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: June 30, 20192020
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-20200630_g1.gif
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
PPG INDUSTRIES INC.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) (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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.66 2/3
PPGNew York Stock Exchange
0.000%0.875% Notes due 20192022PPG 1922New York Stock Exchange
0.875% Notes due 20222025PPG 2225New York Stock Exchange
0.875%1.400% Notes due 20252027PPG 2527New York Stock Exchange
1.400% Notes due 2027PPG 27New 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 June 30, 2019, 236,292,8892020, 235,977,363 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.
Condensed Consolidated Statement of Income
2
Condensed Consolidated Statement of Comprehensive Income/(Loss)Income
3
Condensed Consolidated Balance Sheet
4
Condensed Consolidated Statement of Shareholders' Equity
5
Condensed Consolidated Statement of Cash Flows
7
Notes to Condensed Consolidated Financial Statements
8
Item 2.
2724
Item 3.
3936
Item 4.
4037
Item 1.
4137
Item 1A.
4138
Item 2.
4238
Item 6.
4238
4440

1
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Income (Unaudited)
($ in millions, except per share amounts)
Three Months Ended
June 30		 Six Months Ended
June 30		 Three Months Ended
June 30		Six Months Ended
June 30
2019 2018 2019 2018 2020201920202019
Net sales$4,024
 
$4,131
 $7,648
 
$7,912
Net sales$3,015  $4,024  $6,392  $7,648  
Cost of sales, exclusive of depreciation and amortization2,288
 2,379
 4,361
 4,560
Cost of sales, exclusive of depreciation and amortization1,703  2,288  3,611  4,361  
Selling, general and administrative934
 945
 1,823
 1,851
Selling, general and administrative766  934  1,671  1,823  
Depreciation91
 91
 177
 178
Depreciation91  91  184  177  
Amortization35
 34
 67
 70
Amortization32  35  68  67  
Research and development, net111
 114
 216
 226
Research and development, net86  111  187  216  
Interest expense35
 31
 66
 57
Interest expense41  35  73  66  
Interest income(7) (7) (13) (12)Interest income(5) (7) (14) (13) 
Business restructuring, net176
 83
 173
 83
Business restructuring, net165  176  172  173  
Other charges29
 6
 43
 47
Other charges21  29  24  43  
Other income(31) (24) (47) (48)Other income(11) (31) (29) (47) 
Income before income taxes
$363
 
$479
 
$782
 
$900
Income before income taxes$126  $363  $445  $782  
Income tax expense86
 104
 188
 191
Income tax expense29  86  100  188  
Income from continuing operations
$277
 
$375
 
$594
 
$709
Income from continuing operations$97  $277  $345  $594  
Income from discontinued operations, net of tax2
 —
 2
 6
Income from discontinued operations, net of tax3  2  3  2  
Net income attributable to controlling and noncontrolling interests
$279
 
$375
 
$596
 
$715
Net income attributable to controlling and noncontrolling interests$100  $279  $348  $596  
Less: Net income attributable to noncontrolling interests(7) (4) (12) (10)
Net loss/(income) attributable to noncontrolling interestsNet loss/(income) attributable to noncontrolling interests2  (7) (3) (12) 
Net income (attributable to PPG)
$272
 
$371
 
$584
 
$705
Net income (attributable to PPG)$102  $272  $345  $584  
Amounts attributable to PPG:       Amounts attributable to PPG:
Income from continuing operations, net of tax
$270
 
$371
 
$582
 
$699
Income from continuing operations, net of tax$99  $270  $342  $582  
Income from discontinued operations, net of tax2
 —
 2
 6
Income from discontinued operations, net of tax3  2  3  2  
Net income (attributable to PPG)
$272
 
$371
 
$584
 
$705
Net income (attributable to PPG)$102  $272  $345  $584  
       
Earnings per common share:       Earnings per common share:
Income from continuing operations, net of tax
$1.14
 
$1.51
 
$2.46
 
$2.83
Income from continuing operations, net of tax$0.42  $1.14  $1.45  $2.46  
Income from discontinued operations, net of tax0.01
 —
 0.01
 0.02
Income from discontinued operations, net of tax0.01  0.01  0.01  0.01  
Net income (attributable to PPG)
$1.15
 
$1.51
 
$2.47
 
$2.85
Earnings per common share (attributable to PPG)Earnings per common share (attributable to PPG)$0.43  $1.15  $1.46  $2.47  
Earnings per common share – assuming dilution:       Earnings per common share – assuming dilution:
Income from continuing operations, net of tax
$1.13
 
$1.51
 
$2.44
 
$2.81
Income from continuing operations, net of tax$0.42  $1.13  $1.44  $2.44  
Income from discontinued operations, net of tax0.01
 —
 0.01
 0.02
Income from discontinued operations, net of tax0.01  0.01  0.01  0.01  
Net income (attributable to PPG)
$1.14
 
$1.51
 
$2.45
 
$2.83
Earnings per common share (attributable to PPG) - assuming dilutionEarnings per common share (attributable to PPG) - assuming dilution$0.43  $1.14  $1.45  $2.45  
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

2
Table of Contents
PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Comprehensive IncomeIncome/(Loss) (Unaudited)
($ in millions)
Three Months Ended
June 30		 Six Months Ended
June 30		 Three Months Ended
June 30		Six Months Ended
June 30
2019 2018 2019 2018 2020201920202019
Net income attributable to the controlling and noncontrolling interests
$279
 
$375
 
$596
 
$715
Net income attributable to the controlling and noncontrolling interests$100  $279  $348  $596  
Other comprehensive (loss) income, net of tax:       
Other comprehensive income/(loss), net of tax:Other comprehensive income/(loss), net of tax:
Defined benefit pension and other postretirement benefits12
 15
 6
 32
Defined benefit pension and other postretirement benefits5  12  6  6  
Unrealized foreign currency translation adjustments(15) (297) 66
 (151)Unrealized foreign currency translation adjustments117  (15) (589) 66  
Derivative financial instruments(1) 2
 (1) —
Derivative financial instruments(3) (1) —  (1) 
Other comprehensive (loss) income, net of tax
($4) 
($280) 
$71
 
($119)
Total comprehensive income
$275
 
$95
 
$667
 
$596
Other comprehensive income/(loss), net of taxOther comprehensive income/(loss), net of tax$119  ($4) ($583) $71  
Total comprehensive income/(loss)Total comprehensive income/(loss)$219  $275  ($235) $667  
Less: amounts attributable to noncontrolling interests:       Less: amounts attributable to noncontrolling interests:
Net income(7) (4) (12) (10)
Net loss/(income)Net loss/(income)2  (7) (3) (12) 
Unrealized foreign currency translation adjustments(2) 10
 (1) 8
Unrealized foreign currency translation adjustments(2) (2) 8  (1) 
Comprehensive income attributable to PPG
$266
 
$101
 
$654
 
$594
Comprehensive income/(loss) attributable to PPGComprehensive income/(loss) attributable to PPG$219  $266  ($230) $654  
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)
June 30, 2019 December 31, 2018June 30, 2020December 31, 2019
Assets   Assets
Current assets:   Current assets:
Cash and cash equivalents
$963
 
$902
Cash and cash equivalents$2,252  $1,216  
Short-term investments53
 61
Short-term investments45  57  
Receivables (less allowance for doubtful accounts of $26 and $24)3,332
 2,845
Receivables, netReceivables, net2,673  2,756  
Inventories1,945
 1,783
Inventories1,706  1,710  
Other current assets414
 370
Other current assets401  431  
Total current assets
$6,707
 
$5,961
Total current assets$7,077  $6,170  
Property, plant and equipment (net of accumulated depreciation of $3,963 and $3,828)2,929
 2,805
Property, plant and equipment (net of accumulated depreciation of $4,176 and $4,082)Property, plant and equipment (net of accumulated depreciation of $4,176 and $4,082)2,865  2,983  
Goodwill4,312
 4,070
Goodwill4,307  4,470  
Identifiable intangible assets, net2,081
 1,972
Identifiable intangible assets, net1,916  2,131  
Deferred income taxes199
 229
Deferred income taxes188  220  
Investments251
 251
Investments251  258  
Operating lease right-of-use assets (Note 3)731
 —
Operating lease right-of-use assetsOperating lease right-of-use assets826  782  
Other assets745
 727
Other assets740  694  
Total
$17,955
 
$16,015
Total$18,170  $17,708  
Liabilities and Shareholders’ Equity   Liabilities and Shareholders’ Equity
Current liabilities:   Current liabilities:
Accounts payable and accrued liabilities
$3,746
 
$3,623
Accounts payable and accrued liabilities$3,055  $3,496  
Restructuring reserves139
 99
Restructuring reserves320  196  
Short-term debt and current portion of long-term debt654
 651
Short-term debt and current portion of long-term debt1,688  513  
Current portion of operating lease liabilities (Note 3)167
 —
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities171  170  
Total current liabilities
$4,706
 
$4,373
Total current liabilities$5,234  $4,375  
Long-term debt4,845
 4,365
Long-term debt4,613  4,539  
Operating lease liabilities (Note 3)572
 —
Operating lease liabilitiesOperating lease liabilities669  622  
Accrued pensions637
 645
Accrued pensions727  745  
Other postretirement benefits621
 629
Other postretirement benefits656  661  
Deferred income taxes382
 429
Deferred income taxes397  452  
Other liabilities1,005
 842
Other liabilities936  911  
Total liabilities
$12,768
 
$11,283
Total liabilities$13,232  $12,305  
Commitments and contingent liabilities (Note 15)  
Commitments and contingent liabilities (Note 15)
Shareholders’ equity:   Shareholders’ equity:
Common stock969
 969
Common stock$969  $969  
Additional paid-in capital913
 788
Additional paid-in capital962  950  
Retained earnings18,488
 18,131
Retained earnings19,010  18,906  
Treasury stock, at cost(13,061) (12,958)Treasury stock, at cost(13,184) (13,191) 
Accumulated other comprehensive loss(2,230) (2,300)Accumulated other comprehensive loss(2,925) (2,350) 
Total PPG shareholders’ equity
$5,079
 
$4,630
Total PPG shareholders’ equity$4,832  $5,284  
Noncontrolling interests108
 102
Noncontrolling interests106  119  
Total shareholders’ equity
$5,187
 
$4,732
Total shareholders’ equity$4,938  $5,403  
Total
$17,955
 
$16,015
Total$18,170  $17,708  
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

4
Table of Contents
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity (Unaudited)
($ in millions)
Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive (Loss)/IncomeTotal PPGNon-controlling InterestsTotal
January 1, 2020$969  $950  $18,906  ($13,191) ($2,350) $5,284  $119  $5,403  
Net income attributable to the controlling and noncontrolling interests—  —  243  —  —  $243  5  $248  
Other comprehensive loss, net of tax—  —  —  —  (692) ($692) (10) ($702) 
Cash dividends—  —  (120) —  —  ($120) —  ($120) 
Issuance of treasury stock—  12  —  4  —  $16  —  $16  
Stock-based compensation activity—  (8) —  —  —  ($8) —  ($8) 
March 31, 2020$969  $954  $19,029  ($13,187) ($3,042) $4,723  $114  $4,837  
Net income attributable to the controlling and noncontrolling interests—  —  102  —  —  $102  (2) $100  
Other comprehensive income, net of tax—  —  —  —  117  $117  2  $119  
Cash dividends—  —  (121) —  —  ($121) —  ($121) 
Issuance of treasury stock—  2  —  3  —  $5  —  $5  
Stock-based compensation activity—  6  —  —  —  $6  —  $6  
Dividends paid on subsidiary common stock to noncontrolling interests—  —  —  —  —  $—  (3) ($3) 
Reductions in noncontrolling interests—  —  —  —  —  $—  (5) ($5) 
June 30, 2020$969  $962  $19,010  ($13,184) ($2,925) $4,832  $106  $4,938  
5
Table of Contents
Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive (Loss)/IncomeTotal PPGNon-controlling InterestsTotalCommon StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive (Loss)/IncomeTotal PPGNon-controlling InterestsTotal
January 1, 2019
$969

$788

$18,131

($12,958)
($2,300)
$4,630

$102

$4,732
January 1, 2019$969  $788  $18,131  ($12,958) ($2,300) $4,630  $102  $4,732  
Net income attributable to the controlling and noncontrolling interests—
—
312
—
—
312
5
317
Net income attributable to the controlling and noncontrolling interests—  —  312  —  —  $312  5  $317  
Other comprehensive income, net of tax—
—
—
—
76
76
(1)75
Other comprehensive income/(loss), net of taxOther comprehensive income/(loss), net of tax—  —  —  —  76  $76  (1) $75  
Cash dividends—
—
(113)—
—
(113)—
(113)Cash dividends—  —  (113) —  —  ($113) —  ($113) 
Purchase of treasury stock—
—
—
(175)—
(175)—
(175)Purchase of treasury stock—  —  —  (175) —  ($175) —  ($175) 
Issuance of treasury stock—
121
—
63
—
184
—
184
Issuance of treasury stock—  121  —  63  —  $184  —  $184  
Stock-based compensation activity—
(10)—
—
—
(10)—
(10)Stock-based compensation activity—  (10) —  —  —  ($10) —  ($10) 
March 31, 2019
$969

$899

$18,330

($13,070)
($2,224)
$4,904

$106

$5,010
March 31, 2019$969  $899  $18,330  ($13,070) ($2,224) $4,904  $106  $5,010  
Net income attributable to the controlling and noncontrolling interests—
—
272
—
—
272
7
279
Net income attributable to the controlling and noncontrolling interests—  —  272  —  —  $272  7  $279  
Other comprehensive income, net of tax—
—
—
—
(6)(6)2
(4)
Other comprehensive (loss)/income, net of taxOther comprehensive (loss)/income, net of tax—  —  —  —  (6) ($6) 2  ($4) 
Cash dividends—
—
(114)—
—
(114)—
(114)Cash dividends—  —  (114) —  —  ($114) —  ($114) 
Issuance of treasury stock—
7
—
9
—
16
—
16
Issuance of treasury stock—  7  —  9  —  $16  —  $16  
Stock-based compensation activity—
7
—
—
—
7
—
7
Stock-based compensation activity—  7  —  —  —  $7  —  $7  
Dividends paid on subsidiary common stock to noncontrolling interests—
—
—
—
—
—
(5)(5)Dividends paid on subsidiary common stock to noncontrolling interests—  —  —  —  —  $—  (5) ($5) 
Reductions in noncontrolling interests—
—
—
—
—
—
(2)(2)Reductions in noncontrolling interests—  —  —  —  —  $—  (2) ($2) 
June 30, 2019
$969

$913

$18,488

($13,061)
($2,230)
$5,079

$108

$5,187
June 30, 2019$969  $913  $18,488  ($13,061) ($2,230) $5,079  $108  $5,187  
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

6
Table of Contents
PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' EquityCash Flows (Unaudited)
($ in millions)
 Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive (Loss)/IncomeTotal PPGNon-controlling InterestsTotal
January 1, 2018
$969

$756

$17,140

($11,251)
($2,057)
$5,557

$115

$5,672
Net income attributable to the controlling and noncontrolling interests—
—
334
—
—

$334
6

$340
Other comprehensive loss, net of tax—
—
—
—
159

$159
2

$161
Cash dividends—
—
(112)—
—

($112)—

($112)
Purchase of treasury stock—
—
—
(600)—

($600)—

($600)
Issuance of treasury stock—
24
—
7
—

$31
—

$31
Stock-based compensation activity—
(19)—
—
—

($19)—

($19)
Reductions in noncontrolling interests—
—
—
—
—

$—
(2)
($2)
Reclassification from other comprehensive income to retained earnings - Adoption of ASU 2018-02—
—
107
—
(107)
$—
—

$—
Adjustment to retained earnings - Adoption of ASU 2016-16—
—
(4)—
—

($4)—

($4)
March 31, 2018
$969

$761

$17,465

($11,844)
($2,005)
$5,346

$121

$5,467
Net income attributable to the controlling and noncontrolling interests—
—
371
—
—
371
4
375
Other comprehensive loss, net of tax—
—
—
—
(270)(270)(10)(280)
Cash dividends—
—
(110)—
—
(110)—
(110)
Purchase of treasury stock—
—
—
(463)—
(463)—
(463)
Issuance of treasury stock—
1
—
2
—
3
—
3
Stock-based compensation activity—
7
—
—
—
7
—
7
Dividends paid on subsidiary common stock to noncontrolling interests—
—
—
—
—
—
(2)(2)
Reductions in noncontrolling interests—
—
—
—
—
—
(14)(14)
June 30, 2018
$969

$769

$17,726

($12,305)
($2,275)
$4,884

$99

$4,983
Six Months Ended
June 30
($ in millions)20202019
Operating activities:
Net income attributable to controlling and noncontrolling interests$348  $596  
Less: Income from discontinued operations(3) (2) 
Income from continuing operations345  594  
Adjustments to reconcile net income to cash from operations:
Depreciation and amortization252  244  
Pension expense20  25  
Debt extinguishment charge7  —  
Environmental remediation charges12  40  
Business restructuring, net172  173  
Stock-based compensation expense15  19  
Equity affiliate income, net of dividends4  6  
Deferred income taxes(8) (7) 
Cash contributions to pension plans(5) (6) 
Cash used for restructuring actions(34) (23) 
Change in certain asset and liability accounts (net of acquisitions):
Receivables92  (431) 
Inventories(29) (97) 
Other current assets18  (70) 
Accounts payable and accrued liabilities(347) 60  
Taxes and interest payable(58) (21) 
Noncurrent assets and liabilities, net5  (10) 
Other(140) (10) 
Cash from operating activities - continuing operations$321  $486  
Cash from/(used for) operating activities - discontinued operations1  (4) 
Cash from operating activities$322  $482  
Investing activities:
Capital expenditures(92) (133) 
Business acquisitions, net of cash balances acquired(45) (361) 
Payments for the settlement of cross currency swap contracts(3) (6) 
Proceeds from the settlement of cross currency swap contracts12  19  
Other17  24  
Cash used for investing activities($111) ($457) 
Financing activities:
Net change in borrowing with maturities of three months or less(7) 6  
Proceeds on commercial paper and short-term debt, net of payments1,434  470  
Proceeds from revolving credit facility800  —  
Repayment of revolving credit facility(800) —  
Proceeds from the issuance of debt, net of discounts and fees296  —  
Repayment of long-term debt(506) (2) 
Repayment of acquired debt(9) (23) 
Purchase of treasury stock—  (175) 
Issuance of treasury stock6  22  
Dividends paid on PPG common stock(241) (227) 
Payments related to tax withholding on stock-based compensation awards(8) (12) 
Other(38) (27) 
Cash from financing activities$927  $32  
Effect of currency exchange rate changes on cash and cash equivalents(102) 4  
Net increase in cash and cash equivalents$1,036  $61  
Cash and cash equivalents, beginning of period1,216  902  
Cash and cash equivalents, end of period$2,252  $963  
Supplemental disclosures of cash flow information:
Interest paid, net of amount capitalized$82  $68  
Taxes paid, net of refunds$187  $194  
Supplemental disclosure of noncash investing activities:
Reissuance of common stock for business acquisition$—  $164  
The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

