UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10‑Q10-Q
(Mark One) | |
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended | |
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OR | |
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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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 | |
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Securities registered pursuant to Section 12(b) of the 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 | NONE | NONE | | NONE |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Huntsman Corporation |
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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 Corporation |
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Huntsman International LLC |
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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,” and “smaller reporting company,” and “emerging growth company” in Rule 12b‑212b-2 of the Exchange Act. (Check one):
Huntsman Corporation | Large accelerated filer ☒ | Accelerated filer ☐ |
| Smaller reporting company ☐ | Emerging growth company ☐ | |
Huntsman International LLC | Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company ☐ | Emerging Growth company ☐ |
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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)13(a) of the SecuritiesExchange Act.
Huntsman Corporation |
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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 Corporation |
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Huntsman International LLC |
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On October 18, 2017, 240,008,103April 22, 2024, 172,996,286 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interestsinterest of Huntsman International LLC were outstanding. There is no trading market for Huntsman International LLC’s units of membership interests.interest. All of Huntsman International LLC’s units of membership interestsinterest are held by Huntsman Corporation.
This Quarterly Report on Form 10‑Q10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman International LLC is a wholly-owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on Form 10‑Q10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10‑Q10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10‑Q10-Q FOR THE QUARTERLY PERIOD
ENDED SEPTEMBER 30, 2017March 31, 2024
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| Huntsman Corporation and Subsidiaries: | | ||
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| Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income | |||
| 7 | |||
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| Huntsman International LLC and Subsidiaries: | | ||
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| Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income | |||
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| Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries: | | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
FORWARD‑LOOKINGFORWARD-LOOKING STATEMENTS
Certain information set forth in this report contains “forward‑looking“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than historical factual information are forward‑lookingforward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, business separations, spin‑offs,spin-offs or other distributions, strategic opportunities, securities offerings,financing activities, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, or the potential outcomes thereof, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. In some cases, forward‑lookingforward-looking statements can be identified by terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward‑lookingforward-looking statements from time to time. All such subsequent forward‑lookingforward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
As previously disclosed, on May 21, 2017, Huntsman, Clariant Ltd, a Swiss corporation, (“Clariant”), and HurricaneCyclone Corporation, a Delaware corporation and wholly owned indirect subsidiary of Clariant (“Merger Sub”, collectively, the “Parties”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) which contemplated that Merger Sub would be merged with and into Huntsman, with Huntsman surviving the merger as a wholly-owned subsidiary of Clariant. On October 26, 2017, Huntsman, Clariant and Merger Sub entered into a Termination Agreement, dated as of October 26, 2017 (the “Termination Agreement”), pursuant to which the parties mutually terminated the Merger Agreement. No fees are currently payable under the terms of the Termination Agreement. Huntsman and Clariant also agreed to release each other from certain claims and liabilities arising out of or related to the Merger Agreement or the transactions contemplated therein or thereby. Pursuant to the Termination Agreement, each party agrees to bear its own costs, fees and expenses in connection with Merger Agreement and the transactions contemplated thereby, except for specified joint filing fees and related expenses as set forth in the Merger Agreement. During the three and nine months ended September 30, 2017 and 2016, we incurred merger-related costs of $12 million, $18 million, nil and nil, respectively.
All forward‑lookingforward-looking statements, including without limitation any projections derived from management’s examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. All forward‑lookingforward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward‑lookingforward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable law.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward‑lookingforward-looking statements contained in or contemplated by this report. Any forward‑lookingforward-looking statements should be considered in light of the risks set forth in “Part II. Item 1A. Risk Factors” below and “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10‑K10-K for the year ended December 31, 2016. 2023.
3
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
HUNTSMAN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
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| September 30, |
| December 31, | March 31, | December 31, | ||||||||
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| 2017 |
| 2016 | 2024 | 2023 | ||||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents(a) |
| $ | 440 |
| $ | 385 | ||||||||
Restricted cash(a) |
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| 11 |
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| 11 | ||||||||
Accounts and notes receivable (net of allowance for doubtful accounts of $24 and $23, respectively), ($369 and $328 pledged as collateral, respectively)(a) |
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| 1,223 |
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| 1,168 | ||||||||
Cash and cash equivalents(1) | $ | 552 | $ | 540 | ||||||||||
Accounts and notes receivable (net of allowance for doubtful accounts of $13), ($290 and $224 pledged as collateral, respectively)(1) | 831 | 747 | ||||||||||||
Accounts receivable from affiliates |
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| 24 |
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| 15 | 6 | 6 | ||||||
Inventories(a) |
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| 1,084 |
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| 918 | ||||||||
Prepaid expenses |
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| 47 |
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| 49 | ||||||||
Other current assets(a) |
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| 193 |
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| 232 | ||||||||
Current assets held for sale |
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| 2,745 |
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| 777 | ||||||||
Inventories(1) | 896 | 867 | ||||||||||||
Other current assets | 158 | 154 | ||||||||||||
Total current assets |
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| 5,767 |
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| 3,555 | 2,443 | 2,314 | ||||||
Property, plant and equipment, net(a) |
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| 3,035 |
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| 3,034 | ||||||||
Property, plant and equipment, net(1) | 2,571 | 2,376 | ||||||||||||
Investment in unconsolidated affiliates |
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| 255 |
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| 248 | 457 | 438 | ||||||
Intangible assets, net(a) |
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| 56 |
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| 43 | ||||||||
Intangible assets, net | 378 | 387 | ||||||||||||
Goodwill |
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| 139 |
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| 121 | 640 | 644 | ||||||
Deferred income taxes |
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| 268 |
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| 253 | 109 | 112 | ||||||
Other noncurrent assets(a) |
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| 463 |
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| 472 | ||||||||
Noncurrent assets held for sale |
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| — |
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| 1,463 | ||||||||
Operating lease right-of-use assets | 411 | 366 | ||||||||||||
Other noncurrent assets(1) | 563 | 611 | ||||||||||||
Total assets |
| $ | 9,983 |
| $ | 9,189 | $ | 7,572 | $ | 7,248 | ||||
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable(a) |
| $ | 871 |
| $ | 774 | ||||||||
Accounts payable(1) | $ | 723 | $ | 660 | ||||||||||
Accounts payable to affiliates |
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| 20 |
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| 16 | 22 | 59 | ||||||
Accrued liabilities(a) |
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| 537 |
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| 471 | ||||||||
Current portion of debt(a) |
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| 29 |
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| 50 | ||||||||
Current liabilities held for sale |
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| 1,633 |
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| 467 | ||||||||
Accrued liabilities(1) | 386 | 395 | ||||||||||||
Current portion of debt(1) | 396 | 12 | ||||||||||||
Current operating lease liabilities(1) | 52 | 46 | ||||||||||||
Total current liabilities |
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| 3,090 |
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| 1,778 | 1,579 | 1,172 | ||||||
Long-term debt(a) |
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| 2,845 |
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| 4,122 | ||||||||
Notes payable to affiliates |
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| — |
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| 1 | ||||||||
Long-term debt(1) | 1,660 | 1,676 | ||||||||||||
Deferred income taxes |
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| 426 |
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| 371 | 225 | 243 | ||||||
Other noncurrent liabilities(a) |
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| 1,031 |
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| 1,057 | ||||||||
Noncurrent liabilities held for sale |
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| — |
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| 393 | ||||||||
Noncurrent operating lease liabilities(1) | 378 | 334 | ||||||||||||
Other noncurrent liabilities(1) | 336 | 345 | ||||||||||||
Total liabilities |
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| 7,392 |
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| 7,722 | 4,178 | 3,770 | ||||||
Commitments and contingencies (Notes 13 and 14) |
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Commitments and contingencies (Notes 15 and 16) | ||||||||||||||
Equity |
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Huntsman Corporation stockholders’ equity: |
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Common stock $0.01 par value, 1,200,000,000 shares authorized, 252,529,511 and 250,802,175 shares issued and 238,609,819 and 236,370,347 shares outstanding, respectively |
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| 3 |
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| 3 | ||||||||
Common stock $0.01 par value, 1,200,000,000 shares authorized, 262,728,837 and 262,190,459 shares issued and 172,121,709 and 171,583,331 shares outstanding, respectively | 3 | 3 | ||||||||||||
Additional paid-in capital |
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| 3,683 |
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| 3,447 | 4,231 | 4,202 | ||||||
Treasury stock, 12,607,223 shares |
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| (150) |
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| (150) | ||||||||
Treasury stock, 90,607,128 shares | (2,290 | ) | (2,290 | ) | ||||||||||
Unearned stock-based compensation |
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| (19) |
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| (17) | (51 | ) | (41 | ) | ||||
Accumulated deficit |
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| (48) |
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| (325) | ||||||||
Retained earnings | 2,528 | 2,622 | ||||||||||||
Accumulated other comprehensive loss |
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| (1,358) |
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| (1,671) | (1,269 | ) | (1,245 | ) | ||||
Total Huntsman Corporation stockholders’ equity |
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| 2,111 |
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| 1,287 | 3,152 | 3,251 | ||||||
Noncontrolling interests in subsidiaries |
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| 480 |
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| 180 | 242 | 227 | ||||||
Total equity |
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| 2,591 |
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| 1,467 | 3,394 | 3,478 | ||||||
Total liabilities and equity |
| $ | 9,983 |
| $ | 9,189 | $ | 7,572 | $ | 7,248 |
| (1) | At |
See accompanying notes to condensed consolidated financial statements.
4
HUNTSMAN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
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| Three months |
| Nine months | ||||||||
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| September 30, |
| September 30, | ||||||||
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| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Revenues: |
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Trade sales, services and fees, net |
| $ | 2,137 |
| $ | 1,802 |
| $ | 6,048 |
| $ | 5,519 |
Related party sales |
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| 32 |
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| 29 |
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| 107 |
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| 95 |
Total revenues |
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| 2,169 |
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| 1,831 |
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| 6,155 |
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| 5,614 |
Cost of goods sold |
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| 1,695 |
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| 1,475 |
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| 4,852 |
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| 4,444 |
Gross profit |
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| 474 |
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| 356 |
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| 1,303 |
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| 1,170 |
Operating expenses: |
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Selling, general and administrative |
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| 198 |
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| 185 |
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| 583 |
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| 564 |
Research and development |
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| 35 |
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| 34 |
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| 103 |
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| 103 |
Restructuring, impairment and plant closing costs |
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| 1 |
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| 38 |
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| 13 |
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| 56 |
Merger costs |
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| 12 |
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| — |
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| 18 |
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| — |
Other operating expense (income), net |
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| 5 |
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| (2) |
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| (9) |
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| (3) |
Total expenses |
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| 251 |
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| 255 |
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| 708 |
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| 720 |
Operating income |
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| 223 |
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| 101 |
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| 595 |
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| 450 |
Interest expense |
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| (39) |
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| (52) |
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| (134) |
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| (153) |
Equity in income of investment in unconsolidated affiliates |
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| 1 |
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| 1 |
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| 4 |
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| 4 |
Loss on early extinguishment of debt |
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| (35) |
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| (1) |
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| (36) |
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| (3) |
Other income (loss), net |
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| 1 |
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| (3) |
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| 2 |
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| (1) |
Income from continuing operations before income taxes |
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| 151 |
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| 46 |
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| 431 |
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| 297 |
Income tax expense |
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| (35) |
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| (6) |
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| (78) |
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| (65) |
Income from continuing operations |
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| 116 |
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| 40 |
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| 353 |
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| 232 |
Income (loss) from discontinued operations, net of tax |
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| 63 |
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| 24 |
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| 101 |
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| (12) |
Net income |
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| 179 |
|
| 64 |
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| 454 |
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| 220 |
Net income attributable to noncontrolling interests |
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| (32) |
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| (9) |
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| (64) |
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| (22) |
Net income attributable to Huntsman Corporation |
| $ | 147 |
| $ | 55 |
| $ | 390 |
| $ | 198 |
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Basic income (loss) per share: |
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Income from continuing operations attributable to Huntsman Corporation common stockholders |
| $ | 0.36 |
| $ | 0.13 |
| $ | 1.22 |
| $ | 0.89 |
Income (loss) from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax |
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| 0.26 |
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| 0.10 |
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| 0.42 |
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| (0.05) |
Net income attributable to Huntsman Corporation common stockholders |
| $ | 0.62 |
| $ | 0.23 |
| $ | 1.64 |
| $ | 0.84 |
Weighted average shares |
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| 238.5 |
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| 236.3 |
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| 238.0 |
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| 236.2 |
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Diluted income (loss) per share: |
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Income from continuing operations attributable to Huntsman Corporation common stockholders |
| $ | 0.34 |
| $ | 0.13 |
| $ | 1.19 |
| $ | 0.88 |
Income (loss) from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax |
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| 0.26 |
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| 0.10 |
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| 0.41 |
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| (0.05) |
Net income attributable to Huntsman Corporation common stockholders |
| $ | 0.60 |
| $ | 0.23 |
| $ | 1.60 |
| $ | 0.83 |
Weighted average shares |
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| 244.0 |
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| 240.1 |
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| 243.5 |
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| 239.1 |
Amounts attributable to Huntsman Corporation common stockholders: |
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Income from continuing operations |
| $ | 84 |
| $ | 31 |
| $ | 289 |
| $ | 210 |
Income (loss) from discontinued operations, net of tax |
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| 63 |
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| 24 |
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| 101 |
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| (12) |
Net income |
| $ | 147 |
| $ | 55 |
| $ | 390 |
| $ | 198 |
Dividends per share |
| $ | 0.125 |
| $ | 0.125 |
| $ | 0.375 |
| $ | 0.375 |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Revenues: | ||||||||
Trade sales, services and fees, net | $ | 1,436 | $ | 1,573 | ||||
Related party sales | 34 | 33 | ||||||
Total revenues | 1,470 | 1,606 | ||||||
Cost of goods sold | 1,269 | 1,337 | ||||||
Gross profit | 201 | 269 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 176 | 188 | ||||||
Research and development | 31 | 30 | ||||||
Restructuring, impairment and plant closing costs (credits) | 11 | (7 | ) | |||||
Gain on acquisition of assets, net | (52 | ) | — | |||||
Prepaid asset write-off | 71 | — | ||||||
Other operating loss (income), net | 2 | (3 | ) | |||||
Total operating expenses | 239 | 208 | ||||||
Operating (loss) income | (38 | ) | 61 | |||||
Interest expense, net | (19 | ) | (18 | ) | ||||
Equity in income of investment in unconsolidated affiliates | 19 | 12 | ||||||
Other income, net | 2 | — | ||||||
(Loss) income from continuing operations before income taxes | (36 | ) | 55 | |||||
Income tax benefit (expense) | 20 | (11 | ) | |||||
(Loss) income from continuing operations | (16 | ) | 44 | |||||
(Loss) income from discontinued operations, net of tax | (7 | ) | 122 | |||||
Net (loss) income | (23 | ) | 166 | |||||
Net income attributable to noncontrolling interests | (14 | ) | (13 | ) | ||||
Net (loss) income attributable to Huntsman Corporation | $ | (37 | ) | $ | 153 | |||
Basic (loss) income per share: | ||||||||
(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders | $ | (0.18 | ) | $ | 0.17 | |||
(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | (0.04 | ) | 0.67 | |||||
Net (loss) income attributable to Huntsman Corporation common stockholders | $ | (0.22 | ) | $ | 0.84 | |||
Weighted average shares | 171.8 | 182.7 | ||||||
Diluted (loss) income per share: | ||||||||
(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders | $ | (0.18 | ) | $ | 0.17 | |||
(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | (0.04 | ) | 0.66 | |||||
Net (loss) income attributable to Huntsman Corporation common stockholders | $ | (0.22 | ) | $ | 0.83 | |||
Weighted average shares | 171.8 | 184.4 | ||||||
Amounts attributable to Huntsman Corporation: | ||||||||
(Loss) income from continuing operations | $ | (30 | ) | $ | 31 | |||
(Loss) income from discontinued operations, net of tax | (7 | ) | 122 | |||||
Net (loss) income | $ | (37 | ) | $ | 153 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In Millions)
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Net (loss) income | $ | (23 | ) | $ | 166 | |||
Other comprehensive (loss) income, net of tax: | ||||||||
Foreign currency translations adjustments | (36 | ) | 54 | |||||
Pension and other postretirement benefits adjustments | 8 | 74 | ||||||
Other, net | 5 | (1 | ) | |||||
Other comprehensive (loss) income, net of tax | (23 | ) | 127 | |||||
Comprehensive (loss) income | (46 | ) | 293 | |||||
Comprehensive income attributable to noncontrolling interests | (15 | ) | (15 | ) | ||||
Comprehensive (loss) income attributable to Huntsman Corporation | $ | (61 | ) | $ | 278 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME EQUITY
(In Millions)Millions, Except Share Amounts)
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| Three months |
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| Nine months | ||||||||
|
| ended |
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| ended | ||||||||
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| September 30, |
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| September 30, | ||||||||
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| 2017 |
| 2016 |
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| 2017 |
| 2016 | ||||
Net income |
| $ | 179 |
| $ | $ 64 |
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| $ | 454 |
| $ | 220 |
Other comprehensive income (loss), net of tax: |
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Foreign currency translations adjustments |
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| 66 |
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| 15 |
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| 201 |
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| (11) |
Pension and other postretirement benefits adjustments |
|
| 18 |
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| 11 |
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| 55 |
|
| 35 |
Other, net |
|
| (1) |
|
| 4 |
|
|
| (3) |
|
| (2) |
Other comprehensive income, net of tax |
|
| 83 |
|
| 30 |
|
|
| 253 |
|
| 22 |
Comprehensive income |
|
| 262 |
|
| 94 |
|
|
| 707 |
|
| 242 |
Comprehensive income attributable to noncontrolling interests |
|
| (37) |
|
| (9) |
|
|
| (76) |
|
| (22) |
Comprehensive income attributable to Huntsman Corporation |
| $ | 225 |
| $ | 85 |
|
| $ | 631 |
| $ | 220 |
Huntsman Corporation Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||
Shares | Additional | Unearned | other | Noncontrolling | ||||||||||||||||||||||||||||||||
common | Common | paid-in | Treasury | stock-based | Retained | comprehensive | interests in | Total | ||||||||||||||||||||||||||||
stock | stock | capital | stock | compensation | earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||
Balance, January 1, 2024 | 171,583,331 | $ | 3 | $ | 4,202 | $ | (2,290 | ) | $ | (41 | ) | $ | 2,622 | $ | (1,245 | ) | $ | 227 | $ | 3,478 | ||||||||||||||||
Net (loss) income | — | — | — | — | — | (37 | ) | — | 14 | (23 | ) | |||||||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | — | — | — | (24 | ) | 1 | (23 | ) | |||||||||||||||||||||||||
Issuance of nonvested stock awards | — | — | 19 | — | (19 | ) | — | — | — | — | ||||||||||||||||||||||||||
Vesting of stock awards | 722,117 | — | 2 | — | — | — | — | — | 2 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | 9 | — | — | — | 9 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (225,895 | ) | — | — | — | — | (5 | ) | — | — | (5 | ) | ||||||||||||||||||||||||
Stock options exercised | 42,156 | — | 8 | — | — | (8 | ) | — | — | — | ||||||||||||||||||||||||||
Dividends declared on common stock ($0.25 per share) | — | — | — | — | — | (44 | ) | — | — | (44 | ) | |||||||||||||||||||||||||
Balance, March 31, 2024 | 172,121,709 | $ | 3 | $ | 4,231 | $ | (2,290 | ) | $ | (51 | ) | $ | 2,528 | $ | (1,269 | ) | $ | 242 | $ | 3,394 |
Huntsman Corporation Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||
Shares | Additional | Unearned | other | Noncontrolling | ||||||||||||||||||||||||||||||||
common | Common | paid-in | Treasury | stock-based | Retained | comprehensive | interests in | Total | ||||||||||||||||||||||||||||
stock | stock | capital | stock | compensation | earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||
Balance, January 1, 2023 | 183,634,464 | $ | 3 | $ | 4,156 | $ | (1,937 | ) | $ | (35 | ) | $ | 2,705 | $ | (1,268 | ) | $ | 216 | $ | 3,840 | ||||||||||||||||
Net income | — | — | — | — | — | 153 | — | 13 | 166 | |||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 125 | 2 | 127 | |||||||||||||||||||||||||||
Issuance of nonvested stock awards | — | — | 32 | — | (32 | ) | — | — | — | — | ||||||||||||||||||||||||||
Vesting of stock awards | 1,016,782 | — | 5 | — | — | — | — | — | 5 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | 1 | — | 9 | — | — | — | 10 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (301,231 | ) | — | — | — | — | (9 | ) | — | — | (9 | ) | ||||||||||||||||||||||||
Stock options exercised | 16,245 | — | 1 | — | — | (1 | ) | — | — | — | ||||||||||||||||||||||||||
Treasury stock repurchased | (3,472,020 | ) | — | — | (101 | ) | — | — | — | — | (101 | ) | ||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (4 | ) | (4 | ) | |||||||||||||||||||||||||
Dividends declared on common stock ($0.2375 per share) | — | — | — | — | — | (44 | ) | — | — | (44 | ) | |||||||||||||||||||||||||
Balance, March 31, 2023 | 180,894,240 | $ | 3 | $ | 4,195 | $ | (2,038 | ) | $ | (58 | ) | $ | 2,804 | $ | (1,143 | ) | $ | 227 | $ | 3,990 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Huntsman Corporation Stockholders' Equity |
|
|
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
| |
|
| Shares |
|
|
|
| Additional |
|
|
|
| Unearned |
|
|
|
| other |
| Noncontrolling |
|
|
| ||||
|
| Common |
| Common |
| paid-in |
| Treasury |
| stock-based |
| Accumulated |
| comprehensive |
| interests in |
| Total | ||||||||
|
| stock |
| stock |
| capital |
| stock |
| compensation |
| deficit |
| loss |
| subsidiaries |
| equity | ||||||||
Balance, January 1, 2017 |
| 236,370,347 |
| $ | 3 |
| $ | 3,447 |
| $ | (150) |
| $ | (17) |
| $ | (325) |
| $ | (1,671) |
| $ | 180 |
| $ | 1,467 |
Net income |
| — |
|
| — |
|
| �� |
|
| — |
|
| — |
|
| 390 |
|
| — |
|
| 64 |
|
| 454 |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 313 |
|
| (60) |
|
| 253 |
Issuance of nonvested stock awards |
| — |
|
| — |
|
| 17 |
|
| — |
|
| (17) |
|
| — |
|
| — |
|
| — |
|
| — |
Vesting of stock awards |
| 1,200,218 |
|
| — |
|
| 8 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 8 |
Recognition of stock-based compensation |
| — |
|
| — |
|
| 7 |
|
| — |
|
| 13 |
|
| — |
|
| — |
|
| — |
|
| 20 |
Repurchase and cancellation of stock awards |
| (348,887) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (8) |
|
| — |
|
| — |
|
| (8) |
Contribution from noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 4 |
|
| 4 |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (26) |
|
| (26) |
Disposition of a portion of P&A Business |
| — |
|
| — |
|
| 209 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 209 |
Separation costs of P&A Business |
| — |
|
| — |
|
| (40) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (40) |
Conversion of restricted awards to P&A Business awards |
| — |
|
| — |
|
| (2) |
|
| — |
|
| 2 |
|
| — |
|
| — |
|
| — |
|
| — |
Minority interest on disposal of P&A Business |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 318 |
|
| 318 |
Stock options exercised |
| 1,388,141 |
|
| — |
|
| 37 |
|
| — |
|
| — |
|
| (15) |
|
| — |
|
| — |
|
| 22 |
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (90) |
|
| — |
|
| — |
|
| (90) |
Balance, September 30, 2017 |
| 238,609,819 |
| $ | 3 |
| $ | 3,683 |
| $ | (150) |
| $ | (19) |
| $ | (48) |
| $ | (1,358) |
| $ | 480 |
| $ | 2,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2016 |
| 237,080,026 |
| $ | 3 |
| $ | 3,407 |
| $ | (135) |
| $ | (17) |
| $ | (528) |
| $ | (1,288) |
| $ | 187 |
| $ | 1,629 |
Net income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 198 |
|
| — |
|
| 22 |
|
| 220 |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 22 |
|
| — |
|
| 22 |
Issuance of nonvested stock awards |
| — |
|
| — |
|
| 17 |
|
| — |
|
| (17) |
|
| — |
|
| — |
|
| — |
|
| — |
Vesting of stock awards |
| 895,660 |
|
| — |
|
| 2 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2 |
Recognition of stock-based compensation |
| — |
|
| — |
|
| 7 |
|
| — |
|
| 13 |
|
| — |
|
| — |
|
| — |
|
| 20 |
Repurchase and cancellation of stock awards |
| (249,155) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (3) |
|
| — |
|
| — |
|
| (3) |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (26) |
|
| (26) |
Stock options exercised |
| 35,170 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Treasury stock repurchased |
| (1,444,769) |
|
| — |
|
| 15 |
|
| (15) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Excess tax shortfall related to stock-based compensation |
| — |
|
| — |
|
| (3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (3) |
Dividends declared on common stock |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (90) |
|
| — |
|
| — |
|
| (90) |
Balance, September 30, 2016 |
| 236,316,932 |
| $ | 3 |
| $ | 3,445 |
| $ | (150) |
| $ | (21) |
| $ | (423) |
| $ | (1,266) |
| $ | 183 |
| $ | 1,771 |
See accompanying notes to condensed consolidated financial statements.
7
HUNTSMAN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
|
|
|
|
|
|
|
|
| Nine months | ||||
|
| ended | ||||
|
| September 30, | ||||
|
| 2017 |
| 2016 | ||
Operating Activities: |
|
|
|
|
|
|
Net income |
| $ | 454 |
| $ | 220 |
Less: (Income) loss from discontinued operations |
|
| (101) |
|
| 12 |
Income from continuing operations |
|
| 353 |
|
| 232 |
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 |
|
| (4) |
|
| (4) |
Depreciation and amortization |
|
| 235 |
|
| 238 |
(Gain) loss on disposal of businesses/assets, net |
|
| (5) |
|
| 1 |
Loss on early extinguishment of debt |
|
| 36 |
|
| 3 |
Noncash interest expense |
|
| 7 |
|
| 12 |
Noncash restructuring and impairment charges |
|
| — |
|
| 2 |
Deferred income taxes |
|
| 24 |
|
| 90 |
Noncash gain on foreign currency transactions |
|
| (4) |
|
| — |
Stock-based compensation |
|
| 25 |
|
| 23 |
Other, net |
|
| 3 |
|
| (3) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts and notes receivable |
|
| (148) |
|
| (3) |
Inventories |
|
| (118) |
|
| 133 |
Prepaid expenses |
|
| 2 |
|
| (6) |
Other current assets |
|
| 31 |
|
| (14) |
Other noncurrent assets |
|
| (22) |
|
| (13) |
Accounts payable |
|
| 95 |
|
| (11) |
Accrued liabilities |
|
| 46 |
|
| 49 |
Other noncurrent liabilities |
|
| (18) |
|
| 7 |
Net cash provided by operating activities from continuing operations |
|
| 538 |
|
| 736 |
Net cash provided by operating activities from discontinued operations |
|
| 205 |
|
| 112 |
Net cash provided by operating activities |
|
| 743 |
|
| 848 |
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
Capital expenditures |
|
| (159) |
|
| (214) |
Investment in unconsolidated affiliates |
|
| — |
|
| (2) |
Acquisition of business, net of cash acquired |
|
| (14) |
|
| — |
Proceeds from sale of businesses/assets |
|
| 21 |
|
| — |
Cash received from termination of cross-currency interest rate contracts |
|
| 7 |
|
| — |
Change in restricted cash |
|
| — |
|
| 1 |
Other, net |
|
| — |
|
| 2 |
Net cash used in investing activities from continuing operations |
|
| (145) |
|
| (213) |
Net cash used in investing activities from discontinued operations |
|
| (49) |
|
| (57) |
Net cash used in investing activities |
|
| (194) |
|
| (270) |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Operating activities: | ||||||||
Net (loss) income | $ | (23 | ) | $ | 166 | |||
Less: Loss (income) from discontinued operations, net of tax | 7 | (122 | ) | |||||
(Loss) income from continuing operations | (16 | ) | 44 | |||||
Adjustments to reconcile (loss) income from continuing operations to net cash used in operating activities from continuing operations: | ||||||||
Equity in income of investment in unconsolidated affiliates | (19 | ) | (12 | ) | ||||
Depreciation and amortization | 69 | 69 | ||||||
Noncash lease expense | 19 | 17 | ||||||
Gain on acquisition of assets, net | (52 | ) | — | |||||
Noncash prepaid asset write-off | 71 | — | ||||||
Deferred income taxes | (33 | ) | (20 | ) | ||||
Noncash stock-based compensation | 9 | 9 | ||||||
Other, net | 6 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | (87 | ) | (23 | ) | ||||
Inventories | (38 | ) | (50 | ) | ||||
Other current assets | (1 | ) | 23 | |||||
Other noncurrent assets | (2 | ) | (17 | ) | ||||
Accounts payable | 30 | (75 | ) | |||||
Accrued liabilities | (9 | ) | (70 | ) | ||||
Other noncurrent liabilities | (10 | ) | (17 | ) | ||||
Net cash used in operating activities from continuing operations | (63 | ) | (122 | ) | ||||
Net cash used in operating activities from discontinued operations | (2 | ) | (32 | ) | ||||
Net cash used in operating activities | (65 | ) | (154 | ) | ||||
Investing activities: | ||||||||
Capital expenditures | (42 | ) | (46 | ) | ||||
Cash received from sale of businesses, net | 12 | 541 | ||||||
Other, net | — | (2 | ) | |||||
Net cash (used in) provided by investing activities from continuing operations | (30 | ) | 493 | |||||
Net cash used in investing activities from discontinued operations | — | (4 | ) | |||||
Net cash (used in) provided by investing activities | (30 | ) | 489 | |||||
Financing activities: | ||||||||
Net borrowings (repayments) on revolving loan facilities | 191 | (220 | ) | |||||
Repayments of long-term debt | (3 | ) | (4 | ) | ||||
Principal payments on note payable | (28 | ) | — | |||||
Dividends paid to common stockholders | (44 | ) | (44 | ) | ||||
Distributions paid to noncontrolling interests | — | (4 | ) | |||||
Repurchase and cancellation of awards | (5 | ) | (9 | ) | ||||
Repurchase of common stock | (1 | ) | (97 | ) | ||||
Other, net | (2 | ) | (1 | ) | ||||
Net cash provided by (used in) financing activities | 108 | (379 | ) | |||||
Effect of exchange rate changes on cash | (1 | ) | 5 | |||||
Increase (decrease) in cash and cash equivalents | 12 | (39 | ) | |||||
Cash and cash equivalents at beginning of period | 540 | 654 | ||||||
Cash and cash equivalents at end of period | $ | 552 | $ | 615 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 12 | $ | 10 | ||||
Cash paid for income taxes | 15 | 29 |
(Continued)
8
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
|
|
|
|
|
|
|
|
| Nine months | ||||
|
| ended | ||||
|
| September 30, | ||||
|
| 2017 |
| 2016 | ||
Financing Activities: |
|
|
|
|
|
|
Net repayments under revolving loan facilities |
| $ | (36) |
| $ | — |
Net repayments on overdraft facilities |
|
| — |
|
| (1) |
Repayments of short-term debt |
|
| (10) |
|
| (41) |
Borrowings on short-term debt |
|
| 6 |
|
| 8 |
Repayments of long-term debt |
|
| (1,439) |
|
| (795) |
Proceeds from long-term debt of P&A Business |
|
| 750 |
|
| — |
Proceeds from issuance of long-term debt |
|
| 24 |
|
| 552 |
Repayments of notes payable |
|
| (20) |
|
| (25) |
Borrowings on notes payable |
|
| 11 |
|
| 31 |
Debt issuance costs paid |
|
| (21) |
|
| (8) |
Dividends paid to noncontrolling interests |
|
| (26) |
|
| (26) |
Contribution from noncontrolling interests |
|
| 4 |
|
| — |
Dividends paid to common stockholders |
|
| (90) |
|
| (90) |
Repurchase and cancellation of stock awards |
|
| (8) |
|
| (3) |
Proceeds from issuance of common stock |
|
| 22 |
|
| — |
Proceeds from the IPO of P&A Business |
|
| 522 |
|
| — |
Cash paid for expenses of the IPO of P&A Business |
|
| (40) |
|
| — |
Other, net |
|
| 2 |
|
| 1 |
Net cash used in financing activities |
|
| (349) |
|
| (397) |
Effect of exchange rate changes on cash |
|
| 12 |
|
| 1 |
Increase in cash and cash equivalents |
|
| 212 |
|
| 182 |
Cash and cash equivalents from continuing operations at beginning of period |
|
| 385 |
|
| 236 |
Cash and cash equivalents from discontinued operations at beginning of period |
|
| 29 |
|
| 21 |
Cash and cash equivalents at end of period |
| $ | 626 |
| $ | 439 |
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash paid for interest |
| $ | 122 |
| $ | 139 |
Cash (received) paid for income taxes |
|
| (31) |
|
| 29 |
As of September 30, 2017For both March 31, 2024 and 2016,2023, the amount of capital expenditures in accounts payable was $39 million and $43 million, respectively. In addition, as of September 30, 2017, the amount of cash taxes included in our supplemental cash flow information related to cash paid for income taxes that was paid by our P&A Business after the IPO date was $5$21 million.
