Pennsylvania
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|
25-0730780
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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|
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One PPG Place, Pittsburgh, Pennsylvania
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15272
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
|
o
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PAGE(S)
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Item 1.
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Item 2.
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Item 3.
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||
Item 4.
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||
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Item 1.
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||
Item 1A.
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||
Item 2.
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Item 5.
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Item 6.
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Signature
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Three Months
Ended September 30 |
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Nine Months
Ended September 30
|
||||||||||||
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2014
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|
2013
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|
2014
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|
2013
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||||||||
Net sales
|
$
|
3,935
|
|
|
$
|
3,774
|
|
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$
|
11,653
|
|
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$
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10,765
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Cost of sales, exclusive of depreciation and amortization
|
2,229
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|
|
2,161
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|
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6,626
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|
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6,286
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||||
Selling, general and administrative
|
941
|
|
|
910
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|
|
2,826
|
|
|
2,581
|
|
||||
Depreciation
|
87
|
|
|
85
|
|
|
260
|
|
|
245
|
|
||||
Amortization
|
32
|
|
|
28
|
|
|
93
|
|
|
88
|
|
||||
Research and development, net
|
120
|
|
|
117
|
|
|
366
|
|
|
344
|
|
||||
Interest expense
|
47
|
|
|
48
|
|
|
142
|
|
|
148
|
|
||||
Interest income
|
(13
|
)
|
|
(11
|
)
|
|
(38
|
)
|
|
(30
|
)
|
||||
Business restructuring
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
||||
Asbestos settlement – net
|
3
|
|
|
3
|
|
|
9
|
|
|
9
|
|
||||
Other charges
|
150
|
|
|
119
|
|
|
190
|
|
|
168
|
|
||||
Other income
|
(160
|
)
|
|
(31
|
)
|
|
(216
|
)
|
|
(82
|
)
|
||||
Income from continuing operations before income taxes
|
499
|
|
|
247
|
|
|
1,395
|
|
|
910
|
|
||||
Income tax expense
|
116
|
|
|
40
|
|
|
330
|
|
|
182
|
|
||||
Income from continuing operations
|
383
|
|
|
207
|
|
|
1,065
|
|
|
728
|
|
||||
(Loss)/income from discontinued operations, net of tax
|
(6
|
)
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|
48
|
|
|
1,005
|
|
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2,343
|
|
||||
Net income attributable to the controlling and noncontrolling interests
|
377
|
|
|
255
|
|
|
2,070
|
|
|
3,071
|
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||||
Less: Net income attributable to noncontrolling interests
|
(6
|
)
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|
(29
|
)
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(51
|
)
|
|
(94
|
)
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||||
Net income (attributable to PPG)
|
$
|
371
|
|
|
$
|
226
|
|
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$
|
2,019
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|
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$
|
2,977
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|
Amounts attributable to PPG:
|
|
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||||||||
Income from continuing operations, net of tax
|
$
|
377
|
|
|
$
|
204
|
|
|
$
|
1,047
|
|
|
$
|
713
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|
(Loss)/income from discontinued operations, net of tax
|
(6
|
)
|
|
22
|
|
|
972
|
|
|
2,264
|
|
||||
Net income (attributable to PPG)
|
$
|
371
|
|
|
$
|
226
|
|
|
$
|
2,019
|
|
|
$
|
2,977
|
|
|
|
|
|
|
|
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||||||||
Earnings per common share:
|
|
|
|
|
|
|
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||||||||
Income from continuing operations, net of tax
|
$
|
2.73
|
|
|
$
|
1.43
|
|
|
$
|
7.55
|
|
|
$
|
4.93
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|
(Loss)/income from discontinued operations, net of tax
|
(0.04
|
)
|
|
0.15
|
|
|
7.01
|
|
|
15.68
|
|
||||
Net income (attributable to PPG)
|
$
|
2.69
|
|
|
$
|
1.58
|
|
|
$
|
14.56
|
|
|
$
|
20.61
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|
Earnings per common share – assuming dilution:
|
|
|
|
|
|
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|
||||||||
Income from continuing operations, net of tax
|
$
|
2.70
|
|
|
$
|
1.41
|
|
|
$
|
7.47
|
|
|
$
|
4.88
|
|
(Loss)/income from discontinued operations, net of tax
|
(0.04
|
)
|
|
0.15
|
|
|
6.94
|
|
|
15.51
|
|
||||
Net income (attributable to PPG)
|
$
|
2.66
|
|
|
$
|
1.56
|
|
|
$
|
14.41
|
|
|
$
|
20.39
|
|
|
|
|
|
|
|
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||||||||
Dividends per common share
|
$
|
0.67
|
|
|
$
|
0.61
|
|
|
$
|
1.95
|
|
|
$
|
1.81
|
|
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30
|
||||||||||||
|
2014
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|
2013
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2014
|
|
2013
|
||||||||
Net income attributable to the controlling and noncontrolling interests
|
$
|
377
|
|
|
$
|
255
|
|
|
$
|
2,070
|
|
|
$
|
3,071
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension and other postretirement benefits
|
16
|
|
|
—
|
|
|
41
|
|
|
198
|
|
||||
Unrealized foreign currency translation adjustments
|
(294
|
)
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|
172
|
|
|
(236
|
)
|
|
(18
|
)
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||||
