Dow Chemical 2014 Annual Report Download - page 128

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Appeals' opinion, and subsequent denial of Dow’s Rehearing Petition indicate that it is reasonably possible that a loss could
occur. The estimate of the possible range of loss to Dow is zero to the $1.06 billion judgment (excluding post-judgment interest
and possible award of class attorney fees).
On September 30, 2014, the "opt-out" cases that had been consolidated with the class action lawsuit for purposes of pre-trial
proceedings were remanded from the District Court to the U.S. District Court for the District of New Jersey.
In addition to the matters described above, there are two separate but inter-related matters in Ontario and Quebec, Canada. In
March 2014, the Superior Court of Justice in London, Ontario, ruled in favor of the plaintiffs’ motion for class certification.
Dow filed its Notice of Motion for Leave to Appeal in March 2014, which was subsequently denied. The Quebec case has been
stayed pending the outcome of the Ontario case. The Company has concluded it is not probable that a loss will occur and,
therefore, a liability has not been recorded with respect to the opt-out litigation or the Canadian matters.
Other Litigation Matters
In addition to the specific matters described above, the Company is party to a number of other claims and lawsuits arising out
of the normal course of business with respect to product liability, patent infringement, governmental regulation, contract and
commercial litigation, 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. It is the opinion of the Company’s management that the
possibility is remote that the aggregate of all such other 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 $354 million in 2014, $405 million in
2013 and $304 million in 2012. The Company’s take-or-pay commitments associated with these agreements at December 31,
2014 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 1 to 31 years. One
agreement has a remaining term of 63 years. The 10-year future commitments for this agreement as well as the fixed and
determinable portion of all other obligations under the Company's purchase commitments have been updated as of
December 31, 2014 and are included in the following table:
Fixed and Determinable Portion of Take-or-Pay and
Throughput Obligations at December 31, 2014
In millions
2015 $ 2,930
2016 2,688
2017 2,222
2018 1,981
2019 1,385
2020 and beyond 7,305
Total $ 18,511
In the fourth quarter of 2014, the Company redeemed its remaining 7.5 percent limited partner interest in Freeport LNG
Development, L.P. in exchange for favorably amended terms related to a Terminal Use Agreement ("TUA"). The primary
changes to the amended TUA include a reduction in the contract term from December 31, 2028 to December 31, 2020, and
monthly fixed and variable take-or-pay payments were replaced with fixed monthly fees. As a result of these changes, Dow's
fixed and determinable portion of the take-or-pay obligation was reduced by approximately $700 million and is reflected in the
preceding table.
In addition to the take-or-pay obligations at December 31, 2014, the Company had outstanding commitments which ranged
from 1 to 11 years for materials, services and other items used in the normal course of business of approximately $346 million.
Such commitments were at prices not in excess of current market prices.