Back to GetFilings.com
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993 Commission File Number 1-1687
PPG INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Pennsylvania 25-0730780
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
One PPG Place, Pittsburgh, Pennsylvania 15272
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: 412 - 434-3131
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock--Par Value $1.66 2/3 New York Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
NOTE: The Common Stock of the Registrant is also listed on the
Tokyo Stock Exchange.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. YES __X__ NO ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of January 31, 1994, 106,489,041 shares of the Registrant's common stock,
with a par value of $1.66 2/3 per share, were outstanding. As of that date, the
aggregate market value of common stock held by non-affiliates was $6,608
million.
DOCUMENTS INCORPORATED BY REFERENCE
INCORPORATED BY
DOCUMENT REFERENCE IN PART NO.
-------- ---------------------
Portions of PPG Industries, Inc. Annual Report to Shareholders
for the year ended December 31, 1993............................ I, II and IV
Portions of PPG Industries, Inc. Proxy Statement for its 1994
Annual Meeting of Shareholders.................................. III
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
------------------------
As used in this report, the terms "PPG," "Company," and "Registrant" mean PPG
Industries, Inc. and its subsidiaries, taken as a whole, unless the context
indicates otherwise.
------------------------
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business....................................................................................... 1
Item 2. Properties..................................................................................... 3
Item 3. Legal Proceedings.............................................................................. 3
Item 4. Submission of Matters to a Vote of Security Holders............................................ 3
Executive Officers of the Registrant........................................................... 4
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters...................... 5
Item 6. Selected Financial Data........................................................................ 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................ 5
Item 8. Financial Statements and Supplementary Data.................................................... 5
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................................................ 5
PART III
Item 10. Directors and Executive Officers of the Registrant............................................. 6
Item 11. Executive Compensation......................................................................... 6
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 6
Item 13. Certain Relationships and Related Transactions................................................. 6
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................... 7
Signatures................................................................................................... 8
NOTE ON INCORPORATION BY REFERENCE
Throughout this report various information and data are incorporated by
reference to the Company's 1993 Annual Report to Shareholders (hereinafter
referred to as "the Annual Report to Shareholders"). Any reference in this
report to disclosures in the Annual Report to Shareholders shall constitute
incorporation by reference only of that specific information and data into this
Form 10-K.
PART I
ITEM 1. BUSINESS
PPG Industries Inc., incorporated in Pennsylvania in 1883, is comprised of three
basic business segments: coatings and resins, glass and chemicals. Within these
business segments, PPG has followed a careful program of directing its resources
of people, capital and technology in selected areas where it enjoys positions of
leadership. Primary areas in which resources have been focused are automotive,
industrial and architectural coatings, flat glass, automotive original and
replacement glass, aircraft transparencies, continuous strand fiber glass, and
industrial and specialty chemicals. Each of the business segments in which PPG
is engaged is highly competitive. However, the broad diversification of product
lines and worldwide markets served tend to minimize the impact of changes in
demand for a particular product line on total sales and earnings. Reference is
made to "Business Segment Information" on pages 20 and 21 of the Annual Report
to Shareholders, which is incorporated herein by reference, for financial
information relating to business segments.
COATINGS AND RESINS
PPG is a major manufacturer of protective and decorative coatings. The coatings
industry is highly competitive and consists of a few large firms with global
presence, and many smaller firms serving local or regional markets. PPG competes
in its primary markets with the world's largest coatings companies, most of
which have operations in North America and Europe. Product development,
innovation, quality and customer service have been stressed by PPG and have been
significant factors in developing an important supplier position.
The industrial portion of the coatings business involves the supply of
protective and decorative finishes for autos, appliances, industrial equipment,
and containers; factory finished aluminum extrusions and coils for architectural
uses; and other industrial and consumer products. In addition to the supply of
finishes to the automotive original equipment market, PPG supplies automotive
refinishes to the aftermarket which are primarily sold through distributors. In
the industrial portion of the coatings business, PPG sells directly to a variety
of manufacturing companies. Product performance, quality and customer service
are major competitive factors. The industrial coatings are formulated
specifically for the customer's needs and application methods. PPG also
manufactures adhesives and sealants for the auto industry and metal
pretreatments for auto and industrial applications.
