Document yrX3Yd8x3aVK6qvE38NXkYmz3

BB 0 0 0 1 5 0 0 INDUSTRIES i-- i i PPG Indust^, Inc. .^ 1976 Annual Report INDUSTRIES ti t to I I to I Il IoI IoI IoI I -I 1I tI I-- I PPG Industs, Inc. 1976 Annual R port P r Cent of 1976 1975 Change Net Sales Income Taxes Net Earnings Earnings--as a Per Cent of Sales Earnings Per Share Cash Dividends Per Share $2,254.8 119.6 151.5 6.7% $ 7.28 2.00 Average Number of Shares Outstanding 20.8 Expenditures for Property and investments $ 173.0 $1,886.6 56.8 89.0 4.7% $ 4.28 1.725 20.8 $ 171.2 20% 111 70 -- 70 16 AT YEAR-END Working Capital Shareholders' Equity Number of Employees Number of Shareholders $ 564.8 1,021.6 36,300 43,855 $ 509.4 910.9 34,900 48,861 (All amounts are in millions except per share data and numbers of employees and shareholders.) Financial Highlights Contents Financial Highlights Letter to the Shareholders 2-3 Information for Our Investors 4-10 Summary of Accounting Policies Statement of Earnings Balance Sheet Statement of Source and Use of Funds Accountants'Opinion Notes to Financial Statements 15-20 Ten-Year Digest 21 Worldwide Manufacturing Locations Officers and Directors 23 22 1 11 12 13 14 15 PPG shareholders and others wishing to obtain a copy of the Company's 1976 Annual Report to the Securities and Exchange Commission, filed on Form 10-K, may obtain it without charge upon written request to: Public Relations Department, PPG Industries, Inc., One Gateway Center, Pittsburgh, Pennsylvania 15222. i I BB 0001502 | Letter to the Shareholders To Our Shareholders: In 1976, both sales and earnings of PPG Industries reached new highs and an important milestone was achieved to mark the Company's steady growth. Net earnings of $7.28 per share were realized, a figure 70 per cent higher than the $4.28 recorded in 1975. Also, PPG sales surpassed the $2 billion mark for the first time, totaling $2.25 billion. Although it took from 1883 until 1968 to cross the $1 billion mark, the second billion dollars in annual sales was achieved in only eight years. The most significant fact about PPG's performance in 1976 is that each of our four major lines of business--chemi cals, glass, coatings and resins, and fiber glass--made outstanding contri butions to our overall accomplishment. Their individual successes were responsible for a far more balanced earnings report than at any time in recent PPG history. Dramatic recoveries in the automotive and housing markets, which were severely depressed during most of 1975, and the continuing strength in most of our chemical markets paced the Company's surge. Car builds in the United States in 1976 reached about 8.6 million units, compared with 6.7 mil lion units in 1975; and housing starts reached 1.5 million units, an increase of about 40 per cent over 1975. Chemical sales and earnings for the year 1976 showed a continuation of tf strong advances that began in late 1973. While inflation, particularly in the critical areas of energy and petroleum feedstocks, had a signifi cant effect on costs, earnings from chemicals increased by nine per cen in 1976, and accounted for 47 per cer of the Corporation's operating earn ings. Positive pricing trends were ma tained for most major industrial chemicals, reflecting the continued strength of chemical markets. Demar was fairly strong for most of our indu trial chemicals. Vinyl chloride mono mer, in particular, benefited from the resurgence in the automotive and co struction industries. Demand for tetraethyl lead was sustained despits the transition to unleaded gasoline ir most new automobile models. PPG's glass business was the chief beneficiary of the recovery in the aut motive and residential markets in 19 It benefited also from the turnarounc the Company's European glass oper tions, which were responsible for a c siderable drag on earnings during IE Coupled with the significant improve ment in the glass business is the fact that we were able to improve produc tivity and achieve cost effectiveness our manufacturing operations. Glasf accounted for 32 per cent of operati earnings in 1976. Progress also was made in replacint our sheet glass capacity with PPG's newly developed process for produt ing a float type glass. Sheet glass manufacturing operations at Mount Vernon, Ohio, were shut down; and construction has begun on a ninth unit to produce glass of the float typ The new unit, located at Fresno, California, will utilize the new PPG process and will replace the existini sheet glass unit there in late 1977. 2 Coatings and resins, which accounted for 15 per cent of operating earnings, continued to make a major contribution to the Company's performance. Sales and earnings were up substantially in 1976. Increased strength was shown in all areas of operation, including inter national activities. Business was stimu lated by an improving economy, particularly in transportation and housing. PPG's leadership in coatings tech nology has resulted in superior product positions in many market areas. Of particular importance in 1976 was the growing worldwide interest in cationic electrodeposition finishes which offer improved corrosion protection for autos, trucks and other industrial prod ucts. The first automotive primer tanks using the unique process became operational in 1976, and demand should increase significantly in 1977. The coatings and resins business also benefited from better utilization of new, highly efficient manufacturing plants at Oak Creek, Wisconsin, and Dover, Delaware. Oak Creek is one of the world's largest coatings facilities and produces resins, trade products and industrial finishes. Dover is devoted solely to the production of water-base trade finishes and supports the con tinued rapid expansion of our business in this market area. In 1976, PPG's fiber glass business made a dramatic turnaround from the previous year, with sales and earnings reaching all-time highs. Fiberglass accounted for six per cent of PPG's operating earnings. For the first time, land transportation supplanted the marine segment as the largest user of reinforced plastics, our largest fiber glass market. Automobiles are using significantly greater quantities of - plastics, and new high-strength fiber glass reinforced plastics developed by PPG moved into the area of structural components for automobiles, such as door beams and transmission supports. PPG's capital spending program reached $173 million in 1976, continu ing at a level that will enable us to maintain and improve the Company's position in its chosen areas of business. In addition to the new float glass plant under construction at Fresno, a major chlorine/caustic soda expansion con tinues on schedule at the Lake Charles, Louisiana, chemical complex. The project's first phase, at a cost of more than $150 million, will be completed in 1977 and initially will add 750 tons per day to our total chlorine production capacity. By 1979, the planned expan sion will add 1,500 tons per day to total chlorine capacity. In addition, announcement was made of another multimillion dollar project at Lake Charles that will increase the Company's production capacity for chlorinated solvents and vinylidene chloride monomer. This expansion is scheduled for completion early in 1978. PPG's earnings growth in the past several years has reflected the results of the Company's broad capital invest ment program, which must be con tinued to maintain PPG's economic health. Much of the capital for fhe replacement and growth program will be provided, of course, by reinvestment of depreciation and most of the Company's earnings. However, in the face of escalating construction and environmental protection costs, depreciation and earnings at present levels will not generate sufficient funds. The Federal government should address the issue and take steps to strengthen this country's industrial growth through stimulation of capital spending. Tax laws should be adjusted to recognize the effects of inflation and, thus, make it possible for all busi ness to invest additional funds in pro ductive facilities, machinery and equipment. Significant management changes took place in 1976. Joseph A. Neubauer, PPG's president and chief operating officer since 1967, retired in August, completing 43 years of distinguished service with the Company. He will con tinue as a member of the Board of Directors of PPG Industries. L. Stanton Williams was elected vice chairman of the board and chief admin istrative officer of the Company, and