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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 September 30, 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
(Do not check if a
smaller reporting company)
  Smaller reporting company o

Huntsman International LLC

 

Large accelerated filer o

 

Accelerated filer o

 

Non-accelerated filer ý
(Do not check if a
smaller reporting company)

 

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 October 21, 2013, 241,438,911 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 SEPTEMBER 30, 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 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 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

    70  

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

    96  

ITEM 4.

 

Controls and Procedures

    98  

PART II

 

OTHER INFORMATION

    99  

ITEM 1.

 

Legal Proceedings

    99  

ITEM 1A.

 

Risk Factors

    99  

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

    99  

ITEM 6.

 

Exhibits

    100  

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)

 
  September 30,
2013
  December 31,
2012
 

ASSETS

             

Current assets:

             

Cash and cash equivalents(a)

  $ 397   $ 387  

Restricted cash(a)

    9     9  

Accounts and notes receivable (net of allowance for doubtful accounts of $43 and $47, respectively), ($594 and $520 pledged as collateral, respectively)(a)

    1,674     1,534  

Accounts receivable from affiliates

    29     49  

Inventories(a)

    1,695     1,819  

Prepaid expenses

    66     48  

Deferred income taxes

    51     51  

Other current assets(a)

    205     222  
           

Total current assets

    4,126     4,119  

Property, plant and equipment, net(a)

    3,745     3,745  

Investment in unconsolidated affiliates

    274     238  

Intangible assets, net(a)

    55     68  

Goodwill

    131     117  

Deferred income taxes

    238     229  

Notes receivable from affiliates

    1     2  

Other noncurrent assets(a)

    451     366  
           

Total assets

  $ 9,021   $ 8,884  
           

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable(a)

  $ 1,034   $ 1,102  

Accounts payable to affiliates

    41     48  

Accrued liabilities(a)

    689     705  

Deferred income taxes

    38     38  

Current portion of debt(a)

    295     288  
           

Total current liabilities

    2,097     2,181  

Long-term debt(a)

    3,574     3,414  

Notes payable to affiliates

    5     4  

Deferred income taxes

    267     228  

Other noncurrent liabilities(a)

    1,115     1,161  
           

Total liabilities

    7,058     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, 245,423,677 and 243,813,779 issued and 239,890,799 and 238,273,422 outstanding in 2013 and 2012, respectively

    2     2  

Additional paid-in capital

    3,297     3,264  

Treasury stock, 4,043,526 shares at both September 30, 2013 and December 31, 2012

    (50 )   (50 )

Unearned stock-based compensation

    (16 )   (12 )

Accumulated deficit

    (698 )   (687 )

Accumulated other comprehensive loss

    (714 )   (744 )
           

Total Huntsman Corporation stockholders' equity

    1,821     1,773  

Noncontrolling interests in subsidiaries

    142     123  
           

Total equity

    1,963     1,896  
           

Total liabilities and equity

  $ 9,021   $ 8,884  
           

(a)
At September 30, 2013 and December 31, 2012, respectively, $45 and $28 of cash and cash equivalents, $9 each of restricted cash, $46 and $38 of accounts and notes receivable (net), $49 and $55 of inventories, $2 and nil of other current assets, $367 and $378 of property, plant and equipment (net), $17 and $19 of intangible assets (net), $28 each of other noncurrent assets, $134 and $76 of accounts payable, $28 and $26 of accrued liabilities, $186 and $193 of current portion of debt, $70 and $77 of long-term debt, and $88 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)

(in Millions, Except Per Share Amounts)

 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Revenues:

                         

Trade sales, services and fees, net

  $ 2,789   $ 2,691   $ 8,198   $ 8,406  

Related party sales

    53     50     176     162  
                   

Total revenues

    2,842     2,741     8,374     8,568  

Cost of goods sold

    2,335     2,204     7,067     6,954  
                   

Gross profit

    507     537     1,307     1,614  

Operating expenses:

                         

Selling, general and administrative

    238     220     697     673  

Research and development

    35     35     105     112  

Other operating (income) expense

    (1 )       6     7  

Restructuring, impairment and plant closing costs

    37     47     110     52  
                   

Total expenses

    309     302     918     844  
                   

Operating income

    198     235     389     770  

Interest expense, net

    (48 )   (56 )   (146 )   (172 )

Equity in income of investment in unconsolidated affiliates

    3     2     6     5  

Loss on early extinguishment of debt

        (1 )   (35 )   (2 )

Other income

        1     2     2  
                   

Income from continuing operations before income taxes

    153     181     216     603  

Income tax expense

    (81 )   (61 )   (105 )   (186 )
                   

Income from continuing operations

    72     120     111     417  

Loss from discontinued operations, net of tax

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

Income before extraordinary gain

    70     119     107     410  

Extraordinary gain on the acquistion of a business, net of tax of nil

        1         1  
                   

Net income

    70     120     107     411  

Net income attributable to noncontrolling interests

    (6 )   (4 )   (20 )   (8 )
                   

Net income attributable to Huntsman Corporation

  $ 64   $ 116   $ 87   $ 403  
                   

Basic income (loss) per share:

                         

Income from continuing operations attributable to Huntsman Corporation common stockholders

  $ 0.28   $ 0.49   $ 0.38   $ 1.72  

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

    (0.01 )       (0.02 )   (0.02 )

Extraordinary gain on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax

                 
                   

Net income attributable to Huntsman Corporation common stockholders

  $ 0.27   $ 0.49   $ 0.36   $ 1.70  
                   

Weighted average shares

    239.8     237.9     239.5     237.4  
                   

Diluted income (loss) per share:

                         

Income from continuing operations attributable to Huntsman Corporation common stockholders

  $ 0.27   $ 0.48   $ 0.38   $ 1.70  

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

    (0.01 )       (0.02 )   (0.02 )

Extraordinary gain on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax

                 
                   

Net income attributable to Huntsman Corporation common stockholders

  $ 0.26   $ 0.48   $ 0.36   $ 1.68  
                   

Weighted average shares

    242.5     240.8     242.1     240.3  
                   

Amounts attributable to Huntsman Corporation common stockholders:

                         

Income from continuing operations

  $ 66   $ 116   $ 91   $ 409  

Loss from discontinued operations, net of tax

    (2 )   (1 )   (4 )   (7 )

Extraordinary gain on the acquisition of a business, net of tax

        1         1  
                   

Net income

  $ 64   $ 116   $ 87   $ 403  
                   

Dividends per share

  $ 0.125   $ 0.10   $ 0.375   $ 0.30  
                   

   

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

4


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HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Net income

  $ 70   $ 120   $ 107   $ 411  

Other comprehensive income, net of tax:

                         

Foreign currency translations adjustments, net of tax of $3 and nil for the three months ended, respectively, and $2 and $1 for the nine months ended, respectively

    53     94     (44 )   25  

Pension and other postretirement benefits adjustments, net of tax $(6) and $3 for the three months ended, respectively, and $(21) and $(15) for the nine months ended, respectively

    18     14     68     55  

Other, net

    3         5     (2 )
                   

Other comprehensive income, net of tax:

    74     108     29     78  
                   

Comprehensive income

    144     228     136     489  

Comprehensive income attributable to noncontrolling interests

    (8 )   (6 )   (19 )   (10 )
                   

