UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10‑K10-K
(Mark One) |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, |
OR |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission | Exact Name of Registrant as Specified in its Charter, | State of | I.R.S. Employer | |||
| Huntsman Corporation | Delaware |
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| Huntsman International LLC | Delaware | 87-0630358 |
87‑0630358
Securities registered pursuant to Section 12(b) of the Exchange Act:
Registrant |
| Title of each class |
| Trading Symbol | Name of each exchange on which registered | |
Huntsman Corporation |
| Common Stock, par value $0.01 per share |
| HUN | New York Stock Exchange | |
Huntsman International LLC |
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| NONE |
Securities registered pursuant to Section 12(g) of the Exchange Act:
Registrant | Title of each class | |
Huntsman |
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Corporation/Huntsman International LLC | None |
None
Indicate by check mark if the registrant is a well‑knownwell-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Huntsman Corporation |
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Huntsman International LLC |
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Huntsman |
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Corporation/Huntsman International LLC |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 |
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Corporation/Huntsman International LLC |
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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‑TS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Huntsman |
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Corporation/Huntsman International LLC |
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to the best of the registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑acceleratednon-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,filer” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b‑212b-2 of the Exchange Act. Huntsman Corporation
Huntsman Corporation | Large accelerated filer ☒ | Accelerated filer ☐ |
| Smaller reporting company ☐ | Emerging Growth Companies ☐ |
Huntsman International LLC | Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company ☐ | Emerging Growth Companies ☐ |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued.
Huntsman Corporation | Yes ☒ |
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Huntsman International LLC | Yes ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
Huntsman |
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Corporation/Huntsman International LLC |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑212b-2 of the Exchange Act).
Huntsman |
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Corporation/Huntsman International LLC |
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On June 30, 2017,2020, the last business day of the registrants’ most recently completed second fiscal quarter, the aggregate market value of voting and non‑votingnon-voting common equity held by non‑affiliatesnon-affiliates was as follows:
Registrant | Common Equity | Market Value Held by Nonaffiliates | ||
Huntsman Corporation | Common Stock | $ | ||
Huntsman International LLC | Units of Membership Interest | NA(2) |
(1) |
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(2) | All units of membership interest are held by Huntsman Corporation, an affiliate. |
(1)Based on the closing price of $25.84 per share of common stock as quoted on the New York Stock Exchange.
(2)All units of membership interest are held by Huntsman Corporation, an affiliate.
On February 8, 2018,1, 2021, the number of shares outstanding of each of the registrant’s classes of common equity were as follows:
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Registrant | Common Equity | Outstanding | |||
Huntsman Corporation | Common Stock |
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Huntsman International LLC | Units of Membership Interest | 2,728 |
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This Annual Report on Form 10‑K10-K 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 Annual Report on Form 10‑K10-K 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 (I)(1)(a) and (b) of Form 10‑K10-K and, to the extent applicable, is therefore filing this form with a reduced disclosure format.
Documents Incorporated by Reference
Part III: Proxy Statement for the 20172021 Annual Meeting of Stockholders to be filed within 120 days of
Huntsman Corporation’s fiscal year ended December 31, 2017.2020.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
20172020 ANNUAL REPORT ON FORM 10‑K10-K
HUNTSMAN CORPORATION AND SUBSIDIARIES HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
This report includes information with respect to market share, industry conditions and forecasts that we obtained from internal industry research, publicly available information (including industry publications and surveys), and surveys and market research provided by consultants. The publicly available information and the reports, forecasts and other research provided by consultants generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, our internal research and forecasts are based upon our management’s understanding of industry conditions, and such information has not been verified by any independent sources. 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; “AAC” refers to Arabian Amines Company, our consolidated manufacturing joint venture with the Zamil Group; “HPS” refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd); and “SLIC” refers to Shanghai Liengheng Isocyanate Investment BV (an unconsolidated manufacturing joint venture with BASF and three Chinese chemical companies). In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products. Many of these terms are defined in the Glossary of Chemical Terms found at the conclusion of “Part I. Item 1. Business” below. Forward-Looking Statements With respect to Huntsman Corporation, certain information set forth in this report contains All There are a number of risks and uncertainties that could cause our actual results to differ materially from the
General We are a global manufacturer of differentiated organic chemical products. Our Company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses, which were founded by Jon M. Huntsman. Mr. Huntsman founded the predecessor to our Company in 1970 as a small polystyrene plastics packaging company. Since then, we have grown through a series of We operate all of our businesses through Huntsman International, our Our principal executive offices are located at 10003 Woodloch Forest Drive, The Woodlands, Texas 77380, and our telephone number at that location is (281)
COVID-19 Update The outbreak of the In response to the impact of COVID-19, we have implemented, and may continue to implement, cost saving initiatives, including:
For more information regarding our 2020 restructuring activities, see “Note 13. Restructuring, Impairment and Plant Closing Costs (Credits)” to our consolidated financial statements. Redemption of the 2021 Senior Notes On January 15, 2021, we redeemed in full €445 million (approximately $541 million) in aggregate principal amount of our 5.125% senior notes due 2021 ("2021 Senior Notes") at the redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the redemption date. In connection with this redemption, we expect to incur an incremental cash tax liability of approximately $15 million in the first quarter of 2021 related to foreign currency exchange gains. Acquisition of Gabriel Performance Products On January 15, 2021, we completed the acquisition of Gabriel Performance Products ("Gabriel"), a North American specialty chemical manufacturer of specialty additives and epoxy curing agents for the coatings, adhesives, sealants and composite end-markets, from funds affiliated with Audax Private Equity in an all-cash transaction of approximately $250 million, subject to customary closing adjustments, funded from available liquidity. The acquired business will be integrated into our Advanced Materials segment. Sale of Assets at our Basel, Switzerland Site In November 2020, we entered into a sale and leaseback agreement to sell certain properties in Basel, Switzerland for approximately CHF 67 million (approximately $73 million) and to lease those properties back for five years. This transaction resulted in a pretax gain of approximately CHF 30 million (approximately $33 million). Sale of India-Based Do-It-Yourself Consumer Adhesives Business On November 3, 2020, we completed the sale of the India-based do-it-yourself consumer adhesives ("DIY") business, previously part of our Advanced Materials segment, to Pidilite Industries Ltd. and received cash of approximately $257 million. Under the terms of the agreement, we may receive up to approximately $28 million of additional cash under an earnout within 18 months if the business achieves certain sales revenue targets in line with the DIY business' 2019 performance. In Sale of Venator Interest On December 23, 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator Materials PLC (“Venator”) Concurrently with the
In connection with the
Other Significant Developments During 2020 Other significant developments that occurred during 2020 were as follows:
2
We are a global manufacturer of differentiated organic 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, We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. In August 2017, we separated our Our Products All four of
3 The following table identifies the key products, principal end markets and applications, representative customers, raw materials and representative competitors of each of our business segments:
4
Polyurethanes General We are a leading global manufacturer and marketer of a broad range of polyurethane chemicals, including MDI products, Our customers produce polyurethane products through the combination of an isocyanate, such as MDI, with polyols, which are derived largely from PO and EO. We are able to produce over We
In May 2020, we rebranded our leading spray polyurethane foam (“SPF”) business as Huntsman Building Solutions (“HBS”). HBS was formed through our acquisitions of Icynene-Lapolla in 2020 and Demilec in 2018. Our SPF products offer significant environmental benefits, as our proprietary manufacturing process transforms low quality PET plastic bottles into highly effective energy-saving polyurethane insulation. HBS offers attractive growth potential as the business turns our lower margin polymeric MDI, the other key ingredient in SPF formulations, into higher margin specialized SPF products.
Products and Markets MDI is used primarily in rigid foam applications and in a wide variety of customized, Polyurethane chemicals are sold to customers who combine the chemicals to produce polyurethane products. Depending on their needs, customers will use either component polyurethane chemicals produced for mass sales or polyurethane systems tailored for their specific requirements. By varying the blend, additives and specifications of the polyurethane chemicals, manufacturers are able to develop and produce a breadth and variety of polyurethane products. Our strategy is focused on growing our differentiated product offering (specialty MDI and polyols, formulated MDI systems and TPU), which requires a greater emphasis on formulating capability to MDI. MDI has grown substantially over the past three decades, increasing by a factor of 6% TPU. TPU is a
industries. It is also extruded into films for apparel, wires and cables for industrial use and in a wide variety of applications in the coatings, adhesives, sealants and elastomers markets. Polyols. Polyols are combined with MDI and other isocyanates to create a broad spectrum of formulated polyurethane systems. Demand for specialty polyols has been growing at approximately the same rate at which MDI consumption has grown. Aniline. Aniline is an intermediate chemical used primarily to manufacture MDI. The majority of our aniline is consumed internally with some sold to third parties. We believe that the lack of a significant spot market for aniline means that in order to remain competitive, MDI manufacturers must either be integrated with an aniline manufacturing facility or have a
Sales and Marketing We market our polyurethane chemicals to over We provide a wide variety of polyurethane solutions as components (i.e., the isocyanate or the polyol) or in the form of “systems” in which we provide the total isocyanate and polyol formulation to our customers. Our ability to deliver a range of polyurethane solutions and technical support, which can be tailored Our strategy is to grow the number We believe that the extensive market knowledge and industry experience of our sales teams and technical experts, in combination with our strong emphasis on customer relationships, have facilitated our ability to establish and maintain
Manufacturing and Operations Our
(1) Represents our share of capacity from SLIC. (2) Represents our
At our Geismar, Rotterdam and Caojing facilities we utilize sophisticated proprietary technology to produce MDI. This technology contributes to our position as a Joint Ventures Rubicon Joint Venture. Lanxess AG (“Lanxess”) Chinese MDI Joint Ventures. We are involved in two related joint ventures which operate MDI production facilities in Caojing, China. SLIC, our manufacturing joint venture with BASF and three Chinese chemical companies, produces MNB, aniline and crude MDI. We effectively own 35% of SLIC and account for our investment under the equity method. HPS, our splitting joint venture with Shanghai
financial statements. These projects have been funded by a combination of equity invested by the joint venture partners and borrowed funds. We completed capacity expansions of these facilities in the first quarter of 2018. The total production capacity of the SLIC facilities is
Chinese PO/MTBE Joint Venture. In November 2012, we entered into an agreement to form a joint venture with Sinopec. The joint venture Raw Materials The primary raw materials for
In connection with the sale of the Chemical Intermediates Businesses to Indorama, we entered into a strategic agreement for the supply of PO in North America. In China, the Competition Our major competitors in the polyurethane chemicals market include BASF, Covestro,
Performance Products General Our Performance Products segment has leading global positions in the manufacture and sale of amines We produce a wide range of amines, many of which are sold into specialty markets such as epoxy curing agents, oil exploration and production, agrochemicals, and fuel and lubricant additives. We believe we are the largest global producer of polyetheramines, one of the largest producers of We believe we are the largest global producer of maleic anhydride, a highly versatile chemical intermediate that is used to produce UPRs, which are mainly used in the production of fiberglass reinforced resins for marine, automotive and construction products. Maleic anhydride is also used in the production of lubricants, food additives and artificial sweeteners. We are also the leading licensor of maleic anhydride manufacturing
Products and Markets Amines. Amines are a family of intermediate chemicals that are produced by reacting ammonia, or an alkylamine, with various ethylene and propylene derivatives. Generally, amines are valued for their properties as a reactive agent, emulsifier, dispersant, solvent or corrosion inhibitor. Growth in demand for amines is highly correlated with GDP growth. However, certain segments of the amines market, such as polyetheramines, have historically grown at rates in excess of GDP growth due to new product development, technical innovation and
generally fluctuate directly with movements in underlying raw materials. Our amines business is organized around the following product groups:
Polyetheramines are produced by reacting polyol with ammonia. They provide sophisticated performance characteristics as an additive in the manufacture of highly customized epoxy formulations, enabling customers to penetrate new markets and substitute for traditional curing materials. Our ethyleneamines are manufactured by reacting EDC and caustic soda with ammonia to produce a range of various ethyleneamines homologues having different molecular weights. Most other producers utilize a reductive amination process, which yields a light slate of ethyleneamines. We believe our heavier slate of homologues allows access to a greater range of markets.
Our amines are used in a wide variety of mainly industrial applications, including composites, paints and coatings, polyurethane foam, fuel and lubricant additives, and solvents. Our key amines customers include Afton, Maleic Anhydride (including
Maleic anhydride is produced by oxidizing either benzene or normal butane through the use of a catalyst. Our maleic anhydride technology is a proprietary fixed bed We license our maleic anhydride technology and Our key maleic anhydride customers include
Sales and Marketing We sell In more specialty products for certain markets (e.g.,
this approach enhances the value of our product offerings and creates opportunities for ongoing differentiation in our development activities with our customers.
We provide extensive Manufacturing and Operations Our Performance Products segment has the capacity to produce
Our amines facilities are located globally. These facilities have a competitive cost base and use modern manufacturing units that allow for flexibility in production capabilities and technical innovation.
A number of our facilities are located within large integrated petrochemical manufacturing complexes. We believe this results in greater scale and lower costs for our products than we would be able to obtain if these facilities were Joint Venture
Raw Materials
Maleic anhydride is produced by the reaction of normal butane with
Competition There are a small number of competitors for many of our amines due to the considerable customization of product formulations, the proprietary nature of many of our product applications and manufacturing processes and the relatively high research and development and technical costs involved. Our global competitors include In our maleic anhydride market, we compete primarily on the basis of price, customer service, technical support and logistics management. Our competitors include Lanxess,
General
Our Advanced Materials segment is a leading global manufacturer and marketer of We operate synthesis, formulating and production facilities in North America, Europe, Asia and South America. We sell to Products and Markets Aerospace. Our Advanced Materials segment is a leading global supplier of advanced, We offer a wide range of materials to the aerospace market under the ARALDITE®, EPIBOND®, EPOCAST®, URALANE® and
Transportation and ARALDITE® is an important brand in high-performance adhesive technologies. We offer formulation expertise in various chemistries, including epoxies, polyurethanes, methacrylates, phenolics and acrylonitrile butadiene based polymer products. Our Electrical Engineering and Electronics. We are a leading global supplier of insulating materials for motors, generators, switchgears, distribution and instrument transformers, and insulators and bushings for utility and industrial applications. The products formulated by our Advanced Materials segment are designed to provide an extended service life and meet specific industry requirements for electrical insulation in indoor and outdoor environments. In the field of electronics, our Advanced Materials segment has a long history delivering a wide range of solutions meeting stringent requirements for electronics applications, such as high temperature and chemical resistance, The strong global push for e-vehicles opens
Coatings and Construction. We offer
Wind and We also offer basic liquid and solid epoxy resins to the general formulators market. Sales and Marketing We maintain multiple routes to market to service our diverse and fragmented customer base throughout the world. These routes to market range from using our own direct sales force,
significant amount of product. We use We conduct sales activities through dedicated regional sales teams in
Manufacturing and Operations We are a global business serving customers in three principal geographic regions:
Advanced Materials:
Textile Effects:
In
Higher Insurance Costs in 2021 During 2020, we saw a deterioration in insurance markets in which we participate, particularly for property and excess/umbrella liability insurance. Rates increased significantly for these coverages, terms and conditions were restricted and some insurers either reduced their available capital or stopped underwriting accounts in the chemical sector. As a result, our annual insurance expense will increase from $32 million in 2020 to $52 million in 2021. We customarily prepay our insurance expense and, accordingly, we prepaid our 2021 insurance expense in December 2020. This prepaid expense will be recognized ratably in our statements of operations in 2021. Refer to “Item 1A. Risk Factors” for a discussion of the factors that may impact our business, results of operations, financial condition or liquidity and “Forward-Looking Statements” for a discussion of our use of forward-looking statements. R For each of our Company and Huntsman International, the following tables set forth our consolidated results of operations for the years ended December 31, Huntsman Corporation
31 Huntsman International
32 Huntsman Corporation
NM—Not meaningful
33 Non-GAAP Financial Measures Our consolidated financial statements are prepared in accordance with U.S. GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related U.S. GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain expenses that we do not believe are indicative of our core operating results. Adjusted EBITDA Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) merger costs; (c) EBITDA from discontinued operations; (d) noncontrolling interest of discontinued operations; (e) fair value adjustments to Venator investment and related loss on disposal; (f) loss on early extinguishment of debt; (g) certain legal and other settlements and related expenses; (h) (gain) loss on sale of businesses/assets; (i) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (j) certain nonrecurring information technology project implementation costs; (k) amortization of pension and postretirement actuarial losses; (l) plant incident remediation costs; and (m) restructuring, impairment and plant closing and transition costs (credits). We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman
International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income Adjusted net income is computed by eliminating the after tax amounts related to the We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may Free Cash Flow We believe free cash flow is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan stock buyback and dividend levels and (d) evaluate our ability to incur and service debt. We have historically defined free cash flow as cash flows provided by operating activities and used in Adjusted Effective Tax Rate We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the
Year Ended December 31, As discussed in “Note
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| ● | Our operating expenses and the operating expenses of Huntsman International for the year ended December 31, |
| ● | Restructuring, impairment and plant closing costs (credits) for the year ended December 31, |
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| Our interest expense, net and the interest expense, net of Huntsman International for the year ended December 31, |
● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2020 decreased to $42 million from $54 million in the 2019 period. The decrease was primarily attributable to a decrease in income at our |
● | We recorded a loss of $88 million in fair value adjustments to our investment in Venator and |
| ● | Loss on early extinguishment of debt for the year ended December 31, |
| ● | Our income tax expense for the year ended December 31, |
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Segment Analysis
Year Ended December 31,2020 Compared with Year Ended December 31, 2017 Compared to Year Ended December 31, 20162019
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| Percent |
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| Change |
| Year ended December 31, |
| Favorable | ||||
| 2017 |
| 2016 |
| (Unfavorable) | ||
Revenues |
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Polyurethanes | $ | 4,399 |
| $ | 3,667 |
| 20% |
Performance Products |
| 2,109 |
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| 2,126 |
| (1)% |
Advanced Materials |
| 1,040 |
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| 1,020 |
| 2% |
Textile Effects |
| 776 |
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| 751 |
| 3% |
Corporate and eliminations |
| 34 |
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| (46) |
| NM |
Total | $ | 8,358 |
| $ | 7,518 |
| 11% |
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Huntsman Corporation |
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Segment adjusted EBITDA(1) |
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Polyurethanes | $ | 850 |
| $ | 569 |
| 49% |
Performance Products |
| 296 |
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| 316 |
| (6)% |
Advanced Materials |
| 219 |
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| 223 |
| (2)% |
Textile Effects |
| 83 |
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| 73 |
| 14% |
Corporate and other |
| (189) |
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| (184) |
| (3)% |
Total | $ | 1,259 |
| $ | 997 |
| 26% |
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Huntsman International |
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Segment adjusted EBITDA(1) |
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Polyurethanes | $ | 850 |
| $ | 569 |
| 49% |
Performance Products |
| 296 |
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| 316 |
| (6)% |
Advanced Materials |
| 219 |
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| 223 |
| (2)% |
Textile Effects |
| 83 |
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| 73 |
| 14% |
Corporate and other |
| (185) |
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| (180) |
| (3)% |
Total | $ | 1,263 |
| $ | 1,001 |
| 26% |
Percent | ||||||||||||
Change | ||||||||||||
Year ended December 31, | Favorable | |||||||||||
(Dollars in millions) | 2020 | 2019 | (Unfavorable) | |||||||||
Revenues | ||||||||||||
Polyurethanes | $ | 3,584 | $ | 3,911 | (8 | )% | ||||||
Performance Products | 1,023 | 1,158 | (12 | )% | ||||||||
Advanced Materials | 839 | 1,044 | (20 | )% | ||||||||
Textile Effects | 597 | 763 | (22 | )% | ||||||||
Corporate and eliminations | (25 | ) | (79 | ) | NM | |||||||
Total | $ | 6,018 | $ | 6,797 | (11 | )% | ||||||
Huntsman Corporation | ||||||||||||
Segment adjusted EBITDA(1) | ||||||||||||
Polyurethanes | $ | 472 | $ | 548 | (14 | )% | ||||||
Performance Products | 164 | 168 | (2 | )% | ||||||||
Advanced Materials | 130 | 201 | (35 | )% | ||||||||
Textile Effects | 42 | 84 | (50 | )% | ||||||||
Corporate and other | (161 | ) | (155 | ) | (4 | )% | ||||||
Total | $ | 647 | $ | 846 | (24 | )% | ||||||
Huntsman International | ||||||||||||
Segment adjusted EBITDA(1) | ||||||||||||
Polyurethanes | $ | 472 | $ | 548 | (14 | )% | ||||||
Performance Products | 164 | 168 | (2 | )% | ||||||||
Advanced Materials | 130 | 201 | (35 | )% | ||||||||
Textile Effects | 42 | 84 | (50 | )% | ||||||||
Corporate and other | (155 | ) | (150 | ) | (3 | )% | ||||||
Total | $ | 653 | $ | 851 | (23 | )% |
NM—Not meaningful | |
(1) | |
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Year ended December 31, 2020 vs 2019 | ||||||||||||||||
Average Selling Prices(1) | ||||||||||||||||
Local | Foreign Currency | Mix & | Sales | |||||||||||||
Currency | Translation Impact | Other | Volumes(2) | |||||||||||||
Period-Over-Period (Decrease) Increase | ||||||||||||||||
Polyurethanes | (3 | )% | — | — | (5 | )% | ||||||||||
Performance Products | (4 | )% | — | 3 | % | (11 | )% | |||||||||
Advanced Materials | 2 | % | (1 | )% | (2 | )% | (19 | )% | ||||||||
Textile Effects | (3 | )% | (1 | )% | (2 | )% | (16 | )% |
Fourth Quarter 2020 vs Third Quarter 2020 | ||||||||||||||||
Average Selling Prices(1) | ||||||||||||||||
Local | Foreign Currency | Mix & | Sales | |||||||||||||
Currency | Translation Impact | Other | Volumes(2) | |||||||||||||
Period-Over-Period (Decrease) Increase | ||||||||||||||||
Polyurethanes | 10 | % | 2 | % | 1 | % | (3 | )% | ||||||||
Performance Products | 2 | % | 1 | % | (8 | )% | 16 | % | ||||||||
Advanced Materials | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||
Textile Effects | 1 | % | 1 | % | — | 20 | % |
(1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
(2) | Excludes sales volumes of byproducts and raw materials. |
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, 2017 vs 2016 | ||||||
|
| Average Selling Price(1) |
|
|
|
| ||
|
| Local |
| Foreign Currency |
| Mix & |
| Sales |
|
| Currency |
| Translation Impact |
| Other |
| Volumes(2) |
Period-Over-Period Increase (Decrease) |
|
|
|
|
|
|
|
|
Polyurethanes |
| 18% |
| 1% |
| 3% |
| (2)% |
Performance Products |
| 7% |
| — |
| 3% |
| (11)% |
Advanced Materials |
| 1% |
| 1% |
| — |
| — |
Textile Effects |
| (2)% |
| — |
| (2)% |
| 7% |
Total Company |
| 12% |
| — |
| 4% |
| (5)% |
|
|
|
|
|
|
|
|
|
|
|
|
53
|
| Fourth Quarter 2017 vs Third Quarter 2017 | ||||||
|
| Average Selling Price(1) |
|
|
|
| ||
|
| Local |
| Foreign Currency |
| Mix & |
| Sales |
|
| Currency |
| Translation Impact |
| Other |
| Volumes(2) |
Period-Over-Period Increase (Decrease) |
|
|
|
|
|
|
|
|
Polyurethanes |
| 5% |
| — |
| 1% |
| (3)% |
Performance Products |
| — |
| — |
| 3% |
| — |
Advanced Materials |
| 2% |
| — |
| (1)% |
| (3)% |
Textile Effects |
| — |
| — |
| — |
| (2)% |
Total Company |
| 3% |
| — |
| 2% |
| (3)% |
|
|
|
|
Polyurethanes
The increasedecrease in revenues in our Polyurethanes segment for 20172020 compared to 20162019 was primarily due to higherlower MDI average selling prices partially offset byand lower MTBEoverall polyurethanes sales volumes. MDI average selling prices increaseddecreased across most major markets in responserelation to higher raw material costs and continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDIthe global economic slowdown resulting from the COVID-19 pandemic. Overall polyurethanes sales volumes increased duedecreased primarily in relation to increasedthe global economic slowdown and the resulting decrease in demand across most major markets. MTBEmarkets, partially offset by additional sales volumes decreased due toin connection with the impact of maintenance and hurricane related production outages during the second and third quarters of 2017.Icynene-Lapolla Acquisition. The increasedecrease in segment adjusted EBITDA was primarily due to higherlower component and polymeric systems margins largely driven by lower MDI margins,pricing and lower polyurethanes sales volumes, partially offset by lower MTBE margins.raw material costs and lower fixed costs.
Performance Products
The decrease in revenues in our Performance Products segment for 20172020 compared to 20162019 was due to lower sales volumes principally because of the sale of the European surfactants business to Innospec Inc. on December 30, 2016, partially offset by higher sales volumes in our remaining businesses as well as higherand lower average selling prices. Sales volumes decreased primarily in relation to the global economic slowdown resulting from the COVID-19 pandemic. Average selling prices increaseddecreased primarily in responserelated to higherlower raw material costs and favorable product mix effect partially from the sale of the European surfactants business.costs. The decrease in segment adjusted EBITDA was primarily due to the sale of the European surfactants business to Innospec Inc. in 2016 and weather related outageslower sales volumes, mostly offset by higher sales volumes in our remaining businesses and lower fixed costs.
Advanced Materials
The increasedecrease in revenues in our Advanced Materials segment for 20172020 compared to 20162019 was primarily due to lower sales volumes, slightly offset by higher average selling prices. Sales volumes decreased significantly across all markets, except in our global power market, primarily in relation to the global economic slowdown resulting from the COVID-19 pandemic, partially offset by additional sales volumes related to the CVC Thermoset Specialties Acquisition. Average selling prices increased in response to higher raw material costs. Sales volumes remained relatively unchanged as growth in our higher value specialty markets wascost increases, partially offset by reduced volumes as we withdrew from certain low margin businesses.the impact of a stronger U.S. dollar against major international currencies. The decrease in segment adjusted EBITDA was primarily due to lower margins resulting from higher raw material costs and highersales volumes, partially offset by lower fixed costs.
Textile Effects
The increasedecrease in revenues in our Textile Effects segment for 20172020 compared to 20162019 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased in both textile chemicalsprices and dyes, particularly in our Asia region.lower sales volumes. Average selling prices decreased as a result of product mix change, competitive market pressures and the impact of a stronger U.S. dollar against major international currencies. Sales volumes decreased primarily due to competitive market conditions.significantly weaker demand in relation to the global economic slowdown resulting from the COVID-19 pandemic. The increasedecrease in segment adjusted EBITDA was primarily due to higherlower sales volumesrevenues and lower selling, generalcapitalization of indirect costs because of reduced production, partially offset by lower raw material costs and administrativelower fixed costs.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign currency 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 2017,2020, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $5$6 million to a loss of $189$161 million from a loss of $184$155 million for 2016.2019. For 2017,2020, adjusted EBITDA from Corporate and other for Huntsman International decreased by $5 million to a loss of $185$155 million from a loss of $180$150 million for 2016.2019. The decrease in adjusted EBITDA from Corporate and other resulted primarily from an increase
54
in unallocated corporate overhead anda charge from a LIFO inventory reserve adjustment, partially offset by an increase in losses from benzene sales, partially offset by a decrease in LIFO inventory valuation expense.unallocated foreign currency exchange gains.
Year Ended December 31, 20162019 Compared with Year Ended December 31, 20152018
As discussed in “Note 3. Discontinued Operations and Business Dispositions—Separation
For a comparison of P&A Business” to our consolidated financial statements, the results from continuingof operations for all periods presented exclude the resultsfiscal years ended December 31, 2019 and 2018, see "Part II. Item 7. Management’s Discussion and Analysis of the former P&A BusinessFinancial Condition and the resultsResults of Operations" of our former polymers, base chemicals and Australian styrenics business. The increase of $233 million in net income attributable to Huntsman Corporation andAnnual Report on Form 10-K for the increase of $229 million in net income attributable to Huntsman International was the result of the following items:
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|
55
Segment Analysis
Year Ended December 31, 2016 Compared to Year Ended December 31, 20152019 filed with the SEC on February 13, 2020.
|
|
|
|
|
|
|
|
|
|
| Percent | ||||
|
|
| Change | ||||
| Year ended December 31, |
| Favorable | ||||
| 2016 |
| 2015 |
| (Unfavorable) | ||
Revenues |
|
|
|
|
|
|
|
Polyurethanes | $ | 3,667 |
| $ | 3,811 |
| (4)% |
Performance Products |
| 2,126 |
|
| 2,501 |
| (15)% |
Advanced Materials |
| 1,020 |
|
| 1,103 |
| (8)% |
Textile Effects |
| 751 |
|
| 804 |
| (7)% |
Corporate and eliminations |
| (46) |
|
| (80) |
| NM |
Total | $ | 7,518 |
| $ | 8,139 |
| (8)% |
|
|
|
|
|
|
|
|
Huntsman Corporation |
|
|
|
|
|
|
|
Segment adjusted EBITDA(1) |
|
|
|
|
|
|
|
Polyurethanes | $ | 569 |
| $ | 573 |
| (1)% |
Performance Products |
| 316 |
|
| 460 |
| (31)% |
Advanced Materials |
| 223 |
|
| 220 |
| 1% |
Textile Effects |
| 73 |
|
| 63 |
| 16% |
Corporate and other |
| (184) |
|
| (156) |
| (18)% |
Total | $ | 997 |
| $ | 1,160 |
| (14)% |
|
|
|
|
|
|
|
|
Huntsman International |
|
|
|
|
|
|
|
Segment adjusted EBITDA(1) |
|
|
|
|
|
|
|
Polyurethanes | $ | 569 |
| $ | 573 |
| (1)% |
Performance Products |
| 316 |
|
| 460 |
| (31)% |
Advanced Materials |
| 223 |
|
| 220 |
| 1% |
Textile Effects |
| 73 |
|
| 63 |
| 16% |
Corporate and other |
| (180) |
|
| (151) |
| (19)% |
Total | $ | 1,001 |
| $ | 1,165 |
| (14)% |
NM—Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, 2016 vs 2015 | ||||||
|
| Average Selling Price(1) |
|
|
|
| ||
|
| Local |
| Foreign Currency |
| Mix & |
| Sales |
|
| Currency |
| Translation Impact |
| Other |
| Volumes(2) |
Period-Over-Period Increase (Decrease) |
|
|
|
|
|
|
|
|
Polyurethanes |
| (9)% |
| (1)% |
| (5)% |
| 11% |
Performance Products |
| (8)% |
| (1)% |
| (4)% |
| (2)% |
Advanced Materials |
| (2)% |
| (2)% |
| 3% |
| (7)% |
Textile Effects |
| (6)% |
| (3)% |
| (1)% |
| 3% |
Total Company |
| (7)% |
| (1)% |
| (3)% |
| 5% |
|
|
|
|
Polyurethanes
The decrease in revenues in our Polyurethanes segment for 2016 compared to 2015 was primarily due to lower average selling prices, partially offset by higher sales volumes. MDI average selling prices decreased in response to lower raw material costs. MTBE average selling prices decreased primarily as a result of lower pricing for high octane
56
gasoline. MDI sales volumes increased due to higher demand in the AmericasLiquidity and European regions. PO/MTBE sales volumes increased primarily due to the impact of the prior year planned maintenance outage. The decrease in segment adjusted EBITDA was primarily due to lower MTBE margins, partially offset by higher MDI margins and sales volumes and the prior year planned PO/MTBE maintenance outage of approximately $90 million. Capital Resources
Performance Products
The decrease in revenues in our Performance Products segment for 2016 compared to 2015 was primarily due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily in response to lower raw material costs and competitive market conditions. Sales volumes decreased primarily due to competitive market conditions, softer demand in China and oilfield applications as well as the impact of weather related and other production outages. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes, lower margins in our amines, maleic anhydride and upstream intermediates businesses as well as the impact of weather related and other production outages estimated at approximately $15 million.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2016 compared to 2015 was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily in the Americas region, due to competitive pressure and soft demand. Average selling prices decreased in our Asia Pacific and European regions primarily due to price concessions in our electrical, electronic and wind markets and the foreign currency exchange impact of a stronger U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to lower fixed costs, partially offset by lower margins as savings from lower raw material costs were offset by lower sales volumes and lower selling prices.
Textile Effects
The decrease in revenues in our Textile Effects segment for 2016 compared to 2015 was due to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased primarily due to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against major international currencies. Sales volumes increased in key target countries, mainly in South Asia. The increase in segment adjusted EBITDA was primarily due to higher margins from lower raw material costs and lower selling, general and administrative costs.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense, benzene sales and gains and losses on the disposition of corporate assets. For 2016, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $28 million to a loss of $184 million from a loss of $156 million for the same period in 2015. For 2016, adjusted EBITDA from Corporate and other for Huntsman International decreased by $29 million to a loss of $180 million from a loss of $151 million for the same period in 2015. The decrease in adjusted EBITDA from Corporate and other resulted primarily from an increase in LIFO inventory valuation expense, partially offset by an increase in gains from benzene sales.
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instruction I of Form 10‑K.10-K.
Cash Flows forFor Year Ended December 31, 20172020 Compared to thewith Year Ended December 31, 20162019
Net cash provided by operating activities from continuing operations for 20172020 and 20162019 was $842$277 million and $974$656 million, respectively. The decrease in net cash provided by operating activities from continuing operations during 20172020 compared with 20162019 was primarily attributable to an unfavorable variance of $424 million in operating assets and liabilities in 2017, offset in part by increaseddecreased operating income as described in “—Results of Operations” above.above, including $257 million of cash paid for taxes in connection with the sale of the Chemical Intermediates Businesses and the sale of the India-based DIY business, partially offset by a $338 million unfavorable variance in operating assets and liabilities for 2020 as compared with 2019.
Net cash used inprovided by (used in) investing activities from continuing operations for 20172020 and 20162019 was $265$1,462 million and $119$(201) million, respectively. During 20172020 and 2016,2019, we paid $282$249 million and $318$274 million, respectively, for capital expenditures. We paid $14expenditures, including $54 million and nil for the acquisition of$13 million during 2020 and 2019, respectively, on a business during the year ended December 31, 2017 and 2016, respectively. During 2017 and 2016new MDI splitter in Geismar, Louisiana. In January 2020, we received proceeds from the sale of businesses and assets of $25 million
57
and $199 million, respectively, including proceeds of $199 million fromapproximately $1.92 billion for the sale of our European surfactants business during 2016. For further information, see “Note 3.Chemical Intermediates Businesses. Additionally, in November 2020, we received approximately $257 million for the sale of the India-based DIY business. See "Note 4. Discontinued Operations and Business Dispositions—Sale of European Surfactants Manufacturing Facilities”Chemical Intermediates Businesses" and "Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business" to our consolidated financial statements. In December 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator and received approximately $99 million. See "Note 4. Discontinued operations and Business Dispositions—Separation and Deconsolidation of Venator" to our consolidated financial statements. During 2020, we paid approximately $650 million for the acquisition of businesses, net of cash acquired. See "Note 3. Business Combinations and Acquisitions" to our consolidated financial statements. During the year ended December 31, 20172020, we entered into a sale and 2016,leaseback agreement to sell certain properties in Basel, Switzerland, for which we received $7approximately $73 million and nil, respectively,in proceeds from the terminationsale of cross-currency interest rate contracts.assets. During the year ended December 31, 2019, we received approximately $49 million in proceeds from the sale of assets in connection with the closure of certain Textile Effects facilities and offices in Basel, Switzerland. During 2019, we received $16 million in proceeds from the settlement of the December 3, 2018 sale of Venator ordinary shares to Bank of America N.A.
Net cash used in financing activities for 20172020 and 20162019 was $519$655 million and $723 million, respectively. The decrease in net cash used in financing activities was primarily due to proceeds from the IPO and secondary offering of our former P&A Business, offset in part by an increase in net repayments of our revolving loan facility and net repayments of long‑term debt during 2017 as compared with 2016.
Free cash flow from continuing operations for 2017 and 2016 were cash proceeds of $594 million and $656 million, respectively. The decrease in free cash flow was attributable to the changes in cash flows from operating and investing activities, excluding merger and acquisition activities.
Cash Flows for Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015
Net cash provided by operating activities from continuing operations for 2016 and 2015 was $974 million and $614 million, respectively. The increase in net cash provided by operating activities during 2016 compared with 2015 was primarily attributable to higher net income for 2015 as described in “—Results of Operations” above and a $522 million favorable variance in operating assets and liabilities for 2016 as compared with 2015.
Net cash used in investing activities from continuing operations for 2016 and 2015 was $119 million and $404 million, respectively. During 2016 and 2015, we paid $318 million and $461 million, respectively, for capital expenditures. During 2016 and 2015 we received proceeds from the sale of businesses and assets of $199 million and $1 million, respectively, including proceeds of $199 million from the sale of our European surfactants business during 2016. For further information, see “Note 3. Discontinued Operations and Business Dispositions—Sale of European Surfactants Manufacturing Facilities” to our consolidated financial statements. During 2016 and 2015, we made investments in our BASF Huntsman Shanghai Isocyanate Investment B.V. joint venture of nil and $12 million, respectively. During 2016 and 2015, we received nil and $66 million, respectively, from the termination of cross‑currency interest rate contracts.
Net cash used in financing activities for 2016 and 2015 was $723 million and $562$450 million, respectively. The increase in net cash used in financing activities was primarily due to anthe increase in repayments on our Revolving Credit Facility during 2020 as compared with 2019, the repayment in full of long‑our 364-day term debt, partially offset by an increaseloan facility ("2019 Term Loan") in the third quarter of 2020 and the proceeds from the issuance of long‑term debtour 2029 Senior Notes in the first quarter of 2019, partially offset by a decrease in repurchases of common stock during the 2016 period2020 as compared to the 2015 period. On April 1, 2016, we entered into our 2016 term loan B facility due 2023 (“2016 Term Loan B”)with 2019 and cash paid in an aggregate principal amount of $550 million. Additionally, on April 1, 2016, we used the net proceeds of the 2016 Term Loan B to repay in full our extended term loan B due 2017, extended term loan B—series 2 due 2017 and our Term Loan C. On both July 22, 2016 and September 30, 2016, we prepaid $100 million of our 2015 Extended Term Loan B. On December 30, 2016, we made an early repayment of $260 million on our 2015 Extended Term Loan B using proceeds from the sale of our European surfactants business and existing cash. On March 31, 2015, we issued €300 million (approximately $326 million) aggregate principal amount of our 4.25% senior notes due April 1, 2025 (“2025 Senior Notes”). On April 17, 2015, we used the net proceeds of this offering to redeem $289 million ($294 million carrying value) of our 2021 Senior Subordinated Notes and redeemed the remaining $195 million ($198 million carrying value) of our 2021 Senior Subordinated Notes during the third quarter of 2015. During 2015,2019 to acquire the 50% noncontrolling interest that we repurchased $100 million of our common stock.did not own in the Sasol-Huntsman joint venture.
Free cash flow from continuing operations for 20162020 and 20152019 were cash proceeds of $656cash of $28 million and $205$382 million, respectively. The increasereduction in free cash flow was primarily attributable to the changesdecrease in cash flowsprovided by operating activities from operating and investing activities, excluding merger and acquisition activities.continuing operations, partially offset by a decrease in cash used for capital expenditures during 2020 as compared with 2019.
58
TableCash Flows For Year Ended December 31,2019Compared with Year Ended December 31, 2018
For a comparison of Contentsour cash flows for the fiscal years ended December 31, 2019 and 2018, see "Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on February 13, 2020.
Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, |
| December 31, |
| Increase |
| Percent | |||
|
| 2017 |
| 2016 |
| (Decrease) |
| Change | |||
Cash and cash equivalents |
| $ | 470 |
| $ | 385 |
| $ | 85 |
| 22% |
Restricted cash |
|
| 11 |
|
| 11 |
|
| — |
| — |
Accounts and notes receivable, net |
|
| 1,283 |
|
| 1,183 |
|
| 100 |
| 8% |
Inventories |
|
| 1,073 |
|
| 918 |
|
| 155 |
| 17% |
Prepaid expenses |
|
| 60 |
|
| 49 |
|
| 11 |
| 22% |
Other current assets |
|
| 202 |
|
| 232 |
|
| (30) |
| (13)% |
Current assets held for sale(1) |
|
| 2,880 |
|
| 777 |
|
| 2,103 |
| 271% |
Total current assets |
|
| 5,979 |
|
| 3,555 |
|
| 2,424 |
| 68% |
Accounts payable |
|
| 964 |
|
| 790 |
|
| 174 |
| 22% |
Accrued liabilities |
|
| 569 |
|
| 471 |
|
| 98 |
| 21% |
Current portion of debt |
|
| 40 |
|
| 50 |
|
| (10) |
| (20)% |
Current liabilities held for sale(1) |
|
| 1,692 |
|
| 467 |
|
| 1,225 |
| 262% |
Total current liabilities |
|
| 3,265 |
|
| 1,778 |
|
| 1,487 |
| 84% |
Working capital |
| $ | 2,714 |
| $ | 1,777 |
| $ | 937 |
| 53% |
December 31, | Less | December 31, | Increase | Percent | ||||||||||||||||||||
2020 | Acquisitions(1) | Subtotal | 2019 | (Decrease) | Change | |||||||||||||||||||
Cash and cash equivalents | $ | 1,593 | $ | (7 | ) | $ | 1,586 | $ | 525 | $ | 1,061 | 202 | % | |||||||||||
Accounts and notes receivable, net | 910 | (48 | ) | 862 | 953 | (91 | ) | (10 | )% | |||||||||||||||
Inventories | 848 | (69 | ) | 779 | 914 | (135 | ) | (15 | )% | |||||||||||||||
Other current assets | 217 | (1 | ) | 216 | 155 | 61 | 39 | % | ||||||||||||||||
Current assets held for sale(2) | — | — | — | 1,208 | (1,208 | ) | (100 | )% | ||||||||||||||||
Total current assets | 3,568 | (125 | ) | 3,443 | 3,755 | (312 | ) | (8 | )% | |||||||||||||||
Accounts payable | 876 | (20 | ) | 856 | 822 | 34 | 4 | % | ||||||||||||||||
Accrued liabilities | 458 | (11 | ) | 447 | 420 | 27 | 6 | % | ||||||||||||||||
Current portion of debt | 593 | — | 593 | 212 | 381 | 180 | % | |||||||||||||||||
Current operating lease liabilities | 52 | — | 52 | 42 | 10 | 24 | % | |||||||||||||||||
Current liabilities held for sale(2) | — | — | — | 512 | (512 | ) | (100 | )% | ||||||||||||||||
Total current liabilities | 1,979 | (31 | ) | 1,948 | 2,008 | (60 | ) | (3 | )% | |||||||||||||||
Working capital | $ | 1,589 | $ | (94 | ) | $ | 1,495 | $ | 1,747 | $ | (252 | ) | (14 | )% |
(1) | Represents combined amounts related to the Icynene-Lapolla Acquisition and the CVC Thermoset Specialties Acquisition. For more information, see “Note 3. Business Combinations and Acquisitions” to our consolidated financial statements. |
(2) | Represents amounts related to the sale of our Chemical Intermediates Businesses. The assets and liabilities held for sale |
Our working capital increaseddecreased by $937$252 million as a result of the net impact of the following significant changes:
| ● | The increase in cash and cash equivalents of |
| ● | Accounts and notes receivable |
| ● | Inventories |
● |
|
|
|
|
● | Accounts payable |
● | Current portion of debt increased by $381 million primarily due to the current classification of our 2021 Senior Notes, offset in part by our repayment of the 2019 Term Loan in full at maturity. |
Direct
Direct and Subsidiary Debt Subsidiary Debt
See “Note 13.15. Debt—Direct and Subsidiary Debt” to our consolidated financial statements.
Debt Issuance Costs
See “Note 13.15. Debt—Direct and Subsidiary Debt—Debt Issuance Costs” to our consolidated financial statements.
Senior
Revolving Credit FacilitiesFacility
See “Note 13.15. Debt—Direct and Subsidiary Debt—SeniorRevolving Credit Facilities”Facility” to our consolidated financial statements.
Seventeenth Amendment to
Term Loan Credit AgreementFacility
See “Note 13.15. Debt—Direct and Subsidiary Debt—Seventeenth Amendment toTerm Loan Credit Agreement”Facility” to our consolidated financial statements.
59
A/R Programs
See “Note 13.15. Debt—Direct and Subsidiary Debt—A/R Programs” to our consolidated financial statements.
Notes
See “Note 13.15. Debt—Direct and Subsidiary Debt—Notes” to our consolidated financial statements.
Redemption of Notes and Loss on Early Extinguishment of Debt
See “Note 13. Debt—Direct and Subsidiary Debt—Redemption of Notes and Loss on Early Extinguishment of Debt” to our consolidated financial statements.
Variable Interest Entity Debt
See “Note 13.15. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our consolidated financial statements.
Other Debt
See “Note 13. Debt—Direct and Subsidiary Debt—Other Debt” to our consolidated financial statements.
Note Payable from Huntsman International to Huntsman Corporation
See “Note 13.15. Debt—Direct and Subsidiary Debt—Note Payable from Huntsman International to Huntsman Corporation” to our consolidated financial statements.
Compliance With Covenants
Compliance With Covenants
See “Note 13. Debt—Direct and Subsidiary15. Debt—Compliance with Covenants” to our consolidated financial statements.
Maturities
Maturities
See “Note 13. Debt—Direct and Subsidiary15. Debt—Maturities” to our consolidated financial statements.
Short‑Term and Long‑Term Liquidity
Short-Term Liquidity
We depend upon our cash, SeniorRevolving Credit Facilities,Facility, U.S. accounts receivable securitization program (“U.S. A/R Program”), and European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”) and other debt instruments to provide liquidity for our operations and working capital needs. As of December 31, 2017,2020, we had $1,247$2,952 million of combined cash and unused borrowing capacity, consisting of $481$1,593 million in cash, and restricted cash, $641$1,194 million in availability under our revolving facility (“Revolving Facility”),Credit Facility and $125$165 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:
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● | During 2020, management implemented cost realignment and synergy plans. In connection with |
● | In November 2020, we entered into a sale and leaseback agreement to sell certain properties in Basel, Switzerland for approximately CHF 67 (approximately $73 million) and to lease those properties back for five years. | |||
● | On November 3, 2020, we completed the sale of the India-based DIY business, part of the Advanced Materials segment, to Pidilite Industries Ltd. and received cash of approximately $257 million. Under the terms of the agreement, we may receive up to approximately $28 million of additional cash under an earnout within 18 months if the business achieves certain sales revenue targets in line with the DIY business' 2019 performance. | |||
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● | On January 15, 2021, we redeemed in full €445 million (approximately $541 million) in aggregate principal amount of | ||
● | On January 15, 2021, we completed the acquisition of Gabriel, a North American specialty chemical manufacturer of specialty additives and epoxy curing agents for the coatings, adhesives, sealants and composite end-markets, from |
With available free cash flow, the net proceeds from the sale of our investment in the P&A business and cash from the repayment of related intercompany indebtedness as described above, we repaid $2.1 billion of debt during the full year 2017 and believe we achieved investment grade-type leverage metrics at year end. See “Note 13. Debt—Direct and Subsidiary Debt —Senior Credit Facilities” to our consolidated financial statements. We seek to achieve investment grade ratings on our debt from the rating agencies, although we cannot provide any assurances of such status.
Long-Term Liquidity
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As of December 31, 2017,2020, we had $40$593 million classified as current portion of debt, including $545 million on our 2021 Senior Notes, which we redeemed in full on January 15, 2021, debt at our variable interest entities of $21$47 million and certain other short‑termshort-term facilities and scheduled amortization payments totaling $19$1 million. Although we cannot provide assurances, weWe intend to renew, repay or extend the majority of these short‑termshort-term facilities in the next twelve months.
As of December 31, 2017,2020, we had approximately $402$491 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. Additionally,With the exception of certain amounts that we have intercompany debt obligations owedexpect to us by our non‑U.S. subsidiaries. Werepatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends or as repayments of intercompany debt, and the repatriation of cash as a dividend or repayment of intercompany debt would generally not be subject to U.S. taxation as a result of the U.S. Tax Reform Act, buttaxation. However, such repatriation may potentially be subject to limited foreign withholding taxes. Cash held by certain foreign subsidiaries, including our variable interest entities, may be subject to changing monetary policies of governments and legal restrictions, including those arising from the interests of our partners, which could limit the amounts available for repatriation.
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Venator is commissioning a new production facility in Augusta, Georgia for the synthesis of iron oxide pigments, which was purchased from Rockwood. During commissioning, the facility has experienced delays producing products at the expected specifications and quantities, raising questions regarding the capabilities of the Augusta technology. Based on the facility’s performance during the commissioning process, it was concluded that production capacity at Venator’s Augusta facility will be substantially lower than originally anticipated. On February 6, 2017, Huntsman filed a lawsuit against Rockwood, Albemarle Corporation (as Rockwood’s successor) and certain former Rockwood executives to recover damage for fraud and breach of contract involving the Augusta technology. Venator is not party to the suit.
Contractual Obligations and Commercial Commitments
Our obligations under long‑term debt (including the current portion), lease agreements and other contractual commitments as of December 31, 2017 are summarized below (dollars in millions):
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| 2018 |
| 2019 - 2020 |
| 2021 - 2022 |
| After 2022 |
| Total | |||||
Long-term debt, including current portion |
| $ | 40 |
| $ | 892 |
| $ | 969 |
| $ | 397 |
| $ | 2,298 |
Interest(1) |
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| 107 |
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| 205 |
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| 78 |
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| 21 |
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| 411 |
Operating leases(2) |
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| 74 |
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| 127 |
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| 103 |
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| 134 |
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| 438 |
Purchase commitments(3) |
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| 1,299 |
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| 1,986 |
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| 994 |
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| 2,087 |
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| 6,366 |
Total(4)(5) |
| $ | 1,520 |
| $ | 3,210 |
| $ | 2,144 |
| $ | 2,639 |
| $ | 9,513 |
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| 2018 |
| 2019 - 2020 |
| 2021 - 2022 |
| Annual | ||||
Pension plans |
| $ | 89 |
| $ | 161 |
| $ | 163 |
| $ | 71 |
Other postretirement obligations |
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| 7 |
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| 13 |
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| 13 |
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| 6 |
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Restructuring, Impairment and Plant Closing Costs
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Off‑Balance Sheet Arrangements
No off‑balance sheet arrangements exist.
Restructuring, Impairment and Plant Closing Costs
For a discussion of restructuring plans and the costs involved, see “Note 11.13. Restructuring, Impairment and Plant Closing Costs” to our consolidated financial statements.
