PPG Reports On 4th Quarter
18 January 2001
PPG Reports On 4th Quarter
PITTSBURGH--Jan. 18, 2001--PPG Industries' fourth-quarter 2000 net income was $126 million, or 75 cents a share, on sales of $1.99 billion.This compares with fourth-quarter 1999 net income of $162 million, or 92 cents a share, including an acquisition-related after-tax charge of $2 million, or one cent a share. Sales were $2.05 billion.
For all of 2000, PPG's net income was $620 million, or $3.57 a share, including after-tax charges totaling $38 million, or 22 cents a share, to write-off an equity investment and rationalize the recently formed PPG Auto Glass automotive replacement glass distribution venture. Excluding the charges, net income was $658 million, or $3.79 a share. Sales were a record $8.37 billion.
Net income for all of 1999 was $568 million, or $3.23 a share, including $79 million, or 45 cents a share, in after-tax acquisition-related costs and restructuring charges. Excluding these one-time items, 1999 net income was $647 million, or $3.68 a share. Sales were $7.76 billion.
"Although sales for full-year 2000 were a record, several global economic developments combined to reduce earnings for the final quarter and year," said Raymond W. LeBoeuf, PPG chairman and chief executive. "A significant downturn in the economy became apparent after mid-year. Our sales volume went from 6 percent growth in the first quarter to a reduction of 4 percent in the fourth. Natural gas costs increased significantly, reducing 2000 operating earnings by about $95 million. The weak euro adversely affected our results as well.
"In response, we are now finalizing plans begun last September to implement additional cost reductions," LeBoeuf continued. "In December, we said actions would be taken to reduce costs, increase efficiency and accelerate performance improvement. We also said we would incur pretax charges against first quarter earnings in the range of $50 million to $100 million as a result of these necessary actions, which will include facility and job consolidations. We expect additional earnings to offset these charges within a year."
Fourth-quarter 2000 coatings segment sales declined 6 percent from the year-ago period, largely on lower volume and currency translation for most businesses. Aerospace coatings and sealants volume grew.
PPG's glass segment experienced its strongest sales and operating earnings in several years in the fourth quarter despite a decline in original equipment auto glass volume. Sales grew for other glass and fiber glass businesses, particularly auto replacement glass. Gains in manufacturing efficiencies were achieved across the segment.
In chemicals, sales and operating earnings declined on lower volumes in all businesses. Extraordinarily high energy costs affected chlor-alkali and silicas results.
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
2000 1999 2000 1999
---- ---- ---- ----
Net sales (1) $1,992 $2,053 $8,367 $7,757
Cost of sales:
Recurring 1,220 1,241 5,072 4,696
Non-recurring - 4 - 23
----- ----- ----- -----
Total cost of sales 1,220 1,245 5,072 4,719
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GROSS PROFIT 772 808 3,295 3,038
Other expenses (earnings):
Selling & other 435 400 1,646 1,514
Depreciation 93 96 374 366
Interest 47 43 177 133
Amortization 18 17 73 49
Purchased in-process
research and
development - - - 40
Business divestitures
and realignments (1) (1) 5 42
Other - net 11 (24) 3 (79)
--------------------------------------------------------------
INCOME BEFORE INCOME TAXES
& MINORITY INTEREST 169 277 1,017 973
Income taxes 36 105 369 377
Minority interest 7 10 28 28
--------------------------------------------------------------
NET INCOME $ 126 $ 162 $ 620 $ 568
==============================================================
Earnings per common
share $ 0.75 $ 0.93 $ 3.60 $ 3.27
==============================================================
Earnings per common
share - assuming
dilution $ 0.75 $ 0.92 $ 3.57 $ 3.23
==============================================================
Avg. shares outstanding 169.0 173.9 172.3 173.8
==============================================================
Avg. shares outstanding
- assuming dilution 169.6 175.6 173.6 175.5
==============================================================
(1) Net sales amounts presented above reflect outgoing freight
costs as a deduction in arriving at net sales. In order to
comply with the requirements of Emerging Issues Task Force
00-10, "Accounting for Shipping and Handling Fees and
Costs", we will change our presentation to reflect these
freight costs as an expense in costs of sales in our 2000
audited financial statements and will restate all prior
periods presented. This change has no impact on gross
profit. Outgoing freight costs totaled $66 million and
$262 million for the quarter and year ended December 31, 2000,
respectively, and $61 million and $ 238 million for the
quarter and year ended December 31, 1999, respectively.
