SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2002 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 incorporation (I.R.S. Employer
or organization) Identification No.)
One PPG Place, Pittsburgh, Pennsylvania 15272
(Address of principal executive offices) (Zip Code)
(412) 434-3131
(Registrant's telephone number, including area code)
As of April 30, 2002, 168,775,496 shares of the Registrant's common stock, par
value $1.66-2/3 per share, were outstanding.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No _____
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE(S)
Part I. Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Statement of Income.............................................. 2
Condensed Balance Sheet.................................................... 3
Condensed Statement of Cash Flows.......................................... 4
Notes to Condensed Financial Statements.................................... 5-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................. 14-17
Item 3. Quantitative and Qualitative Disclosures About Market Risk........... 17
Part II. Other Information
Item 1. Legal Proceedings.................................................... 18
Item 2. Change in Securities and Use of Proceeds............................. 18-19
Item 4. Submission of Matters to a Vote of Security Holders.................. 19
Item 6. Exhibits and Reports on Form 8-K..................................... 19-21
Signature....................................................................... 22
-1-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Statement of Income (Unaudited)
-----------------------------------------
(Millions, except per share amounts)
Three Months Ended March 31
2002 2001
------ ------
Net sales......................................................... $1,875 $2,099
Cost of sales..................................................... 1,189 1,324
------ ------
Gross profit................................................... 686 775
------ ------
Other expenses (earnings):
Selling, general and administrative............................ 342 351
Depreciation................................................... 91 94
Research and development....................................... 66 67
Interest....................................................... 33 48
Amortization................................................... 8 18
Business realignments (Note 4)................................. 81 101
Other, net..................................................... (19) (18)
------ ------
Total other expenses - net................................. 602 661
------ ------
Income before income taxes, minority interest
and cumulative effect of accounting change..................... 84 114
Income taxes...................................................... 33 48
Minority interest................................................. 8 10
------ ------
Income before cumulative effect of accounting change.............. 43 56
Cumulative effect of accounting change, net of tax (Note 2)....... 9 -
------ ------
Net income........................................................ $ 34 $ 56
====== ======
Earnings per common share (Note 3):
Income before cumulative effect of accounting change............ $ 0.25 $ 0.33
Cumulative effect of accounting change, net of tax.............. (0.05) -
------ ------
Earnings per common share......................................... $ 0.20 $ 0.33
====== ======
Earnings per common share - assuming dilution (Note 3):
Income before cumulative effect of accounting change............ $ 0.25 $ 0.33
Cumulative effect of accounting change, net of tax.............. (0.05) -
------ ------
Earnings per common share - assuming dilution..................... $ 0.20 $ 0.33
====== ======
Dividends per common share........................................ $ 0.42 $ 0.42
====== ======
The accompanying notes to the condensed financial statements are an integral
part of this consolidated statement.
-2-
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Balance Sheet (Unaudited)
-----------------------------------
March 31 Dec. 31
2002 2001
------- -------
Assets (Millions)
- ------
Current assets:
Cash and cash equivalents...................................... $ 72 $ 108
Receivables-net................................................ 1,533 1,416
Inventories (Note 5)........................................... 948 904
Other.......................................................... 288 275
------- -------
Total current assets....................................... 2,841 2,703
Property (less accumulated depreciation of
$4,466 million and $4,401 million)............................. 2,695 2,752
Investments....................................................... 306 305
Goodwill (Notes 2 and 6).......................................... 979 972
Identifiable intangible assets (Notes 2 and 6).................... 527 570
Prepaid pension asset............................................. 974 982
Other assets...................................................... 165 168
------- -------
Total...................................................... $ 8,487 $ 8,452
======= =======
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Short-term debt and current
portion of long-term debt.................................. $ 735 $ 696
Accounts payable and accrued liabilities....................... 1,333 1,259
------- -------
Total current liabilities.................................. 2,068 1,955
Long-term debt.................................................... 1,679 1,699
Deferred income taxes............................................. 523 552
Accumulated provisions............................................ 535 530
Other postretirement benefits..................................... 517 514
------- -------
Total liabilities.......................................... 5,322 5,250
------- -------
Commitments and contingent liabilities (Note 11)..................
Minority interest................................................. 128 122
------- -------
Shareholders' equity:
Common stock................................................... 484 484
Additional paid-in capital..................................... 113 109
Retained earnings.............................................. 6,514 6,551
Treasury stock................................................. (3,489) (3,496)
Unearned compensation.......................................... (100) (108)
Accumulated other comprehensive loss (Note 7).................. (485) (460)
------- -------
Total shareholders' equity................................. 3,037 3,080
------- -------
Total...................................................... $ 8,487 $ 8,452
======= =======
The accompanying notes to the condensed financial statements are an integral
part of this consolidated statement.
-3-
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Statement of Cash Flows (Unaudited)
---------------------------------------------
Three Months Ended March 31
2002 2001
----- -----
(Millions)
Cash from operating activities.................................... $ 48 $ 50
----- -----
Investing activities:
Capital spending
Additions to property and investments...................... (47) (57)
Business acquisitions, net of cash balances
acquired............................................... (9) (8)
Other.......................................................... 1 (2)
----- -----
Cash used for investing activities......................... (55) (67)
----- -----
Financing activities:
Net change in borrowings with
maturities of three months or less......................... 136 50
Proceeds from other short-term debt............................ 20 55
Repayment of other short-term debt............................. (14) (45)
Proceeds from long-term debt................................... 1 2
Repayment of long-term debt.................................... (113) (16)
Repayment of loans by employee stock
ownership plan............................................. 8 11
Issuance of treasury stock, net................................ 5 -
Dividends paid................................................. (71) (71)
----- -----
Cash used for financing activities......................... (28) (14)
----- -----
Effect of currency exchange rate changes
on cash and cash equivalents................................... (1) (2)
----- -----
Net decrease in cash and cash equivalents......................... (36) (33)
Cash and cash equivalents, beginning of period.................... 108 111
----- -----
Cash and cash equivalents, end of period.......................... $ 72 $ 78
===== =====
The accompanying notes to the condensed financial statements are an integral
part of this consolidated statement.
