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“Our financial performance this quarter demonstrates both the successful execution of our transformation strategy and the continued strength of our commodity chemicals business,” said Charles E. Bunch, PPG chairman and chief executive officer. “Over the past several years, we have become a more resilient company by expanding our geographic reach, entering new end-markets, and strengthening our ability to generate cash. In the quarter, our adjusted earnings per share were comparable with last year, despite the negative impacts from two U.S. Gulf Coast hurricanes and significantly weaker automotive OEM production. Financial discipline and flexibility remain PPG hallmarks. We have further strengthened our balance sheet by already exceeding our full-year debt-reduction goals and increasing our cash on hand.”
The company reported that year-to-date cash from operations has risen about 50% from last year, that net debt payments for the year totaled approximately $650 million, that cash on hand was about $500 million at quarter-end, and that U.S. commercial paper outstanding was about $175 million.
“We have taken proactive steps to continue to strengthen the company, including divesting the automotive glass business and initiating business restructuring. These steps will provide future financial benefits,” Bunch said. During the quarter, the company finalized the sale of an approximate 60% interest in its automotive glass and services business, and it announced business restructuring that will result in expected savings at an annual run rate of approximately $100 million by the end of 2009.
Reported third quarter 2008 net income includes after-tax charges of $110 million, or $.67 per share, for business restructuring and $3 million, or $.02 per share, to reflect the net increase in the current value of the company’s obligation under its proposed asbestos settlement agreement reported in May 2002, which is pending court proceedings. Net income also includes an after-tax gain of $3 million, or $.02 cents per share, on the divestiture of the automotive glass and services business.
PPG’s sales for the third quarter 2007 were $3.1 billion. Reported net income for the third quarter 2007 was $191 million, or $1.15 per share, and adjusted net income from continuing operations was $231 million, or $1.40 per share. Third quarter 2007 reported net income comprised net income from continuing operations of $213 million, or $1.29 per share, and a loss from discontinued operations from the former fine chemicals business, net of tax, of $22 million, or $.14 per share. Reported net income from continuing operations included after-tax charges of $11 million, or $.06 per share, for pension and other post-employment benefits (OPEB) curtailments related to the automotive glass and services business; $4 million, or $.03 per share, for acquisition-related costs; and $3 million, or $.02 per share, to reflect the net increase in the current value of the company’s obligation under its proposed asbestos settlement agreement. Total adjusted net income, including discontinued operations, was $228 million, or $1.37 per share.
Glass segment sales, including the automotive glass and services business, were flat compared with the prior year. Higher selling prices were equally offset by lower volumes. Segment earnings decreased by $18 million, or 51%, due to lower volumes and higher inflation, which was only partially offset by higher selling prices and lower manufacturing costs.
The automotive glass and services business was divested September 30, 2008. Third quarter 2008 results for that business alone were sales of $229 million and an after-tax loss of $3 million, or $.02 per share. Third quarter 2007 results for automotive glass and services were sales of $249 million and after-tax earnings of $5 million, or $.03 per share.
Additional details are available at www.ppg.com.