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Reportable Business Segment Information
 12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Reportable Business Segment Information Reportable Business Segment Information
Segment Organization and Products
PPG is a multinational manufacturer with 9 operating segments (which the Company refers to as “strategic business units”) that are organized based on the Company’s major products lines. The Company’s reportable business segments include the following two segments: Performance Coatings and Industrial Coatings. The operating segments have been aggregated based on economic similarities, the nature of their products, production processes, end-use markets and methods of distribution.
The Performance Coatings reportable business segment is comprised of the automotive refinish coatings, aerospace coatings, architectural coatings – Americas and Asia Pacific, architectural coatings - EMEA, and protective and marine coatings operating segments. This reportable business 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 business segment is comprised of the automotive OEM coatings, industrial coatings, packaging coatings, and the specialty coatings and materials operating segments. This reportable business 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 and other specialty materials.
Production facilities and sales for Performance Coatings and Industrial Coatings are global. PPG’s reportable business segments continue to pursue opportunities to further develop their global reach, including efforts in Asia, Eastern Europe and Latin America. Each of the reportable business segments in which PPG is engaged is highly competitive. The diversification of our product lines and the worldwide sales tend to minimize the impact on PPG’s Net sales and Income before income taxes in the consolidated statement of income of changes in demand in a particular industry or in a particular geographic area.
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (See Note 1, “Summary of Significant Accounting Policies”). The Company allocates resources to operating segments and evaluates the performance of operating segments based upon segment income, which is income before interest expense – net, income taxes, and noncontrolling interests and excludes certain charges which are considered to be unusual or non-recurring. The Company also evaluates performance of operating segments based on working capital reduction, margin growth, and sales volume growth. Legacy items include current costs related to former operations of the Company not classified as discontinued operations at the time of the disposal, including pension and other postretirement benefit costs, certain charges for legal matters and certain environmental remediation costs, and certain other charges which are not associated with PPG’s current business portfolio. These legacy costs are excluded from the segment income that is used to evaluate the performance of the operating segments.
Corporate unallocated costs include the costs of corporate staff functions not directly associated with the operating segments, certain legal cases, net of related insurance recoveries and the cost of certain insurance and stock-based compensation programs. The service cost component of net periodic pension expense related to current employees of each reportable business segment is allocated to that reportable business segment and the remaining portion of net periodic pension expense is included in the Corporate unallocated costs.
Product movement between Performance Coatings and Industrial Coatings is limited, is accounted for as an inventory transfer, and is recorded at cost plus a mark-up, the impact of which is not significant to the net sales or segment income of the reportable business segments.
($ in millions)
2019

 
2018

 
2017

Net sales to external customers
 
 
 
 
 
Performance Coatings

$9,034

 

$9,087

 

$8,730

Industrial Coatings
6,112

 
6,287

 
6,018

Total Net sales

$15,146

 

$15,374

 

$14,748

Segment income
 
 
 
 
 
Performance Coatings

$1,409

 

$1,300

 

$1,313

Industrial Coatings
862

 
818

 
979

Total Segment income

$2,271

 

$2,118

 

$2,292

Corporate / Non-Segment Items
 
 
 
 
 
Legacy items

($1
)
 

$5

 

($2
)
Business restructuring-related costs, net(1)
(222
)
 
(75
)
 
—

Environmental remediation charges and other costs, net
(61
)
 
(77
)
 
—

Acquisition-related costs(2)
(17
)
 
(6
)
 
(9
)
Litigation matters, net
(12
)
 
(24
)
 
18

Impairment of a non-manufacturing asset
—

 
(9
)
 
—

Costs related to customer assortment changes
—

 
(18
)
 
—

Gain from the sale of non-operating assets
—

 
26

 
13

Brand rationalization charge
—

 
(6
)
 
—

Asset write-downs
—

 
—

 
(7
)
Pension settlement charge
—

 
—

 
(60
)
Gain on disposal of ownership interest in business affiliate
—

 
—

 
25

Interest expense, net of interest income
(100
)
 
(95
)
 
(85
)
Corporate unallocated
(197
)
 
(146
)
 
(180
)
Total Income before income taxes

$1,661

 

$1,693

 

$2,005


($ in millions)
2019

 
2018

 
2017

Depreciation and amortization
 
 
 
 
 
Performance Coatings

$255

 

$274

 

$272

Industrial Coatings
194

 
181

 
164

Corporate / Non-Segment Items
62

 
42

 
24

Total

$511

 

$497

 

$460

Share of net earnings of equity affiliates
 
 
 
 
 
Performance Coatings

$1

 

$1

 

$2

Industrial Coatings
—

 
—

 
—

Corporate / Non-Segment Items
10

 
15

 
10

Total

$11

 

$16

 

$12

Segment assets(3)
 
 
 
 
 
Performance Coatings

$10,636

 

$9,846

 

$9,763

Industrial Coatings
4,912

 
4,441

 
4,563

Corporate / Non-Segment Items
2,160

 
1,728

 
2,212

Total

$17,708

 

$16,015

 

$16,538

Investment in equity affiliates
 
 
 
 
 
Performance Coatings

$33

 

$33

 

$32

Industrial Coatings
14

 
13

 
13

Corporate / Non-Segment Items
82

 
86

 
89

Total

$129

 

$132

 

$134

Expenditures for property (including business acquisitions)
 
 
 
 
 
Performance Coatings

$483

 

$545

 

$224

Industrial Coatings
510

 
157

 
328

Corporate / Non-Segment Items
63

 
87

 
133

Total

$1,056

 

$789

 

$685


($ in millions)
2019

 
2018

 
2017

Geographic Information
 
 
 
 
 
Net sales(4)
 
 
 
 
 
United States and Canada

$6,475

 

$6,485

 

$6,307

Europe, Middle East and Africa (“EMEA”)
4,549

 
4,678

 
4,389

Asia Pacific
2,542

 
2,618

 
2,523

Latin America
1,580

 
1,593

 
1,529

Total

$15,146

 

$15,374

 

$14,748

Segment income
 
 
 
 
 
United States and Canada

$1,073

 

$1,022

 

$1,135

EMEA
569

 
549

 
560

Asia Pacific
342

 
306

 
361

Latin America
287

 
241

 
236

Total

$2,271

 

$2,118

 

$2,292

Property—net
 
 
 
 
 
United States and Canada

$1,300

 

$1,254

 

$1,224

EMEA
836

 
777

 
826

Asia Pacific
538

 
482

 
493

Latin America
309

 
292

 
281

Total

$2,983

 

$2,805

 

$2,824


(1)
Included in business restructuring-related costs, net are business restructuring charges, accelerated depreciation of certain assets and other related costs, offset by releases related to previously approved programs.
(2)
Acquisition-related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred to effect acquisitions. These costs are included in Selling, general and administrative expense in the consolidated statement of income. Acquisition-related costs also include the impact for the step up to fair value of inventory acquired in certain acquisitions which are included in Cost of sales, exclusive of depreciation and amortization in the consolidated statement of income.
(3)
Segment assets are the total assets used in the operation of each segment. Corporate assets are principally cash and cash equivalents, cash held in escrow, short term investments and deferred tax assets.
(4)
Net sales to external customers are attributed to geographic regions based upon the location of the operating unit shipping the product.