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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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Form 10-K

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended December 31, 2004                  
|OR                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                             to

Commission file number 333-116100

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HMP EQUITY HOLDINGS CORPORATION(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

47-0887248(I.R.S. Employer
Identification No.)500 Huntsman Way
Salt Lake City, Utah 84108
(801) 584-5700(Address of principal executive offices and telephone number)


Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

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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. YES ý    NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. ý

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act
Rule 12b-2). YES o    NO ý

On June 30, 2004, the last business day of the Registrant's second fiscal quarter, 1,802,721 shares of the Registrant's common stock were outstanding.
There is no established trading market for the Registrant's common stock. All of the Registrant's common stock is held by an affiliate. Accordingly, the market value of common stock held by
non-affiliates is zero. On March 28, 2005, 1,802,721 shares of common stock of the Registrant were outstanding.

Documents Incorporated by Reference

Part I,
Items 1, 2 and 3; Part II, Items 7 and 7A; Part III, Items 10, 11 and 13: Annual Report on Form 10-K of Huntsman Corporation.



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HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES  2004 ANNUAL REPORT ON FORM 10-K    TABLE OF CONTENTS



|         |          | 
|-------- | -------- | 
|PART I  
|         | ITEM 1.  | 
|         | ITEM 2.  | 
|         | ITEM 3.  | 
|         | ITEM 4.  | 
|PART II 
|         | ITEM 5.  | 
|         | ITEM 6.  | 
|         | ITEM 7.  | 
|         | ITEM 7A. | 
|         | ITEM 8.  | 
|         | ITEM 9.  | 
|         | ITEM 9A. | 
|         | ITEM 9B. | 
|PART III
|         | ITEM 10. | 
|         | ITEM 11. | 
|         | ITEM 12. | 
|         | ITEM 13. | 
|         | ITEM 14. | 
|PART IV 
|         | ITEM 15. | 

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HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES  2004 ANNUAL REPORT ON FORM 10-K

For convenience in this report, the terms "Company," "our," "us" or "we" may be used to refer to HMP Equity Holdings Corporation and, unless the context otherwise
requires, its subsidiaries. In this report, "HI" refers to Huntsman International LLC, and, unless the context otherwise requires, its subsidiaries, "HIH" refers to Huntsman International Holdings
LLC, "Huntsman Specialty" refers to Huntsman Specialty Chemicals Corporation, "Huntsman LLC" or "HLLC" refers to Huntsman LLC, and, unless the context otherwise requires, its subsidiaries, "AdMat"
refers to Huntsman Advanced Materials LLC and, unless the context otherwise requires, its subsidiaries, "Huntsman Holdings" refers to Huntsman Holdings, LLC, "Huntsman Family Holdings" refers to
Huntsman Family Holdings LLC, "Investments Trust" refers to HMP Equity Trust and "MatlinPatterson" refers to MatlinPatterson Global Opportunities Partners L.P. and its affiliates.

PART I

ITEM 1. BUSINESS

The
information required by this Item is contained in the equivalent Item in the Annual Report on Form 10-K of Huntsman Corporation, filed March 15, 2003 (the
"Huntsman Corporation 10-K"), and is incorporated herein by reference in reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

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ITEM 2. PROPERTIES

The information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in
reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

ITEM 3. LEGAL PROCEEDINGS

The information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in
reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 2004, no matters were submitted to a vote of our security holders.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

As of the date of this report, there was no established public trading market for any class of our stock.

Holders

As of the date of this report, Huntsman Corporation was the only holder of record of our stock.

Dividends

We do not anticipate paying any cash dividends on our stock.

ITEM 6. SELECTED FINANCIAL DATA

The selected historical financial data set forth below presents the historical financial data of our Company as of and for the dates and periods indicated. In
such financial data, HIH is accounted for using the equity method of accounting through April 30, 2003. Effective May 1, 2003, as a result of the HIH Consolidation Transaction (as
defined in "Note 1. GeneralHIH Consolidation Transaction"), we have consolidated the financial results of HIH. Effective July 1, 2003, as a result of the AdMat Transaction,
we have consolidated the financial results of Advanced Materials. As a result, the financial information as of and for the year ended December 31, 2003 is not comparable to the prior years'
historical financial data presented herein, and the financial information as of and for the year ended December 31, 2004 is not comparable to the financial information as of and for the year
ended December 31, 2003. You should read the selected financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our
Consolidated Financial Statements and accompanying notes included elsewhere in this report.

Year ended December 31,2004

2003

2002

2001

2000(dollars in millions, except per share amounts)Statement of Operations Data:Revenues

$
11,485.8

$
7,080.9

$
2,661.0

$
2,757.4

$
3,325.7Gross profit


1,396.6


707.8


240.0


90.8


128.7Restructuring, impairment and plant closing costs (credit)


299.3


37.9


(1.0
)

588.5


Operating income (loss)


400.4


176.5


66.3


(709.4
)

(78.7
)Loss before cumulative effect of accounting changes


(227.7
)

(319.8
)

(191.9
)

(842.8
)

(138.6
)Cumulative effect of accounting changes(a)








169.7


(0.1
)

Net loss


(227.7
)

(319.8
)

(22.2
)

(842.9
)

(138.6
)Other Data:Depreciation and amortization

$
536.8

$
353.4

$
152.7

$
197.5

$
200.3Capital expenditures


226.6


191.0


70.2


76.4


90.3Balance Sheet Data (at period end):Total assets

$
9,436.5

$
8,737.4

$
2,747.2

$
2,357.8

$
3,543.8Total debt


6,299.5


5,910.1


1,736.1


2,450.5


2,268.6Total liabilities


9,078.2


8,278.8


2,532.0


3,046.3


3,322.3


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3

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in
reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in
reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our Consolidated Financial Statements required by this item are included on the pages immediately following the Index to Consolidated Financial Statements
appearing on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no changes in our independent accountants, Deloitte & Touche LLP, or disagreements with them on matters of accounting or financial
disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

In connection with the audit of our financial statements for the year ended December 31, 2003, our independent registered public accounting firm, or
auditors, identified several matters that they deemed to be "material weaknesses" in our internal controls as defined in standards established by the American Institute of Certified Public
Accountants. The auditors noted that these material weaknesses had led to restatements of the financial statements of certain of our subsidiaries in recent periods.

The
principal material weakness identified by our auditors was that our controllership function did not have an adequate formal process in place to gather the data required to prepare
the financial statements and disclosures required for the numerous financial reporting requirements of our subsidiaries. Specifically, the auditors noted that there was not a detailed review of the
data supporting the disclosures in our financial statements by a senior member of our controllership function, that supporting documentation for certain disclosures was very limited, that the
processes used to aggregate the information varied by company, without a standard, comprehensive package of supporting disclosure, and that information delivered to our senior management and our audit
committee was not timely and was often incomplete.

4

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In addition, the auditors noted that we had made a data entry error during the transition of our PO business to the SAP enterprise resource planning system in April 2003. This
error, which was not detected until February 2004, led to the restatement of the third quarter 2003 financial statements of certain of our subsidiaries, resulting in a $12.3 million
increase in our net loss for the three months ended September 30, 2003. The auditors also noted that during 2003, loss on sale of accounts receivable related to our receivables securitization
program was reported incorrectly due to a failure to properly understand certain aspects of the securitization program and a lack of oversight in the accounting for the program. This error led to the
restatement of the financial statements of certain of our subsidiaries for the first three quarters of 2003, resulting in a $17.9 million decrease in our net loss for the three months ended
March 31, 2003, a $12.3 million decrease in our net loss for the three months ended June 30, 2003 and a $6.4 million decrease in our net loss for the three months ended
September 30, 2003.

On
October 12, 2004, we announced that we had determined to reclassify certain amounts in our consolidated statements of cash flows caused by errors in the automated process by
which we determined the effect and classification of foreign exchange rate, the classification of repayment of debt by a subsidiary and the classification of certain fees paid in connection with the
AdMat Transaction on our statements of cash flows. These errors led to a restatement of the financial statements of certain of our subsidiaries for the six months ended June 30, 2004 and the
years ended December 31, 2003, 2002 and 2001. These reclassifications had no impact on our consolidated statements of operations or balance sheets.

In
connection with the audit of our parent corporation's financial statements for the nine months ended September 30, 2004, the auditors advised us of various matters involving
internal controls, relating to the closing of our parent corporation's books and records, that they considered to be a "reportable condition." The auditors advised us that they believed this condition
contributed to a number of misstatements in our financial statements that individually and in the aggregate were not material. Although the auditors advised us of this reportable condition, they did
not judge it to be a material weakness in connection with the audit of our parent corporation's financial statements for the nine months ended September 30, 2004. In conducting such audit, the
auditors did not undertake to audit our parent corporation's internal controls, and thus we cannot give any assurance that they would not note additional material weaknesses or reiterate the material
weaknesses described above had they done so.

We
entered into a number of significant transactions in 2003, including the acquisition of the HIH minority interests and the AdMat Transaction, which significantly increased our
financial reporting obligations. To improve our financial accounting organization and processes, we appointed a new independent director as the chairman of our audit committee in December 2003.
In addition, since the beginning of 2004, we have replaced our Controller and have added 13 new positions in the areas of finance, treasury, internal controls and internal audit, including a Director
of Financial Reporting and a Director of Internal Controls. We intend to add two more positions in internal audit before the end of
the first quarter of 2005. We have also adopted and implemented additional policies and procedures to strengthen our financial reporting system.

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 Securities Exchange Act of 1934 (the "Exchange Act")) as of December 31, 2004. In undertaking this evaluation, our
management has considered the matters identified by the auditors. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2004,
our disclosure controls and procedures were (1) designed to ensure that material information relating to our Company, including our consolidated subsidiaries, is made known to the chief
executive officer and chief financial officer by others within those entities, particularly during the period in which this report was being prepared, and (2) effective, in that they provide
reasonable assurance that information required to be disclosed by our Company in the reports that we

5

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file
or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms.

Other
than as specified above, no change in our internal control over financial reporting occurred during the three months ended December 31, 2004 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

ITEM 9B. OTHER INFORMATION

None.

6

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The current members of our board of directors are Jon M. Huntsman, Peter R. Huntsman, J. Kimo Esplin and Samuel D. Scruggs. The
members of our board of directors are appointed by the holder of our common stock, and our directors hold office until they resign, are removed or until their successors are duly appointed and
qualified. The additional information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in reliance on
Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The additional information required by this Item as it applies to us is the same in all material respects as the information set
forth in the equivalent Item in the Huntsman Corporation 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in
reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance under Equity Compensation Plans

As of December 31, 2004, we had no compensation plans (including individual compensation arrangements) under which our equity securities were authorized
for issuance. In connection with its initial public offering in February 2005, Huntsman Corporation adopted a stock incentive plan, which was approved by its stockholders prior to the
completion of the offering. A maximum of 21,590,909 shares of common stock may be issued pursuant to awards under the stock incentive plan.

Security Ownership of Certain Beneficial Owners

As of March 11, 2005, information with respect to each of the persons or groups known to us to be the beneficial owner of more than five percent of our
common stock, which is our only class of voting securities, is as follows:

Name and Address of Beneficial Owner

Amount and Nature of
Beneficial Ownership

Percent of ClassHuntsman Corporation(1)
500 Huntsman Way
Salt Lake City, Utah 84108

1,802,721

100
%


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7

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Name and Address of Beneficial Owner(1)

Amount and Nature of
Beneficial Ownership

Percent of Class(2)Jon M. Huntsman(3)

129,776,387

58.7
%Peter R. Huntsman(3)(4)

130,139,230

58.8
%David J. Matlin(3)(5)

129,776,387

58.7
%Christopher R. Pechock(3)(5)

129,776,387

58.7
%HMP Equity Trust(3)

129,776,387

58.7
%Huntsman Family Holdings(3)

129,776,387

58.7
%MatlinPatterson(3)

129,776,387

58.7
%


Security Ownership of Management

As of March 11, 2005, information with respect to common stock of Huntsman Corporation (which is the only class of equity securities of
Huntsman Corporation or its subsidiaries beneficially owned by our directors and executive officers) beneficially owned by our directors, named executive officers, and directors and executive
officers as a group is as follows:

Name and Address of
Beneficial Owner(1)

Amount and Nature of
Beneficial Ownership

Percent of Class(2)Jon M. Huntsman(3)

129,776,387

58.7%Peter R. Huntsman(3)(4)

130,139,230

58.8%J. Kimo Esplin(4)

158,323

Less than 1%Samuel D. Scruggs(4)

172,323

Less than 1%Anthony P. Hankins(4)

54,469

Less than 1%Paul G. Hulme(4)

58,569

Less than 1%Patrick W. Thomas(6)



All directors and executive officers as a group (13 persons)(4)

130,797,310

59.1%


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8

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is contained in the equivalent Item in the Huntsman Corporation 10-K and is incorporated herein by reference in
reliance on Rule 12b-23 under the Securities Exchange Act of 1934.

We
are a 100% owned subsidiary of Huntsman Corporation. The information required by this Item as it applies to us is the same in all material respects as the information set forth in the
equivalent Item in the Huntsman Corporation 10-K.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees billed to our Company by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte & Touche") for the years specified below were as follows (dollars in millions):

|Year |  | Audit |      | Audit Related |   | Tax |  | Other
|---- |  | ----- | ---- | ------------- | - | --- |  | -----
|2004 |  | $     | 14.4 |               | $ | 0.6 |  | $    
|2003 |  |       | 9.0  |               |   | 0.8 |  |      

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

|Number |  | Description                                                                                                                                                                                                                                                                                                                                                              
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Certificate of Incorporation of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.1 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                               
|3.2    |  | First Certificate of Amendment of the Certificate of Incorporation of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.2 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                         
|3.3    |  | Amended and Restated Bylaws of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.3 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                                
|3.4    |  | First Amendment to the Amended and Restated Bylaws of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.4 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                         
|3.5    |  | Certificate of Incorporation of ICI Alta Inc. (now known as Alta One Inc.) (incorporated by reference to Exhibit 3.5 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                    
|3.6    |  | Certificate of Amendment of Certificate of Incorporation of ICI Alta Inc. (now known as Alta One Inc.) (incorporated by reference to Exhibit 3.61 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                       
|3.7    |  | Bylaws of ICI Alta Inc. (now known as Alta One Inc.) (incorporated by reference to Exhibit 3.7 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                                          
|4.1    |  | Indenture, dated as of June 30, 1999, among Huntsman International LLC (f/k/a Huntsman ICI Chemicals LLC), the Guarantors party thereto and Bank One, N.A., as Trustee, relating to the 101/2% Senior Subordinated Notes due
2009 (incorporated by reference to Exhibit 4.1 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-85141))
|4.2    |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in dollars (included as Exhibit A-3 to Exhibit 4.10)                                                                                                                                                                                                                                                        
|4.3    |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in euros (included as Exhibit A-4 to Exhibit 4.10)                                                                                                                                                                                                                                                          
|4.4    |  | Form of Guarantee relating to the 101/8% Senior Subordinated Notes due 2009 (included as Exhibit E of Exhibit 4.10)                                                                                                                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                                                                          

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|4.5  |  | First Amendment, dated January 5, 2000, to Indenture, dated as of June 30, 1999, among Huntsman International LLC (f/k/a Huntsman ICI Chemicals LLC), as Issuer, each of the Guarantors named therein and Bank One, N.A., as Trustee (incorporated by
reference to Exhibit 4.6 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-85141))                          
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  |  | Indenture, dated as of March 13, 2001, among Huntsman International LLC, as Issuer, the Guarantors named therein and The Bank of New York, as Trustee, relating to 101/8% Senior Subordinated Notes due 2009 (incorporated by
reference to Exhibit 4.6 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)                     
|4.7  |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in dollars (included as Exhibit A-3 to Exhibit 4.6)                                                                                                                                                                                                                                                                                      
|4.8  |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in euros (included as Exhibit A-4 to Exhibit 4.6)                                                                                                                                                                                                                                                                                        
|4.9  |  | Form of Guarantee relating to the 101/8% Senior Subordinated Notes due 2009 (included as Exhibit E of Exhibit 4.6)                                                                                                                                                                                                                                                                                    
|4.10 |  | First Supplemental Indenture, dated as of January 11, 2002, among Huntsman International LLC, as Issuer, the Guarantors named therein and The Bank of New York, as Trustee, relating to 101/8% Senior Subordinated Notes due
2009 (incorporated by reference to Exhibit 4.7 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)
|4.11 |  | Indenture, dated as of March 21, 2002, among Huntsman International LLC, as Issuer, the Guarantors named therein and Wells Fargo Bank Minnesota, National Association, as Trustee, relating to the 97/8% Senior Notes due 2009
(incorporated by reference to Exhibit 4.8 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)   
|4.12 |  | Form of 97/8% Senior Note due 2009 denominated in dollars (included as Exhibit A-3 to Exhibit 4.11)                                                                                                                                                                                                                                                                                                   
|4.13 |  | Form of 97/8% Senior Note due 2009 denominated in euros (included as Exhibit A-4 to Exhibit 4.11)                                                                                                                                                                                                                                                                                                     
|4.14 |  | Form of Guarantee relating to the 97/8% Senior Notes due 2009 (included as Exhibit E of Exhibit 4.11)                                                                                                                                                                                                                                                                                                 
|4.15 |  | Amended and Restated Guarantee, dated as of April 11, 2003, among the Guarantors named therein and Wells Fargo Bank Minnesota, National Association, as Trustee, relating to the 97/8% Senior Notes due 2009 (incorporated by
reference to Exhibit 4.15 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-106482))                                                
|4.16 |  | Exchange and Registration Rights Agreement, dated as of March 21, 2002, among Huntsman International LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to the 97/8% Senior Notes due 2009
(incorporated by reference to Exhibit 4.9 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)  
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                       

11

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|4.17 |  | Exchange and Registration Rights Agreement, dated as of April 11, 2003, among Huntsman International LLC, the Guarantors, as defined therein, and the Purchasers as defined therein, relating to the 97/8%Senior Notes due 2009
(incorporated by reference to Exhibit 4.17 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-106482))                                                                                                            
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.18 |  | Amended and Restated Indenture, dated as of June 14, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $200,000,000
91/2% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.27 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                       
|4.19 |  | Form of Amended and Restated $200,000,000 91/2% Senior Subordinated Note due 2007 (included as Exhibit A to Exhibit 4.18)                                                                                                                                                                                                                                                                                                                                                            
|4.20 |  | First Supplemental Indenture, dated as of July 11, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $200,000,000
91/2% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.29 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                         
|4.21 |  | Second Supplemental Indenture, dated as of August 15, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $200,000,000
91/2% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.30 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                      
|4.22 |  | Amended and Restated Indenture, dated as of June 14, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $275,000,000
91/2% Senior Subordinated Notes due 2007 and the $125,000,000 Senior Subordinated Floating Rate Notes due 2007 (incorporated by reference to Exhibit 4.31 to the registration statement on Form S-4 of Huntsman LLC (File No.
333-112279)) 
|4.23 |  | Form of Amended and Restated Fixed Rate Note due 2007 (included as Exhibit A to Exhibit 4.22)                                                                                                                                                                                                                                                                                                                                                                                        
|4.24 |  | Form of Amended and Restated Floating Rate Note due 2007 (included as Exhibit B to Exhibit 4.22)                                                                                                                                                                                                                                                                                                                                                                                     
|4.25 |  | First Supplemental Indenture, dated as of July 11, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $275,000,000
91/2% Senior Subordinated Notes due 2007 and the $125,000,000 Senior Subordinated Floating Rate Notes due 2007 (incorporated by reference to Exhibit 4.34 to the registration statement on Form S-4 of Huntsman LLC (File No.
333-112279))   
|4.26 |  | Second Supplemental Indenture, dated as of August 15, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $275,000,000
91/2% Senior Subordinated Notes due 2007 and the $125,000,000 Senior Subordinated Floating Rate Notes due 2007 (incorporated by reference to Exhibit 4.35 to the registration statement on Form S-4 of Huntsman LLC (File No.
333-112279))
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

12

---



|4.27 |  | Indenture, dated as of September 30, 2003, among Huntsman LLC, the Guarantors party thereto and HSBC Bank USA, as Trustee, relating to the 115/8% Senior Secured Notes due 2010 (incorporated by reference to Exhibit 4.36 to
the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                                                 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.28 |  | Form of unrestricted 115/8% Senior Secured Note due 2010 (included as Exhibit A-2 to Exhibit 4.27)                                                                                                                                                                                                                                                                                                                          
|4.29 |  | Form of guarantee relating to the 115/8% Senior Secured Notes due 2010 (included as Exhibit E to Exhibit 4.27)                                                                                                                                                                                                                                                                                                              
|4.30 |  | Exchange and Registration Rights Agreement, dated as of September 30, 2003, among Huntsman LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to $380,000,000 aggregate principal amount of the
115/8% Senior Secured Notes due 2010 (incorporated by reference to Exhibit 4.39 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                       
|4.31 |  | Exchange and Registration Rights Agreement, dated as of December 12, 2003, among Huntsman LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to $75,400,000 aggregate principal amount of the
115/8% Senior Secured Notes due 2010 (incorporated by reference to Exhibit 4.40 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                         
|4.32 |  | Indenture, dated as of June 30, 2003, among Huntsman Advanced Materials LLC, as Issuer, each of the Guarantors named therein and Wells Fargo Bank Minnesota, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the
registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                                                                 
|4.33 |  | Form of Unrestricted Fixed Rate Note (included as Exhibit A-3 to Exhibit 4.32)                                                                                                                                                                                                                                                                                                                                              
|4.34 |  | Form of Unrestricted Floating Rate Note (included as Exhibit A-4 to Exhibit 4.32)                                                                                                                                                                                                                                                                                                                                           
|4.35 |  | Form of Guarantee (included as Exhibit E to Exhibit 4.32)                                                                                                                                                                                                                                                                                                                                                                   
|4.36 |  | Registration Rights Agreement, dated as of June 30, 2003, among Huntsman Advanced Materials LLC and the Guarantors named therein, as Issuers, and Deutsche Bank Securities Inc. and UBS Securities LLC, as Initial Purchasers (incorporated by reference
to Exhibit 4.5 to the registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                                 
|4.37 |  | Indenture, dated as of May 9, 2003, among HMP Equity Holdings Corporation, as Issuer, ICI Alta Inc. (now known as Alta One Inc.), as Guarantor, and Wells Fargo Bank Minnesota, National Association, as Trustee, relating to the 15% Senior Secured
Discount Notes due 2008 (incorporated by reference\ to Exhibit 4.46 to the registration statement on Form S-4 of HMP Equity Holdings Corporation (File No. 333-116100))
|4.38 |  | Form of 15% Senior Secured Discount Note due 2008 (included as Exhibit A-2 to Exhibit 4.37)                                                                                                                                                                                                                                                                                                                                 
|4.39 |  | Form of Guarantee (included as Exhibit E to Exhibit 4.37)                                                                                                                                                                                                                                                                                                                                                                   
|4.40 |  | Exchange and Registration Rights Agreement, dated as of May 9, 2003, among HMP Equity Holdings Corporation, ICI Alta Inc. (now known as Alta One Inc.), Credit Suisse First Boston LLC, and CIBC World Markets Corp (incorporated by reference to Exhibit
4.49 to the registration statement on Form S-4 of HMP Equity Holdings Corporation (File No. 333-116100))                                                          
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                             

