UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 1-1687

 

PPG INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania			25-0730780
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
One PPG Place	Pittsburgh	Pennsylvania	15272
(Address of principal executive offices)			(Zip code)
Registrant’s telephone number, including area code:			412	434-3131

 Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock – Par Value $1.66 2/3	PPG	New York Stock Exchange
0.875% Notes due 2022	PPG 22	New York Stock Exchange
0.875% Notes due 2025	PPG 25	New York Stock Exchange
1.400% Notes due 2027	PPG 27	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes  ☐    No   ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ☐    No  ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Act).  Yes  ☐    No  ☒

The aggregate market value of common stock held by non-affiliates as of June 30, 2020, was $25,002 million.

As of January 31, 2021, 236,788,855 shares of the Registrant’s common stock, with a par value of $1.66 2/3 per share, were outstanding. As of that date, the aggregate market value of common stock held by non-affiliates was $31,863 million.

 DOCUMENTS INCORPORATED BY REFERENCE

Document	Incorporated By Reference In Part No.
Portions of PPG Industries, Inc. Proxy Statement for its 2021 Annual Meeting of Shareholders	III

2020 PPG ANNUAL REPORT AND FORM 10-K 1

PPG INDUSTRIES, INC.

AND CONSOLIDATED SUBSIDIARIES

As used in this report, the terms “PPG,” “Company,” “Registrant,” “we,” “us” and “our” refer to PPG Industries, Inc., and its subsidiaries, taken as a whole, unless the context indicates otherwise.

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	15
Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	Selected Financial Data	16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 8.	Financial Statements and Supplementary Data	31
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	76
Item 9A.	Controls and Procedures	76
Item 9B.	Other Information	76
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	76
Item 11.	Executive Compensation	76
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	77
Item 14.	Principal Accounting Fees and Services	77
Part IV
Item 15.	Exhibits, Financial Statement Schedules	77
Item 16.	Form 10-K Summary	80
Signatures		81

Note on Incorporation by Reference

Throughout this report, various information and data are incorporated by reference from the Company’s 2020 Annual Report (hereinafter referred to as “the Annual Report”). Any reference in this report to disclosures in the Annual Report shall constitute incorporation by reference only of that specific information and data into this Form 10-K.

     2020 PPG ANNUAL REPORT AND 10-K 2

Part I

Item 1. Business

PPG Industries, Inc. manufactures and distributes a broad range of paints, coatings and specialty materials. PPG was incorporated in Pennsylvania in 1883. PPG’s vision is to be the world’s leading coatings company by consistently delivering high-quality, innovative and sustainable solutions that customers trust to protect and beautify their products and surroundings. 

PPG has a proud heritage and demonstrated commitment to innovation, sustainability, community engagement and developing leading-edge paint, coatings and specialty materials technologies. Through dedication and industry-leading expertise, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. PPG is a global leader, serving customers in construction, consumer products, industrial and transportation markets and aftermarkets with manufacturing facilities and equity affiliates in more than 70 countries.

PPG supplies coatings and specialty materials to customers in a wide array of end-uses, including industrial equipment and components; packaging material; aircraft and marine equipment; automotive original equipment; automotive refinish; pavement marking products; as well as coatings for other industrial and consumer products. PPG also serves commercial and residential new build and maintenance customers by supplying coatings to painting and maintenance contractors and directly to consumers for decoration and maintenance. The coatings industry is highly competitive and consists of several large firms with global presence and many firms supplying local or regional markets. PPG competes in its primary markets with the world’s largest coatings companies, most of which have global operations, and many regional coatings companies.

PPG’s business is comprised of two reportable business segments: Performance Coatings and Industrial Coatings as described below:

2020 PPG ANNUAL REPORT AND FORM 10-K 3

PERFORMANCE COATINGS

Strategic Business Unit	Products	Primary End-uses	Main Distribution Methods	Primary Brands
Aerospace Coatings	Coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, packaging and chemical management services for the aerospace industry	Commercial, military, regional jet and general aviation aircraft	Direct to customers and company-owned distribution network	PPG®
Architectural Coatings Americas and Asia Pacific	Paints, wood stains, adhesives and purchased sundries	Painting and maintenance contractors and consumers for decoration and maintenance of residential and commercial building structures	Company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires, independent distributors and direct to consumers	PPG®, GLIDDEN®, COMEX®, OLYMPIC®, DULUX® (in Canada), SIKKENS®, PPG PITTSBURGH PAINTS®, MULCO®, FLOOD®, LIQUID NAILS®, SICO®, RENNER®, TAUBMANS®, WHITE KNIGHT®, BRISTOL®, HOMAX® among others
Architectural Coatings Europe, Middle East and Africa (EMEA)				SIGMA®, HISTOR®, SEIGNEURIE®, GUITTET®, PEINTURES GAUTHIER®, RIPOLIN®, JOHNSTONE’S®, LEYLAND®, PRIMALEX®, DEKORAL®, TRILAK®, PROMINENT PAINTS®, GORI®, BONDEX®, and DANKE!® among others
Automotive Refinish Coatings	Coatings, solvents, adhesives, sealants, sundries, software	Automotive and commercial transport/fleet repair and refurbishing, light industrial coatings and specialty coatings for signs	Independent distributors and direct to customers	PPG®, SEM®, SPRINT®
Protective and Marine Coatings	Coatings and finishes for the protection of metals and structures	Metal fabricators, heavy duty maintenance contractors and manufacturers of ships, bridges and rail cars	Direct to customers, company-owned architectural coatings stores, independent distributors and concessionaires	PPG®
Traffic Solutions	Paints, thermoplastics, pavement marking products and other advanced technologies for pavement marking	Government, commercial infrastructure, painting and maintenance contractors, military	Direct to customers, government agencies and independent distributors	Ennis-Flint®

Segment Overview	This reportable business segment primarily supplies a variety of protective and decorative coatings, sealants and finishes along with pavement marking products, paint strippers, stains and related chemicals, as well as transparencies and transparent armor.
Major Competitive Factors	Product performance, technology, quality, technical and customer service, price, customer productivity, distribution and brand recognition
Global Competitors	Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Benjamin Moore, Cromology, Hempel A/S, Kansai Paints, the Jotun Group, Masco Corporation, Nippon Paint; RPM International Inc, the Sherwin-Williams Company, Tikkurila Oyj and 3M Company
2020 Strategic Acquisitions	Ennis-Flint, Industria Chimica Reggiana (“ICR”). Refer to Note 3, “Acquisitions and Divestitures” under Item 8 of this Form 10-K for more information.
Average Number of Employees in 2020	26,400
Principal Manufacturing and Distribution Facilities	Amsterdam, Netherlands; Birstall, United Kingdom; Busan, South Korea; Carrollton, Texas; Clayton, Australia; Delaware, Ohio; Deurne, Belgium; Gonfreville, France; Huntsville, Alabama; Huron, Ohio; Kunshan, China; Little Rock, Arkansas; Mexico City, Mexico; Milan, Italy; Mojave, California; Oakwood, Georgia; Ontario, Canada; Ostrow Wielkopolski, Poland; Ruitz, France; Shildon, United Kingdom; Sylmar, California; Stowmarket, United Kingdom; Tepexpan, Mexico; Waxahachie, Texas; and Wroclaw, Poland.

     2020 PPG ANNUAL REPORT AND 10-K 4

INDUSTRIAL COATINGS

Strategic Business Unit	Products	Primary End-uses	Main Distribution Methods	Primary Brands
Automotive OEM(a) Coatings	Specifically formulated coatings, adhesives and sealants and metal pretreaments	Automotive original equipment	Direct to manufacturing companies and various coatings applicators	PPG®
Industrial Coatings	Specifically formulated coatings, adhesives and sealants and metal pretreaments; services and coatings application	Appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products (including residential and commercial construction), kitchenware, transportation vehicles and numerous other finished products; On-site coatings services within several customer manufacturing locations as well as at regional service centers.		PPG®
Packaging Coatings	Specifically formulated coatings	Metal cans, closures, plastic tubes, industrial packaging, and promotional and specialty packaging		PPG®
Specialty Coatings and Materials	Amorphous precipitated silicas, TESLIN® substrate, Organic Light Emitting Diode (OLED) materials, optical lens materials and photochromic dyes	SILICA - Tire, battery separator and other end-uses TESLIN - Labels, e-passports, drivers’ licenses, breathable membranes, loyalty cards and identification cards OLED - displays and lighting LENS MATERIALS - optical lenses and color-change products		PPG® TESLIN®

(a) Original equipment manufacturer (OEM)

Segment Overview	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, low-friction coatings, precipitated silicas and other specialty materials.
Alliances	PPG has established alliances with Kansai Paints to serve Japanese-based automotive OEM customers in North America and Europe and Asian Paints Ltd. to serve certain aftermarket customers and automotive OEM customers in India.
Major Competitive Factors	Product performance, technology, quality, technical and customer service, price, customer productivity and distribution.
Global Competitors	Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Kansai Paints, Nippon Paint and the Sherwin-Williams Company
2020 Strategic Acquisitions	Alpha Coating Technologies, LLC. Refer to Note 3, “Acquisitions and Divestitures” under Item 8 of this Form 10-K for more information.
Average Number of Employees in 2020	15,200
Principal Manufacturing and Distribution Facilities	Barberton, Ohio; Busan, South Korea; Cieszyn, Poland; Cleveland, Ohio; Delfzijl, Netherlands; Lake Charles, Louisiana; Oak Creek, Wisconsin; Quattordio, Italy; San Juan del Rio, Mexico; Springdale, Pennsylvania; Sumaré, Brazil; Weingarten, Germany; and Suzhou, Tianjin and Zhangjiagang, China.

2020 PPG ANNUAL REPORT AND FORM 10-K 5

Research and Development

($ in millions)	2020		2019		2018
Research and development costs, including depreciation of research facilities	$401		$456		$464
% of annual net sales	2.9	%	3.0	%	3.0	%

Technology innovation has been a hallmark of PPG’s success throughout its history. The Company seeks to optimize its investment in research and development to create new products to drive profitable growth. We align our product development with the macro trends in the markets we serve and leverage core technology platforms to develop products for unmet market needs. Additionally, we operate laboratories in close geographic proximity to our customers, and we customize our products for our customers' end-use applications. Our history of successful technology introductions is based on a commitment to an efficient and effective innovation process and disciplined portfolio management. We have obtained government funding for a small portion of the Company’s research efforts, and we will continue to pursue government funding where appropriate.

We own and operate several facilities to conduct research and development for new and improved products and processes. In addition to the Company’s centralized principal research and development centers (See Item 2. “Properties” of this Form 10-K), operating segments manage their development through centers of excellence. As part of our ongoing efforts to manage our formulations and raw material costs effectively, we operate global competitive sourcing laboratories. Because of our broad array of products and customers, we are not materially dependent upon any single technology platform.

Raw Materials, Energy and Logistics

The effective management of raw materials, energy and logistics is important to PPG’s continued success as PPG uses a wide variety of complex raw materials that serve as the building blocks of our manufactured products. The Company’s most significant raw materials are epoxy and other resins, titanium dioxide and other pigments, and solvents in the coatings businesses and sand and soda ash in the specialty coatings and materials business. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide. These raw materials represent PPG’s single largest production cost component.

Most of the raw materials and energy used in production are purchased from outside sources, and the Company has made, and plans to continue to make, supply arrangements to meet our planned operating requirements for the future. Supply of critical raw materials and energy is managed by establishing contracts with multiple sources and identifying alternative materials or technology whenever possible. Our raw materials include bio-based materials as part of a product renewal strategy. While prices for certain raw materials typically fluctuate with energy prices and global supply and demand changes, such fluctuations are impacted by the fact that the manufacture of our raw materials is several steps downstream from crude oil, natural gas, and other key feedstocks.

We are continuing our aggressive sourcing initiatives to broaden our supply of high quality raw materials, improve our overall competitive cost position and ensure ongoing security of supply. These initiatives include qualifying multiple sources of supply, both local and international, including suppliers from Asia and other lower cost regions of the world, adding on-site resin production at certain manufacturing locations and reducing the amount of titanium dioxide used in our product formulations.

