HUNTSMAN CORPORATION 2016 ANNUAL REPORT
We are growing
We are growing
our downstream
our downstream
differentiated
differentiated
businesses and
businesses and
driving improvement
driving improvement
in those that are
in those that are
more cyclical.
more cyclical.
REVENUES
H U N T S M A N C O R P O R AT I O N
H U N T S M A N C O R P O R AT I O N
5 B U S INE S S D I V I S I O N S
5 B U S INE S S D I V I S I O N S
POLYURETHANES
POLYURETHANES
We are a global leader in the manufacture of MDI-based
polyurethanes used to produce energy-saving insula-
tion; comfort foam for automotive seating, bedding and
furniture; adhesives; coatings; elastomers for footwear;
and composite wood products.
PERFORMANCE PRODUCTS
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.
ADVANCED MATERIALS
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.
TEXTILE EFFECTS
TEXTILE EFFECTS
We are a major global solutions provider for textile
dyes, digital inks and chemicals that enhance color
and improve performance such as wrinkle resistance,
longer lasting fabrics and faster drying properties and
the ability to repel water and stains in apparel, home
and technical textiles.
PIGMENTS AND ADDITIVES
PIGMENTS AND ADDITIVES
Expected to be spun-off as Venator Materials Corporation.
We manufacture and market a broad range of titanium
dioxide pigments and performance additives including
color pigments, functional additives, timber treatment
chemicals and water treatment chemicals. Our pigments
and additives add performance and color to thousands
of everyday items from paints, inks and cosmetics to
plastics, pharmaceuticals and concrete.
HUNTSMAN CORPORATION 2016 ANNUAL REPORT
w w w . h u n t s m a n . c o m
w w w . h u n t s m a n . c o m
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.
2 0 1 6 M I L E S T O N E S
2 0 1 6 M I L E S T O N E S
We generated $686
million of free cash
flow in 2016.
We strengthened
our balance sheet by
repaying $560 million
of debt.
In 2016, our MDI
EBITDA increased
by 9%.
We initiated the
process to spin off our
Pigments and Additives
business, Venator
Materials Corporation.
1
HUNTSMAN CORPORATION 2016 ANNUAL REPORT
D E A R F E L L O W S
D E A R F
O L D E R S
H A R E H O L D E R S
E L L O W S H A R E H
UNTSMAN
PETER R. H. HUNTSMAN
PETER R
Commencing in 2016, we laid out three primary objectives to unlock shareholder value and position
our company for long-term sustainable growth: improving free cash flow generation, expanding our
downstream differentiated businesses and preparing for the separation of our cyclical titanium
dioxide business. During this past year, we delivered on each of these objectives, while at the same
time significantly strengthening our balance sheet, expanding our trading multiple and delivering
impressive returns to shareholders.
In my letter to shareholders last year, I indicated that
received approval from the IRS to retain a 40% eco-
I believed that improving our free cash flow generation
nomic interest in Venator, which will allow Huntsman
profile was the single most significant objective we could
to capture the anticipated appreciation in value associ-
achieve to create shareholder value. Coming off a year
ated with an improving titanium dioxide cycle. This will
of important restructuring and capital projects, we
enhance our drive to make further reductions of debt
publicly committed to generate $350 million free cash
while continuing to strengthen our balance sheet. The
flow in 2016. I am pleased to report that we nearly
Venator spin-off by mid-2017 should unlock value for
doubled this commitment, delivering a record $686
our shareholders. This will be a particularly efficient
million of free cash flow this past year. This impressive
move, since titanium dioxide prices continue to rebound
cash flow generation allowed us to pay off $560 million
and Venator will enjoy a leading market position in
of debt, significantly strengthening our balance sheet.
this arena.
Free cash flow generation remains a focus for us. We
anticipate a continuation of our efforts to improve
inventory and working capital management and again
expect to exceed $350 million in free cash flow gener-
ation in 2017.
During the year, we also made steady progress in our
commitment to transform Huntsman into a stronger,
less cyclical company through the growth of our differ-
entiated businesses. This focus is showing results. In
our key MDI business, where EBITDA grew 9% last year,
differentiated MDI volumes grew 6% and represented
85% of MDI EBITDA. We continue to collaborate with
our global customers to develop innovative solutions
that enhance product performance and business com-
petitiveness. Leading global manufacturers recognize
Huntsman as the industry leader through this strategy.
We are also making significant progress in the separa-
tion of our titanium dioxide business through a spin-off
to be named Venator (a Latin word for hunter—intended
in part to acknowledge the Huntsman legacy). We are
making excellent progress. Huntsman has recently
2017 will be a critical and transformative year for
Huntsman as we continue to deliver on our commit-
ments to our shareholders and unlock the value within
the company. Thank you for your continued support.
This should be a very exciting year.
PETER R. HUNTSMAN
PETER R. HUNTSMAN
President and Chief Executive Officer
February 21, 2017
PETER R. HUNTSMAN
PETER R. HUNTSMAN
2
HUNTSMAN CORPORATION 2016 ANNUAL REPORT
S P E C I A L N O T E T O S H A R E H O L D E R S
JON M. HUNTSMAN
It is a privilege to continue to serve as Executive Chair-
experience from a variety of leadership positions with
man of the company I founded 47 years ago. Our business
the best companies around the world. Our Board remains
has progressed dramatically since then, but as the
fully aligned with management as Huntsman pursues and
world continues to change, Huntsman Corporation will
delivers on its strategic and financial goals—generating
continue to adapt and transform itself to effectively
free cash flow, expanding our downstream differentiated
compete in the chemical industry. We begin 2017 as a
businesses and separating our titanium dioxide business.
world-class global business with revenues of approxi-
mately $10 billion and a global footprint that is the envy
of the industry. By mid-year, we expect to divide into two
world class companies—one, a global leader in the
titanium dioxide industry on the upswing of its cycle, and
the other, a world-class differentiated chemical com-
pany with consistent, strong performing businesses.
As the company’s largest shareholder, I can assure you
that we will continue our intense focus on creation of
shareholder value. We appreciate the confidence and
trust that you have shown in our Board, management
and the outstanding employees of our company. This is
an exciting time to be a Huntsman Corporation share-
holder, and I look forward to a year of transformation
Last year, Huntsman created significant value for our
and value creation with you, our shareholders.
JON M. HUNTSMAN
Executive Chairman and Founder
February 21, 2017
shareholders as we delivered total shareholder return
of over 70%, significantly outperforming the global
markets and our industry peers. This is a clear recog-
nition of the quality of our businesses and the strategic
goals that we have announced and on which we have
delivered. We expect to see strong growth again this
year and anticipate an expansion of our EBITDA multiple.
Moreover, we anticipate additional value creation through
the separation of our Pigments and Additives division.
One of the hallmarks of this great company is its strong
leadership. Our management team is headed by Peter
Huntsman, a gifted CEO who has steered our company
through challenging economic conditions to a position
of strength on the doorstep of significant transforma-
tion. We have a talented Board of Directors who bring
JON M. HUNTSMAN
3
HUNTSMAN CORPORATION 2016 ANNUAL REPORT
A T - A - G L A N C E
2 0 1 6 : A T - A - G L A N C E
2 0 1 6 :
Year Ended December 31,
2016
2016
2015
2014
$ 9,657
$ 9,657
$ 10,299
$ 11,578
1,678
$$1,678
$ 1,848
$ 1,919
$ 202
$ 202
$$ 357357
$ 377
$ 377
$
$
$
205
126
492
$
$
$
205
345
478
$ 1.57
$ 1.57
$ 2.00
$ 1.94
$ 1,127
$ 1,127
$ 1,221
$ 1,340
$ 686
$ 686
$ 390
$ 390
$
$
(30) $
99
648
$
564
December 31,
2016
2016
2015
2014
$ 9,189
$ 9,189
$ 9,820
$ 10,923
$ 3,770
$ 3,770
$ 4,526
$ 4,251
ADJUSTED EBITDA B
ADJUSTED E
BITDA BY DY DIVISION
IVISION (4)
IGHLIGHTS
FINANCIAL HHIGHLIGHTS
FINANCIAL
$ in millions
Revenues
Gross profit
Interest expense, net
Net income
Adjusted net income(1)
Adjusted diluted income per share(1)
Adjusted EBITDA(1)
Free cash flow(1)
Capital expenditures(2)
$ in millions
Total assets
Net debt(3)
REVENUES BY DY DIVISION
REVENUES B
IVISION (4)
38% Polyurethanes
43% Polyurethanes
22% Performance Products
10% Advanced Materials
8% Textile Effects
22% Pigments and Additives
24% Performance Products
17% Advanced Materials
6% Textile Effects
10% Pigments and Additives
(1) For a reconciliation see pages 10–11 of the Financials section.
(2) Net of reimbursements of $31 million, $15 million and $37 million in 2016, 2015 and 2014, respectively.
(3) Net debt calculated as total debt excluding affiliates less cash.
(4) Segment allocation before Corporate and other unallocated items.
4
2 0 1 6 : F I N A N C I A L R E V I E W A N D F O R M 1 0 - K
6
Definitions
7
Selected Financial Data
8
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
30
Quantitative and Qualitative Disclosures about Market Risk
32
Controls and Procedures
34
Reports of Independent Registered Public Accounting Firm
36
Consolidated Balance Sheets
37
Consolidated Statements of Operations
39
Consolidated Statements of Comprehensive Loss
40
Consolidated Statements of Equity
41
Consolidated Statements of Cash Flows
43
Notes to Consolidated Financial Statements
114
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
IBC
Corporate Information
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, 2016, which was filed with the
Securities and Exchange Commission on February 15, 2017.
DEFINITIONS
6
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.
2016
Year ended December 31,
2013
2014
(in millions, except per share amounts)
2015
2012
Statements of Operations Data:
Revenues
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . .
Loss from discontinued operations, net of tax(a) . . . . . . . . . . .
Extraordinary gain on the acquisition of a business, net of tax
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,657 $10,299 $11,578 $11,079 $11,187
2,034
92
845
378
(7)
1,678
81
647
361
(4)
1,753
151
510
154
(5)
1,919
158
633
353
(8)
1,848
302
405
130
(4)
of nil(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . . . . . . . .
—
357
326
—
126
93
—
345
323
—
149
128
2
373
363
Basic income (loss) per common share:
Income from continuing operations attributable to Huntsman
Corporation common stockholders . . . . . . . . . . . . . . . . . . . $ 1.40 $ 0.40 $ 1.36 $ 0.55 $ 1.55
Loss from discontinued operations attributable to Huntsman
Corporation common stockholders, net of tax(a) . . . . . . . . .
Extraordinary gain on the acquisition of a business attributable
to Huntsman Corporation common stockholders, net of
tax(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation common
(0.02)
(0.02)
(0.03)
(0.02)
(0.03)
—
—
—
—
0.01
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.38 $ 0.38 $ 1.33 $ 0.53 $ 1.53
Diluted income (loss) per common share:
Income from continuing operations attributable to Huntsman
Corporation common stockholders . . . . . . . . . . . . . . . . . . . $ 1.38 $ 0.40 $ 1.34 $ 0.55 $ 1.53
Loss from discontinued operations attributable to Huntsman
Corporation common stockholders, net of tax(a) . . . . . . . . .
Extraordinary gain on the acquisition of a business attributable
to Huntsman Corporation common stockholders, net of
tax(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation common
(0.02)
(0.02)
(0.03)
(0.02)
(0.03)
—
—
—
—
0.01
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.36 $ 0.38 $ 1.31 $ 0.53 $ 1.51
Other Data:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . $ 432 $
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Data (at period end):
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,189 $ 9,820 $10,923 $ 9,159 $ 8,862
3,684
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,966
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
448 $
471
0.50
445 $
601
0.50
399 $
663
0.50
432
412
0.40
3,887
7,030
5,127
8,972
4,796
8,191
4,196
7,722
421
0.50
(a) Loss from discontinued operations represents the operating results and loss on disposal of our former
Australian styrenics business, our former U.S. base chemicals business and our former North American
polymers business. The U.S. base chemicals business was sold on November 5, 2007 and the North
American polymers business was sold on August 1, 2007.
(b) The extraordinary gain on the acquisition of a business relates to the June 30, 2006 acquisition of our
Textile Effects segment.
7
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RECENT DEVELOPMENTS
On January 30, 2017, our titanium dioxide manufacturing facility in Pori, Finland experienced fire
damage and is currently not operational. The fire brigade responded quickly to extinguish the fire and
there were no injuries. We have notified applicable customers and suppliers of this force majeure event.
We do not currently have an estimated time frame for how long the facility will be off line, but we are
committed to repairing the facility as quickly as possible. The Pori facility has a nameplate capacity of
130,000 metric tons, which represents approximately 15% of our total titanium dioxide capacity and
approximately 10% of total European titanium dioxide demand. The site is insured for property
damage as well as business interruption losses. According to our insurance policies, the respective
retention levels (deductibles) for physical damage and business interruption are $15 million and
60 days, respectively. On February 9, 2017, we received a A50 million (approximately $52 million)
payment from our insurer as an initial partial progress payment towards the overall pending claim.
On October 28, 2016, we filed an initial Form 10 registration statement with the SEC as part of
the process to spin off our Pigments and Additives and Textile Effects businesses in a tax-free
transaction. On January 17, 2017, we announced that we will retain our Textile Effects business and we
amended the Form 10 registration statement. We also announced that the name of the spin-off entity
will be Venator Materials Corporation (‘‘Venator’’). Venator shares are expected to trade on the New
York Stock Exchange under the ticker VNTR after the distribution to our stockholders. The
completion of the spin-off is subject to the satisfaction or waiver of a number of conditions, including
the registration statement on Form 10 for Venator’s common stock being declared effective by the SEC
and certain other conditions described in the information statement included in the Form 10. The
ongoing process to separate the Pigments and Additives business is proceeding and is targeted for the
second quarter 2017. As noted above, there was fire damage sustained at our titanium dioxide facility
in Pori, Finland. The potential impact of this interruption, if any, on the spin date is not yet known.
On December 30, 2016, our Performance Products segment completed the sale of its European
surfactants business to Innospec Inc. for $199 million in cash plus our retention of trade receivables
and payables for an enterprise value of $225 million. Under the terms of the transaction, Innospec
acquired our manufacturing facilities located in Saint-Mihiel, France; Castiglione delle Stiviere, Italy;
and Barcelona, Spain. The purchase price is subject to the finalization of working capital adjustments.
We remain committed to our global surfactants business, including in the U.S. and Australia, where our
differentiated surfactants businesses are backward integrated into essential feedstocks. Upon closing the
transaction, we entered into supply and long-term tolling arrangements with Innospec in order to
continue marketing certain core products strategic to our global agrochemicals, lubes and certain other
businesses. In connection with this sale, we recognized a pre-tax gain in the fourth quarter of 2016 of
$98 million.
On December 30, 2016, we made an early repayment of $260 million on our 2015 extended term
loan B facility due 2019 (‘‘2015 Extended Term Loan B’’) using proceeds from the sale of the European
surfactants business and existing cash.
OUTLOOK
We expect the following factors to impact our operating segments:
Polyurethanes:
• Continued focus on downstream MDI differentiation
• Improving MDI demand growth
8
• Low MTBE margins
• Planned maintenance at Rotterdam production facility
Performance Products:
• Amines and maleic anhydride showing signs of recovery
• Margins lower than historical norms
• Planned ethylene oxide maintenance during second half of 2017
Advanced Materials:
• Strong aerospace market more than one-third of earnings
Pigments and Additives:
• Increasing TiO2 selling prices
• Impact of fire at Pori, Finland manufacturing facility
• Lawsuit against Rockwood Holdings, Inc. (‘‘Rockwood’’) and Albemarle Corporation for fraud
and breach of contract related to Augusta facility
In 2017, we expect to spend approximately $400 million on capital expenditures.
In 2016, our adjusted effective tax rate was 22%. We expect our long term adjusted effective tax
rate will be approximately 30%. We believe our 2017 adjusted effective tax rate will be slightly less than
the long term rate.
9
RESULTS OF OPERATIONS
The following tables set forth our consolidated results of operations for the years ended
December 31, 2016, 2015 and 2014 (dollars in millions, except per share amounts).
Year ended December 31,
2014
2015
2016
Percent Change
2016 vs. 2015
2015 vs. 2014
(6)%
(6)%
(9)%
(6)%
(73)%
NM
NM
60%
(1)%
(17)%
(90)%
—
155%
89%
178%
—
183%
(6)%
(1)%
89%
—
8%
(11)%
(13)%
(4)%
1%
91%
—
(75)%
(36)%
—
—
11%
NM
(56)%
(10)%
(63)%
(50)%
(63)%
50%
—
(10)%
—
(10)%
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . .
$9,657
7,979
$10,299
8,451
$11,578
9,659
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . .
Spin-off separation expenses . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
Other operating income, net
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in income of investment in unconsolidated
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Other income (loss), net
Income from continuing operations before income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . .
Loss from discontinued operations, net of tax . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reconciliation of net income to adjusted EBITDA:
Net income attributable to noncontrolling interests . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense from continuing operations
. . . . .
Income tax benefit from discontinued operations . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . .
Other adjustments:
Business acquisition and integration expenses and
purchase accounting adjustments . . . . . . . . . . . . . .
EBITDA from discontinued operations . . . . . . . . . . .
(Gain) loss on disposition of businesses/assets . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . .
Certain legal settlements and related expenses . . . . . .
Amortization of pension and postretirement actuarial
losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net plant incident remediation costs . . . . . . . . . . . . .
Restructuring, impairment and plant closing and
transition costs(4) . . . . . . . . . . . . . . . . . . . . . . . .
Spin-off separation expenses . . . . . . . . . . . . . . . . . . .
1,678
1,072
81
18
(140)
647
(202)
5
(3)
1
448
(87)
361
(4)
357
(31)
202
87
(2)
432
23
6
(119)
3
3
65
1
82
18
1,848
1,142
302
—
(1)
405
(205)
1,919
1,132
158
—
(4)
633
(205)
6
(31)
1
176
(46)
130
(4)
126
(33)
205
46
(2)
399
53
6
2
31
4
74
4
306
—
6
(28)
(2)
404
(51)
353
(8)
345
(22)
205
51
(2)
445
67
10
(3)
28
3
51
—
162
—
Adjusted EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . .
$1,127
$ 1,221
$ 1,340
Net cash provided by operating activities . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . .
$1,088
(202)
(723)
(421)
$
575
(600)
(562)
(663)
$
760
(1,606)
1,197
(601)
89%
(66)%
29%
(37)%
(24)%
(63)%
NM
10%
10
Year ended
ended
December 31, 2016
Net
Gross Tax(3)
Year ended
ended
December 31, 2015
Net
Gross Tax(3)
Year ended
ended
December 31, 2014
Net
Gross Tax(3)
Reconciliation of net income to adjusted
net income
Net income . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . .
Business acquisition and integration
expenses and purchase accounting
adjustments . . . . . . . . . . . . . . . . . . . . . $ 23 $ (7)
Impact of certain foreign tax credit
$ 357
(31)
$ 126
(33)
$ 345
(22)
16 $ 53 $(13)
40 $ 67 $(10)
57
elections . . . . . . . . . . . . . . . . . . . . . . . — —
(2)
Loss from discontinued operations . . . . . .
(Gain) loss on disposition of businesses/
6
— — —
(2)
6
4
— — (94)
(2)
10
4
assets . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . .
Certain legal settlements and related
(119)
3
16
(1)
(103)
2
2 —
(11)
31
expenses . . . . . . . . . . . . . . . . . . . . . . .
3
(1)
2
53
1
4
74
4
(1)
(17)
(1)
65
(12)
1 —
(94)
8
(2)
18
3
41
—
2
20
3
(3)
28
1
(10)
3 —
57
(10)
51
3 — —
Amortization of pension and
postretirement actuarial losses . . . . . . .
Net plant incident remediation costs . . . . .
Restructuring, impairment and plant
closing and transition costs(4) . . . . . . . .
Spin-off separation expenses . . . . . . . . . .
Adjusted net income(2) . . . . . . . . . . . . . .
Weighted average shares-basic . . . . . . . . .
Weighted average shares-diluted . . . . . . . .
Net income attributable to Huntsman
Corporation per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-GAAP measures:
Adjusted net income per share(2):
Basic . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures, net of
reimbursements(5) . . . . . . . . . . . . . . . .
.
Net cash provided by operating activities
Capital expenditures . . . . . . . . . . . . . . . .
All other investing activities, excluding
acquisition and disposition activities . . .
Spin-off separation costs . . . . . . . . . . . . .
Free cash flow(6) . . . . . . . . . . . . . . . . . .
NM—Not meaningful
82
18
(19)
(5)
63
(36)
306
13 — —
270
(38)
162
— — —
124
—
$ 377
236.3
239.6
$ 1.38
1.36
$ 1.60
1.57
$ (390)
$1,088
(421)
11
8
$ 686
$ 492
242.8
245.4
$ 0.38
0.38
$ 2.03
2.00
$ (648)
$ 575
(663)
58
—
$ (30)
$ 478
242.1
246.0
$ 1.33
1.31
$ 1.97
1.94
$ (564)
$ 760
(601)
(60)
—
$
99
(1) Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income of Huntsman Corporation before interest, income tax, depreciation and
amortization, net income attributable to noncontrolling interests and certain Corporate and other
items, as well as eliminating the following adjustments: (a) business acquisition and integration
expenses and purchase accounting adjustments; (b) EBITDA from discontinued operations;
11
(c) (gain) loss on disposition of businesses/assets; (d) loss on early extinguishment of debt;
(e) certain legal settlements and related expenses; (f) amortization of pension and postretirement
actuarial losses; (g) net plant incident remediation costs; (h) restructuring, impairment, plant
closing and transition costs; and (i) spin-off separation expenses. We believe that net income of
Huntsman Corporation is the performance measure calculated and presented in accordance with
U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial
performance and provides improved comparability between periods through the exclusion of
certain items that management believes are not indicative of the businesses’ operational
profitability and that may obscure underlying business results and trends. However, this measure
should not be considered in isolation or viewed as a substitute for net income of Huntsman
Corporation, or other measures of performance determined in accordance with U.S. GAAP.
Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled
measures of other companies due to potential inconsistencies in the methods of calculation. Our
management believes this measure is useful to compare general operating performance from
period to period and to make certain related management decisions. Adjusted EBITDA is also
used by securities analysts, lenders and others in their evaluation of different companies because it
excludes 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 adjusted EBITDA in the evaluation of our Company as compared to net income of
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 adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a
more complete understanding of the factors and trends affecting the business rather than
U.S. 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.