13

---



|4.41 |  | Indenture, dated August 1, 2000, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the registration statement on Form F-4 of Vantico Group S.A. (File No. 333-13156))                                                                                                                                                                                       
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.42 |  | First Supplemental Indenture, dated as of April 10, 2003, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to the registration statement of Form S-4 of Huntsman Advanced
Materials LLC (File No. 333-115344))                                                                                                                                                
|4.43 |  | Second Supplemental Indenture, dated as of June 17, 2003, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.8 to the registration statement of Form S-4 of Huntsman Advanced
Materials LLC (File No. 333-115344))                                                                                                                                                
|4.44 |  | Third Supplemental Indenture, dated as of June 30, 2003, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.51 to the registration statement on Form S-4 of HMP Equity Holdings
Corporation (File No. 333-116100))                                                                                                                                                
|4.45 |  | Indenture, dated as of June 22, 2004, among Huntsman LLC, the Guarantors party thereto and HSBC Bank USA, as Trustee, relating to the 111/2% Senior Notes due 2012 and Senior Floating Rate Notes due 2011 (incorporated by
reference to Exhibit 4.1 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended June 30, 2004)                                                                                
|4.46 |  | Form of Restricted Fixed Rate Note due 2012 (included as Exhibit A-1 to Exhibit 4.45)                                                                                                                                                                                                                                                                                                                                              
|4.47 |  | Form of Restricted Floating Rate Note due 2011 (included as Exhibit A-2 to Exhibit 4.45)                                                                                                                                                                                                                                                                                                                                           
|4.48 |  | Form of Guarantee relating to the 111/2% Senior Notes due 2012 and Senior Floating Rate Notes due 2011 (included as Exhibit E to Exhibit 4.45)                                                                                                                                                                                                                                                                                     
|4.49 |  | Exchange and Registration Rights Agreement, dated as of June 22, 2004, among Huntsman LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to $300,000,000 111/2% Senior Notes due 2012 and
$100,000,000 Senior Floating Rate Notes due 2011 (incorporated by reference to Exhibit 4.5 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended June 30, 2004)           
|4.50 |  | Indenture, dated as of December 17, 2004, among Huntsman International LLC, as Issuer, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, relating to the 73/8% Senior Subordinated Notes due
2015 and the 71/2% Senior Subordinated Notes due 2015 (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K of Huntsman International LLC filed December 23, 2004)           
|4.51 |  | Form of 73/8% Senior Subordinated Note due 2015 (included as Exhibit A-1 to Exhibit 4.50)                                                                                                                                                                                                                                                                                                                                          
|4.52 |  | Form of 71/2% Senior Subordinated Note due 2015 (included as Exhibit A-2 to Exhibit 4.50)                                                                                                                                                                                                                                                                                                                                          
|4.53 |  | Form of Guarantee (included as Exhibit E to Exhibit 4.50)                                                                                                                                                                                                                                                                                                                                                                          
|4.54 |  | Exchange and Registration Rights Agreement, dated as of December 17, 2004, among Huntsman International LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to the 73/8% Senior Subordinated
Notes due 2015 and the 71/2% Senior Subordinated Notes due 2015 (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K of Huntsman International LLC filed December 23, 2004)
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    

14

---



|10.1 |  | Business Consulting Agreement, dated as of June 3, 2003, between Huntsman International LLC and Jon M. Huntsman (incorporated by reference to Exhibit 10.41 to the registration statement on Form S-4 of Huntsman International LLC (File No.
333-106482))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2 |  | Aircraft Dry Lease, dated as of September 14, 2001, between Jstar Corporation and Airstar Corporation (incorporated by reference to Exhibit 10.10 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.3 |  | Amended and Restated Subordinated Promissory Note, dated as of July 2, 2001, by Huntsman Corporation (now known as Huntsman LLC) in favor of Horizon Ventures, L.C. (incorporated by reference to Exhibit 10.11 to the registration statement on Form
S-4 of Huntsman LLC (File No. 333-112279))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.4 |  | Credit Agreement, dated as of June 30, 2003, among Huntsman Advanced Materials LLC, certain subsidiaries from time to time party thereto and various lending institutions with Deutsche Bank AG, New York Branch, as Administrative Agent (incorporated by
reference to Exhibit 10.1 to the registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                                                                                                                                                                                                                                                                                                                                                                          
|10.5 |  | Intercreditor and Collateral Agency Agreement, dated as of June 30, 2003, among Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank Minnesota, National Association, as trustee, Huntsman Advanced Materials LLC and the
subsidiaries listed therein (incorporated by reference to Exhibit 10.2 to the registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                                                                                                                                                                                                                                                                                                                                      
|10.6 |  | Pledge Agreement, dated as of May 9, 2003, by HMP Equity Holdings Corporation, as Issuer and Pledgor, and Huntsman Holdings, LLC, Huntsman Group Inc. and ICI Alta Inc. (now known as Alta One Inc.), as Pledgors, and Wells Fargo Bank Minnesota,
National Association, as Trustee (incorporated by reference to Exhibit 10.28 to the registration statement on Form S-4 of HMP Equity Holdings Corporation (File No. 333-116100))                                                                                                                                                                                                                                                                                                                                               
|10.7 |  | Amended and Restated Credit Agreement, dated as of July 13, 2004, among Huntsman International LLC, as the borrower, Huntsman International Holdings LLC, as the guarantor, Deutsche Bank Trust Company Americas, as administrative agent, Deutsche Bank
Securities Inc., as co-lead arranger and joint book runner, JP Morgan Securities Inc., as co-documentation agent and joint book runner, UBS Securities LLC, as co-syndication agent, Credit Suisse First Boston, as co-documentation agent, Merrill Lynch,
Pierce Fenner & Smith Inc., as co-documentation agent, and various lending institutions party thereto (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Huntsman International LLC for the three months ended June 30,
 2004)
|10.8 |  | First Amendment to Amended and Restated Credit Agreement, dated as of December 21, 2004, among Huntsman International LLC, Huntsman International Holdings LLC and the various agents and lending institutions party thereto (incorporated by reference to
Exhibit 10.1 to the current report on Form 8-K of Huntsman International LLC filed December 23, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.9 |  | Revolving Credit Agreement dated as of October 14, 2004, among Huntsman LLC, Huntsman Petrochemical Corporation, Huntsman Expandable Polymers Company, LC, Huntsman Polymers Corporation, Huntsman Fuels, L.P., and Huntsman International Trading
Corporation, as borrowers, the financial institutions party thereto, including Deutsche Bank Trust Company Americas, in their capacities as lenders thereunder, and Deutsche Bank Trust Company Americas, as administrative agent and as collateral agent
(incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

15

---



|10.10 |  | Term Credit Agreement dated as of October 14, 2004, among Huntsman LLC, the financial institutions party thereto, including Deutsche Bank Trust Company Americas, in their capacities as lenders thereunder, and Deutsche Bank Trust Company Americas, as
agent for the lenders (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 |  | Security Agreement (Revolving) dated as of October 14, 2004, among Huntsman LLC, certain subsidiaries of Huntsman LLC, and Deutsche Bank Trust Company Americas, as collateral agent (incorporated by reference to Exhibit 10.3 to the quarterly report on
Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                           
|10.12 |  | Security Agreement (Term) dated as of October 14, 2004, among Huntsman LLC, certain subsidiaries of Huntsman LLC, and Deutsche Bank Trust Company Americas, as collateral agent (incorporated by reference to Exhibit 10.4 to the quarterly report on Form
10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                
|10.13 |  | Second Amended and Restated Intercreditor Agreement dated as of October 14, 2004, among Deutsche Bank Trust Company Americas, as administrative agent, collateral agent, and mortgagee, and HSBC Bank USA, National Association, as trustee, and consented
to by Huntsman LLC (incorporated by reference to Exhibit 10.5 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)  
|10.14 |  | Huntsman Cost Reduction Incentive Plan and Form of Participation Agreement (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K of HMP Equity Holdings Corporation filed on November 23, 2004)                                                                                                                                                                                                        
|21.1* |  | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                                                                                                                   
|31.1* |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                            
|31.2* |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                            
|32.1* |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                            
|32.2* |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                            
|99.1* |  | Huntsman Corporation's Annual Report on Form 10-K for the year ended December 31, 2004, filed March 15, 2005 (File No. 001-32427)                                                                                                                                                                                                                                                                                             

---

16

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated:
March 28, 2005

| |  | HMP EQUITY HOLDINGS CORPORATION
| |  | -------------------------------
| |  | By:                            

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities
indicated on the    th day of March 2005.

|/s/JON M. HUNTSMANJon M. Huntsman Chairman of the Board and
Director                                                            |  | /s/PETER R. HUNTSMANPeter R. Huntsman President and Chief Executive
Officer and Director
(Principal Executive Officer)
|------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|/s/J. KIMO ESPLINJ. Kimo Esplin Executive Vice President and Chief
Financial Officer and Director
(Principal Financial Officer) |  | /s/L. RUSSELL HEALYL. Russell Healy Vice President and Controller
(Principal Accounting Officer)                      
|/s/SAMUEL D. SCRUGGSSamuel D. Scruggs Executive Vice President and General Counsel and
Director                                 |  |                                                                                                                       

17

---





HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------
|HMP Equity Holdings Corporation and Subsidiaries:                                                                                    
|Consolidated Financial Statements:                                                                                                   
|Responsibility for the Consolidated Financial Statements                                                                             
|Report of Independent Registered Public Accounting Firm                                                                              
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                                                         
|Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2004, 2003 and 2002           
|Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2004, 2003 and 2002                                 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002                                           
|Notes to Consolidated Financial Statements                                                                                           
|Schedule to Consolidated Financial Statements, Schedule ICondensed Financial Information of Registrant                              
|Schedule to Consolidated Financial Statements, Schedule IIValuation and Qualifying Accounts                                         
|Huntsman International Holdings LLC and Subsidiaries:                                                                                
|Unaudited Consolidated Financial Statements:                                                                                         
|Consolidated Condensed Balance Sheets (unaudited) as of March 31, 2003 and December 31, 2002                                         
|Consolidated Condensed Statements of Operations and Comprehensive Loss (Unaudited) for the three months ended March 31, 2003 and 2002
|Consolidated Statement of Changes in Members' Equity (unaudited) for three months ended March 31, 2003                               
|Consolidated Condensed Statements of Cash Flows (unaudited) for the three months ended March 31, 2003 and 2002                       
|Notes to Consolidated Financial Statements                                                                                           
|Consolidated Financial Statements:                                                                                                   
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                                                         
|Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2002, 2001 and 2000           
|Consolidated Statements of Equity for the years ended December 31, 2002, 2001 and 2000                                               
|Consolidated Statements of Cash Flows for the years ended December 31, 2002 (as restated), 2001 (as restated) and 2000               

F-1

---





RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

HMP Equity Holdings Corporation ("Company") management is responsible for the preparation, accuracy and integrity of the consolidated financial statements and
other financial information included in this Annual Report. This responsibility includes preparing the statements in accordance with accounting principles generally accepted in the United States of
America and necessarily includes estimates based upon management's best judgment.

To
help ensure the accuracy and integrity of Company financial data, management maintains internal controls which are designed to provide reasonable assurance that transactions are
executed as authorized, that they are accurately recorded and that assets are properly safeguarded. It is essential for all Company employees to conduct their business affairs in keeping with the
highest ethical standards as outlined in our code of conduct policy, "Business Conduct Guidelines." Careful selection of employees, and appropriate divisions of responsibility also help us to achieve
our control objectives.

The
consolidated balance sheets of HMP Equity Holdings Corporation and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations and
comprehensive income (loss), stockholders' equity (deficit), and cash flows for the years ended December 31, 2004, 2003 and 2002 have been audited by the Company's independent registered public
accounting firm Deloitte & Touche LLP. Their report is shown on page F-3.

The
Board of Directors oversees the adequacy of the Company's control environment. Representatives of the Audit Committee meet periodically with representatives of Deloitte &
Touche LLP, internal financial management and the internal auditor to review accounting, control, auditing and financial reporting matters. The independent registered public accounting firm and the
internal auditor also have full and free access to meet privately with the Audit Committee.

F-2

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of HMP Equity Holdings Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of HMP Equity Holdings Corporation and subsidiaries (the "Company") as of December 31, 2004
and 2003, and the related consolidated statements of operations and comprehensive loss, members' equity (deficit), and cash flows for each of the three years in the period ended December 31,
2004. Our audit also included the financial statement schedules listed on page F-1. These financial statements and financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
controls over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of HMP Equity Holdings Corporation and subsidiaries as of
December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements
taken as a whole, present fairly in all material respects the information set forth therein.

As
discussed in Note 1 to the consolidated financial statements of HMP Equity Holdings Corporation presented herein, the consolidated financial statements reflect the financial
position and results of operations and cash flows as if Huntsman LLC and HMP Equity Holdings Corporation were combined for all periods presented.

As
discussed in Note 2 to the consolidated financial statements, the Company changed its method of computing depreciation for certain assets effective January 1, 2003. In
addition, the Company adopted Statements of Financial Accounting Standards Nos. 141 and 142 effective January 1, 2002.

/s/
DELOITTE & TOUCHE LLP

Houston,
Texas
March 14, 2005

F-3

---





HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (Dollars in Millions)

|                                                                                                        |                                                                                                          | December 31,                               |        
|------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -------
|
|ASSETS                                                                                                  |                                                                                                          |                                            |        
|Current assets:                                                                                         |                                                                                                          |                                            |        
|                                                                                                        | Cash and cash equivalents                                                                                |                                            | $      
|                                                                                                        | Restricted cash                                                                                          |                                            |        
|                                                                                                        | Accounts and notes receivables (net of allowance for doubtful accounts of $25.8 and $26.5, respectively) |                                            |        
|                                                                                                        | Accounts receivable from affiliates                                                                      |                                            |        
|                                                                                                        | Inventories                                                                                              |                                            |        
|                                                                                                        | Prepaid expenses                                                                                         |                                            |        
|                                                                                                        | Deferred income taxes                                                                                    |                                            |        
|                                                                                                        | Other current assets                                                                                     |                                            |        
|                                                                                                        |                                                                                                          |                                            |        
|                                                                                                        |                                                                                                          | Total current assets                       |        
|Property, plant and equipment, net                                                                      |                                                                                                          |                                            | 5,150.9
|Investment in unconsolidated affiliates                                                                 |                                                                                                          |                                            | 170.9  
|Intangible assets, net                                                                                  |                                                                                                          |                                            | 245.6  
|Goodwill                                                                                                |                                                                                                          |                                            | 3.3    
|Deferred income taxes                                                                                   |                                                                                                          |                                            | 34.5   
|Notes receivable from affiliates                                                                        |                                                                                                          |                                            | 23.6   
|Other noncurrent assets                                                                                 |                                                                                                          |                                            | 608.6  
|                                                                                                        |                                                                                                          |                                            |        
|                                                                                                        |                                                                                                          | Total assets                               |        
|                                                                                                        |                                                                                                          |                                            |        
|LIABILITIES AND STOCKHOLDER'S EQUITY                                                                    |                                                                                                          |                                            |        
|Current liabilities:                                                                                    |                                                                                                          |                                            |        
|                                                                                                        | Accounts payable                                                                                         |                                            | $      
|                                                                                                        | Accounts payable to affiliates                                                                           |                                            |        
|                                                                                                        | Accrued liabilities                                                                                      |                                            |        
|                                                                                                        | Deferred income taxes                                                                                    |                                            |        
|                                                                                                        | Current portion of long-term debt                                                                        |                                            |        
|                                                                                                        | Current portion of long-term debtaffiliates                                                             |                                            |        
|                                                                                                        |                                                                                                          |                                            |        
|                                                                                                        |                                                                                                          | Total current liabilities                  |        
|Long-term debt                                                                                          |                                                                                                          |                                            | 6,221.1
|Long-term debtaffiliates                                                                               |                                                                                                          |                                            | 40.9   
|Deferred income taxes                                                                                   |                                                                                                          |                                            | 217.9  
|Other noncurrent liabilities                                                                            |                                                                                                          |                                            | 745.3  
|                                                                                                        |                                                                                                          |                                            |        
|                                                                                                        |                                                                                                          | Total liabilities                          |        
|                                                                                                        |                                                                                                          |                                            |        
|Minority interests in common stock of consolidated subsidiary                                           |                                                                                                          |                                            | 36.8   
|HGI's interest in preferred stock of consolidated subsidiary (liquidation preference of $513.3 million) |                                                                                                          |                                            | 195.7  
|Commitments and contingencies (Notes 20 and 22)                                                         |                                                                                                          |                                            |        
|Stockholder's equity:                                                                                   |                                                                                                          |                                            |        
|                                                                                                        | Common stock                                                                                             |                                            |        
|                                                                                                        | Warrants issued                                                                                          |                                            |        
|                                                                                                        | Warrants reacquired and held in treasury, at cost                                                        |                                            |        
|                                                                                                        | Accumulated deficit                                                                                      |                                            |        
|                                                                                                        | Accumulated other comprehensive income                                                                   |                                            |        
|                                                                                                        |                                                                                                          |                                            |        
|                                                                                                        |                                                                                                          | Total stockholder's equity                 |        
|                                                                                                        |                                                                                                          |                                            |        
|                                                                                                        |                                                                                                          | Total liabilities and stockholder's equity |        
|                                                                                                        |                                                                                                          |                                            |        

See accompanying notes to consolidated financial statements.

F-4

---



HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS AND  COMPREHENSIVE INCOME (LOSS)        (Dollars in Millions)

|                                                                                                |                                                 | Year ended December 31, |         
|----------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------- | --------
|
|Revenues:                                                                                       |                                                 |                         |         
|                                                                                                | Trade sales                                     |                         | $       
|                                                                                                | Related party sales                             |                         |         
|                                                                                                |                                                 |                         |         
|                                                                                                |                                                 | Total revenues          |         
|Cost of goods sold                                                                              |                                                 |                         | 10,089.2
|                                                                                                |                                                 |                         |         
|Gross profit                                                                                    |                                                 |                         | 1,396.6 
|Expenses:                                                                                       |                                                 |                         |         
|                                                                                                | Selling, general and administrative             |                         |         
|                                                                                                | Research and development                        |                         |         
|                                                                                                | Other operating income                          |                         |         
|                                                                                                | Restructuring and plant closing costs (credits) |                         |         
|                                                                                                |                                                 |                         |         
|                                                                                                |                                                 | Total expenses          |         
|                                                                                                |                                                 |                         |         
|Operating income                                                                                |                                                 |                         | 400.4   
|Interest expense                                                                                |                                                 |                         | (607.2  
|Interest (expense) incomeaffiliate                                                             |                                                 |                         | (5.4    
|Loss on sale of accounts receivable                                                             |                                                 |                         | (15.6   
|Equity in income (losses) of investment in unconsolidated affiliates                            |                                                 |                         | 4.0     
|Other expense                                                                                   |                                                 |                         | (25.8   
|                                                                                                |                                                 |                         |         
|Loss before income tax benefit, minority interests, and cumulative effect of accounting changes |                                                 |                         | (249.6  
|Income tax (benefit) expense                                                                    |                                                 |                         | (29.1   
|                                                                                                |                                                 |                         |         
|Loss before minority interest and cumulative effect of accounting changes                       |                                                 |                         | (220.5  
|Minority interest in subsidiaries' (income) loss                                                |                                                 |                         | (7.2    
|Cumulative effect of accounting change                                                          |                                                 |                         |        
|                                                                                                |                                                 |                         |         
|Net loss                                                                                        |                                                 |                         | (227.7  
|Other comprehensive income                                                                      |                                                 |                         | 70.5    
|                                                                                                |                                                 |                         |         
|Comprehensive loss                                                                              |                                                 | $                       | (157.2  
|                                                                                                |                                                 |                         |         

See
accompanying notes to consolidated financial statements

F-5

---





HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY        (Dollars in Millions and Shares in Thousands)

|                                                                                                    |  | Common stock |   | Preferred stock |         | Warrants |        | Retained
earnings
(accumulated
deficit) |   | Accumulated
other comprehensive
income
(loss) |   |   |      
|--------------------------------------------------------------------------------------------------- |  | ------------ | - | --------------- | ------- | -------- | ------ | --------------------------------------- | - | --------------------------------------------- | - | - | -----
|
|Balance, January 1, 2002                                                                            |  | 17,998.0     |   | $               | 181.0   |          | 114.5  |                                         | $ | 100.0                                         |   | $ |     
|Recapitalization of the Company (Note 1)                                                            |  | (31.4        | ) |                 | 0.5     |          | 6.3    |                                         |   | (0.5                                          | ) |   |     
|Capital contribution from parent related to exchange of debt for parent company equity              |  |             |   |                 | 753.1   |          |       |                                         |   |                                              |   |   |     
|Expenses of exchange of debt                                                                        |  |             |   |                 | (10.1   | )        |       |                                         |   |                                              |   |   |     
|Capital contribution from parent related to acquisition of minority interest in affiliates (Note 1) |  |             |   |                 | 71.1    |          |       |                                         |   |                                              |   |   |     
|Capital contribution from parent related to notes receivable from HIH and payable to ICI            |  |             |   |                 | 169.7   |          |       |                                         |   |                                              |   |   |     
|Capital contribution from members                                                                   |  |             |   |                 | 5.2     |          |       |                                         |   |                                              |   |   |     
|Net loss                                                                                            |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|Other comprehensive income                                                                          |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|                                                                                                    |  |              |   |                 |         |          |        |                                         |   |                                               |   |   |      
|Balance, December 31, 2002                                                                          |  | 17,966.6     |   |                 | 1,170.5 |          | 120.8  |                                         |   | 99.5                                          |   |   |     
|Acquisition of subsidiary debt by the Company at less than carrying amount                          |  |             |   |                 | 19.5    |          |       |                                         |   |                                              |   |   |     
|Distribution to parent                                                                              |  |             |   |                 | (2.2    | )        |       |                                         |   |                                              |   |   |     
|Preferred stock surrendered                                                                         |  |             |   |                 | 99.5    |          | (120.8 | )                                       |   | (99.5                                         | ) |   |     
|Issuance of warrants                                                                                |  |             |   |                 |        |          |       |                                         |   |                                              |   |   | 130.0
|Requisition of warrants for treasury                                                                |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|Net loss                                                                                            |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|Accumulated other comprehensive loss of HIH at May 1, 2003 (date of consolidation)                  |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|Other comprehensive income                                                                          |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|                                                                                                    |  |              |   |                 |         |          |        |                                         |   |                                               |   |   |      
|Balance, December 31, 2003                                                                          |  | 17,966.6     |   |                 | 1,287.3 |          |       |                                         |   |                                              |   |   | 130.0
|Net loss                                                                                            |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|Purchase accounting adjustment                                                                      |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|Other comprehensive income                                                                          |  |             |   |                 |        |          |       |                                         |   |                                              |   |   |     
|                                                                                                    |  |              |   |                 |         |          |        |                                         |   |                                               |   |   |      
|                                                                                                    |  | 17,966.6     |   | $               | 1,287.3 |          |       |                                         | $ |                                              |   | $ | 130.0
|                                                                                                    |  |              |   |                 |         |          |        |                                         |   |                                               |   |   |      

See accompanying notes to consolidated financial statements

F-6

---



HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (Dollars in Millions)

|                                                                                          |                                 | Year ended December 31, |       
|----------------------------------------------------------------------------------------- | ------------------------------- | ----------------------- | ------
|
|Cash Flows From Operating Activities:                                                     |                                 |                         |       
|Net loss                                                                                  |                                 | $                       | (227.7
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |                                 |                         |       
|Cumulative effect of accounting change                                                    |                                 |                         |      
|Equity in (income) losses of investment in unconsolidated affiliates                      |                                 |                         | (4.0  
|Depreciation and amortization                                                             |                                 |                         | 536.8 
|Provision for losses on accounts receivable                                               |                                 |                         | 0.7   
|Non-cash restructuring and plant closing charges (credits)                                |                                 |                         | 138.0 
|Loss (gain) on disposal of plant and equipment                                            |                                 |                         | 2.4   
|Loss on early extinguishment of debt                                                      |                                 |                         | 25.6  
|Noncash interest expense                                                                  |                                 |                         | 160.6 
|Noncash interest on affiliate debt                                                        |                                 |                         | 5.4   
|Deferred income taxes                                                                     |                                 |                         | (64.5 
|Unrealized gains on foreign currency transactions                                         |                                 |                         | (111.7
|Minority interests in subsidiaries income (loss)                                          |                                 |                         | 6.2   
|Other                                                                                     |                                 |                         | (13.0 
|Changes in operating assets and liabilities (net of acquisitions):                        |                                 |                         |       
|                                                                                          | Accounts and notes receivables  |                         |       
|                                                                                          | Change in receivables sold, net |                         |       
|                                                                                          | Inventories                     |                         |       
|                                                                                          | Prepaid expenses                |                         |       
|                                                                                          | Other current assets            |                         |       
|                                                                                          | Other noncurrent assets         |                         |       
|                                                                                          | Accounts payable                |                         |       
|                                                                                          | Accrued liabilities             |                         |       
|                                                                                          | Other noncurrent liabilities    |                         |       
|                                                                                          |                                 |                         |       
|Net cash provided by operating activities                                                 |                                 |                         | 180.8 
|                                                                                          |                                 |                         |       
|Investing Activities:                                                                     |                                 |                         |       
|Capital expenditures                                                                      |                                 |                         | (226.6
|Proceeds from sale of plant & equipment                                                   |                                 |                         | 5.2   
|Cash paid for intangible asset                                                            |                                 |                         |      
|Advances to unconsolidated affiliates                                                     |                                 |                         | (21.9 
|Net borrowings under revolving loan facilities                                            |                                 |                         | 2.1   
|Net cash received from unconsolidated affiliates                                          |                                 |                         | 8.6   
|Acquisition of minority interest                                                          |                                 |                         |      
|Loans and other assets                                                                    |                                 |                         | 1.0   
|Change in restricted cash                                                                 |                                 |                         | 1.6   
|Cash portion of AdMat acquisition                                                         |                                 |                         |      
|Purchase of Vantico senior notes                                                          |                                 |                         |      
|                                                                                          |                                 |                         |       
|Net cash used in investing activities                                                     |                                 |                         | (230.0
|                                                                                          |                                 |                         |       