Legal Proceedings
For a discussion of legal proceedings, see “Note 18. Commitments and Contingencies—Legal Matters” to our consolidated financial statements.Recently Issued Accounting Pronouncements
Environmental, Health and Safety Matters
As noted above in “Part I. Item 1. Business—Environmental, 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 19. Environmental, Health and Safety Matters” to our consolidated financial statements.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see “Note 2. Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements”Policies" to our consolidated financial statements.
Critical Accounting Policies
Critical Accounting Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires managementus to make judgments, estimates and assumptions that affect the reported amounts ininvolve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on our consolidated financial statements. Our significant accounting policies are summarized in “Note 2. Summarycondition and/or results of Significant Accounting Policies” to our consolidated financial statements.operations. Summarized below are our critical accounting policies:estimates.
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 recorded to offset deferred tax assets unlikely to be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction.assets. These conclusions require significant judgment.judgments. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable period.losses. Cumulative historical losses incurred over the period limitsperiods of time limit our ability to consider othermore subjective evidence such as our projections for the future.of future taxable income. Changes in expected future taxable income and tax planning strategies in applicable jurisdictions could affect our assessment of the realization of deferred tax assets in those jurisdictions.assets. Our judgments regarding valuation allowances are also influenced by factors outside of business results that could impact our ability to utilize a deferred tax asset. As of December 31, 2017,2020, we had total valuation allowances of $424$206 million, which represents a decrease of $25 million from the prior year, and we have recognized net deferred tax assets of $76 million. See “Note 17.20. Income Taxes” to our consolidated financial statements for more information regarding our valuation allowances.
On December 22, 2017, the U.S. Tax Reform Act was signed into law. The U.S. Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, repealing the deduction for domestic production activities and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.
As a result of the U.S. Tax Reform Act, the Company recorded a provisional tax benefit of $137 million due to a remeasurement of deferred U.S. tax assets and liabilities and a provisional tax expense of $85 million due to the transition tax on deemed repatriation of deferred foreign income. Absent the Venator offering and certain tax related restructuring transactions, our provisional transition tax liability on deemed repatriation of deferred foreign income would have been $12 million.valuation allowances.
Both the tax benefit and the tax charge represent provisional amounts and our current best estimates. Any adjustments recorded to the provisional amounts through calendar year 2018 will be included in income as an adjustment to tax expense in the period of the adjustment. The provisional amounts incorporate assumptions made based upon
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available information and our current interpretation of the U.S. Tax Reform Act and may change as we receive additional implementation guidance and as we further refine our calculations with additional information.
Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The application of income tax law is inherently complex. We are required to determine if an income tax position meets the criteria of more‑likely‑than‑not to be realized based on the merits of the position under tax law, in order to recognize an income tax benefit. This requires us to make significant judgments regarding the merits of income tax positions and the application of income tax law. Additionally, if a tax position meets the recognition criteria of more‑likely‑than‑not we are required to make judgments and apply assumptions in order to measure the amount of the tax benefits to recognize. These judgments are based on the probability of the amount of tax benefits that would be realized if the tax position was challenged by the taxing authorities. Interpretations and guidance surrounding income tax laws and regulations change over time. As a consequence, changes in assumptions and judgments can materially affect amounts recognized in our consolidated financial statements. We have not determined the need for, or change in, any unrecognized tax positions due to the U.S. Tax Reform Act. For further information concerning taxes, see “Note 17. Income Taxes” to our consolidated financial statements.
Employee Benefit Programs
We sponsor several contributory and non‑contributorynon-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., The Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering certain employees in the U.S. and Canada. Amounts recorded in our consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding expected long‑termlong-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. Each of these critical estimates are subject to uncertainty and are assessed by us using historical data, as well as projections of future conditions. These assumptions and changes during the period are described in “Note 16.19. Employee Benefit Plans” to our consolidated financial statements.
Management,
We retain third party actuaries to assist us with the advice of actuaries, uses judgmentjudgments necessary to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The effect of a 1% change in three key assumptions is summarized as follows (dollars in millions):
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| Statement of |
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Assumptions |
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| Impact(2) | ||
Discount rate |
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—1% increase |
| $ | (10) |
| $ | (470) |
—1% decrease |
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| 12 |
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| 557 |
Expected long-term rates of return on plan assets |
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—1% increase |
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| (23) |
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| — |
—1% decrease |
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| 23 |
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| — |
Rate of compensation increase |
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—1% increase |
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| 8 |
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| 98 |
—1% decrease |
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| (8) |
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| (93) |
Statement of | Balance Sheet | |||||||
Assumptions | Operations(1) | Impact(2) | ||||||
Discount rate | ||||||||
—1% increase | $ | (36 | ) | $ | (545 | ) | ||
—1% decrease | 44 | 622 | ||||||
Expected long-term rates of return on plan assets | ||||||||
—1% increase | (21 | ) | — | |||||
—1% decrease | 21 | — | ||||||
Rate of compensation increase | ||||||||
—1% increase | 10 | 54 | ||||||
—1% decrease | (6 | ) | (61 | ) |
(1) | Estimated (decrease) increase |
(2) | Estimated (decrease) increase |
Contingent Loss Accruals
Environmental remediation costs for our facilities are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. Estimates of environmental reserves require evaluating government regulation, available technology, site‑specific information and remediation alternatives. We accrue an amount equal to our best estimate of the costs to remediate based upon the available information. The extent of environmental impacts may not be fully known and the processes and costs of remediation may change as new information is obtained or technology for remediation is improved. Our process for estimating the expected cost for remediation considers the information available, technology that can be utilized and estimates of the extent of environmental damage. Adjustments to our estimates are made periodically based upon additional information received
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as remediation progresses. For further information, see “Note 19. Environmental, Health and Safety Matters” to our consolidated financial statements.
We are subject to legal proceedings and claims arising out of our business operations. We routinely assess the likelihood of any adverse outcomes to these matters, as well as ranges of probable losses. A determination of the amount of the reserves required, if any, for these contingencies is made after analysis of each known claim. We have an active risk management program consisting of numerous insurance policies secured from many carriers. These policies often provide coverage that is intended to minimize the financial impact, if any, of the legal proceedings. The required reserves may change in the future due to new developments in each matter. For further information, see “Note 18. Commitments and Contingencies—Legal Matters” to our consolidated financial statements.
Restructuring and Plant Closing Costs
We have recorded restructuring charges in recent periods in connection with closing certain plant locations, workforce reductions and other cost savings programs in each of our business segments. These charges are recorded when management has committed to a plan and incurred a liability related to the plan. Estimates for plant closing costs include the write‑off of the carrying value of the plant, any necessary environmental and/or regulatory costs, contract termination and demolition costs. Estimates for workforce reductions and other costs savings are recorded based upon estimates of the number of positions to be terminated, termination benefits to be provided and other information, as necessary. Management evaluates the estimates on a quarterly basis and will adjust the reserve when information indicates that the estimate is above or below the currently recorded estimate. For further discussion of our restructuring activities, see “Note 11. Restructuring, Impairment and Plant Closing Costs” to our consolidated financial statements.
Goodwill
We test our goodwill for impairment at least annually (at the beginning of the third quarter) and when events and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill has been assigned to reporting units for purposes of impairment testing. Approximately 59% of our goodwill balance relates to our Advanced Materials reporting unit. The remaining goodwill relates to three other reporting units.
Fair value is estimated using the market approach, as well as the income approach based on discounted cash flow projections. The estimated fair values of our reporting units are dependent on several significant assumptions including, among others, market information, discount rates operating results, earnings projections and anticipated future cash flows.
We tested goodwill for impairment at the beginning of the third quarter of 2017 as part of the annual impairment testing procedures and determined that no goodwill impairment existed. Our most recent fair value determination resulted in an amount that exceeded the carrying amounts of all reporting units by a significant margin.
Long‑Lived Assets
The useful lives of our property, plant and equipment are estimated based upon our historical experience, engineering estimates and industry information and are reviewed when economic events indicate that we may not be able to recover the carrying value of the assets. The estimated lives of our property range from 3 to 50 years and depreciation is recorded on the straight‑line method. Inherent in our estimates of useful lives is the assumption that periodic maintenance and an appropriate level of annual capital expenditures will be performed. Without on‑going capital improvements and maintenance, the productivity and cost efficiency declines and the useful lives of our assets would be shorter.
Management uses judgment to estimate the useful lives of our long‑lived assets. At December 31, 2017, if the estimated useful lives of our property, plant and equipment had either been one year greater or one year less than their recorded lives, then depreciation expense for 2017 would have been approximately $35 million less or $41 million greater, respectively.
We are required to evaluate the carrying value of our long‑lived tangible and intangible assets whenever events indicate that such carrying value may not be recoverable in the future or when management’s plans change regarding those assets, such as idling or closing a plant. We evaluate impairment by comparing undiscounted cash flows of the related asset groups that are largely independent of the cash flows of other asset groups to their carrying values. Key assumptions in determining the future cash flows include the useful life, technology, competitive pressures, raw material pricing and regulations. In connection with our asset evaluation policy, we reviewed all of our long‑lived assets for indicators that the carrying value may not be recoverable.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded in accumulated other comprehensive loss.
Interest Rate Risks
See “Note 16. Derivative Instruments and Hedging Activities—Interest Rate Risks
Through our borrowing activities, we are exposed to interest rate risk. Such risk arises due to the structure of our debt portfolio, including the mix of fixed and floating interest rates. Actions taken to reduce interest rate risk include managing the mix and rate characteristics of various interest bearing liabilities, as well as entering into interest rate derivative instruments.
From time to time, we may purchase interest rate swaps and/or other derivative instruments to reduce the impact of changes in interest rates on our floating-rate long-term debt. Under interest rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed notional principal amount.
Huntsman International had entered into several interest rate contracts to hedge the variability caused by monthly changes in cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps were designated as cash flow hedges and the effective portion of the changes in the fair value of the swaps were recorded in other comprehensive income (loss). These swaps expired in April 2017.
Beginning in 2009, AAC entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of AAC as of July 1, 2010, the interest rate contract is now included in our consolidated results. See “Note 7. Variable Interest Entities”Risk” to our consolidated financial statements. The notional amount of the swap as of December 31, 2017 was $14 million,
Foreign Exchange Rate Risk
See “Note 16. Derivative Instruments and the interest rate contract is not designated as a cash flow hedge. As of both December 31, 2017 and 2016, the fair value of the swap was $1 million, and was recorded as other noncurrent liabilities on our consolidated balance sheets. For 2017 and 2016, we recorded a reduction of interest expense of nil each due to changes in fair value of the swap.
During 2017, accumulated other comprehensive loss of nil was reclassified to earnings. The actual amount that will be reclassified to earnings over the next twelve months may vary from this amount due to changing market conditions. We would be exposed to credit losses in the event of nonperformance by a counterparty to our derivative financial instruments. We anticipate, however, that the counterparties will be able to fully satisfy their obligations under the contracts. Market risk arises from changes in interest rates.
Hedging Activities—Foreign Exchange Rate Risk
Our cash flows and earnings are subjectRisk” to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in various currencies. We enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time throughconsolidated financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of three months or less). We do not hedge our currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of December 31, 2017 and 2016, we had approximately $93 million and $176 million, respectively, notional amount (in U.S. dollar equivalents) outstanding in foreign currency contracts with a term of approximately one month, of which nil and $88 million, respectively, were on behalf of our former P&A Business.statements.
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. The swap was designated as a hedge of net investment for financial reporting purposes. In August 2017, we terminated these cross-currency interest rate contracts and received $7 million from the counterparties.
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.
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Commodity Prices Risk
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
See “Note 16. Derivative Instruments and the designation of certain debt and swaps as net investment hedges.
Foreign currency transaction gains and losses on intercompany loans that are not designated as permanent loans are recorded in earnings. Foreign currency transaction gains and losses on intercompany loans that are designated as permanent loans are recorded in other comprehensive income (loss). From time to time, we review such designation of intercompany loans.
We review our non‑U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of December 31, 2017, for our continuing operations, we have designated approximately €470 million (approximately $559 million) of euro‑denominated debt and cross‑currency interest rate contracts as a hedge of our net investment. For the years ended December 31, 2017, 2016 and 2015, for our continuing operations, the amounts recognized on the hedge of our net investment was a loss of $96 million, and gains of $27 million and $68 million, respectively, and were recorded in other comprehensive income (loss).
Hedging Activities—Commodity Prices RiskRisk” to our consolidated financial statements.
Inherent in our business is exposure to price changes for several commodities. However, our exposure to changing commodity prices is somewhat limited since the majority of our raw materials are acquired at posted or market related prices, and sales prices for many of our finished products are at market related prices which are largely set on a monthly or quarterly basis in line with industry practice. Consequently, we do not generally hedge our commodity exposures.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements required by this item are included on the pages immediately following the Index to Consolidated Financial Statements appearing on page F‑1.F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in our independent accountants, Deloitte & Touche LLP, or disagreements with them on matters of accounting or financial disclosure.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation
Evaluation of Disclosure Controls Disclosure Controls and ProceduresProcedures
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)13a-15(e) and 15d‑15(e)15d-15(e) under the Exchange Act) as of December 31, 2017.2020. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2017,2020, our disclosure controls and procedures were effective, in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes
Changes in Internal Control Over Financial Reporting Internal Control Over Financial Reporting
No changes to our internal control over financial reporting occurred during the quarter ended December 31, 20172020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a‑15(f)13a-15(f) and 15d‑15(f)15d-15(f) under the Exchange Act).
Management’s Report
Management’s Report on Internal Control Over Financial Reporting Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control framework and processes for our Company and Huntsman International are designed to provide reasonable assurance to management, Huntsman International’s Board of Managers and our Board of Directors regarding
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the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting for our Company and Huntsman International includes those policies and procedures that:
| ● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company and Huntsman International; |
● | provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our Company and Huntsman International are being made only in accordance with authorizations of management and Directors of our Company and Huntsman International; |
| ● | provide reasonable assurance |
| ● | provide reasonable assurance |
fraud. |
|
provide reasonable assurance as to the detection of fraud.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changing conditions, effectiveness of internal control over financial reporting may vary over time.
Our management assessed the effectiveness of our internal control over financial reporting for our Company and Huntsman International and concluded that, as of December 31, 2017,2020, such internal control is effective. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013) (“COSO”).
Our independent registered public accountants,accounting firm, Deloitte & Touche LLP, with direct access to our Board of Directors through our Audit Committee, have audited our consolidated financial statements prepared by our Company and Huntsman International and have issued attestation reports on internal control over financial reporting for our Company and Huntsman International.Company.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors and Stockholders of
Huntsman Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Huntsman Corporation and subsidiaries (the “Company”) as of December 31, 2017,2020, based on criteria established in Internal Control — Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control — Integrated Framework (2013)issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 20172020, of the Company and our report dated February 23, 2018,12, 2021, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 23, 2018
69
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Managers and Members of
Huntsman International LLC
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Huntsman International and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017 of the Company and our report dated February 23, 2018, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
February 23, 201812, 2021
70
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information relating to our Directors (including identification of our Audit Committee’s financial expert(s)) and executive officers will be disclosed in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference. See also the information regarding executive officers of the registrant set forth in Part I under the caption “Executive Officers of the Registrant” in reliance on General Instruction G to Form 10‑K.10-K.
Code of Ethics
Our Company has
We have adopted a code of ethics, as defined by Item 406(b) of Regulation S‑KS-K under the Exchange Act, that applies to our principal executive officer, principal financial officer and principal accounting officer or controller. A copy of the code of ethics is posted on our website, at www.huntsman.com. We intend to disclose any amendments to, or waivers from, our code of ethics on our website.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation and our equity compensation plans will be disclosed in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information with respect to beneficial ownership of our common stock by each Director and all Directors and officers of our Company as a group will be disclosed in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference.
Information relating to any person who beneficially owns in excess of 5five percent of the total outstanding shares of our common stock will be disclosed in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference.
Information with respect to compensation plans under which equity securities are authorized for issuance will be disclosed in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information with respect to certain relationships and related transactions will be disclosed in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information with respect to principal accountant fees and services, and the disclosure of the Audit Committee’s pre‑approvalpre-approval policies and procedures are contained in the definitive Proxy Statement for our Annual Meeting of Stockholders and are incorporated herein by reference.
71
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) | Documents filed with this report. |
|
1. | Consolidated Financial Statements: |
|
See Index to Consolidated Financial Statements on page F‑1F-1
2. | Financial Statement Schedules: |
|
Other than as stated on the Index to Consolidated Financial Statements on page F‑1F-1 with respect to Schedule I, and Schedule II, financial statement schedules are omitted because they are not required or are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
3. | Exhibits: |
|
The exhibits to this report are listed on the Exhibit Index below.
(b) | Description of exhibits. |
|
|
|
| Incorporated by Reference | ||
Number |
| Description | Form | Exhibit | Filing Date |
3.1 |
| Amended and Restated Certificate of Incorporation of Huntsman Corporation | 8-K | 3.1 | May 12, 2014 |
3.2 |
| Fifth Amended and Restated Bylaws of Huntsman Corporation dated as of December 21, 2016 | 8-K | 3.1 | December 23, 2016 |
4.1 |
| 8-K | 10.1 | February 16, 2005 | |
4.2 |
| S-1 | 4.68 | February 8, 2005 | |
4.3 |
| S-8 | 4.8 | February 10, 2006 | |
4.4 |
| 10-K | 4.32 | February 22, 2008 | |
4.5 |
| 8-K | 4.1 | November 19, 2012 | |
4.6 |
| Form of 4.875% Senior Note due 2020 (included as Exhibit A to Exhibit 4.5) | 8-K | 4.2 | November 19, 2012 |
4.7 |
| Form of Notation of Guarantee (included as Exhibit D to Exhibit 4.5) | 8-K | 4.3 | November 19, 2012 |
4.8 |
| 8-K | 4.1 | December 23, 2013 |
72
73
10.14 | U.S. Receivables Loan Agreement dated as of October 16, 2009 (File No. 001-32427) | 8-K | 10.1 | October 22, 2009 | ||||
10.15 | 8-K | 10.2 | October 22, 2009 |
* Filed herewith.
|
|
| Incorporated by Reference | ||
Number |
| Description | Form | Exhibit | Filing Date |
10.11 |
| 8-K | 10.1 | July 7, 2006 | |
10.12 |
| 8-K | 10.1 | February 22, 2008 | |
10.13 |
| First Amendment to Huntsman Supplemental Executive Retirement Plan (File No. 001‑32427) | 10-K | 10.32 | February 22, 2008 |
10.14 |
| First Amendment to Huntsman Supplemental Executive MPP Plan (File No. 001‑32427) | 10-K | 10.33 | February 22, 2008 |
10.15 |
| First Amendment to Huntsman Supplemental Savings Plan (File No. 001‑32427) | 10-K | 10.34 | February, 22, 2008 |
10.16 |
| Second Amendment to Huntsman Supplemental Savings Plan (File No. 001‑32427) | 10-K | 10.35 | February 22, 2008 |
10.17 |
| First Amendment to Huntsman Outside Directors Elective Deferral Plan (File No. 001‑32427) | 10-K | 10.36 | February 22, 2008 |
10.18 |
| 8-K | 10.3 | June 23, 2009 | |
10.19 |
| 8-K | 10.1 | October 22, 2009 | |
10.20 |
| 8-K | 10.2 | October 22, 2009 |
74
|
|
| Incorporated by Reference | ||
Number |
| Description | Form | Exhibit | Filing Date |
10.21 |
| 8-K | 10.3 | October 22, 2009 | |
10.22 |
| 8-K | 10.4 | October 22, 2009 | |
10.23 |
| 10-Q | 10.1 | May 7, 2010 | |
10.24 |
| 10-Q | 10.2 | November 4, 2010 | |
10.25 |
| Second Amendment to Huntsman Supplemental Executive Retirement Plan (File No. 001‑32427) | 10-K | 10.38 | February 17, 2011 |
10.26 |
| Third Amendment to Huntsman Supplemental Executive Retirement Plan (File No. 001‑32427) | 10-K | 10.39 | February 17, 2011 |
10.27 |
| 10-K | 10.40 | February 17, 2011 | |
10.28 |
| 10-K | 10.41 | February 17, 2011 | |
10.29 |
| 10-K | 10.42 | February 17, 2011 | |
10.30 |
| 10-K | 10.43 | February 17, 2011 | |
10.31 |
| 8-K | 10.1 | March 9, 2011 | |
10.32 |
| 8-K | 10.1 | April 20, 2011 |
75
|
|
| Incorporated by Reference | ||
Number |
| Description | Form | Exhibit | Filing Date |
10.33 |
| 8-K | 10.2 | April 20, 2011 | |
10.34 |
| Second Amendment to Huntsman Outside Directors Elective Deferral Plan (File No. 001‑32427) | 10-Q | 10.5 | May 5, 2011 |
10.35 |
| Third Amendment to Huntsman Outside Directors Elective Deferral Plan (File No. 001‑32427) | 10-Q | 10.6 | May 5, 2011 |
10.36 |
| Huntsman Corporation Stock Incentive Plan (amended and restated) (File No. 001‑32427) | S-8 | 4.1 | May 10, 2011 |
10.37 |
| 8-K | 10.1 | March 6, 2012 | |
10.38 |
| 10-K | 10.56 | February 12, 2013 | |
10.39 |
| 8-K | 10.1 | March 12, 2013 | |
10.40 |
| 8-K | 10.1 | May 2, 2013 | |
10.41 |
| Master Amendment No. 3 to the European Receivables Loan Agreement dated as of April 29, 2013 | 8-K | 10.2 | May 2, 2013 |
10.42 |
| 8-K | 10.1 | August 26, 2013 | |
10.43 |
| 8-K | 10.1 | October 18, 2013 | |
10.44 |
| 10-Q | 10.3 | October 29, 2013 | |
10.45 |
| Huntsman Corporation Stock Incentive Plan (amended and restated) | 8-K | 10.1 | May 12, 2014 |
76
|
|
| Incorporated by Reference | ||
Number |
| Description | Form | Exhibit | Filing Date |
10.46 |
| 8-K | 10.1 | August 15, 2014 | |
10.47 |
| 8-K | 10.2 | August 15, 2014 | |
10.48 |
| 8-K | 10.1 | October 7, 2014 | |
10.49 |
| 8-K | 10.1 | November 17, 2014 | |
10.50 |
| 10-K | 10.65 | February 18, 2015 | |
10.51 |
| 10-K | 10.66 | February 18, 2015 | |
10.52 |
| 8-K | 10.1 | April 2, 2015 | |
10.53 |
| 8-K | 10.1 | March 9, 2015 | |
10.54 |
| 8-K | 10.2 | April 2, 2015 | |
10.55 |
| 8-K | 10.1 | August 10, 2015 | |
10.56 |
| 8-K | 10.1 | April 6, 2016 | |
10.57 |
| 8-K | 10.1 | May 11, 2016 |
77
78
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79
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: February 23, 201812, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Huntsman Corporation in the capacities indicated on the
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Huntsman International LLC in the capacities indicated on the
48 HUNTSMAN CORPORATION AND SUBSIDIARIES HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors Huntsman Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Huntsman Corporation and subsidiaries (the We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Change in Accounting Principle As discussed in Note 2 to the financial statements, effective January 1, 2019, the Company adopted the Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842). Basis for Opinion These financial statements are the responsibility of the We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Income Taxes—Realizability of Deferred Tax Assets—Refer to Notes 2 and 20 to the financial statements Critical Audit Matter Description The Company recognizes deferred income taxes for tax attributes and for differences between the financial statement and tax carrying amounts of assets and liabilities at enacted statutory tax rates in effect for the years in which the deferred tax liability or asset are expected to be settled or realized. A valuation allowance is provided to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company files tax returns in multiple jurisdictions with complex tax laws and regulations. Valuation allowances are evaluated on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. In evaluating the objective evidence that historical results provide, the Company considers the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limits the Company’s ability to consider other subjective evidence such as taxable income for the future. The Company’s valuation allowances as of December 31, 2020, were $206 million. We identified management’s determination that it is not more likely than not that sufficient taxable income will be generated in the future to realize some of its deferred tax assets as a critical audit matter because of the significant judgments and estimates management makes related to future taxable income. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates of future taxable income. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to estimated future taxable income and the determination of whether it is more likely than not that the deferred tax assets will be realized included the following, among others:
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
We have served as the Company’s auditor since 1984.
HUNTSMAN CORPORATION AND SUBSIDIARIES (In Millions, Except
See accompanying notes to consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except Share and Per Share Amounts)
See accompanying notes to consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions)
See accompanying notes to consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In Millions, Except Share Amounts)
See accompanying notes to consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions)
(continued)
F-8 HUNTSMAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In Millions)
As of December 31, See accompanying notes to consolidated financial statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members and Board of Managers Huntsman International LLC Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Huntsman International LLC and subsidiaries
Change in As discussed in Note 2 to the Basis for Opinion These financial statements are the responsibility of We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includedexamining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Board of Managers and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Income Taxes—Realizability of Deferred Tax Assets—Refer to Notes 2 and 20 to the financial statements Critical Audit Matter Description Huntsman International recognizes deferred income taxes for tax attributes and for differences between the financial statement and tax carrying amounts of assets and liabilities at enacted statutory tax rates in effect for the years in which the deferred tax liability or asset are expected to be settled or realized. A valuation allowance is provided to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Huntsman International files tax returns in multiple jurisdictions with complex tax laws and regulations. Valuation allowances are evaluated on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. In evaluating the objective evidence that historical results provide, Huntsman International considers the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limits Huntsman International’s ability to consider other subjective evidence such as taxable income for the future. Huntsman International’s valuation allowances as of December 31, 2020, were $206 million. We identified management’s determination that it is not more likely than not that sufficient taxable income will be generated in the future to realize some of its deferred tax assets as a critical audit matter because of the significant judgments and estimates management makes related to future taxable income. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates of future taxable income. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to estimated future taxable income and the determination of whether it is more likely than not that the deferred tax assets will be realized included the following, among others:
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
We have served as
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES (In Millions, Except Unit Amounts)
|
See accompanying notes to consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions)
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Year ended December 31, | Year ended December 31, | ||||||||||||||||||
|
| 2017 |
| 2016 |
| 2015 | 2020 | 2019 | 2018 | ||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
| ||||||||||||
Trade sales, services and fees, net |
| $ | 8,208 |
| $ | 7,387 |
| $ | 8,008 | $ | 5,903 | $ | 6,664 | $ | 7,451 | ||||||
Related party sales |
|
| 150 |
|
| 131 |
|
| 131 | 115 | 133 | 153 | |||||||||
Total revenues |
|
| 8,358 |
|
| 7,518 |
|
| 8,139 | 6,018 | 6,797 | 7,604 | |||||||||
Cost of goods sold |
|
| 6,543 |
|
| 5,988 |
|
| 6,401 | 4,918 | 5,415 | 5,837 | |||||||||
Gross profit |
|
| 1,815 |
|
| 1,530 |
|
| 1,738 | 1,100 | 1,382 | 1,767 | |||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||||||||||
Selling, general and administrative |
|
| 793 |
|
| 764 |
|
| 786 | 769 | 781 | 784 | |||||||||
Research and development |
|
| 138 |
|
| 137 |
|
| 143 | 135 | 137 | 145 | |||||||||
Restructuring, impairment and plant closing costs |
|
| 20 |
|
| 47 |
|
| 83 | ||||||||||||
Restructuring, impairment and plant closing costs (credits) | 49 | (41 | ) | (7 | ) | ||||||||||||||||
Merger costs |
|
| 28 |
|
| — |
|
| — | 0 | 0 | 2 | |||||||||
Gain on sale of India-based DIY business | (247 | ) | 0 | 0 | |||||||||||||||||
Other operating (income) expense, net |
|
| (23) |
|
| (101) |
|
| 1 | (45 | ) | 31 | 8 | ||||||||
Total operating expenses |
|
| 956 |
|
| 847 |
|
| 1,013 | 661 | 908 | 932 | |||||||||
Operating income |
|
| 859 |
|
| 683 |
|
| 725 | 439 | 474 | 835 | |||||||||
Interest expense |
|
| (181) |
|
| (215) |
|
| (214) | ||||||||||||
Interest expense, net | (88 | ) | (126 | ) | (136 | ) | |||||||||||||||
Equity in income of investment in unconsolidated affiliates |
|
| 13 |
|
| 5 |
|
| 6 | 42 | 54 | 55 | |||||||||
Fair value adjustments to Venator investment and related loss on disposal | (88 | ) | (18 | ) | (62 | ) | |||||||||||||||
Loss on early extinguishment of debt |
|
| (54) |
|
| (3) |
|
| (31) | 0 | (23 | ) | (3 | ) | |||||||
Other income, net |
|
| 3 |
|
| 5 |
|
| 7 | 33 | 16 | 27 | |||||||||
Income from continuing operations before income taxes |
|
| 640 |
|
| 475 |
|
| 493 | 338 | 377 | 716 | |||||||||
Income tax expense |
|
| (61) |
|
| (108) |
|
| (59) | ||||||||||||
Income tax (expense) benefit | (46 | ) | 41 | (41 | ) | ||||||||||||||||
Income from continuing operations |
|
| 579 |
|
| 367 |
|
| 434 | 292 | 418 | 675 | |||||||||
Income (loss) from discontinued operations, net of tax |
|
| 155 |
|
| (13) |
|
| (307) | 775 | 169 | (39 | ) | ||||||||
Net income |
|
| 734 |
|
| 354 |
|
| 127 | 1,067 | 587 | 636 | |||||||||
Net income attributable to noncontrolling interests |
|
| (105) |
|
| (31) |
|
| (33) | (32 | ) | (36 | ) | (313 | ) | ||||||
Net income attributable to Huntsman International LLC |
| $ | 629 |
| $ | 323 |
| $ | 94 | $ | 1,035 | $ | 551 | $ | 323 |
See accompanying notes to consolidated financial statements.
F-11
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
|
|
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|
|
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|
|
| ||||||||||||
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|
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| |||||||||||||||||
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| |||||||||||||||||
|
| Year ended December 31, | Year ended December 31, | ||||||||||||||||||
|
| 2017 |
| 2016 |
| 2015 | 2020 | 2019 | 2018 | ||||||||||||
Net income |
| $ | 734 |
| $ | 354 |
| $ | 127 | $ | 1,067 | $ | 587 | $ | 636 | ||||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
| ||||||||||||
Other comprehensive loss, net of tax: | |||||||||||||||||||||
Foreign currency translations adjustment |
|
| 210 |
|
| (170) |
|
| (314) | 41 | 2 | (194 | ) | ||||||||
Pension and other postretirement benefits adjustments |
|
| 112 |
|
| (212) |
|
| 73 | (16 | ) | (35 | ) | (37 | ) | ||||||
Other, net |
|
| (1) |
|
| (1) |
|
| 7 | 0 | (1 | ) | (6 | ) | |||||||
Other comprehensive income (loss), net of tax |
|
| 321 |
|
| (383) |
|
| (234) | ||||||||||||
Comprehensive income (loss) |
|
| 1,055 |
|
| (29) |
|
| (107) | ||||||||||||
Other comprehensive loss, net of tax | 25 | (34 | ) | (237 | ) | ||||||||||||||||
Comprehensive income | 1,092 | 553 | 399 | ||||||||||||||||||
Comprehensive income attributable to noncontrolling interests |
|
| (127) |
|
| (23) |
|
| (28) | (38 | ) | (31 | ) | (266 | ) | ||||||
Comprehensive income (loss) attributable to Huntsman International LLC |
| $ | 928 |
| $ | (52) |
| $ | (135) | ||||||||||||
Comprehensive income attributable to Huntsman International LLC | $ | 1,054 | $ | 522 | $ | 133 |
See accompanying notes to consolidated financial statements.
F-12
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Unit Amounts)
|
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| Huntsman International LLC Members |
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| |||||||||
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| Accumulated |
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| |
|
|
|
|
|
|
|
|
|
| other |
| Noncontrolling |
|
|
| ||
|
| Members’ equity |
| Accumulated |
| comprehensive |
| interests in |
| Total | |||||||
|
| Units |
| Amount |
| deficit |
| loss |
| subsidiaries |
| equity | |||||
Beginning balance, January 1, 2015 |
| 2,728 |
| $ | 3,166 |
| $ | (956) |
| $ | (1,087) |
| $ | 173 |
| $ | 1,296 |
Net income |
| — |
|
| — |
|
| 94 |
|
| — |
|
| 33 |
|
| 127 |
Dividends paid to parent |
| — |
|
| — |
|
| (121) |
|
| — |
|
| — |
|
| (121) |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| (229) |
|
| (5) |
|
| (234) |
Contribution from parent |
| — |
|
| 29 |
|
| — |
|
| — |
|
| — |
|
| 29 |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| (14) |
|
| (14) |
Excess tax benefit related to stock‑based compensation |
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| 1 |
Balance, December 31, 2015 |
| 2,728 |
|
| 3,196 |
|
| (983) |
|
| (1,316) |
|
| 187 |
|
| 1,084 |
Net income |
| — |
|
| — |
|
| 323 |
|
| — |
|
| 31 |
|
| 354 |
Dividends paid to parent |
| — |
|
| — |
|
| (119) |
|
| — |
|
| — |
|
| (119) |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| (375) |
|
| (8) |
|
| (383) |
Contribution from parent |
| — |
|
| 33 |
|
| — |
|
| — |
|
| — |
|
| 33 |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| (30) |
|
| (30) |
Excess tax benefit related to stock‑based compensation |
| — |
|
| (3) |
|
| — |
|
| — |
|
| — |
|
| (3) |
Balance, December 31, 2016 |
| 2,728 |
|
| 3,226 |
|
| (779) |
|
| (1,691) |
|
| 180 |
|
| 936 |
Net income |
| — |
|
| — |
|
| 629 |
|
| — |
|
| 105 |
|
| 734 |
Dividends paid to parent |
| — |
|
| — |
|
| (120) |
|
| — |
|
| — |
|
| (120) |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| 428 |
|
| (107) |
|
| 321 |
Contribution from parent |
| — |
|
| 35 |
|
| — |
|
| — |
|
| — |
|
| 35 |
Contribution from noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| 5 |
|
| 5 |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| (34) |
|
| (34) |
Disposition of a portion of P&A Business |
| — |
|
| 413 |
|
| — |
|
| — |
|
| — |
|
| 413 |
Costs of the IPO and secondary offering of the P&A Business |
| — |
|
| (58) |
|
| — |
|
| — |
|
| — |
|
| (58) |
Noncontrolling interest from partial disposal of P&A Business |
| — |
|
| — |
|
| — |
|
| — |
|
| 602 |
|
| 602 |
Balance, December 31, 2017 |
| 2,728 |
| $ | 3,616 |
| $ | (270) |
| $ | (1,263) |
| $ | 751 |
| $ | 2,834 |
Huntsman International LLC Members | ||||||||||||||||||||||||
(Accumulated | Accumulated | |||||||||||||||||||||||
deficit) | other | Noncontrolling | ||||||||||||||||||||||
Members’ equity | retained | comprehensive | interests in | Total | ||||||||||||||||||||
Units | Amount | earnings | loss | subsidiaries | equity | |||||||||||||||||||
Beginning balance, January 1, 2018 | 2,728 | $ | 3,616 | $ | (270 | ) | $ | (1,263 | ) | $ | 751 | $ | 2,834 | |||||||||||
Cumulative effect of changes in fair value of equity investments | 0 | 0 | 10 | (10 | ) | 0 | 0 | |||||||||||||||||
Net income | — | 0 | 323 | 0 | 313 | 636 | ||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | (195 | ) | (42 | ) | (237 | ) | |||||||||||||||
Dividends paid to parent | — | 0 | (154 | ) | 0 | 0 | (154 | ) | ||||||||||||||||
Contribution from parent | — | 26 | 0 | 0 | 0 | 26 | ||||||||||||||||||
Dividends paid to noncontrolling interests | — | 0 | 0 | 0 | (69 | ) | (69 | ) | ||||||||||||||||
Disposition of a portion of Venator | 0 | 18 | 0 | 0 | 0 | 18 | ||||||||||||||||||
Costs of secondary offering of Venator | 0 | (2 | ) | 0 | 0 | 0 | (2 | ) | ||||||||||||||||
Noncontrolling interest from partial disposal of Venator | 0 | 0 | 0 | 0 | 27 | 27 | ||||||||||||||||||
Deconsolidation of Venator | — | 0 | 0 | 160 | (751 | ) | (591 | ) | ||||||||||||||||
Balance, December 31, 2018 | 2,728 | 3,658 | (91 | ) | (1,308 | ) | 229 | 2,488 | ||||||||||||||||
Net income | — | 0 | 551 | 0 | 36 | 587 | ||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | (44 | ) | 10 | (34 | ) | ||||||||||||||||
Dividends paid to parent | — | 0 | (148 | ) | 0 | 0 | (148 | ) | ||||||||||||||||
Contribution from parent | — | 28 | 0 | 0 | 0 | 28 | ||||||||||||||||||
Dividends declared to noncontrolling interests | — | 0 | 0 | 0 | (65 | ) | (65 | ) | ||||||||||||||||
Acquisition of noncontrolling interests, net of tax | — | (11 | ) | 0 | 0 | (73 | ) | (84 | ) | |||||||||||||||
Balance, December 31, 2019 | 2,728 | 3,675 | 312 | (1,352 | ) | 137 | 2,772 | |||||||||||||||||
Net income | — | 0 | 1,035 | 0 | 32 | 1,067 | ||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | 19 | 6 | 25 | ||||||||||||||||||
Dividends paid to parent | — | 0 | (144 | ) | 0 | 0 | (144 | ) | ||||||||||||||||
Contribution from parent | — | 26 | 0 | 0 | 0 | 26 | ||||||||||||||||||
Dividends declared to noncontrolling interests | — | 0 | 0 | 0 | (21 | ) | (21 | ) | ||||||||||||||||
Balance, December 31, 2020 | 2,728 | $ | 3,701 | $ | 1,203 | $ | (1,333 | ) | $ | 154 | $ | 3,725 |
See accompanying notes to consolidated financial statements.
F-13
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
| ||||||||||||||||
|
| Year ended December 31, | Year ended December 31, | ||||||||||||||||||
|
| 2017 |
| 2016 |
| 2015 | 2020 | 2019 | 2018 | ||||||||||||
Operating Activities: |
|
|
|
|
|
|
|
|
| ||||||||||||
Net income |
| $ | 734 |
| $ | 354 |
| $ | 127 | $ | 1,067 | $ | 587 | $ | 636 | ||||||
Less: (Income) loss from discontinued operations |
|
| (155) |
|
| 13 |
|
| 307 | ||||||||||||
Less: (Income) loss from discontinued operations, net of tax | (775 | ) | (169 | ) | 39 | ||||||||||||||||
Income from continuing operations |
|
| 579 |
|
| 367 |
|
| 434 | 292 | 418 | 675 | |||||||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations: |
|
|
|
|
|
|
|
|
| ||||||||||||
Equity in income of investment in unconsolidated affiliates |
|
| (13) |
|
| (5) |
|
| (6) | (42 | ) | (54 | ) | (55 | ) | ||||||
Unrealized losses on fair value adjustments to Venator investment and related loss on disposal | 88 | 19 | 62 | ||||||||||||||||||
Cash received from return on investment in unconsolidated subsidiary | 19 | 24 | 0 | ||||||||||||||||||
Depreciation and amortization |
|
| 311 |
|
| 306 |
|
| 286 | 283 | 270 | 252 | |||||||||
(Gain) loss on disposal of businesses/assets, net |
|
| (6) |
|
| (94) |
|
| 5 | ||||||||||||
Noncash lease expense | 63 | 55 | 0 | ||||||||||||||||||
(Gain) loss on disposal of businesses/assets | (281 | ) | (49 | ) | 3 | ||||||||||||||||
Loss on early extinguishment of debt |
|
| 54 |
|
| 3 |
|
| 31 | 0 | 23 | 3 | |||||||||
Noncash interest expense |
|
| 25 |
|
| 27 |
|
| 22 | ||||||||||||
Noncash restructuring and impairment charges (credits) |
|
| 1 |
|
| (4) |
|
| 7 | 7 | 3 | (22 | ) | ||||||||
Deferred income taxes |
|
| (50) |
|
| 3 |
|
| (17) | 172 | (91 | ) | (172 | ) | |||||||
Noncash (gain) loss on foreign currency transactions |
|
| (5) |
|
| (2) |
|
| 10 | ||||||||||||
Noncash compensation |
|
| 35 |
|
| 31 |
|
| 28 | 26 | 28 | 26 | |||||||||
Other, net |
|
| 7 |
|
| 1 |
|
| 2 | 8 | 36 | 26 | |||||||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| ||||||||||||
Accounts and notes receivable |
|
| (181) |
|
| (25) |
|
| 87 | 100 | 138 | (23 | ) | ||||||||
Inventories |
|
| (104) |
|
| 177 |
|
| 84 | 145 | 77 | (80 | ) | ||||||||
Prepaid expenses |
|
| (10) |
|
| 5 |
|
| (10) | (9 | ) | (27 | ) | (8 | ) | ||||||
Other current assets |
|
| 21 |
|
| 12 |
|
| (76) | (56 | ) | 48 | 59 | ||||||||
Other noncurrent assets |
|
| (60) |
|
| 44 |
|
| (100) | (55 | ) | (90 | ) | (41 | ) | ||||||
Accounts payable |
|
| 138 |
|
| 35 |
|
| (138) | 30 | 7 | (9 | ) | ||||||||
Accrued liabilities |
|
| 57 |
|
| 123 |
|
| (35) | (126 | ) | (51 | ) | 44 | |||||||
Taxes paid on sale of Chemical Intermediates Businesses | (231 | ) | 0 | 0 | |||||||||||||||||
Other noncurrent liabilities |
|
| 37 |
|
| (36) |
|
| — | (154 | ) | (139 | ) | (53 | ) | ||||||
Net cash provided by operating activities from continuing operations |
|
| 836 |
|
| 968 |
|
| 614 | 279 | 645 | 687 | |||||||||
Net cash provided by (used in) operating activities from discontinued operations |
|
| 372 |
|
| 110 |
|
| (44) | ||||||||||||
Net cash (used in) provided by operating activities from discontinued operations | (24 | ) | 241 | 503 | |||||||||||||||||
Net cash provided by operating activities |
|
| 1,208 |
|
| 1,078 |
|
| 570 | 255 | 886 | 1,190 | |||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||
Investing Activities: |
|
|
|
|
|
|
|
| �� | ||||||||||||
Capital expenditures |
|
| (282) |
|
| (318) |
|
| (461) | (249 | ) | (274 | ) | (251 | ) | ||||||
Investment in unconsolidated affiliates |
|
| — |
|
| (1) |
|
| (12) | ||||||||||||
Acquisition of business, net of cash acquired |
|
| (14) |
|
| — |
|
| (14) | ||||||||||||
Cash received from sale of businesses | 2,181 | 0 | 0 | ||||||||||||||||||
Cash received from the sale of Venator shares | 99 | 0 | 0 | ||||||||||||||||||
Acquisition of businesses, net of cash acquired | (650 | ) | 0 | (366 | ) | ||||||||||||||||
Increase in receivable from affiliate | 273 | (1 | ) | (16 | ) | ||||||||||||||||
Proceeds from sale of businesses/assets |
|
| 25 |
|
| 199 |
|
| 1 | 75 | 50 | 0 | |||||||||
(Increase) decrease in receivable from affiliate |
|
| (15) |
|
| 6 |
|
| 1 | ||||||||||||
Cash received from purchase price adjustment for business acquired |
|
| — |
|
| — |
|
| 18 | ||||||||||||
Cash received from termination of cross-currency interest rate contracts |
|
| 7 |
|
| — |
|
| 66 | ||||||||||||
Change in restricted cash |
|
| — |
|
| 1 |
|
| (3) | ||||||||||||
Cash received from forward swap contract related to the sale of investment in Venator | 0 | 16 | 3 | ||||||||||||||||||
Other, net |
|
| — |
|
| 1 |
|
| 1 | 7 | 7 | 0 | |||||||||
Net cash used in investing activities from continuing operations |
|
| (279) |
|
| (112) |
|
| (403) | ||||||||||||
Net cash used in investing activities from discontinued operations |
|
| (159) |
|
| (83) |
|
| (196) | ||||||||||||
Net cash used in investing activities |
|
| (438) |
|
| (195) |
|
| (599) | ||||||||||||
Net cash provided by (used in) investing activities from continuing operations | 1,736 | (202 | ) | (630 | ) | ||||||||||||||||
Net cash provided by (used in) investing activities from discontinued operations | 1 | (59 | ) | (358 | ) | ||||||||||||||||
Net cash provided by (used in) investing activities | 1,737 | (261 | ) | (988 | ) |
(continued)
F-14
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
| ||||||||||||||||
|
| Year ended December 31, | Year ended December 31, | ||||||||||||||||||
|
| 2017 |
| 2016 |
| 2015 | 2020 | 2019 | 2018 | ||||||||||||
Financing Activities: |
|
|
|
|
|
|
|
|
| ||||||||||||
Net repayments under revolving loan facilities |
| $ | (41) |
| $ | — |
| $ | (1) | ||||||||||||
Net borrowings (repayments) on overdraft facilities |
|
| 1 |
|
| (1) |
|
| (8) | ||||||||||||
Net (repayments) borrowings on revolving loan facilities | $ | (203 | ) | $ | (89 | ) | $ | 125 | |||||||||||||
Repayments of long-term debt | (21 | ) | (676 | ) | (68 | ) | |||||||||||||||
Proceeds from issuance of long-term debt | 0 | 742 | 0 | ||||||||||||||||||
Repayments of short-term debt |
|
| (15) |
|
| (56) |
|
| — | (109 | ) | 0 | (8 | ) | |||||||
Borrowings on short-term debt |
|
| 8 |
|
| 10 |
|
| 12 | 0 | 102 | 6 | |||||||||
Repayments of long-term debt |
|
| (2,058) |
|
| (1,070) |
|
| (604) | ||||||||||||
Proceeds from long-term debt of P&A Business |
|
| 750 |
|
| — |
|
| — | ||||||||||||
Proceeds from issuance of long-term debt |
|
| 24 |
|
| 559 |
|
| 326 | ||||||||||||
Repayments of notes payable to affiliate |
|
| — |
|
| (1) |
|
| (148) | (380 | ) | (207 | ) | (255 | ) | ||||||
Proceeds from issuance of notes payable to affiliate |
|
| 47 |
|
| — |
|
| 195 | ||||||||||||
Repayments of notes payable |
|
| (27) |
|
| (33) |
|
| (33) | (32 | ) | (27 | ) | (29 | ) | ||||||
Borrowings on notes payable |
|
| 31 |
|
| 31 |
|
| 34 | 0 | 37 | 27 | |||||||||
Debt issuance costs paid |
|
| (21) |
|
| (9) |
|
| (8) | 0 | (8 | ) | (4 | ) | |||||||
Call premiums related to early extinguishment of debt |
|
| — |
|
| (1) |
|
| (35) | ||||||||||||
Contingent consideration paid for acquisition |
|
| — |
|
| — |
|
| (4) | ||||||||||||
Costs of early extinguishment of debt | 0 | (21 | ) | 0 | |||||||||||||||||
Dividends paid to parent | (144 | ) | (148 | ) | (154 | ) | |||||||||||||||
Dividends paid to noncontrolling interests |
|
| (34) |
|
| (30) |
|
| (14) | (44 | ) | (41 | ) | (69 | ) | ||||||
Contribution from noncontrolling interests |
|
| 5 |
|
| — |
|
| — | ||||||||||||
Dividends paid to parent |
|
| (120) |
|
| (119) |
|
| (121) | ||||||||||||
Proceeds from the IPO and secondary offering of P&A Business |
|
| 1,012 |
|
| — |
|
| — | ||||||||||||
Cash paid for expenses of the IPO and secondary offering of P&A Business |
|
| (58) |
|
| — |
|
| — | ||||||||||||
Other, net |
|
| 1 |
|
| (1) |
|
| 1 | ||||||||||||
Cash paid for noncontrolling interest | 0 | (101 | ) | 0 | |||||||||||||||||
Proceeds from the secondary offering of Venator | 0 | 0 | 44 | ||||||||||||||||||
Other | 0 | (1 | ) | (5 | ) | ||||||||||||||||
Net cash used in financing activities |
|
| (495) |
|
| (721) |
|
| (408) | (933 | ) | (438 | ) | (390 | ) | ||||||
Effect of exchange rate changes on cash |
|
| 18 |
|
| (6) |
|
| (16) | 7 | (2 | ) | (35 | ) | |||||||
Increase in cash and cash equivalents |
|
| 293 |
|
| 156 |
|
| (453) | ||||||||||||
Cash and cash equivalents from continuing operations at beginning of period |
|
| 384 |
|
| 236 |
|
| 675 | ||||||||||||
Cash and cash equivalents from discontinued operations at beginning of period |
|
| 29 |
|
| 21 |
|
| 35 | ||||||||||||
Cash and cash equivalents at end of period |
| $ | 706 |
| $ | 413 |
| $ | 257 | ||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 1,066 | 185 | (223 | ) | |||||||||||||||||
Cash, cash equivalents and restricted cash from continuing operations at beginning of period | 525 | 340 | 479 | ||||||||||||||||||
Cash, cash equivalents and restricted cash from discontinued operations at beginning of period | 0 | 0 | 238 | ||||||||||||||||||
Deconsolidation of cash, cash equivalents and restricted cash of Venator | 0 | 0 | (154 | ) | |||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,591 | $ | 525 | $ | 340 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
| ||||||||||||
Cash paid for interest |
| $ | 175 |
| $ | 139 |
| $ | 225 | $ | 90 | $ | 111 | $ | 163 | ||||||
Cash paid for income taxes |
|
| 25 |
|
| 40 |
|
| 126 | 316 | 100 | 179 |
As of December 31, 2017, 20162020, 2019 and 2015,2018 the amount of capital expenditures in accounts payable was $51$74 million, $61$64 million and $53$66 million, respectively. DuringFor the yearsyear ended 2017, 2016 and 2015, Huntsman Corporation contributed $35 million, $31 million and $28 million, respectively, related to stock-based compensation for continuing operations. In addition, as of December 31, 2017,2019, the amount of cash interest and cash income taxes included in our supplemental cash flow information related to cash paid for interest and cash paid for income taxes that was paid by our former P&A Business after the IPO dateVenator was $6$46 million and $16$38 million, respectively. For the year ended December 31, 2020, the amounts of cash paid for taxes in connection with the sale of the Chemical Intermediates Businesses and the India-based DIY business were $231 million and $26 million, respectively.
