PPG Annual Report and 10K 2019

Notes to the Consolidated Financial Statements 60 2019 PPG ANNUAL REPORT AND 10-K A valuation allowance of $158 million and $164 million has been established for carry-forwards and certain other items at December 31, 2019 and 2018, respectively, when the ability to utilize them is not likely. Undistributed foreign earnings The Company had $3.6 billion and $3.0 billion of undistributed earnings of non-U.S. subsidiaries as of December 31, 2019 and 2018, respectively. These amounts relate to approximately 290 subsidiaries in approximately 75 taxable jurisdictions. The Company estimates repatriation of undistributed earnings of non-U.S. subsidiaries as of December 31, 2019 and 2018 would have resulted in a tax cost of $32 million and $19 million, respectively. PPG has established deferred tax liabilities on certain undistributed earnings, namely in connection with divestitures and the funding of the Pittsburgh Corning Asbestos Trust (refer to Note 14, “Commitments and Contingent Liabilities”). As of December 31, 2019, with exception of the aforementioned deferred liability established for the asbestos trust, the Company has not changed its intention to reinvest foreign earnings indefinitely or repatriate when it is tax effective to do so, and as such, has not established a liability for foreign withholding taxes or other costs that would be incurred if the earnings were repatriated. Unrecognized tax benefits The Company files federal, state and local income tax returns in numerous domestic and foreign jurisdictions. In most tax jurisdictions, returns are subject to examination by the relevant tax authorities for a number of years after the returns have been filed. The Company is no longer subject to examinations by tax authorities in any major tax jurisdiction for years before 2008. Additionally, the Company is no longer subject to examination by the Internal Revenue Service for U.S. federal income tax returns filed for years through 2014. The examinations of the Company’s U.S. federal income tax returns for 2015 through 2016 are currently underway. A reconciliation of the total amounts of unrecognized tax benefits (excluding interest and penalties) as of December 31 follows: ($ in millions) 2019 2018 2017 January 1 $166 $148 $94 Current year tax positions - additions 25 36 37 Prior year tax positions - additions 4 17 26 Prior year tax positions - reductions (9) (6) — Statute of limitations expirations (6) (9) (8) Settlements (12) (15) (10) Foreign currency translation (1) (5) 9 December 31 $167 $166 $148 The Company expects that any reasonably possible change in the amount of unrecognized tax benefits in the next 12 months would not be significant. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $143 million as of December 31, 2019. Interest and penalties ($ in millions) 2019 2018 2017 Accrued interest and penalties related to unrecognized tax benefits $17 $16 $15 Loss recognized in income tax expense related to interest and penalties $1 $2 $4 The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. 13. Employee Benefit Plans Defined Benefit Plans PPG has defined benefit pension plans that cover certain employees worldwide. The principal defined benefit pension plans are those in the U.S., Canada, the Netherlands and the U.K. These plans in the aggregate represent approximately 93% of PPG’s total projected benefit obligation at December 31, 2019, of which the U.S. defined benefit pension plans represent the largest component. As of January 1, 2006, the Company’s U.S. salaried defined benefit plans were closed to new entrants. In 2011, the Company approved amendments related to certain U.S. defined benefit plans so that depending upon the affected employee’s combined

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