SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2001 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 June 30, 2001, 168,257,246 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........................................................ 14-19
Item 3. Quantitative and Qualitative Disclosures About Market Risk.................................. 19
Part II. Other Information
Item 1. Legal Proceedings........................................................................... 20
Item 2. Change in Securities and Use of Proceeds.................................................... 20
Item 6. Exhibits and Reports on Form 8-K............................................................ 21-22
Signature................................................................................................. 23
-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 Six Months
Ended June 30 Ended June 30
------------- -------------
2001 2000 2001 2000
------------ ------------ ----------- ------------
Net sales.......................................... $ 2,164 $ 2,275 $ 4,263 $ 4,427
Cost of sales...................................... 1,342 1,392 2,666 2,711
------------ ------------ ------------ -----------
Gross profit................................... 822 883 1,597 1,716
------------ ------------ ------------ ------------
Other expenses (earnings):
Selling, general and administrative............ 342 343 693 670
Depreciation................................... 94 94 188 187
Research and development....................... 67 70 134 140
Interest....................................... 46 44 94 87
Amortization................................... 18 18 36 37
Business realignments (Note 3) ................ - (1) 101 -
Other, net..................................... (6) (28) (24) (4)
------------ ------------ ----------- ------------
Total other expenses - net................. 561 540 1,222 1,117
------------ ------------ ----------- ------------
Income before income taxes and minority
interest....................................... 261 343 375 599
Income taxes....................................... 94 132 142 241
Minority interest.................................. 12 6 22 14
------------ ------------ ------------ ------------
Net income......................................... $ 155 $ 205 $ 211 $ 344
========== ========== ========== ==========
Earnings per common share (Note 2)................. $ 0.92 $ 1.18 $ 1.25 $ 1.98
========== ========== ========== ==========
Earnings per common share - assuming
dilution (Note 2)............................. $ 0.92 $ 1.17 $ 1.25 $ 1.96
========== ========== ========== ==========
Dividends per common share......................... $ 0.42 $ 0.40 $ 0.84 $ 0.80
========== ========== ========== ==========
The accompanying notes to the condensed financial statements are an integral
part of this statement.
-2-
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Balance Sheet (Unaudited)
-----------------------------------
June 30 Dec. 31
2001 2000
----------- -----------
Assets (Millions)
- ------
Current assets:
Cash and cash equivalents ................................................ $ 118 $ 111
Receivables-net .......................................................... 1,637 1,563
Inventories (Note 4) ..................................................... 1,076 1,121
Other .................................................................... 305 298
------- -------
Total current assets ................................................. 3,136 3,093
Property (less accumulated depreciation of
$4,259 million and $4,148 million) ....................................... 2,801 2,941
Investments ................................................................... 302 320
Goodwill (less accumulated amortization of
$138 million and $128 million) ........................................... 983 1,032
Identifiable intangible assets (less accumulated
amortization of $119 million and $102 million) ........................... 587 616
Prepaid pension asset ......................................................... 952 919
Other assets .................................................................. 191 204
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Total ................................................................ $ 8,952 $ 9,125
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt and current
portion of long-term debt ............................................ $ 1,116 $ 1,161
Accounts payable and accrued liabilities ................................. 1,389 1,382
------- -------
Total current liabilities ............................................ 2,505 2,543
Long-term debt ................................................................ 1,703 1,810
Deferred income taxes ......................................................... 539 543
Accumulated provisions ........................................................ 481 475
Other postretirement benefits ................................................. 527 529
------- -------
Total liabilities .................................................... 5,755 5,900
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Commitments and contingent liabilities (Note 9)
Minority interest ............................................................. 135 128
------- -------
Shareholders' equity:
Common stock ............................................................. 484 484
Additional paid-in capital ............................................... 109 102
Retained earnings ........................................................ 6,515 6,444
Treasury stock ........................................................... (3,497) (3,508)
Unearned compensation .................................................... (125) (114)
Accumulated other comprehensive loss (Note 5) ............................ (424) (311)
------- -------
Total shareholders' equity ........................................... 3,062 3,097
------- -------
Total ................................................................ $ 8,952 $ 9,125
======= =======
The accompanying notes to the condensed financial statements are an integral
part of this statement.