See accompanying notes to consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DefinitionsDefinitions
For convenience in this report, the terms “Company,” “our” or “we” may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. Any references to the “Company” “we” “us” or “our” as of a date prior to October 19, 2004 (the date of our Company’s formation) are to Huntsman Holdings, LLC and its subsidiaries (including their respective predecessors). In this report, “Huntsman International” refers to Huntsman International LLC (our 100% ownedwholly-owned subsidiary) and, unless the context otherwise requires, its subsidiaries; “AAC” refers to Arabian Amines Company, our consolidated manufacturing joint venture with the Zamil Group; “HPS” refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd); “Sasol-Huntsman” refers to Sasol-Huntsman GmbH and Co. KG (our consolidated joint venture with Sasol that owns and operates a maleic anhydride facility in Moers, Germany); and “SLIC” refers to Shanghai Liengheng Isocyanate Company (our unconsolidated manufacturing joint venture with BASF and three Chinese chemical companies).
In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.
Description
Description of Business Business
We are a global manufacturer of differentiated organic chemical products. We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. 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‑durablenon-durable consumer products, digital inks, electronics, insulation, medical, packaging, coatings and construction, 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‑basedepoxy-based polymer formulations, textile chemicals and dyes.
We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. In August 2017, we separated the P&A Business through an IPO of ordinary shares of Venator. Beginning in the third quarter of 2017, we reported the results of the former P&A Business as discontinued operations. See “Note 3. Discontinued Operations and Business Dispositions—Separation of P&A Business.” 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 also report the results of these businesses as discontinued operations.
CompanyCompany
Our Company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses, which were founded by Jon M. Huntsman. Mr. Huntsman founded the predecessor to our Company in 1970 as a small polystyrene plastics packaging company. Since then, we have grown through a series of significant acquisitions and now own a global portfolio of businesses. Jon M. Huntsman served as the Executive Chairman of our Company until December 31, 2017, at which time Peter Huntsman, our Chief Executive Officer, was appointed to the role of Chairman of the Board. Jon M. Huntsman served as Director and Chairman Emeritus until his passing on February 2, 2018.
Currently, we operate all of our businesses through Huntsman International, our 100% ownedwholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.
Recent Developments
SeparationRecent Developments
COVID-19 Update
The outbreak of the P&ACOVID-19 has spread from China to many other countries, including the U.S. In March 2020, the World Health Organization characterized COVID-19 as a pandemic. As of December 31, 2020, there have not been any significant interruptions in our ability to provide our products and support to our customers. However, the COVID-19 pandemic has significantly impacted economic conditions throughout the U.S. and the world, including the markets in which we operate. Demand for our products declined at a rapid pace in the second quarter 2020, which led to a meaningful adverse impact on our revenues and financial results. Although we have experienced improved conditions in most of our core markets in the second half of 2020, there continues to be many uncertainties regarding the impact of the COVID-19 pandemic, including the scope of scientific and health issues, the anticipated duration of the pandemic and the extent of local, regional and worldwide economic, social and political disruption. Given such uncertainties, it is difficult to estimate the magnitude COVID-19may impact our future business, but we expect any adverse impact to continue for some time.
In response to the impact of COVID-19, we have implemented, and may continue to implement, cost saving initiatives, including:
● | suspended merit and general wage increases that customarily would have occurred at the end of the first quarter of 2020; |
● | implemented a temporary hiring freeze for all non-business critical positions; |
● | accelerated integration efforts related to the Icynene-Lapolla and CVC Thermoset Specialties acquisitions in order to more expeditiously capture related synergies; |
● | implemented restructuring programs in our Polyurethanes segment to reorganize our spray polyurethane foam business to better position this business for efficiencies and growth in coming years and to optimize our downstream footprint; |
● | implemented a restructuring program in our Performance Products segment, primarily related to workforce reductions, in response to the sale of our Chemical Intermediates Businesses to Indorama; |
● | implemented restructuring programs in our Advanced Materials segment, primarily related to workforce reductions in connection with the CVC Thermoset Specialties Acquisition and the alignment of the segment’s commercial organization and optimization of the segment’s manufacturing processes; and |
● | implemented restructuring programs in our Textile Effects segment to rationalize and realign structurally across various functions and certain locations within the segment. |
For more information regarding our 2020 restructuring activities, see “Note 13. Restructuring, Impairment and Plant Closing Costs (Credits).”
Redemption of the 2021 Senior Notes
On January 15, 2021, we redeemed in full €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes at the redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the redemption date.
Acquisition of Gabriel Performance Products
On January 15, 2021, we completed the acquisition of Gabriel, a North American specialty chemical manufacturer of specialty additives and epoxy curing agents for the coatings, adhesives, sealants and composite end-markets, from funds affiliated with Audax Private Equity in an all-cash transaction of approximately $250 million, subject to customary closing adjustments, funded from available liquidity. The acquired business will be integrated into our Advanced Materials segment.
Sale of Assets at our Basel, Switzerland Site
In November 2020, we entered into a sale and leaseback agreement to sell certain properties in Basel, Switzerland for approximately CHF 67 million (approximately $73 million) and to lease those properties back for five years. This transaction resulted in a pretax gain of approximately CHF 30 million (approximately $33 million).
Sale of India-Based Do-It-Yourself Consumer Adhesives Business
On November 3, 2020, we completed the sale of the India-based DIY business, previously part of our Advanced Materials segment, to Pidilite Industries Ltd. and received cash of approximately $257 million. Under the terms of the agreement, we may receive up to approximately $28 million of additional cash under an earnout within 18 months if the business achieves certain sales revenue targets in line with the DIY business' 2019 performance. In August 2017,connection with this sale, we separatedrecognized a pretax gain of $247 million in the P&A Business and conducted an IPOfourth quarter of2020, which was recorded in gain on sale of India-based DIY business in our consolidated statements of operations.
Sale of Venator Interest
On December 23, 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator formerlyto funds advised by SK Capital Partners, LP. We received approximately $99 million in cash, which included $8 million for a wholly-owned subsidiary30-month option as described below. In addition to the cash proceeds received from the sale, we achieved immediate cash tax savings of Huntsman. Additionally, in December 2017, we conducted a secondary offeringapproximately $150 million by offsetting the capital loss on the sale of Venator ordinary shares. Allshares against the capital gain realized on the sale of such ordinary shares were sold by Huntsman, and Venator did not receive any proceeds
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HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
from the offerings. Venator’s ordinary shares began trading on The New York Stock Exchange under the symbol “VNTR” on August 3, 2017. As of December 31, 2017, Huntsman retained approximately 55% ownership in Venator. On January 3, 2018, the underwriters purchased an additional 1,948,955 Venator ordinary shares pursuant to their over-allotment option, which reduced Huntsman’s ownership interest in Venator to approximately 53%. Beginning in the third quarter of 2017, we reported the results of operations of the P&A Business as discontinued operations. For more information, seeour Chemical Intermediates Businesses. See “Note 3.4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of P&A Business.Venator.”
Prepayment
Concurrently with the sale of Debt
In August 2017,Venator ordinary shares, we made early prepaymentsentered into an option agreement, pursuant to which we granted an option to funds advised by SK Capital Partners, LP to purchase the remaining approximate 9.7 million ordinary shares we hold in Venator at $2.15 per share. The option will expire on June 23, 2023 and will not be exercisable so long as such exercise would result in a default or an "Event of $1,207 million on our Senior Credit Facilities, of which $106 million was paid on our 2015 ExtendedDefault" under Venator’s Term Loan B, $347 million was paid on our 2021 Term Loan B,Credit Agreement and $754 million was paid on our 2023 Term Loan B. The funds used to pay down the debt included $732 million received from Venator ($750 million of debt raised by Venator, net of $18 million of debt issuance costs), upon its payment of intercompany debt obligations owed to Huntsman, and $475 million from proceeds of the Venator IPO. Revolving Credit Agreement.
In connection with the $1,2072017 initial public offering of Venator, we recorded a receivable of approximately $34 million prepaymentsrelated to certain income tax benefits that was reduced upon completion of our term loans, we recognized a loss on early extinguishment of debt of $34 million. Additionally, in December 2017, we repaid in full the remaining $511 million on our 2023 Term Loan B using the funds raised from the secondary offering and existing cash and recognized a loss on early extinguishment of debt of $15 million. See “Note 13. Debt—Direct and Subsidiary Debt—Senior Credit Facilities.”
With available free cash flow, the net proceeds from the sale of our investment in the P&A business and cash from the repayment of related intercompany indebtedness as described above, we repaid $2.1 billion of debt during the full year 2017 and believe we achieved investment grade-type leverage metrics at year end. See “Note 13. Debt—Direct and Subsidiary Debt—Senior Credit Facilities.”
Termination of Huntsman and Clariant Merger Agreement
As previously disclosed, on May 21, 2017, Huntsman and Clariant entered into a merger agreement. On October 26, 2017, Huntsman and Clariant entered into a termination agreement pursuantVenator shares to which the parties mutually terminated the merger agreement. No fees are payable under the terms of the termination agreement at this time. Huntsman and Clariant also agreed to release each other from claims and liabilities arising out of or related to the merger agreement or the transactions contemplated thereby. Pursuant to the termination agreement, each party agreed to bear its own costs, fees and expenses in connection with the merger agreement and the transaction costs contemplated thereby, except for specified joint filing fees and related expenses as set forth in the merger agreement. During the years ended December 31, 2017, 2016 and 2015, we incurred merger-related costs of $28 million, nil and nil, respectively.
U.S. Tax Reform Act
On December 22, 2017, the U.S. Tax Reform Act was signed into law. The U.S.Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, repealing the deduction for domestic production activities and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.
As a result of the U.S. Tax Reform Act, the Company recorded a provisional tax benefit of $137 millionSK Capital Partners, LP due to a remeasurementchange of deferredcontrol limitation on specific Venator tax assets and liabilities and a provisional tax expenseattributes. Accordingly, we wrote off approximately $31 million of $85 million due tothis receivable upon completion of the transition tax on deemed repatriationsale of deferred foreign income. Absent the Venator offering and certain tax related restructuring transactions, our provisional transition tax liability on deemed repatriation of deferred foreign income would have been $12 million.ordinary shares in December 2020.
Share Repurchase ProgramOther Significant Developments During 2020
On February 7, 2018, our Board of Directors authorized our Company to repurchase up to $400 million in shares of our common stock in addition to the $50 million remaining under our September 2015 share repurchase authorization. Repurchases may be made through the open market or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are held in treasury at cost.
F-17
Table of ContentsOther significant developments that occurred during 2020 were as follows:
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
● | In May 2020, we completed the CVC Thermoset Specialties Acquisition. For more information, see “Note 3. Business Combinations and Acquisitions—Acquisition of CVC Thermoset Specialties." |
● | In February 2020, we completed the Icynene-Lapolla Acquisition. For more information, see “Note 3. Business Combinations and Acquisitions—Acquisition of Icynene-Lapolla.” |
● | In January 2020, we completed the sale of our Chemical Intermediates Businesses to Indorama in a transaction valued at approximately $2 billion, comprised of a cash purchase price of approximately $1.92 billion and the transfer of approximately $72 million in net underfunded pension and other post-employment benefit liabilities. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses.” |
Huntsman CoprorationHuntsman Corporation and Huntsman International Financial Statements Huntsman International Financial Statements
Except where otherwise indicated, these notes relate to the consolidated financial statements for both our Company and Huntsman International. The differences between our consolidated financial statements and Huntsman International’s consolidated financial statements relate primarily to the following:
| ● | purchase accounting recorded at our Company for the 2003 |
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| ● | a note payable from Huntsman International to |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Asset Retirement Obligations
We accrue for asset retirement obligations, which consist primarily
Carrying Value of landfill capping, closure and post‑closure costs, asbestos abatement costs, demolition and removal costs and leasehold remediation costs, in the period in which the obligations are incurred. Asset retirement obligations are accrued at estimated fair value. When the liability is initially recorded, we capitalize the cost by increasing the carrying amount of the related long‑lived asset. Over time, the liability is accreted to its estimated settlement value and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we will recognize a gain or loss for any difference between the settlement amount and the liability recorded. Asset retirement obligations were $9 million and $8 million at December 31, 2017 and 2016, respectively. Long-Lived Assets
Carrying Value of Long‑Lived Assets
We review long‑livedlong-lived assets and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based upon current and anticipated undiscounted cash flows, and we recognize an impairment when such estimated cash flows are less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the difference between carrying value and fair value. Fair value is generally estimated by discounting estimated future cash flows using a discount rate commensurate with the risks involved or selling price of assets held for sale. See “Note 11. Restructuring, Impairment
Cash and Plant Closing Costs.” Cash Equivalents
Cash and Cash Equivalents
We consider cash in checking accounts and cash in short‑termshort-term highly liquid investments with remainingoriginal maturities of three months or less at the date of purchase, to be cash and cash equivalents. Cash flows from financing activities from discontinued operations are not presented separately in our consolidated statements
Cost of cash flows. Goods Sold
Cost of Goods Sold
We classify the costs of manufacturing and distributing our products as cost of goods sold. Manufacturing costs include variable costs, primarily raw materials and energy, and fixed expenses directly associated with production. Manufacturing costs also include, among other things, plant site operating costs and overhead (including depreciation), production planning and logistics costs, repair and maintenance costs, plant site purchasing costs, and engineering and technical support costs. Distribution, freight and warehousing costs are also included in cost of goods sold.
Derivatives
Derivatives and Hedging Activities Hedging Activities
All derivatives, whether designated in hedging relationships or not, are recorded on our balance sheetsheets 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
F-18
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
derivative are recorded in accumulated other comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. Changes in the fair value of the hedge in the net investment of certain international operations are recorded in other comprehensive income (loss), to the extent effective. The effectiveness of a cash flow hedging relationship is established at the inception of the hedge, and after inception we perform effectiveness assessments at least every three months. A derivative designated as a cash flow hedge is determined to be effective if the change in value of the hedge divided by the change in value of the hedged item is within a range of 80% to 125%. Hedge ineffectiveness in a cash flow hedge occurs only if the cumulative gain or loss on the derivative hedging instrument exceeds the cumulative change in the expected future cash flows on the hedged transaction. For a derivative that does not qualify or has not been designated as a hedge, changes in fair value are recognized in earnings.
Environmental Expenditures
Environmental Expenditures
Environmental related restoration and remediation costs are recorded as liabilities when site restoration and environmental remediation and clean‑upclean-up obligations are either known or considered probable and the related costs can be reasonably estimated. Other environmental expenditures that are principally maintenance or preventative in nature are recorded when expended and incurred and are expensed or capitalized as appropriate. See “Note 19.22. Environmental, Health and Safety Matters.”
Foreign Currency Translation
Equity Method Investments
We account for our equity investments where we own a non-controlling interest, but exercise significant influence, under the equity method of accounting. Under the equity method of accounting, our original cost of the investment is adjusted for our share of equity in the earnings of the equity investee and reduced by dividends and distributions of capital received, unless the fair value option is elected, in which case the investment balance is marked to fair value each reporting period and the impact of changes in fair value of the equity investment are reported in earnings.
Foreign Currency Translation
The accounts of our operating subsidiaries outside of the U.S., unless they are operating in highly inflationary economic environments, consider the functional currency to be the currency of the economic environment in which they operate. Accordingly, assets and liabilities are translated at rates prevailing at the balance sheet date. Revenues, expenses, gains and losses are translated at a weighted average rate for the period. Cumulative translation adjustments are recorded to equity as a component of accumulated other comprehensive loss.
If a subsidiary operates in an economic environment that is considered to be highly inflationary (100% cumulative inflation over a three-yearthree-year period), the U.S. dollar is considered to be the functional currency and gains and losses from remeasurement to the U.S. dollar from the local currency are included in the statement of operations. Where a subsidiary’s operations are effectively run, managed, financed and contracted in U.S. dollars, such as certain finance subsidiaries outside of the U.S., the U.S. dollar is considered to be the functional currency.
Foreign currency transaction gains and losses are recorded in other operating (income) expense, net in our consolidated statements of operations and were (gains) losses(losses) gains of $(5)$2 million, $(2)$(8) million and $10$3 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively.
Income Taxes
Income Taxes
We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions.
On December 22, 2017, the U.S. Tax Reform Act was signed into law. The U.S. Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21%, effective (effective January 1, 2018, repealing2018), creation of the deduction for domestic production activities base erosion anti-abuse tax provision (“BEAT”) and a new provision designed to tax global intangible low-taxed income (“GILTI”) (effective January 1, 2018) and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.
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TableIn 2017, we booked provisional amounts for the remeasurements of Contents
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As a result of the U.S. Tax Reform Act, the Company recorded a provisional tax benefit of $137 million due to a remeasurement of deferred tax assets and liabilities and a provisional tax expense of $85 million due to the transitiontransitional tax on deemed repatriation of deferred foreign income. Absent the Venator offering and certain taxincome related restructuring transactions, our provisional transition tax liability on deemed repatriation of deferred foreign income would have been $12 million.
Both the tax benefit and the tax charge represent provisional amounts and our current best estimates. Any adjustments recorded to the provisional amounts through calendar year 2018 will be includedenactment of the U.S. Tax Reform Act. During the remeasurement period in income as an adjustment to2018, we recorded a net tax expense inof $32 million. We did not make the period ofelection to reclassify the adjustment. The provisional amounts incorporate assumptions made based upon available information and our current interpretationincome tax effects of the U.S. Tax Reform Act and may change as we receive additional implementation guidance and as we further refine our calculations with additional information.from accumulated other comprehensive income to retained earnings.
Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The application of income tax law is inherently complex. We are required to determine if an income tax position meets the criteria of more‑likely‑than‑more-likely-than-not to be realized based on the merits of the position under tax law, in order to recognize an income tax benefit. This requires us to make significant judgments regarding the merits of income tax positions and the application of income tax law. Additionally, if a tax position meets the recognition criteria of more‑likely‑than‑more-likely-than-not we are required to make judgments and apply assumptions to measure the amount of the tax benefits to recognize. These judgments are based on the probability of the amount of tax benefits that would be realized if the tax position was challenged by the taxing authorities. Interpretations and guidance surrounding income tax laws and regulations change over time. As a consequence, changes in assumptions and judgments can materially affect amounts recognized in our consolidated financial statements. We have not determined the need for, or change in, any unrecognized tax positions due to the U.S. Tax Reform Act. For further information concerning taxes, seeSee “Note 17.20. Income Taxes.”
Intangible Assets
Intangible Assets and Goodwill Goodwill
Intangible assets are stated at cost (fair value at the time of acquisition) and are amortized using the straight‑linestraight-line method over the estimated useful lives or the life of the related agreement as follows:
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Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill is not subject to any method of amortization, but is tested for impairment annually (at the beginning of the third quarter) and when events and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. When the fair value is less than the carrying value of the related reporting unit, we are required to reduce the amount of goodwill through a charge to earnings. Fair value is estimated using the market approach, as well as the income approach based on discounted cash flow projections. Goodwill has been assigned to reporting units for purposes of impairment testing. The
During 2020, goodwill increased by approximately $259 million due to the addition of our acquired businesses, partially offset by a net change to goodwill in responsedecrease of approximately $2 million due to changes in foreign currency exchange rates during 2017 was $3 million.rates. See “Note 3. Business Combinations and Acquisitions.” During 2019, goodwill decreased by approximately $2 million due to the finalization of the valuation of the assets and liabilities of an acquisition, partially offset by a net increase of approximately $1 million due to changes in foreign currency exchange rates.
Inventories
Inventories
Inventories are stated at the lower of cost or market, with cost determined using LIFO, first‑in first‑out,first-in first-out, and average costs methods for different components of inventory.
Legal Costs
Leases
On January 1, 2019, we adopted the new lease standard using the optional transition method provided under ASU No.2018-11, which allowed us to initially apply the amendments of the new lease standard at the adoption date. Upon adoption of the new lease standard, we elected the package of three practical expedient permitted under the transition guidance within the new lease standard, which among other things, allowed us to carry forward the historical lease classification on existing leases at adoption. In addition, we elected the practical expedient related to land easements, which allowed us to carry forward our accounting treatment for land easements on existing agreements. We also elected the hindsight practical expedient to determine the lease term for existing leases.
The determination of whether a contract is or contains a lease is performed at the lease inception date. Lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, using incremental borrowing rates as the implicit rates are not readily determinable for our leases. The incremental borrowing rates are determined on a collateralized basis and vary from lease to lease depending on the country where the leased asset exists and the term of the lease arrangement. We combine lease components with non-lease components and account for them as a single lease component for all classes of underlying assets, except for leases of manufacturing and research facilities and administrative offices. For these assets, non-lease components are separated from lease components and accounted for as normal operating expenses. See “Note 9. Leases.”
Legal Costs
We expense legal costs, including those legal costs incurred in connection with a loss contingency, as incurred.
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HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net Income Per Share Attributable
Net Income Per Share Attributable to Huntsman Corporation Huntsman Corporation
Basic income per share excludes dilution and is computed by dividing net income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period. Diluted income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing net income available to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities.
Basic and diluted income per share is determined using the following information (in millions):
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Basic and diluted income from continuing operations: |
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Income from continuing operations attributable to Huntsman Corporation |
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Basic and diluted net income: |
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Net income attributable to Huntsman Corporation |
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Weighted average shares outstanding |
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Basic and diluted income from continuing operations: | ||||||||||||
Income from continuing operations attributable to Huntsman Corporation | $ | 259 | $ | 393 | $ | 608 | ||||||
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Net income attributable to Huntsman Corporation | $ | 1,034 | $ | 562 | $ | 337 | ||||||
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Weighted average shares outstanding | 220.6 | 228.9 | 238.1 | |||||||||
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Stock-based awards | 1.3 | 1.7 | 3.5 | |||||||||
Total weighted average shares outstanding, including dilutive shares | 221.9 | 230.6 | 241.6 |
Additional stock‑basedstock-based awards of 0.84.3 million, 5.73.0 million and 6.10.8 million weighted average equivalent shares of stock were outstanding during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. However, these stock‑basedstock-based awards were not included in the computation of diluted earnings per share for the respective periods mentioned because the effect would be anti‑dilutive.anti-dilutive.
Other Noncurrent Assets
Other noncurrent assets consist primarily of spare parts, the overfunded portion related to defined benefit plans for employees and capitalized turnaround costs.
Other Noncurrent Assets
Periodic maintenance and repairs applicable to major units of manufacturing facilities (a “turnaround”) are accounted for on the deferral basis by capitalizing the costs of the turnaround and amortizing the costs over the estimated period until the next turnaround.
Principles
Principles of Consolidation Consolidation
Our consolidated financial statements include the accounts of our wholly owned and majority owned subsidiaries and any variable interest entities for which we are the primary beneficiary. All intercompany accounts and transactions have been eliminated.
Property, Plant
Property, Plant and Equipment Equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight‑linestraight-line method over the estimated useful lives or lease term as follows:
Interest expense capitalized as part of plant and equipment was
Normal maintenance and repairs of plant and equipment are charged to expense as incurred. Renewals, betterments and major repairs that materially extend the useful life of the assets are capitalized, and the assets replaced, if any, are retired.
Revenue Recognition We generate substantially all of our revenue through product sales in
We generate substantially all of our revenues through sales in the open market and
Substantially all of our revenue is generated through product sales in which revenue is recognized at a point in time. At contract inception, we assess the goods and services, if any, promised in our contracts and identify a performance obligation for each promise to transfer to the customer a good or service that is distinct. In substantially all cases, a contract has a single performance obligation to deliver a promised good to the customer. Revenue is recognized when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment. Further, in determining whether control has transferred, we consider if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. The amount of consideration we receive and revenue we recognize is based upon the terms stated in the sales contract, which may contain variable consideration such as discounts or rebates. We allocate the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the purchase order or in the sales contract is considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar customer in similar circumstances. In order to estimate the applicable variable consideration, we use historical and current trend information to estimate the amount of discounts or rebates to which customers are likely to be entitled. Historically, actual discount or rebate adjustments relative to those estimated and included when determining the transaction price have not materially differed. Payment terms vary but are generally less than one year. As our standard payment terms are less than one year, we have elected to not assess whether a contract has a significant financing component. In the normal course of business, we do not accept product returns unless the item is defective as manufactured. We establish provisions for estimated returns based on an analysis of historical experience. See “Note 18. Revenue Recognition.” Securitization of Accounts Receivable Under our A/R Programs, we grant an undivided interest in certain of our trade receivables to the special purpose entities (“SPE”) in the U.S.
Stock-Based Compensation We measure the cost of employee services received in exchange for an award of equity instruments based on the
Use of The preparation of financial statements in conformity with U.S. 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.
Accounting Pronouncements Adopted During2020 We adopted the
The following accounting pronouncement becomes effective subsequent to fiscal year 2020, and
3. BUSINESS COMBINATIONS AND Acquisition of CVC Thermoset Specialties On May 18, 2020, we completed the CVC Thermoset Specialties Acquisition, a North American specialty chemical manufacturer serving the industrial composites, adhesives and coatings markets. We acquired the business for $304 million from Emerald Performance Materials LLC,
We have accounted for the CVC Thermoset Specialties Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in
The The acquired business had revenues and net loss of $43 million and $6 million, respectively, for the Acquisition of Icynene-Lapolla On February 20, 2020, we completed the Icynene-Lapolla Acquisition. We acquired the business from an affiliate of FFL Partners, LLC for $353 million in an all-cash transaction funded from available liquidity. The acquired business was integrated into our Polyurethanes segment. Transaction costs related to this acquisition were approximately $14 million for the year ended December 31, 2020, and were recorded in other operating (income) expense, net in our consolidated We have accounted for the Icynene-Lapolla Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost
The acquisition cost allocation is preliminary pending final determination of the The acquired business had revenues and net income of $199 million and $12 million, respectively, for the period from the date of acquisition to December 31, 2020. PRO FORMA INFORMATION FOR ACQUISITIONS OCCURRING IN2020 If the CVC Thermoset Specialties Acquisition and the Icynene-Lapolla Acquisition were to have occurred on January 1, 2019, the following estimated pro forma revenues, net income and net income attributable to Huntsman Corporation and Huntsman International would have been reported (dollars in millions):
Acquisition of Remaining Interest in Sasol-Huntsman Joint Venture On September 30, 2019, we acquired from Sasol, our former joint venture partner, the 50% noncontrolling interest that we did not own in the Sasol-Huntsman maleic anhydride joint venture. We paid Sasol $101 million, which included acquired cash, net of any debt. The purchase price was funded from the 2019 Term Loan. See “Note 15. Debt—Direct and Subsidiary Debt—Term Loan Credit Facility.” In connection with this The effects of changes in our ownership interest in Sasol-Huntsman on the equity attributable to Huntsman Corporation and Huntsman International are as follows (dollars in millions):
Acquisition of Demilec On April 23, 2018, we acquired 100% of the outstanding equity interests of Demilec (USA) Inc. and Demilec Inc. (collectively, "Demilec") for approximately $353 million, including working capital adjustments, in an all-cash transaction ("Demilec Acquisition"), which was funded from our Prior Credit Facility and our U.S. A/R Program. Demilec is a leading North American manufacturer and distributor of spray polyurethane foam formulations for residential and commercial applications. The acquired business was integrated into our Polyurethanes segment. Transaction costs charged to expense related to this acquisition were approximately $5 million in 2018 and were recorded in other We have accounted for the Demilec Acquisition using the acquisition method. As such, we
Intangible assets acquired consist primarily of trademarks, trade secrets and customer relationships, all of which are being amortized over 15 years. We have assigned any excess of the acquisition cost of
The acquired business had revenues and net income of $142 million and $5 million, respectively, for If this
4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS
Sale of On January 3, 2020, we completed the sale of our Chemical Intermediates Businesses to Indorama in a transaction valued at approximately $2 billion, comprised of a cash purchase price of approximately $1.92 billion and the transfer of approximately $72 million in net underfunded pension and other post-employment benefit liabilities. In During the
The following table
The following table reconciles major line items constituting pretax income of discontinued operations to after-tax income (loss) of discontinued operations as presented in our consolidated statements of operations (dollars in millions):
Separation and Deconsolidation of Venator In August 2017, we separated our Titanium Dioxide and Performance Additives business and conducted an initial public offering of ordinary shares of Venator. Beginning in December 2018, following a series of public offerings and sales of Venator ordinary shares, our ownership in Venator decreased to approximately 49%, and we began accounting for our remaining interest in Venator as an equity method investment using the fair value option. On December 23, 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator and received approximately $99 million in cash. See “Note 1. General—Recent Developments—Sale of Venator Interest.” Subsequent to this sale of ordinary shares of Venator, we no longer account for our current remaining ownership interest in Venator as an equity method investment, but rather as an investment in equity securities that are marked to fair value with changes in fair value reported in earnings. For the years ended December, 2020, 2019 and 2018, we recorded a loss of $55 million, $19 million and $62 million, respectively. The loss of $88 million for the year ended December 31, 2020 primarily includes the marked to fair value adjustment of $43 million for the Venator ordinary shares
Sale of On
5. INVENTORIES Inventories consisted of the following (dollars in millions):
For December 31,
The cost and accumulated depreciation of property, plant and equipment were as follows (dollars in millions): Huntsman Corporation
Depreciation expense for Huntsman International
Depreciation expense for
7. INVESTMENT IN UNCONSOLIDATED AFFILIATES
Our ownership percentage and investment in unconsolidated affiliates were as follows (dollars in millions):
Summarized Financial Information of Unconsolidated Affiliates
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:
|
| ● | AAC is our 50%-owned joint venture with Zamil group that |
|
|
Sasol-Huntsman was our 50%-owned joint venture with Sasol that owned and operated a maleic anhydride facility in Moers, Germany. On September 30, 2019, we acquired the 50% noncontrolling interest that we did not own in the Sasol-Huntsman. As such, as of September 30, 2019, Sasol-Huntsman became our wholly-owned subsidiary and was no longer accounted for as a variable interest entity.
During the year ended December 31, 2020, there were no changes in our variable interest entities.
Creditors of theseour variable interest entities have no recourse to our general credit. See “Note 13.15. Debt—Direct and Subsidiary Debt.” As the primary beneficiary of these variable interest entities at December 31, 2017,2020, the joint ventures’ assets, liabilities and results of operations are included in our consolidated financial statements.
The following table summarizes the carrying amount of our variable interest entities’ assets and liabilities included in our consolidated balance sheets as of December 31, 2017 2020 and 20162019 (dollars in millions):
|
|
|
|
|
|
|
|
| December 31, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
Current assets |
| $ | 114 |
| $ | 103 |
Property, plant and equipment, net |
|
| 283 |
|
| 279 |
Other noncurrent assets |
|
| 116 |
|
| 99 |
Deferred income taxes |
|
| 33 |
|
| 43 |
Intangible assets |
|
| 10 |
|
| 10 |
Goodwill |
|
| 14 |
|
| 12 |
Total assets |
| $ | 570 |
| $ | 546 |
Current liabilities |
| $ | 163 |
| $ | 131 |
Long-term debt |
|
| 86 |
|
| 114 |
Deferred income taxes |
|
| 12 |
|
| 10 |
Other noncurrent liabilities |
|
| 98 |
|
| 76 |
Total liabilities |
| $ | 359 |
| $ | 331 |
F-29
December 31, | ||||||||
2020 | 2019 | |||||||
Current assets | $ | 49 | $ | 50 | ||||
Property, plant and equipment, net | 167 | 180 | ||||||
Operating lease right-of-use assets | 22 | 16 | ||||||
Other noncurrent assets | 138 | 132 | ||||||
Deferred income taxes | 30 | 30 | ||||||
Total assets | $ | 406 | $ | 408 | ||||
Current liabilities | $ | 183 | $ | 151 | ||||
Long-term debt | 3 | 29 | ||||||
Noncurrent operating lease liabilities | 17 | 11 | ||||||
Other noncurrent liabilities | 82 | 87 | ||||||
Deferred income taxes | 1 | 0 | ||||||
Total liabilities | $ | 286 | $ | 278 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities are as follows (dollars in millions):
Year ended December 31, | ||||||||||||
2020 | 2019(1) | 2018 | ||||||||||
Revenues | $ | 0 | $ | 95 | $ | 154 | ||||||
Income from continuing operations before income taxes | 4 | 17 | 40 | |||||||||
Net cash provided by operating activities | 10 | 81 | 65 |
(1) | As of September 30, 2019, Sasol-Huntsman was no longer accounted for as a variable interest entity. Therefore, this financial data only includes information for Sasol-Huntsman applicable to the period from January 1, 2019 through September 30, 2019. |
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| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Revenues |
| $ | 132 |
| $ | 97 |
| $ | 130 |
Income from continuing operations before income taxes |
|
| 25 |
|
| 15 |
|
| 36 |
Net cash provided by operating activities |
|
| 51 |
|
| 50 |
|
| 66 |
Prior
9. LEASES
We primarily lease manufacturing and research facilities, administrative offices, land, tanks, railcars and equipment. Leases with an initial term of 12 months or less are not recognized on the balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. Our variable lease cost was approximately nil for each of the years ended December 31, 2020 and 2019, respectively. Our leases have remaining lives from one month to 37 years. Certain lease agreements include one or more options to renew, at our discretion, with renewal terms that can extend the Separation,lease term by approximately one year to 30 years or more. Renewal and termination options that we held variable interestsare reasonably certain to exercise have been included in two additional joint ventures for which we were the primary beneficiary: Pacific Iron Products Sdn Bhd and Viance, LLC. In connection withcalculation of the Separation, these variable interests are now held by Venator. As such, thelease right-of-use assets and lease liabilities. None of our lease agreements contain material residual value guarantees or material restrictions or covenants.
The components of operating lease expense, cash flows and supplemental noncash information from continuing operations are as follows (dollars in millions):
Years Ended December 31, | ||||||||
2020 | 2019 | |||||||
Operating lease expense: | ||||||||
Cost of goods sold | $ | 34 | $ | 35 | ||||
Selling, general and administrative | 26 | 15 | ||||||
Research and development | 6 | 6 | ||||||
Total operating lease expense(1)(2) | $ | 66 | $ | 56 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 74 | $ | 53 | ||||
Supplemental noncash information: | ||||||||
Leased assets obtained in exchange for new operating lease liabilities | $ | 91 | $ | 416 |
(1) | Total operating lease expense includes short-term lease expense of approximately $3 million and $1 million for the years ended December 31, 2020 and 2019, respectively. |
(2) | Total operating lease expense for the year ended December 31, 2018 was $55 million. |
The weighted-average lease term and discount rate for our operating leases from continuing operations are as follows:
Years Ended December 31, | ||||||||
2020 | 2019 | |||||||
Weighted-average remaining lease term (in years) | 11 | 11 | ||||||
Weighted-average discount rate | 4.0 | % | 4.1 | % |
The undiscounted future cash flows of operating lease liabilities from continuing operations as of these variable interest entitiesDecember 31, 2020 are now included as partfollows (dollars in millions):
Year ending December 31, | ||||
2021 | $ | 68 | ||
2022 | 62 | |||
2023 | 58 | |||
2024 | 55 | |||
2025 | 51 | |||
Thereafter | 276 | |||
Total lease payments | 570 | |||
Less imputed interest | (107 | ) | ||
Total | $ | 463 |
As of assetsDecember 31, 2020, we have additional leases, primarily for leases of office and liabilities heldmanufacturing facilities and rail cars, that have not yet commenced of approximately $9 million. These leases will commence in 2021 with lease terms of up to seven years.
During November 2020, we entered into a sale and leaseback agreement to sell certain properties in Basel, Switzerland for sale. See “Note 3. Discontinued Operationsapproximately CHF 67 million (approximately $73 million) and Business Dispositions—Separationto lease those properties back for five years. This transaction resulted in a gain of P&A Business.”approximately CHF 30 million (approximately $33 million).
8.
10. INTANGIBLE ASSETS
The gross carrying amount and accumulated amortization of intangible assets were as follows (dollars in millions):
Huntsman Corporation
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|
|
|
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|
|
| December 31, 2017 |
| December 31, 2016 | ||||||||||||||
|
| Carrying |
| Accumulated |
|
|
| Carrying |
| Accumulated |
|
| ||||||
|
| Amount |
| Amortization |
| Net |
| Amount |
| Amortization |
| Net | ||||||
Patents, trademarks and technology |
| $ | 350 |
| $ | 332 |
| $ | 18 |
| $ | 349 |
| $ | 327 |
| $ | 22 |
Licenses and other agreements |
|
| 40 |
|
| 25 |
|
| 15 |
|
| 37 |
|
| 23 |
|
| 14 |
Non-compete agreements |
|
| 4 |
|
| 2 |
|
| 2 |
|
| 3 |
|
| 2 |
|
| 1 |
Other intangibles |
|
| 82 |
|
| 61 |
|
| 21 |
|
| 62 |
|
| 56 |
|
| 6 |
Total |
| $ | 476 |
| $ | 420 |
| $ | 56 |
| $ | 451 |
| $ | 408 |
| $ | 43 |
December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||
Amount | Amortization | Net | Amount | Amortization | Net | |||||||||||||||||||
Patents, trademarks and technology | $ | 316 | $ | 237 | $ | 79 | $ | 314 | $ | 230 | $ | 84 | ||||||||||||
Licenses and other agreements | 140 | 61 | 79 | 140 | 48 | 92 | ||||||||||||||||||
Non-compete agreements | 3 | 2 | 1 | 3 | 2 | 1 | ||||||||||||||||||
Other intangibles(1) | 349 | 55 | 294 | 61 | 41 | 20 | ||||||||||||||||||
Total | $ | 808 | $ | 355 | $ | 453 | $ | 518 | $ | 321 | $ | 197 |
Amortization expense was $6$33 million, $12$16 million and $6 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively.
Huntsman International
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|
|
|
|
|
| December 31, 2017 |
| December 31, 2016 | ||||||||||||||
|
| Carrying |
| Accumulated |
|
|
| Carrying |
| Accumulated |
|
| ||||||
|
| Amount |
| Amortization |
| Net |
| Amount |
| Amortization |
| Net | ||||||
Patents, trademarks and technology |
| $ | 350 |
| $ | 332 |
| $ | 18 |
| $ | 349 |
| $ | 327 |
| $ | 22 |
Licenses and other agreements |
|
| 40 |
|
| 25 |
|
| 15 |
|
| 37 |
|
| 23 |
|
| 14 |
Non-compete agreements |
|
| 4 |
|
| 2 |
|
| 2 |
|
| 3 |
|
| 2 |
|
| 1 |
Other intangibles |
|
| 90 |
|
| 69 |
|
| 21 |
|
| 70 |
|
| 64 |
|
| 6 |
Total |
| $ | 484 |
| $ | 428 |
| $ | 56 |
| $ | 459 |
| $ | 416 |
| $ | 43 |
December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||
Amount | Amortization | Net | Amount | Amortization | Net | |||||||||||||||||||
Patents, trademarks and technology | $ | 316 | $ | 237 | $ | 79 | $ | 314 | $ | 230 | $ | 84 | ||||||||||||
Licenses and other agreements | 140 | 61 | 79 | 140 | 48 | 92 | ||||||||||||||||||
Non-compete agreements | 3 | 2 | 1 | 3 | 2 | 1 | ||||||||||||||||||
Other intangibles(1) | 357 | 63 | 294 | 70 | 50 | 20 | ||||||||||||||||||
Total | $ | 816 | $ | 363 | $ | 453 | $ | 527 | $ | 330 | $ | 197 |
Amortization expense was $7$33 million, $12$16 million and $6 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively.
F-30
(1) | Includes provisional intangible asset fair values related to the CVC Thermoset Specialties Acquisition and the Icynene-Lapolla Acquisition. For more information, see “Note 3. Business Combinations and Acquisitions." |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Our and Huntsman International’s estimated future amortization expense for intangible assets over the next five years is as follows (dollars in millions):
|
|
|
|
Year ending December 31, |
|
|
|
2018 |
| $ | 6 |
2019 |
|
| 6 |
2020 |
|
| 6 |
2021 |
|
| 5 |
2022 |
|
| 4 |
Year ending December 31, | ||||
2021 | $ | 30 | ||
2022 | 34 | |||
2023 | 34 | |||
2024 | 34 | |||
2025 | 34 |
9.11. OTHER NONCURRENT ASSETS
Other noncurrent assets consisted of the following (dollars in millions):
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|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Capitalized turnaround costs, net |
| $ | 233 |
| $ | 214 |
Spare parts inventory |
|
| 91 |
|
| 79 |
Deposits |
|
| 52 |
|
| 46 |
Catalyst assets, net |
|
| 46 |
|
| 43 |
Investment in available-for-sale securities |
|
| — |
|
| 18 |
Pension assets |
|
| 22 |
|
| 1 |
Other |
|
| 53 |
|
| 71 |
Total |
| $ | 497 |
| $ | 472 |
December 31, | ||||||||
2020 | 2019 | |||||||
Capitalized turnaround costs, net | $ | 250 | $ | 223 | ||||
Investment in Venator | 32 | 0 | ||||||
Catalyst assets, net | 27 | 24 | ||||||
Other | 239 | 205 | ||||||
Total | $ | 548 | $ | 452 |
Amortization expense of catalyst assets for the years ended December 31, 2017, 20162020, 2019 and 20152018 was $15$8 million, $17$9 million and $14$10 million, respectively.
10.
12. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (dollars in millions):
Huntsman Corporation
|
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|
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|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Payroll and related accruals |
| $ | 172 |
| $ | 135 |
Volume and rebate accruals |
|
| 58 |
|
| 48 |
Taxes other than income taxes |
|
| 77 |
|
| 60 |
Income taxes |
|
| 62 |
|
| 28 |
Restructuring and plant closing reserves |
|
| 15 |
|
| 28 |
Interest |
|
| 20 |
|
| 21 |
Pension liabilities |
|
| 15 |
|
| 11 |
Other postretirement benefits |
|
| 7 |
|
| 8 |
Environmental accruals |
|
| 6 |
|
| 7 |
Other miscellaneous accruals |
|
| 137 |
|
| 125 |
Total |
| $ | 569 |
| $ | 471 |
F-31
December 31, | ||||||||
2020 | 2019 | |||||||
Payroll and related accruals | $ | 97 | $ | 100 | ||||
Income taxes | 73 | 59 | ||||||
Taxes other than income taxes | 56 | 64 | ||||||
Volume and rebate accruals | 55 | 53 | ||||||
Other miscellaneous accruals | 177 | 144 | ||||||
Total | $ | 458 | $ | 420 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman International
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Payroll and related accruals |
| $ | 172 |
| $ | 135 |
Volume and rebate accruals |
|
| 58 |
|
| 48 |
Taxes other than income taxes |
|
| 77 |
|
| 60 |
Income taxes |
|
| 62 |
|
| 28 |
Restructuring and plant closing reserves |
|
| 15 |
|
| 28 |
Interest |
|
| 20 |
|
| 21 |
Pension liabilities |
|
| 15 |
|
| 11 |
Other postretirement benefits |
|
| 7 |
|
| 8 |
Environmental accruals |
|
| 6 |
|
| 7 |
Other miscellaneous accruals |
|
| 134 |
|
| 122 |
Total |
| $ | 566 |
| $ | 468 |
December 31, | ||||||||
2020 | 2019 | |||||||
Payroll and related accruals | $ | 97 | $ | 100 | ||||
Income taxes | 73 | 59 | ||||||
Taxes other than income taxes | 56 | 64 | ||||||
Volume and rebate accruals | 55 | 53 | ||||||
Other miscellaneous accruals | 174 | 141 | ||||||
Total | $ | 455 | $ | 417 |
11.13. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (CREDITS)
As of December 31, 2017, 20162020, 2019 and 2015,2018, accrued restructuring costs of continuing operations by type of cost and initiative consisted of the following (dollars in millions):
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|
|
|
|
|
|
|
|
|
|
| Non-cancelable |
| Other |
|
| |||||
|
| Workforce |
| Demolition and |
| lease and contract |
| restructuring |
|
| |||||
|
| reductions(1) |
| decommissioning |
| termination costs |
| costs |
| Total(2) | |||||
Accrued liabilities as of January 1, 2015 |
| $ | 28 |
| $ | — |
| $ | 47 |
| $ | 3 |
| $ | 78 |
2015 charges for 2014 and prior initiatives |
|
| 8 |
|
| 24 |
|
| 15 |
|
| 9 |
|
| 56 |
2015 charges for 2015 initiatives |
|
| 30 |
|
| — |
|
| — |
|
| 3 |
|
| 33 |
Reversal of reserves no longer required |
|
| (7) |
|
| — |
|
| (6) |
|
| — |
|
| (13) |
2015 payments for 2014 and prior initiatives |
|
| (23) |
|
| (8) |
|
| (17) |
|
| (7) |
|
| (55) |
2015 payments for 2015 initiatives |
|
| (16) |
|
| — |
|
| — |
|
| (3) |
|
| (19) |
Foreign currency effect on liability balance |
|
| (1) |
|
| — |
|
| (2) |
|
| — |
|
| (3) |
Accrued liabilities as of December 31, 2015 |
|
| 19 |
|
| 16 |
|
| 37 |
|
| 5 |
|
| 77 |
2016 charges for 2015 and prior initiatives |
|
| 1 |
|
| 24 |
|
| 9 |
|
| 13 |
|
| 47 |
2016 charges for 2016 initiatives |
|
| 1 |
|
| — |
|
| — |
|
| 5 |
|
| 6 |
Reversal of reserves no longer required |
|
| (2) |
|
| — |
|
| — |
|
| — |
|
| (2) |
Distribution of prefunded restructuring costs |
|
| (5) |
|
| (5) |
|
| — |
|
| (1) |
|
| (11) |
2016 payments for 2015 and prior initiatives |
|
| (8) |
|
| (15) |
|
| (4) |
|
| (13) |
|
| (40) |
2016 payments for 2016 initiatives |
|
| (1) |
|
| — |
|
| — |
|
| (4) |
|
| (5) |
Foreign currency effect on liability balance |
|
| (1) |
|
| (1) |
|
| (2) |
|
| — |
|
| (4) |
Accrued liabilities as of December 31, 2016 |
|
| 4 |
|
| 19 |
|
| 40 |
|
| 5 |
|
| 68 |
2017 (credits) charges for 2016 and prior initiatives |
|
| (1) |
|
| 3 |
|
| 2 |
|
| 2 |
|
| 6 |
2017 charges for 2017 initiatives |
|
| 10 |
|
| — |
|
| — |
|
| 2 |
|
| 12 |
2017 payments for 2016 and prior initiatives |
|
| (1) |
|
| (21) |
|
| (2) |
|
| (2) |
|
| (26) |
2017 payments for 2017 initiatives |
|
| (8) |
|
| — |
|
| — |
|
| (2) |
|
| (10) |
Foreign currency effect on liability balance |
|
| 1 |
|
| 1 |
|
| 1 |
|
| — |
|
| 3 |
Accrued liabilities as of December 31, 2017 |
| $ | 5 |
| $ | 2 |
| $ | 41 |
| $ | 5 |
| $ | 53 |
|
|
|
|
|
F-32
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
2015 initiatives |
| $ | 50 |
| $ | 67 |
2016 initiatives |
|
| 1 |
|
| 1 |
2017 initiatives |
|
| 2 |
|
| — |
Total |
| $ | 53 |
| $ | 68 |
Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Performance |
| Advanced |
| Textile |
| Corporate |
|
|
| ||||||
|
| Polyurethanes |
| Products |
| Materials |
| Effects |
| and other |
| Total |
| ||||||
Accrued liabilities as of January 1, 2015 |
| $ | 6 |
| $ | 9 |
| $ | 5 |
| $ | 54 |
| $ | 4 |
| $ | 78 |
|
2015 charges for 2014 and prior initiatives |
|
| 2 |
|
| 3 |
|
| 1 |
|
| 42 |
|
| 8 |
|
| 56 |
|
2015 charges for 2015 initiatives |
|
| 17 |
|
| 8 |
|
| 5 |
|
| 2 |
|
| 1 |
|
| 33 |
|
Reversal of reserves no longer required |
|
| (4) |
|
| (1) |
|
| — |
|
| (7) |
|
| (1) |
|
| (13) |
|
2015 payments for 2014 and prior initiatives |
|
| (4) |
|
| (8) |
|
| (2) |
|
| (34) |
|
| (7) |
|
| (55) |
|
2015 payments for 2015 initiatives |
|
| (11) |
|
| (1) |
|
| (5) |
|
| (1) |
|
| (1) |
|
| (19) |
|
Foreign currency effect on liability balance |
|
| (1) |
|
| (1) |
|
| — |
|
| (1) |
|
| — |
|
| (3) |
|
Accrued liabilities as of December 31, 2015 |
|
| 5 |
|
| 9 |
|
| 4 |
|
| 55 |
|
| 4 |
|
| 77 |
|
2016 charges for 2015 and prior initiatives |
|
| — |
|
| 16 |
|
| — |
|
| 28 |
|
| 3 |
|
| 47 |
|
2016 charges for 2016 initiatives |
|
| 4 |
|
| — |
|
| — |
|
| 1 |
|
| 1 |
|
| 6 |
|
Reversal of reserves no longer required |
|
| (1) |
|
| — |
|
| — |
|
| — |
|
| (1) |
|
| (2) |
|
Distribution of prefunded restructuring costs |
|
| — |
|
| (6) |
|
| — |
|
| (5) |
|
| — |
|
| (11) |
|
2016 payments for 2015 and prior initiatives |
|
| (3) |
|
| (19) |
|
| — |
|
| (14) |
|
| (4) |
|
| (40) |
|
2016 payments for 2016 initiatives |
|
| (3) |
|
| — |
|
| — |
|
| (1) |
|
| (1) |
|
| (5) |
|
Foreign currency effect on liability balance |
|
| — |
|
| — |
|
| (1) |
|
| (3) |
|
| — |
|
| (4) |
|
Accrued liabilities as of December 31, 2016 |
|
| 2 |
|
| — |
|
| 3 |
|
| 61 |
|
| 2 |
|
| 68 |
|
2017 charges for 2016 and prior initiatives |
|
| — |
|
| — |
|
| — |
|
| 6 |
|
| — |
|
| 6 |
|
2017 charges for 2017 initiatives |
|
| — |
|
| 1 |
|
| — |
|
| 7 |
|
| 4 |
|
| 12 |
|
2017 payments for 2016 and prior initiatives |
|
| (1) |
|
| — |
|
| — |
|
| (25) |
|
| — |
|
| (26) |
|
2017 payments for 2017 initiatives |
|
| — |
|
| — |
|
| — |
|
| (5) |
|
| (5) |
|
| (10) |
|
Foreign currency effect on liability balance |
|
| — |
|
| — |
|
| — |
|
| 3 |
|
| — |
|
| 3 |
|
Accrued liabilities as of December 31, 2017 |
| $ | 1 |
| $ | 1 |
| $ | 3 |
|
| 47 |
| $ | 1 |
| $ | 53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of restructuring reserves |
| $ | 1 |
| $ | 1 |
| $ | 3 |
| $ | 9 |
| $ | 1 |
| $ | 15 |
|
Long-term portion of restructuring reserves |
|
| — |
|
| — |
|
| — |
|
| 38 |
|
| — |
|
| 38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance | Advanced | Textile | Corporate | |||||||||||||||||||||
Polyurethanes | Products | Materials | Effects | and other | Total | |||||||||||||||||||
Accrued liabilities as of January 1, 2018 | $ | 1 | $ | 1 | $ | 3 | $ | 47 | $ | 1 | $ | 53 | ||||||||||||
2018 charges (credits) for 2017 and prior initiatives | 0 | 1 | 0 | (4 | ) | 5 | 2 | |||||||||||||||||
2018 charges for 2018 initiatives | 0 | 2 | 3 | 0 | 10 | 15 | ||||||||||||||||||
2018 payments for 2017 and prior initiatives | (1 | ) | (1 | ) | 0 | 0 | (3 | ) | (5 | ) | ||||||||||||||
2018 payments for 2018 initiatives | 0 | (1 | ) | 0 | 0 | (5 | ) | (6 | ) | |||||||||||||||
Reversal of reserves no longer required | 0 | (1 | ) | 0 | (29 | ) | (1 | ) | (31 | ) | ||||||||||||||
Accrued liabilities as of December 31, 2018 | 0 | 1 | 6 | 14 | 7 | 28 | ||||||||||||||||||
2019 charges for 2018 and prior initiatives | 0 | 0 | 0 | 2 | 4 | 6 | ||||||||||||||||||
2019 charges for 2019 initiatives | 0 | 0 | 7 | 0 | 1 | 8 | ||||||||||||||||||
2019 payments for 2018 and prior initiatives | 0 | (1 | ) | (2 | ) | (9 | ) | (8 | ) | (20 | ) | |||||||||||||
2019 payments for 2019 initiatives | 0 | 0 | (1 | ) | 0 | 0 | (1 | ) | ||||||||||||||||
Reversal of reserves no longer required | 0 | 0 | 0 | (4 | ) | 0 | (4 | ) | ||||||||||||||||
Accrued liabilities as of December 31, 2019 | 0 | 0 | 10 | 3 | 4 | 17 | ||||||||||||||||||
2020 charges (credits) for 2019 and prior initiatives | 0 | 1 | (1 | ) | 1 | 4 | 5 | |||||||||||||||||
2020 charges for 2020 initiatives | 16 | 4 | 9 | 7 | 2 | 38 | ||||||||||||||||||
2020 payments for 2019 and prior initiatives | (1 | ) | 0 | (5 | ) | (2 | ) | (8 | ) | (16 | ) | |||||||||||||
2020 payments for 2020 initiatives | (3 | ) | (3 | ) | (3 | ) | (2 | ) | (2 | ) | (13 | ) | ||||||||||||
Reversal of reserves no longer required | 0 | 0 | (1 | ) | 0 | 0 | (1 | ) | ||||||||||||||||
Foreign currency effect on liability balance | 0 | 0 | 0 | 1 | 0 | 1 | ||||||||||||||||||
Accrued liabilities as of December 31, 2020 | $ | 12 | $ | 2 | $ | 9 | $ | 8 | $ | 0 | $ | 31 | ||||||||||||
Current portion of restructuring reserves | $ | 12 | $ | 2 | $ | 6 | $ | 6 | $ | 0 | $ | 26 | ||||||||||||
Long-term portion of restructuring reserves | 0 | 0 | 3 | 2 | 0 | 5 |
Details with respect to cash and noncash restructuring charges for the years ended December 31, 2017, 20162020, 2019 and 20152018 by initiative are provided below (dollars in millions):
|
|
|
|
|
Cash charges: |
|
|
|
|
2017 charges for 2016 and prior initiatives |
|
| $ | 6 |
2017 charges for 2017 initiatives |
|
|
| 12 |
Pension-related charges |
|
|
| 1 |
Noncash charges: |
|
|
|
|
Accelerated depreciation |
|
|
| 2 |
Other noncash credits |
|
|
| (1) |
Total 2017 Restructuring, Impairment and Plant Closing Costs |
|
| $ | 20 |
Cash charges: | ||||
2020 charges for 2019 and prior initiatives | $ | 5 | ||
2020 charges for 2020 initiatives | 38 | |||
Reversal of reserves no longer required | (1 | ) | ||
Noncash charges: | ||||
Accelerated depreciation | 7 | |||
Total 2020 restructuring, impairment and plant closing costs | $ | 49 | ||
Cash charges: | ||||
2019 charges for 2018 and prior initiatives | $ | 6 | ||
2019 charges for 2019 initiatives | 8 | |||
Reversal of reserves no longer required | (4 | ) | ||
Noncash charges: | ||||
Gain on sale of assets | (49 | ) | ||
Other noncash credits | (2 | ) | ||
Total 2019 restructuring, impairment and plant closing costs | $ | (41 | ) | |
Cash charges: | ||||
2018 charges for 2017 and prior initiatives | $ | 2 | ||
2018 charges for 2018 initiatives | 15 | |||
Noncash charges: | ||||
Reversal of reserves no longer required | (31 | ) | ||
Other noncash charges | 7 | |||
Total 2018 restructuring, impairment and plant closing costs | $ | (7 | ) |
2020Restructuring Activities
Beginning in the second quarter of 2020, our Polyurethanes segment implemented a restructuring program to reorganize its spray polyurethane foam business to better position this business for efficiencies and growth in coming years. In connection with this restructuring program, we recorded restructuring expense of approximately $9 million for the year ended December 31, 2020, primarily related to workforce reductions and accelerated depreciation recorded as restructuring, impairment and plant closing costs. We expect to record additional restructuring expenses of approximately $4 million through 2021.