Comprehensive income attributable to Huntsman Corporation

  $ 136   $ 222   $ 117   $ 479  
                   

   

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

5


Table of Contents


HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in Millions)

 
  Nine months
ended
September 30,
 
 
  2013   2012  

Operating Activities:

             

Net income

  $ 107   $ 411  

Adjustments to reconcile net income to net cash provided by operating activities:

             

Loss on the consolidation of a business

        4  

Equity in income of investment in unconsolidated affiliates

    (6 )   (5 )

Depreciation and amortization

    326     324  

Loss on disposal of businesses/assets, net

    4     2  

Loss on early extinguishment of debt

    35     2  

Noncash interest expense

    7     27  

Noncash restructuring and impairment charges

    7     10  

Deferred income taxes

    31     47  

Noncash loss on foreign currency transactions

    23     9  

Stock-based compensation

    21     21  

Other, net

    1     3  

Changes in operating assets and liabilities:

             

Accounts and notes receivable

    (146 )   (102 )

Inventories

    118     (252 )

Prepaid expenses

    (16 )   (17 )

Other current assets

    17     12  

Other noncurrent assets

    (108 )   (8 )

Accounts payable

    (18 )   122  

Accrued liabilities

    (45 )   15  

Other noncurrent liabilities

    30     (69 )
           

Net cash provided by operating activities

    388     556  
           

Investing Activities:

             

Capital expenditures

    (295 )   (248 )

Investment in unconsolidated affiliates

    (76 )   (84 )

Proceeds from sale of businesses/assets

    (1 )    

Cash received from unconsolidated affiliates

    48     51  

Acquisition of a business

    (66 )   (18 )

Increase in restricted cash

        (2 )

Other, net

    2     2  
           

Net cash used in investing activities

    (388 )   (299 )
           

   

(Continued)

6


Table of Contents


HUNTSMAN CORPORATION AND SUBSIDIARIES

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

(Dollars in Millions)


 
  Nine months
ended
September 30,
 
 
  2013   2012  

Financing Activities:

             

Net repayments under revolving loan facilities

  $ (3 ) $ (16 )

Net borrowings on overdraft facilities

    (2 )   2  

Repayments of short-term debt

    (18 )   (40 )

Borrowings on short-term debt

    14      

Repayments of long-term debt

    (459 )   (242 )

Proceeds from issuance of long-term debt

    572     3  

Repayments of notes payable

    (30 )   (33 )

Borrowings on notes payable

    34     34  

Debt issuance costs paid

    (4 )   (4 )

Call premiums and other costs related to early extinguishment of debt

    (4 )   (2 )

Dividends paid to common stockholders

    (90 )   (72 )

Repurchase and cancellation of stock awards

    (6 )   (7 )

Proceeds from issuance of common stock

    4     2  

Excess tax benefit related to stock-based compensation

    4     4  

Other, net

        (7 )
           

Net cash provided by (used in) financing activities

    12     (378 )
           

Effect of exchange rate changes on cash

    (2 )   2  
           

Increase (decrease) in cash and cash equivalents

    10     (119 )

Cash and cash equivalents at beginning of period

    387     554  
           

Cash and cash equivalents at end of period

  $ 397   $ 435  
           

Supplemental cash flow information:

             

Cash paid for interest

  $ 152   $ 177  

Cash paid for income taxes

    60     153  

        During the nine months ended September 30, 2013 and 2012, the amount of capital expenditures in accounts payable decreased by $41 million and $1 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    
   
 
 
  Common stock    
   
   
   
   
   
   
 
 
  Additional
paid-in
capital
  Treasury
stock
  Unearned
stock-based
compensation
  Accumulated
deficit
  Accumulated other
comprehensive
(loss) income
  Noncontrolling
interests in
subsidiaries
  Total
equity
 
 
  Shares   Amount  

Balance, January 1, 2013

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

Net income (loss)

                        87         20     107  

Other comprehensive income

                            30     (1 )   29  

Issuance of nonvested stock awards

            14         (14 )                

Vesting of stock awards

    1,067,888         5                         5  

Recognition of stock-based compensation

            6         10                 16  

Repurchase and cancellation of stock awards

    (304,209 )                   (6 )           (6 )

Stock options exercised

    853,698         4                         4  

Excess tax benefit related to stock- based compensation

            4                         4  

Accrued and unpaid dividends

                        (2 )           (2 )

Dividends paid on common stock

                        (90 )           (90 )
                                       

Balance, September 30, 2013

    239,890,799   $ 2   $ 3,297   $ (50 ) $ (16 ) $ (698 ) $ (714 ) $ 142   $ 1,963  
                                       

Balance, January 1, 2012

    235,746,087   $ 2   $ 3,228   $ (50 ) $ (12 ) $ (947 ) $ (559 ) $ 114   $ 1,776  

Net income

                        403         8     411  

Other comprehensive income

                            76     2     78  

Issuance of nonvested stock awards

            12         (12 )                

Vesting of stock awards

    2,155,549         10                         10  

Recognition of stock-based compensation

            6         10                 16  

Repurchase and cancellation of stock awards

    (534,996 )                   (7 )           (7 )

Stock options exercised

    661,299         2                         2  

Excess tax benefit related to stock-based compensation

            4                         4  

Dividends paid on common stock

                        (72 )           (72 )

Acquisition of a business

            (2 )                       (2 )
                                       

Balance, September 30, 2012

    238,027,939   $ 2   $ 3,260   $ (50 ) $ (14 ) $ (623 ) $ (483 ) $ 124   $ 2,216  
                                       

   

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)

 
  September 30,
2013
  December 31,
2012
 

ASSETS

             

Current assets:

             

Cash and cash equivalents(a)

  $ 378   $ 210  

Restricted cash(a)

    9     9  

Accounts and notes receivable (net of allowance for doubtful accounts of $43 and $47, respectively), ($594 and $520 pledged as collateral, respectively)(a)

    1,673     1,534  

Accounts receivable from affiliates

    286     299  

Inventories(a)

    1,695     1,819  

Prepaid expenses

    66     48  

Deferred income taxes

    51     51  

Other current assets(a)

    205     222  
           

Total current assets

    4,363     4,192  

Property, plant and equipment, net(a)

    3,675     3,656  

Investment in unconsolidated affiliates

    274     238  

Intangible assets, net(a)

    57     70  

Goodwill

    131     117  

Deferred income taxes

    237     229  

Notes receivable from affiliates

    1     2  

Other noncurrent assets(a)

    451     366  
           

Total assets

  $ 9,189   $ 8,870  
           

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable(a)

  $ 1,034   $ 1,101  

Accounts payable to affiliates

    45     62  

Accrued liabilities(a)

    733     723  

Deferred income taxes

    38     39  

Note payable to affiliate

    100     100  

Current portion of debt(a)

    295     288  
           

Total current liabilities

    2,245     2,313  

Long-term debt(a)

    3,574     3,414  

Notes payable to affiliates

    777     599  

Deferred income taxes

    184     170  

Other noncurrent liabilities(a)

    1,112     1,157  
           

Total liabilities

    7,892     7,653  

Commitments and contingencies (Notes 13 and 14)

             

Equity

             

Huntsman International LLC members' equity:

             

Members' equity, 2,728 units issued and outstanding

    3,133     3,109  

Accumulated deficit

    (1,220 )   (1,224 )

Accumulated other comprehensive loss

    (758 )   (791 )
           

Total Huntsman International LLC members' equity

    1,155     1,094  

Noncontrolling interests in subsidiaries

    142     123  
           

Total equity

    1,297     1,217  
           

Total liabilities and equity

  $ 9,189   $ 8,870  
           

(a)
At September 30, 2013 and December 31, 2012, respectively, $45 and $28 of cash and cash equivalents, $9 each of restricted cash, $46 and $38 of accounts and notes receivable (net), $49 and $55 of inventories, $2 and nil of other current assets, $367 and $378 of property, plant and equipment (net), $17 and $19 of intangible assets (net), $28 each of other noncurrent assets, $134 and $76 of accounts payable, $28 and $26 of accrued liabilities, $186 and $193 of current portion of debt, $70 and $77 of long-term debt, and $88 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).

