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2013
annual
report
3/13/14 8:05 PM
FIVFIVe de dIIststIInct nct
busbusIness dIVI
Iness dIVIssIIonsons
We are a global leader in the manufacture of MDI-based
POLYURETHANES We are a global leader in the manufacture of MDI-based
polyurethanes used to produce energy-saving insulation; comfort foam for
polyurethanes used to produce energy-saving insulation; comfort foam for
automotive seating, bedding and furniture; adhesives; coatings; elastomers for
automotive seating, bedding and furniture; adhesives; coatings; elastomers for
footwear; and composite wood products.
footwear; and composite wood products.
We manufacture products primarily based on
PERFORMANCE PRODUCTS We manufacture products primarily based on
amines, carbonates, surfactants and maleic anhydride. End uses include epoxy
amines, carbonates, surfactants and maleic anhydride. End uses include epoxy
curing agents, oil drilling, agrochemicals, household detergents and personal
curing agents, oil drilling, agrochemicals, household detergents and personal
care products.
care products.
Our technologically advanced epoxy, acrylic and
ADVANCED MATERIALS Our technologically advanced epoxy, acrylic and
polyurethane-based polymer products are replacing traditional materials in
polyurethane-based polymer products are replacing traditional materials in
aircraft, automobiles and electrical power transmission. Our products are also
aircraft, automobiles and electrical power transmission. Our products are also
used in coatings, construction materials, circuit boards and sports equipment.
used in coatings, construction materials, circuit boards and sports equipment.
We are a major global solutions provider for textile dyes and
TEXTILE EFFECTS We are a major global solutions provider for textile dyes and
chemicals that enhance color and improve performance such as wrinkle
chemicals that enhance color and improve performance such as wrinkle
resistance, UV-blocking and the ability to repel water and stains in apparel,
resistance, UV-blocking and the ability to repel water and stains in apparel,
home and technical textiles.
home and technical textiles.
We manufacture and market titanium dioxide—a white pigment that
PIgMENTS We manufacture and market titanium dioxide—a white pigment that
provides whiteness, opacity and brightness to thousands of everyday items
provides whiteness, opacity and brightness to thousands of everyday items
including paints, plastics, paper, inks, food and personal care products.
including paints, plastics, paper, inks, food and personal care products.
40329_CV.indd 2
Dear Fellow
StockholDerS,
2013 was a remarkable year for Huntsman Corporation. Our non-
The third area of focus and value delivery will be the
Pigments business achieved a level of earnings that was not only
acquisition of Rockwood Holdings’ Performance Additives and
the highest in our history, but also the most widely distributed
Titanium Dioxide businesses. We expect to close on this trans-
among our various geographies and chemistries. Most all of our
action in the first half of 2014. We have identified $130 million of
products grew in margin and volume from the previous year, and
synergies that will come to our pigments group over the next two
as we look into 2014, we move forward with confidence that all
years. This acquisition will allow us to participate in a much
our divisions will perform better than the previous year.
broader pigments industry and make us the largest color and white
This past year, many of the broad global economic indica-
pigments company in the world. It is our expectation that we will
tors around the world were not favorable. However, for Huntsman
take this newly formed company public within two years at a time
Corporation, it was the culmination of effort and planning that
when we can maximize shareholder value and strengthen our
started a couple of years ago. We committed to deliver greater
balance sheet.
shareholder value by controlling the variables that we can control.
Between these three initiatives, we will see our margins
These efforts will continue through 2014, but this past year’s
increase, our manufacturing base expand and the number of
results certainly benefited from this focus.
products and markets we are serving grow further.
In the area of controlling our costs, we are approximately
Importantly, 2013 marked the best year for our safety and
75 percent complete with a business reorganization that will
environmental performance. We operate well below the industry
improve our earnings by approximately $250 million. We have
average and remain committed to continuous improvement in
relocated manufacturing to countries such as Thailand, China
these two areas. While I am excited about our expanding chemis-
and Mexico where many of our customers are expanding. We
try, I am far more enthusiastic to be part of a company of over
have invested in our manufacturing assets and increased the
12,000 associates whose creativity and energy provide the
production of more specialty product grades in locations such as
industry’s best service and make Huntsman a globally recognized
the United States, across Europe, Singapore and China. We are
leader. At the end of the day, we are not about chemistry as
expanding our technical and research capabilities in the United
much as we are about people working together to create an ever-
States and China to take advantage of growing economies and
improving company. We are deeply appreciative of your investment
new product development and are adding capacity in the United
and support. We finished 2013 having created significant stock
States to take advantage of lower-cost energy and raw materials.
market value and strong earnings. As I look to the coming years,
Our second area of focus is the expansion of our core
I can’t think of another time in our company’s history when we
business through “bolt-on” acquisitions. Over the past two years,
had more opportunity than we do today.
we have acquired businesses or formed joint ventures in the
Thank you again for your support.
United States, Japan, China, Russia, Turkey, Germany and Saudi
Arabia. All of these acquisitions provide a means to move further
downstream into more differentiated applications. In short, this
will create greater shareholder value. In 2013, we earned over
$50 million from these efforts. Over the next several years, our
acquisitions and ventures will add over $350 million of additional
Peter r. Huntsman
President and Chief executive Officer
EBITDA to our company.
February 27, 2014
Huntsman COrPOratiOn 1
40329_PRcx.indd 1
3/13/14 8:22 PM
Special Note
to StockholDerS
I am honored to serve Huntsman Corporation in the capacity of
outstanding and hands-on Board of Directors, we will continue to
Executive Chairman. I founded this company 44 years ago, start-
provide prudent oversight of opportunities to enhance long-term
ing with a single manufacturing site and expanding it through a
shareholder value. For example, our agreement to acquire the
strategic growth plan into the world-class chemical business it is
Rockwood Holdings, Inc. business segments will augment the
today, with assets of $9 billion, revenues of $11 billion, more
value of our portfolio and open the door to a range of future
than 12,000 associates and a global footprint that is the envy of
opportunities.
the industry.
The Board of Directors joins me in placing full trust and
Our company achieved impressive earnings this past year,
confidence in our CEO, Peter Huntsman. He is recognized globally
reflecting our ongoing commitment to maximize product quality.
as one of the most capable leaders in our industry.
The majority of Huntsman Corporation’s earnings came from
Thank you for your investment, and be assured that we will
divisions of our business that are inherently less volatile and have
strive to enhance shareholder value and safety as our highest
higher underlying growth characteristics. Indicative of our confi-
priorities.
dence in the strong earnings profile of the business, the board
authorized a 25 percent increase in the quarterly dividend rate
in 2013.
As the largest shareholder of the company, my economic
interests are uniquely aligned with yours. This past year, including
dividends received, the value of our investment in Huntsman
Corporation increased approximately 60 percent. I believe the
JOn m. Huntsman
executive Chairman and Founder
full value of our company has yet to be realized. Together with an
February 27, 2014
2 Huntsman COrPOratiOn
40329_PRcx.indd 2
3/13/14 8:22 PM
FiNaNcial
highlightS
In millions
revenues
Gross profit
interest expense, net
net income
adjusted net income (1)
adjusted eBitDa(1)
Capital expenditures (2)
In millions
total assets
net debt(3)
Year ended December 31,
2013
2012
2011
$ 11,079
$ 11,187
$ 11,221
$ 1,753
$ 2,034
$ 1,840
$
$
$
190
149
390
$
$
$
226
373
577
$
$
$
249
254
432
$ 1,213
$ 1,439
$ 1,245
$
471
$
412
$
327
December 31,
2013
2012
2011
$ 9,188
$ 8,884
$ 8,657
$ 3,381
$ 3,306
$ 3,380
REVENUES BY DIVISION(4)
ADJUSTED EDITDA BY DIVISION(4)
44%
Polyurethanes
7%
Textile Effects
53%
Polyurethanes
27%
Performance
Products
11%
Pigments
11%
Advanced
Materials
1%
Textile Effects
8%
Pigments
9%
Advanced
Materials
29%
Performance
Products
(1) For a reconciliation see pages 9–10 of the Financials section.
(2) Net of reimbursement of $3 million in 2011.
(3) Net debt calculated as total debt excluding affiliates less cash.
(4) Segment allocation before corporate and other unallocated items.
Huntsman COrPOratiOn 3
40329_PRcx.indd 3
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40329_PRcx.indd 4
3/13/14 8:22 PM
Each capitalized term used without definition in this report has the meaning specified in the
Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the
Securities and Exchange Commission on February 11, 2014.
DEFINITIONS
SELECTED FINANCIAL DATA
The selected historical financial data set forth below presents our historical financial data as of and
for the dates and periods indicated. You should read the selected financial data in conjunction with
‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and our
consolidated financial statements and accompanying notes.
Statements of Operations Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
Restructuring, impairment and plant closing costs
. . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Expenses) income associated with the terminated merger and related
litigation(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . .
(Loss) income from discontinued operations, net of tax(b) . . . . . . . . .
Extraordinary gain (loss) on the acquisition of a business, net of tax of
nil(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . . . . . . . . . . . . .
Basic income (loss) per common share:
Income (loss) from continuing operations attributable to Huntsman
Year ended December 31,
2013
2012
2011
2010
2009
(in millions, except per share amounts)
$11,079
1,753
151
510
$11,187
2,034
92
845
$11,221
1,840
167
606
$9,250
1,461
29
410
$7,665
1,078
88
13
—
154
(5)
—
149
128
—
378
(7)
2
373
363
—
251
(1)
4
254
247
(4)
(9)
42
(1)
32
27
835
125
(19)
6
112
114
Corporation common stockholders . . . . . . . . . . . . . . . . . . . . . . .
$
0.55
$
1.55
$
1.03
$ (0.06)
$ 0.54
(Loss) income from discontinued operations attributable to Huntsman
Corporation common stockholders, net of tax(b) . . . . . . . . . . . . . .
(0.02)
(0.03)
—
0.17
(0.08)
Extraordinary gain on the acquisition of a business attributable to
Huntsman Corporation common stockholders, net of tax(c)
. . . . . .
Net income attributable to Huntsman Corporation common
—
0.01
0.01
—
0.03
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.53
$
1.53
$
1.04
$ 0.11
$ 0.49
Diluted income (loss) per common share:
Income (loss) from continuing operations attributable to Huntsman
Corporation common stockholders . . . . . . . . . . . . . . . . . . . . . . .
$
0.55
$
1.53
$
1.01
$ (0.06)
$ 0.53
(Loss) income from discontinued operations attributable to Huntsman
Corporation common stockholders, net of tax(b) . . . . . . . . . . . . . .
(0.02)
(0.03)
—
0.17
(0.08)
Extraordinary gain on the acquisition of a business attributable to
Huntsman Corporation common stockholders, net of tax(c)
. . . . . .
—
0.01
0.01
—
0.03
Net income attributable to Huntsman Corporation common
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.53
Other Data:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Data (at period end):
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
448
471
0.50
$ 9,188
3,916
7,059
$
$
$
$
1.51
432
412
0.40
439
330
0.40
$ 8,884
3,706
6,988
$ 8,657
3,946
6,881
1.02
$ 0.11
$ 0.48
$ 405
236
0.40
$8,714
4,150
6,864
$ 442
189
0.40
$8,626
4,217
6,761
(a)
In connection with a 2009 litigation settlement related to a terminated merger, we recognized a gain of $835 million
in 2009 and related expenses of $4 million in 2010.
5
(b)
(Loss) income from discontinued operations represents the operating results, fire insurance settlement gains and loss
on disposal of our former Australian styrenics business, our former U.S. base chemicals business, our former North
American polymers business, our former European base chemicals and polymers business and our former TDI
business. The U.S. base chemicals business was sold on November 5, 2007, the North American polymers business
was sold on August 1, 2007, the European base chemicals and polymers business was sold on December 29, 2006
and the TDI business was sold on July 6, 2005.
(c) The extraordinary gain (loss) on the acquisition of a business relates to the June 30, 2006 acquisition of our Textile
Effects segment. See ‘‘Note 3. Business Combinations and Dispositions—Textile Effects Acquisition’’ to our
consolidated financial statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
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, epoxy-based polymer formulations, textile chemicals, dyes, maleic anhydride and titanium
dioxide. Our administrative, research and development and manufacturing operations are primarily
conducted at the facilities located in 30 countries. We employed approximately 12,000 associates
worldwide at December 31, 2013.
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 have sold or shutdown
substantially all of our former Australian styrenics operations and our North American polymers and
base chemicals operations. We report the results from these businesses as discontinued operations.
Growth in our Polyurethanes and Advanced Materials segments has been driven by the continued
substitution of our products for other materials across a broad range of applications, as well as by the
level of global economic activity. Historically, demand for many of these products has grown at rates in
excess of GDP growth. In Polyurethanes, this growth, driven largely by Asia, has in recent years
resulted in improved demand and higher industry capacity utilization rates for many of our key
products, including MDI. MDI does, however, experience some seasonality in its sales reflecting its
exposure to seasonal construction related end markets. Sales generally peak during the spring and
summer months in the northern hemisphere, resulting in greater sales volumes during the second and
third quarters of the year.
In our Performance Products segment, demand for our performance specialties has generally
continued to grow at rates in excess of GDP as overall demand is significantly influenced by new
product and application development. Demand for most of our performance intermediates has grown
in line with GDP growth. Over time, demand for maleic anhydride has generally grown at rates that
slightly exceed GDP growth. However, given its dependence on the UPR market, which is influenced
by construction end markets, maleic anhydride demand can be cyclical.
Demand in our Textile Effects segment is driven primarily by consumer activity. Consumer
spending for goods incorporating our Textile Effects products is impacted significantly by a wide range
of economic factors, including personal incomes, housing and energy prices and other highly volatile
factors. Accordingly, demand for our Textile Effects products has been volatile and appears likely to
remain volatile.
6
Historically, demand for titanium dioxide pigments has grown at rates approximately equal to
global GDP growth. Pigment prices have historically reflected industry-wide operating rates but have
typically lagged behind movements in these rates by up to twelve months due to the effects of product
stocking and destocking by customers and producers, contract arrangements and seasonality. The
industry experiences some seasonality in its sales because sales of paints, the largest end use for
titanium dioxide, generally peak during the spring and summer months in the northern hemisphere.
This results in greater sales volumes in the second and third quarters of the year.
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, subject to certain purchase price adjustments, and the assumption of certain unfunded pension
liabilities estimated at $225 million 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.
For further information regarding sales price and demand trends, see ‘‘Results of Operations—
Segment Analysis—Year Ended December 31, 2013 Compared to Year Ended December 31, 2012’’ and
the tables captioned ‘‘Year ended December 31, 2013 vs. 2012, Period-Over-Period Increase
(Decrease)’’ and ‘‘Fourth Quarter 2013 vs. Third Quarter 2013, Period-Over-Period Increase
(Decrease)’’ below.
OUTLOOK
We expect to close on the acquisition of Rockwood Holdings, Inc.’s Performance Additives and
Titanium Dioxide businesses during the first half of 2014 and remain confident in our ability to deliver
significant synergies.
We continue to see the benefit of our ongoing restructuring efforts and we believe that these
efforts will yield significant future annual EBITDA benefits. We are investing for long term growth and
are progressing well with the previously disclosed projects that we believe will yield significant future
annual EBITDA benefits.
Polyurethanes:
(cid:127) MDI demand strong in U.S. and Asia, modest in Europe
(cid:127) Improving sales price leverage
(cid:127) Higher raw material costs (notably benzene)
Performance Products:
(cid:127) Improving amines sales volumes and margins
(cid:127) U.S. Gulf Coast raw material cost advantage
(cid:127) Increased margin pressure on European home and personal care surfactants, full European
restructuring benefits in 2015
Advanced Materials:
(cid:127) Restructuring benefit
(cid:127) Strong aerospace market
(cid:127) Weak base liquid resin epoxy market
7
Textile Effects:
(cid:127) Reorganization and restructuring benefit
(cid:127) Continued growth in key countries above underlying market demand
(cid:127) Higher raw materials costs
Pigments:
(cid:127) Favorable ilmenite raw material advantage versus traditional chloride ores
(cid:127) Improving sales volumes and selling prices
(cid:127) Agreement for strategic acquisition of the Performance Additives and Titanium Dioxide
businesses of Rockwood Holdings, Inc.
We expect to spend approximately $500 million in 2014 on capital expenditures, net of
reimbursements, for growth initiatives and maintenance, excluding any amounts associated with the
planned acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood
Holdings, Inc.
We expect our full year 2014 adjusted effective tax rate to be approximately 35%, excluding the
impact of the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood
Holdings, Inc. We believe our long-term effective income tax rate will be approximately 30%.
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. for approximately $1.1 billion
in cash, subject to certain purchase price adjustments, and the assumption of certain unfunded pension
liabilities estimated at $225 million 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.
8
RESULTS OF OPERATIONS
The following table sets forth our consolidated results of operations for the years ended
December 31, 2013, 2012 and 2011 (dollars in millions, except per share amounts).
Year ended December 31,
Percent Change
2013
2012
2011
2013 vs. 2012
2012 vs. 2011
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,079
9,326
$11,187
9,153
$11,221
9,381
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . . .
1,753
1,092
151
2,034
1,097
92
1,840
1,067
167
(1)%
2%
(14)%
—
64%
(40)%
(16)%
14%
(36)%
100%
(49)%
(26)%
(59)%
(29)%
NM
(60)%
110%
(65)%
(16)%
(26)%
(33)%
4%
(25)%
—
(2)%
11%
3%
(45)%
39%
(9)%
(13)%
NM
(50)%
52%
55%
51%
600%
(50)%
47%
43%
47%
(9)%
55%
(40)%
(2)%
14%
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net
. . . . . . . . . . . . . . . . . . . . . . . . .
Equity in income of investment in unconsolidated affiliates
Loss on early extinguishment of debt
. . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations
. . . . . . . . . . . . . . .
Loss from discontinued operations, net of tax . . . . . . . . .
Extraordinary gain on the acquisition of a business, net of
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
tax of nil
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . .
Net income attributable to Huntsman Corporation . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net
Income tax expense from continuing operations
. . . . . . .
Income tax benefit from discontinued operations . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .
EBITDA(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reconciliation of EBITDA to adjusted EBITDA:
EBITDA(1)
Acquisition expenses and purchase accounting inventory
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on initial consolidation of subsidiaries . . . . . .
EBITDA from discontinued operations . . . . . . . . . . . . .
Gain on disposition of businesses/assets . . . . . . . . . . . . .
Loss on early extinguishment of debt
. . . . . . . . . . . . . .
Extraordinary gain on the acquisition of a business . . . . .
Certain legal settlements and related expenses . . . . . . . .
Amortization of pension and postretirement actuarial
losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing and transition
costs(3):
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . .
510
(190)
8
(51)
2
279
(125)
154
(5)
—
149
(21)
128
190
125
(2)
448
845
(226)
7
(80)
1
547
(169)
378
(7)
2
373
(10)
363
226
169
(3)
432
606
(249)
8
(7)
2
360
(109)
251
(1)
4
254
(7)
247
249
109
(5)
439
$
$
889
$ 1,187
$ 1,039
889
$ 1,187
$ 1,039
21
—
5
—
51
—
9
74
2
18
34
87
4
19
5
4
5
(3)
80
(2)
11
43
38
1
38
26
4
2
5
(12)
6
(40)
7
(4)
46
31
—
—
20
135
10
2
167
Total restructuring, impairment and plant closing and
transition costs(3) . . . . . . . . . . . . . . . . . . . . . . .
164
109
Adjusted EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,213
$ 1,439
$ 1,245
Net cash provided by operating activities . . . . . . . . . . . .
Net cash used in investing activities
. . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . .
$
708
(566)
(6)
$
774
(471)
(473)
$
365
(280)
(490)
(9)%
20%
(99)%
112%
68%
(3)%
9
Reconciliation of net income to adjusted net income:
Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition expenses and purchase accounting inventory adjustments, net of tax of $(5),
$(1) and $(1) in 2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on initial consolidation of subsidiaries, net of tax of nil, nil and $2 in 2013,
2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from discontinued operations, net of tax of $(2), $(3) and $(5) in 2013, 2012 and
2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount amortization on settlement financing, net of tax of $(3), $(11) and $(10) in
2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on disposition of businesses/assets, net of tax of nil, nil and $3 in 2013, 2012 and
2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt, net of tax of $(19), $(29) and $(3) in 2013, 2012
and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary gain on the acquisition of a business, net of tax of nil for 2013, 2012 and
2011 each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain legal settlements and related expenses, net of tax of $(2), $(4) and $(17) in
2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of pension and postretirement actuarial losses, net of tax of $(20), $(8)
and $(7) in 2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing and transition costs(3), net of tax of $(22),
$(18) and $(11) in 2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31,
2013
2012
2011
$ 128
$ 363
$ 247
16
—
5
6
—
32
—
7
54
142
4
4
7
20
(3)
51
(2)
7
35
91
4
(10)
1
18
(37)
4
(4)
29
24
156
Adjusted net income(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 390
$ 577
$ 432
Weighted average shares-basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares-diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239.7
242.4
237.6
240.6
237.6
241.7
Net income per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.53
0.53
$ 1.53
1.51
$ 1.04
1.02
Other non-GAAP measures:
Adjusted income per share(2):
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1.63
1.61
$ 2.43
2.40
$ 1.82
1.79
NM—Not meaningful
(1) EBITDA is defined as net income attributable to Huntsman Corporation before interest, income taxes,
depreciation and amortization. Because EBITDA excludes these items, EBITDA provides an indicator of
general economic performance that is not affected by debt restructurings, fluctuations in interest rates or
effective tax rates, or levels of depreciation and amortization. Adjusted EBITDA is computed by eliminating
the following from EBITDA: (a) acquisition expenses and purchase accounting inventory adjustments; (b) loss
(gain) on initial consolidation of subsidiaries; (c) EBITDA from discontinued operations; (d) gain on
disposition of businesses/assets; (e) loss on early extinguishment of debt; (f) extraordinary gain on the
acquisition of a business; (g) certain legal settlements and related expenses; (h) amortization of pension and
postretirement actuarial losses; and (i) restructuring, impairment, plant closing and transition costs. We
believe that net income attributable to Huntsman Corporation is the performance measure calculated and
presented in accordance with GAAP that is most directly comparable to EBITDA and adjusted EBITDA.
We believe that EBITDA and adjusted EBITDA supplement an investor’s understanding of our financial
performance. However, these measures should not be considered in isolation or viewed as substitutes for net
income attributable to Huntsman Corporation or other measures of performance determined in accordance
with GAAP. Moreover, EBITDA and adjusted EBITDA as used herein are not necessarily comparable to
other similarly titled measures of other companies due to potential inconsistencies in the methods of
calculation. Our management believes these measures are useful to compare general operating performance
from period to period and to make certain related management decisions. EBITDA and adjusted EBITDA
are also used by securities analysts, lenders and others in their evaluation of different companies because they
exclude certain items that can vary widely across different industries or among companies within the same
industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels
10
and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among
companies. In addition, the tax positions of companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As
a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies
employ productive assets of different ages and utilize different methods of acquiring and depreciating such
assets. This can result in considerable variability in the relative costs of productive assets and the depreciation
and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of
EBITDA and adjusted EBITDA in the evaluation of our Company as compared to net income attributable to
Huntsman Corporation, which reflects overall financial performance. For example, we have borrowed money
in order to finance our operations and interest expense is a necessary element of our costs and ability to
generate revenue. Our management compensates for the limitations of using EBITDA and adjusted EBITDA
by using these measures to supplement GAAP results to provide a more complete understanding of the
factors and trends affecting the business rather than GAAP results alone.
In addition to the limitations noted above, adjusted EBITDA excludes items that may be recurring in nature
and should not be disregarded in the evaluation of performance. However, we believe it is useful to exclude
such items to provide a supplemental analysis of current results and trends compared to other periods
because certain excluded items can vary significantly depending on specific underlying transactions or events,
and the variability of such items may not relate specifically to ongoing operating results or trends and certain
excluded items, while potentially recurring in future periods, may not be indicative of future results. For
example, while EBITDA from discontinued operations is a recurring item, it is not indicative of ongoing
operating results and trends or future results.
Beginning in 2013, we began to exclude the amortization of actuarial gains and losses associated with pension
and postretirement benefits from adjusted EBITDA, adjusted net income (loss), adjusted net income (loss)
attributable to Huntsman Corporation and adjusted diluted income (loss) per share. The amortization of
actuarial gains and losses associated with pension and postretirement benefits arises from changes in actuarial
assumptions and the difference between actual and expected returns on plan assets, and not from our normal,
or ‘‘core,’’ operations. There is diversity in accounting for these actuarial gains and losses within our industry,
and we believe that removing these gains and losses provides management and investors greater transparency
into the operational results of our businesses and enhances period-over-period comparability. The service cost,
amortization of prior service cost (benefit), interest cost and expected return on plan assets components of
our periodic pension and postretirement benefit costs (income) will continue to be included in adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) attributable to Huntsman Corporation and
adjusted diluted income (loss) per share. Included within adjusted EBITDA for Huntsman Corporation for
2013, 2012 and 2011 are pension and postretirement benefit expenses of $28 million, $23 million and
$38 million, respectively, including expected returns on plan assets of $166 million, $173 million and
$178 million, respectively. The amounts for prior periods have been recast to conform to the current
presentation.
(2) Adjusted net income is computed by eliminating the after-tax amounts related to the following from net
income attributable to Huntsman Corporation: (a) acquisition expenses and purchase accounting inventory
adjustments; (b) loss (gain) on initial consolidation of subsidiaries; (c) loss from discontinued operations;
(d) discount amortization on settlement financing; (e) gain on disposition of businesses/assets; (f) loss on early
extinguishment of debt; (g) extraordinary gain on the acquisition of a business; (h) certain legal settlements
and related expenses; (i) amortization of pension and postretirement actuarial losses; and (j) restructuring,
impairment and plant closing and transition costs. The income tax impacts, if any, of each adjusting item
represent a ratable allocation of the total difference between the unadjusted tax expense and the total
adjusted tax expense, computed without consideration of any adjusting items using a with and without
approach. We do not adjust for changes in tax valuation allowances because we do not believe it provides
more meaningful information than is provided under GAAP. Basic adjusted income per share excludes
dilution and is computed by dividing adjusted net income by the weighted average number of shares
outstanding during the period. Diluted adjusted income per share reflects all potential dilutive common shares
outstanding during the period and is computed by dividing adjusted net income by the weighted average
number of shares outstanding during the period increased by the number of additional shares that would have
been outstanding as dilutive securities.
Adjusted net income and adjusted income per share amounts are presented solely as supplemental disclosures
to net income applicable to Huntsman Corporation and income per share because we believe that these
measures are indicative of our operating performance. These measures are also used by securities analysts,
lenders and others in their evaluation of different companies because they exclude certain items that can vary
11
widely across different industries or among companies within the same industry. Nevertheless, our
management recognizes that there are material limitations associated with the use of adjusted net income and
adjusted income per share in the evaluation of our Company as compared to net income attributable to
Huntsman Corporation, which reflects overall financial performance For example, adjusted net income and
adjusted income per share exclude items that may be recurring in nature and should not be disregarded in the
evaluation of performance. However, we believe it is useful to exclude such items to provide a supplemental
analysis of current results and trends compared to other periods because certain excluded items can vary
significantly depending on specific underlying transactions or events, and the variability of such items may not
relate specifically to current operating results or trends and certain excluded items, while potentially recurring
in future periods, may not be indicative of future results. For example, while loss (gain) from discontinued
operations is a recurring item, it is not indicative of ongoing operating results and trends or future results.
