UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
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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 September 30, | ||
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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 |
Commission | Exact Name of Registrant as Specified in its Charter, | State of | I.R.S. Employer | |||
001-32427 | | Huntsman Corporation | | Delaware | | 42-1648585 |
333-85141 | | Huntsman International LLC | | Delaware | | 87-0630358 |
Securities registered pursuant to Section 12(b) of the Act:
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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 | Yes ☒ | No |
Huntsman International LLC | Yes ☒ | No |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Huntsman Corporation | Yes ☒ | No |
Huntsman International LLC | Yes ☒ | No |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Huntsman Corporation | Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company ☐ | Emerging growth company ☐ |
Huntsman International LLC | Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company ☐ | Emerging Growth company ☐ |
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 13(a) of the Exchange 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-2 of the Exchange Act).
Huntsman Corporation | Yes ☐ | No |
Huntsman International LLC | Yes ☐ | No |
On October 20, 2020, 220,791,4832021, 218,030,754 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interests of Huntsman International LLC were outstanding. There is no trading market for Huntsman International LLC’s units of membership interests. All of Huntsman International LLC’s units of membership interests are held by Huntsman Corporation.
This Quarterly Report on Form 10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman International LLC is a wholly-owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on Form 10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.format.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED SEPTEMBERSeptember 30, 20202021
TABLE OF CONTENTS
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| Huntsman Corporation and Subsidiaries: | |
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| Huntsman International LLC and Subsidiaries: | |
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| Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries: | |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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FORWARD-LOOKING STATEMENTS
Certain information set forth in this report contains “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-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; projected impact of COVID-19 on our operations and future financial results; 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, or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
All forward-looking statements, including without limitation 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 be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable law.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks set forth in “Part II. Item 1A. Risk Factors” below and “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
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| | September 30, | | December 31, | ||
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| 2020 |
| 2019 | ||
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents(a) | | $ | 1,168 | | $ | 525 |
Accounts and notes receivable (net of allowance for doubtful accounts of $26 and $19, respectively), ($207 and $221 pledged as collateral, respectively)(a) | | | 881 | | | 940 |
Accounts receivable from affiliates | | | 8 | | | 13 |
Inventories(a) | | | 819 | | | 914 |
Other current assets | | | 125 | | | 155 |
Current assets held for sale | | | — | | | 1,208 |
Total current assets | | | 3,001 | | | 3,755 |
Property, plant and equipment, net(a) | | | 2,477 | | | 2,383 |
Investment in unconsolidated affiliates | | | 448 | | | 535 |
Intangible assets, net(a) | | | 403 | | | 197 |
Goodwill | | | 523 | | | 276 |
Deferred income taxes | | | 295 | | | 292 |
Notes receivable from affiliate | | | 34 | | | 34 |
Operating lease right-of-use assets | | | 430 | | | 396 |
Other noncurrent assets(a) | | | 486 | | | 452 |
Total assets | | $ | 8,097 | | $ | 8,320 |
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LIABILITIES AND EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable(a) | | $ | 696 | | $ | 765 |
Accounts payable to affiliates | | | 29 | | | 57 |
Accrued liabilities(a) | | | 583 | | | 420 |
Current portion of debt(a) | | | 567 | | | 212 |
Current operating lease liabilities(a) | | | 46 | | | 42 |
Current liabilities held for sale | | | — | | | 512 |
Total current liabilities | | | 1,921 | | | 2,008 |
Long-term debt(a) | | | 1,557 | | | 2,177 |
Deferred income taxes | | | 50 | | | 29 |
Noncurrent operating lease liabilities(a) | | | 403 | | | 384 |
Other noncurrent liabilities(a) | | | 789 | | | 898 |
Total liabilities | | | 4,720 | | | 5,496 |
Commitments and contingencies (Notes 15 and 16) | | | | | | |
Equity | | | | | | |
Huntsman Corporation stockholders’ equity: | | | | | | |
Common stock $0.01 par value, 1,200,000,000 shares authorized, 258,304,485 and 257,405,496 shares issued and 219,827,393 and 224,295,868 shares outstanding, respectively | | | 3 | | | 3 |
Additional paid-in capital | | | 4,042 | | | 4,008 |
Treasury stock, 38,477,091 and 33,112,572 shares, respectively | | | (731) | | | (635) |
Unearned stock-based compensation | | | (23) | | | (17) |
Retained earnings | | | 1,260 | | | 690 |
Accumulated other comprehensive loss | | | (1,329) | | | (1,362) |
Total Huntsman Corporation stockholders’ equity | | | 3,222 | | | 2,687 |
Noncontrolling interests in subsidiaries | | | 155 | | | 137 |
Total equity | | | 3,377 | | | 2,824 |
Total liabilities and equity | | $ | 8,097 | | $ | 8,320 |
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents(a) | $ | 505 | $ | 1,593 | ||||
Accounts and notes receivable (net of allowance for doubtful accounts of $25 and $26, respectively), ($336 and $198 pledged as collateral, respectively)(a) | 1,216 | 902 | ||||||
Accounts receivable from affiliates | 23 | 8 | ||||||
Inventories(a) | 1,174 | 848 | ||||||
Other current assets | 196 | 217 | ||||||
Total current assets | 3,114 | 3,568 | ||||||
Property, plant and equipment, net(a) | 2,540 | 2,505 | ||||||
Investment in unconsolidated affiliates | 466 | 373 | ||||||
Intangible assets, net | 404 | 453 | ||||||
Goodwill | 741 | 533 | ||||||
Deferred income taxes | 281 | 288 | ||||||
Operating lease right-of-use assets | 418 | 445 | ||||||
Other noncurrent assets(a) | 605 | 548 | ||||||
Total assets | $ | 8,569 | $ | 8,713 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable(a) | $ | 955 | $ | 842 | ||||
Accounts payable to affiliates | 30 | 34 | ||||||
Accrued liabilities(a) | 569 | 458 | ||||||
Current portion of debt(a) | 16 | 593 | ||||||
Current operating lease liabilities(a) | 54 | 52 | ||||||
Total current liabilities | 1,624 | 1,979 | ||||||
Long-term debt(a) | 1,567 | 1,528 | ||||||
Deferred income taxes | 201 | 212 | ||||||
Noncurrent operating lease liabilities(a) | 383 | 411 | ||||||
Other noncurrent liabilities(a) | 840 | 910 | ||||||
Total liabilities | 4,615 | 5,040 | ||||||
Commitments and contingencies (Notes 15 and 16) | ||||||||
Equity | ||||||||
Huntsman Corporation stockholders’ equity: | ||||||||
Common stock $0.01 par value, 1,200,000,000 shares authorized, 259,468,984 and 258,520,411 shares issued and 217,028,320 and 220,046,262 shares outstanding, respectively | 3 | 3 | ||||||
Additional paid-in capital | 4,096 | 4,048 | ||||||
Treasury stock, 42,448,875 and 38,477,091 shares, respectively | (833 | ) | (731 | ) | ||||
Unearned stock-based compensation | (30 | ) | (19 | ) | ||||
Retained earnings | 1,881 | 1,564 | ||||||
Accumulated other comprehensive loss | (1,338 | ) | (1,346 | ) | ||||
Total Huntsman Corporation stockholders’ equity | 3,779 | 3,519 | ||||||
Noncontrolling interests in subsidiaries | 175 | 154 | ||||||
Total equity | 3,954 | 3,673 | ||||||
Total liabilities and equity | $ | 8,569 | $ | 8,713 |
(a) | At September 30, |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
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2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Revenues: | | | | | | | | | | | | | ||||||||||||||||
Trade sales, services and fees, net | | $ | 1,487 | | $ | 1,653 | | $ | 4,262 | | $ | 5,044 | $ | 2,230 | $ | 1,487 | $ | 6,006 | $ | 4,262 | ||||||||
Related party sales | | | 23 | | | 34 | | | 88 | | | 96 | 55 | 23 | 140 | 88 | ||||||||||||
Total revenues | | | 1,510 | | | 1,687 | | | 4,350 | | | 5,140 | 2,285 | 1,510 | 6,146 | 4,350 | ||||||||||||
Cost of goods sold | | | 1,231 | | | 1,347 | | | 3,612 | | | 4,068 | 1,802 | 1,231 | 4,840 | 3,612 | ||||||||||||
Gross profit | | | 279 | | | 340 | | | 738 | | | 1,072 | 483 | 279 | 1,306 | 738 | ||||||||||||
Operating expenses: | | | | | | | | | | | | | ||||||||||||||||
Selling, general and administrative | | | 178 | | | 193 | | | 563 | | | 585 | 204 | 178 | 620 | 563 | ||||||||||||
Research and development | | | 33 | | | 35 | | | 101 | | | 109 | 38 | 33 | 113 | 101 | ||||||||||||
Restructuring, impairment and plant closing costs (credits) | | | 12 | | | (43) | | | 34 | | | (42) | ||||||||||||||||
Other operating (income) expense, net | | | (3) | | | 3 | | | (4) | | | 1 | ||||||||||||||||
Restructuring, impairment and plant closing (credits) costs | (1 | ) | 12 | 34 | 34 | |||||||||||||||||||||||
Gain on sale of India-based DIY business | 0 | 0 | (28 | ) | 0 | |||||||||||||||||||||||
Other operating income, net | (3 | ) | (3 | ) | (13 | ) | (4 | ) | ||||||||||||||||||||
Total operating expenses | | | 220 | | | 188 | | | 694 | | | 653 | 238 | 220 | 726 | 694 | ||||||||||||
Operating income | | | 59 | | | 152 | | | 44 | | | 419 | 245 | 59 | 580 | 44 | ||||||||||||
Interest expense, net | | | (24) | | | (27) | | | (63) | | | (86) | (15 | ) | (24 | ) | (52 | ) | (63 | ) | ||||||||
Equity in income of investment in unconsolidated affiliates | | | 21 | | | 19 | | | 25 | | | 41 | 34 | 21 | 118 | 25 | ||||||||||||
Fair value adjustments to Venator investment | | | 6 | | | (148) | | | (100) | | | (90) | (3 | ) | 6 | (28 | ) | (100 | ) | |||||||||
Loss on early extinguishment of debt | | | — | | | — | | | — | | | (23) | 0 | 0 | (27 | ) | 0 | |||||||||||
Other income, net | | | 10 | | | 7 | | | 27 | | | 16 | 7 | 10 | 23 | 27 | ||||||||||||
Income (loss) from continuing operations before income taxes | | | 72 | | | 3 | | | (67) | | | 277 | 268 | 72 | 614 | (67 | ) | |||||||||||
Income tax expense | | | (15) | | | (30) | | | (9) | | | (113) | (38 | ) | (15 | ) | (114 | ) | (9 | ) | ||||||||
Income (loss) from continuing operations | | | 57 | | | (27) | | | (76) | | | 164 | 230 | 57 | 500 | (76 | ) | |||||||||||
Income from discontinued operations, net of tax | | | — | | | 68 | | | 782 | | | 126 | ||||||||||||||||
(Loss) income from discontinued operations, net of tax | (5 | ) | 0 | (3 | ) | 782 | ||||||||||||||||||||||
Net income | | | 57 | | | 41 | | | 706 | | | 290 | 225 | 57 | 497 | 706 | ||||||||||||
Net income attributable to noncontrolling interests | | | (9) | | | (11) | | | (15) | | | (31) | (16 | ) | (9 | ) | (49 | ) | (15 | ) | ||||||||
Net income attributable to Huntsman Corporation | | $ | 48 | | $ | 30 | | $ | 691 | | $ | 259 | $ | 209 | $ | 48 | $ | 448 | $ | 691 | ||||||||
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Basic income (loss) per share: | | | | | | | | | | | | | ||||||||||||||||
Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders | | $ | 0.22 | | $ | (0.17) | | $ | (0.41) | | $ | 0.58 | $ | 0.97 | $ | 0.22 | $ | 2.04 | $ | (0.41 | ) | |||||||
Income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | | | — | | | 0.30 | | | 3.54 | | | 0.54 | ||||||||||||||||
(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | (0.02 | ) | 0 | (0.01 | ) | 3.54 | ||||||||||||||||||||||
Net income attributable to Huntsman Corporation common stockholders | | $ | 0.22 | | $ | 0.13 | | $ | 3.13 | | $ | 1.12 | $ | 0.95 | $ | 0.22 | $ | 2.03 | $ | 3.13 | ||||||||
Weighted average shares | | | 219.8 | | | 227.4 | | | 220.8 | | | 230.3 | 219.4 | 219.8 | 220.2 | 220.8 | ||||||||||||
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Diluted income (loss) per share: | | | | | | | | | | | | | ||||||||||||||||
Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders | | $ | 0.22 | | $ | (0.17) | | $ | (0.41) | | $ | 0.58 | $ | 0.96 | $ | 0.22 | $ | 2.03 | $ | (0.41 | ) | |||||||
Income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | | | — | | | 0.30 | | | 3.54 | | | 0.54 | ||||||||||||||||
(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | (0.02 | ) | 0 | (0.01 | ) | 3.54 | ||||||||||||||||||||||
Net income attributable to Huntsman Corporation common stockholders | | $ | 0.22 | | $ | 0.13 | | $ | 3.13 | | $ | 1.12 | $ | 0.94 | $ | 0.22 | $ | 2.02 | $ | 3.13 | ||||||||
Weighted average shares | | | 221.3 | | | 227.4 | | | 220.8 | | | 232.0 | 221.3 | 221.3 | 222.2 | 220.8 | ||||||||||||
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Amounts attributable to Huntsman Corporation common stockholders: | | | | | | | | | | | | | ||||||||||||||||
Income (loss) from continuing operations | | $ | 48 | | $ | (38) | | $ | (91) | | $ | 133 | $ | 214 | $ | 48 | $ | 451 | $ | (91 | ) | |||||||
Income from discontinued operations, net of tax | | | — | | | 68 | | | 782 | | | 126 | ||||||||||||||||
(Loss) income from discontinued operations, net of tax | (5 | ) | 0 | (3 | ) | 782 | ||||||||||||||||||||||
Net income | | $ | 48 | | $ | 30 | | $ | 691 | | $ | 259 | $ | 209 | $ | 48 | $ | 448 | $ | 691 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
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Net income | | $ | | 57 | | $ | 41 | | $ | 706 | | $ | 290 |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | |
Foreign currency translations adjustments | | | | 14 | | | (40) | | | (42) | | | (20) |
Pension and other postretirement benefits adjustments | | | | 14 | | | 11 | | | 78 | | | 36 |
Other, net | | | | — | | | (1) | | | — | | | (1) |
Other comprehensive income (loss), net of tax | | | | 28 | | | (30) | | | 36 | | | 15 |
Comprehensive income | | | | 85 | | | 11 | | | 742 | | | 305 |
Comprehensive income attributable to noncontrolling interests | | | | (12) | | | (5) | | | (18) | | | (25) |
Comprehensive income attributable to Huntsman Corporation | | $ | | 73 | | $ | 6 | | $ | 724 | | $ | 280 |
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Net income | $ | 225 | $ | 57 | $ | 497 | $ | 706 | ||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Foreign currency translations adjustments | (36 | ) | 14 | (42 | ) | (42 | ) | |||||||||
Pension and other postretirement benefits adjustments | 17 | 14 | 52 | 78 | ||||||||||||
Other comprehensive (loss) income, net of tax | (19 | ) | 28 | 10 | 36 | |||||||||||
Comprehensive income | 206 | 85 | 507 | 742 | ||||||||||||
Comprehensive income attributable to noncontrolling interests | (17 | ) | (12 | ) | (51 | ) | (18 | ) | ||||||||
Comprehensive income attributable to Huntsman Corporation | $ | 189 | $ | 73 | $ | 456 | $ | 724 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
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| | Huntsman Corporation Stockholders' Equity | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | Accumulated | | | | | | | ||||||||||||||||||||||||||||||||||||||
| | Shares | | | | | Additional | | | | | Unearned | | | | other | | Noncontrolling | | | | |||||||||||||||||||||||||||||||||||||||||
| | common | | Common | | paid-in | | Treasury | | stock-based | | Retained | | comprehensive | | interests in | | Total | ||||||||||||||||||||||||||||||||||||||||||||
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| stock |
| capital |
| stock |
| compensation |
| earnings |
| loss |
| subsidiaries |
| equity | ||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2020 | | 224,295,868 |
| $ | 3 |
| $ | 4,008 |
| $ | (635) |
| $ | (17) |
| $ | 690 |
| $ | (1,362) |
| $ | 137 |
| $ | 2,824 | ||||||||||||||||||||||||||||||||||||
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, 2021 | 220,046,262 | $ | 3 | $ | 4,048 | $ | (731 | ) | $ | (19 | ) | $ | 1,564 | $ | (1,346 | ) | $ | 154 | $ | 3,673 | ||||||||||||||||||||||||||||||||||||||||||
Net income | | — | | | — | | | — | | | — | | | — | | | 705 | | | — | | | 3 | | | 708 | — | 0 | 0 | 0 | 0 | 83 | 0 | 17 | 100 | |||||||||||||||||||||||||||
Other comprehensive loss | | — | | | — | | | — | | | — | | | — | | | — | | | (21) | | | — | | | (21) | — | 0 | 0 | 0 | 0 | 0 | (13 | ) | 0 | (13 | ) | |||||||||||||||||||||||||
Issuance of nonvested stock awards | | — | | | — | | | 18 | | | — | | | (18) | | | — | | | — | | | — | | | — | — | 0 | 25 | 0 | (25 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Vesting of stock awards | | 943,026 | | | — | | | 4 | | | — | | | — | | | — | | | — | | | — | | | 4 | 664,818 | 0 | 5 | 0 | 0 | 0 | 0 | 0 | 5 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | | — | | | — | | | 2 | | | — | | | 5 | | | — | | | — | | | — | | | 7 | — | 0 | 2 | 0 | 6 | 0 | 0 | 0 | 8 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | | (283,975) | | | — | | | — | | | — | | | — | | | (6) | | | — | | | — | | | (6) | (202,961 | ) | 0 | 0 | 0 | 0 | (6 | ) | 0 | 0 | (6 | ) | ||||||||||||||||||||||||
Stock options exercised | | 57,209 | | | — | | | 2 | | | — | | | — | | | (2) | | | — | | | — | | | — | 204,005 | 0 | 5 | 0 | 0 | (2 | ) | 0 | 0 | 3 | ||||||||||||||||||||||||||
Treasury stock repurchased | | (5,364,519) | | | — | | | — | | | (96) | | | — | | | — | | | — | | | — | | | (96) | ||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | | — | | | — | | | — | | | — | | | — | | | (37) | | | — | | | — | | | (37) | ||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | | 219,647,609 | | $ | 3 | | $ | 4,034 | | $ | (731) | | $ | (30) | | $ | 1,350 | | $ | (1,383) | | $ | 140 | | $ | 3,383 | ||||||||||||||||||||||||||||||||||||
Net (loss) income | | — | | | — | | | — | | | — | | | — | | | (62) | | | — | | | 3 | | | (59) | ||||||||||||||||||||||||||||||||||||
Other comprehensive income | | — | | | — | | | — | | | — | | | — | | | — | | | 29 | | | — | | | 29 | ||||||||||||||||||||||||||||||||||||
Vesting of stock awards | | 8,448 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | ||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | | — | | | — | | | 2 | | | — | | | 4 | | | — | | | — | | | — | | | 6 | ||||||||||||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | | (1,093) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | ||||||||||||||||||||||||||||||||||||
Stock options exercised | | 92,057 | | | — | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 1 | ||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | | — | | | — | | | — | | | — | | | — | | | (36) | | | — | | | — | | | (36) | ||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | | 219,747,021 | | | 3 | | | 4,037 | | | (731) | | | (26) | | | 1,252 | | | (1,354) | | | 143 | | | 3,324 | ||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | — | 0 | 0 | 0 | 0 | (36 | ) | 0 | 0 | (36 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 220,712,124 | $ | 3 | $ | 4,085 | $ | (731 | ) | $ | (38 | ) | $ | 1,603 | $ | (1,359 | ) | $ | 171 | $ | 3,734 | ||||||||||||||||||||||||||||||||||||||||||
Net income | | — | | | — | | | — | | | — | | | — | | | 48 | | | — | | | 9 | | | 57 | — | 0 | 0 | 0 | 0 | 156 | 0 | 16 | 172 | |||||||||||||||||||||||||||
Other comprehensive income | | — | | | — | | | — | | | — | | | — | | | — | | | 25 | | | 3 | | | 28 | — | 0 | 0 | 0 | 0 | 0 | 41 | 1 | 42 | |||||||||||||||||||||||||||
Vesting of stock awards | | 2,890 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | 3,732 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | | — | | | — | | | 2 | | | — | | | 3 | | | — | | | — | | | — | | | 5 | — | 0 | 2 | 0 | 4 | 0 | 0 | 0 | 6 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | | (710) | | | — | | | — | | | — | | | — | | | (1) | | | — | | | — | | | (1) | (19,912 | ) | 0 | 0 | 0 | 0 | (1 | ) | 0 | 0 | (1 | ) | ||||||||||||||||||||||||
Stock options exercised | | 78,192 | | | — | | | 3 | | | — | | | — | | | (3) | | | — | | | — | | | — | 263,962 | 0 | 6 | 0 | 0 | (3 | ) | 0 | 0 | 3 | ||||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | | — | | | — | | | — | | | — | | | — | | | (36) | | | — | | | — | | | (36) | ||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | | 219,827,393 | | $ | 3 | | $ | 4,042 | | $ | (731) | | $ | (23) | | $ | 1,260 | | $ | (1,329) | | $ | 155 | | $ | 3,377 | ||||||||||||||||||||||||||||||||||||
Dividends declared to noncontrolling interests | — | 0 | 0 | 0 | 0 | 0 | 0 | (30 | ) | (30 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($0.1875 per share) | — | 0 | 0 | 0 | 0 | (41 | ) | 0 | 0 | (41 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 220,959,906 | $ | 3 | $ | 4,093 | $ | (731 | ) | $ | (34 | ) | $ | 1,714 | $ | (1,318 | ) | $ | 158 | $ | 3,885 | ||||||||||||||||||||||||||||||||||||||||||
Net income | — | 0 | 0 | 0 | 0 | 209 | 0 | 16 | 225 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | — | 0 | 0 | 0 | 0 | 0 | (20 | ) | 1 | (19 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of nonvested stock awards | — | 0 | 1 | 0 | (1 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock awards | 7,695 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 1 | 0 | 5 | 0 | 0 | 0 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (1,869 | ) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock options exercised | 34,372 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury stock repurchased | (3,971,784 | ) | 0 | 0 | (102 | ) | 0 | 0 | 0 | 0 | (102 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($0.1875 per share) | — | 0 | 0 | 0 | 0 | (42 | ) | 0 | 0 | (42 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 217,028,320 | $ | 3 | $ | 4,096 | $ | (833 | ) | $ | (30 | ) | $ | 1,881 | $ | (1,338 | ) | $ | 175 | $ | 3,954 |
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 | Retained | comprehensive | interests in | Total | ||||||||||||||||||||||||||||
stock | stock | capital | stock | compensation | earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||
Balance, January 1, 2020 | 224,295,868 | $ | 3 | $ | 4,008 | $ | (635 | ) | $ | (17 | ) | $ | 690 | $ | (1,362 | ) | $ | 137 | $ | 2,824 | ||||||||||||||||
Net income | — | 0 | 0 | 0 | 0 | 705 | 0 | 3 | 708 | |||||||||||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | 0 | 0 | 0 | (21 | ) | 0 | (21 | ) | |||||||||||||||||||||||||
Issuance of nonvested stock awards | — | 0 | 18 | 0 | (18 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Vesting of stock awards | 943,026 | 0 | 4 | 0 | 0 | 0 | 0 | 0 | 4 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 2 | 0 | 5 | 0 | 0 | 0 | 7 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (283,975 | ) | 0 | 0 | 0 | 0 | (6 | ) | 0 | 0 | (6 | ) | ||||||||||||||||||||||||
Stock options exercised | 57,209 | 0 | 2 | 0 | 0 | (2 | ) | 0 | 0 | 0 | ||||||||||||||||||||||||||
Treasury stock repurchased | (5,364,519 | ) | 0 | 0 | (96 | ) | 0 | 0 | 0 | 0 | (96 | ) | ||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | — | 0 | 0 | 0 | 0 | (37 | ) | 0 | 0 | (37 | ) | |||||||||||||||||||||||||
Balance, March 31, 2020 | 219,647,609 | $ | 3 | $ | 4,034 | $ | (731 | ) | $ | (30 | ) | $ | 1,350 | $ | (1,383 | ) | $ | 140 | $ | 3,383 | ||||||||||||||||
Net (loss) income | — | 0 | 0 | 0 | 0 | (62 | ) | 0 | 3 | (59 | ) | |||||||||||||||||||||||||
Other comprehensive income | — | 0 | 0 | 0 | 0 | 0 | 29 | 0 | 29 | |||||||||||||||||||||||||||
Vesting of stock awards | 8,448 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 2 | 0 | 4 | 0 | 0 | 0 | 6 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (1,093 | ) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Stock options exercised | 92,057 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 1 | |||||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | — | 0 | 0 | 0 | 0 | (36 | ) | 0 | 0 | (36 | ) | |||||||||||||||||||||||||
Balance, June 30, 2020 | 219,747,021 | $ | 3 | $ | 4,037 | $ | (731 | ) | $ | (26 | ) | $ | 1,252 | $ | (1,354 | ) | $ | 143 | $ | 3,324 | ||||||||||||||||
Net income | — | 0 | 0 | 0 | 0 | 48 | 0 | 9 | 57 | |||||||||||||||||||||||||||
Other comprehensive income | — | 0 | 0 | 0 | 0 | 0 | 25 | 3 | 28 | |||||||||||||||||||||||||||
Vesting of stock awards | 2,890 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Recognition of stock-based compensation | — | 0 | 2 | 0 | 3 | 0 | 0 | 0 | 5 | |||||||||||||||||||||||||||
Repurchase and cancellation of stock awards | (710 | ) | 0 | 0 | 0 | 0 | (1 | ) | 0 | 0 | (1 | ) | ||||||||||||||||||||||||
Stock options exercised | 78,192 | 0 | 3 | 0 | 0 | (3 | ) | 0 | 0 | 0 | ||||||||||||||||||||||||||
Dividends declared on common stock ($0.1625 per share) | — | 0 | 0 | 0 | 0 | (36 | ) | 0 | 0 | (36 | ) | |||||||||||||||||||||||||
Balance, September 30, 2020 | 219,827,393 | $ | 3 | $ | 4,042 | $ | (731 | ) | $ | (23 | ) | $ | 1,260 | $ | (1,329 | ) | $ | 155 | $ | 3,377 |
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 | | Retained | | comprehensive | | interests in | | Total | ||||||||
|
| stock |
| stock |
| capital |
| stock |
| compensation |
| earnings |
| loss |
| subsidiaries |
| equity | ||||||||
Balance, January 1, 2019 | | 232,994,172 |
| $ | 3 |
| $ | 3,984 |
| $ | (427) |
| $ | (16) |
| $ | 292 |
| $ | (1,316) |
| $ | 229 |
| $ | 2,749 |
Net income | | — | | | — | | | — | | | — | | | — | | | 119 | | | — | | | 12 | | | 131 |
Other comprehensive income | | — | | | — | | | — | | | — | | | — | | | — | | | 52 | | | 2 | | | 54 |
Issuance of nonvested stock awards | | — | | | — | | | 16 | | | — | | | (16) | | | — | | | — | | | — | | | — |
Vesting of stock awards | | 1,619,502 | | | — | | | 7 | | | — | | | — | | | — | | | — | | | — | | | 7 |
Recognition of stock-based compensation | | — | | | — | | | 2 | | | — | | | 4 | | | — | | | — | | | — | | | 6 |
Repurchase and cancellation of stock awards | | (483,053) | | | — | | | — | | | — | | | — | | | (12) | | | — | | | — | | | (12) |
Stock options exercised | | 78,054 | | | — | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 1 |
Treasury stock repurchased | | (1,525,767) | | | — | | | — | | | (34) | | | — | | | — | | | — | | | — | | | (34) |
Dividends declared on common stock ($0.1625 per share) | | — | | | — | | | — | | | — | | | — | | | (39) | | | — | | | — | | | (39) |
Balance, March 31, 2019 | | 232,682,908 | | | 3 | | | 4,010 | | | (461) | | | (28) | | | 360 | | | (1,264) | | | 243 | | | 2,863 |
Net income | | — | | | — | | | — | | | — | | | — | | | 110 | | | — | | | 8 | | | 118 |
Other comprehensive loss | | — | | | — | | | — | | | — | | | — | | | — | | | (7) | | | (2) | | | (9) |
Vesting of stock awards | | 6,701 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Recognition of stock-based compensation | | — | | | — | | | 2 | | | — | | | 4 | | | — | | | — | | | — | | | 6 |
Repurchase and cancellation of stock awards | | (1,732) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Dividends declared to noncontrolling interests | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (40) | | | (40) |
Stock options exercised | | 27,180 | | | — | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 1 |
Treasury stock repurchased | | (4,014,487) | | | — | | | — | | | (81) | | | — | | | — | | | — | | | — | | | (81) |
Dividends declared on common stock ($0.1625 per share) | | — | | | — | | | — | | | — | | | — | | | (38) | | | — | | | — | | | (38) |
Balance, June 30, 2019 | | 228,700,570 | | | 3 | | | 4,013 | | | (542) | | | (24) | | | 432 | | | (1,271) | | | 209 | | | 2,820 |
Net income | | — | | | — | | | — | | | — | | | — | | | 30 | | | — | | | 11 | | | 41 |
Other comprehensive loss | | — | | | — | | | — | | | — | | | — | | | — | | | (39) | | | 9 | | | (30) |
Acquisition of noncontrolling interests, net of tax | | — | | | — | | | (6) | | | — | | | — | | | — | | | — | | | (73) | | | (79) |
Vesting of stock awards | | 11,488 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Recognition of stock-based compensation | | — | | | — | | | 2 | | | — | | | 3 | | | — | | | — | | | — | | | 5 |
Repurchase and cancellation of stock awards | | (2,273) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Stock options exercised | | 36,953 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Treasury stock repurchased | | (4,056,078) | | | — | | | — | | | (81) | | | — | | | — | | | — | | | — | | | (81) |
Dividends declared on common stock ($0.1625 per share) | | — | | | — | | | — | | | — | | | — | | | (38) | | | — | | | — | | | (38) |
Balance, September 30, 2019 | | 224,690,660 | | $ | 3 | | $ | 4,009 | | $ | (623) | | $ | (21) | | $ | 424 | | $ | (1,310) | | $ | 156 | | $ | 2,638 |
See accompanying notes to condensed consolidated financial statements.
