PPG Industries reported on 20 January 2005 net income for the 4Q 2004 of USD 183 million, or USD 1.06 a share.
The figure includes aftertax charges of USD 3 million, or USD 0.01 a share, to reflect t…
PPG Industries reported on 20 January 2005 net income for the 4Q 2004 of USD 183 million, or USD 1.06 a share. The figure includes aftertax charges of USD 3 million, or USD 0.01 a share, to reflect the previously announced decision to begin expensing stock options in 2004; USD 6 million, or USD 0.03 a share, to reflect the net increase in the current value of the company“s obligation under its asbestos settlement agreement reported in May 2002; and income of USD 6 million, or USD 0.04 a share, to reflect the benefit of Medicare prescription drug legislation. Sales were USD 2.41 billion. PPG reported that earnings per share and sales were at record levels for a 4Q. In the 4Q 2003, PPG reported net income of USD 122 million, or USD 0.71 a share. This included an aftertax charge of USD 8 million, or USD 0.05 a share, to reflect the net increase in the value of the company“s obligation under the asbestos settlement agreement. Sales were USD 2.18 billion. For all of 2004, PPG recorded net income of USD 683 million, or USD 3.95 per share. This includes aftertax charges of USD 13 million, or USD 0.07 a share, to reflect the expensing of stock options in 2004; USD 19 million, or USD 0.11 a share, to reflect the net increase in the current value of the company“s obligation under the asbestos settlement agreement; and income of USD 19 million, or USD 0.11 a share, to reflect the benefit of Medicare legislation. Sales were USD 9.51 billion. For all of 2003, PPG recorded net income of USD 494 million, or USD 2.89 per share. This included aftertax charges of USD 6 million, or USD 0.03 a share, for the cumulative effect of a required change in the accounting for asset retirement obligations; USD 23 million, or USD 0.14 a share, to reflect the net increase in the value of the company“s obligation under the asbestos settlement agreement; and USD 2 million, or USD 0.01 a share, for restructuring. Sales for 2003 were USD 8.76 billion. “We delivered a record 4Q performance primarily because of higher volumes in all our businesses, higher selling prices for our commodity chemicals and strong manufacturing efficiencies, producing higher operating margins despite significantly higher raw material and energy costs,” said Raymond W. LeBoeuf, chairman and chief executive officer. “As a result of our strong cash flow in 2004, we contributed to our pension plans, paid down debt, completed our previously announced USD 100 million share repurchase and raised shareholder payments for the 33rd consecutive year. And with all that, we still were able to end the year with more than USD 700 million of cash on hand.” “The rapid growth in the global economy early in 2004 cooled at midyear to what is probably a more sustainable level. The fundamentals in the U.S. economy remain solid: job growth continues, the consumer is healthy and capital spending is strong. Meanwhile, we expect worldwide growth to continue at varying degrees. Regardless of changing economic conditions, PPG continues its commitment to creating growth, driving down costs, generating cash and rewarding our shareholders.” The effective tax rate for the full year 2004 is approximately 30.5% compared with an estimated rate of 31.5% in the 3Q 2004, the company said. The year-to-date impact of the change has been reflected in the 4Q results of operations. Glass sales for the quarter increased USD 13 million, or 3%, as higher volumes in the fiberglass and flat glass businesses and the strengthening of foreign currencies more than offset lower selling prices across all businesses. Operating earnings were up USD 17 million reflecting improved manufacturing efficiencies, increased volumes, higher equity earnings and lower pension and post-retirement medical costs. These increases exceeded the impact of lower selling prices, cost inflation and higher energy costs. Chemical sales for the quarter increased USD 135 million, or 32%, on higher selling prices for commodity products, higher volumes, and the strengthening of foreign currencies. Operating earnings were up USD 55 million as higher selling prices, improved volumes and lower overhead costs combined to exceed the impact of higher energy costs and inflation. Coatings sales for the quarter increased USD 88 million, or 7%, as stronger volumes across all businesses and strengthening of foreign currencies were offset slightly by lower prices in the automotive business. Operating earnings were down USD 16 million due to the impact of inflation, primarily raw materials, up about USD 40 million; higher overhead costs; and lower selling prices. These declines exceeded the benefits from improved volumes, the favorable effect of currency translation and lower pension and postretirement medical costs. Beginning 1 January 2004, PPG adopted the fair value method of recording stock-based compensation, as defined by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” for stock options awarded to employees after the date of adoption and for previously issued stock options that were not vested as of 1 January 2004. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 was enacted in December 2003. During the 3Q of 2004, PPG concluded its evaluation of the provisions of this act and decided to maintain the company“s retiree medical benefits program and take the subsidy available under the act. The impact of this decision lowered the company“s other postretirement medical cost, which for the three and 12 months ended 31 December, 2004 increased net income by USD 6 million, or USD 0.04 a share, and USD 19 million, or USD 0.11 a share, respectively. Recorded comments by William H. Hernandez, senior vice president and chief financial officer, regarding 4Q 2004 results may be heard by telephone at 412-434-2816 until 5 p.m. Eastern Time on Friday, 28 January 2004. The commentary will also be available online at Financial, Financial Commentary, on the PPG web site.