Beginning in 2013, we began to exclude the amortization of actuarial gains and losses associated with pension
and postretirement benefits from adjusted EBITDA, adjusted net income (loss), adjusted net income (loss)
attributable to Huntsman Corporation and adjusted diluted income (loss) per share. The amortization of
actuarial gains and losses associated with pension and postretirement benefits arises from changes in actuarial
assumptions and the difference between actual and expected returns on plan assets, and not from our normal,
or ‘‘core,’’ operations. There is diversity in accounting for these actuarial gains and losses within our industry,
and we believe that removing these gains and losses provides management and investors greater transparency
into the operational results of our businesses and enhances period-over-period comparability. The service cost,
amortization of prior service cost (benefit), interest cost and expected return on plan assets components of
our periodic pension and postretirement benefit costs (income) will continue to be included in adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) attributable to Huntsman Corporation and
adjusted diluted income (loss) per share. The amounts for prior periods have been recast to conform to the
current presentation.
(3)
Includes cost associated with the transition of our Textile Effects segment’s production from Basel,
Switzerland to a tolling facility. These costs were included in cost of sales on our consolidated statements of
operations.
Year Ended December 31, 2013 Compared with Year Ended December 31, 2012
For the year ended December 31, 2013, the net income attributable to Huntsman Corporation was
$128 million on revenues of $11,079 million, compared with net income attributable to Huntsman
Corporation of $363 million on revenues of $11,187 million for 2012. The decrease of $235 million in
net income attributable to Huntsman Corporation was the result of the following items:
(cid:127) Revenues for 2013 decreased by $108 million, or 1%, as compared with 2012. The decrease was
due principally to lower average selling prices in our Pigments segment and lower sales volumes
in our Performance Products and Advanced Materials segments. See ‘‘—Segment Analysis’’
below.
(cid:127) Our gross profit for 2013 decreased by $281 million, or 14%, as compared with 2012. The
decrease resulted from lower gross margins in our Polyurethanes and Pigments segments. See
‘‘—Segment Analysis’’ below.
(cid:127) Restructuring, impairment and plant closing costs for 2013 increased to $151 million from
$92 million in 2012. For more information concerning restructuring activities, see
‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial
statements.
(cid:127) Our net interest expense for 2013 decreased by $36 million, or 16%, as compared with 2012.
The decrease was due primarily to the reduction in noncash interest expense resulting from the
repayment of our 5.50% senior notes due 2016 (‘‘2016 Senior Notes’’) in 2012 and 2013.
12
(cid:127) Loss on early extinguishment of debt for 2013 decreased to $51 million from $80 million in 2012.
In 2012, we recorded a loss on early extinguishment of debt of $80 million primarily from the
repurchase of a portion of our 2016 Senior Notes. In 2013, we recorded a loss on early
extinguishment of debt of $34 million primarily from the repurchase of the remainder of our
2016 Senior Notes and $17 million primarily related to the repayment of our term loan C
Facility (‘‘Term Loan C’’). For more information, see ‘‘Note 13. Debt—Direct and Subsidiary
Debt—Redemption of Notes and Loss on Early Extinguishment of Debt’’ to our consolidated
financial statements.
(cid:127) Our income tax expense decreased by $44 million to an expense of $125 million for 2013 as
compared with an expense of $169 million for 2012. Our tax obligations are affected by the mix
of income and losses in the tax jurisdictions in which we operate. Our 2013 effective tax rate is
significantly impacted by losses in tax jurisdictions where we have a full valuation allowance. For
more information, see ‘‘Note 17. Income Taxes’’ to our consolidated financial statements.
Segment Analysis
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Year ended
December 31,
2013
2012
Percent
Change
Favorable
(Unfavorable)
Revenues
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,964
3,019
1,267
811
1,269
(251)
$ 4,894
3,065
1,325
752
1,436
(285)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,079
$11,187
Segment EBITDA
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued Operations . . . . . . . . . . . . . . . . . . .
$
696
372
86
(78)
79
(261)
894
(5)
$
726
360
54
(49)
352
(251)
1,192
(5)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
889
$ 1,187
1%
(2)%
(4)%
8%
(12)%
12%
(1)%
(4)%
3%
59%
(59)%
(78)%
(4)%
(25)%
—
(25)%
13
Period-Over-Period (Decrease) Increase
Polyurethanes . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Company . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2013 vs. 2012
Average Selling
Price(1)
Foreign
Currency
Translation Mix &
Other
Impact
Local
Currency
Sales
Volumes(2)
(1)%
2%
4%
3%
(23)%
(2)%
1%
—
(1)%
(1)%
1%
—
—
(2)%
3%
—
—
—
1%
(2)%
(10)%
6%
10%
1%
Fourth Quarter 2013 vs. Third Quarter 2013
Average Selling
Price(1)
Foreign
Currency
Translation Mix &
Other
Impact
Local
Currency
Sales
Volumes(2)
Period-Over-Period (Decrease) Increase
Polyurethanes . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Company . . . . . . . . . . . . . . . . . . . . .
(2)%
(1)%
(1)%
4%
(1)%
—
1%
1%
1%
1%
1%
1%
2%
(1)%
4%
—
1%
(1)%
(7)%
(4)%
(7)%
1%
(6)%
(5)%
(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Excludes sales volumes of byproducts and raw materials.
Polyurethanes
The increase in revenues in our Polyurethanes segment for 2013 compared to 2012 was primarily
due to higher sales volumes. MDI sales volumes increased in the Americas and Asia Pacific regions,
partially offset by lower volumes in the European region. European sales volumes were lower primarily
as a result of a force majeure event that caused an extended outage at our Rotterdam, The
Netherlands’ MDI facility in the second quarter of 2013. PO/MTBE sales volumes decreased due to
weaker market demand. MDI average selling prices increased in all regions primarily in response to
higher raw material costs, offset by a decrease in PO/MTBE average selling prices primarily due to less
favorable market conditions. The 2013 decrease in segment EBITDA was primarily due to lower PO/
MTBE earnings (in 2012, first and third quarter EBITDA benefited from industry supply outages) and
lower MDI margins in the European region as a result of the Rotterdam MDI facility outage during
the second quarter of 2013, partially offset by increased MDI margins in the Americas and Asia Pacific
regions. During 2013 and 2012, our Polyurethanes segment recorded restructuring, impairment and
plant closing costs of $2 million and $38 million, respectively. For more information concerning
restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our
consolidated financial statements.
14
Performance Products
The decrease in revenues in our Performance Products segment for 2013 compared to 2012 was
primarily due to lower sales volumes. The decrease in sales volumes resulted from the impact of the
scheduled maintenance on our olefins and ethylene oxide facilities in Port Neches, Texas in the first
quarter of 2013, which more than offset increases in amines and maleic anhydride sales volumes.
Excluding the impact of this scheduled maintenance, sales volumes would have increased by
approximately 4%. Average selling prices increased in amines and maleic anhydride offset by the mix
effect of a higher level of toll business in 2013. The increase in segment EBITDA was primarily due to
improved sales volumes and margins in maleic anhydride and amines, partially offset by the impact of
our scheduled maintenance, estimated at $55 million, and higher restructuring, impairment and plant
closing costs. During 2013 and 2012, our Performance Products segment recorded restructuring,
impairment and plant closing costs of $18 million and $1 million, respectively. For more information
concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’
to our consolidated financial statements.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2013 compared to 2012 was
primarily due to lower sales volumes, partially offset by higher average selling prices. Sales volumes
decreased in our base resins business in all regions due to reduced available output which resulted from
the permanent closure of some production lines and over supply. In our specialty component business,
sales volumes decreased in all regions in the coatings and construction and wind markets, offset in part
by higher sales volumes in the aerospace markets in the Americas and European regions. Sales volumes
also decreased in our formulations business in the Americas and European regions, primarily in the
wind and electrical and electronics markets, offset in part by higher sales volumes in the Asia Pacific
region marine market and in the Africa Middle East region electrical and electronics market. Average
selling prices increased in the European region, primarily in response to higher raw material costs and
increased focus on higher value component and formulations sales, partially offset by decreases in
average selling prices in our Asia Pacific formulations business and in our Americas base resins
business due to increased competition. The increase in segment EBITDA was primarily due to lower
restructuring, impairment and plant closing costs and lower selling, general and administrative costs as
a result of recent restructuring efforts, partially offset by lower sales volumes and lower margins.
During 2013 and 2012, our Advanced Materials segment recorded restructuring, impairment and plant
closing costs of $34 million and $38 million, respectively. For more information concerning
restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our
consolidated financial statements.
Textile Effects
The increase in revenues in our Textile Effects segment for 2013 compared to 2012 was due to
higher sales volumes and higher average selling prices. Sales volumes increased primarily due to
increased market share in key countries. Average selling prices increased primarily in response to
higher raw material costs, offset in part by the strength of the U.S. dollar against major international
currencies. The decrease in segment EBITDA was primarily due to higher restructuring, impairment
and plant closing and transition costs and higher raw material costs, partially offset by lower
manufacturing and selling, general and administrative costs as a result of our restructuring efforts and
higher sales volumes. During 2013 and 2012, our Textile Effects segment recorded restructuring,
impairment and plant closing and transition costs of $87 million and $26 million, respectively. For more
information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant
Closing Costs’’ to our consolidated financial statements.
15
Pigments
The decrease in revenues in our Pigments segment for 2013 compared to 2012 was primarily due
to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased
in all regions of the world primarily as a result of high industry inventory levels. Sales volumes
increased in all regions primarily due to higher end-use demand. The decrease in segment EBITDA
was primarily due to lower margins, partially offset by lower manufacturing and selling, general and
administrative costs as a result of our restructuring efforts. During 2013 and 2012, our Pigments
segment recorded restructuring, impairment and plant closing costs of $4 million each. For more
information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant
Closing Costs’’ to our consolidated financial statements.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains
and losses, last-in first-out (‘‘LIFO’’) inventory valuation reserve adjustments, loss on early
extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating
income and expense, benzene sales and gains and losses on the disposition of corporate assets. For
2013, EBITDA from Corporate and other for Huntsman Corporation decreased by $10 million to a loss
of $261 million from a loss of $251 million for 2012. The decrease in EBITDA from Corporate and
other resulted primarily from a $17 million decrease in income from benzene sales ($7 million of loss
in 2013 compared to $10 million of income in 2012), a $13 million decrease in LIFO inventory
valuation income ($1 million of income in 2013 compared to $14 million of income in 2012) and a
$17 million increase in restructuring, impairment and plant closing costs ($19 million of expense in
2013 compared to $2 million of expense in 2012). For more information concerning restructuring
activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated
financial statements. The decrease in EBITDA was partially offset by a decrease in incentive
compensation of $6 million and a decrease in loss on early extinguishment of debt of $29 million
($51 million of loss in 2013 compared to $80 million of loss in 2012). For more information regarding
the loss on early extinguishment of debt, see ‘‘Note 13. Debt—Direct and Subsidiary Debt—
Redemption of Notes and Loss on Early Extinguishment of Debt’’ to our consolidated financial
statements.
Discontinued Operations
The operating results of our former polymers, base chemicals and Australian styrenics businesses
are classified as discontinued operations, and, accordingly, the revenues of these businesses are
excluded from revenues for all periods presented. The EBITDA of these former businesses are
included in discontinued operations for all periods presented. The loss from discontinued operations
represents the operating results, legal costs, restructuring, impairment and plant closing costs and gain
(loss) on disposal with respect to our former businesses.
Year Ended December 31, 2012 Compared with Year Ended December 31, 2011
For the year ended December 31, 2012, net income attributable to Huntsman Corporation was
$363 million on revenues of $11,187 million, compared with net income attributable to Huntsman
Corporation of $247 million on revenues of $11,221 million for 2011. The increase of $116 million in
net income attributable to Huntsman Corporation was the result of the following items:
(cid:127) Revenues for 2012 decreased by $34 million, or less than one percent, as compared with 2011.
The decrease was due principally to lower average selling prices in our Performance Products
and Advanced Materials segments and lower sales volumes in our Performance Products and
Pigments segments, offset by higher average selling prices in our Polyurethanes and Pigments
16
segments and higher sales volumes in our Polyurethanes, Advanced Materials and Textile Effects
segments. See ‘‘—Segment Analysis’’ below.
(cid:127) Our gross profit for 2012 increased by $194 million, or 11%, as compared with 2011. The
increase resulted from higher gross margins in our Polyurethanes and Textile Effects segments,
offset in part by lower margins in our other segments. See ‘‘—Segment Analysis’’ below.
(cid:127) Our operating expenses for 2012 increased by $30 million, or 3%, as compared with 2011.
Increases in operating expenses in 2012 were primarily due to a $4 million loss recognized in
2012 in connection with our acquisition of the remaining 55% ownership interest in
International Polyurethane Investments B.V. (the ‘‘Russian Systems House Acquisition’’), a
$34 million gain recognized in 2011 on the sale of our Stereolithography resin and Digitalis(cid:1)
machine manufacturing businesses and a $12 million gain on the consolidation of our Sasol-
Huntsman joint venture recognized in 2011, offset in part by decreases in operating expenses
primarily due to the impact of translating foreign currency amounts to the U.S. dollar and a
$35 million decrease in costs related to legal claims in 2012.
(cid:127) Restructuring, impairment and plant closing costs for 2012 decreased to $92 million from
$167 million in 2011. For more information concerning restructuring activities, see
‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial
statements.
(cid:127) Our net interest expense for 2012 decreased by $23 million, or 9%, as compared with 2011. The
decrease is due principally to lower average debt balances.
(cid:127) Our loss on early extinguishment of debt for 2012 increased to $80 million from $7 million in
2011 as a result of higher net repayments of indebtedness in 2012 as compared to 2011. In 2012,
we recorded a loss on early extinguishment of debt of $80 million primarily from the repurchase
of a portion of our 2016 Senior Notes. For more information, see ‘‘Note 13. Debt—Direct and
Subsidiary Debt—Redemption of Notes and Loss on Early Extinguishment of Debt’’ to our
consolidated financial statements.
(cid:127) Our income tax expense increased by $60 million to an expense of $169 million for 2012 as
compared with an expense of $109 million for 2011. Our tax obligations are affected by the mix
of income and losses in the tax jurisdictions in which we operate. Our increase in tax expense
was due primarily to higher pre-tax earnings. For more information, see ‘‘Note 17. Income
Taxes’’ to our consolidated financial statements.
17
Segment Analysis
Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Year ended
December 31,
2012
2011
Percent
Change
Favorable
(Unfavorable)
Revenues
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,894
3,065
1,325
752
1,436
(285)
$ 4,434
3,301
1,372
737
1,642
(265)
10%
(7)%
(3)%
2%
(13)%
(8)%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,187
$11,221
—
Segment EBITDA
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . .
$
$
726
360
54
(49)
352
(251)
469
385
125
(199)
501
(236)
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued Operations . . . . . . . . . . . . . . . . . . .
1,192
(5)
1,045
(6)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,187
$ 1,039
55%
(6)%
(57)%
75%
(30)%
(6)%
14%
17%
14%
Year ended December 31, 2012 vs. 2011
Average Selling
Price(1)
Foreign
Currency
Translation Mix &
Other
Impact
Local
Currency
Sales
Volumes(2)
Period-Over-Period Increase (Decrease)
Polyurethanes . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Company . . . . . . . . . . . . . . . . . . . . .
4%
(3)%
(6)%
—
14%
2%
(2)%
(3)%
(4)%
(4)%
(5)%
(3)%
—
2%
—
(1)%
—
1%
8%
(3)%
7%
7%
(22)%
—
(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Excludes sales volumes of byproducts and raw materials.
Polyurethanes
The increase in revenues in our Polyurethanes segment for 2012 compared to 2011 was due to
higher sales volumes and higher average selling prices, partially offset by the strength of the U.S. dollar
against the euro. MDI sales volumes increased as a result of improved demand in all regions and
across most major markets. PO/MTBE sales volumes increased due to strong demand. MDI average
selling prices increased in all regions, partially offset by the strength of the U.S. dollar against the euro.
18
PO/MTBE average selling prices increased primarily due to favorable market conditions. The increase
in segment EBITDA was primarily due to higher margins and higher sales volumes, partially offset by
higher restructuring, impairment and plant closing costs. During 2012 and 2011, our Polyurethanes
segment recorded restructuring, impairment and plant closing costs of $38 million and nil, respectively.
For more information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and
Plant Closing Costs’’ to our consolidated financial statements.
Performance Products
The decrease in revenues in our Performance Products segment for 2012 compared to 2011 was
primarily due to lower average selling prices and lower sales volumes. Average selling prices decreased
across almost all businesses primarily in response to lower raw material costs and the strength of the
U.S. dollar against major international currencies. Sales volumes decreased primarily due to a shift to
tolling arrangements. The decrease in segment EBITDA was primarily due to lower sales volumes and
higher operating expenses. In addition, in 2011 we recorded a gain of $12 million in connection with
the consolidation of our Sasol-Huntsman joint venture.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2012 compared to 2011 was
primarily due to lower average selling prices, partially offset by higher sales volumes. Average selling
prices decreased in all regions and across most markets in response to competitive market pressure,
lower raw material costs in most regions and the strength of the U.S. dollar against major international
currencies. Sales volumes increased across most regions, primarily due to stronger global demand in
our base resins business, while sales volumes in the Asia-Pacific region decreased due to lower demand
in the wind energy, electrical engineering and electronics markets. The decrease in segment EBITDA
was primarily due to higher restructuring and impairment costs and lower margins due in part to the
change in sales mix from increased base resin sales volumes, partially offset by lower selling, general
and administrative costs as a result of recent restructuring efforts. During 2012 and 2011, our Advanced
Materials segment recorded restructuring, impairment and plant closing costs of $38 million and
$20 million, respectively. For more information concerning restructuring activities, see
‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements.
Textile Effects
The increase in revenues in our Textile Effects segment for 2012 compared to 2011 was primarily
due to higher sales volumes, partially offset by the strength of the U.S. dollar against major
international currencies. Sales volumes increased due to increased market share in key markets. The
increase in segment EBITDA was primarily due to lower restructuring, impairment and plant closing
and transition costs and lower manufacturing and selling, general and administrative costs as a result of
recent restructuring efforts, partially offset by lower margins. During 2012 and 2011, our Textile Effects
segment recorded restructuring, impairment and plant closing costs of $9 million and $135 million,
respectively, and expenses for the transition of production from Basel, Switzerland to a tolling facility
of $17 million and nil, respectively. For more information concerning restructuring activities, see
‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements.
Pigments
The decrease in revenues in our Pigments segment for 2012 compared to 2011 was due to lower
sales volumes, partially offset by higher average selling prices. Sales volumes decreased primarily due to
lower global demand. Average selling prices increased in all regions of the world primarily in response
to higher raw material costs, partially offset by the strength of the U.S. dollar against major
international currencies. The decrease in segment EBITDA was primarily due to lower margins and
19
lower sales volumes. During 2012 and 2011, our Pigments segment recorded restructuring, impairment
and plant closing costs of $4 million and $10 million, respectively. For more information concerning
restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our
consolidated financial statements.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains
and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt,
unallocated restructuring, impairment and plant closing costs, nonoperating income and expense,
benzene sales and gains and losses on the disposition of corporate assets. For 2012, EBITDA from
Corporate and other decreased by $15 million to a loss of $251 million from a loss of $236 million for
2011. The decrease in EBITDA from Corporate and other was primarily the result of an increase in
loss on early extinguishment of debt of $73 million ($80 million of loss in 2012 compared to $7 million
of loss in 2011). For more information regarding the loss on early extinguishment of debt, see
‘‘Note 13. Debt—Direct and Subsidiary Debt—Redemption of Notes and Loss on Early Extinguishment
of Debt’’ to our consolidated financial statements. The decrease was also due to higher incentive
compensation costs of $19 million and a decrease in unallocated foreign exchange gains of $9 million
($2 million gain in 2012 compared to $11 million gain in 2011). The decrease in EBITDA was partially
offset by a decrease in legal settlements of $39 million ($1 million in 2012 compared to $40 million in
2011), an increase in LIFO inventory valuation income of $35 million ($14 million of income in 2012
compared to $21 million of expense in 2011) and an increase of $15 million in income from benzene
sales ($10 million of income in 2012 compared to $5 million of loss in 2011).
Discontinued Operations
The operating results of our former polymers, base chemicals and Australian styrenics businesses
are classified as discontinued operations, and, accordingly, the revenues of these businesses are
excluded from revenues for all periods presented. The EBITDA of these former businesses are
included in discontinued operations for all periods presented. The loss from discontinued operations
represents the operating results, legal costs, restructuring, impairment and plant closing costs and gain
(loss) on disposal with respect to our former businesses. The decrease in loss from discontinued
operations, net of tax, resulted primarily from higher legal costs in 2011.
Liquidity and Capital Resources
Cash Flows for Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012
Net cash provided by operating activities for 2013 and 2012 was $708 million and $774 million,
respectively. The decrease in net cash provided by operating activities during year ended December 31,
2013 compared with the same period in 2012 was primarily attributable to a decrease in operating
income as described in ‘‘—Results of Operations’’ above, offset in part by a $123 million favorable
variance in operating assets and liabilities for 2013 as compared with 2012.
Net cash used in investing activities for 2013 and 2012 was $566 million and $471 million,
respectively. During 2013 and 2012, we paid $471 million and $412 million, respectively, for capital
expenditures. During 2013 and 2012, we made investments in Louisiana Pigment Company, L.P. of
$60 million and $100 million, respectively, and in our Nanjing Jinling joint venture of $37 million and
$24 million, respectively, and received dividends from our unconsolidated joint ventures, Louisiana
Pigment Company, L.P. and BASF Huntsman Shanghai Isocyanate Investment B.V., of $71 million and
$82 million, respectively. During 2013 and 2012, we paid $66 million and $18 million, respectively, for
the acquisitions of businesses.
20
Net cash used in financing activities for 2013 and 2012 was $6 million and $473 million,
respectively. The decrease in net cash used in financing activities was primarily due to lower net
repayments of debt during 2013 as compared to 2012, offset in part by an increase in dividends paid to
common stockholders.
Cash Flows for Year Ended December 31, 2012 Compared to the Year Ended December 31, 2011
Net cash provided by operating activities for 2012 and 2011 was $774 million and $365 million,
respectively. The increase in net cash provided by operating activities during 2012 compared to 2011
was primarily attributable to an increase in operating income as described in ‘‘—Results of Operations’’
above and to a $179 million favorable variance in operating assets and liabilities for 2012 as compared
with 2011.
Net cash used in investing activities for 2012 and 2011 was $471 million and $280 million,
respectively. During 2012 and 2011, we paid $412 million and $327 million, respectively, for capital
expenditures, net of reimbursements. During 2012, we paid A13 million (approximately $16 million) for
the Russian Systems House Acquisition. During 2011, we paid $34 million, net of cash acquired, for our
acquisition of the chemical business of Laffans Petrochemical Limited and the acquisition of an
MDI-based polyurethanes systems house in Istanbul, Turkey. On April 1, 2011, we began consolidating
our Sasol-Huntsman joint venture and assumed its cash balance of $28 million. During 2011, we sold
businesses and assets for $48 million, including the sale of our former stereolithography resin and
Digitalis(cid:1) machine manufacturing businesses for $41 million. During 2012 and 2011, we made
investments in Louisiana Pigment Company, L.P. of $100 million and $26 million, respectively, and
received dividends from our unconsolidated joint ventures, Louisiana Pigment Company, L.P. and
BASF Huntsman Shanghai Isocyanate Investment B.V., of $82 million and $32 million, respectively.
Additionally during 2012, we made investments in our Nanjing Jinling joint venture of $24 million.
Net cash used in financing activities for 2012 and 2011 was $473 million and $490 million,
respectively. The decrease in net cash used in financing activities was primarily due to the repurchase
of $50 million of common stock in 2011, offset in part by higher net repayments of debt in 2012 as
compared to 2011.
During 2012, we issued $400 million aggregate principal amount of 4.875% senior notes due 2020
(‘‘2020 Senior Notes’’) and used the net proceeds to redeem a portion of our 2016 Senior Notes.
Additionally, during 2012 we repaid $139 million on our senior secured credit facilities (‘‘Senior Credit
Facilities’’). For more information, see ‘‘Note 13. Debt’’ to our consolidated financial statements.
21
Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
Cash and cash equivalents . . . . .
Restricted cash . . . . . . . . . . . . .
Accounts and notes receivable,
net
. . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . .
Deferred income taxes . . . . . . . .
Other current assets . . . . . . . . . .
Total current assets . . . . . . . . .
Accounts payable . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . .
Deferred income taxes . . . . . . . .
Current portion of debt . . . . . . .
Total current liabilities . . . . . .
December 31,
2013
Less:
Acquisition(1)
$ 520
9
$ —
—
Subtotal
$ 520
9
December 31,
2012
Increase
(Decrease)
Percent
Change
$ 387
9
$133
—
1,575
1,741
61
53
200
4,159
1,113
726
43
277
2,159
(9)
(14)
—
—
—
(23)
(4)
(1)
—
—
(5)
1,566
1,727
61
53
200
4,136
1,109
725
43
277
2,154
1,583
1,819
48
51
222
4,119
1,150
705
38
288
2,181
(17)
(92)
13
2
(22)
17
(41)
20
5
(11)
(27)
34%
—
(1)%
(5)%
27%
4%
(10)%
—
(4)%
3%
13%
(4)%
(1)%
2%
Working capital . . . . . . . . . .
$2,000
$(18)
$1,982
$1,938
$ 44
(1) Represents opening balance sheet amounts related to the Oxid Acquisition. For more information,
see ‘‘Note. 3 Business Combinations and Dispositions—Oxid Acquisition’’ to our consolidated
financial statements.
Excluding the effects of acquisitions, our working capital increased by $44 million as a result of the
net impact of the following significant changes:
(cid:127) The increase in cash and cash equivalents of $133 million resulted from the matters identified
on our consolidated statements of cash flows.
(cid:127) Accounts and notes receivable decreased by $17 million mainly due to improved collections.
(cid:127) Inventories decreased by $92 million mainly due to lower inventory levels primarily in our
Pigments segment resulting from management’s efforts to reduce inventory, particularly in ores
raw materials.
(cid:127) Accounts payable decreased by $41 million primarily due to lower purchasing activity
attributable to lower inventories.
Direct and Subsidiary Debt
Our 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.
22
Senior Credit Facilities
As of December 31, 2013, our Senior Credit Facilities consisted of our revolving facility
(‘‘Revolving Facility’’), our extended term loan B facility (‘‘Extended Term Loan B’’), our extended
term loan B facility—series 2 (‘‘Extended Term Loan B—Series 2’’) and our Term Loan C follows
(dollars in millions):
Facility
Revolving Facility . . . . . . . . . . .
Extended Term Loan B . . . . . .
Extended Term Loan B—
Series 2 . . . . . . . . . . . . . . . .
Term Loan C . . . . . . . . . . . . . .
Committed
Amount
Principal
Outstanding
Carrying
Value
Interest Rate(3)
Maturity
$400(1)
NA
$ —(2)
962
$ —(2) USD LIBOR plus 2.50% 2017
USD LIBOR plus 2.50% 2017
961
NA
NA
342
50
342
48
USD LIBOR plus 3.00% 2017
USD LIBOR plus 2.25% 2016
(1) We have commitments with certain financial institutions to provide for a $200 million Revolving
Increase to an aggregate Revolving Facility committed amount of $600 million upon completion of
the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood
Holdings, Inc.
(2) We had no borrowings outstanding under our Revolving Facility; we had approximately $17 million
(U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our
Revolving Facility.
(3) The applicable interest rate of the Senior Credit Facilities is subject to certain secured leverage
ratio thresholds. As of December 31, 2013, the weighted average interest rate on our outstanding
balances under the Senior Credit Facilities was approximately 3%.
Our obligations under the Senior Credit Facilities are guaranteed by our guarantors, which consist
of substantially all of our domestic subsidiaries and certain of our foreign subsidiaries, 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.
On December 23, 2013, in conjunction with our issuance of A300 million (approximately
$415 million) aggregate principal amount of 5.125% senior notes due 2021 (‘‘2021 Senior Notes’’) we
repaid $368 million ($352 carrying value) of our Term Loan C. In connection with the repayment, we
recognized a loss on early extinguishment of debt of approximately $16 million during the year ended
December 31, 2013.