PPG INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows (Unaudited)
7
 Six Months Ended
June 30
($ in millions)2019 2018
Operating activities:   
Net income attributable to controlling and noncontrolling interests
$596
 
$715
Less: Income from discontinued operations(2) (6)
Income from continuing operations
$594
 
$709
Adjustments to reconcile net income to cash from operations:   
Depreciation and amortization244
 248
Pension expense25
 20
Environmental remediation charges, net40
 34
Business restructuring, net173
 83
Impairment of a non-manufacturing asset—
 9
Stock-based compensation expense19
 18
Equity affiliate loss, net of dividends6
 6
Deferred income tax benefit(7) (13)
Cash contributions to pension plans(6) (35)
Cash used for restructuring actions(23) (34)
Change in certain asset and liability accounts:   
Receivables(431) (626)
Inventories(97) (270)
Other current assets(70) (5)
Accounts payable and accrued liabilities60
 198
Taxes and interest payable(21) (130)
Noncurrent assets and liabilities, net(10) (30)
Other(10) (51)
Cash from operating activities - continuing operations
$486
 
$131
Cash used for operating activities - discontinued operations(4) —
Cash from operating activities
$482
 
$131
Investing activities:   
Capital expenditures(133) (118)
Business acquisitions, net of cash balances acquired(361) (98)
Payments for the settlement of cross currency swap contracts(6) (17)
Proceeds from the settlement of cross currency swap19
 3
Other24
 13
Cash used for investing activities
($457) 
($217)
Financing activities:   
Net change in borrowing with maturities of three months or less6
 11
Net proceeds/(payments) on commercial paper and short-term debt470
 (1)
Proceeds from the issuance of debt, net of discounts and fees—
 992
Repayment of long-term debt(2) (3)
Repayment of acquired debt(23) —
Purchase of treasury stock(175) (1,063)
Issuance of treasury stock22
 10
Dividends paid(227) (222)
Payments related to tax withholding on stock-based compensation awards(12) (13)
Other(27) (16)
Cash from/(used for) financing activities
$32
 
($305)
Effect of currency exchange rate changes on cash and cash equivalents4
 (25)
Net decrease in cash and cash equivalents
$61
 
($416)
Cash and cash equivalents, beginning of period902
 1,436
Cash and cash equivalents, end of period
$963
 
$1,020
    
Supplemental disclosures of cash flow information:   
Interest paid, net of amount capitalized
$68
 
$53
Taxes paid, net of refunds
$194
 
$234
    
Supplemental disclosure of noncash investing activities:   
Reissuance of common stock for business acquisition
$164
 
$—
The accompanying notes to the condensed consolidated financial statements are an integral part
Table of this condensed consolidated statement.Contents

PPG INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
1.
Basis of Presentation
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 June 30, 2019,2020, and the results of its operations and cash flows for the three and six months ended June 30, 20192020 and 2018.2019. 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 20182019 Annual Report on Form 10-K (the "2018"2019 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 six months ended June 30, 20192020 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
2.
New Accounting Standards
Accounting Standards Adopted in 20192020
Effective January 1, 2019,2020, PPG adopted Accounting Standards Update (“ASU”) No. 2016-02, "Leases.2016-13, "Financial Instruments - Credit Losses." This ASU requires substantiallyan organization to measure all leases be recordedexpected credit losses for financial assets, including trade receivables, held at the reporting date based on the balance sheet as right ofhistorical experience, current conditions, and reasonable and supportable information. Organizations will now use assets and lease obligations. The Companyforward-looking information to better estimate their credit losses. PPG adopted thethis ASU using a modified retrospective adoption method at January 1, 2019, as outlined in ASU No. 2018-11, "Leases - Targeted Improvements."approach. Under this method of adoption, there is no impact to the comparative condensed consolidated statement of income and condensed consolidated balance sheet. PPG determined that there was no cumulative-effect adjustment to beginning Retained earnings on the condensed consolidated balance sheet. PPG will continue to report periods prior to January 1, 2019 in its financial statements under prior guidance as outlined in Accounting Standards Codification Topic 840, "Leases". In addition, PPG elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carry forward of historical lease classifications.
Adoption of this standard did not materially impact PPG’s Income before income taxes and had no impact on the condensed consolidated statement of cash flows. See Note 3, “Leases”“Allowance for Credit Losses” for further details.
Effective January 1, 2020, PPG adopted ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). PPG adopted this ASU prospectively. Under this method of adoption, PPG determined there was not a material impact to the condensed consolidated balance sheet, Income before income taxes or the condensed consolidated statement of cash flows.
Accounting Standards to be Adopted in Future Years
In August 2018,March 2020, the Financial Accounting Standards Board ("FASB"(“FASB”) issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software.2020-04, “Reference Rate Reform." This ASU requires capitalizationprovides optional guidance 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. PPG is currently assessing the potential impacts this ASU may have on its consolidated financial position, results of operations and cash flows.
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes - Simplifying the Accounting for Income Taxes." This ASU is intended to simplify various aspects related to accounting for income taxes by eliminating certain implementation costs incurred in a cloud computing arrangement that is a service contract.exceptions within Accounting Standards Codification Topic 740, "Income Taxes" and clarifies certain aspects of the current accounting guidance. The amendments in this ASU are effective for fiscal years beginning after December 15, 20192020 and for interim periods therein with early adoption permitted. PPG does not believe this ASU will have a material impact on its consolidated financial position, results of operations or cash flows.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments -
8
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3.Allowance for Credit Losses.” This ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The amendments in this ASULosses
All trade receivables are effective for fiscal years beginning after December 15, 2019 and for interim periods therein. Entities may choose to adopt the new ASU as of its fiscal year beginning after December 15, 2018. PPG did not early adopt this standard. PPG does not believe this ASU will have a material impact on its consolidated financial position, results of operations or cash flows.
3.
Leases
PPG leases certain retail paint stores, warehouses, distribution facilities, office space and equipment, including fleet vehicles. PPG determines if a contract is a lease at the inception of the arrangement. PPG reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Certain real estate leases contain lease and non-lease components, which are accounted for separately. For certain equipment leases, lease and non-lease components are accounted for as a single lease component.

Leases with an initial term of 12 months or less are not recordedreported on the condensed consolidated balance sheet. Lease expensesheet at the outstanding principal amount adjusted for these leasesany allowance for credit losses and any charge offs. PPG provides an allowance for credit losses to reduce trade receivables to their estimated net realizable value equal to the amount that is recognizedexpected to be collected. This allowance is estimated based on a straight-line basis overhistorical collection experience, current regional economic and market conditions, the lease term.
aging of accounts receivable, assessments of current creditworthiness of customers, and forward-looking information. The componentsuse of lease expense were as follows:
($ in millions)Classification in the Condensed Consolidated Statement of IncomeThree Months Ended June 30, 2019 Six Months Ended June 30, 2019
Operating lease costCost of sales, exclusive of depreciation and amortization
$9
 
$18
Operating lease costSelling, general and administrative49
 97
Total operating lease cost 
$58
 
$115
Finance lease cost:    
Amortization of right-of-use assetsDepreciation
$—
 
$1
Interest on lease liabilitiesInterest Expense1
 1
Total finance lease cost 
$1
 
$2
Total lease cost 
$59
 
$117
Total operating lease cost is inclusive of the following:
($ in millions)Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Variable lease costs
$3
 
$7
Short-term lease costs
$2
 
$3

Variable lease expenseforward-looking information is based on contractual arrangements with PPG’s lessors determinedcertain macroeconomic and microeconomic indicators including, but not limited to, regional business environment risk, political risk, and commercial and financing risks.
PPG reviews its reserves for credit losses on a quarterly basis to ensure its reserves for credit losses reflect regional risk trends as well as current and future global operating conditions.
In March 2020, PPG recorded estimated future credit losses for trade receivables of $30 million related to the potential financial impacts of the COVID-19 pandemic. These amounts were estimated based on external indices orregional business information, including certain forward-looking information and other relevant market factors. In addition, PPG’s variable lease expense also includes elementsconsiderations. PPG will monitor the adequacy of a contract that do not represent a good or service butthis reserve as new information becomes available.
The following table summarizes the activity for which the lessee is responsibleallowance for paying.
credit losses for the six months ended June 30, 2020:
($ in millions)Classification on the Condensed Consolidated Balance SheetJune 30, 2019Trade Receivables Allowance for Credit Losses
Assets:January 1, 2020$22 
OperatingOperating lease right-of-use assets
$731
FinanceCurrent-period provision for credit losses (a)
Property, plant, and equipment39 20
Total leased assetsTrade receivables written off as uncollectible, net of recoveries(8)
$751
Liabilities:Foreign currency impact(1)
CurrentJune 30, 2020$52 
OperatingCurrent portion of operating lease liabilities
$167
FinanceShort-term debt and current portion of long-term debt3
Noncurrent
OperatingOperating lease liabilities572
FinanceLong-term debt9
Total lease liabilities
$751
(a)Net of accumulated depreciation of $11 million.
($ in millions)Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$105
Operating cash flows from finance leases
$—
Financing cash flows from finance leases
$3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
$80
Finance leases
$1


As of June 30, 2019
Weighted-average remaining lease term (in years)
Operating leases7.4
Finance leases6.1
Weighted-average discount rate
Operating leases3.2%
Finance leases9.1%

Nearly all of PPG’s lease contracts do not provide(a) Includes expense recorded from customer bad debts and a readily determinable implicit rate. For these contracts, PPG’s estimated incremental borrowing rate is based on information available at$30 million adjustment recorded in the inception of the lease.
As of June 30, 2019, maturities of lease liabilities were as follows:
($ in millions)Operating Leases Finance Leases
Remaining six months of 2019
$100
 
$2
2020164
 3
2021125
 3
202298
 2
202375
 2
Thereafter272
 4
Total lease payments
$834
 
$16
Less: Interest95
 3
Total lease obligations
$739
 
$13

Disclosuresfirst quarter 2020 related to periods prior to adoption of ASU 2016-02COVID-19.
The Company adopted ASU 2016-02 using a retrospective adoption method at January 1, 2019 as noted in Note 2. "4.New Accounting Standards." As required, the following disclosure is provided for periods prior to adoption. Minimum lease commitments as of December 31, 2018 that have initial or remaining lease terms in excess of one year are as follows:
($ in millions)Operating Leases Capital Leases
2019
$207
 
$3
2020157
 3
2021116
 1
202293
 1
202376
 1
Beyond 2023
$244
 
$3

4.
Acquisitions and Divestitures
Acquisitions
On April 16, 2019,March 2, 2020, PPG completed the acquisition of Hemmelrath, an automotive coatings manufacturer. Headquartered in Klingenberg, Germany, Hemmelrath isAlpha Coating Technologies, LLC, a global manufacturer of powder coatings for automotive original equipment manufacturers ("OEMs").light industrial applications and heat sensitive substrates. The pro-forma impact on PPG's sales and results of operations, including the pro forma effect of events that are directly attributable to the acquisition, was not significant. The results of this business since the date of acquisition have been reported within the automotive original equipment manufacturer ("OEM") coatings business within the Industrial Coatings reportable segment.
On March 1, 2019, PPG completed the acquisition of Whitford Worldwide Company ("Whitford"), a global manufacturer that specializes in low-friction and nonstick coatings for industrial applications and consumer products. Whitford employs more than 700 people and operates 10 manufacturing facilities globally. The pro-forma impact on PPG's sales and results of operations, including the pro forma effect of events that are directly attributable to the acquisition, was not significant. The results of this business since the date of acquisition have been reported within the industrial coatings business within the Industrial Coatings reportable business segment.

InOn January 2018,31, 2020, PPG acquired ProCoatings, a leading architectural paint and coatings wholesaler located in The Netherlands. ProCoatings, established in 2001, distributes a large portfoliocompleted the acquisition of well-known professional paint brands through its networkIndustria Chimica Reggiana S.p.A ("ICR"), an Italian manufacturer of 23 multi-brand stores. The company employs nearly 100 people.automotive refinish products. The pro-forma impact on PPG's sales and results of operations, including the pro formapro-forma effect of events that are directly attributable to the acquisition, was not significant.Thesignificant. The results of this business since the date of acquisition have been reported within the architecturalautomotive refinish coatings - Europe, Middle East and Africa (EMEA) business within the Performance Coatings reportable business segment.
Divestitures
Glass Segment
On April 16, 2019, PPG completed the acquisition of Hemmelrath, a global manufacturer of coatings for automotive original equipment manufacturers ("OEMs"). The Netpro-forma impact on PPG's sales and Income from discontinuedresults of operations, netincluding the pro-forma effect of tax relatedevents that are directly attributable to the former Glassacquisition, was not significant. The results of this business since the date of acquisition have been reported within the automotive OEM coatings business within the Industrial Coatings reportable business segmentsegment.
On March 1, 2019, PPG completed the acquisition of Whitford Worldwide Company ("Whitford"), a global manufacturer that specializes in low-friction and nonstick coatings for industrial applications and consumer products. Whitford operates 10 manufacturing facilities globally. The pro-forma impact on PPG's sales and results of operations, including the six months ended June 30, 2018 were as follows:proforma effect of events that are directly attributable to the acquisition, was not significant. The results of this business since the date of acquisition have been reported within the industrial coatings business within the Industrial Coatings reportable business segment.
($ in millions)Six Months Ended
June 30, 2018
Income from operations
$8
Income tax expense2
Income from discontinued operations, net of tax
$6
9

Table of Contents
5.Inventories
5.
Inventories
($ in millions)June 30, 2019 December 31, 2018
Finished products
$1,216
 
$1,105
Work in process213
 193
Raw materials482
 452
Supplies34
 33
Total Inventories
$1,945
 
$1,783

($ in millions)June 30, 2020December 31, 2019
Finished products$1,012  $1,047  
Work in process192  197  
Raw materials466  431  
Supplies36  35  
Total Inventories$1,706  $1,710  
Most U.S. inventories are valued using the last-in, first-out method. These inventories represented approximately 33%35% and 36%34% of total inventories at June 30, 20192020 and December 31, 2018,2019, respectively. If the first-in, first-out method of inventory valuation had been used, inventories would have been $126$119 million and $113$124 million higher as of June 30, 20192020 and December 31, 2018,2019, respectively.
6.
Goodwill and Other Identifiable Intangible Assets
6.Goodwill and Other Identifiable Intangible Assets
The Company tests indefinite-lived intangible assets and goodwill for impairment by either performing a qualitative evaluation or a quantitative test at least annually, or more frequently if an indication of impairment arises. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than its carrying amount.
During the second quarter, the Company evaluated the effects of the COVID-19 pandemic and its negative impact on the global economy on each of the Company’s reporting units and indefinite-lived intangible assets. Management reviewed key assumptions, including revisions of projected future revenues for reporting units and the results of the previous annual impairment testing performed during the fourth quarter of 2019. The Company did not identify an indication of impairment for each of its reporting units and indefinite-lived intangible assets. Although it was determined that a triggering event had not occurred as of June 30, 2020, we will continue to monitor the impacts of the COVID-19 pandemic on the Company and significant changes in key assumptions that could result in future period impairment charges.
The change in the carrying amount of goodwill attributable to each reportable segment for the six months ended June 30, 20192020 was as follows:
($ in millions)
Performance
Coatings
 
Industrial
Coatings
 Total
January 1, 2019
$3,266
 
$804
 
$4,070
Acquisitions, including purchase accounting adjustments1
 231
 232
Foreign currency impact9
 1
 10
June 30, 2019
$3,276
 
$1,036
 
$4,312


($ in millions)Performance
Coatings		Industrial
Coatings		Total
January 1, 2020$3,442  $1,028  $4,470  
Acquisitions, including purchase accounting adjustments4  16  20  
Foreign currency impact(164) (19) (183) 
June 30, 2020$3,282  $1,025  $4,307  
A summary of the carrying value of the Company's identifiable intangible assets is as follows:
 June 30, 2019 December 31, 2018
($ in millions)
Gross
Carrying
Amount
 
Accumulated
Amortization
 Net 
Gross
Carrying
Amount
 
Accumulated
Amortization
 Net
Indefinite-Lived Identifiable Intangible Assets
Trademarks
$1,156
 N/A
 
$1,156
 
$1,140
 N/A
 
$1,140
Definite-Lived Identifiable Intangible Assets
Acquired technology
$686
 
($533) 
$153
 
$648
 
($515) 
$133
Customer-related1,511
 (848) 663
 1,396
 (798) 598
Trade names206
 (104) 102
 190
 (96) 94
Other46
 (39) 7
 44
 (37) 7
Total Definite Lived Intangible Assets
$2,449
 