J. Earl Burrell was elected president and chief operating officer. Robert H. Mitchel was elected vice president, finance, and Eugene B. Mosierwas elected to succeed him as controller. Malcolm G. Slaney was elected vice president, industrial products, for the Coatings & Resins Division, succeed ing Howard J. Mather, who retired; and George E. Russell was elected vice president and general manager of the Plastic Fabricating Division. For the remainder of 1977, we expect a moderate strengthening of the economy, which should produce a greater demand for our products and another excellent year for PPG Industries. February 1,1977 Submitted on behalf of the Board of Directors G?.7- Robinson F. Barker Chai rman of the Board Letter to the Shareholders I I i i BB 0 0 0 1 5 0 4 PPG is engaged in four major lines of business: Chemicals, Glass, Coatings and Resins, and Fiber Glass. Within these four businesses, PPG has followed a policy of selective growth and has concentrated its capital, man power and technical resources primarily in chlor-alkali chemicals, flat glass, industrial and trade coatings, and continuous strand fiber glass. Chemicals PPG is a large producer and marketer of industrial chemicals, including chlo rine, caustic soda, chlorobenzenes, chlorinated solvents, ethylene glycol, vinyl chloride monomer and silica pigments. It also is a supplier of potash, antiknock additives for gasoline, and chromium chemical compounds. Chemical products are sold to the chemical processing and petroleum refining industries and to other indus tries, including glass, pulp and paper, metal, minerals, and leather for use in their manufacturing processes. Domestic chemical production facil ities consist of six plants in four states and Puerto Rico. Glass PPG is one of the largest domestic manufacturers of flat glass, as well as a major fabricator and supplier of flat glass products to the automotive, building construction, furniture and aircraft industries. Domestic glass production and fabricating facilities consist of 17 plants in 10 states. Coatings and Resins PPG is a major producer of protective and decorative coatings for buildings, appliances, industrial equipment, automobiles, furniture, containers and other products, as well as numerous resins for industrial and consumer products. Domestic coatings and resins production facilities consist of 11 plants in nine states. Fiber Glass PPG produces yarn for textile manu facture, fibers and mats for reinforced plastic products, and rubber coated' yarn for automotive tires. Domestic Fiber Glass production facilities con sist of two plants in North Carolina. PPG's foreign operations manufacture and market similar lines of products, primarily in Canada and Western Europe. PPG sells the majority of its products to other manufacturing com panies for use in the manufacture of a wide variety of consumer and indus trial products. However, some of PPG's products, principally its flat glass products, Pittsburgh Paints and Zerex antifreeze, are sold at wholesale and retail either through PPG-operated outlets or independent distributors. In general, PPG's products are sold in highly competitive markets. Stock Market Information PPG common stock is traded on the New York and Philadelphia Stock Exchanges (Symbol: PPG). The high, low and closing sales prices of PPG Quarter Ended: March 31___________ June 30___________ September 30______ December 31_______ Sales and Earnings Quarter Ended: March 31_____ June 30______ September 30 _ December 31 _ common stock on the New York Stock Exchange through January 23, 1976, and on the Composite Tape thereafter, are as follows: 1976 High Low Close $50 56% 58 Vs 57 V? $35 45% 47 Vi 44% $46 54% 47% 57% 1976 Net Sales Net Earnings (Millions) $ 522.4 567.9 590.6 573.9 $2,254.8 $ 35.0 43.0 40.1 33.4 $151.5 Earnings per Share $1.68 2.07 1.93 1.60 $7.28 High $28V8 31 32 36% 1975 Low $24 Vs 24% 27% 27% 1975 Net Sales Net Earnings (Millions) $ 392.1 460.5 503.0 531.0 $1,886.6 $ 9.9 18.1 30.5 30.5 $89.0 Close $26% 30% 27% 35% Earnings per Share $ .48 .86 1.47 1.47 $4.28 Dividends The year 1976 marked the 77th year of uninterrupted dividends paid by PPG. The most recent quarterly divi dend of $.55 per share results in an Month of Payment Qppfpmhfif December 1 ... annual dividend rate of $2.20 per share. Cash dividends were paid in 1976 and 1975 as follows: Amount (Millions) $ 9.4 10.4 10.4 11.4 $41.6 1976 Per Share $ .45 .50 .50 .55 $2.00 Amount (Millions) $ 8.8 8.8 8.9 9.4 $35.9 1975 Per Share $ .425 .425 .425 .45 $1.725 Impact of Inflation During the past few years, there has been much discussion among govern ment, industry, investors and others about the effect that inflation has on the allocation of the nation's financial resources. In particular, there is a growing concern as to the usefulness of corporate financial statements, pre pared on the traditional basis of histor ical costs, during periods of above normal inflation. The effect of inflation on PPG is difficult to measure. Basically, inflation reduces the purchasing power of the dollar and results in increased prices being paid by PPG for materials and services. The Company also pays more to its em ployees for wages, salaries, and fringe benefits and, in turn, charges its cus tomers higher prices for the products it sells. These increases in costs and selling prices are occurring continu ously and, for the most part, are re flected in the current financial state ments. However, the longer range effects of inflation are also occurring, but are more difficult to measure and are not generally reflected in the current financial statements. For exa'mple, the cost of replacing presently existing manufacturing facilities with new plants and new equipment is in creasing, but the impact of those higher costs will be reflected primarily in financial statements in future years when the assets are replaced. The re placement of such assets, however, involves many changes. Generally, new facilities are built in new locations, the plants are larger, and the processes used in manufacturing the products employ more efficient technology. Further, when major projects are in volved, a portion of the funds required would normally be borrowed at the time the facilities are constructed, and the debt incurred would be repaid to the lenders over a number of years. Changes in how the plant will be built, where it will be built, and where the money is coming from will all have an effect on PPG's financial statements in future years. At present, many methods have been suggested as to how current financial statements could be adjusted to state the effects of inflation. However, due to the lack of agreement as to what information is essential to measure the effects of in flation and the differing opinions on the procedures to be used, none of these methods are generally accepted by financial statement preparers or users. Because of such disparities in methods and theories, the Company has pre- SHAREHOLDERS' EQUITY/ TOTAL BORROWINGS 1250 72 73 74 75 76 sented its financial information in the traditional manner and has not in cluded inflation-adjusted statements in this report. The Securities and Exchange Com mission (SEC) requires that most major companies report estimated replace ment cost of inventories and productive capacity at December 31,1976, and the related estimated effect of such costs on cost of sales and depreciation for the year then ended. This require ment will be fulfilled in the Company's annual report on Form 10-K to be filed with the SEC; a copy is available upon request. Information for Our Investors I --I fI <0 II IoI imI 1 *-1 1 => 1 101 1ot 1l m 1t I ca I Il l --1 b BB 0001507 Informarron for Our Investors f-- l 1I t t l I l I I l I l tt I-- t 6 Sales and Earnings by Lines of Business The contribution to net sales and operating earnings by lines of business for the five years ended December 31, 1976, are presented in the following table. Net sales do not include sales by equity affiliates; however, PPG's share of earnings or losses of equity affiliates is included in earnings. Oper ating earnings are defined as the results of operations of each business before interest expense and items of a general nature not readily allocable to each separate business. Net sales (Millions) Chemicals Glass Coatings and Resins Fiber Glass Other Total Foreign affiliates (included above)__ 1976 Amount % $ 804 800 511 115 25 36% 35 23 5 1 $2,255 100% $ 397 18% 1975 Amount % $ 702 641 444 81 19 $1,887 37% 34 24 4 1 100% $ 336 18% 1974 Amount % $ 559 665 408 87 25 $1,744 32% 38 23 5 2 100% $ 311 18% 1973 Amount % $ 406 665 337 85 20 27% 44 22 6 1 $1,513 100% $ 248 16% 1972 Amount % $ 405 607 286 90 8 29% 44 21 6 _ $1,396 100% $ 211 15% Operating earnings (Millions) Chemicals Glass Coatings and Resins Fiber Glass Other 1976 1975 1974 1973 1972 Total Amount % $ 159 106 49 19 1 $ 334 47% 32 15 6 -- 100% Amount % $ 146 76% 74 37 19 21 1- $ 193 100% Amount % $ 108 30 37 8 2 $ 185 58% 16 20 4 2 100% Amount % $ 42 23% 86 48 35 20 16 9 1- $ 180 100% Amount % $ 36 22% 81 50 28 17 16 10 11 $ 162 100% Interest expense Unallocated corporate expenses--net _ (42) (14) Earnings before income taxes, minority interest and extraordinary items Foreign affiliates operating earnings (included above) $ 278 $ 60 18% (43) (6) $ 144 $ 25 13% (32) (12) $ 141 ; $ 45 24% (24) 0) $ 147 $ 35 19% (23) (ID $ 128 $ 28 17% Chemicals Sales and earnings for Chemicals established new records in 1976, largely as a result of a stronger economy. Demand was strong throughout the year for most products, particularly rhlonne, caustic soda and vinyl chlo ride monomer. Antifreeze was an exception, with sales below 1975 levels primarily because of a large carry-over of customer inventories. Prices for chemical products con tinued strong through the year. The cost of fuels and petrochemical feed stocks escalated as expected during the course of the year, consistent with national and international trends. Chemicals continues to enjoy favor able positions in the supply and cost of energy and feedstock. Construction continued at the Lake Charles, Louisiana, chemical complex on expansion of the chlorine-caustic soda production facilities with start-up targeted for the latter half of 1977. In addition, construction began at the complex on a multimiliion dollar expansion of facilities for the produc tion of Tri-Ethane solvent and vinylidene chloride monomer. Tri-Ethane is a solvent used extensively in the metals fabrication and other industries lor cold cleaning and vapor degreas ing. Vinylidene chloride monomer is used mainly in the packaging materials and fiber industries. Environmental containment and safety facilities have been constructed or are planned at all producing plants to meet current and scheduled environmental regulations. Glass The Glass business experienced its best year in history as both sales and earnings established new records. The strong recovery in two major markets-- automotive and residential construc tion-coupled with significant produc tivity improvements in manufacturing facilities contributed to the record year. The phase-out of older, higher-cost sheet facilities continued with the shut down of the plant at Mt. Vernon, Ohio, and the beginning of construction of a new line at Fresno, California, employ ing PPG's newly developed process for producing a float type flat glass. The new line replaces the existing sheet facility at Fresno. Vernante-Pennitalia, an Italian sub sidiary, was a major factor in the 1976 turnaround. Its manufacturing facilities operated at near capacity and its products sold at improved prices throughout Europe. Canadian glass operations also con tributed to the sales and earnings im provement as a result of stronger auto motive and construction markets. Coatings and Resins Record sales and earnings were posted by Coatings and Resins in 1976. This performance resulted from a large increase in unit volume coupled with a modest increase in selling prices. Business was generally strong through out the year. While most areas of Coatings and Resins posted strong sales gains, the recovery of the automotive market led to significant increases in sales in that area of business. Other important areas registering impressive sales increases included trade paints, automotive re finishes, general industrial coatings and coil coatings. The large volume increase permitted effective use of the new capacity of the Dover, Delaware, and Oak Creek, Wisconsin, plants. PPG's three majority-owned foreign Coatings and Resins operations posted increases in sales and earnings in spite of mixed economic conditions abroad. Increased customer acceptance of water-base trade paints, cationic electrodeposition primers for industrial and automotive applications, and new water-base industrial coatings high lighted the continuing successful commercialization of PPG's new tech nological developments. Fiber Glass The strong demand for its products throughout the year resulted in the highest sales and earnings ever recorded by Fiber Glass. Earnings recovered from the effects of the recession in 1974 and 1975 and are beginning to reflect the increased utilization of recent plant expansions at Shelby and Lexington, North Carolina. The Fiber Glass equity affiliate in Canada also contributed to the im proved results of operations. Foreign Foreign operations had record sales and earnings in 1976, with the most significant gain recorded by the Italian glass operations. Canadian operations improved slightly despite price controls and the adverse impact of govern mental policies related to potash producers. Revenue and How It Was Used: Per Cent of Revenue* 1976 1975 Paid or set aside for: Materials and services-- 54.9% 57.5% Wages, salaries and other employee benefits 26.0 29.2 Taxes (except payroll tavAs} 6.7 4.6 Depreciation of plant and equipment---------- 3.6 4.0 Earnings: Reinvested in the business Paid to shareholders as dividends 4.6 2.8 1.8 1.9 100.0% 100.0% `Revenue includes net sales and other earnings. information for Our Investors --i i <c ii |0 | tm| ii o* <i ioI ioI t ca t 1 mi i! / BB 0 0 0 1 5 0 9 InformaVh for Our Investors l-- i ii i t i l l i t i i t 1-- e Summary of Operations Net sales Cost of sales Interest expense Farnings hefnre income taxes Income taxes Earninas before extraordinary items Extraordinary items, net of income taxes Net earnings Earnings per share: Refore extraordinary items Net earnings Average numher of shares outstanding Dividends per share 1976 $2,254.8 1,440.1 41.9 271.1 119.6 151.5 - $ 151.5 $ 7.28 $ 7.28 20.8 $ 2.00 1975 $1,886.6 1,249.7 43.3 145] 8 56.8 89.0 - $ 89.0 $ 4.28 $ 4.28 20.8 $ 1.725 1974 (Millions) $1,744.0 1,172.5 31.6 139.4 47.0 92.4 -- $ 92.4 $ 4.44 $ 4.44 20.8 $ 1.70 1973 $1,512.6 9848 ~ 24.3 ^144T 52.6 91.5 11.3 $ 102.8 1972 $1,395.9 23.1 1247 ___42.5 82.2 Hji22 $ 4.40 $ 4.94 20.8 $ 1.60 $ 3.97 $ 3.97 20.7 $ 1.455 In 1974, PPG adopted the last-in, first-out method of valuing most domestic and certain foreign inventories. The effect on reported earnings for the year 1974 was a decrease of $17.9 million, or $.86 per share. Analysis of Operations (millions) 1976 Change Net Farnings Net Sales Cost of Sates Interest Expense Income Taxes $ 151 2,255 1,440 42 120 70% 20 15 -2 111 1975 $ 89 1,887 1,250 43 57 Change - 3% 8 7 34 21 1974 $ 92 1,744 1,173 32 47 Earnings Earnings for 1976 established a new high for PPG, surpassing the previous record earnings from operations achieved in 1974. The higher earnings reflected higher sales volume in all lines of business and improved operat ing results of foreign affiliates. Glass and Fiber Glass earnings recovered from the depressed levels of 1975 and 1974, Coatings and Resins resumed an upward trend, and the Chemicals business continued its significant con tribution to higher earnings. Sales The higher sales in 1976, compared with 1975, were the result of substan tially higher unit volumes and price increases, which accounted for approxi mately two-thirds and one-third, respectively, of the sales increase. The volume increase, which occurred in all lines of business, was particu larly evident in Glass and Fiber Glass, and continues to reflect the upswing irt economic activity that began in the second half of 1975. Price increases reflected inflationary cost pressures, and in 1975 allowed PPG to overcome a decline in volume resulting primarily from weak automotive and construction markets. SALES 72 73 BB 0 0 0 1 5 1 0 l-- I !i t i i ii i-- i Cost of Sales The cost ot sales increase in 1976 was primarily the result of increased pro duction to meet the higher sales volume. The ratio of cost of sales to sales was lower in 1976 compared with the previous two years, reflecting better utilization of productive capacity, especially that of foreign affiliates. In 1975, cost of sales increased over 1974 even though volume declined, reflecting an inflationary trend in the cost