Annual report pursuant to Section 13 and 15(d)

Note 8 - Variable Interest Entities

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Note 8 - Variable Interest Entities
12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Variable Interest Entity Disclosure [Text Block]

8. 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 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.

 

 

AAC is our 50%-owned joint venture with the Zamil Group that manufactures products for our Performance Products segment. As required in the operating agreement governing this joint venture, we purchase all of AAC’s production and sell it to our customers. Substantially all of the joint venture’s activities are conducted on our behalf.

 

During the year ended December 31, 2023, there were no changes in our variable interest entities.

 

Creditors of our variable interest entities have no recourse to our general credit. See “Note 14. Debt—Direct and Subsidiary Debt.” As the primary beneficiary of these variable interest entities at December 31, 2023, the joint ventures’ assets, liabilities and results of operations are included in our consolidated financial statements.

 

The following table summarizes the carrying amount of our variable interest entities’ assets and liabilities included in our consolidated balance sheets as of December 31, 2023 and 2022 (dollars in millions):

 

    December 31,  
    2023     2022  

Current assets

  $ 67     $ 73  

Property, plant and equipment, net

    150       149  

Operating lease right-of-use assets

    29       28  

Other noncurrent assets

    125       140  

Deferred income taxes

    13       13  

Total assets

  $ 384     $ 403  

Current liabilities

  $ 121     $ 144  

Long-term debt

    17       26  

Noncurrent operating lease liabilities

    21       19  

Other noncurrent liabilities

    15       25  

Deferred income taxes

    1        

Total liabilities

  $ 175     $ 214  

 

The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities are as follows (dollars in millions):

 

   

Year ended December 31,

 
   

2023

   

2022

   

2021

 

Revenues

  $     $     $  

Income from continuing operations before income taxes

    60       36       12  

Net cash provided by operating activities

    78       81       33