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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One) | ||
ý |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the quarterly period ended March 31, 2016 |
||
OR |
||
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from to |
Commission File Number |
Exact Name of Registrant as Specified in its Charter, Principal Office Address and Telephone Number |
State of Incorporation or Organization |
I.R.S. Employer Identification No. |
|||
---|---|---|---|---|---|---|
001-32427 | Huntsman Corporation 10003 Woodloch Forest Drive The Woodlands, Texas 77380 (281) 719-6000 |
Delaware | 42-1648585 | |||
333-85141 | Huntsman International LLC 10003 Woodloch Forest Drive The Woodlands, Texas 77380 (281) 719-6000 |
Delaware | 87-0630358 |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Huntsman Corporation |
YES ý | NO o | ||
Huntsman International LLC |
YES ý | NO o |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Huntsman Corporation |
YES ý | NO o | ||
Huntsman International LLC |
YES ý | NO o |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Huntsman Corporation | Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o | ||||
Huntsman International LLC |
Large accelerated filer o |
Accelerated filer o |
Non-accelerated filer ý (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Huntsman Corporation |
YES o | NO ý | ||
Huntsman International LLC |
YES o | NO ý |
On April 20, 2016, 238,163,547 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interests of Huntsman International LLC were outstanding. There is no trading market for Huntsman International LLC's units of membership interests. All of Huntsman International LLC's units of membership interests are held by Huntsman Corporation.
This Quarterly Report on Form 10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman International LLC is a wholly-owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on Form 10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2016
2
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents(a) |
$ | 208 | $ | 257 | |||
Restricted cash(a) |
10 | 12 | |||||
Accounts and notes receivable (net of allowance for doubtful accounts of $29 and $26, respectively), ($493 and $438 pledged as collateral, respectively)(a) |
1,558 | 1,420 | |||||
Accounts receivable from affiliates |
14 | 29 | |||||
Inventories(a) |
1,689 | 1,692 | |||||
Prepaid expenses |
70 | 112 | |||||
Other current assets(a) |
281 | 312 | |||||
| | | | | | | |
Total current assets |
3,830 | 3,834 | |||||
Property, plant and equipment, net(a) |
4,437 | 4,446 | |||||
Investment in unconsolidated affiliates |
344 | 347 | |||||
Intangible assets, net(a) |
106 | 86 | |||||
Goodwill |
123 | 116 | |||||
Deferred income taxes |
424 | 418 | |||||
Other noncurrent assets(a) |
576 | 573 | |||||
| | | | | | | |
Total assets |
$ | 9,840 | $ | 9,820 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
LIABILITIES AND EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable(a) |
$ | 999 | $ | 1,034 | |||
Accounts payable to affiliates |
28 | 27 | |||||
Accrued liabilities(a) |
652 | 686 | |||||
Current portion of debt(a) |
103 | 170 | |||||
| | | | | | | |
Total current liabilities |
1,782 | 1,917 | |||||
Long-term debt(a) |
4,724 | 4,625 | |||||
Notes payable to affiliates |
1 | 1 | |||||
Deferred income taxes |
425 | 422 | |||||
Other noncurrent liabilities(a) |
1,223 | 1,226 | |||||
| | | | | | | |
Total liabilities |
8,155 | 8,191 | |||||
Commitments and contingencies (Notes 12 and 13) |
|||||||
Equity |
|||||||
Huntsman Corporation stockholders' equity: |
|||||||
Common stock $0.01 par value, 1,200,000,000 shares authorized, 250,770,770 and 249,483,541 shares issued and 236,271,202 and 237,080,026 shares outstanding, respectively |
3 | 3 | |||||
Additional paid-in capital |
3,439 | 3,407 | |||||
Treasury stock, 12,607,223 and 11,162,454 shares, respectively |
(150 | ) | (135 | ) | |||
Unearned stock-based compensation |
(28 | ) | (17 | ) | |||
Accumulated deficit |
(504 | ) | (528 | ) | |||
Accumulated other comprehensive loss |
(1,261 | ) | (1,288 | ) | |||
| | | | | | | |
Total Huntsman Corporation stockholders' equity |
1,499 | 1,442 | |||||
Noncontrolling interests in subsidiaries |
186 | 187 | |||||
| | | | | | | |
Total equity |
1,685 | 1,629 | |||||
| | | | | | | |
Total liabilities and equity |
$ | 9,840 | $ | 9,820 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
3
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Revenues: |
|||||||
Trade sales, services and fees, net |
$ | 2,321 | $ | 2,560 | |||
Related party sales |
34 | 29 | |||||
| | | | | | | |
Total revenues |
2,355 | 2,589 | |||||
Cost of goods sold |
1,939 | 2,139 | |||||
| | | | | | | |
Gross profit |
416 | 450 | |||||
Operating expenses: |
|||||||
Selling, general and administrative |
223 | 246 | |||||
Research and development |
37 | 42 | |||||
Other operating expense (income) |
5 | (8 | ) | ||||
Restructuring, impairment and plant closing costs |
13 | 93 | |||||
| | | | | | | |
Total expenses |
278 | 373 | |||||
| | | | | | | |
Operating income |
138 | 77 | |||||
Interest expense |
(50 | ) | (56 | ) | |||
Equity in income of investment in unconsolidated affiliates |
1 | 2 | |||||
Loss on early extinguishment of debt |
| (3 | ) | ||||
Other income (loss) |
1 | (1 | ) | ||||
| | | | | | | |
Income from continuing operations before income taxes |
90 | 19 | |||||
Income tax expense |
(27 | ) | (2 | ) | |||
| | | | | | | |
Income from continuing operations |
63 | 17 | |||||
Loss from discontinued operations |
(1 | ) | (2 | ) | |||
| | | | | | | |
Net income |
62 | 15 | |||||
Net income attributable to noncontrolling interests |
(6 | ) | (10 | ) | |||
| | | | | | | |
Net income attributable to Huntsman Corporation |
$ | 56 | $ | 5 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Basic income (loss) per share: |
|||||||
Income from continuing operations attributable to Huntsman Corporation common stockholders |
$ | 0.24 | $ | 0.03 | |||
Loss from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax |
| (0.01 | ) | ||||
| | | | | | | |
Net income attributable to Huntsman Corporation common stockholders |
$ | 0.24 | $ | 0.02 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Weighted average shares |
236.1 | 243.9 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Diluted income (loss) per share: |
|||||||
Income from continuing operations attributable to Huntsman Corporation common stockholders |
$ | 0.24 | $ | 0.03 | |||
Loss from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax |
| (0.01 | ) | ||||
| | | | | | | |
Net income attributable to Huntsman Corporation common stockholders |
$ | 0.24 | $ | 0.02 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Weighted average shares |
237.9 | 247.2 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Amounts attributable to Huntsman Corporation common stockholders: |
|||||||
Income from continuing operations |
$ | 57 | $ | 7 | |||
Loss from discontinued operations, net of tax |
(1 | ) | (2 | ) | |||
| | | | | | | |
Net income |
$ | 56 | $ | 5 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Dividends per share |
$ | 0.125 | $ | 0.125 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
4
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Net income |
$ | 62 | $ | 15 | |||
Other comprehensive income (loss), net of tax: |
|||||||
Foreign currency translations adjustments |
27 | (182 | ) | ||||
Pension and other postretirement benefits adjustments |
13 | 13 | |||||
Other, net |
(11 | ) | (1 | ) | |||
| | | | | | | |
Other comprehensive income (loss), net of tax |
29 | (170 | ) | ||||
| | | | | | | |
Comprehensive income (loss) |
91 | (155 | ) | ||||
Comprehensive income attributable to noncontrolling interests |
(8 | ) | (3 | ) | |||
| | | | | | | |
Comprehensive income (loss) attributable to Huntsman Corporation |
$ | 83 | $ | (158 | ) | ||
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
5
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
|
Huntsman Corporation Stockholders' Equity | |
|
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Shares | |
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
||||||||||||||||||||
|
Common stock |
Common stock |
Additional paid-in capital |
Treasury stock |
Unearned stock-based compensation |
Accumulated deficit |
Noncontrolling interests in subsidiaries |
Total equity |
||||||||||||||||||||
Balance, January 1, 2016 |
237,080,026 | $ | 3 | $ | 3,407 | $ | (135 | ) | $ | (17 | ) | $ | (528 | ) | $ | (1,288 | ) | $ | 187 | $ | 1,629 | |||||||
Net income |
| | | | | 56 | | 6 | 62 | |||||||||||||||||||
Other comprehensive income |
| | | | | | 27 | 2 | 29 | |||||||||||||||||||
Issuance of nonvested stock awards |
| | 16 | | (16 | ) | | | | | ||||||||||||||||||
Vesting of stock awards |
880,269 | | 2 | | | | | | 2 | |||||||||||||||||||
Recognition of stock-based compensation |
| | 2 | | 5 | | | | 7 | |||||||||||||||||||
Repurchase and cancellation of stock awards |
(244,324 | ) | | | | | (2 | ) | | | (2 | ) | ||||||||||||||||
Dividends paid to noncontrolling interests |
| | | | | | | (9 | ) | (9 | ) | |||||||||||||||||
Treasury stock repurchased |
(1,444,769 | ) | | 15 | (15 | ) | | | | | | |||||||||||||||||
Excess tax shortfall related to stock-based compensation |
| | (3 | ) | | | | | | (3 | ) | |||||||||||||||||
Dividends declared on common stock |
| | | | | (30 | ) | | | (30 | ) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2016 |
236,271,202 | $ | 3 | $ | 3,439 | $ | (150 | ) | $ | (28 | ) | $ | (504 | ) | $ | (1,261 | ) | $ | 186 | $ | 1,685 | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, January 1, 2015 |
243,416,979 | $ | 3 | $ | 3,385 | $ | (50 | ) | $ | (14 | ) | $ | (493 | ) | $ | (1,053 | ) | $ | 173 | $ | 1,951 | |||||||
Net income |
| | | | | 5 | | 10 | 15 | |||||||||||||||||||
Other comprehensive loss |
| | | | | | (163 | ) | (7 | ) | (170 | ) | ||||||||||||||||
Issuance of nonvested stock awards |
| | 19 | | (19 | ) | | | | | ||||||||||||||||||
Vesting of stock awards |
1,000,585 | | 6 | | | | | | 6 | |||||||||||||||||||
Recognition of stock-based compensation |
| | 3 | | 5 | | | | 8 | |||||||||||||||||||
Repurchase and cancellation of stock awards |
(302,372 | ) | | | | | (7 | ) | | | (7 | ) | ||||||||||||||||
Stock options exercised |
11,732 | | | | | | | | | |||||||||||||||||||
Excess tax benefit related to stock-based compensation |
| | 1 | | | | | | 1 | |||||||||||||||||||
Dividends declared on common stock |
| | | | | (31 | ) | | | (31 | ) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2015 |
244,126,924 | $ | 3 | $ | 3,414 | $ | (50 | ) | $ | (28 | ) | $ | (526 | ) | $ | (1,216 | ) | $ | 176 | $ | 1,773 | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to condensed consolidated financial statements.
6
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Operating Activities: |
|||||||
Net income |
$ | 62 | $ | 15 | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Equity in income of investment in unconsolidated affiliates |
(1 | ) | (2 | ) | |||
Depreciation and amortization |
100 | 95 | |||||
Loss on early extinguishment of debt |
| 3 | |||||
Noncash interest expense |
4 | 4 | |||||
Noncash restructuring and impairment charges |
5 | 29 | |||||
Deferred income taxes |
6 | (33 | ) | ||||
Noncash gain on foreign currency transactions |
| (6 | ) | ||||
Stock-based compensation |
8 | 9 | |||||
Other, net |
2 | 1 | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|||||||
Accounts and notes receivable |
(105 | ) | (49 | ) | |||
Inventories |
22 | 54 | |||||
Prepaid expenses |
2 | 3 | |||||
Other current assets |
33 | 25 | |||||
Other noncurrent assets |
(20 | ) | (90 | ) | |||
Accounts payable |
(31 | ) | (2 | ) | |||
Accrued liabilities |
| (3 | ) | ||||
Other noncurrent liabilities |
1 | (19 | ) | ||||
| | | | | | | |
Net cash provided by operating activities |
88 | 34 | |||||
| | | | | | | |
Investing Activities: |
|||||||
Capital expenditures |
(99 | ) | (149 | ) | |||
Cash received from unconsolidated affiliates |
10 | 15 | |||||
Investment in unconsolidated affiliates |
(12 | ) | (13 | ) | |||
Cash received from termination of cross-currency interest rate contracts |
| 66 | |||||
Change in restricted cash |
2 | | |||||
Other, net |
(2 | ) | | ||||
| | | | | | | |
Net cash used in investing activities |
(101 | ) | (81 | ) | |||
| | | | | | | |
(Continued)
7
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Financing Activities: |
|||||||
Net borrowings under revolving loan facilities |
$ | 45 | $ | | |||
Net repayments on overdraft facilities |
| (2 | ) | ||||
Repayments of short-term debt |
(12 | ) | (17 | ) | |||
Borrowings on short-term debt |
4 | | |||||
Repayments of long-term debt |
(27 | ) | (59 | ) | |||
Proceeds from issuance of long-term debt |
| 326 | |||||
Repayments of notes payable |
(9 | ) | (9 | ) | |||
Borrowings on notes payable |
2 | | |||||
Debt issuance costs paid |
| (4 | ) | ||||
Call premiums related to early extinguishment of debt |
| (3 | ) | ||||
Contingent consideration paid for acquisition |
| (4 | ) | ||||
Dividends paid to common stockholders |
(30 | ) | (31 | ) | |||
Dividends paid to noncontrolling interests |
(9 | ) | | ||||
Repurchase and cancellation of stock awards |
(2 | ) | (7 | ) | |||
Excess tax benefit related to stock-based compensation |
| 1 | |||||
Other, net |
| (2 | ) | ||||
| | | | | | | |
Net cash (used in) provided by financing activities |
(38 | ) | 189 | ||||
| | | | | | | |
Effect of exchange rate changes on cash |
2 | (8 | ) | ||||
| | | | | | | |
(Decrease) increase in cash and cash equivalents |
(49 | ) | 134 | ||||
Cash and cash equivalents at beginning of period |
257 | 860 | |||||
| | | | | | | |
Cash and cash equivalents at end of period |
$ | 208 | $ | 994 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Supplemental cash flow information: |
|||||||
Cash paid for interest |
$ | 35 | $ | 48 | |||
Cash paid for income taxes |
5 | 11 |
As of March 31, 2016 and 2015, the amount of capital expenditures in accounts payable was $62 million and $58 million, respectively.
See accompanying notes to condensed consolidated financial statements.
8
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents(a) |
$ | 208 | $ | 257 | |||
Restricted cash(a) |
10 | 12 | |||||
Accounts and notes receivable (net of allowance for doubtful accounts of $29 and $26, respectively), ($493 and $438 pledged as collateral, respectively)(a) |
1,558 | 1,420 | |||||
Accounts receivable from affiliates |
329 | 340 | |||||
Inventories(a) |
1,689 | 1,692 | |||||
Prepaid expenses |
69 | 111 | |||||
Other current assets(a) |
276 | 306 | |||||
| | | | | | | |
Total current assets |
4,139 | 4,138 | |||||
Property, plant and equipment, net(a) |
4,405 | 4,410 | |||||
Investment in unconsolidated affiliates |
344 | 347 | |||||
Intangible assets, net(a) |
106 | 86 | |||||
Goodwill |
123 | 116 | |||||
Deferred income taxes |
424 | 418 | |||||
Other noncurrent assets(a) |
576 | 573 | |||||
| | | | | | | |
Total assets |
$ | 10,117 | $ | 10,088 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
LIABILITIES AND EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable(a) |
$ | 998 | $ | 1,034 | |||
Accounts payable to affiliates |
54 | 52 | |||||
Accrued liabilities(a) |
650 | 683 | |||||
Notes payable to affiliates |
100 | 100 | |||||
Current portion of debt(a) |
103 | 170 | |||||
| | | | | | | |
Total current liabilities |
1,905 | 2,039 | |||||
Long-term debt(a) |
4,724 | 4,625 | |||||
Notes payable to affiliates |
698 | 698 | |||||
Deferred income taxes |
421 | 418 | |||||
Other noncurrent liabilities(a) |
1,226 | 1,224 | |||||
| | | | | | | |
Total liabilities |
8,974 | 9,004 | |||||
Commitments and contingencies (Notes 12 and 13) |
|||||||
Equity |
|||||||
Huntsman International LLC members' equity: |
|||||||
Members' equity, 2,728 units issued and outstanding |
3,200 | 3,196 | |||||
Accumulated deficit |
(957 | ) | (983 | ) | |||
Accumulated other comprehensive loss |
(1,286 | ) | (1,316 | ) | |||
| | | | | | | |
Total Huntsman International LLC members' equity |
957 | 897 | |||||
Noncontrolling interests in subsidiaries |
186 | 187 | |||||
| | | | | | | |
Total equity |
1,143 | 1,084 | |||||
| | | | | | | |
Total liabilities and equity |
$ | 10,117 | $ | 10,088 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
9
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Revenues: |
|||||||
Trade sales, services and fees, net |
$ | 2,321 | $ | 2,560 | |||
Related party sales |
34 | 29 | |||||
| | | | | | | |
Total revenues |
2,355 | 2,589 | |||||
Cost of goods sold |
1,938 | 2,137 | |||||
| | | | | | | |
Gross profit |
417 | 452 | |||||
Operating expenses: |
|||||||
Selling, general and administrative |
221 | 244 | |||||
Research and development |
37 | 42 | |||||
Other operating expense (income) |
5 | (7 | ) | ||||
Restructuring, impairment and plant closing costs |
13 | 93 | |||||
| | | | | | | |
Total expenses |
276 | 372 | |||||
| | | | | | | |
Operating income |
141 | 80 | |||||
Interest expense |
(53 | ) | (58 | ) | |||
Equity in income of investment in unconsolidated affiliates |
1 | 2 | |||||
Loss on early extinguishment of debt |
| (3 | ) | ||||
Other income (loss) |
1 | (1 | ) | ||||
| | | | | | | |
Income from continuing operations before income taxes |
90 | 20 | |||||
Income tax expense |
(27 | ) | (3 | ) | |||
| | | | | | | |
Income from continuing operations |
63 | 17 | |||||
Loss from discontinued operations, net of tax |
(1 | ) | (2 | ) | |||
| | | | | | | |
Net income |
62 | 15 | |||||
Net income attributable to noncontrolling interests |
(6 | ) | (10 | ) | |||
| | | | | | | |
Net income attributable to Huntsman International LLC |
$ | 56 | $ | 5 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
10
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Net income |
$ | 62 | $ | 15 | |||
Other comprehensive income (loss), net of tax: |
|||||||
Foreign currency translations adjustment |
28 | (182 | ) | ||||
Pension and other postretirement benefits adjustments |
15 | 15 | |||||
Other, net |
(11 | ) | (1 | ) | |||
| | | | | | | |
Other comprehensive income (loss), net of tax |
32 | (168 | ) | ||||
| | | | | | | |
Comprehensive income (loss) |
94 | (153 | ) | ||||
Comprehensive income attributable to noncontrolling interests |
(8 | ) | (3 | ) | |||
| | | | | | | |
Comprehensive income (loss) attributable to Huntsman International LLC |
$ | 86 | $ | (156 | ) | ||
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
11
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Unit Amounts)
|
Huntsman International LLC Members | |
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Members' equity | |
Accumulated other comprehensive loss |
|
|
||||||||||||||
|
Accumulated deficit |
Noncontrolling interests in subsidiaries |
|
||||||||||||||||
|
Units | Amount | Total equity | ||||||||||||||||
Balance, January 1, 2016 |
2,728 | $ | 3,196 | $ | (983 | ) | $ | (1,316 | ) | $ | 187 | $ | 1,084 | ||||||
Net income |
| | 56 | | 6 | 62 | |||||||||||||
Dividends paid to parent |
| | (30 | ) | | | (30 | ) | |||||||||||
Other comprehensive income |
| | | 30 | 2 | 32 | |||||||||||||
Contribution from parent |
| 7 | | | | 7 | |||||||||||||
Excess tax shortfall related to stock-based compensation |
| (3 | ) | | | | (3 | ) | |||||||||||
Dividends paid to noncontrolling interests |
| | | | (9 | ) | (9 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2016 |
2,728 | $ | 3,200 | $ | (957 | ) | $ | (1,286 | ) | $ | 186 | $ | 1,143 | ||||||
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Balance, January 1, 2015 |
2,728 | $ | 3,166 | $ | (956 | ) | $ | (1,087 | ) | $ | 173 | $ | 1,296 | ||||||
Net income |
| | 5 | | 10 | 15 | |||||||||||||
Dividends paid to parent |
| | (31 | ) | | | (31 | ) | |||||||||||
Other comprehensive loss |
| | | (161 | ) | (7 | ) | (168 | ) | ||||||||||
Contribution from parent |
| 8 | | | | 8 | |||||||||||||
Excess tax benefit related to stock-based compensation |
| 1 | | | | 1 | |||||||||||||
| | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2015 |
2,728 | $ | 3,175 | $ | (982 | ) | $ | (1,248 | ) | $ | 176 | $ | 1,121 | ||||||
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
See accompanying notes to condensed consolidated financial statements.
12
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Operating Activities: |
|||||||
Net income |
$ | 62 | $ | 15 | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Equity in income of investment in unconsolidated affiliates |
(1 | ) | (2 | ) | |||
Depreciation and amortization |
97 | 92 | |||||
Loss on early extinguishment of debt |
| 3 | |||||
Noncash interest expense |
7 | 6 | |||||
Noncash restructuring and impairment charges |
5 | 29 | |||||
Deferred income taxes |
6 | (33 | ) | ||||
Noncash gain on foreign currency transactions |
| (6 | ) | ||||
Noncash compensation |
7 | 8 | |||||
Other, net |
2 | 3 | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|||||||
Accounts and notes receivable |
(105 | ) | (49 | ) | |||
Inventories |
22 | 54 | |||||
Prepaid expenses |
3 | 4 | |||||
Other current assets |
32 | 25 | |||||
Other noncurrent assets |
(20 | ) | (90 | ) | |||
Accounts payable |
(33 | ) | (4 | ) | |||
Accrued liabilities |
| (3 | ) | ||||
Other noncurrent liabilities |
3 | (17 | ) | ||||
| | | | | | | |
Net cash provided by operating activities |
87 | 35 | |||||
| | | | | | | |
Investing Activities: |
|||||||
Capital expenditures |
(99 | ) | (149 | ) | |||
Cash received from unconsolidated affiliates |
10 | 15 | |||||
Investment in unconsolidated affiliates |
(12 | ) | (13 | ) | |||
Increase in receivable from affiliate |
(2 | ) | (6 | ) | |||
Cash received from termination of cross-currency interest rate contracts |
| 66 | |||||
Change in restricted cash |
2 | | |||||
Other, net |
(1 | ) | | ||||
| | | | | | | |
Net cash used in investing activities |
(102 | ) | (87 | ) | |||
| | | | | | | |
(Continued)
13
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Financing Activities: |
|||||||
Net borrowings under revolving loan facilities |
$ | 45 | $ | | |||
Net repayments on overdraft facilities |
| (2 | ) | ||||
Repayments of short-term debt |
(12 | ) | (17 | ) | |||
Borrowings on short-term debt |
4 | | |||||
Repayments of long-term debt |
(27 | ) | (59 | ) | |||
Proceeds from issuance of long-term debt |
| 326 | |||||
Repayments of notes payable to affiliate |
| (50 | ) | ||||
Repayments of notes payable |
(9 | ) | (9 | ) | |||
Borrowings on notes payable |
2 | | |||||
Debt issuance costs paid |
| (4 | ) | ||||
Call premiums related to early extinguishment of debt |
| (3 | ) | ||||
Contingent consideration paid for acquisition |
| (4 | ) | ||||
Dividends paid to noncontrolling interests |
(9 | ) | | ||||
Dividends paid to parent |
(30 | ) | (31 | ) | |||
Excess tax benefit related to stock-based compensation |
| 1 | |||||
Other, net |
| (2 | ) | ||||
| | | | | | | |
Net cash (used in) provided by financing activities |
(36 | ) | 146 | ||||
| | | | | | | |
Effect of exchange rate changes on cash |
2 | (8 | ) | ||||
| | | | | | | |
(Decrease) increase in cash and cash equivalents |
(49 | ) | 86 | ||||
Cash and cash equivalents at beginning of period |
257 | 710 | |||||
| | | | | | | |
Cash and cash equivalents at end of period |
$ | 208 | $ | 796 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Supplemental cash flow information: |
|||||||
Cash paid for interest |
$ | 35 | $ | 48 | |||
Cash paid for income taxes |
5 | 11 |
As of March 31, 2016 and 2015, the amount of capital expenditures in accounts payable was $62 million and $58 million, respectively. During the three months ended March 31, 2016 and 2015, Huntsman Corporation contributed $7 million and $8 million, respectively, related to stock-based compensation.
See accompanying notes to condensed consolidated financial statements.
14
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
CERTAIN DEFINITIONS
For convenience in this report, the terms "Company," "our," "us" or "we" may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. In this report, "Huntsman International" refers to Huntsman International LLC (our wholly-owned subsidiary) and, unless the context otherwise requires, its subsidiaries.
In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.
INTERIM FINANCIAL STATEMENTS
Our unaudited interim condensed consolidated financial statements and Huntsman International's unaudited interim condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP" or "U.S. GAAP") and in management's opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income, financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 for our Company and Huntsman International.
DESCRIPTION OF BUSINESS
We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride, epoxy-based polymer formulations, textile chemicals, dyes, 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.
15
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. GENERAL (Continued)
Since then, we have grown through a series of acquisitions and now own a global portfolio of businesses.
Currently, we operate all of our businesses through Huntsman International, our wholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.
HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS
Except where otherwise indicated, these notes relate to the condensed consolidated financial statements for both our Company and Huntsman International. The differences between our financial statements and Huntsman International's financial statements relate primarily to the following:
PRINCIPLES OF CONSOLIDATION
Our condensed consolidated financial statements include the accounts of our wholly-owned and majority-owned subsidiaries and any variable interest entities for which we are the primary beneficiary. Intercompany accounts and transactions have been eliminated.
RECENT DEVELOPMENTS
Debt Activity
On April 1, 2016, Huntsman International entered into a new $550 million term loan B due 2023 ("2016 Term Loan B"). Proceeds from the 2016 Term Loan B were used to repay in full our extended term loan B facility due 2017 ("Extended Term Loan B"), our extended term loan B facilityseries 2 due 2017 ("Extended Term Loan BSeries 2"), and our term loan C due 2016 ("Term Loan C"). In connection with these repayments, we expect to record a loss on early extinguishment of debt of approximately $1 million in the second quarter of 2016. In addition, Huntsman International extended the maturity date of its revolving credit facility ("Revolving Facility") to 2021 and increased the committed amount to $650 million. For more information, see "Note 6. DebtDirect and Subsidiary Debt."
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.
16
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. 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 StatementExtraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, eliminating from US GAAP the concept of extraordinary items. Reporting entities will no longer have to assess whether a particular event or transaction event is extraordinary. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. 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 condensed 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 condensed consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-05, IntangiblesGoodwill and OtherInternal-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 condensed 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, and in April 2016, the
17
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
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). 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 and ASU No. 2016-10 should be applied retrospectively, and early application is permitted. We are currently evaluating the impact of the adoption of the amendments in ASU No. 2014-09, ASU No. 2016-08 and ASU No. 2016-10 on our condensed consolidated financial statements.
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 (FIFO) 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 condensed 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 condensed consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09, CompensationStock Compensation (Topic 718): Improvements to Employee Shared-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 condensed consolidated financial statements.
18
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVENTORIES
Inventories are stated at the lower of cost or market, with cost determined using last-in first-out ("LIFO"), first-in first-out, and average costs methods for different components of inventory. Inventories consisted of the following (dollars in millions):
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
Raw materials and supplies |
$ | 383 | $ | 389 | |||
Work in progress |
112 | 125 | |||||
Finished goods |
1,233 | 1,221 | |||||
| | | | | | | |
Total |
1,728 | 1,735 | |||||
LIFO reserves |
(39 | ) | (43 | ) | |||
| | | | | | | |
Net inventories |
$ | 1,689 | $ | 1,692 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
For both March 31, 2016 and December 31, 2015, approximately 9% of inventories were recorded using the LIFO cost method.
4. 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:
19
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. VARIABLE INTEREST ENTITIES (Continued)
Creditors of these entities have no recourse to our general credit. See "Note 6. DebtDirect and Subsidiary Debt." As the primary beneficiary of these variable interest entities at March 31, 2016, the joint ventures' assets, liabilities and results of operations are included in our condensed consolidated financial statements.