-4-
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Financial Statements (Unaudited)
---------------------------------------------------
1. Financial Statements
--------------------
The condensed financial statements included herein are unaudited. In the
opinion of management, these statements include all adjustments, consisting only
of normal, recurring adjustments, necessary for a fair presentation of the
financial position of PPG Industries, Inc. and subsidiaries (the Company or PPG)
at March 31, 2002 and the results of their operations and their cash flows for
the three months ended March 31, 2002 and 2001. These condensed financial
statements should be read in conjunction with the financial statements and notes
thereto incorporated by reference in PPG's Annual Report on Form 10-K for the
year ended December 31, 2001.
The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the full year.
2. Changes in Method of Accounting
-------------------------------
Effective January 1, 2002, PPG adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets."
This standard changes the accounting for goodwill and certain other intangible
assets from an amortization method to an impairment only approach. The standard
also requires a reassessment of the useful lives of identifiable intangible
assets other than goodwill and at least an annual test for impairment of
goodwill and intangibles with indefinite lives. Note 6, "Goodwill and Other
Identifiable Intangible Assets" provides additional information concerning
goodwill and other identifiable intangible assets.
In accordance with the requirements of SFAS No. 142, the Company tested the
goodwill attributable to each of our reporting units for impairment as of
January 1, 2002 and concluded that none of its goodwill was impaired. The
Company's reporting units are the major product lines comprising our reportable
business segments. Fair value was estimated using discounted cash flow
methodologies and market comparable information. The Company will test goodwill
of each of our reporting units for impairment annually in connection with our
strategic planning process.
In addition, the Company reassessed the useful lives of its identifiable
intangible assets and determined that the lives were appropriate other than for
the Company's trademarks, which were concluded to have indefinite useful lives.
As a result, the Company ceased amortization of the cost of its trademarks as of
January 1, 2002. Also, in accordance with the requirements of SFAS No. 142, the
Company tested each of its trademarks for impairment by comparing the fair value
of each trademark to its carrying value as of January 1, 2002. Fair value was
estimated by using the relief from royalty method (a discounted cash flow
methodology.) Based on these impairment tests, PPG recognized an adjustment of
$14 million ($9 million or $0.05 per share, net of tax) in the first quarter of
2002 to reduce the carrying value of certain trademarks within our coatings
segment to their estimated fair value as the level of future cash flows from
sales of certain brands are expected to be less than originally anticipated.
Under SFAS No. 142, this impairment adjustment has been reported as the
cumulative effect of an accounting change in our first quarter 2002 income
statement. The Company will test the carrying value of trademarks for
impairment at least annually.
-5-
Had the Company been accounting for its goodwill and certain other intangible
assets under SFAS No. 142 for all prior periods presented, the Company's net
income and earnings per common share would have been as follows for the three
months ended March 31, 2001:
(Millions, except per share amounts)
Net income
Reported net income..................................... $ 56
Add back amortization expense, net of tax............... 8
-----
Adjusted net income..................................... $ 64
=====
Earnings per common share
Reported earnings....................................... $0.33
Impact of amortization expense, net of tax.............. 0.05
-----
Adjusted earnings per common share...................... $0.38
=====
Earnings per common share -
assuming dilution
Reported earnings....................................... $0.33
Impact of amortization expense, net of tax.............. 0.05
-----
Adjusted earnings per common share -
assuming dilution..................................... $0.38
=====
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," which requires that the purchase method of accounting
be used for all business combinations initiated after June 30, 2001. All of
the Company's acquisitions have been accounted for using the purchase method.
Also, in accordance with the transition provisions of SFAS No. 141, the
carrying amount of the intangible asset related to the acquired assembled
workforce, net of related tax effects, which totaled $15 million, was
reclassified from identifiable intangible assets to goodwill effective
January 1, 2002, as this intangible asset no longer meets the criteria for
recognition apart from goodwill.
-6-
3. Earnings Per Common Share
-------------------------
The following table reflects the earnings per common share calculations for the
three months ended March 31, 2002 and 2001.
Three Months Ended March 31
(Millions, except per share amounts) 2002 2001
---------- ---------
Earnings per common share
Income before cumulative effect
of accounting change.................................. $ 43 $ 56
Cumulative effect of accounting
change, net of tax.................................... (9) -
---------- ---------
Net income.............................................. $ 34 $ 56
---------- ---------
Weighted average common shares
outstanding........................................... 168.6 168.3
---------- ---------
Income before cumulative effect
of accounting change.................................. $ 0.25 $ 0.33
Cumulative effect of accounting
change, net of tax.................................... (0.05) -
---------- ---------
Earnings per common share............................... $ 0.20 $ 0.33
========== =========
Earnings per common share -
assuming dilution
Income before cumulative effect
of accounting change................................. $ 43 $ 56
Cumulative effect of accounting
change, net of tax................................... (9) -
---------- ---------
Net income.............................................. $ 34 $ 56
---------- ---------
Weighted average common shares
outstanding.......................................... 168.6 168.3
Effect of dilutive securities:
Stock options........................................ 0.2 0.1
Other stock compensation plans....................... 0.7 0.7
---------- ---------
Potentially dilutive common shares...................... 0.9 0.8
---------- ---------
Adjusted common shares
outstanding.......................................... 169.5 169.1
---------- ---------
Income before cumulative effect
of accounting change................................. $ 0.25 $ 0.33
Cumulative effect of accounting
change, net of tax................................... (0.05) -
---------- ---------
Earnings per common share -
assuming dilution.................................... $ 0.20 $ 0.33
========== =========
-7-
4. Business Realignments
---------------------
During the first quarter of 2002, the Company finalized plans to reduce costs,
increase efficiencies and accelerate performance improvement and took a charge
of $81 million for restructuring and other related activities, including
severance and other costs of $66 million and asset dispositions of $15 million.
It is expected that these activities will be completed by June 2003.
