A B C D E F

1 PPG CORP. BALANCE SHEETS, 1991-2000 (Million

2 ASSETS 2000 1999 1998 1997 1996
3 Cash and Short-Term Investments 111 158 128 129 70
4 Receivables 1,563 1,594 1,366 1,353 1,226
5 Inventories - Total 1,121 1,016 917 863 797
6 Other Current Assets 298 294 249 239 205
7 Total Current Assets 3,093 3,062 2,660 2,584 2,296
8
9 Property, Plant, and Equipment, Gross 7,089 6,859 6,739 6,758 6,688
Depreciation, Depletion, and Amortization
10
(Accumulated) 4,148 3,926 3,834 3,903 3,775
11 Property, Plant, and Equipment, Net 2,941 2,933 2,905 2,855 2,914
12
13 Intangibles 1,700 1,685 632 370 23
14 Other Assets 1,391 1,234 1,190 1,059 1,208
15 TOTAL ASSETS 9,125 8,914 7,387 6,868 6,441
16
17
18 LIABILITIES
19 Accounts Payable 764 755 630 646 602
20 Accrued Expense 606 649 634 564 504
21 Other Current Liabilities 12 26 11 8 15
22
23 Debt 2,971 2,790 1,718 1,701 1,482
24 Deferred Taxes 543 520 440 406 419
25 Minority Interest 128 98 87 82 76
26 Other Liabilities 1,004 970 987 952 861
27
28 EQUITY
29 Common Stock 484 484 484 484 484
30 Capital Surplus 102 104 105 99 97
31 Retained Earnings 6,019 5,786 5,489 4,916 4,569

32
Less: Treasury Stock - Total Dollar Amount 3,508 3,268 3,198 2,990 2,667
33 Total stockholders equity 3,097 3,106 2,880 2,509 2,483
34 TOTAL LIABILITIES AND EQUITY 9,125 8,914 7,387 6,868 6,441
35
COMMON SHARES OUTSTANDING
36
(million) 168 174 175 178 183
37
38
39 Balance sheet--historical ratios
40 ASSETS 2000 1999 1998 1997 1996
41 Cash and Short-Term Investments
42 Receivables/Sales 18.11% 20.55% 18.19% 18.34% 16.98%
43 Inventories/Sales 12.99% 13.10% 12.21% 11.70% 11.03%
44 Other Current Assets/Sales 3.45% 3.79% 3.32% 3.24% 2.84%
45 Operating CA/Sales 35.84% 39.47% 35.42% 35.02% 31.81%
46
 A B C D E F
47 Property, Plant, Equipment, Gross/Sales 82.15% 88.42% 89.73% 91.58% 92.66%
48 Annual depreciation/PPE 6.31% 6.05% 5.25% 5.15% 5.09%
49 Property, Plant, Equipment, Net/Sales 34.08% 37.81% 38.68% 38.69% 40.36%
50
51 Other Assets/Sales 16.12% 15.91% 15.85% 14.35% 16.74%
52 Other Assets, growth rate since 1991 7.93% #VALUE!
53
54 LIABILITIES
55 Accounts Payable/Sales 8.85% 9.73% 8.39% 8.75% 8.34%
56 Accrued Expense/Sales 7.02% 8.37% 8.44% 7.64% 6.98%
57 Other Current Liabilities/Sales 0.14% 0.34% 0.15% 0.11% 0.21%
58 Operating CL/Sales 16.02% 18.43% 16.98% 16.51% 15.52%
59
60 Debt
61 Debt/equity 95.93% 89.83% 59.65% 67.80% 59.70%
62 Debt/assets 32.56% 31.30% 23.26% 24.77% 23.01%
63
64 Other Liabilities/Sales 11.64% 12.50% 13.14% 12.90% 11.92%
65 Other Liabilities, growth rate since 1991 12.53% #VALUE!
66
67 Balance sheet--model parameters
68 ASSETS
69 Cash and Short-Term Investments constant
70 Receivables/Sales 18.28% #VALUE!
71 Inventories/Sales 12.24% #VALUE!
72 Other Current Assets/Sales 3.21% #VALUE!
73 Operating CA/Sales 35.11% #VALUE!
74
75 Property, Plant, Equipment, Gross =accrued depreciation + net plant, property, equipment
76 Accrued depreciation =previous year's accrued + this year's depreciation from income
77 Property, Plant, Equipment, Net/Sales 34.08% #VALUE!
78
79 Other Assets, annual growth rate 7.93% #VALUE!
80
81 LIABILITIES
82 Accounts Payable/Sales 8.50%
83 Accrued Expense/Sales 7.25%
84 Other Current Liabilities/Sales 12 <-- constant at current level
85
86 Debt/Assets 32% <-- approximately current level
87 Deferred taxes grows at sales growth
88 Minority Interest 128 <-- constant at current level
89 Other Liabilities, annual growth rate 12.53% #VALUE!
90
91 EQUITY
92 Common Stock 484
93 Capital Surplus 102
94 Retained Earnings =previous year's retained + this year's retentions from income statement
95 Treasury Stock - Total Dollar Amount PLUG
 A B C D E F
96
97
98 Payout to equity 2000 1999 1998 1997 1996
99 Cash dividends 276 264 252 239 237
Minus increase in common stock
100
and capital surplus 2 1 -6 -2 -15
Plus increase in treasury stock
101
at cost 240 70 208 323 608
102 Total paid out to equity 518 335 454 560 829
 G H I J K
TS, 1991-2000
1 (Million $)
2 1995 1994 1993 1992 1991
3 106 62 112 61 38
4 1,245 1,229 997 1,023 1,058
5 738 686 683 742 875
6 187 191 234 124 203
7 2,276 2,168 2,026 1,951 2,173
8
9 6,464 6,163 6,042 6,158 6,212

