PPG Annual Report and 10K 2019

Notes to the Consolidated Financial Statements 54 2019 PPG ANNUAL REPORT AND 10-K Additionally, the Company’s Credit Agreement contains customary cross-default provisions. These provisions provide that a default on a debt service payment of $50 million or more for longer than the grace period provided under another agreement may result in an event of default under this agreement. The Company’s 9% non-callable debentures also contain a customary cross default provision triggered by the Company’s default on a debt service payment of $10 million or more. None of the Company’s primary debt obligations are secured or guaranteed by the Company’s affiliates. Long-term Debt Maturities ($ in millions) Maturity per year 2020 $503 2021 $166 2022 $669 2023 $302 2024 $396 Thereafter $3,006 Short-term Debt Obligations ($ in millions) 2019 2018 Various, weighted average 3.6% and 3.4% as of December 31, 2019 and 2018, respectively. $10 $4 Lines of Credit, Letters of Credit, Surety Bonds and Guarantees PPG’s non-U.S. operations have uncommitted lines of credit totaling $396 million of which $2 million was used as of December 31, 2019. These uncommitted lines of credit are subject to cancellation at any time and are generally not subject to any commitment fees. The Company had outstanding letters of credit and surety bonds of $152 million and $158 million as of December 31, 2019 and 2018, respectively. The letters of credit secure the Company’s performance to third parties under certain self-insurance programs and other commitments made in the ordinary course of business. As of December 31, 2019 and 2018, guarantees outstanding were $9 million and $14 million, respectively. The guarantees relate primarily to debt of certain entities in which PPG has an ownership interest and selected customers of certain PPG businesses. A portion of such debt is secured by the assets of the related entities. The carrying value of these guarantees were zero at December 31, 2019 and 2018, and the fair values of these guarantees were zero and $1 million at December 31, 2019 and 2018, respectively. The fair value of each guarantee was estimated by comparing the net present value of two hypothetical cash flow streams, one based on PPG’s incremental borrowing rate and the other based on the borrower’s incremental borrowing rate, as of the effective date of the guarantee. Both streams were discounted at a risk free rate of return. The Company does not believe any loss related to these letters of credit, surety bonds or guarantees is likely. 10. Financial Instruments, Hedging Activities and Fair Value Measurements Financial instruments include cash and cash equivalents, short-term investments, cash held in escrow, marketable equity securities, accounts receivable, company-owned life insurance, accounts payable, short-termand long-termdebt instruments, and derivatives. The fair values of these financial instruments approximated their carrying values at December 31, 2019 and 2018, in the aggregate, except for long-term debt instruments. Hedging Activities The Company has exposure to market risk from changes in foreign currency exchange rates and interest rates. As a result, financial instruments, including derivatives, have been used to hedge a portion of these underlying economic exposures. Certain of these instruments qualify as fair value, cash flow, and net investment hedges upon meeting the requisite criteria, including effectiveness of offsetting hedged or underlying exposures. Changes in the fair value of derivatives that do not qualify for hedge accounting are recognized in Income before income taxes in the period incurred. PPG’s policies do not permit speculative use of derivative financial instruments. PPG enters into derivative financial instruments with high credit quality counterparties and diversifies its positions among such counterparties in order to reduce its exposure to credit losses. The Company did not realize a credit loss on derivatives during the three-year period ended December 31, 2019. All of PPG’s outstanding derivative instruments are subject to accelerated settlement in the event of PPG’s failure to meet its debt or payment obligations under the terms of the instruments’ contractual provisions. In addition, if the Company would be acquired and its payment obligations under its derivative instruments’ contractual arrangements are not assumed by the

RkJQdWJsaXNoZXIy NTUyMDQ=