PPG’s Income from continuing operationsbefore 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 PPG’sour architectural coatings businesses. Demand for PPG’sour architectural coatings 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.

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, in 2018, we increased the percent of our sales from sustainable products.products to 33% in 2019 from 32% in 2018. 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

waterborne coatings formulations; lightweight sealants and coatings for aircraft; coatings that cool surfaces; coatings for recyclable metal packaging; and solutions for autonomous and battery-powered vehicles.

PPG isWe 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 124 current and former manufacturing sites and offsite waste disposal locations, including 22certain 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.

The Company’sOur experience to date regarding environmental matters leads itus to believe that it 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 $291$304 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.

It is expected that capital expenditures for such projects in 20192020 will be in the range of $25$20 million to $35$30 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.

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.operations, financial position and liquidity.

Our financial results are significantly affected by the cost of raw materials. Coatings rawRaw 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 products use both petroleum-derived andraw 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.

During 2018, economic conditions improved in all of our major geographical regions while remaining mixed by end-use market. 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 slowing global growth, global stockconsumer 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 and increasing interest rates in the United States.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.

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, andsubstances. In addition, various laws regulate various 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

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 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.

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 20182019 by products sold outside the U.S. was approximately 62%61%.

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 comesbecomes 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.

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.

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.

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:

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 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.

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. 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.

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.

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 have 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 has restated these financial statements, andremediated the material weakness in the Company’s internal control over financial reporting, has been remediated, asreached a resultsettlement with the SEC and is no longer the subject of these misstatements,an investigation by the U.S. Attorney’s Office, we have becomecontinue to be subject to a number of additional risks and uncertainties relating to these events, including unanticipated costsshareholder derivative litigation, 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 accounting and legal fees in connection with or relatedalleged violations of the securities laws relating to the restatement the outcome of our shareholder litigation and government investigations,described above, potential loss of investor confidence, potential reputational harm and a potential negative impact on our stock price. Our shareholder litigation and the government investigations could result in substantial defense costs regardless of the outcome of the litigation or investigation. If we do not prevail in any such litigation, we could be required to pay substantial damages or settlement costs.

None.

The Company’sPPG’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. As of February 21, 2019, the Company operated 128 manufacturing facilities in 39 countries. 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.; Marly, France;Tianjin, China; Milan, Italy; Monroeville, Pa.; Springdale, Pa.; Amsterdam, Netherlands; Burbank, Calif.; Tianjin, China; Amsterdam, NetherlandsTepexpan, Mexico; Marly, France and Tepexpan, Mexico.Wroclaw, Poland.

The Company’sOur headquarters, certain distribution centers and substantially all company-owned paint stores are located in facilities that are leased while the Company’sour 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.

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, and 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.

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 new 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.

Set forth below is information related to the Company’s executive officers as of February 21, 2019.20, 2020. 

Not Applicable.

The information required by Item 5 regarding market information, including PPG’s stock exchange listing and quarterly stock market prices, dividends and holders of common stock is included in Exhibit 13.1 filed with this Form 10-K and is incorporated herein by reference. Annual information is also included in the 20182019 Financial Overview and Shareholder Information on page 103 of the Annual Report to shareholders.

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 2018.2019.

The information required by Item 6 regarding the selected financial data for the five years ended December 31, 20182019 is included in Exhibit 13.2 filed with this Form 10-K and is incorporated herein by reference. This information is also reported in the Five-Year Digest on page 10490 of the Annual Report to shareholders.

We achieved higher acquisition-related sales, netselling prices across nearly all businesses, reflecting the value of dispositions

U.S. and Canada net sales increased a low-single-digit percentage primarily driven bywere relatively flat compared to the prior year. Higher selling prices and net sales from acquired businesses which added approximately $110 million, primarilywere almost entirely offset by lower sales volumes. The unfavorable impact from The Crown Group, as well as higher selling pricescustomer assortment changes in most businesses.the U.S. architectural DIY channel negatively impacted sales volumes.

Europe, Middle East and Africa (EMEA) net sales increased a mid-single-digit percentage, leddecreased nearly 3% versus the prior year, driven by slightly positiveunfavorable foreign currency translation and lower sales volumes, partially offset by higher selling prices in all businesses and favorable foreign currency translation driven by the euro and U.K. pound.net sales from acquired businesses.

