Table	of	Contents

# 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,	2008

Commission	File	Number	1-1687

# 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.)

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

# Title	of	each	class

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	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.				x

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

Large	accelerated	filer		x

Non-accelerated	filer		¨

Smaller	reporting	company		¨

(Do	not	check	if	a	smaller

reporting	company)

Indicate	by	check	mark	whether	the	Registrant	is	a	shell	company	(as	defined	by	Rule	12b-2	of	the	Act).		YES		¨				NO		x

The	aggregate	market	value	of	common	stock	held	by	non-affiliates	as	of	June	30,	2008,	was	$9,400	million.

As	of	January	31,	2009,	164,233,391	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	$6,160	million.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Document

Portions	of	PPG	Industries,	Inc.	Proxy	Statement	for	its	2009

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.

| Part	I |  |  |
| :--- | :--- | :--- |
| Item\t1. | Business | 5 |
| Item\t1a. | Risk\tFactors | 10 |
| Item\t1b. | Unresolved\tStaff\tComments | 11 |
| Item\t2. | Properties | 12 |
| Item\t3. | Legal\tProceedings | 12 |
| Item\t4. | Submission\tof\tMatters\tto\ta\tVote\tof\tSecurity\tHolders | 12 |
| Part\tII |  |  |
| Item\t5. | Market\tfor\tthe\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand |  |
|  | Issuer\tPurchases\tof\tEquity\tSecurities | 13 |
| Item\t6. | Selected\tFinancial\tData | 14 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 14 |
| Item\t7a. | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 26 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 28 |
| Item\t9. | Changes\tin\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand |  |
|  | Financial\tDisclosure | 70 |
| Item\t9a. | Controls\tand\tProcedures | 70 |
| Item\t9b. | Other\tInformation | 70 |
| Part\tIII |  |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 70 |
| Item\t11. | Executive\tCompensation | 70 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand |  |
|  | Related\tStockholder\tMatters | 70 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 70 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 70 |
| Part\tIV |  |  |
| Item\t15. | Exhibits,\tFinancial\tStatement\tSchedules | 71 |
| Signatures |  | 73 |

# Note	on	Incorporation	by	Reference

Throughout	this	report,	various	information	and	data	are	incorporated	by	reference	to	the	Company's	2008	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.,	incorporated	in	Pennsylvania	in	1883,	is	comprised	of	six	reportable	business	segments:	Performance	Coatings,	Industrial	Coatings, Architectural	Coatings	–	EMEA	(Europe,	Middle	East	and	Africa),	Optical	and	Specialty	Materials,	Commodity	Chemicals	and	Glass.	Each	of	the	business	segments	in which	PPG	is	engaged	is	highly	competitive.	However,	the	diversification	of	product	lines	and	worldwide	markets	served	tend	to	minimize	the	impact	on	PPG's	total sales	and	earnings	from	changes	in	demand	for	a	particular	product	line	or	in	a	particular	geographic	area.	Refer	to	Note	24,	"Reportable	Business	Segment	Information" under	Item	8	of	this	Form	10-K	for	financial	information	relating	to	our	reportable	business	segments	and	Note	2,	"Acquisitions"	under	Item	8	for	information	regarding acquisition	activity.

# Performance	Coatings,	Industrial	Coatings	and	Architectural	Coatings	-	EMEA

PPG	is	a	major	global	supplier	of	protective	and	decorative	coatings.	The	Performance	Coatings,	Industrial	Coatings	and	Architectural	Coatings	–	EMEA reportable	segments	supply	protective	and	decorative	finishes	for	customers	in	a	wide	array	of	end	use	markets	including	industrial	equipment,	appliances	and packaging;	factory-finished	aluminum	extrusions	and	steel	and	aluminum	coils;	marine	and	aircraft	equipment;	automotive	original	equipment;	and	other	industrial	and consumer	products.	In	addition	to	supplying	finishes	to	the	automotive	original	equipment	market,	PPG	supplies	refinishes	to	the	automotive	aftermarket.	PPG	also supplies	coatings	to	painting	and	maintenance	contractors	and	directly	to	consumers	for	decoration	and	maintenance.	The	coatings	industry	is	highly	competitive	and consists	of	a	few	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.	Product	development,	innovation,	quality	and technical	and	customer	service	have	been	stressed	by	PPG	and	have	been	significant	factors	in	developing	an	important	supplier	position	by	PPG's	coatings	businesses comprising	the	Performance	Coatings,	Industrial	Coatings	and	Architectural	Coatings	–	EMEA	reportable	segments.

On	January	2,	2008,	PPG	completed	the	acquisition	of	SigmaKalon	Group	("SigmaKalon"),	a	worldwide	coatings	producer	based	in	Uithoorn,	Netherlands.	The results	of	operations	of	SigmaKalon	are	included	in	PPG's	consolidated	financial	statements	from	the	acquisition	date	onward.	The	businesses	acquired	from SigmaKalon	produce	architectural,	protective	and	marine	and	industrial	coatings.	The	protective	and	marine	and	industrial	coatings	businesses	of	SigmaKalon	are managed	as	part	of	PPG's	previously	existing	coatings	businesses.	The	SigmaKalon	architectural	coatings	business	in	Europe,	the	Middle	East	and	Africa	is	reported	in 2008	as	a	new	separate	reportable	business	segment	known	as	Architectural	Coatings	–	EMEA.	This	business	represents	about	70%	of	SigmaKalon's	sales.

The	Performance	Coatings	reportable	segment	is	comprised	of	the	refinish,	aerospace,	protective	and	marine	and	architectural	–	Americas	and	Asia	Pacific	coatings businesses.

The	refinish	coatings	business	supplies	coatings	products	for	automotive	and	commercial	transport/fleet	repair	and	refurbishing,	light	industrial	coatings	for	a	wide array	of	markets	and	specialty	coatings	for	signs.	These	products	are	sold	primarily	through	distributors.

The	aerospace	coatings	business	supplies	sealants,	coatings,	technical	cleaners	and	transparencies	for	commercial,	military,	regional	jet	and	general	aviation	aircraft and	transparent	armor	for	military	land	vehicles.	PPG	supplies	products	to	aircraft	manufacturers,	maintenance	and	aftermarket	customers	around	the	world	both	on	a direct	basis	and	through	a	company-owned	distribution	network.

The	protective	and	marine	coatings	business	supplies	coatings	and	finishes	for	the	protection	of	metals	and	structures	to	metal	fabricators,	heavy	duty	maintenance contractors	and	manufacturers	of	ships,	bridges,	rail	cars	and	shipping	containers.	These	products	are	sold	through	the	architectural	coatings	company-owned	stores, independent	distributors	and	directly	to	customers.

Product	performance,	technology,	quality,	distribution	and	technical	and	customer	service	are	major	competitive	factors	in	these	three	coatings	businesses.

The	architectural	coatings-Americas	and	Asia	Pacific	business	primarily	produces	coatings	used	by	painting	and	maintenance	contractors	and	by	consumers	for decoration	and	maintenance.	These	coatings	are	sold	under	a	number	of	brands.	Architectural	coatings	–	Americas	and	Asia	Pacific	products	are	sold	through	a combination	of	company-owned	stores,	home	centers,	paint	dealers,	independent	distributors,	and	directly	to	customers.	Price,	product	performance,	quality,	distribution and	brand	recognition	are	key	competitive	factors	for	the	architectural	coatings	business.	The	architectural	coatings-Americas	and	Asia	Pacific	business	operates approximately	410	company-owned	stores	in	North	America	and	approximately	50	company-owned	stores	in	Australia.

The	major	global	competitors	of	the	Performance	Coatings	reportable	segment	are	Akzo	Nobel	NV,	BASF	Corporation,	the	DuPont	Company,	the	Sherwin- Williams	Company	and	Valspar	Corporation.	The	average	number	of	persons	employed	by	the	Performance	Coatings	reportable	segment	during	2008	was	13,400.

The	Industrial	Coatings	reportable	segment	is	comprised	of	the	automotive,	industrial	and	packaging

coatings	businesses.	Industrial,	automotive	and	packaging	coatings	are	formulated	specifically	for	the	customers'	needs	and	application	methods.

The	industrial	and	automotive	coatings	businesses	sell	directly	to	a	variety	of	manufacturing	companies.	PPG	also	supplies	adhesives	and	sealants	for	the automotive	industry	and	metal	pretreatments	and	related	chemicals	for	industrial	and	automotive	applications.	PPG	maintains	an	alliance	with	Kansai	Paint.	The	venture, known	as	PPG	Kansai	Automotive	Finishes,	is	owned	60%	by	PPG	and	40%	by	Kansai	Paint.	The	focus	of	the	venture	is	Japanese	based	automotive	original	equipment manufacturers	in	North	America	and	Europe.	In	addition,	PPG	and	Kansai	Paint	are	developing	technology	jointly,	potentially	benefiting	customers	worldwide.

The	packaging	coatings	business	supplies	coatings	and	inks	for	aerosol,	food	and	beverage	containers	for	consumer	products	to	the	manufacturers	of	those containers.

Product	performance,	technology,	quality	and	technical	and	customer	service	are	major	competitive	factors	in	the	industrial	coatings	businesses.	The	major	global competitors	of	the	Industrial	Coatings	reportable	segment	are	Akzo	Nobel	NV,	BASF	Corporation,	the	DuPont	Company	and	Valspar	Corporation.	The	average	number of	persons	employed	by	the	Industrial	Coatings	reportable	segment	during	2008	was	9,700.

The	Architectural	Coatings	–	EMEA	business	supplies	a	variety	of	coatings	under	a	number	of	brands	and	purchased	sundries	to	painting	contractors	and consumers	in	Europe,	the	Middle	East	and	Africa.	Architectural	Coatings	–	EMEA	products	are	sold	through	a	combination	of	approximately	500	company-owned stores,	home	centers,	paint	dealers,	independent	distributors,	and	directly	to	customers.	Price,	product	performance,	quality,	distribution	and	brand	recognition	are	key competitive	factors	for	this	business.	The	major	competitors	of	the	Architectural	Coatings	–	EMEA	reportable	segment	are	Akzo	Nobel	NV	and	Materis	Paints.	The average	number	of	persons	employed	by	the	Architectural	Coatings	–	EMEA	reportable	segment	during	2008	was	8,500.

# Optical	and	Specialty	Materials

PPG's	Optical	and	Specialty	Materials	reportable	segment	is	comprised	of	the	optical	products	and	silicas	businesses.	The	primary	Optical	and	Specialty	Materials products	are	Transitions®	lenses,	sunlenses,	optical	materials	and	polarized	film;	amorphous	precipitated	silicas	for	tire,	battery	separator	and	other	end-use	markets;	and Teslin®	synthetic	printing	sheet	used	in	such	applications	as	waterproof	labels,	e-passports,	drivers'	licenses	and	identification	cards.	Transitions®	lenses	are	processed and	distributed	by	PPG's	51%-owned	joint	venture	with	Essilor	International.	In	the	Optical	and	Specialty	Materials	businesses,	product	quality	and	performance	and technical	service	are	the	most	critical	competitive	factors.	The	average	number	of	persons	employed	by	the	Optical	and	Specialty	Materials	reportable	business	segment during	2008	was	3,200.

Historically,	the	Optical	and	Specialty	Materials	reportable	segment	included	the	fine	chemicals	business.	PPG	sold	the	fine	chemicals	business	in	the	fourth	quarter of	2007.	As	such,	the	results	of	operations	and	cash	flows	of	this	business	have	been	classified	as	discontinued	operations	in	the	consolidated	financial	statements	under Item	8	of	this	Form	10-K.	Refer	to	Note	1,	"Summary	of	Significant	Accounting	Policies"	under	Item	8	for	further	information.

# Commodity	Chemicals

PPG	is	a	producer	and	supplier	of	basic	chemicals.	The	Commodity	Chemicals	reportable	segment	produces	chlor-alkali	and	derivative	products	including	chlorine, caustic	soda,	vinyl	chloride	monomer,	chlorinated	solvents,	calcium	hypochlorite,	ethylene	dichloride	and	phosgene	derivatives.	Most	of	these	products	are	sold	directly to	manufacturing	companies	in	the	chemical	processing,	rubber	and	plastics,	paper,	minerals,	metals	and	water	treatment	industries.	PPG	competes	with	five	other	major producers	of	chlor-alkali	products	including	The	Dow	Chemical	Company;	Formosa	Plastics	Corporation,	U.S.A.;	Georgia	Gulf	Corporation;	Olin	Corporation	and Occidental	Chemical	Corporation.	Price,	product	availability,	product	quality	and	customer	service	are	the	key	competitive	factors.	The	average	number	of	persons employed	by	the	Commodity	Chemicals	reportable	business	segment	during	2008	was	2,100.

# Glass

PPG	is	a	producer	of	flat	glass	in	North	America	and	a	global	producer	of	continuous-strand	fiber	glass.	The	Glass	reportable	business	segment	is	comprised	of	the performance	glazings	and	fiber	glass	businesses.	PPG's	major	markets	are	commercial	and	residential	construction	and	the	wind	energy,	energy	infrastructure, transportation	and	electronics	industries.	Most	glass	products	are	sold	directly	to	manufacturing	companies.	PPG	manufactures	flat	glass	by	the	float	process	and	fiber glass	by	the	continuous-strand	process.

The	bases	for	competition	in	the	Glass	businesses	are	price,	quality,	technology	and	customer	service.	The	Company	competes	with	four	major	producers	of	flat glass	including	Asahi	Glass	Company,	Cardinal	Glass	Industries,	Guardian	Industries	and	NSG	Pilkington,	and	five	major	producers	of	fiber	glass	throughout	the	world including	Owens	Corning-Vetrotex,	Jushi	Group,	Johns	Manville	Corporation,	CPIC	Fiberglass	and	AGY.	The	average	number	of	persons	employed	by	the	Glass reportable	business	segment	during	2008	was	3,700,	excluding	the	automotive	glass	and	services	business.

Historically,	the	Glass	reportable	segment	has	included	the	automotive	glass	and	services	business.	In

September	2008,	PPG	completed	a	transaction	by	which	it	divested	a	majority	interest	in	the	automotive	glass	and	services	business.	The	results	of	this	business	through September	30,	2008	are	reported	as	part	of	the	Glass	reportable	segment	in	the	consolidated	financial	statements	under	Item	8	of	this	Form	10-K.	See	Note	3, "Divestiture	of	Automotive	Glass	and	Services	Business"	under	Item	8	for	additional	information.

# Raw	Materials	and	Energy

The	effective	management	of	raw	materials	and	energy	is	important	to	PPG's	continued	success.	Our	primary	energy	cost	is	natural	gas	used	in	our	Commodity Chemicals	and	Glass	businesses.	In	2008,	our	natural	gas	costs	were	volatile	and	on	average	increased	almost	25	percent	in	the	U.S.	compared	to	2007	levels.	The increase	can	be	linked	to	year-over-year	strong	pricing	for	energy	commodities,	including	the	run	up	in	the	price	of	crude	oil	by	mid-year.

During	2008,	our	average	coatings	raw	material	costs	increased	about	5	percent,	with	differing	results	by	region.	Coatings	raw	material	costs	rose	1	percent	and	3 percent	in	2007	and	2006,	respectively.	Many	of	our	coatings	raw	materials	are	petroleum	based,	and	changes	in	pricing	for	these	raw	materials	traditionally	lags	oil price	fluctuations	by	about	six	months.	Our	costs	are	also	dependent	on	global	supply	and	demand	for	these	materials.	Escalating	crude	oil	prices	and	global	economic growth	rates,	especially	in	emerging	regions,	in	the	first	two	quarters	of	2008	resulted	in	higher	inflation	impacts	to	PPG's	coatings	raw	materials	in	the	third	and	most	of the	fourth	quarter	of	2008.	This	inflation	was	more	acute	and	volatile	in	North	America,	Asia	and	other	emerging	regions.	However,	rapid	second	half	2008	oil	price declines,	along	with	the	sudden	drop	in	global	industrial	demand	late	in	the	year,	resulted	in	a	decline	in	the	price	of	certain	raw	materials	in	these	same	regions	as	we were	exiting	the	year.

The	Company's	most	significant	raw	materials	are	titanium	dioxide	and	epoxy	and	other	resins	in	the	Coatings	businesses;	lenses,	photochromic	dye,	sand	and	soda ash	in	the	Optical	and	Specialty	Materials	businesses;	brine	and	ethylene	in	the	Commodity	Chemicals	business;	and	sand	and	soda	ash	in	the	Glass	businesses.	Energy	is a	significant	production	cost	in	the	Commodity	Chemicals	and	Glass	businesses.	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	the	planned	operating	requirements	for	the	future.	Supply	of	critical raw	materials	and	energy	is	managed	by	establishing	contracts,	multiple	sources,	and	identifying	alternative	materials	or	technology,	whenever	possible.	The	Company has	aggressive	sourcing	initiatives	underway	to	support	its	continuous	efforts	to	find	the	lowest	total	material	costs.	These	initiatives	include	reformulation	of	certain	of our	products	using	both	petroleum	derived	and	bio-based	materials	as	part	of	a	product	renewal	strategy.	Another	initiative	is	to	qualify	multiple	sources	of	supply, including	supplies	from	Asia	and	other	lower	cost	regions	of	the	world.

We	are	subject	to	existing	and	evolving	standards	relating	to	the	registration	of	chemicals	that	impact	or	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.	In	December	2006,	the	environment	ministers	of	the	European	Union	("EU")	member	states	gave	final	approval	to	comprehensive	chemical	management legislation	known	as	"REACH"	(Registration,	Evaluation,	and	Authorization	of	Chemicals).	REACH	applies	to	all	chemical	substances	manufactured	or	imported	into the	EU	in	quantities	of	one	metric	ton	or	more	annually	and	will	require	the	registration	of	approximately	30,000	chemical	substances	with	the	European	Chemicals Agency.	The	pre-registration	period	for	such	chemicals	ended	on	December	1,	2008.	Additionally,	REACH	requires	the	registration	of	these	materials,	entailing	the filing	of	extensive	data	on	their	potential	risks	to	human	health	and	the	environment.	Registration	activities	will	be	phased	over	an	11-year	period,	based	on	tonnage	and level	of	concern,	with	the	first	registration	deadline	set	for	December	1,	2010.	In	the	case	of	chemicals	with	a	high	level	of	concern,	the	regulation	calls	for	progressive substitution	unless	no	alternative	can	be	found;	in	these	cases,	authorization	of	the	chemicals	will	be	required.

PPG	has	established	a	dedicated	organization	to	manage	REACH	implementation.	We	have	reviewed	our	product	portfolio,	worked	closely	with	our	suppliers	to assure	their	commitment	to	pre-register	our	key	raw	materials	and	completed	pre-registrations	of	PPG	manufactured	or	imported	raw	materials.	We	will	continue	to	work with	our	suppliers	to	understand	the	future	availability	and	viability	of	the	raw	materials	we	use	in	our	production	processes.

PPG	anticipates	that	some	current	raw	materials	and	products	will	be	subject	to	the	REACH	authorization	process	and	believes	that	PPG	will	be	able	to demonstrate	adequate	risk	management	for	the	use	and	application	of	the	majority	of	such	substances.	Compliance	with	the	REACH	legislation	will	result	in	increased costs	due	to	registration	costs,	product	testing	and	reformulation,	risk	characterization,	participation	in	Substance	Information	Exchange	Forums	and	Consortia	and dossier	preparation.	The	REACH	legislation	has	prompted	a	growing	number	of	initiatives	in	other	regions,	the	most	notable	of	which	is	the	"ChAMP"	(Chemical Assessment	and	Management	Program)	that	has	been	initiated	in	the	U.S.	Under	ChAMP,	chemicals	imported	or	manufactured	in	the	U.S.	above	25,000	pounds annually	will	undergo	hazard	and	risk	characterization	by	the	U.S.	Environmental	Protection	Agency	("USEPA").	Chemicals	identified	by

the	USEPA	as	high	risk	or	of	special	concern	will	be	subject	to	further	data	development	and/or	regulatory	control.	At	this	time	it	is	not	possible	to	quantify	the	financial impact	of	these	regulatory	initiatives	on	PPG's	businesses.

# Research	and	Development

Technology	innovation	has	been	a	hallmark	of	PPG's	success	throughout	its	history.	Research	and	development	costs,	including	depreciation	of	research	facilities, were	$468	million,	$363	million	and	$330	million	during	2008,	2007	and	2006,	respectively.	These	costs	totaled	approximately	3%	of	sales	in	each	of	these	years, representing	a	level	of	expenditure	that	is	expected	to	continue	in	2009.	PPG	owns	and	operates	several	facilities	to	conduct	research	and	development	relating	to	new and	improved	products	and	processes.	Additional	process	and	product	research	and	development	work	is	also	undertaken	at	many	of	the	Company's	manufacturing plants.	As	part	of	our	ongoing	efforts	to	manage	our	costs	effectively,	we	operate	a	laboratory	in	China,	have	outsourcing	arrangements	with	several	laboratories	and have	been	actively	pursuing	government	funding	of	a	small,	but	growing	portion	of	the	Company's	research	efforts.	Because	of	the	Company's	broad	array	of	products and	customers,	PPG	is	not	materially	dependent	upon	any	single	technology	platform.

# Patents

PPG	considers	patent	protection	to	be	important.	The	Company's	reportable	business	segments	are	not	materially	dependent	upon	any	single	patent	or	group	of related	patents.	PPG	received	$52	million	in	2008,	$48	million	in	2007	and	$44	million	in	2006	from	royalties	and	the	sale	of	technical	know-how.

# 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.

# Non-U.S.	Operations

PPG	has	a	significant	investment	in	non-U.S.	operations,	and	as	a	result	we	are	subject	to	certain	inherent	risks,	including	economic	and	political	conditions	in international	markets	and	fluctuations	in	foreign	currency	exchange	rates.	While	approximately	75%	of	sales	and	operating	income	is	generated	by	products	sold	in	the United	States,	Canada	and	Western	Europe,	our	remaining	sales	and	operating	income	are	generated	in	developing	regions,	such	as	Asia,	Eastern	Europe	and	Latin America.	With	the	acquisition	of	SigmaKalon	in	January	2008,	we	have	increased	our	international	operations	as	substantially	all	of	its	sales	are	outside	the	United States.

# Employee	Relations

The	average	number	of	persons	employed	worldwide	by	PPG	during	2008	was	44,900.	The	Company	has	numerous	collective	bargaining	agreements	throughout the	world.	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	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	operating results.	Overall,	the	Company	believes	it	has	good	relationships	with	its	employees.

# Environmental	Matters

PPG	is	subject	to	existing	and	evolving	standards	relating	to	protection	of	the	environment.	Capital	expenditures	for	environmental	control	projects	were	$15 million,	$16	million	and	$14	million	in	2008,	2007	and	2006,	respectively.	It	is	expected	that	expenditures	for	such	projects	in	2009	will	be	in	the	range	of	$15-$25 million.	Although	future	capital	expenditures	are	difficult	to	estimate	accurately	because	of	constantly	changing	regulatory	standards	and	policies,	it	can	be	anticipated that	environmental	control	standards	will	become	increasingly	stringent	and	the	cost	of	compliance	will	increase.

Prior	to	2007,	about	20%	of	our	chlor-alkali	production	capacity	used	mercury	cell	technology.	PPG	strives	to	operate	these	cells	in	accordance	with	applicable laws	and	regulations,	and	these	cells	are	reviewed	at	least	annually	by	state	authorities.	The	USEPA	has	issued	new	regulations	imposing	significantly	more	stringent requirements	on	mercury	emissions.	These	new	rules	took	effect	in	December	2006.	In	order	to	meet	the	USEPA's	new	air	quality	standards,	a	decision	was	made	in July	2005	to	replace	the	existing	mercury	cell	production	unit	at	the	Lake	Charles,	La.,	chlor-alkali	plant	with	newer	membrane	cell	technology.	The	Louisiana Department	of	Environmental	Quality	granted	the	Company	a	one	year	extension	to	meet	the	new	requirements	on	mercury	emissions.	This	capital	project	began	in	2005 and	was	completed	in	2007.	With	the	completion	of	this	project	in	2007,	4%	of	PPG's	chlor-alkali	production	uses	mercury	cell	technology.

PPG	is	negotiating	with	various	government	agencies	concerning	105	current	and	former	manufacturing	sites	and	offsite	waste	disposal	locations,	including	23	sites on	the	National	Priority	List.	The	number	of	sites	has	increased	when	compared	to	the	prior	year,	primarily	as	a	result	of	sites	that	were	assumed	as	a	result	of	the SigmaKalon	acquisition.	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	can	be	reasonably	estimated.	As	of	December	31,	2008	and	2007,	PPG had	reserves	for	environmental	contingencies	totaling	$299	million	and	$276	million,	respectively,	of	which	$44	million	and	$57	million,	respectively,	were	classified	as current	liabilities.	Pretax	charges	against	income	for	environmental	remediation	costs	in	2008,	2007	and	2006	totaled	$15	million,	$12	million	and	$207	million, respectively.	Cash	outlays	related	to	such	environmental	remediation	aggregated	$24	million,	$19	million	and	$22	million	in	2008,	2007	and	2006,	respectively.	As	part of	the	allocation	of	the	SigmaKalon	purchase	price	to	the	assets	acquired	and	liabilities	assumed,	the	reserve	for	environmental	contingencies	was	increased	by	$37 million	in	2008.	The	impact	of	foreign	currency	translation	decreased	the	liability	by	$5	million	in	2008.	Environmental	remediation	of	a	former	chromium manufacturing	plant	site	and	associated	sites	in	Jersey	City,	N.J.,	represented	the	major	part	of	our	2006	environmental	charges	and	our	existing	reserves.	Included	in	the amounts	mentioned	above	were	$185	million	of	2006	charges	against	income	and	$193	million	and	$195	million	in	reserves	at	December	31,	2008	and	2007, respectively,	associated	with	all	New	Jersey	chromium	sites.

The	Company's	experience	to	date	regarding	environmental	matters	leads	PPG	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.

Charges	for	estimated	environmental	remediation	costs	in	2006	were	significantly	higher	than	our	historical	range.	Our	continuing	efforts	to	analyze	and	assess	the environmental	issues	associated	with	a	former	chromium	manufacturing	plant	site	located	in	Jersey	City,	N.J.,	and	the	Calcasieu	River	Estuary	located	near	our	Lake Charles,	La.,	chlor-alkali	plant	resulted	in	a	pre-tax	charge	of	$173	million	in	the	third	quarter	of	2006	for	the	estimated	costs	of	remediating	these	sites.	Excluding	2006, pre-tax	charges	against	income	have	ranged	between	$10	million	and	$49	million	per	year	for	the	past	15	years.	We	anticipate	that	charges	against	income	in	2009	for environmental	remediation	costs	will	be	within	this	historical	range.

In	management's	opinion,	the	Company	operates	in	an	environmentally	sound	manner,	is	well	positioned,	relative	to	environmental	matters,	within	the	industries	in which	it	operates,	and	the	outcome	of	these	environmental	contingencies	will	not	have	a	material	adverse	effect	on	PPG's	financial	position	or	liquidity;	however,	any such	outcome	may	be	material	to	the	results	of	operations	of	any	particular	period	in	which	costs,	if	any,	are	recognized.	See	Note	15,	"Commitments	and	Contingent Liabilities,"	under	Item	8	of	this	Form	10-K	for	additional	information	related	to	environmental	matters.

There	are	growing	public	and	governmental	concerns	related	to	climate	change,	which	have	led	to	efforts	to	limit	greenhouse	gas	("GHG")	emissions.	These concerns	were	reflected	in	the	2005	framework	for	GHG	reduction	under	the	Kyoto	Protocol	to	the	United	Nations	Framework	Convention	on	Climate	Change.	The Kyoto	Protocol	has	been	adopted	by	many	countries	where	PPG	operates,	including	the	EU	and	Canada,	though	not	in	the	U.S.	The	EU	has	implemented	a	cap	and	trade approach	with	a	mandatory	emissions	trading	scheme	for	GHGs.	In	December	2007,	delegates	to	the	United	Nations	Framework	Convention	on	Climate	Change reached	agreement	on	development	of	a	plan	for	the	second	phase	of	Kyoto,	scheduled	to	start	in	2013.	This	could	potentially	lead	to	further	reduction	requirements.	A substantial	portion	of	PPG's	GHG	emissions	are	generated	by	locations	in	the	U.S.;	however,	at	this	time	it	is	uncertain	whether	the	U.S.	will	set	GHG	reduction	goals under	the	Kyoto	Protocol	or	by	some	other	mechanism.	PPG	has	joined	the	U.S.-based	Climate	Registry	to	assist	in	verification	of	future	GHG	reduction	achievements in	preparation	for	potential	imposition	in	the	U.S.	of	GHG	reduction	goals.

Energy	prices	and	availability	of	supply	continue	to	be	a	concern	for	major	energy	users.	Since	PPG's	GHG	emissions	arise	principally	from	combustion	of	fossil fuels,	PPG	has	for	some	time	recognized	the	desirability	of	reducing	energy	consumption	and	GHG	generation.	We	committed	under	the	Business	Roundtable's	Climate RESOLVE	program	to	reduce	our	GHG	intensity	(GHGs	produced	per	million	dollars	of	revenue)	by	18%	between	2002	and	2012.	PPG	achieved	this	target	in	2006, six	years	ahead	of	schedule.	Recognizing	the	continuing	importance	of	this	matter,	PPG	has	appointed	an	Energy	Security	and	Climate	Change	Steering	Group	to	guide the	Company's	progress	in	this	area.	Additionally,	in	2007	PPG	announced	new	corporate	targets,	namely	(i)	a	reduction	in	energy	intensity	by	25%	from	2006	to	2016 and	(ii)	a	10%	absolute	reduction	in	GHG	emissions	from	2006	to	2011.	PPG's	public	disclosure	on	energy	security	and	climate	change	can	be	viewed	at	the	Carbon Disclosure	Project	www.cdproject.net.

# 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	and	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	and	SEC's	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	coatings,	glass	and	chemicals	products,	we	operate	in	a	business	environment	that	includes	risks.	These	risks	are	not	unlike	the	risks	we have	faced	in	the	recent	past.	Each	of	the	risks	described	in	this	section	could	adversely	affect	our	operating	results,	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	business.

# The	current	U.S.	and	worldwide	recession	and	credit	crisis	could	have	a	continuing	negative	impact	on	our	results	of	operations	and	cash	flows.

During	the	fourth	quarter	of	2008,	the	demand	for	many	of	our	products	in	Europe,	Asia	and	Latin	America	declined	significantly	as	the	impact	of	the	recession	in the	U.S.	economy,	which	had	impacted	demand	throughout	2008,	spread	globally.	The	impact	of	the	recession	was	felt	most	noticeably	by	our	businesses	serving	the automotive	original	equipment,	construction	and	general	industrial	markets.	Entering	2009,	the	global	economic	outlook	in	terms	of	GDP	and	industrial	production	is	for weak	conditions	to	prevail.	Many	economists	are	forecasting	that	the	recession	will	persist	through	at	least	the	first	half	of	2009.	Continued	weakness	in	the	global economy	would	be	expected	to	result	in	lower	demand	for	many	of	our	products	and	increase	our	exposure	to	credit	risk	from	customers	in	the	industries	most	impacted by	the	weak	economy.	How	deep	and	how	long	the	recession	will	last	is	not	known.

# We	sell	products	to	global	and	regional	automotive	original	equipment	manufacturers	and	their	suppliers.

Global	production	of	automobiles	and	light	trucks	declined	by	2%	in	2008	reflecting	declines	of	19%	in	the	U.S.	and	Canada	and	7%	in	Western	Europe	that	were substantially	offset	by	growth	in	production	in	Eastern	Europe,	Asia	and	Latin	America.	The	industry	forecast	for	2009	projects	a	global	decline	of	nearly	10%,	with declines	in	production	in	all	regions	of	the	world	led	by	the	U.S.	and	Canada,	where	vehicle	production	is	forecast	to	be	down	approximately	25%.	Declines	in	the	global production	of	automobiles	and	light	trucks	of	this	magnitude	would	adversely	impact	our	sales	volume.

The	North	American	automotive	industry	continues	to	experience	structural	change,	including	the	loss	of	U.S.	market	share	by	General	Motors,	Ford	and	Chrysler. Further	deterioration	of	market	conditions	could	cause	certain	of	our	customers	and	suppliers	to	experience	liquidity	problems,	potentially	resulting	in	the	write-off	of amounts	due	from	these	customers	and	cost	impacts	of	changing	suppliers.	Our	worldwide	sales	to	General	Motors,	Ford	and	Chrysler	are	made	under	normal	credit terms	and	we	expect	to	collect	substantially	all	of	the	approximately	$45	million	due	from	these	customers	at	December	31,	2008	in	the	first	quarter	of	2009;	however, we	remain	focused	on	the	continual	management	of	this	credit	risk.

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

Our	operating	results	are	significantly	affected	by	the	cost	of	raw	materials	and	energy,	including	natural	gas.	Changes	in	natural	gas	prices	have	a	significant impact	on	the	operating	performance	of	our	Commodity	Chemicals	and	Glass	businesses.	Each	one-dollar	change	in	our	unit	price	of	natural	gas	per	million	British Thermal	Units	("mmbtu")	has	a	direct	impact	of	approximately	$60	million	to	$70	million	on	our	annual	operating	costs.	In	2008,	our	natural	gas	costs	were	volatile and,	on	average	increased	almost	25%	in	the	U.S.	compared	to	2007	levels.	Year-over-year	coatings	raw	material	costs	rose	by	$150	million	in	2008	following	a	rise	of $40	million	in	2007.	This	inflation,	which	was	partially	linked	to	increased	oil	prices,	occurred	in	all	regions	of	the	world,	with	the	most	significant	impact	in	the	U.S. The	impact	was	most	significant	in	the	automotive,	industrial,	architectural	coatings–Americas	and	Asia	Pacific	and	automotive	refinish	businesses.

We	also	import	raw	materials,	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,	our	margins	are	at	risk	of	being	lowered	if	those	foreign	currencies	strengthen	against	the	local	currencies	of	our	manufacturing facilities.

Additionally,	certain	raw	materials	are	critical	to	our	production	processes.	These	include	titanium	dioxide	and	epoxy	and	other	resins	in	the	Coatings	businesses; lenses,	photochromic	dye,	sand	and	soda	ash	in	the	Optical	and	Specialty	Materials	businesses;	brine	and	ethylene	in	the	Commodity	Chemicals	business;	and	sand	and soda	ash	in	the	Glass	businesses.	We	have	made,	and	plan	to	continue	to	make,	supply	arrangements	to	meet	the	planned	operating	requirements	for	the	future.	However, an	inability	to	obtain	these	critical	raw	materials	would	adversely	impact	our	ability	to	produce	products.

# We	experience	substantial	competition	from	certain	low-cost	regions.

Growing	competition	from	companies	in	certain	regions	of	the	world,	including	Asia,	Eastern	Europe	and	Latin	America,	where	energy	and	labor	costs	are	lower than	those	in	the	U.S.,	could	result	in	lower	selling	prices	or	reduced	demand	for	some	of	our	glass	and	fiber	glass	products.

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

Excluding	2006,	pretax	charges	against	income	for	environmental	remediation	ranged	between	$10	million	and	$49	million	per	year	over	the	past	15	years.	In	2006 those	charges	totaled	$207	million.	We	have	accrued	$299	million	for	estimated	remediation	costs	that	are	probable	at	December	31,	2008.	Our	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.	As	such,	in	addition	to	the	amounts currently	reserved,	we	may	be	subject	to	loss	contingencies	related	to	environmental	matters	estimated	to	be	as	much	as	$200	million	to	$300	million.	Such	unreserved losses	are	reasonably	possible	but	are	not	currently	considered	to	be	probable	of	occurrence.

# We	are	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential,	in	which	substantial	monetary	damages	are	sought.

The	results	of	any	future	litigation	or	settlement	of	such	lawsuits	and	claims	are	inherently	unpredictable,	but	such	outcomes	could	be	adverse	and	material	in amount.

# For	over	30	years,	we	have	been	a	defendant	in	lawsuits	involving	claims	alleging	personal	injury	from	exposure	to	asbestos.

Most	of	our	potential	exposure	relates	to	allegations	by	plaintiffs	that	PPG	should	be	liable	for	injuries	involving	asbestos	containing	thermal	insulation	products manufactured	by	Pittsburgh	Corning	Corporation	("PC").	PPG	is	a	50%	shareholder	of	PC.	Although	we	have	entered	into	a	settlement	arrangement	with	several	parties concerning	these	asbestos	claims	as	discussed	in	Note	15,	"Commitments	and	Contingent	Liabilities,"	under	Item	8	of	this	Form	10-K,	the	arrangement	remains	subject to	court	proceedings	and,	if	not	approved,	the	outcome	could	be	material	to	the	results	of	operations	of	any	particular	period.

# Our	products	are	subject	to	existing	and	evolving	regulations.

Regulations	concerning	the	composition	and	use	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.

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

Because	we	are	a	global	company,	our	results	are	subject	to	certain	inherent	risks,	including	economic	and	political	conditions	in	international	markets	and fluctuations	in	foreign	currency	exchange	rates.	While	approximately	75%	of	sales	and	operating	income	in	2008	was	generated	by	products	sold	in	the	United	States, Canada	and	Western	Europe,	our	remaining	sales	and	operating	income	are	generated	in	developing	regions,	such	as	Asia,	Eastern	Europe	and	Latin	America.

# As	a	producer	of	chemicals,	we	manufacture	and	transport	certain	materials	that	are	inherently	hazardous	due	to	their	toxic	nature.

We	have	significant	experience	in	handling	these	materials	and	take	precautions	to	handle	and	transport	them	in	a	safe	manner.	However,	these	materials,	if mishandled	or	released	into	the	environment,	could	cause	substantial	property	damage	or	personal	injuries	resulting	in	significant	legal	claims	against	us.	In	addition, evolving	regulations	concerning	the	security	of	chemical	production	facilities	and	the	transportation	of	hazardous	chemicals	could	result	in	increased	future	capital	or operating	costs.

# 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,	natural	disasters	and	severe	weather	events,	fires,	or	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	demand	for	our	products	or	make	it	difficult	or	impossible	for	us	to	receive	raw materials	from	suppliers	and	to	deliver	products	to	customers.

# 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.	The	Company	operates	133	manufacturing	facilities	in	44	countries.	The	Company's	principal	manufacturing	and distribution	facilities	are	as	follows:

EMEA: 55	manufacturing	facilities	in	27	countries.

Asia: 25	manufacturing	facilities	in	10	countries.

The	Company's	principal	research	and	development	centers	are	located	in	Allison	Park,	Pa.;	Harmarville,	Pa.;	and	Monroeville,	Pa.

The	Company's	headquarters	and	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,	the	most	significant	of	which	are	described	below,	relate	to	contract,	patent,	environmental,	product	liability,	antitrust 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	result	of	any	future	litigation	of	such	lawsuits	and	claims	is	inherently	unpredictable.	However,	management	believes	that,	in	the	aggregate,	the	outcome	of	all lawsuits	and	claims	involving	PPG,	including	asbestos-related	claims	in	the	event	the	settlement	described	below	does	not	become	effective,	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.

For	over	30	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	and	the	terms	and	status	of	the	proposed	asbestos	settlement,	see	Note	15,	"Commitments	and	Contingent	Liabilities,"	under	Item	8	of	this	Form 10-K.

Over	the	past	several	years,	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.

# Item	4.	Submission	of	Matters	to	a	Vote	of	Security	Holders

# Executive	Officers	of	the	Company

Set	forth	below	is	information	related	to	the	Company's	executive	officers	as	of	February	19,	2009.

(a) Mr.	Bunch	held	the	position	of	President	and	Chief	Operating	Officer	from	July	2002	until	July	2005.

(b) Mr.	Hernandez	also	held	the	position	of	Treasurer	from	April	2007	until	January	2008.

(c) Mr.	Alexander	held	the	position	of	Vice	President,	Industrial	Coatings	from	July	2002	until	April	2005.

(d) Mr.	De	Leener	was	appointed	to	Senior	Vice	President,	Architectural	Coatings,	Europe,	Middle	East	and	Africa	upon	PPG's	acquisition	of	SigmaKalon	Group	on	January	2,	2008.	He	previously	served	as	Chief Executive	Officer	of	SigmaKalon	Group	from	1999	until	January	2008.

(e) Mr.	Elias	held	the	position	of	Vice	President,	Optical	Products	from	April	2000	until	June	2008.

(f) Ms.	Holt	held	the	position	of	Vice	President,	Fiber	Glass	from	February	2003	until	April	2005.