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)Millions, Except Unit Amounts)
March 31, | December 31, | |||||||
2024 | 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents(1) | $ | 552 | $ | 540 | ||||
Accounts and notes receivable (net of allowance for doubtful accounts of $13), ($290 and $224 pledged as collateral, respectively)(1) | 831 | 747 | ||||||
Accounts receivable from affiliates | 6 | 6 | ||||||
Inventories(1) | 896 | 867 | ||||||
Other current assets | 163 | 159 | ||||||
Total current assets | 2,448 | 2,319 | ||||||
Property, plant and equipment, net(1) | 2,571 | 2,376 | ||||||
Investment in unconsolidated affiliates | 457 | 438 | ||||||
Intangible assets, net | 378 | 387 | ||||||
Goodwill | 640 | 644 | ||||||
Deferred income taxes | 109 | 112 | ||||||
Operating lease right-of-use assets | 411 | 366 | ||||||
Other noncurrent assets(1) | 563 | 611 | ||||||
Total assets | $ | 7,577 | $ | 7,253 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable(1) | $ | 723 | $ | 659 | ||||
Accounts payable to affiliates | 22 | 59 | ||||||
Accrued liabilities(1) | 381 | 390 | ||||||
Current portion of debt(1) | 396 | 12 | ||||||
Current operating lease liabilities(1) | 52 | 46 | ||||||
Total current liabilities | 1,574 | 1,166 | ||||||
Long-term debt(1) | 1,660 | 1,676 | ||||||
Deferred income taxes | 230 | 247 | ||||||
Noncurrent operating lease liabilities(1) | 378 | 334 | ||||||
Other noncurrent liabilities(1) | 332 | 339 | ||||||
Total liabilities | 4,174 | 3,762 | ||||||
Commitments and contingencies (Notes 15 and 16) | ||||||||
Equity | ||||||||
Huntsman International LLC members’ equity: | ||||||||
Members’ equity, 2,728 units issued and outstanding | 3,793 | 3,785 | ||||||
Retained earnings | 622 | 709 | ||||||
Accumulated other comprehensive loss | (1,254 | ) | (1,230 | ) | ||||
Total Huntsman International LLC members’ equity | 3,161 | 3,264 | ||||||
Noncontrolling interests in subsidiaries | 242 | 227 | ||||||
Total equity | 3,403 | 3,491 | ||||||
Total liabilities and equity | $ | 7,577 | $ | 7,253 |
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
| �� | 2017 |
| 2016 | ||
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents(a) |
| $ | 438 |
| $ | 384 |
Restricted cash(a) |
|
| 11 |
|
| 11 |
Accounts and notes receivable (net of allowance for doubtful accounts of $24 and $23, respectively), ($369 and $328 pledged as collateral, respectively)(a) |
|
| 1,222 |
|
| 1,168 |
Accounts receivable from affiliates |
|
| 353 |
|
| 329 |
Inventories(a) |
|
| 1,084 |
|
| 918 |
Prepaid expenses |
|
| 46 |
|
| 49 |
Other current assets(a) |
|
| 193 |
|
| 227 |
Current assets held for sale |
|
| 2,745 |
|
| 777 |
Total current assets |
|
| 6,092 |
|
| 3,863 |
Property, plant and equipment, net(a) |
|
| 3,031 |
|
| 3,012 |
Investment in unconsolidated affiliates |
|
| 255 |
|
| 248 |
Intangible assets, net(a) |
|
| 57 |
|
| 43 |
Goodwill |
|
| 139 |
|
| 121 |
Deferred income taxes |
|
| 268 |
|
| 253 |
Other noncurrent assets(a) |
|
| 464 |
|
| 472 |
Noncurrent assets held for sale |
|
| — |
|
| 1,463 |
Total assets |
| $ | 10,306 |
| $ | 9,475 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable(a) |
| $ | 871 |
| $ | 773 |
Accounts payable to affiliates |
|
| 67 |
|
| 51 |
Accrued liabilities(a) |
|
| 538 |
|
| 468 |
Notes payable to affiliates |
|
| 100 |
|
| 100 |
Current portion of debt(a) |
|
| 29 |
|
| 50 |
Current liabilities held for sale |
|
| 1,633 |
|
| 467 |
Total current liabilities |
|
| 3,238 |
|
| 1,909 |
Long-term debt(a) |
|
| 2,845 |
|
| 4,122 |
Notes payable to affiliates |
|
| 717 |
|
| 697 |
Deferred income taxes |
|
| 421 |
|
| 367 |
Other noncurrent liabilities(a) |
|
| 1,030 |
|
| 1,051 |
Noncurrent liabilities held for sale |
|
| — |
|
| 393 |
Total liabilities |
|
| 8,251 |
|
| 8,539 |
Commitments and contingencies (Notes 13 and 14) |
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Huntsman International LLC members’ equity: |
|
|
|
|
|
|
Members’ equity, 2,728 units issued and outstanding |
|
| 3,412 |
|
| 3,226 |
Accumulated deficit |
|
| (483) |
|
| (779) |
Accumulated other comprehensive loss |
|
| (1,354) |
|
| (1,691) |
Total Huntsman International LLC members’ equity |
|
| 1,575 |
|
| 756 |
Noncontrolling interests in subsidiaries |
|
| 480 |
|
| 180 |
Total equity |
|
| 2,055 |
|
| 936 |
Total liabilities and equity |
| $ | 10,306 |
| $ | 9,475 |
(1) |
| At |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 2,137 |
| $ | 1,802 |
| $ | 6,048 |
| $ | 5,519 |
Related party sales |
|
| 32 |
|
| 29 |
|
| 107 |
|
| 95 |
Total revenues |
|
| 2,169 |
|
| 1,831 |
|
| 6,155 |
|
| 5,614 |
Cost of goods sold |
|
| 1,694 |
|
| 1,474 |
|
| 4,849 |
|
| 4,441 |
Gross profit |
|
| 475 |
|
| 357 |
|
| 1,306 |
|
| 1,173 |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
| 197 |
|
| 184 |
|
| 579 |
|
| 561 |
Research and development |
|
| 35 |
|
| 34 |
|
| 103 |
|
| 103 |
Restructuring, impairment and plant closing costs |
|
| 1 |
|
| 38 |
|
| 13 |
|
| 56 |
Merger costs |
|
| 12 |
|
| — |
|
| 18 |
|
| — |
Other operating expense (income), net |
|
| 5 |
|
| (2) |
|
| (9) |
|
| (3) |
Total expenses |
|
| 250 |
|
| 254 |
|
| 704 |
|
| 717 |
Operating income |
|
| 225 |
|
| 103 |
|
| 602 |
|
| 456 |
Interest expense |
|
| (44) |
|
| (55) |
|
| (146) |
|
| (162) |
Equity in income of investment in unconsolidated affiliates |
|
| 1 |
|
| 1 |
|
| 4 |
|
| 4 |
Loss on early extinguishment of debt |
|
| (35) |
|
| (1) |
|
| (36) |
|
| (3) |
Other income (loss), net |
|
| 2 |
|
| — |
|
| 5 |
|
| 5 |
Income from continuing operations before income taxes |
|
| 149 |
|
| 48 |
|
| 429 |
|
| 300 |
Income tax expense |
|
| (34) |
|
| (7) |
|
| (77) |
|
| (65) |
Income from continuing operations |
|
| 115 |
|
| 41 |
|
| 352 |
|
| 235 |
Income (loss) from discontinued operations, net of tax |
|
| 62 |
|
| 22 |
|
| 98 |
|
| (17) |
Net income |
|
| 177 |
|
| 63 |
|
| 450 |
|
| 218 |
Net income attributable to noncontrolling interests |
|
| (32) |
|
| (9) |
|
| (64) |
|
| (22) |
Net income attributable to Huntsman International LLC |
| $ | 145 |
| $ | 54 |
| $ | 386 |
| $ | 196 |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Revenues: | ||||||||
Trade sales, services and fees, net | $ | 1,436 | $ | 1,573 | ||||
Related party sales | 34 | 33 | ||||||
Total revenues | 1,470 | 1,606 | ||||||
Cost of goods sold | 1,269 | 1,337 | ||||||
Gross profit | 201 | 269 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 174 | 186 | ||||||
Research and development | 31 | 30 | ||||||
Restructuring, impairment and plant closing costs (credits) | 11 | (7 | ) | |||||
Gain on acquisition of assets, net | (52 | ) | — | |||||
Prepaid asset write-off | 71 | — | ||||||
Other operating loss (income), net | 2 | (3 | ) | |||||
Total operating expenses | 237 | 206 | ||||||
Operating (loss) income | (36 | ) | 63 | |||||
Interest expense, net | (19 | ) | (18 | ) | ||||
Equity in income of investment in unconsolidated affiliates | 19 | 12 | ||||||
Other income, net | 2 | — | ||||||
(Loss) income from continuing operations before income taxes | (34 | ) | 57 | |||||
Income tax benefit (expense) | 20 | (11 | ) | |||||
(Loss) income from continuing operations | (14 | ) | 46 | |||||
(Loss) income from discontinued operations, net of tax | (7 | ) | 122 | |||||
Net (loss) income | (21 | ) | 168 | |||||
Net income attributable to noncontrolling interests | (14 | ) | (13 | ) | ||||
Net (loss) income attributable to Huntsman International LLC | $ | (35 | ) | $ | 155 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
|
| Nine months | ||||||||
|
| ended |
|
| ended | ||||||||
|
| September 30, |
|
| September 30, | ||||||||
|
| 2017 |
| 2016 |
|
| 2017 |
| 2016 | ||||
Net income |
| $ | 177 |
| $ | 63 |
|
| $ | 450 |
| $ | 218 |
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translations adjustment |
|
| 65 |
|
| 15 |
|
|
| 199 |
|
| (11) |
Pension and other postretirement benefits adjustments |
|
| 39 |
|
| 14 |
|
|
| 80 |
|
| 40 |
Other, net |
|
| — |
|
| 3 |
|
|
| (2) |
|
| (2) |
Other comprehensive income (loss), net of tax |
|
| 104 |
|
| 32 |
|
|
| 277 |
|
| 27 |
Comprehensive income |
|
| 281 |
|
| 95 |
|
|
| 727 |
|
| 245 |
Comprehensive income attributable to noncontrolling interests |
|
| (37) |
|
| (9) |
|
|
| (76) |
|
| (22) |
Comprehensive income attributable to Huntsman International LLC |
| $ | 244 |
| $ | 86 |
|
| $ | 651 |
| $ | 223 |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Net (loss) income | $ | (21 | ) | $ | 168 | |||
Other comprehensive (loss) income, net of tax: | ||||||||
Foreign currency translations adjustments | (36 | ) | 54 | |||||
Pension and other postretirement benefits adjustments | 8 | 74 | ||||||
Other, net | 5 | — | ||||||
Other comprehensive (loss) income, net of tax | (23 | ) | 128 | |||||
Comprehensive (loss) income | (44 | ) | 296 | |||||
Comprehensive income attributable to noncontrolling interests | (15 | ) | (15 | ) | ||||
Comprehensive (loss) income attributable to Huntsman International LLC | $ | (59 | ) | $ | 281 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Unit Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Huntsman International LLC Members |
|
|
|
|
|
| |||||||||
|
| Members' |
|
|
|
| Accumulated other |
| Noncontrolling |
|
|
| |||||
|
| equity |
| Accumulated |
| comprehensive |
| interests in |
| Total | |||||||
|
| Units |
| Amount |
| deficit |
| loss |
| subsidiaries |
| equity | |||||
Balance, January 1, 2017 |
| 2,728 |
| $ | 3,226 |
| $ | (779) |
| $ | (1,691) |
| $ | 180 |
| $ | 936 |
Net income |
| — |
|
| — |
|
| 386 |
|
| — |
|
| 64 |
|
| 450 |
Dividends paid to parent |
| — |
|
| — |
|
| (90) |
|
| — |
|
| — |
|
| (90) |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| 337 |
|
| (60) |
|
| 277 |
Contribution from parent |
| — |
|
| 26 |
|
| — |
|
| — |
|
| — |
|
| 26 |
Contribution from noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| 4 |
|
| 4 |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| (26) |
|
| (26) |
Separation costs of P&A Business |
| — |
|
| (40) |
|
| — |
|
| — |
|
| — |
|
| (40) |
Minority interest on disposal of P&A Business |
| — |
|
| — |
|
| — |
|
| — |
|
| 318 |
|
| 318 |
Other |
| — |
|
| (9) |
|
| — |
|
| — |
|
| — |
|
| (9) |
Disposition of a portion of P&A Business |
| — |
|
| 209 |
|
| — |
|
| — |
|
| — |
|
| 209 |
Balance, September 30, 2017 |
| 2,728 |
| $ | 3,412 |
| $ | (483) |
| $ | (1,354) |
| $ | 480 |
| $ | 2,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2016 |
| 2,728 |
| $ | 3,196 |
| $ | (983) |
| $ | (1,316) |
| $ | 187 |
| $ | 1,084 |
Net income |
| — |
|
| — |
|
| 196 |
|
| — |
|
| 22 |
|
| 218 |
Dividends paid to parent |
| — |
|
| — |
|
| (90) |
|
| — |
|
| — |
|
| (90) |
Other comprehensive income |
| — |
|
| — |
|
| — |
|
| 27 |
|
| — |
|
| 27 |
Contribution from parent |
| — |
|
| 24 |
|
| — |
|
| — |
|
| — |
|
| 24 |
Dividends paid to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| (26) |
|
| (26) |
Excess tax shortfall related to stock-based compensation |
| — |
|
| (3) |
|
| — |
|
| — |
|
| — |
|
| (3) |
Balance, September 30, 2016 |
| 2,728 |
| $ | 3,217 |
| $ | (877) |
| $ | (1,289) |
| $ | 183 |
| $ | 1,234 |
Huntsman International LLC Members | ||||||||||||||||||||||||
Members' | Accumulated other | Noncontrolling | ||||||||||||||||||||||
equity | comprehensive | interests in | Total | |||||||||||||||||||||
Units | Amount | Retained earnings | loss | subsidiaries | equity | |||||||||||||||||||
Balance, January 1, 2024 | 2,728 | $ | 3,785 | $ | 709 | $ | (1,230 | ) | $ | 227 | $ | 3,491 | ||||||||||||
Net (loss) income | — | — | (35 | ) | — | 14 | (21 | ) | ||||||||||||||||
Other comprehensive (loss) income | — | — | — | (24 | ) | 1 | (23 | ) | ||||||||||||||||
Dividends paid to parent | — | — | (43 | ) | — | — | (43 | ) | ||||||||||||||||
Contribution from parent | — | 8 | — | — | — | 8 | ||||||||||||||||||
Distribution to parent | — | — | (9 | ) | — | — | (9 | ) | ||||||||||||||||
Balance, March 31, 2024 | 2,728 | $ | 3,793 | $ | 622 | $ | (1,254 | ) | $ | 242 | $ | 3,403 |
Huntsman International LLC Members | ||||||||||||||||||||||||
Members' | Accumulated other | Noncontrolling | ||||||||||||||||||||||
equity | comprehensive | interests in | Total | |||||||||||||||||||||
Units | Amount | Retained earnings | loss | subsidiaries | equity | |||||||||||||||||||
Balance, January 1, 2023 | 2,728 | $ | 3,759 | $ | 1,130 | $ | (1,253 | ) | $ | 216 | $ | 3,852 | ||||||||||||
Net income | — | — | 155 | — | 13 | 168 | ||||||||||||||||||
Other comprehensive income | — | — | — | 126 | 2 | 128 | ||||||||||||||||||
Dividends paid to parent | — | — | (43 | ) | — | — | (43 | ) | ||||||||||||||||
Contribution from parent | — | 10 | — | — | — | 10 | ||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||
Distribution to parent | — | — | (109 | ) | — | — | (109 | ) | ||||||||||||||||
Balance, March 31, 2023 | 2,728 | $ | 3,769 | $ | 1,133 | $ | (1,127 | ) | $ | 227 | $ | 4,002 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
|
|
|
|
|
|
|
|
| Nine months | ||||
|
| ended | ||||
|
| September 30, | ||||
|
| 2017 |
| 2016 | ||
Operating Activities: |
|
|
|
|
|
|
Net income |
| $ | 450 |
| $ | 218 |
Less: (Income) loss from discontinued operations |
|
| (98) |
|
| 17 |
Income from continuing operations |
|
| 352 |
|
| 235 |
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 |
|
| (4) |
|
| (4) |
Depreciation and amortization |
|
| 227 |
|
| 228 |
(Gain) loss on disposal of businesses/assets, net |
|
| (5) |
|
| 1 |
Loss on early extinguishment of debt |
|
| 36 |
|
| 3 |
Noncash interest expense |
|
| 19 |
|
| 20 |
Noncash restructuring and impairment charges |
|
| — |
|
| 2 |
Deferred income taxes |
|
| 24 |
|
| 90 |
Noncash gain on foreign currency transactions |
|
| (4) |
|
| — |
Noncash compensation |
|
| 24 |
|
| 22 |
Other, net |
|
| 3 |
|
| — |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts and notes receivable |
|
| (147) |
|
| (3) |
Inventories |
|
| (118) |
|
| 133 |
Prepaid expenses |
|
| 3 |
|
| (5) |
Other current assets |
|
| 30 |
|
| (15) |
Other noncurrent assets |
|
| (22) |
|
| (13) |
Accounts payable |
|
| 84 |
|
| (20) |
Accrued liabilities |
|
| 45 |
|
| 49 |
Other noncurrent liabilities |
|
| (11) |
|
| 13 |
Net cash provided by operating activities from continuing operations |
|
| 536 |
|
| 736 |
Net cash provided by operating activities from discontinued operations |
|
| 202 |
|
| 107 |
Net cash provided by operating activities |
|
| 738 |
|
| 843 |
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
Capital expenditures |
|
| (159) |
|
| (214) |
Investment in unconsolidated affiliates |
|
| — |
|
| (2) |
Acquisition of business, net of cash acquired |
|
| (14) |
|
| — |
Proceeds from sale of businesses/assets |
|
| 21 |
|
| — |
Increase in receivable from affiliate |
|
| (3) |
|
| 3 |
Cash received from termination of cross-currency interest rate contracts |
|
| 7 |
|
| — |
Change in restricted cash |
|
| — |
|
| 1 |
Other, net |
|
| 1 |
|
| 2 |
Net cash used in investing activities from continuing operations |
|
| (147) |
|
| (210) |
Net cash used in investing activities from discontinued operations |
|
| (49) |
|
| (57) |
Net cash provided by (used in) investing activities |
|
| (196) |
|
| (267) |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Operating activities: | ||||||||
Net (loss) income | $ | (21 | ) | $ | 168 | |||
Less: Loss (income) from discontinued operations, net of tax | 7 | (122 | ) | |||||
(Loss) income from continuing operations | (14 | ) | 46 | |||||
Adjustments to reconcile (loss) income from continuing operations to net cash used in operating activities from continuing operations: | ||||||||
Equity in income of investment in unconsolidated affiliates | (19 | ) | (12 | ) | ||||
Depreciation and amortization | 69 | 69 | ||||||
Noncash lease expense | 19 | 17 | ||||||
Gain on acquisition of assets, net | (52 | ) | — | |||||
Noncash prepaid asset write-off | 71 | — | ||||||
Deferred income taxes | (32 | ) | (19 | ) | ||||
Noncash stock-based compensation | 8 | 8 | ||||||
Other, net | 5 | (3 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | (87 | ) | (23 | ) | ||||
Inventories | (38 | ) | (50 | ) | ||||
Other current assets | (1 | ) | 29 | |||||
Other noncurrent assets | (2 | ) | (17 | ) | ||||
Accounts payable | 30 | (75 | ) | |||||
Accrued liabilities | (9 | ) | (75 | ) | ||||
Other noncurrent liabilities | (10 | ) | (17 | ) | ||||
Net cash used in operating activities from continuing operations | (62 | ) | (122 | ) | ||||
Net cash used in operating activities from discontinued operations | (2 | ) | (32 | ) | ||||
Net cash used in operating activities | (64 | ) | (154 | ) | ||||
Investing activities: | ||||||||
Capital expenditures | (42 | ) | (46 | ) | ||||
Cash received from sale of businesses, net | 12 | 541 | ||||||
Increase in receivable from affiliate | (9 | ) | (109 | ) | ||||
Other, net | — | (1 | ) | |||||
Net cash (used in) provided by investing activities from continuing operations | (39 | ) | 385 | |||||
Net cash used in investing activities from discontinued operations | — | (4 | ) | |||||
Net cash (used in) provided by investing activities | (39 | ) | 381 | |||||
Financing activities: | ||||||||
Net borrowings (repayments) on revolving loan facilities | 191 | (220 | ) | |||||
Repayments of long-term debt | (3 | ) | (4 | ) | ||||
Principal payments on note payable | (28 | ) | — | |||||
Dividends paid to parent | (43 | ) | (43 | ) | ||||
Distributions paid to noncontrolling interests | — | (4 | ) | |||||
Other, net | (1 | ) | — | |||||
Net cash provided by (used in) financing activities | 116 | (271 | ) | |||||
Effect of exchange rate changes on cash | (1 | ) | 5 | |||||
Increase (decrease) in cash and cash equivalents | 12 | (39 | ) | |||||
Cash and cash equivalents at beginning of period | 540 | 654 | ||||||
Cash and cash equivalents at end of period | $ | 552 | $ | 615 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 12 | $ | 10 | ||||
Cash paid for income taxes | 15 | 29 |
(Continued)
14
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
|
|
|
|
|
|
|
|
| Nine months | ||||
|
| ended | ||||
|
| September 30, | ||||
|
| 2017 |
| 2016 | ||
Financing Activities: |
|
|
|
|
|
|
Net repayments under revolving loan facilities |
| $ | (36) |
| $ | — |
Net repayments on overdraft facilities |
|
| — |
|
| (1) |
Repayments of short-term debt |
|
| (10) |
|
| (41) |
Borrowings on short-term debt |
|
| 6 |
|
| 8 |
Repayments of long-term debt |
|
| (1,439) |
|
| (795) |
Proceeds from long-term debt of P&A Business |
|
| 750 |
|
| — |
Proceeds from issuance of long-term debt |
|
| 24 |
|
| 552 |
Repayments of notes payable to affiliate |
|
| — |
|
| (1) |
Proceeds from issuance of notes payable from affiliate |
|
| 21 |
|
| — |
Repayments of notes payable |
|
| (20) |
|
| (25) |
Borrowings on notes payable |
|
| 11 |
|
| 31 |
Debt issuance costs paid |
|
| (21) |
|
| (8) |
Dividends paid to noncontrolling interests |
|
| (26) |
|
| (26) |
Contribution from noncontrolling interests |
|
| 4 |
|
| — |
Dividends paid to parent |
|
| (90) |
|
| (90) |
Proceeds from the IPO of P&A Business |
|
| 522 |
|
| — |
Cash paid for expenses of the IPO of P&A Business |
|
| (40) |
|
| — |
Other, net |
|
| 1 |
|
| 1 |
Net cash used in financing activities |
|
| (343) |
|
| (395) |
Effect of exchange rate changes on cash |
|
| 12 |
|
| 1 |
Increase in cash and cash equivalents |
|
| 211 |
|
| 182 |
Cash and cash equivalents from continuing operations at beginning of period |
|
| 384 |
|
| 236 |
Cash and cash equivalents from discontinued operations at beginning of period |
|
| 29 |
|
| 21 |
Cash and cash equivalents at end of period |
| $ | 624 |
| $ | 439 |
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash paid for interest |
| $ | 122 |
| $ | 139 |
Cash (received) paid for income taxes |
|
| (31) |
|
| 29 |
As of September 30, 2017For both March 31, 2024 and 2016,2023, the amount of capital expenditures in accounts payable was $39 million and $43 million, respectively. During the nine months ended September 30, 2017 and 2016, Huntsman Corporation contributed $24 million and $22 million, respectively, related to stock-based compensation for continuing operations. In addition, as of September 30, 2017, the amount of cash taxes included in our supplemental cash flow information related to cash paid for income taxes that was paid by our P&A Business after the IPO date was $5$21 million.
See accompanying notes to condensed consolidated financial statements.
15
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
1. GENERAL
Certain Definitions
CERTAIN DEFINITIONS
For convenience in this report, the terms “Company,” “Huntsman,” “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 ownedwholly-owned subsidiary).
In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.
INTERIM FINANCIAL STATEMENTSInterim Financial Statements
Our unaudited interim condensed consolidated financial statements and Huntsman International’s unaudited interim condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) and in management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive (loss) income, financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10‑K10-K for the year ended December 31, 20162023 for our Company and Huntsman International.
DESCRIPTION OF BUSINESSDescription of Businesses
We are a global manufacturer of differentiateddiversified organic chemical products. We operate in three segments: Polyurethanes, Performance Products and Advanced Materials. Our products comprise a broad range ofmany different chemicals and formulations, which we market globally to a diversified groupwide range of consumerconsumers that consist primarily of industrial and industrial customers.building product manufacturers. Our products are used in a widebroad range of applications, including those in the adhesives, aerospace, automotive, coatings and construction, construction products, personal care and hygiene, durable and non-durable consumer products, digital inks, electronics, medical,insulation, packaging, coatings and construction, power generation refining, synthetic fiber, textile chemicals and dyes industries.refining. Many of our products offer effects such as premium insulation in homes and buildings and the light weighting of airplanes and automobiles that help conserve energy. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride and epoxy-based polymer formulations, textile chemicals and dyes.
formulations. We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. In August 2017, we separated our Titanium Dioxide and Performance Additives business (the “P&A Business”) through an initial public offering (“IPO”) of ordinary shares of Venator Materials PLC (“Venator”), formerly our wholly-owned subsidiary (the “Separation”). Beginning in the third quarter of 2017, we reported the results of the former P&A Business as discontinued operations. See “Note 4. Discontinued Operations.” In a series of transactions beginning in 2006, we sold or shut down 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.
COMPANY
Our Company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses. Jon M. Huntsman founded the predecessor to our Company in 1970 as a small packaging company. Since then, we have grown through a series of acquisitions and now own a global portfolio of businesses.
Currently, we operate all of our businesses through Huntsman International, our wholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.
16
Huntsman Corporation and Huntsman International Financial Statements
HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS
Except where otherwise indicated, these notes relate to the condensed consolidated financial statements for both our Company and Huntsman International. The differences between our condensed consolidated financial statements and Huntsman International’s condensed consolidated financial statements relate primarily to different capital structures and purchase accounting recorded at our Company for the following:2003 step-acquisition of Huntsman International Holdings LLC, the former parent company of Huntsman International that was merged into Huntsman International in 2005.
|
|
|
|
|
|
PRINCIPLES OF CONSOLIDATIONPrinciples of Consolidation
Our condensed consolidated financial statements include the accounts of our wholly‑ownedwholly-owned and majority‑ownedmajority-owned subsidiaries and any variable interest entities for which we are the primary beneficiary. Intercompany accounts and transactions have been eliminated.
RECLASSIFICATIONSHuntsman International declared and paid to us distributions in the form of certain affiliate accounts receivable during 2024 and 2023.
Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform with the current presentation. These reclassifications were to record the assets and liabilities as held for sale and resultsUse of operations of the former P&A Business to discontinued operations. See “Note 4. Discontinued Operations.” In connection with the separation of the P&A Business, certain entities were removed from the debt guarantor structure. The unaudited condensed consolidated financial information included in “Note 19. Condensed Consolidating Financial Information of Huntsman International LLC” has been presented as if the new debt guarantor structure existed for all periods presented.
RECENT DEVELOPMENTS
Separation of the P&A Business
In August 2017, we separated the P&A Business and conducted an IPO of ordinary shares of Venator, formerly a wholly-owned subsidiary of Huntsman. All of such ordinary shares were sold by Huntsman and Venator did not receive any proceeds from the offering. Venator’s ordinary shares began trading on The New York Stock Exchange under the symbol “VNTR” on August 3, 2017. Huntsman retains approximately 75% ownership in Venator. Beginning in the third quarter of 2017, we reported the results of operations of the P&A Business as discontinued operations. For more information, see “Note 4. Discontinued Operations.”
In August 2017, we made early prepayments of $1,207 million on our senior credit facilities (“Senior Credit Facilities”), of which $106 million was paid on our extended term loan B facility due 2015 (“2015 Extended Term Loan B”), $347 million was paid on our term loan B facility due 2021 (“2021 Term Loan B”), and $754 million was paid on our term loan B facility due 2023 (“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. In connection with the $1,207 million prepayments of our term loans, we recognized a loss on early extinguishment of debt of $34 million. See “Note 7. Debt—Direct and Subsidiary Debt—Senior Credit Facilities.”
Termination of Huntsman and Clariant Merger Agreement
As previously disclosed, on May 21, 2017, Huntsman, Clariant and Merger Sub entered into the Merger Agreement which contemplated that Merger Sub would be merged with and into Huntsman, with Huntsman surviving the merger as a wholly-owned subsidiary of Clariant. On October 26, 2017, Huntsman, Clariant and Merger Sub entered into the Termination Agreement, dated as of October 26, 2017, pursuant to which the parties mutually terminated the Merger Agreement. No fees are currently payable under the terms of the Termination Agreement. Huntsman and
17
Clariant also agreed to release each other from certain claims and liabilities arising out of or related to the Merger Agreement or the transactions contemplated therein or thereby. Pursuant to the Termination Agreement, each party agrees to bear its own costs, fees and expenses in connection with Merger Agreement and the transactions contemplated thereby, except for specified joint filing fees and related expenses as set forth in the Merger Agreement. During the three and nine months ended September 30, 2017 and 2016, we incurred merger-related costs of $12 million, $18 million, nil and nil, respectively.
Debt Prepayment
In addition to the debt prepayments made in connection with the separation of our former P&A Business and the Venator IPO described above, on October 25, 2017, we made an early prepayment of $100 million on our 2023 Term Loan B from existing cash. See “Note 7. Debt—Direct and Subsidiary Debt—Senior Credit Facilities.”
USE OF ESTIMATESEstimates
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.
2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTSSTANDARDS
Accounting Pronouncements Adopted During 2017RECENTLY ADOPTED ACCOUNTING STANDARDS
In July 2015, theOn January 1, 2024, we adopted Financial Accounting Standards Board (“FASB”) issued(FASB) Accounting Standards Update (“ASU”) (ASU) No. 2015-11, Inventory2023-07,Segment Reporting (Topic 330)280): SimplifyingImprovements to Reportable Segment Disclosures; however, the Measurement of Inventory. The amendments in this ASU do not apply to inventory that is measured using last-in first-out (“LIFO”) or the retail inventory method, but rather does apply to all other inventory, which includes inventory that is measured using first-in first-out or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments in this ASUrequired disclosures are effective for fiscal years,our 2024 annual reporting and interim periods within those fiscal years beginning after December 15, 2016. The amendments in this ASU should be applied prospectively. We adopted the amendments in this ASU effective January 1, 2017, and the initial adoption of the amendment in this ASU did not have a significant impact on our condensed consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016‑09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share‑Based Payment Accounting. The amendments in this ASU simplify several aspects of the accounting for share‑based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We adopted the amendments in this ASU effective January 1, 2017, and the initial adoption of the amendment in this ASU did not have a significant impact on our condensed consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017‑04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value, which eliminates the current requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount. The amendments in this ASU are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments in this ASU should be applied on a prospective basis. We adopted the amendments in this ASU effective January 1, 2017 and the initial adoption of the amendments in this ASU did not have a significant impact on our condensed consolidated financial statements.