8
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
| | | | | | | ||||||||
| | Nine months | ||||||||||||
| | ended | ||||||||||||
| | September 30, | ||||||||||||
|
| 2020 |
| 2019 | ||||||||||
Nine months | ||||||||||||||
ended | ||||||||||||||
September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Operating Activities: | | | | | | | ||||||||
Net income | | $ | 706 | | $ | 290 | $ | 497 | $ | 706 | ||||
Less: Income from discontinued operations, net of tax | | | (782) | | | (126) | ||||||||
(Loss) income from continuing operations | | | (76) | | | 164 | ||||||||
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities from continuing operations: | | | | | | | ||||||||
Less: Loss (income) from discontinued operations, net of tax | 3 | (782 | ) | |||||||||||
Income (loss) from continuing operations | 500 | (76 | ) | |||||||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations: | ||||||||||||||
Equity in income of investment in unconsolidated affiliates | | | (25) | | | (41) | (118 | ) | (25 | ) | ||||
Unrealized losses on fair value adjustments to Venator investment | | | 100 | | | 91 | 28 | 100 | ||||||
Cash received from return on investment in unconsolidated subsidiary | | | 18 | | | 17 | 31 | 18 | ||||||
Depreciation and amortization | | | 206 | | | 201 | 219 | 206 | ||||||
Noncash lease expense | | | 46 | | | 41 | 46 | 46 | ||||||
Gain on disposal of businesses/assets, net | | | — | | | (49) | ||||||||
Gain on disposal of businesses/assets | (28 | ) | 0 | |||||||||||
Loss on early extinguishment of debt | | | — | | | 23 | 27 | 0 | ||||||
Noncash restructuring and impairment charges | | | 5 | | | 3 | 14 | 5 | ||||||
Deferred income taxes | | | (16) | | | 64 | (22 | ) | (16 | ) | ||||
Stock-based compensation | | | 20 | | | 22 | 24 | 20 | ||||||
Other, net | | | 4 | | | 12 | (4 | ) | 4 | |||||
Changes in operating assets and liabilities: | | | | | | | ||||||||
Accounts and notes receivable | | | 103 | | | 69 | (342 | ) | 103 | |||||
Inventories | | | 154 | | | 19 | (329 | ) | 154 | |||||
Prepaid expenses | | | 23 | | | 4 | 31 | 23 | ||||||
Other current assets | | | 4 | | | 26 | (11 | ) | 4 | |||||
Other noncurrent assets | | | (47) | | | (73) | (84 | ) | (47 | ) | ||||
Accounts payable | | | (85) | | | (16) | 125 | (85 | ) | |||||
Accrued liabilities | | | (22) | | | (57) | 88 | (22 | ) | |||||
Taxes paid on sale of Chemical Intermediates Businesses | | | (188) | | | — | 0 | (188 | ) | |||||
Other noncurrent liabilities | | | (114) | | | (86) | (32 | ) | (114 | ) | ||||
Net cash provided by operating activities from continuing operations | | | 110 | | | 434 | 163 | 110 | ||||||
Net cash (used in) provided by operating activities from discontinued operations | | | (22) | | | 222 | ||||||||
Net cash used in operating activities from discontinued operations | (1 | ) | (22 | ) | ||||||||||
Net cash provided by operating activities | | | 88 | | | 656 | 162 | 88 | ||||||
| | | | | | | ||||||||
Investing Activities: | | | | | | | ||||||||
Capital expenditures | | | (170) | | | (181) | (250 | ) | (170 | ) | ||||
Cash received from sale of business | | | 1,923 | | | — | ||||||||
Acquisition of a businesses, net of cash acquired | | | (653) | | | — | ||||||||
Proceeds from sale of assets | | | — | | | 49 | ||||||||
Cash received from forward swap contract related to the sale of investment in Venator | | | — | | | 16 | ||||||||
Cash received from sale of businesses | 43 | 1,923 | ||||||||||||
Acquisition of businesses, net of cash acquired | (245 | ) | (653 | ) | ||||||||||
Insurance proceeds for recovery of property damage | 3 | 0 | ||||||||||||
Other, net | | | 5 | | | 5 | 10 | 5 | ||||||
Net cash provided by (used in) investing activities from continuing operations | | | 1,105 | | | (111) | ||||||||
Net cash used in investing activities from discontinued operations | | | — | | | (31) | ||||||||
Net cash provided by (used in) investing activities | | | 1,105 | | | (142) | ||||||||
Net cash (used in) provided by investing activities | (439 | ) | 1,105 |
(Continued)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
| | | | | | | ||||||||
| | Nine months | ||||||||||||
| | ended | ||||||||||||
| | September 30, | ||||||||||||
|
| 2020 |
| 2019 | ||||||||||
Nine months | ||||||||||||||
ended | ||||||||||||||
September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Financing Activities: | | | | | | | ||||||||
Net repayments on revolving loan facilities | | $ | (153) | | $ | (104) | ||||||||
Net borrowings (repayments) on revolving loan facilities | $ | 8 | $ | (153 | ) | |||||||||
Proceeds from issuance of long-term debt | 427 | 0 | ||||||||||||
Repayments of long-term debt | | | (17) | | | (662) | (965 | ) | (17 | ) | ||||
Proceeds from issuance of long-term debt | | | — | | | 742 | ||||||||
Repayments of short-term debt | | | (109) | | | — | 0 | (109 | ) | |||||
Borrowings on short-term debt | | | — | | | 101 | ||||||||
Repayments of notes payable | | | (32) | | | (21) | 0 | (32 | ) | |||||
Borrowings on notes payable | | | — | | | 2 | ||||||||
Debt issuance costs paid | | | — | | | (7) | (4 | ) | 0 | |||||
Cash paid for noncontrolling interests | | | — | | | (100) | ||||||||
Dividends paid to noncontrolling interests | (30 | ) | (24 | ) | ||||||||||
Dividends paid to common stockholders | | | (109) | | | (115) | (119 | ) | (109 | ) | ||||
Dividends paid to noncontrolling interests | | | (24) | | | (40) | ||||||||
Repurchase and cancellation of stock awards | | | (7) | | | (12) | ||||||||
Repurchase and cancellation of awards | (7 | ) | (7 | ) | ||||||||||
Proceeds from issuance of common stock | | | 2 | | | 2 | 7 | 2 | ||||||
Repurchase of common stock | | | (96) | | | (196) | (102 | ) | (96 | ) | ||||
Costs of early extinguishment of debt | | | — | | | (21) | (26 | ) | 0 | |||||
Other, net | | | (1) | | | — | 2 | (1 | ) | |||||
Net cash used in financing activities | | | (546) | | | (431) | (809 | ) | (546 | ) | ||||
Effect of exchange rate changes on cash | | | (4) | | | (5) | (2 | ) | (4 | ) | ||||
Increase in cash, cash equivalents and restricted cash | | | 643 | | | 78 | ||||||||
(Decrease) increase in cash, cash equivalents and restricted cash | (1,088 | ) | 643 | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | | | 525 | | | 340 | 1,593 | 525 | ||||||
Cash, cash equivalents and restricted cash at end of period | | $ | 1,168 | | $ | 418 | $ | 505 | $ | 1,168 | ||||
| | | | | | | ||||||||
Supplemental cash flow information: | | | | | | | ||||||||
Cash paid for interest | | $ | 49 | | $ | 65 | $ | 57 | $ | 49 | ||||
Cash paid for income taxes | | | 242 | | | 102 | 83 | 242 |
As ofFor both September 30, 20202021 and 2019,2020, the amount of capital expenditures in accounts payable was $54 millionmillion. For the nine months ended September 30, 2021, the amount of cash paid for taxes in connection with the earnout provision achieved under the terms of the sales agreement of the India-based do-it-yourself (“DIY”) business was $3 million. See “Note 4. Discontinued Operations and $48 million, respectively.Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business.”
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)Millions, Except Unit Amounts)
| | | | | | |
| | September 30, | | December 31, | ||
| | 2020 |
| 2019 | ||
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents(a) |
| $ | 1,167 |
| $ | 525 |
Accounts and notes receivable (net of allowance for doubtful accounts of $26 and $19, respectively), ($207 and $221 pledged as collateral, respectively)(a) | | | 881 | | | 940 |
Accounts receivable from affiliates | | | 45 | | | 410 |
Inventories(a) | | | 819 | | | 914 |
Other current assets | | | 122 | | | 161 |
Current assets held for sale | | | — | | | 1,208 |
Total current assets | | | 3,034 | | | 4,158 |
Property, plant and equipment, net(a) | | | 2,477 | | | 2,383 |
Investment in unconsolidated affiliates | | | 448 | | | 535 |
Intangible assets, net(a) | | | 403 | | | 197 |
Goodwill | | | 523 | | | 276 |
Deferred income taxes | | | 295 | | | 292 |
Notes receivable from affiliate | | | 34 | | | 34 |
Operating lease right-of-use assets | | | 430 | | | 396 |
Other noncurrent assets(a) | | | 487 | | | 452 |
Total assets | | $ | 8,131 | | $ | 8,723 |
| | | | | | |
LIABILITIES AND EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable(a) | | $ | 696 | | $ | 765 |
Accounts payable to affiliates | | | 30 | | | 143 |
Accrued liabilities(a) | | | 573 | | | 417 |
Notes payable to affiliates | | | — | | | 100 |
Current portion of debt(a) | | | 567 | | | 212 |
Current operating lease liabilities(a) | | | 46 | | | 42 |
Current liabilities held for sale | | | — | | | 512 |
Total current liabilities | | | 1,912 | | | 2,191 |
Long-term debt(a) | | | 1,557 | | | 2,177 |
Notes payable to affiliates | | | — | | | 280 |
Deferred income taxes | | | 51 | | | 29 |
Noncurrent operating lease liabilities(a) | | | 403 | | | 384 |
Other noncurrent liabilities(a) | | | 782 | | | 890 |
Total liabilities | | | 4,705 | | | 5,951 |
Commitments and contingencies (Notes 15 and 16) | | | | | | |
Equity | | | | | | |
Huntsman International LLC members’ equity: | | | | | | |
Members’ equity, 2,728 units issued and outstanding | | | 3,694 | | | 3,675 |
Retained earnings | | | 894 | | | 312 |
Accumulated other comprehensive loss | | | (1,317) | | | (1,352) |
Total Huntsman International LLC members’ equity | | | 3,271 | | | 2,635 |
Noncontrolling interests in subsidiaries | | | 155 | | | 137 |
Total equity | | | 3,426 | | | 2,772 |
Total liabilities and equity | | $ | 8,131 | | $ | 8,723 |
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents(a) | $ | 505 | $ | 1,591 | ||||
Accounts and notes receivable (net of allowance for doubtful accounts of $25 and $26, respectively), ($336 and $198 pledged as collateral, respectively)(a) | 1,216 | 902 | ||||||
Accounts receivable from affiliates | 167 | 47 | ||||||
Inventories(a) | 1,174 | 848 | ||||||
Other current assets | 194 | 223 | ||||||
Total current assets | 3,256 | 3,611 | ||||||
Property, plant and equipment, net(a) | 2,540 | 2,505 | ||||||
Investment in unconsolidated affiliates | 466 | 373 | ||||||
Intangible assets, net | 404 | 453 | ||||||
Goodwill | 741 | 533 | ||||||
Deferred income taxes | 281 | 288 | ||||||
Operating lease right-of-use assets | 418 | 445 | ||||||
Other noncurrent assets(a) | 604 | 548 | ||||||
Total assets | $ | 8,710 | $ | 8,756 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable(a) | $ | 954 | $ | 842 | ||||
Accounts payable to affiliates | 32 | 36 | ||||||
Accrued liabilities(a) | 559 | 455 | ||||||
Current portion of debt(a) | 16 | 593 | ||||||
Current operating lease liabilities(a) | 54 | 52 | ||||||
Total current liabilities | 1,615 | 1,978 | ||||||
Long-term debt(a) | 1,567 | 1,528 | ||||||
Deferred income taxes | 203 | 214 | ||||||
Noncurrent operating lease liabilities(a) | 383 | 411 | ||||||
Other noncurrent liabilities(a) | 831 | 900 | ||||||
Total liabilities | 4,599 | 5,031 | ||||||
Commitments and contingencies (Notes 15 and 16) | ||||||||
Equity | ||||||||
Huntsman International LLC members’ equity: | ||||||||
Members’ equity, 2,728 units issued and outstanding | 3,724 | 3,701 | ||||||
Retained earnings | 1,536 | 1,203 | ||||||
Accumulated other comprehensive loss | (1,324 | ) | (1,333 | ) | ||||
Total Huntsman International LLC members’ equity | 3,936 | 3,571 | ||||||
Noncontrolling interests in subsidiaries | 175 | 154 | ||||||
Total equity | 4,111 | 3,725 | ||||||
Total liabilities and equity | $ | 8,710 | $ | 8,756 |
(a) | At September 30, |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions)
| | | | | | | | | | | | |||||||||||||||||
| | Three months | | Nine months | ||||||||||||||||||||||||
| | ended | | ended | ||||||||||||||||||||||||
| | September 30, | | September 30, | ||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||||||||||||||
Three months | Nine months | |||||||||||||||||||||||||||
ended | ended | |||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Revenues: | | | | | | | | | | | | |||||||||||||||||
Trade sales, services and fees, net | | $ | 1,487 | | $ | 1,653 | | $ | 4,262 | | $ | 5,044 | $ | 2,230 | $ | 1,487 | $ | 6,006 | $ | 4,262 | ||||||||
Related party sales | | | 23 | | | 34 | | | 88 | | | 96 | 55 | 23 | 140 | 88 | ||||||||||||
Total revenues | | | 1,510 | | | 1,687 | | | 4,350 | | | 5,140 | 2,285 | 1,510 | 6,146 | 4,350 | ||||||||||||
Cost of goods sold | | | 1,231 | | | 1,347 | | | 3,612 | | | 4,068 | 1,802 | 1,231 | 4,840 | 3,612 | ||||||||||||
Gross profit | | | 279 | | | 340 | | | 738 | | | 1,072 | 483 | 279 | 1,306 | 738 | ||||||||||||
Operating expenses: | | | | | | | | | | | | | ||||||||||||||||
Selling, general and administrative | | | 177 | | | 192 | | | 559 | | | 581 | 203 | 177 | 614 | 559 | ||||||||||||
Research and development | | | 33 | | | 35 | | | 101 | | | 109 | 38 | 33 | 113 | 101 | ||||||||||||
Restructuring, impairment and plant closing costs (credits) | | | 12 | | | (43) | | | 34 | | | (42) | ||||||||||||||||
Other operating (income) expense, net | | | (3) | | | 3 | | | (4) | | | 1 | ||||||||||||||||
Restructuring, impairment and plant closing (credits) costs | (1 | ) | 12 | 34 | 34 | |||||||||||||||||||||||
Gain on sale of India-based DIY business | 0 | 0 | (28 | ) | 0 | |||||||||||||||||||||||
Other operating income, net | (3 | ) | (3 | ) | (13 | ) | (4 | ) | ||||||||||||||||||||
Total operating expenses | | | 219 | | | 187 | | | 690 | | | 649 | 237 | 219 | 720 | 690 | ||||||||||||
Operating income | | | 60 | | | 153 | | | 48 | | | 423 | 246 | 60 | 586 | 48 | ||||||||||||
Interest expense, net | | | (24) | | | (31) | | | (65) | | | (99) | (15 | ) | (24 | ) | (52 | ) | (65 | ) | ||||||||
Equity in income of investment in unconsolidated affiliates | | | 21 | | | 19 | | | 25 | | | 41 | 34 | 21 | 118 | 25 | ||||||||||||
Fair value adjustments to Venator investment | | | 6 | | | (148) | | | (100) | | | (90) | (3 | ) | 6 | (28 | ) | (100 | ) | |||||||||
Loss on early extinguishment of debt | | | — | | | — | | | — | | | (23) | 0 | 0 | (27 | ) | 0 | |||||||||||
Other income, net | | | 10 | | | 6 | | | 25 | | | 13 | 7 | 10 | 21 | 25 | ||||||||||||
Income (loss) from continuing operations before income taxes | | | 73 | | | (1) | | | (67) | | | 265 | 269 | 73 | 618 | (67 | ) | |||||||||||
Income tax expense | | | (15) | | | (29) | | | (9) | | | (110) | (39 | ) | (15 | ) | (115 | ) | (9 | ) | ||||||||
Income (loss) from continuing operations | | | 58 | | | (30) | | | (76) | | | 155 | 230 | 58 | 503 | (76 | ) | |||||||||||
Income from discontinued operations, net of tax | | | — | | | 68 | | | 782 | | | 126 | ||||||||||||||||
(Loss) income from discontinued operations, net of tax | (5 | ) | 0 | (3 | ) | 782 | ||||||||||||||||||||||
Net income | | | 58 | | | 38 | | | 706 | | | 281 | 225 | 58 | 500 | 706 | ||||||||||||
Net income attributable to noncontrolling interests | | | (9) | | | (11) | | | (15) | | | (31) | (16 | ) | (9 | ) | (49 | ) | (15 | ) | ||||||||
Net income attributable to Huntsman International LLC | | $ | 49 | | $ | 27 | | $ | 691 | | $ | 250 | $ | 209 | $ | 49 | $ | 451 | $ | 691 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
| | | | | | | | | | | | | |
| | Three months | | Nine months | |||||||||
| | ended | | ended | |||||||||
| | September 30, | | September 30, | |||||||||
| | 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
Net income | | $ | | 58 | | $ | 38 | | $ | 706 | | $ | 281 |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | |
Foreign currency translations adjustment | | | | 15 | | | (41) | | | (42) | | | (21) |
Pension and other postretirement benefits adjustments | | | | 14 | | | 12 | | | 80 | | | 38 |
Other, net | | | | — | | | (1) | | | — | | | (1) |
Other comprehensive income (loss), net of tax | | | | 29 | | | (30) | | | 38 | | | 16 |
Comprehensive income | | | | 87 | | | 8 | | | 744 | | | 297 |
Comprehensive income attributable to noncontrolling interests | | | | (12) | | | (5) | | | (18) | | | (25) |
Comprehensive income attributable to Huntsman International LLC | | $ | | 75 | | $ | 3 | | $ | 726 | | $ | 272 |
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net income | $ | 225 | $ | 58 | $ | 500 | $ | 706 | ||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Foreign currency translations adjustment | (36 | ) | 15 | (42 | ) | (42 | ) | |||||||||
Pension and other postretirement benefits adjustments | 17 | 14 | 53 | 80 | ||||||||||||
Other comprehensive (loss) income, net of tax | (19 | ) | 29 | 11 | 38 | |||||||||||
Comprehensive income | 206 | 87 | 511 | 744 | ||||||||||||
Comprehensive income attributable to noncontrolling interests | (17 | ) | (12 | ) | (51 | ) | (18 | ) | ||||||||
Comprehensive income attributable to Huntsman International LLC | $ | 189 | $ | 75 | $ | 460 | $ | 726 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Unit Amounts)
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
| | Huntsman International LLC Members | | | | | | | |||||||||||||||||||||||||||||||||
| | Members' | | | | Accumulated other | | Noncontrolling | | | | ||||||||||||||||||||||||||||||
| | equity | | | | comprehensive | | interests in | | Total | |||||||||||||||||||||||||||||||
|
| Units |
| Amount |
| Retained earnings |
| loss |
| subsidiaries |
| equity | |||||||||||||||||||||||||||||
Balance, January 1, 2020 | | 2,728 |
| $ | 3,675 |
| $ | 312 |
| $ | (1,352) |
| $ | 137 |
| $ | 2,772 | ||||||||||||||||||||||||
Huntsman International LLC Members | |||||||||||||||||||||||||||||||||||||||||
Members' | Accumulated other | Noncontrolling | |||||||||||||||||||||||||||||||||||||||
equity | comprehensive | interests in | Total | ||||||||||||||||||||||||||||||||||||||
Units | Amount | Retained earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||||||||||
Balance, January 1, 2021 | 2,728 | $ | 3,701 | $ | 1,203 | $ | (1,333 | ) | $ | 154 | $ | 3,725 | |||||||||||||||||||||||||||||
Net income | | — | | | — | | | 704 | | | — | | | 3 | | | 707 | — | 0 | 85 | 0 | 17 | 102 | ||||||||||||||||||
Dividends paid to parent | | — | | | — | | | (37) | | | — | | | — | | | (37) | — | 0 | (36 | ) | 0 | 0 | (36 | ) | ||||||||||||||||
Other comprehensive loss | | — | | | — | | | — | | | (20) | | | — | | | (20) | — | 0 | 0 | (12 | ) | 0 | (12 | ) | ||||||||||||||||
Contribution from parent | | — | | | 6 | | | — | | | — | | | — | | | 6 | — | 8 | 0 | 0 | 0 | 8 | ||||||||||||||||||
Balance, March 31, 2020 | | 2,728 | | | 3,681 | | $ | 979 | | | (1,372) | | | 140 | | | 3,428 | ||||||||||||||||||||||||
Net (loss) income | | — | | | — | | | (62) | | | — | | | 3 | | | (59) | ||||||||||||||||||||||||
Dividends paid to parent | | — | | | — | | | (36) | | | — | | | — | | | (36) | ||||||||||||||||||||||||
Other comprehensive income | | — | | | — | | | — | | | 29 | | | — | | | 29 | ||||||||||||||||||||||||
Contribution from parent | | — | | | 7 | | | — | | | — | | | — | | | 7 | ||||||||||||||||||||||||
Balance, June 30, 2020 | | 2,728 | | | 3,688 | | | 881 | | | (1,343) | | | 143 | | | 3,369 | ||||||||||||||||||||||||
Balance, March 31, 2021 | 2,728 | $ | 3,709 | $ | 1,252 | $ | (1,345 | ) | $ | 171 | $ | 3,787 | |||||||||||||||||||||||||||||
Net income | | — | | | — | | | 49 | | | — | | | 9 | | | 58 | — | 0 | 157 | 0 | 16 | 173 | ||||||||||||||||||
Dividends paid to parent | | — | | | — | | | (36) | | | — | | | — | | | (36) | — | 0 | (41 | ) | 0 | 0 | (41 | ) | ||||||||||||||||
Other comprehensive income | | — | | | — | | | — | | | 26 | | | 3 | | | 29 | — | 0 | 0 | 41 | 1 | 42 | ||||||||||||||||||
Contribution from parent | | — | | | 6 | | | — | | | — | | | — | | | 6 | — | 7 | 0 | 0 | 0 | 7 | ||||||||||||||||||
Balance, September 30, 2020 | | 2,728 | | $ | 3,694 | | $ | 894 | | $ | (1,317) | | $ | 155 | | $ | 3,426 | ||||||||||||||||||||||||
Dividends declared to noncontrolling interests | — | 0 | 0 | 0 | (30 | ) | (30 | ) | |||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 2,728 | $ | 3,716 | $ | 1,368 | $ | (1,304 | ) | $ | 158 | $ | 3,938 | |||||||||||||||||||||||||||||
Net income | — | 0 | 209 | 0 | 16 | 225 | |||||||||||||||||||||||||||||||||||
Dividends paid to parent | — | 0 | (41 | ) | 0 | 0 | (41 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | — | 0 | 0 | (20 | ) | 1 | (19 | ) | |||||||||||||||||||||||||||||||||
Contribution from parent | — | 8 | 0 | 0 | 0 | 8 | |||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 2,728 | $ | 3,724 | $ | 1,536 | $ | (1,324 | ) | $ | 175 | $ | 4,111 |
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
| | Huntsman International LLC Members | | | | | | | |||||||||||||||||||||||||||||||||
| | Members' | | (Accumulated | | Accumulated other | | Noncontrolling | | | | ||||||||||||||||||||||||||||||
| | equity | | deficit) | | comprehensive | | interests in | | Total | |||||||||||||||||||||||||||||||
|
| Units |
| Amount |
| Retained earnings |
| loss |
| subsidiaries |
| equity | |||||||||||||||||||||||||||||
Balance, January 1, 2019 | | 2,728 |
| $ | 3,658 |
| $ | (91) |
| $ | (1,308) |
| $ | 229 |
| $ | 2,488 | ||||||||||||||||||||||||
Huntsman International LLC Members | |||||||||||||||||||||||||||||||||||||||||
Members' | Accumulated other | Noncontrolling | |||||||||||||||||||||||||||||||||||||||
equity | comprehensive | interests in | Total | ||||||||||||||||||||||||||||||||||||||
Units | Amount | Retained earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||||||||||
Balance, January 1, 2020 | 2,728 | $ | 3,675 | $ | 312 | $ | (1,352 | ) | $ | 137 | $ | 2,772 | |||||||||||||||||||||||||||||
Net income | — | 0 | 704 | 0 | 3 | 707 | |||||||||||||||||||||||||||||||||||
Dividends paid to parent | — | 0 | (37 | ) | 0 | 0 | (37 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive loss | — | 0 | 0 | (20 | ) | 0 | (20 | ) | |||||||||||||||||||||||||||||||||
Contribution from parent | — | 6 | 0 | 0 | 0 | 6 | |||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | 2,728 | $ | 3,681 | $ | 979 | $ | (1,372 | ) | $ | 140 | $ | 3,428 | |||||||||||||||||||||||||||||
Net (loss) income | — | 0 | (62 | ) | 0 | 3 | (59 | ) | |||||||||||||||||||||||||||||||||
Dividends paid to parent | — | 0 | (36 | ) | 0 | 0 | (36 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive income | — | 0 | 0 | 29 | 0 | 29 | |||||||||||||||||||||||||||||||||||
Contribution from parent | — | 7 | 0 | 0 | 0 | 7 | |||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 2,728 | $ | 3,688 | $ | 881 | $ | (1,343 | ) | $ | 143 | $ | 3,369 | |||||||||||||||||||||||||||||
Net income | | — | | | — | | | 116 | | | — | | | 12 | | | 128 | — | 0 | 49 | 0 | 9 | 58 | ||||||||||||||||||
Dividends paid to parent | | — | | | — | | | (37) | | | — | | | — | | | (37) | — | 0 | (36 | ) | 0 | 0 | (36 | ) | ||||||||||||||||
Other comprehensive income | | — | | | — | | | — | | | 52 | | | 2 | | | 54 | — | 0 | 0 | 26 | 3 | 29 | ||||||||||||||||||
Contribution from parent | | — | | | 7 | | | — | | | — | | | — | | | 7 | — | 6 | 0 | 0 | 0 | 6 | ||||||||||||||||||
Balance, March 31, 2019 | | 2,728 | | | 3,665 | | | (12) | | | (1,256) | | | 243 | | | 2,640 | ||||||||||||||||||||||||
Net income | | — | | | — | | | 107 | | | — | | | 8 | | | 115 | ||||||||||||||||||||||||
Dividends paid to parent | | — | | | — | | | (38) | | | — | | | — | | | (38) | ||||||||||||||||||||||||
Other comprehensive loss | | — | | | — | | | — | | | (6) | | | (2) | | | (8) | ||||||||||||||||||||||||
Contribution from parent | | — | | | 7 | | | — | | | — | | | — | | | 7 | ||||||||||||||||||||||||
Dividends declared to noncontrolling interests | | — | | | — | | | — | | | — | | | (40) | | | (40) | ||||||||||||||||||||||||
Balance, June 30, 2019 | | 2,728 | | | 3,672 | | | 57 | | | (1,262) | | | 209 | | | 2,676 | ||||||||||||||||||||||||
Net income | | — | | | — | | | 27 | | | — | | | 11 | | | 38 | ||||||||||||||||||||||||
Dividends paid to parent | | — | | | — | | | (37) | | | — | | | — | | | (37) | ||||||||||||||||||||||||
Other comprehensive income | | — | | | — | | | — | | | (39) | | | 9 | | | (30) | ||||||||||||||||||||||||
Acquisition of noncontrolling interests, net of tax | | — | | | (6) | | | — | | | — | | | (73) | | | (79) | ||||||||||||||||||||||||
Treasury stock repurchased | | — | | | — | | | — | | | — | | | — | | | — | ||||||||||||||||||||||||
Contribution from parent | | — | | | 7 | | | — | | | — | | | — | | | 7 | ||||||||||||||||||||||||
