PPG Posts 4th Quarter Results, Slates Dispositions, Sets Dividend
15 January 1998
PPG Posts 4th Quarter Records; Slates Dispositions; Dividend Set
PITTSBURGH, Jan. 15, -- Excluding effects of non-recurring
gains and charges recorded in the last three months of 1997, PPG Industries
achieved higher sales, earnings and earnings per share than in any
previous fourth quarter, propelled by record sales for a final quarter in all
three business segments -- coatings, glass and chemicals.
Sales and earnings per share for all of 1997 were also records, even
including effects of the final-quarter non-recurring items. Earnings were
lower for 1997 than in 1996, in part because of effects of the net charges.
Fourth-quarter net income was $159 million, or 89 cents a share, on sales
of $1.8 billion. Excluding gains and charges, net income was $174 million, or
98 cents a share. In the 1996 quarter, net income was $152 million, or
83 cents a share, on sales of $1.8 billion.
Full-year net income was $714 million, or $3.97 per share, on sales of
$7.4 billion. Excluding the non-recurring items, net income was $729 million,
or $4.06 a share. Net income for all of 1996 was $744 million, or $3.96 per
share, on sales of $7.2 billion.
Also today, PPG's board of directors declared a regular quarterly dividend
of 34 cents a share, payable March 12 to shareholders of record Feb. 17.
PPG recorded non-recurring pre-tax charges of $102 million for glass
segment restructuring actions that include closing a Georgia float glass plant
and disposal of equity interests in two Chinese float glass plants, said
Raymond W. LeBoeuf, board chairman and chief executive officer. Partially
offset by a pre-tax gain of about $59 million from divestiture of certain
chemicals businesses, principally surfactants, the charges reduced
fourth-quarter net income by about $15 million and per-share earnings by nine
cents.
"Dispositions included in the fourth quarter charges, our first in several
years, are actions to eliminate the drag of operations not meeting performance
objectives," LeBoeuf said.
"We have increased our emphasis on accelerating earnings growth and
further reducing cyclicality," he said. "This includes growing profitable
sales of our existing operations, as well as acquisitions focused on areas of
recognized strength -- such as our fourth-quarter coatings acquisitions that
will add annual sales of more than $400 million.
"What is not new," he continued, "is our strong financial discipline,
aimed at assuring that return on capital continues to be greater than the cost
of that capital, providing real value to shareholders."
The Perry, Ga., glass plant will close in late 1998. Plans for
disposition this year of PPG's equity interest in Dalian Float Glass Co. and
Guangdong Float Glass Co. are being completed, LeBoeuf said, noting that this
decision was centered on "significant excess capacity in China's flat glass
industry."
Record fourth-quarter coatings segment sales and operating earnings
reflected, in part, worldwide volume gains compared with the year-earlier
period in all coatings businesses, particularly automotive original equipment
and industrial. North and South American and European acquisitions during
1997 also contributed to the sales increase.
Record glass segment sales were achieved in the quarter despite continued
economic weakness in Europe. Excluding the one-time restructuring charges,
operating earnings increased slightly from a year ago.
PPG's chemicals segment recorded record fourth-quarter sales and -- even
excluding effects of the one-time divestitures gain -- a 21 percent
improvement in operating earnings. Although caustic soda pricing was slightly
lower than year-ago levels, chlor-alkali volumes increased for the 12th
consecutive year without significant capital investment. Specialty chemicals
sales and operating earnings remained strong because of volume increases,
again led by Transitions photochromic plastic eyewear lenses.
PPG INDUSTRIES AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENT OF OPERATIONS (unaudited)
(All amounts in millions except per-share data)
3 Months Ended 12 Months Ended
Dec. 31 Dec. 31
1997 1996 1997 1996
Net sales $1,846 $1,754 $7,379 $7,218
Cost of sales 1,085 1,072 4,397 4,340
GROSS PROFIT 761 682 2,982 2,878
Other expenses:
Selling & other 348 327 1,318 1,243
Depreciation 87 88 348 340
Interest 29 24 105 96
Other (earnings) charges - net 47 (12) 36 (41)
INCOME BEFORE INCOME
TAXES & MINORITY INTEREST 250 255 1,175 1,240
Income taxes 83 97 435 471
Minority interest 8 6 26 25
NET INCOME $159 $152 $714 $744
==========================================================================
Earnings Per Common Share $0.89 $0.83 $3.97 $3.96
==========================================================================
Earnings Per Common Share
- Assuming Dilution $0.89 $0.82 $3.94 $3.93
==========================================================================
Avg. shares outstanding 177.9 183.9 179.8 187.8
==========================================================================
CONDENSED BALANCE SHEET (unaudited)
Dec. 31 Dec. 31
1997 1996
(millions)
Current assets:
Cash & cash equivalents $129 $70
Receivables - net 1,353 1,226
Inventories 863 797
Other 239 203
Total current assets 2,584 2,296
Investments 219 254
Property less accumulated depreciation 2,855 2,913
Other assets 1,210 978
TOTAL $6,868 $6,441
=========================================================================
Current liabilities:
Short-term debt & current portion of
long-term debt $444 $648
Accounts payable & accrued liabilities 1,210 1,106
Income taxes 8 15
Total current liabilities 1,662 1,769
Long-term debt 1,257 834
Deferred income taxes 406 419
Accumulated provisions 952 860
Minority interest 82 76
Shareholders' equity 2,509 2,483
TOTAL $6,868 $6,441
=========================================================================
BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended 12 Months Ended
Dec. 31 Dec. 31
1997 1996 1997 1996
(millions)
Net sales
Coatings & Resins $800 $727 $3,059 $2,902
Glass 649 638 2,673 2,704
Chemicals 397 389 1,647 1,612
TOTAL $1,846 $1,754 $7,379 $7,218
==========================================================================
Operating income
Coatings & Resins $149 $116 $568 $529
Glass (1) 26 84 330 431
Chemicals (2) 156 80 430 376
TOTAL 331 280 1,328 1,336
Interest - net (26) (20) (97) (85)
Other unallocated
corporate (expense)
income - net (3) (55) (5) (56) (11)
INCOME BEFORE INCOME
TAXES & MINORITY INTEREST $250 $255 $1,175 $1,240
==========================================================================
(1) Includes in each 1997 period pre-tax charge of $65 million related
principally to closure of the Perry, Ga., plant.
(2) Includes in each 1997 period pre-tax gain of $59 million related
principally to sale of certain chemicals businesses.
(3) Includes in each 1997 period pre-tax charge of $37 million related to
divestiture of equity interests in two Chinese float glass plants.
SOURCE PPG Industries