The architectural finishes business consists primarily of coatings used by
painting and maintenance contractors and by consumers for decoration and
maintenance. PPG's products are sold through independent distributors, paint
dealers, mass merchandisers and home centers. Price, quality and service are key
competitive factors in the architectural finishes market.
Coatings and resins' principal production facilities are concentrated in North
America and Europe. North American production facilities consist of 14 plants in
the United States, one in Canada and one in Mexico. The three largest facilities
are the Cleveland, OH plant, which primarily produces automotive original
coatings; the Oak Creek, WI plant, which produces automotive original and other
industrial coatings; and the Delaware, OH plant, which primarily produces
automotive refinishes and certain industrial coatings. Outside North America,
PPG operates three plants each in Italy and Spain; two plants in France and one
plant each in England and Germany. These plants produce a variety of industrial
and architectural coatings. PPG owns a 60 percent interest in a sales operation
in Hong Kong, 50 percent interests in operations in South Korea and in Japan,
and a minority interest in an operation in Taiwan. Additionally, coatings and
resins operates 11 service centers in the United States, two in Canada and one
in Mexico to provide just-in-time delivery and service to selected automotive
assembly plants. The average number of persons employed by the coatings and
resins segment during 1993 was 9,400.
GLASS
PPG is one of the major producers of flat glass, fabricated glass and continuous
strand fiber glass in the world. PPG's major markets are automotive original
equipment, automotive replacement, residential and commercial construction,
aircraft transparencies, the furniture, marine and electronics industries and
other markets. Most glass products are sold directly to manufacturing and
construction companies, although in some instances products are sold directly to
independent distributors and through PPG distribution outlets. Fiber glass
products are sold directly to manufacturing companies and independent
distributors. PPG manufactures flat glass by the float process and fiber glass
by the continuous filament process.
The bases for competition are price, quality, technology, cost and customer
service. The Company competes with five other major producers of flat glass,
five other major producers of fabricated glass and two other major producers of
fiber glass throughout the world.
PPG's principal glass production facilities are concentrated in North America
and Europe. Fourteen plants operate in the United States, of which six produce
flat glass, five produce automotive glass, two produce fiber glass products and
one produces aircraft transparencies. There are three plants in Canada, two of
which produce automotive glass and one produces flat glass. Four plants operate
in Italy; one manufactures automotive and flat glass, one produces automotive
1
glass, one produces flat glass, and another produces aircraft transparencies.
Three plants are located in France; one plant manufactures automotive and flat
glass and two plants produce automotive glass. One plant in England and one
plant in the Netherlands produce fiber glass. PPG owns equity interests in
operations in the United States, Canada, France, the People's Republic of China,
Taiwan and Venezuela and a majority interest in a glass distribution company in
Japan. The average number of persons employed by the glass segment during 1993
was 15,800.
CHEMICALS
Major chlor-alkali products of PPG's chemicals business are chlorine, caustic
soda, vinyl chloride monomer, chlorinated solvents, and chlorinated benzenes.
Major specialty chemicals are silicas-based compounds for the tire, shoe and
battery separator businesses; surfactants used for food emulsification, sugar
processing, and personal care products; CR-39 monomer for optical plastics;
photochromic lenses; calcium hypochlorite used for water treatment, primarily
swimming pool applications; and phosgene derivatives for the pharmaceutical,
herbicide and fuel additives businesses.
PPG is a major producer of those chlor-alkali chemicals it manufactures. Most of
the chemicals are sold directly to other manufacturing companies in the chemical
processing, rubber and plastics, paper, minerals and metals, and water treatment
industries. Price, availability and quality of product and customer services are
competitive factors for chlor-alkali chemical products. In the specialty
chemicals area, PPG's market share varies greatly and product performance and
technical service are important competitive factors.