Balance, September 30, 2019 | | 2,728 | | $ | 3,673 | | $ | 47 | | $ | (1,301) | | $ | 156 | | $ | 2,575 | ||||||||||||||||||||||||
Balance, September 30, 2020 | 2,728 | $ | 3,694 | $ | 894 | $ | (1,317 | ) | $ | 155 | $ | 3,426 |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
| | | | | | |
| | Nine months | ||||
| | ended | ||||
| | September 30, | ||||
|
| 2020 |
| 2019 | ||
Operating Activities: | | | | | | |
Net income | | $ | 706 | | $ | 281 |
Less: Income from discontinued operations, net of tax | | | (782) | | | (126) |
(Loss) income from continuing operations | | | (76) | | | 155 |
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities from continuing operations: | | | | | | |
Equity in income of investment in unconsolidated affiliates | | | (25) | | | (41) |
Unrealized losses on fair value adjustments to Venator investment | | | 100 | | | 91 |
Cash received from return on investment in unconsolidated subsidiary | | | 18 | | | 17 |
Depreciation and amortization | | | 206 | | | 201 |
Noncash lease expense | | | 46 | | | 41 |
Gain on disposal of businesses/assets, net | | | — | | | (49) |
Loss on early extinguishment of debt | | | — | | | 23 |
Noncash restructuring and impairment charges | | | 5 | | | 3 |
Deferred income taxes | | | (17) | | | 63 |
Noncash compensation | | | 19 | | | 21 |
Other, net | | | 8 | | | 24 |
Changes in operating assets and liabilities: | | | | | | |
Accounts and notes receivable | | | 103 | | | 69 |
Inventories | | | 154 | | | 19 |
Prepaid expenses | | | 24 | | | 5 |
Other current assets | | | 11 | | | 24 |
Other noncurrent assets | | | (47) | | | (73) |
Accounts payable | | | (87) | | | (28) |
Accrued liabilities | | | (29) | | | (57) |
Taxes paid on sale of Chemical Intermediates Businesses | | | (188) | | | — |
Other noncurrent liabilities | | | (112) | | | (84) |
Net cash provided by operating activities from continuing operations | | | 113 | | | 424 |
Net cash (used in) provided by operating activities from discontinued operations | | | (22) | | | 222 |
Net cash provided by operating activities | | | 91 | | | 646 |
| | | | | | |
Investing Activities: | | | | | | |
Capital expenditures | | | (170) | | | (181) |
Proceeds from sale of businesses/assets | | | — | | | 49 |
Cash received from sale of business | | | 1,923 | | | — |
Acquisition of businesses, net of cash acquired | | | (653) | | | — |
Decrease (increase) in receivable from affiliate | | | 275 | | | (3) |
Cash received from forward swap contract related to the sale of investment in Venator | | | — | | | 16 |
Other, net | | | 4 | | | 6 |
Net cash provided by (used in) investing activities from continuing operations | | | 1,379 | | | (113) |
Net cash used in investing activities from discontinued operations | | | — | | | (31) |
Net cash provided by (used in) investing activities | | | 1,379 | | | (144) |
(Continued)
15
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Nine months | ||||||||
ended | ||||||||
September 30, | ||||||||
2021 | 2020 | |||||||
Operating Activities: | ||||||||
Net income | $ | 500 | $ | 706 | ||||
Less: Loss (income) from discontinued operations, net of tax | 3 | (782 | ) | |||||
Income (loss) from continuing operations | 503 | (76 | ) | |||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations: | ||||||||
Equity in income of investment in unconsolidated affiliates | (118 | ) | (25 | ) | ||||
Unrealized losses on fair value adjustments to Venator investment | 28 | 100 | ||||||
Cash received from return on investment in unconsolidated subsidiary | 31 | 18 | ||||||
Depreciation and amortization | 219 | 206 | ||||||
Noncash lease expense | 46 | 46 | ||||||
Gain on disposal of businesses/assets | (28 | ) | 0 | |||||
Loss on early extinguishment of debt | 27 | 0 | ||||||
Noncash restructuring and impairment charges | 14 | 5 | ||||||
Deferred income taxes | (22 | ) | (17 | ) | ||||
Noncash compensation | 23 | 19 | ||||||
Other, net | (6 | ) | 8 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | (342 | ) | 103 | |||||
Inventories | (329 | ) | 154 | |||||
Prepaid expenses | 32 | 24 | ||||||
Other current assets | (4 | ) | 11 | |||||
Other noncurrent assets | (84 | ) | (47 | ) | ||||
Accounts payable | 124 | (87 | ) | |||||
Accrued liabilities | 82 | (29 | ) | |||||
Taxes paid on sale of Chemical Intermediates Businesses | 0 | (188 | ) | |||||
Other noncurrent liabilities | (29 | ) | (112 | ) | ||||
Net cash provided by operating activities from continuing operations | 167 | 113 | ||||||
Net cash used in operating activities from discontinued operations | (1 | ) | (22 | ) | ||||
Net cash provided by operating activities | 166 | 91 | ||||||
Investing Activities: | ||||||||
Capital expenditures | (250 | ) | (170 | ) | ||||
Cash received from sale of businesses | 43 | 1,923 | ||||||
Acquisition of businesses, net of cash acquired | (245 | ) | (653 | ) | ||||
(Increase) decrease in receivable from affiliate | (105 | ) | 275 | |||||
Insurance proceeds for recovery of property damage | 3 | 0 | ||||||
Other, net | 10 | 4 | ||||||
Net cash (used in) provided by investing activities | (544 | ) | 1,379 |
(Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
| | | | | | | ||||||||
| | Nine months | ||||||||||||
| | ended | ||||||||||||
| | September 30, | ||||||||||||
|
| 2020 |
| 2019 | ||||||||||
Nine months | ||||||||||||||
ended | ||||||||||||||
September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Financing Activities: | | | | | | | ||||||||
Net repayments on revolving loan facilities | | $ | (153) | | $ | (104) | ||||||||
Net borrowings (repayments) on revolving loan facilities | $ | 8 | $ | (153 | ) | |||||||||
Proceeds from issuance of long-term debt | 427 | 0 | ||||||||||||
Repayments of long-term debt | | | (17) | | | (662) | (965 | ) | (17 | ) | ||||
Proceeds from issuance of long-term debt | | | — | | | 742 | ||||||||
Repayments of short-term debt | | | (109) | | | — | 0 | (109 | ) | |||||
Borrowings on short-term debt | | | — | | | 101 | ||||||||
Repayments of notes payable to affiliate | | | (380) | | | (197) | 0 | (380 | ) | |||||
Repayments of notes payable | | | (32) | | | (21) | 0 | (32 | ) | |||||
Debt issuance costs paid | (4 | ) | 0 | |||||||||||
Dividends paid to noncontrolling interests | | | (23) | | | (40) | (30 | ) | (23 | ) | ||||
Debt issuance costs paid | | | — | | | (7) | ||||||||
Cash paid for noncontrolling interests | | | — | | | (100) | ||||||||
Dividends paid to parent | | | (109) | | | (112) | (118 | ) | (109 | ) | ||||
Costs of early extinguishment of debt | | | — | | | (21) | (26 | ) | 0 | |||||
Other | | | (1) | | | 1 | ||||||||
Other, net | 2 | (1 | ) | |||||||||||
Net cash used in financing activities | | | (824) | | | (420) | (706 | ) | (824 | ) | ||||
Effect of exchange rate changes on cash | | | (4) | | | (5) | (2 | ) | (4 | ) | ||||
Increase in cash, cash equivalents and restricted cash | | | 642 | | | 77 | ||||||||
(Decrease) increase in cash, cash equivalents and restricted cash | (1,086 | ) | 642 | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | | | 525 | | | 340 | 1,591 | 525 | ||||||
Cash, cash equivalents and restricted cash at end of period | | $ | 1,167 | | $ | 417 | $ | 505 | $ | 1,167 | ||||
| | | | | | | ||||||||
Supplemental cash flow information: | | | | | | | ||||||||
Cash paid for interest | | $ | 49 | | $ | 65 | $ | 57 | $ | 49 | ||||
Cash paid for income taxes | | | 242 | | | 102 | 83 | 242 |
As ofFor both September 30, 20202021 and 2019,2020, the amount of capital expenditures in accounts payable was $54 million and $48 million, respectively. Duringmillion. For the nine months ended September 30, 20202021, the amount of cash paid for taxes in connection with the earnout provision achieved under the terms of the sales agreement of the India-based DIY business was $3 million. See “Note 4. Discontinued Operations and 2019, Huntsman Corporation contributed $19 million and $21 million, respectively, related to stock-based compensation for continuing operations.Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business.”
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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-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 Statements
Interim Financial Statements
Our unaudited interim condensed consolidated financial statements and Huntsman International’s unaudited interim condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) and in management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income (loss), 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, 20192020 for our Company and Huntsman International.
Description of Businesses
Description of Businesses
We are a global manufacturer of differentiated organic chemical products. We operate in 4 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, durable and non-durable consumer products, digital inks, electronics, insulation, 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, maleic anhydride, epoxy-based polymer formulations, textile chemicals and dyes.
We currently operate all of our businesses through Huntsman International, our wholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.
Huntsman Corporation and Huntsman International Financial Statements
Huntsman Corporation and Huntsman International Financial Statements
Except where otherwise indicated, these notes relate to the condensed consolidated financial statements for both our Company and Huntsman International. The differences between our financial statements and Huntsman International’s financial statements relate primarily to the following:
● | purchase accounting recorded at our Company for the 2003 step-acquisition of Huntsman International Holdings LLC, the former parent company of Huntsman International that was merged into Huntsman International in 2005; and |
● | the different capital |
Principles of Consolidation
17
Principles of Consolidation
Our condensed consolidated financial statements include the accounts of our wholly-owned and majority-owned subsidiaries and any variable interest entities for which we are the primary beneficiary. Intercompany accounts and transactions have been eliminated.
Recent DevelopmentsRecent Developments
Sale of India-Based Do-It-Yourself Consumer Adhesives BusinessAmendments to Accounts Receivable Securitization Programs
In October 2020, we announced that we have entered into a definitive agreement to sell our India-based do-it-yourself consumer adhesives (“DIY”) business, part of the Advanced Materials segment, to Pidilite Industries Ltd. in an all-cash transaction valued at up to $285 million, excluding customary working capital and other adjustments. Under the terms of the agreement, we will receive approximately $257 million in cash at closing and up to approximately $28 million of additional cash under an earnout within 18 months if the business achieves sales revenue in line with 2019. The transaction is expected to close in November 2020. We estimate cash taxes of just under 10% with this transaction.
Sale of Venator Interest
In August 2020, On July 1, 2021, we entered into a definitive agreementamendments to 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 funds advised by SK Capital Partners, LP to sell approximately 42.5 million of ordinary shares we hold in Venator Materials PLC (“Venator”the U.S. A/R Program, “A/R Programs”) for a cash purchase price of approximately $100 million, including a 30-month option forthat, among other things, extended the sale of the remaining approximate 9.5 million ordinary shares we hold in Venator at $2.15 per share. The transaction is subject to regulatory approvals and is expected to close near year end 2020. The sale of the Venator shares facilitates an estimated cash tax savings of approximately $150 million anticipated by offsetting an expected capital loss on the sale of Venator shares against the capital gain realized on the salescheduled termination dates of our chemical intermediates businesses, which included PO/MTBE, and our surfactants businesses (collectively, our “Chemical Intermediates Businesses”) that closed this year in January. See “Note 4. Discontinued Operations and Business Disposition—Separation and Deconsolidation of Venator.”
In connection with the 2017 initial public offering of Venator, we recorded a receivable of approximately $34 million related A/R Programs from April 2022 to certain income tax benefits that will be reduced upon completion of the sale of Venator shares to SK Capital Partners, LP due to a tax change of control limitation on certain Venator tax net operating losses. Accordingly, we expect to write off a significant portion of this receivable when the transaction closes.
COVID-19 Update
The recent outbreak of the coronavirus disease (“COVID-19”) has spread from China to many other countries, including the United States (“U.S.”). In March 2020, the World Health Organization characterized COVID-19 as a pandemic. As of September 30, 2020, there have not been any significant interruptions in our ability to provide our products and support to our customers. However, the COVID-19 pandemic has significantly impacted economic conditions throughout the U.S. and the world, including the markets in which we operate. Demand for our products declined at a rapid pace in the second quarter 2020, which led to a meaningful adverse impact on our revenues and financial results. Although we have experienced improved conditions in most of our core markets in the third quarter of 2020, demand for our products remained modestly down compared to the same period of 2019.
In response to the impact of COVID-19, we have implemented, and may continue to implement, cost saving initiatives, including:
18
July 2024. For moreadditional information, regarding our 2020 restructuring activities, see “Note 7. Restructuring, Impairment8. Debt—Direct and Plant Closing Costs”.Subsidiary Debt—A/R Programs.”
There continues to be many uncertainties regarding the impact of the COVID-19 pandemic, including the scope of scientific and health issues, the anticipated duration of the pandemic and the extent of local, regional and worldwide economic, social and political disruption. Given such uncertainties, it is difficult to estimate the magnitude COVID-19 may impact our future business, but we expect any adverse impact to continue for some time.
UseUse 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 PRONOUNCEMENTS
Accounting Pronouncements Adopted During 2020Accounting Pronouncements ADopted During 2021
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. On January 1, 2020, weWe adopted the amendments in this ASU and the initial adoption of these amendmentsfollowing accounting pronouncement during 2021, which did not have a significant impact on our condensed consolidated financial statements.statements:
● | Financial Accounting Standards Board Accounting Standards Update No.2021-01,Reference Rate Reform (Topic 848): Scope. |
In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). On January 1, 2020, we adopted the amendments in this ASU and the initial adoption of these amendments did not have a significant impact on our condensed consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. On March 12, 2020, we adopted the amendments in this ASU and the initial adoption of these amendments did not have a significant impact on our condensed consolidated financial statements.
Accounting Pronouncements Pending Adoption in Future Periods
In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this ASU modify certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant. The amendments in
19
this ASU are effective for fiscal years ending after December 15, 2020 and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We do not expect the adoption of the amendments in this ASU to have a significant impact on our condensed consolidated financial statements.
3. BUSINESS COMBINATIONS AND ACQUISITIONS
AcquisitionAcquisition of CVC Thermoset SpecialtiesgaBRIEL Performance Products
On May 18, 2020, January 15, 2021, we completed ourthe acquisition of CVC Thermoset Specialties (“CVC Thermoset Specialties Acquisition”),Gabriel Performance Products, a North American specialty chemical manufacturer servingof specialty additives and epoxy curing agents for the industrial composites,coatings, adhesives, sealants and coatings markets. We acquired the business for $306 millioncomposite end-markets (“Gabriel Acquisition”), from Emerald Performance Materials LLC, which is majority owned by affiliates of American Securities LLC,funds affiliated with Audax Private Equity in an all-cash transaction of approximately $251 million, subject to customary closing adjustments. The purchase price was funded from available liquidity. Theliquidity, and the acquired business is being integrated into our Advanced Materials segment. Transaction costs related to this acquisition were approximately NaNnil and $5$2 million, as ofrespectively, for the three and nine months ended September 30, 2020, respectively, 2021 and were recorded in other operating expenses,income, net in our condensed consolidated statements of operations.
We have accounted for the CVC Thermoset SpecialtiesGabriel Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):
| | | | ||||
Fair value of assets acquired and liabilities assumed: | | | | ||||
Cash paid for the CVC Thermoset Specialties Acquisition | | $ | 306 | ||||
| | | | ||||
Cash paid for the Gabriel Acquisition | $ | 251 | |||||
Cash | $ | 9 | |||||
Accounts receivable | | $ | 12 | 13 | |||
Inventories | | | 39 | 26 | |||
Property, plant and equipment | | | 88 | 23 | |||
Intangible assets | | | 60 | 16 | |||
Goodwill | | | 119 | 174 | |||
Accounts payable | | | (7) | (7 | ) | ||
Accrued liabilities | (2 | ) | |||||
Deferred income taxes | | | (5) | (1 | ) | ||
Total fair value of net assets acquired | | $ | 306 | $ | 251 |
The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired and liabilities assumed, including final valuation of certain liabilities, property, plant and equipment, intangible assets, leases and deferred taxes. Intangible assets acquired included in this preliminary allocation consist primarily of trademarks, technology and trade secrets and customer relationships.secrets. The applicable amortization periods are still being assessed. For purposes of this preliminary allocation of fair value, we have assigned any excess of the acquisition cost over the estimated preliminary fair value to goodwill. The estimated goodwill recognized is attributable primarily to projected future profitable growth in our Advanced Materials specialty portfolio and synergies. We expect that nonea portion of the estimated goodwill arising from the acquisition will be deductible for income tax purposes.purposes, but the amount is still being assessed. It is possible that material changes to this preliminary allocation of acquisition cost could occur.
The acquired business had revenues and net lossincome of $25$81 million and $4$14 million, respectively, for the period from the date of acquisition to September 30, 2020.2021.
Acquisition of CVC Thermoset Specialties
20
TableOn May 18, 2020, we completed our acquisition of ContentsCVC Thermoset Specialties, a North American specialty chemical manufacturer serving the industrial composites, adhesives and coatings markets (“CVC Thermoset Specialties Acquisition”). We acquired the business for $304 million from Emerald Performance Materials LLC, which is majority owned by affiliates of American Securities LLC, in an all-cash transaction funded from available liquidity. The acquired business was integrated into our Advanced Materials segment.
If this
We accounted for the CVC Thermoset Specialties Acquisition using the acquisition weremethod. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The allocation of acquisition cost to have occurred on January 1, 2019, the following estimated pro forma revenues, net incomeassets acquired and net income attributable to Huntsman Corporation and Huntsman International would have been reportedliabilities assumed is summarized as follows (dollars in millions):
Fair value of assets acquired and liabilities assumed: | ||||
Cash paid for the CVC Thermoset Specialties Acquisition | $ | 304 | ||
Accounts receivable | $ | 12 | ||
Inventories | 37 | |||
Property, plant and equipment | 67 | |||
Intangible assets | 117 | |||
Goodwill | 120 | |||
Accounts payable | (7 | ) | ||
Accrued liabilities | (1 | ) | ||
Deferred income taxes | (41 | ) | ||
Total fair value of net assets acquired | $ | 304 |
Intangible assets acquired consist primarily of trademarks, trade secrets and customer relationships, which are predominantly being amortized over a period of 20 years. The goodwill recognized is attributable primarily to projected future profitable growth in our Advanced Materials specialty portfolio and synergies. None of the goodwill arising from the acquisition is deductible for income tax purposes.
| | | | | | | | |
| Three months | | Nine months | |||||
| ended | | ended | |||||
| September 30, | | September 30, | |||||
| 2019 | | 2020 | | 2019 | |||
Revenues | $ | 1,714 | | $ | 4,382 | | $ | 5,228 |
Net (loss) income | | 61 | | | 707 | | | 327 |
Net (loss) income attributable to Huntsman Corporation | | 50 | | | 692 | | | 296 |
Acquisition of
| | | | | | | | |
| Three months | | Nine months | |||||
| ended | | ended | |||||
| September 30, | | September 30, | |||||
| 2019 | | 2020 | | 2019 | |||
Revenues | $ | 1,714 | | $ | 4,382 | | $ | 5,228 |
Net (loss) income | | 58 | | | 707 | | | 318 |
Net (loss) income attributable to Huntsman International | | 47 | | | 692 | | | 287 |
Icynene-Lapolla
Acquisition of Icynene-Lapolla
On February 20, 2020, we completed our acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of spray polyurethane foam insulation systems for residential and commercial applications (“Icynene-Lapolla Acquisition”). We acquired the business from an affiliate of FFL Partners, LLC for $353 million in an all-cash transaction funded from available liquidity. The acquired business was integrated into our Polyurethanes segment. Transaction costs related to this acquisition were approximately NaN and $14 million for the three and nine months ended September 30, 2020, respectively, and were recorded in other operating expenses, net in our condensed consolidated statements of operations.
We have accounted for the Icynene-Lapolla Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):
| | | | ||||
Fair value of assets acquired and liabilities assumed: | | | | ||||
Cash paid for the Icynene-Lapolla Acquisition | | $ | 353 | $ | 353 | ||
| | | | ||||
Cash | | $ | 7 | $ | 7 | ||
Accounts receivable | | | 37 | 36 | |||
Inventories | | | 36 | 32 | |||
Prepaid expenses and other current assets | | | 1 | 2 | |||
Property, plant and equipment | | | 7 | 9 | |||
Intangible assets | | | 165 | 130 | |||
Goodwill | | | 134 | 167 | |||
Other noncurrent assets | | | 3 | 4 | |||
Accounts payable | | | (13) | (14 | ) | ||
Accrued liabilities | | | (10) | (11 | ) | ||
Deferred income taxes | | | (14) | (9 | ) | ||
Total fair value of net assets acquired | | $ | 353 | $ | 353 |
The acquisition cost allocation is preliminary pending final determinationAs a result of the fair valuefinal valuation of the assets acquired and liabilities, assumed, including final valuationreallocations were made during the first quarter of2021 in certain current asset and liability, property, plant and equipment, intangible asset, goodwill, other noncurrent assets leases and deferred taxes.tax balances. Intangible assets acquired included in this preliminary allocation consist primarily of trademarks, trade secrets and customer relationships.relationships, which are predominantly being amortized over a period of 10 years. The applicable amortization periods are still being assessed. For purposes of this preliminary allocation of fair value, we have assigned any excess of the acquisition cost over the estimated preliminary fair value to goodwill. The estimated goodwill recognized is attributable primarily to projected future profitable growth, penetration into downstream markets and synergies. We expect that noneNone of the estimated goodwill arising from the acquisition will
21
beis deductible for income tax purposes. It is possible that material changes to this preliminary allocation of acquisition cost could occur.