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Revenues:

                         

Trade sales, services and fees, net

  $ 2,789   $ 2,691   $ 8,198   $ 8,406  

Related party sales

    53     50     176     162  
                   

Total revenues

    2,842     2,741     8,374     8,568  

Cost of goods sold

    2,331     2,199     7,054     6,940  
                   

Gross profit

    511     542     1,320     1,628  

Operating expenses:

                         

Selling, general and administrative

    236     220     692     669  

Research and development

    35     35     105     112  

Other operating (income) expense

    (1 )       6     7  

Restructuring, impairment and plant closing costs

    37     47     110     52  
                   

Total expenses

    307     302     913     840  
                   

Operating income

    204     240     407     788  

Interest expense, net

    (51 )   (59 )   (156 )   (181 )

Equity in income of investment in unconsolidated affiliates

    3     2     6     5  

Loss on early extinguishment of debt

        (1 )   (35 )   (2 )

Other income

        1     2     2  
                   

Income from continuing operations before income taxes

    156     183     224     612  

Income tax expense

    (80 )   (62 )   (106 )   (188 )
                   

Income from continuing operations

    76     121     118     424  

Loss from discontinued operations, net of tax

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

Income before extraordinary gain

    74     120     114     417  

Extraordinary gain on the acquisition of a business, net of tax of nil

        1         1  
                   

Net income

    74     121     114     418  

Net income attributable to noncontrolling interests

    (6 )   (4 )   (20 )   (8 )
                   

Net income attributable to Huntsman International LLC

  $ 68   $ 117   $ 94   $ 410  
                   

   

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

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in Millions)

 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Net income

  $ 74   $ 121   $ 114   $ 418  

Other comprehensive income, net of tax:

                         

Foreign currency translations adjustments, net of tax of $3 and nil for the three months ended, respectively, and $2 and $1 for the nine months ended, respectively

    53     94     (44 )   25  

Pension and other postretirement benefits adjustments, net of tax $(7) and $(3) for the three months ended, respectively, and $(22) and $(16) for the nine months ended, respectively

    19     15     71     58  

Other, net

    2         5     (1 )
                   

Other comprehensive income, net of tax:

    74     109     32     82  
                   

Comprehensive income

    148     230     146     500  

Comprehensive income attributable to noncontrolling interests

    (8 )   (6 )   (19 )   (10 )
                   

Comprehensive income attributable to Huntsman International LLC

  $ 140   $ 224   $ 127   $ 490  
                   

   

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)

 
  Nine months
ended
September 30,
 
 
  2013   2012  

Operating Activities:

             

Net income

  $ 114   $ 418  

Adjustments to reconcile net income to net cash provided by operating activities:

             

Loss on the consolidation of a business

        4  

Equity in income of investment in unconsolidated affiliates

    (6 )   (5 )

Depreciation and amortization

    308     306  

Loss on disposal of businesses/assets, net

    4     2  

Loss on early extinguishment of debt

    35     2  

Noncash interest (income) expense

    (1 )   36  

Noncash restructuring and impairment charges

    7     10  

Deferred income taxes

    6     127  

Noncash loss on foreign currency transactions

    23     9  

Noncash compensation

    20     20  

Other, net

    3     5  

Changes in operating assets and liabilities:

             

Accounts and notes receivable

    (146 )   (102 )

Inventories

    118     (252 )

Prepaid expenses

    (16 )   (17 )

Other current assets

    17     (14 )

Other noncurrent assets

    (108 )   (8 )

Accounts payable

    (9 )   112  

Accrued liabilities

    (20 )   45  

Other noncurrent liabilities

    33     (65 )
           

Net cash provided by operating activities

    382     633  
           

Investing Activities:

             

Capital expenditures

    (295 )   (248 )

Increase in receivable from affiliate

    (16 )   (97 )

Investment in unconsolidated affiliates

    (76 )   (84 )

Proceeds from sale of businesses/assets

    (1 )    

Cash received from unconsolidated affiliates

    48     51  

Acquisition of a business

    (66 )   (18 )

Increase in restricted cash

        (2 )

Other, net

    2     2  
           

Net cash used in investing activities

    (404 )   (396 )
           

   

(Continued)

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

(Dollars in Millions)


 
  Nine months
ended
September 30,
 
 
  2013   2012  

Financing Activities:

             

Net repayments under revolving loan facilities

  $ (3 ) $ (16 )

Net borrowings on overdraft facilities

    (2 )   2  

Repayments of short-term debt

    (18 )   (40 )

Borrowings on short-term debt

    14      

Repayments of long-term debt

    (459 )   (242 )

Proceeds from issuance of long-term debt

    572     3  

Proceeds from notes payable to affiliate

    177     172  

Repayments of notes payable

    (30 )   (33 )

Borrowings on notes payable

    34     34  

Debt issuance costs paid

    (4 )   (4 )

Call premiums and other costs related to early extinguishment of debt

    (4 )   (2 )

Dividends paid to parent

    (90 )   (72 )

Excess tax benefit related to stock-based compensation

    4     4  

Other, net

    1     (5 )
           

Net cash provided by (used in) financing activities

    192     (199 )
           

Effect of exchange rate changes on cash

    (2 )   2  
           

Increase in cash and cash equivalents

    168     40  

Cash and cash equivalents at beginning of period

    210     231  
           

Cash and cash equivalents at end of period

  $ 378   $ 271  
           

Supplemental cash flow information:

             

Cash paid for interest

  $ 170   $ 177  

Cash paid for income taxes

    60     70  

        During the nine months ended September 30, 2013 and 2012, the amount of capital expenditures in accounts payable decreased by $41 million and $1 million, respectively. During the nine months ended September 30, 2013 and 2012, Huntsman Corporation contributed $20 million related to stock-based compensation each.

   

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 income

            94         20     114  

Other comprehensive income (loss)

                33     (1 )   32  

Dividends paid to parent

            (90 )           (90 )

Contribution from parent

        20                 20  

Excess tax benefit related to stock-based compensation

        4                 4  
                           

Balance, September 30, 2013

    2,728   $ 3,133   $ (1,220 ) $ (758 ) $ 142   $ 1,297  
                           

Balance, January 1, 2012

    2,728   $ 3,081   $ (1,493 ) $ (611 ) $ 114   $ 1,091  

Net income

            410         8     418  

Other comprehensive income

                80     2     82  

Dividends paid to parent

            (72 )           (72 )

Acquisition of a business

        (2 )               (2 )

Contribution from parent

        20                 20  

Excess tax benefit related to stock-based compensation

        4                 4  
                           

Balance, September 30, 2012

    2,728   $ 3,103   $ (1,155 ) $ (531 ) $ 124   $ 1,541  
                           

   

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.

