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AES CORP

6. INVESTMENTS IN AND ADVANCES TO AFFILIATES

50%-or-less Owned Affiliates and Majority-owned Unconsolidated Subsidiaries

AES holds a 71% ownership interest in AES Energia Cartagena (“Cartagena”), a VIE, in which the Company is not the primary beneficiary. The Company’s investment in Cartagena is a combination of common stock and participative loans. As a result of unrealized losses on Cartagena’s interest rate hedges, in December 2008 the investment balance was reduced to zero and the recognition of equity losses was suspended. AES will resume the equity method of accounting and recognize income once Cartagena generates income of which AES’s portion is greater than or equal to the cumulative losses AES has not recognized while the equity method of accounting has been suspended. In June 2009, Cartagena received a cash settlement of $53 million for liquidated damages, including legal costs incurred, related to the construction delay from December 2005 to November 2006 of the 1,200 MW generation plant in Cartagena, Spain. Cartagena used the settlement proceeds to repay a portion of the participative loans outstanding to its investors including AES. The Company received its proportionate share of the settlement, $35 million, which was recognized as “net equity in earnings of affiliates” in the second quarter of 2009 because the distribution was in excess of the Company’s current investment balance of zero and AES does not have an obligation or intent to fund future cash flow requirements of Cartagena.

The following table summarizes financial information of the affiliates in which we own 50% or less and have the ability to exercise significant influence but do not control and our majority-owned unconsolidated subsidiaries accounted for using the equity method of accounting:


	50%-or-less Owned Affiliates ⁽¹⁾									Majority-owned Unconsolidated Subsidiaries ⁽²⁾
	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended September 30,					Nine Months Ended September 30,
	2009		2008			2009		2008		2009		2008			2009		2008
	(in millions)									(in millions)
Revenue	$	343	$	301		$	880	$	889	$	41	$	43		$	120	$	131
Gross margin	$	73	$	14		$	143	$	99	$	21	$	18		$	41	$	49
Net income (loss)	$	58	$	(3	)	$	92	$	80	$	5	$	(5	)	$	27	$	(2	)

⁽¹⁾

The 50%-or-less Owned Affiliates portion of the table excludes information related to the Companhia Energetica de Minas Gerais (“CEMIG”) business because the Company discontinued the application of the equity method of accounting in accordance with its accounting policy regarding equity method investments. In addition, although the Company’s ownership interest in Trinidad Generation Unlimited, (“Trinidad”) is 10%, the Company accounts for its investment in Trinidad as an equity method investment because AES continues to exercise significant influence through the supermajority vote requirement for any significant future project development activities.

⁽²⁾

The Majority-owned Unconsolidated Subsidiaries portion of the table includes information related to Barry, Cartagena, Cili and IC Ictas Energy Group. Although we continue to maintain 100% ownership of Barry, as a result of an amended credit agreement, no material financial or operating decisions can be made without the banks’ consent, and the Company no longer controls Barry. Consequently, the Company discontinued consolidating the business’s results and began using the equity method to account for this unconsolidated majority-owned subsidiary.

ALCOA INC

G. Investments – On February 12, 2009, Alcoa and the Aluminum Corporation of China (Chinalco) entered into an agreement in which Chinalco redeemed the convertible senior secured note (the “note”) that was previously issued by a special purpose vehicle called Shining Prospect Pte. Ltd., which was a private limited liability company created solely for the purpose of acquiring shares of Rio Tinto plc (RTP). Previously, Alcoa joined with Chinalco on February 1, 2008 to acquire 12% of the U.K. common stock of RTP for approximately $14,000. Alcoa contributed $1,200 of the $14,000 through the purchase of the note on February 6, 2008. Under the agreement executed on February 12, 2009, Alcoa received $1,021 in cash in three installments over a six-month period ending July 31, 2009. This amount was reflected in Sales of investments on the accompanying Statement of Consolidated Cash Flows. As a result of this transaction, Alcoa realized a loss of $182 ($118 after-tax), which was reflected in Other (income) expenses, net on the accompanying Statement of Consolidated Operations, and reversed the unrealized loss that had been recognized in Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheet since the initial investment was made.

ALTRIA GROUP, INC.

Note 6. Earnings from Equity Investment in SABMiller:

Earnings from Altria Group, Inc.’s equity investment in SABMiller consisted of the following:


	For the Nine Months Ended September 30,				For the Three Months Ended September 30,
	2009		2008		2009		2008
	(in millions)
Equity earnings	$	259	$	344	$	111	$	54
Gains on issuances of common stock by SABMiller		183				8

	$	442	$	344	$	119	$	54

Altria Group, Inc.’s earnings from its equity investment in SABMiller for the nine months ended September 30, 2009 included pre-tax gains of $183 million due primarily to the issuance of 60 million shares of common stock by SABMiller in connection with its acquisition of the remaining noncontrolling interest in its Polish subsidiary.

ANADARKO PETROLEUM CORP

6. Investments

Noncontrolling Mandatorily Redeemable Interests In 2007, Anadarko contributed certain of its oil and gas properties and gathering and processing assets with an aggregate fair value of approximately $2.9 billion at the time of the contribution to newly formed unconsolidated entities in exchange for noncontrolling mandatorily redeemable interests in those entities. Subsequent to their formation, the investee entities loaned Anadarko an aggregate of $2.9 billion. The Company accounts for its investment in these entities under the equity method of accounting. At September 30, 2009, the carrying amount of these investments was $2.79 billion, while the carrying amount of notes payable to affiliates was $2.85 billion. Anadarko has legal right of setoff and intends to net settle its obligations under each of the notes payable to the investees with the distributable value of its interest in the corresponding investee. Accordingly, the investments and the obligations are presented net on the consolidated balance sheet with the excess of the notes payable to affiliates over the aggregate investment carrying amount included in other long-term liabilities — other for all periods presented. Other income (expense) for the three and nine months ended September 30, 2009 includes interest expense on the notes payable to the investee entities of $(12) million and $(48) million, respectively, and equity in earnings from Anadarko’s investments in the investee entities of $11 million and $34 million, respectively. Other income (expense) for the three and nine months ended September 30, 2008 includes interest expense on the notes payable to the investee entities of $(27) million and $(96) million, respectively, and equity in earnings from Anadarko’s investments in the investee entities of $32 million and $106 million, respectively.

BOSTON PROPERTIES INC

4. Investments in Unconsolidated Joint Ventures

The Company’s investments in unconsolidated joint ventures consist of the following at September 30, 2009:


Entity	Properties	Nominal % Ownership
Square 407 Limited Partnership	Market Square North	50.0	%
The Metropolitan Square Associates LLC	Metropolitan Square	51.0	%(1)
BP/CRF 901 New York Avenue LLC	901 New York Avenue	25.0	%(2)
WP Project Developer LLC	Wisconsin Place Land and Infrastructure	23.9	%(3)
Wisconsin Place Retail LLC	Wisconsin Place Retail	5.0	%
Eighth Avenue and 46^th Street Entities	Eighth Avenue and 46^th Street	50.0	%(4)
Boston Properties Office Value-Added Fund, L.P.	300 Billerica Road, One & Two Circle Star Way and Mountain View Research and Technology Parks	36.9	%(2)(5)
Annapolis Junction NFM, LLC	Annapolis Junction	50.0	%(6)
767 Venture, LLC	The General Motors Building	60.0	%(1)
2 GCT Venture LLC	Two Grand Central Tower	60.0	%(1)
540 Madison Venture LLC	540 Madison Avenue	60.0	%(1)
125 West 55^th Street Venture LLC	125 West 55^th Street	60.0	%(1)

(1)	The Company has determined that these entities are not VIEs and that its joint venture partners have substantive participating rights with respect to the assets and operations of the properties, pursuant to the joint venture agreements.

(2)	The Company’s economic ownership can increase based on the achievement of certain return thresholds.

(3)	Represents the Company’s effective ownership interest. The Company has a 66.67%, 5% and 0% interest in the office, retail and residential joint venture entities, respectively, each of which owns a 33.33% interest in the entity developing and owning the land and infrastructure of the project.

(4)	These properties have been partially placed in-service or are not in operation (i.e., under construction or assembled land).

(5)	Represents the Company’s effective ownership interest. The Company has a 25.0% interest in the 300 Billerica Road and One & Two Circle Star Way properties and a 39.5% interest in the Mountain View Research and Technology Park properties.

(6)	Two of the three Annapolis Junction land parcels are undeveloped land.

Certain of the Company’s joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures at an agreed upon fair value. Under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners.

The combined summarized balance sheets of the unconsolidated joint ventures are as follows:


	September 30, 2009			December 31, 2008
	(in thousands)
ASSETS
Real estate and development in process, net	$	5,191,948		$	5,235,149
Other assets		764,103			824,232

Total assets	$	5,956,051		$	6,059,381

LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable	$	3,211,839		$	3,189,549
Other liabilities		1,096,152			1,215,849
Members’/Partners’ equity		1,648,060			1,653,983

Total liabilities and members’/partners’ equity	$	5,956,051		$	6,059,381

Company’s share of equity	$	937,887		$	948,222
Basis differentials(1)		(165,720	)		(165,462	)

Carrying value of the Company’s investments in unconsolidated joint ventures	$	772,167		$	782,760

(1)

This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from impairment of investments and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level.

The combined summarized statements of operations of the unconsolidated joint ventures are as follows:


	For the three months ended September 30,						For the nine months ended September 30,
	2009			2008			2009			2008
	(in thousands)						(in thousands)
Total revenue(1)	$	148,885		$	134,425		$	445,827		$	216,319
Expenses
Operating		41,977			35,562			122,614			62,329
Interest		58,975			53,229			173,356			81,698
Depreciation and amortization		57,160			55,182			175,648			81,411
Losses from early extinguishments of debt		—			—			—			152

Total expenses		158,112			143,973			471,618			225,590

Net loss	$	(9,227	)	$	(9,548	)	$	(25,791	)	$	(9,271	)

Company’s share of net loss	$	(4,174	)	$	(5,000	)	$	(12,619	)	$	(3,918	)
Impairment loss on investment		—			—			(7,357	)		—
Basis differential		2,319			—			7,099			—
Elimination of inter-entity interest on partner loan		8,205			7,644			23,973			9,459

Income from unconsolidated joint ventures	$	6,350		$	2,644		$	11,096		$	5,541

(1)

Includes straight-line rent adjustments of $6.7 million and $5.2 million for the three months ended September 30, 2009 and 2008, respectively, and $20.3 million and $6.5 million for the nine months ended September 30, 2009 and 2008, respectively. Includes “above” and “below” market rent adjustments of $37.8 million and $40.8 million for the three months ended September 30, 2009 and 2008, respectively, and $115.1 million and $47.4 million for the nine months ended September 30, 2009 and 2008, respectively.

During June 2009, the Company recognized a non-cash impairment charge which represented the other-than-temporary decline in the fair value below the carrying value of the Company’s investment in its Value-Added Fund. In accordance with ASC 323 “Investments-Equity Method and Joint Ventures” (“ASC 323”) (formerly known as Accounting Principles Board Opinion No. 18 “The Equity Method of Accounting for Investments in Common Stock” (“APB No. 18”)), a loss in value of an investment under the equity method of accounting, which is other than a temporary decline, must be recognized. Unlike the guidance in ASC 360 “Property, Plant and Equipment” (“ASC 360”) (formerly known as SFAS No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets”), impairments under ASC 323 result from fair values derived based on discounted cash flows and other valuation techniques that are more sensitive to current market conditions. As a result, the Company recognized a non-cash impairment charge of approximately $7.4 million on its investment in the Company’s Value-Added Fund. The Company has determined that its valuation of these investments was categorized within Level 3 of the fair value hierarchy in accordance with ASC 820-10 “Fair Value Measurements and Disclosures” (“ASC 820-10”) (formerly known as SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”)), as it utilized significant unobservable inputs in its assessment. The equity method investments represent the Company’s only Level 3 assets for the nine months ended September 30, 2009. The following table reflects the activity of its investments in unconsolidated joint ventures for the nine months ended September 30, 2009 (in thousands):


Balance at January 1, 2009:	$	782,760
Net loss		(5,520	)
Impairment loss		(7,357	)
Contributions		9,822
Distributions		(7,538	)

Balance at September 30, 2009:	$	772,167

BOSTON PROPERTIES LTD PARTNERSHIP

4. Investments in Unconsolidated Joint Ventures

The Company’s investments in unconsolidated joint ventures consist of the following at September 30, 2009:


Entity	Properties	Nominal % Ownership
Square 407 Limited Partnership	Market Square North	50.0	%
The Metropolitan Square Associates LLC	Metropolitan Square	51.0	%(1)
BP/CRF 901 New York Avenue LLC	901 New York Avenue	25.0	%(2)
WP Project Developer LLC	Wisconsin Place Land and Infrastructure	23.9	%(3)
Wisconsin Place Retail LLC	Wisconsin Place Retail	5.0	%
Eighth Avenue and 46^th Street Entities	Eighth Avenue and 46^th Street	50.0	%(4)
Boston Properties Office Value-Added Fund, L.P.	300 Billerica Road, One & Two Circle Star Way and Mountain View Research and Technology Parks	36.9	%(2)(5)
Annapolis Junction NFM, LLC	Annapolis Junction	50.0	%(6)
767 Venture, LLC	The General Motors Building	60.0	%(1)
2 GCT Venture LLC	Two Grand Central Tower	60.0	%(1)
540 Madison Venture LLC	540 Madison Avenue	60.0	%(1)
125 West 55^th Street Venture LLC	125 West 55^th Street	60.0	%(1)

(1)	The Company has determined that these entities are not VIEs and that its joint venture partners have substantive participating rights with respect to the assets and operations of the properties, pursuant to the joint venture agreements.

(2)	The Company’s economic ownership can increase based on the achievement of certain return thresholds.

(3)	Represents the Company’s effective ownership interest. The Company has a 66.67%, 5% and 0% interest in the office, retail and residential joint venture entities, respectively, each of which owns a 33.33% interest in the entity developing and owning the land and infrastructure of the project.

(4)	These properties have been partially placed in-service or are not in operation (i.e., under construction or assembled land).

(5)	Represents the Company’s effective ownership interest. The Company has a 25.0% interest in the 300 Billerica Road and One & Two Circle Star Way properties and a 39.5% interest in the Mountain View Research and Technology Park properties.

(6)	Two of the three Annapolis Junction land parcels are undeveloped land.

The combined summarized balance sheets of the unconsolidated joint ventures are as follows:


	September 30, 2009			December 31, 2008
	(in thousands)
ASSETS
Real estate and development in process, net	$	5,191,948		$	5,235,149
Other assets		764,103			824,232

Total assets	$	5,956,051		$	6,059,381

LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable	$	3,211,839		$	3,189,549
Other liabilities		1,096,152			1,215,849
Members’/Partners’ equity		1,648,060			1,653,983

Total liabilities and members’/partners’ equity	$	5,956,051		$	6,059,381

Company’s share of equity	$	937,887		$	948,222
Basis differentials(1)		(165,720	)		(165,462	)

Carrying value of the Company’s investments in unconsolidated joint ventures	$	772,167		$	782,760

(1)

The combined summarized statements of operations of the unconsolidated joint ventures are as follows:


	For the three months ended September 30,						For the nine months ended September 30,
	2009			2008			2009			2008
	(in thousands)						(in thousands)
Total revenue(1)	$	148,885		$	134,425		$	445,827		$	216,319
Expenses
Operating		41,977			35,562			122,614			62,329
Interest		58,975			53,229			173,356			81,698
Depreciation and amortization		57,160			55,182			175,648			81,411
Losses from early extinguishments of debt		—			—			—			152

Total expenses		158,112			143,973			471,618			225,590

Net loss	$	(9,227	)	$	(9,548	)	$	(25,791	)	$	(9,271	)

Company’s share of net loss	$	(4,174	)	$	(5,000	)	$	(12,619	)	$	(3,918	)
Impairment loss on investment		—			—			(7,357	)		—
Basis differential		2,319			—			7,099			—
Elimination of inter-entity interest on partner loan		8,205			7,644			23,973			9,459

Income from unconsolidated joint ventures	$	6,350		$	2,644		$	11,096		$	5,541

(1)


Balance at January 1, 2009:	$	782,760
Net loss		(5,520	)
Impairment loss		(7,357	)
Contributions		9,822
Distributions		(7,538	)

Balance at September 30, 2009:	$	772,167

CELGENE CORP /DE/

11. Investment in Affiliated Companies

A summary of the Company’s equity investment in affiliated companies follows:


	September 30,		December 31,
Investment in Affiliated Companies	2009		2008

Investment in affiliated companies⁽¹⁾	$	18,500	$	14,862
Excess of investment over share of equity ⁽²⁾		2,746		3,530

Investment in affiliated companies	$	21,246	$	18,392


	Three-Month Periods Ended				Nine-Month Periods Ended
	September 30,				September 30,
Equity in Losses of Affiliated Companies	2009		2008		2009		2008

Affiliated companies losses ⁽¹⁾	$	329	$	2,338	$	944	$	8,761


⁽¹⁾		The Company records its interest and share of losses based on its ownership percentage.