Asia Pacific net sales increased by a mid-single-digit percentage aided by higher selling prices in most businesses and higher sales volumes, slightly offset by weakening industry demand in China later in the year. Sales growth was also supported by a more than 10% increase in India and solid gains in Australia and Southeast Asia. Net sales in this region also benefited from favorable foreign currency translation.

Latin America net sales decreased slightly versus the prior year, driven by the Mexican peso.lower sales volumes and unfavorable foreign currency translation, partially offset by higher selling prices.

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

Selling, general and administrative expenses

Interest expense, net of Interest income increased $10$5 million in 20182019 versus 20172018 primarily due to the issuancehigher levels of long-term debt in early 2018. Interest expense, net of Interest income decreased $14 million in 2017 versus 2016 due to lower interest rate debt outstanding in 2017.the current year.

Other income was lower in 2018 and 20162019 than in 2017prior year primarily due to thea gain fromin 2018 on the sale of land near a facility of the Mexican Plaka business of $25 million and income from a legal settlement of $18 million in 2017. Refer to Note 3, "Acquisitions and Divestitures" in Item 8 of this Form 10-K for additional information.

The effective tax rate for the year-ended December 31, 20182019 was 20.9% and decreased 9.8%23.6%, an increase of 2.7% from the prior year. In 2017,2018, the tax rate includedbenefited from certain favorable adjustments, including finalization of the taxprovisional toll charge recorded in 2017 for unremitted foreign earnings under the U.S. Tax Cuts and Jobs Act, while in 2018, the tax rate benefited from prior period adjustments, including finalization of the provisional toll charge recorded in 2017. The Act.

As reported, earnings per diluted share from continuing operations for the year ended December 31, 2018 increased2019 decreased year-over-year. Refer to the Regulation G Reconciliations - Results offrom Operations for additional information. The Company’s earnings per diluted share and adjusted earnings per diluted share benefited from the 15.9 million, 7.42.7 million and 10.715.9 million shares of stock repurchased in 2018, 20172019 and 2016,2018, respectively, in conjunction with the Company’s cash deployment objectives.

PPG Industries believes investors’investor’s understanding of the Company’s operating performance is enhanced by the disclosure of net income from continuing operations, earnings per diluted share from continuing operations and thePPG’s effective tax rate from continuing operations adjusted for certain charges.items. PPG’s management considers this information useful in providing insight into the Company’s ongoing operating 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 andfrom 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 (GAAP)(“U.S. GAAP”) and should not be considered a substitute for net income, or 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.

HigherFor the full year 2019, PPG achieved higher selling prices across all businesses, were achieved, reflecting the value of our products and services, and which offset persistent raw material and logistics cost inflation.by unfavorable foreign currency translation in all businesses.

Architectural coatings - Americas and Asia-PacificAsia Pacific net sales volumes decreased by a low-single-digitmid-single-digit percentage versus the prior year. Sales volumes were positive year-over-year in the U.S. and Canada company-owned store network as well as in Mexico, Central America, Australia and Brazil. This growth was more than offset by lower DIY and independent dealer network channel declines, including theThe unfavorable impact from a customer assortment changechanges in the U.S. architectural DIY channel. In February 2018, PPG announced that Lowe’s would discontinuechannel negatively impacted sales volumes. The U.S. and Canada company-owned stores network net sales decreased slightly compared to the sale of OLYMPIC® brand paints and stains in its U.S. retail stores, effective mid-2018. Duringprior year. The PPG-Comex architectural coatings businesses had slightly higher net sales, excluding the second quarter 2018, the Company launched its OLYMPIC® stain products at THE HOME DEPOT®’s U.S. retail stores, expanding an existing partnership arrangement. The net impact of these customer assortment changes resultedforeign currency translation and acquisitions (organic sales), and continued to benefit from the opening of a net of approximately 160 new concessionaire locations. Net sales in net sales being lowerAsia Pacific were negatively impacted by approximately $100 million in 2018.unfavorable foreign currency translation.

Architectural coatings - EMEA net sales grewdecreased by a mid-single digit percentage. Higher selling prices and acquisition-related sales more than offset modestly lower sales volumes. Sales volumes grew in countries in Northern and Eastern Europe and were lower in Southern Europe.

Automotive refinish coatings net sales were relatively flat versus the prior year including the increase in net sales from the SEM acquisition. Sales volumes were impacted by softer U.S. industry demand inevidenced by lower collision claims during the U.S. due to customer inventory destocking and lower industry collision claim activity.year. Organic sales increased in all other major geographic regions as customers continued to adopt PPG’s industry leadingindustry-leading technologies.

