Dow Chemical 2013 Annual Report Download - page 59

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The tax rate for 2011 was positively impacted by a high level of equity earnings as a percentage of total earnings, earnings in
foreign locations taxed at rates less than the U.S. statutory rate, the sale of a contract manufacturing business and the
reorganization of a joint venture. The tax rate for 2011 was negatively impacted by a $264 million valuation allowance
recorded in the fourth quarter of 2011. The valuation allowance was recorded against the deferred tax assets of two Dow
entities in Brazil. As a result of the global recession in 2008-2009, coupled with rapidly deteriorating isocyanate industry
conditions and increasing local costs, these two entities were in a three-year cumulative pretax operating loss position at
December 31, 2011. While the Company expects to realize the tax loss carryforwards generated by these operating losses based
on several factors - including forecasted margin expansion resulting from improving economic conditions, higher industry
growth rates in Brazil, improving Dow operating rates, and a restructuring of legal entities to maximize the use of existing tax
loss carryforwards - Dow was unable to overcome the negative evidence of recent cumulative operating losses; and at
December 31, 2011, the Company could not assert it was more likely than not that it will realize its deferred tax assets in the
two Brazilian entities. Accordingly, the Company established the valuation allowance against the deferred tax assets of these
companies in the fourth quarter of 2011. If in the future, as a result of the Company's plans and expectations, one or both of
these entities generates sufficient profitability such that the evaluation of the recoverability of the deferred tax assets changes,
the valuation allowance could be reversed in whole or in part in a future period. These factors resulted in an effective tax rate of
22.7 percent for 2011.
Net Income (Loss) Attributable to Noncontrolling Interests
Net income (loss) attributable to noncontrolling interests was net income of $29 million in 2013, net loss of $82 million in 2012
and net income of $42 million in 2011. Net income (loss) attributable to noncontrolling interests increased in 2013, primarily
due to reduced losses at Dow Kokam, which was impacted by a significant restructuring charge related to the write-down of
long-lived assets in the fourth quarter of 2012. Net income (loss) attributable to noncontrolling interests decreased in 2012
compared with 2011 due to Dow Kokam's impairment charge and operating losses which more than offset improved results in
the Performance Materials affiliates. On November 22, 2013, the Company sold its ownership interest in Dow Kokam. See
Notes 3 and 5 to the Consolidated Financial Statements for details on the Dow Kokam impairment charge and divestiture. See
Note 19 to the Consolidated Financial Statements for additional information concerning noncontrolling interests.
Preferred Stock Dividends
Preferred stock dividends of $340 million were recognized in 2013, 2012 and 2011. These dividends related to the Company's
Cumulative Convertible Perpetual Preferred Stock, Series A. See Note 21 to the Consolidated Financial Statements for
additional information.
Net Income Available for Common Stockholders
Net income available for common stockholders was $4,447 million ($3.68 per share) in 2013, compared with $842 million
($0.70 per share) in 2012 and $2,402 million ($2.05 per share) in 2011.
Certain Items Impacting Results
The Company's management believes that measures of income adjusted to exclude certain items ("non-GAAP" financial
measures) provide relevant and meaningful information to investors about the ongoing operating results of the Company. Such
financial measures are not recognized in accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP") and should not be viewed as an alternative to U.S. GAAP financial measures of performance.