⁽²⁾		Consists of goodwill.

Additional equity method investments totaling $3.6 million were made during the nine-month period ended September 30, 2009. The three- and nine-month periods ended September 30, 2008 included other-than-temporary impairment losses of $1.6 million and $6.0 million, respectively. These impairment losses were based on an evaluation of several factors, including a decrease in fair value of the equity investment below its cost.

CF Industries Holdings, Inc.

13. Investments in and Advances to Unconsolidated Affiliates

We own 50% of the common shares of KEYTRADE AG (Keytrade), a global fertilizer trading company headquartered near Zurich, Switzerland. We also own certain non-voting preferred shares of Keytrade and have provided additional subordinated financing. Keytrade is a reseller of fertilizer products that it purchases from various manufacturers around the world and resells in approximately 50 countries through a network of seven offices. Keytrade is our exclusive exporter of phosphate fertilizer products from North America and our exclusive importer of UAN products into North America. We account for our investment in Keytrade under the equity method.

Our investment in and advances to Keytrade consist of the following:

	September 30, 2009		December 31, 2008

	(in millions)
Equity investment in Keytrade	$	34.0	$	32.4
Advances to Keytrade		12.4		12.4

	$	46.4	$	44.8

For the three months ended September 30, 2009 and 2008, we recognized in our consolidated statements of operations equity in earnings (loss) of Keytrade of $0.6 million and ($1.4) million, respectively, and for the nine months ended September 30, 2009 and 2008 of ($0.8) million and $7.5 million, respectively. At September 30, 2009, the amount of our consolidated retained earnings that represents our undistributed earnings of Keytrade is $5.1 million.

During the third quarter of 2009, we acquired Keytrade's exclusive U.S. marketing and terminal usage rights related to certain fertilizer products for $2.5 million. These rights are recognized as intangible assets and are being amortized against our share of Keytrade's net income over their useful lives.

The advances to Keytrade are subordinated notes that mature on September 30, 2017 and bear interest at LIBOR plus 1.00 percent. For the nine months ended September 30, 2009 and 2008, we recognized interest income on advances to Keytrade of $0.2 million and $0.4 million, respectively. The carrying value of our advances to Keytrade approximates fair value.

CHESAPEAKE ENERGY CORP

8.	Midstream Joint Venture

On September 30, 2009, we formed a joint venture with Global Infrastructure Partners (GIP), a New York-based private equity fund, to own and operate natural gas midstream assets. As part of the transaction, Chesapeake contributed certain natural gas gathering and processing assets to a new entity, Chesapeake Midstream Partners, L.L.C. (CMP), and GIP purchased a 50% interest in CMP. Chesapeake retained the remaining 50% interest in CMP and received a $588 million cash distribution from CMP. The assets we contributed to the joint venture were substantially all of our midstream assets in the Barnett Shale and also the majority of our non-shale midstream assets in the Arkoma, Anadarko, Delaware and Permian Basins. The financial results of CMP will be consolidated and GIP’s 50% ownership interest is reflected as a noncontrolling interest as of September 30, 2009 in our consolidated financial statements.

CMP will focus on unregulated business activities in service to both Chesapeake and third-party natural gas producers and its revenues will be generated almost entirely from fixed fee-based arrangements for gathering, compression, dehydration and treating services. CMP has entered into various agreements with Chesapeake, including a long-term gas gathering agreement at rates consistent with current market pricing. CMP will operate the contributed assets. Certain Chesapeake employees will provide services to CMP through an employee secondment agreement. In return for certain cost reimbursements, CMP will utilize various support functions within Chesapeake, including accounting, human resources and information technology.

Subsidiaries of our wholly-owned subsidiary CMD will continue to operate our midstream assets outside of the CMP joint venture. These include natural gas gathering assets in the Fayetteville Shale, Haynesville Shale, Marcellus Shale and other areas in Appalachia.

Concurrent with GIP’s funding of its interest in the joint venture, CMP closed a new $500 million secured revolving bank credit facility to partially fund capital expenditures associated with the building of additional natural gas gathering systems and for general corporate purposes. Additionally, we amended and restated the existing midstream lending agreement to reduce the total capacity from $460 million to $250 million, among other changes. This separate secured revolving bank credit facility supports CMD’s continuing midstream activities. These facilities are described in Note 6.

In the Current Quarter, we recorded an $82 million impairment of certain of the gathering systems contributed to CMP prior to the formation of the joint venture, and we expensed $4 million of debt issuance costs associated with the portion of our $460 million credit facility that was reduced to $250 million. The combined impairment of $86 million was included in impairment of natural gas and oil properties and other assets on our condensed consolidated statement of operations. Additionally, an estimated post-closing adjustment related to the joint venture transaction was recorded in the Current Quarter and is expected to be finalized by December 31, 2009.

The $851 million noncontrolling interest included in our consolidated equity at September 30, 2009 represents GIP’s 50% interest in the net assets of CMP, which were recorded by CMP at Chesapeake’s historical cost basis. This noncontrolling interest includes the $588 million GIP contributed in exchange for a 50% ownership interest in CMP plus $263 million of Chesapeake equity allocated to GIP pursuant to ASC 810 in order to properly reflect GIP’s 50% interest in the carrying value of CMP’s net assets.

CONOCOPHILLIPS

Note 6—Investments, Loans and Long-Term Receivables

LUKOIL

Our ownership interest in LUKOIL was 20 percent at September 30, 2009, based on 851 million shares authorized and issued. For financial reporting under U.S. generally accepted accounting principles (GAAP), treasury shares held by LUKOIL are not considered outstanding for determining our equity method ownership interest in LUKOIL. Our ownership interest, based on estimated shares outstanding, was 20.09 percent at September 30, 2009.

At September 30, 2009, the book value of our ordinary share investment in LUKOIL was $6,466 million. Our 20 percent share of the net assets of LUKOIL was estimated to be $10,971 million. A majority of this negative basis difference of $4,505 million is being amortized on a straight-line basis over a 22-year useful life as an increase to equity earnings. On September 30, 2009, the closing price of LUKOIL shares on the London Stock Exchange was $54.20 per share, making the total market value of our LUKOIL investment $9,220 million.

Because LUKOIL’s accounting cycle close and preparation of U.S. GAAP financial statements occur subsequent to our reporting deadline, our equity earnings are estimated based on current market indicators, publicly available LUKOIL information and other objective data. Once the difference between actual and estimated results is known, an adjustment is recorded. Net income attributable to ConocoPhillips for the third quarter of 2009 included a $33 million positive alignment of our second-quarter estimate of LUKOIL’s results to LUKOIL’s reported results.

Loans to Related Parties

As part of our normal ongoing business operations and consistent with industry practice, we invest and enter into numerous agreements with other parties to pursue business opportunities, which share costs and apportion risks among the parties as governed by the agreements. Included in such activity are loans made to certain affiliated companies. Significant loans to affiliated companies at September 30, 2009, included the following:

· $723 million in loan financing to Freeport LNG Development, L.P. for the construction of an LNG receiving terminal, which became operational in June 2008. Freeport began making repayments in September 2008.

· $291 million in loan financing at September 2009 exchange rates to Varandey Terminal Company associated with the costs of a terminal expansion. The terminal expansion was completed in June 2008. Principal repayments began in April 2009.

· $979 million of project financing and an additional $85 million of accrued interest to Qatargas 3, an integrated project to produce and liquefy natural gas from Qatar’s North Field. Our maximum exposure to this financing structure is $1.2 billion.

· $174 million of loan financing to WRB Refining LLC to assist it in meeting its operating and capital spending requirements.

The long-term portion of these loans are included in the “Loans and advances—related parties” line on the consolidated balance sheet, while the short-term portion is in “Accounts and notes receivable—related parties.”

Other Investments

We have investments remeasured at fair value on a recurring basis to support certain nonqualified deferred compensation plans. The fair value of these assets at September 30, 2009, was $333 million, and substantially the entire value is categorized in Level 1 of the fair value hierarchy.

As disclosed in our 2008 Form 10-K, late in 2008 Petroleos de Venezuela S.A. (PDVSA) notified us that January 2009 crude oil supplies nominated for the Sweeny Refinery for processing through facilities owned by the Merey Sweeny Limited Partnership (MSLP) would not be delivered due to instructions from the Venezuelan government. In subsequent months of 2009, PDVSA failed to supply crude oil and/or delivered crude oil not meeting contractual grade specifications. PDVSA also failed to pay contractually required amounts in connection with their non-delivery or off-spec delivery. As a result, and in accordance with our rights under the contractual agreements governing the ownership of MSLP, on August 28, 2009, we exercised our right to acquire PDVSA’s 50 percent ownership interest in MSLP. Due to the expected legal challenges to this action by PDVSA, we will continue to use the equity method of accounting for our investment in MSLP until any legal challenges are resolved.

CORNING INC /NY

9. Investments

Investments comprise the following (in millions):

	Ownership Interest (1)	September 30, 2009		December 31, 2008
Affiliated companies accounted for by the equity method
Samsung Corning Precision Glass Co., Ltd.	50%	$	2,746	$	1,965
Dow Corning Corporation	50%		846		866
All other	20%-50%		222		221
			3,814		3,052
Other investments			4		4
Total		$	3,818	$	3,056

(1) Amounts reflect Corning’s direct ownership interests in the respective affiliated companies. Corning does not control any of these entities.

Related party information for these investments in affiliates follows (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2009		2008		2009		2008
Related Party Transactions:
Corning sales to affiliates	$	6	$	9	$	27	$	32
Corning purchases from affiliates	$	14	$	16	$	26	$	38
Dividends received from affiliates	$	20	$	191	$	439	$	470
Royalty income from affiliates	$	62	$	54	$	167	$	148
Contractual services to affiliates	$	14			$	14
Corning transfers of assets, at cost, to affiliates	$	12	$	53	$	54	$	152

As of September 30, 2009, balances due to and due from affiliates were $3million and $139million, respectively. As of December 31, 2008, balances due to and due from affiliates were $2 million and $20 million, respectively.

We have contractual agreements with several of our equity affiliates which include sales, purchasing, licensing, financing and technology agreements.

Summarized results of operations for our two significant investments accounted for by the equity method follow:

Samsung Corning Precision Glass Co., Ltd. (Samsung Corning Precision)

Samsung Corning Precision is a South Korea-based manufacturer primarily of liquid crystal display (LCD) glass for flat panel displays.

Samsung Corning Precision’s results of operations follow (in millions):

	Three months ended September 30,				Nine months ended September 30,
	Three months ended September 30,				Nine months ended September 30,
	2009		2008		2009		2008

Statement of Operations:
Net sales	$	1,164	$	1,022	$	2,989	$	2,837
Gross profit	$	854	$	704	$	2,145	$	1,955
Net income	$	632	$	540	$	1,592	$	1,494
Corning’s equity in earnings of Samsung Corning Precision	$	316	$	268	$	797	$	737

Related Party Transactions:
Corning purchases from Samsung Corning Precision	$	8	$	11	$	12	$	25
Corning sales to Samsung Corning Precision					$	9	$	7
Dividends received from Samsung Corning Precision			$	126	$	181	$	277
Royalty income from Samsung Corning Precision	$	62	$	54	$	165	$	148
Corning transfers of machinery and equipment to Samsung Corning Precision at cost (1)	$	12	$	53	$	54	$	152

(1) Corning purchases machinery and equipment on behalf of Samsung Corning Precision to support its capital expansion initiatives. The machinery and equipment are transferred to Samsung Corning Precision at our cost basis, with no gain or loss recognized on the transaction.

Corning owns 50% of Samsung Corning Precision. Samsung Electronics Co., Ltd. owns 43% and three other shareholders own the remaining 7%.

As of September 30, 2009 and December 31, 2008, balances due from Samsung Corning Precision were $42 million and $17 million, respectively.

On December 31, 2007, Samsung Corning Precision acquired all of the outstanding shares of Samsung Corning Co., Ltd. (Samsung Corning). After the transaction, Corning retained its 50% interest in Samsung Corning Precision. Samsung Corning Precision accounted for the transaction at fair value while Corning accounted for the transaction at historical cost.

Prior to their merger, Samsung Corning Precision and Samsung Corning Co. Ltd. (Samsung Corning) were two of approximately thirty co-defendants in a lawsuit filed by Seoul Guarantee Insurance Co. and thirteen other creditors (SGI and Creditors) for alleged breach of an agreement that approximately twenty-eight affiliates of the Samsung group (Samsung Affiliates) entered into with SGI and Creditors on August 24, 1999 (the Agreement). The lawsuit is pending in the courts of South Korea. Under the Agreement it is alleged that the Samsung Affiliates agreed to sell certain shares of Samsung Life Insurance Co., Ltd. (SLI), which had been transferred to SGI and Creditors in connection with the petition for court receivership of Samsung Motor Inc. In the lawsuit, SGI and Creditors allege a breach of the Agreement by the Samsung Affiliates and are seeking the loss of principal (approximately $1.95 billion) for loans extended to Samsung Motors Inc., default interest and a separate amount for breach. On January 31, 2008, the Seoul District Court ordered the Samsung Affiliates: to pay approximately $1.3 billion by disposing of 2,334,045 shares of SLI less 1,165,955 shares of SLI previously sold by SGI and Creditors and paying the proceeds to SGI and Creditors; to satisfy any shortfall by participating in the purchase of equity or subordinate debentures issued by them; and pay default interest of 6% per annum. The ruling has been appealed and a ruling on the appeal is expected sometime in November of 2009. Due to the uncertainties around the financial impact to each of the respective Samsung affiliates, Samsung Corning Precision is unable to reasonably estimate the amount of potential loss, if any, associated with this case and therefore no provision for such loss is reflected in its financial statements. Other than as described above, no claim in these matters has been asserted against Corning or any of its affiliates.

In connection with an investigation by the Commission of the European Communities, Competition DG, of alleged anticompetitive behavior relating to the worldwide production of LCD glass, Corning and Samsung Corning Precision received a request on March 30, 2009, for certain information from the Competition DG. Corning and Samsung Corning Precision have responded to those requests for information. On October 9, 2009, in connection with its investigation, the Competition DG made a further request for information from both Corning and Samsung Corning Precision to which each party is responding.

In September 2009, Corning and Samsung Corning Precision formed Corsam Technologies LLC (Corsam), a new equity affiliate established to provide glass technology research for future product applications. Samsung Corning Precision invested $124 million in cash and Corning contributed intellectual property with a corresponding value. Corning and Samsung Corning Precision each own 50% of the common stock of Corsam and Corning has agreed to provide research and development services at arms length to Corsam. Corning does not control Corsam because Samsung Corning Precision’s other investors maintain significant participating voting rights. In addition, Corsam has sufficient equity to finance its activities, the voting rights of investors in Corsam are considered substantive, and the risks and rewards of Corsam’s research are shared only by those investors noted. As a result, Corsam is accounted for under the equity method of accounting for investments.

