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Letter to the Editor

PPG Reports on Improved Second Quarter

This compares with a net loss of $345 million, or a loss per share of $2.03, for the second quarter 2002, which included the $495 million aftertax charge, or $2.92 a share, for the asbestos settlement announced in May of last year, and income of $3 million, or 2 cents a share, related to a restructuring reversal. Sales for the quarter were $2.13 billion.

For the first six months of 2003, PPG recorded net income of $230 million, or $1.35 per share, which includes aftertax charges of $6 million, or 3 cents a share, for the cumulative effect of a required change in the accounting for asset retirement obligations; $10 million, or 6 cents a share, to reflect the net increase in the current value of the company's obligation under the asbestos settlement agreement; and $2 million, or 1 cent a share, for restructuring. Sales for the first half of 2003 were $4.38 billion.

For the first six months of 2002, PPG recorded a net loss of $311 million, or a loss per share of $1.83, including aftertax charges of $52 million, or 31 cents a share, for restructuring, $9 million, or 5 cents a share, for the cumulative effect of a required accounting change, and the initial charge for the asbestos settlement of $2.92 a share. Sales for the first half of 2002 were $4.01 billion.

"We produced higher earnings this quarter compared with last year despite a continuing sluggish industrial economy, lower North American vehicle production, and higher energy and pension and retiree medical costs," said Raymond W. LeBoeuf, chairman and chief executive officer. "Our second quarter earnings benefited from stronger pricing in commodity chemicals, reduced costs in our coatings businesses reflecting restructuring actions taken over the past two years, the strengthening of the euro and the lack of the initial asbestos charge we took a year ago. In addition, we have further reduced debt in the first six months of 2003 by more than $130 million, while maintaining our commitment to fund technology, growth initiatives and higher dividend payments."

Looking to the future, LeBoeuf added, "We will continue to maintain our focus on generating cash and reducing costs, which has served us well in good economic times and bad. Although many forecasts call for a stronger second half in the U.S., we are fully prepared to capture the benefits of whatever expansion results."

Consistent with previous disclosures, second quarter 2003 earnings included approximately $36 million of higher pension and retiree medical costs compared with a year ago.

Coatings sales increased $62 million, or 5 percent, due to the strengthening of foreign currencies offset slightly by lower prices in the automotive original equipment business. Volume gains in Asia nearly offset declines in North America and Europe. Operating earnings were down $9 million largely because of higher pension and retiree medical costs and inflationary cost increases. These were offset, in part, by lower overhead costs and the favorable effects of foreign currency translation.

Glass sales increased $20 million, or 4 percent, on stronger volumes in the automotive original equipment and automotive replacement glass businesses as well as the strengthening of foreign currencies. These increases were offset partially by lower prices in the automotive replacement glass and fiber glass businesses. Operating earnings were down by $21 million because of lower selling prices, a shift in the sales mix to lower-margin products, higher energy costs and higher pension and retiree medical costs, which more than offset the benefit of higher volumes, improved manufacturing efficiencies and lower overhead.

Chemicals sales increased $88 million, or 22 percent, on higher selling prices for our commodity products, improved volumes in specialty chemicals and the strengthening of foreign currencies. Operating earnings increased $48 million because of higher selling prices and improved volumes. These were offset, in part, by higher energy costs and higher pension and retiree medical costs.

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