10
3,629 3,420 3,255 3,186 3,029
11 2,835 2,742 2,787 2,972 3,183
12
13 0 0 0 0 0
14 1,084 983 838 739 700
15 6,194 5,894 5,652 5,662 6,056
16
17
18
19 583 518 436 447 520
20 520 481 423 323 348
21 41 55 67 48 62
22
23 1,221 1,144 1,129 1,307 1,574
24 355 303 269 472 476
25 68 70 52 60 76
26 837 766 803 306 347
27
28
29 484 484 242 242 242
30 81 68 298 233 230
31 4,063 3,494 3,158 3,424 3,369

32
2,060 1,489 1,225 1,200 1,186
33 2,569 2,557 2,473 2,699 2,655
34 6,194 5,894 5,652 5,662 6,056
35
36
194 207 107 106 106
37
38
39
40 1995 1994 1993 1992 1991
41
42 17.64% 19.41% 17.32% 17.60% 18.65%
43 10.45% 10.84% 11.88% 12.77% 15.43%
44 2.65% 3.01% 4.07% 2.13% 3.57%
45 32.24% 34.25% 35.21% 33.55% 38.31%
46
 G H I J K
47 91.59% 97.34% 105.01% 105.91% 109.52%
48 5.13% 5.15% 5.48% 5.71% 5.65%
49 40.17% 43.31% 48.44% 51.11% 56.12%
50
51 15.36% 15.53% 14.57% 12.72% 12.33%
52
53
54
55 8.27% 8.18% 7.58% 7.69% 9.17%
56 7.37% 7.60% 7.34% 5.56% 6.13%
57 0.58% 0.87% 1.17% 0.83% 1.09%
58 16.21% 16.64% 16.09% 14.08% 16.40%
59
60
61 47.52% 44.74% 45.66% 48.42% 59.28%
62 19.71% 19.41% 19.98% 23.08% 25.98%
63
64 11.86% 12.10% 13.95% 5.26% 6.12%
65
66
67
68
69
70
71
72
73
74
75
eciation from income
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
ntions from income
94 statement
95
 G H I J K
96
97
98 1995 1994 1993 1992
99 239 238 221 200

100
-14 -12 -65 -3

101
571 264 24 14
102 796 490 181 211
 A B C D E F
1 PPG CORP. INCOME STATEMENTS, 1991-2000 (M
2 2000 1999 1998 1997 1996
3 Sales 8,629 7,757 7,510 7,379 7,218
4 Cost of Goods Sold 5,334 4,696 4,476 4,397 4,340
Selling, General, and Administrative
5
Expense 1,646 1,514 1,404 1,318 1,243
6 Operating Income Before Depreciation 1,649 1,547 1,630 1,664 1,634
7 Depreciation and Amortization 447 415 354 348 340
8 Interest Expense 193 142 119 115 108
Nonoperating Income (Expense) and
9
Special Items 8 -17 137 -26 .
10 Pretax Income 1,017 973 1,294 1,175 1,240
11 Income Taxes - Total 369 377 466 435 471
12 Minority Interest 28 28 27 26 25
13 Income Before Extraordinary Items 620 568 801 714 744
Extraordinary Items and Discontinued
14
Operations 0 0 0 0 0
15 Net Income (Loss) 620 568 801 714 744
16 Cash Dividends 276 264 252 239 237
17 Retained 344 304 549 475 507
18
19 Dividends per share 1.60 1.52 1.42 1.33 1.26
20
Earnings Per Share (Primary) - Excluding
21
Extraordinary Items 3.6 3.27 4.52 3.97 3.96
Earnings Per Share (Primary) - Including
22
Extraordinary Items 3.6 3.27 4.52 3.97 3.96
Common Shares Used to Calculate Primary
23
EPS 172.3 173.8 177 179.8 187.8
Earnings Per Share (Fully Diluted) -
24
Excluding Extraordinary Items 3.57 3.23 4.48 3.94 3.92
Earnings Per Share (Fully Diluted) -
25
Including Extraordinary Items 3.57 3.23 4.48 3.94 3.92
26
27
28 Profit and loss historical ratios 2000 1999 1998 1997 1996
29 COGS/Sales 61.81% 60.54% 59.60% 59.59% 60.13%
30 SG&A/Sales 19.08% 19.52% 18.70% 17.86% 17.23%
31 Total costs/Sales (sum of above items) 80.89% 80.06% 78.30% 77.45% 77.36%
32
33 Depreciation/Gross fixed assets 6.31% 6.05% 5.25% 5.15% 5.09%
34 Interest expense/Average debt 6.70% 6.30% 6.96% 7.23% 7.96%
35 Incomes Taxes/Pretax Income 36.28% 38.75% 36.01% 37.02% 38.00%
36 Minority Interest/(Pretax - Taxes) 4.32% 4.70% 3.26% 3.51% 3.20%
37 Dividends/Net Income 44.52% 46.48% 31.46% 33.47% 31.80%
38
39 Profit and loss--model parameters
40 COGS/Sales 61.39% #VALUE!
41 SG&A/Sales 18.38% #VALUE!
 A B C D E F
42 Depreciation/Gross fixed assets 6.31% #VALUE!
43 Interest rate 6.70% #VALUE!
44 Tax rate 36.28% #VALUE!
45 Minority Interest/(Pretax - Taxes) 4.32% #VALUE!
46 Dividend growth 4.13% <-- See explanation in section 4.9
47
48
49 Stock price, end-December 2001 46.31
50 P/E multiple, trailing 12.86
 G H I J K L
EMENTS, 1991-2000
1 (Million $)
2 1995 1994 1993 1992 1991 1990
3 7,058 6,331 5,754 5,814 5,673 5,889
4 4,212 3,866 3,633 3,695 3,676 .

