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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)    

ý

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                to                               

 

Commission
File Number
  Exact Name of Registrant as Specified in its Charter,
Principal Office Address and Telephone Number
  State of Incorporation
or Organization
  I.R.S. Employer
Identification No.
 
 

001-32427

  Huntsman Corporation
500 Huntsman Way
Salt Lake City, Utah 84108
(801) 584-5700
  Delaware     42-1648585  
 

333-85141

 

Huntsman International LLC
500 Huntsman Way
Salt Lake City, Utah 84108
(801) 584-5700

 

Delaware

   
87-0630358
 



         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Huntsman Corporation

  YES ý   NO o

Huntsman International LLC

  YES ý   NO o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Huntsman Corporation

  YES ý   NO o

Huntsman International LLC

  YES ý   NO o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Huntsman Corporation   Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
Huntsman International LLC   Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý   Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Huntsman Corporation

  YES o   NO ý

Huntsman International LLC

  YES o   NO ý



         On April 22, 2013, 241,144,776 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interests of Huntsman International LLC were outstanding. There is no trading market for Huntsman International LLC's units of membership interests. All of Huntsman International LLC's units of membership interests are held by Huntsman Corporation.



         This Quarterly Report on Form 10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman International LLC is a wholly owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on Form 10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.

   


Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2013


TABLE OF CONTENTS

 
   
  Page  

PART I

 

FINANCIAL INFORMATION

    3  


ITEM 1.


 


Financial Statements:


 

 



 



 


Huntsman Corporation and Subsidiaries:


 

 

 

 

 

Condensed Consolidated Balance Sheets (Unaudited)

   
3
 

 

Condensed Consolidated Statements of Operations (Unaudited)

   
4
 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

   
5
 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

   
6
 

 

Condensed Consolidated Statements of Equity (Unaudited)

   
8
 



 


Huntsman International LLC and Subsidiaries:


 

 

 

 

 

Condensed Consolidated Balance Sheets (Unaudited)

   
9
 

 

Condensed Consolidated Statements of Operations (Unaudited)

   
10
 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

   
11
 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

   
12
 

 

Condensed Consolidated Statements of Equity (Unaudited)

   
14
 



 


Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries:


 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

   
15
 


ITEM 2.


 


Management's Discussion and Analysis of Financial Condition and Results of Operations


 

 


64

 


ITEM 3.


 


Quantitative and Qualitative Disclosures About Market Risk


 

 


83

 


ITEM 4.


 


Controls and Procedures


 

 


85

 


PART II


 


OTHER INFORMATION


 

 


86

 


ITEM 1.


 


Legal Proceedings


 

 


86

 


ITEM 1A.


 


Risk Factors


 

 


86

 


ITEM 2.


 


Unregistered Sales of Equity Securities and Use of Proceeds


 

 


86

 


ITEM 6.


 


Exhibits


 

 


87

 

2


Table of Contents


PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

        


HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in Millions, Except Share and Per Share Amounts)

 
  March 31,
2013
  December 31,
2012
 

ASSETS

             

Current assets:

             

Cash and cash equivalents(a)

  $ 247   $ 387  

Restricted cash(a)

    9     9  

Accounts and notes receivable (net of allowance for doubtful accounts of $47, each), ($572 and $520 pledged as collateral, respectively)(a)

    1,594     1,534  

Accounts receivable from affiliates

    52     49  

Inventories(a)

    1,797     1,819  

Prepaid expenses

    49     48  

Deferred income taxes

    51     51  

Other current assets(a)

    204     222  
           

Total current assets

    4,003     4,119  

Property, plant and equipment, net(a)

    3,643     3,745  

Investment in unconsolidated affiliates

    236     238  

Intangible assets, net(a)

    63     68  

Goodwill

    116     117  

Deferred income taxes

    216     229  

Notes receivable from affiliates

    1     2  

Other noncurrent assets(a)

    441     366  
           

Total assets

  $ 8,719   $ 8,884  
           

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable(a)

  $ 1,101   $ 1,102  

Accounts payable to affiliates

    34     48  

Accrued liabilities(a)

    652     705  

Deferred income taxes

    38     38  

Current portion of debt(a)

    298     288  
           

Total current liabilities

    2,123     2,181  

Long-term debt(a)

    3,489     3,414  

Notes payable to affiliates

    4     4  

Deferred income taxes

    163     228  

Other noncurrent liabilities(a)

    1,115     1,161  
           

Total liabilities

    6,894     6,988  

Commitments and contingencies (Notes 13 and 14)

             

Equity

             

Huntsman Corporation stockholders' equity:

             

Common stock $0.01 par value, 1,200,000,000 shares authorized, 245,185,797 and 243,813,779 issued and 239,655,070 and 238,273,422 outstanding in 2013 and 2012, respectively

    2     2  

Additional paid-in capital

    3,288     3,264  

Treasury stock, 4,043,526 shares at both March 31, 2013 and December 31, 2012

    (50 )   (50 )

Unearned stock-based compensation

    (21 )   (12 )

Accumulated deficit

    (747 )   (687 )

Accumulated other comprehensive loss

    (777 )   (744 )
           

Total Huntsman Corporation stockholders' equity

    1,695     1,773  

Noncontrolling interests in subsidiaries

    130     123  
           

Total equity

    1,825     1,896  
           

Total liabilities and equity

  $ 8,719   $ 8,884  
           

(a)
At March 31, 2013 and December 31, 2012, respectively, $20 and $28 of cash and cash equivalents, $9 each of restricted cash, $48 and $38 of accounts and notes receivable (net), $51 and $55 of inventories, nil each of other current assets, $372 and $378 of property, plant and equipment (net), $18 and $19 of intangible assets (net), $27 and $28 of other noncurrent assets, $78 and $76 of accounts payable, $23 and $26 of accrued liabilities, $187 and $193 of current portion of debt, $75 and $77 of long-term debt, and $99 and $101 of other noncurrent liabilities from consolidated variable interest entities are included in the respective Balance Sheet captions above. See "Note 5. Variable Interest Entities."

   

See accompanying notes to condensed consolidated financial statements (unaudited).

3


Table of Contents


HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in Millions, Except Per Share Amounts)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Revenues:

             

Trade sales, services and fees, net

  $ 2,635   $ 2,853  

Related party sales

    67     60  
           

Total revenues

    2,702     2,913  

Cost of goods sold

    2,353     2,363  
           

Gross profit

    349     550  

Operating expenses:

             

Selling, general and administrative

    226     221  

Research and development

    36     39  

Other operating (income) expense

    (7 )   5  

Restructuring, impairment and plant closing costs

    44      
           

Total expenses

    299     265  
           

Operating income

    50     285  

Interest expense, net

    (51 )   (59 )

Equity in income of investment in unconsolidated affiliates

    1     2  

Loss on early extinguishment of debt

    (35 )   (1 )
           

(Loss) income from continuing operations before income taxes

    (35 )   227  

Income tax benefit (expense)

    20     (60 )
           

(Loss) income from continuing operations

    (15 )   167  

Loss from discontinued operations, net of tax

    (2 )   (4 )
           

Net (loss) income

    (17 )   163  

Net income attributable to noncontrolling interests

    (7 )    
           

Net (loss) income attributable to Huntsman Corporation

  $ (24 ) $ 163  
           

Basic (loss) income per share:

             

(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders

  $ (0.09 ) $ 0.71  

Loss from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax

    (0.01 )   (0.02 )
           

Net (loss) income attributable to Huntsman Corporation common stockholders

  $ (0.10 ) $ 0.69  
           

Weighted average shares

    239.0     236.5  
           

Diluted (loss) income per share:

             

(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders

  $ (0.09 ) $ 0.70  

Loss from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax

    (0.01 )   (0.02 )
           

Net (loss) income attributable to Huntsman Corporation common stockholders

  $ (0.10 ) $ 0.68  
           

Weighted average shares

    239.0     240.1  
           

Amounts attributable to Huntsman Corporation common stockholders:

             

(Loss) income from continuing operations

  $ (22 ) $ 167  

Loss from discontinued operations, net of tax

    (2 )   (4 )
           

Net (loss) income

    (24 )   163  
           

Dividends per share

  $ 0.125   $ 0.10  
           

   

See accompanying notes to condensed consolidated financial statements (unaudited).

4


Table of Contents


HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Net (loss) income

  $ (17 ) $ 163  

Other comprehensive (loss) income, net of tax:

             

Foreign currency translation adjustments, net of tax of $2 and $(1), respectively

    (67 )   73  

Pension and other postretirement benefits adjustments, net of tax of $(10) and $(1), respectively

    33     19  

Other, net

    1     1  
           

Other comprehensive (loss) income

    (33 )   93  
           

Comprehensive (loss) income

    (50 )   256  

Comprehensive income attributable to noncontrolling interests

    (7 )   (2 )
           

Comprehensive (loss) income attributable to Huntsman Corporation

  $ (57 ) $ 254  
           

   

See accompanying notes to condensed consolidated financial statements (unaudited).

5


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HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Operating Activities:

             

Net (loss) income

  $ (17 ) $ 163  

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

             

Equity in income of investment in unconsolidated affiliates

    (1 )   (2 )

Depreciation and amortization

    107     109  

Loss on disposal of businesses/assets, net

        1  

Loss on early extinguishment of debt

    35     1  

Noncash interest expense

    2     7  

Noncash restructuring and impairment charges

    1      

Deferred income taxes

    (67 )   19  

Noncash loss on foreign currency transactions

    10     9  

Stock-based compensation

    8     10  

Other, net

    4     4  

Changes in operating assets and liabilities:

             

Accounts and notes receivable

    (85 )   (239 )

Inventories

    (9 )   (65 )

Prepaid expenses

    1     (1 )

Other current assets

    16     53  

Other noncurrent assets

    (73 )   (1 )

Accounts payable

    10     186  

Accrued liabilities

    (44 )   (51 )

Other noncurrent liabilities

    28     (13 )
           

Net cash (used in) provided by operating activities

    (74 )   190  
           

Investing Activities:

             

Capital expenditures

    (89 )   (81 )

Investment in unconsolidated affiliates

    (5 )   (34 )

Cash received from unconsolidated affiliates

    15     15  

Acquisition of a business

    (7 )   (2 )

Increase in restricted cash

        (8 )

Other, net

    1     1  
           

Net cash used in investing activities

    (85 )   (109 )
           

   

(Continued)

6


Table of Contents


HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Financing Activities:

             

Net repayments under revolving loan facilities

  $   $ (17 )

Net borrowings on overdraft facilities

    1     3  

Repayments of short-term debt

    (5 )   (4 )

Borrowings on short-term debt

    13      

Repayments of long-term debt

    (413 )   (109 )

Proceeds from issuance of long-term debt

    473      

Repayments of notes payable

    (10 )   (17 )

Borrowings on notes payable

        1  

Debt issuance costs paid

        (4 )

Call premiums and other costs related to early extinguishment of debt

    (4 )   (1 )

Dividends paid to common stockholders

    (30 )   (24 )

Repurchase and cancellation of stock awards

    (6 )   (7 )

Proceeds from issuance of common stock

    3     1  

Excess tax benefit related to stock-based compensation

    1     4  

Other, net

    (2 )   (2 )
           

Net cash provided by (used in) financing activities

    21     (176 )
           

Effect of exchange rate changes on cash

    (2 )   4  
           

Decrease in cash and cash equivalents

    (140 )   (91 )

Cash and cash equivalents at beginning of period

    387     554  
           

Cash and cash equivalents at end of period

  $ 247   $ 463  
           

Supplemental cash flow information:

             

Cash paid for interest

  $ 59   $ 82  

Cash paid for income taxes

    17     13  

        During the three months ended March 31, 2013 and 2012, the amount of capital expenditures in accounts payable decreased by $25 and $13 million, respectively.

   

See accompanying notes to condensed consolidated financial statements (unaudited).