(2) Adjusted net income is computed by eliminating the after-tax amounts related to the following
from net income attributable to Huntsman Corporation: (a) business acquisition and integration
expenses and purchase accounting adjustments; (b) impact of certain foreign tax credit elections;
(c) loss from discontinued operations; (d) (gain) loss on disposition of businesses/assets; (e) loss on
early extinguishment of debt; (f) certain legal settlements and related expenses; (g) amortization of
pension and postretirement actuarial losses; (h) net plant incident remediation costs; and
12
(i) restructuring, impairment and plant closing and transition costs; (j) spin-off separation expenses.
Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net
income by the weighted average number of shares outstanding during the period. Adjusted diluted
net 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 net income per share amounts
are presented solely as supplemental information.
(3) 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.
(4) Includes costs associated with transition activities relating to the migration of our information
system data centers and the transition of our Textile Effects segment’s production from Basel,
Switzerland to a tolling facility. These transition costs were included in either selling, general and
administrative expenses or cost of sales on our consolidated statements of operations.
(5) Capital expenditures, net of reimbursements, represent cash paid for capital expenditures less
payments received as reimbursements from customers and joint venture partners. During 2016,
2015 and 2014, capital expenditures of $421 million, $663 million and $601 million, respectively,
were reimbursed in part by $31 million, $15 million and $37 million, respectively.
(6) Management internally uses a free cash flow measure: (a) to evaluate the Company’s liquidity,
(b) to evaluate strategic investments, (c) to plan stock buyback and dividend levels, and (d) to
evaluate the Company’s ability to incur and service debt. Free cash flow is not a defined term
under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available
for discretionary expenditures. The Company defines free cash flow as cash flows provided by
operating activities and used in investing activities, excluding acquisition and disposition activities.
Free cash flow is typically derived directly from the Company’s consolidated statement of cash
flows; however, it may be adjusted for items that affect comparability between periods.
Year Ended December 31, 2016 Compared with Year Ended December 31, 2015
For the year ended December 31, 2016, net income attributable to Huntsman Corporation was
$326 million on revenues of $9,657 million, compared with net income attributable to Huntsman
Corporation of $93 million on revenues of $10,299 million for the same period of 2015. The increase of
$233 million in net income attributable to Huntsman Corporation was the result of the following items:
• Revenues for the year ended December 31, 2016 decreased by $642 million, or 6%, as compared
with the 2015 period. The decrease was primarily due to lower average selling prices in all our
segments and lower sales volumes in our Performance Products and Advanced Materials
segments. See ‘‘—Segment Analysis’’ below.
• Our gross profit for the year ended December 31, 2016 decreased by $170 million, or 9%, as
compared with the 2015 period. The decrease resulted from lower gross margins in our
Polyurethanes, Performance Products and Advanced Materials segments. See ‘‘—Segment
Analysis’’ below.
• Our operating expenses for the year ended December 31, 2016 decreased by $70 million, or 6%,
as compared with the 2015 period, primarily related to the impact of translating foreign currency
amounts to the U.S. dollar and a decrease in selling, general and administrative expenses as a
result of cost savings from restructuring programs within our Pigments and Additives segment.
• Restructuring, impairment and plant closing costs for the year ended December 31, 2016
decreased to $81 million from $302 million in the 2015 period. For more information concerning
restructuring activities, see ‘‘Note 12. Restructuring, Impairment and Plant Closing Costs’’ to our
consolidated financial statements.
13
• In connection with the proposed spin-off of our Pigments and Additives business, we recorded
spin-off separation expenses of $18 million during 2016. We expect to record additional spin-off
separation expenses of approximately $56 million in 2017.
• Our other operating income, net increased by $139 million for the year ended December 31,
2016 as compared with 2015, primarily related to a gain on the sale of our European surfactants
business in the fourth quarter of 2016. For more information concerning the sale of our
European surfactants business, see ‘‘Note 3. Business Combinations and Dispositions—Sale of
European Surfactants Manufacturing Facilities’’ to our consolidated financial statements.
• Loss on early extinguishment of debt for the year ended December 31, 2016 decreased to
$3 million from $31 million in the 2015 period. During 2016, we recorded a loss on early
extinguishment of debt of $3 million primarily related to repayment of our term loan B facilities
due 2017 and our term loan C facility due 2016 (‘‘Term Loan C’’) as well as voluntary
repayments on our 2015 Extended Term Loan B. During 2015, we recorded a loss on early
extinguishment of debt of $30 million primarily related to the redemption of our 8.625% senior
subordinated notes due 2021 (‘‘2021 Senior Subordinated Notes’’).
• Our income tax expense for the year ended December 31, 2016 increased to $87 million from
$46 million in the 2015 period. 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 19.
Income Taxes’’ to our consolidated financial statements.
Segment Analysis
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Year ended
December 31,
2016
2015
Percent
Change
(Unfavorable)
Favorable
Revenues
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . .
Corporate and eliminations . . . . . . . . . . . . . . . . . .
$3,667
2,126
1,020
751
2,139
(46)
$ 3,811
2,501
1,103
804
2,160
(80)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,657
$10,299
Segment adjusted EBITDA(1)
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . .
$
$ 569
316
223
73
130
(184)
573
460
220
63
61
(156)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,127
$ 1,221
(4)%
(15)%
(8)%
(7)%
(1)%
NM
(6)%
(1)%
(31)%
1%
16%
113%
(18)%
(8)%
NM—Not meaningful
(1) For more information, including reconciliation of segment adjusted EBITDA to net
income of Huntsman Corporation, see ‘‘Note 26. Operating Segment Information’’ to our
consolidated financial statements.
14
Year ended December 31, 2016 vs. 2015
Average Selling Price(1)
Local
Currency
Foreign Currency Mix &
Other
Translation Impact
Sales
Volumes(2)
Period-Over-Period (Decrease) Increase
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . .
Total Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)%
(8)%
(2)%
(6)%
(4)%
(7)%
(1)%
(1)%
(2)%
(3)%
(1)%
(1)%
(5)%
(4)%
3%
(1)%
—
(3)%
11%
(2)%
(7)%
3%
4%
5%
Fourth Quarter 2016 vs. Third Quarter 2016
Average Selling Price(1)
Local
Currency
Foreign Currency Mix &
Other
Translation Impact
Sales
Volumes(2)
Period-Over-Period Increase (Decrease)
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . .
Total Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7%
—
1%
1%
3%
3%
(1)%
—
(1)%
(1)%
(1)%
(1)%
(1)%
1%
(1)%
(1)%
(2)%
—
3%
—
1%
1%
(8)%
(1)%
(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Excludes sales volumes of byproducts and raw materials.
Polyurethanes
The decrease in revenues in our Polyurethanes segment for 2016 compared to 2015 was primarily
due to lower average selling prices, partially offset by higher sales volumes. MDI average selling prices
decreased in response to lower raw material costs. MTBE average selling prices decreased primarily as
a result of lower pricing for high octane gasoline. MDI sales volumes increased due to higher demand
in the Americas and European regions. PO/MTBE sales volumes increased primarily due to the impact
of the prior year planned maintenance outage. The decrease in segment adjusted EBITDA was
primarily due to lower MTBE margins, partially offset by higher MDI margins and sales volumes and
the prior year planned PO/MTBE maintenance outage of approximately $90 million.
Performance Products
The decrease in revenues in our Performance Products segment for 2016 compared to 2015 was
primarily due to lower average selling prices and lower sales volumes. Average selling prices decreased
primarily in response to lower raw material costs and competitive market conditions. Sales volumes
decreased primarily due to competitive market conditions, softer demand in China and oilfield
applications as well as the impact of weather related and other production outages. The decrease in
segment adjusted EBITDA was primarily due to lower sales volumes, lower margins in our amines,
maleic anhydride and upstream intermediates businesses as well as the impact of weather related and
other production outages estimated at approximately $15 million.
15
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2016 compared to 2015 was due
to lower sales volumes and lower average selling prices. Sales volumes decreased primarily in the
Americas region, due to competitive pressure and soft demand. Average selling prices decreased in our
Asia Pacific and European regions primarily due to price concessions in our electrical, electronic and
wind markets and the foreign currency exchange impact of a stronger U.S. dollar against major
international currencies. The increase in segment adjusted EBITDA was primarily due to lower fixed
costs, partially offset by lower margins as savings from lower raw material costs were offset by lower
sales volumes and lower selling prices.
Textile Effects
The decrease in revenues in our Textile Effects segment for 2016 compared to 2015 was due to
lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased
primarily due to lower raw material costs and the foreign currency exchange impact of a stronger U.S.
dollar against major international currencies. Sales volumes increased in key target countries, mainly in
South Asia. The increase in segment adjusted EBITDA was primarily due to higher margins from lower
raw material costs and lower selling, general and administrative costs.
Pigments and Additives
The decrease in revenues in our Pigments and Additives segment for 2016 compared to 2015 was
due to lower average selling prices, partially offset by higher sales volumes. Average selling prices
decreased primarily as a result of competitive pressure and the foreign currency exchange impact of a
stronger U.S. dollar primarily against the euro. Sales volumes increased primarily due to increased end
use demand for our titanium dioxide, functional additives and timber treatment products. The increase
in segment adjusted EBITDA was primarily due to higher margins resulting from restructuring savings.
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 2016, adjusted EBITDA
from Corporate and other for Huntsman Corporation decreased by $28 million to a loss of
$184 million from a loss of $156 million for the same period in 2015. The decrease in adjusted
EBITDA from Corporate and other resulted primarily from an increase in LIFO inventory valuation
expense, partially offset by an increase in gain from benzene sales.
Year Ended December 31, 2015 Compared with Year Ended December 31, 2014
For the year ended December 31, 2015, net income attributable to Huntsman Corporation was
$93 million on revenues of $10,299 million, compared with net income attributable to Huntsman
Corporation of $323 million on revenues of $11,578 million for 2014. The decrease of $230 million in
net income attributable to Huntsman Corporation was the result of the following items:
• Revenues for the year ended December 31, 2015 decreased by $1,279 million, or 11%, as
compared with 2014. The decrease was due principally to lower sales volumes and lower average
selling prices in all our segments. See ‘‘—Segment Analysis’’ below.
• Our gross profit for the year ended December 31, 2015 decreased by $71 million, or 4%, as
compared with 2014. The impact on gross profit resulted from lower gross margins in all of our
segments, except for our Advanced Materials segment. See ‘‘—Segment Analysis’’ below.
16
• Our operating expenses increased by $10 million, or 1%, for the year ended December 31, 2015
as compared with 2014, primarily related to the consolidated expenses of the acquired
Rockwood businesses, offset in part by the foreign currency exchange impacts of the
strengthening U.S. dollar against other major international currencies.
• Restructuring, impairment and plant closing costs for the year ended December 31, 2015
increased to $302 million from $158 million in 2014. For more information concerning
restructuring activities, see ‘‘Note 12. Restructuring, Impairment and Plant Closing Costs’’ to our
consolidated financial statements.
• Loss on early extinguishment of debt for the year ended December 31, 2015 increased to
$31 million from $28 million in 2014. During 2015, we recorded a loss on early extinguishment
of debt of $30 million related to the redemption of our 2021 Senior Subordinated Notes. For
more information, see ‘‘Note 15. Debt—Direct and Subsidiary Debt—Redemption of Notes and
Loss on Early Extinguishment of Debt’’ to our consolidated financial statements.
• Our income tax expense for the year ended December 31, 2015 decreased to $46 million from
$51 million in 2014. The change in income tax expense is impacted by the benefit in 2015 of
generating $14 million of excess U.S. foreign tax credits and in 2014 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 decreased by $97 million as compared with 2014,
primarily due to lower pre-tax income and tax impacts of tax only foreign currency exchange
losses. 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 19. Income Taxes’’ to our
consolidated financial statements.
Segment Analysis
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Year ended
December 31,
2015
2014
Percent
Change
(Unfavorable)
Favorable
Revenues
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . .
Corporate and eliminations . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment adjusted EBITDA(1)
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,811
2,501
1,103
804
2,160
(80)
$10,299
$
573
460
220
63
61
(156)
$ 1,221
$ 5,032
3,072
1,248
896
1,549
(219)
$11,578
$
722
473
199
58
76
(188)
$ 1,340
(24)%
(19)%
(12)%
(10)%
39%
NM
(11)%
(21)%
(3)%
11%
9%
(20)%
17%
(9)%
NM—Not meaningful
(1) For more information, including reconciliation of segment adjusted EBITDA to net
income of Huntsman Corporation, see ‘‘Note 26. Operating Segment Information’’ to our
consolidated financial statements.
17
Year ended December 31, 2015 vs. 2014
Average Selling Price(1)
Local
Currency
Foreign Currency
Mix &
Translation Impact Other(2)
Sales
Volumes(3)
Period-Over-Period Increase (Decrease)
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . .
Total Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12)%
(7)%
2%
1%
(10)%
(8)%
(5)%
(5)%
(8)%
(6)%
(8)%
(6)%
3%
(3)%
(1)%
2%
62%
10%
(10)%
(4)%
(5)%
(7)%
(5)%
(7)%
(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Includes the impact from the Rockwood Acquisition.
(3) Excludes sales volumes of byproducts and raw materials.
Polyurethanes
The decrease in revenues in our Polyurethanes segment for 2015 compared to 2014 was primarily
due to a planned maintenance outage at our PO/MTBE facility in Port Neches, Texas that commenced
in the first quarter of 2015 and extended into the second quarter of 2015, lower MDI average selling
prices and the foreign currency exchange impact of a stronger U.S. dollar against other key currencies.
PO/MTBE sales volumes decreased due to the planned maintenance outage at our PO/MTBE facility
in Port Neches, Texas. MDI sales volumes decreased slightly due to the market slowdown in China and
lower sales into commercial construction in the U.S. PO/MTBE average selling prices decreased
following lower pricing for high octane gasoline. MDI average selling prices decreased in response to
lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against
major European currencies. The decrease in segment adjusted EBITDA was due to lower PO/MTBE
earnings and the foreign currency exchange impact of a stronger U.S. dollar against the euro. We
estimate the reduction to segment adjusted EBITDA resulting from the planned PO/MTBE
maintenance outage was approximately $90 million for 2015.
Performance Products
The decrease in revenues in our Performance Products segment for 2015 compared to 2014 was
primarily due to lower average selling prices and lower sales volumes. Average selling prices decreased
across all product lines primarily in response to lower raw material costs and the foreign currency
exchange impact of a stronger U.S. dollar against major European currencies. Sales volumes decreased
across most product lines, including the effect of the sale of our European commodity surfactants
business in the second quarter of 2014 partially offset by higher toll volumes in our upstream
intermediates business. The decrease in segment adjusted EBITDA was primarily due to lower margins
on produced ethylene, partially offset by higher amines margins.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2015 compared to 2014 was due
to lower sales volumes and lower average selling prices. Sales volumes decreased globally primarily in
our coatings and construction and transportation and industrial markets due to the de-selection of
certain business and competitive pressure, partially offset by strong volume growth in our do-it-yourself
and wind markets in the Asia Pacific region. Average selling prices increased, in most markets, on a
local currency basis in the Americas and Asia Pacific regions due to certain price increase initiatives
and our focus on higher value markets; overall this was more than offset by the foreign currency
18
exchange impact of a stronger U.S. dollar against major international currencies. The increase in
segment adjusted EBITDA was primarily due to higher margins, resulting from lower raw material
costs, and our focus on higher value business as well as lower fixed costs.
Textile Effects
The decrease in revenues in our Textile Effects segment for 2015 compared to 2014 was due to
lower average selling prices and lower sales volumes. Average selling prices decreased in response to
lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against
major international currencies. Sales volumes decreased primarily due to the de-selection of certain less
profitable business and challenging market conditions. The increase in segment adjusted EBITDA was
primarily due to lower fixed costs, partially offset by lower margins.
Pigments and Additives
The increase in revenues in our Pigments and Additives segment for 2015 compared to 2014 was
primarily due to the impact of the Rockwood Acquisition. Other than the impact of the Rockwood
Acquisition, average selling prices decreased primarily as a result of high titanium dioxide industry
inventory levels and the foreign currency exchange impact of a stronger U.S. dollar against major
European currencies. Sales volumes decreased primarily as a result of lower end-use demand and the
impact of a nitrogen tank explosion owned and operated by a third party at our Uerdingen, Germany
facility, which disrupted our manufacturing during the third quarter of 2015. The decrease in segment
adjusted EBITDA was primarily due to lower contribution margin for titanium dioxide and the negative
impact from the manufacturing disruption at our Uerdingen, Germany facility.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains
and losses, LIFO inventory valuation reserve adjustments, nonoperating income and expense, benzene
sales and gains and losses on the disposition of corporate assets. For 2015, adjusted EBITDA from
Corporate and other for Huntsman Corporation increased by $32 million to a loss of $156 million from
a loss of $188 million for 2014. The increase in adjusted EBITDA from Corporate and other resulted
primarily from an increase in LIFO inventory valuation income and a decrease in unallocated corporate
overhead, partially offset by an increase in loss from benzene sales.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows for Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015
Net cash provided by operating activities for 2016 and 2015 was $1,088 million and $575 million,
respectively. The increase in net cash provided by operating activities during 2016 compared with 2015
was primarily attributable to increased operating income as described in ‘‘—Results of Operations’’
above as well as a $473 million favorable variance in operating assets and liabilities for 2016 as
compared with 2015.
Net cash used in investing activities for 2016 and 2015 was $202 million and $600 million,
respectively. During 2016 and 2015, we paid $421 million and $663 million, respectively, for capital
expenditures. During 2016 and 2015, we made investments in Louisiana Pigment Company, L.P.
(‘‘LPC’’) of $29 million and $42 million, respectively, and in our BASF Huntsman Shanghai Isocyanate
Investment B.V. joint venture of nil and $12 million, respectively, and received dividends from LPC of
$33 million and $48 million, respectively. During 2016 and 2015, we paid nil and $14 million,
respectively, for the acquisition of businesses and received proceeds from a purchase price adjustment
of nil and $18 million, respectively, related to the Rockwood Acquisition. During 2016 and 2015, we
received proceeds from the sale of businesses and assets of $208 million and $1 million, respectively,
including proceeds of $199 million from the sale of our European surfactants business during 2016.
During 2015, we received $66 million from the termination of cross-currency interest rate contracts.
19
Net cash used in financing activities for 2016 and 2015 was $723 million and $562 million,
respectively. The increase in net cash used in financing activities was primarily due to an increase in
repayments of long-term debt, partially offset by an increase in proceeds from the issuance of long-term
debt during the 2016 period as compared to the 2015 period. On April 1, 2016, we entered into our
2016 term loan B facility due 2023 (‘‘2016 Term Loan B’’) in an aggregate principal amount of
$550 million. Additionally, on April 1, 2016, we used the net proceeds of the 2016 Term Loan B to
repay in full our extended term loan B due 2017, extended term loan B—series 2 due 2017 and our
Term Loan C. On both July 22, 2016 and September 30, 2016, we prepaid $100 million of our 2015
Extended Term Loan B. On December 30, 2016, we made an early repayment of $260 million on our
2015 Extended Term Loan B using proceeds from the sale of our European surfactants business and
existing cash. On March 31, 2015, we issued A300 million (approximately $326 million) aggregate
principal amount of our 4.25% senior notes due April 1, 2025 (‘‘2025 Senior Notes’’). On April 17,
2015, we used the net proceeds of this offering to redeem $289 million ($294 million carrying value) of
our 2021 Senior Subordinated Notes and redeemed the remaining $195 million ($198 million carrying
value) of our 2021 Senior Subordinated Notes during the third quarter of 2015. During 2015, we
repurchased $100 million of our common stock.
Free cash flow for 2016 and 2015 were cash proceeds of $686 million and use of cash of
$30 million, respectively. The improvement in free cash flow was attributable to the changes in cash
flows from operating and investing activities, excluding merger and acquisition activities.
Cash Flows for Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014
Net cash provided by operating activities for 2015 and 2014 was $575 million and $760 million,
respectively. The decrease in net cash provided by operating activities during 2015 compared with 2014
was primarily attributable to lower net income as described in ‘‘—Results of Operations’’ above and a
$24 million unfavorable variance in operating assets and liabilities for 2015 as compared with 2014.
Net cash used in investing activities for 2015 and 2014 was $600 million and $1,606 million,
respectively. During 2015 and 2014, we paid $663 million and $601 million, respectively, for capital
expenditures. During 2014, we paid $1.04 billion for the Rockwood Acquisition, and during 2015 and
2014, we received proceeds from a purchase price adjustment of $18 million and nil, respectively,
related to the Rockwood Acquisition. For further information, see ‘‘Note 3. Business Combinations and
Dispositions’’ to our consolidated financial statements. During 2015 and 2014, we made investments
in LPC of $42 million and $37 million, respectively, in Nanjing Jinling Huntsman New
Materials Co., Ltd. of nil and $62 million, respectively, and in our BASF Huntsman Shanghai
Isocyanate Investment B.V. joint venture of $12 million and $9 million, respectively, and we received
dividends from LPC of $48 million each. During 2015 and 2014, we received $1 million and
$15 million, respectively, from the sale of businesses and assets. During 2015 and 2014, we received
$66 million and nil, respectively, from the termination of cross-currency interest rate contracts.
Net cash (used in) provided by financing activities for 2015 and 2014 was $(562) million and
$1,197 million, respectively. The decrease in net cash provided by financing activities was primarily due
to higher net borrowings during 2014, primarily used to fund the Rockwood Acquisition and an
increase in repayments of long-term debt in 2015. On March 31, 2015, we issued A300 million
(approximately $326 million) aggregate principal amount of our 2025 Senior Notes. On April 17, 2015,
we used the net proceeds of this offering to redeem $289 million ($294 million carrying value) of our
2021 Senior Subordinated Notes. In the third quarter of 2015, we redeemed the remaining $195 million
($198 million carrying value) of our 2021 Senior Subordinated Notes. During 2015, we repurchased
$100 million of our common stock.
20
Free cash flow for 2015 and 2014 were a use of cash of $30 million and cash proceeds of
$99 million, respectively. The decrease in free cash flow was attributable to the changes in cash flows
from operating and investing activities, excluding merger and acquisition activities.
Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
December 31,
2016
December 31,
2015
Increase
(Decrease)
Percent
Change
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts and notes receivable, net . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of debt . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . .
$ 414
11
1,435
1,344
60
291
3,555
1,102
616
60
1,778
$ 257
12
1,449
1,692
112
312
3,834
1,061
686
170
1,917
$ 157
(1)
(14)
(348)
(52)
(21)
(279)
41
(70)
(110)
(139)
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,777
$1,917
$(140)
61%
(8)%
(1)%
(21)%
(46)%
(7)%
(7)%
4%
(10)%
(65)%
(7)%
(7)%
Our working capital decreased by $140 million as a result of the net impact of the following
significant changes:
• The increase in cash and cash equivalents of $157 million resulted from the matters identified
on our consolidated statements of cash flows.
• Inventories decreased by $348 million primarily due to lower inventory volumes and lower
inventory costs.
• Prepaid expenses decreased by $52 million mainly due to the distribution of employee
termination and other restructuring costs that were prefunded during the fourth quarter of 2015.
• Accrued liabilities decreased by $70 million primarily due to the distribution of prefunded
restructuring costs.
• Current portion of debt decreased by $110 million primarily due to the repayment of $50 million
our Term Loan C during the second quarter of that was recorded as current debt as of
December 31, 2015. On April 1, 2016, this debt was refinanced with the 2016 Term Loan B due
2023. In addition, the company has repaid $47 million under its HPS working capital facility in
2016 that was classified as current as of December 31, 2015.
Direct and Subsidiary Debt
See ‘‘Note 15. Debt—Direct and Subsidiary Debt’’ to our consolidated financial statements.
Debt Issuance Costs
See ‘‘Note 15. Debt—Debt Issuance Costs’’ to our consolidated financial statements.
21
Senior Credit Facilities
See ‘‘Note 15. Debt—Senior Credit Facilities’’ to our consolidated financial statements.
Amendment to Credit Agreement
See ‘‘Note 15. Debt—Amendment to Credit Agreement’’ to our consolidated financial statements.
A/R Programs
See ‘‘Note 15. Debt—A/R Programs’’ to our consolidated financial statements.
Notes
See ‘‘Note 15. Debt—Notes’’ to our consolidated financial statements.
Redemption of Notes and Loss on Early Extinguishment of Debt
See ‘‘Note 15. Debt—Redemption of Notes and Loss on Early Extinguishment of Debt’’ to our
consolidated financial statements.
Variable Interest Entity Debt
See ‘‘Note 15. Debt—Variable Interest Entity Debt’’ to our consolidated financial statements.
Compliance with Covenants
See ‘‘Note 15. Debt—Compliance with Covenants’’ to our consolidated financial statements.
Maturities
See ‘‘Note 15. Debt—Maturities’’ to our consolidated financial statements.
Short-Term and Long-Term Liquidity
We depend upon our cash, senior credit facilities (‘‘Senior Credit Facilities’’), U.S. accounts
receivable securitization program (‘‘U.S. A/R Program’’), European accounts receivable securitization
program (‘‘EU A/R Program’’ and collectively with the U.S. A/R Program, ‘‘A/R Programs’’) and other
debt instruments to provide liquidity for our operations and working capital needs. As of December 31,
2016, we had $1,208 million of combined cash and unused borrowing capacity, consisting of
$425 million in cash and restricted cash, $628 million in availability under our revolving facility
(‘‘Revolving Facility’’), and $155 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:
• Cash from our accounts receivable and inventory, net of accounts payable, increased by
approximately $304 million for 2016, as reflected in our consolidated statements of cash flows.
We expect volatility in our working capital components to continue.
• During 2017, we expect to spend approximately $400 million on capital expenditures. Our future
expenditures include certain EHS maintenance and upgrades, and periodic maintenance and
repairs applicable to major units of manufacturing facilities. We expect to fund this spending
with cash provided by operations.
• During 2016, we made contributions to our pension and postretirement benefit plans of
$74 million. During 2017, we expect to contribute an additional amount of approximately
$116 million to these plans.
22
• We are involved in a number of cost reduction programs for which we have established
restructuring accruals. As of December 31, 2016, we had $89 million of accrued restructuring
costs from continuing operations, of which $43 million is classified as current. For further
discussion of these plans and the costs involved, see ‘‘Note 12. Restructuring, Impairment and
Plant Closing costs’’ to our consolidated financial statements.
Further, we expect to incur additional restructuring charges for recently identified plans for
business improvements in our Pigments and Additives segment expected to be completed by the
end of 2018. We expect these additional business improvements to provide additional
contributions to adjusted EBITDA beginning in 2017.
• 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. Historically, our Board of Directors has declared
quarterly cash dividends of $0.125 per share of common stock. While management currently
expects that the Company will continue to pay the quarterly cash dividend, its dividend practice
may change at any time.
• In connection with the sale of our European surfactants business, we recognized a pre-tax gain
in the fourth quarter of 2016 of $98 million which was reflected in other operating income, net
on the accompanying consolidated statements of operations. For more information, see
‘‘Note 3. Business Combination and Dispositions—Sale of European Surfactants Manufacturing
Facilities’’ to our consolidated financial statements.
• On December 30, 2016, we made an early repayment of $260 million on our 2015 Extended
Term Loan B using proceeds from the sale of the European surfactants business and existing
cash. See ‘‘Note 15. Debt—Direct and Subsidiary Debt—Amendment to the Credit Agreement.’’
On both July 22, 2016 and September 30, 2016, Huntsman International prepaid $100 million of
the 2015 Extended Term Loan B. In connection with the $200 million prepayments on our term
loan, we recognized a loss on early extinguishment of debt of $1 million in the third quarter of
2016. See ‘‘Note 15. Debt—Direct and Subsidiary Debt—Senior Credit Facilities’’ to our
consolidated financial statements.
• In connection with the proposed spin-off of our Pigments and Additives business into a separate,
publicly traded company, Venator, we anticipate that Venator will enter into new financing
arrangements in anticipation of the spin-off. After Venator has entered into its new financing
arrangements but immediately prior to separation, it will make a cash distribution to Huntsman
International and, at separation, Venator will assume various Huntsman International
indebtedness. We anticipate that Venator will fund such cash distribution and will repay such
assumed indebtedness with the proceeds of its new financing arrangement.
• During 2017, we expect to spend approximately $100 million of non-recurring costs related to
the proposed spin-off of our Pigments and Additives business, including costs for capital
expenditures and financing. For more information see ‘‘Note 4. Separation of Pigments and
Additives Business’’ to our consolidated financial statements.
• On November 18, 2016, we entered into a new $350 million term loan B facility due 2021 (‘‘2021
Term Loan B’’) and a new $1,375 million term loan B facility due 2023 (‘‘2023 Term Loan B’’).
Proceeds from the new term loans were used to repay in full our 2014 term loan B facility due
2021 (‘‘2014 Term Loan B’’) and our 2016 Term Loan B. As a result of this refinancing, we
extended $829 million of term loan maturities from 2021 to 2023 and did not increase our
overall indebtedness.
23
• On January 30, 2017, our titanium dioxide manufacturing facility in Pori, Finland experienced
fire damage and is currently not operational. We do not currently have an estimated time frame
for how long the facility will be off line, but we are committed to repairing the facility as quickly
as possible. The Pori facility has a nameplate capacity of 130,000 metric tons, which represents
approximately 15% of our total titanium dioxide capacity and approximately 10% of total
European titanium dioxide demand. The site is insured for property damage as well as business
interruption losses. According to our insurance policies, the respective retention levels
(deductibles) for physical damage and business interruption are $15 million and 60 days,
respectively. On February 9, 2017, we received a A50 million (approximately $52 million)
payment from our insurer as an initial partial progress payment towards the overall pending
claim.
• During 2017 we expect to receive a cash benefit of approximately $90 million related to
overpayments of prior year tax payments. We expect to receive this refund in the first half of
2017.
As of December 31, 2016, we had $60 million classified as current portion of debt, scheduled
Senior Credit Facilities amortization payments totaling $18 million, debt at our variable interest entities
of $14 million, and certain other short-term facilities and scheduled amortization payments totaling
$28 million. Although we cannot provide assurances, we intend to renew, repay or extend the majority
of these short-term facilities in the next twelve months.
As of December 31, 2016, we had approximately $383 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 changing monetary
policies of governments, legal restrictions, including those arising from the interests of our partners,
which could limit the amounts available for repatriation.
CAPITAL RESOURCES
We are now commissioning a new production facility in Augusta, Georgia for the synthesis of iron
oxide pigments, which we purchased from Rockwood. During commissioning, the facility has
experienced delays producing products at the expected specifications and quantities, causing us to
question the capabilities of the Augusta technology. Based on the facility’s performance during the
commissioning process, we have concluded that production capacity at our Augusta facility will be
substantially lower than originally anticipated. On February 6, 2017, we filed a lawsuit against
Rockwood, Albemarle Corporation (as Rockwood’s successor) and certain former Rockwood executives
to recover damage for fraud and breach of contract involving the Augusta technology.
24
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, 2016 are summarized below (dollars in millions):
2017
2018 - 2019
2020 - 2021
After 2021
Total
Long-term debt, including current portion . . . . . .
Interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases(2) . . . . . . . . . . . . . . . . . . . . . .
Purchase commitments(3) . . . . . . . . . . . . . . . . . .
$
60
191
82
1,636
Total(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,969
$ 611
358
138
1,579
$2,686
$1,538
276
113
338
$2,265
$1,986
122
177
1,063
$ 4,195
947
510
4,616
$3,348
$10,268
(1) Interest calculated using interest rates as of December 31, 2016 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 $2 million
due in the future under noncancelable subleases.
(3) We have various purchase commitments extending through 2029 for materials, supplies and
services entered into in the ordinary course of business. Included in the purchase commitments
table above are contracts which require minimum volume purchases that extend beyond one year
or are renewable annually and have been renewed for 2017. 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, 2016, 2015 and 2014, we made minimum payments of $2 million, nil
and nil, respectively, under such take or pay contracts without taking the product.
(4) Totals do not include commitments pertaining to our pension and other postretirement obligations.
Our estimated future contributions to our pension and postretirement plans are as follows (dollars
in millions):
Pension plans . . . . . . . . . . . . . . . . . . . . . . .
Other postretirement obligations . . . . . . . . .
$108
8
$222
16
$231
16
2017
2018 - 2019
2020 - 2021
5-Year
Average
Annual
$107
8
(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 19. Income Taxes’’ to our
consolidated financial statements.
Off-Balance Sheet Arrangements
No off-balance sheet arrangements exist at this time.
25
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
Since the Rockwood Acquisition, our Pigments and Additives segment has been involved in a cost
reduction program expected to reduce costs by approximately $140 million and improve its global
competitiveness. In addition, we have announced a capacity reduction at our titanium dioxide
manufacturing facility in Calais, France expected to generate approximately $35 million of annual
savings. The cost savings from this cost reduction program were achieved during the first half of 2016.
Further, we expect to incur additional restructuring charges for recently identified plans for business
improvements in our Pigments and Additives segment expected to be completed by the end of 2018.
We expect these additional business improvements to provide additional contributions to adjusted
EBITDA beginning in 2017.
For further discussion of these and other restructuring plans and the costs involved, see ‘‘Note 12.
Restructuring, Impairment and Plant Closing Costs’’ to our consolidated financial statements.
LEGAL PROCEEDINGS
For a discussion of legal proceedings, see ‘‘Note 20. Commitments and Contingencies—Legal
Matters’’ to our consolidated financial statements.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
We are subject to extensive environmental regulations, which may impose significant additional
costs on our operations in the future. While we do not expect any of these enactments or proposals to
have a material adverse effect on us in the near term, we cannot predict the longer-term effect of any
of these regulations or proposals on our future financial condition. For a discussion of environmental,
health and safety matters, see ‘‘Note 21. 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.
Summary of Significant Accounting Policies’’ to our consolidated financial statements. Summarized
below are our critical accounting policies:
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
26
assumptions are described in ‘‘Note 18. Employee Benefit Plans’’ to our consolidated financial
statements.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(37)
48
(37)
37
11
(11)
$(588)
662
—
—
83
(72)
(1) Estimated increase (decrease) on 2016 net periodic benefit cost
(2) Estimated increase (decrease) on December 31, 2016 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. Approximately 69% 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 2016 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 all
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
27
jurisdictions could affect the realization of deferred tax assets in those jurisdictions. As of
December 31, 2016, we had total valuation allowances of $757 million. See ‘‘Note 19. Income Taxes’’ to
our consolidated financial statements for more information regarding our valuation allowances.
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 dividend we will utilize 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 19. Income
Taxes’’ to our consolidated financial statements, we made a distribution of a portion of our earnings in
2015 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 $390 million at December 31, 2016. 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,
2016, 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 2016 would have been
approximately $35 million less or $41 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
28
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
long-lived assets for indicators that the carrying value may not be recoverable. During 2016, we
recorded an impairment charge of $1 million related to the impairment of our Pigments and Additives
South African asset group. See ‘‘Note 12. Restructuring, Impairment and Plant Closing Costs’’ to our
consolidated financial statements.
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.
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 12. Restructuring, Impairment and Plant Closing
Costs’’ to our consolidated financial statements.
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 21. 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 20. Commitments
and Contingencies—Legal Matters’’ to our consolidated financial statements.
29
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and
commodity prices. 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. As of
December 31, 2016 and December 31, 2015, we had $100 million notional value of interest rate hedges
with a fixed rate of 2.5%. 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. The fair value of
these hedges on December 31, 2016 and December 31, 2015 was $1 million and $2 million, respectively,
and was recorded as other current liabilities on our consolidated balance sheets. These hedges will
expire in April 2017. For the years ended December 31, 2016 and 2015, the changes in accumulated
other comprehensive loss associated with these cash flow hedging activities were gains of approximately
$2 million and $1 million, respectively.
Beginning in 2009, AAC 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 AAC as of July 1, 2010, the interest rate contract is now included in our consolidated
results. See ‘‘Note 8. Variable Interest Entities’’ to our consolidated financial statements. The notional
amount of the swap as of December 31, 2016 was $18 million, and the interest rate contract is not
designated as a cash flow hedge. As of December 31, 2016 and 2015, the fair value of the swap was
$1 million and $2 million, respectively, and was recorded as other noncurrent liabilities on our
consolidated balance sheets. For 2016 and 2015, we recorded a reduction of interest expense of
$1 million each due to changes in fair value of the swap.
During 2017, 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
30
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 both December 31, 2016 and 2015, we had approximately $176 million notional
amount (in U.S. dollar equivalents) outstanding 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 U.S. dollar
payments of $5 million semiannually 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, 2016, the fair value of this swap was $29 million and was
recorded in noncurrent assets.
In March 2010, we entered into three five year cross-currency interest rate contracts to swap an
aggregate notional $350 million for an aggregate notional A255 million. This swap was designated as a
hedge of net investment for financial reporting purposes. During the three months ended March 31,
2015, we terminated these cross-currency interest rate contracts and received $66 million in payments
from the counterparties.
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, 2016, we have designated
approximately A651 million (approximately $677 million) of euro-denominated debt and cross-currency
interest rate contracts as a hedge of our net investment. For the years ended December 31, 2016, 2015
and 2014, the amount of gain recognized on the hedge of our net investment was $27 million, $68
million and $97 million, respectively, and was recorded in other comprehensive (loss) income.
COMMODITY PRICES RISK
Inherent in our business is exposure to price changes for several commodities. However, 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. For further information,
see ‘‘Note 16. Derivative Instruments and Hedging Activities—Commodity Prices Risk’’ to our
consolidated financial statements.
31
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, 2016. Based on this evaluation, our chief
executive officer and chief financial officer have concluded that, as of December 31, 2016, 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, 2016 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over
financial reporting. Our internal control framework and processes are designed to provide reasonable
assurance to management and our Board of Directors regarding the reliability of financial reporting
and the preparation of our consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of our Company;
• 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 are being made only in accordance with authorizations of
management and Directors of our Company;
• 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
• provide reasonable assurance as to the detection of fraud.
Because of its inherent limitations, a system of internal control over financial reporting can provide
only reasonable assurance and may not prevent or detect misstatements. Further, because of changing
conditions, effectiveness of internal control over financial reporting may vary over time.
Our management assessed the effectiveness of our internal control over financial reporting and
concluded that, as of December 31, 2016, 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.
32
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 2016 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/ SEAN DOUGLAS
Peter R. Huntsman
President and Chief Executive Officer
Sean Douglas
Executive Vice President and Chief Financial Officer
February 15, 2017
33
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, 2016, based on criteria established in Internal
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the
supervision of, the company’s principal executive and principal financial officers, or persons performing
similar functions, and effected by the company’s board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation
of the effectiveness of the internal control over financial reporting to future periods are subject to the
risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2016, based on the criteria established in Internal Control—
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
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, 2016 of the Company and our report dated February 15, 2017 expressed an unqualified
opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 15, 2017
34
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, 2016 and 2015, and the related consolidated
statements of operations, comprehensive loss, equity, and cash flows for each of the three years in the
period ended December 31, 2016. 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, 2016 and 2015, and
the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2016, 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, 2016, 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 15, 2017 expressed an unqualified opinion on the Company’s internal control over
financial reporting.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 15, 2017
35
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 $27 and $26,
respectively), ($437 and $438 pledged as collateral, respectively)(a) . . . . . . . . . . . . . . . .
Accounts receivable from affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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,
2016
December 31,
2015
$
414
11
$
257
12
1,402
33
1,344
60
291
3,555
4,212
332
66
121
396
507
1,420
29
1,692
112
312
3,834
4,446
347
86
116
418
573
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 9,189
$ 9,820
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 20 and 21)
Equity
Huntsman Corporation stockholders’ equity:
Common stock $0.01 par value, 1,200,000,000 shares authorized, 250,802,175 and 249,483,541
issued and 236,370,347 and 237,080,026 outstanding in 2016 and 2015, respectively . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, 12,607,223 and 11,162,454 shares in 2016 and 2015, respectively . . . . . . . . .
Unearned stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Huntsman Corporation stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,071
31
616
60
1,778
4,135
1
427
1,381
7,722
3
3,447
(150)
(17)
(325)
(1,671)
1,287
180
1,467
$ 1,034
27
686
170
1,917
4,625
1
422
1,226
8,191
3
3,407
(135)
(17)
(528)
(1,288)
1,442
187
1,629
Total liabilities and equity
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 9,189
$ 9,820
(a) At December 31, 2016 and December 31, 2015, respectively, $25 and $34 of cash and cash equivalents, $10 and $12 of
restricted cash, $27 and $26 of accounts and notes receivable (net), $46 and $54 of inventories, $5 each of other current
assets, $284 and $307 of property, plant and equipment (net), $31 and $36 of intangible assets (net), $37 and $38 of other
noncurrent assets, $90 and $82 of accounts payable, $34 and $27 of accrued liabilities, $14 and $15 of current portion of
debt, $114 and $137 of long-term debt, and $76 and $54 of other noncurrent liabilities from consolidated variable interest
entities are included in the respective Balance Sheet captions above. See ‘‘Note 8. Variable Interest Entities.’’
See accompanying notes to consolidated financial statements.
36
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
Year ended December 31,
2015
2014
2016
Revenues:
Trade sales, services and fees, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related party sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,526
131
$10,168
131
$11,317
261
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
Operating expenses:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,657
7,979
1,678
10,299
8,451
1,848
11,578
9,659
1,919
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . . . . . . . . . . . . . .
Spin-off separation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
920
152
81
18
(140)
982
160
302
—
(1)
974
158
158
—
(4)
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,031
1,443
1,286
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in income of investment in unconsolidated affiliates . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt
Other income (loss), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . .
647
(202)
5
(3)
1
448
(87)
361
(4)
357
(31)
405
(205)
6
(31)
1
176
(46)
130
(4)
126
(33)
633
(205)
6
(28)
(2)
404
(51)
353
(8)
345
(22)
Net income attributable to Huntsman Corporation . . . . . . . . . . . . . . . . .
$ 326
$
93
$
323
(continued)
37
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(In Millions, Except Per Share Amounts)
Year ended December 31,
2014
2015
2016
Basic income (loss) per share:
Income from continuing operations attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1.40
$ 0.40
$ 1.36
Loss from discontinued operations attributable to Huntsman Corporation
common stockholders, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.02)
(0.02)
(0.03)
Net income attributable to Huntsman Corporation common stockholders . . .
$ 1.38
$ 0.38
$ 1.33
Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
236.3
242.8
242.1
Diluted income (loss) per share:
Income from continuing operations attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1.38
$ 0.40
$ 1.34
Loss from discontinued operations attributable to Huntsman Corporation
common stockholders, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.02)
(0.02)
(0.03)
Net income attributable to Huntsman Corporation common stockholders . . .
$ 1.36
$ 0.38
$ 1.31
Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239.6
245.4
246.0
Amounts attributable to Huntsman Corporation common stockholders:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . .
$ 330
(4)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 326
$
$
97
(4)
$ 331
(8)
93
$ 323
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.50
$ 0.50
$ 0.50
See accompanying notes to consolidated financial statements.
38
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax:
Year ended December 31,
2014
2015
2016
$ 357
$ 126
$ 345
Foreign currency translations adjustments . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other postretirement benefits adjustments . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(171)
(219)
(1)
(313)
66
7
(221)
(271)
1
Other comprehensive loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(391)
(240)
(491)
Comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to noncontrolling interests . . . . . . . . . . . .
(34)
(23)
(114)
(28)
(146)
(7)
Comprehensive loss attributable to Huntsman Corporation . . . . . . . . . . . . . . .
$ (57) $(142) $(153)
See accompanying notes to consolidated financial statements.
39
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
Huntsman Corporation Stockholders’ Equity
Shares
Common
stock
Common
stock
Additional
paid-in
capital
Treasury
stock
Unearned
stock-based
compensation
Accumulated
other
Accumulated comprehensive
deficit
loss
Noncontrolling
interests in
subsidiaries
Total
equity
4
0
. . .
. . .
. . . . .
.
. .
. .
. . .
. . .
Beginning balance, January 1, 2014 . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . .
. . . .
Issuance of nonvested stock awards . . . . . . . . .
. . .
Vesting of stock awards . . . . . . . . . . . . . . . .
. . .
Recognition of stock-based compensation . . . . . .
. . . .
Repurchase and cancellation of stock awards . . . .
. . .
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
. 240,401,442
.
—
—
.
.
—
—
. .
—
—
. . .
—
1,018,050
.
.
. . .
. . .
—
—
. . . . .
(302,200) —
. . .
. . . .
1
2,299,687
. . .
. . .
—
—
. .
. . . . .
—
—
. .
. . . . .
—
—
.
. .
. .
. .
