PPG Reports On Second Quarter
PITTSBURGH--July 19, 2001--PPG Industries today reported second quarter 2001 net income of $155 million, or 92 cents a share, on sales of $2.16 billion.In the same quarter last year, net income was $205 million, or $1.17 a share, on record sales of $2.28 billion.
For the first six months of 2001, net income was $211 million or $1.25 a share, including a first-quarter pretax restructuring charge of $101 million. After-tax, the charge was $71 million or 42 cents a share. Excluding the charge, net income for the first half of 2001 was $282 million or $1.67 a share. Sales were $4.3 billion. First-half 2000 net income was $344 million, or $1.96 a share, on sales of $4.4 billion. Excluding a charge for the writeoff of an equity investment, net income for the first six months of 2000 was $379 million or $2.16 a share.
"The overall market weakness that is affecting industry is affecting our performance, too," said Raymond W. LeBoeuf, chairman and chief executive officer. "Our early recognition of the sluggish global economy, however, enabled us to accelerate actions to reduce costs and increase efficiency. This is one reason that, despite deteriorating economic conditions, the 21 percent decline in earnings per share in the second quarter was less than the first quarter's decline. The focus on cost savings not only helps our earnings in tough times like these -- but positions us to improve our performance as the economy recovers. Even in this difficult environment, our disciplined approach enabled us to satisfy the corporation's cash requirements and still reduce our debt by more than $150 million in the quarter."
Coatings sales were down from record highs in the second quarter of 2000, largely driven by lower volumes in automotive and industrial coatings. The earnings decline from lower volumes was partially offset by manufacturing efficiencies and reductions in overhead, primarily in automotive OEM coatings.
Glass sales were flat despite sharply lower demand for fiber glass used in printed wiring boards. Although strong manufacturing efficiencies were achieved throughout the glass segment, earnings fell on lower fiber glass volumes and higher natural gas costs.
Chemical sales and earnings were down, largely as a result of volume declines in commodity chemicals and higher energy costs.
Internet: www.ppg.com
Additional Information
Recorded comments by William H. Hernandez, senior vice president and chief financial officer, regarding second quarter 2001 results may be heard by telephone at 412-434-2816 between about 7:30 a.m. EDT on Thursday, July 19, and 5 p.m. EDT on Friday, July 27. The commentary will also be available online at Financial, Financial Commentary, on PPG's Web site (www.ppg.com). The commentary may include forward-looking statements or other material information. Additional information, including historical performance, is also available at Financial on PPG's Web site.
Forward-Looking Statement
Statements in this news release relating to matters that are not historical facts are forward-looking statements reflecting the company's current view with respect to future events and financial performance. These matters involve risks and uncertainties that affect the company's operations, as discussed in PPG Industries' Annual Report on Form 10-K filed with the Securities and Exchange Commission. Accordingly, 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 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, and 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.
Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the company's consolidated financial condition, operations or liquidity.
PPG INDUSTRIES AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENT OF OPERATIONS (unaudited)
(All amounts in millions except per-share data)
3 Months Ended 6 Months Ended
June 30 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
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GROSS PROFIT 822 883 1,597 1,716
Other expenses (earnings):
Selling & other 409 413 827 810
Depreciation 94 94 188 187
Interest 46 44 94 87
Amortization 18 18 36 37
Business realignments - (1) 101 -
Other - net (6) (28) (24) (4)
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INCOME BEFORE INCOME TAXES
& 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 $ 0.92 $ 1.18 $ 1.25 $ 1.98
===============================================================
Earnings per common
share - assuming
dilution $ 0.92 $ 1.17 $ 1.25 $ 1.96
===============================================================
Avg. shares outstanding 168.3 173.9 168.3 174.0
===============================================================
Avg. shares outstanding
- assuming dilution 169.3 175.4 169.1 175.5
===============================================================
CONDENSED BALANCE SHEET (unaudited)
June 30 Dec. 31
2001 2000
---- ----
(millions)
Current assets:
Cash & cash equivalents $ 118 $ 111
Receivables - net 1,637 1,563
Inventories 1,076 1,121
Other 305 298
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Total current assets 3,136 3,093
Investments 302 320
Property less accumulated depreciation 2,801 2,941
Goodwill & identifiable intangible
assets less accumulated amortization 1,570 1,648
Other assets 1,143 1,123
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TOTAL $8,952 $9,125
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Current liabilities:
Short-term debt & current portion of
long-term debt $1,116 $1,161
Accounts payable & accrued liabilities 1,389 1,382
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Total current liabilities 2,505 2,543
Long-term debt 1,703 1,810
Deferred income taxes 539 543
Accumulated provisions 1,008 1,004
Minority interest 135 128
Shareholders' equity 3,062 3,097
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TOTAL $8,952 $9,125
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BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended 6 Months Ended
June 30 June 30
2001 2000 2001 2000
---- ---- ---- ----
(millions)
Net sales
Coatings $1,165 $1,237 $2,270 $2,414
Glass 608 607 1,191 1,172
Chemicals 391 431 802 841
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TOTAL $2,164 $2,275 $4,263 $4,427
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Operating income
Coatings $ 175 $ 205 $ 236 $ 372
Glass 99 112 184 210
Chemicals 26 50 49 124
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TOTAL 300 367 469 706
Interest - net (44) (41) (87) (81)
Other unallocated
corporate income
(expense) - net (2) 5 17 (7) (26)
-------------------------------------------------------------
INCOME BEFORE INCOME
TAXES & MINORITY
INTEREST (1) $ 261 $ 343 $ 375 $ 599
=============================================================
(1) Income before income taxes and minority interest for the six
months ended June 30, 2001, includes a charge for $101
million for restructuring and other related activities,
including severance and other costs of $67 million and asset
write-offs of $34 million. The amounts by business segment
were as follows:
Coatings $ 83
Glass 10
Chemicals 7
Corporate 1
------
$ 101
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(2) Includes for the six months ended June 30, 2000, a pretax
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.