Reportable Segment Information

6 Months Ended

Jun. 30, 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 product 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 and six months ended June 30, 2013 and 2012 were as follows: 

	Three Months Ended June 30						Six Months Ended June 30
	2013			2012			2013			2012
	(Millions)
Net sales:
Performance Coatings	$	1,688		$	1,241		$	2,812		$	2,391
Industrial Coatings	1,241			1,099			2,424			2,175
Architectural Coatings - EMEA	571			601			1,025			1,118
Optical and Specialty Materials	326			314			640			648
Glass	269			273			525			529
Total (a)	$	4,095		$	3,528		$	7,426		$	6,861
Segment income:
Performance Coatings	$	255		$	204		$	427		$	364
Industrial Coatings	191			143			369			293
Architectural Coatings - EMEA	69			64			89			80
Optical and Specialty Materials	96			95			195			204
Glass	8			23			13			31
Total	619			529			1,093			972
Legacy items (b)	(11		)	(15		)	(57		)	(190		)
Business restructuring (See Note 8)	—			—			—			(208		)
Acquisition-related costs (c)	(21		)	—			(28		)	(6		)
Interest expense, net of interest income	(38		)	(40		)	(81		)	(81		)
Other unallocated corporate expense – net	(60		)	(48		)	(120		)	(108		)
Income from continuing operations before income taxes	$	489		$	426		$	807		$	379

(a) Intersegment net sales for the three and six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2013 includes a pretax charge of $18 million for the settlement losses related to certain legacy Canadian glass pension plans.

(c) For the three and six months ended June 30, 2013, the expense includes the flow-through cost of sales of the step up to fair value of inventory acquired primarily from the North American architectural coatings business of AkzoNobel and advisory, legal, accounting, valuation and other professional or consulting fees incurred in connection with acquisition activity. For the six months ended June 30, 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.