Huntsman Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

12 Months Ended

Dec. 31, 2017

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

3. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

Separation of P&A Business

In August 2017, we separated the P&A Business and conducted an IPO of ordinary shares of Venator, formerly a wholly-owned subsidiary of Huntsman, and have presented the former P&A Business as discontinued operations in the accompanying financial statements. Additionally, in December 2017, we completed a secondary offering of Venator ordinary shares. As of December 31, 2017, Huntsman retained approximately 55% ownership in Venator. On January 3, 2018, the underwriters purchased an additional 1,948,955 Venator ordinary shares pursuant to their over-allotment option, which reduced Huntsman’s ownership interest in Venator to approximately 53%. We intend to monetize our retained ownership in Venator at prevailing market conditions and expect to implement multiple follow-on capital market or block transactions to permit the orderly distribution of our retained shares.

In August 2017, we entered into a separation agreement, a transition services agreement (“TSA”) and a registration rights agreement with Venator to effect the Separation and provide a framework for a short term set of transition services as well as a tax matters agreement and an employee matters agreement. Pursuant to the TSA, we will, for a limited time following the Separation, provide Venator with certain services and functions that the parties have historically shared, including administrative, payroll, human resources, data processing, environmental, health and safety, financial audit support, financial transaction support, marketing support, information technology systems and various other corporate and support services. We may also provide Venator with additional services that Venator and Huntsman may identify from time to time in the future. In general, the services began following the Separation and cover a period not expected to exceed 24 months; however, Venator may terminate individual services provided by us under the TSA early, as it becomes able to operate its business without such services.

The following table summarizes the major classes of assets and liabilities constituting assets and liabilities held for sale:


	December 31,		December 31,
	2017		2016
Carrying amounts of major classes of assets held for sale:
Accounts receivable	$	380	$	234
Inventories		454		426
Other current assets		318		117
Total current assets(1)				777
Property, plant and equipment, net		1,424		1,178
Deferred income taxes		158		143
Other noncurrent assets		146		142
Total noncurrent assets(1)				1,463
Total assets held for sale	$	2,880	$	2,240
Carrying amounts of major classes of liabilities in held for sale:
Accounts payable	$	385	$	297
Accrued liabilities		236		145
Other current liabilities		25		25
Total current liabilities(1)				467
Deferred income taxes		—		56
Long term debt		746		—
Other noncurrent liabilities		300		337
Total noncurrent liabilities(1)				393
Total liabilities held for sale	$	1,692	$	860

(1) The assets and liabilities held for sale are classified as current as of December 31, 2017 because it is probable that the sale of our remaining ownership interest in Venator ordinary shares will occur and proceeds will be collected within one year.

The following table summarizes major classes of line items constituting pretax and after-tax income of discontinued operations.

Huntsman Corporation


	Year ended December 31,
	2017		2016		2015
Major classes of line items constituting pretax income (loss) of discontinued operations:
Trade sales, services and fees, net	$	2,234	$	2,168	$	2,193
Cost of goods sold		1,840		2,012		2,077
Selling, general and administrative		187		174		214
Restructuring, impairment and plant closing costs		56		36		220
Business separation expenses		40		18		—
Interest expense (income)		19		(1)		—
Other operating income, net		(134)		(38)		(1)
Other loss (income), net		1		(1)		1
Income (loss) from discontinued operations before income taxes		225		(32)		(318)
Income tax (expense) benefit		(67)		24		16
Income (loss) from discontinued operations, net of tax		158		(8)		(302)
Net income attributable to noncontrolling interests		(10)		(10)		(7)
Net income (loss) attributable to discontinued operations	$	148	$	(18)	$	(309)

Huntsman International


	Year ended December 31,
	2017		2016		2015
Major classes of line items constituting pretax income (loss) of discontinued operations:
Trade sales, services and fees, net	$	2,234	$	2,168		2,193
Cost of goods sold		1,843		2,017		2,082
Selling, general and administrative		187		174		214
Restructuring, impairment and plant closing costs		56		36		220
Business separation expenses		40		18		—
Interest expense		19		(1)		—
Other operating income, net		(134)		(38)		(1)
Other loss (income), net		1		(1)		1
Income (loss) from discontinued operations before income taxes		222		(37)		(323)
Income tax (expense) benefit		(67)		24		16
Income (loss) from discontinued operations, net of tax		155		(13)		(307)
Net income attributable to noncontrolling interests		(10)		(10)		(7)
Net income (loss) attributable to discontinued operations	$	145	$	(23)	$	(314)

Sale of European Surfactants Manufacturing Facilities

On December 30, 2016, our Performance Products segment completed the sale of its European surfactants business to Innospec Inc. for $199 million in cash plus our retention of trade receivables and payables for an enterprise value of $225 million. Under the terms of the transaction, Innospec acquired our manufacturing facilities located in Saint-Mihiel, France; Castiglione delle Stiviere, Italy; and Barcelona, Spain. We remain committed to our global surfactants business, including in the U.S. and Australia, where our differentiated surfactants businesses are backward integrated into essential feedstocks. Upon closing the transaction, we entered into supply and long-term tolling arrangements with Innospec in order to continue marketing certain core products strategic to our global agrochemicals, lubes and certain other businesses. In connection with this sale, we recognized a pre-tax gain in the fourth quarter of 2016 of $98 million which was reflected in other operating income, net on the consolidated statements of operations. This business is not presented as discontinued operations as it was not considered a strategic shift in our operations.