($1,524) 
$925
 
$2,278
 
($1,446) 
$832
Total Identifiable Intangible Assets
$3,605
 
($1,524) 
$2,081
 
$3,418
 
($1,446) 
$1,972

 June 30, 2020December 31, 2019
($ in millions)Gross
Carrying
Amount		Accumulated
Amortization		NetGross
Carrying
Amount		Accumulated
Amortization		Net
Indefinite-Lived Identifiable Intangible Assets
Trademarks$1,034  N/A$1,034  $1,167  N/A$1,167  
Definite-Lived Identifiable Intangible Assets
Acquired technology$712  ($560) $152  $710  ($549) $161  
Customer-related1,527  (899) 628  1,578  (885) 693  
Trade names208  (114) 94  210  (111) 99  
Other48  (40) 8  51  (40) 11  
Total Definite Lived Intangible Assets$2,495  ($1,613) $882  $2,549  ($1,585) $964  
Total Identifiable Intangible Assets$3,529  ($1,613) $1,916  $3,716  ($1,585) $2,131  
The Company’s identifiable intangible assets with finitedefinite lives are being amortized over their estimated useful lives.
10
Table of Contents
As of June 30, 2019,2020, estimated future amortization expense of identifiable intangible assets is as follows:
($ in millions)Future Amortization Expense
Remaining six months of 2019
$58
2020105
2021100
202290
202385
202470
Thereafter417

($ in millions)Future Amortization Expense
Remaining six months of 2020$65  
2021$125  
2022$125  
2023$110  
2024$90  
2025$85  
Thereafter$282  
7.
7.Business Restructuring
The Company records restructuring liabilities that represent charges incurred in connection with consolidations of certain operations, including operations from acquisitions, as well as headcount reduction programs. These charges consist primarily of severance costs and certain other cash costs. As a result of these programs, the Company will also incur incremental non-cash accelerated depreciation expense for certain assets due to their reduced expected asset write-downs.life. These charges are not allocated to the Company’s reportable business segments. Refer to Note 17 Reportable Business Segment Information for additional information.
2020 Restructuring Program
In June 2020, the Company approved a business restructuring plan which included actions to reduce its global cost structure. 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. A pretax restructuring charge of $176 million was recorded in PPG's second quarter 2020 financial results. This charge represents employee severance and other cash costs. The majority of restructuring actions are expected to be completed by the end of 2020 with the remainder of the actions expected to be completed in 2021.
2019 and 2018 Restructuring Programs
As a result of the COVID-19 pandemic, the Company expects delays in the timing of certain previously recorded restructuring actions. Program completion dates may differ from the originally targeted timeline, as noted below.
In June 2019, the Company approved a business restructuring plan which included actions to reduce its global cost structure. The program is the result of a comprehensive internal operational assessment to identify further opportunities to improve the profitability of the overall business portfolio. This program includes further manufacturing optimization; targeted pruning of low-profit business in certain regions; exiting certain smaller product lines that are not meeting profitability objectives; reorganization of certain business unit cost structures based on the current economic climate; and certain redundancy actions related to recent acquisitions.
A pretax restructuring charge of $184 million was recorded in PPG's second quarter 2019 financial results. This charge represents employee severance and other cash costs. The majority of restructuring actions are now expected to be completed by the end of the fourth quarter 2020 with the remainder of the actions expected to be completed in 2022. There was no material activity on this reserve during the second quarter.
2018 Restructuring Program
In April 2018, the Company approved a business restructuring plan which included actions to reduce its global cost structure. The program was in response to the impacts of customer assortment changes in our U.S. architectural coatings business during the first quarter 2018 and sustained, elevated raw material inflation. The program aims to further right-size employee headcount and production capacity in certain businesses based on product demand, as well as reductions in various global functional and administrative costs. Substantially allThe majority of restructuring actions from this business restructuring plan are now expected to be complete by the end of the first quarter of 2020.

2016 Restructuring Program
In December 2016, PPG’s Board of Directors approved a business restructuring program which includes actions necessary to reduce the Company's global cost structure. The program is focused on certain regions and end-use markets where business conditions were the weakest, as well as reductions in production capacity and various global functional and administrative costs. Substantially all actions from this business restructuring plan are expected to be completecompleted by the end of the third quarter of 2019.2020.
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The following table summarizes the reserve activity for the six months ended June 30, 2020 and 2019:
($ in millions)Total Reserve
December 31, 2018
$110
Second quarter 2019 restructuring charge184
Cash payments(23)
Release of prior reserves (11)
Foreign currency impact1
June 30, 2019
$261

Total Reserve
($ in millions)20202019
January 1$224  $110  
Approved restructuring actions (a)
198  184  
Release of prior reserves(26) (11) 
Cash payments(34) (23) 
Foreign currency impact(2) 1  
June 30$360  $261  
Adjustments(a) In the first quarter of approximately $8 million2020, additional programs were approved by management and $11charges of $22 million were recorded in the PPG's financial results.
8.three and sixBorrowings months ended
In June 30, 2019, respectively, to reduce the remaining restructuring reserves to reflect the current estimate2020, PPG completed an early redemption of the costs$500 million 3.6% notes due November 2020 using proceeds from the May 2020 public offering and cash on hand. The Company recorded a charge of $7 million in the second quarter for the debt redemption which consists of the aggregate make-whole cash premium of $6 million and a balance of unamortized fees and discounts of $1 million related to complete these actions.
8.
Borrowings
During the six months of 2019, PPG issued $470 million of commercial paper. The Company's commercial paper borrowings are supported by the five-year credit agreement (the "Credit Agreement") entered into in 2015. As a result, the commercial paper borrowings as of June 30, 2019 are classified as long-term debt based on PPG's intent and ability to refinance these borrowings on a long-term basis.redeemed.
In February 2018,May 2020, PPG completed a public offering of $300 million aggregate principal amount of 3.2%2.55% notes due 2023 and $700 million aggregate principal amount of 3.75% notes due 2028.2030. 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.supplemented (the "Indenture"). The 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 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 $992$296 million. A portion
In April 2020, PPG entered into a $1.5 billion 364-Day Term Loan Credit Agreement (the “Term Loan”).The Term Loan contains covenants that are consistent with those in the Credit Agreement 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 terminates and all amounts outstanding are payable on April 13, 2021.
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 notesCredit 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. In March 2020, PPG borrowed $800 million under the Credit Agreement and repaid that amount in full in April 2020. There were converted fromno amounts outstanding under the credit agreement as of June 30, 2020 and December 31, 2019.
The Term Loan and Credit Agreement require the Company to maintain a fixed interest rateratio of Total Indebtedness to Total Capitalization, as defined in the Term Loan 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 June 30, 2020, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and Term Loan was 53%.
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 floating interest rate using interest rate swap contracts. For more information, refer to Note 13, “long-term basis. There were 0 commercial paper borrowing outstanding as of June 30, 2020. Commercial paper borrowings of $100 million were outstanding as of December 31, 2019.
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9.Financial Instruments, Hedging Activities and Fair Value MeasurementsEarnings Per Common Share.”

9.
Earnings Per Common Share
The effect of dilutive securities on the weighted average common shares outstanding included in the calculation of earnings per diluted common share for the three and six months ended June 30, 20192020 and 20182019 were as follows:
 Three Months Ended
June 30		 Six Months Ended
June 30
(number of shares in millions)2019 2018 2019 2018
Weighted average common shares outstanding236.9
 244.9
 236.8
 247.4
Effect of dilutive securities:       
Stock options0.7
 0.8
 0.7
 0.8
Other stock compensation plans0.7
 0.7
 0.6
 0.7
Potentially dilutive common shares1.4
 1.5
 1.3
 1.5
Adjusted weighted average common shares outstanding238.3
 246.4
 238.1
 248.9
        
Dividends per common share
$0.48
 
$0.45
 
$0.96
 
$0.90

 Three Months Ended
June 30		Six Months Ended
June 30
(number of shares in millions)2020201920202019
Weighted average common shares outstanding236.6  236.9  236.6  236.8  
Effect of dilutive securities:
Stock options0.3  0.7  0.4  0.7  
Other stock compensation plans0.7  0.7  0.6  0.6  
Potentially dilutive common shares1.0  1.4  1.0  1.3  
Adjusted weighted average common shares outstanding237.6  238.3  237.6  238.1  
Dividends per common share$0.51  $0.48  $1.02  $0.96  
Excluded from the computation of earnings per diluted share due to their antidilutive effect were 2.7 million and 2.1 million outstanding stock options for the three and six months ended June 30, 2020, respectively and 1.0 million outstanding stock options for both the three and six months ended June 30, 20192019.
10., and 1.1 million outstanding stock options for the Income Taxesthree and six months ended June 30, 2018.
10.
Income Taxes
 Six Months Ended
June 30
 2019 2018
Effective tax rate on pre-tax income from continuing operations24.0% 21.2%

Six Months Ended
June 30
20202019
Effective tax rate on pretax income22.5 %24.0 %
The effective tax rate of 24.0%22.5% for the six months ended June 30, 20192020 reflects a benefit of $3$14 million of discrete items associated with PPG's U.S. and foreign jurisdictions. For the six months ended June 30, 2018, the effective tax rate was 21.2% inclusive of a $38 million benefit for discrete items. Income tax expense for the first six months of 20192020 is based on an estimated annual effective rate, which requires management to make its best estimate of annual pretax income or loss. Income tax expense for the six months ended June 30, 2019 reflects $3 million for discrete items associated with PPG's U.S. and foreign locations and implementation of updated regulations associated with the 2017 Tax Cuts and Jobs Act for Global Intangible Low Taxed Income.
During the year, PPG management regularly updates forecasted annual pretax results for the various countries in which PPG operates based on changes in factors such as prices, shipments, product mix, raw material inflation and manufacturing operations. To the extent that actual 20192020 pretax results for U.S. and foreign income or loss vary from estimates, the actual Income tax expense recognized in 20192020 could be different from the forecasted amount used to estimate the Income tax expense for the six months ended June 30, 2019.2020.
11.
11.Pensions and Other Postretirement Benefits
Service cost for net periodic pension and other postretirement benefit costs is included in Cost of sales, exclusive of depreciation and amortization, Selling, general and administrative, and Research and development, net in the accompanying condensed consolidated statements of income. All other components of net periodic benefit cost are now recorded in Other charges, except for pension settlement charges in the accompanying condensed consolidated statements of income.

The net periodic pension and other postretirement benefit costs for the three and six months ended June 30, 20192020 and 20182019 were as follows:
 Pension
 Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Service cost$6  $5  $12  $11  
Interest cost21  27  43  53  
Expected return on plan assets(36) (35) (72) (70) 
Amortization of actuarial losses18  16  36  31  
Curtailments1  —  1  —  
Net periodic benefit cost$10  $13  $20  $25  
 Pension
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
Service cost
$5
 
$8
 
$11
 
$16
Interest cost27
 24
 53
 48
Expected return on plan assets(35) (38) (70) (76)
Amortization of actuarial losses16
 16
 31
 32
Net periodic benefit cost
$13
 
$10
 
$25
 
$20
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 Other Postretirement Benefits
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
Service cost
$2
 
$3
 
$4
 
$5
Interest cost7
 6
 13
 12
Amortization of actuarial losses2
 4
 4
 9
Amortization of prior service credit(15) (15) (29) (30)
Net periodic benefit cost
($4) 
($2) 
($8) 
($4)

 Other Postretirement Benefits
 Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Service cost$3  $2  $5  $4  
Interest cost5  7  10  13  
Amortization of actuarial losses4  2  8  4  
Amortization of prior service credit(15) (15) (30) (29) 
Net periodic benefit cost($3) ($4) ($7) ($8) 
PPG expects its 20192020 net periodic pension and other postretirement benefit cost towill be approximately $35$25 million, with pension expense representing approximately $50$40 million and other postretirement benefit cost representing a benefit of approximately $15 million.
Contributions to Defined Benefit Pension Plans
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
U.S. defined benefit pension contributions
$—
 
$—
 
$—
 
$25
Non-U.S. defined benefit pension mandatory contributions
$3
 
$5
 
$6
 
$10

Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Non-U.S. defined benefit pension mandatory contributions$3  $3  $5  $6  
PPG made a voluntary contribution of $25 million to its U.S. defined benefit pension plans in January 2018. PPG expects to make mandatory contributions to its non-U.S. pension plans in the range of $10$5 million to $20$10 million during the remaining six months of 2019.2020. PPG may make voluntary contributions to its defined benefit pension plans in 20192020 and beyond.

12
12.Accumulated Other Comprehensive Loss
($ in millions)Unrealized Foreign Currency Translation Adjustments
Pension and Other Postretirement Benefit Adjustments, net of tax (c)
Unrealized Gain on Derivatives, net of taxAccumulated Other Comprehensive Loss
January 1, 2020($1,627) ($724) $1  ($2,350) 
Current year deferrals to AOCI (a)
(600) —  —  (600) 
Current year deferrals to AOCI, net of tax (b)
19  (5) —  14  
Reclassifications from AOCI to net income—  11  —  11  
Period change($581) $6  $—  ($575) 
June 30, 2020($2,208) ($718) $1  ($2,925) 
January 1, 2019($1,734) ($568) $2  ($2,300) 
Current year deferrals to AOCI (a)
44  —  —  44  
Current year deferrals to AOCI, net of tax (b)
21  (1) (2) 18  
Reclassifications from AOCI to net income—  7  1  8  
Period change$65  $6  ($1) $70  
June 30, 2019($1,669) ($562) $1  ($2,230) 
(a)Except for income taxes of $8 million and $9 million as of June 30, 2020 and 2019, respectively, related to foreign currency impacts of certain unasserted earnings, unrealized foreign currency translation adjustments related to translation of foreign denominated balance sheets are not presented net of tax given that no deferred U.S. income taxes have been provided on undistributed earnings of non-U.S. subsidiaries because they are deemed to be reinvested for an indefinite period of time.
(b)The tax cost related to unrealized foreign currency translation adjustments on tax inter-branch transactions and net investment hedges as of June 30, 2020 and 2019 was $5 million and $7 million, respectively.
(c)The tax cost related to the adjustment for pension and other postretirement benefits as of June 30, 2020 and 2019 was $3 million and $2 million, respectively. Reclassifications from AOCI are included in the computation of net periodic benefit costs (See Note 11, "Pensions and Other Postretirement Benefits").
Accumulated Other Comprehensive Loss
($ in millions)Unrealized Foreign Currency Translation Adjustments Pension and Other Postretirement Benefit Adjustments, net of tax (c) Unrealized Gain (Loss) on Derivatives, net of tax (d) Accumulated Other Comprehensive Loss
January 1, 2019 
($1,734)  
($568)  
$2
  
($2,300)
Current year deferrals to AOCI (a)44
  —
  —
  44
 
Current year deferrals to AOCI, net of tax (b)21
  (1)  (2)  18
 
Reclassifications from AOCI to net income—
  7
  1
  8
 
Period change 
$65
  
$6
  
($1)  
$70
June 30, 2019 
($1,669)  
($562)  
$1
  
($2,230)
            
January 1, 2018 
($1,567)  
($493)  
$3
  
($2,057)
Current year deferrals to AOCI(257)  —
  —
  (257) 
Current year deferrals to AOCI, net of tax (b)114
  24
  (1)  137
 
Reclassifications from AOCI to net income—
  8
  1
  9
 
Period change 
($143)  
$32
  
$—
  
($111)
Reclassification from AOCI to Retained earnings - Adoption ASU 2018-02 (23)  (84)  —
 
(107)
June 30, 2018 
($1,733)  
($545)  
$3
  
($2,275)
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(a)Except for income taxes of $9 million related to foreign currency impacts of certain unasserted earnings, unrealized foreign currency translation adjustments related to translation of foreign denominated balance sheets are not presented net of tax given that no deferred U.S. income taxes have been provided on undistributed earnings of non-U.S. subsidiaries because they are deemed to be reinvested for an indefinite period of time.
(b)The tax cost related to unrealized foreign currency translation adjustments on tax inter-branch transactions and net investment hedges for the six months ended June 30, 2019 and 2018 was $7 million and $31 million, respectively.
(c)
The tax cost (benefit) related to the adjustment for pension and other postretirement benefits for the six months ended June 30, 2019 and 2018 was $2 million and ($1) million, respectively. Reclassifications from AOCI are included in the computation of net periodic benefit costs (See Note 11, "
13.Pensions and Other Postretirement Benefits").
(d)
The tax cost (benefit) related to the changes in the unrealized gain (loss) on derivatives for the six months ended June 30, 2019 and 2018 was $2 million and ($1) million, respectively. Reclassifications from AOCI are included in the gain recognized on cash flow hedges (See Note 13, "Financial Instruments, Hedging Activities and Fair Value Measurements").
13.
Financial Instruments, Hedging Activities and Fair Value Measurements
Financial instruments include cash and cash equivalents, short-term investments, cash held in escrow, marketable equity securities, accounts receivable, company-owned life insurance, accounts payable, short-term and long-term debt instruments, and derivatives. The fair values of these financial instruments approximated their carrying values at June 30, 20192020 and December 31, 2018,2019, in the aggregate, except for long-term debt instruments.
Hedging Activities
The Company has exposure to market risk from changes in foreign currency exchange rates and interest rates. As a result, financial instruments, including derivatives, have been used to hedge a portion of these underlying economic exposures. Certain of these instruments qualify as fair value, cash flow, and net investment hedges upon meeting the requisite criteria, including effectiveness of offsetting hedged or underlying exposures. Changes in the fair value of derivatives that do not qualify for hedge accounting are recognized in Income before income taxes in the period incurred.
PPG’s policies do not permit speculative use of derivative financial instruments. PPG enters into derivative financial instruments with high credit quality counterparties and diversifies its positions among such counterparties in order to reduce its exposure to credit losses. The Company did not realize a credit loss on derivatives during the three and six month periods ended June 30, 20192020 and 2018.2019.
All of PPG's outstanding derivative instruments are subject to accelerated settlement in the event of PPG’s failure to meet its debt or payment obligations under the terms of the instruments’ contractual provisions. In addition, if the Company would be acquired and its payment obligations under its derivative instruments’ contractual arrangements are not assumed by the acquirer, or if PPG would enter into bankruptcy, receivership or reorganization proceedings, its outstanding derivative instruments would also be subject to accelerated settlement.

