Dow Chemical 2011 Annual Report Download - page 210

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appeal from the final order. In November 2010, the District Court issued an order approving class counsel’s fee award petition
in an amount consistent with the terms of the settlement. The same objectors also appealed this order. On September 2, 2011,
the Seventh Circuit affirmed the approval of the settlement and award of attorneys' fees. A lone objector filed a petition for
rehearing, which was denied on October 17, 2011. The objector continued the appeal process by timely filing a petition for a
writ of certiorari to the U.S. Supreme Court, which is pending.
A pension liability associated with this matter of $185 million was recognized as part of the acquisition of Rohm and Haas
on April 1, 2009. The liability, which was determined in accordance with the accounting guidance for contingencies,
recognized the estimated impact of the above described judicial decisions on the long-term Rohm and Haas Plan obligations
owed to the applicable Rohm and Haas retirees and active employees. The Company had a liability associated with this matter
of $189 million at December 31, 2011 and $186 million at December 31, 2010.
Other Litigation Matters
In addition to breast implant, DBCP, environmental and synthetic rubber industry matters, the Company is party to a number of
other claims and lawsuits arising out of the normal course of business with respect to commercial matters, including product
liability, governmental regulation and other actions. Certain of these actions purport to be class actions and seek damages in
very large amounts. All such claims are being contested. Dow has an active risk management program consisting of numerous
insurance policies secured from many carriers at various times. These policies often provide coverage that will be utilized to
minimize the financial impact, if any, of the contingencies described above.
Summary
Except for the possible effect of Union Carbide’s asbestos-related liability described above, it is the opinion of the Company’s
management that the possibility is remote that the aggregate of all claims and lawsuits will have a material adverse impact on
the results of operations, financial condition and cash flows of the Company.
Purchase Commitments
The Company has numerous agreements for the purchase of ethylene-related products globally. The purchase prices are
determined primarily on a cost-plus basis. Total purchases under these agreements were $552 million in 2011, $714 million in
2010 and $784 million in 2009. The Company’s take-or-pay commitments associated with these agreements at December 31,
2011 are included in the table below.
The Company also has various commitments for take-or-pay and throughput agreements. These commitments are at prices
not in excess of current market prices. The terms of all but two of these agreements extend from one to 25 years. One
agreement has terms extending to 35 years and another has terms extending to 80 years. The determinable future commitments
for these two specific agreements for a period of 10 years are included in the following table along with the fixed and
determinable portion of all other obligations under the Company’s purchase commitments at December 31, 2011:
Fixed and Determinable Portion of Take-or-Pay and
Throughput Obligations at December 31, 2011
In millions
2012
2013
2014
2015
2016
2017 and beyond
Total
$ 2,968
2,964
2,371
1,693
1,426
9,074
$ 20,496
In addition to the take-or-pay obligations at December 31, 2011, the Company had outstanding commitments which ranged
from one to ten years for materials, services and other items used in the normal course of business of approximately
$171 million. Such commitments were at prices not in excess of current market prices.
Guarantees
The Company provides a variety of guarantees, as described more fully in the following sections.
Guarantees
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 (via delivery of cash or other assets) if specified