        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.

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.

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

1. GENERAL (Continued)

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 September 17, 2013, we entered into a definitive agreement to acquire the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. The transaction remains subject to regulatory approvals and customary closing conditions and is expected to close during the first half of 2014. For more information, see "Note 3. Business Combinations—Performance Additives and Titanium Dioxide Acquisition."

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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

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 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 Income."

        In July 2013, the FASB issued ASU No. 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes, permitting entities to use the Fed Funds Effective Swap Rate (OIS) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to the U.S. Treasury rate and the London Interbank Offered Rate (LIBOR). The amendments also remove the restriction on using different benchmark rates for similar hedges. The amendments in this ASU were effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. We adopted the amendments in this ASU effective July 17, 2013, and the initial adoption of the amendments in this ASU did not have a significant impact on our condensed consolidated financial statements (unaudited).

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

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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)

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).

        In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, providing guidance on the presentation of unrecognized tax benefits in the financial statements as either a reduction to a deferred tax asset or as a liability to better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses or tax credit carryforwards exist. The amendments in this ASU do not require new recurring disclosures. 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 prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. 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

PERFORMANCE ADDITIVES AND TITANIUM DIOXIDE ACQUISITION

        On September 17, 2013, we entered into a definitive agreement to acquire the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. for approximately $1.1 billion in cash and the assumption of approximately $225 million in unfunded pension liabilities as of June 30, 2013. The transaction remains subject to regulatory approvals and customary closing conditions and is expected to close during the first half of 2014.

OXID ACQUISITION

        On August 29, 2013, we completed the acquisition of the chemical business of Oxid L.P. (the "Oxid Acquisition"), a privately-held manufacturer and marketer of specialty urethane polyols based in

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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)

Houston, Texas. The acquisition cost of approximately $76 million consisted of cash payments of approximately $66 million and contingent consideration of $10 million. The contingent consideration relates to an earn-out agreement which will be paid over two years if certain conditions are met. The acquired business has been integrated into our Polyurethanes segment. Transaction costs charged to expense related to this acquisition were not significant.

        We have accounted for the Oxid 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):

Cash paid for acquisition

  $ 66  

Contingent consideration

    10  
       

Acquisition cost

  $ 76  
       

Fair value of assets acquired and liabilities assumed:

       

Accounts receivable

  $ 9  

Inventories

    13  

Property, plant and equipment

    59  

Accounts payable

    (4 )

Accrued liabilities

    (1 )
       

Total fair value of net assets acquired

  $ 76  
       

        The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired and liabilities assumed, including final valuation of 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 of historical carrying values to property, plant and equipment and no amounts have been allocated to goodwill. It is possible that changes to this allocation could occur.

        If this acquisition were to have occurred on January 1, 2012, the following estimated pro forma revenues and net income attributable to Huntsman Corporation and Huntsman International would have been reported (dollars in millions):

Huntsman Corporation

 
  Pro Forma  
 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Revenues

  $ 2,868   $ 2,764   $ 8,446   $ 8,628  

Net income attributable to Huntsman Corporation

    67     118     94     409  

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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)

Huntsman International

 
  Pro Forma  
 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Revenues

  $ 2,868   $ 2,764   $ 8,446   $ 8,628  

Net income attributable to Huntsman International

    71     120     101     416  

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):

 
  September 30,
2013
  December 31,
2012
 

Raw materials and supplies

  $ 435   $ 484  

Work in progress

    100     98  

Finished goods

    1,233     1,311  
           

Total

    1,768     1,893  

LIFO reserves

    (73 )   (74 )
           

Net

  $ 1,695   $ 1,819  
           

        For both September 30, 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 September 30, 2013 and December 31, 2012 were $8 million and $6 million, respectively. Other open exchanges are settled in cash and result in a net deferred profit margin. The amounts receivable under these open exchange agreements for September 30, 2013 and December 31, 2012 was $2 million and nil, respectively.

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:

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

5. VARIABLE INTEREST ENTITIES (Continued)

        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 September 30, 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):

 
  September 30,
2013
  December 31,
2012
 

Current assets

  $ 248   $ 163  

Property, plant and equipment, net

    367     378  

Other noncurrent assets

    71     61  

Deferred income taxes

    45     45  

Intangible assets, net

    17     19  

Goodwill

    16     16  
           

Total assets

  $ 764   $ 682  
           

Current liabilities

  $ 421   $ 348  

Long-term debt

    76     82  

Deferred income taxes

    9     8  

Other noncurrent liabilities

    88     102  
           

Total liabilities

  $ 594   $ 540  
           

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

        As of September 30, 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 2009 initiatives

                2     2  

2013 charges for 2010 initiatives

    1                 1  

2013 charges for 2011 initiatives

    1     10     35     2     48  

2013 charges for 2012 initiatives

    24             12     36  

2013 charges for 2013 initiatives

    24             4     28  

Reversal of reserves no longer required

    (15 )       (4 )       (19 )

2013 payments for 2009 initiatives

    (1 )           (2 )   (3 )

2013 payments for 2011 initiatives

    (11 )   (10 )   (2 )   (2 )   (25 )

2013 payments for 2012 initiatives

    (30 )           (12 )   (42 )

2013 payments for 2013 initiatives

    (7 )           (3 )   (10 )

Net activity of discontinued operations

            (2 )       (2 )
                       

Accrued liabilities as of September 30, 2013

  $ 76   $   $ 42   $ 1   $ 119  
                       

(1)
The workforce reduction reserves relate to the termination of 927 positions, of which 788 positions had not been terminated as of September 30, 2013.

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

 
  September 30,
2013
  December 31,
2012
 

2008 and prior initiatives

  $ 1   $ 2  

2009 initiatives

    5     7  

2010 initiatives

    6     9  

2011 initiatives

    52     34  

2012 initiatives

    37     53  

2013 initiatives

    18      
           

Total

  $ 119   $ 105  
           

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

        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 2009 initiatives

                    2             2  

2013 charges for 2010 initiatives

                            1     1  

2013 charges for 2011 initiatives

                48                 48  

2013 charges for 2012 initiatives

    3         33                     36  

2013 charges for 2013 initiatives

        17             1         10     28  

Reversal of reserves no longer required

    (7 )       (4 )   (8 )               (19 )

2013 payments for 2009 initiatives

                    (3 )           (3 )

2013 payments for 2011 initiatives

                (25 )               (25 )

2013 payments for 2012 initiatives

    (11 )       (30 )               (1 )   (42 )

2013 payments for 2013 initiatives

        (6 )                   (4 )   (10 )

Net activity of discontinued operations

                        (2 )       (2 )
                                   

Accrued liabilities as of September 30, 2013

  $ 12   $ 11   $ 26   $ 57   $ 1   $ 4   $ 8   $ 119  
                                   

Current portion of restructuring reserves

  $ 5   $ 11   $ 25   $ 24   $ 1   $ 4   $ 8   $ 78  

Long-term portion of restructuring reserves

    7         1     33                 41  

Estimated additional future charges for current restructuring projects

                                                 