Unrealized losses on marketable securities
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Derivative financial instruments
|
6
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|
|
2
|
|
|
6
|
|
|
9
|
|
||||
Other comprehensive (loss) income, net of tax
|
$
|
(272
|
)
|
|
$
|
173
|
|
|
$
|
(189
|
)
|
|
$
|
189
|
|
Total comprehensive income
|
105
|
|
|
428
|
|
|
1,881
|
|
|
3,260
|
|
||||
Less: amounts attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Net income
|
(6
|
)
|
|
(29
|
)
|
|
(51
|
)
|
|
(94
|
)
|
||||
Unrealized foreign currency translation adjustments
|
6
|
|
|
(3
|
)
|
|
2
|
|
|
8
|
|
||||
Comprehensive income attributable to PPG
|
$
|
105
|
|
|
$
|
396
|
|
|
$
|
1,832
|
|
|
$
|
3,174
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,468
|
|
|
$
|
1,116
|
|
Short-term investments
|
570
|
|
|
629
|
|
||
Receivables (less allowance for doubtful accounts of
$65 and $74)
|
2,968
|
|
|
2,736
|
|
||
Inventories
|
1,905
|
|
|
1,824
|
|
||
Deferred Income Taxes
|
421
|
|
|
425
|
|
||
Other
|
566
|
|
|
484
|
|
||
Total current assets
|
8,898
|
|
|
7,214
|
|
||
Property, plant and equipment (net of accumulated depreciation of $4,463 and $4,805)
|
2,720
|
|
|
2,876
|
|
||
Goodwill
|
2,898
|
|
|
3,008
|
|
||
Identifiable intangible assets, net
|
1,274
|
|
|
1,339
|
|
||
Deferred income taxes
|
252
|
|
|
491
|
|
||
Investments
|
449
|
|
|
393
|
|
||
Other assets
|
596
|
|
|
542
|
|
||
Total
|
$
|
17,087
|
|
|
$
|
15,863
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
3,687
|
|
|
$
|
3,265
|
|
Asbestos settlement
|
773
|
|
|
763
|
|
||
Restructuring reserves
|
42
|
|
|
73
|
|
||
Short-term debt and current portion of long-term debt
|
394
|
|
|
34
|
|
||
Total current liabilities
|
4,896
|
|
|
4,135
|
|
||
Long-term debt
|
2,954
|
|
|
3,372
|
|
||
Accrued pensions
|
721
|
|
|
728
|
|
||
Other postretirement benefits
|
1,004
|
|
|
1,007
|
|
||
Asbestos settlement
|
255
|
|
|
245
|
|
||
Deferred income taxes
|
241
|
|
|
249
|
|
||
Other liabilities
|
811
|
|
|
929
|
|
||
Total liabilities
|
10,882
|
|
|
10,665
|
|
||
Commitments and contingent liabilities (Note 15)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common stock
|
484
|
|
|
484
|
|
||
Additional paid-in capital
|
1,001
|
|
|
953
|
|
||
Retained earnings
|
14,506
|
|
|
12,757
|
|
||
Treasury stock, at cost
|
(8,423
|
)
|
|
(8,002
|
)
|
||
Accumulated other comprehensive loss
|
(1,447
|
)
|
|
(1,260
|
)
|
||
Total PPG shareholders’ equity
|
6,121
|
|
|
4,932
|
|
||
Noncontrolling interests
|
84
|
|
|
266
|
|
||
Total shareholders’ equity
|
6,205
|
|
|
5,198
|
|
||
Total
|
$
|
17,087
|
|
|
$
|
15,863
|
|
($ in millions)
|
Nine Months
Ended September 30 |
||||||
|
2014
|
|
2013
|
||||
Operating activities:
|
|
|
|
||||
Net income attributable to controlling and noncontrolling interests
|
$
|
2,070
|
|
|
$
|
3,071
|
|
Less: Income from discontinued operations
|
(1,005
|
)
|
|
(2,343
|
)
|
||
Income from continuing operations
|
1,065
|
|
|
728
|
|
||
Adjustments to reconcile net income to cash from operations:
|
|
|
|
||||
Depreciation and amortization
|
353
|
|
|
333
|
|
||
Pension expense
|
49
|
|
|
90
|
|
||
Stock-based compensation expense
|
53
|
|
|
59
|
|
||
Business restructuring
|
—
|
|
|
98
|
|
||
Environmental remediation charge
|
138
|
|
|
101
|
|
||
Equity affiliate earnings, net of distributions received
|
(55
|
)
|
|
9
|
|
||
Deferred income taxes
|
(59
|
)
|
|
(49
|
)
|
||
Cash contributions to pension plans
|
(12
|
)
|
|
(47
|
)
|
||
Restructuring cash spending
|
(41
|
)
|
|
(55
|
)
|
||
Change in certain asset and liability accounts:
|
|
|
|
||||
Receivables
|
(416
|
)
|
|
(306
|
)
|
||
Inventories
|
(205
|
)
|
|
(6
|
)
|
||
Other current assets
|
(86
|
)
|
|
(28
|
)
|
||
Accounts payable and accrued liabilities
|
433
|
|
|
191
|
|
||
Noncurrent assets
|
(23
|
)
|
|
10
|
|
||
Noncurrent liabilities
|
(121
|
)
|
|
(62
|
)
|
||
Taxes and interest payable
|
106
|
|
|
5
|
|
||
Other
|
65
|
|
|
73
|
|
||
Cash from operating activities - continuing operations
|
1,244
|
|
|
1,144
|
|
||
Cash (used for) from operating activities - discontinued operations
|
(207
|
)
|
|
138
|
|
||
Cash from operating activities
|
1,037
|
|
|
1,282
|
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(358
|
)
|
|
(250
|
)
|
||
Business acquisitions, net of cash balances acquired
|
(114
|
)
|
|
(978
|
)
|
||
Deposit of cash into escrow
|
(11
|
)
|
|
—
|
|
||
Proceeds from separation and merger of commodity chemicals business, net
|
—
|
|
|
940
|
|
||
Proceeds from the disposition of PPG's interest in the Transitions Optical joint venture and sunlens business (proceeds of $1,735, net of $110 cash divested)
|
1,625
|
|
|
—
|
|
||
Proceeds from the sale of assets
|
56
|
|
|
—
|
|
||
Purchase of short-term investments
|
(936
|
)
|
|
(1,063
|
)
|
||
Proceeds from maturity of short-term investments
|
960
|
|
|
1,532
|
|
||
Payments on cross currency swap contracts
|
(45
|
)
|
|
(24
|
)
|
||
Proceeds from cross currency swap contracts
|
37
|
|
|
19
|
|
||
Other
|
7
|
|
|
(1
|
)
|
||
Cash from investing activities - continuing operations
|
1,221
|
|
|
175
|
|
||
Cash used for investing activities - discontinued operations
|
(1
|
)
|
|
(7
|
)
|
||
Cash from investing activities
|
1,220
|
|
|
168
|
|
||
Financing activities:
|
|
|
|
||||
Net change in borrowing with maturities of three months or less
|
(14
|
)
|
|
(13
|
)
|
||
Repayment of debt
|
(2
|
)
|
|
(607
|
)
|
||
Repayment of acquired debt
|
(37
|
)
|
|
—
|
|
||
Purchase of treasury stock
|
(450
|
)
|
|
(320
|
)
|
||
Issuance of treasury stock
|
52
|
|
|
59
|
|
||
Dividends paid on PPG common stock
|
(269
|
)
|
|
(259
|
)
|
||
Acquisition of noncontrolling interest
|
(39
|
)
|
|
—
|
|
||
Other
|
(17
|
)
|
|
7
|
|
||
Cash used for financing activities - continuing operations
|
(776
|
)
|
|
(1,133
|
)
|
||
Cash used for financing activities - discontinued operations
|
(40
|
)
|
|
(54
|
)
|
||
Cash used for financing activities
|
(816
|
)
|
|
(1,187
|
)
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
(89
|
)
|
|
(7
|
)
|
||
Net increase in cash and cash equivalents
|
1,352
|
|
|
256
|
|
||
Cash and cash equivalents, beginning of period
|
1,116
|
|
|
1,306
|
|
||
Cash and cash equivalents, end of period
|
$
|
2,468
|
|
|
$
|
1,562
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid, net of amount capitalized
|
160
|
|
|
166
|
|
||
Taxes paid, net of refunds
|
504
|
|
|
231
|
|
1.
|
Basis of Presentation
|
2.
|
New Accounting Standards
|
3.