5
1,214 1,137 1,073 1,083 1,079 1,079
6 1,632 1,329 1,048 1,036 918 .
7 332 318 331 352 351 .
8 93 91 109 148 169 .

9
. -64 -63 . -44 .
10 1,262 856 544 542 354 353
11 480 325 236 218 147 147
12 15 16 13 4 5 5
13 768 515 295 319 201 201

14
0 0 -273 0 75 75
15 767.6 514.6 22.2 319.4 276.2 276
16 239 238 221 200 183
17 529 277 -199 120 94
18
19 1.18 1.12 1.04 0.94 0.86 0
20
21
3.8 2.43 2.78 3.01 1.9 0.95

22
3.8 2.43 0.21 3.01 2.6 1.3

23
202 211.9 106.3 106.1 106.2 212.4

24
3.76 2.41 2.75 2.99 . 0.94

25
3.76 2.41 0.21 2.99 2.59 1.29
26
27
28 1995 1994 1993 1992 1991
29 59.68% 61.05% 63.14% 63.55% 64.80%
30 17.19% 17.96% 18.65% 18.62% 19.02%
31 76.87% 79.02% 81.79% 82.18% 83.82%
32
33 5.13% 5.15% 5.48% 5.71% 5.65%
34 7.88% 8.04% 8.96% 10.30%
35 38.00% 38.00% 43.41% 40.31%
36 1.92% 3.00% 4.19% 1.24%
37 31.12% 46.21% 994.59% 62.49%
38
39
40
41
 A B C D E F G H
1 PPG CORP. ANALYSIS OF SALES 1990-2000
Year-on-
2

Sales ($ million)
Year Sales year growth PPG, Sales and Sales Growth, 19
3 1990 5,889
4 1991 5,673 -3.67% #VALUE! 10,000
5 1992 5,814 2.49%
9,000
6 1993 5,754 -1.03%
1994 6,331 10.03% 8,000
7
8 1995 7,058 11.47% 7,000
9 1996 7,218 2.27% 6,000
10 1997 7,379 2.23% 5,000
11 1998 7,510 1.78%
4,000
12 1999 7,757 3.29%
13 2000 8,629 11.24% 3,000
14 2,000
Compound growth 1,000
15 rate
0
1990-2000 3.89% #VALUE!

1990

1991

1992

1993

1994

1995

1996

1997
16
17
Sales Year-on-
18 year growth
19
20
 I J K L
ES 1990-2000
1

2
ales and Sales Growth, 1990-2000
3

Sales growth
4 14%
5 12%
6
10%
7
8 8%
9 6%
10 4%
11
2%
12
13 0%
14 -2%
-4%
15
-6%
1992

1993

1994

1995

1996

1997

1998

1999

2000

16
17
Sales Year-on-
18 year growth
19
20
 A B C

1
PPG, FINANCIAL MODEL
first year only--2001
2 Profit and loss assumptions Cell names
3 Sales growth 3.89% <-- growth
4 COGS/Sales 61.39% <-- cogs_sales
5 SG&A/Sales 18.38% <-- sga_sales
6 Depreciation/Gross fixed assets 6.31% <-- depr_perc
7 Interest rate 6.70% <-- interest
8 Minority interest as % of PAT 4.32% <-- minority
9 Growth rate of total dividends 4.13% <-- divgrowth
10 Tax rate 36.28% <-- tax
11
12 Balance sheet assumptions
13 Assets
14 Cash and short-term investments constant
15 Receivables/Sales 18.28% <-- ar_sales
16 Inventories/Sales 12.24% <-- inventory_sales
17 Other Current Assets/Sales 3.21% <-- otherca_sales
18 Property, Plant, Equipment, Net/Sales 34.08% <-- ppe_sales
19 Investments and advances constant
20 Other Assets, annual growth rate 7.93% <-- otherassets_growth
21
22 Liabilities
23 Accounts Payable/Sales 8.50% <-- ap_sales
24 Accrued Expense/Sales 7.25% <-- accruedexp_sales
25 Other Current Liabilities/Sales constant
26
27 Debt/Assets 32.00% <-- debt_assets
28 Deferred Taxes growth at sales growth
29 Minority Interest constant
30 Other liabilities, annual growth 12.53% <-- otherliab_growth
31 Treasury stock plug
32
33 PROFIT AND LOSS 2000 2001
34 Sales 8,629 8,965
35 Cost of Goods Sold 5,334 5,503
Selling, General, and Administrative
36
Expense 1,646 1,648
37 Operating Income Before Depreciation 1,649 1,813
38 Depreciation and Amortization 447 465
39 Interest Expense 193 200
Nonoperating Income (Expense) and
40
Special Items 8 8
41 Pretax Income 1,017 1,140
42 Income Taxes - Total 369 414
43 Minority Interest 28 18
44 Net Income 620 709
45 Dividend 276 287
 A B C
46 Retained earnings 344 421
47
48 ASSETS 2000 2001
49 Cash and Short-Term Investments 111 111
50 Receivables 1,563 1,639
51 Inventories - Total 1,121 1,097
52 Other Current Assets 298 287
53 Total Current Assets 3,093 3,134
54
55 Property, Plant, and Equipment, Gross 7,089 7,669
Depreciation, Depletion, and Amortization
56
(Accumulated) 4,148 4,613
57 Property, Plant, and Equipment, Net 2,941 3,055
58
59 Investments and Advances 320 320
60 Intangibles 1,700 1,700
61 Other Assets 1,071 1,156
62 TOTAL ASSETS 9,125 9,366
63
64 LIABILITIES 2000 2001
65 Accounts Payable 764 762
66 Accrued Expense 606 650
67 Other Current Liabilities 12 12
68
69 Debt 2,971 2,997
70 Deferred Taxes 543 564
71 Minority Interest 128 128
72 Other Liabilities 1,004 1,130
73
74 EQUITY
75 Common Stock 484 484
76 Capital Surplus 102 102
77 Retained Earnings 6,019 6,440
78 Less: Treasury Stock 3,508 3,903
79 Total stockholders equity 3,097 3,124
80 TOTAL LIABILITIES AND EQUITY 9,125 9,366
81
82
83 FREE CASH FLOW 2001
84 Profit after tax 709
85 Add back depreciation 465
86 Change in net working capital
87 Increase in operating current assets -41
88 Add increase in operating current liabilities 41
89 Subtract capital expenditures -580
90 Subtract increase in other assets -85
91 Add back after-tax interest 127
92 FCF 636
 A B C
93
94
95 What's paid out to shareholders? 2001
96 Dividend 287
97 Calculating the share repurchases
98 New stock raised (negative equity payout) 0
99 Additional treasury stock (positive equity payout) 395
Paid out to shareholders =
100 dividend - new stock
+ additional treasury 682
101
102 How was this financed?
103 Free cash flow 636
104 Additional debt financing 26
105 Increase in deferred taxes 21
106 Increase in minority interest 0
107 Increase in other liabilities 126
108 Interest after tax 127
109 Paid out to shareholders 682
 D
CIAL MODEL1
only--2001
2
3
4
5
6
7
8
9
10
11
12
13
14
15
<-- inventory_sales
16
<-- otherca_sales
17
18
19
<-- otherassets_growth
20
21
22
23
<-- accruedexp_sales
24
25
26
<-- debt_assets
27
28
29
<-- otherliab_growth
30
31
32
33
34 #VALUE!
35 #VALUE!

