# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# Annual	Report	Pursuant	to	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934

# For	the	fiscal	year	ended	December	31,	2018

Commission	File	Number	1-1687

ppga08.jpg

# PPG	INDUSTRIES,	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

Pennsylvania

(State	or	other	jurisdiction	of	incorporation	or	organization)

One	PPG	Place,	Pittsburgh,	Pennsylvania

(Address	of	principal	executive	offices)

Registrant's	telephone	number,	including	area	code:

(I.R.S.	Employer	Identification	No.)

(Zip	code)

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

Name	of	each	exchange	on which	registered

New	York	Stock	Exchange

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

Indicate	by	check	mark	if	the	Registrant	is	a	well-known	seasoned	issuer	as	defined	in	Rule	405	of	the	Securities	Act.		YES		x				NO		¨

Indicate	by	check	mark	if	the	Registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.		YES		¨				NO		x

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

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

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	Registrant's knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.		¨

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	a	smaller	reporting	company,	or	an	emerging	growth	company.

See	the	definitions	of	"large	accelerated	filer,"	"accelerated	filer,"	"smaller	reporting	company,"	and	"emerging	growth	company"	in	Rule	12b-2	of	the	Exchange	Act.	(Check	one):

Large	accelerated	filer		x

Non-accelerated	filer		¨

(Do	not	check	if	a	smaller	reporting	company)

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	by	Rule	12b-2	of	the	Act).		YES		o				NO		x

The	aggregate	market	value	of	common	stock	held	by	non-affiliates	as	of	June	30,	2018,	was	$25,075	million.

As	of	January	31,	2019,	235,898,957	shares	of	the	Registrant's	common	stock,	with	a	par	value	of	$1.66	2/3	per	share,	were	outstanding.	As	of	that	date,	the	aggregate	market	value of	common	stock	held	by	non-affiliates	was	$24,842	million.

# 	DOCUMENTS	INCORPORATED	BY	REFERENCE

Document

Portions	of	PPG	Industries,	Inc.	Proxy	Statement	for	its	2019	Annual	Meeting	of	Shareholders

# AND	CONSOLIDATED	SUBSIDIARIES

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

# TABLE	OF	CONTENTS

# Note	on	Incorporation	by	Reference

Throughout	this	report,	various	information	and	data	are	incorporated	by	reference	from	the	Company's	 2018	Annual	Report	(hereinafter	referred	to	as "the	Annual	Report").	Any	reference	in	this	report	to	disclosures	in	the	Annual	Report	shall	constitute	incorporation	by	reference	only	of	that	specific information	and	data	into	this	Form	10-K.

# Part	I

# Item	1.	Business

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

# Performance	Coatings	and	Industrial	Coatings

PPG	is	a	major,	global	supplier	of	coatings.	The	Performance	Coatings	and	Industrial	Coatings	reportable	business	segments	supply	coatings	and specialty	materials	to	customers	in	a	wide	array	of	end-uses,	including	industrial	equipment	and	components;	packaging	material;	aircraft	and	marine equipment;	automotive	original	equipment	("automotive	OEM");	automotive	refinish;	as	well	as	for	other	industrial	and	consumer	products.	PPG	also serves	commercial	and	residential	new	build	and	maintenance	customers	by	supplying	coatings	to	painting	and	maintenance	contractors	and	directly	to consumers	for	decoration	and	maintenance.	The	coatings	industry	is	highly	competitive	and	consists	of	several	large	firms	with	global	presence	and many	smaller	firms	serving	local	or	regional	markets.	PPG	competes	in	its	primary	markets	with	the	world's	largest	coatings	companies,	most	of	which have	global	operations,	and	many	smaller	regional	coatings	companies.

# PERFORMANCE	COATINGS

# INDUSTRIAL	COATINGS

# Research	and	Development

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Research\tand\tdevelopment\tcosts,\tincluding\tdepreciation\tof\tresearch\tfacilities\t(a) | $464 | $472 | $473 |
| %\tof\tannual\tnet\tsales | 3.0% | 3.2% | 3.3% |

(a)	Prior	year	amounts	have	been	recast	for	the	adoption	of	Accounting	Standards	Update	No.	2017-07,	"Improving	the	Presentation	of	Net	Periodic	Pension	Cost	and Net	Periodic	Postretirement	Benefit	Cost."	See	Note	1	within	Item	8	of	this	Form	10-K	for	additional	information.

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

PPG	owns	and	operates	several	 facilities	 to	conduct	research	and	development	 for	new	and	 improved	products	and	processes.	 In	addition	 to	 the Company's	centralized	principal	research	and	development	centers	(See	Item	2.	"Properties"	of	this	Form	10-K),	operating	segments	manage	their development	through	centers	of	excellence.	As	part	of	our	ongoing	efforts	to	manage	our	formulations	and	raw	material	costs	effectively,	we	operate	a global	competitive	sourcing	laboratory	in	China.	Because	of	the	Company's	broad	array	of	products	and	customers,	PPG	is	not	materially	dependent upon	any	single	technology	platform.

# Raw	Materials	and	Energy

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

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

The	Company	is	continuing	its	aggressive	sourcing	initiatives	to	broaden	our	supply	of	high	quality	raw	materials.	These	initiatives	include	qualifying multiple	and	local	sources	of	supply,	including	suppliers	from	Asia	and	other	lower	cost	regions	of	the	world,	adding	on-site	resin	production	at	certain manufacturing	locations	and	a	reduction	in	the	amount	of	titanium	dioxide	used	in	our	product	formulations.

We	are	subject	to	existing	and	evolving	standards	relating	to	the	registration	of	chemicals	which	could	potentially	impact	the	availability	and	viability	of some	 of	 the	 raw	 materials	 we	 use	 in	 our	 production	 processes.	 Our	 ongoing,	 global	 product	 stewardship	 efforts	 are	 directed	 at	 maintaining	 our compliance	with	these	standards.	PPG	has	joined	a	global	initiative	to	eliminate	child	labor	from	the	mica	industry,	and	the	Company	is	continuing	to	take steps,	including	audits	of	our	suppliers,	to	ensure	compliance	with	PPG's	zero-tolerance	policy	against	the	use	of	child	labor	in	their	supply	chains.

Changes	to	chemical	registration	regulations	have	been	proposed	or	implemented	in	the	EU	and	many	other	countries,	including	China,	Canada,	the United	States	(U.S.),	Brazil,	Mexico	and	Korea.	Because	implementation	of	many	of	these	programs	has	not	been	finalized,	the	financial	impact	cannot be	estimated	at	this	time.	We	anticipate	that	the	number	of	chemical	registration	regulations	will	continue	to	increase	globally,	and	we	have	implemented programs	to	track	and	comply	with	these	regulations.

Given	the	recent	volatility	in	certain	energy-based	input	costs	and	foreign	currencies,	the	Company	is	not	able	to	predict	with	certainty	the	2019	full	year impact	of	related	changes	in	raw	material	pricing	versus	2018;	however,	PPG	currently	expects	overall	coatings	raw	material	costs	to	increase	a	low- single-digit	percentage	in	the	first	half	of	2019,	with	impacts	varied	by	region	and	commodity.	Further,	given	the	distribution	nature	of	many	of	our businesses,	logistics	and	distribution	costs	are	sizable,	as	are	wages	and	benefits	but	to	a	lesser	degree.	PPG	typically	experiences	fluctuating	prices	for energy	and	raw	materials	driven	by	various	factors,	including	changes	in	supplier	feedstock	costs	and	inventories,	global	industry	activity	levels,	foreign currency	exchange	rates,	government	regulation,	and	global	supply	and	demand	factors.	In	aggregate,	average

raw	material	cost	inflation	rose	by	a	mid-single-digit	percentage	in	2018	versus	2017	and	a	comparable	amount	in	2017	versus	2016,	driven	by	supply shortages,	the	rise	in	crude	oil	and	feedstock	prices,	Chinese	environmental	regulations,	and	new	tariffs.	In	addition,	freight	and	logistics	costs	increased by	a	low-teen-digit	percentage	due	to	higher	fuel	costs,	lack	of	transportation	availability	and	other	reasons.

# Backlog

In	general,	PPG	does	not	manufacture	its	products	against	a	backlog	of	orders.	Production	and	inventory	levels	are	geared	primarily	to	projections	of future	demand	and	the	level	of	incoming	orders.

# Global	Operations

PPG	has	a	significant	investment	in	non-U.S.	operations.	This	broad	geographic	footprint	serves	to	lessen	the	significance	of	economic	impacts	occurring in	any	one	region	on	PPG's	total	Net	sales	and	Income	before	income	taxes	in	the	consolidated	statement	of	income.	As	a	result	of	our	expansion outside	the	U.S.,	we	are	subject	to	certain	inherent	risks,	including	economic	and	political	conditions	in	international	markets,	trade	protection	measures and	fluctuations	in	foreign	currency	exchange	rates.	During	2018,	favorable	foreign	currency	translation	increased	Net	sales	by	approximately	 $100 million	and	Income	before	income	taxes	by	 $20	million.	Foreign	currency	translation	was	favorable	in	the	first	half	of	the	year,	partly	offset	by	unfavorable foreign	currency	translation	in	the	second	half	of	the	year.

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

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tSales |  |  |  |
| United\tStates,\tCanada,\tWestern\tEurope | $10,299 | $9,911 | $9,773 |
| Latin\tAmerica,\tCentral\tand\tEastern\tEurope,\tMiddle\tEast,\tAfrica,\tAsia\tPacific | 5,075 | 4,837 | 4,497 |
| Total | $15,374 | $14,748 | $14,270 |

Refer	to	Note	20,	"Reportable	Business	Segment	Information"	under	Item	8	of	this	Form	10-K	for	geographic	information	related	to	PPG's	property,	plant and	equipment,	and	for	additional	geographic	information	pertaining	to	sales.

# Seasonality

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

# Employee	Relations

The	average	number	of	people	employed	worldwide	by	PPG	during	2018	was	approximately	47,300.	The	Company	has	numerous	collective	bargaining agreements	throughout	the	world.	We	observe	local	customs,	laws	and	practices	in	labor	relations	when	negotiating	collective	bargaining	agreements. There	were	no	significant	work	stoppages	in	2018.	While	we	have	experienced	occasional	work	stoppages	as	a	result	of	the	collective	bargaining process	and	may	experience	some	work	stoppages	in	the	future,	we	believe	that	we	will	be	able	to	negotiate	all	labor	agreements	on	satisfactory	terms. To	date,	these	work	stoppages	have	not	had	a	significant	impact	on	PPG's	results	of	operations.	Overall,	the	Company	believes	it	has	good	relationships with	its	employees.

# Environmental	Matters

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

Our	dedication	to	innovation	is	intertwined	with	sustainability.	Once	again	in	2018,	we	increased	the	percent	of	our	sales	from	sustainable	products.	We are	marketing	an	ever-growing	variety	of	products	and	services	that	provide	environmental,	safety	and	other	benefits	to	our	customers.	Our	products contribute	to	lighter,	more	fuel-efficient	vehicles,	airplanes	and	ships,	and	they	help	our	customers	reduce	their	energy	consumption,	conserve	water	and reduce	 waste.	These	 products	 include	 a	 compact	 automotive	 paint	 process	 that	 saves	 energy	 and	 reduces	 water	 usage;	 sustainable,	 waterborne coatings

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

Public	and	governmental	concerns	related	to	climate	change	continue	to	grow,	leading	to	efforts	to	limit	the	greenhouse	gas	("GHG")	emissions.	While PPG	has	operations	 in	many	countries,	a	substantial	portion	of	PPG's	GHG	emissions	are	generated	by	 locations	 in	 the	U.S.	where	considerable legislative	and	regulatory	activity	has	been	taking	place.	PPG	has,	and	will	continue	to,	annually	report	our	global	GHG	emissions	to	the	voluntary	CDP, formerly	the	Carbon	Disclosure	Project.

PPG	participates	in	both	the	U.S.	Department	of	Energy,	BETTER	BUILDINGS®,	BETTER	PLANTS®	program,	formerly	the	SAVE	ENERGY	NOW® Leadership	 program,	 and	 the	 Environmental	 Protection	Agency	 ENERGY	 STAR®	 Industrial	 Partnership	 program,	 both	 reinforcing	 the	 Company's voluntary	 efforts	 to	 significantly	 reduce	 its	 industrial	 energy	 intensity.	 These	 programs	 include	 developing	 and	 implementing	 energy	 management processes	 and	 setting	 energy	 savings	 targets	 while	 providing	 a	 suite	 of	 educational,	 training,	 and	 technical	 resources	 to	 help	 meet	 those	 targets. Recognizing	the	continuing	importance	of	this	matter,	PPG	has	a	senior	management	group	with	a	mandate	to	guide	the	Company's	progress	in	this area.

Our	commitment	to	sustainability	continues	to	yield	tangible	results.	In	2018,	we	again	made	significant	progress	reducing	our	energy	intensity,	GHG emissions	 intensity,	water	usage	 intensity	and	waste	 intensity.	More	 information	about	PPG's	sustainability	values,	efforts,	goals	and	data	and	our community	 and	 employee	 engagement	 programs	 can	 be	 found	 in	 our	 Sustainability	 Report	 and	 on	 our	 sustainability	 website	 at http://sustainability.ppg.com	and	on	the	CDP's	website	at	www.cdp.net.

PPG	is	subject	to	existing	and	evolving	standards	relating	to	the	protection	of	the	environment.	In	management's	opinion,	the	Company	operates	in	an environmentally	sound	manner	and	is	well	positioned,	relative	to	environmental	matters,	within	the	industries	in	which	it	operates.	PPG	is	negotiating	with various	government	agencies	concerning	124	current	and	former	manufacturing	sites	and	offsite	waste	disposal	locations,	including	22	sites	on	the National	Priority	List.	While	PPG	is	not	generally	a	major	contributor	of	wastes	to	these	offsite	waste	disposal	locations,	each	potentially	responsible	party may	 face	 governmental	 agency	 assertions	 of	 joint	 and	 several	 liability.	 Generally,	 however,	 a	 final	 allocation	 of	 costs	 is	 made	 based	 on	 relative contributions	of	wastes	to	the	site.	There	is	a	wide	range	of	cost	estimates	for	cleanup	of	these	sites,	due	largely	to	uncertainties	as	to	the	nature	and extent	of	their	condition	and	the	methods	that	may	have	to	be	employed	for	their	remediation.	The	Company	has	established	reserves	for	onsite	and offsite	remediation	of	those	sites	where	it	is	probable	that	a	liability	has	been	incurred	and	the	amount	of	loss	can	be	reasonably	estimated.

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

In	addition	to	the	$291	million	currently	reserved	for	environmental	remediation	efforts,	we	may	be	subject	to	loss	contingencies	related	to	environmental matters	estimated	to	be	approximately	$100	million	to	$200	million.	These	reasonably	possible	unreserved	losses	relate	to	environmental	matters	at	a number	of	sites,	none	of	which	are	individually	significant.	The	loss	contingencies	related	to	these	sites	include	significant	unresolved	issues	such	as	the nature	and	extent	of	contamination	at	these	sites	and	the	methods	that	may	have	to	be	employed	to	remediate	them.

It	is	expected	that	expenditures	for	such	projects	in	2019	will	be	in	the	range	of	$25	million	to	$35	million.	Although	future	capital	expenditures	are	difficult to	estimate	accurately	because	of	constantly	changing	regulatory	standards	and	policies,	it	can	be	anticipated	that	environmental	control	standards	will become	increasingly	stringent	and	the	cost	of	compliance	will	increase.

Management	believes	that	the	outcome	of	these	environmental	contingencies	will	not	have	a	material	adverse	effect	on	PPG's	financial	position	or liquidity;	however,	any	such	outcome	may	be	material	to	the	results	of	operations	of	any	particular	period	in	which	costs,	if	any,	are	recognized.	See	Note 14,	"Commitments	and	Contingent	Liabilities"	under	Item	8	of	this	Form	10-K	for	additional	information	related	to	environmental	matters	and	our	accrued liability	for	estimated	environmental	remediation	costs.

# Available	Information

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

# Item	1A.	Risk	Factors

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

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

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

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

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

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

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

During	2018,	economic	conditions	improved	in	all	of	our	major	geographical	regions	while	remaining	mixed	by	end-use	market.	Demand	for	our	products and	 services	 depends	 in	 part	 on	 the	 general	 economic	 conditions	 affecting	 the	 countries	 and	 markets	 in	 which	 we	 do	 business.	 Weak	 economic conditions	in	certain	geographies	and	changing	supply	and	demand	balances	in	the	markets	we	serve	have	negatively	impacted	demand	for	our	products and	services	in	the	past	and	may	do	so	in	the	future.	Recently,	global	economic	uncertainty	has	increased	due	to	a	number	of	factors,	including	slowing global	growth,	global	stock	and	commodity	market	volatility,	disruption	in	existing	trade	agreements,	the	imposition	of	tariffs	and	the	threat	of	additional tariffs,	the	United	Kingdom's	exit	from	the	European	Union,	weaker	demand	in	China	and	increasing	interest	rates	in	the	United	States.	PPG	provides products	and	services	to	a	variety	of	end-use	markets	in	many	geographies.	This	broad	end-use	market	exposure	and	expanded	geographic	presence lessens	the	significance	of	any	individual	decrease	in	activity	levels;	nonetheless,	lower	demand	levels	may	result	in	lower	sales,	which	would	result	in reduced	Income	from	continuing	operations	and	Cash	from	operating	activities.

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

Environmental	laws	and	regulations	control,	among	other	things,	the	discharge	of	pollutants	into	the	air	and	water,	the	handling,	use,	treatment,	storage and	clean-up	of	hazardous	and	non-hazardous	waste,	the	investigation	and	remediation	of	soil	and	groundwater	affected	by	hazardous	substances,	and regulate	various	health	and	safety	matters.	The	environmental	laws	and	regulations	we	are	subject	to	impose	liability	for	the	costs	of,	and	damages resulting	from,	cleaning	up	current	sites,	past	spills,	disposals	and	other	releases	of	hazardous	substances.	Violations	of	these	laws	and	regulations	can also	result

in	fines	and	penalties.	Future	environmental	laws	and	regulations	may	require	substantial	capital	expenditures	or	may	require	or	cause	us	to	modify	or curtail	our	operations,	which	may	have	a	material	adverse	impact	on	our	business,	financial	condition	and	results	of	operations.

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

PPG	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential,	in	which	substantial	monetary	damages	are	sought.	Those	lawsuits	and claims	relate	to	contract,	patent,	environmental,	product	liability,	asbestos	exposure,	antitrust,	employment,	securities	and	other	matters	arising	out	of	the conduct	of	PPG's	current	and	past	business	activities.	Any	such	claims,	whether	with	or	without	merit,	could	be	time	consuming,	expensive	to	defend	and could	divert	management's	attention	and	resources.	We	maintain	 insurance	against	some,	but	not	all,	of	 these	potential	claims,	and	 the	 levels	of insurance	we	do	maintain	may	not	be	adequate	to	fully	cover	any	and	all	losses.	We	believe	that,	in	the	aggregate,	the	outcome	of	all	current	lawsuits and	claims	involving	PPG,	including	those	described	in	Note	14,	"Commitments	and	Contingent	Liabilities"	under	Item	8	of	this	Form	10-K,	will	not	have	a material	effect	on	PPG's	consolidated	financial	position	or	liquidity;	however,	such	outcome	may	be	material	to	the	results	of	operations	of	any	particular period	in	which	costs,	if	any,	are	recognized.	Nonetheless,	the	results	of	any	future	litigation	or	claims	are	inherently	unpredictable,	and	such	outcomes could	have	a	material	adverse	effect	on	our	results	of	operations,	Cash	from	operating	activities	or	financial	condition.

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

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

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

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

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

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

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

PPG	has	a	significant	investment	in	global	operations.	This	broad	geographic	footprint	serves	to	lessen	the	significance	of	economic	impacts	occurring	in any	one	region.	Notwithstanding	the	benefits	of	geographic	diversification,	our	ability	to	achieve	and	maintain	profitable	growth	in	international	markets	is subject	to	risks	related	to	the	differing	legal,	political,	social	and	regulatory	requirements	and	economic	conditions	of	many	countries.	As	a	result	of	our operations	outside	the	U.S.,	we	are	subject	to	certain	inherent	risks,	including	political	and	economic	uncertainty,	inflation	rates,	exchange	rates,	trade protection	measures,	local	labor	conditions	and	laws,	restrictions	on	foreign	investments	and	repatriation	of	earnings,	and	weak	intellectual	property protection.	Our	percentage	of	sales	generated	in	2018	by	products	sold	outside	the	U.S.	was	approximately	62%.

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

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

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

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

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

# Integrating	acquired	businesses	into	our	existing	operations.

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

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

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

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

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

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

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

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

•difficulties	in	retaining	key	employees	of	the	acquired	businesses.

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

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

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

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

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

# The	industries	in	which	we	operate	are	highly	competitive.

With	each	of	our	businesses,	an	increase	in	competition	may	cause	us	to	lose	market	share,	lose	a	large	regional	or	global	customer,	or	compel	us	to reduce	prices	to	remain	competitive,	which	could	result	in	reduced	margins	for	our	products.	Competitive	pressures	may	not	only	reduce	our	margins	but may	also	impact	our	revenues	and	our	growth	which	could	adversely	affect	our	results	of	operations.

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

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

# We	 have	 concluded	 that	 previously	 issued	 financial	 statements	 as	 detailed	 below	 should	 not	 be	 relied	 upon	 and	 have	 restated	 those previously	issued	financial	statements,	which	has	led	to,	among	other	things,	shareholder	litigation,	investigations	by	the	SEC	and	the	U.S. Attorney's	office	and	unanticipated	costs	for	accounting	and	legal	fees,	and	may	result	in	certain	other	risks.

As	 discussed	 in	 the	 Explanatory	 Note,	 Note	 2,	 "Restatement	 of	 Previously	 Reported	 Consolidated	Annual	 Financial	 Statements"	 and	 in	 Note	 19, "Quarterly	Financial	Information	(unaudited)"	under	Item	8	of	the	2017	Form	10-K/A,	we	have	concluded	that	our	previously	issued	financial	statements as	of	December	31,	2017	and	2016,	and	for	each	of	the	quarterly	and	year-to-date	periods	in	2017,	and	the	final	quarterly	and	year-to-date	period	in 2016,	should	no	longer	be	relied	upon.	The	determination	that	the	applicable	financial	statements	should	no	longer	be	relied	upon	and	that	these	financial statements	would	be	restated	was	made	following	the	identification	of	misstatements.	Although	the	Company	has	restated	these	financial	statements and	the	material	weakness	in	the	Company's	internal	control	over	financial	reporting	has	been	remediated,	as	a	result	of	these	misstatements,	we	have become	subject	to	a	number	of	additional	risks	and	uncertainties,	including	unanticipated	costs	for	accounting	and	legal	fees	in	connection	with	or	related to	the	restatement,	the	outcome	of	our	shareholder	litigation	and	government	investigations,	potential	loss	of	investor	confidence,	and	a	negative	impact on	our	stock	price.	Our	shareholder	litigation	and	the	government	investigations	could	result	in	substantial	defense	costs	regardless	of	the	outcome	of	the litigation	or	investigation.	If	we	do	not	prevail	in	any	such	litigation,	we	could	be	required	to	pay	substantial	damages	or	settlement	costs.

# We	are	involved	in	investigations	by	the	SEC	and	the	U.S.	Attorney's	office	which	are	costly	to	conduct	and	may	result	in	substantial	financial and	other	penalties,	as	well	as	adverse	effects	on	our	business	and	financial	condition.

In	connection	with	the	Audit	Committee's	review	of	alleged	violations	of	our	accounting	policies	and	procedures,	we	self-reported	this	matter	to	the	SEC. We	are	cooperating	with	the	SEC	and	the	U.S.	Attorney's	office	in	their	investigations	of	this	matter.	These	investigations	are	continuing,	and	we	are currently	unable	to	predict	their	duration,	scope	or	results	or	whether	the	SEC	or	U.S.	Attorney	will	commence	any	legal	action.	If	we	are	found	to	have violated	securities	laws	or	other	federal	statutes,	we	may	be	subject	to	criminal	and	civil	penalties	and	other	remedial	measures,	including,	but	not	limited to,	injunctive	relief,	disgorgement,	civil	and	criminal	fines	and	penalties,	modifications	of	compliance	programs	and	the	retention	of	a	monitor	to	oversee compliance.	The	imposition	of	any	of	these	sanctions	or	remedial	measures	could	have	a	material	adverse	impact	on	our	business,	reputation,	revenues, results	of	operations	and	financial	condition.

# Item	1B.	Unresolved	Staff	Comments

# None.

# Item	2.	Properties

The	Company's	corporate	headquarters	is	located	in	Pittsburgh,	Pa.	The	Company's	manufacturing	facilities,	sales	offices,	research	and	development centers	and	distribution	centers	are	located	throughout	the	world.	As	of	February	21,	2019,	the	Company	operated	128	manufacturing	facilities	in	39 countries.	See	Item	1.	"Business"	of	this	Form	10-K	for	the	principal	manufacturing	and	distribution	facilities	by	reportable	segment.

The	Company	has	manufacturing	facilities	in	the	following	geographic	areas:

The	Company's	principal	research	and	development	centers	are	located	in	Allison	Park,	Pa.;	Marly,	France;	Milan,	Italy;	Monroeville,	Pa.;	Burbank,	Calif.; Tianjin,	China;	Amsterdam,	Netherlands	and	Tepexpan,	Mexico.

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

# Item	3.	Legal	Proceedings

PPG	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential,	including	some	that	it	has	asserted	against	others,	in	which	substantial monetary	damages	are	sought.	These	lawsuits	and	claims	may	relate	to	contract,	patent,	environmental,	product	liability,	asbestos	exposure,	antitrust, employment,	securities	and	other	matters	arising	out	of	the	conduct	of	PPG's	current	and	past	business	activities.	To	the	extent	these	lawsuits	and	claims involve	personal	injury	and	property	damage,	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	to	the	SEC	information	concerning	the	internal	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	2017	Form	10-K/A.	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.

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	certain	of	 its	current	or	 former	officers.	On	September	21,	2018,	an	Amended	Class	Action	Complaint	was	 filed	 in	 the	action.	The	Amended Complaint,	captioned	Trevor	Mild	v.	PPG	Industries,	Inc.,	Michael	H.	McGarry,	Vincent	J.	Morales,	and	Mark	C.	Kelly ,	asserts	securities	fraud	claims under	Sections	10(b)	and	20(a)	of	the	Securities	Exchange	Act	of	1934	on	behalf	of	putative	classes	of	persons	who	purchased	or	otherwise	acquired stock	of	the	Company	during	various	time	periods	between	January	19,	2017	and	May	10,	2018.	The	allegations	relate	to,	among	other	things,	allegedly false	and	misleading	statements	and/or	failures	to	disclose	information	about	the	Company's	business,	operations	and	prospects.	On	December	21, 2018,	the	Court	denied	the	defendants'	motion	to	dismiss	the	lawsuit,	and	on	January	4,	2019	the	defendants	filed	answers	to	the	Amended	Complaint. This	action	remains	pending.	The	Company	believes	this	action	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	14,	"Commitments	and	Contingent	Liabilities"	to	the	accompanying	consolidated	financial	statements	under Part	I,	Item	8	of	this	Form	10-K.

In	the	past,	the	Company	and	others	have	been	named	as	defendants	in	several	cases	in	various	jurisdictions	claiming	damages	related	to	exposure	to lead	and	remediation	of	lead-based	coatings	applications.	PPG	has	been	dismissed	as	a	defendant	from	most	of	these	lawsuits	and	has	never	been found	liable	in	any	of	these	cases.	After	having	not	been	named	in	a	new	lead-related	lawsuit	for	15	years,	PPG	was	named	as	a	defendant	in	two	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.

# Executive	Officers	of	the	Company

Set	forth	below	is	information	related	to	the	Company's	executive	officers	as	of

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

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

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

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

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

(f) Ms.	Liebert	was	appointed	Senior	Vice	President,	Automotive	Coatings	in	June	2018	when	she	joined	PPG	from	Honeywell	International,	Inc.	She	previously served	as	President	and	Chief	Executive	Officer	of	Honeywell	UOP	from	2016	to	2018,	Senior	Vice	President	and	General	Manager,	Catalyst	Adsorbents	and Specialties	of	Honeywell	UOP	from	2015	to	2016	and	Senior	Vice	President	and	General	Manager,	Gas	Processing	and	Hydrogen	of	Honeywell	UOP	from	2012 to	2015.

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

# Item	4.	Mine	Safety	Disclosures

Not	Applicable.

# Part	II

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

The	information	required	by	Item	5	regarding	market	information,	including	PPG's	stock	exchange	listing	and	quarterly	stock	market	prices,	dividends	and holders	of	common	stock	is	included	in	Exhibit	13.1	filed	with	this	Form	10-K	and	is	incorporated	herein	by	reference.	Annual	information	is	also	included in	the	2018	Financial	Overview	and	Shareholder	Information	on	page	10	of	the	Annual	Report	to	shareholders.

# Issuer	Purchases	of	Equity	Securities	-	Fourth	Quarter	2018

| Month | Total	Number	of<br>Shares	Purchased | Avg.	Price	Paid	per<br>Share | Total	Number	of	Shares<br>Purchased	as	Part	of<br>Publicly	Announced<br>Programs | Max.	Number	of	Shares<br>That	May	Yet	Be<br>Purchased	Under	the<br>Programs(1) |
| :--- | :--- | :--- | :--- | :--- |
| October\t2018 |  |  |  |  |
| Repurchase\tprogram | 2,217,910 | $101.80 | 2,217,910 | 19,202,867 |
| November\t2018 |  |  |  |  |
| Repurchase\tprogram | — | $— | — | 18,458,147 |
| December\t2018 |  |  |  |  |
| Repurchase\tprogram | 1,855,100 | $98.45 | 1,855,100 | 17,953,509 |
| Total\tquarter\tended\tDecember\t31,\t2018 |  |  |  |  |
| Repurchase\tprogram | 4,073,010 | $100.28 | 4,073,010 | 17,953,509 |

(1) In	December	2017,	PPG's	board	of	directors	approved	a	$2.5	billion	share	repurchase	program.	The	remaining	shares	yet	to	be	purchased	under	the	program has	been	calculated	using	PPG's	closing	stock	price	on	the	last	business	day	of	the	respective	month.	This	repurchase	program	has	no	expiration	date.

No	shares	were	withheld	in	satisfaction	of	the	exercise	price	and/or	tax	withholding	obligation	by	holders	of	employee	stock	options	who	exercised options	granted	under	the	Company's	equity	compensation	plans	in	the	fourth	quarter	of	2018.

# Item	6.	Selected	Financial	Data

The	information	required	by	Item	6	regarding	the	selected	financial	data	for	the	five	years	ended	 December	31,	2018	is	included	in	Exhibit	13.2	filed	with this	Form	10-K	and	is	incorporated	herein	by	reference.	This	information	is	also	reported	in	the	Five-Year	Digest	on	page	104	of	the	Annual	Report	to shareholders.

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

# Performance	Overview

# Net	Sales	by	Region

# %	Change

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| United\tStates\tand\tCanada | $6,485 | $6,307 | $6,254 | 2.8% | 0.8% |
| Europe,\tMiddle\tEast\tand\tAfrica\t(EMEA) | 4,678 | 4,389 | 4,164 | 6.6% | 5.4% |
| Asia\tPacific | 2,618 | 2,523 | 2,431 | 3.8% | 3.8% |
| Latin\tAmerica | 1,593 | 1,529 | 1,421 | 4.2% | 7.6% |
| Total | $15,374 | $14,748 | $14,270 | 4.2% | 3.3% |

Net	sales	increased	$626	million	due	to	the	following:

●	Higher	selling	prices	(+2%)

●	Slightly	higher	acquisition-related	sales,	net	of	dispositions

●	Slightly	higher	sales	volumes

●	Slightly	favorable	foreign	currency	translation

U.S.	and	Canada	net	sales	increased	a	low-single-digit	percentage	primarily	driven	by	net	sales	from	acquired	businesses	which	added	approximately $110	million,	primarily	from	The	Crown	Group,	as	well	as	higher	selling	prices	in	most	businesses.

Europe,	Middle	East	and	Africa	(EMEA)	net	sales	increased	a	mid-single-digit	percentage,	led	by	slightly	positive	sales	volumes,	higher	selling	prices	in all	businesses	and	favorable	foreign	currency	translation	driven	by	the	euro	and	U.K.	pound.

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

Latin	American	net	sales	volumes	grew	by	a	mid-single-digit	percentage	versus	the	prior	year.	Sales	also	benefited	from	higher	selling	prices	in	the region,	offset	by	unfavorable	foreign	currency	translation	driven	by	the	Mexican	peso.

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

●	Acquisition-related	sales	(+1%)

●	Slightly	higher	selling	prices

Net	sales	from	acquired	businesses	added	over	$200	million	of	sales	in	2017,	primarily	MetoKote,	DEUTEK,	Univer	and	The	Crown	Group.

U.S.	and	Canada	sales	volumes	declined	slightly	year-over-year,	with	mixed	demand	by	business	and	end-use	segment.	Sales	volumes	in	architectural coatings	U.S.	company-owned	stores	grew	by	a	mid-single-digit	percentage,	but	were	more	than	offset	by	sales	volumes	declines	in	the	independent dealer	networks	and	national	retail	(DIY)	customer	accounts	in	aggregate.	Automotive	OEM	coatings	sales	volumes	declined	year-over-year	and	lagged industry	demand	levels	due	to	a	customer-driven	share	shift	away	from	PPG	that	was	offset	in	other	regions	of	the	world.	These	decreases	in	sales volumes	were	partially	offset	by	higher	sales	volumes	 in	specialty	coatings	and	materials,	automotive	refinish	coatings,	general	 industrial	coatings, aerospace	coatings	and	packaging	coatings.

EMEA	sales	volumes	increased	a	low-single-digit	percentage	versus	the	prior	year.	Sales	volumes	in	our	automotive	OEM	coatings	and	aerospace coatings	businesses	each	grew	by	a	mid-single-digit	percentage.	Specialty	coatings	and	materials	sales	volumes	grew	by	a	double-digit	percentage, driven	by	strong	silica	demand.	Protective	coatings	volumes	also	grew	year-over-year.	These	increases	in	sales	volumes	were	partially	offset	by	lower demand	in	architectural	coatings.

