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17. DISCONTINUED OPERATIONS
AUSTRALIAN STYRENICS BUSINESS SHUTDOWN
During the first quarter of 2010, we ceased operation of our former Australian styrenics business. The following results of operations of our former Australian styrenics business have been presented as discontinued operations in the accompanying condensed consolidated statements of operations (unaudited) (dollars in millions):
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Three months ended
June 30, |
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Six months ended
June 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenues
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$ |
9 |
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$ |
10 |
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$ |
18 |
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$ |
35 |
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Costs and expenses
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(11 |
) |
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(17 |
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(41 |
) |
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(62 |
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Operating loss
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(2 |
) |
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(7 |
) |
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(23 |
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(27 |
) |
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Income tax benefit
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1 |
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1 |
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8 |
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9 |
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Loss from discontinued operations, net of tax
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$ |
(1 |
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$ |
(6 |
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$ |
(15 |
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$ |
(18 |
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In 2006, product defect actions were filed against our subsidiary Huntsman Chemical Company Australia Pty Ltd ("HCCA") in Australian courts relating to the sale and supply of vinyl ester resins that were used in the manufacture of fiberglass swimming pools. HCCA ceased manufacturing these resins by 2004 and sold the business that manufactured and sold these resins in 2007.
In 2010 and 2011, the courts found HCCA liable for damage to certain swimming pools and one court issued a ruling awarding $87,000 per pool for each of 423 known damaged pools, plus an additional 143 pools that could potentially fail plus economic damages, costs and interest in amounts still to be determined.
These and other related claims were tendered to HCCA's insurers, who continue to defend these matters. During the first quarter of 2011, HCCA increased its estimate of potential loss related to these claims and recorded a liability for the full estimated value of the claims and a corresponding receivable relating to our indemnity protection with a net charge to discontinued operations for any potential shortfall in insurance coverage.
U.S. BASE CHEMICALS AND NORTH AMERICAN POLYMERS DISPOSITIONS
In 2007, we completed the sale of our former U.S. base chemicals business (the "U.S. Base Chemicals Disposition") and our North American polymers business assets (the "North American Polymers Disposition"). The results of these former businesses are presented as discontinued operations in the accompanying condensed consolidated statements of operations (unaudited).
During the three and six months ended June 30, 2010, we recorded after tax income from discontinued operations related to our former U.S. base chemicals and North American polymers businesses of $68 million and $67 million, respectively, which consisted of a $110 million pretax gain recorded in connection with the final settlement of insurance claims related to the 2006 fire at our former Port Arthur, Texas plant and a pretax gain of $7 million from the settlement of insurance claims related to the 2005 gulf coast storms, offset in part by income taxes and legal fees related to the arbitration of the fire insurance claim.
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