18
Accounting Pronouncements Pending Adoption in Future Periods
In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606), outlining a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and supersedes most current revenue recognition guidance. In August 2015, the FASB issued ASU No. 2015‑14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of ASU No. 2014‑09 for all entities by one year. Further, in March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifying the implementation guidance on principal versus agent considerations, in April 2016, the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, clarifying the implementation guidance on identifying performance obligations in a contract and determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time), in May 2016, the FASB issued ASU No. 2016‑12, Revenue from Customers (Topic 606): Narrow‑Scope Improvements and Practical Expedients, providing clarifications and practical expedients for certain narrow aspects in Topic 606, and in December 2016, the FASB issued ASU 2016‑20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in these ASUs are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 should be applied retrospectively, and early application is permitted. We are substantially complete with our analysis to identify areas that will be impacted by the adoption of the amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 on our condensed consolidated financial statements. At this time, other than additional required disclosures, we do not expect the adoption of the amendments in these ASUs to have a significant impact on our condensed consolidated financial statements. The standard will be adopted in our fiscal year 2018, and we have elected the modified retrospective approach as the transition method.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this ASU will increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU will require lessees to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application of the amendments in this ASU is permitted for all entities. Reporting entities are required to recognize and measure leases under these amendments at the beginning of the earliest period presented using a modified retrospective approach. 2024. We are currently evaluating the impact of the adoption of the amendments in this ASUaccounting standard on our condensed consolidated financial statements and believe,related disclosures.
ACCOUNTING STANDARDS PENDING ADOPTION IN FUTURE PERIODS
The following relevant accounting standard becomes effective subsequent to fiscal year 2024, and we are currently evaluating the impact of the future adoption of this accounting standard on our consolidated financial statements and related disclosures:
● | FASB ASU No.2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective for annual periods of fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025 |
3. BUSINESS COMBINATIONS AND ACQUISITIONS
SEPARATION AND ACQUISITION OF ASSETS OF SLIC JOINT VENTURE
On January 31, 2024, we completed the planned separation and acquisition of assets of Shanghai Lianheng Isocyanate Company Ltd. (“SLIC”), our joint venture with BASF and three Chinese chemical companies. The final purchase price of the acquired assets will be determined based on an asset valuation, which we currently expect to be completed in the first half of 2024. The acquisition of the assets was funded in part with Huntsman Polyurethanes Shanghai Ltd., our 70%-owned consolidated joint venture in China (“HPS”), issuing a U.S. dollar equivalent note payable at closing of approximately $218 million, as adjusted to reflect the preliminary assessment,valuation and is subject to further change pending the final valuation. As of March 31, 2024, the note payable has been reduced by approximately $28 million to reflect cash payments made during the quarter. We expect that the remainder of the note payable will be paid by the end of 2024 using available funds at HPS. Upon liquidation of the joint venture, all remaining cash of SLIC, primarily resulting from the proceeds received by SLIC, will be distributed back to the joint venture partners. We currently anticipate that the liquidation will be completed by mid-2025.
The acquisition is being integrated into our Polyurethanes segment. Transaction costs related to this acquisition were not material for the three months ended March 31, 2024.
We have accounted for the acquisition using the acquisition method. As such, we will record significant additional right-to-useanalyzed the fair value of assets acquired. The preliminary allocation of acquisition cost to the assets acquired is summarized as follow (dollars in millions):
Fair value of assets acquired: | ||||
Accounts receivable | $ | 20 | ||
Inventories | 10 | |||
Property, plant and equipment | 233 | |||
Other long-term assets | 23 | |||
Deferred income taxes | 1 | |||
Total | $ | 287 |
The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired, including final valuation of certain inventories, property, plant and equipment, leases, other long-term assets and lease obligations.deferred taxes. It is possible that material changes to this preliminary valuation and allocation of acquisition cost could occur. The preliminary estimate of the total fair value of the assets acquired is in excess of the acquisition cost resulting in a preliminary net bargain purchase gain of approximately $52 million. Concurrent with the acquisition of assets, we wrote off certain prepaid assets of approximately $71 million related to operating agreements with SLIC and other joint venture partners.
In August 2016,According to the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and include specific guidance to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We do not expect the adoptionoperating agreement of the amendmentsjoint venture, SLIC sold all of its output to the joint venture partners with no external sales. After the separation and acquisition of assets, we use all of the output of the acquired assets for internal use. As such, the acquired business has no external revenues or net income.
4. DISCONTINUED OPERATIONS
SaLEof tEXTILE eFFECTS bUSINESS
On February 28, 2023, we completed the sale of our textile chemicals and dyes business (“Textile Effects Business”) to Archroma, a portfolio company of SK Capital Partners (“Archroma”), and during the first quarter of 2024, we finalized the purchase price valued at $597 million, which includes adjustments to the purchase price for working capital plus the assumption of underfunded pension liabilities. Additionally, during the first quarter of 2024, we recorded a net charge of approximately $8 million related to certain post-closing indemnification obligations and other outstanding charges between the parties. During the first quarter of 2024, we have paid cash taxes of approximately $1 million, and we expect to pay additional cash taxes of approximately $11 million.
The following table reconciles major line items constituting pretax (loss) income of discontinued operations to after-tax (loss) income of discontinued operations, primarily related to our Textile Effects Business, as presented in this ASU to have a significant impact on our condensed consolidated financial statements.statements of operations (dollars in millions):
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The amendments in this ASU require entities to recognize the current and deferred income taxes for an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to deferring the recognition of the income tax consequences until the asset has been sold to an outside party. The amendments in this ASU are effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We do not expect the adoption of the amendments in this ASU to have a significant impact on our condensed consolidated financial statements.
19
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Major line items constituting pretax (loss) income of discontinued operations: | ||||||||
Trade sales, services and fees, net | $ | — | $ | 88 | ||||
Cost of goods sold | — | (69 | ) | |||||
(Loss) gain on sale of our Textile Effects Business, net | (8 | ) | 153 | |||||
Other expense items, net | — | (35 | ) | |||||
(Loss) income from discontinued operations before income taxes | (8 | ) | 137 | |||||
Income tax benefit (expense) | 1 | (15 | ) | |||||
Net (loss) income attributable to discontinued operations | $ | (7 | ) | $ | 122 |
5. INVENTORIES
In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning‑of‑period and end‑of‑period total amounts shown on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We do not expect the adoption of the amendments in this ASU to have a significant impact onstate our condensed consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. We do not expect the adoption of the amendments in this ASU to have a significant impact on our condensed consolidated financial statements.
In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this ASU require that an employer report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit cost in assets. The amendments in this ASU will impact the presentation of our condensed consolidated financial statements. Our current presentation of service cost components is consistent with the amendments in this ASU. Upon adoption of the amendments in this ASU, we expect to present the other components within other nonoperating income, whereas we currently present these within cost of goods sold and selling, general and administrative expenses.
In August 2017, the FASB issued ASU No. 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this ASU better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships as well as the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements to increase the understandability of the results of an entity’s intended hedging strategies. The amendments in this ASU also include certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted in any interim period after the issuance of this ASU. Transition requirements and elections should be applied to hedging relationships existing on the date of adoption. For cash flow and net investment hedges, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness, and the amended presentation and disclosure guidance is required only prospectively. We do not expect the adoption of the amendments in this ASU to have a significant impact on our condensed consolidated financial statements.
20
3. INVENTORIES
Inventories are statedinventories at the lower of cost or market, with cost determined using LIFO, first-in first-out,average cost, last-in first-out (“LIFO”) and average costfirst-in first-out methods for different components of inventory. Inventories consisted of the following (dollars in millions):
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|
|
|
|
|
| ||||||||
|
| September 30, |
| December 31, | March 31, | December 31, | ||||||||
|
| 2017 |
| 2016 | 2024 | 2023 | ||||||||
Raw materials and supplies |
| $ | 218 |
| $ | 157 | $ | 199 | $ | 191 | ||||
Work in progress |
|
| 54 |
|
| 45 | 40 | 39 | ||||||
Finished goods |
|
| 867 |
|
| 771 | 694 | 673 | ||||||
Total |
|
| 1,139 |
|
| 973 | 933 | 903 | ||||||
LIFO reserves |
|
| (55) |
|
| (55) | (37 | ) | (36 | ) | ||||
Net inventories |
| $ | 1,084 |
| $ | 918 | $ | 896 | $ | 867 |
For both September 30, 2017March 31, 2024 and December 31, 2016,2023, approximately 13%8% of inventories were recorded using the LIFO cost method.
4. DISCONTINUED OPERATIONS
In August 2017, we separated the P&A Business and conducted an IPO of ordinary shares of Venator, formerly a wholly-owned subsidiary of Huntsman. Following the IPO, we retained approximately 75% ownership in Venator. We intend to monetize our retained ownership in Venator at prevailing market conditions and expect to implement multiple follow-on capital market or block transactions to permit the orderly distribution of our retained shares.
In August 2017, we entered into a separation agreement, a transition services agreement (“TSA”) and a registration rights agreement with Venator to effect the Separation and provide a framework for a short term set of transition services as well as a tax matters agreement and an employee matters agreement. Pursuant to the TSA, we will, for a limited time following the Separation, provide Venator with certain services and functions that the parties have historically shared, including administrative, payroll, human resources, data processing, environmental, health and safety, financial audit support, financial transaction support, marketing support, information technology systems and various other corporate and support services. We may also provide Venator with additional services that Venator and Huntsman may identify from time to time in the future. In general, the services began following the Separation and cover a period not expected to exceed 24 months; however, Venator may terminate individual services provided by us under the TSA early, as it becomes able to operate its business without such services.
21
The following table summarizes the major classes of assets and liabilities constituting assets and liabilities held for sale:
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
Carrying amounts of major classes of assets held for sale: |
|
|
|
|
|
|
Accounts receivable |
| $ | 411 |
| $ | 234 |
Inventories |
|
| 432 |
|
| 426 |
Other current assets |
|
| 280 |
|
| 117 |
Total current assets(1) |
|
|
|
|
| 777 |
Property, plant and equipment, net |
|
| 1,290 |
|
| 1,178 |
Deferred income taxes |
|
| 195 |
|
| 143 |
Other noncurrent assets |
|
| 137 |
|
| 142 |
Total noncurrent assets(1) |
|
|
|
|
| 1,463 |
Total assets held for sale |
| $ | 2,745 |
| $ | 2,240 |
Carrying amounts of major classes of liabilities in held for sale: |
|
|
|
|
|
|
Accounts payable |
| $ | 319 |
| $ | 297 |
Accrued liabilities |
|
| 213 |
|
| 145 |
Other current liabilities |
|
| 16 |
|
| 25 |
Total current liabilities(1) |
|
|
|
|
| 467 |
Deferred income taxes |
|
| — |
|
| 56 |
Long term debt |
|
| 747 |
|
| — |
Other noncurrent liabilities |
|
| 338 |
|
| 337 |
Total noncurrent liabilities(1) |
|
|
|
|
| 393 |
Total liabilities held for sale |
| $ | 1,633 |
| $ | 860 |
|
|
The following table summarizes major classes of line items constituting pretax and after-tax income of discontinued operations:
22
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Major classes of line items constituting pretax income (loss) of discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 589 |
| $ | 540 |
| $ | 1,700 |
| $ | 1,670 |
Cost of goods sold |
|
| 470 |
|
| 496 |
|
| 1,421 |
|
| 1,566 |
Selling, general and administrative |
|
| 54 |
|
| 42 |
|
| 128 |
|
| 131 |
Restructuring, impairment and plant closing costs |
|
| 17 |
|
| 8 |
|
| 51 |
|
| 32 |
Business separation expenses |
|
| 11 |
|
| — |
|
| 32 |
|
| — |
Other operating income, net |
|
| (51) |
|
| (23) |
|
| (83) |
|
| (37) |
Other loss (income), net |
|
| 8 |
|
| — |
|
| 9 |
|
| (2) |
Income (loss) from discontinued operations before income taxes |
|
| 80 |
|
| 17 |
|
| 142 |
|
| (20) |
Income tax (expense) benefit |
|
| (17) |
|
| 7 |
|
| (41) |
|
| 8 |
Income (loss) from discontinued operations, net of tax |
|
| 63 |
|
| 24 |
|
| 101 |
|
| (12) |
Net income attributable to noncontrolling interests |
|
| (2) |
|
| (3) |
|
| (8) |
|
| (8) |
Net income (loss) attributable to discontinued operations |
| $ | 61 |
| $ | 21 |
| $ | 93 |
| $ | (20) |
Huntsman International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Major classes of line items constituting pretax income (loss) of discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 589 |
| $ | 540 |
| $ | 1,700 |
| $ | 1,670 |
Cost of goods sold |
|
| 471 |
|
| 498 |
|
| 1,424 |
|
| 1,571 |
Selling, general and administrative |
|
| 54 |
|
| 42 |
|
| 128 |
|
| 131 |
Restructuring, impairment and plant closing costs |
|
| 17 |
|
| 8 |
|
| 51 |
|
| 32 |
Business separation expenses |
|
| 11 |
|
| — |
|
| 32 |
|
| — |
Other operating income, net |
|
| (51) |
|
| (23) |
|
| (83) |
|
| (37) |
Other loss (income), net |
|
| 8 |
|
| — |
|
| 9 |
|
| (2) |
Income (loss) from discontinued operations before income taxes |
|
| 79 |
|
| 15 |
|
| 139 |
|
| (25) |
Income tax (expense) benefit |
|
| (17) |
|
| 7 |
|
| (41) |
|
| 8 |
Income (loss) from discontinued operations, net of tax |
|
| 62 |
|
| 22 |
|
| 98 |
|
| (17) |
Net income attributable to noncontrolling interests |
|
| (2) |
|
| (3) |
|
| (8) |
|
| (8) |
Net income (loss) attributable to discontinued operations |
| $ | 60 |
| $ | 19 |
| $ | 90 |
| $ | (25) |
5.6. VARIABLE INTEREST ENTITIES
We evaluate our investments and transactions to identify variable interest entities for which we are the primary beneficiary. We hold a variable interest in the following joint ventures for which we are the primary beneficiary:
| ● | Rubicon LLC is our 50%-owned joint venture with |
| ● | Arabian Amines Company (“AAC”) is our 50%-owned joint venture with Zamil group that manufactures products for our Performance Products segment. |
23
|
|
|
During the three months ended March 31, 2024, there were no changes in our variable interest entities.
Creditors of theseour variable interest entities have no recourse to our general credit. See “Note 7.8. Debt—Direct and Subsidiary Debt.” As the primary beneficiary of these variable interest entities at September 30, 2017,March 31, 2024, the joint ventures’ assets, liabilities and results of operations are included in our condensed consolidated financial statements.
The following table summarizes the carrying amountamounts of our variable interest entities’ assets and liabilities included in our condensed consolidated balance sheetssheet as of September 30, 2017March 31, 2024 and our consolidated balance sheetssheet as of December 31, 20162023 (dollars in millions):
|
|
|
|
|
|
| ||||||||
|
| September 30, |
| December 31, | March 31, | December 31, | ||||||||
|
| 2017 |
| 2016 | 2024 | 2023 | ||||||||
Current assets |
| $ | 124 |
| $ | 103 | $ | 85 | $ | 67 | ||||
Property, plant and equipment, net |
|
| 272 |
|
| 279 | 151 | 150 | ||||||
Operating lease right-of-use assets | 26 | 29 | ||||||||||||
Other noncurrent assets |
|
| 107 |
|
| 99 | 126 | 125 | ||||||
Deferred income taxes |
|
| 43 |
|
| 43 | 13 | 13 | ||||||
Intangible assets |
|
| 10 |
|
| 10 | ||||||||
Goodwill |
|
| 14 |
|
| 12 | ||||||||
Total assets |
| $ | 570 |
| $ | 546 | $ | 401 | $ | 384 | ||||
Current liabilities |
| $ | 131 |
| $ | 131 | $ | 126 | $ | 121 | ||||
Long-term debt |
|
| 94 |
|
| 114 | 15 | 17 | ||||||
Noncurrent operating lease liabilities | 19 | 21 | ||||||||||||
Other noncurrent liabilities | 16 | 15 | ||||||||||||
Deferred income taxes |
|
| 11 |
|
| 10 | 1 | 1 | ||||||
Other noncurrent liabilities |
|
| 80 |
|
| 76 | ||||||||
Total liabilities |
| $ | 316 |
| $ | 331 | $ | 177 | $ | 175 |
The revenues, income from continuing operations before income taxes and net cash provided byCertain operating activities for our variable interest entities for the three and nine months ended September 30, 2017 March 31, 2024 and 20162023 are as follows (dollars in millions):
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Income from continuing operations before income taxes | $ | 18 | $ | 15 | ||||
Net cash provided by operating activities | 19 | 25 |
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||||||||
| ended |
| ended | ||||||||
| September 30, |
| September 30, | ||||||||
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Revenues | $ | 32 |
| $ | 24 |
| $ | 99 |
| $ | 72 |
Income from continuing operations before income taxes |
| 8 |
|
| 2 |
|
| 22 |
|
| 12 |
Net cash provided by operating activities |
| 20 |
|
| 13 |
|
| 42 |
|
| 37 |
Prior to the Separation, we held variable interests in two additional joint ventures for which we were the primary beneficiary: Pacific Iron Products Sdn Bhd and Viance, LLC. In connection with the Separation, these variable interests are now held by Venator. As such, the assets and liabilities of these variable interest entities are now included as part of discontinued operations. See “Note 4. Discontinued Operations.”
24
6.7. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of September 30, 2017March 31, 2024 and December 31, 2016,2023, accrued restructuring costs of continuing operations by type of cost and initiative consisted of the following (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-cancelable |
| Other |
|
| |||||
|
| Workforce |
| Demolition and |
| lease and contract |
| restructuring |
|
| |||||
|
| reductions(1) |
| decommissioning |
| termination costs |
| costs |
| Total(2) | |||||
Accrued liabilities as of January 1, 2017 |
| $ | 4 |
| $ | 19 |
| $ | 40 |
| $ | 5 |
| $ | 68 |
2017 charges for 2016 and prior initiatives |
|
| — |
|
| 5 |
|
| 1 |
|
| 1 |
|
| 7 |
2017 charges for 2017 initiatives |
|
| 6 |
|
| — |
|
| — |
|
| — |
|
| 6 |
2017 payments for 2016 and prior initiatives |
|
| — |
|
| (21) |
|
| (1) |
|
| (2) |
|
| (24) |
2017 payments for 2017 initiatives |
|
| (2) |
|
| — |
|
| — |
|
| — |
|
| (2) |
Foreign currency effect on liability balance |
|
| 1 |
|
| 1 |
|
| 2 |
|
| — |
|
| 4 |
Accrued liabilities as of September 30, 2017 |
| $ | 9 |
| $ | 4 |
| $ | 42 |
| $ | 4 |
| $ | 59 |
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
2015 and prior initiatives |
| $ | 55 |
| $ | 67 |
2016 initiatives |
|
| — |
|
| 1 |
2017 initiatives |
|
| 4 |
|
| — |
Total |
| $ | 59 |
| $ | 68 |
Workforce reductions | Other restructuring costs | Total | ||||||||||
Accrued liabilities as of January 1, 2024 | $ | 27 | $ | — | $ | 27 | ||||||
Charges | 6 | 2 | 8 | |||||||||
Payments | (15 | ) | (2 | ) | (17 | ) | ||||||
Accrued liabilities as of March 31, 2024 | $ | 18 | $ | — | $ | 18 |
Details with respect to our reserves for restructuring, impairment and plant closing costs by segment 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, 2017 |
| $ | 2 |
| $ | — |
| $ | 3 |
| $ | 61 |
| $ | 2 |
| $ | 68 |
|
2017 charges for 2016 and prior initiatives |
|
| — |
|
| — |
|
| — |
|
| 7 |
|
| — |
|
| 7 |
|
2017 charges for 2017 initiatives |
|
| — |
|
| — |
|
| — |
|
| 6 |
|
| — |
|
| 6 |
|
2017 payments for 2016 and prior initiatives |
|
| (1) |
|
| — |
|
| — |
|
| (23) |
|
| — |
|
| (24) |
|
2017 payments for 2017 initiatives |
|
| — |
|
| — |
|
| — |
|
| (2) |
|
| — |
|
| (2) |
|
Foreign currency effect on liability balance |
|
| — |
|
| — |
|
| — |
|
| 4 |
|
| — |
|
| 4 |
|
Accrued liabilities as of September 30, 2017 |
| $ | 1 |
| $ | — |
| $ | 3 |
|
| 53 |
| $ | 2 |
| $ | 59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of restructuring reserves |
| $ | 1 |
| $ | — |
| $ | 2 |
| $ | 14 |
| $ | 2 |
| $ | 19 |
|
Long-term portion of restructuring reserves |
|
| — |
|
| — |
|
| 1 |
|
| 39 |
|
| — |
|
| 40 |
|
Performance | Advanced | Corporate | ||||||||||||||||||
Polyurethanes | Products | Materials | and other | Total | ||||||||||||||||
Accrued liabilities as of January 1, 2024 | $ | 8 | $ | 7 | $ | 4 | $ | 8 | $ | 27 | ||||||||||
Charges | 2 | — | 6 | — | 8 | |||||||||||||||
Payments | (7 | ) | (2 | ) | (4 | ) | (4 | ) | (17 | ) | ||||||||||
Accrued liabilities as of March 31, 2024 | $ | 3 | $ | 5 | $ | 6 | $ | 4 | $ | 18 | ||||||||||
Current portion of restructuring reserves | $ | 3 | $ | 5 | $ | 3 | $ | 4 | $ | 15 | ||||||||||
Long-term portion of restructuring reserves | — | — | 3 | — | 3 |
25
Details with respect to cash and noncash restructuring charges from continuing operations for the three and nine months ended September 30, 2017 March 31, 2024 and 2016 by initiative2023 are provided below (dollars in millions):
|
|
|
|
|
|
|
|
| Three months ended September 30, 2017 |
| Nine months ended September 30, 2017 | ||
Cash charges: |
|
|
|
|
|
|
2017 charges for 2016 and prior initiatives |
| $ | 2 |
| $ | 7 |
2017 charges for 2017 initiatives |
|
| — |
|
| 6 |
Pension-related charges |
|
| — |
|
| 1 |
Accelerated depreciation |
|
| — |
|
| 2 |
Gain on sale of land |
|
| (1) |
|
| (3) |
Total 2017 Restructuring, Impairment and Plant Closing Costs |
| $ | 1 |
| $ | 13 |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Cash charges (credits) | $ | 8 | $ | (7 | ) | |||
Noncash charges: | ||||||||
Accelerated depreciation | 3 | — | ||||||
Total restructuring, impairment and plant closing costs (credits) | $ | 11 | $ | (7 | ) |
|
|
|
|
|
|
|
|
| Three months ended September 30, 2016 |
| Nine months ended September 30, 2016 | ||
Cash charges: |
|
|
|
|
|
|
2016 charges for 2015 and prior initiatives |
| $ | 40 |
| $ | 56 |
2016 charges for 2016 initiatives |
|
| 1 |
|
| 4 |
Gain on sale of land |
|
| (3) |
|
| (3) |
Reversal of reserves no longer required |
|
| — |
|
| (1) |
Total 2016 Restructuring, Impairment and Plant Closing Costs |
| $ | 38 |
| $ | 56 |
2017 RESTRUCTURING ACTIVITIESRestructuring Activities
In September 2011, we implemented a significant restructuring of our Textile Effects segment, includingBeginning in the closure of our production facilities and business support offices in Basel, Switzerland (the “2011 Textile Effects Restructuring”). In connection with this restructuring plan, during the nine months ended September 30, 2017, our Textile Effects segment recorded restructuring expense of approximately $4 million associated with this initiative. We expect to receive an income of upfront installment payment from the sale of property at the Basel, Switzerland site of approximately $5 million through the end of 2017 to cover our large portion of contract settlement payments.
During the first quarter of 2017, we2024, our Advanced Materials segment implemented the first phase of a restructuring program to improve competitivenessoptimize the segment’s manufacturing processes and cost structure in our Textile Effects segment.the U.S. to better align with future market opportunities. In connection with this restructuring program, we recorded net restructuring expense of $7approximately $8 million in the ninethree months ended September 30, 2017March 31, 2024, primarily related primarily to workforce reductions.reductions and accelerated depreciation. We expect to incur additional chargesrecord further restructuring expenses of approximately $2$11 million through the end 2017.2025, primarily related to accelerated depreciation.
2016 RESTRUCTURING ACTIVITIES
In December 2015,Beginning in the fourth quarter of 2022, we implemented a restructuring program to further realign our Performance Products segment announced plans for a reorganizationcost structure with additional restructuring in Europe. This program is associated with all of its commercialour segments and technical functionsincludes exiting and a refocused divisional business strategyconsolidating certain facilities, workforce relocation to better position the segment for growth in coming years. In addition, a program was launched to capture growth opportunities, improve manufacturinglower cost efficiencylocations and reduce inventories.further personnel rationalization. In connection with this restructuring program, we recorded net restructuring expense of $16approximately $2 million for the three months ended March 31, 2024, primarily related to site closures. During the first quarter of 2023, we evaluated the then current developments of this program and related anticipated cash costs, and we recorded a net restructuring credit of approximately $8 million for the three months ended March 31, 2023, primarily to adjust restructuring reserves that were no longer required for certain workforce reductions. We expect to record further restructuring expenses of approximately $3 million through the first half of 2025.
Beginning in the first quarter of 2021, our Corporate function implemented a restructuring program to optimize our global approach to leveraging shared services capabilities. During the second quarter of 2022, this program was further expanded to include additional geographies. During the three months ended March 31, 2024, we recorded net restructuring expense of approximately nil. During the first quarter of 2023, we evaluated the then current developments of this program and related anticipated cash costs, and we recorded a net restructuring credit of approximately $5 million for the three months ended March 31, 2023, primarily to adjust restructuring reserves that were no longer required for certain workforce reductions. We expect to record further restructuring expenses of approximately $1 million through 2024.
Beginning in the second quarter of 2020, our Advanced Materials segment implemented restructuring programs in connection with our 2020 acquisition of CVC Thermoset Specialties, the alignment of the segment’s commercial organization and optimization of the segment’s manufacturing processes. In connection with these restructuring programs, we recorded net restructuring expense of approximately nil and $2 million in the ninethree months ended September 30, 2016.March 31, 2024 and 2023, respectively, primarily related to a site closure and accelerated depreciation. We expect to record further restructuring expenses of approximately $1 million through the first half of 2024.
Beginning in the third quarter of 2020, our Polyurethanes segment implemented a restructuring program to optimize its downstream footprint. During the second quarter of 2022, this optimization program was further expanded to include the entire Polyurethanes business. In connection with this restructuring program, we recorded net restructuring expense of approximately $2 million in the 2011 Textile Effects Restructuring, during the ninethree months ended September 30, 2016, our Textile Effects segment recorded charges of $8 million for non‑cancelable long‑term contract termination costs and $28 million for decommissioning associated with this initiative.March 31, 2023, primarily related to workforce reductions.
8. DEBT
26
7. DEBT
OutstandingOur outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):
March 31, | December 31, | |||||||
2024 | 2023 | |||||||
Senior credit facilities: | ||||||||
Revolving facility | $ | 195 | $ | — | ||||
Senior notes | 1,463 | 1,471 | ||||||
Amounts outstanding under A/R programs | 163 | 169 | ||||||
Note payable | 190 | — | ||||||
Variable interest entities | 24 | 26 | ||||||
Other | 21 | 22 | ||||||
Total debt | $ | 2,056 | $ | 1,688 | ||||
Current portion of debt | $ | 396 | $ | 12 | ||||
Long-term portion of debt | 1,660 | 1,676 | ||||||
Total debt | $ | 2,056 | $ | 1,688 |
Huntsman CorporationDirect and Subsidiary Debt
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
Senior Credit Facilities: |
|
|
|
|
|
|
Term loans |
| $ | 592 |
| $ | 1,967 |
Amounts outstanding under A/R programs |
|
| 184 |
|
| 208 |
Senior notes |
|
| 1,913 |
|
| 1,812 |
Variable interest entities |
|
| 114 |
|
| 126 |
Other |
|
| 71 |
|
| 59 |
Total debt—excluding debt to affiliates |
| $ | 2,874 |
| $ | 4,172 |
Total current portion of debt |
| $ | 29 |
| $ | 50 |
Long-term portion |
|
| 2,845 |
|
| 4,122 |
Total debt—excluding debt to affiliates |
| $ | 2,874 |
| $ | 4,172 |
Total debt—excluding debt to affiliates |
| $ | 2,874 |
| $ | 4,172 |
Notes payable to affiliates-noncurrent |
|
| — |
|
| 1 |
Total debt |
| $ | 2,874 |
| $ | 4,173 |
Huntsman International
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
Senior Credit Facilities: |
|
|
|
|
|
|
Term loans |
| $ | 592 |
| $ | 1,967 |
Amounts outstanding under A/R programs |
|
| 184 |
|
| 208 |
Senior notes |
|
| 1,913 |
|
| 1,812 |
Variable interest entities |
|
| 114 |
|
| 126 |
Other |
|
| 71 |
|
| 59 |
Total debt—excluding debt to affiliates |
| $ | 2,874 |
| $ | 4,172 |
Total current portion of debt |
| $ | 29 |
| $ | 50 |
Long-term portion |
|
| 2,845 |
|
| 4,122 |
Total debt—excluding debt to affiliates |
| $ | 2,874 |
| $ | 4,172 |
Total debt—excluding debt to affiliates |
| $ | 2,874 |
| $ | 4,172 |
Notes payable to affiliates-current |
|
| 100 |
|
| 100 |
Notes payable to affiliates-noncurrent |
|
| 717 |
|
| 697 |
Total debt |
| $ | 3,691 |
| $ | 4,969 |
DIRECT AND SUBSIDIARY DEBT
Huntsman Corporation’s direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily Huntsman International). Huntsman Corporation is not a guarantor of such subsidiary debt.
Certain of our subsidiaries are designated as nonguarantor subsidiaries (“Nonguarantors”) and have third‑party debt agreements. Thesethird-party debt agreements that 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.
27
Debt Issuance CostsRevolving Credit Facility
We record debt issuance costs related toOn May 20, 2022, Huntsman International entered into a debt liabilitynew $1.2 billion senior unsecured revolving credit facility (the “2022 Revolving Credit Facility”). Borrowings will bear interest at the rates specified in the credit agreement governing the 2022 Revolving Credit Facility, which will vary based on the balance sheet as atype of loan and Huntsman International’s debt ratings. Under the credit agreement, the interest rate margin and the commitment fee rates are also subject to adjustments based on the Company’s performance on specified sustainability target thresholds with respect to annual percentage reduction in operational greenhouse gas emissions intensity and annual percentage reduction in water consumption intensity. Unless previously terminated in accordance with its terms, the face amountcredit agreement will mature in May 2027. Huntsman International may increase the 2022 Revolving Credit Facility commitments up to an additional $500 million, subject to the satisfaction of that debt liability. Ascertain conditions.
The following table presents certain amounts under our 2022 Revolving Credit Facility as of September 30, 2017 and DecemberMarch 31, 2016, the amount of debt issuance costs directly reducing the debt liability was $25 million and $57 million, respectively. We record the amortization of debt issuance costs as interest expense.2024 (monetary amounts in millions):
Senior Credit Facilities
Unamortized | ||||||||||||||||||||
discounts and | ||||||||||||||||||||
Committed | Principal | debt issuance | Carrying | |||||||||||||||||
Facility | amount | outstanding | costs | value | Interest rate(2) | Maturity | ||||||||||||||
2022 Revolving Credit Facility | $ | 1,200 | $ | 195 | (1) | $ | — | $ | 195 | Term Secured Overnight Financing Rate (“SOFR”) plus 1.525% | May 2027 |
As of September 30, 2017, our Senior Credit Facilities consisted of our revolving facility (“Revolving Facility”) and our 2023 Term Loan B as follows (dollars in millions):
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| Discounts and |
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| Committed |
| Principal |
| Debt Issuance |
| Carrying |
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| ||||
Facility |
| Amount |
| Outstanding |
| Costs |
| Value |
| Interest Rate(3) |
| Maturity | ||||
Revolving Facility |
| $ | 650 |
| $ | — | (1) | $ | — | (1) | $ | — | (1) | USD LIBOR plus 2.50% |
| 2021 |
2023 Term Loan B |
|
| N/A |
|
| 611 |
|
| (19) |
|
| 592 |
| USD LIBOR plus 3.00%(2) |
| 2023 |
(1) |
|
|
(2) |
| Interest rates on borrowings under the 2022 Revolving Credit Facility vary based on the type of loan and Huntsman International’s debt ratings. The |
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|
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.Notes
On October 25, 2017, we made an early prepaymentOur senior notes consisted of $100 million on our 2023 Term Loan B from existing cash. In connection with the $100 million prepayment of our term loan, we recognized a loss on early extinguishment of debt of $3 million. In addition, on both April 25, 2017 and July 26, 2017, we made early prepayments of $100 million each on our 2015 Extended Term Loan B from existing cash.following (monetary amounts in millions):
Unamortized | ||||||||||||
premiums, | ||||||||||||
discounts | ||||||||||||
and debt | ||||||||||||
Notes | Maturity | Interest rate | Amount outstanding | issuance costs | ||||||||
2025 Senior notes | April 2025 | 4.25 | % | €300 (€300 carrying value ($324)) | $ | — | ||||||
2029 Senior notes | February 2029 | 4.50 | % | $750 ($742 carrying value) | 8 | |||||||
2031 Senior notes | June 2031 | 2.95 | % | $400 ($397 carrying value) | 3 |
In August 2017, we made early prepayments of $1,207 million ($450 million of which constituted a mandatory repayment as described in the seventeenth amendment to the Senior Credit Facilities) on our Senior Credit Facilities, of which $106 million was paid on our 2015 Extended Term Loan B, $347 million was paid on our 2021 Term Loan B, 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. In connection with the $1,207 million prepayments of our term loans, we recognized a loss on early extinguishment of debt of $34 million.