Asia	Pacific	sales	volumes	expanded	by	a	mid-single-digit	percentage	year-over-year	led	by	growth	in	each	business	within	the	Industrial	Coatings segment	along	with	sales	volume	growth	in	the	architectural	coatings	business.	These	increases	in	sales	volumes	were	partially	offset	by	lower	demand in	marine	coatings	year-over-year.	From	a	country	and	sub-region	perspective,	sales	volumes	grew	in	India,	China,	and	Southeast	Asia	versus	the	prior year.	Korea	sales	volumes	continued	to	decline	year-over-year	primarily	due	to	continued	weakness	in	new	shipbuilding.

Latin	America	sales	volumes	expanded	by	a	mid-single-digit	percentage	versus	the	prior	year	primarily	due	to	above	market	growth	in	our	automotive OEM	coatings	and	general	industrial	coatings	businesses.	The	automotive	OEM	coatings	growth	was	driven	by	industry	production	expansion	with	the opening	of	new	assembly	facilities	in	Mexico.	Regional	sales	volumes	were	lower	in	architectural	coatings	versus	the	prior	year	primarily	due	to	lower sales	volumes	in	Brazil	and	in	Mexico	due	to	the	impact	of	the	natural	disasters	during	the	third	quarter.

# Cost	of	sales,	exclusive	of	depreciation	and	amortization

|  |  |  |  | %	Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Cost\tof\tsales,\texclusive\tof\tdepreciation\tand\tamortization | $9,001 | $8,209 | $7,665 | 9.6% | 7.1% |
| Cost\tof\tsales\tas\ta\t%\tof\tnet\tsales | 58.5% | 55.7% | 53.7% | 2.8% | 2.0% |

Cost	of	sales,	exclusive	of	depreciation	and	amortization,	increased	 $792	million	due	to	the	following:

# ●	Raw	material	cost	inflation

●	Higher	sales	volumes

●	Cost	reclassifications	associated	with	the	adoption	of	the	new	revenue	recognition	standard.	Refer	to	Note 2,	"Revenue	Recognition"	within Part	2	of	this	Form	10-K

●	Cost	of	sales	attributable	to	acquired	businesses

●	Foreign	currency	translation

Partially	offset	by:

●	Restructuring	cost	savings

# Selling,	general	and	administrative	expenses

|  |  |  |  | %	Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Selling,\tgeneral\tand\tadministrative\texpenses | $3,573 | $3,554 | $3,555 | 0.5% | —% |
| Selling,\tgeneral\tand\tadministrative\texpenses\tas\ta\t%\tof\tnet\nsales | 23.2% | 24.1% | 24.9% | (0.9)% | (0.8)% |

Selling,	general	and	administrative	expenses	declined	as	a	percent	of	net	sales,	but	increased $19	million	primarily	due	to:

●	Wage	and	other	cost	inflation

●	Selling,	general	and	administrative	expenses	from	acquired	businesses

# ●	Cost	management	including	restructuring	cost	savings

Selling,	general	and	administrative	expenses	decreased	 $1	million	primarily	due	to:

●	Lower	net	periodic	pension	and	other	postretirement	benefit	costs

●	Lower	selling	and	advertising	costs ●	Restructuring	cost	savings Partially	offset	by:

# Other	charges	and	other	income

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Interest\texpense,\tnet\tof\tInterest\tincome | $95 | $85 | $99 | 11.8% | (14.1)% |
| Business\trestructuring,\tnet | $66 | $— | $191 | N/A | (100.0)% |
| Pension\tsettlement\tcharges | $— | $60 | $968 | (100.0)% | (93.8)% |
| Other\tcharges | $122 | $74 | $242 | 64.9% | (69.4)% |
| Other\tincome | ($114) | ($150) | ($127) | (24.0)% | 18.1% |

# Interest	expense,	net	of	Interest	income

Interest	expense,	net	of	Interest	income	increased	$10	million	in	2018	versus	2017	primarily	due	to	the	issuance	of	long-term	debt	in	early	2018.	Interest expense,	net	of	Interest	income	decreased	$14	million	in	2017	versus	2016	due	to	lower	interest	rate	debt	outstanding	in	2017.

# Business	restructuring,	net

A	pretax	restructuring	charge	of	$83	million	was	recorded	in	the	second	quarter	of	2018,	offset	by	certain	changes	in	estimates	to	complete	previously recorded	programs	of	$17	million.	A	pretax	charge	of	$191	million	was	recorded	in	2016.	Refer	to	Note	8,	"Business	Restructuring"	in	Item	8	of	this	Form 10-K	for	additional	information.

# Pension	settlement	charges

During	2017,	PPG	made	lump-sum	payments	to	certain	retirees	who	had	participated	in	PPG's	U.S.	qualified	and	non-qualified	pension	plans	totaling approximately	$127	million.	As	the	lump-sum	payments	were	in	excess	of	the	expected	2017	service	and	interest	costs	for	the	affected	plans,	PPG remeasured	the	periodic	benefit	obligation	of	these	plans	in	the	period	payments	were	made	and	recorded	settlement	charges	totaling	$60	million	($38 million	after-tax)	during	2017.

During	2016,	PPG	permanently	transferred	approximately	$1.8	billion	of	its	U.S.	and	Canadian	pension	obligations	and	assets	to	several	highly	rated insurance	companies.	These	actions	triggered	remeasurement	and	partial	settlement	of	certain	of	the	Company's	defined	benefit	pension	plans.	PPG recognized	a	$968	million	pre-tax	settlement	charge	in	connection	with	these	transactions.	Refer	to	Note	13,	"Employee	Benefit	Plans"	in	Item	8	of	this Form	10-K	for	additional	information.

# Other	charges

Other	 charges	 in	 2018	 and	 2016	 were	 higher	 than	 2017	 primarily	 due	 to	 environmental	 remediation	 charges.	 These	 charges	 were	 principally	 for environmental	 remediation	 at	 a	 former	 chromium	 manufacturing	 plant	 and	 associated	 sites	 in	 New	 Jersey.	 Refer	 to	 Note	14,	 "Commitments	 and Contingent	Liabilities"	in	Item	8	of	this	Form	10-K	for	additional	information.

# Other	income

Other	income	was	lower	in	2018	and	2016	than	in	2017	primarily	due	to	the	gain	from	the	sale	of	the	Mexican	Plaka	business	of	$25	million	and	income from	a	legal	settlement	of	$18	million	in	2017.	Refer	to	Note	3,	"Acquisitions	and	Divestitures"	in	Item	8	of	this	Form	10-K	for	additional	information.

# Effective	tax	rate	and	earnings	per	diluted	share,	continuing	operations

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Income\ttax\texpense | $353 | $615 | $214 | (42.6)% | 187.4% |
| Effective\ttax\trate | 20.9% | 30.7% | 27.5% | (9.8)% | 3.2% |
| Adjusted\teffective\ttax\trate* | 22.1% | 24.3% | 24.5% | (2.2)% | (0.2)% |
| Earnings\tper\tdiluted\tshare | $5.40 | $5.31 | $2.04 | 1.7% | 160.3% |
| Adjusted\tearnings\tper\tdiluted\tshare* | $5.92 | $5.86 | $5.64 | 1.0% | 3.9% |

*See	the	Regulation	G	reconciliations	-	results	of	operations

The	effective	tax	rate	for	the	year-ended	December	31,	2018	was	20.9%	and	decreased	9.8%	from	the	prior	year.	In	2017,	the	tax	rate	included	the	tax toll	charge	for	unremitted	foreign	earnings	under	the	U.S.	Tax	Cuts	and	Jobs	Act,	while	in	2018,	the	tax	rate	benefited	from	prior	period	adjustments, including	finalization	of	the	provisional	toll	charge	recorded	in	2017.	The	2019	effective	tax	rate	from	continuing	operations	is	expected	to	be	in	the	range of	23%	to	25%.

As	reported,	earnings	per	diluted	share	 from	continuing	operations	 for	 the	year	ended	 December	31,	2018	 increased	year-over-year.	Refer	 to	 the Regulation	G	Reconciliations	-	Results	of	Operations	for	additional	information.	The	Company's	earnings	per	diluted	share	and	adjusted	earnings	per diluted	 share	 benefited	 from	 the	 15.9	 million,	 7.4	 million	 and	 10.7	 million	 shares	 of	 stock	 repurchased	 in	2018,	 2017	 and	2016,	 respectively,	 in conjunction	with	the	Company's	cash	deployment	objectives.

# Regulation	G	Reconciliations	-	Results	of	Operations

PPG	Industries	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	and	earnings	per	diluted	share	adjusted	for	these	items	are	not	recognized	financial measures	determined	 in	accordance	with	U.S.	generally	accepted	accounting	principles	(GAAP)	and	should	not	be	considered	a	substitute	 for	net income	or	earnings	per	diluted	share	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,	the	effective	tax	rate	from	continuing operations	is	reconciled	to	the	adjusted	effective	tax	rate	from	continuing	operations	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:

| ($	in	millions,	except	percentages	and	per	share	amounts) | Income	Before<br>Income	Taxes | Tax	Expense | Effective	Tax<br>Rate | continuing	operations<br>(attributable	to	PPG) | Earnings	per<br>diluted	share |
| :--- | :--- | :--- | :--- | :--- | :--- |
| As\treported,\tcontinuing\toperations | $1,693 | $353 | 20.9% | $1,323 | $5.40 |
| Includes: |  |  |  |  |  |
|  | — | 13 | N/A | (13) | (0.05) |
| Charges\trelated\tto\tcustomer\tassortment\tchange | 18 | 4 | 24.3% | 14 | 0.05 |
| Charges\trelated\tto\tenvironmental\tremediation\tand\tother\tcosts | 77 | 19 | 24.3% | 58 | 0.24 |
| Net\tcharge\trelated\tto\tbusiness\trestructuring | 66 | 20 | 30.3% | 46 | 0.18 |
| Accelerated\tdepreciation\tfrom\trestructuring\tactions | 9 | 2 | 22.2% | 7 | 0.03 |
| Charge\trelated\tto\ta\tlegacy\tlegal\tsettlement | 10 | 2 | 24.3% | 8 | 0.03 |
| Charges\trelated\tto\taccounting\tinvestigation\tcosts | 14 | 3 | 24.3% | 11 | 0.05 |
| Charges\trelated\tto\ttransaction-related\tcosts(1) | 6 | 2 | 25.5% | 4 | 0.02 |
| Charge\trelated\tto\tbrand\trationalization | 6 | 2 | 26.8% | 4 | 0.02 |
| Gain\tfrom\tthe\tsale\tof\ta\tnon-operating\tasset | (26) | (6) | 24.3% | (20) | (0.08) |
| Charge\trelated\tto\timpairment\tof\ta\tnon-manufacturing\tasset | 9 | 2 | 24.3% | 7 | 0.03 |
| Adjusted,\tcontinuing\toperations,\texcluding\tcertain\titems | $1,882 | $416 | 22.1% | $1,449 | $5.92 |

| ($	in	millions,	except	percentages	and	per	share	amounts) | Income	Before<br>Income	Taxes | Tax	Expense | Effective	Tax<br>Rate | continuing	operations<br>(attributable	to	PPG) | Earnings	per<br>diluted	share |
| :--- | :--- | :--- | :--- | :--- | :--- |
| As\treported,\tcontinuing\toperations | $2,005 | $615 | 30.7% | $1,369 | $5.31 |
| Includes: |  |  |  |  |  |
|  | — | (134) | N/A | 134 | 0.52 |
| Charges\trelated\tto\ttransaction-related\tcosts(1) | 9 | 3 | 37.9% | 6 | 0.02 |
| Charges\trelated\tto\tpension\tsettlements | 60 | 22 | 37.9% | 38 | 0.14 |
| Gain\tfrom\tsale\tof\tbusiness | (25) | (1) | 3.2% | (24) | (0.09) |
| Gain\tfrom\ta\tlegacy\tlegal\tsettlement | (18) | (7) | 37.9% | (11) | (0.04) |
| Gain\tfrom\tsale\tof\ta\tnon-operating\tasset | (13) | (5) | 37.9% | (8) | (0.03) |
| Charges\trelated\tto\tasset\twrite-downs | 7 | — | —% | 7 | 0.03 |
| Adjusted,\tcontinuing\toperations,\texcluding\tcertain\titems | $2,025 | $493 | 24.3% | $1,511 | $5.86 |

| ($	in	millions,	except	percentages	and	per	share	amounts) | Income	Before<br>Income	Taxes | Tax	Expense | Effective	Tax<br>Rate | continuing	operations<br>(attributable	to	PPG) | Earnings	per<br>diluted	share |
| :--- | :--- | :--- | :--- | :--- | :--- |
| As\treported,\tcontinuing\toperations | $779 | $214 | 27.5% | $543 | $2.04 |
| Includes: |  |  |  |  |  |
| Charges\trelated\tto\ttransaction-related\tcosts(1) | 8 | 3 | 37.6% | 5 | 0.03 |
| Charge\trelated\tto\tpension\tsettlement | 968 | 352 | 36.4% | 616 | 2.31 |
| Charge\trelated\tto\tbusiness\trestructuring | 191 | 50 | 26.2% | 141 | 0.53 |
| Charge\trelated\tto\tenvironmental\tremediation | 82 | 31 | 37.6% | 51 | 0.20 |
| Net\tgain\tfrom\tdisposals\tof\townership\tinterests\tin\tbusiness\naffiliates | (46) | (16) | 34.8% | (30) | (0.12) |
| Net\ttax\teffect\tof\tasbestos\tsettlement\tfunding | — | (151) | N/A | 151 | 0.57 |
| Charge\trelated\tto\tearly\tretirement\tof\tdebt | 8 | 3 | 37.6% | 5 | 0.02 |
| Charges\trelated\tto\tasset\twrite-downs | 23 | 7 | 30.4% | 17 | 0.06 |
| Adjusted,\tcontinuing\toperations,\texcluding\tcertain\titems | $2,013 | $493 | 24.5% | $1,499 | $5.64 |

(1) Transaction-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	impact	for	the	step	up	to fair	value	of	inventory	acquired	in	certain	acquisitions.

# Performance	of	Reportable	Business	Segments

|  |  |  |  | $	Change | $	Change | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Net\tsales | $9,087 | $8,730 | $8,580 | $357 | $150 | 4.1% | 1.7% |
| Segment\tincome | $1,300 | $1,313 | $1,322 | ($13) | ($9) | (1.0)% | (0.7)% |

Performance	Coatings	net	sales	increased	(4%)	due	to	the	following:

●	Favorable	foreign	currency	translation	(+1%)

Higher	selling	prices	across	all	businesses	were	achieved,	reflecting	the	value	of	our	products	and	services	and	which	offset	persistent	raw	material	and logistics	cost	inflation.

Architectural	coatings	-	Americas	and	Asia-Pacific	sales	volumes	decreased	by	a	low-single-digit	percentage	versus	the	prior	year.	Sales	volumes	were positive	year-over-year	in	the	U.S.	and	Canada	company-owned	store	network	as	well	as	in	Mexico,	Central	America,	Australia	and	Brazil.	This	growth was	more	than	offset	by	lower	DIY	and	independent	dealer	network	channel	declines,	including	the	unfavorable	impact	from	a	customer	assortment change	in	the	U.S.	architectural	DIY	channel.	In	February	2018,	PPG	announced	that	Lowe's	would	discontinue	the	sale	of	OLYMPIC®	brand	paints	and stains	in	its	U.S.	retail	stores,	effective	mid-2018.	During	the	second	quarter	2018,	the	Company	launched	its	OLYMPIC®	stain	products	at	THE	HOME DEPOT®'s	U.S.	retail	stores,	expanding	an	existing	partnership	arrangement.	The	net	impact	of	these	customer	assortment	changes	resulted	in	net sales	being	lower	by	approximately	$100	million	in	2018.

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

Automotive	refinish	coatings	organic	sales	grew	by	a	low-single-digit	percentage	year-over-year,	despite	lower	demand	in	the	U.S.	due	to	customer inventory	destocking	and	lower	industry	collision	claim	activity.	Organic	sales	increased	in	all	other	geographic	regions	as	customers	continued	to	adopt PPG's	industry	leading	technologies.

Aerospace	coatings	sales	volumes	grew	by	more	than	10	percent	versus	the	prior	year,	including	above-market	volume	growth	in	the	U.S.	and	Asia. Strong	growth	was	supported	by	positive	industry	demand	fundamentals	and	market	outperformance	in	all	major	platforms	stemming	from	technology advantaged	products.

Protective	and	marine	coatings	sales	volumes	increased	by	a	high-single-digit	percentage	year-over-year.	Protective	coatings	sales	volumes	were	up	a mid-single-digit	percentage,	driven	by	growth	in	China.	Marine	coatings	sales	volumes	grew	by	more	than	10	percent	off	a	low	sales	base	as	ship	building activity	grew	modestly	in	Asia.

Segment	income	decreased	$13	million	year-over-year	primarily	driven	by	increasing	raw	material	and	logistics	costs.	These	cost	increases	were	partially offset	by	higher	selling	prices	and	additional	benefits	 from	 the	Company's	restructuring	programs.	Favorable	 foreign	currency	 translation	 increased segment	income	by	approximately	$15	million,	primarily	related	to	the	strengthening	of	the	euro.

●	Net	sales	from	acquisitions	(+1%)

●	Modest	foreign	currency	translation

# ●	Slightly	lower	sales	volumes

Selling	prices	increased	year-over-year	primarily	due	to	selling	price	initiatives	across	all	businesses	to	combat	accelerating	raw	material	cost	inflation.

Architectural	coatings	-	Americas	and	Asia	Pacific	sales	volumes	declined	a	low-single-digit-percentage	versus	the	prior	year.	Sales	volumes	increased by	a	mid-single-digit	percentage	in	company-owned	stores	in	the	U.S.	and	Canada,	including

the	unfavorable	impact	from	natural	disasters	in	the	third	quarter	2017.	This	increase	was	more	than	offset	by	sales	volume	declines	in	the	U.S.	and Canada	independent	dealer	networks	and	national	retail	(DIY)	customer	accounts,	as	both	distribution	channels	continued	to	experience	soft	demand. Organic	sales	improved	in	both	the	Latin	America	and	Asia	Pacific	regions.

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

Automotive	refinish	coatings	organic	sales	grew	by	a	low-single-digit	percentage	year-over-year,	led	by	above-market	performance	in	U.S.	and	Canada as	customers	continued	to	adopt	PPG's	industry	leading	technologies.	Organic	sales	also	increased	in	the	Latin	American	region	versus	the	prior	year, reflecting	high	end-use	market	demand.	In	Asia	Pacific,	net	sales	increased,	largely	due	to	the	recent	Futian	Xinshi	acquisition	in	China.

Aerospace	 coatings	 sales	 volumes	 grew	 by	 a low-single-digit	 percentage	 versus the	 prior	 year, led	 by	 above	 market	 performance in	 Europe	 and consistent	with	the	overall	industry	demand.

Protective	and	marine	coatings	sales	volumes	declined	by	a	mid-single-digit	percentage	year-over-year.	Protective	coatings	sales	volumes	expanded	in most	regions,	led	by	Europe,	but	were	more	than	offset	by	significant	weakness	in	new	shipbuilding	activity,	primarily	in	the	Asia	Pacific	region.

Segment	income	decreased	$9	million	year-over-year	primarily	due	increasing	raw	material	costs,	wage	and	other	cost	inflation,	and	lower	sales	volumes partially	offset	by	selling	price	increases,	lower	overhead	and	manufacturing	costs,	including	the	initial	benefits	from	business	restructuring	actions.

# Looking	Ahead

Looking	ahead,	year-over-year	raw	material	cost	inflation	is	expected	in	the	first	half	of	2019,	primarily	due	to	carry-over	inflation.	Acquisition	related	sales are	forecast	to	add	a	low-single-digit	percentage	of	sales	growth	primarily	from	the	SEM	acquisition	and	based	on	current	exchange	rates,	we	expect foreign	currency	translation	to	have	an	unfavorable	impact	on	segment	sales	of	approximately	$100	million	in	the	first	quarter.

Additionally,	further	selling	price	increases	are	expected	in	2019	as	we	continue	to	offset	the	cumulative	impact	of	raw	material	inflation	over	the	past	nine quarters.	Net	sales	are	expected	to	be	lower	in	the	first	half	compared	to	2018	driven	by	lower	U.S.	DIY	sales	of	approximately	$110	million	due	to	the customer	 assortment	 changes	 that	 occurred	 in	 2018.	The	 impact	 will	 be	 larger	 than	 the	 impact	 realized	 in	 the	 fourth	 quarter	 of	 2018	 due	 to	 the seasonality	of	the	U.S.	DIY	business.

|  |  |  |  | $	Change | $	Change | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Net\tsales | $6,287 | $6,018 | $5,690 | $269 | $328 | 4.5% | 5.8% |
| Segment\tincome | $818 | $979 | $1,060 | ($161) | ($81) | (16.4)% | (7.6)% |

Industrial	Coatings	segment	net	sales	increased	(5%)	due	to	the	following:

Selling	prices	increased	sequentially	throughout	the	year	and	were	up	approximately	1.5	percent	year-over-year	primarily	driven	by	the	general	industrial and	packaging	businesses.

Industrial	coatings	sales	volumes	continued	 to	grow	 led	by	strong	outperformance	 in	coil,	heavy-duty	equipment	and	electronics	materials.	From	a geographic	 perspective,	 sales	 volume	 growth	 was	 led	 by	 EMEA	 and	 Latin	 America.	 Acquisition-related	 sales	 from	 The	 Crown	 Group	 added approximately	$100	million	in	sales	during	the	year.

Packaging	coatings	sales	volumes	were	up	a	mid-single-digit	percentage	year-over-year	driven	by	continued	customer	adoption	of	PPG's	new	can coating	technologies.	From	a	geographic	perspective,	sales	volumes	in	the	developed	regions	grew	a	high-single-digit	percentage,	offset	by	a	low-single- digit	percentage	decrease	in	the	Asia	Pacific	region.

PPG's	automotive	OEM	coatings	sales	volumes	were	slightly	lower	versus	the	prior	year,	consistent	with	the	global	automotive	industry	growth	rate.	In the	second	half	of	the	year,	automotive	OEM	production	fell	sharply	in	China	and	new	emission	standards	negatively	impacted	production	in	Europe.

Specialty	coatings	and	materials	net	sales	increased	by	a	low-single-digit	percentage	due	to	higher	selling	prices	and	higher	sales	volumes	in	EMEA.

Segment	income	decreased	$161	million	year-over-year	primarily	due	to	continuing,	significant	raw	material	and	logistics	cost	inflation,	partially	offset	by higher	selling	prices	and	lower	manufacturing	costs,	including	benefits	from	business	restructuring	actions.	Favorable	foreign	currency	translation	added approximately	$5	million	to	segment	income.

# ●	Lower	selling	prices	(1%)

PPG's	automotive	OEM	coatings	sales	volumes	increased	by	a	low-single-digit	percentage	versus	the	prior	year,	consistent	with	the	global	automotive industry	production	growth	rate,	led	by	China,	Mexico,	Europe	and	Brazil.	Sales	volumes	declined	in	the	U.S.	and	Canada,	partially	reflecting	fewer automotive	new	builds.

General	industrial	coatings	and	specialty	coatings	and	materials	sales	volumes,	in	aggregate,	grew	by	a	mid-single-digit	percentage	year-over-year. Sales	volumes	grew	year-over-year	in	every	major	region	with	mixed	demand	by	end-use	and	geography.	This	growth	was	led	by	Asia	Pacific	and	the U.S.,	which	outpaced	regional	industrial	production	demand	growth.	Sales	volumes	grew	across	most	segments,	including	year-over-year	increases	in electronics	materials,	heavy	duty	equipment	and	organic	light	emitting	diode	(OLED)	materials.	Acquisition-related	sales,	primarily	MetoKote,	added approximately	$155	million.

Packaging	coatings	sales	volumes	grew	by	a	mid-single-digit	percentage	year-over-year,	primarily	driven	by	ongoing	industry	conversions	to	PPG's	new can	coatings	technologies,	led	by	the	U.S.

Segment	income	decreased	$81	million	year-over-year	primarily	due	to	increasing	raw	material	costs,	lower	selling	prices	and	wage	and	other	cost inflation.	These	cost	increases	were	partially	offset	by	income	from	higher	sales	volumes,	lower	manufacturing	and	overhead	costs,	including	the	initial benefits	from	business	restructuring	actions,	and	acquisition-related	income.

Looking	ahead,	we	expect	that	greater	volatility	in	global	industrial	demand	will	continue	through	the	first	quarter	of	2019	with	inconsistencies	by	region. The	carryover	impact	from	2018	cost	inflation	and	significantly	unfavorable	foreign	currency	translation	will	impact	first	quarter	earnings.	The	Company will	continue	to	prioritize	implementing	selling	price	increases	and	operating	margin	recovery.

Global	automotive	OEM	industry	demand	is	expected	to	remain	soft	in	the	first	quarter	for	most	major	regions	with	greater	volatility	expected	in	China. We	anticipate	that	aggregate	global	general	industrial	demand	growth	will	continue,	but	at	a	more	moderate	rate	than	in	the	first	quarter	of	2019.	In addition,	we	expect	 that	 the	Whitford	acquisition	will	close	during	 the	 latter	portion	of	 the	 first	quarter,	pending	required	regulatory	approvals,	and therefore	will	not	provide	meaningful	sales	or	earnings	benefit	in	the	quarter.	In	addition,	we	expect	packaging	sales	volumes	to	moderate	as	the	pace	of technology	conversions	slow	in	2019.

# Review	and	Outlook

During	2018,	economic	conditions	were	generally	positive	in	all	of	our	major	geographical	regions	while	remaining	mixed	by	end-uses.	PPG's	aggregate organic	sales	grew	approximately	3%	versus	the	prior	year.	Acquisition-related	sales	from	two	acquisitions	completed	in	2017	and	the	four	completed	in 2018	contributed	approximately	1%	to	net	sales	growth	year-over-year,	net	of	dispositions.	Foreign	currency	translation	was	favorable	for	the	first	half	of the	 year	 then	 turned	 unfavorable	 in	 the	 second	 half	 of	 the	 year.	 For	 the	 full	 year	 2018,	 foreign	 currency	 translation	 favorably	 impacted	 sales	 by approximately	1%.	Raw	material	inflation	was	elevated	throughout	the	year	and	overall	rose	a	mid-single	digit	percentage	driven	by	supply	related factors,	including	government	mandated	production	curtailments	in	China	to	help	improve	pollution	and	higher	oil	prices.	In	addition,	logistics	costs	were significantly	higher	in	2018	driven	by	higher	oil	prices	and	shortages	in	the	availability	in	transportation.

# U.S.	and	Canada

During	2018,	the	pace	of	economic	activity	improved	in	the	U.S.	and	Canada	region	versus	the	prior	year,	led	by	stronger	GDP	growth	in	the	U.S.	despite flat	automotive	industry	builds.	Demand	in	the	residential	and	commercial	construction	markets	was	modestly	higher	in	2018	compared	to	2017.	New home	 starts	 advanced	 approximately	 4%	 in	 2018	 versus	 approximately	 3%	 in	 2017.	 Residential	 remodeling	 was	 flat	 in	 2018	 versus	 2017,	 while commercial	construction	was	flat	compared	to	a	1%	decline	in	2017.	Market	demand	for	architectural	paint	continued	to	shift	more	to	the	professional trade	painters	channel	as	the	continued	decline	in	U.S.	unemployment	resulted	in	consumers	choosing	professional	painters	rather	than	completing projects	 themselves.	 Demand	 in	 U.S.	 do-it-yourself	 (DIY)	 paint	 stores	 continued	 to	 remain	 soft	 throughout	 the	 year	 consistent	 with	 2017.	 PPG's architectural	coatings	performance	in	the	U.S.	and	Canada	was	impacted	by	DIY	customer	assortment	changes	that	unfavorably	impacted	sales	by approximately	$100	million.	The	automotive	refinish	coatings	business	was	impacted	by	lower	collision	rates	and	a	higher	number	of	automobiles	in accidents	being	totaled	rather	than	repainted	offsetting	modest	growth	in	miles	driven.	PPG's	packaging	coatings	business	continued	to	expand	well ahead	of	the	industry	driven	by	continued	strong	sales	growth	momentum	related	to	customer	adoption	of	PPG's	new	interior	can	coatings	technologies. PPG's	automotive	OEM	coatings	business	performance	was	slightly	better	 than	 industry	demand	 levels	due	 to	modest	share	gains.	The	U.S.	and Canada	region	remained	PPG's	largest,	representing	approximately	42%	of	2018	sales,	although	a	smaller	percentage	of	total	sales	than	in	the	prior year.

# Europe,	Middle	East	and	Africa

European	economic	activity	was	mixed	in	2018.	Industrial	production	was	higher	in	the	first	half	of	the	year	and	moderated	as	the	year	progressed.	The region	was	impacted	by	continuing	uncertainty	over	the	United	Kingdom's	exit	from	the	European	Union.	Overall	GDP	and	industrial	production	were similar	to	2017	in	the	region.	Regional	demand	continued	to	be	mixed	by	country	and	end-uses.	Demand	for	PPG's	products	in	several	end-uses	drove the	regional	growth	rate,	including	above	market	performance	in	general	industrial	coatings,	packaging	coatings	and	specialty	coatings	and	materials. PPG's	architectural	coatings	-	EMEA	business	sales	volumes	decreased	year-over-year,	driven	by	soft	demand	in	Southern	Europe.

EMEA	represented	approximately	30%	of	PPG's	2018	sales,	similar	to	prior	year	levels.	Regional	coatings	volumes	remain	approximately	15%	below their	pre-recession	levels	in	2008.	The	modest	volume	recovery	reflects	the	slow	pace	of	economic	growth	in	the	region.	PPG	expects	modest	volume growth	over	time	at	attractive	incremental	margins	due	to	significant	cost	structure	improvements	and	available	capacity	to	satisfy	additional	demand.	In the	second	half	of	the	year,	the	euro	and	British	pound	both	depreciated	against	the	U.S.	dollar.

# Asia	Pacific	and	Latin	America

The	emerging	regions	of	Asia	Pacific	and	Latin	America	represented	 28%	of	PPG's	2018	sales	in	aggregate,	similar	to	the	prior	year.

Asia	remained	the	largest	emerging	region,	with	sales	of	approximately	$2.5	billion,	led	by	China,	which	continued	as	PPG's	second	largest	country	by revenue.	The	Performance	Coatings	segment	led	sales	volume	growth	in	Asia,	in	part	due	to	strong	sales	volume	growth	in	protective	and	marine coatings,	 aerospace	 coatings,	 and	 automotive	 refinish	 coatings.	 These	 increases	 were	 partially	 offset	 by	 a	 decline	 in	 automotive	 OEM	 coatings, particularly	in	China	where	industry	retail	automobile	sales	fell	for	the	first	time	in	over	25	years.

Overall,	demand	in	Latin	America	improved	year-over-year	for	the	second	consecutive	year,	with	continued	above	market	growth	in	Mexico	and	Central America.	Economic	conditions	were	mixed	in	South	America,	and	there	was	heightened	currency	volatility	throughout	the	entire	region.	In	Mexico,	the PPG-Comex	business	added	over	200	new	concessionaire	locations.	The	overall	region's	performance	was	supported	by	strong	growth	in	the	general industrial	and	packaging	coatings	businesses.	Foreign	currency	translation	was	volatile	and	finished	4	percent	unfavorable	compared	to	2017,	principally the	Mexican	peso	and	Brazilian	real.

# Outlook

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

We	anticipate	PPG's	U.S.	and	Canada	regional	growth	will	be	led	by	general	industrial	coatings	and	aerospace	coatings,	with	flat	automotive	industry builds.	We	expect	growth	in	housing	and	commercial	construction	to	be	comparable	to	2018.

We	expect	demand	in	Europe	to	grow	but	at	lower	levels	than	2018.	Regional	growth	is	expected	to	remain	mixed	by	sub-region	and	country.	Favorable end-use	trends	are	expected	to	continue	in	general	industrial	and	packaging	with	flattening	demand	in	automotive	OEM	coatings	as	industry	growth	rates are	anticipated	to	be	flat.	Demand	is	expected	to	stay	subdued	in	the	architectural	coatings	business.	We	continue	to	monitor	the	economic	environment in	the	U.K.	as	their	exit	from	the	European	Union	progresses	and	impacts	consumer	sentiment	and	coatings	demand.

In	Asia	Pacific,	we	expect	continued	industrial	production	growth	in	China,	Southeast	Asia	and	India.	In	China,	we	foresee	continued	above	global average	 growth	 with	 heightened	 risk	 as	 the	 Chinese	 economy	 continues	 to	 shift	 and	 rely	 more	 on	 domestic	 consumption.	 The	 sharp	 decline	 in automotive	OEM	activity	seen	in	the	second	half	of	2018	is	expected	to	continue	in	the	beginning	of	2019.	We	expect	year-over-year	demand	patterns	to become	more	favorable	in	the	second	half	of	2019.	The	recovery	in	marine	coatings	demand	is	expected	to	continue,	albeit	off	a	low	base.

In	Latin	America,	we	anticipate	economic	expansion	will	continue	in	Mexico,	most	of	Central	America	and	South	America.

# Significant	other	factors

In	May	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	million	of	savings	from	this	program	in	2018.

Significant	progress	was	made	on	the	global	restructuring	program	that	was	announced	in	December	2016.	This	program	targeted	annual	savings	of approximately	$125	million	once	fully	implemented.	The	Company	achieved	approximately	$60	million	of	savings	in	2018	bringing	the	total	savings	to approximately	$110	million	to	date.

We	expect	to	achieve	the	full-annualized	target	of	$125	million	in	2019.	We	will	continue	to	aggressively	manage	the	Company's	cost	structure	to	ensure alignment	with	the	overall	demand	environment,	and	we	will	make	adjustments	as	required	to	remain	competitive	in	the	marketplace.	Restructuring savings	from	the	2018	and	2016	programs	are	expected	to	be	between	$60	million	and	$70	million	in	2019.