|
Acquisitions and Dispositions
|
($ in millions)
|
|
||
Current assets
|
$
|
558
|
|
Property, plant, and equipment
|
184
|
|
|
Trademarks with indefinite lives
|
174
|
|
|
Identifiable intangible assets with finite lives
|
196
|
|
|
Goodwill
|
225
|
|
|
Other non-current assets
|
49
|
|
|
Total assets
|
$
|
1,386
|
|
Current liabilities
|
(326
|
)
|
|
Accrued pensions
|
(29
|
)
|
|
Other post-retirement benefits
|
(40
|
)
|
|
Other long-term liabilities
|
(44
|
)
|
|
Total liabilities
|
$
|
(439
|
)
|
Total purchase price, net of cash acquired
|
$
|
947
|
|
4.
|
Discontinued Operations
|
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30 |
||||||||||||
($ in millions)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
206
|
|
|
$
|
247
|
|
|
$
|
649
|
|
Income from operations
|
$
|
—
|
|
|
$
|
62
|
|
|
$
|
104
|
|
|
$
|
206
|
|
Net gain from divestiture of PPG's interest in the Transitions Optical joint venture and sunlens business
|
—
|
|
|
—
|
|
|
1,468
|
|
|
—
|
|
||||
Income tax expense
|
(6
|
)
|
|
(20
|
)
|
|
(567
|
)
|
|
(60
|
)
|
||||
(Loss)/income from discontinued operations, net of tax
|
(6
|
)
|
|
42
|
|
|
1,005
|
|
|
146
|
|
||||
Less: Net income attributable to non-controlling interests, discontinued operations
|
—
|
|
|
(26
|
)
|
|
(33
|
)
|
|
(79
|
)
|
||||
Net (loss) income from discontinued operations (attributable to PPG)
|
$
|
(6
|
)
|
|
$
|
16
|
|
|
$
|
972
|
|
|
$
|
67
|
|
|
December 31,
|
||
($ in millions)
|
2013
|
||
Cash
|
$
|
154
|
|
Receivables
|
225
|
|
|
Inventory
|
68
|
|
|
Other current assets
|
13
|
|
|
Property, plant, and equipment
|
158
|
|
|
Goodwill
|
47
|
|
|
Other non-current assets
|
3
|
|
|
Total assets
|
$
|
668
|
|
Accounts payable and accrued liabilities
|
(199
|
)
|
|
Short-term debt and current portion of long-term debt
|
(24
|
)
|
|
Accrued pensions
|
(1
|
)
|
|
Other long-term liabilities
|
(10
|
)
|
|
Noncontrolling interests
|
(167
|
)
|
|
Net assets
|
$
|
267
|
|
|
Nine Months
Ended September 30
|
||
($ in millions)
|
2013
|
||
Net sales
|
$
|
108
|
|
Income from operations
|
—
|
|
|
Net gain from separation and merger of commodity chemicals business
|
2,192
|
|
|
Income tax expense
|
5
|
|
|
Income from discontinued operations, net of tax
|
$
|
2,197
|
|
Less: Net income attributable to non-controlling interests, discontinued operations
|
—
|
|
|
Net income from discontinued operations (attributable to PPG)
|
$
|
2,197
|
|
5.
|
Inventories
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
($ in millions)
|
|
||||||
Finished products
|
$
|
1,214
|
|
|
$
|
1,156
|
|
Work in process
|
165
|
|
|
160
|
|
||
Raw materials
|
464
|
|
|
440
|
|
||
Supplies
|
62
|
|
|
68
|
|
||
Total
|
$
|
1,905
|
|
|
$
|
1,824
|
|
6.
|
Goodwill and Other Identifiable Intangible Assets
|
|
Performance
Coatings
|
|
Industrial
Coatings
|
|
Glass
|
|
Total
|
||||||||
($ in millions)
|
|
||||||||||||||
Balance, December 31, 2013
|
$
|
2,381
|
|
|
$
|
575
|
|
|
$
|
52
|
|
|
$
|
3,008
|
|
Acquisitions
|
76
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||
Divestitures
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
||||
Currency
|
(110
|
)
|
|
(26
|
)
|
|
(3
|
)
|
|
(139
|
)
|
||||
Balance, September 30, 2014
|
$
|
2,347
|
|
|
$
|
502
|
|
|
$
|
49
|
|
|
$
|
2,898
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
($ in millions)
|
|
||||||||||||||||||||||
Acquired technology
|
$
|
532
|
|
|
$
|
(389
|
)
|
|
$
|
143
|
|
|
$
|
522
|
|
|
$
|
(372
|
)
|
|
$
|
150
|
|
Customer-related intangibles
|
1,139
|
|
|
(572
|
)
|
|
567
|
|
|
1,177
|
|
|
(557
|
)
|
|
620
|
|
||||||
Trade names
|
120
|
|
|
(61
|
)
|
|
59
|
|
|
127
|
|
|
(61
|
)
|
|
66
|
|
||||||
Other
|
34
|
|
|
(23
|
)
|
|
11
|
|
|
30
|
|
|
(26
|
)
|
|
4
|
|
||||||
Balance
|
$
|
1,825
|
|
|
$
|
(1,045
|
)
|
|
$
|
780
|
|
|
$
|
1,856
|
|
|
$
|
(1,016
|
)
|
|
$
|
840
|
|
7.
|
Business Restructuring
|
($ in millions, except no. of employees)
|
Severance
and Other
Costs
|
|
Asset
Write-offs
|
|
Total
Reserve
|
|
Employees
Impacted
|
|||||||
Performance Coatings
|
$
|
74
|
|
|
$
|
5
|
|
|
$
|
79
|
|
|
1,253
|
|
Industrial Coatings
|
14
|
|
|
—
|
|
|
14
|
|
|
165
|
|
|||
Glass
|
4
|
|
|
—
|
|
|
4
|
|
|
14
|
|
|||
Corporate
|
1
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|||
Total third quarter 2013 restructuring charge
|
$
|
93
|
|
|
$
|
5
|
|
|
$
|
98
|
|
|
1,436
|
|
2013 activity
|
(23
|
)
|
|
(5
|
)
|
|
(28
|
)
|
|
(645
|
)
|
|||
Balance as of December 31, 2013
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
791
|
|
2014 activity to date
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
|
(216
|
)
|
|||
Balance as of September 30, 2014
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
575
|
|
8.
|
Earnings Per Common Share
|
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30 |
||||||||
(in millions)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Weighted average common shares outstanding
|
138.2
|
|
|
143.2
|
|
|
138.7
|
|
|
144.4
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||
Stock options
|
0.7
|
|
|
0.9
|
|
|
0.7
|
|
|
0.8
|
|
Other stock compensation plans
|
0.8
|
|
|
0.8
|
|
|
0.7
|
|
|
0.8
|
|
Potentially dilutive common shares
|
1.5
|
|
|
1.7
|
|
|
1.4
|
|
|
1.6
|
|
Adjusted weighted average common shares outstanding
|
139.7
|
|
|
144.9
|
|
|
140.1
|
|
|
146.0
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2014
|
2013
|
Effective tax rate
|
|
23.7%
|
20.0%
|
10.