—
—
. . . . .
. . .
—
—
. .
.
. . .
. .
—
—
.
. . .
. . .
. .
. .
. . . .
. . .
. .
. . .
. . .
. . . . .
. . .
. . . . .
. . .
. . .
. .
.
. .
. . .
. . .
. . .
. . .
. . .
Balance, December 31, 2014 . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss . . . . . . . . . . . . . . . . .
Issuance of nonvested stock awards . . . . . . . . .
Vesting of stock awards . . . . . . . . . . . . . . .
Recognition of stock-based compensation . . . . .
Repurchase and cancellation of stock awards . . .
Stock options exercised . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . .
. . .
Excess tax benefit related to stock-based compensation . .
Cash paid for noncontrolling interest
Treasury stock repurchased . . . . . . . . . . . . .
Dividends declared on common stock . . . . . . . . .
. . .
. .
. . .
. . .
. . . . . . . . .
. . . .
. . . .
. . .
. . . .
. . . .
. . .
. . . .
. . .
. . .
. . .
. . . .
. . . .
. . .
. . .
. . .
. . .
. . .
. . . . .
. . .
. . .
. . .
. . . .
. . .
. . . .
. . .
. . .
. . . . .
. . .
. . .
. . .
. . .
. .
.
. . . . .
. . .
. . .
. . .
. . .
. . .
. . .
. . .
. .
3
. 243,416,979
. . .
—
—
.
.
. .
—
—
. .
. . .
—
. . .
—
—
1,037,743
.
.
—
—
(304,340) —
.
—
.
—
. . .
. .
—
. .
.
.
(7,118,928) —
—
—
. . .
. . .
. .
. . .
. .
. . . . .
. . .
. .
. . .
. . . . .
. . .
48,572
—
—
. . .
. .
. .
. . .
. . .
. . . . .
. .
.
. . .
. . .
. .
.
. . .
. . .
. . .
. . .
. . . .
Balance, December 31, 2015 . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . .
Issuance of nonvested stock awards . . . . . . . . .
Vesting of stock awards . . . . . . . . . . . . . . .
Recognition of stock-based compensation . . . . .
Repurchase and cancellation of stock awards . . .
Stock options exercised . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . .
. . .
Excess tax benefit related to stock-based compensation . .
Treasury stock repurchased . . . . . . . . . . . . . .
. . . .
Dividends declared on common stock . . . . . . . . .
. . .
. .
. . .
. . .
. . . .
. . .
. . .
. . . .
. . .
. . . .
. . . . .
. .
. . .
. . . . .
. . .
. . .
. . .
. . .
. . . . .
. . .
. . .
. . .
. . .
. . .
. . .
. . .
. . . .
. . . .
. . .
. . .
. . .
. . .
. . .
. . .
. . .
. .
.
. . .
. . .
. . .
. .
. . .
. .
. . . . .
. . .
. .
. . . . .
. . .
. . .
. . .
. . .
. . . .
. . . .
. . .
. . .
. . .
. . . . .
. .
. . .
. . .
. . .
. . .
. . . . .
3
. 237,080,026
—
—
.
—
—
.
—
. . .
—
—
914,081
.
.
—
—
(256,468) —
.
—
. .
77,477
—
. . .
—
. .
—
—
(1,444,769) —
. .
—
—
. .
3,305
—
—
15
7
10
—
47
—
1
—
—
—
—
3,385
—
—
19
7
10
—
1
—
1
(1)
(15)
—
3,407
—
—
16
2
9
—
1
—
(3)
15
—
(50)
—
—
—
—
—
—
—
—
—
—
—
—
—
(50)
—
—
—
—
—
—
—
—
—
(85)
—
(135)
—
—
—
—
—
—
—
—
—
(15)
—
(13)
—
—
(15)
—
14
—
—
—
—
—
—
—
—
(14)
—
—
(19)
—
16
—
—
—
—
—
—
(17)
—
—
(16)
—
16
—
—
—
—
—
—
(687)
323
—
—
—
—
(7)
—
—
—
(1)
—
—
(121)
(493)
93
—
—
—
—
(7)
—
—
—
—
(121)
(528)
326
—
—
—
—
(3)
—
—
—
—
(120)
(577)
—
(476)
—
—
—
—
—
—
—
—
—
—
—
(1,053)
—
(235)
—
—
—
—
—
—
—
—
—
(1,288)
—
(383)
—
—
—
—
—
—
—
—
—
149
22
(15)
—
—
—
—
—
(4)
—
—
5
16
—
173
33
(5)
—
—
—
—
—
(14)
—
—
—
187
31
(8)
—
—
—
—
—
(30)
—
—
—
2,129
345
(491)
—
7
24
(7)
48
(4)
1
(1)
5
16
(121)
1,951
126
(240)
—
7
26
(7)
1
(14)
1
(1)
(100)
(121)
1,629
357
(391)
—
2
25
(3)
1
(30)
(3)
—
(120)
Balance, December 31, 2016 . . . . . . . . . . . .
. . . . .
. . .
. . .
. . .
. .
.
. .
. . . 236,370,347
$3
$3,447
$(150)
$(17)
$(325)
$(1,671)
$180
$1,467
See accompanying notes to consolidated financial statements.
Year ended December 31,
2014
2015
2016
$ 357
$ 126
$
345
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 . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) 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 (gain) loss on foreign currency transactions . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portion of insurance proceeds representing cash provided by investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
432
2
(117)
3
15
5
15
(5)
34
(8)
5
(35)
283
6
8
35
56
65
(63)
(6)
399
1
4
31
11
112
(25)
7
30
—
3
121
179
(52)
(64)
(98)
(157)
(9)
(38)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . .
1,088
575
Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance proceeds for recovery of property damage . . . . . . . . . . . . . . . . . .
Cash received from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . .
Cash received from purchase price adjustment for business acquired . . . . . .
Proceeds from sale of businesses/assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from termination of cross-currency interest rate contracts . . . .
Change in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
(421)
8
33
(30)
—
—
208
—
1
(1)
(663)
—
48
(54)
(14)
18
1
66
(3)
1
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(202)
(600)
(1,606)
(continued)
41
(6)
445
—
4
28
11
37
(51)
15
28
—
(2)
2
(20)
(2)
(44)
(44)
86
11
(83)
760
(601)
—
51
(108)
(960)
—
15
—
—
(3)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
Financing Activities:
Net repayments under revolving loan facilities
. . . . . . . . . . . . . . . . . . . . . .
Net repayments 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 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase and cancellation of stock awards . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit related to stock-based compensation . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net
Year ended December 31,
2014
2015
2016
(1) $
$ — $
(8)
(1)
—
(56)
12
10
(604)
(1,070)
326
559
(33)
(33)
34
31
(8)
(9)
(35)
(1)
(4)
—
(121)
(120)
(14)
(30)
(7)
(3)
1
1
— (100)
1
—
(1)
(1)
(1)
(5)
(8)
15
(418)
1,792
(34)
33
(67)
(24)
(6)
(121)
(4)
(7)
47
—
1
4
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . .
(723)
(562)
1,197
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)
(16)
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental cash flow information:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for interest
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(11)
340
520
(603)
860
157
257
414
$ 257
$ 860
205
40
$ 225
126
$ 208
165
As of December 31, 2016, 2015 and 2014, the amount of capital expenditures in accounts payable
was $81 million, $79 million and $88 million, respectively.
See accompanying notes to consolidated financial statements.
42
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; ‘‘AAC’’ refers to Arabian Amines Company, our consolidated manufacturing joint venture
with the Zamil Group; ‘‘HPS’’ refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated
splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd); ‘‘Sasol-Huntsman’’ refers to
Sasol-Huntsman GmbH and Co. KG (our consolidated joint venture with Sasol that owns and operates
a maleic anhydride facility in Moers, Germany); 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, 2016, which was filed with the Securities and
Exchange Commission on February 15, 2017.
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, digital inks,
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.
43
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. GENERAL (Continued)
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.
RECENT DEVELOPMENTS
On January 30, 2017, our titanium dioxide manufacturing facility in Pori, Finland experienced fire
damage and is currently not operational. The fire brigade responded quickly to extinguish the fire and
there were no injuries. We have notified applicable customers and suppliers of this force majeure event.
We do not currently have an estimated time frame for how long the facility will be off line, but we are
committed to repairing the facility as quickly as possible. The Pori facility has a nameplate capacity of
130,000 metric tons, which represents approximately 15% of our total titanium dioxide capacity and
approximately 10% of total European titanium dioxide demand. The site is insured for property
damage as well as business interruption losses. According to our insurance policies, the respective
retention levels (deductibles) for physical damage and business interruption are $15 million and
60 days, respectively. On February 9, 2017, we received a A50 million (approximately $52 million)
payment from our insurer as an initial partial progress payment towards the overall pending claim.
On October 28, 2016, we filed an initial Form 10 registration statement with the SEC as part of
the process to spin off our Pigments and Additives and Textile Effects businesses in a tax-free
transaction. On January 17, 2017, we announced that we will retain our Textile Effects business and we
amended the Form 10 registration statement. For further information, see ‘‘Note 4. Separation of
Pigments and Additives Business.’’
On December 30, 2016, our Performance Products segment completed the sale of its European
surfactants business to Innospec Inc. for $199 million in cash plus our retention of trade receivables
and payables for an enterprise value of $225 million. For further information, see ‘‘Note 3. Business
Combinations and Dispositions—Sale of European Surfactants Manufacturing Facilities.’’
On December 30, 2016, we made an early repayment of $260 million on our 2015 Extended Term
Loan B using proceeds from the sale of the European surfactants business and existing cash. For
further information, see ‘‘Note 15. Direct and Subsidiary Debt—Senior Credit Facilities.’’
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, asbestos abatement costs, demolition and removal costs and leasehold remediation
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.
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.
44
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 or selling price of assets held for sale. See ‘‘Note 12.
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
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
45
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
principally maintenance or preventative in nature are recorded when expended and incurred and are
expensed or capitalized as appropriate. See ‘‘Note 21. 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, net in our
consolidated statements of operations and were net (gains) losses of $(5) million, $7 million and
$15 million for the years ended December 31, 2016, 2015 and 2014, 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
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
46
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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
9 - 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 in goodwill during 2016 of
$5 million was due to the addition of goodwill of approximately $5 million from the finalization of the
accounting for an acquisition, partially offset by less than $1 million of changes in foreign currency
exchange rates.
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.
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.
47
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basic and diluted income per share is determined using the following information (in millions):
Year Ended December 31,
2014
2015
2016
Numerator:
Basic and diluted income from continuing operations:
Income from continuing operations attributable to
Huntsman Corporation . . . . . . . . . . . . . . . . . . . . . . . .
$ 330
Basic and diluted net income:
Net income attributable to Huntsman Corporation . . . . . .
$ 326
$
$
97
$ 331
93
$ 323
Shares (denominator):
Weighted average shares outstanding . . . . . . . . . . . . . . . .
Dilutive securities:
Stock-based awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total weighted average shares outstanding, including
236.3
242.8
242.1
3.3
2.6
3.9
dilutive shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
239.6
245.4
246.0
Additional stock-based awards of 5.7 million, 6.1 million and 1.0 million weighted average
equivalent shares of stock were outstanding during the years ended December 31, 2016, 2015 and 2014,
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 capitalized turnover costs, spare parts, deposits,
catalyst assets and investments in available-for-sale securities.
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.
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 $18 million, $22 million and
$16 million for the years ended December 31, 2016, 2015 and 2014, respectively.
48
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 within
noncurrent assets 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.
SECURITIZATION OF ACCOUNTS RECEIVABLE
Under our A/R Programs, we grant an 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’’). 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 15. 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 23. Stock-
Based Compensation Plan.’’
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 2016
In January 2015, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards
Update (‘‘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 U.S. 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,
49
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2015. We adopted the amendments in this ASU effective January 1, 2016, and the initial adoption of
the amendments in this ASU did not have a significant impact on our consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to
the Consolidation Analysis. The amendments in this ASU change the analysis that a reporting entity
must perform to determine whether it should consolidate certain types of legal entities by placing more
emphasis on risk of loss when determining a controlling financial interest. These amendments affect
areas specific to limited partnerships and similar legal entities, evaluating fees paid to a decision maker
or service provider as a variable interest, the effects of both fee arrangements and related parties on
the primary beneficiary determination and certain investment funds. The amendments in this ASU are
effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,
2015. We adopted the amendments in this ASU effective January 1, 2016, and the initial adoption of
the amendments in this ASU did not have a significant impact on our consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-05, Intangibles—Goodwill and Other—Internal-Use
Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The
amendments in this ASU provide guidance that will help entities evaluate the accounting for fees paid
by a customer in a cloud computing arrangement, including whether a cloud computing arrangement
includes a software license. If a cloud computing arrangement includes a software license, then the
customer should account for the software license consistent with the acquisition of other software
licenses; otherwise, the customer should account for the arrangement as a service contract. The
amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2015. We adopted the amendments in this ASU effective January 1,
2016, and the initial adoption of the amendments in this ASU did not have a significant impact on our
consolidated financial statements.
Accounting Pronouncements Pending Adoption in Future Periods
In 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. In
August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606):
Deferral of the Effective Date, deferring the effective date of ASU No. 2014-09 for all entities by one
year. Further, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with
Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),
clarifying the implementation guidance on principal versus agent considerations, in April 2016, the
FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying
Performance Obligations and Licensing, clarifying the implementation guidance on identifying
performance obligations in a contract and determining whether an entity’s promise to grant a license
provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a
point in time) or a right to access the entity’s intellectual property (which is satisfied over time), in May
2016, the FASB issued ASU No. 2016-12, Revenue from Customers (Topic 606): Narrow-Scope
Improvements and Practical Expedients, providing clarifications and practical expedients for certain
narrow aspects in Topic 606, and in December 2016, the FASB issued ASU 2016-20, Technical
Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in
these ASUs are effective for annual reporting periods beginning after December 15, 2017, including
interim periods within that reporting period. The amendments in ASU No. 2014-09, ASU No. 2016-08,
50
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20 should be applied retrospectively, and early
application is permitted. We are currently performing the analysis identifying areas that will be
impacted by the adoption of the amendments in ASU No. 2014-09, ASU No. 2016-08, ASU
No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20 on our consolidated financial statements. At this
time, we believe the key impact of the standard will be on our accounting for revenues from
intellectual property licensing contracts which is not a material revenue stream to our consolidated
financial statements. The standard will be adopted in our fiscal year 2018 and we have not yet
determined the transition method.
In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement
of Inventory. The amendments in this ASU do not apply to inventory that is measured using last-in
first-out (‘‘LIFO’’) or the retail inventory method, but rather does apply to all other inventory, which
includes inventory that is measured using first-in first-out or average cost. An entity should measure in
scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated
selling prices in the ordinary course of business, less reasonably predictable costs of completion,
disposal, and transportation. Subsequent measurement is unchanged for inventory measured using
LIFO or the retail inventory method. The amendments in this ASU are effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2016. The amendments in this
ASU should be applied prospectively with earlier application permitted as of the beginning of an
interim or annual reporting period. We do not expect the adoption of the amendments in this ASU to
have a significant impact on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this
ASU will increase transparency and comparability among entities by recognizing lease assets and lease
liabilities on the balance sheet and disclosing key information about leasing arrangements. The
amendments in this ASU will require lessees to recognize in the statement of financial position a
liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use
the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2018. Early application of the
amendments in this ASU is permitted for all entities. Reporting entities are required to recognize and
measure leases under these amendments at the beginning of the earliest period presented using a
modified retrospective approach. We are currently evaluating the impact of the adoption of the
amendments in this ASU on our consolidated financial statements and believe, based on our
preliminary assessment, that we will record significant additional right-to-use assets and lease
obligations.
In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU
simplify several aspects of the accounting for share-based payment transactions, including the income
tax consequences, classification of awards as either equity or liabilities, and classification on the
statement of cash flows. The amendments in this ASU are effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2016. Early adoption of the amendments in this
ASU is permitted in any interim or annual period. We do not expect the adoption of the amendments
in this ASU to have a significant impact on our consolidated financial statements.
51
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and
include specific guidance to address diversity in how certain cash receipts and cash payments are
presented and classified in the statement of cash flows. The amendments in this ASU are effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early
adoption is permitted, including adoption in an interim period. The amendments in this ASU should be
applied using a retrospective transition method to each period presented. We do not expect the
adoption of the amendments in this ASU to have a significant impact on our consolidated financial
statements.
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity
Transfers of Assets Other Than Inventory. The amendments in this ASU require entities to recognize the
current and deferred income taxes for an intra-entity transfer of an asset other than inventory when the
transfer occurs, as opposed to deferring the recognition of the income tax consequences until the asset
has been sold to an outside party. The amendments in this ASU are effective for annual reporting
periods beginning after December 31, 2017, including interim reporting periods within those annual
reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting
period for which financial statements (interim or annual) have not been issued or made available for
issuance. The amendments in this ASU should be applied on a modified retrospective basis through a
cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.
We do not expect the adoption of the amendments in this ASU to have a significant impact on our
consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230):
Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change
during the period in the total of cash, cash equivalents, and amounts generally described as restricted
cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and
restricted cash equivalents should be included with cash and cash equivalents when reconciling the
beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The
amendments in this ASU are effective for fiscal years beginning after December 15, 2017, and interim
period within those fiscal years. Early adoption is permitted, including adoption in an interim period.
The amendments in this ASU should be applied using a retrospective transition method to each period
presented. We do not expect the adoption of the amendments in this ASU to have a significant impact
on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business
Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU clarify
the definition of a business with the objective of adding guidance to assist entities with evaluating
whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The
amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including
interim periods within those fiscal years. Early application is permitted. The amendments in this ASU
should be applied prospectively on or after the effective date. No disclosures are required at transition.
We do not expect the adoption of the amendments in this ASU to have a significant impact on our
consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350):
Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent
measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the
amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by
52
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
comparing the fair value of a reporting unit with its carrying value, which eliminates the current
requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill
with its carrying amount. The amendments in this ASU are effective for annual or any interim goodwill
impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for
interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The
amendments in this ASU should be applied on a prospective basis. 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
SALE OF EUROPEAN SURFACTANTS MANUFACTURING FACILITIES
On December 30, 2016, our Performance Products segment completed the sale of its European
surfactants business to Innospec Inc. for $199 million in cash plus our retention of trade receivables
and payables for an enterprise value of $225 million. Under the terms of the transaction, Innospec
acquired our manufacturing facilities located in Saint-Mihiel, France; Castiglione delle Stiviere, Italy;
and Barcelona, Spain. The purchase price is subject to the finalization of working capital adjustments.
We remain committed to our global surfactants business, including in the U.S. and Australia, where our
differentiated surfactants businesses are backward integrated into essential feedstocks. Upon closing the
transaction, we entered into supply and long-term tolling arrangements with Innospec in order to
continue marketing certain core products strategic to our global agrochemicals, lubes and certain other
businesses. In connection with this sale, we recognized a pre-tax gain in the fourth quarter of 2016 of
$98 million which was reflected in other operating income, net on the accompanying consolidated
statements of operations.
ROCKWOOD ACQUISITION
On October 1, 2014, we completed the Rockwood Acquisition. We paid $1.02 billion in cash 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 approximately nil, nil and $24 million for the years ended December 31, 2016,
2015 and 2014, respectively, and were recorded in selling, general and administrative expenses in our
consolidated statements of operations.
The following businesses were acquired from Rockwood:
• titanium dioxide, a white pigment derived from titanium bearing ores with strong specialty
business in fibers, inks, pharmaceuticals, food and cosmetics;
• 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;
• color pigments made from synthetic iron-oxide and other non-TiO2 inorganic pigments used by
manufacturers of coatings and colorants;
• timber treatment wood protection chemicals used primarily in residential and commercial
applications;
53
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued)
• water treatment products used to improve water purity in industrial, commercial and municipal
applications; and
• 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.
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 allocation
of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in
millions):
Cash paid for Rockwood Acquisition in 2014 . . . . . . . . . . . . . . . . . . . . . . .
Purchase price adjustment received in 2015 . . . . . . . . . . . . . . . . . . . . . . . .
$1,038
(18)
Net acquisition cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,020
Fair value of assets acquired and liabilities assumed:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
77
220
401
55
665
31
106
8
(146)
(106)
(3)
(233)
(9)
(30)
Total fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,036
Noncontrolling interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,020
During the second quarter of 2015, we received $18 million related to the settlement of certain
purchase price adjustments. As a result of the finalization of the valuation of the assets and liabilities,
reallocations were made in certain property, plant and equipment, deferred tax, accrued liability and
other long-term liability balances. None of the fair value of this acquisition was allocated to goodwill.
Intangible assets acquired consist primarily of developed technology, trademarks and customer
relationships, all of which are being amortized over nine years. The noncontrolling interest primarily
relates to Viance, a 50%-owned joint venture with Dow Chemical acquired as part of the Rockwood
Acquisition. The noncontrolling interest was valued at 50% of the fair value of the net assets of Viance
54
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. BUSINESS COMBINATIONS AND DISPOSITIONS (Continued)
as of October 1, 2014, as dictated by the ownership interest percentages. If the Rockwood Acquisition
were to have occurred on January 1, 2014, 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,
2014 (Unaudited)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . . . . . . . .
Income per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$12,724
398
$
1.64
1.62
4. SEPARATION OF PIGMENTS AND ADDITIVES BUSINESS
On October 28, 2016, we filed an initial Form 10 registration statement with the SEC as part of
the process to spin off our Pigments and Additives and Textile Effects businesses in a tax-free
transaction. On January 17, 2017, we announced that we will retain our Textile Effects business and we
amended the Form 10 registration statement. We also announced that the name of the spin-off entity
will be Venator Materials Corporation. Venator shares are expected to trade on the New York Stock
Exchange under the ticker VNTR after the distribution to our stockholders. The completion of the
spin-off is subject to the satisfaction or waiver of a number of conditions, including the registration
statement on Form 10 for Venator’s common stock being declared effective by the SEC and certain
other conditions described in the information statement included in the Form 10. The ongoing process
to separate the Pigments and Additives business is proceeding and is targeted for the second quarter
2017. As noted in ‘‘Note 1. General—Recent Developments’’ above, there was fire damage sustained at
our titanium dioxide facility in Pori, Finland. The potential impact of this interruption, if any, on the
spin date is not yet known.
