PPG Industries will record a one-time aftertax charge in the first quarter 2010 of approximately $85 million, as a result of a change in U.S. tax law that is part of the recently-enacted U.S. Patient Protection and Affordable Care Act (H.R. 3590).
Under the prior tax law, the total amount paid for prescription drug costs for retirees over the age of 65 was tax-deductible. Beginning in 2013, however, these costs will only be deductible to the extent they exceed the amount of the annual subsidy PPG receives from the U.S. government under Medicare Part D. As a result of this change, the company's deferred tax asset, which reflects the future tax-deductibility of these post-retirement costs, must be reduced under the requirements of U.S. accounting rules and recorded as a charge against earnings in the period that the change in the tax law was enacted.
The company said it evaluating the legislation and the impacts it will have on the company which includes assessing potential actions it could take to ensure that its health care costs do not increase as a result of this legislation.