Dow Corning Corporation (Dow Corning)

Dow Corning is a U.S.-based manufacturer of silicone products. Dow Corning’s results of operations follow (in millions):

	Three months ended September 30,				Nine months ended September 30,
	2009		2008		2009		2008

Statement of Operations:
Net sales	$	1,409	$	1,487	$	3,625	$	4,146
Gross profit	$	529	$	565	$	1,187	$	1,444
Net income	$	184	$	218	$	309	$	566
Corning’s equity in earnings of Dow Corning	$	92	$	109	$	154	$	283

Related Party Transactions:
Corning purchases from Dow Corning	$	5	$	4	$	13	$	12
Dividends received from Dow Corning			$	52	$	222	$	155

Balances due to Dow Corning were $2 million and $1 million as of September 30, 2009 and December 31, 2008, respectively.

In response to recent economic challenges, Dow Corning incurred restructuring charges associated with a global workforce reduction in the first quarter of 2009. Our share of these charges was $29 million.

At September 30, 2009, Dow Corning’s marketable securities included approximately $1.1billion of auction rate securities, net of a temporary impairment of $50million. As a result of the temporary impairment, unrealized losses of $39million, net of $11million for a minority interest’s share, were included in accumulated other comprehensive income in Dow Corning’s consolidated balance sheet. Corning’s share of this unrealized loss was $20 million and is included in Corning’s accumulated other comprehensive income.

Dow Corning has borrowed the full amount under its $500 million revolving credit facility and believes it has adequate liquidity to fund operations, its capital expenditure plan, breast implant settlement liabilities, and shareholder dividends.

Corning and The Dow Chemical Company (Dow Chemical) each own 50% of the common stock of Dow Corning. In May 1995, Dow Corning filed for bankruptcy protection to address pending and claimed liabilities arising from many thousands of breast implant product lawsuits. On June 1, 2004, Dow Corning emerged from Chapter 11 with a Plan of Reorganization (the Plan) which provided for the settlement or other resolution of implant claims. The Plan also includes releases for Corning and Dow Chemical as shareholders in exchange for contributions to the Plan.

Under the terms of the Plan, Dow Corning has established and is funding a Settlement Trust and a Litigation Facility to provide a means for tort claimants to settle or litigate their claims. Inclusive of insurance, Dow Corning has paid approximately $1.6billion to the Settlement Trust. As of September 30, 2009, Dow Corning had recorded a reserve for breast implant litigation of $1.6billion and anticipates insurance receivables of $16million. As a separate matter arising from the bankruptcy proceedings, Dow Corning is defending claims asserted by a number of commercial creditors who claim additional interest at default rates and enforcement costs, during the period from May 1995 through June 2004. As of September 30, 2009, Dow Corning has estimated the liability to commercial creditors to be within the range of $82million to $224million. As Dow Corning management believes no single amount within the range appears to be a better estimate than any other amount within the range, Dow Corning has recorded the minimum liability within the range. Should Dow Corning not prevail in this matter, Corning’s equity earnings would be reduced by its 50% share of the amount in excess of $82million, net of applicable tax benefits. In addition, the London Market Insurers (the LMI Claimants) have claimed a reimbursement right with respect to a portion of insurance proceeds previously paid by the LMI Claimants to Dow Corning. This claim is based on a theory that the LMI Claimants overestimated Dow Corning’s liability for the resolution of implant claims pursuant to the Plan. The LMI Claimants offered two calculations of their claim amount: $54 million and $93million, plus minimum interest of $67million and $116million, respectively. These estimates were explicitly characterized as preliminary and subject to change. Litigation regarding this claim is in the discovery stage. Dow Corning disputes the claim and is unable to reasonably estimate any potential liability. There are a number of other claims in the bankruptcy proceedings against Dow Corning awaiting resolution by the U.S. District Court, and it is reasonably possible that Dow Corning may record bankruptcy-related charges in the future. There are no remaining tort claims against Corning, other than those that will be channeled by the Plan into facilities established by the Plan or otherwise defended by the Litigation Facility.

In 1995, Corning fully impaired its investment in Dow Corning after it filed for bankruptcy protection. Corning did not recognize net equity earnings from the second quarter of 1995 through the end of 2002. Corning began recognizing equity earnings in the first quarter of 2003 when management concluded that Dow Corning’s emergence from bankruptcy was probable. Corning considers the $249 million difference between the carrying value of its investment in Dow Corning and its 50% share of Dow Corning’s equity to be permanent.

Pittsburgh Corning Corporation (PCC)

Corning and PPG Industries, Inc. (PPG) each own 50% of the capital stock of Pittsburgh Corning Corporation (PCC). Over a period of more than two decades, PCC and several other defendants have been named in numerous lawsuits involving claims alleging personal injury from exposure to asbestos. Corning also has an equity interest in Pittsburgh Corning Europe N.V. (PCE), a Belgian Corporation which is a component of the Company’s proposed settlement for asbestos litigation. At September 30, 2009 and December 31, 2008, the fair value of PCE significantly exceeded its carrying value of $122million and $112 million, respectively. There have been no impairment indicators for our investment in PCE and we continue to recognize equity earnings of this affiliate. PCC filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Western District of Pennsylvania on April 16, 2000. At that time, Corning determined that it lacked the ability to recover the carrying amount of its investment in PCC and its investment was other-than-temporarily impaired. As a result, we reduced our investment in PCC to zero. Refer to Note 3 (Commitments and Contingencies) for additional information about PCC and PCE.

Variable Interest Entities

Corning leases certain transportation equipment from three Trusts that qualify as variable interest entities under ASC 810 Consolidation (ASC 810). The sole purpose of these entities is to lease transportation equipment to Corning.

For variable interest entities, we assess the terms of our interest in each entity to determine if we are the primary beneficiary as prescribed by ASC 810. Corning has performed the required ASC 810 assessments and has identified three entities as being variable interest entities. None of these entities are considered significant to Corning’s consolidated financial statements.

Corning does not have retained interests in assets transferred to an unconsolidated entity that serve as credit, liquidity or market risk support to that entity.

DOW CHEMICAL CO /DE/

NOTE G – NONCONSOLIDATED AFFILIATES

The table below presents summarized financial information for Dow Corning Corporation and EQUATE Petrochemical Company K.S.C., significant nonconsolidated affiliates (at 100 percent):

Summarized Income Statement Information	Nine Months Ended
In millions	Sept. 30, 2009		Sept. 30, 2008
Dow Corning Corporation
Sales	$	3,624	$	4,146
Gross profit	$	1,186	$	1,447
Net income	$	309	$	566
EQUATE Petrochemical Company K.S.C.
Sales	$	624	$	1,024
Gross profit	$	183	$	671
Net income	$	176	$	651

Duke Energy CORP

10. Investments in Equity Method Unconsolidated Affiliates

Impairments. During the three and nine months ended September 30, 2009, Duke Energy recorded pre-tax impairment charges to the carrying value of investments in unconsolidated affiliates of approximately $3 million and $9 million, respectively. Pre-tax impairment charges of approximately $4 million were recorded during the three and nine months ended September 30, 2008. These impairment charges, which were recorded in Losses on Sales and Impairments of Unconsolidated Affiliates on the Consolidated Statements of Operations, were recorded as a result of Duke Energy concluding that it would not be able to recover its carrying value in these investments, thus the carrying value of these investments were written down to their estimated fair value.

Crescent. In connection with the renegotiation of its debt agreements in June 2008, Crescent management modified its existing business strategy to focus some of its efforts on producing near term cash flows from its non-strategic real estate projects in order to improve liquidity. As a result of its revised business strategy to accelerate certain cash flows resulting from the June 2008 amendments to its debt agreements, Crescent updated its recoverability assessments for its real estate projects as required under the accounting rules for asset impairments. Under the accounting rules for asset impairments, the carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. For certain of Crescent’s non-strategic assets, it was determined that some projects’ projected undiscounted cash flows did not exceed the carrying value of the projects based on the revised business strategy assumptions, and an impairment loss was recorded equal to the amount by which the carrying amount of each impaired project exceeded its estimated fair value. The methods for determining fair value included discounted cash flow models, as well as valuing certain properties based on recent offer prices for bulk-sale transactions and other price data for similar assets. During the three and nine months ended September 30, 2008, Crescent recorded impairment charges on certain of its property holdings, primarily in its residential division, of which Duke Energy’s proportionate pre-tax share was approximately $114 million and $238 million, respectively. Of the approximate $114 million of impairment charges recorded during the three months ended September 30, 2008, approximately $45 million related to impairments triggered by the consideration of capitalized interest costs. Had capitalized interest costs been properly considered during the second quarter of 2008, these charges would have been recorded in the second quarter of 2008. Duke Energy’s proportionate share of these impairment charges are recorded in Equity in Earnings (Losses) of Unconsolidated Affiliates in Duke Energy’s Consolidated Statements of Operations.

As a result of the impairment charges recorded during the third quarter of 2008, the carrying value of Duke Energy’s investment in Crescent was reduced to zero. Accordingly, Duke Energy discontinued applying the equity method of accounting to its investment in Crescent in the third quarter of 2008 and did not record its proportionate share of any Crescent earnings or losses in subsequent periods.

As a result of Duke Energy recording its proportionate share of the aforementioned impairment charges, the total amount of equity method losses recorded during the three months ended September 30, 2008 related to Crescent triggers disclosure of summarized income statement information for Crescent under the significant subsidiary rules in accordance with Rule 4-08 of Regulation S-X. Accordingly, summarized income statement information for Crescent for the three months ended September 30, 2008 is as follows:


	Three Months Ended September 30, 2008
	(in millions)
Operating Revenues	$	38
Operating Expenses	$	286

Net Loss	$	(248	)

See Note 15 for a discussion of a charge recorded in the first quarter of 2009 related to performance guarantees issued by Duke Energy on behalf of Crescent. Crescent filed Chapter 11 petitions in a U.S. Bankruptcy Court in June 2009.

ENTERPRISE PRODUCTS PARTNERS L P

Note 7. Investments in Unconsolidated Affiliates

We own interests in a number of related businesses that are accounted for using the equity method of accounting. Our investments in unconsolidated affiliates are grouped according to the business segment to which they relate. See Note 11 for a general discussion of our business segments. The following table shows our investments in unconsolidated affiliates at the dates indicated:

	Ownership
	Percentage at
	September 30,		September 30,		December 31,
	2009		2009		2008
NGL Pipelines & Services:
Venice Energy Service Company, L.L.C.		13.1%	$	33.1	$	37.7
K/D/S Promix, L.L.C. (“Promix”)		50%		47.8		46.4
Baton Rouge Fractionators LLC		32.2%		23.6		24.1
Skelly-Belvieu Pipeline Company, L.L.C. (“Skelly-Belvieu”)		49%		37.4		36.0
Onshore Natural Gas Pipelines & Services:
Jonah Gas Gathering Company (“Jonah”)		19.4%		250.1		258.1
Evangeline (1)		49.5%		5.4		4.5
White River Hub, LLC		50%		27.0		21.4
Offshore Pipelines & Services:
Poseidon Oil Pipeline, L.L.C. (“Poseidon”)		36%		61.3		60.2
Cameron Highway Oil Pipeline Company (“Cameron Highway”)		50%		243.2		250.8
Deepwater Gateway, L.L.C.		50%		102.8		104.8
Neptune Pipeline Company, L.L.C. (“Neptune”)		25.7%		54.4		52.7
Nemo Gathering Company, LLC		33.9%		--		0.4
Texas Offshore Port System (“TOPS”) (2)		--		--		35.9
Petrochemical Services:
Baton Rouge Propylene Concentrator, LLC		30%		11.4		12.6
La Porte (3)		50%		3.5		3.9
Total			$	901.0	$	949.5

(1) Refers to our ownership interests in Evangeline Gas Pipeline Company, L.P. and Evangeline Gas Corp., collectively. (2) In April 2009, we elected to dissociate from this partnership and forfeit our investment (see discussion below). (3) Refers to our ownership interests in La Porte Pipeline Company, L.P. and La Porte GP, LLC, collectively.

Our investments in Promix, La Porte, Neptune, Poseidon, Cameron Highway, Jonah and Skelly-Belvieu include excess cost amounts totaling $54.8 million and $56.6 million at September 30, 2009 and December 31, 2008, respectively, all of which are attributable to the fair value of the underlying tangible assets of these entities exceeding their book carrying values at the time of our acquisition of interests in these entities. To the extent that we attribute all or a portion of an excess cost amount to higher fair values, we amortize such excess cost as a reduction in equity earnings in a manner similar to depreciation. To the extent we attribute an excess cost amount to goodwill, we do not amortize this amount, but it is subject to evaluation for impairment. Amortization of excess cost amounts was $0.6 million and $0.5 million for the three months ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009 and 2008, amortization of such amounts was $1.8 million and $1.5 million, respectively.

The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods indicated:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2009		2008		2009			2008
NGL Pipelines & Services	$	4.0	$	3.0	$	7.5		$	2.3
Onshore Natural Gas Pipelines & Services		7.4		5.6		21.7			16.9
Offshore Pipelines & Services		10.6		6.0		(12.1	)		27.9
Petrochemical Services		0.5		0.3		1.2			1.0
Total	$	22.5	$	14.9	$	18.3		$	48.1

Exit from TOPS Partnership

In August 2008, a wholly owned subsidiary of ours, together with a subsidiary of TEPPCO and Oiltanking Holding Americas, Inc. (“Oiltanking”), formed the TOPS partnership. Effective April 16, 2009, our wholly owned subsidiary dissociated from TOPS. As a result, equity earnings for the nine months ended September 30, 2009 reflects a non-cash charge of $34.2 million. This loss, which is classified within our Offshore Pipelines & Services business segment, represents our cumulative investment in TOPS through the date of dissociation and reflects our capital contributions to TOPS for construction in progress amounts. The wholly owned subsidiary of TEPPCO that was a partner in TOPS also dissociated from the partnership effective April 16, 2009 and recorded a $34.2 million non-cash charge. See Note 14 for litigation matters associated with TOPS.

Summarized Financial Information of Unconsolidated Affiliates

The following tables present unaudited income statement data for our current unconsolidated affiliates, aggregated by business segment, for the periods indicated (on a 100% basis):

	Summarized Income Statement Information for the Three Months Ended
	September 30, 2009						September 30, 2008
			Operating		Net				Operating		Net
	Revenues		Income		Income		Revenues		Income		Income
NGL Pipelines & Services	$	60.0	$	10.9	$	11.2	$	75.1	$	9.7	$	6.7
Onshore Natural Gas Pipelines & Services		108.6		34.2		34.3		188.9		29.0		27.9
Offshore Pipelines & Services		43.2		24.7		24.0		31.9		12.9		12.0
Petrochemical Services		5.1		2.0		2.0		5.6		1.1		1.1

	Summarized Income Statement Information for the Nine Months Ended
	September 30, 2009						September 30, 2008
			Operating		Net				Operating		Net
	Revenues		Income		Income		Revenues		Income		Income
NGL Pipelines & Services	$	161.7	$	23.7	$	24.2	$	217.8	$	17.7	$	15.0
Onshore Natural Gas Pipelines & Services		311.8		100.7		100.8		492.5		88.7		85.3
Offshore Pipelines & Services		106.4		39.2		37.7		115.0		62.4		57.2
Petrochemical Services		14.9		5.1		5.1		16.6		3.9		3.9

FISERV INC

5. Investment in and Advances to Unconsolidated Affiliate

In July 2008, the Company completed the sale of a 51% interest in substantially all of the businesses in its Insurance segment (“Fiserv Insurance”) and recognized a pre-tax gain of $19 million and a related income tax provision of $44 million in the third quarter of 2008. The Company received net cash proceeds of $513 million at closing and a $30 million note due in 2018. In July 2009, the Company loaned Fiserv Insurance $67 million, with interest payable quarterly and the principal due in 2013. The Company’s investment in and advances to Fiserv Insurance, totaling $288 million and $211 million at September 30, 2009 and December 31, 2008, respectively, are reported within other long-term assets in the condensed consolidated balance sheets.

