Huntsman
Annual Report 2014

Plain-text annual report

H u n t s m a n C o r p o r a t i o n 2 0 1 4 A n n u a l R e p o r t 2014 ANNUAL REPORT 3/16/15 5:01 PM Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. POLYURETHANES We are a global leader in the manufacture of MDI-based polyure- thanes used to produce energy- saving insulation; comfort foam for automotive seating, bedding and furniture; adhesives; coatings; elastomers for footwear; and composite wood products. ADVANCED MATERIALS Our technologically advanced epoxy, acrylic and polyurethane-based polymer products are replacing traditional materials in aircraft, automobiles and electrical power transmission. Our products are also used in coatings, construction materials, circuit boards and sports equipment. 55 BUSINESS DIVISIONS PIGMENTS AND ADDITIVES We manufacture and market a broad range of specialty titanium dioxide pigments, color pigments, functional additives and timber and water treat- ment chemicals. Our pigments and additives add performance and color to thousands of everyday items from to thousands of everyday items from paints, inks, plastics and concrete to paints, inks, plastics and concrete to cosmetics, pharmaceuticals and food. cosmetics, pharmaceuticals and food. PERFORMANCE PRODUCTS We manufacture products primarily based on amines, carbonates, surfactants and maleic anhydride. End uses include agrochemicals, oil and gas and alternative energy solutions, home detergents and personal care products, adhesives and coatings, mining, and polyurethane/ epoxy curing agents. TEXTILE EFFECTS We are a major global solutions provider for textile dyes and chemicals that enhance color and improve performance such as wrinkle resistance, UV-blocking and the ability to repel water and stains in apparel, home and technical textiles. 43169cvr.indd 4-6 2014 AT-A-GLANCE REVENUES $11.6 BILLION ADJUSTED EBITDA $1,340 MILLION REVENUES BY DIVISION(1) ADJUSTED EBIITTDDAA BY DIVISION(1) 43% POLYURETHANES 26% PERFORMANCE PRODUCTS 10% ADVANCED MATERIALS 8% TEXTILE EFFECTS 13% PIGMENTS AND ADDITIVES 47% POLYURETHANES 31% PERFORMANCE PRODUCTS 13% ADVANCED MATERIALS 4% TEXTILE EFFECTS 5% PIGMENTS AND ADDITIVES Adjusted EBITDA increased 10% compared to the prior year. FINANCIAL HIGHLIGHTS $ in millions Revenues Gross profit Interest expense, net Net income Adjusted net income(2) Adjusted EBITDA(2) Capital expenditures(3) $ in millions Total assets Net debt(4) YYeeaar Er Ennddeed Dd Deecceemmbbeer 3r 311,, 2014 2013 2013 20122012 $ 11,578 $ 11,079 $ 11,079 $ 11,187 $ 11,187 $ 1,919 $ 1,753 $ 1,753 $ 2,034 $ 2,034 $ $ $ 205 345 478 $ $ $ $ $ $ 190 190 149 149 390 390 $ $ $ $ $ $ 226 226 373 373 577 577 $ 1,340 $ 1,213 $ 1,213 $ 1,439 $ 1,439 $ 564 $ 467 $ $ 408 408 December 31, 2014 2013 20122012 $ 11,002 $ 9,188 $ 8,884 $ 4,330 $ 3,381 $ 3,306 OPERATE MORE THAN 100 MANUFACTURING AND R&D FACILITIES FACILITIES IN MORE THAN 30 COUNTRIES ~16,000 EMPLOYEES (1) Segment allocation before Corporate and other unallocated items. (2) For a reconciliation see pages 10–11 of the Financials section. (3) Net of reimbursements of $37 million, $4 million and $4 million in 2014, 2013 and 2012, respectively. (4) Net debt calculated as total debt excluding affiliates less cash. HUNTSMAN CORPORATION 1 43169nar.indd 1 3/13/15 12:19 AM PPEETTEER RR R. H. HUUNNTSMAN: A LA LEETTTTER TO OOUURR ST STOCKHOLDERS We have spent considerable capital investing in safety measures, envi- ronmental performance and the long-term growth of our company. In total, we spent $564 million on capital expenditures in 2014, net of reimbursements. We expect these investments will lead to more than $300 million of increased EBITDA over the next several years. Importantly, we continue to focus on safety improvements for our employees and improve our environmental footprint. Our safety and environmental performance is rated among the best in our industry and we continue to pursue further improvement. Dear Fellow Stockholder, 2014 ended a very strong year for our company. Our differentiated businesses, which include our MDI urethanes, Performance Products, I believe we are well positioned for success. We recently completed a Advanced Materials and Textile Effects, collectively increased their multi-year planning review with senior leaders of our company. I have adjusted EBITDA by more than $200 million. Our full year adjusted never been more excited about our company’s future than I am today. earnings per share grew 20% compared to the prior year. We are well on our way to delivering $2 billion of adjusted EBITDA and In October, we successfully completed the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. Thank you for your continued support. $700 million of free cash flow. The addition of these businesses broadens our product offering and further enables our ability to build the most competitive and successful pigments and additives business in the world. This acquisition was immediately accretive to our earnings and we have implemented a plan to deliver more than $140 million of synergies. In addition, this acquisition provides further optionality for our Pigments and Additives business. PETER R. HUNTSMAN President and Chief Executive Officer We have made a tremendous effort to control our costs and improve the February 25, 2015 competitiveness of our businesses this year. In 2014, we completed a number of initiatives across many of our divisions, generating annual savings of nearly $100 million. These initiatives include relocating manu- facturing from Europe to countries such as Thailand and China, where many of our customers are expanding. 2 HUNTSMAN CORPORATION 43169nar.indd 2 3/13/15 12:19 AM JJOON MN M. H. HUUNNTTSMAN: SSPPECIECIAAL NOTE TO STSTOOCCKKHOLDERS Peter Huntsman is a gifted CEO and a proven leader in whom the board instills full faith and confidence. Under his leadership, Huntsman’s management maintains an unwavering focus on executing our corporate vision, including expansion of key product lines into high growth markets, perfecting cost control measures and making strategic additions to our portfolio of businesses. Our business continues to expand and to thrive. Huntsman’s assets now As founder of the business our family established more than four total $11 billion. We employ approximately 16,000 associates around decades ago, I also remain its largest shareholder, so my economic the globe at more than 100 manufacturing and research and develop- interests are directly aligned with yours. Please know that I am relent- ment sites in more than 30 countries. Our earnings continue to grow lessly committed to pursuing consistent and progressive value creation concurrently; Huntsman’s adjusted EBITDA increased 10% compared to of our common investment. the prior year. In my capacity as Executive Chairman, I am honored to represent a Board of Directors comprised of members who emerged from diverse backgrounds to positions of prominence in their respective fields. Each has earned a reputation for knowledge and integrity. Huntsman is fortunate to have the benefit of the wealth of experience and prudent JON M. HUNTSMAN Executive Chairman and Founder judgment they bring to our company’s corporate governance. February 25, 2015 43169nar.indd 3 3/13/15 12:19 AM HUNTSMAN CORPORATION 3 2200114 F4 FIINNAANNCCIIAAL RL REEVVIIEEW AW ANND FD FOORRM 1M 100--KK DDeeffiinitnitionionss SeSelelectcteedd F Fiinanannciaciall Da Dattaa MMaananagegememenntt’’ss D Diissccusussisionon a anndd A Ananallyysisiss ooff Fin Finaancnciiaall C Coondindittioionn a andnd RReessuulltts os of f OOppeerarattiioonsns QQuuaannttiittaattiivve ae annd Qd Quuaalliittaattiivve De Diisscclloossuurrees s ababooutut Mar Markkeett Ri Risskk CCononttrrololss a anndd P Prroocceeddurureess ReReporporttss o off I Innddeeppeendndeenntt Re Regigisstteerreedd P Publublicic AAccccouounnttinging Fir Firmm CCononssololiidadatteedd Ba Balalannccee She Sheeettss CCononssololiidadatteedd St Staatteememennttss o off O Oppeerraattiiononss CCononssololiidadatteedd St Staatteememennttss o off CCompr ompreehehennsisivvee ( (LLoossss)) I Innccomeome CCononssololiidadatteedd St Staatteememennttss o off E Eqquituityy CCoonnssoolliiddaatteed Sd Sttaatteemmeenntts os of Cf Caassh Fh Flloowsws NoNotteess t too C Cononssololiidadatteedd F Fiinanannciaciall St Staatteememennttss MMaarrkkeett f foror Re Regigissttrraanntt’’ss C Common ommon E Equitquityy,, RReellaatteed Sd Sttoocckkhhoollddeer Mr Maatttteerrs as annd d IIsssusueerr P Pururcchahasesess o off E Equitquityy Se Seccururititieiess CCororporporaattee I Innfforormamattionion 44 HU HUNNTTSSMMAANN C CORORPPORORAATTIOIONN 43169narcx.indd 4 3/16/15 7:13 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, 2014, which was filed with the Securities and Exchange Commission on February 18, 2015. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income (loss) from continuing operations . . . . . . . . . . . . . . . . (Loss) income from discontinued operations, net of tax(a) . . . . Extraordinary gain (loss) on the acquisition of a business, net of tax of nil(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to Huntsman Corporation . . . . . . . . . Basic income (loss) per common share: Income (loss) from continuing operations attributable to Year ended December 31, 2014 2013 2012 2011 2010 (in millions, except per share amounts) $11,578 1,919 158 633 353 (8) $11,079 1,753 151 510 154 (5) $11,187 2,034 92 845 378 (7) $11,221 1,840 167 606 251 (1) $9,250 1,461 29 410 (9) 42 — 345 323 — 149 128 2 373 363 4 254 247 (1) 32 27 Huntsman Corporation common stockholders . . . . . . . . . . . $ 1.36 $ 0.55 $ 1.55 $ 1.03 $ (0.06) (Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax(a) . . (0.03) (0.02) (0.03) — 0.17 Extraordinary gain on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax(b) — — 0.01 0.01 — Net income attributable to Huntsman Corporation common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.33 $ 0.53 $ 1.53 $ 1.04 $ 0.11 Diluted income (loss) per common share: Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders . . . . . . . . . . . $ 1.34 $ 0.55 $ 1.53 $ 1.01 $ (0.06) (Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax(a) . . (0.03) (0.02) (0.03) — 0.17 Extraordinary gain on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax(b) — — 0.01 0.01 — Net income attributable to Huntsman Corporation common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.31 Other Data: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance Sheet Data (at period end): Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02 $ 0.11 $ $ 0.53 448 471 0.50 $ $ 1.51 432 412 0.40 $ $ 439 330 0.40 $ 445 601 0.50 $11,002 5,206 9,051 $ 9,188 3,916 7,059 $ 8,884 3,706 6,988 $ 8,657 3,946 6,881 $ 405 236 0.40 $8,714 4,150 6,864 (a) (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 5 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. (b) The extraordinary gain (loss) on the acquisition of a business relates to the June 30, 2006 acquisition of our Textile Effects segment. 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, maleic anhydride, epoxy-based polymer formulations, textile chemicals, dyes, titanium dioxide and color pigments. Our administrative, research and development and manufacturing operations are primarily conducted at the facilities located in more than 30 countries. We employed approximately 16,000 associates worldwide at December 31, 2014. We operate in five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments and Additives. Our Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments produce differentiated organic chemical products and our Pigments and Additives segment produces primarily inorganic chemical products. In a series of transactions beginning in 2006, we have sold or shut down 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, maleic anhydride demand can be cyclical given its dependence on the UPR market, which is influenced by construction end markets. 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 and additives has grown at rates approximately equal to 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. For further information regarding sales price and demand trends, see ‘‘Results of Operations— Segment Analysis—Year Ended December 31, 2014 Compared to Year Ended December 31, 2013’’ and the tables captioned ‘‘Year ended December 31, 2014 vs. 2013, Period-Over-Period Increase (Decrease)’’ and ‘‘Fourth Quarter 2014 vs. Third Quarter 2014, Period-Over-Period Increase (Decrease)’’ below. OUTLOOK Our differentiated businesses that include MDI urethanes, Performance Products, Advanced Materials and Textile Effects have an attractive growth profile and we expect profitability to continue to improve during 2015. We have a number of initiatives underway that will improve the competitiveness and strength of our entire Company and we are investing in growth projects that will improve our businesses over the next few years. We are taking aggressive action to deliver synergies as we integrate the businesses we purchased from Rockwood Holdings, Inc. (‘‘Rockwood’’). Our earnings are subject to fluctuations due to exchange rate movements. Our revenues and expenses are denominated in various currencies, including the primary European currencies which have recently been volatile, while our reporting currency is the U.S. dollar. Generally, a decline in the value of the Euro relative to the U.S. dollar, will reduce the reported profitability of our Polyurethanes, Performance Products, Advanced Materials and Pigments and Additives segments. A decline in the value of the Pound Sterling relative to the U.S. dollar will increase the reported profitability of our Pigments and Additives segment and an increase in the value of the Swiss Franc relative to the U.S. dollar will reduce the reported profitability of our Advanced Materials and Textile Effects segments. We are also exposed to other foreign currencies including the Chinese Renminbi, the Indian Rupiah, the Brazilian Real and the Thai Baht. In general, a decline in the value of these currencies as compared to the U.S. dollar will reduce our reported profitability. Notwithstanding near term headwinds and shocks to the business landscape, such as meaningful movements in foreign currency rates and lower priced oil, we believe we are well positioned to deliver increased earnings, an improvement in free cash flow and increased stockholder value over the next several years. The following is a summary of the key trends expected in our business segments: Polyurethanes: (cid:127) Strong MDI demand in the U.S. and Asia, modest demand in Europe (cid:127) Improving MDI margins (cid:127) Lower benzene raw material costs (cid:127) Lower PO/MTBE margins (cid:127) PO/MTBE maintenance outage in the first quarter 2015, approximate $60 million EBITDA impact and $90 million maintenance cost 7 Performance Products: (cid:127) Benefits of European surfactants restructuring expected in 2015 (cid:127) Improving downstream product margins (cid:127) Singapore polyetheramine facility expansion in mid-2016 (cid:127) Lower oil prices reduces U.S. Gulf Coast manufacturing advantage Advanced Materials: (cid:127) Strong aerospace market Textile Effects: (cid:127) Selective growth above underlying market demand (cid:127) Progressive environmental regulations impacting raw materials costs Pigments and Additives: (cid:127) Approximately $130 million of synergies from integration of former Rockwood businesses (cid:127) Approximately $35 million of cost savings from planned titanium dioxide capacity rationalization in Calais, France (cid:127) Improving sales prices We expect to spend approximately $625 million in 2015 on capital expenditures, net of reimbursements, for growth initiatives, maintenance and restructuring. We expect our full year 2015 adjusted effective income tax rate to be in the low 30%s. We believe our long-term effective income tax rate will be approximately 30%. RECENT DEVELOPMENTS Rockwood Acquisition On October 1, 2014, we completed the acquisition of the Performance Additives and Titanium Dioxide businesses (the ‘‘Rockwood Acquisition’’) of Rockwood. These businesses manufacture and market titanium dioxide and performance additives products. We paid $1.04 billion in cash, subject to certain purchase price adjustments, and assumed certain unfunded pension liabilities in connection with the Rockwood Acquisition. The Rockwood Acquisition was financed using a bank term loan. The following businesses were acquired from Rockwood: (cid:127) titanium dioxide, a white pigment derived from titanium bearing ores, with strong specialty business in fibers, inks, pharmaceuticals, food and cosmetics; (cid:127) functional additives made from barium and zinc-based inorganics used to make colors more brilliant, primarily in plastics, coatings, films, food, cosmetics, pharmaceuticals and paper industries; (cid:127) color pigments made from synthetic iron-oxide and other (not titanium dioxide) inorganic pigments used by manufacturers of coatings and colorants; (cid:127) timber treatment wood protection chemicals used primarily in residential and commercial applications; 8 (cid:127) water treatment products used to improve water purity in industrial, commercial and municipal applications; and (cid:127) specialty automotive molded components. The unaudited condensed combined balance sheet of the acquired businesses as of June 30, 2014 and the unaudited condensed combined statements of operations, comprehensive income (loss), cash flows, and changes in parent company equity of the acquired businesses for the six months ended June 30, 2014 and June 30, 2013 can be found in our current report on Form 8-K filed on October 7, 2014. In connection with securing certain regulatory approvals required to complete the Rockwood Acquisition, we sold our TiO2 TR52 product line used in printing inks to Henan Billions Chemicals Co., Ltd. (‘‘Henan’’) in December 2014. The sale did not include any manufacturing assets but does include an agreement to supply TR52 to Henan. Pigments and Additives Restructuring On December 1, 2014, we announced that we are taking significant action to improve the global competitiveness of our Pigments and Additives segment. As part of a comprehensive restructuring program, we plan to reduce our workforce by approximately 900 positions. Annual cost savings are expected to exceed $130 million and are expected to be achieved by the middle of 2016. In connection with this restructuring program, we recorded restructuring expense of $57 million in the fourth quarter of 2014 related primarily to workforce reductions. We expect to record additional restructuring expense in 2015 once negotiations of employee termination benefits with European works councils are completed. On February 12, 2015, we announced plans to reduce our titanium dioxide capacity by approximately 100 kt by closing specific operations at our Calais, France facility, subject to consultation with employees and appropriate representative groups. Annual cost savings are expected to be approximately $35 million and are expected to be achieved by the middle of 2016. This plan is in addition to that announced on December 1, 2014. Notes Issuance In November 2014, Huntsman International issued $400 million in aggregate principal amount of senior notes carrying an interest rate of 5.125% and maturing on November 15, 2022 (the ‘‘2022 Senior Notes’’). We used the net proceeds of this offering to redeem all of our 8.625% senior subordinated notes due 2020 (the ‘‘2020 Senior Subordinated Notes’’), including accrued interest, and for general corporate purposes. 9 RESULTS OF OPERATIONS The following table sets forth our consolidated results of operations for the years ended December 31, 2014, 2013 and 2012 (dollars in millions, except per share amounts). Year ended December 31, Percent Change 2014 2013 2012 2014 vs. 2013 2013 vs. 2012 5% 4% 9% 3% 5% 24% 8% (25)% (45)% NM 45% (59)% 129% 60% — 132% 5% 152% 8% (59)% — (1)% 15% (1)% 2% (14)% — 64% (40)% (16)% 14% (36)% 100% (49)% (26)% (59)% (29)% NM (60)% 110% (65)% (16)% (26)% (33)% 4% (25)% Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,578 9,659 $11,079 9,326 $11,187 9,153 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring, impairment and plant closing costs . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity in income of investment in unconsolidated affiliates Loss on early extinguishment of debt . . . . . . . . . . . . . . Other (loss) 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense from continuing operations . . . . . . . Income tax benefit from discontinued operations . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . 1,919 1,128 158 633 (205) 6 (28) (2) 404 (51) 353 (8) — 345 (22) 323 205 51 (2) 445 EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,022 Reconciliation of EBITDA to adjusted EBITDA: EBITDA(1) Acquisition and integration expenses and purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . accounting adjustments . . . . . . . . . . . . . . . . . . . . . . Loss 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 and Additives . . . . . . . . . . . . . . . . . . . . . . Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . Total restructuring, impairment and plant closing and $ 1,022 67 — 10 (3) 28 — 3 51 19 28 11 28 60 16 1,753 1,092 151 2,034 1,097 92 510 (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 $ $ 889 $ 1,187 889 $ 1,187 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 transition costs(3) . . . . . . . . . . . . . . . . . . . . . . . 