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PPG: environmental and legal charges

US PPG Industries announced at the end of September 2006 that it will record an after-tax charge of USD 106 million in the third quarter to account for the estimated cost of proposed environmental rem…

US PPG Industries announced at the end of September 2006 that it will record an after-tax charge of USD 106 million in the third quarter to account for the estimated cost of proposed environmental remediation of its sites in New Jersey and Louisiana. An after-tax charge of USD 14 million was also recorded by the company for a proposed settlement of a class-action lawsuit related to alleged antitrust violations in the US automotive refinish coatings market. PPG says that the two charges combined will reduce third-quarter 2006 earnings by USD 0.72/share. Environmental remediation is expected to take place at PPG“s former chromium manufacturing location in Jersey City, New Jersey, as well as at the Calcasieu River estuary near the company“s Lake Charles, Louisiana site. PPG announced that its exposure to legacy environmental remediation costs is concentrated at the locations covered by these charges and that they reflect “material progress“ toward resolving these environmental contingencies. “The cash flow impact of the environmental charges will be very manageable, as the actual remediation will occur over an extended period of time,” says PPG chairman and CEO Charles Bunch. The company has also agreed to settle a federal class-action lawsuit related to alleged antitrust violations in the US automotive refinish industry in the period of from 1993 to 2000. The settlement agreement remains tentative, pending formal documentation and necessary court proceedings, PPG announced. “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 defence, as well as risks associated with a jury trial involving complex issues,” Bunch said.

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