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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
  –––––––––––––––––––––––––––––––––––––––––––––––––
FORM 10-Q
  –––––––––––––––––––––––––––––––––––––––––––––––––
☑    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2022
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-20220930_g1.gif
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
PPG INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
25-0730780
(I.R.S. Employer Identification No.)
Pennsylvania
(State or Other Jurisdiction of Incorporation or Organization)
One PPG Place, Pittsburgh, Pennsylvania
(Address of Principal Executive Offices)
15272
(Zip Code)
(412) 434-3131
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
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
PPGNew York Stock Exchange
0.875% Notes due 2025PPG 25New York Stock Exchange
1.875% Notes due 2025PPG 25ANew York Stock Exchange
1.400% Notes due 2027PPG 27New York Stock Exchange
2.750% Notes due 2029PPG 29ANew York Stock Exchange
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☑     No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes ☑    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
Large Accelerated Filer☑Accelerated Filer☐
Non-accelerated Filer
☐ 
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 is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐    No ☑
As of September 30, 2022, 235,027,394 shares of the Registrant’s common stock, par value $1.66 2/3 per share, were outstanding.


PPG INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
 
  PAGE
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
1
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Income (Unaudited)
 Three Months Ended
September 30		Nine Months Ended
September 30
($ in millions, except per share amounts)2022202120222021
Net sales$4,468 $4,372 $13,467 $12,612 
Cost of sales, exclusive of depreciation and amortization2,821 2,733 8,473 7,594 
Selling, general and administrative931 950 2,887 2,796 
Depreciation95 100 296 286 
Amortization40 46 125 126 
Research and development, net110 114 340 323 
Interest expense46 30 114 91 
Interest income(14)(7)(34)(19)
Impairment and other related charges, net— 21 230 21 
Business restructuring, net36 — 36 (21)
Other income, net(15)(56)(62)(118)
Income before income taxes$418 $441 $1,062 $1,533 
Income tax expense79 96 252 370 
Income from continuing operations$339 $345 $810 $1,163 
Loss from discontinued operations, net of tax— — (2)— 
Net income attributable to controlling and noncontrolling interests$339 $345 $808 $1,163 
Net income attributable to noncontrolling interests(10)(1)(20)(10)
Net income (attributable to PPG)$329 $344 $788 $1,153 
Amounts attributable to PPG:
Income from continuing operations, net of tax$329 $344 $790 $1,153 
Loss from discontinued operations, net of tax— — (2)— 
Net income (attributable to PPG)$329 $344 $788 $1,153 
Earnings per common share:
Income from continuing operations, net of tax$1.40 $1.45 $3.34 $4.85 
Loss from discontinued operations, net of tax— — (0.01)— 
Earnings per common share (attributable to PPG)$1.40 $1.45 $3.33 $4.85 
Earnings per common share – assuming dilution:
Income from continuing operations, net of tax$1.39 $1.43 $3.33 $4.81 
Loss from discontinued operations, net of tax— — (0.01)— 
Earnings per common share (attributable to PPG) - assuming dilution$1.39 $1.43 $3.32 $4.81 
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.
2
Table of Contents

Condensed Consolidated Statement of Comprehensive (Loss)/Income (Unaudited)
 Three Months Ended
September 30		Nine Months Ended
September 30
($ in millions)2022202120222021
Net income attributable to controlling and noncontrolling interests$339 $345 $808 $1,163 
Other comprehensive loss, net of tax:
Defined benefit pension and other postretirement benefits2 6 11 (1)
Unrealized foreign currency translation adjustments(353)(215)(543)(276)
Other comprehensive loss, net of tax($351)($209)($532)($277)
Total comprehensive (loss)/income($12)$136 $276 $886 
Less: amounts attributable to noncontrolling interests:
Net income(10)(1)(20)(10)
Unrealized foreign currency translation adjustments7 2 16 5 
Comprehensive (loss)/income attributable to PPG($15)$137 $272 $881 
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.