Aerospace coatings net sales volumes grewincreased by more than 10 percentover 10% versus the prior year, including above-market volume growth in the U.S. and Asia. Strong growthdriven by higher sales volumes. This increase was supported by positive industry demand fundamentals and market outperformance in all major platforms stemming from technology advantaged products.technology-advantaged products and robust industry demand.

Protective and marine coatings increased net sales volumes increased by a high-single-digit percentage year-over-year. Protective coatings sales volumes were up a mid-single-digit percentage versus the prior year, driven by growth in China. Marine coatingsstrong sales volumes grewin China and Europe and price gains in each region. Net sales in the U.S. were negatively impacted by more than 10 percent off a low sales base as ship buildingreduced activity grew modestly in Asia.the oil and gas sector.

Segment income decreased $13increased $109 million year-over-year primarily driven by increasing raw materialdue to higher selling prices and logistics costs.the continued benefits from the Company’s ongoing restructuring programs. These cost increasesbenefits were partially offset by higher selling pricesthe earnings impact of lower sales volumes, which were mostly attributable to the previously announced customer assortment changes, and additional benefits from the Company’s restructuring programs. Favorableother cost inflation. Additionally, unfavorable foreign currency translation increaseddecreased segment income by approximately $15$25 million, primarily related to the strengtheningweakening of key currencies, including the Mexican peso and euro.

Performance CoatingsLooking ahead, industry demand levels in the first quarter of 2020 are expected to be similar to those experienced in the fourth quarter of 2019. Acquisitions are forecasted to add about $25 million of net sales increased (2%)primarily from Dexmet, Texstars, and ICR. In addition, net sales will be impacted due to the following:

For the full year 2019, PPG achieved higher selling prices in all major regions for nearly all businesses, reflecting the value of our products and services, offset by unfavorable impactforeign currency translation in all businesses.

In the automotive OEM coatings business, net sales decreased by a mid-single-digit percentage driven by lower sales volumes versus the prior year, consistent with the overall global industry automotive build rate. Partially offsetting the lower sales volumes were acquisition-related sales from natural disastersthe Hemmelrath acquisition and higher selling prices in all major regions.

Industrial coatings net sales increased slightly versus the third quarter 2017. This increase wasprior year, despite lower sales volumes due to weakening global manufacturing demand for certain end-use products. Lower sales volumes were more than offset by acquisition-related sales volume declines infrom the U.S. and Canada independent dealer networks and national retail (DIY) customer accounts, as both distribution channels continued to experience soft demand. Organic sales improved in both the Latin America and Asia Pacific regions.Whitford acquisition.

ArchitecturalPackaging coatings - EMEA net sales increaseddecreased by a high-single-digitmid-single-digit percentage year-over-year, primarily due to acquisition-relatedlower sales principally DEUTEK and Univer, which contributed approximately $85 million to net sales. Sales volumes were down year-over-year primarily driven by continued weak demand in France and eastern Europe, as well as our turning away certain business due to low profitability or lack of customer acceptance of selling price increases. Demand growth continued in Northern Europe, where we continued to outperform the market.

Specialty coatings and materials net sales increased, largely due to the recent Futian Xinshi acquisition in China.

Segment income decreased $9increased $44 million year-over-year primarily due increasing raw material costs, wageyear-over-year. Segment income benefited from improving selling prices, continued benefits from the Company’s ongoing restructuring programs and acquisition-related income, which were partially offset by the earnings impact of lower sales volumes and other cost inflation,inflation. Unfavorable foreign currency translation decreased segment income by approximately $20 million, primarily related to the Chinese yuan, Mexican peso and lower sales volumes partially offset by selling price increases, lower overhead and manufacturing costs, including the initial benefits from business restructuring actions.euro.

Looking ahead, year-over-year raw material cost inflation isglobal industrial demand trends are expected into remain subdued through the first halfquarter of 2019, primarily due2020, with inconsistencies by region. Significant public health issues could have an unfavorable impact in certain industries and regions. The company will continue to carry-over inflation. Acquisition relatedprioritize operating margin recovery, focusing on executing its cost savings program and implementing contingency actions where necessary. Acquisition-related sales are forecast to add a low-single-digit percentage of sales growth primarilyabout $60 million stemming from the SEM acquisitionWhitford and basedHemmelrath. Based on current exchange rates, we expect foreign currency translation is not expected to have an unfavorablea material impact on segment sales of approximately $100 million in the first quarter.

