Wednesday October 18
PPG Records Charges for Environmental Remediation, Class-Action SettlementPPG Industries has recorded an after-tax charge of $106 million to account for the estimated cost of proposed environmental remediation of sites in New Jersey and Louisiana. The company also recorded an after-tax charge of $14 million for a proposed settlement of a class-action lawsuit. Combined, these two charges will reduce third quarter 2006 earnings per share by $0.72.
Environmental remediation is expected to occur at PPG's former chromium manufacturing location in Jersey City, N.J., which the company operated in the late 1950s and early 1960s. In addition, remediation is also expected to occur at the Calcasieu River estuary in Calcasieu Parish near the company's Lake Charles, La., facility, where PPG is working with other potentially responsible parties. Both projects are expected to occur over a number of years.
"PPG is a member of the American Chemistry Council's Responsible Care initiative, and we take our commitment to the environment seriously," said Charles E. Bunch, chairman and chief executive officer of PPG. Bunch added that the company's exposure to legacy environmental remediation costs is concentrated in the locations covered by these charges and that they reflect material progress toward resolving these environmental contingencies, which have been disclosed in PPG's financial reports for many years. "The cash flow impact of the environmental charges will be very manageable, as the actual remediation will occur over an extended period of time," he said.
Separately, the company has agreed to settle a federal class-action lawsuit related to alleged antitrust violations in the U.S. automotive refinish industry from 1993 through 2000. The settlement agreement remains tentative, pending formal documentation and necessary court proceedings.
"Based on both PPG's internal investigations and discovery conducted to date, we continue to strongly believe that there was no wrongdoing on the part of PPG. However, settling this case helps us avoid considerable ongoing expense of a prolonged defense, as well as risks associated with a jury trial involving complex issues," concluded Bunch. "Resolving these issues reduces uncertainty associated with the company. Meanwhile, our strong operating cash flows and financial flexibility will allow us to pay these costs while continuing to reward shareholders with organic and acquisitive earnings growth, dividends and share buybacks."
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