Raw	materials	are	a	significant	input	cost	to	the	process	of	manufacturing	coatings.	PPG	experiences	fluctuating	energy	and	raw	material	costs	driven	by various	factors,	including	changes	in	supplier	feedstock	costs	and	inventories,	global	industry	activity	levels,	foreign	currency	exchange	rates,	and	global supply	and	demand	factors.	In	aggregate,	average	raw	material	costs	were	higher	by	a	mid-single-digit	percentage	in	2018	versus	2017	due	to	variety	of reasons,	including	supplier	force	majeure,	environmental	regulation	enforcement,	and	higher	crude	oil	prices.	PPG	currently	expects	overall	coatings	raw material	prices	to	increase	a	low-single-digit	percentage	in	the	first	half	of	2019,	with	impacts	varied	by	region	and	commodity,	marking	the	tenth	and eleventh	consecutive	quarters	of	inflation.	In	addition,	logistics	costs	were	inflated	throughout	the	year	driven	by	higher	crude	oil	prices	and	availability	of transportation.	Logistics	costs	are	expected	to	further	increase	in	2019.

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

Pension	and	postretirement	benefit	costs,	excluding	settlements,	curtailments	and	special	termination	benefits,	totaled	approximately	$30	million	in	2018, down	approximately	$20	million	from	2017.	In	2019,	we	expect	pension	and	other	postretirement	benefit	costs	will	be	approximately	$30	million,	similar	to 2018.

PPG	contributed	$75	million	 to	 its	U.S.	defined	benefit	pension	plans	 in	2018	and	$54	million	 in	2017.	 In	2018,	 the	Company	made	contributions aggregating	$24	million	to	its	non-U.S.	defined	benefit	pension	plans.	In	2019,	mandatory	contributions	to	PPG's	non-U.S.	defined	benefit	pension	plans are	expected	to	be	between	$20	million	and	$30	million.

In	2018,	favorable	foreign	currency	translation	experienced	in	the	first	half	of	the	year	was	mostly	offset	by	unfavorable	foreign	currency	translation experienced	in	the	second	half	of	the	year.	Based	on	mid-January	2019	exchange	rates,	the	Company	expects	year-over-year	unfavorable	foreign currency	translation	to	decrease	2019	sales	by	$400	million	to	$500	million	and	2019	income	before	income	taxes	by	$50	million	to	$70	million.	We	expect the	foreign	currency	translation	impact	to	be	more	prevalent	during	the	first	half	of	2019	due	to	prior	year	foreign	exchange	rate	trends.	The	foreign currency	environment	continues	to	be	volatile,	and	the	impact	on	2019	net	sales	and	income	before	income	taxes	could	differ	from	this	estimate.	The Company	generally	purchases	raw	materials,	incurs	manufacturing	costs	and	sells	finished	goods	in	the	same	currency,	so	we	 typically	 incur	only modest	foreign	currency	transaction	related	impacts.

The	2019	effective	tax	rate	from	continuing	operations	is	expected	to	be	in	the	range	of	23%	to	25%.	This	range	represents	the	Company's	best	estimate, including	updated	guidance	for	the	2017	the	U.S.	Tax	Cuts	and	Jobs	Act.

Over	the	past	five	years,	the	Company	used	over	$5	billion	of	cash	to	repurchase	approximately	50	million	shares	of	PPG	stock,	including	approximately $1.7	billion	in	2018.	The	Company	ended	the	year	with	approximately	$1.8	billion	remaining	under	its	current	share	repurchase	authorization.	During 2018,	the	Company	deployed	approximately	$380	million	for	acquisitions	and	$450	million	for	dividends.	PPG	increased	its	per-share	dividend	in	October 2018,	marking	the	47th	annual	per	share	dividend	increase	and	the	119th	consecutive	year	of	annual	dividend	payments.

PPG	ended	2018	with	approximately	$1	billion	in	cash	and	short-term	investments.	The	Company	expects	continued	strong	cash	generation	in	2019.

# Accounting	Standards	Adopted	in	2018

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

# Accounting	Standards	to	be	Adopted	in	Future	Years

Note	1,	"Summary	of	Significant	Accounting	Policies"	under	Item	8	of	this	Form	10-K	describes	accounting	pronouncements	that	have	been	promulgated prior	to	December	31,	2018	but	are	not	effective	until	a	future	date.

# Commitments	and	Contingent	Liabilities,	including	Environmental	Matters

PPG	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential,	including	some	that	it	has	asserted	against	others,	in	which	substantial monetary	damages	are	sought.	See	Item	3.	"Legal	Proceedings"	and	Note	14,	"Commitments	and	Contingent	Liabilities"	under	Item	8	of	this	Form	10-K for	a	description	of	certain	of	these	lawsuits.

As	discussed	in	Item	3	and	Note	14,	although	the	result	of	any	future	litigation	of	such	lawsuits	and	claims	is	inherently	unpredictable,	management believes	that,	in	the	aggregate,	the	outcome	of	all	lawsuits	and	claims	involving	PPG,	including	asbestos-related	claims,	will	not	have	a	material	effect	on PPG's	consolidated	financial	position	or	liquidity;	however,	any	such	outcome	may	be	material	to	the	results	of	operations	of	any	particular	period	in which	costs,	if	any,	are	recognized.

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

The	Company	continues	to	analyze,	assess	and	remediate	the	environmental	issues	associated	with	PPG's	former	chromium	manufacturing	plant	in Jersey	 City,	 N.J.	 and	 associated	 sites	 ("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	in	2021.

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.	Final	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	be	adjusted.

# Liquidity	and	Capital	Resources

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

# Cash	and	cash	equivalents	and	short-term	investments

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Cash\tand\tcash\tequivalents | $902 | $1,436 |
| Short-term\tinvestments | 61 | 55 |
| Total | $963 | $1,491 |

# Cash	from	operating	activities	-	continuing	operations

| ($	in	millions,	except	percentages) |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Cash\tfrom\toperating\tactivities | $1,487 | $1,551 | $1,218 | (4.1)% | 27.3% |

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

The	$333	million	increase	in	Cash	from	operating	activities	-	continuing	operations	was	primarily	due	to	the	absence	of	the	prior	year	funding	of	the Pittsburgh	Corning	asbestos	trust	(the	"Trust"),	lower	defined	benefit	pension	contributions,	lower	restructuring	payments	and	lower	interest	payments, partially	offset	by	higher	cash	taxes	paid	in	2017	and	higher	working	capital.

# Operating	working	capital

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

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

| ($	in	millions,	except	percentages) | 2018 | 2017 |
| :--- | :--- | :--- |
| Trade\tReceivables,\tnet | $2,505 | $2,559 |
| Inventories,\tFIFO | 1,896 | 1,833 |
| Trade\tCreditor's\tLiabilities | 2,177 | 2,321 |
| Operating\tWorking\tCapital | $2,224 | $2,071 |
| Operating\tWorking\tCapital\tas\ta\t%\tof\tfourth\tquarter\tsales,\tannualized | 15.3% | 14.1% |
| Trade\tReceivables,\tnet\tas\ta\t%\tof\tfourth\tquarter\tsales,\tannualized | 17.2% | 17.4% |
| Days\tsales\toutstanding | 56 | 57 |
| Inventories,\tFIFO\tas\ta\t%\tof\tfourth\tquarter\tsales,\tannualized | 13.0% | 12.4% |
| Inventory\tturnover | 4.8 | 4.8 |

# Environmental	expenditures

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Cash\toutlays\trelated\tto\tenvironmental\tremediation\tactivities | $64 | $44 | $47 |

We	expect	cash	outlays	for	environmental	remediation	activities	in	 2019	to	be	between	$80	million	and	$100	million.

# Defined	benefit	pension	plan	contributions

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| U.S.\tdefined\tbenefit\tpension\tplans | $75 | $54 | $134 |
| Non-U.S.\tdefined\tbenefit\tpension\tplans | $24 | $33 | $54 |

PPG	contributed	$75	million	to	its	U.S.	defined	benefit	pension	plans	in	2018.	Contributions	to	PPG's	non-U.S.	defined	benefit	pension	plans	in	2018 were	required	by	local	funding	requirements.	PPG	expects	to	make	mandatory	contributions	to	its	non-U.S.	defined	benefit	pension	plans	in	the	range	of $20	million	to	$30	million	in	2019.	PPG	may	make	voluntary	contributions	to	its	defined	benefit	pension	plans	in	2019	and	beyond.

# Asbestos	settlement	trust	funding

In	June	2016,	PPG	fully	funded	its	portion	of	the	trust	that	was	established	by	the	U.S.	Bankruptcy	Court	for	the	Western	District	of	Pennsylvania	in	May 2016.	PPG's	total	cash	obligations	to	fund	the	Trust	totaled	$813	million	(pre-tax).	All	payments	were	applied	against	a	previously	established	PPG reserve	for	the	total	asbestos	trust	obligation.	The	Company	utilized	cash	on	hand	for	the	payments,	and	this	funding	had	no	impact	on	PPG's	previously stated	cash-deployment	targets.	Refer	to	Note	14,	"Commitments	and	Contingent	Liabilities"	under	Item	8	of	this	Form	10-K	for	additional	information.

# Cash	used	for	investing	activities	-	continuing	operations

| ($	in	millions,	except	percentages) |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Cash\t(used\tfor)/from\tinvesting\tactivities | ($764) | ($63) | $472 | 1,112.7% | (113.3)% |

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

The	$535	million	decrease	in	cash	(used	for)/from	investing	activities	-	continuing	operations,	was	primarily	due	to	the	absence	of	the	prior	year	proceeds from	the	sale	of	the	flat	glass	business,	European	fiber	glass	business	and	two	Asian	joint	ventures,	as	well	as	lower	capital	expenditures,	including business	acquisitions,	partially	offset	by	the	current	year	proceeds	from	the	sale	of	the	North	American	fiber	glass	business.

# Capital	expenditures,	including	business	acquisitions

| ($	in	millions,	except	percentages) |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Capital\texpenditures\t(1) | $411 | $360 | $380 | 14.2% | (5.3)% |
| Business\tacquisitions,\tnet\tof\tcash\tacquired\t(2) | $378 | $325 | $349 | 16.3% | (6.9)% |
| Total\tcapital\texpenditures,\tincluding\tacquisitions | $789 | $685 | $729 | 15.2% | (6.0)% |
| Capital\texpenditures,\texcluding\tacquisitions,\tas\ta\t%\tof\tsales | 2.7% | 2.4% | 2.7% | 12.5% | (11.1)% |

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

Capital	expenditures	related	to	modernization	and	productivity	improvements,	expansion	of	existing	businesses	and	environmental	control	projects	is expected	to	be	in	the	range	of	2.5%	to	3.0%	of	sales	during	2019.

A	primary	focus	for	the	Company	in	2019	will	continue	to	be	cash	deployment	focused	on	shareholder	value	creation,	with	a	preference	for	business acquisitions.

# Cash	proceeds	from	divestitures

In	September	2017,	PPG	completed	the	sale	of	its	North	American	fiber	glass	business	to	Nippon	Electric	Glass	Co.	and	received	approximately	$540 million	in	pre-tax	cash	proceeds.

During	2016,	PPG	finalized	the	sale	of	its	flat	glass	business	and	several	other	businesses	and	business	affiliates.	The	Company	received	total	pre-tax cash	proceeds	of	approximately	$1.1	billion	from	these	business	divestitures.	Refer	to	Note	3,	"Acquisitions	and	Divestitures"	under	Item	8	of	this	Form 10-K	for	additional	information.

# Cash	used	for	financing	activities	-	continuing	operations

|  |  |  |  | %	Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tpercentages) | 2018 | 2017 | 2016 | 2018\tvs.\t2017 | 2017\tvs.\t2016 |
| Cash\tused\tfor\tfinancing\tactivities | ($1,205) | ($1,954) | ($1,210) | (38.3)% | 61.5% |

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

The	$744	million	increase	in	cash	used	for	financing	activities	-	continuing	operations,	was	primarily	due	to	repayment	of	long	term	debt	and	higher dividends	in	2017,	partially	offset	by	issuance	of	long	term	debt	in	2016	and	lower	net	purchases	of	treasury	stock	year-over-year.

# Share	repurchase	activity

| ($	in	millions,	except	number	of	shares) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Number\tof\tshares\trepurchased\t(millions) | 15.9 | 7.4 | 10.7 |
| Cost\tof\tshares\trepurchased | $1,721 | $813 | $1,050 |

The	Company	has	approximately	$1.8	billion	remaining	under	the	current	authorization	from	the	Board	of	Directors,	which	was	approved	in	December 2017.	The	current	authorized	repurchase	program	has	no	expiration	date.

# Dividends	paid	to	shareholders

PPG	has	paid	uninterrupted	annual	dividends	since	1899,	and	2018	marked	the	47th	consecutive	year	of	increased	annual	per-share	dividend	payments to	shareholders.	The	Company	raised	its	per-share	quarterly	dividend	by	7%	to	$0.48	per	share	paid	in	September	2018.

# Debt	issued	and	repaid

| Debt	Repaid | Year | $	in	millions |
| :--- | :--- | :--- |
| 3-year\tvariable\trate\tbank\tloan\tdue\t2017 | 2017 | $587 |
| $125\tmillion\t6.65%\tnotes\tdue\t2018 | 2016 | 133 |
| Two\t$250\tmillion\tTerm\tLoan\tCredit\tAgreements | 2016 | 500 |
| $250\tmillion\t1.9%\tnotes | 2016 | 250 |

The	ratio	of	total	debt,	including	capital	leases,	to	total	debt	and	equity	was 52%	at	December	31,	2018	up	from	 43%	in	2017.

# Credit	agreements	and	lines	of	credit

In	December	2015,	PPG	entered	into	a	five-year	credit	agreement	(the	"Credit	Agreement")	with	several	banks	and	 financial	 institutions	as	 further discussed	 in	Note	9,	"Borrowings	and	Lines	of	Credit"	under	Item	8	of	this	Form	10-K.	The	Credit	Agreement	provides	for	a	$1.8	billion	unsecured revolving	credit	facility.	The	Credit	Agreement	will	terminate	on	December	18,	2020.	During	the	years	ended	December	31,	2018	and	2017,	there	were no	borrowings	outstanding.

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

See	Note	9,	"Borrowings	and	Lines	of	Credit"	under	Item	8	of	this	Form	10-K	for	information	regarding	notes	entered	into	and	repaid	as	well	as	details regarding	the	use	and	availability	of	committed	and	uncommitted	lines	of	credit,	letters	of	credit,	guarantees	and	debt	covenants.

# Contractual	obligations

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

| ($	in	millions) | Total | 2019 | 2020-2021 | 2022-2023 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Contractual\tObligations |  |  |  |  |  |
| Long-term\tdebt | $5,000 | $644 | $624 | $981 | $2,751 |
| Short-term\tdebt | 4 | 4 | — | — | — |
| Capital\tlease\tobligations | 12 | 3 | 4 | 2 | 3 |
| Operating\tleases | 893 | 207 | 273 | 169 | 244 |
| Interest\tpayments(1) | 1,257 | 130 | 250 | 170 | 707 |
| Pension\tcontributions(2) | 30 | 30 | — | — | — |
| Unconditional\tpurchase\tcommitments(3) | 170 | 77 | 51 | 24 | 18 |
| Other\tcommitments | 127 | 6 | 13 | 13 | 95 |
| Total | $7,493 | $1,101 | $1,215 | $1,359 | $3,818 |

(1) Includes	interest	on	all	outstanding	debt.

(2) Includes	the	high	end	of	the	range	of	the	expected	non-US	mandatory	pension	contributions	for	2019	only,	as	PPG	is	unable	to	estimate	the	pension	contributions	beyond 2019.

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

# Other	liquidity	matters

At	December	31,	2018,	the	total	amount	of	unrecognized	tax	benefits	for	uncertain	tax	positions,	including	an	accrual	of	related	interest	and	penalties along	with	positions	only	impacting	the	timing	of	tax	benefits,	was	$182	million.	The	timing	of	payments	will	depend	on	the	progress	of	examinations	with tax	authorities.	PPG	does	not	expect	a	significant	tax	payment	related	to	these	obligations	within	the	next	year.	The	Company	is	unable	to	make	a reasonably	reliable	estimate	as	to	when	any	significant	cash	settlements	with	taxing	authorities	may	occur.

# Off-Balance	Sheet	Arrangements

The	Company's	off-balance	sheet	arrangements	include	the	operating	leases	and	unconditional	purchase	commitments	disclosed	in	the	"Liquidity	and Capital	Resources"	section	in	the	contractual	obligations	table	as	well	as	letters	of	credit	and	guarantees	as	discussed	in	Note	9,	"Borrowings	and	Lines of	Credit"	under	Item	8	of	this	Form	10-K.

# Critical	Accounting	Estimates

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

# Contingencies

Contingencies,	by	their	nature,	relate	to	uncertainties	that	require	management	to	exercise	judgment	both	in	assessing	the	likelihood	that	a	liability	has been	incurred	as	well	as	in	estimating	the	amount	of	potential	loss.	The	most	important	contingencies	impacting	our	financial	statements	are	those related	to	environmental	remediation,	to	pending,	impending	or	overtly	threatened	litigation	against	the	Company	and	to	the	resolution	of	matters	related to	open	tax	years.	For	more	information	on	these	matters,	see	Note	14,	"Commitments	and	Contingent	Liabilities"	and	Note	12,	"Income	Taxes"	under Item	8	of	this	Form	10-K.

# Defined	Benefit	Pension	and	Other	Postretirement	Benefit	Plans

Accounting	for	pensions	and	other	postretirement	benefits	involves	estimating	the	cost	of	benefits	to	be	provided	well	into	the	future	and	attributing	that cost	over	the	time	period	each	employee	works.	To	accomplish	this,	we	make	extensive	use	of	assumptions	about	inflation,	investment	returns,	mortality, turnover,	medical	costs	and	discount	rates.	The	Company	has

established	a	process	by	which	management	reviews	and	selects	these	assumptions	annually.	See	Note 13,	"Employee	Benefit	Plans"	under	Item	8	of this	Form	10-K	for	information	on	these	plans	and	the	assumptions	used.

# Business	Combinations

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

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

# Goodwill	and	Intangible	Assets

The	Company	tests	indefinite-lived	intangible	assets	and	goodwill	for	impairment	annually	by	either	performing	a	qualitative	evaluation	or	a	quantitative test.	The	qualitative	evaluation	is	an	assessment	of	factors	to	determine	whether	it	is	more	likely	than	not	that	the	fair	values	of	a	reporting	unit	or	asset	is less	 than	 its	 carrying	 amount.	 Fair	 values	 under	 the	 quantitative	 test	 are	 estimated	 using	 discounted	 cash	 flow	 methodologies	 that	 are	 based	 on projections	of	the	amounts	and	timing	of	future	revenues	and	cash	flows.	For	more	information	on	these	matters,	see	Note	1,	"Summary	of	Significant Accounting	Policies"	under	Item	8	of	this	Form	10-K.

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

# Currency

Comparing	exchange	rates	from	December	31,	2017	to	December	31,	2018,	the	U.S.	dollar	strengthened	against	all	other	major	currencies	associated with	countries	 in	which	PPG	operates,	most	notably	 the	Australian	dollar,	British	pound,	Chinese	yuan,	euro	and	South	Korean	won.	As	a	result, consolidated	net	assets	at	December	31,	2018	decreased	by	approximately	$167	million	from	December	31,	2017.	Comparing	exchange	rates	from December	31,	2016	to	December	31,	2017,	the	U.S.	dollar	was	weaker	against	the	currencies	in	most	countries	in	which	PPG	operates,	most	notably	the Mexican	peso,	British	pound,	Chinese	yuan	and	euro.	As	a	result,	consolidated	net	assets	at	December	31,	2017	increased	by	approximately	$231 million	from	December	31,	2016.

Comparing	exchange	rates	during	2018	to	those	of	2017,	in	the	countries	in	which	PPG	operates,	there	was	a	favorable	impact	of	approximately	$21 million	on	full	year	2018	income	before	income	taxes	from	the	translation	of	this	foreign	income	into	U.S.	dollars.	Comparing	exchange	rates	during	2017 to	those	of	2016,	in	the	countries	in	which	PPG	operates,	there	was	an	unfavorable	impact	of	approximately	$7	million	on	full	year	2017	income	before income	taxes	from	the	translation	of	this	foreign	income	into	U.S.	dollars.

# 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	Annual	Report	contain	forward-looking	statements	that	reflect	the	Company's	current views	with	respect	to	future	events	and	financial	performance.

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

Many	 factors	could	cause	actual	results	 to	differ	materially	 from	 the	Company's	 forward-looking	statements.	Such factors include	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,	 including	 the	 identification	 of	 additional	 control deficiencies,	 further	 expenditures	 related	 to	 our	 restatement,	 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	under	Item	1A	is	considered	representative,	no	such	list	should	be	considered	to	be	a	complete statement	 of	 all	 potential	 risks	 and	 uncertainties.	 Unlisted	 factors	 may	 present	 significant	 additional	 obstacles	 to	 the	 realization	 of	 forward-looking statements.

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

# Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk

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

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

# Foreign	Currency	Risk

We	conduct	operations	in	many	countries	around	the	world.	Our	results	of	operations	are	subject	to	both	currency	transaction	and	currency	translation risk.	Foreign	currency	forward	contracts	outstanding	during	2018	and	2017	were	generally	designated	as	a	hedge	of	PPG's	exposure	to	foreign	currency transaction	risk.	As	of	December	31,	2018	and	2017,	the	fair	value	of	these	contracts	was	a	net	asset	of	$36	million	and	a	net	liability	of	$19	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	years	ended	December	31,	2018	and	2017	would	have	been	$291	million	and	$255	million,	respectively.

In	February	2018,	PPG	entered	into	U.S.	dollar	to	euro	cross	currency	swap	contracts	with	a	total	notional	amount	of	 $575	million	outstanding,	which	had a	fair	value	of	a	net	asset	of	$35	million	as	of	December	31,	2018.	As	of	December	31,	2017,	PPG	had	U.S.	dollar	to	euro	cross	currency	swap	contracts with	a	total	notional	amount	of	$560	million	outstanding,	which	had	a	fair	value	of	a	net	asset	of	 $2	million.	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	million	and $58	million	at	December	31,	2018	and	December	31,	2017,	respectively.

As	of	December	31,	2018	and	2017,	PPG	had	non-U.S.	dollar	denominated	debt	outstanding	of	$2.6	billion	and	$2.8	billion,	respectively.	A	weakening	of the	U.S.	dollar	by	10%	against	European	currencies	and	by	20%	against	Asian	and	South	American	currencies	would	have	resulted	in	unrealized translation	losses	of	$299	million	and	$314	million	as	of	December	31,	2018	and	2017,	respectively.

# Interest	Rate	Risk

The	Company	manages	its	interest	rate	risk	by	balancing	its	exposure	to	fixed	and	variable	rates	while	attempting	to	minimize	its	interest	costs.	In	the	first quarter	of	2018,	PPG	entered	into	interest	rate	swaps	which	converted	$525	million	of	fixed	rate	debt	to	variable	rate	debt.	The	fair	value	of	these contracts	was	an	asset	of	$8	million	as	of	December	31,	2018.	An	increase	in	variable	interest	rates	of	10%	would	lower	the	fair	value	of	these	swaps and	increase	interest	expense	by	$10	million	over	the	term	of	the	instrument.	A	10%	increase	in	interest	rates	in	the	U.S.,	Canada,	Mexico	and	Europe and	a	20%	increase	in	interest	rates	in	Asia	and	South	America	would	have	an	insignificant	effect	on	PPG's	variable	rate	debt	obligations	and	interest

expense	for	the	years	ended	December	31,	2018	and	2017,	respectively.	Further,	a	10%	reduction	in	interest	rates	would	have	increased	the	present value	of	the	Company's	fixed	rate	debt	by	approximately	$84	million	and	$61	million	as	of	December	31,	2018	and	2017,	respectively;	however,	such changes	would	not	have	had	an	effect	on	PPG's	annual	Income	before	income	taxes	or	cash	flows.

# Equity	Price	Risk

In	prior	years,	PPG	entered	into	equity	forward	arrangements	to	hedge	the	Company's	exposure	to	changes	in	the	fair	value	of	its	future	obligation	to contribute	PPG	stock	to	the	Trust	(see	Note	10,	"Financial	Instruments,	Hedging	Activities	and	Fair	Value	Measurements "	and	Note	14,	"Commitments and	Contingent	Liabilities"	under	 Item	8	of	 this	Form	10-K).	 In	June	2016,	PPG	satisfied	 its	 funding	obligation	 to	 the	Trust	and	 the	equity	 forward arrangements	were	settled.	At	settlement,	the	aggregated	fair	value	of	the	equity	forward	arrangements	was	an	asset	of	$258	million.

# Item	8.	Financial	Statements	and	Supplementary	Data

# Report	of	Independent	Registered	Public	Accounting	Firm

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

# Opinions	on	the	Financial	Statements	and	Internal	Control	over	Financial	Reporting

We	have	audited	the	accompanying	consolidated	balance	sheets	of	PPG	Industries,	Inc.	and	its	subsidiaries	(the	"Company")	as	of	December	31,	2018 and	2017,	and	the	related	consolidated	statements	of	income,	comprehensive	income,	shareholders'	equity,	and	cash	flows	for	each	of	the	three	years	in the	period	ended	December	31,	2018,	including	the	related	notes	and	schedule	of	valuation	and	qualifying	accounts	for	each	of	the	three	years	in	the period	ended	December	31,	2018	appearing	under	Item	15(a)(2)(collectively	referred	to	as	the	"consolidated	financial	statements").	We	also	have	audited the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2018,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework (2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	the	Company	as	of December	31,	2018	and	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2018	in conformity	with	accounting	principles	generally	accepted	in	the	United	States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material respects,	 effective	 internal	 control	 over	 financial	 reporting	 as	 of	 December	 31,	 2018,	 based	 on	 criteria	 established	 in	 Internal	 Control	 -	 Integrated Framework	(2013)	issued	by	the	COSO.

# Basis	for	Opinions

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

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

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

# Definition	and	Limitations	of	Internal	Control	over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal control	over	financial	reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures of	the	company	are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(iii)	provide	reasonable assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	company's	assets	that	could	have	a	material effect	on	the	financial	statements.

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

# /s/	PricewaterhouseCoopers	LLP

Pittsburgh,	Pennsylvania February	21,	2019

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

# Management	Report

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

# Financial	Reporting

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

We	conducted	an	evaluation	of	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2018.	In	making	this evaluation,	we	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO)	in	Internal	Control	- Integrated	Framework	(2013).	Based	on	this	evaluation	we	have	concluded	that,	as	of	December	31,	2018,	the	Company's	internal	control	over	financial reporting	were	effective.

PricewaterhouseCoopers	 LLP,	 an	 independent	 registered	 public	 accounting firm,	 has issued their report, included	 on	 page	 46	 of this	 Form	 10-K, regarding	the	Company's	internal	control	over	financial	reporting.

# /s/	Michael	H.	McGarry

# Michael	H.	McGarry

Chairman	and	Chief	Executive	Officer February	21,	2019

# /s/	Vincent	J.	Morales

# Vincent	J.	Morales

Senior	Vice	President	and	Chief	Financial	Officer February	21,	2019

# Consolidated	Statement	of	Income

| ($	in	millions,	except	per	share	amounts) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $15,374 | $14,748 | $14,270 |
| Cost\tof\tsales,\texclusive\tof\tdepreciation\tand\tamortization | 9,001 | 8,209 | 7,665 |
| Selling,\tgeneral\tand\tadministrative | 3,573 | 3,554 | 3,555 |
| Depreciation | 354 | 331 | 319 |
| Amortization | 143 | 129 | 121 |
| Research\tand\tdevelopment,\tnet | 441 | 451 | 453 |
| Interest\texpense | 118 | 105 | 125 |
| Interest\tincome | (23) | (20) | (26) |
| Business\trestructuring,\tnet | 66 | — | 191 |
| Pension\tsettlement\tcharges | — | 60 | 968 |
| Asbestos\tsettlement,\tnet | — | — | 5 |
| Other\tcharges | 122 | 74 | 242 |
| Other\tincome | (114) | (150) | (127) |
| Income\tbefore\tincome\ttaxes | $1,693 | $2,005 | $779 |
| Income\ttax\texpense | 353 | 615 | 214 |
| Income\tfrom\tcontinuing\toperations | $1,340 | $1,390 | $565 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 18 | 225 | 330 |
| Net\tincome\tattributable\tto\tthe\tcontrolling\tand\tnoncontrolling\tinterests | $1,358 | $1,615 | $895 |
| Less:\tnet\tincome\tattributable\tto\tnoncontrolling\tinterests | 17 | 21 | 22 |
| Net\tincome\t(attributable\tto\tPPG) | $1,341 | $1,594 | $873 |
| Amounts\tAttributable\tto\tPPG |  |  |  |
| Continuing\toperations | $1,323 | $1,369 | $543 |
| Discontinued\toperations | 18 | 225 | 330 |
| Net\tincome | $1,341 | $1,594 | $873 |
| Earnings\tper\tcommon\tshare |  |  |  |
| Continuing\toperations | $5.43 | $5.34 | $2.05 |
| Discontinued\toperations | 0.07 | 0.88 | 1.24 |
| Net\tincome\t(attributable\tto\tPPG) | $5.50 | $6.22 | $3.29 |
| Earnings\tper\tcommon\tshare\t-\tassuming\tdilution |  |  |  |
| Continuing\toperations | $5.40 | $5.31 | $2.04 |
| Discontinued\toperations | 0.07 | 0.87 | 1.23 |
| Net\tincome\t(attributable\tto\tPPG) | $5.47 | $6.18 | $3.27 |

# Consolidated	Statement	of	Comprehensive	Income

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tattributable\tto\tthe\tcontrolling\tand\tnoncontrolling\tinterests | $1,358 | $1,615 | $895 |
| Unrealized\tforeign\tcurrency\ttranslation\t(losses)/gains | (155) | 248 | (476) |
| Defined\tbenefit\tpension\tand\tother\tpostretirement\tbenefit\tadjustments | 9 | 78 | 808 |
| Unrealized\t(losses)/gains\t–\tderivative\tfinancial\tinstruments | (1) | (10) | 4 |
| Other\tcomprehensive\t(loss)/income,\tnet\tof\ttax | (147) | 316 | 336 |
| Total\tcomprehensive\tincome | $1,211 | $1,931 | $1,231 |
| Less:\tamounts\tattributable\tto\tnoncontrolling\tinterests: |  |  |  |
| Net\tincome | (17) | (21) | (22) |
| Unrealized\tforeign\tcurrency\ttranslation\tgains/(losses) | 11 | (17) | 10 |
| Comprehensive\tincome\tattributable\tto\tPPG | $1,205 | $1,893 | $1,219 |

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

# Consolidated	Balance	Sheet

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets |  |  |
| Cash\tand\tcash\tequivalents | $902 | $1,436 |
| Short-term\tinvestments | 61 | 55 |
| Receivables | 2,845 | 2,903 |
| Inventories | 1,783 | 1,730 |
| Other | 370 | 353 |
| Total\tcurrent\tassets | $5,961 | $6,477 |
| Property,\tplant\tand\tequipment,\tnet | 2,805 | 2,824 |
| Goodwill | 4,070 | 3,942 |
| Identifiable\tintangible\tassets,\tnet | 1,972 | 2,045 |
| Deferred\tincome\ttaxes | 229 | 305 |
| Investments | 251 | 268 |
| Other\tassets | 727 | 677 |
| Total | $16,015 | $16,538 |
| Liabilities\tand\tShareholders'\tEquity |  |  |
| Current\tliabilities |  |  |
| Accounts\tpayable\tand\taccrued\tliabilities | $3,623 | $3,781 |
| Restructuring\treserves | 99 | 102 |
| Short-term\tdebt\tand\tcurrent\tportion\tof\tlong-term\tdebt | 651 | 12 |
| Total\tcurrent\tliabilities | $4,373 | $3,895 |
| Long-term\tdebt | 4,365 | 4,134 |
| Accrued\tpensions | 645 | 729 |
| Other\tpostretirement\tbenefits | 629 | 699 |
| Deferred\tincome\ttaxes | 429 | 442 |
| Other\tliabilities | 842 | 967 |
| Total\tliabilities | $11,283 | $10,866 |
| Commitments\tand\tcontingent\tliabilities\t(See\tNote\t14) |  |  |
| Shareholders'\tequity |  |  |
| Common\tstock | $969 | $969 |
| Additional\tpaid-in\tcapital | 788 | 756 |
| Retained\tearnings | 18,131 | 17,140 |
| Treasury\tstock,\tat\tcost | (12,958) | (11,251) |
| Accumulated\tother\tcomprehensive\tloss | (2,300) | (2,057) |
| Total\tPPG\tshareholders'\tequity | $4,630 | $5,557 |
| Noncontrolling\tinterests | 102 | 115 |
| Total\tshareholders'\tequity | $4,732 | $5,672 |
| Total | $16,015 | $16,538 |