162 164 109 Adjusted EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,340 $ 1,213 $ 1,439 Net cash provided by operating activities . . . . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital expenditures $ 760 (1,606) 1,197 (601) $ 708 (566) (6) (471) $ 774 (471) (473) (412) 7% 184% NM 28% (9)% 20% (99)% 14% 10 Reconciliation of net income to adjusted net income: Net income attributable to Huntsman Corporation . . . . . . Acquisition and integration expenses and purchase accounting adjustments net of tax of $(10), $(5) and $(1) in 2014, 2013 and 2012, respectively . . . . . . . . . . . Impact of certain foreign tax credit elections . . . . . . . . . . Loss on initial consolidation of subsidiaries, net of tax of nil for 2014, 2013 and 2012 each . . . . . . . . . . . . . . . . . Loss from discontinued operations, net of tax of $(2), $(2) and $(3) in 2014, 2013 and 2012, respectively . . . . . . . . Discount amortization on settlement financing, net of tax of nil, $(3) and $(11) in 2014, 2013 and 2012, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on disposition of businesses/assets, net of tax of $1, nil and nil in 2014, 2013 and 2012, respectively . . . . . . . Loss on early extinguishment of debt, net of tax of $(10), $(19) and $(29) in 2014, 2013 and 2012, respectively . . . Extraordinary gain on the acquisition of a business, net of tax of nil for 2014, 2013 and 2012 each . . . . . . . . . . . . . Certain legal settlements and related expenses, net of tax of nil, $(2) and $(4) in 2014, 2013 and 2012, respectively Amortization of pension and postretirement actuarial losses, net of tax of $(10), $(20) and $(8) in 2014, 2013 and 2012, respectively . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring, impairment and plant closing and transition costs(3), net of tax of $(38), $(22) and $(18) in 2014, 2013 and 2012, respectively . . . . . . . . . . . . . . . . . . . . . Year ended December 31, 2014 2013 2012 $ 323 $ 128 $ 363 57 (94) — 8 — (2) 18 — 3 41 16 — — 5 6 — 32 — 7 54 124 142 4 — 4 7 20 (3) 51 (2) 7 35 91 Adjusted net income(2) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 478 $ 390 $ 577 Weighted average shares-basic . . . . . . . . . . . . . . . . . . . . . Weighted average shares-diluted . . . . . . . . . . . . . . . . . . . 242.1 246.0 239.7 242.4 237.6 240.6 Net income per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.33 1.31 $ 0.53 0.53 $ 1.53 1.51 Other non-GAAP measures: Adjusted income per share(2): Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital expenditures, net of reimbursements(4) . . . . . . . . $ 1.97 1.94 (564) $ 1.63 1.61 (467) $ 2.43 2.40 (408) 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 and integration expenses and purchase 11 accounting adjustments; (b) loss 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 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. 12 (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 and integration expenses and purchase accounting adjustments; (b) impact of certain foreign tax credit elections; (c) loss on initial consolidation of subsidiaries; (d) loss from discontinued operations; (e) discount amortization on settlement financing; (f) gain on disposition of businesses/assets; (g) loss on early extinguishment of debt; (h) extraordinary gain on the acquisition of a business; (i) certain legal settlements and related expenses; (j) amortization of pension and postretirement actuarial losses; and (k) 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 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. (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. Additionally, includes costs associated with a reorganization of our global information technology organization. (4) Capital expenditures, net of reimbursements, represent cash paid for capital expenditures less payments received as reimbursements from customers and joint venture partners. During 2014, 2013 and 2012, capital expenditures of $601 million, $471 million and $412 million, respectively, were reimbursed in part by $37 million, $4 million and $4 million, respectively. 13 Year Ended December 31, 2014 Compared with Year Ended December 31, 2013 For the year ended December 31, 2014, net income attributable to Huntsman Corporation was $323 million on revenues of $11,578 million, compared with net income attributable to Huntsman Corporation of $128 million on revenues of $11,079 million for 2013. The increase of $195 million in net income attributable to Huntsman Corporation was the result of the following items: (cid:127) Revenues for the year ended December 31, 2014 increased by $499 million, or 5%, as compared with 2013. The increase was due principally to higher average selling prices in our Performance Products, Advanced Materials and Textile Effects segments and higher sales volumes in our Polyurethanes and Pigments and Additives segments. See ‘‘—Segment Analysis’’ below. (cid:127) Our gross profit for the year ended December 31, 2014 increased by $166 million, or 9%, as compared with 2013. The increase resulted from higher gross margins in all our segments, except for our Pigments and Additives segment. See ‘‘—Segment Analysis’’ below. (cid:127) Operating expenses for the year ended December 31, 2014 increased by $36 million, or 3%, as compared with 2013, primarily related to higher acquisition and integration costs and higher foreign currency losses. (cid:127) Restructuring, impairment and plant closing costs for the year ended December 31, 2014 increased to $158 million from $151 million in 2013. For more information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements. (cid:127) Our interest expense for 2014 increased by $15 million, or 8%, as compared with 2013. The increase was due primarily to additional borrowings in 2014 that were used to fund the Rockwood Acquisition. (cid:127) Loss on early extinguishment of debt for the year ended December 31, 2014 decreased to $28 million from $51 million in 2013. The loss in 2014 resulted from the redemption of our 2020 Senior Subordinated Notes. The loss in 2013 resulted primarily from the repurchase of the remainder of our 5.50% senior notes due 2016 (‘‘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 decreased by $74 million as compared with 2013, primarily due to the benefit of utilizing U.S. foreign tax credits, which had been subject to a valuation allowance. Excluding the impact of the U.S. foreign tax credits, our income tax expense increased by $40 million as compared with 2013. For the year ended December 31, 2014, excluding the impact of the benefit of our U.S. foreign tax credits, our effective tax rate was 39%, which is lower than our effective tax rate of 45% for 2013, primarily due to various valuation allowance releases in 2014 and because our Textile Effects segment’s restructuring charges in 2013 received nominal tax benefit. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see ‘‘Note 17. Income Taxes’’ to our consolidated financial statements. 14 Segment Analysis Year Ended December 31, 2014 Compared to Year Ended December 31, 2013 Year ended December 31, 2014 2013 Percent Change Favorable (Unfavorable) Revenues Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,032 3,072 1,248 896 1,549 (219) $ 4,964 3,019 1,267 811 1,269 (251) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,578 $11,079 Segment EBITDA Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . Corporate and other . . . . . . . . . . . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued Operations . . . . . . . . . . . . . . . . . . . $ $ 669 440 182 28 (59) (228) 1,032 (10) 696 372 86 (78) 79 (261) 894 (5) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,022 $ 889 1% 2% (1)% 10% 22% 13% 5% (4)% 18% 112% NM NM 13% 15% 100% 15% Year ended December 31, 2014 vs 2013 Average Selling Price(1) Foreign Currency Translation Mix & Other Impact Local Currency Sales Volumes(2) 2% (1)% (10)% (4)% 1% (1)% 4% — 26%(3) — — 3% Period-Over-Period Increase (Decrease) Polyurethanes . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . Total Company . . . . . . . . . . . . . . . . . . . . (2)% 4% 5% 15% (6)% 2% — — — (1)% 2% — 15 Fourth Quarter 2014 vs. Third Quarter 2014 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 and Additives . . . . . . . . . . . . . . Total Company . . . . . . . . . . . . . . . . . . . . (3)% — — (2)% 4% (5)% (7)% (2)% 1% (1)% (2)% (2)% (3)% (2)% (8)% 103%(3) (2)% 10% 3% (3)% (3)% (3)% (19)% (1)% (1) Excludes revenues from tolling arrangements, byproducts and raw materials. (2) Excludes sales volumes of byproducts and raw materials. (3) Includes the effects of the Rockwood Acquisition. NM—Not Meaningful Polyurethanes The increase in revenues in our Polyurethanes segment for 2014 compared to 2013 was primarily due to higher sales volumes and improved sales mix, partially offset by lower average selling prices. MDI sales volumes increased due to improved demand in the Americas and Asian regions and across most major markets. PO/MTBE sales volumes decreased primarily as a result of two manufacturing disruptions at our Port Neches, Texas facility in the second and third quarters of 2014. PO/MTBE average selling prices decreased primarily due to less favorable market conditions. MDI average selling prices increased in the Americas and European regions, partially offset by lower component pricing in China. The decrease in segment EBITDA was primarily due to lower PO/MTBE earnings, partially offset by higher MDI sales margins. During 2014 and 2013, our Polyurethanes segment recorded restructuring, impairment and plant closing costs of $19 million and $2 million, respectively. For more information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements. Performance Products The increase in revenues in our Performance Products segment for 2014 compared to 2013 was primarily due to higher average selling prices, partially offset by lower sales volumes and unfavorable changes in sales mix. Average selling prices increased in response to higher raw material costs and continued strong market conditions for amines, maleic anhydride and specialty surfactants. Sales volumes decreased primarily due to a decline in sales volumes of surfactants, which resulted from the restructuring of our European surfactants business, partially offset by an increased demand for amines and maleic anhydride. The increase in segment EBITDA was primarily due to the impact of our scheduled maintenance in the first quarter of 2013, estimated at $55 million, and increased margins in amines and maleic anhydride, partially offset by higher restructuring charges. During 2014 and 2013, our Performance Products segment recorded restructuring, impairment and plant closing costs of $28 million and $18 million, respectively. For more information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements. 16 Advanced Materials The decrease in revenues in our Advanced Materials segment for 2014 compared to 2013 was primarily due to lower sales volumes, partially offset by higher average selling prices and improved sales mix. Sales volumes decreased primarily in our coatings and construction market due to our restructuring efforts, partially offset by higher demand in the wind market in the Americas and Asia Pacific regions. During the fourth quarter of 2013, we closed two of our base resins production units as we focus on higher value markets, such as aerospace and transportation and industrial. During 2014, we also experienced an unplanned production outage due to a raw materials supply disruption in the Americas region. Average selling prices increased in all regions and across most markets primarily due to certain price increase initiatives and a focus on higher value markets. The increase in segment EBITDA was primarily due to higher margins, improved sales mix, lower restructuring, impairment and plant closing costs and lower selling, general and administrative costs as a result of recent restructuring efforts. During 2014 and 2013, our Advanced Materials segment recorded restructuring, impairment and plant closing costs of $11 million and $34 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 2014 compared to 2013 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily in response to higher raw material costs. Sales volumes decreased primarily due to the de-selection of lower value business. The increase in segment EBITDA was primarily due to higher margins, lower manufacturing costs and lower restructuring, impairment and plant closing and transition costs, partially offset by higher selling, general and administrative costs. During 2014 and 2013, our Textile Effects segment recorded restructuring, impairment and plant closing and transition costs of $28 million and $87 million, respectively. For more information concerning restructuring activities, see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements. Pigments and Additives The increase in revenues in our Pigments and Additives segment for 2014 compared to 2013 was primarily due to the impact of the Rockwood Acquisition. Other than the impact of the Rockwood Acquisition, sales volumes remained flat as a result of higher end-use demand in the European and North American regions, offset by lower demand in the Africa, Latin America and Middle East regions. Average selling prices decreased primarily as a result of high industry inventory levels, partially offset by the strength of the euro against the U.S. dollar. The decrease in segment EBITDA was primarily due to lower margins, higher acquisition expenses and integration costs and higher restructuring costs, partially offset by lower selling, general and administrative costs. During 2014 and 2013, our Pigments and Additives segment recorded acquisition expenses and integration costs of $43 million and $8 million, respectively. During 2014 and 2013, our Pigments and Additives segment recorded restructuring, impairment and plant closing costs of $60 million and $4 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, 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 17 2014, EBITDA from Corporate and other for Huntsman Corporation increased by $33 million to a loss of $228 million from a loss of $261 million for 2013. The increase in EBITDA from Corporate and other resulted primarily from a decrease in loss on early extinguishment of debt of $23 million ($28 million loss in 2014 compared to $51 million loss in 2013). 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 increase in EBITDA also resulted from a $7 million decrease in loss from benzene sales (nil in 2014 compared to $7 million loss in 2013), a $6 million decrease in restructuring, impairment and plant closing costs ($13 million of expense in 2014 compared to $19 million of expense in 2013) and a decrease in legal settlements of $5 million (nil in 2014 compared to $5 million of expense in 2013). For more information concerning restructuring activities see ‘‘Note 11. Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements. The increase in EBITDA was partially offset by an increase in unallocated foreign exchange losses of $5 million ($5 million loss in 2014 compared to nil in 2013) and an increase in global information technology transition costs of $3 million ($3 million of expense in 2014 compared to nil in 2013). 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, 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 and Additives 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 and Additives 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 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 2016 Senior Notes in 2012 and 2013. (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. 18 (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 and Additives . . . . . . . . . . . . . . . . . . . . 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 and Additives . . . . . . . . . . . . . . . . . . . . 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)% Year ended December 31, 2013 vs. 2012 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 and Additives . . . . . . . . . . . . . . . Total Company . . . . . . . . . . . . . . . . . . . . . (1)% 2% 4% 3% (23)% (2)% 1% — (1)% (1)% 1% — — (2)% 3% — — — 1% (2)% (10)% 6% 10% 1% (1) Excludes revenues from tolling arrangements, byproducts and raw materials. (2) Excludes sales volumes of byproducts and raw materials. 19 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. 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 20 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. Pigments and Additives The decrease in revenues in our Pigments and Additives 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 and Additives 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, 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. 21 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. Liquidity and Capital Resources Cash Flows for Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013 Net cash provided by operating activities for 2014 and 2013 was $760 million and $708 million, respectively. The increase in net cash provided by operating activities during 2014 compared with 2013 was primarily attributable to an increase in net income as described in ‘‘—Results of Operations’’ above, offset in part by a $61 million unfavorable variance in operating assets and liabilities for 2014 as compared with 2013. Net cash used in investing activities for 2014 and 2013 was $1,606 million and $566 million, respectively. During 2014 and 2013, we paid $601 million and $471 million, respectively, for capital expenditures. During 2014, we paid $1.04 billion for Rockwood’s Performance Additives and Titanium Dioxide businesses and during 2013 we paid $66 million for the acquisition of businesses. During 2014 and 2013, we made investments in Louisiana Pigment Company, L.P. of $37 million and $60 million, respectively, and in Nanjing Jinling Huntsman New Materials Co., Ltd of $62 and $37 million, respectively, and we received dividends from Louisiana Pigment Company, L.P. of $48 million and $71 million, respectively. Net cash provided by (used in) financing activities for 2014 and 2013 was $1,197 million and $(6) million, respectively. The increase in net cash provided by financing activities was due to higher net borrowings during 2014, primarily used to fund the Rockwood Acquisition, as compared to 2013. 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. 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. 22 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, 2014 Less: Acquisition(1) $ 860 10 $ (78) — Subtotal $ 782 10 December 31, 2013 Increase (Decrease) Percent Change $ 520 9 $ 262 1 1,707 2,025 62 62 313 5,039 1,275 739 51 267 2,332 (245) (400) (3) (2) (41) (769) (146) (71) (9) — (226) 1,462 1,625 59 60 272 4,270 1,129 668 42 267 2,106 1,575 1,741 61 53 200 4,159 1,113 726 43 277 2,159 (113) (116) (2) 7 72 111 16 (58) (1) (10) (53) 50% 11% (7)% (7)% (3)% 13% 36% 3% 1% (8)% — (4)% (2)% 8% Working capital . . . . . . . . . $2,707 $(543) $2,164 $2,000 $ 164 (1) Represents amounts related to the Rockwood Acquisition. For more information, see ‘‘Note. 3 Business Combinations and Dispositions—Rockwood Acquisition’’ to our consolidated financial statements. Excluding the effects of the Rockwood Acquisition on October 1, 2014, our working capital increased by $164 million as a result of the net impact of the following significant changes: (cid:127) The increase in cash and cash equivalents of $262 million resulted from the matters identified on our consolidated statements of cash flows. (cid:127) Accounts and notes receivable decreased by $113 million mainly due to lower sales in the fourth quarter of 2014, excluding sales from the acquired Rockwood businesses, compared with the fourth quarter of 2013. (cid:127) Inventories decreased by $116 million mainly due to lower raw material costs offset in part by an increase in inventory levels in anticipation of scheduled maintenance outages at certain manufacturing facilities during the first quarter of 2015. (cid:127) Other current assets increased by $72 million mainly due to increases in income taxes receivable and the value of cross-currency interest rate contracts. (cid:127) Accrued liabilities decreased by $58 million mainly due to decreases in accrued taxes other than income, income taxes payable and accrued rebates, offset in part by an increase in accrued restructuring, impairment and plant closing costs. 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); we are not a guarantor of such subsidiary debt. 23 Certain of our subsidiaries are designated as nonguarantor subsidiaries and have third-party debt agreements. These debt agreements contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us. Senior Credit Facilities As of December 31, 2014, our senior credit facilities (‘‘Senior Credit Facilities’’) consisted of our revolving credit 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’’), our 2014 new term loan facility (‘‘2014 New Term Loan’’), and Term Loan C as follows (dollars in millions): Facility Committed Amount Principal Outstanding Carrying Value Interest Rate(3) Maturity Revolving Facility . . . . . . . . Extended Term Loan B . . . . Extended Term Loan B— Series 2 . . . . . . . . . . . . . 