PPG's chemical production facilities consist of ten plants in North America, two
plants in Taiwan, and one each in France, the Netherlands and the People's
Republic of China. The two largest facilities are the Lake Charles, LA and
Natrium, WV plants which primarily produce chlor-alkali products and
derivatives. PPG owns equity interests in one company each in Japan and in
Thailand, and two in the United States. The average number of persons employed
by the chemicals segment during 1993 was 4,300.
BUSINESS TO BE DIVESTED IN 1994--BIOMEDICAL SYSTEMS DIVISION
The Biomedical Systems Division is a manufacturer, supplier and servicer of
integrated medical systems for human health care on a worldwide basis. Major
markets involve cardiopulmonary applications, including cardiac catheterization,
electrocardiographs and related equipment for diagnosis of cardiovascular
diseases, patient monitoring systems and sensors for both vital signs and
respiratory monitoring functions. A large number of competitors provide products
on either a global or regional basis. PPG sells directly to hospital and
clinical customers and through distributor organizations in selected markets,
and distributes selected original equipment products for other manufacturers.
Product performance, quality and technical service capability are major
competitive factors.
A decision was made in the fourth quarter of 1993 to divest the Company's
Biomedical Systems Division. PPG expects the sale of the medical electronics
portion of this business to be completed by the end of the first quarter of
1994. The remaining sensors business is expected to be sold by the end of 1994.
Production facilities include two plants in the United States and two in
Germany. The average number of persons employed by the Biomedical Systems
Division during 1993 was 1,300.
RAW MATERIALS
The effective management of raw materials is important to PPG's continued
success. The Company's most significant raw materials are sand, soda ash, energy
and polyvinyl butyral in the glass segment, titanium dioxide and epoxy resins in
the coatings and resins segment, and energy and ethylene in the chemicals
segment. Most of the raw materials used in production are purchased from outside
sources, and the Company has made, and will continue to make, supply
arrangements to meet the planned operating requirements for the future. For the
significant raw material requirements identified above, and other material,
there is more than one source of supply.
PATENTS
Although PPG considers patent protection to be important from an overall
standpoint, the Company's business segments are not materially dependent upon
any single patent or group of related patents. PPG received $25 million, $27
million and $30 million from royalties and the sale of technical know-how during
the years 1993, 1992 and 1991, respectively.
RESEARCH AND DEVELOPMENT
Research and development costs, including depreciation of research facilities,
during 1993, 1992 and 1991 were $218 million, $221 million and $240 million,
respectively. Research and development facilities are maintained for each
business segment. Each of the facilities conducts research and development
involving new and improved products and processes, and additional process and
product development work is undertaken at many of the Company's manufacturing
plants. PPG owns and operates 11 research and development facilities in the
United States and Europe.
BACKLOG
In general, PPG does not manufacture its products against a backlog of orders;
production and inventory
2
levels are geared primarily to projections of future demand and the level of
incoming orders.
NON-U.S. OPERATIONS
Although PPG has a significant investment in non-U.S. operations, based upon the
extent and location of investments, management believes that the risk associated
with its international operations is not significantly greater than domestic
operations.
EMPLOYEES
The average number of persons employed by PPG during 1993 was 31,400.
ENVIRONMENTAL MATTERS
Like other companies, PPG is subject to the existing and evolving standards
relating to the protection of the environment. Capital expenditures for
environmental control projects were approximately $29 million, $48 million, and
$18 million in 1993, 1992 and 1991, respectively. It is projected that
expenditures for such projects in 1994 will approximate $40 million with similar
amounts of annual expenditures expected in the near future. Although future
capital expenditures are difficult to forecast accurately because of constantly
changing regulatory standards, it can be anticipated that environmental control
standards will become increasingly stringent and costly.
