Dow Chemical 2015 Annual Report Download - page 122

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Purchase Commitments
The Company 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 29 years. One
agreement has a remaining term of 62 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, 2015 and are included in the following table:
Fixed and Determinable Portion of Take-or-Pay and
Throughput Obligations at December 31, 2015
In millions
2016 $ 2,935
2017 2,415
2018 2,262
2019 1,927
2020 1,799
2021 and beyond 7,827
Total $ 19,165
In addition to the take-or-pay obligations at December 31, 2015, the Company had outstanding commitments which ranged
from 1 to 15 years for materials, services and other items used in the normal course of business of approximately $354 million.
Such commitments were at prices not in excess of current market prices.
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, 2015
In millions
Final
Expiration
Maximum Future
Payments
Recorded
Liability
Guarantees 2021 $ 4,910 $ 102
Residual value guarantees 2025 912 117
Total guarantees $ 5,822 $ 219
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
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 six
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.
The Company has entered into guarantee agreements (“Guarantees”) related to project financing for 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 $11.9 billion of Total Project Financing outstanding at December 31, 2015
($10.5 billion at December 31, 2014). 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.