F-33
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
Cash charges: |
|
|
|
|
2016 charges for 2015 and prior initiatives |
|
| $ | 47 |
2016 charges for 2016 initiatives |
|
|
| 6 |
Reversal of reserves no longer required |
|
|
| (2) |
Noncash charges: |
|
|
|
|
Gain on sale of land |
|
|
| (4) |
Total 2016 Restructuring, Impairment and Plant Closing Costs |
|
| $ | 47 |
|
|
|
|
|
Cash charges: |
|
|
|
|
2015 charges for 2014 and prior initiatives |
|
| $ | 56 |
2015 charges for 2015 initiatives |
|
|
| 33 |
Reversal of reserves no longer required |
|
|
| (13) |
Noncash charges: |
|
|
|
|
Accelerated depreciation |
|
|
| 6 |
Other noncash charges |
|
|
| 1 |
Total 2015 Restructuring, Impairment and Plant Closing Costs |
|
| $ | 83 |
2017 Restructuring ActivitiesBeginning in the third quarter of 2020, our Polyurethanes segment implemented a restructuring program to optimize its downstream footprint. In connection with this restructuring program, we recorded restructuring expense of approximately $12 million for the year ended December 31, 2020, and we expect to record further restructuring expenses of between approximately $15 million and $20 million through 2021.
Beginning in the second quarter of 2020, our Performance Products segment implemented a restructuring program, primarily related to workforce reductions, in response to the sale of our Chemical Intermediates Businesses to Indorama. In connection with this restructuring program, we recorded restructuring expense of approximately $4 million for the year ended December 21, 2020.
Beginning in the second quarter of 2020, our Advanced Materials segment implemented restructuring programs, primarily related to workforce reductions and accelerated depreciation in connection with the CVC Thermoset Specialties Acquisition, the alignment of the segment’s commercial organization and optimization of the segment’s manufacturing processes. In connection with these restructuring programs, we recorded restructuring expense of approximately $10 million for the year ended December 31, 2020.
During 2020, our Textile Effects segment implemented restructuring programs to rationalize and realign structurally across various functions and certain locations within the segment. In connection with these restructuring programs, we recorded restructuring expense of approximately $7 million for the year ended December 31, 2020 related primarily to workforce reductions.
2019Restructuring Activities
In September 2011, we initiated a restructuring program in our Textile Effects segment to close its production facilities and business support offices in Basel, Switzerland. In July 2019, we sold the production and business support offices in Basel. Accordingly, during the third quarter of 2019, we received proceeds of $49 million related to this sale and recognized a corresponding gain on disposal of assets of $49 million. This gain was recorded as a credit to restructuring, impairment and plant closing costs during the third quarter of 2019.
2018Restructuring Activities
In 2011,we implemented thea significant restructuring of our Textile Effects segment (the “Textile Effects Restructuring Plan,Plan”), including the closure of our production facilities and business support offices in Basel, Switzerland. In connection with this plan, we recorded restructuring plan,reserves covering, among other things, a non-cancelable long-term service agreement. In the fourth quarter of 2018, we settled this agreement in exchange for the payment of $10 million, $8 million of which was paid in 2019 and $2 million will be paid in 2023. In connection with this settlement, we reversed the related restructuring reserve and recorded a net credit of $29 million in the fourth quarter of 2018. In addition, during 2018, we recorded a credit of $4 million primarily related to a gain on the year ended December 31, 2017, our Textile Effectssale of land at the Basel, Switzerland site.
Our Corporate and other segment recorded restructuring expense of approximately $6 million associated with this initiative, including $2 million for non-cancelable long-term contract termination costs and $4 million for decommissioning.
During the first quarter of 2017, we implemented a restructuring program to improve competitiveness in our Textile Effects segment. In connection with this restructuring program, we recorded restructuring expense of $7$15 million in the year ended December 31, 2017 related primarily to workforce reductions. We expect to incur additional charges of approximately $1 million through the fourth quarter of 2018.
2016 Restructuring Activities
In December 2015, our Performance Products segment announced plans for a reorganization of its commercial and technical functions and a refocused divisional business strategy to better position the segment for growth in coming years. In addition, a program was launched to capture growth opportunities, improve manufacturing cost efficiency and reduce inventories. In connection with this restructuring program, we recorded restructuring expense of $16 million in 2016. All expected charges have been incurred as of the end of 2016.
In connection with the Textile Effects Restructuring Plan during 2016, our Textile Effects segment recorded charges of $9 million for non-cancelable long-term contract termination costs and $20 million for decommissioning associated with this initiative.
2015 Restructuring Activities
In June 2015, our Polyurethanes segment initiated a restructuring program in Europe. In connection with this restructuring program, we recorded restructuring expense of $13 million during 2015 related primarily to workforce reductions. All expected charges have been incurred as of the end of 2015.
During 2013, our Performance Products segment initiated a restructuring program to refocus its surfactants business in Europe (the “Performance Products Restructuring Plan”). As part of our Performance Products Restructuring Plan, we recorded cash charges of $8 million primarily2018 related to workforce reductions in 2015.corporate initiatives.
In June 2015, our Advanced Materials segment initiated a restructuring program in Europe. In connection with this restructuring program, we recorded restructuring expense of $11 million during 2015 related primarily to workforce reductions and accelerated depreciation recorded as restructuring, impairment and plant closing costs.
F-34
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In connection with the Textile Effects Restructuring Plan, during 2015, we recorded charges of $9 million for non-cancelable long-term contract termination costs, $21 million for decommissioning and $1 million of other restructuring charges associated with this initiative. During the fourth quarter of 2015, we settled certain of our obligations under these long-term contracts and recorded a restructuring charge of $14 million. In addition, we recorded charges of $6 million associated with other initiatives.
During 2015, our Corporate and other segment recorded charges of $8 million primarily related to a reorganization of our global information technology organization.
12.14. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consisted of the following (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Pension liabilities |
| $ | 715 |
| $ | 743 |
Other postretirement benefits |
|
| 73 |
|
| 85 |
Environmental accruals |
|
| 15 |
|
| 15 |
Restructuring and plant closing reserves |
|
| 38 |
|
| 40 |
Employee benefit accrual |
|
| 34 |
|
| 27 |
Asset retirement obligations |
|
| 9 |
|
| 8 |
Other |
|
| 202 |
|
| 139 |
Total |
| $ | 1,086 |
| $ | 1,057 |
December 31, | ||||||||
2020 | 2019 | |||||||
Pension liabilities | $ | 680 | $ | 650 | ||||
Other postretirement benefits | 59 | 55 | ||||||
Employee benefit accrual | 44 | 38 | ||||||
Other | 127 | 155 | ||||||
Total | $ | 910 | $ | 898 |
Huntsman International
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Pension liabilities |
| $ | 715 |
| $ | 743 |
Other postretirement benefits |
|
| 73 |
|
| 85 |
Environmental accruals |
|
| 15 |
|
| 15 |
Restructuring and plant closing reserves |
|
| 38 |
|
| 40 |
Employee benefit accrual |
|
| 34 |
|
| 27 |
Asset retirement obligations |
|
| 9 |
|
| 8 |
Other |
|
| 188 |
|
| 133 |
Total |
| $ | 1,072 |
| $ | 1,051 |
December 31, | ||||||||
2020 | 2019 | |||||||
Pension liabilities | $ | 680 | $ | 650 | ||||
Other postretirement benefits | 59 | 55 | ||||||
Employee benefit accrual | 44 | 38 | ||||||
Other | 117 | 147 | ||||||
Total | $ | 900 | $ | 890 |
F-35
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. DEBT
13. DEBT
Outstanding debt, net of debt issuance costs, of consolidated entities consisted of the following (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Senior Credit Facilities: |
|
|
|
|
|
|
Term loans |
| $ | — |
| $ | 1,967 |
Amounts outstanding under A/R programs |
|
| 180 |
|
| 208 |
Senior notes |
|
| 1,927 |
|
| 1,812 |
Variable interest entities |
|
| 107 |
|
| 126 |
Other |
|
| 84 |
|
| 59 |
Total debt—excluding debt to affiliates |
| $ | 2,298 |
| $ | 4,172 |
Total current portion of debt |
| $ | 40 |
| $ | 50 |
Long-term portion |
|
| 2,258 |
|
| 4,122 |
Total debt—excluding debt to affiliates |
| $ | 2,298 |
| $ | 4,172 |
Total debt—excluding debt to affiliates |
| $ | 2,298 |
| $ | 4,172 |
Notes payable to affiliates-noncurrent |
|
| — |
|
| 1 |
Total debt |
| $ | 2,298 |
| $ | 4,173 |
December 31, | December 31, | |||||||
2020 | 2019 | |||||||
Senior Credit Facilities: | ||||||||
Revolving facility | $ | 0 | $ | 40 | ||||
Amounts outstanding under A/R programs | 0 | 167 | ||||||
Term loan | 0 | 103 | ||||||
Senior notes | 2,047 | 1,963 | ||||||
Variable interest entities | 50 | 65 | ||||||
Other | 24 | 51 | ||||||
Total debt | $ | 2,121 | $ | 2,389 | ||||
Total current portion of debt | $ | 593 | $ | 212 | ||||
Long-term portion of debt | 1,528 | 2,177 | ||||||
Total debt | $ | 2,121 | $ | 2,389 |
Huntsman International
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Senior Credit Facilities: |
|
|
|
|
|
|
Term loans |
| $ | — |
| $ | 1,967 |
Amounts outstanding under A/R programs |
|
| 180 |
|
| 208 |
Senior notes |
|
| 1,927 |
|
| 1,812 |
Variable interest entities |
|
| 107 |
|
| 126 |
Other |
|
| 84 |
|
| 59 |
Total debt—excluding debt to affiliates |
| $ | 2,298 |
| $ | 4,172 |
Total current portion of debt |
| $ | 40 |
| $ | 50 |
Long-term portion |
|
| 2,258 |
|
| 4,122 |
Total debt—excluding debt to affiliates |
| $ | 2,298 |
| $ | 4,172 |
Total debt—excluding debt to affiliates |
| $ | 2,298 |
| $ | 4,172 |
Notes payable to affiliates-current |
|
| 100 |
|
| 100 |
Notes payable to affiliates-noncurrent |
|
| 742 |
|
| 697 |
Total debt |
| $ | 3,140 |
| $ | 4,969 |
December 31, | December 31, | |||||||
2020 | 2019 | |||||||
Senior Credit Facilities: | ||||||||
Revolving facility | $ | 0 | $ | 40 | ||||
Amounts outstanding under A/R programs | 0 | 167 | ||||||
Term loan | 0 | 103 | ||||||
Senior notes | 2,047 | 1,963 | ||||||
Variable interest entities | 50 | 65 | ||||||
Other | 24 | 51 | ||||||
Total debt, excluding debt to affiliates | $ | 2,121 | $ | 2,389 | ||||
Total current portion of debt | $ | 593 | $ | 212 | ||||
Long-term portion of debt | 1,528 | 2,177 | ||||||
Total debt, excluding debt to affiliates | $ | 2,121 | $ | 2,389 | ||||
Notes payable to affiliates-current | 0 | 100 | ||||||
Notes payable to affiliates-noncurrent | 0 | 280 | ||||||
Total debt | $ | 2,121 | $ | 2,769 |
DirectDirect and Subsidiary DebtSubsidiary 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‑partythird-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.
F-36
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Debt Issuance Costs
We record debt issuance costs related to a debt liability on the balance sheetsheets as a reduction in the face amount of that debt liability. As of December 31, 2017 2020 and 2016,2019, the amount of debt issuance costs directly reducing the debt liability was $11$9 million and $57$11 million, respectively. We record the amortization of debt issuance costs as interest expense.
Senior
Revolving Credit FacilitiesFacility
On May 21, 2018, Huntsman International entered into the Revolving Credit Facility. Borrowings under the Revolving Credit Facility will bear interest at the rates specified in the credit agreement governing the Revolving Credit Facility, which will vary based on the type of loan and Huntsman International’s debt ratings. Unless earlier terminated, the Revolving Credit Facility will mature in May 2023. Huntsman International may increase the Revolving Credit Facility commitments up to an additional $500 million, subject to the satisfaction of certain conditions.
In connection with entering into the Revolving Credit Facility, Huntsman International terminated all commitments and repaid all obligations under our previous $650 million senior secured revolving credit facility. In addition, we recognized a loss of early extinguishment of debt of $3 million. As of December 31, 2017,2020, our SeniorRevolving Credit Facilities consisted of a Revolving Facility was as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unamortized |
|
|
|
|
|
| ||||
|
|
|
|
|
| Discounts and |
|
|
|
|
|
| ||||
|
| Committed |
| Principal |
| Debt Issuance |
| Carrying |
|
|
|
| ||||
Facility |
| Amount |
| Outstanding |
| Costs |
| Value |
| Interest Rate(2) |
| Maturity | ||||
Revolving Facility |
| $ | 650 |
| $ | — | (1) | $ | — | (1) | $ | — | (1) | USD LIBOR plus 2.50% |
| 2021 |
Unamortized | |||||||||||||||||||||
Discounts and | |||||||||||||||||||||
Committed | Principal | Debt Issuance | Carrying | ||||||||||||||||||
Facility | Amount | Outstanding | Costs | Value | Interest Rate(2) | Maturity | |||||||||||||||
Revolving Credit Facility | $ | 1,200 | $ | 0 | (1) | $ | 0 | (1) | $ | 0 | (1) | USD LIBOR plus 1.50% | 2023 |
(1) |
|
|
(2) |
| Interest rates on borrowings under the Revolving Credit Facility vary based on the type of loan and Huntsman International’s debt ratings. The then applicable interest rate as of |
Our obligations under the Senior Credit Facilities are guaranteed by substantially all of our domestic subsidiaries (collectively, the “Guarantors”), and are secured by a first priority lien on substantially all of our domestic property, plant and equipment (other than property, plant and equipment held by Venator and its subsidiaries), the stock of all of our material domestic subsidiaries (other than Venator and its subsidiaries) and certain foreign subsidiaries, and pledges of intercompany notes between certain of our subsidiaries.
Repayment of Senior Secured Term Loans
During 2017, we repaid in full our 2015 Extended Term Loan B, our 2021Credit Facility
On September 24, 2019, Huntsman International entered into the 2019 Term Loan, B, and our 2023 Term Loan B as follows:
|
|
|
|
In connection with the Separation, Venator raised $750 million of new financing, which included (i) $375 million of senior unsecured notes and (ii) $375 million under a new senior secured term loan facility. In addition, Venator entered into a new undrawn asset-based revolving lending facility inHuntsman International borrowed an aggregate principal amount of up€92 million (or $101 million equivalent). We used the net proceeds from the 2019 Term Loan to $300 million. The Venator senior unsecured notes are guaranteed on a general unsecured senior basis by Venator and certain Venator subsidiaries. The Venator senior credit facilities are unconditionally guaranteed, jointly and severally, on a senior secured basis by Venator and certain of its subsidiaries. At Separation, the Venator debt facilities were recorded within current liabilities held for sale.
F-37
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman Corporation and its direct and indirect subsidiaries (other than Venator and its subsidiaries) do not provide any direct or indirect guarantee for the Venator debt obligations described above and they are non recourse to Huntsman Corporation and its subsidiaries.
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Seventeenth Amendment to Credit Agreement
On June 15, 2017, Huntsman International entered into a seventeenth amendment to the agreement governing the Senior Credit Facilities. The amendment permitted us to complete the Separation. In connection with the Separation, the amendment permitted the incurrence of certain indebtedness of Venator and the internal restructuringfinance our acquisition of the P&A Business assets. With50% noncontrolling interest that we did not own in the completion ofSasol-Huntsman maleic anhydride joint venture. On September 22, 2020 we repaid the Separation, Venator and its subsidiaries were designated as unrestricted subsidiaries.2019 Term Loan in full at maturity.
A/R Programs
Our A/R Programs are structured so that we grant a participating undivided interest intransfer 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. We retain
In April 2019, we entered into amendments to the servicing rightsEU A/R Program (the “European Amendment”) and a retained interest in the securitized receivables. U.S. A/R Program (the “U.S. Amendment”). The European Amendment, among other things, extended the scheduled commitment termination date of the loan facility to April 2022, reduced the facility maximum funding availability from €150 million to €100 million and made certain other amendments. The U.S. Amendment, among other things, extended the scheduled commitment termination date of the loan facility to April 2022 and made certain other amendments.
In December 2019, we entered into amendments to the U.S. A/R Program and the EU A/R Program. The European amendment allowed the removal of pledged obligors related to the Chemical Intermediates Businesses sold to Indorama. The U.S. amendment allowed the removal of pledged obligors related to the Chemical Intermediates Businesses sold to Indorama as well as reduced the maximum funding capacity from $250 million to $150 million upon completion of the sale on January 3, 2020.
In October 2020, we entered into an amendment to the U.S. A/R Program to account for certain internal reorganization activities related to CVC Thermoset Specialties Acquisition.
Information regarding our A/R Programs as of December 31, 20172020 was as follows (monetary amounts in millions):
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| Maximum Funding |
| Amount |
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| ||
Facility |
| Maturity |
| Availability(1) |
| Outstanding |
| Interest Rate(2) | ||
U.S. A/R Program |
| April 2020 |
| $ | 250 |
| $ | 90 | (3) | Applicable rate plus 0.95% |
EU A/R Program |
| April 2020 |
| € | 150 |
| € | 76 |
| Applicable rate plus 1.30% |
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|
| (approximately $179) |
|
| (approximately $90) |
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|
Maximum Funding | Amount | ||||||||||
Facility | Maturity | Availability(1) | Outstanding | Interest Rate(2) | |||||||
U.S. A/R Program | April 2022 | $ | 150 | $ | 0 | (3) | Applicable rate plus 0.90% | ||||
EU A/R Program | April 2022 | € | 100 | € | 0 | Applicable rate plus 1.30% | |||||
(or approximately $123) | (or approximately $0) |
| (1) | The amount of actual availability under our A/R Programs may be lower based on the level of eligible receivables sold, changes in the credit ratings of our customers, customer concentration levels and certain characteristics of the accounts receivable being transferred, as defined in the |
(2) |
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|
| (3) | As of December 31, |
On April 21, 2017, we entered into amendments to our A/R Programs that, among other things, extend the scheduled termination dates to April 2020.
As of December 31, 20172020 and December 31, 2016, $3342019, $198 million and $328$221 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs from continuing operations.Programs.
Notes
As of December 31, 2017,2020, we had outstanding the following notes (monetary amounts in millions):
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| Unamortized | |
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| Discounts | |
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| and Debt | |
Notes |
| Maturity |
| Interest Rate |
| Amount Outstanding |
| Issuance Costs | |
2020 Senior Notes |
| November 2020 |
| 4.875 | % | $650 ($647 carrying value) |
| $ | (3) |
2021 Senior Notes |
| April 2021 |
| 5.125 | % | €445 (€444 carrying value $(529)) |
|
| (1) |
2022 Senior Notes |
| November 2022 |
| 5.125 | % | $400 ($397 carrying value) |
|
| (3) |
2025 Senior Notes |
| April 2025 |
| 4.250 | % | €300 (€297 carrying value $(354)) |
|
| (3) |
Unamortized | ||||||||||||
Premiums, | ||||||||||||
Discounts | ||||||||||||
and Debt | ||||||||||||
Notes | Maturity | Interest Rate | Amount Outstanding | Issuance Costs | ||||||||
2021 Senior Notes | April 2021 | 5.125 | % | €445 (€445 carrying value $(545)) | $ | 0 | ||||||
2022 Senior Notes | November 2022 | 5.125 | % | $400 ($399 carrying value) | 1 | |||||||
2025 Senior Notes | April 2025 | 4.250 | % | €300 (€298 carrying value $(366)) | 2 | |||||||
2029 Senior Notes | February 2029 | 4.500 | % | $750 ($737 carrying value) | 13 |
F-38
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The 2020, 2021,2022,2025 and 20252029 Senior Notes are general unsecured senior obligations of Huntsman International and are guaranteed on a general unsecured senior basis by the Guarantors.International. The indentures impose certain limitations on the ability of Huntsman International and its subsidiaries to, among other things, incur additional indebtedness secured by any principal properties, incur indebtedness of nonguarantor subsidiaries, enter into sale and leaseback transactions with respect to any principal properties and consolidate or merge with or into any other person or lease, sell or transfer all or substantially all of its properties and assets. Upon the occurrence of certain change of control events, holders of the 2020, 2021,2022,2025 and 20252029 Senior Notes will have the right to require that Huntsman International purchase all or a portion of such holder’s notes in cash at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase.
On March 13, 2019, Huntsman International completed a $750 million offering of its 4.50% senior notes due 2029 (“2029 Senior Notes”). On March 27, 2019, Huntsman International applied the net proceeds of the offering of the 2029 Senior Notes to redeem in full $650 million in aggregate principal amount of its 4.875% senior notes due 2020 (“2020 Senior Notes”) and also paid associated costs and accrued interest of $21 million and $12 million, respectively. In addition, we recognized a loss on early extinguishment of debt of $23 million.
The 2029 Senior Notes bear interest at 4.50% per year, payable semi-annually on May 1 and November 1, and will mature on May 1, 2029. Huntsman International may redeem the 2029 Senior Notes in whole or in part at any time prior to February 1,2029 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest. Huntsman International may redeem the 2029 Senior Notes at any time, in whole or from time to time in part, on or after February 1, 2029 at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.
Redemption of the 2021 Senior Notes and Loss on Early Extinguishment of Debt
During the year ended December 31, 2015,
On January 15, 2021, we redeemed or repurchasedin full €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes at the followingredemption price equal to 100% of the principal amount of the notes, (dollars in millions):plus accrued and unpaid interest to, but not including, the redemption date.
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| Amount Paid |
| Loss on Early | ||
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| Principal Amount of |
| (Excluding Accrued |
| Extinguishment | |||
Date of Redemption |
| Notes |
| Notes Redeemed |
| Interest) |
| of Debt | |||
September 2015 |
| 2021 Senior Subordinated Notes |
| $ | 195 |
| $ | 204 |
| $ | 7 |
April 2015 |
| 2021 Senior Subordinated Notes |
|
| 289 |
|
| 311 |
|
| 20 |
January 2015 |
| 2021 Senior Subordinated Notes |
|
| 37 |
|
| 40 |
|
| 3 |
Variable Interest Entity Debt
As of December 31, 2017,2020, AAC, our consolidated 50%-owned joint venture, had $107$50 million outstanding under its loan commitments and debt financing arrangements. As of December 31, 2017,2020, we have $21$47 million classified as current debt and $86$3 million as long-term debt on our consolidated balance sheets. We do not guarantee these loan commitments, and AAC is not a guarantor of any of our other debt obligations.
Other Debt
On July 24, 2015, HPS entered into a financing arrangement to fund the construction of our MDI plant in China. As part of the financing, HPS has secured commitments of a RMB 669 million (approximately $102 million) term loan and a RMB 423 million (approximately $65 million) working capital facility. These facilities are unsecured, and we do not provide a guarantee of these loan commitments. As of December 31, 2017, we had term loan borrowings of RMB 277 million (approximately $42 million) and no borrowings under the working capital facility. The interest rate on the facilities is 90% of the Peoples Bank of China rate. As of December 31, 2017, the interest rate was approximately 4%.
Note Payable from Huntsman International to Huntsman Corporation
As
During the first quarter of December 31, 2017, we have a2020, our loan of $842$380 million to our subsidiary Huntsman International. The Intercompany Note is unsecured and $100 millionInternational was repaid to us in full.
Compliance With Covenants
Our Revolving Credit Facility contains a financial covenant regarding the leverage ratio of the outstanding amount is classified as current as of December 31, 2017 on our consolidated balance sheets. As of December 31, 2017, 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 obtainedand its subsidiaries. The Revolving Credit Facility also contains other customary covenants and events of default 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
F-39
Tablecredit facilities of Contents
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 inthis type. Upon an event of default under another financing arrangement.
Our Senior Credit Facilities have the Leverage Covenant which applies onlythat is not cured or waived within any applicable cure periods, in addition to other remedies that may be available to the Revolving Facility and is calculated atlenders, the Huntsman International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstandingobligations under the Revolving Credit 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.may be accelerated.
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 SeniorRevolving Credit Facilities,Facility, which could require us to pay off the balance of the SeniorRevolving Credit FacilitiesFacility in full and could result in the loss of our SeniorRevolving Credit Facilities.Facility.
Maturities
We believe that we are in compliance with the covenants governing our material debt instruments, including our Revolving Credit Facility, our A/R Programs and our notes.
Maturities
The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31, 20172020 are as follows (dollars in millions):
|
|
|
|
Year ending December 31, |
|
|
|
2018 |
| $ | 40 |
2019 |
|
| 27 |
2020 |
|
| 865 |
2021 |
|
| 560 |
2022 |
|
| 409 |
Thereafter |
|
| 397 |
|
| $ | 2,298 |
Year ending December 31, | ||||
2021 | $ | 593 | ||
2022 | 403 | |||
2023 | 1 | |||
2024 | 2 | |||
2025 | 369 | |||
Thereafter | 753 | |||
$ | 2,121 |
14.
16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded in accumulated other comprehensive loss.
Interest Rate Risk
Interest Rate Risks
Through our borrowing activities, we are exposed to interest rate risk. Such risk arises due to the structure of our debt portfolio, including the mix of fixed and floating interest rates. Actions taken to reduce interest rate risk include managing the mix and rate characteristics of various interest bearinginterest-bearing liabilities, as well as entering into interest rate derivative instruments.
F-40
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
From time to time, we may purchase interest rate swaps and/or other derivative instruments to reduce the impact of changes in interest rates on our floating-rate long-term debt.exposures. Under interest rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed notional principal amount.
Huntsman International had On January 9, 2019, we entered into severala six-year $17 million notional value interest rate contracts to hedge the variability caused by monthly changes inwith a fixed rate of 2.66%. This swap was designated as a cash flow due to associated changes in LIBOR under our Senior Credit Facilities. These swaps were designated as cash flow hedgeshedge and the effective portion of the changes in the fair value of the swaps wereswap was recorded in other comprehensive income (loss). These swaps expired in April 2017.
Beginning in 2009, AAC entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. income. In connection with the consolidation of AAC as of July 1, 2010, the interest rate contract is now included in our consolidated results. See “Note 7. Variable Interest Entities.” The notional amount of theNovember 2019, we terminated this swap as of December 31, 2017 was $14 million, and the interest rate contract is not designated as a cash flow hedge. As of both December 31, 2017 and 2016, the fair value of the swap waspaid $1 million and was recorded as other noncurrent liabilities onto our consolidated balance sheets. For 2017 and 2016, we recorded a reduction of interest expense of nil each due to changes in fair value of the swap.
During 2017,counterparties. This $1 million settlement will be amortized from accumulated other comprehensive loss of nil was reclassifiedto earnings.
During 2020, there were no other reclassifications from accumulated other comprehensive loss to earnings. The actual amount that will be reclassified to earnings over the next twelve months may vary from this amount due to changing market conditions. We would be exposed to credit losses in the event of nonperformance by a counterparty to our derivative financial instruments. We anticipate, however, that the counterparties will be able to fully satisfy their obligations under the contracts. Market risk arises from changes in interest rates.
Foreign Exchange Rate Risk
Foreign Exchange Rate Risk
Our cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in various currencies. We enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of three months or less). We do not hedge our currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of December 31, 2017 2020 and 2016,2019, we had approximately $93$145 million and $176$135 million, respectively, notional amount (in U.S. dollar equivalents) outstanding in foreign currency contracts with a term of approximately one month, of which nil and $88 million, respectively, were on behalf of our former P&A Business. month.
In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract to swap an aggregate notional $200 million for an aggregate notional €161 million. The swap was designated as a hedge of net investment for financial reporting purposes. In August 2017, we terminated these cross-currency interest rate contracts and received $7 million from the counterparties.
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). From time to time, we review such designation of intercompany loans.
F-41
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We review our non‑U.S.non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of December 31, 2017, for our continuing operations,2020, we have designated approximately €470€523 million (approximately $559$641 million) of euro‑denominatedeuro-denominated debt and cross‑currency interest rate contracts as a hedge of our net investment. For the years ended December 31, 2017, 20162020, 2019 and 2015, for our continuing operations,2018, the amounts recognized on the hedge of our net investment waswere a loss of $96$66 million, a gain of $14 million and gainsa gain of $27 million and $68$35 million, respectively, and were recorded in other comprehensive income (loss). income.
Commodity Prices Risk
Commodity Prices Risk
Inherent in our business is exposure to price changes for several commodities. However, our exposure to changing commodity prices is somewhat limited since the majority of our raw materials are acquired at posted or market related prices, and sales prices for many of our finished products are at market related prices which are largely set on a monthly or quarterly basis in line with industry practice. Consequently, we do not generally hedge our commodity exposures.
15.
17. FAIR VALUE
The fair values of our financial instruments were as follows (dollars in millions):
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|
|
|
|
| December 31, 2017 |
| December 31, 2016 | ||||||||
| Carrying |
| Estimated |
| Carrying |
| Estimated | ||||
| Value |
| Fair Value |
| Value |
| Fair Value | ||||
Non-qualified employee benefit plan investments | $ | 33 |
| $ | 33 |
|
| 27 |
| $ | 27 |
Investments in equity securities |
| — |
|
| — |
|
| 18 |
|
| 18 |
Cross-currency interest rate contracts |
| — |
|
| — |
|
| 29 |
|
| 29 |
Interest rate contracts |
| (1) |
|
| (1) |
|
| (2) |
|
| (2) |
Long-term debt (including current portion) |
| (2,298) |
|
| (2,483) |
|
| (4,172) |
|
| (4,345) |
December 31, 2020 | December 31, 2019 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||
Non-qualified employee benefit plan investments | $ | 26 | $ | 26 | $ | 28 | $ | 28 | ||||||||
Option agreement for remaining Venator shares | 11 | 11 | 0 | 0 | ||||||||||||
Long-term debt (including current portion) | (2,121 | ) | (2,334 | ) | (2,389 | ) | (2,544 | ) |
The carrying amounts reported in the balance sheets of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short‑termshort-term maturity of these financial instruments. Our investment in Venator is marked to fair value, which is obtained through market observable pricing using prevailing market prices (Level 1). Additionally, the estimated fair value of the option agreement related to the remaining ordinary shares we hold in Venator is based on a valuation technique using market observable inputs (Level 2). See “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator.” The fair values of non‑qualifiednon-qualified employee benefit plan investments and investments in equity securities are obtained through market observable pricing using prevailing market prices.prices (Level 1). The estimated fair values of our long‑termlong-term debt are based on quoted market prices for the identical liability when traded as an asset in an active market (Level 1)1).
The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2017 2020 and 2016.2019. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2017,2020, 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):
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| Fair Value Amounts Using | |||||||
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|
|
| Quoted prices |
| Significant other |
| Significant | |||
|
|
|
|
| in active markets |
| observable |
| unobservable | |||
|
| December 31, |
| for identical |
| inputs |
| inputs | ||||
Description |
| 2017 |
| assets (Level 1)(3) |
| (Level 2)(3) |
| (Level 3) | ||||
Assets: |
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|
|
|
Available-for sale equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified employee benefit plan investments |
| $ | 33 |
| $ | 33 |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
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|
|
|
|
|
|
|
|
|
Interest rate contracts(1) |
| $ | (1) |
| $ | — |
| $ | (1) |
| $ | — |
F-42
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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| Fair Value Amounts Using | |||||||
|
|
|
|
| Quoted prices |
| Significant other |
| Significant | |||
|
|
|
| in active markets |
| observable |
| unobservable | ||||
|
| December 31, |
| for identical |
| inputs |
| inputs | ||||
Description |
| 2016 |
| assets (Level 1)(3) |
| (Level 2)(3) |
| (Level 3) | ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Available-for sale equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified employee benefit plan investments |
| $ | 27 |
| $ | 27 |
| $ | — |
| $ | — |
Investments in equity securities |
|
| 18 |
|
| 18 |
|
| — |
|
| — |
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency interest rate contracts(2) |
|
| 29 |
|
| — |
|
| — |
|
| 29 |
Total assets |
| $ | 74 |
| $ | 45 |
| $ | — |
| $ | 29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts(1) |
| $ | (2) |
| $ | — |
| $ | (2) |
| $ | — |
|
|
|
|
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 had 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. In August 2017, we terminated these cross-currency interest rate contracts and received $7 million in payments from the counterparties.
|
|
The following tables show reconciliations of beginning and ending balances forDuring the years ended December 31, 2017 2020 and 2016 for2019, there were 0 instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).
|
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|
|
| Cross-Currency | |
|
| Interest | |
|
| Rate Contracts | |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
|
| |
Beginning balance |
| $ | 29 |
Transfers into Level 3 |
|
| — |
Transfers out of Level 3 |
|
| — |
Total (losses) gains: |
|
|
|
Included in earnings |
|
| — |
Included in other comprehensive income (loss) |
|
| (22) |
Purchases, sales, issuances and settlements |
|
| (7) |
Ending balance, December 31, 2017 |
| $ | — |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2017 |
| $ | — |
F-43
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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Gains3), and there were 0 gains or losses (realized andor unrealized) included in earnings for instruments measured atcategorized as Level 3 within the fair value on a recurring basis using significant unobservable inputs (Level 3) are reported in interest expensehierarchy.
18. REVENUE RECOGNITION
The following table disaggregates our revenue by major source for the years ended December 31, 2020, 2019 and other comprehensive income (loss) as follows2018 (dollars in millions):
2020 | Polyurethanes | Performance Products | Advanced Materials | Textile Effects | Corporate and Eliminations | Total | ||||||||||||||||||
Primary Geographic Markets(1) | ||||||||||||||||||||||||
U.S. and Canada | $ | 1,362 | $ | 447 | $ | 217 | $ | 48 | $ | (23 | ) | $ | 2,051 | |||||||||||
Europe | 961 | 252 | 319 | 98 | (1 | ) | 1,629 | |||||||||||||||||
Asia Pacific | 997 | 260 | 224 | 360 | 0 | 1,841 | ||||||||||||||||||
Rest of world | 264 | 64 | 79 | 91 | (1 | ) | 497 | |||||||||||||||||
$ | 3,584 | $ | 1,023 | $ | 839 | $ | 597 | $ | (25 | ) | $ | 6,018 | ||||||||||||
Major Product Groupings | ||||||||||||||||||||||||
MDI urethanes | $ | 3,584 | $ | 3,584 | ||||||||||||||||||||
Differentiated | $ | 1,023 | 1,023 | |||||||||||||||||||||
Specialty | $ | 746 | 746 | |||||||||||||||||||||
Non-specialty | 93 | 93 | ||||||||||||||||||||||
Textile chemicals and dyes | $ | 597 | 597 | |||||||||||||||||||||
Eliminations | $ | (25 | ) | (25 | ) | |||||||||||||||||||
$ | 3,584 | $ | 1,023 | $ | 839 | $ | 597 | $ | (25 | ) | $ | 6,018 |
2019 | Polyurethanes | Performance Products | Advanced Materials | Textile Effects | Corporate and Eliminations | Total | ||||||||||||||||||
Primary Geographic Markets(1) | ||||||||||||||||||||||||
U.S. and Canada | $ | 1,475 | $ | 531 | $ | 289 | $ | 62 | $ | (64 | ) | $ | 2,293 | |||||||||||
Europe | 1,051 | 316 | 410 | 128 | (9 | ) | 1,896 | |||||||||||||||||
Asia Pacific | 1,078 | 248 | 269 | 446 | (2 | ) | 2,039 | |||||||||||||||||
Rest of world | 307 | 63 | 76 | 127 | (4 | ) | 569 | |||||||||||||||||
$ | 3,911 | $ | 1,158 | $ | 1,044 | $ | 763 | $ | (79 | ) | $ | 6,797 | ||||||||||||
Major Product Groupings | ||||||||||||||||||||||||
MDI urethanes | $ | 3,911 | $ | 3,911 | ||||||||||||||||||||
Differentiated | $ | 1,158 | 1,158 | |||||||||||||||||||||
Specialty | $ | 891 | 891 | |||||||||||||||||||||
Non-specialty | 153 | 153 | ||||||||||||||||||||||
Textile chemicals and dyes | $ | 763 | 763 | |||||||||||||||||||||
Eliminations | $ | (79 | ) | (79 | ) | |||||||||||||||||||
$ | 3,911 | $ | 1,158 | $ | 1,044 | $ | 763 | $ | (79 | ) | $ | 6,797 |
2018 | Polyurethanes | Performance Products | Advanced Materials | Textile Effects | Corporate and Eliminations | Total | ||||||||||||||||||
Primary Geographic Markets(1) | ||||||||||||||||||||||||
U.S. and Canada | $ | 1,426 | $ | 586 | $ | 285 | $ | 68 | $ | 122 | $ | 2,487 | ||||||||||||
Europe | 1,277 | 368 | 445 | 135 | (16 | ) | 2,209 | |||||||||||||||||
Asia Pacific | 1,236 | 278 | 301 | 485 | (24 | ) | 2,276 | |||||||||||||||||
Rest of world | 343 | 69 | 85 | 136 | (1 | ) | 632 | |||||||||||||||||
$ | 4,282 | $ | 1,301 | $ | 1,116 | $ | 824 | $ | 81 | $ | 7,604 | |||||||||||||
Major Product Groupings | ||||||||||||||||||||||||
MDI urethanes | $ | 4,282 | $ | 4,282 | ||||||||||||||||||||
Differentiated | $ | 1,301 | 1,301 | |||||||||||||||||||||
Specialty | $ | 932 | 932 | |||||||||||||||||||||
Non-specialty | 184 | 184 | ||||||||||||||||||||||
Textile chemicals and dyes | $ | 824 | 824 | |||||||||||||||||||||
Eliminations | $ | 81 | 81 | |||||||||||||||||||||
$ | 4,282 | $ | 1,301 | $ | 1,116 | $ | 824 | $ | 81 | $ | 7,604 |
(1) | Geographic information for revenues is based upon countries into which product is sold. | |||||
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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 both 2017 and 2016, there were no charges recorded for the impairment of long-lived assets.
16.19. EMPLOYEE BENEFIT PLANS
Defined Benefit
Defined Benefit and Other Postretirement BenefitOther Postretirement Benefit
We provide a trusteed, non contributory defined benefit pension plan (the “Plan”) that covers the majority of our U.S. employees. Effective July 1, 2004, the Plan formula for employees not covered by a collective bargaining agreement was converted to a cash balance design. For represented employees, participation in the cash balance design was subject to the terms of negotiated contracts. For participating employees, benefits accrued under the prior formula were converted to opening cash balance accounts. The cash balance benefit formula provides annual pay credits from 6% to 12% of eligible pay, depending on age and service, plus accrued interest. The conversion to the cash balance plan did not have a significant impact on the accrued benefit liability, the funded status or ongoing pension expense.
Beginning July 1, 2014, the Huntsman Defined Benefit Pension Plan was closed to new non-union entrants and as of April 1, 2015, it was closed to new union entrants. In addition, as of January 1, 2015, Rubicon LLC closed its defined benefit plan to new entrants. Following the closure of these plans, new hires have been provided with a defined contribution plan with a non-discretionary employer contribution of 6% of pay and a company match of up to 4% of pay,
F-44
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
for a total company contribution of up to 10% of pay. We also sponsor unfunded postretirement benefit plans other than pensions, which provide medical and life insurance benefits. Effective August 1, 2015, the post retirement benefit plans were closed to new entrants.
Our postretirement benefit plans provide access to two fully insured Medicare Part D plans including prescription drug benefits affected by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). We cannot determine whether the medical benefits provided by our postretirement benefit plans are actuarially equivalent to those provided by the Act. We do not collect a subsidy and our net periodic postretirement benefits cost, and related benefit obligation, do not reflect an amount associated with the subsidy. We do not subsidize the premium cost of these plans; the premiums are entirely paid by the retirees.
We sponsor defined benefit plans in a number of countries outside of the U.S. The availability of these plans, and their specific design provisions, are consistent with local competitive practices and regulations.