There were no derivative instruments de-designated or discontinued as hedging instruments during the three and six month periods ended June 30, 20192020 and 20182019 and there were no gains or losses deferred in Accumulated other comprehensive loss on the condensed consolidated balance sheet that were reclassified to Income before income taxes in the condensed consolidated statement of income statement in the six month periods ended June 30, 20192020 and 20182019 related to hedges of anticipated transactions that were no longer expected to occur.
Fair Value Hedges
The Company uses interest rate swaps from time to time to manage it’sits exposure to changing interest rates. When outstanding, the interest rate swaps are typically designated as fair value hedges of certain outstanding debt obligations of the Company and are recorded at fair value.
In February of 2018, PPG entered intohas interest rate swaps which converted $525 million of fixed rate debt to variable rate debt. TheThese swaps are designated as fair value hedges and are carried at fair value. Changes in the fair value of these swaps and changes in the fair value of the related debt are recorded in Interestinterest expense in the accompanying condensed consolidated statement of income. The fair value of these interest rate swaps was $78 million and $35 million at June 30, 2020 and December 31, 2019, respectively.
Cash Flow Hedges
PPG designates certain foreign currency forward contracts as cash flow hedges of the Company’s exposure to variability in exchange rates on third party transactions denominated in foreign currencies. UnderlyingThere were no outstanding cash flow hedges at June 30, 2020. The underlying notional amounts relatedrelating to these foreign currency forward contracts were $71 million at June 30, 2019 and $50$43 million at December 31, 2018, respectively.2019. As of December 31, 2019, the fair value of all foreign currency forward contracts designated as cash flow hedges was a liability of $1 million.
Net Investment Hedges
PPG uses cross currency swaps and foreign currency euro-denominated debt to hedge a significant portion of its net investment in its European operations, as follows:
In February 2018,As of June 30, 2020 and December 31, 2019, PPG entered intohad U.S. dollar to euro cross currency swap contracts with a total notional amount of $575$875 million and designated these contracts as hedges of the Company's net investment in its European operations. During the term of these contracts, PPG will receive paymentspayment in U.S. dollars and make payments in euros to the counterparties. Also in February 2018,As of June 30, 2020 and December 31, 2019, the Company settled outstandingfair value of the U.S. dollar to euro cross currency swap contracts withwas an asset of $73 million and a total notional amountnet asset of $560 million.$48 million, respectively.
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As of June 30, 20192020 and December 31, 2018,2019, PPG had designated €2.3€2.0 billion of euro-denominated borrowings as hedges of a portion of its net investment in the Company's European operations. The carrying value of these instruments as of June 30, 20192020 and December 31, 20182019 was $2.6$2.2 billion for both periods.
Other Financial Instruments
PPG uses foreign currency forward contracts to manage net transaction exposures that do not qualify for hedge accounting; therefore, the change in the fair value of these instruments is recorded in Other charges in the condensed consolidated statement of income in the period of change. Underlying notional amounts related to these foreign currency forward contracts were $2.7$1.3 billion and $2.5$2.8 billion at June 30, 20192020 and December 31, 2018,2019, respectively. As of June 30, 2020 and December 31, 2019 the fair value of these contracts was a net asset and a net liability of $7 million and $6 million, respectively.
Gains/Losses Deferred in Accumulated Other Comprehensive Loss
As of June 30, 2019,2020, the Company had accumulated pre-taxpretax unrealized translation gains in Accumulated other comprehensive loss on the condensed consolidated balance sheet related to the euro-denominated borrowings, foreign currency forward contracts and the cross currency swaps of $188 million.$256 million. As of December 31, 2018,2019, the Company had accumulated pre-taxpretax unrealized translation gains of $161$235 million.
The following table summarizes the location within the condensed consolidated financial statements and amount of gains gains/(losses) related to derivative and debt financial instruments activity for the six months ended June 30, 20192020 and 2018.2019. All dollar amounts are shown on a pre-taxpretax basis.

June 30, 2020June 30, 2019
($ in millions)(Loss)Gain Deferred in OCIGain Recognized(Loss)Gain Deferred in OCIGain/(Loss) RecognizedCaption In Condensed Consolidated Statement of Income
Economic
   Foreign currency forward contracts
$—  $26  $—  $32  Other charges
Fair Value
   Interest rate swaps
—  5  —  1  Interest expense
Cash Flow
Foreign currency forward contracts—  —  (3) (4) Other charges and Cost of sales
Total Cash Flow$—  $31  ($3) $29  
Net Investment
Cross currency swaps($4) $9  $6  $8  Interest expense
Foreign denominated debt25  —  22  —  
Total Net Investment$21  $9  $28  $8  
 June 30, 2019 June 30, 2018  
($ in millions)(Loss)/
Gain Deferred in OCI		 Gain/(Loss) Recognized (Loss)/Gain Deferred in OCI Gain/(Loss) Recognized Caption In Condensed Consolidated Statement of Income
Economic         
   Foreign currency forward contracts 

$—
 
$32
 
$—
 
$23
 Other charges
Fair Value         
   Interest rate swaps 
—
 1
 —
 2
 Interest expense
Cash Flow         
Foreign currency forward contracts(1)
(3) (4) (3) (3) Other charges and Cost of sales
Total Cash Flow
($3)

$29
 
($3) 
$22
  
Net Investment         
Cross currency swaps
$6
 
$8
 
$5
 
$5
 Interest expense
Foreign denominated debt22
 —
 74
 —
  
Total Net Investment
$28
 
$8
 
$79
 
$5
  

(1)For the period ended June 30, 2019, the amounts excluded from effectiveness testing recognized in earnings based on an amortized approach was expense of $1 million.
Fair Value Measurements
The Company follows a fair value measurement hierarchy to measure its assets and liabilities. As of June 30, 20192020 and December 31, 2018,2019, the assets and liabilities measured at fair value on a recurring basis were cash equivalents, equity securities and derivatives. In addition, the Company measures its pension plan assets at fair value (see Note 13, "Employee Benefit Plans" under Item 8 in the 20182019 Form 10-K for further details). The Company's financial assets and liabilities are measured using inputs from the following three levels:
Level 1 inputs are quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Level 1 inputs are considered to be the most reliable evidence of fair value as they are based on unadjusted quoted market prices from various financial information service providers and securities exchanges.
Level 2 inputs are directly or indirectly observable prices that are not quoted on active exchanges, which include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. The fair values of the derivative instruments reflect the instruments' contractual terms, including the period to maturity, and uses observable market-based inputs, including forward curves.
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Level 3 inputs are unobservable inputs employed for measuring the fair value of assets or liabilities. The Company does not have any recurring financial assets or liabilities that are recorded in its condensed consolidated balance sheets as of June 30, 20192020 and December 31, 20182019 that are classified as Level 3 inputs.

Assets and liabilities reported at fair value on a recurring basis:
June 30, 2019 December 31, 2018June 30, 2020December 31, 2019
($ in millions)Level 1 Level 2 Level 3 Level 1 Level 2 Level 3($ in millions)Level 1Level 2Level 3Level 1Level 2Level 3
Assets:           Assets:
Other current assets:           Other current assets:
Marketable equity securities
$4
 
$—
 
$—
 
$4
 
$—
 
$—
Marketable equity securities$5  $—  $—  $5  $—  $—  
Foreign currency forward contracts (a)
—
 19
 —
 —
 45
 —
Foreign currency forward contracts (a)
—  15  —  —  14  —  
Investments:           Investments:
Marketable equity securities78
 —
 —
 69
 —
 —
Marketable equity securities$83  $—  $—  $80  $—  $—  
Other assets:           Other assets:
Cross currency swaps (b)
—
 41
 —
 —
 35
 —
Cross currency swaps (b)
$—  $73  $—  $—  $52  $—  
Interest rate swaps (c)
—
 35
 —
 —
 8
 —
Interest rate swaps (c)
—  78  —  —  35  —  
Liabilities:           Liabilities:
Accounts payable and accrued liabilities:           Accounts payable and accrued liabilities:
Foreign currency forward contracts (d)
—
 —
 —
 —
 1
 —
Foreign currency forward contracts (d)
$—  $—  $—  $—  $1  $—  
Foreign currency forward contracts (a)
—
 10
 —
 —
 9
 —
Foreign currency forward contracts (a)
—  8  —  —  20  —  
Other liabilities:Other liabilities:
Cross currency swap (b)
Cross currency swap (b)
$—  $—  $—  $—  $4  $—  

(a) Derivatives not designated as hedging instruments(c) Fair value hedges
(b) Net investment hedges(d) Cash flow hedges

Long-Term Debt
($ in millions)
June 30, 2020 (a)
December 31, 2019 (b)
Long-term debt - carrying value$4,776  $5,031  
Long-term debt - fair value$5,221  $5,363  
($ in millions)
June 30, 2019 (a)
 
December 31, 2018 (b)
Long-term debt - carrying value
$5,478
 
$5,000
Long-term debt - fair value
$5,666
 
$5,101
(a) Excluding finance lease obligations of $8 million and short-term borrowings of $1.5 billion as of June 30, 2020.
(a)(b) Excluding finance lease obligations of $11 million and short termshort-term borrowings of $10 million as of June 30, 2019.
(b) Excluding capital lease obligations of $12 million and short term borrowings of $4 million as of December 31, 2018.2019.
The fair values of the debt instruments were based on discounted cash flows and interest rates then currently available to the Company for instruments of the same remaining maturities and were measured using level 2 inputs.
14.
14.Stock-Based Compensation
The Company’s stock-based compensation includes stock options, restricted stock units (“RSUs”) and grants of contingent shares that are earned based on achieving targeted levels of total shareholder return. All current grants of stock options, RSUs and contingent shares are made under the PPG Industries, Inc. Amended and Restated Omnibus Incentive Plan (“PPG Amended Omnibus Plan”), which was amended and restated effective April 21, 2016. Shares available for future grants under the PPG Amended Omnibus Plan were 7.26.4 million as of June 30, 2019.2020.
Stock-based compensation and the income tax benefit recognized during the three and six months ended June 30, 20192020 and 20182019 were as follows:
Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Stock-based compensation$8  $10  $15  $19  
Income tax benefit recognized$2  $2  $4  $4  
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
Stock-based compensation
$10
 
$9
 
$19
 
$18
Income tax benefit recognized
$2
 
$2
 
$4
 
$4
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Grants of stock-based compensation during the six months ended June 30, 20192020 and 20182019 were as follows:
Six Months Ended
June 30		Six Months Ended
June 30
2019 201820202019
Grant DetailsShares Fair Value Shares Fair ValueGrant DetailsSharesFair ValueSharesFair Value
Stock options588,870
 
$22.50
 532,705
 
$25.27
Stock options663,485  $21.93  588,870  $22.50  
Restricted stock units208,602
 
$104.46
 230,363
 
$107.73
Restricted stock units203,239  $110.00  208,602  $104.46  
Contingent shares (a)51,850
 
$109.74
 52,450
 
$115.64
Contingent shares (a)
55,319  $119.52  51,850  $109.74  
(a) The number of contingent shares represents the target value of the award.
Stock options are generally exercisable 36 months after being granted and have a maximum term of 10 years. Compensation expense for stock options is recorded over the vesting period based on the fair value on the date of grant. The fair value of the stock option grants issued during the six months ended June 30, 20192020 was calculated with the following weighted average assumptions:
Weighted average exercise price
$109.74
119.52
Risk-freeRisk free interest rate2.61.6 %
Expected life of option in years6.5
Expected dividend yield1.61.5 %
Expected volatility20.0%

The risk-free interest rate is determined by using the U.S. Treasury yield curve at the date of the grant and using a maturity equal to the expected life of the option. The expected life of options is calculated using the average of the vesting term and the maximum term, as prescribed by accounting guidance on the use of the simplified method for determining the expected term of an employee share option. The expected dividend yield and volatility are based on historical stock prices and dividend amounts over past time periods equal in length to the expected life of the options.
Time-based RSUs generally vest over the three-year period following the date of grant, unless forfeited, and will be paid out in the form of stock, cash or a combination of both at the Company’s discretion at the end of the vesting period. Performance-based RSUs vest based on achieving specific annual performance targets for earnings per share growth and cash flow return on capital over the three calendar year-end periods following the date of grant. Unless forfeited, the performance-based RSUs will be paid out in the form of stock, cash or a combination of both at the Company’s discretion at the end of the three-yearthree-year performance period if PPG meets the performance targets.
TheFor awards granted in 2020, the amount paid upon vesting of performance-based RSUs may range from 0% to 200% of the original grant, based upon the level of earnings per share growth achieved and frequency with which the annual cash flow return on capital performance target is met over the three calendar year periods comprising the vesting period. For awards granted in 2019 and 2018, the amount paid upon vesting of performance-based RSUs may range from 0% to 180% of the original grant, based upon the frequency with which the annual earnings per share growth and cash flow return on capital performance targets are met over the three calendar year periods comprising the vesting period.grant.
Contingent share grants (referred to as “TSR awards”) are made annually and are paid out at the end of each three-year period following the date of grant based on PPG's performance. Performance is measured by determining the percentile rank of the total shareholder return of PPG common stock in relation to the total shareholder return of the S&P 500 as it existed at the beginning of the three-yearthree-year performance period excluding any companies that have been removed from the index because they ceased to be publicly traded during the performance period. For awards granted in 2020, the payment of awards following the three-year award period will be based on performance achieved in accordance with the scale set forth in the plan agreement and may range from 0% to 200% of the initial grant. For awards granted in 2019 and 2018, the amount paid following the three-year award period may range from 0% to 220% of the initial grant. Any payments made at the end of the award period may be in the form of stock, cash or a combination of both at the Company's discretion. The TSR awards qualify as liability awards, and compensation expense is recognized over the three-yearthree-year award period based on the fair value of the awards (giving consideration to the Company’s percentile rank of total shareholder return) remeasured in each reporting period until settlement of the awards.
15.
15.Commitments and Contingent Liabilities
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
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matters arising out of the conduct of PPG’s current and past business activities. To the extent that 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, as they had prior to the asbestos settlement described below, may contest coverage with respect to some of the asbestos claims if the settlement is not implemented.claims. 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.
The results of any current or future litigation and claims are inherently unpredictable. However, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG 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.
Shareholder Class Action
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, assertsasserted 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 relaterelated 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 athe proposed settlement amount of $25 million. The parties awaitOn November 22, 2019, the Court’s ruling on the Petition.  If preliminary approval is granted, the parties will proceed with the remaining procedures required to obtainCourt entered final approval ofjudgment approving the settlement. PPG’s insurance carriers confirmed to the Company insurance coverage for the full amount of the proposed settlement. Settlement payments are expected to occur in 2020.
As of June 30, 2019, PPG recorded an accrued liability of $25 million for the proposed settlement amount and a corresponding asset for the insurance coverage of $25 million within Accounts payable and accrued liabilities and Other current assets, respectively.
Asbestos Matters
Prior to 2000, the Company had been named as a defendant in numerous claims alleging bodily injury from (i) exposure to asbestos-containing products allegedly manufactured, sold or distributed by the Company, its subsidiaries, or for which they are otherwise alleged to be liable; (ii) exposure to asbestos allegedly present at a facility owned or leased by the Company; or (iii) exposure to asbestos-containing products of Pittsburgh Corning Corporation (“PC”) for which the Company was alleged to be liable under a variety of legal theories (the Company and Corning Incorporated were each 50% shareholders in PC)PC prior to April 27, 2016).
Pittsburgh Corning Corporation asbestos bankruptcy
In 2000, PC filed for Chapter 11 in the U.S. Bankruptcy Court for the Western District of Pennsylvania in an effort to permanently and comprehensively resolve all of its pending and future asbestos-related liability claims. At the time of the bankruptcy filing, the Company had been named as one of many defendants in approximately 114,000 open claims. The Bankruptcy Court subsequently entered a series of orders preliminarily enjoining the prosecution of asbestos litigation against PPG until after the effective date of a confirmed PC plan of reorganization. During the pendency of this preliminary injunction staying asbestos litigation against PPG, PPG and certain of its historical liability insurers negotiated a settlement with representatives of present and future asbestos claimants. That settlement was incorporated into a PC plan of reorganization that was confirmed by the Bankruptcy Court on May 24, 2013 and ultimately became effective on April 27, 2016. With the effectiveness of the plan, the preliminary injunction staying the prosecution of asbestos litigation against PPG expired by its own terms on May 27, 2016. In accordance with the settlement, the Bankruptcy Court issued a permanent channeling injunction under Section 524(g) of the Bankruptcy Code that prohibits present and future claimants from asserting claims against PPG that arise, in whole or in part, out of exposure to asbestos or asbestos-containing products manufactured, sold and/or distributed by PC or asbestos on or emanating from any PC premises. The channeling injunction, by its terms, also prohibits codefendants in cases that are subject to the channeling injunction from asserting claims against PPG for contribution, indemnification or other recovery. The channeling injunction also precludes the prosecution of claims against PPG arising from alleged exposure to asbestos or asbestos-containing products to the extent that a claimant is alleging or seeking to impose liability, directly or indirectly, for the conduct of, claims against, or demands on PC by reason of PPG’s:PPG’s prior: (i) ownership of a financial interest in PC; (ii) involvement in the management of PC, or service as an officer, director or employee of PC or a related party; (iii) provision of insurance to PC or a related party; or (iv) involvement in a financial transaction affecting the financial condition of PC or a related party. The foregoing PC related claims are referred to as “PC Relationship Claims.”
The Bankruptcy Court's channeling injunction channels the Company’s liability for PC Relationship Claims to a trust funded in part by PPG and its participating insurers for the benefit of current and future PC asbestos claimants (the “Trust”). The Trust is the