|
Pensions and Other Postretirement Benefits
|
|
Pensions
|
||||||||||||||
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30 |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
($ in millions)
|
|
||||||||||||||
Service cost
|
$
|
11
|
|
|
$
|
16
|
|
|
$
|
38
|
|
|
$
|
45
|
|
Interest cost
|
54
|
|
|
56
|
|
|
172
|
|
|
162
|
|
||||
Expected return on plan assets
|
(76
|
)
|
|
(72
|
)
|
|
(224
|
)
|
|
(211
|
)
|
||||
Amortization of actuarial losses
|
18
|
|
|
16
|
|
|
58
|
|
|
76
|
|
||||
Amortization of prior service credit
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Settlement losses
|
2
|
|
|
—
|
|
|
7
|
|
|
18
|
|
||||
Net periodic pension cost
|
$
|
8
|
|
|
$
|
16
|
|
|
$
|
49
|
|
|
$
|
90
|
|
|
Other Postretirement Benefits
|
||||||||||||||
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30 |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
|
2013
|
|
||||||
($ in millions)
|
|
||||||||||||||
Service cost
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
15
|
|
Interest cost
|
10
|
|
|
12
|
|
|
35
|
|
|
37
|
|
||||
Amortization of prior service credit
|
(2
|
)
|
|
(2
|
)
|
|
(7
|
)
|
|
(7
|
)
|
||||
Amortization of actuarial losses
|
1
|
|
|
7
|
|
|
8
|
|
|
21
|
|
||||
Net periodic other postretirement benefit cost
|
$
|
12
|
|
|
$
|
22
|
|
|
$
|
48
|
|
|
$
|
66
|
|
11.
|
Shareholders’ Equity
|
($ in millions)
|
Total PPG
Shareholders’
Equity
|
|
Non-
controlling
Interests
|
|
Total
|
||||||
Balance, January 1, 2014
|
$
|
4,932
|
|
|
$
|
266
|
|
|
$
|
5,198
|
|
Net income
|
2,019
|
|
|
51
|
|
|
2,070
|
|
|||
Other comprehensive income, net of tax
|
(187
|
)
|
|
(2
|
)
|
|
(189
|
)
|
|||
Cash dividends
|
(269
|
)
|
|
—
|
|
|
(269
|
)
|
|||
Issuance of treasury stock
|
64
|
|
|
—
|
|
|
64
|
|
|||
Stock repurchase program
|
(450
|
)
|
|
—
|
|
|
(450
|
)
|
|||
Stock-based compensation activity
|
40
|
|
|
—
|
|
|
40
|
|
|||
Reduction in non-controlling interests (Notes 3 and 4)
|
(28
|
)
|
|
(183
|
)
|
|
(211
|
)
|
|||
Distribution to noncontrolling interests
|
—
|
|
|
(48
|
)
|
|
(48
|
)
|
|||
Balance, September 30, 2014
|
$
|
6,121
|
|
|
$
|
84
|
|
|
$
|
6,205
|
|
($ in millions)
|
Total PPG
Shareholders’
Equity
|
|
Non-
controlling
Interests
|
|
Total
|
||||||
Balance, January 1, 2013
|
$
|
4,063
|
|
|
$
|
259
|
|
|
$
|
4,322
|
|
Net income
|
2,977
|
|
|
94
|
|
|
3,071
|
|
|||
Other comprehensive income, net of tax
|
197
|
|
|
(8
|
)
|
|
189
|
|
|||
Cash dividends
|
(259
|
)
|
|
—
|
|
|
(259
|
)
|
|||
Issuance of treasury stock
|
74
|
|
|
—
|
|
|
74
|
|
|||
Stock repurchase program
|
(320
|
)
|
|
—
|
|
|
(320
|
)
|
|||
Stock-based compensation activity
|
40
|
|
|
—
|
|
|
40
|
|
|||
Increase in treasury stock (Note 4)
|
(1,561
|
)
|
|
—
|
|
|
(1,561
|
)
|
|||
Reduction in noncontrolling interests (Note 4)
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
|||
Distribution to noncontrolling interests
|
—
|
|
|
(58
|
)
|
|
(58
|
)
|
|||
Balance, September 30, 2013
|
$
|
5,211
|
|
|
$
|
270
|
|
|
$
|
5,481
|
|
12.
|
Accumulated Other Comprehensive Loss
|
($ in millions)
|
Unrealized Foreign
Currency
Translation Adjustments
|
|
Pension and Other Postretirement Benefit Adjustments, net of tax
|
|
Unrealized Gain (Loss) on Derivatives, net of tax
|
|
Accumulated
Other Comprehensive
(Loss) Income
|
|||||||||||||||||||
Balance, January 1, 2014
|
|
|
$
|
(38
|
)
|
|
|
|
$
|
(1,157
|
)
|
|
|
|
$
|
(65
|
)
|
|
|
$
|
(1,260
|
)
|
||||
Current year deferrals to AOCI
|
(367
|
)
|
(a)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(367
|
)
|
|
||||||||
Current year deferrals to AOCI, tax effected
|
133
|
|
(b)
|
|
|
5
|
|
(c)
|
|
|
15
|
|
(d)
|
|
|
153
|
|
|
||||||||
Reclassifications from AOCI to net income
|
—
|
|
|
|
|
36
|
|
(c)
|
|
|
(9
|
)
|
(d)
|
|
|
27
|
|
|
||||||||
Net change
|
|
|
(234
|
)
|
|
|
|
41
|
|
|
|
|
6
|
|
|
|
(187
|
)
|
||||||||
Balance, September 30, 2014
|
|
|
$
|
(272
|
)
|
|
|
|
$
|
(1,116
|
)
|
|
|
|
$
|
(59
|
)
|
|
|
$
|
(1,447
|
)
|
13.