CONDENSED BALANCE SHEET (unaudited)
Dec. 31 Dec. 31
2000 1999
---- ----
(millions)
Current assets:
Cash & cash equivalents $ 111 $ 158
Receivables - net 1,563 1,594
Inventories 1,121 1,016
Other 298 294
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Total current assets 3,093 3,062
Investments 320 261
Property less accumulated depreciation 2,941 2,933
Goodwill & identifiable intangible assets
less accumulated amortization 1,648 1,662
Other assets 1,123 996
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TOTAL $9,125 $8,914
================================================================
Current liabilities:
Short-term debt & current portion of
long-term debt $1,161 $ 954
Accounts payable & accrued liabilities 1,382 1,430
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Total current liabilities 2,543 2,384
Long-term debt 1,810 1,836
Deferred income taxes 543 520
Accumulated provisions 1,004 970
Minority interest 128 98
Shareholders' equity 3,097 3,106
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TOTAL $9,125 $8,914
================================================================
BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended 12 Months Ended
Dec. 31 Dec. 31
2000 1999 2000 1999
---- ---- ---- ----
(millions)
Net sales
Coatings $1,091 $1,164 $4,573 $4,191
Glass 551 519 2,260 2,143
Chemicals 350 370 1,534 1,423
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TOTAL $1,992 $2,053 $8,367 $7,757
===========================================================
Operating income
Coatings (1) $ 149 $ 183 $ 685 $ 545
Glass (2) 73 78 377 363
Chemicals (3) 13 56 174 177
-----------------------------------------------------------
TOTAL 235 317 1,236 1,085
Interest - net (43) (39) (165) (124)
Other unallocated
corporate (expense)
income - net (4) (23) (1) (54) 12
-----------------------------------------------------------
INCOME BEFORE INCOME
TAXES & MINORITY
INTEREST $ 169 $ 277 $1,017 $ 973
===========================================================
(1) Includes for the 3 months ended Dec. 31, 2000, pre-tax
charges of $3 million related to cost reduction
initiatives and a $4 million reversal of restructuring
reserves.
Includes for the 3 months ended Dec. 31, 1999, pre-tax
charges of $4 million representing the fair-market-value
adjustment of acquired inventories that have been sold,
$3 million related to cost reduction initiatives and a
$1 million reversal of restructuring reserves.
Includes for the 12 months ended Dec. 31, 2000, pretax
charges of $2 million, representing the fair-market-value
adjustment of acquired inventories that have been sold, $1
million related to cost reduction initiatives associated with
the integration of the Imperial Chemical Industries PLC (ICI)
businesses acquired in 1999, $3 million related to additional
cost reduction initiatives and a $4 million reversal of
restructuring reserves.
Includes for the 12 months ended Dec. 31, 1999, pre-tax
charges of $42 million for disposal of a redundant European
packaging coatings facility, work force reductions and the
closure of a facility, $40 million for purchased in-process
research and development, $23 million representing the
fair-market-value adjustment of acquired inventories that
have been sold and $6 million related to the bankruptcy of a
home-center chain. Also includes a $1 million reversal of
previously established restructuring reserves.
(2) Includes for the 3 months ended Dec. 31, 2000, a $1 million
reversal of restructuring reserves.
Includes for the 3 months ended Dec. 31, 1999, a pre-tax
restructuring charge of $1 million and a $4 million reversal
of restructuring reserves.
Includes for the 12 months ended Dec. 31, 2000, pre-tax
charges of $7 million for restructuring and one-time
integration costs related to the recently formed PPG Auto
Glass L.L.C. and a $3 million reversal of previously
established restructuring reserves.
Includes for the 12 months ended Dec. 31, 1999, pre-tax
restructuring charges of $4 million related to cost reduction
initiatives and a $4 million reversal of restructuring
reserves.
(3) Includes for the 12 months ended Dec. 31, 1999, a pre-tax
restructuring charge of $1 million related to cost
reduction initiatives.
(4) Includes for the three months ended Dec. 31, 2000, a pretax
charge of $14 million representing an other than temporary
decline in the market value of an investment in marketable
equity securities and net insurance recoveries of $3 million.
Includes for the 12 months ended Dec. 31, 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, and $14
million representing an other than temporary decline in the
market value of an investment in marketable equity
securities. Also included is a $9 million pretax gain from
the sale of corporate assets and net insurance recoveries of
$7 million.