The following table summarizes the carrying amount of our variable interest entities' assets and liabilities included in our condensed consolidated balance sheets, before intercompany eliminations, as of March 31, 2016 and our consolidated balance sheets as of December 31, 2015 (dollars in millions):
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
Current assets |
$ | 87 | $ | 121 | |||
Property, plant and equipment, net |
303 | 307 | |||||
Other noncurrent assets |
112 | 95 | |||||
Deferred income taxes |
35 | 35 | |||||
Intangible assets |
37 | 36 | |||||
Goodwill |
13 | 13 | |||||
| | | | | | | |
Total assets |
$ | 587 | $ | 607 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Current liabilities |
$ | 158 | $ | 159 | |||
Long-term debt |
125 | 140 | |||||
Deferred income taxes |
11 | 11 | |||||
Other noncurrent liabilities |
55 | 54 | |||||
| | | | | | | |
Total liabilities |
$ | 349 | $ | 364 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
20
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of March 31, 2016 and December 31, 2015, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):
|
Workforce reductions(1) |
Demolition and decommissioning |
Non-cancelable lease and contract termination costs |
Other restructuring costs |
Total(2) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Accrued liabilities as of January 1, 2016 |
$ | 109 | $ | 16 | $ | 38 | $ | 5 | $ | 168 | ||||||
2016 charges for 2015 and prior initiatives |
2 | 1 | 1 | 5 | 9 | |||||||||||
Reversal of reserves no longer required |
| | (1 | ) | | (1 | ) | |||||||||
Distribution of prefunded restructuring costs |
(38 | ) | (2 | ) | | | (40 | ) | ||||||||
2016 payments for 2015 and prior initiatives |
(14 | ) | (1 | ) | | (5 | ) | (20 | ) | |||||||
Foreign currency effect on liability balance |
1 | | 1 | | 2 | |||||||||||
| | | | | | | | | | | | | | | | |
Accrued liabilities as of March 31, 2016 |
$ | 60 | $ | 14 | $ | 39 | $ | 5 | $ | 118 | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
2014 and prior initiatives |
$ | 98 | $ | 143 | |||
2015 initiatives |
20 | 25 | |||||
| | | | | | | |
Total |
$ | 118 | $ | 168 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
21
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):
|
Polyurethanes | Performance Products |
Advanced Materials |
Textile Effects |
Pigments | Discontinued Operations |
Corporate and Other |
Total | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Accrued liabilities as of January 1, 2016 |
$ | 5 | $ | 9 | $ | 4 | $ | 55 | $ | 90 | $ | 1 | $ | 4 | $ | 168 | |||||||||
2016 charges for 2015 and prior initiatives |
| | | 2 | 6 | | 1 | 9 | |||||||||||||||||
Reversal of reserves no longer required |
| | | (1 | ) | | | | (1 | ) | |||||||||||||||
Distribution of prefunded restructuring costs |
| (2 | ) | | (2 | ) | (36 | ) | | | (40 | ) | |||||||||||||
2016 payments for 2015 and prior initiatives |
(1 | ) | (1 | ) | | (1 | ) | (16 | ) | | (1 | ) | (20 | ) | |||||||||||
Foreign currency effect on liability balance |
| | | 1 | 1 | | | 2 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Accrued liabilities as of March 31, 2016 |
$ | 4 | $ | 6 | $ | 4 | $ | 54 | $ | 45 | $ | 1 | $ | 4 | $ | 118 | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Current portion of restructuring reserves |
$ | 4 | $ | 6 | $ | | $ | 14 | $ | 38 | $ | 1 | $ | 4 | $ | 67 | |||||||||
Long-term portion of restructuring reserves |
| | 4 | 40 | 7 | | | 51 |
Details with respect to cash and noncash restructuring charges for the three months ended March 31, 2016 and 2015 by initiative are provided below (dollars in millions):
|
Three months ended March 31, 2016 |
|||
---|---|---|---|---|
Cash charges: |
||||
2016 charges for 2015 and prior initiatives |
$ | 9 | ||
Reversal of reserves no longer required |
(1 | ) | ||
Accelerated depreciation |
4 | |||
Other non-cash charges |
1 | |||
| | | | |
Total 2016 Restructuring, Impairment and Plant Closing Costs |
$ | 13 | ||
| | | | |
| | | | |
| | | | |
22
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)
|
Three months ended March 31, 2015 |
|||
---|---|---|---|---|
Cash charges: |
||||
2015 charges for 2014 and prior initiatives |
$ | 42 | ||
2015 charges for 2015 initiatives |
24 | |||
Reversal of reserves no longer required |
(1 | ) | ||
Accelerated depreciation |
28 | |||
| | | | |
Total 2015 Restructuring, Impairment and Plant Closing Costs |
$ | 93 | ||
| | | | |
| | | | |
| | | | |
2016 RESTRUCTURING ACTIVITIES
On December 1, 2014, we announced a comprehensive restructuring program to improve the global competitiveness of our Pigments and Additives segment. As part of the program, we are reducing our workforce by approximately 900 positions. In connection with this restructuring program, we recorded restructuring expense of $3 million in the three months ended March 31, 2016.
On February 12, 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 announcement, we recorded restructuring expense of $1 million in the three months ended March 31, 2016.
On March 4, 2015, we announced plans to restructure our color pigments business, another step in our comprehensive restructuring program in our Pigments and Additives segment, and recorded restructuring expense of approximately $3 million in the three months ended March 31, 2016.
In connection with planned restructuring activities, our Pigments and Additives segment recorded accelerated depreciation as restructuring expense of $4 million during the three months ended March 31, 2016.
2015 RESTRUCTURING ACTIVITIES
As part of the comprehensive restructuring program in our Pigments and Additives segment announced in December 2014, we recorded restructuring expense of $34 million in the three months ended March 31, 2015 related primarily to workforce reductions.
In connection with the closure of the 'black end' at our Calais, France site announced in February 2015, we began to accelerate depreciation on the affected assets and recorded incremental accelerated depreciation in the three months ended March 31, 2015 of $28 million as restructuring, impairment and plant closing costs. In addition, we recorded restructuring expense of $22 million in the three months ended March 31, 2015 related primarily to workforce reductions.
In connection with our plans announced in March 2015 to restructure our color pigments business within our Pigments and Additives segment, we recorded restructuring expense of approximately $1 million in the three months ended March 31, 2015 related to workforce reductions.
23
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DEBT
Outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):
Huntsman Corporation
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
Senior Credit Facilities: |
|||||||
Term loans |
$ | 2,441 | $ | 2,454 | |||
Amounts outstanding under A/R programs |
263 | 215 | |||||
Senior notes |
1,872 | 1,850 | |||||
Variable interest entities |
140 | 151 | |||||
Other |
111 | 125 | |||||
| | | | | | | |
Total debtexcluding debt to affiliates |
$ | 4,827 | $ | 4,795 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total current portion of debt |
$ | 103 | $ | 170 | |||
Long-term portion |
4,724 | 4,625 | |||||
| | | | | | | |
Total debtexcluding debt to affiliates |
$ | 4,827 | $ | 4,795 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total debtexcluding debt to affiliates |
$ | 4,827 | $ | 4,795 | |||
Notes payable to affiliates-noncurrent |
1 | 1 | |||||
| | | | | | | |
Total debt |
$ | 4,828 | $ | 4,796 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Huntsman International
|
March 31, 2016 |
December 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
Senior Credit Facilities: |
|||||||
Term loans |
$ | 2,441 | $ | 2,454 | |||
Amounts outstanding under A/R programs |
263 | 215 | |||||
Senior notes |
1,872 | 1,850 | |||||
Variable interest entities |
140 | 151 | |||||
Other |
111 | 125 | |||||
| | | | | | | |
Total debtexcluding debt to affiliates |
$ | 4,827 | $ | 4,795 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total current portion of debt |
$ | 103 | $ | 170 | |||
Long-term portion |
4,724 | 4,625 | |||||
| | | | | | | |
Total debtexcluding debt to affiliates |
$ | 4,827 | $ | 4,795 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total debtexcluding debt to affiliates |
$ | 4,827 | $ | 4,795 | |||
Notes payable to affiliates-current |
100 | 100 | |||||
Notes payable to affiliates-noncurrent |
698 | 698 | |||||
| | | | | | | |
Total debt |
$ | 5,625 | $ | 5,593 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
24
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DEBT (Continued)
DIRECT AND SUBSIDIARY DEBT
Huntsman Corporation's direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily Huntsman International). Huntsman Corporation is not a guarantor of such subsidiary debt.
Certain of our subsidiaries are designated as nonguarantor subsidiaries and have third-party debt agreements. These debt agreements contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us.
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 March 31, 2016 and December 31, 2015, the amount of debt issuance costs directly reducing the debt liability was $64 million and $67 million, respectively. We record the amortization of debt issuance costs as interest expense.
Senior Credit Facilities
As of March 31, 2016, our senior credit facilities ("Senior Credit Facilities") consisted of our Revolving Facility, our Extended Term Loan B, our Extended Term Loan BSeries 2, our 2015 extended term loan B facility ("2015 Extended Term Loan B"), our 2014 term loan facility ("2014 Term Loan B") and our Term Loan C as follows (dollars in millions):
Facility
|
Committed Amount |
Principal Outstanding |
Unamortized Discounts and Debt Issuance Costs |
Carrying Value |
Interest Rate(3) | Maturity | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revolving Facility(1) |
$ | 625 | $ | | $ | | $ | | USD LIBOR plus 3.00% | 2017 | ||||||
Extended Term Loan B |
NA | 309 | (1 | ) | 308 | USD LIBOR plus 2.75% | 2017 | |||||||||
Extended Term Loan BSeries 2 |
NA | 190 | | 190 | USD LIBOR plus 3.00% | 2017 | ||||||||||
2015 Extended Term Loan B |
NA | 766 | (4 | ) | 762 | USD LIBOR plus 3.00% | 2019 | |||||||||
2014 Term Loan B |
NA | 1,185 | (53 | ) | 1,132 | USD LIBOR plus 3.00%(2) | 2021 | |||||||||
Term Loan C |
NA | 49 | | 49 | USD LIBOR plus 2.25% | 2016 |
25
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DEBT (Continued)
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 April 1, 2016, Huntsman International entered into a fifteenth amendment to the agreement governing the Senior Credit Facilities (the "Credit Agreement"). The amendment provides for a new term loan facility, 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 Huntsman International's Extended Term Loan B, Extended Term Loan BSeries 2 and Term Loan C. In connection with these repayments, we expect to record a loss on early extinguishment of debt of approximately $1 million in the second quarter of 2016.
The 2016 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 our senior notes upon maturity. The 2016 Term Loan B is subject to the same terms and conditions as our existing senior secured term loan facilities.
The 2016 Term Loan B bears interest at an interest rate margin of LIBOR plus 3.50% (subject to a 0.75% floor) and amortizes in annual amounts equal to 1% of the principal amount of the 2016 Term Loan B, payable quarterly commencing on June 30, 2016.
The 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 Term Loan B due 2019 or our senior notes upon their maturity. The amendment further increases 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 March 31, 2016 we had no borrowings under our Revolving Facility.
A/R Programs
Our U.S. accounts receivable securitization program ("U.S. A/R Program") and our European accounts receivable securitization program ("EU A/R Program" and collectively with the U.S. A/R Program, "A/R Programs") are structured so that we transfer certain of our trade receivables to the U.S. special purpose entity ("U.S. SPE") and the European special purpose entity ("EU SPE") in transactions intended to be true sales or true contributions. The receivables collateralize debt
26
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DEBT (Continued)
incurred by the U.S. SPE and the EU SPE. Information regarding our A/R Programs as of March 31, 2016 was as follows (monetary amounts in millions):
Facility
|
Maturity | Maximum Funding Availability(1) |
Amount Outstanding |
Interest Rate(2) | ||||
---|---|---|---|---|---|---|---|---|
U.S. A/R Program |
March 2018 | $250 | $135(3) | Applicable rate plus 0.95% | ||||
EU A/R Program |
March 2018 | €225 | €114 | Applicable rate plus 1.10% | ||||
|
(approximately $252) | (approximately $128) |
As of March 31, 2016 and December 31, 2015, $493 million and $438 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.
Redemption of Notes and Loss on Early Extinguishment of Debt
During the three months ended March 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 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
January 2015 |
2021 Senior Subordinated Notes | $ | 37 | $ | 40 | $ | 3 |
Note Payable from Huntsman International to Huntsman Corporation
As of March 31, 2016, we had a loan of $797 million to our subsidiary, Huntsman International (the "Intercompany Note"). The Intercompany Note is unsecured and $100 million of the outstanding amount is classified as current as of March 31, 2016 on our condensed consolidated balance sheets. As of March 31, 2016, under the terms of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility).
27
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DEBT (Continued)
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 subject to a single financial covenant (the "Leverage Covenant"), which applies only to the Revolving Facility and is calculated at the Huntsman International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage Covenant is a net senior secured leverage ratio covenant, which requires that Huntsman International's ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75 to 1.
If in the future Huntsman International fails to comply with the Leverage Covenant, then we may not have access to liquidity under our Revolving Facility. If Huntsman International failed to comply with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit outstanding under the Revolving Facility, Huntsman International would be in default under the Senior Credit Facilities, and, unless Huntsman International obtained a waiver or forbearance with respect to such default (as to which we can provide no assurance), Huntsman International could be required to pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such facilities.
The agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs' metrics in the future could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures.
28
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
All derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.
We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded as an unrealized currency translation adjustment in accumulated other comprehensive loss.
Our revenues and expenses are denominated in various foreign currencies, and our cash flows and earnings are thus subject to fluctuations due to exchange rate variations. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of March 31, 2016, we had approximately $185 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.
Huntsman International has entered into two interest rate contracts to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps are designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps are recorded in other comprehensive income (loss) (dollars in millions):
March 31, 2016 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Notional Value |
Effective Date | Maturity | Fixed Rate |
Fair Value | ||||||
$ | 50 | December 2014 | April 2017 | 2.5 | % | $1 noncurrent liability | ||||
50 | January 2015 | April 2017 | 2.5 | % | 1 noncurrent liability |
Beginning in 2009, Arabian Amines Company entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of Arabian Amines Company as of July 1, 2010, the interest rate contract is now included in our consolidated results. See "Note 4. Variable Interest Entities." The notional amount of the swap as of March 31, 2016 was $22 million, and the interest rate contract is not designated as a cash flow hedge. As of March 31, 2016, the fair value of the swap was $2 million and was recorded in noncurrent liabilities on our condensed consolidated balance sheets. For each of the three months ended March 31, 2016 and 2015, we recorded a reduction of interest expense of nil due to changes in fair value of the swap.
29
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
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 €161 million. This 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 €3 million (equivalent to an annual rate of approximately 3.6%). As of March 31, 2016, the fair value of this swap was $20 million and was recorded in noncurrent assets on our condensed consolidated balance sheets.
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 €255 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 income (loss) on our condensed statements of comprehensive income (loss). From time to time, we review such designation of intercompany loans.
We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of March 31, 2016, we have designated approximately €621 million (approximately $697 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the three months ended March 31, 2016, the amount of loss recognized on the hedge of our net investment was $21 million and was recorded in other comprehensive income (loss) on our condensed consolidated statements of comprehensive income (loss).
30
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. FAIR VALUE
The fair values of financial instruments were as follows (dollars in millions):
|
March 31, 2016 | December 31, 2015 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Carrying Value |
Estimated Fair Value |
Carrying Value |
Estimated Fair Value |
|||||||||
Non-qualified employee benefit plan investments |
$ | 27 | $ | 27 | $ | 26 | $ | 26 | |||||
Investments in equity securities |
14 | 14 | 18 | 18 | |||||||||
Cross-currency interest rate contracts |
20 | 20 | 28 | 28 | |||||||||
Interest rate contracts |
(4 | ) | (4 | ) | (4 | ) | (4 | ) | |||||
Long-term debt (including current portion) |
(4,827 | ) | (4,837 | ) | (4,795 | ) | (4,647 | ) |
The carrying amounts reported in our condensed consolidated 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 March 31, 2016 and December 31, 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 March 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):
|
|
Fair Value Amounts Using | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Description
|
March 31, 2016 |
Quoted prices in active markets for identical assets (Level 1)(4) |
Significant other observable inputs (Level 2)(4) |
Significant unobservable inputs (Level 3) |
|||||||||
Assets: |
|||||||||||||
Available-for sale equity securities: |
|||||||||||||
Equity mutual funds |
$ | 27 | $ | 27 | $ | | $ | | |||||
Investments in equity securities(1) |
14 | 14 | | | |||||||||
Derivatives: |
|||||||||||||
Cross-currency interest rate contracts(2) |
20 | | | 20 | |||||||||
| | | | | | | | | | | | | |
Total assets |
$ | 61 | $ | 41 | $ | | $ | 20 | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Liabilities: |
|||||||||||||
Derivatives: |
|||||||||||||
Interest rate contracts(3) |
$ | (4 | ) | $ | | $ | (4 | ) | $ | | |||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
31
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. FAIR VALUE (Continued)
|
|
Fair Value Amounts Using | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Description
|
December 31, 2015 |
Quoted prices in active markets for identical assets (Level 1)(4) |
Significant other observable inputs (Level 2)(4) |
Significant unobservable inputs (Level 3) |
|||||||||
Assets: |
|||||||||||||
Available-for sale equity securities: |
|||||||||||||
Equity mutual funds |
$ | 26 | $ | 26 | $ | | $ | | |||||
Investments in equity securities(1) |
18 | 18 | | | |||||||||
Derivatives: |
|||||||||||||
Cross-currency interest rate contracts(2) |
28 | | | 28 | |||||||||
| | | | | | | | | | | | | |
Total assets |
$ | 72 | $ | 44 | $ | | $ | 28 | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Liabilities: |
|||||||||||||
Derivatives: |
|||||||||||||
Interest rate contracts(3) |
$ | (4 | ) | $ | | $ | (4 | ) | $ | | |||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
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.
32
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. FAIR VALUE (Continued)
The following table shows a reconciliation of beginning and ending balances for the three months ended March 31, 2016 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
Cross-Currency Interest Rate Contracts |
|||
---|---|---|---|---|
Beginning balance, January 1, 2016 |
$ | 28 | ||
Transfers into Level 3 |
| |||
Transfers out of Level 3 |
| |||
Total gains (losses): |
||||
Included in earnings |
| |||
Included in other comprehensive income (loss) |
(8 | ) | ||
Purchases, sales, issuances and settlements |
| |||
| | | | |
Ending balance, March 31, 2016 |
$ | 20 | ||
| | | | |
| | | | |
| | | | |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at March 31, 2016 |
$ | | ||
| | | | |
| | | | |
| | | | |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
Cross-Currency Interest Rate Contracts |
|||
---|---|---|---|---|
Beginning balance, January 1, 2015 |
$ | 5 | ||
Transfers into Level 3 |
| |||
Transfers out of Level 3 |
| |||
Total gains (losses): |
||||
Included in earnings |
| |||
Included in other comprehensive income (loss) |
28 | |||
Purchases, sales, issuances and settlements |
| |||
| | | | |
Ending balance, March 31, 2015 |
$ | 33 | ||
| | | | |
| | | | |
| | | | |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at March 31, 2015 |
$ | | ||
| | | | |
| | | | |
| | | | |
33
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. 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
|
Interest expense |
Other comprehensive income (loss) |
|||||
---|---|---|---|---|---|---|---|
Total net gains included in earnings |
$ | | $ | | |||
Changes in unrealized losses relating to assets still held at March 31, 2016 |
| (8 | ) |
2015
|
Interest expense | Other comprehensive income (loss) |
|||||
---|---|---|---|---|---|---|---|
Total net gains included in earnings |
$ | | $ | | |||
Changes in unrealized gains relating to assets still held at March 31, 2015 |
| 28 |
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 each of the three months ended March 31, 2016 and 2015, we recorded charges of nil for the impairment of long-lived assets.
9. EMPLOYEE BENEFIT PLANS
Components of the net periodic benefit costs for the three months ended March 31, 2016 and 2015 were as follows (dollars in millions):
Huntsman Corporation
|
Defined Benefit Plans |
Other Postretirement Benefit Plans |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Three months ended March 31, |
Three months ended March 31, |
|||||||||||
|
2016 | 2015 | 2016 | 2015 | |||||||||
Service cost |
$ | 16 | $ | 19 | $ | 1 | $ | 1 | |||||
Interest cost |
30 | 31 | 1 | 1 | |||||||||
Expected return on assets |
(47 | ) | (51 | ) | | | |||||||
Amortization of prior service benefit |
(2 | ) | (2 | ) | (2 | ) | (1 | ) | |||||
Amortization of actuarial loss |
16 | 19 | 1 | 1 | |||||||||
| | | | | | | | | | | | | |
Net periodic benefit cost |
$ | 13 | $ | 16 | $ | 1 | $ | 2 | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
34
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. EMPLOYEE BENEFIT PLANS (Continued)
Huntsman International
|
Defined Benefit Plans |
Other Postretirement Benefit Plans |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Three months ended March 31, |
Three months ended March 31, |
|||||||||||
|
2016 | 2015 | 2016 | 2015 | |||||||||
Service cost |
$ | 16 | $ | 19 | $ | 1 | $ | 1 | |||||
Interest cost |
30 | 31 | 1 | 1 | |||||||||
Expected return on assets |
(47 | ) | (51 | ) | | | |||||||
Amortization of prior service benefit |
(2 | ) | (2 | ) | (2 | ) | (1 | ) | |||||
Amortization of actuarial loss |
18 | 21 | 1 | 1 | |||||||||
| | | | | | | | | | | | | |
Net periodic benefit cost |
$ | 15 | $ | 18 | $ | 1 | $ | 2 | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
During the three months ended March 31, 2016 and 2015, we made contributions to our pension and other postretirement benefit plans of $20 million and $33 million, respectively. During the remainder of 2016, we expect to contribute an additional amount of approximately $55 million to these plans.
10. 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 Huntsman Corporation common stock. Repurchases under this program may be made through open market transactions, in privately negotiated transactions, through accelerated share repurchase programs or by other means. The timing and actual number of 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 our 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 common stock. The final number of shares repurchased and the aggregate cost per share of $11.68 was based on the Company's daily volume-weighted average stock price during the term of the transaction, less a discount. For more information, see "Part 2. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds."
COMMON STOCK DIVIDENDS
During the three months ended March 31, 2016 and 2015, we paid cash dividends of approximately $30 million and $31 million, respectively, or $0.125 per share, to common stockholders.
35
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) and changes in accumulated other comprehensive loss by component were as follows (dollars in millions):
Huntsman Corporation
|
Foreign currency translation adjustment(a) |
Pension and other postretirement benefits adjustments(b) |
Other comprehensive income of unconsolidated affiliates |
Other, net | Total | Amounts attributable to noncontrolling interests |
Amounts attributable to Huntsman Corporation |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance, January 1, 2016 |
$ | (288 | ) | $ | (1,056 | ) | $ | 11 | $ | 17 | $ | (1,316 | ) | $ | 28 | $ | (1,288 | ) | ||||
| | | | | | | | | | | | | | | | | | | | | | |
Other comprehensive income (loss) before reclassifications, gross |
17 | | (11 | ) | | 6 | (2 | ) | 4 | |||||||||||||
Tax benefit |
10 | | | | 10 | | 10 | |||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
| 13 | | | 13 | | 13 | |||||||||||||||
Tax benefit |
| | | | | | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Net current-period other comprehensive income (loss) |
27 | 13 | (11 | ) | | 29 | (2 | ) | 27 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance, March 31, 2016 |
$ | (261 | ) | $ | (1,043 | ) | $ | | $ | 17 | $ | (1,287 | ) | $ | 26 | $ | (1,261 | ) | ||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
36
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
|
Foreign currency translation adjustment(a) |
Pension and other postretirement benefits adjustments(b) |
Other comprehensive income of unconsolidated affiliates |
Other, net | Total | Amounts attributable to noncontrolling interests |
Amounts attributable to Huntsman Corporation |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance, January 1, 2015 |
$ | 25 | $ | (1,122 | ) | $ | 10 | $ | 11 | $ | (1,076 | ) | $ | 23 | $ | (1,053 | ) | |||||
| | | | | | | | | | | | | | | | | | | | | | |
Other comprehensive (loss) income before reclassifications, gross |
(155 | ) | | (1 | ) | | (156 | ) | 7 | (149 | ) | |||||||||||
Tax expense |
(27 | ) | | | | (27 | ) | | (27 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
| 17 | | | 17 | | 17 | |||||||||||||||
Tax expense |
| (4 | ) | | | (4 | ) | | (4 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Net current-period other comprehensive (loss) income |
(182 | ) | 13 | (1 | ) | | (170 | ) | 7 | (163 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance, March 31, 2015 |
$ | (157 | ) | $ | (1,109 | ) | $ | 9 | $ | 11 | $ | (1,246 | ) | $ | 30 | $ | (1,216 | ) | ||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
|
Three months ended March 31, | |
||||||
---|---|---|---|---|---|---|---|---|
|
2016 | 2015 | |
|||||
Details about Accumulated Other Comprehensive Loss Components(a): |
Amount reclassified from accumulated other comprehensive loss |
Amount reclassified from accumulated other comprehensive loss |
Affected line item in the statement where net income is presented |
|||||
Amortization of pension and other postretirement benefits: |
||||||||
Prior service credit |
$ | (4 | ) | $ | (2 | ) | (b) | |
Actuarial loss |
17 | 19 | (b)(c) | |||||
| | | | | | | | |
|
13 | 17 | Total before tax | |||||
|
| (4 | ) | Income tax expense | ||||
| | | | | | | | |
Total reclassifications for the period |
$ | 13 | $ | 13 | Net of tax | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
37
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
Huntsman International
|
Foreign currency translation adjustment(a) |
Pension and other postretirement benefits adjustments(b) |
Other comprehensive income of unconsolidated affiliates |
Other, net | Total | Amounts attributable to noncontrolling interests |
Amounts attributable to Huntsman International |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance, January 1, 2016 |
$ | (292 | ) | $ | (1,074 | ) | $ | 11 | $ | 11 | $ | (1,344 | ) | $ | 28 | $ | (1,316 | ) | ||||
| | | | | | | | | | | | | | | | | | | | | | |
Other comprehensive income (loss) before reclassifications, gross |
18 | | (11 | ) | | 7 | (2 | ) | 5 | |||||||||||||
Tax benefit |
10 | | | | 10 | | 10 | |||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
| 15 | | | 15 | | 15 | |||||||||||||||
Tax benefit |
| | | | | | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Net current-period other comprehensive income (loss) |
28 | 15 | (11 | ) | | 32 | (2 | ) | 30 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance, March 31, 2016 |
$ | (264 | ) | $ | (1,059 | ) | $ | | $ | 11 | $ | (1,312 | ) | $ | 26 | $ | (1,286 | ) | ||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
38
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
|
Foreign currency translation adjustment(a) |
Pension and other postretirement benefits adjustments(b) |
Other comprehensive income of unconsolidated affiliates |
Other, net | Total | Amounts attributable to noncontrolling interests |
Amounts attributable to Huntsman International |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance, January 1, 2015 |
$ | 22 | $ | (1,147 | ) | $ | 10 | $ | 5 | $ | (1,110 | ) | $ | 23 | $ | (1,087 | ) | |||||
| | | | | | | | | | | | | | | | | | | | | | |
Other comprehensive (loss) income before reclassifications, gross |
(155 | ) | | (1 | ) | | (156 | ) | 7 | (149 | ) | |||||||||||
Tax expense |
(27 | ) | | | | (27 | ) | | (27 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
| 19 | | | 19 | | 19 | |||||||||||||||
Tax expense |
| (4 | ) | | | (4 | ) | | (4 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Net current-period other comprehensive (loss) income |
(182 | ) | 15 | (1 | ) | | (168 | ) | 7 | (161 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance, March 31, 2015 |
$ | (160 | ) | $ | (1,132 | ) | $ | 9 | $ | 5 | $ | (1,278 | ) | $ | 30 | $ | (1,248 | ) | ||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
|
Three months ended March 31, | |
||||||
---|---|---|---|---|---|---|---|---|
|
2016 | 2015 | |
|||||
Details about Accumulated Other Comprehensive Loss Components(a): |
Amount reclassified from accumulated other comprehensive loss |
Amount reclassified from accumulated other comprehensive loss |
Affected line item in the statement where net income is presented |
|||||
Amortization of pension and other postretirement benefits: |
||||||||
Prior service credit |
$ | (4 | ) | $ | (2 | ) | (b) | |
Actuarial loss |
19 | 21 | (b)(c) | |||||
| | | | | | | | |
|
15 | 19 | Total before tax | |||||
|
| (4 | ) | Income tax expense | ||||
| | | | | | | | |
Total reclassifications for the period |
$ | 15 | $ | 15 | Net of tax | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
39
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
12. COMMITMENTS AND CONTINGENCIES
LEGAL MATTERS
Antitrust Matters
We were named as a defendant in consolidated class action civil antitrust suits filed on February 9 and 12, 2010 in the U.S. District Court for the District of Maryland alleging that we and our co-defendants and other alleged co-conspirators conspired to fix prices of titanium dioxide sold in the U.S. between at least March 1, 2002 and the present. The other defendants named in this matter were DuPont, Kronos and Cristal (formerly Millennium). On August 28, 2012, the court certified a class consisting of all U.S. customers who purchased titanium dioxide directly from the defendants (the "Direct Purchasers") since February 1, 2003. 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 for an amount immaterial to our financial statements. The case was subsequently dismissed on March 9, 2016.
We were also named as a defendant in a class action civil antitrust suit filed on March 15, 2013 in the U.S. District Court for the Northern District of California by the purchasers of products made from titanium dioxide (the "Indirect Purchasers") making essentially the same allegations as did the Direct Purchasers. On October 14, 2014, plaintiffs filed their Second Amended Class Action Complaint narrowing the class of plaintiffs to those merchants and consumers of architectural coatings containing titanium dioxide. 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 9 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, which remains pending. The Indirect Purchasers plaintiffs seek to recover injunctive relief, treble damages or the maximum damages allowed by state law, costs of suit and attorneys' fees. We are not aware of any illegal conduct by us or any of our employees. Nevertheless, we have incurred costs relating to this claim and could incur additional costs in amounts which in the aggregate could be material to us. Because of the overall complexity of this case, we are unable to reasonably estimate any possible loss or range of loss and we have made no accrual with respect to this claim.
40
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. COMMITMENTS AND CONTINGENCIES (Continued)
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 €153 million (approximately $172 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 €113 million (approximately $127 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 €0 and €113 million (approximately $127 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 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 April 9, 2015, the court denied the Banks' motions to dismiss the Wisconsin Litigation, which were on the same grounds asserted in the Texas Litigation, as moot. We expect the Banks to refile these motions once limited discovery related to jurisdiction is complete. 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.
