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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1998 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
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. [X]
As of January 29, 1999, 174,199,797 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 $9,338
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, 1998....... I, II and IV
Portions of PPG Industries, Inc. Proxy Statement for its
1999 Annual Meeting of Shareholders..................... III
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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.......... 4
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 7a. Quantitative and Qualitative Disclosures About Market Risk... 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 1998 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, glass and chemicals. Within these
business segments, PPG has followed a program of directing its resources of
people, capital and technology in selected areas for positions of leadership.
Areas in which resources have been focused are automotive original, refinish,
industrial, packaging and architectural coatings; flat glass, automotive
original and replacement glass, aircraft transparencies, continuous-strand
fiber glass; and chlor-alkali and specialty chemicals. Each of the business
segments in which PPG is engaged is highly competitive. However, the
diversification of product lines and worldwide markets served tend to minimize
the impact on total sales and earnings of changes in demand for a particular
product line or in a particular geographic area. Reference is made to
"Business Segment Information" on pages 30 through 32 of the Annual Report to
Shareholders, which is incorporated herein by reference, for financial
information relating to business segments.
Coatings
PPG is a major supplier 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, and many smaller
regional coatings companies. Product development, innovation, quality and
customer service have been stressed by PPG and have been significant factors
in developing an important supplier position.
The coatings business involves the supply of protective and decorative
finishes for automotive original equipment, appliances, industrial equipment
and packaging; factory-finished aluminum extrusions and coils for
architectural uses; and other industrial and consumer products. In addition to
supplying finishes to the automotive original equipment market, PPG supplies
automotive refinishes to the aftermarket, which are primarily sold through
distributors. In addition to specific products, PPG supplies technical
expertise, engineering and purchasing services to the automotive original and
industrial portions of the business. In the automotive original and industrial
portions of the coatings business, PPG sells directly to a variety of
manufacturing companies. The packaging portion of the coatings business
supplies finishes for aerosol, food and beverage consumer products. Product
performance, technology, quality and customer service are major competitive
factors. The automotive original and industrial coatings are formulated
specifically for the customer's needs and application methods. PPG also
supplies adhesives and sealants for the automotive industry and metal
pretreatments for automotive and industrial applications.
The architectural finishes business consists primarily of coatings used by
painting and maintenance contractors and by consumers for decoration and
maintenance. PPG's products are sold through independent distributors, paint
dealers, mass merchandisers, home centers, PPG-operated outlets and directly
to some customers. Price, quality and distribution are key competitive factors
in the architectural finishes market.
PPG grew the coatings business through several acquisitions completed during
1998. In February 1998, PPG acquired the German automotive coatings business
of Helios-Lacke Bollig & Kemper GmbH & Co. KG; in September 1998, PPG acquired
the technical coatings business in Australia and New Zealand of Orica Ltd.,
which included the automotive refinish, automotive original equipment, coil,
packaging and industrial coatings businesses; in November 1998, PPG acquired
the U.S. architectural coatings business of Courtaulds plc (Courtaulds) held
by Akzo Nobel N.V. (Akzo); and in December 1998, PPG acquired a portion of the
global packaging coatings business of Courtaulds from Akzo, with substantially
all of the remainder acquired by PPG in early 1999. In August 1998, PPG
divested the European decorative coatings business of Max Meyer Duco S.p.A.
The principal production facilities of the coatings business are concentrated
in North America and Europe. North American production facilities consist of
18 plants in the United States, two in Canada and one in Mexico. The three
largest facilities are the Cleveland, Ohio, plant, which primarily produces
automotive original coatings; the Oak Creek, Wis., plant, which produces
automotive original and industrial coatings; and the Delaware, Ohio, plant,
which primarily produces automotive refinishes and certain industrial
coatings. Outside North America, PPG operates four plants each in Italy and
Germany, three plants in Spain, two plants in the People's Republic of China,
and one plant each in Brazil, England, France, Netherlands, Australia, Turkey
and Portugal. PPG owns equity interests in operations in India, South Korea
and Taiwan. Additionally, the coatings business operates 10 service centers in
the United States, two each in Canada and Mexico, and one each in Poland and
Argentina to provide just-in-time delivery and service to selected automotive
assembly plants. Nineteen training centers in the United States, 15 in Europe,
10 in Asia, two in South America and one each in Mexico and Canada are
in operation. These centers provide training for automotive aftermarket
refinish customers. Also, four automotive original coatings application
centers that provide testing facilities for customer paint processes and new
products are in operation. The average number
1
of persons employed by the coatings segment during 1998 was 12,000.