PPG is negotiating with various government agencies concerning 75 National
Priority List ("NPL") and various other cleanup sites. While PPG is not
generally a major contributor of wastes to these sites, each potentially
responsible party or contributor may face agency assertions of joint and several
liability. Generally, however, a final allocation of costs is made based on
relative contributions of wastes to the site. There is a wide range of cost
estimates for cleanup of these sites, due largely to uncertainties as to the
nature and extent of their condition and the methods which may have to be
employed for their remediation. Additionally, remediation projects have been or
may be undertaken at certain of the Company's current and former plant sites.
The Company has established reserves for those sites where it is probable a
liability exists and the amount can be reasonably estimated. Reserve balances
were $90 million and $107 million at December 31, 1993 and 1992, respectively.
Charges against income increasing environmental remediation reserves totaled
approximately $23 million in 1993, $16 million in 1992 and $23 million in 1991.
Cash outlays against these reserves were approximately $40 million, $58 million
and $48 million in 1993, 1992 and 1991, respectively.
The Company's experience to date regarding environmental matters leads PPG to
believe that it will have continuing expenditures for compliance with provisions
regulating the protection of the environment and for present and future
remediation efforts at waste and plant sites. However, management believes such
expenditures will not have a material adverse effect on the financial position,
operating earnings or liquidity of the Company and its subsidiaries as a whole.
In management's opinion, the Company operates in an environmentally sound manner
and is well positioned, relative to environmental matters, within the industries
in which it operates.
ITEM 2. PROPERTIES
See "Item 1. Business" for information on PPG's production and fabrication
facilities.
Generally, the Company's plants are suitable and adequate for the purposes for
which they are intended, and overall have sufficient capacity to conduct
business in the upcoming year.
ITEM 3. LEGAL PROCEEDINGS
Securities and Exchange Commission regulations require the disclosure of any
environmental legal proceeding in which a governmental authority is a party and
which may reasonably be expected to involve monetary sanctions in excess of
$100,000. In this regard, on November 14, 1991, the Company received a penalty
notice from the Louisiana Department of Environmental Quality (DEQ) proposing a
penalty of $1,236,000 for alleged violations of hazardous waste regulations
relating to the Company's investigation of groundwater contamination at the
Company's Lake Charles, LA plant. The Company has filed an appeal of the
proposed penalty and negotiations with the DEQ continue.
Separately, the Company has voluntarily entered into an agreement with the EPA
to participate in the EPA's Toxic Substances Control Act Section 8(e) Compliance
Audit Program (the "Program"). Under the Program the Company conducted a
self-audit. On October 28, 1992, the Company submitted the first of two final
reports pursuant to the Program. Based on this submission, the Company would pay
$522,000 in stipulated penalties. The EPA has not yet reviewed the report or
issued any order as a result of the report. Under the Program, the EPA has
agreed that the combined potential civil penalties for both final reports of the
Company will not exceed a cap of $1,000,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
3
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE TITLE
---- --- -----
Jerry E. Dempsey (a) 61 Chairman of the Board and Chief Executive Officer since September 1993
Robert D. Duncan 54 Group Vice President, Glass since June 1987
Peter R. Heinze (b) 51 Group Vice President, Chemicals since August 1992
John J. Horgan (c) 51 Vice President, Fiber Glass Products since December 1991
Raymond W. LeBoeuf 47 Vice President, Finance since September 1988
Richard M. Rompala (d) 47 Group Vice President, Coatings and Resins since January 1992
Guy A. Zoghby 59 Vice President and General Counsel since August 1987
(a) Mr. Dempsey was Senior Vice President of WMX Technologies, Inc., and
Chairman of Chemical Waste Management, Inc., prior to his present position.
(b) Dr. Heinze was President of the Chemical Division of BASF (U.S.) prior to
his present position.
(c) Mr. Horgan was Vice President, Administration prior to his present position.
(d) Mr. Rompala was Group Vice President, Chemicals prior to his present
position.