-3-
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Statement of Cash Flows (Unaudited)
Six Months Ended
June 30
2001 2000
-------------- -----------
(Millions)
Cash from operating activities ........................................... $ 391 $ 363
----- ---
Investing activities:
Capital spending
Additions to property and investments ........................... (126) (232)
Business acquisitions, net of cash balances
acquired .................................................... (8) (109)
Reduction of property and investments ............................... 10 23
----- -----
Cash used for investing activities .............................. (124) (318)
----- -----
Financing activities:
Net change in borrowings with
maturities of three months or less .............................. (74) 99
Proceeds from other short-term debt ................................. 78 139
Repayment of other short-term debt .................................. (111) (135)
Proceeds from long-term debt ........................................ 23 7
Repayment of long-term debt ......................................... (30) (29)
Loans to employee stock ownership plan .............................. (32) (24)
Repayment of loans by employee stock
ownership plan .................................................. 22 23
Issuance of treasury stock, net ..................................... 8 3
Dividends paid ...................................................... (141) (139)
----- -----
Cash used for financing activities .............................. (257) (56)
----- -----
Effect of currency exchange rate changes
on cash and cash equivalents ........................................ (3) (3)
----- -----
Net increase (decrease) in cash and cash equivalents ..................... 7 (14)
Cash and cash equivalents, beginning of period ........................... 111 158
----- -----
Cash and cash equivalents, end of period ................................. $ 118 $ 144
===== =====
The accompanying notes to the condensed financial statements are an integral
part of this 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 June 30, 2001, and the results of
their operations for the three and six month periods ended June 30,
2001 and 2000 and their cash flows for the six month periods then
ended. 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, 2000.
The results of operations for the six months ended June 30, 2001 are
not necessarily indicative of the results to be expected for the full
year. In the fourth quarter of 2000 the Company changed its policy for
classifying freight costs from a deduction in arriving at net sales to
an expense in cost of sales as required by Emerging Issues Task Force
00-10, "Accounting for Shipping and Handling Fees and Costs." As a
result, sales and cost of sales have been restated by an equal amount
for each prior period presented.
Change in Method of Accounting
Effective January 1, 2001, PPG adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" as amended by SFAS No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities." These standards require the Company to recognize all
derivatives as either assets or liabilities at fair value in its
balance sheet. The accounting for changes in the fair value of a
derivative depends on the use of the derivative. To the extent that a
derivative is effective as a hedge of a future exposure to changes in
value, the fair value of the derivative is deferred in other
comprehensive income. Any portion considered to be ineffective is
reported in earnings immediately.
Adoption of these new standards on January 1, 2001 resulted in an
increase in current assets, current liabilities and other comprehensive
income of $70 million, $26 million and $43 million, respectively, with
a cumulative after-tax increase in net income of less than $1 million.
-5-
2. Earnings Per Common Share
-------------------------
The following table reflects the earnings per common share calculations
for the three and six months ended June 30, 2001 and 2000.
Three Months Six Months
Ended June 30 Ended June 30
----------------------- ------------------------
2001 2000 2001 2000
---------- ---------- ---------- ---------
(Millions, except per share amounts)
Earnings per common share
Net income.................................. $ 155 $ 205 $ 211 $ 344
---------- ---------- ---------- ----------
Weighted average common shares
outstanding............................... 168.3 173.9 168.3 174.0
---------- ---------- ---------- ----------
Earnings per common share................... $ 0.92 $ 1.18 $ 1.25 $ 1.98
========== ========== ========== ==========
Earnings per common share -
assuming dilution
Net income.................................. $ 155 $ 205 $ 211 $ 344
---------- ---------- ---------- ----------
Weighted average common shares
outstanding............................... 168.3 173.9 168.3 174.0
Effect of dilutive securities:
Stock options............................. 0.2 0.2 0.1 0.2
Other stock compensation plans............ 0.8 1.3 0.7 1.3
---------- ---------- ---------- ----------
Potentially dilutive common shares.......... 1.0 1.5 0.8 1.5
---------- ---------- ---------- ----------
Adjusted weighted average common shares
outstanding............................... 169.3 175.4 169.1 175.5
---------- ---------- ---------- ----------
Earnings per common share -
assuming dilution......................... $ 0.92 $ 1.17 $ 1.25 $ 1.96
========== ========== ========== ==========
-6-
3. Business Realignments
---------------------
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 these activities will be substantially completed by March
2002.