7


Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(Dollars in Millions)

 
  Huntsman Corporation Stockholders    
   
 
 
  Shares    
   
   
   
   
   
   
   
 
 
   
   
   
   
   
  Accumulated
other
comprehensive
(loss) income
   
   
 
 
  Common
stock
  Common
stock
  Additional
paid-in
capital
  Treasury
stock
  Unearned
stock-based
compensation
  Accumulated
deficit
  Noncontrolling
interests in
subsidiaries
  Total
equity
 

Balance, January 1, 2013

    238,273,422   $ 2   $ 3,264   $ (50 ) $ (12 ) $ (687 ) $ (744 ) $ 123   $ 1,896  

Net (loss) income

                        (24 )       7     (17 )

Other comprehensive loss

                            (33 )       (33 )

Issuance of nonvested stock awards

            13         (13 )                

Vesting of stock awards

    1,045,187         5                         5  

Recognition of stock-based compensation

            2         4                 6  

Repurchase and cancellation of stock awards

    (301,212 )                   (6 )           (6 )

Stock options exercised

    637,673         3                         3  

Excess tax benefit related to stock-based compensation

            1                         1  

Dividends paid on common stock

                        (30 )           (30 )
                                       

Balance, March 31, 2013

    239,655,070   $ 2   $ 3,288   $ (50 ) $ (21 ) $ (747 ) $ (777 ) $ 130   $ 1,825  
                                       

Balance, January 1, 2012

   
235,746,087
 
$

2
 
$

3,228
 
$

(50

)

$

(12

)

$

(947

)

$

(559

)

$

114
 
$

1,776
 

Net income

                        163             163  

Other comprehensive income

                            91     2     93  

Issuance of nonvested stock awards

            12         (12 )                

Vesting of stock awards

    2,141,910         10                         10  

Recognition of stock-based compensation

            2         4                 6  

Repurchase and cancellation of stock awards

    (533,266 )                   (7 )           (7 )

Stock options exercised

    431,495         1                         1  

Excess tax benefit related to stock-based compensation

            4                         4  

Dividends paid on common stock

                        (24 )           (24 )

Acquisition of a business

            (2 )                       (2 )
                                       

Balance, March 31, 2012

    237,786,226   $ 2   $ 3,255   $ (50 ) $ (20 ) $ (815 ) $ (468 ) $ 116   $ 2,020  
                                       

See accompanying notes to condensed consolidated financial statements (unaudited).

8


Table of Contents


HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in Millions)

 
  March 31,
2013
  December 31,
2012
 

ASSETS

             

Current assets:

             

Cash and cash equivalents(a)

  $ 215   $ 210  

Restricted cash(a)

    9     9  

Accounts and notes receivable (net of allowance for doubtful accounts of $47 each), ($572 and $520 pledged as collateral, respectively)(a)

    1,594     1,534  

Accounts receivable from affiliates

    308     299  

Inventories(a)

    1,797     1,819  

Prepaid expenses

    47     48  

Deferred income taxes

    51     51  

Other current assets(a)

    204     222  
           

Total current assets

    4,225     4,192  

Property, plant and equipment, net(a)

    3,561     3,656  

Investment in unconsolidated affiliates

    236     238  

Intangible assets, net(a)

    65     70  

Goodwill

    116     117  

Deferred income taxes

    215     229  

Notes receivable from affiliates

    1     2  

Other noncurrent assets(a)

    441     366  
           

Total assets

  $ 8,860   $ 8,870  
           

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable(a)

  $ 1,101   $ 1,101  

Accounts payable to affiliates

    50     62  

Accrued liabilities(a)

    669     723  

Deferred income taxes

    38     39  

Note payable to affiliate

    100     100  

Current portion of debt(a)

    298     288  
           

Total current liabilities

    2,256     2,313  

Long-term debt(a)

    3,489     3,414  

Notes payable to affiliates

    744     599  

Deferred income taxes

    107     170  

Other noncurrent liabilities(a)

    1,117     1,157  
           

Total liabilities

    7,713     7,653  

Commitments and contingencies (Notes 13 and 14)

             

Equity

             

Huntsman International LLC members' equity:

             

Members' equity, 2,728 units issued and outstanding

    3,117     3,109  

Accumulated deficit

    (1,277 )   (1,224 )

Accumulated other comprehensive loss

    (823 )   (791 )
           

Total Huntsman International LLC members' equity

    1,017     1,094  

Noncontrolling interests in subsidiaries

    130     123  
           

Total equity

    1,147     1,217  
           

Total liabilities and equity

  $ 8,860   $ 8,870  
           

(a)
At March 31, 2013 and December 31, 2012, respectively, $20 and $28 of cash and cash equivalents, $9 each of restricted cash, $48 and $38 of accounts and notes receivable (net), $51 and $55 of inventories, nil each of other current assets, $372 and $378 of property, plant and equipment (net), $18 and $19 of intangible assets (net), $27 and $28 of other noncurrent assets, $78 and $76 of accounts payable, $23 and $26 of accrued liabilities, $187 and $193 of current portion of debt, $75 and $77 of long-term debt, and $99 and $101 of other noncurrent liabilities from consolidated variable interest entities are included in the respective Balance Sheet captions above. See "Note 5. Variable Interest Entities."

   

See accompanying notes to condensed consolidated financial statements (unaudited).

9


Table of Contents


HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Revenues:

             

Trade sales, services and fees, net

  $ 2,635   $ 2,853  

Related party sales

    67     60  
           

Total revenues

    2,702     2,913  

Cost of goods sold

    2,349     2,359  
           

Gross profit

    353     554  

Operating expenses:

             

Selling, general and administrative

    224     219  

Research and development

    36     39  

Other operating (income) expense

    (7 )   5  

Restructuring, impairment and plant closing costs

    44      
           

Total expenses

    297     263  
           

Operating income

    56     291  

Interest expense, net

    (54 )   (61 )

Equity in income of investment in unconsolidated affiliates

    1     2  

Loss on early extinguishment of debt

    (35 )   (1 )
           

(Loss) income from continuing operations before income taxes

    (32 )   231  

Income tax benefit (expense)

    18     (61 )
           

(Loss) income from continuing operations

    (14 )   170  

Loss from discontinued operations, net of tax

    (2 )   (4 )
           

Net (loss) income

    (16 )   166  

Net income attributable to noncontrolling interests

    (7 )    
           

Net (loss) income attributable to Huntsman International LLC

  $ (23 ) $ 166  
           

   

See accompanying notes to condensed consolidated financial statements (unaudited).

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Net (loss) income

  $ (16 ) $ 166  

Other comprehensive (loss) income, net of tax:

             

Foreign currency translation adjustments, net of tax of $2 and $(2), respectively

    (67 )   73  

Pension and other postretirement benefits adjustments, net of tax of $(11) and $(2), respectively

    33     21  

Other, net

    2     1  
           

Other comprehensive (loss) income

    (32 )   95  
           

Comprehensive (loss) income

    (48 )   261  

Comprehensive income attributable to noncontrolling interests

    (7 )   (2 )
           

Comprehensive (loss) income attributable to Huntsman International LLC

  $ (55 ) $ 259  
           

   

See accompanying notes to condensed consolidated financial statements (unaudited).

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Operating Activities:

             

Net (loss) income

  $ (16 ) $ 166  

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

             

Equity in income of investment in unconsolidated affiliates

    (1 )   (2 )

Depreciation and amortization

    102     103  

Loss on disposal of businesses/assets, net

        1  

Loss on early extinguishment of debt

    35     1  

Noncash interest expense

    5     9  

Noncash restructuring and impairment charges

    1      

Deferred income taxes

    (65 )   47  

Noncash loss on foreign currency transactions

    10     9  

Noncash compensation

    7     9  

Other, net

    4     4  

Changes in operating assets and liabilities:

             

Accounts and notes receivable

    (85 )   (239 )

Inventories

    (9 )   (65 )

Prepaid expenses

    3     1  

Other current assets

    16     27  

Other noncurrent assets

    (73 )   (1 )

Accounts payable

    6     183  

Accrued liabilities

    (44 )   (53 )

Other noncurrent liabilities

    29     (11 )
           

Net cash (used in) provided by operating activities

    (75 )   189  
           

Investing Activities:

             

Capital expenditures

    (89 )   (81 )

Increase in receivable from affiliate

    (3 )   (20 )

Investment in unconsolidated affiliates

    (5 )   (34 )

Cash received from unconsolidated affiliates

    15     15  

Acquisition of a business

    (7 )   (2 )

Increase in restricted cash

        (8 )

Other, net

    1     1  
           

Net cash used in investing activities

    (88 )   (129 )
           

   

(Continued)

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

(Dollars in Millions)

 
  Three months
ended
March 31,
 
 
  2013   2012  

Financing Activities:

             

Net repayments under revolving loan facilities

  $   $ (17 )

Net borrowings on overdraft facilities

    1     3  

Repayments of short-term debt

    (5 )   (4 )

Borrowings on short-term debt

    13      

Repayments of long-term debt

    (413 )   (109 )

Proceeds from issuance of long-term debt

    473      

Proceeds from notes payable to affiliate

    145     102  

Repayments of notes payable

    (10 )   (17 )

Borrowings on notes payable

        1  

Debt issuance costs paid

        (4 )

Call premiums and other costs related to early extinguishment of debt

    (4 )   (1 )

Dividends paid to parent

    (30 )   (24 )

Excess tax benefit related to stock-based compensation

    1     4  

Other, net

    (1 )   1  
           

Net cash provided by (used in) financing activities

    170     (65 )
           

Effect of exchange rate changes on cash

    (2 )   4  
           

Increase (decrease) in cash and cash equivalents

    5     (1 )

Cash and cash equivalents at beginning of period

    210     231  
           

Cash and cash equivalents at end of period

  $ 215   $ 230  
           

Supplemental cash flow information:

             

Cash paid for interest

  $ 59   $ 82  

Cash paid for income taxes

    17     13  

        During the three months ended March 31, 2013 and 2012, the amount of capital expenditures in accounts payable decreased by $25 and $13 million, respectively. During the three months ended March 31, 2013 and 2012, Huntsman Corporation contributed $7 million and $9 million related to stock-based compensation, respectively.

   

See accompanying notes to condensed consolidated financial statements (unaudited).

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Dollars in Millions)

 
  Huntsman International LLC Members    
   
 
 
  Members' equity    
  Accumulated
other
comprehensive
(loss) income
   
   
 
 
  Accumulated
deficit
  Noncontrolling
interests in
subsidiaries
  Total
equity
 
 
  Units   Amount  

Balance, January 1, 2013

    2,728   $ 3,109   $ (1,224 ) $ (791 ) $ 123   $ 1,217  

Net (loss) income

            (23 )       7     (16 )

Other comprehensive loss

                (32 )       (32 )

Contribution from parent

        7                 7  

Dividends paid to parent

            (30 )           (30 )

Excess tax benefit related to stock-based compensation

        1                 1  
                           

Balance, March 31, 2013

    2,728   $ 3,117   $ (1,277 ) $ (823 ) $ 130   $ 1,147  
                           

Balance, January 1, 2012

   
2,728
 
$

3,081
 
$

(1,493

)

$

(611

)

$

114
 
$

1,091
 

Net income

            166             166  

Other comprehensive income

                93     2     95  

Dividends paid to parent

            (24 )           (24 )

Acquisition of a business

        (2 )               (2 )

Contribution from parent

        9                 9  

Excess tax benefit related to stock-based compensation

        4                 4  
                           

Balance, March 31, 2012

    2,728   $ 3,092   $ (1,351 ) $ (518 ) $ 116   $ 1,339  
                           

   

See accompanying notes to condensed consolidated financial statements (unaudited).

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

CERTAIN DEFINITIONS

        For convenience in this report, the terms "Company," "our," "us" or "we" may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. In this report, "Huntsman International" refers to Huntsman International LLC (our 100% owned subsidiary) and, unless the context otherwise requires, its subsidiaries; and "HPS" refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd) and "SLIC" refers to Shanghai Liengheng Isocyanate Company (our unconsolidated manufacturing joint venture with BASF and three Chinese chemical companies).

        In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.

INTERIM FINANCIAL STATEMENTS

        Our interim condensed consolidated financial statements (unaudited) and Huntsman International's interim condensed consolidated financial statements (unaudited) were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP" or "U.S. GAAP") and in management's opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income, financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be expected for the full year. These condensed consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2012 for our Company and Huntsman International.

DESCRIPTION OF BUSINESS

        We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride, epoxy- based polymer formulations, textile chemicals, dyes and titanium dioxide.

        We operate in five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments. Our Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments produce differentiated organic chemical products and our Pigments segment produces inorganic chemical products. In a series of transactions beginning in 2006, we sold or shutdown substantially all of our Australian styrenics operations and our North American polymers and base chemicals operations. We report the results of these businesses as discontinued operations.

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

1. GENERAL (Continued)

COMPANY

        Our Company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses. Jon M. Huntsman founded the predecessor to our Company in 1970 as a small packaging company. Since then, we have grown through a series of acquisitions and now own a global portfolio of businesses.

        We operate all of our businesses through Huntsman International, our 100% owned subsidiary. Huntsman International is a Delaware limited liability company.

HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS

        Except where otherwise indicated, these notes relate to the condensed consolidated financial statements (unaudited) for both our Company and Huntsman International. The differences between our financial statements and Huntsman International's financial statements relate primarily to the following:

PRINCIPLES OF CONSOLIDATION

        Our condensed consolidated financial statements (unaudited) include the accounts of our wholly-owned and majority-owned subsidiaries and any variable interest entities for which we are the primary beneficiary. All intercompany accounts and transactions have been eliminated, except for intercompany sales between continuing and discontinued operations.

USE OF ESTIMATES

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

RECENT DEVELOPMENTS

        On April 29, 2013, Huntsman International entered into amendments to its U.S. accounts receivable securitization program ("U.S. A/R Program") and its European accounts receivable securitization program ("EU A/R Program" and, collectively with the U.S. A/R Program, our "A/R Programs"). These amendments, among other things, extend the scheduled commitment termination date of the loan facilities under our A/R Programs to April 2016. For more information, see "Note 7. Debt—Direct and Subsidiary Debt—Amendments to A/R Programs."

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

1. GENERAL (Continued)

        On March 11, 2013, Huntsman International entered into an eighth amendment to its senior secured credit facilities (the "Senior Credit Facilities"). The amendment provided for an additional term loan of $225 million, the net proceeds of which were used to repay in full the remaining $193 million principal amount outstanding under our term loan B facility ("Term Loan B") and for general corporate purposes. We recognized a loss on early extinguishment of debt of approximately $1 million on this redemption. The additional term loan has identical terms to our existing extended term loan B facility ("Extended Term Loan B"). See "Note 7. Debt—Direct and Subsidiary Debt—Amendment to Credit Agreement."

        On March 4, 2013, Huntsman International, pursuant to an indenture entered into on November 19, 2012, issued $250 million aggregate principal amount of additional 4.875% senior notes due 2020 (the "2020 Senior Notes"). Huntsman International applied the net proceeds to redeem the remaining $200 million in aggregate principal amount of its 5.50% senior notes due 2016 (the "2016 Senior Notes"), to pay associated accrued interest and for general corporate purposes. We recognized a loss on early extinguishment of debt of approximately $34 million on this redemption. For more information, see "Note 7. Debt—Direct and Subsidiary Debt—Notes."

        During the first quarter of 2013, we successfully completed the scheduled maintenance of our olefins and ethylene oxide facilities in Port Neches, Texas. This significant maintenance occurs approximately every four years at this facility.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted During 2013

        In July 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The guidance in this ASU is intended to reduce complexity and costs of the annual impairment tests for indefinite-lived intangible assets by providing entities with the option of performing a qualitative assessment to determine whether further impairment testing is necessary. The amendments in this ASU include examples of events and circumstances that might indicate that an asset's fair value is less than its carrying value. The amendments in this ASU were effective prospectively for annual and interim indefinite-lived intangible assets impairment tests performed for fiscal years beginning after September 15, 2012. We adopted the amendments in this ASU effective January 1, 2013, and the initial adoption of the amendments in this ASU did not have a significant impact on our condensed consolidated financial statements (unaudited).

        In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, requiring entities to disclose information about the amounts reclassified out of accumulated other comprehensive income by component, as well as report, either on the face of the income statement where net income is presented or in the notes, the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items of net income. The amendments in this ASU were effective prospectively for interim and annual periods beginning after December 15, 2012. We adopted the amendments of this ASU effective January 1, 2013 and have disclosed the above additional

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

information about reclassifications out of accumulated other comprehensive (loss) income in the notes to our condensed consolidated financial statements (unaudited). See "Note 12. Other Comprehensive (Loss) Income."

Accounting Pronouncements Pending Adoption in Future Periods

        In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, requiring entities to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments in this ASU should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements that exist at the beginning of an entity's fiscal year of adoption. We do not expect the adoption of the amendments in this ASU to have a significant impact on our condensed consolidated financial statements (unaudited).

        In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, resolving diversity in practice and clarifying the applicable guidance for the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or business within a foreign entity. The amendments in this ASU are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not expect the adoption of the amendments in this ASU to have a significant impact on our condensed consolidated financial statements (unaudited).

3. BUSINESS COMBINATIONS

NIPPON AQUA EQUITY INVESTMENT

        In March 2013, we completed the acquisition of a 20% equity interest in Nippon Aqua Co. Ltd. ("Nippon Aqua"), a spray polyurethane foam ("SPF") insulation company based in Yokohama, Japan. In addition, we entered into a 10 year supply agreement with the company. Nippon Aqua is the SPF market leader in Japan, with business operations in over 30 locations across the country, and is a subsidiary of leading residential home builder Hinokiya Holdings Co. Ltd. We supply various advanced MDI-based polyurethanes systems to Nippon Aqua. We will account for this investment using the equity method and will report the equity earnings in our Polyurethanes segment.

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. BUSINESS COMBINATIONS (Continued)

RUSSIAN MDI, COATINGS AND SYSTEMS ACQUISITION

        On July 3, 2012, we completed our acquisition of the remaining 55% ownership interest in International Polyurethane Investments B.V. (the "Russian Systems House Acquisition"). This company's wholly owned subsidiary, Huntsman NMG ZAO, is a leading supplier of polyurethane systems to the adhesives, coatings and footwear markets in Russia, Ukraine and Belarus and is headquartered in Obninsk, Russia. The acquisition cost was approximately €13 million (approximately $16 million). The acquired business was integrated into our Polyurethanes segment. Transaction costs charged to expense related to this acquisition were not significant. The fair value of our existing 45% ownership interest immediately prior to the acquisition was $13 million, valued by applying the income approach. Key assumptions include a discount rate of 17% and a terminal growth rate of 4%. In connection with this transaction, during the third quarter of 2012 we recorded a noncash pretax loss of approximately $4 million in other operating (income) expense on the consolidation of this investment. The long-term debt of approximately $7 million that was assumed as part of this transaction was repaid shortly after the acquisition date.

        We have accounted for the Russian Systems House Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):

Fair value of original 45% ownership interest acquired in 2007

  $ 13  

Acquisition cost of 55% ownership interest acquired in 2012

    16  
       

Total fair value of net assets acquired

  $ 29  
       

Fair value of assets acquired and liabilities assumed:

       

Accounts receivable

  $ 2  

Inventories

    9  

Other current assets

    1  

Property, plant and equipment

    31  

Accounts payable

    (4 )

Accrued liabilities

    (1 )

Deferred income taxes

    (2 )

Long-term debt

    (7 )
       

Total fair value of net assets acquired

  $ 29  
       

        The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired and liabilities assumed, including final valuation of working capital, property, plant and equipment, intangible assets and the determination of related deferred taxes. For purposes of this preliminary allocation of fair value, we have assigned any excess of the acquisition cost over historical carrying values to property, plant and equipment and no amounts have been allocated to goodwill. It is possible that changes to this preliminary allocation could occur.

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. BUSINESS COMBINATIONS (Continued)

        If this acquisition were to have occurred January 1, 2012, there would have been no significant impact to combined earnings to our Company and Huntsman International. The following estimated pro forma revenues attributable to our Company and Huntsman International would have been reported (dollars in millions):

 
  Pro Forma  
 
  Three months
ended
March 31, 2012
(unaudited)
 

Revenues

  $ 2,919  

4. INVENTORIES

        Inventories are stated at the lower of cost or market, with cost determined using last-in first-out ("LIFO"), first-in first-out, and average costs methods for different components of inventory. Inventories consisted of the following (dollars in millions):

 
  March 31,
2013
  December 31,
2012
 

Raw materials and supplies

  $ 478   $ 484  

Work in progress

    101     98  

Finished goods

    1,297     1,311  
           

Total

    1,876     1,893  

LIFO reserves

    (79 )   (74 )
           

Net

  $ 1,797   $ 1,819  
           

        For both March 31, 2013 and December 31, 2012, approximately 11% of inventories were recorded using the LIFO cost method.

        In the normal course of operations we, at times, exchange raw materials and finished goods with other companies for the purpose of reducing transportation costs. The net nonmonetary open exchange positions are valued at cost. The amounts included in inventory under nonmonetary open exchange agreements receivable by us for both March 31, 2013 and December 31, 2012 was $6 million. Other open exchanges are settled in cash and result in a net deferred profit margin. The amounts payable under these open exchange agreements as of March 31, 2013 and December 31, 2012 were $2 million and nil, respectively.

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. VARIABLE INTEREST ENTITIES

        We evaluate our investments and transactions to identify variable interest entities for which we are the primary beneficiary. We hold a variable interest in the following four joint ventures for which we are the primary beneficiary:

        Creditors of these entities have no recourse to our general credit, except in the event that we offer guarantees of specified indebtedness. See "Note 7. Debt—Direct and Subsidiary Debt." As the primary beneficiary of these variable interest entities at March 31, 2013, the joint ventures' assets, liabilities and results of operations are included in our condensed consolidated financial statements (unaudited).

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. VARIABLE INTEREST ENTITIES (Continued)

        The following table summarizes the carrying amount of our variable interest entities' assets and liabilities included in our condensed consolidated balance sheets (unaudited), before intercompany eliminations (dollars in millions):

 
  March 31,
2013
  December 31,
2012
 

Current assets

  $ 172   $ 163  

Property, plant and equipment, net

    372     378  

Other noncurrent assets

    67     61  

Deferred income taxes

    45     45  

Intangible assets, net

    18     19  

Goodwill

    15     16  
           

Total assets

  $ 689   $ 682  
           

Current liabilities

  $ 358   $ 348  

Long-term debt

    79     82  

Deferred income taxes

    8     8  

Other noncurrent liabilities

    99     102  
           

Total liabilities

  $ 544   $ 540  
           

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

        As of March 31, 2013 and December 31, 2012, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):

 
  Workforce
reductions(1)
  Demolition and
decommissioning
  Non-cancelable
lease and contract
termination costs
  Other
restructuring
costs
  Total(2)  

Accrued liabilities as of January 1, 2013

  $ 90   $   $ 15   $   $ 105  

2013 charges for 2011 initiatives

        4     16     1     21  

2013 charges for 2012 initiatives

    17             6     23  

2013 charges for 2013 initiatives

    2                 2  

Reversal of reserves no longer required

    (7 )               (7 )

2013 payments for 2011 initiatives

    (4 )   (4 )       (1 )   (9 )

2013 payments for 2012 initiatives

    (4 )           (6 )   (10 )

Foreign currency effect on liability balance

    (3 )       (1 )       (4 )
                       

Accrued liabilities as of March 31, 2013

  $ 91   $   $ 30   $   $ 121  
                       

(1)
The total workforce reduction reserves of $91 million relate to the termination of 817 positions, of which 738 positions had not been terminated as of March 31, 2013.

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

(2)
Accrued liabilities by initiatives were as follows (dollars in millions):

 
  March 31,
2013
  December 31,
2012
 

2008 and prior initiatives

  $ 2   $ 2  

2009 initiatives

    6     7  

2010 initiatives

    9     9  

2011 initiatives

    44     34  

2012 initiatives

    58     53  

2013 initiatives

    2      
           

Total

  $ 121   $ 105  
           

        Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):

 
  Polyurethanes   Performance
Products
  Advanced
Materials
  Textile
Effects
  Pigments   Discontinued
Operations
  Corporate
and
Other
  Total  

Accrued liabilities as of January 1, 2013

  $ 27   $   $ 27   $ 42   $ 1   $ 6   $ 2   $ 105  

2013 charges for 2011 initiatives

                21                 21  

2013 charges for 2012 initiatives

            23                     23  

2013 charges for 2013 initiatives

        2                         2  

Reversal of reserves no longer required

    (4 )       (2 )   (1 )               (7 )

2013 payments for 2011 initiatives

                (9 )               (9 )

2013 payments for 2012 initiatives

    (2 )       (8 )                   (10 )

Foreign currency effect on liability balance

    (1 )       (1 )   (2 )               (4 )
                                   

Accrued liabilities as of March 31, 2013

  $ 20   $ 2   $ 39   $ 51   $ 1   $ 6   $ 2   $ 121  
                                   

Current portion of restructuring reserves

  $ 20   $ 2   $ 38   $ 26   $ 1   $ 6   $ 2   $ 95  

Long-term portion of restructuring reserves

            1     25                 26  

Estimated additional future charges for current restructuring projects

                                                 

Estimated additional charges within one year

        3     13     65                 81  

Estimated additional charges beyond one year

                                 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

        Details with respect to cash and non-cash restructuring charges for the periods ended March 31, 2013 and 2012 by initiative are provided below (dollars in millions):

 
  Three months
ended
March 31, 2013
 

Cash charges:

       

2013 charges for 2011 initiatives

  $ 21  

2013 charges for 2012 initiatives

    23  

2013 charges for 2013 initiatives

    2  

Pension-related charges

    4  

Reversal of reserves no longer required

    (7 )

Non-cash charges

    1  
       

Total 2013 Restructuring, Impairment and Plant Closing Costs

  $ 44  
       

 

 
  Three months
ended
March 31, 2012
 

Cash charges:

       

2012 charges for 2008 and prior initiatives

  $ 2  

2012 charges for 2009 initiatives

    1  

2012 charges for 2011 initiatives

    3  

2012 charges for 2012 initiatives

    5  

Reversal of reserves no longer required

    (12 )

Non-cash charges

    1  
       

Total 2012 Restructuring, Impairment and Plant Closing Costs

  $  
       

2013 RESTRUCTURING ACTIVITIES

        During the three months ended March 31, 2013, our Polyurethanes segment reversed charges of $4 million related to workforce reductions in association with our program to reduce annualized fixed costs by approximately $75 million. Our Polyurethanes segment also recorded pension-related settlement charges of $5 million related to this program.