F-7

---



HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)        (Dollars in Millions)

|                                                                            |                                            | Year ended December 31, |         
|--------------------------------------------------------------------------- | ------------------------------------------ | ----------------------- | --------
|
|Financing Activities:                                                       |                                            |                         |         
|Net borrowings (repayment) under revolving loan facilities                  |                                            |                         | 113.8   
|Net (repayment) borrowings on overdraft                                     |                                            |                         | (10.6   
|Repayment of long-term debt                                                 |                                            |                         | (2,489.4
|Proceeds from long-term debt                                                |                                            |                         | 2,515.3 
|Repayment of note payable                                                   |                                            |                         | (19.6   
|Proceeds from issuance of subsidiary warrants                               |                                            |                         |        
|Cash paid for reacquired subsidiary warrants                                |                                            |                         |        
|Proceeds from subordinated note issued to an affiliated entity              |                                            |                         |        
|Shares of subsidiary issued to minority interests for cash                  |                                            |                         | 5.4     
|Cost of raising subisidiary equity capital                                  |                                            |                         |        
|Debt issuance costs                                                         |                                            |                         | (35.5   
|(Distribution to) capital contribution from members                         |                                            |                         |        
|Cash contributed to subsidiary later exchanged for preferred tracking stock |                                            |                         |        
|Repayments of senior notes                                                  |                                            |                         | (333.4  
|Issuance of senior notes                                                    |                                            |                         | 354.5   
|Cash acquired in acquisition of equity method affiliate                     |                                            |                         |        
|Costs of early extinguishment of debt                                       |                                            |                         | (17.0   
|                                                                            |                                            |                         |         
|Net cash provided by (used in) financing activities                         |                                            |                         | 83.5    
|                                                                            |                                            |                         |         
|Effect of exchange rate changes on cash                                     |                                            |                         | 11.1    
|                                                                            |                                            |                         |         
|Increase (decrease) in cash and cash equivalents                            |                                            |                         | 45.4    
|Cash and cash equivalents at beginning of period                            |                                            |                         | 197.8   
|Cash and cash equivalents of HIH at May 1, 2003 (date of consolidation)     |                                            |                         |        
|                                                                            |                                            |                         |         
|Cash and cash equivalents at end of period                                  |                                            | $                       | 243.2   
|                                                                            |                                            |                         |         
|Supplemental cash flow information:                                         |                                            |                         |         
|                                                                            | Cash paid for interest                     |                         | $       
|                                                                            | Cash paid for (received from) income taxes |                         |         

See accompanying notes to consolidated financial statements

F-8

---



Supplemental non-cash investing and financing activities:

The Company finances a portion of its property and liability insurance premiums with third parties. During the year ended December 31, 2003, 2002 and 2001,
the Company issued notes payable for approximately $9.3 million, $2.3 million and $2.5 million, respectively, and recorded prepaid insurance for the same amount, which will be
amortized over the period covered.

On
June 30, 2003, Huntsman Group Inc., the Company's parent contributed its 100% of Huntsman Advanced Materials Investment LLC's common equity. Huntsman Group Inc.
retained 100% ownership of the preferred shares, which has a liquidation preference of $513.3 million. Therefore, for financial reporting purposes, this equity contribution had no impact to the
Company's equity.

On
September 30, 2002, Huntsman Holdings, LLC, the Company's ultimate parent, exchanged $753.1 million of subordinated notes, including interest, less deferred debt
issuance costs of Huntsman LLC and Huntsman Polymers Corporation for an equity interest. The effective cancellation of debt by the Company was recorded as an equity contribution. In connection with
this exchange of debt for equity, on September 30, 2002, the Company effectively acquired the following interests from Huntsman Holdings, LLC: (1) the remaining 20% interest in JK
Holdings Corporation and the remaining 20% interest in Huntsman Surfactants Technology Corporation, both previously accounted for as consolidated subsidiaries, (2) the remaining 50% interest in
Huntsman Chemical Australia Unit Trust and HCPH Holdings Pty Limited, formerly accounted for as an investment in unconsolidated affiliates using equity method accounting; and (3) the remaining
19.9% interest in Huntsman Specialty Chemicals Holdings Corporation. The Company accounted for the acquisition of these minority interests from Huntsman Holdings, LLC as an equity contribution with a
fair value of $71.1 million (including cash of $7.9 million and net of debt assumed of $35.3 million).

On
September 30, 2002, Huntsman Holdings, LLC contributed to the Company subordinated discount notes receivable of Huntsman International Holdings LLC valued at
$273.1 million (including accrued interest of $13.1 million) and a payable to Imperial Chemicals Industries PLC of $103.5 million (including accrued interest of
$3.5 million). The net contribution of $169.7 million has been accounted for as an equity contribution.

During
2001, the Company executed a capital lease and recorded a $4.9 million increase to long-term debt and property, plant and equipment.

See
accompanying notes to consolidated financial statements

F-9

---





HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    General



HMP Equity Holdings Corporation (the "Company" and, unless the context otherwise requires, including its predecessors and subsidiaries) is a global manufacturer
and marketer of differentiated and commodity chemicals. The Company produces a wide range of products for a variety of global industries, including the chemical, plastics, automotive, aviation,
footwear, paints and coatings, construction, technology, agriculture, healthcare, consumer products, textile, furniture, appliance and packaging industries. The Company operates at facilities located
in North America, Europe, Asia, Australia, South America and Africa. The Company's business is organized into six reportable operating segments: Polyurethanes, Advanced Materials, Performance
Products, Pigments, Polymers and Base Chemicals.



In this report, "HLLC" or "Huntsman LLC" refers to Huntsman LLC and, unless the context otherwise requires, its subsidiaries, "Huntsman Polymers" refers to
Huntsman Polymers Corporation (a 100% owned subsidiary of HLLC) and, unless the context otherwise requires, its subsidiaries, "Huntsman Specialty" refers to Huntsman Specialty Chemicals Corporation (a
100% owned subsidiary
of HLLC), "HCCA" refers to Huntsman Chemical Company Australia Pty. Ltd. (a 100% owned indirect subsidiary of HLLC) and, unless the context otherwise requires, its subsidiaries, "HIH" refers to
Huntsman International Holdings LLC (a subsidiary, which as of February 16, 2005, is owned 58% by the Company and 42% by Huntsman LLC) and, unless the context otherwise requires, its
subsidiaries, "HI" refers to Huntsman International LLC (a 100% owned subsidiary of HIH) and, unless the context otherwise requires, its subsidiaries, "HGI" refers to Huntsman Group Inc., "Huntsman
Holdings" refers to Huntsman Holdings, LLC, "AdMat" refers to Huntsman Advanced Materials LLC (a 90.3% owned indirect subsidiary of the Company) and, unless the context otherwise requires, its
subsidiaries, "Vantico" refers to Vantico Group S.A. (a 100% owned subsidiary of AdMat) and, unless the context otherwise requires, its subsidiaries, "MatlinPatterson" refers to MatlinPatterson Global
Opportunities Partners L.P., MatlinPatterson Global Opportunities Partners (Bermuda) L.P. and MatlinPatterson Global Opportunities Partners B L.P., and "ICI" refers to Imperial Chemical Industries PLC
(a former indirect owner of certain of HIH's membership interests) and its subsidiaries.



The Company is a Delaware corporation and is owned 100% by HGI, subject to warrants that, if exercised, would entitle the holders to up to 12% of the common
equity of the Company. HGI is owned 100% by Huntsman Holdings, a Delaware limited liability company. The voting membership interests of Huntsman Holdings are owned by the Huntsman family,
MatlinPatterson, Consolidated Press and certain members of the Company's senior management. In addition, Huntsman Holdings has issued a non-voting preferred unit to Huntsman Holdings
Preferred Member LLC, which, in turn, is owned by MatlinPatterson (indirectly), Consolidated Press, the Huntsman Cancer Foundation, certain members of the Company's senior management and certain
members of the Huntsman family. Huntsman Holdings has issued certain other non-voting preferred units to the Huntsman family, MatlinPatterson and Consolidated Press that track the
performance of the AdMat business. The Huntsman family has board and operational control of the Company.

The
Company operates its businesses through three principal operating subsidiaries, Huntsman LLC, HIH and AdMat. Each of the Company's principal operating subsidiaries is separately
financed,

F-10

---



its
debt is non-recourse to the Company and the Company has no contractual obligations to fund its respective operations. Moreover, the debt of Huntsman LLC is non-recourse to
HIH and AdMat, the debt of HIH is non-recourse to Huntsman LLC and AdMat, and the debt of AdMat is non-recourse to Huntsman LLC and HIH.



On February 16, 2005, Huntsman Corporation, the Company's ultimate parent corporation, completed an initial public offering of 55,681,819 shares of its
common stock sold by it and 13,579,546 shares of its common stock sold by a selling stockholder, in each case at a price to the public of $23 per share, and 5,750,000 shares of its 5% mandatory
convertible preferred stock sold by it at a price to the public of $50 per share.

The
net proceeds to Huntsman Corporation from its initial public offering of common and preferred stock were approximately $1,500 million, substantially all of which are being
used to repay outstanding indebtedness of the Company and certain of the Company's subsidiaries, Huntsman LLC and HIH, as follows:



In
connection with the repayment of indebtedness discussed above, the Company expects to record a loss on early extinguishment of debt in the first quarter of 2005 of approximately
$235 million.

In
connection with the completion of its initial public offering, Huntsman Corporation consummated a reorganization transaction (the "Reorganization Transaction"). In the
Reorganization Transaction, the Company's previous ultimate parent, Huntsman Holdings, became a subsidiary of Huntsman Corporation.

As
a result of Huntsman Corporation's cash contributions that were used to redeem the HIH Senior Discount Notes and its contribution to HIH of the senior subordinated reset discount
notes due 2009 of HIH that were originally issued to ICI (the "HIH Senior Subordinated Discount Notes"), the

F-11

---



Company's
ownership interest in HIH increased from 40% to 58%, and, accordingly, Huntsman LLC's interest in HIH decreased from 60% to 42%.

In
connection with its initial public offering and as part of the Reorganization Transaction, the Company exercised its right under the outstanding warrants to purchase common stock of
the Company (the "HMP Warrants") to require that all the HMP Warrants and any shares of the Company's equity securities issued upon exercise of the HMP Warrants be exchanged for newly issued shares of
Huntsman Corporation's common stock. Under the terms of the HMP Warrants, an aggregate of approximately 16.9 million shares of Huntsman Corporation's common stock will be issued in exchange for
the outstanding HMP Warrants on March 14, 2005.



The Company was formed on August 25, 2002 to hold, among other things, the equity interest of Huntsman LLC. Prior to September 30, 2002, Huntsman
LLC was owned by members of the Huntsman family and by certain affiliated entities. On September 30, 2002, Huntsman LLC and its subsidiary, Huntsman Polymers, completed debt for equity
exchanges (the "HLLC Restructuring"). Pursuant to the
HLLC Restructuring, the Huntsman family contributed all their equity interests in Huntsman LLC and its subsidiaries, including minority interests acquired from Consolidated Press Holdings Limited
("Consolidated Press") and the interests described in the second following paragraph, to the Company in exchange for equity interests in the Company MatlinPatterson and Consolidated Press exchanged
approximately $679 million in principal amount of Huntsman LLC's outstanding subordinated notes and Huntsman Polymers' outstanding senior notes they held into equity interests in the Company.
There was also approximately $84 million in accrued interest that was cancelled as a result of the exchange. The net book value of the $763 million of principal and accrued interest,
after considering debt issuance costs, was $753 million. The Company contributed its investment in Huntsman LLC to HMP.

In
the HLLC Restructuring, the effective cancellation of debt was recorded as a capital contribution because MatlinPatterson and Consolidated Press received equity of the Company in
exchange. The fair value of the equity received approximated the carrying value of the debt exchanged. No gain was recorded on the HLLC Restructuring.

As
mentioned above, on September 30, 2002, the Company effectively acquired the following interests:



The
Company accounted for the acquisition of the minority interests as an equity contribution with a value of $71.1 million (including cash of $7.9 million and net of debt
assumed of $35.3 million).

Also
related to the HLLC Restructuring, in June 2002, MatlinPatterson entered into an agreement with ICI (the "Option Agreement"). The Option Agreement provided BNAC, Inc.
("BNAC"), then a

F-12

---



MatlinPatterson
subsidiary, with an option to acquire the ICI subsidiary that held a 30% membership interest in HIH (the "ICI 30% Interest") on or before May 15, 2003 upon the payment of
$180 million plus accrued interest from May 15, 2002, and subject to completion of the purchase of the HIH Senior Subordinated Discount Notes. Concurrently, BNAC paid ICI
$160 million to acquire the HIH Senior Subordinated Discount Notes, subject to certain conditions, including the obligation to make an additional payment of $100 million plus accrued
interest to ICI. The HIH Senior Subordinated Discount Notes were pledged to ICI as collateral security for such additional payment. BNAC's sole business purpose was to acquire both the HIH Senior
Subordinated Discount Notes and the ICI 30% Interest, and to participate in the HLLC Restructuring.

In
connection with the HLLC Restructuring, all the shares in BNAC were contributed to HMP. The Company caused BNAC to be merged into HMP. As a result of its merger with BNAC, HMP held
the interests formerly held by BNAC in the HIH Senior Subordinated Discount Notes and the option to acquire the subsidiary of ICI that held the ICI 30% Interest. The HIH Senior Subordinated Discount
Notes were valued at $273.1 million (including accrued interest of $13.2 million) and the note payable to ICI of $103.5 million (including accrued interest of $3.5 million)
was recorded by the Company. The net contribution to HMP of $169.7 (the $160 million paid by BNAC for the HIH Senior Subordinated Discount Notes plus net accrued interest) million was accounted
for as an equity contribution.



Prior to May 9, 2003, the Company owned, indirectly, approximately 61% of the membership interests of HIH. The Company accounted for its investment in HIH
on the equity method due to the significant management participation rights formerly granted to ICI pursuant to the HIH limited liability company agreement. On May 9, 2003, the Company's
indirect subsidiary, HMP, exercised the option under the Option Agreement and purchased the ICI subsidiary that held ICI's 30% membership interest in HIH, and, at that time, HMP also purchased
approximately 9% of the HIH membership interests held by institutional investors (the "HIH Consolidation Transaction"). The total consideration paid in connection with the HIH Consolidation
Transaction was approximately $286 million. As a result of the HIH Consolidation Transaction, the Company (indirectly through HMP and its subsidiaries) owns 100% of the HIH membership
interests. Accordingly, as of May 1, 2003, HIH is a consolidated subsidiary of the Company and is no longer accounted for on an equity basis.

The
Company accounted for the acquisition using the purchase method. Accordingly, the results of operation and cash flows of the acquired interests were consolidated with those of the
Company beginning in May 2003. During the second quarter of 2004, the Company finalized the allocation of the purchase price. As part of its final purchase price allocation, the Company valued
the related pension liabilities, recorded deferred taxes and reclassified certain other amounts resulting in a corresponding increase in property, plant and equipment of approximately
$286 million. The following is a summary

F-13

---



of
the final allocation of the purchase price to assets acquired and liabilities assumed (dollars in millions):

Current assets

$
533.6Property, plant and equipment, net


1,605.9Noncurrent assets


194.5Current liabilities


(344.3
)Long-term debt


(1,427.6
)Deferred taxes


(145.4
)Noncurrent liabilities


(130.7
)Cash paid for acquisition

$
286.0




On June 30, 2003, the Company, MatlinPatterson, SISU Capital Ltd. ("SISU"), Huntsman Group Inc., and Morgan Grenfell Private Equity Limited
("MGPE") completed a restructuring and business combination involving Vantico, whereby ownership of the equity of Vantico was transferred to AdMat in exchange for substantially all of the issued and
outstanding Vantico senior notes ("Vantico Senior
Notes") and approximately $165 million of additional equity (the "AdMat Transaction"). The Company entered into the AdMat Transaction in order to expand its liquid epoxy resins product lines
and to integrate its polyurethanes products into liquid epoxy resins. In connection with the AdMat Transaction, AdMat issued $250 million aggregate principal amount of its 11% senior secured
notes due 2010 (the "AdMat Fixed Rate Notes") and $100 million aggregate principal amount of its senior secured floating rate notes due 2008 at a discount of 2%, or for $98 million (the
"AdMat Floating Rate Notes" and, collectively with the AdMat Fixed Rate Notes, the "AdMat Senior Secured Notes"). Proceeds from the issuance of the AdMat Senior Secured Notes, along with a portion of
the additional equity, were used to purchase 100% of the Vantico senior secured credit facilities (the "Vantico Credit Facilities"). Also in connection with the AdMat Transaction, AdMat entered into a
$60 million senior secured revolving credit facility (the "AdMat Revolving Credit Facility"). The AdMat Transaction was completed as follows:



F-14

---





Cash

$
164.4Vantico Senior Notes


67.8MatlinPatterson Contributed assets


232.2Acquisition subsidiary organization costs


(10.1
)Purchase accounting adjustments


1.5Minority interest


(29.2
)Preferred members' interest as of December 31, 2003


194.4Purchase accounting adjustment


1.3Preferred members' interest at December 31, 2004

$
195.7




The
AdMat Transaction has been accounted for as follows:



F-15

---





There
were no contingent payments or commitments in connection with the AdMat Transaction. The total purchase price of AdMat was derived from the fair value of equity exchanged or debt
instruments acquired as follows (dollars in millions):

Cash paid for the Vantico Credit Facilities and other credit facilities

$
431.3Equity issued for Vantico Senior Notes


67.8Cash paid for Vantico Senior Notes


22.7Total purchase price of AdMat

$
521.8


The
Company has completed its allocation of the purchase price to the assets and liabilities of AdMat, which is summarized as follows (dollars in millions):

Current assets

$
415.8Current liabilities


(242.4
)Property, plant and equipment, net


397.9Intangible assets, net


37.0Deferred taxes


(8.6
)Other noncurrent assets


44.2Other noncurrent liabilities


(122.1
)Total purchase price of AdMat


521.8Minority interest


(29.2
)Preferred members' interest


(195.7
)Net assets acquired

$
296.9


The
acquired intangible assets represent trademarks and patents which have a weighted-average useful life of approximately 15-30 years. The following table reflects
the Company's results of operations on a pro forma basis as if the business combination of HIH and AdMat had been completed at the beginning of the periods presented utilizing HIH and AdMat's
historical results (dollars in millions, except per unit amounts):

2003

2002Revenue

$
9,252.4

$
8,012.2Loss before minority interest and cumulative effect of accounting change


(369.6
)

(359.3
)Net loss


(395.6
)

(166.8
)Net loss per common share


(1.79
)

(0.76
)


The
pro forma information is not necessarily indicative of the operating results that would have occurred had the HIH Consolidation Transaction and the AdMat Transaction been consummated
at the beginning of the period presented, nor are they necessarily indicative of future operating results.

The
HIH Consolidation Transaction and the AdMat Transaction have resulted in changes in the Company's operating segments. Prior to the HIH Consolidation Transaction, the Company reported
its operations through three principal operating segments. After the HIH Consolidation Transaction but prior to the AdMat Transaction, the Company reported its operations through five segments. The
Company now reports its operations through six segments: Polyurethanes, Advanced Materials, Performance Products, Pigments, Polymers and Base Chemicals.

F-16

---



On
March 19, 2004, the Company acquired MGPE's 2.1% equity in AdMat Holdings for $7.2 million.

As
of December 31, 2004, the Company owned approximately 90% of AdMat Holdings, directly and indirectly. The remaining approximately 10% of the equity of AdMat Holdings is owned
by unrelated third parties.

2.    Summary of Significant Accounting Policies



The consolidated financial statements of the Company include the accounts of the Company and its majority wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.



The Company generates substantially all of its revenues through sales in the open market and long-term supply agreements. The Company recognizes
revenue when it is realized or realizable, and earned. Revenue for product sales is recognized when a sales arrangement exists, risk and title to the product transfer to the customer, collectibility
is reasonably assured, and pricing is fixed or determinable. This occurs at the time shipment is made.



The Company classifies the costs of manufacturing and distributing its products as cost of goods sold. Manufacturing costs include variable costs, primarily raw
materials and energy, and fixed expenses directly associated with production. Manufacturing costs include, among other things, plant site operating costs and overhead, production planning and
logistics costs, repair and maintenance costs, plant site purchasing costs, and engineering and technical support costs. Distribution, freight and warehousing costs are also included in cost of goods
sold.



The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.



The Company considers cash in checking accounts and cash in short-term highly liquid investments with an original maturity of three months or less to
be cash and cash equivalents.



HI securitizes certain trade receivables in connection with a revolving accounts receivable securitization program in which HI grants a participating undivided
interest in certain of its trade receivables to a qualified off-balance sheet entity. HI retains the servicing rights and a retained interest in the securitized receivables. Losses are
recorded on the sale and are based on the carrying value of the receivables as allocated between the receivables sold and the retained interests and their relative

F-17

---



fair
value at the date of the transfer. Retained interests are subsequently carried at fair value which is estimated based on the present value of expected cash flows, calculated using management's
best estimates of key assumptions including credit losses and discount rates commensurate with the risks involved. For more information, see "Note 11. Securitization of Accounts Receivable."



Inventories are stated at the lower of cost or market, with cost determined using last-in first-out, first-in
first-out, and average costs methods for different components of inventory.



Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the
estimated useful lives or lease term as follows:

Buildings and equipment

10 - 60 yearsPlant and equipment

3 - 25 yearsFurniture, fixtures and leasehold improvements

5 - 20 years


Until
January 1, 2003, approximately $1.3 billion of the total plant and equipment was depreciated using the straight-line method on a group basis at a 4.7%
composite rate. When capital assets representing complete groups of property were disposed of, the difference between the disposal proceeds and net book value was credited or charged to income. When
miscellaneous assets were disposed of, the difference between asset costs and salvage value was charged or credited to accumulated depreciation. Effective January 1, 2003, the Company changed
its method of accounting for depreciation for the assets previously recorded on a group basis to the component method. Specifically, the net book value of all the assets on January 1, 2003 were
allocated to individual components and are being depreciated over their remaining useful lives and gains and losses are recognized when a component is retired. This change encompassed both a change in
accounting method and a change in estimate and resulted in a decrease to depreciation expense for the year ended December 31, 2003 by $43.0 million. The change from the group method to
the composite method was made in order to reflect more precisely overall depreciation expense based on the lives of individual components rather than overall depreciation expense based on the average
lives for large groups of related assets.

Interest
expense capitalized as part of plant and equipment was $6.7 million, $5.1 million and $3.3 million for the years ended December 31, 2004, 2003 and
2002, respectively.

Periodic
maintenance and repairs applicable to major units of manufacturing facilities are accounted for on the prepaid basis by capitalizing the costs of the turnaround and amortizing
the costs over the estimated period until the next turnaround. Normal maintenance and repairs of plant and equipment are charged to expense as incurred. Renewals, betterments and major repairs that
materially extend the useful life of the assets are capitalized, and the assets replaced, if any, are retired.