(g) Mr.	McGarry	held	the	positions	of	Vice	President,	Coatings,	Europe	and	Managing	Director,	PPG	Europe	from	July	2006	through	June	2008;	Vice	President,	Chlor-Alkali	and	Derivatives	from	March	2004 through	June	2006;	and	General	Manager,	Fine	Chemicals	from	October	2000	through	February	2004.

(h) Mr.	Wulfsohn	also	held	the	position	of	Managing	Director,	PPG	Europe	from	May	2005	until	June	2006;	and	the	position	of	Vice	President,	Coatings,	Europe,	and	Managing	Director,	PPG	Europe	from February	2003	until	April	2005.

# 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	stock	exchange	listings	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.	This	information	is	also	included	in	the	PPG	Shareholder Information	on	page	79	of	the	Annual	Report	to	shareholders.

Directors	who	are	not	also	officers	of	the	Company	receive	common	stock	equivalents	pursuant	to	the	PPG	Industries,	Inc.,	Deferred	Compensation	Plan	for Directors	("PPG	Deferred	Compensation	Plan	for	Directors").	Common	stock	equivalents	are	hypothetical	shares	of	common	stock	having	a	value	on	any	given	date equal	to	the	value	of	a	share	of	common	stock.	Common	stock	equivalents	earn	dividend	equivalents	that	are	converted	into	additional	common	stock	equivalents	but carry	no	voting	rights	or	other	rights	afforded	to	a	holder	of	common	stock.	The	common	stock	equivalents	credited	to	directors	under	this	plan	are	exempt	from registration	under	Section	4(2)	of	the	Securities	Act	of	1933	as	private	offerings	made	only	to	directors	of	the	Company	in	accordance	with	the	provisions	of	the	plan.

Under	the	PPG	Deferred	Compensation	Plan	for	Directors,	each	director	may	elect	to	defer	the	receipt	of	all	or	any	portion	of	the	compensation	paid	to	such director	for	serving	as	a	PPG	director.	All	deferred	payments	are	held	in	the	form	of	common	stock	equivalents.	Payments	out	of	the	deferred	accounts	are	made	in	the form	of	common	stock	of	the	Company	(and	cash	as	to	any	fractional	common	stock	equivalent).	The	directors,	as	a	group,	were	credited	with	9,751;	9,742;	and	2,886 common	stock	equivalents	in	2008,	2007	and	2006,	respectively,	under	this	plan.	The	values	of	the	common	stock	equivalents,	when	credited,	ranged	from	$43.89	to $67.77	in	2008,	$68.71	to	$75.50	in	2007	and	$61.32	to	$65.84	in	2006.

# Issuer	Purchases	of	Equity	Securities

The	following	table	summarizes	the	Company's	stock	repurchase	activity	for	the	three	months	ended	December	31,	2008:

|  |  |  |  | Total |  | Maximum |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Number |  | Number\tof |
|  |  |  |  | of\tShares |  | Shares |
|  |  |  |  | Purchased |  | that\tMay |
|  |  | Total |  | as\tPart\tof |  | Yet\tBe |
|  |  | Number\tof | Average | Publicly |  | Purchased |
|  |  | Shares | Price\tPaid | Announced |  | Under\tthe |
| Month |  | Purchased | per\tShare | Program^(1) |  | Program |
| October\t2008 |  |  |  |  |  |  |
|  | Repurchase\tprogram | — | $— |  | — | 3,868,609 |
|  | Other\ttransactions^(2) | — | — |  | — | — |
| November\t2008 |  |  |  |  |  |  |
|  | Repurchase\tprogram | 18,600 | 37.77 |  | — | 3,850,009 |
|  | Other\ttransactions^(2) | — | — |  | — | — |
| December\t2008 |  |  |  |  |  |  |
|  | Repurchase\tprogram | — | — |  | — | 3,850,009 |
|  | Other\ttransactions^(2) | — | — |  | — | — |
| Total\tquarter\tended |  |  |  |  |  |  |
| December\t31,\t2008 |  |  |  |  |  |  |
|  | Repurchase\tprogram | 18,600 | $37.77 |  | — | 3,850,009 |
|  | Other\ttransactions^(2) | — | — |  | — | — |
| (1) |  |  |  |  |  |  |

(1) These	shares	were	repurchased	under	a	10	million	share	repurchase	program	approved	by	PPG's	Board	of	Directors	in	October	2005.	This	program	does	not	have	an	expiration	date.

(2) Includes	shares	withheld	or	certified	to	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.

# Equity	Compensation	Plan	Information

The	equity	compensation	plan	documents	described	in	the	footnotes	below	are	included	as	Exhibits	to	this	Form	10-K,	and	are	incorporated	herein	by	reference	in their	entirety.	The	following	table	provides	information	as	of	December	31,	2008	regarding	the	number	of	shares	of	PPG	common	stock	that	may	be	issued	under	PPG's equity	compensation	plans.	For	additional	information	on	the	Company's	equity	compensation	program,	see	Note	20,	"Stock-Based	Compensation,"	under	Item	8	of	this Form	10-K.

|  | Number	of<br>securities<br>to	be	issued<br>upon<br>exercise	of<br>outstanding<br>options,<br>warrants<br>and	rights<br>(a) | Weighted-<br>average<br>exercise<br>price	of<br>outstanding<br>options,<br>warrants<br>and	rights<br>(b) | available	for<br>future<br>issuance<br>under	equity<br>compensation<br>plans<br>(excluding<br>securities<br>reflected	in<br>column	(a))<br>(c) |
| :--- | :--- | :--- | :--- |
|  | 8,289,946 | $60.28 | 7,772,483 |
|  | — | — | — |
| Total | 8,289,946 | $60.28 | 7,772,483 |

(1) Equity	compensation	plans	approved	by	security	holders	include	the	PPG	Industries,	Inc.,	Stock	Plan,	the	PPG	Industries,	Inc.,	Omnibus	Incentive	Plan,	the	PPG	Industries,	Inc.,	Executive	Officers'	Long	Term Incentive	Plan	and	the	PPG	Industries	Inc.,	Long	Term	Incentive	Plan.

(2) Excluded	from	the	information	presented	here	are	common	stock	equivalents	held	under	the	PPG	Industries,	Inc.,	Deferred	Compensation	Plan	and	the	PPG	Industries,	Inc.,	Deferred	Compensation	Plan	for Directors,	neither	of	which	are	equity	compensation	plans.	As	supplemental	information,	there	were	526,569	common	stock	equivalents	held	under	such	plans	as	of	December	31,	2008.

# Item	6.	Selected	Financial	Data

The	information	required	by	Item	6	regarding	the	selected	financial	data	for	the	five	years	ended	December	31,	2008	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	78	of	the	Annual	Report	to	shareholders.

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

# Divestiture	of	Automotive	Glass	and	Services	Business

During	the	third	quarter	of	2007,	the	Company	entered	into	an	agreement	to	sell	its	automotive	glass	and	services	business	to	Platinum	Equity	("Platinum")	for approximately	$500	million.	Accordingly,	the	assets	and	liabilities	of	this	business	were	classified	as	held	for	sale	and	the	results	of	operations	and	cash	flows	of	this business	were	classified	as	discontinued	operations.	In	the	fourth	quarter	of	2007,	PPG	was	notified	that	affiliates	of	Platinum	had	filed	suit	in	the	Supreme	Court	of	the State

# Management's	Discussion	and	Analysis

of	New	York,	County	of	New	York,	alleging	that	Platinum	was	not	obligated	to	consummate	the	agreement.	Platinum	also	terminated	the	agreement.	PPG	has	sued Platinum	and	certain	of	its	affiliates	for	damages,	including	the	$25	million	breakup	fee	stipulated	by	the	terms	of	the	agreement,	based	on	various	alleged	actions	of	the Platinum	parties.	While	the	transaction	with	Platinum	was	terminated,	PPG	management	remained	committed	to	a	sale	of	the	automotive	glass	and	services	business	and continued	to	classify	its	assets	and	liabilities	as	held	for	sale	and	report	its	results	of	operations	and	cash	flows	as	discontinued	operations	through	the	first	quarter	of 2008.

In	July	2008,	PPG	entered	into	an	agreement	with	affiliates	of	Kohlberg	&	Company,	LLC,	under	which	PPG	would	divest	the	automotive	glass	and	services business	to	a	new	company	formed	by	affiliates	of	Kohlberg.	Under	the	agreement,	PPG	would	receive	a	minority	interest	in	the	new	company,	and,	as	such,	the accounting	requirements	of	Statement	of	Financial	Accounting	Standards,	("SFAS")	No.	144,	"Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets"	for classifying	the	business	as	assets	held	for	sale	and	reporting	its	results	of	operations	and	cash	flows	as	discontinued	operations	had	no	longer	been	met.	The	assets	and liabilities	of	the	business	have	been	classified	as	held	for	use	in	the	consolidated	balance	sheet	as	of	December	31,	2007,	and	the	results	of	operations	and	cash	flows	of the	business	through	September	30,	2008	have	been	classified	as	continuing	operations	in	the	Glass	reportable	segment	in	the	consolidated	statements	of	income	and cash	flows	under	Item	8	of	this	Form	10-K	for	the	three	years	ended	December	31,	2008.

In	the	second	quarter	of	2008,	as	a	result	of	the	reclassification	of	the	automotive	glass	and	services	business	to	continuing	operations,	PPG	recorded	a	one-time, non-cash	charge	of	$17	million	($11	million	aftertax)	to	reflect	a	catch-up	of	depreciation	expense,	which	was	suspended	when	the	business	was	classified	as	a discontinued	operation.	Additionally,	in	the	second	quarter	of	2008,	PPG	recorded	a	charge	of	$19	million	($12	million	aftertax)	for	special	termination	benefits	and	a pension	curtailment	loss	relating	to	the	impact	of	benefit	changes,	including	accelerated	vesting,	negotiated	as	part	of	the	sale.

The	transaction	with	affiliates	of	Kohlberg	was	completed	on	September	30,	2008,	with	PPG	receiving	total	proceeds	of	$315	million,	including	$225	million	in cash	and	two	6-year	notes	totaling	$90	million	($60	million	at	8.5%	interest	and	$30	million	at	10%	interest).	Both	notes,	which	may	be	prepaid	at	any	time	without penalty,	are	senior	to	the	equity	of	the	new	company.	In	addition,	PPG	has	received	a	minority	interest	of	approximately	40	percent	in	the	new	company,	Pittsburgh Glass	Works	LLC.	This	transaction	resulted	in	a	third	quarter	2008	gain	of	$15	million	pretax,	net	of	transaction	costs,	and	is	included	in	"Other	income"	in	the consolidated	statement	of	income	for	the	year	ended	December	31,	2008	under	Item	8.	The	aftertax	gain	on	the	transaction	was	$3	million,	reflective	of	tax	expense	of $12	million.	Tax	expense	on	the	gain	includes	the	tax	cost	of	repatriating	certain	transaction	proceeds	from	Canada	to	the	U.S.	and	the	impact	of	certain	permanent book/tax	differences	which	resulted	in	a	larger	taxable	gain.	PPG	will	account	for	its	interest	in	Pittsburgh	Glass	Works	LLC	under	the	equity	method	of	accounting from	October	1,	2008	onward.	PPG	has	retained	certain	liabilities	for	pension	and	post-employment	benefits	earned	for	service	up	to	September	30,	2008.

# Divestiture	of	Fine	Chemicals	Business

In	the	third	quarter	of	2007,	PPG	entered	into	an	agreement	to	sell	its	fine	chemicals	business	to	ZaCh	System	S.p.A.,	a	subsidiary	of	Zambon	Company	S.p.A.,	for approximately	$65	million.	The	sale	of	this	business	was	completed	in	November	2007.	The	results	of	operations	and	cash	flows	of	this	business,	which	had	previously been	included	in	the	Optical	and	Specialty	Materials	reportable	segment,	have	been	classified	as	discontinued	operations	in	the	consolidated	statements	of	income	and cash	flows	under	Item	8	for	the	years	ended	December	31,	2007	and	2006.	PPG	recorded	a	pretax	loss	on	sale	of	the	fine	chemicals	business	of	$25	million	($19	million aftertax)	in	2007.

# Performance	in	2008	compared	with	2007

# Performance	Overview

Our	sales	increased	30%	to	$15.8	billion	in	2008	compared	to	$12.2	billion	in	2007.	Sales	increased	28%	due	to	the	impact	of	acquisitions,	4%	due	to	increased selling	prices	and	2%	due	to	the	positive	effects	of	foreign	currency	translation.	These	sales	increases	were	offset	by	a	2%	decline	due	to	lower	sales	volumes	and	by	a 2%	decline	related	to	the	automotive	glass	and	services	business	divestiture.

Cost	of	sales,	exclusive	of	depreciation	and	amortization,	increased	by	$2,327	million	in	2008	to	$10,155	million	compared	to	$7,828	million	in	2007.	This	increase corresponds	with	the	increase	in	sales.	Cost	of	sales	as	a	percentage	of	sales	was	64.1%	in	both	2008	and	2007.	Cost	of	sales	in	2008	includes	$94	million	for	the	flow through	cost	of	sales	of	the	step	up	to	fair	value	of	acquired	inventory	related	to	the	SigmaKalon	acquisition.

Selling,	general	and	administrative	expenses	increased	by	$1,122	million	in	2008	due	principally	to	the	impact	of	the	acquisition	of	SigmaKalon.	Selling,	general and	administrative	expenses	as	a	percentage	of	sales	were	21.7%	for	2008	compared	to	18.9%	for	2007.	The	increase

in	selling,	general	and	administrative	expenses	as	a	percentage	of	sales	was	due	largely	to	the	addition	of	SigmaKalon	and	reflects	the	distribution	nature	of	these businesses,	which	requires	higher	selling,	distribution,	advertising	and	regional	management	costs	to	serve	their	broad	customer	profile.	Selling,	general	and administrative	expenses	as	a	percent	of	sales	in	the	Architectural	Coatings	-	EMEA	reportable	segment	are	in	line	with	PPG's	other	architectural	coatings	businesses. Other	factors	causing	the	increase	in	these	expenses	were	higher	levels	of	cost	to	support	growth	in	our	coatings	and	optical	businesses,	higher	bad	debt	expense associated	with	the	impact	of	the	weakening	economy	on	our	customers,	a	second	quarter	charge	of	$19	million	for	special	termination	benefits	and	foreign	currency translation.

Depreciation	expense	increased	by	$83	million	due	primarily	to	the	acquisition	of	SigmaKalon.	Research	and	development	costs	increased	by	$103	million	and amortization	increased	by	$77	million	compared	to	2007.	These	increases	were	primarily	due	to	the	acquisition	of	SigmaKalon.	Interest	expense	increased	by	$161 million	in	2008	due	to	debt	incurred	to	finance	the	acquisition	of	SigmaKalon.

During	the	third	quarter	of	2008,	the	Company	finalized	a	restructuring	plan	that	is	part	of	implementing	PPG's	global	transformation	strategy	and	the	integration of	its	acquisition	of	SigmaKalon.	The	Company	recorded	a	charge	of	$163	million	for	the	cost	of	this	restructuring.

The	effective	tax	rate	on	pretax	earnings	from	continuing	operations	in	2008	was	31.3%	compared	to	29.1%	in	2007.	The	2008	rate	includes	a	tax	benefit	of	$14 million	related	to	the	settlement	with	the	Internal	Revenue	Service	of	our	U.S.	tax	returns	for	tax	years	2004,	2005	and	2006.	The	2008	rate	also	includes	a	total	net	tax benefit	of	26.5%	on	costs	related	to	the	acquisition	of	SigmaKalon,	the	charges	for	the	catch-up	of	depreciation	expense	and	the	impact	of	benefit	changes	related	to	the divestiture	of	the	automotive	glass	and	services	business,	the	business	restructuring	charge,	the	adjustment	to	increase	the	current	value	of	the	Company's	obligation under	the	proposed	asbestos	settlement,	as	discussed	in	Note	15,	"Commitments	and	Contingent	Liabilities"	under	Item	8	of	this	Form	10-K,	and	the	gain	on	divestiture of	the	automotive	glass	and	services	business.	The	tax	rate	was	31.3%	on	the	remaining	pretax	earnings	in	2008.

The	rate	in	2007	includes	the	benefit	of	$15	million	for	the	reversal	of	a	valuation	allowance	previously	recorded	against	the	benefit	of	a	tax	net	operating	loss carryforward,	the	benefit	associated	with	an	enacted	reduction	in	the	Canadian	federal	corporate	income	tax	rate	and	a	tax	benefit	of	39%	on	the	adjustment	to	increase the	current	value	of	the	Company's	obligation	under	the	proposed	asbestos	settlement.	The	tax	rate	was	30.5%	on	the	remaining	pretax	earnings	from	continuing operations	in	2007.

The	effective	tax	rate	on	pretax	earnings	from	discontinued	operations	in	2007	was	25.2%.	This	rate	includes	a	tax	benefit	of	24%	on	the	loss	on	the	sale	of	the	fine chemicals	business.	The	tax	rate	was	36.5%	on	the	remaining	pretax	earnings	from	discontinued	operations	in	2007.

Net	income	and	earnings	per	share	–	assuming	dilution	for	2008	and	2007	are	summarized	below:

(Millions,	except	per	share	amounts)

(1) Costs	related	to	SigmaKalon	acquisition,	including	$66	million	aftertax	for	the	flow-through	cost	of	sales	of	the	step	up	to	fair	value	of	acquired	inventory	and	$23	million	aftertax	for	the	write-off	of	in-process research	and	development.

(2) Represents	the	catch-up	of	depreciation	expense,	which	was	suspended	when	the	automotive	glass	and	services	business	was	classified	previously	as	a	discontinued	operation.

(3) Represents	special	termination	benefits	and	a	pension	curtailment	loss	relating	to	the	impact	of	benefit	changes,	including	accelerated	vesting,	negotiated	as	part	of	the	sale	of	the	automotive	glass	and	services business.

(4) Net	increase	in	the	current	value	of	the	Company's	obligation	under	the	proposed	asbestos	settlement.

(5) Costs	related	to	Barloworld	Coatings	Australia	acquisition	for	the	flow-through	cost	of	sales	of	the	step	up	to	fair	value	of	acquired	inventory.

(6) Represents	curtailment	losses	on	certain	defined	benefit	plans	of	the	automotive	glass	and	services	business.

# Results	of	Reportable	Business	Segments

| (Millions) | 2008 | 2007 | 2008 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
| Performance\tCoatings | $4,716 | $3,811 | $582 | $563 |
| Industrial\tCoatings | 3,999 | 3,646 | 212 | 370 |
| Architectural\tCoatings\t–\tEMEA | 2,249 | — | 141 | — |
| Optical\tand\tSpecialty\tMaterials | 1,134 | 1,029 | 244 | 235 |
| Commodity\tChemicals | 1,837 | 1,539 | 340 | 243 |
| Glass | 1,914 | 2,195 | 70 | 138 |

Performance	Coatings	sales	increased	$905	million	or	24%	in	2008.	Sales	increased	21%	due	to	acquisitions,	largely	due	to	the	impact	of	the	SigmaKalon	protective and	marine	coatings	business.	Sales	also	grew	by	3%	due	to	higher	selling	prices	and	2%	due	to	the	positive	impact	of	foreign	currency	translation.	Sales	volumes declined	2%	as	reduced	volumes	in	architectural	coatings	–	Americas	and	Asia	Pacific	and	automotive	refinish	were	not	fully	offset	by	improved	volumes	in	the aerospace	and	protective	and	marine	businesses.	Volume	growth	in	the	aerospace	businesses	occurred	throughout	the	world,	while	the	volume	growth	in	protective	and marine	coatings	occurred	primarily	in	Asia.	Segment	income	increased	$19	million	in	2008.	Factors	increasing	segment	income	were	the	positive	impact	of	acquisitions, lower	overhead	costs	and	the	positive	impact	of	foreign	currency	translation.	The	benefit	of	higher	selling	prices	more	than	offset	the	negative	impact	of	inflation, including	higher	raw	materials	and	benefit	costs.	Segment	income	was	reduced	by	the	impact	of	the	lower	sales	volumes	in	architectural	coatings	and	automotive refinish,	which	more	than	offset	the	benefit	of	volume	gains	in	the	aerospace	and	protective	and	marine	coatings	businesses.

Industrial	Coatings	sales	increased	$353	million	or	10%	in	2008.	Sales	increased	11%	due	to	acquisitions,	including	the	impact	of	the	SigmaKalon	industrial coatings	business.	Sales	also	grew	3%	due	to	the	positive	impact	of	foreign	currency	translation,	and	1%	from	higher	selling	prices.	Sales	volumes	declined	5%	as reduced	volumes	were	experienced	in	all	three	businesses,	reflecting	the	substantial	declines	in	global	demand.	Volume	declines	in	the	automotive	and	industrial businesses	were	primarily	in	the	U.S.	and	Canada.	Additional	volume	declines	in	the	European	and	Asian	regions	were	experienced	by	the	industrial	coatings	business. In	packaging	coatings,	volume	declines	in	Europe	were	only	partially	offset	by	gains	in	Asia	and	North	America.	Segment	income	declined	$158	million	in	2008	due	to the	lower	volumes	and	inflation,	including	higher	raw	material	and	freight	costs,	the	impact	of	which	was	only	partially	mitigated	by	the	increased	selling	prices. Segment	income	also	declined	due	to	higher	selling	and	distribution	costs,	including	higher	bad	debt	expense.	Factors	increasing	segment	income	were	the	earnings	of acquired	businesses,	the	positive	impact	of	foreign	currency	translation	and	lower	manufacturing	costs.

Architectural	Coatings	-	EMEA	sales	for	the	year	were	$2,249	million.	This	business	was	acquired	in	the	SigmaKalon	acquisition.	Segment	income	was	$141 million,	which	included	amortization	expense	of	$63	million	related	to	acquired	intangible	assets	and	depreciation	expense	of	$58	million.

Optical	and	Specialty	Materials	sales	increased	$105	million	or	10%	in	2008.	Sales	increased	5%	due	to	higher	volumes	in	our	optical	products	business	resulting from	the	launch	of	Transitions	Optical's	next	generation	lens	product,	3%	due	to	the	positive	impact	of	foreign	currency	translation	and	2%	due	to	increased	selling prices.	Segment	income	increased	$9	million	in	2008.	The	increase	in	segment	income	was	the	result	of	increased	sales	volumes	and	the	favorable	impact	of	currency partially	offset	by	increased	selling	and	marketing	costs	in	the	optical	products	business	related	to	the	Transitions	Optical	product	launch	mentioned	above.	Increased selling	prices	only	partially	offset	higher	raw	material	costs,	primarily	in	our	silicas	business.

Commodity	Chemicals	sales	increased	$298	million	or	19%	in	2008.	Sales	increased	18%	due	to	higher	selling	prices	and	1%	due	to	improved	sales	volumes. Segment	income	increased	$97	million	in	2008.	Segment	income	increased	in	large	part	due	to	higher	selling	prices,	which	more	than	offset	the	negative	impact	of inflation,	primarily	higher	raw	material	and	energy	costs.	Segment	income	also	improved	due	to	lower	manufacturing	costs,	while	lower	margin	mix	and	equity	earnings reduced	segment	income.

Glass	sales	decreased	$281	million	or	13%	in	2008.	Sales	decreased	11%	due	to	the	divestiture	of	the	automotive	glass	and	services	business	in	September	2008	and 4%	due	to	lower	sales	volumes.	Sales	increased	2%	due	to	higher	selling	prices.	Segment	income	decreased	$68	million	in	2008.	Segment	income	decreased	due	to	the divestiture	of	the	automotive	glass	and	services	business,	lower	volumes,	the	negative	impact	of	inflation	and	lower	equity	earnings	from	our	Asian	fiber	glass	joint ventures.	Factors	increasing	segment	income	were	lower	manufacturing	costs,	higher	selling	prices	and	stronger	foreign	currency.

# Outlook

Overall	global	economic	activity	was	volatile	in	2008	with	an	overall	downward	trend.	The	North	American	economy	continued	a	slowing	trend	which	began during	the	second	half	of	2006	and	continued	all	of	2007.	The	impact	of	the	weakening	U.S.	economy	was	particularly

evident	in	lower	automotive	production,	housing	starts	and	consumer	confidence.	Many	economies	in	other	regions	were	stable	early	in	2008	but	then	began	to	slow during	the	year,	with	nearly	all	global	economies	slowing	rapidly	in	the	fourth	quarter.	The	significance	of	access	to	credit	and	overall	liquidity	concerns	increased	as	the year	progressed,	triggering	intervention	by	many	governments	to	provide	interim	financial	aid	to	the	global	banking	system	and	to	lower	interest	rates	and	implement other	measures	intended	to	stimulate	economic	activity.	Industrial	end-markets	experienced	rapid	declines	in	the	fourth	quarter,	as	global	demand	dropped	reflecting	a deepening	U.S.	recession	and	the	spread	of	the	banking	crisis	and	recessionary	conditions	to	many	European,	Asian	and	Latin	American	economies.

Early	in	2008,	global	inflation	intensified	as	oil	prices	accelerated	to	all-time	highs.	These	inflationary	trends	continued	well	into	the	third	quarter,	driving	up	costs of	other	energy	sources	and	many	of	the	products	that	are	dependent	upon	energy	as	a	feedstock.	Then,	in	recognition	of	the	global	economic	slowing,	prices	of	energy and	many	related	commodities	declined	in	the	latter	part	of	the	year.

The	North	American	economy	continued	to	slow	during	the	year.	Residential	construction	continued	to	decline,	while	rising	unemployment,	high	levels	of mortgage	foreclosures	and	real	estate	pricing	declines	were	among	the	primary	causal	factors	of	the	ongoing	banking	crisis.	Industrial	output	sagged,	with	the	U.S. automotive	OEM	market	declining	the	most	of	any	of	the	major	industrial	markets.	By	year-end,	declines	in	many	industrial	end-markets	exceeded	10	percent,	with several	declining	20-30	percent.	The	declining	economic	environment	resulted	in	a	continued	upward	shift	of	the	U.S.	unemployment	rate	and	a	decline	in	consumer confidence	to	all-time	lows.

The	European	economy	was	more	stable	early	in	the	year,	with	softness	beginning	to	appear	in	a	few	countries	such	as	Spain,	Italy	and	the	United	Kingdom.	Most of	the	remaining	parts	of	Western	Europe	began	to	experience	similar	declines	to	the	U.S.	later	in	the	year.	Eastern	European	growth	once	again	outpaced	growth	in Western	Europe,	with	most	countries	continuing	to	grow	throughout	the	year,	albeit	at	declining	rates.	However,	several	countries,	including	Hungary,	Poland	and Russia	began	to	experience	economic	decline	stemming	from	either	the	spread	of	the	banking	crisis	or	the	drop	in	commodity	pricing.

The	Asian	economies	continued	to	post	very	high	growth	rates	well	into	the	year,	but	the	impact	of	the	decline	in	the	U.S.	and	European	economies	eventually	led to	declines	in	the	Asian	growth	rates	late	in	the	year.	Overall,	China	GDP	grew	to	the	point	that	China	now	represents	the	third	largest	economy	globally,	but	even	this growth	rate	fell	below	10	percent	for	the	first	time	in	over	five	years.

Entering	2009,	the	overall	economic	outlook	is	uncertain	and	extremely	bearish.	Many	economists	believe	the	U.S.	will	experience	its	worst	recession	in	at	least	50 years,	with	other	major	regional	economies	possibly	following	suit.	As	a	result,	we	expect	the	2008	inflationary	pressures	on	our	input	cost	to,	at	least	in	part,	reverse. The	Company	is	anticipating	a	generally	stronger	U.S.	dollar	in	2009	resulting	in	negative	sales	and	earnings	impacts	relating	to	translation	of	the	sales	and	earnings from	our	foreign	affiliates	compared	to	2008.

Pension	and	postretirement	benefit	costs	will	increase	in	2009	due	largely	to	the	significant	declines	in	plan	assets	due	to	2008	investment	performance.	Our	pension and	postretirement	benefit	costs	totaled	$258	million	in	2008,	including	charges	of	$34	million	related	to	plan	changes	stemming	from	the	divestiture	of	the	automotive glass	and	services	business	and	our	2008	restructuring	actions.	Based	on	our	current	estimates,	we	expect	our	ongoing	pension	and	other	postretirement	benefits	costs	to increase	by	approximately	$100-$125	million	in	2009.

Our	natural	gas	costs	in	2008	were	volatile	and	on	average	increased	by	almost	25	percent	in	the	U.S.	as	compared	to	2007.	Changes	in	natural	gas	prices	have	a significant	impact	on	the	operating	performance	of	our	Commodity	Chemicals	and	Glass	businesses.	Each	one	dollar	change	in	our	price	of	natural	gas	per	million British	thermal	units	("mmbtu")	has	a	direct	impact	of	$60	million	to	$70	million	on	our	annual	operating	costs.	Our	2008	natural	gas	costs	averaged	over	$9.00	per mmbtu	for	the	year,	while	our	2007	costs	averaged	about	$7.25.	While	it	remains	difficult	to	predict	future	natural	gas	prices,	in	order	to	reduce	the	risks	associated	with volatile	prices,	we	use	a	variety	of	techniques,	which	include	reducing	consumption	through	improved	manufacturing	processes,	switching	to	alternative	fuels	and hedging.	We	currently	estimate	our	cost	for	natural	gas	in	the	first	quarter	of	2009	will	be	lower	than	the	first	quarter	of	2008.	We	currently	have	about	50%	of	our	first quarter	2009	U.S.	natural	gas	purchases	hedged	at	a	price	of	about	$8.50,	and	approximately	50%	of	our	2009	U.S.	annual	requirements	hedged	at	about	$8.00.	The current	spot	price	for	natural	gas	is	about	$5.00.

In	the	past	year,	we	experienced	increases	in	the	prices	we	pay	for	raw	materials	used	in	many	of	our	businesses,	particularly	in	our	coatings	businesses.	The increases	have	resulted	from	global	industrial	expansion,	supply/demand	imbalance	and	increases	in	supplier	feedstock	costs.	We	have	and	plan	to	continue	to	combat the	impact	of	these	rising	costs	by	seeking	alternate	and	global	supply	sources	for	our	raw	materials,	reformulating	our	products,

improving	our	production	processes	and	raising	our	selling	prices.	Year-over-year	coatings	raw	material	costs	rose	by	about	$150	million	in	2008,	or	about	a	5	percent increase,	up	notably	from	2007	which	increased	by	about	$40	million	or	1	percent.	Our	current	forecast	for	the	early	portion	of	2009	is	for	the	cost	of	certain	raw materials	to	decline,	resulting	from	the	delayed	impact	of	lower	oil	prices	and	lower	global	demand	for	the	materials	we	purchase.	We	also	expect	a	negative	impact	on our	margins	in	the	United	Kingdom,	Eastern	Europe,	and	Latin	America,	where	raw	materials	are	purchased	in	currencies	that	are	expected	to	be	stronger	than	the	local currencies.	About	30%	of	our	coatings	sales	in	Europe	are	made	outside	the	Eurozone.	Given	the	dynamic	supply/demand,	energy	cost	and	currency	environment,	it	is not	feasible	to	project	full	year	raw	material	pricing,	but	the	main	drivers	will	continue	to	be	overall	economic	conditions	and	resulting	supply	and	demand	factors.

The	combination	of	a	tight	supply	position	for	caustic	and	high	energy	costs	resulted	in	chlor-alkali	pricing	that	ended	2008	at	an	all-time	record	high	and	pricing for	the	fourth	quarter	that	was	up	20%	over	the	prior	year.	Chlor-alkali	demand	was	strong	at	the	beginning	of	the	fourth	quarter	following	the	adverse	impact	of	third quarter	hurricanes	on	industrial	activity	in	the	U.S.	Gulf	Coast.	Demand	softened	in	November	and	December	and	we	are	anticipating	that	early	2009	demand	levels	will be	less	than	in	the	fourth	quarter.

We	completed	significant	portfolio	changes	in	2008	that	have	been	crucial	in	the	transformation	of	the	Company.	We	completed	the	acquisition	of	SigmaKalon.	The total	transaction	value	was	approximately	$3.2	billion,	consisting	of	cash	paid	of	$1,673	million	and	debt	assumed	of	$1,517	million.	We	also	completed	a	few	other targeted	acquisitions	at	a	cost	totaling	nearly	$140	million.	As	in	past	years,	these	acquisitions	are	intended	to	strengthen	our	coatings	businesses	by	extending	their geographic	breadth	and/or	product	offering.	The	sales	for	businesses	held	for	less	than	one	year	added	approximately	$3.4	billion	to	PPG's	2008	sales	with	mid-single digit	operating	margins,	excluding	certain	one-time	acquisition	related	costs	and	including	amortization	expense	stemming	from	the	acquisitions,	which	amortization totaled	$79	million.	Interim	financing	from	the	SigmaKalon	acquisition	was	replaced	with	permanent	financing	in	March	2008,	as	PPG	placed	term	debt	with	five,	ten and	thirty	year	maturities	at	a	cost	of	5.75%,	6.65%	and	7.70%	respectively,	which	we	believe	is	favorable	to	the	cost	of	placing	that	debt	today.

Also	in	2008,	we	completed	the	divestiture	of	a	majority	interest	in	the	automotive	glass	and	services	business.	We	retained	about	a	40	percent	interest	in	the business	and	will	account	for	this	interest	using	the	equity	method	of	accounting.	The	weak	economic	conditions	that	are	adversely	impacting	our	continuing	businesses that	serve	the	automotive	OEM	market	are	also	significantly	impacting	this	divested	business.

The	Company	announced	restructuring	actions	in	the	third	quarter	of	2008	focused	on	reducing	its	cost	structure,	including	actions	associated	with	achieving	the synergies	from	the	integration	of	the	acquired	SigmaKalon	business	and	in	reflection	of	the	lower	demand	levels.	We	are	considering	additional	cost-reduction	actions which	may	result	in	additional	restructuring	charges	and	related	cost	savings	in	2009.

Global	economic	conditions	entering	2009	are	extremely	challenging	due	to	continued	lack	of	industrial	demand	and	global	credit	issues.	The	transformation	of	the Company,	including	the	2008	portfolio	changes,	has	enhanced	our	geographic	sales	mix,	as	now	only	about	45	percent	of	sales	are	derived	in	the	U.S.	and	Canada,	and emerging	regions	account	for	nearly	25	percent	of	sales.	Additionally,	we	have	broadened	our	end-markets	served	resulting	in	lower	exposure	to	any	individual	end- market.	Entering	the	year,	we	have	$1	billion	of	cash	on	hand	following	record	cash	generation	in	2008.	We	anticipate	that	our	increased	diversification	and	our	cash	and existing	borrowing	capacity	will	provide	the	Company	with	the	liquidity	it	needs	to	finance	operations	and	reward	shareholders	in	2009,	even	in	the	face	of	today's weakened	global	economy	and	the	possibility	that	the	recovery	does	not	begin	until	2010.

# Accounting	Standards	Adopted	in	2008

Note	1,	"Summary	of	Significant	Accounting	Policies,"	under	Item	8	describes	the	Company's	adoption	of	the	Emerging	Issues	Task	Force,	("EITF")	Issue	No.	06- 10,	"Accounting	for	Collateral	Assignment	Split-Dollar	Life	Insurance	Arrangements,"	Statement	of	Financial	Accounting	Standards,	("SFAS")	No.	157,	"Fair	Value Measurements"	and	SFAS	No.	159,	"The	Fair	Value	Option	for	Financial	Assets	and	Financial	Liabilities	–	Including	an	Amendment	of	Financial	Accounting	Standards Board,	("FASB")	Statement	No.	115"	as	of	January	1,	2008.

# Accounting	Standards	to	be	Adopted	in	Future	Years

Note	1,	"Summary	of	Significant	Accounting	Policies,"	under	Item	8	describes	the	potential	impact	on	PPG	of	accounting	standards	that	are	not	yet	effective, including	SFAS	No.	141	(revised	2007),	"Business	Combinations,"	SFAS	No.	160,	"Noncontrolling	Interests	in	Consolidated	Financial	Statements	-	an	amendment	of ARB	No.	51,"	EITF	Issue	No.	07-1,	"Accounting	for	Collaborative	Arrangements"	and	SFAS	No.	161,	"Disclosures	about	Derivative	Instruments	and	Hedging Activities."

Our	sales	increased	12%	to	$12.2	billion	in	2007	compared	to	$10.9	billion	in	2006.	Sales	increased	6%	due	to	the	impact	of	acquisitions,	3%	due	to	increased volumes	and	3%	due	to	the	positive	effects	of	foreign	currency	translation.

Cost	of	sales	as	a	percentage	of	sales	increased	slightly	to	64.1%	compared	to	63.6%	in	2006	due	to	the	adverse	impact	of	inflation	net	of	selling	price	changes.

Selling,	general	and	administrative	expense	increased	slightly	as	a	percentage	of	sales	to	18.9%	compared	to	18.1%	in	2006.	These	costs	increased	primarily	due	to higher	expenses	related	to	growth,	including	increased	advertising	costs	and	the	impact	of	inflation.

Business	restructuring	expense	decreased	$37	million	in	2007.	In	2006,	the	Company	finalized	plans	for	certain	actions	to	reduce	its	workforce	and	consolidate facilities	and	recorded	a	charge	of	$37	million.

Other	charges	decreased	$195	million	in	2007.	The	reduction	was	primarily	due	to	a	reduction	in	environmental	expenses,	which	were	$195	million	lower	in	2007 as	compared	to	2006.

Other	earnings	increased	$18	million	in	2007	due	to	higher	royalty	income,	higher	interest	income	and	gains	from	asset	sales.

The	effective	tax	rate	on	pretax	earnings	from	continuing	operations	in	2007	was	29.1%	compared	to	26.1%	in	2006.	The	rate	in	2007	included	the	benefit	of	$15 million	for	the	reversal	of	a	valuation	allowance	previously	recorded	against	the	benefit	of	a	tax	net	operating	loss	carryforward,	the	benefit	associated	with	an	enacted reduction	in	the	Canadian	federal	corporate	income	tax	rate	and	a	tax	benefit	of	39%	on	the	adjustment	to	increase	the	current	value	of	the	Company's	obligation	under the	proposed	asbestos	settlement.	The	tax	rate	was	30.5%	on	the	remaining	pretax	earnings	from	continuing	operations	in	2007.	The	effective	tax	rate	on	earnings	from continuing	operations	in	2006	included	the	benefit	of	a	tax	refund	from	Canada	resulting	from	the	favorable	resolution	of	a	tax	dispute	dating	back	to	1998	and	a	tax benefit	related	to	the	settlement	with	the	Internal	Revenue	Service	of	our	tax	returns	for	the	years	2001-2003.	In	the	aggregate,	these	benefits	reduced	2006	income	tax expense	by	$39	million.	The	2006	effective	tax	rate	also	included	a	tax	benefit	of	36%	on	the	charge	for	business	restructuring	and	a	tax	benefit	of	39%	on	the	third quarter	environmental	remediation	charge	for	sites	in	New	Jersey	and	Louisiana,	on	the	charges	for	legal	settlements,	and	on	the	adjustment	to	increase	the	current	value of	the	Company's	obligation	under	the	proposed	asbestos	settlement.	Income	tax	expense	of	39%	was	recognized	on	certain	insurance	recoveries,	and	income	tax expense	of	29.4%	was	recognized	on	the	remaining	pretax	earnings	from	continuing	operations	in	2006.

The	effective	tax	rate	on	pretax	earnings	from	discontinued	operations	in	2007	was	25.2%	compared	to	39%	in	2006.	The	rate	in	2007	included	a	tax	benefit	of	24% on	the	loss	on	the	sale	of	the	fine	chemicals	business.	The	tax	rate	was	36.5%	on	the	remaining	pretax	earnings	from	discontinued	operations	in	2007.