36
#VALUE!
37 #VALUE!
38 #VALUE!
39 #VALUE!

40
#VALUE!
41 #VALUE!
42 #VALUE!
43 #VALUE!
44 #VALUE!
45 #VALUE!
 D
46 #VALUE!
47
48
49 #VALUE!
50 #VALUE!
51 #VALUE!
52 #VALUE!
53 #VALUE!
54
55 #VALUE!

56
#VALUE!
57 #VALUE!
58
59 #VALUE!
60 #VALUE!
61 #VALUE!
62 #VALUE!
63
64
65 #VALUE!
66 #VALUE!
67 #VALUE!
68
69 #VALUE!
70 #VALUE!
71 #VALUE!
72 #VALUE!
73
74
75 #VALUE!
76 #VALUE!
77 #VALUE!
78 #VALUE!
79 #VALUE!
80 #VALUE!
81
82
83
84 #VALUE!
85 #VALUE!
86
87 #VALUE!
88 #VALUE!
89 #VALUE!
90 #VALUE!
91 #VALUE!
92 #VALUE!
 D
93
94
95
96 #VALUE!
97
98 #VALUE!
99 #VALUE!

100
#VALUE!
101
102
103 #VALUE!
104 #VALUE!
105 #VALUE!
106 #VALUE!
107 #VALUE!
108 #VALUE!
109 #VALUE!
 A B C D E F
1 PPG, FINANCIAL MODEL, 2001-2005
2 Profit and loss assumptions
3 Sales growth 3.89%
4 COGS/Sales 61.39%
5 SG&A/Sales 18.38%
6 Depreciation/Gross fixed assets 6.31%
7 Interest rate 6.70%
8 Minority interest as % of PAT 4.32%
9 Growth rate of total dividends 4.13%
10 Tax rate 36.28%
11
12 Balance sheet assumptions
13 Assets
14 Cash and short-term investments constant
15 Receivables/Sales 18.28%
16 Inventories/Sales 12.24%
17 Other Current Assets/Sales 3.21%
18 Property, Plant, Equipment, Net/Sales 34.08%
19 Investments and advances constant
20 Other Assets/Sales 7.93%
21
22 Liabilities
23 Accounts Payable/Sales 8.50%
24 Accrued Expense/Sales 7.25%
25 Other Current Liabilities/Sales constant
26
27 Debt/Assets 32.00%
28 Deferred Taxes growth at sales growth
29 Minority Interest assumed constant
30 Other liabilities, annual growth 12.53%
31 Treasury stock plug
32
33 PROFIT AND LOSS 2000 2001 2002 2003 2004
34 Sales 8,629 8,965 9,313 9,676 10,052
35 Cost of Goods Sold 5,334 5,503 5,718 5,940 6,171
Selling, General, and Administrative
36
Expense 1,646 1,648 1,712 1,779 1,848
37 Operating Income Before Depreciation 1,649 1,813 1,884 1,957 2,033
38 Depreciation and Amortization 447 465 503 544 587
39 Interest Expense 193 200 204 212 219
Nonoperating Income (Expense) and
40
Special Items 8 8 8 8 8
41 Pretax Income 1,017 1,140 1,168 1,194 1,219
42 Income Taxes - Total 369 414 424 433 442
43 Minority Interest 28 18 18 19 19
44 Net Income 620 709 726 742 757
45 Dividend 276 287 299 312 324
46 Accrued 344 421 427 430 433
47
 A B C D E F
48 ASSETS 2000 2001 2002 2003 2004
49 Cash and Short-Term Investments 111 111 111 111 111
50 Receivables 1,563 1,639 1,702 1,769 1,837
51 Inventories - Total 1,121 1,097 1,140 1,184 1,230
52 Other Current Assets 298 287 299 310 322
53 Total Current Assets 3,093 3,134 3,252 3,374 3,501
54
55 Property, Plant, and Equipment, Gross 7,089 7,669 8,291 8,958 9,674
Depreciation, Depletion, and Amortization
56
(Accumulated) 4,148 4,613 5,116 5,660 6,248
57 Property, Plant, and Equipment, Net 2,941 3,055 3,174 3,298 3,426
58
59 Investments and Advances 320 320 320 320 320
60 Intangibles 1,700 1,700 1,700 1,700 1,700
61 Other Assets 1,071 1,156 1,248 1,347 1,454
62 TOTAL ASSETS 9,125 9,366 9,694 10,039 10,401
63
64 LIABILITIES 2000 2001 2002 2003 2004
65 Accounts Payable 764 762 791 822 854
66 Accrued Expense 606 650 675 701 728
67 Other Current Liabilities 12 12 12 12 12
68
69 Debt 2,971 2,997 3,102 3,212 3,328