In 1998, PPG approved a restructuring plan associated with cost reduction
initiatives which resulted in a pre-tax charge of $9 million in our coatings
operations.
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. PPG manufactures flat glass by the float process and fiber glass by
the continuous-filament process.
The bases for competition are price, quality, technology, cost and customer
service. The Company competes with six other major producers of flat glass,
six other major producers of fabricated glass and two other major producers of
fiber glass throughout the world.
In January 1998, PPG acquired the assets of an automotive glass plant in
Evart, Mich. PPG divested its European flat and automotive glass operations in
July 1998, resulting in a pre-tax gain of $85 million.
PPG's principal glass production facilities are concentrated in North America
and Europe. Fifteen plants operate in the United States, of which six produce
automotive glass products, five produce flat glass, three 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. One
plant operates in Italy producing aircraft transparencies. One plant each in
England and the Netherlands produce fiber glass. PPG owns equity interests in
operations in Denmark, Mexico, the Netherlands, the People's Republic of China,
Taiwan, the United States and Venezuela and a majority interest in a glass
distribution company in Japan. Additionally, there are four satellite operations
that provide limited manufacturing and just-in-time service to selected
automotive customer locations, and one coating facility for flat glass products.
The average number of persons employed by the glass segment during 1998 was
14,700.
During 1998, PPG approved a restructuring program, which included cost
reduction initiatives in our glass operations, and recorded a pre-tax charge
of $9 million. PPG also recorded additional pre-tax charges in 1998 related to
a 1997 restructuring program, including a $15 million pre-tax charge related
to the disposition of the Company's equity interests in two Asian float glass
plants and two Asian downstream fabrication facilities and the reversal of a
$3 million reserve related to the closure of the Perry, Ga., flat glass plant.
Chemicals
PPG is a major producer and marketer of chlor-alkali chemicals and a supplier
of specialty chemicals. The primary chlor-alkali products are chlorine,
caustic soda, vinyl chloride monomer, chlorinated solvents, chlorinated
benzenes and calcium hypochlorite. Most of these products are sold directly to
manufacturing companies in the chemical processing, rubber and plastics,
paper, minerals and metals, and water treatment industries. The primary
products of PPG's specialty chemicals businesses are Transitions(Registered
Trademark) lenses; optical monomers; precipitated silicas for tire, shoe, and
battery separator businesses and phosgene derivatives and other intermediates
for the pharmaceutical, agricultural and fuel additives businesses.
PPG competes with six other major producers of chlor-alkali products. Price,
product availability, product quality and customer service are the key
competitive factors. In the specialty chemicals area, PPG's market share
varies greatly by business; product quality and performance and technical
service are the most critical competitive factors.
Chemicals' principal production facilities are concentrated in North
America, with five plants in the United States and one each in Canada and
Mexico. The two largest facilities, located in Lake Charles, La., and Natrium,
W. Va., primarily produce chlor-alkali products. Outside North America, PPG
operates two plants each in Taiwan and the People's Republic of China, and one
each in Australia, France, Ireland and the Netherlands. PPG owns equity
interests in operations in Japan, Thailand and the United States. The average
number of persons employed by the chemicals segment during 1998 was 4,800.
Raw Materials
The effective management of raw materials is important to PPG's continued
success. The Company's most significant raw materials are titanium dioxide and
epoxy and other resins in the coatings segment; sand, soda ash, energy and
polyvinyl butyral in the glass 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 PPG's significant raw material requirements, there is more than one source
of supply or alternative raw materials.