        During the three months ended March 31, 2013, our Advanced Materials segment recorded charges of $23 million primarily related to workforce reductions related to our global transformational change program designed to improve the segment's manufacturing efficiencies, enhance commercial excellence and ensure its long-term global competitiveness. Our Advanced Materials segment also reversed charges of $2 million related to this initiative. We expect to incur additional charges of $13 million through March 2014, also related to this initiative.

        On September 27, 2011, we announced plans to implement a significant restructuring of our Textile Effects segment, including the closure of our production facilities and business support offices in Basel, Switzerland, as part of an ongoing strategic program aimed at improving the Textile Effects segment's

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

long-term global competitiveness. In connection with this plan, during the three months ended March 2013, our Textile Effects segment recorded charges of $16 million for non-cancelable long-term contract termination costs, $4 million for decommissioning and $1 million for other restructuring and reversed charges of $1 million related to workforce reductions associated with this initiative. We expect to incur additional charges of $65 million through March 2014, also related to this initiative.

2012 RESTRUCTURING ACTIVITIES

        During the three months ended March 31, 2012, our Polyurethanes segment recorded charges of $5 million primarily related to cost reduction programs.

        During the three months ended March 31, 2012, our Advanced Materials segment recorded charges of $1 million primarily related to the reorganization of our global business structure and the relocation of our divisional headquarters from Basel, Switzerland to The Woodlands, Texas.

        On September 27, 2011, we announced plans to implement a significant restructuring of our Textile Effects segment, including the closure of our production facilities and business support offices in Basel, Switzerland, as part of an ongoing strategic program aimed at improving the Textile Effects segment's long-term global competitiveness. In connection with this plan, during the first quarter of 2012, we recorded a charge of $1 million primarily for workforce reductions. In addition, during the three months ended March 31, 2012, our Textile Effects segment recorded charges of $3 million primarily related to the closure of our St. Fons, France facility and a global transfer pricing initiative. Also during the three months ended March 31, 2012, we reversed $12 million of reserves that were no longer required for workforce reductions at our production facility in Langweid, Germany, the consolidation of manufacturing activities and processes at our site in Basel, Switzerland and closure of our production facilities in Basel, Switzerland.

        During the three months ended March 31, 2012, our Pigments segment recorded charges of $1 million related to the closure of our Grimsby, U.K. plant.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT

        Outstanding debt consisted of the following (dollars in millions):

Huntsman Corporation

 
  March 31,
2013
  December 31,
2012
 

Senior Credit Facilities:

             

Term loans

  $ 1,598   $ 1,565  

Amounts outstanding under A/R programs

    236     241  

Senior notes

    646     568  

Senior subordinated notes

    892     892  

HPS (China) debt

    90     94  

Variable interest entities

    262     270  

Other

    63     72  
           

Total debt—excluding debt to affiliates

  $ 3,787   $ 3,702  
           

Total current portion of debt

  $ 298   $ 288  

Long-term portion

    3,489     3,414  
           

Total debt—excluding debt to affiliates

  $ 3,787   $ 3,702  
           

Total debt—excluding debt to affiliates

  $ 3,787   $ 3,702  

Notes payable to affiliates-noncurrent

    4     4  
           

Total debt

  $ 3,791   $ 3,706  
           

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

Huntsman International

 
  March 31,
2013
  December 31,
2012
 

Senior Credit Facilities:

             

Term loans

  $ 1,598   $ 1,565  

Amounts outstanding under A/R programs

    236     241  

Senior notes

    646     568  

Senior subordinated notes

    892     892  

HPS (China) debt

    90     94  

Variable interest entities

    262     270  

Other

    63     72  
           

Total debt—excluding debt to affiliates

  $ 3,787   $ 3,702  
           

Total current portion of debt

  $ 298   $ 288  

Long-term portion

    3,489     3,414  
           

Total debt—excluding debt to affiliates

  $ 3,787   $ 3,702  
           

Total debt—excluding debt to affiliates

  $ 3,787   $ 3,702  

Notes payable to affiliates-current

    100     100  

Notes payable to affiliates-noncurrent

    744     599  
           

Total debt

  $ 4,631   $ 4,401  
           

DIRECT AND SUBSIDIARY DEBT

        Huntsman Corporation's direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily Huntsman International). Huntsman Corporation is not a guarantor of such subsidiary debt.

        Certain of our subsidiaries are designated as nonguarantor subsidiaries and have third-party debt agreements. These debt agreements contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us.

Amendment to Credit Agreement

        On March 11, 2013, Huntsman International entered into an eighth amendment to its Senior Credit Facilities. The amendment provided for an additional term loan of $225 million, the net proceeds of which were used to repay in full the remaining $193 million principal amount outstanding under our Term Loan B and for general corporate purposes. The additional term loan was recorded at its carrying value of $224 million as of March 31, 2013. The additional term loan has identical terms to our Extended Term Loan B.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

        In connection with this debt repayment, we recognized a loss on early extinguishment of debt of approximately $1 million.

Senior Credit Facilities

        As of March 31, 2013, our Senior Credit Facilities consisted of our revolving credit facility ("Revolving Facility"), Extended Term Loan B, our extended term loan B facility—series 2 ("Extended Term Loan B—Series 2") and our term loan C facility ("Term Loan C") as follows (dollars in millions):

Facility
  Committed
Amount
  Principal
Outstanding
  Carrying
Value
  Interest Rate(2)   Maturity  

Revolving Facility

  $400   $ (1) $ (1) USD LIBOR plus 2.50%     2017 (3)

Extended Term Loan B

  NA     863     861   USD LIBOR plus 2.50%     2017  

Extended Term Loan B—Series 2

  NA     342     342   USD LIBOR plus 2.75%     2017  

Term Loan C

  NA     419     395   USD LIBOR plus 2.25%     2016  

(1)
We had no borrowings outstanding under our Revolving Facility; we had approximately $18 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Facility.

(2)
The applicable interest rate of the Senior Credit Facilities is subject to certain secured leverage ratio thresholds. As of March 31, 2013, the weighted average interest rate on our outstanding balances under the Senior Credit Facilities was approximately 3%.

(3)
The maturity of the Revolving Facility commitments will accelerate if we do not repay, refinance or have a minimum level of liquidity available to enable us to repay our Term Loan C due June 30, 2016.

        Our obligations under the Senior Credit Facilities are guaranteed by substantially all of our domestic subsidiaries and certain of our foreign subsidiaries (collectively, the "Guarantors"), and are secured by a first priority lien on substantially all of our domestic property, plant and equipment, the stock of all of our material domestic subsidiaries and certain foreign subsidiaries, and pledges of intercompany notes between certain of our subsidiaries.

Amendments to A/R Programs

        On April 29, 2013, Huntsman International entered into an amendment to the EU A/R Program. This amendment, among other things, extends the scheduled commitment termination date of the EU A/R Program by two years to April 2016 and reduces the applicable margin on borrowings to 1.35%.

        On April 29, 2013, Huntsman International entered into an amendment to the U.S. A/R Program. This amendment, among other things, extends the scheduled commitment termination date of the U.S. A/R Program by two years to April 2016, provides for additional availability under the U.S. A/R program and reduces the applicable margin on borrowings to 1.10%.

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

Notes

        On March 4, 2013, pursuant to an indenture entered into on November 19, 2012, Huntsman International issued $250 million aggregate principal amount of additional 2020 Senior Notes. The notes are recorded at carrying value of $246 million as of March 31, 2013. Huntsman International applied the net proceeds to redeem the remaining $200 million in aggregate principal amount of its 2016 Senior Notes, to pay associated accrued interest and for general corporate purposes.

        The 2020 Senior Notes bear interest at the rate of 4.875% per year payable semi-annually on May 15 and November 15 of each year, beginning on May 15, 2013 and are due on November 15, 2020. Huntsman International may redeem the 2020 Senior Notes in whole or in part at any time prior to August 17, 2020 at a price equal to 100% of the principal amount thereof plus a "make-whole" premium and accrued and unpaid interest.

        The 2020 Senior Notes are general unsecured senior obligations of Huntsman International and are guaranteed on a general unsecured senior basis by the Guarantors. The indenture with respect to the 2020 Senior Notes imposes certain limitations on the ability of Huntsman International and its subsidiaries to, among other things, incur additional indebtedness secured by any principal properties, incur indebtedness of nonguarantor subsidiaries, enter into sale and leaseback transactions with respect to any principal properties and consolidate or merge with or into any other person or lease, sell or transfer all or substantially all of its properties and assets. Upon the occurrence of certain change of control events, holders of the 2020 Senior Notes will have the right to require that Huntsman International purchase all or a portion of such holder's 2020 Senior Notes in cash at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase.

        As of March 31, 2013, we had outstanding the following notes (monetary amounts in millions):

Notes
  Maturity   Interest
Rate
  Amount Outstanding

2020 Senior Notes

  November 2020     4.875 % $650 ($646 carrying value)

Senior Subordinated Notes

  March 2020     8.625 % $350

Senior Subordinated Notes

  March 2021     8.625 % $530 ($542 carrying value)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

Redemption of Notes and Loss on Early Extinguishment of Debt

        During the three months ended March 31, 2013 and 2012, we redeemed or repurchased the following notes (monetary amounts in millions):

Date of Redemption
  Notes   Principal Amount of
Notes Redeemed
  Amount Paid
(Excluding Accrued
Interest)
  Loss on Early
Extinguishment
of Debt
 

March 4, 2013

  5.50% Senior Notes
due 2016
  $200   $200   $ 34  

March 26, 2012

 

7.50% Senior
Subordinated Notes
due 2015

 

€64 (approximately $86)

 

€65 (approximately $87)

 
$

1
 

Variable Interest Entity Debt

        As of March 31, 2013, Arabian Amines Company had $179 million outstanding under its loan commitments and debt financing arrangements. Arabian Amines Company, our consolidated 50%-owned joint venture, is currently not in compliance with payment and other obligations under these loan commitments. We do not guarantee these loan commitments and Arabian Amines Company is not a guarantor of any of our other debt obligations, and the non-compliance with these financial covenants does not affect any of our other debt obligations. We are currently in discussions with the lenders under these loan commitments and expect to resolve the noncompliance. As of March 31, 2013, the amounts outstanding under these loan commitments were classified as current on our condensed consolidated balance sheets (unaudited).

Note Payable from Huntsman International to Huntsman Corporation

        As of March 31, 2013, we have a loan of $840 million to our subsidiary, Huntsman International (the "Intercompany Note"). The Intercompany Note is unsecured and $100 million of the outstanding amount is classified as current as of March 31, 2013 on our condensed consolidated balance sheets (unaudited). As of March 31, 2013, under the terms of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility).

COMPLIANCE WITH COVENANTS

        We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our Senior Credit Facilities, our A/R Programs and our notes. However, Arabian Amines Company, our consolidated 50%-owned joint venture, is currently not in compliance with payment and other obligations under its loan commitments. See "—Variable Interest Entity Debt" above.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

        Our material financing arrangements contain certain covenants with which we must comply. A failure to comply with a covenant could result in a default under a financing arrangement unless we obtained an appropriate waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, certain of our material financing arrangements contain cross-default and cross-acceleration provisions under which a failure to comply with the covenants in one financing arrangement may result in an event of default under another financing arrangement.

        Our Senior Credit Facilities are subject to a single financial covenant (the "Leverage Covenant") which applies only to the Revolving Facility and is tested at the Huntsman International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage Covenant is a net senior secured leverage ratio covenant which requires that Huntsman International's ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75 to 1.

