Dow Chemical 2009 Annual Report Download - page 91

Table of Contents
Major projects underway during 2009 included: the design and construction of a new chlor-alkali production facility to replace existing facilities, and the
replacement of furnaces used in the production of ethylene in Freeport, Texas; construction of a regional headquarters facility in Shanghai, China; and
construction of a new polyols plant in Terneuzen, The Netherlands. Additional major projects included upgrades to isopropanol production facilities in Texas
City, Texas; construction of a facility to produce diesel particulate filters in Midland, Michigan; the construction of a facility to produce DOWANOL™
glycol ethers in Zhangjiagang, China; and the installation of two new steam boilers in Stade, Germany. Because the Company designs and builds most of its
capital projects in-house, it had no material capital commitments other than for the purchase of materials from fabricators and construction labor. The
Company expects capital spending in 2010 to be approximately $1.6 billion not including capital spending by the consolidated variable interest entity.
Contractual Obligations
The following tables summarize the Company’s contractual obligations, commercial commitments and expected cash requirements for interest at December 31,
2009. Additional information related to these obligations can be found in Notes N, O, P, Q and X to the Consolidated Financial Statements.
Contractual Obligations at December 31,
2009 Payments Due by Year
In millions 2010 2011 2012 2013 2014
2015 and
beyond Total
Long-term debt – current and noncurrent (1) $ 1,082 $ 1,796 $ 2,843 $ 862 $ 2,201 $ 11,935 $ 20,719
Deferred income tax liabilities – noncurrent (2) - - - - - 1,285 1,285
Pension and other postretirement benefits 496 565 1,188 1,327 1,330 2,241 7,147
Other noncurrent obligations (3) 133 327 198 139 133 3,098 4,028
Uncertain tax positions, including interest and
penalties (4) 76 - - - - 600 676
Other contractual obligations:
Minimum operating lease commitments 245 168 132 111 85 1,225 1,966
Purchase commitments – take-or-pay and
throughput obligations 2,845 2,655 1,716 1,088 944 5,969 15,217
Purchase commitments – other (5) 20 5 3 - - 20 48
Expected cash requirements for interest 1,364 1,319 1,229 1,095 1,045 9,354 15,406
Total $ 6,261 $ 6,835 $ 7,309 $ 4,622 $ 5,738 $ 35,727 $ 66,492
(1) Excludes unamortized debt discount of $485 million, which is reflected in “2015 and beyond.”
(2) Deferred income tax liabilities may vary according to changes in tax laws, tax rates and the operating results of the Company. As a result, it is impractical to determine whether there
will be a cash impact to an individual year. All noncurrent deferred income tax liabilities have been reflected in “2015 and beyond.”
(3) Annual payments to resolve asbestos litigation will vary based on changes in defense strategies, changes in state and national law, and claims filing and resolution rates. As a result,
it is impractical to determine the anticipated payments in any given year. Therefore, the majority of the noncurrent asbestos-related liability of $734 million has been reflected in “2015
and beyond.”
(4) Due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities, the Company is unable to determine the timing of payments
related to its uncertain tax positions, including interest and penalties. Amounts beyond the current year are therefore reflected in “2015 and beyond.”
(5) Includes outstanding purchase orders and other commitments greater than $1 million, obtained through a survey conducted within the Company.
Off-Balance Sheet Arrangements
Guarantees arise during the ordinary course of business from relationships with customers and nonconsolidated affiliates when the Company undertakes an
obligation to guarantee the performance of others if specific triggering events occur. Information regarding the Company’s outstanding guarantees at
December 31, 2009 is disclosed in Note N to the Consolidated Financial Statements.
The Company leases an ethylene facility in The Netherlands from an owner trust that is a variable interest entity (“VIE”). Dow is not the primary
beneficiary of the owner trust and therefore is not required to consolidate the owner trust. In addition, the Company holds a variable interest in a joint venture
accounted for under the equity method of accounting. The Company is not the primary beneficiary of the joint venture and therefore is not required to
consolidate the entity. Additional information regarding these VIEs can be found in Note R to the Consolidated Financial Statements. See Note B to the
Consolidated Financial Statements for information regarding the impact of adopting Accounting Standards Update (“ASU”) 2009-17, “Consolidations (Topic
810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” on January 1, 2010.
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