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

# Consolidated	Statement	of	Shareholders'	Equity

| ($	in	millions) | Common<br>Stock | Additional	Paid-<br>In	Capital | Retained<br>Earnings | Treasury<br>Stock | Accumulated	Other<br>Comprehensive<br>(Loss)/Income | Total	PPG | Non-<br>controlling<br>Interests | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| January\t1,\t2016 | $969 | $635 | $15,521 | ($9,440) | ($2,702) | $4,983 | $86 | $5,069 |
| Net\tincome\tattributable\tto\tthe\tcontrolling\tand\nnoncontrolling\tinterests | — | — | 873 | — | — | 873 | 22 | 895 |
| Other\tcomprehensive\tincome/(loss),\tnet\tof\ntax | — | — | — | — | 346 | 346 | (10) | 336 |
| Cash\tdividends | — | — | (414) | — | — | (414) | — | (414) |
| Purchase\tof\ttreasury\tstock | — | — | — | (1,050) | — | (1,050) | — | (1,050) |
| Issuance\tof\ttreasury\tstock | — | 37 | — | 18 | — | 55 | — | 55 |
| Stock-based\tcompensation\tactivity | — | 35 | — | — | — | 35 | — | 35 |
| Dividends\tpaid\ton\tsubsidiary\tcommon\tstock\nto\tnoncontrolling\tinterests | — | — | — | — | — | — | (4) | (4) |
| Reductions\tin\tnoncontrolling\tinterests | — | — | — | — | — | — | (7) | (7) |
| December\t31,\t2016 | $969 | $707 | $15,980 | ($10,472) | ($2,356) | $4,828 | $87 | $4,915 |
| Net\tincome\tattributable\tto\tthe\tcontrolling\tand\nnoncontrolling\tinterests | — | — | 1,594 | — | — | 1,594 | 21 | 1,615 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax | — | — | — | — | 299 | 299 | 17 | 316 |
| Cash\tdividends | — | — | (434) | — | — | (434) | — | (434) |
| Purchase\tof\ttreasury\tstock | — | — | — | (813) | — | (813) | — | (813) |
| Issuance\tof\ttreasury\tstock | — | 49 | — | 34 | — | 83 | — | 83 |
| Dividends\tpaid\ton\tsubsidiary\tcommon\tstock\nto\tnoncontrolling\tinterests | — | — | — | — | — | — | (5) | (5) |
| Reductions\tin\tnoncontrolling\tinterests | — | — | — | — | — | — | (5) | (5) |
| December\t31,\t2017 | $969 | $756 | $17,140 | ($11,251) | ($2,057) | $5,557 | $115 | $5,672 |
| Net\tincome\tattributable\tto\tthe\tcontrolling\tand\nnoncontrolling\tinterests | — | — | 1,341 | — | — | 1,341 | 17 | 1,358 |
| Other\tcomprehensive\tloss,\tnet\tof\ttax | — | — | — | — | (136) | (136) | (11) | (147) |
| Cash\tdividends | — | — | (453) | — | — | (453) | — | (453) |
| Purchase\tof\ttreasury\tstock | — | — | — | (1,721) | — | (1,721) | — | (1,721) |
| Issuance\tof\ttreasury\tstock | — | 28 | — | 14 | — | 42 | — | 42 |
| Stock-based\tcompensation\tactivity | — | 4 | — | — | — | 4 | — | 4 |
| Dividends\tpaid\ton\tsubsidiary\tcommon\tstock\nto\tnoncontrolling\tinterests | — | — | — | — | — | — | (7) | (7) |
| Reductions\tin\tnoncontrolling\tinterests | — | — | — | — | — | — | (12) | (12) |
| Reclassification\tfrom\tother\tcomprehensive |  |  |  |  |  |  |  |  |
| income\tto\tretained\tearnings\t-\tAdoption\tof |  |  |  |  |  |  |  |  |
| ASU\t2018-02 | — | — | 107 | — | (107) | — | — | — |
| Adjustment\tto\tretained\tearnings\t-\tAdoption\nof\tASU\t2016-16 | — | — | (4) | — | — | (4) | — | (4) |
| December\t31,\t2018 | $969 | $788 | $18,131 | ($12,958) | ($2,300) | $4,630 | $102 | $4,732 |

# Consolidated	Statement	of	Cash	Flows

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities |  |  |  |
| Net\tincome\tattributable\tto\tthe\tcontrolling\tand\tnoncontrolling\tinterests | $1,358 | $1,615 | $895 |
| Less:\tIncome\tfrom\tdiscontinued\toperations | 18 | 225 | 330 |
| Income\tfrom\tcontinuing\toperations | $1,340 | $1,390 | $565 |
| Adjustments\tto\treconcile\tto\tcash\tfrom\toperations: |  |  |  |
| Depreciation\tand\tamortization | 497 | 460 | 440 |
| Defined\tbenefit\tpension\texpense | 43 | 65 | 85 |
| Pension\tsettlement\tcharge | — | 60 | 968 |
| Business\trestructuring\tcharge,\tnet | 66 | — | 191 |
| Environmental\tremediation\tcharges\tand\tother\tcosts | 77 | — | 82 |
| Stock-based\tcompensation\texpense | 37 | 35 | 45 |
| Gain\ton\tsale\tof\tland | (26) | — | — |
| Net\tgain,\tfrom\tsale\tof\tbusinesses | — | (25) | (39) |
| Equity\taffiliate\t(income)/loss,\tnet\tof\tdividends | (1) | (4) | (6) |
| Deferred\tincome\ttaxes | 45 | 38 | 171 |
| Contributions\tto\tpension\tplans | (99) | (87) | (188) |
| Restructuring\tpayments | (66) | (49) | (76) |
| Funding\tof\tasbestos\tsettlement\ttrust | — | — | (813) |
| Change\tin\tcertain\tasset\tand\tliability\taccounts\t(net\tof\tacquisitions): |  |  |  |
| Receivables | (69) | (76) | (68) |
| Inventories | (109) | (116) | 56 |
| Other\tcurrent\tassets | 5 | (43) | 21 |
| Accounts\tpayable\tand\taccrued\tliabilities | (76) | 188 | 169 |
| Noncurrent\tassets\tand\tliabilities,\tnet | (207) | (170) | (53) |
| Taxes\tand\tinterest\tpayable | 50 | (129) | (268) |
| Other | (20) | 14 | (64) |
| Cash\tfrom\toperating\tactivities\t-\tcontinuing\toperations | $1,487 | $1,551 | $1,218 |
| Cash\t(used\tfor)/from\toperating\tactivities\t-\tdiscontinued\toperations | (20) | 17 | 133 |
| Cash\tfrom\toperating\tactivities | $1,467 | $1,568 | $1,351 |
| Investing\tactivities |  |  |  |
| Capital\texpenditures | ($411) | ($360) | ($380) |
| Business\tacquisitions,\tnet\tof\tcash\tbalances\tacquired | (378) | (225) | (349) |
| Payments\tfor\tacquisition\tof\tequity\tinvestment | — | (100) | — |
| Net\tproceeds\tfrom\tthe\tsale\tof\tbusinesses | — | 593 | 1,094 |
| Proceeds\tfrom\tsale\tof\tland | 27 | — | — |
| Proceeds\tfrom\tmaturity\tof\tshort-term\tinvestments | — | — | 92 |
| Payments\tfor\tthe\tsettlement\tof\tcross\tcurrency\tswap\tcontracts | (28) | (34) | (36) |
| Proceeds\tfrom\tthe\tsettlement\tof\tcross\tcurrency\tswap\tcontracts | 23 | 37 | 37 |
| Payments\ton\tnet\tinvestment\thedges | — | — | (13) |
| Other | 3 | 26 | 27 |
| Cash\t(used\tfor)/from\tinvesting\tactivities\t-\tcontinuing\toperations | ($764) | ($63) | $472 |
| Cash\tused\tfor\tinvesting\tactivities\t-\tdiscontinued\toperations | — | (4) | (36) |
| Cash\t(used\tfor)/from\tinvesting\tactivities | ($764) | ($67) | $436 |
| Financing\tactivities |  |  |  |
| Net\tchange\tin\tborrowings\twith\tmaturities\tof\tthree\tmonths\tor\tless | ($1) | ($7) | ($15) |
| Net\tpayments\ton\tcommercial\tpaper\tand\tshort-term\tdebt | (2) | (93) | (361) |
| Net\tproceeds\tfrom\tthe\tissuance\tof\tlong-term\tdebt\t(net\tof\tdiscount\tand\tissuance\tcosts) | 992 | — | 988 |
| Repayment\tof\tlong-term\tdebt | (6) | (588) | (379) |
| Payments\trelated\tto\ttax\twithholding\ton\tstock-based\tcompensation\tawards | (15) | (28) | (26) |
| Purchase\tof\ttreasury\tstock | (1,721) | (813) | (1,050) |
| Issuance\tof\ttreasury\tstock | 15 | 52 | 31 |
| Dividends\tpaid\ton\tPPG\tcommon\tstock | (453) | (434) | (414) |
| Other | (14) | (43) | 16 |
| Cash\tused\tfor\tfinancing\tactivities | ($1,205) | ($1,954) | ($1,210) |
| Effect\tof\tcurrency\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (32) | 69 | (68) |
| Net\t(decrease)/increase\tin\tcash\tand\tcash\tequivalents | ($534) | ($384) | $509 |

| Cash	and	cash	equivalents,	beginning	of	year | $1,436 | $1,820 | $1,311 |
| :--- | :--- | :--- | :--- |
| Cash\tand\tcash\tequivalents,\tend\tof\tyear | $902 | $1,436 | $1,820 |
| Supplemental\tdisclosures\tof\tcash\tflow\tinformation: |  |  |  |
| Interest\tpaid,\tnet\tof\tamount\tcapitalized | $108 | $100 | $118 |
| Taxes\tpaid,\tnet\tof\trefunds | $380 | $648 | $349 |

# Notes	to	the	Consolidated	Financial	Statements

# 1.	Summary	of	Significant	Accounting	Policies

# Principles	of	Consolidation

The	accompanying	consolidated	financial	statements	include	the	accounts	of	PPG	Industries,	Inc.	("PPG"	or	the	"Company")	and	all	subsidiaries,	both U.S.	and	non-U.S.,	that	it	controls.	PPG	owns	more	than	50%	of	the	voting	stock	of	most	of	the	subsidiaries	that	it	controls.	For	those	consolidated subsidiaries	in	which	the	Company's	ownership	is	less	than	100%,	the	outside	shareholders'	interests	are	shown	as	noncontrolling	interests.	Investments in	companies	in	which	PPG	owns	20%	to	50%	of	the	voting	stock	and	has	the	ability	to	exercise	significant	influence	over	operating	and	financial	policies of	the	investee	are	accounted	for	using	the	equity	method	of	accounting.	As	a	result,	PPG's	share	of	income	or	losses	from	such	equity	affiliates	is included	 in	 the	 consolidated	 statement	 of	 income	 and	 PPG's	 share	 of	 these	 companies'	 shareholders'	 equity	 is	 included	 in	 Investments	 on	 the consolidated	balance	sheet.	Transactions	between	PPG	and	its	subsidiaries	are	eliminated	in	consolidation.

# Use	of	Estimates	in	the	Preparation	of	Financial	Statements

The	preparation	of	financial	statements	in	conformity	with	U.S.	generally	accepted	accounting	principles	requires	management	to	make	estimates	and assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities	and	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial statements,	as	well	as	the	reported	amounts	of	income	and	expenses	during	the	reporting	period.	Such	estimates	also	include	the	fair	value	of	assets acquired	and	liabilities	assumed	resulting	from	the	allocation	of	the	purchase	price	related	to	business	combinations	consummated.	Actual	outcomes could	differ	from	those	estimates.

# Revenue	Recognition

Revenue	is	recognized	as	performance	obligations	with	the	customer	are	satisfied,	at	an	amount	that	is	determined	to	be	collectible.	For	the	sale	of products,	this	generally	occurs	at	the	point	in	time	when	control	of	the	Company's	products	transfers	to	the	customer	based	on	the	agreed	upon	shipping terms.

# Shipping	and	Handling	Costs

Amounts	billed	to	customers	for	shipping	and	handling	are	reported	in	Net	sales	in	the	consolidated	statement	of	income.	Shipping	and	handling	costs incurred	 by	 the	 Company	 for	 the	 delivery	 of	 goods	 to	 customers	 are	 included	 in	 Cost	 of	 sales,	 exclusive	 of	 depreciation	 and	 amortization	 in	 the consolidated	statement	of	income.

# Selling,	General	and	Administrative	Costs

Amounts	presented	in	Selling,	general	and	administrative	in	the	consolidated	statement	of	income	are	comprised	of	selling,	customer	service,	distribution and	advertising	costs,	as	well	as	the	costs	of	providing	corporate-wide	functional	support	in	such	areas	as	finance,	law,	human	resources	and	planning. Distribution	costs	pertain	to	the	movement	and	storage	of	finished	goods	inventory	at	company-owned	and	leased	warehouses	and	other	distribution facilities.

# Advertising	Costs

Research	and	development	costs,	which	consist	primarily	of	employee	related	costs,	are	charged	to	expense	as	incurred.

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Research\tand\tdevelopment\t–\ttotal | $464 | $472 | $473 |
| Less\tdepreciation\ton\tresearch\tfacilities | 23 | 21 | 20 |
| Research\tand\tdevelopment,\tnet | $441 | $451 | $453 |

# Legal	Costs

Legal	costs,	primarily	 include	costs	associated	with	acquisition	and	divestiture	 transactions,	general litigation,	environmental	regulation	compliance, patent	and	trademark	protection	and	other	general	corporate	purposes,	are	charged	to	expense	as	incurred.

# Income	Taxes

Income	taxes	are	accounted	for	under	the	asset	and	liability	method.	Deferred	tax	assets	and	liabilities	are	recognized	for	the	future	tax	consequences attributable	to	operating	losses	and	tax	credit	carryforwards	as	well	as	differences	between	the	financial	statement	carrying	amounts	of	existing	assets and	liabilities	and	their	respective	tax	bases.	The	effect	on	deferred

tax	assets	and	liabilities	of	a	change	in	tax	rates	is	recognized	in	Income	tax	expense	in	the	consolidated	statement	of	income	in	the	period	that	includes the	enactment	date.

A	valuation	allowance	will	be	provided	against	deferred	tax	assets	if	PPG	determines	it	is	more	likely	than	not	such	assets	will	not	ultimately	be	realized.

PPG	does	not	recognize	a	tax	benefit	unless	it	concludes	that	it	is	more	likely	than	not	that	the	benefit	will	be	sustained	on	audit	by	the	taxing	authority based	solely	on	the	technical	merits	of	the	associated	tax	position.	If	the	recognition	threshold	is	met,	PPG	recognizes	a	tax	benefit	measured	at	the largest	amount	of	the	tax	benefit	that,	in	PPG's	judgment,	is	greater	than	50	percent	likely	to	be	realized.	PPG	records	interest	and	penalties	related	to uncertain	tax	positions	in	Income	tax	expense	in	the	consolidated	statement	of	income.

The	functional	currency	of	most	significant	non-U.S.	operations	is	their	local	currency.	Assets	and	liabilities	of	those	operations	are	translated	into	U.S. dollars	using	year-end	exchange	rates;	income	and	expenses	are	translated	using	the	average	exchange	rates	for	the	reporting	period.	Unrealized foreign	currency	translation	gains	and	losses	are	deferred	in	Accumulated	other	comprehensive	loss	on	the	consolidated	balance	sheet.

# Cash	Equivalents

Cash	equivalents	are	highly	liquid	investments	(valued	at	cost,	which	approximates	fair	value)	acquired	with	an	original	maturity	of	three	months	or	less.

# Short-term	Investments

Short-term	investments	are	highly	liquid,	high	credit	quality	investments	(valued	at	cost	plus	accrued	interest)	that	have	stated	maturities	of	greater	than three	months	to	less	than	one	year.	The	purchases	and	sales	of	these	investments	are	classified	as	Investing	activities	in	the	consolidated	statement	of cash	flows.

# Marketable	Equity	Securities

The	Company's	investment	in	marketable	equity	securities	is	recorded	at	fair	market	value	and	reported	as	Other	current	assets	and	Investments	on	the consolidated	balance	sheet	with	changes	in	fair	market	value	recorded	in	income.

# Inventories

Inventories	are	stated	at	the	lower	of	cost	or	net	realizable	value.	Most	U.S.	inventories	are	stated	at	cost,	using	the	last-in,	first-out	("LIFO")	method	of accounting,	which	does	not	exceed	net	realizable	value.	All	other	inventories	are	stated	at	cost,	using	the	first-in,	first-out	("FIFO")	method	of	accounting, which	does	not	exceed	net	realizable	value.	PPG	determines	cost	using	either	average	or	standard	factory	costs,	which	approximate	actual	costs, excluding	 certain	 fixed	 costs	 such	 as	 depreciation	 and	 property	 taxes.	 See	 Note	4,	"Working	Capital	Detail"	 for	 further	 information	 concerning	 the Company's	inventory.

# Derivative	Financial	Instruments

The	Company	recognizes	all	derivative	financial	instruments	(a	"derivative")	as	either	assets	or	liabilities	at	fair	value	on	the	consolidated	balance	sheet. The	accounting	for	changes	in	the	fair	value	of	a	derivative	depends	on	the	use	of	the	instrument.

For	derivative	instruments	that	are	designated	and	qualify	as	cash	flow	hedges,	the	unrealized	gains	or	losses	on	the	derivatives	are	recorded	in	the consolidated	 statement	 of	 comprehensive	 income.	 Amounts	 in	 Accumulated	 other	 comprehensive	 loss	 on	 the	 consolidated	 balance	 sheet	 are reclassified	 into	 Income	 before	 income	 taxes	 in	 the	 consolidated	 statement	 of	 income	 in	 the	 same	 period	 or	 periods	 during	 which	 the	 hedged transactions	are	recorded	in	Income	before	income	taxes	in	the	consolidated	statement	of	income.

For	derivative	instruments	that	are	designated	and	qualify	as	fair	value	hedges,	the	change	in	the	fair	value	of	the	derivatives	are	reported	in	Income before	income	taxes	in	the	consolidated	statement	of	income,	offsetting	the	gain	or	loss	recognized	for	the	change	in	fair	value	of	the	asset,	liability,	or firm	commitment	that	is	being	hedged.

For	derivatives,	debt	or	other	financial	instruments	that	are	designated	and	qualify	as	net	investment	hedges,	the	gains	or	losses	associated	with	the financial	instruments	are	reported	as	translation	gains	or	losses	in	Accumulated	other	comprehensive	loss	on	the	consolidated	balance	sheet.	Gains	and losses	 in	Accumulated	other	comprehensive	 loss	related	 to	hedges	of	 the	Company's	net	 investments	 in	 foreign	operations	are	reclassified	out	of Accumulated	other	comprehensive	loss	and	recognized	in	Income	before	income	taxes	in	the	consolidated	statement	of	income	upon	a	substantial liquidation,	sale	or	partial	sale	of	such	investments	or	upon	impairment	of	all	or	a	portion	of	such	investments.	The	cash	flow	impact	of	these	instruments are	classified	as	Investing	activities	in	the	consolidated	statement	of	cash	flows.

Changes	in	the	fair	value	of	derivative	instruments	not	designated	as	hedges	for	hedge	accounting	purposes	are	recognized	in	Income	before	income taxes	in	the	consolidated	statement	of	income	in	the	period	of	change.

# Property,	Plant	and	Equipment

Property,	plant	and	equipment	is	recorded	at	cost.	Depreciation	is	computed	on	a	straight-line	method	based	on	the	estimated	useful	lives	of	related assets.	Additional	depreciation	expense	is	recorded	when	facilities	or	equipment	are	subject	to	abnormal	economic	conditions,	restructuring	actions	or obsolescence.

The	cost	of	significant	improvements	that	add	to	productive	capacity	or	extend	the	lives	of	properties	are	capitalized.	Costs	for	repairs	and	maintenance are	charged	to	expense	as	incurred.	When	a	capitalized	asset	is	retired	or	otherwise	disposed	of,	the	original	cost	and	related	accumulated	depreciation balance	are	removed	from	the	accounts	and	any	related	gain	or	loss	is	recorded	in	Income	before	income	taxes	in	the	consolidated	statement	of	income. The	amortization	cost	of	capitalized	leased	assets	is	recorded	in	Depreciation	expense	in	the	consolidated	statement	of	income.	Property	and	other	long- lived	assets	are	reviewed	for	impairment	whenever	events	or	circumstances	indicate	that	their	carrying	amounts	may	not	be	recoverable.	See	Note	5, "Property,	Plant	and	Equipment"	for	further	details.

# Goodwill	and	Identifiable	Intangible	Assets

Goodwill	represents	the	excess	of	the	cost	over	the	fair	value	of	acquired	identifiable	tangible	and	intangible	assets	less	liabilities	assumed	from	acquired businesses.	Identifiable	intangible	assets	acquired	in	business	combinations	are	recorded	based	upon	their	fair	value	at	the	date	of	acquisition.

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.	These	operating	segments	are	also	the	Company's	reporting	units	for	purposes	of	testing	goodwill	for	impairment, which	is	tested	at	least	annually	in	connection	with	PPG's	strategic	planning	process.	The	Company	tests	goodwill	for	impairment	by	either	performing	a qualitative	evaluation	or	a	quantitative	test.	The	qualitative	evaluation	is	an	assessment	of	factors,	including	reporting	unit	specific	operating	results	as well	as	industry,	market	and	general	economic	conditions,	to	determine	whether	it	is	more	likely	than	not	that	the	fair	values	of	a	reporting	unit	is	less	than its	carrying	amount,	including	goodwill.	The	Company	may	elect	to	bypass	this	qualitative	assessment	for	some	or	all	of	its	reporting	units	and	perform	a quantitative	test.	The	quantitative	goodwill	impairment	test	is	performed	during	the	fourth	quarter	by	comparing	the	estimated	fair	value	of	the	associated reporting	unit	as	of	September	30	to	its	carrying	value.	Fair	value	is	estimated	using	discounted	cash	flow	methodologies.

The	Company	has	determined	that	certain	acquired	trademarks	have	indefinite	useful	lives.	The	Company	tests	the	carrying	value	of	these	trademarks for	impairment	at	least	annually,	or	as	needed	whenever	events	and	circumstances	indicate	that	their	carrying	amount	may	not	be	recoverable.	The annual	assessment	takes	place	in	the	fourth	quarter	of	each	year	either	by	completing	a	qualitative	assessment	or	quantitatively	by	comparing	the estimated	fair	value	of	each	trademark	as	of	September	30	to	its	carrying	value.	Fair	value	is	estimated	by	using	the	relief	from	royalty	method	(a discounted	cash	flow	methodology).	The	qualitative	assessment	includes	consideration	of	factors,	including	revenue	relative	to	the	asset	being	assessed, the	operating	results	of	the	related	business	as	well	as	industry,	market	and	general	economic	conditions,	to	determine	whether	it	is	more	likely	than	not that	the	fair	value	of	the	asset	is	less	than	its	carrying	amount.

Identifiable	intangible	assets	with	finite	lives	are	amortized	on	a	straight-line	basis	over	their	estimated	useful	lives	( 1	to	30	years)	and	are	reviewed	for impairment	whenever	events	or	circumstances	indicate	that	their	carrying	amount	may	not	be	recoverable.

# Receivables	and	Allowances

All	trade	receivables	are	reported	on	the	consolidated	balance	sheet	at	the	outstanding	principal	adjusted	for	any	allowance	for	credit	losses	and	any charge	offs.	The	Company	provides	an	allowance	for	doubtful	accounts	to	reduce	receivables	to	their	estimated	net	realizable	value	when	it	is	probable that	a	loss	will	be	incurred.	Those	estimates	are	based	on	historical	collection	experience,	current	economic	and	market	conditions,	a	review	of	the	aging of	accounts	receivable	and	the	assessments	of	current	creditworthiness	of	customers.

# Product	warranties

The	Company	accrues	for	product	warranties	at	the	time	the	associated	products	are	sold	based	on	historical	claims	experience.	The	reserve,	pre-tax charges	against	income	and	cash	outlays	for	product	warranties	were	not	significant	to	the	consolidated	financial	statements	of	the	Company	for	any year	presented.

# Asset	Retirement	Obligations

An	 asset	 retirement	 obligation	 represents	 a	 legal	 obligation	 associated	 with	 the	 retirement	 of	 a	 tangible	 long-lived	 asset	 that	 is	 incurred	 upon	 the acquisition,	construction,	development	or	normal	operation	of	that	long-lived	asset.	PPG	recognizes	asset	retirement	obligations	in	the	period	in	which they	are	incurred,	if	a	reasonable	estimate	of	fair	value	can	be	made.	The

asset	retirement	obligation	is	subsequently	adjusted	for	changes	in	fair	value.	The	associated	estimated	asset	retirement	costs	are	capitalized	as	part	of the	carrying	amount	of	the	long-lived	asset	and	depreciated	over	its	useful	life.	PPG's	asset	retirement	obligations	are	primarily	associated	with	the retirement	or	closure	of	certain	assets	used	in	PPG's	manufacturing	process.	The	accrued	asset	retirement	obligation	is	recorded	in	Accounts	payable and	accrued	liabilities	and	Other	liabilities	on	the	consolidated	balance	sheet,	and	was	$22	million	and	$19	million	as	of	December	31,	2018	and	2017, respectively.

PPG's	only	conditional	asset	retirement	obligation	relates	to	the	possible	future	abatement	of	asbestos	contained	in	certain	PPG	production	facilities.	The asbestos	 in	PPG's	production	 facilities	arises	 from	 the	application	of	normal	and	customary	building	practices	 in	 the	past	when	 the	 facilities	were constructed.	This	asbestos	is	encapsulated	in	place	and,	as	a	result,	there	is	no	current	legal	requirement	to	abate	it.	Because	there	is	no	requirement	to abate,	the	Company	does	not	have	any	current	plans	or	an	intention	to	abate	and	therefore	the	timing,	method	and	cost	of	future	abatement,	if	any,	are not	known.	The	Company	has	not	recorded	an	asset	retirement	obligation	associated	with	asbestos	abatement,	given	the	uncertainty	concerning	the timing	of	future	abatement,	if	any.

# Reclassifications

Certain	reclassifications	of	prior	years'	data	have	been	made	to	conform	to	the	current	year	presentation.	These	reclassifications	had	no	impact	on	our previously	reported	Net	income,	cash	flows	or	shareholders'	equity.

Effective	January	1,	2018,	PPG	adopted	Accounting	Standard	Updates	("ASU")	No.	2017-07,	"Improving	the	Presentation	of	Net	Periodic	Pension	Cost and	 Net	 Periodic	 Postretirement	 Benefit	 Cost."	 This	ASU	 requires	 the	 service	 cost	 component	 of	 these	 costs	 to	 be	 disaggregated	 from	 all	 other components	and	to	be	reported	in	the	same	line	item	or	items	as	other	compensation	costs.	The	other	components	of	these	costs	are	required	to	be presented	in	the	consolidated	statement	of	income	separately	from	the	service	cost	component.	This	ASU	required	retrospective	adoption	for	all	prior periods	presented.

The	effect	of	the	retrospective	adoption	on	the	consolidated	statement	of	income	related	to	the	net	periodic	pension	and	other	postretirement	benefit costs	was	as	follows:

| ($	in	millions) | Reported | Reclassifications | As	Revised |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales,\texclusive\tof\tdepreciation\tand\tamortization | $8,207 | $2 | $8,209 |
| Selling,\tgeneral\tand\tadministrative | $3,564 | ($10) | $3,554 |
| Research\tand\tdevelopment,\tnet | $453 | ($2) | $451 |
| Other\tcharges | $64 | $10 | $74 |
| Income\tbefore\tincome\ttaxes | $2,005 | $— | $2,005 |

| ($	in	millions) | Reported | Reclassifications | As	Revised |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales,\texclusive\tof\tdepreciation\tand\tamortization | $7,693 | ($28) | $7,665 |
| Selling,\tgeneral\tand\tadministrative | $3,588 | ($33) | $3,555 |
| Research\tand\tdevelopment,\tnet | $459 | ($6) | $453 |
| Other\tcharges | $175 | $67 | $242 |
| Income\tbefore\tincome\ttaxes | $779 | $— | $779 |

In	 February	 2018,	 the	 Financial	 Accounting	 Standards	 Board	 ("FASB")	 issued	 ASU	 No.	 2018-02,	 "Reclassification	 of	 Certain	 Tax	 Effects	 from Accumulated	Other	Comprehensive	Income."	This	ASU	allows	a	reclassification	from	Accumulated	other	comprehensive	income	to	Retained	earnings	for stranded	tax	effects	resulting	from	the	Tax	Cuts	and	Jobs	Act.	 PPG	early	adopted	this	standard	in	the	first	quarter	of	2018	using	the	specific	identification method	and	recorded	a	reclassification	from	Other	comprehensive	(loss)/income,	net	of	tax	in	the	consolidated	statement	of	comprehensive	income	to Retained	earnings	on	the	consolidated	balance	sheet	of	$107	million.

Effective	January	1,	2018,	PPG	adopted	ASU	No.	2014-09,	"Revenue	from	Contracts	with	Customers:	Topic	606."	See	Note	2,	"Revenue	Recognition" for	further	details	regarding	the	impact	of	adoption	of	this	standard.

PPG's	adoption	of	the	following	ASU's	in	2018	did	not	have	a	material	impact	on	PPG's	consolidated	financial	position,	results	of	operations	or	cash flows:

# Accounting	Standard	Update

2016-15 Classification	of	Certain	Cash	Receipts	and	Cash	Payments

2016-01 Recognition	and	Measurement	of	Financial	Assets	and	Liabilities

In	August	2018,	the	FASB	issued	ASU	No.	2018-15,	"Intangibles	-	Goodwill	and	Other	-	Internal-Use	Software."	This	ASU	requires	capitalization	of certain	implementation	costs	incurred	in	a	cloud	computing	arrangement	that	is	a	service	contract.	The	amendments	in	this	ASU	are	effective	for	fiscal years	beginning	after	December	15,	2019	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	-	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 ASU	are	effective	for	fiscal	years	beginning	after	December	15,	2019	and	for	interim	periods	therein.	Entities	may	chose	to	adopt	the	new	ASU	as	of	its fiscal	year	beginning	after	December	15,	2018.	PPG	does	not	plan	to	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.

In	February	2016,	the	FASB	issued	ASU	No.	2016-02,	"Leases."	This	ASU	requires	all	lessees	to	recognize	on	the	balance	sheet	right	to	use	assets	and lease	liabilities	for	the	rights	and	obligations	created	by	lease	arrangements	with	terms	greater	than	12	months.	Additionally,	in	July	2018,	the	FASB issued	ASU	No.	2018-11,	"Targeted	Improvements."	This	ASU	provides	an	additional	transition	method	to	adopt	the	new	leasing	standard.	Under	this new	 transition	method,	an	entity	 initially	applies	 the	new	 leasing	standard	using	a	cumulative-effect	adjustment	 to	 the	opening	balance	of	retained earnings	but	will	continue	to	report	comparative	periods	under	existing	guidance	in	accordance	with	ASC	840,	Leases.	PPG	adopted	the	new	standard effective	January	1,	2019,	using	this	new	transition	method	and	does	not	expect	a	material	cumulative-effect	adjustment	to	the	opening	balance	of Retained	earnings.	The	Company	is	nearly	complete	in	assessing	the	impact	the	adoption	will	have	on	its	consolidated	financial	statements	and	expects an	impact	on	assets	and	liabilities	on	its	consolidated	balance	sheet	in	the	range	of	$700	million	to	$750	million.	These	lease	obligations	will	be	classified as	debt	on	the	consolidated	balance	sheet.	Due	to	the	corresponding	increase	in	total	debt,	the	Company's	total	debt	to	total	debt	and	equity	ratio	and other	financial	ratios	that	include	total	debt	or	total	capital	will	be	impacted	with	the	adoption	of	this	ASU	in	the	first	quarter	of	2019.

# Background

In	May	2014,	the	FASB	issued	ASU	No.	2014-09,	"Revenue	from	Contracts	with	Customers:	Topic	606."	This	ASU	replaces	nearly	all	existing	U.S. GAAP	guidance	on	revenue	recognition.	The	standard	prescribes	a	 five-step	model	 for	recognizing	revenue,	 the	application	of	which	may	 require significant	judgment.	The	new	guidance	requires	PPG	to	evaluate	the	transfer	of	promised	goods	or	services	to	customers	and	recognize	revenue	in	an amount	that	reflects	the	consideration	which	the	Company	expects	to	be	entitled	to	receive	in	exchange	for	those	goods	and	services.

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	various	shipping	terms	applicable	to	the	Company's	sales.	For	most transactions,	 control	 passes	 in	 accordance	 with	 agreed	 upon	 delivery	 terms.	 This	 approach	 is	 consistent	 with	 the	 Company's	 historical	 revenue recognition	methodology.

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	years	ended	December	31,	2018	 and	2017,	service	revenue	constituted	approximately	 5%	of	 total revenue.

|  |  | Performance	Coatings |  |  | Industrial	Coatings |  |  | Total	Net	Sales |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| United\tStates\tand\tCanada | $4,062 | $4,031 | $4,055 | $2,423 | $2,276 | $2,199 | $6,485 | $6,307 | $6,254 |
| EMEA | 2,936 | 2,761 | 2,619 | 1,742 | 1,628 | 1,545 | 4,678 | 4,389 | 4,164 |
| Asia\tPacific | 1,071 | 970 | 959 | 1,547 | 1,553 | 1,472 | 2,618 | 2,523 | 2,431 |
| Latin\tAmerica | 1,018 | 968 | 947 | 575 | 561 | 474 | 1,593 | 1,529 | 1,421 |
| Total | $9,087 | $8,730 | $8,580 | $6,287 | $6,018 | $5,690 | $15,374 | $14,748 | $14,270 |

The	Company	adopted	the	ASU	using	the	modified	retrospective	approach	which	required	the	financial	statements	to	reflect	the	new	standard	as	of January	1,	2018,	and	as	a	result,	contracts	that	ended	prior	to	January	1,	2018	were	not	included	within	the	Company's	assessment.	Accordingly,	the amounts	in	the	comparative	consolidated	statements	of	income	and	consolidated	balance	sheet	have	not	been	adjusted	for	the	adoption	of	this	standard. The	ASU	also	provided	additional	clarity	that	resulted	in	reclassifications	to	or	from	Net	sales,	Cost	of	sales,	exclusive	of	depreciation	and	amortization, Selling,	general	and	administrative	and	Other	income.	Certain	costs	historically	reported	in	Selling,	general	and	administrative	costs	will	now	be	recorded in	Cost	of	sales,	exclusive	of	depreciation	and	amortization	in	the	consolidated	statement	of	income,	as	they	represent	costs	incurred	in	satisfaction	of performance	obligations.	In	addition,	the	cost	of	certain	customer	incentives	are	now	recorded	as	a	reduction	of	Net	sales	rather	than	Cost	of	sales, exclusive	of	depreciation	and	amortization	or	Selling,	general	and	administrative	costs.

The	following	table	summarizes	the	impact	of	the	adoption	of	this	ASU	on	the	consolidated	statement	of	income	for	the	year	ended December	31,	2018:

| ($	in	millions) | adoption | Adjustments | As	Reported |
| :--- | :--- | :--- | :--- |
| Net\tsales | $15,399 | ($25) | $15,374 |
| Cost\tof\tsales,\texclusive\tof\tdepreciation\tand\tamortization | $8,925 | $76 | $9,001 |
| Selling,\tgeneral\tand\tadministrative | $3,682 | ($109) | $3,573 |
| Other\tincome | ($122) | $8 | ($114) |
| Income\tbefore\tincome\ttaxes | $1,693 | $— | $1,693 |

# 3.	Acquisitions	and	Divestitures

# Acquisitions

# Announced	Acquisitions

In	January	2019,	PPG	announced	that	it	has	reached	a	definitive	agreement	to	acquire	automotive	coatings	manufacturer	Hemmelrath.	The	transaction is	expected	to	close	in	the	first	half	of	2019.