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 in aggregate principal amount of up 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 of discontinued operations. 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.
28
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 restructuring of the P&A Business assets. With the completion of the Separation, Venator and its subsidiaries were designated as unrestricted subsidiaries.
A/R Programs
Our U.S. accounts receivable securitization program (“U.S. A/R Program”) and our European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”) are structured so that we transfer certain of our trade receivables to the U.S. special purpose entity (“U.S. SPE”) and the European special purpose entity (“EU SPE”) in transactions intended to be true sales or true contributions. The receivables collateralize debt incurred by the U.S. SPE and the EU SPE.
On January 22, 2024, we entered into an amendment to our U.S. A/R Program that extended the scheduled maturity date of our U.S. A/R Program from July 2024 to January 2027. In addition, on January 31, 2024, we entered into an amendment to our EU A/R Program, effective as of February 15, 2024, that extended the scheduled maturity date of our EU A/R Program from July 2024 to July 2027. Aside from the extended maturity dates, these amendments to our A/R Programs secured substantially similar terms as those in the prior agreements.
Information regarding our A/R Programs as of September 30, 2017March 31, 2024 was as follows (monetary amounts in millions):
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| Maximum Funding |
| Amount |
|
| Maximum funding | Amount | ||||||||||||
Facility |
| Maturity |
| Availability(1) |
| Outstanding |
| Interest Rate(2) | Maturity | availability(1) | outstanding | Interest rate(2) | ||||||||||
U.S. A/R Program |
| April 2020 |
| $ | 250 |
| $ | 90 | (3) | Applicable rate plus 0.95% | January 2027 | $ | 150 | $ | 102 | (3) | Applicable rate plus 0.95% | |||||
EU A/R Program |
| April 2020 |
| € | 150 |
| € | 80 |
| Applicable rate plus 1.30% | July 2027 | € | 100 | € | 57 | Applicable rate plus 1.45% | ||||||
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|
| (approximately $176) |
|
| (approximately $94) |
|
| (or approximately $108) | (or approximately $61) |
| (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) | The applicable rate for our U.S. A/R Program is defined by the lender as |
| (3) | As of |
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 September 30, 2017March 31, 2024 and December 31, 2016, $3692023, $290 million and $328$224 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs from continuing operations.Programs.
Note Payable from Huntsman International to Huntsman Corporation
As of September 30, 2017, weMarch 31, 2024, HPS had a loanan outstanding note payable to SLIC denominated in Chinese renminbi, the equivalent of $817$190 million, related to our subsidiary, Huntsman International (the “Intercompany Note”). The Intercompany Note is unsecuredthe separation and $100 millionacquisition of assets of SLIC. We expect that the remainder of the note payable will be paid by the end of 2024 using available funds at HPS. For more information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture.”
Variable Interest Entity Debt
As of March 31, 2024, AAC, our consolidated 50%-owned joint venture, had $24 million outstanding amount isunder its loan commitments and debt financing arrangements. As of March 31, 2024, we have $9 million classified as current debt and $15 million as of September 30, 2017long-term debt on our condensed consolidated balance sheets. AsWe do not guarantee these loan commitments, and AAC is not a guarantor of September 30, 2017, under the termsany of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility).other debt obligations.
COMPLIANCE WITH COVENANTSDebt Issuance Costs
We record debt issuance costs related to a debt liability on the balance sheets as a reduction to the face amount of that debt liability. As of March 31, 2024 and December 31, 2023, the amount of debt issuance costs directly reducing the debt liability was $6 million and $7 million, respectively. We amortize debt issuance costs using either a straight line or effective interest method, depending on the debt agreement, and record them as interest expense.
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.Compliance with Covenants
Our material financing arrangements contain certain2022 Revolving Credit Facility contains a financial covenant regarding the leverage ratio of Huntsman International and its subsidiaries. The 2022 Revolving Credit Facility also contains other customary covenants with which we must comply. A failure to comply with a covenant could result in aand events of default under a financing arrangement unless we obtained an appropriate
29
waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, certain of our material financing arrangements contain cross-default and cross-acceleration provisions under which a failure to comply with the covenants in one financing arrangement may result inthis type. Upon an event of default under another financing arrangement.
Our Senior Credit Facilities are subjectthat is not cured or waived within any applicable cure periods, in addition to a single financial covenant (the “Leverage Covenant”), which applies onlyother 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 2022Revolving 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.
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.accelerated.
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 Senior2022 Revolving Credit Facilities,Facility, which could require us to pay off the balance of the Senior2022 Revolving Credit FacilitiesFacility in full and could result in the loss of our Senior2022 Revolving Credit Facilities.Facility.
8.We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our 2022 Revolving Credit Facility, our A/R Programs and our senior notes.
9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks.prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures.
All derivatives, whether designated as hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.
We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded as an unrealized currency translation adjustment in other accumulated other comprehensive loss.
Our revenues and expenses are denominated in various foreign currencies, and our cash flows and earnings are thus subject to fluctuations due to exchange rate variations. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of September 30, 2017,March 31, 2024 and 2023, we had approximately $81$185 million inand $387 million, respectively, of notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.contracts related to continuing operations.
30
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, Arabian Amines Company entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of Arabian Amines Company as of July 1, 2010, the interest rate contract is now included in our consolidated results. See “Note 5. Variable Interest Entities.” The notional amount of the swap as of September 30, 2017 was $16 million, and the interest rate contract is not designated as a cash flow hedge. As of September 30, 2017, the fair value of the swap was $1 million and was recorded in noncurrent liabilities on our condensed consolidated balance sheets. For each of the nine months ended September 30, 2017 and 2016, we recorded a reduction of interest expense of nil due to changes in fair value of the swap.
In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract to swap an aggregate notional $200 million for an aggregate notional €161 million. This swap is designated as a hedge of net investment for financial reporting purposes. Under the cross-currency interest rate contract, we will receive fixed U.S. dollar payments of $5 million semiannually on May 15 and November 15 (equivalent to an annual rate of 5.125%) and make interest payments of approximately €3 million (equivalent to an annual rate of approximately 3.6%). In August 2017, we terminated these cross-currency interest rate contracts and received $7 million 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 on our condensed consolidated statements of comprehensive income. From time to time, we review such designationmay purchase interest rate swaps and/or other derivative instruments to reduce the impact of intercompany loans.changes in interest rates on our floating-rate 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.
We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of September 30, 2017,March 31, 2024, we have designated approximately €505€90 million (approximately $592$97 million) of euro-denominated debt as a hedge of our net investment. For the ninethree months ended September 30, 2017,March 31, 2024 and 2023, the amount of lossamounts recognized on the hedge of our net investment was $85were losses of approximately $1 million and was$4 million, respectively, and were recorded in other comprehensive income (loss) onin our condensed consolidated statements of comprehensive income.
9.10. FAIR VALUE
The fair values of financial instruments were as follows (dollars in millions):
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|
| September 30, 2017 |
| December 31, 2016 | ||||||||
| Carrying |
| Estimated |
| Carrying |
| Estimated | ||||
| Value |
| Fair Value |
| Value |
| Fair Value | ||||
Non-qualified employee benefit plan investments | $ | 30 |
| $ | 30 |
| $ | 27 |
| $ | 27 |
Investments in equity securities |
| 3 |
|
| 3 |
|
| 18 |
|
| 18 |
Cross-currency interest rate contracts |
| — |
|
| — |
|
| 29 |
|
| 29 |
Interest rate contracts |
| (1) |
|
| (1) |
|
| (2) |
|
| (2) |
Long-term debt (including current portion) |
| (2,874) |
|
| (3,098) |
|
| (4,172) |
|
| (4,345) |
March 31, 2024 | December 31, 2023 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
value | fair value | value | fair value | |||||||||||||
Non-qualified employee benefit plan investments | $ | 10 | $ | 10 | $ | 15 | $ | 15 | ||||||||
Long-term debt (including current portion) | (2,056 | ) | (1,965 | ) | (1,688 | ) | (1,613 | ) |
The carrying amounts reported in our condensed consolidatedthe balance sheets of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair values of non-qualified employee benefit plan investments and investments in equity securities are obtained through market observable pricing using prevailing market prices.prices (Level 1). The estimated fair values of our long-term debtsenior notes are based on quoted market prices for the identical liability when traded as an asset in an active market (Level 1).
31
all our other outstanding debt are based on observable inputs other than quoted prices (Level 2). The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2017March 31, 2024 and December 31, 2016. The2023. Although we are 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 September 30, 2017March 31, 2024, 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 | |||
|
| September 30, |
| 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 |
| $ | 30 |
| $ | 30 |
| $ | — |
| $ | — |
Investments in equity securities |
|
| 3 |
|
| 3 |
|
| — |
|
| — |
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency interest rate contracts(1) |
|
| — |
|
| — |
|
| — |
|
| — |
Total assets |
| $ | 33 |
| $ | 33 |
| $ | — |
| $ | — |
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|
|
|
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|
|
|
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|
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Liabilities: |
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|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts(2) |
| $ | (1) |
| $ | — |
| $ | (1) |
| $ | — |
|
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|
|
|
|
|
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|
|
|
|
|
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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(1) |
|
| 29 |
|
| — |
|
| — |
|
| 29 |
Total assets |
| $ | 74 |
| $ | 45 |
| $ | — |
| $ | 29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts(2) |
| $ | (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 withinDuring 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.
|
|
32
|
|
The following table shows a reconciliation of beginning and ending balances for the three and nine months ended September 30, 2017 and 2016 forMarch 31, 2024, we held no instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).
|
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|
|
|
|
|
| Three months |
| Nine months | ||
|
| ended |
| ended | ||
|
| September 30, 2017 |
| September 30, 2017 | ||
|
| Cross-Currency |
| Cross-Currency | ||
|
| Interest |
| Interest | ||
|
| Rate Contracts |
| Rate Contracts | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
|
|
|
| ||
Beginning balance |
| $ | 16 |
| $ | 29 |
Transfers into Level 3 |
|
| — |
|
| — |
Transfers out of Level 3 |
|
| — |
|
| — |
Total (losses) gains: |
|
|
|
|
|
|
Included in earnings |
|
| — |
|
| — |
Included in other comprehensive income (loss) |
|
| (9) |
|
| (22) |
Purchases, sales, issuances and settlements |
|
| (7) |
|
| (7) |
Ending balance, September 30, 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 September 30, 2017 |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||
|
| ended |
| ended | ||
|
| September 30, 2016 |
| September 30, 2016 | ||
|
| Cross-Currency |
| Cross-Currency | ||
|
| Interest |
| Interest | ||
|
| Rate Contracts |
| Rate Contracts | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
|
|
|
|
| |
Beginning balance |
| $ | 26 |
| $ | 28 |
Transfers into Level 3 |
|
| — |
|
| — |
Transfers out of Level 3 |
|
| — |
|
| — |
Total (losses) gains: |
|
|
|
|
|
|
Included in earnings |
|
| — |
|
| — |
Included in other comprehensive income (loss) |
|
| (5) |
|
| (7) |
Purchases, sales, issuances and settlements |
|
| — |
|
| — |
Ending balance, September 30, 2016 |
| $ | 21 |
| $ | 21 |
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 September 30, 2016 |
| $ | — |
| $ | — |
Gains3), and there were no gains or losses (realized and unrealized) included in our 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 expense hierarchy.
11. REVENUE RECOGNITION
The following tables disaggregate our revenue from continuing operations by major source for the three months ended March 31, 2024 and other comprehensive income (loss) as follows2023 (dollars in millions):
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| Three months |
| Nine months | ||||||||
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| ended |
| ended | ||||||||
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| September 30, 2017 |
| September 30, 2017 | ||||||||
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| Other |
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| Other | ||
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| Interest |
| comprehensive |
| Interest |
| comprehensive | ||||
2017 |
| expense |
| income (loss) |
| expense |
| income (loss) | ||||
Total net gains included in earnings |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
Changes in unrealized losses |
|
| — |
|
| (9) |
|
| — |
|
| (22) |
Performance | Advanced | Corporate and | ||||||||||||||||||
2024 | Polyurethanes | Products | Materials | eliminations | Total | |||||||||||||||
Primary geographic markets(1) | ||||||||||||||||||||
U.S. and Canada | $ | 370 | $ | 137 | $ | 73 | $ | (3 | ) | $ | 577 | |||||||||
Europe | 240 | 61 | 107 | (4 | ) | 404 | ||||||||||||||
Asia Pacific | 243 | 71 | 62 | (1 | ) | 375 | ||||||||||||||
Rest of world | 73 | 22 | 19 | — | 114 | |||||||||||||||
$ | 926 | $ | 291 | $ | 261 | $ | (8 | ) | $ | 1,470 | ||||||||||
Major product groupings | ||||||||||||||||||||
Diversified | $ | 926 | $ | 291 | $ | 1,217 | ||||||||||||||
Specialty | $ | 246 | 246 | |||||||||||||||||
Other | 15 | 15 | ||||||||||||||||||
Eliminations | $ | (8 | ) | (8 | ) | |||||||||||||||
$ | 926 | $ | 291 | $ | 261 | $ | (8 | ) | $ | 1,470 |
Performance | Advanced | Corporate and | ||||||||||||||||||
2023 | Polyurethanes | Products | Materials | eliminations | Total | |||||||||||||||
Primary geographic markets(1) | ||||||||||||||||||||
U.S. and Canada | $ | 386 | $ | 157 | $ | 89 | $ | (3 | ) | $ | 629 | |||||||||
Europe | 272 | 74 | 116 | (4 | ) | 458 | ||||||||||||||
Asia Pacific | 258 | 79 | 62 | (1 | ) | 398 | ||||||||||||||
Rest of world | 75 | 24 | 22 | — | 121 | |||||||||||||||
$ | 991 | $ | 334 | $ | 289 | $ | (8 | ) | $ | 1,606 | ||||||||||
Major product groupings | ||||||||||||||||||||
Diversified | $ | 991 | $ | 334 | $ | 1,325 | ||||||||||||||
Specialty | $ | 268 | 268 | |||||||||||||||||
Other | 21 | 21 | ||||||||||||||||||
Eliminations | $ | (8 | ) | (8 | ) | |||||||||||||||
$ | 991 | $ | 334 | $ | 289 | $ | (8 | ) | $ | 1,606 |
(1) | Geographic information for revenues is based upon countries into which product is sold. |
33
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| Three months |
| Nine months | ||||||||
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| ended |
| ended | ||||||||
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| September 30, 2016 |
| September 30, 2016 | ||||||||
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| Other |
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| Other | ||
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| Interest |
| comprehensive |
| Interest |
| comprehensive | ||||
2016 |
| expense |
| income (loss) |
| expense |
| income (loss) | ||||
Total net gains included in earnings |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
Changes in unrealized losses relating to assets still held at September 30, 2016 |
|
| — |
|
| (5) |
|
| — |
|
| (7) |
We also have assets that under certain conditions are subject to measurement at fair value on a non‑recurring basis. These assets include property, plant and equipment and those associated with acquired businesses, including goodwill and intangible assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. During each of the three and nine months ended September 30, 2017 and 2016, we recorded charges of nil for the impairment of long‑lived assets.
10.12. EMPLOYEE BENEFIT PLANS
Components of the net periodic benefit costscost from continuing operations for the three and nine months ended September 30, 2017 March 31, 2024 and 20162023 were as follows (dollars in millions):
Other postretirement | ||||||||||||||||
Defined benefit plans | benefit plans | |||||||||||||||
Three months | Three months | |||||||||||||||
ended | ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Service cost | $ | 7 | $ | 6 | $ | — | $ | — | ||||||||
Interest cost | 22 | 23 | 1 | 1 | ||||||||||||
Expected return on assets | (32 | ) | (31 | ) | — | — | ||||||||||
Amortization of prior service benefit | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Amortization of actuarial loss | 8 | 8 | — | — | ||||||||||||
Net periodic benefit cost | $ | 4 | $ | 5 | $ | — | $ | — |
Huntsman Corporation
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| Other Postretirement | ||||
|
| Defined Benefit Plans |
| Benefit Plans | ||||||||
|
| Three months |
| Three months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Service cost |
| $ | 16 |
| $ | 15 |
| $ | 1 |
| $ | 1 |
Interest cost |
|
| 20 |
|
| 22 |
|
| 1 |
|
| 1 |
Expected return on assets |
|
| (39) |
|
| (37) |
|
| — |
|
| — |
Amortization of prior service benefit |
|
| (2) |
|
| (2) |
|
| (2) |
|
| (2) |
Amortization of actuarial loss |
|
| 19 |
|
| 15 |
|
| 1 |
|
| — |
Net periodic benefit cost |
| $ | 14 |
| $ | 13 |
| $ | 1 |
| $ | — |
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| Other Postretirement | ||||
|
| Defined Benefit Plans |
| Benefit Plans | ||||||||
|
| Nine months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Service cost |
| $ | 47 |
| $ | 44 |
| $ | 2 |
| $ | 2 |
Interest cost |
|
| 59 |
|
| 67 |
|
| 3 |
|
| 3 |
Expected return on assets |
|
| (116) |
|
| (111) |
|
| — |
|
| — |
Amortization of prior service benefit |
|
| (5) |
|
| (7) |
|
| (5) |
|
| (5) |
Amortization of actuarial loss |
|
| 56 |
|
| 43 |
|
| 2 |
|
| 1 |
Special termination benefits |
|
| 1 |
|
| — |
|
| — |
|
| — |
Net periodic benefit cost |
| $ | 42 |
| $ | 36 |
| $ | 2 |
| $ | 1 |
34
Huntsman International
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| Other Postretirement | ||||
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| Defined Benefit Plans |
| Benefit Plans | ||||||||
|
| Three months |
| Three months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Service cost |
| $ | 16 |
| $ | 15 |
| $ | 1 |
| $ | 1 |
Interest cost |
|
| 20 |
|
| 22 |
|
| 1 |
|
| 1 |
Expected return on assets |
|
| (39) |
|
| (37) |
|
| — |
|
| — |
Amortization of prior service benefit |
|
| (2) |
|
| (2) |
|
| (2) |
|
| (2) |
Amortization of actuarial loss |
|
| 20 |
|
| 16 |
|
| 1 |
|
| — |
Net periodic benefit cost |
| $ | 15 |
| $ | 14 |
| $ | 1 |
| $ | — |
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| Other Postretirement | ||||
|
| Defined Benefit Plans |
| Benefit Plans | ||||||||
|
| Nine months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Service cost |
| $ | 47 |
| $ | 44 |
| $ | 2 |
| $ | 2 |
Interest cost |
|
| 59 |
|
| 67 |
|
| 3 |
|
| 3 |
Expected return on assets |
|
| (116) |
|
| (111) |
|
| — |
|
| — |
Amortization of prior service benefit |
|
| (5) |
|
| (7) |
|
| (5) |
|
| (5) |
Amortization of actuarial loss |
|
| 58 |
|
| 45 |
|
| 2 |
|
| 1 |
Special termination benefits |
|
| 1 |
|
| — |
|
| — |
|
| — |
Net periodic benefit cost |
| $ | 44 |
| $ | 38 |
| $ | 2 |
| $ | 1 |
During the ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, we made contributions to our pension and other postretirement benefit plans related to continuing operations of $80$10 million and $38$11 million, respectively. During the remainder of 2017,2024, we expect to contribute an additional amount of approximately $17$23 million to these plans.
11. COMMON STOCK DIVIDENDS13. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY
Share Repurchase Program
On October 26, 2021, our Board of Directors approved a share repurchase program of $1 billion. On March 25, 2022, our Board of Directors increased the authorization of our share repurchase program from $1 billion to $2 billion. The share repurchase program is supported by our free cash flow generation. Repurchases may be made in 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 three months ended March 31, 2024, we did not repurchase any shares of our common stock.
Dividends on Common Stock
During each of the quartersthree months ended September 30, 2017 and 2016, June 30, 2017 and 2016 and March 31, 2017 2024 and 2016,2023, we paiddeclared dividends of $30$43 million and $44 million, respectively, or $0.125$0.25 and $0.2375 per share, respectively, to common stockholders.
12.14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)LOSS
The components of other comprehensive (loss) income (loss) and changes in accumulated other comprehensive loss by component were as follows (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 | |||||
|
| translation |
| benefits |
| unconsolidated |
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| noncontrolling |
| Huntsman | |||||
|
| 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 |
|
| 170 |
|
| — |
|
| (1) |
|
| 7 |
|
| 176 |
|
| (12) |
|
| 164 |
Tax benefit |
|
| 31 |
|
| — |
|
| — |
|
| (1) |
|
| 30 |
|
| — |
|
| 30 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| — |
|
| 60 |
|
| — |
|
| (8) |
|
| 52 |
|
| — |
|
| 52 |
Tax expense |
|
| — |
|
| (5) |
|
| — |
|
| — |
|
| (5) |
|
| — |
|
| (5) |
Net current-period other comprehensive income (loss) |
|
| 201 |
|
| 55 |
|
| (1) |
|
| (2) |
|
| 253 |
|
| (12) |
|
| 241 |
Disposition of a portion of P&A Business |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 72 |
|
| 72 |
Ending balance, September 30, 2017 |
| $ | (258) |
| $ | (1,220) |
| $ | 3 |
| $ | 21 |
| $ | (1,454) |
| $ | 96 |
| $ | (1,358) |
Pension | ||||||||||||||||||||||||
Foreign | and other | Amounts | Amounts | |||||||||||||||||||||
currency | postretirement | attributable to | attributable to | |||||||||||||||||||||
translation | benefits | noncontrolling | Huntsman | |||||||||||||||||||||
adjustments(1) | adjustments(2) | Other, net | Total | interests | Corporation | |||||||||||||||||||
Beginning balance, January 1, 2024 | $ | (614 | ) | $ | (656 | ) | $ | (3 | ) | $ | (1,273 | ) | $ | 28 | $ | (1,245 | ) | |||||||
Other comprehensive (loss) income before reclassifications, gross | (36 | ) | 2 | 5 | (29 | ) | (1 | ) | (30 | ) | ||||||||||||||
Tax impact | — | — | — | — | — | — | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(3) | — | 6 | — | 6 | — | 6 | ||||||||||||||||||
Tax impact | — | — | — | — | — | — | ||||||||||||||||||
Net current-period other comprehensive (loss) income | (36 | ) | 8 | 5 | (23 | ) | (1 | ) | (24 | ) | ||||||||||||||
Ending balance, March 31, 2024 | $ | (650 | ) | $ | (648 | ) | $ | 2 | $ | (1,296 | ) | $ | 27 | $ | (1,269 | ) |
| (1) | Amounts are net of tax of |
| (2) | Amounts are net of tax of |
(3) | See table below for details about these reclassifications. |
Pension | ||||||||||||||||||||||||
Foreign | and other | Amounts | Amounts | |||||||||||||||||||||
currency | postretirement | attributable to | attributable to | |||||||||||||||||||||
translation | benefits | noncontrolling | Huntsman | |||||||||||||||||||||
adjustments(1) | adjustments(2) | Other, net | Total | interests | Corporation | |||||||||||||||||||
Beginning balance, January 1, 2023 | $ | (648 | ) | $ | (652 | ) | $ | 7 | $ | (1,293 | ) | $ | 25 | $ | (1,268 | ) | ||||||||
Other comprehensive income (loss) before reclassifications, gross | 27 | (24 | ) | (1 | ) | 2 | (2 | ) | — | |||||||||||||||
Tax impact | — | 2 | — | 2 | — | 2 | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(3) | 28 | 72 | — | 100 | — | 100 | ||||||||||||||||||
Tax impact | (1 | ) | 24 | — | 23 | — | 23 | |||||||||||||||||
Net current-period other comprehensive income (loss) | 54 | 74 | (1 | ) | 127 | (2 | ) | 125 | ||||||||||||||||
Ending balance, March 31, 2023 | $ | (594 | ) | $ | (578 | ) | $ | 6 | $ | (1,166 | ) | $ | 23 | $ | (1,143 | ) |
(1) | Amounts are net of tax of $56 million and $55 as of |
(2) | Amounts are net of tax of $57 million and $31 million as of March 31, 2023 and January 1,2023, respectively. |
(3) | See table below for details about these reclassifications. |
35
Three months ended March 31, | ||||||||||
2024 | 2023 | |||||||||
Amounts reclassified | Amounts reclassified | Affected line item in | ||||||||
from accumulated | from accumulated | the statement | ||||||||
Details about accumulated other | other | other | where net income | |||||||
comprehensive loss components(1): | comprehensive loss | comprehensive loss | is presented | |||||||
Amortization of pension and other postretirement benefits: | ||||||||||
Prior service credit | $ | (2 | ) | $ | (2 | ) | (2)(3) | Other income, net | ||
Actuarial loss | 8 | 8 | (2)(3) | Other income, net | ||||||
Curtailment gains | — | (1 | ) | (2)(4) | Other income, net | |||||
Settlement losses | — | 67 | (2)(4) | Other income, net | ||||||
6 | 72 | Total before tax | ||||||||
— | 24 | Income tax expense | ||||||||
Total reclassifications for the period | $ | 6 | $ | 96 | Net of tax |
(1) |
|
See table below for details about these reclassifications.
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| Pension and |
| Other |
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| |||
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| Foreign |
| other |
| comprehensive |
| �� |
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| Amounts |
| Amounts | |||||||
|
| currency |
| postretirement |
| income of |
|
|
|
|
| attributable to |
| attributable to | |||||||
|
| translation |
| benefits |
| unconsolidated |
|
|
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|
| 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 |
|
| (18) |
|
| — |
|
| (8) |
|
| 6 |
|
| (20) |
|
| — |
|
| (20) |
Tax benefit |
|
| 7 |
|
| — |
|
| — |
|
| — |
|
| 7 |
|
| — |
|
| 7 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| — |
|
| 40 |
|
| — |
|
| — |
|
| 40 |
|
| — |
|
| 40 |
Tax expense |
|
| — |
|
| (5) |
|
| — |
|
| — |
|
| (5) |
|
| — |
|
| (5) |
Net current-period other comprehensive (loss) income |
|
| (11) |
|
| 35 |
|
| (8) |
|
| 6 |
|
| 22 |
|
| — |
|
| 22 |
Ending balance, September 30, 2016 |
| $ | (299) |
| $ | (1,021) |
| $ | 3 |
| $ | 23 |
| $ | (1,294) |
| $ | 28 |
| $ | (1,266) |
(a)Amounts are net of tax of $83 and $90 as of September 30, 2016 and January 1, 2016, respectively.
(b)Amounts are net of tax of $130 and $135 as of September 30, 2016 and January 1, 2016, respectively.
(c)See table below for details about these reclassifications.