of raw materials and other pro duction costs. While raw material prices increased during 1976, the increase was moderate compared with the inflation experienced in 1975 and 1974. Interest Expense Interest expense declined in 1976, compared with 1975, due to the reduc volume of short-term borrowings by foreign operations. The 1975 increasi over 1974 was a result of advance funding for the expansion of domestic operating facilities and an escalation in volume and cost of short-term borrowings by foreign operations. The Company's net financing costs are affected by the temporary invest ment of funds in short-term securities The interest income generated from these and other investments amountt To $10 million in each of the fast threi years. Interest income is included in Other earnings in the Statement of Earnings shown on page 12 of this report. Income Taxes Income taxes increased in 1976 because of the higher level of earnings and a decrease in the investment tax credit. The income tax increase for 1975 over 1974 was primarily the result of oppressive taxation policies in Canada related to the potash opera tions and the losses in the Italian glass operations without tax offsets. Markets PPG serves a variety of markets. Some are served almost exclusively by one of PPG's businesses, and others are served by all or combinations of its businesses. For example, products of the Chemicals business are sold largely to the chemical processing and petro leum refining markets, while the trans portation and construction markets are served in varying degrees by the Glass, Coatings and Resins, and Fiber Glass businesses. For 1976, the chemical processing and petroleum refining markets accounted for approximately one-fourth of sales. The transportation market, which is primarily automotive, represented approximately one-fifth of sales. The construction market, which includes both residential and commercial building, totaled approximately onefifth of sales. Various foreign markets aggregated approximately one-fifth of sales. The balance of 1976 sales was distributed among several other indus trial and agricultural market segments. Raw Materials and Fuels While PPG produces a portion of its raw material requirements, the bulk of its raw materials are purchased from outside sources. PPG has made and is making supply arrangements to meet the planned operating requirements of the future. Although PPG is de pendent in its operations on large amounts of energy from a number of sources, steps have been taken to minimize the longer range effects of higher energy costs. The float glass process, for example, consumes less energy per square foot of glass than the sheet glass process, and the Glanor cell recently developed for the manu facture of chlorine and caustic soda provides energy savings as well as environmental advantages. Natural gas is required in significant quantities at a number of manufactur ing locations, and contracts for ade quate quantities currently exist. How ever, natural gas curtailments have required the utilization of alternate fuels at a number of plants for which secondary systems and fuels have been provided. At this time, fuel sup plies and available secondary systems appear sufficient to cover PPG's presently planned operating levels. Research and Development Research and development constitutes an important part of PPG's activities. In 1976, research and development expenditures amounted to $56 million, or 2.5% of sales. PPG maintains cen tralized research and development laboratories for Glass at Harmarville, Pennsylvania, for Coatings and Resins at Springdale and Allison Park, Penn sylvania, and for Fiber Glass at O'Hara Township, Pennsylvania. Chemicals research laboratories are located at Barberton, Ohio, and Corpus Christi, Texas. Basic research and develop ment of new and improved products and processes are carried on at each of these laboratories and, to a limited extent, at a number of the manufac turing plants by approximately 800 professional employees. PPG believes that much of its success has been due to technological innovations produced by its ongoing research and develop ment expenditures, resulting in improved product quality, production process improvements and the development of product modifications to meet market demands. Information for Our Investors 9 I Informamtn for Our Investors I-- t II I co I Li atlt jo! * -( l-i I-- | 10 CAPITAL EXPENDITURES Capital Expenditures Expenditures for property and invest ments in 1976 totaled $173 million, compared with $171 million in 1975. Th major expenditures in 1976 included continuation of the chlorine-caustic soda production facilities expansion and beginning of construction of a neu industrial solvent production facility at the Lake Charles, Louisiana, chemi cal complex; beginning of an expan sion of the Natrium, West Virginia, sulfide chemicals production facilities; construction of an iodine plant at Woodward, Oklahoma; modernization and expansion of ethylene glycol facilities at Beaumont, Texas; and completion of the Fiber Glass tech nical center at O'Hara Township, Pennsylvania. Funds necessary to complete capital projects approved prior to December 31,1976, approxi mate $177 million. Translation of Foreign Currencies All foreign currency translation gains and losses are included in current earnings. Fluctuations of foreign cur rency exchange rates during 1976 re sulted in a net gain of $3.6 million, after deducting minority interest of $1.6 million. This compares with a net gain of $100,000 in 1975. The net gain in 1976 results primarily from translating financial statements of Italian sub sidiaries from Italian lire to United States dollars. Pensions PPG has pension plans covering sub stantially all employees. Generally, pension expense is determined by periodic actuarial valuation of the pension plans. Pension expense, in cluding current service cost and amor tization of prior service costs, amounted to $42 million in 1976, compared with $34 million in 1975. In recent years, pension costs have been rising due to the progressively increasing benefits granted PPG's employees. The in creased pension costs for 1976, com pared with 1975, are primarily the result of PPG-initiated amendments to its pension plans and other changes to bring the plans into compliance with current federal regulations. The actuarially computed value of vested benefits for the plans as of the latest valuation dates exceeded the value of the pen sion fund assets and balance sheet accruals by approximately $63 million. relating to the prrteclionof ttae!fr<*S' V'!TMunt PPG spent aPPrximateIy $14 million on environmental control projects in both 1975 and 1976 Although future capital expenditure, cannot be forecast accurately becau.o the regulatory standards are in a state of development, compliance with the requirements of the existing standards will continue to involve significant expenditures. The required emission standard tor vinyl chloride monomer operations was not met on January 19,1977 ^g deadline set by the Environmental Protection Agency (EPA). PPG has filed for a waiver of compliance but there is no assurance a waiver will be granted. It is estimated that the Com pany's compliance with the current standard will cost $10--$15 million for environmental control equipment. PPG manufactures lead antiknock compounds for use in gasoline. Under regulations adopted by the EPA, the amount of lead in gasoline will be re quired to be reduced to approximately 30% of present levels by October 1, 1979. Other, unrelated regulations adopted earlier by the EPA to control exhaust emissions have caused auto motive manufacturers generally to in stall catalytic converters in vehicles produced after the 1974 model year. If vehicles with catalytic converters use gasoline containing lead additives, the catalytic converters will be damaged Accordingly, the use of catalytic con verters will lessen the demand lor leaded gasoline. Principles of Consolidation The consolidated financial statements Icml me accounts ol PPG Indus- tries Inc. and all significant subsidianes, domestic and foreign, in which PPG owns more than 50% of the votma stock. Investments in companies m which PPG owns 20 to 50% of the voting stock are carried at equity, and PPG's share of the earnings or losses ot such equity affiliates is included in the statement of earnings. Significant transactions between PPG Industries, Inc, its subsidiaries and its equity