41
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. 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 three months ended March 31, 2016 and 2015, our capital expenditures for EHS matters totaled $11 million and $26 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 $39 million and $38 million for environmental liabilities as of March 31, 2016 and December 31, 2015, respectively. Of these amounts, $7 million and $6 million were classified as accrued liabilities in our consolidated balance sheets as of March 31, 2016 and December 31, 2015, respectively, and $32 million was classified as other noncurrent liabilities in our consolidated balance sheets for both March 31, 2016 and December 31, 2015. 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 10 former facilities or third-party sites in the U.S. for which we have been notified of potential claims against us for cleanup liabilities, including, but not limited to, sites listed under CERCLA. Based on current information and past experiences at other CERCLA sites, we do not expect these third-party claims to have a material impact on our consolidated financial statements.
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
42
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)
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 March 31, 2016, we had an accrued liability of approximately $17 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 PRP for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a portion of the site and are currently engaged in that process. At this time, we are unable to reasonably estimate our potential liabilities at this site.
Port Neches Flaring Matter
As part of the Environmental Protection Agency's (the "EPA") 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.
43
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. STOCK-BASED COMPENSATION PLANS
Under the Huntsman Corporation Stock Incentive Plan, as amended and restated (the "Stock Incentive Plan"), a plan approved by stockholders, we may grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, phantom stock, performance share unit awards and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock options may be granted solely to employees. The terms of the grants are fixed at the grant date. As of March 31, 2016, we were authorized to grant up to 37.2 million shares under the Stock Incentive Plan. As of March 31, 2016, we had 3 million shares remaining under the Stock Incentive Plan available for grant. Option awards have a maximum contractual term of 10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Stock-based awards generally vest over a three-year period; certain performance share unit awards vest over a two-year period.
The compensation cost from continuing operations under the Stock Incentive Plan for our Company and Huntsman International were as follows (dollars in millions):
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Huntsman Corporation compensation cost |
$ | 8 | $ | 9 | |||
Huntsman International compensation cost |
7 | 8 |
The total income tax benefit recognized in the statements of operations for us and Huntsman International for stock-based compensation arrangements was $2 million for each of the three months ended March 31, 2016 and 2015.
STOCK OPTIONS
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees' expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions noted below represent the weighted average of the assumptions utilized for stock options granted during the periods.
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Dividend yield |
5.6 | % | 2.2 | % | |||
Expected volatility |
57.9 | % | 58.0 | % | |||
Risk-free interest rate |
1.4 | % | 1.4 | % | |||
Expected life of stock options granted during the period |
5.9 years | 5.9 years |
44
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. STOCK-BASED COMPENSATION PLANS (Continued)
A summary of stock option activity under the Stock Incentive Plan as of March 31, 2016 and changes during the three months then ended is presented below:
Option Awards
|
Shares | Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
(in thousands) |
|
(years) |
(in millions) |
|||||||||
Outstanding at January 1, 2016 |
9,544 | $ | 15.51 | ||||||||||
Granted |
2,940 | 8.86 | |||||||||||
Exercised |
| | |||||||||||
Forfeited |
(931 | ) | 20.29 | ||||||||||
| | | | | | | | | | | | | |
Outstanding at March 31, 2016 |
11,553 | 13.43 | 6.2 | $ | 33 | ||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Exercisable at March 31, 2016 |
7,558 | 14.07 | 4.5 | 20 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2016 was $2.94 per option. As of March 31, 2016, there was $16 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.2 years.
The total intrinsic value of stock options exercised during the three months ended both March 31, 2016 and 2015 was approximately nil.
NONVESTED SHARES
Nonvested shares granted under the Stock Incentive Plan consist of restricted stock and performance share unit awards, which are accounted for as equity awards, and 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 three months ended March 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 in the three months ended March 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.
45
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. STOCK-BASED COMPENSATION PLANS (Continued)
A summary of the status of our nonvested shares as of March 31, 2016 and changes during the three months then ended is presented below:
|
Equity Awards | Liability Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Shares | Weighted Average Grant-Date Fair Value |
Shares | Weighted Average Grant-Date Fair Value |
|||||||||
|
(in thousands) |
|
(in thousands) |
|
|||||||||
Nonvested at January 1, 2016 |
1,854 | $ | 19.97 | 475 | $ | 21.37 | |||||||
Granted |
1,871 | 9.23 | 693 | 8.86 | |||||||||
Vested |
(652 | )(1) | 19.86 | (229 | ) | 20.65 | |||||||
Forfeited |
(3 | ) | 22.25 | (13 | ) | 18.95 | |||||||
| | | | | | | | | | | | | |
Nonvested at March 31, 2016 |
3,070 | 13.44 | 926 | 12.22 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
As of March 31, 2016, there was $40 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.4 years. The value of share awards that vested during the three months ended March 31, 2016 and 2015 was $15 million and $20 million, respectively.
15. 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 an individual 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. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of our businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the applicable period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions.
During the three months ended March 31, 2016 and 2015, for unrecognized tax benefits that impact tax expense, we recorded a net decrease in unrecognized tax benefits and a corresponding income tax benefit of $1 million and a net decrease in unrecognized benefits and a corresponding income tax benefit of $9 million, respectively. Additional increases and decreases in unrecognized tax
46
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. INCOME TAXES (Continued)
benefits were offset by cash settlements or decreases in net deferred tax assets and, therefore, did not affect income tax expense.
Huntsman Corporation
We recorded income tax expense of $27 million and $2 million for the three months ended March 31, 2016 and 2015, respectively. 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. Notably, we continue to earn a significant portion of our pre-tax income in the United States with an approximate 35% federal and state blended effective tax rate.
Huntsman International
Huntsman International recorded income tax expense of $27 million and $3 million for the three months ended March 31, 2016 and 2015, respectively. 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. Notably, we continue to earn a significant portion of our pre-tax income in the United States with an approximate 35% federal and state blended effective tax rate.
16. NET INCOME PER SHARE
Basic income per share excludes dilution and is computed by dividing net income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period. Diluted income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing net income available to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities.
Basic and diluted income per share is determined using the following information (in millions):
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Numerator: |
|||||||
Basic and diluted income from continuing operations: |
|||||||
Income from continuing operations attributable to Huntsman Corporation |
$ | 57 | $ | 7 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Basic and diluted net income: |
|||||||
Net income attributable to Huntsman Corporation |
$ | 56 | $ | 5 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Shares (denominator): |
|||||||
Weighted average shares outstanding |
236.1 | 243.9 | |||||
Dilutive securities: |
|||||||
Stock-based awards |
1.8 | 3.3 | |||||
| | | | | | | |
Total weighted average shares outstanding, including dilutive shares |
237.9 | 247.2 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
47
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. NET INCOME PER SHARE (Continued)
Additional stock-based awards of 11.8 million and 2.3 million weighted average equivalent shares of stock were outstanding during the three months ended March 31, 2016 and 2015, respectively. However, these stock-based awards were not included in the computation of diluted earnings per share for the three months ended March 31, 2016 and 2015 because the effect would be anti-dilutive.
17. 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.
The major products of each reportable operating segment are as follows:
Segment
|
Products | |
---|---|---|
Polyurethanes | MDI, PO, polyols, PG, TPU, aniline and MTBE | |
Performance Products | amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licenses | |
Advanced Materials | basic liquid and solid epoxy resins; specialty resin compounds; cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-based formulations | |
Textile Effects | textile chemicals, dyes and inks | |
Pigments and Additives | titanium dioxide, functional additives, color pigments, timber treatment and water treatment chemicals |
Sales between segments are generally recognized at external market prices and are eliminated in consolidation. We use EBITDA to measure the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The EBITDA of operating segments excludes items that principally apply to our
48
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. OPERATING SEGMENT INFORMATION (Continued)
Company as a whole. The revenues and EBITDA for each of our reportable operating segments are as follows (dollars in millions):
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Revenues: |
|||||||
Polyurethanes |
$ | 836 | $ | 890 | |||
Performance Products |
536 | 656 | |||||
Advanced Materials |
266 | 290 | |||||
Textile Effects |
185 | 206 | |||||
Pigments and Additives |
540 | 572 | |||||
Corporate and eliminations |
(8 | ) | (25 | ) | |||
| | | | | | | |
Total |
$ | 2,355 | $ | 2,589 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Huntsman Corporation: |
|||||||
Segment EBITDA(1): |
|||||||
Polyurethanes |
$ | 123 | $ | 93 | |||
Performance Products |
90 | 118 | |||||
Advanced Materials |
57 | 55 | |||||
Textile Effects |
15 | 11 | |||||
Pigments and Additives |
(8 | ) | (75 | ) | |||
Corporate and other(2) |
(43 | ) | (42 | ) | |||
| | | | | | | |
Subtotal |
234 | 160 | |||||
Discontinued Operations(3) |
(2 | ) | (1 | ) | |||
| | | | | | | |
Total |
232 | 159 | |||||
Interest expense, net |
(50 | ) | (56 | ) | |||
Income tax expensecontinuing operations |
(27 | ) | (2 | ) | |||
Income tax benefit (expense)discontinued operations |
1 | (1 | ) | ||||
Depreciation and amortization |
(100 | ) | (95 | ) | |||
| | | | | | | |
Net income attributable to Huntsman Corporation |
$ | 56 | $ | 5 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
49
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. OPERATING SEGMENT INFORMATION (Continued)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Huntsman International: |
|||||||
Segment EBITDA(1): |
|||||||
Polyurethanes |
$ | 123 | $ | 93 | |||
Performance Products |
90 | 118 | |||||
Advanced Materials |
57 | 55 | |||||
Textile Effects |
15 | 11 | |||||
Pigments and Additives |
(8 | ) | (75 | ) | |||
Corporate and other(2) |
(43 | ) | (42 | ) | |||
| | | | | | | |
Subtotal |
234 | 160 | |||||
Discontinued Operations(3) |
(2 | ) | (1 | ) | |||
| | | | | | | |
Total |
232 | 159 | |||||
Interest expense, net |
(53 | ) | (58 | ) | |||
Income tax expensecontinuing operations |
(27 | ) | (3 | ) | |||
Income tax benefit (expense)discontinued operations |
1 | (1 | ) | ||||
Depreciation and amortization |
(97 | ) | (92 | ) | |||
| | | | | | | |
Net income attributable to Huntsman International |
$ | 56 | $ | 5 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
50
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC
The following unaudited condensed consolidating financial statements present, in separate columns, financial information for the following: Huntsman International (on a parent only basis), with its investment in subsidiaries recorded under the equity method; the Guarantors on a combined, and where appropriate, consolidated basis; and the nonguarantors on a combined, and where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015. There are no contractual restrictions limiting transfers of cash from the Guarantors to Huntsman International. Each of the Guarantors is wholly-owned by Huntsman International and has fully and unconditionally guaranteed, subject to certain customary release provisions, Huntsman International's outstanding notes on a joint and several basis.
51
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF MARCH 31, 2016
(In Millions)
|
Parent Company |
Guarantors | Nonguarantors | Eliminations | Consolidated Huntsman International LLC |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 31 | $ | | $ | 177 | $ | | $ | 208 | ||||||
Restricted cash |
| | 10 | | 10 | |||||||||||
Accounts and notes receivable, net |
31 | 105 | 1,415 | 7 | 1,558 | |||||||||||
Accounts receivable from affiliates |
1,885 | 4,777 | 172 | (6,505 | ) | 329 | ||||||||||
Inventories |
87 | 338 | 1,268 | (4 | ) | 1,689 | ||||||||||
Prepaid expenses |
36 | 13 | 48 | (28 | ) | 69 | ||||||||||
Other current assets |
804 | 8 | 194 | (730 | ) | 276 | ||||||||||
| | | | | | | | | | | | | | | | |
Total current assets |
2,874 | 5,241 | 3,284 | (7,260 | ) | 4,139 | ||||||||||
Property, plant and equipment, net |
459 | 1,432 | 2,513 | 1 | 4,405 | |||||||||||
Investment in unconsolidated affiliates |
6,132 | 1,644 | 256 | (7,688 | ) | 344 | ||||||||||
Intangible assets, net |
31 | 3 | 72 | | 106 | |||||||||||
Goodwill |
(13 | ) | 82 | 54 | | 123 | ||||||||||
Deferred income taxes |
480 | | 436 | (492 | ) | 424 | ||||||||||
Notes receivable from affiliates |
36 | 550 | | (586 | ) | | ||||||||||
Other noncurrent assets |
63 | 216 | 298 | (1 | ) | 576 | ||||||||||
| | | | | | | | | | | | | | | | |
Total assets |
$ | 10,062 | $ | 9,168 | $ | 6,913 | $ | (16,026 | ) | $ | 10,117 | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
LIABILITIES AND EQUITY |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 47 | $ | 181 | $ | 763 | $ | 7 | $ | 998 | ||||||
Accounts payable to affiliates |
3,678 | 976 | 1,905 | (6,505 | ) | 54 | ||||||||||
Accrued liabilities |
78 | 811 | 518 | (757 | ) | 650 | ||||||||||
Note payable to affiliate |
100 | | | | 100 | |||||||||||
Current portion of debt |
27 | | 76 | | 103 | |||||||||||
| | | | | | | | | | | | | | | | |
Total current liabilities |
3,930 | 1,968 | 3,262 | (7,255 | ) | 1,905 | ||||||||||
Long-term debt |
4,293 | | 431 | | 4,724 | |||||||||||
Notes payable to affiliates |
697 | | 588 | (587 | ) | 698 | ||||||||||
Deferred income taxes |
24 | 278 | 44 | 75 | 421 | |||||||||||
Other noncurrent liabilities |
161 | 244 | 820 | 1 | 1,226 | |||||||||||
| | | | | | | | | | | | | | | | |
Total liabilities |
9,105 | 2,490 | 5,145 | (7,766 | ) | 8,974 | ||||||||||
Equity |
||||||||||||||||
Huntsman International LLC members' equity |
||||||||||||||||
Members' equity |
3,200 | 4,512 | 3,386 | (7,898 | ) | 3,200 | ||||||||||
Accumulated (deficit) income |
(957 | ) | 746 | (514 | ) | (232 | ) | (957 | ) | |||||||
Accumulated other comprehensive (loss) income |
(1,286 | ) | 1,420 | (1,267 | ) | (153 | ) | (1,286 | ) | |||||||
| | | | | | | | | | | | | | | | |
Total Huntsman International LLC members' equity |
957 | 6,678 | 1,605 | (8,283 | ) | 957 | ||||||||||
Noncontrolling interests in subsidiaries |
| | 163 | 23 | 186 | |||||||||||
| | | | | | | | | | | | | | | | |
Total equity |
957 | 6,678 | 1,768 | (8,260 | ) | 1,143 | ||||||||||
| | | | | | | | | | | | | | | | |
Total liabilities and equity |
$ | 10,062 | $ | 9,168 | $ | 6,913 | $ | (16,026 | ) | $ | 10,117 | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
52
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2015
(In Millions)
|
Parent Company |
Guarantors | Nonguarantors | Eliminations | Consolidated Huntsman International LLC |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 44 | $ | 1 | $ | 212 | $ | | $ | 257 | ||||||
Restricted cash |
| | 12 | | 12 | |||||||||||
Accounts and notes receivable, net |
21 | 96 | 1,298 | 5 | 1,420 | |||||||||||
Accounts receivable from affiliates |
2,163 | 4,730 | 163 | (6,716 | ) | 340 | ||||||||||
Inventories |
101 | 322 | 1,275 | (6 | ) | 1,692 | ||||||||||
Prepaid expenses |
49 | 31 | 91 | (60 | ) | 111 | ||||||||||
Other current assets |
790 | 8 | 212 | (704 | ) | 306 | ||||||||||
| | | | | | | | | | | | | | | | |
Total current assets |
3,168 | 5,188 | 3,263 | (7,481 | ) | 4,138 | ||||||||||
Property, plant and equipment, net |
473 | 1,433 | 2,503 | 1 | 4,410 | |||||||||||
Investment in unconsolidated affiliates |
5,991 | 1,558 | 263 | (7,465 | ) | 347 | ||||||||||
Intangible assets, net |
32 | 3 | 51 | | 86 | |||||||||||
Goodwill |
(13 | ) | 82 | 47 | | 116 | ||||||||||
Deferred income taxes |
473 | | 430 | (485 | ) | 418 | ||||||||||
Notes receivable from affiliates |
36 | 539 | 6 | (581 | ) | | ||||||||||
Other noncurrent assets |
71 | 223 | 279 | | 573 | |||||||||||
| | | | | | | | | | | | | | | | |
Total assets |
$ | 10,231 | $ | 9,026 | $ | 6,842 | $ | (16,011 | ) | $ | 10,088 | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
LIABILITIES AND EQUITY |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 50 | $ | 207 | $ | 772 | $ | 5 | $ | 1,034 | ||||||
Accounts payable to affiliates |
3,905 | 973 | 1,891 | (6,717 | ) | 52 | ||||||||||
Accrued liabilities |
74 | 793 | 581 | (765 | ) | 683 | ||||||||||
Note payable to affiliate |
100 | | | | 100 | |||||||||||
Current portion of debt |
89 | | 81 | | 170 | |||||||||||
| | | | | | | | | | | | | | | | |
Total current liabilities |
4,218 | 1,973 | 3,325 | (7,477 | ) | 2,039 | ||||||||||
Long-term debt |
4,229 | | 396 | | 4,625 | |||||||||||
Notes payable to affiliates |
703 | | 576 | (581 | ) | 698 | ||||||||||
Deferred income taxes |
24 | 276 | 36 | 82 | 418 | |||||||||||
Other noncurrent liabilities |
160 | 241 | 819 | 4 | 1,224 | |||||||||||
| | | | | | | | | | | | | | | | |
Total liabilities |
9,334 | 2,490 | 5,152 | (7,972 | ) | 9,004 | ||||||||||
Equity |
||||||||||||||||
Huntsman International LLC members' equity |
||||||||||||||||
Members' equity |
3,196 | 4,517 | 3,394 | (7,911 | ) | 3,196 | ||||||||||
Accumulated (deficit) income |
(983 | ) | 652 | (557 | ) | (95 | ) | (983 | ) | |||||||
Accumulated other comprehensive (loss) income |
(1,316 | ) | 1,367 | (1,311 | ) | (56 | ) | (1,316 | ) | |||||||
| | | | | | | | | | | | | | | | |
Total Huntsman International LLC members' equity |
897 | 6,536 | 1,526 | (8,062 | ) | 897 | ||||||||||
Noncontrolling interests in subsidiaries |
| | 164 | 23 | 187 | |||||||||||
| | | | | | | | | | | | | | | | |
Total equity |
897 | 6,536 | 1,690 | (8,039 | ) | 1,084 | ||||||||||
| | | | | | | | | | | | | | | | |
Total liabilities and equity |
$ | 10,231 | $ | 9,026 | $ | 6,842 | $ | (16,011 | ) | $ | 10,088 | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
53
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2016
(In
Millions)
|
Parent Company |
Guarantors | Nonguarantors | Eliminations | Consolidated Huntsman International LLC |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues: |
||||||||||||||||
Trade sales, services and fees, net |
$ | 251 | $ | 566 | $ | 1,504 | $ | | $ | 2,321 | ||||||
Related party sales |
53 | 104 | 269 | (392 | ) | 34 | ||||||||||
| | | | | | | | | | | | | | | | |
Total revenues |
304 | 670 | 1,773 | (392 | ) | 2,355 | ||||||||||
Cost of goods sold |
240 | 548 | 1,543 | (393 | ) | 1,938 | ||||||||||
| | | | | | | | | | | | | | | | |
Gross profit |
64 | 122 | 230 | 1 | 417 | |||||||||||
Selling, general and administrative |
40 | 46 | 135 | | 221 | |||||||||||
Research and development |
11 | 11 | 15 | | 37 | |||||||||||
Other operating expense (income) |
12 | (7 | ) | | | 5 | ||||||||||
Restructuring, impairment and plant closing costs |
| 4 | 9 | | 13 | |||||||||||
| | | | | | | | | | | | | | | | |
Operating income |
1 | 68 | 71 | 1 | 141 | |||||||||||
Interest (expense) income |
(54 | ) | 8 | (7 | ) | | (53 | ) | ||||||||
Equity in income of investment in affiliates and subsidiaries |
92 | 44 | 1 | (136 | ) | 1 | ||||||||||
Other income |
1 | | | | 1 | |||||||||||
| | | | | | | | | | | | | | | | |
Income from continuing operations before income taxes |
40 | 120 | 65 | (135 | ) | 90 | ||||||||||
Income tax benefit (expense) |
15 | (26 | ) | (16 | ) | | (27 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Income from continuing operations |
55 | 94 | 49 | (135 | ) | 63 | ||||||||||
Income (loss) from discontinued operations, net of tax |
1 | | (2 | ) | | (1 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Net income |
56 | 94 | 47 | (135 | ) | 62 | ||||||||||
Net income attributable to noncontrolling interests |
| | (3 | ) | (3 | ) | (6 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Net income attributable to Huntsman International LLC |
$ | 56 | $ | 94 | $ | 44 | $ | (138 | ) | $ | 56 | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net income |
$ | 56 | $ | 94 | $ | 47 | $ | (135 | ) | $ | 62 | |||||
Other comprehensive income |
30 | 55 | 50 | (103 | ) | 32 | ||||||||||
Comprehensive income attributable to noncontrolling interests |
| | (5 | ) | (3 | ) | (8 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Comprehensive income attributable to Huntsman International LLC |
$ | 86 | $ | 149 | $ | 92 | $ | (241 | ) | $ | 86 | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
54
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2015
(In Millions)
|
Parent Company |
Guarantors | Nonguarantors | Eliminations | Consolidated Huntsman International LLC |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues: |
||||||||||||||||
Trade sales, services and fees, net |
$ | 257 | $ | 579 | $ | 1,724 | $ | | $ | 2,560 | ||||||
Related party sales |
68 | 122 | 267 | (428 | ) | 29 | ||||||||||
| | | | | | | | | | | | | | | | |
Total revenues |
325 | 701 | 1,991 | (428 | ) | 2,589 | ||||||||||
Cost of goods sold |
261 | 579 | 1,723 | (426 | ) | 2,137 | ||||||||||
| | | | | | | | | | | | | | | | |
Gross profit |
64 | 122 | 268 | (2 | ) | 452 | ||||||||||
Selling, general and administrative |
45 | 40 | 159 | | 244 | |||||||||||
Research and development |
11 | 10 | 21 | | 42 | |||||||||||
Other operating (income) expense |
(28 | ) | 1 | 20 | | (7 | ) | |||||||||
Restructuring, impairment and plant closing costs |
| | 93 | | 93 | |||||||||||
| | | | | | | | | | | | | | | | |
Operating income (loss) |
36 | 71 | (25 | ) | (2 | ) | 80 | |||||||||
Interest (expense) income |
(57 | ) | 8 | (9 | ) | | (58 | ) | ||||||||
Equity in income (loss) of investment in affiliates and subsidiaries |
25 | (16 | ) | 2 | (9 | ) | 2 | |||||||||
Loss on early extinguishment of debt |
(3 | ) | | | | (3 | ) | |||||||||
Other income (loss) |
1 | (7 | ) | 5 | | (1 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes |
2 | 56 | (27 | ) | (11 | ) | 20 | |||||||||
Income tax benefit (expense) |
4 | (23 | ) | 16 | | (3 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Income (loss) from continuing operations |
6 | 33 | (11 | ) | (11 | ) | 17 | |||||||||
Loss from discontinued operations, net of tax |
(1 | ) | | (1 | ) | | (2 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Net income (loss) |
5 | 33 | (12 | ) | (11 | ) | 15 | |||||||||
Net income attributable to noncontrolling interests |
| | (8 | ) | (2 | ) | (10 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Net income (loss) attributable to Huntsman International LLC |
$ | 5 | $ | 33 | $ | (20 | ) | $ | (13 | ) | $ | 5 | ||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net income (loss) |
$ | 5 | $ | 33 | $ | (12 | ) | $ | (11 | ) | $ | 15 | ||||
Other comprehensive (loss) income |
(161 | ) | 73 | (170 | ) | 90 | (168 | ) | ||||||||
Comprehensive income attributable to noncontrolling interests |
| | | (3 | ) | (3 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Comprehensive (loss) income attributable to Huntsman International LLC |
$ | (156 | ) | $ | 106 | $ | (182 | ) | $ | 76 | $ | (156 | ) | |||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
55
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2016
(In Millions)
|
Parent Company |
Guarantors | Nonguarantors | Eliminations | Consolidated Huntsman International LLC |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net cash provided by (used in) operating activities |
$ | 55 | $ | 34 | $ | (3 | ) | $ | 1 | $ | 87 | |||||
| | | | | | | | | | | | | | | | |
Investing activities: |
||||||||||||||||
Capital expenditures |
(6 | ) | (31 | ) | (62 | ) | | (99 | ) | |||||||
Cash received from unconsolidated affiliates |
| 10 | | | 10 | |||||||||||
Investment in affiliate |
(7 | ) | 2 | | 5 | | ||||||||||
Investment in unconsolidated affiliates |
| (11 | ) | (1 | ) | | (12 | ) | ||||||||
Increase in receivable from affiliate |
(2 | ) | | | | (2 | ) | |||||||||
Change in restricted cash |
| | 2 | | 2 | |||||||||||
Other, net |
| | (1 | ) | | (1 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Net cash used in investing activities |
(15 | ) | (30 | ) | (62 | ) | 5 | (102 | ) | |||||||
| | | | | | | | | | | | | | | | |
Financing activities: |
||||||||||||||||
Net borrowings under revolving loan facilities |
| | 45 | | 45 | |||||||||||
Repayments of short-term debt |
| | (12 | ) | | (12 | ) | |||||||||
Borrowings on short-term debt |
| | 4 | | 4 | |||||||||||
Repayments of long-term debt |
(16 | ) | | (11 | ) | | (27 | ) | ||||||||
Proceeds from notes payable to affiliate |
| | 6 | (6 | ) | | ||||||||||
Repayments of notes payable |
(9 | ) | | | | (9 | ) | |||||||||
Borrowings on notes payable |
2 | | | | 2 | |||||||||||
Dividends paid to noncontrolling intrests |
| | (5 | ) | (4 | ) | (9 | ) | ||||||||
Contribution from parent |
| 2 | 7 | (9 | ) | | ||||||||||
Distribution to parent |
| (7 | ) | (6 | ) | 13 | | |||||||||
Dividends paid to parent |
(30 | ) | | | | (30 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Net cash (used in) provided by financing activities |
(53 | ) | (5 | ) | 28 | (6 | ) | (36 | ) | |||||||
Effect of exchange rate changes on cash |
| | 2 | | 2 | |||||||||||
| | | | | | | | | | | | | | | | |
Decrease in cash and cash equivalents |
(13 | ) | (1 | ) | (35 | ) | | (49 | ) | |||||||
Cash and cash equivalents at beginning of period |
44 | 1 | 212 | | 257 | |||||||||||
| | | | | | | | | | | | | | | | |
Cash and cash equivalents at end of period |
$ | 31 | $ | | $ | 177 | $ | | $ | 208 | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
56
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2015
(In Millions)
|
Parent Company |
Guarantors | Nonguarantors | Eliminations | Consolidated Huntsman International LLC |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net cash (used in) provided by operating activities |
$ | (410 | ) | $ | 42 | $ | 403 | $ | | $ | 35 | |||||
| | | | | | | | | | | | | | | | |
Investing activities: |
||||||||||||||||
Capital expenditures |
(22 | ) | (53 | ) | (74 | ) | | (149 | ) | |||||||
Cash received from unconsolidated affiliates |
| 15 | | | 15 | |||||||||||
Investment in affiliate |
(20 | ) | (1 | ) | | 21 | | |||||||||
Investment in unconsolidated affiliates |
| (4 | ) | (9 | ) | | (13 | ) | ||||||||
Increase in receivable from affiliate |
(6 | ) | | | | (6 | ) | |||||||||
Cash received from termination of cross-currency interest rate contracts |
66 | | | | 66 | |||||||||||
| | | | | | | | | | | | | | | | |
Net cash provided by (used in) investing activities |
18 | (43 | ) | (83 | ) | 21 | (87 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Financing activities: |
||||||||||||||||
Net repayments on overdraft facilities |
| | (2 | ) | | (2 | ) | |||||||||
Repayments of short-term debt |
| | (17 | ) | | (17 | ) | |||||||||
Repayments of long-term debt |
(54 | ) | | (5 | ) | | (59 | ) | ||||||||
Proceeds from issuance of long-term debt |
326 | | | | 326 | |||||||||||
Repayments of notes payable to affiliate |
(50 | ) | | | | (50 | ) | |||||||||
Repayments of notes payable |
(9 | ) | | | | (9 | ) | |||||||||
Debt issuance costs paid |
(4 | ) | | | | (4 | ) | |||||||||
Call premiums related to early extinguishment of debt |
(3 | ) | | | | (3 | ) | |||||||||
Contingent consideration paid for acquisition |
(4 | ) | | | | (4 | ) | |||||||||
Contribution from parent |
| 2 | 28 | (30 | ) | | ||||||||||
Distribution to parent |
| (7 | ) | (2 | ) | 9 | | |||||||||
Dividends paid to parent |
(31 | ) | | | | (31 | ) | |||||||||
Excess tax benefit related to stock-based compensation |
1 | | | | 1 | |||||||||||
Other, net |
| | (2 | ) | | (2 | ) | |||||||||
| | | | | | | | | | | | | | | | |
Net cash provided by (used in) financing activities |
172 | (5 | ) | | (21 | ) | 146 | |||||||||
Effect of exchange rate changes on cash |
| | (8 | ) | | (8 | ) | |||||||||
| | | | | | | | | | | | | | | | |
(Decrease) increase in cash and cash equivalents |
(220 | ) | (6 | ) | 312 | | 86 | |||||||||
Cash and cash equivalents at beginning of period |
353 | 6 | 351 | | 710 | |||||||||||
| | | | | | | | | | | | | | | | |
Cash and cash equivalents at end of period |
$ | 133 | $ | | $ | 663 | $ | | $ | 796 | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
During the three months ended March 31, 2015, we made a noncash capital contribution of approximately $284 million between guarantor and nonguarantor entities and a noncash capital contribution of approximately $123 million between parent and guarantor entities.
