighbors
and customers, and that protects the environment.
PPG'S ENVIRONMENT, HEALTH AND SAFETY ANNUAL REPORT--a report of progress during
the year with respect to the Company's environment, health and safety
commitment.
PPG'S RESPONSIBLE CARE COMMITMENT--a brochure outlining the Company's voluntary
activities under the Responsible Care initiative of the Chemical Manufacturers
Association for safe and ethical management of chemicals.
DIVIDEND INFORMATION
PPG has paid uninterrupted dividends since 1899. The latest quarterly dividend
of 30 cents per share, voted by the board of directors on Jan. 18, 1996,
results in an annual dividend rate of $1.20 per share.
STOCK EXCHANGE LISTINGS
PPG common stock is traded on the New York, Pacific and Philadelphia stock
exchanges (symbol: PPG).
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
PPG's Dividend Reinvestment and Stock Purchase Plan is offered as a service and
convenience to shareholders. The Plan provides for the automatic reinvestment
of dividends in shares of PPG stock. Shareholders also may purchase additional
stock through cash contributions to the Plan.
A prospectus fully describing the Plan and authorization forms for
participation are available from the Company at the address shown under
"Investor Relations."
INVESTOR RELATIONS
General information about PPG common stock, debt and the Dividend Reinvestment
and Stock Purchase Plan may be obtained from Douglas B. Atkinson, Director of
Investor Relations. Phone (412) 434-2120, or write Director of Investor
Relations, 40N, PPG Industries, One PPG Place, Pittsburgh, PA 15272.
QUARTERLY STOCK MARKET PRICE
<TABLE>
<CAPTION>
1995 1994(/1/)
- --------------------------------------------------------------
Quarter Ended High Low Close High Low Close
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31 $39 7/8 $34 7/8 $37 3/4 $40 3/8 $36 3/8 $37 1/8
- --------------------------------------------------------------
June 30 43 36 5/8 42 7/8 39 1/2 34 5/8 37 1/2
- --------------------------------------------------------------
Sept. 30 47 42 1/4 46 3/8 42 1/8 37 5/8 39 5/8
- --------------------------------------------------------------
Dec. 31 47 7/8 41 7/8 45 3/4 41 1/2 33 3/4 37 1/8
- --------------------------------------------------------------
</TABLE>
The number of holders of record of PPG common stock as of Jan. 31, 1996, was
33,901, as shown on the records of the Company's transfer agent.
DIVIDENDS
<TABLE>
<CAPTION>
1995 1994(/1/)
- --------------------------------------------
Month of Amount Per Amount Per
Payment (Millions) Share (Millions) Share
- --------------------------------------------
<S> <C> <C> <C> <C>
March $ 59.8 $ .29 $ 57.4 $ .27
- --------------------------------------------
June 58.0 .29 59.5 .28
- --------------------------------------------
September 62.3 .30 59.5 .28
- --------------------------------------------
December 58.8 .30 61.4 .29
- --------------------------------------------
Total $238.9 $1.18 $237.8 $1.12
============================================
</TABLE>
(1) Data was adjusted to reflect the two-for-one stock split payable on June
10, 1994.