|
Financial Instruments, Hedging Activities and Fair Value Measurements
|
($ in Millions)
|
September 30, 2014
|
||||||||
Hedge Type
|
Gain (Loss)
Deferred in
OCI
|
|
Gain (Loss) Recognized
|
||||||
Amount
|
|
Caption
|
|||||||
Fair Value
|
|
|
|
|
|
||||
Interest rate swaps
|
Not applicable
|
|
$
|
6
|
|
|
Interest expense
|
||
Foreign currency forward contracts
|
Not applicable
|
|
1
|
|
|
Net sales
|
|||
Equity forward arrangements
|
Not applicable
|
|
11
|
|
|
Asbestos - net
|
|||
Total Fair Value
|
|
|
$
|
18
|
|
|
|
||
Cash Flow
|
|
|
|
|
|
||||
Forward starting swaps
|
—
|
|
|
$
|
(9
|
)
|
|
Interest expense
|
|
Foreign currency forward contracts
(a)
|
23
|
|
|
24
|
|
|
Other charges
|
||
Total Cash Flow
|
$
|
23
|
|
|
$
|
15
|
|
|
|
Net Investment
|
|
|
|
|
|
||||
Cross currency swaps
|
$
|
47
|
|
|
$
|
—
|
|
|
Other charges
|
Foreign currency forward contracts
|
45
|
|
|
—
|
|
|
Other charges
|
||
Foreign denominated debt
|
33
|
|
|
Not applicable
|
|
|
|||
Total Net Investment
|
$
|
125
|
|
|
$
|
—
|
|
|
|
($ in Millions)
|
September 30, 2013
|
||||||||
Hedge Type
|
Gain (Loss)
Deferred in OCI
|
|
Gain (Loss) Recognized
|
||||||
Amount
|
|
Caption
|
|||||||
Fair Value
|
|
|
|
|
|
||||
Interest rate swaps
|
Not applicable
|
|
$
|
7
|
|
|
Interest expense
|
||
Foreign currency forward contracts
|
Not applicable
|
|
1
|
|
|
Net sales
|
|||
Equity forward arrangements
|
Not applicable
|
|
46
|
|
|
Asbestos - net
|
|||
Total Fair Value
|
|
|
$
|
54
|
|
|
|
||
Cash Flow
|
|
|
|
|
|
||||
Forward starting swaps
|
—
|
|
|
(9
|
)
|
|
Interest expense
|
||
Foreign currency forward contracts
(a)
|
29
|
|
|
30
|
|
|
Other charges
|
||
Total Cash Flow
|
$
|
29
|
|
|
$
|
21
|
|
|
|
Net Investment
|
|
|
|
|
|
||||
Cross currency swaps
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
|
Foreign denominated debt
|
(10
|
)
|
|
Not applicable
|
|
|
|||
Total Net Investment
|
$
|
(25
|
)
|
|
$
|
—
|
|
|
|
|
September 30, 2014
|
||||||||||
($ in Millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Assets:
|
|
|
|
|
|
||||||
Other current assets:
|
|
|
|
|
|
||||||
Marketable equity securities
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
—
|
|
|
39
|
|
|
—
|
|
|||
Equity forward arrangement
|
—
|
|
|
218
|
|
|
—
|
|
|||
Investments:
|
|
|
|
|
|
||||||
Marketable equity securities
|
73
|
|
|
—
|
|
|
—
|
|
|||
Other Assets:
|
|
|
|
|
|
||||||
Foreign currency forward contracts
|
—
|
|
|
9
|
|
|
—
|
|
|||
Liabilities:
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities:
|
|
|
|
|
|
||||||
Foreign currency forward contracts
|
—
|
|
|
24
|
|
|
—
|
|
|||
Other liabilities:
|
|
|
|
|
|
||||||
Cross currency swaps
|
—
|
|
|
66
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
|
December 31, 2013
|
||||||||||
($ in Millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Assets:
|
|
|
|
|
|
||||||
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper and certificates of deposit
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
—
|
|
Other current assets:
|
|
|
|
|
|
||||||
Marketable equity securities
|
5
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency forward contracts
|
—
|
|
|
25
|
|
|
—
|
|
|||
Equity forward arrangement
|
—
|
|
|
207
|
|
|
—
|
|
|||
Investments:
|
|
|
|
|
|
||||||
Marketable equity securities
|
70
|
|
|
—
|
|
|
—
|
|
|||
Other assets:
|
|
|
|
|
|
||||||
Foreign currency forward contracts
|
—
|
|
|
2
|
|
|
—
|
|
|||
Liabilities:
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities:
|
|
|
|
|
|
||||||
Foreign currency forward contracts
|
—
|
|
|
7
|
|
|
—
|
|
|||
Other liabilities:
|
|
|
|
|
|
||||||
Cross currency swaps
|
—
|
|
|
120
|
|
|
—
|
|
|||
Foreign currency forward contracts
|
—
|
|
|
11
|
|
|
—
|
|
14.
|
Stock-Based Compensation
|
|
|
2014
|
|
2013
|
||||
Grant Details
|
|
Shares
|
Fair Value
|
|
Shares
|
Fair Value
|
||
Stock options
|
|
362,721
|
|
$43.09
|
|
519,299
|
|
$27.36
|
Restricted stock units
|
|
128,046
|
|
$180.39
|
|
189,554
|
|
$126.35
|
Contingent shares (a)
|
|
38,759
|
|
$187.06
|
|
49,293
|
|
$134.72
|
Weighted average exercise price
|
$187.22
|
|
Risk-free interest rate
|
2.1
|
%
|
Expected life of option in years
|
6.5
|
|
Expected dividend yield
|
3.0
|
%
|
Expected volatility
|
30.1
|
%
|
15.
|
Commitments and Contingent Liabilities
|
Remainder of 2014
|
$
|
3
|
|
2015
|
14
|
|
|
2016 – 2023
|
67
|
|
|
Total
|
$
|
84
|
|
($ in millions)
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30 |
||||||||||||
Increase (decrease) in expense
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
||||||||||||||
Change in fair value:
|
|
|
|
|
|
|
|
||||||||
PPG stock
|
$
|
(18
|
)
|
|
$
|
29
|
|
|
$
|
10
|
|
|
$
|
45
|
|
Equity forward instrument
|
18
|
|
|
(29
|
)
|
|
(11
|
)
|
|
(46
|
)
|
||||
Accretion of asbestos liability
|
3
|
|
|
3
|
|
|
10
|
|
|
10
|
|
||||
Asbestos settlement – net expense
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
9
|
|
|
$
|
9
|
|
16.
|
Reportable Business Segment Information
|
|
Three Months
Ended September 30 |
|
Nine Months
Ended September 30 |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
($ in millions)
|
|
||||||||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Performance Coatings
|
$
|
2,257
|
|
|
$
|
2,190
|
|
|
$
|
6,607
|
|
|
$
|
6,027
|
|
Industrial Coatings
|
1,395
|
|
|
1,306
|
|
|
4,208
|
|
|
3,935
|
|
||||
Glass
|
283
|
|
|
278
|
|
|
838
|
|
|
803
|
|
||||
Total (a)
|
$
|
3,935
|
|
|
$
|
3,774
|
|
|
$
|
11,653
|
|
|
$
|
10,765
|
|
Segment income:
|
|
|
|
|
|
|
|
||||||||
Performance Coatings
|
$
|
345
|
|
|
$
|
325
|
|
|
$
|
966
|
|
|
$
|
841
|
|
Industrial Coatings
|
240
|
|
|
206
|
|
|
728
|
|
|
622
|
|
||||
Glass
|
33
|
|
|
21
|
|
|
48
|
|
|
34
|
|
||||
Total
|
618
|
|
|
552
|
|
|
1,742
|
|
|
1,497
|
|
||||
Legacy items (b)
|
(25
|
)
|
|
(99
|
)
|
|
(46
|
)
|
|
(156
|
)
|
||||
Business restructuring
|
—
|
|
|
(98
|
)
|
|
—
|
|
|
(98
|
)
|
||||
Acquisition-related costs (c)
|
(4
|
)
|
|
(6
|
)
|
|
(10
|
)
|
|
(31
|
)
|
||||
Interest expense, net of interest income
|
(34
|
)
|
|
(37
|
)
|
|
(104
|
)
|
|
(118
|
)
|
||||
Other corporate expense
|
(56
|
)
|
|
(65
|
)
|
|
(187
|
)
|
|
(184
|
)
|
||||
Income from continuing operations before income taxes
|
$
|
499
|
|
|
$
|
247
|
|
|
$
|
1,395
|
|
|
$
|
910
|
|
(a)
|
Intersegment net sales for the three and nine months ended September 30, 2014 and 2013 were not material.