57
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
With respect to Huntsman Corporation, certain information set forth in this report contains "forward-looking statements" within the meaning the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management's plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, spin-offs, or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. In some cases, forward-looking statements can be identified by terminology such as "believes," "expects," "may," "will," "should," "anticipates" or "intends" or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
All forward-looking statements, including without limitation management's examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable law.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks set forth in "Part I. Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015.
OVERVIEW
Business
We operate in five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments and Additives. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride, epoxy-based polymer formulations, textile chemicals, dyes, titanium dioxide and color pigments. Our revenues for the three months ended March 31, 2016 and 2015 were $2,355 million and $2,589 million, respectively.
58
RECENT DEVELOPMENTS
Debt Activity
On April 1, 2016, Huntsman International entered into the 2016 Term Loan B. Proceeds from the 2016 Term Loan B were used to repay in full our Extended Term Loan B, our Extended Term Loan BSeries 2 and our Term Loan C. In connection with these repayments, we expect to record a loss on early extinguishment of debt of approximately $1 million in the second quarter of 2016. In addition, Huntsman International extended the maturity date of its Revolving Facility to 2021 and increased the committed amount to $650 million. For more information, see "Note 6. DebtDirect and Subsidiary Debt" to our condensed consolidated financial statements.
OUTLOOK
We are encouraged by our first quarter 2016 results and we believe we will continue to see improvements across our businesses during 2016 as we remain focused on three strategic priorities: first, growing margins and earnings in our core downstream differentiated businesses; second, generating free cash flow of $350 million in 2016; and third, separating our titanium dioxide business. We believe that our first quarter results position us well to accomplish these objectives. The following is a summary of the key trends expected in our business segments:
Polyurethanes:
Performance Products:
Advanced Materials:
Textile Effects:
Pigments and Additives:
We remain committed to a separation of some or all of our Pigments and Additives businesses and are actively exploring additional possibilities outside of an initial public offering or a spin-off. Our ability to effect such separation is subject to, among other things, market conditions and the approval of our Board of Directors.
59
In 2016, we expect to spend approximately $450 million on capital expenditures, net of reimbursements.
We expect our full year 2016 tax rate to be approximately 30% and our full year adjusted effective tax rate to be approximately 30%. We believe our long-term effective income tax rate will be approximately 30%.
60
RESULTS OF OPERATIONS
For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):
Huntsman Corporation
|
Three months ended March 31, |
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Percent Change |
|||||||||
|
2016 | 2015 | ||||||||
Revenues |
$ | 2,355 | $ | 2,589 | (9 | )% | ||||
Cost of goods sold |
1,939 | 2,139 | (9 | )% | ||||||
| | | | | | | | | | |
Gross profit |
416 | 450 | (8 | )% | ||||||
Operating expenses |
265 | 280 | (5 | )% | ||||||
Restructuring, impairment and plant closing costs |
13 | 93 | (86 | )% | ||||||
| | | | | | | | | | |
Operating income |
138 | 77 | 79 | % | ||||||
Interest expense, net |
(50 | ) | (56 | ) | (11 | )% | ||||
Equity in income of investment in unconsolidated affiliates |
1 | 2 | (50 | )% | ||||||
Loss on early extinguishment of debt |
| (3 | ) | NM | ||||||
Other income (loss) |
1 | (1 | ) | NM | ||||||
| | | | | | | | | | |
Income from continuing operations before income taxes |
90 | 19 | 374 | % | ||||||
Income tax expense |
(27 | ) | (2 | ) | NM | |||||
| | | | | | | | | | |
Income from continuing operations |
63 | 17 | 271 | % | ||||||
Loss from discontinued operations, net of tax |
(1 | ) | (2 | ) | (50 | )% | ||||
| | | | | | | | | | |
Net income |
62 | 15 | 313 | % | ||||||
Net income attributable to noncontrolling interests |
(6 | ) | (10 | ) | (40 | )% | ||||
| | | | | | | | | | |
Net income attributable to Huntsman Corporation |
56 | 5 | NM | |||||||
Interest expense, net |
50 | 56 | (11 | )% | ||||||
Income tax expense from continuing operations |
27 | 2 | NM | |||||||
Income tax (benefit) expense from discontinued operations |
(1 | ) | 1 | NM | ||||||
Depreciation and amortization |
100 | 95 | 5 | % | ||||||
| | | | | | | | | | |
EBITDA(1) |
$ | 232 | $ | 159 | 46 | % | ||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Reconciliation of EBITDA to adjusted EBITDA: |
||||||||||
EBITDA(1) |
$ | 232 | $ | 159 | ||||||
Acquisition and integration expenses and purchase accounting adjustments |
9 | 9 | ||||||||
EBITDA from discontinued operations |
2 | 1 | ||||||||
Loss on early extinguishment of debt |
| 3 | ||||||||
Certain legal settlements and related expenses |
1 | 1 | ||||||||
Amortization of pension and postretirement actuarial losses |
16 | 18 | ||||||||
Net plant incident remediation costs |
1 | | ||||||||
Restructuring, impairment and plant closing and transition costs(3): |
||||||||||
Polyurethanes |
| 2 | ||||||||
Performance Products |
| 1 | ||||||||
Textile Effects |
1 | 4 | ||||||||
Pigments and Additives |
11 | 85 | ||||||||
Corporate and other |
1 | 2 | ||||||||
| | | | | | | | | | |
Total restructuring, impairment and plant closing and transition costs(3) |
13 | 94 | ||||||||
| | | | | | | | | | |
Adjusted EBITDA(1) |
$ | 274 | $ | 285 | ||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities |
$ | 88 | $ | 34 | 159 | % | ||||
Net cash used in investing activities |
(101 | ) | (81 | ) | 25 | % | ||||
Net cash (used in) provided by financing activities |
(38 | ) | 189 | NM | ||||||
Capital expenditures |
(99 | ) | (149 | ) | (34 | )% |
61
Huntsman International
|
Three months ended March 31, |
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Percent Change |
|||||||||
|
2016 | 2015 | ||||||||
Revenues |
$ | 2,355 | $ | 2,589 | (9 | )% | ||||
Cost of goods sold |
1,938 | 2,137 | (9 | )% | ||||||
| | | | | | | | | | |
Gross profit |
417 | 452 | (8 | )% | ||||||
Operating expenses |
263 | 279 | (6 | )% | ||||||
Restructuring, impairment and plant closing costs |
13 | 93 | (86 | )% | ||||||
| | | | | | | | | | |
Operating income |
141 | 80 | 76 | % | ||||||
Interest expense, net |
(53 | ) | (58 | ) | (9 | )% | ||||
Equity in income of investment in unconsolidated affiliates |
1 | 2 | (50 | )% | ||||||
Loss on early extinguishment of debt |
| (3 | ) | NM | ||||||
Other income (loss) |
1 | (1 | ) | NM | ||||||
| | | | | | | | | | |
Income from continuing operations before income taxes |
90 | 20 | 350 | % | ||||||
Income tax expense |
(27 | ) | (3 | ) | 800 | % | ||||
| | | | | | | | | | |
Income from continuing operations |
63 | 17 | 271 | % | ||||||
Loss from discontinued operations, net of tax |
(1 | ) | (2 | ) | (50 | )% | ||||
| | | | | | | | | | |
Net income |
62 | 15 | 313 | % | ||||||
Net income attributable to noncontrolling interests |
(6 | ) | (10 | ) | (40 | )% | ||||
| | | | | | | | | | |
Net income attributable to Huntsman International LLC |
56 | 5 | NM | |||||||
Interest expense, net |
53 | 58 | (9 | )% | ||||||
Income tax expense from continuing operations |
27 | 3 | 800 | % | ||||||
Income tax (benefit) expense from discontinued operations |
(1 | ) | 1 | NM | ||||||
Depreciation and amortization |
97 | 92 | 5 | % | ||||||
| | | | | | | | | | |
EBITDA(1) |
$ | 232 | $ | 159 | 46 | % | ||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Reconciliation of EBITDA to adjusted EBITDA: |
||||||||||
EBITDA(1) |
$ | 232 | $ | 159 | ||||||
Acquisition and integration expenses and purchase accounting adjustments |
9 | 9 | ||||||||
EBITDA from discontinued operations |
2 | 1 | ||||||||
Loss on early extinguishment of debt |
| 3 | ||||||||
Certain legal settlements and related expenses |
1 | 1 | ||||||||
Amortization of pension and postretirement actuarial losses |
16 | 20 | ||||||||
Net plant incident remediation costs |
1 | | ||||||||
Restructuring, impairment and plant closing and transition costs(3): |
||||||||||
Polyurethanes |
| 2 | ||||||||
Performance Products |
| 1 | ||||||||
Textile Effects |
1 | 4 | ||||||||
Pigments and Additives |
11 | 85 | ||||||||
Corporate and other |
1 | 2 | ||||||||
| | | | | | | | | | |
Total restructuring, impairment and plant closing and transition costs(3) |
13 | 94 | ||||||||
| | | | | | | | | | |
Adjusted EBITDA(1) |
$ | 274 | $ | 287 | ||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Net cash provided by operating activities |
$ | 87 | $ | 35 | 149 | % | ||||
Net cash used in investing activities |
(102 | ) | (87 | ) | 17 | % | ||||
Net cash (used in) provided by financing activities |
(36 | ) | 146 | NM | ||||||
Capital expenditures |
(99 | ) | (149 | ) | (34 | )% |
62
Huntsman Corporation
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Reconciliation of net income to adjusted net income: |
|||||||
Net income attributable to Huntsman Corporation |
$ | 56 | $ | 5 | |||
Acquisition and integration expenses and purchase accounting adjustments, net of tax of $(3) and $(2), respectively |
6 | 7 | |||||
Loss from discontinued operations, net of tax of $(1) and $1, respectively |
1 | 2 | |||||
Loss on early extinguishment of debt, net of tax of nil and $(1), respectively |
| 2 | |||||
Certain legal settlements and related expenses, net of tax of nil each |
1 | 1 | |||||
Amortization of pension and postretirement actuarial losses, net of tax of $(3) and $(5), respectively |
13 | 13 | |||||
Net plant incident remediation costs, net of tax of nil each |
1 | | |||||
Restructuring, impairment and plant closing and transition costs(3), net of tax of $(3) and $(26), respectively |
10 | 68 | |||||
| | | | | | | |
Adjusted net income(2) |
$ | 88 | $ | 98 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Weighted average sharesbasic |
236.1 | 243.9 | |||||
Weighted average sharesdiluted |
237.9 | 247.2 | |||||
Net income per share: |
|||||||
Basic |
$ | 0.24 | $ | 0.02 | |||
Diluted |
0.24 | 0.02 | |||||
Other non-GAAP measures: |
|||||||
Adjusted income per share(2): |
|||||||
Basic |
$ | 0.37 | $ | 0.40 | |||
Diluted |
0.37 | 0.40 |
Huntsman International
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2016 | 2015 | |||||
Reconciliation of net income to adjusted net income: |
|||||||
Net income attributable to Huntsman International |
$ | 56 | $ | 5 | |||
Acquisition and integration expenses and purchase accounting adjustments, net of tax of $(3) and $(2), respectively |
6 | 7 | |||||
Loss from discontinued operations, net of tax of $(1) and $1, respectively |
1 | 2 | |||||
Loss on early extinguishment of debt, net of tax of nil and $(1), respectively |
| 2 | |||||
Certain legal settlements and related expenses, net of tax of nil each |
1 | 1 | |||||
Amortization of pension and postretirement actuarial losses, net of tax of $(3) and $(5), respectively |
13 | 15 | |||||
Net plant incident remediation costs, net of tax of nil each |
1 | | |||||
Restructuring, impairment and plant closing and transition costs(3), net of tax of $(3) and $(26), respectively |
10 | 68 | |||||
| | | | | | | |
Adjusted net income(2) |
$ | 88 | $ | 100 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
NMNot Meaningful
63
as appropriate, before interest, income taxes, depreciation and amortization. Adjusted EBITDA is computed by eliminating the following from EBITDA: (a) acquisition and integration expenses and purchase accounting adjustments; (b) EBITDA from discontinued operations; (c) loss on early extinguishment of debt; (d) certain legal settlements and related (income) expenses; (e) amortization of pension and postretirement actuarial losses; (f) net plant incident remediation costs; and (g) restructuring, impairment and plant closing and transition costs.
EBITDA and adjusted EBITDA are not necessarily comparable to other similarly titled measures used by other companies. There are material limitations associated with our use of these measures because they do not reflect overall financial performance, including the effects of interest, income taxes, depreciation and amortization. Our management compensates for the limitations of these measures by using them as a supplement to GAAP results.
Three Months Ended March 31, 2016 Compared with Three Months Ended March 31, 2015
For the three months ended March 31, 2016, net income attributable to Huntsman Corporation and net income attributable to Huntsman International was $56 million on revenues of $2,355 million, compared with net income attributable to Huntsman Corporation and net income attributable to Huntsman International of $5 million on revenues of $2,589 million for the same period of 2015. The increase of $51 million in net income attributable to Huntsman Corporation and net income attributable to Huntsman International was the result of the following items:
64
65
Segment Analysis
|
Three months ended March 31, |
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Percent Change Favorable (Unfavorable) |
|||||||||
|
2016 | 2015 | ||||||||
Revenues |
||||||||||
Polyurethanes |
$ | 836 | $ | 890 | (6 | )% | ||||
Performance Products |
536 | 656 | (18 | )% | ||||||
Advanced Materials |
266 | 290 | (8 | )% | ||||||
Textile Effects |
185 | 206 | (10 | )% | ||||||
Pigments and Additives |
540 | 572 | (6 | )% | ||||||
Corporate and eliminations |
(8 | ) | (25 | ) | NM | |||||
| | | | | | | | | | |
Total |
$ | 2,355 | $ | 2,589 | (9 | )% | ||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Huntsman Corporation |
||||||||||
Segment EBITDA |
||||||||||
Polyurethanes |
$ | 123 | $ | 93 | 32 | % | ||||
Performance Products |
90 | 118 | (24 | )% | ||||||
Advanced Materials |
57 | 55 | 4 | % | ||||||
Textile Effects |
15 | 11 | 36 | % | ||||||
Pigments and Additives |
(8 | ) | (75 | ) | 89 | % | ||||
Corporate and other |
(43 | ) | (42 | ) | (2 | )% | ||||
| | | | | | | | | | |
Subtotal |
234 | 160 | 46 | % | ||||||
Discontinued Operations |
(2 | ) | (1 | ) | (100 | )% | ||||
| | | | | | | | | | |
Total |
$ | 232 | $ | 159 | 46 | % | ||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Huntsman International |
||||||||||
Segment EBITDA |
||||||||||
Polyurethanes |
$ | 123 | $ | 93 | 32 | % | ||||
Performance Products |
90 | 118 | (24 | )% | ||||||
Advanced Materials |
57 | 55 | 4 | % | ||||||
Textile Effects |
15 | 11 | 36 | % | ||||||
Pigments and Additives |
(8 | ) | (75 | ) | 89 | % | ||||
Corporate and other |
(43 | ) | (42 | ) | (2 | )% | ||||
| | | | | | | | | | |
Subtotal |
234 | 160 | 46 | % | ||||||
Discontinued Operations |
(2 | ) | (1 | ) | (100 | )% | ||||
| | | | | | | | | | |
Total |
$ | 232 | $ | 159 | 46 | % | ||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
NMNot meaningful
66
|
Three months ended March 31, 2016 vs 2015 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Average Selling Price(1) | |
|
||||||||||
|
Local Currency |
Foreign Currency Translation Impact |
Mix & Other |
Sales Volumes(2) |
|||||||||
Period-Over-Period Increase (Decrease) |
|||||||||||||
Polyurethanes |
(19 | )% | (2 | )% | 2 | % | 13 | % | |||||
Performance Products |
(13 | )% | (2 | )% | (10 | )% | 7 | % | |||||
Advanced Materials |
(3 | )% | (5 | )% | 2 | % | (2 | )% | |||||
Textile Effects |
(2 | )% | (5 | )% | (1 | )% | (2 | )% | |||||
Pigments and Additives |
(11 | )% | (3 | )% | 2 | % | 6 | % | |||||
Total Company |
(13 | )% | (3 | )% | (2 | )% | 9 | % |
|
Three months ended March 31, 2016 vs December 31, 2015 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Average Selling Price(1) | |
|
||||||||||
|
Local Currency |
Foreign Currency Translation Impact |
Mix & Other |
Sales Volumes(2) |
|||||||||
Period-Over-Period Increase (Decrease) |
|||||||||||||
Polyurethanes |
(4 | )% | | 2 | % | (6 | )% | ||||||
Performance Products |
(5 | )% | | (7 | )% | 9 | % | ||||||
Advanced Materials |
(2 | )% | (1 | )% | | 7 | % | ||||||
Textile Effects |
(3 | )% | (1 | )% | (2 | )% | 5 | % | |||||
Pigments and Additives |
(2 | )% | | (1 | )% | 22 | % | ||||||
Total Company |
(4 | )% | | | 5 | % |
Polyurethanes
The decrease in revenues in our Polyurethanes segment for the three months ended March 31, 2016 compared to the same period of 2015 was primarily due to lower average selling prices. MDI average selling prices decreased in response to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar primarily against the euro. 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 due to the impact of the prior year planned maintenance outage. The increase in segment EBITDA was primarily due to the impact of the planned PO/MTBE maintenance outage of approximately $60 million and higher MDI volumes, partially offset by lower MTBE margins and the foreign currency exchange impact of a stronger U.S. dollar primarily against the euro.
Performance Products
The decrease in revenues in our Performance Products segment for the three months ended March 31, 2016 compared to the same period of 2015 was due to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased primarily in response to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar primarily against the euro. Sales volumes increased primarily due to higher sales volumes of ethylene oxide intermediates, partially offset by lower sales volumes for amines and maleic anhydride. The decrease in segment
67
EBITDA was primarily due to lower sales volumes for amines and maleic anhydride and lower margins for ethylene and maleic anyhydride.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for the three months ended March 31, 2016 compared to the same period of 2015 was due to lower sales volumes and lower average selling prices. Sales volumes decreased in the Americas region, primarily due to competitive pressure, partially offset by strong volume growth in our European and Asia Pacific regions. Average selling prices decreased in our European and Asia Pacific regions as a result of competitive pricing pressure and the foreign currency exchange impact of a stronger U.S. dollar primarily against the euro. The increase in segment EBITDA was primarily due to higher margins from lower raw material costs.
Textile Effects
The decrease in revenues in our Textile Effects segment for the three months ended March 31, 2016 compared to the same period of 2015 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily due to the foreign currency exchange impact of a stronger U.S. dollar. Sales volumes decreased primarily due to the de-selection of lower value business and destocking within the dyes supply chain. The increase in segment EBITDA was primarily due to higher margins from lower raw material costs, lower selling, general and administrative expenses and lower restructuring costs.
Pigments and Additives
The decrease in revenues in our Pigments and Additives segment for three months ended March 31, 2016 compared to the same period in 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. The increase in segment EBITDA was primarily due to lower restructuring, impairment and plant closing costs, partially offset by lower margins for titatnium dioxide. During the three months ended March 31, 2016 and 2015, our Pigments and Additives segment recorded acquisition expenses and integration costs of $5 million and $6 million, respectively. During the three months ended March 31, 2016 and 2015, our Pigments and Additives segment recorded restructuring, impairment and plant closing costs of $11 million and $85 million, respectively. For more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense, benzene sales and gains and losses on the disposition of corporate assets. For the three months ended March 31, 2016, EBITDA from Corporate and other for Huntsman Corporation and Huntsman International decreased by $1 million to a loss of $43 million from a loss of $42 million for the same period in 2015. The decrease in EBITDA from Corporate and other resulted primarily from a decrease in LIFO inventory valuation income, substantially offset by a decrease in loss from benzene sales and a decrease in loss on early extinguishment of debt.
68
Discontinued Operations
The operating results of our former polymers, base chemicals and Australian styrenics businesses are classified as discontinued operations, and, accordingly, the revenues of these businesses are excluded from revenues for all periods presented. The EBITDA of these former businesses are included in discontinued operations for all periods presented. The loss from discontinued operations represents the operating results, legal costs, restructuring, impairment and plant closing costs and gain (loss) on disposal with respect to our former businesses.
LIQUIDITY AND CAPITAL RESOURCES
The following is a discussion of our liquidity and capital resources and does not include separate information with respect to Huntsman International in accordance with General Instructions H(1)(a) and (b) of Form 10-Q.
Cash
Net cash provided by operating activities for the three months ended March 31, 2016 and 2015 was $88 million and $34 million, respectively. The increase in net cash provided by operating activities during the three months ended March 31, 2016 compared with the same period in 2015 was primarily attributable to increased operating income as described in "Results of Operations" above, offset in part by a $17 million unfavorable variance in operating assets and liabilities for the three months ended March 31, 2016 as compared with the same period of 2015.
Net cash used in investing activities for the three months ended March 31, 2016 and 2015 was $101 million and $81 million, respectively. During the three months ended March 31, 2016 and 2015, we paid $99 million and $149 million, respectively, for capital expenditures. During the three months ended March 31, 2016 and 2015, we made investments in Louisiana Pigment Company, L.P. of $11 million and $4 million, respectively, and in our BASF Huntsman Shanghai Isocyanate Investment B.V. joint venture of nil and $9 million, respectively, and received dividends from Louisiana Pigment Company, L.P. of $10 million and $15 million, respectively. During the three months ended March 31, 2015, we received $66 million from the termination of cross-currency interest rate contracts.
Net cash (used in) provided by financing activities for the three months ended March 31, 2016 and 2015 was $(38) million and $189 million, respectively. The decrease in net cash provided by financing activities was primarily due to the issuance of long-term debt during the three months ended March 31, 2015. On March 31, 2015, we issued €300 million (approximately $326 million) aggregate principal amount of 4.25% senior notes due 2025.
69
Changes in Financial Condition
The following information summarizes our working capital position (dollars in millions):
|
March 31, 2016 |
December 31, 2015 |
Increase (Decrease) |
Percent Change |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash and cash equivalents |
$ | 208 | $ | 257 | $ | (49 | ) | (19 | )% | ||||
Restricted cash |
10 | 12 | (2 | ) | (17 | )% | |||||||
Accounts and notes receivable, net |
1,572 | 1,449 | 123 | 8 | % | ||||||||
Inventories |
1,689 | 1,692 | (3 | ) | | ||||||||
Prepaid expenses |
70 | 112 | (42 | ) | (38 | )% | |||||||
Other current assets |
281 | 312 | (31 | ) | (10 | )% | |||||||
| | | | | | | | | | | | | |
Total current assets |
3,830 | 3,834 | (4 | ) | | ||||||||
| | | | | | | | | | | | | |
Accounts payable |
1,027 | 1,061 | (34 | ) | (3 | )% | |||||||
Accrued liabilities |
652 | 686 | (34 | ) | (5 | )% | |||||||
Current portion of debt |
103 | 170 | (67 | ) | (39 | )% | |||||||
| | | | | | | | | | | | | |
Total current liabilities |
1,782 | 1,917 | (135 | ) | (7 | )% | |||||||
| | | | | | | | | | | | | |
Working capital |
$ | 2,048 | $ | 1,917 | $ | 131 | 7 | % | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Our working capital increased by $131 million as a result of the net impact of the following significant changes:
DIRECT AND SUBSIDIARY DEBT
See "Note 6. DebtDirect and Subsidiary Debt" to our condensed consolidated financial statements.
70
Debt Issuance Costs
See "Note 6. DebtDirect and Subsidiary DebtDebt Issuance Costs" to our condensed consolidated financial statements.
Senior Credit Facilities
See "Note 6. DebtDirect and Subsidiary DebtSenior Credit Facilities" to our condensed consolidated financial statements.
Amendment to the Credit Agreement
See "Note 6. DebtDirect and Subsidiary DebtAmendment to the Credit Agreement" to our condensed consolidated financial statements.
A/R Programs
See "Note 6. DebtDirect and Subsidiary DebtA/R Programs" to our condensed consolidated financial statements.
Redemption of Notes and Loss on Early Extinguishment of Debt
See "Note 6. DebtDirect and Subsidiary DebtRedemption of Notes and Loss on Early Extinguishment of Debt" to our condensed consolidated financial statements.
Note Payable from Huntsman International to Huntsman Corporation
See "Note 6. DebtDirect and Subsidiary DebtNote Payable from Huntsman International to Huntsman Corporation" to our condensed consolidated financial statements.
COMPLIANCE WITH COVENANTS
See "Note 6. DebtCompliance with Covenants" to our condensed consolidated financial statements.
SHORT-TERM AND LONG-TERM LIQUIDITY
We depend upon our cash, credit facilities, A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of March 31, 2016, we had $974 million of combined cash and unused borrowing capacity, consisting of $218 million in cash and restricted cash, $610 million in availability under our Revolving Facility, and $146 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:
71
As of March 31, 2016, we had $103 million classified as current portion of debt, including a short-term borrowing facility in China totaling $39 million, scheduled Senior Credit Facilities amortization payments totaling $20 million, debt at our variable interest entities of $17 million, and certain other short-term facilities and scheduled amortization payments totaling $27 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 March 31, 2016, we had approximately $175 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. Additionally, we have material intercompany debt obligations owed to us by our non-U.S. subsidiaries. We intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate cash as dividends or as repayments of intercompany debt. If foreign cash were repatriated as dividends, the dividends could be subject to U.S. federal and state income taxes without any offsetting foreign tax credit relief. At present, we estimate that we will generate sufficient cash in our U.S. operations, together with the payments of intercompany debt if necessary, to meet our cash needs in the U.S and we do not expect to repatriate cash to the U.S. as dividends. Cash held by certain foreign subsidiaries, including our variable interest entities, may also be subject to legal restrictions, including those arising from the interests of our partners, which could limit the amounts available for repatriation.
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. These cost savings are expected to be achieved by the middle of 2016.
For further discussion of these and other restructuring plans and the costs involved, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements.
72
LEGAL PROCEEDINGS
For a discussion of legal proceedings, see "Note 12. Commitments and ContingenciesLegal Matters" and "Note 13. Environmental, Health and Safety Matters" to our condensed consolidated financial statements.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
As noted in our Annual Report on Form 10-K for the year ended December 31, 2015, "Part I. Item 1. BusinessEnvironmental, Health and Safety Matters" and "Part I. Item 1A, "Risk Factors," 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 13. Environmental, Health and Safety Matters" to our condensed consolidated financial statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
For a discussion of recently issued accounting pronouncements, see "Note 2. Recently Issued Accounting Pronouncements" to our condensed consolidated financial statements.
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies are presented in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2015.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures.
All derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.
We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded as an unrealized currency translation adjustment in accumulated other comprehensive loss.
Our revenues and expenses are denominated in various foreign currencies, and our cash flows and earnings are thus subject to fluctuations due to exchange rate variations. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in
73
exchange rates on our cash flows and earnings. As of March 31, 2016, we had approximately $185 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.
Huntsman International has entered into two interest rate contracts to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps are designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps are recorded in other comprehensive income (loss) (dollars in millions):
March 31, 2016 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Notional Value |
Effective Date | Maturity | Fixed Rate |
Fair Value | ||||||
$ | 50 | December 2014 | April 2017 | 2.5 | % | $1 noncurrent liability | ||||
50 | January 2015 | April 2017 | 2.5 | % | 1 noncurrent liability |
Beginning in 2009, Arabian Amines Company entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of Arabian Amines Company as of July 1, 2010, the interest rate contract is now included in our consolidated results. See "Note 4. Variable Interest Entities" to our condensed consolidated financial statements. The notional amount of the swap as of March 31, 2016 was $22 million, and the interest rate contract is not designated as a cash flow hedge. As of March 31, 2016, the fair value of the swap was $2 million and was recorded in noncurrent liabilities on our condensed consolidated balance sheets. For each of the three months ended March 31, 2016 and 2015, we recorded a reduction of interest expense of nil due to changes in fair value of the swap.
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 €161 million. This 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 €3 million (equivalent to an annual rate of approximately 3.6%). As of March 31, 2016, the fair value of this swap was $20 million and was recorded in noncurrent assetsin our condensed consolidated balance sheets.
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 €255 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 income (loss) on our condensed consolidated statements of comprehensive income (loss). From time to time, we review such designation of intercompany loans.
We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of March 31, 2016, we have designated approximately €
74
621 million (approximately $697 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the three months ended March 31, 2016, the amount of loss recognized on the hedge of our net investment was $21 million and was recorded in other comprehensive income (loss) on our condensed consolidated statements of comprehensive income (loss).
ITEM 4. 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 March 31, 2016. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of March 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 Commission'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.
No changes to our internal control over financial reporting occurred during the quarter ended March 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). However, we can only give reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal controls over financial reporting could cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.
75
Antitrust Matters
On February 26, 2016, we reached an agreement to settle the Opt-Out Litigation for an amount immaterial to our financial statements. The case was subsequently dismissed on March 9, 2016. See "Note 12. Commitments and ContingenciesLegal MattersAntitrust Matters" to our condensed consolidated financial statements.