affiliates are eliminated. Translation of Foreign Currencies The financial statements of foreign subsidiaries and equity affiliates are translated to United States dollars, based on the official or free rates of exchange applicable in the circum stances. Current assets, except in ventories, and all liabilities, except future income taxes, are translated at the rates of exchange in effect at year-end. Inventories, property, other assets and future income taxes are translated at the historic exchange rates which prevailed when the assets were acquired or the taxes were pro vided. Revenue and expense accounts are translated at the weighted average exchange rates in effect during the year, except that historic rates are used to translate those expense items related to inventories, property and future in come taxes. Translation gains and losses arising from exchange rate fluctuations are reflected in current earnings. Acquisitions I-- I M /"( I ol Iol Ij o |I I cn | I--I K) I II I-- I When PPG purchases a company f< amounts in excess of the net assets n^'re5 the excess cost is conside goodwill and is charged to earnings over a period not exceeding 40 yea comTM ?3 Tade by an exchange "jmon stoeks are generally reflec annrwi? m9 of.interests basis, with 9 will not being recognized. Short-term Securities Short-term securities are vafued at the lower of aggregate cost or market. Inventories Most domestic and certain foreign in ventories are stated at cost, using the last-in, first-out (LIFO) method, which is not in excess of market. Other in ventories are stated at the lower of cost or market. Cost is determined using either average or standard factory costs, which approximate actual costs, ex cluding certain fixed expenses such as depreciation and property taxes. Property and Depreciation Property includes the cost of land, buildings, equipment and significant improvements which add to productive capacity or extend the life of assets. When units of property are abandoned or disposed of, the cost and accumu lated depreciation are removed from the accounts, and any resulting gain or loss is recognized in current earnings. For financial reporting purposes, de preciation is computed by the straighttine method based on the estimated useful lives of depreciable assets. Income Taxes PPG provides income taxes based on earnings reported in the financial statements rather than on taxable in come. Accordingly, the provision for income taxes includes charges or credits for future income taxes, resulting primarily from the differences between depreciation deducted for income tax purposes and for financial reporting purposes. PPG follows the policy of treating the investment credit allowance as a reduction of income tax expense in the year in which expenditures become eligible for the allowance. Income taxes on the undistributed earn ings of affiliates are not provided if such earnings are considered to be rein vested indefinitely or if the credit for taxes already paid by the affiliates substantially offsets the applicable income taxes on earnings that may be remitted. Research and Development Research and development expendi tures, including development costs of products, processes and product appli cations, are charged to earnings in the year incurred. Provision for Maintenance and Repairs Current earnings are charged with the cost of labor and materials incurred in maintaining properties in, and restoring properties to, good operating condi tion, except tor major furnace repairs. In accordance with industry practice, the estimated cost of major furnace repairs is provided for in advance by charges against earnings. Pension Costs Pension costs charged to current earn ings include charges for current serv ice and amortization of prior service costs over 30 years. The extra cost of improvements in benefits to present retirees is amortized over 10 years. Pension liabilities are funded by periodic payments to pension fund trustees. Summary of Accounting Policies PPG Industries, Inc. and Consolidated Subsidiaries Statement of Earnings Net sales ______ Cost ol sales ___ Gross margin Other expenses: Selling, general and administrative__ Depreciation_______________________ Taxes--exclusive of income taxes__ Research and development-------------Interest ___________________________ Share of net losses of equity affiliates Other charges______________________ Total other expenses_____________ Other earnings__________________________________ Earnings before income taxes and minority interest Domestic and foreign income taxes______________ Earnings before minority interest_________________ Minority interest in earnings (losses) of consolidated subsidiaries______________________ Net earnings____________________________________ Earnings per share______________________________ Average shares outstanding_____________________ _forthe Year 1976 1975 (Millions) $2,254.8 1,440.1 814.7 $1,886.6 1,249.7 636.9 310.6 86.5 66.6 56.3 41.9 .6 9.5 572.0 278.3 76.8 61.2 49.9 43.3 9.1 6.2 524.8 35.5 278.2 119.6 158.6 32.0 144.1 56.0 87.3 7.1 S 151.5 $ 7.28 -- 20.8 (1.7) $ 89.0 $ 4.28 -- 20.8 II IB1 I ca I II l SI 12! I U1 | !t W I I-- I 12 The accompanying summary of accounting policies and notes to financial statements are an integral part of this statement. Assets Current assets: Cash------------------------------------- Short-term securities, at market-------------Receivables-less allowance for doubtful receivables---------------------- --------------------Inventories----------- ------------------------------------, Other ------------- --------------- --------------------- Total current assets-------------- i------------ Property------------ --------------------Less accumulated depreciation Property-net____________ Investments__________________ Other assets__________________ Total___________________ December 31 1976 1975 (Millions) $ 51.9 123.8 $ 52.8 111.0 353.1 327.8 37.9 894.5 320.4 287.7 29.9 801.8 1,882.8 875.2 1,007.6 91.0 40.1 $2,033.2 1,749.2 817.8 931.4 93.8 44.0 $1,871.0 PPG Industries, Inc. and Consolidated Subsidiaries Balance Sheet Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings__________________ Accounts payable and accrued expenses Domestic and foreign income taxes_____ Total current liabilities_______________ $21.4 237.4 ___ 70.9 329.7 $ 35.0 236.0 21.4 292.4 h Long-term debt 46R.fi 483.9 Future income taxes 100.3 78.9 Provision for unfunded and uninsured pensions 40.4 36.9 Provision for maintenance and repairs 20.0 24.2 uiher provisions i-- i t Priority interest 21 9 18.7 30 5 25.1 BB 0 0 0 1 5 1 4 I Shareholders' equitv 1.021.6 910.9 i Total i $2,033.2 $1,871.0 t t I I l i t-- i companying summary of accounting policies and notes to financial statements are an integral part of this statement. 13 PPG Industries, Inc. and Consolidated Subsidiaries Statement of Source and Use of Funds Source of Funds: Net earnings______.____________________________________________________ Charges to earnings not requiring funds: Depreciation and amortization Future income taxes and investment credit Increase in accumulated provisions Share of net losses of equity affiliates Funds provided from operations Issuance of long-term debt Decrease in property and investments (Zhang'1 in minority interest other--net Total Use of Funds: FYpenditures tor property and investments Cash dividends paid Reduction in long-term debt increase in working capital Total Changes in Working Capital: Cash and securities Receivahles Inventories Other current assets Short-term hnrrmyings --i i Accounts payahle and accrued expenses Domestic and foreign income taxes Total --------------- _Forth^Year 1976 1975 (Millions) V(DUieit.Oc $ 89.0. RQ A 1R 7 An c 261 0 6^ 11 A aa 7\ $9t1 4 78.1 19.4 4.4 __ 9.1 200.0 131.0 6.8 (U) ___ 17 $338.1 $i7an 41 fi 91 A 55.4 $291.4 $171.2 35.9 14.0 117.0 $338.1 $ 11.9 $ 79.0 32.7 37.1 40.1 2.4 8.0 1.1 : 13.6 30.4 (1.4) (31.7) (49.5) (1.3) $ 55.4 $117.0 BB 000 J515 ii t-- i 14 The accompanying summary of accounting policies and notes to financial statements are an integral part of this statement. Accountants' Opinion To the Board of Directors and Shareholders of PPG Industries, Inc.: We have examined the balance sheets ot PPG Industries, Inc. and consolidated subsidiaries as of December 31,1976 and 1975 and the related statements of earnings and source and use of funds for the years then ended. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the cir cumstances. In our opinion, the financial statements referred to above present fairly the financial position of PPG Industries, Inc. and consolidated subsidiaries as of December 31,1976 and 1975, and the results of their operations and the source and use of their funds for the years then ended, in conformity with generally accepted accounting prin ciples applied on a consistent basis. Pittsburgh, Pennsylvania February 1,1977 Inventories Finished products and work in process Raw materials Supplies _ Total December 31 1976 1975 (Millions) $216.8 71 3 39 7 $181.5 70.5 35.7 $327.8 $287.7 If the first-in, first-out method of inventory accounting had been used, inventories would have been $97.3 million and $68.4 million higher at December 31,1976 and 1975, respectively. 2. Property t and and land improvements Ruildings Machinery and equipment Other Construction in progress Total December 31 1976 1975 (Millions) & 63.5 337.4 1,293 n 8.7 180.2 $ 63.8 340.5 1,250.1 6.6 88.2 $1,882.8 $1,749.2 The computed composite annual rates of depreciation follow: 1976 Land improvements Rnildings Machinery and equipment 4.66% 3.29% 5.61 % 1975 4.31% 3.44% 5.23% i-- i ii i co i .1*1 ii II IOI I--I I U1 I I -l I ffl I II I-- 3. Investments Investments in equity affiliates Other investments --at rnet or less Total December 31 1976 1975 (Millions) $83.1 $82.6 7.9 11.2 $91.0 $93.8 Accountants' Opinion Notes to Financial Statements 15 Notes to Financial Statements i-- i ii ioi jtnl Ioi >oI !2I !2l t -JI (l I-- I 16 4. Short-term borrowings and long debt Short-term borrowings include long-term debt payments due within one year and foreign subsidiaries' notes nav able. Information on borrowings is as follows (millions): ^y Short-term borrowings Average aggregate notes payable during the year__________________________________ _ Maximum amount of notes payable during the year--------------------------------------------------_____ Average interest rates on foreign notes payable: As of December 31---------------------------------------------------------------------------------------------------------- During the year---------------------------------------------------------------------------------------------------------___ Long-term debt Notes--8%, due 1985 ---------------------------------------------------------------------------------------------------------- Sinking fund debentures: 5Vs%, due 1991, payments of $6.3 required 1978 to 1990 9%, due 1995, payments of $8 required 1980 to 1994 8Vt>%, due 2000, payments of $4,5 required 1985 to 1999_________________________________ Bank notes: Due I960, 7.1% interest Due 1980 to 1982, interest at 1 % above the bank's prime rate, not to exceed an 8% average annual rate prior to 1979 Due 1983, 7.125% interest through 1979 and at V2% above the bank's prime rate thereafter European borrowings, 3% to 12.5%, due 1977 to 1990 Various other debts Total Less payments due within one year------------------------------------------------------------------------------------- Long-term debt____________ .________________ _____________________________________ 1976 1975 (Millions) $ 22.3 26.7 $ 39.4 54.6 15.3% 16.9% 11.2% 13.5% $ 50.0 $ 50.0 87.5 125.0 75.0 89.4 125.0 75.0 50.0 50.0 -- 25.0 25.2 35.0 472.7 3.9 $468.8 16.0 25.0 23.0 33.8 487.2 3.3 $483.9 The aggregate maturities and sinking fund requirements for the next five years on long-term debt outstanding at December 31,1976 are as follows (millions): 1977 1978 1979 1980 1981 $3.9 $8.6 $66.5 $16.6 At December 31,1976, PPG had unused bank lines of credit totaling $222 millioh, including $200 million under revolving credit agreements. A $150 million agreement provides for borrowings at the option of PPG until December 31, 1978, at which time PPG may convert up to $150 million into a term loan repayable in installments through December 31,1982. A $50 million Eurodollar revolving credit agreement provides for borrowings at the option of PPG through January 1, 1981. A fee of one-half of one per cent per annum is payable on the unused portion of the revolving credit commitments. All or any part of the revolving credit commitments and the bank lines may be can celed by PPG at any time. PPG has informal arrangements with certain banks to maintain balances in compensation for credit commitments " d some outstanding loans; such balances also compensate the banks for other banking services performed for PPG There are no legal restrictions on PPG's use of these funds. At December 31, 1976, the compensating balances after giving effect to float, were not significant in relation to PPG's total cash and short-term securities. The various loan agreements and indentures contain certain restrictive covenants, including the maintenance of working capital and limitations on sale and leaseback of property and incurrence of additional debt. In addition, certain loan agreements provide for the pledging of assets as collateral. PPG is in compliance with these covenants. 5. Shareholders' equity Balance, January 1, 1975-----------------------------------------------------Net earnings------------ -----------------------------------------------------------Cash dividends ($1.725 per share) Shares delivered to retired employees under incentive compensation agreements Balance, December 31, 1975 Net earnings Cash dividends ($2.00 per share) Shares delivered to retired employees under incentive compensation agreements Shares issued under employee stock option plan Balance, December 31,1976 Common Stock $213.3 -- -- Retained Earnings Common Stock in Treasury (Millions) $679.9 89.0 (35.9) $(35.5) -- -- -- 213.3 -- -- 733.0 151.5 (41.6) .1 (35.4) -- -- .1 $213.4 -- -- $842.9 .2 .5 $(34.7) Total $ 857.7 89.0 (35.9) .1 910.9 151.5 (41.6) .2 .6 $1,021.6 Amounts shown in the above tabulation for "Common Stock'' represent the par value of shares issued plus capital contributed for stock in excess of par value. BB 0 0 0 1 5 1 8 i-- I I I I( tI-- il Balance, January 1, 1975 Shares delivered to retired employees under incentive compensation agreements Other Balance, December 31, 1975 Shares delivered to retired employees under incentive compensation agreements Shares issued under employee stnnk nptinn plan Balance, December 31, 197R Issued 21,826,933 Common Shares In Treasury Outstanding 1,034,178 20,792,755 21,826,933 (3,920) ______ (5) 1,030,253 3,920 5 20,796,680 21,826,933 (4,235) (14,728) 1,011,290 4,235 14,728 20,815,643 issued8r* ^ m^ion shares of Cumulative Preferred Stock, without par value, is authorized but no shares have been tr- ' CoiTimon stock has a par value of $2.50 and 50 million shares are authorized. Common shares held in the treasury are valued at cost. Notes to Financial Statements 17 Not s to Financial Statements ii Joi "i 2| 21 1*1 18 6. Income taxes The provision for domestic and foreign income taxes consisted of the following components: 1976 1975 Current: Federal Foreign City and state Future income taxes Deferred investment credit amortized (Millions) $ 70.7 21.5 10.7 18.2 $17.0 14.5 5.9 21.1 (1.5) (1.7) Total $119.6 $56.6 The future income tax provisions in 1976 and 1975 arose primarily from timing differences related to depreciation ($ 5.6 million and $14.1 million, respectively), providing for taxes on undistributed earnings of a DISC subsidiary ($5.9 million in 1976) and foreign exchange translations ($4.4 million in 1975). The current provision for federal income taxes for 1976 and 1975 has been reduced by $7.8 million and $14.0 million, respectively, for investment tax credits taken directly into earnings in those years. The unamortized investment credit of $3.0 million at December 31, 1976, deferred from years prior to 1969, will be added to earnings over the next two years. Future income taxes have not been provided on undistributed earnings of consolidated foreign subsidiaries which amounted to approximately $147 million at December 31, 1976. The remittance of a substantial portion of such earnings has been indefinitely postponed because they have been reinvested. Any dividends which might be received would not result in significant income taxes, since such taxes would be substantially offset by foreign tax credits. The effective income tax rate on pre-tax earnings for 1976 was 43.0%, compared with 39.5% in 1975. The following table details the major factors reducing the statutory federal income tax rate of 48% for 1976 and 1975. Federal income tax rate Changes in tax rate resulting from: Investments in facilities and subsidiaries outside the continental United States _ Investment tax credit Other Effective income tax rate Per Cent of Pre--Tax Earnings 1976 1975 48.0% 48.0% (4.5) (3.3) 2.8 43.0% 2.0 (10.9) .4 39.5% The federal income tax returns through 1971 have been examined by the Internal Revenue Service and have been settled. In the opinion of management, adequate provision has been made for all tax liabilities. 