3
Table of Contents
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet (Unaudited)
($ in millions)September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$1,029 $1,005 
Short-term investments60 67 
Receivables, net3,541 3,152 
Inventories2,411 2,171 
Other current assets449 379 
Total current assets$7,490 $6,774 
Property, plant and equipment (net of accumulated depreciation of $4,435 and $4,532)
3,140 3,442 
Goodwill5,884 6,248 
Identifiable intangible assets, net2,352 2,783 
Deferred income taxes182 197 
Investments253 274 
Operating lease right-of-use assets815 891 
Other assets752 742 
Total$20,868 $21,351 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities$4,299 $4,392 
Restructuring reserves135 173 
Short-term debt and current portion of long-term debt314 9 
Current portion of operating lease liabilities178 192 
Total current liabilities$4,926 $4,766 
Long-term debt6,478 6,572 
Operating lease liabilities631 693 
Accrued pensions801 834 
Other postretirement benefits657 672 
Deferred income taxes539 646 
Other liabilities692 757 
Total liabilities$14,724 $14,940 
Commitments and contingent liabilities (Note 15)
Shareholders’ equity:
Common stock$969 $969 
Additional paid-in capital1,122 1,081 
Retained earnings20,736 20,372 
Treasury stock, at cost(13,527)(13,386)
Accumulated other comprehensive loss(3,266)(2,750)
Total PPG shareholders’ equity$6,034 $6,286 
Noncontrolling interests110 125 
Total shareholders’ equity$6,144 $6,411 
Total$20,868 $21,351 
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity (Unaudited)
($ in millions)Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal PPGNon-controlling InterestsTotal
January 1, 2022$969 $1,081 $20,372 ($13,386)($2,750)$6,286 $125 $6,411 
Net income attributable to controlling and noncontrolling interests— — 18 — — 18 5 23 
Other comprehensive income/(loss), net of tax— — — — 36 36 (3)33 
Cash dividends— — (139)— — (139)— (139)
Issuance of treasury stock— 24 — 5 — 29 — 29 
Stock-based compensation activity— (12)— — — (12)— (12)
Dividends paid on subsidiary common stock to noncontrolling interests— — — — — — (1)(1)
Reductions in noncontrolling interests— — — — — — (11)(11)
March 31, 2022$969 $1,093 $20,251 ($13,381)($2,714)$6,218 $115 $6,333 
Net income attributable to the controlling and noncontrolling interests— — 441 — — 441 5 446 
Other comprehensive loss, net of tax— — — — (208)(208)(6)(214)
Cash dividends— — (140)— — (140)— (140)
Purchase of treasury stock— — — (150)— (150)— (150)
Issuance of treasury stock— 6 — 3 — 9 — 9 
Stock-based compensation activity— 9 — — — 9 — 9 
Dividends paid on subsidiary common stock to noncontrolling interests— — — — — — (6)(6)
Other— 3 — — — 3 1 4 
June 30, 2022$969 $1,111 $20,552 ($13,528)($2,922)$6,182 $109 $6,291 
Net income attributable to the controlling and noncontrolling interests— — 329 — — 329 10 339 
Other comprehensive loss, net of tax— — — — (344)(344)(7)(351)
Cash dividends— — (145)— — (145)— (145)
Issuance of treasury stock— 2 — 1 — 3 — 3 
Stock-based compensation activity— 9 — — — 9 — 9 
Dividends paid on subsidiary common stock to noncontrolling interests— — — — — — (1)(1)
Reductions in noncontrolling interests— — — — — — (1)(1)
September 30, 2022$969 $1,122 $20,736 ($13,527)($3,266)$6,034 $110 $6,144 
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($ in millions)Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive LossTotal PPGNon-controlling InterestsTotal
January 1, 2021$969 $1,008 $19,469 ($13,158)($2,599)$5,689 $126 $5,815 
Net income attributable to controlling and noncontrolling interests— — 378 — — 378 7 385 
Other comprehensive loss, net of tax— — — — (131)(131)(2)(133)
Cash dividends— — (128)— — (128)— (128)
Issuance of treasury stock— 25 — 10 — 35 — 35 
Stock-based compensation activity— (4)— — — (4)— (4)
