Quarterly report pursuant to Section 13 or 15(d)

VARIABLE INTEREST ENTITIES

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VARIABLE INTEREST ENTITIES
9 Months Ended
Sep. 30, 2018
VARIABLE INTEREST ENTITIES  
VARIABLE INTEREST ENTITIES

6. VARIABLE INTEREST ENTITIES

 

We 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 joint ventures for which we are the primary beneficiary:

 

·

Rubicon LLC is our 50%-owned joint venture with Lanxess that 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.

 

·

Arabian Amines Company is our 50%-owned joint venture with Zamil group that manufactures products for our Performance Products segment. 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.

 

·

Sasol‑Huntsman 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. The joint venture uses our technology and expertise, and at the time of the last reconsideration event, we took on a disproportionate amount of risk of loss due to a related‑party loan to Sasol‑Huntsman for which we assumed the default risk.

 

Creditors of these entities have no recourse to our general credit. See “Note 8. Debt—Direct and Subsidiary Debt.” As the primary beneficiary of these variable interest entities at September 30, 2018, the joint ventures’ assets, liabilities and results of operations are included in our condensed consolidated financial statements.

 

The following table summarizes the carrying amount of our variable interest entities’ assets and liabilities included in our condensed consolidated balance sheet as of September 30, 2018 and our consolidated balance sheet as of December 31, 2017 (dollars in millions):

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2018

    

2017

Current assets

 

$

118

 

$

114

Property, plant and equipment, net

 

 

257

 

 

283

Other noncurrent assets

 

 

119

 

 

116

Deferred income taxes

 

 

34

 

 

33

Intangible assets

 

 

11

 

 

10

Goodwill

 

 

14

 

 

14

Total assets

 

$

553

 

$

570

Current liabilities

 

$

147

 

$

163

Long-term debt

 

 

71

 

 

86

Deferred income taxes

 

 

12

 

 

12

Other noncurrent liabilities

 

 

94

 

 

98

Total liabilities

 

$

324

 

$

359

 

The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities for the three and nine months ended September 30, 2018 and 2017 are as follows (dollars in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

Nine months

 

    

ended

 

ended

 

    

September 30, 

 

September 30, 

 

 

2018

    

2017

 

2018

 

2017

Revenues

 

$

39

 

$

32

 

$

116

 

$

99

Income from continuing operations before income taxes

 

 

 8

 

 

 8

 

 

27

 

 

22

Net cash provided by operating activities

 

 

21

 

 

20

 

 

50

 

 

42