PPG Delivers Record Fourth Quarter and Full Year Sales; Annual Sales Surpass $10 Billion.PITTSBURGH Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. -- PPG Industries PPG Industries (NYSE: PPG) was founded in 1883 as the Pittsburgh Plate Glass Company. PPG is an American manufacturer of glass and chemical products, including automotive safety glass. (NYSE NYSE See: New York Stock Exchange :PPG PPG Points Per Game (basketball player statistic) PPG Power Play Goals (hockey) PPG Planning Policy Guidance (UK) PPG Programmable Pulse Generator PPG Power Puff Girls ) reported today fourth quarter net income of $113 million, or 68 cents a share, including aftertax charges of $17 million, or 10 cents a share, for the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of certain assets in the company's specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. business; $10 million, or 6 cents a share, for direct costs related to the impact of hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita; and $3 million, or 2 cents a share, to reflect the net increase in the current value of the company's obligation under its asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. settlement agreement reported in May 2002. The company estimates aftertax earnings were also reduced by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $11 million, or 6 cents a share, due to lower sales volumes resulting from the hurricanes. Sales of $2.51 billion were a record for any fourth quarter. In the fourth quarter 2004, PPG reported net income of $183 million, or $1.06 a share. This included aftertax charges of $6 million, or 3 cents a share, to reflect the net increase in the value of the company's asbestos settlement agreement. Sales were $2.41 billion. For all of 2005, PPG recorded net income of $596 million, or $3.49 per share, including aftertax charges of $117 million, or 68 cents a share, for legal settlements net of insurance recoveries; $21 million, or 12 cents a share, for direct costs related to the impact of hurricanes Katrina and Rita; $17 million, or 10 cents a share, for the impairment of certain assets in the company's specialty chemicals business; $12 million, or 7 cents a share, for debt refinancing Refinancing An extension and/or increase in amount of existing debt. ; and $13 million, or 8 cents a share, to reflect the net increase in the value of the company's obligation under its asbestos settlement agreement. The company estimates aftertax earnings were also reduced by approximately $17 million, or 10 cents a share, due to lower sales volumes resulting from the hurricanes. Sales for 2005 were $10.2 billion, a record for any year. For all of 2004, PPG recorded net income of $683 million, or $3.95 per share. This included aftertax charges of $19 million, or 11 cents a share, to reflect the net increase in the value of the company's asbestos settlement agreement. Sales were $9.51 billion. "We faced many notable headwinds this quarter and during the entire year, including the economic fallout fallout, minute particles of radioactive material produced by nuclear explosions (see atomic bomb; hydrogen bomb; Chernobyl) or by discharge from nuclear-power or atomic installations and scattered throughout the earth's atmosphere by winds and convection currents. from the hurricanes, historical peaks in energy costs and demanding conditions in some of the markets we serve," said Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by E. Bunch, PPG's chairman and chief executive officer. "Despite these challenges, we achieved record annual and fourth quarter sales, which were supported by all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high chlor-alkali pricing. In addition, in the quarter we delivered on our commitment made earlier this year to fully recover our coatings margins to the prior year level. "As we look ahead to 2006, we see continued profitable growth opportunities, but also see continued pressure due to the high energy and raw material pricing environment. As a result, in addition to the annual cost reductions that we consistently deliver, we are finalizing plans to take severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions to further streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. our operations that would result in first-quarter charges in the range of $50 million to $70 million. "Our focus on profitable growth, meanwhile, remains unchanged. We anticipate continued organic growth, as evidenced by the performance of many of our businesses in 2005, including optical products, architectural coatings and aerospace products. Furthermore, we want to accelerate that growth through potential acquisitions, leveraging our strong balance sheet and consistent free cash flow. This growth will position us to continue our tradition of rewarding shareholders." Coatings sales for the quarter increased $59 million, or 4 percent, as a result of improved selling prices across most businesses and higher volumes across all businesses. These increases were slightly offset by the impact of weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. foreign currencies. Operating earnings Operating EarningsProfits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before were up $12 million due to the benefits of the higher selling prices and volumes as well as improved manufacturing efficiencies. These increases were substantially offset by the negative impact of inflation, primarily raw materials costs. Fourth quarter glass sales increased $24 million, or 5 percent, due to higher volumes across most businesses and higher selling prices, which were partially offset by the impact of weakening foreign currencies. The glass businesses posted an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1 million for the quarter, down $29 million due to the impact of inflation, including $28 million in higher energy costs, and lower other income. These decreases were partially offset by improved volumes and selling prices, as well as lower manufacturing and overhead costs overhead costs see fixed costs. . Chemicals sales for the quarter increased $11 million, or 2 percent, due to higher selling prices for chlor-alkali products of $75 million. These increases were partially offset by lower volumes for chlor-alkali products due primarily to the unfavorable impact of the hurricanes. Operating earnings were down $82 million primarily due to the impact of higher inflation, principally higher energy and ethylene ethylene (ĕth`əlēn') or ethene (ĕth`ēn), H2C=CH2, a gaseous unsaturated hydrocarbon. It is the simplest alkene. costs of $72 million; $27 million due to the impairment of certain specialty chemical assets; $16 million due to direct facility start-up Start-up The earliest stage of a new business venture. and equipment repair costs associated with the hurricanes; and higher environmental charges. These decreases were partially offset by the higher selling prices discussed above. Additional Information Recorded comments by William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack H. Hernandez, senior vice president and chief financial officer, regarding fourth quarter 2005 results may be heard by telephone at 412-434-2816 until 5 p.m. ET on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , Jan. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 could affect the company's operations, as discussed in PPG Industries' periodic reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 10-Q. 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 COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , fluctuations in cost and availability of raw materials, the ability to maintain favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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, foreign exchange rates and fluctuations in those rates, and the unpredictability of possible future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , including litigation that could result if the asbestos settlement discussed in PPG's reports filed with the Securities and Exchange Commission does not become effective. 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 (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. 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 disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. , 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 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 12 Months Ended
Dec. 31 Dec. 31
2005 2004 2005 2004
------ ------- ------- -------
Net sales $2,505 $2,411 $10,201 $9,513
Cost of sales 1,651 1,526 6,473 5,999
----------------------------------------------------------------------
GROSS PROFIT 854 885 3,728 3,514
Other expenses (earnings):
Selling and other 502 523 2,080 2,018
Depreciation 84 89 340 357
Interest 19 20 81 90
Amortization 8 8 32 31
Asbestos settlement - net 6 11 22 32
Other - net (Note A) 48 (31) 226 (77)
----------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST 187 265 947 1,063
Income tax expense 60 72 282 322
Minority interest 14 10 69 58
----------------------------------------------------------------------
NET INCOME (Note B) $113 $183 $596 $683
======================================================================
Earnings per common share $0.68 $1.07 $3.51 $3.98
======================================================================
Earnings per common share - assuming
dilution $0.68 $1.06 $3.49 $3.95
======================================================================
Average shares outstanding 166.0 172.1 169.6 171.7
======================================================================
Average shares outstanding - assuming
dilution 167.1 173.6 170.9 173.0
======================================================================
Note A:
The three months ended December 31, 2005, includes pretax charges of
$27 million related to impairment of certain assets in our
specialty chemicals business and $16 million for direct costs
related to hurricanes. The twelve months ended December 31, 2005,
includes pretax charges of $193 million for legal settlements net
of insurance, $34 million for direct costs related to hurricanes,
$27 million related to impairment of certain assets in our
specialty chemicals business and $19 million for debt refinancing
costs.
Note B:
The three months ended December 31, 2005, includes aftertax charges
of $17 million related to impairment of certain assets in our
specialty chemicals business and $10 million for direct costs
related to hurricanes. The twelve months ended December 31, 2005,
includes aftertax charges of $117 million for legal settlements net
of insurance, $21 million for direct costs related to hurricanes,
$17 million related to impairment of certain assets in our
specialty chemicals business and $12 million for debt refinancing
costs.
CONDENSED BALANCE SHEET (unaudited)
Dec. 31 Dec. 31
2005 2004
--------- ---------
(millions)
Current assets:
Cash and cash equivalents $466 $659
Short-term investments - 50
--------------------------------------------------------------------
Total cash, cash equivalents and short-term
investments 466 709
Receivables - net 1,871 1,797
Inventories 1,119 1,076
Other 563 472
----------------------------------------------------------------------
Total current assets 4,019 4,054
Property less accumulated depreciation 2,304 2,471
Investments 311 298
Goodwill and identifiable intangible assets 1,654 1,713
Other assets 393 396
----------------------------------------------------------------------
TOTAL $8,681 $8,932
======================================================================
Current liabilities:
Short-term debt and current portion of long-term
debt $101 $166
Asbestos settlement 472 404
Accounts payable and accrued liabilities 1,776 1,651
----------------------------------------------------------------------
Total current liabilities 2,349 2,221
Long-term debt 1,169 1,184
Asbestos settlement 385 440
Deferred income taxes 90 145
Accumulated provisions 1,527 1,274
Minority interest 108 96
Shareholders' equity 3,053 3,572
----------------------------------------------------------------------
TOTAL $8,681 $8,932
======================================================================
BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended 12 Months Ended
Dec. 31 Dec. 31
2005 2004 2005 2004
------ ------- ------- -------
(millions)
Net sales
Coatings $1,388 $1,329 $5,566 $5,275
Glass 548 524 2,237 2,204
Chemicals 569 558 2,398 2,034
----------------------------------------------------------------------
TOTAL $2,505 $2,411 $10,201 $9,513
======================================================================
Operating income (loss)
Coatings (Note A) $180 $168 $609 $777
Glass (Note B) (1) 28 56 169
Chemicals (Note C) 23 105 451 291
----------------------------------------------------------------------
TOTAL 202 301 1,116 1,237
Interest expense - net (16) (16) (68) (78)
Asbestos settlement - net (6) (11) (22) (32)
Compensation cost associated with stock
options (6) (5) (28) (20)
Other unallocated corporate income
(expense) - net (Note D) 13 (4) (51) (44)
----------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST $187 $265 $947 $1,063
======================================================================
Note A:
The twelve months ended December 31, 2005, includes pretax charges
of $132 million for legal settlements net of insurance.
Note B:
The twelve months ended December 31, 2005, includes pretax charges
of $61 million for legal settlements.
Note C:
The three months ended December 31, 2005, includes pretax charges of
$16 million for direct costs related to hurricanes and $27 million
related to impairment of certain assets in our specialty chemicals
business. The twelve months ended December 31, 2005, includes
pretax charges of $34 million related to hurricanes and $27 million
related to impairment of certain assets in our specialty chemicals
business.
Note D:
The twelve months ended December 31, 2005, includes pretax charges
of $19 million for debt refinancing costs.
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