Dow Chemical 2012 Annual Report Download - page 156

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Dividends on unallocated shares held by the ESOP are used by the ESOP to make debt service payments and to purchase
additional shares if dividends exceed the debt service payments. Dividends on allocated shares are used by the ESOP to make
debt service payments to the extent needed; otherwise, they are paid to the Plan participants. Shares are released for allocation
to participants based on the ratio of the current year’s debt service to the sum of the principal and interest payments over the
life of the loan. The shares are allocated to Plan participants in accordance with the terms of the Plan.
Compensation expense for allocated shares is recorded at the fair value of the shares on the date of allocation. ESOP shares
that have not been released or committed to be released are not considered outstanding for purposes of computing basic and
diluted earnings per share.
Compensation expense for ESOP shares allocated to plan participants was $107 million in 2012, $102 million in 2011 and
$81 million in 2010. At December 31, 2012, 15.4 million shares out of a total 40.9 million shares held by the ESOP had been
allocated to participants’ accounts; 0.9 million shares were released but unallocated; and 24.6 million shares, at a fair value of
$794 million, were considered unearned.
Treasury Stock
The total number of treasury shares purchased by the Company, primarily 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
zero in 2012, 0.5 million in 2011 and 0.5 million in 2010.
The Company issues shares for options exercised as well as for the release of deferred and restricted stock out of treasury
stock or as new common stock shares. The number of treasury shares issued to employees and non-employee directors under
the Company’s option and purchase programs was zero in 2012, 5.6 million in 2011 and 7.5 million in 2010.
Reserved Treasury Stock at December 31
Shares in millions 2012 2011 2010
Stock option and deferred stock plans — — 5.1
Subsequent Event
On February 13, 2013, the Board of Directors approved a share buy-back program, authorizing up to $1.5 billion to be spent on
the repurchase of the Company's common stock over a period of time.
NOTE 22 – INCOME TAXES
Domestic and Foreign Components of Income Before Income Taxes
In millions 2012 2011 2010
Domestic (1) $ (401) $ 386 $ (821)
Foreign 2,066 3,215 3,623
Total $ 1,665 $ 3,601 $ 2,802
(1) In 2012, the domestic component of "Income Before Income Taxes" was significantly
impacted by the Company's 1Q12 and 4Q12 restructuring charges.
Provision for Income Taxes
2012 2011 2010
In millions Current Deferred Total Current Deferred Total Current Deferred Total
Federal $ 241 $ (312) $ (71) $ 36 $ (244) $ (208) $ (576) $ 445 $ (131)
State and local 9 (10) (1) 12 (13) (1) (36) (21) (57)
Foreign 780 (143) 637 768 258 1,026 765 (96) 669
Total $ 1,030 $ (465) $ 565 $ 816 $ 1 $ 817 $ 153 $ 328 $ 481