We are subject to existing and evolving standards relating to the registration of chemicals which could potentially impact the availability and viability of some of the raw materials we use in our production processes. Our ongoing, global product stewardship efforts are directed at maintaining our compliance with these standards. Changes to chemical registration regulations have been proposed or implemented in the European Union and many other countries, including China, Canada, the United States (“U.S.”), the United Kingdom (“U.K.”), Brazil, Mexico and South Korea. Because implementation of many of these programs has not been finalized, the financial impact cannot be estimated at this time. We anticipate that the number of chemical registration regulations will continue to increase globally, and we have implemented programs to track and comply with these regulations.

PPG has joined a global initiative to eliminate child labor from the mica industry, and the Company is continuing to take steps, including audits of our suppliers, to ensure compliance with PPG’s policy against the use of child labor in our supply chains.

At PPG, our commitment to sustainability extends to our suppliers as an extension of our internal focus on sustainability. Our Global Supplier Code of Conduct clarifies our global expectations in the areas of business integrity, labor practices, associate health and safety, and environmental management. As a member of the Responsible Mica Initiative, PPG continues to be committed to establishing a fair, responsible and sustainable mica supply chain. In addition, in 2020, PPG engaged EcoVadis™, a leading global corporate social responsibility and sustainability ratings company, to leverage assessment processes, tools, resources and insights to drive sustainability standards and practices throughout PPG's

     2020 PPG ANNUAL REPORT AND 10-K 6

global supply base. The EcoVadis sustainability intelligence suite will assist PPG in providing broad-scale supply chain risk screening and mapping, more reliable supplier sustainability metric scorecards with actionable ratings, and complete audit and improvement management capabilities.

PPG earned a Gold rating from EcoVadis underscoring our ongoing commitment to corporate social responsibility (CSR) and our efforts to manage our economic, social and environmental impact.

We typically experience fluctuating prices for energy and raw materials driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, government regulation, and global supply and demand factors. For 2020 versus 2019, we experienced deflationary movements in the majority of our costs, driven by a general slowdown in industrial demand due to the pandemic, affecting the global supply and demand balances. This was in addition to price and cost decreases in most of our key feedstocks through the first half of 2020.

Given the uncertainty of the global economic recovery from the pandemic, coupled with the continuing volatility in certain feedstock costs, particularly the volatility in oil and oil-based derivatives, and foreign currencies, we are not able to predict with certainty the 2021 full-year impact of changes in raw material pricing versus 2020.

Further, given the distribution nature of many of our businesses, logistics and distribution costs are sizable, as are wage and benefit changes. For 2020 versus 2019, PPG experienced a modest increase in logistics costs as a percentage of sales. This is due to inefficiencies in the global supply network and lower transportation agility due to restrictions associated with the global pandemic. Entering into 2021, transportation remains challenged with multiple supply and international trade factors, after the United Kingdom’s exit from the European Union led to equipment shortages, impacting availability. Through the year we see these factors waning as supply networks become stabilized with new global demand patterns and the reduced impact of COVID-19 through vaccination. As a result of these factors, offset by improved operating efficiencies, PPG expects low level increases in logistics costs as a percentage of sales in 2021.

Global Operations

PPG has a significant investment in non-U.S. operations. This broad geographic footprint serves to lessen the significance of economic impacts occurring in any one region on our total Net sales and Income before income taxes in the consolidated statement of income. As a result of our global footprint, we are subject to certain inherent risks, including economic and political conditions in international markets, trade protection measures and fluctuations in foreign currency exchange rates. During 2020, unfavorable foreign currency translation decreased Net sales by approximately $150 million and Income before income taxes by approximately $25 million.

Our net sales in the developed and emerging regions of the world for the years ended December 31st are summarized below:

($ in millions)	2020	2019	2018
Net sales
United States, Canada, Western Europe	$9,218	$10,191	$10,299
Latin America, Central and Eastern Europe, Middle East, Africa, Asia Pacific	4,616	4,955	5,075
Total	$13,834	$15,146	$15,374

Refer to Note 22, “Reportable Business Segment Information” under Item 8 of this Form 10-K for geographic information related to PPG’s property, plant and equipment, and for additional geographic information pertaining to sales.

Seasonality

PPG’s Income before income taxes has typically been greater in the second and third quarters and Cash from operating activities has been greatest in the fourth quarter due to end-use market seasonality, primarily in our architectural coatings and traffic solutions businesses. Demand for our architectural coatings and traffic solutions products is typically the strongest in the second and third quarters due to higher home improvement, maintenance and construction activity during the spring and summer months in the U.S., Canada and Europe. The Latin America paint season is the strongest in the fourth quarter. These cyclical activity levels result in the collection of outstanding receivables and lower inventory on hand in the fourth quarter generating higher Cash from operating activities.

2020 PPG ANNUAL REPORT AND FORM 10-K 7

Employee Relations

The average number of people employed worldwide by PPG during 2020 was approximately 46,900. The Company has numerous collective bargaining agreements throughout the world. We observe local customs, laws and practices in labor relations when negotiating collective bargaining agreements. There were no significant work stoppages in 2020. While we have experienced occasional work stoppages as a result of the collective bargaining process and may experience some work stoppages in the future, we believe that we will be able to negotiate all labor agreements on satisfactory terms. To date, these work stoppages have not had a significant impact on our results of operations. Overall, we believe we have good relationships with our employees.

Human Capital

Launched in 2019, The PPG Way is how we enable, empower and engage each employee to implement the strategies needed to strengthen our position as an industry leader. It guides our employees and leaders as we strive to achieve our purpose of protecting and beautifying the world. Employee engagement is a measure of how authentically we are living our culture. We conduct PPG Pulse Surveys multiple times each year, even in the midst of the global pandemic in 2020, to increase dialogue among teams and implement meaningful action to improve results.

Our people strategies provide the foundation for our teams to thrive and deliver exceptional performance. We are committed to ensuring our employees are safe, healthy, enabled, engaged and valued for the diverse talents they bring to PPG. We believe that having quality dialogue with our people, recognizing the value they bring and championing an authentic culture generates engaged employees and a company that is more innovative, productive and competitive. Our focus on and investment in learning and development are crucial to ensuring we keep our people engaged, productive and successful at every stage of their careers. We are committed to promoting from within wherever possible while also bringing in new ideas, thoughts and insights.

One of PPG’s greatest strengths is the diversity of our people, who represent wide-ranging nationalities, cultures, languages, religions, ethnicities, lifestyles, and professional and educational backgrounds. Their unique perspectives enable us to meet challenges quickly, creatively and effectively, providing a significant competitive advantage in today’s global economy. To ensure our people feel valued and respected, we are committed to providing a workplace that embraces a culture of diversity and inclusion and is free from harassment and bullying. More information about PPG’s people strategies and our workforce can be found in the Proxy Statement for our 2021 Annual Meeting of Shareholders and our Sustainability Report and on our sustainability website at http://sustainability.ppg.com.

Environmental Matters

PPG is committed to operating in a sustainable manner and to helping our customers meet their sustainability goals. Our sustainability efforts are led by the Technology and Environment Committee of our Board of Directors and our Sustainability Committee, which is comprised of members of PPG’s senior management team. The Sustainability Committee establishes policies, programs, procedures and goals to address sustainability in our business practices, including resource management, climate change, innovation, communications, purchasing, manufacturing and employee wellness.

Our dedication to innovation is intertwined with sustainability. Once again, we increased the percent of our sales from sustainable products to 35% in 2020 from 33% in 2019. We are marketing an ever-growing variety of products and services that provide environmental, safety and other benefits to our customers. Our products contribute to lighter, more fuel-efficient vehicles, airplanes and ships, and they help our customers reduce their energy consumption, conserve water and reduce waste. These products include a compact automotive paint process that saves energy and reduces water usage; sustainable, waterborne coatings formulations; lightweight sealants and coatings for aircraft; coatings that cool surfaces; coatings for recyclable metal packaging; antimicrobial products; and solutions for autonomous and battery-powered vehicles.

The Company’s commitment to sustainability continues to yield tangible results. In 2020, we again made significant progress reducing our energy intensity, greenhouse gas emissions intensity and waste intensity. More information about PPG’s sustainability values, efforts, goals and data and our community and employee engagement programs can be found in our Sustainability Report and on our sustainability website at http://sustainability.ppg.com and on the CDP’s website at www.cdp.net.

     2020 PPG ANNUAL REPORT AND 10-K 8

We are subject to existing and evolving standards relating to the protection of the environment. In management’s opinion, the Company operates in an environmentally sound manner and is well positioned, relative to environmental matters, within the industries in which it operates. PPG is negotiating with various government agencies concerning current and former manufacturing sites and offsite waste disposal locations, including certain sites on the National Priority List. While PPG is not generally a major contributor of wastes to these offsite waste disposal locations, each potentially responsible party may face governmental agency assertions of joint and several liability. Generally, however, a final allocation of costs is made based on relative contributions of wastes to the site. There is a wide range of cost estimates for cleanup of these sites, due largely to uncertainties as to the nature and extent of their condition and the methods that may have to be employed for their remediation. The Company has established reserves for onsite and offsite remediation of those sites where it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Our experience to date regarding environmental matters leads us to believe that we will have continuing expenditures for compliance with provisions regulating the protection of the environment and for present and future remediation efforts at waste and plant sites. Management anticipates that such expenditures will occur over an extended period of time.

In addition to the $300 million currently reserved for environmental remediation efforts, we may be subject to loss contingencies related to environmental matters estimated to be approximately $100 million to $200 million. These reasonably possible unreserved losses relate to environmental matters at a number of sites, none of which are individually significant. The loss contingencies related to these sites include significant unresolved issues such as the nature and extent of contamination at these sites and the methods that may have to be employed to remediate them.

($ in millions)	2020	2019	2018
Capital expenditures for environmental control projects	$12	$15	$20

It is expected that capital expenditures for such projects in 2021 will be in the range of $15 million to $25 million. Although future capital expenditures are difficult to estimate accurately because of constantly changing regulatory standards and policies, it can be anticipated that environmental control standards will become increasingly stringent and the cost of compliance will increase.

Management believes that the outcome of these environmental contingencies will not have a material adverse effect on PPG’s financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. See Note 15, “Commitments and Contingent Liabilities” under Item 8 of this Form 10-K for additional information related to environmental matters and our accrued liability for estimated environmental remediation costs.

Available Information

The Company’s website address is www.ppg.com. The Company posts, and shareholders may access without charge, the Company’s recent filings and any amendments thereto of its annual reports on Form 10-K, quarterly reports on Form 10-Q and its proxy statements as soon as reasonably practicable after such reports are filed with the Securities and Exchange Commission (“SEC”). The Company also posts all financial press releases, including earnings releases, to its website. All other reports filed or furnished to the SEC, including reports on Form 8-K, are available via direct link on PPG’s website to the SEC’s website, www.sec.gov. Reference to the Company’s, the SEC’s or other websites herein does not incorporate by reference any information contained on those websites and such information should not be considered part of this Form 10-K.

Item 1A. Risk Factors

As a global manufacturer of paints, coatings and specialty materials, we operate in a business environment that includes risks. These risks are not unlike the risks we have faced in the recent past nor are they unlike risks faced by our competitors. Each of the risks described in this section could adversely affect our results of operations, financial position and liquidity. While the factors listed here are considered to be the more significant factors, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles which may adversely affect our businesses and our results of operations, financial position and liquidity.

The effects of the recent COVID-19 pandemic have negatively impacted and are continuing to adversely impact our financial condition and results of operations.

The effects of the public health crisis caused by the COVID-19 pandemic have interfered with the ability of PPG, our suppliers, customers, and others to conduct business and have negatively affected consumer confidence and the global economy. Public health officials have recommended or mandated certain precautions to mitigate the spread of COVID-19, including prohibitions on congregating in groups, shelter-in-place orders or similar measures. Preventative and protective actions that public health officials, governments or PPG have taken with respect to COVID-19 have and will continue to adversely impact our business, suppliers, distribution channels, and customers, including business shutdowns or

2020 PPG ANNUAL REPORT AND FORM 10-K 9

disruptions for an indefinite period of time, reduced operations, reduced ability to supply products, or reduced demand for our products. Our financial condition, liquidity and results of operations have been and will continue to be adversely impacted by these preventative actions and the disruption to our business and that of our suppliers and customers. As we cannot predict the duration or scope of the COVID-19 pandemic, the negative financial impact to our results cannot be reasonably estimated, but could be material.

