PPG Annual Report and 10K 2019

2019 PPG ANNUAL REPORT AND FORM 10-K 21 Selling, general and administrative expenses % Change ($ in millions, except percentages) 2019 2018 2019 vs. 2018 Selling, general and administrative expenses $3,604 $3,573 0.9% Selling, general and administrative expenses as a % of net sales 23.8% 23.2% 0.6% Selling, general and administrative expenses increased $31 million primarily due to: Wage and other cost inflation Selling, general and administrative expenses from acquired businesses Partially offset by: Foreign currency translation Cost management including restructuring cost savings Other charges and other income % Change ($ in millions, except percentages) 2019 2018 2019 vs. 2018 Interest expense, net of Interest income $100 $95 5.3% Business restructuring, net $176 $66 166.7% Other charges $98 $122 (19.7)% Other income ($89) ($114) (21.9)% Interest expense, net of Interest income Interest expense, net of Interest income increased $5 million in 2019 versus 2018 primarily due to higher levels of debt in the current year. Business restructuring, net Pretax restructuring charges of $194 million were recorded in 2019, offset by certain changes in estimates to complete previously recorded programs of $18 million. A pretax restructuring charge of $83 million was recorded in the second quarter of 2018, offset by certain changes in estimates to complete previously recorded programs of $17 million. Refer to Note 8, "Business Restructuring" in Item 8 of this Form 10-K for additional information. Other charges Other charges consist primarily of environmental remediation charges. These charges were principally for environmental remediation at a former chromium manufacturing plant and associated sites in New Jersey. Refer to Note 14, "Commitments and Contingent Liabilities" in Item 8 of this Form 10-K for additional information. Other income Other income was lower in 2019 than prior year primarily due to a gain in 2018 on the sale of land near a facility of the Company’s former commodity chemicals business. Effective tax rate and earnings per diluted share, continuing operations % Change ($ in millions, except percentages) 2019 2018 2019 vs. 2018 Income tax expense $392 $353 11.0% Effective tax rate 23.6% 20.9% 2.7% Adjusted effective tax rate, continuing operations* 23.7% 22.1% 1.6% Earnings per diluted share, continuing operations $5.22 $5.40 (3.3)% Adjusted earnings per diluted share, continuing operations* $6.22 $5.92 5.1% *See the Regulation G reconciliations - results of operations The effective tax rate for the year-ended December 31, 2019 was 23.6%, an increase of 2.7% from the prior year. In 2018, the tax rate benefited from certain favorable adjustments, including finalization of the provisional toll charge recorded in 2017 for unremitted foreign earnings under the U.S. Tax Cuts and Jobs Act.

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