sole recourse for holders of PC Relationship Claims. PPG and its affiliates have no further
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liability or responsibility for, and will beare permanently protected from, pending and future PC Relationship Claims. The channeling injunction does not extend to present and future claims against PPG that arise out of alleged exposure to asbestos or asbestos-containing products historically manufactured, sold and/or distributed by PPG or its subsidiaries or for which they are alleged to be liable that are not PC Relationship Claims, and does not extend to claims against PPG alleging personal injury allegedly caused by asbestos on premises presently or formerly owned, leased or occupied by PPG. These claims are referred to as non-PC"non-PC Relationship Claims.
In accordance with the PC plan of reorganization, PPG's equity interest in PC was canceled. PPG satisfied its funding obligations to the Trust on June 9, 2016, when it conveyed to the Trust the stock it owned in Pittsburgh Corning Europe and 2,777,778 shares of PPG’s common stock and made a cash payment to the Trust in the amount of $764 million. PPG’s historical insurance carriers participating in the PC plan of reorganization are required to make cash payments to the Trust of approximately $1.7 billion, subject to a right of prepayment at a 5.5% discount rate.
On October 13, 2016, the Bankruptcy Court issued an order entering a final decree and closing the Chapter 11 case. That order provided that the Bankruptcy Court retained jurisdiction to enforce any order issued in the case and any agreements approved by the court, enforce the terms and conditions of the modified third amended Plan, and consider any requests to reopen the case.Claims".
Non-PC relationship asbestos claims
At the time PC filed for bankruptcy, PPG had been named as one of many defendants in one or more of the categories of asbestos-related claims identified above. Over the course of the 16 years during which the PC bankruptcy proceedings, and corresponding preliminary injunction staying the prosecution of asbestos-related claims against PPG, were pending, certain plaintiffs alleging premises claims filed motions seeking to lift the stay with respect to more than 1,000 individually-identified premises claims. The Bankruptcy Court granted motions to lift the stay in respect to certain of these premises claims and directed PPG to engage in a process to address any additional premises claims that were the subject of pending or anticipated lift-stay motions. As a result of the overall process as directed by the Bankruptcy Court involving more than 1,000 premises claims between 2006 and May 27, 2016, hundreds of these claims were withdrawn or dismissed without payment and approximately 650 premises claims were dismissed upon agreements by PPG and its insurers to resolve such claims in exchange for monetary payments.
With respect to the remainingasbestos-related claims still reportable withinpending against the inventory of 114,000 asbestos-related claimsCompany at the time PC filed for bankruptcy, the Company considers such claims to fall within one or more of the following categories: (1) claims that have been closed or dismissed as a result of processes undertaken during the bankruptcy; (2) claims that may have been previously filed on the dockets of state and federal courts in various jurisdictions, but are inactive as to the Company; and (3) claims that are subject, in whole or in part, to the channeling injunction and thus will be resolved, in whole or in part, in accordance with the Trust procedures established under the PC bankruptcy reorganization plan. As a result of the foregoing, the Company does not consider these three categories of claims to be open or active litigation against it, although the Company cannot now determine whether, or the extent to which, any of these claims may in the future be reinstituted, reinstated, or revived such that they may become open and active asbestos-related claimsnon-PC Relationship Claims against it.
Current open and active claims post-Pittsburgh Corning bankruptcy
As of June 30, 2019,2020, the Company was aware of approximately 490500 open and active asbestos-related claims pending against the Company and certain of its subsidiaries. These claims consist primarily of non-PC Relationship Claims against PPG and claims against a PPG subsidiary of PPG.the Company acquired on April 1, 2013. The Company is defending the remainingthese open and active claims vigorously.
Since April 1, 2013, a subsidiary of PPG has been implicated in claims alleging death or injury caused by asbestos-containing products manufactured, distributed or sold by a North American architectural coatings business or its predecessors which was acquired by PPG. All such claims have been either served upon or tendered to the seller for defense and indemnity pursuant to obligations undertaken by the seller in connection with the Company’s purchase of the North American architectural coatings business. The seller has accepted the defense of these claims subject to the terms of various agreements between the Company and the seller. The seller’s defense and indemnity obligations in connection with newly filed claims ceased with respect to claims filed after April 1, 2018.
PPG has established reserves totaling approximately $180$190 million for asbestos-related claims that would not be channeled to the Trust which, based on presently available information, we believe will be sufficient to encompass all of PPG’s current and estimable potential future asbestos liabilities.  These reserves include a $162 million reserve established in 2009 in connection with an amendment to the PC plan of reorganization. These reserves, which are included within Other liabilities on the accompanying condensed consolidated balance sheets, represent PPG’s best estimate of its liability for these claims.
These reserves include a $162 million reserve established in 2009 in connection with an amendment to the PC plan of reorganization for non-PC Relationship Claims other than claims arising from premises-related exposures. PPG does not have sufficient current claim information or settlement history on which to base

a better estimate of this liability in light of the fact that the Bankruptcy Court’s injunction staying most asbestos claims against the Company was in effect from April 2000 through May 2016.
These reserves also include PPG’s best estimate, following an analysis performed in 2019 of its claims history and discussions with consultants and its counsel, of the value of the Company’s potential liability for premises-related non-PC Relationship Claims against it and claims against PPG’s subsidiary acquired on April 1, 2013 that are presently pending, and that are projected to be asserted through December 31, 2028.
PPG will monitormonitors the activity associated with its remaining asbestos claims and evaluate,evaluates, on a periodic basis, its estimated liability for such claims, its insurance assets then available, and all underlying assumptions to determine whether any adjustment to the reserves for these claims is required.
The amount reserved for asbestos-related claims by its nature is subject to many uncertainties that may change over time, including (i) the ultimate number of claims filed; (ii) the amounts required to resolve both currently known and future unknown claims; (iii) the amount of insurance, if any, available to cover such claims; (iv) the unpredictable aspects of the litigation process, including a changing trial docket and the jurisdictions in which trials are scheduled; (v) the outcome of any trials, including potential judgments or jury verdicts; (vi) the lack of specific information in many cases concerning exposure for which PPG is allegedly responsible, and the claimants’ alleged diseases resulting from such exposure; and (vii) potential changes in applicable federal and/or state tort liability law. All of these factors may have a material effect upon future asbestos-related liability estimates. As a potential offset to any future asbestos financial exposure, under the PC plan of reorganization PPG retained, for its own account, the right to pursue insurance coverage from certain of its historical insurers that did not participate in the PC plan of reorganization. While the ultimate outcome of PPG’s asbestos litigation cannot be predicted with certainty, PPG believes that any financial exposure resulting from its asbestos-related claims will not have a material adverse effect on PPG’s consolidated financial position, liquidity or results of operations.
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Environmental Matters
It is PPG’s policy to accrue expenses for environmental 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. See Note 14, "Commitments and Contingent Liabilities," under Item 8 of the 20182019 Form 10-K for additional descriptions of the following environmental matters.
As remediation at certain legacy environmental sites progresses, PPG continues to refine its assumptions underlying the estimates of the expected future costs of its remediation programs. PPG’s ongoing evaluation may result in additional charges against income to increase the reserves for these sites. Remediation activities at our legacy sites are not related to the ongoing operations of PPG. In 2020 and 2019, certain charges have been recorded based on updated estimates to increase existing reserves for these sites. Certain other charges related to environmental remediation actions are also expensed as incurred.
As of June 30, 20192020 and December 31, 2018,2019, PPG had reserves for environmental contingencies associated with PPG’s former chromium manufacturing plant in Jersey City, N.J.New Jersey (“New Jersey Chrome”), legacy glass and chemical manufacturing sites, and for other environmental contingencies, including current manufacturing locations and National Priority List sites. These reserves are reported as Accounts payable and accrued liabilities and Other liabilities in the accompanying condensed consolidated balance sheet.
Environmental Reserves
($ in millions)June 30, 2019 December 31, 2018
New Jersey Chrome
$148
 
$151
Glass and chemical73
 90
Other72
 50
Total
$293
 
$291
Current portion
$110
 
$105

Environmental Reserves
($ in millions)June 30, 2020December 31, 2019
New Jersey Chrome$108  $134  
Glass and chemical99  96  
Other84  74  
Total$291  $304  
Current portion$85  $62  
Pre-taxPretax charges against income for environmental remediation costs are included in Other charges in the accompanying condensed consolidated statement of income. The pre-taxpretax charges and cash outlays related to such environmental remediation for the three and six months ended June 30, 2019 and 2018 were as follows:
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
Environmental remediation pre-tax charges
$35
 
$1
 
$51
 
$35
Cash outlays for environmental remediation activities
$20
 
$14
 
$36
 
$31

During the three months ended June 30, 2019, charges were taken to increase the existing reserve for New Jersey Chrome based on updated estimates of the underlying factors as described below and an existing glass and chemical

site reserve based on changes in estimates of future costs. In the first quarter of 2019, a one-time charge was taken to increase an existing reserve related to a manufacturing site.
During the six months ended June 30, 2018, charges2020 and 2019 were taken to increase the existing reserve for New Jersey Chrome and for reserves associated with legacy Glass and chemical sites.as follows:
Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Environmental remediation pretax charges$4  $35  $15  $51  
Cash outlays for environmental remediation activities$12  $20  $37  $36  
Remediation: New Jersey Chrome
In June 2009, PPG entered into a settlement agreement with the New Jersey Department of Environmental Protection (“NJDEP”) and Jersey City, New Jersey (which had asserted claims against PPG for lost tax revenue) which was in the form of a Judicial Consent Order (the "JCO"). Under the JCO, PPG accepted sole responsibility for the remediation activities at its former chromium manufacturing location in Jersey City and 19 additional sites. The principal contaminant of concern is hexavalent chromium. The JCO also provided for the appointment of a court-approved Site Administrator who is responsible for establishing a master schedule for the remediation of the 20 PPG sites which existed at that time. One site was subsequently removed from the JCO process during 2014 and will be remediated separately at a future date. A total of 19 sites remain subject to the JCO process.
The most significant assumptions underlying the estimate of remediation costs for all New Jersey Chrome sites are those related to the extent and concentration of chromium impacts in the soil, as these determine the quantity of soil that must be treated in place, the quantity that will have to be excavated and transported for offsite disposal, and the nature of disposal required. PPG regularly evaluates the assessments of costs incurred to date versus current progress and the potential cost impacts of the most recent information, including the extent of impacted soils, percentage of hazardous versus non-hazardous soils, daily soil excavation rates, and engineering, administrative and other associated costs. Based on these assessments, the reserve is adjusted accordingly. Principal factors
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affecting costs include refinements in the estimate of the mix of hazardous to non-hazardous soils to be excavated, an overall increase in soil volumes to be excavated, enhanced water management requirements, decreased daily soil excavation rates due to site conditions, initial estimates for remedial actions related to groundwater, and oversight and management costs. The reserve adjustments for the estimated costs to remediate all New Jersey Chrome sites are exclusive of any third party indemnification, as the recovery of any such amounts is uncertain.
Groundwater remediation at the former Garfield Avenue chromium manufacturing site and five adjacent sites is expected to occur over several years after NJDEP's approval of the work plan.years. Ongoing groundwater monitoring will be utilized to develop a final groundwater remedial action work plan which is currently expected to be submitted to NJDEP in 2021.2020.
PPG’s financial reserve for remediation of all New Jersey Chrome sites is $148was $108 million at June 30, 2019.2020. The major cost components of this liability continue to be related to excavation, transportation and disposal of impacted soil, as well as construction services. These components each account for approximately 18%, 17%14% and 28%34% of the accrued amount, respectively.
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 Chrome sites. FinalFurther 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.
Remediation: Glass, ChemicalChemicals and Other Sites
Among other sites at which PPG is managing environmental liabilities, remedial actions are occurring at a legacy chemical manufacturing site in Barberton, Ohio, where PPG has completed a Facility Investigation and Corrective Measure Study under USEPA’sthe United States Environmental Protection Agency's Resource Conservation and Recovery Act (“RCRA”) Corrective Action Program. PPG has also been addressing the impacts from a legacy plate glass manufacturing site in Kokomo, Indiana under the Voluntary Remediation Program of the Indiana Department of Environmental Management and a site associated with a legacy plate glass manufacturing site near Ford City, Pennsylvania under the Pennsylvania Land Recycling Program under the oversight of the Pennsylvania Department of Environmental Protection. PPG is currently performing additional investigation and remedial activities at these locations.
With respect to certain other waste sites, the financial condition of other potentially responsible parties also contributes to the uncertainty of estimating PPG’s final costs. Although contributors of waste to sites involving other potentially responsible parties may face governmental agency assertions of joint and several liability, in general, final allocations of costs are made based on the relative contributions of wastes to such sites. PPG is generally not a major contributor to such sites.

Remediation: Reasonably Possible Matters
In addition to the amounts currently reserved for environmental remediation, the Company may be subject to loss contingencies related to environmental matters estimated to be as much as $100 million to $200 million. Such unreserved losses are reasonably possible but are not currently considered to be probable of occurrence. 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.
The impact of evolving programs, such as natural resource damage claims, industrial site re-use initiatives and domestic and international remediation programs, also adds to the present uncertainties with regard to the ultimate resolution of this unreserved exposure to future loss. The Company’s assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments.
Other Matters
The Company had outstanding letters of credit and surety bonds of $147$134 million and guarantees of $14$9 million as of June 30, 2019.2020. The Company does not believe any loss related to such guarantees is likely.
16.
16.Revenue Recognition
The Company recognizes revenue when control of the promised goods or services is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the
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various shipping terms applicable to the Company’s sales. For most transactions, control passes in accordance with agreed upon delivery terms. 
The Company delivers products to company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires and independent distributors, company-owned distribution networks, and directly to manufacturing companies and retail customers. Each product delivered to a third party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates. Accounts receivable are recognized when there is an unconditional right to consideration. Payment terms vary from customer to customer, depending on creditworthiness, prior payment history and other considerations.
The Company also provides services by applying coatings to customers' manufactured parts and assembled products and by providing technical support to certain customers. Performance obligations are satisfied over time as critical milestones are met and as services are provided. PPG is entitled to payment as the services are rendered. For the three and six months ended June 30, 20192020 and 2018,2019, service revenue constituted approximately 5% of total revenue.
Net sales by segment and region for the three and six months ended June 30, 20192020 and 20182019 were as follows:
Performance CoatingsIndustrial CoatingsTotal Net Sales
Three Months Ended
June 30		Three Months Ended
June 30		Three Months Ended
June 30
($ in millions)202020192020201920202019
United States and Canada$940  $1,110  $336  $623  $1,276  $1,733  
Europe, Middle East and Africa ("EMEA")686  793  240  462  926  1,255  
Asia Pacific255  283  311  360  566  643  
Latin America188  244  59  149  247  393  
Total$2,069  $2,430  $946  $1,594  $3,015  $4,024  
($ in millions)Performance Coatings Industrial Coatings Total Net Sales
 Three Months Ended
June 30		 Three Months Ended
June 30		 Three Months Ended
June 30
 20192018 20192018 20192018
United States and Canada
$1,110

$1,173
 
$623

$619
 
$1,733

$1,792
EMEA793
811
 462
468
 1,255
1,279
Asia-Pacific283
277
 360
403
 643
680
Latin America244
237
 149
143
 393
380
Total
$2,430

$2,498
 
$1,594

$1,633
 
$4,024

$4,131


Performance CoatingsIndustrial CoatingsTotal Net Sales
Six Months Ended
June 30		Six Months Ended
June 30		Six Months Ended
June 30
($ in millions)202020192020201920202019
United States and Canada$1,867  $2,063  $918  $1,236  $2,785  $3,299  
EMEA1,351  1,481  636  888  1,987  2,369  
Asia Pacific454  526  571  700  1,025  1,226  
Latin America405  468  190  286  595  754  
Total$4,077  $4,538  $2,315  $3,110  $6,392  $7,648  
($ in millions)Performance Coatings Industrial Coatings Total Net Sales
 Six Months Ended
June 30		 Six Months Ended
June 30		 Six Months Ended
June 30
 20192018 20192018 20192018
United States and Canada
$2,063

$2,147
 
$1,236

$1,230
 
$3,299

$3,377
EMEA1,481
1,518
 888
941
 2,369
2,459
Asia-Pacific526
519
 700
791
 1,226
1,310
Latin America468
474
 286
292
 754
766
Total
$4,538

$4,658
 
$3,110

$3,254
 
$7,648

$7,912

17.
17.Reportable Business Segment Information
PPG is a multinational manufacturer with 9 operating segments (which the Company refers to as “strategic business units”) that are organized based on the Company’s major products lines. The Company’s reportable business segments include the following two2 segments: Performance Coatings and Industrial Coatings. The operating segments have been aggregated based on economic similarities, the nature of their products, production processes, end-use markets and methods of distribution.
The Performance Coatings reportable business segment is comprised of the automotive refinish coatings, aerospace coatings, architectural coatings – Americas and Asia-Pacific,Asia Pacific, architectural coatings - EMEA, and protective and marine coatings operating segments. This reportable business segment primarily supplies a variety of protective and decorative coatings, sealants and finishes along with paint strippers, stains and related chemicals, as well as transparencies and transparent armor.
The Industrial Coatings reportable business segment is comprised of the automotive original equipment manufacturer (“OEM”)OEM coatings, industrial coatings, packaging coatings, and the specialty coatings and materials operating segments. This reportable business segment primarily supplies a variety of protective and decorative coatings and finishes along with adhesives, sealants, metal pretreatment products, optical monomers and coatings, precipitated silicas, and other specialty materials.
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Reportable business segment net sales and segment income for the three and six months ended June 30, 20192020 and 20182019 were as follows: 
Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Net sales:
Performance Coatings$2,069  $2,430  $4,077  $4,538  
Industrial Coatings946  1,594  2,315  3,110  
Total$3,015  $4,024  $6,392  $7,648  
Segment income:
Performance Coatings$362  $425  $634  $722  
Industrial Coatings34  235  215  453  
Total$396  $660  $849  $1,175  
Corporate(50) (44) (110) (91) 
Interest expense, net of interest income(36) (28) (59) (53) 
Business restructuring-related costs, net (a)
(173) (182) (186) (185) 
Debt extinguishment charge(7) —  (7) —  
Environmental remediation charges(4) (30) (12) (40) 
Increase in allowance for doubtful accounts related to COVID-19—  —  (30) —  
Costs associated with accounting investigations—  (3) —  (7) 
Acquisition-related costs (b)
—  (10) —  (17) 
Income before income taxes$126  $363  $445  $782  
(a)Included in business restructuring-related costs, net are business restructuring charges, accelerated depreciation of certain assets and other related costs, offset by releases related to previously approved programs.
(b)Acquisition-related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred to effect acquisitions. These costs are included in Selling, general and administrative expense in the condensed consolidated statement of income. Acquisition-related costs also include the impact for the step up to fair value of inventory acquired in certain acquisitions which are included in Cost of Sales, exclusive of depreciation and amortization in the condensed consolidated statement of income.
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
Net sales:       
Performance Coatings
$2,430
 