Reductions in noncontrolling interests— — — — — — (1)(1)
March 31, 2021$969 $1,029 $19,719 ($13,148)($2,730)$5,839 $130 $5,969 
Net income attributable to the controlling and noncontrolling interests— — 431 — — 431 2 433 
Other comprehensive income/(loss), net of tax— — — — 66 66 (1)65 
Cash dividends— — (128)— — (128)— (128)
Issuance of treasury stock— 17 — 10 — 27 — 27 
Stock-based compensation activity— 7 — — — 7 — 7 
Dividends paid on subsidiary common stock to noncontrolling interests— — — — — — (4)(4)
Acquisition of noncontrolling interests— — — — — — 53 53 
Reductions in noncontrolling interests— — — — — — (11)(11)
June 30, 2021$969 $1,053 $20,022 ($13,138)($2,664)$6,242 $169 $6,411 
Net income attributable to the controlling and noncontrolling interests— — 344 — — 344 1 345 
Other comprehensive loss, net of tax— — — — (207)(207)(2)(209)
Cash dividends— — (140)— — (140)— (140)
Issuance of treasury stock— 3 — 2 — 5 — 5 
Stock-based compensation activity— 9 — — — 9 — 9 
Dividends paid on subsidiary common stock to noncontrolling interests— — — — — — (1)(1)
Reductions in noncontrolling interests— — — — — — (10)(10)
September 30, 2021$969 $1,065 $20,226 ($13,136)($2,871)$6,253 $157 $6,410 
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended
September 30
($ in millions)20222021
Operating activities:
Net income attributable to controlling and noncontrolling interests$808 $1,163 
Less: Loss from discontinued operations(2)— 
Income from continuing operations$810 $1,163 
Adjustments to reconcile net income to cash from operations:
Depreciation and amortization421 412 
Pension income(19)(27)
Environmental remediation charges— 26 
Business restructuring, net36 (21)
Impairment and other related charges, net230 21 
Stock-based compensation expense27 39 
Gain from sale of production facility— (34)
Equity affiliate income, net of dividends(15)(6)
Deferred income taxes(129)58 
Cash used for restructuring actions(63)(60)
Change in certain asset and liability accounts (net of acquisitions):
Receivables(644)(376)
Inventories(458)(334)
Other current assets(68)24 
Accounts payable and accrued liabilities340 423 
Taxes and interest payable67 (52)
Noncurrent assets and liabilities, net(41)(74)
Other(118)(76)
Cash from operating activities$376 $1,106 
Investing activities:
Capital expenditures($368)($220)
Business acquisitions, net of cash balances acquired(43)(2,137)
Proceeds from asset sales116 — 
Proceeds from sale of production facility— 47 
Other49 34 
Cash used for investing activities($246)($2,276)
Financing activities:
Proceeds from commercial paper and short-term debt, net of payments($439)$375 
Proceeds from Term Loan Credit Agreement, net of fees— 699 
Repayment of Term Loan Credit Agreement(100)— 
Repayment of term loan— (400)
Proceeds from the issuance of debt, net of discounts and fees1,116 692 
Repayment of long-term debt(3)(173)
Repayment of acquired debt(2)(207)
Purchase of treasury stock(190)— 
Issuance of treasury stock11 46 
Dividends paid on PPG common stock(424)(396)
Payments related to tax withholding on stock-based compensation awards(14)(18)
Other(11)(12)
Cash (used for)/from financing activities($56)$606 
Effect of currency exchange rate changes on cash and cash equivalents(50)(46)
Net increase/(decrease) in cash and cash equivalents$24 ($610)
Cash and cash equivalents, beginning of period1,005 1,826 
Cash and cash equivalents, end of period$1,029 $1,216 
Supplemental disclosures of cash flow information:
Interest paid, net of amount capitalized$119 $110 
Taxes paid, net of refunds$343 $376 
Supplemental disclosure of noncash investing and financing activities:
Capital expenditures accrued within Accounts payable and accrued liabilities at period-end$76 $76 
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.
