Dow Chemical 2011 Annual Report Download - page 188

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NOTE G – PROPERTY
Property at December 31
In millions
Land
Land and waterway improvements
Buildings
Machinery and equipment
Utility and supply lines
Other property
Construction in progress
Total property
Estimated Useful
Lives (Years)
—
15-25
5-55
3-20
5-20
3-30
—
2011
$ 862
1,310
4,513
37,580
2,264
2,290
3,397
$ 52,216
2010
$ 893
1,264
4,442
37,224
2,229
2,133
3,463
$ 51,648
In millions
Depreciation expense
Manufacturing maintenance and repair costs
Capitalized interest
2011
$ 2,177
$ 2,247
$ 90
2010
$ 2,289
$ 1,949
$ 72
2009
$ 2,291
$ 1,473
$ 61
NOTE H – NONCONSOLIDATED AFFILIATES AND RELATED COMPANY TRANSACTIONS
The Company’s investments in companies accounted for using the equity method (“nonconsolidated affiliates”) were
$3,405 million at December 31, 2011 and $3,453 million at December 31, 2010. At December 31, 2011, the carrying amount of
the Company’s investments in nonconsolidated affiliates was $80 million more than its share of the investees’ net assets,
exclusive of additional differences for Dow Corning Corporation (“Dow Corning”) and MEGlobal, which are discussed
separately below. At December 31, 2010, the carrying amount of the Company’s investments in nonconsolidated affiliates was
$74 million more than its share of the investees’ net assets, exclusive of additional differences for Dow Corning, MEGlobal and
Equipolymers. Dividends received from the Company’s nonconsolidated affiliates were $1,016 million in 2011, $668 million in
2010 and $690 million in 2009.
At December 31, 2011 and December 31, 2010, the Company’s investment in Dow Corning was $227 million less than the
Company’s proportionate share of Dow Corning’s underlying net assets. This amount is considered a permanent difference
related to the other-than-temporary decline in the Company's investment in Dow Corning, triggered by Dow Corning's May 15,
1995 bankruptcy filing. Dow Corning emerged from bankruptcy in 2004 (see Note N).
At December 31, 2010, the Company’s 50 percent investment in Equipolymers was $7 million less than the Company’s
proportionate share of Equipolymers’ underlying net assets. This amount represented 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 was 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. On July 1, 2011, Equipolymers was merged into MEGlobal, with
MEGlobal continuing as the surviving entity. In the third quarter of 2011, the Company received $115 million on a previously
impaired note receivable related to its investment in Equipolymers and recognized $86 million in income, included in "Equity
in earnings of nonconsolidated affiliates" in the consolidated statements of income and reflected in Performance Plastics.
At December 31, 2011, the Company’s investment in MEGlobal was $199 million less than the Company’s proportionate
share of MEGlobal’s underlying net assets ($250 million less at December 31, 2010). 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
$60 million (including $6 million related to Equipolymers) is being amortized over the remaining useful lives of the assets and
$139 million is considered to be a permanent difference.
On October 30, 2011, the Company and Saudi Arabian Oil Company (“Saudi Aramco”) formed a joint venture, Sadara
Chemical Company (“Sadara”), to build and operate a world-scale, fully integrated chemicals complex in Jubail Industrial City,
Kingdom of Saudi Arabia. The Company and Saudi Aramco have jointly funded the development of this project to date.
However, formal contribution of the development costs to Sadara will not occur until 2012. At December 31, 2011, the
Company's cumulative investment in the development costs since inception of $824 million is recorded in “Noncurrent
receivables” in the consolidated balance sheets. With the formation of the joint venture, the Company's investment in the
Sadara project in the fourth quarter of 2011 is included in “Investments in and loans to nonconsolidated affiliates” in the
consolidated statements of cash flows. Prior to the fourth quarter of 2011, the Company's investment in the Sadara project was
included in “Investments in consolidated companies, net of cash acquired” in the consolidated statements of cash flows.