Severance and Asset Total Employees
Other Costs Dispositions Charge Covered
----------- ------------ ------ -------
(Millions, except employee amounts)
Coatings ..................... $ 60 $ 23 $ 83 1,072
Glass ........................ 4 6 10 254
Chemicals .................... 2 5 7 23
Corporate .................... 1 -- 1 18
------ ------ ------ ------
Total PPG ................ $ 67 $ 34 $ 101 1,367
Activity ................. (20) (24) (44) (516)
------ ------ ------ ------
Balance, end of period ... $ 47 $ 10 $ 57 851
====== ====== ====== ======
During 2000, the Company finalized restructuring plans for certain locations
related to the integration of the automotive and industrial coatings businesses
of Imperial Chemical Industries PLC (the ICI business) and PRC-DeSoto
International, Inc. (PRC-DeSoto). These restructuring plans were originally
developed at the acquisition date (principally July 1999). The plans cover
severance benefits for 618 employees, as well as other costs, and resulted in an
increase to goodwill of $24 million and a charge of $1 million in 2000. As of
June 30, 2001, $20 million has been paid to 615 employees. The balance of the
reserve, $5 million, will cover the remaining employee separations and lease
costs, which run through the termination of a lease.
During 2000, PPG Auto Glass L.L.C. (PPG Auto Glass) accrued severance and other
restructuring related costs of $10 million, resulting in an increase to goodwill
of $6 million and a pre-tax charge of $4 million. In addition, PPG Auto Glass
incurred one-time integration costs of $2 million. The restructuring plans
include severance benefits for 133 employees and other exit costs. As of June
30, 2001, $7 million has been paid, including $2 million to 118 employees. The
remaining reserve of $3 million, which includes severance for 15 employees and
other restructuring costs, is expected to be paid by the end of 2001.
In the fourth quarter of 2000, the Company took charges of $3 million related to
work force reductions in the coatings business for 65 people. As of June 30,
2001 these actions are complete.
During 1999, the Company approved restructuring plans associated with the
integration of the packaging coatings acquisition and cost reduction activities
across all of the businesses that resulted in charges of $47 million. The
components of the plans included severance benefits for 519 employees and
estimated losses of $17 million on the disposition of a redundant European
facility and the disposition of the assets of a U.S. coatings facility.
Additionally in 2000, severance reserves for 121 people totaling $5 million were
reversed due to changes in estimates. As of June 30, 2001, the asset
dispositions are complete and $23 million has been paid under the plans to 382
employees and to cover other exit costs. The remaining balance of $2 million
will be substantially utilized in 2001.
-7-
4. Inventories
-----------
Inventories at June 30, 2001 and December 31, 2000 are detailed below.
June 30 Dec. 31
2001 2000
------ ------
(Millions)
Finished products and work in process ................ $ 766 $ 807
Raw materials......................................... 191 198
Supplies.............................................. 119 116
-------------- -------------
Total............................................. $ 1,076 $ 1,121
============== =============
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 $180 million and $183 million higher
at June 30, 2001 and December 31, 2000, respectively.
5. Comprehensive Income
--------------------
Total comprehensive income for the three and six months ended June 30,
2001 and 2000 was as follows:
Three Months Six Months
Ended June 30 Ended June 30
------------- -------------
2001 2000 2001 2000
--------- -------- ---------- ---------
(Millions)
Net income........................................ $ 155 $ 205 $ 211 $ 344
Other comprehensive (loss) income, net of tax:
Currency translation adjustment............... (18) (33) (101) (89)
Minimum pension liability adjustment.......... - - (6) 2
Unrealized gains (losses) on
marketable securities....................... 4 - 8 (5)
Transition adjustment on
derivatives (Note 1)........................ - - 43 -
Net change - derivatives (Note 8)............. (12) - (57) -
------- -------- -------- --------
(26) (33) (113) (92)
------- -------- -------- --------
Total comprehensive income.................. $ 129 $ 172 $ 98 $ 252
======= ======== ======== ========
-8-
As of June 30, 2001 and December 31, 2000, accumulated other
comprehensive loss net of tax, as reflected on the condensed balance
sheet, was comprised of the following:
June 30 Dec. 31
2001 2000
-------- --------
(Millions)
Accumulated derivative loss (Note 8).............................. $ (14) $ -
Currency translation adjustment................................... (383) (282)
Minimum pension liability adjustment.............................. (35) (29)
Unrealized gains on marketable securities......................... 8 -
-------- --------
Accumulated other comprehensive loss.......................... $ (424) $ (311)
======== ========
6. Cash Flow Information
---------------------
Cash payments for interest were $101 million and $98 million for the
six months ended June 30, 2001 and 2000, respectively. Net cash
payments for income taxes for the six months ended June 30, 2001 and
2000 were $108 million and $170 million, respectively.