7. Rent expense and lease commitments Rent expense for 1976 and 1975 was $30.4 million and $32.5 million, respectively. The aggregate minimum rentals on long-term, non-cancelable leases (excluding payments for executory expenses required under certain leases) are: Year Transportation Real Estate Equipment Other (Millions) Total 1977 1978 1979 1980 1981 1982 to 1986 1987 to 1991 1992 to 1996 1997 and thereafter____ $11.9 10.0 8:8 7.4 6.4 22.3 3.1 1.9 - $ 8.1 5.2 4.5 4.1 3.8 18.9 13.8 1.3 .3 $ 6.0 2.1 1.1 .7 .2 -- -- -- -- $ 26.0 17.3 14.4 12.2 10.4 41.2 16.9 3.2 .3 Total $71.8 $60.0 $10.1 $141.9 Per Cent of Total__ 50.6% 42.3% 7.1% 100.0% These leases extend over various periods up to 1999, and it is expected that in the normal course of operations they will be extended or replaced. 8. Earnings per share Earnings per share are computed on the basis of the weighted average number of shares of common stock outstanding during the respective years. Shares reserved for issuance under the employee stock option plan, deferred incentive compensation agreements and earnings growth plan would not materially dilute earnings per share. 9. Stock options and incentive compensation plans The following table summarizes the changes during 1976 and 1975 in the shares of common stock under option for the Employee Stock Option Plan. Number of Shares Under Option 1976 1975 Outstanding January 1 139,725 142,550 Exercised during year (14,728) -- I-- Terminated during year (19,350) (2,825) IJ I O3 ! Outstanding December 31 105,647 139,725 *IOK. Exercisable at December 31 93,209 91,472 lOl I O I Option prices ranged from $33.50 to $45.56 at December 31,1976. At December 31, 1976, 219,917 shares of common I -* I I O' I stock were reserved for outstanding options and the granting of additional options. t toJ At December 31,1976,154,931 shares of common stock were reserved for future issuance to certain key employees I i i-- i n or incentive compensation agreements and contingent awards under thh^^e^arrinings growth plan. Notes to Financial Statements 19 BB 0001521 Notes to Financial Statements I-- l lt I t t I I l i I t I it I-- l 20 10. Litigation A number of lawsuits seeking substantial money damages are pending against PPG. One group of actions pending is against PPG and Pittsburgh Corning (a 50% owned equity affiliate) by or on behalf of approximately 370 formeremployees of Pittsburgh Corning alleging that their work exposed them to asbestos fibers which caused or will cause pulmonary diseases. Another group of legal proceedings involves lawsuits brought against PPG and numerous other manufacturers of polyurethane foam products. These suits, in general, claim that polyurethane foam presents ' a fire hazard, the existence of which was concealed by various of the defendants. Although the existence of liability and the amounts thereof with respect to litigation pending against PPG are not determinable, management believes that the outcome of all such litigation will not have a material effect on the financial position or results of operations of PPG. 11. Quarterly financial information (unaudited) 1976 Quarter Ended March 31 June 30 September 30 December 31 Net Sales $ 522.4 667 9 590.6 . . 573.9 $2,254.8 Gross Margin (Millions) $190.8 218.0 208.9 197.0 $814.7 Net Earnings $ 35.0 43.0 40.1 33.4 $151.5 Earnings Per Share $1.68 2.07 1.93 1.60 $7.28 12. Other matters Reference is made to the Information for Our Investors section regarding Impact of Inflation (unaudited), Transla tion of Foreign Currencies, Pensions, and Capital Expenditures as to amounts required to complete capital projects approved prior to December 31,1976. Earnings Net sales----- ------------------------------Earnings before income taxes---------- Income taxes------------ ---------------------Earnings before extraordinary items. Extraordinary items, net of income taxes--------------------Net earnings --------------------------------- Earnings per share: Before extraordinary items----------Net earnings-----------------------------Average number of shares outstanding ----------------------Dividends-------- ---------------------------Per share---------------------------------- 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 ,254.8 271.1 119.6 151.5 1,886.6 145.8 56.8 89.0 1,744.0 139.4 47.0 92.4 1,512.6 144.1 52.6 91.5 1,395.9 124.7 42.5 82.2 1,238.5 98.4 35.2 63.2 1,093.8 57.9 26.8 31.1 1,151.7 101.0 50.5 50.5 1,048.4 92.2 47.5 44.7 948.1 79.8 37.6 42.2 ___ 151.5 ___ 89.0 ___ 92.4 11.3 102.8 _ (16.0) .1 82.2 47.2 31.2 -- 50.5 -- 44.7 -- 42.2 7.28 4.28 4.44 4,40 3.97 3.07 1.51 2.47 2.19 2.08 7.28 4.28 4.44 4.94 3.97 2.29 1.52 2.47 2.19 2.08 20.8 20.8 20.8 20.8 20.7 20.6 20.5 20.5 20.4 20.3 41.6 35.9 35.3 33.3 30.1 28.8 28.7 28.7 27.5 26.4 2.00 1.725 1.70 1.60 1.455 1.40 1.40 1.40 1.35 1.30 Balance Sheet Current liabilities Working capital Plant and equipment (tesc; rlppffsrjatinn) Total assets t nng-term fieht Rharehnlrlers' equity Per share 894.5 329.7 564.8 801.8 292.4 509.4 682.2 289.8 392.4 623.6 230.5 393.1 548.8 202.7 346.1 491.8 193.1 298.7 445.4 217.7 227.7 436.3 239.3 197.0 415.5 203.2 212.3 396.2 161.2 235.0 1,007.6 2,033.2 468.8 1.021.6 49.10 931.4 1,871.0 483.9 910.9 43.80 851.9 1,679.5 366.9 857.7 41.25 738.8 1,486.5 304.0 800.5 38.51 725.8 1,393.6 300.7 730.7 35.16 710.1 1,320.7 301.4 675.2 32.66 706.5 1,270.3 277.6 653.4 31.88 652.0 1,181.0 182.1 650.6 31.75 621.5 1,119.7 186.2 638.9 31.20 564.2 1,040.8 184.6 615.2 30.27 Other Data Expenditures for property and investments Depreciation expense Quoted market price: High Low Price/earnings ratio: Hiah il il Low _ t Number of employees l i Payroll and benefits . l 173.0 86.5 171.2 76.8 198.8 69.0 132.4 63.7 92.3 123.5 153.2 110.7 113.2 137.6 62.9 59.1 54.7 53.7 45.4 47.3 58Vi 36'/2 28% 47 50 45 37 Va 42 46 Vi 34% 35 24Va 20 21 Va 36 32 21 Va 31 Va 31 V4 26% 8 5 36,300 640.0 9 6 34,900 560.5 6 4 38,000 543.5 10 5 38,000 507.2 13 9 38,100 476.0 15 10 37,700 430.8 25 14 39,000 398.6 17 13 41,400 393.5 21 14 40,100 356.2 17 13 39,800 332.7 BB 0001522 I t t- I I AH amountsare in millions except per share data and number of employees. l Ten-Year Digest 21 Jvi^fe World\ Manufacturing Locations I CO I I to I II IOI tOI IOI I_I I un I I tsj I I Co I II I-- I 22 DOMESTIC Chemicals Barberton, Ohio Chlor-Alkalies, Silica Pigments, Herbicides, Polymerization Initiators, Optical Plastic Monomer, Hydrogen Peroxide, Calcium Hypochlorite Beaumont, Tex. Antifreeze, Ethylene Glycol, Ethylene Oxide, Antiknock Compounds, Anti-icer Compounds Corpus Christi, Tex. Chlor-Alkalies, Caustic Potash, Chrome Chemicals, Soda Ash El Dorado, Ark. (50%) Bromine Guayanilla, P.R. Chlor-Alkalies, Ethylene Glycol, Vinyl Chloride Monomer Lake Charles, La. Chlor-Alkalies, Chlori nated Solvents, Chlorinated Hydro carbons, Silica Pigments, Vinyl Chloride Monomer, Vinylidene Chloride Monomer Natrium, W.Va. Chlor-Alkalies, Chloro benzenes, Sulfide Chemicals, Ammonia, Muriatic Acid Penuelas, P.R. (50%) Ethylene, Propylene, Butadiene Woodward, Okla. (51%) Iodine Glass Carlisle, Pa. Flat Glass, Tempered Glass Creighton, Pa. Automotive and Aircraft Glass Fabrication Crestline, Ohio Automotive and Specialty Glass Fabrication Crystal City, Mo. Flat Glass Cumberland, Md. Flat Glass Ford City, Pa. Architectural and Insulating Glass Fabrication, Coated Glass, Tempered Glass, Solar Collectors, GlassCe ramies Fresno, Calit. Flat Glass, Tempered Glass Greensburg, Pa. Automotive Replacement Glass Fabricalion Huntsville, Ala. Aircraft and Specialty Transparency Fabrication Kokomo, Ind. Architectural Metals Lincoln, III. Insulating Glass Fabrication Marshall, Minn. Insulating Glass Fabrication Meadville, Pa. Flat Glass Mount Zion, III. Flat Gtass, Tempered Glass Tipton, Pa. Automotive Glass Fabrication Valencia, Calit. Aircraft and Specialty Transparency Fabrication Wichita Falls, Tex. Flat Giass Coatings & Resins Baltimore, Md. Brushes and Rollers Circleville, Ohio Resins Cleveland, Ohio Original Equipment Automotive Finishes, Industrial Coatings elaware, Ohio Industrial Coatings, Automotive Refinishes