2012 PPG Annual Report and Form 10-K PPG Industries One PPG Place Pittsburgh, PA 15272 USA +1-412-434-3131 www.ppg.com LinkedIn: linkedin.com/company/ppg-industries Facebook: facebook.com/ppgindustries Twitter: twitter.com/ppgindustries This annual report is printed on paper that is FSC-certified, contains 30% post-consumer Bringing innovation recovered fiber and is manufactured with ™ electricity in the form of renewable energy. AR-CORP-0213-ENG-20K to the surface. Company Profile Letter from the Chairman Performance Coatings PPG Industries’ vision is to continue to be the AEROSPACE. Leading manufacturer of transparencies, sealants, and coatings, and provider of electrochromic window systems, surface solutions, packaging, and chemical management world’s leading coatings and specialty products services, delivering new technologies and solutions to airframe manufacturers, airlines and In 2012, PPG Industries achieved record results and took to aggressively manage our businesses and costs, and we will company. Through leadership in innovation, maintenance providers for the commercial, military and general aviation industries globally. several significant strategic actions that accelerated the maintain a focus on opportunities for margin improvement and Also supplies transparent armor for military vehicles, buildings and rail. pace of our business portfolio transformation. profitable growth. sustainability and color, PPG helps customers in ARCHITECTURAL COATINGS – AMERICAS AND ASIA PACIFIC. Produces paints, stains industrial, transportation, consumer products, and and specialty coatings for the commercial, maintenance and residential markets under First, PPG achieved new adjusted earnings-per-share records in Effective execution of our strategies will be key to our 2013 growth construction markets and aftermarkets to enhance brands such as PPG, PPG Pittsburgh Paints™, PPG Porter Paints™, Master’s Mark®, Renner®, Lucite®, Olympic®, Taubmans® and Ivy®. each quarter and delivered higher full-year adjusted earnings in each objectives. This will include closing the AkzoNobel North American more surfaces in more ways than does any other major region, reflecting our strong operating execution. Full-year architectural coatings transaction and successfully integrating this company. Founded in 1883, PPG has global headquarters AUTOMOTIVE REFINISH. Produces and markets, primarily through independent 2012 adjusted net income was $1.2 billion, or $7.94 per diluted business, efficiently managing our more focused business portfolio, distribution, a full line of coatings products and related services for automotive share, up $1.07, or 16 percent, versus the prior-year record. We and maintaining our disciplined approach to cost control and in Pittsburgh and operates in nearly 70 countries around the and commercial transport/fleet repair and refurbishing, light industrial coatings and specialty coatings for signs. continued our history of strong cash generation, delivering record operational excellence. We will also continue to analyze prudent world. PPG shares are traded on the New York Stock Exchange full-year cash from operations, up nearly 25 percent versus the cash-deployment opportunities for our strong cash position, with (symbol:PPG). For more information, visit www.ppg.com. PROTECTIVE AND MARINE COATINGS. Leading supplier of corrosion-resistant, appearance-enhancing coatings for the marine, infrastructure, petrochemical, prior year, and ended the year with $2.4 billion of cash and short- an emphasis on profitable earnings-growth initiatives. offshore and power industries. Produces the Amercoat®, Freitag®, PPG High term investments. Sales for the year increased to $15.2 billion, up Performance Coatings and Sigma Coatings® brands. 2 percent compared to 2011, despite moderate overall economic As always, PPG remains committed to and focused on safety, conditions that varied by region and end-use market. environmental performance, compliance and Industrial Coatings ethics. And we will continue to expand our AUTOMOTIVE OEM COATINGS. Leading supplier of coatings, specialty Second, we made continued progress in transforming PPG’s community and social initiatives around products and services to automotive, commercial vehicle, fascia and business portfolio, including the following key achievements: the globe in the communities where we trim manufacturers. Products include electrocoats, primer surfacers, basecoats, clearcoats, liquid applied sound dampeners, bedliner, • Completed the separation of the commodity chemicals operate. For more about this work, please pretreatment chemicals, adhesives and sealants. business and its subsequent merger with Georgia Gulf see our 2012 Sustainability Report, which INDUSTRIAL COATINGS. Produces coatings for appliances, agricultural will be available in April. Corporation to form Axiall Corporation; and construction equipment, consumer products, electronics, automotive 2 2 parts, residential and commercial construction, wood flooring, joinery 0 • Signed an agreement to acquire AkzoNobel’s In summary, PPG has successfully (windows and doors) and other finished products. 