2014 New Term Loan . . . . . Term Loan C . . . . . . . . . . . $625 NA NA NA NA $ —(1) $ —(1) USD LIBOR plus 2.50% USD LIBOR plus 2.50% 952 952 339 1,200 50 339 1,188 49 USD LIBOR plus 2.75% USD LIBOR plus 3.00%(2) USD LIBOR plus 2.25% 2017 2017 2017 2021 2016 (1) We had no borrowings outstanding under our Revolving Facility; we had approximately $16 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Facility. (2) The 2014 New Term Loan is subject to a 0.75% LIBOR floor. (3) The applicable interest rate of the Senior Credit Facilities is subject to certain secured leverage ratio thresholds. As of December 31, 2014, 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 substantially all of our domestic subsidiaries and certain of our foreign subsidiaries (collectively, the ‘‘Guarantors’’), and are secured by a first priority lien on substantially all of our domestic property, plant and equipment, the stock of all of our material domestic subsidiaries and certain foreign subsidiaries, and pledges of intercompany notes between certain of our subsidiaries. Amendment to the 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, permitted us to incur a senior secured term loan facility in an aggregate principal amount of $1.2 billion, the 2014 New Term Loan, and to increase our Revolving Facility. In August 2014, we entered into the eleventh and twelfth amendments, which modified the Credit Agreement to initially fund the 2014 New Term Loan into escrow and completed the increase of our Revolving Facility by $200 million. On October 1, 2014, the 2014 New Term Loan was used to fund the Rockwood Acquisition. See ‘‘Note 3. Business Combinations and Dispositions—Rockwood Acquisition.’’ The 2014 New Term Loan matures on October 1, 2021 and will amortize in aggregate annual amounts equal to 1% of the original principal amount of the 2014 New Term Loan, payable quarterly commencing March 31, 2015. The 2014 New Term Loan bears interest at an interest rate margin of LIBOR plus 3.00% (subject to a 0.75% floor). The 2014 New Term Loan was recorded at a carrying value of $1,188 million as of October 1, 2014. 24 On October 1, 2014, Huntsman International entered into a further amendment to the Credit Agreement. The amendment increased revolving commitments in an aggregate principal amount of $25 million to an aggregate amount of $625 million. A/R Programs Our U.S. accounts receivable securitization program (‘‘U.S. A/R Program’’) and our European accounts receivable securitization program (‘‘EU A/R Program’’ and collectively with the U.S. A/R Program, ‘‘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, 2014 was as follows (monetary amounts in millions): Facility Maturity Maximum Funding Availability(1) Amount Outstanding U.S. A/R Program . . . . . April 2016 EU A/R Program . . . . . . April 2016 $250 A225 (approximately $275) $90(4) A114 (approximately $139) Interest Rate(2)(3) Applicable rate plus 1.10% Applicable rate plus 1.35% (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, 2014, 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, 2014 and 2013, $472 million and $521 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs. Notes As of December 31, 2014, we had outstanding the following notes (monetary amounts in millions): Notes Maturity Interest Rate Amount Outstanding Senior Notes (‘‘2020 Senior Notes’’) . . . . . . . . . . . November 2020 Senior Notes (‘‘2021 Senior Notes’’) . . . . . . . . . . . 2022 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . November 2022 Senior Subordinated Notes (‘‘2021 Senior April 2021 4.875% $650 ($647 carrying value) 5.125% A445 (A449 carrying value ($549)) 5.125% $400 Subordinated Notes’’) . . . . . . . . . . . . . . . . . . . March 2021 8.625% $522 ($531 carrying value) On November 13, 2014, Huntsman International issued $400 million aggregate principal amount of 2022 Senior Notes. We applied the net proceeds to redeem in full $350 million of its 2020 Senior Subordinated Notes, pay associated accrued interest and for general corporate purposes. 25 The 2022 Senior Notes bear interest at 5.125% per year, payable semi-annually on November 15 and May 15, and are due on November 15, 2022. We may redeem the 2022 Senior Notes in whole or in part at any time prior to August 15, 2022 at a price equal to 100% of the principal amount thereof plus a ‘‘make-whole’’ premium and accrued and unpaid interest. On June 2, 2014, pursuant to an indenture entered into on December 23, 2013, Huntsman International issued A145 million (approximately $197 million) aggregate principal amount of additional 2021 Senior Notes. The additional notes are recorded at carrying value A149 million (approximately $182 million) as of December 31, 2014. The 2021 Senior Notes bear interest at 5.125% per year, payable semi-annually on April 15 and October 15, and are due on April 15, 2021. We 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. The 2020, 2021 and 2022 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 2020, 2021 and 2022 Senior Notes will have the right to require that Huntsman International purchase all or a portion of such holder’s 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, 2014 and 2013, we redeemed or repurchased the following notes (dollars in millions): Date of Redemption December 2014 . . . . . . . . . . . . November 28, 2014 . . . . . . . . . . March 4, 2013 . . . . . . . . . . . . . Variable Interest Entity Debt Notes Principal Amount of Notes Redeemed Amount Paid (Excluding Accrued Interest) Loss on Early Extinguishment of Debt 2021 Senior Subordinated Notes 2020 Senior Subordinated Notes 2016 Senior Notes $ 8 350 200 $ 9 374 200 $— 28 34 As of December 31, 2014, Arabian Amines Company had $158 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, 2014, the amounts outstanding under these loan commitments were classified as current on the accompanying consolidated balance sheets. As of December 31, 2014, Sasol-Huntsman, our consolidated 50%-owned venture has A40 million (approximately $49 million) outstanding under the term loan facility. The facility will be repaid over 26 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. 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 contained 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 calculated 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. 27 MATURITIES The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31, 2014 are as follows (dollars in millions): Year ending December 31 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 267 322 1,293 25 14 3,279 $5,200 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, 2014, we had $1,601 million of combined cash and unused borrowing capacity, consisting of $870 million in cash and restricted cash, $609 million in availability under our Revolving Facility, and $122 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 $68 million for 2014, as reflected in our consolidated statements of cash flows. We expect volatility in our working capital components to continue. (cid:127) During 2015, we expect to spend approximately $625 million on capital expenditures, net of reimbursements, including approximately $100 million combined for our new MDI facility, the completion of the Augusta, Georgia color pigments facility and replacement of Rockwood computer systems. Our future expenditures include certain EHS 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 2014, we made contributions to our pension and postretirement benefit plans of $159 million. During 2015, we expect to contribute an additional amount of approximately $101 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, 2014, we had $138 million of accrued restructuring costs from continuing operations, and we expect to incur and pay additional restructuring and plant closing costs of up to approximately $150 million in 2015. On December 1, 2014, we announced that we are taking significant action to improve the global competitiveness of our Pigments and Additives segment. As part of a comprehensive restructuring program, we plan to reduce our workforce by approximately 900 positions. Annual cost savings are expected to exceed $130 million and are expected to be achieved by the middle of 2016. In connection with this restructuring program, we recorded restructuring expense of $57 million in the fourth quarter of 2014 related primarily to workforce reductions. We expect to record additional restructuring expense in 2015 once negotiations of employee termination benefits with European works councils are completed. 28 On February 12, 2015, we announced plans to reduce our titanium dioxide capacity by approximately 100 kt by closing specific operations at our Calais, France facility, subject to consultation with employees and appropriate representative groups. Annual cost savings are expected to be approximately $35 million and are expected to be achieved by the middle of 2016. This plan is in addition to that announced on December 1, 2014. (cid:127) During 2014, after extensive analysis, we filed amended U.S. tax returns for tax years 2008 thought 2012, along with our original U.S. tax return for tax year 2013, which allowed us to utilize foreign tax credits. As a result of utilizing these assets, we realized reductions in our cash taxes paid of $55 million for 2014 and expect to realize an additional $12 million reduction in future cash taxes paid. (cid:127) On October 1, 2014, we completed the Rockwood Acquisition for a purchase price of $1.04 billion in cash, subject to certain purchase price adjustments. See ‘‘Note 3. Acquisition and Dispositions—Rockwood Acquisition’’ to our consolidated financial statements. The transaction was financed by a $1.2 billion New Term Loan under our existing Senior Credit Facilities. See ‘‘Note 13. Debt—Direct and Subsidiary Debt’’ to our consolidated financial statements. (cid:127) In August 2014, we completed an amendment to our Senior Credit Facilities to increase our commitments by $200 million to our existing Revolving Facility to an aggregate principal amount of $600 million. See ‘‘Note 13. Debt—Direct and Subsidiary Debt’’ to our consolidated financial statements. In addition, in October 2014, we further increased commitments under our Revolving Facility by $25 million to an aggregate principal amount of $625 million. (cid:127) During the first half of 2015, we will have scheduled maintenance at our PO/MTBE facility in Port Neches, Texas. We estimate the facility will be off-line for approximately 60 days and the EBITDA impact will be approximately $60 million. This amount includes lost revenue and unabsorbed fixed costs for the period. In addition, the maintenance costs will be approximately $90 million; however, these costs will be capitalized and amortized over approximately five years until the next scheduled maintenance outage reducing future EBITDA over that period of time. As of December 31, 2014, we had $267 million classified as current portion of debt, including debt at our variable interest entities of $172 million, a short term borrowing facility in China totaling $36 million, our scheduled Senior Credit Facilities amortization payments totaling $26 million, our annual financing of various insurance premiums totaling $14 million, and certain other short-term facilities and scheduled amortization payments totaling $19 million. Although we cannot provide assurances, we intend to renew or extend the majority of these short-term facilities in the current period. As of December 31, 2014, we had approximately $356 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 U.S. federal and state income taxes without any offsetting foreign tax credit relief. 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. 29 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, 2014 are summarized below (dollars in millions): 2015 2016 - 2017 2018 - 2019 After 2019 Total Long-term debt, including current portion . . . . . . . Interest expense(1) . . . . . . . . . . . . . . . . . . . . . . . Operating leases(2) . . . . . . . . . . . . . . . . . . . . . . . Purchase commitments(3) . . . . . . . . . . . . . . . . . . $ 267 245 94 1,365 Total(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,971 $1,615 423 158 679 $2,875 $ 39 357 130 181 $707 $3,279 285 152 190 $5,200 1,310 534 2,415 $3,906 $9,459 (1) Interest calculated using interest rates as of December 31, 2014 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 $3 million due in the future under noncancelable subleases. (3) We have various purchase commitments extending through 2027 for materials, supplies and services entered into in the ordinary course of business. Included in the purchase commitments table above are contracts which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed for 2015. 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, 2014, 2013 and 2012, we made minimum payments of nil, $7 million 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 . . . . . . . . . . $92 9 $165 20 $237 20 2015 2016 - 2017 2018 - 2019 5-Year Average Annual $112 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. 30 Restructuring, Impairment and Plant Closing Costs On December 1, 2014, we announced that we are taking significant action to improve the global competitiveness of our Pigments and Additives segment. As part of a comprehensive restructuring program, we plan to reduce our workforce by approximately 900 positions. Annual cost savings are expected to exceed $130 million and are expected to be achieved by the middle of 2016. In connection with this restructuring program, we recorded restructuring expense of $57 million in the fourth quarter of 2014 related primarily to workforce reductions. We expect to record additional restructuring expense in 2015 once negotiations of employee termination benefits with European works councils are completed. On February 12, 2015, we announced plans to reduce our titanium dioxide capacity by approximately 100 kt by closing specific operations at our Calais, France facility, subject to consultation with employees and appropriate representative groups. Annual cost savings are expected to be approximately $35 million and are expected to be achieved by the middle of 2016. This plan is in addition to that announced on December 1, 2014. During 2013, our Performance Products segment initiated a restructuring program to refocus its surfactants business in Europe. In connection with this program, in 2014 we completed the sale of our European commodity surfactants business, including the ethoxylation facility in Lavera, France to Wilmar. In addition, Wilmar has entered into a multi-year arrangement to purchase certain sulfated surfactant products from our facilities in St. Mihiel, France and Castiglione delle Stiviere, Italy. Additionally, in 2014 we ceased production at our Patrica, Italy surfactants facility. During 2014, we recorded charges of $23 million primarily related to workforce reductions. We expect to complete this program by the end of 2015. 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. 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. 31 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. 32 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(29) 33 (42) 42 16 (16) $(609) 634 — — 116 (89) (1) Estimated increase (decrease) on 2014 net periodic benefit cost (2) Estimated increase (decrease) on December 31, 2014 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. 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 2014 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 amounts of reporting units 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, 2014, we had total valuation allowances of $702 million. See ‘‘Note 17. Income Taxes’’ to our consolidated financial statements for more information regarding our valuation allowances. 33 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 that are reinvested and, in the opinion of management, will continue to be reinvested indefinitely. We have material intercompany 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 intercompany 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 dividends, we will repay certain of our intercompany debt. If any earnings were repatriated via dividend, we may need to accrue and pay taxes on the distributions. 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 with positive earnings that are deemed to be permanently invested were approximately $307 million at December 31, 2014. It is not practicable to determine the unrecognized deferred tax liability on those earnings because of the significant assumptions necessary to compute the tax. 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, 2014, 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 2014 would have been approximately $34 million less or $40 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 34 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, 2014. 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. 35 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 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 other derivative instruments 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. We have entered into several interest rate contracts to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps are designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps are recorded in other comprehensive (loss) income (dollars in millions): December 31, 2014 Notional Value Effective Date Maturity Fixed Rate Fair Value $50 50 50 January 2010 December 2014 January 2015 January 2015 April 2017 April 2017 2.8% less than $1 current liability 2.5% 2 noncurrent liability 2.5% 2 noncurrent liability December 31, 2013 Notional Value $50 50 50 50 Effective Date Maturity Fixed Rate Fair Value December 2009 December 2014 January 2015 April 2017 April 2017 January 2010 December 2014 January 2015 2.6% $1 current liability 2.8% 1 current liability 2.5% 1 noncurrent liability 2.5% 2 noncurrent liability In 2009, Sasol-Huntsman, our consolidated 50% owned joint venture, 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%. As of December 31, 2014, the interest rate contracts expired and we have only the remaining interest cap for future periods until December 2018. 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 interest rate caps as of December 31, 2014 was A22 million (approximately $27 million) and the derivative transactions do not qualify for hedge accounting. As of December 31, 2014 and 2013, the fair value of this hedge was nil and A1 million (approximately $1 million), respectively, and was recorded in other noncurrent liabilities on the accompanying consolidated balance sheets. For 2014 and 2013, we recorded a reduction of interest expense of A1 million (approximately $1 million) and A1 million (approximately $2 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, 2014 was $28 million, and the interest rate contract is not designated as a cash flow hedge. As of December 31, 2014 and 2013, the fair value of the swap was $3 million and $4 million, respectively, and was recorded as other current liabilities on our consolidated 36 balance sheets. For 2014 and 2013, we recorded a reduction of interest expense of $1 million and $2 million, respectively, due to changes in fair value of the swap. As of December 31, 2014 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, 2014 and 2013, the changes in accumulated other comprehensive gain (loss) associated with these cash flow hedging activities were approximately $2 million and $(3) million, respectively. During 2015, 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, 2014 and 2013, we had approximately $179 million and $193 million notional amount (in U.S. dollar equivalents) outstanding, respectively, in foreign currency contracts with a term of approximately one month. In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract to swap an aggregate notional $200 million for an aggregate notional A161 million. The swap is designated as a hedge of net investment for financial reporting purposes. Under the cross-currency interest rate contract, we will receive fixed USD payments of $5 million semi annually on May 15 and November 15 (equivalent to an annual rate of 5.125%) and make interest payments of approximately A3 million (equivalent to an annual rate of approximately 3.6%). As of December 31, 2014 the fair value of this swap was $5 million and recorded in noncurrent assets. In conjunction with the issuance of our 2020 Senior Subordinated Notes, 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, 2014 and 2013, the fair value of this swap was $43 million and $2 million, respectively, and was recorded in current assets. On February 11, 2015, we terminated $200 million notional amounts of these cross-currency interest rate contracts and received a $37 million payment from the counterparty. 37 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 (loss) income. From time to time, we review such designation of intercompany loans. We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of December 31, 2014, we have designated approximately A655 million (approximately $800 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the years ended December 31, 2014, 2013 and 2012, the amount of gain (loss) recognized on the hedge of our net investment was $97 million, $(22) million and $(11) million, respectively, and was recorded in other comprehensive (loss) income. As of December 31, 2014, we had approximately A1,516 million (approximately $1,851 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, 2014. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2014, 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, 2014 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 38 and the preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. 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. On October 1, 2014, we completed the Rockwood Acquisition. As a result, we have excluded the internal controls of Rockwood from our annual evaluation of the effectiveness of internal control over financial reporting. For the year ended December 31, 2014, Rockwood represents 2.9% of total revenues, and as of December 31, 2014, Rockwood represents 13.4% of total assets. Our management assessed the effectiveness of our internal control over financial reporting and concluded that, as of December 31, 2014, 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 (2013) (‘‘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. 39 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 2014 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 18, 2015 40 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, 2014, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. (‘‘Rockwood’’), which was acquired on October 1, 2014 and whose financial statements constitute 13.4% of total assets and 2.9% of revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2014. Accordingly, our audit did not include the internal control over financial reporting at Rockwood. 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, 2014, based on the criteria established in Internal Control— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 41 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, 2014 of the Company and our report dated February 18, 2015 expressed an unqualified opinion on those financial statements. /s/ DELOITTE & TOUCHE LLP Houston, Texas February 18, 2015 42 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, 2014 and 2013, 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, 2014. 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, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, 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, 2014, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2015 expressed an unqualified opinion on the Company’s internal control over financial reporting. /s/ DELOITTE & TOUCHE LLP Houston, Texas February 18, 2015 43 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 $34 and $42, respectively), ($472 and $521 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other noncurrent assets(a) December 31, 2014 December 31, 2013 $ 860 10 $ 520 9 1,665 42 2,025 62 62 313 5,039 4,423 350 95 122 435 538 1,542 33 1,741 61 53 200 4,159 3,824 285 87 131 243 459 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,002 $9,188 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, 248,893,036 and 245,930,859 issued and 243,416,979 and 240,401,442 outstanding in 2014 and 2013, respectively . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury stock, 4,043,526 shares at both December 31, 2014 and 2013 . . . . . . . . . . . . . . . . . Unearned stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated other comprehensive loss Total Huntsman Corporation stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,218 57 739 51 267 2,332 4,933 6 333 1,447 9,051 3 3,385 (50) (14) (493) (1,053) 1,778 173 1,951 $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 Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,002 $9,188 (a) At December 31, 2014 and December 31, 2013, respectively, $46 and $39 of cash and cash equivalents, $10 and $9 of restricted cash, $41 each of accounts and notes receivable (net), $68 and $54 of inventories, $6 and $3 of other current assets, $339 and $369 of property, plant and equipment (net), $40 and $17 of intangible assets (net), $27 and $28 of other noncurrent assets, $92 and $73 of accounts payable, $37 and $32 of accrued liabilities, $172 and $183 of current portion of debt, $36 and $64 of long-term debt, and $97 and $45 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. 44 HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except Per Share Amounts) Year ended December 31, 2014 2013 2012 Revenues: Trade sales, services and fees, net . . . . . . . . . . . . . . . . . . . . . . . . . . . Related party sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,317 261 $10,847 232 $10,964 223 Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses: Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other operating (income) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring, impairment and plant closing costs . . . . . . . . . . . . . . . . 11,578 9,659 1,919 11,079 9,326 1,753 11,187 9,153 2,034 974 158 (4) 158 942 140 10 151 951 152 (6) 92 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,286 1,243 1,189 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity in income of investment in unconsolidated affiliates . . . . . . . . . . . Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . Other (loss) 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 . . . . . . . . . . . . . . . . . 633 (205) 6 (28) (2) 404 (51) 353 (8) 345 — 345 (22) 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) Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . $ 323 $ 128 $ 363 (continued) 45 HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Continued) (In Millions, Except Per Share Amounts) Year ended December 31, 2014 2013 2012 Basic income (loss) per share: Income from continuing operations attributable to Huntsman Corporation common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.36 $ 0.55 $ 1.55 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 . . . . . . . . . . . . . . . . . . . . . (0.03) (0.02) (0.03) — — 0.01 Net income attributable to Huntsman Corporation common stockholders . . . $ 1.33 $ 0.53 $ 1.53 Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242.1 239.7 237.6 Diluted income (loss) per share: Income from continuing operations attributable to Huntsman Corporation common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.34 $ 0.55 $ 1.53 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 . . . . . . . . . . . . . . . . . . . . . (0.03) (0.02) (0.03) — — 0.01 Net income attributable to Huntsman Corporation common stockholders . . . $ 1.31 $ 0.53 $ 1.51 Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246.0 242.4 240.6 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 . . . . . . . . . . . $ 331 (8) — $ 133 (5) — $ 368 (7) 2 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 323 $ 128 $ 363 Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.50 $ 0.50 $ 0.40 See accompanying notes to consolidated financial statements. 46 HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (In Millions) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive (loss) income, net of tax: Foreign currency translations adjustments, net of tax of $47, $13 and $20 in Year ended December 31, 2014 2013 2012 $ 345 $149 $ 373 2014, 2013 and 2012, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (221) (23) 51 Pension and other postretirement benefits adjustments, net of tax of $182, $83 and $197 in 2014, 2013 and 2012, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other, net Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive income attributable to noncontrolling interests . . . . . . . . . . . . . (271) 1 (491) (146) (7) 185 10 172 321 (26) (236) (1) (186) 187 (9) Comprehensive (loss) income attributable to Huntsman Corporation . . . . . . . . $(153) $295 $ 178 See accompanying notes to consolidated financial statements. 47 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 8 Balance, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . 240,401,442 — Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive loss Issuance of nonvested stock awards . . . . . . . . . . . . . . . . . . . . . — 1,018,050 Vesting of stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recognition of stock-based compensation . . . . . . . . . . . . . . . . . — (302,200) Repurchase and cancellation of stock awards . . . . . . . . . . . . . . . 2,299,687 Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . — Dividends paid to noncontrolling interests . . . . . . . . . . . . . . . . . — Excess tax benefit related to stock-based compensation . . . . . . . . . — Accrued and unpaid dividends . . . . . . . . . . . . . . . . . . . . . . . . — Cash received for a noncontrolling interest of a subsidiary . . . . . . . — Acquisition of a business . . . . . . . . . . . . . . . . . . . . . . . . . . . — Dividends declared on common stock . . . . . . . . . . . . . . . . . . . $ 2 — — — — — — — — — 2 — — — — — — — — — — 2 — — — — — — 1 — — — — — — $3,228 — — 12 10 9 — 3 4 (2) — 3,264 — — 14 5 8 — 13 1 — — 3,305 — — 15 7 10 — 47 — 1 — — — — $(50) — — — — — — — — — — (50) — — — — — — — — — — (50) — — — — — — — — — — — — — $(12) — — (12) — 12 — — — — — (12) — — (14) — 13 — — — — — (13) — — (15) — 14 — — — — — — — — $(947) 363 — — — — (7) — — — (96) (687) 128 — — — — (6) — — (2) (120) (687) 323 — — — — (7) — — — (1) — — (121) $ (559) — (185) — — — — — — — — (744) — 167 — — — — — — — — (577) — (476) — — — — — — — — — — — Noncontrolling interests in subsidiaries $114 10 (1) — — — — — — — — 123 21 5 — — — — — — — — 149 22 (15) — — — — — (4) — — 5 16 — Total equity $1,776 373 (186) — 10 21 (7) 3 4 (2) (96) 1,896 149 172 — 5 21 (6) 13 1 (2) (120) 2,129 345 (491) — 7 24 (7) 48 (4) 1 (1) 5 16 (121) Balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . 243,416,979 $ 3 $3,385 $(50) $(14) $(493) $(1,053) $173 $1,951 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: Equity in income of investment in unconsolidated affiliates . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for losses on accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . Loss 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 on foreign currency transactions . . . . . . . . . . . . . . . . . . . . . . . Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in operating assets and liabilities, net of effects of acquisitions: Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Year ended December 31, 2014 2013 2012 $ 345 $ 149 $ 373 (6) 445 — 4 28 11 37 (51) 15 28 (2) 2 (20) (2) (44) (44) 86 11 (83) (8) 448 2 5 51 11 13 10 31 29 — (11) 77 (11) 23 (113) (12) (39) 53 (7) 432 4 — 80 33 15 (38) 11 27 — — (248) (3) 24 103 146 23 (201) Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 760 708 774 Investing Activities: Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash received from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . Investment in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of businesses/assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (601) 51 (108) (960) 15 (3) (471) 71 (104) (66) 2 2 (412) 82 (127) (18) 6 (2) Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,606) (566) (471) (continued) 49 HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In Millions) Financing Activities: Net repayments under revolving loan facilities . . . . . . . . . . . . . . . . . . . . . . . . Net (repayments) borrowings on 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 . . . . . . . . . . . . . . . . . . Contingent consideration paid for acquisition . . . . . . . . . . . . . . . . . . . . . . . . Dividends paid to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and cancellation of stock awards . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefit related to stock-based compensation . . . . . . . . . . . . . . . . . Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Year ended December 31, 2014 2013 2012 $ (1) $ (5) (8) 15 (418) 1,792 (34) 33 (67) (24) (6) (121) (7) 47 1 — (4) $ (15) 2 (9) (53) (18) — 15 (694) (840) 405 979 (37) (40) 34 35 (11) (11) (2) (4) — — (96) (120) (7) (6) 3 13 4 1 (6) 3 Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . 1,197 Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . (11) 340 520 (6) (3) 133 387 (473) 3 (167) 554 Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 860 $ 520 $ 387 Supplemental cash flow information: Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 208 165 $ 187 78 $ 209 224 During 2014, 2013 and 2012, the amount of capital expenditures in accounts payable (decreased) increased by $(2) million, $(16) million and $31 million, respectively. See accompanying notes to consolidated financial statements. 50 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, 2014, which was filed with the Securities and Exchange Commission on February 18, 2015. 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, titanium dioxide and color pigments. We operate in five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments and Additives. Our Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments produce differentiated organic chemical products and our Pigments and Additives 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. 51 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 estimated 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 $26 million and $29 million at December 31, 2014 and 2013, 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 52 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 (income) expense in our consolidated statements of operations and were net losses of $15 million, $11 million and $4 million for the years ended December 31, 2014, 2013 and 2012, 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 53 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 that 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 13 - 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. The net change to goodwill in response to changes in foreign currency exchange rates during 2014 was $9 million. 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. 54 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): Year Ended December 31, 2014 2013 2012 Numerator: Basic and diluted income from continuing operations: Income from continuing operations attributable to Huntsman Corporation . . $ 331 $ 133 $ 368 Basic and diluted net income: Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . . . . $ 323 $ 128 $ 363 Shares (denominator): Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dilutive securities: Stock-based awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242.1 239.7 237.6 3.9 2.7 3.0 Total weighted average shares outstanding, including dilutive shares . . . . . . . 246.0 242.4 240.6 Additional stock-based awards of 1.0 million, 7.3 million and 7.8 million weighted average equivalent shares of stock were outstanding during the years ended December 31, 2014, 2013 and 2012, 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. 55 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 $16 million, $7 million and $4 million for the years ended December 31, 2014, 2013 and 2012, 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 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—Direct and Subsidiary 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.’’ 56 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 2014 In February 2013, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards Update (‘‘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 adopted the amendments in this ASU effective January 1, 2014, and the initial adoption of the amendments in this ASU did not have any 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. We adopted the amendments in this ASU effective January 1, 2014, and the initial adoption of the amendments in this ASU did not have any 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, 57 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) beginning after December 15, 2013. We adopted the amendments in this ASU effective January 1, 2014, and the initial adoption of the amendments in this ASU did not have any impact on our consolidated financial statements. In November 2014, the FASB issued ASU No. 2014-17, Business Combinations (Topic 805): Pushdown Accounting, providing guidance on whether and at what threshold an acquired entity that is a business or nonprofit activity can apply pushdown accounting in its separate financial statements. The amendments in this ASU provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs or otherwise in a subsequent reporting period to the acquired entity’s most recent change-in-control event. The amendments in this ASU were effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. We adopted the amendments in this ASU effective November 18, 2014, and the initial adoption of the amendments in this ASU did not have any impact on our consolidated financial statements. Accounting Pronouncements Pending Adoption in Future Periods In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, changing the criteria for reporting discontinued operations and enhancing reporting requirements for discontinued operations. A disposal of a component of an entity or a group of components of an entity will be required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Further, the amendments in this ASU will require an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position. The amendments in this ASU are effective prospectively for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years, and for all businesses that, on acquisition, are classified as held for sale that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. We do not expect the adoption of the amendments in this ASU to have a significant impact on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), outlining a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and supersedes most current revenue recognition guidance. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The amendments in this ASU should be applied retrospectively, and early application is not permitted. We are currently evaluating the impact of the adoption of the amendments in this ASU on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, providing guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote 58 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) disclosures. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. We do not expect the adoption of the amendments in this ASU to have a significant impact on our consolidated financial statements. In January 2015, the FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, eliminating from US GAAP the concept of extraordinary items. Reporting entities will no longer have to assess whether a particular event or transaction event is extraordinary. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively or may also apply them retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the 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. 3. BUSINESS COMBINATIONS AND DISPOSITIONS ROCKWOOD ACQUISITION On October 1, 2014, we completed the Rockwood Acquisition. We paid $1.04 billion in cash, subject to certain purchase price adjustments, and assumed certain unfunded pension liabilities in connection with the Rockwood Acquisition. The acquisition was financed using a bank term loan. The majority of the acquired businesses have been integrated into our Pigments and Additives segment. Transaction costs charged to expense related to this acquisition were $24 million and $8 million for the years ended December 31, 2014 and 2013, respectively, and were recorded in selling, general and administrative expenses in our consolidated statements of operations. The following businesses were acquired from Rockwood: (cid:127) titanium dioxide, a white pigment derived from titanium bearing ores with strong specialty business in fibers, inks, pharmaceuticals, food and cosmetics; (cid:127) functional additives made from barium and zinc based inorganics used to make colors more brilliant, primarily in plastics, coatings, films, food, cosmetics, pharmaceuticals and paper; (cid:127) color pigments made from synthetic iron-oxide and other non-TiO2 inorganic pigments used by manufacturers of coatings and colorants; (cid:127) timber treatment wood protection chemicals used primarily in residential and commercial applications; (cid:127) water treatment products used to improve water purity in industrial, commercial and municipal applications; and (cid:127) specialty automotive molded components. In connection with securing certain regulatory approvals required to complete the Rockwood Acquisition, we sold our TiO2 TR52 product line used in printing inks to Henan in December 2014. The sale did not include any manufacturing assets but does include an agreement to supply TR52 product to Henan during a transitional period. 