Dover, Del. TradeCoatings East Point, Ga. Trade and Industrial Coatings Houston, Tex. Trade and Industrial Coatings, Polyester Resins Oak Creek, Wis. Trade and Industrial Coatings, Resins Plainfield, III. Radiation Curing Equipment Springdale, Pa. Trade and Industrial Coat ings, Polyester Resins, Automotive Refinishes Torrance, Calif. Trade and Industrial Coat ings, Polyester Resins, Automotive Refinishes Fiber Glass Lexington, N.C. Continuous Strand Textile and Plastic Reinforcement Products Shelby, N.C. Continuous Strand Plastic Reinforcement Products, Tire Cord Plastic Fabricating Columbus, Ind, Injection Molded Com ponents for Home Furnishings and Industrial Applications, Injection Molds Newton, N.C. Decorative and Structuraf Furniture and Factory-Built Home Components Other Port Allegany, Pa. (50%) Cellular Glass Products, Glass Block Sedalia, Mo. (50%) Cellular Glass Insulation, Modular Glass Products FOREIGN Chemicals Beauharnois, Que., Canada Chlor-Alkalies, Sodium Chlorate Belle Plaine, Sask., Canada Potash Chiba, Japan (50%) Chlorinated Solvents, Vtnyl Chloride Monomer Paris, France (51%) Optical Plastic Monomer Glass Caracas, Venezuela (49%) Automotive and Architectural Glass Fabrication Cuneo, Italy (81%) Flat Glass, Architectural Glass Hamilton, Ont., Canada Architectural Metals Fabrication Hawkesbury, Ont., Canada (66%) Automo tive Glass Fabrication London, Ont., Canada Mirror, insulating Glass and Architectural Metals Fabrication Montreal, Que., Canada Mir sulatmg Glass and Architectural M Fabrication Moose Jaw, Sask., Canada Insulating Glass Fabrication Oshawa, Ont., Canada (66%) Automotive Glass Fabrication Owen Sound, Ont., Canada Fiat Glass, Tempered Glass, Insulating Glass Fabrication Roccasecca, Italy (81%) Automotive Glass Fabrication Salerno, Italy (81%) Flat Glass Sfrathroy, Ont., Canada Architectural Metals Fabrication Tejerias, Venezuela (49%) Automotive Glass Fabrication Vancouver, B.C., Canada Architectural Metals Fabrication Coatings & Resins Milan, Italy (78%) Automotive and Industrial Coatings Mississauga, Ont., Canada Automotive and Industrial Coatings North Vancouver, B.C., Canada Trade and Industrial Coatings Saultain, France (62%) Automotive and Industrial Coatings Tlalnepantfa, Mexico (59%) Trade, Automotive and Industrial Coatings Toronto, Ont., Canada Trade and Industrial Coatings, Polyester Resins Valenciennes, France (62%) Trade Coatings FiberGlass Candiac, Que., Canada (32%) Insulation Products Edmonton, Alta., Canada (32%) Insulation Products Guelph, Ont., Canada (32%) Continuous Strand Textile Products, Chemical Resins Hoogezand, The Netherlands (50%) Continuous Strand Textile and Plastic Reinforcement Products Moncton, N.B., Canada (32%) Insulation Products Sarnia, Ont., Canada (32%) Insulation Products Other Burlington, Ont., Canada (33%) Plastic Containers Georgetown, Ont., Canada (66%) Electrical Devices Montreal, Que., Canada (33%) Plastic Containers Tessenderlo, Belgium (50%) Cellular Glass Insulation (Includes subsidiaries and affiliates in which PPG has at least 30% equity. The percent age of equity in those not wholly owned is shown in parentheses.) OFFICERS Robinson F. Barker, Chairman of (he Board and Chief Executive Officer L. Stanton Williams, Vice Chairman of the ' Board and Chief Administrative Officer J. Earl Burrell, President and Chief Operating Officer W. F. Newton, Vice President, Marketing William Carpenter, Vice President, Corporate Relations W. Parmer Fuller III, Vice President, Western Region, Corporate Marketing David D. Ogilvie, Vice President, Corporate Development Cyrus V, Anderson, Vice President, Law Edward Mazeski, Jr., Secretary Robert H. Mitchel, Vice President, Finance Edward H. Eaton, Vice President and Treasurer Eugene B. Mosier, Controller R. Wayne Oates, Assistant Vice President, Information Systems Edward I. Sproull, Jr., Vice President, Tax Administration Donald G. Griffin, Vice President, Distribution and Transportation Edward J. Slack, Vice President, Employee Relations Richard F. Spurring, Vice President, Supply Frank V. Breeze, Vice President and General Manager, Glass Division John L. Baldwin, Vice President, Contract and Supply Department, Glass Division Charles P. Blahous, Vice President, Research, Glass Division Francis B. O'Neil, Vice President, Planning and Foreign Operations Group, Glass Division Robert C. Perry, Vice President, Automotive and Aircraft Group, Glass Division John H. Strome, Vice President, Sales, Marketing and Distribution Group, Glass Division Robert F. Wells, Vice President, General Sales, Glass Division John B. While, Vice President, Flat Glass Group, Glass Division Elmer C. Larsen, Vice President and General Manager, Coatings and Resins Division Harold G. Bittle, Vice President, International Operations, Coatings and Resins Division Richard P. Cook, Vice President, Trade Paint Sales, Coatings and Resins Division James A. Kassekert, Vice President, Manu facturing, Coalings and Resins Division Frederick F. Rhue, Vice President, Automo tive Finishes, Coatings and Resins Division Malcolm G. Slaney, Vice President, Industrial |-- | Products, Coatings and Resins Division j j Marco Wismer, Vice President, Research and | , Development, Coatings and Resins Division t -1 I I' t 1 I I BB 0 0 0 1 5 2 4 I-- I Robert A. McLaughlin, Vice President and General Manager, Fiber Glass Division John E, Brownell, Jr., Vice President, Sales and Marketing, Fiber Glass Division Franklin H. Green, Vice President, Manufacturing, Fiber Glass Division John W. Morris, Vice President, Technical Services, Fiber Glass Division George E. Russell, Vice President and General Manager, Plastic Fabricating Division Vincent A. Sarni, Vice President and General Manager, Chemical Division Richard H. Blair, Vice President and General Manager, PPG Industries (Caribe), Industrial Chemical Department, Chemical Division William R. Harris, Vice President and General Manager, Industrial Chemical Department, Chemical Division John L. MacMillan, Vice President, Sales and Distribution, Industrial Chemical Department, Chemical Division John M. Robinson, Vice President and General Manager, Houston Chemical Company, Chemical Division Hobert C. Twiehaus, Vice President and Technical Director, Chemical Division Robert E. Widing.Vice President, Operations, Industrial Chemical Department, Chemical Division Boyd R. Willett, Vice President and General Manager, International Department, Chemical Division George M. Zapp, Vice President, Planning and Development, Chemical Division DIRECTORS fRobinson F. Barker, Chairman of the Board and Chief Executive Officer, PPG Industries, Inc. Charles M. Beeghly, Retired Chairman of the Board and Chief Executive Officer, Jones & Laughlin Steel Corporation * J. Earf Burreli, President and Chief Operating Officer, PPG Industries, Inc. Paul Desruisseaux, Chairman and President. Desmont Research and Development, Inc. (Canada) *W. H. Krome George, Chairman of the Board and Chief Executive Officer, Aluminum Company of America `James F. Jung6, President, Pitcairn Incorporated Stephen F. Keating, Chairman of the Board, Honeywell, Inc. `John A. Mayer, Former Chairman of the Board and Chief Executive Officer, Mellon National Corporation and Mellon Bank, N.A. Thomas J. McHugh, Senior Vice President and Investment Director, Pitcairn Incorporated Robert W. Morse, Associate Director, Woods Hole Oceanographic Institution `Joseph A. Neubauer, Retired President and Chief Operating Officer, PPG Industries, Inc. *$Jack W. Robbins, Senior Vice President and General Counsel, Pitcairn Incorporated Julio A. Torres, Senior Executive Vice President, Banco de Ponce (Puerto Rico) *L. Stanton Williams, Vice Chairman of the Board and Chief Administrative Officer, PPG Industries, Inc. IChairman, Executive Committee 'Member, Executive Committee "Chairman, Management Committee Member, Management Committee tChairman, Audit Committee Member, Audit Committee Annual Meeting The Annual Meeting of Shareholders will be held on Thursday, April 21,1977, at 2 p.m., at the William Penn Hotel, Pittsburgh, Pa. Transfer Agent and Registrar Pittsburgh National Bank P.O. Box 340746-P Pittsburgh, Pa. 15230 Trademarks These registered trademarks of PPG Industries, Inc., are used in this report; PPG Industries (monogram), Pittsburgh Paints, Tri-Ethane, Zerex. Gtanor is a trademark of Oronzio de Nora Impianti Elettrochimici S p A. Officers and Directors 23 BB 0001525 II tI I I I I l I tI -- I PPG: a Concern for the Future