F-45
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table sets forth the funded status of the plans for us and Huntsman International and the amounts recognized in our consolidated balance sheets at December 31, 2017 2020 and 20162019 (dollars in millions):
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| Defined Benefit Plans |
| Other Postretirement Benefit Plans | ||||||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
|
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. | ||||||||
|
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans | ||||||||
Change in benefit obligation |
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|
|
Benefit obligation at beginning of year |
| $ | 1,049 |
| $ | 2,064 |
| $ | 953 |
| $ | 1,986 |
| $ | 93 |
| $ | — |
| $ | 87 |
| $ | — |
Service cost |
|
| 30 |
|
| 33 |
|
| 30 |
|
| 29 |
|
| 3 |
|
| — |
|
| 2 |
|
| — |
Interest cost |
|
| 44 |
|
| 35 |
|
| 47 |
|
| 41 |
|
| 3 |
|
| — |
|
| 4 |
|
| — |
Participant contributions |
|
| — |
|
| 5 |
|
| — |
|
| 5 |
|
| 2 |
|
| — |
|
| 3 |
|
| — |
Plan amendments |
|
| — |
|
| (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Foreign currency exchange rate changes |
|
| — |
|
| 207 |
|
| — |
|
| (165) |
|
| — |
|
| — |
|
| — |
|
| — |
Special termination benefits |
|
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Settlements/transfers/divestitures |
|
| — |
|
| — |
|
| — |
|
| (2) |
|
| — |
|
| — |
|
| — |
|
| — |
Curtailments |
|
| — |
|
| — |
|
| — |
|
| (1) |
|
| — |
|
| — |
|
| — |
|
| — |
Actuarial (gain) loss |
|
| 91 |
|
| (10) |
|
| 73 |
|
| 242 |
|
| (12) |
|
| — |
|
| 8 |
|
| — |
Benefits paid |
|
| (61) |
|
| (75) |
|
| (54) |
|
| (71) |
|
| (9) |
|
| — |
|
| (11) |
|
| — |
Benefit obligation at end of year |
| $ | 1,153 |
| $ | 2,259 |
| $ | 1,049 |
| $ | 2,064 |
| $ | 80 |
| $ | — |
| $ | 93 |
| $ | — |
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Change in plan assets |
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|
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Fair value of plan assets at beginning of year |
| $ | 721 |
| $ | 1,639 |
| $ | 716 |
| $ | 1,637 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
Actual return on plan assets |
|
| 104 |
|
| 109 |
|
| 53 |
|
| 175 |
|
| — |
|
| — |
|
| — |
|
| — |
Foreign currency exchange rate changes |
|
| — |
|
| 166 |
|
| — |
|
| (143) |
|
| — |
|
| — |
|
| — |
|
| — |
Participant contributions |
|
| — |
|
| 5 |
|
| — |
|
| 5 |
|
| 2 |
|
| — |
|
| 3 |
|
| — |
Acquisitions/divestitures |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Company contributions |
|
| 57 |
|
| 39 |
|
| 6 |
|
| 36 |
|
| 7 |
|
| — |
|
| 8 |
|
| — |
Benefits paid |
|
| (61) |
|
| (75) |
|
| (54) |
|
| (71) |
|
| (9) |
|
| — |
|
| (11) |
|
| — |
Fair value of plan assets at end of year |
| $ | 821 |
| $ | 1,883 |
| $ | 721 |
| $ | 1,639 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
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Funded status |
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Fair value of plan assets |
| $ | 821 |
| $ | 1,883 |
| $ | 721 |
| $ | 1,639 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
Benefit obligation |
|
| 1,153 |
|
| 2,259 |
|
| 1,049 |
|
| 2,064 |
|
| 80 |
|
| — |
|
| 93 |
|
| — |
Accrued benefit cost |
| $ | (332) |
| $ | (376) |
| $ | (328) |
| $ | (425) |
| $ | (80) |
| $ | — |
| $ | (93) |
| $ | — |
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Amounts recognized in balance sheet: |
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Noncurrent asset |
| $ | — |
| $ | 22 |
| $ | — |
| $ | 1 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
Current liability |
|
| (10) |
|
| (5) |
|
| (6) |
|
| (5) |
|
| (7) |
|
| — |
|
| (8) |
|
| — |
Noncurrent liability |
|
| (322) |
|
| (393) |
|
| (322) |
|
| (421) |
|
| (73) |
|
| — |
|
| (85) |
|
| — |
|
| $ | (332) |
| $ | (376) |
| $ | (328) |
| $ | (425) |
| $ | (80) |
| $ | — |
| $ | (93) |
| $ | — |
F-46
Defined Benefit Plans | Other Postretirement Benefit Plans | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
U.S. | Non-U.S. | U.S. | Non-U.S. | U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | Plans | Plans | |||||||||||||||||||||||||
Change in benefit obligation | ||||||||||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 1,024 | $ | 2,377 | $ | 956 | $ | 2,157 | $ | 60 | $ | 0 | $ | 59 | $ | 0 | ||||||||||||||||
Service cost | 21 | 31 | 20 | 30 | 1 | 0 | 1 | 0 | ||||||||||||||||||||||||
Interest cost | 37 | 25 | 41 | 37 | 2 | 0 | 3 | 0 | ||||||||||||||||||||||||
Participant contributions | 0 | 6 | 0 | 6 | 2 | 0 | 2 | 0 | ||||||||||||||||||||||||
Plan amendments | 0 | 0 | 0 | (9 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
Foreign currency exchange rate changes | 0 | 200 | 0 | 7 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Settlements/curtailments/divestitures | (2 | ) | (10 | ) | 20 | (2 | ) | 0 | 0 | 1 | 0 | |||||||||||||||||||||
Actuarial (gain) loss | 87 | 116 | 65 | 224 | 9 | 0 | 0 | 0 | ||||||||||||||||||||||||
Benefits paid | (76 | ) | (74 | ) | (78 | ) | (73 | ) | (9 | ) | 0 | (6 | ) | 0 | ||||||||||||||||||
Benefit obligation at end of year | $ | 1,091 | $ | 2,671 | $ | 1,024 | $ | 2,377 | $ | 65 | $ | 0 | $ | 60 | $ | 0 | ||||||||||||||||
Change in plan assets | ||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 790 | $ | 1,960 | $ | 697 | $ | 1,751 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Actual return on plan assets | 99 | 143 | 107 | 224 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Foreign currency exchange rate changes | 0 | 161 | 0 | 11 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Participant contributions | 0 | 6 | 0 | 6 | 2 | 0 | 2 | 0 | ||||||||||||||||||||||||
Settlement/transfers/divestitures | (1 | ) | (11 | ) | 19 | (2 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Company contributions | 54 | 40 | 45 | 43 | 7 | 0 | 4 | 0 | ||||||||||||||||||||||||
Benefits paid | (76 | ) | (74 | ) | (78 | ) | (73 | ) | (9 | ) | 0 | (6 | ) | 0 | ||||||||||||||||||
Fair value of plan assets at end of year | $ | 866 | $ | 2,225 | $ | 790 | $ | 1,960 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Funded status | ||||||||||||||||||||||||||||||||
Fair value of plan assets | $ | 866 | $ | 2,225 | $ | 790 | $ | 1,960 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Benefit obligation | 1,091 | 2,671 | 1,024 | 2,377 | 65 | 0 | 60 | 0 | ||||||||||||||||||||||||
Accrued benefit cost | $ | (225 | ) | $ | (446 | ) | $ | (234 | ) | $ | (417 | ) | $ | (65 | ) | $ | 0 | $ | (60 | ) | $ | 0 | ||||||||||
Amounts recognized in balance sheet: | ||||||||||||||||||||||||||||||||
Noncurrent asset | $ | 0 | $ | 20 | $ | 0 | $ | 10 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Current liability | (5 | ) | (6 | ) | (5 | ) | (6 | ) | (6 | ) | 0 | (5 | ) | 0 | ||||||||||||||||||
Noncurrent liability | (220 | ) | (460 | ) | (229 | ) | (421 | ) | (59 | ) | 0 | (55 | ) | 0 | ||||||||||||||||||
Total | $ | (225 | ) | $ | (446 | ) | $ | (234 | ) | $ | (417 | ) | $ | (65 | ) | $ | 0 | $ | (60 | ) | $ | 0 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman Corporation
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| Defined Benefit Plans |
| Other Postretirement Benefit Plans | ||||||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
|
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. | ||||||||
|
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans | ||||||||
Amounts recognized in accumulated other comprehensive loss: |
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Net actuarial loss |
| $ | 419 |
| $ | 1,000 |
| $ | 407 |
| $ | 1,100 |
| $ | 30 |
| $ | — |
| $ | 45 |
| $ | 1 |
Prior service credit |
|
| (15) |
|
| (29) |
|
| (17) |
|
| (31) |
|
| (45) |
|
| — |
|
| (51) |
|
| (2) |
|
| $ | 404 |
| $ | 971 |
| $ | 390 |
| $ | 1,069 |
| $ | (15) |
| $ | — |
| $ | (6) |
| $ | (1) |
Defined Benefit Plans | Other Postretirement Benefit Plans | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
U.S. | Non-U.S. | U.S. | Non-U.S. | U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | Plans | Plans | |||||||||||||||||||||||||
Amounts recognized in accumulated other comprehensive loss: | ||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 363 | $ | 874 | $ | 394 | $ | 840 | $ | 26 | $ | 0 | $ | 20 | $ | 0 | ||||||||||||||||
Prior service credit | (9 | ) | (27 | ) | (11 | ) | (32 | ) | (25 | ) | 0 | (33 | ) | 0 | ||||||||||||||||||
Total | $ | 354 | $ | 847 | $ | 383 | $ | 808 | $ | 1 | $ | 0 | $ | (13 | ) | $ | 0 |
Huntsman International
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| Defined Benefit Plans |
| Other Postretirement Benefit Plans | ||||||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
|
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. |
| U.S. |
| Non-U.S. | ||||||||
|
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans |
| Plans | ||||||||
Amounts recognized in accumulated other comprehensive loss: |
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|
|
|
|
|
Net actuarial loss |
| $ | 420 |
| $ | 1,030 |
| $ | 408 |
| $ | 1,137 |
| $ | 30 |
| $ | — |
| $ | 45 |
| $ | 1 |
Prior service credit |
|
| (15) |
|
| (29) |
|
| (17) |
|
| (31) |
|
| (45) |
|
| — |
|
| (51) |
|
| (2) |
|
| $ | 405 |
| $ | 1,001 |
| $ | 391 |
| $ | 1,106 |
| $ | (15) |
| $ | — |
| $ | (6) |
| $ | (1) |
Defined Benefit Plans | Other Postretirement Benefit Plans | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
U.S. | Non-U.S. | U.S. | Non-U.S. | U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||||||||||||||||
Plans | Plans | Plans | Plans | Plans | Plans | Plans | Plans | |||||||||||||||||||||||||
Amounts recognized in accumulated other comprehensive loss: | ||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 363 | $ | 877 | $ | 395 | $ | 846 | $ | 26 | $ | 0 | $ | 20 | $ | 0 | ||||||||||||||||
Prior service credit | (9 | ) | (27 | ) | (11 | ) | (31 | ) | (25 | ) | 0 | (33 | ) | 0 | ||||||||||||||||||
Total | $ | 354 | $ | 850 | $ | 384 | $ | 815 | $ | 1 | $ | 0 | $ | (13 | ) | $ | 0 |
During 2020, the overall increases in our U.S. pension and other postretirement benefit plan obligations were primarily due to decreases in discount rates. The amountsoverall increase in accumulated other comprehensive loss that are expectedour non-U.S. pension plan obligation was primarily due to be recognizeddecreases in discount rates in Switzerland, Germany, The Netherlands and the U.K., as components of net periodic benefit cost of continuing operations during the next fiscal year arewell as follows (dollarsforeign currency exchange rate changes in millions):Switzerland, The Netherlands, Germany and Belgium.
Huntsman Corporation
|
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|
|
|
| Other Postretirement | ||||
|
| Defined Benefit Plans |
| Benefit Plans | ||||||||
|
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|
|
| Non-U.S. |
|
|
|
| Non-U.S. | ||
|
| U.S. Plans |
| Plans |
| U.S. Plans |
| Plans | ||||
Actuarial loss |
| $ | 33 |
| $ | 38 |
| $ | 2 |
| $ | — |
Prior service credit |
|
| (2) |
|
| (5) |
|
| (6) |
|
| — |
Total |
| $ | 31 |
| $ | 33 |
| $ | (4) |
| $ | — |
Huntsman InternationalDuring 2019, the overall increases in our U.S. pension and other postretirement benefit plan obligations were primarily due to decreases in discount rates. The overall increase in our non-U.S. pension plan obligation was primarily due to decreases in discount rates in Switzerland, Germany, The Netherlands and the U.K.
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| Other Postretirement | ||||
|
| Defined Benefit Plans |
| Benefit Plans | ||||||||
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| Non-U.S. |
|
|
|
| Non-U.S. | ||
|
| U.S. Plans |
| Plans |
| U.S. Plans |
| Plans | ||||
Actuarial loss |
| $ | 33 |
| $ | 41 |
| $ | 2 |
| $ | — |
Prior service credit |
|
| (2) |
|
| (5) |
|
| (6) |
|
| — |
Total |
| $ | 31 |
| $ | 36 |
| $ | (4) |
| $ | — |
F-47
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Components of net periodic benefit costs of continuing operations for the years ended December 31, 2017, 20162020, 2019 and 20152018 were as follows (dollars in millions):
Huntsman Corporation
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| Defined Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Service cost |
| $ | 30 |
| $ | 30 |
| $ | 32 |
| $ | 33 |
| $ | 29 |
| $ | 34 |
Interest cost |
|
| 44 |
|
| 47 |
|
| 42 |
|
| 35 |
|
| 41 |
|
| 45 |
Expected return on plan assets |
|
| (55) |
|
| (54) |
|
| (56) |
|
| (100) |
|
| (93) |
|
| (93) |
Amortization of prior service credit |
|
| (2) |
|
| (5) |
|
| (6) |
|
| (5) |
|
| (4) |
|
| (1) |
Amortization of actuarial loss |
|
| 30 |
|
| 25 |
|
| 32 |
|
| 45 |
|
| 31 |
|
| 34 |
Special termination benefits |
|
| — |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Net periodic benefit cost |
| $ | 47 |
| $ | 43 |
| $ | 44 |
| $ | 9 |
| $ | 4 |
| $ | 20 |
Defined Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Service cost | $ | 21 | $ | 20 | $ | 23 | $ | 31 | $ | 30 | $ | 32 | ||||||||||||
Interest cost | 37 | 41 | 39 | 25 | 37 | 37 | ||||||||||||||||||
Expected return on plan assets | (59 | ) | (53 | ) | (54 | ) | (114 | ) | (102 | ) | (109 | ) | ||||||||||||
Amortization of prior service credit | (2 | ) | (2 | ) | (2 | ) | (5 | ) | (4 | ) | (5 | ) | ||||||||||||
Amortization of actuarial loss | 28 | 23 | 31 | 53 | 45 | 38 | ||||||||||||||||||
Settlement loss | 0 | 0 | 2 | 0 | 1 | 0 | ||||||||||||||||||
Net periodic benefit cost (credit) | $ | 25 | $ | 29 | $ | 39 | $ | (10 | ) | $ | 7 | $ | (7 | ) |
Other Postretirement Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 2 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Interest cost | 2 | 3 | 2 | 0 | 0 | 0 | ||||||||||||||||||
Amortization of prior service credit | (5 | ) | (5 | ) | (5 | ) | 0 | 0 | 0 | |||||||||||||||
Amortization of actuarial loss | 1 | 1 | 2 | 0 | 0 | 0 | ||||||||||||||||||
Net periodic benefit (credit) costs | $ | (1 | ) | $ | 0 | $ | 1 | $ | 0 | $ | 0 | $ | 0 |
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|
|
| Other Postretirement Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Service cost |
| $ | 3 |
| $ | 2 |
| $ | 4 |
| $ | — |
| $ | — |
| $ | — |
Interest cost |
|
| 3 |
|
| 4 |
|
| 5 |
|
| — |
|
| — |
|
| — |
Amortization of prior service credit |
|
| (6) |
|
| (7) |
|
| (5) |
|
| — |
|
| — |
|
| — |
Amortization of actuarial loss |
|
| 3 |
|
| 2 |
|
| 3 |
|
| — |
|
| — |
|
| — |
Net periodic benefit cost |
| $ | 3 |
| $ | 1 |
| $ | 7 |
| $ | — |
| $ | — |
| $ | — |
Huntsman International
|
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|
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|
|
|
|
| Defined Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Service cost |
| $ | 30 |
| $ | 30 |
| $ | 32 |
| $ | 33 |
| $ | 29 |
| $ | 34 |
Interest cost |
|
| 44 |
|
| 47 |
|
| 42 |
|
| 35 |
|
| 41 |
|
| 45 |
Expected return on plan assets |
|
| (55) |
|
| (54) |
|
| (56) |
|
| (100) |
|
| (93) |
|
| (93) |
Amortization of prior service credit |
|
| (2) |
|
| (5) |
|
| (6) |
|
| (5) |
|
| (4) |
|
| (1) |
Amortization of actuarial loss |
|
| 30 |
|
| 25 |
|
| 32 |
|
| 48 |
|
| 34 |
|
| 37 |
Special termination benefits |
|
| — |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Net periodic benefit cost |
| $ | 47 |
| $ | 43 |
| $ | 44 |
| $ | 12 |
| $ | 7 |
| $ | 23 |
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| Other Postretirement Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Service cost |
| $ | 3 |
| $ | 2 |
| $ | 4 |
| $ | — |
| $ | — |
| $ | — |
Interest cost |
|
| 3 |
|
| 4 |
|
| 5 |
|
| — |
|
| — |
|
| — |
Amortization of prior service credit |
|
| (6) |
|
| (7) |
|
| (5) |
|
| — |
|
| — |
|
| — |
Amortization of actuarial loss |
|
| 3 |
|
| 2 |
|
| 3 |
|
| — |
|
| — |
|
| — |
Net periodic benefit cost |
| $ | 3 |
| $ | 1 |
| $ | 7 |
| $ | — |
| $ | — |
| $ | — |
F-48
Huntsman International
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Defined Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Service cost | $ | 21 | $ | 20 | $ | 23 | $ | 31 | $ | 30 | $ | 32 | ||||||||||||
Interest cost | 37 | 41 | 39 | 25 | 37 | 37 | ||||||||||||||||||
Expected return on plan assets | (59 | ) | (53 | ) | (54 | ) | (114 | ) | (102 | ) | (109 | ) | ||||||||||||
Amortization of prior service credit | (2 | ) | (2 | ) | (2 | ) | (5 | ) | (4 | ) | (5 | ) | ||||||||||||
Amortization of actuarial loss | 28 | 23 | 31 | 57 | 48 | 41 | ||||||||||||||||||
Settlement loss | 0 | 0 | 2 | 0 | 1 | 0 | ||||||||||||||||||
Net periodic benefit cost (credit) | $ | 25 | $ | 29 | $ | 39 | $ | (6 | ) | $ | 10 | $ | (4 | ) |
Other Postretirement Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 2 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Interest cost | 2 | 3 | 2 | 0 | 0 | 0 | ||||||||||||||||||
Amortization of prior service credit | (5 | ) | (5 | ) | (5 | ) | 0 | 0 | 0 | |||||||||||||||
Amortization of actuarial loss | 1 | 1 | 2 | 0 | 0 | 0 | ||||||||||||||||||
Net periodic benefit (credit) costs | $ | (1 | ) | $ | 0 | $ | 1 | $ | 0 | $ | 0 | $ | 0 |
The amounts recognized in net periodic benefit cost and other comprehensive income (loss) as of December 31, 2017, 20162020, 2019 and 20152018 were as follows (dollars in millions):
Huntsman Corporation
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Defined Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Current year actuarial loss (gain) |
| $ | 42 |
| $ | 74 |
| $ | 2 |
| $ | (42) |
| $ | 235 |
| $ | 33 |
Amortization of actuarial loss |
|
| (30) |
|
| (25) |
|
| (32) |
|
| (61) |
|
| (42) |
|
| (43) |
Current year prior service (credits) cost |
|
| — |
|
| — |
|
| — |
|
| (2) |
|
| — |
|
| (32) |
Amortization of prior service credit |
|
| 2 |
|
| 5 |
|
| 6 |
|
| 4 |
|
| 4 |
|
| — |
Curtailment (gain)/loss |
|
| — |
|
| — |
|
| — |
|
| 3 |
|
| — |
|
| — |
Total recognized in other comprehensive income (loss) |
|
| 14 |
|
| 54 |
|
| (24) |
|
| (98) |
|
| 197 |
|
| (42) |
Amounts related to discontinued operations |
|
| 3 |
|
| — |
|
| 1 |
|
| 37 |
|
| (65) |
|
| (13) |
Total recognized in other comprehensive income (loss) in continuing operations |
|
| 17 |
|
| 54 |
|
| (23) |
|
| (61) |
|
| 132 |
|
| (55) |
Net periodic benefit cost |
|
| 47 |
|
| 43 |
|
| 44 |
|
| 9 |
|
| 4 |
|
| 20 |
Total recognized in net periodic benefit cost and other comprehensive income (loss) |
| $ | 64 |
| $ | 97 |
| $ | 21 |
| $ | (52) |
| $ | 136 |
| $ | (35) |
Defined Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Current year actuarial loss | $ | 40 | $ | 19 | $ | 18 | $ | 87 | $ | 101 | $ | 117 | ||||||||||||
Amortization of actuarial loss | (28 | ) | (26 | ) | (34 | ) | (53 | ) | (45 | ) | (38 | ) | ||||||||||||
Current year prior service (credits) cost | 0 | 0 | 0 | 0 | (10 | ) | 4 | |||||||||||||||||
Amortization of prior service credit | 2 | 2 | 2 | 5 | 4 | 5 | ||||||||||||||||||
Settlements | (42 | ) | 0 | (2 | ) | 0 | 1 | 0 | ||||||||||||||||
Total recognized in other comprehensive income (loss) | (28 | ) | (5 | ) | (16 | ) | 39 | 51 | 88 | |||||||||||||||
Amounts related to discontinued operations | 17 | 9 | (4 | ) | 0 | 0 | 0 | |||||||||||||||||
Total recognized in other comprehensive income (loss) in continuing operations | (11 | ) | 4 | (20 | ) | 39 | 51 | 88 | ||||||||||||||||
Net periodic benefit cost | 25 | 29 | 39 | (10 | ) | 7 | (7 | ) | ||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 14 | $ | 33 | $ | 19 | $ | 29 | $ | 58 | $ | 81 |
Other Postretirement Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Current year actuarial loss (gain) | $ | 9 | $ | 0 | $ | (10 | ) | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Amortization of actuarial loss | (1 | ) | (1 | ) | (2 | ) | 0 | 0 | 0 | |||||||||||||||
Current year prior service credit | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Amortization of prior service credit | 5 | 5 | 6 | 0 | 0 | 0 | ||||||||||||||||||
Settlements | (1 | ) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Curtailment (gain) loss | 2 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total recognized in other comprehensive income (loss) | 14 | 4 | (6 | ) | 0 | 0 | 0 | |||||||||||||||||
Amounts related to discontinued operations | 0 | (6 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||
Total recognized in other comprehensive income (loss) in continuing operations | 14 | (2 | ) | (6 | ) | 0 | 0 | 0 | ||||||||||||||||
Net periodic benefit cost | (1 | ) | 0 | 1 | 0 | 0 | 0 | |||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 13 | $ | (2 | ) | $ | (5 | ) | $ | 0 | $ | 0 | $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Postretirement Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Current year actuarial loss (gain) |
| $ | (12) |
| $ | 9 |
| $ | (9) |
| $ | — |
| $ | — |
| $ | — |
Amortization of actuarial loss |
|
| (3) |
|
| (2) |
|
| (3) |
|
| (1) |
|
| — |
|
| — |
Current year prior service credit |
|
| — |
|
| — |
|
| (40) |
|
| — |
|
| (2) |
|
| — |
Amortization of prior service credit |
|
| 6 |
|
| 7 |
|
| 5 |
|
| 2 |
|
| — |
|
| — |
Total recognized in other comprehensive income (loss) |
|
| (9) |
|
| 14 |
|
| (47) |
|
| 1 |
|
| (2) |
|
| — |
Amounts related to discontinued operations |
|
| — |
|
| (1) |
|
| 1 |
|
| (1) |
|
| 3 |
|
| — |
Total recognized in other comprehensive income (loss) in continuing operations |
|
| (9) |
|
| 13 |
|
| (46) |
|
| — |
|
| 1 |
|
| — |
Net periodic benefit cost |
|
| 3 |
|
| 1 |
|
| 7 |
|
| — |
|
| — |
|
| — |
Total recognized in net periodic benefit cost and other comprehensive income (loss) |
| $ | (6) |
| $ | 14 |
| $ | (39) |
| $ | — |
| $ | 1 |
| $ | — |
Huntsman International
|
|
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|
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|
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|
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|
|
|
|
|
|
| Defined Benefit Plans | ||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | ||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||
Current year actuarial loss |
| $ | 42 |
| $ | 74 |
| $ | 2 |
| $ | (42) |
| $ | 235 |
| $ | 33 |
Amortization of actuarial loss |
|
| (30) |
|
| (25) |
|
| (32) |
|
| (68) |
|
| (49) |
|
| (51) |
Current year prior service credit |
|
| — |
|
| — |
|
| — |
|
| (2) |
|
| — |
|
| (32) |
Amortization of prior service credit |
|
| 2 |
|
| 5 |
|
| 6 |
|
| 4 |
|
| 4 |
|
| — |
Curtailment (gain)/loss |
|
| — |
|
| — |
|
| — |
|
| 3 |
|
| — |
|
| — |
Total recognized in other comprehensive income (loss) |
|
| 14 |
|
| 54 |
|
| (24) |
|
| (105) |
|
| 190 |
|
| (50) |
Amounts related to discontinued operations |
|
| 3 |
|
| — |
|
| 1 |
|
| 42 |
|
| (61) |
|
| (8) |
Total recognized in other comprehensive income (loss) in continuing operations |
|
| 17 |
|
| 54 |
|
| (23) |
|
| (63) |
|
| 129 |
|
| (58) |
Net periodic benefit cost |
|
| 47 |
|
| 43 |
|
| 44 |
|
| 12 |
|
| 7 |
|
| 23 |
Total recognized in net periodic benefit cost and other comprehensive income (loss) |
| $ | 64 |
| $ | 97 |
| $ | 21 |
| $ | (51) |
| $ | 136 |
| $ | (35) |
F-49
Huntsman International
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Defined Benefit Plans | |||||||||||||||||||||||
|
| Other Postretirement Benefit Plans | U.S. plans | Non-U.S. plans | ||||||||||||||||||||||||||||||||||||||
|
| U.S. plans |
| Non-U.S. plans | 2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 | ||||||||||||||||||||||||||||||
Current year actuarial loss (gain) |
| $ | (12) |
| $ | 9 |
| $ | (9) |
| $ | — |
| $ | — |
| $ | — | ||||||||||||||||||||||||
Current year actuarial loss | $ | 40 | $ | 19 | $ | 18 | $ | 87 | $ | 101 | $ | 117 | ||||||||||||||||||||||||||||||
Amortization of actuarial loss |
|
| (3) |
|
| (2) |
|
| (3) |
|
| (1) |
|
| — |
|
| — | (28 | ) | (26 | ) | (34 | ) | (57 | ) | (48 | ) | (41 | ) | ||||||||||||
Current year prior service credit |
|
| — |
|
| — |
|
| (40) |
|
| — |
|
| (2) |
|
| — | 0 | 0 | 0 | 0 | (10 | ) | 4 | |||||||||||||||||
Amortization of prior service credit |
|
| 6 |
|
| 7 |
|
| 5 |
|
| 2 |
|
| — |
|
| — | 2 | 2 | 2 | 5 | 4 | 5 | ||||||||||||||||||
Settlements | (42 | ) | 0 | (2 | ) | 0 | 1 | 0 | ||||||||||||||||||||||||||||||||||
Curtailment (gain)/loss | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Total recognized in other comprehensive income (loss) |
|
| (9) |
|
| 14 |
|
| (47) |
|
| 1 |
|
| (2) |
|
| — | (28 | ) | (5 | ) | (16 | ) | 35 | 48 | 85 | |||||||||||||||
Amounts related to discontinued operations |
|
| — |
|
| (1) |
|
| 1 |
|
| (1) |
|
| 3 |
|
| — | 17 | 9 | (4 | ) | 0 | 0 | 0 | |||||||||||||||||
Total recognized in other comprehensive income (loss) in continuing operations |
|
| (9) |
|
| 13 |
|
| (46) |
|
| — |
|
| 1 |
|
| — | (11 | ) | 4 | (20 | ) | 35 | 48 | 85 | ||||||||||||||||
Net periodic benefit cost |
|
| 3 |
|
| 1 |
|
| 7 |
|
| — |
|
| — |
|
| — | 25 | 29 | 39 | (6 | ) | 10 | (4 | ) | ||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) |
| $ | (6) |
| $ | 14 |
| $ | (39) |
| $ | — |
| $ | 1 |
| $ | — | $ | 14 | $ | 33 | $ | 19 | $ | 29 | $ | 58 | $ | 81 |
Other Postretirement Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Current year actuarial loss | $ | 9 | $ | 0 | $ | (10 | ) | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Amortization of actuarial loss | (1 | ) | (1 | ) | (2 | ) | 0 | 0 | 0 | |||||||||||||||
Current year prior service credit | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Amortization of prior service credit | 5 | 5 | 6 | 0 | 0 | 0 | ||||||||||||||||||
Settlements | (1 | ) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Curtailment (gain)/loss | 2 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total recognized in other comprehensive income (loss) | 14 | 4 | (6 | ) | 0 | 0 | 0 | |||||||||||||||||
Amounts related to discontinued operations | 0 | (6 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||
Total recognized in other comprehensive income (loss) in continuing operations | 14 | (2 | ) | (6 | ) | 0 | 0 | 0 | ||||||||||||||||
Net periodic benefit cost | (1 | ) | 0 | 1 | 0 | 0 | 0 | |||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 13 | $ | (2 | ) | $ | (5 | ) | $ | 0 | $ | 0 | $ | 0 |
The following weighted‑averageweighted-average assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost for the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Defined Benefit Plans |
| ||||||||||
|
| U.S. plans |
| Non-U.S. plans |
| ||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 |
|
Projected benefit obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
| 3.74 | % | 4.24 | % | 4.90 | % | 1.65 | % | 1.61 | % | 2.15 | % |
Rate of compensation increase |
| 4.13 | % | 4.17 | % | 4.17 | % | 3.38 | % | 3.37 | % | 3.28 | % |
Net periodic pension cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
| 4.24 | % | 4.90 | % | 4.25 | % | 1.61 | % | 2.15 | % | 2.15 | % |
Rate of compensation increase |
| 4.17 | % | 4.17 | % | 4.19 | % | 3.37 | % | 3.28 | % | 3.35 | % |
Expected return on plan assets |
| 7.55 | % | 7.54 | % | 7.75 | % | 5.68 | % | 5.91 | % | 5.69 | % |
Defined Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Projected benefit obligation | ||||||||||||||||||||||||
Discount rate | 2.82 | % | 3.59 | % | 4.39 | % | 0.69 | % | 1.07 | % | 1.75 | % | ||||||||||||
Rate of compensation increase | 4.09 | % | 4.09 | % | 4.10 | % | 2.59 | % | 2.65 | % | 2.95 | % | ||||||||||||
Interest credit rate | 5.15 | % | 5.15 | % | 5.15 | % | 0.33 | % | 0.49 | % | 1.04 | % | ||||||||||||
Net periodic pension cost | ||||||||||||||||||||||||
Discount rate | 3.59 | % | 4.39 | % | 3.74 | % | 1.07 | % | 1.75 | % | 1.65 | % | ||||||||||||
Rate of compensation increase | 4.09 | % | 4.07 | % | 4.10 | % | 2.65 | % | 2.64 | % | 3.38 | % | ||||||||||||
Expected return on plan assets | 7.52 | % | 7.52 | % | 7.52 | % | 5.89 | % | 5.89 | % | 5.88 | % | ||||||||||||
Interest credit rate | 5.15 | % | 5.15 | % | 5.15 | % | 0.49 | % | 1.04 | % | 0.88 | % |
Other Postretirement Benefit Plans | ||||||||||||||||||||||||
U.S. plans | Non-U.S. plans | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||||||||||||
Projected benefit obligation | ||||||||||||||||||||||||
Discount rate | 2.63 | % | 3.46 | % | 4.26 | % | 2.30 | % | 2.90 | % | 3.50 | % | ||||||||||||
Net periodic pension cost | ||||||||||||||||||||||||
Discount rate | 3.46 | % | 4.26 | % | 3.58 | % | 2.90 | % | 3.50 | % | 3.30 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Postretirement Benefit Plans |
| ||||||||||
|
| U.S. plans |
| Non-U.S. plans |
| ||||||||
|
| 2017 |
| 2016 |
| 2015 |
| 2017 |
| 2016 |
| 2015 |
|
Projected benefit obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
| 3.57 | % | 4.03 | % | 4.68 | % | 3.30 | % | 3.50 | % | 3.70 | % |
Net periodic pension cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
| 4.03 | % | 4.68 | % | 4.37 | % | 3.50 | % | 3.70 | % | 3.80 | % |
At both December 31, 2017 and 2016 the health care trend rate used to measure the expected increase in the cost of benefits was assumed to be 7.0%, decreasing to 5% after 2025. Assumed health care cost trend rates can have a significant effect on the amounts reported for the postretirement benefit plans. A one-percent point change in assumed health care cost trend rates would have the following effects (dollars in millions):
|
| |||||
| ||||||
|
|
|
|
| ||
|
|
|
F-50
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The projected benefit obligation and fair value of plan assets for the defined benefit plans with projected benefit obligations in excess of plan assets as of December 31, 2017 2020 and 20162019 were as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. plans |
| Non-U.S. plans | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Projected benefit obligation in excess of plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation |
| $ | 1,153 |
| $ | 1,049 |
| $ | 1,213 |
| $ | 2,050 |
Fair value of plan assets |
|
| 821 |
|
| 721 |
|
| 815 |
|
| 1,623 |
U.S. plans | Non-U.S. plans | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Projected benefit obligation in excess of plan assets | ||||||||||||||||
Projected benefit obligation | $ | 1,091 | $ | 1,024 | $ | 2,017 | $ | 2,203 | ||||||||
Fair value of plan assets | 866 | 790 | 1,551 | 1,777 |
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2017 2020 and 20162019 were as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. plans |
| Non-U.S. plans | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Accumulated benefit obligation in excess of plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation |
| $ | 1,153 |
| $ | 1,049 |
| $ | 1,026 |
| $ | 1,121 |
Accumulated benefit obligation |
|
| 1,127 |
|
| 1,022 |
|
| 957 |
|
| 1,043 |
Fair value of plan assets |
|
| 821 |
|
| 721 |
|
| 638 |
|
| 721 |
U.S. plans | Non-U.S. plans | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Accumulated benefit obligation in excess of plan assets | ||||||||||||||||
Projected benefit obligation | $ | 1,091 | $ | 1,024 | $ | 1,203 | $ | 1,066 | ||||||||
Accumulated benefit obligation | 1,073 | 1,019 | 1,116 | 991 | ||||||||||||
Fair value of plan assets | 866 | 790 | 746 | 664 |
Expected future contributions and benefit payments related to continuing operations are as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Plans |
| Non-U.S. Plans | ||||||||
|
|
|
|
| Other |
|
|
|
| Other | ||
|
| Defined |
| Postretirement |
| Defined |
| Postretirement | ||||
|
| Benefit |
| Benefit |
| Benefit |
| Benefit | ||||
|
| Plans |
| Plans |
| Plans |
| Plans | ||||
2018 expected employer contributions |
|
|
|
|
|
|
|
|
|
|
|
|
To plan trusts |
| $ | 51 |
| $ | 7 |
| $ | 38 |
| $ | — |
Expected benefit payments |
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
| 72 |
|
| 7 |
|
| 71 |
|
| — |
2019 |
|
| 61 |
|
| 7 |
|
| 71 |
|
| — |
2020 |
|
| 62 |
|
| 6 |
|
| 74 |
|
| — |
2021 |
|
| 62 |
|
| 6 |
|
| 78 |
|
| — |
2022 |
|
| 107 |
|
| 6 |
|
| 79 |
|
| — |
2023 - 2027 |
|
| 370 |
|
| 31 |
|
| 428 |
|
| — |
U.S. Plans | Non-U.S. Plans | ||||||||||||||||
Other | Other | ||||||||||||||||
Defined | Postretirement | Defined | Postretirement | ||||||||||||||
Benefit | Benefit | Benefit | Benefit | ||||||||||||||
Plans | Plans | Plans | Plans | ||||||||||||||
2021 expected employer contributions | |||||||||||||||||
To plan trusts | $ | 14 | $ | 6 | $ | 40 | $ | 0 | |||||||||
Expected benefit payments | |||||||||||||||||
2021 | 59 | 6 | 86 | 0 | |||||||||||||
2022 | 65 | 6 | 87 | 0 | |||||||||||||
2023 | 70 | 5 | 92 | 0 | |||||||||||||
2024 | 66 | 5 | 90 | 0 | |||||||||||||
2025 | 100 | 5 | 92 | 0 | |||||||||||||
2026 - 2030 | 316 | 24 | 493 | 0 |
Our investment strategy with respect to pension assets is to pursue an investment plan that, over the long term, is expected to protect the funded status of the plan, enhance the real purchasing power of plan assets, and not threaten the plan’s ability to meet currently committed obligations. Additionally, our investment strategy is to achieve returns on plan assets, subject to a prudent level of portfolio risk. Plan assets are invested in a broad range of investments. These investments are diversified in terms of domestic and international equities, both growth and value funds, including small, mid and large capitalization equities; short‑termshort-term and long‑termlong-term debt securities; real estate; and cash and cash equivalents. The investments are further diversified within each asset category. The portfolio diversification provides protection against a single investment or asset category having a disproportionate impact on the aggregate performance of the plan assets.
Our pension plan assets are managed by outside investment managers. The investment managers value our plan assets using quoted market prices, other observable inputs or unobservable inputs. For certain assets, the investment managers obtain third‑partythird-party appraisals at least annually, which use valuation techniques and inputs specific to the applicable property, market, or geographic location. During 2017,2020, there were no transferswas a transfer into or outLevel 3 assets of Level 3 assets.approximately $11 million due to a change in the significance of unobservable inputs for one investment, which is immaterial. This investment is included within the real estate/other category.
F-51
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We have established target allocations for each asset category. Our pension plan assets are periodically rebalanced based upon our target allocations.
The fair value of plan assets for the pension plans was $2.7$3.1 billion and $2.4$2.8 billion at December 31, 2017 2020 and 2016,2019, respectively. The following plan assets are measured at fair value on a recurring basis (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair Value Amounts Using | |||||||
|
|
|
|
| Quoted prices in active |
| Significant other |
| Significant | |||
|
| December 31, |
| markets for identical |
| observable inputs |
| unobservable inputs | ||||
Asset category |
| 2017 |
| assets (Level 1) |
| (Level 2) |
| (Level 3) | ||||
U.S. pension plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Equities |
| $ | 440 |
| $ | 318 |
| $ | 122 |
| $ | — |
Fixed income |
|
| 311 |
|
| 239 |
|
| 72 |
|
| — |
Real estate/other |
|
| 70 |
|
| — |
|
| — |
|
| 70 |
Cash |
|
| — |
|
| — |
|
| — |
|
| — |
Total U.S. pension plan assets |
| $ | 821 |
| $ | 557 |
| $ | 194 |
| $ | 70 |
Non-U.S. pension plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Equities |
| $ | 602 |
| $ | 230 |
| $ | 372 |
| $ | — |
Fixed income |
|
| 739 |
|
| 477 |
|
| 262 |
|
| — |
Real estate/other |
|
| 508 |
|
| 104 |
|
| 349 |
|
| 55 |
Cash |
|
| 34 |
|
| 33 |
|
| 1 |
|
| — |
Total Non-U.S. pension plan assets |
| $ | 1,883 |
| $ | 844 |
| $ | 984 |
| $ | 55 |
Fair Value Amounts Using | ||||||||||||||||
Quoted prices in active | Significant other | Significant | ||||||||||||||
December 31, | markets for identical | observable inputs | unobservable inputs | |||||||||||||
Asset category | 2020 | assets (Level 1) | (Level 2) | (Level 3) | ||||||||||||
U.S. pension plans: | ||||||||||||||||
Equities | $ | 481 | $ | 315 | $ | 166 | $ | 0 | ||||||||
Fixed income | 323 | 242 | 81 | 0 | ||||||||||||
Real estate/other | 62 | 0 | 0 | 62 | ||||||||||||
Cash | 0 | 0 | 0 | 0 | ||||||||||||
Total U.S. pension plan assets | $ | 866 | $ | 557 | $ | 247 | $ | 62 | ||||||||
Non-U.S. pension plans: | ||||||||||||||||
Equities | $ | 564 | $ | 229 | $ | 335 | $ | 0 | ||||||||
Fixed income | 971 | 610 | 361 | 0 | ||||||||||||
Real estate/other | 628 | 93 | 459 | 76 | ||||||||||||
Cash | 62 | 59 | 3 | 0 | ||||||||||||
Total Non-U.S. pension plan assets | $ | 2,225 | $ | 991 | $ | 1,158 | $ | 76 |
Fair Value Amounts Using | ||||||||||||||||
Quoted prices in active | Significant other | Significant | ||||||||||||||
December 31, | Markets for identical | Observable inputs | Unobservable inputs | |||||||||||||
Asset category | 2019 | assets (Level 1) | (Level 2) | (Level 3) | ||||||||||||
U.S. pension plans: | ||||||||||||||||
Equities | $ | 422 | $ | 283 | $ | 139 | $ | 0 | ||||||||
Fixed income | 301 | 220 | 81 | 0 | ||||||||||||
Real estate/other | 67 | 0 | 0 | 67 | ||||||||||||
Cash | 0 | 0 | 0 | 0 | ||||||||||||
Total U.S. pension plan assets | $ | 790 | $ | 503 | $ | 220 | $ | 67 | ||||||||
Non-U.S. pension plans: | ||||||||||||||||
Equities | $ | 535 | $ | 228 | $ | 307 | $ | 0 | ||||||||
Fixed income | 847 | 560 | 287 | 0 | ||||||||||||
Real estate/other | 505 | 99 | 349 | 57 | ||||||||||||
Cash | 73 | 72 | 1 | 0 | ||||||||||||
Total Non-U.S. pension plan assets | $ | 1,960 | $ | 959 | $ | 944 | $ | 57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair Value Amounts Using | |||||||
|
|
|
|
| Quoted prices in active |
| Significant other |
| Significant | |||
|
| December 31, |
| Markets for identical |
| Observable inputs |
| Unobservable inputs | ||||
Asset category |
| 2016 |
| assets (Level 1) |
| (Level 2) |
| (Level 3) | ||||
U.S. pension plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Equities |
| $ | 383 |
| $ | 272 |
| $ | 111 |
| $ | — |
Fixed income |
|
| 274 |
|
| 210 |
|
| 64 |
|
| — |
Real estate/other |
|
| 64 |
|
| — |
|
| — |
|
| 64 |
Cash |
|
| — |
|
| — |
|
| — |
|
| — |
Total U.S. pension plan assets |
| $ | 721 |
| $ | 482 |
| $ | 175 |
| $ | 64 |
Non-U.S. pension plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Equities |
| $ | 594 |
| $ | 245 |
| $ | 349 |
| $ | — |
Fixed income |
|
| 599 |
|
| 509 |
|
| 90 |
|
| — |
Real estate/other |
|
| 430 |
|
| 66 |
|
| 322 |
|
| 42 |
Cash |
|
| 16 |
|
| 16 |
|
| — |
|
| — |
Total Non-U.S. pension plan assets |
| $ | 1,639 |
| $ | 836 |
| $ | 761 |
| $ | 42 |
The following table reconciles the beginning and ending balances of plan assets measured at fair value using unobservable inputs (Level 3)3) (dollars in millions):
|
|
|
|
|
|
|
|
| Real Estate/Other | ||||
|
| Year ended December 31, | ||||
|
| 2017 |
| 2016 | ||
Fair Value Measurements of Plan Assets Using Significant Unobservable Inputs (Level 3) |
|
|
|
|
|
|
Balance at beginning of period |
| $ | 106 |
| $ | 104 |
Return on pension plan assets |
|
| 14 |
|
| 4 |
Purchases, sales and settlements |
|
| 5 |
|
| (2) |
Transfers into (out of) Level 3 |
|
| — |
|
| — |
Balance at end of period |
| $ | 125 |
| $ | 106 |
F-52
Real Estate/Other | ||||||||
Year ended December 31, | ||||||||
2020 | 2019 | |||||||
Fair Value Measurements of Plan Assets Using Significant Unobservable Inputs (Level 3) | ||||||||
Balance at beginning of period | $ | 124 | $ | 121 | ||||
Return on pension plan assets | 5 | 4 | ||||||
Purchases, sales and settlements | (2 | ) | (1 | ) | ||||
Transfers into (out of) Level 3 | 11 | 0 | ||||||
Balance at end of period | $ | 138 | $ | 124 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Based upon historical returns, the expectations of our investment committee and outside advisors, the expected long‑termlong-term rate of return on the pension assets is estimated to be between 5.68% and 7.75%7.53%. The asset allocation for our pension plans at December 31, 2017 2020 and 20162019 and the target allocation for 2015,2021, by asset category are as follows:
|
|
|
|
|
|
|
|
|
| Target |
|
|
| ||
|
| Allocation |
| Allocation at December 31, |
| ||
Asset category |
| 2018 |
| 2017 |
| 2016 |
|
U.S. pension plans: |
|
|
|
|
|
|
|
Equities |
| 53 | % | 54 | % | 53 | % |
Fixed income |
| 39 | % | 38 | % | 38 | % |
Real estate/other |
| 8 | % | 8 | % | 9 | % |
Cash |
| — | % | — | % | — |
|
Total U.S. pension plans |
| 100 | % | 100 | % | 100 | % |
Non-U.S. pension plans: |
|
|
|
|
|
|
|
Equities |
| 38 | % | 32 | % | 36 | % |
Fixed income |
| 37 | % | 39 | % | 37 | % |
Real estate/other |
| 24 | % | 27 | % | 26 | % |
Cash |
| 1 | % | 2 | % | 1 | % |
Total non-U.S. pension plans |
| 100 | % | 100 | % | 100 | % |
Target | ||||||||||||
Allocation | Allocation at December 31, | |||||||||||
Asset category | 2021 | 2020 | 2019 | |||||||||
U.S. pension plans: | ||||||||||||
Equities | 54 | % | 56 | % | 54 | % | ||||||
Fixed income | 39 | % | 37 | % | 38 | % | ||||||
Real estate/other | 4 | % | 7 | % | 8 | % | ||||||
Cash | 3 | % | 0 | % | 0 | % | ||||||
Total U.S. pension plans | 100 | % | 100 | % | 100 | % | ||||||
Non-U.S. pension plans: | ||||||||||||
Equities | 26 | % | 25 | % | 27 | % | ||||||
Fixed income | 48 | % | 44 | % | 43 | % | ||||||
Real estate/other | 14 | % | 28 | % | 26 | % | ||||||
Cash | 12 | % | 3 | % | 4 | % | ||||||
Total non-U.S. pension plans | 100 | % | 100 | % | 100 | % |
Equity securities in our pension plans did not include any direct investments in equity securities of our Company or our affiliates at the end of 2017.2020.
Defined Contribution Plans—
Defined Contribution Plans—U.S.
We had a money purchase pension plan that covered substantially all of our domestic employees who were hired prior to January 1, 2004. Employer contributions were made based on a percentage of employees’ earnings (ranging up to 8%). During 2014, we closed this plan to non-union participants, and in 2015, we closed this plan to union associates. We continue to provide equivalent benefits to those who were covered under this plan into their salary deferral account.
We have a salary deferral plan covering substantially all U.S. employees. Plan participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation. We contribute an amount equal to the participant’s contribution, not to exceed 4 % of the participant’s compensation. For new hires who are not eligible for the cash balance plan, and associates who were covered by the money purchase pension plan prior to its closure, we contribute an additional amount into their salary deferral accounts, not to exceed 6% of the participant’s compensation.
Our total combined expense for the above defined contribution plans for each of the years ended December 31, 2017, 20162020, 2019 and 20152018 was $22$17 million, $20$17 million and $20$16 million, respectively.
Defined Contribution Plans—Non-U.S.
DefinedContribution Plans—Non-U.S
We have defined contribution plans in a variety of non-U.S. locations.
Our total combined expense for these defined contribution plans for the years ended December 31, 2017, 2016 and 2015 was $5 million, $4 million and $5 million, respectively, primarily related to the Huntsman UK Pension Plan.
All UK associates are eligible to participate in the Huntsman UK Pension Plan, a contract-basedcontract-based arrangement with a third party. Company contributions vary by business during a five year-year transition period. Plan participants elect to make voluntary contributions to this plan up to a specified amount of their compensation. We contribute a matching amount not to exceed 12% of the participant’s salary for new hires and 15% of the participant’s salary for all other participants.
Supplemental Salary Deferral Plan
Our total combined expense for these defined contribution plans for the years ended December 31, 2020, 2019 and Supplemental Executive Retirement Plan2018 was $3 million, $4 million and $4 million, respectively, primarily related to the Huntsman UK Pension Plan.
Supplemental Salary Deferral Plan and Supplemental Executive Retirement Plan
The Huntsman Supplemental Savings Plan (the “SSP”) is a non-qualified plan covering key management employees and allows participants to defer amounts that would otherwise be paid as compensation. The participant can
F-53
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
defer up to 75% of their salary and bonus each year. This plan also provides benefits that would be provided under the Huntsman Salary Deferral Plan if that plan were not subject to legal limits on the amount of contributions that can be allocated to an individual in a single year. The SSP was amended and restated effective as of January 1, 2005 to allow eligible executive employees to comply with Section 409A of the Internal Revenue Code of 1986.
The Huntsman Supplemental Executive Retirement Plan (the “SERP”) is an unfunded non-qualified pension plan established to provide certain executive employees with benefits that could not be provided, due to legal limitations, under the Huntsman Defined Benefit Pension Plan, a qualified defined benefit pension plan, and the Huntsman Money Purchase Pension Plan, a qualified money purchase pension plan.
Assets of these plans are included in other noncurrent assets and as of December 31, 2017 2020 and 20162019 were $33$44 million and $27$39 million, respectively. During each of the years ended December 31, 2017, 20162020, 2019 and 2015,2018, we expensed a total of $1 million as contributions to the SSP and the SERP.
Stock-Based Incentive Plan
Stock-Based Incentive Plan
On May 5, 2016, our stockholders approved a new Huntsman Corporation 2016 Stock Incentive Plan (the “2016“2016 Stock Incentive Plan”), which reserved 8.2 million shares for issuance. The Huntsman Corporation Stock Incentive Plan, as amended and restated (the “Prior Plan”), remains in effect for outstanding awards granted pursuant to the Prior Plan, but no further awards may be granted under the Prior Plan. Under the 2016 Stock Incentive Plan, we may grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, phantom stock, performance share units and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock options may be granted solely to employees. The terms of the grants under both the 2016 Stock Incentive Plan and the Prior Plan are fixed at the grant date. As of December 31, 2017,2020, we had approximately 87 million shares remaining under the 20172016 Stock Incentive Plan available for grant. See “Note 21.24. Stock-Based Compensation Plan.”
International Plans
International Plans
International employees are covered by various post‑employmentpost-employment arrangements consistent with local practices and regulations. Such obligations are included in other long‑termlong-term liabilities in our consolidated balance sheets.
17.
