ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

7. VARIABLE INTEREST ENTITIES

ÌýÌýÌýÌýÌýÌýÌýÌýWe evaluate our investments and transactions to identify variable interest entities 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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  RubiconÌýLLC manufactures products for our Polyurethanes and Performance Products segments. The structure of the joint venture is such that the total equity investment at risk is not sufficient to permit the joint venture to finance its activities without additional financial support. By virtue of the operating agreement with this joint venture, 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 manufactures products for our Pigments segment. In this joint venture we supply all the raw materials through a fixed cost supply contract, operate the manufacturing facility and market the products of the joint venture to customers. Through a fixed price raw materials supply contract with the joint venture we are exposed to the risk related to the fluctuation of raw material pricing.
  
  

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  Arabian Amines Company manufactures products for our Performance Products segment. Prior to JulyÌý1, 2010, this joint venture was in the development stage and the total equity investment at risk was sufficient for the joint venture to finance its activities without additional support. Therefore, Arabian Amines Company was accounted for under the equity method. In July 2010, Arabian Amines Company exited the development stage, which triggered the reconsideration of Arabian Amines Company as a variable interest entity. As required in the operating agreement governing this joint venture, we purchase all of Arabian Amines Company's production and sell it to our customers. Substantially all of the joint venture's activities are conducted on our behalf. Accordingly, we concluded that we were the primary beneficiary and began consolidating Arabian Amines Company beginning JulyÌý1, 2010.
  
  

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  Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ is our 50%-owned 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 AprilÌý1, 2011, we accounted for Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ using the equity method. In April 2011, an expansion at this facility began production, which triggered the reconsideration of this joint venture as a variable interest entity. 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-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ for which we bear the default risk. As a result, we concluded that we were the primary beneficiary and began consolidating Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ beginning AprilÌý1, 2011.

ÌýÌýÌýÌýÌýÌýÌýÌýCreditors of these entities have no recourse to our general credit, except in the event that we offer guarantees of specified indebtedness. See "NoteÌý14. Debt—Direct and Subsidiary Debt." As the primary beneficiary of these variable interest entities at DecemberÌý31, 2012, the joint ventures' assets, liabilities and results of operations are included in our consolidated financial statements.

ÌýÌýÌýÌýÌýÌýÌýÌýThe following table summarizes the carrying amount of our variable interest entities' assets and liabilities included in our consolidated balance sheets, before intercompany eliminations, as of DecemberÌý31, 2012 and 2011 (dollars in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýIn April 2011, Arabian Amines Company settled a dispute with its contractors and received an amount totaling $11Ìýmillion. Of this $11Ìýmillion settlement, $8Ìýmillion 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 consolidated statements of operations and included in the cash flows from operating activities in the consolidated statements of cash flows. The remaining $3Ìýmillion of the settlement was received for the reimbursement of capital expenditures for work left unfinished by the contractors. This amount was included in cash flows from investing activities in the consolidated statements of cash flows.

ÌýÌýÌýÌýÌýÌýÌýÌýThe following table summarizes the fair value of Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾'s assets and liabilities recorded upon initial consolidation in our consolidated balance sheet, before intercompany eliminations (dollars in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýGoodwill of $17Ìýmillion was recognized upon consolidation of Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾, of which approximately $12Ìýmillion is deductible for income tax purposes. The total amount of goodwill changed approximately $2Ìýmillion from the date of consolidation to DecemberÌý31, 2011, due to a change in the foreign currency exchange rate. All other intangible assets are being amortized over an average useful life of 18Ìýyears. The net change to goodwill in response to changes in the foreign currency exchange rate during 2012 was $1Ìýmillion.

ÌýÌýÌýÌýÌýÌýÌýÌýSasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ had revenues and earnings of $116Ìýmillion and $7Ìýmillion, respectively, for the period from the date of consolidation to DecemberÌý31, 2011. If this consolidation had occurred on JanuaryÌý1, 2010, the approximate pro forma revenues attributable to our Company would have been $11,259Ìýmillion and $9,337Ìýmillion for 2011 and 2010, respectively. There would have been no impact to the combined earnings attributable to us excluding a one-time noncash gain of approximately $12Ìýmillion recognized upon consolidation included in other operating income in the consolidated statements of operations and comprehensive (loss) income. Upon consolidation we also recognized a one-time noncash income tax expense of approximately $2Ìýmillion. The fair value of the noncontrolling interest was estimated to be $61Ìýmillion at AprilÌý1, 2011. The noncontrolling interest was valued at 50% of the fair value of the net assets as of AprilÌý1, 2011, as dictated by the ownership interest percentages, adjusted for certain tax consequences only applicable to one parent.