59 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued) We have accounted for the Rockwood 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 Rockwood Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected purchase price adjustment receivable . . . . . . . . . . . . . . . . . . . . . . $1,038 (25) Expected net acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,013 Fair value of assets acquired and liabilities assumed: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . Long-term debt, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension and related liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78 220 400 46 591 33 126 9 (146) (80) (3) (233) (10) (18) Total fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,013 The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired and liabilities assumed, including final valuation of property, plant and equipment, intangible assets, asset retirement obligations, and environmental and other legal reserves, and finalizing the expected purchase price adjustment receivable. None of the fair value of this acquisition was allocated to goodwill. It is possible that changes to this allocation could occur. The acquired businesses had revenues and net loss of $330 million and $2 million, respectively, for the period from the date of acquisition to December 31, 2014. If the Rockwood Acquisition were to have occurred on January 1, 60 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued) 2013, the following estimated pro forma revenues and net income attributable to Huntsman Corporation would have been reported (dollars in millions, except per share amounts): Pro Forma Year ended December 31, (Unaudited) 2014 2013 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to Huntsman Corporation . . . . . . . . . . . $12,724 398 $12,599 100 Income per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.64 1.62 $ 0.42 0.41 OXID ACQUISITION On August 29, 2013, we completed the Oxid Acquisition. The acquisition cost of approximately $76 million consists 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. Related to this earn-out agreement, $6 million was paid during 2014 and the balance has been paid in 2015. 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 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 61 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued) Intangible assets acquired consist primarily of developed technology and customer relationships, both of which will be amortized over 15 years. If the Oxid Acquisition were to have occurred on January 1, 2012, the following estimated pro forma revenues and net income attributable to Huntsman Corporation would have been reported (dollars in millions, except per share amounts): Pro Forma Year ended December 31, (Unaudited) 2013 2012 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to Huntsman Corporation . . . . . . . . . . . $11,142 135 $11,269 369 Income per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.56 0.56 $ 1.55 1.53 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, we recorded an additional extraordinary gain on the acquisition of $2 million, 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, 2014 December 31, 2013 Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIFO reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 508 96 1,494 2,098 (73) $ 433 92 1,290 1,815 (74) Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,025 $1,741 For December 31, 2014 and 2013, approximately 9% and 11%, respectively, of inventories were recorded using the LIFO cost method. 62 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, 2014 2013 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 227 799 6,889 869 $ 159 730 6,589 613 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 8,784 (4,361) 8,091 (4,267) Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,423 $ 3,824 Depreciation expense for 2014, 2013 and 2012 was $413 million, $415 million and $399 million, respectively, of which nil, $2 million and $5 million was related to discontinued operations in 2014, 2013 and 2012, 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%) . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2014 2013 $ 91 100 122 16 12 — 341 5 3 1 $104 87 62 15 8 1 277 5 3 — Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $350 $285 (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. 63 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 $90 million, net of reimbursements, 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 the second half of 2016). At the end of 2014, cumulative capital contributions were approximately $85 million, net of license fees from the joint venture. 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 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 and Additives 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. 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. (cid:127) Viance is our 50%-owned joint venture with Dow Chemical. Viance markets timber treatment products for our Pigments and Additives segment. Our joint venture interest in Viance was acquired as part of the Rockwood Acquisition on October 1, 2014. The joint venture sources all of its products through a contract manufacturing arrangement at our Harrisburg, North Carolina facility, and we bear a disproportionate amount of working capital risk of loss due to the supply arrangement whereby we control manufacturing on Viance’s behalf. As a result, we concluded that we are the primary beneficiary and began consolidating Viance upon the Rockwood Acquisition on October 1, 2014. 64 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. VARIABLE INTEREST ENTITIES (Continued) Creditors of these entities have no recourse to our general credit. See ‘‘Note 13. Debt—Direct and Subsidiary Debt.’’ As the primary beneficiary of these variable interest entities at December 31, 2014, the joint ventures’ assets, liabilities and results of operations are included in our consolidated financial statements. The following table summarizes the carrying amount of Rubicon LLC, Pacific Iron Products Sdn Bhd, Arabian Amines Company and Sasol-Huntsman’s assets and liabilities included in our consolidated balance sheets, before intercompany eliminations, as of December 31, 2014 and 2013 (dollars in millions): December 31, 2014 December 31, 2013 Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment, net . . . . . . . . . . . . . . . . . Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $176 335 70 50 15 14 $660 $348 42 9 97 $496 $147 369 76 28 17 16 $653 $330 72 9 45 $456 The following table summarizes the fair value of Viance’s assets and liabilities as of October 1, 2014 recorded upon initial consolidation in our consolidated balance sheet and the carrying amounts of such assets and liabilities as of December 31, 2014, before intercompany eliminations (dollars in millions): Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, October 1, 2014 $10 5 — 24 $39 $ 8 2014 $15 2 1 27 $45 $13 Viance had revenues and net income of $21 million and $2 million, respectively, for the period from the date of acquisition to December 31, 2014. For more information regarding the Rockwood Acquisition, see ‘‘Note 3. Business Combinations and Dispositions—Rockwood Acquisition.’’ 65 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, 2014 December 31, 2013 Carrying Amount Accumulated Amortization Patents, trademarks and technology . . . . . . . Licenses and other agreements . . . . . . . . . . . Non-compete agreements . . . . . . . . . . . . . . . Other intangibles . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $371 37 4 87 $499 $328 19 2 55 $404 Net $43 18 2 32 $95 Carrying Amount Accumulated Amortization $384 52 4 62 $502 $339 19 2 55 $415 Net $45 33 2 7 $87 Amortization expense was $19 million, $21 million and $23 million for the years ended December 31, 2014, 2013 and 2012, respectively. Our estimated future amortization expense for intangible assets over the next five years is as follows (dollars in millions): Year ending December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9 10 10 10 9 9. OTHER NONCURRENT ASSETS Other noncurrent assets consisted of the following (dollars in millions): December 31, 2014 2013 Capitalized turnaround costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spare parts inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Catalyst assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $191 96 83 43 28 8 89 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $538 $192 100 32 41 26 20 48 $459 Amortization expense of catalyst assets for the years ended December 31, 2014, 2013 and 2012 was $13 million, $12 million and $10 million, respectively. 66 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. ACCRUED LIABILITIES Accrued liabilities consisted of the following (dollars in millions): December 31, 2014 2013 Payroll and related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Volume and rebate accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring and plant closing costs . . . . . . . . . . . . . . . . . . . . . . . . . Taxes other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Self-insured casualty loss reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . Other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other miscellaneous accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $204 79 89 65 35 32 13 12 9 7 6 5 — 183 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $739 $172 95 55 79 61 35 12 12 9 5 3 11 1 176 $726 67 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS As of December 31, 2014, 2013 and 2012, accrued restructuring, impairment and plant closing costs by type of cost and initiative consisted of the following (dollars in millions): Workforce reductions(1) Demolition and decommissioning Non-cancelable lease costs Other restructuring costs Total(2) Accrued liabilities as of January 1, 2012 . . . . 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 . . liabilities Accrued liabilities as of December 31, 2013 . . Pigments and Additives opening balance sheet . . . . . . . . . . . . . . . . . . . . . . 2014 charges for 2013 and prior initiatives . . . 2014 charges for 2014 initiatives . . . . . . . . . Reversal of reserves no longer required . . . . . 2014 payments for 2013 and prior initiatives 2014 payments for 2014 initiatives . . . . . . . . Net activity of discontinued operations . . . . . Foreign currency effect on liability balance . . $ 73 9 64 (15) (31) (12) 2 90 32 28 (22) (66) (10) — — 52 1 37 64 (4) (58) (1) — (4) $ — 5 — — (6) — 1 — 16 — — (16) — — — — — 7 — — (7) — — — $17 — — — (2) — — 15 53 — (4) (3) — (3) 2 60 — 4 — — (8) — (2) (6) $ 2 10 5 (1) (11) (6) 1 — 20 8 — (19) (8) — — 1 — 17 — (1) (13) (1) — — $ 92 24 69 (16) (50) (18) 4 105 121 36 (26) (104) (18) (3) 2 113 1 65 64 (5) (86) (2) (2) (10) Accrued liabilities as of December 31, 2014 . . $ 87 $ — $48 $ 3 $ 138 (1) The total workforce reduction reserves of $87 million relate to the termination of 1,572 positions, of which 1,418 positions had not been terminated as of December 31, 2014. (2) Accrued liabilities remaining at December 31, 2014 and 2013 by year of initiatives were as follows (dollars in millions): 2012 initiatives and prior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 $ 63 12 63 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $138 2013 $ 95 18 — $113 December 31, 68 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): Performance Advanced Textile Pigments and Discontinued Corporate & Polyurethanes Products Materials Effects Additives Operations Other Total Accrued liabilities as of January 1, 2012 . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . Pigments and Additives opening balance sheet liabilities . . . . . . 2014 charges for 2013 and prior initiatives . . . . . . . . . . . . . . . 2014 charges for 2014 initiatives . . Reversal of reserves no longer required . . . . . . . . . . . . . . . 2014 payments for 2013 and prior initiatives . . . . . . . . . . . . . . . 2014 payments for 2014 initiatives . Net activity of discontinued operations . . . . . . . . . . . . . . Foreign currency effect on liability balance . . . . . . . . . . . . . . . . Accrued liabilities as of December 31, 2014 . . . . . . . . . Current portion of restructuring reserves . . . . . . . . . . . . . . . . Long-term portion of restructuring reserve . . . . . . . . . . . . . . . . — — 38 — — (12) 1 27 5 — (9) (14) — — — 9 — 2 — (1) (3) — — (1) $ 6 $ 3 3 6 — — — — — — 6 — — — — — (3) — 3 — — — — — — (2) — $ 1 $ 1 — 1 1 1 — (1) — — 2 1 17 — (1) (10) — — 9 — 14 — (1) (18) — — — $ 4 $ 4 — 92 24 69 (16) (50) (18) 4 105 121 36 (26) (104) (18) (3) 2 113 1 65 64 (5) (86) (2) (2) (10) $138 $ 89 49 12 4 30 — (15) (6) 2 27 38 — (8) (45) — — — 12 — 10 1 (2) (14) (1) — (1) $ 5 $ 2 3 69 14 — (16) (27) — 2 42 73 1 (9) (41) — — 2 68 — 13 6 (1) (25) (1) — (6) 3 4 — — (5) — (1) 1 4 — — (3) (1) — 1 2 1 3 57 — (4) — — — $54 $59 $11 43 $59 — 1 1 — — (2) — — — — 18 — — (7) — (1) 10 — 23 — — (22) — — (2) $ 9 $ 9 — 69 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, 2014, 2013 and 2012 by initiative are provided below (dollars in millions): Cash charges: 2014 charges for 2013 and prior initiatives . . . . . . . . . . . . . . . . . . . . . . . . . 2014 charges for 2014 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of reserves no longer required . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension-related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 64 (5) 2 32 Total 2014 Restructuring, Impairment and Plant Closing Costs . . . . . . . . . . . . $158 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 2014 RESTRUCTURING ACTIVITIES In connection with a September 2014 announcement of a feasibility study into a MDI production expansion at our Geismar, Louisiana facility, we concluded that certain capitalized engineering costs associated with a previously planned MDI production expansion at our Rotterdam, The Netherlands facility were impaired and our Polyurethanes segment recorded a noncash impairment charge of $16 million during 2014. During 2013, our Performance Products segment initiated a restructuring program to refocus its surfactants business in Europe. In connection with this program, in 2014 we completed the sale of our European commodity surfactants business, including the ethoxylation facility in Lavera, France to Wilmar. In addition, Wilmar has entered into a multi-year arrangement to purchase certain sulfated surfactant products from our facilities in St. Mihiel, France and Castiglione delle Stiviere, Italy. Additionally, in 2014 we ceased production at our Patrica, Italy surfactants facility. During 2014, we recorded charges of $23 million primarily related to workforce reductions. We expect to complete this program by the end of 2015. During 2014, our Advanced Materials segment recorded charges of $11 million primarily related to workforce reductions with our global transformational change program designed to improve the segment’s manufacturing efficiencies, enhance its commercial excellence and improve its long-term global competitiveness. We expect to incur charges related to this program through the second quarter of 2015. 70 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued) During 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 program, during 2014, our Textile Effects segment recorded charges of $19 million, including a $9 million noncash charge for a pension settlement loss. We expect to incur charges related to this program through 2015. In June 2014, we announced plans for the closure of our Qingdao, China plant to be completed by December 2015. During 2014, we recorded charges of $6 million primarily related to workforce reductions related to this initiative. We expect to incur charges related to this program through the end of 2016. On December 1, 2014, we announced that we are taking significant action to improve the global competitiveness of our Pigments and Additives segment. As part of a comprehensive restructuring program, we plan to reduce our workforce by approximately 900 positions. In connection with this restructuring program, we recorded restructuring expense of $57 million in the fourth quarter of 2014 related primarily to workforce reductions. We expect to record additional restructuring expense in 2015 once negotiations of employee termination benefits with European works councils are completed. On February 12, 2015, we announced plans to reduce our titanium dioxide capacity by approximately 100 kt by closing specific operations at our Calais, France facility, subject to consultation with employees and appropriate representative groups. This plan is in addition to that announced on December 1, 2014. During 2014, our Corporate and other segment recorded charges of $13 million primarily related to the reorganization of our global information technology organization. We expect to incur charges related to this program through the end of 2015. 2013 RESTRUCTURING ACTIVITIES During 2012, our Polyurethanes segment began implementing a restructuring program to reduce annualized fixed costs. In connection with this program, we recorded cash 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 recorded charges of $13 million primarily related to workforce reductions in association with plans to refocus our surfactants business in Europe and $5 million primarily related to workforce reductions in our Australian operation. 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. During 2013, we recorded cash 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, we recorded cash charges of $73 million, a noncash charge of $9 million for a pension settlement loss and reversed charges of $5 million. 71 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 11. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued) During 2013, our Corporate and other segment recorded charges of $18 million primarily related to workforce reductions in association with a reorganization of our global information technology organization. 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. 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. During 2012, we recorded charges of $38 million, including 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 $10 million, an $11 million noncash charge primarily for pension settlements and reversed charges of $7 million. Additionally, we reversed charges of $9 million for other initiatives. 12. OTHER NONCURRENT LIABILITIES Other noncurrent liabilities consisted of the following (dollars in millions): December 31, 2014 2013 Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring and plant closing costs . . . . . . . . . . . . . . . . . . . . . . . . Employee benefit accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 965 134 53 49 39 26 11 170 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,447 $546 101 22 58 38 28 11 144 $948 72 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, 2014 December 31, 2013 Senior Credit Facilities: Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts outstanding under A/R programs . . . . . . . . . . . Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . Variable interest entities . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total debt—excluding debt to affiliates . . . . . . . . . . . . . . Total current portion of debt . . . . . . . . . . . . . . . . . . . . . . Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total debt—excluding debt to affiliates . . . . . . . . . . . . . . Total debt—excluding debt to affiliates . . . . . . . . . . . . . . Notes payable to affiliates-noncurrent . . . . . . . . . . . . . . . Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,528 229 1,596 531 207 109 $5,200 $ 267 4,933 $5,200 $5,200 6 $5,206 $1,351 248 1,061 891 247 112 $3,910 $ 277 3,633 $3,910 $3,910 6 $3,916 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); we are 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. 73 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. DEBT (Continued) Senior Credit Facilities As of December 31, 2014, our Senior Credit Facilities consisted of our Revolving Facility, our Extended Term Loan B, our Extended Term Loan B—Series 2, our 2014 New Term Loan, and Term Loan C as follows (dollars in millions): Facility Committed Amount Principal Outstanding Carrying Value Interest Rate(3) Maturity Revolving Facility . . . . . . . . Extended Term Loan B . . . Extended Term Loan B— Series 2 . . . . . . . . . . . . . 2014 New Term Loan . . . . . Term Loan C . . . . . . . . . . . $625 NA NA NA NA $ —(1) $ —(1) USD LIBOR plus 2.50% USD LIBOR plus 2.50% 952 952 339 1,200 50 339 1,188 49 USD LIBOR plus 2.75% USD LIBOR plus 3.00%(2) USD LIBOR plus 2.25% 2017 2017 2017 2021 2016 (1) We had no borrowings outstanding under our Revolving Facility; we had approximately $16 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Facility. (2) The 2014 New Term Loan is subject to a 0.75% LIBOR floor. (3) The applicable interest rate of the Senior Credit Facilities is subject to certain secured leverage ratio thresholds. As of December 31, 2014, 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, 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. Amendment to the Credit Agreement On October 15, 2013, Huntsman International entered into a tenth amendment to the agreement governing the Credit Agreement. The amendment, among other things, permitted us to incur a senior secured term loan facility in an aggregate principal amount of $1.2 billion, the 2014 New Term Loan, and to increase our Revolving Facility. In August 2014, we entered into the eleventh and twelfth amendments, which modified the Credit Agreement to initially fund the 2014 New Term Loan into escrow and completed the increase of our Revolving Facility by $200 million. On October 1, 2014, the 2014 New Term Loan was used to fund the Rockwood Acquisition. See ‘‘Note 3. Business Combinations and Dispositions—Rockwood Acquisition.’’ The 2014 New Term Loan matures on October 1, 2021 and will amortize in aggregate annual amounts equal to 1% of the original principal amount of the 2014 New Term Loan, payable quarterly commencing March 31, 2015. The 2014 New Term Loan bears interest at an interest rate margin of LIBOR plus 3.00% (subject to a 0.75% floor). The 2014 New Term Loan was recorded at a carrying value of $1,188 million as of October 1, 2014. On October 1, 2014, Huntsman International entered into a further amendment to the Credit Agreement. The amendment increased revolving commitments in an aggregate principal amount of $25 million to an aggregate amount of $625 million. 