FLOWSERVE CORP

9. Equity Method Investments

As of September 30, 2009, we had investments in seven joint ventures (one located in each of China, Japan, Korea, Saudi Arabia and the United Arab Emirates and two located in India) that were accounted for using the equity method. Summarized below is combined income statement information, based on the most recent financial information, for those investments:


	Three Months Ended September 30,
(Amounts in thousands)	2009			2008
Revenues	$	46,346		$	71,365
Gross profit		16,426			16,318
Income before provision for income taxes		11,578			11,481
Provision for income taxes		(3,428	)		(3,101	)

Net income	$	8,150		$	8,380


	Nine Months Ended September 30,
(Amounts in thousands)	2009			2008 (1)
Revenues	$	159,368		$	259,187
Gross profit		57,541			70,020
Income before provision for income taxes		40,733			49,788
Provision for income taxes		(12,605	)		(14,776	)

Net income	$	28,128		$	35,012


(1)		As discussed in Note 2, effective March 1, 2008, we purchased the remaining 50% interest in Niigata, resulting in the full consolidation of Niigata as of that date. Prior to this transaction, our 50% interest was recorded using the equity method of accounting. As a result, Niigata’s income statement information presented herein includes only the first two months of 2008.

The provision for income taxes is based on the tax laws and rates in the countries in which our investees operate. The tax jurisdictions vary not only by their nominal rates, but also by the allowability of deductions, credits and other benefits. Our share of net income is reflected in our condensed consolidated statements of income.

Foster Wheeler AG

3. Equity Interests

We own a noncontrolling equity interest in two electric power generation projects, one waste-to-energy project and one wind farm project in Italy and in a refinery/electric power generation project in Chile. We also own a 50% noncontrolling equity interest in an Italian project which generates earnings from royalty payments linked to the price of natural gas. The two electric power generation projects in Italy are each 42% owned by us, the waste-to-energy project is 39% owned by us and the wind farm project is 50% owned by us. The project in Chile is 85% owned by us; however, we do not have a controlling interest in the Chilean project as a result of participating rights held by the minority shareholder. We account for these investments in Italy and Chile under the equity method. The following is summarized financial information for these entities (each as a whole) in which we have an equity interest:

	September 30, 2009		December 26, 2008
	Italian Projects	Chilean Project	Italian Projects	Chilean Project

Balance Sheet Data:
Current assets	$ 333,997	$ 32,048	$ 288,387	$ 66,991
Other assets (primarily buildings and equipment)	664,411	129,797	618,083	137,007
Current liabilities	99,915	15,933	63,227	26,319
Other liabilities (primarily long-term debt)	551,468	63,109	535,954	70,950
Net assets	347,025	82,803	307,289	106,729

	Fiscal Quarters Ended
	September 30, 2009		September 26, 2008
	Italian Projects	Chilean Project	Italian Projects	Chilean Project

Income Statement Data:
Total revenues	$ 84,074	$ 13,830	$ 122,068	$ 16,385
Gross earnings	28,574	7,813	24,079	10,590
Income before income taxes	23,640	6,752	17,280	9,017
Net earnings	11,918	5,605	(5,570)	7,485


	Fiscal Nine Months Ended
	September 30, 2009		September 26, 2008
	Italian Projects	Chilean Project	Italian Projects	Chilean Project

Income Statement Data:
Total revenues	$ 283,232	$ 47,176	$ 338,981	$ 68,459
Gross earnings	67,823	27,713	81,998	40,967
Income before income taxes	56,239	23,121	61,759	37,244
Net earnings	32,972	19,191	24,225	30,913

Our equity in the net earnings of these partially-owned affiliates, which is recorded within other income, net on the consolidated statement of operations, totaled $8,664 and $25,555 for the fiscal quarter and nine months ended September 30, 2009, respectively, and $2,202 and $27,082 for the fiscal quarter and nine months ended September 26, 2008, respectively.

Our investment in these equity affiliates, which is recorded within investments in and advances to unconsolidated affiliates on the consolidated balance sheet, totaled $206,989 and $200,352 as of September 30, 2009 and December 26, 2008, respectively. Distributions of $25,486 and $24,452 were received during the fiscal nine months ended September 30, 2009 and September 26, 2008, respectively.

We have guaranteed certain performance obligations of the Chilean project. We have a contingent obligation, which is measured annually based on the operating results of the Chilean project for the preceding year. We did not have a current payment obligation under this guarantee as of December 26, 2008.

We also have guaranteed the obligations of our subsidiary under the Chilean project’s operations and maintenance agreement. The guarantee is limited to $20,000 over the life of the operations and maintenance agreement, which extends through 2016. No amounts have ever been paid under the guarantee.

In addition, we have provided a $10,000 debt service reserve letter of credit to cover debt service payments in the event that the Chilean project does not generate sufficient cash flow to make such payments. We are required to maintain the debt service reserve letter of credit during the term of the Chilean project’s debt, which matures in 2014. As of September 30, 2009, no amounts have been drawn under this letter of credit.

Under the Chilean project’s operations and maintenance agreement, our subsidiary provides services for the management, operation and maintenance of the refinery/electric power generation facility. Our fees for these services were $2,116 and $6,348 for the fiscal quarter and nine months ended September 30, 2009, respectively, and $2,328 and $6,984 for the fiscal quarter and nine months ended September 26, 2008, respectively, and were recorded in operating revenues on our consolidated statement of operations. We had a receivable from our partially-owned affiliate in Chile of $2,985 and $12,615 recorded in trade accounts and notes receivable on our consolidated balance sheet as of September 30, 2009 and December 26, 2008, respectively.

GENERAL GROWTH PROPERTIES INC

NOTE 3 UNCONSOLIDATED REAL ESTATE AFFILIATES

The Unconsolidated Real Estate Affiliates include our noncontrolling investments in real estate joint ventures. Generally, we share in the profits and losses, cash flows and other matters relating to our investments in Unconsolidated Real Estate Affiliates in accordance with our respective ownership percentages. We manage most of the properties owned by these joint ventures. As we have joint interest and control of these ventures with our venture partners and they have substantive participating rights in such ventures, we account for these joint ventures using the equity method. Some of the joint ventures have elected to be taxed as REITs.

Generally, we anticipate that the 2009 operations of our joint venture properties will support the operational cash needs of the properties, including debt service payments. In June and July, 2009 we made capital contributions of $28.7 million and $57.5 million, respectively, to fund our portion of $172.2 million of joint venture mortgage debt which had reached maturity. As of September 30, 2009, approximately $6.3 billion of indebtedness was secured by our Unconsolidated Properties, our proportionate share of which was approximately $3.0 billion. There can be no assurance that we will be able to refinance or restructure such debt on acceptable terms or otherwise, or that joint venture operations or contributions by us and/or our partners will be sufficient to repay such loans.

In certain circumstances, we have debt obligations in excess of our pro rata share of the debt of our Unconsolidated Real Estate Affiliates (“Retained Debt”). This Retained Debt represents distributed debt proceeds of the Unconsolidated Real Estate Affiliates in excess of our pro rata share of the non-recourse mortgage indebtedness of such Unconsolidated Real Estate Affiliates. The proceeds of the Retained Debt which are distributed to us are included as a reduction in our investment in Unconsolidated Real Estate Affiliates. In the event that the Unconsolidated Real Estate Affiliates do not generate sufficient cash flow to pay debt service, by agreement with our partners, our distributions may be reduced or we may be required to contribute funds in an amount equal to the debt service on Retained Debt. Such Retained Debt totaled $158.9 million as of September 30, 2009 and $160.8 million as of December 31, 2008, and has been reflected as a reduction in our investment in Unconsolidated Real Estate Affiliates. As of September 30, 2009, we do not anticipate an inability to perform on our obligations with respect to such Retained Debt.

In certain other circumstances, the Company, in connection with the debt obligations of certain Unconsolidated Real Estate Affiliates, has agreed to provide supplemental guarantees or master-lease commitments to provide to the debt holders additional credit-enhancement or security. As of September 30, 2009, we do not expect to be required to perform pursuant to any of such supplemental credit-enhancement provisions for our Unconsolidated Real Estate Affiliates, either due to estimates of the current obligations represented by such provisions or as a result of the protections afforded us through our Chapter 11 Cases.

The significant accounting policies used by the Unconsolidated Real Estate Affiliates are the same as ours.

Condensed Combined Financial Information of Unconsolidated Real Estate Affiliates

Following is summarized financial information for our Unconsolidated Real Estate Affiliates as of September 30, 2009 and December 31, 2008 and for the three and nine months ended September 30, 2009 and 2008.

	September 30, 2009			December 31, 2008
	(In thousands)
Condensed Combined Balance Sheets - Unconsolidated Real Estate Affiliates
Assets:
Land	$	874,186		$	863,965
Buildings and equipment	7,804,740			7,558,344
Less accumulated depreciation	(1,705,978		)	(1,524,121		)
Developments in progress	593,948			549,719
Net property and equipment	7,566,896			7,447,907
Investment in unconsolidated joint ventures	414,922			241,786
Investment property and property held for development and sale	276,718			282,636
Net investment in real estate	8,258,536			7,972,329
Cash and cash equivalents	198,724			231,500
Accounts and notes receivable, net	153,754			163,749
Deferred expenses, net	197,149			173,213
Prepaid expenses and other assets	336,900			225,809
Total assets	$	9,145,063		$	8,766,600

Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	6,342,519		$	6,411,631
Accounts payable, accrued expenses and other liabilities	465,488			513,538
Owners’ equity	2,337,056			1,841,431
Total liabilities and owners’ equity	$	9,145,063		$	8,766,600

Investment In and Loans To/From Unconsolidated Real Estate Affiliates, Net:
Owners’ equity	$	2,337,056		$	1,841,431
Less joint venture partners’ equity	(1,183,382		)	(915,690		)
Capital or basis differences and loans	826,270			911,894
Investment in and loans to/from Unconsolidated Real Estate Affiliates, net	$	1,979,944		$	1,837,635

Reconciliation - Investment In and Loans To/From Unconsolidated Real Estate Affiliates:
Asset - Investment in and loans to/from Unconsolidated Real Estate Affiliates	$	2,011,638		$	1,869,929
Liability - Investment in and loans to/from Unconsolidated Real Estate Affiliates	(31,694		)	(32,294		)
Investment in and loans to/from Unconsolidated Real Estate Affiliates, net	$	1,979,944		$	1,837,635

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)						(In thousands)
Condensed Combined Statements of Income - Unconsolidated Real Estate Affiliates
Revenues:
Minimum rents	$	184,701		$	189,869		$	564,497		$	560,458
Tenant recoveries	84,262			85,463			253,109			251,648
Overage rents	2,416			3,444			5,475			8,683
Land sales	14,858			25,036			50,134			102,978
Management and other fees	8,845			11,262			25,267			77,436
Other	19,634			22,085			66,383			33,039
Total revenues	314,716			337,159			964,865			1,034,242

Expenses:
Real estate taxes	24,642			21,675			76,506			70,701
Repairs and maintenance	18,566			18,647			54,199			57,433
Marketing	3,133			4,124			8,857			12,251
Other property operating costs	53,147			58,403			162,126			177,093
Land sales operations	11,838			16,887			39,404			62,217
Provision for doubtful accounts	3,224			2,590			9,531			4,219
Property management and other costs	20,469			25,382			58,491			66,579
General and administrative	755			7,207			13,879			18,565
Provisions for impairment	—			121			6,459			121
Depreciation and amortization	66,253			63,476			199,830			183,126
Total expenses	202,027			218,512			629,282			652,305
Operating income	112,689			118,647			335,583			381,937

Interest income	1,745			3,419			5,141			10,024
Interest expense	(74,900		)	(93,383		)	(246,255		)	(265,248		)
(Provision for) benefit from income taxes	(81		)	7,881			(1,050		)	4,549
Equity in income of unconsolidated joint ventures	14,472			7,381			31,699			26,775
Income from continuing operations	53,925			43,945			125,118			158,037
Net income	53,925			43,945			125,118			158,037
Allocation to noncontrolling interests	(1,119		)	(115		)	(2,044		)	(85		)
Net income attributable to joint venture partners	$	52,806		$	43,830		$	123,074		$	157,952

Equity In Income of Unconsolidated Real Estate Affiliates:
Net income attributable to joint venture partners	$	52,806		$	43,830		$	123,074		$	157,952
Joint venture partners’ share of income	(26,632		)	(23,092		)	(63,423		)	(82,591		)
Amortization of capital or basis differences	(10,536		)	(3,420		)	(19,543		)	(12,364		)
Elimination of Unconsolidated Real Estate Affiliates loan interest	(297		)	(379		)	(890		)	(1,085		)
Equity in income of Unconsolidated Real Estate Affiliates	$	15,341		$	16,939		$	39,218		$	61,912

Condensed Financial Information of Individually Significant Unconsolidated Real Estate Affiliates

Following is summarized financial information for GGP/Homart II L.L.C. (“GGP/Homart II”), GGP-TRS L.L.C. (“GGP/Teachers”) and The Woodlands Land Development Holdings, L.P. (“The Woodlands Partnership”). We account for these joint ventures using the equity method because we have joint interest and control of these ventures with our venture partners and they have substantive participating rights in such ventures. For financial reporting purposes, we consider each of these joint ventures to be an individually significant Unconsolidated Real Estate Affiliate. Our investment in such affiliates varies from a strict ownership percentage due to capital or basis differences or loans and related amortization.

	GGP/Homart II
	September 30,			December 31,
	2009			2008
	(In thousands)
Assets:
Land	$	239,481		$	239,481
Buildings and equipment	2,827,761			2,761,838
Less accumulated depreciation	(545,779		)	(482,683		)
Developments in progress	14,861			85,676
Net investment in real estate	2,536,324			2,604,312
Cash and cash equivalents	41,866			42,836
Accounts and notes receivable, net	46,796			45,025
Deferred expenses, net	95,753			84,902
Prepaid expenses and other assets	24,368			27,411
Total assets	$	2,745,107		$	2,804,486

Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	2,251,846		$	2,269,989
Accounts payable, accrued expenses and other liabilities	71,014			80,803
Owners’ equity	422,247			453,694
Total liabilities and owners’ equity	$	2,745,107		$	2,804,486

	GGP/Homart II						GGP/Homart II
	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)						(In thousands)
Revenues:
Minimum rents	$	59,298		$	61,183		$	181,405		$	181,849
Tenant recoveries	26,854			28,526			82,596			83,602
Overage rents	475			774			1,359			1,702
Other	1,572			2,376			5,048			6,861
Total revenues	88,199			92,859			270,408			274,014

Expenses:
Real estate taxes	7,615			8,482			24,383			24,894
Repairs and maintenance	5,994			6,265			17,015			19,144
Marketing	1,135			1,539			3,385			4,416
Other property operating costs	10,064			11,192			29,351			32,683
Provision for doubtful accounts	109			686			2,110			978
Property management and other costs	5,302			5,761			16,562			17,085
General and administrative	84			1,098			294			2,969
Provisions for impairment	(1		)	—			3,693			—
Depreciation and amortization	24,231			22,916			72,282			67,994
Total expenses	54,533			57,939			169,075			170,163
Operating income	33,666			34,920			101,333			103,851

Interest income	1,294			1,858			3,914			5,743
Interest expense	(31,117		)	(33,284		)	(92,575		)	(97,321		)
(Provision for) benefit from income taxes	(234		)	7,718			(783		)	5,948
Net income	3,609			11,212			11,889			18,221
Allocation to noncontrolling interests	2			(3		)	(2		)	(8		)
Net income attributable to joint venture partners	$	3,611		$	11,209		$	11,887		$	18,213

	GGP/Teachers
	September 30,			December 31,
	2009			2008
	(In thousands)
Assets:
Land	$	175,344		$	177,740
Buildings and equipment	1,100,457			1,076,748
Less accumulated depreciation	(168,539		)	(145,101		)
Developments in progress	33,952			54,453
Net investment in real estate	1,141,214			1,163,840
Cash and cash equivalents	5,577			7,148
Accounts and notes receivable, net	18,608			16,675
Deferred expenses, net	38,509			20,011
Prepaid expenses and other assets	3,450			17,097
Total assets	$	1,207,358		$	1,224,771

Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	1,013,744		$	1,020,825
Accounts payable, accrued expenses and other liabilities	30,123			40,787
Owners’ equity	163,491			163,159
Total liabilities and owners’ equity	$	1,207,358		$	1,224,771

	GGP/Teachers						GGP/Teachers
	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)						(In thousands)
Revenues:
Minimum rents	$	24,648		$	29,008		$	76,752		$	86,441
Tenant recoveries	14,226			12,869			39,237			37,662
Overage rents	451			843			816			2,157
Other	390			606			1,453			1,706
Total revenues	39,715			43,326			118,258			127,966

Expenses:
Real estate taxes	3,740			3,417			11,152			9,173
Repairs and maintenance	2,367			2,268			7,294			7,466
Marketing	550			595			1,662			1,877
Other property operating costs	4,914			5,347			14,183			15,546
Provision for doubtful accounts	441			524			1,392			687
Property management and other costs	2,112			2,307			6,681			7,015
General and administrative	44			99			178			205
Provisions for impairment	—			103			17			103
Depreciation and amortization	9,359			8,982			28,950			26,082
Total expenses	23,527			23,642			71,509			68,154
Operating income	16,188			19,684			46,749			59,812

Interest income	2			52			5			221
Interest expense	(13,866		)	(13,982		)	(41,197		)	(41,643		)
(Provision for) benefit from income taxes	(25		)	28			(67		)	(110		)
Net income attributable to joint venture partners	$	2,299		$	5,782		$	5,490		$	18,280

	The Woodlands Partnership
	September 30,			December 31,
	2009			2008
	(In thousands)
Assets:
Land	$	21,941		$	16,573
Buildings and equipment	101,956			60,130
Less accumulated depreciation	(13,898		)	(11,665		)
Developments in progress	64,561			71,124
Investment property and property held for development and sale	276,718			282,636
Net investment in real estate	451,278			418,798
Cash and cash equivalents	15,068			45,710
Accounts and notes receivable, net	5,547			20,420
Deferred expenses, net	799			1,268
Prepaid expenses and other assets	98,126			93,538
Total assets	$	570,818		$	579,734

Liabilities and Owners’ Equity:
Mortgages, notes and loans payable	$	311,085		$	318,930
Accounts payable, accrued expenses and other liabilities	70,044			74,067
Owners’ equity	189,689			186,737
Total liabilities and owners’ equity	$	570,818		$	579,734

	The Woodlands Partnership						The Woodlands Partnership
	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands)						(In thousands)
Revenues:
Minimum rents	$	1,820		$	1,504		$	4,738		$	2,640
Land sales	14,858			25,036			50,134			102,978
Other	2,319			1,882			7,144			7,491
Total revenues	18,997			28,422			62,016			113,109

Expenses:
Real estate taxes	131			254			392			661
Repairs and maintenance	356			224			804			467
Other property operating costs	3,865			4,600			11,988			13,969
Land sales operations	11,838			16,890			39,404			62,217
Depreciation and amortization	799			622			2,233			1,925
Total expenses	16,989			22,590			54,821			79,239
Operating income	2,008			5,832			7,195			33,870

Interest income	116			199			474			586
Interest expense	(978		)	(1,681		)	(2,870		)	(4,447		)
Provision for income taxes	(158		)	(193		)	(426		)	(706		)
Net income attributable to joint venture partners	$	988		$	4,157		$	4,373		$	29,303

HCP, INC.

(7) Investments in and Advances to Unconsolidated Joint Ventures

The Company owns interests in the following entities which are accounted for under the equity method at September 30, 2009 (dollars in thousands):

Entity(1)	Properties	Investment(2)			Ownership%
HCP Ventures II	25 senior housing facilities	$	139,064		35
HCP Ventures III, LLC	13 MOBs	11,092			30
HCP Ventures IV, LLC	54 MOBs and 4 hospitals	41,284			20
HCP Life Science(3)	4 life science facilities	63,991			50 - 63
Suburban Properties, LLC	1 MOB	3,727			67
Advances to unconsolidated joint ventures, net		2,206
		$	261,364
Edgewood Assisted Living Center, LLC(4)(5)	1 senior housing facility	$	(488	)	45
Seminole Shores Living Center, LLC(4)(5)	1 senior housing facility	(888		)	50
		$	259,988

(1) These joint ventures are not consolidated since the Company does not control, through voting rights or other means, the joint ventures. See Note 2 regarding the Company’s policy on consolidation.

(2) Represents the carrying value of the Company’s investment in the unconsolidated joint venture. See Note 2 regarding the Company’s policy for accounting for joint venture interests.

(3) Includes three unconsolidated joint ventures between the Company and an institutional capital partner for which the Company is the managing member. HCP Life Science includes the following partnerships: (i) Torrey Pines Science Center, LP (50%); (ii) Britannia Biotech Gateway, LP (55%); and (iii) LASDK, LP (63%).

(4) As of September 30, 2009, the Company has guaranteed in the aggregate $4 million of a total of $8 million of notes payable for these joint ventures. No amounts have been recorded related to these guarantees at September 30, 2009.

(5) Negative investment amounts are included in accounts payable and accrued liabilities.

Summarized combined financial information for the Company’s unconsolidated joint ventures follows (in thousands):

	September 30,		December 31,
	2009		2008
Real estate, net	$	1,659,879	$	1,703,308
Other assets, net	192,210		184,297
Total assets	$	1,852,089	$	1,887,605

Notes payable	$	1,162,994	$	1,172,702
Accounts payable	44,526		39,883
Other partners’ capital	465,557		488,860
HCP’s capital(1)	179,012		186,160
Total liabilities and partners’ capital	$	1,852,089	$	1,887,605

(1) Aggregate basis difference of the Company’s investments in these joint ventures of $79 million, as of September 30, 2009, is primarily attributable to real estate and related intangible assets.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009			2008(1)
Total revenues	$	46,366	$	46,522	$	138,833		$	138,938
Net income (loss)	2		1,615		(1,093		)	5,408
HCP’s equity income	1,328		1,227		1,993			3,736
Fees earned by HCP	1,326		1,523		4,133			4,448
Distributions received, net	4,202		4,208		11,219			12,463

(1) Includes the financial information of Arborwood Living Center, LLC and Greenleaf Living Centers, LLC, which were sold on April 3, 2008 and June 12, 2008, respectively.

HESS CORP

Refining Joint Venture

The Corporation accounts for its investment in HOVENSA L.L.C. (HOVENSA) using the equity method. Summarized financial information for HOVENSA follows (in millions):


	September 30,			December 31,
	2009			2008
Summarized balance sheet
Cash and short-term investments	$	145		$	75
Other current assets		503			664
Net fixed assets		2,077			2,136
Other assets		59			58
Current liabilities		(847	)		(679	)
Long-term debt		(356	)		(356	)
Deferred liabilities and credits		(111	)		(104	)

Members’ equity	$	1,470		$	1,794


	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2009			2008			2009			2008
Summarized income statement
Total revenues	$	2,644		$	5,413		$	7,307		$	15,170
Cost and expenses		(2,741	)		(5,308	)		(7,632	)		(15,119	)

Net income (loss)	$	(97	)	$	105		$	(325	)	$	51

Hess Corporation’s share, before income taxes	$	(49	)	$	52		$	(165	)	$	23

HOST HOTELS & RESORTS, INC.

5.	Investments in Affiliates

We hold a 32.1% ownership interest in a joint venture based in Europe that owns 11 hotel properties located in six countries. The terms of this joint venture agreement limit the life of the investment to 2016, with two one-year extensions. We review our investment in the joint venture for other than temporary impairment based on the occurrence of any events that would indicate that the carrying amount of the investment exceeds its fair value on an other than temporary basis. We used certain inputs such as available third-party appraisals and forecast net operating income for the hotel properties to estimate the fair value of our investment in the joint venture as of September 11, 2009. During the second quarter of 2009, we determined that our investment was impaired based on the reduction of anticipated distributable cash flows from the joint venture, which was caused primarily by a decline in cash flows generated by the properties. We believe this impairment to be other than temporary as defined by GAAP because the time period over which the joint venture may be able to improve operations such that our investment would be fully recoverable is limited by the remaining life of the joint venture. As a result, in the second quarter of 2009, we recorded a non-cash impairment charge totaling $34 million based on the difference between the estimated fair value and carrying value of our investment. This impairment is included in equity in earnings (losses) of affiliates in the condensed consolidated statements of operations. There were no impairment charges recorded in the third quarter of 2009 for our joint venture investment in Europe.

On September 11, 2009, we sold our remaining 3.6% limited partnership interest in CBM Joint Venture Limited Partnership (“CBM JV”) for approximately $13 million and recorded the gain on property transaction of $5 million, net of taxes. As a result of this transaction, we no longer have any ownership interest in CBM JV. The net loss for the third quarter of 2009 includes a $12 million tax benefit related to the reversal of an excess deferred tax liability that was established in prior periods associated with our investment.

JONES APPAREL GROUP INC

EQUITY-METHOD INVESTMENTS

We had a 50% ownership interest in a joint venture with Sutton Development Pty. Ltd. (“Sutton”) to operate retail locations in Australia, which operated under the name Nine West Australia Pty Ltd. We sold our interest in this joint venture to Sutton on December 3, 2007 for $20.7 million, which resulted in a pre-tax gain of $8.2 million. The sales price was subject to certain working capital adjustments, which resulted in additional sales proceeds and pre-tax gain of $0.8 million in the fiscal nine months ended October 4, 2008.

On June 20, 2008, we acquired a 10% equity interest in GRI, an international accessories and apparel brand management and retail-distribution network, for $20.2 million. On June 24, 2009, we increased our equity interest to 25% for an additional $15.2 million. The selling shareholders of GRI are entitled to receive an additional cash payment equaling 60% of the amount of GRI’s fiscal year 2011 net income that exceeds a certain threshold. GRI, which (including its franchisees) operates over 800 points of sale in 12 Asian countries, is the exclusive licensee of several of our brands in Asia, including Nine West, Anne Klein New York, AK Anne Klein, Easy Spirit, Enzo Angiolini and Joan & David. GRI also distributes other women’s apparel, shoes and accessory brands. See ”Accounts Receivable” for additional information regarding GRI.

LEUCADIA NATIONAL CORP

Investments in Associated Companies

A summary of investments in associated companies at September 30, 2009 and December 31, 2008 is as follows:


	September 30,		December 31,
	2009		2008
	(In thousands)
Investments in associated companies accounted for under the equity method of accounting (a):
Jefferies High Yield Holdings, LLC (“JHYH”)	$	311,418	$	280,923
Keen Energy Services, LLC (“Keen Energy”) (b)		209,806		252,362
Cobre Las Cruces, S.A. (“CLC”)		218,630		165,227
Garcadia		36,956		72,135
HomeFed Corporation		44,481		44,093
Pershing Square IV, L.P. (“Pershing Square”)		32,093		36,731
Brooklyn Renaissance Plaza		29,940		31,217
Berkadia Commercial Mortgage LLC (“Berkadia”)		5,002		—
Wintergreen Partners Fund, L.P. (“Wintergreen”)		—		42,895
HFH ShortPLUS Fund L.P. (“Shortplus”)		—		39,942
IFIS Limited (“IFIS”)		—		14,590
Other		68,067		93,402

Total accounted for under the equity method of accounting		956,393		1,073,517


Investments in associated companies carried at fair value (c):
Jefferies Group, Inc. (“Jefferies”)		1,322,980		683,111
AmeriCredit Corp. (“ACF”)		526,446		249,946

Total accounted for at fair value		1,849,426		933,057


Total investments in associated companies	$	2,805,819	$	2,006,574


(a)		Investments accounted for under the equity method of accounting are initially recorded at their original cost and subsequently increased for the Company’s share of the investees’ earnings, decreased for the Company’s share of the investees’ losses, reduced for dividends received and impairment charges recorded, if any, and increased for any additional investment of capital.

(b)		Keen Energy was formerly known as Goober Drilling, LLC.

(c)		As more fully discussed in the 2008 10-K, during 2008 the Company elected to account for its investments in Jefferies and ACF at fair value commencing on the dates these investments became subject to the equity method of accounting. The original cost for the Jefferies shares was $794,400,000 and the original cost for the ACF shares was $413,500,000.

For the nine month period ending September 30, 2009, the Company’s equity in losses of Garcadia includes impairment charges for goodwill and other intangible assets aggregating $32,300,000. Garcadia’s automobile dealerships have been adversely impacted by general economic conditions, and the bankruptcy filings by two of the three largest U.S. automobile manufacturers was a change in circumstances that caused Garcadia to evaluate the recoverability of its goodwill and other intangible assets. Garcadia prepared discounted cash flow projections for each of its dealerships and concluded that the carrying amount of its goodwill and other intangible assets was impaired. Garcadia’s cash flow projections assume that new car sales at their foreign car dealerships remain flat with 2009 sale levels through 2011 and project growth thereafter. Cash flow projections at dealerships that sell domestic cars are projected to continue to decline through 2012 or 2013 with projected growth thereafter. None of Garcadia’s automobile dealerships are currently expected to close as a result of the restructuring of the U.S. automobile manufacturers. However, if new vehicle sales at Garcadia’s automobile dealerships are less than projected amounts or dealerships are closed, further impairment charges are likely.

		For the three and nine month periods ended September 30, 2008, the Company’s equity in losses of IFIS includes impairment charges of $36,100,000. IFIS is a private Argentine company that owns a variety of investments, and its largest investment is ownership of common shares of Cresud Sociedad Anonima Comercial, Inmobiliaria, Financiera y Agropecuaria (“Cresud”), an agricultural company primarily based in Argentina. During the third quarter of 2008, as a result of significant declines in quoted market prices for Cresud and other investments of IFIS, combined with declines in worldwide food commodity prices, the global mortgage and real estate crisis and political and financial conditions in Argentina, the Company determined that its investment in IFIS was impaired. The fair values of IFIS securities were determined using quoted market prices at September 30, 2008; further declines in the values of IFIS’s investments resulted in the recognition of additional impairment charges during the fourth quarter of 2008. In January 2009, IFIS raised a significant amount of new equity in a rights offering in which the Company did not participate. As a result, the Company’s ownership interest in IFIS was reduced to 8% and the Company no longer applies the equity method of accounting for this investment. At September 30, 2009, the Company’s investment in IFIS was classified as a non-current investment.

		The Company owns approximately 25% of the outstanding voting securities of ACF, a company listed on the New York Stock Exchange (“NYSE”) (Symbol: ACF). ACF is an independent auto finance company that is in the business of purchasing and servicing automobile sales finance contracts, historically to consumers who are typically unable to obtain financing from other sources. Income related to associated companies include unrealized gains (losses) resulting from changes in the fair value of ACF of $73,300,000 and $51,600,000 for the three month periods ended September 30, 2009 and 2008, respectively, and $268,300,000 and $(73,900,000) for the nine month periods ended September 30, 2009 and 2008, respectively.

		The Company owns approximately 29% of the outstanding voting securities of Jefferies, a company listed on the NYSE (Symbol: JEF). Jefferies is a full-service global investment bank and institutional securities firm serving companies and their investors. Income related to associated companies include unrealized gains resulting from changes in the fair value of Jefferies of $286,700,000 and $271,100,000 for the three months ended September 30, 2009 and 2008, respectively, and $639,900,000 and $293,900,000 for the nine month periods ended September 30, 2009 and 2008, respectively.

		In accordance with GAAP, the Company is allowed to choose, at specified election dates, to measure many financial instruments and certain other items at fair value (the “fair value option”) that would not otherwise be required to be measured at fair value. If the fair value option is elected for a particular financial instrument or other item, the Company is required to report unrealized gains and losses on those items in earnings. The Company’s investments in ACF and Jefferies are the only eligible items for which the fair value option was elected, commencing on the date the investments became subject to the equity method of accounting. If these investments were accounted for under the equity method, the Company would have to record its share of their results of operations employing a quarterly reporting lag because of the investees’ public reporting requirements. In addition, electing the fair value option eliminates some of the uncertainty involved with impairment considerations, since quoted market prices for these investments provides a readily determinable fair value at each balance sheet date. The Company’s investment in HomeFed is the only other investment in an associated company that is also a publicly traded company but for which the Company did not elect the fair value option. HomeFed’s common stock is not listed on any stock exchange, and price information for the common stock is not regularly quoted on any automated quotation system. It is traded in the over-the-counter market with high and low bid prices published by the National Association of Securities Dealers OTC Bulletin Board Service; however, trading volume is minimal. For these reasons the Company did not elect the fair value option for HomeFed.