($	in	Millions,	except	per	share	amounts)

(4) Charge	for	estimated	environmental	remediation	costs	at	our	former	chromium	manufacturing	plant	in	Jersey	City,	N.J.	and	at	the	Calcasieu	River	estuary	near	our	Lake	Charles,	La.	facility.

| (Millions) | 2007 | 2006 | 2007 | 2006 |
| :--- | :--- | :--- | :--- | :--- |
| Performance\tCoatings | $3,811 | $3,088 | $563 | $514 |
| Industrial\tCoatings | 3,646 | 3,236 | 370 | 349 |
| Optical\tand\tSpecialty\tMaterials | 1,029 | 904 | 235 | 217 |
| Commodity\tChemicals | 1,539 | 1,483 | 243 | 285 |
| Glass | 2,195 | 2,227 | 138 | 148 |

Performance	Coatings	sales	increased	$723	million	or	23%	in	2007.	Sales	increased	15%	due	to	sales	from	acquisitions	in	all	Performance	Coatings	businesses,	4% due	to	the	positive	impact	of	foreign	currency	translation

and	3%	due	to	improved	sales	volumes	in	our	aerospace	and	automotive	refinish	businesses,	which	more	than	offset	slightly	lower	volumes	in	architectural	coatings.	The volume	growth	in	the	aerospace	and	refinish	businesses	occurred	throughout	the	world,	while	the	volume	decline	in	architectural	coatings	was	in	North	America.	Sales also	increased	1%	due	to	higher	selling	prices.	Segment	income	increased	$49	million	to	a	total	of	$563	million	in	2007.	Factors	increasing	segment	income	were improved	sales	volumes,	earnings	from	acquisitions	and	the	positive	impact	of	foreign	currency	translation.	Additionally,	the	benefit	of	higher	selling	prices	more	than offset	the	impact	of	inflation.	Segment	income	decreased	due	to	higher	overhead	costs	to	support	growth	initiatives	in	this	segment.

Industrial	Coatings	sales	increased	$410	million	or	13%	in	2007.	Sales	increased	6%	due	to	the	positive	impact	of	foreign	currency	translation,	4%	due	to acquisitions	in	our	automotive	and	industrial	coatings	businesses	and	3%	from	improved	sales	volumes	as	volume	increases	in	automotive	coatings	and	packaging coatings	more	than	offset	declines	in	the	volume	of	the	industrial	coatings	business	in	the	U.S.	and	Canada.	Volume	growth	in	the	automotive	coatings	business	occurred in	all	regions	of	the	world,	while	the	volume	growth	in	packaging	coatings	was	experienced	mainly	in	Asia	and	Europe.	The	decline	in	industrial	coatings'	North American	volumes	overshadowed	solid	growth	for	this	business	in	Europe,	Asia	and	Latin	America.	Segment	income	increased	$21	million	in	2007	due	to	improved sales	volumes,	the	impact	of	acquisitions,	lower	manufacturing	costs	and	the	positive	impact	of	foreign	currency	translation.	Factors	decreasing	segment	income	were inflation,	including	higher	raw	material	costs,	which	more	than	offset	a	slight	improvement	in	selling	prices,	and	increased	overhead	costs	to	support	growth	initiatives.

Optical	and	Specialty	Materials	sales	increased	$125	million	or	14%	in	2007.	Sales	increased	8%	due	to	higher	volumes	primarily	in	the	optical	products	business, 4%	due	to	the	positive	impact	of	foreign	currency	translation,	1%	as	the	result	of	sales	from	acquisitions	in	the	optical	products	business	and	1%	due	to	higher	selling prices.	Segment	income	increased	$18	million	in	2007.	The	increase	in	segment	income	was	primarily	the	result	of	the	increased	sales	volumes	partially	offset	by	higher advertising	expense	related	to	optical	products	volume	growth	initiatives	in	all	regions	and	to	the	impending	launch	of	Transitions	Optical's	next	generation	lens	product in	the	first	quarter	of	2008.

Commodity	Chemicals	sales	increased	$56	million	or	4%	in	2007.	Sales	increased	9%	due	to	higher	sales	volumes	of	caustic	and	derivatives,	which	was	partially offset	by	a	5%	decrease	in	selling	prices	in	part	due	to	lower	natural	gas	input	costs.	Segment	income	decreased	$42	million	in	2007.	Segment	income	was	lower	in	large part	due	to	lower	selling	prices,	higher	manufacturing	costs,	including	maintenance	costs	and	higher	raw	material	costs.	Segment	income	also	decreased	as	a	result	of	the absence	of	an	insurance	recovery	received	in	2006	for	damage	caused	by	Hurricane	Rita	in	2005.	The	benefit	of	lower	energy	and	environmental	costs	and	improved sales	volumes	were	factors	that	increased	segment	income	in	2007.

Glass	sales	decreased	by	$32	million	or	1%	in	2007.	Sales	decreased	1%	due	to	lower	sales	volumes	in	our	automotive	glass	and	services	business	and	1%	due	to the	negative	impact	of	lower	selling	prices	primarily	in	our	performance	glazings	business.	Pricing	in	the	performance	glazings	business	includes	a	surcharge	related	to the	cost	of	energy	lagged	by	one	quarter.	The	surcharge	in	2006	exceeded	the	2007	surcharge	due	to	higher	energy	costs	during	the	comparable	periods.	Sales	increased by	1%	due	to	the	positive	impact	of	foreign	currency	translation.	Segment	income	decreased	$10	million	in	2007.	Segment	income	decreased	due	to	the	negative	impact of	inflation	and	lower	pricing,	including	the	lower	energy	surcharge	in	performance	glazings.	These	factors	were	only	partially	offset	by	the	benefit	from	lower manufacturing	and	selling	costs.

See	Note	24,	"Reportable	Business	Segment	Information,"	under	Item	8	of	this	Form	10-K	for	further	information	related	to	the	Company's	operating	segments and	reportable	business	segments.

# Commitments	and	Contingent	Liabilities,	including	Environmental	Matters

PPG	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential,	including	some	that	it	has	asserted	against	others,	in	which	substantial	monetary damages	are	sought.	See	Item	3,	"Legal	Proceedings"	and	Note	15,	"Commitments	and	Contingent	Liabilities,"	under	Item	8	of	this	Form	10-K	for	a	description	of certain	of	these	lawsuits,	including	a	description	of	the	proposed	asbestos	settlement	and	a	description	of	the	antitrust	suits	against	PPG	related	to	the	flat	glass	and automotive	refinish	industries.	As	discussed	in	Item	3	and	Note	15,	although	the	result	of	any	future	litigation	of	such	lawsuits	and	claims	is	inherently	unpredictable, management	believes	that,	in	the	aggregate,	the	outcome	of	all	lawsuits	and	claims	involving	PPG,	including	asbestos-related	claims	in	the	event	the	proposed	asbestos settlement	described	in	Note	15	does	not	become	effective,	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	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.	Management	anticipates	that	the resolution	of	the	Company's	environmental	contingencies	will	occur	over	an	extended	period	of	time.	As	of	December	31,	2008	and	2007,	PPG	had	reserves	for environmental	contingencies	totaling	$299	million	and	$276	million,	respectively,	of	which	$44	million	and	$57	million,	respectively,	were	classified	as	current liabilities.	Pretax	charges	against	income	for	environmental	remediation	costs	in	2008,	2007	and	2006	totaled	$15	million,	$12	million	and	$207	million,	respectively, and	are	included	in	"Other	charges"	in	the	consolidated	statement	of	income.	Cash	outlays	related	to	such	environmental	remediation	aggregated	$24	million,	$19 million	and	$22	million,	in	2008,	2007	and	2006,	respectively.	As	part	of	the	allocation	of	the	SigmaKalon	purchase	price	to	the	assets	acquired	and	liabilities	assumed, the	reserve	for	environmental	contingencies	was	increased	by	$37	million	in	2008.	The	impact	of	foreign	currency	translation	decreased	the	liability	by	$5	million	in 2008.

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	$200	million	to	$300	million,	which	range	is	unchanged	since	December	31,	2007.	Such	unreserved	losses	are	reasonably	possible	but	are not	currently	considered	to	be	probable	of	occurrence.

Charges	for	estimated	environmental	remediation	costs	in	2006	were	significantly	higher	than	our	historical	range.	Our	continuing	efforts	to	analyze	and	assess	the environmental	issues	associated	with	a	former	chromium	manufacturing	plant	site	located	in	Jersey	City,	N.J.,	and	at	the	Calcasieu	River	Estuary	located	near	our	Lake Charles,	La.,	chlor-alkali	plant	resulted	in	a	pre-tax	charge	of	$173	million	in	the	third	quarter	of	2006	for	the	estimated	costs	of	remediating	these	sites.	Excluding	2006, pretax	charges	against	income	have	ranged	between	$10	million	and	$49	million	per	year	for	the	past	15	years.	We	anticipate	that	charges	against	income	in	2009	for environmental	remediation	costs	will	be	within	this	historical	range.

Management	expects	cash	outlays	for	environmental	remediation	costs	to	be	approximately	$50	million	in	2009	and	to	range	from	$45	million	to	$75	million annually	through	2013.	It	is	possible	that	technological,	regulatory	and	enforcement	developments,	the	results	of	environmental	studies	and	other	factors	could	alter	our expectations	with	respect	to	charges	against	income	and	future	cash	outlays.	Specifically,	the	level	of	expected	cash	outlays	is	highly	dependent	upon	activity	related	to the	former	chromium	manufacturing	plant	site	in	New	Jersey,	as	PPG	awaits	approval	of	workplans	that	have	been	submitted	to	the	applicable	regulatory	agencies.

# Impact	of	Inflation

In	2008,	PPG	was	able	to	more	than	offset	the	increase	in	our	costs	due	to	the	negative	effects	of	inflation,	including	the	impact	of	higher	raw	materials	and	energy costs,	with	increased	selling	prices.	In	our	Commodity	Chemicals	reportable	segment,	the	increase	in	our	costs	due	to	inflation	was	more	than	offset	by	higher	selling prices.	In	our	Performance	Coatings	and	Optical	and	Specialty	Materials	reportable	segments,	the	increase	in	our	costs	due	to	the	negative	effects	of	inflation	was	offset by	higher	selling	prices.	However,	in	our	Industrial	Coatings	and	Glass	reportable	segments,	the	increase	in	our	costs	due	to	the	negative	effects	of	inflation	was	not offset	by	higher	selling	prices.

In	2007,	the	increase	in	our	costs	due	to	the	negative	effects	of	inflation,	including	the	impact	of	higher	raw	material	costs	in	our	Industrial	Coatings,	Commodity Chemicals	and	Glass	reportable	segments,	were	not	offset	by	higher	selling	prices.	Higher	selling	prices	did	offset	the	negative	impact	of	inflation	in	our	Performance Coatings	and	Optical	and	Specialty	Materials	reportable	segments.

In	2006,	the	increase	in	our	costs	due	to	the	negative	effects	of	inflation,	including	the	impact	of	higher	raw	material	costs	in	our	coatings	businesses,	was	offset	by higher	selling	prices	in	our	Industrial	Coatings,	Performance	Coatings	and	Commodity	Chemicals	reportable	segments	and	by	reduced	manufacturing	costs	in	our	Glass and	Optical	and	Specialty	Materials	reportable	segments.

In	2009,	we	expect	that	the	combined	impact	of	productivity	improvements,	lower	manufacturing	costs	and	higher	selling	prices	will	offset	any	negative	impact	of inflation	on	raw	materials,	energy	and	other	costs.	We	expect	erosion	in	the	cost	of	certain	raw	materials	in	some	regions	of	the	world	in	the	beginning	of	2009,	resulting from	the	delayed	impact	of	lower	oil	prices	and	lower	global	demand	for	these	raw	materials.	However,	our	forecast	for	raw	material	inflation	remains	uncertain	for	the full	year	2009	given	the	current	economic	uncertainty	and	the	volatility	in	commodity	and	raw	material	costs	we	experienced	in	2008.

# Liquidity	and	Capital	Resources

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

respectively.	The	increase	in	cash	from	operations	in	2008	compared	to	2007	of	$362	million	was	due	in	large	part	to	an	increase	in	earnings	after	adjustment	for	non- cash	charges	for	amortization,	depreciation,	SigmaKalon	acquired	inventory	step-up	and	in-process	research	and	development	costs	and	business	restructuring	and	to less	growth	in	working	capital.	The	major	factors	contributing	to	these	higher	year-over-year	earnings	were	the	earnings	from	the	acquired	SigmaKalon	business	and higher	Commodity	Chemicals	earnings.	Our	strong	2008	performance	in	terms	of	cash	from	operating	activities	has	enabled	us	to	repay	$681	million	of	debt	during	the year	and	still	have	over	$1	billion	of	cash	on	hand	at	December	31,	2008.	Our	debt	reduction	activity	has	lowered	our	U.S.	commercial	paper	outstanding	at December	31,	2008	to	$222	million.	The	credit	crisis	in	the	U.S.	drove	up	our	cost	of	borrowing	in	the	commercial	paper	market	late	in	2008	by	about	300	basis	points compared	to	our	cost	earlier	in	2008,	shortened	the	term	of	our	commercial	paper	borrowings	and	effectively	reduced	the	amount	of	credit	available	to	us	in	this	market from	time	to	time;	however,	our	strong	cash	position	and	other	available	credit	facilities	were	sufficient	to	fund	the	shortfall	we	experienced	in	terms	of	commercial paper	availability	in	2008.	In	the	early	part	of	2009,	our	cost	of	borrowing	in	the	commercial	paper	market	has	declined	by	about	400	basis	points,	and	the	amount	of credit	available	to	us	in	this	market	has	returned	to	a	more	normal	level.

Total	current	assets	less	total	current	liabilities	(net	working	capital)	decreased	$171	million	to	$2,138	million	at	December	31,	2008	from	$2,309	million	at December	31,	2007.	The	decrease	in	net	working	capital	is	principally	related	to	the	change	in	net	short-term	borrowings	and	the	growth	in	accounts	payable	and accrued	liabilities,	offset	with	increases	in	accounts	receivable	and	inventory	driven	by	acquisitions	and	an	increase	in	cash	due	to	our	cash	flow	focus	in	the	fourth quarter	of	2008.	Accounts	receivable	as	a	percent	of	annual	sales	for	2008	decreased	to	17.7	percent	from	20.6	percent	in	2007.	Days	sales	outstanding	decreased	to	65 days	in	2008	from	75	days	in	2007.	Inventories	as	a	percent	of	annual	sales	decreased	to	10.7	percent	from	12.5	percent	in	2007.	Inventory	turnover	was	5	times	in	2008 and	2007.

Total	capital	spending	was	$2,056	million,	$597	million	and	$771	million	in	2008,	2007	and	2006,	respectively.	Spending	related	to	modernization	and	productivity improvements,	expansion	of	existing	businesses	and	environmental	control	projects	was	$383	million,	$364	million	and	$369	million	in	2008,	2007	and	2006,

respectively,	and	is	expected	to	be	approximately	$200	million	during	2009.	Capital	spending	related	to	business	acquisitions	amounted	to	$1,673	million,	$233	million and	$402	million	in	2008,	2007	and	2006,	respectively.

On	January	2,	2008,	PPG	completed	the	acquisition	of	SigmaKalon,	a	worldwide	coatings	producer	based	in	Uithoorn,	Netherlands,	from	global	private	investment firm	Bain	Capital	("the	seller").	SigmaKalon	produces	architectural,	protective	and	marine	and	industrial	coatings	and	is	a	leading	coatings	supplier	in	Europe	and	other key	markets	across	the	globe,	with	an	increasing	presence	in	Africa	and	Asia.	The	total	transaction	value	was	approximately	$3.2	billion,	consisting	of	cash	paid	to	the seller	of	$1,673	million	and	debt	assumed	of	$1,517	million.

In	order	to	provide	financing	for	the	SigmaKalon	acquisition,	in	December	2007,	PPG	and	certain	of	its	subsidiaries	entered	into	a	three	year	€650	million revolving	credit	facility	with	several	banks	and	financial	institutions	and	Societe	Generale,	as	facility	agent	for	the	lenders.	The	facility	has	an	annual	fee	of	7	basis points.	In	addition,	PPG	and	a	subsidiary	entered	into	two	bridge	loan	agreements,	one	in	the	amount	of	€1	billion	with	multiple	lenders	and	Credit	Suisse	as administrative	agent	for	those	lenders	and	the	other	in	the	amount	of	$500	million	with	Credit	Suisse	as	the	lender.

In	December	2007,	PPG	issued	$617	million	of	commercial	paper	and	borrowed	$1,056	million	(€717	million)	under	the	€1	billion	bridge	loan	agreement.	The proceeds	from	these	borrowings	were	deposited	into	escrow	in	December	2007.	Upon	closing	of	the	acquisition	on	January	2,	2008,	these	amounts	were	released	from escrow	and	paid	to	the	seller.	Also,	in	January	2008,	PPG	borrowed	$1,143	million,	representing	the	remaining	$417	million	(€283	million)	available	under	the	€1 billion	bridge	loan	agreement	and	$726	million	(€493	million)	under	the	€650	million	revolving	credit	facility.	The	proceeds	from	these	borrowings	and	cash	on	hand	of $116	million	were	used	to	refinance	$1,259	million	of	the	$1,517	million	of	SigmaKalon	debt	outstanding	on	the	date	of	acquisition.	No	amounts	were	borrowed	under the	$500	million	bridge	loan	agreement	and,	due	to	the	passage	of	time	and	the	specific	purpose	of	this	agreement,	PPG	can	no	longer	make	borrowings	under	this agreement.

On	March	18,	2008,	PPG	completed	a	public	offering	of	$600	million	in	aggregate	principal	amount	of	its	5.75%	Notes	due	2013	(the	"2013	Notes"),	$700	million in	aggregate	principal	amount	of	its	6.65%	Notes	due	2018	(the	"2018	Notes")	and	$250	million	in	aggregate	principal	amount	of	its	7.70%	Notes	due	2038	(the	"2038 Notes"	and,	together	with	the	2013	Notes	and	the	2018	Notes,	the	"Notes").	The	Notes	were	offered	by	the	Company	pursuant	to	its	existing	shelf	registration.	The proceeds	of	this	offering	of	$1,538	million	(net	of	discount	and	issuance	costs)	and	additional	borrowings	of	$195	million	under	the	€650	million	revolving	credit

facility	were	used	to	repay	existing	debt,	including	certain	short-term	debt	and	the	amounts	outstanding	under	the	€1	billion	bridge	loan.	No	further	amounts	can	be borrowed	under	the	€1	billion	bridge	loan.	The	discount	and	issuance	costs	related	to	the	Notes,	which	totaled	$12	million,	will	be	amortized	to	interest	expense	over	the respective	lives	of	the	Notes.

In	the	fourth	quarter	2008,	the	Company	monetized	certain	cross	currency	foreign	exchange	swap	contracts,	which	had	been	designated	as	hedges	of	our	Euro denominated	net	investment	in	SigmaKalon,	and	replaced	them	with	new	swap	contracts.	As	a	result	of	these	swap	monetizations,	the	Company	received	$208	million	in cash	proceeds.	See	Item	7a	of	this	Form	10-K	for	further	information	regarding	these	instruments.

In	July	2008,	the	Company	entered	into	an	agreement	to	divest	its	automotive	OEM	glass	and	automotive	replacement	glass	and	services	businesses	("automotive glass	and	services	business").	Under	the	agreement,	PPG	received	a	minority	ownership	interest	in	the	new	company	formed	by	the	buyer.	The	transaction	was completed	on	September	30,	2008.	The	Company	received	proceeds	of	$225	million	from	this	transaction.

Dividends	paid	to	shareholders	totaled	$343	million,	$335	million	and	$316	million	in	2008,	2007	and	2006,	respectively.	PPG	has	paid	uninterrupted	dividends since	1899,	and	2008	marked	the	37th	consecutive	year	of	increased	annual	dividend	payments	to	shareholders.	Over	time,	our	goal	is	to	sustain	our	dividends	at approximately	one-third	of	our	earnings	per	share.

During	2008,	the	Company	repurchased	0.1	million	shares	of	PPG	common	stock	at	a	cost	of	$7	million	under	a	previously	authorized	share	repurchase	program. In	2007,	the	Company	purchased	3.7	million	shares	of	PPG	common	stock	at	a	cost	of	$274	million,	and	during	2006,	the	Company	repurchased	2.3	million	shares	of PPG	common	stock	at	a	cost	of	$153	million.

On	August	17,	2006,	the	Pension	Protection	Act	of	2006	(the	"PPA")	was	signed	into	law,	changing	the	funding	requirements	for	our	U.S.	defined	benefit	pension plans	beginning	in	2008.	Under	the	requirements	of	PPA,	we	did	not	have	a	mandatory	contribution	to	these	plans	in	2008;	however,	we	made	a	voluntary	contribution of	$50	million	to	our	U.S.	defined	benefit	pension	plans	in	2008.	We	do	not	currently	expect	to	have	a	mandatory	contribution	to	these	plans	in	2009;	however,	due	in large	part	to	the	negative	investment	return	on	pension	plan	assets	in	2008,	we	made	a	voluntary	contribution	in	the	amount	of	$160	million	to	these	plans	in	January 2009	and	we	may	make	additional	voluntary	contributions	to	these	plans	in	2009	in	an	amount	up	to	$140	million.	In	both	2007	and	2006,	we	made	voluntary contributions	to	our	U.S.	defined	benefit	pension	plans	of	$100	million.	Contributions	were	made	to	our	non-U.S.	defined	benefit	pension	plans	of	$69	million,	$49 million	and	$24	million	for	2008,	2007	and	2006,	respectively,	some	of	which	were	required	by	local	funding	requirements.	We	expect	to	make	contributions	to	our non-U.S.	plans	in	2009	of	approximately	$60	million,	all	of	which	are	mandatory.

The	ratio	of	total	debt,	including	capital	leases,	to	total	debt	and	equity	was	54%	at	December	31,	2008	and	42%	at	December	31,	2007.	The	increase	in	2008	is primarily	due	to	the	additional	debt	borrowed	to	finance	the	acquisition	of	SigmaKalon	combined	with	a	reduction	in	equity	driven	by	currency	and	pension	adjustments to	other	comprehensive	income	(loss).

We	continue	to	believe	that	our	cash	on	hand,	cash	from	operations	and	the	Company's	available	debt	capacity	will	continue	to	be	sufficient	to	fund	operating activities,	capital	spending,	including	acquisitions,	dividend	payments,	debt	service,	amounts	due	under	the	proposed	asbestos	settlement,	share	repurchases,

contributions	to	pension	plans,	and	PPG's	significant	contractual	obligations.	These	significant	contractual	obligations,	along	with	amounts	due	under	the	proposed asbestos	settlement	are	presented	in	the	following	table.

|  |  |  |  |  |  | 2010- | 2012- |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) |  |  |  | Total | 2009 | 2011 | 2013 | Thereafter |
| Contractual\tObligations |  |  |  |  |  |  |  |  |
|  | Long-term\tdebt |  |  | $3,122 | $117 | $378 | $676 | $1,951 |
|  | Short-term\tdebt | Short-term\tdebt | Short-term\tdebt | 784 | 784 | — | — | — |
|  | Capital\tlease\tobligations | Capital\tlease\tobligations | Capital\tlease\tobligations | 6 | 2 | 1 | 1 | 2 |
|  | Operating\tleases | Operating\tleases | Operating\tleases | 633 | 126 | 189 | 116 | 202 |
|  | Interest\tpayments | (1) |  | 1,776 | 188 | 331 | 306 | 951 |
|  | Pension\tcontributions | Pension\tcontributions | (2) | 220 | 220 | — | — | — |
|  | Unconditional |  |  |  |  |  |  |  |
|  | purchase\tobligations | purchase\tobligations |  | 1,220 | 374 | 403 | 101 | 342 |
|  | Total | Total | Total | $7,761 | $1,811 | $1,302 | $1,200 | $3,448 |
| Asbestos\tSettlement | (3) |  |  |  |  |  |  |  |
|  | Aggregate\tcash\tpayments | Aggregate\tcash\tpayments | Aggregate\tcash\tpayments | $825 | $417 | $29 | $33 | $346 |
|  | PPG\tstock\tand\tother | PPG\tstock\tand\tother | PPG\tstock\tand\tother | 74 | 74 | — | — | — |
|  | Total | Total | Total | $899 | $491 | $29 | $33 | $346 |

(1) Includes	interest	on	all	outstanding	debt.	Interest	for	variable-rate	debt	instruments	is	based	on	effective	rates	at	December	31,	2008.	Interest	for	fixed-rate	debt	instruments	have	been	adjusted	for	the	impact	of interest	rate	swaps	using	the	effective	rate	at	December	31,	2008.

(2) Includes	the	estimated	pension	contribution	for	2009	only,	as	PPG	is	unable	to	estimate	the	pension	contributions	beyond	2009.

(3) We	have	recorded	an	obligation	equal	to	the	net	present	value	of	the	aggregate	cash	payments,	along	with	the	PPG	stock	and	other	assets	to	be	contributed	to	a	trust	under	the	proposed	asbestos	settlement. However,	PPG	has	no	obligation	to	pay	any	amounts	under	this	settlement	until	the	Funding	Effective	Date,	as	more	fully	discussed	in	Note	15,	"Commitments	and	Contingent	Liabilities,"	under	Item	8	of	this Form	10-K.

The	unconditional	purchase	commitments	are	principally	take-or-pay	obligations	related	to	the	purchase	of	certain	materials,	including	industrial	gases,	natural	gas, coal	and	electricity,	consistent	with	customary	industry	practice.	These	amounts	also	include	PPG's	commitment	to	purchase	electricity	and	steam	from	the	RS	Cogen joint	venture	discussed	in	Note	6,	"Investments,"	under	Item	8	of	this	Form	10-K.

See	Note	9,	"Debt	and	Bank	Credit	Agreements	and	Leases,"	under	Item	8	of	this	Form	10-K	for	details	regarding	the	use	and	availability	of	committed	and uncommitted	lines	of	credit,	letters	of	credit,	guarantees	and	debt	covenants.

In	addition	to	the	amounts	available	under	the	lines	of	credit,	the	Company	has	an	automatic	shelf	registration	on	file	with	the	SEC	pursuant	to	which	it	may	issue, offer	and	sell	from	time	to	time	on	a	continuous	or	delayed	basis	any	combination	of	securities	in	one	or	more	offerings.

# Off-Balance	Sheet	Arrangements

The	Company's	off-balance	sheet	arrangements	include	the	operating	leases	and	unconditional	purchase	obligations	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,	"Debt	and	Bank	Credit	Agreements	and	Leases," 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,	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,	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	the	collectibility of	accounts	receivable,	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	4,	"Working	Capital	Detail,"	Note	13,	"Income	Taxes"	and	Note	15,	"Commitments	and	Contingent Liabilities"	under	Item	8	of	this	Form	10-K.

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,	extensive	use	is	made	of	assumptions	about	inflation,	investment	returns,	mortality,	turnover,	medical	costs and	discount	rates.	These	assumptions	are	reviewed	annually.	See	Note	14,	"Pensions	and	Other	Postretirement	Benefits,"	under	Item	8	for	information	on	these	plans and	the	assumptions	used.

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.	The	discount	rate	assumption	for	2009	is	6.15%	for	our	U.S.	defined	benefit	pension	and	other	postretirement	benefit plans.	A	reduction	in	the	discount	rate	of	50	basis	points,	with	all	other	assumptions	held	constant,	would	increase	2009	net	periodic	benefit	expense	for	our	defined benefit	pension	and	other	postretirement	benefit	plans	by	approximately	$9	million	and	$5	million,	respectively.

The	expected	return	on	plan	assets	assumption	used	in	accounting	for	our	pension	plans	is	determined	by	evaluating	the	mix	of	investments	that	comprise	plan assets	and	external	forecasts	of	future	long-term	investment	returns.	For	2008,	the	return	on	plan	assets	assumption	for	our	U.S.	defined	benefit	pension	plans	was	8.5%. We	will	use	the	same	assumption	for	2009.	A	reduction	in	the	rate	of	return	of	50	basis	points,	with	other	assumptions	held	constant,	would	increase	2009	net	periodic pension	expense	by	approximately	$10	million.

As	discussed	in	Note	1,	"Summary	of	Significant	Accounting	Policies,"	under	Item	8	of	this	Form	10-K,	the	Company	tests	goodwill	and	identifiable	intangible assets	with	indefinite	lives	for	impairment	at	least	annually	by	comparing	the	fair	value	of	the	reporting	units	to	their	carrying	values.	Fair	values	are	estimated	using discounted	cash	flow	methodologies	that	are	based	on	projections	of	the	amounts	and	timing	of	future	revenues	and	cash	flows.	Based	on	this	testing,	none	of	our goodwill	or	identifiable	intangible	assets	with	indefinite	lives	was	impaired	as	of	December	31,	2008.

As	part	of	our	ongoing	financial	reporting	process,	a	collaborative	effort	is	undertaken	involving	PPG	managers	with	functional	responsibility	for	financial,	credit, environmental,	legal,	tax	and	benefit	matters.	The	results	of	this	effort	provide	management	with	the	necessary	information	on	which	to	base	their	judgments	on	these contingencies	and	to	develop	the	estimates	and	assumptions	used	to	prepare	the	financial	statements.

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,	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

From	December	31,	2007	to	December	31,	2008,	the	U.S.	dollar	strengthened	against	the	currencies	of	most	of	the	countries	in	which	PPG	operates,	most	notably against	the	euro,	the	British	pound	sterling,	the	Polish	zloty,	the	Brazilian	real,	the	South	Korean	won	and	the	Australian	dollar.	As	a	result,	the	effects	of	translating	the net	assets	of	PPG's	operations	denominated	in	non-U.S.	currencies	to	the	U.S.	dollar	decreased	consolidated	net	assets	at	December	31,	2008	by	$499	million	compared to	December	31,	2007.	During	much	of	the	year,	the	U.S.	dollar	was	weaker	against	the	currencies	of	many	countries	in	which	PPG	operates	than	it	was	in	2007,	which had	a	favorable	impact	on	2008	pretax	earnings	of	$45	million	from	the	translation	of	these	foreign	earnings	into	U.S.	dollars.

During	2007,	the	U.S.	dollar	weakened	against	certain	of	the	currencies	in	the	countries	in	which	PPG	operates,	most	notably	against	the	euro,	the	Canadian	dollar and	the	Brazilian	real.	The	effects	of	translating	the	net	assets	of	PPG's	operations	denominated	in	non-U.S.	currencies	to	the	U.S.	dollar	increased	consolidated	net assets	at	December	31,	2007	by	$260	million	compared	to	December	31,	2006.	In	addition,	the	weaker	U.S.	dollar	had	a	favorable	impact	on	2007	pretax	earnings	of $47	million.

During	2006,	the	U.S.	dollar	weakened	against	the	currencies	of	most	of	the	countries	in	which	PPG	operates,	most	notably	against	the	euro,	the	British	pound sterling	and	the	Australian	dollar.	The	effects	of	translating	the	net	assets	of	PPG's	operations	denominated	in	non-U.S.	currencies	to	the	U.S.	dollar	increased consolidated	net	assets	by	$179	million	for	the	year	ended	December	31,	2006.	In	addition,	the	weaker	U.S.	dollar	had	a	favorable	impact	on	2006	pretax	earnings	of	$9 million.

# 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.

Forward-looking	statements	are	identified	by	the	use	of	the	words	"aim,"	"believe,"	"expect,"	"anticipate,"	"intend,"	"estimate"	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	increasing	price	and	product competition	by	foreign	and	domestic	competitors,	fluctuations	in	cost	and	availability	of	raw	materials,	the	ability	to	maintain	favorable	supplier	relationships	and arrangements,	difficulties	in	integrating	acquired	businesses	and	achieving	expected	synergies	therefrom,	economic	and	political	conditions	in	international	markets,	the ability	to	penetrate	existing,	developing	and	emerging	foreign	and	domestic	markets,	which	also	depends	on	economic	and	political	conditions,	foreign	exchange	rates and	fluctuations	in	such	rates,	the	impact	of	environmental	regulations,	unexpected	business	disruptions	and	the	unpredictability	of	existing	and	possible	future	litigation, including	litigation	that	could	result	if	the	proposed	asbestos	settlement	does	not	become	effective.	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,	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	natural	gas	prices	and	to	changes	in	PPG's	stock	price.	The Company	may	enter	into	derivative	financial	instrument	transactions	in	order	to	manage	or	reduce	these	market	risks.	A	detailed	description	of	these	exposures	and	the Company's	risk	management	policies	are	provided	in	Note	11,	"Derivative	Financial	Instruments	and	Hedge	Activities,"	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	forward	and	option	contracts	outstanding	during	2008	and	2007	were	used	to	hedge	PPG's	exposure	to	foreign	currency	transaction	risk.	The	fair value	of	these	contracts	as	of	December	31,	2008	and	2007	were	liabilities	of	$17	million	and	assets	of	$0.4	million,	respectively.	The	potential	reduction	in	PPG's earnings	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 currencies	and	20%	for	Asian	and	South	American	currencies	for	the	years	ended	December	31,	2008	and	2007	would	have	been	$27	million	and	$0.3	million, respectively.

Concurrent	with	the	March	18,	2008	completion	of	the	$1.55	billion	public	debt	offering,	PPG	entered	into	ten	U.S.	dollar	to	euro	cross	currency	swap	contracts with	a	total	notional	amount	of	$1.3	billion,	of	which	$600	million	were	to	settle	on	March	15,	2013	and	$700	million	were	to	settle	on	March	15,	2018.	On	March	18, 2008,	PPG	paid	the	counterparties	to	the	contracts	a	total	of	$1.3	billion	and	received	euros,	which	were	used	to	repay	most	of	the	€1	billion	bridge	loan,	which	the Company	employed	to	finance	the	acquisition	of	SigmaKalon.	During	the	fourth	quarter	of	2008,	PPG	converted	$1.16	billion	of	these	contracts	to	$208	million	of	cash and	replaced	them	with	new	cross	currency	swap	contracts.	On	settlement	of	the	contracts,	PPG	will	receive	$1.3	billion	U.S.	dollars	and	pay	euros	to	the	counterparties to	the	contracts	of	which	$600	million	will	settle	on	March	15,	2013	and	$700	million	will	settle	on	March	15,	2018.	The	Company	has	designated	these	swaps	as hedges	of	its	net	investment	in	SigmaKalon	and,	as	a	result,	mark	to	fair	value	adjustments	of	the	swaps	have	been	and	will	be	recorded	as	a	component	of	other comprehensive	income.	As	of	December	31,	2008,	the	aggregate	fair	value	of	these	swaps	was	a	liability	of	$130	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	and	increased	the	liability	by	$181	million	at	December	31,	2008.

PPG	had	non-U.S.	dollar	denominated	debt	outstanding	of	$1,373	million	as	of	December	31,	2008	and	$1,636	million	as	of	December	31,	2007.	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 approximately	$118	million	and	$203	million	as	of	December	31,	2008	and	2007,	respectively.

Interest	rate	swaps	are	used	to	manage	a	portion	of	PPG's	interest	rate	risk.	The	fair	value	of	the	interest	rate	swaps	was	an	asset	of	$3	million	and	$6	million	as	of December	31,	2008	and	2007,	respectively.	The	fair	value	of	these	swaps	would	have	decreased	by	$0.5	million	and	$8	million	as	of	December	31,	2008	and	2007, respectively,	if	variable	interest	rates	increased	by	10%.	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	affected	PPG's	variable	rate	debt	obligations	by	increasing	interest	expense	approximately	$3	million	as	of	December	31,	2008	and $10	million	as	of	December	31,	2007.	Further,	a	10%	reduction	in	interest	rates	would	have	increased	the	present	value	of	the	Company's	fixed	rate	debt	by approximately	$118	million	and	$48	million	as	of	December	31,	2008	and	2007,	respectively;	however,	such	changes	would	not	have	had	an	effect	on	PPG's	annual earnings	or	cash	flows.

The	fair	value	of	natural	gas	swap	contracts	in	place	as	of	December	31,	2008	and	2007	was	a	liability	of	$85	million	and	$8	million,	respectively.	These	contracts were	entered	into	to	reduce	PPG's	exposure	to	higher	prices	of	natural	gas.	A	10%	reduction	in	the	price	of	natural	gas	would	have	had	an	unfavorable	effect	on	the	fair value	of	these	contracts	and	increased	the	liability	by	$27	million	and	$26	million	at	December	31,	2008	and	2007,	respectively.

An	equity	forward	arrangement	was	entered	into	to	hedge	the	Company's	exposure	to	changes	in	fair	value	of	its	future	obligation	to	contribute	PPG	stock	into	an asbestos	settlement	trust	(see	Note	11	"Derivative	Financial	Instruments	and	Hedge	Activities"	and	Note	15,	"Commitments	and	Contingent	Liabilities,"	under	Item	8 of	this	Form	10-K).	The	fair	value	of	this	instrument	as	of	December	31,	2008	and	2007	was	a	liability	of	$6	million	and	an	asset	of	$18	million,	respectively.	A	10% decrease	in	PPG's	stock	price	would	have	had	an	unfavorable	effect	on	the	fair	value	of	this	instrument	and	increased	the	liability	by	$6	million	at	December	31,	2008 and	reduced	the	asset	by	$6	million	at	December	31,	2007.

# Item	8.	Financial	Statements	and	Supplementary	Data

# Internal	Controls	–	Report	of	Independent	Registered	Public	Accounting	Firm

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

We	have	audited	the	internal	control	over	financial	reporting	of	PPG	Industries,	Inc.	and	subsidiaries	(the	"Company")	as	of	December	31,	2008,	based	on	criteria established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	As	described	in	the Management	Report,	management	excluded	from	its	assessment	the	internal	control	over	financial	reporting	at	the	SigmaKalon	Group,	which	was	acquired	on	January 2,	2008	and	whose	financial	statements	constitute	approximately	33%	of	assets	and	20%	of	sales	of	the	consolidated	financial	statement	amounts	as	of	and	for	the	year ended	December	31,	2008.	Accordingly,	our	audit	did	not	include	the	internal	control	over	financial	reporting	at	the	SigmaKalon	Group.	The	Company's	management	is responsible	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.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	internal	control	over	financial	reporting	based	on	our audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	by,	or	under	the	supervision	of,	the	company's	principal	executive	and	principal financial	officers,	or	persons	performing	similar	functions,	and	effected	by	the	company's	board	of	directors,	management,	and	other	personnel	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	(1)	pertain	to	the	maintenance	of	records	that,	in reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(2)	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	(3)	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	the	inherent	limitations	of	internal	control	over	financial	reporting,	including	the	possibility	of	collusion	or	improper	management	override	of	controls, material	misstatements	due	to	error	or	fraud	may	not	be	prevented	or	detected	on	a	timely	basis.	Also,	projections	of	any	evaluation	of	the	effectiveness	of	the	internal control	over	financial	reporting	to	future	periods	are	subject	to	the	risk	that	the	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2008,	based	on	the	criteria established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	financial	statements and	financial	statement	schedule	as	of	and	for	the	year	ended	December	31,	2008	of	the	Company	and	our	report	dated	February	19,	2009	expressed	an	unqualified opinion	on	those	financial	statements	and	financial	statement	schedule	and	included	an	explanatory	paragraph	relating	to	the	Company's	adoption	of	FASB Interpretation	No.	48,	"Accounting	for	Uncertainty	in	Income	Taxes,	an	interpretation	of	FASB	Statement	No.	109."

# /s/	Deloitte	&	Touche	LLP

# Deloitte	&	Touche	LLP

Pittsburgh,	Pennsylvania

# Management	Report

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

We	are	responsible	for	the	preparation	of	the	financial	statements	included	in	this	Annual	Report.	The	financial	statements	were	prepared	in	accordance	with accounting	principles	generally	accepted	in	the	United	States	of	America	and	include	amounts	that	are	based	on	the	best	estimates	and	judgments	of	management.

We	are	also	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting.	Our	internal	control	system	is	designed	to	provide reasonable	assurance	concerning	the	reliability	of	the	financial	data	used	in	the	preparation	of	PPG's	financial	statements,	as	well	as	to	safeguard	the	Company's	assets from	unauthorized	use	or	disposition.

All	internal	control	systems,	no	matter	how	well	designed,	have	inherent	limitations.	Therefore,	a	system	of	internal	control	over	financial	reporting	can	provide only	reasonable	assurance	and	may	not	prevent	or	detect	misstatements.	In	addition,	because	of	changing	conditions,	there	is	risk	in	projecting	any	evaluation	of	internal controls	to	future	periods.

We	conducted	an	evaluation	of	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2008.	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.	Our evaluation	included	reviewing	the	documentation	of	our	controls,	evaluating	the	design	effectiveness	of	our	controls	and	testing	their	operating	effectiveness.	Our evaluation,	however,	excluded	the	internal	control	over	financial	reporting	related	to	the	SigmaKalon	Group,	which	was	acquired	by	the	Company	in	January	of	2008 and	whose	financial	statements	constituted	approximately	33%	of	our	consolidated	assets	and	20%	of	our	consolidated	sales	as	of	and	for	the	year	ended	December	31, 2008.	This	acquired	business	will	be	included	in	management's	assessment	of	the	effectiveness	of	our	internal	controls	over	financial	reporting	as	of	December	31, 2009.	Based	on	this	evaluation	we	believe	that,	as	of	December	31,	2008,	the	Company's	internal	controls	over	financial	reporting	were	effective	and	provide	reasonable assurance	that	the	accompanying	financial	statements	do	not	contain	any	material	misstatement.