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PPG INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
1.Basis of Presentation
The condensed consolidated financial statements included herein are unaudited and have been prepared following the requirements of the Securities and Exchange Commission (the "SEC") and accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim reporting. Under these rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. These statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the financial position and shareholders' equity of PPG as of September 30, 2022 and the results of its operations and cash flows for the three and nine months ended September 30, 2022 and 2021. All intercompany balances and transactions have been eliminated. Material subsequent events are evaluated through the report issuance date and disclosed where applicable. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in PPG's 2021 Annual Report on Form 10-K (the "2021 Form 10-K").
Net sales, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results of operations for the three and nine months ended September 30, 2022 and the trends in these unaudited condensed consolidated financial statements may not necessarily be indicative of the results to be expected for the full year.
2.New Accounting Standards
Accounting Standards Adopted in 2022
Effective January 1, 2022, PPG adopted Accounting Standards Update ("ASU") No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)." This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity. Adoption of this standard did not materially impact PPG's consolidated financial position, results of operations or cash flows.
Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform." This ASU provides optional expedients and exceptions to U.S. GAAP for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in this ASU are effective through December 31, 2022. As of September 30, 2022, PPG has not applied any of the optional expedients or exceptions allowed under this ASU. PPG does not believe that this ASU will have a material impact on its consolidated financial position, results of operations or cash flows.
3.     Inventories
($ in millions)September 30, 2022December 31, 2021
Finished products$1,293 $1,175 
Work in process255 234 
Raw materials824 723 
Supplies39 39 
Total Inventories$2,411 $2,171 
Most U.S. inventories are valued using the last-in, first-out method. These inventories represented approximately 34% and 29% of total inventories at September 30, 2022 and December 31, 2021, respectively. If the first-in, first-out ("FIFO") method of inventory valuation had been used, inventories would have been $260 million and $174 million higher as of September 30, 2022 and December 31, 2021, respectively.
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4.    Goodwill and Other Identifiable 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 first quarter 2022, due to the adverse economic impacts of Russian military forces invading Ukraine, the Company identified indicators that the carrying value of an indefinite-lived intangible asset and certain definite-lived intangible assets associated with the Company's operations in Russia may not be recoverable as of March 31, 2022, and the carrying value of those assets was assessed for impairment. As a result of this assessment, the Company recorded impairment charges of $124 million related to the indefinite-lived intangible asset and $23 million related to definite-lived intangible assets in the condensed consolidated statement of income during the three months ended March 31, 2022. Refer to Note 8, "Impairment and Other Related Charges, Net" for additional information.
The Company did not identify an indication of goodwill impairment for any of its reporting units or an indication of impairment of any of its indefinite-lived intangible assets during the quarter ended September 30, 2022.
The change in the carrying amount of goodwill attributable to each reportable segment for the nine months ended September 30, 2022 was as follows:
($ in millions)Performance
Coatings		Industrial
Coatings		Total
January 1, 2022$5,034 $1,214 $6,248 
Acquisitions, including purchase accounting adjustments31 (6)25 
Divestitures (40)— (40)
Foreign currency impact(270)(79)(349)
September 30, 2022$4,755 $1,129 $5,884 
A summary of the carrying value of the Company's identifiable intangible assets is as follows:
 September 30, 2022December 31, 2021
($ in millions)Gross
Carrying
Amount		Accumulated
Amortization		NetGross
Carrying
Amount		Accumulated
Amortization		Net
Indefinite-Lived Identifiable Intangible Assets
Trademarks$1,274 N/A$1,274 $1,449 N/A$1,449 
Definite-Lived Identifiable Intangible Assets
Acquired technology$829 ($628)$201 $862 ($616)$246 
Customer-related1,756 (1,034)722 1,956 (1,064)892 
Trade names303 (150)153 336 (144)192 
Other47 (45)2 51 (47)4 
Total Definite-Lived Intangible Assets$2,935 ($1,857)$1,078 $3,205 ($1,871)$1,334 
Total Identifiable Intangible Assets$4,209 ($1,857)$2,352 $4,654 ($1,871)$2,783 
The Company’s identifiable intangible assets with definite lives are being amortized over their estimated useful lives.