In connection with this spin-off, we recorded spin-off separation costs of $18 million during 2016,
within Corporate and other, including $7 million of accrued employee termination benefit costs and
$11 million of other separation costs, of which $8 million was paid during 2016 and $3 million was
recorded in accounts payable as of December 31, 2016 in the accompanying consolidated balance
sheets.
55
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. INVENTORIES
Inventories consisted of the following (dollars in millions):
December 31,
2016
December 31,
2015
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . .
Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIFO reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 291
91
1,017
1,399
(55)
$ 389
125
1,221
1,735
(43)
Net inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,344
$1,692
For both December 31, 2016 and 2015, approximately 9% of inventories were recorded using the
LIFO cost method.
6. PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment were as follows (dollars
in millions):
December 31,
2016
2015
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
229
822
7,244
483
$
208
793
6,981
935
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .
8,778
(4,566)
8,917
(4,471)
Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,212
$ 4,446
Depreciation expense for 2016, 2015 and 2014 was $400 million, $377 million and $413 million,
respectively.
7. 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.
56
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENT IN UNCONSOLIDATED AFFILIATES (Continued)
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%) . . . . . . .
December 31,
2015
2016
$ 81
112
112
19
$ 84
116
120
18
Total equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . .
324
338
Cost Method:
International Diol Company (4%) . . . . . . . . . . . . . . . . . . . . . . . . . . .
White Mountain Titanium Corporation (3%) . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
3
—
5
3
1
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$332
$347
(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.
In November 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 $85 million, net of license
fees from the joint venture. At the end of 2016, cumulative capital contributions were approximately
$85 million, net of license fees from the joint venture. The facility is expected to be mechanically
complete in early 2017 with beneficial commercial operations expected in the second half of 2017.
8. 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:
• Rubicon LLC is our 50%-owned joint venture with Chemtura that 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.
• Pacific Iron Products Sdn Bhd is our 50%-owned joint venture with Coogee Chemicals that
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
57
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. VARIABLE INTEREST ENTITIES (Continued)
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.
• AAC is our 50%-owned joint venture with Zamil group that manufactures products for our
Performance Products segment. As required in the operating agreement governing this joint
venture, we purchase all of AAC’s production and sell it to our customers. Substantially all of
the joint venture’s activities are conducted on our behalf.
• 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.
• 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.
Creditors of these entities have no recourse to our general credit. See ‘‘Note 15. Debt—Direct and
Subsidiary Debt.’’ As the primary beneficiary of these variable interest entities at December 31, 2016,
the joint ventures’ assets, liabilities and results of operations are included in our consolidated financial
statements.
58
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. VARIABLE INTEREST ENTITIES (Continued)
The following table summarizes the carrying amount of our variable interest entities’ assets and
liabilities included in our consolidated balance sheets, before intercompany eliminations, as of
December 31, 2016 and 2015 (dollars in millions):
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
December 31,
2015
2016
$117
284
98
43
31
12
$121
307
95
35
36
13
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$585
$607
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$172
116
10
76
$159
140
11
54
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$374
$364
The revenues, income from continuing operations before income taxes and net cash provided by
operating activities for our variable interest entities are as follows (dollars in millions):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before income taxes . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . .
$213
35
76
$230
49
84
$219
39
59
Year ended December 31,
2014
2015
2016
9. INTANGIBLE ASSETS
The gross carrying amount and accumulated amortization of intangible assets were as follows
(dollars in millions):
December 31, 2016
December 31, 2015
Carrying
Amount
Accumulated
Amortization
Patents, trademarks and technology . . . . . . .
Licenses and other agreements . . . . . . . . . . .
Non-compete agreements . . . . . . . . . . . . . . .
Other intangibles . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$368
37
3
76
$484
$329
23
2
64
$418
Net
$39
14
1
12
$66
Carrying
Amount
Accumulated
Amortization
$369
38
3
82
$492
$327
22
2
55
$406
Net
$42
16
1
27
$86
Amortization expense was $15 million, $8 million and $19 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
59
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. INTANGIBLE ASSETS (Continued)
Our estimated future amortization expense for intangible assets over the next five years is as
follows (dollars in millions):
Year ending December 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9
9
9
9
8
10. OTHER NONCURRENT ASSETS
Other noncurrent assets consisted of the following (dollars in millions):
Capitalized turnaround costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spare parts inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Catalyst assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in available-for-sale securities . . . . . . . . . . . . . . . . . . . . . .
Pension assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2015
2016
$214
92
46
43
18
6
88
$507
$248
95
45
44
18
35
88
$573
Amortization expense of catalyst assets for the years ended December 31, 2016, 2015 and 2014 was
$17 million, $14 million and $13 million, respectively.
11. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (dollars in millions):
Payroll and related accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volume and rebate accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes other than income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and plant closing reserves . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spin-off separation accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other miscellaneous accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2015
2016
$185
73
62
32
45
22
13
11
8
7
7
151
$616
$183
72
65
18
117
22
18
11
9
6
—
165
$686
60
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of December 31, 2016, 2015 and 2014, accrued restructuring, impairment and plant closing
costs by type of cost and initiative consisted of the following (dollars in millions):
Workforce
Demolition and lease costs and contract restructuring
reductions(1) decommissioning
termination costs
costs
Total(2)
Non-cancelable
Other
Accrued liabilities as of January 1, 2014 . . . .
Adjustment to 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 . .
Adjustment to Pigments and Additives
opening balance sheet liabilities . . . . . . . .
2015 charges for 2014 and prior initiatives
. .
2015 charges for 2015 initiatives . . . . . . . . .
Reversal of reserves no longer required . . . .
2015 payments for 2014 and prior initiatives .
2015 payments for 2015 initiatives . . . . . . . .
Foreign currency effect on liability balance . .
Accrued liabilities as of December 31, 2015 . .
2016 charges for 2015 and prior initiatives
. .
2016 charges for 2016 initiatives . . . . . . . . .
Reversal of reserves no longer required . . . .
Distribution of prefunded restructuring costs .
2016 payments for 2015 and prior initiatives .
2016 payments for 2016 initiatives . . . . . . . .
Net activity of discontinued operations . . . . .
Foreign currency effect on liability balance . .
$ 52
$ —
$ 60
$ 1
$ 113
1
37
64
(4)
(58)
(1)
—
(4)
87
1
71
58
(7)
(68)
(26)
(7)
109
4
7
(2)
(41)
(43)
(7)
—
(1)
—
7
—
—
(7)
—
—
—
—
—
24
1
—
(8)
(1)
—
16
24
—
—
(5)
(16)
—
—
(1)
—
4
—
—
(8)
—
(2)
(6)
48
—
15
—
(6)
(17)
—
(2)
38
9
—
—
—
(4)
—
1
(2)
—
17
—
(1)
(13)
(1)
—
—
3
—
23
8
—
(21)
(8)
—
5
29
5
—
(1)
(29)
(4)
—
—
1
65
64
(5)
(86)
(2)
(2)
(10)
138
1
133
67
(13)
(114)
(35)
(9)
168
66
12
(2)
(47)
(92)
(11)
1
(4)
Accrued liabilities as of December 31, 2016 . .
$ 26
$ 18
$ 42
$ 5
$ 91
(1) The total workforce reduction reserves of $26 million relate to the termination of 375 positions, of which 339 positions had
not been terminated as of December 31, 2016.
(2)
In December 2015, we prepaid $49 million of severance and other restructuring costs related to restructuring programs in
our Pigments and Additives, Textile Effects and Performance Products segments. Certain of the severance costs were
prepaid to a third party who distributed the severance payments to affected employees when they were terminated in 2016.
(3) Accrued liabilities remaining at December 31, 2016 and 2015 by year of initiatives were as follows (dollars in millions):
2014 initiatives and prior
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2016
$84
4
3
$91
2015
$143
25
—
$168
61
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
Details with respect to our reserves for restructuring, impairment and plant closing costs are
provided below by segment and initiative (dollars in millions):
Accrued liabilities as of January 1, 2014
Adjustment to 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 . . . . . . . . . . . . . . . . . . . . .
Adjustment to Pigments & Additives
opening balance sheet liabilities . . . .
2015 charges for 2014 and prior
initiatives
. . . . . . . . . . . . . . . . . .
2015 charges for 2015 initiatives
. . . . .
Reversal of reserves no longer required .
2015 payments for 2014 and prior
initiatives
. . . . . . . . . . . . . . . . . .
2015 payments for 2015 initiatives . . . .
Foreign currency effect on liability
balance . . . . . . . . . . . . . . . . . . . .
Accrued liabilities as of December 31,
2015 . . . . . . . . . . . . . . . . . . . . .
2016 charges for 2015 and prior
initiatives
. . . . . . . . . . . . . . . . . .
. . . . .
2016 charges for 2016 initiatives
Reversal of reserves no longer required .
Distribution of prefunded restructuring
costs
. . . . . . . . . . . . . . . . . . . . .
2016 payments for 2015 and prior
initiatives
. . . . . . . . . . . . . . . . . .
2016 payments for 2016 initiatives . . . .
Net activity of discontinued operations .
Foreign currency effect on liability
balance . . . . . . . . . . . . . . . . . . . .
Accrued liabilities as of December 31,
2016 . . . . . . . . . . . . . . . . . . . . .
Current portion of restructuring reserves
Long-term portion of restructuring
reserves
. . . . . . . . . . . . . . . . . . .
Polyurethanes
Products Materials Effects
Additives
Operations
and other Total
Performance Advanced Textile Pigments and Discontinued Corporate
$ 9
$ 10
$ 12
$ 68
$ 2
$ 3
$ 9
$ 113
—
10
1
(2)
(14)
(1)
—
—
13
6
(1)
(25)
(1)
—
(1)
(6)
5
—
1
5
—
(2)
(5)
—
4
—
—
—
—
—
—
—
54
—
42
2
(7)
(34)
(1)
(1)
55
28
1
—
(5)
(14)
(1)
—
(1)
(3)
$ 3
$ 1
$ 61
$ 24
2
37
1
3
57
—
(4)
—
—
—
59
1
77
34
—
(59)
(16)
(6)
90
19
6
—
(36)
(52)
(6)
—
—
—
—
—
—
—
—
(2)
—
1
—
—
—
—
—
—
—
1
—
—
—
—
—
—
1
—
—
14
—
(1)
(18)
—
—
—
4
—
8
1
(1)
(7)
(1)
—
4
3
1
(1)
—
(4)
(1)
—
—
1
65
64
(5)
(86)
(2)
(2)
(10)
138
1
133
67
(13)
(114)
(35)
(9)
168
66
12
(2)
(47)
(92)
(11)
1
(4)
$ 21
$ 14
7
$ 2
$ 2
—
$ 2
$ 2
$ 91
$ 45
—
46
—
2
—
(1)
(3)
—
—
(1)
6
—
2
17
(4)
(4)
(11)
(1)
5
—
4
(1)
—
(3)
(3)
—
—
$ 2
$ 2
—
—
23
—
—
(22)
—
—
(2)
9
—
3
8
(1)
(8)
(1)
(1)
9
16
—
—
(6)
(19)
—
—
—
$ —
$ —
—
62
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
Details with respect to cash and noncash restructuring charges for the years ended December 31,
2016, 2015 and 2014 by initiative are provided below (dollars in millions):
Cash charges:
2016 charges for 2015 and prior initiatives . . . . . . . . . . . . . . . . . . . . . . . . .
2016 charges for 2016 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserves no longer required . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accelerated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash credits, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 66
12
(2)
8
(3)
Total 2016 restructuring, impairment and plant closing costs . . . . . . . . . . . . . .
$ 81
Cash charges:
2015 charges for 2014 and prior initiatives . . . . . . . . . . . . . . . . . . . . . . . . .
2015 charges for 2015 initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reversal of reserves no longer required . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension-related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accelerated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$133
67
(13)
3
74
38
Total 2015 restructuring, impairment and plant closing costs . . . . . . . . . . . . . .
$302
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
2016 RESTRUCTURING ACTIVITIES
In December 2015, our Performance Products segment announced plans for a reorganization of its
commercial and technical functions and a refocused divisional business strategy to better position the
segment for growth in coming years. In addition, a program was launched to capture growth
opportunities, improve manufacturing cost efficiency and reduce inventories. In connection with this
restructuring program, we recorded restructuring expense of $16 million in 2016. All expected charges
have been incurred as of the end of 2016.
In September 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 (the ‘‘Textile Effects Restructuring Plan’’). In connection with the
Textile Effects Restructuring Plan and in connection with revised estimates of site closure costs, during
2016, our Textile Effects segment recorded charges of $9 million for non-cancelable long-term contract
termination costs and $20 million for decommissioning associated with this initiative.
63
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
In December 2014, we announced a comprehensive restructuring program to improve the global
competitiveness of our Pigments and Additives segment (the ‘‘Pigments and Additives Restructuring
Plan’’). As part of the Pigments and Additives Restructuring Plan, we are reducing our workforce by
approximately 900 positions. In connection with the Pigments and Additives Restructuring Plan, we
recorded restructuring expense of $3 million in 2016. We expect to incur additional charges of
approximately $4 million through the end of 2017.
In March 2015, we announced plans to restructure our color pigments business (the ‘‘Color
Pigments Restructuring Plan’’), another step in our Pigments and Additives Restructuring Plan, and
recorded restructuring expense of approximately $15 million in 2016. We expect to incur additional
charges of approximately $10 million through the end of 2017.
In July 2016, we announced plans to close our Pigments and Additives segment’s South African
titanium dioxide manufacturing facility. As part of the program, we recorded restructuring expense of
approximately $6 million in 2016. Additionally, we recorded an impairment charge of $1 million during
the second quarter of 2016. The majority of the long-lived assets associated with this manufacturing
facility were impaired in the fourth quarter of 2015. We expect to incur additional charges of
approximately $5 million through the third quarter of 2018.
In connection with planned restructuring activities, our Pigments and Additives segment recorded
accelerated depreciation as restructuring expense of $8 million during 2016.
2015 RESTRUCTURING ACTIVITIES
In June 2015, our Polyurethanes segment initiated a restructuring program in Europe. In
connection with this restructuring program, we recorded restructuring expense of $13 million during
2015 related primarily to workforce reductions. All expected charges have been incurred as of the end
of 2015.
During 2013, our Performance Products segment initiated a restructuring program to refocus its
surfactants business in Europe (the ‘‘Performance Products Restructuring Plan’’). As part of our
Performance Products Restructuring Plan, we recorded cash charges of $8 million primarily related to
workforce reductions in 2015.
In June 2015, our Advanced Materials segment initiated a restructuring program in Europe. In
connection with this restructuring program, we recorded restructuring expense of $11 million during
2015 related primarily to workforce reductions and accelerated depreciation recorded as restructuring,
impairment and plant closing costs.
In connection with the Textile Effects Restructuring Plan, during 2015, we recorded charges of
$9 million for non-cancelable long-term contract termination costs, $21 million for decommissioning
and $1 million of other restructuring charges associated with this initiative. During the fourth quarter
of 2015, we settled certain of our obligations under these long-term contracts and recorded a
restructuring charge of $14 million. In addition, we recorded charges of $6 million associated with other
initiatives.
In February 2015, we announced a plan to close the ‘black end’ manufacturing operations and
ancillary activities at our Calais, France site, which will reduce our titanium dioxide capacity by
approximately 100 kilotons, or 13% of our European titanium dioxide capacity. In connection with this
64
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
announcement, we began to accelerate depreciation on the affected assets and recorded accelerated
depreciation in 2015 of $68 million as restructuring, impairment and plant closing costs. In addition,
during 2015, we recorded charges of $30 million primarily for workforce reductions and non-cash
charges of $17 million.
In connection with the Pigments and Additives Restructuring Plan, during 2015, our Pigments and
Additives segment recorded charges of $61 million for workforce reductions, $3 million for pension
related charges and $15 million in other restructuring costs.
In connection with our Color Pigments Restructuring Plan, we recorded restructuring expense of
approximately $4 million during 2015 primarily related to workforce reductions.
During the fourth quarter of 2015, we determined that the South African asset group of our
Pigments and Additives segment was impaired and recorded an impairment charge of $19 million.
During 2015, our Corporate and other segment recorded charges of $8 million primarily related to
a reorganization of our global information technology organization.
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.
In connection with the Performance Products Restructuring Plan, 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.
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.
In connection with the Textile Effects Restructuring Plan, during 2014, our Textile Effects segment
recorded charges of $19 million, including a $9 million noncash charge for a pension settlement loss. In
June 2014, we announced plans for the closure of our Qingdao, China plant, which was completed in
2015. During 2014, we recorded charges of $6 million primarily related to workforce reductions related
to this initiative.
As part of the Pigments and Additives Restructuring Program, we recorded restructuring expense
of $57 million in the fourth quarter of 2014 related primarily to workforce reductions.
During 2014, our Corporate and other segment recorded charges of $13 million primarily related
to the reorganization of our global information technology organization.
65
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations consist primarily of landfill capping, closure and post-closure costs,
asbestos abatement costs, demolition and removal costs and leasehold remediation costs. We are legally
required to perform capping and closure and post-closure care on the landfills and asbestos abatement
on certain of our premises. For each asset retirement obligation we recognized the estimated fair value
of a liability and capitalized the cost as part of the cost basis of the related asset.
The following table describes changes to our asset retirement obligation liabilities (dollars
in millions):
Asset retirement obligations at beginning of year . . . . . . . . . . . . . . . . .
$52
2
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities assumed in connection with the Rockwood Acquisition . . . . . —
(4)
Liabilities settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Foreign currency effect on reserve balance . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations at end of year . . . . . . . . . . . . . . . . . . . . .
$48
$26
3
30
(1)
(6)
$52
December 31,
2015
2016
14. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consisted of the following (dollars in millions):
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and plant closing reserves . . . . . . . . . . . . . . . . . . . .
Employee benefit accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2016
2015
$1,010
88
27
46
32
35
143
$ 842
84
32
51
36
34
147
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,381
$1,226
66
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT
Outstanding debt, net of debt issuance costs, of consolidated entities consisted of the following
(dollars in millions):
December 31,
2016
December 31,
2015
Senior Credit Facilities:
Term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts outstanding under A/R programs . . . . . . . . . . .
Senior 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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,967
208
1,812
128
80
$4,195
$
60
4,135
$4,195
$4,195
1
$4,196
$2,454
215
1,850
151
125
$4,795
$ 170
4,625
$4,795
$4,795
1
$4,796
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.
Debt Issuance Costs
We record debt issuance costs related to a debt liability on the balance sheet as a reduction in the
face amount of that debt liability. As of December 31, 2016 and 2015, the amount of debt issuance
costs directly reducing the debt liability was $57 million and $67 million, respectively. We record the
amortization of debt issuance costs as interest expense.
67
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT (Continued)
Senior Credit Facilities
As of December 31, 2016, our Senior Credit Facilities consisted of our Revolving Facility, our 2015
Extended Term Loan B, our 2021 Term Loan B, and our 2023 Term Loan B as follows (dollars
in millions):
Facility
Revolving Facility . . . . .
2015 Extended Term
Loan B . . . . . . . . . .
2021 Term Loan B . . . . .
2023 Term Loan B . . . . .
Committed
Amount
Principal
Outstanding
Unamortized
Discounts and
Debt Issuance
Costs
Carrying
Value
Interest Rate(3)
Maturity
$650
$ —(1)
$—(1)
$ —(1) USD LIBOR plus 3.00%
NA
NA
NA
306
349
1,372
(1)
(12)
(47)
305
337
1,325
USD LIBOR plus 3.00%
USD LIBOR plus 2.75%(2)
USD LIBOR plus 3.00%(2)
2021
2019
2021
2023
(1) We had no borrowings outstanding under our Revolving Facility; we had approximately $22 million (U.S. dollar equivalents)
of letters of credit and bank guarantees issued and outstanding under our Revolving Facility.
(2) The 2021 Term Loan B and the 2023 Term Loan B are subject to a 0.75% LIBOR floor.
(3) The applicable interest rate of the Revolving Facility is subject to certain secured leverage ratio thresholds. As of
December 31, 2016, the weighted average interest rate on our outstanding balances under the Senior Credit Facilities was
approximately 4%.
On both July 22, 2016 and September 30, 2016, we prepaid $100 million of our 2015 Extended
Term Loan B. In connection with the $200 million prepayments on our term loan, we recognized a loss
on early extinguishment of debt of $1 million. On December 30, 2016, we made an early repayment of
$260 million on our 2015 Extended Term Loan B using proceeds from the sale of the European
surfactants business and existing cash.
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 November 15, 2016, we entered into a sixteenth amendment to the agreement governing the
Senior Credit Facilities (‘‘Credit Agreement’’). The amendment provides for a new term loan facility in
an aggregate principal amount of $350 million, the 2021 Term Loan B, and a new term loan facility in
an aggregate principal amount of $1,375 million, the 2023 Term Loan B. Proceeds of these loans, along
with cash on hand, were used to repay in full our 2014 Term Loan B and our 2016 Term Loan B.
The 2021 Term Loan B matures on October 1, 2021 and the 2023 Term Loan B matures on
April 1, 2023, provided that the maturity date will accelerate if we do not repay, refinance or have a
minimum level of liquidity available to enable us to repay certain of our senior notes upon maturity.
The 2021 Term Loan B and 2023 Term Loan B are subject to the same terms and conditions as our
existing senior secured term loan facilities.
68
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT (Continued)
The margin for borrowing under the 2021 Term Loan B is LIBOR plus 2.75% and the margin for
borrowing under the 2023 Term Loan B is LIBOR plus 3.00% and both loans are subject to a 0.75%
LIBOR floor. The 2021 Term Loan B and 2023 Term Loan B amortize in amounts equal to 1% of the
principal amount, payable quarterly commencing on December 31, 2016.
On April 1, 2016, we entered into a fifteenth amendment to the Credit Agreement. The
amendment provided for a new term loan facility, the 2016 Term Loan B, to refinance existing term
loans pursuant to the Credit Agreement in an aggregate principal amount of $550 million. The net
proceeds of the 2016 Term Loan B were used to repay in full our extended term loan B due 2017, our
extended term loan B—series 2 due 2017 and our Term Loan C. In connection with these repayments,
we recorded a loss on early extinguishment of debt of approximately $2 million in the second quarter
of 2016. The 2016 Term Loan B was repaid in full in conjunction with the sixteenth amendment on
November 15, 2016.
The fifteenth amendment also extends the stated termination date of our Revolving Facility from
March 20, 2017 to March 20, 2021, provided that the maturity date will accelerate if we do not repay,
refinance or have a minimum level of liquidity available to enable us to repay our 2015 Extended Term
Loan B due 2019 or our senior notes upon their maturity. The amendment further increased the
committed amount of our Revolving Facility by $25 million (from $625 million to $650 million).