Amendment 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 (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 our 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.
23
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.
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 and are reflected as part of 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 is
recorded at its carrying value of $224 million as of December 31, 2013. The additional term loan has
identical terms to our Extended Term Loan B and is reflected as part of our Extended Term Loan B.
In connection with this debt repayment, we recognized a loss on early extinguishment of debt of
approximately $1 million.
In connection with these amendments and debt repayments, we recognized a loss on early
extinguishment of debt with regard to our Senior Credit Facilities of approximately $17 million and
$2 million during the years ended December 31, 2013 and 2012, respectively.
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 our A/R Programs as of December 31, 2013 was as follows
(monetary amounts in millions):
Facility
Maturity
Maximum Funding
Availability(1)
Amount
Outstanding
Interest Rate(2)(3)
U.S. A/R Program . . . . . . . . . April 2016
EU A/R Program . . . . . . . . . . April 2016
$250
A225
$90(4)
A114
Applicable rate plus 1.10%
Applicable rate plus 1.35%
(approximately (approximately
$311)
$158)
(1) The amount of actual availability under our 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 our 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 December 31, 2013, we had approximately $7 million (U.S. dollar equivalents) of letters of
credit issued and outstanding under our U.S. A/R Program.
24
As of December 31, 2013 and 2012, $521 million and $520 million, respectively, of accounts
receivable were pledged as collateral under our A/R Programs.
Amendments to A/R Programs
On April 29, 2013, Huntsman International entered into an amendment to the agreements
governing our U.S. A/R Program. This amendment, among other things, extends the scheduled
commitment termination date of our U.S. A/R Program by two years to April 2016, provides for
additional availability under our 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 our EU A/R Program. This amendment, among other things, extends the scheduled
commitment termination date of our EU A/R Program by two years to April 2016 and reduces the
applicable margin on borrowings to 1.35%.
Notes
As of December 31, 2013, we had outstanding the following notes (monetary amounts in millions):
Notes
Maturity
Interest Rate
Amount Outstanding
2021 Senior Notes . . . . . . . . . . . . . . . . . .
2020 Senior Notes . . . . . . . . . . . . . . . . . . November 2020
Senior Subordinated Notes . . . . . . . . . . . .
Senior Subordinated Notes . . . . . . . . . . . .
March 2020
March 2021
April 2021
5.125% A300 (approximately $415)
4.875% $650 ($647 carrying value)
8.625% $350
8.625% $530 ($541 carrying value)
Our notes are governed by indentures which impose certain limitations on Huntsman International
including, among other things limitations on the incurrence of debt, distributions, certain restricted
payments, asset sales, and affiliate transactions. The notes are unsecured obligations and are
guaranteed by certain subsidiaries named as guarantors.
On December 23, 2013, Huntsman International issued A300 million (approximately $415)
aggregate principal amount of 2021 Senior Notes. Huntsman International applied the net proceeds to
redeem $368 million of its Term Loan C due 2016, pay associated accrued interest and for general
corporate purposes.
The 2021 Senior Notes bear interest at the rate of 5.125% per year payable semi-annually on
April 15 and October 15 of each year and are due on April 15, 2021. Huntsman International may
redeem the 2021 Senior Notes in whole or in part at any time prior to January 15, 2021 at a price
equal to 100% of the principal amount thereof plus a ‘‘make-whole’’ premium and accrued and unpaid
interest.
On March 4, 2013, pursuant to an indenture entered into on November 19, 2012, Huntsman
International issued $250 million aggregate principal amount of 2020 Senior Notes. The aggregate
additional notes are recorded at carrying value of $247 million as of December 31, 2013. Huntsman
International applied the net proceeds to redeem the remaining $200 million in aggregate principal
amount of its 2016 Senior Notes, to pay associated accrued interest and for general corporate purposes.
Huntsman International issued, on November 19, 2012, $400 million aggregate principal amount of
2020 Senior Notes.
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.
25
The 2021 Senior Notes and 2020 Senior Notes are general unsecured senior obligations of
Huntsman International and are guaranteed on a general unsecured senior basis by the Guarantors.
The indentures impose 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 2021 Senior Notes and 2020 Senior Notes will have the right to require
that Huntsman International purchase all or a portion of such holder’s 2020 Senior Notes in cash at a
purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the
date of repurchase.
Redemption of Notes and Loss on Early Extinguishment of Debt
During the years ended December 31, 2013 and 2012, we redeemed or repurchased the following
notes (monetary amounts in millions):
Date of Redemption
Notes
Principal Amount of
Notes Redeemed
March 4, 2013 . . . . . . 5.50% Senior Notes due 2016
$200
Interest)
$200
December 3, 2012 . . . 5.50% Senior Notes due 2016
March 26, 2012 . . . . .
7.50% Senior Subordinated
Notes due 2015
$400
A64
(approximately
$86)
$400
A65
(approximately
$87)
of Debt
$34
$77
$ 1
Amount Paid
Loss on Early
(Excluding Accrued Extinguishment
Variable Interest Entity Debt
As of December 31, 2013, Arabian Amines Company had $169 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 December 31, 2013, the
amounts outstanding under these loan commitments were classified as current in our consolidated
balance sheets and are comprised of the following:
(cid:127) A loan facility from Saudi Industrial Development Fund with SAR 451 million (approximately
$120 million) outstanding. Repayment of the loan is to be made in semiannual installments with
final maturity in 2019. The loan is secured by a mortgage over the fixed assets of the project and
is 100% guaranteed by the Zamil Group, our 50% joint venture partner.
(cid:127) A multipurpose Islamic term facility with $49 million outstanding. This facility is scheduled to be
repaid in semiannual installments with final maturity in 2022.
As of December 31, 2013, Sasol-Huntsman, our consolidated 50%-owned venture has a facility
agreement which included a A5 million (approximately $7 million) revolving facility and A56 million
(approximately $78 million) outstanding under the term loan facility. The facility will be repaid over
semiannual installments with the final repayment scheduled for December 2018. Obligations under the
facility agreement are secured by, among other things, first priority right on the property, plant and
equipment of Sasol-Huntsman.
26
Other Debt
During the year ended December 31, 2013, HPS repaid $4 million and RMB 293 million
(approximately $47 million) on term loans and working capital loans under its secured facilities. As of
December 31, 2013, HPS had $4 million and RMB 61 million (approximately $10 million) outstanding
under its debt facilities. The interest rate on these facilities is LIBOR plus 0.48% for U.S. dollar
borrowings and approximately 90% of the Peoples Bank of China rate for RMB borrowings. As of
December 31, 2013, the interest rate was approximately 1% for the U.S. dollar borrowings and
approximately 6% for RMB borrowings.
As of December 31, 2013, HPS has RMB 160 million (approximately $26 million) under its loan
facility for working capital loans and discounting of commercial drafts, which is classified as current
portion of debt in our consolidated balance sheets. Interest is calculated using a Peoples Bank of China
rate plus the applicable margin. The average all-in rate as of December 31, 2013 was approximately
6%.
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 certain financial covenants 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,
27
requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs
would also constitute an event of default under our Senior Credit Facilities, which could require us to
pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior
Credit Facilities.
MATURITIES
The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31,
2013 are as follows (dollars in millions):
Year ending December 31,
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 277
32
326
1,282
23
1,970
$3,910
Short-Term and Long-Term Liquidity
We depend upon our cash, credit facilities, A/R Programs and other debt instruments to provide
liquidity for our operations and working capital needs. As of December 31, 2013, we had $1,048 million
of combined cash and unused borrowing capacity, consisting of $529 million in cash and restricted cash,
$383 million in availability under our Revolving Facility, and $136 million in availability under our
A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters
had, or are expected to have, a significant impact on our liquidity:
(cid:127) Cash invested in our accounts receivable and inventory, net of accounts payable, decreased by
approximately $54 million for the year ended December 31, 2013, as reflected in our
consolidated statements of cash flows. We expect volatility in our working capital components to
continue.
(cid:127) On August 29, 2013, we completed the Oxid Acquisition for a $66 million cash payment on
August 29, 2013 and $10 million of contingent consideration subject to the performance of the
business in 2013 and 2014. See ‘‘Note 3. Business Combinations and Dispositions—Oxid
Acquisition’’ to our consolidated financial statements.
(cid:127) During 2014, we expect to spend approximately $500 million on capital expenditures, net of
reimbursements, excluding any amounts associated with the planned acquisition of the
Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. Our future
expenditures include certain environmental, health and safety maintenance and upgrades;
periodic maintenance and repairs applicable to major units of manufacturing facilities;
expansions of our existing facilities or construction of new facilities; certain cost reduction
projects; and certain information technology expenditures. We expect to fund this spending with
cash provided by operations.
(cid:127) During the year ended December 31, 2013, we made contributions to our pension and
postretirement benefit plans of $171 million. During 2014, we expect to contribute an additional
amount of approximately $135 million to these plans.
(cid:127) We are also involved in a number of cost reduction programs for which we have established
restructuring accruals. As of December 31, 2013, we had $113 million of accrued restructuring
28
costs and we expect to incur and pay additional restructuring and plant closing costs of up to
approximately $44 million.
(cid:127) On September 17, 2013, we entered into a definitive to acquire the Performance Additives and
Titanium Dioxide businesses of Rockwood Holdings, Inc. for approximately $1.1 billion in cash,
subject to certain purchase price adjustments and the assumption of unfunded pension liabilities
estimated at $225 million as of June 30, 2013. See ‘‘Note 3. Business Combinations and
Dispositions—Performance Additives and Titanium Dioxide Acquisition’’ to our consolidated
financial statements. In connection with the acquisition, we have entered into financing
commitments with certain financial institutions to provide a $1.2 billion New Term Loan and a
$200 million Revolving Increase under our existing Senior Credit Facilities. See
‘‘Note 13. Debt—Direct and Subsidiary Debt’’ to our consolidated financial statements.
As of December 31, 2013, we had $277 million classified as current portion of debt, including an
HPS borrowing facility in China with $40 million outstanding, our scheduled Senior Credit Facilities
amortization payments totaling $13 million, debt at our variable interest entities of $183 million,
$15 million related to the annual financing of our insurance premiums, and certain other short-term
facilities and scheduled amortization payments totaling $26 million. Although we cannot provide
assurances, we intend to repay, renew or extend the majority of these short-term facilities in the
current period.
As of December 31, 2013, we had approximately $215 million of cash and cash equivalents,
including restricted cash, held by our foreign subsidiaries, including our variable interest entities.
Additionally, we have material intercompany debt obligations owed to us by our non-U.S. subsidiaries.
We intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we
could repatriate cash as dividends or as repayments of intercompany debt. If foreign cash were
repatriated as dividends, the dividends could be subject to adverse tax consequences. At present, we
estimate that we will generate sufficient cash in our U.S. operations, together with the payments of
intercompany debt, if necessary, to meet our cash needs in the U.S and we do not expect to repatriate
cash to the U.S. as dividends. Cash held by certain foreign subsidiaries, including our variable interest
entities, may also be subject to legal restrictions, including those arising from the interests of our
partners, which could limit the amounts available for repatriation.
Contractual Obligations and Commercial Commitments
Our obligations under long-term debt (including the current portion), lease agreements and other
contractual commitments as of December 31, 2013 are summarized below (dollars in millions):
Long-term debt, including current portion . . . . . . . . . . $ 277
205
Interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83
Operating leases(2) . . . . . . . . . . . . . . . . . . . . . . . . . .
1,315
Purchase commitments(3) . . . . . . . . . . . . . . . . . . . . . .
$ 358
372
127
696
Total(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,882
$1,553
$1,305
293
103
162
$1,863
$1,970
254
174
169
$3,910
1,124
487
2,342
$2,565
$7,863
2014
2015 - 2016 2017 - 2018 After 2018
Total
(1) Interest calculated using interest rates as of December 31, 2013 and contractual maturity dates
assuming no refinancing or extension of debt instruments.
(2) Future minimum lease payments have not been reduced by minimum sublease rentals of
$19 million due in the future under noncancelable subleases.
(3) We have various purchase commitments extending through 2029 for materials, supplies and
services entered into in the ordinary course of business. Included in the purchase commitments
29
table above are contracts which require minimum volume purchases that extend beyond one year
or are renewable annually and have been renewed for 2014. Certain contracts allow for changes in
minimum required purchase volumes in the event of a temporary or permanent shutdown of a
facility. To the extent the contract requires a minimum notice period, such notice period has been
included in the above table. The contractual purchase price for substantially all of these contracts
is variable based upon market prices, subject to annual negotiations. We have estimated our
contractual obligations by using the terms of our current pricing for each contract. We also have a
limited number of contracts which require a minimum payment even if no volume is purchased.
We believe that all of our purchase obligations will be utilized in our normal operations. For the
years ended December 31, 2013, 2012 and 2011, we made minimum payments of $7 million, nil
and nil, respectively, under such take or pay contracts without taking the product.
(4) Totals do not include commitments pertaining to our pension and other postretirement obligations.
Our estimated future contributions to our pension and postretirement plans are as follows (dollars
in millions):
Pension plans . . . . . . . . . . . . . . . . . . . . . . .
Other postretirement obligations . . . . . . . . .
$125
10
$247
19
$177
19
2014
2015 - 2016
2017 - 2018
5-Year
Average
Annual
$96
9
(5) The above table does not reflect expected tax payments and unrecognized tax benefits due to the
inability to make reasonably reliable estimates of the timing and amount of payments. For
additional discussion on unrecognized tax benefits, see ‘‘Note 17. Income Taxes’’ to our
consolidated financial statements.
Off-Balance Sheet Arrangements
No off-balance sheet arrangements exist at this time.
Restructuring, Impairment and Plant Closing Costs
Our Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments are
involved in cost reduction programs that are expected to reduce costs in these businesses by
approximately $240 million. These costs savings are expected to be achieved through the beginning of
2015. Through December 31, 2013, we have achieved approximately $180 million of costs savings
related to these programs. For a discussion of restructuring, impairment and plant closing costs, see
‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements.
Legal Proceedings
For a discussion of legal proceedings, see ‘‘Note 18. Commitments and Contingencies—Legal
Matters’’ to our consolidated financial statements.
Environmental, Health and Safety Matters
For a discussion of environmental, health and safety matters, see ‘‘Note 19. Environmental, Health
and Safety Matters’’ to our consolidated financial statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
For a discussion of recently issued accounting pronouncements, see ‘‘Note 2. Summary of
Significant Accounting Policies—Recently Issued Accounting Pronouncements’’ to our consolidated
financial statements.
30
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with U.S. GAAP
requires management to make judgments, estimates and assumptions that affect the reported amounts
in our consolidated financial statements. Our significant accounting policies are summarized in
‘‘Note 2. Summary of Significant Accounting Policies’’ to our consolidated financial statements.
Summarized below are our critical accounting policies:
Contingent Loss Accruals
Environmental remediation costs for our facilities are accrued when it is probable that a liability
has been incurred and the amount can be reasonably estimated. Estimates of environmental reserves
require evaluating government regulation, available technology, site-specific information and
remediation alternatives. We accrue an amount equal to our best estimate of the costs to remediate
based upon the available information. The extent of environmental impacts may not be fully known and
the processes and costs of remediation may change as new information is obtained or technology for
remediation is improved. Our process for estimating the expected cost for remediation considers the
information available, technology that can be utilized and estimates of the extent of environmental
damage. Adjustments to our estimates are made periodically based upon additional information
received as remediation progresses. For further information, see ‘‘Note 19. Environmental, Health and
Safety Matters’’ to our consolidated financial statements.
We are subject to legal proceedings and claims arising out of our business operations. We routinely
assess the likelihood of any adverse outcomes to these matters, as well as ranges of probable losses. A
determination of the amount of the reserves required, if any, for these contingencies is made after
analysis of each known claim. We have an active risk management program consisting of numerous
insurance policies secured from many carriers. These policies often provide coverage that is intended to
minimize the financial impact, if any, of the legal proceedings. The required reserves may change in the
future due to new developments in each matter. For further information, see ‘‘Note 18. Commitments
and Contingencies—Legal Matters’’ to our consolidated financial statements.
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans, covering employees
primarily in the U.S., the U.K., The Netherlands, Belgium and Switzerland, but also covering
employees in a number of other countries. We fund the material plans through trust arrangements (or
local equivalents) where the assets are held separately from us. We also sponsor unfunded
postretirement plans which provide medical and, in some cases, life insurance benefits covering certain
employees in the U.S., Canada and South Africa. Amounts recorded in our consolidated financial
statements are recorded based upon actuarial valuations performed by various independent actuaries.
Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on
plan assets, discount rates, compensation increases, mortality rates and health care cost trends. These
assumptions are described in ‘‘Note 16. Employee Benefit Plans’’ to our consolidated financial
statements.
31
Management, with the advice of actuaries, uses judgment to make assumptions on which our
employee pension and postretirement benefit plan obligations and expenses are based. The effect of a
1% change in three key assumptions is summarized as follows (dollars in millions):
Assumptions
Statement of
Operations(1)
Balance Sheet
Impact(2)
Discount rate
—1% increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—1% decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term rates of return on plan assets
—1% increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—1% decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase
—1% increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—1% decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(34)
29
(29)
29
18
(17)
$(502)
614
—
—
91
(88)
(1) Estimated increase (decrease) on 2013 net periodic benefit cost
(2) Estimated increase (decrease) on December 31, 2013 pension and postretirement
liabilities and accumulated other comprehensive loss
Goodwill
We test our goodwill for impairment at least annually (at the beginning of the third quarter) and
when events and circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. Goodwill has been assigned to reporting units for purposes of
impairment testing. Currently, more than 60% of our goodwill balance relates to our Advanced
Materials reporting unit. The remaining goodwill relates to three other reporting units.
Fair value is estimated using the market approach, as well as the income approach based on
discounted cash flow projections. The estimated fair values of our reporting units are dependent on
several significant assumptions including, among others, market information, operating results, earnings
projections and anticipated future cash flows.
We tested goodwill for impairment at the beginning of the third quarter of 2013 as part of the
annual impairment testing procedures and determined that no goodwill impairment existed. Our most
recent fair value determination resulted in an amount that exceeded the carrying amount of our
Advanced Materials reporting unit by a significant margin.
Income Taxes
We use the asset and liability method of accounting for income taxes. Deferred income taxes
reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine
whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax
jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a
change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These
conclusions require significant judgment. In evaluating the objective evidence that historical results
provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable
period. Cumulative losses incurred over the period limits our ability to consider other subjective
evidence such as our projections for the future. Changes in expected future income in applicable
jurisdictions could affect the realization of deferred tax assets in those jurisdictions. As of
December 31, 2013, we had total valuation allowances of $814 million. See ‘‘Note 17. Income Taxes’’ to
our consolidated financial statements for more information regarding our valuation allowances.
32
For non-U.S. entities that were not treated as branches for U.S. tax purposes, we do not provide for
income taxes on the undistributed earnings of these subsidiaries as earnings are reinvested and, in the
opinion of management, will continue to be reinvested indefinitely. As discussed in ‘‘Note 17. Income
Taxes’’ to our consolidated financial statements, we made a distribution of a portion of our earnings in 2013
when the amount of foreign tax credits associated with the distribution was greater than the amount of tax
otherwise due. The undistributed earnings of foreign subsidiaries that are deemed to be permanently
invested were approximately $194 million at December 31, 2013. It is not practicable to determine the
unrecognized deferred tax liability on those earnings. We have material inter-company debt obligations
owed by our non-U.S. subsidiaries to the U.S. We do not intend to repatriate earnings to the U.S. via
dividend based on estimates of future domestic cash generation, combined with the ability to return cash to
the U.S. through payments of inter-company debt owed by our non-U.S. subsidiaries to the U.S. To the
extent that cash is required in the U.S., rather than repatriate earnings to the U.S. via dividend we will
utilize our inter-company debt. If any earnings were repatriated via dividend, we would need to accrue and
pay taxes on the distributions.
Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. The application of income tax law is inherently complex. We are required
to determine if an income tax position meets the criteria of more-likely-than-not to be realized based
on the merits of the position under tax law, in order to recognize an income tax benefit. This requires
us to make significant judgments regarding the merits of income tax positions and the application of
income tax law. Additionally, if a tax position meets the recognition criteria of more-likely-than-not we
are required to make judgments and apply assumptions in order to measure the amount of the tax
benefits to recognize. These judgments are based on the probability of the amount of tax benefits that
would be realized if the tax position was challenged by the taxing authorities. Interpretations and
guidance surrounding income tax laws and regulations change over time. As a consequence, changes in
assumptions and judgments can materially affect amounts recognized in our consolidated financial
statements.
Long-Lived Assets
The useful lives of our property, plant and equipment are estimated based upon our historical
experience, engineering estimates and industry information and are reviewed when economic events
indicate that we may not be able to recover the carrying value of the assets. The estimated lives of our
property range from 3 to 50 years and depreciation is recorded on the straight-line method. Inherent in
our estimates of useful lives is the assumption that periodic maintenance and an appropriate level of
annual capital expenditures will be performed. Without on-going capital improvements and
maintenance, the productivity and cost efficiency declines and the useful lives of our assets would be
shorter.
Management uses judgment to estimate the useful lives of our long-lived assets. At December 31,
2013, if the estimated useful lives of our property, plant and equipment had either been one year
greater or one year less than their recorded lives, then depreciation expense for 2013 would have been
approximately $30 million less or $35 million greater, respectively.
We are required to evaluate the carrying value of our long-lived tangible and intangible assets
whenever events indicate that such carrying value may not be recoverable in the future or when
management’s plans change regarding those assets, such as idling or closing a plant. We evaluate
impairment by comparing undiscounted cash flows of the related asset groups that are largely
independent of the cash flows of other asset groups to their carrying values. Key assumptions in
determining the future cash flows include the useful life, technology, competitive pressures, raw
material pricing and regulations. In connection with our asset evaluation policy, we reviewed all of our
33
long-lived assets for indicators that the carrying value may not be recoverable. We determined that such
indicators did not exist during the year ended December 31, 2013.
Restructuring and Plant Closing Costs
We have recorded restructuring charges in recent periods in connection with closing certain plant
locations, workforce reductions and other cost savings programs in each of our business segments, other
than Performance Products. These charges are recorded when management has committed to a plan
and incurred a liability related to the plan. Estimates for plant closing costs include the write-off of the
carrying value of the plant, any necessary environmental and/or regulatory costs, contract termination
and demolition costs. Estimates for workforce reductions and other costs savings are recorded based
upon estimates of the number of positions to be terminated, termination benefits to be provided and
other information, as necessary. Management evaluates the estimates on a quarterly basis and will
adjust the reserve when information indicates that the estimate is above or below the currently
recorded estimate. For further discussion of our restructuring activities, see ‘‘Note 11. Restructuring,
Impairment and Plant Closing Costs’’ to our consolidated financial statements.
Revenue Recognition
We generate substantially all of our revenues through sales in the open market and long-term
supply agreements. We recognize revenue when it is realized or realizable and earned. Revenue for
product sales is recognized when a sales arrangement exists, risk and title to the product transfer to the
customer, collectability is reasonably assured and pricing is fixed or determinable. The transfer of risk
and title to the product to the customer usually occurs at the time shipment is made.
Revenue arrangements that contain multiple deliverables, which relate primarily to the licensing of
technology, are evaluated in accordance with ASC 605-25, Revenue Recognition—Multiple-Element
Arrangements, to determine whether the arrangements should be divided into separate units of
accounting and how the arrangement consideration should be measured and allocated among the
separate units of accounting.
Variable Interest Entities—Primary Beneficiary
We evaluate each of our variable interest entities on an on-going basis to determine whether we
are the primary beneficiary. Management assesses, on an on-going basis, the nature of our relationship
to the variable interest entity, including the amount of control that we exercise over the entity as well
as the amount of risk that we bear and rewards we receive in regards to the entity, to determine if we
are the primary beneficiary of that variable interest entity. Management judgment is required to assess
whether these attributes are significant. We consolidate all variable interest entities for which we have
concluded that we are the primary beneficiary.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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. 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.
INTEREST RATE RISKS
Through our borrowing activities, we are exposed to interest rate risk. Such risk arises due to the
structure of our debt portfolio, including the duration of the portfolio and the mix of fixed and floating
interest rates. Actions taken to reduce interest rate risk include managing the mix and rate
34
characteristics of various interest bearing liabilities, as well as entering into interest rate derivative
instruments.
From time to time, we may purchase interest rate swaps and/or interest rate collars to reduce the
impact of changes in interest rates on our floating-rate long-term debt. Under interest rate swaps, we
agree with other parties to exchange, at specified intervals, the difference between fixed-rate and
floating-rate interest amounts calculated by reference to an agreed notional principal amount. The
collars entitle us to receive from the counterparties (major banks) the amounts, if any, by which our
interest payments on certain of our floating-rate borrowings exceed a certain rate, and require us to
pay to the counterparties (major banks) the amount, if any, by which our interest payments on certain
of our floating-rate borrowings are less than a certain rate.
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 income (loss). We will pay a fixed 2.6% on the hedge and receive the one-month
LIBOR rate. As of December 31, 2013 and 2012, the fair value of the hedge was $1 million and
$2 million, respectively, and was recorded in other noncurrent liabilities.
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 in
other comprehensive income (loss). We will pay a fixed 2.8% on the hedge and receive the one-month
LIBOR rate. As of December 31, 2013 and 2012, the fair value of the hedge was $1 million and
$3 million, respectively, and was recorded in other noncurrent liabilities.
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 (loss). 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
December 31, 2013 and 2012, the combined fair value of these two hedges was $3 million and
$4 million, respectively, and was recorded in other noncurrent liabilities.
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 7. Variable Interest Entities’’ to our consolidated financial statements. The notional
amount of the hedge as of December 31, 2013 was A31 million (approximately $42 million) and the
derivative transactions do not qualify for hedge accounting. As of December 31, 2013 and 2012, the fair
value of this hedge was A1 million (approximately $1 million) and A2 million (approximately $3 million),
respectively, and was recorded in other noncurrent liabilities in our consolidated balance sheets. For
2013 and 2012, we recorded a reduction of interest expense of A1 million (approximately $1 million)
and less than A1 million (approximately $1 million) respectively, due to changes in the fair value of the
swap.
35
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 7. Variable Interest Entities’’ to our consolidated financial
statements. The notional amount of the swap as of December 31, 2013 was $32 million, and the interest
rate contract is not designated as a cash flow hedge. As of December 31, 2013 and 2012, the fair value of
the swap was $4 million and $6 million, respectively, and was recorded in other noncurrent liabilities in our
consolidated balance sheets. For 2013 and 2012, we recorded a reduction of interest expense of $2 million
and $1 million, respectively, due to changes in fair value of the swap. As of December 31, 2013 Arabian
Amines Company was not in compliance with certain financial covenants contained in its loan
commitments. For more information, see ‘‘Note 13. Debt—Direct and Subsidiary Debt—Variable Interest
Entity Debt’’ to our consolidated financial statements.
For the years ended December 31, 2013 and 2012, the changes in accumulated other
comprehensive gain (loss) associated with these cash flow hedging activities were approximately
$3 million and $(1) million, respectively.
During 2014, accumulated other comprehensive loss of nil is expected to be reclassified to
earnings. The actual amount that will be reclassified to earnings over the next twelve months may vary
from this amount due to changing market conditions. We would be exposed to credit losses in the event
of nonperformance by a counterparty to our derivative financial instruments. We anticipate, however,
that the counterparties will be able to fully satisfy their obligations under the contracts. Market risk
arises from changes in interest rates.
FOREIGN EXCHANGE RATE RISK
Our cash flows and earnings are subject to fluctuations due to exchange rate variation. Our
revenues and expenses are denominated in various currencies. We 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 three months or less). We do not hedge our currency
exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows
and earnings. As of December 31, 2013 and 2012, we had approximately $193 million and $217 million
notional amount (in U.S. dollar equivalents) outstanding, respectively, in foreign currency contracts
with a term of approximately one month.
