Dow Chemical 2014 Annual Report Download - page 80

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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 if specific triggering events occur. The Company
had outstanding guarantees at December 31, 2014 of $5,993 million, compared with $5,782 million at December 31, 2013.
Additional information related to these guarantees can be found in the “Guarantees” section of Note 14 to the Consolidated
Financial Statements.
Fair Value Measurements
See Note 10 to the Consolidated Financial Statements for information related to other-than-temporary impairments; see Note 11
for additional information concerning fair value measurements, including the Company’s interests held in trade receivable
conduits; and, see Note 17 for information related to fair value measurements of pension and other postretirement benefit plan
assets.
OUTLOOK
Dow enters 2015 against the backdrop of ongoing macroeconomic, currency and energy market uncertainty. In this
environment, the Company will exercise a strong command over the factors within its control - demanding operational and
commercial excellence, driving proactive portfolio management and productivity actions, executing financial discipline,
efficiently managing cash, and investing in people, markets and assets for long-term growth.
The Company expects to benefit from achieving key strategic milestones during 2015. The first production units at Sadara,
Dow’s strategic joint venture in the Middle East, are expected to come on-line. Dow’s on-purpose propylene production
facility in Freeport, Texas, is expected to start up in mid-2015. The Company will also initiate a controlled launch of
ENLIST™ during the year. These strategic investments, coupled with the Company's integrated strategy and operational
discipline, are expected to deliver higher cash flows, more consistent earnings and increased shareholder renumeration over the
long-term.
OTHER MATTERS
Recent Accounting Guidance
See Note 2 to the Consolidated Financial Statements for a summary of recent accounting guidance.
Critical Accounting Policies
The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) requires management to make judgments, assumptions and estimates that
affect the amounts reported in the consolidated financial statements and accompanying notes. Note 1 to the Consolidated
Financial Statements describes the significant accounting policies and methods used in the preparation of the consolidated
financial statements. Following are the Company’s critical accounting policies impacted by judgments, assumptions and
estimates:
Litigation
The Company is subject to legal proceedings and claims arising out of the normal course of business including product
liability, patent infringement, governmental regulations, contract and commercial litigation, and other actions. The
Company routinely assesses the legal and factual circumstances of each matter, the likelihood of any adverse outcomes
to these matters, as well as ranges of probable losses. A determination of the amount of the reserves required, if any,
for these contingencies is made after thoughtful analysis of each known claim. Dow has an active risk management
program consisting of numerous insurance policies secured from many carriers covering various timeframes. These
policies often provide coverage that is utilized to minimize the financial impact, if any, of the legal proceedings. The
required reserves may change in the future due to new developments in each matter. For further discussion, see
Note 14 to the Consolidated Financial Statements.
Asbestos-Related Matters of Union Carbide Corporation
Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved
in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits
principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both
actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past,
alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s
responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc. Each year,
Analysis, Research and Planning Corporation ("ARPC") performs a review for Union Carbide based upon historical
asbestos claims and resolution activity. Union Carbide compares current asbestos claim and resolution activity to the