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As of September 30, 2022, estimated future amortization expense of identifiable intangible assets is as follows:
($ in millions)Future Amortization Expense
Remaining three months of 2022$40 
2023$165 
2024$150 
2025$135 
2026$115 
2027$100 
Thereafter$373 
5.     Business Restructuring
The Company records restructuring liabilities that represent charges incurred in connection with consolidations of certain operations, including both operations from acquisitions and headcount reduction programs. These charges consist primarily of severance costs and certain other cash costs. As a result of these programs, the Company also incurs incremental non-cash accelerated depreciation expense for certain assets due to their reduced expected useful life. These charges are not allocated to the Company’s reportable business segments. Refer to Note 17, "Reportable Business Segment Information" for additional information.
In the third quarter 2022, the Company approved a business restructuring plan which included actions to reduce its global cost structure in response to current economic conditions, including softening demand in Europe and lower than expected demand recovery in China. The Company performed a comprehensive evaluation to identify opportunities to reduce costs and improve the profitability of the overall business portfolio. The program includes actions to right-size employee headcount, reductions in functional and administrative costs and other cost savings actions. The majority of these restructuring actions are expected to be completed by the end of 2023. Based on the approval of this business restructuring plan, the Company recorded net business restructuring charges of $36 million during the three months ended September 30, 2022, comprised of $84 million of charges related to the recently approved business restructuring plan, partially offset by $48 million of income due to releases of existing restructuring reserves recorded to reflect the current estimate of costs to complete previously approved business restructuring actions.
In the fourth quarter 2021, the Company approved business restructuring actions related to recent acquisitions targeting further consolidation of its manufacturing footprint and headcount reductions. The majority of these restructuring actions are expected to be completed by the end of 2023.
In the second quarter 2020, the Company approved a business restructuring plan which included actions to reduce its global cost structure. The program addressed weakened global economic conditions stemming from COVID-19 and related pace of recovery in a few end-use markets along with further opportunities to optimize supply chain and functional costs. In the second quarter 2019, the Company approved a business restructuring plan which included actions to reduce its global cost structure. Substantially all remaining actions of the 2020 and 2019 restructuring programs are expected to be completed in 2022.
The following table summarizes restructuring reserve activity for the nine months ended September 30, 2022 and 2021:
Total Reserve
($ in millions)20222021
January 1$231 $293 
Approved restructuring actions84 2 
Release of prior reserves and other adjustments(a)
(48)(23)
Cash payments(63)(60)
Foreign currency impact(23)(14)
September 30$181 $198 
(a)Certain releases were recorded to reflect the current estimate of costs to complete planned business restructuring actions.
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6.    Borrowings
In May 2022, PPG completed a public offering of €300 million 1.875% Notes due 2025 and €700 million 2.750% Notes due 2029. These notes were issued pursuant to PPG’s existing shelf registration statement and pursuant to an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented (the "2022 Indenture"). The 2022 Indenture governing these notes contains covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of these notes also require the Company to make an offer to repurchase Notes upon a Change of Control Triggering Event (as defined in the 2022 Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest. The Company may issue additional debt from time to time pursuant to the Indenture. The aggregate cash proceeds from the notes, net of discounts and fees, was $1,061 million. The notes are denominated in euro and have been designated as hedges of net investments in the Company’s European operations. For more information, refer to Note 13 “Financial Instruments, Hedging Activities and Fair Value Measurements.”