Deloitte	&	Touche	LLP,	an	independent	registered	public	accounting	firm,	has	issued	their	report,	included	on	page	28	of	this	Form	10-K,	regarding	the Company's	internal	control	over	financial	reporting.

# /s/	Charles	E.	Bunch

# Charles	E.	Bunch

Chairman	of	the	Board

and	Chief	Executive	Officer

# /s/	William	H.	Hernandez

# William	H.	Hernandez

Senior	Vice	President,	Finance	and

Chief	Financial	Officer

# Consolidated	Financial	Statements	–	Report	of	Independent	Registered	Public	Accounting	Firm

We	have	audited	the	accompanying	consolidated	balance	sheets	of	PPG	Industries,	Inc.	and	subsidiaries	(the	"Company")	as	of	December	31,	2008	and	2007,	and the	related	consolidated	statements	of	income,	shareholders'	equity,	comprehensive	income	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31, 2008.	Our	audits	also	included	the	financial	statement	schedule	listed	in	Item	15(b).	These	financial	statements	and	the	financial	statement	schedule	are	the	responsibility of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	financial	statements	and	financial	statement	schedule	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion. In	our	opinion,	such	consolidated	financial	statements	present	fairly,	in	all	material	respects,	the	financial	position	of	PPG	Industries,	Inc.	and	subsidiaries	as	of December	31,	2008	and	2007,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2008,	in	conformity with	accounting	principles	generally	accepted	in	the	United	States	of	America.	Also,	in	our	opinion,	such	financial	statement	schedule,	when	considered	in	relation	to	the basic	consolidated	financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

As	discussed	in	Note	1	to	the	consolidated	financial	statements,	on	January	1,	2007	the	Company	adopted	the	provisions	of	FASB	Interpretation	No.	48,

"Accounting	for	Uncertainty	in	Income	Taxes,	an	interpretation	of	FASB	Statement	No.	109."

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	Company's	internal	control	over financial	reporting	as	of	December	31,	2008,	based	on	the	criteria	established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	February	19,	2009	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial reporting.

# Consolidated	Statement	of	Income

| (Millions,	except	per	share	amounts) | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $15,849 | $12,220 | $10,938 |
| Cost\tof\tsales,\texclusive\tof\tdepreciation\tand\tamortization\t(See\tNote\t2) | \t 10,155 | 7,828 | 6,957 |
| Selling,\tgeneral\tand\tadministrative\t(See\tNote\t3) | 3,432 | 2,310 | 1,979 |
| Depreciation\t(See\tNote\t3) | 428 | 345 | 332 |
| Research\tand\tdevelopment\t–\tnet\t(See\tNote\t22) | 451 | 348 | 314 |
| Interest | 254 | 93 | 83 |
| Amortization\t(See\tNote\t7) | 135 | 58 | 43 |
| Asbestos\tsettlement\t–\tnet\t(See\tNotes\t11\tand\t15) | 4 | 24 | 28 |
| In-process\tresearch\tand\tdevelopment\t(See\tNote\t2) | 23 | — | — |
| Business\trestructuring\t(See\tNote\t8) | 163 | — | 37 |
| Other\tcharges\t(See\tNote\t15) | 61 | 59 | 254 |
| Other\tearnings\t(See\tNote\t19) | (165) | (160) | (142) |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes\tand\tminority\tinterest | 908 | 1,315 | 1,053 |
| Income\ttax\texpense\t(See\tNote\t13) | 284 | 383 | 275 |
| Minority\tinterest | 86 | 76 | 71 |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | 538 | 856 | 707 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations,\tnet\tof\ttax\t(See\tNote\t3) | — | (22) | 4 |
| Net\tincome | $538 | $834 | $711 |
| Earnings\tper\tcommon\tshare\t(See\tNote\t12) |  |  |  |
| Income\tfrom\tcontinuing\toperations | $3.27 | $5.20 | $4.27 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations\t(See\tNote\t3) | — | (0.13) | 0.02 |
| Net\tincome | $3.27 | $5.07 | $4.29 |
| Earnings\tper\tcommon\tshare\t–\tassuming\tdilution\t(See\tNote\t12) |  |  |  |
| Income\tfrom\tcontinuing\toperations | $3.25 | $5.16 | $4.25 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations\t(See\tNote\t3) | — | (0.13) | 0.02 |
| Net\tIncome | $3.25 | $5.03 | $4.27 |

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

# Consolidated	Balance	Sheet

| (Millions) | 2008 | 2007 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets |  |  |
| \t Cash\tand\tcash\tequivalents | \t\t $1,021 | $526 |
| \t Cash\theld\tin\tescrow\t(See\tNote\t2) | 24 | 1,706 |
| \t Receivables\t(See\tNote\t4) | 2,804 | 2,522 |
| Inventories\t(See\tNote\t4) | 1,702 | 1,532 |
| \t Deferred\tincome\ttaxes\t(See\tNote\t13) | 515 | 418 |
| \t Other | 282 | 237 |
| Total\tcurrent\tassets | 6,348 | 6,941 |
| Property\t(See\tNote\t5) | 8,043 | 8,694 |
| Less\taccumulated\tdepreciation | 5,245 | 6,116 |
| Property\t–\tnet | 2,798 | 2,578 |
| Investments\t(See\tNote\t6) | 509 | 370 |
| Goodwill\t(See\tNote\t7) | 2,641 | 1,507 |
| Identifiable\tintangible\tassets\t–\tnet\t(See\tNote\t7) | 1,472 | 614 |
| Other\tassets\t(See\tNote\t13) | 930 | 619 |
| Total | \t\t $14,698 | $12,629 |
| Liabilities\tand\tShareholders'\tEquity |  |  |
| Current\tliabilities |  |  |
| Short-term\tdebt\tand\tcurrent\tportion\tof\tlong-term\tdebt\t(See\tNote\t9) | \t\t $903 | $1,819 |
| \t Asbestos\tsettlement\t(See\tNote\t15) | 491 | 593 |
| \t Accounts\tpayable\tand\taccrued\tliabilities\t(See\tNote\t4) | 2,816 | 2,220 |
| Total\tcurrent\tliabilities | 4,210 | 4,632 |
| Long-term\tdebt\t(See\tNote\t9) | 3,009 | 1,201 |
| Asbestos\tsettlement\t(See\tNote\t15) | 244 | 324 |
| Deferred\tincome\ttaxes\t(See\tNote\t13) | 425 | 164 |
| Accrued\tpensions\t(See\tNote\t14) | 1,250 | 396 |
| Other\tpostretirement\tbenefits\t(See\tNote\t14) | 1,072 | 997 |
| Other\tliabilities\t(See\tNote\t14) | 999 | 603 |
| Total\tliabilities | \t 11,209 | 8,317 |
| Commitments\tand\tcontingent\tliabilities\t(See\tNote\t15) |  |  |
| Minority\tinterest | 156 | 161 |
| Shareholders'\tequity\t(See\tNote\t16)\n\t Common\tstock | 484 | 484 |
| \t Additional\tpaid-in\tcapital | 580 | 553 |
| \t Retained\tearnings | 8,156 | 7,963 |
| Treasury\tstock,\tat\tcost | (4,259) | (4,267) |
| \t Accumulated\tother\tcomprehensive\tloss\t(See\tNote\t17) | (1,628) | (582) |

# Consolidated	Statement	of	Shareholders'	Equity

| (Millions) | Common<br>Stock | Additional<br>Paid-In<br>Capital | Retained<br>Earnings | Treasury<br>Stock | Unearned<br>Compensation<br>(See	Note	1) | Comprehensive<br>(Loss)	Income<br>(See	Note	17) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance,\tJanuary\t1,\t2006 | $484 | $352 | $7,057 | $(3,984) | $(37) | $(819) | $3,053 |
| Net\tincome | — | — | 711 | — | — | — | 711 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax | — | — | — | — | — | 339 | 339 |
|  | — | — | — | — | — | (459) | (459) |
| Cash\tdividends | — | — | (316) | — | — | — | (316) |
| Purchase\tof\ttreasury\tstock | — | — | — | (153) | — | — | (153) |
| Issuance\tof\ttreasury\tstock | — | 25 | — | 36 | — | — | 61 |
| Stock\toption\tactivity | — | 31 | — | — | — | — | 31 |
| Repayment\tof\tloans\tby\tESOP | — | — | — | — | 12 | — | 12 |
| Other | — | — | 1 | — | — | — | 1 |
| Balance,\tDecember\t31,\t2006 | $484 | $408 | $7,453 | $(4,101) | $(25) | $(939) | $3,280 |
| Net\tincome | — | — | 834 | — | — | — | 834 |
| Other\tcomprehensive\tincome,\tnet\tof\ttax | — | — | — | — | — | 357 | 357 |
| Cash\tdividends | — | — | (335) | — | — | — | (335) |
| Purchase\tof\ttreasury\tstock | — | — | — | (274) | — | — | (274) |
| Issuance\tof\ttreasury\tstock | — | 102 | — | 108 | — | — | 210 |
| Stock\toption\tactivity | — | 43 | — | — | — | — | 43 |
| Repayment\tof\tloans\tby\tESOP | — | — | — | — | 25 | — | 25 |
| 1) | — | — | 11 | — | — | — | 11 |
| Balance,\tDecember\t31,\t2007 | $484 | $553 | $7,963 | $(4,267) | $— | $(582) | $4,151 |
| Net\tincome | — | — | 538 | — | — | — | 538 |
| Other\tcomprehensive\t(loss),\tnet\tof\ttax | — | — | — | — | — | (1,046) | (1,046) |
| Cash\tdividends | — | — | (343) | — | — | — | (343) |
| Purchase\tof\ttreasury\tstock | — | — | — | (7) | — | — | (7) |
| Issuance\tof\ttreasury\tstock | — | 18 | — | 15 | — | — | 33 |
| Stock\toption\tactivity | — | 9 | — | — | — | — | 9 |
|  | — | — | (2) | — | — | — | (2) |
| Balance,\tDecember\t31,\t2008 | $484 | $580 | $8,156 | $(4,259) | $— | $(1,628) | $3,333 |

# Consolidated	Statement	of	Comprehensive	Income

|  |  | For	the	Year |  |
| :--- | :--- | :--- | :--- |
| (Millions) | 2008 | 2007 | 2006 |
| Net\tincome | $538 | $834 | $711 |
| Other\tcomprehensive\t(loss)\tincome,\tnet\tof\ttax\t(See\tNote\t17)\nUnrealized\tcurrency\ttranslation\tadjustment | (499) | 260 | 179 |
| Defined\tbenefit\tpension\tand\tother\tpostretirement\tbenefit\tadjustments\n(See\tNote\t14) | (494) | 90 | 170 |
| Unrealized\t(losses)\tgains\ton\tmarketable\tequity\tsecurities | (4) | — | 3 |
| Net\tchange\t–\tderivatives\t(See\tNote\t11) | (49) | 7 | (13) |

| Other	comprehensive	(loss)	income,	net	of	tax | (1,046) | 357 | 339 |
| :--- | :--- | :--- | :--- |
| Comprehensive\t(loss)\tincome | $(508) | $1,191 | $1,050 |

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

# Consolidated	Statement	of	Cash	Flows

| (Millions) | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities |  |  |  |
| Net\tincome | $538 | $834 | $711 |
| Loss\t(income)\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | — | 22 | (4) |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | 538 | 856 | 707 |
| Adjustments\tto\treconcile\tto\tcash\tfrom\toperations\nDepreciation\tand\tamortization | 563 | 403 | 375 |
| Asbestos\tsettlement,\tnet\tof\ttax | 2 | 15 | 17 |
| Business\trestructuring | 163 | — | 37 |
| Write-off\tof\tin-process\tresearch\tand\tdevelopment | 23 | — | — |
| Restructuring\tcash\tspending | (27) | (15) | (33) |
| Bad\tdebt\texpense | 52 | 16 | 14 |
| Equity\taffiliate\tloss\t(earnings)\tnet\tof\tdividends | 15 | (11) | (18) |
| Increase\t(decrease)\tin\tnet\taccrued\tpension\tbenefit\tcosts | 78 | (7) | 21 |
| Increase\tin\treceivables | (4) | (224) | (92) |
| Decrease\t(increase)\tin\tinventories | 79 | (49) | (80) |
| Increase\tin\tother\tcurrent\tassets | (123) | (24) | (11) |
| Increase\tin\taccounts\tpayable\tand\taccrued\tliabilities | 15 | 72 | 61 |
| Decrease\t(increase)\tin\tnoncurrent\tassets | 21 | (100) | (99) |
| (Decrease)\tincrease\tin\tnoncurrent\tliabilities | (132) | 3 | 167 |
| Other | 95 | 60 | 50 |
| Cash\tfrom\toperating\tactivities\t–\tcontinuing\toperations | 1,358 | 995 | \t 1,116 |
| Cash\tfrom\t(used\tfor)\toperating\tactivities\t–\tdiscontinued\toperations | — | 1 | (1) |
| Cash\tfrom\toperating\tactivities | 1,358 | 996 | \t 1,115 |
| Investing\tactivities |  |  |  |
| Capital\tspending |  |  |  |
| Additions\tto\tproperty\tand\tinvestments | (383) | (364) | (369) |
| Business\tacquisitions,\tnet\tof\tcash\tbalances\tacquired\t(See\tNote\t2) | (1,673) | (233) | (402) |
| Deposits\theld\tin\tescrow\t(See\tNote\t2) | (37) | (1,718) | (3) |
| Release\tof\tdeposits\theld\tin\tescrow\t(See\tNote\t2) | 1,740 | 2 | 67 |
| Proceeds\tfrom\tsale\tof\tautomotive\tglass\tand\tservices\tbusiness\t(See\tNote\t3) | 225 | — | — |
| Proceeds\tfrom\ttermination\tof\tcurrency\tswap\tcontracts\t(See\tNote\t11) |  |  |  |
|  | 208 | — | — |
| Reductions\tof\tother\tproperty\tand\tinvestments | 45 | 68 | 48 |
| Purchases\tof\tshort-term\tinvestments\t(See\tNote\t1) | — | — | (963) |
| Proceeds\tfrom\tsales\tof\tshort-term\tinvestments\t(See\tNote\t1) | — | — | 963 |
| Cash\tfrom\t(used\tfor)\tinvesting\tactivities\t–\tcontinuing\toperations | 125 | (2,245) | (659) |
| Cash\tfrom\t(used\tfor)\tinvesting\tactivities\t–\tdiscontinued\toperations | — | 38 | (3) |
| Cash\tfrom\t(used\tfor)\tinvesting\tactivities | 125 | (2,207) | (662) |
| Financing\tactivities |  |  |  |
| Debt: |  |  |  |
| Borrowings\tto\trefinance\tacquired\tSigmaKalon\tdebt\t(See\tNote\t9) | 1,143 | — | — |
| Repayment\tof\tacquired\tSigmaKalon\tdebt\t(See\tNote\t9) | (1,259) | — | — |
| Proceeds\tfrom\tissuance\tof\tnotes\t(net\tof\tdiscount\tand\tissuance\tcosts)\t(See\tNote\t9) | 1,538 | — | — |
| Repayment\tof\tbridge\tloan\t(See\tNote\t9) | (1,557) | — | — |
| Net\tchange\tin\tborrowings\twith\tmaturities\tof\tthree\tmonths\tor\tless | (392) | 698 | (4) |
| Proceeds\tfrom\tother\tshort-term\tdebt | 329 | 1,129 | 143 |
| Repayment\tof\tother\tshort-term\tdebt | (442) | (83) | (212) |
| Repayment\tof\tother\tlong-term\tdebt | (41) | (71) | (26) |
| Net\tchange\tin\tcash\trelated\tto\tdebt\ttransactions | (681) | 1,673 | (99) |
| Other\tfinancing\tactivities: |  |  |  |
| Proceeds\tfrom\ttermination\tof\tinterest\trate\tswaps | 40 | — | — |
| Repayment\tof\tloans\tby\temployee\tstock\townership\tplan | — | 25 | 12 |
| Purchase\tof\ttreasury\tstock | (7) | (274) | (153) |
|  | 13 | 194 | 55 |

| Dividends	paid | (343) | (335) | (316) |
| :--- | :--- | :--- | :--- |
| Cash\t(used\tfor)\tfrom\tfinancing\tactivities\t–\tcontinuing\toperations | (978) | 1,283 | (501) |
| Cash\t(used\tfor)\tfrom\tfinancing\tactivities\t–\tdiscontinued\toperations | — | — | — |
| Cash\t(used\tfor)\tfrom\tfinancing\tactivities | (978) | 1,283 | (501) |
| Effect\tof\tcurrency\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (10) | 11 | 22 |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | 495 | 83 | (26) |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tyear | 526 | 443 | 469 |
| Cash\tand\tcash\tequivalents,\tend\tof\tyear | $ 1,021 | $526 | $443 |
| 2008\tPPG\tANNUAL\tREPORT\tAND\tFORM\t10-K | 2008\tPPG\tANNUAL\tREPORT\tAND\tFORM\t10-K | 2008\tPPG\tANNUAL\tREPORT\tAND\tFORM\t10-K | 33 |

# 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	the	subsidiaries	that	it	controls.	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	the	earnings	or	losses	of	such	equity	affiliates	is	included	in	the	accompanying	consolidated	statement	of	income	and	PPG's share	of	these	companies'	shareholders'	equity	is	included	in	investments	in	the	accompanying	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.	Actual	outcomes	could	differ	from	those	estimates.

# Basis	of	Presentation

In	July	2008,	the	Company	entered	into	an	agreement	to	divest	its	automotive	OEM	glass	and	automotive	replacement	glass	and	services	businesses	("automotive glass	and	services	business").	Under	the	agreement,	PPG	would	receive	a	minority	ownership	interest	in	the	new	company	formed	by	the	buyer.	In	accordance	with	the requirements	of	Statement	of	Financial	Accounting	Standards,	("SFAS")	No.	144,	"Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets,"	the	results	of	the automotive	glass	and	services	business	were	reported	as	discontinued	operations	beginning	in	September	2007,	and	in	the	second	quarter	of	2008	the	business	was reclassified	into	continuing	operations	because	of	PPG's	continuing	involvement	arising	from	the	approximate	40%	retained	equity	interest.	The	transaction	was completed	on	September	30,	2008.	The	results	of	the	automotive	glass	and	services	business	through	September	30,	2008	are	reported	as	part	of	the	Glass	reportable segment	in	the	accompanying	financial	statements.	See	Note	3,	"Divestiture	of	Automotive	Glass	and	Services	Business"	for	additional	information.

In	the	third	quarter	of	2007,	PPG	entered	into	an	agreement	to	sell	its	fine	chemicals	business	to	ZaCh	System	S.p.A.,	a	subsidiary	of	Zambon	Company	S.p.A.,	for approximately	$65	million.	The	sale	of	this	business	was	completed	in	November	2007.	The	results	of	operations	and	cash	flows	of	this	business,	which	had	previously been	included	in	the	Optical	and	Specialty	Materials	reportable	segment,	have	been	classified	as	discontinued	operations	in	the	accompanying	consolidated	statements	of income	and	of	cash	flows	for	the	years	ended	December	31,	2007	and	2006.	Sales	of	the	fine	chemicals	business	were	$79	million	and	$99	million	for	the	years	ended December	31,	2007	and	2006,	respectively.	For	the	year	ended	December	31,	2007	the	fine	chemicals	business	had	a	loss	from	discontinued	operations	of	$22	million, which	included	a	pretax	charge	of	$25	million	($19	million	aftertax)	related	to	the	divestiture	of	the	fine	chemicals	business.	For	the	year	ended	December	31,	2006, income	from	discontinued	operations	was	$4	million.

# Revenue	Recognition

Revenue	from	sales	is	recognized	by	all	operating	segments	when	goods	are	shipped	and	title	to	inventory	and	risk	of	loss	passes	to	the	customer	or	when	services have	been	rendered.

# Shipping	and	Handling	Costs

Amounts	billed	to	customers	for	shipping	and	handling	are	reported	in	"Net	sales"	in	the	accompanying	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	accompanying consolidated	statement	of	income.

# Selling,	General	and	Administrative	Costs

Amounts	presented	as	"Selling,	general	and	administrative"	in	the	accompanying	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,	terminals	and	other	distribution	facilities.

Certain	of	these	costs	may	be	included	in	cost	of	sales	by	other	companies,	resulting	in	a	lack	of	comparability	with	other	companies.

# Legal	Costs

Legal	costs	are	expensed	as	incurred.

# Foreign	Currency	Translation

For	all	significant	non-U.S.	operations,	their	functional	currency	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	currency	translation	adjustments	are	deferred	in	accumulated	other comprehensive	(loss)	income,	a	separate	component	of	shareholders'	equity.

# 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.

# Cash	Held	in	Escrow

Cash	held	in	escrow	is	restricted	cash	and	consists	of	amounts	deposited	into	third-party	escrow	accounts	to	comply	with	contractual	stipulations	or	legal requirements.	Cash	deposited	into	escrow	or	released	from	escrow	is	classified	as	an	investing	activity	in	the	consolidated	statement	of	cash	flows.

# Short-term	Investments

Short-term	investments	are	highly	liquid	investments	that	have	stated	maturities	of	three	months	to	one	year.	The	purchases	and	sales	of	these	investments	are classified	as	investing	activities	in	the	consolidated	statement	of	cash	flows.

# Inventories

Most	U.S.	inventories	are	stated	at	cost,	using	the	last-in,	first-out	("LIFO")	method	of	accounting,	which	does	not	exceed	market.	All	other	inventories	are	stated at	cost,	using	the	first-in,	first-out	("FIFO")	method	of	accounting,	which	does	not	exceed	market.	PPG	determines	cost	using	either	average	or	standard	factory	costs, which	approximate	actual	costs,	excluding	certain	fixed	costs	such	as	depreciation	and	property	taxes.

# Marketable	Equity	Securities

The	Company's	investment	in	marketable	equity	securities	is	recorded	at	fair	market	value	and	reported	in	"Other	current	assets"	and	"Investments"	in	the accompanying	consolidated	balance	sheet	with	changes	in	fair	market	value	recorded	in	income	for	those	securities	designated	as	trading	securities	and	in	other comprehensive	(loss)	income,	net	of	tax,	for	those	designated	as	available	for	sale	securities.

# Property

Property	is	recorded	at	cost.	PPG	computes	depreciation	by	the	straight-line	method	based	on	the	estimated	useful	lives	of	depreciable	assets.	Additional	expense	is recorded	when	facilities	or	equipment	are	subject	to	abnormal	economic	conditions	or	obsolescence.	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	property	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	included	in	income.	Amortization	of	the	cost	of capitalized	leased	assets	is	included	in	depreciation	expense.	Property	and	other	long-lived	assets	are	reviewed	for	impairment	whenever	events	or	circumstances indicate	that	their	carrying	amounts	may	not	be	recoverable.

# 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.

The	Company	tests	goodwill	of	each	reporting	unit	for	impairment	at	least	annually	in	connection	with	PPG's	strategic	planning	process	in	the	third	quarter.	The goodwill	impairment	test	is	performed	by	comparing	the	fair	value	of	the	associated	reporting	unit	to	its	carrying	value.	The	Company's	reporting	units	are	its	operating segments.	(See	Note	24,	"Reportable	Business	Segment	Information"	for	further	information	concerning	the	Company's	operating	segments.)	Fair	value	is	estimated using	discounted	cash	flow	methodologies	and	market	comparable	information.

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	in	the	third	quarter	by	comparing	the	fair	value	of	each	trademark	to	its	carrying	value.	Fair	value	is	estimated	by	using	the	relief	from royalty	method	(a	discounted	cash	flow	methodology).

Identifiable	intangible	assets	with	finite	lives	are	amortized	on	a	straight-line	basis	over	their	estimated	useful	lives	(2	to	25	years)	and	are	reviewed	for	impairment whenever	events	or	circumstances	indicate	that	their	carrying	amount	may	not	be	recoverable.

# Employee	Stock	Ownership	Plan

Compensation	expense	related	to	the	employee	stock	ownership	plan	("ESOP")	was	equal	to	the	Company's	matching	contribution	in	2008.

PPG	accounted	for	its	ESOP	in	accordance	with	Statement	of	Position	("SOP")	No.	93-6	for	PPG	common	stock	purchased	after	December	31,	1992	("new	ESOP shares").	As	permitted	by	SOP	No.	93-6,	shares	purchased	prior	to	December	31,	1992	("old	ESOP	shares")	were	accounted	for	in	accordance	with	SOP	No.	76-3. ESOP	shares	were	released	for	future	allocation	to	participants

based	on	the	ratio	of	debt	service	paid	during	the	year	on	loans	used	by	the	ESOP	to	purchase	the	shares	to	the	remaining	debt	service	on	these	loans.	These	loans	were	a combination	of	borrowings	guaranteed	by	PPG	and	borrowings	by	the	ESOP	directly	from	PPG.	No	loan	balances	remained	outstanding	as	of	December	31,	2007. Unearned	compensation	was	reflected	as	a	reduction	of	shareholders'	equity	as	of	December	31,	2006,	which	principally	represented	the	unpaid	balance	of	all	of	the ESOP's	loans.	Dividends	received	by	the	ESOP	were	primarily	used	to	pay	debt	service.

When	old	ESOP	shares	were	released,	compensation	expense	was	equal	to	cash	contributed	to	the	ESOP	by	the	Company	less	the	appreciation	on	the	allocated	old ESOP	shares.	Cash	contributions	to	the	ESOP	were	reduced	by	$30	million	in	2007	and	$18	million	in	2006	for	the	appreciation	on	the	old	shares	allocated	to participants'	accounts	in	each	of	those	years.	Dividends	paid	on	old	ESOP	shares	were	deducted	from	retained	earnings.	Old	ESOP	shares	were	considered	to	be outstanding	in	computing	earnings	per	common	share.	For	new	ESOP	shares,	compensation	expense	was	equal	to	the	Company's	matching	contribution	(see	Note	18, "Employee	Stock	Ownership	Plan").	Dividends	paid	on	released	new	ESOP	shares	were	deducted	from	retained	earnings,	and	dividends	on	unreleased	shares	were reported	as	a	reduction	of	debt	or	accrued	interest.	New	ESOP	shares	that	were	released	were	considered	outstanding	in	computing	earnings	per	common	share. Unreleased	new	ESOP	shares	were	not	considered	to	be	outstanding.

# Derivative	Financial	Instruments	and	Hedge	Activities

The	Company	recognizes	all	derivative	instruments	as	either	assets	or	liabilities	at	fair	value	on	the	balance	sheet.	The	accounting	for	changes	in	the	fair	value	of	a derivative	depends	on	the	use	of	the	derivative.	To	the	extent	that	a	derivative	is	effective	as	a	cash	flow	hedge	of	an	exposure	to	future	changes	in	value,	the	change	in fair	value	of	the	derivative	is	deferred	in	accumulated	other	comprehensive	(loss)	income.	Any	portion	considered	to	be	ineffective	is	reported	in	earnings	immediately, including	changes	in	value	related	to	credit	risk.	To	the	extent	that	a	derivative	is	effective	as	a	hedge	of	an	exposure	to	future	changes	in	fair	value,	the	change	in	the derivative's	fair	value,	to	the	extent	effective,	is	offset	in	the	consolidated	statement	of	income	by	the	change	in	fair	value	of	the	item	being	hedged.	To	the	extent	that	a derivative	or	a	financial	instrument	is	effective	as	a	hedge	of	a	net	investment	in	a	foreign	operation,	the	change	in	the	derivative's	fair	value	is	deferred	as	an	unrealized currency	translation	adjustment	in	accumulated	other	comprehensive	(loss)	income.

# Product	Warranties

The	Company	accrues	for	product	warranties	at	the	time	the	associated	products	are	sold	based	on	historical	claims	experience.	As	of	December	31,	2008	and	2007, the	reserve	for	product	warranties	was	$10	million	and	$9	million,	respectively.	Pretax	charges	against	income	for	product	warranties	in	2008,	2007	and	2006	totaled	$7 million,	$5	million	and	$4	million,	respectively.	Cash	outlays	related	to	product	warranties	were	$7	million,	$6	million	and	$5	million	in	2008,	2007	and	2006, respectively.	In	addition,	$1	million	of	warranty	obligations	were	assumed	as	part	of	the	Company's	2008	business	acquisitions.

# 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	closure	of	certain	assets	used	in	the	chemicals	manufacturing	process.

The	accrued	asset	retirement	obligation	was	$14	million	and	$11	million	as	of	December	31,	2008	and	2007,	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.	Inasmuch	as	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.

# Pensions	and	Other	Postretirement	Benefits

In	September	2006,	the	Financial	Accounting	Standards	Board,	("FASB")	issued	SFAS	No.	158,	"Employers'	Accounting	for	Defined	Benefit	Pension	and	Other Postretirement	Plans,	an	amendment	of	FASB	Statements	No.	87,	88,	106,	and	132(R)."	Under	this

standard,	a	company	must	recognize	a	net	liability	or	asset	to	report	the	funded	status	of	its	defined	benefit	pension	and	other	postretirement	benefit	plans	on	its consolidated	balance	sheet	as	well	as	recognize	changes	in	that	funded	status	in	the	year	in	which	the	changes	occur,	through	charges	or	credits	to	comprehensive income.	SFAS	No.	158	does	not	change	how	pensions	and	other	postretirement	benefits	are	accounted	for	and	reported	in	the	income	statement.	As	a	result	of	the adoption	of	SFAS	No.	158	on	December	31,	2006,	the	Company	increased	its	net	pension	and	other	postretirement	benefit	liabilities	by	$459	million	by	recording	a direct	adjustment	to	accumulated	other	comprehensive	loss.	See	Note	14,	"Pensions	and	Other	Postretirement	Benefits,"	for	additional	information.

# Uncertain	Tax	Positions

In	June	2006,	the	FASB	issued	FASB	Interpretation	("FIN")	No.	48,	"Accounting	for	Uncertainty	in	Income	Taxes,	an	interpretation	of	FASB	Statement	No.	109" ("FIN	No.	48").	FIN	No.	48	clarifies	the	accounting	for	uncertainty	in	income	taxes	recognized	in	an	enterprise's	financial	statements	and	prescribes	a	recognition threshold	and	measurement	attribute	for	the	financial	statement	recognition	and	measurement	of	a	tax	position	taken	or	expected	to	be	taken	in	a	tax	return.	The Company	adopted	the	provisions	of	FIN	No.	48	as	of	January	1,	2007.	As	a	result	of	the	implementation	of	FIN	No.	48,	the	Company	reduced	its	liability	for unrecognized	tax	benefits	by	$11	million,	which	was	recorded	as	a	direct	increase	in	retained	earnings.	Refer	to	Note	13,	"Income	Taxes"	for	additional	information.

In	September	2006,	the	FASB	issued	SFAS	No.	157,	"Fair	Value	Measurements"	("SFAS	No.	157"),	which	defines	fair	value,	establishes	a	framework	in	generally accepted	accounting	principles	for	measuring	fair	value	and	expands	disclosures	about	fair	value	measurements.	This	standard	only	applies	when	other	standards	require or	permit	the	fair	value	measurement	of	assets	and	liabilities.	It	does	not	increase	the	use	of	fair	value	measurement.	SFAS	No.	157	is	effective	for	fiscal	years	beginning after	November	15,	2007,	except	as	it	relates	to	nonrecurring	fair	value	measurements	of	nonfinancial	assets	and	liabilities	for	which	the	standard	is	effective	for	fiscal years	beginning	after	November	15,	2008,	as	mandated	by	FASB	Staff	Position	No.	157-2,	"Effective	Date	of	FASB	Statement	No.	157."	The	adoption	of	SFAS	No. 157	with	respect	to	financial	assets	and	liabilities	in	the	first	quarter	of	2008	did	not	have	a	significant	effect	on	PPG's	consolidated	results	of	operations	or	financial position.	The	standard	did	not	have	a	significant	impact	on	PPG's	2008	results	of	operations	or	PPG's	financial	position	as	of	December	31,	2008.	The	Company	is evaluating	the	impact	of	SFAS	No.	157	for	measuring	nonfinancial	assets	and	liabilities	on	future	results	of	operations	and	financial	position,	which	is	not	expected	to	be significant.

SFAS	No.	157	defines	fair	value	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between	market participants,	as	of	the	measurement	date.	The	standard	establishes	a	hierarchy	of	inputs	employed	to	determine	fair	value	measurements,	with	three	levels.	Level	1	inputs are	quoted	prices	in	active	markets	for	identical	assets	and	liabilities,	are	considered	to	be	the	most	reliable	evidence	of	fair	value,	and	should	be	used	whenever available.	Level	2	inputs	are	observable	prices	that	are	not	quoted	on	active	exchanges.	Level	3	inputs	are	unobservable	inputs	employed	for	measuring	the	fair	value	of assets	or	liabilities.

The	Company's	financial	assets	and	liabilities	that	are	reported	at	fair	value	in	the	accompanying	consolidated	balance	sheet,	as	of	December	31,	2008,	were	as follows:

| (Millions) | Level	1 | Level	2 | Level	3 | Total |
| :--- | :--- | :--- | :--- | :--- |
| Other\tcurrent\tassets: |  |  |  |  |
| Foreign\tcurrency\tcontracts | $\t\t— | $7 | $\t\t— | $7 |
| Marketable\tequity\tsecurities | 4 | — | — | 4 |
| Investments: |  |  |  |  |
| Marketable\tequity\tsecurities | 48 | 2 | — | 50 |
| Other\tassets: |  |  |  |  |
| Natural\tgas\tswap\tcontracts | — | 1 | — | 1 |
| Interest\trate\tswaps | — | 3 | — | 3 |
| Cross\tcurrency\tswaps | — | 21 | — | 21 |
| Accounts\tpayable\tand\taccrued\tliabilities: |  |  |  |  |
| Foreign\tcurrency\tcontracts | — | 16 | — | 16 |
| Equity\tforward\tarrangement | — | 6 | — | 6 |
| Natural\tgas\tswap\tcontracts | — | 62 | — | 62 |
| Other\tliabilities: |  |  |  |  |
| Foreign\tcurrency\tcontracts | — | 6 | — | 6 |
| Natural\tgas\tswap\tcontracts | — | 24 | — | 24 |
| Cross\tcurrency\tswaps | — | 151 | — | 151 |

In	February	2007,	the	FASB	issued	SFAS	No.	159,	"The	Fair	Value	Option	for	Financial	Assets	and	Financial	Liabilities	–	Including	an	Amendment	of	FASB Statement	No.	115"	("SFAS	No.	159").	SFAS	No.	159	permits	entities	to	choose	to	measure	eligible	items	at	fair	value	at	specified	election	dates	and	report	unrealized gains	and	losses	on	items,	for	which	the	fair	value	option	has	been	elected,	in	earnings	at	each	subsequent	reporting	date.	SFAS	No.	159	is	effective	for	fiscal	years beginning	after	November	15,	2007.	The	adoption	of	SFAS	No.	159	in	the	first	quarter	of	2008	did	not	have	an	impact	on	PPG's	consolidated	results	of	operations	or financial	position.

In	March	2007,	the	Emerging	Issues	Task	Force	("EITF")	issued	EITF	No.	06-10,	"Accounting	for	Collateral	Assignment	Split-Dollar	Life	Insurance Arrangements"	("EITF	06-10").	Under	the	provisions	of	EITF	06-10,	an	employer	is	required	to	recognize	a	liability	for	the	postretirement	benefit	related	to	a	collateral assignment	split-dollar	life	insurance	arrangement	in	accordance	with

either	SFAS	No.	106,	"Employers'	Accounting	for	Postretirement	Benefits	Other	Than	Pensions,"	or	Accounting	Principles	Board	Opinion	No.	12,	"Omnibus	Opinion	– 1967,"	if	the	employer	has	agreed	to	maintain	a	life	insurance	policy	during	the	employee's	retirement	or	provide	the	employee	with	a	death	benefit	based	on	the substantive	arrangement	with	the	employee.	The	provisions	of	EITF	06-10	also	require	an	employer	to	recognize	and	measure	the	asset	in	a	collateral	assignment	split- dollar	life	insurance	arrangement	based	on	the	nature	and	substance	of	the	arrangement.	EITF	06-10	was	effective	as	of	January	1,	2008.	PPG	has	collateral	assignment split-dollar	life	insurance	arrangements	within	the	scope	of	EITF	06-10.	The	Company	adopted	the	provisions	of	EITF	06-10	as	of	January	1,	2008.	As	a	result	of	the adoption,	the	Company	recognized	a	liability	of	$2	million,	representing	the	present	value	of	the	future	premium	payments	to	be	made	under	the	existing	policies.	In accordance	with	the	transition	provisions	of	EITF	06-10,	this	amount	was	recorded	as	a	direct	decrease	to	retained	earnings.	No	adjustment	to	the	recorded	asset	value was	required	upon	adoption.

In	December	2007,	the	FASB	issued	SFAS	No.	141	(revised	2007),	"Business	Combinations"	("SFAS	No.	141(R)"),	which	replaces	SFAS	No.	141,	"Business Combinations."	SFAS	No.	141(R)	retains	the	underlying	concepts	of	SFAS	No.	141	in	that	all	business	combinations	are	still	required	to	be	accounted	for	at	fair	value under	the	acquisition	method	of	accounting	(formerly	known	as	the	purchase	method	of	accounting),	but	SFAS	No.	141(R)	changes	the	method	of	applying	the acquisition	method	in	a	number	of	significant	aspects.	Acquisition	costs	will	generally	be	expensed	as	incurred;	noncontrolling	interests	will	be	valued	at	fair	value	at the	acquisition	date;	in-process	research	and	development	will	be	recorded	at	fair	value	as	an	indefinite-lived	intangible	asset	at	the	acquisition	date;	restructuring	costs associated	with	a	business	combination	will	generally	be	expensed	subsequent	to	the	acquisition	date;	and	changes	in	deferred	tax	asset	valuation	allowances	and	income tax	uncertainties	after	the	acquisition	date	generally	will	affect	income	tax	expense.	SFAS	No.	141(R)	is	effective	on	a	prospective	basis	for	all	business	combinations	for which	the	acquisition	date	is	on	or	after	the	beginning	of	the	first	annual	period	subsequent	to	December	15,	2008,	with	an	exception	related	to	the	accounting	for valuation	allowances	on	deferred	taxes	and	acquired	tax	contingencies	related	to	acquisitions	completed	before	the	effective	date.	SFAS	No.	141(R)	amends	SFAS	No. 109	to	require	adjustments,	made	after	the	effective	date	of	this	statement,	to	valuation	allowances	for	acquired	deferred	tax	assets	and	uncertain	income	tax	positions	to be	recognized	as	income	tax	expense.	Beginning	January	1,	2009,	PPG	will	apply	the	provisions	of	SFAS	No.	141(R)	to	its	accounting	for	applicable	business combinations.

In	December	2007,	the	FASB	issued	SFAS	No.	160,	"Noncontrolling	Interests	in	Consolidated	Financial	Statements—an	amendment	of	ARB	No.	51"	("SFAS	No. 160").	This	statement	is	effective	for	fiscal	years,	and	interim	periods	within	those	fiscal	years,	beginning	on	or	after	December	15,	2008.	SFAS	No.	160	requires	the recognition	of	a	noncontrolling	interest	(minority	interest)	as	equity	in	the	consolidated	financial	statements	and	separate	from	the	parent's	equity.	The	amount	of	net income	attributable	to	the	noncontrolling	interest	will	be	included	in	consolidated	net	income	on	the	face	of	the	income	statement.	SFAS	No.	160	amends	certain	of	ARB No.	51's	consolidation	procedures	for	consistency	with	the	requirements	of	SFAS	No.	141(R).	This	statement	requires	changes	in	the	parent's	ownership	interest	in consolidated	subsidiaries	to	be	accounted	for	as	equity	transactions.	This	statement	also	includes	expanded	disclosure	requirements	regarding	the	interests	of	the	parent and	related	noncontrolling	interests.	Beginning	January	1,	2009,	PPG	will	apply	the	provisions	of	SFAS	No.	160	to	its	accounting	for	noncontrolling	interests	and	its financial	statement	disclosures.

In	November	2007,	EITF	Issue	No.	07-1,	"Accounting	for	Collaborative	Arrangements"	("EITF	07-1"),	which	defines	collaborative	arrangements	and	establishes reporting	and	disclosure	requirements	for	such	arrangements,	was	issued.	EITF	07-1	is	effective	for	fiscal	years	beginning	after	December	15,	2008.	The	Company	is continuing	to	evaluate	the	impact	of	adopting	the	provisions	of	EITF	07-1;	however,	it	does	not	anticipate	that	adoption	will	have	a	material	effect	on	its	consolidated results	of	operations	or	financial	position.