Investments in companies in which the Company exercises significant management influence are accounted for using the equity method.

F-18

---





Intangible assets are stated at cost (fair value at the time of acquisition) and are amortized using the straight-line method over the estimated
useful lives or the life of the related agreement as follows:

Patents and technology

5 - 30 yearsTrademarks

15 - 30 yearsLicenses and other agreements

5 - 15 yearsOther intangibles

5 - 15 years


Prior
to January 2002, the Company amortized goodwill over periods ranging from 10-20 years. Effective January 1, 2002, the Company ceased amortizing
goodwill in accordance with SFAS No. 142. All goodwill is recorded within the Base Chemicals segment.



Other non-current assets consist primarily of spare parts, deferred debt issuance costs, employee benefit assets and capitalized turnaround costs.
Debt issuance costs are amortized using the interest method over the term of the related debt.



Upon the occurrence of a triggering event, the Company evaluates the carrying value of long-term assets based upon current and anticipated
undiscounted cash flows and recognizes an impairment when such estimated cash flows are less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the
difference between carrying value and fair value. Fair value is generally estimated by discounting estimated future cash flows using a discount rate commensurate with the risks involved. See
"Note 10. Restructuring and Plant Closing Costs."



The carrying amount reported in the balance sheet for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the
immediate or short-term maturity of these financial instruments. The carrying value of the senior secured credit facilities of the Company's subsidiaries approximates fair value since they
bear interest at a variable rate plus an applicable margin. The fair value of the fixed rate and floating rate notes of the Companies subsidiaries is estimated based on interest rates that are
currently available to the Company for issuance of debt with similar terms and remaining maturities. See "Note 22. Fair Value of Financial Instruments."



The Company uses 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. The Company evaluates the resulting deferred tax assets to determine whether it is more likely than not that
they will be realized. Valuation allowances have been established against the entire U.S. and a material portion of the non-U.S. deferred tax assets due to an uncertainty of realization.
Valuation allowances are reviewed each period on a tax jurisdiction by 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.

F-19

---



Subsequent
to the AdMat Transaction, substantially all non-U.S. operations of AdMat are treated as the Company's branches for U.S. income tax purposes and are, therefore,
subject to both U.S. and non-U.S. income tax. Until the Company has sufficient U.S. taxable income to utilize U.S. foreign tax credits, most AdMat income will continue to be effectively
taxed in both the U.S. and in the non-U.S. jurisdictions in which it is earned.

For
non-U.S. entities that are not treated as branches for U.S. tax purposes, the Company does not provide for income taxes on the undistributed earnings of these
subsidiaries as earnings are reinvested and, in the opinion of management, will continue to be reinvested indefinitely. The undistributed earnings of foreign subsidiaries that are deemed to be
permanently invested were $30.0 million at December 31, 2004. It is not practicable to determine the unrecognized deferred tax liability on those earnings.



The Company follows Statement of Financial Accounting Standards ("SFAS") No. 133,"Accounting For Derivative Instruments And
Hedging Activities."SFAS No. 133, as amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair
value. If the derivative is designated in a fair-value hedge, the changes in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is
designated in a cash-flow hedge, changes in the fair value of the derivative are recorded in other comprehensive income and will be recognized in the income statement when the hedged item
affects earnings. SFAS No. 133 defines
new requirements for designation and documentation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge accounting. For a derivative that does not qualify as a
hedge, changes in fair value are recognized in earnings.



Environmental related restoration and remediation costs are recorded as liabilities when site restoration and environmental remediation and clean-up
obligations are either known or considered probable and the related costs can be reasonably estimated. Other environmental expenditures that are principally maintenance or preventative in nature are
recorded when expended and expensed or capitalized as appropriate. See "Note 23. Environmental Matters."



The Company accrues for asset retirement obligations, which consist primarily of landfill closure costs in the period in which the obligations are incurred and
the Company has sufficient information to estimate a range of potential settlement dates for the obligation. These costs are accrued at estimated fair value. When the related liability is initially
recorded, the Company capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its settlement value and the
capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company will recognize a gain or loss for any difference between the settlement amount
and the liability recorded.

Asset
retirement obligations consist primarily of landfill capping and closure and post-closure costs. The Company is legally required to perform capping and closure and
post-closure care on the landfills and reclamation on the quarries. In accordance with SFAS No. 143,"Accounting for Asset Retirement

F-20

---



Obligations,"each landfill the Company recognizes the fair value of a liability for an asset retirement obligation and capitalizes that cost as part of the cost basis of the
related asset. The related assets are being depreciated on a straight-line basis over 27 years. The Company has additional asset retirement obligations with indeterminate settlement
dates; the fair value of these asset retirement obligations cannot be estimated due to the lack of sufficient information to estimate a range of potential settlement dates for the obligation. An asset
retirement obligation related to these assets will be recognized when the Company knows such information.

The
following table describes changes to the asset retirement obligation liability:

Year Ended
December 31, 2004Asset retirement obligation at the beginning of the period

$
Liabilities incurred


6.7Accretion expense


0.5Liabilities settled


Revisions in estimated cash flows


Asset retirement obligation at the end of the period

$
7.2


If
the asset retirement obligation and measurement provisions of SFAS No. 143 had been in effect on January 1, 2002, the aggregate carrying amount of those obligations
would have been $5.0 million. The amortization of the asset retirement cost and accretion of asset retirement obligation for each of 2002 and 2003 would have been immaterial.



Research and development costs are expensed as incurred.



The accounts of the Company's subsidiaries outside of the United States, except for those operating in highly inflationary economic environments, consider local
currency to be the functional currency. Accordingly, assets and liabilities are translated at rates prevailing at the balance sheet date. Revenues, expenses, gains and losses are translated at a
weighted average rate for the period. Cumulative translation adjustments are recorded to stockholder's equity as a component of accumulated other comprehensive income (loss).

Subsidiaries
that operate in economic environments that are highly inflationary consider the U.S. dollar to be the functional currency and include gains and losses from translation to
the U.S. dollar from the local currency in the statement of operations.

Transaction
gains and losses are recorded in the statement of operations and were a net gain of $118.8 million, a net gain of $67.8 million and a net loss of
$3.2 million for the years ended December 31, 2004, 2003 and 2002, respectively.



Net loss per share is not presented because it is not considered meaningful information due to the Company's ownership by a single equity holder.

F-21

---





In January 2003, the FASB issued FIN No. 46,"Consolidation of Variable Interest Entities."FIN
No. 46 addresses the requirements for business enterprises to consolidate related entities, for which they do not have controlling interests through voting or other rights, if they are
determined to be the primary beneficiary as a result of variable economic interests. FIN No. 46 provides guidance for determining the primary beneficiary for entities with multiple economic
entities with multiple economic interests.
Transfers to a qualifying special purpose entity are not subject to this interpretation. In December 2003, the FASB issued a complete replacement of FIN 46 (FIN 46R) to clarify certain
complexities. The Company adopted this standard on January 1, 2005. The impact of FIN 46R on the Company's financial statements was not significant.

In
May 2003, the FASB issued SFAS No. 150,"Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity."SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003 and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the Company's consolidated financial statements.

In
November 2004, the FASB issued SFAS No. 151, "Inventory Costsan amendment of ARB No. 43". SFAS No. 151 requires abnormal amounts of idle
facility expense, freight, handling costs, and wasted material to be recognized as current-period charges. It also requires that allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities. The requirements of the standard will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The
Company is reviewing SFAS No. 151 to determine the statement's impact on its consolidated financial statements.

In
December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary Assets an amendment of APB Opinion No. 29."SFAS No. 153 addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in APB
Opinion No. 29 and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies that a nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of this standard are effective for nonmonetary exchanges occurring in fiscal periods
beginning after June 15, 2005. The Company will apply this standard prospectively.

In
December 2004, the FASB issued SFAS No. 123R,"Share Based Payment."SFAS No. 123R requires entities to measure
the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost will be recognized over the period during
which the employee is required to provide services in exchange for the award. This standard eliminates the alternative to use the intrinsic value method of accounting for share based payments as
previously provided in APB Opinion No. 25,"Accounting for Stock Issued to Employees."This standard is effective for the Company beginning in
January 2006. The Company is reviewing SFAS No. 123R to determine the statement's impact on its consolidated financial statements.

F-22

---



3.     Inventories

Inventories consist of the following (dollars in millions):

December 31,2004

2003Raw materials and supplies

$
332.0

$
283.6Work in progress


90.1


32.7Finished goods


924.1


749.5Total


1,346.2


1,065.8LIFO reserves


(91.9
)

(15.5
)Lower of cost or market reserves


(0.4
)

(11.0
)Net

$
1,253.9

$
1,039.3


As
of December 31, 2004 and 2003, approximately 18%, and 16%, respectively, of inventories were recorded using the last-in, first-out cost method ("LIFO").
At December 31, 2004, the excess of current cost over the stated LIFO value was $81.0 million.

For
the year ended December 31, 2004, 2003, and 2002, inventory quantities were reduced resulting in a liquidation of certain LIFO inventory layers carried at costs that were
lower than the cost of current
purchases, the effect of which reduced the net loss by approximately $2.0 million, $1.0 million, and $1.7 million, respectively.

In
the normal course of operations, the Company at times exchanges raw materials and finished goods with other companies for the purpose of reducing transportation costs. The net open
exchange positions are valued at the Company's cost. Net amounts deducted from or added to inventory under open exchange agreements, which represent the net amounts payable or receivable by the
Company under open exchange agreements, were approximately $11.3 million payable and $8.2 million payable (40.6 million and 26.9 million pounds) at December 31, 2004
and 2003, respectively.

4.     Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions):

|                              |  | December 31, |         
|----------------------------- |  | ------------ | --------
|
|Land                          |  | $            | 130.8   
|Buildings                     |  |              | 563.9   
|Plant and equipment           |  |              | 6,422.2 
|Construction in progress      |  |              | 251.8   
|                              |  |              |         
|Total                         |  |              | 7,368.7 
|Less accumulated depreciation |  |              | (2,217.8
|                              |  |              |         
|Net                           |  | $            | 5,150.9 
|                              |  |              |         

Depreciation
expense for the years ended December 31, 2004, 2003 and 2002 was $492.1 million, $336.7 million and $131.8 million, respectively.

F-23

---



Property,
plant and equipment includes gross assets acquired under capital leases of $24.5 million and $23.9 million at December 31, 2004 and 2003, respectively;
related amounts included in accumulated depreciation were $9.0 million and $5.4 million at December 31, 2004 and 2003, respectively.

5.     Investment in Unconsolidated Affiliates

The Company's ownership percentage and investment in unconsolidated affiliates were as follows (dollars in millions):

|                                      |  | December 31,
|------------------------------------- |  | ------------
|
|
|Polystyrene Australia Pty Ltd.        |  | $           
|Condea-Huntsman GmbH and Co. KG (50%) |  |             
|Louisiana Pigment Company, L.P. (50%) |  |             
|Rubicon, LLC (50%)                    |  |             
|BASF Huntsman Shanghai Isocyanate     |  |             
|Investment BV (50%)(2)                |  |             
|Others                                |  |             
|                                      |  |             
|Total equity method investments       |  |             
|Cost Method:                          |  |             
|Gulf Advanced Chemicals Industry      |  |             
|Corporation (10%)                     |  |             
|                                      |  |             
|Total invesmtents                     |  | $           
|                                      |  |             

---



Summarized financial information of Sasol-Huntsman GmbH and Co. KG ("Sasol"), Louisiana Pigment Company, Rubicon, LLC, BASF AG ("BASF"), Huntsman Shanghai
Isocyanate Investment BV and Polystyrene Australia Pty Ltd. as of December 31, 2004 and 2003 and for the years ended December 31, 2004, 2003 and 2002 is presented below (dollars
in millions):

|                         |  | December 31,
|------------------------ |  | ------------
|
|Assets                   |  | $           
|Liabilities              |  |             
|Revenues                 |  |             
|Net income (loss)        |  |             
|The Company's equity in: |  |             
|Net assets               |  | $           
|Net income (loss)        |  |             

F-24

---





Effective June 30, 1999, Huntsman Specialty, a consolidated unrestricted subsidiary of the Company, transferred its propylene oxide business to HIH. ICI
transferred its polyurethane chemicals, selected petrochemicals (including ICI's 80% interest in the Wilton olefins facility) and titanium dioxide businesses to HIH. In addition, HIH also acquired the
remaining 20% ownership interest in the Wilton olefins facility from BP Chemicals Limited for approximately $117.0 million.

In
exchange for transferring its business, Huntsman Specialty retained a 60% common equity interest in HIH and received approximately $360.0 million in cash as a distribution from
HIH. In exchange for transferring its businesses, ICI received a 30% common equity interest in HIH, approximately $2 billion in cash and discount notes of HIH with approximately
$508.0 million of accreted value at issuance. Institutional investors acquired the remaining 10% common equity interest in HIH for $90.0 million in cash.

The
transfer of Huntsman Specialty's propylene oxide business was recorded at the net book value of the assets and liabilities transferred. Prior to the HIH Consolidation Transaction,
Huntsman LLC accounted for its investment in HIH on the equity method due to the significant management participation rights of ICI in HIH pursuant to HIH's limited liability company agreement.

The
carrying value of Huntsman LLC's investment in HIH was less than its proportionate share of the underlying net assets of HIH at December 31, 2001 by approximately
$176.1 million. Such difference was being accreted to income over a 20 year period. Management recorded an adjustment to reflect the accretion of the difference of $7.4 million in
the investment basis in Huntsman LLC's consolidated financial statements for December 31, 2001. As discussed in "Note 2. Summary of Significant Accounting Policies" above, Huntsman LLC
adopted SFAS No. 141 and increased its investment by $169.7 million as of January 1, 2002 to reflect its proportionate share of the underlying net assets of HIH.

On
September 30, 2002, Huntsman LLC acquired the 19.9% interest in Huntsman Specialty Chemicals Holdings Corporation ("HSCHC") which was previously owned by the Huntsman family
directly. HSCHC holds 60% of the Company's investment in HIH. The estimated fair value of the 19.9% interest of $37.9 million has been recorded as an increase in the investment in HIH. The
excess of $23.3 million over the Company's proportionate share of the net assets of HIH was accounted for as equity basis property and is being depreciated over the average useful life of
property.

On
November 2, 2000, ICI, Huntsman Specialty, HIH and HI entered into agreements (the "ICI Agreements") pursuant to which ICI had an option to transfer to Huntsman Specialty or
its permitted designated buyers the 30% membership interest in HIH that ICI indirectly held (the "ICI 30% Interest"). Pursuant to these agreements, on October 30, 2001, ICI exercised its put
right requiring Huntsman Specialty or its nominee to purchase the ICI 30% Interest. On December 20, 2001, ICI and
Huntsman Specialty amended ICI's put option arrangement under the ICI Agreements to, among other things, provide that the purchase of the ICI 30% Interest would occur on July 1, 2003, or
earlier under certain circumstances, and to provide for certain discounts to the purchase price for the ICI 30% Interest. The amended option agreement also required Huntsman Specialty to cause HIH to
pay up to $112 million of dividends to its members, subject to certain conditions. These conditions included the receipt of consent from HI's senior secured lenders and HI's ability to make
restricted payments under the indentures governing its outstanding senior notes and senior subordinated notes, as well as the outstanding high yield notes of HIH. In addition, in order to secure its
obligation to pay the purchase price for the ICI 30% Interest under the ICI Agreements, Huntsman Specialty granted ICI a lien on 30% of the outstanding membership interests in HIH.

F-25

---



As discussed in "Note 1. General" above, MatlinPatterson also entered into the Option Agreement with ICI in June 2002. The Option Agreement provided BNAC, then a
MatlinPatterson subsidiary, with an option to acquire the ICI subsidiary that held the ICI 30% Interest on or before May 15, 2003 upon the payment of $180 million plus accrued interest
from May 15, 2002, and subject to completion of the purchase of the HIH senior subordinated discount notes due 2009 (the HIH Senior Subordinated Discount Notes"). Concurrently, BNAC paid ICI
$160 million to acquire the HIH Senior Subordinated Discount Notes, subject to certain conditions, including the obligation to make an additional payment of $100 million plus accrued
interest to ICI. The HIH Senior Subordinated Discount Notes were pledged to ICI as collateral security for such additional payment.

In
connection with the HLLC Restructuring, all the shares in BNAC were contributed to the Company. The Company then caused BNAC to be merged into HMP. As a result of its merger with
BNAC, HMP held the interests formerly held by BNAC in the HIH Senior Subordinated Discount Notes and the option to acquire the subsidiary of ICI that held the ICI 30% Interest.

Prior
to May 9, 2003, the Company owned approximately 61% of the HIH membership interests. On May 9, 2003, the Company exercised its option under the Option Agreement and
completed the HIH Consolidation Transaction. As a result, as of May 9, 2003, the Company indirectly owns 100% of the HIH membership interests. Prior to May 1, 2003, the Company accounted
for its investment in HIH using the equity method of accounting due to the significant management participation rights formerly granted to ICI pursuant to the HIH limited liability company agreement.
As a consequence of the Company's 100% indirect ownership of HIH and the resulting termination of ICI's management participation rights, the Company is considered to have a controlling financial
interest in HIH. Accordingly, the Company no longer accounts for HIH using the equity method of accounting, but effective May 1, 2003 HIH's results of operations are consolidated with the
Company's results of operations. Consequently, results of HIH through April 30, 2003 are recorded using the equity method of accounting, and results of HIH beginning May 1, 2003 are
recorded on a consolidated basis. As a result, the summary historical financial data for periods ending prior to May 1, 2003 are not comparable to financial periods ending on or after
May 1, 2003.

Summarized
information for HIH as of December 31, 2002 and for the year then ended and the income statement information for the four months ended April 30, 2003 is as
follows (dollars in millions):

Four months
ended
April 30,
2003

December 31,
2002(unaudited)Assets

$
5,187.1

$
5,044.1Liabilities


4,899.2


4,706.1Revenues


1,733.4


4,518.1Net income (loss)


(65.2
)

(68.5
)The Company's equity in:Net assets

$
179.3

$
202.8Net loss


(39.0
)

(41.1
)


F-26

---



6.     Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets are as follows (dollars in millions):

|                                    |  | December 31, 2004 |       | December 31, 2003
|----------------------------------- |  | ----------------- | ----- | -----------------
|
|Patents, trademarks, and technology |  | $                 | 411.3 |                  
|Licenses and other agreements       |  |                   | 18.3  |                  
|Non-compete agreements              |  |                   | 49.6  |                  
|Other intangibles                   |  |                   | 8.1   |                  
|                                    |  |                   |       |                  
|Total                               |  | $                 | 487.3 |                  
|                                    |  |                   |       |                  

During
2004, the Company reversed certain valuation allowances on deferred tax assets and certain restructuring reserves recorded in the AdMat Transaction and recorded a corresponding
reduction to intangible assets of approximately $31.9 million.

Amortization
expense was $34.8 million, $32.0 million and $6.4 million for the years ended December 31, 2004, 2003, and 2002, respectively. Estimated future
amortization expense for intangible assets over the next five years is as follows (dollars in millions):

Year ending December 31:2005

30.32006

29.92007

27.92008

27.92009

27.8


7.     Other Noncurrent Assets

Other noncurrent assets consist of the following (dollars in millions):

December 31,
2004

December 31,
2003Prepaid pension costs

$
267.2

$
235.8Debt issuance costs


90.1


105.9Capitalized turnaround expense


116.6


83.9Spare parts inventory


103.0


100.5Other noncurrent assets


31.7


86.9Total

$
608.6

$
613.0


F-27

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8.     Accrued Liabilities

Accrued liabilities consist of the following (dollars in millions):

|                                        |  | December 31,
2004 |       | December 31,
2003
|--------------------------------------- |  | ----------------- | ----- | -----------------
|Payroll, severance and related costs    |  | $                 | 197.1 |                  
|Interest                                |  |                   | 119.3 |                  
|Volume and rebates accruals             |  |                   | 94.4  |                  
|Income taxes                            |  |                   | 49.4  |                  
|Taxes (property and VAT)                |  |                   | 77.7  |                  
|Restructuring and plant closing costs   |  |                   | 134.1 |                  
|Environmental accruals                  |  |                   | 7.7   |                  
|Interest and commodity hedging accruals |  |                   |      |                  
|Other miscellaneous accruals            |  |                   | 102.4 |                  
|                                        |  |                   |       |                  
|Total                                   |  | $                 | 782.1 |                  
|                                        |  |                   |       |                  

9.     Other Noncurrent Liabilities

Other noncurrent liabilities consist of the following (dollars in millions):

|                                      |  | December 31,
2004 |       | December 31,
2003
|------------------------------------- |  | ----------------- | ----- | -----------------
|Pension liabilities                   |  | $                 | 414.7 |                  
|Other postretirement benefits         |  |                   | 88.4  |                  
|Environmental accruals                |  |                   | 27.4  |                  
|Notes payableaffiliates              |  |                   | 29.9  |                  
|Restructuring and plant closing costs |  |                   | 19.0  |                  
|Fair value of interest derivatives    |  |                   | 8.3   |                  
|Other noncurrent liabilities          |  |                   | 157.6 |                  
|                                      |  |                   |       |                  
|Total                                 |  | $                 | 745.3 |                  
|                                      |  |                   |       |                  

10.   Restructuring and Plant Closing Costs

During the periods discussed below, the Company has pursued two major cost reduction programs to improve operational efficiencies, HLLC Restructuring
(2001-2002) and Project Coronado (2003-2004). The Company has conducted, and with respect to Project Coronado continues to conduct numerous discrete, but frequently
individually immaterial, restructuring projects in connection with these two major programs.