In March 2022, PPG privately placed a 15-year €50 million 1.95% fixed interest note. This note contains covenants materially consistent with the 1.200% notes discussed below. This debt arrangement is denominated in euros and has been designated as a net investment hedge of the Company's European operations. Refer to Note 13 "Financial Instruments, Hedging Activities and Fair Value Measurements" for additional information.
In the second quarter of 2021, two of PPG's long-term debt obligations matured; $134 million 9% non-callable debentures and non-U.S. debt of €30 million. The Company paid $170 million to settle these obligations using cash on hand.
In March 2021, PPG completed a public offering of $700 million aggregate principal amount of 1.200% notes due 2026. These notes were issued pursuant to PPG’s existing shelf registration statement and pursuant to the Indenture between the Company and the Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented (the "2021 Indenture"). The 2021 Indenture governing these notes contains covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of these notes also require the Company to make an offer to repurchase the notes upon a Change of Control Triggering Event (as defined in the 2021 Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest. The Company may issue additional debt from time to time pursuant to the 2021 Indenture. The aggregate cash proceeds from the notes, net of discounts and fees, was $692 million.
In February 2021, PPG entered into a $2.0 billion Term Loan Credit Agreement (the "Term Loan Credit Agreement") to finance the Company’s acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. The Term Loan Credit Agreement provided the Company with the ability to borrow up to an aggregate principal amount of $2.0 billion on an unsecured basis. In addition to the amounts borrowed to finance the acquisition of Tikkurila, the Term Loan Credit Agreement allowed the Company to make up to eleven additional borrowings prior to December 31, 2021, to be used for working capital and general corporate purposes. The Term Loan Credit Agreement contains covenants that are consistent with those in the Credit Agreement discussed below and that are usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the Company’s ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Term Loan Credit Agreement matures and all outstanding borrowings are due and payable on the third anniversary of the date of the initial borrowing under the Agreement. In June 2021, PPG borrowed $700 million under the Term Loan Credit Agreement to finance the Company’s acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. In December 2021, PPG borrowed an additional $700 million under the Term Loan Credit Agreement. In the third quarter 2022, PPG repaid $100 million of the Term Loan Credit Agreement using cash on hand. Borrowings of $1.3 billion and $1.4 billion were outstanding under the Term Loan Credit Agreement as of September 30, 2022 and December 31, 2021, respectively.
In April 2020, PPG entered into a $1.5 billion 364-Day Term Loan Credit Agreement (the “Term Loan”). The Term Loan contained covenants that are consistent with those in the Credit Agreement discussed below and that are usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the Company’s ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. In 2020, PPG repaid $1.1 billion of the Term Loan using cash on hand. In the first quarter 2021, PPG repaid the remaining $400 million of the Term Loan using cash on hand. The Term Loan terminated on April 13, 2021.
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In August 2019, PPG amended and restated its five-year credit agreement (the “Credit Agreement”) with several banks and financial institutions. The Credit Agreement provides for a $2.2 billion unsecured revolving credit facility. The Company has the ability to increase the size of the Credit Agreement by up to an additional $750 million, subject to the receipt of lender commitments and other conditions precedent. The Credit Agreement will terminate on August 30, 2024. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. There were no amounts outstanding under the credit agreement as of September 30, 2022 and December 31, 2021.
The Term Loan Credit Agreement and Credit Agreement require the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Term Loan Credit Agreement and 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 September 30, 2022, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and Term Loan Credit Agreement was 50%.
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. Commercial paper borrowings of zero and $440 million were outstanding as of September 30, 2022 and December 31, 2021, respectively.
Letters of Credit and Surety Bonds
The Company had outstanding letters of credit and surety bonds of $235 million as of September 30, 2022.
7.Other Income, Net
Three Months Ended
September 30		Nine Months Ended
September 30
($ in millions)2022202120222021
Gain on sale of assets(a)
$2 $34 $7 $38 
Foreign currency gain, net— 4 27 14 
Share of net earnings of equity affiliates6 4 20