74 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. DEBT (Continued) 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, 2014 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 $275) $139) (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, 2014, 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, 2014 and 2013, $472 million and $521 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs. Notes As of December 31, 2014, we had outstanding the following notes (monetary amounts in millions): Notes Maturity Interest Rate Amount Outstanding 2020 Senior Notes . . . . . . . . . . . . . . . . . November 2020 2021 Senior Notes . . . . . . . . . . . . . . . . . 2022 Senior Notes . . . . . . . . . . . . . . . . . November 2022 2021 Senior Subordinated Notes . . . . . . . March 2021 April 2021 $650 ($647 carrying value) 4.875% 5.125% A445 (A449 carrying value ($549)) 5.125% 8.625% $400 $522 ($531 carrying value) On November 13, 2014, Huntsman International issued $400 million aggregate principal amount of 2022 Senior Notes. We applied the net proceeds to redeem in full $350 million of its 2020 Senior Subordinated Notes, pay associated accrued interest and for general corporate purposes. The 2022 Senior Notes bear interest at 5.125% per year, payable semi-annually on November 15 and May 15, and are due on November 15, 2022. We may redeem the 2022 Senior Notes in whole or in 75 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. DEBT (Continued) part at any time prior to August 15, 2022 at a price equal to 100% of the principal amount thereof plus a ‘‘make-whole’’ premium and accrued and unpaid interest. On June 2, 2014, pursuant to an indenture entered into on December 23, 2013, Huntsman International issued A145 million (approximately $197 million) aggregate principal amount of additional 2021 Senior Notes. The additional notes are recorded at carrying value A149 million (approximately $182 million) as of December 31, 2014. The 2021 Senior Notes bear interest at 5.125% per year, payable semi-annually on April 15 and October 15, and are due on April 15, 2021. We 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. The 2020, 2021 and 2022 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 2020, 2021 and 2022 Senior Notes will have the right to require that Huntsman International purchase all or a portion of such holder’s 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, 2014 and 2013, we redeemed or repurchased the following notes (dollars in millions): Date of Redemption Notes December 2014 . . . . November 28, 2014 . . March 4, 2013 . . . . . 2021 Senior Subordinated Notes 2020 Senior Subordinated Notes 2016 Senior Notes Variable Interest Entity Debt Principal Amount of Notes Redeemed Amount Paid (Excluding Accrued Interest) Loss on Early Extinguishment of Debt $ 8 350 200 $ 9 374 200 $— 28 34 As of December 31, 2014, Arabian Amines Company had $158 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, 2014, the 76 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. DEBT (Continued) amounts outstanding under these loan commitments were classified as current on the accompanying consolidated balance sheets. As of December 31, 2014, Sasol-Huntsman, our consolidated 50%-owned venture has A40 million (approximately $49 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. 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 contained 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 the Leverage Covenant which applies only to the Revolving Facility and is calculated 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. 77 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. DEBT (Continued) MATURITIES The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31, 2014 are as follows (dollars in millions): Year ending December 31 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 267 322 1,293 25 14 3,279 $5,200 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 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 other derivative instruments 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. We have entered into several interest rate contracts to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps are designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps are recorded in other comprehensive (loss) income (dollars in millions): December 31, 2014 Notional Value Effective Date Maturity Fixed Rate Fair Value $50 50 50 January 2010 December 2014 January 2015 January 2015 April 2017 April 2017 2.8% less than $1 current liability 2.5% 2 noncurrent liability 2.5% 2 noncurrent liability 78 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued) December 31, 2013 Notional Value $50 50 50 50 Effective Date Maturity Fixed Rate Fair Value December 2009 December 2014 January 2015 April 2017 April 2017 January 2010 December 2014 January 2015 2.6% $1 current liability 2.8% 1 current liability 2.5% 1 noncurrent liability 2.5% 2 noncurrent liability In 2009, Sasol-Huntsman, our consolidated 50% owned joint venture, 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%. As of December 31, 2014, the interest rate contracts expired and we have only the remaining interest cap for future periods until December 2018. 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 interest rate caps as of December 31, 2014 was A22 million (approximately $27 million) and the derivative transactions do not qualify for hedge accounting. As of December 31, 2014 and 2013, the fair value of this hedge was nil and A1 million (approximately $1 million), respectively, and was recorded in other noncurrent liabilities on the accompanying consolidated balance sheets. For 2014 and 2013, we recorded a reduction of interest expense of A1 million (approximately $1 million) and A1 million (approximately $2 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, 2014 was $28 million, and the interest rate contract is not designated as a cash flow hedge. As of December 31, 2014 and 2013, the fair value of the swap was $3 million and $4 million, respectively, and was recorded as other current liabilities on our consolidated balance sheets. For 2014 and 2013, we recorded a reduction of interest expense of $1 million and $2 million, respectively, due to changes in fair value of the swap. As of December 31, 2014 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, 2014 and 2013, the changes in accumulated other comprehensive gain (loss) associated with these cash flow hedging activities were approximately $2 million and $(3) million, respectively. During 2015, 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. 79 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued) 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, 2014 and 2013, we had approximately $179 million and $193 million notional amount (in U.S. dollar equivalents) outstanding, respectively, in foreign currency contracts with a term of approximately one month. In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract to swap an aggregate notional $200 million for an aggregate notional A161 million. The swap is designated as a hedge of net investment for financial reporting purposes. Under the cross-currency interest rate contract, we will receive fixed USD payments of $5 million semi annually on May 15 and November 15 (equivalent to an annual rate of 5.125%) and make interest payments of approximately A3 million (equivalent to an annual rate of approximately 3.6%). As of December 31, 2014 the fair value of this swap was $5 million and recorded in noncurrent assets. In conjunction with the issuance of our 2020 Senior Subordinated Notes, 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, 2014 and 2013, the fair value of this swap was $43 million and $2 million, respectively, and was recorded in current assets. On February 11, 2015, we terminated $200 million notional amounts of these cross-currency interest rate contracts and received a $37 million payment from the counterparty. 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 (loss) income. From time to time, we review such designation of intercompany loans. 80 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued) We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of December 31, 2014, we have designated approximately A655 million (approximately $800 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the years ended December 31, 2014, 2013 and 2012, the amount of gain (loss) recognized on the hedge of our net investment was $97 million, $(22) million and $(11) million, respectively, and was recorded in other comprehensive (loss) income. As of December 31, 2014, we had approximately A1,516 million (approximately $1,851 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. 15. FAIR VALUE The fair values of our financial instruments were as follows (dollars in millions): December 31, 2014 2013 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) . $ 22 48 (7) (5,200) $ 22 48 (7) (5,210) $ 21 2 (10) (3,910) $ 21 2 (10) (4,010) 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, 2014 and 2013. 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, 2014, and current estimates of fair value may differ significantly from the amounts presented herein. 81 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 15. FAIR VALUE (Continued) 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, 2014 Available-for sale equity securities: Equity mutual funds . . . . . . . . . . . . . . . . . . Derivatives: Cross-currency interest rate contracts(1) . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22 48 $70 Liabilities: Derivatives: Interest rate contracts(2) . . . . . . . . . . . . . . . $ (7) $22 — $22 $— $— 43 $43 $— 5 $ 5 $ (7) $— 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 . . . . . . . . . . . . . . . . . . Derivatives: Cross-currency interest rate contracts(1) . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21 2 $ 23 $21 — $21 $ — 2 $ 2 $— — $— Liabilities: Derivatives: Interest rate contracts(2) . . . . . . . . . . . . . . . $(10) $— $(10) $— (1) The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates, exchange rates, and yield curves at stated intervals. There were no material changes to the valuation methods or assumptions used to determine the fair value during the current period. In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract. These instruments have been categorized by us as Level 3 within the fair value hierarchy due to unobservable inputs associated with the credit valuation adjustment, which we deemed to be significant inputs to the overall measurement of fair value at inception. (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 82 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 15. FAIR VALUE (Continued) 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, 2014 and 2013. The following table shows a reconciliation of beginning and ending balances for the year ended December 31, 2014 for instruments measured at fair value on a recurring basis using significant 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, 2014 . . . . . . . . . . . . . . . . . . . . . . . . Transfers into Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfers out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total gains (losses): Included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Included in other comprehensive income (loss) . . . . . . . . . . . . . . Purchases, sales, issuances and settlements . . . . . . . . . . . . . . . . . . . . Ending balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . 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, 2014 . . . . . . . . . . . . . . . . . . . . . . Cross-Currency Interest Rate Contracts $— — — — 5 — $ 5 $— Gains and losses (realized and unrealized) included in earnings for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are reported in interest expense and other comprehensive income (loss) as follows (dollars in millions): Interest expense Other comprehensive income (loss) 2014 Total net gains included in earnings . . . . . . . . . . . . . . . Changes in unrealized gains relating to assets still held at December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . $— — $— 5 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 2014 and 2013, we recorded charges of $26 million and nil, respectively, for the impairment of long-lived 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. Beginning July 1, 2014, the Huntsman Defined Benefit Pension Plan was closed to new non-union entrants. New, non-union entrants will be provided with a defined contribution plan with a non-discretionary employer contribution and a company match. In connection with the Rockwood Acquisition, we assumed certain pension and other postretirement benefit liabilities in the amount of approximately $233 million. 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, 2014 and 2013 (dollars in millions): Defined Benefit Plans Other Postretirement Benefit Plans 2014 2013 2014 2013 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 Service cost . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Participant contributions Plan amendments . . . . . . . . . . . . . . . Acquisitions/divestitures . . . . . . . . . . . Foreign currency exchange rate changes . . . . . . . . . . . . . . . . . . . . . Curtailments . . . . . . . . . . . . . . . . . . . Special termination benefits . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . $ 877 27 45 — — 9 $2,859 32 102 7 (6) 333 $ 958 31 40 — — — $2,755 38 90 9 1 — $ 105 3 5 3 — 3 $ 5 — — — — — $ 136 4 5 5 $ 7 — — — (22) — — — — (294) (1) — — 3 458 129 (176) (86) — — — (100) (52) 92 (5) 9 39 (169) — — — — — — 30 1 (12) — (1) — — — — — (9) — (1) (14) Benefit obligation at end of year . . . . . . $1,001 $3,317 $ 877 $2,859 $ 137 $ 6 $ 105 $ 5 Change in plan assets Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . $ 755 41 Actual return on plan assets . . . . . . . . Foreign currency exchange rate $2,443 337 $ 636 99 $2,237 198 $ — $— $ — $— — — — — changes . . . . . . . . . . . . . . . . . . . . . Participant contributions . . . . . . . . . . Acquisitions/divestitures . . . . . . . . . . . Company contributions . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . — (235) — 7 106 6 105 45 (176) (86) — — — 72 (52) 79 9 — 89 (169) — 3 — 9 — — — — (12) — — 5 — 9 (14) — — — 1 (1) Fair value of plan assets at end of year . . $ 761 $2,587 $ 755 $2,443 $ — $— $ — $— Funded status Fair value of plan assets . . . . . . . . . . . . $ 761 1,001 Benefit obligation . . . . . . . . . . . . . . . . . $2,587 3,317 $ 755 877 $2,443 2,859 $ — $— $ — $— 5 105 137 6 Accrued benefit cost . . . . . . . . . . . . . . . $ (240) $ (730) $(122) $ (416) $(137) $ (6) $(105) $(5) Amounts recognized in balance sheet: Noncurrent asset Current liability . . . . . . . . . . . . . . . . . . Noncurrent liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ (6) (234) 8 (7) (731) $ — $ (6) (116) 20 (6) (430) $ — $— $ — $— (9) — (5) (9) — (6) (128) (96) $ (240) $ (730) $(122) $ (416) $(137) $ (6) $(105) $(5) 85 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. EMPLOYEE BENEFIT PLANS (Continued) Defined Benefit Plans 2014 2013 Other Postretirement Benefit Plans 2014 2013 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 . . . . . . . . . . . . . . . . . . . . . $390 (29) Prior service cost . . . . . . . . . . . . . . . . . . . . . $916 (2) $264 (35) $705 5 $ 50 $ 1 $— (23) — (27) — $ 21 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): $361 $914 $229 $710 $ 27 $ 1 $ (6) $— 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31 (6) $25 $45 — $45 $ 3 (3) $— $— — $— Components of net periodic benefit costs for the years ended December 31, 2014, 2013 and 2012 were as follows (dollars in millions): Defined Benefit Plans U.S. plans Non-U.S. plans 2014 2013 2012 2014 2013 2012 Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . . Amortization of prior service cost . . . . . . . . . . . . . . . . . . Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . Settlement loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special termination benefits . . . . . . . . . . . . . . . . . . . . . . $ 27 45 (56) (6) 19 — — $ 31 40 (50) (7) 35 — — $ 26 42 (48) (6) 21 — — $ 32 102 (138) — 34 13 3 $ 38 90 (124) 1 43 12 9 $ 32 102 (133) (1) 23 13 — Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . $ 29 $ 49 $ 35 $ 46 $ 69 $ 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 2014 2013 2012 2014 2013 2012 Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service cost . . . . . . . . . . . . . . . . . . Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . $ 3 5 (4) 1 Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . $ 5 $ 4 5 (2) 2 $ 9 $ 4 7 (3) 2 $10 $— $— $— 1 — — — — — — — — $— $— $ 1 The amounts recognized in net periodic benefit cost and other comprehensive income (loss) as of December 31, 2014, 2013 and 2012 were as follows (dollars in millions): Current year actuarial loss (gain) . . . . . . . . . . . . . . . . . . . Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . Current year prior service (credits) cost . . . . . . . . . . . . . . . Amortization of prior service cost (credits) . . . . . . . . . . . . Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total recognized in other comprehensive loss (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net periodic benefit cost Total recognized in net periodic benefit cost and other Defined Benefit Plans U.S. plans Non-U.S. plans 2014 2013 2012 2014 2013 2012 $144 (19) — 6 — 131 29 $(149) $103 $257 (35) (21) (34) — (26) (6) — 6 — (13) 7 — $(40) $272 (23) — 1 (13) (43) 1 (1) (12) (177) 49 62 35 204 46 (95) 69 237 36 comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . $160 $(128) $ 97 $250 $(26) $273 Other Postretirement Benefit Plans U.S. plans Non-U.S. plans 2014 2013 2012 2014 2013 2012 $30 Current year actuarial loss (gain) . . . . . . . . . . . . . . . . . . . (1) Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . Current year prior service credit . . . . . . . . . . . . . . . . . . . . — 4 Amortization of prior service cost . . . . . . . . . . . . . . . . . . . $ 9 $ (8) (2) (22) — 3 $ 1 (2) — — — 2 $(1) — — — $— — — — Total recognized in other comprehensive loss (income) . . . . Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5 (30) 9 10 10 1 — (1) — 1 — Total recognized in net periodic benefit cost and other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . $38 $(21) $20 $ 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 2014 2013 2012 2014 2013 2012 Projected benefit obligation Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of compensation increase . . . . . . . . . . . . . . . . . . 4.25% 5.13% 4.18% 2.48% 3.62% 3.38% 4.16% 4.17% 4.19% 3.23% 3.37% 3.34% Net periodic pension cost Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of compensation increase . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . 5.13% 4.18% 5.30% 3.62% 3.38% 4.39% 4.17% 4.19% 3.88% 3.37% 3.34% 3.44% 7.75% 7.75% 8.00% 5.82% 5.75% 6.52% Other Postretirement Benefit Plans U.S. plans Non-U.S. plans 2014 2013 2012 2014 2013 2012 Projected benefit obligation Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17% 4.79% 3.89% 6.44% 6.49% 5.79% Net periodic pension cost Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.79% 3.89% 5.09% 6.49% 5.79% 6.09% At December 31, 2014 and 2013, the health care trend rate used to measure the expected increase in the cost of benefits was assumed to be 6.5% and 7.0%, 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 7 $(1) (5) 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, 2014 and 2013 were as follows (dollars in millions): U.S. plans Non-U.S. plans 2014 2013 2014 2013 Projected benefit obligation in excess of plan assets Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . $1,002 $871 $2,945 $2,234 1,797 Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . 2,206 749 761 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, 2014 and 2013 were as follows (dollars in millions): U.S. plans Non-U.S. plans 2014 2013 2014 2013 Accumulated benefit obligation in excess of plan assets Projected benefit obligation . . . . . . . . . . . . . . . . . Accumulated benefit obligation . . . . . . . . . . . . . . . Fair value of plan assets . . . . . . . . . . . . . . . . . . . . $1,002 980 761 $871 853 749 $2,253 2,108 1,554 $1,868 1,732 1,451 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 2015 expected employer contributions To plan trusts . . . . . . . . . . . . . . . . . $ 17 $ 9 $ 75 $— Expected benefit payments 2015 . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . 2020 - 2024 . . . . . . . . . . . . . . . . . . 63 67 60 61 64 342 10 10 10 10 10 45 140 119 121 126 130 698 — — — — — 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 2014, 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 $3.3 billion and $3.2 billion at December 31, 2014 and 2013, respectively. The following plan assets are measured at fair value on a recurring basis (dollars in millions): 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 . 