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 A255 million from these counterparties,
and on maturity (March 15, 2015) we are required to pay A255 million to these counterparties and will
receive $350 million from these counterparties. On March 15 and September 15 of each year, we will
receive U.S. dollar interest payments of approximately $15 million (equivalent to an annual rate of
8.625%) and make interest payments of approximately A11 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 December 31, 2013 and 2012, the fair value of this swap was $2 million and
$18 million, respectively, and was recorded in noncurrent assets.
A portion of our debt is denominated in euros. We also 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
36
permanent loans because they are not expected to be repaid in the foreseeable future (‘‘permanent
loans’’) 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 (loss). 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 December 31, 2013, we have designated
approximately A525 million (approximately $725 million) of euro-denominated debt and cross-currency
interest rate contracts as a hedge of our net investment. For the years ended December 31, 2013, 2012
and 2011, the amount of gain (loss) recognized on the hedge of our net investment was $(22) million,
$(11) million and $5 million, respectively, and was recorded in other comprehensive income (loss). As
of December 31, 2013, we had approximately A988 million (approximately $1,364 million) in net euro
assets.
COMMODITY PRICES RISK
Our exposure to changing commodity prices is somewhat limited since the majority of our raw
materials are acquired at posted or market related prices, and sales prices for many of our finished
products are at market related prices which are largely set on a monthly or quarterly basis in line with
industry practice. Consequently, we do not generally hedge our commodity exposures.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
CONTROLS AND PROCEDURES
Our management, with the participation of our chief executive officer and chief financial officer,
has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) as of December 31, 2013. Based on this evaluation, our chief
executive officer and chief financial officer have concluded that, as of December 31, 2013, our
disclosure controls and procedures were effective, in that they ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and
(2) accumulated and communicated to our management, including our chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No changes to our internal control over financial reporting occurred during the quarter ended
December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act).
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over
financial reporting. Our internal control framework and processes are designed to provide reasonable
assurance to management and our Board of Directors regarding the reliability of financial reporting
and the preparation of our consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America.
37
Our internal control over financial reporting includes those policies and procedures that:
(cid:127) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of our Company;
(cid:127) provide reasonable assurance that transactions are recorded properly to allow for the
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of our Company are being made only in accordance with
authorizations of management and Directors of our Company;
(cid:127) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on our consolidated
financial statements; and
(cid:127) provide reasonable assurance as to the detection of fraud.
Because of its inherent limitations, a system of internal control over financial reporting can provide
only reasonable assurance and may not prevent or detect misstatements. Further, because of changing
conditions, effectiveness of internal control over financial reporting may vary over time.
Our management assessed the effectiveness of our internal control over financial reporting and
concluded that, as of December 31, 2013, such internal control is effective. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control—Integrated Framework (1992) (‘‘COSO’’).
Our independent registered public accountants, Deloitte & Touche LLP, with direct access to our
Board of Directors through our Audit Committee, have audited our consolidated financial statements
prepared by us and have issued attestation reports on internal control over financial reporting for our
Company.
38
MANAGEMENT’S PROCESS TO ASSESS THE EFFECTIVENESS OF
INTERNAL CONTROL OVER FINANCIAL REPORTING
To comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we completed
a comprehensive compliance process to evaluate our internal control over financial reporting for our
Company. We involved employees at all levels of our Company during 2013 in training, performing and
evaluating our internal controls.
Our management’s conclusion on the effectiveness of internal control over financial reporting is
based on a comprehensive evaluation and analysis of the five elements of COSO. Our management
considered information from multiple sources as the basis its conclusion—including self-assessments of
the control activities within each work process, assessments of division-level and entity-level controls
and internal control attestations from key external service providers, as well as from key management.
In addition, our internal control processes contain self-monitoring mechanisms, and proactive steps are
taken to correct deficiencies as they are identified. We also maintain an internal auditing program that
independently assesses the effectiveness of internal control over financial reporting within each of the
five COSO elements.
/s/ PETER R. HUNTSMAN
/s/ J. KIMO ESPLIN
Peter R. Huntsman
President and Chief Executive Officer
J. Kimo Esplin
Executive Vice President and Chief Financial Officer
February 11, 2014
39
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Huntsman Corporation and subsidiaries
We have audited the internal control over financial reporting of Huntsman Corporation and
subsidiaries (the ‘‘Company’’) as of December 31, 2013, based on criteria established in Internal
Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the
supervision of, the company’s principal executive and principal financial officers, or persons performing
similar functions, and effected by the company’s board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation
of the effectiveness of the internal control over financial reporting to future periods are subject to the
risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2013, based on the criteria established in Internal Control—
Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
40
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of and for the year ended
December 31, 2013 of the Company and our report dated February 11, 2014 expressed an unqualified
opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 11, 2014
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Huntsman Corporation and subsidiaries
We have audited the accompanying consolidated balance sheets of Huntsman Corporation and
subsidiaries (the ‘‘Company’’) as of December 31, 2013 and 2012, and the related consolidated
statements of operations, comprehensive income (loss), equity, and cash flows for each of the three
years in the period ended December 31, 2013. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on the financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the
financial position of Huntsman Corporation and subsidiaries as of December 31, 2013 and 2012, and
the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2013, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company’s internal control over financial reporting as of
December 31, 2013, based on the criteria established in Internal Control—Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report
dated February 11, 2014 expressed an unqualified opinion on the Company’s internal control over
financial reporting.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 11, 2014
42
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
ASSETS
Current assets:
Cash and cash equivalents(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash(a)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts and notes receivable (net of allowance for doubtful accounts of $42 and $47, respectively),
($521 and $520 pledged as collateral, respectively)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable from affiliates
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated affiliates
Intangible assets, net(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent assets(a)
December 31,
2013
December 31,
2012
$ 520
9
$ 387
9
1,542
33
1,741
61
53
200
4,159
3,824
285
87
131
243
1
458
1,534
49
1,819
48
51
222
4,119
3,745
238
68
117
229
2
366
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,188
$8,884
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable to affiliates
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of debt(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt(a)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes payable to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities(a)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies (Notes 18 and 19)
Equity
Huntsman Corporation stockholders’ equity:
Common stock $0.01 par value, 1,200,000,000 shares authorized, 245,930,859 and 243,813,779 issued
and 240,401,442 and 238,273,422 outstanding in 2013 and 2012, respectively . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, 4,043,526 shares at both December 31, 2013 and 2012 . . . . . . . . . . . . . . . . . . . .
Unearned stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Huntsman Corporation stockholders’ equity
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,067
46
726
43
277
2,159
3,633
6
313
948
7,059
2
3,305
(50)
(13)
(687)
(577)
1,980
149
2,129
$1,102
48
705
38
288
2,181
3,414
4
228
1,161
6,988
2
3,264
(50)
(12)
(687)
(744)
1,773
123
1,896
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,188
$8,884
(a) At December 31, 2013 and 2012, respectively, $39 and $28 of cash and cash equivalents, $9 each of restricted cash, $41 and $38 of
accounts and notes receivable (net), $54 and $55 of inventories, $3 and nil of other current assets, $369 and $378 of property, plant
and equipment (net), $17 and $19 of intangible assets (net), $28 each of other noncurrent assets, $73 and $76 of accounts payable,
$32 and $26 of accrued liabilities, $183 and $193 of current portion of debt, $64 and $77 of long-term debt, and $45 and $101 of
other noncurrent liabilities from consolidated variable interest entities are included in the respective Balance Sheet captions above.
See ‘‘Note 7. Variable Interest Entities.’’
See accompanying notes to consolidated financial statements.
43
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
Year ended December 31,
2013
2012
2011
Revenues:
Trade sales, services and fees, net
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Related party sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$10,847
232
$10,964
223
$11,041
180
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense (income) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . . . . . . . . . . . . .
11,079
9,326
1,753
11,187
9,153
2,034
11,221
9,381
1,840
942
140
10
151
951
152
(6)
92
921
166
(20)
167
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,243
1,189
1,234
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in income of investment in unconsolidated affiliates . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before extraordinary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary gain on the acquisition of a business, net of tax of nil . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . .
510
(190)
8
(51)
2
279
(125)
154
(5)
149
—
149
(21)
845
(226)
7
(80)
1
547
(169)
378
(7)
371
2
373
(10)
606
(249)
8
(7)
2
360
(109)
251
(1)
250
4
254
(7)
Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . .
$
128
$
363
$
247
(continued)
44
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
Year ended December 31,
2013
2012
2011
Basic income (loss) per share:
Income from continuing operations attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.55
$ 1.55
$ 1.03
Loss from discontinued operations attributable to Huntsman Corporation
common stockholders, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary gain on the acquisition of a business attributable to Huntsman
Corporation common stockholders, net of tax . . . . . . . . . . . . . . . . . . . . .
(0.02)
(0.03)
—
—
0.01
0.01
Net income attributable to Huntsman Corporation common stockholders . . .
$ 0.53
$ 1.53
$ 1.04
Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239.7
237.6
237.6
Diluted income (loss) per share:
Income from continuing operations attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.55
$ 1.53
$ 1.01
Loss from discontinued operations attributable to Huntsman Corporation
common stockholders, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary gain on the acquisition of a business attributable to Huntsman
Corporation common stockholders, net of tax . . . . . . . . . . . . . . . . . . . . .
(0.02)
(0.03)
—
—
0.01
0.01
Net income attributable to Huntsman Corporation common stockholders . . .
$ 0.53
$ 1.51
$ 1.02
Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
242.4
240.6
241.7
Amounts attributable to Huntsman Corporation common stockholders:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary gain on the acquisition of a business, net of tax . . . . . . . . . . .
$ 133
(5)
—
$ 368
(7)
2
$ 244
(1)
4
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 128
$ 363
$ 247
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.50
$ 0.40
$ 0.40
See accompanying notes to consolidated financial statements.
45
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax:
Foreign currency translations adjustments, net of tax of $13, $20 and $24 in
Year ended December 31,
2013
2012
2011
$149
$ 373
$ 254
2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23)
51
(80)
Pension and other postretirement benefits adjustments, net of tax of $83,
$197 and $124 in 2013, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to noncontrolling interests . . . . . . . . . . . . .
185
10
172
321
(26)
(236)
(1)
(187)
—
(186)
(267)
187
(9)
(13)
(2)
Comprehensive income (loss) attributable to Huntsman Corporation . . . . . . . .
$295
$ 178
$ (15)
See accompanying notes to consolidated financial statements.
46
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
Huntsman Corporation Stockholders’ Equity
Shares
Common Common
stock
stock
Additional
paid-in
capital
Treasury
stock
Unearned
stock-based Accumulated comprehensive
deficit
compensation
loss
Accumulated
other
4
7
Balance, January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,799,455
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Dividend paid to noncontrolling interest . . . . . . . . . . . . . . . . . .
—
Other comprehensive loss
. . . . . . . . . . . . . . . . . . . . . . . . . .
—
Consolidation of a variable interest entity . . . . . . . . . . . . . . . . .
Issuance of nonvested stock awards . . . . . . . . . . . . . . . . . . . . .
—
2,229,418
Vesting of stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of stock-based compensation . . . . . . . . . . . . . . . . .
—
(4,043,526)
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . .
(507,624)
Repurchase and cancellation of stock awards . . . . . . . . . . . . . . .
1,268,364
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Excess tax benefit related to stock- based compensation . . . . . . . .
—
Dividends declared on common stock . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . 235,746,087
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Other comprehensive loss
. . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of nonvested stock awards . . . . . . . . . . . . . . . . . . . . .
—
2,162,043
Vesting of stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Recognition of stock-based compensation . . . . . . . . . . . . . . . . .
(537,039)
Repurchase and cancellation of stock awards . . . . . . . . . . . . . . .
902,331
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Excess tax benefit related to stock- based compensation . . . . . . . .
—
Acquisition of a business . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Dividends declared on common stock . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . 238,273,422
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of nonvested stock awards . . . . . . . . . . . . . . . . . . . . .
—
1,067,888
Vesting of stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Recognition of stock-based compensation . . . . . . . . . . . . . . . . .
(304,209)
Repurchase and cancellation of stock awards . . . . . . . . . . . . . . .
1,364,341
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Excess tax benefit related to stock- based compensation . . . . . . . .
—
Accrued and unpaid dividends . . . . . . . . . . . . . . . . . . . . . . . .
—
Dividends declared on common stock . . . . . . . . . . . . . . . . . . .
$ 2
—
—
—
—
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
$3,186
—
—
—
—
11
13
5
—
—
3
10
—
3,228
—
—
12
10
9
—
3
4
(2)
—
3,264
—
—
14
5
8
—
13
1
—
—
$ —
—
—
—
—
—
—
—
(50)
—
—
—
—
(50)
—
—
—
—
—
—
—
—
—
—
(50)
—
—
—
—
—
—
—
—
—
—
$(11)
—
—
—
—
(11)
—
10
—
—
—
—
—
(12)
—
—
(12)
—
12
—
—
—
—
—
(12)
—
—
(14)
—
13
—
—
—
—
—
$(1,090)
247
—
—
—
—
—
—
—
(8)
—
—
(96)
(947)
363
—
—
—
—
(7)
—
—
—
(96)
(687)
128
—
—
—
—
(6)
—
—
(2)
(120)
$(297)
—
—
(262)
—
—
—
—
—
—
—
—
—
(559)
—
(185)
—
—
—
—
—
—
—
—
(744)
—
167
—
—
—
—
—
—
—
—
Noncontrolling
interests in
subsidiaries
$ 60
7
(9)
(5)
61
—
—
—
—
—
—
—
—
114
10
(1)
—
—
—
—
—
—
—
—
123
21
5
—
—
—
—
—
—
—
—
Total
equity
$1,850
254
(9)
(267)
61
—
13
15
(50)
(8)
3
10
(96)
1,776
373
(186)
—
10
21
(7)
3
4
(2)
(96)
1,896
149
172
—
5
21
(6)
13
1
(2)
(120)
Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . 240,401,442
$ 2
$3,305
$(50)
$(13)
$ (687)
$(577)
$149
$2,129
See accompanying notes to consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating
activities:
Extraordinary gain on the acquisition of a business, net of tax . . . . . . . . . . . . .
Loss (gain) on initial consolidation of subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Equity in income of investment in unconsolidated affiliates . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for losses (gains) on accounts receivable . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on disposal of businesses/assets, net . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash restructuring and impairment charges . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash loss (gain) on foreign currency transactions . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31,
2013
2012
2011
$ 149
$ 373
$ 254
—
—
(8)
448
2
5
51
11
13
10
31
29
—
(11)
77
(11)
23
(113)
(12)
(39)
53
(2)
4
(7)
432
4
—
80
33
15
(38)
11
27
(2)
(4)
(12)
(8)
439
(4)
(38)
7
38
60
(23)
(32)
24
(1)
— (121)
(161)
(4)
(108)
2
24
112
(79)
(248)
(3)
24
103
146
23
(201)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
708
774
365
Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from settlements treated as reimbursement of capital expenditures . .
Cash received from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . .
Cash assumed in connection with the initial consolidation of a variable interest
entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of businesses/assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
(471)
—
71
(104)
(66)
—
2
2
(412)
—
82
(127)
(18)
—
6
(2)
(330)
3
32
(26)
(34)
28
48
(1)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(566)
(471)
(280)
(continued)
48
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
Financing Activities:
Net repayments under revolving loan facilities . . . . . . . . . . . . . . . . . . . . . . . .
Net (repayments) on borrowings overdraft facilities . . . . . . . . . . . . . . . . . . . . .
Repayments of short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on short-term debt
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call premiums related to early extinguishment of debt
. . . . . . . . . . . . . . . . . .
Dividends paid to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase and cancellation of stock awards . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit related to stock-based compensation . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31,
2013
2012
2011
$
(4)
(9)
(18)
15
(840)
979
(40)
35
(11)
(4)
(120)
(6)
—
13
—
1
3
(6)
(3)
133
387
(15) $
2
(53)
—
(694)
405
(37)
34
(11)
(2)
(96)
(7)
—
3
—
4
(6)
(2)
9
(187)
162
(408)
98
(34)
35
(7)
(6)
(96)
(8)
(50)
3
(9)
10
—
(473)
(490)
3
(167)
554
(7)
(412)
966
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 520
$ 387
$ 554
Supplemental cash flow information:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for interest
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 187
78
$ 209
224
$ 204
119
During 2013, 2012 and 2011, the amount of capital expenditures in accounts payable (decreased)
increased by $(16), $31 and $16, respectively.
See accompanying notes to consolidated financial statements.
49
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
DEFINITIONS
For convenience in this report, the terms ‘‘Company,’’ ‘‘our’’ or ‘‘we’’ may be used to refer to
Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors.
Any references to our ‘‘Company’’ ‘‘we’’ ‘‘us’’ or ‘‘our’’ as of a date prior to October 19, 2004 (the date
of our Company’s formation) are to Huntsman Holdings, LLC and its subsidiaries (including their
respective predecessors). In this report, ‘‘Huntsman International’’ refers to Huntsman
International LLC (our 100% owned subsidiary) and, unless the context otherwise requires, its
subsidiaries; ‘‘HPS’’ refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated splitting joint
venture with Shanghai Chlor-Alkali Chemical Company, Ltd); and ‘‘SLIC’’ refers to Shanghai
Liengheng Isocyanate Company (our unconsolidated manufacturing joint venture with BASF and three
Chinese chemical companies).
In this report, we may use, without definition, the common names of competitors or other industry
participants. We may also use the common names or abbreviations for certain chemicals or products.
Each capitalized term used without definition in this report has the meaning specified in the Annual
Report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and
Exchange Commission on February 11, 2014.
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.
Since then, we have grown through a series of acquisitions and now own a global portfolio of
businesses.
Currently, we operate all of our businesses through Huntsman International, our 100% owned
subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.
50
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ASSET RETIREMENT OBLIGATIONS
We accrue for asset retirement obligations, which consist primarily of landfill capping, closure and
post-closure costs and asbestos abatement costs, in the period in which the obligations are incurred.
Asset retirement obligations are accrued at estimated fair value. When the liability is initially recorded,
we capitalize the cost by increasing the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its settlement value and the capitalized cost is depreciated over the useful life of
the related asset. Upon settlement of the liability, we will recognize a gain or loss for any difference
between the settlement amount and the liability recorded. Asset retirement obligations were $29 million
and $28 million at December 31, 2013 and 2012, respectively.
CARRYING VALUE OF LONG-LIVED ASSETS
We review long-lived assets and all amortizable intangible assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.
Recoverability is based upon current and anticipated undiscounted cash flows, and we recognize an
impairment when such estimated cash flows are less than the carrying value of the asset. Measurement
of the amount of impairment, if any, is based upon the difference between carrying value and fair
value. Fair value is generally estimated by discounting estimated future cash flows using a discount rate
commensurate with the risks involved. See ‘‘Note 11. Restructuring, Impairment and Plant Closing
Costs.’’
CASH AND CASH EQUIVALENTS
We consider cash in checking accounts and cash in short-term highly liquid investments with
remaining maturities of three months or less at the date of purchase, to be cash and cash equivalents.
Cash flows from discontinued operations are not presented separately in our consolidated statements of
cash flows.
COST OF GOODS SOLD
We classify the costs of manufacturing and distributing our products as cost of goods sold.
Manufacturing costs include variable costs, primarily raw materials and energy, and fixed expenses
directly associated with production. Manufacturing costs also include, among other things, plant site
operating costs and overhead (including depreciation), production planning and logistics costs, repair
and maintenance costs, plant site purchasing costs, and engineering and technical support costs.
Distribution, freight and warehousing costs are also included in cost of goods sold.
DERIVATIVES AND HEDGING ACTIVITIES
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. Changes in the fair value of the hedge in the net investment of certain
international operations are recorded in other comprehensive income (loss), to the extent effective. The
effectiveness of a cash flow hedging relationship is established at the inception of the hedge, and after
51
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
inception we perform effectiveness assessments at least every three months. A derivative designated as
a cash flow hedge is determined to be effective if the change in value of the hedge divided by the
change in value of the hedged item is within a range of 80% to 125%. Hedge ineffectiveness in a cash
flow hedge occurs only if the cumulative gain or loss on the derivative hedging instrument exceeds the
cumulative change in the expected future cash flows on the hedged transaction. For a derivative that
does not qualify or has not been designated as a hedge, changes in fair value are recognized in
earnings.
ENVIRONMENTAL EXPENDITURES
Environmental related restoration and remediation costs are recorded as liabilities when site
restoration and environmental remediation and clean-up obligations are either known or considered
probable and the related costs can be reasonably estimated. Other environmental expenditures that are
principally maintenance or preventative in nature are recorded when expended and incurred and are
expensed or capitalized as appropriate. See ‘‘Note 19. Environmental, Health and Safety Matters.’’
FOREIGN CURRENCY TRANSLATION
The accounts of our operating subsidiaries outside of the U.S., unless they are operating in highly
inflationary economic environments, consider the functional currency to be the currency of the
economic environment in which they operate. Accordingly, assets and liabilities are translated at rates
prevailing at the balance sheet date. Revenues, expenses, gains and losses are translated at a weighted
average rate for the period. Cumulative translation adjustments are recorded to equity as a component
of accumulated other comprehensive loss.
If a subsidiary operates in an economic environment that is considered to be highly inflationary
(100% cumulative inflation over a three-year period), the U.S. dollar is considered to be the functional
currency and gains and losses from remeasurement to the U.S. dollar from the local currency are
included in the statement of operations. Where a subsidiary’s operations are effectively run, managed,
financed and contracted in U.S. dollars, such as certain finance subsidiaries outside of the U.S., the
U.S. dollar is considered to be the functional currency.
Foreign currency transaction gains and losses are recorded in other operating expense (income) in
our consolidated statements of operations and were net losses of $11 million, $4 million and $3 million
for the years ended December 31, 2013, 2012 and 2011, respectively.
INCOME TAXES
We use the asset and liability method of accounting for income taxes. Deferred income taxes
reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine
whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax
jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a
change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These
conclusions require significant judgment. In evaluating the objective evidence that historical results
provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable
period. Cumulative losses incurred over the period limits our ability to consider other subjective
52
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
evidence such as our projections for the future. Changes in expected future income in applicable
jurisdictions could affect the realization of deferred tax assets in those jurisdictions.
We do not provide for income taxes or benefits on the undistributed earnings of our non-U.S.
subsidiaries as earnings are reinvested and, in the opinion of management, will continue to be
reinvested indefinitely.
Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. The application of income tax law is inherently complex. We are required
to determine if an income tax position meets the criteria of more-likely-than-not to be realized based
on the merits of the position under tax law, in order to recognize an income tax benefit. This requires
us to make significant judgments regarding the merits of income tax positions and the application of
income tax law. Additionally, if a tax position meets the recognition criteria of more-likely-than-not we
are required to make judgments and apply assumptions to measure the amount of the tax benefits to
recognize. These judgments are based on the probability of the amount of tax benefits that would be
realized if the tax position was challenged by the taxing authorities. Interpretations and guidance
surrounding income tax laws and regulations change over time. As a consequence, changes in
assumptions and judgments can materially affect amounts recognized in our consolidated financial
statements.
INTANGIBLE ASSETS AND GOODWILL
Intangible assets are stated at cost (fair value at the time of acquisition) and are amortized using
the straight-line method over the estimated useful lives or the life of the related agreement as follows:
Patents and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Licenses and other agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 - 30 years
15 - 30 years
5 - 15 years
5 - 15 years
Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired
businesses. Goodwill is not subject to any method of amortization, but is tested for impairment
annually (at the beginning of the third quarter) and when events and circumstances change that would
more likely than not reduce the fair value of a reporting unit below its carrying amount. When the fair
value is less than the carrying value of the related reporting unit, we are required to reduce the amount
of goodwill through a charge to earnings. Fair value is estimated using the market approach, as well as
the income approach based on discounted cash flow projections. Goodwill has been assigned to
reporting units for purposes of impairment testing. Goodwill increased by $14 million during the year
ended December 31, 2013 due to the finalization of purchase accounting.
INVENTORIES
Inventories are stated at the lower of cost or market, with cost determined using LIFO, first-in
first-out, and average costs methods for different components of inventory.
53
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
LEGAL COSTS
We expense legal costs, including those legal costs incurred in connection with a loss contingency,
as incurred.
NET INCOME PER SHARE ATTRIBUTABLE TO HUNTSMAN CORPORATION
Basic income per share excludes dilution and is computed by dividing net income attributable to
Huntsman Corporation common stockholders by the weighted average number of shares outstanding
during the period. Diluted income per share reflects all potential dilutive common shares outstanding
during the period and is computed by dividing net income available to Huntsman Corporation common
stockholders by the weighted average number of shares outstanding during the period increased by the
number of additional shares that would have been outstanding as dilutive securities.
Basic and diluted income per share is determined using the following information (in millions):
2013
2012
2011
Numerator:
Basic and diluted income from continuing operations:
Income from continuing operations attributable to Huntsman Corporation . .
$ 133
$ 368
$ 244
Basic and diluted net income:
Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . . . .
$ 128
$ 363
$ 247
Shares (denominator):
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive securities:
Stock-based awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239.7
237.6
237.6
2.7
3.0
4.1
Total weighted average shares outstanding, including dilutive shares . . . . . . .
242.4
240.6
241.7
Additional stock-based awards of 7.3 million, 7.8 million and 6.7 million weighted average
equivalent shares of stock were outstanding during the years ended December 31, 2013, 2012 and 2011,
respectively. However, these stock-based awards were not included in the computation of diluted
earnings per share for the respective periods mentioned because the effect would be anti-dilutive.
OTHER NONCURRENT ASSETS
Other noncurrent assets consist primarily of spare parts, deferred debt issuance costs, the
overfunded portion related to defined benefit plans for employees and capitalized turnaround costs.
Debt issuance costs are amortized using the interest method over the term of the related debt.
PRINCIPLES OF CONSOLIDATION
Our consolidated financial statements 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.
54
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is
computed using the straight-line method over the estimated useful lives or lease term as follows:
Buildings and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and leasehold improvements . . . . . . . . . . . . . . . . . .
5 - 50 years
3 - 30 years
5 - 20 years
Interest expense capitalized as part of plant and equipment was $7 million, $4 million and
$2 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Periodic maintenance and repairs applicable to major units of manufacturing facilities (a
‘‘turnaround’’) are accounted for on the deferral basis by capitalizing the costs of the turnaround and
amortizing the costs over the estimated period until the next turnaround. Normal maintenance and
repairs of plant and equipment are charged to expense as incurred. Renewals, betterments and major
repairs that materially extend the useful life of the assets are capitalized, and the assets replaced, if
any, are retired.
REVENUE RECOGNITION
We generate substantially all of our revenues through sales in the open market and long-term
supply agreements. We recognize revenue when it is realized or realizable and earned. Revenue for
product sales is recognized when a sales arrangement exists, risk and title to the product transfer to the
customer, collectability is reasonably assured and pricing is fixed or determinable. The transfer of risk
and title to the product to the customer usually occurs at the time shipment is made.
Revenue arrangements that contain multiple deliverables, which relate primarily to licensing of
technology, are evaluated to determine whether the arrangements should be divided into separate units
of accounting and how the arrangement consideration should be measured and allocated among the
separate units of accounting.
SECURITIZATION OF ACCOUNTS RECEIVABLE
Under our A/R Programs, we grant an undivided interest in certain of our trade receivables to the
U.S. SPE and the EU SPE. This undivided interest serves as security for the issuance of debt. The
A/R Programs provide for financing through a conduit program (in both U.S. dollars and euros). The
amounts outstanding under our A/R Programs are accounted for as secured borrowings. See
‘‘Note 13. Debt—A/R Programs.’’
