Reportable Business Segment Information

PPG is a multinational manufacturer with 9 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 two reportable business segments.

Effective January 1, 2018, the coatings services operating segment was merged into the industrial coatings operating segment to achieve operational efficiencies and to realign management teams and operations to better deliver the Company's total value proposition and provide optimal solutions to its customers.

The Performance Coatings reportable segment is comprised of the automotive refinish, aerospace, architectural coatings – Americas and Asia-Pacific, architectural coatings - EMEA, 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”) coatings, industrial coatings, packaging coatings, and the specialty coatings and materials operating segments. This reportable segment primarily supplies a variety of protective and decorative coatings and finishes along with adhesives, sealants, metal pretreatment products, optical monomers and coatings, precipitated silicas, Teslin® and other specialty materials, and coatings services.

Reportable segment net sales and segment income for the three and six months ended June 30, 2018 and 2017 were as follows:



	Three Months Ended June 30						Six Months Ended June 30
($ in millions)	2018			2017			2018			2017
				As Restated						As Restated
Net sales:
Performance Coatings		$2,498			$2,299			$4,658			$4,316
Industrial Coatings	1,633			1,505			3,254			2,974
Total		$4,131			$3,804			$7,912			$7,290
Segment income: ^(a)
Performance Coatings		$428			$405			$708			$689
Industrial Coatings	223			264			462			540
Total		$651			$669			$1,170			$1,229
Corporate ^(a)	(23		)	(27		)	(66		)	(88		)
Interest expense, net of interest income	(24		)	(22		)	(45		)	(43		)
Legacy items ^(a),(b)	1			1			5			(5		)
Business restructuring charge	(83		)	—			(83		)	—
Accelerated depreciation related to restructuring actions	(5		)	—			(5		)	—
Legacy legal settlements	(10		)	18			(10		)	18
Accounting investigation costs	(9		)	—			(9		)	—
Impairment of a non-manufacturing asset	(9		)	—			(9		)	—
Costs related to customer assortment change	(10		)	—			(14		)	—
Environmental remediation charges	—			—			(34		)	—
Gain from sale of a business	—			25			—			25
Transaction-related costs ^(c)	—			(5		)	—			(9		)
Pension settlement charge	—			—			—			(22		)
Income from continuing operations before income taxes		$479			$659			$900			$1,105


(a)	During the first quarter 2018, PPG recast 2017 segment income, legacy items and corporate to present the non-service cost components of pension and other post-retirement benefit costs as corporate costs. Segment income only includes the service cost component of pension and other post-retirement benefit costs for all periods presented. See Note 3, "New Accounting Standards" for more information.


(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 other charges which are not associated with PPG's current business portfolio.


(c)	Transaction-related costs include advisory, legal, accounting, valuation and other professional or consulting fees incurred to effect significant acquisitions, as well as similar fees and other costs to effect disposals not classified as discontinued operations. These costs may also include the flow-through cost of sales for the step up to fair value of inventories acquired in acquisitions.