Dow Chemical 2009 Annual Report Download - page 176

Table of Contents
Compensation expense for ESOP shares allocated to plan participants was $48 million for the year ended December 31, 2009; no shares were allocated to
plan participants in 2008. At December 31, 2009, 14.2 million shares out of a total 48.7 million shares held by the ESOP had been allocated to participants’
accounts, 0.4 million shares were released but unallocated and 34.1 million shares, at a fair value of $942 million, were considered unearned.
Treasury Stock
On July 14, 2005, the Board of Directors authorized the repurchase of up to 25 million shares of Dow common stock over the period ending on December 31,
2007 (the “2005 Program”). During the first quarter of 2007, the Company purchased 6.2 million shares of the Company’s common stock under the 2005
Program, bringing the program to a close.
On October 26, 2006, the Company announced that its Board of Directors had approved a share buy-back program, authorizing up to $2 billion to be
spent on the repurchase of the Company’s common stock (the “2006 Program”). Purchases under the 2006 Program began in March 2007, following the
completion of the 2005 Program. In 2007, the Company purchased 26.2 million shares of the Company’s common stock under the 2006 Program. In 2008,
the Company purchased 21.9 million shares under the 2006 Program, bringing the total number of shares purchased under this program to 48.1 million and
bringing the program to a close.
The total number of treasury shares purchased by the Company, including shares received from employees and non-employee directors to pay taxes owed
to the Company as a result of the exercise of stock options or the delivery of deferred stock, was 0.5 million in 2009; 23.0 million in 2008 and 33.3 million in
2007.
The Company issues shares for options exercised as well as for the release of deferred and restricted stock out of treasury stock. The Company does not
plan to repurchase shares for this activity in 2010. The number of treasury shares issued to employees and non-employee directors under the Company’s
option and purchase programs was 8.7 million in 2009, 7.0 million in 2008 and 15.6 million in 2007.
Reserved Treasury Stock at December 31
Shares in millions 2009 2008 2007
Stock option and deferred stock plans 12.2 57.0 41.0
In May 2009, the Company sold 36.7 million shares from treasury stock to the ESOP.
NOTE X – INCOME TAXES
Operating loss carryforwards amounted to $4,550 million at December 31, 2009 and $4,087 million at December 31, 2008. At December 31, 2009,
$344 million of the operating loss carryforwards were subject to expiration in 2010 through 2014. The remaining operating loss carryforwards expire in years
beyond 2014 or have an indefinite carryforward period. Tax credit carryforwards at December 31, 2009 amounted to $656 million ($680 million at
December 31, 2008), net of uncertain tax positions, of which $1 million is subject to expiration in 2010 through 2014. The remaining tax credit carryforwards
expire in years beyond 2014.
Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently invested amounted to $8,707 million at
December 31, 2009, $8,043 million at December 31, 2008 and $7,752 million at December 31, 2007. It is not practicable to calculate the unrecognized
deferred tax liability on those earnings.
The Company had valuation allowances, which were primarily related to the realization of recorded tax benefits on tax loss carryforwards from operations
in the United States, Brazil, Asia Pacific and Denmark of $721 million at December 31, 2009; valuation allowances of $487 million at December 31, 2008
were primarily related to the realization of recorded tax benefits on tax loss carryforwards from operations in the United States, Brazil, Asia Pacific and
Switzerland. In 2009, $206 million of valuation allowances were associated with the deferred tax assets acquired from Rohm and Haas (see Note D).
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