In	March	2008,	the	FASB	issued	SFAS	No.	161,	"Disclosures	about	Derivative	Instruments	and	Hedging	Activities,"	("SFAS	No.	161")	which	changes	the disclosure	requirements	for	derivative	instruments	and	hedging	activities.	This	statement's	disclosure	requirements	are	effective	for	fiscal	years	and	interim	periods beginning	after	November	15,	2008.	SFAS	No.	161	requires	enhanced	disclosures	about	(a)	how	and	why	an	entity	uses	derivative	instruments,	(b)	how	derivative instruments	and	related	hedged	items	are	accounted	for	under	SFAS	No.	133,	"Accounting	for	Derivative	Instruments	and	Hedging	Activities"	and	its	related interpretations,	and	(c)	how	derivative	instruments	and	related	hedged	items	affect	an	entity's	financial	position,	financial	performance,	and	cash	flows.	PPG	will	apply the	provisions	of	SFAS	No.	161	to	its	financial	statement	disclosures	beginning	in	2009.

# 2.	Acquisitions

The	Company	spent	$1,673	million	on	acquisitions	(net	of	cash	acquired	of	$136	million)	in	2008,	including

purchase	price	adjustments	related	to	2007	acquisitions.	Most	of	this	spending	was	related	to	the	January	2,	2008	acquisition	of	SigmaKalon,	a	worldwide	coatings producer	based	in	Uithoorn,	Netherlands,	from	global	private	investment	firm	Bain	Capital	("the	seller").	The	acquired	SigmaKalon	business	produces	architectural, protective	and	marine	and	industrial	coatings	and	is	a	leading	coatings	supplier	in	Europe	and	other	key	markets	across	the	globe,	with	an	increasing	presence	in	Africa and	Asia.	The	results	of	these	businesses	have	been	included	in	PPG's	consolidated	results	of	operations	from	January	2,	2008	onward.	The	2008	sales	of	the	acquired SigmaKalon	businesses	were	$3.2	billion.

The	total	transaction	value	was	approximately	$3.2	billion,	consisting	of	cash	paid	to	the	seller	of	$1,673	million	and	debt	assumed	of	$1,517	million.	The	cash	paid to	the	seller	consisted	of	€717	million	($1,056	million)	and	$617	million.	In	2007,	PPG	issued	$617	million	of	commercial	paper	and	borrowed	$1,056	million	(€717 million)	under	the	€1	billion	bridge	loan	agreement	established	in	December	2007	in	anticipation	of	completing	the	SigmaKalon	acquisition.	The	proceeds	from	these borrowings	were	deposited	into	escrow	in	December	2007.	Upon	closing	of	the	transaction	on	January	2,	2008,	these	amounts	were	released	from	escrow	and	paid	to	the seller.	The	funds	held	in	escrow	were	reported	as	"Cash	held	in	escrow"	in	the	accompanying	consolidated	balance	sheet	as	of	December	31,	2007.

     The	following	table	summarizes	the	final	purchase	price	allocation	for	the	SigmaKalon	acquisition.

| seller.	The	funds	held	in	escrow	were	reported	as	"Cash	held	in	escrow"	in	the	accompanying	consolidated	balance	sheet	as	of	December	31,	2007. |  |
| :--- | :--- |
| The\tfollowing\ttable\tsummarizes\tthe\tfinal\tpurchase\tprice\tallocation\tfor\tthe\tSigmaKalon\tacquisition. |  |
| (Millions) |  |
| Current\tassets\t(including\tcash\tof\t$136) | $1,415 |
| Property,\tplant,\tand\tequipment | 635 |
| Customer-related\tintangibles | 685 |
| Trade\tnames | 277 |
| Acquired\ttechnology | 122 |
| Goodwill\t(non-deductible) | 1,353 |
| Other | 172 |
| Total\tassets | 4,659 |
| Short-term\tdebt | (1,507) |
| Current\tliabilities | (798) |
| Long-term\tdebt | (10) |
| Deferred\ttaxes | (389) |
| Other\tlong-term\tliabilities | (305) |
| Net\tassets | 1,650 |
| In-process\tresearch\tand\tdevelopment | 23 |
| Total\tpurchase\tprice | $1,673 |

Identifiable	intangible	assets	with	finite	lives	are	subject	to	amortization	over	their	estimated	useful	lives.	The	identifiable	intangible	assets	acquired	in	the SigmaKalon	transaction	will	be	amortized	over	an	estimated	weighted-average	amortization	period	of	11	years.	Customer-related	intangibles	will	be	amortized	over	an estimated	weighted-average	amortization	period	of	12	years,	acquired	technology	will	be	amortized	over	an	estimated	weighted-average	amortization	period	of	seven years	and	trade	names	will	be	amortized	over	an	estimated	weighted-average	amortization	period	of	15	years.	Estimated	future	amortization	expense	related	to	these identifiable	intangible	assets	is	approximately	$75	million	in	each	of	the	next	five	years.

Goodwill	related	to	the	SigmaKalon	acquisition	has	been	recorded	by	PPG's	reportable	segments	as	follows:	$1,045	million	by	Architectural	Coatings	–	EMEA, $112	million	by	Performance	Coatings	(protective	and	marine	operating	segment)	and	$196	million	by	Industrial	Coatings	(industrial	operating	segment).

The	step	up	to	fair	value	of	acquired	inventory	as	part	of	the	purchase	price	allocation	totaled	$94	million.	This	amount	was	included	in	cost	of	sales,	exclusive	of depreciation	and	amortization,	in	the	accompanying	consolidated	statement	of	income	for	the	year	ended	December	31,	2008	as	the	related	inventory	was	sold	to customers	in	the	first	quarter	of	2008.	The	amount	allocated	to	in-process	research	and	development	was	charged	to	expense	in	the	first	quarter	of	2008.

The	following	information	reflects	the	results	of	PPG's	operations	for	the	year	ended	December	31,	2007	on	a	pro	forma	basis	as	if	the	acquisition	of	SigmaKalon had	been	completed	on	January	1,	2007.	The	unaudited	pro	forma	financial	information	was	prepared	to	give	pro	forma	effect	to	events	that	are	1)	directly	attributable	to the	acquisition,	2)	factually	supportable	and	3)	expected	to	have	a	continuing	impact	on	the	combined	results.	Pro	forma	adjustments	have	been	made	to	illustrate	the incremental	impact	on	earnings	of	interest	costs	on	the	borrowings	to	acquire	SigmaKalon,	amortization	expense	related	to	acquired	intangible	assets	of	SigmaKalon,	and the	tax	benefit	associated	with	the	incremental	interest	costs	and	amortization	expense.	The	following	unaudited	pro	forma	information	does	not	include	certain	cost savings	or	operating	synergies	(or	costs	associated	with	realizing	such	savings	or	synergies)	that	may	result	from	the	acquisition.

The	unaudited	pro	forma	information	is	provided	for	illustrative	purposes	only	and	does	not	purport	to	represent	what	PPG's	consolidated	results	of	operations would	have	been	had	the	transaction	actually	occurred	as

of	January	1,	2007,	and	does	not	purport	to	project	PPG's	future	consolidated	results	of	operations.

During	2008,	the	Company	made	several	other	acquisitions	in	the	coatings	businesses.	The	following	table	summarizes	the	estimated	fair	value	of	assets	acquired and	liabilities	assumed	as	a	result	of	these	acquisitions	and	reflected	in	the	preliminary	purchase	price	allocations	and	adjustments	recorded	as	of	December	31,	2008. No	significant	adjustments	to	these	preliminary	allocations	are	expected.

The	Company	spent	$233	million	on	several	acquisitions	in	2007,	including	purchase	price	adjustments	related	to	2006	acquisitions.	The	2007	results	of	the acquired	businesses	have	been	included	in	PPG's	consolidated	results	of	operations	for	the	period	since	the	acquisitions	were	completed.	Sales	in	2007	increased	by approximately	$592	million	due	to	acquisitions	and	the	acquired	businesses	were	accretive	to	earnings	in	2007.	The	largest	of	the	transactions	completed	in	2007	were the	acquisition	of	Barloworld	Coatings	Australia	and	the	acquisition	of	the	architectural	and	industrial	coatings	businesses	of	Renner	Sayerlack,	S.A.

In	the	third	quarter	of	2007,	PPG	acquired	Barloworld	Coatings	Australia,	the	architectural	paint	unit	of	South	African-based	Barloworld,	Ltd.,	a	multinational industrial	brand	management	company.	Barloworld	Coatings	Australia,	a	leading	Australian	architectural	paint	manufacturer,	produces	Taubmans,	Bristol	and	White Knight	brands	of	architectural	coatings.	The	acquisition	includes	a	production	facility	in	Villawood,	New	South	Wales.	Barloworld	Coatings	Australia	distributes products	through	approximately	50	company-owned	stores,	a	network	of	sole-brand	distributors	and	numerous	independent	dealers.	In	addition,	the	company's	paints are	sold	through	Bunnings,	Australia's	largest	home-improvement	retailer,	and	exported	to	New	Zealand.	Barloworld	Coatings	Australia	sales	in	2006	were approximately	$150	million.

During	the	first	quarter	of	2007,	the	Company	acquired	the	architectural	and	industrial	coatings	businesses	of	Renner	Sayerlack,	S.A.,	Gravatai,	Brazil,	to	expand its	coatings	businesses	in	Latin	America.	The	acquired	business	operates	manufacturing	plants	in	Brazil,	Chile,	and	Uruguay	and	each	plant	also	serves	as	a	distribution center.	The	purchase	price	allocation	resulted	in	an	excess	of	purchase	price	over	the	fair	value	of	net	assets	acquired,	which	has	been	reflected	as	an	addition	to goodwill.

The	following	table	summarizes	the	estimated	fair	value	of	assets	acquired	and	liabilities	assumed	as	a	result	of	the	acquisitions	completed	in	2007	and	reflected	in the	purchase	price	allocations	and	adjustments	recorded	as	of	December	31,	2007.	There	were	no	significant	adjustments	to	these	amounts	subsequent	to	December	31, 2007.

| 2007. |  |
| :--- | :--- |
| (Millions) |  |
| Current\tassets | $ 124 |
| Property,\tplant,\tand\tequipment | 38 |
| Goodwill | 59 |
| Other\tnon-current\tassets | 67 |
| Total\tassets | 288 |
| Current\tliabilities | (48) |
| Long-term\tliabilities | (7) |
| Net\tassets | $ 233 |

During	2006,	the	Company	made	several	acquisitions,	primarily	in	the	coatings	and	optical	products	businesses.	The	total	cost	of	these	acquisitions	was	$482 million,	consisting	of	$402	million	of	cash	and	the	assumption	of	$80	million	of	debt.	In	addition,	certain	of	these	acquisitions	also	provide	for	contingent	payments and/or	escrowed	holdbacks	that	could	result	in	future	adjustments	to	the	cost	of	the	acquisitions.

The	largest	of	the	transactions	completed	during	2006	were	the	acquisition	of	the	performance	coatings	and	finishes	businesses	of	Ameron	International Corporation,	the	acquisitions	of	Sierracin	Corporation	and	Intercast	Europe,	S.p.A.,	and	the	acquisition	of	the	remaining	50%	share	of	Dongju	Industrial	Co.,	Ltd.

| Current	liabilities | (153) |
| :--- | :--- |
| Long-term\tdebt | (11) |
| Long-term\tliabilities | (71) |
| Net\tassets | $ 402 |

During	the	third	quarter	of	2007,	the	Company	entered	into	an	agreement	to	sell	its	automotive	glass	and	services	business	to	Platinum	Equity	("Platinum")	for approximately	$500	million.	Accordingly,	the	assets	and	liabilities	of	this	business	were	classified	as	held	for	sale	and	the	results	of	operations	and	cash	flows	of	this business	were	classified	as	discontinued	operations.	In	the	fourth	quarter	of	2007,	PPG	was	notified	that	affiliates	of	Platinum	had	filed	suit	in	the	Supreme	Court	of	the State	of	New	York,	County	of	New	York,	alleging	that	Platinum	was	not	obligated	to	consummate	the	agreement.	Platinum	also	terminated	the	agreement.	PPG	has sued	Platinum	and	certain	of	its	affiliates	for	damages,	including	the	$25	million	breakup	fee	stipulated	by	the	terms	of	the	agreement,	based	on	various	alleged	actions of	the	Platinum	parties.	While	the	transaction	with	Platinum	was	terminated,	PPG	management	remained	committed	to	a	sale	of	the	automotive	glass	and	services business	and	continued	to	classify	its	assets	and	liabilities	as	held	for	sale	and	report	its	results	of	operations	and	cash	flows	as	discontinued	operations	through	the	first quarter	of	2008.

In	July	2008,	PPG	entered	into	an	agreement	with	affiliates	of	Kohlberg	&	Company,	LLC,	under	which	PPG	would	divest	the	automotive	glass	and	services business	to	a	new	company	formed	by	affiliates	of	Kohlberg.	Under	the	agreement,	PPG	would	receive	a	minority	interest	in	the	new	company,	and,	as	such,	the accounting	requirements	of	SFAS	No.	144	for	classifying	the	business	as	assets	held	for	sale	and	reporting	its	results	of	operations	and	cash	flows	as	discontinued operations	had	no	longer	been	met.	The	assets	and	liabilities	of	the	business	have	been	classified	as	held	for	use	in	the	consolidated	balance	sheet	as	of	December	31, 2007,	and	the	results	of	operations	and	cash	flows	of	the	business	through	September	30,	2008	have	been	classified	as	continuing	operations	in	the	Glass	reportable segment	in	the	accompanying	consolidated	statements	of	income	and	cash	flows	for	the	three	years	ended	December	31,	2008.

In	the	second	quarter	of	2008,	as	a	result	of	the	reclassification	of	the	automotive	glass	and	services	business	to	continuing	operations,	PPG	recorded	a	one-time, non-cash	charge	of	$17	million	($11	million	aftertax)	to	reflect	a	catch-up	of	depreciation	expense,	which	was	suspended	during	the	period	the	business	was	classified	as a	discontinued	operation.	Additionally,	in	the	second	quarter	of	2008,	PPG	recorded	a	charge	of	$19	million	($12	million	aftertax)	for	special	termination	benefits	and	a pension	curtailment	loss	relating	to	the	impact	of	benefit	changes,	including	accelerated	vesting,	negotiated	as	part	of	the	sale.	This	charge	is	included	in	selling,	general and	administrative	expenses	in	the	accompanying	consolidated	statement	of	income	for	the	year	ended	December	31,	2008.

The	transaction	with	affiliates	of	Kohlberg	was	completed	on	September	30,	2008,	with	PPG	receiving	total	proceeds	of	$315	million,	including	$225	million	in cash	and	two	6-year	notes	totaling	$90	million	($60	million	at	8.5%	interest	and	$30	million	at	10%	interest).	Both	notes,	which	may	be	prepaid	at	any	time	without penalty,	are	senior	to	the	equity	of	the	new	company.	In	addition,	PPG	received	a	minority	interest	of	approximately	40	percent	in	the	new	company,	Pittsburgh	Glass Works	LLC.	This	transaction	resulted	in	a	third	quarter	2008	gain	of	$15	million	pretax,	net	of	transaction	costs,	and	is	included	in	"Other	income"	in	the	accompanying consolidated	statement	of	income	for	the	year	ended	December	31,	2008.	The	aftertax	gain	on	the	transaction	was	$3	million,	reflective	of	tax	expense	of	$12	million. Tax	expense	on	the	gain	includes	the	tax	cost	of	repatriating	certain	transaction	proceeds	from	Canada	to	the	U.S.	and	the	impact	of	certain	permanent	book/tax differences	which	resulted	in	a	larger	taxable	gain.	PPG	will	account	for	its	interest	in	Pittsburgh	Glass	Works	LLC	under	the	equity	method	of	accounting	from October	1,	2008	onward.	PPG	has	retained	certain	liabilities	for	pension	and	post-employment	benefits	earned	for	service	up	to	September	30,	2008,	totaling approximately	$280	million	at	December	31,	2008.	PPG	expects	to	recognize	expense	of	approximately	$15	million	related	to	these	obligations	in	2009.	In	addition, PPG	is	providing	certain	transition	services,	including	information	technology	and	accounting	services,	to	Pittsburgh	Glass	Works	LLC	for	a	period	of	up	to	two	years.

In	December	2008,	Pittsburgh	Glass	Works	LLC	announced	its	intention	to	close	its	Oshawa,	Canada	manufacturing	plant	in	the	first	quarter	of	2009.	Under Canadian	pension	regulations,	this	closure	will	result	in	a	partial	wind-up	of	the	pension	plans	for	former	employees	in	Canada	that	were	retained	by	PPG.	This	will result	in	a	settlement	charge	against	PPG	earnings	and	a	required	cash	contribution	to	the	plans	in	amounts	that	will	be	determined	as	of	the	settlement	date,	which	will occur	later	in	2009	or	in	2010	following	a	required	review	of	the	partial	wind-up	by	the	Canadian	pension	authorities.	The	amount	of	the	pretax	charge	and	the	cash contribution	is	currently	estimated	to	be	in	the	range	of	$20-$30	million	and	$10-$15	million,	respectively.	A	similar	outcome	to	PPG	would	result	from	a	future decision	by	Pittsburgh	Glass	Works	LLC	management	to	close	its	remaining	manufacturing	plant	in	Canada.

# 4.	Working	Capital	Detail

| (Millions) | 2008 | 2007 |
| :--- | :--- | :--- |
| Receivables |  |  |
| Customers | $2,640 | $2,369 |
| Equity\taffiliates | 22 | 35 |
| Other | 245 | 169 |
| Allowance\tfor\tdoubtful\taccounts | (103) | (51) |
| Total | $2,804 | $2,522 |
| Inventories^(1) |  |  |
| Finished\tproducts | $1,045 | $937 |
| Work\tin\tprocess | 134 | 131 |
| Raw\tmaterials | 412 | 323 |
| Supplies | 111 | 141 |
| Total | $1,702 | $1,532 |
| Accounts\tpayable\tand\taccrued\tliabilities |  |  |
| Trade\tcreditors | $1,402 | $1,182 |
| Accrued\tpayroll | 378 | 326 |
| Customer\trebates | 208 | 142 |
| Other\tpostretirement\tand\tpension\tbenefits | 102 | 90 |
| Income\ttaxes | 62 | 49 |
| Other | 664 | 431 |
| Total | $2,816 | $2,220 |

(1) Inventories	valued	using	the	LIFO	method	of	inventory	valuation	comprised	 35%	and	50%	of	total	gross	inventory	values	as	of	December	31,	2008	and	2007,	respectively.	If	the	FIFO	method	of	inventory valuation	had	been	used,	inventories	would	have	been	$213	million	and	$234	million	higher	as	of	December	31,	2008	and	2007,	respectively.	During	the	year	ended	December	31,	2008	and	2007,	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	net	effect	on	earnings	was	not material.

|  | Useful |  |  |
| :--- | :--- | :--- | :--- |
|  | Lives |  |  |
|  | (years) | 2008 | 2007 |
| Land\tand\tland\timprovements | 5-30 | $453 | $418 |
| Buildings | 20-40 | 1,416 | 1,391 |
| (1) |  |  |  |
| Machinery\tand\tequipment | 5-25 | 5,338 | 6,164 |
| Other | 3-20 | 604 | 553 |
| Construction\tin\tprogress |  | 232 | 168 |
| Total^(2) |  | $8,043 | $8,694 |

(1) Factors	reducing	machinery	and	equipment	in	2008	were	the	sale	of	the	automotive	glass	and	services	business,	asset	write-offs	included	in	the	business	restructuring	and	the	impact	of	currency.	These	factors were	partially	offset	by	increases	due	to	the	acquisition	of	SigmaKalon	and	2008	capital	spending.

# 6.	Investments

| (Millions) | 2008 | 2007 |
| :--- | :--- | :--- |
| Investments\tin\tand\tadvances\tto\tequity\taffiliates | $381 | $190 |
| Marketable\tequity\tsecurities |  |  |
| Trading\t(See\tNote\t14) | 47 | 80 |
| Available\tfor\tsale | 4 | 9 |
| Other | 77 | 91 |
| Total | $509 | $370 |

The	Company's	investments	in	and	advances	to	equity	affiliates	includes	its	approximately	40	percent	interest	in	Pittsburgh	Glass	Works	LLC,	which	had	a carrying	value,	including	$90	million	in	notes	receivable,	of	$183	million	at	December	31,	2008	(see	Note	3,	"Divestiture	of	Automotive	Glass	and	Services	Business"). The	Company's	investments	in	and	advances	to	equity	affiliates	also	include	50%	ownership	interests	in	a	number	of	joint	ventures	that	manufacture	and	sell	coatings, glass	and	chemicals	products,	the	most	significant	of	which	produce	fiber	glass	products	and	are	located	in	Asia.

In	addition,	PPG	has	a	fifty-percent	ownership	interest	in	RS	Cogen,	L.L.C.,	which	toll	produces	electricity	and	steam	primarily	for	PPG	and	its	joint	venture partner.	The	joint	venture	was	formed	with	a	wholly-owned	subsidiary	of	Entergy	Corporation	in	2000	for	the	construction	and	operation	of	a	$300	million	process steam,	natural	gas-fired	cogeneration	facility	in	Lake	Charles,	La.,	the	majority	of	which	was	financed	by	a	syndicate	of	banks.	PPG's	future	commitment	to	purchase

electricity	and	steam	from	the	joint	venture	approximates	$25	million	per	year	subject	to	contractually	defined	inflation	adjustments	for	the	next	15	years.	The	purchases for	the	years	ended	December	31,	2008,	2007	and	2006	were	$24	million,	$25	million	and	$24	million,	respectively.

Summarized	financial	information	of	PPG's	equity	affiliates	on	a	100	percent	basis,	in	the	aggregate,	is	as	follows:

PPG's	share	of	undistributed	net	earnings	of	equity	affiliates	was	$60	million	and	$75	million	as	of	December	31,	2008	and	2007,	respectively.	Dividends	received from	equity	affiliates	were	$18	million,	$21	million	and	$16	million	in	2008,	2007	and	2006,	respectively.

As	of	December	31,	2008	and	2007,	there	were	unrealized	pretax	losses	of	$1	million	and	unrealized	pretax	gains	of	$4	million,	respectively,	recorded	in "Accumulated	other	comprehensive	loss"	in	the	accompanying	consolidated	balance	sheet	related	to	marketable	equity	securities	available	for	sale.	During	2008,	PPG sold	certain	of	these	investments	resulting	in	recognition	of	pretax	gains	of	$0.1	million	and	proceeds	of	$1	million.	During	2007,	PPG	sold	certain	of	these	investments resulting	in	recognition	of	a	pretax	gain	of	$2	million	and	proceeds	of	$8	million.

# 7.	Goodwill	and	Other	Identifiable	Intangible	Assets

The	change	in	the	carrying	amount	of	goodwill	attributable	to	each	reportable	business	segment	for	the	years	ended	December	31,	2008	and	2007	was	as	follows:

|  |  |  |  | Optical |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Architectural | and |  |  |
|  | Performance | Industrial | Coatings— | Specialty |  |  |
| (Millions) | Coatings | Coatings | EMEA | Materials | Glass | Total |
| Balance, |  |  |  |  |  |  |
| Jan.\t1,\t2007 | $943 | $285 | — | $55 | $83 | $1,366 |
| Goodwill\tfrom |  |  |  |  |  |  |
| acquisitions | 55 | 7 | — | (3) | — | 59 |
| Currency |  |  |  |  |  |  |
| translation | 53 | 18 | — | 5 | 6 | 82 |
| Balance, |  |  |  |  |  |  |
| Dec.\t31,\t2007 | $1,051 | $310 | — | $57 | $89 | $1,507 |
| Goodwill\tfrom |  |  |  |  |  |  |
| acquisitions | 122 | 209 | 1,047 | (4) | — | \t 1,374 |
| Impact\tof\tdivestiture\n(See\tNote\t3) | — | — | — | — | (29) | (29) |
| Currency |  |  |  |  |  |  |
| translation | (95) | (37) | (71) | (3) | (5) | (211) |
| Balance, |  |  |  |  |  |  |
| Dec.\t31,\t2008 | $1,078 | $482 | $976 | $50 | $55 | $2,641 |

The	carrying	amount	of	acquired	trademarks	with	indefinite	lives	as	of	December	31,	2008	and	2007	totaled	$339	million	and	$144	million,	respectively.	The amount	at	December	31,	2008	includes	$195	million	related	to	the	SigmaKalon	acquisition.

The	Company's	identifiable	intangible	assets	with	finite	lives	are	being	amortized	over	their	estimated	useful	lives	and	are	detailed	below.

|  |  | Dec.	31,	2008 |  |  | Dec.	31,	2007 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross |  |  | Gross |  |  |
|  | Carrying | Accumulated |  | Carrying | Accumulated |  |
| (Millions) | Amount | Amortization | Net | Amount | Amortization | Net |
| Acquired\ttechnology | $520 | $(201) | $319 | $392 | $(164) | $228 |
| Customer-related\tintangibles | 927 | (195) | 732 | 334 | (131) | 203 |
| Tradenames | 97 | (23) | 74 | 55 | (24) | 31 |
| Other | 26 | (18) | 8 | 25 | (17) | 8 |
| Balance | $1,570 | $(437) | $1,133 | $806 | $(336) | $470 |

Most	of	the	increase	in	gross	carrying	amount	of	identifiable	intangible	assets	from	December	31,	2007	to	December	31,	2008	is	the	result	of	the	SigmaKalon acquisition	offset	somewhat	by	the	impact	of	foreign	currency	changes.

Aggregate	amortization	expense	was	$135	million,	$58	million	and	$43	million	in	2008,	2007	and	2006,	respectively.	The	estimated	future	amortization	expense	of identifiable	intangible	assets	during	each	of	the	next	five	years	is	approximately	$135	million.

# 8.	Business	Restructuring

During	the	third	quarter	of	2008,	the	Company	finalized	a	restructuring	plan	that	is	part	of	implementing	PPG's	global	transformation	strategy	and	the	integration of	its	acquisition	of	SigmaKalon,	completed	January	2,	2008.	As	part	of	the	restructuring,	PPG	will	close	several	coatings	manufacturing	facilities,	including	those	in Clarkson,	Ont.,	Canada,	and	Geldermalsen,	Netherlands,	which	are	anticipated	to	close	in	the	second	and	third	quarters	of	2009,	respectively.	The	consultation	with	the applicable	works	council	at	Geldermalsen	has	been	completed.	Other	staffing	reductions	will	occur	in	PPG's	coatings	businesses	in	North	America	and	Europe.	PPG closed	its	Owen	Sound,	Ont.,	Canada,	glass	manufacturing	facility	and	idled	one	float	glass	production	line	at	its	Mt.	Zion,	Ill.,	facility	in	the	fourth	quarter	of	2008. Other	actions	included	writing	off	idle	production	assets	in	PPG's	fiber	glass	and	chemicals	businesses.

In	the	third	quarter	of	2008,	the	Company	recorded	a	charge	of	$163	million	for	business	restructuring,	including	severance	and	other	costs	of	$73	million,	pension curtailments	of	$21	million	and	asset	write-offs	of	$69	million.	Severance	and	other	restructuring	costs	related	to	the	SigmaKalon	acquisition	totaling	$33	million	have been	recorded	as	part	of	the	purchase	price	allocation,	effectively	increasing	goodwill.	The	restructuring	reserve	recorded	in	2008	totaled	$196	million.	It	is	expected that	these	restructuring	actions	will	be	substantially	completed	by	the	fourth	quarter	of	2009.

The	Company	also	expects	to	incur	additional	costs	of	approximately	$15	million	directly	associated	with	the	restructuring	actions	for	demolition,	dismantling, relocation	and	training	that	will	be	charged	to	expense	as	incurred.	The	Company	expects	to	incur	these	additional	expenses	primarily	in	the	second	half	of	2009.

The	following	table	summarizes	the	details	through	December	31,	2008:

| (Millions,	except	no.	of<br>employees) | Severance<br>and	Other<br>Costs | Pension<br>Curtailment<br>Losses | Asset<br>Write-<br>offs | Total<br>Reserve | Employees<br>Impacted |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Performance\tCoatings | $30 | $— | $15 | $45 | 270 |
| Industrial\tCoatings | 45 | 9 | 10 | 64 | 577 |
| Architectural\tCoatings\t-\tEMEA | 19 | — | — | 19 | 215 |
| Commodity\tChemicals | — | — | 13 | 13 | 10 |
| Glass | 12 | 12 | 31 | 55 | 285 |
| Total | $106 | $21 | $69 | $196 | 1,357 |
| Activity\tto\tdate | (12) | (21) | (69) | (102) | (249) |
| Currency\timpact | (6) | — | — | (6) | — |
| Balance\tas\tof\tDec.\t31,\t2008 | $88 | $— | $— | $88 | 1,108 |

During	2006,	the	Company	finalized	plans	for	certain	actions	to	reduce	its	workforce	and	consolidate	facilities	and	recorded	a	charge	of	$37	million	for restructuring	and	other	related	activities,	including	severance	costs	of	$35	million	and	loss	on	asset	impairment	of	$2	million.	All	actions	related	to	the	2006	restructuring charge	were	substantially	completed	by	the	end	of	the	second	quarter	of	2007.

# 9.	Debt	and	Bank	Credit	Agreements	and	Leases

| (Millions) |  | 2008 | 2007 |
| :--- | :--- | :--- | :--- |
| 7.05%\tnotes,\tdue\t2009^(1) | 7.05%\tnotes,\tdue\t2009^(1) | $116 | $116 |
| 6^\t7 | /8%\tnotes,\tdue\t2012^(1) | 71 | 71 |
| 5.75%\tnotes,\tdue\t2013 | 5.75%\tnotes,\tdue\t2013 | 600 | — |
| 3^\t7 | /8%\tnotes,\tdue\t2015\t(€300) | 418 | 436 |
| 7^\t3 | /8%\tnotes,\tdue\t2016 | 146 | 146 |
| \t7 |  |  |  |
| 6 | /8%\tnotes,\tdue\t2017 | 74 | 74 |
| 6.65%\tnotes,\tdue\t2018 | 6.65%\tnotes,\tdue\t2018 | 700 | — |
| 7.4%\tnotes,\tdue\t2019 | 7.4%\tnotes,\tdue\t2019 | 198 | 198 |
| 9%\tnon-callable\tdebentures,\tdue\t2021 | 9%\tnon-callable\tdebentures,\tdue\t2021 | 149 | 149 |
| 7.70%\tnotes,\tdue\t2038 | 7.70%\tnotes,\tdue\t2038 | 249 | — |
| €650\trevolving\tcredit\tfacility,\tweighted\taverage | 2.9% |  |  |
| as\tof\tDecember\t31,\t2008 | (2) | 368 | — |
| Impact\tof\tderivatives\ton\tdebt | (1) | 15 | 9 |
| Various\tother\tnon-U.S.\tdebt,\tweighted\taverage\nas\tof\tDecember\t31,\t2008 | 8.0% | 18 | 2 |
| Capital\tlease\tobligations | Capital\tlease\tobligations | 6 | 1 |
|  | Total | 3,128 | 1,202 |
| Less\tpayments\tdue\twithin\tone\tyear | Less\tpayments\tdue\twithin\tone\tyear | 119 | 1 |
|  | Long-term\tdebt | $3,009 | $1,201 |

(1) PPG	entered	into	several	interest	rate	swaps	which	have	the	effect	of	converting	$125	million	and	$ 275	million	as	of	December	31,	2008	and	2007,	respectively,	of	these	fixed	rate	notes	to	variable	rates,	based	on the	three-month	London	Interbank	Offered	Rate	(LIBOR).	The	weighted	average	effective	interest	rate	for	these	borrowings,	including	the	effects	of	the	outstanding	swaps	was	5.4%	and	8.0%	for	the	years	ended December	31,	2008	and	2007,	respectively.	Refer	to	Notes	1	and	11	for	additional	information.

(2) This	borrowing	is	effectively	due	in	2010	as	PPG	has	the	intent	and	ability	to	rollover	this	amount.	PPG	has	therefore	classified	this	amount	as	long-term	debt.

The	Company	has	in	place	a	$1	billion	revolving	credit	facility	that	expires	in	2011.	The	annual	facility	fee	payable	on	the	committed	amount	is	7	basis	points.	This facility	is	available	for	general	corporate	purposes	and	also	to	support	PPG's	commercial	paper	programs	in	the	U.S.	and	Europe.	As	of	December	31,	2008,	no	amounts were	outstanding	under	this	facility;	however,	borrowing	availability	under	the	facility	was	reduced	by	the	outstanding	commercial	paper	balance	of	$222	million	at December	31,	2008.

PPG's	non-U.S.	operations	have	uncommitted	lines	of	credit	totaling	$684	million	of	which	$312	million	was	used	as	of	December	31,	2008.	These	uncommitted lines	of	credit	are	subject	to	cancellation	at	any	time	and	are	generally	not	subject	to	any	commitment	fees.

In	order	to	provide	financing	for	the	SigmaKalon	acquisition,	in	December	2007,	PPG	and	certain	of	its	subsidiaries	entered	into	a	three	year	€650	million revolving	credit	facility	with	several	banks	and	financial	institutions	and	Societe	Generale,	as	facility	agent	for	the	lenders.	The	facility	has	an	annual	fee	of	7	basis points.	In	addition,	PPG	and	a	subsidiary	entered	into	two	bridge	loan	agreements,	one	in	the	amount	of	€1	billion	with	multiple	lenders	and	Credit	Suisse	as administrative	agent	for	those	lenders	and	the	other	in	the	amount	of	$500	million	with	Credit	Suisse	as	the	lender.	Each	bridge	loan	had	a	term	of	364	days.

In	December	2007,	PPG	issued	$617	million	of	commercial	paper	and	borrowed	$1,056	million	(€717	million)	under	the	€1	billion	bridge	loan	agreement.	The proceeds	from	these	borrowings	were	deposited	into	escrow	in	December	2007.	Upon	closing	of	the	acquisition	on	January	2,	2008,	these	amounts	were	released	from escrow	and	paid	to	the	seller.	Also,	in	January	2008,	PPG	borrowed	$1,143	million,	representing	the	remaining	$417	million	(€283	million)	available	under	the	€1 billion	bridge	loan	agreement	and	$726	million	(€493	million)	under	the	€650	million	revolving	credit	facility.	The	proceeds	from	these	borrowings	and	cash	on	hand	of $116	million	were	used	to	repay	$1,259	million	of	the	$1,517	million	SigmaKalon	debt	assumed	in	the	acquisition.	No	amounts	were	borrowed	under	the	$500	million bridge	loan	agreement,	and	it	has	expired.	As	of	December	31,	2008,	$568	million	(€406	million)	has	been	borrowed	under	the	€650	million	revolving	credit	facility.

On	March	18,	2008,	PPG	completed	a	public	offering	of	$600	million	in	aggregate	principal	amount	of	its	5.75%	Notes	due	2013	(the	"2013	Notes"),	$700	million in	aggregate	principal	amount	of	its	6.65%	Notes	due	2018	(the	"2018	Notes")	and	$250	million	in	aggregate	principal	amount	of	its	7.70%	Notes	due	2038	(the	"2038 Notes"	and,	together	with	the	2013	Notes	and	the	2018	Notes,	the	"Notes").	The	Notes	were	offered	by	the	Company	pursuant	to	its	existing	shelf	registration.	The proceeds	of	this	offering	of	$1,538	million	(net	of	discount	and	issuance	costs)	and	additional	borrowings	of	$195	million	under	the	€650	million	revolving	credit	facility were	used	to	repay	existing	debt,	including	certain	short-term	debt	and	the	amounts	outstanding	under	the	€1	billion	bridge	loan.	No	further	amounts	can	be	borrowed under	the	€1	billion	bridge	loan.	The	discount	and	issuance	costs	related	to	the	Notes,	which	totaled	$12	million,	will	be	amortized	to	interest	expense	over	the	respective lives	of	the	Notes.

Short-term	debt	outstanding	as	of	December	31,	2008	and	2007,	was	as	follows:

| (Millions) | 2008 | 2007 |
| :--- | :--- | :--- |
| €1\tbillion\tbridge\tloan\tagreement,\t5.2% | $\t\t— | $1,047 |
| U.S.\tcommercial\tpaper,\t5.3%\tas\tof\tDec.\t31,\t2008 | 222 | 617 |
| (1) | 200 | — |
| Other,\tweighted\taverage\t4.0%\tas\tof\tDec.\t31,\t2008 | 362 | 154 |
| Total | $784 | $1,818 |

(1) Borrowings	under	this	facility	have	a	term	of	30	days	and	can	be	rolled	over	monthly	until	the	facility	expires	in	2010.

PPG	is	in	compliance	with	the	restrictive	covenants	under	its	various	credit	agreements,	loan	agreements	and	indentures.	The	Company's	revolving	credit agreements	include	a	financial	ratio	covenant.	The	covenant	requires	that	the	amount	of	total	indebtedness	not	exceed	60%	of	the	Company's	total	capitalization excluding	the	portion	of	accumulated	other	comprehensive	income	(loss)	related	to	pensions	and	other	postretirement	benefit	adjustments.	As	of	December	31,	2008, total	indebtedness	was	45%	of	the	Company's	total	capitalization	excluding	the	portion	of	accumulated	other	comprehensive	income	(loss)	related	to	pensions	and	other postretirement	benefit	adjustments.	Additionally,	substantially	all	of	the	Company's	debt	agreements	contain	customary	cross-default	provisions.	Those	provisions generally	provide	that	a	default	on	a	debt	service	payment	of	$10	million	or	more	for	longer	than	the	grace	period	provided	(usually	10	days)	under	one	agreement	may result	in	an	event	of	default	under	other	agreements.	None	of	the	Company's	primary	debt	obligations	are	secured	or	guaranteed	by	the	Company's	affiliates.

Rental	expense	for	operating	leases	was	$267	million,	$188	million	and	$161	million	in	2008,	2007	and	2006,	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. Minimum	lease	commitments	for	operating	leases	that	have	initial	or	remaining	lease	terms	in	excess	of	one	year	as	of	December	31,	2008,	are	(in	millions)	$126	in 2009,	$107	in	2010,	$82	in	2011,	$65	in	2012,	$51	in	2013	and	$202	thereafter.

The	Company	had	outstanding	letters	of	credit	of	$82	million	as	of	December	31,	2008.	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,	2008	and	2007	guarantees	outstanding	were $70	million.	The	guarantees	relate	primarily	to	debt	of	certain	entities	in	which	PPG	has	an	ownership	interest	and	selected	customers	of	certain	of	the	Company's businesses.	A	portion	of	such	debt	is	secured	by	the	assets	of	the	related	entities.	The	carrying	values	of	these	guarantees	were	$9	million	and	$3	million	as	of	December 31,	2008	and	2007,	respectively,	and	the	fair	values	were	$40	million	and	$17	million,	as	of	December	31,	2008	and	2007,	respectively.	The	Company	does	not	believe any	loss	related	to	these	letters	of	credit	or	guarantees	is	likely.

# 10.	Financial	Instruments,	Excluding	Derivative	Financial	Instruments

Included	in	PPG's	financial	instrument	portfolio	are	cash	and	cash	equivalents,	cash	held	in	escrow,	marketable	equity	securities,	company-owned	life	insurance and	short-	and	long-term	debt	instruments.	The	fair	values	of	the	financial	instruments	approximated	their	carrying	values,	in	the	aggregate,	except	for	long-term	debt.

Long-term	debt	(excluding	capital	lease	obligations),	had	carrying	and	fair	values	totaling	$3,122	million	and	$3,035	million,	respectively,	as	of	December	31, 2008.	The	corresponding	amounts	as	of	December	31,	2007,	were	$1,201	million	and	$1,226	million,	respectively.	The	fair	values	of	the	debt	instruments	were	based on	discounted	cash	flows	and	interest	rates	currently	available	to	the	Company	for	instruments	of	the	same	remaining	maturities.