        If in the future Huntsman International fails to comply with the Leverage Covenant, then we may not have access to liquidity under our Revolving Facility. If Huntsman International failed to comply with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit outstanding under the Revolving Facility, Huntsman International would be in default under the Senior Credit Facilities, and, unless Huntsman International obtained a waiver or forbearance with respect to such default (as to which we can provide no assurance), Huntsman International could be required to pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such facilities.

        The agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs' metrics in the future could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

        We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures.

        All derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.

        We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded in accumulated other comprehensive loss.

        Our cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in various foreign currencies. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of March 31, 2013, we had approximately $229 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.

        On December 9, 2009, we entered into a five-year interest rate contract to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. The notional value of the contract is $50 million, and it has been designated as a cash flow hedge. The effective portion of the changes in the fair value of the swap was recorded in other comprehensive loss. We will pay a fixed 2.6% on the hedge and receive the one-month LIBOR rate. As of March 31, 2013, the fair value of the hedge was $2 million and was recorded in other noncurrent liabilities on our condensed consolidated balance sheets (unaudited).

        On January 19, 2010, we entered into an additional five-year interest rate contract to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. The notional value of the contract is $50 million, and it has been designated as a cash flow hedge. The effective portion of the changes in the fair value of the swap was recorded as other comprehensive loss. We will pay a fixed 2.8% on the hedge and receive the one-month LIBOR rate. As of March 31, 2013, the fair value of the hedge was $2 million and was recorded in other noncurrent liabilities on our condensed consolidated balance sheets (unaudited).

        On September 1, 2011, we entered into a $50 million forward interest rate contract that will begin in December 2014 with maturity in April 2017 and a $50 million forward interest rate contract that will begin in January 2015 with maturity in April 2017. These two forward contracts are to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities once our existing interest rate hedges mature. These swaps are designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps were recorded in other comprehensive income. Both interest rate contracts will pay a fixed 2.5% on the hedge and receive the one-month LIBOR rate once the contracts begin in 2014 and 2015, respectively. As of

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

March 31, 2013, the combined fair value of these two hedges was $4 million and was recorded in other noncurrent liabilities on our condensed consolidated balance sheets (unaudited).

        In 2009, Sasol-Huntsman entered into derivative transactions to hedge the variable interest rate associated with its local credit facility. These derivative rate hedges include a floating to fixed interest rate contract providing Sasol-Huntsman with EURIBOR interest payments for a fixed payment of 3.62% and a cap for future periods with a strike price of 3.62%. In connection with the consolidation of Sasol-Huntsman as of April 1, 2011, the interest rate contract is now included in our consolidated results. See "Note 5. Variable Interest Entities." The notional amount of the hedge as of March 31, 2013 was €42 million (approximately $54 million) and the derivative transactions do not qualify for hedge accounting. As of March 31, 2013, the fair value of this hedge was €2 million (approximately $3 million) and was recorded in other noncurrent liabilities on our condensed consolidated balance sheets (unaudited). For the three months ended March 31, 2013, we recorded additional interest expense of nil due to changes in the fair value of the swap.

        Beginning in 2009, Arabian Amines Company entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of Arabian Amines Company as of July 1, 2010, the interest rate contract is now included in our consolidated results. See "Note 5. Variable Interest Entities." The notional amount of the swap as of March 31, 2013 was $34 million, and the interest rate contract is not designated as a cash flow hedge. As of March 31, 2013, the fair value of the swap was $5 million and was recorded as other noncurrent liabilities on our condensed consolidated balance sheets (unaudited). For the three months ended March 31, 2013, we recorded additional interest expense of $1 million due to changes in fair value of the swap. As of March 31, 2013, Arabian Amines Company was not in compliance with payment and other obligations contained in its loan commitments. For more information, see "Note 7. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt."

        In conjunction with the issuance of our 8.625% senior subordinated notes due 2020, we entered into cross-currency interest rate contracts with three counterparties. On March 17, 2010, we made payments of $350 million to these counterparties and received €255 million from these counterparties, and on maturity (March 15, 2015) we are required to pay €255 million to these counterparties and will receive $350 million from these counterparties. On March 15 and September 15 of each year, we will receive U.S. dollar interest payments of approximately $15 million (equivalent to an annual rate of 8.625%) and make interest payments of approximately €11 million (equivalent to an annual rate of approximately 8.41%). This swap is designated as a hedge of net investment for financial reporting purposes. As of March 31, 2013, the fair value of this swap was $29 million and was recorded in other noncurrent assets on our condensed consolidated balance sheets (unaudited).

        We finance certain of our non-U.S. subsidiaries with intercompany loans that are, in many cases, denominated in currencies other than the entities' functional currency. We manage the net foreign currency exposure created by this debt through various means, including cross-currency swaps, the designation of certain intercompany loans as permanent loans because they are not expected to be repaid in the foreseeable future and the designation of certain debt and swaps as net investment hedges.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

        Foreign currency transaction gains and losses on intercompany loans that are not designated as permanent loans are recorded in earnings. Foreign currency transaction gains and losses on intercompany loans that are designated as permanent loans are recorded in other comprehensive income. From time to time, we review such designation of intercompany loans.

        We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of March 31, 2013, we have designated approximately €255 million (approximately $325 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the three months ended March 31, 2013, the amount of gain recognized on the hedge of our net investment was $10 and was recorded in other comprehensive (loss) income on our condensed consolidated statements of comprehensive (loss) income (unaudited). As of March 31, 2013, we had approximately €999 million (approximately $1,276 million) in net euro assets.

9. FAIR VALUE

        The fair values of financial instruments were as follows (dollars in millions):

 
  March 31, 2013   December 31, 2012  
 
  Carrying
Value
  Estimated
Fair Value
  Carrying
Value
  Estimated
Fair Value
 

Non-qualified employee benefit plan investments

  $ 17   $ 17   $ 14   $ 14  

Cross-currency interest rate contracts

    29     29     18     18  

Interest rate contracts

    (16 )   (16 )   (18 )   (18 )

Long-term debt (including current portion)

    (3,787 )   (3,928 )   (3,702 )   (3,869 )

        The carrying amounts reported in our condensed consolidated balance sheets (unaudited) of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of non-qualified employee benefit plan investments is obtained through market observable pricing using prevailing market prices. The estimated fair values of our long-term debt are based on quoted market prices for the identical liability when traded as an asset in an active market (Level 1).

        The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2013 and December 31, 2012. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2013 and current estimates of fair value may differ significantly from the amounts presented herein.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. FAIR VALUE (Continued)

        The following assets and liabilities are measured at fair value on a recurring basis (dollars in millions):

 
   
  Fair Value Amounts Using  
Description
  March 31,
2013
  Quoted prices in active
markets for identical
assets (Level 1)(3)
  Significant other
observable inputs
(Level 2)(3)
  Significant
unobservable inputs
(Level 3)
 

Assets:

                         

Available-for sale equity securities:

                         

Equity mutual funds

  $ 17   $ 17   $   $  

Derivatives:

                         

Cross-currency interest rate contracts(1)

    29         29      
                   

Total assets

  $ 46   $ 17   $ 29   $  
                   

Liabilities:

                         

Derivatives:

                         

Interest rate contracts(2)

    (16 ) $     (16 ) $  
                   

 

 
   
  Fair Value Amounts Using  
Description
  December 31,
2012
  Quoted prices in active
markets for identical
assets (Level 1)(3)
  Significant other
observable inputs
(Level 2)(3)
  Significant
unobservable inputs
(Level 3)
 

Assets:

                         

Available-for sale equity securities:

                         

Equity mutual funds

  $ 14   $ 14   $   $  

Derivatives:

                         

Cross-currency interest rate contracts(1)

    18         18      
                   

Total assets

  $ 32   $ 14   $ 18   $  
                   

Liabilities:

                         

Derivatives:

                         

Interest rate contracts(2)

  $ (18 ) $   $ (18 ) $  
                   

(1)
The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates, exchange rates, and yield curves at stated intervals. There were no material changes to the valuation methods or assumptions used to determine the fair value during the current period.

(2)
The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates and yield

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. FAIR VALUE (Continued)

(3)
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three months ended March 31, 2013 and December 31, 2012.

        The following table shows a reconciliation of beginning and ending balances for the three months ended March 31, 2012 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions). During the three months ended March 31, 2013, there were no instruments categorized as Level 3 within the fair value hierarchy.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
  Cross-Currency Interest
Rate Contracts
 

Beginning balance, January 1, 2012

  $ 27  

Transfers into Level 3

     

Transfers out of Level 3(1)

    (27 )

Total gains (losses):

       

Included in earnings

     

Included in other comprehensive (loss) income

     

Purchases, sales, issuances and settlements

     
       

Ending balance, March 31, 2012

  $  
       

The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at March 31, 2012

  $  
       

(1)
We are party to cross-currency interest rate contracts that are measured at fair value in the financial statements. These instruments have historically been categorized by us as Level 3 within the fair value hierarchy due to an unobservable input associated with the credit valuation adjustment, which we deemed to be a significant input to the overall measurement of fair value at inception. During the three months ended March 31, 2012, this credit valuation adjustment had ceased to be a significant input to the entire fair value measurement of these instruments. The remaining inputs which are significant to the fair value measurement of these instruments represent observable market inputs that are inputs other than quoted prices (Level 2 inputs).

Our policy is to recognize transfers between levels within the fair value hierarchy as of the beginning of the reporting period. Due to the change in significance of the credit valuation adjustment to the entire fair value measurement of these instruments, effective January 1, 2012, we have categorized our cross-currency interest rate contracts as Level 2 within the fair value hierarchy.

        We also have assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include property, plant and equipment and those associated with acquired businesses, including goodwill and intangible assets. For these assets, measurement at fair

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. FAIR VALUE (Continued)

value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. During the three months ended March 31, 2013 and 2012, we had no impairments related to these assets.

10. EMPLOYEE BENEFIT PLANS

        Components of the net periodic benefit costs for the three months ended March 31, 2013 and 2012 were as follows (dollars in millions):

Huntsman Corporation

 
   
   
  Other
Postretirement
Benefit Plans
 
 
  Defined Benefit
Plans
 
 
  Three months
ended
ended
March 31,
 
 
  Three months
ended
March 31,
 
 
  2013   2012   2013   2012  

Service cost

  $ 17   $ 16   $ 1   $ 1  

Interest cost

    33     37     1     2  

Expected return on assets

    (44 )   (46 )        

Amortization of prior service benefit

    (2 )   (2 )       (1 )

Amortization of actuarial loss

    20     11          

Special termination benefits

    5              
                   

Net periodic benefit cost

  $ 29   $ 16   $ 2   $ 2  
                   

Huntsman International

 
  Defined Benefit
Plans
  Other
Postretirement
Benefit Plans
 
 
  Three months
ended
ended
March 31,
  Three months
ended
ended
March 31,
 
 
  2013   2012   2013   2012  

Service cost

  $ 17   $ 16   $ 1   $ 1  

Interest cost

    33     37     1     2  

Expected return on assets

    (44 )   (46 )        

Amortization of prior service benefit

    (2 )   (2 )       (1 )

Amortization of actuarial loss

    21     12          

Special termination benefits

    5              
                   

Net periodic benefit cost

  $ 30   $ 17   $ 2   $ 2  
                   

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

10. EMPLOYEE BENEFIT PLANS (Continued)

        During the three months ended March 31, 2013 and 2012, we made contributions to our pension and other postretirement benefit plans of $31 million and $48 million, respectively. During the remainder of 2013, we expect to contribute an additional amount of approximately $113 million to these plans.

Huntsman Corporation

        During the three months ended March 31, 2013 and 2012, we reclassified approximately $9 million and $4 million, respectively, of accumulated other comprehensive loss into cost of goods sold, approximately $8 million and $4 million, respectively, into selling, general and administrative expense and approximately $1 million for both periods into research and development expense.

Huntsman International

        During the three months ended March 31, 2013 and 2012, we reclassified approximately $10 million and $5 million, respectively, of accumulated other comprehensive loss into cost of goods sold, approximately $8 million and $4 million, respectively, into selling, general and administrative expense and approximately $1 million for both periods into research and development expense.

11. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY

COMMON STOCK DIVIDENDS

        On March 29, 2013, we paid cash dividends of $30 million, or $0.125 per share, to common stockholders of record as of March 15, 2013. On March 30, 2012, we paid cash dividends of $24 million, or $0.10 per share, to common stockholders of record as of March 15, 2012.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. OTHER COMPREHENSIVE (LOSS) INCOME

        The components of other comprehensive (loss) income and changes in accumulated other comprehensive (loss) income by component were as follows (dollars in millions):

Huntsman Corporation

 
  Foreign
currency
translation
adjustment(a)
  Pension and other
postretirement benefits
adjusments, net of tax(b)
  Other comprehensive
income (loss) of
unconsolidated affiliates
  Other, net   Total   Amounts
attributable to
noncontrolling
interests
  Amounts
attributable to
Huntsman
Corporation
 

Beginning balance, January 1, 2013

  $ 269   $ (1,036 ) $ 7   $ 3   $ (757 ) $ 13   $ (744 )
                               

Other comprehensive (loss) income before reclassifications

    (67 )   25         1     (41 )       (41 )

Amounts reclassified from accumulated other comprehensive loss(c)

        8             8         8  
                               

Net current-period other comprehensive (loss) income

    (67 )   33         1     (33 )       (33 )
                               

Ending balance, March 31, 2013

  $ 202   $ (1,003 ) $ 7   $ 4   $ (790 ) $ 13   $ (777 )
                               

(a)
Amounts are net of tax of $22 and $20 as of March 31, 2013 and January 1, 2013, respectively.

(b)
Amounts are net of tax of $187 and $197 as of March 31, 2013 and January 1, 2013, respectively.

(c)
See table below for details about these reclassifications.

 
  Foreign
currency
translation
adjustment(a)
  Pension and other
postretirement benefits
adjusments, net of tax(b)
  Other comprehensive
income of
unconsolidated affiliates
  Other, net   Total   Amounts
attributable to
noncontrolling
interests
  Amounts
attributable to
Huntsman
Corporation
 

Beginning balance, January 1, 2012

  $ 218   $ (800 ) $ 8   $ 3   $ (571 ) $ 12   $ (559 )
                               

Other comprehensive income before reclassifications

    73     12         1     86     (2 )   84  

Amounts reclassified from accumulated other comprehensive loss(c)

        7             7         7  
                               

Net current-period other comprehensive income

    73     19         1     93     (2 )   91  
                               

Ending balance, March 31, 2012

  $ 291   $ (781 ) $ 8   $ 4   $ (478 ) $ 10   $ (468 )
                               

(a)
Amounts are net of tax of $23 and $24 as of March 31, 2012 and January 1, 2012, respectively.

(b)
Amounts are net of tax of $123 and $124 as of March 31, 2012 and January 1, 2012, respectively.

(c)
See table below for details about these reclassifications.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. OTHER COMPREHENSIVE (LOSS) INCOME (Continued)

 
  Three months
ended
March 31, 2013
   
Details about Accumulated Other Comprehensive Loss
Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Affected line item in the
statement where net income
is presented

Amortization of pension and other postretirement benefits:

         

Prior service credit

  $ (2 ) (b)

Actuarial loss

    20   (b)(c)
         

    18   Total before tax

    (10 ) Income tax benefit (expense)
         

    8   Net of tax
         

Total reclassifications for the period

  $ 8   Net of tax
         

 

 
  Three months
ended
March 31, 2012
   
Details about Accumulated Other Comprehensive Loss
Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Affected line item in the
statement where net income
is presented

Amortization of pension and other postretirement benefits:

         

Prior service credit

  $ (3 ) (b)

Actuarial loss

    11   (b)(c)
         

    8   Total before tax

    (1 ) Income tax benefit (expense)
         

    7   Net of tax
         

Total reclassifications for the period

  $ 7   Net of tax
         

(a)
Amounts in parentheses indicate credits on our condensed consolidated statements of operations (unaudited).

(b)
These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See "Note 10. Employee Benefit Plans."

(c)
Amounts contain approximately $1 million of actuarial losses related to discontinued operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. OTHER COMPREHENSIVE (LOSS) INCOME (Continued)

Huntsman International

 
  Foreign
currency
translation
adjustment(a)
  Pension and other
postretirement benefits
adjusments, net of tax(b)
  Other comprehensive
income (loss) of
unconsolidated affiliates
  Other, net   Total   Amounts
attributable to
noncontrolling
interests
  Amounts
attributable to
Huntsman
International
 

Beginning balance, January 1, 2013

  $ 268   $ (1,076 ) $ 7   $ (3 ) $ (804 ) $ 13   $ (791 )
                               

Other comprehensive (loss) income before reclassifications

    (67 )   25         2     (40 )       (40 )

Amounts reclassified from accumulated other comprehensive loss(c)

        8             8         8  
                               

Net current-period other comprehensive (loss) income

    (67 )   33         2     (32 )       (32 )
                               

Ending balance, March 31, 2013

  $ 201   $ (1,043 ) $ 7   $ (1 ) $ (836 ) $ 13   $ (823 )
                               

(a)
Amounts are net of tax of $9 and $7 as of March 31, 2013 and January 1, 2013, respectively.

(b)
Amounts are net of tax of $217 and $228 as of March 31, 2013 and January 1, 2013, respectively.

(c)
See table below for details about these reclassifications.

 
  Foreign
currency
translation
adjustment(a)
  Pension and other
postretirement benefits
adjusments, net of tax(b)
  Other comprehensive
income of
unconsolidated affiliates
  Other, net   Total   Amounts
attributable to
noncontrolling
interests
  Amounts
attributable to
Huntsman
International
 

Beginning balance, January 1, 2012

  $ 217   $ (845 ) $ 8   $ (3 ) $ (623 ) $ 12   $ (611 )
                               

Other comprehensive income before reclassifications

    73     14         1     88     (2 )   86  

Amounts reclassified from accumulated other comprehensive loss(c)

        7             7         7  
                               

Net current-period other comprehensive income

    73     21         1     95     (2 )   93  
                               

Ending balance, March 31, 2012

  $ 290   $ (824 ) $ 8   $ (2 ) $ (528 ) $ 10   $ (518 )
                               

(a)
Amounts are net of tax of $9 and $11 as of March 31, 2012 and January 1, 2012, respectively.

(b)
Amounts are net of tax of $154 and $156 as of March 31, 2012 and January 1, 2012, respectively.

(c)
See table below for details about these reclassifications.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

12. OTHER COMPREHENSIVE (LOSS) INCOME (Continued)

 
  Three months
ended
March 31, 2013
   
Details about Accumulated Other Comprehensive Loss
Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Affected line item in the
statement where net income
is presented

Amortization of pension and other postretirement benefits:

         

Prior service credit

  $ (2 ) (b)

Actuarial loss

    21   (b)(c)
         

    19   Total before tax

    (11 ) Income tax benefit (expense)
         

    8   Net of tax
         

Total reclassifications for the period

  $ 8   Net of tax
         

 

 
  Three months
ended
March 31, 2012
   
Details about Accumulated Other Comprehensive Loss
Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Affected line item in the
statement where net income
is presented

Amortization of pension and other postretirement benefits:

         

Prior service credit

  $ (3 ) (b)

Actuarial loss

    12   (b)(c)
         

    9   Total before tax

    (2 ) Income tax benefit (expense)
         

    7   Net of tax
         

Total reclassifications for the period

  $ 7   Net of tax
         

(a)
Amounts in parentheses indicate credits on our condensed consolidated statements of operations (unaudited).

(b)
These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See "Note 10. Employee Benefit Plans."

(c)
Amounts contain approximately $1 million of actuarial losses related to discontinued operations.

13. COMMITMENTS AND CONTINGENCIES

LEGAL MATTERS

Asbestos Litigation

        We have been named as a "premises defendant" in a number of asbestos exposure cases, typically claims by nonemployees of exposure to asbestos while at a facility. These complaints generally do not provide the necessary information about the time period in which the alleged injuries occurred or the alleged exposures giving rise to the asserted liability. This information, which would be central to any estimate of probable loss, generally must be obtained through legal discovery.

        Where a claimant's alleged exposure occurred prior to our ownership of the relevant "premises," the prior owners generally have contractually agreed to retain liability for, and to indemnify us against, asbestos exposure claims. This indemnification is not subject to any time or dollar amount limitations. Upon service of a complaint in one of these cases, we tender it to the prior owner. Rarely do the complaints in these cases state the amount of damages being sought. The prior owner accepts

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. COMMITMENTS AND CONTINGENCIES (Continued)

responsibility for the conduct of the defense of the cases and payment of any amounts due to the claimants. In our nineteen-year experience with tendering these cases, we have not made any payment with respect to any tendered asbestos cases. We believe that the prior owners have the intention and ability to continue to honor their indemnity obligations, although we cannot assure you that they will continue to do so or that we will not be liable for these cases if they do not.

        The following table presents for the periods indicated certain information about cases for which service has been received that we have tendered to the prior owner, all of which have been accepted.

 
  Three months
ended
March 31,
 
 
  2013   2012  

Unresolved at beginning of period

    1,080     1,080  

Tendered during period

    2     1  

Resolved during period(1)

    1      

Unresolved at end of period

    1,081     1,081  

(1)
Although the indemnifying party informs us when tendered cases have been resolved, it generally does not inform us of the settlement amounts relating to such cases, if any. The indemnifying party has informed us that it typically manages our defense together with the defense of other entities in such cases and resolves claims involving multiple defendants simultaneously, and that it considers the allocation of settlement amounts, if any, among defendants to be confidential and proprietary. Consequently, we are not able to provide the number of cases resolved with payment by the indemnifying party or the amount of such payments.

        We have never made any payments with respect to these cases. As of March 31, 2013, we had an accrued liability of approximately $10 million relating to these cases and a corresponding receivable of approximately $10 million relating to our indemnity protection with respect to these cases. We cannot assure you that our liability will not exceed our accruals or that our liability associated with these cases would not be material to our financial condition, results of operations or liquidity; accordingly, we are not able to estimate the amount or range of loss in excess of our accruals. Additional asbestos exposure claims may be made against us in the future, and such claims could be material. However, because we are not able to estimate the amount or range of losses associated with such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of March 31, 2013.

        Certain cases in which we are a premises defendant are not subject to indemnification by prior owners or operators. However, we may be entitled to insurance or other recoveries in some of these cases. The following table presents for the periods indicated certain information about these cases.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. COMMITMENTS AND CONTINGENCIES (Continued)

Cases include all cases for which service has been received by us. Certain prior cases that were filed in error against us have been dismissed.

 
  Three
months
ended
March 31,
 
 
  2013   2012  

Unresolved at beginning of period

    50     36  

Filed during period

        3  

Resolved during period

        1  

Unresolved at end of period

    50     38  

        We paid gross settlement costs for asbestos exposure cases that are not subject to indemnification of nil and $82,000 during the three months ended March 31, 2013 and 2012, respectively. As of March 31, 2013, we had no accrual relating to these cases. We cannot assure you that our liability will not exceed our accruals or that our liability associated with these cases would not be material to our financial condition, results of operations or liquidity; accordingly, we are not able to estimate the amount or range of loss in excess of our accruals. Additional asbestos exposure claims may be made against us in the future, and such claims could be material. However, because we are not able to estimate the amount or range of losses associated with such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of March 31, 2013.

Antitrust Matters

        We have been named as a defendant in two class action civil antitrust suits filed on February 9 and 12, 2010 in the U.S. District Court for the District of Maryland alleging that we and our co-defendants and other asserted co-conspirators conspired to fix prices of titanium dioxide sold in the U.S. between at least March 1, 2002 and the present. The suits were subsequently consolidated. The other defendants named in this matter are DuPont, Kronos and Millennium. On August 28, 2012, the court certified a class consisting of all U.S. customers who purchased titanium dioxide directly from defendants (the "Direct Purchasers") since February 1, 2003. A hearing to consider our motion for summary judgment is scheduled for June 25, 2013 and trial is set to begin September 9, 2013.

        We have also been named as a defendant in a class action civil antitrust suit filed on March 15, 2013 in the U.S. District Court for the Northern District of California by purchasers of products made from titanium dioxide (the "Indirect Purchasers") making essentially the same allegations as the Direct Purchasers.

        The plaintiffs in both the Direct Purchasers and Indirect Purchasers' actions seek to recover on behalf of their respective classes injunctive relief, treble damages or the maximum damages allowed by state law, costs of suit and attorneys fees. We are not aware of any illegal conduct by us or any of our employees. Nevertheless, we have incurred costs relating to these claims and could incur additional costs in amounts material to us. Because of the overall complexity of these cases, we are unable to reasonably estimate any possible loss or range of loss associated with these claims and we have made no accruals with respect to these claims.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. COMMITMENTS AND CONTINGENCIES (Continued)

Product Delivery Claim

        We have been notified by a customer of potential claims related to our allegedly delivering a different product than it had ordered. Our customer claims that it was unaware that the different product had been delivered until after it had been used to manufacture materials which were subsequently sold. Originally, the customer stated that it had been notified of claims of up to an aggregate of €153 million (approximately $202 million) relating to this matter and believed that we may be responsible for all or a portion of these potential claims. Our customer has since resolved some of these claims and the aggregate amount of the current claims is now approximately €113 million (approximately $144 million). Based on the facts currently available to us, we believe that we are insured for any liability we may ultimately have in excess of $10 million. However, no assurance can be given regarding our ultimate liability or costs. We believe the range of possible loss to our Company in this matter to be between €0 and €113 million and have made no accrual with respect to this matter.