|
(b)
|
Legacy items include current costs related to former operations of the Company, including pension and other postretirement benefit costs, certain charges for legal matters and environmental remediation costs, and certain charges which are considered to be unusual or non-recurring, including the earnings impact of the proposed asbestos settlement. Legacy items also include equity earnings from PPG’s approximate
40%
investment in the former automotive glass and services business.
|
(c)
|
Includes advisory, legal, accounting, valuation and other professional or consulting fees incurred in connection with acquisition activity. In addition, for the nine months ended September 30, 2013, the expense includes flow-through costs of sales of the step up to fair value of inventory acquired primarily from the North American architectural coatings business acquisition.
|
Three months ended September 30, 2014
|
|
|||||||||
(Millions, except per share amounts)
|
Income Before Income Taxes
|
|
Tax Expense
|
|
Effective Tax Rate
|
|||||
Effective tax rate, continuing operations
|
499
|
|
|
116
|
|
|
23.2
|
%
|
||
Includes:
|
|
|
|
|
|
|||||
Increase to legacy environmental reserves
|
138
|
|
|
52
|
|
|
37.6
|
%
|
||
Gain on asset dispositions
|
(116
|
)
|
|
(43
|
)
|
|
37.6
|
%
|
||
Acquisition-related costs
|
4
|
|
|
2
|
|
|
37.6
|
%
|
||
Pension plan settlement costs
|
2
|
|
|
—
|
|
|
26.7
|
%
|
||
Adjusted effective tax rate, continuing operations, excluding certain charges
|
$
|
527
|
|
|
$
|
127
|
|
|
24.0
|
%
|
Three months ended September 30, 2013
|
|
|||||||||
(Millions, except per share amounts)
|
Income Before Income Taxes
|
|
Tax Expense
|
|
Effective Tax Rate
|
|||||
Effective tax rate, continuing operations
|
$
|
247
|
|
|
$
|
40
|
|
|
16.2
|
%
|
Includes:
|
|
|
|
|
|
|||||
Business restructuring charge
|
98
|
|
|
25
|
|
|
25.5
|
%
|
||
Increase to legacy environmental reserves
|
89
|
|
|
33
|
|
|
37.1
|
%
|
||
Acquisition-related costs
|
6
|
|
|
3
|
|
|
50.0
|
%
|
||
Adjusted effective tax rate, continuing operations, excluding certain charges
|
$
|
440
|
|
|
$
|
101
|
|
|
23.0
|
%
|
|
|
|
|
||||
Three Months ended September 30, 2014
|
Continuing Operations
|
||||||
(Millions, except per share amounts)
|
Net Income
|
|
EPS
|
||||
Net income (attributable to PPG)
|
|
$377
|
|
|
|
$2.70
|
|
Net income (attributable to PPG) includes (after-tax):
|
|
|
|
||||
Increase to legacy environmental reserves
|
86
|
|
|
0.61
|
|
||
Gain on asset dispositions
|
(73
|
)
|
|
(0.52
|
)
|
||
Acquisition-related costs
|
2
|
|
|
0.02
|
|
||
Pension plan settlement costs
|
2
|
|
|
0.01
|
|
||
Adjusted net income
|
|
$394
|
|
|
|
$2.82
|
|
|
|
|
|
||||
Three Months ended September 30, 2013
|
Continuing Operations
|
||||||
(Millions, except per share amounts)
|
Net Income
|
|
EPS
|
||||
Net income (attributable to PPG)
|
|
$204
|
|
|
|
$1.41
|
|
Net income (attributable to PPG) includes (after-tax):
|
|
|
|
||||
Business restructuring charge
|
73
|
|
|
0.50
|
|
||
Increase to legacy environmental reserves
|
56
|
|
|
0.39
|
|
||
Acquisition-related costs
|
3
|
|
|
0.02
|
|
||
Adjusted net income
|
|
$336
|
|
|
|
$2.32
|
|
•
|
Performance Coatings - aerospace, architectural coatings Americas and Asia-Pacific, architectural coatings-EMEA, automotive refinish, and protective and marine coatings
|
•
|
Industrial Coatings - automotive OEM coatings, industrial coatings, packaging coatings, and specialty coatings and materials
|
•
|
Glass - fiber glass and flat glass
|
Nine months ended September 30, 2014
|
|
|||||||||
(Millions, except per share amounts)
|
Income Before Income Taxes
|
|
Tax Expense
|
|
Effective Tax Rate
|
|||||
Effective tax rate, continuing operations
|
1,395
|
|
|
330
|
|
|
23.7
|
%
|
||
Includes:
|
|
|
|
|
|
|||||
Increase to legacy environmental reserves
|
138
|
|
|
52
|
|
|
37.7
|
%
|
||
Gain on asset dispositions
|
(116
|
)
|
|
(43
|
)
|
|
37.1
|
%
|
||
Acquisition-related costs
|
10
|
|
|
4
|
|
|
40.0
|
%
|
||
Pension plan settlement costs
|
7
|
|
|
2
|
|
|
28.6
|
%
|
||
Adjusted effective tax rate, continuing operations, excluding certain charges
|
$
|
1,434
|
|
|
$
|
345
|
|
|
24.1
|
%
|
Nine months ended September 30, 2013
|
|
|||||||||
(Millions, except per share amounts)
|
Income Before Income Taxes
|
|
Tax Expense
|
|
Effective Tax Rate
|
|||||
Effective tax rate, continuing operations
|
$
|
910
|
|
|
$
|
182
|
|
|
20.0
|
%
|
Includes:
|
|
|
|
|
|
|||||
Increase to legacy environmental reserves
|
101
|
|
|
37
|
|
|
36.6
|
%
|
||
Business restructuring charge
|
98
|
|
|
25
|
|
|
25.5
|
%
|
||
Pension plan settlement costs
|
18
|
|
|
5
|
|
|
27.8
|
%
|
||
Acquisition-related costs
|
31
|
|
|
10
|
|
|
32.3
|
%
|
||
Retroactive benefit of U.S. tax law change
|
—
|
|
|
10
|
|
|
|
|||
Adjusted effective tax rate, continuing operations, excluding certain charges
|
$
|
1,158
|
|
|
$
|
269
|
|
|
23.2
|
%
|
|
|
|
|
||||
Nine Months ended September 30, 2014
|
Continuing Operations
|
||||||
(Millions, except per share amounts)
|
Net Income
|
|
EPS
|
||||
Net income (attributable to PPG)
|
|
$1,047
|
|
|
|
$7.47
|
|
Net income (attributable to PPG) includes (after-tax):
|
|
|
|
||||
Increase to legacy environmental reserves
|
86
|
|
|
0.61
|
|
||
Gain on asset dispositions
|
(73
|
)
|
|
(0.52
|
)
|
||
Acquisition-related costs
|
6
|
|
|
0.04
|
|
||
Pension settlement costs
|
5
|
|
|
0.03
|
|
||
Adjusted net income
|
|
$1,071
|
|
|
|
$7.63
|
|
|
|
|
|
||||
Nine Months ended September 30, 2013
|
Continuing Operations
|
||||||
(Millions, except per share amounts)
|
Net Income
|
|
EPS
|
||||
Net income (attributable to PPG)
|
|
$713
|
|
|
|
$4.88
|
|
Net income (attributable to PPG) includes (after-tax):
|
|
|
|
||||
Business restructuring charge
|
73
|
|
|
0.50
|
|
||
Increase to legacy environmental reserves
|
64
|
|
|
0.44
|
|
||
Pension settlement costs
|
13
|
|
|
0.09
|
|
||
Acquisition-related costs
|
21
|
|
|
0.14
|
|
||
Retroactive benefit of U.S. tax law change
|
(10
|
)
|
|
(0.07
|
)
|
||
Adjusted net income
|
|
$874
|
|
|
|
$5.98
|
|
•
|
Capital expenditures, excluding acquisitions, were
$358 million
, or about
3 percent
of sales. Anticipated 2014 capital spending is expected to be in the range of $500 million to $600 million.