Research and Development
Research and development costs, including depreciation of research facilities,
during 1998, 1997 and 1996 were $287 million, $266 million and $255 million,
respectively.
2
PPG owns and operates ten research and development facilities in the United
States, Europe and Japan to conduct research and development involving new and
improved products and processes. Additional process and product research and
development work is also undertaken at many of the Company's manufacturing
plants.
Patents
PPG considers patent protection to be important. The Company's business
segments are not materially dependent upon any single patent or group of
related patents. PPG received $18 million in 1998 and $25 million in each of
the years 1997 and 1996 from royalties and the sale of technical know-how.
Backlog
In general, PPG does not manufacture its products against a backlog of orders.
Production and inventory levels are geared primarily to projections of future
demand and the level of incoming orders.
Non-U.S. Operations
Although PPG has a significant investment in non-U.S. operations, based upon
the magnitude and location of investments, management believes that the risk
associated with its international operations is not significantly greater than
that of domestic operations.
Employees
The average number of persons employed worldwide by PPG during 1998 was
32,500.
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 $19 million, $32 million and $18 million
in 1998, 1997 and 1996, respectively. It is expected that expenditures for
such projects in 1999 will approximate $35 million, with similar amounts of
annual expenditures expected in the near future. Although future capital
expenditures are difficult to estimate accurately because of constantly
changing regulatory standards and policies, it can be anticipated that
environmental control standards will become increasingly stringent and
costly.
PPG is negotiating with various government agencies concerning 54 cleanup
sites, including 32 sites on the National Priority List (NPL). While PPG is
not generally a major contributor of wastes to these sites, each potentially
responsible party or contributor may face governmental agency assertions of
joint and several liability as to each cleanup site. 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 that may have to be employed for their remediation.
Additionally, remediation projects have been or may be undertaken at certain
of the Company's current and former plant sites. The Company has established
reserves for those sites where it is probable a liability exists and the
amount can be reasonably estimated. As of December 31, 1998 and 1997, PPG had
reserves for environmental contingencies totaling $94 million and $100
million, respectively. Pre-tax charges against income for environmental
remediation costs totaled $10 million in 1998, $34 million in 1997 and $27
million in 1996.
The Company's experience to date regarding environmental matters leads PPG to
believe that it will have continuing expenditures for compliance with
provisions regulating the protection of the environment and for present and
future remediation efforts at waste and plant sites. However, management
anticipates that such expenditures, which will occur over an extended period
of time, will not result in future annual charges against income that are
significantly greater than those recorded in recent years. It is possible,
however, that technological, regulatory and enforcement developments, the
results of environmental studies and other factors could alter this
expectation. In addition, a portion of such environmental expenditures may be
recovered from insurers and other third parties. In management's opinion, the
Company operates in an environmentally sound manner, is well positioned,
relative to environmental matters, within the industries in which it operates,
and the outcome of these environmental matters will not have a material
adverse effect on PPG's financial position or liquidity. See Commitments and
Contingent Liabilities, including Environmental Matters, in Management's
Discussion and Analysis for additional information related to environmental
matters.
Item 2. Properties
See "Item 1. Business" for information on PPG's production and fabrication
facilities.
Generally, the Company's plants are suitable and adequate for the purposes for
which they are intended, and overall have sufficient capacity to conduct
business in the upcoming year.
Item 3. Legal Proceedings
PPG is involved in a number of lawsuits and claims, both actual and potential,
including some which it has asserted against others, in which substantial
money damages are sought. These lawsuits and claims relate to product
liability, contract, patent, environmental, antitrust and other matters
arising out of the conduct of PPG's business. PPG's lawsuits and claims
against others include claims against insurers and other third
3
parties with respect to actual and contingent losses related to environmental
matters. Included among PPG's legal proceedings are the following:
The Company has been named as a defendant in a number of antitrust lawsuits
filed in federal and state courts by various plaintiffs. These suits allege
PPG was involved with competitors in fixing prices and allocating markets for
certain glass products. Twenty-eight cases were filed in federal courts, all
of which have been consolidated in a single federal district court (W.D. Pa.)
for pretrial proceedings under the multidistrict litigation rules. Ten cases
were filed in state courts in California, Wisconsin and Tennessee; the
Wisconsin case was removed to federal court and then consolidated under
multidistrict litigation. Among the defendants in these actions are Pilkington
plc; Libbey-Owens Ford Co., Inc.; AFG Industries; Asahi Glass Co., Ltd.;
Guardian Industries Corp., and Ford Motor Company. These lawsuits purport to
be class action suits. The plaintiffs in these cases are seeking economic and
treble damages and injunctive relief.