Indemnification Matter

        On July 3, 2012, Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC, or the banks, demanded that we indemnify them for claims brought by certain MatlinPatterson entities that were formerly our shareholders, the plaintiffs, in litigation filed June 19, 2012 in the 9th District Court in Montgomery County, Texas. The banks assert that they are entitled to indemnification pursuant to the Agreement of Compromise and Settlement between the banks and our Company, dated June 22, 2009, wherein the banks and our Company settled claims that we brought relating to the failed merger with Hexion. The plaintiffs claim that the banks knowingly made materially false representations about the nature of the financing for the acquisition of our Company by Hexion and that they suffered substantial losses to their 19 million shares of our common stock as a result of the banks' misrepresentations. The plaintiffs are asserting statutory fraud, common law fraud and aiding and abetting statutory fraud and are seeking actual damages, exemplary damages, costs and attorney's fees, pre-judgment and post-judgment interest. We denied the banks' indemnification demand. On December 21, 2012, the court dismissed the plaintiffs' claims. The plaintiffs filed a motion for reconsideration before the trial court on January 18, 2013 and a Notice of Appeal to the Ninth Court of Appeals at Beaumont, Texas.

Other Proceedings

        We are a party to various other proceedings instituted by private plaintiffs, governmental authorities and others arising under provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in this report, we do not believe that the outcome of any of these matters will have a material effect on our financial condition, results of operations or liquidity.

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14. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

General

        We are subject to extensive federal, state, local and international laws, regulations, rules and ordinances relating to safety, pollution, protection of the environment, product management and distribution, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In the ordinary course of business, we are subject to frequent environmental inspections and monitoring and occasional investigations by governmental enforcement authorities. In addition, our production facilities require operating permits that are subject to renewal, modification and, in certain circumstances, revocation. Actual or alleged violations of safety laws, environmental laws or permit requirements could result in restrictions or prohibitions on plant operations or product distribution, substantial civil or criminal sanctions, as well as, under some environmental laws, the assessment of strict liability and/or joint and several liability. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require us to modify our facilities or operations. Accordingly, environmental or regulatory matters may cause us to incur significant unanticipated losses, costs or liabilities.

Environmental, Health and Safety Systems

        We are committed to achieving and maintaining compliance with all applicable environmental, health and safety ("EHS") legal requirements, and we have developed policies and management systems that are intended to identify the multitude of EHS legal requirements applicable to our operations, enhance compliance with applicable legal requirements, improve the safety of our employees, contractors, community neighbors and customers and minimize the production and emission of wastes and other pollutants. Although EHS legal requirements are constantly changing and are frequently difficult to comply with, these EHS management systems are designed to assist us in our compliance goals while also fostering efficiency and improvement and reducing overall risk to us.

EHS Capital Expenditures

        We may incur future costs for capital improvements and general compliance under EHS laws, including costs to acquire, maintain and repair pollution control equipment. For the three months ended March 31, 2013 and 2012, our capital expenditures for EHS matters totaled $16 million and $19 million, respectively. Because capital expenditures for these matters are subject to evolving regulatory requirements and depend, in part, on the timing, promulgation and enforcement of specific requirements, our capital expenditures for EHS matters have varied significantly from year to year and we cannot provide assurance that our recent expenditures are indicative of future amounts we may spend related to EHS and other applicable laws.

Remediation Liabilities

        We have incurred, and we may in the future incur, liability to investigate and clean up waste or contamination at our current or former facilities or facilities operated by third parties at which we may have disposed of waste or other materials. Similarly, we may incur costs for the cleanup of waste that

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was disposed of prior to the purchase of our businesses. Under some circumstances, the scope of our liability may extend to damages to natural resources.

        Under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and similar state laws, a current or former owner or operator of real property may be liable for remediation costs regardless of whether the release or disposal of hazardous substances was in compliance with law at the time it occurred, and a current owner or operator may be liable regardless of whether it owned or operated the facility at the time of the release. Outside the U.S., analogous contaminated property laws, such as those in effect in France and Australia, can hold past owners and/or operators liable for remediation at former facilities. Currently, there are approximately 10 former facilities or third-party sites in the U.S. for which we have been notified of potential claims against us for cleanup liabilities, including, but not limited to, sites listed under CERCLA. Based on current information and past experiences at other CERCLA sites, we do not expect these third-party claims to have a material impact on our financial statements.

        One of these sites, the North Maybe Canyon Mine site, involves a former phosphorous mine near Soda Springs, Idaho, which is believed to have been operated by a predecessor company to us. In 2004, the U.S. Forest Service notified us that we are a CERCLA potentially responsible party ("PRP") for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a portion of the site and are currently engaged in that process. At this time, we are unable to reasonably estimate our potential liabilities at this site.

        In addition, under the Resource Conservation and Recovery Act ("RCRA") and similar state laws, we may be required to remediate contamination originating from our properties as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste disposal. We are aware of soil, groundwater or surface contamination from past operations at some of our sites, and we may find contamination at other sites in the future. For example, our Port Neches, Texas, and Geismar, Louisiana, facilities are the subject of ongoing remediation requirements imposed under RCRA. Similar laws exist in a number of locations in which we currently operate, or previously operated, manufacturing facilities, such as Australia, India, France, Hungary and Italy.

        By letter dated March 7, 2006, our former Base Chemicals and Polymers facility in West Footscray, Australia, was issued a clean-up notice by the Environmental Protection Authority Victoria ("EPA Victoria") due to concerns about soil and groundwater contamination emanating from the site. On August 23, 2010, EPA Victoria revoked the second clean-up notice and issued a revised notice that included a requirement for financial assurance for the remediation. We have reached agreement with the agency that a mortgage on the land will be held by the agency as financial surety during the period covered by the current clean-up notice, which ends on July 30, 2014. As of March 31, 2013, we had an accrued liability of approximately $29 million related to estimated environmental remediation costs at this site. We can provide no assurance that the agency will not seek to institute additional requirements for the site or that additional costs will not be associated with the clean up.

        In many cases, our potential liability arising from historical contamination is based on operations and other events occurring prior to our ownership of a business or specific facility. In these situations,

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we frequently obtained an indemnity agreement from the prior owner addressing remediation liabilities arising from pre-closing conditions. We have successfully exercised our rights under these contractual covenants for a number of sites and, where applicable, mitigated our ultimate remediation liability. We cannot assure you, however, that the liabilities for all such matters subject to indemnity, will be honored by the prior owner or that our existing indemnities will be sufficient to cover our liabilities for such matters.

        Based on available information and the indemnification rights we believe are likely to be available, we believe that the costs to investigate and remediate known contamination will not have a material effect on our financial statements. However, if such indemnities are not honored or do not fully cover the costs of investigation and remediation or we are required to contribute to such costs, then such expenditures may have a material effect on our financial statements. At the current time, we are unable to estimate the total cost, exclusive of indemnification benefits, to remediate any of the known contamination sites.

Environmental Reserves

        We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued $34 million for environmental liabilities as of both March 31, 2013 and December 31, 2012. Of these amounts, $5 million and $10 million were classified as accrued liabilities in our consolidated balance sheets as of March 31, 2013 and December 31, 2012, respectively, and $29 million and $24 million were classified as other noncurrent liabilities in our consolidated balance sheets as of March 31, 2013 and December 31, 2012, respectively. In certain cases, our remediation liabilities may be payable over periods of up to 30 years. We may incur losses for environmental remediation in excess of the amounts accrued; however, we are not able to estimate the amount or range of such potential excess.

REGULATORY DEVELOPMENTS

        The EU regulatory framework for chemicals, called "REACH", became effective in 2007 and is designed to be phased in gradually over 11 years. As a REACH-regulated company that manufactures in or imports more than one metric ton per year of a chemical substance into the European Economic Area, we were required to pre-register with the European Chemicals Agency ("ECHA"), such chemical substances and isolated intermediates to take advantage of the 11 year phase-in period. To meet our compliance obligations, a cross-business REACH team was established, through which we were able to fulfill all required pre-registrations and our first phase registrations by the November 30, 2010 deadline. While we continue our registration efforts to meet the next registration deadline of May 31, 2013, our REACH implementation team is now strategically focused on the authorization phase of the REACH process, directing its efforts to address "Substances of Very High Concern" and evaluating potential business implications. Where warranted, evaluation of substitute chemicals will be an important element

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of our ongoing manufacturing sustainability efforts. As a chemical manufacturer with global operations, we are also actively monitoring and addressing analogous regulatory regimes being considered or implemented outside of the EU, such as in Korea and Taiwan.

        Although the total long-term cost for REACH compliance is unknown at this time, we spent approximately $8 million, $5 million and $9 million in 2012, 2011 and 2010, respectively, to meet the initial REACH requirements. We cannot provide assurance that these recent expenditures are indicative of future amounts that we may be required to spend for REACH compliance.

GREENHOUSE GAS REGULATION

        Globally, our operations are increasingly subject to regulations that seek to reduce emissions of "greenhouse gases" ("GHGs"), such as carbon dioxide and methane, which may be contributing to changes in the Earth's climate. At the most recent negotiations of the Conference of the Parties to the Kyoto Protocol, a limited group of nations, including the European Union ("EU"), agreed to a second commitment period for the Kyoto Protocol, an international treaty that provides for reductions in GHG emissions. More significantly, the European Union GHG Emissions Trading System, established pursuant to the Kyoto Protocol to reduce GHG emissions in the EU, has just entered its third phase and ongoing reforms at the EU level—including measures to prop up carbon credit prices and ban the use of certain types of certified emission reductions—may increase our operating costs. Australia has also adopted a carbon trading system that has been recognized for formal linkage with the EU trading system by 2018. Australia's GHG cap-and-trade program may impose compliance obligations upon our operations that may increase our operating costs. In the U.S., California has commenced the first compliance period of its cap-and-trade program.

        Federal climate change legislation in the U.S. appears unlikely in the near-term. As a result, domestic efforts to curb GHG emissions will be led by the U.S. Environmental Protection Agency's (the "EPA") GHG regulations and the efforts of states. To the extent that our domestic operations are subject to the EPA's GHG regulations, we may face increased capital and operating costs associated with new or expanded facilities. Expansions of our existing facilities or construction of new facilities may be subject to the Clean Air Act's Prevention of Significant Deterioration requirements under the EPA's GHG "Tailoring Rule." Our facilities are also subject to the EPA's Mandatory Reporting of Greenhouse Gases rule, and the collection and reporting of GHG data may increase our operational costs.

        Under a consent decree with states and environmental groups, the EPA is due to propose new source performance standards for GHG emissions from refineries. These standards could significantly increase the costs of constructing or adding capacity to refineries and may ultimately increase the costs or decrease the supply of refined products. Either of these events could have an adverse effect on our business.

        We are already managing and reporting GHG emissions, to varying degrees, as required by law for our sites in locations subject to Kyoto Protocol obligations and/or EU emissions trading scheme requirements. Although these sites are subject to existing GHG legislation, few have experienced or anticipate significant cost increases as a result of these programs, although it is possible that GHG

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14. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

emission restrictions may increase over time. Potential consequences of such restrictions include capital requirements to modify assets to meet GHG emission restrictions and/or increases in energy costs above the level of general inflation, as well as direct compliance costs. Currently, however, it is not possible to estimate the likely financial impact of potential future regulation on any of our sites.

        Finally, it should be noted that some scientists have concluded that increasing concentrations of GHG in the earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events. If any of those effects were to occur, they could have an adverse effect on our assets and operations.

PORT NECHES FLARING MATTER

        As part of the EPA's national enforcement initiative on flaring operations and by letter dated October 12, 2012, the U.S. Department of Justice (the "DOJ") notified us that we were in violation of the Clean Air Act (the "CAA") based on our response to a 2010 CAA Section 114 Information Request. The EPA has used the enforcement initiative to bring similar actions against refiners and other chemical manufacturers. Specifically, the EPA alleged violations at our Port Neches, Texas facility from 2007-2012 for flare operations not consistent with good pollution control practice and not in compliance with certain flare-related regulations. As a result of these findings, the EPA referred this matter to the DOJ. We have been engaged in discussions with the DOJ and the EPA regarding these alleged violations and are in the process of reviewing and assessing the allegations and will formally respond to the DOJ by early May. We are currently unable to determine the likelihood or magnitude of potential penalty or injunctive relief that may be incurred in resolving this matter.