For information regarding risk factors, see "Part I. Item 1A. Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2015.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information with respect to shares of our common stock that we repurchased as part of our share repurchase program and shares of restricted stock granted under our Stock Incentive Plan that we withheld upon vesting to satisfy our tax withholding obligations during the three months ended March 31, 2016.
|
Total number of shares purchased |
Average price paid per share |
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) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
January |
1,444,769 | $ | 11.68 | 1,444,769 | $ | 50,000,000 | |||||||
February |
210,087 | 9.07 | | 50,000,000 | |||||||||
March |
| | | 50,000,000 | |||||||||
| | | | | | | | | | | | | |
Total |
1,654,856 | $ | 11.35 | 1,444,769 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
76
10.1 | Fifteenth Amendment to Credit Agreement, dated as of August 10, 2015, among Huntsman International LLC, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on April 6, 2016) | ||
31.1 |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
31.2 |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
32.1 |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
||
32.2 |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
||
101.INS |
XBRL Instance Document |
||
101.SCH |
XBRL Taxonomy Extension Schema |
||
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase |
||
101.LAB |
XBRL Taxonomy Extension Label Linkbase |
||
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase |
||
101.DEF |
XBRL Taxonomy Extension Definition Linkbase |
77
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
Dated: April 28, 2016 | HUNTSMAN CORPORATION HUNTSMAN INTERNATIONAL LLC |
|||
By: |
/s/ J. KIMO ESPLIN J. Kimo Esplin Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
|||
By: |
/s/ RANDY W. WRIGHT Randy W. Wright Vice President and Controller (Authorized Signatory and Principal Accounting Officer) |
78
10.1 | Fifteenth Amendment to Credit Agreement, dated as of August 10, 2015, among Huntsman International LLC, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on April 6, 2016) | ||
31.1 |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
31.2 |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
32.1 |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
||
32.2 |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
||
101.INS |
XBRL Instance Document |
||
101.SCH |
XBRL Taxonomy Extension Schema |
||
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase |
||
101.LAB |
XBRL Taxonomy Extension Label Linkbase |
||
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase |
||
101.DEF |
XBRL Taxonomy Extension Definition Linkbase |
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13A-14(A) and 15D-14(A),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Peter R. Huntsman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Huntsman Corporation and Huntsman International LLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
4. The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
5. The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors or board of managers, as applicable (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
Date: April 28, 2016
/s/ PETER R. HUNTSMAN Peter R. Huntsman Chief Executive Officer |
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13A-14(A) and 15D-14(A),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, J. Kimo Esplin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Huntsman Corporation and Huntsman International LLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
4. The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
5. The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors or board of managers, as applicable (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
Date:
April 28, 2016
/s/ J. KIMO ESPLIN J. Kimo Esplin Chief Financial Officer |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Huntsman Corporation and Huntsman International LLC (the "Companies") for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter R. Huntsman, Chief Executive Officer of the Companies, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
/s/ PETER R. HUNTSMAN Peter R. Huntsman Chief Executive Officer April 28, 2016 |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Huntsman Corporation and Huntsman International LLC (the "Companies") for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. Kimo Esplin, Chief Financial Officer of the Companies, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
/s/ J. KIMO ESPLIN J. Kimo Esplin Chief Financial Officer April 28, 2016 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 20, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | Huntsman CORP | |
Entity Central Index Key | 0001307954 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 238,163,547 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
|||
---|---|---|---|---|---|
Accounts and notes receivable, allowance for doubtful accounts (in dollars) | $ 29 | $ 26 | |||
Accounts and notes receivable, pledged as collateral (in dollars) | $ 493 | $ 438 | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Common stock, shares authorized | 1,200,000,000 | 1,200,000,000 | |||
Common stock, shares issued | 250,770,770 | 249,483,541 | |||
Common stock, shares outstanding | 236,271,202 | 237,080,026 | |||
Treasury stock, shares | 12,607,223 | 11,162,454 | |||
Variable Interest Entity | |||||
Cash and cash equivalents | [1] | $ 208 | $ 257 | ||
Restricted cash | [1] | 10 | 12 | ||
Accounts and notes receivable (net) | [1] | 1,558 | 1,420 | ||
Inventories | [1] | 1,689 | 1,692 | ||
Other current assets | [1] | 281 | 312 | ||
Property, plant and equipment (net) | [1] | 4,437 | 4,446 | ||
Intangible assets (net) | [1] | 106 | 86 | ||
Other noncurrent assets | [1] | 576 | 573 | ||
Accounts payable | [1] | 999 | 1,034 | ||
Accrued liabilities | [1] | 652 | 686 | ||
Current portion of debt | [1] | 103 | 170 | ||
Long-term debt | [1] | 4,724 | 4,625 | ||
Other noncurrent liabilities | [1] | 1,223 | 1,226 | ||
Consolidated VIE's | |||||
Variable Interest Entity | |||||
Cash and cash equivalents | 21 | 34 | |||
Restricted cash | 10 | 12 | |||
Accounts and notes receivable (net) | 30 | 26 | |||
Inventories | 37 | 54 | |||
Other current assets | 5 | 5 | |||
Property, plant and equipment (net) | 303 | 307 | |||
Intangible assets (net) | 37 | 36 | |||
Other noncurrent assets | 42 | 38 | |||
Accounts payable | 77 | 82 | |||
Accrued liabilities | 30 | 27 | |||
Current portion of debt | 17 | 15 | |||
Long-term debt | 123 | 137 | |||
Other noncurrent liabilities | 54 | 54 | |||
Huntsman International | |||||
Accounts and notes receivable, allowance for doubtful accounts (in dollars) | 29 | 26 | |||
Accounts and notes receivable, pledged as collateral (in dollars) | $ 493 | $ 438 | |||
Members' equity, units issued (in units) | 2,728 | 2,728 | |||
Members' equity, units outstanding (in units) | 2,728 | 2,728 | |||
Variable Interest Entity | |||||
Cash and cash equivalents | [1] | $ 208 | $ 257 | ||
Restricted cash | [1] | 10 | 12 | ||
Accounts and notes receivable (net) | [1] | 1,558 | 1,420 | ||
Inventories | [1] | 1,689 | 1,692 | ||
Other current assets | [1] | 276 | 306 | ||
Property, plant and equipment (net) | [1] | 4,405 | 4,410 | ||
Intangible assets (net) | [1] | 106 | 86 | ||
Other noncurrent assets | [1] | 576 | 573 | ||
Accounts payable | [1] | 998 | 1,034 | ||
Accrued liabilities | [1] | 650 | 683 | ||
Current portion of debt | [1] | 103 | 170 | ||
Long-term debt | [1] | 4,724 | 4,625 | ||
Other noncurrent liabilities | [1] | 1,226 | 1,224 | ||
Huntsman International | Consolidated VIE's | |||||
Variable Interest Entity | |||||
Cash and cash equivalents | 21 | 34 | |||
Restricted cash | 10 | 12 | |||
Accounts and notes receivable (net) | 30 | 26 | |||
Inventories | 37 | 54 | |||
Other current assets | 5 | 5 | |||
Property, plant and equipment (net) | 303 | 307 | |||
Intangible assets (net) | 37 | 36 | |||
Other noncurrent assets | 42 | 38 | |||
Accounts payable | 77 | 82 | |||
Accrued liabilities | 30 | 27 | |||
Current portion of debt | 17 | 15 | |||
Long-term debt | 123 | 137 | |||
Other noncurrent liabilities | $ 54 | $ 54 | |||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Revenues: | ||
Trade sales, services and fees, net | $ 2,321 | $ 2,560 |
Related party sales | 34 | 29 |
Total revenues | 2,355 | 2,589 |
Cost of goods sold | 1,939 | 2,139 |
Gross profit | 416 | 450 |
Operating expenses: | ||
Selling, general and administrative | 223 | 246 |
Research and development | 37 | 42 |
Other operating expense (income) | 5 | (8) |
Restructuring, impairment and plant closing costs | 13 | 93 |
Total expenses | 278 | 373 |
Operating income | 138 | 77 |
Interest expense | (50) | (56) |
Equity in income of investment in unconsolidated affiliates | 1 | 2 |
Loss on early extinguishment of debt | (3) | |
Other income (loss) | 1 | (1) |
Income from continuing operations before income taxes | 90 | 19 |
Income tax expense | (27) | (2) |
Income from continuing operations | 63 | 17 |
Loss from discontinued operations, net of tax | (1) | (2) |
Net income | 62 | 15 |
Net income attributable to noncontrolling interests | (6) | (10) |
Net income | $ 56 | $ 5 |
Basic income (loss) per share: | ||
Income from continuing operations attributable to Huntsman Corporation common stockholders (in dollars per share) | $ 0.24 | $ 0.03 |
Loss from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax (in dollars per share) | (0.01) | |
Net income attributable to Huntsman Corporation common stockholders (in dollars per share) | $ 0.24 | $ 0.02 |
Weighted average shares (in shares) | 236.1 | 243.9 |
Diluted income (loss) per share: | ||
Income from continuing operations attributable to Huntsman Corporation common stockholders (in dollars per share) | $ 0.24 | $ 0.03 |
Loss from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax (in dollars per share) | (0.01) | |
Net income attributable to Huntsman Corporation common stockholders (in dollars per share) | $ 0.24 | $ 0.02 |
Weighted average shares (in shares) | 237.9 | 247.2 |
Amounts attributable to Huntsman Corporation common stockholders: | ||
Income from continuing operations | $ 57 | $ 7 |
Loss from discontinued operations, net of tax | (1) | (2) |
Net income | $ 56 | $ 5 |
Dividends per share (in dollars per share) | $ 0.125 | $ 0.125 |
Huntsman International | ||
Revenues: | ||
Trade sales, services and fees, net | $ 2,321 | $ 2,560 |
Related party sales | 34 | 29 |
Total revenues | 2,355 | 2,589 |
Cost of goods sold | 1,938 | 2,137 |
Gross profit | 417 | 452 |
Operating expenses: | ||
Selling, general and administrative | 221 | 244 |
Research and development | 37 | 42 |
Other operating expense (income) | 5 | (7) |
Restructuring, impairment and plant closing costs | 13 | 93 |
Total expenses | 276 | 372 |
Operating income | 141 | 80 |
Interest expense | (53) | (58) |
Equity in income of investment in unconsolidated affiliates | 1 | 2 |
Loss on early extinguishment of debt | (3) | |
Other income (loss) | 1 | (1) |
Income from continuing operations before income taxes | 90 | 20 |
Income tax expense | (27) | (3) |
Income from continuing operations | 63 | 17 |
Loss from discontinued operations, net of tax | (1) | (2) |
Net income | 62 | 15 |
Net income attributable to noncontrolling interests | (6) | (10) |
Net income | 56 | 5 |
Amounts attributable to Huntsman Corporation common stockholders: | ||
Net income | $ 56 | $ 5 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Net income | $ 62 | $ 15 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translations adjustments | 27 | (182) |
Pension and other postretirement benefits adjustments | 13 | 13 |
Other, net | (11) | (1) |
Other comprehensive income (loss), net of tax | 29 | (170) |
Comprehensive income (loss) | 91 | (155) |
Comprehensive income attributable to noncontrolling interests | (8) | (3) |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | 83 | (158) |
Huntsman International | ||
Net income | 62 | 15 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translations adjustments | 28 | (182) |
Pension and other postretirement benefits adjustments | 15 | 15 |
Other, net | (11) | (1) |
Other comprehensive income (loss), net of tax | 32 | (168) |
Comprehensive income (loss) | 94 | (153) |
Comprehensive income attributable to noncontrolling interests | (8) | (3) |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | $ 86 | $ (156) |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions |
Huntsman International
Members' equity
|
Huntsman International
Accumulated deficit
|
Huntsman International
Accumulated other comprehensive loss
|
Huntsman International
Noncontrolling interests in subsidiaries
|
Huntsman International |
Common stock |
Additional paid-in capital |
Treasury stock |
Unearned stock-based compensation |
Accumulated deficit |
Accumulated other comprehensive loss |
Noncontrolling interests in subsidiaries |
Total |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at the beginning of the period at Dec. 31, 2014 | $ 3 | $ 3,385 | $ (50) | $ (14) | $ (493) | $ (1,053) | $ 173 | $ 1,951 | |||||
Balance (in shares) at Dec. 31, 2014 | 243,416,979 | ||||||||||||
Balance at the beginning of the period at Dec. 31, 2014 | $ 3,166 | $ (956) | $ (1,087) | $ 173 | $ 1,296 | ||||||||
Balance (in units) at Dec. 31, 2014 | 2,728 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||
Net income | 5 | 10 | 15 | 5 | 10 | 15 | |||||||
Dividends paid to parent | (31) | (31) | |||||||||||
Other comprehensive income (loss) | (161) | (7) | (168) | (163) | (7) | (170) | |||||||
Issuance of nonvested stock awards | 19 | (19) | |||||||||||
Vesting of stock awards | 6 | 6 | |||||||||||
Vesting of stock awards (in shares) | 1,000,585 | ||||||||||||
Recognition of stock-based compensation | 3 | 5 | 8 | ||||||||||
Repurchase and cancellation of stock awards | (7) | (7) | |||||||||||
Repurchase and cancellation of stock awards (in shares) | (302,372) | ||||||||||||
Stock options exercised (in shares) | 11,732 | ||||||||||||
Contribution from parent | $ 8 | 8 | |||||||||||
Excess tax benefit related to stock-based compensation | 1 | 1 | 1 | 1 | |||||||||
Dividends declared on common stock | (31) | (31) | |||||||||||
Balance at the end of the period at Mar. 31, 2015 | $ 3 | 3,414 | (50) | (28) | (526) | (1,216) | 176 | 1,773 | |||||
Balance (in shares) at Mar. 31, 2015 | 244,126,924 | ||||||||||||
Balance at the end of the period at Mar. 31, 2015 | $ 3,175 | (982) | (1,248) | 176 | 1,121 | ||||||||
Balance (in units) at Mar. 31, 2015 | 2,728 | ||||||||||||
Balance at the beginning of the period at Dec. 31, 2015 | $ 3 | 3,407 | (135) | (17) | (528) | (1,288) | 187 | 1,629 | |||||
Balance (in shares) at Dec. 31, 2015 | 237,080,026 | ||||||||||||
Balance at the beginning of the period at Dec. 31, 2015 | $ 3,196 | (983) | (1,316) | 187 | $ 1,084 | ||||||||
Balance (in units) at Dec. 31, 2015 | 2,728 | 2,728 | |||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||
Net income | 56 | 6 | $ 62 | 56 | 6 | 62 | |||||||
Dividends paid to parent | (30) | (30) | |||||||||||
Other comprehensive income (loss) | 30 | 2 | 32 | 27 | 2 | 29 | |||||||
Issuance of nonvested stock awards | 16 | (16) | |||||||||||
Vesting of stock awards | 2 | 2 | |||||||||||
Vesting of stock awards (in shares) | 880,269 | ||||||||||||
Recognition of stock-based compensation | 2 | 5 | 7 | ||||||||||
Repurchase and cancellation of stock awards | (2) | (2) | |||||||||||
Repurchase and cancellation of stock awards (in shares) | (244,324) | ||||||||||||
Contribution from parent | $ 7 | 7 | |||||||||||
Dividends paid to noncontrolling interests | (9) | (9) | (9) | (9) | |||||||||
Treasury stock repurchased | 15 | (15) | |||||||||||
Treasury stock repurchased (in shares) | (1,444,769) | ||||||||||||
Excess tax shortfall related to stock-based compensation | (3) | (3) | (3) | (3) | |||||||||
Dividends declared on common stock | (30) | (30) | |||||||||||
Balance at the end of the period at Mar. 31, 2016 | $ 3 | $ 3,439 | $ (150) | $ (28) | $ (504) | $ (1,261) | $ 186 | $ 1,685 | |||||
Balance (in shares) at Mar. 31, 2016 | 236,271,202 | ||||||||||||
Balance at the end of the period at Mar. 31, 2016 | $ 3,200 | $ (957) | $ (1,286) | $ 186 | $ 1,143 | ||||||||
Balance (in units) at Mar. 31, 2016 | 2,728 | 2,728 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
||||
Operating Activities: | |||||
Net income | $ 62 | $ 15 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Equity in income of investment in unconsolidated affiliates | (1) | (2) | |||
Depreciation and amortization | 100 | 95 | |||
Loss on early extinguishment of debt | (3) | ||||
Noncash interest expense | 4 | 4 | |||
Noncash restructuring and impairment charges | 5 | 29 | |||
Deferred income taxes | 6 | (33) | |||
Noncash gain on foreign currency transactions | (6) | ||||
Stock-based compensation | 8 | 9 | |||
Other, net | 2 | 1 | |||
Changes in operating assets and liabilities, net of effects of acquisitions : | |||||
Accounts and notes receivable | (105) | (49) | |||
Inventories | 22 | 54 | |||
Prepaid expenses | 2 | 3 | |||
Other current assets | 33 | 25 | |||
Other noncurrent assets | (20) | (90) | |||
Accounts payable | (31) | (2) | |||
Accrued liabilities | (3) | ||||
Other noncurrent liabilities | 1 | (19) | |||
Net cash provided by operating activities | 88 | 34 | |||
Investing Activities: | |||||
Capital expenditures | (99) | (149) | |||
Cash received from unconsolidated affiliates | 10 | 15 | |||
Investment in unconsolidated affiliates | (12) | (13) | |||
Cash received from termination of cross-currency interest rate contracts | 66 | ||||
Change in restricted cash | 2 | ||||
Other, net | (2) | ||||
Net cash used in investing activities | (101) | (81) | |||
Financing Activities: | |||||
Net borrowings under revolving loan facilities | 45 | ||||
Net repayments on overdraft facilities | (2) | ||||
Repayments of short-term debt | (12) | (17) | |||
Borrowings on short-term debt | 4 | ||||
Repayments of long-term debt | (27) | (59) | |||
Proceeds from issuance of long-term debt | 326 | ||||
Repayments of notes payable | (9) | (9) | |||
Borrowings on notes payable | 2 | ||||
Debt issuance costs paid | (4) | ||||
Call premiums related to early extinguishment of debt | (3) | ||||
Contingent consideration paid for acquisition | (4) | ||||
Dividends paid to common stockholders | (30) | (31) | |||
Dividends paid to noncontrolling interests | (9) | ||||
Repurchase and cancellation of stock awards | (2) | (7) | |||
Excess tax benefit related to stock-based compensation | 1 | ||||
Other, net | (2) | ||||
Net cash (used in) provided by financing activities | (38) | 189 | |||
Effect of exchange rate changes on cash | 2 | (8) | |||
(Decrease) increase in cash and cash equivalents | (49) | 134 | |||
Cash and cash equivalents at beginning of period | 257 | [1] | 860 | ||
Cash and cash equivalents at end of period | 208 | [1] | 994 | ||
Supplemental cash flow information: | |||||
Cash paid for interest | 35 | 48 | |||
Cash paid for income taxes | 5 | 11 | |||
Huntsman International | |||||
Operating Activities: | |||||
Net income | 62 | 15 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Equity in income of investment in unconsolidated affiliates | (1) | (2) | |||
Depreciation and amortization | 97 | 92 | |||
Loss on early extinguishment of debt | (3) | ||||
Noncash interest expense | 7 | 6 | |||
Noncash restructuring and impairment charges | 5 | 29 | |||
Deferred income taxes | 6 | (33) | |||
Noncash gain on foreign currency transactions | (6) | ||||
Noncash compensation | 7 | 8 | |||
Other, net | 2 | 3 | |||
Changes in operating assets and liabilities, net of effects of acquisitions : | |||||
Accounts and notes receivable | (105) | (49) | |||
Inventories | 22 | 54 | |||
Prepaid expenses | 3 | 4 | |||
Other current assets | 32 | 25 | |||
Other noncurrent assets | (20) | (90) | |||
Accounts payable | (33) | (4) | |||
Accrued liabilities | (3) | ||||
Other noncurrent liabilities | 3 | (17) | |||
Net cash provided by operating activities | 87 | 35 | |||
Investing Activities: | |||||
Capital expenditures | (99) | (149) | |||
Cash received from unconsolidated affiliates | 10 | 15 | |||
Investment in unconsolidated affiliates | (12) | (13) | |||
Increase in receivable from affiliate | (2) | (6) | |||
Cash received from termination of cross-currency interest rate contracts | 66 | ||||
Change in restricted cash | 2 | ||||
Other, net | (1) | ||||
Net cash used in investing activities | (102) | (87) | |||
Financing Activities: | |||||
Net borrowings under revolving loan facilities | 45 | ||||
Net repayments on overdraft facilities | (2) | ||||
Repayments of short-term debt | (12) | (17) | |||
Borrowings on short-term debt | 4 | ||||
Repayments of long-term debt | (27) | (59) | |||
Proceeds from issuance of long-term debt | 326 | ||||
Repayments of notes payable to affiliate | (50) | ||||
Repayments of notes payable | (9) | (9) | |||
Borrowings on notes payable | 2 | ||||
Debt issuance costs paid | (4) | ||||
Call premiums related to early extinguishment of debt | (3) | ||||
Contingent consideration paid for acquisition | (4) | ||||
Dividends paid to noncontrolling interests | (9) | ||||
Dividends paid to parent | (30) | (31) | |||
Excess tax benefit related to stock-based compensation | 1 | ||||
Other, net | (2) | ||||
Net cash (used in) provided by financing activities | (36) | 146 | |||
Effect of exchange rate changes on cash | 2 | (8) | |||
(Decrease) increase in cash and cash equivalents | (49) | 86 | |||
Cash and cash equivalents at beginning of period | 257 | [1] | 710 | ||
Cash and cash equivalents at end of period | 208 | [1] | 796 | ||
Supplemental cash flow information: | |||||
Cash paid for interest | 35 | 48 | |||
Cash paid for income taxes | $ 5 | $ 11 | |||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Capital expenditures in accounts payable | $ 62 | $ 58 |
Huntsman International | ||
Capital expenditures in accounts payable | 62 | 58 |
Stock-based compensation | $ 7 | $ 8 |
GENERAL |
3 Months Ended | ||||||||||||
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Mar. 31, 2016 | |||||||||||||
GENERAL | |||||||||||||
GENERAL |
1. GENERAL CERTAIN DEFINITIONS For convenience in this report, the terms "Company," "our," "us" or "we" may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. In this report, "Huntsman International" refers to Huntsman International LLC (our wholly-owned subsidiary) and, unless the context otherwise requires, its subsidiaries. In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products. INTERIM FINANCIAL STATEMENTS Our unaudited interim condensed consolidated financial statements and Huntsman International's unaudited interim condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP" or "U.S. GAAP") and in management's opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income, financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 for our Company and Huntsman International. DESCRIPTION OF BUSINESS We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride, epoxy-based polymer formulations, textile chemicals, dyes, titanium dioxide and color pigments. We operate in five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects, and Pigments and Additives. Our Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments produce differentiated organic chemical products and our Pigments and Additives segment produces inorganic chemical products. In a series of transactions beginning in 2006, we sold or shutdown substantially all of our Australian styrenics operations and our North American polymers and base chemicals operations. We report the results of these businesses as discontinued operations. COMPANY Our Company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses. Jon M. Huntsman founded the predecessor to our Company in 1970 as a small packaging company. Since then, we have grown through a series of acquisitions and now own a global portfolio of businesses. Currently, we operate all of our businesses through Huntsman International, our wholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999. HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS Except where otherwise indicated, these notes relate to the condensed consolidated financial statements for both our Company and Huntsman International. The differences between our financial statements and Huntsman International's financial statements relate primarily to the following:
PRINCIPLES OF CONSOLIDATION Our condensed consolidated financial statements include the accounts of our wholly-owned and majority-owned subsidiaries and any variable interest entities for which we are the primary beneficiary. Intercompany accounts and transactions have been eliminated. RECENT DEVELOPMENTS Debt Activity On April 1, 2016, Huntsman International entered into a new $550 million term loan B due 2023 ("2016 Term Loan B"). Proceeds from the 2016 Term Loan B were used to repay in full our extended term loan B facility due 2017 ("Extended Term Loan B"), our extended term loan B facility—series 2 due 2017 ("Extended Term Loan B—Series 2"), and our term loan C due 2016 ("Term Loan C"). In connection with these repayments, we expect to record a loss on early extinguishment of debt of approximately $1 million in the second quarter of 2016. In addition, Huntsman International extended the maturity date of its revolving credit facility ("Revolving Facility") to 2021 and increased the committed amount to $650 million. For more information, see "Note 6. Debt—Direct and Subsidiary Debt." 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.
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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
3 Months Ended |
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Mar. 31, 2016 | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
2. 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 US GAAP the concept of extraordinary items. Reporting entities will no longer have to assess whether a particular event or transaction event is extraordinary. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. 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 condensed 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 condensed 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 condensed 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, and 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). 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 and ASU No. 2016-10 should be applied retrospectively, and early application is permitted. We are currently evaluating the impact of the adoption of the amendments in ASU No. 2014-09, ASU No. 2016-08 and ASU No. 2016-10 on our condensed consolidated financial statements. 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 (FIFO) 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 condensed 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 condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Shared-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 condensed consolidated financial statements.
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INVENTORIES |
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INVENTORIES |
3. INVENTORIES Inventories are stated at the lower of cost or market, with cost determined using last-in first-out ("LIFO"), first-in first-out, and average costs methods for different components of inventory. Inventories consisted of the following (dollars in millions):
For both March 31, 2016 and December 31, 2015, approximately 9% of inventories were recorded using the LIFO cost method.
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VARIABLE INTEREST ENTITIES |
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VARIABLE INTEREST ENTITIES |
4. 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:
Creditors of these entities have no recourse to our general credit. See "Note 6. Debt—Direct and Subsidiary Debt." As the primary beneficiary of these variable interest entities at March 31, 2016, the joint ventures' assets, liabilities and results of operations are included in our condensed consolidated financial statements. The following table summarizes the carrying amount of our variable interest entities' assets and liabilities included in our condensed consolidated balance sheets, before intercompany eliminations, as of March 31, 2016 and our consolidated balance sheets as of December 31, 2015 (dollars in millions):
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RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS |
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RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS |
5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS As of March 31, 2016 and December 31, 2015, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):
Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):
Details with respect to cash and noncash restructuring charges for the three months ended March 31, 2016 and 2015 by initiative are provided below (dollars in millions):
2016 RESTRUCTURING ACTIVITIES On December 1, 2014, we announced a comprehensive restructuring program to improve the global competitiveness of our Pigments and Additives segment. As part of the program, we are reducing our workforce by approximately 900 positions. In connection with this restructuring program, we recorded restructuring expense of $3 million in the three months ended March 31, 2016. On February 12, 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 announcement, we recorded restructuring expense of $1 million in the three months ended March 31, 2016. On March 4, 2015, we announced plans to restructure our color pigments business, another step in our comprehensive restructuring program in our Pigments and Additives segment, and recorded restructuring expense of approximately $3 million in the three months ended March 31, 2016. In connection with planned restructuring activities, our Pigments and Additives segment recorded accelerated depreciation as restructuring expense of $4 million during the three months ended March 31, 2016. 2015 RESTRUCTURING ACTIVITIES As part of the comprehensive restructuring program in our Pigments and Additives segment announced in December 2014, we recorded restructuring expense of $34 million in the three months ended March 31, 2015 related primarily to workforce reductions. In connection with the closure of the 'black end' at our Calais, France site announced in February 2015, we began to accelerate depreciation on the affected assets and recorded incremental accelerated depreciation in the three months ended March 31, 2015 of $28 million as restructuring, impairment and plant closing costs. In addition, we recorded restructuring expense of $22 million in the three months ended March 31, 2015 related primarily to workforce reductions. In connection with our plans announced in March 2015 to restructure our color pigments business within our Pigments and Additives segment, we recorded restructuring expense of approximately $1 million in the three months ended March 31, 2015 related to workforce reductions.