|
•
|
PPG expects to make mandatory contributions to its non-U.S. plans in 2014 in the range of $15 million to $25 million, of which $11 million was made as of
September 30, 2014
. PPG does not have a mandatory contribution to make to its U.S. defined benefit pension plans in 2014.
|
•
|
Cash dividends paid totaled
$269 million
.
|
•
|
Cash spent on share repurchases totaled $450 million.
|
•
|
Repayment of acquired debt totaled $37 million.
|
Month
|
Total Number
of Shares Purchased |
|
Average
Price Paid per Share |
|
Total Number
of Shares Purchased as Part of Publicly Announced Programs (1) |
|
Maximum
Number of Shares That May Yet Be Purchased Under the Programs (1) |
|||||
July 2014
|
|
|
|
|
|
|
|
|||||
Repurchase program
|
70,445
|
|
|
$
|
204.66
|
|
|
70,445
|
|
|
10,393,059
|
|
August 2014
|
|
|
|
|
|
|
|
|||||
Repurchase program
|
304,171
|
|
|
$
|
201.97
|
|
|
304,171
|
|
|
10,020,929
|
|
September 2014
|
|
|
|
|
|
|
|
|||||
Repurchase program
|
366,100
|
|
|
$
|
201.96
|
|
|
366,100
|
|
|
10,018,945
|
|
Total quarter ended September 30, 2014
|
|
|
|
|
|
|
|
|||||
Repurchase program
|
740,716
|
|
|
$
|
202.22
|
|
|
740,716
|
|
|
10,018,945
|
|
(1)
|
These shares were repurchased under a 10 million share repurchase program approved in October 2011. In April 2014, PPG's board of directors authorized a $2 billion repurchase program. The remaining shares that may yet to be purchased under the $2 billion repurchase program have been calculated based upon PPG's closing stock price on the last business day of the respective month. These repurchase programs have no expiration date.
|
|
PPG INDUSTRIES, INC.
|
|||
(Registrant)
|
||||
|
||||
Date:
|
October 24, 2014
|
By
|
|
/s/ Frank S. Sklarsky
|
|
Frank S. Sklarsky
Executive Vice President and Chief Financial Officer
(Principal Financial and
Accounting Officer and
Duly Authorized Officer)
|
†3.1
|
|
Statement with Respect to Shares eliminating the Series A Junior Participating Preferred Stock.
|
†3.2
|
|
Restated Articles of Incorporation.
|
†12
|
|
Computation of Ratio of Earnings to Fixed Charges for the Nine Months Ended September 30, 2014 and for the Five Years Ended December 31, 2013.
|
†31.1
|
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
†31.2
|
|
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
†32.1
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
†32.2
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document
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† Filed herewith.
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* Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2014 and 2013, (ii) the Condensed Consolidated Balance Sheet at September 30, 2014 and December 31, 2013, (iii) the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2014 and 2013, and (iv) Notes to Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2014.
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1.
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The name of the corporation is PPG Industries, Inc.
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2.
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The resolution amending the Articles under 15 Pa.C.S. § 1522(b) is set forth in full in Exhibit A attached hereto and made a part thereof.
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3.
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The aggregate number of shares of such class or series established and designated by (a) such resolution, (b) all prior statements, if any, filed under 15 Pa.C.S. § 1522(b) or corresponding provisions of prior law with respect thereto, and (c) any other provision of the Articles is 0 shares.
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4.
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The resolution was adopted by the Board of Directors or an authorized committee thereon on September 18, 2014.
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5.
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The resolution shall be effective upon the filing of this statement with respect to shares in the Department of State.
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PPG Industries, Inc.
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Name of Corporation
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/s/ Charles E. Bunch
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Signature
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Charles E. Bunch, Chairman and CEO
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Title
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(a)
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To manufacture, buy, sell, install, and deal in goods, wares, and merchandise of all descriptions;
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(b)
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To mine, contract, quarry, drill, or bore for, produce, buy, and sell coal, limestone, sand, clay, gypsum, oil, ores, mineral salt, natural gas (sales to be made at the mouth of the well and at wholesale only), and other minerals and mineral substances;
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(c)
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To engage in building construction, as contractor or otherwise; and
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(d)
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To engage in research, engineering, and developmental work.
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(a)
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the distinctive designation of such series and the number of shares which shall constitute such series, which number may be increased or decreased (but not below the number of shares thereof then outstanding) from time to time by the Board of Directors;
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(b)
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the annual dividend rate for such series, and the date or dates from which dividends shall commence to accrue;
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(c)
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the price or prices at which, and the terms and conditions on which, the shares of such series may be made redeemable;
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(d)
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the purchase or sinking fund provisions, if any, for the purchase or redemption of shares of such series;
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(e)
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the preferential amount or amounts payable upon shares of such series in the event of the liquidation, dissolution or winding up of the corporation;
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(f)
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the voting rights, if any, of shares of such series;
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(g)
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the terms and conditions, if any, upon which shares of such series may be converted and the class or classes or series of shares of the corporation or other securities into which such shares may be converted;
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(h)
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the relative seniority, parity or junior rank of such series as to dividends or assets with respect to any other classes or series of stock then or thereafter to be issued; and
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(i)
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such other terms, qualifications, privileges, limitations, options, restrictions, and special or relative rights and preferences, if any, of shares of such series as the Board of Directors may, at the time of such resolution or resolutions, lawfully fix and determine under the laws of the Commonwealth of Pennsylvania.