The executive officers of the Company are elected annually in April by the Board
of Directors.
4
PART II
Information with respect to the following Items can be found on the indicated
pages of the Annual Report to Shareholders and is incorporated herein by
reference.
PAGE(S)
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Stock Exchange Listings.......................................................... 33
Quarterly Stock Information...................................................... 33
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is reported in the Eleven-Year Digest under
the captions net sales, income before accounting changes, cumulative effect of
accounting changes, net income, earnings per share before accounting changes,
cumulative effect of accounting changes on earnings per share, earnings per
share, dividends per share, total assets, and long-term debt and lease
obligations for the years 1989 through 1993...................................... 32
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's Discussion and Analysis............................................. 18-19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report..................................................... 14
Financial Statements:
Statement of Income for the years ended
December 31, 1993, 1992 and 1991............................................ 15
Balance Sheet, December 31, 1993 and 1992...................................... 16
Statement of Cash Flows for the years ended
December 31, 1993, 1992 and 1991............................................ 17
Notes to the Financial Statements.............................................. 22-30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
5
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 regarding Directors is contained under the
caption "Election of Directors" in the Registrant's definitive Proxy Statement
for its 1994 Annual Meeting of Shareholders (the "Proxy Statement") which will
be filed with the Securities and Exchange Commission, pursuant to Regulation
14A, not later than 120 days after the end of the fiscal year, which information
under such caption is incorporated herein by reference.
The information required by Item 10 regarding Executive Officers is set forth in
Part I of this report under the caption "Executive Officers of the Registrant."
The information required by Item 405 of Regulation S-K is set forth in the Proxy
Statement under the caption "Reporting of Securities Transactions," which
information under such caption is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is contained under the captions
"Compensation of Executive Officers" and "Election of Directors--Compensation of
Directors" in the Proxy Statement which information under such captions is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is contained under the caption "Voting
Securities" in the Proxy Statement which information under such caption is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is contained under the caption "Election of
Directors--Other Transactions" in the Proxy Statement which information under
such caption is incorporated herein by reference.
6
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Independent Auditors' Report (see Part II, Item 8
of this report (page 5) regarding incorporation by reference from the Annual
Report to Shareholders).
Financial Statement Schedules (all applicable for years ended December 31,
1993, 1992 and 1991):
The following should be read in conjunction with the previously
referenced financial statements.
PAGE
----
Independent Auditors' Report........................................... 9
V-- Property, Plant and Equipment................................ 10
VI-- Accumulated Depreciation of Property, Plant and Equipment.... 11
VIII-- Valuation and Qualifying Accounts............................ 12
IX-- Short-Term Borrowings........................................ 13
X-- Supplementary Earnings Information........................... 14
All other schedules are omitted because they are not applicable.
(b) There have been no reports filed on Form 8-K during the last quarter of the
period covered by this report.
(c) Exhibits:
(3) The Restated Articles of Incorporation as amended, were filed as
Exhibit 3 to the Registrant's Form 10-K for the year ended December
31, 1990, which exhibit is incorporated herein by reference. The
By-Laws, as amended through February 21, 1991, were filed as Exhibit
3.1 to the Registrant's Form 10-K for the year ended December 31,
1990, 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 May 12, 1988, which exhibit is
incorporated herein by reference.
(10) A Description of the Employment Arrangement between Mr. Jerry E.