STOCK-BASED COMPENSATION
We measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. That cost will be recognized over the period during
which the employee is required to provide services in exchange for the award. See ‘‘Note 21. Stock-
Based Compensation Plan.’’
55
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
SUBSEQUENT EVENTS
We have evaluated material subsequent events through the date these consolidated financial
statements were issued.
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.
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 consolidated financial statements.
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 in the notes to our
consolidated financial statements. See ‘‘Note 22. Other Comprehensive Income (Loss).’’
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
56
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
of the amendments in this ASU did not have a significant impact on our consolidated financial
statements.
ACCOUNTING PRONOUNCEMENTS PENDING ADOPTION IN FUTURE PERIODS
In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting
from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the
Reporting Date, requiring entities to measure obligations resulting from joint and several liability
arrangements for which the total amount of the obligation is fixed at the reporting date, as the sum of
the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors
and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The
amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning
after December 15, 2013. The amendments in this ASU should be applied retrospectively to all prior
periods presented for those obligations resulting from joint and several liability arrangements that exist
at the beginning of an entity’s fiscal year of adoption. We do not expect the adoption of the
amendments in this ASU to have a significant impact on our consolidated financial statements.
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 consolidated financial
statements.
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 (‘‘NOLs’’), 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
consolidated financial statements.
3. BUSINESS COMBINATIONS AND DISPOSITIONS
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, subject to certain purchase price adjustments, and the assumption of certain unfunded pension
liabilities estimated at $225 million 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.
57
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued)
OXID ACQUISITION
On August 29, 2013, we completed the Oxid Acquisition. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of assets acquired and liabilities assumed:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$66
10
$76
$ 9
14
22
36
(4)
(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 and
intangible assets. For purposes of this preliminary allocation of fair value, we have assigned any excess
of the acquisition cost of historical carrying values to intangible assets 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, 2011, the following estimated pro forma
revenues and net income attributable to Huntsman Corporation (unaudited) would have been reported
(dollars in millions):
Pro Forma
Year ended December 31,
(unaudited)
2013
2012
2011
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . .
$11,142
135
$11,269
369
$11,294
246
SALE OF STEREOLITHOGRAPHY RESIN AND DIGITALIS(cid:1) MACHINE MANUFACTURING BUSINESSES
On November 1, 2011, our Advanced Materials division completed the sale of its stereolithography
resin and Digitalis(cid:1) machine manufacturing businesses to 3D Systems Corporation for $41 million in
58
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued)
cash. The stereolithography business produced products that are used primarily in three-dimensional
part building systems. The Digitalis(cid:1) business is a stereolithography rapid manufacturing system that we
were developing. In connection with this sale, we recognized a pre-tax gain in the fourth quarter of
2011 of $34 million which was reflected in other operating income in our consolidated statements of
operations and comprehensive income (loss). We also derecognized $2 million of goodwill that was
allocated to these businesses.
TEXTILE EFFECTS ACQUISITION
On June 30, 2006, we acquired Ciba’s textile effects business and accounted for the Textile Effects
Acquisition using the purchase method. As such, we analyzed the fair value of tangible and intangible
assets acquired and liabilities assumed and determined the excess of fair value of net assets over cost.
Because the fair value of the acquired assets and liabilities assumed exceeded the purchase price, the
value of the long-lived assets acquired was reduced to zero. Accordingly, no basis was assigned to
property, plant and equipment or any other non-current nonfinancial assets and the remaining excess
was recorded as an extraordinary gain. During 2012 and 2011, we recorded an additional extraordinary
gain on the acquisition of $2 million and $4 million, respectively, related to settlement of contingent
purchase price consideration, the reversal of accruals for certain restructuring and employee
termination costs recorded in connection with the Textile Effects Acquisition and a reimbursement by
Ciba of certain costs pursuant to the acquisition agreements.
4. INVENTORIES
Inventories consisted of the following (dollars in millions):
December 31,
2013
2012
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 433
92
1,290
$ 484
98
1,311
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIFO reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,815
(74)
1,893
(74)
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,741
$1,819
For both December 31, 2013 and 2012, approximately 11% of inventories were recorded using the
LIFO cost method.
59
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment were as follows (dollars
in millions):
December 31,
2013
2012
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
159
730
6,589
613
$
151
666
6,242
549
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .
8,091
(4,267)
7,608
(3,863)
Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,824
$ 3,745
Depreciation expense for 2013, 2012 and 2011 was $415 million, $399 million and $398 million,
respectively, of which $2 million, $5 million and nil was related to discontinued operations in 2013,
2012 and 2011, respectively.
6. INVESTMENT IN UNCONSOLIDATED AFFILIATES
Investments in companies in which we exercise significant influence, but do not control, are
accounted for using the equity method. Investments in companies in which we do not exercise
significant influence are accounted for using the cost method.
Our ownership percentage and investment in unconsolidated affiliates were as follows (dollars
in millions):
Equity Method:
Louisiana Pigment Company, L.P. (50%) . . . . . . . . . . . . . . . . . . . . . .
BASF Huntsman Shanghai Isocyanate Investment BV (50%)(1) . . . . .
Nanjing Jinling Huntsman New Material Co., Ltd. (49%) . . . . . . . . . .
Jurong Ningwu New Materials Development Co., Ltd. (30%) . . . . . . .
Nippon Aqua Co., Ltd. (15)% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost Method:
International Diol Company (4%) . . . . . . . . . . . . . . . . . . . . . . . . . . .
White Mountain Titanium Corporation (3%) . . . . . . . . . . . . . . . . . . .
December 31,
2013
2012
$104
87
62
15
8
1
277
$111
81
24
12
—
2
230
5
3
5
3
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$285
$238
(1) We own 50% of BASF Huntsman Shanghai Isocyanate Investment BV. BASF Huntsman
Shanghai Isocyanate Investment BV owns a 70% interest in SLIC, thus giving us an
indirect 35% interest in SLIC.
60
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. INVESTMENT IN UNCONSOLIDATED AFFILIATES (Continued)
On November 13, 2012, we entered into an agreement to form a joint venture with Sinopec
(Nanjing Jingling). The joint venture involves the construction and operation of a PO/MTBE facility in
China. Under the joint venture agreement, we hold a 49% interest in the joint venture and Sinopec
holds a 51% interest. Our total equity investment is anticipated to be approximately $135 million, and
we expect to receive approximately $50 million of license fees from the joint venture. The timing of
equity contributions and license fee payments depends on various factors, but the majority are expected
to be made over the course of the construction period of the plant (expected to be completed in 2015).
7. 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:
(cid:127) Rubicon LLC manufactures products for our Polyurethanes and Performance Products segments.
The structure of the joint venture is such that the total equity investment at risk is not sufficient
to permit the joint venture to finance its activities without additional financial support. By virtue
of the operating agreement with this joint venture, we purchase a majority of the output, absorb
a majority of the operating costs and provide a majority of the additional funding.
(cid:127) Pacific Iron Products Sdn Bhd manufactures products for our Pigments segment. In this joint
venture we supply all the raw materials through a fixed cost supply contract, operate the
manufacturing facility and market the products of the joint venture to customers. Through a
fixed price raw materials supply contract with the joint venture we are exposed to the risk
related to the fluctuation of raw material pricing.
(cid:127) Arabian Amines Company manufactures products for our Performance Products segment. As
required in the operating agreement governing this joint venture, we purchase all of Arabian
Amines Company’s production and sell it to our customers. Substantially all of the joint
venture’s activities are conducted on our behalf.
(cid:127) Sasol-Huntsman is our 50%-owned joint venture with Sasol that owns and operates a maleic
anhydride facility in Moers, Germany. This joint venture manufactures products for our
Performance Products segment. Prior to April 1, 2011, we accounted for Sasol-Huntsman using
the equity method. In April 2011, an expansion at this facility began production, which triggered
the reconsideration of this joint venture as a variable interest entity. The joint venture uses our
technology and expertise, and we bear a disproportionate amount of risk of loss due to a
related-party loan to Sasol-Huntsman for which we bear the default risk. As a result, we
concluded that we were the primary beneficiary and began consolidating Sasol-Huntsman
beginning April 1, 2011.
Creditors of these entities have no recourse to our general credit, except in the event that we offer
guarantees of specified indebtedness. See ‘‘Note 13. Debt—Direct and Subsidiary Debt.’’ As the
primary beneficiary of these variable interest entities at December 31, 2013, the joint ventures’ assets,
liabilities and results of operations are included in our consolidated financial statements.
61
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. VARIABLE INTEREST ENTITIES (Continued)
The following table summarizes the carrying amount of our variable interest entities’ assets and
liabilities included in our consolidated balance sheets, before intercompany eliminations, as of
December 31, 2013 and 2012 (dollars in millions):
December 31,
2013
2012
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
$147
369
76
28
17
16
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$653
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$330
72
9
45
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$456
$163
378
61
45
19
16
$682
$348
82
8
102
$540
In April 2011, Arabian Amines Company settled a dispute with its contractors and received an
amount totaling $11 million. Of this $11 million settlement, $8 million was related to damages incurred
due to the delayed initial acceptance of the plant. This amount was recorded as other operating
expense (income) in our consolidated statements of operations and included in cash flows from
operating activities in our consolidated statements of cash flows. The remaining $3 million of the
settlement was received for the reimbursement of capital expenditures for work left unfinished by the
contractors. This amount was included in cash flows from investing activities in our consolidated
statements of cash flows.
Sasol-Huntsman had revenues and earnings of $116 million and $7 million, respectively, for the
period from the date of consolidation to December 31, 2011. If this consolidation had occurred on
January 1, 2011, the approximate pro forma revenues (unaudited) attributable to our Company would
have been $11,259 million for 2011. There would have been no impact to the combined earnings
attributable to us excluding a one-time noncash gain of approximately $12 million recognized upon
consolidation included in other operating expense (income) in our consolidated statements of
operations. Upon consolidation we also recognized a one-time noncash income tax expense of
approximately $2 million.
62
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INTANGIBLE ASSETS
The gross carrying amount and accumulated amortization of intangible assets were as follows
(dollars in millions):
December 31, 2013
December 31, 2012
Carrying
Amount
Accumulated
Amortization
Patents, trademarks and technology . . . . . . .
Licenses and other agreements . . . . . . . . . . .
Non-compete agreements . . . . . . . . . . . . . . .
Other intangibles . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$384
52
4
62
$502
$339
19
2
55
$415
Net
$45
33
2
7
$87
Carrying
Amount
Accumulated
Amortization
$355
41
2
60
$458
$318
16
2
54
$390
Net
$37
25
—
6
$68
Amortization expense was $21 million, $23 million and $29 million for the years ended
December 31, 2013, 2012 and 2011, respectively.
Our estimated future amortization expense for intangible assets over the next five years is as
follows (dollars in millions):
Year ending December 31,
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$15
8
8
7
6
9. OTHER NONCURRENT ASSETS
Other noncurrent assets consisted of the following (dollars in millions):
Pension assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized turnaround costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spare parts inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Catalyst assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013
2012
$ 20
32
192
100
26
41
47
$
1
29
127
93
25
33
58
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$458
$366
Amortization expense of catalyst assets for the years ended December 31, 2013, 2012 and 2011 was
$12 million, $10 million and $12 million, respectively.
63
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (dollars in millions):
December 31,
2013
2012
Payroll and related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volume and rebate accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and plant closing costs . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Self-insured casualty loss reserves . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other miscellaneous accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$172
35
95
61
79
55
5
12
9
12
11
3
1
176
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$726
$149
34
85
24
87
93
10
11
12
11
16
15
—
158
$705
64
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of December 31, 2013, 2012 and 2011, accrued restructuring, impairment and plant closing
costs by type of cost and initiative consisted of the following (dollars in millions):
Workforce
Demolition and Non-cancelable restructuring
Other
reductions(1) decommissioning
contract costs
Accrued liabilities as of January 1, 2011 . . . . . .
2011 charges for 2010 and prior initiatives . . . . .
2011 charges for 2011 initiatives
. . . . . . . . . . .
Reversal of reserves no longer required . . . . . .
2011 payments for 2010 and prior initiatives . . .
2011 payments for 2011 initiatives . . . . . . . . . .
Net activity of discontinued operations . . . . . . .
Foreign currency effect on liability balance . . . .
Accrued liabilities as of December 31, 2011 . . . .
2012 charges for 2011 and prior initiatives . . . . .
2012 charges for 2012 initiatives
. . . . . . . . . . .
Reversal of reserves no longer required . . . . . .
2012 payments for 2011 and prior initiatives . . .
2012 payments for 2012 initiatives . . . . . . . . . .
Foreign currency effect on liability balance . . . .
Accrued liabilities as of December 31, 2012 . . . .
2013 charges for 2012 and prior initiatives . . . . .
2013 charges for 2013 initiatives
. . . . . . . . . . .
Reversal of reserves no longer required . . . . . .
2013 payments for 2012 and prior initiatives . . .
2013 payments for 2013 initiatives . . . . . . . . . .
Net activity of discontinued operations . . . . . . .
Foreign currency effect on liability balance . . . .
$ 36
4
87
(5)
(26)
(13)
—
(10)
73
9
64
(15)
(31)
(12)
2
90
32
28
(22)
(66)
(10)
—
—
Accrued liabilities as of December 31, 2013 . . . .
$ 52
$ 1
2
—
—
(3)
—
—
—
—
5
—
—
(6)
—
1
—
16
—
—
(16)
—
—
—
$—
$ 7
10
1
—
(1)
—
—
—
17
—
—
—
(2)
—
—
15
53
—
(4)
(3)
—
(3)
2
costs
$ 5
7
1
—
(8)
(1)
(2)
—
2
10
5
(1)
(11)
(6)
1
—
20
8
—
(19)
(8)
—
—
Total(2)
$ 49
23
89
(5)
(38)
(14)
(2)
(10)
92
24
69
(16)
(50)
(18)
4
105
121
36
(26)
(104)
(18)
(3)
2
$113
$60
$ 1
(1) The total workforce reduction reserves of $52 million relate to the termination of 403 positions, of which 324
positions had not been terminated as of December 31, 2013.
(2) Accrued liabilities remaining at December 31, 2013 and 2012 by year of initiatives were as follows (dollars in
millions):
2011 initiatives and prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2013
$ 74
21
18
$113
2012
$ 52
53
—
$105
65
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. 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):
Accrued liabilities as of January 1, 2011
2011 charges for 2010 and prior
initiatives . . . . . . . . . . . . . . . . . .
2011 charges for 2011 initiatives . . . . .
Reversal of reserves no longer required
2011 payments for 2010 and prior
initiatives . . . . . . . . . . . . . . . . . .
2011 payments for 2011 initiatives . . . .
Net activity of discontinued operations .
Foreign currency effect on liability
balance . . . . . . . . . . . . . . . . . . .
Accrued liabilities as of December 31,
2011 . . . . . . . . . . . . . . . . . . . . .
2012 charges for 2011 and prior
initiatives . . . . . . . . . . . . . . . . . .
2012 charges for 2012 initiatives . . . . .
Reversal of reserves no longer required
2012 payments for 2011 and prior
initiatives . . . . . . . . . . . . . . . . . .
2012 payments for 2012 initiatives . . . .
Foreign currency effect on liability
balance . . . . . . . . . . . . . . . . . . .
Accrued liabilities as of December 31,
2012 . . . . . . . . . . . . . . . . . . . . .
2013 charges for 2012 and prior
initiatives . . . . . . . . . . . . . . . . . .
2013 charges for 2013 initiatives . . . . .
Reversal of reserves no longer required
2013 payments for 2012 and prior
initiatives . . . . . . . . . . . . . . . . . .
2013 payments for 2013 initiatives . . . .
Net activity of discontinued operations .
Foreign currency effect on liability
balance . . . . . . . . . . . . . . . . . . .
Accrued liabilities as of December 31,
2013 . . . . . . . . . . . . . . . . . . . . .
Current portion of restructuring
reserves . . . . . . . . . . . . . . . . . . .
Long-term portion of restructuring
reserve . . . . . . . . . . . . . . . . . . .
Polyurethanes
Products Materials Effects Pigments Operations
and other Total
Performance Advanced Textile
Discontinued Corporate
$—
$ 1
$ 2
$ 25
$ 8
$ 8
$ 5
$ 49
—
21
(1)
(1)
(7)
—
(2)
12
4
30
—
(15)
(6)
2
27
38
—
(8)
(45)
—
—
—
14
65
(4)
(18)
(5)
—
(8)
69
14
—
(16)
(27)
—
2
42
73
1
(9)
(41)
—
—
2
7
3
—
(13)
(2)
—
—
3
4
—
—
(5)
—
(1)
1
4
—
—
(3)
(1)
—
1
$12
$ 68
$ 2
$12
—
$ 15
$ 2
53
—
—
—
—
—
—
(2)
—
6
—
—
—
—
—
—
6
—
—
—
—
—
(3)
—
$ 3
$ 3
—
2
—
—
(6)
—
—
—
1
1
1
—
(1)
—
—
2
1
17
—
(1)
(10)
—
—
23
89
(5)
(38)
(14)
(2)
(10)
92
24
69
(16)
(50)
(18)
4
105
121
36
(26)
(104)
(18)
(3)
2
$ 9
$ 113
$ 9
$ 55
—
58
—
—
—
—
—
—
—
—
—
38
—
—
(12)
1
27
5
—
(9)
(14)
—
—
—
$ 9
$ 4
5
—
—
—
—
—
—
—
1
1
—
—
(2)
—
—
—
—
18
—
—
(7)
—
(1)
$10
$10
—
66
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
Details with respect to cash and noncash restructuring charges for the years ended December 31,
2013, 2012 and 2011 by initiative are provided below (dollars in millions):
Cash charges:
2013 charges for 2012 and prior initiatives . . . . . . . . . . . . . . . . . . . . . . . . .
2013 charges for 2013 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserves no longer required . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension-related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$121
36
(26)
7
13
Total 2013 Restructuring, Impairment and Plant Closing Costs . . . . . . . . . . . .
$151
Cash charges:
2012 charges for 2011 and prior initiatives . . . . . . . . . . . . . . . . . . . . . . . . .
2012 charges for 2012 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserves no longer required . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 24
69
(16)
15
Total 2012 Restructuring, Impairment and Plant Closing Costs . . . . . . . . . . . .
$ 92
Cash charges:
2011 charges for 2010 and prior initiatives . . . . . . . . . . . . . . . . . . . . . . . . .
2011 charges for 2011 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserves no longer required . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 23
89
(5)
60
Total 2011 Restructuring, Impairment and Plant Closing Costs . . . . . . . . . . . .
$167
2013 RESTRUCTURING ACTIVITIES
During 2012, our Polyurethanes segment began implementing a restructuring program to reduce
annualized fixed costs. As of December 31, 2013, our Polyurethanes segment restructuring reserve
consisted of $9 million related to this program. In connection with this program, we recorded charges
of $5 million and reversed charges of $9 million during 2013 primarily for workforce reductions. Our
Polyurethanes segment also recorded pension-related charges of $6 million during 2013 related to this
program.
During 2013, our Performance Products segment implemented a restructuring program to refocus
our surfactants business in Europe. As of December 31, 2013, our Performance Products segment
restructuring reserve consisted of $10 million related to this program. In connection with this program,
we recorded charges of $13 million during 2013 primarily related to workforce reductions. Additionally,
we recorded charges of $5 million during 2013 primarily related to workforce reductions in our
Australian operation.
During the fourth quarter of 2012, our Advanced Materials segment began implementing a global
transformational change program, subject to consultation with relevant employee representatives,
designed to improve the segment’s manufacturing efficiencies, enhance commercial excellence and
improve its long-term global competitiveness. As of December 31, 2013, our Advanced Materials
segment restructuring reserve consisted of $12 million primarily related to this program. During 2013,
67
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
we recorded charges of $38 million and noncash charges of $4 million and reversed charges of
$8 million.
During 2011, our Textile Effects segment began implementing a significant restructuring program,
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 segment’s long-term global
competitiveness. In connection with this program, during 2013, our Textile Effects segment recorded
charges of $53 million for the early termination of long-term fixed cost contracts, $16 million for
decommissioning, $3 million for other restructuring and $1 million for workforce reductions and
reversed charges of $5 million related to workforce reductions, as well as recorded a $9 million noncash
charge for a pension settlement loss. In addition, during 2013, we reversed charges of $4 million that
were no longer required for long term fixed costs contracts in relation to our consolidation of
manufacturing activities and processes at our site in Basel, Switzerland.
As of December 31, 2013, our Pigments segment restructuring reserve consisted of $2 million
primarily related to workforce reductions at our Scarlino, Italy plant. During 2013, our Pigments
segment recorded charges of $4 million primarily related to the closure of our Grimsby, U.K. plant.
As of December 31, 2013, our Corporate and other segment restructuring reserve consisted of
$9 million primarily related to a reorganization of our global information technology organization and a
reorganization and regional consolidation of our purchasing activities. During 2013, we recorded
charges of $18 million in Corporate and other primarily related to these initiatives. Our Corporate and
other segment also recorded pension-related charges of $1 million during 2013 related to our initiatives.
2012 RESTRUCTURING ACTIVITIES
During 2012, our Polyurethanes segment implemented a restructuring program to reduce
annualized fixed costs. In connection with this program, we recorded restructuring expenses of
$38 million during 2012 primarily for workforce reductions. As of December 31, 2012, our
Polyurethanes segment restructuring reserve consisted of $27 million related to this program.
During the fourth quarter of 2012, our Advanced Materials segment began implementing a global
transformational change program, subject to consultation with relevant employee representatives,
designed to improve the segment’s manufacturing efficiencies, enhance commercial excellence and
ensure its long-term global competitiveness. As of December 31, 2012, our Advanced Materials segment
restructuring reserve consisted of $27 million primarily related to this program. During 2012, we
recorded charges of $38 million of which $28 million related to our global transformational change
program, $3 million related to the reorganization of our global structure and relocation of our
divisional headquarters from Basel, Switzerland to The Woodlands, Texas and $3 million related
primarily to a redesign of our planning process focused on inventory reduction. Our Advanced
Materials segment also recorded noncash charges of $4 million related to pension settlements.
During 2011, our Textile Effects segment began implementing a significant restructuring program,
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 segment’s long-term global
competitiveness. In connection with this plan, during 2012, we recorded cash charges of $1 million for
workforce reductions, $9 million for decommissioning and other restructuring expenses, and noncash
charges of $11 million primarily for pension settlements. In addition, during 2012, our Textile Effects
segment recorded charges of $4 million of which $2 million related to the closure of our St. Fons,
68
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
France facility and $2 million related to a global transfer pricing initiative. We reversed charges of
$16 million which were no longer required for workforce reductions at our production facility in
Langweid, Germany, the simplification of the commercial organization and optimization of our
distribution network, the consolidation of manufacturing activities and processes at our site in Basel,
Switzerland and the closure of our production facilities in Basel, Switzerland.
As of December 31, 2012, our Pigments segment restructuring reserve consisted of $1 million
primarily related to workforce reductions at our Scarlino, Italy plant. During 2012, our Pigments
segment recorded charges of $4 million related to the closure of our Grimsby, U.K. plant.
As of December 31, 2012, our Corporate and other segment restructuring reserve consisted of
$2 million primarily related to a reorganization and regional consolidation of our purchasing activities.
During 2012, we recorded charges of $2 million in Corporate and other primarily related to workforce
reductions in connection with this project.
2011 RESTRUCTURING ACTIVITIES
As of December 31, 2011, our Advanced Materials segment restructuring reserve consisted of
$12 million related to workforce reductions in connection with a reorganization of its global structure
and relocation of its divisional headquarters from Basel, Switzerland to The Woodlands, Texas. During
2011, our Advanced Materials segment recorded net charges of $20 million primarily related this
activity.
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 2011, we recorded a charge of
$62 million for workforce reduction, a pension curtailment gain of $38 million and a charge of
$53 million for the impairment of long-lived assets at our Basel, Switzerland manufacturing facility. For
purposes of calculating the impairment charge, the fair value of the Basel, Switzerland manufacturing
facility was based on the discounted cash flows of that facility. As of December 31, 2011, our Textile
Effects segment restructuring reserve consisted of $69 million, of which $2 million related to opening
balance sheet liabilities from the Textile Effects Acquisition, $2 million related to workforce reductions
at our production facility in Langweid, Germany, $2 million related to the simplification of the
commercial organization and optimization of our distribution network, $15 million related to the
consolidation of manufacturing activities and processes at our site in Basel, Switzerland, $47 million
related to the closure of our production facilities and business support offices in Basel, Switzerland and
$1 million related to the consolidation of our North Carolina sites.
In addition, during 2011, our Textile Effects segment recorded charges of $22 million, of which
$5 million related to simplification of our commercial organization and optimization of our distribution
network, $12 million related to non-workforce reductions incurred for the consolidation of our
Switzerland manufacturing facilities, and $4 million related to the consolidation of our North Carolina
sites. We reversed charges of $4 million which were no longer required for workforce reductions at our
production facility in Langweid, Germany and the consolidation of manufacturing activities and
processes at our site in Basel, Switzerland.
As of December 31, 2011, our Pigments segment restructuring reserve consisted of $3 million
primarily related to workforce reductions at our Huelva, Spain and Scarlino, Italy plants. During 2011,
69
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
our Pigments segment recorded charges of $10 million, of which $7 million related to the closure of
our Grimsby, U.K. plant and $3 million related to workforce reductions at our Umbogintwini, South
Africa plant.
As of December 31, 2011, our Corporate and other segment restructuring reserve consisted of
$1 million primarily related to a reorganization and regional consolidation of our transactional
accounting activities. During 2011, we recorded charges of $2 million in Corporate and other primarily
related to workforce reductions in connection with this project.
12. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consisted of the following (dollars in millions):
December 31,
2013
2012
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and plant closing costs . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefit accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$546
101
22
58
28
38
11
144
$ 830
131
24
12
28
34
11
91
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$948
$1,161
70
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT
Outstanding debt of consolidated entities consisted of the following (dollars in millions):
December 31,
2013
2012
Senior Credit Facilities:
Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts outstanding under A/R programs . . . . . . . . . . . . . . . . . .
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HPS (China) debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable interest entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,351
248
1,061
891
40
247
72
$1,565
241
568
892
94
270
72
Total debt—excluding debt to affiliates . . . . . . . . . . . . . . . . . . . . .
$3,910
$3,702
Total current portion of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 277
3,633
$ 288
3,414
Total debt—excluding debt to affiliates . . . . . . . . . . . . . . . . . . . . .
$3,910
$3,702
Total debt—excluding debt to affiliates . . . . . . . . . . . . . . . . . . . . .
Notes payable to affiliates-noncurrent . . . . . . . . . . . . . . . . . . . . . .
$3,910
6
$3,702
4
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,916
$3,706
DIRECT AND SUBSIDIARY DEBT
Our 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.
71
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT (Continued)
Senior Credit Facilities
As of December 31, 2013, our Senior Credit Facilities consisted of our Revolving Facility, our
Extended Term Loan B, our Extended Term Loan B—Series 2 and our Term Loan C as follows
(dollars in millions):
Facility
Revolving Facility . . . . . . . . . .
Extended Term Loan B . . . . . .
Extended Term Loan B—
Series 2 . . . . . . . . . . . . . . . .
Term Loan C . . . . . . . . . . . . .
Committed
Amount
Principal
Outstanding
Carrying
Value
Interest Rate(3)
Maturity
$400(1)
NA
$ —(2)
962
$ —(2) USD LIBOR plus 2.50% 2017
USD LIBOR plus 2.50% 2017
961
NA
NA
342
50
342
48
USD LIBOR plus 3.00% 2017
USD LIBOR plus 2.25% 2016
(1) We have commitments with certain financial institutions to provide for a $200 million Revolving
Increase to an aggregate Revolving Facility committed amount of $600 million upon completion of
the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood
Holdings, Inc.
(2) We had no borrowings outstanding under our Revolving Facility; we had approximately $17 million
(U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our
Revolving Facility.
