1. GENERAL

​

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

​

Our unaudited interim condensed consolidated financial statements and Huntsman International’s unaudited interim condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) and in management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive (loss) income, financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019 for our Company and Huntsman International.

​

Description of Businesses

​

We are a global manufacturer of differentiated organic chemical products. 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.

​

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

​

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:

​

​

​

​

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.

​

Reclassifications

​

Prior periods have been recasted to record the results of operations of our chemical intermediates businesses, which includes PO/MTBE, and our surfactants businesses (collectively, our “Chemical Intermediates Businesses”) as discontinued operations. See “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses.”

​

Recent Developments

​

Acquisition of CVC Thermoset Specialties

​

On May 18, 2020, we completed our acquisition of CVC Thermoset Specialties (“CVC Thermoset Specialties Acquisition”), a North American specialty chemical manufacturer serving the industrial composites, adhesives and coatings markets. CVC Thermoset Specialties operates two manufacturing facilities located in Akron, Ohio and Maple Shade, New Jersey. We acquired the business for $306 million from Emerald Performance Materials LLC, which is majority owned by affiliates of American Securities LLC, subject to customary closing adjustments, in an all-cash transaction funded from available liquidity. The acquired business is being integrated into our Advanced Materials segment. See “Note 3. Business Combinations—Acquisition of CVC Thermoset Specialties.”

​

Restructuring Programs

​

In July 2020, management approved a preliminary restructuring plan to optimize our downstream footprint in our Polyurethanes segment. In connection with this program, we expect to record restructuring expenses of between approximately $23 million and $31 million through 2021.

​

COVID-19 Update

​

The recent outbreak of the coronavirus disease (COVID-19) has spread from China to many other countries, including the United States. In March 2020, the World Health Organization characterized COVID-19 as a pandemic. We are a company operating in a “critical infrastructure” industry, as defined by the U.S. Department of Homeland Security. Consistent with federal and international guidelines and with state and local orders to date, we have largely continued to operate our manufacturing facilities across our footprint, with additional precautions in place to ensure the safety of our employees. As of June 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 in the markets in which we operate. Demand for our products has declined at a rapid pace, which has had a meaningful adverse impact on our revenues and financial results in the second quarter 2020. Although demand improved through the quarter in most of our core markets, it remains significantly below the prior year.

​

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. The following is a summary of our recent and anticipated actions in response to COVID-19.

​

Balance Sheet and Liquidity

​

We believe our existing cash balances and amounts available under our credit facility will allow us to manage the anticipated impact of COVID-19 on our business operations for the foreseeable future. On June 30, 2020, we had $1.3 billion in cash and cash equivalents, in addition to $1.2 billion availability under our 2018 Revolving Credit

Facility. In April 2020, we elected to temporarily suspend share repurchases under our existing share repurchase program in order to enhance our liquidity position in response to COVID-19.

​

Capital Expenditures

​

We have significantly reduced planned discretionary capital expenditures for the current year. Among other reductions, we have deferred a portion of capital spending on a new MDI splitter in Geismar, Louisiana for six months leaving roughly $40 million of capital spend in 2020 with the remaining spend of approximately $120 million in 2021 and 2022. During 2020, we expect to spend between approximately $225 million and $235 million on capital expenditures for continuing operations.

​

Expense Management

​

In response to the reduction in revenue, we have implemented, and expect to continue to implement, cost saving initiatives, including:

​

For more information regarding our 2020 restructuring activities, see “Note 7. Restructuring, Impairment and Plant Closing Costs.”

​

Health and Safety

​

In the second quarter 2020, we closed a number of our corporate offices around the world and required certain of our employees (including those located at our corporate headquarters in The Woodlands, Texas) to work remotely on a temporary basis. While we have re-opened some of our offices, many of our employees continue to work remotely.

​

Asset Carrying Value

​

As of June 30, 2020, we did not have any impairment with respect to our goodwill or long-lived assets. Because the full extent of the impact of the COVID-19 pandemic and efforts to slow its spread are unknown at this time, we will continue to monitor and timely identify any triggering events that may require additional impairment testing.

​

Use of Estimates

​

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.

​