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DEBT |
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DEBT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT |
6. DEBT Outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions): Huntsman Corporation
Huntsman International
DIRECT AND SUBSIDIARY DEBT Huntsman Corporation's direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily Huntsman International). Huntsman Corporation is not a guarantor of such subsidiary debt. Certain of our subsidiaries are designated as nonguarantor subsidiaries and have third-party debt agreements. These debt agreements contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us. 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 March 31, 2016 and December 31, 2015, the amount of debt issuance costs directly reducing the debt liability was $64 million and $67 million, respectively. We record the amortization of debt issuance costs as interest expense. Senior Credit Facilities As of March 31, 2016, our senior credit facilities ("Senior Credit Facilities") consisted of our Revolving Facility, our Extended Term Loan B, our Extended Term Loan B—Series 2, our 2015 extended term loan B facility ("2015 Extended Term Loan B"), our 2014 term loan facility ("2014 Term Loan B") and our Term Loan C as follows (dollars in millions):
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 April 1, 2016, Huntsman International entered into a fifteenth amendment to the agreement governing the Senior Credit Facilities (the "Credit Agreement"). The amendment provides for a new term loan facility, 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 Huntsman International's Extended Term Loan B, Extended Term Loan B—Series 2 and Term Loan C. In connection with these repayments, we expect to record a loss on early extinguishment of debt of approximately $1 million in the second quarter of 2016. The 2016 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 our senior notes upon maturity. The 2016 Term Loan B is subject to the same terms and conditions as our existing senior secured term loan facilities. The 2016 Term Loan B bears interest at an interest rate margin of LIBOR plus 3.50% (subject to a 0.75% floor) and amortizes in annual amounts equal to 1% of the principal amount of the 2016 Term Loan B, payable quarterly commencing on June 30, 2016. The 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 Term Loan B due 2019 or our senior notes upon their maturity. The amendment further increases 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 March 31, 2016 we had no borrowings under our Revolving Facility. A/R Programs Our U.S. accounts receivable securitization program ("U.S. A/R Program") and our European accounts receivable securitization program ("EU A/R Program" and collectively with the U.S. A/R Program, "A/R Programs") are structured so that we transfer certain of our trade receivables to the U.S. special purpose entity ("U.S. SPE") and the European special purpose entity ("EU SPE") in transactions intended to be true sales or true contributions. The receivables collateralize debt incurred by the U.S. SPE and the EU SPE. Information regarding our A/R Programs as of March 31, 2016 was as follows (monetary amounts in millions):
As of March 31, 2016 and December 31, 2015, $493 million and $438 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs. Redemption of Notes and Loss on Early Extinguishment of Debt During the three months ended March 31, 2015, we redeemed or repurchased the following notes (dollars in millions):
Note Payable from Huntsman International to Huntsman Corporation As of March 31, 2016, we had a loan of $797 million to our subsidiary, Huntsman International (the "Intercompany Note"). The Intercompany Note is unsecured and $100 million of the outstanding amount is classified as current as of March 31, 2016 on our condensed consolidated balance sheets. As of March 31, 2016, under the terms of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility). COMPLIANCE WITH COVENANTS We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our Senior Credit Facilities, our A/R Programs and our notes. Our material financing arrangements contain certain covenants with which we must comply. A failure to comply with a covenant could result in a default under a financing arrangement unless we obtained an appropriate waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, certain of our material financing arrangements contain cross-default and cross-acceleration provisions under which a failure to comply with the covenants in one financing arrangement may result in an event of default under another financing arrangement. Our Senior Credit Facilities are subject to a single financial covenant (the "Leverage Covenant"), which applies only to the Revolving Facility and is calculated at the Huntsman International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage Covenant is a net senior secured leverage ratio covenant, which requires that Huntsman International's ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75 to 1. If in the future Huntsman International fails to comply with the Leverage Covenant, then we may not have access to liquidity under our Revolving Facility. If Huntsman International failed to comply with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit outstanding under the Revolving Facility, Huntsman International would be in default under the Senior Credit Facilities, and, unless Huntsman International obtained a waiver or forbearance with respect to such default (as to which we can provide no assurance), Huntsman International could be required to pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such facilities. The agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs' metrics in the future could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. All derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings. We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded as an unrealized currency translation adjustment in accumulated other comprehensive loss. Our revenues and expenses are denominated in various foreign currencies, and our cash flows and earnings are thus subject to fluctuations due to exchange rate variations. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of March 31, 2016, we had approximately $185 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts. Huntsman International has entered into two interest rate contracts to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps are designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps are recorded in other comprehensive income (loss) (dollars in millions):
Beginning in 2009, Arabian Amines Company entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of Arabian Amines Company as of July 1, 2010, the interest rate contract is now included in our consolidated results. See "Note 4. Variable Interest Entities." The notional amount of the swap as of March 31, 2016 was $22 million, and the interest rate contract is not designated as a cash flow hedge. As of March 31, 2016, the fair value of the swap was $2 million and was recorded in noncurrent liabilities on our condensed consolidated balance sheets. For each of the three months ended March 31, 2016 and 2015, we recorded a reduction of interest expense of nil due to changes in fair value of the swap. 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 €161 million. This 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 €3 million (equivalent to an annual rate of approximately 3.6%). As of March 31, 2016, the fair value of this swap was $20 million and was recorded in noncurrent assets on our condensed consolidated balance sheets. 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 €255 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 income (loss) on our condensed statements of comprehensive income (loss). From time to time, we review such designation of intercompany loans. We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of March 31, 2016, we have designated approximately €621 million (approximately $697 million) of euro-denominated debt and cross-currency interest rate contracts as a hedge of our net investment. For the three months ended March 31, 2016, the amount of loss recognized on the hedge of our net investment was $21 million and was recorded in other comprehensive income (loss) on our condensed consolidated statements of comprehensive income (loss).
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FAIR VALUE |
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FAIR VALUE |
8. FAIR VALUE The fair values of financial instruments were as follows (dollars in millions):
The carrying amounts reported in our condensed consolidated 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 March 31, 2016 and December 31, 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 March 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):
The following table shows a reconciliation of beginning and ending balances for the three months ended March 31, 2016 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).
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):
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 each of the three months ended March 31, 2016 and 2015, we recorded charges of nil for the impairment of long-lived assets.
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EMPLOYEE BENEFIT PLANS |
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EMPLOYEE BENEFIT PLANS |
9. EMPLOYEE BENEFIT PLANS Components of the net periodic benefit costs for the three months ended March 31, 2016 and 2015 were as follows (dollars in millions): Huntsman Corporation
Huntsman International
During the three months ended March 31, 2016 and 2015, we made contributions to our pension and other postretirement benefit plans of $20 million and $33 million, respectively. During the remainder of 2016, we expect to contribute an additional amount of approximately $55 million to these plans.
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HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY |
3 Months Ended |
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Mar. 31, 2016 | |
HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY | |
HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY |
10. 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 Huntsman Corporation common stock. Repurchases under this program may be made through open market transactions, in privately negotiated transactions, through accelerated share repurchase programs or by other means. The timing and actual number of 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 our 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 common stock. The final number of shares repurchased and the aggregate cost per share of $11.68 was based on the Company's daily volume-weighted average stock price during the term of the transaction, less a discount. For more information, see "Part 2. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds." COMMON STOCK DIVIDENDS During the three months ended March 31, 2016 and 2015, we paid cash dividends of approximately $30 million and $31 million, respectively, or $0.125 per share, to common stockholders.
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OTHER COMPREHENSIVE INCOME (LOSS) |
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OTHER COMPREHENSIVE INCOME (LOSS) |
11. OTHER COMPREHENSIVE INCOME (LOSS) The components of other comprehensive income (loss) and changes in accumulated other comprehensive loss by component were as follows (dollars in millions): Huntsman Corporation
Huntsman International
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES |
12. COMMITMENTS AND CONTINGENCIES LEGAL MATTERS Antitrust Matters We were named as a defendant in consolidated class action civil antitrust suits filed on February 9 and 12, 2010 in the U.S. District Court for the District of Maryland alleging that we and our co-defendants and other alleged co-conspirators conspired to fix prices of titanium dioxide sold in the U.S. between at least March 1, 2002 and the present. The other defendants named in this matter were DuPont, Kronos and Cristal (formerly Millennium). On August 28, 2012, the court certified a class consisting of all U.S. customers who purchased titanium dioxide directly from the defendants (the "Direct Purchasers") since February 1, 2003. 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 for an amount immaterial to our financial statements. The case was subsequently dismissed on March 9, 2016. We were also named as a defendant in a class action civil antitrust suit filed on March 15, 2013 in the U.S. District Court for the Northern District of California by the purchasers of products made from titanium dioxide (the "Indirect Purchasers") making essentially the same allegations as did the Direct Purchasers. On October 14, 2014, plaintiffs filed their Second Amended Class Action Complaint narrowing the class of plaintiffs to those merchants and consumers of architectural coatings containing titanium dioxide. 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 9 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, which remains pending. The Indirect Purchasers plaintiffs seek to recover injunctive relief, treble damages or the maximum damages allowed by state law, costs of suit and attorneys' fees. We are not aware of any illegal conduct by us or any of our employees. Nevertheless, we have incurred costs relating to this claim and could incur additional costs in amounts which in the aggregate could be material to us. Because of the overall complexity of this case, we are unable to reasonably estimate any possible loss or range of loss and we have made no accrual with respect to this claim. 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 €153 million (approximately $172 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 €113 million (approximately $127 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 €0 and €113 million (approximately $127 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 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 April 9, 2015, the court denied the Banks' motions to dismiss the Wisconsin Litigation, which were on the same grounds asserted in the Texas Litigation, as moot. We expect the Banks to refile these motions once limited discovery related to jurisdiction is complete. 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.
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ENVIRONMENTAL, HEALTH AND SAFETY MATTERS |
3 Months Ended |
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Mar. 31, 2016 | |
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS | |
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS |
13. 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 three months ended March 31, 2016 and 2015, our capital expenditures for EHS matters totaled $11 million and $26 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 $39 million and $38 million for environmental liabilities as of March 31, 2016 and December 31, 2015, respectively. Of these amounts, $7 million and $6 million were classified as accrued liabilities in our consolidated balance sheets as of March 31, 2016 and December 31, 2015, respectively, and $32 million was classified as other noncurrent liabilities in our consolidated balance sheets for both March 31, 2016 and December 31, 2015. 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 10 former facilities or third-party sites in the U.S. for which we have been notified of potential claims against us for cleanup liabilities, including, but not limited to, sites listed under CERCLA. Based on current information and past experiences at other CERCLA sites, we do not expect these third-party claims to have a material impact on our consolidated financial statements. 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 March 31, 2016, we had an accrued liability of approximately $17 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 PRP for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a portion of the site and are currently engaged in that process. At this time, we are unable to reasonably estimate our potential liabilities at this site. Port Neches Flaring Matter As part of the Environmental Protection Agency's (the "EPA") 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.
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STOCK-BASED COMPENSATION PLANS |
14. STOCK-BASED COMPENSATION PLANS Under the Huntsman Corporation Stock Incentive Plan, as amended and restated (the "Stock Incentive Plan"), a plan approved by stockholders, we may grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, phantom stock, performance share unit awards and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock options may be granted solely to employees. The terms of the grants are fixed at the grant date. As of March 31, 2016, we were authorized to grant up to 37.2 million shares under the Stock Incentive Plan. As of March 31, 2016, we had 3 million shares remaining under the Stock Incentive Plan available for grant. Option awards have a maximum contractual term of 10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Stock-based awards generally vest over a three-year period; certain performance share unit awards vest over a two-year period. The compensation cost from continuing operations under the Stock Incentive Plan for our Company and Huntsman International were as follows (dollars in millions):
The total income tax benefit recognized in the statements of operations for us and Huntsman International for stock-based compensation arrangements was $2 million for each of the three months ended March 31, 2016 and 2015. STOCK OPTIONS The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees' expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions noted below represent the weighted average of the assumptions utilized for stock options granted during the periods.
A summary of stock option activity under the Stock Incentive Plan as of March 31, 2016 and changes during the three months then ended is presented below:
The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2016 was $2.94 per option. As of March 31, 2016, there was $16 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.2 years. The total intrinsic value of stock options exercised during the three months ended both March 31, 2016 and 2015 was approximately nil. NONVESTED SHARES Nonvested shares granted under the Stock Incentive Plan consist of restricted stock and performance share unit awards, which are accounted for as equity awards, and 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 three months ended March 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 in the three months ended March 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. A summary of the status of our nonvested shares as of March 31, 2016 and changes during the three months then ended is presented below:
As of March 31, 2016, there was $40 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.4 years. The value of share awards that vested during the three months ended March 31, 2016 and 2015 was $15 million and $20 million, respectively.
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INCOME TAXES |
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Mar. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES |
15. 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 an individual 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. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of our businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the applicable period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions. During the three months ended March 31, 2016 and 2015, for unrecognized tax benefits that impact tax expense, we recorded a net decrease in unrecognized tax benefits and a corresponding income tax benefit of $1 million and a net decrease in unrecognized benefits and a corresponding income tax benefit of $9 million, respectively. Additional increases and decreases in unrecognized tax benefits were offset by cash settlements or decreases in net deferred tax assets and, therefore, did not affect income tax expense. Huntsman Corporation We recorded income tax expense of $27 million and $2 million for the three months ended March 31, 2016 and 2015, respectively. 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. Notably, we continue to earn a significant portion of our pre-tax income in the United States with an approximate 35% federal and state blended effective tax rate. Huntsman International Huntsman International recorded income tax expense of $27 million and $3 million for the three months ended March 31, 2016 and 2015, respectively. 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. Notably, we continue to earn a significant portion of our pre-tax income in the United States with an approximate 35% federal and state blended effective tax rate.
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NET INCOME PER SHARE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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NET INCOME PER SHARE |
16. NET INCOME PER SHARE Basic income per share excludes dilution and is computed by dividing net income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period. Diluted income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing net income available to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Basic and diluted income per share is determined using the following information (in millions):
Additional stock-based awards of 11.8 million and 2.3 million weighted average equivalent shares of stock were outstanding during the three months ended March 31, 2016 and 2015, respectively. However, these stock-based awards were not included in the computation of diluted earnings per share for the three months ended March 31, 2016 and 2015 because the effect would be anti-dilutive.
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OPERATING SEGMENT INFORMATION |
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OPERATING SEGMENT INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING SEGMENT INFORMATION |
17. 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. The major products of each reportable operating segment are as follows:
Sales between segments are generally recognized at external market prices and are eliminated in consolidation. We use EBITDA to measure the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The EBITDA of operating segments excludes items that principally apply to our Company as a whole. The revenues and EBITDA for each of our reportable operating segments are as follows (dollars in millions):
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC |
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC |
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC The following unaudited condensed consolidating financial statements present, in separate columns, financial information for the following: Huntsman International (on a parent only basis), with its investment in subsidiaries recorded under the equity method; the Guarantors on a combined, and where appropriate, consolidated basis; and the nonguarantors on a combined, and where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015. There are no contractual restrictions limiting transfers of cash from the Guarantors to Huntsman International. Each of the Guarantors is wholly-owned by Huntsman International and has fully and unconditionally guaranteed, subject to certain customary release provisions, Huntsman International's outstanding notes on a joint and several basis.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
During the three months ended March 31, 2015, we made a noncash capital contribution of approximately $284 million between guarantor and nonguarantor entities and a noncash capital contribution of approximately $123 million between parent and guarantor entities.
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GENERAL (Policies) |
3 Months Ended |
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Mar. 31, 2016 | |
GENERAL | |
PRINCIPLES OF CONSOLIDATION |
PRINCIPLES OF CONSOLIDATION Our condensed 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. Intercompany accounts and transactions have been eliminated.
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USE OF ESTIMATES |
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.
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INVENTORIES (Tables) |
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INVENTORIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of inventory |
Inventories consisted of the following (dollars in millions):
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VARIABLE INTEREST ENTITIES (Tables) |
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Rubicon LLC, Pacific Iron Products, Arabian Amines and Sasol Huntsman GmbH, Co. KG and Viance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Identification of variable interest entities through investments and transactions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities of variable interest entities included in condensed consolidated balance sheets |
The following table summarizes the carrying amount of our variable interest entities' assets and liabilities included in our condensed consolidated balance sheets, before intercompany eliminations, as of March 31, 2016 and our consolidated balance sheets as of December 31, 2015 (dollars in millions):
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RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Tables) |
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RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued restructuring costs by type of cost and initiative |
As of March 31, 2016 and December 31, 2015, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):
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Accrued liabilities by initiative |
Accrued liabilities by initiatives were as follows (dollars in millions):
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Details with respect to reserves for restructuring, impairment and plant closing costs, provided by segment and initiative |
Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):
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Cash and noncash restructuring charges by initiative |
Details with respect to cash and noncash restructuring charges for the three months ended March 31, 2016 and 2015 by initiative are provided below (dollars in millions):
|
DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding debt |
Outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):
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Huntsman International | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding debt |
Outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):
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Schedule of Senior Credit Facilities |
As of March 31, 2016, our senior credit facilities ("Senior Credit Facilities") consisted of our Revolving Facility, our Extended Term Loan B, our Extended Term Loan B—Series 2, our 2015 extended term loan B facility ("2015 Extended Term Loan B"), our 2014 term loan facility ("2014 Term Loan B") and our Term Loan C as follows (dollars in millions):
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Schedule of A/R Programs |
The receivables collateralize debt incurred by the U.S. SPE and the EU SPE. Information regarding our A/R Programs as of March 31, 2016 was as follows (monetary amounts in millions):
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Redemption of Notes and Loss on Early Extinguishment of Debt |
During the three months ended March 31, 2015, we redeemed or repurchased the following notes (dollars in millions):
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Huntsman International | |||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash flow hedges and the effective portion of the changes in the fair value of the swaps |
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 income (loss) (dollars in millions):
|
FAIR VALUE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair values of financial instruments |
The fair values of financial instruments were as follows (dollars in millions):
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Assets and liabilities are measured at fair value on a recurring basis |
The following assets and liabilities are measured at fair value on a recurring basis (dollars in millions):
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Reconciliation of beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) |
The following table shows a reconciliation of beginning and ending balances for the three months ended March 31, 2016 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).
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Schedule of gains and losses (realized and unrealized) included in earnings reported in interest expense and other comprehensive income (loss) |
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):
|
EMPLOYEE BENEFIT PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the net periodic benefit costs |
Components of the net periodic benefit costs for the three months ended March 31, 2016 and 2015 were as follows (dollars in millions):
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Huntsman International | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the net periodic benefit costs |
Components of the net periodic benefit costs for the three months ended March 31, 2016 and 2015 were as follows (dollars in millions):
|
OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other comprehensive income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other comprehensive income (loss) and changes in accumulated other comprehensive loss by component |
The components of other comprehensive income (loss) and changes in accumulated other comprehensive loss by component were as follows (dollars in millions):
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Schedule of details about reclassifications from accumulated other comprehensive loss |
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Huntsman International | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other comprehensive income (loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other comprehensive income (loss) and changes in accumulated other comprehensive loss by component |
The components of other comprehensive income (loss) and changes in accumulated other comprehensive loss by component were as follows (dollars in millions):
|
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Schedule of details about reclassifications from accumulated other comprehensive loss |
|
STOCK-BASED COMPENSATION PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION PLANS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation cost from continuing operations under the Stock Incentive Plan |
The compensation cost from continuing operations under the Stock Incentive Plan for our Company and Huntsman International were as follows (dollars in millions):
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Assumptions used to calculate fair value of each stock option award estimated on the date of grant using the Black-Scholes valuation model |
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Summary of stock option activity under the Stock Incentive Plan |
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Summary of status of nonvested shares under the Stock Incentive Plan |
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NET INCOME PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculation of basic and diluted income per share |
Basic and diluted income per share is determined using the following information (in millions):
|
OPERATING SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating segment information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of major products by reportable operating segment |
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Schedule of revenues and EBITDA for each of the entity's reportable operating segments |
The revenues and EBITDA for each of our reportable operating segments are as follows (dollars in millions):
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Huntsman International | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating segment information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues and EBITDA for each of the entity's reportable operating segments |
|
CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (Tables) - Huntsman International |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEETS |
AS OF MARCH 31, 2016
AS OF DECEMBER 31, 2015
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CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
THREE MONTHS ENDED MARCH 31, 2016
THREE MONTHS ENDED MARCH 31, 2015
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CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS |
THREE MONTHS ENDED MARCH 31, 2016
THREE MONTHS ENDED MARCH 31, 2015
|
GENERAL (Details) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
segment
|
Mar. 31, 2015
USD ($)
|
Apr. 01, 2016
USD ($)
|
|
GENERAL | ||||
Number of business segments | segment | 5 | |||
Debt Issuance | ||||
Expected loss on early extinguishment of debt | $ 3 | |||
Huntsman International | ||||
Debt Issuance | ||||
Expected loss on early extinguishment of debt | $ 3 | |||
Revolving Facility | Huntsman International | ||||
Debt Issuance | ||||
Committed amount | $ 625 | $ 650 | ||
Forecast | ||||
Debt Issuance | ||||
Expected loss on early extinguishment of debt | $ 1 | |||
2016 Term Loan B | Huntsman International | ||||
Debt Issuance | ||||
Principal amount of debt | $ 550 |
INVENTORIES (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
||
---|---|---|---|---|
Inventories | ||||
Raw materials and supplies | $ 383 | $ 389 | ||
Work in progress | 112 | 125 | ||
Finished goods | 1,233 | 1,221 | ||
Total | 1,728 | 1,735 | ||
LIFO reserves | (39) | (43) | ||
Net inventories | [1] | $ 1,689 | $ 1,692 | |
Percentage of inventories recorded using the LIFO cost method | 9.00% | 9.00% | ||
|
VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
||||
Assets and liabilities of VIE | |||||
Current assets | $ 3,830 | $ 3,834 | |||
Property, plant and equipment, net | [1] | 4,437 | 4,446 | ||
Other noncurrent assets | [1] | 576 | 573 | ||
Deferred income taxes | 424 | 418 | |||
Intangible assets | [1] | 106 | 86 | ||
Goodwill | 123 | 116 | |||
Total assets | 9,840 | 9,820 | |||
Current liabilities | 1,782 | 1,917 | |||
Long-term debt | [1] | 4,724 | 4,625 | ||
Deferred income taxes | 425 | 422 | |||
Other noncurrent liabilities | [1] | 1,223 | 1,226 | ||
Total liabilities | 8,155 | 8,191 | |||
Consolidated VIE's | |||||
Assets and liabilities of VIE | |||||
Property, plant and equipment, net | 303 | 307 | |||
Other noncurrent assets | 42 | 38 | |||
Intangible assets | 37 | 36 | |||
Long-term debt | 123 | 137 | |||