$2,498
 
$4,538
 
$4,658
Industrial Coatings1,594
 1,633
 3,110
 3,254
Total
$4,024
 
$4,131
 
$7,648
 
$7,912
Segment income:       
Performance Coatings
$425
 
$428
 
$722
 
$708
Industrial Coatings235
 223
 453
 462
Total
$660
 
$651
 
$1,175
 
$1,170
Corporate(45) (23) (90) (66)
Interest expense, net of interest income(28) (24) (53)
(45)
Legacy items (a)
1
 1
 (1) 5
Business restructuring, net(176) (83) (173) (83)
Costs associated with accounting investigations(3) (9) (7) (9)
Environmental remediation charges, net(30) —
 (40) (34)
Acquisition-related costs (b)
(10) —
 (17) —
Accelerated depreciation and other costs from restructuring actions(6) (5) (12) (5)
Impairment of a non-manufacturing asset—
 (9) —
 (9)
Legacy legal settlement—
 (10) —
 (10)
Costs related to customer assortment changes—
 (10) —
 (14)
Income before income taxes
$363
 
$479
 
$782
 
$900

(a)Legacy items include current costs related to former operations of the Company, including pension and other postretirement benefit costs, certain charges for legal matters and certain environmental remediation costs, and certain other charges which are not associated with PPG's current business portfolio.
(b)Acquisition-related costs include advisory, legal, accounting, valuation, and other professional or consulting fees incurred to effect significant acquisitions, as well as similar fees and other costs to effect divestitures not classified as discontinued operations. These costs also include the flow-through cost of sales for the step up to fair value of inventory acquired in acquisitions.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes thereto included in the condensed consolidated financial statements in Part I, Item 1, “Financial Statements,” of this report and in conjunction with the 20182019 Form 10-K.
Executive Overview
COVID-19
We delivered solid operating results in the second quarter, especially considering the significant declines in economic activity in most of the world due to the COVID-19 pandemic. The strongest performance came from our global architectural coatings businesses, which was driven by increased do-it-yourself ("DIY") demand for PPG paint products in all major regions. During the quarter, several of our businesses in China, including automotive original equipment manufacturer ("OEM") coatings, general industrial coatings, and protective and marine coatings, realized higher sales volumes year-over-year supported by a recovery in Chinese economic activity. Year-over-year demand was lower across most businesses in other major global regions, but our sequential monthly sales volumes improved in each region during the quarter.
The quick and decisive actions we took at the outset of the pandemic helped to mitigate the earnings impact from lower sales volumes. Our aggregate segment margins were about 13%, which is a significant improvement versus the depths of the prior recession in 2008 and 2009, and is primarily a result of the structural cost savings that we have implemented over the past several years. In the quarter, we had about $170 million of incremental cost savings from various interim initiatives and more than $20 million of incremental structural savings from business restructuring programs. In June, we initiated a new restructuring program targeting up to $170 million of annualized structural cost savings. In addition, we generated nearly $500 million of cash from operations, similar to second
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quarter 2019 levels driven by our continued focus on working capital management. In July, the Company's Board of Directors approved a 6% increase in our quarterly dividend.
As the pandemic continues, our focus remains on the protection of our employees and providing excellent support to our customers with the essential products and services they need to resume and ramp-up their operations. Looking ahead, we expect overall economic activity to continue to recover, although at a varied pace across end-use markets and geographic regions, given the uncertainty around the ongoing effects of the pandemic.
Below are our key financial results for the three months ended June 30, 2019:2020:
•Net sales were approximately $4.0$3.0 billion, down 2.6%25.1% compared to the prior year.
•Cost of sales, exclusive of depreciation and amortization ("Cost of sales") was $2.3$1.7 billion, down 3.8%25.6% versus prior year.year primarily due to lower sales volumes as a result of COVID-19 and foreign currency translation. As a percentage of sales, Cost of sales decreased 0.7%0.4%.
•Selling, general and administrative ("SG&A") expense was $934$766 million, down 1.2% year-over-year.18.0% year-over-year due to cost mitigation initiatives. As a percentage of sales, SG&A expense increased 0.3%2.2%.
•Income before income taxes was $363$126 million.
•The reported effective tax rate was 23.7%23.0%. The adjusted effective tax rate was 23.8%24.8%.
Income•Net income from continuing operations net of tax (attributableattributable to PPG)PPG was $270$99 million.
•Earnings per diluted share from continuing operations attributable to PPG was $1.13.$0.42.
Below are our key financial results forFor the six months ended June 30, 2019:2020:
Net sales were approximately $7.6 billion, down 3.3% compared to the prior year.
Cost of sales was $4.4 billion, down 4.4% versus prior year. As a percentage of sales, Cost of sales decreased 0.6%.
SG&A expense was $1.8 billion, down 1.5% year-over-year. As a percentage of sales, SG&A expense increased 0.4%.
Income before income taxes was $782 million.
The reported effective tax rate was 24.0%. The adjusted effective tax rate was 24.1%.
Income from continuing operations, net of tax (attributable to PPG) was $582 million.
Earnings per diluted share•Cash flows provided by operating activities from continuing operations was $2.44.$321 million, a decrease of $165 million year-over-year.
For the •six months ended June 30, 2019:
Cash flows used by operating activities - continuing operations was $486 million, an increase of $355 million year-over-year.
Capital expenditures, including business acquisitions (net of cash acquired), was $494$137 million.
•The Company paid $227$241 million in dividends and repurchased $175 million of its outstanding common stock.

dividends.
Performance in the second quarter of 20192020 compared to the second quarter of 20182019
Performance Overview
Net Sales by Region
 Three Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
United States and Canada
$1,733
 
$1,792
 (3.3)%
Europe, Middle East and Africa (EMEA)1,255
 1,279
 (1.9)%
Asia-Pacific643
 680
 (5.4)%
Latin America393
 380
 3.4 %
Total
$4,024
 
$4,131
 (2.6)%
Three Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
United States and Canada$1,276  $1,733  (26.4)%
Europe, Middle East and Africa ("EMEA")926  1,255  (26.2)%
Asia Pacific566  643  (12.0)%
Latin America247  393  (37.2)%
Total$3,015  $4,024  (25.1)%
Net sales decreased $107$1,009 million due to the following:
● Lower sales volumes (-4%(-24%)
● Unfavorable foreign currency translation (-3%)
Partially offset by:
● Higher selling prices (+2%(2%)
● Higher acquisition-relatedAs a result of COVID-19 and slowing of the global economy, sales net of dispositions (+2%)
Higher selling prices were achieved across all businesses, reflecting the value of our productsvolumes and services. These increases helped to offset other cost inflation.
U.S and Canada net sales decreased, primarily due to lower sales volumes.
Europe, Middle East and Africa ("EMEA") net sales decreased, primarily due to unfavorable foreign currency translation.
Asia-Pacific net sales decreased, due to unfavorable foreign currency translation and lower sales volumes.
Latin Americalowered net sales increased, primarily due to higherin each region and in both reportable business segments. Higher selling prices.prices and acquisition-related sales partially offset this downturn.
Foreign currency translation decreased net sales approximately $130$135 million as the U.S. dollar strengthened against several foreign currencies versus the prior year, most notably the euro, Mexican peso and Chinese yuan.euro.
For specific business results, see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.
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Cost of Sales, exclusive of depreciation and amortization
Three Months Ended
June 30		 Percent ChangeThree Months Ended
June 30		Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018($ in millions, except percentages)202020192020 vs. 2019
Cost of sales, exclusive of depreciation and amortization
$2,288
 
$2,379
 (3.8)%Cost of sales, exclusive of depreciation and amortization$1,703  $2,288  (25.6)%
Cost of sales as a percentage of net sales56.9% 57.6% (0.7)%Cost of sales as a percentage of net sales56.5 %56.9 %(0.4)%
Cost of sales, exclusive of depreciation and amortization, decreased $91$585 million primarily due to the following:
● Lower sales volumes
● Foreign currency translation
Partially offset by:
● Cost of sales attributable to acquired businesses
● Other cost inflation

Selling, general and administrative expenses 
Three Months Ended
June 30		 Percent ChangeThree Months Ended
June 30		Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018($ in millions, except percentages)202020192020 vs. 2019
Selling, general and administrative expenses (SG&A)
$934
 
$945
 (1.2)%Selling, general and administrative expenses (SG&A)$766  $934  (18.0)%
Selling, general and administrative expenses as a percentage of net sales23.2% 22.9% 0.3 %Selling, general and administrative expenses as a percentage of net sales25.4 %23.2 %2.2 %
SG&A expense decreased $11$168 million primarily due to the following:
        ● Cost savings initiatives, including restructuring actions
● Foreign currency translation
Partially offset by:
● Wage and other cost inflation
● SG&A expenses attributable to acquired businesses
Other costs and other income
Three Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
Interest expense, net of Interest income$36  $28  28.6 %
Other charges$21  $29  (27.6)%
Other income($11) ($31) (64.5)%
 Three Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
Interest expense, net of Interest income
$28
 
$24
 16.7%
Other charges
$29
 
$6
 383.3%
Other income
($31) 
($24) 29.2%
Interest expense, net of Interest income
Other charges
Other charges wereInterest expense, net of Interest income was higher in the three months ended June 30, 20192020 due to the early redemption of the $500 million notes due November 2020 and the $1.5 billion 364-day term loan credit agreement entered into in April 2020.
Other charges
Other charges were lower in the three months ended June 30, 2020 compared to prior year due to lower environmental remediation charges.charges during the quarter, offset by a charge related to the early retirement of debt.
Effective tax rate and earnings per diluted share
Three Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
Income tax expense$29  $86  (66.3)%
Effective tax rate23.0 %23.7 %(0.7)%
Adjusted effective tax rate, continuing operations*24.8 %23.8 %1.0 %
Earnings per diluted share, continuing operations$0.42  $1.13  (62.8)%
Adjusted earnings per diluted share*$0.99  $1.85  (46.5)%
*See Regulation G Reconciliation below
26
 Three Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
Income tax expense
$86
 
$104
 (17.3)%
Effective tax rate23.7% 21.7% 2.0 %
Adjusted effective tax rate, continuing operations*23.8% 22.0% 1.8 %
      
Earnings per diluted share, continuing operations
$1.13
 
$1.51
 (25.2)%
Adjusted earnings per diluted share*
$1.85
 
$1.90
 (2.6)%
*See Regulation G Reconciliation below
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The effective tax rate for the three months endingended June 30, 20192020 reflects the benefit of U.S. tax legislation enacted in December 2017 as well as the impact of certain discrete tax items.items for the quarter. The Company expects that its full year 2019 adjustedthird quarter 2020 effective tax rate will be between 23% and 25%.
Adjusted earnings per diluted share from continuing operations for the three months ended June 30, 2019 and 20182020 decreased year-over-year due to the items described further in the Regulation G reconciliation.
Regulation G ReconciliationReconciliations - Results from Operations
PPG believes investors’investors' 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 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 from continuing operations, earnings per diluted share from continuing operations and the effective tax rate adjusted for these items are not recognized financial measures determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP)("U.S. GAAP") and should not be considered a substitute for net income from continuing operations, earnings per diluted share from continuing operations, 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 and the adjusted effective tax rate 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 and net income (attributable to PPG) and earnings per share – assuming dilution (attributable to PPG) are reconciled to adjusted net income (attributable to PPG) and adjusted earnings per share – assuming dilution below:
Three Months Ended June 30, 2020
($ in millions, except percentages and per share amounts)Income Before Income TaxesTax ExpenseEffective Tax RateNet income (attributable to PPG)
Earnings per diluted share(a)
As reported, continuing operations$126  $29  23.0 %$99  $0.42  
Adjusted for:
Business restructuring-related costs, net (b)
173  45  26.5 %128  0.54  
Debt extinguishment charge7  2  24.3 %5  0.02  
Environmental remediation charges4  1  24.3 %3  0.01  
Adjusted, continuing operations, excluding certain items$310  $77  24.8 %$235  $0.99  
Three Months Ended June 30, 2019
($ in millions, except percentages and per share amounts)Income Before Income TaxesTax ExpenseEffective Tax RateNet income (attributable to PPG)
Earnings per diluted share(a)
As reported, continuing operations$363  $86  23.7 %$270  $1.13  
Adjusted for:
Business restructuring-related costs, net (b)
182  44  24.2 %138  0.58  
Environmental remediation charges, net30  7  24.3 %23  0.10  
Acquisition-related costs10  2  23.8 %8  0.03  
Costs associated with accounting investigations3  1  24.3 %2  0.01  
Adjusted, continuing operations, excluding certain items$588  $140  23.8 %$441  $1.85  
(a) Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding. 
(b) Included in business restructuring-related costs, net are business restructuring charges, accelerated depreciation of certain assets and other related costs, offset by releases related to previously approved programs.
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Performance of Reportable Business Segments
Performance Coatings
Three Months Ended
June 30		$ Change% Change
($ in millions, except per share amounts)202020192020 vs. 20192020 vs. 2019
Net sales$2,069  $2,430  ($361) (14.9)%
Segment income$362  $425  ($63) (14.8)%
Performance Coatings net sales decreased due to the following:
        ● Lower sales volumes (-15%)
        ● Unfavorable foreign currency translation (-4%)
Partially offset by:
        ● Higher selling prices (3%)
        ● Acquisition-related sales (1%)
Architectural coatings - Americas and Asia Pacific net sales, excluding the impact of currency and acquisitions ("organic sales") were down slightly with differences by channel and region. Sales volumes in the DIY channel were sharply higher during the quarter in all major regions, while sales volumes in the trade and professional channel suffered from the unfavorable impact of retail store shutdowns in the U.S., Canada and Mexico.
Architectural coatings – EMEA organic sales decreased by a low-single-digit percentage as weak demand trends in the first half of the quarter were nearly offset by strong volume growth in June as countries re-opened their economies.
Net sales for automotive refinish coatings declined nearly 35% versus prior year, despite improving sequentially each month of the quarter. Higher selling prices were more than offset by lower sales volumes in each region reflecting a sharp decline in global miles driven and traffic density in most of the world.
Aerospace coatings sales volumes decreased about 30% year-over-year due to a sharp decline in commercial OEM, general aviation and after-market products. Net sales benefited from consistent military demand and acquisition-related sales from Dexmet and Texstars.
Sales volumes in the protective and marine coatings business were down a mid-single-digit percentage driven by lower sales volumes in all regions, with the exception of China.
Segment income decreased $63 million year-over-year, including unfavorable foreign currency translation impacts of about $10 million. Segment margins were the same as the prior year second quarter despite sales volumes being 15% lower. Segment income was impacted by lower sales volumes related to the pandemic and unfavorable foreign currency translation partially offset by execution of cost-mitigation efforts, higher selling prices, and restructuring initiatives.
Looking Ahead
Looking ahead for the Performance Coatings segment, net sales are expected to be lower year-over-year by 8% to 14%, with sharper declines in the aerospace and refinish coatings businesses. All businesses continue to focus on strong cost management and mitigation actions. In addition, targeted selling price actions continue. Lastly, acquisitions are forecast to add about $20 million of net sales primarily from Dexmet, Texstars, and ICR, and foreign currency translation is expected to have an unfavorable impact on segment sales and earnings of about $35 million and $7 million, respectively, based on recent exchange rates.
Industrial Coatings
Three Months Ended
June 30		$ Change% Change
($ in millions, except per share amounts)202020192020 vs. 20192020 vs. 2019
Net sales$946  $1,594  ($648) (40.7)%
Segment income$34  $235  ($201) (85.5)%
Industrial Coatings segment net sales decreased due to the following:
        ● Lower sales volumes (-38%)
        ● Unfavorable foreign currency translation (-3%)
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Automotive OEM coatings sales volumes decreased by nearly 50% year-over-year driven by the significant curtailment in global automotive industry production, especially in the first six weeks of the quarter when production was down about 80% in the U.S. and Europe. Global automotive production improved during the quarter with Chinese production nearly matching the prior year’s quarterly production level, while North American and European quarterly production was down about 50% for the quarter compared to prior year, but improved markedly in the second half of the quarter.
For the industrial coatings business, net sales decreased by about 35% year-over-year driven by weak demand trends in April and May, but with strong sequential monthly improvement in June.
Packaging coatings organic sales increased by a low-single-digit percentage year-over-year as strong demand in the U.S. was offset by softer demand in Asia, including certain customer facility shutdowns due to the pandemic.
Segment income decreased $201 million year-over-year, including unfavorable foreign currency translation impacts of $7 million. Segment income was impacted by lower sales volumes primarily due to customer shutdowns related to the pandemic, partially offset by cost-mitigation actions, restructuring cost savings, and modestly higher selling prices.
Looking ahead
Looking ahead for the Industrial Coatings segment, while demand is expected to be sequentially better in the third quarter compared to the second quarter, demand is expected to remain below prior-year levels. Aggregate net sales for the business segment are expected to be lower by about 10% to 15%. Based on current exchange rates, foreign currency translation is expected to have an unfavorable impact on segment sales and earnings of about $25 million and $5 million, respectively, for the third quarter. All businesses are focusing on strong cost management and cost mitigation actions along with prioritizing cash flow optimization.
Performance in the first six months of 2020 compared to the first six months of 2019
Performance Overview
Net Sales by Region
Six Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
United States and Canada$2,785  $3,299  (15.6)%
Europe, Middle East and Africa (EMEA)1,987  2,369  (16.1)%
Asia-Pacific1,025  1,226  (16.4)%
Latin America595  754  (21.1)%
Total$6,392  $7,648  (16.4)%
Net sales decreased $1,256 million due to the following:
        ● Lower sales volumes (-16%)
● Unfavorable foreign currency translation (-3%)
Partially offset by:
        ● Higher selling prices (2%)
● Acquisition-related sales (1%)
As a result of COVID-19 and slowing of the global economy, sales volumes and unfavorable foreign currency translation lowered net sales in each region and in both reportable business segments. Higher selling prices and acquisition-related sales partially offset this downturn.
Foreign currency translation decreased net sales approximately $210 million as the U.S. dollar strengthened against several foreign currencies versus the prior year, most notably the Mexican peso and euro.
For specific business results, see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.
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Cost of Sales, exclusive of depreciation and amortization
Six Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
Cost of sales, exclusive of depreciation and amortization$3,611  $4,361  (17.2)%
Cost of sales as a percentage of net sales56.5 %57.0 %(0.5)%
Cost of sales, exclusive of depreciation and amortization, decreased $750 million primarily due to the following:
        ● Lower sales volumes
        ● Foreign currency translation
Partially offset by:
        ● Cost of sales attributable to acquired businesses
Selling, general and administrative expenses
Six Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
Selling, general and administrative expenses (SG&A)$1,671  $1,823  (8.3)%
Selling, general and administrative expenses as a percentage of net sales26.1 %23.8 %2.3 %
SG&A expense decreased $152 million primarily due to the following:
        ● Cost savings initiatives, including restructuring actions
● Foreign currency translation
Partially offset by:
● Charge for potential uncollectible accounts related to COVID-19 incurred in the first quarter of 2020
Other costs and income
Six Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
Interest expense, net of Interest income$59  $53  11.3 %
Other charges$24  $43  (44.2)%
Other income($29) ($47) (38.3)%
Other charges
Other charges were lower in the six months ended June 30, 2020 compared to prior year due to lower environmental remediation charges, offset by a debt extinguishment charge related to the early retirement of debt in the second quarter 2020.
Effective tax rate and earnings per diluted share
Six Months Ended
June 30		Percent Change
($ in millions, except percentages)202020192020 vs. 2019
Income tax expense$100  $188  (46.8)%
Effective tax rate22.5 %24.0 %(1.5)%
Adjusted effective tax rate, continuing operations*23.5 %24.1 %(0.6)%
Earnings per diluted share, continuing operations$1.44  $2.44  (41.0)%
Adjusted earnings per diluted share*$2.18  $3.23  (32.5)%
*See Regulation G Reconciliation below
The effective tax rate for the six months ended June 30, 2020 reflects the impact of certain discrete tax items. The Company expects that its full year 2020 effective tax rate will be between 22% and 24%.
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Adjusted earnings per diluted share for the six months ended June 30, 2020 decreased year-over-year due to the items described further in the Regulation G reconciliation.
Regulation G Reconciliation - Results from Operations
PPG believes investors' 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 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 adjusted for these items are not recognized financial measures determined in accordance with U.S. GAAP and should not be considered a substitute for net income from continuing operations, earnings per diluted share from continuing operations, 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 and the adjusted effective tax rate 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:
Six Months Ended June 30, 2020
($ in millions, except percentages and per share amounts)Income Before Income TaxesTax ExpenseEffective Tax RateNet income from continuing operations (attributable to PPG)
Earnings per diluted share(a)
As reported, continuing operations$445  $100  22.5 %$342  $1.44  
Adjusted for:
Business restructuring-related costs, net (b)
186  48  26.2 %138  0.58  
Increase in allowance for doubtful accounts related to COVID-1930  7  23.2 %23  0.10  
Environmental remediation charges12  3  24.3 %9  0.04  
Debt extinguishment charge7  2  24.3 %5  0.02  
Adjusted, continuing operations, excluding certain items$680  $160  23.5 %$517  $2.18  
Six Months Ended June 30, 2019
($ in millions, except percentages and per share amounts)Income Before Income TaxesTax ExpenseEffective Tax RateNet income from continuing operations (attributable to PPG)
Earnings per diluted share(a)
As reported, continuing operations$782  $188  24.0 %$582  $2.44  
Adjusted for:
Business restructuring-related costs, net (b)
185  45  24.3 %140  0.59  
Environmental remediation charges, net40  9  24.3 %31  0.13  
Acquisition-related costs17  4  23.8 %13  0.05  
Costs associated with accounting investigations7  2  24.3 %5  0.02  
Adjusted, continuing operations, excluding certain items$1,031  $248  24.1 %$771  $3.23  
(a) Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding.
(b)  Included in business restructuring-related costs, net are business restructuring charges, accelerated depreciation of certain assets and other related costs, offset by releases related to previously approved programs.
31
 Three Months Ended June 30, 2019
($ 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
As reported, continuing operations
$363
 