F-28

---



As
of December 31, 2004, accrued restructuring and plant closing costs by type of cost and activity consist of the following (dollars in millions):

|                                                         |  | Workforce
reductions(1) |       | Demolition and
decommissioning |   | Non-cancelable
lease costs |   | Other
restructuring
costs |      | Total(2) |  
|-------------------------------------------------------- |  | ----------------------- | ----- | ------------------------------ | - | -------------------------- | - | ------------------------- | ---- | -------- | -
|Accrued liabilities as of December 31, 2001              |  | $                       | 44.2  |                                | $ | 2.8                        |   | $                         | 6.9  |          | $
|2002 charges (credits) for 2001 initiatives              |  |                         |      |                                |   | 1.0                        |   |                           | (4.6 | )        |  
|2002 charges for 2002 initiatives                        |  |                         | 1.6   |                                |   | 2.7                        |   |                           |     |          |  
|2002 payments for 2001 initiatives(3)                    |  |                         | (40.3 | )                              |   | (0.5                       | ) |                           | (1.7 | )        |  
|2002 payments for 2002 initiatives(3)                    |  |                         | (1.6  | )                              |   | (2.7                       | ) |                           |     |          |  
|                                                         |  |                         |       |                                |   |                            |   |                           |      |          |  
|Accrued liabilities as of December 31, 2002              |  |                         | 3.9   |                                |   | 3.3                        |   |                           | 0.6  |          |  
|HIH balance at consolidation on May 1, 2003(4)           |  |                         | 24.2  |                                |   |                           |   |                           |     |          |  
|AdMat opening balance sheet liabilities at June 30, 2003 |  |                         | 53.2  |                                |   | 1.5                        |   |                           |     |          |  
|2003 credits for 2001 initiatives                        |  |                         | (2.0  | )                              |   | (0.3                       | ) |                           | (0.2 | )        |  
|2003 charges for 2003 initiatives                        |  |                         | 28.2  |                                |   |                           |   |                           |     |          |  
|2003 payments for 2001 initiatives(3)                    |  |                         | (1.9  | )                              |   | (0.4                       | ) |                           | (0.2 | )        |  
|2003 payments for 2003 initiatives(3)                    |  |                         | (39.2 | )                              |   |                           |   |                           |     |          |  
|                                                         |  |                         |       |                                |   |                            |   |                           |      |          |  
|Accrued liabilities as of December 31, 2003              |  |                         | 66.4  |                                |   | 4.1                        |   |                           | 0.2  |          |  
|Adjustments to the opening balance sheet of AdMat        |  |                         | (2.9  | )                              |   |                           |   |                           | (0.6 | )        |  
|2004 charges for 2003 initiatives                        |  |                         | 25.1  |                                |   |                           |   |                           |     |          |  
|2004 charges for 2004 initiatives                        |  |                         | 106.5 |                                |   | 5.1                        |   |                           | 6.2  |          |  
|2004 payments for 2001 initiatives                       |  |                         |      |                                |   |                           |   |                           | (0.2 | )        |  
|2004 payments for 2003 initiatives                       |  |                         | (48.0 | )                              |   |                           |   |                           | (0.4 | )        |  
|2004 payments for 2004 initiatives                       |  |                         | (31.4 | )                              |   | (0.4                       | ) |                           |     |          |  
|Non-cash settlements                                     |  |                         |      |                                |   |                           |   |                           | (0.5 | )        |  
|Foreign currency effect on reserve balance               |  |                         | 6.3   |                                |   |                           |   |                           |     |          |  
|                                                         |  |                         |       |                                |   |                            |   |                           |      |          |  
|Accrued liabilities as of December 31, 2004              |  | $                       | 122.0 |                                | $ | 8.8                        |   | $                         | 4.7  |          | $
|                                                         |  |                         |       |                                |   |                            |   |                           |      |          |  

---

December 31,
2004

December 31,
20032001 initiatives

$
2.6

$
2.82002 initiatives





2003 initiatives


44.8


74.02004 initiatives


99.4


Foreign currency effect on reserve balance


6.3


Total

$
153.1

$
76.8


F-29

---



Details
with respect to the Company's reserves for restructuring and plant closing costs are provided below by segments and activity (dollars in millions):

|                                                                        |                                                          | Polyurethanes   |      | Advanced
Materials |     | Performance
Products |       | Pigments |      | Polymers |   | Base
Chemicals |       | Corporate
& Other |      | Total |    
|----------------------------------------------------------------------- | -------------------------------------------------------- | --------------- | ---- | ------------------ | --- | -------------------- | ----- | -------- | ---- | -------- | - | -------------- | ----- | ----------------- | ---- | ----- | ---
|Accrued liabilities as of December 31, 2001                             |                                                          | $               |     |                    | $   |                     |       | $        |     |          | $ |               |       | $                 | 25.1 |       | $  
|                                                                        | 2002 credits for 2001 initiatives                        |                 |      |                   |     |                      |      |          |      |         |   |                |      |                   |      | (5.3  | )  
|                                                                        | 2002 charges for 2002 initiatives                        |                 |      |                   |     |                      |      |          |      | 4.3      |   |                |      |                   |      |      |    
|                                                                        | 2002 payments for 2001 initiatives(2)                    |                 |      |                   |     |                      |      |          |      |         |   |                |      |                   |      | (17.0 | )  
|                                                                        | 2002 payments for 2002 initiatives(2)                    |                 |      |                   |     |                      |      |          |      | (4.3     | ) |                |      |                   |      |      |    
|                                                                        |                                                          |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|Accrued liabilities as of December 31, 2002                             |                                                          |                 |     |                    |     |                     |       |          |     |          |   |               |       |                   | 2.8  |       |    
|                                                                        | HIH balance at consolidation on May 1, 2003              |                 |      | 24.2               |     |                      |      |          |      |          |   |                |       |                   |      |       |    
|                                                                        | AdMat opening balance sheet liabilities at June 30, 2003 |                 |      |                   |     |                      | 60.8  |          |      |         |   |                |      |                   |      |      |    
|                                                                        | 2003 credits for 2001 initiatives                        |                 |      |                   |     |                      |      |          |      |         |   |                |      |                   |      |      |    
|                                                                        | 2003 charges for 2003 initiatives                        |                 |      | 11.0               |     |                      |      |          |      | 10.7     |   |                | 6.5   |                   |      |      |    
|                                                                        | 2003 payments for 2001 initiatives (2)                   |                 |      |                   |     |                      |      |          |      |         |   |                |      |                   |      |      |    
|                                                                        | 2003 payments for 2003 initiatives (2)                   |                 |      | (19.4              | )   |                      | (9.3  | )        |      | (8.3     | ) |                | (2.2  | )                 |      |      |    
|                                                                        |                                                          |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|Accrued liabilities as of December 31, 2003                             |                                                          |                 | 15.8 |                    |     | 51.5                 |       |          | 2.4  |          |   | 4.3            |       |                   | 2.8  |       |    
|                                                                        | Adjustments to the opening balance sheet of AdMat        |                 |      |                   |     |                      | (2.8  | )        |      |         |   |                |      |                   |      |      |    
|                                                                        | 2004 charges for 2003 initiatives                        |                 |      | 10.0               |     |                      |       |          |      | 0.4      |   |                | 14.5  |                   |      | 0.6   |    
|                                                                        | 2004 charges for 2004 initiatives (1)                    |                 |      | 16.4               |     |                      | 9.0   |          |      | 56.6     |   |                | 27.3  |                   |      | 9.4   |    
|                                                                        | 2004 payments for 2001 initiatives                       |                 |      |                   |     |                      |      |          |      |         |   |                |      |                   |      | (0.2  | )  
|                                                                        | 2004 payments for 2003 initiatives                       |                 |      | (11.5              | )   |                      | (26.0 | )        |      | (2.4     | ) |                | (10.9 | )                 |      | (0.6  | )  
|                                                                        | 2004 payments for 2004 initiatives                       |                 |      | (11.8              | )   |                      | (0.1  | )        |      | (1.4     | ) |                | (14.3 | )                 |      | (6.2  | )  
|                                                                        | Non-cash settlements                                     |                 |      |                   |     |                      | (0.5  | )        |      |         |   |                |      |                   |      |      |    
|                                                                        | Foreign currency effect on reserve balance               |                 |      | 0.1                |     |                      | 1.9   |          |      | 2.6      |   |                | 1.1   |                   |      |      |    
|                                                                        |                                                          |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|Accrued liabilities as of December 31, 2004                             |                                                          | $               | 19.0 |                    | $   | 33.0                 |       | $        | 58.2 |          | $ | 22.0           |       | $                 | 5.8  |       | $  
|                                                                        |                                                          |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|Current portion of restructuring reserve                                |                                                          | $               | 19.0 |                    | $   | 33.0                 |       | $        | 39.2 |          | $ | 22.0           |       | $                 | 5.8  |       | $  
|Noncurrent portion of restructuring reserve                             |                                                          |                 |     |                    |     |                     |       |          | 19.0 |          |   |               |       |                   |     |       |    
|Estimated additional future charges for current restructuring projects: |                                                          |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|                                                                        | Estimated additional charges within one year             |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|                                                                        |                                                          | Cash charges    |      | $                  | 5.5 |                      | $     | 1.0      |      | $        |  |                | $     | 6.0               |      | $     | 2.2
|                                                                        |                                                          | Noncash charges |      |                    |    |                      |       |         |      |          |  |                |       |                  |      |       |   
|                                                                        | Estimated additional charges beyond one year             |                 |      |                    |     |                      |       |          |      |          |   |                |       |                   |      |       |    
|                                                                        |                                                          | Cash charges    |      | $                  |    |                      | $     |         |      | $        |  |                | $     | 4.7               |      | $     |   
|                                                                        |                                                          | Noncash charges |      |                    |    |                      |       |         |      |          |  |                |       |                  |      |       |   

---

2004 Restructuring Activities

As of December 31, 2004 and December 31, 2003, the Company had reserves for restructuring and plant closing costs of $153.1 million and
$76.8 million, respectively. During the year ended December 31, 2004, the Company, on a consolidated basis, recorded additional charges of $299.3 million, including
$138.0 million of charges for asset impairment and write downs, and $161.3 million payable in cash for workforce reductions, demolition and decommissioning and other restructuring costs
associated with closure or curtailment of activities at the Company's smaller, less efficient manufacturing facilities. During the 2004 period, the Company made cash payments against these reserves of
$88.0 million. For purposes of measuring impairment charges, the fair value of the assets was determined by using the present value of expected cash flows.

F-30

---



As
of December 31, 2003, the Polyurethanes segment reserve consisted of $15.8 million related to the restructuring activities at the Rozenburg, Netherlands site (as
announced in 2003), the workforce reductions throughout the Polyurethanes segment (as announced in 2003), and the closure of the Shepton Mallet, U.K. site (as announced in 2002). During the year ended
December 31, 2004, the Polyurethanes segment recorded additional restructuring charges of $36.9 million consisting of $26.4 million of charges for restructuring activities payable
in cash and $10.5 of asset impairment and made cash payments of $23.3 million. These restructuring activities are expected to result in additional restructuring charges of approximately
$5.5 million through 2005 and result in workforce reductions of approximately 160 positions, of which 86 positions have been reduced during the year ended December 31, 2004. As of
December 31, 2004, the balance of the Polyurethanes segment reserve totaled $19.0 million.

As
of December 31 2003, the Advanced Materials segment reserve consisted of $51.5 million related to this restructuring program implemented in association with the AdMat
Transaction. The program includes reductions in costs of the global supply chain, reductions in general and administrative costs across the business and the centralization of operations where
efficiencies may be achieved. The Company reduced its workforce by 192 individuals and 188 individuals during the twelve months ended
December 31, 2004 and the six months ended December 31, 2003, respectively. During 2004, the Advanced Materials segment reversed $2.8 million of restructuring reserves recorded in
the AdMat Transaction that were no longer required and recorded a corresponding reduction to intangible assets (see "Note 6. Intangible Assets"). This initial cost reduction program is expected
to continue through December 2005 and is estimated to involve $57.5 million in total restructuring costs, all of which were recorded in the opening balance sheet of AdMat. In the fourth
quarter 2004, the Company recorded restructuring charges of $9.0 million, all of which are payable in cash, relating to a realignment and simplification of the Company's commercial and
technical organization and the closure of its Kaohsiung, Taiwan production facility. This restructuring activity is expected to result in workforce reductions of approximately 120 employees, of which
approximately 100 will be reduced during the first quarter of 2005. The Company expects to incur additional charges of approximately $1.0 million during 2005 for employee relocation costs
associated with these restructuring activities. During 2004, the Advanced Materials segment made cash payments of $26.1 million relating to its restructuring activities. As of
December 31, 2004, the balance of the Advanced Materials segment reserve totaled $33.0 million.

As
of December 31, 2003, the Performance Products segment reserve consisted of $2.4 million relating to the closure of a number of plants at the Whitehaven, U.K. facility,
the closure of an administrative office in London, U.K., the rationalization of a surfactants technical center in Oldbury, U.K., and the restructuring of a facility in Barcelona, Spain. During the
year ended December 31, 2004, the Performance Products segment recorded additional restructuring charges of $97.5 million consisting of $57.0 million of charges payable in cash
and $40.5 million of asset impairment charges. During 2004, the Company adopted a plan to reduce the workforce across all locations in its European surfactants business by approximately 320
positions over a period of 15 months. This plan included the closure of substantially all of the Company's Whitehaven, U.K. surfactants facility. In connection with the rationalization of the
Whitehaven facility, the Company recognized a restructuring charge of $55.4 million in the fourth quarter of 2004, of which approximately $31.1 million is payable in cash and
$24.3 million is impairment of assets. The Company recorded a restructuring charge of $17.5 million, all payable in cash, in respect to workforce reductions across a number of its
European facilities. During 2004, the Performance Products segment announced the closure of the Company's Guelph, Ontario, Canada Performance Products manufacturing facility, involving a restructuring
charge of $20.4 million consisting of a $15.5 million asset impairment and $4.9 million of charges payable in cash. Production will be moved to the Company's other larger, more
efficient facilities. Workforce reductions of approximately 66 positions are anticipated. During 2004, the Performance Products segment also announced the closure of its maleic anhydride briquette
facility in Queeny, Missouri and recorded a restructuring charge of $1.5 million which consisted of $0.7 million in asset impairment charges and

F-31

---



$0.8 million
in charges payable in cash. During 2004, this segment also announced the closure of its technical facility in Austin, Texas and recorded a restructuring charge of
$2.0 million which is payable in cash. Restructuring charges of $0.7 million were recorded relating to various other cost reduction efforts. During the year ended December 31,
2004, the Performance Products segment made cash payments of $3.8 million related to restructuring activities. As of December 31, 2004, the balance of the Performance Products segment
reserve totaled $58.2 million.

As
of December 31, 2003, the Pigments segment reserve consisted of $4.3 million relating to its global workforce reductions announced in August 2003. During the year
ended December 31, 2004, the Pigments segment recorded additional restructuring charges of $123.3 million and made cash payments
of $25.2 million. During 2004, the Pigments segment recorded restructuring expenses of $17.3 million related to global workforce reductions, all of which are payable in cash. In
addition, in April 2004, the Company announced that, following a review of the Pigments business, it would idle approximately 55,000 tonnes, or about 10%, of its total titanium dioxide
("TiO2") production capacity in the third and fourth quarter of 2004. As a result of this decision, the Company recorded a restructuring charge of $24.5 million to be paid in cash,
a $77.2 million asset impairment charge and a $4.3 million charge for the write-off of spare parts inventory and other assets. These combined restructuring activities are
expected to result in additional restructuring charges of approximately $10.7 million through 2010 and result in workforce reductions of approximately 600 positions, of which approximately 400
positions have been reduced as of December 31, 2004. As of December 31, 2004, the balance of the Pigments segment reserve totaled $22.0 million.

As
of December 31, 2003, the Polymers segment reserve consisted of $2.8 million related to its demolition and decommissioning of the Odessa, Texas styrene manufacturing
facility and non-cancelable lease costs. During 2004, the Polymers segment recorded restructuring expenses related to the closure of an Australian manufacturing unit of $5.4 million
consisting of $3.6 million in non-cash charges and $1.8 million of charges payable in cash. During 2004, the Polymers segment announced additional restructuring activities at
its Odessa, Texas and Mansonville, Canada facilities and recorded a restructuring charge of $8.2 million, all of which is payable in cash. These restructuring activities are expected to result
in additional charges of approximately $2.2 million through 2005 and in workforce reductions of approximately 100 positions. During 2004, the Polymers segment made cash payments of
$7.0 million related to restructuring activities. The Polymers segment reserve totaled $5.8 million as of December 31, 2004.

As
of December 31, 2004, the Base Chemicals segment reserve consisted of $15.1 million related to workforce reductions arising from the announced change in work shift
schedules and in the engineering and support functions at the Wilton and North Tees, U.K. facilities. During the year ended December 31, 2004, the Base Chemicals segment recorded restructuring
charges of $16.7 million, all of which is payable in cash. Also during 2004, the Base Chemicals segment made cash payments of $2.2 million related to these restructuring activities.
These restructuring activities are expected to result in additional charges of approximately $3.5 million and in workforce reductions of approximately 100 positions through 2005. As of
December 31, 2004, the Base Chemical segment reserve totaled $15.1 million.

During
2004, the Company recorded a restructuring charge in corporate and other of $2.3 million, of which $1.9 million related to non-cash charges and
$0.4 million related to relocation costs.

2003 Restructuring Activities

On March 11, 2003 (before HIH was consolidated into the Company), the Polyurethanes segment announced that it would integrate its global flexible products
unit into its urethane specialties unit, and recorded a restructuring charge of $19.2 million for workforce reductions of approximately 118 employees. During the remainder of the year, charges
of $11.0 million were taken for workforce reductions relating to this restructuring at the Rozenberg, Netherlands site.

F-32

---



In
June 2003, the Company announced that its Performance Products segment would close a number of plants at its Whitehaven, U.K. facility and recorded a charge of
$20.1 million in the second quarter 2003. This charge represents $11.4 million relating to an impairment of assets at Whitehaven (in connection with the plant shutdowns) and
$8.7 million of workforce reduction costs. The Company also recorded a $2.0 million charge in respect of severance costs arising from the closure of an administrative office in London,
U.K., the rationalization of its surfactants technical center in Oldbury, U.K., and the restructuring of its facility in Barcelona, Spain. These charges are part of an overall cost reduction program
for this segment that is expected to be implemented through 2005.

In
August 2003, the Company recorded a restructuring charge of $6.5 million related to workforce reductions of approximately 63 employees across its global Pigments
operations. The overall cost reduction program to be completed through 2005 for the Pigments segment will involve 250 employees and is estimated to cost an additional $16.5 million. At
December 31, 2003, $4.3 million remains in the reserve for restructuring and plant closing costs related to these restructuring activities.

In
connection with the AdMat Transaction, the Company is implementing a substantial cost reduction program. The program will include reductions in costs of the Company's global supply
chain, reductions in general and administrative costs across the business and the centralization of operations where efficiencies may be achieved. The cost reduction program is expected to be
implemented through 2005 and is estimated to involve $60.8 million in total restructuring costs. As part of the program, the Company expects to incur approximately $53.2 million to
reduce headcount and to incur approximately $7.6 million to close plants and discontinue certain service contracts worldwide. The Company reduced 188 staff in the six months ended
December 31 2003. Payments of restructuring and plant closing costs were recorded against reserves established in connection with recording the AdMat Transaction as a purchase business
combination. At December 31, 2003, $51.5 million remains in the reserve for restructuring and plant closing costs related to the cost reduction program. The Company expects to finalize
its restructuring plans by June 30, 2004. Accordingly, the reserve for restructuring and plant closing costs are subject to revision based on final assessment.

2002 Restructuring Activities

During 2002, the Company announced that it would be closing certain units at its Jefferson County and Canadian plants, primarily in the Performance Products
business. As a result, the Company recorded accrued severance and shutdown costs of $4.3 million, substantially all of which had not been paid at December 31, 2002. The net effect of
2002 unit closing costs and the reversal of restructuring charges in 2001 to reflect $1.0 million in income in 2002 and to reflect a $7.8 million accrual at December 31, 2002.

11.   Securitization of Accounts Receivable

On December 21, 2000, HI initiated an accounts receivable securitization program (the "HI A/R Securitization Program") under which it grants an undivided
interest in certain of its trade receivables to a qualified off-balance sheet entity (the "Receivables Trust") at a discount. This undivided interest serves as security for the issuance of
commercial paper and medium term notes by the Receivables Trust.

At
December 31, 2004 and December 31, 2003, the Receivables Trust had approximately $208.4 million and $198.4 million, respectively in U.S. dollar equivalents
in medium term notes outstanding and approximately nil and $100 million, respectively in commercial paper outstanding. Under the terms of the agreements, HI and its subsidiaries continue to
service the receivables in exchange for a 1% fee of the outstanding receivables, and HI is subject to recourse provisions.

HI's
retained interest in receivables (including servicing assets) subject to the HI A/R Securitization Program was approximately $337.8 million and $154 million as of
December 31, 2004 and 2003, respectively. The value of the retained interest is subject to credit and interest rate risk. For the

F-33

---



year
ended December 31, 2004 and 2003, new sales of accounts receivable sold into the program totaled approximately $5,057.1 million and $4,132.0 million, respectively, and cash
collections from receivables sold into the program that were reinvested totaled approximately $5,016.9 million and $4,135.6 million, respectively. Servicing fees received during the year
ended December 31, 2004 and 2003 were approximately $5.5 million and $4.9 million, respectively.

The
Company incurs losses on the HI A/R Securitization Program for the discount on receivables sold into the program and fees and expenses associated with the program. The Company also
retains responsibility for the economic gains and losses on forward contracts mandated by the terms of the program to hedge the currency exposures on the collateral supporting the
off-balance
sheet debt issued. Gains and losses on forward contracts included as a component of the loss on the program are a loss of $2.4 million and a loss of $24.6 million for the year ended
December 31, 2004 and 2003, respectively. As of December 31, 2004 and December 31, 2003, the fair value of the open forward currency contracts was $0 million and
$6.8 million, respectively, which is included as a component of the residual interest that is included as a component of trade receivables on the Company's balance sheet. On April 16,
2004, HI amended the commercial paper facility. Pursuant to the amendment, the maturity of the commercial paper facility was extended to March 31, 2007. In addition, the amendment permits the
issuance of euro-denominated commercial paper.

The
key economic assumptions used in valuing the residual interest are presented below:

|                                  |  | December 31, 2004 |   | December 31, 2003 |  
|--------------------------------- |  | ----------------- | - | ----------------- | -
|Weighted average life (in months) |  | Approx. 1.5       |   | Approx. 3         |  
|Credit losses (annual rate)       |  | Less than 1       | % | Less than 1       | %
|Discount rate (annual rate)       |  | Approx. 1         | % | Approx. 2         | %

A
10% and 20% adverse change in any of the key economic assumptions would not have a material impact on the fair value of the retained interest. Total receivables over 60 days
past due as of December 31, 2004 and December 31, 2003 were $12.1 million and $15.6 million, respectively.

F-34

---



12.   Long-Term Debt

Long-term debt outstanding as of December 31, 2004 and 2003 is as follows (dollars in millions):

|                                                                   |                                                                          | December 31, |        
|------------------------------------------------------------------ | ------------------------------------------------------------------------ | ------------ | -------
|
|Huntsman LLC Debt, excluding HIH and HI:                           |                                                                          |              |        
|Senior secured credit facilities:                                  |                                                                          |              |        
|                                                                   | Term Loan A                                                              |              | $      
|                                                                   | Term Loan B                                                              |              |        
|                                                                   | Revolving facility                                                       |              |        
|Other debt:                                                        |                                                                          |              |        
|                                                                   | Huntsman LLC senior secured notes                                        |              |        
|                                                                   | Huntsman Polymers senior unsecured notes                                 |              |        
|                                                                   | Huntsman LLC senior unsecured fixed rate notes                           |              |        
|                                                                   | Huntsman LLC senior unsecured floating rate notes                        |              |        
|                                                                   | Huntsman LLC senior subordinated fixed rate notes                        |              |        
|                                                                   | Huntsman LLC senior subordinated floating rate notes                     |              |        
|                                                                   | Huntsman Specialty Chemicals Corporation subordinated note               |              |        
|                                                                   | Huntsman Australia Holdings Pty Ltd (HCA) credit facilities              |              |        
|                                                                   | Huntsman Corporation Chemical Company Australia (HCCA) credit facilities |              |        
|                                                                   | Subordinated note and accrued interestaffiliate                         |              |        
|                                                                   | Term note payable to a bank                                              |              |        
|                                                                   | Other                                                                    |              |        
|                                                                   |                                                                          |              |        
|Total Huntsman LLC Debt, excluding HIH and HI                      |                                                                          |              | 1,978.2
|HI:                                                                |                                                                          |              |        
|Senior secured credit facilities:                                  |                                                                          |              |        
|                                                                   | Term B loan                                                              |              |        
|                                                                   | Term C loan                                                              |              |        
|                                                                   | Revolving facility                                                       |              |        
|Other debt:                                                        |                                                                          |              |        
|                                                                   | Senior unsecured notes                                                   |              |        
|                                                                   | Senior subordinated notes                                                |              |        
|                                                                   | Other long-term debt                                                     |              |        
|                                                                   |                                                                          |              |        
|Total HI debt                                                      |                                                                          |              | 3,054.7
|HIH:                                                               |                                                                          |              |        
|                                                                   | Senior discount notes                                                    |              |        
|                                                                   | Senior subordinated discount notesaffiliate                             |              |        
|Total HIH debt                                                     |                                                                          |              | 908.4  
|Total HIH consolidated debt                                        |                                                                          |              | 3,963.1
|                                                                   |                                                                          |              |        
|AdMat:                                                             |                                                                          |              |        
|                                                                   | Senior secured notes                                                     |              |        
|                                                                   | Other long-term debt                                                     |              |        
|                                                                   |                                                                          |              |        
|Total AdMat debt                                                   |                                                                          |              | 350.4  
|HMP:                                                               |                                                                          |              |        
|                                                                   | HMP Senior Secured Notes (Principal amount $537.3)(1)                    |              |        
|                                                                   |                                                                          |              |        
|Total HMP debt                                                     |                                                                          |              | 411.9  
|Fair valued adjustment of HIH debt                                 |                                                                          |              | 9.6    
|Elimination of HIH Senior subordinated discount notes owned by HMP |                                                                          |              | (413.7 
|                                                                   |                                                                          |              |        
|Total debt                                                         |                                                                          | $            | 6,299.5
|                                                                   |                                                                          |              |        
|Current portion                                                    |                                                                          | $            | 37.5   
|Long-term portionexcluding affiliate                              |                                                                          |              | 6,221.1
|                                                                   |                                                                          |              |        
|Total debtexcluding affiliate                                     |                                                                          |              | 6,258.6
|Long-term debtaffiliate                                           |                                                                          |              | 40.9   
|                                                                   |                                                                          |              |        
|Total debt                                                         |                                                                          | $            | 6,299.5
|                                                                   |                                                                          |              |        

---

F-35

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On May 9, 2003, the Company issued units consisting of the HMP Senior Discount Notes with an accreted value of $423.5 million and 875,000 warrants
to purchase approximately 12% of the Company's common stock. Of the $423.5 million, $8.5 million was recorded to reflect a discount of 2%, $285.0 million has been recorded as the
initial carrying value for the HMP Senior Discount Notes and $130.0 million was recorded as the carrying value of the warrants. The HMP Senior Discount Notes were issued with original issue
discount for U.S. federal income tax purposes. The aggregate proceeds from the units were allocated to the HMP Senior Discount Notes and warrants based upon the relative fair value of each security.
Interest on the HMP Senior Discount Notes is paid in kind. The effective interest rate based on the initial carrying value is 23.7%. The HMP Senior Discount Notes are secured by a first priority lien
on the HIH Senior Subordinated Discount Notes, the 10% direct and 30% indirect equity interests held by the Company in HIH, the Company's common stock outstanding as of May 9, 2003, and the
Company's equity interests in Huntsman LLC. The HMP Senior Discount Notes are redeemable beginning November 15, 2004 at stipulated redemption prices declining from 107.5% to 100% of accreted
value by May 15, 2007. The HMP Senior Discount Notes contain certain restrictions including limits on the incurrence of debt, restricted payments, liens, transactions with affiliates, and
merger and sales of assets. Management believes that the Company is in compliance with the covenants of the HMP Senior Discount Notes as of December 31, 2004. On February 28, 2005,
Huntsman Corporation used proceeds from its initial public offering of common and preferred stock to redeem in full the HMP Senior Discount Notes at an accreted value of $550.0 million plus a
redemption premium of $41.3 million.