Severance and Asset Total Employees
Other Costs Dispositions Charge Covered
----------- ------------ ------ -------
(Millions)
Coatings..................... $ 62 $ 15 $ 77 1,004
Glass........................ 1 - 1 22
Chemicals.................... 1 - 1 20
Corporate.................... 2 - 2 20
----------- ---------- ------- -----
Total....................... $ 66 $ 15 $ 81 1,066
Activity.................... (5) (1) (6) (114)
----------- ---------- ------- -----
Balance, end of period...... $ 61 $ 14 $ 75 952
=========== ========== ======= =====
During the first quarter of 2001, the Company finalized plans to reduce costs,
increase efficiencies and accelerate performance improvement and took a charge
of $101 million for restructuring and other related activities, including
severance and other costs of $67 million and asset dispositions of $34 million.
It is expected that substantially all of these amounts will be spent by June
2002.
Severance and Asset Total Employees
Other Costs Dispositions Charge Covered
----------- ------------ ------ -------
(Millions)
Coatings..................... $ 60 $ 23 $ 83 1,072
Glass........................ 4 6 10 254
Chemicals.................... 2 5 7 23
Corporate.................... 1 - 1 18
----------- ---------- ------- ------
Total....................... $ 67 $ 34 $ 101 1,367
Activity.................... (46) (33) (79) (1,158)
----------- ---------- ------- ------
Balance, end of period...... $ 21 $ 1 $ 22 209
=========== ========== ======= ======
5. Inventories
-----------
Inventories at March 31, 2002 and December 31, 2001 are detailed below.
March 31 Dec. 31
2002 2001
-------- -------
(Millions)
Finished products and work in process.............. $ 657 $ 622
Raw materials...................................... 173 166
Supplies........................................... 118 116
----- -----
Total.......................................... $ 948 $ 904
===== =====
-8-
Most domestic and certain foreign inventories are valued using the last-in,
first-out method. If the first-in, first-out method had been used, inventories
would have been $160 million and $180 million higher at March 31, 2002 and
December 31, 2001, respectively.
6. Goodwill and Other Identifiable Intangible Assets
-------------------------------------------------
The change in the carrying amount of goodwill attributable to each business
segment for the three months ended March 31, 2002 was as follows:
Coatings Glass Chemicals Total
-------- ----- --------- -----
(Millions)
Balance, December 31, 2001................. $ 873 $ 79 $ 20 $ 972
Reclass assembled workforce, net of
taxes (See Note 2)...................... 15 - - 15
------ ----- ------ -----
Balance, January 1, 2002................... $ 888 $ 79 $ 20 $ 987
Goodwill acquired......................... 8 - - 8
Currency translation...................... (13) (2) (1) (16)
------ ----- ------ -----
Balance, March 31, 2002.................... $ 883 $ 77 $ 19 $ 979
====== ===== ====== =====
The change in the carrying amount of trademarks for the three months ended March
31, 2002 was as follows:
Balance, December 31, 2001............................... $ 158
Cumulative effect of accounting change -
impairment adjustment................................ (14)
------
Balance, March 31, 2002 and January 1, 2002.............. $ 144
======
The Company's identifiable intangible assets with finite lives are being
amortized over their estimated useful lives and are detailed below.
March 31, 2002 December 31, 2001
-------------- -----------------
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Net Amount Amortization Net
------ ------------ --- ------ ------------ ---
(Millions)
Acquired technology...... $ 348 $ (66) $ 282 $ 348 $ (60) $ 288
Assembled workforce...... - - - 29 (10) 19
Other.................... 154 (53) 101 147 (42) 105
----- ------ ----- ------ ------ -----
Balance................. $ 502 $ (119) $ 383 $ 524 $ (112) $ 412
===== ====== ===== ====== ====== =====
Aggregate amortization expense for the three months ended March 31, 2002 and
2001 related to these identifiable intangible assets, was $8 million and $10
million, respectively. At March 31, 2002, estimated future amortization expense
of identifiable intangible assets is as follows: $26 million for the remaining
three quarters of 2002 and $31 million, $30 million, $29 million, $28 million
and $27 million in 2003, 2004, 2005, 2006 and 2007, respectively.
-9-
7. Comprehensive Income
--------------------
Total comprehensive income (loss) for the three months ended March 31, 2002 and
2001 was as follows:
Three Months Ended March 31
2002 2001
------ ------
(Millions)
Net income....................................................... $ 34 $ 56
----- -----
Other comprehensive loss, net of tax:
Currency translation adjustment................................ (42) (83)
Minimum pension liability adjustment........................... - (6)
Unrealized (losses) gains on marketable securities............. (2) 4
Net change - derivatives (Note 10)............................. 19 (45)
Transition adjustment on derivatives (Note 10)................. - 43
----- -----
(25) (87)
----- -----
Total comprehensive income (loss)............................ $ 9 $ (31)
===== =====
8. Business Segment Information
----------------------------
Business segment net sales and operating income for the three months ended March
31, 2002 and 2001 were as follows:
Three Months Ended March 31
2002 2001
------ ------
(Millions)
Net sales:
Coatings...................................................... $1,053 $1,106
Glass......................................................... 488 583
Chemicals..................................................... 336 413
Intersegment net sales........................................ (2) (3)
------ ------
Total...................................................... $1,875 $2,099
====== ======
Operating income:
Coatings...................................................... $ 71 $ 61
Glass......................................................... 20 85
Chemicals..................................................... 27 23
------ ------
Total...................................................... 118 169
Interest expense - net.......................................... (31) (43)
Other unallocated corporate expense - net....................... (3) (12)
------ ------
Income before income taxes, minority interest
and cumulative effect of accounting change (a)................ $ 84 $ 114
====== ======
(a) Includes for the three months ended March 31, 2002, a pretax charge of
$81 million for restructuring and other related activities, including
severance and other costs of $66 million and asset dispositions of $15
million. Includes for the three months ended March 31, 2001, a pretax
charge of $101 million for restructuring and other related activities,
including severance and other costs of $67 million and asset
dispositions of $34 million. See Note 4, "Business Realignments," for
amounts by business segment.