20. INCOME TAXES
The following is a summary of U.S. and non‑U.S.non-U.S. provisions for current and deferred income taxes (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Income tax expense (benefit): |
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
Current |
| $ | 23 |
| $ | 50 |
| $ | 54 |
Deferred |
|
| (95) |
|
| (15) |
|
| 17 |
Non-U.S. |
|
|
|
|
|
|
|
|
|
Current |
|
| 94 |
|
| 55 |
|
| 26 |
Deferred |
|
| 42 |
|
| 19 |
|
| (37) |
Total |
| $ | 64 |
| $ | 109 |
| $ | 60 |
F-54
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Income tax expense (benefit): | ||||||||||||
U.S. | ||||||||||||
Current | $ | (216 | ) | $ | (17 | ) | $ | 57 | ||||
Deferred | 167 | (181 | ) | (30 | ) | |||||||
Non-U.S. | ||||||||||||
Current | 90 | 71 | 153 | |||||||||
Deferred | 5 | 89 | (135 | ) | ||||||||
Total | $ | 46 | $ | (38 | ) | $ | 45 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Income tax expense (benefit): |
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
Current |
| $ | 16 |
| $ | 50 |
| $ | 52 |
Deferred |
|
| (92) |
|
| (16) |
|
| 17 |
Non-U.S. |
|
|
|
|
|
|
|
|
|
Current |
|
| 94 |
|
| 55 |
|
| 25 |
Deferred |
|
| 43 |
|
| 19 |
|
| (35) |
Total |
| $ | 61 |
| $ | 108 |
| $ | 59 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Income tax expense (benefit): | ||||||||||||
U.S. | ||||||||||||
Current | $ | (215 | ) | $ | (21 | ) | $ | 57 | ||||
Deferred | 166 | (179 | ) | (34 | ) | |||||||
Non-U.S. | ||||||||||||
Current | 90 | 70 | 153 | |||||||||
Deferred | 5 | 89 | (135 | ) | ||||||||
Total | $ | 46 | $ | (41 | ) | $ | 41 |
The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate to our provision for income taxes (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Income from continuing operations before income taxes |
| $ | 647 |
| $ | 474 |
| $ | 488 |
Expected tax expense at U.S. statutory rate of 35% |
| $ | 227 |
| $ | 166 |
| $ | 171 |
Change resulting from: |
|
|
|
|
|
|
|
|
|
State tax expense net of federal benefit |
|
| (2) |
|
| (1) |
|
| (3) |
Non-U.S. tax rate differentials |
|
| (64) |
|
| (32) |
|
| (2) |
Non-taxable portion of gain on sale of European surfactants business |
|
| — |
|
| (23) |
|
| — |
U.S. Tax Reform Act impact |
|
| (52) |
|
| — |
|
| — |
U.S. domestic manufacturing deduction |
|
| — |
|
| — |
|
| (7) |
Currency exchange gains and losses |
|
| 15 |
|
| (5) |
|
| (38) |
Effect of tax holidays |
|
| — |
|
| — |
|
| (6) |
U.S. foreign tax credits, net of associated income and taxes |
|
| — |
|
| — |
|
| (22) |
Tax benefit of losses with valuation allowances as a result of other comprehensive income |
|
| — |
|
| — |
|
| (2) |
Tax authority audits and dispute resolutions |
|
| 9 |
|
| 2 |
|
| 1 |
Change in valuation allowance |
|
| (72) |
|
| (38) |
|
| (13) |
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes |
|
| 3 |
|
| 30 |
|
| (20) |
Other U.S. tax effects, including nondeductible expenses and other credits |
|
| — |
|
| 10 |
|
| 1 |
Total income tax expense |
| $ | 64 |
| $ | 109 |
| $ | 60 |
F-55
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Income from continuing operations before income taxes | $ | 337 | $ | 391 | $ | 734 | ||||||
Expected tax expense at U.S. statutory rate of 21% | $ | 71 | $ | 82 | $ | 154 | ||||||
Change resulting from: | ||||||||||||
State tax expense net of federal benefit | (4 | ) | (3 | ) | (1 | ) | ||||||
Non-U.S. tax rate differentials | 16 | 9 | 27 | |||||||||
Other non-U.S. tax effects, including nondeductible expenses and other withholding taxes | 5 | 13 | 8 | |||||||||
U.S. Tax Reform Act impact | 0 | (1 | ) | 32 | ||||||||
Currency exchange gains/losses(net) | 0 | (5 | ) | (10 | ) | |||||||
Venator investment basis difference and fair market value adjustments | 0 | (199 | ) | 18 | ||||||||
Tax losses related to Venator investment | 0 | (18 | ) | 0 | ||||||||
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits | 7 | 7 | 16 | |||||||||
Tax authority audits and dispute resolutions | 1 | (6 | ) | 5 | ||||||||
Share-based compensation excess tax benefits | (1 | ) | (4 | ) | (14 | ) | ||||||
Change in valuation allowance | (14 | ) | 56 | (185 | ) | |||||||
Deferred tax effects of non-U.S. tax rate changes | (2 | ) | 36 | (2 | ) | |||||||
Impact of equity method investments | (10 | ) | (13 | ) | (14 | ) | ||||||
Sale of the India-based DIY business | (35 | ) | 0 | 0 | ||||||||
Non-U.S. withholding tax on repatriated earnings, net of U.S. foreign tax credits | 20 | 6 | 11 | |||||||||
Other U.S. tax effects, including nondeductible expenses and other credits | (8 | ) | 2 | 0 | ||||||||
Total income tax expense (benefit) | $ | 46 | $ | (38 | ) | $ | 45 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Income from continuing operations before income taxes |
| $ | 640 |
| $ | 475 |
| $ | 493 |
Expected tax expense at U.S. statutory rate of 35% |
| $ | 224 |
| $ | 165 |
| $ | 170 |
Change resulting from: |
|
|
|
|
|
|
|
|
|
State tax expense net of federal benefit |
|
| (2) |
|
| (1) |
|
| (3) |
Non-U.S. tax rate differentials |
|
| (64) |
|
| (32) |
|
| (2) |
Non-taxable portion of gain on sale of European surfactants business |
|
| — |
|
| (23) |
|
| — |
U.S. Tax Reform Act impact |
|
| (53) |
|
| — |
|
| — |
U.S. domestic manufacturing deduction |
|
| — |
|
| — |
|
| (7) |
Currency exchange gains and losses |
|
| 15 |
|
| (5) |
|
| (38) |
Effect of tax holidays |
|
| — |
|
| — |
|
| (6) |
U.S. foreign tax credits, net of associated income and taxes |
|
| — |
|
| — |
|
| (22) |
Tax benefit of losses with valuation allowances as a result of other comprehensive income |
|
| — |
|
| — |
|
| (2) |
Tax authority audits and dispute resolutions |
|
| 9 |
|
| 2 |
|
| 1 |
Change in valuation allowance |
|
| (72) |
|
| (39) |
|
| (13) |
Other non-U.S. tax effects, including nondeductible expenses, tax effect of rate changes, transfer pricing adjustments and various withholding taxes |
|
| 4 |
|
| 32 |
|
| (18) |
Other U.S. tax effects, including nondeductible expenses and other credits |
|
| — |
|
| 9 |
|
| (1) |
Total income tax expense |
| $ | 61 |
| $ | 108 |
| $ | 59 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Income from continuing operations before income taxes | $ | 338 | $ | 377 | $ | 716 | ||||||
Expected tax expense at U.S. statutory rate of 21% | $ | 71 | $ | 79 | $ | 150 | ||||||
Change resulting from: | ||||||||||||
State tax expense net of federal benefit | (4 | ) | (3 | ) | (1 | ) | ||||||
Non-U.S. tax rate differentials | 16 | 9 | 27 | |||||||||
Other non-U.S. tax effects, including nondeductible expenses and other withholding taxes | 5 | 13 | 8 | |||||||||
U.S. Tax Reform Act impact | 0 | (1 | ) | 32 | ||||||||
Currency exchange gains/losses(net) | 0 | (5 | ) | (10 | ) | |||||||
Venator investment basis difference and fair market value adjustments | 0 | (199 | ) | 18 | ||||||||
Tax losses related to Venator investment | 0 | (18 | ) | 0 | ||||||||
Non-U.S. income subject to U.S. tax not offset by U.S. foreign tax credits | 7 | 7 | 16 | |||||||||
Tax authority audits and dispute resolutions | 1 | (6 | ) | 5 | ||||||||
Share-based compensation excess tax benefits | (1 | ) | (4 | ) | (14 | ) | ||||||
Change in valuation allowance | (14 | ) | 56 | (185 | ) | |||||||
Deferred tax effects of non-U.S. tax rate changes | (2 | ) | 36 | (2 | ) | |||||||
Impact of equity method investments | (10 | ) | (13 | ) | (14 | ) | ||||||
Sale of the India-based DIY business | (35 | ) | 0 | 0 | ||||||||
Non-U.S. withholding tax on repatriated earnings, net of U.S. foreign tax credits | 20 | 6 | 11 | |||||||||
Other U.S. tax effects, including nondeductible expenses and other credits | (8 | ) | 2 | 0 | ||||||||
Total income tax expense (benefit) | $ | 46 | $ | (41 | ) | $ | 41 |
We operate in many non-U.S. tax jurisdictions with no specific country earning a predominant amount of our off-shore earnings. The vast majority of these countries have income tax rates that are lower than the U.S. statutory rate. During 2017, 20162020,2019 and 2015,2018, the average statutory rate for countries with pre-tax income (in 2020, primarily our operations in China (25% statutory rate), the Netherlands (25% statutory rate), India (25% statutory rate) and Luxembourg (25% statutory rate), was lowerhigher than the average statutory rate for countries with pre-tax losses, almost all of which had statutory rates lower than the U.S., resulting in a net benefitsexpense of $16 million, $9 million and $27 million, respectively, as compared to the 21%U.S. statutory rate of $64 million, $32 million and $2 million, respectively, reflected in the reconciliation above. In 2017, the $64 million net benefit relates primarily to our Polyurethanes business in The Netherlands, China and the U.K., as well as our Advanced Materials business in Switzerland and our Corporate function in Luxembourg. In 2016, the $32 million net benefit relates primarily to our Polyurethanes business in The Netherlands and China and our Advanced Materials business in Switzerland.
In certain non-U.S. tax jurisdictions, our U.S. GAAP functional currency is different than the local tax currency. As a result, foreign exchange gains and losses will impact our effective tax rate. For 2017,2020,2019 and 2018, this resulted in a $15 million tax expense and for 2016, this resulted inbenefits of nil, a $5 million and $10 million, respectively.
In 2019, we recorded $199 million of deferred tax benefit. For 2015, this resultedassets in connection with our tax basis in our Venator investment being greater than our book basis, which deferred tax asset was partially offset by a valuation allowance of $46 million (for a net tax benefit of $153 million), as further discussed below. Effective January 1, 2019, Switzerland reduced certain conditional income tax rates resulting in a $23decrease in our net deferred tax assets and a corresponding noncash income tax expense of $32 million tax benefit ($38 million, net of $15 million of contingent liabilities and valuation allowances).for the year ended December 31, 2019.
During 2015, we declared a dividend from
Under the U.S. Tax Reform Act’s global intangible low-taxed income (“GILTI”) provision, our non-U.S. operations are generally subject to U.S. tax. We have elected to treat the GILTI as a current-period expense when incurred. The stated purpose of the GILTI rules is to generate additional U.S. tax related to income in non-U.S. jurisdictions which included bringing onshore certain U.S. foreignincur less than a blended 13.125% non-U.S. tax credits. Therate. Our non-U.S. income is subject to a blended rate greater than 13.125%; however, in practice, the GILTI regulations result in additional tax liability as a result of expense allocations which limit our ability to utilize foreign tax credits brought onshore exceededagainst the amount neededGILTI inclusion. For 2020,2019 and 2018 we have incurred $7 million, $7 million and $16 million, respectively, of tax expense resulting from these expense allocations.
In 2017, we booked provisional amounts for the remeasurements of U.S. deferred tax assets and liabilities and the transitional tax on deemed repatriation of deferred foreign income related to offset the cash tax impactenactment of the dividend, as well as enoughU.S. Tax Reform Act. During the remeasurement period in 2018, we recorded a net tax expense of $32 million. We did not make the election to allow usreclassify the income tax effects of the U.S. Tax Reform Act from accumulated other comprehensive income to carry $14 million of foreign tax credits back to a prior year and claim a refund.retained earnings.
The 2020 sale of the India-based DIY business created a global taxable gain different than the gain for U.S. GAAP purposes. Because this transaction was the disposition of a legal entity in India, we paid only India capital gains tax on the transaction. The difference in the global taxation of this transaction and the U.S. GAAP gain at the U.S. statutory tax rate was $35 million.
F-56
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The components of income (loss) from continuing operations before income taxes were as follows (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
U.S. |
| $ | (39) |
| $ | 91 |
| $ | 265 |
Non-U.S. |
|
| 686 |
|
| 383 |
|
| 223 |
Total |
| $ | 647 |
| $ | 474 |
| $ | 488 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. | $ | (231 | ) | $ | (106 | ) | $ | (38 | ) | |||
Non-U.S. | 568 | 497 | 772 | |||||||||
Total | $ | 337 | $ | 391 | $ | 734 |
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
U.S. |
| $ | (46) |
| $ | 92 |
| $ | 268 |
Non-U.S. |
|
| 686 |
|
| 383 |
|
| 225 |
Total |
| $ | 640 |
| $ | 475 |
| $ | 493 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. | $ | (230 | ) | $ | (120 | ) | $ | (56 | ) | |||
Non-U.S. | 568 | 497 | 772 | |||||||||
Total | $ | 338 | $ | 377 | $ | 716 |
Components of deferred income tax assets and liabilities were as follows (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Deferred income tax assets: |
|
|
|
|
|
|
Net operating loss carryforwards |
| $ | 411 |
| $ | 539 |
Pension and other employee compensation |
|
| 204 |
|
| 271 |
Property, plant and equipment |
|
| 39 |
|
| 28 |
Intangible assets |
|
| 93 |
|
| 99 |
Foreign tax credits |
|
| — |
|
| 5 |
Other, net |
|
| 49 |
|
| 60 |
Total |
| $ | 796 |
| $ | 1,002 |
Deferred income tax liabilities: |
|
|
|
|
|
|
Property, plant and equipment |
| $ | (363) |
| $ | (489) |
Pension and other employee compensation |
|
| (5) |
|
| (1) |
Intangible assets |
|
| (11) |
|
| (9) |
Other, net |
|
| (49) |
|
| (125) |
Total |
| $ | (428) |
| $ | (624) |
Net deferred tax asset before valuation allowance |
| $ | 368 |
| $ | 378 |
Valuation allowance—net operating losses and other |
|
| (424) |
|
| (496) |
Net deferred tax liability |
| $ | (56) |
| $ | (118) |
Non-current deferred tax asset |
|
| 208 |
|
| 253 |
Non-current deferred tax liability |
|
| (264) |
|
| (371) |
Net deferred tax liability |
| $ | (56) |
| $ | (118) |
F-57
December 31, | ||||||||
2020 | 2019 | |||||||
Deferred income tax assets: | ||||||||
Net operating loss carryforwards | $ | 258 | $ | 281 | ||||
Pension and other employee compensation | 184 | 172 | ||||||
Property, plant and equipment | 15 | 15 | ||||||
Intangible assets | 52 | 56 | ||||||
Basis difference in Venator investment | 35 | 199 | ||||||
Operating leases | 111 | 98 | ||||||
Capital loss carryovers | 30 | 11 | ||||||
Deferred interest | 28 | 19 | ||||||
Other, net | 44 | 42 | ||||||
Total | $ | 757 | $ | 893 | ||||
Deferred income tax liabilities: | ||||||||
Property, plant and equipment | $ | (249 | ) | $ | (218 | ) | ||
Pension and other employee compensation | (4 | ) | (1 | ) | ||||
Intangible assets | (72 | ) | (27 | ) | ||||
Unrealized currency gains | (14 | ) | (43 | ) | ||||
Operating leases | (114 | ) | (102 | ) | ||||
Other, net | (22 | ) | (8 | ) | ||||
Total | $ | (475 | ) | $ | (399 | ) | ||
Net deferred tax asset before valuation allowance | $ | 282 | $ | 494 | ||||
Valuation allowance—net operating losses and other | (206 | ) | (231 | ) | ||||
Net deferred tax asset | $ | 76 | $ | 263 | ||||
Non-current deferred tax asset | 288 | 292 | ||||||
Non-current deferred tax liability | (212 | ) | (29 | ) | ||||
Net deferred tax asset | $ | 76 | $ | 263 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman International
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Deferred income tax assets: |
|
|
|
|
|
|
Net operating loss carryforwards |
| $ | 411 |
| $ | 542 |
Pension and other employee compensation |
|
| 203 |
|
| 269 |
Property, plant and equipment |
|
| 39 |
|
| 32 |
Intangible assets |
|
| 93 |
|
| 99 |
Foreign tax credits |
|
| — |
|
| 5 |
Other, net |
|
| 49 |
|
| 59 |
Total |
| $ | 795 |
| $ | 1,006 |
Deferred income tax liabilities: |
|
|
|
|
|
|
Property, plant and equipment |
| $ | (362) |
| $ | (486) |
Pension and other employee compensation |
|
| (5) |
|
| (1) |
Intangible assets |
|
| (11) |
|
| (9) |
Other, net |
|
| (50) |
|
| (125) |
Total |
| $ | (428) |
| $ | (621) |
Net deferred tax asset before valuation allowance |
| $ | 367 |
| $ | 385 |
Valuation allowance—net operating losses and other |
|
| (424) |
|
| (499) |
Net deferred tax liability |
| $ | (57) |
| $ | (114) |
Non-current deferred tax asset |
|
| 208 |
|
| 253 |
Non-current deferred tax liability |
|
| (265) |
|
| (367) |
Net deferred tax liability |
| $ | (57) |
| $ | (114) |
December 31, | ||||||||
2020 | 2019 | |||||||
Deferred income tax assets: | ||||||||
Net operating loss carryforwards | $ | 258 | $ | 281 | ||||
Pension and other employee compensation | 184 | 172 | ||||||
Property, plant and equipment | 15 | 15 | ||||||
Intangible assets | 52 | 56 | ||||||
Basis difference in Venator investment | 35 | 199 | ||||||
Operating leases | 111 | 98 | ||||||
Capital loss carryovers | 30 | 11 | ||||||
Deferred interest | 28 | 19 | ||||||
Other, net | 44 | 42 | ||||||
Total | $ | 757 | $ | 893 | ||||
Deferred income tax liabilities: | ||||||||
Property, plant and equipment | $ | (249 | ) | $ | (218 | ) | ||
Pension and other employee compensation | (4 | ) | (1 | ) | ||||
Intangible assets | (72 | ) | (27 | ) | ||||
Unrealized currency gains | (14 | ) | (43 | ) | ||||
Operating leases | (114 | ) | (102 | ) | ||||
Other, net | (24 | ) | (8 | ) | ||||
Total | $ | (477 | ) | $ | (399 | ) | ||
Net deferred tax asset before valuation allowance | $ | 280 | $ | 494 | ||||
Valuation allowance—net operating losses and other | (206 | ) | (231 | ) | ||||
Net deferred tax asset | $ | 74 | $ | 263 | ||||
Non-current deferred tax asset | 288 | 292 | ||||||
Non-current deferred tax liability | (214 | ) | (29 | ) | ||||
Net deferred tax asset | $ | 74 | $ | 263 |
We have gross NOLs of $1,615 million in various non‑U.S. jurisdictions. While the majority of the non‑U.S. NOLs have no expiration date, $479 million have a limited life (of which $461 million are subject to a valuation allowance) and $133 million are scheduled to expire in 2018 (all of which are subject to a valuation allowance). We had no NOLs expire unused in 2017.
Included in the $1,615 million of gross non‑U.S. NOLs is $707 million attributable to our Luxembourg entities. As of December 31, 2017, due to the uncertainty surrounding the realization of the benefits of these losses, there is a valuation allowance of $144 million against these net tax‑effected NOLs of $184 million.
We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed each period on a tax jurisdiction by jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limits our ability to consider other subjective evidence such as our projections for the future. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning idea associated with utilizing a deferred tax asset.
We have gross net operating losses (“NOLs”) of $1,037 million ($240 million tax-effected) in various non-U.S. jurisdictions. While the majority of the non-U.S. NOLs have no expiration date, $119 million ($20 million tax-effected) have a limited life (of which $60 million ($9 million tax-effected) are subject to a valuation allowance) and $57 million ($8 million tax-effected) are scheduled to expire in 2021, all of which are subject to a valuation allowance). We had $107 million ($17 million tax-effected) and $111 million ($16 million tax-effected) of NOLs expire unused in 2020 and 2019, respectively, all of which were subject to a valuation allowance.
We have gross U.S. federal NOLs of $71 million ($15 million tax-effected), which were primarily acquired through acquisitions subject to tax change of control limitations. We expect to be able to utilize the all of these NOLs, and therefore they are not subject to a valuation allowance.
Included in the $1,037 million of gross non-U.S. NOLs is $472 million ($118 million tax-effected) attributable to our Luxembourg entities. As of December 31,2020, due to the uncertainty surrounding the realization of the benefits of these losses, there is a valuation allowance of $63 million against these net tax-effected NOLs of $118 million.
We have $30 million tax-effected U.S. capital loss carryovers generated in 2020. Capital loss carryovers may only be utilized against capital gains and have a 5-year carryforward period. We have placed a full valuation allowance against all of these capital loss carryovers.
During 2017,2019, based on our expectation that our remaining interest in Venator would be sold on or before December 31, 2023, we recorded $153 million of deferred tax benefit relating to the portion of the $199 million tax basis greater than book basis in our Venator investment. We expected to be able to utilize such future capital losses on our Venator investment against capital gains anticipated on the sale of our Chemical Intermediates Businesses. We established a valuation allowance of $46 million on the excess unrealizable built-in capital loss deferred tax asset. We also recognized $18 million of tax benefit relating to realized tax losses on our Venator investment. During 2020, we sold approximately 42.4 million ordinary shares of our remaining interest in Venator, which allowed us to utilize the expected portion of the losses against the gains on the sale of the Chemical Intermediates Businesses. Incremental changes to the deferred tax assets relating to the excess capital loss carryover and excess built-in capital loss in our remaining interest in Venator, as a result of the U.S. GAAP fair value adjustments to the Venator investment and related loss on disposal, are offset by a full valuation allowance.
During 2019, we also established $11 million of valuation allowances on the remaining Australia NOLs that are no longer more-likely-than-not realizable following the sale of the Australia portion of our Chemical Intermediates Businesses.
During 2018, we released valuation allowances of $22$132 million. In Italy, weWe released significant valuation allowances of $7 million on certain net deferred tax assets in Switzerland based upon the increased and sustained profitability in our Advanced Materials and Textile Effects businesses. Given Switzerland’s limited seven-year carryover of NOLs, we expect that some of our Polyurethanes business. On March 1, 2017NOLs will expire unused. Therefore, we recorded a partial release of the valuation allowance of $80 million in the second quarter of 2018. In addition, based upon the separation of Venator from our U.K. combined group and April 1, 2017, we de-merged the Italian legal entities containingincreased and sustained profitability in our Polyurethanes business from our combined Italian tax group. The historical and expected continued profitability of those Polyurethanes businesses resulted in the release of the associated valuation allowance. In Luxembourg,U.K., we released significant valuation allowances on certain net deferred tax assets in the U.K. Because the U.K. places limitations on the utilization of certain NOLs and limitations on other deferred tax assets, we recorded a partial valuation allowance release of $15 million in the second quarter of 2018. We also released $24 million of valuation allowances on certain net deferred tax assets in Luxembourg in the third quarter of 2018 as a result of changes in estimated future taxable income resulting from increased intercompany receivables and, therefore, increased income in Luxembourg, our primary treasury center outside of the U.S.
During 2016, we established valuation allowances of $12 million and released valuation allowances of $19 million. In Italy we established $9 million of valuation allowances on certain net deferred tax assets as a result of the sale of our European surfactants business, and in China we established $3 million of valuation allowances as a result of
F-58
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the closure of our Qingdao, China plant. We released valuation allowances of $12 million in Spain as a result of cumulative profitability and $7 million in The Netherlands as a result of tax planning to utilize losses that would have otherwise expired.
During 2015, we established valuation allowances of $21 million and released valuation allowances of $3 million. In the U.S., we established $14 million of valuation allowance on U.S. foreign tax credits due to the application of specific foreign tax credit limitations and in The Netherlands we established $7 million of valuation allowance on losses which are scheduled to expire after 2016.
Uncertainties regarding expected future income in certain jurisdictions could affect the realization of deferred tax assets in those jurisdictions and result in additional valuation allowances in future periods, or, in the case of unexpected pre-tax earnings, the release of valuation allowances in future periods.
The following is a summary of changes in the valuation allowance (dollars in millions):
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2016 |
| 2015 | |||
Valuation allowance as of January 1 |
| $ | 496 |
| $ | 526 |
| $ | 518 |
Valuation allowance as of December 31 |
|
| 424 |
|
| 496 |
|
| 526 |
Net (increase) decrease |
|
| 72 |
|
| 30 |
|
| (8) |
Foreign currency movements |
|
| 11 |
|
| (11) |
|
| (4) |
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances |
|
| (11) |
|
| 19 |
|
| 25 |
Change in valuation allowance per rate reconciliation |
| $ | 72 |
| $ | 38 |
| $ | 13 |
Components of change in valuation allowance affecting tax expense: |
|
|
|
|
|
|
|
|
|
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit |
| $ | 50 |
| $ | 31 |
| $ | 31 |
Releases of valuation allowances in various jurisdictions |
|
| 22 |
|
| 19 |
|
| 3 |
Establishments of valuation allowances in various jurisdictions |
|
| — |
|
| (12) |
|
| (21) |
Change in valuation allowance per rate reconciliation |
| $ | 72 |
| $ | 38 |
| $ | 13 |
2020 | 2019 | 2018 | ||||||||||
Valuation allowance as of January 1 | $ | 231 | $ | 215 | $ | 412 | ||||||
Valuation allowance as of December 31 | 206 | 231 | 215 | |||||||||
Net decrease (increase) | 25 | (16 | ) | 197 | ||||||||
Foreign currency movements | 6 | 0 | 3 | |||||||||
Decrease to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances | (17 | ) | (40 | ) | (15 | ) | ||||||
Change in valuation allowance per rate reconciliation | $ | 14 | $ | (56 | ) | $ | 185 | |||||
Components of change in valuation allowance affecting tax expense: | ||||||||||||
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit | $ | 14 | $ | (133 | ) | $ | 53 | |||||
Releases of valuation allowances in various jurisdictions | 0 | 0 | 132 | |||||||||
Establishments of valuation allowances in various jurisdictions | 0 | 77 | 0 | |||||||||
Change in valuation allowance per rate reconciliation | $ | 14 | $ | (56 | ) | $ | 185 |
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
| 2017 |
| 2016 |
| 2015 | |||
Valuation allowance as of January 1 |
| $ | 499 |
| $ | 530 |
| $ | 522 |
Valuation allowance as of December 31 |
|
| 424 |
|
| 499 |
|
| 530 |
Net (increase) decrease |
|
| 75 |
|
| 31 |
|
| (8) |
Foreign currency movements |
|
| 11 |
|
| (11) |
|
| (4) |
(Decrease) increase to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances |
|
| (14) |
|
| 19 |
|
| 25 |
Change in valuation allowance per rate reconciliation |
| $ | 72 |
| $ | 39 |
| $ | 13 |
Components of change in valuation allowance affecting tax expense: |
|
|
|
|
|
|
|
|
|
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit |
| $ | 49 |
| $ | 32 |
| $ | 31 |
Releases of valuation allowances in various jurisdictions |
|
| 23 |
|
| 19 |
|
| 3 |
Establishments of valuation allowances in various jurisdictions |
|
| — |
|
| (12) |
|
| (21) |
Change in valuation allowance per rate reconciliation |
| $ | 72 |
| $ | 39 |
| $ | 13 |
F-59
2020 | 2019 | 2018 | ||||||||||
Valuation allowance as of January 1 | $ | 231 | $ | 215 | $ | 412 | ||||||
Valuation allowance as of December 31 | 206 | 231 | 215 | |||||||||
Net decrease (increase) | 25 | (16 | ) | 197 | ||||||||
Foreign currency movements | 6 | 0 | 3 | |||||||||
Decrease to deferred tax assets with no impact on operating tax expense, including an offsetting (decrease) increase to valuation allowances | (17 | ) | (40 | ) | (15 | ) | ||||||
Change in valuation allowance per rate reconciliation | $ | 14 | $ | (56 | ) | $ | 185 | |||||
Components of change in valuation allowance affecting tax expense: | ||||||||||||
Pre-tax income and losses in jurisdictions with valuation allowances resulting in no tax expense or benefit | $ | 14 | $ | (133 | ) | $ | 53 | |||||
Releases of valuation allowances in various jurisdictions | 0 | 0 | 132 | |||||||||
Establishments of valuation allowances in various jurisdictions | 0 | 77 | 0 | |||||||||
Change in valuation allowance per rate reconciliation | $ | 14 | $ | (56 | ) | $ | 185 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following is a reconciliation of our unrecognized tax benefits (dollars in millions):
|
|
|
|
|
|
|
|
| 2017 |
| 2016 | ||
Unrecognized tax benefits as of January 1 |
| $ | 17 |
| $ | 37 |
Gross increases and decreases—tax positions taken during a prior period |
|
| 3 |
|
| 1 |
Gross increases and decreases—tax positions taken during the current period |
|
| 4 |
|
| 3 |
Decreases related to settlements of amounts due to tax authorities |
|
| — |
|
| (21) |
Reductions resulting from the lapse of statutes of limitation |
|
| (2) |
|
| (1) |
Foreign currency movements |
|
| 1 |
|
| (2) |
Unrecognized tax benefits as of December 31 |
| $ | 23 |
| $ | 17 |
2020 | 2019 | |||||||
Unrecognized tax benefits as of January 1 | $ | 28 | $ | 26 | ||||
Gross increases and decreases—tax positions taken during a prior period | 2 | 4 | ||||||
Gross increases and decreases—tax positions taken during the current period | 1 | 1 | ||||||
Decreases related to settlements of amounts due to tax authorities | (12 | ) | — | |||||
Reductions resulting from the lapse of statutes of limitation | (2 | ) | (4 | ) | ||||
Foreign currency movements | (1 | ) | 1 | |||||
Unrecognized tax benefits as of December 31 | $ | 16 | $ | 28 |
As of December 31, 2017 2020 and 2016,2019, the amount of unrecognized tax benefits (not including interest and penalty expense) which, if recognized, would affect the effective tax rate is $19$16 million and $9$15 million, respectively.
During 2017,2020, we concluded and settled tax examinations in the U.S. (various states), Thailand and Korea. During 2019, we concluded and settled tax examinations in the U.S. (federal and various states). During 2018, we concluded and settled tax examinations in various jurisdictions, including but not limited to, ChinaEgypt and the U.S. (various states). During 2016, we concluded and settled tax examinations in various non-U.S. jurisdictions including, but not limited to, China, Germany, Indonesia, The Netherlands, Spain and the U.K. During 2015, we concluded and effectively settled tax examinations in the U.S. (both federal(federal and various states) and various non-U.S. jurisdictions, including, but not limited to, China and France..
During 2017,2020, for unrecognized tax benefits that impact tax expense, we recorded a net increase in unrecognized tax benefits with a corresponding income tax expense (notexpenses (not including interest and penalty expense) of $9$1 million. During 20162019, for unrecognized tax benefits that impacted tax expense, we recorded a net decrease in unrecognized tax benefits with a corresponding income tax benefit (not including interest and 2015,penalty expense) of $10 million. During 2018, for unrecognized tax benefits that impact tax expense, we recorded a net increase in unrecognized tax benefits with a corresponding income tax expense (notexpenses (not including interest and penalty expense) of $2 million and $1 million, respectively. Additional decreases in unrecognized tax benefits were offset by cash settlements or by a decrease in net deferred tax assets and, therefore, did not affect income tax expense.$5 million.
In accordance with our accounting policy, we continue to recognize interest and penalties accrued related to unrecognized tax benefits in income tax expense.
|
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|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Interest expense included in tax expense |
| $ | — |
| $ | 1 |
| $ | — |
Penalties expense included in tax expense |
|
| — |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
Accrued liability for interest |
| $ | 3 |
| $ | 3 |
Accrued liability for penalties |
|
| — |
|
| — |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Interest expense included in tax expense | $ | 1 | $ | 2 | $ | 0 | ||||||
Penalties expense included in tax expense | 0 | 2 | 0 |
F-60
December 31, | ||||||||
2020 | 2019 | |||||||
Accrued liability for interest | $ | 4 | $ | 5 | ||||
Accrued liability for penalties | 0 | 2 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We conduct business globally and, as a result, we file income tax returns in U.S. federal, various U.S. state and various non‑U.S.non-U.S. jurisdictions. The following table summarizes the tax years that remain subject to examination by major tax jurisdictions:
|
Tax Jurisdiction | Open Tax Years | |
Belgium | 2018 and later | |
China |
| |
France |
| |
Germany | 2016 and later | |
Hong Kong |
| |
India | 2004 and later | |
Italy | 2015 and later | |
Japan | 2017 and later | |
Mexico | 2014 and later | |
Spain | 2013 and later | |
|
| |
Switzerland |
| |
The Netherlands | 2016 and later | |
Thailand |
| |
United Kingdom |
| |
United States federal |
|
Certain of our U.S. and non-U.S. income tax returns are currently under various stages of audit by applicable tax authorities and the amounts ultimately agreed upon in resolution of the issues raised may differ materially from the amounts accrued.
We estimate that it is reasonably possible that certain of our non-U.S. unrecognized tax benefits could change within 12 months of the reporting date with a resulting decrease in the unrecognized tax benefits within a reasonably possible range of nil$0 million to $9$2 million. For the 12‑month12-month period from the reporting date, we would expect that a substantial portion of the decrease in our unrecognized tax benefits would result in a corresponding benefit to our income tax expense.
On December 22, 2017,
In connection with the U.S. government enacted theprovisions of U.S. Tax Reform, Act. The U.S. Tax Reform Act makes broad and complex changes to the U.S. tax code that will affect 2017, including, but not limited to, requiring a one-time transition tax on certain unrepatriatedall non-U.S. earnings of foreign subsidiaries which is payable over eight years. Because of the complexity of these new laws, we are continuing to evaluate the application of ASC 740 to the U.S. Tax Reform Act and have therefore, recorded only provisional amounts.
The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the U.S. Tax Reform Act. SAB 118 provides a measurement period that should not extend beyond one year from the U.S. Tax Reform Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the U.S. Tax Reform Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the U.S. Tax Reform Act is incomplete but it is able to determine a reasonable estimate, it should record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the U.S. Tax Reform Act.
For various reasons that are discussed more fully below, we have not completed our accounting for the income tax effects of certain elements of the U.S. Tax Reform Act. If we were able to make reasonable estimates of the effects of elements for which our analysis is not yet complete, we recorded provisional adjustments. If we were not yet able to make reasonable estimates of the impact of certain elements, we have not recorded any adjustments related to those elements and have continued accounting for them in accordance with ASC 740 on the basis of the tax laws in effect before the U.S. Tax Reform Act.
The U.S. Tax Reform Act establishes new tax laws that will affect 2018, including, but not limited to, (1) reduction of the U.S. federal corporate tax rate; (2) the creation of the base erosion anti-abuse tax (BEAT), a new minimum tax; (3) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (4) a new provision designed to tax global intangible low-taxed income (“GILTI”); (5) a new limitation on deductible interest expense; and (6) the repeal of the domestic production activity deduction.
F-61
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The U.S. Tax Reform Act reduces the corporate tax rate to 21%, effective January 1, 2018. For our net deferred tax assets and liabilities, we have recorded a provisional decrease of $12 million and $149 million, respectively, with a corresponding provisional net deferred tax benefit of $137 million for the year ended December 31, 2017. The provisional $12 million decrease in net deferred tax assets, with a corresponding net deferred tax expense of $12 million, relates to our consolidated variable interest entity, Rubicon LLC, which is a 50%-owned joint venture. Therefore, $6 million of this provisional tax expense is offset in net income attributable to noncontrolling interests. While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the U.S. Tax Reform Act, including, but not limited to, our calculation of deemed repatriation of deferred foreign income, return to accrual adjustments including completion of computations and analysis of 2017 expenditures that qualify for immediate expensing, and the state tax effect of adjustments made to federal temporary differences.
The Deemed Repatriation Transition Tax is a tax on previously untaxed accumulated and current earnings and profits of certain of our foreign subsidiaries. To determine the amount of the transition tax, we must determine, in addition to other factors, the amount of post-1986 earnings and profits of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate of the transition tax and recorded a provisional transition tax expense of $85 million. However, we are continuing to gather and analyze additional information to more precisely compute the amount of the transition tax. As required by U.S. GAAP, we have recognized the provisional $85 million of transition taxes in our income from continuing operations. Absent the Venator offering and certain tax related restructuring transactions, our provisional transition tax liability would have been $12 million. As required by U.S. GAAP, the impact of the U.S. Tax Reform Act is included in continuing operations, even for transactions associated with the Venator offering. Because of the complexity of the associated multistate tax considerations and limited specific guidance from state tax authorities, we have not determined or recorded any impact of the federal deemed repatriation of foreign earnings on our state tax expense or state deferred tax assets and liabilities.
Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into our measurement of our deferred taxes (the “deferred method”). Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether we expect to have future U.S. inclusions in taxable income related to GILTI depends on not only our current structure and estimated future results of global operations but also our intent and ability to modify our structure and/or our business, we are not yet able to reasonably estimate the effect of this provision of the U.S. Tax Reform Act. Therefore, we have not made any adjustments related to potential GILTI tax in our financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI.
We must assess whether our valuation allowance analyses are affected by various aspects of the U.S. Tax Reform Act (e.g., deemed repatriation of deferred foreign income, GILTI inclusions, new categories of foreign tax credits). Since, as discussed, we have recorded provisional amounts related to certain portions of the U.S. Tax Reform Act, any corresponding determination of the need for or change in any valuation allowances is also provisional.
We must also assess whether our uncertain tax positions are affected by various aspects of the U.S Tax Reform Act (e.g., deemed repatriation of deferred foreign income, GILTI inclusions, new categories of foreign tax credits). Since, as discussed, we have not made any adjustments related to certain portions of the U.S. Tax Reform Act, and have recorded only provisional amounts related to other portions of the U.S. Tax Reform Act, we have not determined the need for or change in any unrecognized tax positions.
The U.S. Tax Reform Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have nowgenerally been subject to U.S. tax. For subsidiaries with localtax and may be repatriated without incurring additional U.S. tax liability. Such repatriation may potentially be subject to limited foreign withholding taxes, wetaxes. We intend to continue to invest most or all of these earnings indefinitely within the local countrycountries and do not expect to incur any significant additional taxes. There are certain countries where we do intend to repatriate some of our earnings, and we have accrued all withholding taxes related tofor such amounts.
F-62
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18.21. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
Purchase Commitments
We have various purchase commitments extending through 2039 for materials, supplies and services entered into in the ordinary course of business. Included in the purchase commitments table below are contracts which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed for 2017.2020. Certain contracts allow for changes in minimum required purchase volumes in the event of a temporary or permanent shutdown of a facility. To the extent the contract requires a minimum notice period, such notice period has been included in the table below. The contractual purchase prices for substantially all of these contracts are variable based upon market prices, subject to annual negotiations. We have estimated our contractual obligations by using the terms of our current pricing for each contract. We also have a limited number of contracts which require a minimum payment even if no volume is purchased. We believe that all of our purchase obligations will be utilized in our normal operations. We made minimum payments of nil,$2 million, $1 million and nil for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively, under such take or pay contracts without taking the product.
Total purchase commitments as of December 31, 20172020 are as follows (dollars in millions):
|
|
|
|
Year ending December 31, |
|
|
|
2018 |
| $ | 1,299 |
2019 |
|
| 1,285 |
2020 |
|
| 701 |
2021 |
|
| 499 |
2022 |
|
| 495 |
Thereafter |
|
| 2,087 |
|
| $ | 6,366 |
Year ending December 31, | ||||
2021 | $ | 1,413 | ||
2022 | 982 | |||
2023 | 818 | |||
2024 | 696 | |||
2025 | 648 | |||
Thereafter | 1,924 | |||
$ | 6,481 |
Operating LeasesLegal Matters
We lease certain railcars, aircraft, equipment and facilities under long-term lease agreements. The total expense recorded under operating lease agreements in our consolidated statements of operations is approximately $80 million, $81 million and $86 million for 2017, 2016 and 2015, respectively, net of sublease rentals of approximately $2 million each for the years ended December 31, 2017, 2016 and 2015.
Future minimum lease payments under operating leases as of December 31, 2017 are as follows (dollars in millions):
|
|
|
|
Year ending December 31, |
|
|
|
2018 |
| $ | 74 |
2019 |
|
| 67 |
2020 |
|
| 60 |
2021 |
|
| 54 |
2022 |
|
| 49 |
Thereafter |
|
| 134 |
|
| $ | 438 |
Future minimum lease payments have not been reduced by minimum sublease rentals of $2 million due in the future under noncancelable subleases.
Legal Matters
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
F-63
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
our stockholders (“MatlinPatterson”) in litigation filed by MatlinPatterson on June 19, 2012 in the 9th District Court in Montgomery County, Texas (the “Texas Litigation”). We denied the Banks’ indemnification demand for 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”). We denied the Banks’ indemnification demand for the Wisconsin Litigation and have made no accrual with respect to this matter. The stockholders in the Wisconsin Litigation have made essentially the same factual allegations as MatlinPatterson made in the Texas Litigation and, additionally, have named Apollo Global Management LLC and Apollo Management Holdings, L.P. as defendants. Stockholder plaintiffs in the Wisconsin Litigation assert claims for misrepresentation and conspiracy to defraud. On June 30, 2016, the plaintiffs voluntarily dismissed the Apollo defendants and on December 5, 2016, the court dismissed Deutsche Bank for lack of personal jurisdiction, but denied Credit Suisse's motion to dismiss. Subsequently, Credit Suisse asked the court to reconsider its decision or certify its judgment to the Seventh Circuit Court of Appeals for an immediate appeal, which remains pending. Subsequent to discovery, Credit Suisse filed a motion for summary judgment on August 25, 2017 and a decision is pending. The court has suspended the current scheduling order, including the trial date. We denied the Banks’ indemnification demand for both the Texas Litigation and the Wisconsin Litigation.
Other Proceedings
We are a party to various other proceedings instituted by private plaintiffs, governmental authorities and others arising under provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in this report, we do not believe that the outcome of any of these matters will have a material effect on our financial condition, results of operations or liquidity.
19.
22. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
EHS Capital ExpendituresCapital Expenditures
We may incur future costs for capital improvements and general compliance under EHS laws, including costs to acquire, maintain and repair pollution control equipment. For the years ended December 31, 2017, 20162020, 2019 and 2015,2018, our capital expenditures for EHS matters totaled $47$28 million, $55$42 million and $121$32 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
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 $21 million and $22$4 million for environmental liabilities as of for both December 31, 2017 2020 and 2016, respectively.2019. Of these amounts, $6$1 million and $7 million werewas classified as accrued liabilities in our consolidated balance sheets as of for both December 31, 2017 2020 and 2016, respectively,2019, and $15$3 million each were classified as other noncurrent liabilities in our consolidated balance sheets as of for both December 31, 2017 2020 and 2016.2019. 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.
F-64
Environmental Matters
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 six6 former facilities or third‑partythird-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‑partythird-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 arefacility is the subject of ongoing remediation requirements imposed under RCRA. Similar laws exist in a number of locations in which we currently operate, or previously operated, manufacturing facilities, such as Australia, India, France, Hungary and Italy.
West Footscray Remediation
By letter dated March 7, 2006, our former Base Chemicals and Polymers facility in West Footscray, Australia was issued a cleanup notice by the Environmental Protection Authority Victoria (“EPA Victoria”) due to concerns about soil and groundwater contamination emanating from the site. On August 23, 2010, EPA Victoria revoked a second cleanup notice and issued a revised notice that included a requirement for financial assurance for the remediation. As of December 31, 2017, we had an accrued liability of approximately $14 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 Canyon Mine Remediation
The North Maybe Canyon Mine site is a CERCLA site and involves a former phosphorous mine near Soda Springs, Idaho, which is believed to have been operated by several companies, including a predecessor company to us. In 2004, the U.S. Forest Service notified us that we are a CERCLA potentially responsible party (“PRP”) for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a 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.
20.
23. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY
Share Repurchase Program
Share Repurchase Program
On September 29, 2015, February 7, 2018 and on May 3, 2018, our Board of Directors authorized our Companyus to repurchase up to $150an additional $950 million in shares of our common stock. Repurchases under this program may be made through open market transactions,stock in privately negotiated transactions, accelerated share repurchase programs or by other means. The timing and actual number of any shares repurchased depends on a variety of factors, including market conditions. The share repurchase authorization does not have an expiration date and repurchases may be commenced, suspended or discontinued from timeaddition to time without prior notice. On October 27, 2015, we entered into and funded an accelerated share repurchase agreement with Citibank, N.A. to repurchase $100 million of our common stock. Citibank, N.A. made an initial delivery of approximately 7.1 million shares of Huntsman Corporation common stock based on the closing price of $11.94 on October 27, 2015. The accelerated share repurchase agreement was completed in January 2016 with the delivery of an
F-65
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
additional approximately 1.5 million shares of Huntsman Corporation common stock. The final number of shares repurchased and the aggregate cost per share was based on the Company’s daily volume-weighted average stock price during the term of the transaction, less a discount. As of December 31, 2017, we had $50 million remaining under this authorization toour September 2015 share repurchase authorization. The share repurchase program will be used to purchase additional shares. On February 7, 2018,supported by our Board of Directors authorized our Company to repurchase up to an additional $400 million in shares of our common stock.free cash flow generation. Repurchases may be made through the open market, including through accelerated share repurchase programs, or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are held in treasury at cost. During the first quarter of 2020, we repurchased 5,364,519 shares of our common stock for approximately $96 million, excluding commissions, under the repurchase program. Subsequent to the end of the first quarter of 2020, we suspended share repurchases under our existing share repurchase program in order to enhance our liquidity position in response to COVID-19.
Dividends
Dividends on Common StockCommon Stock
The following tables represent dividends on common stock for our Company for the years ended December 31, 2017 2020 and 20162019 (dollars in millions, except per share payment amounts):
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| 2017 | ||||
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| Approximate | |
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| Per share |
| amount | ||
Quarter ended |
| payment amount |
| paid | ||
March 31, 2017 |
| $ | 0.125 |
| $ | 30 |
June 30, 2017 |
|
| 0.125 |
|
| 30 |
September 30, 2017 |
|
| 0.125 |
|
| 30 |
December 31, 2017 |
|
| 0.125 |
|
| 30 |
2020 | ||||||||
Approximate | ||||||||
Per share | amount | |||||||
Quarter ended | payment amount | paid | ||||||
March 31, 2020 | $ | 0.1625 | $ | 37 | ||||
June 30, 2020 | 0.1625 | 36 | ||||||
September 30, 2020 | 0.1625 | 36 | ||||||
December 31, 2020 | 0.1625 | 35 |
2019 | ||||||||
Approximate | ||||||||
Per share | amount | |||||||
Quarter ended | payment amount | paid | ||||||
March 31, 2019 | $ | 0.1625 | $ | 39 | ||||
June 30, 2019 | 0.1625 | 38 | ||||||
September 30, 2019 | 0.1625 | 38 | ||||||
December 31, 2019 | 0.1625 | 35 |
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| 2016 | ||||
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| Approximate | |
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| Per share |
| amount | ||
Quarter ended |
| payment amount |
| paid | ||
March 31, 2016 |
| $ | 0.125 |
| $ | 30 |
June 30, 2016 |
|
| 0.125 |
|
| 30 |
September 30, 2016 |
|
| 0.125 |
|
| 30 |
December 31, 2016 |
|
| 0.125 |
|
| 30 |
On February 7, 2018, the Board of Directors approved an increase to the quarterly cash dividend to $0.6125 per share of common stock beginning with the March 30, 2018 quarterly dividend.
21. STOCK‑BASED24. STOCK-BASED COMPENSATION PLAN
Under the 2016 Stock Incentive Plan, we may grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, phantom stock, performance share units and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock options may be granted solely to employees. The terms of the grants under both the 2016 Stock Incentive Plan and the Prior Plan are fixed at the grant date. As of December 31, 2017, weInitially, there were authorized to grant up toapproximately 8.2 million shares available for issuance under the 2016 Stock Incentive Plan. However, the number of shares available for issuance may be adjusted to include any shares surrendered, exchanged, forfeited or settled in cash pursuant to the Prior Plan. As of December 31, 2017,2020, we had approximately 87 million shares remaining under the 2016 Stock Incentive Plan available for grant. Option awards have a maximum contractual term of 10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Outstanding stock-based awards generally vest over a three‑year period; certain performance share unit awards vest over a two-yearthree-year period.
The compensation cost from continuing operations under the 2016 Stock Incentive Plan and the Prior Plan for our Company and Huntsman International were as follows (dollars in millions):
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| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
|
| 2015 | ||
Huntsman Corporation compensation cost |
| $ | 36 |
| $ | 32 |
| $ | 29 |
Huntsman International compensation cost |
|
| 35 |
|
| 31 |
|
| 28 |
F-66
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Huntsman Corporation compensation cost | $ | 27 | $ | 29 | $ | 27 | ||||||
Huntsman International compensation cost | 26 | 28 | 26 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The total income tax benefit recognized in the statement of operations for stock-based compensation arrangements was $18$4 million, $7$8 million and $6$18 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively.
Stock Options
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‑vestingpost-vesting employment termination behavior. The risk‑freerisk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions noted below represent the weighted averages of the assumptions utilized for all stock options granted during the year.
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| Year ended December 31, | |||||||
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| 2017 |
| 2016 |
| 2015 | |||
Dividend yield |
|
| 2.4 | % |
| 5.6 | % |
| 2.3 | % |
Expected volatility |
|
| 56.9 | % |
| 57.9 | % |
| 57.6 | % |
Risk-free interest rate |
|
| 2.0 | % |
| 1.4 | % |
| 1.4 | % |
Expected life of stock options granted during the period |
|
| 5.9 | years |
| 5.9 | years |
| 5.9 | years |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Dividend yield | 3.0 | % | 2.9 | % | 1.6 | % | ||||||
Expected volatility | 53.1 | % | 54.0 | % | 55.2 | % | ||||||
Risk-free interest rate | 1.4 | % | 2.5 | % | 2.6 | % | ||||||
Expected life of stock options granted during the period (in years) | 5.9 | 5.9 | 5.9 |
A summary of stock option activity under the 2016 Stock Incentive Plan and the Prior Plan as of December 31, 20172020 and changes during the year then ended is presented below:
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| Weighted |
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| |
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| Weighted |
| Average |
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| ||
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| Average |
| Remaining |
| Aggregate | |||
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| Exercise |
| Contractual |
| Intrinsic | |||
Option Awards |
| Shares |
| Price |
| Term |
| Value | ||||
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| (in thousands) |
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|
| (years) |
| (in millions) | |||
Outstanding at January 1, 2017 |
|
| 11,245 |
| $ | 13.37 |
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Granted |
|
| 997 |
|
| 21.04 |
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Exercised |
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| (3,772) |
|
| 13.90 |
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Forfeited |
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| (65) |
|
| 17.67 |
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Converted to Venator awards |
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| (417) |
|
| 5.00 |
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Outstanding at December 31, 2017 |
|
| 7,988 |
|
| 13.99 |
|
| 6.0 |
| $ | 154 |
Exercisable at December 31, 2017 |
|
| 5,403 |
|
| 14.05 |
|
| 4.9 |
|
| 104 |
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Option Awards | Shares | Price | Term | Value | ||||||||||||
(in thousands) | (years) | (in millions) | ||||||||||||||
Outstanding at January 1, 2020 | 5,025 | $ | 19.08 | |||||||||||||
Granted | 788 | 21.52 | ||||||||||||||
Exercised | (829 | ) | 12.81 | |||||||||||||
Forfeited | (169 | ) | 24.28 | |||||||||||||
Outstanding at December 31, 2020 | 4,815 | 20.37 | 6.0 | $ | 26 | |||||||||||
Exercisable at December 31, 2020 | 3,371 | 19.23 | 4.9 | 22 |
The weighted‑average grant‑dateweighted-average grant-date fair value of stock options granted during 2017, 20162020, 2019 and 20152018 was $9.26, $3.15$8.25, $9.27 and $9.81$15.20 per option, respectively. As of December 31, 2017,2020, there was $8$7 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the 2016 Stock Incentive Plan and the Prior Plan. That cost is expected to be recognized over a weighted-average period of approximately 1.71.8 years.
During the years ended December 31, 2017, 20162020, 2019 and 2015,2018, the total intrinsic value of stock options exercised was approximately $48$9 million, $1$4 million and nil,$78 million, respectively. Cash received from stock options exercised during the years ended December 31, 2017, 20162020, 2019 and 20152018 was approximately $35$3 million, $1$2 million and $1$17 million, respectively. The cash tax benefit from stock options exercised during the years ended December 31, 2017, 20162020, 2019 and 20152018 was approximately $15$2 million, nil$1 million, and nil,$17 million, respectively.
Nonvested Shares
Nonvested Shares
Nonvested shares granted under the 2016 Stock Incentive Plan and the Prior Plan consist of restricted stock and performance share unit awards, which are accounted for as equity awards, and phantom stock, which is accounted for as a liability award because it can be settled in either stock or cash.
F-67
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The fair value of each performance share unit award is estimated using a Monte Carlo simulation model that uses various assumptions, including an expected volatility rate and a risk-free interest rate. For the years ended December 31, 2017, 20162020, 2019 and 2015,2018, the weighted-average expected volatility rate was 45.0%34.0%, 39.3%34.6% and 30.0%44.3%, respectively, and the weighted average risk-free interest rate was 1.5%1.4%, 0.9%2.5% and 0.7%2.3%, respectively. For the performance share unit awards granted during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, the number of shares earned varies based upon the Company achieving certain performance criteria over two-year and three-yeara three-year performance periods.period. 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-yearthree-year performance periods.
A summary of the status of our nonvested shares as of December 31, 20172020 and changes during the year then ended is presented below:
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| Equity Awards |
| Liability Awards | ||||||||
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| Weighted |
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| Weighted | ||
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| Average |
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| Average | ||
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|
| Grant- Date |
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| Grant-Date | ||
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| Shares |
| Fair Value |
| Shares |
| Fair Value | ||||
|
| (in thousands) |
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|
| (in thousands) |
|
|
| ||
Nonvested at January 1, 2017 |
|
| 2,996 |
| $ | 13.36 |
|
| 912 |
| $ | 12.27 |
Granted |
|
| 779 |
|
| 22.60 |
|
| 285 |
|
| 21.01 |
Vested |
|
| (1,052) | (1) |
| 16.11 |
|
| (372) |
|
| 14.11 |
Forfeited |
|
| (29) |
|
| 15.61 |
|
| (36) |
|
| 12.22 |
Converted to Venator awards |
|
| (237) |
|
| 11.81 |
|
| (93) |
|
| 13.72 |
Nonvested at December 31, 2017 |
|
| 2,457 |
|
| 14.93 |
|
| 696 |
|
| 14.69 |
Equity Awards | Liability Awards | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Grant-Date | Grant-Date | |||||||||||||||
Shares | Fair Value | Shares | Fair Value | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Nonvested at January 1, 2020 | 1,640 | $ | 24.61 | 427 | $ | 24.80 | ||||||||||
Granted | 848 | 21.92 | 238 | 21.53 | ||||||||||||
Vested | (577 | ) | (1)(2) | 25.15 | (218 | ) | 24.64 | |||||||||
Forfeited | (44 | ) | 26.44 | (36 | ) | 23.71 | ||||||||||
Nonvested at December 31, 2020 | 1,867 | 23.18 | 411 | 23.08 |
| (1) | As of December 31, |
(2) | A total of 174,200 performance share unit awards are reflected in the vested shares in this table, which represents the target number of performance share unit awards for this grant and were included in the balance at December 31, 2019. During the year ended December 31, 2020, an additional 165,489 performance share unit awards with a grant date fair value of $26.99 vested |
As of December 31, 2017,2020, there was $28$23 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the Stock Incentive Plan and the Prior Plan. That cost is expected to be recognized over a weighted-average period of approximately 1.71.8 years. The value of share awards that vested during each of the years ended December 31, 2017, 20162020, 2019 and 20152018 was $22 million, $16 million and $20 million, respectively.$24 million.