Dempsey and the Registrant was filed as Exhibit 10 to the Registrant's
Form 10-Q for the quarter ended September 30, 1993. The Nonqualified
Retirement Plan was filed as Exhibit 10.1, the Supplemental Executive
Retirement Plan II was filed as Exhibit 10.2, the Directors'
Retirement Plan was filed as Exhibit 10.3, and the Deferred
Compensation Plan for Directors was filed as Exhibit 10.4 to the
Registrant's Form 10-K for the year ended December 31, 1992. The 1984
Earnings Growth Plan is contained in Exhibit A to the Registrant's
definitive Proxy Statement dated March 2, 1984; the 1984 Stock Option
Plan was filed as Exhibit 10 to the Registrant's Form 10-Q for the
quarter ended March 31, 1992; the form of Employment Agreement the
Registrant has entered into with its Executive Officers providing for
the continued employment of such persons for a period of two years
following a change in control of the Registrant was filed as
Exhibit 10 to the Registrant's Form 8-K dated April 10, 1987; and the
Incentive Compensation and Deferred Income Plan for Key Employees is
contained in Exhibit A to the Registrant's definitive Proxy Statement
dated March 14, 1980. All exhibits referred to in this paragraph (10)
are incorporated by reference.
(11) Computation of Earnings Per Share for the Five Years Ended December
31, 1993.
(13) Company's 1993 Annual Report to Shareholders (except for the pages and
information therein expressly incorporated by reference in this Form
10-K, the Annual Report to Shareholders is provided solely for the
information of the Commission and is not to be deemed "filed" as part
of the Form 10-K).
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
7
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, on February 17, 1994.
PPG INDUSTRIES, INC.
(Registrant)
/s/ R. W. LEBOEUF
By ............................................
R. W. LeBoeuf, Vice President, Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities indicated, on February 17, 1994.
SIGNATURE CAPACITY
--------- --------
/s/ J. E. DEMPSEY
.................................... Director, Chairman of the Board and
J. E. Dempsey Chief Executive Officer
/s/ R. W. LEBOEUF
.................................... Vice President, Finance (Principal
R. W. LeBoeuf Financial and Accounting Officer)
L. J. Fjeldstad Director
S. C. Gault Director
A. J. Krowe Director
S. C. Mason Director /s/ R. W. LEBOEUF
H. A. McInnes Director By .........................
R. Mehrabian Director R. W. LeBoeuf,
V. A. Sarni Director Attorney-in-Fact
D. G. Vice Director
D. R. Whitwam Director
8
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of PPG Industries, Inc.:
We have audited the balance sheet of PPG Industries, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the related statements of income and cash flows
for each of the three years in the period ended December 31, 1993, and have
issued our report thereon dated January 20, 1994; such financial statements and
report are included in your 1993 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the financial
statement schedules of PPG Industries, Inc. and subsidiaries, listed in Item
14(a). These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
DELOITTE & TOUCHE
Pittsburgh, Pennsylvania
January 20, 1994
9
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
BALANCE AT
BEGINNING ADDITIONS BALANCE AT
CLASSIFICATION OF YEAR AT COST(1) RETIREMENTS OTHER(3) END OF YEAR
-------------- ---------- ---------- ----------- -------- -----------
(MILLIONS)
1993
Land $ 112.3 $ 14.1 $ (3.0) $ (5.5) $ 117.9
Land improvements 161.5 6.6 (6.1) (4.0) 158.0
Buildings 1,142.8 16.0 (43.5) (19.2) 1,096.1
Machinery and equipment 4,357.4 227.5 (187.5) (72.9) 4,324.5
Other 235.0 25.6 (19.5) (4.7) 236.4
Construction in progress 148.7 (36.4)(2) -- (3.3) 109.0
----------- ----------- ------------ --------- ------------
Total $ 6,157.7 $ 253.4 $ (259.6) $ (109.6) $ 6,041.9
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1992
Land $ 119.2 $ .5 $ -- $ (7.4) $ 112.3
Land improvements 162.6 6.0 (.3) (6.8) 161.5
Buildings 1,164.1 25.2 (7.3) (39.2) 1,142.8
Machinery and equipment 4,397.1 199.1 (107.6) (131.2) 4,357.4
Other 237.9 20.8 (15.5) (8.2) 235.0
Construction in progress 131.5 27.3(2) -- (10.1) 148.7
----------- ----------- ------------ --------- ------------
Total $ 6,212.4 $ 278.9 $ (130.7) $ (202.9) $ 6,157.7
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1991
Land $ 118.9 $ 3.9 $ (2.8) $ (.8) $ 119.2
Land improvements 155.4 8.3 (2.0) .9 162.6
Buildings 1,120.9 58.9 (20.6) 4.9 1,164.1
Machinery and equipment 4,136.4 300.0 (117.4) 78.1(4) 4,397.1
Other 226.4 26.4 (15.2) .3 237.9
Construction in progress 237.0 (98.7)(2) -- (6.8) 131.5
----------- ----------- ------------ --------- ------------
Total $ 5,995.0 $ 298.8 $ (158.0) $ 76.6 $ 6,212.4
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
------------------------------------
(1) The additions to the property accounts during the year generally represent
construction and acquisitions, including capitalized leases, in the normal
program of expansion and replacement due to retirements.