During 2018,2019, economic conditions were generally positive in all of our major geographicalgeographic regions while remainingdespite soft global manufacturing activity that weakened during the year and remained mixed by end-uses. PPG’s aggregate organicnet sales excluding foreign currency translation impact grew approximately 3%1% versus the prior year. Acquisition-related sales from two acquisitions completed in 20172018 and the four completed in 20182019 contributed approximately 1%2% to net sales growth year-over-year, net of dispositions. Foreign currency translation was favorable for the first half of the year then turned unfavorable in the second half of the year. For the full year 2018, foreign currency translation favorably impacted sales by approximately 1%. Raw material inflation was elevated throughout the year and overall roseimpacted net sales by about 3%. Raw material costs moderated during the year, but remain elevated after a mid-single digit percentage driven by supply related factors, including government mandated production curtailmentsmulti-year inflationary period. Some other key costs continued to increase in China to help improve pollution2019 such as employee wage and higher oil prices. In addition, logistics costs were significantly higher in 2018 driven by higher oil prices and shortages in the availability in transportation.benefit costs.

During 2018,2019, the pace of economic activity improvedgrowth moderated in the U.S. and Canada region versus the prior year, led by strongerweaker U.S. GDP growth in the U.S. despitegrowth. Automotive OEM industry builds were relatively flat automotive industry builds.compared to 2018. Demand in the residential and commercial construction markets was modestly higher in 20182019 compared to 2017.2018. New home starts advanced approximately 2% in 2019 versus approximately 4% in 2018 versus approximately 3% in 2017.2018. Residential remodeling was flatdown 2% in 20182019 versus 2017,2018, while commercial construction was flatdown approximately 4% compared to a 1% declineflat in 2017.2018. Market demand for architectural paint continued to shift more to the professional trade painters channel as the continued decline inlower U.S. unemployment resulted in consumers choosing professional painters

rather than completing projects themselves. Demandthemselves; although, demand in U.S. do-it-yourself (DIY) paint stores continued to remain soft throughout the year consistent with 2017.was stable after several years of weaker trends. PPG’s architectural coatings performancesales volumes in the U.S. and Canada was impacted by DIY customer assortment changes that unfavorably impactedreduced net sales by approximatelymore than $100 million. The aerospace coatings business had above-market sales volume growth of nearly a double-digit percentage year-over-year. The automotive refinish coatings business was impacted by lower collision rates, changes to inventory management by our customers and a continuing trend of a higher number of automobiles in accidents being totaledscrapped rather than being repaired and repainted offsetting modest growth in miles driven. PPG’s packaging coatings business continued to expand well ahead ofwas impacted by lower packaged food demand which offset growth in the industry driven by continued strong sales growth momentum related to customer adoption of PPG’s new interior can coatings technologies.packaged beverage segment. PPG’s automotive OEM coatings business performance was slightly better thanbelow industry demand levels due to modest share gains.customer mix. Higher selling prices and acquisition-related sales nearly offset lower sales volumes in the automotive OEM coatings business. For the industrial coatings business, acquisition-related sales and higher selling prices were partially offset by lower sales volumes. The U.S. and Canada region remained PPG’s largest region, representing approximately 42%43% of 2018 sales, although a smaller percentage of total sales than in the prior year.2019 net sales.

European economic activity was mixedweak in 2018.2019. Industrial production was higherand manufacturing rates in the first half of the yearregion were lower than 2018 and moderatedworsened as the year progressed. The region was impacted by continuing uncertainty over the United Kingdom’s exit from the European Union. Overall GDPUnion and industrial production were similar to 2017overall contracting demand in most of the region.end-use markets that PPG supplies. Regional demand continued to be mixed by country and end-uses. Demand for PPG’s products was impacted by a decline in several end-uses droveautomotive industry builds and soft manufacturing activity in most of the regional growth rate, including above market performance in general industrial coatings packaging coatings and specialty coatings and materials.sub-segments. PPG’s architectural coatings - EMEA business organic sales volumes decreased year-over-year, drivenwere higher by soft demand in Southern Europe.a low-single-digit percentage as higher selling prices offset lower sales volumes.