F-68
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22.25. OTHER COMPREHENSIVE (LOSS)INCOME (LOSS)
Other comprehensive loss consisted of the following (dollars in millions):
Huntsman Corporation
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| Pension and |
| Other |
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| Foreign |
| other |
| comprehensive |
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| Amounts |
| Amounts | |||||
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| currency |
| postretirement |
| income of |
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| attributable to |
| attributable to | |||||
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| translation |
| benefits |
| unconsolidated |
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| noncontrolling |
| Huntsman | |||||
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| adjustment(a) |
| adjustments(b) |
| affiliates |
| Other, net |
| Total |
| interests |
| Corporation | |||||||
Beginning balance, January 1, 2017 |
| $ | (459) |
| $ | (1,275) |
| $ | 4 |
| $ | 23 |
| $ | (1,707) |
| $ | 36 |
| $ | (1,671) |
Other comprehensive income before reclassifications, gross |
|
| 175 |
|
| 11 |
|
| (1) |
|
| 9 |
|
| 194 |
|
| (22) |
|
| 172 |
Tax benefit |
|
| 35 |
|
| 9 |
|
| — |
|
| 2 |
|
| 46 |
|
| — |
|
| 46 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| — |
|
| 80 |
|
| — |
|
| (10) |
|
| 70 |
|
| — |
|
| 70 |
Tax expense |
|
| — |
|
| (14) |
|
| — |
|
| — |
|
| (14) |
|
| — |
|
| (14) |
Net current-period other comprehensive income (loss) |
|
| 210 |
|
| 86 |
|
| (1) |
|
| 1 |
|
| 296 |
|
| (22) |
|
| 274 |
Disposition of a portion of P&A Business |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 129 |
|
| 129 |
Ending balance, December 31, 2017 |
| $ | (249) |
| $ | (1,189) |
| $ | 3 |
| $ | 24 |
| $ | (1,411) |
| $ | 143 |
| $ | (1,268) |
Pension and | Other | |||||||||||||||||||||||||||
Foreign | other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | Corporation | ||||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | (369 | ) | $ | (1,031 | ) | $ | 8 | $ | 4 | $ | (1,388 | ) | $ | 26 | $ | (1,362 | ) | ||||||||||
Other comprehensive income (loss) before reclassifications, gross | 29 | (135 | ) | 0 | 0 | (106 | ) | (6 | ) | (112 | ) | |||||||||||||||||
Tax benefit | 12 | 30 | 0 | 0 | 42 | 0 | 42 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 111 | 0 | 0 | 111 | 0 | 111 | |||||||||||||||||||||
Tax expense | 0 | (25 | ) | 0 | 0 | (25 | ) | 0 | (25 | ) | ||||||||||||||||||
Net current-period other comprehensive income (loss) | 41 | (19 | ) | 0 | 0 | 22 | (6 | ) | 16 | |||||||||||||||||||
Ending balance, December 31, 2020 | $ | (328 | ) | $ | (1,050 | ) | $ | 8 | $ | 4 | $ | (1,366 | ) | $ | 20 | $ | (1,346 | ) |
(a) | Amounts are net of tax of |
(b) | Amounts are net of tax of |
(c) | See table below for details about these reclassifications. |
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| Pension and |
| Other |
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|
|
|
|
| |||
|
| Foreign |
| other |
| comprehensive |
|
|
|
|
| Amounts |
| Amounts | |||||||
|
| currency |
| postretirement |
| income of |
|
|
|
|
| attributable to |
| attributable to | |||||||
|
| translation |
| benefits |
| unconsolidated |
|
|
|
|
| noncontrolling |
| Huntsman | |||||||
|
| adjustment(a) |
| adjustments(b) |
| affiliates |
| Other, net |
| Total |
| interests |
| Corporation | |||||||
Beginning balance, January 1, 2016 |
| $ | (288) |
| $ | (1,056) |
| $ | 11 |
| $ | 17 |
| $ | (1,316) |
| $ | 28 |
| $ | (1,288) |
Other comprehensive (loss) income before reclassifications, gross |
|
| (162) |
|
| (315) |
|
| (7) |
|
| 5 |
|
| (479) |
|
| 8 |
|
| (471) |
Tax benefit |
|
| (10) |
|
| 58 |
|
| — |
|
| 1 |
|
| 49 |
|
| — |
|
| 49 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| 1 |
|
| 53 |
|
| — |
|
| — |
|
| 54 |
|
| — |
|
| 54 |
Tax expense |
|
| — |
|
| (15) |
|
| — |
|
| — |
|
| (15) |
|
| — |
|
| (15) |
Net current-period other comprehensive (loss) income |
|
| (171) |
|
| (219) |
|
| (7) |
|
| 6 |
|
| (391) |
|
| 8 |
|
| (383) |
Ending balance, December 31, 2016 |
| $ | (459) |
| $ | (1,275) |
| $ | 4 |
| $ | 23 |
| $ | (1,707) |
| $ | 36 |
| $ | (1,671) |
Pension and | Other | |||||||||||||||||||||||||||
Foreign | other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | Corporation | ||||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | (371 | ) | $ | (994 | ) | $ | 8 | $ | 5 | $ | (1,352 | ) | $ | 36 | $ | (1,316 | ) | ||||||||||
Other comprehensive (loss) income before reclassifications, gross | 0 | (112 | ) | 0 | (1 | ) | (113 | ) | 5 | (108 | ) | |||||||||||||||||
Tax benefit | 2 | 25 | 0 | 0 | 27 | 0 | 27 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 62 | 0 | 0 | 62 | 0 | 62 | |||||||||||||||||||||
Tax expense | 0 | (12 | ) | 0 | 0 | (12 | ) | 0 | (12 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | 2 | (37 | ) | 0 | (1 | ) | (36 | ) | 5 | (31 | ) | |||||||||||||||||
Acquisition of noncontrolling interest | 0 | 0 | 0 | 0 | 0 | (15 | ) | (15 | ) | |||||||||||||||||||
Ending balance, December 31, 2019 | $ | (369 | ) | $ | (1,031 | ) | $ | 8 | $ | 4 | $ | (1,388 | ) | $ | 26 | $ | (1,362 | ) |
(a) | Amounts are net of tax of |
(b) | Amounts are net of tax of |
(c) | See table below for details about these reclassifications. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, |
|
| |||||||
|
| 2017 |
| 2016 |
| 2015 |
|
| |||
|
| Amount reclassified |
| Amount reclassified |
| Amount reclassified |
| Affected line item in | |||
|
| from accumulated |
| from accumulated |
| from accumulated |
| the statement | |||
Details about Accumulated Other |
| other |
| other |
| other |
| where net income | |||
Comprehensive Loss Components(a): |
| comprehensive loss |
| comprehensive loss |
| comprehensive loss |
| is presented | |||
Amortization of pension and other postretirement benefits: |
|
|
|
|
|
|
|
|
|
|
|
Prior service credit |
| $ | 15 |
| $ | 16 |
| $ | 10 |
| (b) |
Actuarial loss |
|
| (95) |
|
| (69) |
|
| (79) |
| (b)(c) |
|
|
| (80) |
|
| (53) |
|
| (69) |
| Total before tax |
|
|
| 14 |
|
| 15 |
|
| 14 |
| Income tax expense |
Total reclassifications for the period |
| $ | (66) |
| $ | (38) |
| $ | (55) |
| Net of tax |
(a)Pension and other postretirement benefits amounts in parentheses indicate credits on our consolidated statements of operations.
(b)These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note 16. Employee Benefit Plans.”
F-69
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(c)Amounts contain approximately $19 million, $14 million and $15 million of prior service credit and actuarial loss related to discontinued operations for the years ended December 31, 2017, 2016 and 2015, respectively.
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign |
| Pension |
| Other |
| Other, net |
| Total |
| Amounts |
| Amounts | |||||||
Beginning balance, January 1, 2017 |
| $ | (462) |
| $ | (1,286) |
| $ | 4 |
| $ | 17 |
| $ | (1,727) |
| $ | 36 |
| $ | (1,691) |
Other comprehensive income before reclassifications, gross |
|
| 175 |
|
| 12 |
|
| (1) |
|
| 8 |
|
| 194 |
|
| (22) |
|
| 172 |
Tax benefit |
|
| 35 |
|
| 9 |
|
| — |
|
| 2 |
|
| 46 |
|
| — |
|
| 46 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| — |
|
| 86 |
|
| — |
|
| (10) |
|
| 76 |
|
| — |
|
| 76 |
Contribution of other comprehensive income from Parent |
|
| — |
|
| 20 |
|
| — |
|
| — |
|
| 20 |
|
| — |
|
| 20 |
Tax expense |
|
| — |
|
| (15) |
|
| — |
|
| — |
|
| (15) |
|
| — |
|
| (15) |
Net current-period other comprehensive income (loss) |
|
| 210 |
|
| 112 |
|
| (1) |
|
| — |
|
| 321 |
|
| (22) |
|
| 299 |
Disposition of a portion of P&A Business |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 129 |
|
| 129 |
Ending balance, December 31, 2017 |
| $ | (252) |
| $ | (1,174) |
| $ | 3 |
| $ | 17 |
| $ | (1,406) |
| $ | 143 |
| $ | (1,263) |
Amounts reclassified | ||||||||||||||
from accumulated | ||||||||||||||
other | ||||||||||||||
comprehensive loss | Affected line item in | |||||||||||||
Details about Accumulated Other | Year ended December 31, | where net income | ||||||||||||
Comprehensive Loss Components(a): | 2020 | 2019 | 2018 | is presented | ||||||||||
Amortization of pension and other postretirement benefits: | ||||||||||||||
Prior service credit | $ | (12 | ) | $ | (11 | ) | $ | (12 | ) | (b) | ||||
Settlement loss | 43 | 1 | 2 | |||||||||||
Curtailment gain | (2 | ) | 0 | 0 | ||||||||||
Actuarial loss | 82 | 72 | 87 | (b)(c) | ||||||||||
111 | 62 | 77 | Total before tax | |||||||||||
(25 | ) | (12 | ) | (13 | ) | Income tax expense | ||||||||
Total reclassifications for the period | $ | 86 | $ | 50 | $ | 64 | Net of tax |
(a) | Pension and other postretirement benefits amounts in parentheses indicate credits on our consolidated statements of operations. |
|
(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign |
| Pension |
| Other |
| Other, net |
| Total |
| Amounts |
| Amounts | |||||||
Beginning balance, January 1, 2016 |
| $ | (292) |
| $ | (1,074) |
| $ | 11 |
| $ | 11 |
| $ | (1,344) |
| $ | 28 |
| $ | (1,316) |
Other comprehensive (loss) income before reclassifications, gross |
|
| (161) |
|
| (315) |
|
| (7) |
|
| 5 |
|
| (478) |
|
| 8 |
|
| (470) |
Tax benefit |
|
| (10) |
|
| 58 |
|
| — |
|
| 1 |
|
| 49 |
|
| — |
|
| 49 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| 1 |
|
| 61 |
|
| — |
|
| — |
|
| 62 |
|
| — |
|
| 62 |
Tax expense |
|
| — |
|
| (16) |
|
| — |
|
| — |
|
| (16) |
|
| — |
|
| (16) |
Net current-period other comprehensive income (loss) |
|
| (170) |
|
| (212) |
|
| (7) |
|
| 6 |
|
| (383) |
|
| 8 |
|
| (375) |
Ending balance, December 31, 2016 |
| $ | (462) |
| $ | (1,286) |
| $ | 4 |
| $ | 17 |
| $ | (1,727) |
| $ | 36 |
| $ | (1,691) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, |
|
| |||||||
|
| 2017 |
| 2016 |
| 2015 |
|
| |||
|
| Amount |
| Amount |
| Amount |
|
| |||
|
| reclassified |
| reclassified |
| reclassified |
| Affected | |||
|
| from |
| from |
| from |
| line item in | |||
|
| accumulated |
| accumulated |
| accumulated |
| the statement | |||
|
| other |
| other |
| other |
| where | |||
Details about Accumulated Other |
| comprehensive |
| comprehensive |
| comprehensive |
| net income is | |||
Comprehensive Loss Components(a): |
| loss |
| loss |
| loss |
| presented | |||
Amortization of pension and other postretirement benefits: |
|
|
|
|
|
|
|
|
|
|
|
Prior service credit |
| $ | 15 |
| $ | 16 |
| $ | 10 |
| (b) |
Actuarial loss |
|
| (101) |
|
| (77) |
|
| (87) |
| (b)(c) |
|
|
| (86) |
|
| (61) |
|
| (77) |
| Total before tax |
|
|
| 15 |
|
| 16 |
|
| 15 |
| Income tax expense |
Total reclassifications for the period |
| $ | (71) |
| $ | (45) |
| $ | (62) |
| Net of tax |
|
|
F-70
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note |
(c) | Amounts contain approximately |
Huntsman International
Pension | Other | |||||||||||||||||||||||||||
Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | International | ||||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | (374 | ) | $ | (1,012 | ) | $ | 8 | $ | 0 | $ | (1,378 | ) | $ | 26 | $ | (1,352 | ) | ||||||||||
Other comprehensive income (loss) before reclassifications, gross | 29 | (135 | ) | 0 | 0 | (106 | ) | (6 | ) | (112 | ) | |||||||||||||||||
Tax benefit | 12 | 30 | 0 | 0 | 42 | 0 | 42 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 115 | 0 | 0 | 115 | 0 | 115 | |||||||||||||||||||||
Tax expense | 0 | (26 | ) | 0 | 0 | (26 | ) | 0 | (26 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | 41 | (16 | ) | 0 | 0 | 25 | (6 | ) | 19 | |||||||||||||||||||
Ending balance, December 31, 2020 | $ | (333 | ) | $ | (1,028 | ) | $ | 8 | $ | 0 | $ | (1,353 | ) | $ | 20 | $ | (1,333 | ) |
(a) | Amounts are net of tax of $43 and $55 as of December 31,2020 and January 1,2020, respectively. |
(b) | Amounts are net of tax of $178 and $174 as of December 31,2020 and January 1,2020, respectively. |
(c) | See table below for details about these reclassifications. |
Pension | Other | |||||||||||||||||||||||||||
Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | International | ||||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | (376 | ) | $ | (977 | ) | $ | 8 | $ | 1 | $ | (1,344 | ) | $ | 36 | $ | (1,308 | ) | ||||||||||
Other comprehensive (loss) income before reclassifications, gross | 0 | (113 | ) | 0 | (1 | ) | (114 | ) | 5 | (109 | ) | |||||||||||||||||
Tax benefit | 2 | 25 | 0 | 0 | 27 | 0 | 27 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 65 | 0 | 0 | 65 | 0 | 65 | |||||||||||||||||||||
Tax expense | 0 | (12 | ) | 0 | 0 | (12 | ) | 0 | (12 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | 2 | (35 | ) | 0 | (1 | ) | (34 | ) | 5 | (29 | ) | |||||||||||||||||
Acquisition of noncontrolling interest | 0 | 0 | 0 | 0 | 0 | (15 | ) | (15 | ) | |||||||||||||||||||
Ending balance, December 31, 2019 | $ | (374 | ) | $ | (1,012 | ) | $ | 8 | $ | 0 | $ | (1,378 | ) | $ | 26 | $ | (1,352 | ) |
(a) | Amounts are net of tax of $55 and $57 as of December 31,2019 and January 1,2019, respectively. |
(b) | Amounts are net of tax of $174 and $161 as of December 31,2019 and January 1,2019, respectively. |
(c) | See table below for details about these reclassifications. |
Amounts reclassified | ||||||||||||||
from accumulated | ||||||||||||||
other | ||||||||||||||
comprehensive loss | Affected line item in | |||||||||||||
Details about Accumulated Other | Year ended December 31, | where net income | ||||||||||||
Comprehensive Loss Components(a): | 2020 | 2019 | 2018 | is presented | ||||||||||
Amortization of pension and other postretirement benefits: | ||||||||||||||
Prior service credit | $ | (12 | ) | $ | (11 | ) | $ | (12 | ) | (b) | ||||
Settlement loss | 43 | 1 | 2 | (c) | ||||||||||
Curtailment gain | (2 | ) | 0 | 0 | (c) | |||||||||
Actuarial loss | 86 | 75 | 90 | (b)(c) | ||||||||||
115 | 65 | 80 | Total before tax | |||||||||||
(26 | ) | (12 | ) | (14 | ) | Income tax expense | ||||||||
Total reclassifications for the period | $ | 89 | $ | 53 | $ | 66 | Net of tax |
(a) | Pension and other postretirement benefits amounts in parentheses indicate credits on our consolidated statements of operations. |
(b) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note 19. Employee Benefit Plans.” |
(c) | Amounts contain approximately $5, $7 and $22 of prior service credit and actuarial loss related to discontinued operations for the years ended December 31, 2020, 2019 and 2018, respectively. |
Items of other comprehensive income (loss) of our Company and our consolidated affiliates have been recorded net of tax, with the exception of the foreign currency translation adjustments related to subsidiaries with earnings permanently reinvested. The tax effect is determined based upon the jurisdiction where the income or loss was recognized and is net of valuation allowances.
23.
26. RELATED PARTY TRANSACTIONS
Our consolidated financial statements include the following transactions with our affiliates not otherwise disclosed (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Sales to: |
|
|
|
|
|
|
|
|
|
Unconsolidated affiliates |
| $ | 150 |
| $ | 131 |
| $ | 131 |
Inventory purchases from: |
|
|
|
|
|
|
|
|
|
Unconsolidated affiliates |
|
| 280 |
|
| 243 |
|
| 325 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Sales to: | ||||||||||||
Unconsolidated affiliates | $ | 115 | $ | 133 | $ | 153 | ||||||
Inventory purchases from: | ||||||||||||
Unconsolidated affiliates | 407 | 434 | 411 |
24.
27. 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 four operating segments, which are also our reportable segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. We have organized our business and derived our operating segments around differences in product lines. In connection with the Venator IPO in August 2017, we separated the P&A Business and, beginning in the third quarter of 2017, we reported the results of operations of the P&A Business as discontinued operations in our consolidated financial statements for all periods presented. See “Note 3. Discontinued Operations and Business Dispositions—Separation of P&A Business.”
The major products of each reportable operating segment are as follows:
Segment |
| Products |
Polyurethanes | MDI, | |
Performance Products |
| |
Advanced Materials |
| |
Textile Effects | Textile chemicals |
Sales between segments are generally recognized at external market prices and are eliminated in consolidation. We use adjusted EBITDA to measure the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The adjusted EBITDA of
F-71
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
operating segments excludes items that principally apply to our Company as a whole. The revenues and adjusted EBITDA for each of our reportable operating segments are as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Revenues: |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 4,399 |
| $ | 3,667 |
| $ | 3,811 |
Performance Products |
|
| 2,109 |
|
| 2,126 |
|
| 2,501 |
Advanced Materials |
|
| 1,040 |
|
| 1,020 |
|
| 1,103 |
Textile Effects |
|
| 776 |
|
| 751 |
|
| 804 |
Corporate and eliminations |
|
| 34 |
|
| (46) |
|
| (80) |
Total |
| $ | 8,358 |
| $ | 7,518 |
| $ | 8,139 |
|
|
|
|
|
|
|
|
|
|
Huntsman Corporation: |
|
|
|
|
|
|
|
|
|
Segment adjusted EBITDA(1): |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 850 |
| $ | 569 |
| $ | 573 |
Performance Products |
|
| 296 |
|
| 316 |
|
| 460 |
Advanced Materials |
|
| 219 |
|
| 223 |
|
| 220 |
Textile Effects |
|
| 83 |
|
| 73 |
|
| 63 |
Corporate and other(2) |
|
| (189) |
|
| (184) |
|
| (156) |
Total |
|
| 1,259 |
|
| 997 |
|
| 1,160 |
Reconciliation of adjusted EBITDA to net income: |
|
|
|
|
|
|
|
|
|
Interest expense—continuing operations |
|
| (165) |
|
| (203) |
|
| (205) |
Interest (expense) income—discontinued operations |
|
| (19) |
|
| 1 |
|
| — |
Income tax expense—continuing operations |
|
| (64) |
|
| (109) |
|
| (60) |
Income tax (expense) benefit—discontinued operations |
|
| (67) |
|
| 24 |
|
| 16 |
Depreciation and amortization—continuing operations |
|
| (319) |
|
| (318) |
|
| (298) |
Depreciation and amortization—discontinued operations |
|
| (68) |
|
| (114) |
|
| (101) |
Net income attributable to noncontrolling interests |
|
| 105 |
|
| 31 |
|
| 33 |
Other adjustments: |
|
|
|
|
|
|
|
|
|
Business acquisition and integration expenses |
|
| (19) |
|
| (12) |
|
| (9) |
Merger costs |
|
| (28) |
|
| — |
|
| — |
EBITDA from discontinued operations |
|
| 312 |
|
| 81 |
|
| (217) |
Minority interest of discontinued operations |
|
| (49) |
|
| (11) |
|
| (7) |
Loss on early extinguishment of debt |
|
| (54) |
|
| (3) |
|
| (31) |
Certain legal settlements and related income (expenses) |
|
| 11 |
|
| (1) |
|
| (1) |
Gain (loss) on sale of assets |
|
| 9 |
|
| 97 |
|
| (1) |
Amortization of pension and postretirement actuarial losses |
|
| (73) |
|
| (55) |
|
| (66) |
Plant incident remediation costs |
|
| (16) |
|
| — |
|
| — |
U.S. Tax Reform Act impact on minority interest |
|
| 6 |
|
| — |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| (20) |
|
| (48) |
|
| (87) |
Net income |
| $ | 741 |
| $ | 357 |
| $ | 126 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenues: | ||||||||||||
Polyurethanes | $ | 3,584 | $ | 3,911 | $ | 4,282 | ||||||
Performance Products | 1,023 | 1,158 | 1,301 | |||||||||
Advanced Materials | 839 | 1,044 | 1,116 | |||||||||
Textile Effects | 597 | 763 | 824 | |||||||||
Corporate and eliminations | (25 | ) | (79 | ) | 81 | |||||||
Total | $ | 6,018 | $ | 6,797 | $ | 7,604 | ||||||
Huntsman Corporation: | ||||||||||||
Segment adjusted EBITDA(1): | ||||||||||||
Polyurethanes | $ | 472 | $ | 548 | $ | 809 | ||||||
Performance Products | 164 | 168 | 197 | |||||||||
Advanced Materials | 130 | 201 | 225 | |||||||||
Textile Effects | 42 | 84 | 101 | |||||||||
Corporate and other(2) | (161 | ) | (155 | ) | (171 | ) | ||||||
Total | 647 | 846 | 1,161 | |||||||||
Reconciliation of adjusted EBITDA to net income: | ||||||||||||
Interest expense, net—continuing operations | (86 | ) | (111 | ) | (115 | ) | ||||||
Interest expense, net—discontinued operations | 0 | 0 | (36 | ) | ||||||||
Income tax (expense) benefit—continuing operations | (46 | ) | 38 | (45 | ) | |||||||
Income tax expense—discontinued operations | (242 | ) | (35 | ) | (86 | ) | ||||||
Depreciation and amortization—continuing operations | (283 | ) | (270 | ) | (255 | ) | ||||||
Depreciation and amortization—discontinued operations | 0 | (61 | ) | (88 | ) | |||||||
Net income attributable to noncontrolling interests | 32 | 36 | 313 | |||||||||
Other adjustments: | ||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | (31 | ) | (5 | ) | (9 | ) | ||||||
Merger costs | 0 | 0 | (2 | ) | ||||||||
EBITDA from discontinued operations | 1,017 | 265 | 171 | |||||||||
Noncontrolling interest of discontinued operations | 0 | 0 | (232 | ) | ||||||||
Fair value adjustments to Venator investment and related loss on disposal | (88 | ) | (18 | ) | (62 | ) | ||||||
Loss on early extinguishment of debt | 0 | (23 | ) | (3 | ) | |||||||
Certain legal and other settlements and related expenses | (5 | ) | (6 | ) | (1 | ) | ||||||
Gain (loss) on sale of businesses/assets | 280 | (21 | ) | 0 | ||||||||
Income from transition services arrangements | 7 | 0 | 0 | |||||||||
Certain nonrecurring information technology project implementation costs | (6 | ) | (4 | ) | 0 | |||||||
Amortization of pension and postretirement actuarial losses | (76 | ) | (66 | ) | (67 | ) | ||||||
Plant incident remediation costs | (2 | ) | (8 | ) | 0 | |||||||
Restructuring, impairment and plant closing and transition (costs) credits | (52 | ) | 41 | 6 | ||||||||
Net income | $ | 1,066 | $ | 598 | $ | 650 |
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Depreciation and Amortization: |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 116 |
| $ | 114 |
| $ | 100 |
Performance Products |
|
| 137 |
|
| 132 |
|
| 119 |
Advanced Materials |
|
| 33 |
|
| 35 |
|
| 38 |
Textile Effects |
|
| 14 |
|
| 15 |
|
| 17 |
Corporate and other |
|
| 19 |
|
| 22 |
|
| 24 |
Total |
| $ | 319 |
| $ | 318 |
| $ | 298 |
F-72
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Depreciation and Amortization: | ||||||||||||
Polyurethanes | $ | 130 | $ | 120 | $ | 108 | ||||||
Performance Products | 79 | 81 | 78 | |||||||||
Advanced Materials | 45 | 36 | 37 | |||||||||
Textile Effects | 16 | 16 | 16 | |||||||||
Corporate and other | 13 | 17 | 16 | |||||||||
Total | $ | 283 | $ | 270 | $ | 255 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Year ended December 31, | Year ended December 31, | ||||||||||||||||||
|
| 2017 |
| 2016 |
| 2015 | 2020 | 2019 | 2018 | ||||||||||||
Capital Expenditures: |
|
|
|
|
|
|
|
|
| ||||||||||||
Polyurethanes |
| $ | 162 |
| $ | 143 |
| $ | 181 | $ | 172 | $ | 185 | $ | 153 | ||||||
Performance Products |
|
| 79 |
|
| 131 |
|
| 205 | 32 | 32 | 48 | |||||||||
Advanced Materials |
|
| 21 |
|
| 16 |
|
| 25 | 21 | 24 | 20 | |||||||||
Textile Effects |
|
| 16 |
|
| 19 |
|
| 24 | 12 | 22 | 20 | |||||||||
Corporate and other |
|
| 4 |
|
| 9 |
|
| 26 | 12 | 11 | 10 | |||||||||
Total |
| $ | 282 |
| $ | 318 |
| $ | 461 | $ | 249 | $ | 274 | $ | 251 |
December 31, | ||||||||
2020 | 2019 | |||||||
Total Assets: | ||||||||
Polyurethanes | $ | 3,970 | $ | 3,437 | ||||
Performance Products | 1,062 | 1,125 | ||||||
Advanced Materials | 1,002 | 774 | ||||||
Textile Effects | 481 | 511 | ||||||
Corporate and other | 2,198 | 1,265 | ||||||
Total | $ | 8,713 | $ | 7,112 |
December 31, | ||||||||
2020 | 2019 | |||||||
Goodwill: | ||||||||
Polyurethanes | $ | 312 | $ | 177 | ||||
Performance Products | 18 | 16 | ||||||
Advanced Materials | 203 | 83 | ||||||
Total | $ | 533 | $ | 276 |
|
|
|
|
|
|
|
|
|
|
|
| December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Total Assets: |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 3,112 |
| $ | 2,677 |
| $ | 2,779 |
Performance Products |
|
| 2,069 |
|
| 2,046 |
|
| 2,264 |
Advanced Materials |
|
| 796 |
|
| 728 |
|
| 822 |
Textile Effects |
|
| 564 |
|
| 523 |
|
| 562 |
Corporate and other |
|
| 823 |
|
| 975 |
|
| 904 |
Total |
| $ | 7,364 |
| $ | 6,949 |
| $ | 7,331 |
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Huntsman International: |
|
|
|
|
|
|
|
|
|
Segment adjusted EBITDA(1): |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 850 |
| $ | 569 |
| $ | 573 |
Performance Products |
|
| 296 |
|
| 316 |
|
| 460 |
Advanced Materials |
|
| 219 |
|
| 223 |
|
| 220 |
Textile Effects |
|
| 83 |
|
| 73 |
|
| 63 |
Corporate and other(2) |
|
| (185) |
|
| (180) |
|
| (151) |
Total |
|
| 1,263 |
|
| 1,001 |
|
| 1,165 |
Reconciliation of adjusted EBITDA to net income: |
|
|
|
|
|
|
|
|
|
Interest expense—continuing operations |
|
| (181) |
|
| (215) |
|
| (214) |
Interest (expense) income—discontinued operations |
|
| (19) |
|
| 1 |
|
| — |
Income tax expense—continuing operations |
|
| (61) |
|
| (108) |
|
| (59) |
Income tax (expense) benefit—discontinued operations |
|
| (67) |
|
| 24 |
|
| 16 |
Depreciation and amortization—continuing operations |
|
| (311) |
|
| (306) |
|
| (286) |
Depreciation and amortization—discontinued operations |
|
| (68) |
|
| (114) |
|
| (101) |
Net income attributable to noncontrolling interests |
|
| 105 |
|
| 31 |
|
| 33 |
Other adjustments: |
|
|
|
|
|
|
|
|
|
Business acquisition and integration expenses |
|
| (19) |
|
| (12) |
|
| (9) |
Merger costs |
|
| (28) |
|
| — |
|
| — |
EBITDA from discontinued operations |
|
| 309 |
|
| 76 |
|
| (223) |
Minority interest of discontinued operations |
|
| (49) |
|
| (11) |
|
| (7) |
Loss on early extinguishment of debt |
|
| (54) |
|
| (3) |
|
| (31) |
Certain legal settlements and related income (expenses) |
|
| 11 |
|
| (1) |
|
| (1) |
Gain (loss) on sale of assets |
|
| 9 |
|
| 97 |
|
| (1) |
Amortization of pension and postretirement actuarial losses |
|
| (76) |
|
| (58) |
|
| (68) |
Plant incident remediation costs |
|
| (16) |
|
| — |
|
| — |
U.S. Tax Reform Act impact on minority interest |
|
| 6 |
|
| — |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| (20) |
|
| (48) |
|
| (87) |
Net income |
| $ | 734 |
| $ | 354 |
| $ | 127 |
F-73
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Depreciation and Amortization: |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 116 |
| $ | 114 |
| $ | 100 |
Performance Products |
|
| 137 |
|
| 132 |
|
| 119 |
Advanced Materials |
|
| 33 |
|
| 35 |
|
| 38 |
Textile Effects |
|
| 14 |
|
| 15 |
|
| 17 |
Corporate and other |
|
| 11 |
|
| 10 |
|
| 12 |
Total |
| $ | 311 |
| $ | 306 |
| $ | 286 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Huntsman International: | ||||||||||||
Segment adjusted EBITDA(1): | ||||||||||||
Polyurethanes | $ | 472 | $ | 548 | $ | 809 | ||||||
Performance Products | 164 | 168 | 197 | |||||||||
Advanced Materials | 130 | 201 | 225 | |||||||||
Textile Effects | 42 | 84 | 101 | |||||||||
Corporate and other(2) | (155 | ) | (150 | ) | (167 | ) | ||||||
Total | 653 | 851 | 1,165 | |||||||||
Reconciliation of adjusted EBITDA to net income: | ||||||||||||
Interest expense, net—continuing operations | (88 | ) | (126 | ) | (136 | ) | ||||||
Interest expense, net—discontinued operations | 0 | 0 | (36 | ) | ||||||||
Income tax (expense) benefit—continuing operations | (46 | ) | 41 | (41 | ) | |||||||
Income tax expense—discontinued operations | (242 | ) | (35 | ) | (86 | ) | ||||||
Depreciation and amortization—continuing operations | (283 | ) | (270 | ) | (252 | ) | ||||||
Depreciation and amortization—discontinued operations | 0 | (61 | ) | (88 | ) | |||||||
Net income attributable to noncontrolling interests | 32 | 36 | 313 | |||||||||
Other adjustments: | ||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | (31 | ) | (5 | ) | (9 | ) | ||||||
Merger costs | 0 | 0 | (2 | ) | ||||||||
EBITDA from discontinued operations | 1,017 | 265 | 171 | |||||||||
Noncontrolling interest of discontinued operations | 0 | 0 | (232 | ) | ||||||||
Fair value adjustments to Venator investment and related loss on disposal | (88 | ) | (18 | ) | (62 | ) | ||||||
Loss on early extinguishment of debt | 0 | (23 | ) | (3 | ) | |||||||
Certain legal and other settlements and related expenses | (5 | ) | (6 | ) | (1 | ) | ||||||
Gain (loss) on sale of businesses/assets | 280 | (21 | ) | 0 | ||||||||
Income from transition services arrangements | 7 | 0 | 0 | |||||||||
Certain nonrecurring information technology project implementation costs | (6 | ) | (4 | ) | 0 | |||||||
Amortization of pension and postretirement actuarial losses | (79 | ) | (70 | ) | (71 | ) | ||||||
Plant incident remediation costs | (2 | ) | (8 | ) | 0 | |||||||
Restructuring, impairment and plant closing and transition (costs) credits | (52 | ) | 41 | 6 | ||||||||
Net income | $ | 1,067 | $ | 587 | $ | 636 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Depreciation and Amortization: | ||||||||||||
Polyurethanes | $ | 130 | $ | 120 | $ | 108 | ||||||
Performance Products | 79 | 81 | 78 | |||||||||
Advanced Materials | 45 | 36 | 37 | |||||||||
Textile Effects | 16 | 16 | 16 | |||||||||
Corporate and other | 13 | 17 | 13 | |||||||||
Total | $ | 283 | $ | 270 | $ | 252 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Capital Expenditures: | �� | |||||||||||
Polyurethanes | $ | 172 | $ | 185 | $ | 153 | ||||||
Performance Products | 32 | 32 | 48 | |||||||||
Advanced Materials | 21 | 24 | 20 | |||||||||
Textile Effects | 12 | 22 | 20 | |||||||||
Corporate and other | 12 | 11 | 10 | |||||||||
Total | $ | 249 | $ | 274 | $ | 251 |
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Capital Expenditures: |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 162 |
| $ | 143 |
| $ | 181 |
Performance Products |
|
| 79 |
|
| 131 |
|
| 205 |
Advanced Materials |
|
| 21 |
|
| 16 |
|
| 25 |
Textile Effects |
|
| 16 |
|
| 19 |
|
| 24 |
Corporate and other |
|
| 4 |
|
| 9 |
|
| 26 |
Total |
| $ | 282 |
| $ | 318 |
| $ | 461 |
December 31, | ||||||||
2020 | 2019 | |||||||
Total Assets: | ||||||||
Polyurethanes | $ | 3,970 | $ | 3,437 | ||||
Performance Products | 1,062 | 1,125 | ||||||
Advanced Materials | 1,002 | 774 | ||||||
Textile Effects | 481 | 511 | ||||||
Corporate and other | 2,241 | 1,668 | ||||||
Total | $ | 8,756 | $ | 7,515 |
|
|
|
|
|
|
|
|
|
|
|
| December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Total Assets: |
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 3,109 |
| $ | 2,665 |
| $ | 2,760 |
Performance Products |
|
| 2,069 |
|
| 2,045 |
|
| 2,262 |
Advanced Materials |
|
| 796 |
|
| 728 |
|
| 822 |
Textile Effects |
|
| 564 |
|
| 523 |
|
| 562 |
Corporate and other |
|
| 1,167 |
|
| 1,274 |
|
| 1,193 |
Total |
| $ | 7,705 |
| $ | 7,235 |
| $ | 7,599 |
December 31, | ||||||||
2020 | 2019 | |||||||
Goodwill: | ||||||||
Polyurethanes | $ | 312 | $ | 177 | ||||
Performance Products | 18 | 16 | ||||||
Advanced Materials | 203 | 83 | ||||||
Total | $ | 533 | $ | 276 |
| We use segment adjusted EBITDA as the measure of each segment’s profit or loss. We believe that segment adjusted EBITDA more accurately reflects what |
| Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, nonoperating income and expense |
F-74
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenues by geographic area(1): | ||||||||||||
United States | $ | 1,863 | $ | 2,025 | $ | 2,136 | ||||||
China | 1,115 | 1,076 | 1,260 | |||||||||
Germany | 388 | 541 | 537 | |||||||||
India | 211 | 319 | 352 | |||||||||
Other nations | 2,441 | 2,836 | 3,319 | |||||||||
Total | $ | 6,018 | $ | 6,797 | $ | 7,604 |
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
By Geographic Area |
|
|
|
|
|
|
|
|
|
Revenues(1): |
|
|
|
|
|
|
|
|
|
United States |
| $ | 2,729 |
| $ | 2,514 |
| $ | 2,727 |
China |
|
| 1,147 |
|
| 908 |
|
| 1,013 |
Germany |
|
| 508 |
|
| 466 |
|
| 479 |
Mexico |
|
| 481 |
|
| 433 |
|
| 455 |
Other nations |
|
| 3,493 |
|
| 3,197 |
|
| 3,465 |
Total |
| $ | 8,358 |
| $ | 7,518 |
| $ | 8,139 |
|
|
|
|
|
|
|
|
|
|
|
| December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Long-lived assets(2): |
|
|
|
|
|
|
|
|
|
Huntsman Corporation |
|
|
|
|
|
|
|
|
|
United States |
| $ | 1,597 |
| $ | 1,570 |
| $ | 1,677 |
The Netherlands |
|
| 343 |
|
| 294 |
|
| 304 |
China |
|
| 268 |
|
| 235 |
|
| 208 |
Saudi Arabia |
|
| 172 |
|
| 185 |
|
| 196 |
Germany |
|
| 163 |
|
| 136 |
|
| 147 |
Switzerland |
|
| 112 |
|
| 110 |
|
| 120 |
Singapore |
|
| 100 |
|
| 110 |
|
| 76 |
Other nations |
|
| 343 |
|
| 394 |
|
| 442 |
Total |
| $ | 3,098 |
| $ | 3,034 |
| $ | 3,170 |
|
|
|
|
|
|
|
|
|
|
Huntsman International |
|
|
|
|
|
|
|
|
|
United States |
| $ | 1,594 |
| $ | 1,548 |
| $ | 1,641 |
The Netherlands |
|
| 343 |
|
| 294 |
|
| 304 |
China |
|
| 268 |
|
| 235 |
|
| 208 |
Saudi Arabia |
|
| 172 |
|
| 185 |
|
| 196 |
Germany |
|
| 163 |
|
| 136 |
|
| 147 |
Switzerland |
|
| 112 |
|
| 110 |
|
| 120 |
Singapore |
|
| 100 |
|
| 110 |
|
| 76 |
Other nations |
|
| 343 |
|
| 394 |
|
| 442 |
Total |
| $ | 3,095 |
| $ | 3,012 |
| $ | 3,134 |
December 31, | ||||||||
2020 | 2019 | |||||||
Long-lived assets(2): | ||||||||
United States | $ | 1,078 | $ | 970 | ||||
The Netherlands | 368 | 334 | ||||||
China | 251 | 247 | ||||||
Germany | 144 | 137 | ||||||
Saudi Arabia | 143 | 154 | ||||||
Singapore | 90 | 94 | ||||||
Switzerland | 73 | 106 | ||||||
Other nations | 358 | 341 | ||||||
Total | $ | 2,505 | $ | 2,383 |
| Geographic information for revenues is based upon countries into which product is sold. |
(2) | Long-lived assets consist of property, plant and equipment, net. |
|
25. CONDENSED CONSOLIDATING FINANCIAL INFORMATION—HUNTSMAN INTERNATIONAL
The following 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 December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015. There are no contractual restrictions limiting transfers of cash from Guarantor subsidiaries to Huntsman International. Each of the Guarantors is 100% owned by Huntsman International and has fully and unconditionally guaranteed Huntsman International’s outstanding notes on a joint and several basis.
In connection with the separation of the P&A Business in the third quarter of 2017 (see “Note 3. Discontinued Operations and Business Dispositions—Separation of P&A Business”), certain entities were removed from the debt guarantor structure. The following condensed consolidating financial statements have been presented as if the new debt structure existed for all periods presented.