(2) Represents net change.
(3) Represents changes primarily attributable to foreign currency translation
and, in 1991, the accounting change detailed in note (4).
(4) Includes an $85 million increase for the effect of the change in accounting
for glass and fiber glass melting facilities.
Note: Depreciation was computed by the straight-line method based on the
following useful lives:
Land improvements 5-25 years
Buildings 15-50 years
Machinery and equipment 2-32 years
Other 2-15 years
10
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
CLASSIFICATION OF YEAR EXPENSES RETIREMENTS OTHER(1) END OF YEAR
-------------- ---------- ---------- ----------- -------- -----------
(MILLIONS)
1993
Land improvements $ 93.9 $ 7.1 $ (4.7) $ (2.1) $ 94.2
Buildings 466.8 38.3 (35.9) (8.1) 461.1
Machinery and equipment 2,468.4 259.6 (153.5) (38.4) 2,536.1
Other 157.1 26.1 (16.9) (3.1) 163.2
----------- ----------- ------------ --------- ------------
Total $ 3,186.2 $ 331.1 $ (211.0) $ (51.7) $ 3,254.6
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1992
Land improvements $ 89.7 $ 7.6 $ (.1) $ (3.3) $ 93.9
Buildings 445.2 38.6 (4.4) (12.6) 466.8
Machinery and equipment 2,344.3 277.9 (103.0) (50.8) 2,468.4
Other 150.0 27.4 (14.9) (5.4) 157.1
----------- ----------- ------------ --------- ------------
Total $ 3,029.2 $ 351.5 $ (122.4) $ (72.1) $ 3,186.2
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
1991
Land improvements $ 82.3 $ 8.5 $ (1.6) $ .5 $ 89.7
Buildings 410.9 45.6 (13.5) 2.2 445.2
Machinery and equipment 2,112.5 269.5 (103.9) 66.2(2) 2,344.3
Other 134.2 27.6 (12.1) .3 150.0
----------- ----------- ------------ --------- ------------
Total $ 2,739.9 $ 351.2 $ (131.1) $ 69.2 $ 3,029.2
----------- ----------- ------------ --------- ------------
----------- ----------- ------------ --------- ------------
------------------------------------
(1) Represents changes primarily attributable to foreign currency translation
and, in 1991, the changes detailed in note (2).
(2) Includes a $42 million increase for the write-downs to reflect the decline
in value of various glass segment fixed assets and a $21 million increase
for the effect of the change in accounting for glass and fiber glass melting
facilities.
11
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS(1) END OF YEAR
----------- ---------- ---------- ------------- -----------
(MILLIONS)
1993
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 33.0 $ 15.2 $ 22.6 $ 25.6
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
1992
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 35.1 $ 16.6 $ 18.7 $ 33.0
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
1991
Deducted from assets to which
they apply:
Allowance for doubtful accounts $ 33.1 $ 18.5 $ 16.5 $ 35.1
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
------------------------------------
(1) Notes and accounts receivable written off as uncollectible, net of
recoveries and changes attributable to foreign currency translation.