Increases in prices and declines in the availability of raw materials could negatively impact our financial results.

Our financial results are significantly affected by the cost of raw materials. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide. These raw materials represent PPG’s single largest production cost component.

While not our customary practice, we also import raw materials and intermediates, particularly for use at our manufacturing facilities in the emerging regions of the world. In most cases, those imports are priced in the currency of the supplier and, therefore, if that currency strengthens against the currency of our manufacturing facility, our margins may be lower.

Most of our raw materials are purchased from outside sources, and the Company has made, and plans to continue to make, supply arrangements to meet the planned operating requirements for the future. Adequate supply of critical raw materials is managed by establishing contracts, procuring from multiple sources, and identifying alternative materials or technology whenever possible. The Company is continuing its aggressive sourcing initiatives to effectively broaden our supply of high quality raw materials. These initiatives include qualifying multiple and local sources of supply, including suppliers from Asia and other lower cost regions of the world, adding on-site resin production at certain manufacturing locations, and a reduction in the amount of titanium dioxide and other raw materials used in our product formulations. Our raw materials include bio-based materials as part of a product renewal strategy.

An inability to obtain critical raw materials would adversely impact our ability to produce products. Increases in the cost of raw materials may have an adverse effect on our Income from continuing operations or Cash from operating activities in the event we are unable to offset these higher costs in a timely manner.

The pace of economic growth and level of uncertainty could have a negative impact on our results of operations and cash flows.

Demand for our products and services depends, in part, on the general economic conditions affecting the countries and markets in which we do business. Weak economic conditions in certain geographies and changing supply and demand balances in the markets we serve have negatively impacted demand for our products and services in the past and may do so in the future. Recently, global economic uncertainty has increased due to a number of factors, including the COVID-19 pandemic, slowing global growth, consumer sentiment and commodity market volatility, disruption in existing trade agreements, the imposition of tariffs and the threat of additional tariffs, the United Kingdom’s exit from the European Union and weaker demand in China. PPG provides products and services to a variety of end-use markets in many geographies. This broad end-use market exposure and expanded geographic presence lessens the significance of any individual decrease in activity levels; nonetheless, lower demand levels may result in lower sales, which would result in reduced Income from continuing operations and Cash from operating activities.

We are subject to existing and evolving standards relating to the protection of the environment.

Environmental laws and regulations control, among other things, the discharge of pollutants into the air and water, the handling, use, treatment, storage and clean-up of hazardous and non-hazardous waste, and the investigation and remediation of soil and groundwater affected by hazardous substances. In addition, various laws regulate health and safety matters. The environmental laws and regulations we are subject to impose liability for the costs of, and damages resulting from, cleaning up current sites, past spills, disposals and other releases of hazardous substances. Violations of these laws and regulations can also result in fines and penalties. Future environmental laws and regulations may require substantial capital expenditures or may require or cause us to modify or curtail our operations, which may have a material adverse impact on our business, financial condition and results of operations.

We are involved in a number of lawsuits and claims, and we may be involved in future lawsuits and claims, in which substantial monetary damages are sought.

PPG is involved in a number of lawsuits and claims, both actual and potential, in which substantial monetary damages are sought. Those lawsuits and claims relate to contract, patent, environmental, product liability, asbestos exposure, antitrust, employment, securities and other matters arising out of the conduct of PPG’s current and past business activities. Any such claims, whether with or without merit, could be time consuming, expensive to defend and could divert management’s attention and resources. We maintain insurance against some, but not all, of these potential claims, and the levels of insurance we do maintain may not be adequate to fully cover any and all losses. We believe that, in the aggregate, the outcome of all current lawsuits and claims involving PPG, including those described in Note 15, “Commitments and

     2020 PPG ANNUAL REPORT AND 10-K 10

Contingent Liabilities” under Item 8 of this Form 10-K, will not have a material effect on PPG’s consolidated financial position or liquidity; however, such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Nonetheless, the results of any future litigation or claims are inherently unpredictable, and such outcomes could have a material adverse effect on our results of operations, Cash from operating activities or financial condition.

Fluctuations in foreign currency exchange rates could affect our financial results.

We earn revenues, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S. dollar. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses into U.S. dollars at the average exchange rate during each reporting period, as well as assets and liabilities into U.S. dollars at exchange rates in effect at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other currencies will affect our Net sales, Net income and the value of balance sheet items denominated in foreign currencies. We may use derivative financial instruments to reduce our net exposure to currency exchange rate fluctuations related to foreign currency transactions. However, fluctuations in foreign currency exchange rates, particularly the strengthening or weakening of the U.S. dollar against major currencies, could adversely or positively affect our financial condition and results of operations expressed in U.S. dollars.

We are subject to a variety of complex U.S. and non-U.S. laws and regulations, which could increase our compliance costs and could adversely affect our results of operations.

We are subject to a wide variety of complex U.S. and non-U.S. laws and regulations, and legal compliance risks, including securities laws, tax laws, environmental laws, employment and pension-related laws, competition laws, U.S. and foreign export and trading laws, and laws governing improper business practices, including bribery. We are affected by new laws and regulations and changes to existing laws and regulations, as well as interpretations by courts and regulators. These laws and regulations effectively expand our compliance obligations and costs.

For example, regulations concerning the composition, use and transport of chemical products continue to evolve. Developments concerning these regulations could potentially impact the availability or viability of some of the raw materials we use in our product formulations and/or our ability to supply certain products to some customers or markets. Import/export regulations also continue to evolve and could result in increased compliance costs, slower product movements or additional complexity in our supply chains.

Further, although we believe that we have appropriate risk management and compliance programs in place, we cannot guarantee that our internal controls and compliance systems will always protect us from improper acts committed by employees, agents, business partners or businesses that we acquire. Any non-compliance or such improper actions or allegations could damage our reputation and subject us to civil or criminal investigations and shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory fees.

Our international operations expose us to additional risks and uncertainties that could affect our financial results.

PPG has a significant investment in global operations. This broad geographic footprint serves to lessen the significance of economic impacts occurring in any one region. Notwithstanding the benefits of geographic diversification, our ability to achieve and maintain profitable growth in international markets is subject to risks related to the differing legal, political, social and regulatory requirements and economic conditions of many countries. As a result of our operations outside the U.S., we are subject to certain inherent risks, including political and economic uncertainty, inflation rates, exchange rates, trade protection measures, local labor conditions and laws, restrictions on foreign investments and repatriation of earnings, and weak intellectual property protection. Our percentage of sales generated in 2020 by products sold outside the U.S. was approximately 65%.

Changes in the tax regimes and related government policies and regulations in the countries in which we operate could adversely affect our results and our effective tax rate.

As a multinational corporation, we are subject to various taxes in both the U.S. and non-U.S. jurisdictions. Due to economic and political conditions, tax rates in these various jurisdictions may be subject to significant changes. Our future effective income tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpretation. Further, PPG may continue to refine its estimates to incorporate new or better information as it becomes available. Recent developments, including the European Commission’s investigations on illegal state aid as well as the Organisation for Economic Co-operation and Development project on Base Erosion and Profit Shifting may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities. If our effective income tax rate was to increase, our Cash from operating activities, financial condition and results of operations would be adversely affected.

2020 PPG ANNUAL REPORT AND FORM 10-K 11

Although we believe that our tax filing positions are appropriate, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions and accruals. If future audits find that additional taxes are due, we may be subject to incremental tax liabilities, possibly including interest and penalties, which could have a material adverse effect on our Cash from operating activities, financial condition and results of operations.

Business disruptions could have a negative impact on our results of operations and financial condition.

Unexpected events, including supply disruptions, temporary plant and/or power outages, work stoppages, natural disasters and severe weather events, significant public health issues, computer system disruptions, fires, war or terrorist activities, could increase the cost of doing business or otherwise harm the operations of PPG, our customers and our suppliers. It is not possible for us to predict the occurrence or consequence of any such events. However, such events could reduce our ability to supply products, reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers or to deliver products to customers.

Integrating acquired businesses into our existing operations.

Part of the Company’s strategy is growth through acquisitions. Over the last decade, we have successfully completed more than 50 acquisitions, and we will likely acquire additional businesses and enter into additional joint ventures in the future. Growth through acquisitions and the formation of joint ventures involve risks, including:

•difficulties in assimilating acquired companies and products into our existing business;

•delays in realizing the benefits from the acquired companies or products;

•diversion of our management’s time and attention from other business concerns;

•difficulties due to lack of or limited prior experience in any new markets we may enter;

•unforeseen claims and liabilities, including unexpected environmental exposures, product liability, or existing cyber vulnerability;

•unexpected losses of customers or suppliers of the acquired or existing business;

•difficulty in conforming the acquired business’ standards, processes, procedures and controls to those of our operations; and

•difficulties in retaining key employees of the acquired businesses.

These risks or other problems encountered in connection with our past or future acquisitions and joint ventures could cause delays in realizing the anticipated benefits of such acquisitions or joint ventures and could adversely affect our results of operations, Cash from operating activities or financial condition.

Our ability to understand our customers’ specific preferences and requirements, and to innovate, develop, produce and market products that meet customer demand is critical to our business results.

Our business relies on continued global demand for our brands and products. To achieve business goals, we must develop and sell products that appeal to customers. This is dependent on a number of factors, including our ability to produce products that meet the quality, performance and price expectations of our customers and our ability to develop effective sales, advertising and marketing programs. 

We believe the automotive industry will experience significant and continued change in the coming years. Vehicle manufacturers continue to develop new safety features such as collision avoidance technology and self-driving vehicles that may reduce vehicle collisions in the future, potentially lowering demand for our refinish coatings. In addition, through the introduction of new technologies, new business models or new methods of travel, such as ridesharing, the number of automotive OEM new-builds may decline, potentially reducing demand for our automotive OEM coatings and related automotive parts.

Additionally, the development of customer-facing digital platforms has and will continue to transform certain retail industries. An inability to develop such solutions and our customer’s pace of adoption of those solutions could negatively affect our business or the market demand for our products.

Our future growth will depend on our ability to continue to innovate our existing products and to develop and introduce new products. If we fail to keep pace with product innovation on a competitive basis or to predict market demands for our products, our businesses, financial condition and results of operations could be adversely affected.

The industries in which we operate are highly competitive.

With each of our businesses, an increase in competition may cause us to lose market share, lose a large regional or global customer, or compel us to reduce prices to remain competitive, which could result in reduced margins for our products. Additionally, our ability to achieve price increases may impact the overall economics for the products we offer.

     2020 PPG ANNUAL REPORT AND 10-K 12

Competitive pressures may not only reduce our margins but may also impact our revenues and our growth which could adversely affect our results of operations.

The security of our information technology systems could be compromised, which could adversely affect our ability to operate. 

Increased global information technology security requirements, threats and sophisticated and targeted computer crime pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our data. Despite our efforts to protect sensitive information and confidential and personal data, our facilities and systems may be vulnerable to security breaches. This could lead to negative publicity, theft, modification or destruction of proprietary information or key information, manufacture of defective products, production downtimes and operational disruptions, which could adversely affect our reputation, competitiveness and results of operations.

In 2018, we concluded that previously issued financial statements as detailed below should not be relied upon and restated those previously issued financial statements, which led to, among other things, shareholder litigation, investigations by the SEC and the U.S. Attorney’s office, a settlement by the Company with the SEC and unanticipated costs for accounting and legal fees, and which may result in certain other risks.

As discussed in the Explanatory Note, Note 2, “Restatement of Previously Reported Consolidated Annual Financial Statements” and in Note 19, “Quarterly Financial Information (unaudited)” under Item 8 of the 2017 Form 10-K/A, in 2018 we concluded that our previously issued financial statements as of December 31, 2017 and 2016, and for each of the quarterly and year-to-date periods in 2017, and the final quarterly and year-to-date period in 2016, should no longer be relied upon. The determination that the applicable financial statements should no longer be relied upon and that these financial statements would be restated was made following the identification of misstatements. Although the Company restated these financial statements, remediated the material weakness in the Company’s internal control over financial reporting, reached a settlement with the SEC and is no longer the subject of an investigation by the U.S. Attorney’s Office, we continue to be subject to risks and uncertainties relating to these events, including advancement of legal expenses and potential indemnification obligations to certain current and former employees who are responding to investigations by the SEC and U.S. Attorney’s Office for alleged violations of the securities laws relating to the restatement described above, potential loss of investor confidence, potential reputational harm and a potential negative impact on our stock price.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

PPG’s corporate headquarters is located in the United States in Pittsburgh, Pa. The Company’s manufacturing facilities, sales offices, research and development centers and distribution centers are located throughout the world. See Item 1. “Business” of this Form 10-K for the principal manufacturing and distribution facilities by reportable business segment.

