Dow Chemical 2009 Annual Report Download - page 136

Table of Contents
NOTE H – NONCONSOLIDATED AFFILIATES AND RELATED COMPANY TRANSACTIONS
The Company’s investments in related companies accounted for using the equity method (“nonconsolidated affiliates”) were $3,224 million at December 31,
2009 and $3,204 million at December 31, 2008. At December 31, 2009, the carrying amount of the Company’s investments in nonconsolidated affiliates was
$52 million more than its share of the investees’ net assets, exclusive of additional differences for Dow Corning Corporation (“Dow Corning”), MEGlobal,
Equipolymers and Americas Styrenics LLC, which are discussed separately below. This difference was $90 million at December 31, 2008. Dividends
received from the Company’s nonconsolidated affiliates were $690 million in 2009, $836 million in 2008 and $774 million in 2007.
On May 15, 1995, Dow Corning, in which the Company is a 50 percent shareholder, voluntarily filed for protection under Chapter 11 of the U.S.
Bankruptcy Code (see Note N). As a result, the Company fully reserved its investment in Dow Corning and reserved its 50 percent share of equity earnings
from that time through the third quarter of 2000. In November 2000, following affirmation of the Bankruptcy Court’s order confirming the Joint Plan of
Reorganization (the “Joint Plan”), the Company reviewed the value of its investment in Dow Corning, revised its assessment of the recoverability of its
investment, and determined that it had adequately provided for the other-than-temporary decline associated with the bankruptcy. On June 1, 2004, Dow
Corning’s Joint Plan became effective and Dow Corning emerged from bankruptcy. Since May 1995, a difference between the Company’s 50 percent share of
the underlying equity of Dow Corning and the carrying value of this investment has existed. The Company considers the difference to be permanent. The
Company’s investment in Dow Corning was $227 million less than the Company’s proportionate share of Dow Corning’s underlying net assets at
December 31, 2009 and December 31, 2008.
At December 31, 2009, the Company’s investment in MEGlobal was $257 million less than the Company’s proportionate share of MEGlobal’s
underlying net assets ($265 million less at December 31, 2008). This amount represents the difference between the value of certain assets of the joint venture
and the Company’s related valuation on a U.S. GAAP basis, of which $67 million is being amortized over the remaining useful lives of the assets and
$190 million represents the Company’s share of the joint venture’s goodwill.
At December 31, 2009, the Company’s investment in Equipolymers was $8 million less than the Company’s proportionate share of Equipolymers’
underlying net assets ($9 million less at December 31, 2008). This amount represents the difference between the value of certain assets of the joint venture and
the Company’s related valuation on a U.S. GAAP basis, all of which is being amortized over the remaining useful lives of the assets. In the fourth quarter of
2009, the Company recognized an impairment loss of $65 million related to its investment in Equipolymers.
At December 31, 2009, the Company’s investment in Americas Styrenics LLC was $136 million less than the Company’s proportionate share of
Americas Styrenics LLC’s underlying net assets ($150 million less at December 31, 2008). This amount represents the difference between the book value of
assets contributed to the joint venture by the Company at the time of formation (May 1, 2008) and the Company’s 50 percent share of the total recorded value
of the joint venture’s assets. This difference is being amortized over the remaining useful lives of the assets.
All of the nonconsolidated affiliates in which the Company has investments are privately held companies; therefore, quoted market prices are not
available.
See Note E for information regarding the divestiture of the Company’s investment in two nonconsolidated affiliates in 2009.
Principal Nonconsolidated Affiliates
Dow’s principal nonconsolidated affiliates and the Company’s direct or indirect ownership interest for each at December 31, 2009, 2008 and 2007 are as
follows:
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