$86
 23.7% 
$270
 
$1.13
Adjusted for:         
Business restructuring, net176
 43
 24.4% 133
 0.56
Accelerated depreciation and other costs from restructuring actions6
 1
 17.8% 5
 0.02
Costs associated with accounting investigations3
 1
 24.3% 2
 0.01
Environmental remediation charges, net30
 7
 24.3% 23
 0.10
Acquisition-related costs10
 2
 23.8% 8
 0.03
Adjusted, continuing operations, excluding certain items
$588
 
$140
 23.8% 
$441
 
$1.85
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 Three Months Ended June 30, 2018
($ 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
As reported, continuing operations
$479
 
$104
 21.7% 
$371
 
$1.51
Adjusted for:         
Business restructuring, net83
 20
 24.2% 63
 0.25
Costs related to customer assortment changes10
 2
 24.3% 8
 0.03
Accelerated depreciation from restructuring actions5
 1
 23.8% 4
 0.02
Legacy legal settlement10
 2
 24.3% 8
 0.03
Costs associated with accounting investigations9
 2
 24.3% 7
 0.03
Impairment of a non-manufacturing asset9
 2
 24.3% 7
 0.03
Adjusted, continuing operations, excluding certain items
$605
 
$133
 22.0% 
$468
 
$1.90
Performance of Reportable Business Segments
Performance Coatings
Three Months Ended
June 30		 $ Change % ChangeSix Months Ended
June 30		$ Change% Change
($ in millions, except per share amounts)2019 2018 2019 vs. 2018 2019 vs. 2018($ in millions, except per share amounts)202020192020 vs. 20192020 vs. 2019
Net sales
$2,430
 
$2,498
 
($68) (2.7)%Net sales$4,077  $4,538  ($461) (10.2)%
Segment income
$425
 
$428
 
($3) (0.7) %Segment income$634  $722  ($88) (12.2)%
Performance Coatings net sales decreased due to the following:
● Lower sales volumes (-3%(-11%)
● Unfavorable foreign currency translation (-3%)

Partially offset by:
● Higher selling prices (+3%(3%)
● Slightly higher acquisition-relatedAcquisition-related sales net of dispositions
Higher selling prices were achieved across all businesses. Unfavorable foreign currency translation impacted all businesses.(1%)
Architectural coatings - Americas and Asia-Pacific organicAsia Pacific net sales decreased a mid-single-digit percentage during the first half of the year with differences by channel and region. Higher DIY sales volumes were lowermore than offset by a high-single-digit percentage primarilythe unfavorable impact of retail store shutdowns in the U.S., Canada and Mexico and unfavorable foreign currency translation driven by certain previously announced customer assortment changes in the U.S. Do-it-yourself ("DIY") channel. U.S. and Canada company-owned stores sales were relatively flat due to wetter than normal weather. The PPG-Comex architectural coatings businesses had slightly higher organic sales and continued to open new concessionaire locations.Mexican peso.
Architectural coatings -– EMEA organic sales increaseddecreased by a low-single-digit percentage year-over-year driven by higher selling prices. Sales volumeslower demand in Southern Europe where various countries mandated the closures of retail paint stores at the end of the first quarter.
Net sales for automotive refinish coatings were down in certain countriesnearly 25% versus prior year driven by wetter than normal weather conditions.
Automotive refinish coatings sales volumes decreased by a mid-single-digit percentage year-over-year due to strong sales volumessharp decline in global miles driven and traffic density in most of the U.S. and Europe in the prior year. U.S. industry demand was soft evidenced by lower collision claims during the quarter.world.
Aerospace coatings sales volumes grew bydecreased about 15% year-over-year due to a high-single-digit percentagesharp 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.
Sales volumes in the quarter. This increase was supported by technology-advantaged products, above-market volume growth and sales growth across all major technology platforms.
Protectiveprotective and marine coatings sales volumes increased bybusiness were down a mid-single-digit percentage driven by strong sales volumeslower demand in Chinathe U.S. oil and Europe.gas end-use market.
Segment income decreased $3$88 million year-over-year, due to the earnings impactincluding unfavorable foreign currency translation impacts of $18 million. Segment income was impacted by lower sales volumes other cost inflationrelated to the pandemic and unfavorable foreign currency translation of approximately $10 million, partially offset by higher selling prices.
Looking Ahead
Looking ahead, industry demand levels are expected to be similar to those experienced in the second quarter. Sales will be sequentially modestly lower due to normal seasonality. Acquisition-related sales are forecast to add about $15 millionprices, execution of sales growth primarily from the SEM acquisition. Based on current exchange rates, foreign currency translation is expected to have a modest unfavorable impact on segment sales of approximately $15 to $25 million.
From a business perspective, continued strong performance is expected in aerospace coatings in the third quarter. For architectural coatings - EMEA, third quarter net sales are expected to be lower sequentially due to normal seasonal patterns. Protectivecost-mitigation efforts and marine coatings sales volume growth is expected to continue in the third quarter with more moderate sales year-over-year. In automotive refinish coatings, improved year-over-year sales volumes are expected in the third quarter due to the unfavorable impact of PPG-specific customer inventory destocking in the prior year.restructuring initiatives.
Industrial Coatings
Three Months Ended
June 30		 $ Change % ChangeSix Months Ended
June 30		$ Change% Change
($ in millions, except per share amounts)2019 2018 2019 vs. 2018 2019 vs. 2018($ in millions, except per share amounts)202020192020 vs. 20192020 vs. 2019
Net sales
$1,594
 
$1,633
 
($39) (2.4)%Net sales$2,315  $3,110  ($795) (25.6)%
Segment income
$235
 
$223
 
$12
 5.4 %Segment income$215  $453  ($238) (52.5)%
Industrial Coatings segment net sales decreased due to the following:
● Lower sales volumes (-5%(-25%)
● Unfavorable foreign currency translation (-4%(-3%)
Partially offset by:
● Higher acquisition-relatedAcquisition-related sales net of dispositions (+5%(2%)
● Higher selling prices (+2%)
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Higher selling prices were achieved across all businesses. Unfavorable foreign currency translation affected all businesses.

Sales volumes decreased a high-single-digit percentage in the automotiveAutomotive OEM coatings business versus the prior year, which was consistent with the overall global industry automotive build rate largely driven by China. Partially offsetting the lower sales volumes were higher selling prices in all major regions.
Industrial coatings sales volumes decreased by about 35% year-over-year, driven by the significant curtailment in global automotive industry production rates.
For the industrial coatings business, net sales decreased by about 20% compared to prior year. Acquisition-related sales from Whitford and Hemmelrath were down a low-single-digit percentage in the second quarter. Sales volumes were impactedmore than offset by lower coil, general finishes, appliances and transportation end-use demand. Selling prices continuedindustrial production demand in most regions due to increase during the quarter.customer shutdowns.
Packaging coatings organic sales were down a low-single-digit percentage versus the prior year,flat year-over-year as year-over-year growth moderated due to more modestmodestly higher selling prices were offset by lower sales volumes stemming from pandemic-related customer adoption rates for new technologies. Sales volumes increased in Latin America due to recent customer wins in the region.shutdowns.
Segment income increased $12decreased $238 million year-over-year, including unfavorable foreign currency translation impacts of approximatelyabout $10 millionmillion. Segment income was impacted by lower sales volumes driven by customer shutdowns related to the Chinese yuan and the euro. Segment income benefited from improving selling prices andpandemic, partially offset by cost-mitigation actions, restructuring cost savings, initiatives, which were offset by the earnings impact of lower sales volumes.
Looking ahead
Looking ahead, we expect that global industrial demand will remain subdued through the third quarter with inconsistencies by region. Sales volume trends are expected to remain similar in the third quarter and modestly improve in the fourth quarter. The company will continue to prioritize implementing selling price increases and operating margin recovery. In addition, acquisition-related sales are forecast to add about $80 million of sales growth from Whitford and Hemmelrath. Based on current exchange rates, foreign currency translation is expected to have a modest unfavorable impact on segment sales of approximately $15 to $25 million.
From a business perspective, industrial coatings sales volumes are anticipated to be similar in the third quarter due to the expected continuation of weak industrial production activity. Packaging coatings sales volume growth will continue to be modest due to lower customer adoption rates for new technologies and the anniversary of prior-year customer conversions. Global automotive industry demand is expected to remain soft in the third quarter for most regions with greater volatility expected in China.
Performance in the first six months of 2019 compared to the first six months of 2018
Performance Overview
Net Sales by Region
 Six Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
United States and Canada
$3,299
 
$3,377
 (2.3)%
Europe, Middle East and Africa (EMEA)2,369
 2,459
 (3.7)%
Asia-Pacific1,226
 1,310
 (6.4)%
Latin America754
 766
 (1.6)%
Total
$7,648
 
$7,912
 (3.3)%
Net sales decreased due to the following:
● Unfavorable foreign currency translation (-4%)
● Lower sales volumes (-3%)
Partially offset by:
● Higher selling prices (+2%)
● Higher acquisition-related sales, net of dispositions (+2%)
Higher selling prices were achieved across all businesses, reflecting the value of our products and services. These increases helped to offset other cost inflation.
U.S. and Canada net sales decreased, primarily due to by lower sales volumes.
EMEA net sales decreased, primarily due to unfavorable foreign currency translation.
Asia-Pacific net sales decreased, due to unfavorable foreign currency translation and lower sales volumes.
Latin America net sales decreased, due to unfavorable foreign currency translation and lower sales volumes.

Foreign currency translation decreased net sales approximately $290 million as the U.S. dollar strengthened against several foreign currencies versus the prior year, most notably the euro, Mexican peso and Chinese yuan.
For specific business results see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.
Cost of Sales, exclusive of depreciation and amortization
 Six Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
Cost of sales, exclusive of depreciation and amortization
$4,361
 
$4,560
 (4.4)%
Cost of sales as a percentage of net sales57.0% 57.6% (0.6)%
Cost of sales, exclusive of depreciation and amortization, decreased $199 million primarily due to the following:
● Foreign currency translation
● Lower sales volumes
● Restructuring cost savings
Partially offset by:
● Cost of sales attributable to acquired businesses
● Raw materials and other cost inflation
Selling, general and administrative expenses
 Six Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
Selling, general and administrative expenses (SG&A)
$1,823
 
$1,851
 (1.5)%
Selling, general and administrative expenses as a percentage of net sales23.8% 23.4% 0.4 %
SG&A expense decreased $28 million primarily due to the following:
● Foreign currency translation
● Restructuring cost savings
Partially offset by:
● Wage and other cost inflation
● SG&A expenses attributable to acquired businesses
Other costs and income
 Six Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
Interest expense, net of Interest income
$53
 
$45
 17.8 %
Other charges
$43
 
$47
 (8.5)%
Other income
($47) 
($48) (2.1)%
Other charges
Other charges were lower in the six months ended June 30, 2019 compared to prior year due to foreign currency impacts.
Other income
Other income in the six months ended June 30, 2019 was relatively flat compared to the prior year.

Effective tax rate and earnings per diluted share
 Six Months Ended
June 30		 Percent Change
($ in millions, except percentages)2019 2018 2019 vs. 2018
Income tax expense
$188
 
$191
 (1.6)%
Effective tax rate24.0% 21.2% 2.8 %
Adjusted effective tax rate, continuing operations*24.1% 21.5% 2.6 %
      
Earnings per diluted share, continuing operations
$2.44
 
$2.81
 (13.2)%
Adjusted earnings per diluted share*
$3.23
 
$3.31
 (2.4)%
*See Regulation G Reconciliation below
The effective tax rate for the six months ending June 30, 2019 reflects the benefit of U.S. tax legislation enacted in December 2017 as well as the impact of certain discrete tax items. The Company expects that its full year 2019 adjusted effective tax rate will be between 23% and 25%.
Adjusted earnings per diluted share from continuing operations for the six months ended June 30, 2019 and 2018 decreased year-over-year due to items described further in the Regulation G reconciliation.
Regulation G Reconciliation - Results from Operations
PPG believes investors’ understanding of the Company’s operating performance is enhanced by the disclosure of net income, earnings per diluted share and the effective tax rate adjusted for certain charges. 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, earnings per diluted share and the effective tax rate 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, earnings per diluted share and the effective tax rate 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:
 Six Months Ended June 30, 2019
($ 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
As reported, continuing operations
$782
 
$188
 24.0% 
$582
 
$2.44
Adjusted for:         
Business restructuring, net173
 42
 24.4% 131
 0.55
Costs associated with accounting investigations7
 2
 24.3% 5
 0.02
Environmental remediation charges, net40
 9
 24.3% 31
 0.13
Acquisition-related costs17
 4
 23.8% 13
 0.05
Accelerated depreciation and other costs from restructuring actions12
 3
 17.8% 9
 0.04
Adjusted, continuing operations, excluding certain items
$1,031
 
$248
 24.1% 
$771
 
$3.23
 Six Months Ended June 30, 2018
($ 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
As reported, continuing operations
$900
 
$191
 21.2% 
$699
 
$2.81
Adjusted for:         
Costs related to customer assortment changes14
 3
 24.3% 11
 0.04
Environmental remediation charges34
 8
 25.1% 26
 0.10
Business restructuring, net83
 20
 24.2% 63
 0.25
Accelerated depreciation from restructuring actions5
 1
 23.8% 4
 0.02
Legacy legal settlement10
 2
 24.3% 8
 0.03
Costs associated with accounting investigations9
 2
 24.3% 7
 0.03
Impairment of a non-manufacturing asset9
 2
 24.3% 7
 0.03
Adjusted, continuing operations, excluding certain items
$1,064
 
$229
 21.5% 
$825
 
$3.31
Performance of Reportable Business Segments
Performance Coatings
 Six Months Ended
June 30		 $ Change % Change
($ in millions, except per share amounts)2019 2018 2019 vs. 2018 2019 vs. 2018
Net sales
$4,538
 