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, 2014 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) $ 454 216 85 6 $ 761 $ 933 1,207 383 64 $2,587 $ 268 83 34 6 $ 391 $ 487 821 28 59 $1,395 $ 186 133 — — $ 319 $ 446 386 310 5 $1,147 $— — 51 — $51 $— — 45 — $45 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) $ 245 88 45 27 $ 405 $ 580 668 30 80 $1,358 $ 183 120 — — $ 303 $ 473 240 341 2 $1,056 $— — 47 — $47 $— — 29 — $29 $ 428 208 92 27 $ 755 $1,053 908 400 82 $2,443 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 . . . . . . . . . . . . . . . . . . . . . Acquisition date fair value of pension plan assets acquired Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . Real Estate/Other Year ended December 31, 2014 Year ended December 31, 2013 $76 5 6 — 9 $96 $68 6 2 — — $76 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 8.00%. The asset allocation for our pension plans at December 31, 2014 and 2013 and the target allocation for 2015, by asset category are as follows: Asset category U.S. pension plans: Target Allocation 2015 Allocation at December 31, 2014 Allocation at December 31, 2013 Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed income . . . . . . . . . . . . . . . . . . . . . . . Real estate/other . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54% 33% 13% — 60% 28% 11% 1% 57% 27% 12% 4% Total U.S. pension plans . . . . . . . . . . . . . . 100% 100% 100% Non-U.S. pension plans: Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed income . . . . . . . . . . . . . . . . . . . . . . . Real estate/other . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37% 46% 11% 6% 36% 47% 15% 2% 38% 40% 11% 11% 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 2014. DEFINED CONTRIBUTION PLANS—U.S. 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%). During 2014, we closed this plan to non-union participants, continuing to provide equivalent benefits to those covered under this plan into their salary deferral account. 91 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. EMPLOYEE BENEFIT PLANS (Continued) 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 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, 2014, 2013 and 2012 was $15 million, $14 million and $14 million, respectively. DEFINED CONTRIBUTION PLANS—NON-U.S. We have defined contribution plans in a variety of non-U.S. locations. Our total combined expense for these defined contribution plans for the years ended December 31, 2014, 2013 and 2012 was $14 million each, primarily related to the Huntsman UK Pension Plan. All UK associates are eligible to participate in the Huntsman UK Pension Plan, a contract-based arrangement with a third party. Company contributions vary by business during a five year transition period. Plan participants elect to make voluntary contributions to this plan up to a specified amount of their compensation. We contribute a matching amount not to exceed 12% of the participant’s salary for new hires and 15% of the participant’s salary for all other participants. 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, 2014 and 2013 were $24 million and $21 million, respectively. During each of the years ended December 31, 2014, 2013 and 2012, we expensed a total of $1 million as contributions to the Huntsman SSP and the SERP. 92 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. EMPLOYEE BENEFIT PLANS (Continued) 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, 2014 we are authorized to grant up to 37.2 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. 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, 2014 2013 2012 Income tax expense (benefit): U.S. Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55 (4) $ 75 79 $156 17 Non-U.S. Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 (48) 42 (71) 51 (55) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51 $125 $169 93 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. INCOME TAXES (Continued) The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate to our provision for income taxes (dollars in millions): Year ended December 31, 2014 2013 2012 Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . $404 $279 $547 Expected tax expense at U.S. statutory rate of 35% . . . . . . . . . . . . . . . . . . . . . . Change resulting from: $142 $ 98 $192 State tax expense net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-U.S. tax rate differentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of non-U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. domestic manufacturing deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (7) 3 (14) (7) — (2) (7) 3 (76) 6 15 11 1 10 (2) 1 (16) (14) 14 11 — (12) (21) (86) (22) — 5 (11) 7 9 100 4 Total income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51 $125 $169 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 utilize these credits before they were to expire in 2015, we established a partial valuation allowance of $21 million against the incremental deferred tax asset. During 2013, we repatriated a significant amount of foreign earnings to the U.S., which included bringing onshore certain U.S. foreign tax credits. The foreign tax credits brought onshore significantly exceeded the amount needed to offset the cash tax impact of the dividend. A full valuation allowance was placed on the remaining foreign tax credits since it was more likely than not that the credits would expire unused due to a shortage of foreign source income for income tax purposes. In early 2014, the amount of foreign tax credits brought onshore was adjusted downward by $10 million, to $104 million, which was fully offset by a valuation allowance. After extensive research and analysis, in September 2014, we made certain elections and filed amended U.S. tax returns for tax years 2008 through 2012, along with our original U.S. tax return for tax year 2013. These new tax elections and amended tax returns allowed us to utilize U.S. foreign tax credits. The net result was $104 million of income tax benefit recognized during 2014 for the release of the associated valuation allowance, including a discrete income tax benefit of $94 million in the third quarter of 2014. Included in the non-U.S. deferred tax expense are income tax benefits of $7 million in 2014 and $22 million in 2013 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 94 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. INCOME TAXES (Continued) jurisdiction. The benefit in 2014 was largely attributable to the U.K and the benefit in 2013 was largely attributable to Switzerland. In both years, foreign currency gains and changes in pension related items resulted in income in other comprehensive income 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. We operate in over 40 non-U.S. tax jurisdictions with no specific country earning a predominant amount of our off-shore earnings. The vast majority of these countries have income tax rates that are lower than the U.S. statutory rate. The average statutory rate for countries with pre-tax losses was greater than the average statutory rate for countries with pre-tax income, resulting in a net benefit as compared to the U.S. statutory rate. For the year ended December 31, 2014, the tax rate differential resulted in lower tax expense of $7 million, reflected in the reconciliation above. In certain non-U.S. tax jurisdictions, our U.S. GAAP functional currency is different than the local tax currency. As a result, foreign exchange will always result in an impact to tax expense. For 2014, this resulted in a $7 million tax benefit, as reflected in the reconciliation above. 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $435 (31) $ 419 (140) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $404 $ 279 $482 65 $547 Year ended December 31, 2014 2013 2012 95 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, 2014 2013 Deferred income tax assets: Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . Pension and other employee compensation . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 875 313 109 46 17 100 $ 853 197 72 22 114 106 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,460 $1,364 Deferred income tax liabilities: Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . Pension and other employee compensation . . . . . . . . . . . . . . . . Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (540) $ (543) (6) (61) (2) (103) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (645) $ (610) Net deferred tax asset before valuation allowance . . . . . . . . . . . . . Valuation allowance—net operating losses and other . . . . . . . . . . . Valuation allowance—foreign tax credits . . . . . . . . . . . . . . . . . . . . $ 815 (702) — $ 754 (700) (114) Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 113 $ (60) Current deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . $ 62 (51) 435 (333) $ 53 (43) 243 (313) Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 113 $ (60) We have gross NOLs of $3,411 million in various non-U.S. jurisdictions. While the majority of the non-U.S. NOLs have no expiration date, $1,174 million have a limited life (of which $910 million are subject to a valuation allowance) and $124 million are scheduled to expire in 2015 (all of which are subject to a valuation allowance). We had $14 million of gross NOLs expire unused in 2014 (all of which were subject to a valuation allowance). Included in the $3,411 million of gross non-U.S. NOLs is $877 million attributable to our Luxembourg entities. As of December 31, 2014, there is a valuation allowance of $209 million against these net tax-effected NOLs of $255 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. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. 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 96 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. INCOME TAXES (Continued) 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. Our judgments regarding valuation allowances are also influenced by the costs and risks associated with any tax planning idea. During 2014, we released valuation allowances of $111 million and established valuation allowances of $3 million. In the U.S. we released $94 million of valuation allowance on U.S. foreign tax credits as a result of making certain tax elections and filing amended U.S. tax returns and in Luxembourg we released a valuation allowance on $6 million of certain net deferred tax assets as a result of significant changes in estimated future taxable income resulting from increased intercompany receivables and, therefore, increased interest income in Luxembourg, our primary treasury center outside of the U.S. We established a valuation allowance of $3 million on certain net deferred tax assets in India as a result of closing operations in one legal entity which will more likely than not result in the loss of its net operating losses. During 2013, we established valuation allowances of $95 million primarily on U.S. foreign tax credits as a result of insufficient foreign source income and we released valuation allowances on $16 million of certain net deferred tax assets as a result of significant changes in estimated future taxable income resulting from increased intercompany receivables and, therefore, increased interest income. 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. 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. 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, or, in the case of the unexpected pre-tax earnings, the release of valuation allowances in future periods. 97 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. INCOME TAXES (Continued) The following is a summary of changes in the valuation allowance (dollars in millions): 2014 2013 2012 Valuation allowance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valuation allowance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $814 702 $ 736 814 $756 736 Net decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Decrease) increase to deferred tax assets with no impact on operating tax 112 (49) (78) 16 20 7 expense, including an offsetting (decrease) increase to valuation allowances . . . 13 (38) (16) Change in valuation allowance per rate reconciliation . . . . . . . . . . . . . . . . . . . . $ 76 $(100) $ 11 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 . . . . . . . . . . . . $ (32) $ (21) $ 10 24 111 (23) (3) 16 (95) Change in valuation allowance per rate reconciliation . . . . . . . . . . . . . . . . . . . . $ 76 $(100) $ 11 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 2014 2013 $ 96 $57 period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) 39 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (5) (2) (4) 11 (3) (7) (1) Unrecognized tax benefits as of December 31 . . . . . . . . . . . . . . . . . . . $ 68 $96 As of December 31, 2014 and 2013, the amount of unrecognized tax benefits which, if recognized, would affect the effective tax rate is $36 million and $78 million, respectively. During 2014, 2013, and 2012, for unrecognized tax benefits that impact tax expense, we recorded a net increase in unrecognized tax benefits with a corresponding income tax expense of $3 million, $9 million and $5 million, for each period. Additional decreases in unrecognized tax benefits were offset by cash settlements or by a decrease in net deferred tax assets and, therefore, did not affect income tax expense. 98 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. INCOME TAXES (Continued) 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, 2014 2013 2012 Interest expense included in tax expense . . . . . . . . . . . . . . . . . . . $(1) Penalties expense included in tax expense . . . . . . . . . . . . . . . . . . — (1) — $ 2 $ 2 $14 Accrued liability for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued liability for penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2014 2013 $13 — 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 (except for foreign tax credits) . . . . . . . . . . . . Open Tax Years 2004 and later 2002 and later 2004 and later 2010 and later 2003 and later 2008 and later 2009 and later 2012 and later 2009 and later 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 nil to $25 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 2014, 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 Spain. During 2013, 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. 99 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 17. INCOME TAXES (Continued) 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 that are reinvested and, in the opinion of management, will continue to be reinvested indefinitely. We have material intercompany 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 intercompany 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 dividends, we will repay certain of our intercompany debt. If any earnings were repatriated via dividend, we may need to accrue and pay taxes on the distributions. 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 with positive earnings that are deemed to be permanently invested were approximately $307 million at December 31, 2014. It is not practicable to determine the unrecognized deferred tax liability on those earnings because of the significant assumptions necessary to compute the tax. 18. COMMITMENTS AND CONTINGENCIES PURCHASE COMMITMENTS We have various purchase commitments extending through 2027 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, 2014, 2013 and 2012, we made minimum payments of nil, $7 million and nil, respectively, under such take or pay contracts without taking the product. Total purchase commitments as of December 31, 2014 are as follows (dollars in millions): Year ending December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,365 474 205 123 58 190 $2,415 100 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. COMMITMENTS AND CONTINGENCIES (Continued) 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 $97 million, $80 million and $79 million for 2014, 2013 and 2012, respectively, net of sublease rentals of approximately $3 million, $4 million and $4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Future minimum lease payments under operating leases as of December 31, 2014 are as follows (dollars in millions): Year ending December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94 83 75 71 59 152 $534 Future minimum lease payments have not been reduced by minimum sublease rentals of $16 million due in the future under noncancelable subleases. LEGAL MATTERS Antitrust Matters We were 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 alleged 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 were 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 defendants (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 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 (the ‘‘Opt-Out Litigation’’). On April 21, 2014, the court severed the claims against us from the other defendants sued and ordered our case transferred to the U.S. District Court for the Southern District of Texas. Subsequently, Kronos, another defendant, was also severed from the Minnesota case and claims against it were transferred and consolidated for trial with our case in the Southern District of Texas. Trial is scheduled for February 22, 2016. It is possible that additional claims will be filed by other Direct Purchasers who opted out of the class litigation. 101 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. COMMITMENTS AND CONTINGENCIES (Continued) We were also 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 purchasers of products made from titanium dioxide (the ‘‘Indirect Purchasers’’) making essentially the same allegations as did the Direct Purchasers. On October 14, 2014, Plaintiffs filed their Second Amended Class Action Complaint narrowing the class of plaintiffs to those merchants and consumers of architectural coatings containing titanium dioxide. Plaintiffs have raised state antitrust claims under the laws of 16 states, consumer protection claims under the laws of 10 states, as well as unjust enrichment claims under the laws of 20 states. 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. Product Delivery Claim We have been notified by a customer of potential claims related to our alleged delivery of a different product than the one the customer had ordered. Our customer claims that it was unaware that the different product had been delivered until after that product had been used to manufacture materials which were subsequently sold. Originally, the customer stated that it had been notified of claims by its customers of up to an aggregate of A153 million (approximately $187 million) relating to this matter and claimed 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 $138 million). Based on the facts currently available, 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 (approximately $138 million), and we have made no accrual with respect to this matter. Indemnification Matters On July 3, 2012, Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC, demanded that we indemnify them for claims brought against them by certain MatlinPatterson entities that were formerly our stockholders (‘‘MatlinPatterson’’) in litigation filed by MatlinPatterson on June 19, 2012 in the 9th District Court in Montgomery County, Texas (the ‘‘Texas Litigation’’). 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 filed relating to the failed acquisition by and merger with Hexion. MatlinPatterson claims 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 loss in value to their 19 million shares of our common stock as a result thereof. MatlinPatterson is asserting statutory fraud, common law fraud and aiding and abetting statutory fraud and are seeking actual damages, exemplary damages, costs and attorney’s fees and pre-judgment and post-judgment interest. On December 21, 2012, the court dismissed the Texas Litigation, a decision which was affirmed by the Ninth Court of Appeals of Texas on May 15, 2014. A subsequent motion for rehearing by 102 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. COMMITMENTS AND CONTINGENCIES (Continued) MatlinPatterson was denied by the same appellate court on June 12, 2014. A petition for discretionary review in the Texas Supreme Court was filed on July 28, 2014 and is currently pending. On July 14, 2014, the Banks demanded that we indemnify them for additional claims brought against them by certain other former Company stockholders in litigation filed June 14, 2014 in the United States District Court for the Eastern District of Wisconsin (the ‘‘Wisconsin Litigation’’). The stockholders in the Wisconsin Litigation have made essentially the same allegations as MatlinPatterson made in the Texas Litigation and, additionally, have named Apollo Global Management LLC and Apollo Management Holdings, L.P. as defendants. Stockholder plaintiffs in the Wisconsin Litigation assert claims for misrepresentation and conspiracy to defraud. On December 23, 2014, the Banks filed motions to dismiss the Wisconsin Litigation on the same grounds asserted in the Texas Litigation. The court has not ruled on these motions. We denied the Banks’ indemnification demand for both the Texas Litigation and the Wisconsin Litigation. 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. 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 103 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued) 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, 2014, 2013 and 2012, our capital expenditures for EHS matters totaled $125 million, $92 million, and $105 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. 