Other noncurrent liabilities | 54 | 54 | |||
Rubicon LLC, Pacific Iron Products, Arabian Amines and Sasol Huntsman GmbH, Co. KG and Viance | |||||
Assets and liabilities of VIE | |||||
Current assets | 87 | 121 | |||
Property, plant and equipment, net | 303 | 307 | |||
Other noncurrent assets | 112 | 95 | |||
Deferred income taxes | 35 | 35 | |||
Intangible assets | 37 | 36 | |||
Goodwill | 13 | 13 | |||
Total assets | 587 | 607 | |||
Current liabilities | 158 | 159 | |||
Long-term debt | 125 | 140 | |||
Deferred income taxes | 11 | 11 | |||
Other noncurrent liabilities | 55 | 54 | |||
Total liabilities | $ 349 | $ 364 | |||
Rubicon LLC | |||||
Identification of variable interest entities through investments and transactions | |||||
Variable interest entity ownership percentage | 50.00% | ||||
Pacific Iron Products | |||||
Identification of variable interest entities through investments and transactions | |||||
Variable interest entity ownership percentage | 50.00% | ||||
Arabian Amines Company | |||||
Identification of variable interest entities through investments and transactions | |||||
Variable interest entity ownership percentage | 50.00% | ||||
Sasol Huntsman GmbH and Co. KG | |||||
Identification of variable interest entities through investments and transactions | |||||
Variable interest entity ownership percentage | 50.00% | ||||
Viance | |||||
Identification of variable interest entities through investments and transactions | |||||
Variable interest entity ownership percentage | 50.00% | ||||
|
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS - ACCRUED RESTRUCTURING COSTS BY TYPE OF COST AND INITIATIVE (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
item
|
Mar. 31, 2015
USD ($)
|
|
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | $ 168 | |
Reversal of reserves no longer required | (1) | $ (1) |
Distribution of prefunded restructuring costs | (40) | |
Foreign currency effect on liability balance | 2 | |
Accrued liabilities at the end of the period | 118 | |
2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 9 | |
Restructuring payments | (20) | |
Workforce reductions | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 109 | |
Distribution of prefunded restructuring costs | (38) | |
Foreign currency effect on liability balance | 1 | |
Accrued liabilities at the end of the period | $ 60 | |
Number of positions terminated | item | 773 | |
Number of positions not terminated | item | 702 | |
Workforce reductions | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | $ 2 | |
Restructuring payments | (14) | |
Demolition and decommissioning | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 16 | |
Distribution of prefunded restructuring costs | (2) | |
Accrued liabilities at the end of the period | 14 | |
Demolition and decommissioning | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 1 | |
Restructuring payments | (1) | |
Non-cancelable lease and contract termination costs | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 38 | |
Reversal of reserves no longer required | (1) | |
Foreign currency effect on liability balance | 1 | |
Accrued liabilities at the end of the period | 39 | |
Non-cancelable lease and contract termination costs | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 1 | |
Other restructuring costs | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 5 | |
Accrued liabilities at the end of the period | 5 | |
Other restructuring costs | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 5 | |
Restructuring payments | $ (5) |
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS - ACCRUED LIABILITIES BY INITIATIVE (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Accrued liabilities by initiatives | ||
Accrued liabilities | $ 118 | $ 168 |
2014 and prior initiatives | ||
Accrued liabilities by initiatives | ||
Accrued liabilities | 98 | 143 |
2015 initiatives | ||
Accrued liabilities by initiatives | ||
Accrued liabilities | $ 20 | $ 25 |
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS - RESERVES FOR RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | $ 168 | |
Reversal of reserves no longer required | (1) | $ (1) |
Distribution of prefunded restructuring costs | (40) | |
Foreign currency effect on liability balance | 2 | |
Accrued liabilities at the end of the period | 118 | |
Current portion of restructuring reserves | 67 | |
Long-term portion of restructuring reserves | 51 | |
2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 9 | |
Restructuring payments | (20) | |
Corporate and other | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 4 | |
Accrued liabilities at the end of the period | 4 | |
Current portion of restructuring reserves | 4 | |
Corporate and other | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 1 | |
Restructuring payments | (1) | |
Polyurethanes | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 5 | |
Accrued liabilities at the end of the period | 4 | |
Current portion of restructuring reserves | 4 | |
Polyurethanes | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring payments | (1) | |
Performance Products | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 9 | |
Distribution of prefunded restructuring costs | (2) | |
Accrued liabilities at the end of the period | 6 | |
Current portion of restructuring reserves | 6 | |
Performance Products | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring payments | (1) | |
Advanced Materials | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 4 | |
Accrued liabilities at the end of the period | 4 | |
Long-term portion of restructuring reserves | 4 | |
Textile Effects | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 55 | |
Reversal of reserves no longer required | (1) | |
Distribution of prefunded restructuring costs | (2) | |
Foreign currency effect on liability balance | 1 | |
Accrued liabilities at the end of the period | 54 | |
Current portion of restructuring reserves | 14 | |
Long-term portion of restructuring reserves | 40 | |
Textile Effects | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 2 | |
Restructuring payments | (1) | |
Pigments | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 90 | |
Distribution of prefunded restructuring costs | (36) | |
Foreign currency effect on liability balance | 1 | |
Accrued liabilities at the end of the period | 45 | |
Current portion of restructuring reserves | 38 | |
Long-term portion of restructuring reserves | 7 | |
Pigments | 2015 and prior initiatives | ||
Accrued restructuring costs rollforward | ||
Restructuring charges | 6 | |
Restructuring payments | (16) | |
Discontinued Operations | ||
Accrued restructuring costs rollforward | ||
Accrued liabilities at the beginning of the period | 1 | |
Accrued liabilities at the end of the period | 1 | |
Current portion of restructuring reserves | $ 1 |
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS - CASH AND NONCASH RESTRUCTURING CHARGES AND OTHER INFORMATION (Details) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Feb. 12, 2015
kt
|
Dec. 01, 2014
item
|
Mar. 31, 2016
USD ($)
item
|
Mar. 31, 2015
USD ($)
|
|
Accrued restructuring costs by type of cost and initiative | ||||
Reversal of reserves no longer required | $ (1) | $ (1) | ||
Accelerated depreciation | 4 | 28 | ||
Other non-cash charges | 1 | |||
Total restructuring, impairment and plant closing costs | 13 | 93 | ||
Calais, France Facility | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | 1 | |||
Accelerated depreciation | 28 | |||
Decrease in titanium dioxide capacity due to closing operations | kt | 100 | |||
Decrease in titanium dioxide capacity due to closing operations (as a percent) | 13.00% | |||
Pigments and Additives | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | 3 | |||
Accelerated depreciation | $ 4 | |||
Workforce reductions | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Number of positions terminated | item | 773 | |||
Workforce reductions | Calais, France Facility | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | 22 | |||
Workforce reductions | Pigments and Additives | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | $ 3 | 34 | ||
Number of positions terminated | item | 900 | |||
Workforce reductions | Color Pigments Business | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | 1 | |||
2014 and prior initiatives | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | 42 | |||
2015 initiatives | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | $ 24 | |||
2015 and prior initiatives | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | 9 | |||
2015 and prior initiatives | Workforce reductions | ||||
Accrued restructuring costs by type of cost and initiative | ||||
Restructuring charges | $ 2 |
DEBT - DEBT OUTSTANDING (Details) € in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Apr. 01, 2016
USD ($)
|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
Mar. 31, 2016
EUR (€)
|
Mar. 31, 2016
USD ($)
|
||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | $ 4,795 | $ 4,827 | ||||||||
Total current portion of debt | [1] | 170 | 103 | |||||||
Long-term portion | [1] | 4,625 | 4,724 | |||||||
Notes payable to affiliates-noncurrent | 1 | 1 | ||||||||
Total debt | 4,796 | 4,828 | ||||||||
Debt issuances costs | $ 64 | 67 | ||||||||
Loss on early extinguishment of debt | $ 3 | |||||||||
U.S. A/R Program | ||||||||||
Debt | ||||||||||
Reduction in applicable margin on borrowings (as a percent) | 0.10% | |||||||||
Forecast | ||||||||||
Debt | ||||||||||
Loss on early extinguishment of debt | $ 1 | |||||||||
Maximum | U.S. A/R Program | ||||||||||
Debt | ||||||||||
Reduction in applicable margin on borrowings (as a percent) | 0.25% | |||||||||
Consolidated VIE's | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 151 | 140 | ||||||||
Total current portion of debt | 15 | 17 | ||||||||
Long-term portion | 137 | 123 | ||||||||
Huntsman International | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 4,795 | 4,827 | ||||||||
Total current portion of debt | [1] | 170 | 103 | |||||||
Long-term portion | [1] | 4,625 | 4,724 | |||||||
Notes payable to affiliates-current | 100 | 100 | ||||||||
Notes payable to affiliates-noncurrent | 698 | 698 | ||||||||
Principal Outstanding | 797 | |||||||||
Total debt | 5,593 | 5,625 | ||||||||
Loss on early extinguishment of debt | $ 3 | |||||||||
Huntsman International | Consolidated VIE's | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 151 | 140 | ||||||||
Total current portion of debt | 15 | 17 | ||||||||
Long-term portion | 137 | 123 | ||||||||
Revolving Facility | Huntsman International | ||||||||||
Debt | ||||||||||
Committed amount | $ 650 | 625 | ||||||||
Borrowings outstanding | 0 | |||||||||
Amount of letter of credit and bank guarantees issued and outstanding | 15 | |||||||||
Increase to committed amount of facility | 25 | |||||||||
Revolving Facility | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 3.00% | |||||||||
Revolving Facility | Huntsman International | Maximum | ||||||||||
Debt | ||||||||||
Debt instrument covenant consolidated leverage ratio | 3.75 | |||||||||
Term loans | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 2,454 | 2,441 | ||||||||
Term loans | Huntsman International | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 2,454 | 2,441 | ||||||||
Extended Term Loan B | Huntsman International | ||||||||||
Debt | ||||||||||
Principal Outstanding | 309 | |||||||||
Unamortized discounts and debt issuance costs | (1) | |||||||||
Total debt | 308 | |||||||||
Extended Term Loan B | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 2.75% | |||||||||
Extended Term Loans B Series 2 | Huntsman International | ||||||||||
Debt | ||||||||||
Principal Outstanding | 190 | |||||||||
Total debt | 190 | |||||||||
Extended Term Loans B Series 2 | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 3.00% | |||||||||
2015 Extended Term Loan B | Huntsman International | ||||||||||
Debt | ||||||||||
Principal Outstanding | 766 | |||||||||
Unamortized discounts and debt issuance costs | (4) | |||||||||
Total debt | 762 | |||||||||
2015 Extended Term Loan B | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 3.00% | |||||||||
2014 Term Loan B | Huntsman International | ||||||||||
Debt | ||||||||||
Principal Outstanding | 1,185 | |||||||||
Unamortized discounts and debt issuance costs | (53) | |||||||||
Total debt | 1,132 | |||||||||
2014 Term Loan B | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 3.00% | |||||||||
2014 Term Loan B | Huntsman International | LIBOR Floor | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 0.75% | |||||||||
2016 Term Loan B | Huntsman International | ||||||||||
Debt | ||||||||||
Principal amount of debt | $ 550 | |||||||||
Amortization in annual amounts of principal amount (as a percent) | 1.00% | |||||||||
2016 Term Loan B | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 3.50% | |||||||||
2016 Term Loan B | Huntsman International | LIBOR Floor | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 0.75% | |||||||||
Term Loan C | Huntsman International | ||||||||||
Debt | ||||||||||
Principal Outstanding | 49 | |||||||||
Total debt | 49 | |||||||||
Term Loan C | Huntsman International | LIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 2.25% | |||||||||
Accounts receivable programs | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 215 | 263 | ||||||||
Accounts receivable programs | Huntsman International | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 215 | 263 | ||||||||
Accounts receivable pledged as collateral | 438 | 493 | ||||||||
U.S. A/R Program Maturing March 2018 | Huntsman International | ||||||||||
Debt | ||||||||||
Total debt | 135 | |||||||||
Amount of letter of credit and bank guarantees issued and outstanding | 7 | |||||||||
Maximum Funding Availability | 250 | |||||||||
U.S. A/R Program Maturing March 2018 | Huntsman International | USD LIBOR or CP | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 0.95% | |||||||||
EU A/R Program Maturing March 2018 | Huntsman International | ||||||||||
Debt | ||||||||||
Total debt | € 114 | 128 | ||||||||
Maximum Funding Availability | € 225 | 252 | ||||||||
EU A/R Program Maturing March 2018 | Huntsman International | GDP LIBOR, USD LIBOR, or EURIBOR | ||||||||||
Debt | ||||||||||
Reference rate (as a percent) | 1.10% | |||||||||
Senior notes | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 1,850 | 1,872 | ||||||||
Senior notes | Huntsman International | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 1,850 | 1,872 | ||||||||
Other debt instruments | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | 125 | 111 | ||||||||
Other debt instruments | Huntsman International | ||||||||||
Debt | ||||||||||
Total debt - excluding debt to affiliates | $ 125 | $ 111 | ||||||||
Senior Credit Facilities | Huntsman International | ||||||||||
Debt | ||||||||||
Weighted average interest rate at period end (as a percent) | 4.00% | 4.00% | ||||||||
|
DEBT - OTHER INFORMATION (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Redemption of Notes and Loss on Early Extinguishment of Debt | ||
Loss on early extinguishment of debt | $ 3 | |
Huntsman International | ||
Redemption of Notes and Loss on Early Extinguishment of Debt | ||
Loss on early extinguishment of debt | $ 3 | |
Senior Subordinated Notes, March 2021 | Huntsman International | ||
Redemption of Notes and Loss on Early Extinguishment of Debt | ||
Principal Amount of Notes Redeemed | $ 37 | |
Amount Paid (Excluding Accrued Interest) | 40 | |
Loss on early extinguishment of debt | $ 3 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) € in Millions, $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2014
EUR (€)
item
|
Mar. 31, 2010
EUR (€)
item
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2009 |
Mar. 31, 2016
EUR (€)
item
|
Mar. 31, 2016
USD ($)
item
|
Nov. 30, 2014
USD ($)
item
|
Mar. 31, 2010
USD ($)
item
|
|
Derivative Instruments and Hedging Activities | |||||||||
Notional Amounts | € 621 | $ 697 | |||||||
Amount received from counterparties | $ 66 | ||||||||
Amount of loss recognized on the hedge of net investments | $ 21 | ||||||||
Huntsman International | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Amount received from counterparties | 66 | ||||||||
Forward foreign currency contracts | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Maximum maturity period of spot or forward exchange rate contracts | 1 year | ||||||||
Notional Amounts | $ 185 | ||||||||
Forward foreign currency contracts | Huntsman International | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Number of derivative instruments held | item | 2 | 2 | |||||||
Twelve-year interest rate contract entered in year 2009 | Non Designated Hedge Instrument | Arabian Amines Company | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Notional Amounts | $ 22 | ||||||||
Fair value of the hedge | $ 2 | ||||||||
Hedging period of interest rate contract | 12 years | ||||||||
Additional (reduction of) interest expense due to changes in the fair value of the hedges | $ 0 | 0 | |||||||
Twelve-year interest rate contract entered in year 2009 | Non Designated Hedge Instrument | Arabian Amines Company | LIBOR | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Variable rate basis | LIBOR | ||||||||
Fixed percentage to be paid under the hedge | 5.02% | 5.02% | |||||||
Cross-currency interest rate contracts | Designated as Hedging Instrument | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Notional Amounts | € 161 | € 255 | $ 200 | $ 350 | |||||
U.S. dollar interest payments to be received twice each year | $ 5 | ||||||||
Equivalent annual rate of interest receivable (as a percent) | 5.125% | 5.125% | |||||||
U.S. dollar interest payments to be made twice each year | € | € 3 | ||||||||
Equivalent annual rate of interest payable (as a percent) | 3.60% | 3.60% | |||||||
Fair value of the swap | $ 20 | ||||||||
Amount received from counterparties | $ 66 | ||||||||
Five years cross currency interest rate contract | Designated as Hedging Instrument | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Number of derivative instruments held | item | 2 | 3 | 2 | 3 | |||||
Term of cross currency interest rate contract | 5 years | 5 years | |||||||
Eight years cross currency interest rate contract | Designated as Hedging Instrument | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Number of derivative instruments held | item | 1 | 1 | |||||||
Term of cross currency interest rate contract | 8 years | ||||||||
Forward interest rate contract beginning in December, 2014 | Designated as Hedging Instrument | Huntsman International | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Notional Amounts | $ 50 | ||||||||
Fixed percentage to be paid under the hedge | 2.50% | 2.50% | |||||||
Fair value of the hedge | $ 1 | ||||||||
Forward interest rate contract beginning in January, 2015 | Designated as Hedging Instrument | Huntsman International | |||||||||
Derivative Instruments and Hedging Activities | |||||||||
Notional Amounts | $ 50 | ||||||||
Fixed percentage to be paid under the hedge | 2.50% | 2.50% | |||||||
Fair value of the hedge | $ 1 |
FAIR VALUE - FAIR VALUES OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying Value | ||
Fair values of financial instruments | ||
Non-qualified employee benefit plan investments | $ 27 | $ 26 |
Investment in equity securities | 14 | 18 |
Long-term debt (including current portion) | (4,827) | (4,795) |
Carrying Value | Cross-currency interest rate contracts | ||
Fair values of financial instruments | ||
Derivative contracts - assets | 20 | 28 |
Carrying Value | Interest rate contracts | ||
Fair values of financial instruments | ||
Derivative contracts - liabilities | (4) | (4) |
Estimated Fair Value | ||
Fair values of financial instruments | ||
Non-qualified employee benefit plan investments | 27 | 26 |
Investment in equity securities | 14 | 18 |
Long-term debt (including current portion) | (4,837) | (4,647) |
Estimated Fair Value | Cross-currency interest rate contracts | ||
Fair values of financial instruments | ||
Derivative contracts - assets | 20 | 28 |
Estimated Fair Value | Interest rate contracts | ||
Fair values of financial instruments | ||
Derivative contracts - liabilities | $ (4) | $ (4) |
FAIR VALUE - ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS (Details) $ in Millions |
1 Months Ended | |||
---|---|---|---|---|
Nov. 30, 2014
item
|
Mar. 31, 2010
item
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Five years cross currency interest rate contract | Designated as Hedging Instrument | ||||
Assets: | ||||
Number of derivative instruments held | item | 2 | 3 | ||
Term of cross currency interest rate contract | 5 years | 5 years | ||
Eight years cross currency interest rate contract | Designated as Hedging Instrument | ||||
Assets: | ||||
Number of derivative instruments held | item | 1 | |||
Term of cross currency interest rate contract | 8 years | |||
Recurring basis | ||||
Assets: | ||||
Total assets | $ 61 | $ 72 | ||
Liabilities: | ||||
Transfers from Levels 1 to 2 within the fair value hierarchy, assets | 0 | 0 | ||
Transfers from Levels 1 and 2 within the fair value hierarchy, liabilities | 0 | 0 | ||
Transfers from Levels 2 to 1 within the fair value hierarchy, assets | 0 | 0 | ||
Transfers from Levels 2 and 1 within the fair value hierarchy, liabilities | 0 | 0 | ||
Recurring basis | Cross-currency interest rate contracts | ||||
Assets: | ||||
Derivatives | 20 | 28 | ||
Recurring basis | Interest rate contracts | ||||
Liabilities: | ||||
Total liabilities | (4) | (4) | ||
Recurring basis | Equity mutual funds | ||||
Assets: | ||||
Available-for-sale equity securities | 27 | 26 | ||
Recurring basis | Equity securities | ||||
Assets: | ||||
Available-for-sale equity securities | 14 | 18 | ||
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | ||||
Assets: | ||||
Total assets | 41 | 44 | ||
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Equity mutual funds | ||||
Assets: | ||||
Available-for-sale equity securities | 27 | 26 | ||
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Equity securities | ||||
Assets: | ||||
Available-for-sale equity securities | 14 | 18 | ||
Recurring basis | Significant other observable inputs (Level 2) | Interest rate contracts | ||||
Liabilities: | ||||
Total liabilities | (4) | (4) | ||
Recurring basis | Significant unobservable inputs (Level 3) | ||||
Assets: | ||||
Total assets | 20 | 28 | ||
Recurring basis | Significant unobservable inputs (Level 3) | Cross-currency interest rate contracts | ||||
Assets: | ||||
Derivatives | $ 20 | $ 28 |
FAIR VALUE - INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Other Comprehensive Income (Loss) | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||
Amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held | $ (8) | $ 28 |
Cross-currency interest rate contracts | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||
Balance at beginning of period | 28 | 5 |
Included in other comprehensive income (loss) | (8) | 28 |
Balance at end of period | 20 | 33 |
Non-recurring basis | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||
Impairment of long-lived assets | $ 0 | $ 0 |
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Components of net periodic benefit cost | ||
Contributions to pension and other postretirement benefit plans | $ 20 | $ 33 |
Expected contributions to pension and other postretirement benefit plans during remainder of 2016 | 55 | |
Defined Benefit Plans | ||
Components of net periodic benefit cost | ||
Service cost | 16 | 19 |
Interest cost | 30 | 31 |
Expected return on assets | (47) | (51) |
Amortization of prior service benefit | (2) | (2) |
Amortization of actuarial loss | 16 | 19 |
Net periodic benefit cost | 13 | 16 |
Defined Benefit Plans | Huntsman International | ||
Components of net periodic benefit cost | ||
Service cost | 16 | 19 |
Interest cost | 30 | 31 |
Expected return on assets | (47) | (51) |
Amortization of prior service benefit | (2) | (2) |
Amortization of actuarial loss | 18 | 21 |
Net periodic benefit cost | 15 | 18 |
Other Postretirement Benefit Plans | ||
Components of net periodic benefit cost | ||
Service cost | 1 | 1 |
Interest cost | 1 | 1 |
Amortization of prior service benefit | (2) | (1) |
Amortization of actuarial loss | 1 | 1 |
Net periodic benefit cost | 1 | 2 |
Other Postretirement Benefit Plans | Huntsman International | ||
Components of net periodic benefit cost | ||
Service cost | 1 | 1 |
Interest cost | 1 | 1 |
Amortization of prior service benefit | (2) | (1) |
Amortization of actuarial loss | 1 | 1 |
Net periodic benefit cost | $ 1 | $ 2 |
HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Jan. 31, 2016 |
Oct. 27, 2015 |
Sep. 29, 2015 |
|
COMMON STOCK DIVIDENDS | |||||
Cash dividends paid | $ 30 | $ 31 | |||
Cash dividends paid (in dollars per share) | $ 0.125 | $ 0.125 | |||
Maximum | |||||
SHARE REPURCHASE PROGRAM | |||||
Value authorized to be repurchased | $ 150 | ||||
Citibank, N.A | |||||
SHARE REPURCHASE PROGRAM | |||||
Value authorized to be repurchased | $ 100 | ||||
Shares authorized for repurchase | 1.5 | 7.1 | |||
Stock repurchase price (in dollars per share) | $ 11.94 | ||||
Aggregate cost per share (in dollars per share) | $ 11.68 |
OTHER COMPREHENSIVE INCOME (LOSS) - COMPONENTS AND CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME - HUNTSMAN CORPORATION (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | $ 1,629 | $ 1,951 | $ 1,951 | |
Other comprehensive income (loss), net of tax | 29 | (170) | ||
Balance at the end of the period | 1,685 | 1,773 | 1,629 | $ 1,951 |
Total | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (1,316) | (1,076) | (1,076) | |
Other comprehensive income (loss) before reclassifications, gross | 6 | (156) | ||
Tax benefit (expense) | 10 | (27) | ||
Amounts reclassified from accumulated other comprehensive loss, gross | 13 | 17 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 29 | (170) | ||
Balance at the end of the period | (1,287) | (1,246) | (1,316) | (1,076) |
Foreign currency translation adjustment | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (288) | 25 | 25 | |
Other comprehensive income (loss) before reclassifications, gross | 17 | (155) | ||
Tax benefit (expense) | 10 | (27) | ||
Other comprehensive income (loss), net of tax | 27 | (182) | ||
Balance at the end of the period | (261) | (157) | (288) | 25 |
Foreign currency translations adjustments, tax | 80 | 74 | 90 | 47 |
Pension and other postretirement benefits adjustments | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (1,056) | (1,122) | (1,122) | |
Amounts reclassified from accumulated other comprehensive loss, gross | 13 | 17 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 13 | 13 | ||
Balance at the end of the period | (1,043) | (1,109) | (1,056) | (1,122) |
Pension and other postretirement benefits adjustments, tax | 135 | 178 | 135 | 182 |
Other comprehensive income of unconsolidated affiliates | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 11 | 10 | 10 | |
Other comprehensive income (loss) before reclassifications, gross | (11) | (1) | ||
Other comprehensive income (loss), net of tax | (11) | (1) | ||
Balance at the end of the period | 9 | 11 | 10 | |
Other, net | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 17 | 11 | 11 | |
Balance at the end of the period | 17 | 11 | 17 | 11 |
Amounts attributable to noncontrolling interests | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 28 | 23 | 23 | |
Other comprehensive income (loss) before reclassifications, gross | (2) | 7 | ||
Other comprehensive income (loss), net of tax | (2) | 7 | ||
Balance at the end of the period | 26 | 30 | 28 | 23 |
Accumulated other comprehensive loss | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (1,288) | (1,053) | (1,053) | |
Other comprehensive income (loss) before reclassifications, gross | 4 | (149) | ||
Tax benefit (expense) | 10 | (27) | ||
Amounts reclassified from accumulated other comprehensive loss, gross | 13 | 17 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 27 | (163) | ||
Balance at the end of the period | $ (1,261) | $ (1,216) | $ (1,288) | $ (1,053) |
OTHER COMPREHENSIVE INCOME (LOSS) - RECLASSIFICATION DETAILS - HUNTSMAN CORPORATION (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Pension and other postretirement benefits adjustments | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | $ 13 | $ 17 |
Income tax expense | (4) | |
Pension and other postretirement benefits adjustments | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 13 | 17 |
Income tax expense | (4) | |
Net of tax | 13 | 13 |
Prior Service Credit | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | (4) | (2) |
Actuarial loss | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 17 | 19 |
Actuarial loss | Amount reclassified | Discontinued Operations | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | $ 1 | $ 1 |
OTHER COMPREHENSIVE INCOME (LOSS) - COMPONENTS AND CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME - HUNTSMAN INTERNATIONAL (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Components of other comprehensive income (loss) | ||||
Other comprehensive income (loss), net of tax | $ 29 | $ (170) | ||
Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 1,084 | 1,296 | $ 1,296 | |
Other comprehensive income (loss), net of tax | 32 | (168) | ||
Balance at the end of the period | 1,143 | 1,121 | 1,084 | $ 1,296 |
Total | ||||
Components of other comprehensive income (loss) | ||||
Other comprehensive income (loss) before reclassifications, gross | 6 | (156) | ||
Tax benefit (expense) | 10 | (27) | ||
Amounts reclassified from accumulated other comprehensive loss, gross | 13 | 17 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 29 | (170) | ||
Total | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (1,344) | (1,110) | (1,110) | |
Other comprehensive income (loss) before reclassifications, gross | 7 | (156) | ||
Tax benefit (expense) | 10 | (27) | ||
Amounts reclassified from accumulated other comprehensive loss, gross | 15 | 19 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 32 | (168) | ||
Balance at the end of the period | (1,312) | (1,278) | (1,344) | (1,110) |
Foreign currency translation adjustment | ||||
Components of other comprehensive income (loss) | ||||
Other comprehensive income (loss) before reclassifications, gross | 17 | (155) | ||
Tax benefit (expense) | 10 | (27) | ||
Other comprehensive income (loss), net of tax | 27 | (182) | ||
Foreign currency translations adjustments, tax | 80 | 74 | 90 | 47 |
Foreign currency translation adjustment | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (292) | 22 | 22 | |
Other comprehensive income (loss) before reclassifications, gross | 18 | (155) | ||
Tax benefit (expense) | 10 | (27) | ||
Other comprehensive income (loss), net of tax | 28 | (182) | ||
Balance at the end of the period | (264) | (160) | (292) | 22 |
Foreign currency translations adjustments, tax | 66 | 61 | 76 | 34 |
Pension and other postretirement benefits adjustments | ||||
Components of other comprehensive income (loss) | ||||
Amounts reclassified from accumulated other comprehensive loss, gross | 13 | 17 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 13 | 13 | ||
Pension and other postretirement benefits adjustments, tax | 135 | 178 | 135 | 182 |
Pension and other postretirement benefits adjustments | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (1,074) | (1,147) | (1,147) | |
Amounts reclassified from accumulated other comprehensive loss, gross | 15 | 19 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 15 | 15 | ||
Balance at the end of the period | (1,059) | (1,132) | (1,074) | (1,147) |
Pension and other postretirement benefits adjustments, tax | 163 | 207 | 163 | 211 |
Other comprehensive income of unconsolidated affiliates | ||||
Components of other comprehensive income (loss) | ||||
Other comprehensive income (loss) before reclassifications, gross | (11) | (1) | ||
Other comprehensive income (loss), net of tax | (11) | (1) | ||
Other comprehensive income of unconsolidated affiliates | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 11 | 10 | 10 | |
Other comprehensive income (loss) before reclassifications, gross | (11) | (1) | ||
Other comprehensive income (loss), net of tax | (11) | (1) | ||
Balance at the end of the period | 9 | 11 | 10 | |
Other, net | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 11 | 5 | 5 | |
Balance at the end of the period | 11 | 5 | 11 | 5 |
Amounts attributable to noncontrolling interests | ||||
Components of other comprehensive income (loss) | ||||
Other comprehensive income (loss) before reclassifications, gross | (2) | 7 | ||
Other comprehensive income (loss), net of tax | (2) | 7 | ||
Amounts attributable to noncontrolling interests | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | 28 | 23 | 23 | |
Other comprehensive income (loss) before reclassifications, gross | (2) | 7 | ||
Other comprehensive income (loss), net of tax | (2) | 7 | ||
Balance at the end of the period | 26 | 30 | 28 | 23 |
Accumulated other comprehensive loss | ||||
Components of other comprehensive income (loss) | ||||
Other comprehensive income (loss) before reclassifications, gross | 4 | (149) | ||
Tax benefit (expense) | 10 | (27) | ||
Amounts reclassified from accumulated other comprehensive loss, gross | 13 | 17 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 27 | (163) | ||
Accumulated other comprehensive loss | Huntsman International | ||||
Components of other comprehensive income (loss) | ||||
Balance at the beginning of the period | (1,316) | (1,087) | (1,087) | |
Other comprehensive income (loss) before reclassifications, gross | 5 | (149) | ||
Tax benefit (expense) | 10 | (27) | ||
Amounts reclassified from accumulated other comprehensive loss, gross | 15 | 19 | ||
Tax (expense) benefit | (4) | |||
Other comprehensive income (loss), net of tax | 30 | (161) | ||
Balance at the end of the period | $ (1,286) | $ (1,248) | $ (1,316) | $ (1,087) |
OTHER COMPREHENSIVE INCOME (LOSS) - RECLASSIFICATION DETAILS - HUNTSMAN INTERNATIONAL (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Pension and other postretirement benefits adjustments | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | $ 13 | $ 17 |
Income tax expense | (4) | |
Pension and other postretirement benefits adjustments | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 13 | 17 |
Income tax expense | (4) | |
Net of tax | 13 | 13 |
Pension and other postretirement benefits adjustments | Huntsman International | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 15 | 19 |
Income tax expense | (4) | |
Pension and other postretirement benefits adjustments | Huntsman International | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 15 | 19 |
Income tax expense | (4) | |
Net of tax | 15 | 15 |
Prior Service Credit | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | (4) | (2) |
Prior Service Credit | Huntsman International | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | (4) | (2) |
Actuarial loss | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 17 | 19 |