PPG's	policies	do	not	permit	speculative	use	of	derivative	financial	instruments.	PPG	uses	derivative	instruments	to	manage	its	exposure	to	fluctuating	natural	gas prices	through	the	use	of	natural	gas	swap	contracts.	PPG	also	uses	forward	currency	and	option	contracts	as	hedges	against	its	exposure	to	variability	in	exchange	rates on	short-term	intercompany	borrowings,	unrecognized	firm	sales	commitments,	and	cash	flows	denominated	in	foreign	currencies.	PPG	uses	foreign	denominated	debt and	cross	currency	swap	contracts	to	hedge	investments	in	foreign	operations.	Interest	rate	swaps	are	used	to	manage	the	Company's	exposure	to	changing	interest	rates. PPG	also	uses	an	equity	forward	arrangement	to	hedge	the	Company's	exposure	to	changes	in	the	fair	value	of	PPG	stock	that	is	to	be	contributed	to	the	asbestos settlement	trust	as	discussed	in	Note	15,	"Commitments	and	Contingent	Liabilities."

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	has	not	realized	any	credit	losses	on	derivatives	during	the	three-year	period	ended	December	31,	2008.

PPG	centrally	manages	its	foreign	currency	transaction	risk	to	minimize	the	volatility	in	cash	flows	caused	by	currency	fluctuations.	Decisions	on	whether	to	use derivative	financial	instruments	to	hedge	the	net	transaction	exposures,	related	to	all	regions	of	the	world,	are	made	based	on	the	amount	of	those	exposures,	by	currency, and,	in	certain	situations,	an	assessment	of	the	near-term	outlook	for	certain	currencies.	This	net	hedging	strategy	does	not	qualify	for	hedge	accounting	under	the provisions	of	SFAS	No.	133;	therefore,	the	change	in	the	fair	value	of	these	instruments	is	recorded	in	"Other	charges"	in	the	accompanying	consolidated	statement	of income	in	the	period	of	change.	The	amounts	recorded	in	earnings	related	to	this	hedging	activity	for	the	years	ended	December	31,	2008,	2007	and	2006	were	a	gain	of $5	million,	a	loss	of	$2	million	and	a	loss	of	$1	million,	respectively.	The	fair	value	of	these	contracts	as	of	December	31,	2008	and	2007	were	assets	of	$1	million	and $0.4	million,	respectively.

In	December	2007,	PPG	borrowed	€717	million	under	the	€1	billion	bridge	loan	agreement	established	in	December	2007	to	finance	a	portion	of	the	SigmaKalon acquisition.	The	Euro	proceeds	were	converted	to	$1,056	million	and	deposited	into	escrow	until	the	closing	of	the	transaction	on	January	2,	2008.	On	the	same	day	the $1,056	million	was	placed	into	escrow,	the	Company	entered	into	a	foreign	currency	forward	contract	to	convert	the	U.S.	dollars	back	to	€717	million	on	January	2, 2008.	A	loss	on	the	forward	contract	was	recognized	as	of	December	31,	2007	of	$9	million,	which	was	substantially	offset	by	an	$8	million	gain	on	the	Euro	borrowing over	the	same	time	period.

Concurrent	with	the	public	offering	of	the	Company's	Notes,	on	March	18,	2008,	PPG	entered	into	ten	U.S.	dollar	to	euro	cross	currency	swap	contracts	with	a	total notional	amount	of	$1.3	billion,	of	which	$600	million	were	to	settle	on	March	15,	2013	and	$700	million	were	to	settle	on	March	15,	2018.	PPG	paid	the	counterparties to	the	contracts	a	total	of	$1.3	billion	and	received	euros,	which	were	used	to	repay	most	of	the	€1	billion	bridge	loan,	which	the	Company	employed	to	finance	the acquisition	of	SigmaKalon.	During	the	fourth	quarter	of	2008,	PPG	converted	$1.16	billion	of	these	contracts	to	cash	at	their	fair	value	of	$208	million	and	replaced them	with	new	cross	currency	swap	contracts.	During	the	term	of	these	contracts,	PPG	will	receive	semiannual	interest	payments	in	March	and	September	of	each	year based	on	U.S.	dollar,	long-term	fixed	loan	rates,	and	PPG	will	make	annual	interest	payments	in	September	of	each	year	to	the	counterparties	based	on	euro,	long-term fixed	loan	rates.	On	settlement	of	all	of	the	outstanding	contracts,	PPG	will	receive	$1.3	billion	U.S.	dollars	and	pay	euros	to	the	counterparties	to	the	contracts	of	which $600	million	will	settle	on	March	15,	2013	and	$700	million	will	settle	on	March	15,	2018.	The	Company	has	designated	these	swaps	as	hedges	of	its	net	investment	in SigmaKalon	and,	as	a	result,	mark	to	fair	value	adjustments	of	the	swaps	have	been	and	will	be	recorded	as	a	component	of	other	comprehensive	income	and	the	cash flow	impact	of	these	swaps	has	been	and	will	be	classified	as	investing	activities	in	the	consolidated	statement	of	cash	flows.	As	of	December	31,	2008,	the	aggregate fair	value	of	these	swaps	was	a	net	liability	of	$130	million.

The	€300	million	Euro	Notes	due	in	2015	are	designated	as	a	hedge	of	a	portion	of	PPG's	net	investment	in	the	Company's	European	operations.	As	a	result,	the change	in	book	value	from	adjusting	these	foreign	denominated	notes	to	current	spot	rates	at	each	balance	sheet	date	is	deferred	in	accumulated	other	comprehensive (loss)	income.	As	of	December	31,	2008	and	2007,	the	amount	recorded	in	accumulated	other	comprehensive	(loss)	income	from	this	hedge	of	the	Company's	net investment	was	an	unrealized	loss	of	$57	million	and	$76	million,	respectively.

PPG	designates	forward	currency	contracts	as	hedges	against	the	Company's	exposure	to	variability	in	exchange	rates	on	short-term	intercompany	borrowings denominated	in	foreign	currencies.	To	the	extent	effective,	changes	in	the	fair	value	of	these	instruments	are	deferred	in	accumulated	other	comprehensive	(loss)	income and	subsequently	reclassified	to	"Other	charges"	in	the	accompanying	consolidated	statement	of	income	as	foreign	exchange	gains	and	losses	are	recognized	on	the

related	intercompany	borrowings.	The	portion	of	the	change	in	fair	value	considered	to	be	ineffective	is	recognized	in	"Other	charges"	in	the	accompanying	consolidated statement	of	income.	The	amounts	recorded	in	earnings	for	the	years	ended	December	31,	2008,	2007	and	2006,	were	losses	of	$5	million,	$9	million	and	$5	million, respectively.	The	fair	value	of	these	contracts	was	a	net	asset	of	$2	million	and	$5	million	as	of	December	31,	2008	and	2007,	respectively.

PPG	designates	forward	currency	contracts	as	hedges	against	the	Company's	exposure	to	future	changes	in	fair	value	related	to	certain	firm	sales	commitments denominated	in	foreign	currencies.	These	contracts	are	designated	as	fair	value	hedges.	As	such,	these	contracts	are	carried	at	fair	value.	Changes	in	the	fair	value	of these	contracts	and	that	of	the	related	firm	sales	commitments	are	recorded	in	net	sales.	The	portion	of	the	change	in	fair	value	of	the	hedge	contracts	that	was	considered to	be	ineffective	for	the	year	ended	December	31,	2008	was	$4	million	of	expense.	Prior	to	2008,	PPG	did	not	hedge	firm	sales	commitments	denominated	in	foreign currencies.	The	fair	value	of	these	contracts	was	a	liability	of	$18	million	as	of	December	31,	2008.

The	Company	manages	its	interest	rate	risk	by	balancing	its	exposure	to	fixed	and	variable	rates	while	attempting	to	minimize	its	interest	costs.	Generally,	the Company	maintains	variable	interest	rate	debt	at	a	level	of	approximately	25%	to	50%	of	total	borrowings.	PPG	principally	manages	its	fixed	and	variable	interest	rate risk	by	retiring	and	issuing	debt	from	time	to	time	and	through	the	use	of	interest	rate	swaps.	As	of	December	31,	2008	and	2007,	these	swaps	converted	$125	million and	$275	million,	respectively,	of	fixed	rate	debt	to	variable	rate	debt.	These	swaps	are	designated	as	fair	value	hedges.	As	such,	the	swaps	are	carried	at	fair	value. Changes	in	the	fair	value	of	these	swaps	and	that	of	the	related	debt	are	recorded	in	"Interest	expense"	in	the	accompanying	consolidated	statement	of	income.	The	fair value	of	these	contracts	was	an	asset	of	$3	million	and	$6	million	as	of	December	31,	2008	and	2007,	respectively.

The	Company	uses	derivative	instruments	to	manage	its	exposure	to	fluctuating	natural	gas	prices	through	the	use	of	natural	gas	swap	contracts.	These	instruments mature	over	the	next	37	months.	To	the	extent	that	these	instruments	are	effective	in	hedging	PPG's	exposure	to	price	changes,	changes	in	the	fair	values	of	the	hedge contracts	are	deferred	in	accumulated	other	comprehensive	(loss)	income	and	reclassified	to	cost	of	sales	as	the	natural	gas	is	purchased.	The	amount	of	ineffectiveness, which	is	reported	in	"Cost	of	sales,	exclusive	of	depreciation	and	amortization"	in	the	accompanying	consolidated	statement	of	income	for	the	years	ended	December 31,	2008,	2007,	and	2006,	was	$0.3	million	of	expense,	$0.4	million	of	income	and	$0.2	million	of	income,	respectively.	The	fair	value	of	these	contracts	was	a	liability of	$85	million	and	$8	million	as	of	December	31,	2008	and	2007,	respectively.	As	of	December	31,	2008	an	aftertax	loss	of	$52	million	was	deferred	in	accumulated other	comprehensive	(loss)	income,	of	which	$38	million	related	to	natural	gas	hedge	contracts	that	mature	within	the	next	12	months.

In	November	2002,	PPG	entered	into	a	one-year	renewable	equity	forward	arrangement	with	a	bank	in	order	to	mitigate	the	impact	of	changes	in	the	fair	value	of PPG	stock	that	is	to	be	contributed	to	the	asbestos	settlement	trust	as	discussed	in	Note	15,	"Commitments	and	Contingent	Liabilities."	This	instrument,	which	has	been renewed,	is	recorded	at	fair	value	as	an	asset	or	liability	and	changes	in	the	fair	value	of	this	instrument	are	reflected	in	"Asbestos	settlement	–	net"	in	the	accompanying consolidated	statement	of	income.	As	of	December	31,	2008	and	2007,	PPG	had	recorded	a	current	liability	of	$6	million	and	a	current	asset	of	$18	million,

respectively,	and	recognized	a	loss	of	$24	million	for	the	year	ended	December	31,	2008,	income	of	$4	million	for	the	year	ended	December	31,	2007	and	income	of $4	million	for	the	year	ended	December	31,	2006.

In	accordance	with	the	terms	of	this	instrument	the	bank	had	purchased	504,900	shares	of	PPG	stock	on	the	open	market	at	a	cost	of	$24	million	through December	31,	2002,	and	during	the	first	quarter	of	2003	the	bank	purchased	an	additional	400,000	shares	at	a	cost	of	$19	million.	In	December	2008,	the	bank purchased	483,989	shares	at	a	cost	of	$19	million.	The	equity	forward	arrangement	as	of	December	31,	2008	mitigates	the	full	impact	of	changes	in	fair	value	of	PPG stock	that	is	to	be	contributed	to	the	asbestos	settlement	trust.	The	total	principal	amount	for	these	shares	is	$62	million.	PPG	will	pay	to	the	bank	interest	based	on	the principal	amount	and	the	bank	will	pay	to	PPG	an	amount	equal	to	the	dividends	paid	on	these	shares	during	the	period	this	instrument	is	outstanding.	The	difference between	the	principal	amount,	and	any	amounts	related	to	unpaid	interest	or	dividends,	and	the	current	market	price	for	these	shares	will	represent	the	fair	value	of	the instrument	as	well	as	the	amount	that	PPG	would	pay	or	receive	if	the	bank	chose	to	net	settle	the	instrument.	Alternatively,	the	bank	may,	at	its	option,	require	PPG	to purchase	the	shares	covered	by	the	arrangement	at	the	market	price	on	the	date	of	settlement.

No	derivative	instrument	initially	designated	as	a	hedge	instrument	was	undesignated	or	discontinued	as	a	hedging	instrument	during	2008	or	2007.

For	the	year	ended	December	31,	2008,	other	comprehensive	(loss)	income	included	a	net	loss	due	to	derivatives	of	$49	million,	net	of	tax.	This	loss	was

comprised	of	realized	gains	of	$9	million	and	unrealized	losses	of	$40	million.	The	realized	gains	related	to	the	settlement	during	the	period	of	natural	gas	contracts, offset	in	part	by	realized	losses	related	to	the	settlement	of	foreign	currency	contracts	and	interest	rate	swaps	that	were	owned	by	one	of	the	Company's	investees accounted	for	under	the	equity	method	of	accounting.	The	unrealized	losses	related	to	the	change	in	fair	value	of	the	natural	gas	contracts	and	of	interest	rate	swaps owned	by	one	of	the	Company's	investees	accounted	for	under	the	equity	method	of	accounting,	offset	in	part	by	the	change	in	fair	value	on	foreign	currency	contracts.

For	the	year	ended	December	31,	2007,	other	comprehensive	(loss)	income	included	a	net	gain	due	to	derivatives	of	$7	million,	net	of	tax.	This	income	was comprised	of	realized	losses	of	$20	million	and	unrealized	losses	of	$13	million.	The	realized	losses	related	to	the	settlement	during	the	period	of	natural	gas	contracts, foreign	currency	contracts	and	interest	rate	swaps	that	were	owned	by	one	of	the	Company's	investees	accounted	for	under	the	equity	method	of	accounting.	The unrealized	losses	related	to	the	change	in	fair	value	of	the	natural	gas	contracts,	foreign	currency	contracts	and	interest	rate	swaps	that	are	owned	by	one	of	the Company's	investees	accounted	for	under	the	equity	method	of	accounting.

The	fair	values	of	outstanding	derivative	instruments,	excluding	interest	rate	swaps,	were	determined	using	quoted	market	prices.	The	fair	value	of	interest	rate swaps	was	determined	using	discounted	cash	flows	and	current	interest	rates.

# 12.	Earnings	Per	Common	Share

The	earnings	per	common	share	calculations	for	the	three	years	ended	December	31,	2008,	are	as	follows:

| (Millions,	except	per	share	amounts) | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Earnings\tper\tcommon\tshare |  |  |  |
| Income\tfrom\tcontinuing\toperations | $538 | $856 | $707 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations | — | (22) | 4 |
| Net\tIncome | $538 | $834 | $711 |
| \t Weighted\taverage\tcommon\tshares\toutstanding | 164.6 | 164.5 | 165.7 |
| Earnings\tper\tcommon\tshare: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $3.27 | $5.20 | $4.27 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations | — | (0.13) | 0.02 |
| Net\tIncome | $3.27 | $5.07 | $4.29 |
| Earnings\tper\tcommon\tshare\t-\nassuming\tdilution |  |  |  |
| Income\tfrom\tcontinuing\toperations | $538 | $856 | $707 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations | — | (22) | 4 |
| Net\tIncome | $538 | $834 | $711 |
| \t Weighted\taverage\tcommon\tshares\toutstanding | 164.6 | 164.5 | 165.7 |
| Effect\tof\tdilutive\tsecurities:\nStock\toptions | 0.2 | 0.9 | 0.6 |
| Other\tstock\tcompensation\tplans | 0.6 | 0.5 | 0.2 |
| Potentially\tdilutive\tcommon\tshares | 0.8 | 1.4 | 0.8 |
| Adjusted\tweighted\taverage\tcommon\tshares\toutstanding | 165.4 | 165.9 | 166.5 |
| Earnings\tper\tcommon\tshare\t- |  |  |  |
| assuming\tdilution: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $3.25 | $5.16 | $4.25 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations | — | (0.13) | 0.02 |
| Net\tIncome | $3.25 | $5.03 | $4.27 |

There	were	5.1	million,	1.1	million	and	4.0	million	outstanding	stock	options	excluded	in	2008,	2007	and	2006,	respectively,	from	the	computation	of	diluted earnings	per	common	share	due	to	their	anti-dilutive	effect.

# 13.	Income	Taxes

The	following	table	presents	a	reconciliation	of	the	statutory	U.S.	corporate	federal	income	tax	rate	to	the	Company's	effective	income	tax	rate:

| U.S.	federal	income	tax	rate<br>Changes	in	rate	due	to: |  | 2008<br>35.00% | 2007<br>35.00% | 2006<br>35.00% |
| :--- | :--- | :--- | :--- | :--- |
|  | State\tand\tlocal\ttaxes\t–\tU.S. | 2.47 | 1.12 | 0.43 |
|  | Taxes\ton\tnon-U.S.\tearnings | (3.75) | (4.92) | (2.84) |
|  | PPG\tdividends\tpaid\tto\tthe\tESOP | (1.13) | (0.76) | (1.04) |
|  | U.S.\tfederal\taudit\tsettlements | (1.59) | (0.64) | (2.04) |
|  | Other | 0.28 | (0.65) | (3.41) |
|  | Effective\tincome\ttax\trate | 31.28% | 29.15% | 26.10% |

The	change	in	the	impact	on	the	effective	income	tax	rate	for	2008	compared	with	2007	due	to	state	and	local	taxes	and	taxes	on	non-U.S.	earnings	was	largely	the result	of	the	increase	in	U.S.	earnings	as	a	percentage	of	total	earnings.

The	2007	effective	income	tax	rate	includes	the	tax	benefit	of	$15	million	for	the	reversal	of	a	valuation	allowance	previously	recorded	against	the	benefit	of	a	tax net	operating	loss	carryforward	of	a	non-U.S.	subsidiary	and	the	tax	benefit	associated	with	an	enacted	reduction	in	the	Canadian	federal	corporate	income	tax	rate.	The impact	of	these	items	is	presented	as	"Taxes	on	non-U.S.	earnings"	in	the	above	rate	reconciliation	and	accounted	for	most	of	the	increase	in	the	benefit	that	taxes	on non-U.S.	earnings	had	on	the	2007	effective	income	tax	rate.

The	following	table	gives	details	of	income	tax	expense	reported	in	the	accompanying	consolidated	statement	of	income.

| (Millions) |  | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- | :--- |
| Current\tincome\ttaxes |  |  |  |  |
|  | U.S.\tfederal | $140 | $294 | $221 |
|  | Non-U.S. | 141 | 156 | 116 |
|  | State\tand\tlocal\t–\tU.S. | 29 | 31 | 30 |
|  | Total\tcurrent | 310 | 481 | 367 |
| Deferred\tincome\ttaxes |  |  |  |  |
|  | U.S.\tfederal | 54 | (66) | (82) |
|  | Non-U.S. | (86) | (25) | — |
|  | State\tand\tlocal\t–\tU.S. | 6 | (7) | (10) |
|  | Total\tdeferred | (26) | (98) | (92) |
|  | Total | $284 | $383 | $275 |

Net	deferred	income	tax	assets	and	liabilities	as	of	December	31,	2008	and	2007,	were	as	follows:

| (Millions) | 2008 | 2007 |
| :--- | :--- | :--- |
| Deferred\tincome\ttax\tassets\trelated\tto |  |  |
| Employee\tbenefits | $890 | $644 |
| Contingent\tand\taccrued\tliabilities | 529 | 507 |
| Operating\tloss\tand\tother\tcarryforwards | 130 | 109 |
| Inventories | 20 | 25 |
| Property | 35 | 3 |
| Derivatives | 88 | — |
| Other | 121 | 66 |
| Valuation\tallowance | (58) | (64) |
| Total | \t 1,755 | \t 1,290 |
| Deferred\tincome\ttax\tliabilities\trelated\tto |  |  |
| Property | 460 | 381 |
| Intangibles | 505 | 257 |
| Employee\tbenefits | 44 | 42 |
| Other | 49 | 26 |
| Total | \t 1,058 | 706 |
| Deferred\tincome\ttax\tassets\t–\tnet | $697 | $584 |

As	of	December	31,	2008,	subsidiaries	of	the	Company	had	available	net	operating	loss	carryforwards	of	approximately	$439	million	for	income	tax	purposes,	of which	approximately	$314	million	has	an	indefinite	expiration.	The	remaining	$125	million	expires	between	the	years	2009	and	2023.	A	valuation	allowance	has	been established	for	carry-forwards	where	the	ability	to	utilize	them	is	not	likely.

No	deferred	U.S.	income	taxes	have	been	provided	on	certain	undistributed	earnings	of	non-U.S.	subsidiaries,	which	amounted	to	$2,461	million	as	of	December 52

No	deferred	U.S.	income	taxes	have	been	provided	on	certain	undistributed	earnings	of	non-U.S.	subsidiaries,	which	amounted	to	$2,461	million	as	of	December 31,	2008	and	$2,661	million	as	of	December	31,	2007.	These	earnings	are	considered	to	be	reinvested	for	an	indefinite	period	of	time	or	will	be	repatriated	when	it	is	tax effective	to	do	so.	It	is	not	practicable	to	determine	the	deferred	tax	liability	on	these	undistributed	earnings.

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	2001.	Additionally,	the	Internal	Revenue	Service	("IRS")	has	completed	its	examination	of	the	Company's	U.S.	federal income	tax	returns	filed	for	years	through	2006.

The	activity	in	the	accrued	liability	for	unrecognized	tax	benefits	for	the	two	years	ended	December	31,	2008	was	as	follows:

| (Millions) | 2008 | 2007 |
| :--- | :--- | :--- |
| Balance\tat\tJanuary\t1 | $ 110 | $77 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 12 | 21 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 5 | 19 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (17) | (5) |
| Pre-acquisition\tunrecognized\ttax\tbenefits | 20 | — |
| Reductions\tfor\texpiration\tof\tthe\tapplicable\tstatute\tof\tlimitations | (6) | (5) |
| Settlements | (21) | (1) |
| Currency | (4) | 4 |
| Balance\tat\tDecember\t31 | $99 | $110 |

The	amount	of	unrecognized	tax	benefits	was	$99	million	and	$110	million	as	of	December	31,	2008	and	2007,	respectively.	If	recognized,	$89	million	and	$88 million	would	impact	the	effective	rate	as	of	December	31,	2008	and	2007,	respectively.	The	Company	recognizes	accrued	interest	and	penalties	related	to	unrecognized tax	benefits	in	income	tax	expense.	The	Company	had	accrued	$10	million	and	$9	million	for	estimated	interest	and	penalties	on	unrecognized	tax	benefits	as	of December	31,	2008	and	2007,	respectively.	The	Company	recognized	$1	million	and	$3	million	of	expense	for	estimated	interest	and	penalties	during	the	years	ended December	31,	2008	and	2007,	respectively.

While	it	is	expected	that	the	amount	of	unrecognized	tax	benefits	will	change	in	the	next	12	months,	quantification	of	an	estimated	range	cannot	be	made	at	this time.	The	Company	does	not	expect	this	change	to	have	a	significant	impact	on	the	results	of	operations	or	financial	position	of	the	Company,	however,	actual settlements	may	differ	from	amounts	accrued.

# Defined	Benefit	Plans

PPG	has	defined	benefit	pension	plans	that	cover	certain	employees	worldwide.	PPG	also	sponsors	welfare	benefit	plans	that	provide	postretirement	medical	and life	insurance	benefits	for	certain	U.S.	and	Canadian	employees	and	their	dependents.	These	programs	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	or	terminate	certain	of	these	benefit	plans	in	the	future.	Salaried	and	certain	hourly	employees	hired	on	or	after	October	1,	2004, are	not	eligible	for	postretirement	medical	benefits.	Salaried	employees	hired,	rehired	or	transferred	to	salaried	status	on	or	after	January	1,	2006,	and	certain	hourly employees	hired	in	2006	or	thereafter	are	eligible	to	participate	in	a	defined	contribution	retirement	plan.	These	employees	are	not	eligible	for	defined	benefit	pension plan	benefits.

The	Medicare	Act	of	2003	introduced	a	prescription	drug	benefit	under	Medicare	("Medicare	Part	D")	that	provides	several	options	for	Medicare	eligible participants	and	employers,	including	a	federal	subsidy	payable	to	companies	that	elect	to	provide	a	retiree	prescription	drug	benefit	which	is	at	least	actuarially equivalent	to	Medicare	Part	D.	During	the	third	quarter	of	2004,	PPG	concluded	its	evaluation	of	the	provisions	of	the	Medicare	Act	and	decided	to	maintain	its	retiree prescription	drug	program	and	to	take	the	subsidy	available	under	the	Medicare	Act.	The	impact	of	the	Medicare	Act	was	accounted	for	in	accordance	with	FASB	Staff Position	No.	106-2,	"Accounting	and	Disclosure	Requirements	Related	to	the	Medicare	Prescription	Drug,	Improvement	and	Modernization	Act	of	2003"	effective January	1,	2004.	In	addition,	the	plan	was	amended	September	1,	2004,	to	provide	that	PPG	management	will	determine	the	extent	to	which	future	increases	in	the	cost of	its	retiree	medical	and	prescription	drug	programs	will	be	shared	by	certain	retirees.	The	federal	subsidy	related	to	providing	a	retiree	prescription	drug	benefit	is	not subject	to	U.S.	federal	income	tax	and	is	recorded	as	a	reduction	in	annual	net	periodic	benefit	cost	of	other	postretirement	benefits.

In	August	2007,	the	Company's	U.S.	other	postretirement	benefit	plan	was	amended	to	consolidate	the	number	of	retiree	health	care	options	available	for	certain retirees	and	their	dependents.	The	plan	amendment	was	effective	January	1,	2008.	The	amended	plan	also	offers	a	fully-insured	Medicare	Part	D	prescription	drug	plan for	certain	retirees	and	their	dependents.	As	such,	beginning	in	2008	PPG	is	no	longer	eligible	to	receive	the	subsidy	provided	under	the	Medicare	Act	of	2003	for	these retirees	and	their	dependents.	The	impact	of	the	plan	amendment	was	to	reduce	the	accumulated	plan	benefit	obligation	by	$57	million.

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	in	the	accompanying	consolidated	balance	sheet	for	the	Company's	defined	benefit	pension	and	other	postretirement	benefit	plans:

| (Millions) | 2008 | 2007 | 2008 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
| Projected\tbenefit |  |  |  |  |
| obligation,\tJanuary\t1 | $3,744 | $3,790 | $1,072 | $1,107 |
| Service\tcost | 72 | 69 | 21 | 24 |
| Interest\tcost | 258 | 214 | 66 | 64 |
| Plan\tamendments | 4 | 2 | — | (57) |
| Actuarial\t(gains)\tlosses | (33) | (207) | 71 | 16 |
| Benefits\tpaid | (241) | (203) | (69) | (84) |
| Foreign\tcurrency\ttranslation\tadjustments | (229) | 83 | (15) | 14 |
| Curtailment\tand\tspecial\ttermination\tbenefits | 4 | (7) | (1) | (12) |
| Acquisition | 528 | — | 5 | — |
| Divestiture | (12) | — | — | — |
| Other | 1 | 3 | — | — |
| Projected\tbenefit\nobligation,\tDecember,\t31 | $4,096 | $3,744 | $1,150 | $1,072 |
| Market\tvalue\tof\tplan |  |  |  |  |
| assets,\tJanuary\t1 | $3,403 | $3,161 |  |  |
| Actual\treturn\ton\tplan\tassets | (679) | 211 |  |  |
| Company\tcontributions | 128 | 149 |  |  |
| Participant\tcontributions | 5 | 3 |  |  |
| Benefits\tpaid | (230) | (190) |  |  |
| Plan\texpenses\tand\tother-net | (10) | (2) |  |  |
| Foreign\tcurrency\ttranslation\tadjustments | (181) | 71 |  |  |
| Acquisition | 411 | — |  |  |
| Divestiture | (10) | — |  |  |
| Market\tvalue\tof\tplan\nassets,\tDecember,\t31 | $2,837 | $3,403 |  |  |
| Funded\tStatus | $(1,259) | $(341) | $(1,150) | $(1,072) |
| Amounts\trecognized\tin\tthe |  |  |  |  |
| Consolidated\tBalance\tSheet: |  |  |  |  |
| Other\tassets\t(long-term) | — | 64 | — | — |
| Accounts\tpayable\tand\taccrued\tliabilities | (14) | (14) | (78) | (75) |
| Accrued\tpensions | (1,245) | (391) | — | — |
| Other\tpostretirement\tbenefits | — | — | (1,072) | (997) |
| Net\tliability\trecognized | $(1,259) | $(341) | $(1,150) | $(1,072) |

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,	2008	and	2007	was	$3,773	million	and	$3,509	million,	respectively.

Amounts	(pretax)	not	yet	reflected	in	net	periodic	benefit	cost	and	included	in	accumulated	other	comprehensive	loss	include	the	following:

|  | 2008 | 2007 | 2008 | 2007 |
| :--- | :--- | :--- | :--- | :--- |
| Accumulated\tnet\tactuarial\tlosses | $1,860 | $1,102 | $465 | $431 |
| Accumulated\tprior\tservice\tcost\t(credit) | 9 | 21 | (67) | (96) |
| Total | $1,869 | $1,123 | $398 | $335 |

The	accumulated	net	actuarial	losses	for	pensions	relate	primarily	to	the	actual	return	on	plan	assets	being	less	than	the	expected	return	on	plan	assets	in	2000-2002 and	2008	and	a	decline	in	the	discount	rate	since	1999.	The	accumulated	net	actuarial	losses	for	other	postretirement	benefits	relate	primarily	to	actual	healthcare	costs increasing	at	a	higher	rate	than	assumed	during	the	2001-2003	period	and	the	decline	in	the	discount	rate.	Since	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,	amortization	of	such	excess	over	the	average	remaining	service	period	of	active employees	expected	to	receive	benefits	has	been	included	in	net	periodic	benefit	costs	for	pension	and	other	postretirement	benefits	in	each	of	the	last	three	years. 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	increase	(decrease)	in	accumulated	other	comprehensive	loss	(pretax)	in	2008	relating	to	defined	benefit	pension	and	other	postretirement	benefits	consists	of:

| (Millions) | Pensions | Postretirement<br>Benefits |
| :--- | :--- | :--- |
| Net\tactuarial\tloss\tarising\tduring\tthe\tyear | $933 | $71 |
| New\tprior\tservice\tcost | 4 | — |
| Amortization\tof\tactuarial\tloss | (68) | (26) |
| Amortization\tof\tprior\tservice\t(cost)\tcredit | (11) | 16 |
| Impact\tof\tcurtailment | (33) | 4 |
| Foreign\tcurrency\ttranslation\tadjustments\tand\tother | (79) | (2) |
| Net\tchange | $746 | $63 |
|  | 2008\tPPG\tANNUAL\tREPORT\tAND\tFORM\t10-K | 51 |

The	net	actuarial	loss	arising	during	2008	related	to	the	Company's	pension	plans	was	primarily	due	to	lower	than	expected	plan	asset	returns	for	its	U.S.	plans.

The	estimated	amounts	of	accumulated	net	actuarial	loss	and	prior	service	cost	for	the	defined	benefit	pension	plans	that	will	be	amortized	from	accumulated	other comprehensive	(loss)	income	into	net	periodic	benefit	cost	in	2009	are	$130	million	and	$6	million,	respectively.	The	estimated	amounts	of	accumulated	net	actuarial loss	and	prior	service	(credit)	for	the	other	postretirement	benefit	plans	that	will	be	amortized	from	accumulated	other	comprehensive	(loss)	income	into	net	periodic benefit	cost	in	2009	are	$35	million	and	$(13)	million,	respectively.

Net	periodic	benefit	cost	for	the	three	years	ended	December	31,	2008,	includes	the	following:

|  |  | Pensions |  |  | Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 |
| Service\tcost | $72 | $69 | $74 | $21 | $24 | $27 |
| Interest\tcost | 258 | 214 | 197 | 66 | 64 | 62 |
| Expected\treturn |  |  |  |  |  |  |
| on\tplan\tassets | (283) | (267) | (232) | — | — | — |
| Amortization\tof |  |  |  |  |  |  |
| prior\tservice |  |  |  |  |  |  |
| cost\t(credit) | 11 | 14 | 15 | (16) | (12) | (15) |
| Amortization\tof\tactuarial\tlosses | 69 | 77 | 105 | 26 | 33 | 38 |
| Curtailments\tand\tspecial\ttermination\tbenefits | 39 | 12 | — | (5) | 5 | — |
| Net\tperiodic |  |  |  |  |  |  |
| benefit\tcost | $166 | $119 | $159 | $92 | $114 | $112 |

Net	periodic	benefit	cost	is	included	in	"Cost	of	sales,	exclusive	of	depreciation	and	amortization,"	"Selling,	general	and	administrative"	and	"Research	and development"	in	the	accompanying	consolidated	statement	of	income.

# 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,	2008	and	2007:

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	ended	December	31,	2008:

|  | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Discount\trate | 6.2% | 5.7% | 5.5% |
| Expected\treturn\ton\tassets | 8.0% | 8.3% | 8.4% |
| Rate\tof\tcompensation\tincrease | 4.1% | 4.0% | 4.1% |

These	assumptions	are	reviewed	on	an	annual	basis.	In	determining	the	expected	return	on	plan	asset	assumption,	the	Company	evaluates	the	mix	of	investments that	comprise	plan	assets	and	external	forecasts	of	future	long-term	investment	returns.	The	expected	return	on	plan	assets	assumption	to	be	used	in	determining	2009	net periodic	pension	expense	will	be	8.5%	for	the	U.S.	plans,	which	is	the	same	rate	used	for	2008.

The	weighted-average	healthcare	cost	trend	rate	used	was	8.0%	for	2008	declining	to	5.0%	in	the	year	2014.	For	2009,	the	weighted-average	healthcare	cost	trend rate	used	will	be	7.3%	declining	to	5.0%	in	the	year	2017.	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	expectations	of	future	medical	cost	inflation	rates.	If	these	2009	health	care	cost trend	rates	were	increased	or	decreased	by	one	percentage	point	per	year,	such	increase	or	decrease	would	have	the	following	effects:

One-Percentage	Point

# Contributions

On	August	17,	2006,	the	Pension	Protection	Act	of	2006	("PPA")	was	signed	into	law,	changing	the	funding	requirements	for	the	Company's	U.S.	defined	benefit pension	plans	beginning	in	2008.	Under	the	requirements	of	PPA,	PPG	did	not	have	to	make	a	mandatory	contribution	to	these	plans	in	2008	and	does	not	expect	to	have a	mandatory	contribution	to	these	plans	in	2009	because	of	management's	intent	to	make	voluntary	contributions.

PPG	made	in	2008	and	2007	voluntary	contributions	to	its	U.S.	defined	benefit	pension	plans	of	$50	million	and	$100	million,	respectively.	PPG	also	made	in	2008 and	2007	contributions	to	its	non-U.S.	defined	benefit	pension	plans	of	$69	million	and	$49	million,	respectively,	some	of	which	were	required	by	local	funding requirements.	PPG	expects	to	make	mandatory	contributions	to	its	non-U.S.	plans	in	2009	of	approximately	$60	million.	In	January	2009,	PPG	made	a	voluntary contribution	to	its	U.S.	plans	of	$160	million	and	may	make	an	additional	voluntary	contribution	to	these	plans	in	2009	in	an	amount	up	to	$140	million.

# Benefit	Payments

The	estimated	pension	benefits	to	be	paid	under	the	Company's	defined	benefit	pension	plans	during	the	next

# Plan	Assets

The	following	summarizes	the	target	pension	plan	asset	allocation	as	of	December	31,	2008,	and	the	actual	pension	plan	asset	allocations	as	of	December	31,	2008 and	2007:

| Asset	Category | Dec.	31,	2008 | 2008 | 2007 |
| :--- | :--- | :--- | :--- |
| Equity\tsecurities | 50–75% | 46% | 60% |
| Debt\tsecurities | 25–50% | 49% | 36% |
| Real\testate | 0–10% | 5% | 4% |
| Other | 0–10% | 0% | 0% |

The	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 controlling	investment	risk.

# Other	Plans

The	Company	incurred	costs	for	multi-employer	pension	plans	of	$1	million	in	each	of	the	years	2008,	2007	and	2006.	Multi-employer	healthcare	costs	totaled $1	million	in	each	of	the	years	2008,	2007	and	2006.	PPG's	obligations	under	these	plans	were	transferred	as	part	of	the	sale	of	the	automotive	glass	and	services business	(see	Note	3,	"Divestiture	of	Automotive	Glass	and	Services	Business").

The	Company	recognized	expense	for	defined	contribution	pension	plans	in	2008,	2007	and	2006	of	$22	million,	$14	million	and	$7	million,	respectively.	As	of December	31,	2008	and	2007,	the	Company's	liability	related	to	defined	contribution	pension	plans	was	$15	million	and	$6	million,	respectively.

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.	The	changes	in	market	value	of	these	securities	are	also included	in	earnings.	Trading	will	occur	in	this	portfolio	to	align	the	securities	held	with	the	participant's	phantom	non-PPG	stock	investment	accounts	except	the	money market	accounts.

The	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	income	in	2008	of	$25	million,	and	expense	in	2007	and	2006	of	$12	million	and	$9	million,	respectively.	These	amounts	are	included in	"Selling,	general	and	administrative"	in	the	accompanying	consolidated	statement	of	income.	The	change	in	market	value	of	the	investment	portfolio	in	2008	was expense	of	$27	million,	and	in	2007	and	2006	was	income	of	$9	million	and	$8	million,	respectively,	of	which	$1	million,	$2	million	and	$4	million	was	realized	gains, respectively,	and	is	also	included	in	"Selling,	general	and	administrative."

The	Company's	obligations	under	this	plan,	which	are	included	in	"Accounts	payable	and	accrued	liabilities"	and	"Other	liabilities"	in	the	accompanying consolidated	balance	sheet,	totaled	$90	million	and	$119	million	as	of	December	31,	2008	and	2007,	respectively,	and	the	investments	in	marketable	securities,	which are	included	in	"Investments"	and	"Other	current	assets"	in	the	accompanying	consolidated	balance	sheet,	were	$51	million	and	$84	million	as	of	December	31,	2008 and	2007,	respectively.

# 15.	Commitments	and	Contingent	Liabilities

PPG	is	involved	in	a	number	of	lawsuits	and	claims,	both	actual	and	potential,	including	some	that	it	has	asserted	against	others,	in	which	substantial	monetary damages	are	sought.	These	lawsuits	and	claims,	the	most	significant	of	which	are	described	below,	relate	to	contract,	patent,	environmental,	product	liability,	antitrust 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.

# Legacy	Antitrust	Matters

The	Company	has	been	named	as	a	defendant,	along	with	various	other	co-defendants,	in	a	number	of	antitrust	lawsuits	filed	in	federal	and	state	courts.	These	suits allege	that	PPG	acted	with	competitors	to	fix	prices	and	allocate	markets	in	the	flat	glass	and	automotive	refinish	industries.	The	plaintiffs	in	these	cases	are	seeking economic	and,	in	certain	cases,	treble	damages	and	injunctive	relief.	As	described	below,	PPG	has	either	settled	or	agreed	to	settle	the	most	significant	of	these	cases.

Twenty-nine	glass	antitrust	cases	were	filed	in	federal	courts,	all	of	which	were	consolidated	as	a	class	action	in	the	U.S.	District	Court	for	the	Western	District	of Pennsylvania	located	in	Pittsburgh,	Pa.	By	2003,	all	of	the	other	defendants	in	the	glass	class	action	antitrust	case	settled	with	the	plaintiffs	and	were	dismissed	from	the case.	On	May	29,	2003,	the	Court	granted	PPG's	motion	for	summary	judgment	dismissing	the	claims	against	PPG	in	the	glass	class	action	antitrust	case.	The	plaintiffs in	that	case	appealed	that	order	to	the	U.S.	Third	Circuit	Court	of	Appeals.	On	September	30,	2004,	the	U.S.	Third	Circuit	Court	of	Appeals	affirmed	in	part	and	reversed in	part	the	dismissal	of	PPG	and	remanded	the	case	for	further	proceedings.	PPG	petitioned	the	U.S.	Supreme	Court	for	permission	to	appeal	the	decision	of	the	U.S. Third	Circuit	Court	of	Appeals,	however,	the	U.S.	Supreme	Court	rejected	PPG's	petition	for	review.