0 1 North American architectural coatings business; 1 transformed itself during the past PACKAGING COATINGS. Global supplier of coatings, inks, compounds, 2 decade from being a diversified, 2 • Acquired Spraylat, a North American industrial pretreatment chemicals and lubricants for metal and plastic containers multibusiness manufacturer to a for the beverage, food, general line and specialty packaging industries. P coatings company; P focused coatings and specialty P P • Successfully integrated the acquisitions of the products company. We expect Architectural Coatings – EMEA G G Dyrup coatings business in Europe and the Colpisa 2013 to be another milestone year ARCHITECTURAL COATINGS— EMEA (EUROPE, MIDDLE EAST AND AFRICA). coatings business in Colombia and Ecuador; and in this transformation, and I remain Supplier of market-leading paint brands for the trade and retail markets I such as Sigma Coatings®, Histor®, Dyrup®, Bondex®, Balakryl®, Brander®, I confident that our strategy and ® ® ® ® ® ® n • Entered into an additional joint venture with Boonstoppel , Rambo , Seigneurie , Penitures Gauthier , Guittet , Ripolin , n execution will lead to continued ® ® ® ® ® ® d Asian Paints that expands our activities in India. Johnstone’s , Leyland , Dekoral , Trinat , Hera , Primalex , Prominent d Paints® and Freitag®. u success and future value for our u s shareholders. Optical and Specialty Materials s t PPG’s strong earnings performance and strategic progress were t OPTICAL PRODUCTS. Produces optical monomers and coatings, including CR-39®, r rewarded with a record stock price. The year-end stock price r Trivex® and Tribrid™ lens materials, high performance NXT® sun lenses, optical sheet increased more than 60 percent versus the prior year-end. We i transparencies, photochromic dyes and Transitions® photochromic eyeglass lenses. i e also raised the annual dividend payout to shareholders for the 41st e SILICAS. Produces amorphous precipitated silicas for tire, battery separator and other s consecutive year – a legacy we are proud to continue. Charles E. Bunch s end-use applications and Teslin® substrate used in applications such as radio Chairman and Chief Executive Officer frequency identification (RFID) tags and labels, e-passports, driver’s licenses A Clearly, 2012 was a milestone year for PPG and positions us for and identification cards. A n future growth. Looking at the global economies, we expect trends n n will remain varied by region in 2013, with growth continuing in Glass n u North America, modestly improving growth prospects in Asia, and FIBER GLASS. Manufactures fiber glass reinforcement materials for thermoset and thermoplastic u a inconsistent activity levels in Europe. As a result, we will continue composite applications, serving the transportation, energy, infrastructure and consumer markets. a l Produces fiber glass yarns for electronic printed circuit boards and specialty applications. l FLAT GLASS. Produces flat glass and coated glass that is fabricated into products primarily for R commercial construction and residential markets, as well as the solar energy, appliance, R e Contents mirror and transportation industries. e p p o Significant Milestones ...................1 Management’s Discussion and Analysis ......18 o r r Financial and Operating Review ...........32 t 2012 Financial Highlights .................2 t Shareholder Information ..................3 Five-Year Digest .......................86 Corporate Governance ...................4 Company Profile ......................87 87 Significant Milestones • PPG acquired European coatings company Dyrup, which has expanded PPG’s product offerings in Europe. • PPG acquired Colombian coatings company Colpisa, which continued PPG’s coatings growth in Latin America. • To capitalize on regional long-term economic prospects, PPG and Asian Paints expanded their current India joint venture and created a second venture. As part of these changes, PPG gained effective management control of the original venture. • In July 2012, PPG announced plans to separate its commodity chemicals business and subsequently merge it with Georgia Gulf Corporation to create a new company, Axiall Corporation. This transaction, which was successfully completed in January 2013, significantly accelerated the company’s portfolio transformation. • PPG acquired U.S.-based Spraylat Corp., which is contributing to the