Actuarial loss | Amount reclassified | Discontinued Operations | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 1 | 1 |
Actuarial loss | Huntsman International | Amount reclassified | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | 19 | 21 |
Actuarial loss | Huntsman International | Amount reclassified | Discontinued Operations | ||
Reclassification from accumulated other comprehensive loss | ||
Total before tax | $ 1 | $ 1 |
COMMITMENTS AND CONTINGENCIES (Details) - 3 months ended Mar. 31, 2016 € in Millions, $ in Millions |
EUR (€)
state
|
USD ($)
state
|
USD ($) |
---|---|---|---|
State Antitrust Claims | |||
LEGAL MATTERS | |||
Number of states in which Plaintiffs have raised claims | state | 15 | 15 | |
Consumer Protection Claims | |||
LEGAL MATTERS | |||
Number of states in which Plaintiffs have raised claims | state | 9 | 9 | |
Unjust Enrichment Claims | |||
LEGAL MATTERS | |||
Number of states in which Plaintiffs have raised claims | state | 16 | 16 | |
Antitrust matters - Indirect action cases | |||
LEGAL MATTERS | |||
Accrued liability relating to the cases | $ | $ 0 | ||
Product Delivery Claim | |||
LEGAL MATTERS | |||
Accrued liability relating to the cases | $ | 0 | ||
Maximum amount of claims of customer | € 153 | $ 172 | |
Aggregate amount of current claims | 113 | 127 | |
Minimum threshold amount for insured liability | $ | $ 10 | ||
Minimum range of possible loss | € | 0 | ||
Maximum range of possible loss | € 113 | $ 127 |
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016
USD ($)
item
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Environmental, Health, and Safety Matters | |||
Capital expenditures for EHS matters | $ 11,000,000 | $ 26,000,000 | |
Number of former facilities or third party sites with claims against the entity for cleanup liabilities | item | 10 | ||
Accrued environmental liabilities | $ 39,000,000 | $ 38,000,000 | |
Accrued environmental liabilities, classified as accrued liabilities | 7,000,000 | 6,000,000 | |
Accrued environmental liabilities, classified as other noncurrent liabilities | $ 32,000,000 | $ 32,000,000 | |
Maximum period for payment of remediation liabilities | 30 years | ||
Minimum | |||
Environmental, Health, and Safety Matters | |||
Amount of civil penalties soughts after by EPA | $ 100,000 | ||
West Footscray | |||
Environmental, Health, and Safety Matters | |||
Accrued environmental liabilities | $ 17,000,000 |
STOCK-BASED COMPENSATION PLANS - COMPENSATION COST AND STOCK OPTIONS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
STOCK-BASED COMPENSATION PLANS | ||
Authorized number of shares to be granted under the Stock Incentive Plan | 37,200 | |
Remaining shares available for grant | 3,000 | |
Compensation cost from continuing operations | $ 8 | $ 9 |
Total income tax benefit recognized in the statements of operations for stock-based compensation arrangements | $ 2 | $ 2 |
Stock options | ||
Weighted average of the assumptions utilized for stock options granted | ||
Dividend yield (as a percent) | 5.60% | 2.20% |
Expected volatility (as a percent) | 57.90% | 58.00% |
Risk-free interest rate (as a percent) | 1.40% | 1.40% |
Expected life of stock options granted during the period | 5 years 10 months 24 days | 5 years 10 months 24 days |
Shares | ||
Outstanding at the beginning of the period (in shares) | 9,544 | |
Granted (in shares) | 2,940 | |
Forfeited (in shares) | (931) | |
Outstanding at the end of the period (in shares) | 11,553 | |
Exercisable at the end of the period (in shares) | 7,558 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 15.51 | |
Granted (in dollars per share) | 8.86 | |
Forfeited (in dollars per share) | 20.29 | |
Outstanding at the end of the period (in dollars per share) | 13.43 | |
Exercisable at the end of the period (in dollars per share) | $ 14.07 | |
Outstanding, Weighted Average Remaining Contractual Term | 6 years 2 months 12 days | |
Exercisable, Weighted Average Remaining Contractual Term | 4 years 6 months | |
Outstanding, Aggregate Intrinsic Value | $ 33 | |
Exercisable, Aggregate Intrinsic Value | $ 20 | |
Weighted-average grant-date fair value of stock options granted (in dollars per share) | $ 2.94 | |
Total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Stock Incentive Plan | $ 16 | |
Weighted-average period over which cost is expected to be recognized | 2 years 2 months 12 days | |
Total intrinsic value of stock options exercised | $ 0 | $ 0 |
Stock options | Maximum | ||
STOCK-BASED COMPENSATION PLANS | ||
Contractual term | 10 years | |
Stock-based awards | ||
STOCK-BASED COMPENSATION PLANS | ||
Vesting period | 3 years | |
Performance Awards | ||
STOCK-BASED COMPENSATION PLANS | ||
Vesting period | 2 years | |
Weighted average of the assumptions utilized for stock options granted | ||
Risk-free interest rate (as a percent) | 0.90% | 0.70% |
Huntsman International | ||
STOCK-BASED COMPENSATION PLANS | ||
Compensation cost from continuing operations | $ 7 | $ 8 |
STOCK-BASED COMPENSATION PLANS - NONVESTED SHARES (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Nonvested shares | ||
Additional information | ||
Total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Stock Incentive Plan | $ 40 | |
Weighted-average period over which cost is expected to be recognized | 2 years 4 months 24 days | |
Value of share awards vested | $ 15 | $ 20 |
Performance Awards | ||
STOCK-BASED COMPENSATION PLANS | ||
Weighted-average volatility rate | 39.30% | 30.00% |
Risk-free interest rate (as a percent) | 0.90% | 0.70% |
Performance Awards | Minimum | ||
Additional information | ||
Performance period | 2 years | |
Performance Awards | Maximum | ||
Additional information | ||
Performance period | 3 years | |
Equity Awards | ||
Shares | ||
Nonvested at the beginning of the period (in shares) | 1,854,000 | |
Granted (in shares) | 1,871,000 | |
Vested (in shares) | (652,000) | |
Forfeited (in shares) | (3,000) | |
Nonvested at the end of the period (in shares) | 3,070,000 | |
Weighted Average Grant-Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 19.97 | |
Granted (in dollars per share) | 9.23 | |
Vested (in dollars per share) | 19.86 | |
Forfeited (in dollars per share) | 22.25 | |
Nonvested at the end of the period (in dollars per share) | $ 13.44 | |
Liability Awards | ||
Shares | ||
Nonvested at the beginning of the period (in shares) | 475,000 | |
Granted (in shares) | 693,000 | |
Vested (in shares) | (229,000) | |
Forfeited (in shares) | (13,000) | |
Nonvested at the end of the period (in shares) | 926,000 | |
Weighted Average Grant-Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 21.37 | |
Granted (in dollars per share) | 8.86 | |
Vested (in dollars per share) | 20.65 | |
Forfeited (in dollars per share) | 18.95 | |
Nonvested at the end of the period (in dollars per share) | $ 12.22 | |
Restricted stock units | ||
Shares | ||
Vested (in shares) | (60,948) | |
Additional information | ||
Units vested but not yet issued | 454,900 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
INCOME TAXES | ||
Net decrease in unrecognized tax benefits with a corresponding income tax expense (benefit) | $ (1) | $ (9) |
Income tax expense | $ 27 | 2 |
Effective tax rate (as a percent) | 35.00% | |
Huntsman International | ||
INCOME TAXES | ||
Income tax expense | $ 27 | $ 3 |
Effective tax rate (as a percent) | 35.00% |
NET INCOME PER SHARE - BASIC AND DILUTED INCOME PER SHARE (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Basic and diluted income from continuing operations: | ||
Income from continuing operations attributable to Huntsman Corporation | $ 57 | $ 7 |
Basic and diluted net income: | ||
Net income attributable to Huntsman Corporation | $ 56 | $ 5 |
Shares (denominator): | ||
Weighted average shares outstanding | 236.1 | 243.9 |
Dilutive securities: | ||
Stock-based awards (in shares) | 1.8 | 3.3 |
Total weighted average shares outstanding, including dilutive shares | 237.9 | 247.2 |
NET INCOME PER SHARE - INFORMATION ON STOCK-BASED AWARDS (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Stock-based awards | ||
Antidilutive shares not included in the computation of income (loss) per share | ||
Weighted average equivalent shares | 11.8 | 2.3 |
OPERATING SEGMENT INFORMATION (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
segment
|
Mar. 31, 2015
USD ($)
|
|
Operating segment information | ||
Number of segments | segment | 5 | |
Revenues | $ 2,355 | $ 2,589 |
Segment EBITDA | 232 | 159 |
Interest expense, net | (50) | (56) |
Income tax expense continuing operations | (27) | (2) |
Income tax benefit (expense) - discontinued operations | 1 | (1) |
Depreciation and amortization | (100) | (95) |
Net income | 56 | 5 |
Subtotal | ||
Operating segment information | ||
Segment EBITDA | 234 | 160 |
Discontinued Operations | ||
Operating segment information | ||
Segment EBITDA | (2) | (1) |
Operating segments | Polyurethanes | ||
Operating segment information | ||
Revenues | 836 | 890 |
Segment EBITDA | 123 | 93 |
Operating segments | Performance Products | ||
Operating segment information | ||
Revenues | 536 | 656 |
Segment EBITDA | 90 | 118 |
Operating segments | Advanced Materials | ||
Operating segment information | ||
Revenues | 266 | 290 |
Segment EBITDA | 57 | 55 |
Operating segments | Textile Effects | ||
Operating segment information | ||
Revenues | 185 | 206 |
Segment EBITDA | 15 | 11 |
Operating segments | Pigments and Additives | ||
Operating segment information | ||
Revenues | 540 | 572 |
Segment EBITDA | (8) | (75) |
Corporate and eliminations | ||
Operating segment information | ||
Revenues | (8) | (25) |
Corporate and other | ||
Operating segment information | ||
Segment EBITDA | (43) | (42) |
Huntsman International | ||
Operating segment information | ||
Revenues | 2,355 | 2,589 |
Segment EBITDA | 232 | 159 |
Interest expense, net | (53) | (58) |
Income tax expense continuing operations | (27) | (3) |
Income tax benefit (expense) - discontinued operations | 1 | (1) |
Depreciation and amortization | (97) | (92) |
Net income | 56 | 5 |
Huntsman International | Subtotal | ||
Operating segment information | ||
Segment EBITDA | 234 | 160 |
Huntsman International | Discontinued Operations | ||
Operating segment information | ||
Segment EBITDA | (2) | (1) |
Huntsman International | Operating segments | Polyurethanes | ||
Operating segment information | ||
Segment EBITDA | 123 | 93 |
Huntsman International | Operating segments | Performance Products | ||
Operating segment information | ||
Segment EBITDA | 90 | 118 |
Huntsman International | Operating segments | Advanced Materials | ||
Operating segment information | ||
Segment EBITDA | 57 | 55 |
Huntsman International | Operating segments | Textile Effects | ||
Operating segment information | ||
Segment EBITDA | 15 | 11 |
Huntsman International | Operating segments | Pigments and Additives | ||
Operating segment information | ||
Segment EBITDA | (8) | (75) |
Huntsman International | Corporate and other | ||
Operating segment information | ||
Segment EBITDA | $ (43) | $ (42) |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC - CONDENSED CONSOLIDATING BALANCE SHEETS (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
|||||
---|---|---|---|---|---|---|---|---|---|
Current assets: | |||||||||
Cash and cash equivalents | $ 208 | [1] | $ 257 | [1] | $ 994 | $ 860 | |||
Restricted cash | [1] | 10 | 12 | ||||||
Accounts and notes receivable, net | [1] | 1,558 | 1,420 | ||||||
Accounts receivable from affiliates | 14 | 29 | |||||||
Inventories | [1] | 1,689 | 1,692 | ||||||
Prepaid expenses | 70 | 112 | |||||||
Other current assets | [1] | 281 | 312 | ||||||
Total current assets | 3,830 | 3,834 | |||||||
Property, plant and equipment, net | [1] | 4,437 | 4,446 | ||||||
Investment in unconsolidated affiliates | 344 | 347 | |||||||
Intangible assets, net | [1] | 106 | 86 | ||||||
Goodwill | 123 | 116 | |||||||
Deferred income taxes | 424 | 418 | |||||||
Other noncurrent assets | [1] | 576 | 573 | ||||||
Total assets | 9,840 | 9,820 | |||||||
Current liabilities: | |||||||||
Accounts payable | [1] | 999 | 1,034 | ||||||
Accounts payable to affiliates | 28 | 27 | |||||||
Accrued liabilities | [1] | 652 | 686 | ||||||
Current portion of debt | [1] | 103 | 170 | ||||||
Total current liabilities | 1,782 | 1,917 | |||||||
Long-term debt | [1] | 4,724 | 4,625 | ||||||
Notes payable to affiliates | 1 | 1 | |||||||
Deferred income taxes | 425 | 422 | |||||||
Other noncurrent liabilities | [1] | 1,223 | 1,226 | ||||||
Total liabilities | 8,155 | 8,191 | |||||||
Huntsman International LLC members' equity | |||||||||
Accumulated (deficit) income | (504) | (528) | |||||||
Accumulated other comprehensive (loss) income | (1,261) | (1,288) | |||||||
Noncontrolling interests in subsidiaries | 186 | 187 | |||||||
Total liabilities and equity | 9,840 | 9,820 | |||||||
Huntsman International | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 208 | [1] | 257 | [1] | 796 | 710 | |||
Restricted cash | [1] | 10 | 12 | ||||||
Accounts and notes receivable, net | [1] | 1,558 | 1,420 | ||||||
Accounts receivable from affiliates | 329 | 340 | |||||||
Inventories | [1] | 1,689 | 1,692 | ||||||
Prepaid expenses | 69 | 111 | |||||||
Other current assets | [1] | 276 | 306 | ||||||
Total current assets | 4,139 | 4,138 | |||||||
Property, plant and equipment, net | [1] | 4,405 | 4,410 | ||||||
Investment in unconsolidated affiliates | 344 | 347 | |||||||
Intangible assets, net | [1] | 106 | 86 | ||||||
Goodwill | 123 | 116 | |||||||
Deferred income taxes | 424 | 418 | |||||||
Other noncurrent assets | [1] | 576 | 573 | ||||||
Total assets | 10,117 | 10,088 | |||||||
Current liabilities: | |||||||||
Accounts payable | [1] | 998 | 1,034 | ||||||
Accounts payable to affiliates | 54 | 52 | |||||||
Accrued liabilities | [1] | 650 | 683 | ||||||
Notes payable to affiliates | 100 | 100 | |||||||
Current portion of debt | [1] | 103 | 170 | ||||||
Total current liabilities | 1,905 | 2,039 | |||||||
Long-term debt | [1] | 4,724 | 4,625 | ||||||
Notes payable to affiliates | 698 | 698 | |||||||
Deferred income taxes | 421 | 418 | |||||||
Other noncurrent liabilities | [1] | 1,226 | 1,224 | ||||||
Total liabilities | 8,974 | 9,004 | |||||||
Huntsman International LLC members' equity | |||||||||
Members' equity | 3,200 | 3,196 | |||||||
Accumulated (deficit) income | (957) | (983) | |||||||
Accumulated other comprehensive (loss) income | (1,286) | (1,316) | |||||||
Total Huntsman International LLC members' equity | 957 | 897 | |||||||
Noncontrolling interests in subsidiaries | 186 | 187 | |||||||
Total equity | 1,143 | 1,084 | 1,121 | 1,296 | |||||
Total liabilities and equity | 10,117 | 10,088 | |||||||
Reportable legal entities | Huntsman International | Parent Company | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 31 | 44 | 133 | 353 | |||||
Accounts and notes receivable, net | 31 | 21 | |||||||
Accounts receivable from affiliates | 1,885 | 2,163 | |||||||
Inventories | 87 | 101 | |||||||
Prepaid expenses | 36 | 49 | |||||||
Other current assets | 804 | 790 | |||||||
Total current assets | 2,874 | 3,168 | |||||||
Property, plant and equipment, net | 459 | 473 | |||||||
Investment in unconsolidated affiliates | 6,132 | 5,991 | |||||||
Intangible assets, net | 31 | 32 | |||||||
Goodwill | (13) | (13) | |||||||
Deferred income taxes | 480 | 473 | |||||||
Notes receivable from affiliates | 36 | 36 | |||||||
Other noncurrent assets | 63 | 71 | |||||||
Total assets | 10,062 | 10,231 | |||||||
Current liabilities: | |||||||||
Accounts payable | 47 | 50 | |||||||
Accounts payable to affiliates | 3,678 | 3,905 | |||||||
Accrued liabilities | 78 | 74 | |||||||
Notes payable to affiliates | 100 | 100 | |||||||
Current portion of debt | 27 | 89 | |||||||
Total current liabilities | 3,930 | 4,218 | |||||||
Long-term debt | 4,293 | 4,229 | |||||||
Notes payable to affiliates | 697 | 703 | |||||||
Deferred income taxes | 24 | 24 | |||||||
Other noncurrent liabilities | 161 | 160 | |||||||
Total liabilities | 9,105 | 9,334 | |||||||
Huntsman International LLC members' equity | |||||||||
Members' equity | 3,200 | 3,196 | |||||||
Accumulated (deficit) income | (957) | (983) | |||||||
Accumulated other comprehensive (loss) income | (1,286) | (1,316) | |||||||
Total Huntsman International LLC members' equity | 957 | 897 | |||||||
Total equity | 957 | 897 | |||||||
Total liabilities and equity | 10,062 | 10,231 | |||||||
Reportable legal entities | Huntsman International | Guarantors | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 1 | 6 | |||||||
Accounts and notes receivable, net | 105 | 96 | |||||||
Accounts receivable from affiliates | 4,777 | 4,730 | |||||||
Inventories | 338 | 322 | |||||||
Prepaid expenses | 13 | 31 | |||||||
Other current assets | 8 | 8 | |||||||
Total current assets | 5,241 | 5,188 | |||||||
Property, plant and equipment, net | 1,432 | 1,433 | |||||||
Investment in unconsolidated affiliates | 1,644 | 1,558 | |||||||
Intangible assets, net | 3 | 3 | |||||||
Goodwill | 82 | 82 | |||||||
Notes receivable from affiliates | 550 | 539 | |||||||
Other noncurrent assets | 216 | 223 | |||||||
Total assets | 9,168 | 9,026 | |||||||
Current liabilities: | |||||||||
Accounts payable | 181 | 207 | |||||||
Accounts payable to affiliates | 976 | 973 | |||||||
Accrued liabilities | 811 | 793 | |||||||
Total current liabilities | 1,968 | 1,973 | |||||||
Deferred income taxes | 278 | 276 | |||||||
Other noncurrent liabilities | 244 | 241 | |||||||
Total liabilities | 2,490 | 2,490 | |||||||
Huntsman International LLC members' equity | |||||||||
Members' equity | 4,512 | 4,517 | |||||||
Accumulated (deficit) income | 746 | 652 | |||||||
Accumulated other comprehensive (loss) income | 1,420 | 1,367 | |||||||
Total Huntsman International LLC members' equity | 6,678 | 6,536 | |||||||
Total equity | 6,678 | 6,536 | |||||||
Total liabilities and equity | 9,168 | 9,026 | |||||||
Reportable legal entities | Huntsman International | Nonguarantors | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 177 | 212 | $ 663 | $ 351 | |||||
Restricted cash | 10 | 12 | |||||||
Accounts and notes receivable, net | 1,415 | 1,298 | |||||||
Accounts receivable from affiliates | 172 | 163 | |||||||
Inventories | 1,268 | 1,275 | |||||||
Prepaid expenses | 48 | 91 | |||||||
Other current assets | 194 | 212 | |||||||
Total current assets | 3,284 | 3,263 | |||||||
Property, plant and equipment, net | 2,513 | 2,503 | |||||||
Investment in unconsolidated affiliates | 256 | 263 | |||||||
Intangible assets, net | 72 | 51 | |||||||
Goodwill | 54 | 47 | |||||||
Deferred income taxes | 436 | 430 | |||||||
Notes receivable from affiliates | 6 | ||||||||
Other noncurrent assets | 298 | 279 | |||||||
Total assets | 6,913 | 6,842 | |||||||
Current liabilities: | |||||||||
Accounts payable | 763 | 772 | |||||||
Accounts payable to affiliates | 1,905 | 1,891 | |||||||
Accrued liabilities | 518 | 581 | |||||||
Current portion of debt | 76 | 81 | |||||||
Total current liabilities | 3,262 | 3,325 | |||||||
Long-term debt | 431 | 396 | |||||||
Notes payable to affiliates | 588 | 576 | |||||||
Deferred income taxes | 44 | 36 | |||||||
Other noncurrent liabilities | 820 | 819 | |||||||
Total liabilities | 5,145 | 5,152 | |||||||
Huntsman International LLC members' equity | |||||||||
Members' equity | 3,386 | 3,394 | |||||||
Accumulated (deficit) income | (514) | (557) | |||||||
Accumulated other comprehensive (loss) income | (1,267) | (1,311) | |||||||
Total Huntsman International LLC members' equity | 1,605 | 1,526 | |||||||
Noncontrolling interests in subsidiaries | 163 | 164 | |||||||
Total equity | 1,768 | 1,690 | |||||||
Total liabilities and equity | 6,913 | 6,842 | |||||||
Eliminations | Huntsman International | |||||||||
Current assets: | |||||||||
Accounts and notes receivable, net | 7 | 5 | |||||||
Accounts receivable from affiliates | (6,505) | (6,716) | |||||||
Inventories | (4) | (6) | |||||||
Prepaid expenses | (28) | (60) | |||||||
Other current assets | (730) | (704) | |||||||
Total current assets | (7,260) | (7,481) | |||||||
Property, plant and equipment, net | 1 | 1 | |||||||
Investment in unconsolidated affiliates | (7,688) | (7,465) | |||||||
Deferred income taxes | (492) | (485) | |||||||
Notes receivable from affiliates | (586) | (581) | |||||||
Other noncurrent assets | (1) | ||||||||
Total assets | (16,026) | (16,011) | |||||||
Current liabilities: | |||||||||
Accounts payable | 7 | 5 | |||||||
Accounts payable to affiliates | (6,505) | (6,717) | |||||||
Accrued liabilities | (757) | (765) | |||||||
Total current liabilities | (7,255) | (7,477) | |||||||
Notes payable to affiliates | (587) | (581) | |||||||
Deferred income taxes | 75 | 82 | |||||||
Other noncurrent liabilities | 1 | 4 | |||||||
Total liabilities | (7,766) | (7,972) | |||||||
Huntsman International LLC members' equity | |||||||||
Members' equity | (7,898) | (7,911) | |||||||
Accumulated (deficit) income | (232) | (95) | |||||||
Accumulated other comprehensive (loss) income | (153) | (56) | |||||||
Total Huntsman International LLC members' equity | (8,283) | (8,062) | |||||||
Noncontrolling interests in subsidiaries | 23 | 23 | |||||||
Total equity | (8,260) | (8,039) | |||||||
Total liabilities and equity | $ (16,026) | $ (16,011) | |||||||
|
CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC - CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Revenues: | ||
Trade sales, services and fees, net | $ 2,321 | $ 2,560 |
Related party sales | 34 | 29 |
Total revenues | 2,355 | 2,589 |
Cost of goods sold | 1,939 | 2,139 |
Gross profit | 416 | 450 |
Selling, general and administrative | 223 | 246 |
Research and development | 37 | 42 |
Other operating expense (income) | 5 | (8) |
Restructuring, impairment and plant closing costs | 13 | 93 |
Operating income | 138 | 77 |
Interest (expense) income | (50) | (56) |
Equity in income (loss) of investment in affiliates and subsidiaries | 1 | 2 |
Loss on early extinguishment of debt | (3) | |
Other income (loss) | 1 | (1) |
Income from continuing operations before income taxes | 90 | 19 |
Income tax benefit (expense) | (27) | (2) |
Income from continuing operations | 63 | 17 |
Income (loss) from discontinued operations, net of tax | (1) | (2) |
Net income | 62 | 15 |
Net income attributable to noncontrolling interests | (6) | (10) |
Net income | 56 | 5 |
Other comprehensive income (loss) | 29 | (170) |
Comprehensive (loss) income attributable to noncontrolling interests | (8) | (3) |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | 83 | (158) |
Huntsman International | ||
Revenues: | ||
Trade sales, services and fees, net | 2,321 | 2,560 |
Related party sales | 34 | 29 |
Total revenues | 2,355 | 2,589 |
Cost of goods sold | 1,938 | 2,137 |
Gross profit | 417 | 452 |
Selling, general and administrative | 221 | 244 |
Research and development | 37 | 42 |
Other operating expense (income) | 5 | (7) |
Restructuring, impairment and plant closing costs | 13 | 93 |
Operating income | 141 | 80 |
Interest (expense) income | (53) | (58) |
Equity in income (loss) of investment in affiliates and subsidiaries | 1 | 2 |
Loss on early extinguishment of debt | (3) | |
Other income (loss) | 1 | (1) |
Income from continuing operations before income taxes | 90 | 20 |
Income tax benefit (expense) | (27) | (3) |
Income from continuing operations | 63 | 17 |
Income (loss) from discontinued operations, net of tax | (1) | (2) |
Net income | 62 | 15 |
Net income attributable to noncontrolling interests | (6) | (10) |
Net income | 56 | 5 |
Other comprehensive income (loss) | 32 | (168) |
Comprehensive (loss) income attributable to noncontrolling interests | (8) | (3) |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | 86 | (156) |
Reportable legal entities | Huntsman International | Parent Company | ||
Revenues: | ||
Trade sales, services and fees, net | 251 | 257 |
Related party sales | 53 | 68 |
Total revenues | 304 | 325 |
Cost of goods sold | 240 | 261 |
Gross profit | 64 | 64 |
Selling, general and administrative | 40 | 45 |
Research and development | 11 | 11 |
Other operating expense (income) | 12 | (28) |
Operating income | 1 | 36 |
Interest (expense) income | (54) | (57) |
Equity in income (loss) of investment in affiliates and subsidiaries | 92 | 25 |
Loss on early extinguishment of debt | (3) | |
Other income (loss) | 1 | 1 |
Income from continuing operations before income taxes | 40 | 2 |
Income tax benefit (expense) | 15 | 4 |
Income from continuing operations | 55 | 6 |
Income (loss) from discontinued operations, net of tax | 1 | (1) |
Net income | 56 | 5 |
Net income | 56 | 5 |
Other comprehensive income (loss) | 30 | (161) |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | 86 | (156) |
Reportable legal entities | Huntsman International | Guarantors | ||
Revenues: | ||
Trade sales, services and fees, net | 566 | 579 |
Related party sales | 104 | 122 |
Total revenues | 670 | 701 |
Cost of goods sold | 548 | 579 |
Gross profit | 122 | 122 |
Selling, general and administrative | 46 | 40 |
Research and development | 11 | 10 |
Other operating expense (income) | (7) | 1 |
Restructuring, impairment and plant closing costs | 4 | |
Operating income | 68 | 71 |
Interest (expense) income | 8 | 8 |
Equity in income (loss) of investment in affiliates and subsidiaries | 44 | (16) |
Other income (loss) | (7) | |
Income from continuing operations before income taxes | 120 | 56 |
Income tax benefit (expense) | (26) | (23) |
Income from continuing operations | 94 | 33 |
Net income | 94 | 33 |
Net income | 94 | 33 |
Other comprehensive income (loss) | 55 | 73 |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | 149 | 106 |
Reportable legal entities | Huntsman International | Nonguarantors | ||
Revenues: | ||
Trade sales, services and fees, net | 1,504 | 1,724 |
Related party sales | 269 | 267 |
Total revenues | 1,773 | 1,991 |
Cost of goods sold | 1,543 | 1,723 |
Gross profit | 230 | 268 |
Selling, general and administrative | 135 | 159 |
Research and development | 15 | 21 |
Other operating expense (income) | 20 | |
Restructuring, impairment and plant closing costs | 9 | 93 |
Operating income | 71 | (25) |
Interest (expense) income | (7) | (9) |
Equity in income (loss) of investment in affiliates and subsidiaries | 1 | 2 |
Other income (loss) | 5 | |
Income from continuing operations before income taxes | 65 | (27) |
Income tax benefit (expense) | (16) | 16 |
Income from continuing operations | 49 | (11) |
Income (loss) from discontinued operations, net of tax | (2) | (1) |
Net income | 47 | (12) |
Net income attributable to noncontrolling interests | (3) | (8) |
Net income | 44 | (20) |
Other comprehensive income (loss) | 50 | (170) |
Comprehensive (loss) income attributable to noncontrolling interests | (5) | |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | 92 | (182) |
Eliminations | Huntsman International | ||
Revenues: | ||
Related party sales | (392) | (428) |
Total revenues | (392) | (428) |
Cost of goods sold | (393) | (426) |
Gross profit | 1 | (2) |
Operating income | 1 | (2) |
Equity in income (loss) of investment in affiliates and subsidiaries | (136) | (9) |
Income from continuing operations before income taxes | (135) | (11) |
Income from continuing operations | (135) | (11) |
Net income | (135) | (11) |
Net income attributable to noncontrolling interests | (3) | (2) |
Net income | (138) | (13) |
Other comprehensive income (loss) | (103) | 90 |
Comprehensive (loss) income attributable to noncontrolling interests | (3) | (3) |
Comprehensive income (loss) attributable to Huntsman Corporation or Huntsman International LLC | $ (241) | $ 76 |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC - CONDSNED CONSOLIDATING STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
||||
Condensed consolidating statements of cash flows | |||||
Net cash provided by operating activities | $ 88 | $ 34 | |||
Investing Activities: | |||||
Capital expenditures | (99) | (149) | |||
Cash received from unconsolidated affiliates | 10 | 15 | |||
Investment in unconsolidated affiliates | (12) | (13) | |||
Cash received from termination of cross-currency interest rate contracts | 66 | ||||
Change in restricted cash | 2 | ||||
Other, net | (2) | ||||
Net cash used in investing activities | (101) | (81) | |||
Financing activities: | |||||
Net borrowings under revolving loan facilities | 45 | ||||
Net repayments on overdraft facilities | (2) | ||||
Repayments of short-term debt | (12) | (17) | |||
Borrowings on short-term debt | 4 | ||||
Repayments of long-term debt | (27) | (59) | |||
Proceeds from issuance of long-term debt | 326 | ||||
Repayments of notes payable | (9) | (9) | |||
Borrowings on notes payable | 2 | ||||
Debt issuance costs paid | (4) | ||||
Call premiums related to early extinguishment of debt | (3) | ||||
Contingent consideration paid for acquisition | (4) | ||||
Dividends paid to noncontrolling interests | (9) | ||||
Excess tax benefit related to stock-based compensation | 1 | ||||
Other, net | (2) | ||||
Net cash (used in) provided by financing activities | (38) | 189 | |||
Effect of exchange rate changes on cash | 2 | (8) | |||
(Decrease) increase in cash and cash equivalents | (49) | 134 | |||
Cash and cash equivalents at beginning of period | 257 | [1] | 860 | ||
Cash and cash equivalents at end of period | 208 | [1] | 994 | ||
Noncash capital contribution between guarantor and nonguarantor entities | 284 | ||||
Noncash capital contribution between parent and guarantor entities | 123 | ||||
Huntsman International | |||||
Condensed consolidating statements of cash flows | |||||
Net cash provided by operating activities | 87 | 35 | |||
Investing Activities: | |||||
Capital expenditures | (99) | (149) | |||
Cash received from unconsolidated affiliates | 10 | 15 | |||
Investment in unconsolidated affiliates | (12) | (13) | |||
Increase in receivable from affiliate | (2) | (6) | |||
Cash received from termination of cross-currency interest rate contracts | 66 | ||||
Change in restricted cash | 2 | ||||
Other, net | (1) | ||||
Net cash used in investing activities | (102) | (87) | |||
Financing activities: | |||||
Net borrowings under revolving loan facilities | 45 | ||||
Net repayments on overdraft facilities | (2) | ||||
Repayments of short-term debt | (12) | (17) | |||
Borrowings on short-term debt | 4 | ||||
Repayments of long-term debt | (27) | (59) | |||
Proceeds from issuance of long-term debt | 326 | ||||
Repayments of notes payable to affiliate | (50) | ||||
Repayments of notes payable | (9) | (9) | |||
Borrowings on notes payable | 2 | ||||
Debt issuance costs paid | (4) | ||||
Call premiums related to early extinguishment of debt | (3) | ||||
Contingent consideration paid for acquisition | (4) | ||||
Dividends paid to noncontrolling interests | (9) | ||||
Dividends paid to parent | (30) | (31) | |||
Excess tax benefit related to stock-based compensation | 1 | ||||
Other, net | (2) | ||||
Net cash (used in) provided by financing activities | (36) | 146 | |||
Effect of exchange rate changes on cash | 2 | (8) | |||
(Decrease) increase in cash and cash equivalents | (49) | 86 | |||
Cash and cash equivalents at beginning of period | 257 | [1] | 710 | ||
Cash and cash equivalents at end of period | 208 | [1] | 796 | ||
Reportable legal entities | Huntsman International | Parent Company | |||||
Condensed consolidating statements of cash flows | |||||
Net cash provided by operating activities | 55 | (410) | |||
Investing Activities: | |||||
Capital expenditures | (6) | (22) | |||
Investment in affiliate | (7) | (20) | |||
Increase in receivable from affiliate | (2) | (6) | |||
Cash received from termination of cross-currency interest rate contracts | 66 | ||||
Net cash used in investing activities | (15) | 18 | |||
Financing activities: | |||||
Repayments of long-term debt | (16) | (54) | |||
Proceeds from issuance of long-term debt | 326 | ||||
Repayments of notes payable to affiliate | (50) | ||||
Repayments of notes payable | (9) | (9) | |||
Borrowings on notes payable | 2 | ||||
Debt issuance costs paid | (4) | ||||
Call premiums related to early extinguishment of debt | (3) | ||||
Contingent consideration paid for acquisition | (4) | ||||
Dividends paid to parent | (30) | (31) | |||
Excess tax benefit related to stock-based compensation | 1 | ||||
Net cash (used in) provided by financing activities | (53) | 172 | |||
(Decrease) increase in cash and cash equivalents | (13) | (220) | |||
Cash and cash equivalents at beginning of period | 44 | 353 | |||
Cash and cash equivalents at end of period | 31 | 133 | |||
Reportable legal entities | Huntsman International | Guarantors | |||||
Condensed consolidating statements of cash flows | |||||
Net cash provided by operating activities | 34 | 42 | |||
Investing Activities: | |||||
Capital expenditures | (31) | (53) | |||
Cash received from unconsolidated affiliates | 10 | 15 | |||
Investment in affiliate | 2 | (1) | |||
Investment in unconsolidated affiliates | (11) | (4) | |||
Net cash used in investing activities | (30) | (43) | |||
Financing activities: | |||||
Contribution from parent | 2 | 2 | |||
Distribution to parent | (7) | (7) | |||
Net cash (used in) provided by financing activities | (5) | (5) | |||
(Decrease) increase in cash and cash equivalents | (1) | (6) | |||
Cash and cash equivalents at beginning of period | 1 | 6 | |||
Reportable legal entities | Huntsman International | Nonguarantors | |||||
Condensed consolidating statements of cash flows | |||||
Net cash provided by operating activities | (3) | 403 | |||
Investing Activities: | |||||
Capital expenditures | (62) | (74) | |||
Investment in unconsolidated affiliates | (1) | (9) | |||
Change in restricted cash | 2 | ||||
Other, net | (1) | ||||
Net cash used in investing activities | (62) | (83) | |||
Financing activities: | |||||
Net borrowings under revolving loan facilities | 45 | ||||
Net repayments on overdraft facilities | (2) | ||||
Repayments of short-term debt | (12) | (17) | |||
Borrowings on short-term debt | 4 | ||||
Repayments of long-term debt | (11) | (5) | |||
Proceeds from notes payable to affiliate | 6 | ||||
Dividends paid to noncontrolling interests | (5) | ||||
Contribution from parent | 7 | 28 | |||
Distribution to parent | (6) | (2) | |||
Other, net | (2) | ||||
Net cash (used in) provided by financing activities | 28 | ||||
Effect of exchange rate changes on cash | 2 | (8) | |||
(Decrease) increase in cash and cash equivalents | (35) | 312 | |||
Cash and cash equivalents at beginning of period | 212 | 351 | |||
Cash and cash equivalents at end of period | 177 | 663 | |||
Eliminations | Huntsman International | |||||
Condensed consolidating statements of cash flows | |||||
Net cash provided by operating activities | 1 | ||||
Investing Activities: | |||||
Investment in affiliate | 5 | 21 | |||
Net cash used in investing activities | 5 | 21 | |||
Financing activities: | |||||
Proceeds from notes payable to affiliate | (6) | ||||
Dividends paid to noncontrolling interests | (4) | ||||
Contribution from parent | (9) | (30) | |||
Distribution to parent | 13 | 9 | |||
Net cash (used in) provided by financing activities | $ (6) | $ (21) | |||
|