VARIABLE INTEREST ENTITIES

A complete description of the Company's variable interest entities can be found in Note 19 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Consolidated Variable Interest Entities

During the first quarter of 2014, the membrane chlor-alkali joint venture at the Company's Freeport, Texas integrated manufacturing complex successfully initiated full-scale, commercial production.

The Company previously held a variable interest in an owner trust, for which the Company was the primary beneficiary. The owner trust leased an ethylene facility in The Netherlands to the Company, whereby substantially all of the rights and obligations of ownership were transferred to the Company. The Company's variable interest in the owner trust related to a fixed purchased price option. On January 2, 2014, the Company purchased the ethylene facility for $406 million, including cash payments of $350 million and a note payable of $56 million, which is classified as "Notes payable" in the consolidated balance sheets and will be paid by December 31, 2014. In the first quarter of 2014, the Company classified $346 million as "Payments on long-term debt" and $4 million as "Purchases of noncontrolling interests" in the consolidated statements of cash flows. Future payments on the note payable will be classified as "Purchases of noncontrolling interests" in the consolidated statements of cash flows.

The Company's consolidated financial statements include the assets, liabilities and results of operations of variable interest entities ("VIEs"), for which the Company is the primary beneficiary. The other equity holders’ interests are reflected in “Net income attributable to noncontrolling interests” in the consolidated statements of income and "Redeemable Noncontrolling Interest" and “Noncontrolling interests” in the consolidated balance sheets. The following table summarizes the carrying amounts of the entities’ assets and liabilities included in the Company’s consolidated balance sheets at March 31, 2014 and December 31, 2013:



Assets and Liabilities of Consolidated VIEs In millions	Mar 31, 2014		Dec 31, 2013
Cash and cash equivalents (1)	$	184	$	147
Other current assets	154		143
Property	2,699		2,646
Other noncurrent assets	102		105
Total assets (2)	$	3,139	$	3,041
Current liabilities (nonrecourse 2014: $319; 2013: $318)	$	319	$	664
Long-term debt (nonrecourse 2014: $1,388; 2013: $1,360)	1,424		1,392
Other noncurrent liabilities (nonrecourse 2014: $67; 2013: $69)	67		69
Total liabilities	$	1,810	$	2,125


(1)	Includes $8 million at March 31, 2014 ($1 million at December 31, 2013) restricted for the construction, debt servicing and operational expenses of a manufacturing facility.


(2)	All assets were restricted at March 31, 2014 and December 31, 2013.

In addition, the carrying amounts of assets and liabilities included in the Company’s consolidated balance sheets pertaining to the entity created to monetize accounts receivable of select European entities were current assets of $95 million (zero restricted) at March 31, 2014 ($105 million, zero restricted, at December 31, 2013) and zero current liabilities (zero nonrecourse) at March 31, 2014 and 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 March 31, 2014 and December 31, 2013 are adjusted for intercompany eliminations, parental guarantees and residual value guarantees.

Nonconsolidated Variable Interest Entity

At March 31, 2014, the Company’s investment in its crude acrylic acid joint venture was $137 million ($159 million at December 31, 2013) and is classified as “Investment in nonconsolidated affiliates” in the consolidated balance sheets, representing the Company’s maximum exposure to loss.