The acquired business had revenues and net income of $139 million and $4 million, respectively, for the period from the date of acquisition to September 30, 2020.PRO FORMA INFORMATION FOR ACQUISITIONS
If this acquisitionthe Gabriel Acquisition, the CVC Thermoset Specialties Acquisition and the Icynene-Lapolla Acquisition were to have occurred on January 1, 2019,2020, the following estimated pro forma revenues, net (loss) income, and net (loss) income attributable to Huntsman Corporation and Huntsman International would have been reported (dollars in millions):
| | | | | | | | |
| Three months | | Nine months | |||||
| ended | | ended | |||||
| September 30, | | September 30, | |||||
| 2019 |
| 2020 | | 2019 | |||
Revenues | $ | 1,746 | | $ | 4,380 | | $ | 5,312 |
Net income | | 36 | | | 702 | | | 280 |
Net income attributable to Huntsman Corporation | | 25 | | | 687 | | | 249 |
Three months | Nine months | |||||||||||
ended | ended | |||||||||||
September 30, | September 30, | |||||||||||
2020(1) | 2021(1) | 2020 | ||||||||||
Revenues | $ | 1,536 | $ | 6,150 | $ | 4,487 | ||||||
Net income | 55 | 485 | 696 | |||||||||
Net income attributable to Huntsman Corporation | 46 | 436 | 681 |
| | | | | | | | |
| Three months | | Nine months | |||||
| ended | | ended | |||||
| September 30, | | September 30, | |||||
| 2019 |
| 2020 | | 2019 | |||
Revenues | $ | 1,746 | | $ | 4,380 | | $ | 5,312 |
Net income | | 33 | | | 702 | | | 271 |
Net income attributable to Huntsman International | | 22 | | | 687 | | | 240 |
Three months | Nine months | |||||||||||
ended | ended | |||||||||||
September 30, | September 30, | |||||||||||
2020(1) | 2021(1) | 2020 | ||||||||||
Revenues | $ | 1,536 | $ | 6,150 | $ | 4,487 | ||||||
Net income | 56 | 488 | 696 | |||||||||
Net income attributable to Huntsman International | 47 | 439 | 681 |
(1) | Includes pro forma information for the Gabriel Acquisition only. |
4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS
On November 3, 2020, we completed the sale of the India-based DIY business to Pidilite Industries Ltd. and received cash of approximately $257 million. Under the terms of the agreement, an earnout provision of up to approximately $28 million of additional cash was attainable if the business achieved, within 18 months, certain sales revenue targets in line with the DIY business' 2019 performance. The performance criteria of the earnout provision were satisfied in the second quarter of 2021, and we received the full payment of $28 million. As a result, we recognized an additional pretax gain of $28 million in the second quarter of 2021, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.
SaLE of Venator InterEST
Sale
Three months | Nine months | |||||||
ended | ended | |||||||
September 30, | September 30, | |||||||
2020 | 2020 | |||||||
Revenues | $ | 474 | $ | 1,462 | ||||
Gross profit | 20 | 126 | ||||||
Loss from continuing operations | (39 | ) | (48 | ) | ||||
Net loss | (39 | ) | (48 | ) | ||||
Net loss attributable to Venator | (42 | ) | (54 | ) |
Sale of Chemical Intermediates Businesses
On January 3, 2020, we completed the sale of our chemical intermediates businesses, which included PO/MTBE, and our surfactants business (“Chemical Intermediates BusinessesBusinesses”) to Indorama Ventures Holdings L.P. (“Indorama”) in a transaction valued at approximately $2 billion, comprised of a cash purchase price of approximately $1.92 billion and the transfer of approximately $72 million in net underfunded pension and other post-employment benefit liabilities. In connection with this sale, we received proceeds of $1.92 billion and recognized a net after-tax gain of $748 million in the firstnine months of 2020. Additionally, Also, in connection with this sale, we entered into long-term supply agreements with Indorama forto supply us with certain raw materials at market prices supplied by our former Chemical Intermediates Businesses.prices.
During the first nine months of 2020, we paid $188 million of income taxes with respect to the gain on the sale of our Chemical Intermediates Businesses. If the sale of approximately 42.5 million ordinary shares we hold in Venator to SK Capital Partners, LP is completed on or before December 31, 2020, we anticipate to offset an expected capital loss on the sale of the Venator shares against the capital gain realized on the sale of our Chemical Intermediates Businesses, and, accordingly, we expect to pay additional income taxes of approximately $37 million during the fourth quarter of 2020 in connection with the sale of our Chemical Intermediates Businesses. If the sale of these Venator shares does not close on or before December 31, 2020, then we expect to pay additional income taxes of approximately $187 million during the fourth quarter of 2020 in connection with the sale of our Chemical Intermediates Businesses and would realize the benefit of approximately $150 million related to the capital loss on the sale of Venator shares in late 2021 or early 2022. For more information on the sale of ordinary shares we hold in Venator to SK Capital Partners, LP, see “Note 1. Recent Developments – Sale of Venator Interest.”
The following table reconciles the carrying amounts of major classes of assets and liabilities of discontinued operations to total assets and liabilities of discontinued operations that are classified as held for sale in our condensed consolidated balance sheets (dollars in millions):
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| | |
| December 31, | |
| 2019 | |
Carrying amounts of major classes of assets held for sale: | | |
Accounts receivable | $ | 145 |
Inventories | | 105 |
Total current assets | | |
Property, plant and equipment, net | | 720 |
Operating lease right-of-use assets | | 69 |
Deferred income taxes | | 4 |
Other noncurrent assets | | 165 |
Total assets held for sale(1) | $ | 1,208 |
Carrying amounts of major classes of liabilities held for sale: | | |
Accounts payable | $ | 152 |
Accrued liabilities | | 26 |
Current operating lease liabilities | | 20 |
Total current liabilities | | |
Deferred income taxes | | 135 |
Noncurrent operating lease liabilities | | 51 |
Other noncurrent liabilities | | 128 |
Total noncurrent liabilities | | |
Total liabilities held for sale(1) | $ | 512 |
The following table reconciles major line items constituting pretax income of discontinued operations to after-tax income of discontinued operations as presented in our condensed consolidated statements of operations (dollars in millions):
| | | | | | | | | | | |
| Three months | | Nine months | ||||||||
| ended | | ended | ||||||||
| September 30, | | September 30, | ||||||||
| 2020 | | 2019 | | 2020 | | 2019 | ||||
Major line items constituting pretax income of discontinued operations(1): | | | | | | | | | | | |
Trade sales, services and fees, net(2) | $ | — | | $ | 400 | | $ | 7 | | $ | 1,183 |
Cost of goods sold(2) | | — | | | 292 | | | 11 | | | 976 |
Gain on sale of the Chemical Intermediates Businesses | | — | | | — | | | 978 | | | — |
Insurance proceeds | | — | | | — | | | 48 | | | — |
Other expense items, net | | — | | | 15 | | | 1 | | | 37 |
Income from discontinued operations before income taxes | | — | | | 93 | | | 1,021 | | | 170 |
Income tax expense | | — | | | (25) | | | (239) | | | (44) |
Net income attributable to discontinued operations | $ | — | | $ | 68 | | $ | 782 | | $ | 126 |
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Major line items constituting pretax income of discontinued operations(1): | ||||||||||||||||
Trade sales, services and fees, net(2) | $ | 0 | $ | 0 | $ | 0 | $ | 7 | ||||||||
Cost of goods sold(2) | 0 | 0 | 0 | 11 | ||||||||||||
Gain on sale of the Chemical Intermediates Businesses | 0 | 0 | 0 | 978 | ||||||||||||
Insurance proceeds | 0 | 0 | 0 | 48 | ||||||||||||
Other (income) expense items, net | 0 | 0 | (2 | ) | 1 | |||||||||||
Income from discontinued operations before income taxes | 0 | 0 | 2 | 1,021 | ||||||||||||
Income tax expense | (5 | ) | 0 | (5 | ) | (239 | ) | |||||||||
Net (loss) income attributable to discontinued operations | $ | (5 | ) | $ | 0 | $ | (3 | ) | $ | 782 |
(1) | Discontinued operations include our Chemical Intermediates Businesses, our Australian styrenics operations and our North American polymers and base chemicals operations for all periods presented. |
(2) | Includes eliminations of trade sales, services and fees, net and cost of sales between continuing operations and discontinued operations. |
Separation and Deconsolidation of Venator
In August 2017, we separated our Titanium Dioxide and Performance Additives business and conducted an initial public offering of ordinary shares of Venator. Following a series of public offerings and sales of Venator ordinary shares, beginning in December 2018, our ownership in Venator decreased to approximately 49%, and we began
accounting for our remaining interest in Venator as an equity method investment using the fair value option. For the three months ended September 30, 2020 and 2019, we recorded a gain of $6 million and a loss of $148 million, respectively, and for the nine months ended September 30, 2020 and 2019, we recorded a loss of $100 million and $91 million, respectively. These gains and losses were recorded in “Fair value adjustments to Venator investment” on our condensed consolidated statements of operations.
In August 2020, we entered into a definitive agreement to sell approximately 42.5 million of ordinary shares we hold in Venator, including a 30-month option for the sale of the remaining approximate 9.5 million ordinary shares we hold in Venator at $2.15 per share. See “Note 1. General—Recent Developments—Sale of Venator Interest.”
Summarized financial information of Venator for the three and nine months ended September 30, 2020 and 2019 is as follows (in millions):
| | | | | | | | | | | |
| Three months | | Nine months | ||||||||
| ended | | ended | ||||||||
| September 30, | | September 30, | ||||||||
| 2020 | | 2019 | | 2020 | | 2019 | ||||
Revenues | $ | 474 | | $ | 526 | | $ | 1,462 | | $ | 1,666 |
Gross profit | | 20 | | | 62 | | | 126 | | | 205 |
(Loss) income from continuing operations | | (39) | | | (17) | | | (48) | | | 3 |
Net (loss) income | | (39) | | | (17) | | | (48) | | | 3 |
Net loss attributable to Venator | | (42) | | | (18) | | | (54) | | | (1) |
5. INVENTORIES
Inventories are statedWe state our inventories at the lower of cost or market, with cost determined using LIFO, first-in first-outlast-in first-out (“LIFO”), first-in first-out and average cost methods for different components of inventory. Inventories consisted of the following (dollars in millions):
| | | | | | | ||||||||
| | September 30, | | December 31, | ||||||||||
|
| 2020 |
| 2019 | ||||||||||
September 30, | December 31, | |||||||||||||
2021 | 2020 | |||||||||||||
Raw materials and supplies | | $ | 174 | | $ | 175 | $ | 284 | $ | 180 | ||||
Work in progress | | | 44 | | | 49 | 54 | 44 | ||||||
Finished goods | | | 624 | | | 718 | 876 | 651 | ||||||
Total | | | 842 | | | 942 | 1,214 | 875 | ||||||
LIFO reserves | | | (23) | | | (28) | (40 | ) | (27 | ) | ||||
Net inventories | | $ | 819 | | $ | 914 | $ | 1,174 | $ | 848 |
As of For both September 30, 20202021 and December 31, 2019,2020, approximately 7% and 9%, respectively, of inventories were recorded using the LIFO cost method, respectively.method.
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 Lanxess that manufactures products for our Polyurethanes and Performance Products segments. |
● | Arabian Amines Company (“AAC”) is our 50%-owned joint venture with Zamil group that manufactures products for our Performance Products segment. |
During the nine months ended September 30, 2020,2021, there were no changes in our variable interest entities.
Sasol-Huntsman was our 50%-owned joint venture with Sasol that owned and operated a maleic anhydride facility in Moers, Germany. On September 30, 2019, we acquired the 50% noncontrolling interest that we did not own in
24
Sasol-Huntsman. As such, as of September 30, 2019, Sasol-Huntsman became our wholly-owned subsidiary and was no longer accounted for as a variable interest entity.
Creditors of these entities have no recourse to our general credit. See “Note 8. Debt—Direct and Subsidiary Debt.” As the primary beneficiary of these variable interest entities at September 30, 2020,2021, the joint ventures’ assets, liabilities and results of operations are included in our condensed consolidated financial statements.
The following table summarizes the carrying amount of our variable interest entities’ assets and liabilities included in our condensed consolidated balance sheet as of September 30, 20202021 and our consolidated balance sheet as of December 31, 20192020 (dollars in millions):
| | | | | | | ||||||||
| | September 30, | | December 31, | ||||||||||
|
| 2020 |
| 2019 | ||||||||||
September 30, | December 31, | |||||||||||||
2021 | 2020 | |||||||||||||
Current assets | | $ | 36 | | $ | 50 | $ | 97 | $ | 49 | ||||
Property, plant and equipment, net | | | 168 | | | 180 | 161 | 167 | ||||||
Operating lease right-of-use assets | | | 20 | | | 16 | 28 | 22 | ||||||
Other noncurrent assets | | | 136 | | | 132 | 147 | 138 | ||||||
Deferred income taxes | | | 30 | | | 30 | 30 | 30 | ||||||
Total assets | | $ | 390 | | $ | 408 | $ | 463 | $ | 406 | ||||
Current liabilities | | $ | 165 | | $ | 151 | $ | 175 | $ | 183 | ||||
Long-term debt | | | 3 | | | 29 | 53 | 3 | ||||||
Noncurrent operating lease liabilities | | | 16 | | | 11 | 22 | 17 | ||||||
Other noncurrent liabilities | | | 79 | | | 87 | 76 | 82 | ||||||
Deferred income taxes | 1 | 1 | ||||||||||||
Total liabilities | | $ | 263 | | $ | 278 | $ | 327 | $ | 286 |
The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities for the three and nine months ended September 30, 2020 2021 and 20192020 are as follows (dollars in millions):
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Income from continuing operations before income taxes | 4 | 0 | 11 | 1 | ||||||||||||
Net cash provided by operating activities | 6 | 3 | 14 | 17 |
| | | | | | | | | | | | |
| | Three months | | Nine months | ||||||||
| | ended | | ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2020(1) |
| 2019 | | 2020(1) |
| 2019 | ||||
Revenues | | $ | — | | $ | 28 | | $ | — | | $ | 95 |
Income from continuing operations before income taxes | | | — | | | 3 | | | 1 | | | 16 |
Net cash provided by operating activities | | | 3 | | | 12 | | | 17 | | | 72 |
7. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of September 30, 2021 and December 31, 2020, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):
Workforce reductions | Non-cancelable lease and contract termination costs | Other restructuring costs | Total | |||||||||||||
Accrued liabilities as of January 1, 2021 | $ | 29 | $ | 2 | $ | — | $ | 31 | ||||||||
2021 charges for 2020 and prior initiatives | 13 | — | 5 | 18 | ||||||||||||
2021 charges for 2021 initiatives | 2 | — | — | 2 | ||||||||||||
2021 payments for 2020 and prior initiatives | (12 | ) | — | (4 | ) | (16 | ) | |||||||||
2021 payments for 2021 initiatives | (1 | ) | — | — | (1 | ) | ||||||||||
Accrued liabilities as of September 30, 2021 | $ | 31 | $ | 2 | $ | 1 | $ | 34 |
Details with respect to our reserves for restructuring, impairment and plant closing costs by segment and initiative are provided below (dollars in millions):
Performance | Advanced | Textile | Corporate | |||||||||||||||||||||
Polyurethanes | Products | Materials | Effects | and Other | Total | |||||||||||||||||||
Accrued liabilities as of January 1, 2021 | $ | 12 | $ | 2 | $ | 9 | $ | 8 | $ | — | $ | 31 | ||||||||||||
2021 charges (credits) for 2020 and prior initiatives | 5 | 1 | (3 | ) | — | 15 | 18 | |||||||||||||||||
2021 charges for 2021 initiatives | — | — | 2 | — | — | 2 | ||||||||||||||||||
2021 payments for 2020 and prior initiatives | (6 | ) | (2 | ) | (2 | ) | (3 | ) | (3 | ) | (16 | ) | ||||||||||||
2021 payments for 2021 initiatives | — | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||
Accrued liabilities as of September 30, 2021 | $ | 11 | $ | 1 | $ | 5 | $ | 5 | $ | 12 | $ | 34 | ||||||||||||
Current portion of restructuring reserves | $ | 11 | $ | 1 | $ | 4 | $ | 2 | $ | 5 | $ | 23 | ||||||||||||
Long-term portion of restructuring reserves | — | — | 1 | 3 | 7 | 11 |
Details with respect to cash and noncash restructuring charges from continuing operations for the three and nine months ended September 30, 2021 and 2020 are provided below (dollars in millions):
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Cash charges: | ||||||||||||||||
2021 charges for 2020 and prior initiatives | $ | — | $ | — | $ | 18 | $ | — | ||||||||
2021 charges for 2021 initiatives | — | — | 2 | — | ||||||||||||
2020 charges for 2019 and prior initiatives | — | — | — | 3 | ||||||||||||
2020 charges for 2020 initiatives | — | 8 | — | 26 | ||||||||||||
Noncash charges: | ||||||||||||||||
Accelerated depreciation | 4 | 3 | 11 | 3 | ||||||||||||
Gain on sale of assets | (3 | ) | — | (3 | ) | — | ||||||||||
Other noncash (credits) charges | (2 | ) | 1 | 6 | 2 | |||||||||||
Total restructuring, impairment and plant closing costs | $ | (1 | ) | $ | 12 | $ | 34 | $ | 34 |
2020 Restructuring Activities2021Restructuring Activities
Beginning in the secondfirst quarter of 2021, our Corporate and other segment incurred restructuring costs related to a restructuring program to optimize our global approach to leveraging shared services capabilities. In connection with this restructuring program, we recorded restructuring expense of approximately $16 million in the nine months ended September 30,2021 primarily related to workforce reductions, and we expect to record further restructuring expenses of approximately $3 million through 2023.
Beginning in the third quarter of 2020, our Polyurethanes segment implemented a restructuring program to optimize its downstream footprint. In connection with this restructuring program, we recorded restructuring expense of approximately $4 million in the nine months ended September 30,2021 primarily related to workforce reductions and accelerated depreciation, partially offset by a gain on sale of assets of approximately $3 million. We expect to record further restructuring expenses of between approximately $4 million and $5 million through the first half of 2022.
Beginning in the second quarter of 2020, our Advanced Materials segment implemented restructuring programs in connection with the CVC Thermoset Specialties Acquisition, the alignment of the segment’s commercial organization and optimization of the segment’s manufacturing processes. In connection with these restructuring programs, we recorded restructuring expense of approximately $8 million in the nine months ended September 30, 2021 primarily related to accelerated depreciation.
2020Restructuring Activities
Beginning in the second quarter of 2020, our Polyurethanes segment implemented a restructuring program to reorganize its spray polyurethane foam business to better position this business for efficiencies and growth in coming years. In connection with this restructuring program, we recorded restructuring expense of approximately $6 million in the nine months ended September 30, 2020 primarily related primarily to workforce reductions and accelerated depreciation.
Beginning in the third quarter of 2020, our Polyurethanes segment implemented a restructuring program to optimize its downstream footprint. In connection with this restructuring program, we recorded restructuring expense of approximately $1 million in the third quarter of 2020, and we expect to record further restructuring expenses of between approximately $23 million and $30 million through 2021.2020.
Beginning in the second quarter of 2020, our Performance Products segment implemented a restructuring program, primarily related to workforce reductions, in response to the sale of our Chemical Intermediates Businesses to
25
Indorama. In connection with this restructuring program, we recorded restructuring expense of approximately $4 million in the nine months ended September 30, 2020.
Beginning in the second quarter of 2020, our Advanced Materials segment implemented restructuring programs, primarily related to workforce reductions, in connection with the CVC Thermoset Specialties Acquisition and the alignment of the segment’ssegment's commercial organization and optimization of the segment’ssegment's manufacturing processes. In connection with these restructuring programs, we recorded restructuring expense of approximately $10 million in the nine months ended September 30, 2020.
During 2020, our Textile Effects segment implemented restructuring programs to rationalize and realign structurally across various functions and certain locations within the segment. In connection with these restructuring programs, we recorded restructuring expense of approximately $10 million in the nine months ended September 30, 2020, related primarily to workforce reductions.
2019 Restructuring Activities
In September 2011, we initiated a restructuring program in our Textile Effects segment to close its production facilities and business support offices in Basel, Switzerland. In July 2019, we sold the production and business support offices in Basel. Accordingly, during the third quarter of 2019, we received proceeds of $49 million related to this sale and recognized a corresponding gain on disposal of assets of $49 million. This gain was recorded as a credit to restructuring, impairment and plant closing costs during the third quarter of 2019.
8. DEBT
OutstandingOur outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Senior Credit Facilities: | ||||||||
Revolving facility | $ | 0 | $ | 0 | ||||
Amounts outstanding under A/R programs | 0 | 0 | ||||||
Senior notes | 1,484 | 2,047 | ||||||
Variable interest entities | 66 | 50 | ||||||
Other | 33 | 24 | ||||||
Total debt | $ | 1,583 | $ | 2,121 | ||||
Current portion of debt | $ | 16 | $ | 593 | ||||
Long-term portion of debt | 1,567 | 1,528 | ||||||
Total debt | $ | 1,583 | $ | 2,121 |
Direct and Subsidiary Debt
Huntsman Corporation
| | | | | | |
| | September 30, | | December 31, | ||
|
| 2020 | | 2019 | ||
Senior Credit Facilities: |
| | | | | |
Revolving facility | | $ | — | | $ | 40 |
Amounts outstanding under A/R programs | | | 52 | | | 167 |
Term loan | | | — | | | 103 |
Senior notes | | | 2,003 | | | 1,963 |
Variable interest entities | | | 50 | | | 65 |
Other | | | 19 | | | 51 |
Total debt | | $ | 2,124 | | $ | 2,389 |
Total current portion of debt | | $ | 567 | | $ | 212 |
Long-term portion of debt | | | 1,557 | | | 2,177 |
Total debt | | $ | 2,124 | | $ | 2,389 |
26
Huntsman International
| | | | | | |
| | September 30, | | December 31, | ||
|
| 2020 | | 2019 | ||
Senior Credit Facilities: | | | | | | |
Revolving facility | | $ | — | | $ | 40 |
Amounts outstanding under A/R programs | | | 52 | | | 167 |
Term loan | | | — | | | 103 |
Senior notes | | | 2,003 | | | 1,963 |
Variable interest entities | | | 50 | | | 65 |
Other | | | 19 | | | 51 |
Total debt, excluding debt to affiliates | | $ | 2,124 | | $ | 2,389 |
Total current portion of debt | | $ | 567 | | $ | 212 |
Long-term portion of debt | | | 1,557 | | | 2,177 |
Total debt, excluding debt to affiliates | | | 2,124 | | | 2,389 |
Notes payable to affiliates-current | | | — | | | 100 |
Notes payable to affiliates-noncurrent | | | — | | | 280 |
Total debt | | $ | 2,124 | | $ | 2,769 |
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 have third-partythird-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.
Debt Issuance Costs
We record debt issuance costs related to a debt liability on the balance sheet as a reduction to the face amount of that debt liability. For September 30, 20202021 and December 31, 2019,2020, the amount of debt issuance costs directly reducing the debt liability was $9$10 million and $11$9 million, respectively. We record the amortization of debt issuance costs as interest expense.
Revolving Credit Facility
As of September 30, 2020,2021, our $1.2 billion senior unsecured revolving credit facility (“2018 Revolving Credit Facility”) was as follows (dollars(monetary amounts in millions):
| | | | | | | | | | | | | | | | |
| | | | | | Unamortized | | | | | | | ||||
| | | | | | Discounts and | | | | | | | ||||
| | Committed | | Principal | | Debt Issuance | | Carrying | | | | | ||||
Facility | | Amount |
| Outstanding |
| Costs |
| Value |
| Interest Rate(2) |
| Maturity | ||||
2018 Revolving Credit Facility | | $ | 1,200 | | $ | — | (1) | $ | — | (1) | $ | — | (1) | USD LIBOR plus 1.50% | | 2023 |
Unamortized | ||||||||||||||||||||||
Discounts and | ||||||||||||||||||||||
Committed | Principal | Debt Issuance | Carrying | |||||||||||||||||||
Facility | Amount | Outstanding | Costs | Value | Interest Rate(2) | Maturity | ||||||||||||||||
Revolving Credit Facility | $ | 1,200 | $ | 0 | (1) | $ | 0 | (1) | $ | 0 | (1) | USD LIBOR plus 1.50% | 2023 |
(1) | On September 30, |
(2) | Interest rates on borrowings under the |
Term Loan Credit Facility
On September 24, 2019, Huntsman International entered into a 364-day364-day term loan facility (the “2019“2019 Term Loan”), pursuant to which Huntsman International borrowed an aggregate principal amount of €92€92 million (or $101
27
million equivalent). We used the net proceeds from the 2019 Term Loan to finance our acquisition of the 50% noncontrolling interest that we did not own in the Sasol-Huntsman maleic anhydride joint venture. On September 22, 2020, we repaid the 2019 Term Loan in full at maturity.
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”)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.
In December 2019, On July 1, 2021, we entered into amendments to our EU A/R program (the “European Amendment”) andPrograms that, among other things, extended the respective scheduled termination dates of our U.S. A/R Program (the “U.S. Amendment”). The European Amendment allowed the removal of pledged obligors related Programs from April 2022 to the Chemical Intermediates Businesses sold to Indorama. The U.S. Amendment allowed the removal of pledged obligors related to the Chemical Intermediates Businesses sold to Indorama as well as reduced the maximum funding capacity from $250 million to $150 million upon completion of the sale on January 3, 2020.July 2024.
Information regarding our A/R Programs as of September 30, 20202021 was as follows (monetary amounts in millions):
| | | | | | | | | | |
|
| |
| Maximum Funding |
| Amount |
| | ||
Facility |
| Maturity |
| Availability(1) |
| Outstanding |
| Interest Rate(2) | ||
U.S. A/R Program |
| April 2022 | | $ | 150 | | $ | — | (3) | Applicable rate plus 0.90% |
EU A/R Program |
| April 2022 | | € | 100 | | € | 45 |
| Applicable rate plus 1.30% |
| | | | | (or approximately $117) | | | (or approximately $52) | | |
Maximum Funding | Amount | |||||||||||
Facility | Maturity | Availability(1) | Outstanding | Interest Rate(2) | ||||||||
U.S. A/R Program | July 2024 | $ | 150 | $ | 0 | (3) | Applicable rate plus 0.90% | |||||
EU A/R Program | July 2024 | € | 100 | € | 0 | Applicable rate plus 1.30% | ||||||
(or approximately $117) |
(1) | The amount of actual availability under our A/R Programs may be lower based on the level of eligible receivables sold, changes in the credit ratings of our customers, customer concentration levels and certain characteristics of the accounts receivable being transferred, as defined in the applicable agreements. |
(2) | The applicable rate for our U.S. A/R Program is defined by the lender as USD LIBOR. The applicable rate for our EU A/R Program is either |
(3) | As of September 30, |
As of September 30, 20202021 and December 31, 2019, $2072020, $336 million and $221$198 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.
Senior Notes
On March 13, 2019, January 15, 2021, Huntsman International redeemed in full €445 million (approximately $541 million) in aggregate principal amount of our 5.125% senior notes due 2021 (“2021 Senior Notes”) at the redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the redemption date. In connection with this redemption, we incurred an incremental cash tax liability of approximately $15 million in the first quarter of 2021 related to foreign currency exchange gains.