		The following tables provide summarized data with respect to significant investments in associated companies for the periods the investments were owned by the Company. The information is provided for those investments whose current relative significance to the Company could result in the Company including separate audited financial statements for such investments in its Annual Report on Form 10-K for the year ended December 31, 2009 (in thousands).


	September 30,		September 30,
	2009		2008
ACF:
Total revenues	$	1,363,500	$	1,803,200
Income (loss) from continuing operations before extraordinary items		66,900		(113,700	)
Net income (loss)		66,900		(113,700	)

Jefferies:
Total revenues	$	1,850,700	$	1,433,800
Income (loss) from continuing operations before extraordinary items		186,500		(96,200	)
Net income (loss)		186,500		(96,200	)

The amounts reflected as income related to associated companies in the consolidated statements of operations are net of income tax provisions of $12,941,000 and $88,311,000 for the three month periods ended September 30, 2009 and 2008, respectively, and $25,678,000 and $33,181,000 for the nine month periods ended September 30, 2009 and 2008, respectively.

Liberty Media Corporation and Subsidiaries

(7) Investments in Affiliates Accounted for Using the Equity Method

Liberty has various investments accounted for using the equity method. The following table includes Liberty's carrying amount and percentage ownership of the more significant investments in affiliates at September 30, 2009 and the carrying amount at December 31, 2008:

			December 31,
	September 30, 2009		2008
	Percentage	Carrying	Carrying
	ownership	amount	amount
		dollar amounts in millions
Entertainment Group
DIRECTV	57%	$ 13,382	13,085
Other	various	458	281
Interactive Group
Expedia	24%	606	559
Other	various	254	342
Capital Group
Sirius	40%	63	--
Other	various	215	223
		$ 14,978	14,490

The following table presents Liberty's share of earnings (losses) of affiliates:

	Nine months ended
	September 30,
	2009	2008
	amounts in millions
Entertainment Group
DIRECTV	$ 304	301
Other	12	13
Interactive Group
Expedia	47	58
Other	(94)	--
Capital Group
Sirius	(14)	--
Other	(12)	(21)
	$ 243	351

DIRECTV

On February 27, 2008, Liberty completed a transaction with News Corporation (the "News Corporation Exchange") in which Liberty exchanged all of its 512.6 million shares of News Corporation common stock valued at $10,143 million on the closing date for a subsidiary of News Corporation that held an approximate 41% interest in DIRECTV, three regional sports television networks that now comprise Liberty Sports Group and $463 million in cash. In addition, Liberty incurred $21 million of acquisition costs. Liberty recognized a pre-tax gain of $3,666 million in the first quarter of 2008 based on the difference between the fair value and the cost basis of the News Corporation shares exchanged.

Liberty accounted for the News Corporation Exchange as a nonmonetary exchange. Accordingly, Liberty recorded the assets received at an amount equal to the fair value of the News Corporation common stock given up. Such amount was allocated to DIRECTV and Liberty Sports Group based on their relative fair values as follows (amounts in millions):

Cash	$ 463
DIRECTV	10,765
Liberty Sports Group	448
Deferred tax liability	(1,512)
Total	$ 10,164

Liberty estimated the fair values of Liberty Sports Group and DIRECTV's assets using a combination of discounted cash flows and market prices for comparable assets.

At the time of closing, the value attributed to Liberty's investment in DIRECTV exceeded Liberty's proportionate share of DIRECTV's equity by $8,022 million. Due to additional purchases of DIRECTV stock by Liberty and stock repurchases by DIRECTV, such excess basis has increased to $11,032 million as of September 30, 2009. Such amount has been allocated within memo accounts used for equity accounting purposes to DIRECTV's assets and liabilities. Amortization related to the intangible assets with identifiable useful lives within the memo accounts is included in Liberty's share of earnings of DIRECTV in the accompanying condensed consolidated statement of operations and aggregated $231 million and $153 million (net of related taxes) for the nine months ended September 30, 2009 and for the seven months ended September 30, 2008, respectively.

On April 3, 2008, Liberty purchased 78.3 million additional shares of DIRECTV common stock in a private transaction for cash consideration of $1.98 billion. Liberty funded the purchase with borrowings against a newly executed equity collar on 110 million DIRECTV common shares. As of May 5, 2008, Liberty's ownership in DIRECTV was approximately 47.9%, and Liberty and DIRECTV entered into a standstill agreement. Pursuant to the standstill agreement, in the event Liberty's ownership interest goes above 47.9% due to stock repurchases by DIRECTV Liberty has agreed to vote its shares of DIRECTV which represent the excess ownership interest above 47.9% in the same proportion as all DIRECTV shareholders other than Liberty. Accordingly, although Liberty's economic ownership in DIRECTV is above 50%, Liberty continues to account for such investment using the equity method of accounting. Liberty records its share of DIRECTV's earnings based on its economic interest in DIRECTV.

The market value of the Company's investment in DIRECTV was $15,134 million and $12,571 million at September 30, 2009 and December 31, 2008, respectively. Summarized unaudited financial information for DIRECTV is as follows:

DIRECTV Consolidated Balance Sheets
	September 30,	December 31,
	2009	2008
	amounts in millions

Current assets	$ 5,476	4,044
Satellites, net	2,364	2,476
Property and equipment, net	4,153	4,171
Goodwill	3,811	3,753
Intangible assets	952	1,172
Other assets	871	923
Total assets	$ 17,627	16,539

Current liabilities	$ 4,269	3,585
Deferred income taxes	723	524
Long-term debt	6,591	5,725
Other liabilities	1,625	1,749
Redeemable noncontrolling interest	325	325
Equity	4,094	4,631
Total liabilities and equity	$ 17,627	16,539

DIRECTV Consolidated Statements of Operations	Nine months ended
	September 30,
	2009	2008
	amounts in millions

Revenue	$ 15,584	14,379
Costs of revenue	(7,784)	(7,122)
Selling, general and administrative expenses	(3,981)	(3,466)
Depreciation and amortization	(2,008)	(1,675)
Operating income	1,811	2,116

Interest expense	(304)	(248)
Other income, net	92	93
Income tax expense	(585)	(712)
Net income	1,014	1,249
Less income attributable to noncontrolling interest	(40)	(60)
Net income attributable to The DIRECTV Group, Inc.	$ 974	1,189

Expedia

The market value of the Company's investment in Expedia was $1,658 million and $570 million at September 30, 2009 and December 31, 2008, respectively. Summarized unaudited financial information for Expedia is as follows:

Expedia Consolidated Balance Sheets
	September 30,		December 31,
	2009		2008
	amounts in millions

Current assets	$ 1,456	1,199
Property and equipment	232	248
Goodwill	3,579	3,539
Intangible assets	825	833
Other assets	55	75
Total assets	$ 6,147	5,894

Current liabilities	$ 2,177	1,566
Deferred income taxes	212	190
Long-term debt	895	1,545
Other liabilities	227	212
Equity	2,636	2,381
Total liabilities and equity	$ 6,147	5,894

Expedia Consolidated Statements of Operations
	Nine months ended
	September 30,
	2009	2008
	amounts in millions

Revenue	$ 2,258	2,316
Cost of revenue	(462)	(500)
Gross profit	1,796	1,816
Selling, general and administrative expenses	(1,234)	(1,304)
Amortization	(28)	(52)
Restructuring charges and other	(103)	--
Operating income	431	460

Interest expense	(64)	(49)
Other expense, net	(26)	(8)
Income tax expense	(142)	(164)
Net earnings	199	239
Net (earnings) loss attributable to noncontrolling interests	(2)	3
Net earnings attributable to Expedia, Inc.	$ 197	242

Spin Off Companies from IAC

IAC completed the spin off of HSN, Interval, Ticketmaster and Lending Tree (the "IAC Spin Off Companies") on August 21, 2008. Liberty received an approximate 30% ownership interest in each of the IAC Spin Off Companies. Liberty allocated its carrying value in IAC prior to the spin off among IAC and the IAC Spin Off Companies based on their relative fair values at the time of the spin off. Liberty received no super voting shares in and has no special voting arrangements with respect to any of the IAC Spin Off Companies (other than with respect to the election of directors), and therefore, accounts for its interests using the equity method of accounting. Liberty has elected to record its share of earnings/losses for each of the IAC Spin Off Companies on a three month lag due to timeliness considerations. Liberty's share of losses of the IAC Spin Off Companies aggregated $89 million for the nine months ended September 30, 2009.

Sirius XM Radio Inc.

During the first quarter of 2009, Liberty made investments/commitments in Sirius totaling approximately $579 million. Liberty's initial investment was the open market purchase of $46 million principal amount of Sirius bonds for $18 million. Such bonds are accounted for by Liberty as AFS debt securities and are marked to market each reporting period. On February 17, 2009, Liberty and Sirius entered into a senior secured loan agreement (the "Senior Loan") whereby Liberty loaned Sirius $250 million at an interest rate of 15% and made a commitment to loan an additional $30 million to fund qualifying expenditures by Sirius (the "Purchase Money Commitment"). In exchange for making the Senior Loan, Liberty received a $30 million origination fee. Liberty has accounted for the origination fee as a discount to the Senior Loan and is amortizing it to interest income over the term of the Senior Loan. On March 6, 2009, Liberty (i) purchased $100 million of a new senior loan facility of a subsidiary of Sirius ("Subsidiary Senior Loan"), (ii) purchased $61 million of bank debt of such subsidiary directly from the lending group and (iii) committed to make a loan of $150 million to such subsidiary in December 2009 ("Subsidiary Commitment"). In addition, Liberty received voting preferred stock of Sirius (the "Sirius Preferred Stock"), which has substantially the same rights and preferences as common shareholders of Sirius, for a cash payment of $12,500. The Sirius Preferred Stock is convertible into common stock equal to 40% of fully diluted equity.

Liberty allocated the total consideration paid for the Subsidiary Senior Loan, the Subsidiary Commitment and the Sirius Preferred Stock to each of the instruments based on the relative fair values of such instruments.

Since the amount of bank debt purchased from the lending group was a transaction with an outside third party and not with Sirius directly, this investment was not included in the allocation, but was recorded at the amount invested ($61 million).

During the second quarter of 2009, Sirius issued $525 million of 11.25% Senior Secured Notes due 2013, of which Liberty purchased $100 million principal amount at a purchase price of 95.093% The $500 million in net proceeds of the offering were used to repay all amounts outstanding under the Subsidiary Senior Loan; to replace the $150 million Subsidiary Commitment, which was terminated upon the closing of the offering; and to refinance and repay other debt of Sirius. As such, amounts due to Liberty under the Subsidiary Senior Loan ($100 million original funding and $61 million third party purchase, with an aggregate principal amount of $153 million) were repaid in full resulting in a cash payment to Liberty of $156 million, including associated prepayment premiums. As Liberty's book basis in the debt was originally recorded at a discount, Liberty recognized a gain on the debt repayment of $42 million. In addition, Liberty retired the discounted funding obligation under the terminated Subsidiary Commitment, which had a carrying value of $70 million, resulting in a total gain on the Sirius refinancing of $67 million after eliminating 40% of the gain related to Liberty's ownership in Sirius.

During the second quarter of 2009, Liberty also purchased an additional $62 million face amount of other Sirius bonds at an average price of 70.05%.

During the third quarter of 2009, Sirius completed another bond offering and used a portion of the proceeds to repay the Senior Loan. Liberty recognized a gain of $27 million upon receipt of such payment related to the unamortized discount on the Senior Loan. Also, in the third quarter, Liberty purchased an additional $84 million face amount of Sirius bonds for cash payments of $74 million and sold $13 million face amount of Sirius bonds for cash proceeds of $13.4 million.

As of September 30, 2009, Liberty had invested aggregate cash of $611 million and had received scheduled debt repayments, cash from the Sirius refinancings and bond sales proceeds totaling $425 million, resulting in a net cash investment of $186 million. Such net cash investment has resulted in Liberty owning $279 million principal amount of Sirius public bonds and the Sirius Preferred Stock. In addition, the Purchase Money Commitment has been cancelled.

Based on Liberty's voting rights and its conclusion that the Sirius Preferred Stock is in-substance common stock, Liberty accounts for its investment in the Sirius Preferred Stock using the equity method of accounting. Liberty has elected to record its share of earnings/losses for Sirius on a three-month lag due to timeliness considerations. As of September 30, 2009, the Sirius Preferred Stock had a market value of $1,656 million based on the value of the common stock into which it is convertible.

Liberty's investment in Sirius has been attributed to the Capital Group.

MDU RESOURCES GROUP INC

11. Equity method investments

Investments in companies in which the Company has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. The Company's equity method investments at September 30, 2009, include the Brazilian Transmission Lines.

In August 2006, MDU Brasil acquired ownership interests in companies owning the Brazilian Transmission Lines. The interests involve the ENTE (13.3-percent ownership interest), ERTE (13.3-percent ownership interest) and ECTE (25-percent ownership interest) electric transmission lines, which are primarily in northeastern and southern Brazil.

At September 30, 2009 and 2008, and December 31, 2008, the Company's equity method investments had total assets of $379.4 million, $358.6 million and $294.7 million, respectively, and long-term debt of $180.9 million, $179.0 million and $158.0 million, respectively. The Company's investment in its equity method investments was approximately $60.2 million, $53.7 million and $44.4 million, including undistributed earnings of $8.7 million, $8.6 million and $6.8 million, at September 30, 2009 and 2008, and December 31, 2008, respectively.

MERCK & CO INC

Joint Ventures and Other Equity Method Affiliates

Equity income from affiliates reflects the performance of the Company’s joint ventures and other equity method affiliates and was comprised of the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
($ in millions)	2009		2008		2009		2008

Merck/Schering-Plough	$	391.3	$	400.2	$	1,044.5	$	1,158.2
AstraZeneca LP		191.4		139.1		482.6		331.6
Other ⁽¹⁾		105.5		126.3		334.1		350.9

	$	688.2	$	665.6	$	1,861.2	$	1,840.7

⁽¹⁾ Primarily reflects results from Sanofi Pasteur MSD, Johnson & Johnson°Merck Consumer Pharmaceuticals Company and Merial Limited (until disposition on September 17, 2009).

Merck/Schering-Plough

In 2000, the Company and Schering-Plough (collectively the “Partners”) entered into agreements to create an equally-owned partnership to develop and market in the United States new prescription medicines in the cholesterol-management therapeutic area. These agreements generally provide for equal sharing of development costs and for co-promotion of approved products by each company. In 2001, the cholesterol-management partnership agreements were expanded to include all the countries of the world, excluding Japan. In 2002, ezetimibe, the first in a new class of cholesterol-lowering agents, was launched in the United States as Zetia (marketed as Ezetrol outside the United States). In 2004, a combination product containing the active ingredients of both Zetia and Zocor was approved in the United States as Vytorin (marketed as Inegy outside of the United States).

The cholesterol agreements provide for the sharing of operating income generated by the Merck/Schering-Plough cholesterol partnership (the “MSP Partnership”) based upon percentages that vary by product, sales level and country. In the U.S. market, the Partners share profits on Zetia and Vytorin sales equally, with the exception of the first $300 million of annual Zetia sales on which Schering-Plough receives a greater share of profits. Operating income includes expenses that the Partners have contractually agreed to share, such as a portion of manufacturing costs, specifically identified promotion costs (including direct-to-consumer advertising and direct and identifiable out-of-pocket promotion) and other agreed upon costs for specific services such as on-going clinical research, market support, market research, market expansion, as well as a specialty sales force and physician education programs. Expenses incurred in support of the MSP Partnership but not shared between the Partners, such as marketing and administrative expenses (including certain sales force costs), as well as certain manufacturing costs, are not included in Equity income from affiliates. However, these costs are reflected in the overall results of the Company. Certain research and development expenses are generally shared equally by the Partners, after adjusting for earned milestones.