F-75
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2017
(In Millions)
F-76
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 74 |
| $ | — |
| $ | 394 |
| $ | — |
| $ | 468 |
Restricted cash |
|
| — |
|
| — |
|
| 11 |
|
| — |
|
| 11 |
Accounts and notes receivable, net |
|
| 36 |
|
| 94 |
|
| 1,120 |
|
| 5 |
|
| 1,255 |
Accounts receivable from affiliates |
|
| 983 |
|
| 4,130 |
|
| 391 |
|
| (5,131) |
|
| 373 |
Inventories |
|
| 101 |
|
| 210 |
|
| 767 |
|
| (5) |
|
| 1,073 |
Prepaid expenses |
|
| 21 |
|
| 10 |
|
| 39 |
|
| (11) |
|
| 59 |
Other current assets |
|
| 783 |
|
| 3 |
|
| 170 |
|
| (752) |
|
| 204 |
Current assets held for sale |
|
| — |
|
| — |
|
| 2,880 |
|
| — |
|
| 2,880 |
Total current assets |
|
| 1,998 |
|
| 4,447 |
|
| 5,772 |
|
| (5,894) |
|
| 6,323 |
Property, plant and equipment, net |
|
| 461 |
|
| 1,119 |
|
| 1,515 |
|
| — |
|
| 3,095 |
Investment in unconsolidated affiliates |
|
| 6,364 |
|
| 2,268 |
|
| 266 |
|
| (8,632) |
|
| 266 |
Intangible assets, net |
|
| 25 |
|
| — |
|
| 31 |
|
| — |
|
| 56 |
Goodwill |
|
| (14) |
|
| 82 |
|
| 72 |
|
| — |
|
| 140 |
Deferred income taxes |
|
| 323 |
|
| — |
|
| 208 |
|
| (323) |
|
| 208 |
Notes receivable from affiliates |
|
| 72 |
|
| 569 |
|
| — |
|
| (641) |
|
| — |
Other noncurrent assets |
|
| 52 |
|
| 189 |
|
| 257 |
|
| (1) |
|
| 497 |
Total assets |
| $ | 9,281 |
| $ | 8,674 |
| $ | 8,121 |
| $ | (15,491) |
| $ | 10,585 |
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 74 |
| $ | 214 |
| $ | 652 |
| $ | 6 |
| $ | 946 |
Accounts payable to affiliates |
|
| 4,019 |
|
| 485 |
|
| 697 |
|
| (5,131) |
|
| 70 |
Accrued liabilities |
|
| 89 |
|
| 826 |
|
| 413 |
|
| (762) |
|
| 566 |
Note payable to affiliate |
|
| 100 |
|
| — |
|
| — |
|
| — |
|
| 100 |
Current portion of debt |
|
| 17 |
|
| — |
|
| 23 |
|
| — |
|
| 40 |
Current liabilities held for sale |
|
| — |
|
| — |
|
| 1,692 |
|
| — |
|
| 1,692 |
Total current liabilities |
|
| 4,299 |
|
| 1,525 |
|
| 3,477 |
|
| (5,887) |
|
| 3,414 |
Long-term debt |
|
| 1,927 |
|
| — |
|
| 331 |
|
| — |
|
| 2,258 |
Notes payable to affiliates |
|
| 742 |
|
| — |
|
| 642 |
|
| (642) |
|
| 742 |
Deferred income taxes |
|
| 12 |
|
| 179 |
|
| 33 |
|
| 41 |
|
| 265 |
Other noncurrent liabilities |
|
| 218 |
|
| 278 |
|
| 576 |
|
| — |
|
| 1,072 |
Total liabilities |
|
| 7,198 |
|
| 1,982 |
|
| 5,059 |
|
| (6,488) |
|
| 7,751 |
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman International LLC members’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’ equity |
|
| 3,616 |
|
| 2,216 |
|
| 3,641 |
|
| (5,857) |
|
| 3,616 |
Accumulated (deficit) retained earnings |
|
| (270) |
|
| 2,749 |
|
| (116) |
|
| (2,633) |
|
| (270) |
Accumulated other comprehensive (loss) income |
|
| (1,263) |
|
| 1,727 |
|
| (1,211) |
|
| (516) |
|
| (1,263) |
Total Huntsman International LLC members’ equity |
|
| 2,083 |
|
| 6,692 |
|
| 2,314 |
|
| (9,006) |
|
| 2,083 |
Noncontrolling interests in subsidiaries |
|
| — |
|
| — |
|
| 748 |
|
| 3 |
|
| 751 |
Total equity |
|
| 2,083 |
|
| 6,692 |
|
| 3,062 |
|
| (9,003) |
|
| 2,834 |
Total liabilities and equity |
| $ | 9,281 |
| $ | 8,674 |
| $ | 8,121 |
| $ | (15,491) |
| $ | 10,585 |
F-77
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2016
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 37 |
| $ | — |
| $ | 347 |
| $ | — |
| $ | 384 |
Restricted cash |
|
| — |
|
| — |
|
| 11 |
|
| — |
|
| 11 |
Accounts and notes receivable, net |
|
| 22 |
|
| 88 |
|
| 1,053 |
|
| 5 |
|
| 1,168 |
Accounts receivable from affiliates |
|
| 1,351 |
|
| 4,589 |
|
| 149 |
|
| (5,760) |
|
| 329 |
Inventories |
|
| 85 |
|
| 183 |
|
| 652 |
|
| (2) |
|
| 918 |
Prepaid expenses |
|
| 68 |
|
| 46 |
|
| 36 |
|
| (101) |
|
| 49 |
Other current assets |
|
| 820 |
|
| 3 |
|
| 129 |
|
| (725) |
|
| 227 |
Current assets held for sale |
|
| — |
|
| — |
|
| 777 |
|
| — |
|
| 777 |
Total current assets |
|
| 2,383 |
|
| 4,909 |
|
| 3,154 |
|
| (6,583) |
|
| 3,863 |
Property, plant and equipment, net |
|
| 463 |
|
| 1,163 |
|
| 1,385 |
|
| 1 |
|
| 3,012 |
Investment in unconsolidated affiliates |
|
| 5,870 |
|
| 1,458 |
|
| 245 |
|
| (7,325) |
|
| 248 |
Intangible assets, net |
|
| 28 |
|
| — |
|
| 15 |
|
| — |
|
| 43 |
Goodwill |
|
| (12) |
|
| 82 |
|
| 51 |
|
| — |
|
| 121 |
Deferred income taxes |
|
| 515 |
|
| — |
|
| 265 |
|
| (527) |
|
| 253 |
Notes receivable from affiliates |
|
| 37 |
|
| 620 |
|
| — |
|
| (657) |
|
| — |
Other noncurrent assets |
|
| 74 |
|
| 188 |
|
| 210 |
|
| — |
|
| 472 |
Noncurrent assets held for sale |
|
| — |
|
| — |
|
| 1,463 |
|
| — |
|
| 1,463 |
Total assets |
| $ | 9,358 |
| $ | 8,420 |
| $ | 6,788 |
| $ | (15,091) |
| $ | 9,475 |
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 63 |
| $ | 152 |
| $ | 553 |
| $ | 5 |
| $ | 773 |
Accounts payable to affiliates |
|
| 3,667 |
|
| 645 |
|
| 1,499 |
|
| (5,760) |
|
| 51 |
Accrued liabilities |
|
| 87 |
|
| 787 |
|
| 420 |
|
| (826) |
|
| 468 |
Note payable to affiliate |
|
| 100 |
|
| — |
|
| — |
|
| — |
|
| 100 |
Current portion of debt |
|
| 30 |
|
| — |
|
| 20 |
|
| — |
|
| 50 |
Current liabilities held for sale |
|
| — |
|
| — |
|
| 467 |
|
| — |
|
| 467 |
Total current liabilities |
|
| 3,947 |
|
| 1,584 |
|
| 2,959 |
|
| (6,581) |
|
| 1,909 |
Long-term debt |
|
| 3,763 |
|
| — |
|
| 359 |
|
| — |
|
| 4,122 |
Notes payable to affiliates |
|
| 696 |
|
| — |
|
| 658 |
|
| (657) |
|
| 697 |
Deferred income taxes |
|
| 22 |
|
| 257 |
|
| 19 |
|
| 69 |
|
| 367 |
Other noncurrent liabilities |
|
| 174 |
|
| 300 |
|
| 577 |
|
| — |
|
| 1,051 |
Noncurrent liabilities held for sale |
|
| — |
|
| — |
|
| 393 |
|
| — |
|
| 393 |
Total liabilities |
|
| 8,602 |
|
| 2,141 |
|
| 4,965 |
|
| (7,169) |
|
| 8,539 |
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman International LLC members’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’ equity |
|
| 3,226 |
|
| 2,949 |
|
| 5,019 |
|
| (7,968) |
|
| 3,226 |
Accumulated (deficit) retained earnings |
|
| (779) |
|
| 2,332 |
|
| (1,713) |
|
| (619) |
|
| (779) |
Accumulated other comprehensive (loss) income |
|
| (1,691) |
|
| 998 |
|
| (1,652) |
|
| 654 |
|
| (1,691) |
Total Huntsman International LLC members' equity |
|
| 756 |
|
| 6,279 |
|
| 1,654 |
|
| (7,933) |
|
| 756 |
Noncontrolling interests in subsidiaries |
|
| — |
|
| — |
|
| 169 |
|
| 11 |
|
| 180 |
Total equity |
|
| 756 |
|
| 6,279 |
|
| 1,823 |
|
| (7,922) |
|
| 936 |
Total liabilities and equity |
| $ | 9,358 |
| $ | 8,420 |
| $ | 6,788 |
| $ | (15,091) |
| $ | 9,475 |
F-78
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, 2017
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Huntsman | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| International | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 1,116 |
| $ | 2,028 |
| $ | 5,064 |
| $ | — |
| $ | 8,208 |
Related party sales |
|
| 230 |
|
| 329 |
|
| 1,051 |
|
| (1,460) |
|
| 150 |
Total revenues |
|
| 1,346 |
|
| 2,357 |
|
| 6,115 |
|
| (1,460) |
|
| 8,358 |
Cost of goods sold |
|
| 1,050 |
|
| 2,069 |
|
| 4,880 |
|
| (1,456) |
|
| 6,543 |
Gross profit |
|
| 296 |
|
| 288 |
|
| 1,235 |
|
| (4) |
|
| 1,815 |
Selling, general and administrative |
|
| 171 |
|
| 132 |
|
| 490 |
|
| — |
|
| 793 |
Research and development |
|
| 50 |
|
| 43 |
|
| 45 |
|
| — |
|
| 138 |
Restructuring, impairment and plant closing costs |
|
| 8 |
|
| — |
|
| 12 |
|
| — |
|
| 20 |
Merger costs |
|
| 28 |
|
| — |
|
| — |
|
| — |
|
| 28 |
Other operating expense (income), net |
|
| 30 |
|
| (37) |
|
| (16) |
|
| — |
|
| (23) |
Operating income |
|
| 9 |
|
| 150 |
|
| 704 |
|
| (4) |
|
| 859 |
Interest (expense) income |
|
| (179) |
|
| 27 |
|
| (29) |
|
| — |
|
| (181) |
Equity in income of investment in affiliates and subsidiaries |
|
| 614 |
|
| 641 |
|
| 15 |
|
| (1,257) |
|
| 13 |
Loss on early extinguishment of debt |
|
| (54) |
|
| — |
|
| — |
|
| — |
|
| (54) |
Dividend income |
|
| 473 |
|
| — |
|
| — |
|
| (473) |
|
| — |
Other income, net |
|
| 1 |
|
| — |
|
| 2 |
|
| — |
|
| 3 |
Income from continuing operations before income taxes |
|
| 864 |
|
| 818 |
|
| 692 |
|
| (1,734) |
|
| 640 |
Income tax (expense) benefit |
|
| (192) |
|
| 59 |
|
| (161) |
|
| 233 |
|
| (61) |
Income from continuing operations |
|
| 672 |
|
| 877 |
|
| 531 |
|
| (1,501) |
|
| 579 |
(Loss) income from discontinued operations, net of tax |
|
| (43) |
|
| (4) |
|
| 202 |
|
| — |
|
| 155 |
Net income |
|
| 629 |
|
| 873 |
|
| 733 |
|
| (1,501) |
|
| 734 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (111) |
|
| 6 |
|
| (105) |
Net income attributable to Huntsman International LLC |
| $ | 629 |
| $ | 873 |
| $ | 622 |
| $ | (1,495) |
| $ | 629 |
Net income |
| $ | 629 |
| $ | 873 |
| $ | 733 |
| $ | (1,501) |
| $ | 734 |
Other comprehensive income |
|
| 428 |
|
| 728 |
|
| 336 |
|
| (1,171) |
|
| 321 |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (130) |
|
| 3 |
|
| (127) |
Comprehensive income attributable to Huntsman International LLC |
| $ | 1,057 |
| $ | 1,601 |
| $ | 939 |
| $ | (2,669) |
| $ | 928 |
F-79
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
YEAR ENDED DECEMBER 31, 2016
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Huntsman | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| International | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 1,048 |
| $ | 1,862 |
| $ | 4,477 |
| $ | — |
| $ | 7,387 |
Related party sales |
|
| 201 |
|
| 286 |
|
| 946 |
|
| (1,302) |
|
| 131 |
Total revenues |
|
| 1,249 |
|
| 2,148 |
|
| 5,423 |
|
| (1,302) |
|
| 7,518 |
Cost of goods sold |
|
| 984 |
|
| 1,823 |
|
| 4,486 |
|
| (1,305) |
|
| 5,988 |
Gross profit |
|
| 265 |
|
| 325 |
|
| 937 |
|
| 3 |
|
| 1,530 |
Selling, general and administrative |
|
| 156 |
|
| 111 |
|
| 497 |
|
| — |
|
| 764 |
Research and development |
|
| 48 |
|
| 42 |
|
| 47 |
|
| — |
|
| 137 |
Restructuring, impairment and plant closing costs |
|
| 6 |
|
| 16 |
|
| 25 |
|
| — |
|
| 47 |
Other operating income, net |
|
| (24) |
|
| (31) |
|
| (46) |
|
| — |
|
| (101) |
Operating income |
|
| 79 |
|
| 187 |
|
| 414 |
|
| 3 |
|
| 683 |
Interest (expense) income |
|
| (218) |
|
| 31 |
|
| (28) |
|
| — |
|
| (215) |
Equity in income of investment in affiliates and subsidiaries |
|
| 183 |
|
| 320 |
|
| 6 |
|
| (504) |
|
| 5 |
(Loss) income on early extinguishment of debt |
|
| (4) |
|
| — |
|
| 1 |
|
| — |
|
| (3) |
Dividends received (paid) |
|
| 217 |
|
| (430) |
|
| 430 |
|
| (217) |
|
| — |
Other income, net |
|
| — |
|
| — |
|
| 5 |
|
| — |
|
| 5 |
Income from continuing operations before income taxes |
|
| 257 |
|
| 108 |
|
| 828 |
|
| (718) |
|
| 475 |
Income tax benefit (expense) |
|
| 76 |
|
| (78) |
|
| (78) |
|
| (28) |
|
| (108) |
Income from continuing operations |
|
| 333 |
|
| 30 |
|
| 750 |
|
| (746) |
|
| 367 |
(Loss) income from discontinued operations, net of tax |
|
| (10) |
|
| (2) |
|
| (1) |
|
| — |
|
| (13) |
Net income |
|
| 323 |
|
| 28 |
|
| 749 |
|
| (746) |
|
| 354 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (28) |
|
| (3) |
|
| (31) |
Net income attributable to Huntsman International LLC |
| $ | 323 |
| $ | 28 |
| $ | 721 |
| $ | (749) |
| $ | 323 |
Net income |
| $ | 323 |
| $ | 28 |
| $ | 749 |
| $ | (746) |
| $ | 354 |
Other comprehensive loss |
|
| (374) |
|
| (365) |
|
| (347) |
|
| 703 |
|
| (383) |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (11) |
|
| (12) |
|
| (23) |
Comprehensive (loss) income attributable to Huntsman International LLC |
| $ | (51) |
| $ | (337) |
| $ | 391 |
| $ | (55) |
| $ | (52) |
F-80
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
YEAR ENDED DECEMBER 31, 2015
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Huntsman | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| International | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 1,054 |
| $ | 2,121 |
| $ | 4,833 |
| $ | — |
| $ | 8,008 |
Related party sales |
|
| 238 |
|
| 365 |
|
| 969 |
|
| (1,441) |
|
| 131 |
Total revenues |
|
| 1,292 |
|
| 2,486 |
|
| 5,802 |
|
| (1,441) |
|
| 8,139 |
Cost of goods sold |
|
| 1,026 |
|
| 1,925 |
|
| 4,889 |
|
| (1,439) |
|
| 6,401 |
Gross profit |
|
| 266 |
|
| 561 |
|
| 913 |
|
| (2) |
|
| 1,738 |
Selling, general and administrative |
|
| 172 |
|
| 113 |
|
| 501 |
|
| — |
|
| 786 |
Research and development |
|
| 54 |
|
| 44 |
|
| 45 |
|
| — |
|
| 143 |
Restructuring, impairment and plant closing costs |
|
| 7 |
|
| 5 |
|
| 71 |
|
| — |
|
| 83 |
Other operating (income) expense, net |
|
| (27) |
|
| (25) |
|
| 53 |
|
| — |
|
| 1 |
Operating income |
|
| 60 |
|
| 424 |
|
| 243 |
|
| (2) |
|
| 725 |
Interest (expense) income |
|
| (220) |
|
| 33 |
|
| (27) |
|
| — |
|
| (214) |
Equity in income (loss) of investment in affiliates and subsidiaries |
|
| 169 |
|
| (58) |
|
| 7 |
|
| (112) |
|
| 6 |
Loss on early extinguishment of debt |
|
| (31) |
|
| — |
|
| — |
|
| — |
|
| (31) |
Other income, net |
|
| 2 |
|
| — |
|
| 7 |
|
| (2) |
|
| 7 |
(Loss) income from continuing operations before income taxes |
|
| (20) |
|
| 399 |
|
| 230 |
|
| (116) |
|
| 493 |
Income tax benefit (expense) |
|
| 113 |
|
| (125) |
|
| 13 |
|
| (60) |
|
| (59) |
Income from continuing operations |
|
| 93 |
|
| 274 |
|
| 243 |
|
| (176) |
|
| 434 |
Income (loss) from discontinued operations, net of tax |
|
| 1 |
|
| (2) |
|
| (306) |
|
| — |
|
| (307) |
Net income (loss) |
|
| 94 |
|
| 272 |
|
| (63) |
|
| (176) |
|
| 127 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (28) |
|
| (5) |
|
| (33) |
Net income (loss) attributable to Huntsman International LLC |
| $ | 94 |
| $ | 272 |
| $ | (91) |
| $ | (181) |
| $ | 94 |
Net income (loss) |
| $ | 94 |
| $ | 272 |
| $ | (63) |
| $ | (176) |
| $ | 127 |
Other comprehensive loss |
|
| (229) |
|
| (37) |
|
| (246) |
|
| 278 |
|
| (234) |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (13) |
|
| (15) |
|
| (28) |
Comprehensive (loss) income attributable to Huntsman International LLC |
| $ | (135) |
| $ | 235 |
| $ | (322) |
| $ | 87 |
| $ | (135) |
F-81
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2017
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |||||
|
| Parent |
|
|
|
|
|
|
| Huntsman | |||||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Net cash provided by (used in) operating activities from continuing operations |
| $ | 859 |
| $ | 587 |
| $ | (137) |
| $ | (473) |
| $ | 836 |
Net cash (used in) provided by operating activities from discontinued operations |
|
| (19) |
|
| (2) |
|
| 393 |
|
| — |
|
| 372 |
Net cash provided by (used in) operating activities |
|
| 840 |
|
| 585 |
|
| 256 |
|
| (473) |
|
| 1,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (49) |
|
| (69) |
|
| (164) |
|
| — |
|
| (282) |
Cash received from (paid for) consolidated affiliates |
|
| 870 |
|
| (2) |
|
| (276) |
|
| (592) |
|
| — |
Acquisition of business, net of cash acquired |
|
| — |
|
| — |
|
| (14) |
|
| — |
|
| (14) |
Proceeds from sale of businesses/assets |
|
| — |
|
| — |
|
| 25 |
|
| — |
|
| 25 |
Increase in receivable from affiliate |
|
| (15) |
|
| — |
|
| — |
|
| — |
|
| (15) |
Cash received from termination of cross-currency interest rate contracts |
|
| 7 |
|
| — |
|
| — |
|
| — |
|
| 7 |
Net cash provided by (used in) investing activities from continuing operations |
|
| 813 |
|
| (71) |
|
| (429) |
|
| (592) |
|
| (279) |
Net cash used in investing activities from discontinued operations |
|
| — |
|
| — |
|
| (159) |
|
| — |
|
| (159) |
Net cash provided by (used in) investing activities |
|
| 813 |
|
| (71) |
|
| (588) |
|
| (592) |
|
| (438) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under revolving loan facilities |
|
| — |
|
| — |
|
| (41) |
|
| — |
|
| (41) |
Net borrowings on overdraft facilities |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Repayments of short-term debt |
|
| — |
|
| — |
|
| (15) |
|
| — |
|
| (15) |
Borrowings on short-term debt |
|
| — |
|
| — |
|
| 8 |
|
| — |
|
| 8 |
Repayments of long-term debt |
|
| (2,026) |
|
| — |
|
| (32) |
|
| — |
|
| (2,058) |
Proceeds from long-term debt of P&A Business |
|
| — |
|
| — |
|
| 750 |
|
| — |
|
| 750 |
Proceeds from issuance of long-term debt |
|
| — |
|
| — |
|
| 24 |
|
| — |
|
| 24 |
Proceeds from issuance of notes payable from affiliate |
|
| 47 |
|
| — |
|
| — |
|
| — |
|
| 47 |
Repayments of notes payable |
|
| (27) |
|
| — |
|
| — |
|
| — |
|
| (27) |
Borrowings on notes payable |
|
| 31 |
|
| — |
|
| — |
|
| — |
|
| 31 |
Debt issuance costs paid |
|
| (3) |
|
| — |
|
| (18) |
|
| — |
|
| (21) |
Dividends paid to noncontrolling interests |
|
| — |
|
| — |
|
| (34) |
|
| — |
|
| (34) |
Contribution from noncontrolling interests |
|
| — |
|
| — |
|
| 5 |
|
| — |
|
| 5 |
Distribution to parent |
|
| — |
|
| (511) |
|
| (81) |
|
| 592 |
|
| — |
Dividends paid to parent |
|
| (120) |
|
| (1) |
|
| (472) |
|
| 473 |
|
| (120) |
Proceeds from the IPO and secondary offering of P&A Business |
|
| 522 |
|
| — |
|
| 490 |
|
| — |
|
| 1,012 |
Cash paid for expenses of the IPO and secondary offering of P&A Business |
|
| (40) |
|
| — |
|
| (18) |
|
| — |
|
| (58) |
Other, net |
|
| — |
|
| (2) |
|
| 3 |
|
| — |
|
| 1 |
Net cash (used in) provided by financing activities |
|
| (1,616) |
|
| (514) |
|
| 570 |
|
| 1,065 |
|
| (495) |
Effect of exchange rate changes on cash |
|
| — |
|
| — |
|
| 18 |
|
| — |
|
| 18 |
Increase in cash and cash equivalents |
|
| 37 |
|
| — |
|
| 256 |
|
| — |
|
| 293 |
Cash and cash equivalents from continuing operations at beginning of period |
|
| 37 |
|
| — |
|
| 347 |
|
| — |
|
| 384 |
Cash and cash equivalents from discontinued operations at beginning of period |
|
| — |
|
| — |
|
| 29 |
|
| — |
|
| 29 |
Cash and cash equivalents at end of period |
| $ | 74 |
| $ | — |
| $ | 632 |
| $ | — |
| $ | 706 |
During the year ended December 31, 2017, we made a noncash capital contribution of approximately $50 million between Parent Company and Guarantor entities.
F-82
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2016
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |||||
|
| Parent |
|
|
|
|
|
|
| Huntsman | |||||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Net cash provided by operating activities from continuing operations |
| $ | 457 |
| $ | 120 |
| $ | 391 |
| $ | — |
| $ | 968 |
Net cash (used in) provided by operating activities from discontinued operations |
|
| (11) |
|
| — |
|
| 121 |
|
| — |
|
| 110 |
Net cash provided by operating activities |
|
| 446 |
|
| 120 |
|
| 512 |
|
| — |
|
| 1,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (42) |
|
| (92) |
|
| (184) |
|
| — |
|
| (318) |
Cash received from consolidated affiliates |
|
| 203 |
|
| — |
|
| — |
|
| (203) |
|
| — |
Investment in affiliate |
|
| — |
|
| (3) |
|
| — |
|
| 3 |
|
| — |
Investment in unconsolidated affiliate |
|
| — |
|
| — |
|
| (1) |
|
| — |
|
| (1) |
Proceeds from sale of businesses/assets |
|
| 12 |
|
| — |
|
| 187 |
|
| — |
|
| 199 |
Decrease in receivable in affiliate |
|
| 6 |
|
| — |
|
| 6 |
|
| (6) |
|
| 6 |
Change in restricted cash |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Other, net |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Net cash provided by (used in) investing activities from continuing operations |
|
| 179 |
|
| (95) |
|
| 10 |
|
| (206) |
|
| (112) |
Net cash used in investing activities from discontinued operations |
|
| — |
|
| — |
|
| (83) |
|
| — |
|
| (83) |
Net cash provided by (used in) investing activities |
|
| 179 |
|
| (95) |
|
| (73) |
|
| (206) |
|
| (195) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments on overdraft facilities |
| $ | — |
| $ | — |
| $ | (1) |
| $ | — |
| $ | (1) |
Repayments of short-term debt |
|
| — |
|
| — |
|
| (56) |
|
| — |
|
| (56) |
Borrowings on short-term debt |
|
| — |
|
| — |
|
| 10 |
|
| — |
|
| 10 |
Repayments of long-term debt |
|
| (1,039) |
|
| — |
|
| (31) |
|
| — |
|
| (1,070) |
Proceeds from issuance of long-term debt |
|
| 543 |
|
| — |
|
| 16 |
|
| — |
|
| 559 |
Repayments of notes payable to affiliate |
|
| (7) |
|
| — |
|
| — |
|
| 6 |
|
| (1) |
Repayments of notes payable |
|
| (31) |
|
| — |
|
| (2) |
|
| — |
|
| (33) |
Borrowings on notes payable |
|
| 29 |
|
| — |
|
| 2 |
|
| — |
|
| 31 |
Debt issuance costs paid |
|
| (9) |
|
| — |
|
| — |
|
| — |
|
| (9) |
Call premiums related to early extinguishment of debt |
|
| (1) |
|
| — |
|
| — |
|
| — |
|
| (1) |
Dividends paid to noncontrolling interests |
|
| — |
|
| — |
|
| (45) |
|
| 15 |
|
| (30) |
Contribution from parent |
|
| — |
|
| 3 |
|
| 11 |
|
| (14) |
|
| — |
Distribution to parent |
|
| — |
|
| (27) |
|
| (171) |
|
| 198 |
|
| — |
Dividends paid to parent |
|
| (119) |
|
| (1) |
|
| — |
|
| 1 |
|
| (119) |
Other, net |
|
| 2 |
|
| — |
|
| (3) |
|
| — |
|
| (1) |
Net cash used in financing activities |
|
| (632) |
|
| (25) |
|
| (270) |
|
| 206 |
|
| (721) |
Effect of exchange rate changes on cash from continuing operations |
|
| — |
|
| — |
|
| (6) |
|
| — |
|
| (6) |
(Decrease) increase in cash and cash equivalents |
|
| (7) |
|
| — |
|
| 163 |
|
| — |
|
| 156 |
Cash and cash equivalents from continuing operations at beginning of period |
|
| 44 |
|
| — |
|
| 192 |
|
| — |
|
| 236 |
Cash and cash equivalents from discontinued operations at beginning of period |
|
| — |
|
| — |
|
| 21 |
|
| — |
|
| 21 |
Cash and cash equivalents at end of period |
| $ | 37 |
| $ | — |
| $ | 376 |
| $ | — |
| $ | 413 |
During the second quarter of 2016 and the fourth quarter of 2016, we made noncash capital contributions of approximately $215 million and approximately $75 million, respectively, between Parent and certain Nonguarantors.
F-83
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2015
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Huntsman | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| International | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| LLC | |||||
Net cash provided by operating activities from continuing operations |
| $ | (23) |
| $ | 229 |
| $ | 410 |
| $ | (2) |
| $ | 614 |
Net cash used in operating activities from discontinued operations |
|
| — |
|
| — |
|
| (44) |
|
| — |
|
| (44) |
Net cash provided by operating activities |
|
| (23) |
|
| 229 |
|
| 366 |
|
| (2) |
|
| 570 |
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (70) |
|
| (200) |
|
| (191) |
|
| — |
|
| (461) |
Investment in affiliate |
|
| 34 |
|
| (5) |
|
| (6) |
|
| (23) |
|
| — |
Investment in unconsolidated affiliates |
|
| — |
|
| — |
|
| (12) |
|
| — |
|
| (12) |
Acquisition of businesses, net of cash acquired |
|
| — |
|
| — |
|
| (14) |
|
| — |
|
| (14) |
Proceeds from sale of businesses/assets |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Decrease in receivable from affiliate |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| 1 |
Cash received from purchase price adjustment for business acquired |
|
| 18 |
|
| — |
|
| — |
|
| — |
|
| 18 |
Cash received from termination of cross-currency interest rate contracts |
|
| 66 |
|
| — |
|
| — |
|
| — |
|
| 66 |
Change in restricted cash |
|
| — |
|
| — |
|
| (3) |
|
| — |
|
| (3) |
Other, net |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| 1 |
Net cash provided by (used in) investing activities from continuing operations |
|
| 50 |
|
| (205) |
|
| (225) |
|
| (23) |
|
| (403) |
Net cash used in investing activities from discontinued operations |
|
| — |
|
| — |
|
| (196) |
|
| — |
|
| (196) |
Net cash provided by (used in) investing activities |
|
| 50 |
|
| (205) |
|
| (421) |
|
| (23) |
|
| (599) |
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under revolving loan facilities |
|
| — |
|
| — |
|
| (1) |
|
| — |
|
| (1) |
Net repayments on overdraft facilities |
|
| — |
|
| — |
|
| (8) |
|
| — |
|
| (8) |
Borrowings on short-term debt |
|
| — |
|
| — |
|
| 12 |
|
| — |
|
| 12 |
Repayments of long-term debt |
|
| (548) |
|
| — |
|
| (56) |
|
| — |
|
| (604) |
Proceeds from issuance of long-term debt |
|
| 326 |
|
| — |
|
| — |
|
| — |
|
| 326 |
Repayments of notes payable to affiliate |
|
| (148) |
|
| — |
|
| — |
|
| — |
|
| (148) |
Proceeds from notes payable to affiliate |
|
| 201 |
|
| — |
|
| — |
|
| (6) |
|
| 195 |
Repayments of notes payable |
|
| (32) |
|
| — |
|
| (1) |
|
| — |
|
| (33) |
Borrowings on notes payable |
|
| 32 |
|
| — |
|
| 2 |
|
| — |
|
| 34 |
Debt issuance costs paid |
|
| (8) |
|
| — |
|
| — |
|
| — |
|
| (8) |
Call premiums related to early extinguishment of debt |
|
| (35) |
|
| — |
|
| — |
|
| — |
|
| (35) |
Contingent consideration paid for acquisition |
|
| (4) |
|
| — |
|
| — |
|
| — |
|
| (4) |
Dividends paid to noncontrolling interests |
|
| — |
|
| — |
|
| (20) |
|
| 6 |
|
| (14) |
Contribution from parent |
|
| — |
|
| 5 |
|
| 6 |
|
| (11) |
|
| — |
Distribution to parent |
|
| — |
|
| (27) |
|
| (7) |
|
| 34 |
|
| — |
Dividends paid to parent |
|
| (121) |
|
| (2) |
|
| — |
|
| 2 |
|
| (121) |
Other, net |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| 1 |
Net cash used in financing activities |
|
| (336) |
|
| (24) |
|
| (73) |
|
| 25 |
|
| (408) |
Effect of exchange rate changes on cash |
|
| — |
|
| — |
|
| (16) |
|
| — |
|
| (16) |
Decrease in cash and cash equivalents |
|
| (309) |
|
| — |
|
| (144) |
|
| — |
|
| (453) |
Cash and cash equivalents from continuing operations at beginning of period |
|
| 353 |
|
| — |
|
| 322 |
|
| — |
|
| 675 |
Cash and cash equivalents from discontinued operations at beginning of period |
|
| — |
|
| — |
|
| 35 |
|
| — |
|
| 35 |
Cash and cash equivalents at end of period |
| $ | 44 |
| $ | — |
| $ | 213 |
| $ | — |
| $ | 257 |
During the first quarter of 2015, we made a noncash capital contribution of approximately $284 million between Guarantor entities and Nonguarantor entities and a noncash capital contribution of approximately $123 million between Parent Company and Guarantor entities.
F-84
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA
A summary of selected unaudited quarterly financial data for the years ended December 31, 2017 and 2016 is as follows (dollars in millions, except per share amounts):
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended | ||||||||||
|
| March 31, |
| June 30, |
| September 30, |
| December 31, | ||||
|
| 2017 |
| 2017 |
| 2017 |
| 2017(1) | ||||
Revenues |
| $ | 1,932 |
| $ | 2,054 |
| $ | 2,169 |
| $ | 2,203 |
Gross profit |
|
| 392 |
|
| 437 |
|
| 474 |
|
| 509 |
Restructuring, impairment and plant closing costs |
|
| 9 |
|
| 3 |
|
| 1 |
|
| 7 |
Income from continuing operations |
|
| 99 |
|
| 138 |
|
| 116 |
|
| 230 |
Net income |
|
| 92 |
|
| 183 |
|
| 179 |
|
| 287 |
Net income attributable to noncontrolling interests(2) |
|
| 16 |
|
| 16 |
|
| 32 |
|
| 41 |
Net income attributable to Huntsman Corporation |
|
| 76 |
|
| 167 |
|
| 147 |
|
| 246 |
Basic income per share(3): |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Huntsman Corporation common stockholders |
|
| 0.35 |
|
| 0.51 |
|
| 0.36 |
|
| 0.79 |
Net income attributable to Huntsman Corporation common stockholders |
|
| 0.32 |
|
| 0.70 |
|
| 0.62 |
|
| 1.03 |
Diluted income per share(3): |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Huntsman Corporation common stockholders |
|
| 0.34 |
|
| 0.50 |
|
| 0.34 |
|
| 0.77 |
Net income attributable to Huntsman Corporation common stockholders |
|
| 0.31 |
|
| 0.69 |
|
| 0.60 |
|
| 1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended | ||||||||||
|
| March 31, |
| June 30, |
| September 30, |
| December 31, | ||||
|
| 2016 |
| 2016 |
| 2016 |
| 2016(4) | ||||
Revenues |
| $ | 1,815 |
| $ | 1,968 |
| $ | 1,831 |
| $ | 1,904 |
Gross profit |
|
| 390 |
|
| 424 |
|
| 356 |
|
| 356 |
Restructuring, impairment and plant closing costs (credits) |
|
| 2 |
|
| 16 |
|
| 38 |
|
| (9) |
Income from continuing operations |
|
| 85 |
|
| 107 |
|
| 40 |
|
| 133 |
Net income |
|
| 62 |
|
| 94 |
|
| 64 |
|
| 137 |
Net income attributable to noncontrolling interests(2) |
|
| 6 |
|
| 7 |
|
| 9 |
|
| 9 |
Net income attributable to Huntsman Corporation |
|
| 56 |
|
| 87 |
|
| 55 |
|
| 128 |
Basic income per share(3): |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Huntsman Corporation common stockholders |
|
| 0.33 |
|
| 0.42 |
|
| 0.13 |
|
| 0.52 |
Net income attributable to Huntsman Corporation common stockholders |
|
| 0.24 |
|
| 0.37 |
|
| 0.23 |
|
| 0.54 |
Diluted income per share(3): |
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Huntsman Corporation common stockholders |
|
| 0.33 |
|
| 0.42 |
|
| 0.13 |
|
| 0.51 |
Net income attributable to Huntsman Corporation common stockholders |
|
| 0.24 |
|
| 0.36 |
|
| 0.23 |
|
| 0.53 |
F-85
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended | ||||||||||
|
| March 31, |
| June 30, |
| September 30, |
| December 31, | ||||
|
| 2017 |
| 2017 |
| 2017 |
| 2017(1) | ||||
Revenues |
| $ | 1,932 |
| $ | 2,054 |
| $ | 2,169 |
| $ | 2,203 |
Gross profit |
|
| 393 |
|
| 438 |
|
| 475 |
|
| 509 |
Restructuring, impairment and plant closing costs |
|
| 9 |
|
| 3 |
|
| 1 |
|
| 7 |
Income from continuing operations |
|
| 98 |
|
| 139 |
|
| 115 |
|
| 227 |
Net income |
|
| 91 |
|
| 182 |
|
| 177 |
|
| 284 |
Net income attributable to noncontrolling interests(2) |
|
| 16 |
|
| 16 |
|
| 32 |
|
| 41 |
Net income attributable to Huntsman International |
|
| 75 |
|
| 166 |
|
| 145 |
|
| 243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended | ||||||||||
|
| March 31, |
| June 30, |
| September 30, |
| December 31, | ||||
|
| 2016 |
| 2016 |
| 2016 |
| 2016(4) | ||||
Revenues |
| $ | 1,815 |
| $ | 1,968 |
| $ | 1,831 |
| $ | 1,904 |
Gross profit |
|
| 391 |
|
| 425 |
|
| 357 |
|
| 357 |
Restructuring, impairment and plant closing costs (credits) |
|
| 2 |
|
| 16 |
|
| 38 |
|
| (9) |
Income from continuing operations |
|
| 85 |
|
| 109 |
|
| 41 |
|
| 132 |
Net income |
|
| 62 |
|
| 93 |
|
| 63 |
|
| 136 |
Net income attributable to noncontrolling interests(2) |
|
| 6 |
|
| 7 |
|
| 9 |
|
| 9 |
Net income attributable to Huntsman International |
|
| 56 |
|
| 86 |
|
| 54 |
|
| 127 |
|
|
|
|
|
|
|
|
F-86
HUNTSMAN CORPORATION (PARENT ONLY)
Schedule I—Condensed Financial Information of Registrant
HUNTSMAN CORPORATION (Parent Only)
BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
|
|
|
|
|
|
|
|
| December 31, | ||||
|
| 2017 |
| 2016 | ||
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 2 |
| $ | 1 |
Prepaid assets |
|
| 1 |
|
| — |
Receivable from affiliate |
|
| 54 |
|
| 36 |
Note receivable from affiliate |
|
| 100 |
|
| 100 |
Total current assets |
|
| 157 |
|
| 137 |
Note receivable from affiliate-long-term |
|
| 742 |
|
| 696 |
Investment in and advances to affiliates |
|
| 2,082 |
|
| 781 |
Total assets |
| $ | 2,981 |
| $ | 1,614 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Payable to affiliate |
| $ | 346 |
| $ | 315 |
Accrued liabilities |
|
| 3 |
|
| 2 |
Total current liabilities |
|
| 349 |
|
| 317 |
Other long-term liabilities |
|
| 12 |
|
| 10 |
Total liabilities |
|
| 361 |
|
| 327 |
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Common stock $0.01 par value, 1,200,000,000 shares authorized, 252,759,715 and 250,802,175 shares issued and 240,213,606 and 236,370,347 shares outstanding, respectively |
|
| 3 |
|
| 3 |
Additional paid-in capital |
|
| 3,889 |
|
| 3,447 |
Treasury stock, 12,607,223 shares |
|
| (150) |
|
| (150) |
Unearned stock-based compensation |
|
| (15) |
|
| (17) |
Accumulated deficit |
|
| 161 |
|
| (325) |
Accumulated other comprehensive loss |
|
| (1,268) |
|
| (1,671) |
Total stockholders’ equity |
|
| 2,620 |
|
| 1,287 |
Total liabilities and stockholders’ equity |
| $ | 2,981 |
| $ | 1,614 |
December 31, | ||||||||
2020 | 2019 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 2 | $ | 0 | ||||
Prepaid assets | 2 | 1 | ||||||
Receivable from affiliate | 3 | 86 | ||||||
Note receivable from affiliate | 0 | 100 | ||||||
Total current assets | 7 | 187 | ||||||
Note receivable from affiliate-noncurrent | 0 | 280 | ||||||
Investment in and advances to affiliates | 3,561 | 2,626 | ||||||
Total assets | $ | 3,568 | $ | 3,093 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Payable to affiliate | $ | 39 | $ | 396 | ||||
Accrued liabilities | 3 | 3 | ||||||
Total current liabilities | 42 | 399 | ||||||
Other noncurrent liabilities | 7 | 7 | ||||||
Total liabilities | 49 | 406 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock $0.01 par value, 1,200,000,000 shares authorized, 258,520,411 and 257,405,496 shares issued and 220,046,262 and 224,295,868 shares outstanding, respectively | 3 | 3 | ||||||
Additional paid-in capital | 4,048 | 4,008 | ||||||
Treasury stock, 38,477,091 and 33,112,572 shares, respectively | (731 | ) | (635 | ) | ||||
Unearned stock-based compensation | (19 | ) | (17 | ) | ||||
Retained earnings | 1,564 | 690 | ||||||
Accumulated other comprehensive loss | (1,346 | ) | (1,362 | ) | ||||
Total stockholders’ equity | 3,519 | 2,687 | ||||||
Total liabilities and stockholders’ equity | $ | 3,568 | $ | 3,093 |
This statement should be read in conjunction with the notes to the consolidated financial statements.
F-87
HUNTSMAN CORPORATION (Parent Only)
STATEMENTS OF OPERATIONS
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Selling, general and administrative expenses |
| $ | (4) |
| $ | (4) |
| $ | (5) |
Interest income |
|
| 16 |
|
| 12 |
|
| 9 |
Equity in income (loss) of subsidiaries |
|
| 504 |
|
| 199 |
|
| (32) |
Dividend income—affiliate |
|
| 120 |
|
| 119 |
|
| 121 |
Net income |
| $ | 636 |
| $ | 326 |
| $ | 93 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Selling, general and administrative expenses | $ | (6 | ) | $ | (5 | ) | $ | (4 | ) | |||
Interest income | 2 | 15 | 21 | |||||||||
Equity in income of subsidiaries | 892 | 401 | 163 | |||||||||
Dividend income—affiliate | 144 | 148 | 154 | |||||||||
Other income | 2 | 3 | 3 | |||||||||
Net income | $ | 1,034 | $ | 562 | $ | 337 |
This statement should be read in conjunction with the notes to the consolidated financial statements.
F-88
HUNTSMAN CORPORATION (Parent Only)
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Net income | $ | 1,034 | $ | 562 | $ | 337 | ||||||
Other comprehensive income, net of tax: | ||||||||||||
Foreign currency translations adjustments | 41 | 2 | (192 | ) | ||||||||
Pension and other postretirement benefits adjustments | (19 | ) | (37 | ) | (39 | ) | ||||||
Other, net | 32 | 35 | 304 | |||||||||
Other comprehensive income, net of tax | 54 | 0 | 73 | |||||||||
Comprehensive income | 1,088 | 562 | 410 | |||||||||
Comprehensive income attributable to noncontrolling interests | (38 | ) | (31 | ) | (266 | ) | ||||||
Comprehensive income attributable to Huntsman Corporation | $ | 1,050 | $ | 531 | $ | 144 |
This statement should be read in conjunction with the notes to the consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Net income |
| $ | 636 |
| $ | 326 |
| $ | 93 |
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
Foreign currency translations adjustments |
|
| 210 |
|
| (171) |
|
| (313) |
Pension and other postretirement benefits adjustments |
|
| 86 |
|
| (219) |
|
| 66 |
Other, net |
|
| 105 |
|
| 30 |
|
| 40 |
Other comprehensive income (loss), net of tax |
|
| 401 |
|
| (360) |
|
| (207) |
Comprehensive loss |
|
| 1,037 |
|
| (34) |
|
| (114) |
Comprehensive income attributable to noncontrolling interests |
|
| (127) |
|
| (23) |
|
| (28) |
Comprehensive income (loss) attributable to Huntsman Corporation |
| $ | 910 |
| $ | (57) |
| $ | (142) |
HUNTSMAN CORPORATION (Parent Only)
STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Millions, Except Share Amounts)
Huntsman Corporation Stockholders’ Equity | ||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||
Shares | Additional | Unearned | other | |||||||||||||||||||||||||||||
Common | Common | paid-in | Treasury | stock-based | Retained | comprehensive | Total | |||||||||||||||||||||||||
stock | stock | capital | stock | compensation | earnings | loss | equity | |||||||||||||||||||||||||
Beginning balance, January 1, 2018 | 240,213,606 | $ | 3 | $ | 3,889 | $ | (150 | ) | $ | (15 | ) | $ | 161 | $ | (1,268 | ) | $ | 2,620 | ||||||||||||||
Cumulative effect of changes in fair value of equity investments | 0 | 0 | 0 | 0 | 0 | 10 | (10 | ) | 0 | |||||||||||||||||||||||
Net income | — | 0 | 0 | 0 | 0 | 337 | 0 | 337 | ||||||||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | 0 | 0 | 0 | (198 | ) | (198 | ) | ||||||||||||||||||||||
Issuance of nonvested stock awards | — | 0 | 14 | 0 | (14 | ) | 0 | 0 | 0 | |||||||||||||||||||||||
Vesting of stock awards | 1,135,003 | 0 | 11 | 0 | 0 | 0 | 0 | 11 | ||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 8 | 0 | 13 | 0 | 0 | 21 | ||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (259,643 | ) | 0 | 0 | 0 | 0 | (30 | ) | 0 | (30 | ) | |||||||||||||||||||||
Stock options exercised | 2,310,663 | 0 | 46 | 0 | 0 | (29 | ) | 0 | 17 | |||||||||||||||||||||||
Treasury stock repurchased | (10,405,457 | ) | 0 | 0 | (277 | ) | 0 | 0 | 0 | (277 | ) | |||||||||||||||||||||
Disposition of a portion of Venator | — | 0 | 18 | 0 | 0 | 0 | 0 | 18 | ||||||||||||||||||||||||
Costs of the secondary offering of Venator | — | 0 | (2 | ) | 0 | 0 | 0 | 0 | (2 | ) | ||||||||||||||||||||||
Deconsolidation of Venator | — | 0 | 0 | 0 | 0 | 0 | 160 | 160 | ||||||||||||||||||||||||
Accrued and unpaid dividends | — | 0 | 0 | 0 | 0 | (1 | ) | 0 | (1 | ) | ||||||||||||||||||||||
Dividends declared on common stock | — | 0 | 0 | 0 | 0 | (156 | ) | 0 | (156 | ) | ||||||||||||||||||||||
Balance, December 31, 2018 | 232,994,172 | 3 | 3,984 | (427 | ) | (16 | ) | 292 | (1,316 | ) | 2,520 | |||||||||||||||||||||
Net income | — | 0 | 0 | 0 | 0 | 562 | 0 | 562 | ||||||||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | 0 | 0 | 0 | (46 | ) | (46 | ) | ||||||||||||||||||||||
Issuance of nonvested stock awards | — | 0 | 17 | 0 | (17 | ) | 0 | 0 | 0 | |||||||||||||||||||||||
Vesting of stock awards | 1,643,368 | 0 | 7 | 0 | 0 | 0 | 0 | 7 | ||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 7 | 0 | 16 | 0 | 0 | 23 | ||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (488,441 | ) | 0 | 0 | 0 | 0 | (12 | ) | 0 | (12 | ) | |||||||||||||||||||||
Stock options exercised | 246,661 | 0 | 4 | 0 | 0 | (2 | ) | 0 | 2 | |||||||||||||||||||||||
Treasury stock repurchased | (10,099,892 | ) | 0 | 0 | (208 | ) | 0 | 0 | 0 | (208 | ) | |||||||||||||||||||||
Acquisition of noncontrolling interests, net of tax | — | 0 | (11 | ) | 0 | 0 | 0 | 0 | (11 | ) | ||||||||||||||||||||||
Dividends declared on common stock | — | 0 | 0 | 0 | 0 | (150 | ) | 0 | (150 | ) | ||||||||||||||||||||||
Balance, December 31, 2019 | 224,295,868 | 3 | 4,008 | (635 | ) | (17 | ) | 690 | (1,362 | ) | 2,687 | |||||||||||||||||||||
Net income | — | 0 | 0 | 0 | 0 | 1,034 | 0 | 1,034 | ||||||||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | 0 | 0 | 0 | 16 | 16 | ||||||||||||||||||||||||
Issuance of nonvested stock awards | — | 0 | 18 | 0 | (18 | ) | 0 | 0 | 0 | |||||||||||||||||||||||
Vesting of stock awards | 960,406 | 0 | 5 | 0 | 0 | 0 | 0 | 5 | ||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 7 | 0 | 16 | 0 | 0 | 23 | ||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (287,247 | ) | 0 | 0 | 0 | 0 | (8 | ) | 0 | (8 | ) | |||||||||||||||||||||
Stock options exercised | 441,754 | 0 | 10 | 0 | 0 | (7 | ) | 0 | 3 | |||||||||||||||||||||||
Treasury stock repurchased | (5,364,519 | ) | 0 | 0 | (96 | ) | 0 | 0 | 0 | (96 | ) | |||||||||||||||||||||
Dividends declared on common stock | — | 0 | 0 | 0 | 0 | (145 | ) | 0 | (145 | ) | ||||||||||||||||||||||
Balance, December 31, 2020 | 220,046,262 | $ | 3 | $ | 4,048 | $ | (731 | ) | $ | (19 | ) | $ | 1,564 | $ | (1,346 | ) | $ | 3,519 |
This statement should be read in conjunction with the notes to the consolidated financial statements.
HUNTSMAN CORPORATION (Parent Only)
STATEMENTS OF CASH FLOWS
(In Millions)
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Operating Activities: | ||||||||||||
Net income | $ | 1,034 | $ | 562 | $ | 337 | ||||||
Equity in income of subsidiaries | (892 | ) | (401 | ) | (163 | ) | ||||||
Stock-based compensation | 1 | 1 | 1 | |||||||||
Noncash interest income | (2 | ) | (15 | ) | (21 | ) | ||||||
Changes in operating assets and liabilities | (1 | ) | 13 | 19 | ||||||||
Net cash provided by operating activities | 140 | 160 | 173 | |||||||||
Investing Activities: | ||||||||||||
Repayments of loan by affiliate | 380 | 207 | 255 | |||||||||
Net cash provided by investing activities | 380 | 207 | 255 | |||||||||
Financing Activities: | ||||||||||||
Dividends paid to common stockholders | (144 | ) | (150 | ) | (156 | ) | ||||||
Repurchase and cancellation of stock awards | (8 | ) | (12 | ) | (30 | ) | ||||||
Proceeds from issuance of common stock | 3 | 2 | 17 | |||||||||
Repurchase of common stock | (96 | ) | (208 | ) | (277 | ) | ||||||
(Decrease) increase in payable to affiliates | (273 | ) | 1 | 16 | ||||||||
Net cash used in financing activities | (518 | ) | (367 | ) | (430 | ) | ||||||
Increase (decrease) in cash and cash equivalents | 2 | 0 | (2 | ) | ||||||||
Cash and cash equivalents at beginning of period | 0 | 0 | 2 | |||||||||
Cash and cash equivalents at end of period | $ | 2 | $ | 0 | $ | 0 |
This statement should be read in conjunction with the notes to the consolidated financial statements.
F-89
HUNTSMAN CORPORATION (Parent Only)
STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Millions, Except Share Amounts)
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| Huntsman Corporation Stockholders’ Equity |
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|
|
|
| Retained |
| Accumulated |
|
|
| ||
|
| Shares |
|
|
|
| Additional |
|
|
|
| Unearned |
| earnings |
| other |
|
|
| ||||
|
| Common |
| Common |
| paid-in |
| Treasury |
| stock-based |
| (accumulated |
| comprehensive |
| Total | |||||||
|
| stock |
| stock |
| capital |
| stock |
| compensation |
| deficit) |
| loss |
| equity | |||||||
Beginning balance, January 1, 2015 |
| 243,416,979 |
| $ | 3 |
| $ | 3,385 |
| $ | (50) |
| $ | (14) |
| $ | (493) |
| $ | (1,053) |
| $ | 1,778 |
Net income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 93 |
|
| — |
|
| 93 |
Other comprehensive loss |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (235) |
|
| (235) |
Issuance of nonvested stock awards |
| — |
|
| — |
|
| 19 |
|
| — |
|
| (19) |
|
| — |
|
| — |
|
| — |
Vesting of stock awards |
| 1,037,743 |
|
| — |
|
| 7 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7 |
Recognition of stock-based compensation |
| — |
|
| — |
|
| 10 |
|
| — |
|
| 16 |
|
| — |
|
| — |
|
| 26 |
Repurchase and cancellation of stock awards |
| (304,340) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (7) |
|
| — |
|
| (7) |
Stock options exercised |
| 48,572 |
|
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1 |
Excess tax benefit related to stock-based compensation |
| — |
|
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1 |
Cash paid for noncontrolling interest |
| — |
|
| — |
|
| (1) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (1) |
Treasury stock repurchased |
| (7,118,928) |
|
| — |
|
| (15) |
|
| (85) |
|
| — |
|
| — |
|
| — |
|
| (100) |
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (121) |
|
| — |
|
| (121) |
Balance, December 31, 2015 |
| 237,080,026 |
|
| 3 |
|
| 3,407 |
|
| (135) |
|
| (17) |
|
| (528) |
|
| (1,288) |
|
| 1,442 |
Net income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 326 |
|
| — |
|
| 326 |
Other comprehensive loss |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (383) |
|
| (383) |
Issuance of nonvested stock awards |
| — |
|
| — |
|
| 16 |
|
| — |
|
| (16) |
|
| — |
|
| — |
|
| — |
Vesting of stock awards |
| 914,081 |
|
| — |
|
| 2 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2 |
Recognition of stock-based compensation |
| — |
|
| — |
|
| 9 |
|
| — |
|
| 16 |
|
| — |
|
| — |
|
| 25 |
Repurchase and cancellation of stock awards |
| (256,468) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (3) |
|
| — |
|
| (3) |
Stock options exercised |
| 77,477 |
|
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1 |
Excess tax benefit related to stock-based compensation |
| — |
|
| — |
|
| (3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (3) |
Treasury stock repurchased |
| (1,444,769) |
|
| — |
|
| 15 |
|
| (15) |
|
| — |
|
| — |
|
| — |
|
| — |
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (120) |
|
| — |
|
| (120) |
Balance, December 31, 2016 |
| 236,370,347 |
|
| 3 |
|
| 3,447 |
|
| (150) |
|
| (17) |
|
| (325) |
|
| (1,671) |
|
| 1,287 |
Net income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 636 |
|
| — |
|
| 636 |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 403 |
|
| 403 |
Issuance of nonvested stock awards |
| — |
|
| — |
|
| 18 |
|
| — |
|
| (18) |
|
| — |
|
| — |
|
| — |
Vesting of stock awards |
| 1,316,975 |
|
| — |
|
| 8 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 8 |
Recognition of stock-based compensation |
| — |
|
| — |
|
| 10 |
|
| — |
|
| 18 |
|
| — |
|
| — |
|
| 28 |
Repurchase and cancellation of stock awards |
| (402,978) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (12) |
|
| — |
|
| (12) |
Contribution from noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Disposition of a portion of P&A Business |
| — |
|
| — |
|
| 413 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 413 |
Costs of the IPO and secondary offering of the P&A Business |
| — |
|
| — |
|
| (58) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (58) |
Conversion of restricted awards to P&A Business awards |
| — |
|
| — |
|
| (2) |
|
| — |
|
| 2 |
|
| — |
|
| — |
|
| — |
Minority interest on disposal of P&A Business |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Stock options exercised |
| 2,929,262 |
|
| — |
|
| 53 |
|
| — |
|
| — |
|
| (18) |
|
| — |
|
| 35 |
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (120) |
|
| — |
|
| (120) |
Balance, December 31, 2017 |
| 240,213,606 |
| $ | 3 |
| $ | 3,889 |
| $ | (150) |
| $ | (15) |
| $ | 161 |
| $ | (1,268) |
| $ | 2,620 |
This statement should be read in conjunction with the notes to the consolidated financial statements.
F-67
F-90
HUNTSMAN CORPORATION (Parent Only)
STATEMENTS OF CASH FLOWS
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, | |||||||
|
| 2017 |
| 2016 |
| 2015 | |||
Operating Activities: |
|
|
|
|
|
|
|
|
|
Net income |
| $ | 636 |
| $ | 326 |
| $ | 93 |
Equity in (income) loss of subsidiaries |
|
| (504) |
|
| (199) |
|
| 32 |
Stock-based compensation |
|
| 1 |
|
| 1 |
|
| 1 |
Noncash interest income |
|
| (16) |
|
| (12) |
|
| (9) |
Changes in operating assets and liabilities |
|
| 13 |
|
| 12 |
|
| 8 |
Net cash provided by operating activities |
|
| 130 |
|
| 128 |
|
| 125 |
Investing Activities: |
|
|
|
|
|
|
|
|
|
Loan to affiliate |
|
| (47) |
|
| — |
|
| (195) |
Repayments of loan by affiliate |
|
| — |
|
| 1 |
|
| 148 |
Net cash (used in) provided by investing activities |
|
| (47) |
|
| 1 |
|
| (47) |
Financing Activities: |
|
|
|
|
|
|
|
|
|
Dividends paid to common stockholders |
|
| (120) |
|
| (120) |
|
| (121) |
Repurchase and cancellation of stock awards |
|
| (12) |
|
| (3) |
|
| (7) |
Proceeds from issuance of common stock |
|
| 35 |
|
| 1 |
|
| 1 |
Repurchase of common stock |
|
| — |
|
| — |
|
| (100) |
Increase (decrease) in payable to affiliates |
|
| 15 |
|
| (6) |
|
| (1) |
Net cash used in financing activities |
|
| (82) |
|
| (128) |
|
| (228) |
Increase (decrease) in cash and cash equivalents |
|
| 1 |
|
| 1 |
|
| (150) |
Cash and cash equivalents at beginning of period |
|
| 1 |
|
| — |
|
| 150 |
Cash and cash equivalents at end of period |
| $ | 2 |
| $ | 1 |
| $ | — |
This statement should be read in conjunction with the notes to the consolidated financial statements.
F-91
HUNTSMAN CORPORATION AND SUBSIDIARIES
Schedule II—Valuation and Qualifying Accounts
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A |
| Column B |
| Column C |
|
|
|
| Column D |
| Column E | ||||
|
|
|
| Additions |
|
|
|
|
|
| |||||
|
|
|
| Charges |
|
|
|
|
|
| |||||
|
| Balance at |
| (credits) |
| Charged |
|
|
| Balance | |||||
|
| Beginning |
| to cost and |
| to other |
|
|
| at End | |||||
Description |
| of Period |
| expenses |
| accounts |
| Deductions |
| of Period | |||||
Allowance for doubtful accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017 |
| $ | 23 |
| $ | 3 |
| $ | (1) |
| $ | — |
| $ | 25 |
Year ended December 31, 2016 |
|
| 22 |
|
| 2 |
|
| (1) |
| $ | — |
|
| 23 |
Year ended December 31, 2015 |
|
| 27 |
|
| 1 |
|
| (6) |
|
| — |
|
| 22 |
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
Schedule II—Valuation and Qualifying Accounts
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A |
| Column B |
| Column C |
|
|
| Column D |
| Column E | |||||
|
|
|
| Additions |
|
|
|
|
|
| |||||
|
|
|
| Charges |
|
|
|
|
|
| |||||
|
| Balance at |
| (credits) |
| Charged |
|
|
| Balance | |||||
|
| Beginning |
| to cost and |
| to other |
|
|
| at End | |||||
Description |
| of Period |
| expenses |
| accounts |
| Deductions |
| of Period | |||||
Allowance for doubtful accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017 |
| $ | 23 |
| $ | 3 |
| $ | (1) |
| $ | — |
| $ | 25 |
Year ended December 31, 2016 |
|
| 22 |
|
| 2 |
|
| (1) |
| $ | — |
|
| 23 |
Year ended December 31, 2015 |
|
| 27 |
|
| 1 |
|
| (6) |
|
| — |
|
| 22 |
F-92