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| Three months ended |
| Nine months ended |
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| ||
|
| September 30, 2017 |
| September 30, 2017 |
|
| ||
|
| Amount reclassified |
| Amount reclassified |
| Affected line item in | ||
|
| from accumulated |
| from accumulated |
| the statement | ||
Details about Accumulated Other |
| other |
| other |
| where net income | ||
Comprehensive Loss Components(a): |
| comprehensive loss |
| comprehensive loss |
| is presented | ||
Amortization of pension and other postretirement benefits: |
|
|
|
|
|
|
|
|
Prior service credit |
| $ | (4) |
| $ | (11) |
| (b) |
Actuarial loss |
|
| 25 |
|
| 71 |
| (b)(c) |
|
|
| 21 |
|
| 60 |
| Total before tax |
|
|
| (3) |
|
| (5) |
| Income tax expense |
Total reclassifications for the period |
| $ | 18 |
| $ | 55 |
| Net of tax |
|
|
|
|
|
|
|
|
|
|
| Three months ended |
| Nine months ended |
|
| ||
|
| September 30, 2016 |
| September 30, 2016 |
|
| ||
|
| Amount reclassified |
| Amount reclassified |
| Affected line item in | ||
|
| from accumulated |
| from accumulated |
| the statement | ||
Details about Accumulated Other |
| other |
| other |
| where net income | ||
Comprehensive Loss Components(a): |
| comprehensive loss |
| comprehensive loss |
| is presented | ||
Amortization of pension and other postretirement benefits: |
|
|
|
|
|
|
|
|
Prior service credit |
| $ | (4) |
| $ | (12) |
| (b) |
Actuarial loss |
|
| 17 |
|
| 52 |
| (b)(c) |
|
|
| 13 |
|
| 40 |
| Total before tax |
|
|
| (2) |
|
| (5) |
| Income tax expense |
Total reclassifications for the period |
| $ | 11 |
| $ | 35 |
| Net of tax |
|
|
| (2) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note |
| (3) | Amounts | |
(4) | In connection with the sale of our Textile Effects Business, we recognized $67 million of pension settlement losses and |
36
Huntsman International
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| 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 |
|
| 169 |
|
| — |
|
| (1) |
|
| 8 |
|
| 176 |
|
| (12) |
|
| 164 |
Tax benefit |
|
| 30 |
|
| — |
|
| — |
|
| (1) |
|
| 29 |
|
| — |
|
| 29 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| — |
|
| 65 |
|
| — |
|
| (8) |
|
| 57 |
|
| — |
|
| 57 |
Contribution of other comprehensive income from Parent |
|
| — |
|
| 20 |
|
| — |
|
| — |
|
| 20 |
|
| — |
|
| 20 |
Tax expense |
|
| — |
|
| (5) |
|
| — |
|
| — |
|
| (5) |
|
| — |
|
| (5) |
Net current-period other comprehensive income (loss) |
|
| 199 |
|
| 80 |
|
| (1) |
|
| (1) |
|
| 277 |
|
| (12) |
|
| 265 |
Disposition of a portion of P&A Business |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 72 |
|
| 72 |
Ending balance, September 30, 2017 |
| $ | (263) |
| $ | (1,206) |
| $ | 3 |
| $ | 16 |
| $ | (1,450) |
| $ | 96 |
| $ | (1,354) |
Pension | ||||||||||||||||||||||||
Foreign | and other | Amounts | Amounts | |||||||||||||||||||||
currency | postretirement | attributable to | attributable to | |||||||||||||||||||||
translation | benefits | noncontrolling | Huntsman | |||||||||||||||||||||
adjustments(1) | adjustments(2) | Other, net | Total | interests | International | |||||||||||||||||||
Beginning balance, January 1, 2024 | $ | (619 | ) | $ | (632 | ) | $ | (7 | ) | $ | (1,258 | ) | $ | 28 | $ | (1,230 | ) | |||||||
Other comprehensive (loss) income before reclassifications, gross | (36 | ) | 2 | 5 | (29 | ) | (1 | ) | (30 | ) | ||||||||||||||
Tax impact | — | — | — | — | — | — | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(3) | — | 6 | — | 6 | — | 6 | ||||||||||||||||||
Tax impact | — | — | — | — | — | — | ||||||||||||||||||
Net current-period other comprehensive (loss) income | (36 | ) | 8 | 5 | (23 | ) | (1 | ) | (24 | ) | ||||||||||||||
Ending balance, March 31, 2024 | $ | (655 | ) | $ | (624 | ) | $ | (2 | ) | $ | (1,281 | ) | $ | 27 | $ | (1,254 | ) |
| (1) | Amounts are net of tax of |
| (2) | Amounts are net of tax of |
(3) |
|
|
Pension | ||||||||||||||||||||||||
Foreign | and other | Amounts | Amounts | |||||||||||||||||||||
currency | postretirement | attributable to | attributable to | |||||||||||||||||||||
translation | benefits | noncontrolling | Huntsman | |||||||||||||||||||||
adjustments(1) | adjustments(2) | Other, net | Total | interests | International | |||||||||||||||||||
Beginning balance, January 1, 2023 | $ | (653 | ) | $ | (628 | ) | $ | 3 | $ | (1,278 | ) | $ | 25 | $ | (1,253 | ) | ||||||||
Other comprehensive income (loss) before reclassifications, gross | 27 | (24 | ) | — | 3 | (2 | ) | 1 | ||||||||||||||||
Tax impact | — | 2 | — | 2 | — | 2 | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(3) | 28 | 72 | — | 100 | — | 100 | ||||||||||||||||||
Tax impact | (1 | ) | 24 | — | 23 | — | 23 | |||||||||||||||||
Net current-period other comprehensive (loss) income | 54 | 74 | — | 128 | (2 | ) | 126 | |||||||||||||||||
Ending balance, March 31, 2023 | $ | (599 | ) | $ | (554 | ) | $ | 3 | $ | (1,150 | ) | $ | 23 | $ | (1,127 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
| (18) |
|
| — |
|
| (8) |
|
| 6 |
|
| (20) |
|
| — |
|
| (20) |
Tax benefit |
|
| 7 |
|
| — |
|
| — |
|
| — |
|
| 7 |
|
| — |
|
| 7 |
Amounts reclassified from accumulated other comprehensive loss, gross(c) |
|
| — |
|
| 46 |
|
| — |
|
| — |
|
| 46 |
|
| — |
|
| 46 |
Tax expense |
|
| — |
|
| (6) |
|
| — |
|
| — |
|
| (6) |
|
| — |
|
| (6) |
Net current-period other comprehensive income (loss) |
|
| (11) |
|
| 40 |
|
| (8) |
|
| 6 |
|
| 27 |
|
| — |
|
| 27 |
Ending balance, September 30, 2016 |
| $ | (303) |
| $ | (1,034) |
| $ | 3 |
| $ | 17 |
| $ | (1,317) |
| $ | 28 |
| $ | (1,289) |
| (1) | Amounts are net of tax of |
| (2) | Amounts are net of tax of |
(3) |
|
Three months ended March 31, | ||||||||||
2024 | 2023 | |||||||||
Amounts reclassified | Amounts reclassified | Affected line item in | ||||||||
from accumulated | from accumulated | the statement | ||||||||
Details about accumulated other | other | other | where net income | |||||||
comprehensive loss components(1): | comprehensive loss | comprehensive loss | is presented | |||||||
Amortization of pension and other postretirement benefits: | ||||||||||
Prior service credit | $ | (2 | ) | $ | (2 | ) | (2)(3) | Other income, net | ||
Actuarial loss | 8 | 8 | (2)(3) | Other income, net | ||||||
Curtailment gains | — | (1 | ) | (2)(4) | Other income, net | |||||
Settlement losses | — | 67 | (2)(4) | Other income, net | ||||||
6 | 72 | Total before tax | ||||||||
— | 24 | Income tax expense | ||||||||
Total reclassifications for the period | $ | 6 | $ | 96 | Net of tax |
(1) | Pension and other postretirement benefits amounts in parentheses indicate credits on our condensed consolidated statements of operations. |
|
|
|
|
|
|
|
|
|
|
|
| Three months ended |
| Nine months ended |
|
| ||
|
| September 30, 2017 |
| September 30, 2017 |
|
| ||
|
| Amount reclassified |
| Amount reclassified |
| Affected line item in | ||
|
| from accumulated |
| from accumulated |
| the statement | ||
Details about Accumulated Other |
| other |
| other |
| where net income | ||
Comprehensive Loss Components(a): |
| comprehensive loss |
| comprehensive loss |
| is presented | ||
Amortization of pension and other postretirement benefits: |
|
|
|
|
|
|
|
|
Prior service credit |
| $ | (4) |
| $ | (11) |
| (b) |
Actuarial loss |
|
| 26 |
|
| 76 |
| (b)(c) |
|
|
| 22 |
|
| 65 |
| Total before tax |
|
|
| (3) |
|
| (5) |
| Income tax expense |
Total reclassifications for the period |
| $ | 19 |
| $ | 60 |
| Net of tax |
37
|
|
|
|
|
|
|
|
|
|
| Three months ended |
| Nine months ended |
|
| ||
|
| September 30, 2016 |
| September 30, 2016 |
|
| ||
|
| Amount reclassified |
| Amount reclassified |
| Affected line item in | ||
|
| from accumulated |
| from accumulated |
| the statement | ||
Details about Accumulated Other |
| other |
| other |
| where net income | ||
Comprehensive Loss Components(a): |
| comprehensive loss |
| comprehensive loss |
| is presented | ||
Amortization of pension and other postretirement benefits: |
|
|
|
|
|
|
|
|
Prior service credit |
| $ | (4) |
| $ | (12) |
| (b) |
Actuarial loss |
|
| 20 |
|
| 58 |
| (b)(c) |
|
|
| 16 |
|
| 46 |
| Total before tax |
|
|
| (2) |
|
| (6) |
| Income tax expense |
Total reclassifications for the period |
| $ | 14 |
| $ | 40 |
| Net of tax |
|
|
| (2) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note |
| (3) | Amounts | |
(4) | In connection with the sale of our Textile Effects Business, we recognized $67 million of pension settlement losses and |
13.15. COMMITMENTS AND CONTINGENCIES
LEGAL MATTERSLegal Matters
Product Delivery Claim
On April 19, 2024, the Louisiana Fourth Circuit Court of Appeal affirmed the $93.1 million jury verdict and district court judgment in our favor in our long-running court battle against Praxair/Linde, one of the industrial gas suppliers to our Geismar, Louisiana MDI manufacturing site. The case was filed after Praxair refused to maintain properly its own Geismar facility and then repeatedly failed to supply our requirements for industrial gases needed to manufacture MDI under long-term supply contracts that expired in 2013. After adding mandatory pre-judgment and post-judgment interest to the award, we expect damages to exceed $135 million before deducting for taxes and legal contingency fees. The award remains subject to further potential review but, if affirmed or reviewed by the Louisiana Supreme Court, wewould expect to receive net proceeds of approximately $50 million to $60 million. We have been notified by a customernot yet recognized the award in our condensed consolidated statements of potential claims related to our alleged delivery of a different product than the one the customer had ordered. Our customer claims that it was unaware that the different product had been delivered until after that product had been used to manufacture materials which were subsequently sold. Originally, the customer stated that it had been notified of claims by its customers of up to an aggregate of €153 million (approximately $179 million) relating to this matter and claimed that we may be responsible for all or a portion of these potential claims. Our customer has since resolved some of these claimsoperations and the aggregate amounttiming of the current claims is now approximately €113 million (approximately $132 million). Based on the facts currently available, we believe that we are insured for any liability we may ultimately have in excessresolution of $10 million. However, no assurance can be given regarding our ultimate liability or costs. We believe our range of possible loss in this matter is between €0 and €113 million (approximately $132 million), and we have made no accrual with respect to this matter.
Indemnification Matters
On July 3, 2012, Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC (“the Banks”) demanded that we indemnify them for claims brought against them by certain MatlinPatterson entities that were formerly our stockholders (“MatlinPatterson”) in litigation filed by MatlinPatterson on June 19, 2012 in the 9th District Court in Montgomery County, Texas (the “Texas Litigation”). 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
38
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, which also remains pending.
Other Proceedingsuncertain.
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, weWe 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.
14.16. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
EHS CAPITAL EXPENDITURESEHSCapital Expenditures
We may incur future costs for capital improvements and general compliance under environmental, health and safety (“EHS”) laws, including costs to acquire, maintain and repair pollution control equipment. For the ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, our capital expenditures from continuing operations for EHS matters totaled $23$5 million and $33$6 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 RESERVESEnvironmental 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 $22$14 million and $5 million for environmental liabilities for both September 30, 2017as of March 31, 2024 and December 31, 2016.2023, respectively. Of these amounts, $4$6 million and $7$2 million were classified as accrued liabilities in each of our condensed consolidated balance sheets as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively, and $18$8 million and $15$3 million were classified as other noncurrent liabilities in our condensed consolidated balance sheets as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. In certain cases, our remediation liabilities may be payable over periods of up to 30 years. We may incur losses for environmental remediation in excess of the amounts accrued; however, we are not able to estimate the amount or range of such potential excess.
ENVIRONMENTAL MATTERSEnvironmental Matters
Under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"(“CERCLA”) and similar state laws, a current or former owner or operator of real property in the U.S. may be liable for remediation costs regardless of whether the release or disposal of hazardous substances was in compliance with law at the time it occurred, and a current owner or operator may be liable regardless of whether it owned or operated the facility at the time of the release. Outside the U.S., analogous contaminated property laws such as those in effect in France and Australia, can hold past owners and/or operators liable for remediation at former facilities. Currently, there are approximately six former facilities or third-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 condensed consolidated financial statements.
Under the Resource Conservation and Recovery Act ("RCRA"(“RCRA”) in the U.S. and similar state laws, we may be required to remediate contamination originating from our properties asproperties. Similar laws exist in a condition to our hazardous waste permit.number of non-U.S. locations in which we currently operate, or previously operated, manufacturing facilities. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site
39
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
17. STOCK-BASED COMPENSATION PLANS
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 September 30, 2017, we had an accrued liability of approximately $15 million related to estimated environmental remediation costs at this site. We can provide no assurance that the authority will not seek to institute additional requirements for the site or that additional costs will not be required for the cleanup.
North Maybe Mine Remediation
The North Maybe Canyon Mine site is a CERCLA site and involves a former phosphorous mine near Soda Springs, Idaho, which is believed to have been operated by several companies, including a predecessor company to us. In 2004, the U.S. Forest Service notified us that we are a CERCLA potentially responsible party (“PRP”) for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a 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.
15. STOCK‑BASED COMPENSATION PLANS
On May 5, 2016, our stockholders approved a new Huntsman Corporation 2016 Stock Incentive Plan (the “2016 Stock Incentive Plan”)March 31, 2024, 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. In connection with the Separation, certain individuals who were granted awards under the 2016 Stock Incentive Plan and the Prior Plan terminated from Huntsman and are now affiliated with Venator. The unvested awards previously granted to these individuals were converted to awards under Venator’s stock incentive plan during August 2017. As of September 30, 2017, we were authorized to grant up to 8.2 million shares under the 2016 Stock Incentive Plan. As of September 30, 2017, we had approximately 85 million shares remaining under the 2016 Stock Incentive Planstock-based compensation plans 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 annually over a three-yearthree-year period or in total at the end of a three-year period.
In connection with the Separation, certain individuals who were granted awards under the 2016 Stock Incentive Plan and the Prior Plan were transferred to Venator. The unvested awards under the 2016 Stock Incentive Plan and the Prior Plan previously granted to these individuals were converted to awards under Venator’s stock incentive plan during August 2017.
40
The compensation cost from continuing operations under the 2016 Stock Incentive Plan and the Prior Planstock-based compensation plans for our Company and Huntsman International were as follows (dollars in millions):
|
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| ||||||||
|
| Three months ended |
| Nine months ended | Three months | |||||||||||||||
|
| ended |
| ended | ended | |||||||||||||||
|
| September 30, |
| September 30, | March 31, | |||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | 2024 | 2023 | ||||||||||
Huntsman Corporation compensation cost |
| $ | 8 |
| $ | 7 |
| $ | 25 |
| $ | 23 | $ | 9 | $ | 9 | ||||
Huntsman International compensation cost |
|
| 8 |
|
| 7 |
|
| 24 |
|
| 22 | 8 | 8 |
The total income tax benefit recognized in the condensed consolidated statements of operations for us and Huntsman International for stock-based compensation arrangements was $6 millionnil and $5$1 million for the ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, respectively.
STOCK OPTIONSStock Options
The fair value of each stock option award is estimated on the date of grant using the Black‑ScholesBlack-Scholes valuation model that uses the assumptions noted in the following table.model. Expected volatilities arewere 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 average of the assumptions utilized for stock options granted during the periods.
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|
|
| Three months ended |
| Nine months ended |
| ||||||||
|
| ended |
| ended |
| ||||||||
|
| September 30, |
| September 30, |
| ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
| ||||
Dividend yield |
|
| NA |
|
| 3.3 | % |
| 2.4 | % |
| 5.6 | % |
Expected volatility |
|
| NA |
|
| 57.6 | % |
| 56.9 | % |
| 57.9 | % |
Risk-free interest rate |
|
| NA |
|
| 1.1 | % |
| 2.0 | % |
| 1.4 | % |
Expected life of stock options granted during the period |
|
| NA |
|
| 5.9 | years |
| 5.9 | years |
| 5.9 | years |
During each of the three months ended September 30, 2017,March 31, 2024 and 2023, no stock options were granted.
A summary of stock option activity under the 2016 Stock Incentive Plan and the Prior Planstock-based compensation plans as of September 30, 2017March 31, 2024 and changes during the ninethree months then ended is presented below:
Weighted | ||||||||||||||||
Weighted | average | |||||||||||||||
average | remaining | Aggregate | ||||||||||||||
exercise | contractual | intrinsic | ||||||||||||||
Option awards | Shares | price | term | value | ||||||||||||
(in thousands) | (years) | (in millions) | ||||||||||||||
Outstanding at January 1, 2024 | 2,890 | $ | 22.06 | |||||||||||||
Exercised | (382 | ) | 21.24 | |||||||||||||
Forfeited | (20 | ) | 32.40 | |||||||||||||
Outstanding and exercisable at March 31, 2024 | 2,488 | 22.11 | 3.9 | $ | 12 |
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|
| Weighted |
|
|
| |
|
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|
| Weighted |
| Average |
|
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| ||
|
|
|
|
| Average |
| Remaining |
| Aggregate | |||
|
|
|
|
| Exercise |
| Contractual |
| Intrinsic | |||
Option Awards |
| Shares |
| Price |
| Term |
| Value | ||||
|
| (in thousands) |
|
|
|
| (years) |
| (in millions) | |||
Outstanding at January 1, 2017 |
|
| 11,245 |
| $ | 13.37 |
|
|
|
|
|
|
Granted |
|
| 997 |
|
| 21.04 |
|
|
|
|
|
|
Exercised |
|
| (2,118) |
|
| 17.59 |
|
|
|
|
|
|
Forfeited |
|
| (59) |
|
| 17.39 |
|
|
|
|
|
|
Converted to Venator awards |
|
| (417) |
|
| 5.00 |
|
|
|
|
|
|
Outstanding at September 30, 2017 |
|
| 9,648 |
|
| 13.17 |
|
| 5.7 |
| $ | 137 |
Exercisable at September 30, 2017 |
|
| 6,822 |
|
| 12.88 |
|
| 4.6 |
|
| 99 |
The weighted‑average grant‑date fair value
As of September 30, 2017,March 31, 2024, there was $11 million of totalno 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 1.9 years.stock-based compensation plans.
The total intrinsic value of stock options exercised during the ninethree months ended September 30, 2017 March 31, 2024 and 20162023 was approximately $11$1 million and nil, respectively. Cash received from stock options exercised during both of the ninethree months
41
ended September 30, 2017 March 31, 2024 and 20162023 was approximately $22 million and nil respectively.. The cash tax benefit from stock options exercised during both of the ninethree months ended September 30, 2017 March 31, 2024 and 20162023 was approximately $3 million and nil respectively..
NONVESTED SHARESNonvested Shares
Nonvested shares granted under the 2016 Stock Incentive Plan and the Prior Planstock-based compensation plans consist of restricted stock and performance share unit awards, which are accounted for as equity awards, and phantom stock, which is accounted for as a liability award because it can be settled in either stock or cash. The fair value of each restricted stock and phantom stock award is estimated to be the closing stock price of Huntsman’s stock on the date of grant.
For our performance share unit awards, 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 three-year performance periods. 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 ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, the weighted-average expected volatility rate was 45.0%31.8% and 39.3%37.6%, respectively, and the weighted average risk-free interest rate was 1.5%4.39% and 0.9%4.38%, respectively. For the performance share unit awards granted induring the ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, the number of shares earned varies based upon the Company achieving certain performance criteria over a three-yearthree-year performance 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 three-year performance periods.
A summary of the status of our nonvested shares as of September 30, 2017March 31, 2024 and changes during the ninethree months then ended is presented below:
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|
|
| Equity awards | Liability awards | |||||||||||||||
|
| Equity Awards |
| Liability Awards | Weighted | Weighted | |||||||||||||||||||||||
|
|
|
|
| Weighted |
|
|
|
| Weighted | average | average | |||||||||||||||||
|
|
|
|
| Average |
|
|
|
| Average | grant-date | grant-date | |||||||||||||||||
|
|
|
|
| Grant- Date |
|
|
|
| Grant-Date | Shares | fair value | Shares | fair value | |||||||||||||||
|
| Shares |
| Fair Value |
| Shares |
| Fair Value | (in thousands) | (in thousands) | |||||||||||||||||||
|
| (in thousands) |
|
|
|
| (in thousands) |
|
|
| |||||||||||||||||||
Nonvested at January 1, 2017 |
|
| 2,996 |
| $ | 13.36 |
|
| 912 |
| $ | 12.27 | |||||||||||||||||
Nonvested at January 1, 2024 | 1,923 | $ | 38.71 | 181 | $ | 32.75 | |||||||||||||||||||||||
Granted |
|
| 779 |
|
| 22.60 |
|
| 285 |
|
| 21.01 | 1,244 | 26.61 | 143 | 23.93 | |||||||||||||
Vested |
|
| (937) | (1) |
| 16.30 |
|
| (370) |
|
| 14.11 | (635 | ) | (1) | 33.02 | (87 | ) | 32.49 | ||||||||||
Forfeited |
|
| (21) |
|
| 15.23 |
|
| (32) |
|
| 12.37 | (200 | ) | (2) | 44.81 | (3 | ) | 33.75 | ||||||||||
Converted to Venator awards |
|
| (237) |
|
| 11.81 |
|
| (93) |
|
| 13.72 | |||||||||||||||||
Nonvested at September 30, 2017 |
|
| 2,580 |
|
| 14.92 |
|
| 702 |
|
| 14.66 | |||||||||||||||||
Nonvested at March 31, 2024 | 2,332 | 33.28 | 234 | 27.45 |
| (1) | As of |
(2) | A total of |
As of September 30, 2017,March 31, 2024, there was $32approximately $57 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the 2016 Stock Incentive Plan and the Prior Plan.stock-based compensation plans. That cost is expected to be recognized over a weighted‑averageweighted-average period of approximately 1.92.3 years. The value of share awards that vested during the ninethree months ended September 30, 2017 March 31, 2024 and 20162023 was $20approximately $24 million and $15$28 million, respectively.
16.18. INCOME TAXES
We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on an individual tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of our businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the applicable period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions.
42
During the nine months ended September 30, 2017, we released a valuation allowance of $7 million on certain net deferred assets of our Polyurethanes business in Italy. On March 1, 2017 and April 1, 2017, we demerged the Italian legal entities containing our Polyurethanes business from our combined Italian tax group. The historical and expected continued profitability of that Polyurethanes business resulted in the release of the associated valuation allowance. During the same period, we also released a valuation allowance of $13 million on certain deferred tax assets in Luxembourg 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 the nine months ended September 30, 2017 and 2016, for unrecognized tax benefits that impact tax expense, we recorded a net increase in unrecognized tax benefits and a corresponding income tax expense of $7 million and $3 million, respectively. Additional increases and decreases in unrecognized tax benefits were offset by cash settlements or decreases in net deferred tax assets and, therefore, did not affect income tax expense.
We recorded an additional income tax liability of approximately $45 million related to our tax gain on the Venator IPO proceeds, net of separation costs and IPO expenses.
Huntsman Corporation
We recorded income tax expensebenefit (expense) from continuing operations of $78$20 million and $65$(11) million for the ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, respectively. During the three months ended March 31, 2024, we recorded a discrete tax benefit of $18 million resulting from the write-off of certain prepaid assets related to operating agreements with SLIC and other joint venture partners concurrent with the separation and acquisition of assets of SLIC. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. Our effective tax rate was 18% for the nine months ended September 30, 2017. Higher than expected earnings in countries with low tax rates or valuation allowances, and the release of certain valuation allowances in Italy and Luxenbourg, resulted in a lower effective tax rate through the third quarter of 2017.
Huntsman International
Huntsman International recorded income tax (benefit) expense from continuing operations of $77$20 million and $65$(11) million for the ninethree months ended September 30, 2017 March 31, 2024 and 2016,2023, respectively. During the three months ended March 31, 2024, we recorded a discrete tax benefit of $18 million resulting from the write-off of certain prepaid assets related to operating agreements with SLIC and other joint venture partners concurrent with the separation and acquisition of assets of SLIC. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. Our effective tax rate was 18% for the nine months ended September 30, 2017. Higher than expected earnings in countries with low tax rates and valuation allowances, and the release of certain valuation allowances in Italy and Luxenbourg, resulted in a lower effective tax rate through the third quarter of 2017.
17. NET INCOME19. EARNINGS PER SHARE
Basic income per share excludes dilution and is computed by dividing net income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period. Diluted income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing net income availableattributable 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 potential dilutive securities. Diluted income per share is computed using the treasury stock method for all stock-based awards. In periods with reported loss from continuing operations attributable to Huntsman Corporation, all stock-based awards are generally deemed anti-dilutive and would be excluded from the calculation of diluted income per share from continuing operations, discontinued operations and net income regardless of whether there is income or loss from discontinued operations and net income.
43
Basic and diluted (loss) income per share is determined using the following information (in millions):
|
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|
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|
|
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|
| ||||||||
|
| Three months |
| Nine months | Three months | |||||||||||||||
|
| ended |
| ended | ended | |||||||||||||||
|
| September 30, |
| September 30, | March 31, | |||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | 2024 | 2023 | ||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic and diluted income from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Income from continuing operations attributable to Huntsman Corporation |
| $ | 84 |
| $ | 31 |
| $ | 289 |
| $ | 210 | ||||||||
Basic and diluted net income: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income attributable to Huntsman Corporation |
| $ | 147 |
| $ | 55 |
| $ | 390 |
| $ | 198 | ||||||||
(Loss) income from continuing operations attributable to Huntsman Corporation | $ | (30 | ) | $ | 31 | |||||||||||||||
Net (loss) income attributable to Huntsman Corporation | $ | (37 | ) | $ | 153 | |||||||||||||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares outstanding |
|
| 238.5 |
|
| 236.3 |
|
| 238.0 |
|
| 236.2 | 171.8 | 182.7 | ||||||
Dilutive shares: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Stock-based awards |
|
| 5.5 |
|
| 3.8 |
|
| 5.5 |
|
| 2.9 | — | 1.7 | ||||||
Total weighted average shares outstanding, including dilutive shares |
|
| 244.0 |
|
| 240.1 |
|
| 243.5 |
|
| 239.1 | 171.8 | 184.4 |
Additional stock‑basedstock-based awards of 0.9approximately 2.7 million and 5.51.5 million weighted average equivalent shares of stock were outstanding during the three months ended September 30, 2017 March 31, 2024 and 2016, respectively, and 1.8 million and 5.92023, respectively. However, these stock-based awards were not included in the computation of diluted income per share for the respective periods mentioned above because the effect would be anti-dilutive. For the three months ended March 31, 2024, there were 0.9 million weighted average equivalent shares of stock were outstanding during the nine months ended September 30, 2017 and 2016, respectively. However, these stock‑based awards were not included in the computationtotal anti-dilutive weighted average equivalent shares of diluted earnings per share forstock noted above as a result of the three and nine months ended September 30, 2017 and 2016 because the effect would be anti‑dilutive.reported loss from continuing operations attributable to Huntsman Corporation.
18.20. OPERATING SEGMENT INFORMATION
We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commoditydiversified organic chemical products. We have fourthree operating segments, which are also our reportable segments: Polyurethanes, Performance Products and Advanced Materials and Textile Effects.Materials. 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 condensed consolidated financial statements for all periods presented. See “Note 4. Discontinued Operations.”
The major products of each reportable operating segment are as follows:
Segment |
| Products |
Polyurethanes | | MDI, |
Performance Products | | Performance amines, |
Advanced Materials | |
|
|
textile chemicals, dyes and digital inks
44
Sales between segments are generally recognized at external market prices and are eliminated in consolidation. AdjustedWe use adjusted EBITDA is presented as ato measure of the financial performance of our global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The adjusted EBITDA of operating segments excludes items that principally apply to our Company as a whole. The following schedule includes revenues and adjusted EBITDA for each of our reportable operating segments are as follows (dollars in millions):.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 1,197 |
| $ | 891 |
| $ | 3,172 |
| $ | 2,703 |
Performance Products |
|
| 501 |
|
| 509 |
|
| 1,595 |
|
| 1,611 |
Advanced Materials |
|
| 263 |
|
| 247 |
|
| 782 |
|
| 774 |
Textile Effects |
|
| 193 |
|
| 184 |
|
| 586 |
|
| 567 |
Corporate and eliminations |
|
| 15 |
|
| — |
|
| 20 |
|
| (41) |
Total |
| $ | 2,169 |
| $ | 1,831 |
| $ | 6,155 |
| $ | 5,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman Corporation: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted EBITDA(1): |
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 245 |
| $ | 137 |
| $ | 556 |
| $ | 439 |
Performance Products |
|
| 63 |
|
| 70 |
|
| 249 |
|
| 248 |
Advanced Materials |
|
| 56 |
|
| 55 |
|
| 166 |
|
| 173 |
Textile Effects |
|
| 19 |
|
| 17 |
|
| 64 |
|
| 59 |
Corporate and other(2) |
|
| (43) |
|
| (45) |
|
| (136) |
|
| (132) |
Total |
|
| 340 |
|
| 234 |
|
| 899 |
|
| 787 |
Reconciliation of adjusted EBITDA to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense—continuing operations |
|
| (39) |
|
| (52) |
|
| (134) |
|
| (153) |
Interest (expense) income—discontinued operations |
|
| (8) |
|
| — |
|
| (8) |
|
| 1 |
Income tax expense—continuing operations |
|
| (35) |
|
| (6) |
|
| (78) |
|
| (65) |
Income tax (expense) benefit—discontinued operations |
|
| (17) |
|
| 7 |
|
| (41) |
|
| 8 |
Depreciation and amortization—continuing operations |
|
| (80) |
|
| (83) |
|
| (235) |
|
| (238) |
Depreciation and amortization—discontinued operations |
|
| (9) |
|
| (30) |
|
| (68) |
|
| (84) |
Net income attributable to noncontrolling interests |
|
| 32 |
|
| 9 |
|
| 64 |
|
| 22 |
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition and integration expenses |
|
| (10) |
|
| (6) |
|
| (17) |
|
| (11) |
Merger costs |
|
| (12) |
|
| — |
|
| (18) |
|
| — |
EBITDA from discontinued operations |
|
| 97 |
|
| 47 |
|
| 218 |
|
| 63 |
Minority interest of discontinued operations |
|
| (12) |
|
| (3) |
|
| (18) |
|
| (8) |
Loss on early extinguishment of debt |
|
| (35) |
|
| (1) |
|
| (36) |
|
| (3) |
Certain legal settlements and related expenses |
|
| — |
|
| — |
|
| (1) |
|
| — |
Gain on sale of assets |
|
| — |
|
| — |
|
| 8 |
|
| — |
Amortization of pension and postretirement actuarial losses |
|
| (19) |
|
| (14) |
|
| (55) |
|
| (42) |
Plant incident remediation costs |
|
| (13) |
|
| — |
|
| (13) |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| (1) |
|
| (38) |
|
| (13) |
|
| (57) |
Net income |
| $ | 179 |
| $ | 64 |
| $ | 454 |
| $ | 220 |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Revenues: | ||||||||
Polyurethanes | $ | 926 | $ | 991 | ||||
Performance Products | 291 | 334 | ||||||
Advanced Materials | 261 | 289 | ||||||
Total reportable segments’ revenues | 1,478 | 1,614 | ||||||
Intersegment eliminations | (8 | ) | (8 | ) | ||||
Total | $ | 1,470 | $ | 1,606 | ||||
Huntsman Corporation: | ||||||||
Segment adjusted EBITDA(1): | ||||||||
Polyurethanes | $ | 39 | $ | 66 | ||||
Performance Products | 42 | 71 | ||||||
Advanced Materials | 43 | 48 | ||||||
Total reportable segments’ adjusted EBITDA | 124 | 185 | ||||||
Reconciliation of total reportable segments’ adjusted EBITDA to (loss) income from continuing operations before income taxes: | ||||||||
Interest expense, net—continuing operations | (19 | ) | (18 | ) | ||||
Depreciation and amortization—continuing operations | (69 | ) | (69 | ) | ||||
Corporate and other costs, net(2) | (43 | ) | (49 | ) | ||||
Net income attributable to noncontrolling interests | 14 | 13 | ||||||
Other adjustments: | ||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | (20 | ) | (1 | ) | ||||
Fair value adjustments to Venator investment, net | — | (1 | ) | |||||
Certain legal and other settlements and related expenses | (1 | ) | (1 | ) | ||||
Certain nonrecurring information technology project implementation costs | — | (2 | ) | |||||
Amortization of pension and postretirement actuarial losses | (8 | ) | (8 | ) | ||||
Restructuring, impairment and plant closing and transition (costs) credits(3) | (14 | ) | 6 | |||||
(Loss) income from continuing operations before income taxes | (36 | ) | 55 | |||||
Income tax benefit (expense)—continuing operations | 20 | (11 | ) | |||||
(Loss) income from discontinued operations, net of tax | (7 | ) | 122 | |||||
Net (loss) income | $ | (23 | ) | $ | 166 |
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Nine months | ||||||||
|
| ended |
| ended | ||||||||
|
| September 30, |
| September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Huntsman International: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted EBITDA(1): |
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes |
| $ | 245 |
| $ | 137 |
| $ | 556 |
| $ | 439 |
Performance Products |
|
| 63 |
|
| 70 |
|
| 249 |
|
| 248 |
Advanced Materials |
|
| 56 |
|
| 55 |
|
| 166 |
|
| 173 |
Textile Effects |
|
| 19 |
|
| 17 |
|
| 64 |
|
| 59 |
Corporate and other(2) |
|
| (41) |
|
| (43) |
|
| (132) |
|
| (128) |
Total |
|
| 342 |
|
| 236 |
|
| 903 |
|
| 791 |
Reconciliation of adjusted EBITDA to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense—continuing operations |
|
| (44) |
|
| (55) |
|
| (146) |
|
| (162) |
Interest (expense) income—discontinued operations |
|
| (8) |
|
| — |
|
| (8) |
|
| 1 |
Income tax expense—continuing operations |
|
| (34) |
|
| (7) |
|
| (77) |
|
| (65) |
Income tax (expense) benefit—discontinued operations |
|
| (17) |
|
| 7 |
|
| (41) |
|
| 8 |
Depreciation and amortization—continuing operations |
|
| (78) |
|
| (79) |
|
| (227) |
|
| (228) |
Depreciation and amortization—discontinued operations |
|
| (9) |
|
| (30) |
|
| (68) |
|
| (84) |
Net income attributable to noncontrolling interests |
|
| 32 |
|
| 9 |
|
| 64 |
|
| 22 |
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition and integration expenses |
|
| (10) |
|
| (6) |
|
| (17) |
|
| (11) |
Merger costs |
|
| (12) |
|
| — |
|
| (18) |
|
| — |
EBITDA from discontinued operations |
|
| 96 |
|
| 45 |
|
| 215 |
|
| 58 |
Minority interest of discontinued operations |
|
| (12) |
|
| (3) |
|
| (18) |
|
| (8) |
Loss on early extinguishment of debt |
|
| (35) |
|
| (1) |
|
| (36) |
|
| (3) |
Certain legal settlements and related expenses |
|
| — |
|
| — |
|
| (1) |
|
| — |
Gain on sale of assets |
|
| — |
|
| — |
|
| 8 |
|
| — |
Amortization of pension and postretirement actuarial losses |
|
| (20) |
|
| (15) |
|
| (57) |
|
| (44) |
Plant incident remediation costs |
|
| (13) |
|
| — |
|
| (13) |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| (1) |
|
| (38) |
|
| (13) |
|
| (57) |
Net income |
| $ | 177 |
| $ | 63 |
| $ | 450 |
| $ | 218 |
Three months | ||||||||
ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Huntsman International: | ||||||||
Segment adjusted EBITDA(1): | ||||||||
Polyurethanes | $ | 39 | $ | 66 | ||||
Performance Products | 42 | 71 | ||||||
Advanced Materials | 43 | 48 | ||||||
Total reportable segments’ adjusted EBITDA | 124 | 185 | ||||||
Reconciliation of total reportable segments’ adjusted EBITDA to (loss) income from continuing operations before income taxes: | ||||||||
Interest expense, net—continuing operations | (19 | ) | (18 | ) | ||||
Depreciation and amortization—continuing operations | (69 | ) | (69 | ) | ||||
Corporate and other costs, net(2) | (41 | ) | (47 | ) | ||||
Net income attributable to noncontrolling interests | 14 | 13 | ||||||
Other adjustments: | ||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | (20 | ) | (1 | ) | ||||
Fair value adjustments to Venator investment, net | — | (1 | ) | |||||
Certain legal and other settlements and related expenses | (1 | ) | (1 | ) | ||||
Certain nonrecurring information technology project implementation costs | — | (2 | ) | |||||
Amortization of pension and postretirement actuarial losses | (8 | ) | (8 | ) | ||||
Restructuring, impairment and plant closing and transition (costs) credits(3) | (14 | ) | 6 | |||||
(Loss) income from continuing operations before income taxes | (34 | ) | 57 | |||||
Income tax benefit (expense)—continuing operations | 20 | (11 | ) | |||||
(Loss) income from discontinued operations, net of tax | (7 | ) | 122 | |||||
Net (loss) income | $ | (21 | ) | $ | 168 |
(1) |
| 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 the chief operating decision maker uses to make decisions about resources to be allocated to the segments and assess their financial performance. Segment 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 |
(2) |
| Corporate and other costs, net includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, LIFO inventory valuation reserve adjustments, |
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC
(3) | Includes costs associated with transition activities related primarily to our Corporate program to optimize our global approach to leverage shared services capabilities. |
The following unaudited condensed consolidating financial statements present, in separate columns, financial information for the following: Huntsman International (on a parent only basis), with its investment in subsidiaries recorded under the equity method; the Guarantors on a combined, and where appropriate, consolidated basis; and the Nonguarantors on a combined, and where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016. There are no contractual restrictions limiting transfers of cash from the Guarantors to Huntsman International. Each of the Guarantors is 100% owned by Huntsman International and has fully and unconditionally guaranteed, subject to certain customary release provisions, Huntsman International’s outstanding notes on a joint and several basis.
