INCOME TAXES

3 Months Ended

Mar. 31, 2013

INCOME TAXES

INCOME TAXES

14. INCOME TAXES

The effective income tax rates of negative 39.5 percent and 34.3 percent for the three months ended March 31, 2013 and 2012, respectively, were determined using an estimated annual effective tax rate and after considering discrete items for each period. The negative effective tax rate for March 31, 2013 was primarily due to income tax expense on the gain attributable to the acquisition of PPG's 50 percent ownership interest in PHH in connection with the Transactions, and the impact of state income taxes due to the Transactions. These items were recorded as discrete tax items for the three months ended March 31, 2013.

The effective tax rate in 2012 was lower than the U.S. statutory federal income tax rate primarily due to provisions for state tax and various permanent differences including deductions for manufacturing activities and the impact of reversing various uncertain tax positions.