7. Business Segment Information
----------------------------
Business segment net sales and operating income for the three and six
months ended June 30, 2001 and 2000 were as follows:
Three Months Six Months
Ended June 30 Ended June 30
------------- -------------
2001 2000 2001 2000
-------- -------- -------- --------
(Millions)
Net sales:
Coatings (a)........................... $ 1,166 $ 1,238 $ 2,272 $ 2,416
Glass (b).............................. 608 608 1,191 1,173
Chemicals (c).......................... 394 434 807 846
Intersegment net sales................. (4) (5) (7) (8)
---------- ---------- -------- --------
Total.............................. $ 2,164 $ 2,275 $ 4,263 $ 4,427
========== ========== ======== ========
Operating income:
Coatings............................... $ 175 $ 205 $ 236 $ 372
Glass.................................. 99 112 184 210
Chemicals.............................. 26 50 49 124
---------- ---------- -------- --------
Total.............................. 300 367 469 706
Interest expense - net ..................... (44) (41) (87) (81)
Other unallocated corporate
income (expense) - net (d)............. 5 17 (7) (26)
---------- ---------- -------- --------
Income before income taxes and
minority interest (e).................. $ 261 $ 343 $ 375 $ 599
========== ========== ======== ========
- 9 -
(a) Includes intersegment net sales of $1 million for each of the three
months ended June 30, 2001 and 2000 and $2 million for each of the six
months ended June 30, 2001 and 2000.
(b) Includes intersegment net sales of $1 million for both the three and
six months ended June 30, 2000.
(c) Includes intersegment net sales of $3 million for each of the three
months ended June 30, 2001 and 2000 and $5 million for each of the six
months ended June 30, 2001 and 2000.
(d) Includes in each 2001 period presented, net insurance recoveries of
$8 million.
Includes in each 2000 period presented, a $9 million pre-tax gain from
the sales of corporate assets and net insurance recoveries of $4 million.
Includes for the six months ended June 30, 2000, a pre-tax charge of $39
million representing the write-off of an equity investment in Pittsburgh
Corning Corporation, which filed for reorganization under the federal
bankruptcy code.
(e) Includes for the six months ended June 30, 2001, a pre-tax 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 3, "Business Realignments," for amounts by business
segment.
8. Derivative Financial Instruments
--------------------------------
PPG is exposed to certain market risks arising from transactions that are
entered into in the normal course of business. The Company may enter into
derivative financial instrument transactions in order to manage or reduce
this market risk. PPG's policies do not permit active trading of, or
speculation in, derivative financial instruments.
PPG manages its foreign currency transaction risk to minimize the
volatility of cash flows caused by currency fluctuations by forecasting
foreign currency-denominated cash flows of each subsidiary for a 12-month
period and aggregating these cash inflows and outflows in each currency
to determine the overall net transaction exposures. Decisions on whether
to use derivative financial instruments to hedge the net transaction
exposures are made based on the amount of those exposures, by currency,
and an assessment of the near-term outlook for each currency. The
Company's policy permits the use of foreign currency forward and option
contracts to hedge up to 70% of its anticipated net foreign currency cash
flows over the next 12-month period. These contracts do not qualify for
hedge accounting. Therefore, the change in the fair value of these
instruments is recorded in earnings in the period of change in "Other,
net" in the condensed statement of income. Such amount was not material
for the quarter ended June 30, 2001.
The sales, costs, assets and liabilities of our non-U.S. operations must
be reported in U.S. dollars in order to prepare consolidated financial
statements which gives rise to translation risk. The Company monitors its
exposure to translation risk and enters into derivative foreign currency
contracts to hedge its exposure, as deemed appropriate. This risk
management strategy does not qualify for hedge accounting under the
provisions of SFAS No. 133; therefore, the change in the fair value of
these instruments is recorded in earnings in the period of change in
"Other, net" in the
- 10 -
condensed statement of income. Such amount was not material for the
quarter ended June 30, 2001.
PPG designates forward currency contracts as hedges against the Company's
exposure to variability in exchange rates on intercompany borrowings
denominated in foreign currencies. To the extent effective, changes in
the fair value of these instruments are deferred in other comprehensive
income and subsequently reclassified to "Other, net" in the condensed
statement of income as foreign exchange gains and losses are recognized
on the intercompany borrowings. The portion of the change in fair value
considered to be ineffective is reported in "Other, net" in the condensed
statement of income. Such amount was not material for the quarter ended
June 30, 2001.