Estimated additional charges within one year

    1         4     25                 30  

Estimated additional charges beyond one year

                                 

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

        Details with respect to cash and noncash restructuring charges for the periods ended September 30, 2013 and 2012 by initiative are provided below (dollars in millions):

 
  Three months
ended
September 30,
2013
  Nine months
ended
September 30,
2013
 

Cash charges:

             

2013 charges for 2009 initiatives

  $ 1   $ 2  

2013 charges for 2010 initiatives

    1     1  

2013 charges for 2011 initiatives

    18     48  

2013 charges for 2012 initiatives

    5     36  

2013 charges for 2013 initiatives

    14     28  

Pension related charges

    2     7  

Reversal of reserves no longer required

    (10 )   (19 )

Noncash charges

    6     7  
           

Total 2013 Restructuring, Impairment and Plant Closing Costs

  $ 37   $ 110  
           

 

 
  Three months
ended
September 30,
2012
  Nine months
ended
September 30,
2012
 

Cash charges:

             

2012 charges for 2007 and prior initiatives

  $   $ 2  

2012 charges for 2009 initiatives

    1     5  

2012 charges for 2010 initiatives

        1  

2012 charges for 2011 initiatives

    5     9  

2012 charges for 2012 initiatives

    33     39  

Reversal of reserves no longer required

    (1 )   (14 )

Noncash charges

    9     10  
           

Total 2012 Restructuring, Impairment and Plant Closing Costs

  $ 47   $ 52  
           

2013 RESTRUCTURING ACTIVITIES

        During the nine months ended September 30, 2013, our Polyurethanes segment recorded charges of $3 million and reversed charges of $7 million related to workforce reductions in association with our program to reduce annualized fixed costs. Our Polyurethanes segment also recorded pension-related settlement charges of $7 million related to this program. We expect to incur additional charges of $1 million through September 2014 related to this initiative.

        During the nine months ended September 30, 2013, our Performance Products segment recorded charges of $12 million related primarily to workforce reductions in association with plans to refocus our surfactants business in Europe and $5 million primarily related to workforce reductions in our Australian operation.

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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)

        During the nine months ended September 30, 2013, our Advanced Materials segment recorded charges of $33 million primarily related to workforce reductions in association with our global transformational change program designed to improve the segment's manufacturing efficiencies, enhance commercial excellence and improve its long-term global competitiveness. Our Advanced Materials segment also recorded $1 million noncash charges for asset impairments and reversed charges of $4 million related to this initiative. We expect to incur additional charges of $4 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 business, 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 nine months ended September 30, 2013, our Textile Effects segment recorded charges of $35 million for the early termination of long-term fixed cost contracts, $10 million for decommissioning, $2 million for other restructuring and $1 million for workforce reductions, as well as recorded a $6 million noncash charge for a pension settlement loss. In addition, during the nine months ended September 30, 2013, we reversed charges of $4 million related to workforce reductions and reversed $4 million of reserves that were no longer required for long-term fixed cost contracts in relation to our consolidation of manufacturing activities and processes at our site in Basel, Switzerland. We expect to incur additional charges of $25 million through March 2014 also related to this initiative.

        During the nine months ended September 30, 2013, our Pigments segment recorded charges of $3 million primarily related to the closure of our Grimsby, U.K. plant.

        During the nine months ended September 30, 2013, our Corporate and other segment recorded charges of $11 million primarily related to workforce reductions in association with a reorganization of our global information technology organization.

2012 RESTRUCTURING ACTIVITIES

        During the nine months ended September 30, 2012, our Polyurethanes segment implemented a restructuring program to reduce annualized fixed costs. In connection with this program, we recorded restructuring expenses of $37 million during the nine months ended September 30, 2012 primarily for workforce reductions.

        During the nine months ended September 30, 2012, our Advanced Materials segment recorded charges of $6 million primarily related to the reorganization of our global business structure, the relocation of our divisional headquarters from Basel, Switzerland to The Woodlands, Texas and a redesign of our planning process focused on inventory reduction. In connection with the restructuring in Switzerland, we recorded a $3 million noncash charge related to a pension settlement loss.

        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 nine months ended September 30, 2012, we recorded charges of $5 million and a $2 million noncash charge for asset

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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)

impairments and a $5 million noncash charge for a pension settlement loss. In addition, during the nine months ended September 30, 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 nine months ended September 30, 2012, we reversed $14 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 nine months ended September 30, 2012, our Pigments segment recorded charges of $4 million related to the closure of our Grimsby, U.K. plant.

7. DEBT

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

Huntsman Corporation

 
  September 30,
2013
  December 31,
2012
 

Senior Credit Facilities:

             

Term loans

  $ 1,701   $ 1,565  

Amounts outstanding under A/R programs

    244     241  

Senior notes

    646     568  

Senior subordinated notes

    891     892  

HPS (China) debt

    42     94  

Variable interest entities

    256     270  

Other

    89     72  
           

Total debt—excluding debt to affiliates

  $ 3,869   $ 3,702  
           

Total current portion of debt

  $ 295   $ 288  

Long-term portion

    3,574     3,414  
           

Total debt—excluding debt to affiliates

  $ 3,869   $ 3,702  
           

Total debt—excluding debt to affiliates

  $ 3,869   $ 3,702  

Notes payable to affiliates-noncurrent

    5     4  
           

Total debt

  $ 3,874   $ 3,706  
           

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

7. DEBT (Continued)

Huntsman International

 
  September 30,
2013
  December 31,
2012
 

Senior Credit Facilities:

             

Term loans

  $ 1,701   $ 1,565  

Amounts outstanding under A/R programs

    244     241  

Senior notes

    646     568  

Senior subordinated notes

    891     892  

HPS (China) debt

    42     94  

Variable interest entities

    256     270  

Other

    89     72  
           

Total debt—excluding debt to affiliates

  $ 3,869   $ 3,702  
           

Total current portion of debt

  $ 295   $ 288  

Long-term portion

    3,574     3,414  
           

Total debt—excluding debt to affiliates

  $ 3,869   $ 3,702  
           

Total debt—excluding debt to affiliates

  $ 3,869   $ 3,702  

Notes payable to affiliates-current

    100     100  

Notes payable to affiliates-noncurrent

    777     599  
           

Total debt

  $ 4,746   $ 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.

Senior Credit Facilities

        As of September 30, 2013, our senior credit facilities ("Senior Credit Facilities") consisted of our revolving credit facility ("Revolving Facility"), our extended term loan B facility ("Extended Term

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

7. DEBT (Continued)

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     962     961   USD LIBOR plus 2.50%     2017  

Extended Term Loan B—Series 2

  NA     342     342   USD LIBOR plus 3.00%     2017  

Term Loan C

  NA     419     398   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 September 30, 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 September 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 Credit Agreement

        On October 15, 2013, Huntsman International entered into a tenth amendment to the agreement governing the Senior Credit Facilities (the "Credit Agreement"). The amendment, among other things, permits us to incur a senior secured term loan facility in an aggregate principal amount of $1.2 billion (the "New Term Loan") and to increase our Revolving Facility by up to $400 million to a total aggregate revolving credit facility of up to $800 million (the "Revolving Increase").