Securities Exchange Commission rules require the Company to report any
environmental proceeding involving a potential fine exceeding $100,000. For
that reason, PPG's Form 10-Q for the quarter ended September 30, 1998 reported
that the Company received a Notification of Potential Enforcement Action from
the United States Environmental Protection Agency (EPA) which alleged that the
Company's Torrance facility failed to timely submit a certain report for 1995.
On January 12, 1999, that matter was settled and a Consent Agreement and
Consent Order was entered by the EPA under which PPG agreed to pay a civil
penalty of $21,148 and perform a supplemental environmental project to improve
solvent recovery at the Torrance facility.
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.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
The executive officers of the Company are elected annually in April by the
Board of Directors and the business experience during the past five years of
each Executive Officer is set forth below.
Name Age Title
---- --- -----
Raymond W. LeBoeuf (a) 52 Chairman of the Board and Chief Executive Officer since November 1997
Frank A. Archinaco (b) 55 Executive Vice President since April 1997
Charles E. Bunch (c) 49 Senior Vice President, Strategic Planning and Corporate Services since April 1997
Russell L. Crane (d) 58 Senior Vice President, Human Resources and Administration since April 1994
James C. Diggs (e) 50 Senior Vice President and General Counsel since July 1997
William H. Hernandez (f) 50 Senior Vice President, Finance since January 1995
E. Kears Pollock (g) 58 Executive Vice President since April 1997
(a) Mr. LeBoeuf was Chairman Elect and Chief Executive Officer, President and
Chief Operating Officer, Executive Vice President, Group Vice President,
Coatings and Resins, and Vice President, Finance, prior to his present
position.
(b) Mr. Archinaco was Senior Vice President, Glass; Vice President, Glass, and
Vice President, Automotive and Aircraft Products, prior to his present
position.
(c) Mr. Bunch was Vice President, Fiber Glass; Vice President, Architectural
Finishes, and General Manager, Architectural Finishes, prior to his
present position.
(d) Mr. Crane was Vice President, Human Resources, prior to his present
position.
(e) Mr. Diggs was Senior Vice President and General Counsel Elect and was TRW
Inc.'s Vice President and Assistant General Counsel prior to joining PPG
in March 1997.
(f) Mr. Hernandez was Vice President, Finance; Vice President and Controller,
and Controller prior to his present position.
(g) Mr. Pollock was Senior Vice President, Coatings and Resins; Vice
President, Coatings and Resins, and Vice President, Automotive Products,
prior to his present position.
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............................................... 45
Quarterly Stock Information........................................... 45
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 which 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. The plans are incorporated by reference into
this Form 10-K as Exhibits 10 and 10.3.
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 (i) an additional one-third of
each payment of the basic annual retainer, (ii) all of the basic
annual retainer, or (iii) 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 1998, the
Directors, as a group, were credited with 6,674 Common Stock
Equivalents under this plan. The values of the Common Stock
Equivalents, when credited, ranged from $51.00 to $72.88.
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. No more than 10 years of credits may be made for the account
of any Director. 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 1998, the Directors, as a group, received 2,582
Common Stock Equivalents under this plan. The values of those Common
Stock Equivalents, when credited, ranged from $52.50 to $70.94.