-10-
9. Cash Flow Information
---------------------
Cash payments for interest were $40 million and $58 million for the three months
ended March 31, 2002 and 2001, respectively. Net cash payments for income taxes
for the three months ended March 31, 2002 and 2001 were $33 million and $35
million, respectively.
10. Derivative Financial Instruments
--------------------------------
PPG uses derivative instruments to manage its exposure to fluctuating natural
gas prices through the use of natural gas swap and option contracts and forward
currency contracts as hedges against its exposure to variability in exchange
rates on short-term intercompany borrowings denominated in foreign currencies.
The Company recognizes all derivative instruments as either assets or
liabilities at fair value. The unrealized change in the fair value of these
instruments is deferred in accumulated other comprehensive income (loss) and
subsequently recognized, when realized, by reclassification of the gain or loss
into cost of sales, as natural gas is purchased, and into other earnings or
charges, as foreign exchange gains and losses are recognized on the related
intercompany borrowings.
During the first quarter of 2002, the net change in accumulated other
comprehensive loss due to derivatives of $19 million, net of tax, was comprised
of realized losses of $9 million and unrealized gains of $10 million. During
the first quarter of 2001, the net change in accumulated other comprehensive
loss due to derivatives totaled $45 million, net of tax. This was comprised of
realized gains of $23 million and unrealized losses of $22 million. The
transition adjustment on derivatives of $43 million represents the unrealized
gain, net of tax, on the derivatives held at January 1, 2001, the date of our
adoption of SFAS No. 133, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", as amended by SFAS No. 138.
11. Commitments and Contingent Liabilities
--------------------------------------
PPG is involved in a number of lawsuits and claims, both actual and potential,
including some that it has asserted against others, in which substantial
monetary damages are sought. These lawsuits and claims, some of which are
described below, relate to product liability, contract, patent, environmental,
antitrust and other matters arising out of the conduct of PPG's business. Except
with respect to any PPG contribution arising out of a possible voluntary
settlement of asbestos claims as discussed below, the amount of which cannot be
predicted, management believes that, in the aggregate, the outcome of all
lawsuits and claims involving PPG will not have a material effect on PPG's
consolidated financial position or liquidity; however, such outcome may be
material to the results of operations of the period in which the costs, if any,
are recognized.
The Company has been named in a number of antitrust lawsuits alleging that PPG
acted with competitors to fix prices and allocate markets in the automotive
refinish industry and for certain glass products. The automotive refinish
claims have been consolidated, but the proceedings are still at an early stage.
All of the initial defendants in the glass antitrust cases other than PPG, have
settled. PPG believes it has meritorious defenses to these claims.
The Company has been a defendant since April 1994 in a suit filed by Marvin
Windows and Doors (Marvin) alleging numerous claims, including breach of
warranty. All of the plaintiff's claims, other than breach of warranty, have
been dismissed. However, on February 14, 2002, a federal jury awarded Marvin
$136 million on the remaining claim. Subsequently, the court added $20 million
for interest bringing the total judgment to $156 million. PPG believes it has
meritorious defenses to the plaintiff's claims and has reasonable prospects of
prevailing on appeal.
-11-
For over thirty years, PPG has been a defendant in lawsuits involving claims
alleging personal injury from exposure to asbestos. Aggregate settlements by
PPG to date have been immaterial. At March 31, 2002, PPG was one of many
defendants in numerous asbestos-related lawsuits involving approximately 116,000
claims. In many of the cases, the plaintiffs allege that PPG should be liable
for injuries involving asbestos-containing thermal insulation products
manufactured and distributed by Pittsburgh Corning Corporation (PC). PPG and
Corning Incorporated are each 50% shareholders of PC. PPG believes that it is
not responsible for any injuries caused by PC products and intends to defend
against such claims. Prior to 2000, PPG had never been found liable for any
such claims, and in numerous cases PPG had been dismissed on motions prior to
trial. In January 2000, in a trial in a state court in Texas involving six
plaintiffs, the jury found PPG not liable. However, a week later in a separate
trial also in state court in Texas, another jury found PPG, for the first time,
partly responsible for injuries to five plaintiffs alleged to be caused by PC
products. PPG intends to appeal the adverse verdict.
On April 16, 2000, PC filed for Chapter 11 Bankruptcy in the Federal Bankruptcy
Court in Pittsburgh, Pennsylvania. Accordingly, in the first quarter of 2000,
PPG recorded an after-tax charge of $35 million for the write-off of all of its
investment in PC. As a consequence of the bankruptcy filing and the various
motions and orders in that proceeding, the asbestos litigation against PPG (and
against PC and Corning Incorporated) related to PC products has been stayed and
the filing of additional asbestos suits against them has been enjoined, until
May 15, 2002. During the pendency of the stay, interested parties, including PC
and PPG, among others, have been engaged in discussions to determine whether a
settlement of all current and potential asbestos claims can be agreed on within
the context of the PC bankruptcy proceeding. The court has extended the stay
several times with the parties' consent in order to facilitate settlement
discussions. These settlement discussions involve numerous, complex issues.
Accordingly, it is impossible to predict whether, when, or on what terms a
voluntary settlement, if any, on the part of PPG might be reached.
Although PPG believes it has adequate insurance for the personal injury and
property damage claims against PPG described above, certain of PPG's insurers
are contesting coverage with respect to some of these claims. PPG's lawsuits
and claims against others include claims against insurers and other third
parties with respect to actual and contingent losses related to environmental,
asbestos and other matters.
It is PPG's policy to accrue expenses for environmental contingencies when it is
probable that a liability has been incurred and the amount of loss can be
reasonably estimated. Reserves for environmental contingencies are exclusive of
claims against third parties and are generally not discounted. As of March 31,
2002 and December 31, 2001, PPG had reserves for environmental contingencies
totaling $92 million and $94 million, respectively. Pretax charges against
income for environmental remediation costs totaled $3 million and $4 million for
the three months ended March 31, 2002 and 2001, respectively, and are included
in "Other, net" in the condensed statement of income. Cash outlays related to
such environmental remediation totaled $5 million for each of the three months
ended March 31, 2002 and 2001.