        We have entered into commitments with certain financial institutions to provide for the New Term Loan and provide for $200 million of the Revolving Increase. We intend to use the net proceeds of the New Term Loan, when funded, to pay the cash consideration related to Huntsman International's acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. If the acquisition is not consummated, we may use the net proceeds to refinance certain indebtedness of Huntsman International.

        The New Term Loan will mature on the seventh anniversary of the date such New Term Loan is funded and will amortize in aggregate annual amounts equal to 1% of the original principal amount of the New Term Loan, payable quarterly commencing with the first full fiscal quarter ended after the date the New Term Loan is funded. The Revolving Increase will mature on the same date as the Revolving Facility.

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

7. DEBT (Continued)

        On August 22, 2013, Huntsman International entered into a ninth amendment to the Credit Agreement. The amendment provided for additional term loans in the amount of $100 million, the net proceeds of which were used for general corporate purposes. The additional term loans have identical terms to our Extended Term Loan B.

        On March 11, 2013, Huntsman International entered into an eighth amendment to the Credit Agreement. 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 under our then outstanding term loan B facility and for general corporate purposes. The additional term loan was recorded at its carrying value of $224 million as of September 30, 2013. The additional term loan has identical terms to our Extended Term Loan B. In connection with this debt repayment, we recognized a loss on early extinguishment of debt of approximately $1 million.

A/R Programs

        Our U.S. accounts receivable securitization program ("U.S. A/R Program") and our European accounts receivable securitization program ("EU A/R Program" and, collectively with the U.S. A/R Program, our "A/R Programs") are structured so that we grant a participating undivided interest in certain of our trade receivables to a U.S. special purpose entity ("U.S. SPE") and a European special purpose entity ("EU SPE"). We retain the servicing rights and a retained interest in the securitized receivables. Information regarding the A/R Programs was as follows (monetary amounts in millions):

September 30, 2013
Facility
  Maturity   Maximum
Funding
Availability(1)
  Amount
Outstanding
  Interest
Rate(2)(3)

U.S. A/R Program

  April 2016   $250   $90(4)   Applicable rate plus 1.10%

EU A/R Program

  April 2016   €225
(approximately $304)
  €114
(approximately $154)
  Applicable rate plus 1.35%

(1)
The amount of actual availability under the A/R Programs may be lower based on the level of eligible receivables sold, changes in the credit ratings of our customers, customer concentration levels and certain characteristics of the accounts receivable being transferred, as defined in the applicable agreements.

(2)
Each interest rate is defined in the applicable agreements. In addition, the U.S. SPE and the EU SPE are obligated to pay unused commitment fees to the lenders based on the amount of each lender's commitment.

(3)
Applicable rate for the U.S. A/R Program is defined by the lender as USD LIBOR. Applicable rate for our EU A/R Program is either GBP LIBOR, USD LIBOR or EURIBOR.

(4)
As of September 30, 2013, we had approximately $7 million (U.S. dollar equivalents) of letters of credit issued and outstanding under our U.S. A/R Program.

        As of September 30, 2013, $594 million of accounts receivable were pledged as collateral under the A/R Programs.

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

7. DEBT (Continued)

Amendments to A/R Programs

        On April 29, 2013, Huntsman International entered into an amendment to the agreements governing its 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%.

        On April 29, 2013, Huntsman International entered into an amendment to the agreements governing its 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%.

Notes

        As of September 30, 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 ($541 carrying value)

        On March 4, 2013, pursuant to an indenture entered into on November 19, 2012, Huntsman International issued $250 million aggregate principal amount of additional 4.875% senior notes due 2020 (the "2020 Senior Notes"). The aggregate additional notes are recorded at carrying value of $246 million as of September 30, 2013. 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.

        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 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

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

7. DEBT (Continued)

equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase.

Redemption of Notes and Loss on Early Extinguishment of Debt

        During the nine months ended September 30, 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 September 30, 2013, Arabian Amines Company had $175 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 noncompliance 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 September 30, 2013, the amounts outstanding under these loan commitments were classified as current on our condensed consolidated balance sheets (unaudited).

Other Debt

        During the three months ended September 30, 2012, Huntsman Polyurethanes Shanghai Ltd., our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd ("HPS"), repaid RMB 213 million (approximately $35 million) on term loans and working capital loans under its secured facilities. During the nine months ended September 30, 2013, HPS repaid $2 million and RMB 293 million (approximately $48 million) on term loans and working capital loans under its secured facilities. As of September 30, 2013, HPS had $6 million and RMB 221 million (approximately $36 million) outstanding under its debt facilities.

Note Payable from Huntsman International to Huntsman Corporation

        As of September 30, 2013, we have a loan of $872 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 September 30, 2013 on our condensed consolidated balance sheets (unaudited). As of September 30, 2013, under the terms of the Intercompany Note,

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

7. DEBT (Continued)

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.

        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

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

7. DEBT (Continued)

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 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 September 30, 2013, we had approximately $243 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 September 30, 2013, the fair value of the hedge was $1 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

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

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

other comprehensive loss. We will pay a fixed 2.8% on the hedge and receive the one-month LIBOR rate. As of September 30, 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 September 30, 2013, the combined fair value of these two hedges was $3 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 September 30, 2013 was €42 million (approximately $57 million) and the derivative transactions do not qualify for hedge accounting. As of September 30, 2013, the fair value of this hedge was €1 million (approximately $2 million) and was recorded in other noncurrent liabilities on our condensed consolidated balance sheets (unaudited). For the three and nine months ended September 30, 2013, we recorded a reduction of interest expense of €1 million (approximately $1 million) 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 September 30, 2013 was $32 million, and the interest rate contract is not designated as a cash flow hedge. As of September 30, 2013, the fair value of the swap was $4 million and was recorded as other noncurrent liabilities on our condensed consolidated balance sheets (unaudited). For the three and nine months ended September 30, 2013, we recorded additional (reduction of) interest expense of nil and $(2) million each due to changes in fair value of the swap. As of September 30, 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

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

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 September 30, 2013, the fair value of this swap was $8 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.

        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 September 30, 2013, we have designated approximately €255 million (approximately $344 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the three and nine months ended September 30, 2013, the amount of loss recognized on the hedge of our net investment was $15 million and $10 million, respectively, and was recorded in other comprehensive income on our condensed consolidated statements of comprehensive income (unaudited). As of September 30, 2013, we had approximately €935 million (approximately $1,262 million) in net euro assets.

9. FAIR VALUE

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

 
  September 30, 2013   December 31, 2012  
 
  Carrying
Value
  Estimated
Fair Value
  Carrying
Value
  Estimated
Fair Value
 

Non-qualified employee benefit plan investments

  $ 18   $ 18   $ 14   $ 14  

Cross-currency interest rate contracts

    8     8     18     18  

Interest rate contracts

    (12 )   (12 )   (18 )   (18 )

Long-term debt (including current portion)

    (3,869 )   (3,948 )   (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).

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

9. FAIR VALUE (Continued)

        The fair value estimates presented herein are based on pertinent information available to management as of September 30, 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 September 30, 2013 and current estimates of fair value may differ significantly from the amounts presented herein.

