Dow Chemical 2013 Annual Report Download - page 129
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107
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 $405 million in 2013, $304 million in
2012 and $552 million in 2011. The Company’s take-or-pay commitments associated with these agreements at December 31,
2013 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 remaining terms for all but one of these agreements extend from one to 32 years. One
agreement has a remaining term of 64 years. The determinable future commitments for this specific agreement 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, 2013:
Fixed and Determinable Portion of Take-or-Pay and
Throughput Obligations at December 31, 2013
In millions
2014 $ 2,858
2015 2,580
2016 2,175
2017 1,924
2018 1,818
2019 and beyond 6,883
Total $ 18,238
In addition to the take-or-pay obligations at December 31, 2013, the Company had outstanding commitments which ranged
from one to seven years for materials, services and other items used in the normal course of business of approximately
$254 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
triggering events occur. With guarantees, such as commercial or financial contracts, non-performance by the guaranteed party
triggers the obligation of the Company to make payments to the beneficiary of the guarantee. The majority of the Company’s
guarantees relates to debt of nonconsolidated affiliates, which have expiration dates ranging from less than one year to eight
years, and trade financing transactions in Latin America, which typically expire within one year of inception. The Company’s
current expectation is that future payment or performance related to the non-performance of others is considered unlikely.
Residual Value Guarantees
The Company provides guarantees related to leased assets specifying the residual value that will be available to the lessor at
lease termination through sale of the assets to the lessee or third parties.