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. Generally, the Company maintains variable interest
rate debt at a level of 25% to 50% of total borrowings. 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
use of interest rate swaps. To the extent effective, changes in the fair
value of these instruments are deferred in other comprehensive income and
reclassified to interest expense as the interest expense is accrued on
the underlying debt. As of January 1, 2001 and June 30, 2001, the fair
value of interest rate swaps was not material.
Currently, the Company's principal use of derivative financial
instruments is to manage its exposure to fluctuating natural gas prices
through the use of natural gas swap and option contracts. To the extent
that these instruments are effective in hedging PPG's exposure to price
changes, changes in the hedge contracts' fair values are deferred in
other comprehensive income and reclassified to cost of sales as the
natural gas is purchased. Changes in the time value of option contracts
are excluded from the Company's assessment of hedge effectiveness and
reported in earnings immediately. The amount of ineffectiveness, which is
reported in "Other, net" in the condensed statement of income for the
quarter ended June 30, 2001, was not material.
No derivative instrument initially designated as a hedge instrument was
undesignated or discontinued as a hedging instrument for the quarter
ended June 30, 2001. Derivative instruments designated as hedging
instruments mature within the next twelve months. During the three and
six months ended June 30, 2001, $3 million and $26 million, respectively,
of accumulated gain on derivatives, net of tax, was realized and
reclassified from accumulated other comprehensive income to earnings and
other comprehensive income decreased by $9 million and $31 million,
respectively, from a decline in the fair value of derivatives held, net
of tax.
9. 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 relate
to product liability, contract, patent, environmental, antitrust and
other matters arising out of the conduct of PPG's business. The Company
has been named in a number of antitrust lawsuits alleging that PPG acted
with competitors to fix prices and allocate markets for certain glass
products. These antitrust proceedings are in an early stage.
- 11 -
For over thirty years, the Company has been a defendant in lawsuits
involving claims alleging personal injury from exposure to asbestos.
Aggregate settlements by PPG to date have been immaterial. Over the past
few years, the number of asbestos-related claims against the Company, as
well as numerous other defendants, has increased. At June 30, 2001, the
Company was one of many defendants in numerous asbestos-related lawsuits
involving approximately 116,000 claims. In many of the cases, the
plaintiffs allege that the Company should be liable for injuries from
products manufactured and distributed by Pittsburgh Corning Corporation
("PC"). The Company and Corning Incorporated are each 50% shareholders of
PC. The Company believes 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 a 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. The Company intends to appeal that 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, the Company recorded an after-tax charge of $35 million
for the write-off of all of its equity investment in PC. As a consequence
of the bankruptcy filing and the various motions and orders in that
proceeding, the asbestos litigation against PC and PPG has been stayed,
and the filing of additional asbestos suits against them has been
enjoined, until November 30, 2001. 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. These settlement discussions involve numerous,
complex issues. Accordingly, it is impossible to predict whether 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 lawsuits and
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. Except with respect to any PPG
contribution arising out of a possible voluntary settlement of asbestos
claims as discussed above, 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, results of operations or liquidity.
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 not
discounted. As of June 30, 2001 and December 31, 2000, PPG had reserves
for environmental contingencies totaling $84 million. Pre-tax charges
against income for environmental remediation costs for the six months
ended June 30, 2001 and 2000 totaled $7 million and $6 million,
respectively. Cash outlays related to such environmental remediation for
each of the six months ended June 30, 2001 and 2000 aggregated $7
million.
Management anticipates that the resolution of the Company's environmental
contingencies will occur over an extended period of time.
- 12 -
The pre-tax charge for environmental remediation costs
for 2001 is expected to be in the range of $20 million to $30 million. 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, 2000. 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. 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 $20 million as of June 30, 2001.
- 13 -
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
Performance in Second Quarter of 2001 Compared to Second Quarter of 2000
Performance Overview
Sales decreased 5% for the second quarter of 2001 to $2.16 billion compared to
$2.28 billion for the second quarter of 2000. The combination of a 4% volume
decline across all of our business segments and a 2% decline from the negative
effects of foreign currency translation primarily in our coatings segment
contributed to the sales decline. These negative factors were partially offset
by a 1% increase due to higher selling prices primarily in our glass segment.
The gross profit percentage decreased to 38.0% for the second quarter of 2001
compared to 38.8% for the second quarter of 2000. The decrease in the gross
profit percentage was due to higher energy costs offset, in part, by improved
manufacturing efficiencies.