The Company’s principal research and development centers are located in Allison Park, Pa.; Tianjin, China; Zhangjiagang, China; Cleveland, Oh.; Milan, Italy; Harmer, Pa.; Monroeville, Pa.; Springdale, Pa.; Amsterdam, Netherlands; Oak Creek, Wi.; Tepexpan, Mexico; Marly, France; Ingersheim, Germany; Bangplee, Thailand; Cheonan, Republic of Korea; Sumare, Brazil and Wroclaw, Poland.

Our headquarters, certain distribution centers and substantially all company-owned paint stores are located in facilities that are leased while our other facilities are generally owned. Our facilities are considered to be suitable and adequate for the purposes for which they are intended and overall have sufficient capacity to conduct business in the upcoming year.

Item 3. Legal Proceedings

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. These lawsuits and claims may relate to contract, patent, environmental, product liability, asbestos exposure, antitrust, employment, securities and other matters arising out of the conduct of PPG’s current and past business activities. To the extent these lawsuits and claims involve personal injury, property damage and certain other claims, PPG believes it has adequate insurance; however, certain of PPG’s insurers are contesting coverage with respect to some of these claims, and other insurers may contest coverage. PPG’s lawsuits and claims against others include claims against insurers and other third parties with respect to actual and contingent losses related to environmental, asbestos and other matters.

As previously disclosed, the SEC is conducting a non-public investigation of accounting matters described in the Explanatory Note and in Note 2, “Restatement of Previously Reported Consolidated Annual Financial Statements" under Item 8 of the Company’s 2017 Form 10-K/A. On September 26, 2019, PPG announced a final settlement with the SEC as to the Company. Without admitting or denying the findings in the SEC’s administrative cease-and-desist order, the Company consented to the entry of the order, which imposed no financial penalty. The Company continues to cooperate

2020 PPG ANNUAL REPORT AND FORM 10-K 13

fully with the SEC’s ongoing investigation relating to these accounting matters. The Company is also cooperating fully with an investigation into the same accounting matters commenced by the U.S. Attorney’s Office for the Western District of Pennsylvania (“USAO”). As previously disclosed, the USAO has informed PPG that it will not pursue any action as to the Company.

Between January and early April 2020, the Company, as a nominal defendant, and certain of its current or former officers and directors were named as defendants in four shareholder derivative actions. All of the actions were filed in Pittsburgh, three in the U.S. District Court for the Western District of Pennsylvania and one in the Court of Common Pleas for Allegheny County. The plaintiffs in these actions alleged breach of fiduciary duty, unjust enrichment and/or corporate waste arising out of various alleged acts, and alleged failures to act, by the individually named defendants following financial restatements by the Company. One of the federal court actions also alleged breach of fiduciary duty and unjust enrichment claims arising out of certain environmental liabilities the Company incurred, and continues to incur, related to its former Ford City glass plant. The three federal court derivative actions were consolidated. On May 28, 2020, a Motion to Dismiss these federal court actions was filed. Following the submission of legal briefs and oral argument, the federal court dismissed all three cases by Opinion and Order dated December 3, 2020. The plaintiffs to these actions did not appeal the ruling and the cases are closed. Following dismissal of the federal court cases, the plaintiff in the state court derivative action, which had been stayed pending the outcome of the federal court Motion to Dismiss, stipulated to a dismissal of that action with prejudice by Order dated January 6, 2021.

On May 20, 2018, a putative securities class action lawsuit was filed in the U.S. District Court for the Central District of California against the Company and three of its current and former officers.  On September 21, 2018, an Amended Class Action Complaint was filed in the lawsuit. The Amended Complaint, captioned Trevor Mild v. PPG Industries, Inc., Michael H. McGarry, Vincent J. Morales, and Mark C. Kelly, asserted securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of persons who purchased or otherwise acquired stock of the Company between January 19, 2017 and May 10, 2018. The allegations related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business, operations and prospects. The parties reached a settlement in principal on May 1, 2019.  On June 2, 2019, the plaintiff filed with the court a Petition for Preliminary Approval of the proposed settlement, including the proposed settlement amount of $25 million. On November 22, 2019, the court entered final judgment approving the settlement. PPG’s insurance carriers fully funded the settlement escrow account and the court-approved settlement payments to class members are expected to be distributed by the claims administrator in 2021.

From the late 1880’s until the early 1970’s, PPG owned property located in Cadogan and North Buffalo Townships, Pennsylvania which was used for the disposal of solid waste from PPG’s former glass manufacturing facility in Ford City, Pennsylvania. In October 2018, the Pennsylvania Department of Environmental Protection (the “DEP”) approved PPG’s cleanup plan for the Cadogan Property. In April 2019, PPG and the DEP entered into a consent order and agreement (“CO&A”) which incorporated PPG’s approved cleanup plan and a draft final permit for the collection and discharge of seeps emanating from the former disposal area. The CO&A includes a civil penalty of $1.2 million for alleged past unauthorized discharges. PPG’s former disposal area is also the subject of a citizens’ suit filed by the Sierra Club and PennEnvironment seeking remedial measures beyond the measures specified in PPG’s approved cleanup plan, a civil penalty in addition to the penalty included in the CO&A and plaintiffs’ attorneys fees. PPG and the plaintiffs settled plaintiffs’ claims for injunctive relief and PPG agreed to enhancements to the DEP approved cleanup plan and a $250,000 donation to a Pennsylvania nonprofit organization. This settlement has been memorialized by an amendment to the CO&A which was appended to a Consent Agreement between PPG and the plaintiffs which has been lodged with the federal Court. The remaining claims in the case for attorneys’ fees and a civil penalty are not affected by this settlement. PPG believes that the remaining claims are without merit and intends to defend itself against these claims vigorously.

For many years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos. For a description of asbestos litigation affecting the Company, see Note 15, “Commitments and Contingent Liabilities” to the accompanying consolidated financial statements under Part I, Item 8 of this Form 10-K.

In the past, the Company and others have been named as defendants in several cases in various jurisdictions claiming damages related to exposure to lead and remediation of lead-based coatings applications. PPG has been dismissed as a defendant from most of these lawsuits and has never been found liable in any of these cases. After having not been named in a new lead-related lawsuit for 15 years, PPG was named as a defendant in two Pennsylvania state court lawsuits filed by Montgomery County and Lehigh County in the respective counties on October 4, 2018 and October 12, 2018. Both suits seek declaratory relief arising out of alleged public nuisances in the counties associated with the presence of lead paint on various buildings constructed prior to 1980. The Company believes these actions are without merit and intends to defend itself vigorously.

     2020 PPG ANNUAL REPORT AND 10-K 14

Information About Our Executive Officers

Set forth below is information related to the Company’s executive officers as of February 18, 2021. 

Name	Age	Title
Michael H. McGarry (a)	62	Chairman and Chief Executive Officer since September 2016
Anne M. Foulkes (b)	58	Senior Vice President and General Counsel since September 2018
Timothy M. Knavish (c)	55	Executive Vice President since October 2019
Rebecca B. Liebert (d)	53	Executive Vice President since October 2019
Vincent J. Morales (e)	55	Senior Vice President and Chief Financial Officer since March 2017
Amy R. Ericson (f)	55	Senior Vice President, Packaging Coatings since July 2018
Ramaparasad Vadlamannati (g)	58	Senior Vice President, Protective and Marine Coatings and President PPG EMEA since October 2019

(a)Mr. McGarry served as President and Chief Executive Officer from September 2015 through August 2016, President and Chief Operating Officer from March 2015 through August 2015; Chief Operating Officer from August 2014 through February 2015; Executive Vice President from September 2012 through July 2014; and Senior Vice President, Commodity Chemicals from July 2008 through August 2012.

(b)Ms. Foulkes served as Senior Vice President, General Counsel and Secretary from August 2018 to September 2018, Vice President and Associate General Counsel and Secretary from March 2016 through July 2018 and Assistant General Counsel and Secretary from April 2011 through February 2016.

(c)Mr. Knavish served as Senior Vice President, Architectural Coatings and President, PPG EMEA from January 2019 through September 2019, Senior Vice President, Industrial Coatings from October 2017 through December 2018, Senior Vice President, Automotive Coatings from March 2016 through September 2017, Vice President, Protective and Marine Coatings from August 2012 through February 2016 and Vice President, Automotive Coatings, Americas from March 2010 through July 2012.

(d)Ms. Liebert served as Senior Vice President, Automotive Coatings from June 2018 to September 2019. She previously served as President and Chief Executive Officer of Honeywell UOP from 2016 to 2018, Senior Vice President and General Manager, Catalyst Adsorbents and Specialties of Honeywell UOP from 2015 to 2016 and Senior Vice President and General Manager, Gas Processing and Hydrogen of Honeywell UOP from 2012 to 2015.

(e)Mr. Morales served as Vice President, Finance from June 2016 through February 2017. From June 2015 through June 2016, he served as Vice President, Investor Relations and Treasurer and from October 2007 through May 2015 he served as Vice President, Investor Relations.

(f)Ms. Ericson was appointed Senior Vice President, Packaging Coatings in July 2018 when she joined PPG from SUEZ SA. She previously served as President of SUEZ Chemical Monitoring and Solutions from 2017 until 2018, President of General Electric Water Services Company from 2015 to 2017 and President and Chief Executive Officer of Alstom SA’s U.S. business from 2013 to 2015.

(g)Mr. Vadlamannati served as Senior Vice President, Protective and Marine Coatings from March 2016 through September 2019, Vice President, Architectural Coatings, EMEA and Asia/Pacific from August 2014 through February 2016, Vice President, Architectural Coatings, EMEA from February 2012 through July 2014, Vice President, Architectural Coatings, EMEA for Region Western Europe from March 2011 through January 2012 and Vice President, Automotive Refinish, EMEA from September 2010 through February 2011.

Item 4. Mine Safety Disclosures

Not Applicable.

2020 PPG ANNUAL REPORT AND FORM 10-K 15

Part II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The information required by Item 5 regarding market information, including PPG’s stock exchange listing and quarterly stock market prices, dividends, holders of common stock, and the stock performance graph is included in Exhibit 13.1 filed with this Form 10-K and is incorporated herein by reference.

No shares were repurchased in the three months ended December 31, 2020 under the current $2.5 billion share repurchase program approved in December 2017. The maximum number of shares that may yet be purchased under this program is 10,472,586 shares as of December 31, 2020. This repurchase program has no expiration date.

No shares were withheld in satisfaction of the exercise price and/or tax withholding obligation by holders of employee stock options who exercised options granted under the Company’s equity compensation plans in the fourth quarter of 2020.

Item 6. Selected Financial Data

The information required by Item 6 regarding the selected financial data for the five years ended December 31, 2020 is included in Exhibit 13.2 filed with this Form 10-K and is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2020 and 2019. A discussion of changes in our results of operations for the year ended December 31, 2019 as compared to the year ended December 31, 2018 has been omitted from this Form 10-K, but may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2019 Form 10-K, filed with the Securities and Exchange Commission on February 20, 2020.

Performance Overview

Net Sales by Region

			% Change
($ in millions, except percentages)	2020	2019	2020 vs. 2019
United States and Canada	$5,668	$6,475	(12.5)%
Europe, Middle East and Africa (EMEA)	4,328	4,549	(4.9)%
Asia Pacific	2,431	2,542	(4.4)%
Latin America	1,407	1,580	(10.9)%
Total	$13,834	$15,146	(8.7)%

Net sales decreased $1,312 million due to the following:

    ● Lower sales volumes (-10%)

    ● Unfavorable foreign currency translation (-1%)

Partially offset by:

    ● Higher selling prices (+1%)

    ● Acquisition-related sales (+1%)

As a result of the COVID-19 pandemic and reduced global economic activity, lower sales volumes and unfavorable foreign currency translation reduced net sales in most regions and in both reportable business segments. Higher selling prices and acquisition-related sales partially offset this downturn.