In	December	2018,	PPG	announced	that	it	has	reached	a	definitive	agreement	to	acquire	Whitford	Worldwide	Company,	a	global	manufacturer	that specializes	in	low-friction	and	nonstick	coatings	for	industrial	applications	and	consumer	products.	The	transaction	is	expected	to	close	in	the	first	quarter of	2019.

# Completed	Acquisitions

# SEM	Products,	Inc.

In	 the	 fourth	quarter	of	2018,	PPG	completed	 the	acquisition	of	SEM	Products,	 Inc.,	a	U.S.-based	manufacturer	of	specialized	automotive	refinish products	 ("SEM").	 SEM,	 headquartered	 in	 Rock	 Hill,	 South	 Carolina,	 is	 a	 leading	 manufacturer	 of	 repair	 and	 refinish	 products	 used	 primarily	 for automotive	and	other	transportation	applications.	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	refinish	coatings	business	within	the	Performance	Coatings	reportable	segment.

# The	Crown	Group

On	October	2,	2017,	PPG	acquired	The	Crown	Group	("Crown"),	a	U.S.-based	coatings	application	services	business,	which	is	reported	as	part	of	PPG's Industrial	Coatings	reportable	segment.	Crown	is	one	of	the	leading	component	and	product	finishers	in	North	America.	Crown	applies	coatings	to customers'	manufactured	parts	and	assembled	products	at	11	U.S.	sites.	Most	of	Crown's	facilities,	which	also	provide	assembly,	warehousing	and sequencing	services,	are	located	at	customer	facilities	or	positioned	near	customer	manufacturing	sites.	The	company	serves	manufacturers	in	the automotive,	agriculture,	construction,	heavy	truck	and	alternative	energy	industries.	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	segment.

# Taiwan	Chlorine	Industries

Taiwan	 Chlorine	 Industries	 ("TCI")	 was	 established	 in	 1986	 as	 a	 joint	 venture	 between	 PPG	 and	 China	 Petrochemical	 Development	 Corporation ("CPDC")	to	produce	chlorine-based	products	in	Taiwan,	at	which	time	PPG	owned	60	percent	of	the	venture.	In	conjunction	with	the	2013	separation	of its	commodity	chemicals	business,	PPG	conveyed	to	Axiall	Corporation	("Axiall")	its	60%	ownership	interest	in	TCI.	Under	PPG's	agreement	with	CPDC, if	certain	post-closing	conditions	were	not	met	following	the	three	year	anniversary	of	the	separation,	CPDC	had	the	option	to	sell	its	40%	ownership interest	in	TCI	to	Axiall	for	$100	million.	In	turn,	Axiall	had	a	right	to	designate	PPG	as	its	designee	to	purchase	the	 40%	ownership	interest	of	CPDC.	In April	2016,	Axiall	announced	that	CPDC	had	decided	to	sell	its	ownership	interest	in	TCI	to	Axiall.	In	June	2016,	Axiall	formally	designated	PPG	to purchase	the	40%	ownership	interest	in	TCI.	In	August	2016,	Westlake	Chemical	Corporation	acquired	Axiall,	which	became	a	wholly-owned	subsidiary of	Westlake.	In	April	2017,	PPG	finalized	its	purchase	of	CPDC's	40%	ownership	interest	in	TCI.	The	difference	between	the	acquisition	date	fair	value and	 the	 purchase	 price	 of	 PPG's	40%	 ownership	 interest	 in	 TCI	 has	 been	 recorded	 as	 a	 loss	 in	 discontinued	 operations	 during	 the	 year-ended December	31,	2017.	PPG's	ownership	in	TCI	is	accounted	for	as	an	equity	method	investment	and	the	related	equity	earnings	are	reported	within	Other income	in	the	consolidated	statement	of	income	and	in	Legacy	in	Note	20,	"Reportable	Business	Segment	Information."

# MetoKote	Corporation

In	July	2016,	PPG	completed	the	acquisition	of	MetoKote	Corporation	("MetoKote"),	a	U.S.-based	coatings	application	services	business.	MetoKote applies	coatings	to	customers'	manufactured	parts	and	assembled	products.	It	operates	on-site	coatings	services	within	several	customer	manufacturing locations,	as	well	as	at	regional	service	centers,	located	throughout	the	U.S.,	Canada,	Mexico,	the	United	Kingdom,	Germany,	Hungary	and	the	Czech Republic.	Customers	ship	parts	to	METOKOTE®	service	centers	where	they	are	treated	to	enhance	paint	adhesion	and	painted	with	electrocoat,	powder or	liquid	coatings	technologies.	Coated	parts	are	then	shipped	to	the	customer's	next	stage	of	assembly.	MetoKote	coats	an	average	of	more	than	1.5 million	parts	per	day.

The	following	table	summarizes	the	estimated	fair	value	of	assets	acquired	and	liabilities	assumed	as	reflected	in	the	final	purchase	price	allocation	for MetoKote.

(a) The	net	deferred	income	tax	liability	is	included	in	assets	due	to	the	Company's	tax	jurisdictional	netting.

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.	While	calculating	this	impact,	no	cost	savings	or	operating	synergies	that	may	result	from	the	acquisition	were	included.	The	results	of this	business	since	the	date	of	acquisition	have	been	reported	within	the	industrial	coatings	business	within	the	Industrial	Coatings	reportable	segment.

# Other	Acquisitions

In	2018,	2017,	and	2016,	the	Company	completed	several	smaller	business	acquisitions.	The	total	consideration	paid	for	these	acquisitions,	net	of	cash acquired,	debt	assumed	and	other	post	closing	adjustments,	was	$108	million,	$74	million	and	$43	million,	respectively.

In	January	2018,	PPG	acquired	ProCoatings,	a	leading	architectural	paint	and	coatings	wholesaler	located	in	The	Netherlands.	ProCoatings,	established in	2001,	distributes	a	large	portfolio	of	well-known	professional	paint	brands	through	its	network	of	23	multi-brand	stores.	The	company	employs	nearly 100	people.	The	results	of	this	business	since	the	date	of	acquisition	have	been	reported	within	the	architectural	coatings	Americas	and	Asia	Pacific business	within	the	Performance	Coatings	reportable	segment.

In	January	2017,	PPG	acquired	certain	assets	of	automotive	refinish	coatings	company	Futian	Xinshi	("Futian"),	based	in	the	Guangdong	province	of China.	Futian	distributes	its	products	in	China	through	a	network	of	more	than	200	distributors.

In	January	2017,	PPG	completed	the	acquisition	of	DEUTEK	S.A.,	a	leading	Romanian	paint	and	architectural	coatings	manufacturer,	from	the	Emerging Europe	Accession	Fund.	DEUTEK,	established	in	1993,	manufactures	and	markets	a	large	portfolio	of	well-known	professional	and	consumer	paint brands,	including	OSKAR	and	Danke!.	The	company's	products	are	sold	in	more	than	120	do-it-yourself	stores	and	3,500	independent	retail	outlets	in Romania.

# Divestitures

# Glass	Segment

In	2017,	PPG	completed	a	multi-year	strategic	shift	in	the	Company's	business	portfolio,	resulting	in	the	exit	of	all	glass	operations	which	consisted	of	the global	fiber	glass	business,	PPG's	ownership	interest	in	two	Asian	fiber	glass	joint	ventures	and	the	flat	glass	business.	Accordingly,	the	results	of operations,	including	the	gains	on	the	divestitures,	and	cash	flows	have	been	recast	as	discontinued	operations	for	all	periods	presented.	PPG	now	has two	reportable	business	segments.

The	net	sales	and	income	from	discontinued	operations	related	to	the	former	Glass	segment	for	the	three	years	ended	December	31, 2018,	2017,	and 2016	were	as	follows:

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $— | $217 | $908 |
| Income\tfrom\toperations | $21 | $30 | $111 |
| Net\tgains\ton\tthe\tdivestitures\tof\tbusinesses | — | 343 | 421 |
| Income\ttax\texpense | 5 | 140 | 202 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | $16 | $233 | $330 |

During	2018,	PPG	released	$13	million	of	previously	recorded	accruals	and	contingencies	established	in	conjunction	with	the	divestitures	of	businesses within	the	former	Glass	segment	as	a	result	of	completed	actions,	new	information	and	updated	estimates.	Also	during	2018,	PPG	made	a	final	payment of	$20	million	to	Vitro	S.A.B.	de	C.V	related	to	the	transfer	of	certain	pension	obligations	upon	the	sale	of	the	former	flat	glass	business.

# North	American	Fiber	Glass	Business

On	September	1,	2017,	PPG	completed	the	sale	of	its	North	American	fiber	glass	business	to	Nippon	Electric	Glass	Co.	Ltd.	("NEG").	Cash	proceeds from	the	sale	were	$541	million,	resulting	in	a	pre-tax	gain	of	 $343	million,	net	of	certain	accruals	and	contingencies	established	in	conjunction	with	the divestiture.

PPG's	fiber	glass	operations	included	manufacturing	facilities	in	Chester,	South	Carolina,	and	Lexington	and	Shelby,	North	Carolina;	and	administrative and	research-and-development	operations	in	Shelby	and	in	Harmar,	Pennsylvania,	near	Pittsburgh.	The	business,	which	employed	more	than	1,000 people	and	had	net	sales	of	approximately	$350	million	in	2016,	supplies	the	transportation,	energy,	infrastructure	and	consumer	markets.

# Flat	Glass	Business

In	 October	 2016,	 PPG	 completed	 the	 sale	 of	 its	 flat	 glass	 manufacturing	 and	 glass	 coatings	 operations	 to	 Vitro	 S.A.B.	 de	 C.V.	 PPG	 received approximately	$740	million	in	cash	proceeds	and	recorded	a	pre-tax	gain	of	 $421	million	on	the	sale.	Under	the	terms	of	the	agreement,	PPG	divested	its entire	 flat	 glass	 manufacturing	 and	 glass	 coatings	 operations,	 including	 production	 sites	 located	 in	 Fresno,	 California;	 Salem,	 Oregon;	 Carlisle, Pennsylvania;	and	Wichita	Falls,	Texas;	four	distribution/fabrication	facilities	located	across	Canada;	and	a	research-and-development	center	located	in Harmar,	Pennsylvania.	PPG's	 flat	glass	business	 included	approximately	1,200	employees.	The	business	manufactures	glass	that	is	fabricated	into products	used	primarily	in	commercial	and	residential	construction.

# European	Fiber	Glass	Business

In	October	2016,	PPG	completed	the	sale	of	its	European	fiber	glass	business	to	glass	manufacturer	NEG.	PPG	recorded	a	pre-tax	loss	of	 $42	million, consisting	 predominately	 of	 a	$46	million	pension	settlement	charge.	The	European	 fiber	glass	business	 manufactures	 reinforcement	 materials	 for thermoset	and	thermoplastic	composite	applications	for	the	transportation,	energy,	infrastructure	and	consumer	end-uses.	Manufacturing	facilities	in Hoogezand,	Netherlands,	and	Wigan,	England,	and	a	research	and	development	facility	in	Hoogezand	were	included	in	the	transaction.

# PFG	Fiber	Glass	Joint	Ventures

In	November	2016,	PPG	sold	its	50%	ownership	interests	in	its	two	PFG	fiber	glass	joint	ventures	to	its	joint	venture	partner	Nan	Ya	Plastics	Corporation ("Nan	Ya").	Nan	Ya	is	affiliated	with	Taiwan-based	Formosa	Plastics	Group.	The	PFG	fiber	glass	joint	ventures	supply	electronic	yarn	fibers	used	in integrated	electronic	circuit	boards	and	fiber	glass	reinforcement	products	for	automotive	applications.	PPG	recorded	a	net	pre-tax	gain	of	$36	million	on the	sale.

# Other	Divestitures

# Plaka	Business

In	June	2017,	PPG	completed	the	sale	of	the	assets	of	its	Mexico-based	Plaka	plasterboard	and	cement-board	business	to	Knauf	International	GmbH and	recorded	a	$25	million	pre-tax	gain	on	the	sale.	The	Company's	consolidated	balance	sheet	presents	the	assets	and	liabilities	of	the	Plaka	business as	held	for	sale	as	of	December	31,	2016.

# Pittsburgh	Glass	Works

In	April	2016,	PPG	sold	its	minority	ownership	interest	in	Pittsburgh	Glass	Works	LLC	("PGW")	to	LKQ	Corporation	concurrent	with	the	majority	partner's sale	of	its	ownership	interest.	PPG	recorded	a	pre-tax	gain	on	the	sale	of	$20	million.	PPG	accounted	for	its	interest	in	PGW	under	the	equity	method	of accounting.	PPG's	share	of	net	earnings	from	PGW	are	reported	in	Other	income	in	the	consolidated	statement	of	income	for	all	periods	presented	and have	not	been	reclassified	as	discontinued	operations,	as	the	divestiture	of	PGW	does	not	represent	a	strategic	shift	in	PPG's	operations	and	PGW	did not	have	a	major	impact	on	PPG's	ongoing	results	of	operations.

# 4.	Working	Capital	Detail

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Receivables |  |  |
| Trade\t-\tnet(1) | $2,505 | $2,559 |
| Equity\taffiliates | 4 | 5 |
| Other\t-\tnet | 336 | 339 |
| Total | $2,845 | $2,903 |
| Inventories(2) |  |  |
| Finished\tproducts | $1,105 | $1,083 |
| Work\tin\tprocess | 193 | 177 |
| Raw\tmaterials | 452 | 437 |
| Supplies | 33 | 33 |
| Total | $1,783 | $1,730 |
| Accounts\tpayable\tand\taccrued\tliabilities |  |  |
| Trade | $2,177 | $2,321 |
| Accrued\tpayroll | 424 | 441 |
| Customer\trebates | 283 | 261 |
| Other\tpostretirement\tand\tpension\tbenefits | 80 | 78 |
| Income\ttaxes | 112 | 100 |
| Other | 547 | 580 |
| Total | $3,623 | $3,781 |

(1) Allowance	for	doubtful	accounts	was	$24	million	and	$25	million	as	of	December	31,	2018	and	2017,	respectively.

(2) Inventories	valued	using	the	LIFO	method	of	inventory	valuation	comprised	36%	and	34%	of	total	gross	inventory	values	as	of	December	31,	2018	and	2017,	respectively.	If	the FIFO	method	of	inventory	valuation	had	been	used,	inventories	would	have	been	$113	million	and	$103	million	higher	as	of	December	31,	2018	and	2017,	respectively.	During the	years	ended	December	31,	2018	and	2017,	certain	inventories	accounted	for	on	the	LIFO	method	of	accounting	were	reduced,	which	resulted	in	the	liquidation	of	certain quantities	carried	at	costs	prevailing	in	prior	years.	The	effect	on	Income	before	income	taxes	was	income	of	$2	million	and	zero	for	the	years	ended	December	31,	2018	and 2017,	respectively.

| ($	in	millions) | Useful	Lives	(years) | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| \t Land\tand\tland\timprovements | 1-30 | $489 | $487 |
| \t Buildings | 20-40 | 1,472 | 1,488 |
| \t Machinery\tand\tequipment | 5-25 | 3,387 | 3,432 |
| \t Other | 3-20 | 989 | 958 |
| \t Construction\tin\tprogress |  | 296 | 229 |
| Total(1) |  | $6,633 | $6,594 |
| \t Less:\taccumulated\tdepreciation |  | 3,828 | 3,770 |
| Net |  | $2,805 | $2,824 |

# 6.	Investments

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Investments\tin\tequity\taffiliates | $132 | $135 |
| Marketable\tequity\tsecurities\t(See\tNote\t10) | 69 | 79 |
| Other | 50 | 54 |
| Total | $251 | $268 |

Investments	in	equity	affiliates	represent	PPG's	ownership	interests	in	entities	between	 20%	and	50%	that	manufacture	and	sell	coatings	and	certain chemicals.	In	2017,	PPG	purchased	a	40%	ownership	interest	in	TCI.	Refer	to	Note	 3,	"Acquisitions	and	Divestitures"	for	additional	information.

PPG's	share	of	undistributed	net	earnings	of	equity	affiliates	was	 $11	million	 and	$12	million	 as	 of	December	31,	2018	 and	December	31,	2017, respectively.	Dividends	received	from	equity	affiliates	were	$15	million,	$8	million	and	$7	million	in	2018,	2017	and	2016,	respectively.

# 7.	Goodwill	and	Other	Identifiable	Intangible	Assets

| ($	in	millions) | Performance	Coatings | Industrial	Coatings | Total |
| :--- | :--- | :--- | :--- |
| January\t1,\t2017 | $2,870 | $702 | $3,572 |
| Acquisitions,\tincluding\tpurchase\taccounting\tadjustments | 23 | 89 | 112 |
| Foreign\tcurrency\ttranslation | 211 | 47 | 258 |
| December\t31,\t2017 | $3,104 | $838 | $3,942 |
| Acquisitions,\tincluding\tpurchase\taccounting\tadjustments | 248 | (13) | 235 |
| Foreign\tcurrency\ttranslation | (86) | (21) | (107) |
| December\t31,\t2018 | $3,266 | $804 | $4,070 |

# Identifiable	Intangible	Assets

|  |  | December	31,	2018 |  |  | December	31,	2017 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross\tCarrying | Accumulated |  | Gross\tCarrying | Accumulated |  |
| ($\tin\tmillions) | Amount | Amortization | Net | Amount | Amortization | Net |
| Indefinite-Lived\tIdentifiable\tIntangible\tAssets |  |  |  |  |  |  |
| Trademarks | $1,140 | $— | $1,140 | $1,158 | $— | $1,158 |
| Definite-Lived\tIdentifiable\tIntangible\tAssets |  |  |  |  |  |  |
| Acquired\ttechnology | $648 | ($515) | $133 | $613 | ($489) | $124 |
| Customer-related | 1,396 | (798) | 598 | 1,437 | (762) | 675 |
| Tradenames | 190 | (96) | 94 | 166 | (87) | 79 |
| Other | 44 | (37) | 7 | 44 | (35) | 9 |
| Total\tDefinite\tLived\tIntangible\tAssets | $2,278 | ($1,446) | $832 | $2,260 | ($1,373) | $887 |
| Total\tIdentifiable\tIntangible\tAssets | $3,418 | ($1,446) | $1,972 | $3,418 | ($1,373) | $2,045 |

The	Company's	identifiable	intangible	assets	with	definite	lives	are	being	amortized	over	their	estimated	useful	lives.	Aggregate	amortization	expense was	$143	million,	$129	million	and	$121	million	in	2018,	2017	and	2016,	respectively.

# 8.	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	asset	write-downs.

# 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	current product	demand,	as	well	as	reductions	in	various	global	functional	and	administrative	costs.

A	pretax	restructuring	charge	of	 $83	million	was	recorded	in	PPG's	second	quarter	2018	financial	results,	of	which	 $80	million	represented	employee severance	and	other	cash	costs.	The	remainder	of	the	charge	represents	the	write-down	of	certain	assets.	In	addition,	other	cash	costs	of	approximately $25	million	will	be	incurred,	consisting	of	approximately	 $10	million	of	incremental	restructuring-related	cash	costs	for	certain	items	that	are	required	to	be expensed	 on	 an	 as-incurred	 basis	 and	 approximately	$15	 million	 for	 items	 which	 are	 expected	 to	 be	 capitalized.	 The	 Company	 also	 expects approximately	$20	million	of	incremental	non-cash	accelerated	depreciation	expense	for	certain	assets	due	to	their	reduced	expected	asset	life	as	a result	of	this	program,	$9	million	of	which	was	recognized	in	the	year	ended	December	31,	2018.	Substantially	all	actions	from	this	business	restructuring plan	are	expected	to	be	complete	by	the	end	of	the	first	quarter	of	2020.	As	of	December	31,	2018,	 approximately	1,000	employees	remain	to	be impacted.

In	December	2016,	a	pre-tax	restructuring	charge	of	$191	million	was	recorded.	The	restructuring	actions	will	result	in	the	net	reduction	of	approximately 2,000	positions,	with	substantially	all	actions	to	be	completed	by	the	end	of	the	second	quarter	of	2019.	As	of	December	31,	 2018,	approximately	100 employees	remain	to	be	impacted.

# Other	Adjustments

In	2018,	adjustments	of	approximately	$49	million	were	recorded	to	reduce	the	remaining	restructuring	reserves	established	in	2016	to	reflect	the	current estimate	of	the	costs	to	complete	these	actions.	Also	in	2018,	some	additional	restructuring	actions	were	approved	and	charges	of	approximately	$32 million	were	recorded.	These	amounts	are	recorded	in	Business	restructuring,	net	in	the	consolidated	statement	of	income.

A	summary	of	restructuring	charges	by	reportable	business	segment	is	as	follows:

| ($	in	millions) | Severance	and	Other	Costs | Asset	Write-offs | Total |
| :--- | :--- | :--- | :--- |
| Performance\tCoatings | $77 | $45 | $122 |
| Industrial\tCoatings | 52 | 14 | 66 |
| Corporate | 7 | — | 7 |
| Release\tof\tprior\treserves | (4) | — | (4) |
| Total\t2016\trestructuring\tcharge | $132 | $59 | $191 |
| Performance\tCoatings | $49 | $3 | $52 |
| Industrial\tCoatings | 21 | — | 21 |
| Corporate | 10 | — | 10 |
| Total\t2018\trestructuring\tcharge | $80 | $3 | $83 |

# Restructuring	Reserve	Activity

| Restructuring	Reserve	Activity |  |
| :--- | :--- |
| ($\tin\tmillions) | Total\tReserve |
| December\t31,\t2016 | $130 |
| 2017\tActivity | 3 |
| Cash\tpayments | (49) |
| Foreign\tcurrency\timpact | 18 |
| December\t31,\t2017 | $102 |
| Total\t2018\trestructuring\tcharge | 83 |
| Additional\tactions\tapproved | 32 |
| Release\tof\tprior\treserves\tand\tother\tadjustments\t(1) | (49) |
| Cash\tpayments | (66) |
| Foreign\tcurrency\timpact | (4) |
| Other | 12 |
| December\t31,\t2018 | $110 |

(1) Reductions to remaining restructuring reserves to reflect the	 current	 estimate	 of the	 costs to	 complete the actions.

# 9.	Borrowings	and	Lines	of	Credit

# Long-term	Debt	Obligations

| ($	in	millions) | Maturity	Date | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
| 0.00%\tnote\t(€300) | 2019 | $343 | $358 |
| 2.3%\tnotes | 2019 | 299 | 299 |
| 3.6%\tnotes | 2020 | 498 | 497 |
| 9%\tnon-callable\tdebentures(1) | 2021 | 133 | 133 |
| 0.875%\tnotes\t(€600) | 2022 | 685 | 716 |
| 3.2%\tnotes\t($300)(2) | 2023 | 298 | — |
| 0.875%\tnote\t(€600) | 2025 | 679 | 710 |
| 1.4%\tnotes\t(€600) | 2027 | 679 | 711 |
| 3.75%\tnotes\t($700)(3) | 2028 | 694 | — |
| 2.5%\tnote\t(€80) | 2029 | 91 | 95 |
| 7.70%\tnotes | 2038 | 174 | 174 |
| 5.5%\tnotes | 2040 | 247 | 247 |
| 3%\tnote\t(€120) | 2044 | 131 | 137 |
| Various\tother\tnon-U.S.\tdebt(4) | Various | 39 | 43 |
| Capital\tlease\tobligations | Various | 12 | 15 |
| Impact\tof\tderivatives\ton\tdebt(1)(5) | N/A | 10 | 3 |
| Total |  | $5,012 | $4,138 |
| Less\tpayments\tdue\twithin\tone\tyear | N/A | 647 | 4 |
| Long-term\tdebt |  | $4,365 | $4,134 |

(1) PPG	entered	into	several	interest	rate	swaps,	which	were	subsequently	settled	in	prior	periods.	The	impact	of	these	settlements	are	being	amortized	over	the	remaining	life	of the	debentures	as	a	reduction	to	interest	expense.	The	weighted	average	interest	rate	for	these	borrowings	was	8.4%	for	the	years	ended	December	31,	2018	and	2017.

(2) In	February	2018,	PPG	entered	into	interest	rate	swaps	which	converted	$150	million	of	the	notes	from	a	fixed	interest	rate	to	a	floating	interest	rate	based	on	the	three	month London	Interbank	Offered	Rate	(LIBOR).	The	impact	of	the	derivative	on	the	notes	represents	the	fair	value	adjustment	of	the	debt.	The	average	effective	interest	rate	for	the portion	of	the	notes	impacted	by	the	swaps	was	2.7%	for	the	period	ended	December	31,	2018.	Refer	to	Note	10,	"Financial	Instruments,	Hedging	Activities	and	Fair	Value Measurements"	for	additional	information.

(3) In	February	2018,	PPG	entered	into	interest	rate	swaps	which	converted	$375	million	of	the	notes	from	a	fixed	interest	rate	to	a	floating	interest	rate	based	on	the	three	month LIBOR.	The	impact	of	the	derivative	on	the	notes	represents	the	fair	value	adjustment	of	the	debt.	The	average	effective	interest	rate	for	the	portion	of	the	notes	impacted	by	the swaps	 was	3.2%	 for	 the	 period	 ended	 December	 31,	 2018.	 Refer	 to	 Note	10,	"Financial	 Instruments,	 Hedging	Activities	 and	 Fair	 Value	 Measurements"	 for	 additional information.

(5) Fair	value	adjustment	of	the	3.2%	$300	million	notes	and	3.75%	$700	million	notes	as	a	result	of	fair	value	hedge	accounting	treatment	related	to	the	outstanding	interest	rate swaps	as	of	December	31,	2018.	Refer	to	Note	10,	"Financial	Instruments,	Hedging	Activities	and	Fair	Value	Measurements"	for	additional	information.

# 2018	Activities

In	February	2018,	PPG	completed	a	public	offering	of	 $300	million	aggregate	principal	amount	of	3.2%	notes	due	2023	and	 $700	million	aggregate principal	amount	of	3.75%	notes	due	2028.	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	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	 $992	million.	A	portion	of	the	notes	were	converted	from	a	fixed	interest rate	to	a	floating	interest	rate	using	interest	rate	swap	contracts.	For	more	information,	refer	to	Note	10,	"Financial	Instruments,	Hedging	Activities	and Fair	Value	Measurements."

In	November	2017,	PPG's	€500	million	3-year	variable	rate	bank	loan	matured	and	the	Company	repaid	this	obligation	using $587	million	of	cash	on hand.

In	December	2016,	PPG's	$125	million	6.65%	notes,	due	2018,	were	redeemed	using	$133	million	of	cash	on	hand.	Also,	the	Company	prepaid	its	 $250 million	Term	Loan	Credit	Agreements,	one	with	the	Bank	of	Tokyo-Mitsubishi	UFJ,	Ltd.	and	the	other	with	BNP	Paribas,	which	PPG	entered	into	during May	2016.	The	Bank	of	Tokyo-Mitsubishi	UFJ,	Ltd.	Term	Loan	would	have	originally	terminated	and	all	amounts	outstanding	would	have	been	payable	in March	2017.	The	BNP	Paribas	Term	Loan	would	have	originally	terminated	and	all	amounts	outstanding	would	have	been	payable	in	May	2017.

In	November	2016,	PPG	completed	a	public	offering	of	 €300	million	0.000%	Notes	due	2019	and	€600	million	0.875%	Notes	due	2025.	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	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	 $987	million.	The	notes	are	denominated	in	euro	and	have	been	designated as	hedges	of	net	investments	in	the	Company's	European	operations.	For	more	information,	refer	to	Note	10	"Financial	Instruments,	Hedging	Activities and	Fair	Value	Measurements."

In	January	2016,	PPG's	$250	million	1.9%	notes	matured,	and	the	Company	repaid	these	obligations	using	cash	on	hand.

# Credit	agreements

In	December	2015,	PPG	entered	into	a	five-year	credit	agreement	(the	"Credit	Agreement")	with	several	banks	and	financial	institutions.	The	Credit Agreement	provides	for	a	$1.8	billion	unsecured	revolving	credit	facility.	The	Company	has	the	ability	to	increase	the	size	of	the	Credit	Agreement	by	up to	an	additional	$500	million,	subject	to	the	receipt	of	lender	commitments	and	other	conditions.	The	Credit	Agreement	will	terminate	on	December	18, 2020.	The	Company	has	the	right,	subject	to	certain	conditions	set	forth	in	the	Credit	Agreement,	to	designate	certain	subsidiaries	of	the	Company	as borrowers	under	the	Credit	Agreement.	In	connection	with	any	such	designation,	the	Company	is	required	to	guarantee	the	obligations	of	any	such subsidiaries	under	the	Credit	Agreement.	There	were	no	amounts	outstanding	under	the	Credit	Agreement	during	the	years	ended	December	31,	2018 and	2017.	The	Credit	Agreement	also	supports	the	Company's	commercial	paper	borrowings.	There	were	no	commercial	paper	borrowings	outstanding as	of	December	31,	2018	and	2017.

# Restrictive	Covenants	and	Cross-Default	Provisions

As	 of	 December	 31,	2018,	 PPG	 was in full	 compliance	 with the restrictive	 covenants	 under its	 various	 credit	 agreements, loan	 agreements	 and indentures.

Additionally,	the	Company's	Credit	Agreement	contains	customary	cross-default	provisions.	These	provisions	provide	that	a	default	on	a	debt	service payment	 of	$50	million	 or	 more	 for	 longer	 than	 the	 grace	 period	 provided	 under	 another	 agreement	 may	 result	 in	 an	 event	 of	 default	 under	 this agreement.	The	Company's	9%	non-callable	debentures	also	contain	a	customary

cross	default	provision	triggered	by	the	Company's	default	on	a	debt	service	payment	of obligations	are	secured	or	guaranteed	by	the	Company's	affiliates.

$10	million	or	more.	None	of	the	Company's	primary	debt

# Long-term	Debt	Maturities

| ($	in	millions) | Maturity	per	year |
| :--- | :--- |
| 2019 | $647 |
| 2020 | 497 |
| 2021 | 131 |
| 2022 | 685 |
| 2023 | 298 |
| Thereafter | $2,754 |

# Short-term	Debt	Obligations

# Lease	Obligations

Rental	expense	for	operating	leases	was	 $289	million,	$288	million	and	$273	million	in	2018,	2017	and	2016,	respectively.	The	primary	leased	assets include	 paint	 stores,	 transportation	 equipment,	 warehouses	 and	 other	 distribution	 facilities,	 and	 office	 space,	 including	 the	 Company's	 corporate headquarters	 located	 in	Pittsburgh,	Pa.	As	of	January	1,	2019,	PPG	has	adopted	ASU	2016-02.	See	Note	1,	"Summary	 of	 Significant	Accounting Policies"	for	further	information.

Minimum	lease	commitments	for	operating	leases	that	have	initial	or	remaining	lease	terms	in	excess	of	one	year	are	as	follows:

# Lines	of	Credit,	Letters	of	Credit,	Surety	Bonds	and	Guarantees

PPG's	non-U.S.	operations	have	uncommitted	lines	of	credit	totaling	 $401	million	 of	 which	$3	million	 was	 used	 as	 of	December	31,	2018.	 These uncommitted	lines	of	credit	are	subject	to	cancellation	at	any	time	and	are	generally	not	subject	to	any	commitment	fees.

The	Company	had	outstanding	letters	of	credit	and	surety	bonds	of	 $158	million	and	$163	million	as	of	December	31,	2018	and	2017,	respectively.	The letters	of	credit	secure	the	Company's	performance	to	third	parties	under	certain	self-insurance	programs	and	other	commitments	made	in	the	ordinary course	of	business.

As	of	December	31,	2018	and	2017,	guarantees	outstanding	were	$14	million.	The	guarantees	relate	primarily	to	debt	of	certain	entities	in	which	PPG has	an	ownership	interest	and	selected	customers	of	certain	PPG	businesses.	A	portion	of	such	debt	is	secured	by	the	assets	of	the	related	entities.	The carrying	value	of	these	guarantees	were	zero	and	$1	million	at	December	31,	2018	and	2017,	respectively,	and	the	fair	values	of	these	guarantees	were $1	million	at	December	31,	2018	and	2017.	The	fair	value	of	each	guarantee	was	estimated	by	comparing	the	net	present	value	of	two	hypothetical	cash flow	streams,	one	based	on	PPG's	incremental	borrowing	rate	and	the	other	based	on	the	borrower's	incremental	borrowing	rate,	as	of	the	effective	date of	the	guarantee.	Both	streams	were	discounted	at	a	risk	free	rate	of	return.	The	Company	does	not	believe	any	loss	related	to	these	letters	of	credit, surety	bonds	or	guarantees	is	likely.

# 10.	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	December	31,	2018	and	2017,	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,	and	had	exposure	to	PPG's	stock	price changes.	As	a	result,	financial	instruments,	including	derivatives,	have	been	used	to	hedge	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-year	period	ended	December	31,	2018.

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.

In	2018	and	2017,	there	were	no	derivative	instruments	de-designated	or	discontinued	as	a	hedging	instrument.	There	were	no	gains	or	losses	deferred in	Accumulated	other	comprehensive	loss	on	the	consolidated	balance	sheet	that	were	reclassified	to	Income	before	income	taxes	in	the	consolidated statement	of	income	during	the	three-year	period	ended	December	31,	2018	related	to	hedges	of	anticipated	transactions	that	were	no	longer	expected to	occur.

