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PPG Industries Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed February 21, 2003
Period End
December 31, 2002
Security
PPG
In the record · 2016–202610-K1210-Q338-K141

PPG filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 141 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · Sep ’19Sep ’19
  3. Leadership change8-K · Dec ’21Dec ’21
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed February 21, 2003. Cited figures are marked; the original filing is the authoritative source.

PPG Industries, Inc. reported a 2002 net loss of $69 milliona, or $0.41 per diluted share, compared with net income of $387 million, or $2.29 per diluted share, in 2001.

The loss was driven by a pretax charge of $755 millionb for the asbestos settlement (net of insurance-related items, recorded as $772 million gross in the second quarter per Note 13) and a $81 million restructuring charge. Excluding non-recurring items, the company reports net income of $476 million, or $2.80 per diluted share, versus $458 million, or $2.71, in 2001. Net sales declined 1% to $8.07 billion from $8.17 billion, with lower glass and chemicals selling prices partly offset by higher coatings and chemicals volumes.

Segment results were mixed. Coatings sales rose 2% to $4.48 billion and operating income increased to $605 millionc from $495 million. Glass sales fell 7% to $2.07 billion and operating income dropped to $143 million from $255 million, reflecting lower volumes and prices.

Chemicals sales were flat at about $1.5 billion, while operating income rose to $124 milliond from $91 million. Management guided to higher pension and postretirement costs of about $130 million in 2003, reducing earnings per share by about $0.50, and flagged natural gas cost volatility as a key risk. Balance sheet and cash flow were pressured by the asbestos settlement and a $726 million after-tax increase in the minimum pension liability, which cut shareholders' equity to $2.15 billion from $3.08 billion.

Cash from operations was $872 million, and the company reduced debt by over $400 million during 2002. The debt-to-capitalization ratio rose to 49% from 44%. Contingencies remain significant, including a $156 million Marvin Windows judgment under appeal and antitrust suits, though management states these will not materially affect financial position or liquidity.

02—Key points

Key Highlights

  1. Net loss of $69 million, or $0.41 per diluted share, in 2002 versus net income of $387 million, or $2.29 per diluted share, in 2001
  2. Asbestos settlement charge of $755 million pretax (in the Statement of Income), which reduced 2002 earnings by $484 million net of tax
  3. Excluding non-recurring items, net income was $476 million, or $2.80 per diluted share, compared with $458 million, or $2.71, in 2001
  4. Net sales were $8.07 billion, down 1% from $8.17 billion; Coatings sales rose to $4.48 billion while Glass fell 7% to $2.07 billion
  5. Shareholders' equity fell to $2.15 billion from $3.08 billion, driven by the asbestos charge and a $726 million after-tax minimum pension liability adjustment
  6. Pension and postretirement benefit costs are expected to rise by about $130 million in 2003, reducing earnings per share by about $0.50
  7. Cash from operating activities was $872 million, and debt was reduced by over $400 million during 2002

03—Questions

Frequently Asked Questions

  1. What caused PPG's net loss in 2002?

    The net loss was driven mainly by the asbestos settlement, net, recorded as a pretax charge of $755 million, along with a $77 million business restructuring charge and a $9 million after-tax cumulative effect of an accounting change for trademark impairment. Operating income before the asbestos charge was $846 million.

  2. How did PPG's business segments perform in 2002?

    Coatings sales increased 2% to $4.48 billion and operating income rose to $605 million from $495 million. Glass sales declined 7% to $2.07 billion with operating income falling to $143 million from $255 million. Chemicals sales were $1.5 billion in both years, and operating income increased to $124 million from $91 million.

  3. What are the main financial risks PPG flagged for 2003?

    Management cited higher pension and postretirement medical costs of about $130 million, rising natural gas and raw material costs, continued downward pressure on selling prices, and uncertain economic conditions. Each one-dollar change in the price of natural gas per mmbtu could affect annual operating costs by approximately $60 million.

  4. What legal matters could affect PPG?

    The company faces asbestos claims, with about 116,000 claims pending at December 31, 2002, and a proposed settlement that would require payments of approximately $998 million to a trust over 21 years. PPG also faces a $156 million Marvin Windows judgment under appeal and antitrust lawsuits in the glass and automotive refinish industries. Management states these matters will not have a material effect on consolidated financial position or liquidity.

04—Continue

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