乐天堂fun88(中国区)官方网站 Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2011

VARIABLE INTEREST ENTITIES

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VARIABLE INTEREST ENTITIES

5. VARIABLE INTEREST ENTITIES

听听听听听听听听We evaluate our investments and transactions to identify variable interest entities ("VIEs") for which we are the primary beneficiary. We hold a variable interest in the following four joint ventures for which we are the primary beneficiary:

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Rubicon听LLC manufactures products for our Polyurethanes segment. The joint venture is structured such that the total equity investment at risk is not sufficient to permit it to finance its activities without additional financial support. Under the Rubicon听LLC operating agreement, we purchase a majority of the output, absorb a majority of the operating costs and provide a majority of the additional funding.

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Pacific Iron Products Sdn Bhd ("Pacific Iron Products") manufactures products for our Pigments segment. In this joint venture, we supply all the raw materials through a fixed cost supply agreement, operate the manufacturing facility and market the products. Under the fixed cost supply agreement, we are exposed to the risks related to the fluctuation of raw material prices.

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Arabian Amines Company manufactures ethyleneamines products for our Performance Products segment. Prior to July听1, 2010, this joint venture was accounted for under the equity method. In July 2010, Arabian Amines Company exited the development stage, which triggered its reconsideration as a VIE. As required in the Arabian Amines Company operating agreement, we purchase all of its production and sell it to our customers. Substantially all of the joint venture's activities are conducted on our behalf.

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Sasol-乐天堂fun88(中国区)官方网站 is our 50/50 joint venture with Sasol that owns and operates a maleic anhydride facility in Moers, Germany. This joint venture manufactures products for our Performance Products segment. Prior to April听1, 2011, we accounted for Sasol-乐天堂fun88(中国区)官方网站 using the equity method. During the nine months ended September听30, 2010 we recorded a nonrecurring $18听million credit to equity income of investment in unconsolidated affiliates to appropriately reflect our investment in the Sasol-乐天堂fun88(中国区)官方网站 joint venture. In April 2011, an expansion at this facility began production, which triggered the reconsideration of this joint venture as a VIE. The joint venture uses our technology and expertise, and we bear a disproportionate amount of risk of loss due to a related-party loan to Sasol-乐天堂fun88(中国区)官方网站 for which we bear the default risk. As a result, we concluded that we were the primary beneficiary and began consolidating Sasol-乐天堂fun88(中国区)官方网站 beginning April听1, 2011.

听听听听听听听听Creditors of these VIEs have no recourse to our general credit, except in the event that we offer guarantees of specified indebtedness. As the primary beneficiary, the joint ventures' assets, liabilities and results of operations are included in our condensed consolidated financial statements (unaudited).

听听听听听听听听The following table summarizes the carrying amount of Rubicon听LLC, Pacific Iron Products and Arabian Amines Company's assets and liabilities included in our condensed consolidated balance sheet (unaudited), before intercompany eliminations (dollars in millions):

听	听	September听30, 2011		听	December听31, 2010		听

Current assets	听	$	120	听	$	90	听
Property, plant and equipment, net	听	听	261	听	听	275	听
Other noncurrent assets	听	听	59	听	听	56	听
Deferred income taxes	听	听	40	听	听	40	听
Intangible assets	听	听	6	听	听	7	听
听	听	听		听	听		听
Total assets	听	$	486	听	$	468	听
听	听	听		听	听		听
Current liabilities	听	听	129	听	听	111	听
Long-term debt	听	听	186	听	听	188	听
Deferred income taxes	听	听	2	听	听	聴	听
Other noncurrent liabilities	听	听	91	听	听	109	听
听	听	听		听	听		听
Total liabilities	听	$	408	听	$	408	听
听	听	听		听	听		听

听听听听听听听听In April 2011, Arabian Amines Company settled a dispute with its third party contractors and received an amount totaling $11听million. Of this $11听million settlement, $8听million was related to damages incurred due to the delayed initial acceptance of the plant. This amount was recorded as other operating (income) expense in the condensed consolidated statements of operations and comprehensive income (loss) (unaudited) and included in the cash flows from operating activities in the condensed consolidated statements of cash flows (unaudited). The remaining $3听million of the settlement was received for the reimbursement of capital expenditures for work left unfinished by the third party contractors. This amount was included in cash flows from investing activities in the condensed consolidated statements of cash flows (unaudited).

听听听听听听听听The following table summarizes the fair value of Sasol-乐天堂fun88(中国区)官方网站's assets and liabilities as of April听1, 2011 recorded upon initial consolidation in our condensed consolidated balance sheet (unaudited) and the carrying amounts of such assets and liabilities as of September听30, 2011, before intercompany eliminations (dollars in millions):

听	听	September听30, 2011		听	April听1, 2011		听

Current assets	听	$	67	听	$	61	听
Property, plant and equipment, net	听	听	151	听	听	155	听
Intangible assets	听	听	18	听	听	16	听
Goodwill	听	听	16	听	听	17	听
听	听	听		听	听		听
Total assets	听	$	252	听	$	249	听
听	听	听		听	听		听
Current liabilities	听	听	27	听	听	23	听
Long-term debt	听	听	97	听	听	93	听
Deferred income taxes	听	听	8	听	听	8	听
Other noncurrent liabilities	听	听	5	听	听	7	听
听	听	听		听	听		听
Total liabilities	听	$	137	听	$	131	听
听	听	听		听	听		听

听听听听听听听听Goodwill of $17听million was recognized upon consolidation of Sasol-乐天堂fun88(中国区)官方网站, of which approximately $12听million is deductible for income tax purposes. The total amount of goodwill changed approximately $1听million from the date of consolidation to September听30, 2011 due to a change in the foreign currency exchange rate. All other intangible assets are being amortized over an average useful life of 18听years.

听听听听听听听听Sasol-乐天堂fun88(中国区)官方网站 had revenues and earnings of $83听million and $8听million, respectively, for the period from the date of consolidation to September听30, 2011. If this consolidation had occurred on January听1, 2010, the approximate pro forma revenues attributable to both our Company and 乐天堂fun88(中国区)官方网站 International would have been $2,425听million for the three months ended September听30, 2010 and $8,618听million and $6,904听million for the nine months ended September听30, 2011 and 2010, respectively. There would have been no impact to the combined earnings attributable to us or 乐天堂fun88(中国区)官方网站 International excluding a one-time noncash gain of approximately $12听million recognized upon consolidation included in other operating income in the condensed consolidated statements of operations and comprehensive income (loss) (unaudited). Upon consolidation we also recognized a one-time noncash income tax expense of approximately $2听million. The fair value of the noncontrolling interest was estimated to be $61听million at April听1, 2011. The noncontrolling interest was valued at 50% of the fair value of the net assets as of April听1, 2011, as dictated by the ownership interest percentages, adjusted for certain tax consequences only applicable to one parent.

- Definition

Entire disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide. The entire data is captured as a single block of text.

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