EMEA represented approximately 30% of PPG’s 20182019 net sales, similar to prior year levels. Regional coatings volumes remain approximately 15%20% below their2008 pre-recession levelslevels. Net sales, excluding the impact of foreign translation, increased in 2008.2019 compared to 2018 as higher selling prices and acquisition-related sales more than offset lower sales volumes. The modest volume recovery reflects the slow pace of economic growth in the region. PPG expects modest volume growth over time at attractive incremental margins due to significant cost structure improvements and available capacity to satisfy additional demand. In the second half of the year, the euro and British pound both depreciated against the U.S. dollar.dollar during 2019.

The emerging regions of Asia Pacific and Latin America represented 28%27% of PPG’s 20182019 net sales in aggregate, similar to the prior year.

Overall, demand in Latin America improveddeclined year-over-year for the second consecutive year, with continued above market growthdriven by lower automotive industry builds and overall softer economic conditions in Mexico and Central America. Economic conditions were mixedmost countries, including a weak trading environment in South America, and there was heightened currency volatility throughout the entire region.Mexico. In Mexico, the PPG-Comex business added over 200a net of approximately 160 new concessionaire locations. The overall region’s performance was supported by strong growth in the general industrial and packaging coatings businesses.business. Weaker sales volumes were offset by higher selling prices. Foreign currency translation was volatile and finished 4 percent2% unfavorable compared to 2017,2018, principally driven by weaker currencies, including the Mexican peso and Brazilian real.

Looking ahead to 2019,2020, we expect modest global market growth to continue, but we expect a downshift in the pace of growth, and itthat will likely be uneven by region and end-use. We expect most regional growth rates to be modestly lower than 2018, butsimilar to 2019, with the Latin America region growth rate to be slightly higher.softest conditions expected in the EMEA region.

We anticipate PPG’s U.S. and Canada regional growth will be led by general industrial coatings and aerospace coatings, withalbeit at lower levels than 2019 due to expected production curtailments at one customer, especially in the first half of the year. Automotive OEM builds are expected to be relatively flat automotive industry builds.compared to 2019. We expect modestly positive growth in housing and commercial construction to be comparable to 2018.construction.

We expect similar industry demand trends in 2020 in Europe as those experienced in 2019 with continuing improvement in profitability due to grow but at lower levels than 2018.margin improvement. Regional growth is expected to remain mixed by sub-region and country. Favorable end-use trends are expected to continue in general industrial and packagingaerospace coatings, with flattening demandthe potential for heightened volatility in automotive OEM builds due to new regional emission standards. Industrial coatings demand is expected to remain soft as industry growth rates are anticipated to be flat.flat to modestly lower. Demand is expected to stay subduedcontract but be mixed by country in the architectural coatings business. We continue to monitor the economic environment in the U.K., as theirits exit from the European Union progresses and impacts consumer sentiment and coatings demand.

In Asia Pacific, we expect continuedimproved industrial production growth in China, Southeast Asia and India.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. The sharp decline in automotive OEM activity seenrealized in the second half of 2018past 18 months is expected to continue in the beginning of 2019. We expectmoderate and improve as 2020 progresses, with year-over-year demand patterns expected to become more favorable in the second half of 2019.2020. The recovery in marine coatings new-build demand is expected to continue, albeit off a low base.remain subdued.

In Latin America, we anticipate slightly better economic expansion will continueconditions in Mexico, most of Central America and South America.America compared to 2019.

In May 2018,June 2019, PPG initiated an $83a $184 million global restructuring program. The program is largely centered around the change in customer assortment relatedresult of a comprehensive internal operational assessment to identify further opportunities to improve profitability of the U.S. architectural coatings DIY business.overall business portfolio. PPG recognized $18approximately $15 million of savings from this program in 2018.2019. The majority of restructuring actions are expected to be completed by the end of the fourth quarter 2020 with the remainder of the actions expected to be completed in 2022.

SignificantWe made significant progress was made on the global restructuring programprograms that waswere announced in December 2016. This program targeted annual savings of approximately $125 million once fully implemented.2016 and May 2018. The Company achieved approximately $60$70 million of savings in 2019 relating to these programs. These restructuring actions are expected to be completed by the end of the second quarter of 2020. Aggregate restructuring savings related to the 2019, 2018 bringing the total savings toand 2016 programs was approximately $110 million to date.