# Fair	Value	Hedges

Prior	to	June	2016,	PPG	entered	into	renewable	equity	forward	arrangements	to	hedge	the	impact	to	PPG's	Income	before	income	taxes	for	changes	in the	fair	value	of	2,777,778	shares	of	PPG	stock	that	were	contributed	to	the	asbestos	settlement	trust	as	discussed	in	Note	 14,	"Commitments	and Contingent	Liabilities."	These	financial	instruments	were	recorded	at	fair	value	as	assets	or	liabilities	and	changes	in	the	fair	value	of	these	financial instruments	are	reflected	in	Asbestos	settlement,	net	on	the	consolidated	statement	of	income.	The	total	principal	amount	paid	for	these	shares	was approximately	$60	million.	During	the	terms	of	the	equity	forward	arrangements,	PPG	paid	interest	to	the	counterparty	based	on	the	principal	amount, and	the	counterparty	paid	PPG	an	amount	equal	to	the	dividends	paid	on	the	shares,	which	reduced	the	transaction	price	by	approximately	$10	million, net.	The	difference	between	the	principal	amount	and	any	amounts	related	to	unpaid	interest	or	dividends	and	the	market	price	for	the	shares,	adjusted for	credit	risk,	represented	the	fair	value	of	the	financial	instruments	as	well	as	the	amount	that	PPG	received	when	the	counterparty	chose	to	settle	the financial	instruments.	In	conjunction	with	the	funding	of	the	asbestos	settlement	trust,	the	equity	forward	arrangements	were	settled.	At	settlement,	in June	2016,	the	fair	value	of	the	equity	forward	arrangement	was	an	asset	of	$258	million.

The	Company	uses	interest	rate	swaps	from	time	to	time	to	manage	it's	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	into	interest	rate	swaps	which	converted	 $525	million	of	fixed	rate	debt	to	variable	rate	debt.	The	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	Interest	expense	in	the	accompanying	consolidated	statement	of	income.	The	fair	value	of	these	interest	rate	swaps	was	$8	million	at	December	31, 2018.	There	were	no	interest	rate	swaps	outstanding	as	of	December	31,	2017.

# 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 intercompany	and	third	party	transactions	denominated	in	foreign	currencies.	Underlying	notional	amounts	related	to	these	foreign	currency	forward contracts	were	$50	million	and	$284	million	at	December	31,	2018	and	2017,	respectively.	As	of	 December	31,	2018	 and	2017,	the	fair	value	of	all foreign	currency	forward	contracts	designated	as	cash	flow	hedges	was	a	liability	of	$1	million	and	a	net	asset	of	$3	million,	respectively.

# Net	Investment	Hedges

PPG	uses	cross	currency	swaps,	foreign	currency	euro-denominated	debt	and	forward	contracts	to	hedge	a	significant	portion	of	its	net	investment	in	its European	operations,	as	follows:

In	February	2018,	PPG	entered	into	U.S.	dollar	to	euro	cross	currency	swap	contracts	with	a	total	notional	amount	of $575	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	payments	in	U.S.	dollars	and	make	payments	in	euros	to	the	counterparties.	Also	in	February	2018,	the Company	settled	outstanding	U.S.	dollar	to	euro	cross	currency	swap	contracts	with	a	total	notional	amount	of	$560	million.	As	of	December	31,	2018 and	2017,	the	fair	value	of	these	contracts	was	an	asset	of	 $35	million	and	$2	million,	respectively.

At	December	31,	2018	and	2017,	PPG	had	designated	€2.3	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	at	December	31,	2018	and	2017	was	$2.6	billion	and	$2.7	billion,	respectively.

During	2017	and	2016,	PPG	used	foreign	currency	forward	contracts	to	hedge	a	portion	of	its	net	investment	in	its	European	operations.	Changes	in	the fair	value	of	these	derivative	instruments	were	recorded	in	Accumulated	other	comprehensive	loss	on	the	consolidated	balance	sheet	as	gains	or	losses. There	were	no	such	instruments	used	2018.	The	Company	paid	 $3	million	to	settle	a	foreign	currency	forward	contract	in	2017.	There	were	no	foreign currency	forward	contracts	outstanding	as	of	December	31,	2018,	2017,and	2016.

# 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	consolidated	statement	of	 income	 in	 the	period	of	change.	Underlying	notional amounts	related	to	these	foreign	currency	forward	contracts	were	$2.5	billion	 and	$2.2	billion	 at	December	31,	2018	 and	2017,	 respectively.	As	of December	31,	2018	and	2017,	the	fair	values	of	these	contracts	were	a	net	asset	of	 $36	million	and	a	liability	of	$20	million,	respectively.

# Gains/Losses	Deferred	in	Accumulated	other	comprehensive	loss

As	of	December	31,	2018	and	2017,	the	Company	had	accumulated	pre-tax	unrealized	translation	gains	in	Accumulated	other	comprehensive	loss	on the	consolidated	balance	sheet	related	to	the	euro-denominated	borrowings,	foreign	currency	forward	contracts,	and	the	cross	currency	swaps	of	$161 million	and	$16	million,	respectively.

The	 following	 tables	summarize	 the	 location	and	amount	of	gains	(losses)	related to	derivative	and	debt financial instruments for the	years	ended December	31,	2018,	2017	and	2016.	All	dollar	amounts	are	shown	on	a	pre-tax	basis.

|  | 2018 |  | 2017 |  | 2016 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | (Loss)/Gain\nDeferred\tin\nAOCL | Gain/(Loss)\nRecognized | Loss\tDeferred\tin\nAOCL | Gain\nRecognized | Gain/(Loss)\nDeferred\tin\nAOCL | (Loss)/Gain\nRecognized | Caption\tin\nConsolidated\nStatement\tof\tIncome |
| Fair\tValue |  |  |  |  |  |  |  |
| Interest\trate\tSwaps |  | $3 |  | $— |  | $— | Interest\texpense |
| Total\tFair\tValue |  | $3 |  | $— |  | $— |  |
| Cash\tFlow |  |  |  |  |  |  |  |
| Foreign\tcurrency\tforward |  |  |  |  |  |  | Other\tcharges\tand\tCost |
| contracts(1) | ($9) | ($8) | ($7) | $9 | $1 | ($5) | of\tsales |
| Total\tCash\tFlow | ($9) | ($8) | ($7) | $9 | $1 | ($5) |  |
| Net\tInvestment |  |  |  |  |  |  |  |
| Cross\tcurrency\tswaps | $21 | $13 | ($61) | $— | $25 | $— | Interest\texpense |
| Foreign\tdenominated\tdebt | 124 | — | (403) | — | 122 | — |  |
| Foreign\tcurrency\tforward\ncontracts | — | — | — | — | (14) | — |  |
| Total\tNet\tInvestment | $145 | $13 | ($464) | $— | $133 | $— |  |
| Economic |  |  |  |  |  |  |  |
| Foreign\tcurrency\tforward\ncontracts |  | $55 |  | $14 |  | $14 | Other\tcharges |

(1) For	the	period	ended	December	31,	2018,	the	amounts	excluded	from	effectiveness	recognized	in	earnings	based	on	an	amortization	approach	was	expense	of	$4 million.

# Fair	Value	Measurements

The	Company	follows	a	fair	value	measurement	hierarchy	to	measure	its	assets	and	liabilities.	As	of	 December	31,	2018	and	2017,	respectively,	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"	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.

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	consolidated	balance	sheets	as	of	December	31,	2018	and	2017	that	are	classified	as	Level	3	inputs.

# Assets	and	liabilities	reported	at	fair	value	on	a	recurring	basis

|  |  | December	31,	2018 |  |  | December	31,	2017 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | Level\t1 | Level\t2 | Level\t3 | Level\t1 | Level\t2 | Level\t3 |
| Assets: |  |  |  |  |  |  |
| Other\tcurrent\tassets: |  |  |  |  |  |  |
| Marketable\tequity\tsecurities | $4 | $— | $— | $4 | $— | $— |
| Foreign\tcurrency\tforward\tcontracts(a) | — | — | — | — | 6 | — |
| Foreign\tcurrency\tforward\tcontracts(b) | — | 45 | — | — | — | — |
| Cross\tcurrency\tswaps(c) | — | — | — | — | 2 | — |
| Other\tassets: |  |  |  |  |  |  |
| Cross\tcurrency\tswaps(c) | $— | $35 | $— | $— | $— | $— |
| Interest\trate\tswaps(d) | — | 8 | — | — | — | — |
| Investments: |  |  |  |  |  |  |
| Marketable\tequity\tsecurities | $69 | $— | $— | $79 | $— | $— |
| Liabilities: |  |  |  |  |  |  |
| Accounts\tpayable\tand\taccrued\tliabilities: |  |  |  |  |  |  |
| Foreign\tcurrency\tforward\tcontracts(a) | $— | $1 | $— | $— | $23 | $— |
| Foreign\tcurrency\tforward\tcontracts(b) | — | 9 | — | — | — | — |

(a) Cash	flow	hedges

(b) Derivatives	not	designated	as	hedging	instruments

(c) Net	investment	hedges

(d) Fair	value	hedges

# Long-Term	Debt

| ($	in	millions) | December	31,	2018(a) | December	31,	2017(b) |
| :--- | :--- | :--- |
| Long-term\tdebt\t-\tcarrying\tvalue | $5,000 | $4,123 |
| Long-term\tdebt\t-\tfair\tvalue | $5,101 | $4,341 |

(a) Excluding	capital	lease	obligations	of	$12	million	and	short	term	borrowings	of	$4	million	as	of	December	31,	2018.

(b) Excluding	capital	lease	obligations	of	$15	million	and	short	term	borrowings	of	$8	million	as	of	December	31,	2017.

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.

# Assets	and	liabilities	reported	at	fair	value	on	a	nonrecurring	basis

There	were	no	significant	adjustments	to	the	fair	value	of	nonmonetary	assets	or	liabilities	during	the	year	ended	 December	31,	2018.	In	conjunction	with the	2016	restructuring	actions,	certain	nonmonetary	assets	were	written	down	to	their	fair	value.	Refer	to	Note	8,	"Business	Restructuring"	for	further details	associated	with	these	actions."

# Call	and	put	option	on	noncontrolling	interest

PPG	owns	a	majority	interest	in	a	coatings	business	whose	financial	results	are	included	in	PPG's	consolidated	financial	statements.	PPG	has	recorded the	noncontrolling	interest	in	this	consolidated	affiliate	as	a	liability	instead	of	equity	on	its

consolidated	balance	sheets	due	to	call	and	put	option	provisions	associated	with	the	noncontrolling	interest,	which	have	similar	terms.	This	liability	was $40	million	and	$44	million	at	December	31,	2018	and	2017,	respectively.

# 11.	Earnings	Per	Common	Share

| ($	in	millions,	except	per	share	amounts) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Earnings\tper\tcommon\tshare\t(attributable\tto\tPPG) |  |  |  |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | $1,323 | $1,369 | $543 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 18 | 225 | 330 |
| Net\tincome\t(attributable\tto\tPPG) | $1,341 | $1,594 | $873 |
| Weighted\taverage\tcommon\tshares\toutstanding | 243.9 | 256.1 | 265.6 |
| Effect\tof\tdilutive\tsecurities: |  |  |  |
| Stock\toptions | 0.8 | 0.9 | 0.8 |
| Other\tstock\tcompensation\tplans | 0.7 | 0.8 | 1.0 |
| Potentially\tdilutive\tcommon\tshares | 1.5 | 1.7 | 1.8 |
| Adjusted\tweighted\taverage\tcommon\tshares\toutstanding | 245.4 | 257.8 | 267.4 |
| Earnings\tper\tcommon\tshare\t(attributable\tto\tPPG): |  |  |  |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | $5.43 | $5.34 | $2.05 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 0.07 | 0.88 | 1.24 |
| Net\tincome\t(attributable\tto\tPPG) | $5.50 | $6.22 | $3.29 |
| Earnings\tper\tcommon\tshare\t-\tassuming\tdilution\t(attributable\tto\tPPG) |  |  |  |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | $5.40 | $5.31 | $2.04 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 0.07 | 0.87 | 1.23 |
| Net\tincome\t(attributable\tto\tPPG) | $5.47 | $6.18 | $3.27 |

There	were	1.0	million,	0.6	million,	and	0.6	million	outstanding	stock	options	excluded	in	2018,	2017	and	2016,	respectively,	from	the	computation	of earnings	per	diluted	common	share	due	to	their	anti-dilutive	effect.

The	provision	for	income	taxes	by	taxing	jurisdiction	and	by	significant	components	consisted	of	the	following:

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Current |  |  |  |
| U.S.\tfederal | $7 | $179 | ($251) |
| U.S.\tstate\tand\tlocal | 4 | 49 | (12) |
| Foreign | 297 | 349 | 306 |
| Total\tcurrent\tincome\ttax\texpense | $308 | $577 | $43 |
| Deferred |  |  |  |
| U.S.\tfederal | $44 | $107 | $173 |
| U.S.\tstate\tand\tlocal | 7 | (16) | (10) |
| Foreign | (6) | (53) | 8 |
| Total\tdeferred\tincome\ttax\texpense | $45 | $38 | $171 |
| Total\tincome\ttax\texpense | $353 | $615 | $214 |

A	reconciliation	of	the	statutory	U.S.	corporate	federal	income	tax	rate	to	the	Company's	effective	tax	rate	follows:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| U.S.\tfederal\tincome\ttax\trate | 21.0\t% | 35.0\t% | 35.0\t% |
| Changes\tin\trate\tdue\tto: |  |  |  |
| U.S.\ttax\tcost\t-\tTax\tCuts\t&amp;\tJobs\tAct | (2.5) | 11.0 | — |
| U.S./foreign\ttax\tdifferential | 3.3 | (9.3) | (17.7) |
| U.S.\tcurrent\ttax\tbenefit\ton\tforeign\texchange\trealization | — | (4.9) | (3.0) |
| U.S.\ttax\tincentives | (1.0) | (2.3) | (3.7) |
| U.S.\ttax\t(benefit)\tcost\ton\tforeign\tdividends | (0.4) | (1.9) | 0.4 |
| U.S.\tstate\tand\tlocal\ttaxes | 0.5 | 1.1 | (1.8) |
| U.S.\tdeferred\ttax\tbenefit\ton\tforeign\tincome | — | (0.6) | (3.1) |
| Asbestos\tcharge | — | — | 19.1 |
| Other | — | 2.6 | 2.3 |
| Effective\tincome\ttax\trate | 20.9\t% | 30.7\t% | 27.5\t% |

On	December	22,	2017,	the	U.S.	enacted	the	Tax	Cuts	and	Jobs	Act	(the	"Act")	which,	among	other	things	lowered	the	U.S.	corporate	statutory	income tax	rate	from	35%	to	21%,	eliminated	certain	deductible	items	and	added	other	deductible	items	for	corporations,	imposed	a	tax	on	unrepatriated	foreign earnings	and	eliminated	U.S.	taxes	on	most	future	foreign	earnings.

In	December	2017,	as	a	result	of	the	Act,	the	Company	recorded	a	provisional	net	tax	charge	of	 $134	million,	which	included	a	tax	on	unrepatriated earnings	of	$250	million,	a	charge	of	approximately	 $125	million	related	to	the	remeasurement	of	U.S.	deferred	taxes	at	the	new	enacted	statutory	rate, partially	offset	by	a	benefit	from	the	reversal	of	an	existing	deferred	tax	liability	on	repatriated	foreign	earnings	of	approximately	$150	million	and	a	benefit resulting	from	PPG's	decision	to	accelerate	recognition	of	certain	U.S.	tax	attributes	during	the	fourth	quarter.

During	2018,	PPG	 implemented	updated	regulations	 for	certain	aspects	of	 the	Act	and	PPG	completed	 its	accounting	 for	 the	provisional	amounts recognized	in	its	consolidated	financial	statements	in	2017.	The	finalization	of	the	provisional	accounting	during	 2018	resulted	in	a	net	tax	benefit	of	$42 million,	which	consisted	of	a	benefit	of	 $20	million	related	to	unrepatriated	foreign	earnings,	a	benefit	of	 $22	million	for	adjustments	to	certain	deferred taxes,	a	benefit	of	$14	million	for	foreign	derived	intangible	income,	partially	offset	by	an	expense	of	 $14	million	for	global	intangible	low	taxed	income.

The	total	tax	expense	for	2017	includes	a	deferred	tax	benefit	of	 $22	million	related	to	the	$60	million	of	pre-tax	pension	settlement	charges	discussed	in Note	13,	"Employee	Benefit	Plans."	During	2016,	the	Company	recorded	a	$151	million	net	tax	charge	associated	with	the	funding	of	the	Pittsburgh Corning	("PC")	asbestos	settlement	trust	(the	"Trust")	described	in	Note	14,	"Commitments	and	Contingent	Liabilities."	Further,	in	conjunction	with	the funding	of	the	Trust,	PPG	provided	taxes	on	the	earnings	of	certain	foreign	subsidiaries	and	recorded	one-time	book	tax	benefits	for	its	contribution	of	the Company's	ownership	interest	in	PC's	European	subsidiary	to	the	Trust	and	for	a	change	in	the	measurement	of	certain	deferred	tax	liabilities.

# Deferred	income	taxes

Deferred	income	taxes	are	provided	for	the	effect	of	temporary	differences	that	arise	because	there	are	certain	items	treated	differently	for	financial accounting	than	for	income	tax	reporting	purposes.	The	deferred	tax	assets	and	liabilities	are	determined	by	applying	the	enacted	tax	rate	in	the	year	in which	the	temporary	difference	is	expected	to	reverse.

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Deferred\tincome\ttax\tassets\trelated\tto |  |  |
| Employee\tbenefits | $366 | $399 |
| Contingent\tand\taccrued\tliabilities | 149 | 164 |
| Operating\tloss\tand\tother\tcarry-forwards | 251 | 221 |
| Inventories | 7 | 6 |
| Property | 48 | 51 |
| Other | 82 | 135 |
| Valuation\tallowance | (164) | (173) |
| Total | $739 | $803 |
| Deferred\tincome\ttax\tliabilities\trelated\tto |  |  |
| Property | $310 | $314 |
| Intangibles | 545 | 578 |
| Employee\tbenefits | 46 | 11 |
| Derivatives | 1 | 1 |
| Undistributed\tforeign\tearnings | 5 | 24 |
| Other | 9 | 20 |
| Total | $916 | $948 |
| Deferred\tincome\ttax\tliabilities\t–\tnet | ($177) | ($145) |

# Net	operating	loss	and	credit	carryforwards

| ($	in	millions) | 2018 | 2017 | Expiration |
| :--- | :--- | :--- | :--- |
| Available\tnet\toperating\tloss\tcarryforwards: |  |  |  |
| Indefinite\texpiration | $462 | $447 | NA |
| Definite\texpiration | 796 | 247 | 2019\t-\t2038 |
| Total | $1,258 | $694 | NA |
| Net\toperating\tloss\tcarryforwards,\ttax\teffected | $192 | $210 | NA |
| Income\ttax\tcredit\tcarryforwards | $61 | $9 | 2019\t-\t2038 |

A	valuation	allowance	of	$164	million	and	$173	million	has	been	established	for	carry-forwards	and	certain	other	items	at	 December	31,	2018	and	2017, when	the	ability	to	utilize	them	is	not	likely.

# Undistributed	foreign	earnings

The	Company	had	$3	billion	and	$3.4	billion	of	undistributed	earnings	of	non-U.S.	subsidiaries	as	of	 December	31,	2018	and	2017,	respectively.	These amounts	relate	to	approximately	250	subsidiaries	in	approximately	75	taxable	jurisdictions.	The	Company	estimates	repatriation	of	undistributed	earnings of	non-U.S.	subsidiaries	as	of	December	31,	2018	 and	2017	would	have	resulted	in	a	U.S.	tax	cost	of	approximately	 $19	million	and	$30	million, respectively.

Over	the	past	several	years,	PPG	has	established	deferred	tax	liabilities	on	certain	undistributed	earnings,	namely	in	connection	with	divestitures	and	the funding	of	the	Pittsburgh	Corning	Asbestos	Trust	(refer	to	Note	14,	"Commitments	and	Contingent	Liabilities").

As	of	December	31,	2018,	the	Company	has	not	changed	its	intention	to	reinvest	foreign	earnings	indefinitely	or	repatriate	when	it	is	tax	effective	to	do so,	and	as	such	has	not	established	a	liability	for	foreign	withholding	taxes	or	other	costs	that	would	be	incurred	if	the	earnings	were	repatriated.

# Unrecognized	tax	benefits

The	Company	files	federal,	state	and	local	income	tax	returns	in	numerous	domestic	and	foreign	jurisdictions.	In	most	tax	jurisdictions,	returns	are	subject to	examination	by	the	relevant	tax	authorities	for	a	number	of	years	after	the	returns	have	been	filed.	The	Company	is	no	longer	subject	to	examinations by	tax	authorities	in	any	major	tax	jurisdiction	for	years	before	2007.	Additionally,	the	Company	is	no	longer	subject	to	examination	by	the	Internal Revenue	Service	for	U.S.	federal	income

tax	returns filed for	years through	2014.	The	examinations	of the	Company's	U.S. federal income tax	returns for	2015 through	2016	are	currently underway.

A	reconciliation	of	the	total	amounts	of	unrecognized	tax	benefits	(excluding	interest	and	penalties)	as	of	December	31	follows:

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| January\t1 | $148 | $94 | $82 |
| Current\tyear\ttax\tpositions\t-\tadditions | 36 | 37 | 25 |
| Prior\tyear\ttax\tpositions\t-\tadditions | 17 | 26 | 8 |
| Prior\tyear\ttax\tpositions\t-\treductions | (6) | — | (11) |
| Statute\tof\tlimitations\texpirations | (9) | (8) | (8) |
| Settlements | (15) | (10) | — |
| Foreign\tcurrency\ttranslation | (5) | 9 | (2) |
| December\t31 | $166 | $148 | $94 |

The	Company	expects	that	any	reasonably	possible	change	in	the	amount	of	unrecognized	tax	benefits	in	the	next	12	months	would	not	be	significant.

The	total	amount	of	unrecognized	tax	benefits	that,	if	recognized,	would	affect	the	effective	tax	rate	was	 $140	million	as	of	December	31,	2018.

# Interest	and	penalties

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Accrued\tinterest\tand\tpenalties\trelated\tto\tunrecognized\ttax\tbenefits | $16 | $15 | $9 |
| Loss\trecognized\tin\tincome\ttax\texpense\trelated\tto\tinterest\tand\tpenalties | $2 | $4 | $1 |

The	Company	recognizes	accrued	interest	and	penalties	related	to	unrecognized	tax	benefits	in	income	tax	expense.

# 13.	Employee	Benefit	Plans

# Defined	Benefit	Plans

PPG	has	defined	benefit	pension	plans	that	cover	certain	employees	worldwide.	The	principal	defined	benefit	pension	plans	are	those	in	the	U.S., Canada,	the	Netherlands	and	the	U.K.	These	plans	in	the	aggregate	represent	approximately	92%	of	the	projected	benefit	obligation	at	 December	31, 2018,	of	which	the	U.S.	defined	benefit	pension	plans	represent	the	largest	component.

# U.S.	defined	benefit	plans

As	of	January	1,	2006,	the	Company	closed	the	salaried	defined	benefit	plans	to	new	entrants.	The	defined	benefit	plan	of	certain	hourly	employees	was closed	to	new	entrants	in	2006	or	thereafter.	Eligible	employees	participate	in	a	defined	contribution	retirement	plan.	In	2011,	the	Company	approved amendments	related	to	certain	U.S.	defined	benefit	plans	so	that	depending	upon	the	affected	employee's	combined	age	and	years	of	service	to	PPG, certain	employees	stopped	or	will	stop	accruing	benefits	either	in	2011	or	at	the	end	of	2020.	The	affected	employees	will	participate	in	the	Company's defined	contribution	retirement	plans	from	the	date	their	benefits	under	their	respective	defined	benefit	plans	are	frozen.	The	Company	has	amended other	defined	benefit	plans	in	other	countries	in	a	similar	way	and	plans	to	continue	reviewing	and	potentially	changing	other	PPG	defined	benefit	plans	in the	future.

# Postretirement	medical

PPG	sponsors	welfare	benefit	plans	that	provide	postretirement	medical	and	life	insurance	benefits	for	certain	U.S.	and	Canadian	employees	and	their dependents	of	which	the	U.S.	welfare	benefit	plans	represent	approximately	86%	of	the	projected	benefit	obligation	at	 December	31,	2018.	Salaried	and certain	hourly	employees	in	the	U.S.	hired	on	or	after	October	1,	2004,	or	rehired	on	or	after	October	1,	2012	are	not	eligible	for	postretirement	medical benefits.

The	U.S.	welfare	benefit	plans	include	an	Employee	Group	Waiver	Plan	("EGWP")	for	certain	Medicare-eligible	retirees	and	their	dependents	which includes	a	fully-insured	Medicare	Part	D	prescription	drug	plan.	As	such,	PPG	is	not	eligible	to	receive	the	federal	subsidy	provided	under	the	Medicare Act	of	2003	for	these	retirees	and	their	dependents.

These	plans	in	the	U.S.	and	Canada	require	retiree	contributions	based	on	retiree-selected	coverage	levels	for	certain	retirees	and	their	dependents	and provide	for	sharing	of	future	benefit	cost	increases	between	PPG	and	participants	based	on	management	discretion.	The	Company	has	the	right	to modify,	amend	or	terminate	certain	of	these	benefit	plans	in	the	future.

In	2016,	the	Company	communicated	plan	design	changes	to	certain	Medicare-eligible	retiree	plan	participants.	Effective	January	1,	2017,	the	Company- sponsored	Medicare-eligible	plans	were	replaced	by	a	Medicare	private	exchange.	By	offering	retiree	health	coverage	 through	a	private	Medicare exchange,	PPG	is	able	to	provide	Medicare-eligible	participants	with	more	choice	of	plans	and	plan	designs,	greater	flexibility,	and	different	price	points for	coverage.		Beginning	January	1,	2017,	PPG's	contribution	for	health	care	coverage	related	to	Medicare-eligible	retirees	is	in	the	form	of	a	tax-free account	known	as	a	Health	Reimbursement	Arrangement	(HRA).	The	HRA	can	be	used	to	pay	for	health	care	and	prescription	drug	plan	premiums	and certain	out-of-pocket	medical	costs;	unused	funds	can	be	carried	over	to	future	years.

The	announcement	of	these	plan	design	changes	triggered	a	remeasurement	of	PPG's	retiree	medical	benefit	obligation	using	prevailing	interest	rates. The	plan	design	change	resulted	in	a	$306	million	reduction	in	the	Company's	postretirement	benefit	obligation.	PPG	accounted	for	the	plan	design change	prospectively,	and	the	plan	design	change	will	be	amortized	to	periodic	postretirement	benefit	cost	over	a	5.6	year	period.

The	following	table	sets	forth	the	changes	in	projected	benefit	obligations	("PBO")	(as	calculated	as	of	December	31),	plan	assets,	the	funded	status	and the	amounts	recognized	on	the	accompanying	consolidated	balance	sheet	for	the	Company's	defined	benefit	pension	and	other	postretirement	benefit plans:

|  | United	States |  | International |  | Total	PPG |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Projected\tbenefit\tobligation,\tJanuary\t1 | $1,706 | $1,692 | $1,756 | $1,560 | $3,462 | $3,252 |
| Service\tcost | 17 | 19 | 11 | 14 | 28 | 33 |
| Interest\tcost | 57 | 60 | 40 | 38 | 97 | 98 |
| Actuarial\tlosses\t(gains)\t-\tnet | (129) | 124 | (117) | 61 | (246) | 185 |
| Benefits\tpaid | (70) | (104) | (55) | (63) | (125) | (167) |
| Plan\ttransfers | — | — | (8) | — | (8) | — |
| Foreign\tcurrency\ttranslation\tadjustments | — | — | (88) | 165 | (88) | 165 |
| Settlements\tand\tcurtailments | — | (84) | (24) | (1) | (24) | (85) |
| Former\tglass\tbusiness\tchanges,\tnet | — | — | — | (1) | — | (1) |
| Other | 1 | (1) | 3 | (17) | 4 | (18) |
| Projected\tbenefit\tobligation,\tDecember\t31 | $1,582 | $1,706 | $1,518 | $1,756 | $3,100 | $3,462 |
| Market\tvalue\tof\tplan\tassets,\tJanuary\t1 | $1,196 | $1,115 | $1,687 | $1,446 | $2,883 | $2,561 |
| Actual\treturn\ton\tplan\tassets | (82) | 156 | (53) | 133 | (135) | 289 |
| Company\tcontributions | 75 | 54 | 24 | 33 | 99 | 87 |
| Participant\tcontributions | — | — | — | 1 | — | 1 |
| Benefits\tpaid | (49) | (47) | (53) | (62) | (102) | (109) |
| Plan\tsettlements | — | (82) | (24) | (13) | (24) | (95) |
| Foreign\tcurrency\ttranslation\tadjustments | — | — | (95) | 149 | (95) | 149 |
| Other | — | — | (8) | — | (8) | — |
| Market\tvalue\tof\tplan\tassets,\tDecember\t31 | $1,140 | $1,196 | $1,478 | $1,687 | $2,618 | $2,883 |
| Funded\tStatus | ($442) | ($510) | ($40) | ($69) | ($482) | ($579) |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheet: |  |  |  |  |  |  |
| Other\tassets\t(long-term) | — | — | 189 | 173 | 189 | 173 |
| Accounts\tpayable\tand\taccrued\tliabilities | (18) | (16) | (8) | (7) | (26) | (23) |
| Accrued\tpensions | (424) | (494) | (221) | (235) | (645) | (729) |
| Net\tliability\trecognized | ($442) | ($510) | ($40) | ($69) | ($482) | ($579) |

|  | United	States | United	States | International |  | Total	PPG |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Projected\tbenefit\tobligation,\tJanuary\t1 | $641 | $692 | $112 | $100 | $753 | $792 |
| Service\tcost | 9 | 10 | 1 | — | 10 | 10 |
| Interest\tcost | 21 | 21 | 3 | 3 | 24 | 24 |
| Actuarial\tlosses\t(gains)\t-\tnet | (38) | (39) | (9) | 12 | (47) | (27) |
| Benefits\tpaid | (45) | (43) | (4) | (5) | (49) | (48) |
| Foreign\tcurrency\ttranslation\tadjustments | — | — | (8) | 8 | (8) | 8 |
| Former\tglass\tbusiness\tchanges,\tnet | — | — | — | (8) | — | (8) |
| Other | (1) | — | (1) | 2 | (2) | 2 |
| Projected\tbenefit\tobligation,\tDecember\t31 | $587 | $641 | $94 | $112 | $681 | $753 |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheet: |  |  |  |  |  |  |
| Accounts\tpayable\tand\taccrued\tliabilities | (48) | (48) | (4) | (6) | (52) | (54) |
| Other\tpostretirement\tbenefits | (539) | (593) | (90) | (106) | (629) | (699) |
| Net\tliability\trecognized | ($587) | ($641) | ($94) | ($112) | ($681) | ($753) |

The	PBO	 is	 the	actuarial	present	value	of	benefits	attributable	 to	employee	service	rendered	 to	date,	 including	 the	effects	of	estimated	 future	pay increases.	The	accumulated	benefit	obligation	("ABO")	is	the	actuarial	present	value	of	benefits	attributable	to	employee	service	rendered	to	date,	but does	not	include	the	effects	of	estimated	future	pay	increases.	The	ABO	for	all	defined	benefit	pension	plans	as	of	December	31,	2018	and	2017	was $2,944	million	and	$3,382	million,	respectively.

The	following	table	details	the	pension	plans	where	the	benefit	liability	exceeds	the	fair	value	of	the	plan	assets:

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| Plans\twith\tPBO\tin\tExcess\tof\tPlan\tAssets: |  |  |
| Projected\tbenefit\tobligation | $1,935 | $2,544 |
| Fair\tvalue\tof\tplan\tassets | $1,269 | $1,792 |
| Plans\twith\tABO\tin\tExcess\tof\tPlan\tAssets: |  |  |
| Accumulated\tbenefit\tobligation | $1,883 | $2,434 |
| Fair\tvalue\tof\tplan\tassets | $1,269 | $1,749 |

# Net	actuarial	losses	and	prior	service	cost/(credit)	deferred	in	accumulated	other	comprehensive	loss

|  | Pensions | Pensions | Other	Postretirement	Benefits | Other	Postretirement	Benefits |
| :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | 2018 | 2017 | 2018 | 2017 |
| Accumulated\tnet\tactuarial\tlosses | $800 | $835 | $113 | $180 |
| Accumulated\tprior\tservice\tcost\t(credit) | 2 | — | (178) | (239) |
| Total | $802 | $835 | ($65) | ($59) |

The	accumulated	net	actuarial	losses	for	pensions	and	other	postretirement	benefits	relate	primarily	to	historical	declines	in	the	discount	rate	as	well	as updated	mortality	assumptions.	The	accumulated	net	actuarial	losses	exceed	10%	of	the	higher	of	the	market	value	of	plan	assets	or	the	PBO	at	the beginning	of	the	year,	therefore,	amortization	of	such	excess	has	been	included	in	net	periodic	benefit	costs	for	pension	and	other	postretirement	benefits in	each	of	the	last	three	years.	The	amortization	period	is	the	average	remaining	service	period	of	active	employees	expected	to	receive	benefits	unless	a plan	is	mostly	inactive	in	which	case	the	amortization	period	is	the	average	remaining	life	expectancy	of	the	plan	participants.	Accumulated	prior	service cost	(credit)	is	amortized	over	the	future	service	periods	of	those	employees	who	are	active	at	the	dates	of	the	plan	amendments	and	who	are	expected to	receive	benefits.

The	net	decrease	in	Accumulated	other	comprehensive	loss	(pre-tax)	in	 2018	relating	to	defined	benefit	pension	and	other	postretirement	benefits	is primarily	attributable	to	pension	and	other	postretirement	plan	design	changes,	as	follows:

| ($	in	millions) | Pensions | Other	Postretirement	Benefits |
| :--- | :--- | :--- |
| Net\tactuarial\tloss\t(gain)\tarising\tduring\tthe\tyear | $39 | ($47) |
| New\tprior\tservice\tcost | 2 | 1 |
| Amortization\tof\tactuarial\tloss | (63) | (19) |
| Amortization\tof\tprior\tservice\tcredit | — | 60 |
| Foreign\tcurrency\ttranslation\tadjustments | (10) | (1) |
| Impact\tof\tsettlements\tand\tcurtailments | (1) | — |
| Net\tchange | ($33) | ($6) |

The	2018	net	actuarial	gain	related	to	the	Company's	pension	and	other	postretirement	benefit	plans	of	 $8	million	was	primarily	due	to	an	increase	in	the weighted	average	discount	rate	used	to	determine	the	benefit	obligation	at	December	31,	2018,	partially	offset	by	asset	performance	losses	on	plan assets	for	the	year.