Foreign currency translation decreased net sales by approximately $150 million as the U.S. dollar strengthened against several foreign currencies versus the prior year, most notably the Mexican peso.

For specific business results, see the Segment Results section within Item 7 of this Form 10-K.

Cost of sales, exclusive of depreciation and amortization

					% Change
($ in millions, except percentages)	2020		2019		2020 vs. 2019
Cost of sales, exclusive of depreciation and amortization	$7,777		$8,653		(10.1)%
Cost of sales as a % of net sales	56.2	%	57.1	%	(0.9)%

     2020 PPG ANNUAL REPORT AND 10-K 16

Cost of sales, exclusive of depreciation and amortization, decreased $876 million due to the following:

    ● Lower sales volumes

    ● Foreign currency translation

    ● Restructuring and other cost savings

Partially offset by:

    ● Cost of sales attributable to acquired businesses

    ● General cost inflation

Selling, general and administrative expenses

					% Change
($ in millions, except percentages)	2020		2019		2020 vs. 2019
Selling, general and administrative expenses	$3,389		$3,604		(6.0)%
Selling, general and administrative expenses as a % of net sales	24.5	%	23.8	%	0.7%

Selling, general and administrative expenses decreased $215 million primarily due to:

    ● Cost savings initiatives, including restructuring actions     

Partially offset by:

    ● Wage and other cost inflation

    ● Charge for potential uncollectible accounts related to COVID-19 incurred in the first quarter of 2020

    ● Selling, general and administrative expenses from acquired businesses

Other charges and other income

			% Change
($ in millions, except percentages)	2020	2019	2020 vs. 2019
Interest expense, net of Interest income	$115	$100	15.0%
Impairment charges	$93	—	100.0%
Business restructuring, net	$174	$176	(1.1)%
Other charges	$104	$98	6.1%
Other income	($68)	($89)	(23.6)%

Interest expense, net of Interest income

Interest expense, net of Interest income increased $15 million in 2020 versus 2019 primarily due to the $1.5 billion 364-day term loan credit agreement entered into in April 2020. As of December 31, 2020, $400 million remains outstanding under this agreement.

Impairment charges

In 2020, impairment charges were recorded for the write-down of certain assets and liabilities related to the planned sale of certain entities and the carrying value of an indefinite-lived trademark. Refer to Note 3, ”Acquisitions and Divestitures” and Note 7, “Goodwill and Other Identifiable Intangible Assets” in Item 8 of this Form 10-K for additional information.

Business restructuring, net

Pretax restructuring charges of $203 million were recorded in 2020, offset by certain changes in estimates to complete previously recorded programs of $29 million. Pretax restructuring charges of $194 million were recorded in 2019, offset by certain changes in estimates to complete previously recorded programs of $18 million. Refer to Note 8, "Business Restructuring" in Item 8 of this Form 10-K for additional information.

Other charges

Other charges consist primarily of environmental remediation charges. These charges were principally for environmental remediation at a former chromium manufacturing plant and associated sites in New Jersey. Refer to Note 15, "Commitments and Contingent Liabilities" in Item 8 of this Form 10-K for additional information.

Other income

Other income was lower in 2020 than prior year primarily due to slightly lower equity earnings and royalty income.

2020 PPG ANNUAL REPORT AND FORM 10-K 17

Effective tax rate and earnings per diluted share, continuing operations

					% Change
($ in millions, except percentages)	2020		2019		2020 vs. 2019
Income tax expense	$291		$392		(25.8)%
Effective tax rate	21.4	%	23.6	%	(2.2)%
Adjusted effective tax rate, continuing operations*	22.4	%	23.7	%	(1.3)%
Earnings per diluted share, continuing operations	$4.44		$5.22		(14.9)%
Adjusted earnings per diluted share, continuing operations*	$5.70		$6.22		(8.4)%
*See the Regulation G reconciliations - results of operations

The effective tax rate for the year-ended December 31, 2020 was 21.4%, a decrease of 2.2% from the prior year. The lower effective income tax rate included higher net benefits for changes in valuation allowance reserves and for U.S. research and development credits. The Company expects that its full year 2021 effective tax rate will be between 22% and 24%.

As reported earnings per diluted share from continuing operations for the year ended December 31, 2020 decreased year-over-year due to the economic downturn caused by the COVID-19 pandemic and certain impairment charges. Refer to the Regulation G Reconciliations - Results from Operations for additional information.

Regulation G Reconciliations - Results from Operations

PPG believes investor’s understanding of the Company’s performance is enhanced by the disclosure of net income from continuing operations, earnings per diluted share from continuing operations and PPG’s effective tax rate from continuing operations adjusted for certain items. PPG’s management considers this information useful in providing insight into the Company’s ongoing performance because it excludes the impact of items that cannot reasonably be expected to recur on a quarterly basis or that are not attributable to our primary operations. Net income from continuing operations, earnings per diluted share from continuing operations and the effective tax rate from continuing operations adjusted for these items are not recognized financial measures determined in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered a substitute for net income, earnings per diluted share, the effective tax rate or other financial measures as computed in accordance with U.S. GAAP. In addition, adjusted net income, adjusted earnings per diluted share from continuing operations and the adjusted effective tax rate from continuing operations may not be comparable to similarly titled measures as reported by other companies.

Income before income taxes from continuing operations is reconciled to adjusted income before income taxes from continuing operations, the effective tax rate from continuing operations is reconciled to the adjusted effective tax rate from continuing operations and net income from continuing operations (attributable to PPG) and earnings per share – assuming dilution (attributable to PPG) are reconciled to adjusted net income from continuing operations (attributable to PPG) and adjusted earnings per share – assuming dilution below:

($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Tax Expense	Effective Tax Rate		Net income from continuing operations (attributable to PPG)	Earnings per diluted share(1)
Year-ended December 31, 2020
As reported, continuing operations	$1,362	$291	21.4	%	$1,056	$4.44
Includes:
Net charges related to business restructuring-related costs(2)	224	58	25.9	%	166	0.70
Impairment charges(3)	93	25	26.9	%	64	0.27
Increase in allowance for doubtful accounts related to COVID-19	30	7	23.2	%	23	0.10
Net charges related to environmental remediation	26	7	24.7	%	19	0.08
Expenses incurred due to natural disasters(4)	17	4	24.7	%	13	0.06
Acquisition-related costs(5)	9	2	21.6	%	7	0.03
Debt extinguishment charge	7	2	24.3	%	5	0.02
Adjusted, continuing operations, excluding certain items	$1,768	$396	22.4	%	$1,353	$5.70

     2020 PPG ANNUAL REPORT AND 10-K 18

($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Tax Expense	Effective Tax Rate		Net income from continuing operations (attributable to PPG)	Earnings per diluted share(1)
Year-ended December 31, 2019
As reported, continuing operations	$1,661	$392	23.6	%	$1,243	$5.22
Includes:
Net charges related to business restructuring-related costs(2)	222	54	24.4	%	168	0.71
Net charges related to environmental remediation	61	14	23.0	%	47	0.20
Charges related to acquisition-related costs(5)	17	4	23.5	%	13	0.05
Net charges related to litigation matters	12	3	24.1	%	9	0.04
Adjusted, continuing operations, excluding certain items	$1,973	$467	23.7	%	$1,480	$6.22

(1)     Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding.

(2)     Included in net charges related to business restructuring-related costs, are business restructuring charges, accelerated depreciation of certain assets and other related costs, offset by releases related to previously approved programs.

(3)    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. The revenue of the entities to be sold represents less than 1% of PPG annual net sales. Net income of $64 million is attributable to PPG and net income of $4 million is attributable to noncontrolling interests.

(4)     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.

(5)    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.

Performance of Reportable Business Segments

Performance Coatings

			$ Change	% Change
($ in millions, except percentages)	2020	2019	2020 vs. 2019	2020 vs. 2019
Net sales	$8,495	$9,034	($539)	(6.0)%
Segment income	$1,359	$1,409	($50)	(3.5)%

Performance Coatings net sales decreased due to the following:

    ● Lower sales volumes (-8%)

    ● Unfavorable foreign currency translation (-1%)

Partially offset by:

    ● Higher selling prices (+2%)

    ● Acquisition-related sales (+1%)

In 2020, businesses within the Performance Coatings reportable business segment suffered from lower sales volumes due to the COVID-19 pandemic but achieved higher selling prices across all regions.

Architectural coatings - Americas and Asia Pacific net sales, excluding the impact of currency and acquisitions (organic sales) increased a low-single-digit percentage during the year with differences by channel and region. Higher do-it yourself (“DIY”) sales volumes were more than offset by the unfavorable impact of retail store shutdowns in the U.S., Canada and Mexico and unfavorable foreign currency translation driven by the Mexican peso. PPG-Comex organic sales were higher by a mid-single-digit percentage, as the concessionaire network sell-out of PPG products was strong throughout the year.

Architectural coatings – EMEA organic sales increased by a mid-single-digit percentage driven by a strong volumes in the second half of the year offset by lower demand in Southern Europe earlier in the year when various countries mandated the temporary closure of retail paint stores due to COVID-19.

Net sales for automotive refinish coatings were down about 15% versus prior year consistent with the sharp decline in global miles driven and traffic density in most of the world due to mobility restrictions and stay-at-home mandates due to the pandemic. In the U.S., body shops were impacted by a reduction in collision claims activity throughout the year. In the Asia Pacific region, sales volumes did improve in the second half of 2020 as congestion in China neared 2019 levels.

Aerospace coatings sales volumes decreased about 25% year-over-year due to a sharp decline in commercial OEM, general aviation and after-market products. Net sales benefited from consistent demand for the company’s military applications and acquisition-related sales from Dexmet and Texstars.

2020 PPG ANNUAL REPORT AND FORM 10-K 19

Sales volumes in the protective and marine coatings business were down a mid-single-digit percentage driven by delayed projects as a result of the pandemic and lower demand for protective coatings products. Lower sales volumes in the U.S. were related to continued soft demand in the oil and gas industry. Sales volumes in Europe suffered from delayed projects due to the pandemic. In the Asia-Pacific region, sales volumes were flat versus 2019 reflecting strong demand for PPG’s technology-advantaged products and despite lower demand for marine coatings products.

Net sales in the traffic solutions business were entirely attributable to the Ennis-Flint acquisition which closed in late December 2020.

Segment income decreased $50 million year-over-year, including unfavorable foreign currency translation impacts of approximately $20 million. Segment income was impacted by lower sales volumes related to the pandemic and unfavorable foreign currency translation partially offset by higher selling prices, execution of cost-mitigation efforts and restructuring initiatives.

Looking Ahead

Looking ahead, overall segment net sales in the first quarter 2021, are anticipated to be generally similar to the fourth quarter. Sales volumes are expected to be slightly lower on a year-over-year basis. Sharp year-over-year declines in the commercial aerospace coatings business will continue. Lastly, acquisitions are forecast to add about $90 million of net sales, primarily from Ennis-Flint. First quarter sales and earnings for the Ennis-Flint business are historically low due to normal seasonality in that business. It is expected that raw material, logistics, and certain other costs will be inflationary in 2021. The company has already announced selling price increases in most of the businesses within the Performance Coatings reportable segment and will continue to execute various cost-savings initiatives. Finally, foreign currency translation is expected to have a favorable impact on segment net sales and earnings of about $80 million and $10 million, respectively, in the first quarter 2021 based on current exchange rates.

Industrial Coatings

			$ Change	% Change
($ in millions, except percentages)	2020	2019	2020 vs. 2019	2020 vs. 2019
Net sales	$5,339	$6,112	($773)	(12.6)%
Segment income	$750	$862	($112)	(13.0)%

Industrial Coatings segment net sales decreased due to the following:

    ● Lower sales volumes (-13%)

    ● Unfavorable foreign currency translation (-1%)

Partially offset by:

    ● Acquisition-related sales (+1%)

Automotive OEM coatings sales volumes decreased by approximately 15% year-over-year, driven by the significant curtailment in global automotive industry production rates due to the COVID-19 pandemic. Although sales volumes decreased year-over-year, strong sales volumes in China and the company’s strong technology and service capabilities led PPG to outpace the global industry build rate.