We will continue to aggressively manage the Company’s cost structure to ensure alignment with the overall demand environment and we will make adjustments as required to remain cost competitive in the marketplace. RestructuringAggregate restructuring savings from the 2018 and 2016 programs are expected to be between $60 million and $70at least $75 million in 2019.2020.

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 higher by a mid-single-digit percentagemodestly lower in 20182019 versus 20172018 due to variety of reasons, including supplier force majeure, environmental regulation enforcement,softer industry demand and higherlower crude oil prices. PPG currently expects overall coatings raw material prices to increase a low-single-digit percentagebe impacted by weak industrial supply and demand conditions in the first half of 2019, with impacts varied by region2020. Cost inflation is expected in several other areas including wage, benefit, and commodity, marking the tenth and eleventh consecutive quarters of inflation. In addition, logistics costs were inflated throughout the year driven by higher crude oil prices and availability of transportation. Logistics costs are expected to further increase in 2019.2020.

In 2018,2019, we achieved broad selling price improvement, reflecting the Company’s efforts to offset higher raw material costs.inflationary pressures. Further benefits from selling price actions are necessary in 20192020 to recover profit contribution margins.operating margins, reflecting the value of our products. The Company will carefully monitor raw materialall costs during 20192020 and assess the need for additional increases to selling prices for increases in these costs.price increases.

The 20192020 effective tax rate from continuing operations is expected to be in the range of 23%22% to 25%24%. This range represents the Company’s best estimate, including updated guidance forrecent updates to the 2017 the U.S. Tax Cuts and Jobs Act.

Over the past five years, the Company used over $5$4.5 billion of cash to repurchase approximately 5045 million shares of PPG stock, including approximately $1.7 billion$325 million in 2018.2019. The Company ended the year with approximately $1.8$1.5 billion remaining under its current share repurchase authorization. During 2018,2019, the Company deployed approximately $380nearly $700 million for acquisitions, including the purchase of a remaining minority interest, and $450approximately $470 million for dividends. PPG increased its per-share dividend in October 2018,September 2019, marking the 47th48th annual per share dividend increase and the 119th120th consecutive year of annual dividend payments.

PPG ended 20182019 with approximately $1$1.3 billion in cash and short-term investments. The Company expects continued strong cash generation in 2019.2020.

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.

During the past threetwo years, PPG has 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.

The $64 million decrease in Cash from operating activities - continuing operations was primarily due to unfavorable changes in working capital and lower income in 2018 partially offset by lower cash taxes.

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

We expect cash outlays for environmental remediation activities in 20192020 to be between $80 million and $100 million.

PPG contributed $75 million to its U.S. defined benefit pension plans in 2018. Contributions to PPG’s non-U.S. defined benefit pension plans in 20182019 were required by local funding requirements. PPG expects to make mandatory contributions to its non-U.S. defined benefit pension plans in the range of $15 million to $20 million to $30 million in 2019.2020. PPG may make voluntary contributions to its defined benefit pension plans in 20192020 and beyond.

The $701$245 million increase in cash used for investing activities - continuing operations, was primarily due to the absence of the prior year proceeds from the sale of the North American fiber glass business and higher capital expenditures, includingspending on business acquisitions.

Capital expenditures related to modernization and productivity improvements, expansion of existing businesses and environmental control projects is expected to be in the range of 2.5% to 3.0% of sales during 2019.2020.

A primary focus for the Company in 20192020 will continue to be cash deployment focused on shareholder value creation, with a preference for business acquisitions.

The $749$447 million decrease in cash used for financing activities - continuing operations, was primarily due to the issuance of long term debt, partially offset by higher net purchases of treasury stock year-over-year.

The Company has approximately $1.8$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.

PPG has paid uninterrupted annual dividends since 1899, and 20182019 marked the 47th48th consecutive year of increased annual per-share dividend payments to shareholders. The Company raised its per-share quarterly dividend by 7%6% to $0.48$0.51 per share paid in September 2018.2019.

The ratio of total debt, including finance leases (previously referred to as capital leases,leases), to total debt and equity was 52%49% at December 31, 2018 up2019, down from 43%52% in 2017.2018.

The Credit Agreement also supports the Company’s commercial paper borrowings. As of December 31, 2019, there were $100 million of commercial paper borrowings outstanding. There were no commercial paper borrowings outstanding as of December 31, 2018 under the prior credit agreement.

In addition to the amounts available under the 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. 

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. These significant contractual obligations are presented in the following table.