See Note 11 for information with respect to litigation involving the MSP Partnership and the Partners related to the sale and promotion of Zetia and Vytorin.

Summarized financial information for the MSP Partnership is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
($ in millions)	2009		2008		2009		2008

Sales	$	1,028.6	$	1,101.5	$	3,007.3	$	3,486.9

Vytorin		514.1		567.2		1,500.0		1,810.5
Zetia		514.5		534.3		1,507.3		1,676.4

Materials and production costs		42.6		41.0		127.7		144.6
Other expense, net		239.6		283.5		764.1		929.6

Income before taxes	$	746.4	$	777.0	$	2,115.5	$	2,412.7


Merck’s share of income before taxes ⁽¹⁾	$	389.5	$	383.9	$	1,051.9	$	1,124.9

⁽¹⁾ Merck’s share of the MSP Partnership’s income before taxes differs from the equity income recognized from the MSP Partnership primarily due to the timing of recognition of certain transactions between the Company and the MSP Partnership, including milestone payments.

AstraZeneca LP

As previously disclosed, the 1999 AstraZeneca merger triggered a partial redemption in March 2008 of Merck’s interest in certain AstraZeneca LP (“AZLP”) product rights. Upon this redemption, Merck received $4.3 billion from AZLP. This amount was based primarily on a multiple of Merck’s average annual variable returns derived from sales of the former Astra USA, Inc. products for the three years prior to the redemption (the “Limited Partner Share of Agreed Value”). Merck recorded a $1.5 billion pretax gain on the partial redemption in the first quarter of 2008. The partial redemption of Merck’s interest in the product rights did not result in a change in Merck’s 1% limited partnership interest.

Also, as a result of the 1999 AstraZeneca merger, in exchange for Merck’s relinquishment of rights to future Astra products with no existing or pending U.S. patents at the time of the merger, Astra paid $967.4 million (the “Advance Payment”). The Advance Payment was deferred as it remained subject to a true-up calculation (the “True-Up Amount”) that was directly dependent on the fair market value in March 2008 of the Astra product rights retained by the Company. The calculated True-Up Amount of $243.7 million was returned to AZLP in March 2008 and Merck recognized a pretax gain of $723.7 million related to the residual Advance Payment balance.

In 1998, Astra purchased an option (the “Asset Option”) for a payment of $443.0 million, which was recorded as deferred revenue, to buy Merck’s interest in the KBI Inc. (“KBI”) products, excluding the gastrointestinal medicines Nexium and Prilosec (the “Non-PPI Products”). The Asset Option is exercisable in the first half of 2010 at an exercise price equal to the net present value as of March 31, 2008 of projected future pretax revenue to be received by the Company from the Non-PPI Products (the “Appraised Value”). Merck also had the right to require Astra to purchase such interest in 2008 at the Appraised Value. In February 2008, the Company advised AZLP that it would not exercise the Asset Option, thus the $443.0 million remains deferred. In addition, in 1998 the Company granted Astra an option (the “Shares Option”) to buy Merck’s common stock interest in KBI, and, therefore, Merck’s interest in Nexium and Prilosec, exercisable two years after Astra’s exercise of the Asset Option. Astra can also exercise the Shares Option in 2017 or if combined annual sales of the two products fall below a minimum amount provided, in each case, only so long as AstraZeneca’s Asset Option has been exercised in 2010. The exercise price for the Shares Option is based on the net present value of estimated future net sales of Nexium and Prilosec as determined at the time of exercise, subject to certain true-up mechanisms.

The sum of the Limited Partner Share of Agreed Value, the Appraised Value and the True-Up Amount was guaranteed to be a minimum of $4.7 billion. Distribution of the Limited Partner Share of Agreed Value less payment of the True-Up Amount resulted in cash receipts to Merck of $4.0 billion and an aggregate pretax gain of $2.2 billion which is included in Other (income) expense, net. AstraZeneca’s purchase of Merck’s interest in the Non-PPI Products is contingent upon the exercise of the Asset Option by AstraZeneca in 2010 and, therefore, payment of the Appraised Value may or may not occur.

Summarized financial information for AZLP is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
($ in millions)	2009		2008		2009		2008

Sales	$	1,484.7	$	1,306.2	$	4,293.6	$	3,983.0
Materials and production costs		673.2		690.2		2,023.9		2,016.6
Other expense, net		254.5		335.0		872.8		1,072.7

Income before taxes ⁽¹⁾	$	557.0	$	281.0	$	1,396.9	$	893.7

⁽¹⁾ Merck’s partnership returns from AZLP are generally contractually determined and are not based on a percentage of income from AZLP, other than with respect to the 1% limited partnership interest discussed above.

Merial Limited

In 1997, Merck and Rhône-Poulenc S.A. (now sanofi-aventis) combined their animal health businesses to form Merial Limited (“Merial”), a fully integrated animal health company, which was a stand-alone joint venture, 50% owned by each party. Merial provides a comprehensive range of pharmaceuticals and vaccines to enhance the health, well-being and performance of a wide range of animal species.

On September 17, 2009, Merck sold its 50% interest in Merial to sanofi-aventis for $4 billion in cash, subject to adjustment in certain circumstances. The sale resulted in the recognition of a $2.76 billion pretax gain reflected in Other income (expense), net in the third quarter of 2009.

Also, in connection with the sale of Merial, Merck, sanofi-aventis and Schering-Plough signed a call option agreement. Under the terms of the call option agreement, following the closing of the Merck/Schering-Plough merger, sanofi-aventis would have an option to require New Merck to combine Schering-Plough’s Intervet/Schering-Plough Animal Health business with Merial to form an animal health joint venture that would be owned equally by New Merck and sanofi-aventis. As part of the call option agreement, the value of Merial has been fixed at $8 billion. The minimum total value received by New Merck and its affiliates for contributing Intervet/Schering-Plough to the combined entity would be $9.25 billion (subject to customary transaction adjustments), consisting of a floor valuation of Intervet/Schering-Plough which is fixed at a minimum of $8.5 billion (subject to potential upward revision based on a valuation exercise by the two parties) and an additional payment by sanofi-aventis of $750 million. Based on the valuation exercise of Intervet/Schering-Plough and the customary transaction adjustments, if Merial and Intervet/Schering-Plough are combined, a payment may be required to be paid by either party to make the joint venture equally owned by New Merck and sanofi-aventis. This payment would true-up the value of the contributions such that they are equal. Any formation of a new animal health joint venture with sanofi-aventis is subject to customary closing conditions including antitrust review in the United States and Europe. Prior to the closing of the merger between Merck and Schering-Plough, the agreements provide Merck with certain rights to terminate the call option for a fee of $400 million. The termination fee would be a reduction in the price paid by sanofi-aventis for Merial. The recognition of the termination fee has been deferred until the conditions that could trigger its payment lapse which is expected in the fourth quarter of 2009.

Summarized financial information for Merial is as follows:


	Period from		Three		Period from		Nine
	July 1		Months		January 1		Months
	through		Ended		through		Ended
	September 17,		September 30,		September 17,		September 30,
($ in millions)	2009		2008		2009		2008

Sales	$	514.2	$	652.0	$	1,849.5	$	2,117.7
Materials and production costs		162.2		193.1		522.3		608.8
Other expense, net		188.2		313.1		679.2		853.9

Income before taxes	$	163.8	$	145.8	$	648.0	$	655.0

MOLSON COORS BREWING CO

4. EQUITY INVESTMENTS

MillerCoors

Summarized financial information for MillerCoors is as follows (in millions):

Condensed balance sheet

		As of

		September 30, 2009		December 31, 2008
Current assets		$	912	$	849
Noncurrent assets			8,924		8,853

	Total assets	$	9,836	$	9,702

Current liabilities		$	947	$	1,034
Noncurrent liabilities			1,309		1,412

	Total liabilities		2,256		2,446
Shareholders' investment			7,554		7,227
Noncontrolling interests			26		29

Total shareholders' investment			7,580		7,256

Total liabilities and shareholders' investment		$	9,836	$	9,702

Results of operations

	For the three months ended						For the nine months ended

	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
Net sales	$	2,009.5		$	1,949.7		$	5,862.1		$	1,949.7
Cost of goods sold		(1,266.6	)		(1,236.9	)		(3,618.8	)		(1,236.9	)

Gross profit	$	742.9		$	712.8		$	2,243.3		$	712.8
Operating income	$	232.2		$	171.1		$	759.4		$	171.1
Net income attributable to MillerCoors	$	229.7		$	168.2		$	740.6		$	168.2

The following represents MCBC's proportional share in net income attributable to MillerCoors reported under the equity method (in millions):

		Thirteen Weeks Ended						Thirty-nine Weeks Ended

		September 26, 2009			September 28, 2008			September 26, 2009			September 28, 2008
Net income attributable to MillerCoors		$	229.7		$	168.2		$	740.6		$	168.2
	MCBC economic interest		42	%		42	%		42	%		42	%

	MCBC proportionate share of MillerCoors net income		96.5			70.6			311.1			70.6
	Accounting policy elections(1)		—			31.8			7.3			31.8
	Amortization of the difference between MCBC contributed cost basis and proportional share of the underlying equity in net assets of MillerCoors(2)		2.4			6.0			9.3			6.0
	Share-based compensation adjustment(3)		2.3			(1.9	)		4.7			(1.9	)

Equity Income in MillerCoors		$	101.2		$	106.5		$	332.4		$	106.5

(1): MillerCoors made its initial accounting policy elections upon formation, impacting certain asset and liability balances contributed by MCBC. Our investment basis in MillerCoors is based upon the book value of the net assets we contributed. These adjustments reflect the favorable impact to our investment as a result of the differences resulting from accounting policy elections, the most significant of which was MillerCoors' election to value contributed CBC inventories using the first in, first out (FIFO) method, rather than the last in, first out (LIFO) method, which had previously been applied. This adjustment has been phased in over the expected turnover of the related inventories; which was concluded in the first quarter of 2009.
(2): MCBC's net investment in MillerCoors is based on the carrying values of the net assets it contributed to the joint venture which is less than our proportional share of underlying equity (42%) of MillerCoors (contributed by both Coors and Miller) by approximately $633.4 million. This difference is being amortized as additional equity income over the remaining useful lives of long-lived assets giving rise to the difference. For non-depreciable assets, such as goodwill, no adjustment is being recorded.
(3): The net adjustment is to record all stock-based compensation associated with preexisting equity awards to be settled in MCBC Class B common stock held by former CBC employees now employed by MillerCoors and to eliminate all stock-based compensation impacts related to preexisting SABMiller equity awards held by Miller employees now employed by MillerCoors.

During the thirteen weeks ended September 26, 2009, we had $9.1 million of sales of beer to MillerCoors and $3.0 million of purchases of beer from MillerCoors. For the thirty-nine weeks ended September 26, 2009, we had $30.3 million of sales of beer to MillerCoors and $7.3 million of purchases of beer from MillerCoors. During the thirteen and thirty-nine weeks ended September 28, 2008, we had $28.4 million of sales of beer to MillerCoors and $1.4 million of purchases of beer from MillerCoors.

For the thirteen weeks ended September 26, 2009, we recorded $2.2 million of service agreement and other charges to MillerCoors and $0.4 million of service agreement costs from MillerCoors. For the thirty-nine weeks ended September 26, 2009, we had $8.5 million of service agreement and other charges to MillerCoors and $1.1 million of service agreement costs from MillerCoors. We did not record charges related to these items during the thirteen or thirty-nine weeks ended September 28, 2008.

As of September 26, 2009 and December 28, 2008, we had $7.1 million and $20.2 million net receivables due from MillerCoors, included within Accounts receivable, net, related to the activities mentioned above.

Montréal Canadiens

As of September 26, 2009, Molson Hockey Holdings Inc. ("MHHI"), a wholly-owned subsidiary of the Company, owned a 19.9% common ownership interest in the Montréal Canadiens professional hockey club (the "Club"). An independent party owned the controlling 80.1% common ownership interest in the Club. During the third quarter, Racine Limited Partnership / Société en commandite Racine ("Racine"), an investment group involving certain members of the Molson family, reached agreement with the majority owners to purchase the controlling 80.1% common ownership interest in the Club, as well as the Bell Centre arena in Montréal.

The general partner of Racine and one of its limited partners are entities affiliated with Andrew and Geoff Molson who are both members of the board of directors of the Company. Geoff and Andrew Molson are among the directors of the entity that is the general partner of Racine's general partner.

Subsequent Event

In connection with Racine's purchase of the Club and the Bell Centre, on October 9, 2009, MHHI entered into an agreement to sell its 19.9% common ownership interest in the Montréal Canadiens to Racine. Closing of the transaction is subject to the approval by the National Hockey League as well as other customary conditions. Upon closing of the transaction, the Company will receive net proceeds estimated at approximately $63 million (CAD) which is equal to the sale price for the Company's interest reduced by a portion of debt obligations of the Club assumed by the buyer. The Company will retain its guarantee obligations related to the new owners' rent obligations for the land underneath the Bell Centre. We expect to record a gain of approximately $50 million (CAD) on the sale in the fourth quarter of 2009 or the first quarter 2010. In addition, the existing sponsorship agreement between the Company and the Montréal Canadiens remains in place.

As a result, the sale is a related party transaction. Any ongoing related party activities with Racine will be disclosed as required.

NABORS INDUSTRIES LTD

Note 13 Investment in Unconsolidated Affiliate

Our U.S. oil and gas joint venture (49.7% ownership) accounted for using the equity method is included in investment in unconsolidated affiliates. For the nine months ended September 30, 2009 our earnings (losses) from unconsolidated affiliates included non-cash pre-tax writedowns of ($83.3) million. The non-cash pre-tax writedowns included ($75.0) million which represented our proportionate share of a non-cash pre-tax ceiling test writedown from our domestic oil and gas joint venture recorded during the three months ended March 31, 2009. This writedown resulted from the ceiling test application of the full cost method of accounting for costs related to oil and natural gas properties. There was no ceiling test writedown recorded in the three months ended June 30, 2009 or September 30, 2009. In calculating our ceiling test charges, we are required to hold commodity prices constant over the life of the reserves, even though actual prices of natural gas and oil are volatile and change from period to period. We may be required to record additional ceiling test charges in the future if commodity prices continue to decrease. Presented below is summarized income statement information for our U.S. joint venture:


	Nine Months Ended
	September 30,
(In thousands)	2009
Gross revenues	$	100,444
Gross margin		(146,806	)
Net loss		(146,539	)

NATIONAL OILWELL VARCO INC

3. IntelliServ Joint Venture

In September 2009, the Company sold 45 percent of certain of its IntelliServ operations and created the IntelliServ Joint Venture (“IntelliServ”). IntelliServ provides drilling technology that enables downhole drilling conditions to be measured, evaluated and monitored.

NUCOR CORP

EQUITY INVESTMENTS: The carrying value of our equity investments in domestic and foreign companies was $596.6 million at October 3, 2009 ($626.4 million at December 31, 2008) and is recorded in other assets in the consolidated balance sheets. Nucor incurred equity method investment losses of $9.6 million in the third quarter of 2009 and earnings of $2.1 million in the third quarter of 2008. Nucor incurred equity method investment losses of $69.4 million and $16.3 million in the first nine months of 2009 and 2008, respectively. The results of our equity investments are included in marketing, administrative, and other expenses in the condensed consolidated statements of earnings.

Nucor’s most significant equity method investment includes a 50% economic and voting interest in Duferdofin-Nucor S.r.l., a steel manufacturer with three structural mills located in Italy. Nucor accounts for the investment in Duferdofin-Nucor (on a one-month lag basis) under the equity method, as control and risk of loss are shared equally between the partners. Duferdofin-Nucor losses attributable to Nucor included a pre-tax charge to write down inventories to the lower of cost or market of $45.8 million in the first nine months of 2009.