On May 26, 2021, Huntsman International completed a $750$400 million offering of its 4.50% senior notes due 2029 (“20292031 Senior Notes”).Notes. On March 27, 2019, June 23, 2021, Huntsman International applied the net proceeds offrom the offering, of the 2029 Senior Notesalong with cash on hand, to redeem in full $650$400 million in aggregate principal amount of its 4.875% senior notes due 2020 (“20202022 Senior Notes”)Notes and also paid associated costs andto pay accrued but unpaid interest of $21 million and $12 million, respectively.approximately $2 million. In addition, we paid redemption premiums and related fees and expenses of approximately $25 million and recognized a corresponding loss on early extinguishment of debt of $23$26 million in the firstsecond quarter of 2019.2021.
The 20292031 Senior Notes bear interest at 4.50%2.95% per year, payable semi-annuallysemi‑annually on May 1 June 15 and November 1,December 15 of each year, and will mature on May 1, 2029. June 15, 2031. Huntsman International may redeem the 20292031 Senior Notes in whole or in part at any time prior to February 1, 2029 March 15, 2031 at a price equal to 100% of the principal amount thereof plus a “make-whole”“make‑whole” premium as of, and accrued and unpaid interest.interest, if any, to, but not including, the date of redemption. Huntsman International may redeem the 20292031 Senior Notes at any time in whole or from time to time in part, on or after February 1, 2029 March 15, 2031 at a redemption price equal to 100% of the principal amount of the notes to be redeemed,thereof plus accrued and unpaid interest.
28
Tableinterest, if any, to, but not including, the date of Contentsredemption.
Variable Interest Entity Debt
On September 30, 2021, AAC, our consolidated 50%-owned joint venture, entered into a new term loan facility of 177 million SAR (approximately $47 million) with Saudi British Bank, of which approximately 104 million SAR (approximately $27 million) was funded with the remainder being funded subsequent to September 30, 2021. A portion of these funds were used to repay existing debt subsequent to September 30, 2021.
Note Payable from Huntsman International to Huntsman Corporation
During During the first quarter of 2020, our intercompany loan of $380 million to our subsidiary Huntsman International was repaid to us in full.
Compliance with Covenants
Compliance with Covenants
We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our 2018 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 prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations.
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, 2020,2021, we had approximately $139$178 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.
From time to time, we may purchase interest rate swaps and/or other derivative instruments to reduce the impact of changes in interest rates on our floating-rate 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. On January 9, 2019, we entered into a six-year $17 million notional value interest rate hedge with a fixed rate of 2.66%. This swap was designated as a cash flow hedge and the effective portion of the changes in the fair value of the swap was recorded in other comprehensive income. In November 2019, we terminated this swap and paid $1 million to our counterparties.
We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of September 30, 2020,2021, we have designated approximately €715€120 million (approximately $834$140 million) of euro-denominated debt as a hedge of our net investment. For the nine months ended September 30, 2021 and September 30, 2020 and September 30, 2019,, the amount recognized on the hedge of our net investment was a gain of $7 million and a loss of $31 million, and a gain of $23 million, respectively, and waswere recorded in other comprehensive income in our condensed consolidated statements of comprehensive income.
In connection with the December 3, 2018 sale of Venator ordinary shares to Bank of America N.A., we recorded a forward swap. In February 2019, we settled this forward swap and received $16 million from the counterparty.
10. FAIR VALUE
The fair values of financial instruments were as follows (dollars in millions):
| | | | | | | | | | | |
| September 30, 2020 | | December 31, 2019 | ||||||||
| Carrying | | Estimated | | Carrying | | Estimated | ||||
| Value |
| Fair Value |
| Value |
| Fair Value | ||||
Non-qualified employee benefit plan investments | $ | 24 | | $ | 24 | | $ | 28 | | $ | 28 |
Long-term debt (including current portion) | | (2,124) | | | (2,314) | | | (2,389) | | | (2,544) |
September 30, 2021 | December 31, 2020 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||
Non-qualified employee benefit plan investments | $ | 22 | $ | 22 | $ | 26 | $ | 26 | ||||||||
Investment in Venator | 28 | 28 | 32 | 32 | ||||||||||||
Option agreement for remaining Venator shares | (10 | ) | (10 | ) | 11 | 11 | ||||||||||
Long-term debt (including current portion) | (1,583 | ) | (1,755 | ) | (2,121 | ) | (2,334 | ) |
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. We elected the fair value option to account for our equity methodOur investment in Venator post
29
deconsolidation. Theis marked to fair value, of our remaining investment in Venator reported in investment in unconsolidated affiliateswhich is obtained through market observable pricing using prevailing market prices (Level 1)1). Additionally, the estimated fair value of the option agreement related to the remaining ordinary shares we hold in Venator is based on a valuation technique using market observable inputs (Level 2). See “Note 4. Discontinued Operations and Business Dispositions—Separation and DeconsolidationSale of Venator.Venator Interest.” The fair values of our non-qualified employee benefit plan investments are obtained through market observable pricing using prevailing market prices (Level 1)1). The estimated fair values of our long-term debt are based on quoted market prices for the identical liability when traded in an active market (Level 1)1).
The fair value estimates presented herein are based on pertinent information available to management as of September 30, 20202021 and December 31, 2019. 2020. Although management is 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, 2020,2021, and current estimates of fair value may differ significantly from the amounts presented herein.
During the nine months ended September 30, 2020,2021, there were 0 instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3)3), and there were 0 gains or losses (realized and unrealized) included in earnings for instruments categorized as Level 3 within the fair value hierarchy.
11. REVENUE RECOGNITIONRECOGNITION
We generate substantially all of our revenues through sales in the open market and long-term supply agreements. We recognize revenue when control of the promised goods is transferred to our customers. Control of goods usually passes to the customer at the time shipment is made. Revenue is measured as the amount that reflects the consideration that we expect to be entitled to in exchange for those goods. Sales, value add and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. We have elected to account for all shipping and handling activities as fulfillment costs. We have also elected to expense commissions when incurred as the amortization period of the commission asset that we would have otherwise recognized is less than one year.
The following tables disaggregate our revenue from continuing operations by major source for the three months ended September 30, 2020 2021 and 20192020 (dollars in millions):
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
2020 | Polyurethanes | | Performance Products | | Advanced Materials | | Textile Effects | | Corporate and Eliminations | | Total | ||||||||||||||||||||||||||||||
Performance | Advanced | Textile | Corporate and | ||||||||||||||||||||||||||||||||||||||
2021 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | |||||||||||||||||||||||||||||||||||
Primary Geographic Markets(1) | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
U.S. and Canada | $ | 350 | | $ | 104 | | $ | 52 | | $ | 12 | | $ | (5) | | $ | 513 | $ | 537 | $ | 183 | $ | 90 | $ | 14 | $ | (6 | ) | $ | 818 | |||||||||||
Europe | | 253 | | | 57 | | | 70 | | | 20 | | | — | | | 400 | 377 | 106 | 108 | 29 | (3 | ) | 617 | |||||||||||||||||
Asia Pacific | | 264 | | | 63 | | | 57 | | | 86 | | | — | | | 470 | 379 | 88 | 78 | 113 | (1 | ) | 657 | |||||||||||||||||
Rest of world | | 69 | | | 14 | | | 20 | | | 24 | | | — | | | 127 | 110 | 22 | 28 | 32 | 1 | 193 | ||||||||||||||||||
| $ | 936 | | $ | 238 | | $ | 199 | | $ | 142 | | $ | (5) | | $ | 1,510 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
$ | 1,403 | $ | 399 | $ | 304 | $ | 188 | $ | (9 | ) | $ | 2,285 | |||||||||||||||||||||||||||||
Major Product Groupings | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
MDI urethanes | $ | 936 | | | | | | | | | | | | | | $ | 936 | $ | 1,403 | $ | 1,403 | ||||||||||||||||||||
Differentiated | | | | $ | 238 | | | | | | | | | | | | 238 | $ | 399 | 399 | |||||||||||||||||||||
Specialty | | | | | | | $ | 178 | | | | | | | | | 178 | $ | 276 | 276 | |||||||||||||||||||||
Non-specialty | | | | | | | | 21 | | | | | | | | | 21 | 28 | 28 | ||||||||||||||||||||||
Textile chemicals, dyes and digital inks | | | | | | | | | | $ | 142 | | | | | | 142 | ||||||||||||||||||||||||
Textile chemicals and dyes | $ | 188 | 188 | ||||||||||||||||||||||||||||||||||||||
Eliminations | | | | | | | | | | | | | $ | (5) | | | (5) | $ | (9 | ) | (9 | ) | |||||||||||||||||||
| $ | 936 | | $ | 238 | | $ | 199 | | $ | 142 | | $ | (5) | | $ | 1,510 | ||||||||||||||||||||||||
$ | 1,403 | $ | 399 | $ | 304 | $ | 188 | $ | (9 | ) | $ | 2,285 |
Performance | Advanced | Textile | Corporate and | |||||||||||||||||||||
2020 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | ||||||||||||||||||
Primary Geographic Markets(1) | ||||||||||||||||||||||||
U.S. and Canada | $ | 350 | $ | 104 | $ | 52 | $ | 12 | $ | (5 | ) | $ | 513 | |||||||||||
Europe | 253 | 57 | 70 | 20 | 0 | 400 | ||||||||||||||||||
Asia Pacific | 264 | 63 | 57 | 86 | 0 | 470 | ||||||||||||||||||
Rest of world | 69 | 14 | 20 | 24 | 0 | 127 | ||||||||||||||||||
$ | 936 | $ | 238 | $ | 199 | $ | 142 | $ | (5 | ) | $ | 1,510 | ||||||||||||
Major Product Groupings | ||||||||||||||||||||||||
MDI urethanes | $ | 936 | $ | 936 | ||||||||||||||||||||
Differentiated | $ | 238 | 238 | |||||||||||||||||||||
Specialty | $ | 178 | 178 | |||||||||||||||||||||
Non-specialty | 21 | 21 | ||||||||||||||||||||||
Textile chemicals and dyes | $ | 142 | 142 | |||||||||||||||||||||
Eliminations | $ | (5 | ) | (5 | ) | |||||||||||||||||||
$ | 936 | $ | 238 | $ | 199 | $ | 142 | $ | (5 | ) | $ | 1,510 |
30
| | | | | | | | | | | | | | | | | |
2019 | Polyurethanes | | Performance Products | | Advanced Materials | | Textile Effects | | Corporate and Eliminations | | Total | ||||||
Primary Geographic Markets(1) | | | | | | | | | | | | | | | | | |
U.S. and Canada | $ | 362 | | $ | 132 | | $ | 74 | | $ | 15 | | $ | (19) | | $ | 564 |
Europe | | 272 | | | 74 | | | 93 | | | 29 | | | (2) | | | 466 |
Asia Pacific | | 287 | | | 60 | | | 69 | | | 104 | | | — | | | 520 |
Rest of world | | 72 | | | 15 | | | 20 | | | 31 | | | (1) | | | 137 |
| $ | 993 | | $ | 281 | | $ | 256 | | $ | 179 | | $ | (22) | | $ | 1,687 |
| | | | | | | | | | | | | | | | | |
Major Product Groupings | | | | | | | | | | | | | | | | | |
MDI urethanes | $ | 993 | | | | | | | | | | | | | | $ | 993 |
Differentiated | | | | $ | 281 | | | | | | | | | | | | 281 |
Specialty | | | | | | | $ | 222 | | | | | | | | | 222 |
Non-specialty | | | | | | | | 34 | | | | | | | | | 34 |
Textile chemicals, dyes and digital inks | | | | | | | | | | $ | 179 | | | | | | 179 |
Eliminations | | | | | | | | | | | | | $ | (22) | | | (22) |
| $ | 993 | | $ | 281 | | $ | 256 | | $ | 179 | | $ | (22) | | $ | 1,687 |
The following tables disaggregate our revenue from continuing operations by major source for the nine months ended September 30, 2020 2021 and 20192020 (dollars in millions):
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
2020 | Polyurethanes | | Performance Products | | Advanced Materials | | Textile Effects | | Corporate and Eliminations | | Total | ||||||||||||||||||||||||||||||
Performance | Advanced | Textile | Corporate and | ||||||||||||||||||||||||||||||||||||||
2021 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | |||||||||||||||||||||||||||||||||||
Primary Geographic Markets(1) | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
U.S. and Canada | $ | 1,015 | | $ | 333 | | $ | 167 | | $ | 36 | | $ | (16) | | $ | 1,535 | $ | 1,338 | $ | 460 | $ | 262 | $ | 39 | $ | (15 | ) | $ | 2,084 | |||||||||||
Europe | | 681 | | | 184 | | | 243 | | | 71 | | | (1) | | | 1,178 | 949 | 283 | 317 | 95 | (8 | ) | 1,636 | |||||||||||||||||
Asia Pacific | | 673 | | | 194 | | | 164 | | | 251 | | | — | | | 1,282 | 1,055 | 276 | 223 | 362 | (1 | ) | 1,915 | |||||||||||||||||
Rest of world | | 185 | | | 47 | | | 58 | | | 66 | | | (1) | | | 355 | 284 | 56 | 79 | 92 | 0 | 511 | ||||||||||||||||||
| $ | 2,554 | | $ | 758 | | $ | 632 | | $ | 424 | | $ | (18) | | $ | 4,350 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
$ | 3,626 | $ | 1,075 | $ | 881 | $ | 588 | $ | (24 | ) | $ | 6,146 | |||||||||||||||||||||||||||||
Major Product Groupings | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
MDI urethanes | $ | 2,554 | | | | | | | | | | | | | | $ | 2,554 | $ | 3,626 | $ | 3,626 | ||||||||||||||||||||
Differentiated | | | | $ | 758 | | | | | | | | | | | | 758 | $ | 1,075 | 1,075 | |||||||||||||||||||||
Specialty | | | | | | | $ | 561 | | | | | | | | | 561 | $ | 795 | 795 | |||||||||||||||||||||
Non-specialty | | | | | | | | 71 | | | | | | | | | 71 | 86 | 86 | ||||||||||||||||||||||
Textile chemicals, dyes and digital inks | | | | | | | | | | $ | 424 | | | | | | 424 | ||||||||||||||||||||||||
Textile chemicals and dyes | $ | 588 | 588 | ||||||||||||||||||||||||||||||||||||||
Eliminations | | | | | | | | | | | | | $ | (18) | | | (18) | $ | (24 | ) | (24 | ) | |||||||||||||||||||
| $ | 2,554 | | $ | 758 | | $ | 632 | | $ | 424 | | $ | (18) | | $ | 4,350 | ||||||||||||||||||||||||
$ | 3,626 | $ | 1,075 | $ | 881 | $ | 588 | $ | (24 | ) | $ | 6,146 |
| | | | | | | | | | | | | | | | | |
2019 | Polyurethanes | | Performance Products | | Advanced Materials | | Textile Effects | | Corporate and Eliminations | | Total | ||||||
Primary Geographic Markets(1) | | | | | | | | | | | | | | | | | |
U.S. and Canada | $ | 1,094 | | $ | 404 | | $ | 224 | | $ | 48 | | $ | (44) | | $ | 1,726 |
Europe | | 802 | | | 249 | | | 322 | | | 99 | | | (8) | | | 1,464 |
Asia Pacific | | 803 | | | 179 | | | 201 | | | 336 | | | (1) | | | 1,518 |
Rest of world | | 232 | | | 48 | | | 56 | | | 100 | | | (4) | | | 432 |
| $ | 2,931 | | $ | 880 | | $ | 803 | | $ | 583 | | $ | (57) | | $ | 5,140 |
| | | | | | | | | | | | | | | | | |
Major Product Groupings | | | | | | | | | | | | | | | | | |
MDI urethanes | $ | 2,931 | | | | | | | | | | | | | | $ | 2,931 |
Differentiated | | | | $ | 880 | | | | | | | | | | | | 880 |
Specialty | | | | | | | $ | 683 | | | | | | | | | 683 |
Non-specialty | | | | | | | | 120 | | | | | | | | | 120 |
Textile chemicals, dyes and digital inks | | | | | | | | | | $ | 583 | | | | | | 583 |
Eliminations | | | | | | | | | | | | | $ | (57) | | | (57) |
| $ | 2,931 | | $ | 880 | | $ | 803 | | $ | 583 | | $ | (57) | | $ | 5,140 |
Performance | Advanced | Textile | Corporate and | |||||||||||||||||||||
2020 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | ||||||||||||||||||
Primary Geographic Markets(1) | ||||||||||||||||||||||||
U.S. and Canada | $ | 1,015 | $ | 333 | $ | 167 | $ | 36 | $ | (16 | ) | $ | 1,535 | |||||||||||
Europe | 681 | 184 | 243 | 71 | (1 | ) | 1,178 | |||||||||||||||||
Asia Pacific | 673 | 194 | 164 | 251 | 0 | 1,282 | ||||||||||||||||||
Rest of world | 185 | 47 | 58 | 66 | (1 | ) | 355 | |||||||||||||||||
$ | 2,554 | $ | 758 | $ | 632 | $ | 424 | $ | (18 | ) | $ | 4,350 | ||||||||||||
Major Product Groupings | ||||||||||||||||||||||||
MDI urethanes | $ | 2,554 | $ | 2,554 | ||||||||||||||||||||
Differentiated | $ | 758 | 758 | |||||||||||||||||||||
Specialty | $ | 561 | 561 | |||||||||||||||||||||
Non-specialty | 71 | 71 | ||||||||||||||||||||||
Textile chemicals and dyes | $ | 424 | 424 | |||||||||||||||||||||
Eliminations | $ | (18 | ) | (18 | ) | |||||||||||||||||||
$ | 2,554 | $ | 758 | $ | 632 | $ | 424 | $ | (18 | ) | $ | 4,350 |
| Geographic information for revenues is based upon countries into which product is sold. |
|
Substantially all of our revenue is generated through product sales in which revenue is recognized at a point in time. At contract inception, we assess the goods and services, if any, promised in our contracts and identify a performance obligation for each promise to transfer to the customer a good or service that is distinct. In substantially all cases, a contract has a single performance obligation to deliver a promised good to the customer. Revenue is recognized
when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment. Further, in determining whether control has transferred, we consider if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer.
The amount of consideration we receive and revenue we recognize is based upon the terms stated in the sales contract, which may contain variable consideration such as discounts or rebates. We allocate the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the purchase order or in the sales contract is considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar customer in similar circumstances. In order to estimate the applicable variable consideration, we use historical and current trend information to estimate the amount of discounts or rebates to which customers are likely to be entitled. Historically, actual discount or rebate adjustments relative to those estimated and included when determining the transaction price have not materially differed. Payment terms vary but are generally less than one year. As our standard payment terms are less than one year, we have elected to not assess whether a contract has a significant financing component. In the normal course of business, we do not accept product returns unless the item is defective as manufactured. We establish provisions for estimated returns based on an analysis of historical experience.
12. EMPLOYEE BENEFIT PLANS
Components of the net periodic benefit costs from continuing operations for the three and nine months ended September 30, 2020 2021 and 20192020 were as follows (dollars in millions):
Huntsman Corporation
| | | | | | | | | | | | |
| | | | | | | | Other Postretirement | ||||
| | Defined Benefit Plans | | Benefit Plans | ||||||||
| | Three months | | Three months | ||||||||
| | ended | | ended | ||||||||
| | September 30, | | September 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
Service cost | | $ | 13 | | $ | 14 | | $ | — | | $ | — |
Interest cost | | | 15 | | | 19 | | | 1 | | | 1 |
Expected return on assets | | | (44) | | | (40) | | | — | | | — |
Amortization of prior service benefit | | | (2) | | | (1) | | | (2) | | | (1) |
Amortization of actuarial loss | | | 21 | | | 17 | | | 1 | | | — |
Net periodic benefit cost | | $ | 3 | | $ | 9 | | $ | — | | $ | — |
Other Postretirement | ||||||||||||||||
Defined Benefit Plans | Benefit Plans | |||||||||||||||
Three months | Three months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Service cost | $ | 13 | $ | 13 | $ | 1 | $ | 0 | ||||||||
Interest cost | 13 | 15 | 0 | 1 | ||||||||||||
Expected return on assets | (42 | ) | (44 | ) | 0 | 0 | ||||||||||
Amortization of prior service benefit | (2 | ) | (2 | ) | (1 | ) | (2 | ) | ||||||||
Amortization of actuarial loss | 23 | 21 | 0 | 1 | ||||||||||||
Net periodic benefit cost | $ | 5 | $ | 3 | $ | 0 | $ | 0 |
| | | | | | | | | | | | |
| | | | | | | | Other Postretirement | ||||
| | Defined Benefit Plans | | Benefit Plans | ||||||||
| | Nine months | | Nine months | ||||||||
| | ended | | ended | ||||||||
| | September 30, | | September 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
Service cost | | $ | 39 | | $ | 39 | | $ | 1 | | $ | 1 |
Interest cost | | | 46 | | | 59 | | | 2 | | | 2 |
Expected return on assets | | | (129) | | | (118) | | | — | | | — |
Amortization of prior service benefit | | | (5) | | | (4) | | | (4) | | | (4) |
Amortization of actuarial loss | | | 60 | | | 51 | | | 1 | | | 1 |
Net periodic benefit cost | | $ | 11 | | $ | 27 | | $ | — | | $ | — |
Other Postretirement | ||||||||||||||||
Defined Benefit Plans | Benefit Plans | |||||||||||||||
Nine months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Service cost | $ | 41 | $ | 39 | $ | 1 | $ | 1 | ||||||||
Interest cost | 37 | 46 | 1 | 2 | ||||||||||||
Expected return on assets | (126 | ) | (129 | ) | 0 | 0 | ||||||||||
Amortization of prior service benefit | (5 | ) | (5 | ) | (3 | ) | (4 | ) | ||||||||
Amortization of actuarial loss | 69 | 60 | 1 | 1 | ||||||||||||
Settlement loss | 3 | 0 | 0 | 0 | ||||||||||||
Net periodic benefit cost | $ | 19 | $ | 11 | $ | 0 | $ | 0 |
32
Huntsman International
| | | | | | | | | | | | |
| | | | | | | | Other Postretirement | ||||
| | Defined Benefit Plans | | Benefit Plans | ||||||||
| | Three months | | Three months | ||||||||
| | ended | | ended | ||||||||
| | September 30, | | September 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
Service cost | | $ | 13 | | $ | 14 | | $ | — | | $ | — |
Interest cost | | | 15 | | | 19 | | | 1 | | | 1 |
Expected return on assets | | | (44) | | | (40) | | | — | | | — |
Amortization of prior service benefit | | | (2) | | | (1) | | | (2) | | | (1) |
Amortization of actuarial loss | | | 21 | | | 17 | | | 1 | | | — |
Net periodic benefit cost | | $ | 3 | | $ | 9 | | $ | — | | $ | — |
Other Postretirement | ||||||||||||||||
Defined Benefit Plans | Benefit Plans | |||||||||||||||
Three months | Three months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Service cost | $ | 13 | $ | 13 | $ | 1 | $ | 0 | ||||||||
Interest cost | 13 | 15 | 0 | 1 | ||||||||||||
Expected return on assets | (42 | ) | (44 | ) | 0 | 0 | ||||||||||
Amortization of prior service benefit | (2 | ) | (2 | ) | (1 | ) | (2 | ) | ||||||||
Amortization of actuarial loss | 24 | 21 | 0 | 1 | ||||||||||||
Net periodic benefit cost | $ | 6 | $ | 3 | $ | 0 | $ | 0 |
| | | | | | | | | | | | |
| | | | | | | | Other Postretirement | ||||
| | Defined Benefit Plans | | Benefit Plans | ||||||||
| | Nine months | | Nine months | ||||||||
| | ended | | ended | ||||||||
| | September 30, | | September 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
Service cost | | $ | 39 | | $ | 39 | | $ | 1 | | $ | 1 |
Interest cost | | | 46 | | | 59 | | | 2 | | | 2 |
Expected return on assets | | | (129) | | | (118) | | | — | | | — |
Amortization of prior service benefit | | | (5) | | | (4) | | | (4) | | | (4) |
Amortization of actuarial loss | | | 62 | | | 53 | | | 1 | | | 1 |
Net periodic benefit cost | | $ | 13 | | $ | 29 | | $ | — | | $ | — |
Other Postretirement | ||||||||||||||||
Defined Benefit Plans | Benefit Plans | |||||||||||||||
Nine months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Service cost | $ | 41 | $ | 39 | $ | 1 | $ | 1 | ||||||||
Interest cost | 37 | 46 | 1 | 2 | ||||||||||||
Expected return on assets | (126 | ) | (129 | ) | 0 | 0 | ||||||||||
Amortization of prior service benefit | (5 | ) | (5 | ) | (3 | ) | (4 | ) | ||||||||
Amortization of actuarial loss | 71 | 62 | 1 | 1 | ||||||||||||
Settlement loss | 3 | 0 | 0 | 0 | ||||||||||||
Net periodic benefit cost | $ | 21 | $ | 13 | $ | 0 | $ | 0 |
During the nine months ended September 30, 2020 2021 and 2019,2020, we made contributions to our pension and other postretirement benefit plans of $73$45 million and $67$73 million, respectively. During the remainder of 2020,2021, we expect to contribute an additional amount of approximately $16$9 million to these plans.
13. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY
Share Repurchase Program
Share Repurchase Program
On February 7, 2018 and on May 3, 2018, our Board of Directors collectively authorized us to repurchase up to an additional $950 millionaggregate of $1 billion in shares of our common stock in addition to the $50 million remaining under our September 2015 share repurchase authorization.stock. The share repurchase program will beis supported by our free cash flow generation. Repurchases may be made through the open market, including through accelerated share repurchase programs, or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are held in treasury at cost. During the first quarter of 2020, we repurchased 5,364,519 shares of our common stock for approximately $96 million, excluding commissions, under the repurchase program. Subsequent to the end of the first quarter of 2020, we suspended share repurchases under our existing share repurchase program in order to enhance our liquidity position in response to COVID-19.COVID-19. During the third quarter of 2021, we resumed the share repurchase program and repurchased 3,971,784 shares of our common stock for approximately $102 million, excluding commissions.
Dividends on Common Stock
Dividends
On April 28, 2021, our Board of Directors declared a $0.1875 per share cash dividend on Common Stock
our common stock. This represents a 15% increase from the previous dividend. During the quarters ended September 30, 2021 and September 30, 2020, we paid $42 million and September$36 million, respectively, or $0.1875 and $0.1625 per share, respectively, to common stockholders. During the quarters ended June 30, 2019, 2021 and June 30, 2020, we paid $41 million and $36 million, respectively, or $0.1875 and $0.1625 per share, respectively, to common stockholders. During the quarters ended and March 31, 2021 and March 31, 2020, we paid $36 million and $38$37 million, respectively, or $0.1625 per share each to common stockholders. During the quarters ended June 30, 2020 and June 30, 2019, we paid $36 million and $38 million, respectively, or $0.1625 per share each, to common stockholders. During the quarters ended March 31, 2020 and March 31, 2019, we paid dividends of $37 million and $39 million, respectively, or $0.1625 per share each, to common stockholders.
