July 7, 2005
Nathan W. Jones
Direct (801) 578-6943
nwjones@stoel.com
SENT VIA EDGAR TRANSMISSION, FACSIMILE AND EXPRESS COURIER
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Mail Stop 7010
Washington, D.C. 20549
Form 10-K for the year ended December 31, 2004
Filed March 15, 2005
File No. 333-85141
Form 10-Q for the quarter ended March 31, 2005
Filed May 11, 2005
File No. 333-85141
Ladies and Gentlemen:
On behalf of Huntsman International LLC (the "Company"), we are submitting this correspondence in response to the comments provided in your letter dated June 29, 2005 with respect to the Company's Registration Statement on Form S-4, File No. 333-125652. As background information with respect to your comments, please note as follows:
For your convenience, we have repeated your comments below, followed by the Company's response.
Form 10-K for the year ended December 31, 2004
Form 10-Q for the quarter ended March 31, 2005
Response:
The three material weaknesses identified by Huntsman's auditors in connection with their audit of Huntsman's financial statements for the year ended December 31, 2003 were the following:
To remediate the first material weakness, Huntsman implemented the following policies during the first quarter of 2004:
To remediate the second material weakness, Huntsman implemented the following policies during the first quarter of 2004:
To remediate the third material weakness, Huntsman appointed a new independent director as the chairman of its audit committee in December 2003. During the second quarter of 2004, Huntsman replaced its Controller and added a Director of Internal Controls. During the third quarter of 2004, Huntsman added a Director of Financial Reporting. Altogether, Huntsman added 11 new positions in the areas of finance, treasury, internal controls and internal audit during the second and third quarters of 2004 and two additional positions during the fourth quarter of 2004. Huntsman also adopted and implemented additional policies and procedures to strengthen its financial reporting system during the second and third quarters of 2004, as follows:
The Company believes that all three material weaknesses were completely remediated prior to the end of December 2004 (the period covered by the Form 10-K). However, because the Company is not yet subject to Section 404, and because the Company did not otherwise specifically engage its auditors for such purpose, the auditors have not directly concurred in this conclusion or confirmed the remediation steps described above. It is important to note, however, that the Company's auditors did not reiterate the existence of the three material weaknesses they had previously disclosed to the Company (or raise any additional material weaknesses) in connection with either of the two audits for periods subsequent to 2003.
Response:
As disclosed in the Form 10-K and the Form 10-Q, the Company's chief executive officer ("CEO") and chief financial officer ("CFO") concluded, as of December 31, 2004 and March 31, 2005, respectively, that the Company's disclosure controls and procedures were effective. At the end of the periods covered by both the Form 10-K and the Form 10-Q, the Company's management did not believe that any material weaknesses existed. In reaching their conclusions, the CEO and CFO did take into consideration the material weaknesses identified by the auditors in connection with the 2003 audit and the various steps described above that were taken to remediate the material weaknesses, noting that substantially all of the remediation had been taken prior to September 30, 2004. In addition, the CEO and CFO considered, with respect to the Form 10-K, that the auditors did not identify any material weaknesses in connection with either the September 30, 2004 audit or the December 31, 2004 audit, and with respect to the Form 10-Q, that the auditors did not identify any material weaknesses in connection with the September 30, 2004 audit, the December 31, 2004 audit or the March 31, 2005 review.
Response:
The Company has reviewed as requested Rule 13a-15(e) and believes that its disclosure is responsive to Item 307 of Regulation S-K. In fact, clause (1) of the description of the evaluation in the Form 10-K specifically states that the disclosure controls and procedures were "…designed to ensure that material information…is made known to the chief executive officer and chief financial officer by others…" Nevertheless, the Company undertakes as requested by the Staff to state more clearly in future reports, if true, that the CEO and CFO have concluded that the Company's disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
Response:
As with most companies, the Company's disclosures in the area of internal controls is evolving and improving. The disclosure in the Form 10-Q (which was filed subsequent to the Form 10-K) affirmatively states that no changes in its internal controls over financial reporting occurred during the first quarter of 2005 that materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting, and although it was stated less clearly in the Form 10-K, the Company believes that its disclosure is sufficiently clear and will not mislead investors. The Company undertakes in future filings to make the required statement in the affirmative manner set forth in the Form 10-Q to the extent true or to clearly describe any changes during the period that are required to be disclosed.
Response:
The first and second material weaknesses described above led to restatements of the Company's financial statements for the third quarter of 2003 and the first three quarters of 2003, respectively. These impacts are described in the amended quarterly reports on Forms 10-Q/A pursuant to which the restated financial statements were filed with the Commission. These impacts are also described in Item 9A of the Form 10-K. None of the material weaknesses described above led to restatements of the Company's financial statements for 2004. Moreover, the Form 10-K reflects the 2003 financials as restated, so no impact description is necessary. The Form 10-Q does not include the 2003 financial statements that have been restated, so the periods in which the restatements occurred are not covered by the MD&A discussion. In addition, the Company notes that under paragraph 26 of APB Opinion No. 9 it was not required to include a footnote relating to restatements in its financial statements in the Form 10-K or the Form 10-Q. Consequently, the Company does not believe that it is necessary to revise the MD&A discussion in the Form 10-K or the Form 10-Q to discuss the impact of the material weaknesses on the financial statements.
If you have any questions regarding the foregoing response, please feel free to call me.
Very truly yours, | ||||
STOEL RIVES LLP | ||||
/s/ NATHAN W. JONES Nathan W. Jones | ||||