Net income and earnings per share, diluted, for the second quarter of 2001 were
$155 million and $0.92, respectively, compared to $205 million and $1.17,
respectively, for the same quarter in 2000. The decrease in net income was due
to higher energy costs and lower sales volumes across all of our businesses
offset, in part, by improved manufacturing efficiencies and a lower effective
tax rate.
Performance of Business Segments
Coatings sales decreased 6% to $1.17 billion compared to $1.24 billion for the
second quarter of 2000. The combination of a decrease in sales volume of 3%,
primarily in our North American automotive original, refinish and industrial
coatings businesses, and a 3% decline from the negative effects of foreign
currency translation contributed to the sales decline. Operating income for the
second quarter of 2001 was $175 million compared to $205 million for the same
quarter of 2000. The decrease in operating income is attributable primarily to
lower sales volumes.
Glass sales of $608 million were comparable to $607 million for the second
quarter of 2000. A sales increase of 3% resulting from higher selling prices was
offset by a 3% decline in sales volume. Operating income for the second quarter
of 2001 was $99 million compared to $112 million for the same quarter of 2000.
The decrease in operating income is attributable to lower sales volume and
higher natural gas costs offset, in part, by improved manufacturing
efficiencies.
Chemicals sales decreased 9% to $391 million compared to $431 million for the
second quarter of 2000. The combination of a decrease in sales volume of 8% in
our chlor-alkali products and a 1% decline from the negative effects of foreign
currency translation contributed to the sales decline. Operating income for the
second quarter of 2001 was $26 million compared to $50 million for the same
quarter of 2000. The decrease in operating income is attributable to lower sales
volumes and higher natural gas costs, partially offset by lower selling, general
and administrative costs.
Performance in the First Six Months of 2001 Compared to the First Six Months of
2000
Performance Overview
Sales decreased 4% for the first six months of 2001 to $4.26 billion compared to
$4.43 billion for the first six months of 2000. The combination of a 3% volume
decline across all of our
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business segments and a 2% decline from the negative effects of foreign currency
translation in our coatings segment contributed to the sales decline. These
negative factors were partially offset by a 1% increase due to higher selling
prices primarily in our glass and chemicals segments.
The gross profit percentage decreased to 37.5% for the first six months of 2001
compared to 38.8% for the first six months of 2000. The decrease in the gross
profit percentage was due to higher energy costs in our glass and chemicals
segments.
Net income and earnings per share, diluted, for the first six months of 2001
were $211 million and $1.25, respectively, compared to $344 million and $1.96,
respectively for the first six months of 2000. Net income for the first six
months of 2001 included an after-tax charge of $71 million for restructuring and
other related activities and net income for the first six months of 2000
included an after-tax charge of $35 million for the write-off of an equity
investment. Excluding these charges, net income and earnings per share, diluted,
for the first six months of 2001 were $282 million and $1.67, respectively,
compared to $379 million and $2.16, respectively, for the first six months of
2000. The decrease is attributable to higher energy costs and lower sales
volumes, partially offset by slightly higher selling prices and a lower
effective tax rate.
Performance of Business Segments
Coatings sales decreased 6% to $2.27 billion compared to $2.41 billion for the
first six months of 2000. The combination of a decrease in sales volume of 3%,
primarily in our North American automotive original and industrial businesses,
and a 3% decline from the negative effects of foreign currency translation
produced the sales decline. Operating income was $236 million for the first six
months of 2001 compared to $372 million for the first six months of 2000.
Operating income for the first six months of 2001 included pre-tax restructuring
and other related costs of $83 million, as previously discussed. Excluding these
charges, operating income for the first six months of 2001 was $319 million. The
decrease in operating income is attributable to lower sales volumes offset, in
part, by improved manufacturing efficiencies.
Glass sales increased 2% to $1.19 billion compared to $1.17 billion for the
first six months of 2000. Sales increased 3% due to higher selling prices offset
partially by decreased sales volumes of 1% primarily in our automotive original
and fiberglass businesses. Operating income was $184 million for the first six
months of 2001 compared to $210 million for the first six months of 2000.
Operating income for the first six months of 2001 included pre-tax restructuring
and other related costs of $10 million, as previously discussed. Excluding these
charges, operating income for the first six months of 2001 was $194 million. The
decrease in operating income is attributable to lower sales volumes primarily in
our automotive original and fiber glass businesses and the effects of higher
natural gas costs, partially offset by improved manufacturing efficiencies and
higher selling prices.
