Dow Chemical 2014 Annual Report Download - page 144

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summarizes the carrying amounts of these entities’ assets and liabilities included in the Company’s consolidated balance sheets
at December 31, 2014 and 2013:
Assets and Liabilities of Consolidated VIEs at December 31
In millions 2014 2013
Cash and cash equivalents (1) $ 190 $ 147
Other current assets 175 143
Property 2,726 2,646
Other noncurrent assets 85 105
Total assets (2) $ 3,176 $ 3,041
Current liabilities (nonrecourse 2014: $391; 2013: $318) $ 394 $ 664
Long-term debt (nonrecourse 2014: $1,229; 2013: $1,360) 1,260 1,392
Other noncurrent liabilities (nonrecourse 2014: $62; 2013: $69) 62 69
Total liabilities $ 1,716 $ 2,125
(1) Included $20 million at December 31, 2014 ($1 million at December 31, 2013) specifically
restricted for the construction, debt servicing and operational expenses of a manufacturing facility.
(2) All assets were restricted at December 31, 2014 and December 31, 2013.
In addition, the Company holds a variable interest in an entity created to monetize accounts receivable of select European
entities. The Company is the primary beneficiary of this entity as a result of holding subordinated notes while maintaining
servicing responsibilities for the accounts receivable. The carrying amounts of assets and liabilities included in the Company’s
consolidated balance sheets pertaining to this entity, were current assets of $99 million (zero restricted) at December 31, 2014
($105 million, zero restricted, at December 31, 2013) and current liabilities were less than $1 million (zero nonrecourse) at
December 31, 2014 (zero, zero nonrecourse, at December 31, 2013).
Amounts presented in the consolidated balance sheets and the table above as restricted assets or nonrecourse obligations
relating to consolidated VIEs at December 31, 2014 and 2013 are adjusted for intercompany eliminations, parental guarantees
and residual value guarantees.
Nonconsolidated Variable Interest Entity
The Company holds a variable interest in a joint venture that manufactures crude acrylic acid in the United States and Germany
on behalf of the Company and the other joint venture partner. The variable interest relates to a cost-plus arrangement between
the joint venture and each joint venture partner. The Company is not the primary beneficiary, as a majority of the joint venture’s
output is committed to the other joint venture partner; therefore, the entity is accounted for under the equity method of
accounting. At December 31, 2014, the Company’s investment in the joint venture was $162 million ($159 million at
December 31, 2013), classified as “Investment in nonconsolidated affiliates” in the consolidated balance sheets, representing
the Company’s maximum exposure to loss.
NOTE 20 – STOCK-BASED COMPENSATION
The Company provides stock-based compensation in the form of the Employee Stock Purchase Plan (“ESPP”), which grants
eligible employees the right to purchase shares of the Company's common stock at a discounted price. The Company also
grants stock-based compensation to employees and non-employee directors in the form of stock incentive plans, which include
stock options, deferred stock, performance deferred stock and restricted stock. Information regarding these plans is provided
below.
Accounting for Stock-Based Compensation
The Company grants stock-based compensation awards that vest over a specified period or upon employees meeting certain
performance and/or retirement eligibility criteria. The fair value of equity instruments issued to employees is measured on the
grant date. The fair value of liability instruments issued to employees (specifically, performance deferred stock awards, which
are granted to executive employees subject to stock ownership requirements, that provide the recipient the option to elect to
receive a cash payment equal to the value of the stock award on the date of delivery) is measured at the end of each quarter. The
fair value of equity and liability instruments is expensed over the vesting period or, in the case of retirement, from the grant
date to the date on which retirement eligibility provisions have been met and additional service is no longer required.