Management anticipates that the resolution of the Company's environmental
contingencies will occur over an extended period of time and could result in
charges against income of up to $50 million in 2002. It is possible, however,
that technological, regulatory and enforcement developments, the results of
environmental studies and other factors could alter this expectation. In
management's opinion, the Company operates in an environmentally sound manner
and the outcome of the Company's environmental contingencies will not have a
material effect on PPG's financial position or liquidity.
-12-
In addition to the amounts currently reserved, the Company may be subject to
loss contingencies related to environmental matters estimated to be as much as
$200 million to $400 million, which range is unchanged from December 31, 2001.
Such unreserved losses are reasonably possible but are not currently considered
to be probable of occurrence. Although insurers and other third parties may
cover a portion of these costs, to the extent they are incurred, any potential
recovery is not included in this unreserved exposure to future loss. The
Company's environmental contingencies are expected to be resolved over an
extended period of time.
Although the unreserved exposure to future loss relates to all sites, a
significant portion of such exposure involves three operating plant sites in our
chemicals segment. Initial remedial actions are occurring at these sites.
Studies to determine the nature of the contamination are reaching completion and
the need for additional remedial actions, if any, is presently being evaluated.
The loss contingencies related to the remaining portion of such unreserved
exposure include significant unresolved issues such as the nature and extent of
contamination, if any, at sites and the methods that may have to be employed
should remediation be required.
With respect to certain waste sites, the financial condition of any other
potentially responsible parties also contributes to the uncertainty of
estimating PPG's final costs. Although contributors of waste to sites involving
other potentially responsible parties may face governmental agency assertions of
joint and several liability, in general, final allocations of costs are made
based on the relative contributions of wastes to such sites. PPG is generally
not a major contributor to such sites.
The impact of evolving programs, such as natural resource damage claims,
industrial site reuse initiatives and state voluntary remediation programs, also
adds to the present uncertainties with regard to the ultimate resolution of this
unreserved exposure to future loss. The Company's assessment of the potential
impact of these environmental contingencies is subject to considerable
uncertainty due to the complex, ongoing and evolving process of investigation
and remediation, if necessary, of such environmental contingencies.
A major customer of one of the Company's Asian coatings joint ventures is
experiencing financial difficulties. Should this customer be unable to pay the
amounts owed to our investee or cease operations, our loss would be limited to
the carrying value of the Company's investment in the joint venture which was
approximately $19 million as of March 31, 2002.
-13-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
Performance Overview
Sales decreased 11% for the first quarter of 2002 to $1.9 billion compared to
$2.1 billion for the first quarter of 2001. The combination of a 5% sales
volume decline primarily in our coatings and glass segments, a 4% decline in
sales price primarily in our chemicals segment and a 2% decline from the
negative effects of foreign currency translation primarily in our coatings
segment produced the sales decline.
The gross profit percentage decreased slightly to 36.6% for the first quarter of
2002 compared to 36.9% for the first quarter of 2001. The decrease in the gross
profit percentage was due to lower selling prices primarily in our chemicals
segment offset, in part, by lower energy costs and improved manufacturing
efficiencies across all of our business segments.
Net income and earnings per share, diluted, for the first quarter of 2002 were
$34 million and $0.20, respectively, compared to $56 million and $0.33,
respectively, for the same quarter in 2001. Net income for the first quarter of
2002 included after-tax charges of $55 million, or $0.33 a share, for
restructuring and other related activities and $9 million, or $0.05 a share, for
the cumulative effect of an accounting change. Net income for the first quarter
of 2001 included an after-tax charge of $71 million, or $0.42 a share, for
restructuring and other related activities. Excluding these charges, net income
and earnings per share, diluted, for the first quarter of 2002 was $98 million
and $0.58, respectively, compared to $127 million and $0.75, respectively, for
the same quarter of 2001. Also in the first quarter of 2002, the Company
adopted the provisions of Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets," resulting in a cumulative effect of
an accounting change of $9 million after-tax to reflect an impairment in the
carrying value of certain trademarks within the coatings segment. Also, in
accordance with this new standard, the carrying value of goodwill and trademarks
will no longer be amortized and will instead be tested for impairment annually.
Such amortization reduced 2001 first quarter earnings by $8 million after-tax,
or $0.05 a share. Aside from the factors described above, the decrease in net
income was due to lower sales volumes in our coatings and glass segments, lower
selling prices in our chemicals segment and an increase in pension and
postretirement medical benefit costs of approximately $30 million.
Performance of Business Segments
Coatings sales decreased 5% to $1.05 billion compared to $1.11 billion for the
first quarter of 2001. The combination of a decrease in sales volume of 3%,
primarily in our aerospace, industrial, refinish and European automotive
original businesses, and a 2% decline from the negative effects of foreign
currency translation contributed to the sales decline. Operating income was $71
million for the first quarter of 2002 compared to $61 million for the same
quarter of 2001. Operating income for the first quarter of 2002 and 2001
included pretax restructuring and other costs of $77 million and $83 million,
respectively. Excluding these charges, operating income for the first quarter
of 2002 and 2001 was $148 million and $144 million, respectively. The increase
in operating income is attributable to lower raw material prices, improved
manufacturing efficiencies, lower selling, general and administrative expenses
and the benefit of goodwill and certain trademarks no longer being amortized due
to the Company's adoption of SFAS No. 142 offset, in part, by lower sales
volumes.
Glass sales decreased 16% to $488 million compared to $583 million for the first
quarter of 2001. The combination of a decrease in sales volume of 12%,
primarily in our automotive replacement glass, flat glass and U.S. fiber glass
businesses, a 3% decline from lower selling prices across all of our glass
businesses and a 1% decline from the negative effects of foreign
-14-
currency translation contributed to the sales decline. Operating income was $20
million for the first quarter of 2002 compared to $85 million for the same
quarter of 2001. Operating income for the first quarter of 2002 and 2001
included pretax restructuring and other costs of $1 million and $10 million,
respectively. Excluding these charges, operating income for the first quarter of
2002 and 2001 was $21 million and $95 million, respectively. The decrease in
operating income is attributable to lower sales volumes primarily in our
automotive replacement glass and U.S. fiber glass businesses, lower selling
prices, lower equity earnings and higher pension and postretirement medical
benefit costs offset, in part, by improved manufacturing efficiencies.
