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105
Guarantees
The following tables provide a summary of the final expiration, maximum future payments and recorded liability reflected in
the consolidated balance sheets for each type of guarantee:
Guarantees at December 31, 2014
In millions
Final
Expiration
Maximum Future
Payments
Recorded
Liability
Guarantees 2021 $ 5,042 $ 160
Residual value guarantees 2024 951 123
Total guarantees $ 5,993 $ 283
Guarantees at December 31, 2013
In millions
Final
Expiration
Maximum Future
Payments
Recorded
Liability
Guarantees 2021 $ 5,074 $ 137
Residual value guarantees 2021 708 27
Total guarantees $ 5,782 $ 164
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 seven
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.
During 2013, the Company entered into guarantee agreements (“Guarantees”) related to project financing for Sadara Chemical
Company (“Sadara”), a nonconsolidated affiliate. The total of an Islamic bond and Additional Project Financing (collectively
“Total Project Financing”) obtained by Sadara is approximately $12.5 billion. Sadara had $10.5 billion of Total Project
Financing outstanding at December 31, 2014 ($5.8 billion at December 31, 2013). The Company's guarantee of the Total
Project Financing is in proportion to the Company's 35 percent ownership interest in Sadara, or up to approximately
$4.4 billion when the project financing is fully drawn. The Guarantees will be released upon completion of construction of the
Sadara complex and satisfactory fulfillment of certain other conditions, including passage of an extensive operational testing
program, which is currently anticipated by the end of 2017.
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.
During the third quarter of 2014, the Company entered into a residual value guarantee as part of a sale-leaseback transaction for
a significant portion of its North American railcar fleet. The maximum value of the guarantee is $229 million. The sale
transaction resulted in a deferred gain of $102 million, which was recorded as a liability due to the guarantee and will be
deferred until expiration of the ten-year lease unless otherwise terminated.