In connection with the separation of the P&A business during the third quarter of 2017 (see “Note 4. Discontinued Operations”), certain entities were removed from the debt guarantor structure. The following unaudited condensed financial statements have been presented as if the new debt guarantor structure existed for all periods presented.
46
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF SEPTEMBER 30, 2017
(In Millions)
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| Consolidated | |
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| Parent |
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| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 56 |
| $ | — |
| $ | 382 |
| $ | — |
| $ | 438 |
Restricted cash |
|
| — |
|
| — |
|
| 11 |
|
| — |
|
| 11 |
Accounts and notes receivable, net |
|
| 36 |
|
| 73 |
|
| 1,108 |
|
| 5 |
|
| 1,222 |
Accounts receivable from affiliates |
|
| 873 |
|
| 4,213 |
|
| 122 |
|
| (4,855) |
|
| 353 |
Inventories |
|
| 81 |
|
| 201 |
|
| 808 |
|
| (6) |
|
| 1,084 |
Prepaid expenses |
|
| 18 |
|
| 6 |
|
| 31 |
|
| (9) |
|
| 46 |
Other current assets |
|
| 735 |
|
| 3 |
|
| 195 |
|
| (740) |
|
| 193 |
Current assets held for sale |
|
| — |
|
| — |
|
| 2,745 |
|
| — |
|
| 2,745 |
Total current assets |
|
| 1,799 |
|
| 4,496 |
|
| 5,402 |
|
| (5,605) |
|
| 6,092 |
Property, plant and equipment, net |
|
| 451 |
|
| 1,111 |
|
| 1,469 |
|
| — |
|
| 3,031 |
Investment in unconsolidated affiliates |
|
| 6,074 |
|
| 2,302 |
|
| 255 |
|
| (8,376) |
|
| 255 |
Intangible assets, net |
|
| 27 |
|
| — |
|
| 30 |
|
| — |
|
| 57 |
Goodwill |
|
| (14) |
|
| 82 |
|
| 71 |
|
| — |
|
| 139 |
Deferred income taxes |
|
| 510 |
|
| — |
|
| 280 |
|
| (522) |
|
| 268 |
Notes receivable from affiliates |
|
| 111 |
|
| 565 |
|
| — |
|
| (676) |
|
| — |
Other noncurrent assets |
|
| 47 |
|
| 172 |
|
| 245 |
|
| — |
|
| 464 |
Total assets |
| $ | 9,005 |
| $ | 8,728 |
| $ | 7,752 |
| $ | (15,179) |
| $ | 10,306 |
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 60 |
| $ | 175 |
| $ | 631 |
| $ | 5 |
| $ | 871 |
Accounts payable to affiliates |
|
| 3,783 |
|
| 537 |
|
| 602 |
|
| (4,855) |
|
| 67 |
Accrued liabilities |
|
| 88 |
|
| 825 |
|
| 375 |
|
| (750) |
|
| 538 |
Note payable to affiliate |
|
| 100 |
|
| — |
|
| — |
|
| — |
|
| 100 |
Current portion of debt |
|
| 5 |
|
| — |
|
| 24 |
|
| — |
|
| 29 |
Current liabilities held for sale |
|
| — |
|
| — |
|
| 1,633 |
|
| — |
|
| 1,633 |
Total current liabilities |
|
| 4,036 |
|
| 1,537 |
|
| 3,265 |
|
| (5,600) |
|
| 3,238 |
Long-term debt |
|
| 2,504 |
|
| — |
|
| 341 |
|
| — |
|
| 2,845 |
Notes payable to affiliates |
|
| 717 |
|
| — |
|
| 676 |
|
| (676) |
|
| 717 |
Deferred income taxes |
|
| — |
|
| 281 |
|
| 66 |
|
| 74 |
|
| 421 |
Other noncurrent liabilities |
|
| 173 |
|
| 268 |
|
| 589 |
|
| — |
|
| 1,030 |
Total liabilities |
|
| 7,430 |
|
| 2,086 |
|
| 4,937 |
|
| (6,202) |
|
| 8,251 |
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman International LLC members’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’ equity |
|
| 3,412 |
|
| 2,256 |
|
| 3,484 |
|
| (5,740) |
|
| 3,412 |
Accumulated (deficit) income |
|
| (483) |
|
| 2,908 |
|
| 166 |
|
| (3,074) |
|
| (483) |
Accumulated other comprehensive (loss) income |
|
| (1,354) |
|
| 1,478 |
|
| (1,304) |
|
| (174) |
|
| (1,354) |
Total Huntsman International LLC members’ equity |
|
| 1,575 |
|
| 6,642 |
|
| 2,346 |
|
| (8,988) |
|
| 1,575 |
Noncontrolling interests in subsidiaries |
|
| — |
|
| — |
|
| 469 |
|
| 11 |
|
| 480 |
Total equity |
|
| 1,575 |
|
| 6,642 |
|
| 2,815 |
|
| (8,977) |
|
| 2,055 |
Total liabilities and equity |
| $ | 9,005 |
| $ | 8,728 |
| $ | 7,752 |
| $ | (15,179) |
| $ | 10,306 |
47
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) income |
|
| (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 |
48
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2017
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 296 |
| $ | 498 |
| $ | 1,343 |
| $ | — |
| $ | 2,137 |
Related party sales |
|
| 55 |
|
| 75 |
|
| 255 |
|
| (353) |
|
| 32 |
Total revenues |
|
| 351 |
|
| 573 |
|
| 1,598 |
|
| (353) |
|
| 2,169 |
Cost of goods sold |
|
| 275 |
|
| 520 |
|
| 1,251 |
|
| (352) |
|
| 1,694 |
Gross profit |
|
| 76 |
|
| 53 |
|
| 347 |
|
| (1) |
|
| 475 |
Selling, general and administrative |
|
| 34 |
|
| 31 |
|
| 132 |
|
| — |
|
| 197 |
Research and development |
|
| 12 |
|
| 11 |
|
| 12 |
|
| — |
|
| 35 |
Restructuring, impairment and plant closing (credits) costs |
|
| (3) |
|
| 1 |
|
| 3 |
|
| — |
|
| 1 |
Merger costs |
|
| 12 |
|
| — |
|
| — |
|
| — |
|
| 12 |
Other operating expense (income), net |
|
| 20 |
|
| (8) |
|
| (7) |
|
| — |
|
| 5 |
Operating income |
|
| 1 |
|
| 18 |
|
| 207 |
|
| (1) |
|
| 225 |
Interest (expense) income |
|
| (43) |
|
| 7 |
|
| (8) |
|
| — |
|
| (44) |
Equity in income of investment in affiliates and subsidiaries |
|
| 187 |
|
| 180 |
|
| 1 |
|
| (367) |
|
| 1 |
Loss on early extinguishment of debt |
|
| (35) |
|
| — |
|
| — |
|
| — |
|
| (35) |
Dividend income (expense) |
|
| 1 |
|
| — |
|
| (1) |
|
| — |
|
| — |
Other income, net |
|
| (1) |
|
| 2 |
|
| 1 |
|
| — |
|
| 2 |
Income from continuing operations before income taxes |
|
| 110 |
|
| 207 |
|
| 200 |
|
| (368) |
|
| 149 |
Income tax benefit (expense) |
|
| 26 |
|
| (11) |
|
| (49) |
|
| — |
|
| (34) |
Income from continuing operations |
|
| 136 |
|
| 196 |
|
| 151 |
|
| (368) |
|
| 115 |
Income (loss) from discontinued operations, net of tax |
|
| 9 |
|
| (1) |
|
| 54 |
|
| — |
|
| 62 |
Net income |
|
| 145 |
|
| 195 |
|
| 205 |
|
| (368) |
|
| 177 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (32) |
|
| — |
|
| (32) |
Net income attributable to Huntsman International LLC |
| $ | 145 |
| $ | 195 |
| $ | 173 |
| $ | (368) |
| $ | 145 |
Net income |
| $ | 145 |
| $ | 195 |
| $ | 205 |
| $ | (368) |
| $ | 177 |
Other comprehensive income |
|
| 171 |
|
| 329 |
|
| 113 |
|
| (509) |
|
| 104 |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (36) |
|
| (1) |
|
| (37) |
Comprehensive income attributable to Huntsman International LLC |
| $ | 316 |
| $ | 524 |
| $ | 282 |
| $ | (878) |
| $ | 244 |
49
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2016
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 264 |
| $ | 424 |
| $ | 1,114 |
| $ | — |
| $ | 1,802 |
Related party sales |
|
| 45 |
|
| 64 |
|
| 231 |
|
| (311) |
|
| 29 |
Total revenues |
|
| 309 |
|
| 488 |
|
| 1,345 |
|
| (311) |
|
| 1,831 |
Cost of goods sold |
|
| 249 |
|
| 434 |
|
| 1,101 |
|
| (310) |
|
| 1,474 |
Gross profit |
|
| 60 |
|
| 54 |
|
| 244 |
|
| (1) |
|
| 357 |
Selling, general and administrative |
|
| 33 |
|
| 25 |
|
| 126 |
|
| — |
|
| 184 |
Research and development |
|
| 13 |
|
| 11 |
|
| 10 |
|
| — |
|
| 34 |
Restructuring, impairment and plant closing costs |
|
| 2 |
|
| 6 |
|
| 30 |
|
| — |
|
| 38 |
Other operating income, net |
|
| 3 |
|
| (8) |
|
| 3 |
|
| — |
|
| (2) |
Operating income |
|
| 9 |
|
| 20 |
|
| 75 |
|
| (1) |
|
| 103 |
Interest (expense) income |
|
| (54) |
|
| 7 |
|
| (8) |
|
| — |
|
| (55) |
Equity in (loss) income of investment in affiliates and subsidiaries |
|
| 82 |
|
| 80 |
|
| 2 |
|
| (163) |
|
| 1 |
Loss on early extinguishment of debt |
|
| (1) |
|
| — |
|
| — |
|
| — |
|
| (1) |
Dividend income (expense) |
|
| 1 |
|
| — |
|
| (2) |
|
| 1 |
|
| — |
Other (loss) income, net |
|
| (3) |
|
| — |
|
| 3 |
|
| — |
|
| — |
Income from continuing operations before income taxes |
|
| 34 |
|
| 107 |
|
| 70 |
|
| (163) |
|
| 48 |
Income tax benefit (expense) |
|
| 20 |
|
| (13) |
|
| (14) |
|
| — |
|
| (7) |
Income from continuing operations |
|
| 54 |
|
| 94 |
|
| 56 |
|
| (163) |
|
| 41 |
Loss from discontinued operations, net of tax |
|
| — |
|
| — |
|
| 22 |
|
| — |
|
| 22 |
Net income |
|
| 54 |
|
| 94 |
|
| 78 |
|
| (163) |
|
| 63 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (9) |
|
| — |
|
| (9) |
Net income attributable to Huntsman International LLC |
| $ | 54 |
| $ | 94 |
| $ | 69 |
| $ | (163) |
| $ | 54 |
Net income |
| $ | 54 |
| $ | 94 |
| $ | 78 |
| $ | (163) |
| $ | 63 |
Other comprehensive income |
|
| 32 |
|
| 7 |
|
| 31 |
|
| (38) |
|
| 32 |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (6) |
|
| (3) |
|
| (9) |
Comprehensive income attributable to Huntsman International LLC |
| $ | 86 |
| $ | 101 |
| $ | 103 |
| $ | (204) |
| $ | 86 |
50
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2017
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 824 |
| $ | 1,543 |
| $ | 3,681 |
| $ | — |
| $ | 6,048 |
Related party sales |
|
| 169 |
|
| 248 |
|
| 772 |
|
| (1,082) |
|
| 107 |
Total revenues |
|
| 993 |
|
| 1,791 |
|
| 4,453 |
|
| (1,082) |
|
| 6,155 |
Cost of goods sold |
|
| 792 |
|
| 1,551 |
|
| 3,585 |
|
| (1,079) |
|
| 4,849 |
Gross profit |
|
| 201 |
|
| 240 |
|
| 868 |
|
| (3) |
|
| 1,306 |
Selling, general and administrative |
|
| 129 |
|
| 94 |
|
| 356 |
|
| — |
|
| 579 |
Research and development |
|
| 35 |
|
| 31 |
|
| 37 |
|
| — |
|
| 103 |
Restructuring, impairment and plant closing costs |
|
| 1 |
|
| — |
|
| 12 |
|
| — |
|
| 13 |
Merger costs |
|
| 18 |
|
| — |
|
| — |
|
| — |
|
| 18 |
Other operating expense (income), net |
|
| 36 |
|
| (33) |
|
| (12) |
|
| — |
|
| (9) |
Operating (expense) income |
|
| (18) |
|
| 148 |
|
| 475 |
|
| (3) |
|
| 602 |
Interest (expense) income |
|
| (143) |
|
| 20 |
|
| (23) |
|
| — |
|
| (146) |
Equity in income of investment in affiliates and subsidiaries |
|
| 534 |
|
| 453 |
|
| 5 |
|
| (988) |
|
| 4 |
Loss on early extinguishment of debt |
|
| (36) |
|
| — |
|
| — |
|
| — |
|
| (36) |
Dividend income |
|
| 1 |
|
| — |
|
| — |
|
| (1) |
|
| — |
Other income, net |
|
| (1) |
|
| 2 |
|
| 4 |
|
| — |
|
| 5 |
Income from continuing operations before income taxes |
|
| 337 |
|
| 623 |
|
| 461 |
|
| (992) |
|
| 429 |
Income tax benefit (expense) |
|
| 56 |
|
| (58) |
|
| (75) |
|
| — |
|
| (77) |
Income from continuing operations |
|
| 393 |
|
| 565 |
|
| 386 |
|
| (992) |
|
| 352 |
(Loss) income from discontinued operations, net of tax |
|
| (7) |
|
| (2) |
|
| 107 |
|
| — |
|
| 98 |
Net income |
|
| 386 |
|
| 563 |
|
| 493 |
|
| (992) |
|
| 450 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (64) |
|
| — |
|
| (64) |
Net income attributable to Huntsman International LLC |
| $ | 386 |
| $ | 563 |
| $ | 429 |
| $ | (992) |
| $ | 386 |
Net income |
| $ | 386 |
| $ | 563 |
| $ | 493 |
| $ | (992) |
| $ | 450 |
Other comprehensive income |
|
| 337 |
|
| 479 |
|
| 289 |
|
| (828) |
|
| 277 |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (70) |
|
| (6) |
|
| (76) |
Comprehensive income attributable to Huntsman International LLC |
| $ | 723 |
| $ | 1,042 |
| $ | 712 |
| $ | (1,826) |
| $ | 651 |
51
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2016
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |
|
| Parent |
|
|
|
|
|
|
|
|
|
| Huntsman | ||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade sales, services and fees, net |
| $ | 787 |
| $ | 1,396 |
| $ | 3,336 |
| $ | — |
| $ | 5,519 |
Related party sales |
|
| 139 |
|
| 222 |
|
| 700 |
|
| (966) |
|
| 95 |
Total revenues |
|
| 926 |
|
| 1,618 |
|
| 4,036 |
|
| (966) |
|
| 5,614 |
Cost of goods sold |
|
| 726 |
|
| 1,343 |
|
| 3,339 |
|
| (967) |
|
| 4,441 |
Gross profit |
|
| 200 |
|
| 275 |
|
| 697 |
|
| 1 |
|
| 1,173 |
Selling, general and administrative |
|
| 117 |
|
| 79 |
|
| 365 |
|
| — |
|
| 561 |
Research and development |
|
| 35 |
|
| 32 |
|
| 36 |
|
| — |
|
| 103 |
Restructuring, impairment and plant closing costs |
|
| 5 |
|
| 15 |
|
| 36 |
|
| — |
|
| 56 |
Other operating expense (income), net |
|
| 11 |
|
| (28) |
|
| 14 |
|
| — |
|
| (3) |
Operating income |
|
| 32 |
|
| 177 |
|
| 246 |
|
| 1 |
|
| 456 |
Interest (expense) income |
|
| (165) |
|
| 24 |
|
| (21) |
|
| — |
|
| (162) |
Equity in income of investment in affiliates and subsidiaries |
|
| 67 |
|
| 183 |
|
| 6 |
|
| (252) |
|
| 4 |
Loss on early extinguishment of debt |
|
| (3) |
|
| — |
|
| — |
|
| — |
|
| (3) |
Dividend income (expense) |
|
| 217 |
|
| (430) |
|
| 430 |
|
| (217) |
|
| — |
Other (loss) income , net |
|
| (3) |
|
| — |
|
| 8 |
|
| — |
|
| 5 |
Income (loss) from continuing operations before income taxes |
|
| 145 |
|
| (46) |
|
| 669 |
|
| (468) |
|
| 300 |
Income tax benefit (expense) |
|
| 50 |
|
| (71) |
|
| (44) |
|
| — |
|
| (65) |
Income (loss) from continuing operations |
|
| 195 |
|
| (117) |
|
| 625 |
|
| (468) |
|
| 235 |
Income (loss) from discontinued operations, net of tax |
|
| 1 |
|
| (1) |
|
| (17) |
|
| — |
|
| (17) |
Net income (loss) |
|
| 196 |
|
| (118) |
|
| 608 |
|
| (468) |
|
| 218 |
Net income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (19) |
|
| (3) |
|
| (22) |
Net income (loss) attributable to Huntsman International LLC |
| $ | 196 |
| $ | (118) |
| $ | 589 |
| $ | (471) |
| $ | 196 |
Net income (loss) |
| $ | 196 |
| $ | (118) |
| $ | 608 |
| $ | (468) |
| $ | 218 |
Other comprehensive income |
|
| 27 |
|
| 86 |
|
| 32 |
|
| (118) |
|
| 27 |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
| — |
|
| (11) |
|
| (11) |
|
| (22) |
Comprehensive income (loss) attributable to Huntsman International LLC |
| $ | 223 |
| $ | (32) |
| $ | 629 |
| $ | (597) |
| $ | 223 |
52
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2017
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |||||
|
| Parent |
|
|
|
|
|
|
| Huntsman | |||||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Net cash provided by (used in) operating activities from continuing operations |
| $ | 274 |
| $ | 514 |
| $ | (252) |
| $ | — |
| $ | 536 |
Net cash (used in) provided by operating activities from discontinued operations |
|
| (19) |
|
| — |
|
| 221 |
|
| — |
|
| 202 |
Net cash provided by (used in) operating activities |
|
| 255 |
|
| 514 |
|
| (31) |
|
| — |
|
| 738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (26) |
|
| (37) |
|
| (96) |
|
| — |
|
| (159) |
Cash received from consolidated affiliates |
|
| 800 |
|
| — |
|
| (278) |
|
| (522) |
|
| — |
Acquisition of business, net of cash acquired |
|
| — |
|
| — |
|
| (14) |
|
| — |
|
| (14) |
Proceeds from sale of businesses/assets |
|
| — |
|
| — |
|
| 21 |
|
| — |
|
| 21 |
Increase in receivable from affiliate |
|
| (3) |
|
| — |
|
| — |
|
| — |
|
| (3) |
Cash received from termination of cross-currency interest rate contracts |
|
| 7 |
|
| — |
|
| — |
|
| — |
|
| 7 |
Other, net |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| 1 |
Net cash provided by (used in) investing activities from continuing operations |
|
| 779 |
|
| (37) |
|
| (367) |
|
| (522) |
|
| (147) |
Net cash used in investing activities from discontinued operations |
|
| — |
|
| — |
|
| (49) |
|
| — |
|
| (49) |
Net cash provided by (used in) investing activities |
|
| 779 |
|
| (37) |
|
| (416) |
|
| (522) |
|
| (196) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under revolving loan facilities |
|
| — |
|
| — |
|
| (36) |
|
| — |
|
| (36) |
Repayments of short-term debt |
|
| — |
|
| — |
|
| (10) |
|
| — |
|
| (10) |
Borrowings on short-term debt |
|
| — |
|
| — |
|
| 6 |
|
| — |
|
| 6 |
Repayments of long-term debt |
|
| (1,416) |
|
| — |
|
| (23) |
|
| — |
|
| (1,439) |
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 |
|
| 21 |
|
| — |
|
| — |
|
| — |
|
| 21 |
Repayments of notes payable |
|
| (20) |
|
| — |
|
| — |
|
| — |
|
| (20) |
Borrowings on notes payable |
|
| 11 |
|
| — |
|
| — |
|
| — |
|
| 11 |
Debt issuance costs paid |
|
| (3) |
|
| — |
|
| (18) |
|
| — |
|
| (21) |
Dividends paid to noncontrolling interests |
|
| — |
|
| — |
|
| (26) |
|
| — |
|
| (26) |
Contribution from noncontrolling interests |
|
| — |
|
| — |
|
| 4 |
|
| — |
|
| 4 |
Distribution to parent |
|
| — |
|
| (477) |
|
| (45) |
|
| 522 |
|
| — |
Dividends paid to parent |
|
| (90) |
|
| — |
|
| — |
|
| — |
|
| (90) |
Proceeds from the IPO of P&A Business |
|
| 522 |
|
| — |
|
| — |
|
| — |
|
| 522 |
Cash paid for the expenses of the IPO of P&A Business |
|
| (40) |
|
| — |
|
| — |
|
| — |
|
| (40) |
Other, net |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Net cash (used in) provided by financing activities |
|
| (1,015) |
|
| (477) |
|
| 627 |
|
| 522 |
|
| (343) |
Effect of exchange rate changes on cash |
|
| — |
|
| — |
|
| 12 |
|
| — |
|
| 12 |
Increase in cash and cash equivalents |
|
| 19 |
|
| — |
|
| 192 |
|
| — |
|
| 211 |
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 |
| $ | 56 |
| $ | — |
| $ | 568 |
| $ | — |
| $ | 624 |
During the nine months ended September 30, 2017, we made a noncash capital contribution of approximately $50 million between Parent Company and Guarantor entities.
53
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2016
(In Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated | |||||
|
| Parent |
|
|
|
|
|
|
| Huntsman | |||||
|
| Company |
| Guarantors |
| Nonguarantors |
| Eliminations |
| International LLC | |||||
Net cash provided by operating activities from continuing operations |
| $ | 410 |
| $ | 87 |
| $ | 239 |
| $ | — |
| $ | 736 |
Net cash provided by operating activities from discontinued operations |
|
| — |
|
| — |
|
| 107 |
|
| — |
|
| 107 |
Net cash provided by operating activities |
|
| 410 |
|
| 87 |
|
| 346 |
|
| — |
|
| 843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (24) |
|
| (66) |
|
| (124) |
|
| — |
|
| (214) |
Investment in affiliate |
|
| (11) |
|
| (3) |
|
| (2) |
|
| 14 |
|
| (2) |
Decrease in receivable in affiliate |
|
| 3 |
|
| — |
|
| — |
|
| — |
|
| 3 |
Change in restricted cash |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Other, net |
|
| — |
|
| 1 |
|
| 1 |
|
| — |
|
| 2 |
Net cash used in investing activities from continuing operations |
|
| (32) |
|
| (68) |
|
| (124) |
|
| 14 |
|
| (210) |
Net cash used in investing activities from discontinued operations |
|
| — |
|
| — |
|
| (57) |
|
| — |
|
| (57) |
Net cash used in investing activities |
|
| (32) |
|
| (68) |
|
| (181) |
|
| 14 |
|
| (267) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments on overdraft facilities |
| $ | — |
| $ | (1) |
| $ | — |
| $ | — |
| $ | (1) |
Repayments of short-term debt |
|
| — |
|
| — |
|
| (41) |
|
| — |
|
| (41) |
Borrowings on short-term debt |
|
| — |
|
| — |
|
| 8 |
|
| — |
|
| 8 |
Repayments of long-term debt |
|
| (774) |
|
| — |
|
| (21) |
|
| — |
|
| (795) |
Proceeds from issuance of long-term debt |
|
| 547 |
|
| — |
|
| 5 |
|
| — |
|
| 552 |
Repayments of notes payable to affiliate |
|
| (7) |
|
| — |
|
| — |
|
| 6 |
|
| (1) |
Proceeds of notes payable to affiliate |
|
| — |
|
| — |
|
| 6 |
|
| (6) |
|
| — |
Repayments of notes payable |
|
| (23) |
|
| — |
|
| (2) |
|
| — |
|
| (25) |
Borrowings on notes payable |
|
| 30 |
|
| — |
|
| 1 |
|
| — |
|
| 31 |
Debt issuance costs paid |
|
| (8) |
|
| — |
|
| — |
|
| — |
|
| (8) |
Dividends paid to noncontrolling interests |
|
| — |
|
| — |
|
| (26) |
|
| — |
|
| (26) |
Contribution from parent |
|
| — |
|
| 3 |
|
| 31 |
|
| (34) |
|
| — |
Distribution to parent |
|
| — |
|
| (20) |
|
| — |
|
| 20 |
|
| — |
Dividends paid to parent |
|
| (89) |
|
| (1) |
|
| — |
|
| — |
|
| (90) |
Other, net |
|
| 1 |
|
| — |
|
| — |
|
| — |
|
| 1 |
Net cash used in financing activities |
|
| (323) |
|
| (19) |
|
| (39) |
|
| (14) |
|
| (395) |
Effect of exchange rate changes on cash from continuing operations |
|
| — |
|
| — |
|
| 1 |
|
| — |
|
| 1 |
Increase in cash and cash equivalents |
|
| 55 |
|
| — |
|
| 127 |
|
| — |
|
| 182 |
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 |
| $ | 99 |
| $ | — |
| $ | 340 |
| $ | — |
| $ | 439 |
During the nine months ended September 30, 2016, we made a noncash capital contribution of approximately $215 million between Parent Company and certain Nonguarantors.
54
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEWResults of Operations
We operateAs discussed 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‑durable consumer products, digital inks, electronics, medical, packaging, coatings and construction, power generation, refining, synthetic fiber, textile chemicals and dyes industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride, epoxy‑based polymer formulations, textile chemicals and dyes. Our revenues for the nine months ended September 30, 2017 and 2016 were $6,155 million and $5,614 million, respectively.
RECENT DEVELOPMENTS
Separation of the P&A Business
In August 2017, we separated the P&A Business and conducted an IPO of ordinary shares of Venator, formerly a wholly-owned subsidiary of Huntsman. All of such ordinary shares were sold by Huntsman and Venator did not receive any proceeds from the offering. Venator’s ordinary shares began trading on The New York Stock Exchange under the symbol “VNTR” on August 3, 2017. Huntsman retains approximately 75% ownership in Venator. Beginning in the third quarter of 2017, we reported the results of operations of the P&A Business as discontinued operations. For more information, see “Note 4. Discontinued Operations”Operations—Sale of Textile Effects Business” to our condensed consolidated financial statements.
In August 2017, we made early prepayments of $1,207 million on our Senior Credit Facilities, of which $106 million was paid on our 2015 Extended Term Loan B, $347 million was paid on our 2021 Term Loan B, and $754 million was paid on our 2023 Term Loan B. The funds used to pay downstatements, the debt included $732 million receivedresults 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 ofcontinuing operations primarily exclude the Venator IPO. In connection with the $1,207 million prepaymentsresults of our term loans, we recognized a loss on early extinguishment of debt of $34 million. See “Note 7. Debt—Direct and Subsidiary Debt—Senior Credit Facilities” to our condensed consolidated financial statements.
Termination of Huntsman and Clariant Merger Agreement
As previously disclosed, on May 21, 2017, Huntsman, Clariant and Merger Sub entered into the Merger Agreement which contemplated that Merger Sub would be merged with and into Huntsman, with Huntsman surviving the merger as a wholly-owned subsidiary of Clariant. On October 26, 2017, Huntsman, Clariant and Merger Sub entered into the Termination Agreement, dated as of October 26, 2017, pursuant to which the parties mutually terminated the Merger Agreement. No fees are currently payable under the terms of the Termination Agreement. Huntsman and Clariant also agreed to release each other from certain claims and liabilities arising out of or related to the Merger Agreement or the transactions contemplated therein or thereby. Pursuant to the Termination Agreement, each party agrees to bear its own costs, fees and expenses in connection with Merger Agreement and the transactions contemplated thereby, exceptTextile Effects Business for specified joint filing fees and related expenses as set forth in the Merger Agreement. During the three and nine months ended September 30, 2017 and 2016, we incurred merger-related costs of $12 million, $18 million, nil and nil, respectively.
Debt Prepayment
In addition to the debt prepayments made in connection with the separation of our former P&A Business and the Venator IPO described above, on October 25, 2017, we made an early prepayment of $100 million on our 2023 Term Loan B from existing cash. See “Note 7. Debt—Direct and Subsidiary Debt—Senior Credit Facilities” to our condensed consolidated financial statements.
55
OUTLOOK
We expect the following factors to impact our operating segments:
Polyurethanes:
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Performance Products:
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Advanced Materials:
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Textile Effects:
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In 2017, we expect to spend approximately $290 million on capital expenditures, net of reimbursements.
We expect our fourth quarter adjusted effective tax rate will be similar to our third quarter rate of 24%. Our 2018 adjusted effective tax rate will be approximately 25% to 28%.