Chemicals sales decreased 19% to $335 million compared to $411 million for the
first quarter of 2001. The combination of an 18% decline in sales prices
primarily for our chlor-alkali products and a 1% decline from the negative
effects of foreign currency translation contributed to the sales decline.
Operating income was $27 million for the first quarter of 2002 compared to $23
million for the same quarter of 2001. Operating income for the first quarter of
2002 and 2001 included pretax restructuring and other costs of $1 million and $7
million, respectively. Excluding these charges, operating income for the first
quarter of 2002 and 2001 was $28 million and $30 million, respectively. The
decrease in operating income is attributable to lower selling prices for our
chlor-alkali products offset, in part, by improved earnings in our optical
business, lower energy costs and improved manufacturing efficiencies.
Other Factors
The reduction in other unallocated corporate expense - net for the first quarter
of 2002 as compared to the same quarter of 2001 is principally due to the
receipt of insurance recoveries.
The tax rate on earnings excluding restructuring charges for the first quarter
of 2002 and 2001 was 36.0%. However, restructuring charges reflected a lower
tax benefit, which raised the overall effective rate to 39.3% and 42.1% for the
first quarter of 2002 and 2001, respectively.
PPG's net investment in Argentina was $68 million at December 31, 2001. As a
result of the continuing devaluation of the Argentine peso during the first
quarter, the net investment declined to $33 million at March 31, 2002, resulting
in an unrealized currency translation loss of $35 million reported as a direct
charge to the accumulated other comprehensive loss component of shareholders'
equity. The total unrealized currency translation loss related to Argentina at
March 31, 2002 is $63 million and is included in "Accumulated other
comprehensive loss" in the accompanying balance sheet.
Accounting Standards
Note 2, "Changes in Method of Accounting" describes and quantifies the impact of
the Company's adoption, effective January 1, 2002, of the provisions of the
Financial Accounting Standards Board's new standards on the accounting for
goodwill and intangible assets.
Commitments and Contingent Liabilities, including Environmental Matters
PPG is involved in a number of lawsuits and claims, both actual and potential,
including some that it has asserted against others, in which substantial
monetary damages are sought. See Note 11, "Commitments and Contingent
Liabilities," to the condensed financial statements in this Form 10-Q for an
expanded description of certain of these lawsuits. As discussed in Note 11,
except with respect to any PPG contribution arising out of a possible voluntary
settlement of asbestos claims, the amount of which cannot be predicted,
management believes that, in the aggregate, the outcome of all lawsuits and
claims involving PPG will not have a material effect on PPG's consolidated
financial position or liquidity; however, such outcome may be material to the
results of operations of the period in which the costs, if any, are recognized.
-15-
It is PPG's policy to accrue expenses for environmental contingencies when it is
probable that a liability has been incurred and the amount of loss can be
reasonably estimated. Reserves for environmental contingencies are exclusive of
claims against third parties and are generally not discounted. As of March 31,
2002 and December 31, 2001, PPG had reserves for environmental contingencies
totaling $92 million and $94 million, respectively. Pretax charges against
income for environmental remediation costs totaled $3 million and $4 million for
the three months ended March 31, 2002 and 2001, respectively, and are included
in "Other, net" in the condensed statement of income. Cash outlays related to
such environmental remediation totaled $5 million for each of the three months
ended March 31, 2002 and 2001.
Management anticipates that the resolution of the Company's environmental
contingencies will occur over an extended period of time and could result in
charges against income of up to $50 million in 2002. It is possible, however,
that technological, regulatory and enforcement developments, the results of
environmental studies and other factors could alter this expectation. In
management's opinion, the Company operates in an environmentally sound manner
and the outcome of the Company's environmental contingencies will not have a
material effect on PPG's financial position or liquidity.
In addition to the amounts currently reserved, the Company may be subject to
loss contingencies related to environmental matters estimated to be as much as
$200 million to $400 million, which range is unchanged from December 31, 2001.
Such unreserved losses are reasonably possible but are not currently considered
to be probable of occurrence. Although insurers and other third parties may
cover a portion of these costs, to the extent they are incurred, any potential
recovery is not included in this unreserved exposure to future loss. The
Company's environmental contingencies are expected to be resolved over an
extended period of time.
Although the unreserved exposure to future loss relates to all sites, a
significant portion of such exposure involves three operating plant sites in our
chemicals segment. Initial remedial actions are occurring at these sites.
Studies to determine the nature of the contamination are reaching completion and
the need for additional remedial actions, if any, is presently being evaluated.
The loss contingencies related to the remaining portion of such unreserved
exposure include significant unresolved issues such as the nature and extent of
contamination, if any, at sites and the methods that may have to be employed
should remediation be required.
With respect to certain waste sites, the financial condition of any other
potentially responsible parties also contributes to the uncertainty of
estimating PPG's final costs. Although contributors of waste to sites involving
other potentially responsible parties may face governmental agency assertions of
joint and several liability, in general, final allocations of costs are made
based on the relative contributions of wastes to such sites. PPG is generally
not a major contributor to such sites.
The impact of evolving programs, such as natural resource damage claims,
industrial site reuse initiatives and state voluntary remediation programs, also
adds to the present uncertainties with regard to the ultimate resolution of this
unreserved exposure to future loss. The Company's assessment of the potential
impact of these environmental contingencies is subject to considerable
uncertainty due to the complex, ongoing and evolving process of investigation
and remediation, if necessary, of such environmental contingencies.
A major customer of one of the Company's Asian coatings joint ventures is
experiencing financial difficulties. Should this customer be unable to pay the
amounts owed to our investee or cease operations, our loss would be limited to
the carrying value of the Company's investment in the joint venture which was
approximately $19 million as of March 31, 2002.