# Net	periodic	benefit	cost

Effective	January	1,	2018,	PPG	adopted	ASU	No.	2017-07,	"Improving	the	Presentation	of	Net	Periodic	Pension	Cost	and	Net	Periodic	Postretirement Benefit	Cost."	See	Note	1,	"Summary	of	Significant	Accounting	Policies"	for	more	information.

|  |  | Pensions |  | Other	Postretirement	Benefits | Other	Postretirement	Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Service\tcost | $28 | $33 | $48 | $10 | $10 | $15 |
| Interest\tcost | 97 | 98 | 142 | 24 | 24 | 31 |
| Expected\treturn\ton\tplan\tassets | (150) | (141) | (213) | — | — | — |
| Amortization\tof\tprior\tservice\tcredit | — | — | (1) | (60) | (59) | (31) |
| Amortization\tof\tactuarial\tlosses | 63 | 75 | 110 | 19 | 12 | 19 |
| Settlements,\tcurtailments,\tand\tspecial\ttermination\tbenefits | 5 | 60 | 1,015 | — | — | — |
| Net\tperiodic\tbenefit\tcost/(income) | $43 | $125 | $1,101 | ($7) | ($13) | $34 |

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	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	consolidated	statements	of income.

# Key	assumptions

The	 following	 weighted	 average	 assumptions	 were	 used to	 determine the	 benefit	 obligation for the	 Company's	 defined	 benefit	 pension	 and	 other postretirement	plans	as	of	December	31,	2018	and	2017:

The	following	weighted	average	assumptions	were	used	to	determine	the	net	periodic	benefit	cost	for	the	Company's	defined	benefit	pension	and	other postretirement	benefit	plans	for	the	three	years	in	the	period	ended	December	31,	2018:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Discount\trate | 3.2% | 3.6% | 3.6% |
| Expected\treturn\ton\tassets | 5.4% | 5.4% | 6.1% |
| Rate\tof\tcompensation\tincrease | 1.2% | 1.3% | 1.6% |

These	 assumptions	 for	 each	 plan	 are	 reviewed	 on	 an	 annual	 basis.	 In	 determining	 the	 expected	 return	 on	 plan	 asset	 assumption,	 the	 Company evaluates	 the	 mix	 of	 investments	 that	 comprise	 each	 plan's	 assets	 and	 external	 forecasts	 of	 future	 long-term	 investment	 returns.	 The	 Company compares	 the	 expected	 return	 on	 plan	 assets	 assumption	 to	 actual	 historic	 returns	 to	 ensure	 reasonability.	 For	2018,	 the	 return	 on	 plan	 assets assumption	for	PPG's	U.S.	defined	benefit	pension	plans	was	7.4%.	A	change	in	the	rate	of	return	of	1	percentage	point,	with	other	assumptions	held constant,	would	impact	2018

net	periodic	pension	expense	by	$12	million.	The	global	expected	return	on	plan	assets	assumption	to	be	used	in	determining 2019	net	periodic	pension expense	will	be	5.4%	(7.4%	for	the	U.S.	plans	only).

The	 discount	 rate	 used	 in	 accounting	 for	 pensions	 and	 other	 postretirement	 benefits	 is	 determined	 by	 reference	 to	 a	 current	 yield	 curve	 and	 by considering	the	timing	and	amount	of	projected	future	benefit	payments.	In	2016,	the	Company	changed	the	method	it	uses	to	estimate	the	service	and interest	cost	components	of	net	periodic	benefit	cost	for	pension	and	other	postretirement	benefit	costs	for	substantially	all	of	its	U.S.	and	foreign	plans. Historically,	the	service	and	interest	cost	components	were	estimated	using	a	single	weighted-average	discount	rate	derived	from	the	yield	curve	used	to measure	the	projected	benefit	obligation	at	the	beginning	of	the	period.	The	Company	has	elected	to	use	a	full	yield	curve	approach	("Split-rate"	method) in	the	estimation	of	these	components	of	benefit	cost	by	applying	specific	spot	rates	along	the	yield	curve	used	in	the	determination	of	the	benefit obligation	to	the	relevant	projected	cash	flows.	The	Company	made	this	change	to	improve	the	correlation	between	projected	benefit	cash	flows	and	the corresponding	 yield	 curve	 spot	 rates	 and	 to	 provide	 a	 more	 precise	 measurement	 of	 service	 and	 interest	 costs.	This	 change	 does	 not	 affect	 the measurement	of	the	Company's	total	benefit	obligations.	The	Company	accounted	for	this	change	as	a	change	in	estimate	and,	accordingly,	began recognizing	its	effect	in	fiscal	year	2016.	A	change	in	the	discount	rate	of	1	percentage	point,	with	all	other	assumptions	held	constant,	would	impact 2019	net	periodic	benefit	expense	for	our	defined	benefit	pension	and	other	postretirement	benefit	plans	by	 $19	million	and	$22	million,	respectively.

In	 2018,	 the	 Company	 updated	 mortality	 tables	 used	 to	 calculate	 its	 U.S.	 defined	 benefit	 pension	 and	 other	 postretirement	 benefit	 liabilities.	 The Company	considered	the	available	mortality	tables	released	by	the	Society	of	Actuaries'	Retirement	Plans	Experience	Committee	and	performed	a review	of	its	own	mortality	history,	as	well	the	industry	in	which	the	Company	operates	to	assess	future	improvements	in	mortality	rates	based	on	its	U.S. population.	The	Company	chose	to	value	its	U.S.	defined	benefit	pension	and	other	postretirement	benefit	liabilities	using	a	slightly	modified	assumption of	future	mortality	which	better	approximates	our	plan	participant	population.

The	weighted-average	healthcare	cost	trend	rate	(inflation)	used	for	 2018	 was	5.8%	declining	to	a	projected	4.5%	 in	 the	year	2024.	 For	2019,	the assumed	 weighted-average	 healthcare	 cost	 trend	 rate	 used	 will	 be	5.6%	 declining	 to	 a	 projected	4.4%	 between	 2018	 and	 2039	 for	 medical	 and prescription	drug	costs,	respectively.	These	assumptions	are	reviewed	on	an	annual	basis.	In	selecting	rates	for	current	and	long-term	health	care	cost assumptions,	the	Company	takes	into	consideration	a	number	of	factors,	including	the	Company's	actual	health	care	cost	increases,	the	design	of	the Company's	 benefit	 programs,	 the	 demographics	 of	 the	 Company's	 active	 and	 retiree	 populations	 and	 external	 expectations	 of	 future	 medical	 cost inflation	rates.

# Contributions	to	defined	benefit	pension	plans

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| U.S.\tdefined\tbenefit\tpension\tplans(a) | $75 | $54 | $134 |
| Non-U.S.\tdefined\tbenefit\tpension\tplans(b) | $24 | $33 | $54 |

(a) During	2016,	U.S.	contributions	totaling	$12	million	associated	with	the	former	glass	segment	were	recast	as	cash	flows	from	operations	-	discontinued	operations	and	are excluded	from	the	table	above.

(b) During	2016,	non-U.S.	contributions	 totaling	$4	million	associated	with	the	former	European	fiberglass	business	were	recast	as	cash	flows	from	operations	-	discontinued operations	and	are	excluded	from	the	table	above.

PPG	made	voluntary	contributions	of	$75	million	to	its	U.S.	defined	benefit	pension	plans	in	2018.	Contributions	made	to	PPG's	non-U.S.	defined	benefit pension	plans	in	2018	and	2017	were	required	by	local	funding	requirements.	PPG	expects	to	make	mandatory	contributions	to	its	non-U.S.	plans	in	the range	of	$20	million	to	$30	million	in	2019.	PPG	may	make	voluntary	contributions	to	its	defined	benefit	pension	plans	in	2019	and	beyond.

# Benefit	payments

The	estimated	benefits	expected	to	be	paid	under	the	Company's	defined	benefit	pension	and	other	postretirement	benefit	plans	are:

| ($	in	millions) | Pensions | Benefits |
| :--- | :--- | :--- |
| 2019 | $136 | $53 |
| 2020 | $139 | $53 |
| 2021 | $145 | $53 |
| 2022 | $147 | $52 |
| 2023 | $153 | $51 |
| 2024\tto\t2028 | $826 | $228 |

# U.S.	Qualified	Pension

Beginning	in	2012,	the	Company	initiated	a	lump	sum	payout	program	that	gave	certain	terminated	vested	participants	in	certain	U.S.	defined	benefit pension	plans	the	option	to	take	a	one-time	lump	sum	cash	payment	in	lieu	of	receiving	a	future	monthly	annuity.		During	2017,	PPG	paid	$87	million	in lump	sum	benefits	to	terminated	vested	participants	who	elected	to	participate	in	the	program.		As	the	lump-sum	payments	were	in	excess	of	the expected	2017	service	and	interest	costs	for	the	qualified	pension	plans,	PPG	remeasured	the	periodic	benefit	obligation	of	the	qualified	plans	and recorded	a	settlement	charge	totaling	$35	million	($22	million	after-tax).

# U.S.	Non-qualified	Pension

In	 the	 first	 quarter	 2017,	 PPG	 made	 lump-sum	 payments	 to	 certain	 retirees	 who	 had	 participated	 in	 PPG's	 U.S.	 non-qualified	 pension	 plan	 (the "Nonqualified	Plan")	totaling	approximately	$40	million.	As	the	lump-sum	payments	were	in	excess	of	the	expected	2017	service	and	interest	costs	for the	Nonqualified	Plan,	PPG	remeasured	the	periodic	benefit	obligation	of	the	Nonqualified	Plan	as	of	March	1,	2017	and	recorded	a	settlement	charge totaling	$22	million	($14	million	after-tax).

# Plan	assets

Each	PPG	sponsored	defined	benefit	pension	plan	is	managed	in	accordance	with	the	requirements	of	local	laws	and	regulations	governing	defined benefit	pension	plans	for	the	exclusive	purpose	of	providing	pension	benefits	to	participants	and	their	beneficiaries.	Investment	committees	comprised	of PPG	managers	have	fiduciary	responsibility	to	oversee	the	management	of	pension	plan	assets	by	third	party	asset	managers.	Pension	plan	assets	are held	in	trust	by	financial	institutions	and	managed	on	a	day-to-day	basis	by	the	asset	managers.	The	asset	managers	receive	a	mandate	from	each investment	committee	 that	 is	aligned	with	 the	asset	allocation	 targets	established	by	each	 investment	committee	 to	achieve	 the	plan's	 investment strategies.	The	performance	of	the	asset	managers	is	monitored	and	evaluated	by	the	investment	committees	throughout	the	year.

Pension	plan	assets	are	invested	to	generate	investment	earnings	over	an	extended	time	horizon	to	help	fund	the	cost	of	benefits	promised	under	the plans	while	mitigating	investment	risk.	The	asset	allocation	targets	established	for	each	pension	plan	are	intended	to	diversify	the	investments	among	a variety	of	asset	categories	and	among	a	variety	of	individual	securities	within	each	asset	category	to	mitigate	investment	risk	and	provide	each	plan	with sufficient	liquidity	to	fund	the	payment	of	pension	benefits	to	retirees.

The	following	summarizes	the	weighted	average	target	pension	plan	asset	allocation	as	of	 December	31,	2018	and	2017	for	all	PPG	defined	benefit plans:

The	fair	values	of	the	Company's	pension	plan	assets	at	 December	31,	2018	and	2017,	by	asset	category,	are	as	follows:

|  |  | December	31,	2018 |  |  |  | December	31,	2017 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | Level\t1(1) | Level\t2(1) | Level\t3(1) | Total | Level\t1(1) | Level\t2(1) | Level\t3(1) | Total |
| Asset\tCategory |  |  |  |  |  |  |  |  |
| Equity\tsecurities: |  |  |  |  |  |  |  |  |
| U.S. |  |  |  |  |  |  |  |  |
| Large\tcap | $43 | $94 | $— | $137 | $— | $83 | $— | $83 |
| Small\tcap | 23 | — | — | 23 | 29 | — | — | 29 |
| Non-U.S. |  |  |  |  |  |  |  |  |
| Developed\tand\temerging\tmarkets(2) | 115 | 103 | — | 218 | 115 | 79 | — | 194 |
| Debt\tsecurities: |  |  |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | 3 | 19 | — | 22 | — | 11 | — | 11 |
| Corporate(3) |  |  |  |  |  |  |  |  |
| U.S.(4) | — | 220 | 77 | 297 | — | 201 | 86 | 287 |
| Developed\tand\temerging\tmarkets(2) | — | 4 | — | 4 | — | 43 | — | 43 |
| Diversified(5) | — | 142 | — | 142 | — | 124 | — | 124 |
| Government |  |  |  |  |  |  |  |  |
| U.S.(4) | 68 | 8 | — | 76 | 68 | 1 | — | 69 |
| Developed\tmarkets | — | 6 | — | 6 | — | 101 | — | 101 |
| Other(6) | — | 14 | 359 | 373 | — | 14 | 418 | 432 |
| Real\testate,\thedge\tfunds,\tand\tother | — | 304 | 359 | 663 | — | 185 | 498 | 683 |
| Total\tassets\tin\tthe\tfair\tvalue\thierarchy | $252 | $914 | $795 | $1,961 | $212 | $842 | $1,002 | $2,056 |
| Common-collective\ttrusts(7) | — | — | — | 657 | — | — | — | 827 |
| Total\tInvestments | $252 | $914 | $795 | $2,618 | $212 | $842 | $1,002 | $2,883 |

(1) These	levels	refer	to	the	accounting	guidance	on	fair	value	measurement	described	in	Note	10,	"Financial	Instruments,	Hedging	Activities	and	Fair	Value	Measurements."

(2) These	amounts	represent	holdings	in	investment	grade	debt	or	equity	securities	of	issuers	in	both	developed	markets	and	emerging	economies.

(3) This	 category	 represents	 investment	 grade	 debt	 securities	 from	 a	 diverse	 set	 of	 industry issuers.

(4) These investments are primarily long duration fixed income securities.

(5) This	 category represents commingled funds invested in diverse portfolios of debt securities.

(6) This	 category includes	 mortgage-backed	 and	 asset	 backed	 debt securities,	 municipal	 bonds	 and	 other	 debt securities including derivatives.

(7) Certain	 investments that	are	measured	at	net	asset	value	per	share	(or its	equivalent)	are	not	required to	be	classified in the fair	value hierarchy.

The	change	in	the	fair	value	of	the	Company's	Level	3	pension	assets	for	the	years	ended December	31,	2018	and	2017	was	as	follows:

| ($	in	millions) | Real	Estate | Other	Debt	Securities | Other	Assets | Total |
| :--- | :--- | :--- | :--- | :--- |
| January\t1,\t2017 | $129 | $16 | $370 | $515 |
| Realized\tgains | 11 | 45 | 3 | 59 |
| Unrealized\tlosses | — | — | 5 | 5 |
| Transfers\t(out)/in,\tnet | (5) | 355 | 36 | 386 |
| Foreign\tcurrency\tlosses | 3 | 2 | 32 | 37 |
| December\t31,\t2017 | $138 | $418 | $446 | $1,002 |
| Realized\tgains\t(losses) | 9 | (29) | 10 | (10) |
| Unrealized\tlosses | — | — | (28) | (28) |
| Transfers\t(out)/in,\tnet | (6) | (12) | (119) | (137) |
| Foreign\tcurrency\tloss | (4) | (18) | (10) | (32) |
| December\t31,\t2018 | $137 | $359 | $299 | $795 |

Real	estate	properties	are	externally	appraised	at	least	annually	by	reputable,	independent	appraisal	firms.	Property	valuations	are	also	reviewed	on	a regular	basis	and	are	adjusted	if	there	has	been	a	significant	change	in	circumstances	related	to	the	property	since	the	last	valuation.

Other	debt	securities	consist	of	insurance	contracts,	which	are	externally	valued	by	insurance	companies	based	on	the	present	value	of	the	expected future	cash	flows.

Hedge	funds	consist	of	a	wide	range	of	investments	which	target	a	relatively	stable	investment	return.	The	underlying	funds	are	valued	at	different frequencies,	some	monthly	and	some	quarterly,	based	on	the	value	of	the	underlying	investments.	Other	assets	consist	primarily	of	small	investments	in private	equity	funds	and	senior	secured	debt	obligations	of	non-investment	grade	borrowers.

# U.S.	pension	annuity	contracts

In	June	2016,	the	Company	entered	into	a	Definitive	Purchase	Agreement	by	and	among	the	Company,	Massachusetts	Mutual	Life	Insurance	Company ("MassMutual")	and	State	Street	Bank	&	Trust	Company	("State	Street"),	as	 independent	 fiduciary	 to	 the	Company's	United	States	defined	benefit pension	plans	(the	"Plans"),	and	a	Definitive	Purchase	Agreement	by	and	among	the	Company,	Metropolitan	Life	Insurance	Company	("MetLife")	and State	Street.

In	August	2016,	pursuant	to	the	two	Definitive	Purchase	Agreements,	the	Plans	purchased	group	annuity	contracts	that	irrevocably	transferred	to	the	 two insurance	companies	certain	pension	benefit	obligations	for	approximately	13,200	of	the	Company's	retirees	in	the	United	States	who	started	receiving their	monthly	retirement	benefit	payments	on	or	before	April	1,	2016.	The	value	of	the	benefit	obligation	of	each	affected	former	salaried	employee's retirement	benefit	obligation	is	irrevocably	guaranteed	by,	and	split	equally	between,	MassMutual	and	MetLife.	Pursuant	to	these	Definitive	Purchase Agreements,	 MassMutual	 serves	 as	 the	 lead	 administrator.	 The	 value	 of	 each	 affected	 former	 hourly	 employee's	 retirement	 benefit	 obligation	 is irrevocably	guaranteed	by	MetLife,	and	MetLife	will	serve	as	the	administrator.	The	amount	of	each	affected	retiree's	annuity	payment	is	equal	to	the amount	of	such	individual's	pension	benefit.	The	purchase	of	group	annuity	contracts	was	funded	directly	by	the	assets	of	the	Plans.	By	irrevocably transferring	 the	 obligations	 and	 assets	 to	 MassMutual	 and	 MetLife,	 the	 Company	 reduced	 its	 overall	 pension	 projected	 benefit	 obligation	 by approximately	$1.6	billion	and	recognized	a	non-cash	pension	settlement	charge	of	approximately	 $535	million	after-tax	($857	million	pre-tax).

Following	the	transfer	of	the	aforementioned	U.S.	retiree	obligations	and	assets	to	third	party	insurers,	PPG	contributed $29	million	and	$146	million	to	its U.S.	plans	in	2017	and	2016,	respectively.	These	contributions	were	funded	using	cash	on	hand.

During	2016,	in	advance	of	the	purchase	of	group	annuity	contracts,	PPG	merged	two	of	its	qualified	defined	benefit	pension	plans	that	contained	retired plan	participants	into	one	surviving	plan.	In	conjunction	with	the	merger	and	purchase	of	group	annuity	contracts,	PPG	remeasured	its	qualified	pension plan	benefit	obligations	using	prevailing	discount	rates	as	of	July	31,	2016	which	averaged	3.6%	as	compared	to	a	4.5%	discount	rate	as	of	December 31,	2015.	The	remeasurement	increased	the	Company's	cumulative	pension	benefit	obligation	of	its	remaining	plans	by	$306	million	and	increased	the Company's	full	year	2016	qualified	defined	benefit	pension	expense	by	approximately	$10	million.

# Canadian	pension	annuity	contracts

In	 2016,	 the	 Company	 purchased	 group	 annuity	 contracts	 that	 transferred	 pension	 benefit	 obligations	 for	 certain	 of	 the	 Company's	 retirees	 and terminated	 vested	 participants	 in	 Canada	 who	 started	 receiving	 their	 monthly	 retirement	 benefit	 payments	 on	 or	 before	April	 1,	 2016	 to	 Sun	 Life Assurance	Company	of	Canada	("Sun	Life")	and	The	Canada	Life	Assurance	Company	("Canada	Life").	The	amount	of	each	affected	retiree's	annuity payment	is	equal	to	the	amount	of	such	individual's	pension	benefit.	The	purchase	of	group	annuity	contracts	was	funded	directly	by	the	assets	of	the Canadian	plans.	By	transferring	the	obligations	and	assets	to	Sun	Life	and	Canada	Life,	the	Company	reduced	its	overall	pension	projected	benefit obligation	 by	 approximately	$200	million	 and	 recognized	 a	 non-cash	 pension	 settlement	 charge	 of	 $47	million	after-tax	($64	 million	 pre-tax).	 The Company	 made	 voluntary	 contributions	 aggregating	$7	 million	 to	 the	 Canadian	 plans	 in	 2016	 related	 to	 the	 pension	 annuity	 contracts.	 These contributions	were	funded	using	cash	on	hand.

# Sale	of	the	flat	glass	business

In	2016,	PPG	completed	the	sale	of	its	flat	glass	business	as	discussed	in	Note	 3,	"Acquisitions	and	Divestitures."	PPG	transferred	to	Vitro	certain defined	benefit	pension	liabilities	resulting	in	a	settlement	charge	of	$11	million	which	was	included	in	Income	from	discontinued	operations,	net	of	tax. This	transaction	lowered	the	projected	benefit	obligation	of	PPG's	defined	benefit	pension	plan	by	approximately	$100	million.	PPG	transferred	pension assets	of	$55	million	in	2016	in	connection	with	the	sale	and	transferred	an	additional	 $20	million	of	pension	assets	in	2018	as	a	result	of	finalization	of the	pension	transfer.

# Sale	of	the	European	fiber	glass	business

In	2016,	PPG	completed	the	sale	of	its	European	fiber	glass	business	as	discussed	in	Note	 3,	"Acquisitions	and	Divestitures."	PPG	transferred	to	NEG certain	 defined	 benefit	 pension	 liabilities	 resulting	 in	 a	 net	 settlement	 charge	 of	$46	million.	This	 amount	 is	 included	 in	 Income	 from	 discontinued operations,	net	of	tax	in	2016.This	transaction	lowered	the	projected	benefit

obligation	of	PPG's	defined	benefit	pension	plans	by	approximately $340	million.	In	2016,	PPG	transferred	pension	assets	of	approximately	 $250	million in	connection	with	the	sale.

# Retained	liabilities	and	legacy	settlement	charges

PPG	 has	 retained	 certain	 liabilities	 for	 defined	 benefit	 pension	 and	 postretirement	 benefits	 earned	 for	 service	 up	 to	 the	 date	 of	 sale	 of	 its	 former automotive	glass	and	service	business	for	employees	who	were	active	as	of	the	divestiture	date	and	for	individuals	who	were	retirees	of	the	business	as of	the	divestiture	date,	totaling	$313	million	and	$369	million	at	December	31,	2018	and	2017,	respectively.	PPG	recognized	expense	of	 $1	million,	$2 million,	and	$20	million	related	to	these	obligations	in	 2018,	2017,	and	2016,	respectively.

There	have	been	multiple	PPG	facility	closures	in	Canada.	These	various	plant	closures	have	resulted	in	partial	and	full	windups,	and	related	settlement charges,	of	pension	plans	for	various	hourly	and	salary	employees	employed	by	these	locations.	The	charges	are	recorded	for	the	individual	plans	when a	particular	windup	 is	approved	 by	 the	 Canadian	 pension	 authorities	 and	 the	 Company	 has	 made	 all	 contributions	 to	 the	 individual	 plan	 and	 has discharged	the	liability	through	either	lump	sum	payments	to	participants	or	purchasing	annuities.	The	Company	may	incur	additional	charges	related	to this	matter	in	the	future.

During	2016,	PPG	completed	the	wind-up	of	two	legacy	Canadian	plans	and	recorded	after-tax	wind-up	charges	totaling	 $34	million	($47	million	pre-tax). Cash	contributions	made	in	conjunction	with	these	windups	were	approximately	$1	million.

# Other	Plans

# Defined	contribution	plans

The	Company	has	defined	contribution	plans	for	certain	employees	in	the	U.S.,	China,	United	Kingdom,	Australia,	Italy,	and	other	countries.	For	the years	ended	December	31,	2018,	2017,	and	2016,	the	Company	recognized	expense	for	its	defined	contribution	retirement	plans	of	 $63	million,	$57 million	and	$70	million,	respectively.	The	Company's	annual	cash	contributions	to	its	defined	contribution	retirement	plans	approximated	the	expense recognized	in	each	year.

# Employee	savings	plan

PPG's	Employee	Savings	Plan	("Savings	Plan")	covers	substantially	all	employees	in	the	U.S.,	Puerto	Rico	and	Canada.	The	Company	makes	matching contributions	to	the	Savings	Plan,	at	management's	discretion,	based	upon	participants'	savings,	subject	to	certain	limitations.	For	most	participants	not covered	by	a	collective	bargaining	agreement,	Company-matching	contributions	are	established	each	year	at	the	discretion	of	the	Company	and	are applied	to	participant	savings	up	to	a	maximum	of	6%	of	eligible	participant	compensation.	For	those	participants	whose	employment	is	covered	by	a collective	bargaining	agreement,	the	level	of	Company-matching	contribution,	if	any,	is	determined	by	the	relevant	collective	bargaining	agreement.	The Company-matching	contribution	remained	at	100%	for	2018.

In	2016,	the	Company	terminated	its	U.S.	defined	contribution	plan	and	subsequently	merged	the	plan	into	the	Savings	Plan.	Under	the	combined	plan, eligible	employees	will	continue	to	receive	a	contribution	equal	to	between	2%	and	5%	of	annual	compensation,	based	on	age	and	years	of	service.

Compensation	expense	and	cash	contributions	related	to	the	Company	match	of	participant	contributions	to	the	Savings	Plan	for	 2018,	2017,	and	2016 totaled	$47	million,	$46	million	and	$48	million,	respectively.	A	portion	of	the	Savings	Plan	qualifies	under	the	Internal	Revenue	Code	as	an	Employee Stock	Ownership	Plan.	Accordingly,	dividends	received	on	PPG	shares	held	in	that	portion	of	the	Savings	Plan	totaling	$13	million,	$14	million,	and	$14 million	for	2018,	2017,	and	2016,	respectively,	are	deductible	for	U.S.	Federal	tax	purposes.

# Deferred	compensation	plan

The	Company	has	a	deferred	compensation	plan	for	certain	key	managers	which	allows	them	to	defer	a	portion	of	their	compensation	in	a	phantom	PPG stock	account	or	other	phantom	investment	accounts.	The	amount	deferred	earns	a	return	based	on	the	investment	options	selected	by	the	participant. The	amount	owed	to	participants	is	an	unfunded	and	unsecured	general	obligation	of	the	Company.	Upon	retirement,	death,	disability,	termination	of employment,	scheduled	payment	or	unforeseen	emergency,	the	compensation	deferred	and	related	accumulated	earnings	are	distributed	in	accordance with	the	participant's	election	in	cash	or	in	PPG	stock,	based	on	the	accounts	selected	by	the	participant.

The	plan	provides	participants	with	investment	alternatives	and	the	ability	to	transfer	amounts	between	the	phantom	non-PPG	stock	investment	accounts. To	mitigate	the	impact	on	compensation	expense	of	changes	in	the	market	value	of	the	liability,	the	Company	has	purchased	a	portfolio	of	marketable securities	 that	 mirror	 the	 phantom	 non-PPG	 stock	 investment	 accounts	 selected	 by	 the	 participants,	 except	 the	 money	 market	 accounts.	 These investments	are	carried	by	PPG	at	fair	market	value,	and	the	changes	in	market	value	of	these	securities	are	also	included	in	Income	before	income	taxes in	 the	consolidated	statement	of	 income.	Trading	occurs	 in	 this	portfolio	 to	align	 the	securities	held	with	 the	participant's	phantom	non-PPG	stock investment	accounts,	except	the	money	market	accounts.

The	(benefit)	cost	of	the	deferred	compensation	plan,	comprised	of	dividend	equivalents	accrued	on	the	phantom	PPG	stock	account,	investment	income and	the	change	in	market	value	of	the	liability,	was	$(1)	million,	$19	million	and	$7	million	in	2018,	2017	and	2016,	respectively.	These	amounts	are included	in	Selling,	general	and	administrative	in	the	consolidated	statements	of	income.	The	change	in	market	value	of	the	investment	portfolio	was (expense)	 income	 of	$(2)	million,	 $18	million,	 and	$5	million	 in	2018,	 2017	 and	2016,	 respectively,	 and	 is	 also	 included	 in	 Selling,	 general	 and administrative	in	the	consolidated	statements	of	income.

The	Company's	obligations	under	this	plan,	which	are	included	in	Accounts	payable	and	accrued	liabilities	and	Other	liabilities	on	the	consolidated balance	sheet,	totaled	$110	million	and	$121	million	as	of	December	31,	2018	and	2017,	respectively,	and	the	investments	in	marketable	securities, which	are	included	in	Investments	and	Other	current	assets	on	the	accompanying	consolidated	balance	sheet,	were	$73	million	and	$83	million	as	of December	31,	2018	and	2017,	respectively.

# 14.	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,	antitrust,	employment	and	other 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,	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.	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.

# 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).

# Pittsburgh	Corning	Corporation	asbestos	bankruptcy	settlement

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:	(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	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	liability	or	responsibility	for,	and	will	be	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	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	or	the	modified	third	amended	Plan,	and	consider	any	requests	to	reopen	the	case.

The	following	table	outlines	the	impact	on	PPG's	financial	statements	for	the	year-ended	December	31,	2016,	including	the	change	in	fair	value	of	the PPG	stock	contributed	to	the	Trust,	the	equity	forward	instrument	and	the	increase	in	the	net	present	value	of	the	payments	made	to	the	trust.

|  | Asbestos	Settlement	Liability |  | Equity	Forward |  |
| :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions) | Current | Long-term | (Asset)\tLiability | Pre-tax\tCharge |
| Balance\tas\tof\tand\tActivity\tfor\tthe\tyear\tended\tDecember\t31,\t2015 | $796 | $252 | ($223) | $12 |
| Change\tin\tfair\tvalue: |  |  |  |  |
| PPG\tstock | 34 | — | — | 34 |
| Equity\tforward\tinstrument | — | — | (35) | (35) |
| Accretion\tof\tasbestos\tliability | — | 6 | — | 6 |
| Settlement\tof\tequity\tforward\tinstrument\twith\tcounterparty\t(a) | — | — | (49) | — |
| Contribution\tof\tPCE\tshares\tand\trelinquishment\tof\tPC\tinvestment | (15) | — | — | — |
| Contribution\tof\t2,777,778\tshares\tof\tPPG\tstock\tto\tthe\tPC\tTrust | (308) | — | 308 | — |
| Contribution\tof\tcash\tto\tthe\tPC\tTrust\t(a) | (506) | (258) | — | — |
| Reclassification | (1) | — | (1) | — |
| Balance\tas\tof\tand\tActivity\tfor\tthe\tyear\tended\tDecember\t31,\t2016 | $— | $— | $— | $5 |

(a) Cash	 outflows related to the	 asbestos	 settlement funding totaled	$813	 million in 2016.

# 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	remaining	claims	not	identified	above	and	still	reportable	within	the	inventory	of	 114,000	asbestos-related	claims	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	claims	against	it.

# Current	open	and	active	claims	post-Pittsburgh	Corning	bankruptcy

The	Company	is	aware	of	approximately	460	open	and	active	asbestos-related	claims	pending	against	the	Company	and	certain	of	its	subsidiaries. These	claims	consist	primarily	of	non-PC	Relationship	Claims	and	claims	against	a	subsidiary	of	PPG.	The	Company	is	defending	the	remaining	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	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	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	consolidated	balance	sheets,	represent	PPG's	best	estimate	of	its	liability	for	these	claims.	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.	PPG	will	monitor	the activity	associated	with	its	remaining	asbestos	claims	and	evaluate,	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.

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.

As	of	December	31,	2018	and	2017,	PPG	had	reserves	for	environmental	contingencies	associated	with	PPG's	former	chromium	manufacturing	plant	in Jersey	City,	N.J.	("New	Jersey	Chrome")	and	for	other	environmental	contingencies,	including	National	Priority	List	sites	and	legacy	glass	and	chemical manufacturing	sites.	These	reserves	are	reported	as	Accounts	payable	and	accrued	liabilities	and	Other	liabilities	in	the	accompanying	consolidated balance	sheet.

# Environmental	Reserves

| ($	in	millions) | 2018 | 2017 |
| :--- | :--- | :--- |
| New\tJersey\tChrome | $151 | $136 |
| Glass\tand\tchemical | 90 | 71 |
| Other | 50 | 51 |
| Total | $291 | $258 |
| Current\tPortion | $105 | $73 |

Pre-tax	charges	against	income	for	environmental	remediation	costs	are	included	in	"Other	charges"	in	the	accompanying	consolidated	statement	of income.	The	pre-tax	charges	and	cash	outlays	related	to	such	environmental	remediation	in	2018,

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| New\tJersey\tChrome | $62 | $4 | $60 |
| Other | 16 | 6 | 34 |
| Total | $78 | $10 | $94 |
| Cash\toutlays\tfor\tenvironmental\tspending | $64 | $44 | $47 |

The	Company	continues	to	analyze,	assess	and	remediate	the	environmental	issues	associated	with	New	Jersey	Chrome	as	further	discussed	below. During	the	past	three	years,	charges	for	estimated	environmental	remediation	costs	were	significantly	higher	than	PPG's	historical	range.	Excluding	the charges	related	to	New	Jersey	Chrome,	pre-tax	charges	against	income	for	environmental	remediation	have	ranged	between	approximately	$5	million and	$35	million	per	year	for	the	past	10	years.

Management	expects	cash	outlays	for	environmental	remediation	costs	to	range	from	 $80	million	to	$100	million	in	2019	and	$20	million	to	$50	million annually	from	2020	through	2023.

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	as	discussed	below.

# 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.	In	2018	and	2016,	PPG	completed	updated	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	has	been	adjusted	accordingly	as	noted	 in	 the	 table	above.	Principal	 factors	affecting	costs	 included	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 increased	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.	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.

PPG's	financial	reserve	for	remediation	of	all	New	Jersey	Chrome	sites	is	 $151	million	at	December	31,	2018.	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	22%,	19%	and	28%	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.	Final	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	be	adjusted.

# Remediation:	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'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.	PPG	is	currently	performing	additional investigation	activities	at	this	location.

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.