15. STOCK-BASED COMPENSATION PLANS

        Under the Huntsman Corporation Stock Incentive Plan, as amended and restated (the "Stock Incentive Plan"), a plan approved by stockholders, we may grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, phantom stock, performance awards and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock options may be granted solely to employees. The terms of the grants are fixed at the grant date. As of March 31, 2013, we were authorized to grant up to 32.6 million shares under the Stock Incentive Plan. As of March 31, 2013, we had 6 million shares remaining under the Stock Incentive Plan available for grant. Option awards have a maximum contractual term of 10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Stock-based awards generally vest over a three-year period.

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15. STOCK-BASED COMPENSATION PLANS (Continued)

        The compensation cost from continuing operations under the Stock Incentive Plan for our Company and Huntsman International were as follows (dollars in millions):

 
  Three
months
ended
March 31,
 
 
  2013   2012  

Huntsman Corporation compensation cost

  $ 8   $ 10  

Huntsman International compensation cost

    7     9  

        The total income tax benefit recognized in the statements of operations for us and Huntsman International for stock-based compensation arrangements were $2 million and $3 million, respectively, for the three months ended March 31, 2013 and 2012.

STOCK OPTIONS

        The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees' expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions noted below represent the weighted average of the assumptions utilized for stock options granted during the periods.

 
  Three months ended
March 31,
 
 
  2013   2012  

Dividend yield

    2.8 %   3.0 %

Expected volatility

    62.6 %   65.3 %

Risk-free interest rate

    1.0 %   1.3 %

Expected life of stock options granted during the period

    5.6 years     6.6 years  

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15. STOCK-BASED COMPENSATION PLANS (Continued)

        A summary of stock option activity under the Stock Incentive Plan as of March 31, 2013 and changes during the three months then ended is presented below:

Option Awards
  Shares   Weighted
Average
Exercise
Price
  Weighted
Average
Remaining
Contractual
Term
  Aggregate
Intrinsic
Value
 
 
  (in thousands)
   
  (years)
  (in millions)
 

Outstanding at January 1, 2013

    10,517   $ 14.52              

Granted

    1,190     17.85              

Exercised

    (638 )   4.26              

Forfeited

    (102 )   20.93              
                         

Outstanding at March 31, 2013

    10,967     15.42     5.6   $ 48  
                         

Exercisable at March 31, 2013

    8,579     15.27     4.5     42  
                         

        The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2013 was $7.92 per option. As of March 31, 2013, there was $16 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 1.9 years.

        The total intrinsic value of stock options exercised during the three months ended March 31, 2013 and 2012 was $9 million and $5 million, respectively.

NONVESTED SHARES

        Nonvested shares granted under the Stock Incentive Plan consist of restricted stock, which is accounted for as an equity award, and phantom stock, which is accounted for as a liability award

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15. STOCK-BASED COMPENSATION PLANS (Continued)

because it can be settled in either stock or cash. A summary of the status of our nonvested shares as of March 31, 2013 and changes during the three months then ended is presented below:

 
  Equity Awards   Liability Awards  
 
  Shares   Weighted
Average
Grant-Date
Fair Value
  Shares   Weighted
Average
Grant-Date
Fair Value
 
 
  (in thousands)
   
  (in thousands)
   
 

Nonvested at January 1, 2013

    1,789   $ 13.87     638   $ 14.50  

Granted

    774     17.85     268     17.85  

Vested

    (732) (1)   14.61     (314 )   14.57  

Forfeited

                 
                       

Nonvested at March 31, 2013

    1,831     15.26     592     15.88  
                       

(1)
As of March 31, 2013, a total of 569,279 restricted stock units were vested, of which 52,941 vested during the three months ended March 31, 2013. These shares have not been reflected as vested shares in this table because, in accordance with the restricted stock unit agreements, shares of common stock are not issued for vested restricted stock units until termination of employment.

        As of March 31, 2013, there was $31 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.1 years. The value of share awards that vested during the three months ended March 31, 2013 and 2012 was $17 million and $21 million, respectively.

16. INCOME TAXES

        We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the applicable period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions. During the three months ended March 31, 2013, on a discrete basis, we released a valuation allowance of $1 million on certain net deferred tax assets in Luxembourg. During the three months ended March 31, 2012, we recorded a net $1 million expense for changes in valuation allowance related to certain net deferred assets in Guatemala, Indonesia and China, with no change greater than $2 million.

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16. INCOME TAXES (Continued)

        During the three months ended March 31, 2013 and 2012, we recorded a net increase in unrecognized tax benefits with a corresponding income tax expense of $1 million for each period, resulting from the settlement of tax audits, the effective settlement of certain tax positions and the expiration of statutes of limitations, net of additions.

        During the three months ended March 31, 2012, we were granted a tax holiday for the period from January 1, 2012 through December 31, 2016 with respect to certain income from Pigments products manufactured in Malaysia. We are required to make certain investments in order to enjoy the benefits of the tax holiday and we intend to make these investments. During the three months ended March 31, 2012, we recorded a discrete benefit of $3 million from de-recognition of a net deferred tax liability that will reverse during the holiday period. The amount of tax benefit to be realized from the tax holiday is directly dependent on the amount of future pre-tax income generated. We expect that the effects of the tax holiday will not be material to our provision for income taxes.

Huntsman Corporation

        We recorded income tax benefit of $20 million and income tax expense of $60 million for the three months ended March 31, 2013 and 2012, respectively. Our tax expense is affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. Our 2013 effective tax rate is significantly impacted by anticipated losses in tax jurisdictions where we have a full valuation allowance.

Huntsman International

        Huntsman International recorded income tax benefit of $18 million and income tax expense of $61 million for the three months ended March 31, 2013 and 2012, respectively. Our tax expense is affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. Our 2013 effective tax rate is significantly impacted by anticipated losses in tax jurisdictions where we have a full valuation allowance.

17. NET (LOSS) INCOME PER SHARE

        Basic (loss) income per share excludes dilution and is computed by dividing net (loss) income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period. Diluted income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing net income available to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities.

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17. NET (LOSS) INCOME PER SHARE (Continued)

        Basic and diluted (loss) income per share is determined using the following information (in millions):

 
  Three months
ended
March 31,
 
 
  2013   2012  

Numerator:

             

Basic and diluted (loss) income from continuing operations:

             

Loss (income) from continuing operations attributable to Huntsman Corporation

  $ (22 ) $ 167  
           

Basic and diluted net (loss) income:

             

Net (loss) income attributable to Huntsman Corporation

  $ (24 ) $ 163  
           

Shares (denominator):

             

Weighted average shares outstanding

    239.0     236.5  

Dilutive securities:

             

Stock-based awards

        3.6  
           

Total weighted average shares outstanding, including dilutive shares

    239.0     240.1  
           

        Additional stock-based awards of 7.0 million and 8.0 million weighted average equivalent shares of stock were outstanding during the three months ended March 31, 2013 and 2012, respectively. However, these stock-based awards were not included in the computation of diluted earnings per share for the three months ended March 31, 2013 and 2012 because the effect would be anti-dilutive.

18. OPERATING SEGMENT INFORMATION

        We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated chemical products. We have reported our operations through five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments. We have organized our business and derived our operating segments around differences in product lines.

        The major products of each reportable operating segment are as follows:

Segment
  Products

Polyurethanes

  MDI, PO, polyols, PG, TPU, aniline and MTBE

Performance Products

  amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licenses

Advanced Materials

  epoxy resin compounds and formulations; cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-based adhesives and tooling resin formulations

Textile Effects

  textile chemicals and dyes

Pigments

  titanium dioxide

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18. OPERATING SEGMENT INFORMATION (Continued)

        Sales between segments are generally recognized at external market prices and are eliminated in consolidation. We use EBITDA to measure the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The EBITDA of operating segments excludes items that principally apply to our Company as a whole. The revenues and EBITDA for each of our reportable operating segments are as follows (dollars in millions):

 
  Three months
ended
March 31,
 
 
  2013   2012  

Revenues:

             

Polyurethanes

  $ 1,182   $ 1,213  

Performance Products

    722     814  

Advanced Materials

    336     340  

Textile Effects

    188     185  

Pigments

    330     424  

Eliminations

    (56 )   (63 )
           

Total

  $ 2,702   $ 2,913  
           

Huntsman Corporation:

             

Segment EBITDA(1):

             

Polyurethanes

  $ 167   $ 171  

Performance Products

    49     89  

Advanced Materials

    3     31  

Textile Effects

    (27 )   (5 )

Pigments

    3     146  

Corporate and other(2)

    (80 )   (41 )
           

Subtotal

    115     391  

Discontinued Operations(3)

    (3 )   (1 )
           

Total

    112     390  

Interest expense, net

    (51 )   (59 )

Income tax benefit (expense)—continuing operations

    20     (60 )

Income tax benefit—discontinued operations

    2     1  

Depreciation and amortization

    (107 )   (109 )
           

Net (loss) income attributable to Huntsman Corporation

  $ (24 ) $ 163  
           

Huntsman International:

             

Segment EBITDA(1):

             

Polyurethanes

  $ 167   $ 171  

Performance Products

    49     89  

Advanced Materials

    3     31  

Textile Effects

    (27 )   (5 )

Pigments

    3     146  

Corporate and other(2)

    (79 )   (41 )
           

Subtotal

    116     391  

Discontinued Operations(3)

    (3 )   (1 )
           

Total

    113     390  

Interest expense, net

    (54 )   (61 )

Income tax benefit (expense)—continuing operations

    18     (61 )

Income tax benefit—discontinued operations

    2     1  

Depreciation and amortization

    (102 )   (103 )
           

Net (loss) income attributable to Huntsman International LLC

  $ (23 ) $ 166  
           

(1)
Segment EBITDA is defined as net (loss) income attributable to Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, and certain Corporate and other items.

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

18. OPERATING SEGMENT INFORMATION (Continued)

(2)
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs and non-operating income and expense.

(3)
The operating results of our former polymers, base chemicals and Australian styrenics businesses are classified as discontinued operations, and, accordingly, the revenues of these businesses are excluded for all periods presented. The EBITDA of our former polymers, base chemicals and Australian styrenics businesses are included in discontinued operations for all periods presented.

19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED)

        The following condensed consolidating financial statements (unaudited) present, in separate columns, financial information for the following: Huntsman International (on a parent only basis), with its investment in subsidiaries recorded under the equity method; the Guarantors on a combined, and where appropriate, consolidated basis; and the nonguarantors on a combined, and where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as of March 31, 2013 and December 31, 2012 and for the three months ended March 31, 2013 and 2012. There are no contractual restrictions limiting transfers of cash from the Guarantors to Huntsman International. Each of the Guarantors is 100% owned by Huntsman International and has fully and unconditionally guaranteed Huntsman International's outstanding notes on a joint and several basis.

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)


HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2013
(Dollars in Millions)

 
  Parent
Company
  Guarantors   Nonguarantors   Eliminations   Consolidated
Huntsman
International
LLC
 

ASSETS

                               

Current assets:

                               

Cash and cash equivalents

  $ 11   $ 3   $ 201   $   $ 215  

Restricted cash

            9         9  

Accounts and notes receivable, net

    33     145     1,416         1,594  

Accounts receivable from affiliates

    2,035     4,225     122     (6,074 )   308  

Inventories

    142     309     1,352     (6 )   1,797  

Prepaid expenses

    8     4     41     (6 )   47  

Deferred income taxes

    7         57     (13 )   51  

Other current assets

    207     5     207     (215 )   204  
                       

Total current assets

    2,443     4,691     3,405     (6,314 )   4,225  

Property, plant and equipment, net

    362     899     2,298     2     3,561  

Investment in unconsolidated affiliates

    5,338     1,273     167     (6,542 )   236  

Intangible assets, net

    23     1     42     (1 )   65  

Goodwill

    (19 )   82     53         116  

Deferred income taxes

    264         220     (269 )   215  

Notes receivable from affiliates

    21     909     1     (930 )   1  

Other noncurrent assets

    83     189     171     (2 )   441  
                       

Total assets

  $ 8,515   $ 8,044   $ 6,357   $ (14,056 ) $ 8,860  
                       

LIABILITIES AND EQUITY

                               

Current liabilities:

                               

Accounts payable

    84     266     751       $ 1,101  

Accounts payable to affiliates

    3,233     1,431     1,461     (6,075 )   50  

Accrued liabilities

    53     367     470     (221 )   669  

Deferred income taxes

        45     9     (16 )   38  

Note payable to affiliate

    100                 100  

Current portion of debt

    23         275         298