-16-
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of the Company. Management's
Discussion and Analysis and other sections of this Form 10-Q contain forward-
looking statements that reflect the Company's current views with respect to
future events and financial performance.
Forward-looking statements are identified by the use of the words "aim,"
"believe," "expect," "anticipate," "intend," "estimate" and other expressions
that indicate future events and trends. Any forward-looking statement speaks
only as of the date on which such statement is made and the Company undertakes
no obligation to update any forward-looking statement, whether as a result of
new information, future events or otherwise. You are advised, however, to
consult any further disclosures we make on related subjects in our reports to
the Securities and Exchange Commission. Also, note the following cautionary
statements.
Many factors could cause actual results to differ materially from the Company's
forward-looking statements. Among these factors are increasing price and
product competition by foreign and domestic competitors, fluctuations in the
cost and availability of raw materials, the ability to maintain favorable
supplier relationships and arrangements, economic and political conditions in
international markets, the ability to penetrate existing, developing and
emerging foreign and domestic markets, which also depends on economic and
political conditions, foreign exchange rates and fluctuations in those rates.
Further, it is not possible to predict or identify all such factors.
Consequently, while the list of factors presented here is considered
representative, no such list should be considered to be a complete statement of
all potential risks and uncertainties. Unlisted factors may present significant
additional obstacles to the realization of forward-looking statements.
The consequences of material differences in the results as compared to those
anticipated in the forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal liability to
third parties and similar risks, any of which could have a material adverse
effect on the Company's consolidated financial condition, operations or
liquidity.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
There were no material changes in the Company's exposure to market risk from
December 31, 2001.
-17-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
In the Company's Form 10-K for the year ended December 31, 2001, it was reported
the Company has been a defendant since April 1994 in a suit filed in the Federal
District Court in St. Paul, Minnesota, by Marvin Windows and Doors (Marvin)
alleging numerous claims, including breach of warranty. The district court
dismissed the plaintiff's claims in 1999, but certain of the claims were
reinstated on appeal. The Eighth Circuit U.S. Court of Appeals dismissed 12 of
13 claims, but allowed the plaintiff to proceed to trial on a breach of warranty
claim. On February 14, 2002, the federal jury awarded Marvin $136 million on
the remaining claim. Subsequently, the court added $20 million for interest
bringing the total judgment to $156 million. PPG believes it has meritorious
defenses to the plaintiff's claims and has reasonable prospects of prevailing on
appeal.
In the Company's Form 10-K for the year ended December 31, 2001, it was reported
that the Company has been a defendant in lawsuits involving claims alleging
personal injury from exposure to asbestos. In many of the cases, the plaintiffs
allege that the Company should be liable for injuries involving asbestos-
containing thermal insulation products manufactured and distributed by
Pittsburgh Corning Corporation (PC). The Company and Corning Incorporated are
each 50% shareholders of PC. On April 16, 2000, PC filed for Chapter 11
Bankruptcy in the Federal Bankruptcy Court in Pittsburgh, Pennsylvania.
Accordingly in the first quarter of 2000, the Company recorded an after-tax
charge of $35 million for the write-off of all of its investment in PC. As a
consequence of the bankruptcy filing and the various motions and orders in that
proceeding, the asbestos litigation against PPG (and against PC and Corning
Incorporated) related to PC products has been stayed and the filing of
additional asbestos suits against them has been enjoined, until May 15, 2002.
During the pendency of the stay, interested parties, including PC and PPG, among
others, have been engaged in discussions to determine whether a settlement of
current and potential asbestos claims can be agreed on within the context of the
PC bankruptcy proceeding. The court has extended the stay several times with
the parties' consent in order to facilitate settlement discussions. These
settlement discussions involve numerous, complex issues. Accordingly, it is
impossible to predict whether, when, or on what terms a voluntary settlement, if
any, on the part of PPG might be reached.
Item 2. Change in Securities and Use of Proceeds
- -------------------------------------------------
Directors who are not also Officers of the Company receive Common Stock
Equivalents pursuant to the Deferred Compensation Plan for Directors and the
Directors' Common Stock Plan. Common Stock Equivalents are hypothetical shares
of Common Stock having a value on any given date equal to the value of a share
of Common Stock. Common Stock Equivalents earn dividend equivalents that are
converted into additional Common Stock Equivalents but carry no voting rights or
other rights of a holder of Common Stock. The Common Stock Equivalents credited
to Directors under both plans are exempt from registration under Section 4(2) of
the Securities Act of 1933 as private offerings made only to Directors of the
Company in accordance with the provisions of the plans.
Under the Company's Deferred Compensation Plan for Directors, each Director must
defer receipt of such compensation as the Board mandates. Currently, the Board
mandates deferral of one-third of each payment of the basic annual retainer of
each Director. Each Director may also elect to defer the receipt of (1) an
additional one-third of each payment of the basic annual retainer, (2) all of
the basic annual retainer, or (3) all compensation. All deferred payments are
held in the form of Common Stock Equivalents. Payments out of the deferred
accounts are made in the form of Common Stock of the Company (and cash as to any
fractional Common Stock Equivalent). In
-18-
the first quarter of 2002, the Directors, as a group, were credited with 904
Common Stock Equivalents under this Plan. The values of the Common Stock
Equivalents, when credited, ranged from $48.59 to $54.52.
Under the Directors' Common Stock Plan, each Director who neither is nor was an
employee of the Company is credited annually with Common Stock Equivalents worth
one-half of the Director's basic annual retainer. Upon termination of service,
the Common Stock Equivalents held in a Director's account are converted to and
paid in Common Stock of the Company (and cash as to any fractional Common Stock
Equivalent). In the first quarter of 2002, the Directors, as a group, received
277 Common Stock Equivalents under this Plan. The value of each Common Stock
Equivalents, when credited, was $54.52.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
At the Company's Annual Meeting of Shareholders held on April 18, 2002 (the
Annual Meeting), the shareholders voted on the election of three directors to
serve for the terms indicated in the proxy statement relating to the Annual
Meeting.