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
common share before accounting changes, cumulative effect of
accounting changes on earnings per common share, earnings per common
share, earnings per common share-assuming dilution, dividends per
share, total assets and long-term debt for the years 1994 through
1998.................................................................. 44
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management's Discussion and Analysis.................................. 22-29
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
Management's Discussion and Analysis.................................. 28-29
Item 8. Financial Statements and Supplementary Data
Independent Auditors' Report.......................................... 17
Financial Statements:
Statement of Income for the years ended December 31, 1998, 1997 and
1996................................................................ 18
Balance Sheet, December 31, 1998 and 1997............................ 19
Statement of Shareholders' Equity for the years ended December 31,
1998, 1997 and 1996................................................. 20
Statement of Comprehensive Income for the years ended December 31,
1998, 1997 and 1996................................................. 20
Statement of Cash Flows for the years ended December 31, 1998, 1997
and 1996............................................................ 21
Notes to the Financial Statements.................................... 33-42
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 1999 Annual Meeting of Shareholders (the Proxy Statement) which will
be filed with the Securities and Exchange Commission, pursuant to Regulation
14A, not later than 120 days after the end of the fiscal year, which
information under such caption is incorporated herein by reference.
The information required by Item 10 regarding Executive Officers is set forth
in Part I of this report under the caption "Executive Officers of the
Registrant."
The information required by Item 405 of Regulation S-K is included under the
caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy
Statement which information under such caption is incorporated herein by
reference.
Item 11. Executive Compensation
The information required by Item 11 is contained under the captions
"Compensation of Executive Officers" and "Election of Directors--Compensation
of Directors" in the Proxy Statement which information under such captions is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is contained under the caption "Voting
Securities" in the Proxy Statement which information under such caption is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 is contained under the caption "Election
of Directors--Other Transactions" in the Proxy Statement which information
under such caption is incorporated herein by reference.
6
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements and Independent Auditors' Report (see Part II, Item 8
of this report (page 5) regarding incorporation by reference from the
Annual Report to Shareholders).
Financial Statement Schedules for years ended December 31, 1998, 1997 and
1996:
The following should be read in conjunction with the previously
referenced financial statements.
Page
----
Independent Auditors' Report........................................... 9
Schedule II--Valuation and Qualifying Accounts......................... 10
All other schedules are omitted because they are not applicable.
(b) No reports were 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-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.
3.2 The Bylaws, as amended, were filed as Exhibit 3 to the Registrant's
Form 10-Q for the quarter ended March 31, 1998, 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.
*10 The Nonqualified Retirement Plan as amended, was filed as Exhibit 10
to the Registrant's Form 10-Q for the quarter ended March 31, 1996.
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. 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. The Directors' Common Stock Plan as
amended, was filed as Exhibit 10.2 to the Registrant's Form 10-K for
the year ended December 31, 1996. All such exhibits are incorporated
by reference.
10.1 PPG Industries, Inc. Incentive Compensation and Deferred Income Plan
for Key Employees.
10.2 PPG Industries, Inc. Deferred Compensation Plan.
10.3 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 by reference.
10.4 PPG Industries, Inc. Total Shareholder Return Plan for Key
Employees.
12 Computation of Ratio of Earnings to Fixed Charges for the Five Years
Ended December 31, 1998.
13 Company's 1998 Annual Report to Shareholders. (Except for the pages
and information therein expressly incorporated by reference in this
Form 10-K, the Annual Report to Shareholders is provided solely for
the information of the Commission and is not to be deemed "filed" as
part of the Form 10-K.)
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule.
* Items referred to in Exhibit 10 and incorporated by reference and Exhibits
10.1, 10.2, 10.3 and 10.4 are either management contracts, compensatory
plans or arrangements required to be filed as an exhibit hereto pursuant to
Item 14(c) of Form 10-K.
7
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 19, 1999.
PPG INDUSTRIES, INC.
(Registrant)
By /s/ W. H. Hernandez
...............................................
W. H. Hernandez, Senior Vice President,
Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities indicated, on February 19, 1999.