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 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. Another of these sites, the Star Lake Canal site in Port Neches, TX, involves a discharge point for manufacturing facilities owned by us and several other local chemical manufacturers. The EPA issued a draft Consent Decree related to cleanup at this site to us and a prior owner in September 2014. The prior owner has an indemnification obligation and has accepted defense of this matter. As of December 31, 2014, we had an accrued liability of approximately $18 million relating to this matter and a corresponding receivable of approximately $18 million relating to our indemnity protection. In addition, under 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 104 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued) 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 cleanup notice by EPA Victoria due to concerns about soil and groundwater contamination emanating from the site. On August 23, 2010, EPA Victoria revoked a second cleanup notice and issued a revised notice that included a requirement for financial assurance for the remediation. As of December 31, 2014, we had an accrued liability of approximately $19 million related to estimated environmental remediation costs at this site. We can provide no assurance that the authority will not seek to institute additional requirements for the site or that additional costs will not be required for the cleanup. In many cases, our potential liability arising from historical contamination is based on operations and other events occurring prior to our ownership of a business or specific facility. In these situations, we frequently obtained an indemnity agreement from the prior owner addressing remediation liabilities arising from pre-closing conditions. We have successfully exercised our rights under these contractual covenants for a number of sites and, where applicable, mitigated our ultimate remediation liability. We cannot assure you, however, that the liabilities for all such matters subject to indemnity will be honored by the prior owner or that our existing indemnities will be sufficient to cover our liabilities for such matters. Based on available information and the indemnification rights we believe are likely to be available, we believe that the costs to investigate and remediate known contamination will not have a material effect on our financial statements. However, if such indemnities are not honored or do not fully cover the costs of investigation and remediation or we are required to contribute to such costs, then such expenditures may have a material effect on our financial statements. At the current time, we are unable to estimate the total cost, exclusive of indemnification benefits, to remediate any of the known contamination sites. ENVIRONMENTAL RESERVES We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued $60 million and $27 million for environmental liabilities as of December 31, 2014 and 2013, respectively. Of these amounts, $7 million and $5 million were classified as accrued liabilities in our consolidated balance sheets as of December 31, 2014 and 2013, respectively, and $53 million and $22 million were classified as other noncurrent liabilities in our consolidated balance sheets as of December 31, 2014 and 2013, respectively. In certain cases, our remediation liabilities may be payable over periods of up to 30 years. 105 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued) 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. On October 1, 2014, the Company completed the Rockwood Acquisition. The properties involved in the transaction are located primarily in China, Finland, Germany, Italy, the United Kingdom and the U.S., and include both owned and leased sites. The existence of soil and groundwater contamination from historical industrial operations is known to exist at some of these new properties. As of December 31, 2014, these newly acquired businesses had accrued $17 million for environmental liabilities (including remediations, investigations, groundwater monitoring, and reclamation obligations associated with landfill operations). Of this amount, $3 million was classified as accrued liabilities and $14 million was classified as other noncurrent liabilities. In certain cases, these remediation liabilities may be payable over periods of up to 30 years. The Company is currently evaluating these new reserve amounts in relation to similar reserves recorded by the Company in the past, as well as within the context of the terms of the acquisition agreements. Pursuant to the agreements related to the Rockwood Acquisition, Rockwood has agreed to indemnify us for certain environmental matters. 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 evaluation and authorization phases 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 $5 million, $4 million and $8 million in 2014, 2013 and 2012, respectively, to meet the initial REACH requirements. We cannot provide assurance that these recent expenditures are indicative of future amounts that we may be required to spend for REACH compliance. GREENHOUSE GAS REGULATION Globally, our operations are increasingly subject to regulations that seek to reduce emissions of GHG, 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 106 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 19. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued) 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’s 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, 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. 107 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY DIVIDENDS ON COMMON STOCK During the quarters ended December 31, 2014 and September 30, 2014, we paid cash dividends of $30 million and $31 million, respectively, or $0.125 per share, to common stockholders, and during each of the quarters ended June 30, 2014 and March 31, 2014, we paid cash dividends of $30 million, or $0.125 per share, to common stockholders for a total of $121 million of cash dividends paid during 2014. 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. 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, 2014 we were authorized to grant up to 37.2 million shares under the Stock Incentive Plan. As of December 31, 2014, we had 9 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): Year ended December 31, 2014 2013 2012 Compensation cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28 $29 $27 The total income tax benefit recognized in the statement of operations for stock-based compensation arrangements was $6 million, $7 million and $6 million for the years ended December 31, 2014, 2013 and 2012, respectively. STOCK OPTIONS The fair value of each stock option award is estimated on the date of grant using the Black- Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time 108 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. STOCK-BASED COMPENSATION PLAN (Continued) 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 the Year ended December 31, 2014 2013 2012 2.4% 60.3% 1.7% 2.8% 62.5% 1.0% 3.0% 65.3% 1.3% period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 years 5.6 years 6.6 years A summary of stock option activity under the Stock Incentive Plan as of December 31, 2014 and changes during the year then ended is presented below: Option Awards Outstanding at January 1, 2014 . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding at December 31, 2014 . . . . . . . . . . . . . . . . . . Exercisable at December 31, 2014 . . . . . . . . . . . . . . . . . . . Weighted Average Weighted Average Remaining Exercise Contractual Price Term Aggregate Intrinsic Value (years) (in millions) $15.39 21.22 20.25 17.51 14.84 13.47 5.2 4.1 $70 60 Shares (in thousands) 10,019 1,116 (2,300) (54) 8,781 6,451 The weighted-average grant-date fair value of stock options granted during 2014, 2013 and 2012 was $9.63, $7.93 and $6.36 per option, respectively. As of December 31, 2014, there was $11 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, 2014, 2013 and 2012, the total intrinsic value of stock options exercised was $14 million, $14 million and $10 million, respectively. 109 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, 2014 and changes during the year then ended is presented below: Equity Awards Liability Awards Nonvested at January 1, 2014 . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares (in thousands) 1,830 754 (735)(1) (28) Nonvested at December 31, 2014 . . . . . . . . . . . . . 1,821 Weighted Average Grant-Date Fair Value $15.31 21.22 16.16 18.29 17.37 Weighted Average Grant-Date Fair Value $16.03 21.22 15.98 17.00 18.50 Shares (in thousands) 574 237 (284) (35) 492 (1) As of December 31, 2014, a total of 388,299 restricted stock units were vested but not yet issued, of which 44,534 vested during 2014. 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, 2014, there was $22 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, 2014, 2013 and 2012 was $19 million, $18 million and $21 million, respectively. 22. OTHER COMPREHENSIVE (LOSS) INCOME Other comprehensive (loss) income consisted of the following (dollars in millions): Foreign currency translation adjustment(a) Pension and other postretirement benefits adjustments, net of tax(b) Other comprehensive income of unconsolidated Other, affiliates Beginning balance, January 1, 2014 . . . . . . . reclassifications . Other comprehensive (loss) income before . . . . Amounts reclassified from accumulated other . comprehensive loss(c) . . . . . . . . . . . . . . . . . . . . . . Net current-period other comprehensive (loss) . . income . . . . . . . . . . . . . . . . . . . Ending balance, December 31, 2014 . . . . . . . . . . . . . $ 246 $ (851) $12 (221) — (221) $ 25 (223) (48) (271) $(1,122) (2) — (2) $10 (a) (b) (c) Amounts are net of tax of $47 and $13 as of December 31, 2014 and January 1, 2014, respectively. Amounts are net of tax of $182 and $83 as of December 31, 2014 and January 1, 2014, respectively. See table below for details about these reclassifications. 110 Amounts Amounts attributable to attributable to noncontrolling interests Huntsman Corporation Total $ (585) $ 8 $ (577) (443) (48) (491) 15 — 15 $23 (428) (48) (476) $(1,053) $11 $(1,076) net $ 8 3 — 3 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 22. OTHER COMPREHENSIVE (LOSS) INCOME (Continued) Beginning balance, January 1, 2013 . . . . . . . reclassifications . Other comprehensive (loss) income before . . . . Amounts reclassified from accumulated other . comprehensive loss(c) . . . . . . . . . . . . . . . . . . . . . . Net current-period other comprehensive (loss) . . income . . . . . . . . . . . . . . . . . . . Ending balance, December 31, 2013 . . . . . . . . Foreign currency translation adjustment(a) Pension and other postretirement benefits adjustments, net of tax(b) $269 $(1,036) (23) — (23) $246 246 (61) 185 $ (851) . . . . . . . . . . Other comprehensive income of unconsolidated Other, affiliates $ 7 5 — 5 $12 net $3 5 — 5 $8 Amounts Amounts attributable to attributable to noncontrolling interests Huntsman Corporation Total $(757) $13 $(744) 233 (61) 172 $(585) (5) — (5) $ 8 228 (61) 167 $(577) (a) (b) (c) Amounts are net of tax of $13 and $20 as of December 31, 2013 and January 1, 2013, respectively. Amounts are net of tax of $83 and $197 as of December 31, 2013 and January 1, 2013, respectively. See table below for details about these reclassifications. Year ended December 31, 2014 Year ended December 31, 2013 Year ended December 31, 2012 Amount reclassified from accumulated other comprehensive loss Amount reclassified from accumulated other comprehensive loss Amount reclassified from accumulated other comprehensive loss Affected line item in the statement where net income is presented $ 9 (55) (13) (59) 11 $(48) $ 8 (80) (12) (84) 23 $(61) $ 10 (46) (13) (49) 7 $(42) (b) (b)(c) (b) Total before tax Income tax expense Net of tax 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 . . . . . . . . . . . . . . . . . . (a) Pension and other postretirement benefits amounts in parentheses indicate credits on our 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 $4 million, $6 million and $4 million of actuarial losses related to discontinued operations for the years ended December 31, 2014, 2013 and 2012, 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. 111 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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, 2014 2013 2012 Sales to: Unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . $261 $232 $223 Inventory purchases from: Unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 614 597 565 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 pursuant to a lease arrangement that expires in 2021. 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. Under this arrangement, monthly sublease payments from Airstar to Jstar are approximately $115,000, and an aggregate of $10 million is payable through the end of the remaining seven year lease term. These monthly sublease payments are equal to the financing costs paid by Jstar to a leasing company and the arrangement does not result in a financial benefit to Jstar. We occupy and use a portion of an office building owned by the Huntsman Foundation, a private charitable foundation established by Jon M. and Karen H. Huntsman to further the charitable interests of the Huntsman family, under a lease pursuant to which we make annual lease payments of approximately $2 million. During each of the years ended 2014, 2013 and 2012, 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 and Additives. We have organized our business and derived our operating segments around differences in product lines. 112 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 24. OPERATING SEGMENT INFORMATION (Continued) 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 and Additives . . . linking, matting and curing agents; epoxy, acrylic and polyurethane-based formulations textile chemicals and dyes titanium dioxide, functional additives, color pigments, timber treatment and water treatment chemicals 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, 2014 2013 2012 Revenues: Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,032 3,072 1,248 896 1,549 (219) $ 4,964 3,019 1,267 811 1,269 (251) $ 4,894 3,065 1,325 752 1,436 (285) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,578 $11,079 $11,187 Segment EBITDA(1): Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate and other(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued Operations(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense—continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax benefit—discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669 440 182 28 (59) (228) 1,032 (10) 1,022 (205) (51) 2 (445) $ 696 372 86 (78) 79 (261) 894 (5) 889 (190) (125) 2 (448) $ 726 360 54 (49) 352 (251) 1,192 (5) 1,187 (226) (169) 3 (432) Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . . . . $ 323 $ 128 $ 363 113 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 24. OPERATING SEGMENT INFORMATION (Continued) Year ended December 31, 2014 2013 2012 Depreciation and Amortization: Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate and other(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Expenditures: Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate and other $ $ $ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 131 138 42 16 78 40 445 — 445 174 181 46 38 136 26 601 $ $ $ $ 156 121 38 17 73 41 446 2 448 132 115 73 31 98 22 471 $ $ $ $ 152 113 31 23 69 39 427 5 432 107 117 41 27 98 22 412 December 31, 2014 2013 2012 Total Assets: Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate and other $ 2,859 2,326 828 574 2,640 1,775 $ 2,839 2,320 918 653 1,469 989 $ 2,733 2,242 909 630 1,536 834 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,002 $ 9,188 $ 8,884 (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 114 HUNTSMAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 24. OPERATING SEGMENT INFORMATION (Continued) periods presented. The EBITDA of our former polymers, base chemicals and Australian styrenics businesses are included in discontinued operations for all periods presented. Year ended December 31, 2014 2013 2012 By Geographic Area Revenues(1): United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,116 1,626 960 921 522 1,433 $ 3,319 1,081 853 586 437 4,803 $ 3,347 1,040 954 600 465 4,781 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,578 $11,079 $11,187 December 31, 2014 2013 2012 Long-lived assets(2): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,748 381 314 311 221 211 207 170 132 112 616 $1,422 200 356 312 202 197 220 162 154 138 461 $1,387 201 351 314 169 164 231 154 163 147 464 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,423 $3,824 $3,745 (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, 2014 and 2013 is as follows (dollars in millions, except per share amounts): Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring, impairment and plant closing costs . . . . . Income (loss) from continuing operations . . . . . . . . . . . Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) attributable to Huntsman Three months ended March 31, 2014 June 30, 2014 September 30, 2014(1) December 31, 2014 $2,755 450 39 69 62 $2,988 505 13 124 124 $2,884 515 39 194 194 $2,951 449 67 (34) (35) Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 119 188 (38) Basic income per share(2): 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(2): Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders . . Net income (loss) attributable to Huntsman Corporation common stockholders . . . . . . . . . . . . 0.25 0.22 0.25 0.22 0.49 0.49 0.48 0.48 0.77 0.77 0.76 0.76 (0.16) (0.16) (0.16) (0.16) 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 . . . . . (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(2): (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(2): (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 (1) During the three months ended September 30, 2014, as a result of extensive research and analysis, we filed amended U.S. tax returns for tax years 2008 through 2012, along with our original U.S. tax return for tax year 2013, and made elections which allowed us to utilize U.S. foreign tax credits. As a result of utilizing these assets that had been subject to a valuation allowance, we recognized a discrete income tax benefit of $94 million in the third quarter of 2014. (2) 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 9, 2015, there were approximately 194 stockholders of record and the closing price of our common stock on the New York Stock Exchange was $23.62 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 2014 High Low First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25.81 28.87 29.32 27.15 $20.79 23.55 25.64 20.36 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 DIVIDENDS During the quarters ended December 31, 2014 and September 30, 2014, we paid cash dividends of $30 million and $31 million, respectively, or $0.125 per share, to common stockholders, and during each of the quarters ended June 30, 2014 and March 31, 2014, we paid cash dividends of $30 million, or $0.125 per share, to common stockholders for a total of $121 million of cash dividends paid during 2014. 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. 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 The following table provides information with respect to shares of our common stock that we repurchased and shares of restricted stock granted under our stock incentive plan that we withheld 118 upon vesting to satisfy our tax withholding obligations during the three months ended December 31, 2014. Total number of shares purchased Average price paid per share 4,155 — — 4,155 $21.26 — — $21.26 Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs — — — — — — — October . . . . . . . . . . . . . . . . . . . . . . November . . . . . . . . . . . . . . . . . . . . December . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . STOCK PERFORMANCE GRAPH Comparison of Cumulative Five Year Total Return $300 $250 $200 $150 $100 $50 $0 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 Huntsman Corporation S&P 500 Index S&P 500 Chemicals 11MAR201503134723 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 12/31/10 12/31/11 43.15 (cid:1)33.90 2.11 15.06 (cid:1)1.26 21.90 12/31/12 63.47 16.00 23.61 12/31/13 12/31/14 58.69 (cid:1)5.55 13.69 32.39 10.70 31.80 Company / Index Base Period 12/31/09 INDEXED RETURNS Years Ending 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 Huntsman Corporation . . . . . . . . . . . . . . . . . . S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . S&P 500 Chemicals . . . . . . . . . . . . . . . . . . . . . 100 100 100 143.15 115.06 121.90 94.62 117.49 120.37 154.68 136.30 148.78 245.45 180.44 196.10 231.84 205.14 217.09 119 (This page has been left blank intentionally.) CORPORATE INFORMATION CORPORATE INFORMATION Annual Report Design by Curran & Connors, Inc. Annual Report Design by Curran & Connors, Inc. www.curran-connors.com www.curran-connors.com 3/13/15 2:56 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 H u n t s m a n C o r p o r a t i o n 2 0 1 4 A n n u a l R e p o r t 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. 43169cvr.indd 1-3 

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