Sales were $2.21 billion.
This compares with third quarter 2002 net income of $148 million, or 87 cents a share, including aftertax income of $15 million, or 9 cents a share, to reflect the decline in the current value of the company's obligation under the asbestos settlement agreement. Sales were $2.07 billion.
For the first nine months of 2003, PPG recorded net income of $372 million, or $2.18 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; $15 million, or 9 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 nine months of 2003 were $6.58 billion.
For the first nine months of 2002, PPG recorded a net loss of $163 million, or a loss per share of 96 cents, 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 charge for the asbestos settlement of $480 million, or $2.83 a share. Sales for the first nine months of 2002 were $6.08 billion.
"We generated cash from operating activities of about $350 million during the third quarter, representing an increase of about $120 million over last year, as a result of stronger earnings and further reductions in working capital, despite a continued sluggish manufacturing environment," said Raymond W. LeBoeuf, chairman and chief executive officer. "So far this year we paid down more than $300 million in debt, reducing our debt-to-total capital ratio to 41 percent, just one point shy of our year-end goal. In addition, through Sept. 30 we have increased our cash position by about $160 million, and expect further improvement in the fourth quarter.
"We produced solid earnings thanks to stronger pricing in commodity chemicals, the growing success of our optical products business, improved cost performance and increased volumes in our coatings and glass segments, and the strengthening of the euro. This was achieved in the face of inflationary cost increases, lower North American vehicle production, higher energy, environmental, pension and retiree medical costs. Further, the change in the current value of the asbestos settlement agreement negatively impacted the comparison to a year ago by $32 million."
Consistent with previous quarters this year, third quarter 2003 earnings included approximately $37 million of higher pension and retiree medical costs compared with a year ago.
Looking to the future, LeBoeuf added, "We see continuing signs of a slow but likely uneven escalation in the economy, which, in combination with our improved business mix and our unwavering commitment to generating cash and reducing costs, will only amplify any gains that the economic expansion brings."
Coatings sales increased $85 million, or 7 percent, due to the strengthening of foreign currencies and improved volumes across all businesses, offset, in part, by lower prices in the automotive original equipment business. Operating earnings were up $7 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, inflationary cost increases and lower selling prices.
Glass sales increased $13 million, or 2 percent, largely on the strengthening of foreign currencies. Stronger volumes in the automotive original equipment and automotive replacement glass businesses were offset by lower prices in the automotive replacement glass and fiber glass businesses and lower fiber glass volumes. Operating earnings were down by $19 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.
Chemicals sales increased $40 million, or 10 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 $24 million because of higher selling prices and improved volumes in optical products offset, in part, by higher environmental remediation and energy costs and higher pension and retiree medical costs.