33
14. ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of other comprehensive (loss) income and changes in accumulated other comprehensive loss by component were as follows (dollars in millions):
Huntsman Corporation
| | | | | | | | | | | | | | | | | | | | | |
|
| Foreign |
| Pension |
| Other |
| Other, net |
| Total |
| Amounts |
| Amounts attributable to Huntsman Corporation | |||||||
Beginning balance, January 1, 2020 | | $ | (369) | | $ | (1,031) | | $ | 8 | | $ | 4 | | $ | (1,388) | | $ | 26 | | $ | (1,362) |
Other comprehensive (loss) income before reclassifications, gross | | | (42) | | | 8 | | | — | | | — | | | (34) | | | (3) | | | (37) |
Tax expense | | | — | | | (2) | | | — | | | — | | | (2) | | | — | | | (2) |
Amounts reclassified from accumulated other comprehensive loss, gross(c) | | | — | | | 93 | | | — | | | — | | | 93 | | | — | | | 93 |
Tax expense | | | — | | | (21) | | | — | | | — | | | (21) | | | — | | | (21) |
Net current-period other comprehensive (loss) income | | | (42) | | | 78 | | | — | | | — | | | 36 | | | (3) | | | 33 |
Ending balance, September 30, 2020 | | $ | (411) | | $ | (953) | | $ | 8 | | $ | 4 | | $ | (1,352) | | $ | 23 | | $ | (1,329) |
Pension | Other | |||||||||||||||||||||||||||
Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | Corporation | ||||||||||||||||||||||
Beginning balance, January 1, 2021 | $ | (328 | ) | $ | (1,050 | ) | $ | 8 | $ | 4 | $ | (1,366 | ) | $ | 20 | $ | (1,346 | ) | ||||||||||
Other comprehensive loss before reclassifications, gross | (42 | ) | 0 | 0 | 0 | (42 | ) | (2 | ) | (44 | ) | |||||||||||||||||
Tax expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 65 | 0 | 0 | 65 | 0 | 65 | |||||||||||||||||||||
Tax expense | 0 | (13 | ) | 0 | 0 | (13 | ) | 0 | (13 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | (42 | ) | 52 | 0 | 0 | 10 | (2 | ) | 8 | |||||||||||||||||||
Ending balance, September 30, 2021 | $ | (370 | ) | $ | (998 | ) | $ | 8 | $ | 4 | $ | (1,356 | ) | $ | 18 | $ | (1,338 | ) |
| | | | | | | | | | | | | | | | | | | | | |
|
| Foreign |
| Pension |
| Other |
| Other, net |
| Total |
| Amounts |
| Amounts | |||||||
Beginning balance, January 1, 2019 | | $ | (371) | | $ | (994) | | $ | 8 | | $ | 5 | | $ | (1,352) | | $ | 36 | | $ | (1,316) |
Other comprehensive income before reclassifications, gross | | | (19) | | | — | | | — | | | (1) | | | (20) | | | 6 | | | (14) |
Tax expense | | | (1) | | | — | | | — | | | — | | | (1) | | | — | | | (1) |
Amounts reclassified from accumulated other comprehensive loss, gross(c) | | | — | | | 46 | | | — | | | — | | | 46 | | | — | | | 46 |
Tax expense | | | — | | | (10) | | | — | | | — | | | (10) | | | — | | | (10) |
Net current-period other comprehensive income | | | (20) | | | 36 | | | — | | | (1) | | | 15 | | | 6 | | | 21 |
Acquisition of noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | (15) | | | (15) |
Ending balance, September 30, 2019 | | $ | (391) | | $ | (958) | | $ | 8 | | $ | 4 | | $ | (1,337) | | $ | 27 | | $ | (1,310) |
(a) | Amounts are net of tax of |
(b) | Amounts are net of tax of $139 million and $153 million as of September 30, 2021 and January 1,2021, respectively. |
(c) | See table below for details about these reclassifications. |
Pension | Other | |||||||||||||||||||||||||||
Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | Corporation | ||||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | (369 | ) | $ | (1,031 | ) | $ | 8 | $ | 4 | $ | (1,388 | ) | $ | 26 | $ | (1,362 | ) | ||||||||||
Other comprehensive (loss) income before reclassifications, gross | (42 | ) | 8 | 0 | 0 | (34 | ) | (3 | ) | (37 | ) | |||||||||||||||||
Tax expense | 0 | (2 | ) | 0 | 0 | (2 | ) | 0 | (2 | ) | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 93 | 0 | 0 | 93 | 0 | 93 | |||||||||||||||||||||
Tax expense | 0 | (21 | ) | 0 | 0 | (21 | ) | 0 | (21 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | (42 | ) | 78 | 0 | 0 | 36 | (3 | ) | 33 | |||||||||||||||||||
Ending balance, September 30, 2020 | $ | (411 | ) | $ | (953 | ) | $ | 8 | $ | 4 | $ | (1,352 | ) | $ | 23 | $ | (1,329 | ) |
(a) | Amounts are net of tax of $68 million as of both September 30, 2020 and January 1, |
(b) | Amounts are net of tax of $125 million and |
(c) | See table below for details about these reclassifications. |
|
|
| | | | | | | | |
| | Three months ended September 30, | | | ||||
| | 2020 | | 2019 | | | ||
| | 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(a): | | comprehensive loss |
| comprehensive loss | | is presented | ||
Amortization of pension and other postretirement benefits: | | | | | | | | |
Prior service credit | | $ | (3) | | $ | (2) | | (b) |
Actuarial loss | | | 21 | | | 17 | | (b)(d) |
| | | 18 | | | 15 | | Total before tax |
| | | (4) | | | (4) | | Income tax expense |
Total reclassifications for the period | | $ | 14 | | $ | 11 | | Net of tax |
| | | | | | | | |
| | Nine months ended September 30, | | | ||||
| | 2020 | | 2019 | | | ||
| | 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(a): | | comprehensive loss |
| comprehensive loss |
| is presented | ||
Amortization of pension and other postretirement benefits: | | | | | | | | |
Prior service credit | | $ | (9) | | $ | (8) | | (b) |
Settlement loss | | | 41 | | | — | | (c) |
Actuarial loss | | | 61 | | | 54 | | (b)(d) |
| | | 93 | | | 46 | | Total before tax |
| | | (21) | | | (10) | | Income tax expense |
Total reclassifications for the period | | $ | 72 | | $ | 36 | | Net of tax |
Three Months Ended September 30, | ||||||||||
2021 | 2020 | |||||||||
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(a): | comprehensive loss | comprehensive loss | is presented | |||||||
Amortization of pension and other postretirement benefits: | �� | |||||||||
Prior service credit | $ | (3 | ) | $ | (3 | ) | (b) | |||
Actuarial loss | 23 | 21 | (b)(d) | |||||||
20 | 18 | Total before tax | ||||||||
(3 | ) | (4 | ) | Income tax expense | ||||||
Total reclassifications for the period | $ | 17 | $ | 14 | Net of tax |
Nine Months Ended September 30, | ||||||||||
2021 | 2020 | |||||||||
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(a): | comprehensive loss | comprehensive loss | is presented | |||||||
Amortization of pension and other postretirement benefits: | ||||||||||
Prior service credit | $ | (8 | ) | $ | (9 | ) | (b) | |||
Settlement loss | 3 | 41 | (c) | |||||||
Actuarial loss | 70 | 61 | (b)(d) | |||||||
65 | 93 | Total before tax | ||||||||
(13 | ) | (21 | ) | Income tax expense | ||||||
Total reclassifications for the period | $ | 52 | $ | 72 | Net of tax |
(a) | Pension and other postretirement benefits amounts in parentheses indicate credits on our condensed consolidated statements of operations. |
(b) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note 12. Employee Benefit Plans.” |
(c) | In connection with the sale of our Chemical Intermediates Businesses, we recognized $41 million of pension and other post-employment benefit settlement losses during the nine months ended September 30, 2020. |
(d) | Amounts |
Huntsman International
| | | | | | | | | | | | | | | | | | | | | |
|
| Foreign |
| Pension |
| Other |
| Other, net |
| Total |
| Amounts |
| Amounts | |||||||
Beginning balance, January 1, 2020 | | $ | (374) | | $ | (1,012) | | $ | 8 | | $ | — | | $ | (1,378) | | $ | 26 | | $ | (1,352) |
Other comprehensive (loss) income before reclassifications, gross | | | (42) | | | 8 | | | — | | | — | | | (34) | | | (3) | | | (37) |
Tax expense | | | — | | | (2) | | | — | | | — | | | (2) | | | — | | | (2) |
Amounts reclassified from accumulated other comprehensive loss, gross(c) | | | — | | | 95 | | | — | | | — | | | 95 | | | — | | | 95 |
Tax expense | | | — | | | (21) | | | — | | | — | | | (21) | | | — | | | (21) |
Net current-period other comprehensive (loss) income | | | (42) | | | 80 | | | — | | | — | | | 38 | | | (3) | | | 35 |
Ending balance, September 30, 2020 | | $ | (416) | | $ | (932) | | $ | 8 | | $ | — | | $ | (1,340) | | $ | 23 | | $ | (1,317) |
Pension | Other | |||||||||||||||||||||||||||
Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | International | ||||||||||||||||||||||
Beginning balance, January 1, 2021 | $ | (333 | ) | $ | (1,028 | ) | $ | 8 | $ | 0 | $ | (1,353 | ) | $ | 20 | $ | (1,333 | ) | ||||||||||
Other comprehensive loss before reclassifications, gross | (42 | ) | 0 | 0 | 0 | (42 | ) | (2 | ) | (44 | ) | |||||||||||||||||
Tax expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 67 | 0 | 0 | 67 | 0 | 67 | |||||||||||||||||||||
Tax expense | 0 | (14 | ) | 0 | 0 | (14 | ) | 0 | (14 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | (42 | ) | 53 | 0 | 0 | 11 | (2 | ) | 9 | |||||||||||||||||||
Ending balance, September 30, 2021 | $ | (375 | ) | $ | (975 | ) | $ | 8 | $ | 0 | $ | (1,342 | ) | $ | 18 | $ | (1,324 | ) |
| | | | | | | | | | | | | | | | | | | | | |
|
| Foreign |
| Pension |
| Other |
| Other, net |
| Total |
| Amounts |
| Amounts | |||||||
Beginning balance, January 1, 2019 | | $ | (376) | | $ | (977) | | $ | 8 | | $ | 1 | | $ | (1,344) | | $ | 36 | | $ | (1,308) |
Other comprehensive income before reclassifications, gross | | | (20) | | | — | | | — | | | (1) | | | (21) | | | 6 | | | (15) |
Tax expense | | | (1) | | | — | | | — | | | — | | | (1) | | | — | | | (1) |
Amounts reclassified from accumulated other comprehensive loss, gross(c) | | | — | | | 48 | | | — | | | — | | | 48 | | | — | | | 48 |
Tax expense | | | — | | | (10) | | | — | | | — | | | (10) | | | — | | | (10) |
Net current-period other comprehensive income | | | (21) | | | 38 | | | — | | | (1) | | | 16 | | | 6 | | | 22 |
Acquisition of noncontrolling interest | | | — | | | — | | | — | | | — | | | — | | | (15) | | | (15) |
Ending balance, September 30, 2019 | | $ | (397) | | $ | (939) | | $ | 8 | | $ | — | | $ | (1,328) | | $ | 27 | | $ | (1,301) |
(a) | Amounts are net of tax of |
(b) | Amounts are net of tax of |
(c) | See table below for details about these reclassifications. |
|
|
| | | | | | | | |
| | Three months ended September 30, | | | ||||
| | 2020 | | 2019 | | | ||
| | 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(a): | | comprehensive loss |
| comprehensive loss | | is presented | ||
Amortization of pension and other postretirement benefits: | | | | | | | | |
Prior service credit | | $ | (3) | | $ | (2) | | (b) |
Actuarial loss | | | 22 | | | 17 | | (b)(d) |
| | | 19 | | | 15 | | Total before tax |
| | | (4) | | | (3) | | Income tax expense |
Total reclassifications for the period | | $ | 15 | | $ | 12 | | Net of tax |
| | | | | | | | |
| | Nine months ended September 30, | | | ||||
| | 2020 | | 2019 | | | ||
| | 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(a): | | comprehensive loss |
| comprehensive loss |
| is presented | ||
Amortization of pension and other postretirement benefits: | | | | | | | | |
Prior service credit | | $ | (9) | | $ | (8) | | (b) |
Settlement loss | | | 41 | | | — | | (c) |
Actuarial loss | | | 63 | | | 56 | | (b)(d) |
| | | 95 | | | 48 | | Total before tax |
| | | (21) | | | (10) | | Income tax expense |
Total reclassifications for the period | | $ | 74 | | $ | 38 | | Net of tax |
Pension | Other | |||||||||||||||||||||||||||
Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | International | ||||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | (374 | ) | $ | (1,012 | ) | $ | 8 | $ | 0 | $ | (1,378 | ) | $ | 26 | $ | (1,352 | ) | ||||||||||
Other comprehensive (loss) income before reclassifications, gross | (42 | ) | 8 | 0 | 0 | (34 | ) | (3 | ) | (37 | ) | |||||||||||||||||
Tax expense | 0 | (2 | ) | 0 | 0 | (2 | ) | 0 | (2 | ) | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, gross(c) | 0 | 95 | 0 | 0 | 95 | 0 | 95 | |||||||||||||||||||||
Tax expense | 0 | (21 | ) | 0 | 0 | (21 | ) | 0 | (21 | ) | ||||||||||||||||||
Net current-period other comprehensive (loss) income | (42 | ) | 80 | 0 | 0 | 38 | (3 | ) | 35 | |||||||||||||||||||
Ending balance, September 30, 2020 | $ | (416 | ) | $ | (932 | ) | $ | 8 | $ | 0 | $ | (1,340 | ) | $ | 23 | $ | (1,317 | ) |
(a) | Amounts are net of tax of $55 million as of both September 30, 2020 and January 1,2020. |
(b) | Amounts are net of tax of $150 million and $174 million as of September 30, 2020 and January 1,2020, respectively. |
(c) | See table below for details about these reclassifications. |
Three Months Ended September 30, | ||||||||||
2021 | 2020 | |||||||||
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(a): | comprehensive loss | comprehensive loss | is presented | |||||||
Amortization of pension and other postretirement benefits: | ||||||||||
Prior service credit | $ | (3 | ) | $ | (3 | ) | (b) | |||
Actuarial loss | 24 | 22 | (b)(d) | |||||||
21 | 19 | Total before tax | ||||||||
(4 | ) | (4 | ) | Income tax expense | ||||||
Total reclassifications for the period | $ | 17 | $ | 15 | Net of tax |
Nine Months Ended September 30, | ||||||||||
2021 | 2020 | |||||||||
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(a): | comprehensive loss | comprehensive loss | is presented | |||||||
Amortization of pension and other postretirement benefits: | ||||||||||
Prior service credit | $ | (8 | ) | $ | (9 | ) | (b) | |||
Settlement loss | 3 | 41 | (c) | |||||||
Actuarial loss | 72 | 63 | (b)(d) | |||||||
67 | 95 | Total before tax | ||||||||
(14 | ) | (21 | ) | Income tax expense | ||||||
Total reclassifications for the period | $ | 53 | $ | 74 | Net of tax |
(a) | Pension and other postretirement benefits amounts in parentheses indicate credits on our condensed consolidated statements of operations. |
(b) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note 12. Employee Benefit Plans.” |
(c) | In connection with the sale of our Chemical Intermediates Businesses, we recognized $41 million of pension and other post-employment benefit settlement losses during the nine months ended September 30, 2020. |
(d) | Amounts |
15. COMMITMENTS AND CONTINGENCIES
Legal Matters
Legal Matters
We are a party to various proceedings instituted by private plaintiffs, governmental authorities and others arising under provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in this report, we do not believe that the outcome of any of these matters will have a material effect on our financial condition, results of operations or liquidity.
16. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
EHS Capital ExpendituresCapital 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 each of the nine months ended September 30, 2020 2021 and 2019,2020, our capital expenditures for EHS matters totaled $25 million and $17 million.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.
36
Environmental Reserves
Environmental Reserves
We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued $5 million and $4 million for environmental liabilities for both as of September 30, 20202021 and December 31, 2019.2020, respectively. Of these amounts, $2 million and $1 million waswere classified as accrued liabilities in our condensed consolidated balance sheets as of both September 30, 20202021 and December 31, 2019,2020, respectively, and $3 million was classified as other noncurrent liabilities in our condensed consolidated balance sheets as of both September 30, 20202021 and December 31, 2019.2020. In certain cases, our remediation liabilities may be payable over periods of up to 30 years. We may incur losses for environmental remediation in excess of the amounts accrued; however, we are not able to estimate the amount or range of such potential excess.
Environmental Matters
Environmental 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 9nine 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 as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste disposal. We are aware of soil, groundwater or surface contamination from past operations at some of our sites, and we may find contamination at other sites in the future. For example, our Geismar, Louisiana facility 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.
North Maybe Canyon Mine Remediation
The North Maybe Canyon Mine site is a CERCLA site and involves a former phosphorous mine near Soda Springs, Idaho, which is believed to have been operated by several companies, including a predecessor company to us. In 2004, the U.S. Forest Service notified us that we are a CERCLA potentially responsible party (“PRP”) for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a portion of the site and are currently engaged in that process. During the first nine months of 2020, there have been no significant developments, and, atAt this time, we are unable to reasonably estimate our potential liabilities at this site.
17. STOCK-BASED COMPENSATION PLANS
As of September 30, 2020,2021, we had approximately 7 million shares remaining under the stock-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.
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The compensation cost from continuing operations under the stock-based compensation plans for our Company and Huntsman International were as follows (dollars in millions):
| | | | | | | | | | | | |
| | Three months | | Nine months | ||||||||
| | ended | | ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2020 | | 2019 | | 2020 | | 2019 | ||||
Huntsman Corporation compensation cost | | $ | 6 | | $ | 7 | | $ | 20 | | $ | 22 |
Huntsman International compensation cost | | | 6 | | | 7 | | | 19 | | | 21 |
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Huntsman Corporation compensation cost | $ | 8 | $ | 6 | $ | 24 | $ | 20 | ||||||||
Huntsman International compensation cost | 8 | 6 | 23 | 19 |
The total income tax benefit recognized in the condensed consolidated statements of operations for us and Huntsman International for stock-based compensation arrangements was $3$2 million and $7$3 million for the nine months ended September 30, 20202021 and 20192020, respectively.
Stock Options
Stock Options
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions noted below represent the weighted average of the assumptions utilized for stock options granted during the periods.
| | | | | | | | | | |
| Three months | | Nine months | |||||||
| ended | | ended | |||||||
| September 30, | | September 30, | |||||||
| 2020 | | 2019 | | 2020 | | 2019 | |||
Dividend yield | 3.1 | % | | NA | | 3.0 | % | | 2.9 | % |
Expected volatility | 53.7 | % | | NA | | 53.1 | % | | 54.0 | % |
Risk-free interest rate | 0.4 | % | | NA | | 1.4 | % | | 2.5 | % |
Expected life of stock options granted during the period | 5.9 | years | | NA | | 5.9 | years | | 5.9 | years |
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021(1) | 2020 | 2021 | 2020 | |||||||||||||
Dividend yield | NA | 3.1 | % | 2.3 | % | 3.0 | % | |||||||||
Expected volatility | NA | 53.7 | % | 53.3 | % | 53.1 | % | |||||||||
Risk-free interest rate | NA | 0.4 | % | 0.7 | % | 1.4 | % | |||||||||
Expected life of stock options granted during the period (in years) | NA | 5.9 | 5.9 | 5.9 |
(1) | During the three months ended September 30, 2021, 0 stock options were granted. |
During the three months ended September 30, 2019, 0 stock options were granted.
A summary of stock option activity under the stock-based compensation plans as of September 30, 20202021 and changes during the nine 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, 2020 |
| | 5,025 | | $ | 19.08 | | | | | | |
Granted | | | 788 | | | 21.52 | | | | | | |
Exercised | | | (484) | | | 13.05 | | | | | | |
Forfeited | | | (168) | | | 24.19 | | | | | | |
Outstanding at September 30, 2020 | | | 5,161 | | | 19.85 | | | 6.1 | | $ | 17 |
Exercisable at September 30, 2020 | | | 3,713 | | | 18.61 | | | 5.0 | | | 17 |
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Option Awards | Shares | Price | Term | Value | ||||||||||||
(in thousands) | (years) | (in millions) | ||||||||||||||
Outstanding at January 1, 2021 | 4,815 | $ | 20.37 | |||||||||||||
Granted | 304 | 28.58 | ||||||||||||||
Exercised | (697 | ) | 17.44 | |||||||||||||
Forfeited | (71 | ) | 24.29 | |||||||||||||
Outstanding at September 30, 2021 | 4,351 | 21.35 | 5.8 | $ | 37 | |||||||||||
Exercisable at September 30, 2021 | 3,309 | 20.59 | 5.0 | 31 |
The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 20202021 was $8.25$11.48 per option. As of September 30, 2020,2021, there was $9$6 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of approximately 1.91.7 years.
The total intrinsic value of stock options exercised during the nine months ended September 30, 2020 2021 and 20192020 was approximately $4$8 million and $2$4 million, respectively. Cash received from stock options exercised during each of the nine months ended September 30, 2020 2021 and 20192020 was approximately $2$6 million and $1$2 million, respectively. The
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cash tax benefit from stock options exercised during each of the nine months ended September 30, 2020 2021 and 20192020 was approximately $2 million and $1 million, and NaN, respectively.
Nonvested Shares
Nonvested Shares
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Nonvested shares granted under the stock-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 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 nine months ended September 30, 2020 2021 and 2019,2020, the weighted-average expected volatility rate was 34.0%44.9% and 34.6%34.0%, respectively, and the weighted average risk-free interest rate was 1.4%0.2% and 2.5%1.4%, respectively. For the performance share unit awards granted in the nine months ended September 30, 2020 2021 and 2019,2020, 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-yearthree-year performance periods.
A summary of the status of our nonvested shares as of September 30, 20202021 and changes during the nine months then ended is presented below:
| | | | | | | | | | | | |
| | Equity Awards | | Liability Awards | ||||||||
| | | | | Weighted | | | | | Weighted | ||
| | | | | Average | | | | | Average | ||
| | | | | Grant-Date | | | | | Grant-Date | ||
|
| Shares |
| Fair Value |
| Shares |
| Fair Value | ||||
| | (in thousands) | | | | | (in thousands) | | | | ||
Nonvested at January 1, 2020 | | | 1,640 | | $ | 24.61 | | | 427 | | $ | 24.80 |
Granted | | | 848 | | | 21.92 | | | 238 | | | 21.53 |
Vested | | | (571) | (1)(2) | | 25.19 | | | (218) | | | 24.64 |
Forfeited | | | (41) | | | 26.65 | | | (36) | | | 23.66 |
Nonvested at September 30, 2020 | | | 1,876 | | | 23.17 | | | 411 | | | 23.09 |
Equity Awards | Liability Awards | ||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Grant-Date | Grant-Date | ||||||||||||||||
Shares | Fair Value | Shares | Fair Value | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||
Nonvested at January 1, 2021 | 1,867 | $ | 23.18 | 411 | $ | 23.08 | |||||||||||
Granted | 856 | 31.06 | 184 | 28.58 | |||||||||||||
Vested | (521 | ) | (1)(2) | 28.19 | (189 | ) | 24.55 | ||||||||||
Forfeited | (17 | ) | 23.96 | (20 | ) | 24.18 | |||||||||||
Nonvested at September 30, 2021 | 2,185 | 25.07 | 386 | 24.92 |
(1) | As of September 30, |
(2) | A total of |
As of September 30, 2020,2021, there was $27$36 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of approximately 1.92.0 years. The value of share awards that vested during each of the nine months ended September 30, 2020 2021 and 20192020 was $18 million and $24 million.million, respectively.
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
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future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions.
During the nine months ended September 30, 2020 2021 and 2019,2020, there was no0 tax benefit or expense recognized in connection with the lossnet losses of $100$28 million and loss of $90$100 million, respectively, on fair value adjustments to our Venator investment and related option to sell our remaining Venator shares recorded as part of non-operating income from continuing operations. As of December 31, 2019, we have recognized the portion of our Venator investment tax basis in excess of book that we ultimately expect to be able to utilize; therefore, no incremental tax benefit has been recognized on the year-to-date fair value loss.losses incurred in 2020 or 2021. As a significant, unusual and non-operating item, this amount wasthese amounts were treated discretely and excluded from the annual effective tax rate calculation for interim reporting.
Effective January 1, 2019, Switzerland reduced certain cantonal income tax rates resulting in a decrease in our net deferred tax assets and a corresponding noncash income tax expense of $32 million for the nine months ended September 30, 2019.
Huntsman Corporation
We recorded income tax expense from continuing operations of $9$114 million and $113$9 million for the nine months ended September 30, 2020 2021 and 2019,2020, respectively. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. The decrease in pretax income, as well as the one-time tax expense in 2019 due to the reduction in our Switzerland net deferred tax assets related to the 2019 tax rate change, resulted in lower income tax expense during the first nine months of 2020 as compared to the same period of 2019.
Huntsman International
Huntsman International recorded income tax expense from continuing operations of $9$115 million and $110$9 million for the nine months ended September 30, 2020 2021 and 2019,2020, respectively. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. The decrease in pretax income, as well as the one-time tax expense in 2019 due to the reduction in our Switzerland net deferred tax assets related to the 2019 tax rate change, resulted in lower income tax expense during the first nine months of 2020 as compared to the same period of 2019.
19. EARNINGS PER SHARE
Basic earnings 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 earnings 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 dilutive securities.
Basic and diluted earnings per share is determined using the following information (in millions):
| | | | | | | | | | | | | ||||||||||||||||
| | Three months | | Nine months | ||||||||||||||||||||||||
| | ended | | ended | ||||||||||||||||||||||||
| | September 30, | | September 30, | ||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||||||||||||||
Three months | Nine months | |||||||||||||||||||||||||||
ended | ended | |||||||||||||||||||||||||||
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2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Numerator: | | | | | | | | | | | | | ||||||||||||||||
Basic and diluted income (loss) from continuing operations: | ||||||||||||||||||||||||||||
Income (loss) from continuing operations attributable to Huntsman Corporation | | $ | 48 | | $ | (38) | | $ | (91) | | $ | 133 | $ | 214 | $ | 48 | $ | 451 | $ | (91 | ) | |||||||
Basic and diluted net income: | ||||||||||||||||||||||||||||
Net income attributable to Huntsman Corporation |
| | 48 | | | 30 | | | 691 | | | 259 | $ | 209 | $ | 48 | $ | 448 | $ | 691 | ||||||||
Denominator: | | | | | | | | | | | | | ||||||||||||||||
Weighted average shares outstanding | | | 219.8 | | | 227.4 | | | 220.8 | | | 230.3 | 219.4 | 219.8 | 220.2 | 220.8 | ||||||||||||
Dilutive shares: | | | | | | | | | | | | | ||||||||||||||||
Stock-based awards | | | 1.5 | | | — | | | — | | | 1.7 | 1.9 | 1.5 | 2.0 | 0 | ||||||||||||
Total weighted average shares outstanding, including dilutive shares | | | 221.3 | | | 227.4 | | | 220.8 | | | 232.0 | 221.3 | 221.3 | 222.2 | 220.8 |
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Additional stock-based awards of 3.8approximately 1.0 million and 5.23.8 million weighted average equivalent shares of stock were outstanding during the three months ended September 30, 2020 2021 and 2019,2020, respectively, and approximately 1.5 million and 6.1 million and 3.6 million weighted average equivalent shares of stock were outstanding during the nine months ended September 30, 2020 2021 and 2019,2020, respectively. However, these stock-based awards were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 20202021 and 20192020 because the effect would be anti-dilutive.