<PAGE>
Exhibit 21
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
SUBSIDIARIES OF THE REGISTRANT
The Registrant is PPG Industries, Inc. There are no subsidiaries for which
separate financial statements are filed or included in group financial
statements filed for unconsolidated subsidiaries. Material subsidiaries
included in the 1995 consolidated financial statements of the Company are:
<TABLE>
<CAPTION>
Percentage of
Voting Power
<S> <C>
Domestic:
Eighty-Three/One Hundred, Inc. - Delaware.............. 100.00%
LYNX Services from PPG, L.L.C. - Kansas................ 80.00
Market View, Inc. - Delaware........................... 100.00
Matthews Paint Company - Delaware...................... 100.00
PPG Architectural Finishes, Inc. - Delaware............ 100.00
PPG Industries International, Inc. - Delaware.......... 100.00
PPG Industries Securities, Inc. - Delaware............. 100.00
Transitions Optical, Inc. - Delaware................... 51.00
Canadian:
PPG Canada Inc. - Canada............................... 100.00
European:
Ampaspace S.r.l. - Italy............................... 80.00
PPG Iberica, S.A. - Spain.............................. 60.00
PPG Industries (Deutschland) GmbH - Germany............ 100.00
PPG Industries Fiber Glass B.V. - The Netherlands...... 100.00
PPG Industries France - France......................... 100.00
PPG Industries Glass S.A. - France..................... 100.00
PPG Industries Italia S.r.l. - Italy................... 100.00
PPG Industries (U.K.) Limited - England................ 100.00
PPG Ouvrie, SA - France................................ 100.00
PPG Industries Chemicals B.V. - The Netherlands........ 100.00
VB Glas GmbH - Germany................................. 100.00
Subsidiaries in other areas:
PPG Coatings (Hong Kong) Co. Ltd. - Hong Kong.......... 60.00
PPG - Feng Tai, Ltd. - Hong Kong....................... 55.00
PPG Industries Asia/Pacific Ltd. - Japan............... 100.00
PPG Industries de Mexico, S.A. de C.V. - Mexico........ 100.00
PPG Industries Export Sales Corporation - U.S. Virgin
Islands.............................................. 100.00
PPG Industries Taiwan Ltd. - Taiwan.................... 55.00
Taiwan Chlorine Industries Ltd. - Taiwan............... 60.00
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
- ------------------------------
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to Registration Statement No. 2-62328 on Form S-3, in Registration Statement
Nos. 33-04983 and 33-64081 on Form S-3 and in Registration Statement Nos. 33-
23350, 33-50400, 33-58909 and 33-64077 on Form S-8 of our reports dated January
18, 1996, appearing in and incorporated by reference in this Annual Report on
Form 10-K of PPG Industries, Inc. for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
February 16, 1996
<PAGE>
Exhibit 24
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Allen J. Krowe, a Director of PPG Industries, Inc. (the "Corporation"),
a Pennsylvania corporation, hereby constitute and appoint J. E. Dempsey, W. H.
Hernandez and H. K. Linge, or any of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1995, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Allen J. Krowe
----------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Steven C. Mason, a Director of PPG Industries, Inc. (the "Corporation"),
a Pennsylvania corporation, hereby constitute and appoint J. E. Dempsey, W. H.
Hernandez and H. K. Linge, or any of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1995, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Steven C. Mason
-----------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Harold A. McInnes, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Harold A. McInnes
-------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Robert Mehrabian, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Robert Mehrabian
------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Vincent A. Sarni, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Vincent A. Sarni
------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, David G. Vice, a Director of PPG Industries, Inc. (the "Corporation"), a
Pennsylvania corporation, hereby constitute and appoint J. E. Dempsey, W. H.
Hernandez and H. K. Linge, or any of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1995, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ David G. Vice
---------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, David R. Whitwam, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ David R. Whitwam
------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Erroll B. Davis, Jr., a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Erroll B. Davis, Jr.
----------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Stanley C. Gault, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Stanley C. Gault
------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Michele J. Hooper, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Michele J. Hooper
-------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Raymond W. LeBoeuf, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint J. E.
Dempsey, W. H. Hernandez and H. K. Linge, or any of them, my true and lawful
attorneys or attorneys-in-fact, with full power of substitution and revocation,
to sign, in my name and on my behalf as a Director of the Corporation, the
Corporation's Form 10-K for the fiscal year ended December 31, 1995, to be filed
with the Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Raymond W. LeBoeuf
--------------------------------
<PAGE>
PPG INDUSTRIES, INC.
POWER OF ATTORNEY
-----------------
(10-K)
I, Jerry E. Dempsey, a Director of PPG Industries, Inc. (the
"Corporation"), a Pennsylvania corporation, hereby constitute and appoint W. H.
Hernandez and H. K. Linge, or either of them, my true and lawful attorneys or
attorneys-in-fact, with full power of substitution and revocation, to sign, in
my name and on my behalf as a Director of the Corporation, the Corporation's
Form 10-K for the fiscal year ended December 31, 1995, to be filed with the
Securities and Exchange Commission, Washington, DC.
WITNESS my hand this 15th day of February 1996.
/s/ Jerry E. Dempsey
------------------------------
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