For the industrial coatings business, net sales decreased by about 10% compared to prior year. Acquisition-related sales from Whitford and modest increases in selling prices were more than offset by lower demand stemming from reduced industrial production in most regions due to customer shutdowns. Global industrial production improved during the second half of the year compared to the start of the pandemic.

Packaging coatings organic sales were slightly higher year-over-year as sales volume growth in the U.S. and Latin America offset softer demand in the Asia Pacific region. In the U.S. and Latin America, sales volume growth was driven by strong demand in the canned food and beverage segment.

Specialty coatings and materials net sales were lower by approximately 20% versus the prior year, driven by lower sales volumes in the U.S. and Europe. Additionally, in the second half of 2020, a company facility in Louisiana was damaged by both Hurricanes Laura and Delta, causing an estimated $10 million in lost revenues due to production interruptions.

Segment income decreased $112 million year-over-year, including unfavorable foreign currency translation impacts of about $10 million. Segment income was impacted by lower sales volumes driven by customer shutdowns related to the pandemic, partially offset by cost-mitigation actions, restructuring cost savings, and modestly higher selling prices.

Looking ahead

Looking ahead, sales volumes for the Industrial Coatings reportable business segment in the first quarter 2021 are expected to be higher than the prior-year first quarter by a mid-to-high-single-digit percentage, including the benefit of an

     2020 PPG ANNUAL REPORT AND 10-K 20

easier comparison due to the lower industrial activity in China during the first quarter of 2020 due to the pandemic. It is expected that raw material, logistics, and certain other costs will be inflationary in early 2021. The company is planning or has instituted selling price increases to help mitigate these cost pressures, along with continued execution of the previously announced restructuring initiatives. Finally, foreign currency translation is expected to have a favorable impact on segment sales and earnings of about $40 million and $5 million, respectively, in the first quarter 2021 based on current exchange rates.

Review and Outlook

During 2020, the COVID-19 pandemic significantly impacted global economic conditions.The impact in the first quarter was concentrated in China and broadened to most of the rest of the world in the second quarter. Coatings end-use markets related to mobility were more negatively impacted, such as the aerospace and automotive refinish coatings businesses. Some end-use markets benefited from the government mandated restrictions, including architectural coatings DIY and the packaged food segment. PPG’s net sales, excluding foreign currency translation impact, decreased approximately 8% versus the prior year. Acquisition-related sales contributed 1% to net sales growth compared to prior year. Foreign currency translation was unfavorable throughout the year and impacted net sales by about 1%. Raw material costs moderated during the first half of the year and then increased sequentially throughout the second half of 2020 and are expected to continue to be inflationary into the first quarter of 2021. Some other key costs continued to increase in 2020 such as logistics, employee wage and benefit costs.

U.S. and Canada

During 2020, economic activity was impacted by the COVID-19 pandemic with overall economic activity sharply falling in the first half of the year and then continuously improving in the second half of the year. For the full year, U.S. GDP fell by about 5%. Automotive OEM industry builds were down about 20% compared to 2019 with minimal production in the second quarter and improving trends in the second-half of the year. Demand in the residential and commercial construction markets were mixed in 2020 compared to 2019. New home starts advanced approximately 5% in 2020 versus approximately 2% in 2019. Residential remodeling was up 2% in 2020 versus 2019 supported by stay-at-home mandates. Commercial construction was down approximately 10% compared to 2019. Market demand for architectural paint shifted significantly to the DIY channel during the year as higher U.S. unemployment and increased work-from-home resulted in consumers choosing to spend more time renovating their homes. PPG’s architectural coatings sales volumes in the U.S. and Canada were positively impacted by DIY trends and negatively impacted by lower commercial demand trends. The aerospace coatings business was significantly impacted by the pandemic. Before the pandemic, the company’s sales mix was approximately 70% commercial and 30% military. During the pandemic, PPG sales volumes for military applications remained solid, in part due to specification of PPG products with advantaged technology. The commercial segment was down about 50% due to lower passenger miles flown and fewer industry OEM builds. The automotive refinish coatings business was impacted by stay-at-home mandates. These mandates led to less commuting to work, less congestion and fewer miles driven leading to lower collision claims. PPG’s packaging coatings business was favorably impacted by higher packaged food demand. PPG’s automotive OEM coatings business performance was slightly below industry demand levels due to customer mix. Higher acquisition-related sales partially offset lower sales volumes in the automotive OEM coatings business. For the industrial coatings business, acquisition-related sales and higher selling prices were more than offset by lower sales volumes. The U.S. and Canada remained PPG’s largest region, representing approximately 41% of 2020 net sales.

Europe, Middle East and Africa

European economic activity was weak in 2020. Industrial production and manufacturing rates in the region were lower than 2019. The region was impacted by continuing uncertainty over the United Kingdom’s exit from the European Union and overall contracting demand in most end-use markets that PPG supplies due to the pandemic. Regional demand continued to be mixed by country and end-use. Demand for PPG products was impacted by a decline in demand for automotive refinish, automotive OEM, aerospace, and general industrial coatings products. Demand for architectural and packaging coatings products was better, led by higher coatings sales for architectural DIY and the packaged food segment. PPG’s architectural coatings - EMEA business’ organic sales were higher by a mid-single-digit percentage driven by higher selling prices and higher sales volumes.

EMEA represented approximately 31% of PPG’s 2020 net sales, similar to prior year levels. Regional coatings volumes remain approximately 20% below 2008 pre-recession levels. Net sales, excluding the impact of foreign currency translation, decreased in 2020 compared to 2019 as higher selling prices and acquisition-related sales were more than offset by lower sales volumes. Foreign currencies were relatively flat compared to 2019.

Asia Pacific and Latin America

The emerging regions of Asia Pacific and Latin America represented 28% of PPG’s 2020 net sales in aggregate, similar to the prior year.

2020 PPG ANNUAL REPORT AND FORM 10-K 21

Asia Pacific remained the largest emerging region, with net sales of approximately $2.4 billion, led by China, which remained PPG’s second largest country by revenue. Overall net sales were lower in 2020 compared to 2019 driven by lower demand of coatings products due to the pandemic. First quarter sales in China were sharply lower due to a broad shut-down caused by the pandemic. As the year progressed, demand in China was the best of any major region and was higher than the levels seen in 2019 in each of the last three quarters of 2020. In China, the automotive OEM coatings business had retail sales higher than 2019 in each of the last 9 months of 2020. PPG’s organic sales in the Asia Pacific region were lower by about 5% as higher year-over-year sales in China were more than offset by lower sales in India and Southeast Asia due to the pandemic.

Overall, demand in Latin America declined year-over-year driven by lower automotive industry builds and overall softer economic conditions in most countries, including Mexico. In Mexico, the PPG-Comex business added a net of approximately 80 new concessionaire locations. The overall region’s performance was supported by strong growth in the packaging coatings business. Foreign currency translation was volatile and finished about 10% unfavorable compared to 2019, principally driven by weaker currencies, including the Mexican peso and Brazilian real.

Outlook

Looking ahead to 2021, we expect solid global market growth that will likely be uneven by region and end-use. We expect regional growth rates to be higher than 2020 in all regions as demand continues to recover from the pandemic.

We anticipate PPG’s U.S. and Canada regional growth will be led by automotive OEM and general industrial coatings as industrial production levels are expected to be higher than 2020. Automotive OEM builds are expected to be approximately a mid-teen percentage higher compared to 2020. We expect positive growth in housing and continued weakness in commercial construction and maintenance. Architectural DIY demand is expected to remain at elevated levels in the first half of 2021. Demand for aerospace and automotive refinish coatings is expected to remain subdued during the first half of 2021.

We expect industry demand trends in 2021 in Europe to improve from those experienced in 2020 with continuing improvement in profitability due to margin improvement. Regional growth is expected to remain mixed by sub-region and country. Favorable end-use trends are expected to continue in automotive OEM and general industrial coatings. Overall demand is expected to be higher but be mixed by country in the architectural coatings business. We continue to monitor the economic environment in the U.K., as its exit from the European Union progresses and impacts consumer sentiment and coatings demand. Demand for aerospace and automotive refinish coatings is expected to remain soft.

In Asia Pacific, we expect continued improvement in industrial production growth in China, Southeast Asia and India as the year progresses. In China, we foresee continued above global average growth with heightened risk as the Chinese economy continues to shift and rely more on domestic consumption. Industrial production in India is expected to be sharply higher in 2021 from a very low level in 2020 due to the pandemic. The recovery in marine coatings new-build demand is expected to remain subdued.

In Latin America, we anticipate slightly better economic conditions in Mexico, most of Central America and South America compared to 2020. We expect continued strong demand for the PPG-Comex architectural coatings business.

Significant other factors

In June 2020, PPG initiated a $176 million pretax global restructuring program. The program addresses weakened global economic conditions stemming from the COVID-19 pandemic and related pace of recovery in a few end-use markets along with further opportunities to optimize supply chain and functional costs. The plan includes a voluntary separation program that was offered in the U.S. and Canada. PPG recognized approximately $45 million of savings from this program in 2020. The majority of these restructuring actions are expected to be completed by the end of 2021.

We made significant progress on the global restructuring programs that were announced in May 2018 and June 2019. The Company achieved approximately $70 million of savings in 2020 relating to these programs. The majority of these restructuring actions are expected to be completed by the end of the first quarter 2021 with the remainder of the actions expected to be completed by 2022. Aggregate restructuring savings related to the 2020, 2019 and 2018 programs was approximately $115 million in 2020.

We will continue to aggressively manage the Company’s cost structure to ensure alignment with the overall demand environment and will make adjustments as required to remain cost competitive in the marketplace. Aggregate restructuring savings are expected to be at least $120 million in 2021.

Raw materials are a significant input cost to the process of manufacturing coatings. PPG experiences fluctuating energy and raw material costs driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, and global supply and demand factors. In aggregate, average raw material costs were modestly lower in 2020 versus 2019 due to variety of reasons, including softer industry demand and lower crude oil prices. PPG currently expects overall raw material prices to increase by a low-single-digit percentage

     2020 PPG ANNUAL REPORT AND 10-K 22

in the first quarter 2021. Cost inflation is expected in several other areas including wage, benefit, and logistics costs in 2021. PPG expects certain regional logistics equipment shortages in 2021, impacting the Company’s supply chain and distribution channels.

In 2020, we achieved selling price improvement, primarily in the Performance Coatings reportable business segment, reflecting the Company’s efforts to offset various inflationary pressures. Further benefits from selling price actions are necessary in 2021 to recover operating margins, reflecting the value of our products. The Company will carefully monitor all costs during 2021 and assess the need for additional selling price increases.

In 2020, we experienced unfavorable foreign currency translation throughout the year. Based on mid-January 2021 exchange rates, the Company expects favorable year-over-year foreign currency translation in 2021. The foreign currency environment continues to be volatile, and the impact on 2021 net sales and income before income taxes could differ from this expectation. The Company generally purchases raw materials, incurs manufacturing costs and sells finished goods in the same currency, so we typically incur only modest foreign currency transaction related impacts.

The 2021 effective tax rate from continuing operations is expected to be in the range of 22% to 24%, varying by quarter. This range represents the Company’s best estimate.

Over the past five years, the Company used over $3.9 billion of cash to repurchase approximately 35 million shares of PPG stock. No shares were repurchased in 2020. The Company ended the year with approximately $1.5 billion remaining under its current share repurchase authorization. During 2020, the Company deployed nearly $1.2 billion for acquisitions, approximately $300 million for capital expenditures and approximately $495 million for dividends. PPG increased its per-share dividend in September 2020, marking the 49th annual per share dividend increase and the 121st consecutive year of annual dividend payments.

PPG ended 2020 with approximately $1.9 billion in cash and short-term investments. The Company expects continued strong cash generation in 2021.

Also, beginning in 2021, the Company will report adjusted earnings per diluted share excluding amortization expense relating to intangible assets from completed acquisitions.

Accounting Standards Adopted in 2020

Note 1, “Summary of Significant Accounting Policies” under Item 8 of this Form 10-K describes the Company’s recently adopted accounting pronouncements.

Accounting Standards to be Adopted in Future Years

Note 1, “Summary of Significant Accounting Policies” under Item 8 of this Form 10-K describes accounting pronouncements that have been promulgated prior to December 31, 2020 but are not effective until a future date.