On	October	19,	2005,	PPG	entered	into	a	settlement	agreement	to	settle	the	federal	glass	class	action	antitrust	case	in	order	to	avoid	the	ongoing	expense	of	this protracted	case,	as	well	as	the	risks	and	uncertainties	associated	with	complex	litigation	involving	jury	trials.	Pursuant	to	the	settlement	agreement,	PPG	agreed	to	pay $60	million	and	to	bear	up	to	$500,000	in	settlement	administration	costs.	These	amounts	were	held	in	escrow	until	the	U.S.	District	Court	entered	an	order	on	February 7,	2006,	approving	the	settlement.	This	order	is	no	longer	appealable.	As	a	result	of	the	settlement,	PPG	also	paid	$900,000	pursuant	to	a	pre-existing	contractual obligation	to	a	plaintiff	that	did	not	participate	in	the	federal	glass	class	action	antitrust	case.	Separately,	on	November	8,	2006,	PPG	entered	into	a	class-wide	settlement agreement	to	resolve	all	claims	of	indirect	purchasers	of	flat	glass	in	California.	PPG	agreed	to	make	a	payment	of	$2.5	million,	inclusive	of	attorneys'	fees	and	costs.	In early	2009,	the	settlement	became	final	and	non-appealable.	Independent	state	court	cases	remain	pending	in	Tennessee	involving	claims	that	are	not	included	in	the settlement	of	the	federal	and	California	glass	class	action	antitrust	cases.	Notwithstanding	that	PPG	has	settled	the	federal	and	California	glass	class	action	antitrust cases,	and	is	considering	settlement	of	the	Tennessee	cases,	PPG	continues	to	believe	that	there	was	no	wrongdoing	on	the	part	of	the	Company	and	also	believes	that PPG	has	meritorious	defenses	to	the	independent	state	court	cases.

Approximately	60	cases	alleging	antitrust	violations	in	the	automotive	refinish	industry	were	filed	in	various	state	and	federal	jurisdictions.	The	approximately	55 federal	cases	were	consolidated	as	a	class	action	in	the	U.S.	District	Court	for	the	Eastern	District	of	Pennsylvania	located	in	Philadelphia,	Pa.	Certain	of	the	defendants in	the	federal	automotive	refinish	case	settled	prior	to	PPG.	Neither	PPG's	investigation	conducted	through	its	counsel	of	the	allegations	in	these	cases	nor	the	discovery conducted	in	the	case	has	identified	a	basis	for	the	plaintiffs'	allegations	that	PPG	participated	in	a	price-fixing	conspiracy	in	the	U.S.	automotive	refinish	industry. PPG's	management	continues	to	believe	that	there	was	no	wrongdoing	on	the	part	of	the	Company	and	that	it	has	meritorious	defenses	in	the	federal	automotive	refinish case.	Nonetheless,	it	remained	uncertain	whether	the	federal	court	ultimately	would	dismiss	PPG,	or	whether	the	case	would	go	to	trial.	On	September	14,	2006,	PPG agreed	to	settle	the	federal	class	action	for	$23	million	to	avoid	the	ongoing	expense	of	this	protracted	case,	as	well	as	the	risks	and	uncertainties	associated	with complex	litigation	involving	jury	trials.	PPG	recorded	a	charge	for	$23	million	in	the	third	quarter	of	2006.	This	amount	was	held	in	escrow	and,	on	December	28,	2007, the	federal	court	approved	the	class	action	settlement	agreement.	In	January	2008,	the	$23	million	was	released	from	escrow.

Class	action	lawsuits	that	mimic	the	federal	class	action	were	filed	in	five	states	(California,	Maine,	Massachusetts,	Tennessee	and	Vermont)	pursuant	to	state statutes	on	behalf	of	indirect	purchasers	of	automotive	refinish	products.	A	similar	suit	brought	in	a	federal	court	in	New	York	City	was	dismissed	on	May	8,	2007.	In the	fourth	quarter	of	2007,	the	case	in	Tennessee	was	dismissed.	PPG	believes	that	there	was	no	wrongdoing	on	its	part,	and	believes	it	has	meritorious	defenses	to	the independent	state	court	cases.	Notwithstanding	the	foregoing,	to	avoid	the	ongoing	expense	of	protracted	litigation,	as	well	as	the	risks	and	uncertainties	associated	with complex	litigation,	PPG	has	settled	the	cases	in	California,	Maine,	Massachusetts	and	Vermont.

# New	Antitrust	Matters

Several	complaints	were	filed	in	different	federal	courts	naming	PPG	and	other	flat	glass	producers	as	defendants	in	purported	antitrust	class	actions.	The complaints	allege	that	the	defendants	conspired	to	fix,	raise,	maintain	and	stabilize	the	price	and	the	terms	and	conditions	of	sale	of	flat	glass	in	the	United	States	in violation	of	federal	antitrust	laws.	In	June	2008,	these	cases	were	consolidated	into	one	federal	court	class	action	in	Pittsburgh,	Pa.	Many	allegations	in	the	complaints are	similar	to	those	raised	in	recently	concluded	proceedings	in	Europe	in	which	fines	were	levied	against	other	flat	glass	producers	arising	out	of	alleged	antitrust violations.	PPG	was	not	involved	in	any	of	the	proceedings	in	Europe.	PPG	divested	its	European	flat	glass	business	in	1998.	A	complaint	containing	allegations substantially	similar	to	the	U.S.	litigation	was	filed	in	the	Superior	Court	in	Windsor,	Ontario,	Canada	regarding	the	sale	of	flat	glass	in	Canada.	PPG	is	aware	of	no wrongdoing	or	conduct	on	its	part	that	violated	any	antitrust	laws	and	it	intends	to	vigorously	defend	its	position.

# Asbestos	Matters

For	over	30	years,	PPG	has	been	a	defendant	in	lawsuits	involving	claims	alleging	personal	injury	from	exposure	to	asbestos.	Most	of	PPG's	potential	exposure relates	to	allegations	by	plaintiffs	that	PPG	should	be	liable	for	injuries	involving	asbestos-containing	thermal	insulation	products,	known	as	Unibestos,	manufactured and	distributed	by	Pittsburgh	Corning	Corporation	("PC").	PPG	and	Corning	Incorporated	are	each	50%	shareholders	of	PC.	PPG	has	denied	responsibility	for,	and	has defended,	all	claims	for	any	injuries	caused	by	PC	products.	As	of	December	31,	2008,	PPG	was	one	of	many	defendants	in	numerous	asbestos-related	lawsuits involving	approximately	114,000	open	claims	served	on	PPG.

# Background	of	PC	Bankruptcy	Plan	of	Reorganization

On	April	16,	2000,	PC	filed	for	Chapter	11	Bankruptcy	in	the	U.S.	Bankruptcy	Court	for	the	Western	District	of	Pennsylvania	located	in	Pittsburgh,	Pa. Accordingly,	in	the	first	quarter	of	2000,	PPG	recorded	an	after-tax	charge	of	$35	million	for	the	write-off	of	all	of	its	investment	in	PC.	As	a	consequence	of	the bankruptcy	filing	and	various	motions	and	orders	in	that	proceeding,	the	asbestos	litigation	against	PPG	(as	well	as	against	PC)	has	been	stayed	and	the	filing	of additional	asbestos	suits	against	them	has	been	enjoined,	until	30	days	after	the	effective	date	of	a	confirmed	plan	of	reorganization	for	PC	substantially	in	accordance with	the	settlement	arrangement	among	PPG	and	several	other	parties	discussed	below.	The	stay	may	be	terminated	if	the	Bankruptcy	Court	determines	that	such	a	plan will	not	be	confirmed,	or	the	settlement	arrangement	set	forth	below	is	not	likely	to	be	consummated.

On	May	14,	2002,	PPG	announced	that	it	had	agreed	with	several	other	parties,	including	certain	of	its	insurance	carriers,	the	official	committee	representing asbestos	claimants	in	the	PC	bankruptcy,	and	the	legal	representatives	of	future	asbestos	claimants	appointed	in	the	PC	bankruptcy,	on	the	terms	of	a	settlement arrangement	relating	to	certain	asbestos	claims	against	PPG	and	PC	(the	"2002	PPG	Settlement	Arrangement").

On	March	28,	2003,	Corning	Incorporated	announced	that	it	had	separately	reached	its	own	arrangement	with	the	representatives	of	asbestos	claimants	for	the settlement	of	certain	asbestos	claims	against	Corning	and	PC	(the	"2003	Corning	Settlement	Arrangement").

The	terms	of	the	2002	PPG	Settlement	Arrangement	and	the	2003	Corning	Settlement	Arrangement	were	incorporated	into	a	bankruptcy	reorganization	plan	for	PC along	with	a	disclosure	statement	describing	the	plan,	which	PC	filed	with	the	Bankruptcy	Court	on	April	30,	2003.	Amendments	to	the	plan	and	disclosure	statement were	subsequently	filed.	On	November	26,	2003,	after	considering	objections	to	the	second	amended	disclosure	statement	and	plan	of	reorganization,	the	Bankruptcy Court	entered	an	order	approving	such	disclosure	statement	and	directing	that	it	be	sent	to	creditors,	including	asbestos	claimants,	for	voting.	In	March	2004,	the	second amended	PC	plan	of	reorganization	(the	"second	amended	PC	plan	of	reorganization")	received	the	required	votes	to	approve	the	plan	with	a	channeling	injunction	for present	and	future	asbestos	claimants	under	§524(g)	of	the	Bankruptcy	Code.	After	voting	results	for	the	second	amended	PC	plan	of	reorganization	were	received,	the Bankruptcy	Court	judge	conducted	a	hearing	regarding	the	fairness	of	the	settlement,	including	whether	the	plan	would	be	fair	with	respect	to	present	and	future claimants,	whether	such	claimants	would	be	treated	in	substantially	the	same	manner,	and	whether	the	protection	provided	to	PPG	and	its	participating	insurers	would	be fair	in	view	of	the	assets	they	would	convey	to	the	asbestos	settlement	trust	(the	"Trust")	to	be

established	as	part	of	the	second	amended	PC	plan	of	reorganization.	At	that	hearing,	creditors	and	other	parties	in	interest	raised	objections	to	the	second	amended	PC plan	of	reorganization.	Following	that	hearing,	the	Bankruptcy	Court	scheduled	oral	arguments	for	the	contested	items.

The	Bankruptcy	Court	heard	oral	arguments	on	the	contested	items	on	November	17-18,	2004.	At	the	conclusion	of	the	hearing,	the	Bankruptcy	Court	agreed	to consider	certain	post-hearing	written	submissions.	In	a	further	development,	on	February	2,	2005,	the	Bankruptcy	Court	established	a	briefing	schedule	to	address whether	certain	aspects	of	a	decision	of	the	U.S.	Third	Circuit	Court	of	Appeals	in	an	unrelated	case	have	any	applicability	to	the	PC	plan	of	reorganization.	Oral arguments	on	these	matters	were	subsequently	held	in	March	2005.	During	an	omnibus	hearing	on	February	28,	2006,	the	Bankruptcy	Court	judge	stated	that	she	was prepared	to	rule	on	the	PC	plan	of	reorganization	in	the	near	future,	provided	certain	amendments	were	made	to	the	plan.	Those	amendments	were	filed,	as	directed,	on March	17,	2006.	After	further	conferences	and	supplemental	briefings,	in	December	2006,	the	court	denied	confirmation	of	the	second	amended	PC	plan	of reorganization,	on	the	basis	that	the	plan	was	too	broad	in	the	treatment	of	allegedly	independent	asbestos	claims	not	associated	with	PC.

# Terms	of	2002	PPG	Settlement	Arrangement

PPG	had	no	obligation	to	pay	any	amounts	under	the	2002	PPG	Settlement	Arrangement	until	30	days	after	the	second	amended	PC	plan	of	reorganization	was finally	approved	by	an	appropriate	court	order	that	was	no	longer	subject	to	appellate	review	(the	"Effective	Date").	If	the	second	amended	PC	plan	of	reorganization had	been	approved	as	proposed,	PPG	and	certain	of	its	insurers	(along	with	PC)	would	have	made	payments	on	the	Effective	Date	to	the	Trust,	which	would	have provided	the	sole	source	of	payment	for	all	present	and	future	asbestos	bodily	injury	claims	against	PPG,	its	subsidiaries	or	PC	alleged	to	be	caused	by	the	manufacture, distribution	or	sale	of	asbestos	products	by	these	companies.	PPG	would	have	conveyed	the	following	assets	to	the	Trust:	(i)	the	stock	it	owns	in	PC	and	Pittsburgh Corning	Europe,	(ii)	1,388,889	shares	of	PPG's	common	stock	and	(iii)	aggregate	cash	payments	to	the	Trust	of	approximately	$998	million,	payable	according	to	a fixed	payment	schedule	over	21	years,	beginning	on	June	30,	2003,	or,	if	later,	the	Effective	Date.	PPG	would	have	had	the	right,	in	its	sole	discretion,	to	prepay	these cash	payments	to	the	Trust	at	any	time	at	a	discount	rate	of	5.5%	per	annum	as	of	the	prepayment	date.	In	addition	to	the	conveyance	of	these	assets,	PPG	would	have paid	$30	million	in	legal	fees	and	expenses	on	behalf	of	the	Trust	to	recover	proceeds	from	certain	historical	insurance	assets,	including	policies	issued	by	certain insurance	carriers	that	were	not	participating	in	the	settlement,	the	rights	to	which	would	be	assigned	to	the	Trust	by	PPG.

Under	the	proposed	2002	PPG	Settlement	Arrangement,	PPG's	participating	historical	insurance	carriers	would	have	made	cash	payments	to	the	Trust	of approximately	$1.7	billion	between	the	Effective	Date	and	2023.	These	payments	could	also	have	been	prepaid	to	the	Trust	at	any	time	at	a	discount	rate	of	5.5%	per annum	as	of	the	prepayment	date.	In	addition,	as	referenced	above,	PPG	would	have	assigned	to	the	Trust	its	rights,	insofar	as	they	related	to	the	asbestos	claims	to	have been	resolved	by	the	Trust,	to	the	proceeds	of	policies	issued	by	certain	insurance	carriers	that	were	not	participating	in	the	2002	PPG	Settlement	Arrangement	and	from the	estates	of	insolvent	insurers	and	state	insurance	guaranty	funds.

Under	the	proposed	2002	PPG	Settlement	Arrangement,	PPG	would	have	granted	asbestos	releases	to	all	participating	insurers,	subject	to	a	coverage-in-place agreement	with	certain	insurers	for	the	continuing	coverage	of	premises	claims	(discussed	below).	PPG	would	have	granted	certain	participating	insurers	full	policy releases	on	primary	policies	and	full	product	liability	releases	on	excess	coverage	policies.	PPG	would	have	also	granted	certain	other	participating	excess	insurers	credit against	their	product	liability	coverage	limits.

If	the	second	amended	PC	plan	of	reorganization	incorporating	the	terms	of	the	2002	PPG	Settlement	Arrangement	and	the	2003	Corning	Settlement	Arrangement had	been	approved	by	the	Bankruptcy	Court,	the	Court	would	have	entered	a	channeling	injunction	under	§524(g)	and	other	provisions	of	the	Bankruptcy	Code, prohibiting	present	and	future	claimants	from	asserting	bodily	injury	claims	after	the	Effective	Date	against	PPG	or	its	subsidiaries	or	PC	relating	to	the	manufacture, distribution	or	sale	of	asbestos-containing	products	by	PC	or	PPG	or	its	subsidiaries.	The	injunction	would	have	also	prohibited	codefendants	in	those	cases	from asserting	claims	against	PPG	for	contribution,	indemnification	or	other	recovery.	All	such	claims	would	have	been	filed	with	the	Trust	and	only	paid	from	the	assets	of the	Trust.

# Modified	Third	Amended	PC	Plan	of	Reorganization

To	address	the	issues	raised	by	the	Bankruptcy	Court	in	its	December	2006	ruling,	the	interested	parties	engaged	in	extensive	negotiations	regarding	the	terms	of	a third	amended	PC	plan	of	reorganization,	including	modifications	to	the	2002	PPG	Settlement	Arrangement.	A	modified	third	amended	PC	plan	of	reorganization	(the "third	amended	PC	plan	of	reorganization"),	including	a	modified	PPG	settlement	arrangement	(the	"2009	PPG

Settlement	Arrangement"),	was	filed	with	the	Bankruptcy	Court	on	January	29,	2009.	The	parties	also	filed	a	disclosure	statement	describing	the	third	amended	PC	plan of	reorganization	with	the	court.	The	third	amended	PC	plan	of	reorganization	also	includes	a	modified	settlement	arrangement	of	Corning	Incorporated.

Creditors	and	other	interested	parties	may	file	objections	to	the	third	amended	PC	plan	of	reorganization	and	the	disclosure	statement.	Once	such	objections,	if	any, are	resolved,	the	Bankruptcy	Court	would	direct	the	third	amended	PC	plan	of	reorganization	and	disclosure	statement	to	be	sent	to	creditors,	including	asbestos claimants,	for	voting.	In	2004,	creditors	and	claimants	voted	overwhelmingly	in	favor	of	the	second	amended	PC	plan	of	reorganization,	which	included	the	2002	PPG Settlement	Arrangement.	Assuming	a	favorable	vote	by	creditors	and	claimants	on	the	third	amended	PC	plan	of	reorganization,	the	Bankruptcy	Court	would	then conduct	a	hearing	regarding	the	fairness	of	the	proposed	plan,	including	whether	(i)	the	plan	would	be	fair	with	respect	to	present	and	future	claimants,	(ii)	such claimants	would	be	treated	in	substantially	the	same	manner,	and	(iii)	the	protection	provided	to	PPG	and	its	participating	insurers	would	be	fair	in	view	of	the	assets they	would	convey	to	the	trust	(the	"Trust")	to	be	established	as	part	of	the	third	amended	PC	plan	of	reorganization.	At	that	hearing,	creditors	and	parties	in	interest could	raise	objections	to	the	third	amended	PC	plan	of	reorganization.	Following	that	hearing,	the	Bankruptcy	Court,	after	considering	objections	to	the	third	amended PC	plan	of	reorganization,	will	enter	a	confirmation	order	if	all	requirements	to	confirm	a	plan	of	reorganization	under	the	Bankruptcy	Code	have	been	satisfied.	Such	an order	could	be	appealed	to	the	U.S.	District	Court	for	the	Western	District	of	Pennsylvania.	Assuming	that	the	District	Court	approves	a	confirmation	order,	interested parties	could	appeal	the	order	to	the	U.S.	Third	Circuit	Court	of	Appeals	and	subsequently	could	seek	review	by	the	U.S.	Supreme	Court.

The	2009	PPG	Settlement	Arrangement	will	not	become	effective	until	the	third	amended	PC	plan	of	reorganization	is	finally	approved	by	an	appropriate	court order	that	is	no	longer	subject	to	appellate	review,	and	PPG's	initial	contributions	will	not	be	due	until	30	business	days	thereafter	(the	"Funding	Effective	Date").

# Asbestos	Claims	Subject	to	Bankruptcy	Court's	Channeling	Injunction

If	the	third	amended	PC	plan	of	reorganization	is	approved	by	the	Bankruptcy	Court	and	becomes	effective,	a	channeling	injunction	will	be	entered	under	§524(g) of	the	Bankruptcy	Code	prohibiting	present	and	future	claimants	from	asserting	asbestos	claims	against	PC.	With	regard	to	PPG,	the	channeling	injunction	will	prohibit present	and	future	claimants	from	asserting	claims	against	PPG	that	arise,	in	whole	or	in	part,	out	of	exposure	to	Unibestos,	or	any	other	asbestos	or	asbestos-containing products	actually	or	allegedly	manufactured,	sold	and/or	distributed	by	PC,	or	asbestos	on	or	emanating	from	any	PC	premises.	The	injunction	will	also	prohibit codefendants	in	these	cases	that	are	subject	to	the	channeling	injunction	from	asserting	claims	against	PPG	for	contribution,	indemnification	or	other	recovery.	The channeling	injunction	will	also	preclude	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"	and	constitute,	in	PPG	management's	opinion,	the	vast	majority	of	the	pending	asbestos	personal	injury	claims	against	PPG.	All	claims channeled	to	the	Trust	will	be	paid	only	from	the	assets	of	the	Trust.

# Asbestos	Claims	Retained	by	PPG

The	channeling	injunction	provided	for	under	the	third	amended	PC	plan	of	reorganization	will	not	extend	to	any	claim	against	PPG	that	arises	out	of	exposure	to any	asbestos	or	asbestos-containing	products	actually	or	allegedly	manufactured,	sold	and/or	distributed	by	PPG	or	its	subsidiaries	that	is	not	a	PC	Relationship	Claim, and	in	this	respect	differs	from	the	channeling	injunction	contemplated	by	the	second	amended	PC	plan	of	reorganization	filed	in	2003.	While	management	believes	that the	vast	majority	of	the	approximately	114,000	open	claims	against	PPG	alleging	personal	injury	from	exposure	to	asbestos	relate	to	products	manufactured,	distributed or	sold	by	PC,	the	potential	liability	for	any	non-PC	Relationship	Claims	will	be	retained	by	PPG.	Because	a	determination	of	whether	an	asbestos	claim	is	a	non-PC Relationship	Claim	would	typically	not	be	known	until	shortly	before	trial	and	because	the	filing	and	prosecution	of	asbestos	claims	(other	than	certain	premises	claims) against	PPG	has	been	enjoined	since	April	2000,	the	actual	number	of	non-PC	Relationship	Claims	that	may	be	pending	at	the	expiration	of	the	stay	or	the	number	of additional	claims	that	may	be	filed	against	PPG	in	the	future	cannot	be	determined	at	this	time.	PPG	does	not	expect	the	Court	to	lift	the	stay	until	after	confirmation	or rejection	of	the	third	amended	PC	plan	of	reorganization.	PPG	intends	to	defend	against	all	such	claims	vigorously

and	their	ultimate	resolution	in	the	court	system	is	expected	to	occur	over	a	period	of	years.

In	addition,	similar	to	what	was	contemplated	by	the	second	amended	PC	plan	of	reorganization,	the	channeling	injunction	will	not	extend	to	claims	against	PPG alleging	personal	injury	caused	by	asbestos	on	premises	owned,	leased	or	occupied	by	PPG	(so	called	"premises	claims"),	which	generally	have	been	subject	to	the	stay imposed	by	the	Bankruptcy	Court.	Historically,	a	small	proportion	of	the	claims	against	PPG	and	its	subsidiaries	have	been	premises	claims,	and	based	upon	recent review	and	analysis,	PPG	believes	that	the	number	of	premises	claims	currently	comprises	less	than	2%	of	the	total	asbestos-related	claims	against	PPG.	Beginning	in late	2006,	the	Bankruptcy	Court	lifted	the	stay	with	respect	to	certain	premises	claims	against	PPG.	As	a	result,	PPG	and	its	primary	insurers	have	settled	approximately 500	premises	claims.	PPG's	insurers	agreed	to	provide	insurance	coverage	for	a	major	portion	of	the	payments	made	in	connection	with	the	settled	claims,	and	PPG accrued	the	portion	of	the	settlement	amounts	not	covered	by	insurance.	PPG	and	its	primary	insurers	are	evaluating	the	voluminous	factual,	medical,	and	other	relevant information	pertaining	to	approximately	600	additional	claims	that	are	being	considered	for	potential	settlement.	Premises	claims	remain	subject	to	the	stay,	as	outlined above,	although	certain	claimants	have	requested	the	Court	to	lift	the	stay	with	respect	to	these	claims	and	the	stay	has	been	lifted	as	to	some	claims.	PPG	believes	that any	financial	exposure	resulting	from	such	premises	claims,	taking	into	account	available	insurance	coverage,	will	not	have	a	material	adverse	effect	on	PPG's consolidated	financial	position,	liquidity	or	results	of	operations.

# PPG's	Funding	Obligations

PPG	has	no	obligation	to	pay	any	amounts	under	the	third	amended	PC	plan	of	reorganization	until	the	Funding	Effective	Date.	If	the	third	amended	PC	plan	of reorganization	is	approved,	PPG	and	certain	of	its	insurers	will	make	the	following	contributions	to	the	Trust.	On	the	Funding	Effective	Date,	PPG	will	relinquish	any claim	to	its	equity	interest	in	PC,	convey	the	stock	it	owns	in	Pittsburgh	Corning	Europe	and	transfer	1,388,889	shares	of	PPG's	common	stock	or	cash	equal	to	the	fair value	of	such	shares	as	defined	in	the	2009	PPG	Settlement	Arrangement.	PPG	will	make	aggregate	cash	payments	to	the	Trust	of	approximately	$825	million,	payable according	to	a	fixed	payment	schedule	over	the	period	to	2023,	beginning	on	the	Funding	Effective	Date.	PPG	would	have	the	right,	in	its	sole	discretion,	to	prepay	these cash	payments	to	the	Trust	at	any	time	at	a	discount	rate	of	5.5%	per	annum	as	of	the	prepayment	date.	PPG's	participating	historical	insurance	carriers	will	also	make cash	payments	to	the	Trust	of	approximately	$1.6	billion	between	the	Funding	Effective	Date	and	2027.	These	payments	could	also	be	prepaid	to	the	Trust	at	any	time	at a	discount	rate	of	5.5%	per	annum	as	of	the	prepayment	date.	PPG	will	grant	asbestos	releases	and	indemnifications	to	all	participating	insurers,	subject	to	amended coverage-in-place	arrangements	with	certain	insurers	for	remaining	coverage	of	premises	claims.	PPG	will	grant	certain	participating	insurers	full	policy	releases	on primary	policies	and	full	product	liability	releases	on	excess	coverage	policies.	PPG	will	also	grant	certain	other	participating	excess	insurers	credit	against	their	product liability	coverage	limits.	PPG	will	retain	insurance	rights	against	non-participating	insurance	policies	and	insolvent	insurance	policies	that	would	have	been	assigned	to the	Trust	under	the	second	amended	PC	plan	of	reorganization	and	will	retain	any	net	proceeds	of	the	claims	against	such	non-participating	insurers.	However,	PPG	will contribute	to	the	Trust	any	net	proceeds	it	recovers	from	claims	against	certain	other	non-participating	insurers,	and	will	use	reasonable	efforts	to	pursue	such	claims.

PPG's	obligation	at	December	31,	2008	under	the	2009	PPG	Settlement	Arrangement	is	$735	million,	which	is	$162	million	less	than	the	$897	million	accrued	as of	that	date	under	the	2002	PPG	Settlement	Arrangement.	This	reduction	is	attributable	to	a	number	of	negotiated	provisions	in	the	2009	PPG	Settlement	Arrangement, including	the	provisions	relating	to	the	channeling	injunction	under	which	PPG	retains	liability	for	any	non-PC	Relationship	Claims.	PPG	will	retain	such	amount	as	a reserve	for	asbestos-related	claims	that	will	not	be	channeled	to	the	Trust,	as	this	amount	represents	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	stay	has been	in	effect	since	2000.

Following	the	effective	date	of	the	third	amended	PC	plan	of	reorganization	and	the	lifting	of	the	Bankruptcy	Court	stay,	PPG	will	monitor	the	activity	associated with	asbestos	claims	which	are	not	channeled	to	the	Trust	pursuant	to	the	third	amended	PC	plan	of	reorganization,	and	evaluate	its	estimated	liability	for	such	claims and	related	insurance	assets	then	available	to	the	Company	as	well	as	underlying	assumptions	on	a	periodic	basis	to	determine	whether	any	adjustment	to	its	reserve	for these	claims	is	required.

Of	the	total	obligation	of	$735	million	under	the	2009	PPG	Settlement	Arrangement	at	December	31,	2008,	$491	million	is	reported	as	a	current	liability	and	the present	value	of	the	payments	due	in	the	years	2010	to	2023	totaling	$244	million	is	reported	as	a	non-current	liability	in	the	accompanying	consolidated	balance	sheet as	of	December	31,	2008.	The	future	accretion	of	the	non-current	portion	of	the	liability	will	total	$164	million	and

be	reported	as	expense	in	the	consolidated	statement	of	income	over	the	period	through	2023,	as	follows	(in	millions):

The	following	table	summarizes	the	impact	on	PPG's	financial	statements	for	the	three	years	ended	December	31,	2008	resulting	from	the	2002	and	2009	PPG Settlement	Arrangements	including	the	change	in	fair	value	of	the	stock	to	be	transferred	to	the	Trust	and	the	equity	forward	instrument	(see	Note	11,	"Derivative Financial	Instruments	and	Hedge	Activities")	and	the	increase	in	the	net	present	value	of	the	future	payments	to	be	made	to	the	Trust.

|  | Asbestos	Settlement	Liability | Asbestos	Settlement	Liability | Equity |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  | Forward |  |
|  |  |  | (Asset) | Pretax |
| (Millions) | Current | Long-term | Liability | Charge |
| Balance\tas\tof\tJanuary\t1,\t2006 | $472 | $385 | $(10) | $22 |
| Change\tin\tfair\tvalue:\nPPG\tstock | 9 | — | — | 9 |
| Equity\tforward\tinstrument | — | — | (4) | (4) |
| Accretion\tof\nasbestos\tliability | — | 23 | — | 23 |
| Reclassification | 76 | (76) | — | — |
| Balance\tas\tof\tand\tActivity\tfor\tthe\tyear\tended\tDecember\t31,\t2006 | $557 | $332 | $(14) | $28 |
| Change\tin\tfair\tvalue:\nPPG\tstock | 8 | — | — | 8 |
| Equity\tforward\tinstrument | — | — | (4) | (4) |
| Accretion\tof\nasbestos\tliability | — | 20 | — | 20 |
| Reclassification | 28 | (28) | — | — |
| Balance\tas\tof\tand\tActivity\tfor\tthe\tyear\tended\tDecember\t31,\t2007 | $593 | $324 | $(18) | $24 |
| Change\tin\tfair\tvalue:\nPPG\tstock | (39) | — | — | (39) |
| Equity\tforward\tinstrument | — | — | 24 | 24 |
| Accretion\tof\nasbestos\tliability | — | 19 | — | 19 |
| Reclassification | 38 | (38) | — | — |
| Impact\tof\t2009\tPPG\tSettlement\tArrangement^(1) | (101) | (61) | — | — |
| Balance\tas\tof\tand\tActivity\tfor\tthe\tyear\tended\tDecember\t31,\t2008 | $491 | $244 | $6 | $4 |

(1) Amounts	have	been	reclassified	to	Other	liabilities	and	retained	as	a	reserve	for	asbestos-related	claims	that	will	not	be	channeled	to	the	Trust.

Payments	under	the	fixed	payment	schedule	require	annual	payments	that	are	due	each	June.	The	current	portion	of	the	asbestos	settlement	liability	included	in	the accompanying	consolidated	balance	sheet	as	of	December	31,	2008,	consists	of	all	such	payments	required	through	June	2009,	the	fair	value	of	PPG's	common	stock and	the	value	of	PPG's	investment	in	Pittsburgh	Corning	Europe.	The	amount	due	June	30,	2010,	of	$20	million	and	the	net	present	value	of	the	remaining	payments	is included	in	the	long-term	asbestos	settlement	liability	in	the	accompanying	consolidated	balance	sheet.

# Enjoined	Claims

If	the	2009	PPG	Settlement	Arrangement	is	not	implemented,	for	any	reason,	and	the	Bankruptcy	Court	stay	expires,	PPG	intends	to	defend	vigorously	the	pending and	any	future	asbestos	claims,	including	PC	Relationship	Claims,	asserted	against	it	and	its	subsidiaries.	PPG	continues	to	assert	that	it	is	not	responsible	for	any injuries	caused	by	PC	products,	which	it	believes	account	for	the	vast	majority	of	the	pending	open	claims	against	PPG.	Prior	to	2000,	PPG	had	never	been	found	liable for	any	PC-related	claims.	In	numerous	cases	PPG	had	been	dismissed	on	motions	prior	to	trial,	and	in	others	PPG	was	released	as	part	of	settlements	by	PC.	PPG	was found	not	responsible	for	PC-related	claims	at	trial	in	two	cases.	In	January	2000,	one	jury	found	PPG,	for	the	first	time,	partly	responsible	for	injuries	to	five	plaintiffs alleged	to	be	caused	by	PC	products.	PPG	intends	to	appeal	that	adverse	verdict	in	the	event	the	2009	PPG	Settlement	Arrangement	does	not	become	effective,	or	the stay	is	lifted	as	to	these	claims,	which	are	the	subject	of	a	motion	to	lift	the	stay.	Although	PPG	has	successfully	defended	asbestos	claims	brought	against	it	in	the	past, in	view	of	the	number	of	claims,	and	the	significant	verdicts	that	other	companies	have	experienced	in	asbestos	litigation,	the	result	of	any	future	litigation	of	such	claims is	inherently	unpredictable.

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,	2008	and	2007,	PPG	had	reserves	for	environmental	contingencies	totaling	$299	million

and	$276	million,	respectively,	of	which	$44	million	and	$57	million,	respectively,	were	classified	as	current	liabilities.	The	reserve	at	December	31,	2008	included $193	million	for	environmental	contingencies	associated	with	PPG's	former	chromium	manufacturing	plant	in	Jersey	City,	N.J.,	$48	million	for	environmental contingencies	associated	with	the	Calcasieu	River	estuary	and	three	operating	plant	sites	in	PPG's	chemicals	business,	$31	million	for	pre-acquisition	environmental contingencies	related	to	SigmaKalon	operations,	and	$27	million	for	other	environmental	contingencies,	including	PPG's	estimated	obligations	related	to	sites	on	the National	Priority	List.	The	reserve	at	December	31,	2007	included	$195	million	for	environmental	contingencies	associated	with	the	former	chromium	manufacturing plant	in	New	Jersey,	$53	million	for	environmental	contingencies	associated	with	the	Calcasieu	River	estuary	and	three	operating	plant	sites	in	PPG's	chemical	business, and	$28	million	for	other	environmental	contingencies,	including	National	Priority	List	sites.	Pretax	charges	against	income	for	environmental	remediation	costs	in	2008, 2007	and	2006	totaled	$15	million,	$12	million	and	$207	million,	respectively,	and	are	included	in	"Other	charges"	in	the	accompanying	consolidated	statement	of income.	Cash	outlays	related	to	such	environmental	remediation	aggregated	$24	million,	$19	million	and	$22	million	in	2008,	2007,	and	2006,	respectively.	As	part	of the	allocation	of	the	SigmaKalon	purchase	price	to	the	assets	acquired	and	liabilities	assumed,	the	reserve	for	environmental	contingencies	was	increased	by	$37	million in	2008.	The	impact	of	foreign	currency	translation	decreased	the	liability	by	$5	million	in	2008.

Charges	for	estimated	environmental	remediation	costs	in	2006	were	significantly	higher	than	PPG's	historical	range.	The	Company's	continuing	efforts	to	analyze and	assess	the	environmental	issues	associated	with	a	former	chromium	manufacturing	plant	site	located	in	Jersey	City,	N.J.,	and	at	the	Calcasieu	River	Estuary	located near	the	Lake	Charles,	La.,	chlor-alkali	plant	resulted	in	a	pre-tax	charge	of	$173	million	in	the	third	quarter	of	2006	for	the	estimated	costs	of	remediating	these	sites. Excluding	2006,	pretax	charges	against	income	have	ranged	between	$10	million	and	$49	million	per	year	for	the	past	15	years.	PPG	anticipates	that	charges	against income	in	2009	for	environmental	remediation	costs	will	be	within	this	historical	range.

Management	expects	cash	outlays	for	environmental	remediation	costs	to	be	approximately	$50	million	in	2009	and	to	range	from	$45	million	to	$75	million annually	through	2013.	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	charges	against	income	and	future	cash	outlays.	Specifically,	the	level	of	expected	cash	outlays	is	highly	dependent	upon	activity related	to	the	former	chromium	manufacturing	plant	site	in	New	Jersey,	as	PPG	awaits	approval	of	workplans	that	have	been	submitted	to	the	applicable	regulatory agencies.

In	New	Jersey,	PPG	continues	to	perform	its	obligations	under	an	Administrative	Consent	Order	("ACO")	with	the	New	Jersey	Department	of	Environmental Protection	("NJDEP").	Since	1990,	PPG	has	remediated	47	of	61	residential	and	nonresidential	sites	under	the	ACO.	The	most	significant	of	the	14	remaining	sites	is	the former	chromium	manufacturing	location	in	Jersey	City.	The	principal	contaminant	of	concern	is	hexavalent	chromium.	Based	on	current	estimates,	at	least	500,000	tons of	soil	may	be	potentially	impacted	for	all	remaining	sites.	The	Company	submitted	a	feasibility	study	work	plan	to	the	NJDEP	in	October	2006	that	includes	a	review of	the	available	remediation	technology	alternatives	for	the	former	chromium	manufacturing	location.	Under	the	feasibility	study	work	plan,	remedial	alternatives	which will	be	assessed	include,	but	are	not	limited	to,	soil	excavation	and	offsite	disposal	in	a	licensed	disposal	facility,	in	situ	chemical	stabilization	of	soil	and	groundwater, and	in	situ	solidification	of	soils.	PPG	has	submitted	a	Remedial	Action	Work	Plan	for	one	other	of	the	remaining	sites	under	the	ACO.	This	proposal	has	been submitted	to	the	NJDEP	for	approval.	In	addition,	investigation	activities	are	ongoing	for	an	additional	six	sites	covered	by	the	ACO	adjacent	to	the	former manufacturing	site	with	completion	expected	in	2009.	Investigation	activities	have	not	yet	begun	for	the	remaining	six	sites	covered	by	the	ACO,	but	PPG	believes	the results	of	the	study	at	the	former	chromium	manufacturing	location	will	also	provide	the	Company	with	relevant	information	concerning	remediation	alternatives	at these	sites.

As	a	result	of	the	extensive	analysis	undertaken	in	connection	with	the	preparation	and	submission	of	the	feasibility	study	work	plan	for	the	former	chromium manufacturing	location	described	above,	the	Company	recorded	a	pretax	charge	of	$165	million	in	the	third	quarter	of	2006.	The	charge	included	estimated	costs	for remediation	at	the	14	remaining	ACO	sites,	including	the	former	manufacturing	site,	and	for	the	resolution	of	litigation	filed	by	NJDEP	in	May	2005	as	discussed	below. The	principal	estimated	cost	elements	of	the	third	quarter	2006	charge	and	of	the	remaining	reserve	at	December	31,	2008	were	based	on	competitively	derived	or readily	available	remediation	industry	cost	data	for	representative	remedial	options,	e.g.,	excavation	and	in	situ	stabilization/solidification.	The	major	cost	components are	(i)	in	place	soil	treatment	and	transportation	and	disposal	of	excavated	soil	and	(ii)	construction	services	(related	to	soil	excavation,	groundwater	management	and site	security),	which	account	for	approximately	50%	and	30%

of	the	reserve,	respectively,	as	of	December	31,	2008.	The	reserve	also	includes	estimated	costs	for	remedial	investigation,	interim	remedial	measures,	engineering	and project	management.	The	most	significant	assumptions	underlying	the	reserve	are	those	related	to	the	extent	and	concentration	of	chromium	impacts	in	the	soil,	as	these will	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.	The	charges	are	exclusive	of	any	third	party	indemnification,	as	management	believes	the	likelihood	of	receiving	any	such	amounts	to	be	remote.

Multiple	future	events,	including	completion	of	feasibility	studies,	remedy	selection,	remedy	design	and	remedy	implementation	involving	governmental	agency action	or	approvals	will	be	required,	and	considerable	uncertainty	exists	regarding	the	timing	of	these	future	events	for	the	remaining	14	sites	covered	by	the	ACO.	Final resolution	of	these	events	is	expected	to	occur	over	an	extended	period	of	time.	However,	based	on	current	information,	it	is	expected	that	feasibility	study	approval	and remedy	selection	could	occur	during	2010	for	the	former	chromium	plant	and	six	adjacent	sites,	while	remedy	design	and	approval	could	occur	during	2010	to	2011,	and remedy	implementation	could	occur	during	2011	to	2015,	with	some	period	of	long-term	monitoring	for	remedy	effectiveness	to	follow	related	to	these	seven	sites.	One other	site	is	expected	to	be	remediated	during	2009	to	2010.	Activities	at	the	six	other	sites	have	not	yet	begun	and	the	timing	of	future	events	related	to	these	sites cannot	be	predicted	at	this	time.	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	will	be	adjusted.	Based	on	current	information,	PPG	expects	cash	outlays	related	to	remediation	efforts	in	New	Jersey	to	range	from $16	million	to	$26	million	in	2009	and	$30	million	to	$50	million	annually	from	2010	through	2013.