The
Company issued 875,000 warrants in connection with the HMP Senior Discount Notes, each of which entitled the holder to purchase 2.8094 shares of the Company's common stock for an
exercise price of $0.01 per share. On August 7, 2004, the Company completed a 10 for 1 reverse stock split which reduced the number of shares outstanding as of that date from 18,027,214 to
1,802,721. As a result of this reverse stock split, the holders of the warrants are now entitled to purchase 0.28094 shares for each warrant held at an exercise price of $0.10 per share. The warrants
became separately transferable from the HMP Senior Discount Notes 180 days after issuance on May 9, 2003, and the warrants become exercisable on November 15, 2004. In certain
events, the Company has the right to require the holders of the warrants to exercise or exchange them for other equity securities. The warrants expire on May 15, 2011. On December 23,
2003, the Company repurchased 14,145 warrants at a value of $1.3 million. As of December 31, 2004, there were 860,855 warrants outstanding. The aggregate number of shares of
Huntsman Corporation common stock issuable to the warrant holders is 241,849. In connection with Huntsman Corporation's initial public offering, the Company gave notice to all holders of the
outstanding warrants to purchase the Company's common stock that the Company is exercising its rights under the terms of the warrants to require all such warrants and any shares of the Company's
common stock issued upon exercise of the warrants to be exchanged for newly issued shares of Huntsman Corporation's common stock. Under the terms of the warrants, an aggregate of approximately
16.9 million shares of Huntsman Corporation's common stock will be issued in exchange for the outstanding warrants and Company common stock issued under the warrants on March 14, 2005.



The Company's three principal operating subsidiaries are separately financed, their debt is non-recourse to the Company and the Company has no
contractual obligation to fund their respective operations. Moreover, notwithstanding that HIH is consolidated with Huntsman LLC for financial accounting purposes, Huntsman LLC is financed separately
from HIH, HIH's debt is non-recourse to Huntsman LLC and Huntsman LLC has no contractual obligation to fund HIH's operations. AdMat is also financed separately from Huntsman LLC and HIH,
Huntsman LLC and HIH's debt is non-recourse to AdMat and AdMat has no contractual obligation to fund Huntsman LLC or HIH's

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operations.
The following is a discussion of the debt and liquidity of the Company's three primary subsidiaries.

Huntsman LLC Debt (Excluding HIH and HI)



Prior to the October 14, 2004 refinancing of Huntsman LLC's credit facilities described below, Huntsman LLC's senior secured credit facilities consisted of
a $275 million revolving credit facility maturing in 2006 and two term loan facilities maturing in 2007 in the amount of $606.3 million and $96.1 million. On October 14,
2004, Huntsman LLC completed a $1,065 million refinancing of its senior secured credit facilities (as refinanced, the "HLLC Credit Facilities"). The HLLC Credit Facilities consist of a
$350 million revolving credit facility due October 2009 (the "HLLC Revolving Facility") and a $715 million term loan B facility due March 2010 (the "HLLC Term Facility").
Proceeds of the refinancing were used to repay in full the outstanding borrowings under Huntsman LLC's prior senior secured credit facilities. The HLLC Term Facility has scheduled annual amortization
payments of approximately $7 million, with the remaining balance due at maturity.

The
HLLC Revolving Facility is secured by a first priority lien on substantially all the current and intangible assets of Huntsman LLC and its domestic restricted subsidiaries; and is
secured by a second priority lien on substantially all the property, plant and equipment of Huntsman LLC and its restricted domestic subsidiaries and its indirect equity interest in HIH. The HLLC Term
Facility is secured by a first priority lien on substantially all of the property, plant and equipment of Huntsman LLC and its restricted domestic subsidiaries and its indirect equity interest in HIH;
and by a second priority lien on substantially all of the current and intangible assets of Huntsman LLC and its restricted domestic subsidiaries. The HLLC Credit Facilities are also guaranteed by
HSCHC and Huntsman Specialty and by Huntsman LLC's domestic restricted subsidiaries (collectively, the "HLLC Guarantors"). Neither HIH nor HI are restricted subsidiaries of Huntsman LLC or HLLC
Guarantors.

The
HLLC Revolving Facility is subject to a borrowing base of accounts receivable and inventory and is available for general corporate purposes. Borrowings under the HLLC Revolving
Facility bear interest, at Huntsman LLC's option, at a rate equal to (i) a LIBOR-based eurocurrency rate plus an applicable margin of 2.25%, or (ii) a prime-based rate plus an applicable
margin of 1.25%. The HLLC Revolving Facility allows Huntsman LLC to borrow up to $50 million for letters of credit; however, the $350 million revolving credit facility is reduced
dollar-for-dollar by any letters of credit outstanding.

As
of December 31, 2004 and 2003, the weighted average interest rates on the HLLC Credit Facilities were 5.8% and 7.3%, respectively, excluding the impact of interest rate hedges.
As of December 31, 2004, the HLLC Revolving Facility and HLLC Term Facility bore interest at LIBOR plus 2.25% per year and LIBOR plus 3.50% per year, respectively. However, in accordance with
the HLLC Term Facility agreement, as a result of the initial public offering by the Company and the amount of permanent reduction of indebtedness from the use of initial public offering proceeds at
the HLLC restricted group, the HLLC Term Facility interest rate margin decreased to LIBOR plus 3.0% on March 1, 2005.



On September 30, 2003, Huntsman LLC sold $380 million aggregate principal amount of 11.625% senior secured notes due October 15, 2010 at an
issue price of 98.8% (the "September 2003 Offering"). On December 3, 2003, Huntsman LLC sold an additional $75.4 million aggregate principal amount of its senior secured notes
(collectively with the notes sold in the September 2003 Offering, the "HLLC Senior Secured Notes") at an issue price of 99.5% (the "December 2003 Offering"). Interest on the HLLC Senior
Secured Notes is payable semi-annually on April 15 and October 15. The effective interest rate is 11.9%. The HLLC Senior Secured Notes are effectively subordinated to all
Huntsman

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LLC's
obligations under the HLLC Revolving Facility and rankpari passuwith the HLLC Term Facility. The HLLC Senior Secured Notes are guaranteed by the
HLLC Guarantors.

The
HLLC Senior Secured Notes are redeemable after October 15, 2007 at 105.813% of the principal amount thereof, declining ratably to par on and after October 15, 2009. At
any time prior to October 15, 2006, Huntsman LLC may redeem up to 35% of the aggregate principal amount of the HLLC Senior Secured Notes at a redemption price of 111.625% with net cash proceeds
of a qualified equity offering. As a result of the initial public offering by Huntsman Corporation, Huntsman LLC redeemed 35%, or approximately $159.4 million, of the aggregate principal amount
on February 28, 2005 and paid a call premium of approximately $18.5 million. Following this partial redemption of the HLLC Senior Secured Notes on February 28, 2005, there remain
approximately $296.0 million in aggregate principal amount outstanding.

The
indenture governing the HLLC Senior Secured Notes contains covenants relating to the incurrence of debt, limitations on distributions, asset sales and affiliate transactions, among
other things. The indenture also requires Huntsman LLC to offer to repurchase the HLLC Secured Notes upon a change of control. Management believes that Huntsman LLC is in compliance with the covenants
of the HLLC Secured Notes as of December 31, 2004.



On June 22, 2004, Huntsman LLC sold $300 million of senior unsecured fixed rate notes that bear interest at 11.5% and mature on July 15, 2012
(the "HLLC Unsecured Fixed Rate Notes") and $100 million of senior unsecured floating rate notes that bear interest at a rate equal to LIBOR plus 7.25% and mature on July 15, 2011 (the
"HLLC Unsecured Floating Rate Notes," and together with
the HLLC Unsecured Fixed Rate Notes, the "HLLC Senior Notes"). The interest rate on the HLLC Unsecured Floating Rate Notes as of December 31, 2004 was 9.3% before additional interest as
discussed below. The proceeds from the offering were used to repay $362.9 million on Huntsman LLC's prior term loan B and $25 million to repay indebtedness at HCCA. See
"Other Debt" below. The HLLC Senior Notes are unsecured obligations of Huntsman LLC and are guaranteed by the HLLC Guarantors.

The
HLLC Unsecured Fixed Rate Notes are redeemable after July 15, 2008 at 105.75% of the principal amount thereof, declining ratably to par on and after July 15, 2010. The
HLLC Unsecured Floating Rate Notes are redeemable after July 15, 2006 at 104.0% of the principal amount thereof, declining ratably to par on and after July 15, 2008. At any time prior to
July 15, 2007, Huntsman LLC may redeem up to 40% of the aggregate principal amount of the HLLC Unsecured Fixed Rate Notes at a redemption price of 111.5% with proceeds of a qualified equity
offering. At any time prior to July 15, 2006, Huntsman LLC may redeem up to 40% of the aggregate principal amount of the HLLC Unsecured Floating Rate Notes with the proceeds of a qualified
equity offering at a redemption price equal to the par value plus LIBOR plus 7.25%. As a result of the Company's initial public offering, Huntsman LLC has issued notifications to redeem 34%, or
approximately $102.0 million of combined aggregate principal amount on March 14 and March 17, 2005 with combined call premiums of approximately $11.7 million. Following
this partial redemption of the HLLC Unsecured Fixed Rate Notes to be completed by March 17, 2005, there will remain approximately $198.0 million in aggregate principal amount of HLLC
Unsecured Fixed Rate Notes outstanding.

The
indenture governing the HLLC Senior Notes contains covenants relating to the incurrence of debt, limitations on distributions, asset sales and affiliate transactions, among other
things. The indenture also requires Huntsman LLC to offer to repurchase the HLLC Senior Notes upon a change of control. Management believes that Huntsman LLC is in compliance with the covenants of the
HLLC Senior Notes as of December 31, 2004.

Under
the terms of a registration rights agreement among Huntsman LLC, the HLLC Guarantors and the initial purchasers of the HLLC Senior Notes, Huntsman LLC was required to file a
registration

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statement
relating to an exchange offer for the HLLC Senior Notes on or before November 19, 2004 (the "Filing Date"). Under the terms of the registration rights agreement, because Huntsman LLC
did not file the registration statement by the Filing Date, it is required to pay additional interest on the HLLC Senior Notes at a rate of 0.25% per year for the first 90 day period following
the Filing Date, and 0.50% per year for the second 90 day period following the Filing Date, which it is currently paying as of February 17, 2005. Huntsman LLC expects to file the
registration statement during the second quarter of 2005.



Huntsman LLC's 9.5% fixed and variable subordinated notes due 2007 (the "HLLC Notes") with an outstanding principal balance of $59.3 million as of
December 31, 2004 are unsecured subordinated obligations of Huntsman LLC and are junior in right of payment to all existing and future secured or unsecured senior indebtedness of Huntsman LLC
and effectively junior to any secured indebtedness of Huntsman LLC to the extent of the collateral securing such indebtedness. Interest is payable on the HLLC Notes semiannually on January 1
and July 1 at an annual rate of 9.5% on the fixed rate notes and LIBOR plus 3.25% on the floating rate notes. The HLLC Notes are redeemable at the option of Huntsman LLC after July 2002
at a price declining from 104.75% to 100% of par value as of July 1, 2005. The weighted average interest rate on the floating rate notes was 5.2% and 4.4% as of December 31, 2004 and
2003, respectively. As a result of previously executed amendments to the indentures, virtually all the restrictive covenants contained in the indentures have been eliminated.

On
January 28, 2004, Huntsman LLC used $37.5 million of the net cash proceeds from the December 2003 Offering to redeem, in full, Huntsman Polymers' senior unsecured
notes (the "Huntsman Polymers Notes") with a principal amount of $36.8 million plus accrued interest. The Huntsman Polymers Notes were unsecured senior obligations of Huntsman Polymers; they
had an original maturity of December 2004, and a fixed interest rate of 11.75%.



Huntsman Specialty's subordinated note, in the aggregate principal amount of $75.0 million, accrued interest until April 15, 2002 at 7% per annum.
Pursuant to the note agreement, effective April 15, 2002, all accrued interest was added to the principal of the note for a total principal amount of $106.6 million. Such principal
balance will be payable in a single installment on April 15, 2008. Interest has been payable quarterly in cash, commencing July 15, 2002. For financial reporting purposes, the note was
initially recorded at its estimated fair value of $58.2 million, based on prevailing market rates as of the effective date. As of December 31, 2004 and December 31, 2003, the
unamortized discount on the note was $5.4 million and $6.9 million, respectively.

Huntsman
Corporation Australia Pty Ltd. ("HCA"), Huntsman LLC's indirect Australian subsidiary that holds its Australian surfactants assets, maintains credit facilities (the "HCA
Facilities"). As of December 31, 2004, borrowings under the HCA Facilities totaled A$55.5 million ($43.2 million), which include A$42.9 million ($33.4 million) on
the term loan facility and A$12.6 million ($9.8 million) on the revolving credit line. On August 31, 2004, HCA refinanced the previously existing debt facilities with an
A$30.0 million ($23.4 million) revolving credit line supported by a borrowing base of eligible accounts receivable and inventory and an A$44.0 million ($34.2 million) term
facility.

Huntsman
Chemical Company Australia Pty Ltd. ("HCCA") and certain Australian affiliates hold Huntsman LLC's Australian styrenics assets. On August 31, 2004, HCCA refinanced
the previously existing debt facilities of HCCA with an A$30.0 million ($23.4 million) revolving credit line supported by a borrowing base of eligible accounts receivable (the "HCCA
Facility"). As of December 31, 2004 borrowings under the HCCA Facility totaled A$20.6 million ($16.0 million).

F-39

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The
HCA Facilities and the HCCA Facility are secured by a lien on substantially all their respective assets, bear interest at a rate of 2.9% above the Australian base rate, mature in
August 2007 and are non-recourse to Huntsman LLC. As of December 31, 2004, the interest rate on the HCA Facilities and the HCCA Facility was 8.3%. On June 24, 2004,
Huntsman LLC used $25 million of proceeds from the offering of the HLLC Senior Unsecured Notes to repay a portion of the previously existing debt facilities of HCCA. Management believes that
HCA and HCCA are in compliance with the covenants of the HCA Facilities and the HCCA Facility as of December 31, 2004.

On
July 2, 2001, Huntsman LLC entered into a 15% note payable with an affiliated entity in the amount of $25.0 million (the "Affiliate Note"). The Affiliate Note is due and
payable on the earlier of: (1) the tenth anniversary of the issuance date, or (2) the date of the repayment in full in cash of all indebtedness of Huntsman LLC under its senior secured
credit facilities. Interest is not paid in cash, but is accrued at a designated effective rate of 15% per annum, compounded annually. As of December 31, 2004 and December 31, 2003,
accrued interest added to the principal balance was $15.9 million and $10.5 million, respectively. On February 16, 2005, the Affiliate Note was satisfied in full from proceeds of
the initial public offering completed by Huntsman Corporation.

As
of December 31, 2004, Huntsman LLC has $13.6 million outstanding on short term notes payable for financing a portion of its insurance premiums. Such notes have monthly
scheduled amortization payments through April 1, 2005, bear interest at rates ranging from 3.65% to 4.0%, and are secured by unearned insurance premiums.

HI Debt



As of December 31, 2004, HI had senior secured credit facilities (the "HI Credit Facilities") which consisted of a revolving loan facility of up to
$375 million maturing in September 2008 (the "HI Revolving Facility"), which includes a $50 million multicurrency revolving loan facility available in euros, GBP Sterling and U.S.
dollars, and a term loan B facility consisting of a $1,248.9 million term portion and a €47.8 million (approximately $65.2 million) term portion (the "HI Term
Facility"). On July 13, 2004, HI amended and restated the HI Credit Facilities. Prior to the amendment and restatement, the HI Credit Facilities consisted of a $400 million revolving
facility that was scheduled to mature on June 30, 2005, a $620.1 million term loan B facility that was scheduled to mature on June 30, 2007, and a $620.1 million term loan
C facility that was scheduled to mature on June 30, 2008. At the closing of the amendment and restatement of the HI Credit Facilities on July 13, 2004, HI raised approximately
$126.6 million of net proceeds from the issuance of additional term loan borrowings, of which $82.4 million was applied to repay all outstanding borrowings on the HI Revolving Facility
and the balance, net of fees, increased cash and cash equivalents. The increase in cash and availability under the HI Revolving Facility is available for general corporate purposes and to provide a
portion of funds for the construction of a polyethylene production facility at HI's Wilton, U.K. facility. Scheduled amortization of the HI Term Facility is approximately $13.3 million per
annum, commencing June 30, 2006, with the remaining unpaid balance due at maturity. The maturity of the HI Term Facility is December 31, 2010; provided that the maturity will be
accelerated to December 31, 2008 if HI has not refinanced all of the outstanding HI Senior Notes and the HI Subordinated Notes (as defined below) on or before December 31, 2008 on terms
satisfactory to the administrative agent under the HI Credit Facilities.

In
compliance with applicable provisions in its credit facilities, on December 31, 2004, HI prepaid $59 million on the HI Term Facility as a result of excess cash flow.
Such prepayment has been applied in accordance with the provisions of the HI Credit Facilities in such a manner that there will be no scheduled maturities under the HI Credit Facilities due until
June 2006 and such that all remaining scheduled maturities under the HI Term Facility shall be reduced pro rata.

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Interest rates for the amended and restated HI Credit Facilities are based upon, at HI's option, either a eurocurrency rate (LIBOR) or a base rate (prime) plus the applicable spread. The
applicable spreads vary based on a pricing grid, in the case of eurocurrency-based loans, from 2.25% to 3.25% per annum depending on the loan facility and whether specified conditions have been
satisfied, and, in the case of base rate loans, from 1.00% to 2.00% per annum. As of December 31, 2004 and December 31, 2003 (which was prior to the amendment and restatement of the HI
Credit Facilities), the average interest rates on the HI Credit Facilities were 5.0% and 5.6%, respectively, excluding the impact of interest rate hedges. On December 21, 2004, HI amended the
HI Credit Facilities which amendment, among other things, reduced the applicable base (prime) rate margin for the term loan B dollar loans from a range of 1.75% to 2.00% to a range of 1.00% to 1.25%
and reduced the applicable Eurocurrency (LIBOR) rate margin for the term loan B dollar loans from a range of 3.00% to 3.25% to a range of 2.25% to 2.50%.

The
HI Credit Facilities are secured by a first priority lien on substantially all the assets of HIH, its domestic subsidiaries and certain of HIH's foreign subsidiaries. The HI Credit
Facilities are also guaranteed by HIH, HI's domestic subsidiaries and certain of its foreign subsidiaries (the "HI Guarantors").

The
HI Credit Facilities contain financial covenants including a minimum interest coverage ratio and a maximum debt to EBITDA ratio, as defined, and limits on capital expenditures. In
addition to financial covenants, the HI Credit Facilities contain other customary covenants relating to the incurrence of debt, the purchase and sale of assets, limitations on investments, affiliate
transactions, change in control provisions, events of default and acceleration provisions. Management believes that HI was in compliance with the covenants of the HI Credit Facilities as of
December 31, 2004.

The
HI Credit Facility allows HI to borrow up to $100 million for letters of credit; however, the $375 million revolving credit facility is reduced
dollar-for-dollar by any letters of credit outstanding. As of December 31, 2004, there were no loans outstanding on the HI Revolving Facility, and there were
$7.4 million in letters of credit outstanding.



In March 2002, HI sold $300 million aggregate principal amount of HI Senior Notes due 2009. On April 11, 2003, HI sold an additional
$150 million aggregate principal amount of the HI Senior Notes at
an issue price of 105.25%. Net proceeds from the sale of these notes were used to repay amounts outstanding under the HI Credit Facilities. The HI Senior Notes are unsecured obligations. Interest on
the HI Senior Notes is payable semi-annually in March and September of each year. The HI Senior Notes are redeemable after March 1, 2006 at 104.937 of the principal amount thereof,
declining ratably to par on and after March 1, 2008.

On
December 17, 2004, HI completed an offering of $175 million of its 7.375% senior subordinated notes due 2015 and €135 million of its 7.5% senior
subordinated notes due 2015 (the "HI Senior Subordinated Notes due 2015"). HI used all of the net proceeds to redeem part of its outstanding 10.125% senior subordinated notes due 2009 (the "HI Senior
Subordinated Notes due 2009" and, together with the HI Senior Subordinated Notes due 2015, the "HI Senior Subordinated Notes"). Prior to the partial redemptions of the HI Senior Subordinated Notes due
2009 discussed below, HI had outstanding $600 million and €450 million ($559.6 million, which includes $5.2 million of unamortized premium). The HI Senior
Subordinated Notes due 2009 became redeemable on July 1, 2004 at 105.063% of the principal amount thereof, which declines ratably to par on and after July 1, 2007. In advance of the
issuance of the HI Senior Subordinated Notes due 2015, HI gave notice that it would redeem $231 million and €77 million of Senior Subordinated Notes due 2009 on
December 31, 2004 and $2.9 million and €1.0 million of Senior Subordinated Notes due 2009 on January 3, 2005. HI completed these redemptions as scheduled.
In connection with these redemptions, HI paid

F-41

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approximately
$17.0 million and $0.2 million in U.S. dollar equivalents in redemption premiums on December 31, 2004 and January 3, 2005, respectively.

As
of December 31, 2004, following the December 31, 2004 partial redemption of the HI Senior Subordinated Notes due 2009, HI has outstanding $369 million and
€373 million of Senior Subordinated Notes due 2009 and $175 million and €135 million of Senior Subordinated Notes due 2015, for a combined total of
$544 million and €508 million of Senior Subordinated Notes plus $5.3 million of unamortized premium. Following the January 3, 2005 partial redemption, HI
has outstanding $366.1 million and €372 million of Senior Subordinated Notes due 2009 and $175 million and €135 million of Senior
Subordinated Notes due 2015, for a combined total of $541.1 million and €507 million of Senior Subordinated Notes plus $5.3 million of unamortized premium. The
$175 million and €135 million HI Senior Subordinated Notes due 2015 are redeemable on or after January 1, 2010 at 103.688% and 103.750%, respectively, of the
principal amount thereof, which declines ratably to par on and after January 1, 2013. In addition, at any time prior to January 1, 2008, HI may redeem up to 40% of the aggregate
principal amount of the $175 million and €135 million Senior Subordinated Notes due 2015 at redemption prices of 107.375% and 107.5% plus accrued and unpaid interest,
respectively, with the net cash proceeds of a qualified equity offering. The HI Senior Subordinated Notes are unsecured and interest is payable semi-annually in January and July of each
year.