Commitments and Contingent Liabilities, including Environmental Matters

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. See Item 3. “Legal Proceedings” and Note 15, “Commitments and Contingent Liabilities” under Item 8 of this Form 10-K for a description of certain of these lawsuits.

As discussed in Item 3 and Note 15, although the result of any future litigation of such lawsuits and claims is inherently unpredictable, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG, including asbestos-related claims, will not have a material effect on PPG’s consolidated financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.

It is PPG’s policy to accrue expenses for contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Reserves for environmental contingencies are exclusive of claims against third parties and are generally not discounted. In management’s opinion, the Company operates in an environmentally sound manner and the outcome of the Company’s environmental contingencies will not have a material effect on PPG’s financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Management anticipates that the resolution of the Company’s environmental contingencies will occur over an extended period of time.

As also discussed in Note 15, PPG has significant reserves for environmental contingencies. Please refer to the Environmental Matters section of Note 15 for details of these reserves. A significant portion of our reserves for environmental contingencies relate to ongoing remediation at PPG's former chromium manufacturing plant in Jersey City, N.J. and associated sites ("New Jersey Chrome"). There are multiple, future events yet to occur, including further remedy selection and design, remedy implementation and execution and applicable governmental agency or community organization approvals. Considerable uncertainty exists regarding the timing of these future events for the New Jersey

2020 PPG ANNUAL REPORT AND FORM 10-K 23

Chrome sites. Further resolution of these events is expected to occur over the next several years. As these events occur and to the extent that the cost estimates of the environmental remediation remedies change, the existing reserve for this environmental remediation matter will continue to be adjusted.

Liquidity and Capital Resources

During the past two years, PPG had sufficient financial resources to meet its operating requirements, to fund our capital spending, including acquisitions, share repurchases and pension plans and to pay increasing dividends to shareholders.

Cash and cash equivalents and short-term investments

($ in millions)	2020	2019
Cash and cash equivalents	$1,826	$1,216
Short-term investments	96	57
Total	$1,922	$1,273

Cash from operating activities - continuing operations

($ in millions, except percentages)			% Change
	2020	2019	2020 vs. 2019
Cash from operating activities	$2,129	$2,084	2.2%

2020 vs. 2019

The $45 million increase in Cash from operating activities - continuing operations was primarily due to favorable changes in working capital, excluding the impact of business acquisitions.

Operating working capital

Operating working capital is a subset of total working capital and represents (1) receivables from customers, net of allowance for doubtful accounts, (2) inventories, and (3) trade liabilities. See Note 4, “Working Capital Detail” under Item 8 of this Form 10-K for further information related to the components of the Company’s operating working capital. We believe operating working capital represents the key components of working capital under the operating control of our businesses.

A key metric we use to measure our working capital management is operating working capital as a percentage of sales (fourth quarter sales annualized). 

($ in millions, except percentages)	2020		2019
Trade receivables, net	$2,412		$2,479
Inventories, FIFO	1,845		1,834
Trade creditors’ liabilities	2,259		2,098
Operating working capital	$1,998		$2,215
Operating working capital as a % of fourth quarter sales, annualized	13.3	%	15.1	%
Trade receivables, net as a % of fourth quarter sales, annualized	16.1	%	16.9	%
Days sales outstanding	54		56
Inventories, FIFO as a % of fourth quarter sales, annualized	12.3	%	12.5	%
Inventory turnover	4.2		4.6

Environmental expenditures

($ in millions)	2020	2019
Cash outlays related to environmental remediation activities	$60	$77

We expect cash outlays for environmental remediation activities in 2021 to be between $80 million and $100 million.

Defined benefit pension plan contributions

($ in millions)	2020	2019
Non-U.S. defined benefit pension plans	$17	$13

Contributions to PPG’s non-U.S. defined benefit pension plans in 2020 were required by local funding requirements. PPG expects to make contributions to its defined benefit pension plans in the range of $10 million to $20 million in 2021. PPG may make voluntary contributions to its defined benefit pension plans in 2021 and beyond.

     2020 PPG ANNUAL REPORT AND 10-K 24

Cash used for investing activities

($ in millions, except percentages)			% Change
	2020	2019	2020 vs. 2019
Cash used for investing activities	($1,447)	($1,009)	43.4%

2020 vs. 2019

The $438 million increase in cash used for investing activities - continuing operations, was primarily due to higher spending on business acquisitions.

Capital expenditures, including business acquisitions

($ in millions, except percentages)					% Change
	2020		2019		2020 vs. 2019
Capital expenditures (1)	$304		$413		(26.4)%
Business acquisitions, net of cash balances acquired	$1,169		$643		81.8%
Total capital expenditures, including acquisitions	$1,473		$1,056		39.5%
Capital expenditures, excluding acquisitions, as a % of sales	2.2	%	2.7	%	(18.5)%

(1) Includes modernization and productivity improvements, expansion of existing businesses and environmental control projects.

Capital expenditures related to modernization and productivity improvements, expansion of existing businesses and environmental control projects is expected to be approximately $450 million in 2021, reflecting a return to pre-pandemic levels of spending in support of future organic growth opportunities.

A primary focus for the Company in 2021 will continue to be cash deployment focused on shareholder value creation, with a preference for business acquisitions. The near-term cash deployment priority will be to complete the announced acquisitions using a combination of cash on hand and external financing.

Cash used for financing activities

			% Change
($ in millions, except percentages)	2020	2019	2020 vs. 2019
Cash used for financing activities	($59)	($758)	(92.2)%

2020 vs. 2019

The $699 million decrease in cash used for financing activities - continuing operations, was primarily due the issuance of short-term debt in 2020 and lower net purchases of treasury stock year-over-year.

Share repurchase activity

($ in millions, except number of shares)	2020	2019
Number of shares repurchased (millions)	—	2.7
Cost of shares repurchased	$—	$325

The Company has approximately $1.5 billion remaining under the current authorization from the Board of Directors, which was approved in December 2017. The current authorized repurchase program has no expiration date.

Dividends paid to shareholders

($ in millions)	2020	2019
Dividends paid to shareholders	$496	$468

PPG has paid uninterrupted annual dividends since 1899, and 2020 marked the 49th consecutive year of increased annual per-share dividend payments to shareholders. The Company raised its per-share quarterly dividend by 6% to $0.54 per share paid in September 2020.

2020 PPG ANNUAL REPORT AND FORM 10-K 25

Debt issued and repaid

Debt Issued (net of premium/discount and issuance costs)	Year	$ in millions
$100 million 3.75% Notes due 2028	2020	$119
$300 million 2.55% Notes due 2030	2020	$296
$1.5 billion 364-Day Term Loan	2020	$1,500
$300 million 2.4% Note due 2024 and $300 million 2.8% Notes due 2029	2019	$595

Debt Repaid	Year	$ in millions
$1.5 billion 364-Day Term Loan	2020	$1,100
3.6% Notes ($500)	2020	$500
0.00% Note (€300)	2019	$334
2.3% Notes	2019	$300

Credit agreements and lines of credit

In August 2019, PPG amended and restated its five-year credit agreement (the “Credit Agreement”) with several banks and financial institutions as further discussed in Note 10, "Borrowings and Lines of Credit" under Item 8 of this Form 10-K. The Credit Agreement amends and restates the Company's existing five year credit agreement dated as of December 18, 2015. The Credit Agreement provides for a $2.2 billion unsecured revolving credit facility. The Credit Agreement will terminate on August 30, 2024. In March 2020, PPG borrowed $800 million under the Credit Agreement and repaid that amount in full in April 2020. There were no amounts outstanding under the credit agreement as of December 31, 2020 and December 31, 2019.

The Credit Agreement also supports the Company’s commercial paper borrowings which are classified as long-term based on PPG’s intent and ability to refinance these borrowings on a long-term basis. As of December 31, 2020 and 2019, there were $250 million and $100 million of commercial paper borrowings outstanding, respectively.

The Credit Agreement requires the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Credit Agreement, of 60% or less; provided, that for any fiscal quarter in which the Company has made an acquisition for consideration in excess of $1 billion and for the next five fiscal quarters thereafter, the ratio of Total Indebtedness to Total Capitalization may not exceed 65% at any time. As of December 31, 2020, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and the Term Loan was 46%.

In addition to the amounts available under lines of credit, the Company maintains access to the capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity. 

See Note 10, “Borrowings and Lines of Credit” under Item 8 of this Form 10-K for information regarding notes entered into and repaid as well as details regarding the use and availability of committed and uncommitted lines of credit, letters of credit, guarantees and debt covenants.

     2020 PPG ANNUAL REPORT AND 10-K 26

Contractual obligations

We continue to believe that our cash on hand and short term investments, cash from operations and the Company’s access to capital markets will continue to be sufficient to fund our operating activities, capital spending, acquisitions, dividend payments, debt service, share repurchases, contributions to pension plans, and PPG’s significant contractual obligations.

		Obligations Due In:
($ in millions)	Total	2021	2022-2023	2024-2025	Thereafter
Contractual Obligations
Long-term debt	$5,084	$172	$1,036	$1,028	$2,848
Short-term debt	403	403	—	—	—
Commercial paper	250	—	—	250	—
Finance lease obligations	12	3	4	2	3
Interest payments(1)	1,149	124	220	193	612
Operating leases(2)	942	199	284	177	282
Pension contributions(3)	20	20	—	—	—
Unconditional purchase commitments(4)	189	74	79	21	15
Other commitments	74	6	13	14	41
Total	$8,387	$1,001	$1,636	$1,685	$3,801

(1)Interest on all outstanding debt, including finance lease obligations.

(2)Includes interest payments.

(3)Includes the high end of the range of the expected pension contributions for 2021 only, as PPG is unable to estimate the pension contributions beyond 2021.

(4)The unconditional purchase commitments are principally take-or-pay obligations related to the purchase of certain materials, including industrial gases and electricity, consistent with customary industry practice.

Off-Balance Sheet Arrangements

The Company’s off-balance sheet arrangements include unconditional purchase commitments disclosed in the “Liquidity and Capital Resources” section in the contractual obligations table as well as letters of credit and guarantees as discussed in Note 10, “Borrowings and Lines of Credit” under Item 8 of this Form 10-K.

Other liquidity matters

At December 31, 2020, the total amount of unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was $188 million. The timing of payments will depend on the progress of examinations with tax authorities. PPG does not expect a significant tax payment related to these obligations within the next year. The Company is unable to make a reasonably reliable estimate as to when any significant cash settlements with taxing authorities may occur.

Critical Accounting Estimates

Management has evaluated the accounting policies used in the preparation of the financial statements and related notes presented under Item 8 of this Form 10-K and believes those policies to be reasonable and appropriate. We believe that the most critical accounting estimates made in the preparation of our financial statements are those related to accounting for contingencies, under which we accrue a loss when it is probable that a liability has been incurred and the amount can be reasonably estimated, and to accounting for pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives because of the importance of management judgment in making the estimates necessary to apply these policies.

Contingencies

Contingencies, by their nature, relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred as well as in estimating the amount of potential loss. The most important contingencies impacting our financial statements are those related to environmental remediation, to pending, impending or overtly threatened litigation against the Company and to the resolution of matters related to open tax years. For more information on these matters, see Note 15, “Commitments and Contingent Liabilities” and Note 13, “Income Taxes” under Item 8 of this Form 10-K.

Defined Benefit Pension and Other Postretirement Benefit Plans

Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, we make extensive use

2020 PPG ANNUAL REPORT AND FORM 10-K 27

of assumptions about inflation, investment returns, mortality, turnover, medical costs and discount rates. The Company has established a process by which management reviews and selects these assumptions annually. See Note 14, “Employee Benefit Plans” under Item 8 of this Form 10-K for information on these plans and the assumptions used.

Business Combinations

In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed will be recognized as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results. In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including: third-party appraisals for the estimated value and lives of identifiable intangible assets and property, plant and equipment; third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations; and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.

The business and technical judgment of management was used in determining which intangible assets have indefinite lives and in determining the useful lives of finite-lived intangible assets in accordance with the accounting guidance for goodwill and other intangible assets.