Borrowings under the Revolving Facility bear interest at the same rate as the existing revolving
commitments. As of December 31, 2016, we had no borrowings under our Revolving Facility.
On August 10, 2015 we entered into a fourteenth amendment to the Credit Agreement. The
amendment increased the interest rate margin with respect to the 2015 Extended Term Loan B to
LIBOR plus 3.00%.
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,
2016 was as follows (monetary amounts in millions):
Facility
Maturity
U.S. A/R Program . . . March 2018
EU A/R Program . . . March 2018
Maximum Funding
Availability(1)
Amount
Outstanding
$250
A225
(approximately $234)
$90(3)
A114
(approximately $118)
Interest Rate(2)
Applicable rate plus 0.95%
Applicable rate plus 1.10%
(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) 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.
(3) As of December 31, 2016, we had approximately $7 million (U.S. dollar equivalents) of letters of credit issued
and outstanding under our U.S. A/R Program.
69
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT (Continued)
As of December 31, 2016 and 2015, $437 million and $438 million, respectively, of accounts
receivable were pledged as collateral under our A/R Programs.
Notes
As of December 31, 2016, 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
2025 Senior Notes . . . .
4.875%
5.125% A445 (A444 carrying value ($461))
5.125%
4.25% A300 (A297 carrying value ($309))
On March 31, 2015, Huntsman International completed a A300 million (approximately
$400 ($396 carrying value)
$650 ($646 carrying value)
April 2025
April 2021
Unamortized
Discounts
and Debt
Issuance Costs
$(4)
$(1)
$(4)
$(3)
$326 million) offering of 2025 Senior Notes. On April 17, 2015, we applied the net proceeds of this
offering to redeem $289 million ($294 million carrying value) of its 2021 Senior Subordinated Notes.
The 2025 Senior Notes bear interest at 4.25% per year, payable semi-annually on April 1 and
October 1, and are due on April 1, 2025. We may redeem the 2025 Senior Notes in whole or in part at
any time prior to January 1, 2025 at a price equal to 100% of the principal amount thereof plus a
‘‘make-whole’’ premium and accrued and unpaid interest.
The 2020, 2021, 2022 and 2025 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, 2022 and 2025 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 year ended December 31, 2015, we redeemed or repurchased the following notes
(dollars in millions):
Date of Redemption
Notes
Principal Amount
of Notes Redeemed
Amount Paid
(Excluding
Accrued
Interest)
Loss on Early
Extinguishment
of Debt
September 2015 . . . . .
April 2015 . . . . . . . . .
January 2015 . . . . . . .
2021 Senior Subordinated Notes
2021 Senior Subordinated Notes
2021 Senior Subordinated Notes
$195
289
37
$204
311
40
$ 7
20
3
70
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT (Continued)
Variable Interest Entity Debt
As of December 31, 2016, AAC, our consolidated 50%-owned joint venture, had $126 million
outstanding under its loan commitments and debt financing arrangements. As of December 31, 2016,
we have $12 million classified as current debt and $114 million as long-term debt on our consolidated
balance sheets. We do not guarantee these loan commitments, and AAC is not a guarantor of any of
our other debt obligations.
Other Debt
On July 24, 2015, HPS entered into a financing arrangement to fund the construction of our MDI
plant in China. As part of the financing, HPS has secured commitments of a RMB 669 million
(approximately $96 million) term loan and a RMB 423 million (approximately $61 million) working
capital facility. These facilities are unsecured, and we do not provide a guarantee of these loan
commitments. As of December 31, 2016, we had term loan borrowings of RMB111 million
(approximately $16 million) and no borrowings under the working capital facility. The interest rate on
the facilities is 90% of the Peoples Bank of China rate. As of December 31, 2016, the interest rate was
approximately 4%.
HPS also has a loan facility for working capital loans and discounting of commercial drafts. During
the year 2016, HPS has repaid RMB 325 million (approximately $47 million) of borrowings under this
facility. As of December 31, 2016 HPS had no borrowings outstanding under this facility. Interest is
calculated using the Peoples Bank of China rate plus the applicable margin. The average all in rate as
of December 31, 2016 was approximately 4%.
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.
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.
71
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT (Continued)
If in the future Huntsman International fails to comply with the Leverage Covenant, then we may
not have access to liquidity under our Revolving Facility. If Huntsman International failed to comply
with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit
outstanding under the Revolving Facility, Huntsman International would be in default under the Senior
Credit Facilities, and, unless Huntsman International obtained a waiver or forbearance with respect to
such default (as to which we can provide no assurance), Huntsman International could be required to
pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such
facilities.
The agreements governing our A/R Programs also contain certain receivable performance metrics.
Any material failure to meet the applicable A/R Programs’ metrics in the future could lead to an early
termination event under the A/R Programs, which could require us to cease our use of such facilities,
prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders,
requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs
would also constitute an event of default under our Senior Credit Facilities, which could require us to
pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior
Credit Facilities.
MATURITIES
The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31,
2016 are as follows (dollars in millions):
Year ending December 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
60
261
350
700
838
1,986
$4,195
16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and
commodity prices. 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.
72
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
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. As of
December 31, 2016 and December 31, 2015, we had $100 million notional value of interest rate hedges
with a fixed rate of 2.5%. 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. The fair value of
these hedges on December 31, 2016 and December 31, 2015 was $1 million and $2 million, respectively,
and was recorded as other current liabilities on our consolidated balance sheets. These hedges will
expire in April 2017. For the years ended December 31, 2016 and 2015, the changes in accumulated
other comprehensive loss associated with these cash flow hedging activities were gains of approximately
$2 million and $1 million, respectively.
Beginning in 2009, AAC 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 AAC as of July 1, 2010, the interest rate contract is now included in our consolidated
results. See ‘‘Note 8. Variable Interest Entities.’’ The notional amount of the swap as of December 31,
2016 was $18 million, and the interest rate contract is not designated as a cash flow hedge. As of
December 31, 2016 and 2015, the fair value of the swap was $1 million and $2 million, respectively, and
was recorded as other noncurrent liabilities on our consolidated balance sheets. For 2016 and 2015, we
recorded a reduction of interest expense of $1 million each due to changes in fair value of the swap.
During 2017, 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 both December 31, 2016 and 2015, we had approximately $176 million notional
amount (in U.S. dollar equivalents) outstanding 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
73
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
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 U.S. dollar
payments of $5 million semiannually 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, 2016, the fair value of this swap was $29 million and was
recorded in noncurrent assets.
In March 2010, we entered into three five year cross-currency interest rate contracts to swap an
aggregate notional $350 million for an aggregate notional A255 million. This swap was designated as a
hedge of net investment for financial reporting purposes. During the three months ended March 31,
2015, we terminated these cross-currency interest rate contracts and received $66 million in payments
from the counterparties.
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, 2016, we have designated
approximately A651 million (approximately $677 million) of euro-denominated debt and cross-currency
interest rate contracts as a hedge of our net investment. For the years ended December 31, 2016, 2015
and 2014, the amount of gain recognized on the hedge of our net investment was $27 million,
$68 million and $97 million, respectively, and was recorded in other comprehensive (loss) income.
COMMODITY PRICES RISK
Inherent in our business is exposure to price changes for several commodities. However, 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.
74
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. FAIR VALUE
The fair values of our financial instruments were as follows (dollars in millions):
December 31,
2016
2015
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Non-qualified employee benefit plan investments . . . . . . . . . .
Investments in equity securities . . . . . . . . . . . . . . . . . . . . . . .
Cross-currency interest rate contacts . . . . . . . . . . . . . . . . . . .
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (including current portion) . . . . . . . . . . . . . .
$
27
18
29
(2)
(4,195)
$
27
18
29
(2)
(4,368)
$
26
18
28
(4)
(4,795)
$
26
18
28
(4)
(4,647)
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 values of non-qualified employee benefit plan
investments and investments in equity securities are 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, 2016 and 2015. 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, 2016, and
current estimates of fair value may differ significantly from the amounts presented herein.
The following assets and liabilities are measured at fair value on a recurring basis (dollars
in millions):
Description
Assets:
Quoted prices in active
December 31, markets for identical
Significant other
observable inputs unobservable inputs
Significant
2016
assets (Level 1)(3)
(Level 2)(3)
(Level 3)
Fair Value Amounts Using
Available-for-sale equity securities:
Non-qualified employee benefit plan
investments . . . . . . . . . . . . . . . . . .
Investments in equity securities . . . . . . .
Derivatives:
Cross-currency interest rate contracts(1) .
Total assets . . . . . . . . . . . . . . . . . . . . . .
$27
18
29
$74
Liabilities:
Derivatives:
Interest rate contracts(2) . . . . . . . . . . .
$ (2)
$27
18
—
$45
$—
$—
—
—
$—
$(2)
$—
—
29
$29
$—
75
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. FAIR VALUE (Continued)
Description
Assets:
Quoted prices in active
December 31, markets for identical
Significant other
observable inputs unobservable inputs
Significant
2015
assets (Level 1)(3)
(Level 2)(3)
(Level 3)
Fair Value Amounts Using
Available-for-sale equity securities:
Non-qualified employee benefit plan
investments . . . . . . . . . . . . . . . . . .
Investments in equity securities . . . . . . .
Derivatives:
Cross-currency interest rate contracts(1) .
Total assets . . . . . . . . . . . . . . . . . . . . . .
$26
18
28
$72
Liabilities:
Derivatives:
Interest rate contracts(2) . . . . . . . . . . .
$ (4)
$26
18
—
$44
$—
$—
—
—
$—
$(4)
$—
—
28
$28
$—
(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 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, 2016 and
2015.
76
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. FAIR VALUE (Continued)
The following tables show reconciliations of beginning and ending balances for the years ended
December 31, 2016 and 2015 for instruments measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) (dollars in millions).
Cross-Currency Interest
Rate Contracts
Fair Value Measurements Using Significant Unobservable
Inputs (Level 3)
Beginning balance, January 1, 2016 . . . . . . . . . . . . . . . . . . .
Transfers into Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers out of Level 3(1) . . . . . . . . . . . . . . . . . . . . . . . . .
Total gains (losses):
Included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in other comprehensive income (loss) . . . . . . . . .
Purchases, sales, issuances and settlements . . . . . . . . . . . . . . .
Ending balance, December 31, 2016 . . . . . . . . . . . . . . . . . . . .
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, 2016 . . .
$28
—
—
—
1
—
$29
$—
Cross-Currency Interest
Rate Contracts
Fair Value Measurements Using Significant Unobservable
Inputs (Level 3)
Beginning balance, January 1, 2015 . . . . . . . . . . . . . . . . . . .
Transfers into Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers out of Level 3(1) . . . . . . . . . . . . . . . . . . . . . . . . .
Total gains (losses):
Included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in other comprehensive income (loss) . . . . . . . . .
Purchases, sales, issuances and settlements . . . . . . . . . . . . . . .
Ending balance, December 31, 2015 . . . . . . . . . . . . . . . . . . . .
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, 2015 . . .
$ 5
—
—
—
23
—
$28
$—
77
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. FAIR VALUE (Continued)
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):
2016
Total net gains included in earnings . . . . . . . . . . . . . . .
Changes in unrealized gains relating to assets still held
at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .
$—
—
$—
1
Interest expense
Other
comprehensive
income (loss)
Interest expense
Other
comprehensive
income (loss)
2015
Total net gains included in earnings . . . . . . . . . . . . . . .
Changes in unrealized gains relating to assets still held
at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . .
$—
—
$—
23
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 2016 and 2015, we recorded charges of $1 million and $19 million, respectively, for
the impairment of long-lived assets. See ‘‘Note 12. Restructuring, Impairment and Plant Closing Costs.’’
18. 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.
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.
78
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
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.
Beginning July 1, 2014, the Huntsman Defined Benefit Pension Plan was closed to new non-union
entrants and as of April 1, 2015, it was closed to new union entrants. In addition, as of January 1, 2015,
Rubicon LLC also closed its defined benefit plan to new entrants. Following the closure of these plans,
new hires have been provided with a defined contribution plan with a non-discretionary employer
contribution of 6% of pay and a company match of up to 4% of pay, for a total company contribution
of up to 10% of pay.
In connection with the Rockwood Acquisition, we assumed certain pension and other
postretirement benefit liabilities in the amount of approximately $233 million as of October 1, 2014.
79
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. 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, 2016 and 2015 (dollars in millions):
Defined Benefit Plans
Other Postretirement Benefit Plans
2016
2015
2016
2015
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 . . . . . . . . . . . . . . .
Foreign currency exchange rate changes .
Settlements/transfers/divestitures . . . . . .
Curtailments . . . . . . . . . . . . . . . . . .
. . . . . . . .
Special termination benefits
Actuarial (gain) loss
. . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . .
$ 961
30
48
—
—
—
—
—
—
73
(54)
$3,010
34
72
5
—
(322)
(2)
(2)
—
427
(119)
$1,001
32
43
—
—
—
—
—
—
(65)
(50)
$3,317
40
79
6
(31)
(210)
—
(4)
3
(65)
(125)
Benefit obligation at end of year . . . . . . .
$1,058
$3,103
$ 961
$3,010
Change in plan assets
Fair value of plan assets at beginning of
year . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . .
Foreign currency exchange rate changes .
Participant contributions . . . . . . . . . . .
Company contributions
. . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . .
$ 722
55
—
—
5
(54)
$2,431
322
(281)
5
60
(119)
$ 761
(10)
—
—
21
(50)
$2,587
40
(153)
6
76
(125)
Fair value of plan assets at end of year . . .
$ 728
$2,418
$ 722
$2,431
$ 88
2
4
2
—
—
—
—
—
9
(11)
$ 94
$ —
—
—
2
9
(11)
$ —
Funded status
Fair value of plan assets . . . . . . . . . . . .
Benefit obligation . . . . . . . . . . . . . . . .
$ 728
1,058
$2,418
3,103
$ 722
961
$2,431
3,010
$ —
94
Accrued benefit cost . . . . . . . . . . . . . . .
$ (330)
$ (685)
$ (239)
$ (579)
$(94)
Amounts recognized in balance sheet:
Noncurrent asset . . . . . . . . . . . . . . . . .
Current liability . . . . . . . . . . . . . . . . . .
Noncurrent liability . . . . . . . . . . . . . . .
$ —
(6)
(324)
$
6
(5)
(686)
$ —
(6)
(233)
$
35
(5)
(609)
$ (330)
$ (685)
$ (239)
$ (579)
$ —
(8)
(86)
$(94)
$ 5
—
—
—
(3)
—
—
—
—
—
—
$ 2
$—
—
—
—
—
—
$—
$—
2
$(2)
$—
—
(2)
$(2)
$137
4
5
3
(40)
—
—
—
—
(9)
(12)
$ 88
$ —
—
—
3
9
(12)
$ —
$ —
88
$ (88)
$ —
(9)
(79)
$ (88)
$ 6
—
—
—
—
(1)
—
—
—
—
—
$ 5
$—
—
—
—
—
—
$—
$—
5
$(5)
$—
—
(5)
$(5)
80
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
Defined Benefit Plans
Other Postretirement Benefit Plans
2016
2015
2016
2015
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
Amounts recognized in
accumulated other
comprehensive loss:
Net actuarial loss . . . . . . . . . . . . .
Prior service credit . . . . . . . . . . . .
$407
(17)
$1,100
(31)
$359
(22)
$906
(34)
$390
$1,069
$337
$872
$ 45
(51)
$ (6)
$ 1
(2)
$(1)
$ 38
(58)
$(20)
$ 1
—
$ 1
The amounts in accumulated other comprehensive loss that are expected to be recognized as
components of net periodic benefit cost during the next fiscal year are as follows (dollars in millions):
Defined Benefit Plans
Non-U.S.
Plans
U.S. Plans
Other Postretirement
Benefit Plans
U.S. Plans
Non-U.S.
Plans
Actuarial loss . . . . . . . . . . . . . . . . . . . . . .
Prior service credit . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$29
(2)
$27
$58
(4)
$54
$ 3
(6)
$(3)
$ 1
(3)
$(2)
Components of net periodic benefit costs for the years ended December 31, 2016, 2015 and 2014
were as follows (dollars in millions):
Defined Benefit Plans
U.S. plans
2015
2016
2014
2016
Non-U.S. plans
2015
2014
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . .
Settlement loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special termination benefits . . . . . . . . . . . . . . . . . . . . . .
$ 30
48
(55)
(5)
25
—
—
$ 32
43
(57)
(6)
32
—
—
$ 27
45
(56)
(6)
19
—
—
$ 34
72
(132)
(4)
42
—
—
$ 40
79
(143)
—
43
—
3
$ 32
102
(138)
—
34
13
3
Net periodic benefit cost
. . . . . . . . . . . . . . . . . . . . . . . .
$ 43
$ 44
$ 29
$ 12
$ 22
$ 46
81
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
Other Postretirement Benefit Plans
U.S. plans
2015
2016
2014
2016
Non-U.S. plans
2015
2014
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . .
$ 2
4
(7)
2
$ 4
5
(5)
3
$ 3
5
(4)
1
$ — $ — $ —
—
—
—
—
—
—
—
—
—
Net periodic benefit cost
. . . . . . . . . . . . . . . . . . . . . . . .
$ 1
$ 7
$ 5
$ — $ — $ —
The amounts recognized in net periodic benefit cost and other comprehensive (loss) income as of
December 31, 2016, 2015 and 2014 were as follows (dollars in millions):
Current year actuarial loss . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . .
Current year prior service credit . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit
. . . . . . . . . . . . . . . .
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
2015
2014
2016
Non-U.S. plans
2015
2014
$ 2
(32)
—
6
—
(24)
44
$144
(19)
—
6
—
131
29
$ 235
(42)
—
4
—
197
12
$ 33
(43)
(32)
—
—
$ 257
(34)
(6)
—
(13)
(42)
22
204
46
2016
$ 74
(25)
—
5
—
54
43
comprehensive (loss) income . . . . . . . . . . . . . . . . . . . .
$ 97
$ 20
$160
$ 209
$ (20) $ 250
Other Postretirement Benefit Plans
U.S. plans
2015
Non-U.S. plans
2015
2016
2014
2014
2016
Current year actuarial loss (gain) . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . .
Current year prior service credit . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . . . .
$ (9) $ 30
$ 9
(2)
(3)
— (40) —
4
5
7
(1) —
$ — $ — $ 1
—
—
—
(2) —
—
—
—
Total recognized in other comprehensive loss (income) . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Net periodic benefit cost
14
1
(47)
7
33
5
(2) —
—
—
1
—
Total recognized in net periodic benefit cost and other
comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . .
$ 15
$(40) $ 38
$ (2) $ — $ 1
82
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. 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
2015
2016
2014
2016
Non-U.S. plans
2015
2014
Projected benefit obligation
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . .
4.24% 4.90% 4.25% 1.82% 2.53% 2.48%
4.17% 4.17% 4.16% 3.51% 3.23% 3.23%
Net periodic pension cost
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . .
4.90% 4.25% 5.13% 2.53% 2.48% 3.62%
4.17% 4.16% 4.17% 3.42% 3.23% 3.37%
7.56% 7.74% 7.75% 5.68% 5.79% 5.82%
Other Postretirement Benefit Plans
U.S. plans
2015
2016
2014
2016
Non-U.S. plans
2015
2014
Projected benefit obligation
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.03% 4.68% 4.17% 3.50% 7.25% 6.44%
Net periodic pension cost
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.68% 4.20% 4.79% 7.25% 6.44% 6.49%
At both December 31, 2016 and 2015, the health care trend rate used to measure the expected
increase in the cost of benefits was assumed to be 7.0%, decreasing to 5% after 2025. Assumed health
care cost trend rates can have a significant effect on the amounts reported for the postretirement
benefit plans. A one-percent point change in assumed health care cost trend rates would have the
following effects (dollars in millions):
Asset category
Effect on total of service and interest cost . . . . . . . . . . . . . . . . . .
Effect on postretirement benefit obligation . . . . . . . . . . . . . . . . .
$—
1
$—
(1)
Increase
Decrease
The projected benefit obligation and fair value of plan assets for the defined benefit plans with
projected benefit obligations in excess of plan assets as of December 31, 2016 and 2015 were as follows
(dollars in millions):
Projected benefit obligation in excess of plan
assets
Projected benefit obligation . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . .
$1,058
728
$961
722
$3,074
2,389
$2,129
1,514
U.S. plans
Non-U.S. plans
2016
2015
2016
2015
83
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. 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, 2016 and 2015 were as follows (dollars in millions):
U.S. plans
2016
2015
Non-U.S. plans
2015
2016
Accumulated benefit obligation in excess of plan
assets
Projected benefit obligation . . . . . . . . . . . . . . . . .
Accumulated benefit obligation . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . .
$1,058
1,031
728
$961
941
722
$2,145
2,020
1,487
$1,403
1,312
823
Expected future contributions and benefit payments are as follows (dollars in millions):
U.S. Plans
Defined
Benefit
Plans
Other
Postretirement
Benefit
Plans
Non-U.S. Plans
Other
Postretirement
Benefit
Plans
Defined
Benefit
Plans
2017 expected employer contributions
To plan trusts . . . . . . . . . . . . . . . . .
$ 54
$ 8
$ 54
$—
Expected benefit payments
2017 . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . .
2022 - 2026 . . . . . . . . . . . . . . . . . .
66
90
66
65
67
369
8
8
8
8
8
37
97
102
102
107
111
588
—
—
—
—
—
1
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 2016, there were no transfers into 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.
84
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
The fair value of plan assets for the pension plans was $3.1 billion and $3.2 billion at
December 31, 2016 and 2015, respectively. The following plan assets are measured at fair value on a
recurring basis (dollars in millions):
Fair Value Amounts Using
Quoted prices in active
December 31, markets for identical
Significant other
observable inputs unobservable inputs
Significant
2016
assets (Level 1)
(Level 2)
(Level 3)
Quoted prices in active
December 31, markets for identical
Significant other
observable inputs unobservable inputs
Significant
2015
assets (Level 1)
(Level 2)
(Level 3)
Fair Value Amounts Using
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
$ 387
277
64
—
$ 728
$ 803
1,137
458
20
$ 276
212
—
—
$ 488
$ 447
548
64
20
assets . . . . . . . . . . . . . . . . . .