(3) The applicable interest rate of the Senior Credit Facilities is subject to certain secured leverage
ratio thresholds. As of December 31, 2013, the weighted average interest rate on our outstanding
balances under the Senior Credit Facilities was approximately 3%.
Our obligations under the Senior Credit Facilities are guaranteed by our guarantors, which consist
of substantially all of our domestic subsidiaries and certain of our foreign subsidiaries, 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.
On December 23, 2013, in conjunction with our 2021 Senior Notes issuance we repaid $368 million
($352 carrying value) of our Term Loan C. In connection with the repayment, we recognized a loss on
early extinguishment of debt of approximately $16 million during the year ended December 31, 2013.
Amendment to Credit Agreement
On October 15, 2013, Huntsman International entered into a tenth amendment to the Credit
Agreement. The amendment, among other things, permits us to incur the New Term Loan, a senior
secured term loan facility in an aggregate principal amount of $1.2 billion, and to increase our
Revolving Facility.
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 our acquisition of the
Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. If the acquisition
72
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT (Continued)
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.
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 and are reflected as part of 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 is
recorded at its carrying value of $224 million as of December 31, 2013. The additional term loan has
identical terms to our Extended Term Loan B and is reflected as part of our Extended Term Loan B.
In connection with this debt repayment, we recognized a loss on early extinguishment of debt of
approximately $1 million.
In connection with these amendments and debt repayments, we recognized a loss on early
extinguishment of debt with regard to our Senior Credit Facilities of approximately $17 million and
$2 million during the years ended December 31, 2013 and 2012, respectively.
A/R Programs
Our A/R Programs are structured so that we grant a participating undivided interest in certain of
our trade receivables to the U.S. SPE and the EU SPE. We retain the servicing rights and a retained
interest in the securitized receivables. Information regarding our A/R Programs as of December 31,
2013 was as follows (monetary amounts in millions):
Facility
Maturity
Maximum Funding
Availability(1)
Amount
Outstanding
Interest Rate(2)(3)
U.S. A/R Program . . . . . . . . April 2016
EU A/R Program . . . . . . . . April 2016
$250
A225
$90(4)
A114
Applicable rate plus 1.10%
Applicable rate plus 1.35%
(approximately (approximately
$311)
$158)
(1) The amount of actual availability under our 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.
73
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT (Continued)
(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 our 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 December 31, 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 December 31, 2013 and 2012, $521 million and $520 million, respectively, of accounts
receivable were pledged as collateral under our A/R Programs.
Amendments to A/R Programs
On April 29, 2013, Huntsman International entered into an amendment to the agreements
governing our U.S. A/R Program. This amendment, among other things, extends the scheduled
commitment termination date of our U.S. A/R Program by two years to April 2016, provides for
additional availability under our 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 our EU A/R Program. This amendment, among other things, extends the scheduled
commitment termination date of our EU A/R Program by two years to April 2016 and reduces the
applicable margin on borrowings to 1.35%.
Notes
As of December 31, 2013, we had outstanding the following notes (monetary amounts in millions):
Notes
Maturity
Interest Rate
Amount Outstanding
2021 Senior Notes . . . . . . . . . . . . . . . . . .
2020 Senior Notes . . . . . . . . . . . . . . . . . . November 2020
Senior Subordinated Notes . . . . . . . . . . .
Senior Subordinated Notes . . . . . . . . . . .
March 2020
March 2021
April 2021
5.125% A300 (approximately $415)
4.875% $650 ($647 carrying value)
8.625% $350
8.625% $530 ($541 carrying value)
Our notes are governed by indentures which impose certain limitations on Huntsman International
including, among other things limitations on the incurrence of debt, distributions, certain restricted
payments, asset sales, and affiliate transactions. The notes are unsecured obligations and are
guaranteed by certain subsidiaries named as guarantors.
On December 23, 2013, Huntsman International issued A300 million (approximately $415)
aggregate principal amount of 2021 Senior Notes. Huntsman International applied the net proceeds to
redeem $368 million of its Term Loan C due 2016, pay associated accrued interest and for general
corporate purposes.
The 2021 Senior Notes bear interest at the rate of 5.125% per year payable semi-annually on
April 15 and October 15 of each year and are due on April 15, 2021. Huntsman International may
redeem the 2021 Senior Notes in whole or in part at any time prior to January 15, 2021 at a price
74
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT (Continued)
equal to 100% of the principal amount thereof plus a ‘‘make-whole’’ premium and accrued and unpaid
interest.
On March 4, 2013, pursuant to an indenture entered into on November 19, 2012, Huntsman
International issued $250 million aggregate principal amount of 2020 Senior Notes. The aggregate
additional notes are recorded at carrying value of $247 million as of December 31, 2013. Huntsman
International applied the net proceeds to redeem the remaining $200 million in aggregate principal
amount of its 2016 Senior Notes, to pay associated accrued interest and for general corporate purposes.
Huntsman International issued, on November 19, 2012, $400 million aggregate principal amount of
2020 Senior Notes.
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 2021 Senior Notes and 2020 Senior Notes are general unsecured senior obligations of
Huntsman International and are guaranteed on a general unsecured senior basis by the Guarantors.
The indentures impose 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 2021 Senior Notes and 2020 Senior Notes will have the right to require
that Huntsman International purchase all or a portion of such holder’s 2020 Senior Notes in cash at a
purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the
date of repurchase.
Redemption of Notes and Loss on Early Extinguishment of Debt
During the years ended December 31, 2013 and 2012, we redeemed or repurchased the following
notes (monetary amounts in millions):
Date of Redemption
March 4, 2013 . . . . . . . . . . . . . . . . .
December 3, 2012 . . . . . . . . . . . . . .
March 26, 2012 . . . . . . . . . . . . . . . .
Variable Interest Entity Debt
Principal Amount of
Notes Redeemed
Amount Paid
(Excluding Accrued
Interest)
Loss on Early
Extinguishment
of Debt
Notes
5.50% Senior
Notes due 2016
5.50% Senior
Notes due 2016
$200
$400
$200
$400
7.50% Senior
Subordinated Notes
due 2015
A64
(approximately
$86)
A65
(approximately
$87)
$34
$77
$ 1
As of December 31, 2013, Arabian Amines Company had $169 million outstanding under its loan
commitments and debt financing arrangements. Arabian Amines Company, our consolidated
75
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT (Continued)
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 December 31,
2013, the amounts outstanding under these loan commitments were classified as current in our
consolidated balance sheets and are comprised of the following:
(cid:127) A loan facility from Saudi Industrial Development Fund with SAR 451 million (approximately
$120 million) outstanding. Repayment of the loan is to be made in semiannual installments with
final maturity in 2019. The loan is secured by a mortgage over the fixed assets of the project and
is 100% guaranteed by the Zamil Group, our 50% joint venture partner.
(cid:127) A multipurpose Islamic term facility with $49 million outstanding. This facility is scheduled to be
repaid in semiannual installments with final maturity in 2022.
As of December 31, 2013, Sasol-Huntsman, our consolidated 50%-owned venture has a facility
agreement which included a A5 million (approximately $7 million) revolving facility and A56 million
(approximately $78 million) outstanding under the term loan facility. The facility will be repaid over
semiannual installments with the final repayment scheduled for December 2018. Obligations under the
facility agreement are secured by, among other things, first priority right on the property, plant and
equipment of Sasol-Huntsman.
Other Debt
During the year ended December 31, 2013, HPS repaid $4 million and RMB 293 million
(approximately $47 million) on term loans and working capital loans under its secured facilities. As of
December 31, 2013, HPS had $4 million and RMB 61 million (approximately $10 million) outstanding
under its debt facilities. The interest rate on these facilities is LIBOR plus 0.48% for U.S. dollar
borrowings and approximately 90% of the Peoples Bank of China rate for RMB borrowings. As of
December 31, 2013, the interest rate was approximately 1% for the U.S. dollar borrowings and
approximately 6% for RMB borrowings.
As of December 31, 2013, HPS has RMB 160 million (approximately $26 million) under its loan
facility for working capital loans and discounting of commercial drafts, which is classified as current
portion of debt in our consolidated balance sheets. Interest is calculated using a Peoples Bank of China
rate plus the applicable margin. The average all-in rate as of December 31, 2013 was approximately
6%.
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 certain financial covenants 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
76
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. DEBT (Continued)
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 the Leverage Covenant which applies only to the
Revolving Facility and is tested at the Huntsman International level. The Leverage Covenant is
applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving
Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage
Covenant is a net senior secured leverage ratio covenant which requires that Huntsman International’s
ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75
to 1.
If in the future Huntsman International fails to comply with the Leverage Covenant, then we may
not have access to liquidity under our Revolving Facility. If Huntsman International failed to comply
with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit
outstanding under the Revolving Facility, Huntsman International would be in default under the Senior
Credit Facilities, and, unless Huntsman International obtained a waiver or forbearance with respect to
such default (as to which we can provide no assurance), Huntsman International could be required to
pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such
facilities.
The agreements governing our A/R Programs also contain certain receivable performance metrics.
Any material failure to meet the applicable A/R Programs’ metrics in the future could lead to an early
termination event under the A/R Programs, which could require us to cease our use of such facilities,
prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders,
requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs
would also constitute an event of default under our Senior Credit Facilities, which could require us to
pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior
Credit Facilities.
MATURITIES
The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31,
2013 are as follows (dollars in millions):
Year ending December 31,
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 277
32
326
1,282
23
1,970
$3,910
77
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. 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. 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.
INTEREST RATE RISKS
Through our borrowing activities, we are exposed to interest rate risk. Such risk arises due to the
structure of our debt portfolio, including the duration of the portfolio and the mix of fixed and floating
interest rates. Actions taken to reduce interest rate risk include managing the mix and rate
characteristics of various interest bearing liabilities, as well as entering into interest rate derivative
instruments.
From time to time, we may purchase interest rate swaps and/or interest rate collars to reduce the
impact of changes in interest rates on our floating-rate long-term debt. Under interest rate swaps, we
agree with other parties to exchange, at specified intervals, the difference between fixed-rate and
floating-rate interest amounts calculated by reference to an agreed notional principal amount. The
collars entitle us to receive from the counterparties (major banks) the amounts, if any, by which our
interest payments on certain of our floating-rate borrowings exceed a certain rate, and require us to
pay to the counterparties (major banks) the amount, if any, by which our interest payments on certain
of our floating-rate borrowings are less than a certain rate.
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 income (loss). We will pay a fixed 2.6% on the hedge and receive the one-month
LIBOR rate. As of December 31, 2013 and 2012, the fair value of the hedge was $1 million and
$2 million, respectively, and was recorded in other noncurrent liabilities.
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 in
other comprehensive income (loss). We will pay a fixed 2.8% on the hedge and receive the one-month
LIBOR rate. As of December 31, 2013 and 2012, the fair value of the hedge was $1 million and
$3 million, respectively, and was recorded in other noncurrent liabilities.
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 (loss). 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
78
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
December 31, 2013 and 2012, the combined fair value of these two hedges was $3 million and
$4 million, respectively, and was recorded in other noncurrent liabilities.
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 7. Variable Interest Entities.’’ The notional amount of the hedge as of December 31,
2013 was A31 million (approximately $42 million) and the derivative transactions do not qualify for
hedge accounting. As of December 31, 2013 and 2012, the fair value of this hedge was A1 million
(approximately $1 million) and A2 million (approximately $3 million), respectively, and was recorded in
other noncurrent liabilities in our consolidated balance sheets. For 2013 and 2012, we recorded a
reduction of interest expense of A1 million (approximately $2 million) and less than A1 million
(approximately $1 million), respectively, 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 7. Variable Interest Entities.’’ The
notional amount of the swap as of December 31, 2013 was $32 million, and the interest rate contract is
not designated as a cash flow hedge. As of December 31, 2013 and 2012, the fair value of the swap was
$4 million and $6 million, respectively, and was recorded in other noncurrent liabilities in our
consolidated balance sheets. For 2013 and 2012, we recorded a reduction of interest expense of
$2 million and $1 million, respectively, due to changes in fair value of the swap. As of December 31,
2013 Arabian Amines Company was not in compliance with certain financial covenants contained in its
loan commitments. For more information, see ‘‘Note 13. Debt—Direct and Subsidiary Debt—Variable
Interest Entity Debt.’’
For the years ended December 31, 2013 and 2012, the changes in accumulated other
comprehensive gain (loss) associated with these cash flow hedging activities were approximately
$3 million and $(1) million, respectively.
During 2014, accumulated other comprehensive loss of nil is expected to be reclassified to
earnings. The actual amount that will be reclassified to earnings over the next twelve months may vary
from this amount due to changing market conditions. We would be exposed to credit losses in the event
of nonperformance by a counterparty to our derivative financial instruments. We anticipate, however,
that the counterparties will be able to fully satisfy their obligations under the contracts. Market risk
arises from changes in interest rates.
FOREIGN EXCHANGE RATE RISK
Our cash flows and earnings are subject to fluctuations due to exchange rate variation. Our
revenues and expenses are denominated in various currencies. We 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
79
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
exchange contracts (generally with maturities of three months or less). We do not hedge our currency
exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows
and earnings. As of December 31, 2013 and 2012, we had approximately $193 million and $217 million
notional amount (in U.S. dollar equivalents) outstanding, respectively, in foreign currency contracts
with a term of approximately one month.
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 A255 million from these counterparties,
and on maturity (March 15, 2015) we are required to pay A255 million to these counterparties and will
receive $350 million from these counterparties. On March 15 and September 15 of each year, we will
receive U.S. dollar interest payments of approximately $15 million (equivalent to an annual rate of
8.625%) and make interest payments of approximately A11 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 December 31, 2013 and 2012, the fair value of this swap was $2 million and
$18 million, respectively, and was recorded in noncurrent assets.
A portion of our debt is denominated in euros. We also 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 (loss). 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 December 31, 2013, we have designated
approximately A525 million (approximately $725 million) of euro-denominated debt and cross-currency
interest rate contracts as a hedge of our net investment. For the years ended December 31, 2013, 2012
and 2011, the amount of gain (loss) recognized on the hedge of our net investment was $(22) million,
$(11) million and $5 million, respectively, and was recorded in other comprehensive income (loss). As
of December 31, 2013, we had approximately A988 million (approximately $1,364 million) in net euro
assets.
COMMODITY PRICES RISK
Our exposure to changing commodity prices is somewhat limited since the majority of our raw
materials are acquired at posted or market related prices, and sales prices for many of our finished
products are at market related prices which are largely set on a monthly or quarterly basis in line with
industry practice. Consequently, we do not generally hedge our commodity exposures.
80
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. FAIR VALUE
The fair values of our financial instruments were as follows (dollars in millions):
December 31,
2013
2012
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Non-qualified employee benefit plan
investments . . . . . . . . . . . . . . . . . . . . . .
Cross-currency interest rate contacts . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . .
Long-term debt (including current portion) .
$
21
2
(10)
(3,910)
$
21
2
(10)
(4,010)
$
14
18
(18)
(3,702)
$
14
18
(18)
(3,869)
The carrying amounts reported in the balance sheets of cash and cash equivalents, accounts
receivable and accounts payable approximate fair value because of the immediate or short-term
maturity of these financial instruments. The fair value of non-qualified employee benefit plan
investments is obtained through market observable pricing using prevailing market prices. The
estimated fair values of our long-term debt are based on quoted market prices for the identical liability
when traded as an asset in an active market (Level 1).
The fair value estimates presented herein are based on pertinent information available to
management as of December 31, 2013 and 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 December 31, 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):
Description
Assets:
Fair Value Amounts Using
Quoted prices
in active
markets for
identical assets
(Level 1)(3)
Significant
other
observable
inputs
(Level 2)(3)
Significant
unobservable
inputs
(Level 3)
December 31,
2013
Available-for sale equity securities:
Equity mutual funds . . . . . . . . . . . . . . . . . .
$ 21
Derivatives:
Cross-currency interest rate contracts(1) . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
$ 23
$21
—
$21
$ —
2
$ 2
$—
—
$—
Liabilities:
Derivatives:
Interest rate contracts(2) . . . . . . . . . . . . . . .
$(10)
$—
$(10)
$—
81
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. FAIR VALUE (Continued)
Description
Assets:
Fair Value Amounts Using
Quoted prices
in active
markets for
identical assets
(Level 1)(3)
Significant
other
observable
inputs
(Level 2)(3)
Significant
unobservable
inputs
(Level 3)
December 31,
2012
Available-for sale equity securities:
Equity mutual funds . . . . . . . . . . . . . . . . . .
$ 14
Derivatives:
Cross-currency interest rate contracts(1) . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
$ 32
$14
—
$14
$ —
18
$ 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.
(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 years ended
December 31, 2013 and 2012. During the year ended December 31, 2013, there were no
instruments categorized as Level 3 within the fair value hierarchy.
The following table shows a reconciliation of beginning and ending balances for the year ended
December 31, 2012 for instruments measured at fair value on a recurring basis using significant
82
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. FAIR VALUE (Continued)
unobservable inputs (Level 3) (dollars in millions). During the year ended December 31, 2013, there
were no instruments categorized as Level 3 within the fair value hierarchy.
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning balance, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . .
Transfers into Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers out of Level 3(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gains (losses):
Included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in other comprehensive income (loss) . . . . . . . . . . . . . .
Purchases, sales, issuances and settlements . . . . . . . . . . . . . . . . . . . .
Cross-Currency
Interest
Rate Contracts
$ 27
—
(27)
—
—
—
Ending balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . .
$ —
The amount of total gains (losses) for the period included in earnings
attributable to the change in unrealized gains (losses) relating to
assets still held at December 31, 2012 . . . . . . . . . . . . . . . . . . . . . .
$ —
(1) We are party to cross-currency interest rate contracts that are measured at fair value in
our consolidated 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 2012, this credit valuation
adjustment has 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 2013 and 2012, we had no impairments related to these assets.
83
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT AND OTHER POSTRETIREMENT BENEFIT PLANS
Our employees participate in a trusteed, non-contributory defined benefit pension plan (the
‘‘Plan’’) that covers substantially all of our full-time U.S. employees. Effective July 1, 2004, the Plan
formula for employees not covered by a collective bargaining agreement was converted to a cash
balance design. For represented employees, participation in the cash balance design is subject to the
terms of negotiated contracts. For participating employees, benefits accrued under the prior formula
were converted to opening cash balance accounts. The new cash balance benefit formula provides
annual pay credits from 4% to 12% of eligible pay, depending on age and service, plus accrued
interest. Participants in the plan on July 1, 2004 may be eligible for additional annual pay credits from
1% to 8%, depending on their age and service as of that date, for up to five years. The conversion to
the cash balance plan did not have a significant impact on the accrued benefit liability, the funded
status or ongoing pension expense.
During 2013, we amended the Plan which enabled us to transfer some benefit amounts out of the
Huntsman Supplemental Executive Retirement Plan (the ‘‘SERP’’) to the Plan as permitted by the IRS
rules. There was no impact to the overall projected benefit obligation to the Company as a result of
this amendment.
We sponsor defined benefit plans in a number of countries outside of the U.S. The availability of
these plans, and their specific design provisions, are consistent with local competitive practices and
regulations.
We also sponsor unfunded postretirement benefit plans other than pensions, which provide medical
and life insurance benefits.
Our postretirement benefit plans provide a fully insured Medicare Part D plan including
prescription drug benefits affected by the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the ‘‘Act’’). We cannot determine whether the medical benefits provided by
our postretirement benefit plans are actuarially equivalent to those provided by the Act. We do not
collect a subsidy and our net periodic postretirement benefits cost, and related benefit obligation, do
not reflect an amount associated with the subsidy.
During 2013, we amended certain of our postretirement benefit plans to discontinue subsidizing
the cost of health care coverage for retirees who are eligible for Medicare. As a result of this
amendment, our projected benefit obligation decreased by $22 million with an offset to other
comprehensive income (loss) during the year ended December 31, 2013.
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care
Act. On March 30, 2010, President Obama signed into law a reconciliation measure, the Health Care
and Education Reconciliation Act of 2010. The passage of this legislation has resulted in
comprehensive reform of health care in the U.S. We do not believe that this will have a significant
impact on our financial position.
84
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
The following table sets forth the funded status of the plans and the amounts recognized in our
consolidated balance sheets at December 31, 2013 and 2012 (dollars in millions):
Defined Benefit Plans
Other Postretirement Benefit Plans
2013
2012
2013
2012
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
Change in benefit obligation
Benefit obligation at beginning of year . $ 958
31
Service cost . . . . . . . . . . . . . . . . . . . .
40
Interest cost . . . . . . . . . . . . . . . . . . . .
—
Participant contributions . . . . . . . . . . .
—
Plan amendments . . . . . . . . . . . . . . . .
—
Foreign currency exchange rate changes
—
Settlements/transfers . . . . . . . . . . . . . .
—
Curtailments . . . . . . . . . . . . . . . . . . .
—
Special termination benefits . . . . . . . . .
(100)
Actuarial (gain) loss . . . . . . . . . . . . . .
(52)
Benefits paid . . . . . . . . . . . . . . . . . . .
$2,755
38
90
9
1
92
—
(5)
9
39
(169)
$ 834
26
42
—
(26)
—
—
—
—
127
(45)
$2,331
32
102
9
—
80
(2)
—
—
360
(157)
$ 136
4
5
5
$ 7
—
—
—
(22) —
(1)
—
—
—
—
—
—
—
(9) —
(1)
(14)
$ 128
4
7
5
—
—
—
—
—
8
$ 7
—
1
—
(1)
—
—
—
—
—
(16) —
Benefit obligation at end of year . . . . . . . $ 877
$2,859
$ 958
$2,755
$ 105
$ 5
$ 136
$ 7
Change in plan assets
Fair value of plan assets at beginning of
year . . . . . . . . . . . . . . . . . . . . . . . . $ 636
99
—
—
72
—
(52)
Actual return on plan assets . . . . . . . .
Foreign currency exchange rate changes
Participant contributions . . . . . . . . . . .
Company contributions . . . . . . . . . . . .
Settlements/transfers . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . .
$2,237
198
79
9
89
—
(169)
$ 538
71
—
—
72
—
(45)
$2,026
221
65
9
75
(2)
(157)
$ — $— $ — $—
—
—
—
—
—
5
—
11
—
—
(16) —
—
—
5
9
—
(14)
—
—
—
1
—
(1)
Fair value of plan assets at end of year . . $ 755
$2,443
$ 636
$2,237
$ — $— $ — $—
Funded status
Fair value of plan assets . . . . . . . . . . . . . $ 755
877
Benefit obligation . . . . . . . . . . . . . . . . .
$2,443
2,859
$ 636
958
$2,237
2,755
$ — $— $ — $—
7
105
136
5
Accrued benefit cost
. . . . . . . . . . . . . . . $(122) $ (416) $(322) $ (518) $(105)
$(5)
$(136)
$(7)
Amounts recognized in balance sheet:
Noncurrent asset . . . . . . . . . . . . . . . . . . $ — $
Current liability . . . . . . . . . . . . . . . . . . .
Noncurrent liability . . . . . . . . . . . . . . . .
(6)
(116)
20
(6)
(430)
$ — $
(6)
(316)
1
(5)
(514)
$ — $— $ — $—
(1)
(6)
(9) —
(5)
(11)
(125)
(96)
$(122) $ (416) $(322) $ (518) $(105)
$(5)
$(136)
$(7)
85
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
Defined Benefit Plans
Other Postretirement Benefit Plans
2013
2012
2013
2012
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Plans
Plans
Plans
Plans
Plans
Plans
Plans
Plans
Amounts recognized in accumulated other
comprehensive loss:
Net actuarial loss . . . . . . . . . . . . . . . . . . . $264
Prior service cost . . . . . . . . . . . . . . . . . . .
(35)
Transition obligation . . . . . . . . . . . . . . . . —
$229
$705
5
—
$710
$448
(42)
1
$407
$797
4
—
$801
$ 21
$— $32
(27) —
—
—
$ 1
(8) —
—
—
$ (6)
$— $24
$ 1
The amounts in accumulated other comprehensive loss that are expected to be recognized as
components of net periodic benefit cost during the next fiscal year are as follows (dollars in millions):
Defined Benefit Plans
Other Postretirement
Benefit Plans
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Actuarial loss . . . . . . . . . . . . . . . . . . . . . .
Prior service cost . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$19
(6)
$13
$33
1
$34
$ 2
(4)
$(2)
$—
—
$—
Components of net periodic benefit costs for the years ended December 31, 2013, 2012 and 2011
were as follows (dollars in millions):
Defined Benefit Plans
U.S. plans
Non-U.S. plans
2013
2012
2011
2013
2012
2011
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . .
Settlement loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special termination benefits . . . . . . . . . . . . . . . . . . . . . .
$ 31
40
(50)
(7)
35
—
—
$ 26
42
(48)
(6)
21
—
—
$ 23
44
(47)
(4)
16
—
—
$ 38
90
(124)
1
43
12
9
$ 32
102
(133)
(1)
23
13
—
$ 44
110
(140)
(2)
16
—
8
Net periodic benefit cost
. . . . . . . . . . . . . . . . . . . . . . . .
$ 49
$ 35
$ 32
$ 69
$ 36
$ 36
86
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
Other Postretirement Benefit Plans
U.S. plans
Non-U.S. plans
2013
2012
2011
2013
2012
2011
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . .
$ 4
5
(2)
2
$ 4
7
(3)
2
$ 3
7
(3)
2
$ — $ — $ —
1
—
—
—
—
—
1
—
—
Net periodic benefit cost
. . . . . . . . . . . . . . . . . . . . . . . .
$ 9
$ 10
$ 9
$ — $
1
$
1
The amounts recognized in net periodic benefit cost and other comprehensive income (loss) as of
December 31, 2013, 2012 and 2011 were as follows (dollars in millions):
Defined Benefit Plans
U.S. plans
Non-U.S. plans
2013
2012
2011
2013
2012
2011
Current year actuarial (gain) loss . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . .
Current year prior service (credits) cost . . . . . . . . . . . . . . .
Amortization of prior service cost (credits) . . . . . . . . . . . .
Curtailment effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$101
$(149) $103
(43)
(35)
(16)
(21)
1
— (26) —
(1)
4
6
7
—
—
—
—
— (12)
—
—
$(40) $272
(23)
—
1
$182
(16)
(2)
2
— (38)
(13) —
Total recognized in other comprehensive (income) loss . . . .
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . .
(177)
49
62
35
89
32
(95)
69
237
36
128
36
Total recognized in net periodic benefit cost and other
comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . .
$(128) $ 97
$121
$(26) $273
$164
Other Postretirement Benefit Plans
U.S. plans
Non-U.S. plans
2013
2012
2011
2013
2012
2011
Current year actuarial (gain) loss . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . .
Current year prior service credit . . . . . . . . . . . . . . . . . . . .
Amortization of prior service cost . . . . . . . . . . . . . . . . . . .
$
(8) $ 9
(2)
(2)
(22) —
3
2
$
1
(2) —
—
—
—
3
$ (1) $ — $ —
—
—
—
—
—
—
Total recognized in other
comprehensive (income) loss . . . . . . . . . . . . . . . . . . . . .
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . .
(30)
9
10
10
2
9
(1) —
1
—
—
1
Total recognized in net periodic benefit cost and other
comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . .
$ (21) $ 20
$ 11
$ (1) $
1
$
1
87
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
The following weighted-average assumptions were used to determine the projected benefit
obligation at the measurement date and the net periodic pension cost for the year:
Defined Benefit Plans
U.S. plans
Non U.S. plans
2013
2012
2011
2013
2012
2011
Projected benefit obligation
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . .
5.13% 4.18% 5.30% 3.62% 3.38% 4.39%
4.17% 4.19% 3.88% 3.37% 3.34% 3.44%
Net periodic pension cost
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . .
