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Letter to the Editor

PPG Reports Record Q3 Sales and Strong Earnings

PPG reported in September 2007 the signing of agreements to sell its two automotive glass businesses and its fine chemicals business. Those transactions are expected to be completed in the fourth quarter 2007. Consequently, the results of operations for those businesses for the current and prior periods will be reported as discontinued operations in a separate component of PPG’s earnings in accordance with generally accepted accounting principles.

Reported net income from continuing operations includes aftertax charges of $4 million for costs related to the Barloworld Coatings Australia acquisition made during the third quarter and $3 million 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 subject to pending court proceedings. Adjusted net income from continuing operations was $222 million. The reported loss from discontinued operations includes an initial non-cash, aftertax charge of $11 million related to the pending sale of the automotive glass businesses, and a $19 million aftertax charge related to the pending sale of the fine chemicals business.

PPG’s sales for the third quarter of 2006 were $2.5 billion. Third quarter net income was $90 million, and was comprised of net income from continuing operations of $70 million and income from discontinued operations, net of tax, of $20 million. Adjusted net income from continuing operations was $194 million.

“Our continuing operations delivered double-digit sales growth and a 15 percent increase in adjusted earnings per share,” said Charles E. Bunch, PPG’s chairman and chief executive officer. “Achieving this strong financial performance despite a slowing North American economy is largely a result of the successful execution of our strategies over the past few years to rapidly grow the specialty businesses in our portfolio and expand our global presence.”

Bunch noted that both of PPG’s coatings segments and its Optical and Specialty Products segment all reached third quarter sales records, and all of PPG’s business segments improved earnings by at least four percent year over year.

“In addition,” Bunch said, “we’re accelerating the transformation of our business portfolio. We recently announced the pending acquisition of SigmaKalon and the divestiture of our automotive glass and fine chemicals businesses. These pending transactions will dramatically enhance our focus on coatings and optical and specialty products and significantly shift our geographic presence. When these deals are completed, more than 50 percent of our sales will be outside the United States and Canada.

“Looking ahead, we expect the North American economy to soften further,” Bunch continued. “But it should still provide slight growth. Equally important to PPG, the economies outside of North America will continue to provide consistent opportunities for solid growth. Our global businesses enable us to continue to focus on creating shareholder value and improving returns.”

Performance and Applied Coatings segment sales for the quarter increased $163 million, or 20 percent, as a result of increased sales from acquisitions, the positive impact of stronger foreign currencies, increased selling prices, and improved sales volumes. Segment earnings grew by $9 million, or seven percent. The earnings were partially offset by higher selling and general administrative (SGA) costs tied to growth initiatives.

Industrial Coatings segment sales for the quarter increased $90 million, or 11 percent. Segment earnings improved by $6 million due to higher sales volumes, but they were moderated by higher SGA costs for growth initiatives and inflation.

Glass segment sales increased $10 million, or three percent, due to improved volumes and the positive impact of stronger foreign currencies. Segment earnings improved by $3 million due primarily to improved sales volumes. For the first nine months of 2007, sales were $8.3 billion, compared to $7.4 billion in the first nine months of 2006. Net income was $634 million.

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