In	May	2005,	the	NJDEP	filed	a	complaint	against	PPG	and	two	other	former	chromium	producers	seeking	to	hold	the	parties	responsible	for	a	further	53	sites where	the	source	of	chromium	contamination	is	not	known	and	to	recover	costs	incurred	by	the	agency	in	connection	with	its	response	activities	at	certain	of	those	sites. During	the	third	quarter	of	2008,	the	parties	reached	an	agreement	in	principle	on	all	claims	relating	to	these	53	sites.	Under	the	terms	of	the	proposed	settlement,	PPG would,	among	other	things,	accept	responsibility	for	remediation	of	6	of	the	53	sites,	reimburse	the	NJDEP	for	a	portion	of	past	costs	in	the	amount	of	$5	million	and	be responsible	for	the	NJDEP's	oversight	costs	associated	with	the	sites	for	which	PPG	is	wholly	or	partially	responsible.	This	settlement	would	not	affect	PPG's responsibilities	for	the	14	remaining	unremediated	sites	covered	by	PPG's	ACO.	However,	a	tentative	agreement	has	been	reached	with	the	NJDEP	and	the	City	of Jersey	City	regarding	a	new	process	for	the	review	of	the	technical	reports	PPG	must	submit	for	the	investigation	and	remedy	selection	for	the	14	ACO	sites.	This tentative	agreement	would	also	resolve	reparation	claims	by	the	City	of	Jersey	City	with	the	payment	of	$1.25	million	over	a	4-5	year	time	period.	This	tentative agreement	does	not	otherwise	affect	PPG's	responsibility	for	the	remediation	of	the	14	ACO	sites.	PPG's	estimated	costs	under	the	proposed	settlement	relating	to	the	53 sites	and	the	tentative	agreement	relating	to	the	14	ACO	sites	are	included	in	the	December	31,	2008	previously	established	reserve	for	New	Jersey	chrome environmental	remediation	matters.

In	Lake	Charles,	the	U.S.	Environmental	Protection	Agency	("USEPA")	completed	investigation	of	contamination	levels	in	the	Calcasieu	River	Estuary	and	issued a	Final	Remedial	Investigation	Report	in	September	2003,	which	incorporates	the	Human	Health	and	Ecological	Risk	Assessments,	indicating	that	elevated	levels	of risk	exist	in	the	estuary.	PPG	and	other	potentially	responsible	parties	are	performing	a	feasibility	study	under	the	authority	of	the	Louisiana	Department	of Environmental	Quality	("LDEQ").	PPG's	exposure	with	respect	to	the	Calcasieu	Estuary	is	focused	on	the	lower	few	miles	of	Bayou	d'Inde,	a	small	tributary	to	the Calcasieu	Estuary	near	PPG's	Lake	Charles	facility,	and	about	150	to	200	acres	of	adjacent	marshes.	The	Company	and	three	other	potentially	responsible	parties submitted	a	draft	remediation	feasibility	study	report	to	the	LDEQ	in	October	2006.	The	proposed	remedial	alternatives	include	sediment	dredging,	sediment	capping, and	biomonitoring	of	fish	and	shellfish.	Principal	contaminants	of	concern	which	may	require	remediation	include	various	metals,	dioxins	and	furans,	and polychlorinated	biphenyls.	In	response	to	agency	comments	on	the	draft	study,	the	companies	conducted	additional	investigations	and	submitted	a	revised	feasibility report	to	the	agencies	in	the	third	quarter	of	2008.	Government	officials	are	awaiting	the	completion	of	a	Corps	of	Engineers'	study,	which	is	expected	in	the	first	half	of 2009,	before	deciding	whether	to	approve	the	feasibility	study	in	its	current	form.

Multiple	future	events,	such	as	feasibility	study	approval,	remedy	selection,	remedy	design	and	remedy	implementation	involving	agency	action	or	approvals	will be	required	and	considerable	uncertainty	exists	regarding	the	timing	of	these	future	events.	Final	resolution	of	these	events	is	expected	to	occur	over	an	extended	period of	time.	However,	based	on	currently	available	information	it	is	expected	that	feasibility	study	approval	and	remedy	selection	could	occur	in	2009,	remedy	design	and approval	could	occur	during	2010,	and	remedy	implementation	could	occur	during	2010	to	2013,	with	some	period	of

long-term	monitoring	for	remedy	effectiveness	to	follow.	In	addition	PPG's	obligation	related	to	any	potential	remediation	will	be	dependent	in	part	upon	the	final allocation	of	responsibility	among	the	potentially	responsible	parties.	Negotiations	with	respect	to	this	allocation	are	ongoing,	but	the	outcome	is	uncertain.

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	$200	million	to	$300	million,	which	range	is	unchanged	since	December	31,	2007.	Such	unreserved	losses	are	reasonably	possible	but	are not	currently	considered	to	be	probable	of	occurrence.	This	range	of	reasonably	possible	unreserved	loss	relates	to	environmental	matters	at	a	number	of	sites;	however, about	40%	of	this	range	relates	to	additional	costs	at	the	former	chromium	manufacturing	plant	site	and	related	sites	in	Jersey	City,	N.J.,	and	about	30%	relates	to	three operating	PPG	plant	sites	in	the	Company's	chemicals	businesses.	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	status	of	the	remediation	activity	at	the	sites	in	New	Jersey	and	at	the	Calcasieu	River	Estuary	in	Louisiana	and	the	factors	that	could	result	in	the	need	for additional	environmental	remediation	reserves	at	those	sites	are	described	above.	Initial	remedial	actions	are	occurring	at	the	three	operating	plant	sites	in	the	chemicals businesses.	These	three	operating	plant	sites	are	in	Barberton,	Ohio,	Lake	Charles,	La.,	and	Natrium,	W.Va.	At	Barberton,	PPG	has	completed	a	Facility	Investigation and	Corrective	Measure	Study	("CMS")	under	USEPA's	Resource	Conservation	and	Recycling	Act	("RCRA")	Corrective	Action	Program.	Currently,	PPG	is implementing	the	remediation	alternatives	recommended	in	the	CMS	using	a	performance-based	approach	with	USEPA	Region	V	oversight.	Similarly,	the	Company has	completed	a	Facility	Investigation	and	CMS	for	the	Lake	Charles	facility	under	the	oversight	of	the	LDEQ.	The	LDEQ	has	accepted	the	proposed	remedial alternatives	which	are	expected	to	be	incorporated	into	the	facility's	RCRA	operating	permit	during	2009.	Planning	for	or	implementation	of	these	proposed	alternatives is	in	progress.	At	the	Natrium	facility,	a	facility	investigation	has	been	completed,	initial	interim	remedial	measures	have	been	implemented	to	mitigate	soil	impacts	but additional	investigation	is	required	to	more	fully	define	the	nature	and	extent	of	groundwater	contamination	and	to	identify	appropriate,	additional	remedial	actions.

With	respect	to	certain	waste	sites,	the	financial	condition	of	any	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.

The	impact	of	evolving	programs,	such	as	natural	resource	damage	claims,	industrial	site	reuse	initiatives	and	state	remediation	programs,	also	adds	to	the	present uncertainties	with	regard	to	the	ultimate	resolution	of	this	unreserved	exposure	to	future	loss.	The	Company's	assessment	of	the	potential	impact	of	these	environmental contingencies	is	subject	to	considerable	uncertainty	due	to	the	complex,	ongoing	and	evolving	process	of	investigation	and	remediation,	if	necessary,	of	such environmental	contingencies,	and	the	potential	for	technological	and	regulatory	developments.

# Other	Matters

The	Company,	with	the	assistance	of	outside	counsel,	is	conducting	an	investigation	into	potential	violations	of	the	U.S.	export	control	laws,	related	to	the	export	of small	quantities	(approximately	1,000	gallons)	of	protective	coatings	for	potential	use	in	Pakistan	in	2006.	The	Company	has	made	a	preliminary	voluntary	self disclosure	of	potential	U.S.	export	control	law	violations	to	the	U.S.	Department	of	Commerce	and	has	committed	to	submit	a	final	voluntary	self	disclosure	once	its ongoing	investigation	is	completed.	The	Company	is	cooperating	fully	with	the	U.S.	Department	of	Commerce's	Bureau	of	Industry	and	Security	and	with	the	U.S. Department	of	Justice	in	connection	with	their	ongoing	investigation	relating	to	this	issue,	and	has	responded	to	administrative	subpoenas	from	the	Commerce Department	and	a	federal	grand	jury	subpoena.	Violations	of	the	export	control	laws	may	result	in	civil,	administrative	or	criminal	fines	or	penalties,	loss	of	export privileges,	debarment	or	a	combination	of	these	penalties.	At	this	time	the	Company	is	unable	to	determine	the	outcome	of	the	government's	investigation	or	its	possible effect	on	the	Company.

In	June	2003,	PPG's	partners	in	a	fiber	glass	joint	venture	in	Venezuela	filed	for	bankruptcy.	These	proceedings	have	been	in	progress	since	2003	and	remain unresolved,	which	has	created	uncertainty	concerning	the	future	of	the	joint	venture.	After	an	extensive	evaluation	of	a	variety	of	options	concerning	the	path	forward, PPG	concluded	that	the	Company	will	not	be	able	to	recover	the	carrying	amount	of	its	investment	in	and	receivables	from	this	joint	venture	and	wrote	those	assets	off in	the	first	quarter	of	2007	by	recording	a	pre-tax	charge	against	earnings	of	$10	million	which	is	included	in	"Other	charges"	in	the	accompanying	consolidated statement	of	income	for	the	year	ended	December	31,	2007.

# 16.	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;	600	million shares	are	authorized.

The	following	table	summarizes	the	shares	outstanding	for	the	three	years	ended	December	31,	2008:

|  | Common<br>Stock | Treasury<br>Stock | ESOP<br>Shares | Shares<br>Outstanding |
| :--- | :--- | :--- | :--- | :--- |
| Balance, |  |  |  |  |
| January\t1,\t2006 | 290,573,068 | (125,169,906) | (125,872) | 165,277,290 |
| Purchases | — | (2,343,215) | — | (2,343,215) |
| Issuances/releases | — | 1,139,214 | 8,464 | 1,147,678 |
| Balance, |  |  |  |  |
| December\t31,\t2006 | 290,573,068 | (126,373,907) | (117,408) | 164,081,753 |
| Purchases | — | (3,682,791) | — | (3,682,791) |
| Issuances/releases | — | 3,284,298 | 117,408 | 3,401,706 |
| Balance,\nDecember\t31,\t2007 | 290,573,068 | (126,772,400) | — | 163,800,668 |
| Purchases | — | (128,600) | — | (128,600) |
| Issuances/releases | — | 526,565 | — | 526,565 |
| Balance,\nDecember\t31,\t2008 | 290,573,068 | (126,374,435) | — | 164,198,633 |

ESOP	shares	represented	the	unreleased	new	shares	held	by	the	ESOP	that	were	not	considered	outstanding	under	SOP	93-6	(see	Note	1,	"Summary	of	Significant Accounting	Policies"	and	Note	18,	"Employee	Stock	Ownership	Plan").	The	number	of	ESOP	shares	changed	in	2006	and	2007	as	a	result	of	the	purchases	of	new shares	and	releases	of	shares	to	participant	accounts	by	the	ESOP.

# 17.	Accumulated	Other	Comprehensive	Loss

|  |  | Pension |  |  | Accum- |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | and |  |  | ulated |
|  |  | Other | Unrealized |  | Other |
|  | Unrealized | Postretire- | Gain\t(Loss) | Unrealized | Compre- |
|  | Currency | ment | on | Gain\t(Loss) | hensive |
|  | Translation | Benefit | Marketable | on | (Loss) |
| (Millions) | Adjustment | Adjustments | Securities | Derivatives | Income |
| Balance |  |  |  |  |  |
| January\t1,\t2006 | $(47) | $(768) | $— | $(4) | $(819) |
| Net\tchange | 179 | (289) | 3 | (13) | (120) |
| Balance, |  |  |  |  |  |
| December\t31,\t2006 | 132 | (1,057) | 3 | (17) | (939) |
| Net\tChange | 260 | 90 | — | 7 | 357 |
| Balance,\nDecember\t31,\t2007 | 392 | (967) | 3 | (10) | (582) |
| Net\tchange | (499) | (494) | (4) | (49) | (1,046) |
| Balance, |  |  |  |  |  |
| December\t31,\t2008 | $(107) | $(1,461) | $(1) | $(59) | $(1,628) |

Unrealized	currency	translation	adjustments	exclude	income	tax	expense	(benefit)	given	that	the	earnings	of	non-U.S.	subsidiaries	are	deemed	to	be	reinvested	for an	indefinite	period	of	time.	The	tax	benefit	(cost)	related	to	the	adjustment	for	pension	and	other	postretirement	benefits	for	the	years	ended	December	31,	2008,	2007 and	2006	was	$315	million,	$(211)	million	and	$243	million,	respectively.	The	cumulative	tax	benefit	related	to	the	adjustment	for	pension	and	other	postretirement benefits	at	December	31,	2008	and	2007	was	$806	million	and	$491	million,	respectively.	The	tax	benefit	(cost)	related	to	the	change	in	the	unrealized	gain	(loss)	on marketable	securities	for	the	years	ended	December	31,	2008,	2007	and	2006	was	$2	million,	$(0.3)	million	and	$(2)	million,	respectively.	The	tax	benefit	(cost)	related to	the	change	in	the	unrealized	gain	(loss)	on	derivatives	for	the	years	ended	December	31,	2008,	2007	and	2006	was	$30	million,	$(5)	million	and	$9	million, respectively.

PPG's	ESOP	covers	substantially	all	U.S.	employees.	The	Company	makes	matching	contributions	to	the	ESOP	based	upon	participants'	savings,	subject	to	certain limitations.	For	most	participants	not	covered	by	a	collective	bargaining	agreement,	Company-matching	contributions	for	the	year	ended	December	31,	2006,	were computed	by	multiplying	each	participant's	monthly	contribution	or	portion	thereof,	as	defined	by	the	ESOP's	plan	document,	by	a	percentage	based	on	the	Company's return	on	capital	of	the	prior	year.	Effective	January	1,	2007,	the	ESOP's	plan	document	was	amended	to	state	that	the	Company	match	rate	established	each	year	will be	at	the	discretion	of	the	Company	with	the	match	being	100%	in	2008	and	in	2007,	applied	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	collective bargaining	agreement.

# 19.	Other	Earnings

| (Millions) | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $26 | $20 | $14 |
| Royalty\tincome | 52 | 48 | 44 |
| Share\tof\tnet\tearnings\tof\tequity\taffiliates\t(See\tNote\t6) | 3 | 32 | 34 |
| Gain\ton\tdivestiture\tof\tautomotive\tglass\tand\tservices\tbusiness\t(See\tNote\t3) | 15 | — | — |
| Other | 69 | 60 | 50 |
| Total | $165 | $160 | $142 |
|  | 2008\tPPG\tANNUAL\tREPORT\tAND\tFORM\t10-K | 2008\tPPG\tANNUAL\tREPORT\tAND\tFORM\t10-K | 63 |

# 20.	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.,	Omnibus Incentive	Plan	("PPG	Omnibus	Plan").	Shares	available	for	future	grants	under	the	PPG	Omnibus	Plan	were	7.4	million	as	of	December	31,	2008.

Total	stock-based	compensation	cost	was	$33	million,	$46	million	and	$34	million	in	2008,	2007	and	2006,	respectively.	The	total	income	tax	benefit	recognized	in the	accompanying	consolidated	statement	of	income	related	to	the	stock-based	compensation	was	$12	million,	$17	million	and	$12	million	in	2008,	2007	and	2006, respectively.

# Stock	Options

PPG	has	outstanding	stock	option	awards	that	have	been	granted	under	two	stock	option	plans:	the	PPG	Industries,	Inc.,	Stock	Plan	("PPG	Stock	Plan")	and	the PPG	Omnibus	Plan.	Under	the	PPG	Omnibus	Plan	and	the	PPG	Stock	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	beginning	from	six	to	48 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	PPG Stock	Plan	includes	a	restored	option	provision	for	options	originally	granted	prior	to	January	1,	2003	that	allows	an	optionee	to	exercise	options	and	satisfy	the	option price	by	certifying	ownership	of	mature	shares	of	PPG	common	stock	with	equivalent	market	value.

On	July	1,	1998,	under	the	PPG	Industries,	Inc.,	Challenge	2000	Stock	Plan,	the	Company	granted	to	substantially	all	active	employees	of	the	Company	and	its majority	owned	subsidiaries	the	option	to	purchase	100	shares	of	common	stock	at	its	then	fair	market	value	of	$70	per	share.	The	options	became	exercisable	on	July	1, 2003	and	expired	on	June	30,	2008.	A	total	of	1.2	million	options	expired	on	that	date.

The	fair	value	of	stock	options	issued	to	employees	is	measured	on	the	date	of	grant	and	is	recognized	as	expense	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	SEC	Staff	Accounting	Bulletin	("SAB")	No.	107,	"Share-Based	Payment,"	as	amended	by	SAB	No.	110.	This	method	is	used	as	the	vesting	terms of	stock	options	were	changed	in	2004	to	a	three	year	vesting	term,	and	as	a	result,	the	historical	exercise	data	does	not	provide	a	reasonable	basis	upon	which	to estimate	the	expected	life	of	options.	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.	The	fair	value	of	each	grant	was	calculated	with	the	following	weighted	average	assumptions:

|  | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Risk\tfree\tinterest\trate | 3.5% | 4.5% | 4.7% |
| Expected\tlife\tof\toption\tin\tyears | 6.5 | 5.5 | 5.3 |
| Expected\tdividend\tyield | 3.1% | 3.1% | 3.1% |
| Expected\tvolatility | 24.2% | 22.6% | 24.1% |

A	summary	of	stock	options	outstanding	and	exercisable	and	activity	for	the	year	ended	December	31,	2008	is	presented	below:

|  | Number	of<br>Shares | Weighted<br>Average<br>Exercise<br>Price | Remaining<br>Contractual<br>Life<br>(in	years) | Intrinsic<br>Value<br>(in	millions) |
| :--- | :--- | :--- | :--- | :--- |
| Outstanding,\nJanuary\t1,\t2008 | 8,299,583 | $61.40 | 4.6 | $76 |
| Granted | 726,507 | $63.64 |  |  |
| Exercised | (227,443) | $57.44 |  |  |
| Forfeited/Expired | (1,357,014) | $69.39 |  |  |
| Outstanding,\tDecember\t31,\t2008 | 7,441,633 | $60.28 | 4.8 | $— |
| Vested\tor\texpected\tto\tvest,\nDecember\t31,\t2008 | 7,421,114 | $60.26 | 4.8 | $— |
| Exercisable,\tDecember\t31,\t2008 | 5,302,851 | $58.69 | 3.5 | $— |

At	December	31,	2008,	there	was	$7	million	of	total	unrecognized	compensation	cost	related	to	outstanding	stock	options	that	have	not	yet	vested.	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,	2008,	2007	and	2006:

| (Millions) | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Total\tintrinsic\tvalue\tof\tstock\toptions\texercised | $2 | $47 | $16 |
| Cash\treceived\tfrom\tstock\toption\texercises | 13 | \t 194 | 55 |
| Income\ttax\tbenefit\tfrom\tthe\texercise\tof\tstock\toptions | 1 | 17 | 6 |
| Total\tfair\tvalue\tof\tstock\toptions\tvested | 15 | 29 | 4 |

# Restricted	Stock	Units

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	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	released	in	shares	of	stock	or	paid	out	in	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-year	period	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	vesting	period	if	PPG	meets	the	performance	targets.	For	awards	granted	in	2006	and	2007,	the	actual	amount	paid for	performance-based	awards	may	range	from	0%	to	150%	of	the	original	grant,	as	50%	of	the	grant	vests	in	each	year	that	one	of	the	two	targets	are	met	during	the three-year	period.	If	the	designated	performance	targets	are	not	met	in	any	of	the	three	years	in	an	award	period,	no	payout	will	be	made	on	the	performance-based RSUs.	For	awards	granted	in	2008,	the	amount	paid	for	performance-based	awards	may	range	from	0%	to	180%	of	the	original	grant,	based	upon	the	frequency	with which	the	earnings	per	share	growth	and	cash	flow	return	on	capital	performance	targets	are	met	over	the	three-year	period.	The	performance-based	RSUs	granted	in 2006	vested	at	the	150%	level.	For	the	purposes	of	expense	recognition	PPG	has	assumed	that	performance-based	RSUs	granted	in	2007	and	2008	will	vest	at	the	100% level.	The	performance	targets	for	2006,	2007	and	2008	were	achieved	as	it	relates	to	the	2006	and	2007	grants.	With	respect	to	the	2008	grant,	one	of	the	two performance	targets	was	met	in	2008.

The	following	table	summarizes	RSU	activity	for	the	year	ended	December	31,	2008:

|  | Number	of<br>Shares | Weighted<br>Average<br>Fair	Value | Intrinsic<br>Value<br>(in	millions) |
| :--- | :--- | :--- | :--- |
| Outstanding,\tJanuary\t1,\t2008 | 808,413 | $61.60 | $57 |
| Granted | 241,632 | $57.73 |  |
| Additional\tShares\tVested | 95,350 | $54.32 |  |
| Released | (341,258) | $65.31 |  |
| Forfeited | (36,197) | $58.73 |  |
| Outstanding,\tDecember\t31,\t2008 | 767,940 | $57.96 | $33 |
| Vested\tor\texpected\tto\tvest,\nDecember\t31,\t2008 | 759,197 | $57.93 | $32 |

There	was	$10	million	of	total	unrecognized	compensation	cost	related	to	nonvested	RSUs	outstanding	as	of	December	31,	2008.	This	cost	is	expected	to	be recognized	as	expense	over	a	weighted	average	period	of	1.5	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	over	the	three-year period	following	the	date	of	grant.	Contingent	share	grants	("TSR")	are	made	annually	and	are	paid	out	at	the	end	of	each	three-year	period	based	on	the	Company's performance.	For	awards	granted	in	2006	and	2007,	performance	is	measured	by	determining	the	percentile	rank	of	the	total	shareholder	return	of	PPG	common	stock (stock	price	plus	accumulated	dividends)	in	relation	to	the	total	shareholder	return	of	the	S&P	500	and	of	the	S&P	500	Materials	sector	for	the	three-year	period following	the	date	of	grant.	For	awards	granted	in	2008,	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.	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	earn	dividend	equivalents	during	the	three-year	award	period,	which	are credited	to	participants	in	the	form	of	common	stock	equivalents.	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,	2008,	there	was	$4	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.

# 21.	Advertising	Costs

Advertising	costs	are	expensed	in	the	year	incurred	and	totaled	$310	million,	$157	million	and	$121	million	in	2008,	2007	and	2006,	respectively.	The	increase	in 2008	is	primarily	a	result	of	the	SigmaKalon	acquisition.

| (Millions) | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| Research\tand\tdevelopment\t–\ttotal | $468 | $363 | $330 |
| Less\tdepreciation\ton\tresearch\tfacilities | 17 | 15 | 16 |
| Research\tand\tdevelopment\t–\tnet | $451 | $348 | $314 |

# 23.	Quarterly	Financial	Information	(unaudited)

(1) First	quarter	amounts	have	been	adjusted	to	reflect	the	second	quarter	2008	reclassification	of	the	automotive	glass	and	services	business	from	discontinued	operations	to	continuing	operations.

(2) Exclusive	of	depreciation	and	amortization.

# 24.	Reportable	Business	Segment	Information

# Segment	Organization	and	Products

PPG	is	a	multinational	manufacturer	with	13	operating	segments	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	(see	Note	1,	"Summary	of	Significant	Accounting	Policies").	These	operating segments	were	expanded	during	the	first	quarter	of	2008	to	include	the	protective	and	marine	coatings	operating	segment,	which	is	included	in	the	Performance	Coatings reportable	segment,	and	the	Architectural	Coatings	–	EMEA	(Europe,	Middle	East	and	Africa)	operating	segment,	which	is	also	a	reportable	business	segment.	These changes	were	a	result	of	the	SigmaKalon	acquisition.	The	operating	segments	have	been	aggregated	based	on	economic	similarities,	the	nature	of	their	products, production	processes,	end-use	markets	and	methods	of	distribution	into	six	reportable	business	segments.

The	Performance	Coatings	reportable	segment	is	comprised	of	the	refinish,	aerospace,	architectural	coatings	–	Americas	and	Asia	Pacific	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,	industrial	and	packaging	coatings	operating	segments.	This	reportable	segment primarily	supplies	a	variety	of	protective	and	decorative	coatings	and	finishes	along	with	adhesives,	sealants,	inks	and	metal	pretreatment	products.

The	Architectural	Coatings	–	EMEA	reportable	segment	is	comprised	of	the	architectural	coatings	–	EMEA	operating	segment.	This	reportable	segment	primarily supplies	a	variety	of	coatings	under	a	number	of	brands	and	purchased	sundries	to	painting	contractors	and	consumers	in	Europe,	the	Middle	East	and	Africa.

The	Optical	and	Specialty	Materials	reportable	segment	is	comprised	of	the	optical	products	and	silicas	operating	segments.	The	primary	Optical	and	Specialty Materials	products	are	Transitions®	lenses,	sunlenses,	optical	materials,	polarized	film	and	amorphous	precipitated	silica	products.	Transitions®	lenses	are	processed	and distributed	by	PPG's	51%-owned	joint	venture	with	Essilor	International.

The	Commodity	Chemicals	reportable	segment	is	comprised	of	the	chlor-alkali	and	derivatives	operating	segment.	The	primary	chlor-alkali	and	derivative	products are	chlorine,	caustic	soda,	vinyl	chloride	monomer,	chlorinated	solvents,	calcium	hypochlorite,	ethylene	dichloride	and	phosgene	derivatives.

The	Glass	reportable	segment	is	comprised	of	the	performance	glazings	and	fiber	glass	operating	segments.	This	reportable	segment	primarily	supplies	flat	glass and	continuous-strand	fiber	glass	products.

Production	facilities	and	markets	for	Performance	Coatings,	Industrial	Coatings,	Architectural	Coatings	–	EMEA,	Optical	and	Specialty	Materials,	Commodity Chemicals	and	Glass	are	predominantly	in	North	America	and	Europe.	PPG's	reportable	segments	continue	to	pursue	opportunities	to	further	develop	markets	in	Asia,

Eastern	Europe	and	Latin	America.	Each	of	the	reportable	segments	in	which	PPG	is	engaged	is	highly	competitive.	However,	the	diversification	of	product	lines	and

worldwide	markets	served	tends	to	minimize	the	impact	on	PPG's	total	sales	and	earnings	from	changes	in	demand	in	a	particular	market	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.	The	Company	allocates resources	to	operating	segments	and	evaluates	the	performance	of	operating	segments	based	upon	segment	income,	which	is	earnings	before	interest	expense	–	net, income	taxes	and	minority	interest	and	which	may	exclude	certain	charges	which	are	considered	to	be	unusual	or	non-recurring.	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.	Legacy	items	also	include	equity	earnings	(loss)	from	PPG's	approximately	40	percent	investment	in	the	former	automotive glass	and	services	business.	A	substantial	portion	of	corporate	administrative	expenses	is	allocated	to	the	operating	segments.	The	portion	not	allocated	to	the	operating segments	primarily	represents	the	cost	of	corporate	legal	cases,	net	of	related	insurance	recoveries,	a	business	process	redesign	project	in	Europe	and	certain	insurance and	employee	benefit	programs	and	is	included	in	the	amount	presented	as	Corporate	unallocated	loss.	Net	periodic	pension	expense	is	allocated	to	the	operating segments.

For	Optical	and	Specialty	Materials,	Commodity	Chemicals	and	Glass,	intersegment	sales	and	transfers	are	recorded	at	selling	prices	that	approximate	market prices.	Product	movement	between	Performance	Coatings,	Industrial	Coatings	and	Architectural	Coatings	–	EMEA	is	very	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	three	coatings	reportable	segments.

|  |  |  |  |  | Optical |  |  | Corporate	/ |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Architectural | and |  |  | Eliminations\t/ |  |
| (Millions)\nReportable\tBusiness\tSegments | (Millions)\nReportable\tBusiness\tSegments | Performance\nCoatings | Industrial\nCoatings | Coatings\t–\nEMEA | Specialty\nMaterials | Commodity\nChemicals | Glass | Non-Segment\nItems^(1) | Consolidated\nTotals |
| 2008 |  |  |  |  |  |  |  |  |  |
| Net\tsales\tto\texternal\tcustomers | Net\tsales\tto\texternal\tcustomers | $4,716 | $3,999 | $2,249 | $1,134 | $1,837 | $1,914 | $— | $15,849 |
| Intersegment\tnet\tsales | Intersegment\tnet\tsales | — | — | — | 4 | 8 | — | (12) | — |
| Total\tnet\tsales | Total\tnet\tsales | $4,716 | $3,999 | $2,249 | $1,138 | $1,845 | $1,914 | $(12) | $15,849 |
| Segment\tincome | Segment\tincome | $582 | $212 | $141 | $244 | $340 | $70 | $— | $1,589 |
| Corporate\tunallocated | Corporate\tunallocated |  |  |  |  |  |  |  | (88) |
| Legacy\titems^(2) | Legacy\titems^(2) |  |  |  |  |  |  |  | (28) |
| Business\trestructuring\t(See\tNote\t8) | Business\trestructuring\t(See\tNote\t8) |  |  |  |  |  |  |  | (163) |
| Gain\ton\tautomotive\tglass\tand\tservices\tdivestiture\t(See\tNote\t3) | Gain\ton\tautomotive\tglass\tand\tservices\tdivestiture\t(See\tNote\t3) |  |  |  |  |  |  |  | 15 |
| Depreciation\tcatch-up\tcharge\t(See\tNote\t3) | Depreciation\tcatch-up\tcharge\t(See\tNote\t3) |  |  |  |  |  |  |  | (17) |
| Divestiture-related\tbenefit\tcosts\t(See\tNote\t3) | Divestiture-related\tbenefit\tcosts\t(See\tNote\t3) |  |  |  |  |  |  |  | (19) |
| Acquisition\trelated\tcosts\t(See\tNote\t2) | Acquisition\trelated\tcosts\t(See\tNote\t2) |  |  |  |  |  |  |  | (117) |
| Asbestos\tsettlement\t–\tnet\t(See\tNote\t15) | Asbestos\tsettlement\t–\tnet\t(See\tNote\t15) |  |  |  |  |  |  |  | (4) |
| Interest\texpense,\tnet\tof\tinterest\tincome | Interest\texpense,\tnet\tof\tinterest\tincome |  |  |  |  |  |  |  | (227) |
| Unallocated\tstock\tbased\tcompensation\t(See\tNote\t20)^(3) | Unallocated\tstock\tbased\tcompensation\t(See\tNote\t20)^(3) |  |  |  |  |  |  |  | (33) |
| Income\tbefore\tincome\ttaxes\tand\tminority\tinterest | Income\tbefore\tincome\ttaxes\tand\tminority\tinterest |  |  |  |  |  |  |  | $908 |
| Depreciation\tand\tamortization\t(See\tNote\t1) | Depreciation\tand\tamortization\t(See\tNote\t1) | 133 | 109 | 121 | 36 | 44 | 98 | 22 | $563 |
| Share\tof\tnet\tearnings\t(loss)\tof\tequity\taffiliates | Share\tof\tnet\tearnings\t(loss)\tof\tequity\taffiliates | 2 | 1 | 2 | — | (8) | 14 | (8) | 3 |
| Segment\tassets^(4) | Segment\tassets^(4) | 4,190 | 2,699 | 3,003 | 615 | 603 | 923 | 2,665 | 14,698 |
| Investment\tin\tequity\taffiliates | Investment\tin\tequity\taffiliates | 3 | 14 | 18 | — | 3 | 137 | 206 | 381 |
| Expenditures\tfor\tproperty | Expenditures\tfor\tproperty | 139 | 198 | 525 | 49 | 35 | 61 | 25 | 1,032 |
| 2007 |  |  |  |  |  |  |  |  |  |
| Net\tsales\tto\texternal\tcustomers | Net\tsales\tto\texternal\tcustomers | $3,811 | $3,646 | $— | $1,029 | $1,539 | $2,195 | $— | $12,220 |
| Intersegment\tnet\tsales | Intersegment\tnet\tsales | — | — | — | 4 | 8 | 5 | (17) | — |
| Total\tnet\tsales | Total\tnet\tsales | $3,811 | $3,646 | $— | $1,033 | $1,547 | $2,200 | $(17) | $12,220 |
| Segment\tincome | Segment\tincome | $563 | $370 | $— | $235 | $243 | $138 | $— | $1,549 |
| Corporate\tunallocated | Corporate\tunallocated |  |  |  |  |  |  |  | (52) |
| Legacy\titems | (2) |  |  |  |  |  |  |  | (13) |
| Acquisition\trelated\tcosts | Acquisition\trelated\tcosts |  |  |  |  |  |  |  | (9) |
| Divestiture-related\tbenefit\tcosts | Divestiture-related\tbenefit\tcosts |  |  |  |  |  |  |  | (17) |
| Asbestos\tsettlement\t–\tnet\t(See\tNote\t15) | Asbestos\tsettlement\t–\tnet\t(See\tNote\t15) |  |  |  |  |  |  |  | (24) |
| Interest\texpense,\tnet\tof\tinterest\tincome | Interest\texpense,\tnet\tof\tinterest\tincome |  |  |  |  |  |  |  | (73) |
| Unallocated\tstock\tbased\tcompensation\t(See\tNote\t20) | (3) |  |  |  |  |  |  |  | (46) |
| Income\tbefore\tincome\ttaxes\tand\tminority\tinterest | Income\tbefore\tincome\ttaxes\tand\tminority\tinterest |  |  |  |  |  |  |  | $1,315 |
| Depreciation\tand\tamortization\t(See\tNote\t1) | Depreciation\tand\tamortization\t(See\tNote\t1) | $108 | $94 | $— | $38 | $46 | $96 | $21 | $403 |
| Share\tof\tnet\tearnings\t(loss)\tof\tequity\taffiliates | Share\tof\tnet\tearnings\t(loss)\tof\tequity\taffiliates | 1 | 2 | — | — | 2 | 27 | — | 32 |
| Segment\tassets | (4) | 3,848 | 2,508 | — | 630 | 650 | \t 1,523 | 3,470 | 12,629 |
| Investment\tin\tequity\taffiliates | Investment\tin\tequity\taffiliates | 3 | 15 | — | — | 4 | 153 | 15 | 190 |
| Expenditures\tfor\tproperty | Expenditures\tfor\tproperty | 119 | 89 | — | 46 | 61 | 51 | 21 | 387 |

(continued	on	next	page)

(continued)

(1) Corporate	intersegment	net	sales	represent	intersegment	net	sales	eliminations.	Corporate	unallocated	income	(loss)	represents	unallocated	corporate	income	and	expenses.	Corporate/non-segment	assets	are principally	cash	and	cash	equivalents,	cash	held	in	escrow,	deferred	tax	assets	and	the	approximately	40	percent	investment	in	the	former	automotive	glass	and	services	business.

(2) 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	which	are considered	to	be	unusual	or	non-recurring.	Legacy	items	also	include	equity	earnings	(loss)	from	PPG's	approximately	40	percent	investment	in	the	former	automotive	glass	and	services	business.	In	2006,	these costs	include	environmental	remediation	costs	at	sites	related	to	the	Company's	former	chromium	manufacturing	facility	and	related	sites	in	Jersey	City,	NJ	of	$185	million,	a	charge	for	the	settlement	of	the federal	refinish	antitrust	case	of	$23	million,	and	insurance	recoveries	related	to	the	Marvin	litigation	settlement	of	$33	million.

(3) Unallocated	stock	based	compensation	includes	the	cost	of	stock	options,	restricted	stock	units	and	contingent	share	grants	which	are	not	allocated	to	the	operating	segments.

(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,	deferred	tax	assets	and	the	approximately	40	percent investment	in	the	former	automotive	glass	and	services	business.

(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.

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

See	Management	Report	on	page	29	for	management's	annual	report	on	internal	control	over	financial	reporting.	See	Report	of	Independent	Registered	Public Accounting	Firm	on	page	28	for	Deloitte	&	Touche	LLP's	attestation	report	on	the	Company's	internal	control	over	financial	reporting.

# Item	9b.	Other	Information

# Part	III

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance

The	information	required	by	Item	10	and	not	otherwise	set	forth	below	is	contained	under	the	caption	"Proposal	1:	To	Elect	Four	Directors"	in	PPG's	definitive Proxy	Statement	for	the	2009	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.

# 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	caption	"Other	Information	–	Beneficial	Ownership	Tables"	and	in	Part	II,	Item 5	of	this	report	under	the	caption	"Equity	Plan	Compensation	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	"Proposal	2:	To	Endorse	Deloitte	&	Touche	LLP	as	our	Independent Registered	Public	Accounting	Firm	for	2009"	and	is	incorporated	herein	by	reference.

# Part	IV

# Item	15.	Exhibits,	Financial	Statement	Schedules

(a) 	 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:

| Internal	Controls	–	Report	of	Independent	Registered	Public	Accounting	Firm | 28 |
| :--- | :--- |
| Management\tReport | 29 |
| Consolidated\tFinancial\tStatements\t–\tReport\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 29 |
| Consolidated\tStatement\tof\tIncome\tfor\tthe\tYears\tEnded\tDecember\t31,\t2008,\t2007\tand\t2006 | 30 |
| Consolidated\tBalance\tSheet\tas\tof\tDecember\t31,\t2008\tand\t2007 | 31 |
| Consolidated\tStatement\tof\tShareholders'\tEquity\tfor\tthe\tYears\tEnded\tDecember\t31,\t2008,\t2007\tand\t2006 | 32 |
| Consolidated\tStatement\tof\tComprehensive\tIncome\tfor\tthe\tYears\tEnded\tDecember\t31,\t2008,\t2007\tand\t2006 | 32 |
| Consolidated\tStatement\tof\tCash\tFlows\tfor\tthe\tYears\tEnded\tDecember\t31,\t2008,\t2007\tand\t2006 | 33 |
| Notes\tto\tthe\tConsolidated\tFinancial\tStatements | 34 |

The	following	should	be	read	in	conjunction	with	the	previously	referenced	financial	statements:

# Schedule	II	–	Valuation	and	Qualifying	Accounts

# Allowance	for	Doubtful	Accounts	for	the	Years	Ended	December	31,	2008,	2007	and	2006

|  | Balance	at | Charged	to |  |  | Balance	at |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Beginning | Costs\tand | Other |  | End\tof |
|  | of\tYear | Expenses^(1) | Additions^(2) | Deductions^(3) | Year |
| 2008 | $51 | $52 | $38 | $(38) | $103 |
| 2007 | $48 | $16 | $2 | $(15) | $51 |
| 2006 | $39 | $14 | $8 | $(13) | $48 |

(1) Bad	debt	expense	was	$11	million	in	2008	for	acquired	businesses.	The	remainder	of	the	increase	in	bad	debt	expense	compared	to	2007	was	primarily	related	to	the	Industrial	Coatings	segment.

(2) Represents	allowance	for	doubtful	accounts	of	acquired	businesses.

(3) Notes	and	accounts	receivable	written	off	as	uncollectible,	net	of	recoveries,	amounts	attributable	to	divestitures	and	changes	attributable	to	foreign	currency	translation.	In	2008,	write-offs	totaled	approximately $30	million.

All	other	schedules	are	omitted	because	they	are	not	applicable.

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

†	Filed	herewith.

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

# 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	19,	2009.

(Registrant)

	W.	H.	Hernandez,	Senior	Vice	President,	Finance	and	Chief	Financial	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	19,	2009.

# PPG	Industries	Inc.	and	Consolidated	Subsidiaries

# Index	to	Exhibits

		*10.11 PPG	Industries,	Inc.	Omnibus	Incentive	Plan	was	filed	as	Exhibit	10.18	to	the	Registrant's	Quarterly	Report	on	Form	10-Q	for	the	period	ended	March	31, 2006.

		*10.12	 Form	of	Non-Qualified	Option	Agreement	for	Directors	was	filed	as	Exhibit	10.4	to	the	Registrant's	Current	Report	on	Form	8-K	dated	February	15,	2005.

†*10.13	 Form	of	time-vested	Restricted	Stock	Unit	Award	Agreement.

†*10.14	 Form	of	Non-Qualified	Stock	Option	Award	Agreement.

†*10.15	 Form	of	TSR	Share	Award	Agreement.

†*10.16	 Form	of	performance-based	Restricted	Stock	Unit	Award	Agreement	for	Key	Employees.

†*10.17	 Form	of	performance-based	Restricted	Stock	Unit	Award	Agreement.

		*10.18	 Material	terms	of	retirement	arrangement	with	Kevin	F.	Sullivan,	was	filed	as	Exhibit	10	to	the	Registrant's	current	report	on	Form	8-K	filed	on	April	28,	2008.



Question: without the impact of settlements , what would the december 31 2008 amount of unrecognized tax benefits have been , in $ millions?
Calculation:    december_31_2008_amount = 21 + 99
 answer = december_31_2008_amount
Answer: 120