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(a)
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The Board of Directors shall consist of not less than 9 nor more than 17 persons, the exact number to be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority vote of the directors then in office;
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(b)
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Directors shall, from and after the annual meeting of shareholders held in 1987, continue to be classified with respect to the time for which they shall severally hold office by dividing them into 3 classes, as nearly equal in number as possible. At such meeting and at each succeeding annual meeting of shareholders, the class of directors then being elected shall be elected to hold office for a term of 3 years. Each director shall hold office for the term for which elected and until his or her successor shall have been elected and qualified;
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(c)
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Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, any class of directors, or the entire Board of Directors, may be removed from office by shareholder vote at any time, with or without assigning any cause, but only if shareholders entitled to cast at least 80% of the votes which all shareholders would be entitled to cast at an annual election of directors or of such class of directors shall vote in favor of such removal; provided, however, that no individual director shall be removed (unless the entire Board of Directors or any class of directors be removed) in case the votes cast against such removal would be sufficient, if voted cumulatively for such director, to elect him or her to the class of directors of which he or she is a member; and
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(d)
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Subject to the rights of the holders of any series of Preferred Stock then outstanding, vacancies in the Board of Directors, including vacancies resulting from an increase in the number of directors, shall be filled only by a majority vote of the remaining directors then in office, though less than a quorum, except that vacancies resulting from removal from office by a vote of the shareholders may be filled by the shareholders at the same meeting at which such removal occurs. All directors elected to fill vacancies shall hold office for a term expiring at the annual meeting of shareholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
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(a)
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In addition to any affirmative vote required by law or the Restated Articles, and except as otherwise expressly provided in Section 7.2 of this Article Seventh:
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(b)
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The term "Business Combination" as used in this Article Seventh shall mean any transaction which is referred to in any one or more of clauses (1) through (5) of paragraph (a) of Section 7.1 of this Article Seventh.
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(a)
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The Business Combination shall have been approved by a majority of the Continuing Directors; or
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(b)
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All of the following six conditions shall have been met:
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(A)
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(if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid in order to acquire any shares of Common Stock beneficially owned by the Interested Shareholder which were acquired (i) within the two-year period immediately prior to the first public announcement of the proposed Business Combination (the "Announcement Date") or (ii) in the transaction in which it became an Interested Shareholder, whichever is higher;
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(B)
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the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Shareholder became an Interested Shareholder (the "Determination Date"), whichever is higher; and
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(C)
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(if applicable) the price per share equal to the Fair Market Value per share of Common Stock determined pursuant to clause (B) immediately preceding, multiplied by the ratio of (i) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid in order to acquire any shares of Common Stock beneficially owned by the Interested Shareholder which were acquired within the two-year period immediately prior to the Announcement Date to (ii) the Fair Market Value per share of Common Stock on the first day in such two-year period on which the Interested Shareholder beneficially owned any shares of Common Stock.
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(A)
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(if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid in order to acquire any shares of such class of Voting Stock beneficially owned by the Interested Shareholder which were acquired (i) within the two-year period immediately prior to the Announcement Date or (ii) in the transaction in which it became an Interested Shareholder, whichever is higher;
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(B)
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(if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation;
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(C)
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the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher; and
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(D)
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(if applicable) the price per share equal to the Fair Market Value per share of such class of Voting Stock determined pursuant to clause (C) immediately preceding, multiplied by the ratio of (i) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid in order to acquire any shares of such class of Voting Stock beneficially owned by the Interested Shareholder which were acquired within the two-year period immediately prior to the Announcement Date to (ii) the Fair Market Value per share of such class of Voting Stock on the first day in such two-year period on which the Interested Shareholder beneficially owned any shares of such class of Voting Stock.
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(a)
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A "person" shall mean any individual, firm, corporation or other entity.
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(b)
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"Interested Shareholder" at any particular time shall mean any person (other than the corporation or any Subsidiary) who or which:
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(c)
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A person shall be a "beneficial owner" of any shares of Voting Stock:
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(d)
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For the purposes of determining whether a person is an Interested Shareholder pursuant to paragraph (b) of this Section 7.3, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned by an Interested Shareholder through application of paragraph (c) of this Section 7.3 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise.
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(e)
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"Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on February 17, 1983 (the term "registrant" in said Rule 12b-2 meaning in this case the corporation).
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(f)
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"Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that for the purposes
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(g)
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"Continuing Director" means any member of the Board of Directors of the corporation who is unaffiliated with, and not a representative of, the Interested Shareholder and was a member of the Board of Directors prior to the time that the Interested Shareholder became an Interested Shareholder, and any successor of a Continuing Director who is unaffiliated with, and not a representative of, the Interested Shareholder and is recommended to succeed a Continuing Director by a majority of the Continuing Directors then on the Board of Directors.
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(h)
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"Fair Market Value" means: (1) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board of Directors in good faith; and (2) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board of Directors in good faith.
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(i)
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"Institutional Voting Stock" shall mean any class of Voting Stock which was issued to and continues to be held solely by one or more insurance companies, pension funds, commercial banks, savings banks or similar financial institutions or institutional investors.
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(j)
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In the event of any Business Combination in which the corporation survives, the phrase "consideration other than cash to be received" as used in paragraph (b) of Section 7.2 of this Article Seventh shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares.
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Nine Months
Ended September 30
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Year Ended December 31
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2014
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2013
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2012
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2011
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2010
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2009
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Earnings:
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Earnings before income taxes and net earnings in equity affiliates
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$
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1,293
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$
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1,229
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$
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814
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$
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936
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$
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778
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$
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244
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Plus:
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Fixed charges exclusive of capitalized interest
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215
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284
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281
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280
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263
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269
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Amortization of capitalized interest
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5
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6
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6
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6
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6
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6
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Adjustments for equity affiliates
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5
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9
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12
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19
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6
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11
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Total
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$
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1,518
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$
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1,528
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$
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1,113
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$
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1,241
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$
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1,053
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$
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530
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Fixed Charges:
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Interest expense incl amortization of debt discount/premium and debt expense
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$
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142
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$
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197
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$
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210
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$
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210
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$
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189
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$
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192
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Rentals - portion representative of interest
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73
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87
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71
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70
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74
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77
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Fixed charges exclusive of capitalized interest
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215
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284
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281
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280
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263
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269
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Capitalized interest
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12
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10
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8
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9
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7
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9
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Total
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$
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227
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$
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294
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$
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289
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$
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289
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$
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270
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$
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278
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Ratio of earnings to fixed charges
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6.7
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5.2
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3.9
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4.3
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3.9
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1.9
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1.
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I have reviewed this quarterly report on Form 10-Q of PPG Industries, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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October 24, 2014
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/s/ Charles E. Bunch
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Charles E. Bunch
Chairman and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of PPG Industries, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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October 24, 2014
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/s/ Frank S. Sklarsky
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Frank S. Sklarsky
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PPG Industries, Inc.
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/s/ Charles E. Bunch
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Charles E. Bunch
Chairman and Chief Executive Officer
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October 24, 2014
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PPG Industries, Inc.
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/s/ Frank S. Sklarsky
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Frank S. Sklarsky
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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October 24, 2014
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