PPG Reports On 2nd Quarter, Coatings Segment Sets Records
20 July 2000
PPG Reports On 2nd Quarter, Coatings Segment Sets Records
PITTSBURGH - PPG Industries reported second-quarter net income of $205 million, or $1.17 a share, on record sales for any quarter of $2.21 billion.In the same quarter last year, net income was $184 million, or $1.05 a share, on sales of $1.95 billion.
For the first six months of 2000, PPG's net income was $344 million, or $1.96 a share, on sales of $4.30 billion. First-half 1999 net income was $307 million, or $1.75 a share, on sales of $3.75 billion.
Raymond W. LeBoeuf, board chairman and chief executive, said higher energy prices "that adversely affected our second-quarter results may continue throughout the year. Mitigating actions include selective price increases and additional cost-containment efforts, and we are hedging future natural gas purchases.
"Integration of acquisitions completed during the past year is also progressing well or has been completed, and returns on those investments continue to rise as their performance improves," he added.
Record coatings segment sales and earnings in the second quarter were driven by acquisitions and volume improvements, compared with a year ago, for automotive original and industrial coatings.
Glass segment sales and earnings rose on increased volumes in all businesses as well as pricing gains for fiber glass and automotive replacement glass products. Continued strength in global demand contributed to improved fiber glass prices. Glass earnings also benefited from manufacturing efficiencies.
"Our auto replacement glass business will benefit from the recently-announced distribution venture with Apogee Enterprises to form PPG Auto Glass," LeBoeuf said. "In September we expect the unit to take a charge, equivalent to two to three cents a share for PPG, to rationalize the business. This charge should be recovered in 2001." PPG will own 66 percent of the auto replacement glass distribution venture.
PPG's chemical segment sales and earnings improved in comparison with the year-ago period, largely on commodity chemical price improvements, despite higher energy prices.
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
2000 1999 2000 1999
---- ---- ---- ----
Net sales $2,210 $1,947 $4,297 $3,750
Cost of sales 1,327 1,165 2,581 2,268
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GROSS PROFIT 883 782 1,716 1,482
Other expenses:
Selling & other 413 374 810 727
Depreciation 94 87 187 178
Interest 44 29 87 55
Amortization 18 8 37 17
Business divestitures
and realignments (1) - - 24
Other earnings - net (28) (20) (4) (31)
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INCOME BEFORE INCOME TAXES
& MINORITY INTEREST 343 304 599 512
Income taxes 132 116 241 195
Minority interest 6 4 14 10
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NET INCOME $ 205 $ 184 $ 344 $ 307
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Earnings per common
share $ 1.18 $ 1.06 $ 1.98 $ 1.77
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Earnings per common
share - assuming
dilution $ 1.17 $ 1.05 $ 1.96 $ 1.75
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Avg. shares outstanding 173.9 173.5 174.0 173.9
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Avg. shares outstanding
- assuming dilution 175.4 175.2 175.5 175.5
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CONDENSED BALANCE SHEET (unaudited)
June 30 Dec. 31
2000 1999
---- ----
(millions)
Current assets:
Cash & cash equivalents $ 144 $ 158
Receivables - net 1,724 1,594
Inventories 1,067 1,016
Other 256 294
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Total current assets 3,191 3,062
Investments 234 261
Property less accumulated depreciation 2,920 2,933
Goodwill and identifiable intangible
assets less accumulated amortization 1,696 1,662
Other assets 1,060 996
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TOTAL $9,101 $8,914
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Current liabilities:
Short-term debt & current portion of
long-term debt $1,018 $ 954
Accounts payable & accrued liabilities 1,463 1,430
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Total current liabilities 2,481 2,384
Long-term debt 1,824 1,836
Deferred income taxes 461 520
Accumulated provisions 1,004 970
Minority interest 105 98
Shareholders' equity 3,226 3,106
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TOTAL $9,101 $8,914
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BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended 6 Months Ended
June 30 June 30
2000 1999 2000 1999
---- ---- ---- ----
(millions)
Net sales
Coatings $1,185 $1,004 $2,312 $1,915
Glass 615 586 1,186 1,143
Chemicals 410 357 799 692
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TOTAL $2,210 $1,947 $4,297 $3,750
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Operating income
Coatings(1) $ 198 $ 179 $ 358 $ 280
Glass (2) 119 116 224 213
Chemicals 50 42 124 78
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TOTAL 367 337 706 571
Interest - net (41) (27) (81) (52)
Other unallocated
corporate income
(expense) - net (3) 17 (6) (26) (7)
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INCOME BEFORE INCOME
TAXES & MINORITY
INTEREST $ 343 $ 304 $ 599 $ 512
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(1) Includes for the six months ended June 30 2000, pretax charges
of $2 million representing the fair-market-value adjustment of
acquired inventories that have been sold and $1 million
related to cost reduction initiatives associated with the
integration of the global automotive refinish, automotive and
industrial coatings businesses of Imperial Chemical Industries
PLC acquired in 1999.
Includes for the six months ended June 30, 1999, a pretax
restructuring charge of $24 million for disposal of a
redundant European packaging coatings facility and work-force
reductions.
(2) Includes in each 2000 period, a $1 million reversal of
previously established restructuring reserves.
(3) 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 Corp. which has filed for
reorganization under the federal bankruptcy code.