1. On the matter of the election of three directors to serve for the terms
indicated in the proxy statement relating to the Annual Meeting, the vote
was as follows:
Nominees Votes For Votes Against
-------- --------- -------------
Michele J. Hooper 127,566,670 3,495,437
Raymond W. LeBoeuf 127,731,309 3,330,798
Robert Mehrabian 127,872,559 3,189,548
There were no broker non-votes with respect to this matter. Each of the
nominees was elected to serve as a director for the terms indicated in the proxy
statement relating to the Annual Meeting.
The following proposal was approved by the margin indicated:
2. Adoption of the Stock Plan, the vote was as follows:
Votes For Votes Against Votes Abstain
--------- ------------- -------------
79,179,854 28,395,816 1,864,205
There were 21,622,232 broker non-votes with respect to this matter.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
a. 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 Statement with Respect to Shares, amending the Restated Articles of
Incorporation effective April 21, 1998 was filed as Exhibit 3.1 to the
Registrant's Form 10-K for the year ended December 31, 1998, which
exhibit is incorporated herein by reference.
-19-
3.2 The Bylaws, as amended, were filed as Exhibit 3.2 to the Registrant's
Form 10-Q for the quarter ended March 31, 2002, which exhibit is
incorporated herein by reference.
4 The Shareholders' Rights Plan was filed as Exhibit 4 on the Registrant's
Form 8-K, dated February 19, 1998, which exhibit is incorporated herein
by reference.
4.1 Indenture, dated as of August 1, 1982, was filed as Exhibit 4.1 to PPG's
Registration Statement on Form S-3 (No. 333-44397) dated January 16, 1998
(the"1998 Form S-3"), which exhibit is incorporated herein by reference.
4.2 First Supplemental Indenture, dated as of April 1, 1986, was filed as
Exhibit 4.2 to the 1998 Form S-3, which exhibit is incorporated herein by
reference.
4.3 Second Supplemental Indenture, dated as of October 1, 1989, was filed as
Exhibit 4.3 to the 1998 Form S-3, which exhibit is incorporated herein by
reference.
4.4 Third Supplemental Indenture, dated as of November 1, 1995, was filed as
Exhibit 4.4 to the 1998 Form S-3, which exhibit is incorporated herein by
reference.
*10 The Supplemental Executive Retirement Plan II, as amended, and the Change
in Control Employment Agreement were filed as Exhibits 10.2 and 10.5,
respectively, to the Registrant's Form 10-Q for the quarter ended
September 30, 1995, which exhibit is incorporated herein by reference.
PPG Industries, Inc. Deferred Compensation Plan for Directors was filed
as Exhibit 10.3 to the Registrant's Form 10-K for the year ended December
31, 1997, which exhibit is incorporated herein by reference. PPG
Industries, Inc. Incentive Compensation and Deferred Income Plan for Key
Employees, as amended, was filed as Exhibit 10.1 to the Registrant's Form
10-Q for the quarter ended March 31, 2000, which exhibit is incorporated
herein by reference. PPG Industries, Inc. Directors' Common Stock Plan,
as amended April 19, 2000, was filed as Exhibit 10.1 to the Registrant's
Form 10-K for the year ended December 31, 2000, which exhibit is
incorporated herein by reference. PPG Industries, Inc. Executive Officers
Annual Incentive Compensation Plan, dated as of April 19, 2001, was filed
as Exhibit 10.3 to the Registrant's Form 10-K for the year ended December
31, 2000, which exhibit is incorporated herein by reference.
*10.1 PPG Industries, Inc. Nonqualified Retirement Plan dated as of January 1,
1989, as amended February 21, 2002, was filed as Exhibit 10.1 to the
Registrant's Form 10-K for the year ended December 31, 2001, which
exhibit is incorporated herein by reference.
*10.2 PPG Industries, Inc. Deferred Compensation Plan, as amended effective
February 21, 2002, was filed as Exhibit 10.2 to the Registrant's Form 10-
K for the year ended December 31, 2001, which exhibit is incorporated
herein by reference.
*10.3 PPG Industries, Inc. Stock Plan, dated as of April 17, 1997, as amended
April 18, 2002, was filed as Exhibit 10.3 to the Registrant's Form 10-K
for the year ended December 31, 2001, which exhibit is incorporated
herein by reference.
-20-
*10.4 PPG Industries, Inc. Total Shareholder Return Plan for Key
Employees, as amended effective April 18, 2002, was filed as Exhibit
10.4 to the Registrant's Form 10-K for the year ended December 31,
2001, which exhibit is incorporated herein by reference.
*10.5 PPG Industries, Inc. Executive Officers' Total Shareholder Return
Plan, as amended effective April 18, 2002, was filed as Exhibit 10.5
to the Registrant's Form 10-K for the year ended December 31, 2001,
which exhibit is incorporated herein by reference.
12 Computation of Ratio of Earnings to Fixed Charges for the Quarter
Ended March 31, 2002 and for the Five Years Ended December 31, 2001.
* Items referred to in Exhibit 10, 10.1, 10.2, 10.3, 10.4 and 10.5 and
incorporated by reference are either management contracts, compensatory plans
or arrangements required to be filed as an exhibit hereto pursuant to Item
601 of Regulation S-K.
b. Reports on Form 8-K
1. The Company filed a Form 8-K issuing a press release dated February
25, 2002. The release announced that Frank A. Archinaco, executive
vice president, will retire July 1, 2002 and Charles E. (Chuck)
Bunch, executive vice president, has been elected president and
chief operating officer, effective the same day.
-21-
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PPG INDUSTRIES, INC.
-------------------------------------
(Registrant)
Date: May 3, 2002 By /s/ W. H. Hernandez
----------------------------------
W. H. Hernandez
Senior Vice President, Finance
(Principal Financial and
Accounting Officer and
Duly Authorized Officer)
-22-
PPG INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
3.2 The Bylaws of PPG Industries, Inc., as amended.
12 Computation of Ratio of Earnings to Fixed Charges for the Quarter
Ended March 31, 2002 and for the Five Years Ended December 31,
2001.