$2,418
$1,079
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
$ 387
277
58
—
$ 722
$ 830
1,113
477
11
$ 279
211
—
—
$ 490
$ 446
514
84
10
assets . . . . . . . . . . . . . . . . . .
$2,431
$1,054
85
$ 111
65
—
—
$ 176
$ 356
583
326
—
$1,265
$—
—
64
—
$64
$—
6
68
—
$74
$ 108
66
—
—
$ 174
$ 384
599
339
1
$1,323
$—
—
58
—
$58
$—
—
54
—
$54
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. 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):
Real Estate/Other
Year ended
December 31,
2016
Year ended
December 31,
2015
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 into (out of) Level 3 . . . . . . . . . . . . . . . . . . . . .
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . .
$112
4
16
—
$132
$ 96
4
12
—
$112
Fixed Income
Year ended
December 31,
2016
Year ended
December 31,
2015
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 into (out of) Level 3 . . . . . . . . . . . . . . . . . . . . .
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . .
$—
—
6
—
$ 6
$—
—
—
—
$—
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 5.68% and
86
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
7.75%. The asset allocation for our pension plans at December 31, 2016 and 2015 and the target
allocation for 2017, by asset category are as follows:
Asset category
U.S. pension plans:
Target
Allocation
2017
Allocation at
December 31,
2016
Allocation at
December 31,
2015
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53%
39%
4%
4%
53%
38%
9%
—
54%
38%
8%
—
Total U.S. pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . .
100%
100%
100%
Non-U.S. pension plans:
Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate/other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36%
44%
19%
1%
33%
47%
19%
1%
34%
46%
20%
—
Total non-U.S. pension plans . . . . . . . . . . . . . . . . . . . . . . . .
100%
100%
100%
Equity securities in our pension plans did not include any direct investments in equity securities of
our Company or our affiliates at the end of 2016.
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.
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, 2016, 2015 and 2014 was $23 million, $23 million and $15 million, respectively.
87
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
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, 2016, 2015 and 2014 was $12 million, $13 million and $14 million, respectively, 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 (the ‘‘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 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 Huntsman Supplemental Executive Retirement Plan (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, 2016 and
2015 were $27 million and $26 million, respectively. During each of the years ended December 31,
2016, 2015 and 2014, we expensed a total of $1 million as contributions to the SSP and the SERP.
STOCK-BASED INCENTIVE PLAN
On May 5, 2016, our stockholders approved a new Huntsman Corporation 2016 Stock Incentive Plan
(the ‘‘2016 Stock Incentive Plan’’), which reserved 8.2 million shares for issuance. The Huntsman
Corporation Stock Incentive Plan, as amended and restated (the ‘‘Prior Plan’’), remains in effect for
outstanding awards granted pursuant to the Prior Plan, but no further awards may be granted under the
Prior Plan. Under the 2016 Stock Incentive Plan, we may grant nonqualified stock options, incentive
stock options, stock appreciation rights, restricted stock, phantom stock, performance share units 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 under both the 2016 Stock Incentive Plan and the Prior Plan are fixed at the grant date. As
of December 31, 2016, we had approximately 8 million shares remaining under the 2016 Stock Incentive
Plan available for grant. See ‘‘Note 23. Stock-Based Compensation Plan.’’
88
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. EMPLOYEE BENEFIT PLANS (Continued)
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.
19. 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,
2015
2014
2016
Income tax (benefit) expense:
U.S.
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (4) $ 48
21
25
$ 55
(4)
Non-U.S.
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
(9)
24
(47)
48
(48)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$87
$ 46
$ 51
89
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. 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,
2015
2016
2014
Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . .
$448
$176
$404
Expected tax expense at U.S. statutory rate of 35% . . . . . . . . . . . . . . . . . . . . . .
Change resulting from:
$157
$ 62
$142
State tax expense net of federal benefit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. tax rate differentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-taxable portion of gain on sale of European surfactants business . . . . . . . .
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 non-U.S. tax effects, including nondeductible expenses, tax effect of rate
changes, transfer pricing adjustments and various withholding taxes . . . . . . . .
Other U.S. tax effects, including nondeductible expenses and other credits . . . .
(3)
(1)
(47)
4
(23) —
(7)
—
(4)
(58)
—
— (22)
10
(7)
—
(14)
(7)
(6) —
(2)
(1)
(6)
(13)
19
6
(3)
10
75
(6)
—
(7)
3
(76)
3
6
Total income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 87
$ 46
$ 51
After extensive research and analysis, in 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.
During 2015, we declared a dividend from our non-U.S. operations to the U.S. which included
bringing onshore certain U.S. foreign tax credits. The foreign tax credits brought onshore exceeded the
amount needed to offset the cash tax impact of the dividend, as well as enough to allow us to carry
$14 million of foreign tax credits back to a prior year and claim a refund.
Included in the non-U.S. deferred tax expense are income tax benefits of $1 million in 2016,
$3 million in 2015 and $7 million in 2014 for losses from continuing operations for certain jurisdictions
with valuation allowances to the extent that income was recorded in other comprehensive income in
that same jurisdiction. The benefits in 2016 were largely attributable to South Africa, and the benefits
in 2015 and 2014 were largely attributable to the U.K. In all 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.
90
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. INCOME TAXES (Continued)
We operate in many 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. During 2016 and 2014, the average statutory rate for countries with
pre-tax income was lower than the average statutory rate for countries with pre-tax losses, resulting in
net benefits as compared to the U.S. statutory rate of $47 million and $7 million, respectively, reflected
in the reconciliation above. In 2016, the $47 million net benefit relates primarily to our Polyurethanes
operations in The Netherlands and China and our Advanced Materials operations in Switzerland.
During 2015, the average statutory rate for countries with pre-tax losses was lower than the average
statutory rate for countries with pre-tax income, resulting in net expenses as compared to the U.S.
statutory rate of $4 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 gains and losses will impact our effective tax rate. For 2016,
this resulted in a $4 million tax benefit, for 2015, this resulted in a $33 million tax benefit ($58 million,
net of $25 million of contingent liabilities and valuation allowances) and for 2014, this resulted in a
$7 million tax benefit. A number of our intercompany liabilities that were denominated in U.S. dollars
were owed by entities whose tax currency was the euro. As a result of the depreciation in the euro
opposite the U.S. dollar, these entities recorded a tax only foreign exchange loss. Most of the
intercompany receivables associated with these same U.S. dollar denominated intercompany debts were
held by entities with a tax currency of the U.S. dollar which, therefore, resulted in no taxable gain.
During 2015, we were granted an extension of a tax holiday from 2015 to 2022 on certain of our
manufacturing operations in Singapore. During 2015, pursuant to the Singapore tax holiday, we
recorded a benefit of $6 million. We will continue to enjoy this benefit to the extent of continuing
profits in this manufacturing endeavor. There were no net tax benefits recorded in 2016.
We calculate deferred tax assets and liabilities related to U.S. state income taxes based on
projected apportionment factors. During 2015, we experienced a decrease in our projected
apportionment factors, which decreased our deferred tax liability for U.S. state income taxes. The
amount of our deferred tax liability for U.S. state income taxes is significant, and therefore, the change
in apportionment factors for 2015 decreased our net deferred tax liabilities by $5 million. Also during
2015, we changed the legal entity location of certain of our U.S. operations. These changes had the
effect of reducing our state tax expense by approximately $3 million.
The components of income (loss) from continuing operations before income taxes were as follows
(dollars in millions):
U.S.
Non-U.S.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 66
382
$243
(67)
$435
(31)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$448
$176
$404
Year ended
December 31,
2015
2016
2014
91
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. INCOME TAXES (Continued)
Components of deferred income tax assets and liabilities were as follows (dollars in millions):
December 31,
2016
2015
Deferred income tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other employee compensation . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 848
329
85
118
5
87
$ 871
280
97
131
14
100
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,472
$1,493
Deferred income tax liabilities:
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other employee compensation . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (611) $ (577)
(8)
(128)
(1)
(134)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (746) $ (713)
Net deferred tax asset before valuation allowance . . . . . . . . . . . . .
Valuation allowance—net operating losses and other . . . . . . . . . . .
$ 726
(757)
$ 780
(784)
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (31) $
(4)
Non-current deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . .
396
(427)
418
(422)
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (31) $
(4)
We have gross NOLs of $3,407 million in various non-U.S. jurisdictions. While the majority of the
non-U.S. NOLs have no expiration date, $475 million have a limited life (of which $448 million are
subject to a valuation allowance) and $3 million are scheduled to expire in 2017 (all of which are
subject to a valuation allowance). We had no NOLs expire unused in 2016.
Included in the $3,407 million of gross non-U.S. NOLs is $940 million attributable to our
Luxembourg entities. As of December 31, 2016, due to the uncertainty surrounding the realization of
the benefits of these losses, there is a valuation allowance of $211 million against these net tax-effected
NOLs of $255 million.
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
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.
92
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. INCOME TAXES (Continued)
During 2016, we established valuation allowances of $12 million and released valuation allowances
of $25 million. In Italy we established $9 million of valuation allowances on certain net deferred tax
assets as a result of the sale of our European surfactants business, and in China we established
$3 million of valuation allowances as a result of the closure of our Qingdao, China plant. We released
valuation allowances of $12 million in Spain as a result of cumulative profitability, $7 million in The
Netherlands as a result of tax planning to utilize losses that would have otherwise expired, and
$6 million in France as a result of a tax combination allowing deferred tax liabilities to be offset by
deferred tax assets which previously had a valuation allowance.
During 2015, we established valuation allowances of $35 million and released valuation allowances
of $3 million. In the U.S., we established $14 million of valuation allowance on U.S. foreign tax credits
due to the application of specific foreign tax credit limitations, in The Netherlands we established
$7 million of valuation allowance on losses which are scheduled to expire after 2016, and in Italy we
established $12 million of valuation allowances on certain net deferred tax assets as a result of
cumulative losses.
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.
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 unexpected pre-tax earnings, the release of valuation allowances in future
periods.
93
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. INCOME TAXES (Continued)
The following is a summary of changes in the valuation allowance (dollars in millions):
2016
2015
2014
Valuation allowance as of January 1 . . . . . . . . . . . . . . . . . . . .
Valuation allowance as of December 31 . . . . . . . . . . . . . . . . . .
$784
757
$702
784
$814
702
Net (increase) decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency movements
. . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase to deferred tax assets with no impact on
operating tax expense, including an offsetting (decrease)
increase to valuation allowances . . . . . . . . . . . . . . . . . . . . .
27
(35)
(82)
(22)
112
(49)
21
29
13
Change in valuation allowance per rate reconciliation . . . . . . . .
$ 13
$ (75) $ 76
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
$ — $ (43) $ (32)
111
25
3
jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12)
(35)
(3)
Change in valuation allowance per rate reconciliation . . . . . . . .
$ 13
$ (75) $ 76
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
2016
2015
$ 62
$68
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
3
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
(22)
(4)
(2)
5
(2)
(8)
(4)
Unrecognized tax benefits as of December 31 . . . . . . . . . . . . . . . . . . .
$ 37
$62
As of December 31, 2016 and 2015, the amount of unrecognized tax benefits which, if recognized,
would affect the effective tax rate is $21 million and $50 million, respectively.
During 2016, we concluded and settled tax examinations on various non-U.S. jurisdictions
including, but not limited to, China, Germany, Indonesia, The Netherlands, Spain and the U.K. During
2015, 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 China and France. 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 2016, for unrecognized tax benefits that impact tax expense, we recorded a net decrease in
unrecognized tax benefits with a corresponding income tax benefit (not including interest and penalty
94
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. INCOME TAXES (Continued)
expense) of $5 million. During 2015 and 2014, we recorded a net increase in unrecognized tax benefits
with a corresponding income tax expense (not including interest and penalty expense) of $19 million
and $1 million, respectively. 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.
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,
2015
2016
2014
$(9) $ 2
Interest expense included in tax expense . . . . . . . . . . . . . . . . . . .
Pentalties expense included in tax expense . . . . . . . . . . . . . . . . . . — — —
$(1)
December 31,
2015
2016
Accrued liabilitiy for interest
$ 3
Accrued liability for penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4
—
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open Tax Years
2012 and later
2002 and later
2011 and later
2004 and later
2012 and later
2012 and later
2010 and later
2013 and later
2015 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 $6 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.
95
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. 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
dividend, we expect to utilize 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 2015 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 $390 million at December 31, 2016. It is not practicable to
determine the unrecognized deferred tax liability on those earnings because of the significant
assumptions necessary to compute the tax.
20. COMMITMENTS AND CONTINGENCIES
PURCHASE COMMITMENTS
We have various purchase commitments extending through 2029 for materials, supplies and
services entered into in the ordinary course of business. Included in the purchase commitments table
below are contracts which require minimum volume purchases that extend beyond one year or are
renewable annually and have been renewed for 2017. 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, 2016, 2015 and
2014, we made minimum payments of $2 million, nil and nil, respectively, under such take or pay
contracts without taking the product.
Total purchase commitments as of December 31, 2016 are as follows (dollars in millions):
Year ending December 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,636
1,164
415
170
168
1,063
$4,616
96
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. 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 $89 million, $94 million and $97 million for 2016, 2015 and 2014, respectively, net of
sublease rentals of approximately $2 million, $3 million and $3 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
Future minimum lease payments under operating leases as of December 31, 2016 are as follows
(dollars in millions):
Year ending December 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 82
73
65
59
54
177
$510
Future minimum lease payments have not been reduced by minimum sublease rentals of $2 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, 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 since February 1, 2003 (the
‘‘Direct Purchasers’’). On December 13, 2013, we and all other defendants settled the Direct
Purchasers litigation and the court approved the settlement. 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. On February 26, 2016, we reached an agreement to settle the Opt-Out
Litigation and subsequently paid the settlement in an amount immaterial to our financial statements.
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
97
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. COMMITMENTS AND CONTINGENCIES (Continued)
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. On August 11, 2015, the court granted our motion to dismiss the Indirect Purchasers
litigation with leave to amend the complaint. A Third Amended Class Action Complaint was filed on
September 29, 2015 further limiting the class to consumers of architectural paints. Plaintiffs have raised
state antitrust claims under the laws of 15 states, consumer protection claims under the laws of nine
states and unjust enrichment claims under the laws of 16 states. On November 4, 2015, we and our
co-defendants filed another motion to dismiss. On June 13, 2016, the court substantially denied the
motion to dismiss except as to consumer protection claims in one state. The parties are presently
negotiating a settlement for an amount immaterial to our consolidated financial statements.
On August 23, 2016, we were named as a defendant in a fourth civil antitrust suit filed in the U.S.
District Court for the Northern District of California by an Indirect Purchaser, Home Depot. Home
Depot is an Indirect Purchaser primarily through paints it purchases from various manufacturers. Home
Depot makes the same claims as the Direct and Indirect Purchasers.
The plaintiffs in the Indirect Purchasers claims 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 and we have made no accrual with respect to the Home Depot 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 $159 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 $117 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 $117 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 (the
‘‘Banks’’) 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’’). These claims allegedly arose from the failed acquisition by and merger with Hexion. The
98
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. COMMITMENTS AND CONTINGENCIES (Continued)
Texas Litigation was dismissed, which was upheld by the Ninth Court of Appeals and the Texas
Supreme Court denied review by final order entered January 7, 2016.
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 factual 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 June 30, 2016,
the plaintiffs voluntarily dismissed the Apollo defendants and on December 5, 2016, the court dismissed
Deutsche Bank for lack of personal jurisdiction, but denied Credit Suisse’s motion to dismiss.
Subsequently, Credit Suisse asked the court to reconsider its decision or certify its judgment to the
Seventh Circuit Court of Appeals for an immediate appeal, which remains pending. 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.
21. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
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, 2016, 2015 and 2014, our capital expenditures for EHS matters totaled $66 million,
$141 million, and $125 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.
ENVIRONMENTAL RESERVES
We have accrued liabilities relating to anticipated environmental cleanup obligations, site
reclamation and closure costs and known penalties. Liabilities are recorded when potential liabilities
are either known or considered probable and can be reasonably estimated. Our liability estimates are
calculated using present value techniques as appropriate and are based upon requirements placed upon
us by regulators, available facts, existing technology and past experience. The environmental liabilities
do not include amounts recorded as asset retirement obligations. We had accrued $34 million and
$38 million for environmental liabilities as of December 31, 2016 and 2015, respectively. Of these
amounts, $7 million and $6 million were classified as accrued liabilities in our consolidated balance
sheets as of December 31, 2016 and 2015, respectively, and $27 million and $32 million were classified
99
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
as other noncurrent liabilities in our consolidated balance sheets as of December 31, 2016 and 2015,
respectively. In certain cases, our remediation liabilities may be payable over periods of up to 30 years.
We may incur losses for environmental remediation in excess of the amounts accrued; however, we are
not able to estimate the amount or range of such potential excess.
ENVIRONMENTAL MATTERS
Under the Comprehensive Environmental Response, Compensation, and Liability Act
(‘‘CERCLA’’) and similar state laws, a current or former owner or operator of real property in the U.S.
may be liable for remediation costs regardless of whether the release or disposal of hazardous
substances was in compliance with law at the time it occurred, and a current owner or operator may be
liable regardless of whether it owned or operated the facility at the time of the release. Outside the
U.S., analogous contaminated property laws, such as those in effect in France and Australia, can hold
past owners and/or operators liable for remediation at former facilities. Currently, there are
approximately six 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.
Under the Resource Conservation and Recovery Act (‘‘RCRA’’) in the U.S. and similar state laws,
we may be required to remediate contamination originating from our properties as a condition to our
hazardous waste permit. Some of our manufacturing sites have an extended history of industrial
chemical manufacturing and use, including on-site waste disposal. We are aware of soil, groundwater or
surface contamination from past operations at some of our sites, and we may find contamination at
other sites in the future. For example, our Port Neches, Texas, and Geismar, Louisiana, facilities are
the subject of ongoing remediation requirements imposed under RCRA. Similar laws exist in a number
of locations in which we currently operate, or previously operated, manufacturing facilities, such as
Australia, India, France, Hungary and Italy.
West Footscray Remediation
By letter dated March 7, 2006, our former Base Chemicals and Polymers facility in West Footscray,
Australia was issued a cleanup notice by the Environmental Protection Authority Victoria (‘‘EPA
Victoria’’) due to concerns about soil and groundwater contamination emanating from the site. On
August 23, 2010, EPA Victoria revoked a second cleanup notice and issued a revised notice that
included a requirement for financial assurance for the remediation. As of December 31, 2016, we had
an accrued liability of approximately $15 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.
North Maybe Mine Remediation
The North Maybe Canyon Mine site is a CERCLA site and involves a former phosphorous mine
near Soda Springs, Idaho, which is believed to have been operated by several companies, including a
predecessor company to us. In 2004, the U.S. Forest Service notified us that we are a CERCLA
potentially responsible party (‘‘PRP’’) for contamination originating from the site. In February 2010, we
and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a
100
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
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.
Port Neches Flaring Matter
As part of the EPA’s national enforcement initiative on flaring operations and by letter dated
October 12, 2012, the U.S. Department of Justice (the ‘‘DOJ’’) notified us that we were in violation of
the CAA based on our response to a 2010 CAA Section 114 Information Request. The EPA has used
the enforcement initiative to bring similar actions against refiners and other chemical manufacturers
and has sought to collect civil penalties in excess of $100,000. Specifically, the EPA alleged violations at
our Port Neches, Texas facility from 2007-2012 for flare operations not consistent with good pollution
control practice and not in compliance with certain flare-related regulations. As a result of these
findings, the EPA referred this matter to the DOJ. We provided a formal response to the DOJ and the
EPA with a supplemental data submission on April 29, 2013. We have been engaged in discussions with
the DOJ and the EPA regarding these alleged violations and conducted field trials on an alternate flare
monitoring method beginning in September 2014. We are currently unable to determine the likelihood
or magnitude of any potential penalty or injunctive relief that may be incurred in resolving this matter.
22. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY
SHARE REPURCHASE PROGRAM
On September 29, 2015, our Board of Directors authorized our Company to repurchase up to
$150 million in shares of our common stock. Repurchases under this program may be made through
open market transactions, in privately negotiated transactions, accelerated share repurchase programs
or by other means. The timing and actual number of any shares repurchased depends on a variety of
factors, including market conditions. The share repurchase authorization does not have an expiration
date and repurchases may be commenced, suspended or discontinued from time to time without prior
notice. On October 27, 2015, we entered into and funded an accelerated share repurchase agreement
with Citibank, N.A. to repurchase $100 million of our common stock. Citibank, N.A. made an initial
delivery of approximately 7.1 million shares of Huntsman Corporation common stock based on the
closing price of $11.94 on October 27, 2015. The accelerated share repurchase agreement was
completed in January 2016 with the delivery of an additional approximately 1.5 million shares of
Huntsman Corporation common stock. The final number of shares repurchased and the aggregate cost
per share was based on the Company’s daily volume-weighted average stock price during the term of
the transaction, less a discount. We have $50 million remaining that is available under this
authorization to be used to purchase additional shares.
101
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY (Continued)
DIVIDENDS ON COMMON STOCK
The following tables represent dividends on common stock for our Company for the years ended
December 31, 2016 and 2015 (dollars in millions, except per share payment amounts):
Quarter ended
2016
Per share
payment amount
Approximate
amount
paid
March 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$0.125
0.125
0.125
0.125
$30
30
30
30
Quarter ended
2015
Per share
payment amount
Approximate
amount
paid
March 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$0.125
0.125
0.125
0.125
$31
31
31
30
23. STOCK-BASED COMPENSATION PLAN
Under the 2016 Stock Incentive Plan, we may grant nonqualified stock options, incentive stock
options, stock appreciation rights, restricted stock, phantom stock, performance share units 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 under both the 2016 Stock Incentive Plan and the Prior Plan are fixed at the grant date.
As of December 31, 2016, we were authorized to grant up to 8.2 million shares under the 2016 Stock
Incentive Plan. As of December 31, 2016, we had approximately 8 million shares remaining under the
2016 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. Outstanding stock-based awards generally vest over a
three-year period; certain performance share unit awards vest over a two-year period.
The compensation cost from continuing operations under the 2016 Stock Incentive Plan was as
follows (dollars in millions):
Year ended
December 31,
2015
2016
2014
Compensation cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$34
$30
$28
The total income tax benefit recognized in the statement of operations for stock-based
compensation arrangements was $7 million, $6 million and $6 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
102
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
23. STOCK-BASED COMPENSATION PLAN (Continued)
STOCK OPTIONS
The fair value of each stock option award is estimated on the date of grant using the Black-
Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are
based on the historical volatility of our common stock through the grant date. The expected term of
options granted was estimated based on the contractual term of the instruments and employees’
expected exercise and post-vesting employment termination behavior. The risk-free rate for periods
within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time
of grant. The assumptions noted below represent the weighted averages of the assumptions utilized for
all stock options granted during the year.