56
RESULTS OF OPERATIONS
all periods presented. For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):
Huntsman Corporation
Three months | ||||||||||||
ended | ||||||||||||
March 31, | Percent | |||||||||||
2024 | 2023 | change | ||||||||||
Revenues | $ | 1,470 | $ | 1,606 | (8 | )% | ||||||
Cost of goods sold | 1,269 | 1,337 | (5 | )% | ||||||||
Gross profit | 201 | 269 | (25 | )% | ||||||||
Operating expenses, net | 209 | 215 | (3 | )% | ||||||||
Restructuring, impairment and plant closing costs (credits) | 11 | (7 | ) | NM | ||||||||
Gain on acquisition of assets, net | (52 | ) | — | NM | ||||||||
Prepaid asset write-off | 71 | — | NM | |||||||||
Operating (loss) income | (38 | ) | 61 | NM | ||||||||
Interest expense, net | (19 | ) | (18 | ) | 6 | % | ||||||
Equity in income of investment in unconsolidated affiliates | 19 | 12 | 58 | % | ||||||||
Other expense, net | 2 | — | NM | |||||||||
(Loss) income from continuing operations before income taxes | (36 | ) | 55 | NM | ||||||||
Income tax benefit (expense) | 20 | (11 | ) | NM | ||||||||
(Loss) income from continuing operations | (16 | ) | 44 | NM | ||||||||
(Loss) income from discontinued operations, net of tax(1) | (7 | ) | 122 | NM | ||||||||
Net (loss) income | (23 | ) | 166 | NM | ||||||||
Reconciliation of net (loss) income to adjusted EBITDA: | ||||||||||||
Net income attributable to noncontrolling interests | (14 | ) | (13 | ) | 8 | % | ||||||
Interest expense, net from continuing operations | 19 | 18 | 6 | % | ||||||||
Income tax (benefit) expense from continuing operations | (20 | ) | 11 | NM | ||||||||
Income tax (benefit) expense from discontinued operations | (1 | ) | 15 | NM | ||||||||
Depreciation and amortization from continuing operations | 69 | 69 | — | |||||||||
Other adjustments: | ||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | 20 | 1 | ||||||||||
EBITDA from discontinued operations(1) | 8 | (137 | ) | |||||||||
Fair value adjustments to Venator investment, net | — | 1 | ||||||||||
Certain legal and other settlements and related expenses | 1 | 1 | ||||||||||
Certain nonrecurring information technology project implementation costs | — | 2 | ||||||||||
Amortization of pension and postretirement actuarial losses | 8 | 8 | ||||||||||
Restructuring, impairment and plant closing and transition costs (credits)(2) | 14 | (6 | ) | |||||||||
Adjusted EBITDA(3) | $ | 81 | $ | 136 | (40 | )% | ||||||
Net cash used in operating activities from continuing operations | $ | (63 | ) | $ | (122 | ) | (48 | )% | ||||
Net cash (used in) provided by investing activities from continuing operations | (30 | ) | 493 | NM | ||||||||
Net cash provided by (used in) financing activities | 108 | (379 | ) | NM | ||||||||
Capital expenditures from continuing operations | (42 | ) | (46 | ) | (9 | )% |
Huntsman International
Three months | ||||||||||||
ended | ||||||||||||
March 31, | Percent | |||||||||||
2024 | 2023 | change | ||||||||||
Revenues | $ | 1,470 | $ | 1,606 | (8 | )% | ||||||
Cost of goods sold | 1,269 | 1,337 | (5 | )% | ||||||||
Gross profit | 201 | 269 | (25 | )% | ||||||||
Operating expenses, net | 207 | 213 | (3 | )% | ||||||||
Restructuring, impairment and plant closing costs (credits) | 11 | (7 | ) | NM | ||||||||
Gain on acquisition of assets, net | (52 | ) | — | NM | ||||||||
Prepaid asset write-off | 71 | — | NM | |||||||||
Operating (loss) income | (36 | ) | 63 | NM | ||||||||
Interest expense, net | (19 | ) | (18 | ) | 6 | % | ||||||
Equity in income of investment in unconsolidated affiliates | 19 | 12 | 58 | % | ||||||||
Other expense, net | 2 | — | NM | |||||||||
(Loss) income from continuing operations before income taxes | (34 | ) | 57 | NM | ||||||||
Income tax benefit (expense) | 20 | (11 | ) | NM | ||||||||
(Loss) income from continuing operations | (14 | ) | 46 | NM | ||||||||
(Loss) income from discontinued operations, net of tax(1) | (7 | ) | 122 | NM | ||||||||
Net (loss) income | (21 | ) | 168 | NM | ||||||||
Reconciliation of net (loss) income to adjusted EBITDA: | ||||||||||||
Net income attributable to noncontrolling interests | (14 | ) | (13 | ) | 8 | % | ||||||
Interest expense, net from continuing operations | 19 | 18 | 6 | % | ||||||||
Income tax (benefit) expense from continuing operations | (20 | ) | 11 | NM | ||||||||
Income tax (benefit) expense from discontinued operations | (1 | ) | 15 | NM | ||||||||
Depreciation and amortization from continuing operations | 69 | 69 | — | |||||||||
Other adjustments: | ||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | 20 | 1 | ||||||||||
EBITDA from discontinued operations(1) | 8 | (137 | ) | |||||||||
Fair value adjustments to Venator investment, net | — | 1 | ||||||||||
Certain legal and other settlements and related expenses | 1 | 1 | ||||||||||
Certain nonrecurring information technology project implementation costs | — | 2 | ||||||||||
Amortization of pension and postretirement actuarial losses | 8 | 8 | ||||||||||
Restructuring, impairment and plant closing and transition costs (credits)(2) | 14 | (6 | ) | |||||||||
Adjusted EBITDA(3) | $ | 83 | $ | 138 | (40 | )% | ||||||
Net cash used in operating activities from continuing operations | $ | (62 | ) | $ | (122 | ) | (49 | )% | ||||
Net cash (used in) provided by investing activities from continuing operations | (39 | ) | 385 | NM | ||||||||
Net cash provided by (used in) financing activities | 116 | (271 | ) | NM | ||||||||
Capital expenditures from continuing operations | (42 | ) | (46 | ) | (9 | )% |
Huntsman Corporation
Three months | Three months | |||||||||||||||||||||||
ended | ended | |||||||||||||||||||||||
March 31, 2024 | March 31, 2023 | |||||||||||||||||||||||
Tax and | Tax and | |||||||||||||||||||||||
Gross | other(4) | Net | Gross | other(4) | Net | |||||||||||||||||||
Reconciliation of net (loss) income to adjusted net income | ||||||||||||||||||||||||
Net (loss) income | $ | (23 | ) | $ | 166 | |||||||||||||||||||
Net income attributable to noncontrolling interests | (14 | ) | (13 | ) | ||||||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 20 | $ | (18 | ) | 2 | $ | 1 | $ | — | 1 | |||||||||||||
Loss (income) from discontinued operations(1)(5) | 8 | (1 | ) | 7 | (137 | ) | 15 | (122 | ) | |||||||||||||||
Fair value adjustments to Venator investment, net | — | — | — | 1 | — | 1 | ||||||||||||||||||
Certain legal and other settlements and related expenses | 1 | — | 1 | 1 | — | 1 | ||||||||||||||||||
Certain nonrecurring information technology project implementation costs | — | — | — | 2 | — | 2 | ||||||||||||||||||
Amortization of pension and postretirement actuarial losses | 8 | (1 | ) | 7 | 8 | (1 | ) | 7 | ||||||||||||||||
Restructuring, impairment and plant closing and transition costs (credits)(2) | 14 | (5 | ) | 9 | (6 | ) | — | (6 | ) | |||||||||||||||
Adjusted net (loss) income(3) | $ | (11 | ) | $ | 37 | |||||||||||||||||||
Weighted average shares-basic | 171.8 | 182.7 | ||||||||||||||||||||||
Weighted average shares-diluted | 171.8 | 184.4 | ||||||||||||||||||||||
Basic net (loss) income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||
(Loss) income from continuing operations | $ | (0.18 | ) | $ | 0.17 | |||||||||||||||||||
(Loss) income from discontinued operations | (0.04 | ) | 0.67 | |||||||||||||||||||||
Net (loss) income | $ | (0.22 | ) | $ | 0.84 | |||||||||||||||||||
Diluted net (loss) income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||
(Loss) income from continuing operations | $ | (0.18 | ) | $ | 0.17 | |||||||||||||||||||
(Loss) income from discontinued operations | (0.04 | ) | 0.66 | |||||||||||||||||||||
Net (loss) income | $ | (0.22 | ) | $ | 0.83 | |||||||||||||||||||
Other non-GAAP measures: | ||||||||||||||||||||||||
Diluted adjusted net (loss) income per share(3) | $ | (0.06 | ) | $ | 0.20 | |||||||||||||||||||
Net cash used in operating activities from continuing operations | $ | (63 | ) | $ | (122 | ) | ||||||||||||||||||
Capital expenditures from continuing operations | (42 | ) | (46 | ) | ||||||||||||||||||||
Free cash flow from continuing operations(3) | $ | (105 | ) | $ | (168 | ) | ||||||||||||||||||
Effective tax rate | 56 | % | 20 | % | ||||||||||||||||||||
Impact of non-GAAP adjustments(6) | 1 | % | (1 | )% | ||||||||||||||||||||
Adjusted effective tax rate | 57 | % | 19 | % |
NM—Not meaningful
(1) | Includes the net (loss) gain on the sale of our Textile Effects Business. |
(2) | Includes costs associated with transition activities related primarily to our Corporate program to optimize our global approach to leverage shared services capabilities. |
(3) | See “—Non-GAAP Financial Measures.” |
(4) | The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach. |
(5) | In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
(6) | For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net (loss) income to adjusted net income noted above. |
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| Three months |
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| Nine months |
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| ended |
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| ended |
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| September 30, |
| Percent |
| September 30, |
| Percent | ||||||||
|
| 2017 |
| 2016 |
| Change |
| 2017 |
| 2016 |
| Change | ||||
Revenues |
| $ | 2,169 |
| $ | 1,831 |
| 18% |
| $ | 6,155 |
| $ | 5,614 |
| 10% |
Cost of goods sold |
|
| 1,695 |
|
| 1,475 |
| 15% |
|
| 4,852 |
|
| 4,444 |
| 9% |
Gross profit |
|
| 474 |
|
| 356 |
| 33% |
|
| 1,303 |
|
| 1,170 |
| 11% |
Operating expenses |
|
| 238 |
|
| 217 |
| 10% |
|
| 677 |
|
| 664 |
| 2% |
Restructuring, impairment and plant closing costs |
|
| 1 |
|
| 38 |
| (97)% |
|
| 13 |
|
| 56 |
| (77)% |
Merger costs |
|
| 12 |
|
| — |
| NM |
|
| 18 |
|
| — |
| NM |
Operating income |
|
| 223 |
|
| 101 |
| 121% |
|
| 595 |
|
| 450 |
| 32% |
Interest expense |
|
| (39) |
|
| (52) |
| (25)% |
|
| (134) |
|
| (153) |
| (12)% |
Equity in income of investment in unconsolidated affiliates |
|
| 1 |
|
| 1 |
| — |
|
| 4 |
|
| 4 |
| — |
Loss on early extinguishment of debt |
|
| (35) |
|
| (1) |
| NM |
|
| (36) |
|
| (3) |
| NM |
Other (loss) income, net |
|
| 1 |
|
| (3) |
| NM |
|
| 2 |
|
| (1) |
| NM |
Income from continuing operations before income taxes |
|
| 151 |
|
| 46 |
| 228% |
|
| 431 |
|
| 297 |
| 45% |
Income tax expense |
|
| (35) |
|
| (6) |
| 483% |
|
| (78) |
|
| (65) |
| 20% |
Income from continuing operations |
|
| 116 |
|
| 40 |
| 190% |
|
| 353 |
|
| 232 |
| 52% |
Income (loss) from discontinued operations, net of tax |
|
| 63 |
|
| 24 |
| 163% |
|
| 101 |
|
| (12) |
| NM |
Net income |
|
| 179 |
|
| 64 |
| 180% |
|
| 454 |
|
| 220 |
| 106% |
Reconciliation of net income to adjusted EBITDA: |
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Net income attributable to noncontrolling interests |
|
| (32) |
|
| (9) |
| 256% |
|
| (64) |
|
| (22) |
| 191% |
Interest expense from continuing operations |
|
| 39 |
|
| 52 |
| (25)% |
|
| 134 |
|
| 153 |
| (12)% |
Interest expense (income) from discontinued operations |
|
| 8 |
|
| — |
| NM |
|
| 8 |
|
| (1) |
| NM |
Income tax expense from continuing operations |
|
| 35 |
|
| 6 |
| 483% |
|
| 78 |
|
| 65 |
| 20% |
Income tax expense (benefit) from discontinued operations |
|
| 17 |
|
| (7) |
| NM |
|
| 41 |
|
| (8) |
| NM |
Depreciation and amortization of continuing operations |
|
| 80 |
|
| 83 |
| (4)% |
|
| 235 |
|
| 238 |
| (1)% |
Depreciation and amortization of discontinued operations |
|
| 9 |
|
| 30 |
| (70)% |
|
| 68 |
|
| 84 |
| (19)% |
Other adjustments: |
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Business acquisition and integration expenses |
|
| 10 |
|
| 6 |
|
|
|
| 17 |
|
| 11 |
|
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Merger costs |
|
| 12 |
|
| — |
|
|
|
| 18 |
|
| — |
|
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EBITDA from discontinued operations |
|
| (97) |
|
| (47) |
|
|
|
| (218) |
|
| (63) |
|
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Minority interest of discontinued operations |
|
| 12 |
|
| 3 |
|
|
|
| 18 |
|
| 8 |
|
|
Loss on early extinguishment of debt |
|
| 35 |
|
| 1 |
|
|
|
| 36 |
|
| 3 |
|
|
Certain legal settlements and related expenses |
|
| — |
|
| — |
|
|
|
| 1 |
|
| — |
|
|
Gain on sale of assets |
|
| — |
|
| — |
|
|
|
| (8) |
|
| — |
|
|
Amortization of pension and postretirement actuarial losses |
|
| 19 |
|
| 14 |
|
|
|
| 55 |
|
| 42 |
|
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Plant incident remediation costs |
|
| 13 |
|
| — |
|
|
|
| 13 |
|
| — |
|
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Restructuring, impairment and plant closing and transition costs |
|
| 1 |
|
| 38 |
|
|
|
| 13 |
|
| 57 |
|
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Adjusted EBITDA(1) |
| $ | 340 |
| $ | 234 |
| 45% |
| $ | 899 |
| $ | 787 |
| 14% |
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Net cash provided by operating activities from continuing operations |
|
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| $ | 538 |
| $ | 736 |
| (27)% |
Net cash used in investing activities from continuing operations |
|
|
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|
|
|
|
|
|
| (145) |
|
| (213) |
| (32)% |
Net cash used in financing activities |
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|
|
|
|
|
|
|
|
| (349) |
|
| (397) |
| (12)% |
Capital expenditures from continuing operations |
|
|
|
|
|
|
|
|
|
| (159) |
|
| (214) |
| (26)% |
57
Huntsman International
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| Three months |
|
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| Nine months |
|
| ||||||||
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| ended |
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| ended |
|
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|
| September 30, |
| Percent |
| September 30, |
| Percent | ||||||||
|
| 2017 |
| 2016 |
| Change |
| 2017 |
| 2016 |
| Change | ||||
Revenues |
| $ | 2,169 |
| $ | 1,831 |
| 18% |
| $ | 6,155 |
| $ | 5,614 |
| 10% |
Cost of goods sold |
|
| 1,694 |
|
| 1,474 |
| 15% |
|
| 4,849 |
|
| 4,441 |
| 9% |
Gross profit |
|
| 475 |
|
| 357 |
| 33% |
|
| 1,306 |
|
| 1,173 |
| 11% |
Operating expenses |
|
| 237 |
|
| 216 |
| 10% |
|
| 673 |
|
| 661 |
| 2% |
Restructuring, impairment and plant closing costs |
|
| 1 |
|
| 38 |
| (97)% |
|
| 13 |
|
| 56 |
| (77)% |
Merger costs |
|
| 12 |
|
| — |
| NM |
|
| 18 |
|
| — |
| NM |
Operating income |
|
| 225 |
|
| 103 |
| 118% |
|
| 602 |
|
| 456 |
| 32% |
Interest expense |
|
| (44) |
|
| (55) |
| (20)% |
|
| (146) |
|
| (162) |
| (10)% |
Equity in income of investment in unconsolidated affiliates |
|
| 1 |
|
| 1 |
| — |
|
| 4 |
|
| 4 |
| — |
Loss on early extinguishment of debt |
|
| (35) |
|
| (1) |
| NM |
|
| (36) |
|
| (3) |
| NM |
Other (loss) income, net |
|
| 2 |
|
| — |
| NM |
|
| 5 |
|
| 5 |
| — |
Income from continuing operations before income taxes |
|
| 149 |
|
| 48 |
| 210% |
|
| 429 |
|
| 300 |
| 43% |
Income tax expense |
|
| (34) |
|
| (7) |
| 386% |
|
| (77) |
|
| (65) |
| 18% |
Income from continuing operations |
|
| 115 |
|
| 41 |
| 180% |
|
| 352 |
|
| 235 |
| 50% |
Income (loss) from discontinued operations, net of tax |
|
| 62 |
|
| 22 |
| 182% |
|
| 98 |
|
| (17) |
| NM |
Net income |
|
| 177 |
|
| 63 |
| 181% |
|
| 450 |
|
| 218 |
| 106% |
Reconciliation of net income to adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests |
|
| (32) |
|
| (9) |
| 256% |
|
| (64) |
|
| (22) |
| 191% |
Interest expense from continuing operations |
|
| 44 |
|
| 55 |
| (20)% |
|
| 146 |
|
| 162 |
| (10)% |
Interest expense (income) from discontinued operations |
|
| 8 |
|
| — |
| NM |
|
| 8 |
|
| (1) |
| NM |
Income tax expense from continuing operations |
|
| 34 |
|
| 7 |
| 386% |
|
| 77 |
|
| 65 |
| 18% |
Income tax expense (benefit) from discontinued operations |
|
| 17 |
|
| (7) |
| NM |
|
| 41 |
|
| (8) |
| NM |
Depreciation and amortization of continuing operations |
|
| 78 |
|
| 79 |
| (1)% |
|
| 227 |
|
| 228 |
| — |
Depreciation and amortization of discontinued operations |
|
| 9 |
|
| 30 |
| (70)% |
|
| 68 |
|
| 84 |
| (19)% |
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisition and integration expenses |
|
| 10 |
|
| 6 |
|
|
|
| 17 |
|
| 11 |
|
|
Merger costs |
|
| 12 |
|
| — |
|
|
|
| 18 |
|
| — |
|
|
EBITDA from discontinued operations |
|
| (96) |
|
| (45) |
|
|
|
| (215) |
|
| (58) |
|
|
Minority interest of discontinued operations |
|
| 12 |
|
| 3 |
|
|
|
| 18 |
|
| 8 |
|
|
Loss on early extinguishment of debt |
|
| 35 |
|
| 1 |
|
|
|
| 36 |
|
| 3 |
|
|
Certain legal settlements and related expenses |
|
| — |
|
| — |
|
|
|
| 1 |
|
| — |
|
|
Gain on sale of assets |
|
| — |
|
| — |
|
|
|
| (8) |
|
| — |
|
|
Amortization of pension and postretirement actuarial losses |
|
| 20 |
|
| 15 |
|
|
|
| 57 |
|
| 44 |
|
|
Plant incident remediation costs |
|
| 13 |
|
| — |
|
|
|
| 13 |
|
| — |
|
|
Restructuring, impairment and plant closing and transition costs |
|
| 1 |
|
| 38 |
|
|
|
| 13 |
|
| 57 |
|
|
Adjusted EBITDA(1) |
| $ | 342 |
| $ | 236 |
| 45% |
| $ | 903 |
| $ | 791 |
| 14% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities from continuing operations |
|
|
|
|
|
|
|
|
| $ | 536 |
| $ | 736 |
| (27)% |
Net cash used in investing activities from continuing operations |
|
|
|
|
|
|
|
|
|
| (147) |
|
| (210) |
| (30)% |
Net cash used in financing activities |
|
|
|
|
|
|
|
|
|
| (343) |
|
| (395) |
| (13)% |
Capital expenditures from continuing operations |
|
|
|
|
|
|
|
|
|
| (159) |
|
| (214) |
| (26)% |
58
Huntsman Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Three months | ||||||||||||||
|
| ended |
| ended | ||||||||||||||
|
| September 30, 2017 |
| September 30, 2016 | ||||||||||||||
|
| Gross |
| Tax and other(3) |
| Net |
| Gross |
| Tax and other(3) |
| Net | ||||||
Reconciliation of net income to adjusted net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
| $ | 179 |
|
|
|
|
|
|
| $ | 64 |
Net income attributable to noncontrolling interests |
|
|
|
|
|
|
|
| (32) |
|
|
|
|
|
|
|
| (9) |
Business acquisition and integration expenses |
| $ | 10 |
| $ | (3) |
|
| 7 |
| $ | 6 |
| $ | (2) |
|
| 4 |
Merger costs |
|
| 12 |
|
| (1) |
|
| 11 |
|
| — |
|
| — |
|
| — |
Loss from discontinued operations(6) |
|
| (97) |
|
| 34 |
|
| (63) |
|
| (47) |
|
| 23 |
|
| (24) |
Minority interest of discontinued operations |
|
| 12 |
|
| — |
|
| 12 |
|
| 3 |
|
| — |
|
| 3 |
Loss on early extinguishment of debt |
|
| 35 |
|
| (12) |
|
| 23 |
|
| 1 |
|
| — |
|
| 1 |
Gain on sale of assets |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
Amortization of pension and postretirement actuarial losses |
|
| 19 |
|
| (3) |
|
| 16 |
|
| 14 |
|
| (5) |
|
| 9 |
Plant incident remediation costs |
|
| 13 |
|
| (4) |
|
| 9 |
|
| — |
|
| — |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| 1 |
|
| 1 |
|
| 2 |
|
| 38 |
|
| (12) |
|
| 26 |
Adjusted net income(2) |
|
|
|
|
|
|
| $ | 164 |
|
|
|
|
|
|
| $ | 74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares-basic |
|
|
|
|
|
|
|
| 238.5 |
|
|
|
|
|
|
|
| 236.3 |
Weighted average shares-diluted |
|
|
|
|
|
|
|
| 244.0 |
|
|
|
|
|
|
|
| 240.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income attributable to Huntsman Corporation per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
|
|
|
|
| $ | 0.36 |
|
|
|
|
|
|
| $ | 0.13 |
Income from discontinued operations |
|
|
|
|
|
|
|
| 0.26 |
|
|
|
|
|
|
|
| 0.10 |
Net income |
|
|
|
|
|
|
| $ | 0.62 |
|
|
|
|
|
|
| $ | 0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income attributable to Huntsman Corporation per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
|
|
|
|
| $ | 0.34 |
|
|
|
|
|
|
| $ | 0.13 |
Income from discontinued operations |
|
|
|
|
|
|
|
| 0.26 |
|
|
|
|
|
|
|
| 0.10 |
Net income |
|
|
|
|
|
|
| $ | 0.60 |
|
|
|
|
|
|
| $ | 0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
| $ | 0.69 |
|
|
|
|
|
|
| $ | 0.31 |
Diluted |
|
|
|
|
|
|
|
| 0.67 |
|
|
|
|
|
|
|
| 0.31 |
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine months |
| Nine months | ||||||||||||||
|
| ended |
| ended | ||||||||||||||
|
| September 30, 2017 |
| September 30, 2016 | ||||||||||||||
|
| Gross |
| Tax and other(3) |
| Net |
| Gross |
| Tax and other(3) |
| Net | ||||||
Reconciliation of net income to adjusted net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
| $ | 454 |
|
|
|
|
|
|
| $ | 220 |
Net income attributable to noncontrolling interests |
|
|
|
|
|
|
|
| (64) |
|
|
|
|
|
|
|
| (22) |
Business acquisition and integration expenses |
| $ | 17 |
| $ | (4) |
|
| 13 |
| $ | 11 |
| $ | (3) |
|
| 8 |
Merger costs |
|
| 18 |
|
| (1) |
|
| 17 |
|
| — |
|
| — |
|
| — |
Loss from discontinued operations(6) |
|
| (218) |
|
| 117 |
|
| (101) |
|
| (63) |
|
| 75 |
|
| 12 |
Minority interest of discontinued operations |
|
| 18 |
|
| — |
|
| 18 |
|
| 8 |
|
| — |
|
| 8 |
Loss on early extinguishment of debt |
|
| 36 |
|
| (12) |
|
| 24 |
|
| 3 |
|
| (1) |
|
| 2 |
Certain legal settlements and related expenses |
|
| 1 |
|
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
Gain on sale of assets |
|
| (8) |
|
| — |
|
| (8) |
|
| — |
|
| — |
|
| — |
Amortization of pension and postretirement actuarial losses |
|
| 55 |
|
| (11) |
|
| 44 |
|
| 42 |
|
| (10) |
|
| 32 |
Plant incident remedation costs |
|
| 13 |
|
| (4) |
|
| 9 |
|
| — |
|
| — |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| 13 |
|
| (2) |
|
| 11 |
|
| 57 |
|
| (15) |
|
| 42 |
Adjusted net income(2) |
|
|
|
|
|
|
| $ | 418 |
|
|
|
|
|
|
| $ | 302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares-basic |
|
|
|
|
|
|
|
| 238.0 |
|
|
|
|
|
|
|
| 236.2 |
Weighted average shares-diluted |
|
|
|
|
|
|
|
| 243.5 |
|
|
|
|
|
|
|
| 239.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income attributable to Huntsman Corporation per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
|
|
|
|
| $ | 1.22 |
|
|
|
|
|
|
| $ | 0.89 |
Income from discontinued operations |
|
|
|
|
|
|
|
| 0.42 |
|
|
|
|
|
|
|
| (0.05) |
Net income |
|
|
|
|
|
|
| $ | 1.64 |
|
|
|
|
|
|
| $ | 0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income attributable to Huntsman Corporation per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
|
|
|
|
| $ | 1.19 |
|
|
|
|
|
|
| $ | 0.88 |
Income from discontinued operations |
|
|
|
|
|
|
|
| 0.41 |
|
|
|
|
|
|
|
| (0.05) |
Net income |
|
|
|
|
|
|
| $ | 1.60 |
|
|
|
|
|
|
| $ | 0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
| $ | 1.76 |
|
|
|
|
|
|
| $ | 1.28 |
Diluted |
|
|
|
|
|
|
|
| 1.72 |
|
|
|
|
|
|
|
| 1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of reimbursements(4) |
|
|
|
|
|
|
| $ | (158) |
|
|
|
|
|
|
| $ | (186) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities from continuing operations |
|
|
|
|
|
|
| $ | 538 |
|
|
|
|
|
|
| $ | 736 |
Capital expenditures |
|
|
|
|
|
|
|
| (159) |
|
|
|
|
|
|
|
| (214) |
All other investing activities from continuing operations, excluding acquisitions and disposition activities |
|
|
|
|
|
|
|
| 7 |
|
|
|
|
|
|
|
| 1 |
Non-recurring merger costs |
|
|
|
|
|
|
|
| 18 |
|
|
|
|
|
|
|
| — |
Free cash flow(5) |
|
|
|
|
|
|
| $ | 404 |
|
|
|
|
|
|
| $ | 523 |
60
Non-GAAP Financial Measures
Huntsman InternationalOur condensed consolidated financial statements are prepared in accordance with 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 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 GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months |
| Three months | ||||||||||||||
|
| ended |
| ended | ||||||||||||||
|
| September 30, 2017 |
| September 30, 2016 | ||||||||||||||
|
| Gross |
| Tax and other(3) |
| Net |
| Gross |
| Tax and other(3) |
| Net | ||||||
Reconciliation of net income to adjusted net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
| $ | 177 |
|
|
|
|
|
|
| $ | 63 |
Net income attributable to noncontrolling interests |
|
|
|
|
|
|
|
| (32) |
|
|
|
|
|
|
|
| (9) |
Business acquisition and integration expenses |
| $ | 10 |
| $ | (3) |
|
| 7 |
| $ | 6 |
| $ | (2) |
|
| 4 |
Merger costs |
|
| 12 |
|
| (1) |
|
| 11 |
|
| — |
|
| — |
|
| — |
Loss from discontinued operations(6) |
|
| (96) |
|
| 34 |
|
| (62) |
|
| (45) |
|
| 23 |
|
| (22) |
Minority interest of discontinued operations |
|
| 12 |
|
| — |
|
| 12 |
|
| 3 |
|
| — |
|
| 3 |
Loss on early extinguishment of debt |
|
| 35 |
|
| (12) |
|
| 23 |
|
| 1 |
|
| — |
|
| 1 |
Amortization of pension and postretirement actuarial losses |
|
| 20 |
|
| (3) |
|
| 17 |
|
| 15 |
|
| (5) |
|
| 10 |
Plant incident remediation costs |
|
| 13 |
|
| (4) |
|
| 9 |
|
| — |
|
| — |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| 1 |
|
| 1 |
|
| 2 |
|
| 38 |
|
| (12) |
|
| 26 |
Adjusted net income(2) |
|
|
|
|
|
|
| $ | 164 |
|
|
|
|
|
|
| $ | 76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine months |
| Nine months | ||||||||||||||
|
| ended |
| ended | ||||||||||||||
|
| September 30, 2017 |
| September 30, 2016 | ||||||||||||||
|
| Gross |
| Tax and other(3) |
| Net |
| Gross |
| Tax and other(3) |
| Net | ||||||
Reconciliation of net income to adjusted net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
| $ | 450 |
|
|
|
|
|
|
| $ | 218 |
Net income attributable to noncontrolling interests |
|
|
|
|
|
|
|
| (64) |
|
|
|
|
|
|
|
| (22) |
Business acquisition and integration expenses |
| $ | 17 |
| $ | (4) |
|
| 13 |
| $ | 11 |
| $ | (3) |
|
| 8 |
Merger costs |
|
| 18 |
|
| (1) |
|
| 17 |
|
| — |
|
| — |
|
| — |
Loss from discontinued operations(6) |
|
| (215) |
|
| 117 |
|
| (98) |
|
| (58) |
|
| 75 |
|
| 17 |
Minority interest of discontinued operations |
|
| 18 |
|
| — |
|
| 18 |
|
| 8 |
|
| — |
|
| 8 |
Loss on early extinguishment of debt |
|
| 36 |
|
| (12) |
|
| 24 |
|
| 3 |
|
| (1) |
|
| 2 |
Certain legal settlements and related expenses |
|
| 1 |
|
| — |
|
| 1 |
|
| — |
|
| — |
|
| — |
Gain on sale of assets |
|
| (8) |
|
| — |
|
| (8) |
|
| — |
|
| — |
|
| — |
Amortization of pension and postretirement actuarial losses |
|
| 57 |
|
| (11) |
|
| 46 |
|
| 44 |
|
| (10) |
|
| 34 |
Plant incident remediation costs |
|
| 13 |
|
| (4) |
|
| 9 |
|
| — |
|
| — |
|
| — |
Restructuring, impairment and plant closing and transition costs |
|
| 13 |
|
| (2) |
|
| 11 |
|
| 57 |
|
| (15) |
|
| 42 |
Adjusted net income(2) |
|
|
|
|
|
|
| $ | 419 |
|
|
|
|
|
|
| $ | 307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of reimbursements(4) |
|
|
|
|
|
|
| $ | (158) |
|
|
|
|
|
|
| $ | (186) |
NM—Not meaningfulAdjusted EBITDA
| Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income |
61
|
EBITDA andWe 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 othersecurities 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. ThereIn 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 ourthe use of these measures because they do not reflectadjusted 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, including the effectsperformance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of interest, income taxes, depreciationour costs and amortization.ability to generate revenue. Our management compensates for the limitations of these measuresusing adjusted EBITDA by using them asthis measure to supplement U.S. GAAP results to provide a supplement tomore complete understanding of the factors and trends affecting the business rather than U.S. GAAP results.results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after-tax amounts related to the following from net income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) loss (income) from discontinued operations; (c) fair value adjustments to Venator investment, net; (d) certain legal and other settlements and related expenses; (e) certain nonrecurring information technology project implementation costs; (f) amortization of pension and postretirement actuarial losses; and (g) restructuring, impairment and plant closing and transition costs (credits). Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
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 obscure underlying business results and trends.
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.
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 exclusion of certain items, such as, business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted, that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Our forward-looking adjusted effective tax rate is calculated based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to differ.