Chemicals sales decreased 5% to $802 million compared to $841 million for the
first six months of 2000. The combination of a decrease in sales volume of 6%,
primarily from our chlor-alkali products and a 1% decline from the negative
effects of foreign currency translation contributed to the sales decline. These
sales decreases were offset slightly by a 2% increase in sales from higher
selling prices for our chlorine and other chlor-alkali products. Operating
income was $49 million for the first six months of 2001 compared to $124 million
for the first six months of 2000. Operating income for the first six months of
2001 included pre-tax restructuring and other related costs of $7 million, as
previously discussed. Excluding these charges, operating income for the first
six months of 2001 was $56 million. The decrease in operating income is
attributable to lower sales volumes, higher natural gas costs and decreased
manufacturing efficiencies offset, in part, by higher selling prices.
-15-
Other Factors
The change in other unallocated corporate income (expense) - net for second
quarter of 2001 as compared to the same quarter of 2000 is principally due to
the absence of a second quarter 2000 gain from the sales of corporate assets.
Additionally, other unallocated corporate income (expense) - net for the six
months ended June 30, 2000 includes a pre-tax charge of $39 million representing
the write-off of an equity investment, a gain from the sale of corporate assets
and lower employee benefit costs.
The Company's pre-tax earnings for the first six months of 2001 and 2000
included net periodic pension income of $30 million and $42 million,
respectively, related to its U.S. defined benefit pension plans. Net periodic
pension income for 2002 will be less than that recorded in 2001 unless there is
a significant recovery in the U.S. equity markets between now and the end of the
year.
The tax rate on on-going operations for 2001 is 36.0% and reflects an
improvement in the regional mix of non-U.S. taxable earnings and a lower
effective state tax rate when compared with the prior year. Restructuring
charges in 2001, which reflected a tax benefit at a rate of 30.0%, raised the
overall effective tax rate for the first six months of 2001 to 37.9%. The
overall effective tax rate of 40.2% for the first six month of 2000 reflects a
38.5% tax rate on on-going operations and the adverse effects of the write-off
of an equity investment, which was not deductible for tax purposes.
During the second quarter of 2001 the Company renegotiated $1.2 billion in
credit lines which support the commercial paper programs in the United States,
Europe and Canada. The new facility is comprised of a $600 million portion
having a 5-year term and a $600 million portion having a 364-day term. The
facility fee paid on the committed amount is 7 1/2 basis points on the 5-year
portion and six basis points on the 364-day portion. At June 30, 2001, there
were no outstanding borrowings on these lines of credit.
The decrease in short-term and long-term debt is due principally to the
repayment of various non-U.S. debt obligations, primarily related to our
European operations.
Accounting Standards
Effective January 1, 2001, PPG adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities" as amended by SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." These standards require
the Company to recognize all derivatives as either assets or liabilities at fair
value in its balance sheet. The accounting for changes in the fair value of a
derivative depends on the use of the derivative. To the extent that a derivative
is effective as a hedge of a future exposure to changes in value, the fair value
of the derivative is deferred in other comprehensive income. Any portion
considered to be ineffective is reported in earnings immediately.
Adoption of these new standards on January 1, 2001 resulted in an increase in
current assets, current liabilities and other comprehensive income of $70
million, $26 million and $43 million, respectively, with a cumulative after-tax
increase in net income of less than $1 million.
In June 2001, the Financial Accounting Standards Board approved SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001. The Company does
not believe that the prospective adoption of this standard will have a material
impact on its consolidated results of operations, financial
-16-
position or cash flows for 2001. SFAS No. 142 changes the accounting for
goodwill and certain other intangible assets from an amortization method to an
impairment only approach. We will adopt the provisions of SFAS No. 142 on
January 1, 2002 and are currently in the process of evaluating the effect the
adoption of SFAS No. 142 will have on PPG's consolidated results of operations,
financial position and cash flows. Amortization of goodwill recorded in 2001
will be approximately $30 million.
Conversion to the Euro
On January 1, 1999, eleven of the member countries of the European Monetary
Union converted from their sovereign currencies to a common currency, the euro.
At that time, fixed conversion rates between the legacy currencies and the euro
were set. Greece has joined the original 11 countries and will adopt the euro in
2002. The legacy currencies will remain legal tender through July 1, 2002.
Beginning January 1, 2002, euro-denominated currency will be issued. No later
than July 1, 2002, the participating countries will withdraw all bills and coins
so that their legacy currencies will no longer be considered legal tender.