$4,658
 
($120) (2.6)%
Segment income
$722
 
$708
 
$14
 2.0 %
Performance Coatings net sales decreased due to the following:
● Unfavorable foreign currency translation (-3%)
● Lower sales volumes (-3%)

Partially offset by:
● Higher selling prices (+3%)
● Slightly higher acquisition-related sales, net of dispositions
Higher selling prices were achieved across all businesses. Unfavorable foreign currency translation affected all businesses.
Architectural coatings - Americas and Asia-Pacific organic sales were lower by a high-single-digit percentage primarily driven by certain previously announced customer assortment changes in the U.S. DIY channel. The U.S. and Canada company-owned stores network was relatively flat compared to the prior year. The PPG-Comex architectural coatings businesses had slightly higher organic sales and continued to open new concessionaire locations.
Architectural coatings - EMEA organic sales increased by a mid-single-digit percentage year-over-year, including volume growth in all key countries.
Automotive refinish coatings organic sales decreased by a low-single-digit percentage year-over-year. Sales volumes were impacted by softer U.S. industry demand evidenced by lower collision claims during the year.
Aerospace coatings sales volumes grew by over 10%. This increase was supported by market outperformance in all major platforms stemming from technology-advantaged products and robust industry demand.
Protective and marine coatings sales volumes increased by a high-single-digit percentage driven by strong sales volumes in China and Europe.
Segment income increased $14 million year-over-year due to higher selling prices and continued cost management offset by the earnings impact of lower sales volumes, other cost inflation and unfavorable foreign currency translation of approximately $20 million.prices.
Industrial Coatings
 Six Months Ended
June 30		 $ Change % Change
($ in millions, except per share amounts)2019 2018 2019 vs. 2018 2019 vs. 2018
Net sales
$3,110
 
$3,254
 
($144) (4.4)%
Segment income
$453
 
$462
 
($9) (1.9)%
Industrial Coatings segment net sales decreased due to the following:
● Lower sales volumes (-5%)
● Unfavorable foreign currency translation (-4%)
Partially offset by:
● Higher acquisition-related sales, net of dispositions (+3%)
● Higher selling prices (+2%)
Higher selling prices were achieved across all businesses. Unfavorable foreign currency translation affected all businesses.
Sales volumes decreased a high-single-digit percentage in the automotive OEM coatings business versus the prior year, which was consistent with the overall global industry automotive build rate. Partially offsetting the lower sales volumes were higher selling prices in all major regions.
Aggregate industrial coatings and specialty coatings and materials sales volumes were down a low-single-digit percentage. Sales volumes were impacted by lower coil and general finishes end-use demand. Selling prices increased during the year.
Packaging coatings sales volumes were down a low-single-digit percentage versus the prior year, as year-over-year growth moderated due to more modest customer adoption rates for new technologies. Sales volumes increased in Latin America due to recent customer wins in the region.
Segment income decreased $9 million year-over-year. Segment income benefited from improving selling prices and from prior business restructuring actions, which were more than offset by the earnings impact of lower sales volumes and unfavorable foreign currency translation which decreased segment income by approximately $15 million, primarily related to the Chinese yuan, Mexican peso and the euro.

Liquidity and Capital Resources
PPG had cash and short-term investments totaling $1.0$2.3 billion and $1.3 billion at June 30, 20192020 and December 31, 2018.2019, respectively.
Cash fromprovided by operating activities -from continuing operations for the six months ended June 30, 2020 and 2019 was $321 million and $486 million. Cash from operating activities - continuing operations was $131 million, for the six months ended June 30, 2018.respectively. Operating cash flow increaseddecreased primarily due to less growthlower net sales partially offset by improvement in working capital in the first six months of 20192020 compared to the prior year.
Other uses of cash during the six months ended June 30, 20192020 included:
•Capital expenditures, excluding acquisitions, of $133$92 million.
•Business acquisition cash spending of $361$45 million.
•Cash dividends paid of $227$241 million.
In June 2020, PPG completed an early redemption of the $500 million 3.6% notes due November 2020 using proceeds from the May 2020 public offering and cash on hand. The Company recorded a charge of $7 million in the second quarter for the debt redemption which consists of the aggregate make-whole cash premium of $6 million and a balance of unamortized fees and discounts of $1 million related to the debt redeemed.
In May 2020, PPG completed a public offering of $300 million aggregate principal amount of 2.55% notes due 2030. 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 "Indenture"). The 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 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 $296 million.
Share repurchasesIn April 2020, PPG entered into a $1.5 billion 364-Day Term Loan Credit Agreement (the “Term Loan”).The Term Loan contains covenants that are consistent with those in the Credit Agreement and that are usual and customary restrictive covenants for facilities of $175 million.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 terminates and all amounts outstanding are payable on April 13, 2021.
DuringIn March 2020, PPG borrowed $800 million under the year, PPG issued $470 millionCredit Agreement and repaid this amount in full in April 2020. There were no amounts outstanding under the Credit agreement as of commercial paper borrowings. June 30, 2020 and December 31, 2019.
The Term Loan and Credit Agreement require the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Term Loan, 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 June 30, 2020, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and the Term Loan was 53%.
The Company's commercial paper borrowings are supported by the five-year revolving credit agreement (the "Credit Agreement") entered into in 2015.2019. As a result, the commercial paper borrowings as of June 30, 2019 are classified as long-term debt based
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on PPG's intent and ability to refinance these borrowings on a long-term basis. In February 2018, PPG completed a public debt offeringAs of $300June 30, 2020, no commercial paper borrowings were outstanding. As of December 31, 2019, there were $100 million aggregate principal amount of 3.2% notes due 2023 and $700 million aggregate principal amount of 3.75% notes due 2028 and received aggregate net proceeds of $992 million.commercial paper borrowings outstanding.
Total capital spending in 20192020 is expected to be upapproximately $300 million, an increase versus the prior company estimate due to 3.0%the restart of full year sales.certain capital projects in China and capital spending associated with the restructuring programs approved in the second quarter 2020. The Company continues to defer non-essential capital spending in response to lower industry demand conditions. PPG expects to make mandatory contributions to its non-U.S. pension plans in the range of $10$5 million to $20$10 million during the remaining six months of 2019.2020. PPG may make voluntary contributions to its defined benefit pension plans in 20192020 and beyond.
A primary focus for the Company in 20192020 will continuebe to bemaintain appropriate balance sheet flexibility, including cash deployment focused on long-term shareholder value creation.
PPG's ratiohand, due to the uncertain nature and unpredictable timing of total debt, including finance leases, to total debt and equity was 52% at June 30, 2019 and December 31, 2018.the COVID-19 pandemic.
Operating Working Capitalworking capital is a subset of total working capital and represents (1) trade receivables – net of the allowance for doubtful accounts (2) FIFO inventories and (3) trade liabilities. We believe Operating Working Capitaloperating working capital represents the key components of working capital under the operating control of our businesses. A key metric we use to measure improvement in our working capital management is Operating Working Capitaloperating working capital as a percentage of sales (current quarter sales annualized).
($ in millions, except percentages)June 30, 2019 December 31, 2018 June 30, 2018($ in millions, except percentages)June 30, 2020December 31, 2019June 30, 2019
Trade Receivables, Net
$3,028
 
$2,505
 
$3,094
Trade receivables, netTrade receivables, net$2,356  $2,479  $3,028  
Inventories, FIFO2,071
 1,896
 2,069
Inventories, FIFO1,825  1,834  2,071  
Trade Creditors’ Liabilities2,319
 2,177
 2,464
Operating Working Capital
$2,780
 
$2,224
 
$2,699
Operating Working Capital as a % of Sales17.3% 15.3% 16.3%
Trade creditors’ liabilitiesTrade creditors’ liabilities1,798  2,098  2,319  
Operating working capitalOperating working capital$2,383  $2,215  $2,780  
Operating working capital as a % of SalesOperating working capital as a % of Sales19.8 %15.1 %17.3 %
Days sales outstanding62
 56
 60
Days sales outstanding65  56  62  
Days payable outstanding96
 96
 97
Days payable outstanding97  94  96  
Other Liquidity Information
The Company continues to believe that cash on hand and short termshort-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.

Environmental
 Three Months Ended
June 30		 Six Months Ended
June 30
($ in millions)2019 2018 2019 2018
Cash outlays for environmental remediation activities
$20
 
$14
 
$36
 
$31
Three Months Ended
June 30		Six Months Ended
June 30
($ in millions)2020201920202019
Cash outlays for environmental remediation activities$12  $20  $37  $36  
($ in millions)
Remainder of
2019

2020
Annually
2020
2021 - 2023
2024
Projected future cash outlays for environmental remediation activities$4530 - $65$40$20 - $50
Restructuring
In June 2020, PPG initiated a $176 million restructuring program. The 2016 restructuring actionsprogram 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. We expect to achieve annualized cost savings from the 2020 program of $160 to $170 million by the expected completion date in 2021.
As a result of the COVID-19 pandemic, the Company expects delays in the timing of certain previously recorded restructuring actions. Program completion dates may differ from the originally targeted timeline, as noted below.
In June 2019, PPG initiated a $184 million restructuring program. This program is a result of a comprehensive internal operational assessment to identify further opportunities to improve the profitability of the overall business portfolio. PPG recognized $15 million of savings from this program in 2019. The 2019 program is expected to achieve approximately $125 million once fully implementedof annualized cost savings by the endexpected completion date in 2022.
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In MayApril 2018, PPG initiated an $83 million global restructuring program. The program is largely centered around the change in customer assortment related to the U.S. architectural coatings DIY business. PPG recognized $18$55 million of savings from this program in 2018.2019. We expect to achieve annualized cost savings from the 2018 program of $85 million once fully implemented in 2020.
In June 2019, PPG initiated an approximately $185 million restructuring program. This program is a result of a comprehensive internal operational assessment to identify further opportunities to improve the profitability of the overall business portfolio. The 2019 program is expected to achieve approximately $125 million of annualized cost savings by the expected completion date in 2022.
Total restructuring savings are expected to be between $75$100 million and $85$110 million in 2019.2020. In addition, the Company continues to review its cost structure to identify additional cost savings opportunities. See Note 7, “Business“Business Restructuring,,” to the accompanying condensed consolidated financial statements for further details on the Company's business restructuring programs.
Currency
Comparing spot exchange rates as ofat December 31, 2018 to2019 and at June 30, 2019,2020, the U.S. dollar weakenedstrengthened against certain currencies in whichof most countries within the regions PPG operates, most notably the Canadian dollar and the Mexican peso.operates. As a result, consolidated net assets at June 30, 2019 increased2020 decreased by $65$581 million compared to December 31, 2018.2019 primarily driven by the Mexican peso.
Comparing average exchange rates during the first six months of 20192020 to those of the first six months of 2018,2019, the U.S. dollar strengthened against the currencies of most countries in whichwithin the regions PPG operates most notably in South America, Europe Russia, the Middle East, South Africa, Asia, and Australia.. This had an unfavorable impactimpact on Income before income taxes for the six months ended June 30, 20192020 of $35$29 million from the translation of these foreign earnings into U.S. dollars.
New Accounting Standards
See Note 2, “New“New Accounting Standards,,” to the accompanying condensed consolidated financial statements for further details on recently issued accounting guidance.
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 Part II, Item 1, “Legal Proceedings” of this Form 10-Q and Note 15, “Commitments“Commitments and Contingent Liabilities”Liabilities” to the accompanying condensed consolidated financial statements for a description of certain of these lawsuits.
As discussed in Part II, Item 1 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.
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"). The Company continues to analyze, assess and remediate

the environmental issues associated with New Jersey Chrome. Information will continue to be generated from the ongoing groundwater remedial investigation activities related to New Jersey Chrome and will be incorporated into a final draft remedial action work plan for groundwater expected to be submitted to the New Jersey Department of Environmental Protection no later than 2021.in 2020.
It is possible that technological, regulatory and enforcement developments, the results of environmental studies and other factors could alter the Company’s expectations with respect to future charges against income and future cash outlays. Specifically, the level of expected future remediation costs and cash outlays is highly dependent upon activity related to New Jersey Chrome.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Management’s Discussion and Analysis and other sections of this Quarterly 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.Commission ("SEC"). Also, note the following cautionary statements.
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Many factors could cause actual results to differ materially from the Company’s forward-looking statements. Such factors include statements related to the expected effects on our business of the COVID-19 pandemic, global economic conditions, increasing price and product competition by foreign and domestic 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 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 actions relating to pending investigations, the results of shareholder actions relating to the restatement of our financial statements 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 in the 20182019 Form 10-K under Item 1A areand in this Form 10-Q 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 the 20182019 Form 10-K and in Item 1A of this Form 10-Q 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 3. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Risk
As ofAt June 30, 20192020 and December 31, 2018,2019, PPG had non-U.S. dollar denominated borrowings outstanding of $2.6$2.3 billion. 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 on these borrowings of $297$256 million as ofat June 30, 20192020 and $299$255 million as ofat December 31, 2018,2019, respectively.
The fair value of foreign currency forward contracts outstanding as ofat June 30, 20192020 and December 31, 20182019 was ana net asset of $9$7 million and $36a net liability of $7 million, respectively. 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 three monthsperiod ended June 30, 20192020 was $306$196 million and $291$357 million for the period ended December 31, 2018.2019.
In February 2018, PPG entered into U.S.has U. S. dollar to euro cross currency swap contracts with a total notional amount of $575$875 million outstanding, resulting in an asset with a fair value of $41$73 million and $35a net asset of $48 million as ofat June 30, 20192020 and December 31, 2018,2019, 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 $57$91 million and $87 million at June 30, 20192020 and December 31, 2018.2019, respectively.
Interest Rate Risk
In MarchThe Company manages its interest rate risk of 2018,fixed and variable rates while attempting to minimize its interest costs. PPG entered intohas 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 $78 million and $35 million and $8 million as ofat June 30, 20192020 and December 31, 2018,2019, respectively. An increase in variable interest rates of 10% would lower the fair value of these swaps and increase interest expense by $9$1 million and $10$7 million for the periods ended June 30, 20192020 and December 31, 2018.2019, respectively. A 10% increase in the interest rates in the U.S., Canada, Mexico and Europe and a 20% increase in the interest rates in Asia and South America would have an insignificant effect on PPG's variable rate debt obligations and interest expense for the periods ended June 30, 20192020 and December 31, 2018, respectively.2019. Further a 10% reduction in interest rates would have increased the presentfair value of the Company's fixed rate debt by approximately $72$61 million and $84$67 million as ofat June 30, 20192020 and December 31, 2018,2019, respectively; however, such changes would not have had an effect on PPG's income before income taxes or cash flows for the periods ended June 30, 2019 and December 31, 2018.flows.
There were no other material changes in the Company’s exposure to market risk from December 31, 20182019 to June 30, 2019.2020. See Note 13, “Financial“Financial Instruments, Hedging Activities and Fair Value Measurements”Measurements” for a description of our instruments subject to market risk.
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Item 4. Controls and Procedures
a. Evaluation of disclosure controls and procedures. Based on their evaluation as of the end of the period covered by this Form 10-Q, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
b. Changes in internal control.control over financial reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION
Item 1. Legal Proceedings
PPG ("the Company") 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.
The Company has self-reported toAs previously disclosed, the SEC information concerning the internalis 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 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.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 allege 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 alleges 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 have been consolidated. On May 28, 2020, a Motion to Dismiss all three federal court derivative actions was filed. The court has confirmed that the Company and the individual defendants need not respond to the lawsuits while the Motion to Dismiss is pending. The state court derivative action has been stayed pending the outcome of the federal court Motion to Dismiss.
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, assertsasserted 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 relaterelated 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 Courtcourt a Petition for Preliminary Approval of the proposed settlement, including athe proposed settlement amount of $25 million. The parties awaitOn November 22, 2019, the Court’s ruling on the Petition.  If preliminary approval is granted, the parties will proceed with the remaining procedures required to obtaincourt
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entered final approval ofjudgment approving the settlement. PPG’s insurance carriers confirmed to the Company insurance coverage for the full amount of the proposed settlement. Settlement payments are expected to occur in 2020.
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 believes that the citizen’s suit is without merit and intends to defend itself 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“Commitments and Contingent Liabilities”Liabilities” to the accompanying condensed consolidated financial statements under Part I, Item 1 of this Form 10-Q.
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.
Item 1A. Risk Factors
ThereExcept for the effects of COVID-19 as a result of its negative impact to the global economy as described below, there were no material changes in the Company’s risk factors from the risks disclosed in the 20182019 Form 10-K.

The effects of the recent COVID-19 outbreak are negatively impacting, and are expected to continue to adversely impact our financial condition and results of operations.
The effects of the public health crisis caused by the COVID-19 outbreak 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 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
No shares were repurchased in the three months ended June 30, 20192020 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 14,226,34114,240,585 shares as of June 30, 2019.2020. This repurchase program has no expiration date.

Item 6. Exhibits
See the Index to Exhibits on page 43.41.

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PPG INDUSTRIES, INC. AND SUBSIDIARIES
Index to Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.
†31.1
†31.2
††32.1
††32.2
101.INS*Inline XBRL Instance Document
101.SCH**Inline XBRL Taxonomy Extension Schema Document
101.CAL**Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**Inline XBRL Taxonomy Extension Presentation Linkbase Document
104Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.
† Filed herewith.
†† Furnished herewith.
*The instance document does not appear in the Interactive Data File because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document.
**Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language):Inline XBRL: (i) the Condensed Consolidated Statement of Income for the six months ended June 30, 20192020 and 2018,2019, (ii) the Condensed Consolidated Balance Sheet at June 30, 20192020 and December 31, 2018,2019, (iii) the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 20192020 and 2018,2019, and (iv) Notes to Condensed Consolidated Financial Statements for the six months ended June 30, 2019.2020.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PPG INDUSTRIES, INC.
(Registrant)
Date:July 17, 2020By:PPG INDUSTRIES, INC.
(Registrant)
Date:July 19, 2019By:/s/ Vincent J. Morales
Vincent J. Morales
Senior Vice President and Chief Financial Officer

(Principal Financial Officer and Duly Authorized Officer)
By:/s/ William E. Schaupp
William E. Schaupp
Vice President and Controller

(Principal Accounting Officer and Duly Authorized Officer)

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