70 Deferred Taxes 543 564 586 609 633
71 Minority Interest 128 128 128 128 128
72 Other Liabilities 1,004 1,130 1,271 1,431 1,610
73
74 EQUITY
75 Common Stock 484 484 484 484 484
76 Capital Surplus 102 102 102 102 102
77 Retained Earnings 6,019 6,440 6,867 7,297 7,730
78 Less: Treasury Stock 3,508 3,903 4,325 4,760 5,209
79 Total stockholders equity 3,097 3,124 3,128 3,124 3,107
80 TOTAL LIABILITIES AND EQUITY 9,125 9,366 9,694 10,039 10,401
81
82
83 FREE CASH FLOW (FCF) 2001 2002 2003 2004
84 Profit after tax 709 726 742 757
85 Add back depreciation 465 503 544 587
86 Change in net working capital
87 Increase in operating current assets -41 -118 -122 -127
88 Add increase in operating current liabilities 41 55 57 59
89 Subtract capital expenditures -580 -622 -667 -716
90 Subtract increase in other assets -85 -92 -99 -107
91 Add back after-tax interest 127 130 135 140
92 FCF 636 583 589 594
93
94
 A B C D E F
95 Valuing PPG
96 WACC #VALUE!
97 Long-term free cash flow growth rate 4%
98
99 Year 2001 2002 2003 2004
100 FCF 636 583 589 594
101 Terminal
102 Total 636 583 589 594
103
104 Discounted value 4,785 #VALUE!
105 Add back initial cash 111
106 Firm value 4,896
107 Subtract total debt value, Dec.00 4,646 #VALUE!
108 Implied equity value 250
109
110 Number of shares outstanding, Dec.00 168.22
111 Implied value per share 1.48
112
113 Market price per share, Dec. 00 46.31
114 PPG over or under-valued? overvalued #VALUE!
115

116 DATA TABLE: SENSITIVITY OF PPG'S STOCK VALUA

=IF(B96>B97,B111,"nmf")
TO WACC AND LONG-TERM GROWTH RATE
117 Long-term FCF growth
118 #VALUE! 1% 3% 4% 5%
119 6% 43.81 82.49 130.83 275.86
120 7% 32.35 55.75 79.14 125.92
121 WACC → 8% 24.17 39.70 53.28 75.92
122 9% 18.03 28.99 37.76 50.91
123 10% 13.25 21.34 27.41 35.90
124 11% 9.43 15.60 20.01 25.89
125 12% 6.30 11.13 14.46 18.73
126 13% 3.69 7.56 10.13 13.35
127 14% 1.48 4.63 6.67 9.17
 G H
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33 2005
34 10,443
35 6,411

36
1,920
37 2,112
38 634
39 227

40
8
41 1,243
42 451
43 19
44 773
45 338
46 435
47
 G H
48 2005
49 111
50 1,909
51 1,278
52 335
53 3,633
54
55 10,441

56
6,882
57 3,559
58
59 320
60 1,700
61 1,569
62 10,781
63
64 2005
65 887
66 757
67 12
68
69 3,450
70 657
71 128
72 1,812
73
74
75 484
76 102
77 8,165
78 5,673
79 3,078
80 10,781
81
82
83 2005
84 773
85 634
86
87 -132
88 62
89 -767
90 -115
91 145
92 598
93
94
 G H
95
96
97
98
99 2005
100 598
101 4,649 #VALUE!
102 5,247
103
104
105
106
107
108
109
110
111
112
113
114
115
TIVITY OF PPG'S
116 STOCK VALUATION
D LONG-TERM GROWTH RATE
g-term FCF growth
117 ˜
118 6% 7%
119 nmf nmf
120 266.26 nmf
121 121.20 #VALUE!
122 72.84 116.68
123 48.64 69.87
124 34.11 46.46
125 24.42 32.40
126 17.50 23.02
127 12.29 16.31
 A B C D E
1 CALCULATING THE DIVIDENDS AND EQUITY PAYOUT FOR PPG
Minus
increase Plus increase
Dividends Total cash
2 Year in common in treasury
per share dividends
stock and stock
surplus
3 1992 0.94 200 -3 14
4 1993 1.04 221 -65 24
5 1994 1.12 238 -12 264
6 1995 1.18 239 -14 571
7 1996 1.26 237 -15 608
8 1997 1.33 239 -2 323
9 1998 1.42 252 -6 208
10 1999 1.52 264 1 70
11 2000 1.60 276 2 240
12
13 Growth 6.88% 4.13%
14
Dividends per share

15
16
17 1.80 PPG: Dividends and Total Equity Payout
18
19 1.60
20
21 1.40
22 1.20
23
24 1.00
25
26 0.80
27
0.60
28 Dividends per share
29 0.40 Payout to equity
30
31 0.20
32
33 0.00
1992 1993 1994 1995 1996 1997 1998 1999 2000
34
35
36
37
38
39 2000 1999 1998 1997
40 Net income 620 568 801 714
41 Cash Dividends 276 264 252 239
42
43 Dividend/Net income 45% 46% 31% 33%
44
45 Common shares outstanding 168 174 175 178
 A B C D E
46
47 Dividend growth rate? 6%
48 Next year's dividend/share 1.70
49 Total dividends 286
 Payout to
F G H I J K
equity
EQUITY PAYOUT
1 FOR PPG

3 211 #VALUE!
4 181 #VALUE!
5 490
6 796
7 829
8 560
9 454
10 335
11 518
12
13 11.91% #VALUE!
14
Total equity payout

15
16
17
otal Equity Payout 900
18
19 800
20
21 700
22 600
23
24 500
25
26 400
27
300
e 28
29 200
30
31 100
32
0
1997 33 1998 1999 2000
34
35
36
37
38
39 1996 1995 1994 1993 1992
40 744 767.6 514.6 22.2 319.4
41 237 239 238 221 200
42
43 32% 31% 46% 995% 62%
44
45 183 194 207 107 106 106
 A B C D E F
1 PPG: EARNINGS PER SHARE VERSUS EARNINGS
2 Earnings Profits
Year per share after taxes
3 1990 0.95 276
4 1991 1.90 276
5 1992 3.01 319
6 1993 2.78 22
7 1994 2.43 515
8 1995 3.80 768
9 1996 3.96 744
10 1997 3.97 714
11 1998 4.52 801
12 1999 3.27 568
13 2000 3.60 620
14
15 Compound growth 14.25% 8.43% #VALUE!
16
17
18 5.00 PPG: EPS versus Profits
Source: Profit-loss 91-00 in this
900
19 workbook
4.50 800
20
21 4.00

Profits
700
22 3.50
EPS

600
23 3.00
24 500
2.50
25 400
26 2.00
300
27 1.50
28 1.00 200
29 100
0.50
30
31 0.00 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
32 Earnings Profits
33 per share after taxes
34
 A B
1 CALCULATING THE GORDON MODEL rE FOR PPG
2 Number of shares outstanding, Dec. 2000 (million) 168.22
3 Share price, 31Dec00 46.31
4 Equity value, Dec00 7,791
5
6 Method 1: rE Gordon using only dividends
7 Stock price, 31dec00 46.31
8 Dividend, 2000 1.60
9 Anticipated dividend growth 6.88%
10 rE, cost of equity using only dividends 10.57%
11
12 Method 2: rE Gordon using equity payout
13 Total equity payout, 2000 518
14 Anticipated growth of this payout 11.91%
15 rE, cost of equity using total equity payout 19.35%
16
17 Using the two-stage Gordon model
18 Number of high-growth years 3
19 Normal growth after high-growth years 5.00%
20 rE, cost of equity using two-stage Gordon model #VALUE!
 C
E GORDON1 MODEL rE FOR PPG
2
3
4 #VALUE!
5
6
7
8
9 #VALUE!
10 #VALUE!
11
12
13 #VALUE!
14 #VALUE!
15 #VALUE!
16
17
18
19
20 #VALUE!
 A B C D E F G H

1
COMPUTING THE BETA FOR PPG
Uses monthly data, Dec. 1995 - Dec. 2000
2 Beta 0.8672 #VALUE!
3
SP500 SP500 PPG PPG
4
Date Close Return Date Close Return
5 Dec-95 615.93 Dec-95 38.98
6 Jan-96 636.02 3.21% #VALUE! Jan-96 39.83 2.16% #VALUE!
7 Feb-96 640.43 0.69% Feb-96 39.76 -0.18%
8 Mar-96 645.5 0.79% Mar-96 41.91 5.25%
9 Apr-96 654.17 1.33% Apr-96 43.41 3.52% Computing the Be
10 May-96 669.12 2.26% May-96 44.65 2.84% using monthly pri
11 Jun-96 670.63 0.23% Jun-96 42.07 -5.97%
12 Jul-96 639.95 -4.68% Jul-96 42.50 1.02%

