Sales were $2.18 billion.
This compares with fourth quarter 2002 net income of $94 million, or 55 cents a share, including an aftertax charge of $4 million, or 2 cents a share, to reflect the net increase in the value of the company's obligation under the asbestos settlement agreement. Sales were $1.99 billion.
For all of 2003, PPG recorded net income of $494 million, or $2.89 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; $23 million, or 14 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 2003 were $8.76 billion.
For all of 2002, PPG recorded a net loss of $69 million, or 41 cents a share, including aftertax charges of $484 million, or $2.85 a share, for the asbestos settlement; $52 million, or 31 cents a share, for restructuring; and $9 million, or 5 cents a share, for the cumulative effect of a required accounting change. Sales for 2002 were $8.07 billion.
"We generated cash from operating activities of about $350 million during the fourth quarter, representing an increase of about $75 million over last year's fourth quarter, as a result of stronger earnings and further reductions in working capital," said Raymond W. LeBoeuf, PPG chairman and chief executive officer. "In 2003 we paid down debt by nearly $400 million, reducing our debt-to-total capital ratio to 36 percent, surpassing our year-end goal of 40 percent. In addition, we increased our cash position for the year by about $375 million, and expect strong cash flow again in 2004.
"We produced solid earnings for the quarter thanks to improved cost performance, increased volumes across all of our businesses, stronger pricing in commodity chemicals, the growing success of our optical products business and the strengthening of the euro. This was achieved in the face of cost increases for energy, labor, pension and retiree medical and environmental costs. Further, the change in the current value of the asbestos settlement agreement negatively impacted the pretax comparison to a year ago by $7 million."
Consistent with previous disclosures, fourth quarter 2003 pretax earnings included approximately $37 million of higher pension and retiree medical costs compared with a year ago.
Looking to the future, LeBoeuf added, "Our optimism about the global economy grew throughout 2003 and that continues today, fueled by improvements in North America and Asia, where we are well positioned. Even in Europe, there are some positive signs in the economy; however, that improvement could be negated by a stronger euro. At the same time, we remain committed to making significant further reductions in costs, ensuring that an improving economy will produce even better results. Additionally, we will continue to develop new products and pursue growth."
Coatings sales increased $134 million, or 12 percent, due to the strengthening of foreign currencies and stronger volumes in the architectural, aerospace, automotive and industrial businesses. Operating earnings were up $36 million largely due to increased volumes, lower overhead costs, improved manufacturing efficiencies and the favorable effects of foreign currency translation. These were offset, in part, by higher pension and retiree medical costs and inflationary cost increases.
Glass sales increased $18 million, or 4 percent, largely on the strengthening of foreign currencies. Stronger volumes in the automotive original equipment and flat glass businesses were offset by lower prices in the automotive original equipment, automotive replacement glass and fiber glass businesses. Operating earnings were down by $18 million because of lower selling prices and higher energy, pension and retiree medical costs, which more than offset the benefit of higher volumes, improved manufacturing efficiencies and lower overhead.
Chemical sales increased $33 million, or 8 percent, on higher selling prices for commodity products, stronger optical products volumes and the strengthening of foreign currencies, offset partially by lower volumes for commodity products. Operating earnings increased $17 million as higher selling prices and improved volumes more than offset increased overhead (in our optical business), environmental remediation, energy and pension and retiree medical costs.