4.18% 5.30% 5.70% 3.38% 4.39% 4.69%
4.19% 3.88% 3.88% 3.34% 3.44% 3.38%
7.75% 8.00% 8.19% 5.75% 6.52% 6.62%
Other Postretirement Benefit Plans
U.S. plans
Non U.S. plans
2013
2012
2011
2013
2012
2011
Projected benefit obligation
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.79% 3.89% 5.09% 6.49% 5.79% 6.09%
Net periodic pension cost
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.89% 5.09% 5.46% 5.79% 6.09% 6.69%
At December 31, 2013 and 2012, the health care trend rate used to measure the expected increase
in the cost of benefits was assumed to be 7.0% and 7.5%, respectively, decreasing to 5% after 2018.
Assumed health care cost trend rates can have a significant effect on the amounts reported for the
postretirement benefit plans. A one-percent point change in assumed health care cost trend rates would
have the following effects (dollars in millions):
Asset category
Effect on total of service and interest cost . . . . . . . . . . . . . . . . . .
Effect on postretirement benefit obligation . . . . . . . . . . . . . . . . .
$ 1
—
$ (1)
—
Increase
Decrease
The projected benefit obligation and fair value of plan assets for the defined benefit plans with
projected benefit obligations in excess of plan assets as of December 31, 2013 and 2012 were as follows
(dollars in millions):
Projected benefit obligation in excess of plan assets
Projected benefit obligation . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . .
$871
749
$958
636
$2,234
1,797
$2,742
2,223
U.S. plans
Non-U.S. plans
2013
2012
2013
2012
88
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for
the defined benefit plans with an accumulated benefit obligation in excess of plan assets as of
December 31, 2013 and 2012 were as follows (dollars in millions):
U.S. plans
Non-U.S. plans
2013
2012
2013
2012
Accumulated benefit obligation in excess of plan
assets
Projected benefit obligation . . . . . . . . . . . . . . . . . . .
Accumulated benefit obligation . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . .
$871
853
749
$958
925
636
$1,868
1,732
1,451
$1,751
1,603
1,266
Expected future contributions and benefit payments are as follows (dollars in millions):
U.S. Plans
Non-U.S. Plans
Defined
Benefit
Plans
Other
Postretirement
Benefit
Plans
Defined
Benefit
Plans
Other
Postretirement
Benefit
Plans
2014 expected employer contributions
To plan trusts . . . . . . . . . . . . . . . . .
$ 46
$ 9
$ 79
$1
Expected benefit payments
2014 . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . .
2019 - 2023 . . . . . . . . . . . . . . . . . .
63
63
56
59
61
340
10
9
9
9
9
41
149
83
81
83
86
456
1
1
1
1
1
2
Our investment strategy with respect to pension assets is to pursue an investment plan that, over
the long term, is expected to protect the funded status of the plan, enhance the real purchasing power
of plan assets, and not threaten the plan’s ability to meet currently committed obligations. Additionally,
our investment strategy is to achieve returns on plan assets, subject to a prudent level of portfolio risk.
Plan assets are invested in a broad range of investments. These investments are diversified in terms of
domestic and international equities, both growth and value funds, including small, mid and large
capitalization equities; short-term and long-term debt securities; real estate; and cash and cash
equivalents. The investments are further diversified within each asset category. The portfolio
diversification provides protection against a single investment or asset category having a
disproportionate impact on the aggregate performance of the plan assets.
Our pension plan assets are managed by outside investment managers. The investment managers
value our plan assets using quoted market prices, other observable inputs or unobservable inputs. For
certain assets, the investment managers obtain third-party appraisals at least annually, which use
valuation techniques and inputs specific to the applicable property, market, or geographic location.
During 2013, there were no transfers in or out of Level 3 assets.
We have established target allocations for each asset category. Our pension plan assets are
periodically rebalanced based upon our target allocations.
89
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
The fair value of plan assets for the pension plans was $3.2 billion and $2.9 billion at
December 31, 2013 and 2012, respectively. The following plan assets are measured at fair value on a
recurring basis (dollars in millions):
Asset category
U.S. pension plans:
Fair Value Amounts Using
December 31,
2013
Quoted prices in
active markets
for identical
assets (Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Equities . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total U.S. pension plan assets . . . . . . . .
Non-U.S. pension plans:
Equities . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Non-U.S. pension plan assets . . . .
$ 428
208
92
27
$ 755
$1,053
908
400
82
$2,443
$ 245
88
45
27
$ 405
$ 580
668
30
80
$1,358
$ 183
120
—
—
$ 303
$ 473
240
341
2
$1,056
$—
—
47
—
$47
$—
—
29
—
$29
Asset category
U.S. pension plans:
Equities . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total U.S. pension plan assets . . . . . . . .
Non-U.S. pension plans:
Equities . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Non-U.S. pension plan assets . . . .
Fair Value Amounts Using
December 31,
2012
Quoted prices in
active markets
for identical
assets (Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$ 195
116
48
11
$ 370
$ 649
632
27
112
$1,420
$145
80
—
—
$225
$213
273
303
1
$790
$—
—
41
—
$41
$—
—
27
—
$27
$ 340
196
89
11
$ 636
$ 862
905
357
113
$2,237
90
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
The following table reconciles the beginning and ending balances of plan assets measured at fair
value using unobservable inputs (Level 3) (dollars in millions):
Fair Value Measurements of Plan Assets Using Significant Unobservable
Inputs (Level 3)
Balance at beginning of period . . . . . . . . . . . . . . . . . . . .
Return on pension plan assets . . . . . . . . . . . . . . . . . . . . .
Purchases, sales and settlements . . . . . . . . . . . . . . . . . . .
Transfers (out of) into Level 3 . . . . . . . . . . . . . . . . . . . . .
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . .
Real Estate/Other
Year ended
December 31,
2013
Year ended
December 31,
2012
$68
6
2
—
$76
$61
4
10
(7)
$68
Based upon historical returns, the expectations of our investment committee and outside advisors,
the expected long-term rate of return on the pension assets is estimated to be between 5.75% and
8.19%. The asset allocation for our pension plans at December 31, 2013 and 2012 and the target
allocation for 2014, by asset category are as follows:
Asset category
U.S. pension plans:
Target
Allocation
2014
Allocation at
December 31,
2013
Allocation at
December 31,
2012
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54%
33%
13%
—
57%
27%
12%
4%
53%
31%
14%
2%
Total U.S. pension plans . . . . . . . . . . . . . .
100%
100%
100%
Non-U.S. pension plans:
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38%
40%
11%
11%
38%
40%
11%
11%
38%
41%
20%
1%
Total non-U.S. pension plans
. . . . . . . . . .
100%
100%
100%
Equity securities in our pension plans did not include any equity securities of our Company or our
affiliates at the end of 2013.
DEFINED CONTRIBUTION PLANS
We have a money purchase pension plan covering substantially all of our domestic employees who
were hired prior to January 1, 2004. Employer contributions are made based on a percentage of
employees’ earnings (ranging up to 8%).
We also have a salary deferral plan covering substantially all U.S. employees. Plan participants may
elect to make voluntary contributions to this plan up to a specified amount of their compensation. We
91
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. EMPLOYEE BENEFIT PLANS (Continued)
contribute an amount equal to one-half of the participant’s contribution, not to exceed 2% of the
participant’s compensation.
Along with the introduction of the cash balance formula within our defined benefit pension plan,
the money purchase pension plan was closed to new hires. At the same time, our match in the salary
deferral plan was increased, for new hires, to a 100% match, not to exceed 4% of the participant’s
compensation, once the participant has achieved six years of service with our Company.
Our total combined expense for the above defined contribution plans for each of the years ended
December 31, 2013, 2012 and 2011 was $14 million.
SUPPLEMENTAL SALARY DEFERRAL PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Huntsman Supplemental Savings Plan (‘‘Huntsman SSP’’) is a non-qualified plan covering key
management employees and allows participants to defer amounts that would otherwise be paid as
compensation. The participant can defer up to 75% of their salary and bonus each year. This plan also
provides benefits that would be provided under the Huntsman Salary Deferral Plan if that plan were
not subject to legal limits on the amount of contributions that can be allocated to an individual in a
single year. The Huntsman SSP was amended and restated effective as of January 1, 2005 to allow
eligible executive employees to comply with Section 409A of the Internal Revenue Code of 1986.
The SERP is an unfunded non-qualified pension plan established to provide certain executive
employees with benefits that could not be provided, due to legal limitations, under the Huntsman
Defined Benefit Pension Plan, a qualified defined benefit pension plan, and the Huntsman Money
Purchase Pension Plan, a qualified money purchase pension plan.
Assets of these plans are included in other noncurrent assets and as of December 31, 2013 and
2012 were $21 million and $14 million, respectively. During each of the years ended December 31,
2013, 2012 and 2011, we expensed a total of $1 million as contributions to the Huntsman SSP and the
SERP.
STOCK-BASED INCENTIVE PLAN
In connection with the initial public offering of common and preferred stock on February 16, 2005,
we adopted the Huntsman Stock Incentive Plan (the ‘‘Stock Incentive Plan’’). The Stock Incentive Plan
permits the grant of non-qualified stock options, incentive stock options, stock appreciation rights,
nonvested stock, phantom stock, performance awards and other stock-based awards to our employees,
directors and consultants and to employees and consultants of our subsidiaries, provided that incentive
stock options may be granted solely to employees. As of December 31, 2013 we are authorized to grant
up to 32.6 million shares under the Stock Incentive Plan. See ‘‘Note 21. Stock-Based Compensation
Plan.’’
INTERNATIONAL PLANS
International employees are covered by various post-employment arrangements consistent with
local practices and regulations. Such obligations are included in other long-term liabilities in our
consolidated balance sheets.
92
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES
The following is a summary of U.S. and non-U.S. provisions for current and deferred income taxes
(dollars in millions):
Year ended
December 31,
2013
2012
2011
Income tax expense (benefit):
U.S.
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 75
79
$156
17
$ 69
4
Non-U.S.
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
(71)
51
(55)
63
(27)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$125
$169
$109
The following schedule reconciles the differences between the U.S. federal income taxes at the
U.S. statutory rate to our provision (benefit) for income taxes (dollars in millions):
Year ended
December 31,
2013
2012
2011
Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . .
$279
$547
$360
Expected tax expense at U.S. statutory rate of 35% . . . . . . . . . . . . . . . . . . . . . .
Change resulting from:
$ 98
$192
$126
State tax expense (benefit) net of federal benefit . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. tax rate differentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects of non-U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. domestic manufacturing deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized currency exchange gains and losses . . . . . . . . . . . . . . . . . . . . . . . .
Effect of tax holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. foreign tax credits, net of associated income and taxes . . . . . . . . . . . . . . .
Tax benefit of losses with valuation allowances as a result of other
comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax authority audits and dispute resolutions . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
11
1
10
(2)
1
(16)
(14)
14
11
— (12)
(21)
(86)
(22) —
5
(11)
7
9
100
4
7
6
8
(5)
(5)
(1)
(4)
—
4
(16)
(11)
Total income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$125
$169
$109
Included in the non-U.S. deferred tax expense is a $22 million income tax benefit for losses from
continuing operations for certain jurisdictions with valuation allowances to the extent that income was
recorded in other comprehensive income in that same jurisdiction. This benefit in 2013 was largely
attributable to Switzerland where changes in pension related items resulted in income in other
comprehensive income (loss) and where we have a full valuation allowance against the net deferred tax
asset. An offsetting income tax expense was recognized in accumulated other comprehensive loss.
93
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
Included in the $14 million unrealized exchange gains and losses reconciliation item above is
$10 million which occurred in Luxembourg where an offsetting valuation allowance was released.
We operate in over 40 non-U.S. tax jurisdictions with no specific country earning a predominant
amount of our off-shore earnings. While the vast majority of these countries have income tax rates that
are lower than the U.S. statutory rate, the operating losses we incur in some of our non-U.S.
jurisdictions results in a tax benefit for losses lower than the U.S. statutory rate and therefore mitigates
or reverses the amount of tax rate benefit we would otherwise realize from these tax rate differentials.
For the year ended December 31, 2013, this amount was an additional tax expense of $10 million,
reflected in the reconciliation above.
During 2013, we repatriated a significant amount of earnings to the U.S. from our Netherlands
holding company, which included bringing onshore certain U.S. foreign tax credits. The foreign tax
credits brought onshore significantly exceeded the amount needed to fully offset the cash tax impact of
the dividend. After a net $9 million benefit for the utilization of foreign tax credits in 2013, a full
valuation allowance was placed on the remaining foreign tax credits as it is currently more likely than
not that the credits will expire unused due to a shortage of foreign source income for income tax
purposes. These credits represent a potential future cash benefit to the Company and we intend to
expend resources and explore changes to future business operations all of which could enable us to
utilize the foreign tax credits and release the valuation allowance. This is a complex area of tax law
subject to very specific factors and our ability to utilize these credits will likely have a significant impact
on future income tax expense.
During 2012, we were granted a tax holiday for the period from January 1, 2012 through
December 31, 2016 with respect to certain income from Pigments products manufactured in Malaysia.
We are required to make certain investments in order to enjoy the benefits of the tax holiday and we
intend to make these investments.
The components of income (loss) from continuing operations before income taxes were as follows
(dollars in millions):
U.S.
Non-U.S.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 419
(140)
$482
65
$256
104
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 279
$547
$360
Year ended
December 31,
2013
2012
2011
94
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
Components of deferred income tax assets and liabilities were as follows (dollars in millions):
December 31,
2013
2012
Deferred income tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other employee compensation . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 853
197
72
22
114
106
$ 819
289
69
34
71
107
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,364
$1,389
Deferred income tax liabilities:
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other employee compensation . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (543) $ (551)
—
(88)
(6)
(61)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (610) $ (639)
Net deferred tax asset before valuation allowance . . . . . . . . . . . . .
Valuation allowance—net operating losses and other . . . . . . . . . . .
Valuation allowance—foreign tax credits . . . . . . . . . . . . . . . . . . . .
$ 754
(700)
(114)
$ 750
(715)
(21)
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (60) $
14
Current deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . .
$
53
(43)
243
(313)
$
51
(38)
229
(228)
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (60) $
14
We have NOLs of $3,189 million in various non-U.S. jurisdictions. While the majority of the
non-U.S. NOLs have no expiration date, $923 million have a limited life (of which $860 million are
subject to a valuation allowance) and $15 million are scheduled to expire in 2014 (all of which are
subject to a valuation allowance). We had $15 million of NOLs expire unused in 2013 (all of which
were subject to a valuation allowance).
Included in the $3,189 million of non-U.S. NOLs is $758 million attributable to our Luxembourg
entities. As of December 31, 2013, there is a valuation allowance of $180 million against these net
tax-effected NOLs of $220 million. Due to the uncertainty surrounding the realization of the benefits of
these losses, we have reduced the related deferred tax asset with a valuation allowance.
Valuation allowances are reviewed each period on a tax jurisdiction by jurisdiction basis to analyze
whether there is sufficient positive or negative evidence to support a change in judgment about the
realizability of the related deferred tax assets. These conclusions require significant judgment. In
evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses
and cumulative income or losses during the applicable period. Cumulative losses incurred over the
95
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
period limits our ability to consider other subjective evidence such as our projections for the future.
Our judgments regarding valuation allowances are also influenced by the costs and risks associated with
any tax planning idea.
During 2013, we released valuations allowances of $16 million on a portion of our net deferred
assets primarily in Luxembourg as a result of significant changes in estimated future taxable income
resulting from increased intercompany debt and, therefore, increased interest income in Luxembourg.
During 2012, we released valuation allowances of $24 million on a portion of our net deferred tax
assets in China, in certain U.S. states and in Luxembourg, and we established valuation allowances of
$23 million on certain net deferred tax assets in the U.S., India and Indonesia. Primarily as a result of
a cumulative history of operating profits, we released the above noted valuation allowances in China
and certain U.S. state tax jurisdictions. Additionally, a partial valuation allowance release was
recognized in Luxembourg for $12 million as a result of significant changes in estimated future taxable
income resulting from increased intercompany debt and, therefore, increased interest income in
Luxembourg.
During 2012, we amended certain prior year U.S. federal income tax filings and claimed
$31 million of additional U.S. foreign tax credits. Due to uncertainty regarding our ability to actually
utilize these credits before they expire in 2015, we established a partial valuation allowance of
$21 million against the incremental deferred tax asset.
During 2011, we released valuation allowances of $27 million on certain net deferred tax assets in
France and Spain (as a result of recent profitability in our Pigments business), Singapore (as a result of
a cumulative history of operating profits), Australia (as a result of discontinuing the unprofitable
portion of the business operations in that country) and Luxembourg (as a result of significant changes
in estimated future taxable income).
Uncertainties regarding expected future income in certain jurisdictions could affect the realization
of deferred tax assets in those jurisdictions and result in additional valuation allowances in future
periods.
The following is a summary of changes in the valuation allowance (dollars in millions):
2013
2012
2011
Valuation allowance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 736
814
$756
736
$797
756
Net decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase to deferred tax assets with no impact on operating tax expense,
(78)
16
20
7
41
(30)
including an offsetting (decrease) increase to valuation allowances . . . . . . . . . . . . .
(38)
(16)
5
Change in valuation allowance per rate reconciliation . . . . . . . . . . . . . . . . . . . . . . .
$(100) $ 11
$ 16
Components of change in valuation allowance affecting tax expense:
Pre-tax losses in jurisdictions with valuation allowances resulting in no tax expense
or benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Releases of valuation allowances in various jurisdictions . . . . . . . . . . . . . . . . . . . .
Establishments of valuation allowances in various jurisdictions . . . . . . . . . . . . . . . .
$ (21) $ 10
24
(23)
16
(95)
$ (6)
27
(5)
Change in valuation allowance per rate reconciliation . . . . . . . . . . . . . . . . . . . . . . .
$(100) $ 11
$ 16
96
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
The following is a reconciliation of our unrecognized tax benefits (dollars in millions):
Unrecognized tax benefits as of January 1 . . . . . . . . . . . . . . . . . . . . . . .
Gross increases and decreases—tax positions taken during a prior period
Gross increases and decreases—tax positions taken during the current
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreases related to settlements of amounts due to tax authorities . . . . .
Reductions resulting from the lapse of statutes of limitation . . . . . . . . . .
Foreign currency movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013
2012
$57
39
$39
15
9
11
(3)
(3)
(7)
(3)
(1) —
Unrecognized tax benefits as of December 31 . . . . . . . . . . . . . . . . . . . .
$96
$57
As of December 31, 2013 and 2012, the amount of unrecognized tax benefits which, if recognized,
would affect the effective tax rate is $78 million and $37 million, respectively.
In accordance with our accounting policy, we continue to recognize interest and penalties accrued
related to unrecognized tax benefits in income tax expense.
Year ended
December 31,
2013
2012
2011
Interest expense included in tax expense . . . . . . . . . . . . . . . . . . .
Penalties expense included in tax expense . . . . . . . . . . . . . . . . . .
$ 2
$ (1) $ 5
(1) — —
Accrued liability for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$13
Accrued liability for penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
2013
2012
$10
1
December 31,
We conduct business globally and, as a result, we file income tax returns in U.S. federal, various
U.S. state and various non-U.S. jurisdictions. The following table summarizes the tax years that remain
subject to examination by major tax jurisdictions:
Tax Jurisdiction
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open Tax Years
2001 and later
2002 and later
2004 and later
2009 and later
2003 and later
2007 and later
2007 and later
2011 and later
2012 and later
97
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
Certain of our U.S. and non-U.S. income tax returns are currently under various stages of audit by
applicable tax authorities and the amounts ultimately agreed upon in resolution of the issues raised
may differ materially from the amounts accrued.
We estimate that it is reasonably possible that certain of our non-U.S. unrecognized tax benefits
could change within 12 months of the reporting date with a resulting decrease in the unrecognized tax
benefits within a reasonably possible range of $3 million to $41 million. For the 12-month period from
the reporting date, we would expect that a substantial portion of the decrease in our unrecognized tax
benefits would result in a corresponding benefit to our income tax expense.
During 2012, we concluded and settled tax examinations in the U.S. (both federal and various
states) and various non-U.S. jurisdictions including, but not limited to, China, France and Italy. During
2012, we concluded and effectively settled tax examinations in the U.S. (both federal and various states)
and various non-U.S. jurisdictions including, but not limited to, Hong Kong, Thailand and Japan.
During 2011, we concluded and settled tax examinations in the U.S. (both federal and various states)
and various non-U.S. jurisdictions including, but not limited to, Australia, China, France and Germany.
For non-U.S. entities that were not treated as branches for U.S. tax purposes, we do not provide
for income taxes on the undistributed earnings of these subsidiaries as earnings are reinvested and, in
the opinion of management, will continue to be reinvested indefinitely. As discussed, we made a
distribution of a portion of our earnings in 2013 when the amount of foreign tax credits associated with
the distribution was greater than the amount of tax otherwise due. The undistributed earnings of
foreign subsidiaries that are deemed to be permanently invested were approximately $194 million at
December 31, 2013. It is not practicable to determine the unrecognized deferred tax liability on those
earnings. We have material inter-company debt obligations owed by our non-U.S. subsidiaries to the
U.S. We do not intend to repatriate earnings to the U.S. via dividend based on estimates of future
domestic cash generation and our ability to return cash to the U.S. through payments of inter-company
debt owned by our non-U.S. subsidiaries to the U.S. To the extent that cash is required in the U.S.,
rather than repatriate earnings to the U.S. via dividend, we expect to utilize our inter-company debt. If
any earnings were repatriated via dividend, we would need to accrue and pay taxes on the distributions.
18. COMMITMENTS AND CONTINGENCIES
PURCHASE COMMITMENTS
We have various purchase commitments extending through 2029 for materials, supplies and
services entered into in the ordinary course of business. Included in the purchase commitments table
below are contracts which require minimum volume purchases that extend beyond one year or are
renewable annually and have been renewed for 2014. Certain contracts allow for changes in minimum
required purchase volumes in the event of a temporary or permanent shutdown of a facility. To the
extent the contract requires a minimum notice period, such notice period has been included in the
table below. The contractual purchase prices for substantially all of these contracts are variable based
upon market prices, subject to annual negotiations. We have estimated our contractual obligations by
using the terms of our current pricing for each contract. We also have a limited number of contracts
which require a minimum payment even if no volume is purchased. We believe that all of our purchase
obligations will be utilized in our normal operations. For the years ended December 31, 2013, 2012 and
2011, we made minimum payments of $7 million, nil and nil, respectively, under such take or pay
contracts without taking the product.
98
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. COMMITMENTS AND CONTINGENCIES (Continued)
Total purchase commitments as of December 31, 2013 are as follows (dollars in millions):
Year ending December 31,
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,315
515
181
91
71
169
$2,342
OPERATING LEASES
We lease certain railcars, aircraft, equipment and facilities under long-term lease agreements. The
total expense recorded under operating lease agreements in our consolidated statements of operations
is approximately $80 million, $79 million and $83 million for 2013, 2012 and 2011, respectively, net of
sublease rentals of approximately $4 million for each of 2013, 2012 and 2011.
Future minimum lease payments under operating leases as of December 31, 2013 are as follows
(dollars in millions):
Year ending December 31,
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 83
68
59
53
50
174
$487
Future minimum lease payments have not been reduced by minimum sublease rentals of
$19 million due in the future under noncancelable subleases.
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.
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,
99
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. COMMITMENTS AND CONTINGENCIES (Continued)
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.
Year ended December 31,
2013
2012
2011
Unresolved at beginning of period . . . . . . . . . . . . . . . . . . . .
Tendered during period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resolved during period(1) . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved at end of period . . . . . . . . . . . . . . . . . . . . . . . . .
1,080
6
13
1,073
1,080
3
3
1,080
1,116
10
46
1,080
(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 December 31, 2013, we had
an accrued liability of approximately $10 million relating to these cases and a corresponding receivable
of approximately $10 million relating to our indemnity protection with respect to these cases. We
cannot assure you that our liability will not exceed our accruals or that our liability associated with
these cases would not be material to our financial condition, results of operations or liquidity;
accordingly, we are not able to estimate the amount or range of loss in excess of our accruals.
Additional asbestos exposure claims may be made against us in the future, and such claims could be
material. However, because we are not able to estimate the amount or range of losses associated with
such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of
December 31, 2013.
Certain cases in which we are a premises defendant are not subject to indemnification by prior
owners or operators. However, we may be entitled to insurance or other recoveries in some of these
cases. The following table presents for the periods indicated certain information about these cases.
100
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. COMMITMENTS AND CONTINGENCIES (Continued)
Cases include all cases for which service has been received by us. Certain prior cases that were filed in
error against us have been dismissed.
Year ended December 31,
2013
2012
2011
Unresolved at beginning of period . . . . . . . . . . . . . . . . . . . .
Filed during period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resolved during period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved at end of period . . . . . . . . . . . . . . . . . . . . . . . . .
50
3
5
48
36
21
7
50
37
11
12
36
We paid gross settlement costs for asbestos exposure cases that are not subject to indemnification
of $45,000, $559,000 and $584,000 during the years ended December 31, 2013, 2012 and 2011,
respectively. As of December 31, 2013, we had an accrual of $356,000 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
December 31, 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 the Direct Purchasers
since February 1, 2003. We and all other defendants settled the Direct Purchasers litigation and the
court approved the settlement on December 13, 2013. We have paid the settlement in an amount
immaterial to our consolidated financial statements.
On November 22, 2013, we were named as a defendant in a civil antitrust suit filed in the U.S.
District Court for the District of Minnesota brought by a Direct Purchaser who opted out of the Direct
Purchasers class litigation. It is possible that additional claims will be filed by other Direct Purchasers
who opted out of the class litigation.
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 the Indirect Purchasers
making essentially the same allegations as the Direct Purchasers. The Opt-Out Litigation and Indirect
Purchasers plaintiffs seek to recover injunctive relief, treble damages or the maximum damages allowed
by state law, costs of suit and attorneys’ fees. We are not aware of any illegal conduct by us or any of
our employees. Nevertheless, we have incurred costs relating to these claims and could incur additional
costs in amounts which in the aggregate could be material to us. Because of the overall complexity of
these cases, we are unable to reasonably estimate any possible loss or range of loss associated with
these claims and we have made no accruals with respect to these claims.
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HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. 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 A153 million (approximately $211 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 A113 million
(approximately $156 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 A0 and A113 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.
102
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. 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 EHS legal
requirements, and we have developed policies and management systems that are intended to identify
the multitude of EHS legal requirements applicable to our operations, enhance compliance with
applicable legal requirements, improve the safety of our employees, contractors, community neighbors
and customers and minimize the production and emission of wastes and other pollutants. Although
EHS legal requirements are constantly changing and are frequently difficult to comply with, these EHS
management systems are designed to assist us in our compliance goals while also fostering efficiency
and improvement and reducing overall risk to us.
EHS Capital Expenditures
We may incur future costs for capital improvements and general compliance under EHS laws,
including costs to acquire, maintain and repair pollution control equipment. For the years ended
December 31, 2013, 2012 and 2011, our capital expenditures for EHS matters totaled $92 million,
$105 million, and $92 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
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 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
103
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
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 consolidated 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 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 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 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 December 31, 2013, we had an accrued liability of approximately $24 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.
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.
104
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
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 $27 million and
$34 million for environmental liabilities as of December 31, 2013 and 2012, respectively. Of these
amounts, $5 million and $10 million were classified as accrued liabilities in our consolidated balance
sheets as of December 31, 2013 and 2012, respectively, and $22 million and $24 million were classified
as other noncurrent liabilities in our consolidated balance sheets as of December 31, 2013 and 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 European Union 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 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 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 European Union, such as in Korea and Taiwan.
Although the total long-term cost for REACH compliance is unknown at this time, we spent
approximately $4 million, $8 million and $5 million in 2013, 2012 and 2011, 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.