PPG has identified and substantially addressed the significant issues that may
have resulted from the euro conversion. These issues include increased
competitive pressures from greater price transparency, changes to information
systems to accommodate various aspects of the new currency and exposure to
market risk with respect to financial instruments. The impact on PPG's operating
results and financial condition from the conversion to the euro has not been,
and is not expected to be, material.
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
-17-
could have a material adverse effect on the Company's consolidated financial
condition, operations or liquidity.
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. These lawsuits and claims relate to product
liability, contract, patent, environmental, antitrust and other matters arising
out of the conduct of PPG's business. See Note 9, "Commitments and Contingent
Liabilities," to the condensed financial statements in this Form 10-Q for an
expanded description of certain of these lawsuits. 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 and other
matters. As discussed in Note 9, 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, results of operations or liquidity.
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 not discounted. As of June 30, 2001 and
December 31, 2000, PPG had reserves for environmental contingencies totaling $84
million. Pre-tax charges against income for environmental remediation costs for
the six months ended June 30, 2001 and 2000 totaled $7 million and $6 million,
respectively. Cash outlays related to such environmental remediation for each of
the six months ended June 30, 2001 and 2000 aggregated $7 million.
Management anticipates that the resolution of the Company's environmental
contingencies will occur over an extended period of time. The pre-tax charge
for environmental remediation costs for 2001 is expected to be in the range of
$20 million to $30 million. 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, 2000.
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.
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.
-18-
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 $20 million as of June 30, 2001.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
With the exception of natural gas swap and option contracts, there were no
material changes in the Company's exposure to market risk from December 31,
2000. See Note 8, "Derivative Financial Instruments," to the condensed financial
statements in the Form 10-Q for an expanded description of these market risks.
-19-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
In the Company's Form 10-K for the year ended December 31, 2000, 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 equity investment in PC.
As a consequence of the bankruptcy filing and the various motions and orders in
that proceeding, the asbestos litigation against PC and PPG has been stayed, and
the filing of additional asbestos suits against them has been enjoined, until
November 30, 2001. 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. These
settlement discussions involve numerous, complex issues. Accordingly, it is
impossible to predict whether 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 the second quarter of 2001, the
Directors, as a group, were credited with 5,869 Common Stock Equivalents under
this Plan. The values of the Common Stock Equivalents, when credited, ranged
from $53.15 to $54.09.
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 second quarter of 2001, the Directors, as a group, received
2,917 Common Stock Equivalents under this Plan. The value of each Common Stock
Equivalent, when credited, ranged from $51.05 to $54.09.
-20-
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.
(3.2) The Bylaws, as amended, were filed as Exhibit 3 to
the Registrant's Form 10-Q for the quarter ended
March 31, 2000, 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) PPG Industries, Inc. Nonqualified Retirement Plan
dated as of January 1, 1989, as amended January 1,
1996 was filed as Exhibit 10 to the Registrant's
Form 10-Q for the quarter ended March 31, 1996,
which exhibit is incorporated by reference. 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 by reference. The PPG Industries, Inc.
Stock Plan was filed as Exhibit 10 to the
Registrant's Form 10-Q for the quarter ended March
31, 1997, which exhibit is incorporated 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,
-21-
2000, 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. Total Shareholder Plan for Key Employees was
filed as Exhibit 10.4 to the Registrant's Form 10-K
for the year ended December 31, 1998, which exhibit
is incorporated herein by reference.
*(10.1) The 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.
*(10.2) PPG Industries, Inc. Deferred Compensation Plan, as
amended effective October 1, 2000, was filed as
Exhibit 10.2 to the Registrant's Form 10-K for the
year ended December 31, 2000, which exhibit is
incorporated herein by reference.
*(10.3) PPG Industries, Inc. Executive Officers Annual
Incentive Compensation Plan 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.
*(10.4) PPG Industries, Inc. Executive Officers Total
Shareholder Return Plan was filed as Exhibit 10.4
to the Registrant's Form 10-K for the year ended
December 31, 2000, which exhibit is incorporated
herein by reference.
(12) Computation of Ratio of Earnings to Fixed Charges.
* Items referred to in Exhibit 10, 10.1, 10.2, 10.3 and 10.4 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 did not file any reports on Form 8-K
during the three months ended June 30, 2001.
-22-
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PPG INDUSTRIES, INC.
---------------------------------
(Registrant)
Date: July 27, 2001 By /s/ W. H. Hernandez
---------------------------------
W. H. Hernandez
Senior Vice President, Finance
(Principal Financial and
Accounting Officer and
Duly Authorized Officer)
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
(12) Computation of Ratio of Earnings to Fixed Charges.