Nucor’s investment in Duferdofin-Nucor at October 3, 2009 was $547.8 million ($581.9 million at December 31, 2008). Nucor’s 50% share of the total net assets of Duferdofin-Nucor on a historical basis was $42.2 million at October 3, 2009, resulting in a basis difference of $505.6 million due to the step-up to fair value of certain assets and liabilities attributable to Duferdofin-Nucor as well as the identification of goodwill ($231.6 million) and definite-lived intangible assets. This basis difference, excluding the portion attributable to goodwill, is being amortized based on the remaining estimated useful lives of the various underlying net assets, as appropriate.

As of October 3, 2009, Nucor held notes receivable from Duferdofin-Nucor with a notional value of 35 million Euro ($50.9 million). The notes receivable bear interest at the twelve-month Euro Interbank Offered Rate (Euribor) as of the date of the notes plus 1% per year. The interest rates were reset on September 30, 2009 to the Euribor twelve month rate as of that date plus 1% per year. The principal amount of 9 million Euros ($13.1 million) is due on April 30, 2011. The remaining principal amount of 26 million Euros ($37.8 million) is due on May 31, 2011. Accordingly, the notes receivable have been classified in other assets in the condensed consolidated balance sheet.

ONEOK INC /NEW/

L. UNCONSOLIDATED AFFILIATES

Equity Earnings from Investments - The following table sets forth our equity earnings from investments for the periods indicated. All amounts in the table below are equity earnings from investments in our ONEOK Partners segment:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
	(Thousands of dollars)
Northern Border Pipeline	$	10,882	$	20,090	$	32,374	$	48,752
Fort Union Gas Gathering, L.L.C.		4,397		4,033		10,412		9,792
Bighorn Gas Gathering, L.L.C.		1,935		2,044		5,845		6,367
Lost Creek Gathering Company, L.L.C.		1,445		1,345		3,647		4,427
Other		1,395		1,900		3,186		5,467
Equity earnings from investments	$	20,054	$	29,412	$	55,464	$	74,805

Unconsolidated Affiliates Financial Information - The following table sets forth summarized combined financial information of our unconsolidated affiliates for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
	(Thousands of dollars)
Income Statement
Operating revenues	$	101,987	$	98,298	$	296,004	$	304,733
Operating expenses	$	49,312	$	44,382	$	138,544	$	132,927
Net income	$	42,929	$	64,217	$	125,574	$	153,965

Distributions paid to us	$	19,615	$	30,466	$	83,088	$	91,093

ONEOK Partners LP

K. UNCONSOLIDATED AFFILIATES

Equity Earnings from Investments - The following table sets forth our equity earnings from investments for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
	(Thousands of dollars)
Northern Border Pipeline	$	10,882	$	20,090	$	32,374	$	48,752
Fort Union Gas Gathering, L.L.C.		4,397		4,033		10,412		9,792
Bighorn Gas Gathering, L.L.C.		1,935		2,044		5,845		6,367
Lost Creek Gathering Company, L.L.C.		1,445		1,345		3,647		4,427
Other		1,395		1,900		3,186		5,467
Equity earnings from investments	$	20,054	$	29,412	$	55,464	$	74,805

Unconsolidated Affiliates Financial Information - The following table sets forth summarized combined financial information of our unconsolidated affiliates for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
	(Thousands of dollars)
Income Statement
Operating revenues	$	101,987	$	98,298	$	296,004	$	304,733
Operating expenses	$	49,312	$	44,382	$	138,544	$	132,927
Net income	$	42,929	$	64,217	$	125,574	$	153,965

Distributions paid to us	$	19,615	$	30,466	$	83,088	$	91,093

PLUM CREEK TIMBER CO INC

Note 4. Summarized Income Statement Information of Affiliate

On October 1, 2008, the company contributed 454,000 acres of timberlands to the Timberland Venture (see Note 3 of the Notes to Consolidated Financial Statements) in exchange for a $705 million preferred interest and a 9% common interest valued at $78 million. Following the contribution, the company borrowed $783 million from the Timberland Venture. The Timberland Venture is accounted for under the equity method. The earnings of the joint venture are a significant component of our consolidated earnings. Equity earnings for the Timberland Venture were $14 million for the quarter ended September 30, 2009, and $43 million for the nine months ended September 30, 2009. Equity earnings includes the amortization of the difference between the book value of the company’s investment and its proportionate share of the Timberland Venture’s net assets of $2 million for the quarter ended September 30, 2009, and $6 million for the nine months ended September 30, 2009. Furthermore, interest expense in connection with our loan from the Timberland Venture was $14 million for the quarter ended September 30, 2009, and was $43 million for the nine months ended September 30, 2009. Prior to October 1, 2008, the entity did not exist. Summarized income statement information for the Timberland Venture for the quarterly and nine-month periods ended September 30, 2009 are as follows (in millions):


	Quarter Ended September 30, 2009			Nine Months Ended September 30, 2009

Revenues	$	4		$	11
Cost of Goods Sold^(A)		5			15
Selling, General and Administrative Expenses		1			2

Operating Income		(2	)		(6	)
Interest Income, net		14			43

Net Income before Allocation to Preferred and Common Interests	$	12		$	37

(A) Cost of Goods Sold includes Depreciation, Depletion and Amortization of $4 million for the quarter ended and $13 million for the nine months ended September 30, 2009.

PLUM CREEK TIMBER CO INC

Note 3. Summarized Income Statement Information of Affiliate

On October 1, 2008, a subsidiary of the Operating Partnership contributed 454,000 acres of timberlands to the Timberland Venture (see Note 2 of the Notes to Consolidated Financial Statements) in exchange for a $705 million preferred interest and a 9% common interest valued at $78 million. The Timberland Venture is accounted for under the equity method. The earnings of the joint venture are a significant component of our consolidated earnings. Equity earnings for the Timberland Venture were $14 million for the quarter ended September 30, 2009, and $43 million for the nine months ended September 30, 2009. Equity earnings includes the amortization of the difference between the book value of the company’s investment and its proportionate share of the Timberland Venture’s net assets of $2 million for the quarter ended September 30, 2009, and $6 million for the nine months ended September 30, 2009. Prior to October 1, 2008, the entity did not exist. Summarized income statement information for the Timberland Venture for the quarterly and nine-month periods ended September 30, 2009 are as follows (in millions):


	Quarter Ended September 30, 2009			Nine Months Ended September 30, 2009
Revenues	$	4		$	11
Cost of Goods Sold ^(A)		5			15
Selling, General and Administrative Expenses		1			2

Operating Income		(2	)		(6	)
Interest Income, net		14			43

Net Income before Allocation to Preferred and Common Interests	$	12		$	37

(A) Cost of Goods Sold includes Depreciation, Depletion and Amortization of $4 million for the quarter ended and $13 million for the nine months ended September 30, 2009.

ProLogis

4. Unconsolidated Investees:

Summary of Investments

Our investments in and advances to unconsolidated investees, which are accounted for under the equity method, are summarized by type of investee as follows (in thousands):

	September 30, 2009	December 31, 2008
Property funds	$ 1,838,797	$ 1,957,977
Other investees	366,451	312,016
Totals	$ 2,205,248	$ 2,269,993

Property Funds

We have investments in several property funds that own portfolios of operating industrial properties. Many of these properties were originally developed by ProLogis and contributed to these property funds, although certain of the property funds have also acquired properties from third parties. When we contribute a property to a property fund, we may receive ownership interests as part of the proceeds generated by the contribution. We earn fees for acting as manager of the property funds and the properties they own. We may earn additional fees by providing other services including, but not limited to, acquisition, development, construction management, leasing and financing activities. We may also earn incentive performance returns based on the investors’ returns over a specified period.

Summarized information regarding our investments in the property funds is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2009	2008	2009	2008
Earnings (loss) from unconsolidated property funds:
North America	$ 1,072	$ 4,408	$ 2,025	$ (1,798)
Europe	10,374	7,277	25,449	16,977
Asia	193	6,233	3,661	20,725
Total earnings from unconsolidated property funds	$ 11,639	$ 17,918	$ 31,135	$ 35,904

Property management and other fees and incentives:
North America	$ 15,224	$ 15,423	$ 46,021	$ 44,734
Europe	13,375	15,181	38,102	39,957
Asia	178	4,521	2,353	12,504
Total property management and other fees and incentives	$ 28,777	$ 35,125	$ 86,476	$ 97,195

We also earned property management fees from joint ventures and other entities of $17.0 million and $24.7 million during the three and nine months ended September 30, 2009, respectively. This includes fees earned from the Japan property funds after February 2009, which is the date we sold our investments in the funds, through July 2009. In connection with the termination of the property management agreement for these properties, we earned a termination fee of $16.3 million that is included within Property Management and Other fees and Incentives in our Consolidated Statements of Operations for the three and nine months ended September 30, 2009.

Information about our investments in the property funds is as follows (dollars in thousands):

	Ownership Percentage		Investments in and Advances to
	September 30,	December 31,	September 30,	December 31,
Property Fund	2009	2008	2009	2008
ProLogis California	50.0%	50.0%	$ 113,292	$ 102,685
ProLogis North American Properties Fund I	41.3%	41.3%	21,916	25,018
ProLogis North American Properties Fund VI	20.0%	20.0%	34,464	35,659
ProLogis North American Properties Fund VII	20.0%	20.0%	32,529	32,679
ProLogis North American Properties Fund VIII	20.0%	20.0%	12,674	13,281
ProLogis North American Properties Fund IX	20.0%	20.0%	13,652	13,375
ProLogis North American Properties Fund X	20.0%	20.0%	15,121	15,567
ProLogis North American Properties Fund XI	20.0%	20.0%	28,311	28,322
ProLogis North American Industrial Fund	23.0%	23.1%	198,905	191,088
ProLogis North American Industrial Fund II (1)	37.0%	36.9%	340,355	265,575
ProLogis North American Industrial Fund III	20.0%	20.0%	142,639	122,148
ProLogis Mexico Industrial Fund	24.2%	24.2%	93,526	96,320
ProLogis European Properties (“PEPR”)	24.8%	24.9%	335,301	321,984
ProLogis European Properties Fund II (“PEPF II”) (2)	32.7%	36.9%	434,938	312,600
ProLogis Korea Fund	20.0%	20.0%	21,174	21,867
ProLogis Japan property funds (3)	-	20.0%	-	359,809
Totals			$ 1,838,797	$ 1,957,977

__________

(1) On July 1, 2009, we and our fund partner amended a loan agreement and the governing documents of this property fund. The property fund extended the term of a $411.3 million loan payable to an affiliate of our fund partner, which was scheduled to mature in July 2009, until 2014 with an option for an additional extension until 2016. As part of the restructuring, we made an $85 million cash capital contribution to the property fund and we may be required to make an additional cash contribution of up to $25 million for the repayment of debt or other obligations. In addition, we pledged properties we own directly, valued at approximately $275 million, to serve as additional collateral on the loan and outstanding derivative contracts. As a result, we are entitled to receive a 10% preferred distribution on all new contributions paid out of operating cash flow prior to other distributions. Upon liquidation of the property fund, we are entitled to receive a 10% preferred return per annum on our initial equity investment and the return of our total investment prior to any other distributions.

(2) During 2008, PEPR owned approximately 30% of PEPF II. In December 2008, we purchased a 20% ownership interest in PEPF II from PEPR. In February 2009, PEPR sold its remaining 10% interest in PEPF II.

(3) On February 9, 2009, we sold our interests in the Japan property funds resulting in the recognition of a gain of $180.2 million and current income tax expense of $20.5 million (see Note 2).

Several property funds have equity commitments from us and our fund partners. We may fulfill our equity commitment through property fund contributions or cash. Our fund partners fulfill their equity commitment with cash. To the extent a property fund acquires properties from a third party or requires cash to pay-off debt or has other cash needs, we may be required or agree to contribute our proportionate share of the equity component in cash to the property fund. During the nine months ended September 30, 2009, we made cash contributions into the property funds of $196.8 million and loaned $25.4 million to a property fund (discussed below). The contributions included $106.6 million (in respect of our 20% ownership interest that we acquired from PEPR in December 2008) in connection with the contribution of 30 properties to PEPF II, $85 million to ProLogis North American Industrial Fund II (as discussed above), and amounts to ProLogis North American Industrial Fund and ProLogis North American Properties Fund XI for the repayment of debt.

Summarized financial information of the property funds (for the entire entity, not our proportionate share) and our investment in such funds is presented below (dollars in millions):

	2009
	North America	Europe	Asia	Total
For the three months ended September 30, 2009:
Revenues	$ 212.5	$ 191.8	$ 2.6	$ 406.9
Net earnings (loss) (1)(2)(3)	$ (3.3)	$ 31.6	$ 0.9	$ 29.2
For the nine months ended September 30, 2009:
Revenues	$ 649.0	$ 536.3	$ 38.1	$ 1,223.4
Net earnings (loss) (1)(2)(3)	$ (22.0)	$ 68.2	$ 15.5	$ 61.7
As of September 30, 2009:
Total assets	$ 9,867.7	$ 8,927.1	$ 148.8	$ 18,943.6
Amounts due to us (4)	$ 53.7	$ 33.8	$ -	$ 87.5
Third party debt (5)	$ 5,570.1	$ 4,168.2	$ 47.3	$ 9,785.6
Total liabilities	$ 5,890.5	$ 5,052.1	$ 50.9	$ 10,993.5
Noncontrolling interest	$ (0.5)	$ 19.2	$ -	$ 18.7
Fund partners’ equity	$ 3,977.8	$ 3,855.8	$ 97.8	$ 7,931.4
Our weighted average ownership (6)	27.6%	28.7%	20.0%	28.0%
Our investment balance (1)(7)	$ 1,047.4	$ 770.2	$ 21.2	$ 1,838.8
Deferred gains, net of amortization (8)	$ 242.5	$ 296.3	$ -	$ 538.8

	2008
	North America	Europe	Asia	Total
For the three months ended September 30, 2008:
Revenues	$ 216.3	$ 171.8	$ 77.5	$ 465.6
Net earnings (loss)(1)	$ (2.3)	$ 23.0	$ 24.0	$ 44.7
For the nine months ended September 30, 2008:
Revenues	$ 622.5	$ 480.3	$ 212.7	$ 1,315.5
Net earnings (loss) (1)	$ (43.8)	$ 50.2	$ 83.9	$ 90.3
As of December 31, 2008:
Total assets	$ 9,979.2	$ 8,982.9	$ 5,821.6	$ 24,783.7
Amounts due to us	$ 30.2	$ 22.4	$ 147.4	$ 200.0
Third party debt (5)	$ 5,726.0	$ 4,829.9	$ 2,906.5	$ 13,462.4
Total liabilities	$ 5,985.4	$ 5,581.1	$ 3,855.1	$ 15,421.6
Noncontrolling interest	$ 10.7	$ 19.8	$ -	$ 30.5
Fund partners’ equity	$ 3,983.1	$ 3,382.0	$ 1,966.5	$ 9,331.6
Our weighted average ownership (6)	27.5%	30.2%	20.0%	26.9%
Our investment balance (1)(7)	$ 941.7	$ 634.6	$ 381.7	$ 1,958.0
Deferred gains, net of amortization (8)	$ 246.7	$ 299.0	$ 163.3	$ 709.0

__________

(1) In North America, certain property funds are or have been a party to interest rate swap contracts that were initially designated as cash flow hedges and used to mitigate interest expense volatility associated with movements of interest rates in future debt issuances. Certain of these derivative contracts no longer meet the requirements for hedge accounting and, therefore, the changes in fair value of these contracts are recorded through earnings, along with the gain or loss on settlement of the underlying debt instrument. In Japan, each of the property funds were party to interest rate swap contracts that did not qualify for hedge accounting and all of the change in fair value was recorded through earnings.

The following table represents gains (losses) recognized by the property funds, on a combined basis, related to derivative activity (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2009	2008	2009	2008

North America property funds	$ (7,815)	$ (1,899)	$ (20,822)	$ (41,957)
Japan property funds	-	(8,725)	-	11,338
Total losses related to derivative activity	$ (7,815)	$ (10,624)	$ (20,822)	$ (30,619)

Our proportionate share of losses from unconsolidated property funds derivative activity