105
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
GREENHOUSE GAS REGULATION
Globally, our operations are increasingly subject to regulations that seek to reduce emissions of
GHGs, such as carbon dioxide and methane, which may be contributing to changes in the Earth’s
climate. At the Durban negotiations of the Conference of the Parties to the Kyoto Protocol in 2012, a
limited group of nations, including the European Union, 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 European Union, continues in its third phase. The European
Union parliament continues with a process to formalized ‘‘backloading’’—the withholding of GHG
allowances to prop up carbon prices. In addition, the European Union has recently announced its
intentions to cut GHG emissions to 40% below 1990 levels by 2040 and impose a 27% renewable
energy requirement at the European Union level. In the U.S., California has commenced the first
compliance period of its cap-and-trade program. In June 2013, China implemented its first pilot carbon
emissions exchange in Shenzhen, China. Pilot carbon emissions schemes have also begun in Beijing,
Shanghai, Guangdong, and Tianjin. Further expansion of China’s regional cap-and-trade is planned, and
ultimately it is expected that these regional systems will form the backbone of a national cap-and-trade
program. As these programs have not been fully implemented and have experienced significant price
volatility on low early trading volumes, we are unable at this time to determine their impact on our
operations.
Federal climate change legislation in the U.S. appears unlikely in the near-term. As a result,
domestic efforts to curb GHG emissions will continue to be led by the EPA’s 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 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.
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 European Union 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 our
sites.
Finally, it should be noted that some scientists have concluded that increasing concentrations of
GHGs in the earth’s atmosphere may produce climate changes that have significant physical effects,
106
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
such as increased frequency and severity of storms, droughts, and floods and other climatic events. If
any of those effects were to occur, they could have an adverse effect on our assets and operations.
PORT NECHES FLARING MATTER
As part of the EPA’s national enforcement initiative on flaring operations and by letter dated
October 12, 2012, the DOJ notified us that we were in violation of the CAA based on our response to
a 2010 CAA Section 114 Information Request. The EPA has used the enforcement initiative to bring
similar actions against refiners and other chemical manufacturers. Specifically, the EPA alleged
violations at our Port Neches, Texas facility from 2007-2012 for flare operations not consistent with
good pollution control practice and not in compliance with certain flare-related regulations. As a result
of these findings, the EPA referred this matter to the DOJ. We provided a formal response to the DOJ
and the EPA with a supplemental data submission on April 29, 2013. We have been engaged in
discussions with the DOJ and the EPA regarding these alleged violations. We are currently unable to
determine the likelihood or magnitude of potential penalty or injunctive relief that may be incurred in
resolving this matter.
20. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY
DIVIDENDS ON COMMON STOCK
During each quarter of 2013, we paid cash dividends of $30 million, or $0.125 per share, to
common stockholders for a total of $120 million of cash dividends paid during 2013. During each
quarter of 2012, we paid cash dividends of $24 million, or $0.10 per share, to common stockholders for
a total of $96 million of cash dividends paid during 2012.
21. STOCK-BASED COMPENSATION PLAN
Under the Stock Incentive Plan, a plan approved by stockholders, we may grant non-qualified
stock options, incentive stock options, stock appreciation rights, restricted stock, phantom stock,
performance awards and other stock-based awards to our employees, directors and consultants and to
employees and consultants of our subsidiaries, provided that incentive stock options may be granted
solely to employees. The terms of the grants are fixed at the grant date. As of December 31, 2013 we
were authorized to grant up to 32.6 million shares under the Stock Incentive Plan. As of December 31,
2013, we had 6 million shares remaining under the Stock Incentive Plan available for grant. Option
awards have a maximum contractual term of 10 years and generally must have an exercise price at least
equal to the market price of our common stock on the date the option award is granted. Stock-based
awards generally vest over a three-year period.
The compensation cost from continuing operations under the Stock Incentive Plan was as follows
(dollars in millions):
Compensation cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$29
$27
$24
Year ended
December 31,
2013
2012
2011
107
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. STOCK-BASED COMPENSATION PLAN (Continued)
The total income tax benefit recognized in the statement of operations for stock-based
compensation arrangements was $7 million, $6 million and $6 million for the years ended
December 31, 2013, 2012 and 2011, respectively.
The fair value of each stock option award is estimated on the date of grant using the Black-
Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are
based on the historical volatility of our common stock through the grant date. The expected term of
options granted was estimated based on the contractual term of the instruments and employees’
expected exercise and post-vesting employment termination behavior. The risk-free rate for periods
within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time
of grant. The assumptions noted below represent the weighted averages of the assumptions utilized for
all stock options granted during the year.
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . .
Expected life of stock options granted during
Year ended December 31,
2013
2012
2011
2.8%
62.5%
1.0%
3.0%
65.3%
1.3%
2.3%
65.6%
2.8%
the period . . . . . . . . . . . . . . . . . . . . . . . . . .
5.6 years
6.6 years
6.6 years
STOCK OPTIONS
A summary of stock option activity under the Stock Incentive Plan as of December 31, 2013 and
changes during the year then ended is presented below:
Option Awards
Outstanding at January 1, 2013 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
(in thousands)
10,517
1,239
(1,365)
(372)
Outstanding at December 31, 2013 . . . . . . . . . . . . . .
10,019
Exercisable at December 31, 2013 . . . . . . . . . . . . . . .
7,614
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(years)
(in millions)
$14.52
17.87
9.65
21.18
15.39
15.14
4.9
3.8
$92
72
The weighted-average grant-date fair value of stock options granted during 2013, 2012 and 2011
was $7.93, $6.36 and $9.17 per option, respectively. As of December 31, 2013, there was $10 million of
total unrecognized compensation cost related to nonvested stock option arrangements granted under
the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of
approximately 1.7 years.
During the years ended December 31, 2013, 2012 and 2011, the total intrinsic value of stock
options exercised was $14 million, $10 million and $19 million, respectively.
108
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. STOCK-BASED COMPENSATION PLAN (Continued)
NONVESTED SHARES
Nonvested shares granted under the Stock Incentive Plan consist of restricted stock, which is
accounted for as an equity award, and phantom stock, which is accounted for as a liability award
because it can be settled in either stock or cash. A summary of the status of our nonvested shares as of
December 31, 2013 and changes during the year then ended is presented below:
Equity Awards
Liability Awards
Nonvested at January 1, 2013 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
(in thousands)
1,789
803
(753)(1)
(9)
Nonvested at December 31, 2013 . . . . . . . . . . . . .
1,830
Weighted
Average
Grant-Date
Fair Value
$13.87
17.88
14.61
17.01
15.31
Weighted
Average
Grant-Date
Fair Value
$14.50
17.85
14.57
15.60
16.03
Shares
(in thousands)
638
270
(314)
(20)
574
(1) As of December 31, 2013, a total of 591,106 restricted stock units were vested, of which 74,768
vested during 2013. These shares have not been reflected as vested shares in this table because, in
accordance with the restricted stock unit agreements, shares of common stock are not issued for
vested restricted stock units until termination of employment.
As of December 31, 2013, there was $21 million of total unrecognized compensation cost related
to nonvested share compensation arrangements granted under the Stock Incentive Plan. That cost is
expected to be recognized over a weighted-average period of approximately 1.7 years. The value of
share awards that vested during the years ended December 31, 2013, 2012 and 2011 was $18 million,
$21 million and $23 million, respectively.
109
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) consisted of the following (dollars in millions):
Pension
and other
Other
Foreign
currency
translation
adjustment(a)
postretirement comprehensive
benefits
adjustments,
net of tax(b)
income of
unconsolidated
affiliates
Amounts
Amounts
attributable to attributable to
noncontrolling
interests
Huntsman
Corporation
Other, net Total
$269
$(1,036)
$ 7
$ 3
$(757)
$13
$(744)
(23)
—
(23)
246
(61)
185
5
—
5
5
—
233
(5)
(61)
—
228
(61)
5
172
(5)
167
Beginning balance, January 1,
2013 . . . . . . . . . . . . . . .
Other comprehensive (loss)
income before
reclassifications . . . . . .
Amounts reclassified from
accumulated other
comprehensive loss(c) . .
Net current-period other
comprehensive (loss)
income . . . . . . . . . . . . .
Ending balance,
December 31, 2013 . . . . .
$246
$ (851)
$12
$ 8
$(585)
$ 8
$(577)
(a) Amounts are net of tax of $13 and $20 as of December 31, 2013 and January 1, 2013, respectively.
(b) Amounts are net of tax of $83 and $197 as of December 31, 2013 and January 1, 2013, respectively.
(c)
See table below for details about these reclassifications.
Foreign
currency
translation
adjustment(a)
Pension
and other
postretirement
benefits
adjustments,
net of tax(b)
Other
comprehensive
income (loss) of
unconsolidated
affiliates
Amounts
attributable to
noncontrolling
interests
Amounts
attributable to
Huntsman
Corporation
Other, net Total
Beginning balance,
January 1, 2012 . . . . . .
$218
$ (800)
$ 8
$ 3
$(571)
$12
$(559)
Other comprehensive
income (loss) before
reclassifications . . . . .
Amounts reclassified
from accumulated
other comprehensive
loss(c)
. . . . . . . . . .
Net current-period other
comprehensive income
(loss)
. . . . . . . . . . . .
Ending balance,
51
—
51
(194)
(1)
—
(144)
(42)
—
—
(42)
1
—
1
(143)
(42)
(185)
$(744)
December 31, 2012 . . . .
$269
$(1,036)
$ 3
$(757)
$13
(236)
—
(186)
(1)
$ 7
(a) Amounts are net of tax of $20 and $24 as of December 31, 2012 and January 1, 2012, respectively.
(b) Amounts are net of tax of $197 and $124 as of December 31, 2012 and January 1, 2012, respectively.
(c)
See table below for details about these reclassifications.
110
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
Details about Accumulated Other
Comprehensive Loss Components(a):
Amortization of pension and
other postretirement benefits:
Prior service credit . . . . . . . . .
Actuarial loss . . . . . . . . . . . .
Settlement loss . . . . . . . . . . . . .
Total reclassifications for the
period . . . . . . . . . . . . . . . . .
Year ended
December 31, 2013
Year ended
December 31, 2012
Year ended
December 31, 2011
Amount reclassified Amount reclassified Amount reclassified
from accumulated
from accumulated
from accumulated
other
other
other
comprehensive loss
comprehensive loss
comprehensive loss
Affected line item in
the statement where
net income is
presented
$ 8
(80)
(12)
(84)
23
$(61)
$ 10
(46)
(13)
(49)
7
$(42)
$ 9
(34)
—
(25)
5
$(20)
(b)
(b)(c)
(b)
Total before tax
Income tax expense
Net of tax
(a) Pension and other postretirement benefits amounts in parentheses indicate credits on our condensed
consolidated statements of operations.
(b) These accumulated other comprehensive loss components are included in the computation of net periodic
pension costs. See ‘‘Note 16. Employee Benefit Plans.’’
(c) Amounts contain approximately $6 million, $4 million and $3 million of actuarial losses related to
discontinued operations for the years ended December 31, 2013, 2012 and 2011, respectively.
Items of other comprehensive income (loss) of our Company and our consolidated affiliates have
been recorded net of tax, with the exception of the foreign currency translation adjustments related to
subsidiaries with earnings permanently reinvested. The tax effect is determined based upon the
jurisdiction where the income or loss was recognized and is net of valuation allowances.
23. RELATED PARTY TRANSACTIONS
Our consolidated financial statements include the following transactions with our affiliates not
otherwise disclosed (dollars in millions):
Year ended December 31,
2013
2012
2011
Sales to:
Unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . .
$232
$223
$180
Inventory purchases from:
Unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . .
597
565
465
Pursuant to an agreement entered into in 2001, our subsidiary Airstar Corporation (‘‘Airstar’’)
subleases a Gulfstream IV-SP Aircraft (the ‘‘Aircraft’’) from Jstar Corporation (‘‘Jstar’’), a corporation
wholly owned by Jon M. Huntsman. Jon M. Huntsman is the Executive Chairman and the father of our
Chief Executive Officer, Peter R. Huntsman, and our director, Jon M. Huntsman, Jr. In 2011, this
arrangement was extended for an additional 10 year period. Under this arrangement, monthly sublease
payments from Airstar to Jstar are approximately $115,000, and an aggregate of $11 million is payable
through the end of the remaining eight year lease term. These monthly sublease payments are used to
fund financing costs paid by Jstar to a leasing company. An unrelated third party pays $2.4 million per
111
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
23. RELATED PARTY TRANSACTIONS (Continued)
year to our subsidiary for such third party’s part-time use of the Aircraft (or an alternate owned by us
if the Aircraft is unavailable), subject to an annual adjustment, which typically has been at least fair
market value for the number of flight hours used by such third party. We bear all other costs of
operating the Aircraft. In accordance with our Aircraft Use Policy, we have entered into aircraft
time-sharing agreements with certain members of the Huntsman family, pursuant to which these
persons pay for the costs of any personal use of the Aircraft by them.
An agreement was reached prior to the initial public offering of our common stock in February
2005 with the Huntsman Foundation, a private charitable foundation established by Jon M. and
Karen H. Huntsman, to further the charitable interests of the Huntsman family, that we would donate
our Salt Lake City office building and our option to acquire an adjacent undeveloped parcel of land to
the foundation free of debt. On March 24, 2010, we completed this donation. At the time of the
donation, the building had an appraised value of approximately $10 million. We continue to occupy and
use a portion of the building under a lease pursuant to which we make annual lease payments of
approximately $2 million to the Huntsman Foundation. During each of the years ended 2013, 2012 and
2011, we made payments of approximately $2 million to the Huntsman Foundation under the lease.
The lease expires on December 31, 2018, subject to a five-year extension, at our option.
Through May 2002, we paid the premiums on various life insurance policies for Jon M. Huntsman.
These policies have been liquidated, and the cash values have been paid to Mr. Huntsman.
Mr. Huntsman is indebted to us in the amount of approximately $2 million with accrued interest, which
represents the insurance premiums paid on his behalf through May 2002. This amount is included in
other noncurrent assets in our consolidated balance sheets.
24. OPERATING SEGMENT INFORMATION
We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety
of differentiated and commodity chemical products. We have reported our operations through five
segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments. We
have organized our business and derived our operating segments around differences in product lines.
The major products of each reportable operating segment are as follows:
Segment
Products
Polyurethanes . . . . . . . . . . MDI, PO, polyols, PG, TPU, aniline and MTBE
Performance Products . . . .
amines, surfactants, LAB, maleic anhydride, other performance
chemicals, EG, olefins and technology licenses
Advanced Materials . . . . . Basic liquid and solid epoxy resins; specialty resin compounds; cross-
Textile Effects . . . . . . . . . .
Pigments . . . . . . . . . . . . .
linking, matting and curing agents; epoxy, acrylic and polyurethane-based
formulations
textile chemicals and dyes
titanium dioxide
112
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24. OPERATING SEGMENT INFORMATION (Continued)
Sales between segments are generally recognized at external market prices and are eliminated in
consolidation. We use EBITDA to measure the financial performance of our global business units and
for reporting the results of our operating segments. This measure includes all operating items relating
to the businesses. The EBITDA of operating segments excludes items that principally apply to our
Company as a whole. The revenues and EBITDA for each of our reportable operating segments are as
follows (dollars in millions):
Year ended December 31,
2013
2012
2011
Revenues:
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,964
3,019
1,267
811
1,269
(251)
$ 4,894
3,065
1,325
752
1,436
(285)
$ 4,434
3,301
1,372
737
1,642
(265)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,079
$11,187
$11,221
Segment EBITDA(1):
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued Operations(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net
Income tax expense—continuing operations . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit—discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . .
Depreciation and Amortization:
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
696
372
86
(78)
79
(261)
894
(5)
889
(190)
(125)
2
(448)
128
156
121
38
17
73
41
446
2
448
$
$
$
$
726
360
54
(49)
352
(251)
1,192
(5)
1,187
(226)
(169)
3
(432)
363
152
113
31
23
69
39
427
5
432
$
$
$
$
469
385
125
(199)
501
(236)
1,045
(6)
1,039
(249)
(109)
5
(439)
247
160
110
33
27
74
35
439
—
439
113
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24. OPERATING SEGMENT INFORMATION (Continued)
Year ended
December 31,
2013
2012
2011
Capital Expenditures:
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 132
115
73
31
98
22
$ 107
117
41
27
98
22
$
85
96
39
34
57
19
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 471
$ 412
$ 330
December 31,
2013
2012
2011
Total Assets(4):
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,839
2,320
918
653
1,469
989
$2,733
2,242
909
630
1,536
834
$2,687
2,205
874
591
1,376
924
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,188
$8,884
$8,657
(1) Segment EBITDA is defined as net income attributable to Huntsman Corporation before
interest, income tax, depreciation and amortization, and certain Corporate and other
items.
(2) Corporate and other includes unallocated corporate overhead, unallocated foreign
exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early
extinguishment of debt, expenses associated with the Terminated Merger and related
litigation, unallocated restructuring, impairment and plant closing costs and non-operating
income and expense.
(3) The operating results of our former polymers, base chemicals and Australian styrenics
businesses are classified as discontinued operations, and, accordingly, the revenues of
these businesses are excluded for all periods presented. The EBITDA of our former
polymers, base chemicals and Australian styrenics businesses are included in discontinued
operations for all periods presented.
(4) Effective in the fourth quarter of 2013, we began reclassifying cash and deferred tax
amounts from our business segments to Corporate and other and we began reclassifying
intercompany investment amounts from our business segments to Corporate and other to
114
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24. OPERATING SEGMENT INFORMATION (Continued)
mirror the treatment of related elimination amounts. The amounts for prior periods have
been reclassified to conform to the current presentation.
Year ended December 31,
2013
2012
2011
By Geographic Area
Revenues(1):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other nations
$ 3,319
1,081
853
586
437
4,803
$ 3,347
1,040
954
600
465
4,781
$ 3,470
944
723
638
558
4,888
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,079
$11,187
$11,221
December 31,
2013
2012
2011
Long-lived assets(2):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,422
356
312
220
200
202
197
154
162
138
461
$1,387
351
314
231
201
169
164
163
154
147
464
$1,390
310
306
243
205
162
152
166
126
157
405
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,824
$3,745
$3,622
(1) Geographic information for revenues is based upon countries into which product is sold.
(2) Long-lived assets consist of property, plant and equipment, net.
115
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA
A summary of selected unaudited quarterly financial data for the years ended December 31, 2013
and 2012 is as follows (dollars in millions, except per share amounts):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . .
(Loss) income from continuing operations . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income attributable to Huntsman
Three months ended
March 31,
2013
June 30,
2013
September 30,
2013
December 31,
2013
$2,702
349
44
(15)
(17)
$2,830
451
29
54
54
$2,842
507
37
72
70
$2,705
446
41
43
42
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(24)
47
64
41
Basic income (loss) per share(3):
(Loss) income from continuing operations
attributable to Huntsman Corporation common
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income attributable to Huntsman
(0.09)
0.20
Corporation common stockholders . . . . . . . . . . . .
(0.10)
0.20
Diluted (loss) income per share(3):
(Loss) income from continuing operations
attributable to Huntsman Corporation common
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income attributable to Huntsman
(0.09)
0.19
Corporation common stockholders . . . . . . . . . . . .
(0.10)
0.19
0.28
0.27
0.27
0.26
0.17
0.17
0.17
0.17
116
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA (Continued)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . .
Income (loss) from continuing operations . . . . . . . . . . .
Income (loss) before extraordinary gain . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to Huntsman
Three months ended
March 31,
2012(1)
June 30,
2012
September 30,
2012(1)
December 31,
2012(1)(2)
$2,913
550
—
167
163
163
$2,914
527
5
130
128
128
$2,741
537
47
120
119
120
$2,619
420
40
(39)
(39)
(38)
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163
124
116
(40)
Basic income (loss) per share(3):
Income (loss) from continuing operations attributable
to Huntsman Corporation common stockholders . .
Net income (loss) attributable to Huntsman
Corporation common stockholders . . . . . . . . . . . .
Diluted income (loss) per share(3):
Income (loss) from continuing operations attributable
to Huntsman Corporation common stockholders . .
Net income (loss) attributable to Huntsman
Corporation common stockholders . . . . . . . . . . . .
0.71
0.69
0.70
0.68
0.53
0.52
0.52
0.52
0.49
0.49
0.48
0.48
(0.17)
(0.17)
(0.17)
(0.17)
(1) During 2012, our Polyurethanes segment implemented a restructuring program to reduce
annualized fixed costs. In connection with this program, we recorded restructuring expenses of
$5 million, $32 million and $1 million in the first, third and fourth quarters of 2012, respectively.
(2) During the fourth quarter of 2012, our Advanced Materials segment began implementing a global
transformational change program, subject to consultation with relevant employee representatives,
designed to improve the segment’s manufacturing efficiencies, enhance commercial excellence and
ensure its long-term global competitiveness. In connection with this global transformational change
program, we recorded charges of $28 million related primarily to workforce reduction costs.
Also during the fourth quarter of 2012, we recorded a loss on early extinguishment of debt of
$77 million in connection with the redemption of $400 million of our 2016 Senior Notes.
(3) Basic and diluted income per share are computed independently for each of the quarters presented
based on the weighted average number of common shares outstanding during that period.
Therefore, the sum of quarterly basic and diluted per share information may not equal annual
basic and diluted earnings per share.
******
117
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION AND HOLDERS
Our common stock is listed on the New York Stock Exchange under the symbol ‘‘HUN.’’ As of
February 3, 2014, there were approximately 191 stockholders of record and the closing price of our
common stock on the New York Stock Exchange was $21.28 per share.
The reported high and low sale prices of our common stock on the New York Stock Exchange for
each of the periods set forth below are as follows:
Period
2013
High
Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$19.51
20.14
21.11
24.74
$16.16
16.02
16.18
20.53
Period
2012
High
Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$14.92
15.98
16.35
17.17
$ 9.75
11.51
10.99
14.18
DIVIDENDS
During each quarter of 2013, we paid cash dividends of $30 million, or $0.125 per share, to
common stockholders for a total of $120 million of cash dividends paid during 2013. During each
quarter of 2012, we paid cash dividends of $24 million, or $0.10 per share, to common stockholders for
a total of $96 million of cash dividends paid during 2012. The payment of dividends is a business
decision made by our Board of Directors from time to time based on our earnings, financial position
and prospects, and such other considerations as our Board of Directors considers relevant. Accordingly,
while management currently expects that the Company will continue to pay the quarterly cash dividend,
its dividend practice may change at any time.
PURCHASES OF EQUITY SECURITIES BY THE COMPANY
None.
118
STOCK PERFORMANCE GRAPH
Comparison of Cumulative Five Year Total Return
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
12/31/08
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
Huntsman Corporation
S&P 500 Index
S&P 500 Chemicals
8MAR201411332370
Total Return To Shareholders
(Includes reinvestment of dividends)
Company / Index
Huntsman Corporation . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUAL RETURN PERCENTAGE
Years Ending
12/31/09
252.30
26.46
44.76
12/31/10
12/31/11
43.15 (cid:3)33.90
2.11
15.06
(cid:3)1.26
21.90
12/31/12
12/31/13
63.47
16.00
23.61
58.69
32.39
31.80
Company / Index
Base
Period
12/31/08
INDEXED RETURNS
Years Ending
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
Huntsman Corporation . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Chemicals . . . . . . . . . . . . . . . . . . . . .
100
100
100
352.30
126.46
144.76
504.32
145.51
176.46
333.34
148.59
174.24
544.92
172.37
215.38
864.72
228.19
283.88
119
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InInFFormat
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HEADqUARTERS
STOCk TRANSFER AgENT
STOCk LISTINg
10003 Woodloch Forest Drive
10003 Woodloch Forest Drive
The Woodlands, Texas 77380
The Woodlands, Texas 77380
Tel.: +1-281-719-6000
Tel.: +1-281-719-6000
y Regular Mail:
bby Regular Mail:
Computershare
Computershare
ox 30170
P.O. box 30170
P.O. b
Our common stock is listed on the
Our common stock is listed on the
New York Stock Exchange under the
New York Stock Exchange under the
symbol HUN.
symbol HUN.
500 Huntsman Way
500 Huntsman Way
Salt Lake City, Utah 84108
Salt Lake City, Utah 84108
Tel.: +1-801-584-5700
Tel.: +1-801-584-5700
INDEPENDENT REgISTERED
PUbLIC ACCOUNTINg FIRM
Deloitte & Touche LLP
Deloitte & Touche LLP
College Station, TX 77842
College Station, TX 77842
United States of America
United States of America
y Overnight Delivery:
bby Overnight Delivery:
Computershare
Computershare
uality Circle
211 q211 quality Circle
Suite 210
Suite 210
College Station, TX 77845
College Station, TX 77845
United States of America
United States of America
STOCkHOLDER INqUIRIES
Toll Free: 1-866-210-6997
Toll Free: 1-866-210-6997
Inquiries from stockholders and other
Inquiries from stockholders and other
International: +1-201-680-6578
International: +1-201-680-6578
interested parties regarding our com--
interested parties regarding our com
TTY—Hearing Impaired Toll Free:
TTY—Hearing Impaired Toll Free:
pany are always welcome. Please
pany are always welcome. Please
1-800-952-9245
1-800-952-9245
direct your requests to:
direct your requests to:
TTY—Hearing Impaired International:
TTY—Hearing Impaired International:
Investor Relations
Investor Relations
500 Huntsman Way
500 Huntsman Way
+1-781-575-4592
+1-781-575-4592
Website:
Website:
Salt Lake City, Utah 84108
Salt Lake City, Utah 84108
www.computershare.com/investor
www.computershare.com/investor
Tel.: +1-801-584-5959
Tel.: +1-801-584-5959
Fax.: +1-801-584-5788
Fax.: +1-801-584-5788
Email: ir@huntsman.com
Email: ir@huntsman.com
ANNUAL MEETINg
The 2014 annual meeting of stock--
The 2014 annual meeting of stock
holders will take place on Thursday,
holders will take place on Thursday,
May 8, 2014 at 8:30 a.m., local time,
May 8, 2014 at 8:30 a.m., local time,
at the following location:
at the following location:
The Woodlands Waterway Marriott
The Woodlands Waterway Marriott
Hotel and Convention Center
Hotel and Convention Center
1601 Lake Robbins Drive
1601 Lake Robbins Drive
The Woodlands, Texas 77380
The Woodlands, Texas 77380
Tel.: +1-281-367-9797
Tel.: +1-281-367-9797
WEbSITE
www.huntsman.com
www.huntsman.com
FORWARD-LOOkINg STATEMENTS
Statements in this report that are not historical are forward-looking statements. These statements are based on management’s current belief
Statements in this report that are not historical are forward-looking statements. These statements are based on management’s current belief
and expectations. The forward-looking statements in this report are subject to uncertainty and changes in circumstances and involve risks
and expectations. The forward-looking statements in this report are subject to uncertainty and changes in circumstances and involve risks
and uncertainties that may affect our operations, markets, products, services, prices and other factors as discussed in our filings with the
and uncertainties that may affect our operations, markets, products, services, prices and other factors as discussed in our filings with the
Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive,
Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive,
environmental, political, legal, regulatory and technological factors. We assume no obligation to provide revisions to any forward-looking
environmental, political, legal, regulatory and technological factors. We assume no obligation to provide revisions to any forward-looking
circumstances change, except as otherwise required by securities and other applicable laws.
statements should circumstances change, except as otherwise required by securities and other applicable laws.
statements should
Annual Report Design by Curran & Connors, Inc.
Annual Report Design by Curran & Connors, Inc.
www.curran-connors.com
www.curran-connors.com
3/13/14 8:05 PM
Global Headquarters
Huntsman Corporation
10003 Woodloch Forest Drive
The Woodlands, Texas 77380 USA
Telephone +1-281-719-6000
Fax +1-281-719-6416
www.huntsman.com
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Copyright © 2014 Huntsman Corporation or an affiliate thereof. All rights reserved.
The use of the symbol ® herein signifies the registration of the associated trademark in one or more, but not all, countries.
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