On
December 10, 2004, HI entered into a cross-currency swap. The cross-currency swap requires HI to pay euros and receive U.S. dollars at the maturity date of January 1,
2010. The U.S. dollar notional
amount is $175 million and bears interest at a fixed rate of 7.375%, payable semiannually on January 1 and July 1. The euro notional amount is approximately
€132 million and bears interest at a blended fixed rate of approximately 6.63%, payable semiannually on January 1 and July 1.

The
HI Senior Notes and the HI Senior Subordinated Notes contain covenants relating to the incurrence of debt, limitations on distributions, asset sales and affiliate transactions, among
other things. They also contain a change of control provision requiring HI to offer to repurchase the HI Senior Notes and the HI Subordinated Notes upon a change of control. Management believes that
HI was in compliance with the covenants of the HI Senior Notes and the HI Senior Subordinated Notes as of December 31, 2004.



HI maintains a $25 million multicurrency overdraft facility for its European subsidiaries (the "HI European Overdraft Facility"), all of which was
available as of December 31, 2004. As of December 31, 2003, HI had approximately $7.5 million outstanding under the HI European Overdraft Facility included within trade payables.
The HI European Overdraft Facility is used for daily working capital needs.

Included
within other debt is debt associated with one of HI's Chinese MDI joint ventures. In January 2003, HI entered into a joint venture agreement with Shanghai Chlor-Alkali
Chemical Company, Ltd. to build MDI production facilities near Shanghai, China. HI owns 70% of Huntsman Polyurethanes Shanghai Ltd. (the "Consolidated Chinese Splitting JV"), which is a
consolidated affiliate. On September 19, 2003, the Consolidated Chinese Splitting JV obtained secured financing for the construction of the production facilities, consisting of various
committed loans in the aggregate amount of approximately $119 million in U.S. dollar equivalents. As of December 31, 2004, there were $8.0 million outstanding in U.S. dollar
borrowings and 20.0 million in RMB borrowings ($2.4 million) under these facilities. The interest rate on these facilities is LIBOR plus 0.48% for U.S. dollar borrowings and 90% of the
Peoples Bank of China rate for RMB borrowings. As of December 31, 2004, the interest rate for U.S. dollar borrowings was approximately 3.1% and 5.5% for RMB borrowings. The loans are secured by
substantially all the assets of the Consolidated Chinese Splitting JV and will be repaid in 16 semi-annual installments, beginning no later than June 30, 2007. The

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financing
is non-recourse to HI, but is guaranteed during the construction phase by affiliates of the Consolidated Chinese Splitting JV, including the Company, as the successor to Huntsman
Holdings. The Company has unconditionally guaranteed 70% of any amounts due and unpaid by the Consolidated Chinese Splitting JV under the loans described above (except for the VAT facility, which is
not guaranteed). The Company's guarantees remain in effect until the Consolidated Chinese Splitting JV has (i) commenced production of at least 70% of capacity for at least 30 days, and
(ii) achieved a debt service cover ratio of at least 1.5:1.



On June 30, 1999, HIH issued senior discount notes ("HIH Senior Discount Notes") and senior subordinated discount notes (the "HIH Senior Subordinated
Discount Notes" and, collectively with the HIH Senior Discount Notes, the "HIH Discount Notes") to ICI with initial stated values of $242.7 million and $265.3 million, respectively. The
HIH Discount Notes are due December 31, 2009. Interest on the HIH Discount Notes is paid in kind. The effective interest rate is 13.4%. The HIH Discount Notes contain limits on the incurrence
of debt, restricted payments, liens, transactions with affiliates, and merger and sales of assets. Management believes that HIH was in compliance with the covenants of the HIH Discount Notes as of
December 31, 2004.

Interest
on the HIH Senior Discount Notes accrues at 13.375% per annum. The HIH Senior Discount Notes are redeemable after July 1, 2004 at 106.688% of the principal amount
thereof, declining ratably to par on and after July 1, 2007. As a result of the Company's initial public offering, HIH redeemed 89.5% or approximately $452.3 million, of accreted value
as of February 28, 2005 and paid call premiums of approximately $30.2 million. In order to make this partial redemption, HIH received a contribution of $447.5 million from the
Company resulting from proceeds of the initial public offering and HIH received $35.0 million as a restricted payment made by HI in the form of a dividend. On March 14, 2005 HIH will
redeem the remaining HIH Senior Discount Notes, in full, at an accreted value of approximately $53.4 million and it will pay call premiums of approximately $3.6 million. In order to make
this redemption, HIH will receive a contribution from the Company resulting from proceeds of its initial public offering.

The
HIH Senior Subordinated Discount Notes have a stated rate of 8% that was reset to a market rate of 13.125% effective September 30, 2004. For financial reporting purposes, the
HIH Senior Subordinated Discount Notes were initially recorded at their estimated fair value of $223 million based upon prevailing market rates at June 30, 1999. On December 31,
2001, the terms of the HIH Senior Subordinated Discount Notes were modified, resulting in a significant decrease in the present value of the debt and, as a result, the modification was treated
effectively as an extinguishment and reissuance of the debt. The debt was recorded using a 16% interest rate, the estimated market rate for the debt as of December 20, 2001. The effective
interest rate is 13.1%. In connection with the financial restructuring of Huntsman LLC on September 30, 2002, MatlinPatterson contributed its interest in the HIH Senior Subordinated Discount
Notes to HMP. On May 9, 2003, HMP completed the purchase of the HIH Senior Subordinated Discount Notes from ICI. As of December 31, 2004, the HIH Senior Subordinated Discount Notes were
held by HMP. On February 28, 2005, HMP contributed the HIH
Senior Subordinated Discount Notes at an accreted value of $422.8 million to HIH in exchange for equity in HIH.

As
of December 31, 2004 and 2003, the HIH Senior Discount Notes included $251.9 million and $191.9 million of accrued interest, respectively. As of
December 31, 2004, the HIH Senior Subordinated Discount Notes included $13.1 million of accrued interest since the September 30, 2004 reset date when $135.3 million of
accrued interest was added to principal for a reset principal balance of

F-43

---



$400.6 million.
As of December 31, 2003, the HIH Senior Subordinated Discount Notes included $112.3 million of accrued interest and $19.2 million of discount.



On June 30, 2003, AdMat entered into the AdMat Revolving Credit Facility that provides up to $60 million of borrowings and is secured by a first
lien on substantially all of AdMat's assets and those of certain of its subsidiaries. The collateral includes substantially all real property and equipment relating to AdMat's manufacturing plants
located at Bergkamen, Germany; Monthey, Switzerland; McIntosh, Alabama; and Duxford, U.K. The collateral also includes certain capital stock and intercompany notes of certain subsidiaries of AdMat,
and certain other assets, principally including inventory and accounts receivable. AdMat's obligations under the AdMat Revolving Credit Facility have been initially guaranteed by all of AdMat's U.S.
subsidiaries and certain of its non-U.S. subsidiaries (collectively, the "AdMat Guarantors"). The agent for the lenders under the AdMat Revolving Credit Facility and the trustee under the
indenture governing the AdMat Senior Secured Notes are parties to an intercreditor agreement (the "AdMat Intercreditor Agreement").

The
AdMat Revolving Credit Facility matures on June 30, 2007. Interest rates, at AdMat's option, are based upon either a eurocurrency rate (LIBOR) or a base rate (prime), plus an
applicable spread. The applicable spreads vary based on a pricing grid. In the case of the eurocurrency based loans, spreads range from 3.0% to 4.5% per annum, depending on whether specified
conditions have been satisfied, and, in the case of base rate loans, from 2.0% to 3.5% per annum. As of December 31, 2004, AdMat
had nothing drawn on the AdMat Revolving Credit Facility and had approximately $10.1 million of letters of credit issued and outstanding under the AdMat Revolving Credit Facility.

The
AdMat Revolving Credit Facility contains covenants relating to incurrence of additional debt, purchase and sale of assets, limitations on investments, affiliate transactions, change
in control and maintenance of certain financial ratios. The financial covenants include a leverage ratio, fixed charge coverage ratio and a limit on capital expenditures. The AdMat Revolving Credit
Facility also limits the payment of dividends and distributions generally to the amount required by AdMat's members to pay income taxes. Management believes that AdMat is in compliance with the
covenants of the AdMat Revolving Credit Facility as of December 31, 2004.

There
are no scheduled debt amortization payments on the AdMat Revolving Credit Facility until its maturity date.

The
AdMat Revolving Credit Facility allows AdMat to borrow up to $20 million for letters of credit; however, the $60 million revolving credit facility is reduced
dollar-for-dollar by any letters of credit outstanding.

Senior Secured Notes (AdMat Senior Secured Notes)

In connection with the AdMat Transaction, on June 30, 2003, AdMat issued $250 million of Fixed Rate Notes due 2010 and $100 million of
Floating Rate Notes due 2008. The $250 million Fixed Rate Notes bear a fixed rate of interest of 11%, and the Floating Rate Notes bear interest at a rate per annum equal to LIBOR plus 8.0%,
subject to a floor with respect to LIBOR of 2.0%. As of December 31, 2004, the interest rate on the Floating Rate Notes was 10%. Interest on the Floating Rate Notes resets
semi-annually. The $100 million Floating Rate Notes were issued with an original issue discount of 2.0%, or for $98 million. The $2 million discount is being amortized
to interest expense over the term of the Floating Rate Notes. Interest is payable on the AdMat Senior Secured Notes semiannually on January 15 and July 15 of each year. The effective
interest rate on the AdMat

F-44

---



Floating
Rate Notes was 10.3% for the year ended December 31, 2004, excluding the impact of additional interest discussed below.

The
AdMat Senior Secured Notes are secured by a second lien, subject to the AdMat Intercreditor Agreement, on substantially all of the assets that secure the AdMat Revolving Credit
Facility. The AdMat Senior Secured Notes effectively rank senior in right of payment to all existing and future obligations of AdMat that are unsecured or secured by liens on the collateral junior to
the liens
securing the AdMat Senior Secured Notes. The AdMat Senior Secured Notes are initially guaranteed on a senior basis by the AdMat Guarantors and are also supported by liens on substantially all of the
assets of the AdMat Guarantors.

The
AdMat Fixed Rate Notes are redeemable on or after July 15, 2007 at the option of AdMat at a price declining ratably from 105.5% to 100.0% of par value by the year 2009. The
AdMat Floating Rate Notes are redeemable on or after July 15, 2005 at the option of AdMat at a price declining ratably from 105.0% to 100.0% of par value by the year 2007. At any time prior to
July 15, 2007 for the AdMat Fixed Rate Notes and July 15, 2005 for the AdMat Floating Rate Notes, AdMat may redeem all or part of such notes at 100% of their principal amount, plus a
"make whole" premium, as defined in the indenture. In addition, at any time prior to July 15, 2006 for the AdMat Fixed Rate Notes and July 15, 2005 for the AdMat Floating Rate Notes,
AdMat may redeem up to 35% of the aggregate principal amount of the AdMat Senior Secured Notes at a redemption price of 111% of the principal thereof with the net cash proceeds of one or more
qualified equity offerings, subject to certain conditions and limitations.

The
indenture governing the AdMat Senior Secured Notes contains covenants relating to the incurrence of debt, limitations on distributions, asset sales and affiliate transactions, among
other things. The indenture also contains a change of control provision requiring AdMat to offer to repurchase the AdMat Senior Secured Notes upon a change of control. Management believes that AdMat
was in compliance with the covenants of the indenture as of December 31, 2004.

Under
the terms of a registration rights agreement among AdMat, the AdMat Guarantors and the initial purchasers of the AdMat Senior Secured Notes, AdMat was required to cause a
registration statement relating to an exchange offer for the AdMat Senior Secured Notes to become effective on or before July 9, 2004 (the "Effectiveness Date") and to complete the exchange
offer on or before August 23, 2004 (the "Completion Date"). Due to a delay in the completion of predecessor company prior period audited financial statements for certain of AdMat's
subsidiaries, the registration statement did not become effective by the Effectiveness Date and the exchange offer was not completed by the Completion Date. Accordingly, under the registration rights
agreement, AdMat was required to pay additional interest on the AdMat Senior Secured Notes at a rate of 0.25% per annum for the first 90 day period following the Effectiveness Date and 0.50%
for the second 90-day period and is currently paying additional interest at a rate of 0.75% per year. Once the registration statement becomes effective, AdMat will be required to continue
paying additional interest until the exchange offer is completed. AdMat filed an amended registration statement on December 22, 2004 and expects to file a second amended registration statement
late in the first quarter of 2005. AdMat expects that the exchange offer will be completed approximately 30 days after the registration statement becomes effective.

There
are no scheduled debt amortization payments on the AdMat Senior Secured Notes until their maturity date.



As of December 31, 2004, AdMat had $1 million debt outstanding under credit facilities in Brazil. These facilities are primarily revolving credit
lines that support the working capital needs of the

F-45

---



business
and the issuance of certain letters of credit and guarantees. A portion of the other debt is backed by letters of credit issued and outstanding under the AdMat Revolving Credit Facility.



The scheduled maturities of the Company's debt, after giving effect to the repayment of debt from the proceeds of the initial public offering of the Company's
common and preferred stock, are as follows (dollars in millions):

Year ended December 31:2005

$
37.52006


34.72007


134.32008


634.72009


1,991.7Later Years


3,466.6$
6,299.5


13.   Derivative Instruments and Hedging Activities

The Company is exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to time, the Company
enters into transactions, including transactions involving derivative instruments, to manage interest rate exposure, but does not currently hedge for movements in commodities or foreign exchange
rates. The Company manages interest rate exposure through a program designed to reduce the impact of fluctuations in variable interest rates and to meet the requirements of certain credit agreements.

Interest Rate Hedging

Through the Company's borrowing activities, it is exposed to interest rate risk. Such risk arises due to the structure of the Company's debt portfolio, including
the duration of the portfolio and the mix of fixed and floating interest rates. Actions taken to reduce interest rate risk include managing the mix and rate characteristics of various interest bearing
liabilities as well as entering into interest rate swaps, collars and options.

As
of December 31, 2004 and 2003, the Company had entered into various types of interest rate contracts to manage its interest rate risk on its long-term debt as
indicated below (dollars in millions):

December 31, 2004

December 31, 2003Pay fixed swapsNotional amount

$
184.3

$
447.5Fair value asset (liability)


(3.2
)

(14.4
)Weighted average pay rate


4.44
%

5.49
%Maturing


2005-2007


2004-2007Interest rate collarsNotional amount

$


$
150.0Fair value





(4.8
)Weighted average cap rate





7.00
%Weighted average floor rate





6.25
%Maturing





2004


F-46

---



The
Company purchases both interest rate swaps and interest rate collars to reduce the impact of changes in interest rates on its floating-rate long-term debt.
Under interest rate swaps, the Company agrees 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. The collars entitle the Company to receive from the counterparties (major banks) the amounts, if any, by which the Company's interest
payments on certain of its floating-rate borrowings exceed a certain rate, and require the Company to pay to the counterparties (major banks) the amount, if any, by which the Company's
interest payments on certain of its floating-rate borrowings are less than a certain rate.

Interest
rate contracts with a fair value of $3.2 million and $19.2 million were recorded as a component of other noncurrent liabilities as of December 31, 2004 and
2003, respectively. The fair value of cash flow hedges and interest rate contracts not designated as hedges are $2.0 million and 1.2 million as of December 31, 2004 and
$13.0 million as of December 31, 2003. The changes in the fair value of cash flow hedges resulted in a $0.2 million decrease in interest expense, a $4.8 million decrease in
interest expense and a $3.4 million increase in interest expense, and a $4.5 million decrease, a $12.4 million decrease, and a $3.5 million increase in other comprehensive
income for the year ended December 31, 2004, 2003 and 2002 respectively. The changes in the fair value of interest rate contracts not designated as hedges resulted in a $4.9 million
increase in expense and a $6.5 million decrease in interest expense and a $3.5 million increase in interest expense for the year ended December 31, 2004, 2003 and 2002
respectively.

The
Company is exposed to credit losses in the event of nonperformance by a counterparty to the derivative financial instruments. The Company anticipates, however, that the
counterparties will be able to fully satisfy obligations under the contracts. Market risk arises from changes in interest rates.

Commodity Price Hedging

As of December 31, 2004, there was $0.1 million included in other current assets and accrued liabilities related to cash flow commodity price
hedging contracts recorded in other current assets and other comprehensive income.

As
of December 31, 2004 commodity price hedging contracts designated as fair value hedges are included in the balance sheet as $1.5 million in other current assets and
$1.8 million decrease in inventory. As of December 31, 2003, there were no cash flow commodity price hedging contracts designated as fair value hedges are included in the balance sheet
as an increase of $0.8 million to other current liabilities and an increase in inventory of $0.5 million.

Commodity
price contracts not designated as hedges are reflected in the balance sheet as $5.6 million and $1.8 million in other current assets and liabilities,
respectively, as of December 31, 2004 and as $0.5 million and $0.3 million in other current assets and liabilities, respectively, as of December 31, 2003.

During
the year ended December 31, 2004, 2003 and 2002 the Company recorded an increase of $2.4 million, $1.2 million and $3.5 million, respectively, in cost
of goods sold related to net gains and losses from settled contracts, net gains and losses in fair value price hedges, and the change in fair value on commodity price hedging contracts not designated
as hedges.

Foreign Currency Rate Hedging

The Company may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. These
contracts are not designated as hedges for financial reporting purposes and are recorded at fair value. As of December 31, 2004 and 2003 and for the year ended December 31, 2004, 2003
and 2002 the fair value, change in fair value, and realized gains (losses) of outstanding foreign currency rate hedging contracts was not material.

F-47

---



Net Investment Hedging

The Company has designated all of its euro-denominated debt as a hedge of its net investments in foreign operations. Currency effects of net
investment hedges produced a loss of $45.2 million, a loss of $93.6 million, and loss of 95.9 million in other comprehensive income (loss) (foreign currency translation
adjustments) for the year ended December 31, 2004, 2003, and 2002, respectively. As of December 31, 2004 and December 31, 2003, there was a cumulative net loss of approximately
$171.5 million and $126.3 million, respectively.

On
December 10, 2004, the Company entered into a cross-currency swap. The cross-currency swap requires the Company to pay euros and receive U.S. dollars at the maturity date of
January 1, 2010. The U.S. dollar notional amount is $175 million and bears interest at a fixed rate of 7.375%, payable semiannually on January 1 and July 1. The euro
notional amount is approximately €132 million and bears interest at a blended fixed rate of approximately 6.63%, payable semiannually on January 1 and July 1. The
Company has designated this cross-currency swap as a hedge of its net investment in euro-denominated operations.

14.   Operating Leases

The Company leases certain railcars, aircraft, equipment and facilities under long-term lease agreements. The total expense recorded under operating
lease agreements in the accompanying consolidated statements of operations is approximately $55.2 million, $38.4 million and $36.5 million for the years ended December 31,
2004, 2003 and 2002, respectively.

Future
minimum lease payments under operating leases as of December 31, 2004 are as follows (dollars in millions):

Year ending December 31:2005

$
47.82006


40.52007


33.42008


27.22009


25.0Thereafter


108.1$
282.0


15.   Income Taxes

The following is a summary of U.S. and non-U.S. provisions for current and deferred income taxes (dollars in millions):

For the Year ended
December 31,2004

2003

2002Income tax expense (benefit):U.S.Current

$
11.1

$
8.4

$
8.1Deferred


(2.2
)

(12.8
)

Non-U.S.Current


24.3


26.0


0.4Deferred


(62.3
)

9.2


Total

$
(29.1
)
$
30.8

$
8.5


F-48

---



The
following schedule reconciles the differences between the United States federal income taxes at the United States statutory rate to the Company's provision (benefit) for income taxes
(dollars in millions):

For the Year ended December 31,2004

2003

2002Loss before income tax

$
(249.6
)
$
(290.5
)
$
(154.6
)Expected benefit at U.S. statutory rate of 35%

$
(87.4
)
$
(101.7
)
$
(54.1
)Change resulting from:State taxes (benefit) net of federal benefit


2.6


(5.6
)

(4.6
)Effects of non-U.S. operations and tax rate differential


(37.4
)

(1.5
)

5.3Equity method of accounting





5.2


14.9Incremental U.S. tax on non-U.S. income


28.4


1.6


Cancellation of indebtedness income








73.8Tax authority audits


2.3


3.6


22.9Change in valuation allowance


72.5


124.8


(59.4
)Other-net


(10.1
)

4.4


9.7Total income tax (benefit) expense

$
(29.1
)
$
30.8

$
8.5


The
components of (losses) earnings from continuing operations before taxes were as follows (dollars in millions):

For the Year ended December 31,2004

2003

2002Loss before income taxes:U.S.

$
(163.2
)
$
(202.7
)
$
(154.2
)Non-U.S.


(86.4
)

(87.8
)

(0.4
)Total

$
(249.6
)
$
(290.5
)
$
(154.6
)


Subsequent
to the AdMat Transaction, substantially all non-U.S. operations of AdMat are treated as branches of the Company for U.S. income tax purposes and are, therefore,
subject to both U.S. and non-U.S. income tax. The pre-tax income by jurisdictional location and the preceding analysis of the income tax provision by taxing jurisdiction may,
therefore, not be directly related.

F-49

---



Components
of deferred income tax assets and liabilities are as follows (dollars in millions):

December 31,
2004

December 31,
2003Deferred income tax assets:Net operating loss and AMT credit carryforwards

$
1,217.8

$
1,212.7Employee benefits


96.3


65.1Intangible assets


190.7


148.5Othernet


55.0


58.6Total


1,559.8


1,484.9Deferred income tax liabilities:Tax depreciation in excess of book depreciation


(889.5
)

(1,000.9
)Othernet


(10.5
)

(87.1
)Total


(900.0
)

(1,088.0
)Net deferred tax asset before valuation allowance


659.8


396.9Valuation allowance


(842.1
)

(603.3
)Net deferred tax liability

$
(182.3
)
$
(206.4
)Current tax asset

$
11.9

$
14.7Current tax liability


(10.8
)

(15.1
)Non-current tax asset


34.5


28.8Non-current tax liability


(217.9
)

(234.8
)Total

$
(182.3
)
$
(206.4
)


As
of December 31, 2004, the Company has U.S. Federal net operating loss carryforwards ("NOLs") of $1,352.9 million. The U.S. NOLs begin to expire in 2018 and fully expire
in 2024. The Company also has NOLs of $2,240.0 million in various non-U.S. jurisdictions. While the majority of the non-U.S. NOLs have no expiration date,
$353.7 million have a limited life and begin to expire in 2006.

Included
in the $2,240.0 million of non-U.S. NOLs is $1,122.7 million attributable to AdMat's Luxembourg entities. As of December 31, 2004, there is a
valuation allowance of $318.5 million against these net tax-effected NOLs of $336.8 million. The Company is currently exploring initiatives that could result in the
dissolution of these entities. The net operating loss carryforwards of these entities would be lost on dissolution.

The
Company has a valuation allowance against its entire U.S. and a material portion of its non-U.S. net deferred tax assets. A future valuation allowance reversal of
$3.7 million will reduce goodwill and other non-current intangibles. During the year ended December 31, 2004, the Company reversed valuation allowances of
$26.6 million, which were used to reduce non-current intangibles. Additionally, included in the deferred tax assets at December 31, 2004 is approximately $7.7 million
of cumulative tax benefit related to equity transactions which will be credited to stockholder's equity when realized, after all other valuation allowances have been reversed.