20. OPERATING SEGMENT INFORMATION
We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. We have 4 operating segments, which are also our reportable segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. We have organized our business and derived our operating segments around differences in product lines. Beginning in the third quarter of 2019, we reported the results of our Chemical Intermediates Businesses as discontinued operations in our condensed consolidated financial statements for all periods presented. See “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses.”
The major products of each reportable operating segment are as follows:
|
|
|
Segment |
| Products |
Polyurethanes | | MDI, polyols, TPU and other polyurethane-related products |
Performance Products | | Specialty amines, ethyleneamines, maleic anhydride and technology licenses |
Advanced Materials | | Basic liquid and solid epoxy resins; specialty resin compounds; cross-linking, matting, and curing and toughening agents; epoxy, acrylic and polyurethane-based |
Textile Effects | | Textile chemicals |
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Sales between segments are generally recognized at external market prices and are eliminated in consolidation. Adjusted EBITDA is presented as a measure of the financial performance of our global business units and for reporting the results of our operating segments. The adjusted EBITDA of our reportable operating segments excludes items that principally apply to our Company as a whole. The revenues and adjusted EBITDA from continuing operations for each of our reportable operating segments are as follows (dollars in millions):
| | | | | | | | | | | | ||||||||||||||||
| Three months | | Nine months | ||||||||||||||||||||||||
| ended | | ended | ||||||||||||||||||||||||
| September 30, | | September 30, | ||||||||||||||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||||||||||||||
Three months | Nine months | ||||||||||||||||||||||||||
ended | ended | ||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
Revenues: | | | | | | | |
| | |
| ||||||||||||||||
Polyurethanes | $ | 936 | | $ | 993 | | $ | 2,554 | | $ | 2,931 | $ | 1,403 | $ | 936 | $ | 3,626 | $ | 2,554 | ||||||||
Performance Products | | 238 | | | 281 | | | 758 | | | 880 | 399 | 238 | 1,075 | 758 | ||||||||||||
Advanced Materials | | 199 | | | 256 | | | 632 | | | 803 | 304 | 199 | 881 | 632 | ||||||||||||
Textile Effects | | 142 | | | 179 | | | 424 | | | 583 | 188 | 142 | 588 | 424 | ||||||||||||
Corporate and eliminations | | (5) | | | (22) | | | (18) | | | (57) | (9 | ) | (5 | ) | (24 | ) | (18 | ) | ||||||||
Total | $ | 1,510 | | $ | 1,687 | | $ | 4,350 | | $ | 5,140 | $ | 2,285 | $ | 1,510 | $ | 6,146 | $ | 4,350 | ||||||||
| | | | | | | | | | | | ||||||||||||||||
Huntsman Corporation: | | | | | | | | | | | | ||||||||||||||||
Segment adjusted EBITDA(1): | | | | | | | | | | | | ||||||||||||||||
Polyurethanes | $ | 156 | | $ | 146 | | $ | 271 | | $ | 426 | $ | 246 | $ | 156 | $ | 661 | $ | 271 | ||||||||
Performance Products | | 36 | | | 38 | | | 123 | | | 125 | 103 | 36 | 254 | 123 | ||||||||||||
Advanced Materials | | 25 | | | 51 | | | 103 | | | 159 | 48 | 25 | 150 | 103 | ||||||||||||
Textile Effects | | 8 | | | 16 | | | 24 | | | 66 | 22 | 8 | 75 | 24 | ||||||||||||
Corporate and other(2) | | (37) | | | (36) | | | (114) | | | (112) | (48 | ) | (37 | ) | (146 | ) | (114 | ) | ||||||||
Total | | 188 | | | 215 | | | 407 | | | 664 | 371 | 188 | 994 | 407 | ||||||||||||
Reconciliation of adjusted EBITDA to net income: | | | | | | | | | | | | ||||||||||||||||
Reconciliation of adjusted EBITDA to net income (loss): | |||||||||||||||||||||||||||
Interest expense, net—continuing operations | | (24) | | | (27) | | | (63) | | | (86) | (15 | ) | (24 | ) | (52 | ) | (63 | ) | ||||||||
Income tax expense—continuing operations | | (15) | | | (30) | | | (9) | | | (113) | (38 | ) | (15 | ) | (114 | ) | (9 | ) | ||||||||
Income tax expense—discontinued operations | | — | | | (25) | | | (239) | | | (44) | (5 | ) | 0 | (5 | ) | (239 | ) | |||||||||
Depreciation and amortization—continuing operations | | (70) | | | (65) | | | (206) | | | (201) | (72 | ) | (70 | ) | (219 | ) | (206 | ) | ||||||||
Depreciation and amortization—discontinued operations | | — | | | (13) | | | — | | | (59) | ||||||||||||||||
Net income attributable to noncontrolling interests | | 9 | | | 11 | | | 15 | | | 31 | 16 | 9 | 49 | 15 | ||||||||||||
Other adjustments: | | | | | | | | | | | | ||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | | (9) | | | (3) | | | (30) | | | (4) | (5 | ) | (9 | ) | (19 | ) | (30 | ) | ||||||||
EBITDA from discontinued operations(3) | | — | | | 106 | | | 1,021 | | | 229 | 0 | 0 | 2 | 1,021 | ||||||||||||
Fair value adjustments to Venator investment | | 6 | | | (148) | | | (100) | | | (90) | (3 | ) | 6 | (28 | ) | (100 | ) | |||||||||
Loss on early extinguishment of debt | | — | | | — | | | — | | | (23) | 0 | 0 | (27 | ) | 0 | |||||||||||
Certain legal and other settlements and related income (expenses) | | 4 | | | (1) | | | (2) | | | (1) | 0 | 4 | (10 | ) | (2 | ) | ||||||||||
Gain on sale of businesses/assets | | — | | | — | | | 1 | | | — | 0 | 0 | 30 | 1 | ||||||||||||
Income from transition services arrangements | | 1 | | | — | | | 6 | | | — | 2 | 1 | 6 | 6 | ||||||||||||
Certain nonrecurring information technology project implementation costs | | (1) | | | (1) | | | (3) | | | (1) | (2 | ) | (1 | ) | (6 | ) | (3 | ) | ||||||||
Amortization of pension and postretirement actuarial losses | | (20) | | | (16) | | | (57) | | | (49) | (22 | ) | (20 | ) | (65 | ) | (57 | ) | ||||||||
Plant incident remediation costs | | — | | | (5) | | | (1) | | | (5) | (2 | ) | 0 | (3 | ) | (1 | ) | |||||||||
Restructuring, impairment and plant closing and transition (costs) credits | | (12) | | | 43 | | | (34) | | | 42 | ||||||||||||||||
Restructuring, impairment and plant closing and transition costs | 0 | (12 | ) | (36 | ) | (34 | ) | ||||||||||||||||||||
Net income | $ | 57 | | $ | 41 | | $ | 706 | | $ | 290 | $ | 225 | $ | 57 | $ | 497 | $ | 706 |
| | | | | | | | | | | |
| Three months | | Nine months | ||||||||
| ended | | ended | ||||||||
| September 30, | | September 30, | ||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
Huntsman International: | | | | | | | |
| | |
|
Segment adjusted EBITDA(1): | | | | | | | | | | | |
Polyurethanes | $ | 156 | | $ | 146 | | $ | 271 | | $ | 426 |
Performance Products | | 36 | | | 38 | | | 123 | | | 125 |
Advanced Materials | | 25 | | | 51 | | | 103 | | | 159 |
Textile Effects | | 8 | | | 16 | | | 24 | | | 66 |
Corporate and other(2) | | (36) | | | (35) | | | (110) | | | (108) |
Total | | 189 | | | 216 | | | 411 | | | 668 |
Reconciliation of adjusted EBITDA to net income: | | | | | | | | | | | |
Interest expense, net—continuing operations | | (24) | | | (31) | | | (65) | | | (99) |
Income tax expense—continuing operations | | (15) | | | (29) | | | (9) | | | (110) |
Income tax expense—discontinued operations | | — | | | (25) | | | (239) | | | (44) |
Depreciation and amortization—continuing operations | | (70) | | | (65) | | | (206) | | | (201) |
Depreciation and amortization—discontinued operations | | — | | | (13) | | | — | | | (59) |
Net income attributable to noncontrolling interests | | 9 | | | 11 | | | 15 | | | 31 |
Other adjustments: | | | | | | | | | | | |
Business acquisition and integration expenses and purchase accounting inventory adjustments | | (9) | | | (3) | | | (30) | | | (4) |
EBITDA from discontinued operations(3) | | — | | | 106 | | | 1,021 | | | 229 |
Fair value adjustments to Venator investment | | 6 | | | (148) | | | (100) | | | (90) |
Loss on early extinguishment of debt | | — | | | — | | | — | | | (23) |
Certain legal and other settlements and related income (expenses) | | 4 | | | (1) | | | (2) | | | (1) |
Gain on sale of businesses/assets | | — | | | — | | | 1 | | | — |
Income from transition services arrangements | | 1 | | | — | | | 6 | | | — |
Certain nonrecurring information technology project implementation costs | | (1) | | | (1) | | | (3) | | | (1) |
Amortization of pension and postretirement actuarial losses | | (20) | | | (17) | | | (59) | | | (52) |
Plant incident remediation costs | | — | | | (5) | | | (1) | | | (5) |
Restructuring, impairment and plant closing and transition (costs) credits | | (12) | | | 43 | | | (34) | | | 42 |
Net income | $ | 58 | | $ | 38 | | $ | 706 | | $ | 281 |
Three months | Nine months | |||||||||||||||
ended | ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Huntsman International: | ||||||||||||||||
Segment adjusted EBITDA(1): | ||||||||||||||||
Polyurethanes | $ | 246 | $ | 156 | $ | 661 | $ | 271 | ||||||||
Performance Products | 103 | 36 | 254 | 123 | ||||||||||||
Advanced Materials | 48 | 25 | 150 | 103 | ||||||||||||
Textile Effects | 22 | 8 | 75 | 24 | ||||||||||||
Corporate and other(2) | (47 | ) | (36 | ) | (140 | ) | (110 | ) | ||||||||
Total | 372 | 189 | 1,000 | 411 | ||||||||||||
Reconciliation of adjusted EBITDA to net income (loss): | ||||||||||||||||
Interest expense, net—continuing operations | (15 | ) | (24 | ) | (52 | ) | (65 | ) | ||||||||
Income tax expense—continuing operations | (39 | ) | (15 | ) | (115 | ) | (9 | ) | ||||||||
Income tax expense—discontinued operations | (5 | ) | 0 | (5 | ) | (239 | ) | |||||||||
Depreciation and amortization—continuing operations | (72 | ) | (70 | ) | (219 | ) | (206 | ) | ||||||||
Net income attributable to noncontrolling interests | 16 | 9 | 49 | 15 | ||||||||||||
Other adjustments: | ||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | (5 | ) | (9 | ) | (19 | ) | (30 | ) | ||||||||
EBITDA from discontinued operations(3) | 0 | 0 | 2 | 1,021 | ||||||||||||
Fair value adjustments to Venator investment | (3 | ) | 6 | (28 | ) | (100 | ) | |||||||||
Loss on early extinguishment of debt | 0 | 0 | (27 | ) | 0 | |||||||||||
Certain legal and other settlements and related income (expenses) | 0 | 4 | (10 | ) | (2 | ) | ||||||||||
Gain on sale of businesses/assets | 0 | 0 | 30 | 1 | ||||||||||||
Income from transition services arrangements | 2 | 1 | 6 | 6 | ||||||||||||
Certain nonrecurring information technology project implementation costs | (2 | ) | (1 | ) | (6 | ) | (3 | ) | ||||||||
Amortization of pension and postretirement actuarial losses | (22 | ) | (20 | ) | (67 | ) | (59 | ) | ||||||||
Plant incident remediation costs | (2 | ) | 0 | (3 | ) | (1 | ) | |||||||||
Restructuring, impairment and plant closing and transition costs | 0 | (12 | ) | (36 | ) | (34 | ) | |||||||||
Net income | $ | 225 | $ | 58 | $ | 500 | $ | 706 |
(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 |
(2) | Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. |
Includes the gain on the sale of our Chemical Intermediates Businesses in 2020. |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Overview
We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, digital inks, electronics, insulation, 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, maleic anhydride, epoxy-based polymer formulations, textile chemicals and dyes. Our revenues from continuing operations for the nine months ended September 30, 2021 and 2020 were $6,146 million and 2019 were $4,350 million, and $5,140 million, respectively.
Recent Developments
Recent Developments
Amendments to Accounts Receivable Securitization Programs
Reduced Operating Rates at our Geismar, Louisiana MDI Facility
On October 15, 2020, we announced that due to a mechanical failure at a third-party raw material supplier, our Geismar, Louisiana MDI facility is experiencing a partial outage which is estimated to last approximately five weeks. We currently estimate that this partial outage will negatively impact our fourth quarter 2020 adjusted EBITDA by approximately $15 million. Refer to “—Non-GAAP Financial Measures” and “Forward-Looking Statements” for a discussion of our use of adjusted EBITDA and forward-looking statements in this Form 10-Q.
Sale of India-Based Do-It-Yourself Consumer Adhesives Business
In October 2020, we announced that we have entered into a definitive agreement to sell our India-based DIY business, part of the Advanced Materials segment, to Pidilite Industries Ltd. in an all-cash transaction valued at up to $285 million, excluding customary working capital and other adjustments. Under the terms of the agreement, we will receive approximately $257 million in cash at closing and up to approximately $28 million of additional cash under an earnout within 18 months if the business achieves sales revenue in line with 2019. The transaction is expected to close in November 2020. We estimate cash taxes of just under 10% with this transaction.
Sale of Venator Interest
In August 2020,July 1, 2021, we entered into a definitive agreement with funds advised by SK Capital Partners, LPamendments to sell approximately 42.5 million of ordinary shares we hold in Venator for a cash purchase price of approximately $100 million, including a 30-month option forour A/R Programs that, among other things, extended the sale of the remaining approximate 9.5 million ordinary shares we hold in Venator at $2.15 per share. The transaction is subject to regulatory approvals and is expected to close near year end 2020. The sale of the Venator shares facilitates an estimated cash tax savings of approximately $150 million anticipated by offsetting an expected capital loss on the sale of Venator shares against the capital gain realized on the salescheduled termination dates of our Chemical Intermediates Businesses that closed this year in January. SeeA/R Programs from April 2022 to July 2024. For additional information, see “Note 4. Discontinued Operations8. Debt—Direct and Business Dispositions—Separation and Deconsolidation of Venator”Subsidiary Debt—A/R Programs” to our condensed consolidated financial statements.
In connection with the 2017 initial public offering of Venator, we recorded a receivable of approximately $34 million related to certain income tax benefits that will be reduced upon completion of the sale of Venator shares to SK Capital Partners, LP due to a tax change of control limitation on certain Venator tax net operating losses. Accordingly, we expect to write off a significant portion of this receivable when the transaction closes.
COVID-19 Update
The recent outbreak of COVID-19 has spread from China to many other countries, including the U.S. In March 2020, the World Health Organization characterized COVID-19 as a pandemic. As of September 30, 2020, there have not been any significant interruptions in our ability to provide our products and support to our customers. However, the COVID-19 pandemic has significantly impacted economic conditions throughout the United States and the world, including the markets in which we operate. Demand for our products declined at a rapid pace in the second quarter 2020,
44
which led to a meaningful adverse impact on our revenues and financial results. Although we have experienced improved conditions in most of our core markets in the third quarter of 2020, demand for our products remained modestly down compared to the same period of 2019.
In response to the impact of COVID-19, we have implemented, and may continue to implement, cost saving initiatives, including:
For more information regarding our 2020 restructuring activities, see “Note 7. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements.
There continues to be many uncertainties regarding the impact of the COVID-19 pandemic, including the scope of scientific and health issues, the anticipated duration of the pandemic and the extent of local, regional and worldwide economic, social and political disruption. Given such uncertainties, it is difficult to estimate the magnitude COVID-19 may impact our future business, but we expect any adverse impact to continue for some time.
OutlookOutlook
We expect the following factors to impact our operating segments in the fourth quarter of 2020:segments:
Polyurethanes:
● | Fourth quarter |
● | Positive trends in |
● | Automotive market continues to |
Performance Products:
● | Fourth quarter 2021 adjusted EBITDA |
● | Commercial initiatives to positively impact results |
Advanced Materials:
● | Fourth quarter |
Advanced Materials:
45
● | Aerospace continues to recover |
● | Pricing increases to offset raw material cost increases |
Textile Effects:
● | Fourth quarter 2021 adjusted EBITDA |
● | Favorable trends in sustainable solutions |
● |
In the third quarter of 2020,2021, our adjusted effective tax rate was 23%15%. For 2020,2021, our adjusted effective tax rate is expected to be approximately 20%19% to 20%, which is below our previously expected rate of approximately 22% to 24% due largely to tax benefits for increased export sales and services taxed at a U.S. income tax rate lower than 21%. We continue to expect our forward adjusted effective tax rate will be approximately 22% to 24%. For further information, see “—Non-GAAP Financial Measures” and “Note 18. Income Taxes” to our condensed consolidated financial statements.
Refer to “Forward-Looking Statements” for a discussion of our use of forward-looking statements in this Quarterly Report on Form 10-Q.
Results of Operations
Results of Operations
For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):
Huntsman Corporation
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Revenues | | $ | 1,510 | | $ | 1,687 | | (10)% | | $ | 4,350 | | $ | 5,140 | | (15)% | | $ | 2,285 | $ | 1,510 | 51 | % | $ | 6,146 | $ | 4,350 | 41 | % | ||||||||||||
Cost of goods sold | | | 1,231 | | | 1,347 | | (9)% | | | 3,612 | | | 4,068 | | (11)% | | 1,802 | 1,231 | 46 | % | 4,840 | 3,612 | 34 | % | ||||||||||||||||
Gross profit | | | 279 | | | 340 | | (18)% | | | 738 | | | 1,072 | | (31)% | | 483 | 279 | 73 | % | 1,306 | 738 | 77 | % | ||||||||||||||||
Operating expenses | | | 208 | | | 231 | | (10)% | | | 660 | | | 695 | | (5)% | | ||||||||||||||||||||||||
Restructuring, impairment and plant closing costs (credits) | | | 12 | | | (43) | | NM | | | 34 | | | (42) | | NM | | ||||||||||||||||||||||||
Operating expenses, net | 239 | 208 | 15 | % | 692 | 660 | 5 | % | |||||||||||||||||||||||||||||||||
Restructuring, impairment and plant closing (credits) costs | (1 | ) | 12 | NM | 34 | 34 | — | ||||||||||||||||||||||||||||||||||
Operating income | | | 59 | | | 152 | | (61)% | | | 44 | | | 419 | | (89)% | | 245 | 59 | 315 | % | 580 | 44 | NM | |||||||||||||||||
Interest expense, net | | | (24) | | | (27) | | (11)% | | | (63) | | | (86) | | (27)% | | (15 | ) | (24 | ) | (38 | )% | (52 | ) | (63 | ) | (17 | )% | ||||||||||||
Equity in income of investment in unconsolidated affiliates | | | 21 | | | 19 | | 11% | | | 25 | | | 41 | | (39)% | | 34 | 21 | 62 | % | 118 | 25 | 372 | % | ||||||||||||||||
Fair value adjustments to Venator investment | | | 6 | | | (148) | | NM | | | (100) | | | (90) | | 11% | | (3 | ) | 6 | NM | (28 | ) | (100 | ) | (72 | )% | ||||||||||||||
Loss on early extinguishment of debt | | | — | | | — | | — | | | — | | | (23) | | (100)% | | — | — | — | (27 | ) | — | NM | |||||||||||||||||
Other income, net | | | 10 | | | 7 | | 43% | | | 27 | | | 16 | | 69% | | 7 | 10 | (30 | )% | 23 | 27 | (15 | )% | ||||||||||||||||
Income (loss) from continuing operations before income taxes | | | 72 | | | 3 | | NM | | | (67) | | | 277 | | NM | | 268 | 72 | 272 | % | 614 | (67 | ) | NM | ||||||||||||||||
Income tax expense | | | (15) | | | (30) | | (50)% | | | (9) | | | (113) | | (92)% | | (38 | ) | (15 | ) | 153 | % | (114 | ) | (9 | ) | NM | |||||||||||||
Income (loss) from continuing operations | | | 57 | | | (27) | | NM | | | (76) | | | 164 | | NM | | 230 | 57 | 304 | % | 500 | (76 | ) | NM | ||||||||||||||||
Income from discontinued operations, net of tax | | | — | | | 68 | | (100)% | | | 782 | | | 126 | | 521% | | ||||||||||||||||||||||||
(Loss) income from discontinued operations, net of tax(1) | (5 | ) | — | NM | (3 | ) | 782 | NM | |||||||||||||||||||||||||||||||||
Net income | | | 57 | | | 41 | | 39% | | | 706 | | | 290 | | 143% | | 225 | 57 | 295 | % | 497 | 706 | (30 | )% | ||||||||||||||||
Reconciliation of net income to adjusted EBITDA: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Net income attributable to noncontrolling interests | | | (9) | | | (11) | | (18)% | | | (15) | | | (31) | | (52)% | | (16 | ) | (9 | ) | 78 | % | (49 | ) | (15 | ) | 227 | % | ||||||||||||
Interest expense, net from continuing operations | | | 24 | | | 27 | | (11)% | | | 63 | | | 86 | | (27)% | | 15 | 24 | (38 | )% | 52 | 63 | (17 | )% | ||||||||||||||||
Income tax expense from continuing operations | | | 15 | | | 30 | | (50)% | | | 9 | | | 113 | | (92)% | | 38 | 15 | 153 | % | 114 | 9 | NM | |||||||||||||||||
Income tax expense from discontinued operations | | | — | | | 25 | | (100)% | | | 239 | | | 44 | | 443% | | 5 | — | NM | 5 | 239 | (98 | )% | |||||||||||||||||
Depreciation and amortization of continuing operations | | | 70 | | | 65 | | 8% | | | 206 | | | 201 | | 2% | | 72 | 70 | 3 | % | 219 | 206 | 6 | % | ||||||||||||||||
Depreciation and amortization of discontinued operations | | | — | | | 13 | | (100)% | | | — | | | 59 | | (100)% | | ||||||||||||||||||||||||
Other adjustments: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | | | 9 | | | 3 | | | | | 30 | | | 4 | | | | 5 | 9 | 19 | 30 | ||||||||||||||||||||
EBITDA from discontinued operations(1) | | | — | | | (106) | | | | | (1,021) | | | (229) | | | | — | — | (2 | ) | (1,021 | ) | ||||||||||||||||||
Fair value adjustments to Venator investment | | | (6) | | | 148 | | | | | 100 | | | 90 | | | | 3 | (6 | ) | 28 | 100 | |||||||||||||||||||
Loss on early extinguishment of debt | | | — | | | — | | | | | — | | | 23 | | | | — | — | 27 | — | ||||||||||||||||||||
Certain legal and other settlements and related (income) expenses | | | (4) | | | 1 | | | | | 2 | | | 1 | | | | — | (4 | ) | 10 | 2 | |||||||||||||||||||
Gain on sale of businesses/assets | | | — | | | — | | | | | (1) | | | — | | | | — | — | (30 | ) | (1 | ) | ||||||||||||||||||
Income from transition services arrangements | | | (1) | | | — | | | | | (6) | | | — | | | | (2 | ) | (1 | ) | (6 | ) | (6 | ) | ||||||||||||||||
Certain nonrecurring information technology project implementation costs | | | 1 | | | 1 | | | | | 3 | | | 1 | | | | 2 | 1 | 6 | 3 | ||||||||||||||||||||
Amortization of pension and postretirement actuarial losses | | | 20 | | | 16 | | | | | 57 | | | 49 | | | | 22 | 20 | 65 | 57 | ||||||||||||||||||||
Plant incident remediation costs | | | — | | | 5 | | | | | 1 | | | 5 | | | | 2 | — | 3 | 1 | ||||||||||||||||||||
Restructuring, impairment and plant closing and transition costs (credits)(2) | | | 12 | | | (43) | | | | | 34 | | | (42) | | | | ||||||||||||||||||||||||
Adjusted EBITDA(3) | | $ | 188 | | $ | 215 | | (13)% | | $ | 407 | | $ | 664 | | (39)% | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Restructuring, impairment and plant closing and transition costs | — | 12 | 36 | 34 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA(2) | $ | 371 | $ | 188 | 97 | % | $ | 994 | $ | 407 | 144 | % | |||||||||||||||||||||||||||||
Net cash provided by operating activities from continuing operations | | | | | | | | | | $ | 110 | | $ | 434 | | (75)% | | $ | 163 | $ | 110 | 48 | % | ||||||||||||||||||
Net cash provided by (used in) investing activities from continuing operations | | | | | | | | | | | 1,105 | | | (111) | | NM | | ||||||||||||||||||||||||
Net cash (used in) provided by investing activities | (439 | ) | 1,105 | NM | |||||||||||||||||||||||||||||||||||||
Net cash used in financing activities | | | | | | | | | | | (546) | | | (431) | | 27% | | (809 | ) | (546 | ) | 48 | % | ||||||||||||||||||
Capital expenditures from continuing operations | | | | | | | | | | | (170) | | | (181) | | (6)% | | ||||||||||||||||||||||||
Capital expenditures | (250 | ) | (170 | ) | 47 | % |
Huntsman International
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Three months | Nine months | ||||||||||||||||||||||||||||||||||||||||
ended | ended | ||||||||||||||||||||||||||||||||||||||||
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2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||||||||
Revenues | | $ | 1,510 | | $ | 1,687 | | (10)% | | $ | 4,350 | | $ | 5,140 | | (15)% | | $ | 2,285 | $ | 1,510 | 51 | % | $ | 6,146 | $ | 4,350 | 41 | % | ||||||||||||
Cost of goods sold | | | 1,231 | | | 1,347 | | (9)% | | | 3,612 | | | 4,068 | | (11)% | | 1,802 | 1,231 | 46 | % | 4,840 | 3,612 | 34 | % | ||||||||||||||||
Gross profit | | | 279 | | | 340 | | (18)% | | | 738 | | | 1,072 | | (31)% | | 483 | 279 | 73 | % | 1,306 | 738 | 77 | % | ||||||||||||||||
Operating expenses | | | 207 | | | 230 | | (10)% | | | 656 | | | 691 | | (5)% | | ||||||||||||||||||||||||
Restructuring, impairment and plant closing costs (credits) | | | 12 | | | (43) | | NM | | | 34 | | | (42) | | NM | | ||||||||||||||||||||||||
Operating expenses, net | 238 | 207 | 15 | % | 686 | 656 | 5 | % | |||||||||||||||||||||||||||||||||
Restructuring, impairment and plant closing (credits) costs | (1 | ) | 12 | NM | 34 | 34 | — | ||||||||||||||||||||||||||||||||||
Operating income | | | 60 | | | 153 | | (61)% | | | 48 | | | 423 | | (89)% | | 246 | 60 | 310 | % | 586 | 48 | NM | |||||||||||||||||
Interest expense, net | | | (24) | | | (31) | | (23)% | | | (65) | | | (99) | | (34)% | | (15 | ) | (24 | ) | (38 | )% | (52 | ) | (65 | ) | (20 | )% | ||||||||||||
Equity in income of investment in unconsolidated affiliates | | | 21 | | | 19 | | 11% | | | 25 | | | 41 | | (39)% | | 34 | 21 | 62 | % | 118 | 25 | 372 | % | ||||||||||||||||
Fair value adjustments to Venator investment | | | 6 | | | (148) | | NM | | | (100) | | | (90) | | 11% | | (3 | ) | 6 | NM | (28 | ) | (100 | ) | (72 | )% | ||||||||||||||
Loss on early extinguishment of debt | | | — | | | — | | — | | | — | | | (23) | | (100)% | | — | — | — | (27 | ) | — | NM | |||||||||||||||||
Other income, net | | | 10 | | | 6 | | 67% | | | 25 | | | 13 | | 92% | | 7 | 10 | (30 | )% | 21 | 25 | (16 | )% | ||||||||||||||||
Income (loss) from continuing operations before income taxes | | | 73 | | | (1) | | NM | | | (67) | | | 265 | | NM | | 269 | 73 | 268 | % | 618 | (67 | ) | NM | ||||||||||||||||
Income tax expense | | | (15) | | | (29) | | (48)% | | | (9) | | | (110) | | (92)% | | (39 | ) | (15 | ) | 160 | % | (115 | ) | (9 | ) | NM | |||||||||||||