12
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE IX--SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
END OF YEAR DURING THE YEAR
------------------------ --------------------------------------
WEIGHTED
WEIGHTED MAXIMUM AVERAGE AVERAGE
AVERAGE AMOUNT AMOUNT INTEREST
CATEGORY BALANCE INTEREST RATE OUTSTANDING(1) OUTSTANDING(2) RATE(3)
-------- ------- ------------- -------------- -------------- --------
(DOLLARS IN MILLIONS)
1993
Notes payable to banks $ 151.0 6.4% $ 270.6 $ 239.8 7.8%
Commercial paper 173.9 3.5% $ 271.3 $ 211.0 4.2%
---------
Total $ 324.9
---------
---------
1992
Notes payable to banks $ 193.0 8.1% $ 206.7 $ 159.7 10.7%
Commercial paper 141.1 5.7% $ 185.3 $ 116.0 6.0%
---------
Total $ 334.1
---------
---------
1991
Notes payable to banks $ 130.8 10.9% $ 174.9 $ 133.1 10.9%
Commercial paper 118.8 6.1% $ 432.4 $ 249.6 7.6%
---------
Total $ 249.6
---------
---------
------------------------------------
(1) The amounts for notes payable to banks and commercial paper represent the
greater of the amounts payable at any individual month-end or the maximum
weighted average amount outstanding for any month.
(2) The average amount outstanding for notes payable to banks and commercial
paper was computed by dividing the sum of the daily principal balances by
365.
(3) The weighted average interest rate during the year was computed by dividing
the actual interest expense by average short-term debt outstanding.
13
PPG INDUSTRIES, INC.
AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY EARNINGS INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
CHARGED TO
COSTS AND
EXPENSES
-----------
(MILLIONS)
1993
Maintenance and repairs $ 367.5
----------
----------
Taxes other than payroll and income taxes $ 81.0
----------
----------
Advertising costs $ 69.2
----------
----------
1992
Maintenance and repairs $ 373.4
----------
----------
Taxes other than payroll and income taxes $ 80.6
----------
----------
Advertising costs $ 63.0
----------
----------
1991
Maintenance and repairs $ 366.6
----------
----------
Taxes other than payroll and income taxes $ 74.6
----------
----------
Advertising costs $ 70.7
----------
----------
14
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
INDEX TO EXHIBITS
Exhibit Incorporated by Reference
- ------- -------------------------
3 The Restated Articles Exhibit 3 - Form 10-K for the year ended
of Incorporation December 31, 1990
3 The By-Laws Exhibit 3.1 - Form 10-K for the year ended
December 31, 1990
4 The Shareholders' Rights Exhibit 4 - Form 8-K, dated May 12, 1988
Plan
10 Description of Employment Exhibit 10 - Form 10-Q for the quarter
Arrangement between ended September 30, 1993
Jerry E. Dempsey and
the Registrant
10 The Nonqualified Retire- Exhibit 10.1 - Form 10-K for the year ended
ment Plan December 31, 1992
10 The Supplemental Exhibit 10.2 - Form 10-K for the year ended
Executive Retirement December 31, 1992
Plan II
10 The Directors' Retirement Exhibit 10.3 - Form 10-K for the year ended
Plan December 31, 1992
10 The Deferred Compensation Exhibit 10.4 - Form 10-K for the year ended
Plan for Directors December 31, 1992
10 1984 Earnings Growth Plan Exhibit A - Proxy Statement, dated
March 2, 1984
10 1984 Stock Option Plan Exhibit 10 - Form 10-Q for the quarter
ended March 31, 1992
10 Form of Employment Exhibit 10 - Form 8-K, dated April 10, 1987
Agreement
10 Incentive Compensation Exhibit A - Proxy Statement dated
and Deferred Income March 14, 1980
Plan for Key Employees
Exhibit Description
- ------- -----------
11 Computation of Earnings Per Share for the Five Years Ended
December 31, 1993
13 Company's 1993 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
24 Powers of Attorney