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Letter to the Editor

PPG Reports On Fourth Quarter, Strengthens Balance Sheet Amid Recession

PITTSBURGH -- PPG Industries has reported fourth-quarter net income of $83 million, or 49 cents a share, on sales of $1.91 billion. This compares with fourth-quarter 2000 net income of $126 million, or 75 cents a share, on sales of $2.1 billion.

For all of 2001, PPG's net income was $387 million, or $2.29 a share, including a $101 million pretax restructuring charge in the first quarter. Excluding the charge, equaling 42 cents a share aftertax, income was $458 million, or $2.71 a share. Sales were $8.2 billion.

Net income for all of 2000 was $620 million, or $3.57 a share, including aftertax charges totaling $38 million, or 22 cents a share, to write-off an equity investment and rationalize an automotive replacement glass distribution venture. Excluding the charges, net income was $658 million, or $3.79 a share. Sales were a record $8.6 billion.

"We anticipated a difficult year by accelerating actions to cut costs and conserve capital. Our financial discipline and continuous drive to improve efficiency have not reduced our commitment to technology and service," said Chairman and Chief Executive Officer Raymond W. LeBoeuf. "Despite a decrease in net earnings of $233 million, we increased cash flow from operations by about $200 million and reduced capital spending by $375 million, enabling us to reduce debt by about 20 percent. This strengthening of our balance sheet amid the recession improves our ability to generate earnings growth when economic expansion resumes.

"One of PPG's fundamental strengths is the continuous improvement of business processes, which is particularly important in times such as these, when market conditions are weak and the timing of the recovery is uncertain. Following the restructuring and work force reductions begun last year, we're developing plans to take additional restructuring actions in the first quarter of 2002, in the range of $60 to $90 million before taxes. These actions will include work force reductions and the closing of facilities or portions of facilities no longer needed as a result of improved business processes."

Fourth quarter 2001 sales were down $39 million, or 4 percent, in the coatings segment, driven by volume declines in all businesses except architectural coatings. The impact of these declines was partially offset by manufacturing efficiencies and lower overhead.

In the glass segment, sales were down 14 percent mostly on lower volumes, especially in fiber glass. Despite the positive impact of pricing and manufacturing efficiencies, earnings also fell.

In the chemicals segment, increased earnings because of higher specialty chemicals volumes and reductions in overhead throughout the segment were substantially offset by lower volumes and pricing in commodity chemicals.

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