Income (loss) from continuing operations | | | 58 | | | (30) | | NM | | | (76) | | | 155 | | NM | | 230 | 58 | 297 | % | 503 | (76 | ) | NM | ||||||||||||||||
Income from discontinued operations, net of tax | | | — | | | 68 | | (100)% | | | 782 | | | 126 | | 521% | | ||||||||||||||||||||||||
(Loss) income from discontinued operations, net of tax(1) | (5 | ) | — | NM | (3 | ) | 782 | NM | |||||||||||||||||||||||||||||||||
Net income | | | 58 | | | 38 | | 53% | | | 706 | | | 281 | | 151% | | 225 | 58 | 288 | % | 500 | 706 | (29 | )% | ||||||||||||||||
Reconciliation of net income to adjusted EBITDA: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Net income attributable to noncontrolling interests | | | (9) | | | (11) | | (18)% | | | (15) | | | (31) | | (52)% | | (16 | ) | (9 | ) | 78 | % | (49 | ) | (15 | ) | 227 | % | ||||||||||||
Interest expense, net from continuing operations | | | 24 | | | 31 | | (23)% | | | 65 | | | 99 | | (34)% | | 15 | 24 | (38 | )% | 52 | 65 | (20 | )% | ||||||||||||||||
Income tax expense from continuing operations | | | 15 | | | 29 | | (48)% | | | 9 | | | 110 | | (92)% | | 39 | 15 | 160 | % | 115 | 9 | NM | |||||||||||||||||
Income tax expense from discontinued operations | | | — | | | 25 | | (100)% | | | 239 | | | 44 | | 443% | | 5 | — | NM | 5 | 239 | (98 | )% | |||||||||||||||||
Depreciation and amortization of continuing operations | | | 70 | | | 65 | | 8% | | | 206 | | | 201 | | 2% | | 72 | 70 | 3 | % | 219 | 206 | 6 | % | ||||||||||||||||
Depreciation and amortization of discontinued operations | | | — | | | 13 | | (100)% | | | — | | | 59 | | (100)% | | ||||||||||||||||||||||||
Other adjustments: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | | | 9 | | | 3 | | | | | 30 | | | 4 | | | | 5 | 9 | 19 | 30 | ||||||||||||||||||||
EBITDA from discontinued operations(1) | | | — | | | (106) | | | | | (1,021) | | | (229) | | | | — | — | (2 | ) | (1,021 | ) | ||||||||||||||||||
Fair value adjustments to Venator investment | | | (6) | | | 148 | | | | | 100 | | | 90 | | | | 3 | (6 | ) | 28 | 100 | |||||||||||||||||||
Loss on early extinguishment of debt | | | — | | | — | | | | | — | | | 23 | | | | — | — | 27 | — | ||||||||||||||||||||
Certain legal and other settlements and related (income) expenses | | | (4) | | | 1 | | | | | 2 | | | 1 | | | | — | (4 | ) | 10 | 2 | |||||||||||||||||||
Gain on sale of businesses/assets | | | — | | | — | | | | | (1) | | | — | | | | — | — | (30 | ) | (1 | ) | ||||||||||||||||||
Income from transition services arrangements | | | (1) | | | — | | | | | (6) | | | — | | | | (2 | ) | (1 | ) | (6 | ) | (6 | ) | ||||||||||||||||
Certain nonrecurring information technology project implementation costs | | | 1 | | | 1 | | | | | 3 | | | 1 | | | | 2 | 1 | 6 | 3 | ||||||||||||||||||||
Amortization of pension and postretirement actuarial losses | | | 20 | | | 17 | | | | | 59 | | | 52 | | | | 22 | 20 | 67 | 59 | ||||||||||||||||||||
Plant incident remediation costs | | | — | | | 5 | | | | | 1 | | | 5 | | | | 2 | — | 3 | 1 | ||||||||||||||||||||
Restructuring, impairment and plant closing and transition costs (credits)(2) | | | 12 | | | (43) | | | | | 34 | | | (42) | | | | ||||||||||||||||||||||||
Adjusted EBITDA(3) | | $ | 189 | | $ | 216 | | (13)% | | $ | 411 | | $ | 668 | | (38)% | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Restructuring, impairment and plant closing and transition costs | — | 12 | 36 | 34 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA(2) | $ | 372 | $ | 189 | 97 | % | $ | 1,000 | $ | 411 | 143 | % | |||||||||||||||||||||||||||||
Net cash provided by operating activities from continuing operations | | | | | | | | | | $ | 113 | | $ | 424 | | (73)% | | $ | 167 | $ | 113 | 48 | % | ||||||||||||||||||
Net cash provided by (used in) investing activities from continuing operations | | | | | | | | | | | 1,379 | | | (113) | | NM | | ||||||||||||||||||||||||
Net cash (used in) provided by investing activities | (544 | ) | 1,379 | NM | |||||||||||||||||||||||||||||||||||||
Net cash used in financing activities | | | | | | | | | | | (824) | | | (420) | | 96% | | (706 | ) | (824 | ) | (14 | )% | ||||||||||||||||||
Capital expenditures from continuing operations | | | | | | | | | | | (170) | | | (181) | | (6)% | | (250 | ) | (170 | ) | 47 | % |
Huntsman Corporation
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
| Three months | | Three months | ||||||||||||||||||||||||||||||||||||||
| ended | | ended | ||||||||||||||||||||||||||||||||||||||
| September 30, 2020 | | September 30, 2019 | ||||||||||||||||||||||||||||||||||||||
| Gross |
| Tax and other(4) |
| Net |
| Gross |
| Tax and other(4) |
| Net | ||||||||||||||||||||||||||||||
Three months | Three months | ||||||||||||||||||||||||||||||||||||||||
ended | ended | ||||||||||||||||||||||||||||||||||||||||
September 30, 2021 | September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||
Tax and | Tax and | ||||||||||||||||||||||||||||||||||||||||
Gross | other(3) | Net | Gross | other(3) | Net | ||||||||||||||||||||||||||||||||||||
Reconciliation of net income to adjusted net income | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Net income | | | | | | | $ | 57 | | | | | | | | $ | 41 | $ | 225 | $ | 57 | ||||||||||||||||||||
Net income attributable to noncontrolling interests | | | | | | | | (9) | | | | | | | | | (11) | (16 | ) | (9 | ) | ||||||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 9 | | $ | (3) | | | 6 | | $ | 3 | | $ | (1) | | | 2 | $ | 5 | $ | (2 | ) | 3 | $ | 9 | $ | (3 | ) | 6 | ||||||||||||
Income from discontinued operations(1)(5) | | — | | | — | | | — | | | (106) | | | 38 | | | (68) | ||||||||||||||||||||||||
Loss from discontinued operations(1)(4) | — | 5 | 5 | — | — | — | |||||||||||||||||||||||||||||||||||
Fair value adjustments to Venator investment | | (6) | | | — | | | (6) | | | 148 | | | — | | | 148 | 3 | — | 3 | (6 | ) | — | (6 | ) | ||||||||||||||||
Certain legal and other settlements and related (income) expenses | | (4) | | | 1 | | | (3) | | | 1 | | | — | | | 1 | ||||||||||||||||||||||||
Certain legal and other settlements and related income | — | — | — | (4 | ) | 1 | (3 | ) | |||||||||||||||||||||||||||||||||
Income from transition services arrangements | | (1) | | | — | | | (1) | | | — | | | — | | | — | (2 | ) | — | (2 | ) | (1 | ) | — | (1 | ) | ||||||||||||||
Certain nonrecurring information technology project implementation costs | | 1 | | | — | | | 1 | | | 1 | | | — | | | 1 | 2 | — | 2 | 1 | — | 1 | ||||||||||||||||||
Amortization of pension and postretirement actuarial losses | | 20 | | | (4) | | | 16 | | | 16 | | | (5) | | | 11 | 22 | (5 | ) | 17 | 20 | (4 | ) | 16 | ||||||||||||||||
Plant incident remediation costs | | — | | | — | | | — | | | 5 | | | (1) | | | 4 | 2 | — | 2 | — | — | — | ||||||||||||||||||
Restructuring, impairment and plant closing and transition costs (credits)(2) | | 12 | | | (3) | | | 9 | | | (43) | | | 9 | | | (34) | ||||||||||||||||||||||||
Restructuring, impairment and plant closing and transition costs | — | — | — | 12 | (3 | ) | 9 | ||||||||||||||||||||||||||||||||||
Adjusted net income | | | | | | | $ | 70 | | | | | | | | $ | 95 | $ | 239 | $ | 70 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Weighted average shares-basic | | | | | | | | 219.8 | | | | | | | | | 227.4 | 219.4 | 219.8 | ||||||||||||||||||||||
Weighted average shares-diluted | | | | | | | | 221.3 | | | | | | | | | 227.4 | 221.3 | 221.3 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Basic net (loss) income attributable to Huntsman Corporation per share: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Income (loss) from continuing operations | | | | | | | $ | 0.22 | | | | | | | | $ | (0.17) | ||||||||||||||||||||||||
Basic net income attributable to Huntsman Corporation per share: | |||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.97 | $ | 0.22 | |||||||||||||||||||||||||||||||||||||
Income from discontinued operations | | | | | | | | — | | | | | | | | | 0.30 | (0.02 | ) | — | |||||||||||||||||||||
Net income | | | | | | | $ | 0.22 | | | | | | | | $ | 0.13 | $ | 0.95 | $ | 0.22 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Diluted net (loss) income attributable to Huntsman Corporation per share: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Income (loss) from continuing operations | | | | | | | $ | 0.22 | | | | | | | | $ | (0.17) | ||||||||||||||||||||||||
Diluted net income attributable to Huntsman Corporation per share: | |||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.96 | $ | 0.22 | |||||||||||||||||||||||||||||||||||||
Income from discontinued operations | | | | | | | | — | | | | | | | | | 0.30 | (0.02 | ) | — | |||||||||||||||||||||
Net income | | | | | | | $ | 0.22 | | | | | | | | $ | 0.13 | $ | 0.94 | $ | 0.22 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Other non-GAAP measures: | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
Diluted adjusted net income per share | | | | | | | $ | 0.32 | | | | | | | | $ | 0.41 | $ | 1.08 | $ | 0.32 |
49
| | | | | | | | | | | | | | | | | |
| Nine months | | Nine months | ||||||||||||||
| ended | | ended | ||||||||||||||
| September 30, 2020 | | September 30, 2019 | ||||||||||||||
| Gross |
| Tax and other(4) |
| Net |
| Gross |
| Tax and other(4) |
| Net | ||||||
Reconciliation of net income to adjusted net income | | | | | | | | | | | | | | | | | |
Net income | | | | | | | $ | 706 | | | | | | | | $ | 290 |
Net income attributable to noncontrolling interests | | | | | | | | (15) | | | | | | | | | (31) |
Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 30 | | $ | (6) | | | 24 | | $ | 4 | | $ | (1) | | | 3 |
Income from discontinued operations(1)(5) | | (1,021) | | | 239 | | | (782) | | | (229) | | | 103 | | | (126) |
Fair value adjustments to Venator investment | | 100 | | | — | | | 100 | | | 90 | | | — | | | 90 |
Loss on early extinguishment of debt | | — | | | — | | | — | | | 23 | | | (5) | | | 18 |
Certain legal and other settlements and related expenses | | 2 | | | — | | | 2 | | | 1 | | | — | | | 1 |
Gain on sale of businesses/assets | | (1) | | | — | | | (1) | | | — | | | — | | | — |
Income from transition services arrangements | | (6) | | | 1 | | | (5) | | | — | | | — | | | — |
Certain nonrecurring information technology project implementation costs | | 3 | | | — | | | 3 | | | 1 | | | — | | | 1 |
Amortization of pension and postretirement actuarial losses | | 57 | | | (12) | | | 45 | | | 49 | | | (13) | | | 36 |
U.S. Tax Reform impact on income tax expense | | — | | | — | | | — | | | — | | | 3 | | | 3 |
Significant activities related to deferred tax assets and liabilities(6) | | — | | | — | | | — | | | — | | | 32 | | | 32 |
Plant incident remediation costs | | 1 | | | — | | | 1 | | | 5 | | | (1) | | | 4 |
Restructuring, impairment and plant closing and transition costs (credits)(2) | | 34 | | | (7) | | | 27 | | | (42) | | | 9 | | | (33) |
Adjusted net income(3) | | | | | | | $ | 105 | | | | | | | | $ | 288 |
| | | | | | | | | | | | | | | | | |
Weighted average shares-basic | | | | | | | | 220.8 | | | | | | | | | 230.3 |
Weighted average shares-diluted | | | | | | | | 220.8 | | | | | | | | | 232.0 |
| | | | | | | | | | | | | | | | | |
Basic net income attributable to Huntsman Corporation per share: | | | | | | | | | | | | | | | | | |
(Loss) income from continuing operations | | | | | | | $ | (0.41) | | | | | | | | $ | 0.58 |
Income from discontinued operations | | | | | | | | 3.54 | | | | | | | | | 0.54 |
Net income | | | | | | | $ | 3.13 | | | | | | | | $ | 1.12 |
| | | | | | | | | | | | | | | | | |
Diluted net income attributable to Huntsman Corporation per share: | | | | | | | | | | | | | | | | | |
(Loss) income from continuing operations | | | | | | | $ | (0.41) | | | | | | | | $ | 0.58 |
Income from discontinued operations | | | | | | | | 3.54 | | | | | | | | | 0.54 |
Net income | | | | | | | $ | 3.13 | | | | | | | | $ | 1.12 |
| | | | | | | | | | | | | | | | | |
Other non-GAAP measures: | | | | | | | | | | | | | | | | | |
Diluted weighted average shares-adjusted | | | | | | | | 222.0 | | | | | | | | | 232.0 |
Diluted adjusted net income per share(3) | | | | | | | $ | 0.47 | | | | | | | | $ | 1.24 |
| | | | | | | | | | | | | | | | | |
Net cash provided by operating activities from continuing operations | | | | | | | $ | 110 | | | | | | | | $ | 434 |
Capital expenditures from continuing operations | | | | | | | | (170) | | | | | | | | | (181) |
Free cash flow from continuing operations(3) | | | | | | | $ | (60) | | | | | | | | $ | 253 |
| | | | | | | | | | | | | | | | | |
Other cash flow measure: | | | | | | | | | | | | | | | | | |
Taxes paid on sale of Chemical Intermediates Businesses(7) | | | | | | | $ | (188) | | | | | | | | $ | — |
Nine months | Nine months | |||||||||||||||||||||||
ended | ended | |||||||||||||||||||||||
September 30, 2021 | September 30, 2020 | |||||||||||||||||||||||
Tax and | Tax and | |||||||||||||||||||||||
Gross | other(3) | Net | Gross | other(3) | Net | |||||||||||||||||||
Reconciliation of net income to adjusted net income | ||||||||||||||||||||||||
Net income | $ | 497 | $ | 706 | ||||||||||||||||||||
Net income attributable to noncontrolling interests | (49 | ) | (15 | ) | ||||||||||||||||||||
Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 19 | $ | (4 | ) | 15 | $ | 30 | $ | (6 | ) | 24 | ||||||||||||
Income from discontinued operations(1)(4) | (2 | ) | 5 | 3 | (1,021 | ) | 239 | (782 | ) | |||||||||||||||
Fair value adjustments to Venator investment | 28 | — | 28 | 100 | — | 100 | ||||||||||||||||||
Loss on early extinguishment of debt | 27 | (6 | ) | 21 | — | — | — | |||||||||||||||||
Certain legal and other settlements and related expenses | 10 | (3 | ) | 7 | 2 | — | 2 | |||||||||||||||||
Gain on sale of businesses/assets | (30 | ) | 4 | (26 | ) | (1 | ) | — | (1 | ) | ||||||||||||||
Income from transition services arrangements | (6 | ) | 1 | (5 | ) | (6 | ) | 1 | (5 | ) | ||||||||||||||
Certain nonrecurring information technology project implementation costs | 6 | (1 | ) | 5 | 3 | — | 3 | |||||||||||||||||
Amortization of pension and postretirement actuarial losses | 65 | (15 | ) | 50 | 57 | (12 | ) | 45 | ||||||||||||||||
Plant incident remediation costs | 3 | — | 3 | 1 | — | 1 | ||||||||||||||||||
Restructuring, impairment and plant closing and transition costs | 36 | (8 | ) | 28 | 34 | (7 | ) | 27 | ||||||||||||||||
Adjusted net income(2) | $ | 577 | $ | 105 | ||||||||||||||||||||
Weighted average shares-basic | 220.2 | 220.8 | ||||||||||||||||||||||
Weighted average shares-diluted | 222.2 | 220.8 | ||||||||||||||||||||||
Basic net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 2.04 | $ | (0.41 | ) | |||||||||||||||||||
(Loss) income from discontinued operations | (0.01 | ) | 3.54 | |||||||||||||||||||||
Net income | $ | 2.03 | $ | 3.13 | ||||||||||||||||||||
Diluted net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 2.03 | $ | (0.41 | ) | |||||||||||||||||||
(Loss) income from discontinued operations | (0.01 | ) | 3.54 | |||||||||||||||||||||
Net income | $ | 2.02 | $ | 3.13 | ||||||||||||||||||||
Other non-GAAP measures: | ||||||||||||||||||||||||
Diluted adjusted net income per share(2) | $ | 2.60 | $ | 0.47 | ||||||||||||||||||||
Net cash provided by operating activities from continuing operations | $ | 163 | $ | 110 | ||||||||||||||||||||
Capital expenditures from continuing operations | (250 | ) | (170 | ) | ||||||||||||||||||||
Free cash flow from continuing operations(2) | $ | (87 | ) | $ | (60 | ) | ||||||||||||||||||
Other cash flow measure: | ||||||||||||||||||||||||
Taxes paid on sale of businesses(5) | $ | 3 | $ | 188 |
NM—Not meaningful
(1) | Includes the gain on the sale
Non-GAAP Financial Measures Our 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. Adjusted EBITDA Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related (income) expenses; (f) gain on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation costs; and (k) restructuring, impairment and plant closing and transition We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
45
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) 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 that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. We do not provide reconciliations for adjusted effective tax rate on a forward-looking basis because we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as business acquisition and integration expenses, merger costs, certain legal and other settlements and related costs, gains on sale of Three Months Ended September 30, As discussed in “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses” to our condensed consolidated financial statements, the results from continuing operations exclude the results of our Chemical Intermediates Businesses and the results of our former polymers, base chemicals and Australian styrenics businesses for all periods presented. The increase of $166 million in net income from continuing operations attributable to Huntsman Corporation and the increase of $165 million in net income from continuing operations attributable to Huntsman International was the result of the following items:
NM—Not meaningful
Polyurethanes The increase in revenues in our Polyurethanes segment for the three months ended September 30, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices and slightly higher sales volumes. MDI average selling prices increased in all our regions. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the impact of Hurricane Ida at our Geismar, Louisiana facility that occurred in the third quarter of 2021. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and slightly higher sales volumes as well as stronger earnings from our PO/MTBE joint venture in China, partially offset by higher raw material costs. Performance Products The increase in revenues in our Performance Products segment for the three months ended September 30, 2021 compared to the same period of 2020 was primarily due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown as well as in response to an increase in raw material costs. Sales volumes also increased primarily due to stronger demand. The increase in segment adjusted EBITDA was primarily due to increased revenue and margins, partially offset by increased fixed costs. Advanced Materials The increase in revenues in our Advanced Materials segment for the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to higher sales volumes, higher average selling prices and the favorable net impact of the Gabriel Acquisition and the sale of the India-based DIY business. See “Note 3. Business Combinations and Acquisitions” and “Note 4. Discontinued Operations and Business Dispositions” to our condensed consolidated financial statements. Excluding our recent acquisition and divestiture, sales volumes increased across all of our specialty markets, primarily in relation to the ongoing recovery from the global economic slowdown. Average selling prices increased largely in response to higher raw material costs. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and the benefit from our recent acquisition. Textile Effects The increase in revenues in our Textile Effects segment for the three months ended September 30, 2021 compared to the same period of 2020 was due to higher sales volumes and higher average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly in the North Asia and Americas regions. Average selling prices increased primarily in response to higher freight and logistics costs. The increase in segment adjusted EBITDA was primarily due to higher sales revenues, partially offset by higher fixed costs. Corporate and other Corporate and other includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. For the three months ended September 30, 2021, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $11 million to a loss of $48 million from a loss of $37 million for the same period of 2020. For the three months ended September 30, 2021, adjusted EBITDA from Corporate and other for Huntsman International decreased by $11 million to a loss of $47 million from a loss of $36 million for the same period of 2020. The decrease in adjusted EBITDA from Corporate and other was primarily due to a charge from a LIFO inventory valuation reserve adjustment and an increase in corporate overhead costs, partially offset by an increase in unallocated foreign currency exchange gains. Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020 As discussed in “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses” to our condensed consolidated financial statements, the results from continuing operations exclude the results of our Chemical Intermediates and Businesses and the results of our former polymers, base chemicals and Australian styrenics business for all periods presented. The increase of
Huntsman Corporation and the increase of
50
NM—Not meaningful
The
Performance Products The
Advanced Materials The
Textile Effects The
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 gains and losses on the disposition of corporate assets. For the nine months ended September 30, Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and does not include separate information with respect to Huntsman International in accordance with General Instructions H(1)(a) and (b) of Form 10-Q. Cash Flows for the Nine Months Ended September 30, Net cash provided by operating activities from continuing operations for the nine months ended September 30, 2021 and 2020
Net cash (used in) provided by investing activities for the nine months ended September 30, 2021 and 2020
Net cash used in financing activities for the nine months ended September 30, 2021 and 2020 was $809 million and
Free cash flow from continuing operations for the nine months ended September 30, Changes in Financial Condition The following information summarizes our working capital position (dollars in millions):
Our working capital decreased by
See “Note 8. Debt—Direct and Subsidiary Debt” to our condensed consolidated financial statements. Debt Issuance Costs
See “Note 8. Debt—Direct and Subsidiary Debt—Debt Issuance Costs” to our condensed consolidated financial statements. Revolving Credit Facility
See “Note 8. Debt—Direct and Subsidiary Debt—Revolving Credit Facility” to our condensed consolidated financial statements.
Term Loan Credit Facility
See “Note 8. Debt—Direct and Subsidiary Debt—Term Loan Credit Facility” to our condensed consolidated financial statements.
A/R Programs
See “Note 8. Debt—Direct and Subsidiary Debt—A/R Programs” to our condensed consolidated financial statements.
SeniorNotes
See “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our condensed consolidated financial statements. Variable Interest Entity Debt See “Note 8. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our condensed consolidated financial statements. Note Payable from Huntsman International to Huntsman Corporation
See “Note 8. Debt—Direct and Subsidiary Debt—Note Payable from Huntsman International to Huntsman Corporation” to our condensed consolidated financial statements.
See “Note 8. Debt—Compliance with Covenants” to our condensed consolidated financial statements.
54
We depend upon our cash,
As of September 30,
As of September 30,
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 prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. See “Note 9. Derivative Instruments and Hedging Activities” to our condensed consolidated financial statements. ITEM 4. CONTROLS AND PROCEDURES Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, No changes to our internal control over financial reporting occurred during the quarter ended September 30, PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS
Rockwood Litigation On February 6, 2017, we filed a lawsuit in New York state court against Rockwood Specialties Group, Inc., Rockwood Holdings, Inc. (collectively, “Rockwood”), Albemarle Corporation (as Rockwood’s successor) (“Albemarle”) and certain former Rockwood executives to recover damages for fraud and breach of contract in connection with our purchase of Rockwood’s pigments businesses, including its Color Pigments Division, for $1.1 billion in 2014. The case was ordered to arbitration under the rules of the American Arbitration Association and, after a two-week trial in May 2021, a panel consisting of three former federal judges awarded us in excess of $600 million for the fraud and breach, inclusive of punitive damages and statutory interest at 9%, of which we expect to net in excess of $400 million after attorney’s fees. The award is subject to confirmation and limited appeal in New York state court, and the arbitration panel directed us to file for reimbursement from Albemarle for attorney’s fees as prevailing party. Texas Emissions Enforcement On July 26, 2021, the Attorney General of the State of Texas filed a civil suit in the District Court of Travis County, Texas seeking civil penalties and attorney’s fees for alleged violations of the Texas Clean Air Act, Texas Commission on Environmental Quality regulations and facility permit terms. The complaint alleged multiple unauthorized emissions events and reporting discrepancies that occurred between December 2016 and June 2019 at our former manufacturing facility in Port Neches, Texas. The state is seeking monetary relief between $250,000 and $1 million. We completed the sale of our former Port Neches, Texas facility to Indorama Ventures Holdings L.P. on January 3, 2020. We believe that we are contractually indemnified for any defense costs and potential liability that may result from this action. ITEM 1A. RISK FACTORS For information regarding risk factors, see “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The following table provides information with respect to shares of our common stock that we repurchased as part of our share repurchase program and shares of restricted stock granted under our stock incentive plans that we withheld upon vesting to satisfy our tax withholding obligations during the three months ended September 30,
ITEM 6. EXHIBITS See the Exhibit Index at the end of this Quarterly Report on Form 10-Q for exhibits filed with this report.
EXHIBIT INDEX
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.
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