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

 
   
  Fair Value Amounts Using  
Description
  September 30,
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

  $ 18   $ 18   $   $  

Derivatives:

                         

Cross-currency interest rate contracts(1)

    8         8      
                   

Total assets

  $ 26   $ 18   $ 8   $  
                   

Liabilities:

                         

Derivatives:

                         

Interest rate contracts(2)

  $ (12 ) $   $ (12 ) $  
                   

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

9. FAIR VALUE (Continued)


 
   
  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 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.

(3)
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the nine months ended September 30, 2013 and the year ended December 31, 2012.

        The following table shows a reconciliation of beginning and ending balances for the nine months ended September 30, 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 September 30, 2013

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

9. FAIR VALUE (Continued)

and 2012 and nine months ended September 30, 2013, there were no instruments categorized as Level 3 within the fair value hierarchy.

 
  Nine months
ended
September 30, 2012
 
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, September 30, 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 September 30, 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 nine months ended September 30, 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 value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. During the nine months ended September 30, 2013 and 2012, we recorded charges of $1 million and $2 million, respectively, for the impairment of long-lived assets.

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

10. EMPLOYEE BENEFIT PLANS

        Components of the net periodic benefit costs for the three and nine months ended September 30, 2013 and 2012 were as follows (dollars in millions):

Huntsman Corporation

 
  Defined
Benefit Plans
  Other
Postretirement
Benefit Plans
 
 
  Three months
ended
September 30,
  Three months
ended
September 30,
 
 
  2013   2012   2013   2012  

Service cost

  $ 18   $ 12   $ 1   $ 1  

Interest cost

    32     36     2     2  

Expected return on assets

    (44 )   (45 )        

Amortization of prior service benefit

    (1 )   (2 )   (1 )   (1 )

Amortization of actuarial loss

    19     11     1      

Special termination benefits

    2              

Settlement loss

    6     8          
                   

Net periodic benefit cost

  $ 32   $ 20   $ 3   $ 2  
                   

 

 
  Defined
Benefit Plans
  Other
Postretirement
Benefit Plans
 
 
  Nine months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Service cost

  $ 51   $ 43   $ 3   $ 3  

Interest cost

    97     109     4     5  

Expected return on assets

    (130 )   (136 )        

Amortization of prior service benefit

    (4 )   (6 )   (2 )   (2 )

Amortization of actuarial loss

    59     33     2     1  

Special termination benefits

    7              

Settlement loss

    6     8          
                   

Net periodic benefit cost

  $ 86   $ 51   $ 7   $ 7  
                   

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

10. EMPLOYEE BENEFIT PLANS (Continued)

Huntsman International

 
  Defined
Benefit Plans
  Other
Postretirement
Benefit Plans
 
 
  Three months
ended
September 30,
  Three months
ended
September 30,
 
 
  2013   2012   2013   2012  

Service cost

  $ 17   $ 12   $ 1   $ 1  

Interest cost

    32     36     2     2  

Expected return on assets

    (44 )   (45 )        

Amortization of prior service benefit

    (1 )   (2 )   (1 )   (1 )

Amortization of actuarial loss

    22     13     1      

Special termination benefits

    2              

Settlement loss

    6     8          
                   

Net periodic benefit cost

  $ 34   $ 22   $ 3   $ 2  
                   

 

 
  Defined
Benefit Plans
  Other
Postretirement
Benefit Plans
 
 
  Nine months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2013   2012   2013   2012  

Service cost

  $ 51   $ 43   $ 3   $ 3  

Interest cost

    97     109     4     5  

Expected return on assets

    (130 )   (136 )        

Amortization of prior service benefit

    (4 )   (6 )   (2 )   (2 )

Amortization of actuarial loss

    64     37     2     1  

Special termination benefits

    7              

Settlement loss

    6     8          
                   

Net periodic benefit cost

  $ 91   $ 55   $ 7   $ 7  
                   

        During the first quarter of 2012, certain U.K. pension plans were closed to new entrants. For existing participants, benefits will only grow as a result of increases in pay. Defined contribution plans were established to replace these pension plans for future benefit accruals. This change did not have a significant impact on our pension liability.

        During 2012, a certain U.S. pension plan formula was converted from an average pay design to a cash balance plan design. The existing defined contribution plan match was enhanced to offset this reduction in benefits. In connection with this plan change, we reduced our pension liability by approximately $23 million with a corresponding offset to other comprehensive income during the nine months ended September 30, 2012.

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

10. EMPLOYEE BENEFIT PLANS (Continued)

        During the nine months ended September 30, 2013 and 2012, we made contributions to our pension and other postretirement benefit plans of $130 million and $124 million, respectively. During the remainder of 2013, we expect to contribute an additional amount of approximately $36 million to these plans.

        In connection with employee terminations in Switzerland related to restructuring programs, we recorded a noncash pension settlement loss of $6 million in the third quarter of 2013.

11. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY

COMMON STOCK DIVIDENDS

        On each of September 30, June 28 and March 29, 2013, we paid cash dividends of $30 million, or $0.125 per share, to common stockholders of record as of September 23, June 14 and March 15, 2013. On each of September 28, June 29 and March 30, 2012, we paid cash dividends of $24 million, or $0.10 per share, to common stockholders of record as of September 14, June 15 and March 15, 2012.

12. OTHER COMPREHENSIVE INCOME

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

Huntsman Corporation

 
  Foreign
currency
translation
adjustment(a)
  Pension
and other
postretirement
benefits
adjustments,
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, 2013

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

Other comprehensive (loss) income before reclassifications

    (44 )   22     2     3     (17 )   1     (16 )

Amounts reclassified from accumulated other comprehensive loss(c)

        46             46         46  
                               

Net current-period other comprehensive (loss) income

    (44 )   68     2     3     29     1     30  
                               

Ending balance, September 30, 2013

  $ 225   $ (968 ) $ 9   $ 6   $ (728 ) $ 14   $ (714 )
                               

(a)
Amounts are net of tax of $18 and $20 as of September 30, 2013 and January 1, 2013, respectively.

(b)
Amounts are net of tax of $176 and $197 as of September 30, 2013 and January 1, 2013, 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 INCOME (Continued)

 
  Foreign
currency
translation
adjustment(a)
  Pension
and other
postretirement
benefits
adjustments,
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

    25     27     (1 )   (1 )   50     (2 )   48  

Amounts reclassified from accumulated other comprehensive loss(c)

        28             28         28  
                               

Net current-period other comprehensive income (loss)

    25     55     (1 )   (1 )   78     (2 )   76  
                               

Ending balance, September 30, 2012

  $ 243   $ (745 ) $ 7   $ 2   $ (493 ) $ 10   $ (483 )
                               

(a)
Amounts are net of tax of $23 and $24 as of September 30, 2012 and January 1, 2012, respectively.

(b)
Amounts are net of tax of $109 and $124 as of September 30, 2012 and January 1, 2012, respectively.

