Reportable Business Segment Information

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Reportable Business Segment Information

Reportable Business Segment Information

Segment Organization and Products

PPG is a multinational manufacturer with 10 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, protective and marine coatings and traffic solutions 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, pavement marking products 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.

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)	2020	2019	2018
Net sales to external customers
Performance Coatings	$8,495	$9,034	$9,087
Industrial Coatings	5,339	6,112	6,287
Total Net sales	$13,834	$15,146	$15,374
Segment income
Performance Coatings	$1,359	$1,409	$1,300
Industrial Coatings	750	862	818
Total Segment income	$2,109	$2,271	$2,118
Corporate / Non-Segment Items
Corporate unallocated	(226)	(198)	(141)
Interest expense, net of interest income	(115)	(100)	(95)
Business restructuring-related costs, net(1)	(224)	(222)	(75)
Impairment charges(2)	(93)	—	(15)
Increase in allowance for doubtful accounts related to COVID-19	(30)	—	—
Environmental remediation charges and other costs, net	(26)	(61)	(77)
Expense incurred due to natural disasters(3)	(17)	—	—
Acquisition-related costs(4)	(9)	(17)	(6)
Debt extinguishment fees	(7)	—	—
Litigation matters, net	—	(12)	(24)
Costs related to customer assortment changes	—	—	(18)
Gain from the sale of non-operating assets	—	—	26
Total Income before income taxes	$1,362	$1,661	$1,693

($ in millions)	2020	2019	2018
Depreciation and amortization
Performance Coatings	$251	$255	$274
Industrial Coatings	200	194	181
Corporate / Non-Segment Items	58	62	42
Total	$509	$511	$497
Share of net earnings of equity affiliates
Performance Coatings	$3	$1	$1
Corporate / Non-Segment Items	5	10	15
Total	$8	$11	$16
Segment assets(5)
Performance Coatings	$11,551	$10,636	$9,846
Industrial Coatings	5,040	4,912	4,441
Corporate / Non-Segment Items	2,965	2,160	1,728
Total	$19,556	$17,708	$16,015
Investment in equity affiliates
Performance Coatings	$31	$33	$33
Industrial Coatings	15	14	13
Corporate / Non-Segment Items	74	82	86
Total	$120	$129	$132
Expenditures for property (including business acquisitions)
Performance Coatings	$1,293	$483	$545
Industrial Coatings	166	510	157
Corporate / Non-Segment Items	14	63	87
Total	$1,473	$1,056	$789

($ in millions)	2020	2019	2018
Geographic Information
Net sales(6)
United States and Canada	$5,668	$6,475	$6,485
Europe, Middle East and Africa (“EMEA”)	4,328	4,549	4,678
Asia Pacific	2,431	2,542	2,618
Latin America	1,407	1,580	1,593
Total	$13,834	$15,146	$15,374
Segment income
United States and Canada	$855	$1,073	$1,022
EMEA	572	569	549
Asia Pacific	382	342	306
Latin America	300	287	241
Total	$2,109	$2,271	$2,118
Property—net
United States and Canada	$1,351	$1,300	$1,254
EMEA	857	836	777
Asia Pacific	623	538	482
Latin America	296	309	292
Total	$3,127	$2,983	$2,805

(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)Impairment charges were recorded in the fourth quarter 2020 related to the planned sale of certain smaller entities in non-strategic regions and for certain asset write-downs.

(3)In the second half of 2020, Hurricanes Laura and Delta damaged a southern U.S. factory that supports the Company’s specialty coatings and materials business.

(4)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.

(5)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.

(6)Net sales to external customers are attributed to geographic regions based upon the location of the operating unit shipping the product.