Year ended December 31,
2015
2014
2016
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . .
Expected life of stock options granted during the
5.6%
2.4%
2.3%
57.9% 57.6% 60.3%
1.7%
1.4%
1.4%
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9 years 5.9 years 5.7 years
A summary of stock option activity under the 2016 Stock Incentive Plan and the Prior Plan as of
December 31, 2016 and changes during the year then ended is presented below:
Option Awards
Outstanding at January 1, 2016 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
(in thousands)
9,544
3,024
(148)
(1,175)
Outstanding at December 31, 2016 . . . . . . . . . . . . . .
11,245
Exercisable at December 31, 2016 . . . . . . . . . . . . . . .
7,339
Weighted
Average
Exercise
Price
$15.51
9.04
12.65
19.70
13.37
14.02
Weighted
Average
Remaining
Contractual
Term
(years)
Aggregate
Intrinsic
Value
(in millions)
5.5
3.7
$71
42
The weighted-average grant-date fair value of stock options granted during 2016, 2015 and 2014
was $3.15, $9.81 and $9.63 per option, respectively. As of December 31, 2016, there was $10 million of
total unrecognized compensation cost related to nonvested stock option arrangements granted under
the 2016 Stock Incentive Plan and the Prior Plan. That cost is expected to be recognized over a
weighted-average period of approximately 1.8 years.
During the years ended December 31, 2016, 2015 and 2014, the total intrinsic value of stock
options exercised was approximately $1 million, nil and $14 million, respectively.
NONVESTED SHARES
Nonvested shares granted under the 2016 Stock Incentive Plan and the Prior Plan consist of
restricted stock and performance share unit awards, which are accounted for as equity awards, and
103
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
23. STOCK-BASED COMPENSATION PLAN (Continued)
phantom stock, which is accounted for as a liability award because it can be settled in either stock or
cash.
The fair value of each performance share unit award is estimated using a Monte Carlo simulation
model that uses various assumptions, including an expected volatility rate and a risk-free interest rate.
For the years ended December 31, 2016 and 2015, the weighted-average expected volatility rate was
39.3% and 30.0%, respectively and the weighted average risk-free interest rate was 0.9% and 0.7%,
respectively. For the performance share unit awards granted during the years ended December 31, 2016
and 2015 the number of shares earned varies based upon the Company achieving certain performance
criteria over two-year and three-year performance periods. The performance criteria are total
stockholder return of our common stock relative to the total stockholder return of a specified industry
peer group for the two-year and three-year performance periods. No performance share unit awards
were granted during the year ended December 31, 2014.
A summary of the status of our nonvested shares as of December 31, 2016 and changes during the
year then ended is presented below:
Equity Awards
Liability Awards
Nonvested at January 1, 2016 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
(in thousands)
1,854
1,889
(671)(1)
(76)
Nonvested at December 31, 2016 . . . . . . . . . . . . .
2,996
Weighted
Average
Grant-Date
Fair Value
$19.97
9.28
19.74
16.42
13.36
Weighted
Average
Grant-Date
Fair Value
$21.37
9.09
20.18
15.74
12.27
Shares
(in thousands)
475
715
(243)
(35)
912
(1) As of December 31, 2016, a total of 454,900 restricted stock units were vested but not yet issued,
of which 60,948 vested during 2016. 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, 2016, there was $28 million of total unrecognized compensation cost related
to nonvested share compensation arrangements granted under the Stock Incentive Plan and the Prior
Plan. That cost is expected to be recognized over a weighted-average period of approximately 1.9 years.
The value of share awards that vested during the years ended December 31, 2016, 2015 and 2014 was
$16 million, $20 million and $19 million, respectively.
104
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24. OTHER COMPREHENSIVE LOSS
Other comprehensive loss consisted of the following (dollars in millions):
Foreign
currency
translation
Pension
and other
postretirement
benefits
Other
comprehensive
income of
unconsolidated
affiliates
Other, net Total
Amounts
Amounts
attributable to attributable to
noncontrolling
interests
Huntsman
Corporation
adjustment(a) adjustments(b)
Beginning balance,
January 1, 2016 . . . . . .
$(288)
$(1,056)
$11
$17
$(1,316)
$28
$(1,288)
Other comprehensive
(loss) income before
reclassifications, gross .
Tax (expense) benefit . . .
Amounts reclassified
from accumulated
other comprehensive
loss, gross(c) . . . . . . .
Tax expense . . . . . . . . .
Net current-period other
comprehensive (loss)
income . . . . . . . . . . . .
Ending balance,
(162)
(10)
1
—
(315)
58
53
(15)
(171)
(219)
December 31, 2016 . . . .
$(459)
$(1,275)
(7)
—
—
—
(7)
$ 4
5
1
—
—
(479)
49
54
(15)
6
(391)
8
—
—
—
8
(471)
49
54
(15)
(383)
$23
$(1,707)
$36
$(1,671)
(a) Amounts are net of tax of $100 and $90 as of December 31, 2016 and January 1, 2016, respectively.
(b) Amounts are net of tax of $177 and $135 as of December 31, 2016 and January 1, 2016, respectively.
(c)
See table below for details about these reclassifications.
Foreign
currency
translation
Pension
and other
postretirement
benefits
adjustment(a) adjustments(b)
Other
comprehensive
income of
unconsolidated
affiliates
Other, net Total
Amounts
Amounts
attributable to attributable to
noncontrolling
interests
Huntsman
Corporation
Beginning balance,
January 1, 2015 . . . . . .
$ 25
$(1,122)
$10
$11
$(1,076)
$23
$(1,053)
Other comprehensive
(loss) income before
reclassifications, gross .
Tax expense . . . . . . . . .
Amounts reclassified
from accumulated
other comprehensive
loss, gross(c) . . . . . . .
Tax expense . . . . . . . . .
Net current-period other
comprehensive (loss)
income . . . . . . . . . . . .
Ending balance,
(271)
(42)
—
—
44
(33)
69
(14)
(313)
66
1
—
—
—
1
6
—
—
—
(220)
(75)
69
(14)
6
(240)
5
—
—
—
5
(215)
(75)
69
(14)
(235)
December 31, 2015 . . . .
$(288)
$(1,056)
$11
$17
$(1,316)
$28
$(1,288)
(a) Amounts are net of tax of $90 and $47 as of December 31, 2015 and January 1, 2015, respectively.
105
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24. OTHER COMPREHENSIVE LOSS (Continued)
(b) Amounts are net of tax of $135 and $182 as of December 31, 2015 and January 1, 2015, respectively.
(c)
See table below for details about these reclassifications.
Details about Accumulated Other Comprehensive Loss
Components(a):
Amortization of pension and other postretirement benefits:
Prior service credit
. . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement loss
Total reclassifications for the period . . . . . . . . . . . . . . .
Year ended
Year ended
Year ended
December 31, December 31, December 31,
2015
Amount
reclassified
from
accumulated
other
comprehensive comprehensive comprehensive
loss
2016
Amount
reclassified
from
accumulated
other
2014
Amount
reclassified
from
accumulated
other
loss
loss
$ 16
(69)
—
(53)
15
$(38)
$ 10
(79)
—
(69)
14
$(55)
$ 9
(55)
(13)
(59)
11
$(48)
Affected line
item in the
statement
where net
income is
presented
(b)
(b)(c)
(b)
Total before tax
Income tax expense
Net of tax
(a)
Pension and other postretirement benefits amounts in parentheses indicate credits on our consolidated statements of
operations.
(b) These accumulated other comprehensive loss components are included in the computation of net periodic pension costs.
See ‘‘Note 18. 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, 2016, 2015 and 2014, 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.
25. RELATED PARTY TRANSACTIONS
Our consolidated financial statements include the following transactions with our affiliates not
otherwise disclosed (dollars in millions):
Sales to:
Unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .
$131
$131
$261
Inventory purchases from:
Unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .
397
487
614
Year ended
December 31,
2016
2015
2014
106
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. RELATED PARTY TRANSACTIONS (Continued)
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. Under this arrangement, monthly sublease
payments from Airstar to Jstar are approximately $120,000, and an aggregate of $7 million is payable
through the end of the remaining five 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. With the
scheduled transition of employees to The Woodlands, Texas the original lease rate was reduced by 50%
effective February 1, 2016. During 2016, we made payments of approximately $1 million to the
Huntsman Foundation under the lease, which includes a contractual 2% increase from 2015. 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.
Effective August 31, 2015, we entered into a Consulting Agreement with Jon M. Huntsman, Jr.,
one of our former directors and the former governor of Utah and U.S. Ambassador to Singapore and
China. Pursuant to the Consulting Agreement, Jon M. Huntsman, Jr. agreed to: provide strategic
advice to senior management and the Board of Directors of the Company on political, economic and
business matters; support development and continued maintenance of the Company’s high value
customers and significant business relationships across all regions; support development and continued
maintenance of governmental and business relationships in developing economic regions, particularly in
connection with markets and opportunities in India, China and Southeast Asia; participate in
negotiations and discussions with business executives and leaders, government officials and/or
dignitaries; and participate in such other meetings or discussions as may be requested by senior
management of the Company upon reasonable notice. In exchange for these services, we agree to pay
Jon M. Huntsman, Jr. $50,000 per month and up to $200,000 in additional compensation based on
achievement of designated results as determined by the Board of Directors. The Consulting Agreement
was renewed for one year effective August 31, 2016, subject to our right to extend the agreement for
additional one year terms. Jon M. Huntsman, Jr. is the son of our Executive Chairman, Jon M.
Huntsman and the brother of our Chief Executive Officer, Peter R. Huntsman.
26. 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.
107
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. 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 . . . .
Advanced Materials . . . . .
Textile Effects . . . . . . . . . .
Pigments and Additives . . .
amines, surfactants, LAB, maleic anhydride, other performance
chemicals, EG, olefins and technology licenses
basic liquid and solid epoxy resins; specialty resin compounds;
cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-
based formulations
textile chemicals, dyes and digital inks
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 adjusted 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 adjusted EBITDA of operating segments excludes items that principally
apply to our Company as a whole.
108
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. OPERATING SEGMENT INFORMATION (Continued)
The revenues and adjusted EBITDA for each of our reportable operating segments are as follows
(dollars in millions):
Revenues:
Year ended December 31,
2015
2014
2016
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,667
2,126
1,020
751
2,139
(46)
$ 3,811
2,501
1,103
804
2,160
(80)
$ 5,032
3,072
1,248
896
1,549
(219)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,657
$10,299
$11,578
Segment adjusted EBITDA(1):
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 569
316
223
73
130
(184)
$
573
460
220
63
61
(156)
$
722
473
199
58
76
(188)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,127
1,221
1,340
Reconciliation of adjusted EBITDA to net income:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense—continuing operations . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit—discontinued operations . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . .
Other adjustments:
Business acquisition and integration expenses and purchase accounting
adjustments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on disposition of business/assets . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain legal settlements and related expenses . . . . . . . . . . . . . . . . . . .
Amortization of pension and postretirement actuarial losses . . . . . . . . .
Net plant incident remediation costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing and transition costs . . . . . .
Spin-off separation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(202)
(87)
2
(432)
31
(23)
(6)
119
(3)
(3)
(65)
(1)
(82)
(18)
(205)
(46)
2
(399)
33
(53)
(6)
(2)
(31)
(4)
(74)
(4)
(306)
—
(205)
(51)
2
(445)
22
(67)
(10)
3
(28)
(3)
(51)
—
(162)
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 357
$
126
$
345
109
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. OPERATING SEGMENT INFORMATION (Continued)
Depreciation and Amortization:
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . .
2016
$114
132
35
15
106
30
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$432
Capital Expenditures:
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . .
2016
$143
131
16
19
103
9
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$421
Year ended
December 31,
2015
$100
119
38
17
93
32
$399
Year ended
December 31,
2015
$181
205
25
24
202
26
$663
2014
$131
138
42
16
78
40
$445
2014
$174
181
46
38
136
26
$601
December 31,
2015
2014
2016
Total Assets:
Polyurethanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Products . . . . . . . . . . . . . . . . . . . . . . . .
Advanced Materials . . . . . . . . . . . . . . . . . . . . . . . . . .
Textile Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pigments and Additives . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . .
$2,677
2,046
728
523
2,155
1,060
$2,779
2,264
822
562
2,494
899
$ 2,859
2,326
828
574
2,640
1,696
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,189
$9,820
$10,923
(1) Beginning in the second quarter of 2016, we use segment adjusted EBITDA as the
measure of each segment’s profit or loss. We believe that segment adjusted EBITDA
more accurately reflects what management uses to make decisions about resources to be
allocated to the segments and assess their financial performance. We have recast the
measure of each segment’s profit or loss in the prior periods disclosed to reflect segment
adjusted EBITDA.
110
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. OPERATING SEGMENT INFORMATION (Continued)
Segment adjusted EBITDA is defined as net income of Huntsman Corporation before
interest, income tax, depreciation and amortization, net income attributable to
noncontrolling interests and certain Corporate and other items, as well as eliminating the
following adjustments: (a) business acquisition and integration expenses and purchase
accounting adjustments; (b) EBITDA from discontinued operations; (c) gain (loss) on
disposition of businesses/assets; (d) loss on early extinguishment of debt; (e) certain legal
settlements and related expenses; (f) amortization of pension and postretirement actuarial
losses; (g) net plant incident remediation costs; (h) restructuring, impairment, plant
closing and transition costs; and (i) spin-off separation expenses.
(2) Corporate and other includes unallocated corporate overhead, unallocated foreign exchange
gains and losses, LIFO inventory valuation reserve adjustments, nonoperating income and
expense, benzene sales and gains and losses on the disposition of corporate assets.
(3) The operating results of our former polymers, base chemicals and Australian styrenics
businesses are classified as discontinued operations, and, accordingly, the revenues of
these businesses are excluded for all periods presented. The EBITDA of our former
polymers, base chemicals and Australian styrenics businesses are included in discontinued
operations for all periods presented.
Year ended December 31,
2015
2014
2016
By Geographic Area
Revenues(1):
United States
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,005
1,021
676
453
4,502
$ 3,228
1,110
714
475
4,772
$ 3,540
1,200
677
825
5,336
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$9,657
$10,299
$11,578
December 31,
2015
2014
2016
Long-lived assets(2):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,841
350
294
254
243
203
1,027
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$4,212
$1,938
362
304
320
217
229
1,076
$4,446
$1,748
381
314
311
221
211
1,237
$4,423
(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.
111
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
27. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA
A summary of selected unaudited quarterly financial data for the years ended December 31, 2016
and 2015 is as follows (dollars in millions, except per share amounts):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs
(credits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . . .
Basic income per share(2):
Income from continuing operations attributable to
Huntsman Corporation common stockholders . . . .
Net income attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . .
Diluted income per share(2):
Income from continuing operations attributable to
Huntsman Corporation common stockholders . . . .
Net income attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . .
March 31,
2016
Three months ended
September 30,
2016
June 30,
2016
December 31,
2016(1)
$2,355
416
$2,544
457
$2,363
398
$2,395
407
13
63
62
56
0.24
0.24
0.24
0.24
29
95
94
87
0.37
0.37
0.36
0.36
45
65
64
55
0.23
0.23
0.23
0.23
(6)
138
137
128
0.54
0.54
0.53
0.53
March 31,
2015
Three months ended
September 30,
2015
June 30,
2015
December 31,
2015(3)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring, impairment and plant closing costs . . . . .
Income from continuing operations . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Huntsman Corporation . . . .
Basic income per share(2):
Income from continuing operations attributable to
Huntsman Corporation common stockholders . . . .
Net income attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . .
Diluted income per share(2):
Income from continuing operations attributable to
Huntsman Corporation common stockholders . . . .
Net income attributable to Huntsman Corporation
common stockholders . . . . . . . . . . . . . . . . . . . . . .
$2,589
450
93
17
15
5
$2,740
549
114
41
39
29
0.03
0.02
0.03
0.02
0.13
0.12
0.13
0.12
$2,638
473
14
63
63
55
0.23
0.23
0.22
0.22
$2,332
376
81
9
9
4
0.02
0.02
0.02
0.02
(1) On December 30, 2016, our Performance Products segment completed the sale of its European
surfactants business to Innospec Inc. for $199 million in cash plus our retention of trade
receivables and payables for an enterprise value of $225 million. For further information, see
112
HUNTSMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
27. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA (Continued)
‘‘Note 3. Business Combinations and Dispositions—Sale of European Surfactants Manufacturing
Facilities.’’
(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.
(3) During the three months ended December 31, 2015, we declared a dividend from our non-U.S.
operations to the U.S., which included bringing onshore certain U.S. foreign tax credits. The
foreign tax credits brought onshore exceeded the amount needed to offset the cash tax impact of
the dividend, as well as enough to allow us to carry $14 million of foreign tax credits back to a
prior year and claim a refund. During 2015, a number of our intercompany liabilities that were
denominated in U.S. dollars were owed by entities whose tax currency was the euro. As a result of
the depreciation in the euro opposite the U.S. dollar, these entities recorded a tax only foreign
exchange loss. Most of the intercompany receivables associated with these same U.S. dollar
denominated intercompany debts were held by entities with a tax currency of the U.S. dollar
which, therefore, resulted in no taxable gain. This resulted in a $33 million tax benefit ($58 million,
net of $25 million of contingent liabilities and valuation allowances) in the fourth quarter of 2015.
* * * * * *
113
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 8, 2017, there were approximately 62 stockholders of record and the closing price of our
common stock on the New York Stock Exchange was $20.05 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
2016
High
Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$13.83
16.65
18.11
20.52
$ 7.46
12.45
12.40
15.38
Period
2015
High
Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$24.62
23.83
22.40
14.02
$21.01
21.46
9.27
9.84
DIVIDENDS
The following tables represent dividends on common stock for our Company for the years ended
December 31, 2016 and 2015 (dollars in millions, except per share payment amounts):
Quarter ended
2016
Per share
payment amount
Approximate
amount paid
March 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$0.125
0.125
0.125
0.125
$30
30
30
30
Quarter ended
2015
Per share
payment amount
Approximate
amount paid
March 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . .
$0.125
0.125
0.125
0.125
$31
31
31
30
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.
114
PURCHASES OF EQUITY SECURITIES BY THE COMPANY
The following table provides information with respect to shares of restricted stock granted under
our stock incentive plans that we withheld upon vesting to satisfy our tax withholding obligations during
the three months ended December 31, 2016.
Total number
of shares
purchased
Average
price paid
per share
October . . . . . . . . . . . . . . . . . . . . . . .
November . . . . . . . . . . . . . . . . . . . . .
December . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . .
—
—
2,227
2,227
$ —
—
19.08
$19.08
Total number of
shares purchased
as part of publicly
announced plans
or programs(1)
Maximum number
(or approximate
dollar value) of
shares that may yet
be purchased under
the plans or programs(1)
—
—
—
$50,000,000
50,000,000
50,000,000
(1) On September 29, 2015, our Board of Directors authorized our Company to repurchase up to
$150 million in shares of our common stock. No shares were repurchased under our publicly
announced stock repurchase program during the three months ended December 31, 2016. For
more information, see ‘‘Note 22. Huntsman Corporation Stockholders’ Equity—Share Repurchase
Program’’ to our consolidated financial statements.
STOCK PERFORMANCE GRAPH
Comparison of Cumulative Five Year Total Return
$300
$250
$200
$150
$100
$50
$0
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
Huntsman Corporation
S&P 500 Index
S&P 500 Chemicals
22FEB201713375149
115
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HUNTSMAN CORPORATION 2016 ANNUAL REPORT
C O R P O R A T E I N F O R M A T I O N
C O R P O R A T E I N F O R M A T I O N
GLOBAL HEADQUARTERS
GLOBAL HEADQUARTERS
STOCK TRANSFER AGENT
STOCK TRANSFER AGENT
STOCK LISTING
STOCK LISTING
10003 Woodloch Forest Drive
The Woodlands, Texas 77380
Tel.: +1-281-719-6000
By Regular Mail:
Computershare
P.O. Box 30170
Our common stock is listed on the
New York Stock Exchange under the
symbol HUN.
INDEPENDENT REGISTERED
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
STOCKHOLDER INQUIRIES
STOCKHOLDER INQUIRIES
Inquiries from stockholders and
College Station, TX 77842 USA
By Overnight Delivery:
Computershare
211 Quality Circle
Suite 210
College Station, TX 77845 USA
other interested parties regarding
Toll Free: 1-866-210-6997
our company are always welcome.
International: +1-201-680-6578
Please direct your requests to:
Website:
Investor Relations
www.computershare.com/investor
10003 Woodloch Forest Drive
The Woodlands, Texas 77380
Tel.: +1-281-719-4610
Email: ir@huntsman.com
ANNUAL MEETING
ANNUAL MEETING
The 2017 annual meeting of
stockholders will take place on
Thursday, May 4, 2017 at 8:30 a.m.,
local time, at the following location:
The Westin The Woodlands
2 Waterway Square Place
The Woodlands, TX 77380
Tel.: +1-281-419-4300
WEBSITE
WEBSITE
www.huntsman.com
FORWARD-LOOKING STATEMENTS
FORWARD-LOOKING STATEMENTS
Statements in this report that are not historical are forward-looking statements. These statements are based on management’s current beliefs and
expectations. The forward-looking statements in this report are subject to uncertainty and changes in circumstances and involve risks and uncer-
tainties that may affect the company’s operations, markets, products, services, prices and other factors as discussed in the Huntsman companies’
filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, volatile global
economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, reorganization or restructuring of
Huntsman’s operations, including any delay of, or other negative developments affecting, the spin-off of Venator Materials Corporation, the ability
to implement cost reductions and manufacturing optimization improvements in Huntsman businesses and realize anticipated cost savings, and
other financial, economic, competitive, environmental, political, legal, regulatory and technological factors. The company assumes no obligation to
provide revisions to any forward-looking statements should circumstances change, except as otherwise required by applicable laws.
Annual Report Design by Curran & Connors, Inc.
www.curran-connors.com
Global Headquarters
Huntsman Corporation
10003 Woodloch Forest Drive
The Woodlands, Texas 77380 USA
Telephone +1-281-719-6000
www.huntsman.com
www.venatorcorp.com
Copyright © 2017 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.