Signature Capacity
--------- --------
/s/ R. W. LeBoeuf Director, Chairman of the Board and
..................... Chief Executive Officer
R. W. LeBoeuf
/s/ W. H. Hernandez Senior Vice President, Finance (Principal
..................... Financial and Accounting Officer)
W. H. Hernandez
E. B. Davis, Jr. Director ||
||
M. J. Hooper Director ||
||
A. J. Krowe Director ||
||
N. C. Lautenbach Director ||
||
R. Mehrabian Director ||
|| By /s/ W. H. Hernandez
V. A. Sarni Director || ..............................
|| W. H. Hernandez, Attorney-in-Fact
T. J. Usher Director ||
||
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, 1998 and
1997, and the related statements of income,
comprehensive income, shareholders' equity and cash
flows for each of the three years in the period ended
December 31, 1998, and have issued our report thereon
dated January 21, 1999; such financial statements and
report are included in your 1998 Annual Report to
Shareholders and are incorporated herein by
reference. Our audits also included financial
statement schedule II, Valuation and Qualifying
Accounts, of PPG Industries, Inc. and subsidiaries
for the years ended December 31, 1998, 1997 and 1996.
The financial statement schedule is the
responsibility of the Company's management. Our
responsibility is to express an opinion based on our
audits. In our opinion, such financial statement
schedule, when considered in relation to the basic
financial statements taken as a whole, presents
fairly in all material respects the information set
forth therein.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
January 21, 1999
9
PPG Industries, Inc. and Subsidiaries
Schedule II--Valuation and Qualifying Accounts
For the Years Ended December 31, 1998, 1997 and 1996
Balance at Charged to
Beginning Costs and Balance at
Description of Year Expenses Deductions(/1/) End of Year
----------- ---------- ---------- --------------- -----------
(Millions)
1998
Deducted from assets to
which they apply:
Allowance for doubtful
accounts ____________ $20.5 $11.4 $11.3 $20.6
===== ===== ===== =====
1997
Deducted from assets to
which they apply:
Allowance for doubtful
accounts ____________ $25.6 $10.2 $15.3 $20.5
===== ===== ===== =====
1996
Deducted from assets to
which they apply:
Allowance for doubtful
accounts ____________ $28.2 $12.9 $15.5 $25.6
===== ===== ===== =====
---------------------
(/1/) Notes and accounts receivable written off as uncollectible, net of
recoveries, changes attributable to foreign currency translation and
activity related to businesses sold.
10
PPG INDUSTRIES, INC.
AND CONSOLIDATED SUBSIDIARIES
-----------------------------
INDEX TO EXHIBITS
Exhibit Incorporated by Reference
- ------- -------------------------
3 Restated Articles Exhibit 3 - Form 10-Q for the quarter
of Incorporation. ended March 31, 1995.
3.2 Bylaws. Exhibit 3 - Form 10-Q for the quarter
ended March 31, 1998.
4 Shareholders' Rights Exhibit 4 - Form 8-K, dated February
Plan. 19, 1998.
10 Nonqualified Retirement Exhibit 10 - Form 10-Q for the quarter
Plan. ended March 31, 1996.
10 Supplemental Executive Exhibit 10.2 - Form 10-Q for the quarter
Retirement Plan II. ended September 30, 1995.
10 Change in Control Exhibit 10.5 - Form 10-Q for the quarter
Employment Agreement. ended September 30, 1995.
10 PPG Industries, Inc. Exhibit 10 - Form 10-Q for the quarter
Stock Plan. ended March 31, 1997.
10 Directors' Common Exhibit 10.2 - Form 10-K for the year
Stock Plan. ended December 31, 1996.
10.3 PPG Industries, Inc. Exhibit 10.3 - Form 10-K for the year
Deferred Compensation ended December 31, 1997.
Plan for Directors.
Exhibit Description
- ------- -----------
3.1 Statement with Respect to Shares, amending the Restated Articles of
Incorporation.
10.1 PPG Industries, Inc. Incentive Compensation and Deferred Income
Plan for Key Employees.
10.2 PPG Industries, Inc. Deferred Compensation Plan.
10.4 PPG Industries, Inc. Total Shareholder Return Plan for Key Employees.
12 Computation of Ratio of Earnings to Fixed Charges for the Five
Years Ended December 31, 1998.
13 Company's 1998 Annual Report to Shareholders.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule.