Reportable Segment Information

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Reportable Segment Information

Reportable Segment Information

PPG is a multinational manufacturer with 12 operating segments that are organized based on the Company’s major products lines. These operating segments are also the Company’s reporting units for purposes of testing goodwill for impairment. The operating segments have been aggregated based on economic similarities, the nature of their products, production processes, end-use markets and methods of distribution into five reportable business segments.

The Performance Coatings reportable segment is comprised of the refinish, aerospace, architectural coatings – Americas and Asia Pacific and protective and marine coatings operating segments. This reportable segment primarily supplies a variety of protective and decorative coatings, sealants and finishes along with paint strippers, stains and related chemicals, as well as transparencies and transparent armor.

The Industrial Coatings reportable segment is comprised of the automotive original equipment manufacturer (“OEM”), industrial and packaging coatings operating segments. This reportable segment primarily supplies a variety of protective and decorative coatings and finishes along with adhesives, sealants, inks and metal pretreatment products.

The Architectural Coatings – EMEA (Europe, Middle East, and Africa) reportable segment is comprised of the architectural coatings – EMEA operating segment. This reportable segment primarily supplies a variety of coatings under a number of brands and purchased sundries to painting contractors and consumers in Europe, the Middle East and Africa.

The Optical and Specialty Materials reportable segment is comprised of the optical products and silicas businesses. The primary Optical and Specialty Materials products are Transitions^® lenses, optical lens materials and high performance sunlenses; amorphous precipitated silicas for tire, battery separator and other end-use markets; and Teslin^® substrate used in such applications as radio frequency identification (RFID) tags and labels, e-passports, drivers’ licenses and identification cards. Transitions^® lenses are processed and distributed by PPG’s 51 percent-owned joint venture with Essilor International.

The Glass reportable segment is comprised of the flat glass and fiber glass operating segments. This reportable segment primarily supplies flat glass and continuous-strand fiber glass products.

On January 28, 2013, PPG completed the separation of its commodity chemicals business and the merger of the subsidiary holding PPG's former commodity chemicals business with a subsidiary of Georgia Gulf. As a result of the completion of this transaction, the sales and results of operations of the commodity chemicals business were reclassified to discontinued operations for all periods presented and there no longer is a Commodity Chemicals operating or reportable segment (see Note 5).

Reportable segment net sales and segment income for the three months ended March 31, 2013 and 2012 were as follows: 

	Three Months Ended March 31
	2013			2012
	(Millions)
Net sales:
Performance Coatings	$	1,124		$	1,150
Industrial Coatings	1,183			1,076
Architectural Coatings - EMEA	454			517
Optical and Specialty Materials	314			334
Glass	256			256
Total (a)	$	3,331		$	3,333
Segment income:
Performance Coatings	$	172		$	160
Industrial Coatings	178			150
Architectural Coatings - EMEA	20			16
Optical and Specialty Materials	99			109
Glass	5			8
Total	474			443
Legacy items (b)	(46		)	(175		)
Business restructuring (See Note 8)	—			(208		)
Acquisition-related costs (c)	(7		)	(6		)
Interest expense, net of interest income	(43		)	(41		)
Other unallocated corporate expense – net	(60		)	(60		)
Income (loss) from continuing operations before income taxes	$	318		$	(47	)

(a) Intersegment net sales for the three months ended March 31, 2013 and 2012 were not material.

(b) Legacy items include current costs related to former operations of the Company, including pension and other postretirement benefit costs, certain charges for legal matters and environmental remediation costs, and certain charges which are considered to be unusual or non-recurring including the earnings impact of the proposed asbestos settlement. Legacy items also include equity earnings from PPG’s approximate 40 percent investment in the former automotive glass and services business. The expense for the three months ended March 31, 2013 and 2012 includes nonrecurring environmental remediation pretax charges of $12 million and $159 million, respectively. The 2012 charge relates to continued environmental remediation activities at legacy chemicals sites, primarily at PPG’s former Jersey City, N.J. chromium manufacturing plant and associated sites. The expense for the three months ended March 31, 2013 include a pretax charge of $18 million for the settlement losses related to certain legacy Canadian glass pension plans.

(c) For the three months ended March 31, 2013, the expense includes the flow-through cost of sales of the step up to fair value of inventory acquired from Spraylat and advisory, legal, accounting, valuation and other professional or consulting fees incurred in connection with acquisition activity. For the three months ended March 31, 2012, the expense represents the flow-through cost of sales of the step up to fair value of inventory acquired from Dyrup and Colpisa. These costs are considered to be unusual and non-recurring and do not reduce the segment earnings used to evaluate the performance of the operating segments.