Goodwill and Intangible Assets

The Company tests indefinite-lived intangible assets and goodwill for impairment by either performing a qualitative evaluation or a quantitative test at least annually, or more frequently if an indication of impairment arises. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than its carrying amount. In the quantitative test, fair values are estimated using a discounted cash flow model. Key assumptions and estimates used in the discounted cash flow model include discount rates, tax rates, future revenues, operating cash flows and capital expenditures. For more information on these matters, see Note 1, “Summary of Significant Accounting Policies” under Item 8 of this Form 10-K.

We believe that the amounts recorded in the financial statements under Item 8 of this Form 10-K related to these contingencies, pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives are based on the best estimates and judgments of the appropriate PPG management, although actual outcomes could differ from our estimates.

Currency

Comparing spot exchange rates at December 31, 2020 and at December 31, 2019, the U.S. dollar strengthened against certain currencies in the countries where PPG operates, most notably the Mexican peso. As a result, consolidated net assets at December 31, 2020 decreased by $36 million from December 31, 2019. Comparing spot exchange rates at December 31, 2019 and at December 31, 2018, the U.S. dollar weakened against certain currencies in the countries where PPG operates, most notably the British pound, Canadian dollar, and the Mexican peso. As a result, consolidated net assets at December 31, 2019 increased by $106 million from December 31, 2018.

Comparing average exchange rates during 2020 to those of 2019, the U.S. dollar strengthened against currencies of the countries within the regions PPG operates, including EMEA and Latin America. This had an unfavorable impact of approximately $26 million on full year 2020 income before income taxes from the translation of this foreign income into U.S. dollars. Comparing average exchange rates during 2019 to those of 2018, the U.S. dollar strengthened against currencies of the countries within the regions PPG operates, including EMEA, Asia Pacific, and Latin America. This had an unfavorable impact of approximately $50 million on full year 2019 income before income taxes from the translation of this foreign income into U.S. dollars.

Forward-Looking Statements

Management’s Discussion and Analysis and other sections of this Annual Report contain forward-looking statements that reflect the Company’s current views with respect to future events and financial performance.

You can identify forward-looking statements by the fact that they do not relate strictly to current or historic facts. Forward-looking statements are identified by the use of the words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast” and other expressions that indicate future events and trends. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our reports to the Securities and Exchange Commission. Also, note the following cautionary statements.

     2020 PPG ANNUAL REPORT AND 10-K 28

Many factors could cause actual results to differ materially from the Company’s forward-looking statements. Such factors include statements related to expected effects on our business of the COVID-19 pandemic, global economic conditions, increasing price and product competition by our competitors, fluctuations in cost and availability of raw materials, the ability to achieve selling price increases, the ability to recover margins, customer inventory levels, our ability to maintain favorable supplier relationships and arrangements, the timing of and the realization of anticipated cost savings from restructuring and other initiatives, the ability to identify additional cost savings opportunities, difficulties in integrating acquired businesses and achieving expected synergies therefrom, economic and political conditions in the markets we serve, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions, the effectiveness of our internal control over financial reporting, the results of governmental investigations and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors.

Consequently, while the list of factors presented here and under Item 1A is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Consequences of material differences in the results compared with those anticipated in the forward-looking statements could include, among other things, lower sales or income, business disruption, operational problems, financial loss, legal liability to third parties, other factors set forth in Item 1A of this Form 10-K and similar risks, any of which could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

PPG is exposed to market risks related to changes in foreign currency exchange rates, interest rates, and was exposed to changes in PPG’s stock price. The Company may enter into derivative financial instrument transactions in order to manage or reduce these market risks. A detailed description of these exposures and the Company’s risk management policies are provided in Note 11, “Financial Instruments, Hedging Activities and Fair Value Measurements” under Item 8 of this Form 10-K.

The following disclosures summarize PPG’s exposure to market risks and information regarding the use of and fair value of derivatives employed to manage its exposure to such risks. Quantitative sensitivity analyses have been provided to reflect how reasonably possible, unfavorable changes in market rates can impact PPG’s consolidated results of operations, cash flows and financial position.

Foreign Currency Risk

We conduct operations in many countries around the world. Our results of operations are subject to both currency transaction and currency translation risk. Certain foreign currency forward contracts outstanding during 2020 and 2019 served as a hedge of a portion of PPG’s exposure to foreign currency transaction risk. The fair value of these contracts was a net asset of $2 million as of December 31, 2020 and a net liability of $7 million as of December 31, 2019. The potential reduction in PPG’s Income before income taxes resulting from the impact of adverse changes in exchange rates on the fair value of its outstanding foreign currency hedge contracts of 10% for European and Canadian currencies and 20% for Asian and Latin American currencies for the years ended December 31, 2020 and 2019 would have been $226 million and $357 million, respectively.

In August 2019 and February 2018, PPG entered into U.S. dollar to euro cross currency swap contracts for $300 million and $575 million, respectively; with a combined notional amount of $875 million outstanding, resulting in a net liability and a net asset with a fair value of $8 million and $48 million as of December 31, 2020 and 2019, respectively. A 10% increase in the value of the euro to the U.S. dollar would have had an unfavorable effect on the fair value of these swap contracts by reducing the value of these instruments by $95 million and $87 million at December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019, PPG had non-U.S. dollar denominated debt outstanding of $2.4 billion and $2.3 billion, respectively. A weakening of the U.S. dollar by 10% against European currencies and by 20% against Asian and South American currencies would have resulted in unrealized translation losses of $273 million and $255 million as of December 31, 2020 and 2019, respectively.

Interest Rate Risk

The Company manages its interest rate risk of fixed and variable rates while attempting to minimize its interest costs. In the first quarter of 2018, PPG entered into interest rate swaps which converted $525 million of fixed rate debt to variable rate debt. The fair value of these contracts was an asset of $67 million and $35 million as of December 31, 2020 and 2019, respectively. An increase in variable interest rates of 10% would lower the fair value of these swaps and increase interest expense by $1 million and $7 million for the periods ended December 31, 2020 and 2019, respectively. A 10% increase in interest rates in the U.S., Canada, Mexico and Europe and a 20% increase in interest rates in Asia and South

2020 PPG ANNUAL REPORT AND FORM 10-K 29

America would have an insignificant effect on PPG’s variable rate debt obligations and interest expense for the periods ended December 31, 2020 and 2019, respectively. Further, a 10% reduction in interest rates would have increased the fair value of the Company’s fixed rate debt by approximately $48 million and $67 million as of December 31, 2020 and 2019, respectively; however, such changes would not have had an effect on PPG’s annual Income before income taxes or cash flows.

     2020 PPG ANNUAL REPORT AND 10-K 30

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of PPG Industries, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of PPG Industries, Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2020 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As described in Note 9 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management Report on Establishing and Maintaining Adequate Internal Control Over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in the Management Report on Establishing and Maintaining Adequate Internal Control Over Financial Reporting, management has excluded Ennis-Flint from its assessment of internal control over financial reporting as of December 31, 2020 because it was acquired by the Company in a purchase business combination during 2020. We have also excluded Ennis-Flint from our audit of internal control over financial reporting. Ennis-Flint is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2% and less than 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2020.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit

2020 PPG ANNUAL REPORT AND FORM 10-K 31

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Quantitative Goodwill Impairment Test

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $5,102 million as of December 31, 2020. Management tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test, at least annually, or more frequently if an indication of impairment exists. Management’s quantitative goodwill impairment testing, if deemed necessary, is performed during the fourth quarter of each year by comparing the estimated fair value of an associated reporting unit as of September 30 to its carrying value. Fair value is estimated using a discounted cash flow model. Key assumptions and estimates used in the discounted cash flow model relate to projected future revenues, discount rates, operating cash flows, capital expenditures and tax rates.

The principal considerations for our determination that performing procedures relating to quantitative goodwill impairment testing is a critical audit matter are: (i) the significant judgment by management when developing the fair value measurement of any reporting units where a quantitative test was performed; and (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the significant assumption used in management’s cash flow projections related to projected future revenues.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s quantitative goodwill impairment test, including controls over the valuation of any reporting units for which a quantitative test was performed. These procedures also included, among others, testing management’s process for developing the fair value estimate. This included evaluating the appropriateness of the discounted cash flow model, testing the completeness, accuracy, and relevance of underlying data used, and evaluating management’s assumption related to projected future revenues. Evaluating management’s assumption related to projected future revenues involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania

February 18, 2021

We have served as the Company’s auditor since 2013.

     2020 PPG ANNUAL REPORT AND 10-K 32

Management Report

Responsibility for Preparation of the Financial Statements and Establishing and Maintaining Adequate Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this evaluation, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). In December 2020, the Company acquired Ennis-Flint and created the traffic solutions business within the Performance Coatings reportable business segment. The scope of the Company's assessment of the design and effectiveness of PPG's internal control over financial reporting for the year ended December 31, 2020 excluded this acquired business. Ennis-Flint is a wholly-owned subsidiary whose total assets and total revenues excluded from our assessment represented 2% and less than 1%, respectively, of PPG's consolidated total assets and total revenue as of and for the year ended December 31, 2020. This acquired business will be included in management’s assessment of the effectiveness of our internal controls over financial reporting as of December 31, 2021. Based on this evaluation we have concluded that, as of December 31, 2020, the Company’s internal control over financial reporting were effective.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has issued their report, included on pages 31-32 of this Form 10-K, regarding the Company’s internal control over financial reporting.

/s/ Michael H. McGarry	/s/ Vincent J. Morales
Michael H. McGarry Chairman and Chief Executive Officer February 18, 2021	Vincent J. Morales Senior Vice President and Chief Financial Officer February 18, 2021

2020 PPG ANNUAL REPORT AND FORM 10-K 33

Consolidated Statement of Income

	For the Year
($ in millions, except per share amounts)	2020	2019	2018
Net sales	$13,834	$15,146	$15,374
Cost of sales, exclusive of depreciation and amortization	7,777	8,653	9,001
Selling, general and administrative	3,389	3,604	3,573
Depreciation	371	375	354
Amortization	138	136	143
Research and development, net	379	432	441
Interest expense	138	132	118
Interest income	(23)	(32)	(23)
Impairment charges	93	—	—
Business restructuring	174	176	66
Other charges	104	98	122
Other income	(68)	(89)	(114)
Income before income taxes	$1,362	$1,661	$1,693
Income tax expense	291	392	353
Income from continuing operations	$1,071	$1,269	$1,340
Income from discontinued operations, net of tax	3	—	18
Net income attributable to the controlling and noncontrolling interests	$1,074	$1,269	$1,358
Less: Net income attributable to noncontrolling interests	15	26	17
Net income (attributable to PPG)	$1,059	$1,243	$1,341
Amounts attributable to PPG
Income from continuing operations, net of tax	$1,056	$1,243	$1,323
Income from discontinued operations, net of tax	3	—	18
Net income (attributable to PPG)	$1,059	$1,243	$1,341
Earnings per common share
Income from continuing operations, net of tax	$4.46	$5.25	$5.43
Income from discontinued operations, net of tax	0.01	—	0.07
Net income (attributable to PPG)	$4.47	$5.25	$5.50
Earnings per common share - assuming dilution
Income from continuing operations, net of tax	$4.44	$5.22	$5.40
Income from discontinued operations, net of tax	0.01	—	0.07
Net income (attributable to PPG)	$4.45	$5.22	$5.47

Consolidated Statement of Comprehensive Income

		For the Year
($ in millions)		2020	2019	2018
Net income attributable to the controlling and noncontrolling interests		$1,074	$1,269	$1,358
Other comprehensive (loss)/income, net of tax
	Defined benefit pension and other postretirement benefits	(213)	(156)	9
	Unrealized foreign currency translation adjustments	(36)	106	(155)
	Derivative financial instruments	—	(1)	(1)
Other comprehensive loss, net of tax		(249)	(51)	(147)
Total comprehensive income		$825	$1,218	$1,211
Less: amounts attributable to noncontrolling interests:
	Net income	(15)	(26)	(17)
	Unrealized foreign currency translation adjustments	—	1	11
Comprehensive income attributable to PPG		$810	$1,193	$1,205

The accompanying notes to the consolidated financial statements are an integral part of these consolidated statements.

     2020 PPG ANNUAL REPORT AND 10-K 34

Consolidated Balance Sheet

	December 31
($ in millions)	2020	2019
Assets
Current assets
Cash and cash equivalents	$1,826	$1,216
Short-term investments	96	57
Receivables	2,726	2,756
Inventories	1,735	1,710