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Three Months Ended September 30, 2017March 31, 2024 Compared with Three Months Ended September 30, 2016March 31, 2023
As discussed in “Note 4. Discontinued Operations” to our condensed consolidated financial statements,For the resultsthree months ended March 31, 2024, loss from continuing operations for all periods presented exclude the results of the former P&A Business and the results of our former polymers, base chemicals and Australian styrenics business. The increase of $92 million in net
62
income attributable to Huntsman Corporation and the increasewas $30 million, a decrease of $91$61 million from income of $31 million in net incomethe 2023 period. For the three months ended March 31, 2024, loss from continuing operations attributable to Huntsman International was $28 million, a decrease of $61 million from income of $33 million in the 2023 period. The decreases noted above were the result of the following items:
| ● | Revenues for the three months ended |
| ● | Gross profit for the three months ended |
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|
| ● | Restructuring, impairment and plant closing costs (credits) were $11 million for the three months ended |
● | Gain on acquisition of assets, net was approximately $52 million for the three months ended March 31, 2024 related to a preliminary net bargain purchase gain related to the separation and acquisition of assets of SLIC. For further information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our condensed consolidated financial statements. |
● | Prepaid asset write-off was approximately $71 million for the three months ended March 31, 2024. Concurrent with the acquisition of assets of SLIC, we wrote off certain prepaid assets related to operating agreements with SLIC and other joint venture partners. For further information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our condensed consolidated financial statements. |
● | Equity in income of investment in unconsolidated affiliates for the three months ended March 31, 2024 increased to $19 million from $12 million in the 2023 period, primarily related to an increase in income at our joint venture in China. |
| ● | Our |
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| condensed consolidated financial statements. Our income tax |
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Segment Analysis
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| Three months | Percent | |||||||||||
| Three months |
| Percent | ended | change | ||||||||||||||
| ended |
| Change | March 31, | (unfavorable ) | ||||||||||||||
| September 30, |
| Favorable | ||||||||||||||||
| 2017 |
| 2016 |
| (Unfavorable) | ||||||||||||||
(Dollars in millions) | 2024 | 2023 | favorable | ||||||||||||||||
Revenues |
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| |||||||||||||
Polyurethanes | $ | 1,197 |
| $ | 891 |
| 34% | $ | 926 | $ | 991 | (7 | )% | ||||||
Performance Products |
| 501 |
| 509 |
| (2)% | 291 | 334 | (13 | )% | |||||||||
Advanced Materials |
| 263 |
| 247 |
| 6% | 261 | 289 | (10 | )% | |||||||||
Textile Effects |
| 193 |
| 184 |
| 5% | |||||||||||||
Corporate and eliminations |
| 15 |
|
| — |
| NM | ||||||||||||
Total reportable segments’ revenues | 1,478 | 1,614 | (8 | )% | |||||||||||||||
Intersegment eliminations | (8 | ) | (8 | ) | NM | ||||||||||||||
Total | $ | 2,169 |
| $ | 1,831 |
| 18% | $ | 1,470 | $ | 1,606 | (8 | )% | ||||||
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Huntsman Corporation |
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Segment adjusted EBITDA(1) |
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Segment adjusted EBITDA(1) | |||||||||||||||||||
Polyurethanes | $ | 245 |
| $ | 137 |
| 79% | $ | 39 | $ | 66 | (41 | )% | ||||||
Performance Products |
| 63 |
| 70 |
| (10)% | 42 | 71 | (41 | )% | |||||||||
Advanced Materials |
| 56 |
| 55 |
| 2% | 43 | 48 | (10 | )% | |||||||||
Textile Effects |
| 19 |
| 17 |
| 12% | |||||||||||||
Total reportable segments’ adjusted EBITDA | 124 | 185 | (33 | )% | |||||||||||||||
Corporate and other |
| (43) |
|
| (45) |
| 4% | (43 | ) | (49 | ) | 12 | % | ||||||
Total | $ | 340 |
| $ | 234 |
| 45% | $ | 81 | $ | 136 | (40 | )% | ||||||
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Huntsman International |
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Segment adjusted EBITDA(1) |
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Segment adjusted EBITDA(1) | |||||||||||||||||||
Polyurethanes | $ | 245 |
| $ | 137 |
| 79% | $ | 39 | $ | 66 | (41 | )% | ||||||
Performance Products |
| 63 |
| 70 |
| (10)% | 42 | 71 | (41 | )% | |||||||||
Advanced Materials |
| 56 |
| 55 |
| 2% | 43 | 48 | (10 | )% | |||||||||
Textile Effects |
| 19 |
| 17 |
| 12% | |||||||||||||
Total reportable segments’ adjusted EBITDA | 124 | 185 | (33 | )% | |||||||||||||||
Corporate and other |
| (41) |
|
| (43) |
| 5% | (41 | ) | (47 | ) | 13 | % | ||||||
Total | $ | 342 |
| $ | 236 |
| 45% | $ | 83 | $ | 138 | (40 | )% |
NM—Not meaningful
(1) | For further information, including reconciliation of total reportable segments’ adjusted EBITDA to income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 20. Operating Segment Information” to our condensed consolidated financial statements. |
Three months ended March 31, 2024 vs 2023 | ||||||||||||
Average selling price(1) | ||||||||||||
Local | Foreign currency | Sales | ||||||||||
currency and mix | translation impact | volumes(2) | ||||||||||
Period-over-period increase (decrease) | ||||||||||||
Polyurethanes | (16 | )% | — | 9 | % | |||||||
Performance Products | (17 | )% | — | 4 | % | |||||||
Advanced Materials | (6 | )% | — | (4 | )% |
(1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
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(2) | Excludes sales volumes of byproducts and raw materials. |
For more information, including reconciliation of segment adjusted EBITDA to net income of Huntsman Corporation or Huntsman International, as appropriate, see “Note 18. Operating Segment Information” to our condensed consolidated financial statements.
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| Three months ended September 30, 2017 vs 2016 | ||||||
|
| Average Selling Price(1) |
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| Local |
| Foreign Currency |
| Mix & |
| Sales |
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| Currency |
| Translation Impact |
| Other |
| Volumes(2) |
Period-Over-Period Increase (Decrease) |
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Polyurethanes |
| 20% |
| 2% |
| — |
| 12% |
Performance Products |
| 9% |
| 1% |
| 4% |
| (16)% |
Advanced Materials |
| 1% |
| 2% |
| — |
| 3% |
Textile Effects |
| (1)% |
| 1% |
| (2)% |
| 7% |
Total Company |
| 12% |
| 2% |
| 3% |
| 1% |
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| Three months ended September 30, 2017 vs June 30, 2017 | ||||||
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| Average Selling Price(1) |
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| Local |
| Foreign Currency |
| Mix & |
| Sales |
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| Currency |
| Translation Impact |
| Other |
| Volumes(2) |
Period-Over-Period Increase (Decrease) |
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Polyurethanes |
| 3% |
| 3% |
| (1)% |
| 12% |
Performance Products |
| 1% |
| 2% |
| 4% |
| (18)% |
Advanced Materials |
| (1)% |
| 3% |
| 3% |
| (4)% |
Textile Effects |
| (3)% |
| 1% |
| (1)% |
| (3)% |
Total Company |
| 1% |
| 3% |
| 3% |
| (1)% |
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Polyurethanes
The increasedecrease in revenues in our Polyurethanes segment for the three months ended September 30, 2017March 31, 2024 compared to the same period of 20162023 was primarily due to higherlower MDI average selling prices and unfavorable sales mix, partially offset by higher sales volumes. MDI average selling prices increased in responsedecreased primarily due to continued strong market conditionsless favorable supply and higher raw material costs. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI salesdemand dynamics. Sales volumes increased due to increasedmodestly improved demand across most major markets. MTBE sales volumes increased due to the timing of shipmentsand share gains in certain markets, primarily in the 2016 period, partially offset by the impact of hurricane related production outages during the third quarter of 2017.Americas and Europe regions. The increasedecrease in segment adjusted EBITDA was primarily due to higherlower MDI margins,average selling prices, partially offset by lower MTBEraw materials costs, higher sales volumes, higher equity earnings and the estimated $15 million impact of hurricane related production outages during the third quarter of 2017.cost savings from our cost optimization programs.
Performance Products
The decrease in revenues in our Performance Products segment for the three months ended September 30, 2017March 31, 2024 compared to the same period of 20162023 was primarily due to lower sales volumes, partially offset by higher average selling prices. Sales volumes decreased primarily due to the sale of the European surfactants business to Innospec Inc. on December 30, 2016 as well as the impact of hurricane related production outages in the third quarter of 2017,prices and unfavorable sales mix, partially offset by higher sales volumes in our maleic anhydride and amines businesses.volumes. Average selling prices decreased primarily due to competitive pressure, particularly in Europe. Sales volumes increased primarily due to improvement in response to higher raw material costsindustrial and favorable product mix effect.construction activity as well as increased demand in coatings and adhesives and lubes markets. The decrease in segment adjusted EBITDA was primarily due to the estimated $35 million impact of hurricane related production outages in the third quarter of 2017lower average selling prices, partially offset by higher sales volumes and the sale of the European surfactants business at the end of 2016.lower raw materials costs.
Advanced Materials
The increasedecrease in revenues in our Advanced Materials segment for the three months ended September 30, 2017March 31, 2024 compared to the same period of 20162023 was due to higher sales volumes and higher average selling prices. Sales volumes increased primarily due to growthlower average selling prices and lower sales volumes. Average selling prices decreased primarily in response to lower raw materials costs. Sales volumes decreased in our specialty electronicsgeneral industry and electrical and coatings components businesses,commodity markets, partially offset by an increase in our withdrawal from certain low margin business. Average selling prices increasedaerospace and electrical infrastructure markets in response to
65
higher raw material costs and favorable product mix effect. customer demand. The increasedecrease in segment adjusted EBITDA was primarily due to higherlower sales volumes and higher average selling prices,foreign currency exchange rate fluctuations, partially offset by higher raw material costs.
Textile Effectsimproved sales mix.
The increase in revenues in our Textile Effects segment for the three months ended September 30, 2017 compared to the same period of 2016 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased in both textile chemicals and dyes, particularly in our Asia region. Average selling prices decreased primarily due to competitive market conditions. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and lower fixed costs, partially offset by lower margins.
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 and benzene sales.gains and losses on the disposition of corporate assets. For the three months ended September 30, 2017, segmentMarch 31, 2024, adjusted EBITDA from Corporate and other for Huntsman Corporation increased by $2 million towas a loss of $43 million fromas compared to a loss of $45$49 million for the same period in 2016.of 2023. For the three months ended September 30, 2017, segmentMarch 31, 2024, adjusted EBITDA from Corporate and other for Huntsman International increased by $2 million towas a loss of $41 million fromas compared to a loss of $43$47 million for the same period in 2016.of 2023. The increase in segment adjusted EBITDA from Corporate and other resulted primarily from an increase in LIFO inventory valuation income, partially offset by an increase in loss from benzene sales and an increase in unallocated foreign currency exchange loss.
Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016
As discussed in “Note 4. Discontinued Operations” to our condensed consolidated financial statements, the results from continuing operations for all periods presented exclude the results of the former P&A Business and the results of our former polymers, base chemicals and Australian styrenics business. The increase of $192 million in net income attributable to Huntsman Corporation and the increase of $190 million in net income attributable to Huntsman International was the result of the following items:
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| Nine months |
| Percent | ||||
| ended |
| Change | ||||
| September 30, |
| Favorable | ||||
| 2017 |
| 2016 |
| (Unfavorable) | ||
Revenues |
|
|
|
|
|
|
|
Polyurethanes | $ | 3,172 |
| $ | 2,703 |
| 17% |
Performance Products |
| 1,595 |
|
| 1,611 |
| (1)% |
Advanced Materials |
| 782 |
|
| 774 |
| 1% |
Textile Effects |
| 586 |
|
| 567 |
| 3% |
Corporate and eliminations |
| 20 |
|
| (41) |
| NM |
Total | $ | 6,155 |
| $ | 5,614 |
| 10% |
|
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Huntsman Corporation |
|
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Segment adjusted EBITDA(1) |
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|
|
Polyurethanes | $ | 556 |
| $ | 439 |
| 27% |
Performance Products |
| 249 |
|
| 248 |
| — |
Advanced Materials |
| 166 |
|
| 173 |
| (4)% |
Textile Effects |
| 64 |
|
| 59 |
| 8% |
Corporate and other |
| (136) |
|
| (132) |
| (3)% |
Total | $ | 899 |
| $ | 787 |
| 14% |
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Huntsman International |
|
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|
Segment adjusted EBITDA(1) |
|
|
|
|
|
|
|
Polyurethanes | $ | 556 |
| $ | 439 |
| 27% |
Performance Products |
| 249 |
|
| 248 |
| — |
Advanced Materials |
| 166 |
|
| 173 |
| (4)% |
Textile Effects |
| 64 |
|
| 59 |
| 8% |
Corporate and other |
| (132) |
|
| (128) |
| (3)% |
Total | $ | 903 |
| $ | 791 |
| 14% |
NM—Not meaningful
67
For more information, including reconciliation of segment adjusted EBITDA to net income of Huntsman Corporation or Huntsman International, as appropriate, see “Note 18. Operating Segment Information” to our condensed consolidated financial statements.
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| Nine months ended September 30, 2017 vs 2016 | ||||||
|
| Average Selling Price(1) |
|
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| ||
|
| Local |
| Foreign Currency |
| Mix & |
| Sales |
|
| Currency |
| Translation Impact |
| Other |
| Volumes(2) |
Period-Over-Period Increase (Decrease) |
|
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|
Polyurethanes |
| 15% |
| — |
| 5% |
| (3)% |
Performance Products |
| 6% |
| — |
| 2% |
| (9)% |
Advanced Materials |
| 1% |
| — |
| — |
| — |
Textile Effects |
| (2)% |
| — |
| (3)% |
| 8% |
Total Company |
| 9% |
| — |
| 6% |
| (5)% |
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Polyurethanes
The increase in revenues in our Polyurethanes segment for the nine months ended September 30, 2017 compared to the same period of 2016 was primarily due to higher average selling prices, partially offset by lower sales volumes. MDI average selling prices increased in response 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. MDI and MTBE sales volumes decreased due to the impact of maintenance and hurricane related production outages during the second and third quarters of 2017. The increase in segment adjusted EBITDA was primarily due to higher MDI margins, partially offset by lower MTBE margins.
Performance Products
The decrease in revenues in our Performance Products segment for the nine months ended September 30, 2017 compared to the same period of 2016 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 higher average selling prices. Average selling prices increased primarily in response to higher raw material costs and favorable product mix effect partially from the sale of the European surfactants business. The increase in segment adjusted EBITDA was primarily due to higher sales volumes in our remaining businesses and lower fixed costs.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the nine months ended September 30, 2017 compared to the same period of 2016 was primarily due to higher average selling prices. Average selling prices increased in response to higher raw material costs. Sales volumes remained relatively unchanged as strong growth in our European and Asian region, mainly in the wind market and certain higher value businesses, was almost entirely offset by reduced volumes in our Americas region, primarily due to our withdrawal from certain low margin businesses. The decrease in segment adjusted EBITDA was due to lower margins resulting from higher raw material costs and higher fixed costs.
Textile Effects
The increase in revenues in our Textile Effects segment for the nine months ended September 30, 2017 compared to the same period of 2016 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased in both textile chemicals and dyes, particularly in our Asia region. Average selling prices decreased primarily due to competitive market conditions. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and lower fixed costs.
68
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 and benzene sales. For the nine months ended September 30, 2017, segment adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $4 million to a loss of $136 million from a loss of $132 million for the same period in 2016. For the nine months ended September 30, 2017, segment adjusted EBITDA from Corporate and other for Huntsman International decreased by $4 million to a loss of $132 million from a loss of $128 million for the same period in 2016. The decrease in segment adjusted EBITDA from Corporate and other resulted primarily from an increase in loss from benzene sales and an increase in unallocated corporate overhead, partially offset by a decrease in LIFO inventory valuation expenseunallocated foreign currency exchange gains and an increase in unallocated foreign currency exchange gain.LIFO valuation losses.
LIQUIDITY AND CAPITAL RESOURCES
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 Instructions H(1)(a) and (b) of Form 10‑Q.10-Q.
Cash Flows for the Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023
Net cash provided byused in operating activities from continuing operations for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 was $538$63 million and $736$122 million, respectively. The decrease in net cash provided byused in operating activities from continuing operations during the ninethree months ended September 30, 2017 compared with the same period in 2016 was primarily attributable to a $274 million unfavorable variance in operating assets and liabilities for the nine months ended September 30, 2017March 31, 2024 as compared with the same period of 2016,2023 was primarily attributable to a net cash inflow of $112 million related to changes in operating assets and liabilities, partially offset by increased operating incomeloss as described in “—Results of Operations” above.above for the three months ended March 31, 2024 as compared with the same period of 2023.
Net cash used in(used in) provided by investing activities from continuing operations for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 was $145$(30) million and $213$493 million, respectively. During the ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, we paid $159$42 million and $214$46 million respectively, for capital expenditures. Weexpenditures, respectively. During the three months ended March 31, 2024, we received proceeds$12 million for the sale of businesses, net, related to the resolution of net working capital from the sale of assetsour Textile Effects Business. During the three months ended March 31, 2023, we received $541 million for the sale of $21businesses, net, primarily related to net proceeds of $530 million from the sale of our Textile Effects Business. See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our condensed consolidated financial statements.
Net cash provided by (used in) financing activities for the three months ended March 31, 2024 and 2023 was $108 million and $(379) million, respectively. During the three months ended March 31, 2024 and 2023, we had net borrowings from (repayments against) our 2022 Revolving Credit Facility and our A/R Programs of $191 million and $(220) million, respectively. During the three months ended March 31, 2024, HPS paid $14approximately $28 million against the note payable with SLIC for the acquisition of a business duringassets. See “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our condensed consolidated financial statements. During the ninethree months ended September 30, 2017. During the nine months ended September 30, 2017 and 2016,March 31, 2023, we received $7paid $97 million and nil, respectively, from the terminationfor repurchases of cross-currency interest rate contracts.our common stock.
Net cash used in financing activities for the nine months ended September 30, 2017 and 2016 was $404 million and $523 million, respectively. The increase in net cash used in financing activities was primarily due to an increase in net repayments of our revolving loan facility and net repayments of long‑term debt during the 2017 period as compared with the 2016 period and proceeds from the IPO of our former P&A Business.
Free cash flow from continuing operations for the ninethree months ended September 30, 2017March 31, 2024 and 2016 were2023 was a use of cash proceeds of $404$105 million and $523$168 million, respectively. The improvementincrease in free cash flow from continuing operations was primarily attributable to the changesa decrease in cash flows fromused in operating and investing activities from continuing operations excluding merger and acquisition activities.a decrease in cash used for capital expenditures during the three months ended March 31, 2024 as compared with the same period of 2023.
69
Changes in Financial Condition
The following information summarizes our working capital position (dollars in millions):
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| September 30, |
| December 31, |
| Increase |
| Percent | |||
|
| 2017 |
| 2016 |
| (Decrease) |
| Change | |||
Cash and cash equivalents |
| $ | 440 |
| $ | 385 |
| $ | 55 |
| 14% |
Restricted cash |
|
| 11 |
|
| 11 |
|
| — |
| — |
Accounts and notes receivable, net |
|
| 1,247 |
|
| 1,183 |
|
| 64 |
| 5% |
Inventories |
|
| 1,084 |
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| 918 |
|
| 166 |
| 18% |
Prepaid expenses |
|
| 47 |
|
| 49 |
|
| (2) |
| (4)% |
Other current assets |
|
| 193 |
|
| 232 |
|
| (39) |
| (17)% |
Current assets held for sale(1) |
|
| 2,745 |
|
| 777 |
|
| 1,968 |
| 253% |
Total current assets |
|
| 5,767 |
|
| 3,555 |
|
| 2,212 |
| 62% |
Accounts payable |
|
| 891 |
|
| 790 |
|
| 101 |
| 13% |
Accrued liabilities |
|
| 537 |
|
| 471 |
|
| 66 |
| 14% |
Current portion of debt |
|
| 29 |
|
| 50 |
|
| (21) |
| (42)% |
Current liabilities held for sale(1) |
|
| 1,633 |
|
| 467 |
|
| 1,166 |
| 250% |
Total current liabilities |
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| 3,090 |
|
| 1,778 |
|
| 1,312 |
| 74% |
Working capital |
| $ | 2,677 |
| $ | 1,777 |
| $ | 900 |
| 51% |
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|
March 31, | December 31, | Increase | Percent | |||||||||||||
2024 | 2023 | (decrease) | change | |||||||||||||
Cash and cash equivalents | $ | 552 | $ | 540 | $ | 12 | 2 | % | ||||||||
Accounts and notes receivable, net | 837 | 753 | 84 | 11 | % | |||||||||||
Inventories | 896 | 867 | 29 | 3 | % | |||||||||||
Other current assets | 158 | 154 | 4 | 3 | % | |||||||||||
Total current assets | 2,443 | 2,314 | 129 | 6 | % | |||||||||||
Accounts payable | 745 | 719 | 26 | 4 | % | |||||||||||
Accrued liabilities | 386 | 395 | (9 | ) | (2 | )% | ||||||||||
Current portion of debt | 396 | 12 | 384 | NM | ||||||||||||
Current operating lease liabilities | 52 | 46 | 6 | 13 | % | |||||||||||
Total current liabilities | 1,579 | 1,172 | 407 | 35 | % | |||||||||||
Working capital | $ | 864 | $ | 1,142 | $ | (278 | ) | (24 | )% |
Our working capital increaseddecreased by $900$278 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, net increased by |
| Inventories increased by |
● | Accounts payable increased by $26 million primarily due to higher inventory |
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DIRECT AND SUBSIDIARY DEBT
See “Note 7. Debt—Direct and Subsidiary Debt” to our condensed consolidated financial statements.
Debt Issuance Costs
See “Note 7. Debt—Direct and Subsidiary Debt—Debt Issuance Costs” to our condensed consolidated financial statements.
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Senior Credit Facilities
See “Note 7. Debt—Direct and Subsidiary Debt—Senior Credit Facilities” to our condensed consolidated financial statements.
Seventeenth Amendment to Credit Agreement
See “Note 7. Debt—Direct and Subsidiary Debt—Seventeenth Amendment to Credit Agreement” to our condensed consolidated financial statements.
A/R Programs
See “Note 7. Debt—Direct and Subsidiary Debt—A/R Programs” to our condensed consolidated financial statements.
Note Payable from Huntsman International to Huntsman Corporation
See “Note 7. Debt—Direct and Subsidiary Debt—Note Payable from Huntsman International to Huntsman Corporation” to our condensed consolidated financial statements.
COMPLIANCE WITH COVENANTS
See “Note 7. Debt—Compliance with Covenants” to our condensed consolidated financial statements.
SHORT-TERM AND LONG-TERM LIQUIDITYLiquidity
We depend upon our cash, Seniorour 2022 Revolving Credit Facilities,Facility, A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of September 30, 2017,March 31, 2024, we had $1,211$1,607 million of combined cash and unused borrowing capacity, consisting of $451$552 million in cash, and restricted cash, $642$995 million in availability under our 2022 Revolving Credit Facility and $118$60 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:
Short-Term Liquidity
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● | On January 31, 2024, we completed the planned separation and acquisition of assets of SLIC, our joint venture with BASF and three Chinese chemical companies. The final purchase price of the acquired assets will be determined based on an asset valuation, which we currently expect to be completed in the first half of 2024. The acquisition of the assets was funded in part with HPS issuing a U.S. dollar equivalent note payable at closing of approximately $218 million, as adjusted to reflect the preliminary valuation and is subject to further change pending the final valuation. As of March 31, 2024, the note payable has been reduced by approximately $28 million to reflect cash payments made during the quarter. We expect that the remainder of the note payable will be paid by the end of 2024 using available funds at HPS. Upon liquidation of the joint venture, all remaining cash of SLIC, primarily resulting from the proceeds received by SLIC, will be distributed back to the joint venture partners. We currently anticipate that the liquidation will be completed by mid-2025. |
● | On February 28, 2023, we completed the sale of our Textile Effects Business to Archroma, and during the first quarter of 2024, we finalized the purchase price valued at $597 million, which includes adjustments to the purchase price for working capital plus the assumption of underfunded pension liabilities. During the first quarter of 2024, we have paid cash taxes of approximately $1 million, and we expect to pay additional cash taxes of approximately $11 million. See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our condensed consolidated financial statements. |
● | During 2020 and 2021, management implemented cost realignment and synergy plans and, in November 2022, committed to further plans to realign our cost structure with additional restructuring in Europe, including exiting and consolidating certain facilities, workforce relocation to lower cost locations and further personnel rationalization. In connection with these plans, we have achieved combined annualized cost savings and synergy benefits in excess of $280 million. Associated with these plans, we expect total cash costs of approximately $293 million (including approximately $56 million of capital expenditures) through 2025, of which we have spent approximately $255 million through the first quarter of 2024 (including approximately $39 million of capital expenditures). Of the remaining cash costs, the majority will be payments related to our restructuring in Europe, primarily for personnel who have exited as of the end of 2023 as well as capital expenditures related to our research and development footprint, which is included in our |
● | As of March 31, 2024, we have approximately $547 million remaining under the authorization of our existing share repurchase program. Repurchases may be commenced or suspended from time to time without prior notice. |
Long-Term Liquidity
● | On January 22, 2024, we entered into an amendment to our U.S. A/R Program that extended the scheduled maturity date of our U.S. A/R Program from July 2024 to January 2027. In addition, on January 31, 2024, we entered into an amendment to our EU A/R Program, effective as of February 15, 2024, that extended the scheduled maturity date of our EU A/R Program from July 2024 to July 2027. Aside from the extended maturity dates, these amendments to our A/R Programs secured substantially similar terms as those in the prior agreements. |
● | On April 19, 2024, the Louisiana Fourth Circuit Court of Appeal affirmed the $93.1 million jury verdict and |
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As of September 30, 2017,March 31, 2024, we had $29$396 million classified as current portion of debt, including scheduled Senior$195 million outstanding under our 2022 Revolving Credit Facilities amortization payments totaling $1Facility, an outstanding U.S. dollar equivalent note payable of approximately $190 million related to the separation and acquisition of assets of the SLIC joint venture, debt at our variable interest entities of $20$9 million and certain other short‑termshort-term facilities and scheduled amortization payments totaling $8$2 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 September 30, 2017,March 31, 2024, we had approximately $388$529 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 material 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 or tooperations. Nevertheless, we could repatriate additional cash as repaymentsdividends, and the repatriation of intercompany debt. If foreign cash was repatriated as a dividend instead of repayment of intercompany debt, the dividend couldwould generally not be subject to U.S. federal and state income taxes without any offsetting foreign tax credit relief. At present, we estimate that we will generate sufficient cash in our U.S. operations, together with the payments of intercompany debt, to meet our cash needs in the U.S and we do not expect to repatriate cash to the U.S. as a dividend. Cash held by certain foreign subsidiaries, including our variable interest entities,taxation. However, such repatriation may alsopotentially be subject to legal restrictions, including those arising from the interests of our partners, which could limit the amounts available for repatriation.
CAPITAL RESOURCES
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.
RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTSlimited foreign withholding taxes.
For a discussion of restructuring plans and the costs involved,more information regarding our debt, see “Note 6. Restructuring, Impairment and Plant Closing Costs”8. Debt” to our condensed consolidated financial statements.
LEGAL PROCEEDINGS
For a discussion of legal proceedings, see “Note 13. Commitments and Contingencies—Legal Matters” and “Note 14. Environmental, Health and Safety Matters—Environmental Matters” to our condensed consolidated financial statements.
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ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
As noted in our Annual Report on Form 10‑K for the year ended December 31, 2016, “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 14. Environmental, Health and Safety Matters” to our condensed consolidated financial statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
For a discussion of recently issued accounting pronouncements, see “Note 2. Recently Issued Accounting Pronouncements” to our condensed consolidated financial statements.
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies are presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10‑K for the year ended December 31, 2016.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks.prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures.
All derivatives, whether designated as hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive loss, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.
We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded as an unrealized currency translation adjustment in accumulated other comprehensive loss.
Our revenues and expenses are denominated in various foreign currencies, and our cash flows and earnings are thus subject to fluctuations due to exchange rate variations. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of September 30, 2017, we had approximately $81 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.
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, Arabian Amines Company entered into a 12-year floating to fixed interest rate contract providing for a receipt of LIBOR interest payments for a fixed payment of 5.02%. In connection with the consolidation of Arabian Amines Company as of July 1, 2010, the interest rate contract is now included in our consolidated results. See “Note 5. Variable Interest Entities”9. Derivative Instruments and Hedging Activities” to our condensed consolidated financial statements. The notional amount of the
73
swap as of September 30, 2017 was $16 million, and the interest rate contract is not designated as a cash flow hedge. As of September 30, 2017, the fair value of the swap was $1 million and was recorded in noncurrent liabilities on our condensed consolidated balance sheets. For each of the nine months ended September 30, 2017 and 2016, we recorded a reduction of interest expense of nil due to changes in fair value of the swap.
In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract to swap an aggregate notional $200 million for an aggregate notional €161 million. This swap is designated as a hedge of net investment for financial reporting purposes. Under the cross-currency interest rate contract, we will receive fixed U.S. dollar payments of $5 million semiannually on May 15 and November 15 (equivalent to an annual rate of 5.125%) and make interest payments of approximately €3 million (equivalent to an annual rate of approximately 3.6%). In August 2017, we terminated these cross-currency interest rate contracts and received $7 million 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 on our condensed consolidated statements of comprehensive income. From time to time, we review such designation of intercompany loans.
We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of September 30, 2017, we have designated approximately €505 million (approximately $592 million) of euro-denominated debt as a hedge of our net investment. For the nine months ended September 30, 2017, the amount of loss recognized on the hedge of our net investment was $85 million and was recorded in other comprehensive income (loss) on our condensed consolidated statements of comprehensive income.
ITEM 4. CONTROLS AND PROCEDURES
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a‑15(e)13a-15(e) and 15d‑15(e)15d-15(e) under the Exchange Act) as of September 30, 2017.March 31, 2024. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of September 30, 2017,March 31, 2024, our disclosure controls and procedures were effective, in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
No changes to our internal control over financial reporting occurred during the quarter ended September 30, 2017March 31, 2024 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). However, we can only give reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal controls over financial reporting could cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.
Texas Emissions PenaltiesThere have been no material developments with respect to the legal proceedings referenced in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2023.
On August 17, 2017, we were informed by the TCEQ that we would be assessed a penalty of $104,128 in connection with eight alleged unauthorized air emission events dating back to November 2015. We anticipate that the order will become final upon approval by the TCEQ commissioners in 2018.
For information regarding risk factors, see “Part I. Item 1A. Risk Factors,”Factors” in our Annual Report on Form 10‑K10-K for the year ended December 31, 2016.2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information with respect to shares of our common stock that we repurchased as part of our share repurchase program and shares of restricted stock granted under our 2016 Stock Incentive Plan and our Prior Planstock incentive plans that we withheld upon vesting to satisfy our tax withholding obligations during the three months ended September 30, 2017.March 31, 2024.
Total number of | Approximate dollar | |||||||||||||||
shares purchased | value of shares that | |||||||||||||||
Total number | Average | as part of publicly | may yet be purchased | |||||||||||||
of shares | price paid | announced plans | under the plans or | |||||||||||||
purchased | per share(1) | or programs(2) | programs(2) | |||||||||||||
January 1 - January 31 | — | $ | — | — | $ | 547,000,000 | ||||||||||
February 1 - February 29 | 188,126 | 24.21 | — | 547,000,000 | ||||||||||||
March 1 - March 31 | — | — | — | 547,000,000 | ||||||||||||
Total | 188,126 | 24.21 | — |
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| Maximum number (or | |
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| Total number of |
| approximate dollar | |
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| shares purchased |
| value) of shares that | |
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| Total number |
| Average |
| as part of publicly |
| may yet be purchased | ||
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| of shares |
| price paid |
| announced plans |
| under the plans or | ||
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| purchased |
| per share |
| or programs(1) |
| programs(1) | ||
July |
| 892 |
| $ | 25.94 |
| — |
| $ | 50,000,000 |
August |
| — |
|
| — |
| — |
|
| 50,000,000 |
September |
| 2,760 |
|
| 26.90 |
| — |
|
| 50,000,000 |
Total |
| 3,652 |
| $ | 26.67 |
| — |
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|
(1) | Represents net purchase price per share, exclusive of any fees or commissions. | ||
(2) |
| On |
See the Exhibit Index at the end of this Quarterly Report on Form 10-Q for exhibits filed with this report.
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EXHIBIT INDEX
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| Incorporated by Reference | ||
Exhibit Number |
| Exhibit Description | Form | Exhibit | Filing Date |
4.1 |
| 8-K | 4.1 | July 18, 2017 | |
4.2 |
| Form of 5.75% Senior Note (included as Exhibit A to Exhibit 4.1) | 8-K | 4.2 | July 18, 2017 |
31.1 | * | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 |
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31.2 | * | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 |
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32.1 | * | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002 |
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32.2 | * | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002 |
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101.INS | * | XBRL Instance Document |
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101.SCH | * | XBRL Taxonomy Extension Schema |
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101.CAL | * | XBRL Taxonomy Extension Calculation Linkbase |
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101.LAB | * | XBRL Taxonomy Extension Label Linkbase |
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101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase |
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101.DEF | * | XBRL Taxonomy Extension Definition Linkbase |
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* | Filed |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
Dated: | HUNTSMAN CORPORATION | |
| HUNTSMAN INTERNATIONAL LLC | |
| | |
| By: | /s/ |
| |
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| | Executive Vice President and Chief Financial Officer |
| | and Manager (Principal Financial Officer) |
| | |
| By: | /s/ |
| |
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| | Vice President and Controller (Authorized Signatory and |
| | Principal Accounting Officer) |
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