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PPG Industries Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed February 20, 2004
Period End
December 31, 2003
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 20, 2004. Cited figures are marked; the original filing is the authoritative source.

PPG Industries, Inc. reported 2003 net sales of $8.76 billiona, up 9% from $8.1 billion in 2002, with net income of $494 million, or $2.89 per diluted share, compared with a net loss of $69 million in 2002.

Sales growth came from foreign currency translation (4%), higher volumes (3%) and higher selling prices (2%). The gross profit percentage slipped slightly to 36.9% from 37.2%, as higher pension and postretirement medical costs and energy costs offset gains from higher chemicals pricing and manufacturing efficiencies. Results were also shaped by the prior-year $755 millionb pretax asbestos settlement charge, which was $38 million in 2003.

Operating income rose to $978 millionc from $846 million, led by the coatings segment. Cash from operating activities was $1,123 million in 2003, and PPG reduced debt by nearly $400 million during the year, bringing the three-year reduction to more than $1.3 billion. The ratio of total debt, including capital leases, to total debt and equity fell to 36% from 49%.

Management expects 2004 pension costs to be slightly lower than 2003, while other postretirement benefit costs are expected to rise by about $15 milliond. Natural gas costs remain a significant risk, with each one-dollar change per mmbtu estimated to affect annual operating costs by $60 million to $70 million. Legal and contingent exposures remain material to investors.

The Pittsburgh Corning asbestos settlement, which carries about $998 million in aggregate cash payments, depends on bankruptcy court approval and a plan vote due March 2, 2004. A $156 million Marvin Windows judgment is under appeal. Environmental reserves total $92 million, with possible additional losses estimated at $200 million to $400 million.

02—Key points

Key Highlights

  1. Net sales rose 9% to $8.76 billion in 2003 from $8.07 billion in 2002, driven by currency translation, higher volumes and higher selling prices.
  2. Net income was $494 million, or $2.89 per diluted share, compared with a net loss of $69 million, or $0.41 per share, in 2002.
  3. Operating income increased to $978 million from $846 million, with coatings operating income rising to $707 million from $605 million.
  4. Glass operating income fell to $71 million from $143 million, reflecting lower selling prices, higher pension and medical costs, and higher energy costs.
  5. Cash from operating activities was $1,123 million, and debt was reduced by nearly $400 million in 2003, with more than $1.3 billion repaid over three years.
  6. Pension and postretirement benefit costs rose sharply, with net periodic pension expense of $176 million in 2003 compared with $54 million in 2002.
  7. The Pittsburgh Corning asbestos settlement remains subject to bankruptcy court approval, and the $156 million Marvin Windows judgment is under appeal.

03—Questions

Frequently Asked Questions

  1. How did PPG perform in 2003 compared with 2002?

    Net sales increased 9% to $8.76 billion, and net income was $494 million, or $2.89 per diluted share, versus a net loss of $69 million in 2002. The 2002 result included a $484 million net asbestos settlement charge.

  2. Which business segment performed best?

    The coatings segment led, with net sales of $4.84 billion and operating income of $707 million, up from $605 million in 2002. The chemicals segment also improved, with operating income of $232 million compared with $124 million, largely from higher commodity product pricing.

  3. What are the main cost pressures PPG faces?

    Pension expense and other postretirement benefit costs were nearly $300 million combined in 2003, and management expects other postretirement costs to rise about $15 million in 2004. Natural gas costs are also a major risk, with each one-dollar change per mmbtu estimated to affect annual operating costs by $60 million to $70 million.

  4. What is the status of the asbestos settlement and other major litigation?

    The PPG Settlement Arrangement, involving aggregate cash payments of about $998 million to a trust, will take effect only after the Pittsburgh Corning bankruptcy plan is approved and no longer subject to appeal. Creditor voting ended March 2, 2004, with a hearing scheduled for May 3-7, 2004. Separately, PPG has appealed the $156 million Marvin Windows judgment, and the appeals court has not yet ruled.

  5. How strong is PPG's balance sheet?

    PPG generated $3.1 billion in operating cash flow over 2001 to 2003 and used it to reduce debt by more than $1.3 billion. The ratio of total debt, including capital leases, to total debt and equity declined to 36% at December 31, 2003 from 49% a year earlier. Cash and cash equivalents rose to $499 million from $117 million.

04—Continue

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