# 15.	Shareholders'	Equity

A	class	of	10	million	shares	of	preferred	stock,	without	par	value,	is	authorized	but	unissued.	Common	stock	has	a	par	value	of	$1.66 	2/3	per	share;	1.2 billion	shares	are	authorized.

|  | Common	Stock | Treasury	Stock | Shares	Outstanding |
| :--- | :--- | :--- | :--- |
| January\t1,\t2016 | 581,146,136 | (314,270,127) | 266,876,009 |
| Purchases | — | (10,725,869) | (10,725,869) |
| Issuances | — | 1,180,020 | 1,180,020 |
| December\t31,\t2016 | 581,146,136 | (323,815,976) | 257,330,160 |
| Purchases | — | (7,427,557) | (7,427,557) |
| Issuances | — | 1,271,796 | 1,271,796 |
| December\t31,\t2017 | 581,146,136 | (329,971,737) | 251,174,399 |
| Purchases | — | (15,877,364) | (15,877,364) |
| Issuances | — | 564,399 | 564,399 |
| December\t31,\t2018 | 581,146,136 | (345,284,702) | 235,861,434 |

# 16.	Accumulated	Other	Comprehensive	Loss

| ($	in	millions) | Unrealized	Foreign	Currency<br>Translation	Adjustments | Pension	and	Other	Postretirement<br>Benefit	Adjustments,	net	of	tax	(c) | Unrealized	Gain	(Loss)	on<br>Derivatives,	net	of	tax	(d) | Accumulated	Other<br>Comprehensive	Loss |
| :--- | :--- | :--- | :--- | :--- |
| January\t1,\t2016 | ($1,332) | ($1,379) | $9 | ($2,702) |
| Current\tyear\tdeferrals\tto\tAOCI\t(a) | (299) | — | — | (299) |
| Current\tyear\tdeferrals\tto\tAOCI,\ttax\teffected\t(b) | (167) | 29 | 3 | (135) |
| Reclassifications\tfrom\tAOCI\tto\tnet\tincome | — | 779 | 1 | 780 |
| Period\tchange | ($466) | $808 | $4 | $346 |
| December\t31,\t2016 | ($1,798) | ($571) | $13 | ($2,356) |
| Current\tyear\tdeferrals\tto\tAOCI\t(a) | 542 | — | — | 542 |
| Current\tyear\tdeferrals\tto\tAOCI,\ttax\teffected\t(b) | (311) | 20 | (4) | (295) |
| Reclassifications\tfrom\tAOCI\tto\tnet\tincome | — | 58 | (6) | 52 |
| Period\tchange | $231 | $78 | ($10) | $299 |
| December\t31,\t2017 | ($1,567) | ($493) | $3 | ($2,057) |
| Current\tyear\tdeferrals\tto\tAOCI\t(a) | (292) | — | — | (292) |
| Current\tyear\tdeferrals\tto\tAOCI,\ttax\teffected\t(b) | 148 | (12) | (7) | 129 |
| Reclassifications\tfrom\tAOCI\tto\tnet\tincome | — | 21 | 6 | 27 |
| Period\tchange | ($144) | $9 | ($1) | ($136) |
| Reclassification\tfrom\tAOCI\tto\tRetained\tearnings\t-\nAdoption\tof\tASU\t2018-02 | (23) | (84) | — | (107) |
| December\t31,\t2018 | ($1,734) | ($568) | $2 | ($2,300) |

(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	 benefit	 (cost)	 related	 to	 unrealized	 foreign	 currency	 translation	 adjustments	 on	 tax inter-branch transactions	 and	 net investment	 hedges for the	 years	 ended December	31,	2018,	2017	and	2016	was	$4	million,	$141	million	and	$(34)	million,	respectively.

(c) The	tax	cost	related	to	the	adjustment	for	pension	and	other	postretirement	benefits	for	the	years	ended	December	31,	2018,	2017	and	2016	was	$(34)	million,	$(33)	million	and $(403)	million,	respectively.	Reclassifications	from	AOCI	are	included	in	the	computation	of	net	periodic	benefit	costs	(See	Note	13,	"Employee	Benefit	Plans").	The	cumulative tax	benefit	related	to	the	adjustment	for	pension	and	other	postretirement	benefits	at	December	31,	2018	and	2017	was	$209	million	and	$243	million,	respectively.

(d) The	tax	cost	related	to	the	change	in	the	unrealized	loss	on	derivatives	for	the	year	ended	December	31,	2018	 was	$2	million.	The	tax	cost	related	to	the	change	in	the unrealized	gain	on	derivatives	for	the	years	ended	December	31,	2017	and	2016	was	$5	million	and	$2	million,	respectively.	Reclassifications	from	AOCI	are	included	in	the gain	or	loss	recognized	on	cash	flow	hedges	(See	Note	10	"Financial	Instruments,	Hedging	Activities	and	Fair	Value	Measurements").

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Gain\ton\tsale\tof\tassets(1) | $33 | $28 | $6 |
| Royalty\tincome | 10 | 11 | 12 |
| Share\tof\tnet\tearnings\tof\tequity\taffiliates\t(See\tNote\t6) | 16 | 12 | 8 |
| Gain\ton\tdisposals\tof\townership\tinterests\tin\tbusiness\taffiliates | — | 25 | 46 |
| Income\tfrom\ta\tlegal\tsettlement | — | 18 | — |
| Other | 55 | 56 | 55 |
| Total | $114 | $150 | $127 |

(1) Includes	a	$26	million	gain	on	the	sale	of	land	near	a	facility	of	the	Company's	former	commodity	chemicals	business	in 2018.

# 18.	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	7.8	million	as	of	December	31,	2018.

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Total\tstock-based\tcompensation | $37 | $35 | $45 |
| Income\ttax\tbenefit\trecognized | $8 | $12 | $17 |

# Stock	Options

PPG	has	outstanding	stock	option	awards	that	have	been	granted	under	the	PPG	Amended	Omnibus	Plan.	Under	the	PPG	Amended	Omnibus	Plan, certain	employees	of	the	Company	have	been	granted	options	to	purchase	shares	of	common	stock	at	prices	equal	to	the	fair	market	value	of	the	shares on	the	date	the	options	were	granted.	The	options	are	generally	exercisable	36	months	after	being	granted	and	have	a	maximum	term	of	 10	years.	Upon exercise	of	a	stock	option,	shares	of	Company	stock	are	issued	from	treasury	stock.

The	fair	value	of	stock	options	issued	to	employees	is	measured	on	the	date	of	grant	and	is	recognized	as	expense,	net	of	estimated	forfeitures,	over	the requisite	service	period.	PPG	estimates	 the	 fair	value	of	stock	options	using	 the	Black-Scholes	option	pricing	model.	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.	PPG	applies	an	estimated	forfeiture	rate	that	is	calculated based	on	historical	activity.

The	following	weighted	average	assumptions	were	used	to	calculate	the	fair	values	of	stock	option	grants	in	each	year:

|  | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Weighted\taverage\texercise\tprice | $115.98 | $101.53 | $95.29 |
| Risk\tfree\tinterest\trate | 2.9% | 2.4% | 1.6% |
| Expected\tlife\tof\toption\tin\tyears | 6.5 | 6.5 | 6.5 |
| Expected\tdividend\tyield | 1.7% | 1.8% | 2.1% |
| Expected\tvolatility | 21.0% | 22.0% | 22.8% |

|  |  |  | Weighted	Average |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted\tAverage | Remaining\tContractual\tLife | Intrinsic\tValue |
| Stock\tOptions\tOutstanding\tand\tExercisable | Number\tof\tShares | Exercise\tPrice | (in\tyears) | (in\tmillions) |
| Outstanding,\tJanuary\t1,\t2018 | 3,575,625 | $83.34 | 6.4 | $120 |
| Granted | 533,105 | $115.98 |  |  |
| Exercised | (288,760) | $50.82 |  |  |
| Forfeited/Expired | (58,970) | $106.32 |  |  |
| Outstanding,\tDecember\t31,\t2018 | 3,761,000 | $90.10 | 6.1 | $61 |
| Vested\tor\texpected\tto\tvest,\tDecember\t31,\t2018 | 3,724,235 | $89.89 | 6.1 | $61 |
| Exercisable,\tDecember\t31,\t2018 | 1,924,079 | $77.79 | 4.3 | $56 |

At	December	31,	2018,	unrecognized	compensation	cost	related	to	outstanding	stock	options	that	have	not	yet	vested	totaled $7	million.	This	cost	is expected	to	be	recognized	as	expense	over	a	weighted	average	period	of	1.5	years.

The	following	table	presents	stock	option	activity	for	the	years	ended	 December	31,	2018,	2017	and	2016:

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Total\tintrinsic\tvalue\tof\tstock\toptions\texercised | $19 | $40 | $34 |
| Cash\treceived\tfrom\tstock\toption\texercises | $15 | $52 | $32 |
| Income\ttax\tbenefit\tfrom\tthe\texercise\tof\tstock\toptions | $4 | $15 | $12 |
| Total\tfair\tvalue\tof\tstock\toptions\tvested | $10 | $13 | $16 |

# Restricted	Stock	Units	("RSUs")

Long-term	incentive	value	is	delivered	to	selected	key	management	employees	by	granting	RSUs,	which	have	either	time	or	performance-based	vesting features.	The	fair	value	of	an	RSU	is	equal	to	the	market	value	of	a	share	of	PPG	stock	on	the	date	of	grant.	Time-based	RSUs	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	three	year	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-year	performance	period	if PPG	meets	the	performance	targets.	The	amount	paid	for	performance-based	awards	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.	PPG	has	assumed	that	performance-based	RSUs	granted	in	2016,	2017	and	2018	will	vest	at	the	100%	level.	As of	December	31,	2018,	three	of	the	six	possible	performance	targets	had	been	met	for	the	2016	grant,	 two	of	the	four	possible	performance	targets	had been	met	for	the	2017	grant,	and	one	of	two	possible	performance	targets	had	been	met	for	the	2018	grant.

| RSU	Activity | Number	of	Shares | Weighted	Average<br>Fair	Value | Intrinsic	Value<br>(in	millions) |
| :--- | :--- | :--- | :--- |
| Outstanding,\tJanuary\t1,\t2018 | 615,607 | $101.73 | $63 |
| Granted | 252,885 | $112.98 |  |
| Released\tfrom\trestrictions | (194,329) | $99.80 |  |
| Forfeited | (42,432) | $106.15 |  |
| Outstanding,\tDecember\t31,\t2018 | 631,731 | $102.80 | $65 |
| Vested\tor\texpected\tto\tvest,\tDecember\t31,\t2018 | 616,894 | $102.67 | $63 |

There	was	$17	million	of	total	unrecognized	compensation	cost	related	to	unvested	RSUs	outstanding	as	of December	31,	2018.	This	cost	is	expected	to be	recognized	as	expense	over	a	weighted	average	period	of	1.8	years.

# Contingent	Share	Grants

The	Company	also	provides	grants	of	contingent	shares	to	selected	key	executives	that	may	be	earned	based	on	PPG	total	shareholder	return	("TSR") over	the	three-year	period	following	the	date	of	grant.	Contingent	share	grants	(referred	to	as	"TSR	awards")	are	made	annually	and	are	paid	out	at	the end	 of	 each	three-year	 period	 based	 on	 the	 Company'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	for	the	three-year	period	following	the	date	of	grant. This	comparison	group	represents	the	entire	S&P	500	Index	as	it	existed	at	the	beginning	of	the	performance	period,	excluding	any	companies	that	have been	removed	from	the	index	because	they	ceased	to	be	publicly	traded.	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	220%	of	the	initial	grant.	A	payout	of 100%	is	earned	if	the	target	performance	is	achieved.	Contingent	share	awards	for	the	2016-2018,	2017-2019,	and	2018-2020	periods	earn	dividend equivalents	for	the	award	period,	which	will	be	paid	to	participants	or	credited	to	the	participants'	deferred	compensation	plan	accounts	with	the	award payout	at	the	end	of	the	period	based	on	the	actual	number	of	contingent	shares	that	are	earned.	Any	payments	made	at	the	end	of	the	award	period may	be	in	the	form	of	stock,	cash	or	a	combination	of	both.	The	TSR	awards	qualify	as	liability	awards,	and	compensation	expense	is	recognized	over the	three-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.

As	 of	December	31,	2018,	 there	 was	$5	million	of	total	unrecognized	compensation	cost	related	to	outstanding	TSR	awards	based	on	the	current estimate	of	fair	value.	This	cost	is	expected	to	be	recognized	as	expense	over	a	weighted	average	period	of	1.8	years.

# 19.	Quarterly	Financial	Information	(unaudited)

|  |  | 2018	Quarter	Ended | 2018	Quarter	Ended |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions,\texcept\tper\tshare\tamounts) | March\t31 | June\t30 | September\t30 | December\t31 | Full\tYear\t2018(1) |
| Net\tsales | $3,781 | $4,131 | $3,817 | $3,645 | $15,374 |
| Cost\tof\tsales(2) | 2,181 | 2,379 | 2,253 | 2,188 | 9,001 |
| Net\tincome\tattributable\tto\tPPG |  |  |  |  |  |
| Continuing\toperations | $328 | $371 | $368 | $256 | $1,323 |
| Discontinued\toperations | 6 | — | 10 | 2 | 18 |
| Net\tincome | $334 | $371 | $378 | $258 | $1,341 |
| Earnings\tper\tcommon\tshare |  |  |  |  |  |
| Continuing\toperations | $1.32 | $1.51 | $1.52 | $1.07 | $5.43 |
| Discontinued\toperations | 0.02 | — | 0.04 | 0.01 | 0.07 |
| Earnings\tper\tcommon\tshare | $1.34 | $1.51 | $1.56 | $1.08 | $5.50 |
| Earnings\tper\tcommon\tshare\t-\tassuming\tdilution |  |  |  |  |  |
| Continuing\toperations | $1.31 | $1.51 | $1.51 | $1.07 | $5.40 |
| Discontinued\toperations | 0.02 | — | 0.04 | 0.01 | 0.07 |
| Earnings\tper\tcommon\tshare\t–\tassuming\tdilution | $1.33 | $1.51 | $1.55 | $1.08 | $5.47 |

|  |  | 2017	Quarter	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| ($\tin\tmillions\texcept\tper\tshare\tamounts) | March\t31 | June\t30 | September\t30 | December\t31 | Full\tYear\t2017(1) |
| Net\tsales | $3,486 | $3,804 | $3,776 | $3,682 | $14,748 |
| Cost\tof\tsales(2) | 1,902 | 2,083 | 2,104 | 2,120 | 8,209 |
| Net\tincome\tattributable\tto\tPPG |  |  |  |  |  |
| Continuing\toperations | $331 | $497 | $393 | $148 | $1,369 |
| Discontinued\toperations | 6 | (1) | 217 | 3 | 225 |
| Net\tincome | $337 | $496 | $610 | $151 | $1,594 |
| Earnings\tper\tcommon\tshare |  |  |  |  |  |
| Continuing\toperations | $1.29 | $1.93 | $1.53 | $0.59 | $5.34 |
| Discontinued\toperations | 0.02 | — | 0.85 | 0.01 | 0.88 |
| Earnings\tper\tcommon\tshare | $1.31 | $1.93 | $2.38 | $0.60 | $6.22 |
| Earnings\tper\tcommon\tshare\t-\tassuming\tdilution |  |  |  |  |  |
| Continuing\toperations | $1.28 | $1.92 | $1.52 | $0.58 | $5.31 |
| Discontinued\toperations | 0.02 | — | 0.84 | 0.01 | 0.87 |
| Earnings\tper\tcommon\tshare\t–\tassuming\tdilution | $1.30 | $1.92 | $2.36 | $0.59 | $6.18 |

(1) Full	year	earnings-per-share	was	calculated	using	the	full	year	weighted	average	shares	outstanding.	As	such,	the	sum	of	the	quarters	may	not	equal	the	total	earnings-per- share	for	the	year.

(2) Exclusive	of	depreciation	and	amortization.

# 20.	Reportable	Business	Segment	Information

# Segment	Organization	and	Products

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	two	segments:	Performance	Coatings	and Industrial	Coatings.	The	operating	segments	have	been	aggregated	based	on	economic	similarities,	the	nature	of	their	products,	production	processes, end-use	markets	and	methods	of	distribution.

The	Performance	Coatings	reportable	segment	is	comprised	of	the	automotive	refinish	coatings,	aerospace	coatings,	architectural	coatings	–	Americas and	Asia-Pacific,	architectural	coatings	-	EMEA,	and	protective	and	marine	coatings	operating	segments.	This	reportable	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	 segment	 is	 comprised	 of	 the	 automotive	 original	 equipment	 manufacturer	 ("OEM")	 coatings,	 industrial	 coatings, packaging	coatings,	and	the	specialty	coatings	and	materials	operating	segments.	This	reportable	segment	primarily	supplies	a	variety	of	protective	and decorative	coatings	and	finishes	along	with	adhesives,	sealants,	metal	pretreatment	products,	optical	monomers	and	coatings,	precipitated	silicas	and other	specialty	materials.

Production	facilities	and	sales	for	Performance	Coatings	and	Industrial	Coatings	are	global.	PPG's	reportable	segments	continue	to	pursue	opportunities to	further	develop	their	global	reach,	including	efforts	in	Asia,	Eastern	Europe	and	Latin	America.	Each	of	the	reportable	segments	in	which	PPG	is engaged	is	highly	competitive.	The	diversification	of	our	product	lines	and	the	worldwide	sales	tend	to	minimize	the	impact	on	PPG's	Net	sales	and Income	before	income	taxes	in	the	consolidated	statement	of	income	of	changes	in	demand	in	a	particular	industry	or	in	a	particular	geographic	area. The	accounting	policies	of	the	operating	segments	are	the	same	as	those	described	in	the	summary	of	significant	accounting	policies	(See	Note 1, "Summary	of	Significant	Accounting	Policies ").	The	Company	allocates	resources	to	operating	segments	and	evaluates	the	performance	of	operating segments	based	upon	segment	income,	which	is	income	before	interest	expense	–	net,	income	taxes,	and	noncontrolling	interests	and	excludes	certain charges	which	are	considered	to	be	unusual	or	non-recurring.	The	Company	also	evaluates	performance	of	operating	segments	based	on	working	capital reduction,	margin	growth,	and	sales	volume	growth.	Legacy	items	include	current	costs	related	to	former	operations	of	the	Company,	including	certain environmental	remediation,	pension	and	other	postretirement	benefit	costs,	and	certain	charges	for	legal	and	other	matters	which	are	considered	to	be unusual	 or	 non-recurring.	 These	 legacy	 costs	 are	 excluded	 from	 the	 segment	 income	 that	 is	 used	 to	 evaluate	 the	 performance	 of	 the	 operating segments.

Corporate	unallocated	costs	include	the	costs	of	corporate	staff	functions	not	directly	associated	with	the	operating	segments,	the	cost	of	corporate	legal cases,	net	of	related	insurance	recoveries	and	the	cost	of	certain	insurance	and	stock-based	compensation	programs.	Net	periodic	pension	expense	is allocated	to	the	operating	segments	and	the	portion	of	net	periodic	pension	expense	related	to	the	corporate	staff	functions	is	included	in	the	Corporate unallocated	costs.

Product	movement	between	Performance	Coatings	and	Industrial	Coatings	is	limited,	is	accounted	for	as	an	inventory	transfer,	and	is	recorded	at	cost plus	a	mark-up,	the	impact	of	which	is	not	significant	to	the	segment	income	of	the	reportable	segments.

| ($	in	millions) | 2018 | 2017 | 2016 |
| :--- | :--- | :--- | :--- |
| Net\tsales\tto\texternal\tcustomers(1) |  |  |  |
| Performance\tCoatings | $9,087 | $8,730 | $8,580 |
| Industrial\tCoatings | 6,287 | 6,018 | 5,690 |
| Total\tNet\tsales | $15,374 | $14,748 | $14,270 |
| Segment\tincome |  |  |  |
| Performance\tCoatings | $1,300 | $1,313 | $1,322 |
| Industrial\tCoatings | 818 | 979 | 1,060 |
| Total\tSegment\tincome | $2,118 | $2,292 | $2,382 |
| Corporate\t/\tNon-Segment\tItems(1) |  |  |  |
| Legacy\titems(2) | $5 | ($2) | ($17) |
| Environmental\tremediation\tcharges\tand\tother\tcosts | (77) | — | (82) |
| Business\trestructuring,\tnet | (66) | — | (191) |
| Accelerated\tdepreciation\trelated\tto\trestructuring\tactions | (9) | — | — |
| Impairment\tof\ta\tnon-manufacturing\tasset | (9) | — | — |
| Accounting\tinvestigation\tcosts | (14) | — | — |
| Legacy\tlegal\tsettlements | (10) | — | — |
| Costs\trelated\tto\tcustomer\tassortment\tchange | (18) | — | — |
| Transaction-related\tcosts(3) | (6) | (9) | (8) |
| Gain\tfrom\tsale\tof\ta\tnon-operating\tasset | 26 | 13 | — |
| Brand\trationalization\tcharge | (6) | — | — |
| Gain\tfrom\ta\tlegal\tsettlement | — | 18 | — |
|  | — | (7) | (23) |
| Asset\twrite-downs |  |  |  |
| Pension\tsettlement\tcharges | — | (60) | (968) |
| Gains\ton\tdisposals\tof\townership\tinterests\tin\tbusiness\taffiliates | — | 25 | 46 |
| Interest\texpense,\tnet\tof\tinterest\tincome | (95) | (85) | (99) |
| Corporate\tunallocated(1) | (146) | (180) | (261) |
| Total\tIncome\tbefore\tincome\ttaxes | $1,693 | $2,005 | $779 |

(1) Corporate	 intersegment	 net	 sales	 represent	 intersegment	 net	 sales	 eliminations.	 Corporate	 unallocated	 costs include the	 costs	 of	 corporate	 staff functions	 not	 directly associated	with	the	operating	segments,	certain	legal	and	insurance	costs	and	stock-based	compensation	expense.

(2) Legacy	items	include	current	costs	related	to	former	operations	of	the	Company,	including	pension	and	other	postretirement	benefit	costs,	legal	costs	and	certain	charges	which are	considered	to	be	non-recurring.	Legacy	items	also	include	equity	earnings	from	PPG's	investment	in	TCI.	Refer	to	Note	3,	"Acquisitions	and	Divestitures".

(3) Transaction-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.

(4) Segment	assets	are	the	total	assets	used	in	the	operation	of	each	segment.	Corporate	assets	are	principally	cash	and	cash	equivalents,	cash	held	in	escrow,	short	term investments	and	deferred	tax	assets.	Non-segment	items	also	includes	the	assets	of	businesses	which	have	been	reclassified	as	discontinued	operations	in	the	consolidated statement	of	income.	Refer	to	Note	3,	"Acquisitions	and	Divestitures".

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

# Item	9.	Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure

# Item	9A.	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-K,	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	over	financial	reporting.

There	were	no	changes	in	the	Company's	internal	control	over	financial	reporting	that	occurred	during	the	Company's	quarter	ended December	31,	2018 that	have	materially	affected,	or	are	reasonably	likely	to	materially	affect,	the	Company's	internal	control	over	financial	reporting.

# (c)	Management	report	on	internal	control	over	financial	reporting.

See	Management	Report	on	page	47	for	management's	annual	report	on	internal	control	over	financial	reporting.	See	Report	of	Independent	Registered Public	Accounting	Firm	on	page	46	for	PricewaterhouseCoopers	LLP's	audit	report	on	the	Company's	internal	control	over	financial	reporting.

# (d)	Remediation	of	Material	Weakness.

In	connection	with	the	investigation	described	in	the	Explanatory	Note	within	the	2017	Form	10-K/A,	the	Company	identified	and	implemented	actions	to improve	the	effectiveness	of	its	internal	control	over	financial	reporting	and	disclosure	controls	and	procedures,	including	enhancing	the	Company's resources	and	training	with	respect	to	financial	reporting	and	disclosure	responsibilities.	Management	reviewed	and	will	continue	to	review	such	actions with	the	Audit	Committee.	The	steps	taken	to	remediate	the	Company's	material	weakness	included	the	following:

•The	Company	terminated	the	employment	of	the	former	Vice	President	and	Controller.

•Two	employees	who	acted	under	the	direction	of	the	former	Vice	President	and	Controller	were	re-assigned	to	different	positions	within	the Company	where	they	do	not	have	a	Financial	Reporting	Oversight	Role	or	a	role	in	the	design	or	operation	of	internal	control	over	financial reporting,	disclosure	controls	or	accounting	policy.

•The	Company	appointed	its	former	Director	of	Corporate	Audit	Services	and	former	Assistant	Controller,	Financial	Reporting	as	Acting Controller	and,	on	July	19,	2018	appointed	him	the	Company's	permanent	Vice	President	and	Controller.

•The	 Company's	 Chairman	 and	 Chief	 Executive	 Officer	 has	 emphasized	 to	 all	 employees,	 and to the	 Company's finance	 employees specifically,	the	importance	of	acting	ethically	and	adhering	to	the	Company's	Global	Code	of	Ethics.

The	 Company	 is	 committed	 to	 maintaining	 a	 strong	 internal	 control	 environment	 and	 to	 ensuring	 that	 a	 proper,	 consistent	 tone	 is	 communicated throughout	the	organization.	In	addition	to	the	steps	set	forth	above,	the	Company	has	also	taken	other	remedial	measures	as	described	below:

•The	Company	re-emphasized	(1)	its	commitment	to	ethical	standards,	(2)	the	requirements	of	the	Company's	Code	of	Ethics,	(3)	reporting obligations	and	(4)	non-retaliation	policy	for	complaints;

•The	Company	enhanced	its	corporate	finance	department	by	adding	personnel	with	responsibility	for	areas	identified	in	the	investigation	and enhanced	segregation	of	duties	in	the	finance	department;

•The	Company	enhanced	policies	and	procedures	relating	to	the	preparation,	approval	and	entry	of	journal	entries;

•The	Company	enhanced	its	process	to	evaluate	and	adjust	certain	significant	expense	accruals;

•The	Company	enhanced	its	policies	and	procedures	relating	to	inventory	standard	cost	revaluations;

•The	Company	enhanced	its	policies	and	procedures	concerning	accounting	entries	related	to	discontinued	operations;

•The	Company	now	requires	additional	annual/onboarding	education	for	finance	staff;

•The	Company	will	conduct	additional	periodic	risk	assessments	and	targeted	internal	audit	reviews;	and

•The	Company	separated	the	financial	forecasting	process	from	financial	accounting.

As	discussed	in	Management's	Report	on	page	47,	management	has	determined	that,	as	of	December	31,	2018,	the	remedial	measures	described above	have	been	satisfactorily	implemented	and	that	the	Company	has	had	sufficient	time	to	test	the	design	and	operating	effectiveness	of	such	remedial measures.	As	such,	the	material	weakness	identified	in	the	Company's	internal	control	over	financial	reporting	has	been	remediated.

# Item	9B.	Other	Information

# Part	III

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance

The	information	about	the	Company's	directors	required	by	Item	10	and	not	otherwise	set	forth	below	is	contained	under	the	caption	"Proposal	1:	Election of	Directors"	in	PPG's	definitive	Proxy	Statement	for	the	2019	Annual	Meeting	of	Shareholders	(the	"Proxy	Statement")	which	the	Company	anticipates filing	with	the	Securities	and	Exchange	Commission,	pursuant	to	Regulation	14A,	not	later	than	120	days	after	the	end	of	the	Company's	fiscal	year,	and is	incorporated	herein	by	reference.

The	executive	officers	of	the	Company	are	elected	by	the	Board	of	Directors.	The	information	required	by	this	item	concerning	the	Company's	executive officers	is	incorporated	by	reference	herein	from	Part	I	of	this	report	under	the	caption	"Executive	Officers	of	the	Company."

Information	regarding	the	Company's	Audit	Committee	is	included	in	the	Proxy	Statement	under	the	caption	"Corporate	Governance	–	Audit	Committee" and	is	incorporated	herein	by	reference.

Information	regarding	the	Company's	codes	of	ethics	is	included	in	the	Proxy	Statement	under	the	caption	"Corporate	Governance	–	Codes	of	Ethics" and	is	incorporated	herein	by	reference.

Information	about	compliance	with	Section	16(a)	of	the	Exchange	Act	is	included	in	the	Proxy	Statement	under	the	caption	"Beneficial	Ownership	– Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	and	is	incorporated	herein	by	reference.

# Item	11.	Executive	Compensation

The	information	required	by	Item	11	is	contained	in	the	Proxy	Statement	under	the	captions	"Compensation	of	Directors,"	"Compensation	Discussion	and Analysis,"	"Compensation	of	Executive	Officers,"	"Potential	Payments	upon	Termination	or	Change	in	Control,"	"Corporate	Governance	–	Compensation Committee	Interlocks	and	Insider	Participation,"	and	"Corporate	Governance	–	Officers-Directors	Compensation	Committee	Report	to	Shareholders"	and is	incorporated	herein	by	reference.

# Item	12.	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters

The	information	required	by	Item	12	is	contained	in	the	Proxy	Statement	under	the	captions	"Beneficial	Ownership"	and	"Equity	Compensation	Plan Information"	and	is	incorporated	herein	by	reference.

# Item	13.	Certain	Relationships	and	Related	Transactions,	and	Director	Independence

The	 information	 required	 by	 Item	 13	 is	 contained	 in	 the	 Proxy	 Statement	 under	 the	 captions	 "Corporate	 Governance	 –	 Director	 Independence," "Corporate	 Governance	 –	 Review	 and	 Approval	 or	 Ratification	 of	 Transactions	 with	 Related	 Persons"	 and	 "Corporate	 Governance	 –	 Certain Relationships	and	Related	Transactions"	and	is	incorporated	herein	by	reference.

# Item	14.	Principal	Accounting	Fees	and	Services

The	information	required	by	Item	14	is	contained	in	the	Proxy	Statement	under	the	caption	"Independent	Registered	Public	Accounting	Firm"	and	is incorporated	herein	by	reference.

# Part	IV

# Item	15.	Exhibits,	Financial	Statement	Schedules

(a)(1)				Consolidated	Financial	Statements	and	Reports	of	Independent	Registered	Public	Accounting	Firm	(see	Part	II,	Item	8	of	this	Form	10-K).

# The	following	information	is	filed	as	part	of	this	Form	10-K:

|  | Page |
| :--- | :--- |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 46 |
| Management\tReport | 47 |
| Consolidated\tStatement\tof\tIncome\tfor\tthe\tYears\tEnded\tDecember\t31,\t2018,\t2017\tand\t2016 | 48 |
| Consolidated\tStatement\tof\tComprehensive\tIncome\tfor\tthe\tYears\tEnded\tDecember\t31,\t2018,\t2017\tand\t2016 | 48 |
| Consolidated\tBalance\tSheet\tas\tof\tDecember\t31,\t2018\tand\t2017 | 49 |
| Consolidated\tStatement\tof\tShareholders'\tEquity\tfor\tthe\tYears\tEnded\tDecember\t31,\t2018,\t2017\tand\t2016 | 50 |
| Consolidated\tStatement\tof\tCash\tFlows\tfor\tthe\tYears\tEnded\tDecember\t31,\t2018,\t2017\tand\t2016 | 51 |
| Notes\tto\tthe\tConsolidated\tFinancial\tStatements | 52 |

The	following	Consolidated	Financial	Statement	Schedule	should	be	read	in	conjunction	with	the	previously	referenced	financial	statements:

# Schedule	II	–	Valuation	and	Qualifying	Accounts

| ($	in	millions) | Balance	at	Beginning	of<br>Year | Charged	to	Costs	and<br>Expenses | Deductions(1) | Balance	at	End	of	Year |
| :--- | :--- | :--- | :--- | :--- |
| 2018 | $25 | $18 | ($19) | $24 |
| 2017 | $36 | $15 | ($26) | $25 |
| 2016 | $43 | $22 | ($29) | $36 |

(1) Notes	and	accounts	receivable	written	off	as	uncollectible,	net	of	recoveries,	amounts	attributable	to	divestitures	and	changes	attributable	to	foreign	currency	translation.

All	other	schedules	are	omitted	because	they	are	not	applicable.

(a)(3)				Exhibits.	The	following	exhibits	are	filed	as	a	part	of,	or	incorporated	by	reference	into,	this	Form	10-K.

# Index	to	Exhibits

** 101.PRE XBRL	Taxonomy	Extension	Presentation	Linkbase	Document

† Filed	herewith.

†† Furnished	herewith.

* 	 Management	contracts,	compensatory	plans	or	arrangements	required	to	be	filed	as	an	exhibit	hereto	pursuant	to	Item	601	of	Regulation	S-K.

** Attached	as	Exhibit	101	to	this	report	are	the	following	documents	formatted	in	XBRL	(Extensible	Business	Reporting	Language)	as	of	and	for	the year	ended	December	31,	2018:	(i)	the	Consolidated	Statement	of	Income,	(ii)	the	Consolidated	Balance	Sheet,	(iii)	the	Consolidated	Statement	of Shareholders'	Equity,	(iv)	the	Consolidated	Statement	of	Comprehensive	Income	(Loss),	(v)	the	Consolidated	Statement	of	Cash	Flows,	(vi)	Notes to	Consolidated	Financial	Statements	and	(vii)	Financial	Schedule	of	Valuation	and	Qualifying	Accounts.

# Signatures

Pursuant	to	the	requirements	of	Section	13	or	15(d)	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	on	February	21,	2019.

(Registrant)

Senior	Vice	President	and	Chief	Financial	Officer

(Principal	Financial	Officer	and	Duly	Authorized	Officer)

/s/	William	E.	Schaupp

# William	E.	Schaupp

Vice	President	and	Controller	(Principal	Accounting	Officer and	Duly	Authorized	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	by	the	following	persons	on	behalf	of	the	Registrant and	in	the	capacities	indicated	on	February	21,	2019.

S.	F.	Angel 		 Director J.	G.	Berges 		 Director J.	V.	Faraci Director H.	Grant 		 Director V.	F.	Haynes 		 Director By /s/	Vincent	J.	Morales M.	L.	Healey Director Vincent	J.	Morales,	Attorney-in-Fact

G.	R.	Heminger Director

M.	J.	Hooper 		 Director

M.	W.	Lamach Director M.	H.	Richenhagen 		 Director



Question: are the 2018 environmental reserves greater than asbestos-related claim reserves?
Answer: no