PPG Reports On Third Quarter
PITTSBURGH--Oct. 19, 2001--PPG Industries reported today third quarter net income was $93 million, or 55 cents a share, on sales of $2.00 billion.This compares with third-quarter 2000 net income of $150 million, or 86 cents a share, including one-time after-tax charges of $3 million, or two cents a share, to rationalize the PPG Auto Glass automotive replacement glass distribution venture. Excluding charges, net income was $153 million, or 88 cents a share. Sales were $2.14 billion.
PPG's nine-month net income was $304 million, or $1.80 a share, including the $101 million pretax restructuring charge taken in the first quarter. Excluding the charge, equaling 42 cents a share after-tax, net income was $375 million, or $2.22 a share. Sales were $6.26 billion.
This compares with nine-month 2000 net income of $494 million, or $2.82 a share, including the third-quarter charges and a first quarter charge of $35 million for the write-off of an equity investment. Excluding these charges, equaling 22 cents a share, net income was $532 million, or $3.04 a share. Sales were $6.57 billion.
"Our actions to reduce costs, increase efficiency and improve our performance are on track to deliver more than $70 million in savings on an annual basis," said Chairman and Chief Executive Officer Raymond W. LeBoeuf, referring to the $101 million pretax restructuring charge taken in the first quarter. "However, as we continue to see deterioration in global markets, we will continue our aggressive pursuit of additional cost-reduction opportunities."
LeBoeuf added that despite lower 2001 nine-month earnings, PPG's focus on conserving capital has increased cash from operations and reduced capital spending. "This has enabled us to reduce debt this year by about $300 million, with about $180 million net reduction in the third quarter, without sacrificing service, investments in technology or productive capacity," LeBoeuf said. "As a result, we will be better positioned to grow earnings per share when the global economic recovery begins, as we have done in recoveries over the past 30 years."
Third quarter 2001 sales in PPG's coatings segment were down 6 percent from last year's record period, driven largely by volume declines in automotive and industrial coatings. The earnings impact of these declines was offset partially by manufacturing efficiencies and reductions in overhead costs.
The decline in glass sales resulted primarily from lower volumes, most notably in fiber glass. Earnings also fell despite the positive impacts in pricing and manufacturing efficiencies.
Chemical sales and earnings fell also as a result of lower volumes. The impact of lower volumes and charges for estimated environmental remediation costs more than offset the reduction in overhead costs.
Additional Information
Recorded comments by William H. Hernandez, senior vice president and chief financial officer, regarding third quarter 2001 results may be heard by telephone at 412-434-2816 between about 7:30 a.m. EDT on Friday, Oct. 19, and 5 p.m. EDT on Friday, Oct. 26. 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 9 Months Ended
September 30 September 30
2001 2000 2001 2000
---- ---- ---- ----
Net sales $ 1,999 $ 2,144 $ 6,262 $ 6,571
Cost of sales 1,261 1,337 3,927 4,048
---------------------------------------------------------------------
GROSS PROFIT 738 807 2,335 2,523
Other expenses (earnings):
Selling & other 414 401 1,241 1,211
Depreciation 93 94 281 281
Interest 43 43 137 130
Amortization 18 18 54 55
Business realignments 2 6 103 6
Other - net 15 (4) (9) (8)
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES
& MINORITY INTEREST 153 249 528 848
Income taxes 55 92 197 333
Minority interest 5 7 27 21
---------------------------------------------------------------------
NET INCOME $ 93 $ 150 $ 304 $ 494
=====================================================================
Earnings per common share $ 0.56 $ 0.87 $ 1.81 $ 2.85
=====================================================================
Earnings per common share
- assuming dilution $ 0.55 $ 0.86 $ 1.80 $ 2.82
=====================================================================
Avg. shares outstanding 168.3 172.8 168.3 173.5
=====================================================================
Avg. shares outstanding
- assuming dilution 169.3 174.2 169.2 174.9
=====================================================================
CONDENSED BALANCE SHEET (unaudited)
Sept. 30 Dec. 31
2001 2000
(millions)
Current assets:
Cash & cash equivalents $ 159 $ 111
Receivables - net 1,534 1,563
Inventories 1,006 1,121
Other 285 298
----------------------------------------------------------------------
Total current assets 2,984 3,093
Investments 302 320
Property less accumulated depreciation 2,791 2,941
Goodwill & identifiable intangible
assets less accumulated amortization 1,574 1,648
Other assets 1,177 1,123
----------------------------------------------------------------------
TOTAL $8,828 $9,125
======================================================================
Current liabilities:
Short-term debt & current portion of
long-term debt $ 944 $1,161
Accounts payable & accrued liabilities 1,368 1,382
----------------------------------------------------------------------
Total current liabilities 2,312 2,543
Long-term debt 1,720 1,810
Deferred income taxes 555 543
Accumulated provisions 1,011 1,004
Minority interest 127 128
Shareholders' equity 3,103 3,097
----------------------------------------------------------------------
TOTAL $8,828 $9,125
======================================================================
BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended 9 Months Ended
September 30 September 30
2001 2000 2001 2000
---- ---- ---- ----
(millions)
Net sales
Coatings $ 1,068 $ 1,133 $ 3,338 $ 3,547
Glass 554 604 1,745 1,776
Chemicals 377 407 1,179 1,248
---------------------------------------------------------------------
TOTAL $ 1,999 $ 2,144 $ 6,262 $ 6,571
=====================================================================
Operating income
Coatings $ 123 $ 164 $ 359 $ 536
Glass (2) 49 94 233 304
Chemicals 25 37 74 161
---------------------------------------------------------------------
TOTAL 197 295 666 1,001
Interest - net (37) (41) (124) (122)
Other unallocated
corporate expense - net (3) (7) (5) (14) (31)
---------------------------------------------------------------------
INCOME BEFORE INCOME
TAXES & MINORITY
INTEREST (1) $ 153 $ 249 $ 528 $ 848
=====================================================================
(1) Income before income taxes and minority interest for the nine
months ended September 30, 2001, includes a first quarter 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
======
(2) Includes for each 2000 period, pretax charges of $7 million for
restructuring and one-time integration costs related to PPG Auto
Glass L.L.C.
(3) Includes for the nine months ended September 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.