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

 
  Three months ended
September 30, 2013
  Nine months ended
September 30, 2013
   
 
  Affected line item
in the statement
where net income
is presented
Details about Accumulated Other
Comprehensive Loss Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Amount reclassified from
accumulated other
comprehensive loss

Amortization of pension and other postretirement benefits:

               

Prior service credit

  $ (2 ) $ (6 ) (b)

Actuarial loss

    20     61   (b)(c)

Settlement loss

    6     6   (b)
             

    24     61   Total before tax

    (6 )   (15 ) Income tax expense
             

Total reclassifications for the period

  $ 18   $ 46   Net of tax
             

 

 
  Three months ended
September 30, 2012
  Nine months ended
September 30, 2012
   
 
  Affected line item
in the statement
where net income
is presented
Details about Accumulated Other
Comprehensive Loss Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Amount reclassified from
accumulated other
comprehensive loss

Amortization of pension and other postretirement benefits:

               

Prior service credit

  $ (3 ) $ (8 ) (b)

Actuarial loss

    11     34   (b)(c)

Settlement loss

    8     8   (b)
             

    16     34   Total before tax

    (2 )   (6 ) Income tax expense
             

Total reclassifications for the period

  $ 14   $ 28   Net of tax
             

(a)
Pension and other postretirement benefits 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 each of actuarial losses related to discontinued operations for the three months ended September 30, 2013 and 2012, and $5 million and $3 million for the nine months ended September 30, 2013 and 2012, respectively.

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

12. OTHER COMPREHENSIVE INCOME (Continued)

Huntsman International

 
  Foreign
currency
translation
adjustment(a)
  Pension
and other
postretirement
benefits
adjustments,
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

    (44 )   22     2     3     (17 )   1     (16 )

Amounts reclassified from accumulated other comprehensive loss(c)

        49             49         49  
                               

Net current-period other comprehensive (loss) income

    (44 )   71     2     3     32     1     33  
                               

Ending balance, September 30, 2013

  $ 224   $ (1,005 ) $ 9   $   $ (772 ) $ 14   $ (758 )
                               

(a)
Amounts are net of tax of $5 and $7 as of September 30, 2013 and January 1, 2013, respectively.

(b)
Amounts are net of tax of $206 and $228 as of September 30, 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
adjustments,
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

    25     27     (1 )       51     (2 )   49  

Amounts reclassified from accumulated other comprehensive loss(c)

        31             31         31  
                               

Net current-period other comprehensive income (loss)

    25     58     (1 )       82     (2 )   80  
                               

Ending balance, September 30, 2012

  $ 242   $ (787 ) $ 7   $ (3 ) $ (541 ) $ 10   $ (531 )
                               

(a)
Amounts are net of tax of $10 and $11 as of September 30, 2012 and January 1, 2012, respectively.

(b)
Amounts are net of tax of $140 and $156 as of September 30, 2012 and January 1, 2012, respectively.

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

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12. OTHER COMPREHENSIVE INCOME (Continued)

 
  Three months ended
September 30, 2013
  Nine months ended
September 30, 2013
   
 
  Affected line item
in the statement
where net income
is presented
Details about Accumulated Other
Comprehensive Loss Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Amount reclassified from
accumulated other
comprehensive loss

Amortization of pension and other postretirement benefits:

               

Prior service credit

  $ (2 ) $ (6 ) (b)

Actuarial loss

    23     66   (b)(c)

Settlement loss

    6     6   (b)
             

    27     66   Total before tax

    (8 )   (17 ) Income tax expense
             

Total reclassifications for the period

  $ 19   $ 49   Net of tax
             

 

 
  Three months ended
September 30, 2012
  Nine months ended
September 30, 2012
   
 
  Affected line item
in the statement
where net income
is presented
Details about Accumulated Other
Comprehensive Loss Components(a):
  Amount reclassified from
accumulated other
comprehensive loss
  Amount reclassified from
accumulated other
comprehensive loss

Amortization of pension and other postretirement benefits:

               

Prior service credit

  $ (3 ) $ (8 ) (b)

Actuarial loss

    13     38   (b)(c)

Settlement loss

    8     8   (b)
             

    18     38   Total before tax

    (3 )   (7 ) Income tax benefit (expense)
             

Total reclassifications for the period

  $ 15   $ 31   Net of tax
             

(a)
Pension and other postretirement benefits 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 each of actuarial losses related to discontinued operations for the three months ended September 30, 2013 and 2012, and $5 million and $3 million for the nine months ended September 30, 2013 and 2012, respectively.

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 specific information about the amount of damages being sought, 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.

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13. COMMITMENTS AND CONTINGENCIES (Continued)

        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. The prior owner accepts 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 indemnifying party, all of which have been accepted by the indemnifying party.

 
  Nine months
ended
September 30,
 
 
  2013   2012  

Unresolved at beginning of period

    1,080     1,080  

Tendered during period

    6     3  

Resolved during period(1)

    13     2  

Unresolved at end of period

    1,073     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 September 30, 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 September 30, 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

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13. COMMITMENTS AND CONTINGENCIES (Continued)

cases. The following table presents for the periods indicated certain information about these cases. 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.

 
  Nine months
ended
September 30,
 
 
  2013   2012  

Unresolved at beginning of period

    50     36  

Filed during period

    2     8  

Resolved during period

    2     3  

Unresolved at end of period

    50     41  

        We paid gross settlement costs for asbestos exposure cases that are not subject to indemnification of $48,000 and $82,000 during the nine months ended September 30, 2013 and 2012, respectively. As of September 30, 2013, we had an accrual of $375,000 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 September 30, 2013.

Antitrust Matters

        We have been named as a defendant in consolidated 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 other defendants named in this matter are DuPont, Kronos and Cristal (formerly 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.

        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.

        We and all other defendants have agreed to settle the Direct Purchasers litigation. A hearing to consider final approval of the settlement is scheduled for November 25, 2013. We have fully accrued for the settlement with the Direct Purchasers. The settlement does not resolve the Indirect Purchasers litigation and, while it is difficult to reasonably estimate any loss or range of loss associated with these kinds of complex claims, we do not believe that costs related to the Indirect Purchasers litigation will be material to our consolidated financial statements. No accrual has been made for the Indirect Purchasers litigation.

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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 $207 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 $153 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 our range of possible loss in this matter is between €0 and €113 million, and we 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 have appealed 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, operate, maintain and repair pollution control equipment. For the nine months ended September 30, 2013 and 2012, our capital expenditures for EHS matters totaled $53 million and $61 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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14. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

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 in the U.S. 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 several companies, including 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") in the U.S. 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 Environment 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 September 30, 2013, we had an accrued liability of approximately $25 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 required for the clean up.

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

14. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

        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, 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 $29 million and $34 million for environmental liabilities as of September 30, 2013 and December 31, 2012, respectively. Of these amounts, $1 million and $10 million were classified as accrued liabilities in our consolidated balance sheets as of September 30, 2013 and December 31, 2012, respectively, and $28 million and $24 million were classified as other noncurrent liabilities in our consolidated balance sheets as of September 30, 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, our first phase registrations by the November 30, 2010 deadline and our second phase registrations by the May 31, 2013 deadline. While we continue our registration efforts

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14. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

to meet the next registration deadline of May 31, 2018, 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 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 the price for carbon credit allowances 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 has had a financial impact on our operations by increasing our operating costs, specifically with regards to steam, electricity, oxygen and nitrogen. 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. Significant expansions of our existing facilities or construction of new facilities may be subject to the Clean Air Act's (the "CAA") Prevention of Significant Deterioration requirements under the EPA's GHG "Tailoring Rule." Some of our facilities are also subject to the EPA's Mandatory Reporting of Greenhouse Gases rule, and any further regulation 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.

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14. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

        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 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 o