PPG return
13 Aug-96 651.99 1.86% Aug-96 42.87 0.88%
14 Sep-96 687.33 5.28% Sep-96 47.22 9.65%
15 Oct-96 705.27 2.58% Oct-96 49.50 4.71%
16 Nov-96 757.02 7.08% Nov-96 53.48 7.75%
17 Dec-96 740.74 -2.17% Dec-96 49.01 -8.74% f(x) = 0.867178636031
18 Jan-97 786.16 5.95% Jan-97 46.71 -4.79% R² = 0.3026585116323
19 Feb-97 790.82 0.59% Feb-97 49.20 5.19%
20 Mar-97 757.12 -4.35% Mar-97 47.44 -3.64% -16% -11% -
21 Apr-97 801.34 5.68% Apr-97 47.77 0.69%
22 May-97 848.28 5.69% May-97 51.37 7.25%
23 Jun-97 885.14 4.25% Jun-97 51.37 0.00%
24 Jul-97 954.31 7.52% Jul-97 56.56 9.63%
25 Aug-97 899.47 -5.92% Aug-97 55.95 -1.08%
26 Sep-97 947.28 5.18% Sep-97 55.67 -0.50%
27 Oct-97 914.62 -3.51% Oct-97 50.29 -10.17%
28 Nov-97 955.4 4.36% Nov-97 51.77 2.90%
29 Dec-97 970.43 1.56% Dec-97 51.04 -1.41%
30 Jan-98 980.28 1.01% Jan-98 51.26 0.44%
31 Feb-98 1049.34 6.81% Feb-98 58.23 12.75%
32 Mar-98 1101.75 4.87% Mar-98 61.04 4.71%
33 Apr-98 1111.75 0.90% Apr-98 63.51 3.97%
34 May-98 1090.82 -1.90% May-98 65.81 3.56%
35 Jun-98 1133.84 3.87% Jun-98 62.82 -4.65%
36 Jul-98 1120.67 -1.17% Jul-98 57.24 -9.32%
37 Aug-98 957.28 -15.76% Aug-98 46.33 -21.13%
38 Sep-98 1017.01 6.05% Sep-98 49.57 6.75%
39 Oct-98 1098.67 7.72% Oct-98 52.01 4.81%
40 Nov-98 1163.63 5.74% Nov-98 55.91 7.23%
41 Dec-98 1229.23 5.48% Dec-98 53.17 -5.03%
42 Jan-99 1279.64 4.02% Jan-99 49.12 -7.93%
43 Feb-99 1238.33 -3.28% Feb-99 47.91 -2.49%
44 Mar-99 1286.37 3.81% Mar-99 47.16 -1.57%
45 Apr-99 1335.18 3.72% Apr-99 59.76 23.67%
46 May-99 1301.84 -2.53% May-99 56.16 -6.20%
 A B C D E F G H
47 Jun-99 1372.71 5.30% Jun-99 54.66 -2.71%
48 Jul-99 1328.72 -3.26% Jul-99 55.18 0.95%
49 Aug-99 1320.41 -0.63% Aug-99 55.93 1.34%
50 Sep-99 1282.71 -2.90% Sep-99 55.87 -0.10%
51 Oct-99 1362.93 6.07% Oct-99 56.45 1.04%
52 Nov-99 1388.91 1.89% Nov-99 54.88 -2.83%
53 Dec-99 1469.25 5.62% Dec-99 58.63 6.61%
54 Jan-00 1394.46 -5.22% Jan-00 51.60 -12.77%
55 Feb-00 1366.42 -2.03% Feb-00 46.62 -10.14%
56 Mar-00 1498.58 9.23% Mar-00 49.39 5.78%
57 Apr-00 1452.43 -3.13% Apr-00 51.34 3.87%
58 May-00 1420.6 -2.22% May-00 47.14 -8.54%
59 Jun-00 1454.6 2.37% Jun-00 42.15 -11.20%
60 Jul-00 1430.83 -1.65% Jul-00 38.70 -8.53%
61 Aug-00 1517.68 5.89% Aug-00 38.90 0.53%
62 Sep-00 1436.51 -5.50% Sep-00 38.11 -2.07%
63 Oct-00 1429.4 -0.50% Oct-00 42.85 11.73%
64 Nov-00 1314.95 -8.35% Nov-00 40.39 -5.92%
65 Dec-00 1320.28 0.40% Dec-00 44.87 10.52%
 I J K L M N O

2
3
4
5
6
7
8
9
Computing the Beta for PPG
10
using monthly price data for PPG and the SP500
11
12 23%
PPG return

13 18%
14
15 13%
16 8%
f(x)17= 0.867178636031054 x − 0.008675643791038
3%
R²18 = 0.302658511632324
19 -2%
-16% 20 -11% -6% -1% 4% 9%
21 -7%
22 -12%
23
24 -17%
25 SP500 return
-22%
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
 A B
1 USING THE CAPM TO COMPUTE PPG'S COST OF EQUITY
2 Market price/earnings multiple, December 2000 32
3 Equity cash flow payout ratio 50.00%
4 Anticipated growth of market equity cash flow 6.00%
5 Expected market return, E(rM) 7.66%
6 Treasury bill rate, December 2000 0.51%
7 PPG's tax rate, TC 36.28%
8
9 Method 3: rE using the SML
10 Equity beta 0.8672
11 rE, cost of equity 6.71%
12
13 Method 4: rE using the tax-adjusted SML
14 Equity beta 0.8672
15 rE, cost of equity 6.68%
16
17
18
19 Note: Price/Earnings ratio for S&P 500 from http://www.bullandbearwise.com
 C

OMPUTE PPG'S
1 COST OF EQUITY
2
3
4
5 #VALUE!
6
7 #VALUE!
8
9
10
11 #VALUE!
12
13
14
15 #VALUE!
16
17
18
19
tp://www.bullandbearwise.com
 A B C
1 COMPUTING PPG's COST OF DEBT, rD
Year 2000 interest expense
2
from PPG's income statement 193
Year 2000 debt,
3
from PPG's balance sheet 2,971 #VALUE!
Year 1999 debt,
4
from PPG's balance sheet 2,790 #VALUE!
5 Average debt 2,881 #VALUE!
6
7 Cost of debt, rD 6.70% #VALUE!
 A B

1
COMPUTING THE WEIGHTED AVERAGE COST
OF CAPITAL (WACC) FOR PPG
2 Shares outstanding (million) 168
3 Share price, end 2000 46.315
4 Equity value, E 7,791
5 Net debt, D 4,535
6 Cost of debt, rD 6.70%
7 PPG's tax rate, TC 36.28%
8 Market risk free rate, rf 0.51%
9 Expected market return, E(rM) 7.66%
10
11 WACC based on Gordon per-share dividends and interest from financial statements
12 Stock price, 31dec00 46.31
13 Dividend, 2000 1.60
14 Anticipated dividend growth 6.88%
15 Cost of equity, rE 10.57%
16 WACC 8.25%
17
18 WACC based on Gordon equity payouts and interest from financial statements
19 Total equity payout, 2000 518
20 Anticipated growth of this payout 11.91%
21 Cost of equity, rE #VALUE!
22 WACC #VALUE!
23
24 WACC based on classic CAPM and interest from financial statements
25 PPG beta 0.8672
26 Cost of equity, rE 6.71%
27 WACC 5.81%
28
29 WACC based on tax-adjusted CAPM and interest from financial statements
30 PPG beta 0.8672
31 Cost of equity, rE 6.68%
32 WACC 5.79%
33
34 Estimated WACC? #VALUE!
 C

OMPUTING1THE WEIGHTED AVERAGE COST

OF CAPITAL (WACC) FOR PPG
2 #VALUE!
3
4 #VALUE!
5 #VALUE!
6 #VALUE!
7 #VALUE!
8 #VALUE!
9 #VALUE!
10
vidends and interest
11 from financial statements
12
13
14
15 #VALUE!
16 #VALUE!
17
uts and interest
18from financial statements
19 #VALUE!
20 #VALUE!
21 #VALUE!
22 #VALUE!
23
terest from financial
24 statements
25 #VALUE!
26 #VALUE!
27 #VALUE!
28
nd interest from
29 financial statements
30 #VALUE!
31 #VALUE!
32 #VALUE!
33
34 #VALUE!
 A B C D E
1 EXPLAINING PPG'S MYSTERIOUS EQUITY ACCOUNTS
2
3 From Income Statement 2000 1999
4 Net Income (Loss) 620
5 Cash Dividends 276
6 Retained 344
7
8
9
10 From Balance Sheet 2000 1999 D = change
11 Common Stock 484 484 0 #VALUE!
12 Capital Surplus 102 104 -2 #VALUE!
13 Retained Earnings 6019 5786 233 #VALUE!
14 Less: Treasury Stock - Total Dollar Amount 3508 3268 240 #VALUE!
15 Total stockholders equity 3097 3106 -9 #VALUE!
16
17
18
19 Net income 620 Retained
20 Other comprehensive loss, net of tax -133 Retained
21 Cash dividends -276 Retained
22 Purchase of treasury stock -247 Treasury These items
23 Issuance of treasury stock Treasury
24 Loans to ESOP -24 Retained
25 Repayment of loans by ESOP 44 Retained
26 Other 2 Retained
27 Additional internal addition 2 Treasury
28 Additional internal subtraction -2 Capital surplus
29 Total change in equity accounts -14
30
31 Adjustments to retained 233 #VALUE!
32 Adjustments to Treasury -245 #VALUE!
33 Adjustments to capital surplus -2 #VALUE!
34 Total change in equity accounts -12 #VALUE!
 F G H I J K L M N
ACCOUNTS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
 O P Q
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
PPG INDUSTRIES INC
ANNUAL STATEMENT OF CASH FLOWS

2000 1999 1998 1997 1996

INDIRECT OPERATING ACTIVITIES
Income Before Extraordinary Items 620 568 801 714 744
Depreciation and Amortization 447 419 383 373 363
Extraordinary Items and Disc. Operations 0 0 0 0 0
Deferred Taxes 0 0 0 0 0
Equity in Net Loss (Earnings) C C C C C
Sale of Property, Plant, and Equipment and
Sale of Investments - Loss (Gain) 0 0 -85 -59 0
Funds from Operations - Other 53 82 31 102 0

Accounts Receivable - Decrease (Increase) -44 -128 -85 -124 -2

Inventory - Decrease (Increase) -92 -7 -73 -60 -56
Accounts Payable and Incrued Liab. -
Increase (Decrease) -11 77 46 40 C
Income Taxes - Accrued - Increase
(Decrease) C C 9 -3 C
Other Assets and Liabilities - Net Change -103 -109 -85 24 -41
Operating Activities - Net Cash Flow 870 902 942 1,007 1,008

INVESTING ACTIVITIES
Investments - Increase C C C C C
Sale of Investments C C C C C
Short-Term Investments - Change 0 0 0 0 0
Capital Expenditures C C C C C
Sale of Property, Plant, and Equipment C C C C C
Acquisitions 115 1,343 390 363 13
Investing Activities - Other -521 -301 -191 -220 -456
Investing Activities - Net Cash Flow -636 -1,644 -581 -583 -468
FINANCING ACTIVITIES
Sale of Common and Preferred Stock 4 9 22 14 27

Purchase of Common and Preferred Stock 247 82 217 343 635

Cash Dividends 276 264 252 239 237
Long-Term Debt - Issuance 32 821 12 472 158
Long-Term Debt - Reduction 55 203 64 63 153
Current Debt - Changes 244 477 125 -212 257
Financing Activities - Other 20 15 13 11 8
Financing Activities - Net Cash Flow -278 773 -361 -360 -575
Exchange Rate Effect -3 -1 -1 -5 0
Cash and Cash Equivalents - Increase
(Decrease) -47 30 -1 59 -36
DIRECT OPERATING ACTIVITIES
Interest Paid - Net 195 123 121 106 109
Income Taxes Paid 319 394 385 452 402
Payout to equity? 523 346 469 582 872
1995 1994 1993 1992 1991

768 515 295 319 201

352 335 350 373 373
0 0 0 0 0
0 0 0 0 0
C C C C C

0 0 0 0 0
0 -74 42 64 107

-29 -264 -34 -41 -11

-47 -26 27 85 55

C C C C C

C C C C C
29 205 60 -130 -246
1,072 691 741 670 479

C C C C C
C C C C C
0 0 0 0 0
C C C C C
C C C C C
7 34 36 1 4
-269 -212 -201 -255 -271
-276 -245 -237 -256 -275

7 19 13 12 10

588 280 81 27 15
239 238 221 200 183
118 23 9 11 300
51 33 199 312 289
-4 11 7 111 -65
4 -1 20 16 16
-753 -498 -452 -389 -227
0 2 -2 -1 1

44 -50 51 24 -22

91 93 112 154 163

358 254 210 142 231
827 518 302 226 198