The
Company and AdMat are subject to the "ownership change" rules of Section 382 of the Internal Revenue Code. Under these rules, the use of the NOLs by the Company and AdMat
could be limited in tax periods following the date of the ownership change. Based upon the existence of significant tax "built-in income" items, the effect of the ownership change rules on
the ability to utilize the NOLs is not anticipated to be material.

During
the twelve months ended December 31, 2004, included in the $37.4 million "Effects of non-U.S. operations and tax rate differential" above is
approximately $28.3 million of non-recurring

F-50

---



items
including amounts associated with enacted changes in tax rates, the expiration of tax statute of limitations as well as the reversal of previously established contingency reserves.

For
non-U.S. entities that are not treated as branches for U.S. tax purposes, the Company does not provide for income taxes on the undistributed earnings of these
subsidiaries as earnings are reinvested and, in the opinion of management, will continue to be reinvested indefinitely. The undistributed earnings of foreign subsidiaries that are deemed to be
permanently invested were $30.0 million at December 31, 2004. It is not practicable to determine the unrecognized deferred tax liability on those earnings.

As
a matter of course, the Company's subsidiaries are regularly audited by various taxing authorities in both the U.S. and numerous non-U.S. jurisdictions. The Company
believes adequate provision has been made for all outstanding issues for all open years.

16.   Other Comprehensive Income (Loss)

Other comprehensive income consisted of the following (dollars in millions):

|                                                                                                                                          |  | December 31, 2004 |        | December 31, 2003 |   | HIH
May 1, 2003 |   | December 31, 2002 |      
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | ----------------- | - | --------------- | - | ----------------- | -----
|
|Foreign currency translation adjustments (net of investment hedges) and net of tax of $18.3 million as of both December 31, 2004 and 2003 |  | $                 | 333.6  |                   | $ | 67.1            |   | $                 | 167.1
|Unrealized loss on non-qualified plan investments                                                                                         |  |                   | 0.9    |                   |   | 0.3             |   |                   | 0.6  
|Unrealized loss on derivative instruments                                                                                                 |  |                   | (5.2   | )                 |   | 8.3             |   |                   | (13.5
|Cumulative effect of accounting change                                                                                                    |  |                   |       |                   |   |                |   |                   | (1.1 
|Minimum pension liability, net of tax of $14.2 million and $29.9 million as of December 31, 2004 and 2003, respectively                   |  |                   | (152.1 | )                 |   | (5.7            | ) |                   | (95.2
|Minimum pension liability unconsolidated affiliate                                                                                        |  |                   | (6.6   | )                 |   | (1.0            | ) |                   | (5.6 
|Unrealized loss on securities                                                                                                             |  |                   | 1.2    |                   |   | 1.0             |   |                   | 0.2  
|Other comprehensive income (loss) of minority interest                                                                                    |  |                   | (74.4  | )                 |   | (73.9           | ) |                   | (0.5 
|Other comprehensive income (loss) of unconsolidated affiliates                                                                            |  |                   | 83.6   |                   |   | 74.4            |   |                   | 9.2  
|                                                                                                                                          |  |                   |        |                   |   |                 |   |                   |      
|Total                                                                                                                                     |  | $                 | 181.0  |                   | $ | 70.5            |   | $                 | 61.2 
|                                                                                                                                          |  |                   |        |                   |   |                 |   |                   |      

Items of other comprehensive income of the Company and its consolidated affiliates have been recorded net of tax, with the exception of the SFAS
No. 52 adjustments related to subsidiaries with earnings treated as permanently reinvested. The tax effect in other comprehensive income is determined based upon the jurisdiction in which the
income or loss is recognized and is net of valuation allowances.

17.   Preferred and Common Stock

Preferred Stock

On May 8, 2003, the Company amended its certificate of incorporation to eliminate the preferred stock. At that time, the preferred stock was surrendered.
The classes of preferred stock of the Company were similar to those of Huntsman LLC prior to its conversion to a limited liability company.

F-51

---



The
dividends and liquidation preferences on the Company's preferred stock accumulated from corresponding amounts of prior Huntsman Corporation stock.

The
components of preferred stock were as follows (dollars in millions):

December 31, 2002Book Value

Liquidation
PreferenceClass A 8% cumulative convertible preferred stock$0.01 per share par value: 30,869 shares issued and outstanding

$
16.0

$
51.1Class B 8% cumulative convertible preferred stock$0.01 per share par value: 72,000 shares issued and outstanding


72.0


111.9Class C 12% cumulative convertible preferred stock$0.01 per share par value: 8,000 shares issued and outstanding


8.0


9.9Class D 15% cumulative preferred stock$0.01 per share par value: 3,504 shares issued and outstanding


3.5


4.4Total

$
99.5

$
177.3


Each
class of preferred stock had 7.5 million shares authorized as of December 31, 2004 and 2003. The Class A, C and D Preferred each had a liquidation preference of
$1,000 per share plus the amount of all accrued but unpaid dividends, whether or not declared. The Class B Preferred had a liquidation preference of $1,000 per share plus an accrued dividend of
$142.0274 per share plus the amount of all accrued but unpaid dividends, whether or not declared. The Class A, B, and C Preferred had voting rights and the right to be converted at the option
of the shareholder into shares of common stock based upon a conversion ratio determined at the date of conversion. The conversion ratio would have been calculated based on the liquidation preference
divided by the fair market value of the common stock determined by an appraiser at the date of conversion. The Company's Class D Preferred was non-voting and not convertible. All
classes of preferred stock could have been redeemed by the Company at any time for an amount equal to the liquidation price, as defined above. During 2004, 2003 and 2002, no dividends on the preferred
stock were declared. At December 31, 2004, the dividends in arrears were approximately $35.1 million, $39.9 million, $1.9 million, and $0.9 million on
Class A, Class B, Class C, and Class D Preferred Stock, respectively.

Common Stock

As of December 31, 2001, the Company's common stock had no par value, 50.0 million shares were authorized and 18.0 million shares were issued
and outstanding. On September 30, 2002, the Company's common stock was effectively cancelled and reissued in connection with the formation of the Company.
As of December 31, 2004 and 2003, the Company's common stock had $0.01 par value, 250.0 million shares were authorized and 18.0 million shares were issued and outstanding.

18.   Employee Benefit Plans



The Company's employees participate in a trusteed, non-contributory defined benefit pension plan (the "Plan") that covers substantially all
full-time U.S. employees of the Company. The Plan provides benefits based on years of service and final average salary. However, effective July 1, 2004, the existing Plan formula
for employees not covered by a collective bargaining agreement was converted to a cash balance design. For represented employees, participation in the cash balance design is subject to the terms of
negotiated contracts, and as of July 1, 2004, one collectively bargained unit had negotiated to participate. For participating employees, benefits accrued as of June 30, 2004 under the
prior formula were converted to opening cash balance accounts. The new cash balance benefit formula provides

F-52

---



annual
pay credits from 4% to 12% of eligible pay, depending on age and service, plus accrued interest. Participants in the plan on July 1, 2004 may be eligible for additional annual pay
credits from 1% to 8%, depending on their age and service as of that date, for up to five years. The conversion to the cash balance plan did not have a significant impact on the accrued benefit
liability, the funded status or ongoing pension expense.

The
Company also sponsors two unfunded postretirement benefit plans other than pensions, which provide medical and life insurance benefits. In 2003, the health care trend rate used to
measure the expected increase in the cost of benefits was assumed to be 10% decreasing to 5% after 2007.

In
May 2004, the FASB issued FASB Staff Position ("FSP") No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003." The FSP provides accounting guidance for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") to a sponsor
of a postretirement health care plan. On July 1, 2004 the Company adopted the provisions of FSP No. 106-2. The adoption of FSP No. 106-2 reduced the
Company's non-pension postretirement accumulated benefit obligation by approximately $4.7 million, which has been recognized
as a change in the Company's unrecognized actuarial gain/loss. The adoption of FSP No. 106-2 reduced the net periodic postretirement benefit cost recognized during the period ended
December 31, 2004 by approximately $0.5 million.

The
following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31, 2004 and 2003 (dollars
in millions):

|                                  |                                         | Defined Benefit Plans |       | Other Postretirement Benefit Plans |  
|--------------------------------- | --------------------------------------- | --------------------- | ----- | ---------------------------------- | -
|
|
|Change in benefit obligation      |                                         |                       |       |                                    |  
|                                  | Benefit obligation at beginning of year |                       | $     | 483.2                              |  
|                                  | Service cost                            |                       |       | 19.0                               |  
|                                  | Interest cost                           |                       |       | 30.8                               |  
|                                  | Participant contributions               |                       |       |                                   |  
|                                  | Plan amendments                         |                       |       | (58.8                              | )
|                                  | Acquisitions of HI                      |                       |       |                                   |  
|                                  | Exchange rate changes                   |                       |       |                                   |  
|                                  | Settlements/transfers                   |                       |       |                                   |  
|                                  | Other                                   |                       |       |                                   |  
|                                  | Curtailments                            |                       |       |                                   |  
|                                  | Special termination benefits            |                       |       |                                   |  
|                                  | Actuarial (gain)/loss                   |                       |       | 39.1                               |  
|                                  | Benefits paid                           |                       |       | (23.7                              | )
|                                  |                                         |                       |       |                                    |  
|Benefit obligation at end of year |                                         | $                     | 489.6 |                                    | $
|                                  |                                         |                       |       |                                    |  

F-53

---



|                                                                                        |                                                | Defined Benefit Plans |        | Other Postretirement Benefit Plans |  
|--------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------------- | ------ | ---------------------------------- | -
|
|
|Change in plan assets                                                                   |                                                |                       |        |                                    |  
|                                                                                        | Fair value of plan assets at beginning of year |                       | $      | 257.8                              |  
|                                                                                        | Actual return on plan assets                   |                       |        | 34.9                               |  
|                                                                                        | Adjustments to opening value                   |                       |        |                                   |  
|                                                                                        | Exchange rate changes                          |                       |        |                                   |  
|                                                                                        | Acquisitions of HI                             |                       |        |                                   |  
|                                                                                        | Participant contributions                      |                       |        |                                   |  
|                                                                                        | Other                                          |                       |        |                                   |  
|                                                                                        | Administrative expenses                        |                       |        |                                   |  
|                                                                                        | Company contributions                          |                       |        | 28.9                               |  
|                                                                                        | Settlements/Transfers                          |                       |        |                                   |  
|                                                                                        | Benefits paid                                  |                       |        | (23.7                              | )
|                                                                                        |                                                |                       |        |                                    |  
|                                                                                        | Fair value of plan assets at end of year       |                       | $      | 297.9                              |  
|                                                                                        |                                                |                       |        |                                    |  
|Funded status                                                                           |                                                |                       |        |                                    |  
|Funded status                                                                           |                                                | $                     | (191.7 | )                                  | $
|Unrecognized net actuarial (gain)/loss                                                  |                                                |                       | 119.7  |                                    |  
|Unrecognized prior service (credit) cost                                                |                                                |                       | (52.3  | )                                  |  
|Unrecognized net transition obligation                                                  |                                                |                       | 3.9    |                                    |  
|                                                                                        |                                                |                       |        |                                    |  
|Accrued benefit cost                                                                    |                                                | $                     | (120.4 | )                                  | $
|                                                                                        |                                                |                       |        |                                    |  
|Amounts recognized in balance sheet:                                                    |                                                |                       |        |                                    |  
|Accrued benefit cost recognized in accrued liabilities and other noncurrent liabilities |                                                | $                     | (173.6 | )                                  | $
|Prepaid pension cost                                                                    |                                                |                       | 0.8    |                                    |  
|Intangible asset                                                                        |                                                |                       | 4.1    |                                    |  
|Accumulated other comprehensive Income                                                  |                                                |                       | 48.3   |                                    |  
|                                                                                        |                                                |                       |        |                                    |  
|Accrued benefit cost                                                                    |                                                | $                     | (120.4 | )                                  | $
|                                                                                        |                                                |                       |        |                                    |  

Components of the net periodic benefit costs for the years ended December 31, 2004, 2003 and 2002 are as follows (dollars in millions):

|                                      |  | Defined Benefit Plans |       | Other Postretirement Benefit Plans
|------------------------------------- |  | --------------------- | ----- | ----------------------------------
|
|
|Service cost                          |  | $                     | 19.0  |                                   
|Interest cost                         |  |                       | 30.8  |                                   
|Expected return on assets             |  |                       | (22.1 | )                                 
|Amortization of transition obligation |  |                       | 1.1   |                                   
|Amortization of prior service cost    |  |                       | 0.9   |                                   
|Amortization of actuarial (gain)/loss |  |                       | 4.7   |                                   
|                                      |  |                       |       |                                   
|Net periodic benefit cost             |  | $                     | 34.4  |                                   
|                                      |  |                       |       |                                   

F-54

---



The following assumptions were used in the above calculations:

|                                                |                                | Defined Benefit Plans |      | Other Postretirement Benefit Plans |     
|----------------------------------------------- | ------------------------------ | --------------------- | ---- | ---------------------------------- | ----
|
|
|Weighted-average assumptions as of December 31: |                                |                       |      |                                    |     
|                                                | Discount rate                  |                       | 6.00 | %                                  | 6.75
|                                                | Expected return on plan assets |                       | 8.25 | %                                  | 8.25
|                                                | Rate of compensation increase  |                       | 4.00 | %                                  | 4.00

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the defined benefit plans with accumulated
benefit obligations in excess of plan assets were as follows (dollars in millions):

U.S. plans

Non U.S. Plans2004

2003

2004

2003Projected benefit obligation

$
489.6

$
483.2

$
2,020.8

$
1,654.6Accumulated benefit obligation


468.1


402.6


1,645.3


1,370.2Fair value of plan assets


297.9


257.8


1,607.4


1,345.1


Expected
future contributions and benefit payments are as follows for the U.S. plans (dollars in millions):

Defined Benefit Plans

Other Postretirement
Benefit Plans2005 expected employer contributions:To plan trusts

$
27.6

$
10.6To plan participants


4.1Expected benefit payments:2005


22.9


10.62006


24.3


10.52007


26.4


10.52008


28.6


10.52009


30.6


10.42010-2014


195.7


52.1


Assumed
health care cost trend rates have a significant effect on the amounts reported for the postretirement benefit plans. A one-percent-point change in assumed health care
cost trend rates would have the following effects (dollars in millions):

Asset category

One-
Percentage-
Point
Increase

One-
Percentage-
Point
DecreaseEffect on total of service and interest cost

$
1.5

$
(1.2
)Effect on postretirement benefit obligation

$
11.4

$
(9.9
)


The
asset allocation for the Company's pension plans at the end of 2004 and the target allocation for 2005, by asset category, follows. The fair value of plan assets for these plans was
$1,905.3 million at the end of 2004. Based upon historical returns, the expectations of the Company's investment

F-55

---



committee
and outside advisors, the expected long term rate of return on these assets is estimated to be between 7.11% to 8.25%.

|Asset category         |                              | Target Allocation 2005 |  | Allocation at
December 31, 2004 |     | Allocation at
December 31, 2003 |    
|---------------------- | ---------------------------- | ---------------------- |  | ------------------------------- | --- | ------------------------------- | ---
|Large Cap Equities     |                              | 25%-35%                |  | 29                              | %   | 28                              | %  
|Small/Mid Cap Equities |                              | 15%-25%                |  | 22                              | %   | 21                              | %  
|International Equities |                              | 10%-20%                |  | 16                              | %   | 15                              | %  
|Fixed Income           |                              | 15%-25%                |  | 18                              | %   | 19                              | %  
|Real Estate/Other      |                              | 10%-20%                |  | 14                              | %   | 5                               | %  
|Cash                   |                              | 0%-5%                  |  | 1                               | %   | 12                              | %  
|                       |                              |                        |  |                                 |     |                                 |    
|                       | Total U.S. pension plans     |                        |  |                                 | 100 | %                               | 100
|                       |                              |                        |  |                                 |     |                                 |    
|Equities               |                              | 59%                    |  | 61                              | %   | 59                              | %  
|Fixed Income           |                              | 37%                    |  | 34                              | %   | 35                              | %  
|Real estate            |                              | 3%                     |  | 3                               | %   | 4                               | %  
|Cash                   |                              | 1%                     |  | 2                               | %   | 2                               | %  
|                       |                              |                        |  |                                 |     |                                 |    
|                       | Total non-U.S. pension plans |                        |  |                                 | 100 | %                               | 100
|                       |                              |                        |  |                                 |     |                                 |    

Equity
securities in the Company's pension plans did not include any equity securities of the Company or its affiliates at the end of 2004.

The
Company's pension plan assets are managed by outside investment managers; assets are rebalanced based upon market opportunities and the consideration of transactions costs. The
Company's strategy with respect to pension assets is to pursue an investment plan that, over the long term is expected to protect the funded status of the plan, enhance the real purchasing power of
plan assets, and not threaten the plan's ability to meet currently committed obligations.



The Company has a money purchase pension plan covering substantially all of its domestic employees who have completed at least two years of service. Employer
contributions are made based on a percentage of employees' earnings (ranging up to 8%).

The
Company also has a salary deferral plan covering substantially all domestic employees. Plan participants may elect to make voluntary contributions to this plan up to a specified
amount of their compensation. The Company contributes an amount equal to one-half of the participant's contribution, not to exceed 2% of the participant's compensation.

The
Company's total combined expense for the above defined contribution plans for the years ended December 31, 2004, 2003, and 2002 was approximately $20.7 million,
$12.8 million, $11.9 million, respectively.



Effective January 1, 2003, the Company created the Huntsman Supplemental Savings Plan ("SSP"). This is a non-qualified plan covering key
management employees of Huntsman LLC and its participating affiliates. This plan allows participants to defer amounts that would otherwise be paid as compensation. The participant can defer up to 50%
of their salary and up to 82% of their bonus each year. This plan also provides benefits that would be provided under the Huntsman Salary Deferral Plan if that plan were not subject to legal limits on
the amount of contributions that can be allocated to an individual in a single year.

F-56

---



During
the year ended December 31 2004, 2003 and 2002, the Company expensed $0.5 million, $1.1 million and $0.4 million for the SSP and the SERP,
respectively.



Under the terms of the Equity Appreciation Rights Plan, the Company grants equity appreciation rights ("EARs") to key management employees. The EARs vest at a
rate of 25% per year, beginning with the first anniversary of the date of grant and can be exercised anytime within ten years of the date of grant. During the year ended December 31, 2001,
1,065,700 EARs were granted to employees. No awards were subsequently granted. The EARs entitle the employees to receive an amount equal to the increase in the value of a phantom share of Company
stock since the date of the grant multiplied by the number of rights granted. There is no right under the EARs to receive any form of stock or equity interest in the Company or any other entity.
Compensation expense is recorded for the increase in the value of the rights. No compensation expense was recorded for the years ended December 31, 2004, 2003 or 2002.

As
of January 18, 2005, all of the EARs have been cancelled.



In connection with the initial public offering of Huntsman Corporation's common and preferred stock on February 16, 2005, the Company adopted the Huntsman
Stock Incentive Plan (the "Stock Incentive Plan"). The Stock Incentive Plan permits the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted
stock, phantom stock, performance awards and other stock-based awards ("Awards") to the Company's employees, directors and consultants and to employees and consultants of the Company's subsidiaries,
provided that incentive stock options may be granted solely to employees. A maximum of 21,590,909 shares of common stock may be delivered pursuant to the Awards under the Stock Incentive Plan.

In
connection with the initial public offering on February 16, 2005, the Company granted to certain of its employees options to purchase an aggregate of 2,372,740 shares of
Huntsman Corporation's common stock at an exercise price of $23 per share. These options vest one-third on each of the first, second and third anniversaries of the date of grant. The
options will expire on the tenth anniversary of the date of grant.

Also
in connection with the initial public offering on February 16, 2005, the Company granted an aggregate of 749,513 shares of Huntsman Corporation's restricted stock to certain
of its employees. The restrictions will lapse with respect to one-third of the restricted shares on each of the first, second and third anniversaries of the date of grant. In connection
with the issuance of these shares of restricted stock, the Company expects to recognize compensation expense of approximately $5.7 million annually over the vesting period.



International employees are covered by various post employment arrangements consistent with local practices and regulations. Such obligations are included in the
consolidated financial statements in other long-term liabilities.

F-57

---



19.   Related Party Transactions

The accompanying consolidated financial statements of the Company include the following balances not otherwise disclosed with affiliates of the Company (dollars
in millions):

December 31, 2004

December 31, 2003Trade receivables:Other unconsolidated affiliates

$
9.4

$
11.5Other accounts payable:Other unconsolidated affiliates


35.7


25.2


Huntsman
LLC shares services and resources with HIH and its subsidiaries. In accordance with various agreements with HIH, Huntsman LLC provides management and operating services and
supplies certain raw materials. The accompanying consolidated financial statements of the Company include the following transactions not otherwise disclosed with affiliates, officers and employees of
the Company (dollars in millions):

Year ended December 31,2004

2003

2002Sales to:HIH

$


$
76.3

$
162.1Other unconsolidated affiliates


47.6


14.4


4.1Inventory purchases fromHIH





53.0


57.7Other unconsolidated affiliates


403.9


261.4


Operating expenses allocated (to)/from:HIH





(22.3
)

(64.5
)Other affiliates








2.4


The
Company has agreed with the Jon and Karen Huntsman Foundation, a private charitable foundation established by Jon. M. and Karen H. Huntsman to further the charitable interests of the
Huntsman family, that it will donate its Salt Lake City office building and its option to acquire an adjacent undeveloped parcel of land to the foundation free of debt. The Company has agreed to
complete this donation on the earlier of November 30, 2009 or the date on which it occupies less than 20% of the two main floors of the Salt Lake City office building. Under certain
circumstances, after the Company makes this donation it will have the right, but not the obligation, to lease space in the Salt Lake City office building from the foundation.

20.   Commitments and Contingencies



The Company has various purchase commitments extending through 2023 for materials and supplies entered into in the ordinary course of business. The purchase
commitments are contracts that require minimum volume purchases. Certain contracts allow for changes in minimum required purchases volumes in the event of a temporary or permanent shutdown of a
facility. The contractual purchase price for substantially all of these contracts require minimum payments, even if no volume is purchased. These contracts approximate $157 million in 2005,
decreasing to approximately $26 million after 2008. Historically, the Company has not made any minimum payments under its take or pay contracts.

F-58

---





The Company has settled certain claims relating to discoloration of unplasticized polyvinyl chloride products allegedly caused by its titanium dioxide
("Discoloration Claims") during and prior to the second quarter of 2004. Substantially all of the titanium dioxide that was the subject of these claims was manufactured prior to the Company's
acquisition of its titanium dioxide business from ICI in 1999. Net of amounts it has received from insurers and pursuant to contracts of indemnity, the Company has
paid approximately £8 million ($14.9 million) in costs and settlement amounts for Discoloration Claims as of December 31, 2004.

The
following table presents information about the number of Discoloration Claims for the periods indicated. Claims include all claims for which service has been received by the Company,
and each such claim represents a plaintiff who is pursuing a claim against the Company.

Year ended
December 31, 2004

Year ended
December 31, 2003

Year ended
December 31, 2002Claims filed during period

1

1

0Claims resolved during period

2

2

0Claims unresolved at end of period

3

4

5


The
five Discoloration Claims unresolved at the end of 2002 included three claims that did not quantify monetary damages and two claims asserting aggregate damages of approximately
$4.5 million. During the year ended December 31, 2003, the Company settled claims for approximately $77.7 million, all of which was paid by the Company's insurers or ICI. The four
Discoloration Claims unresolved at the end of 2003 included two claims that did not quantify monetary damages and two claims asserting aggregate damages of approximately $4.5 million. During
the year ended December 31, 2004, the Company settled claims for approximately $45.3 million, approximately $30.4 million of which was paid by its insurers or ICI and
approximately $14.9 million of which was paid by the Company. During 2004, the Company recorded charges of $15.1 million relating to Discoloration Claims. The three Discoloration Claims
unresolved on December 31, 2004 asserted aggregate damages of approximately $6.7 million. A liability has been accrued for these Discoloration Claims. In March 2005, one of these
Discoloration Claims was amended to assert additional damages of approximately $56 million. Based on the Company's understanding of the merits of this claim and its rights under contracts of
indemnity and insurance, the
Company does not believe that the net impact on its financial condition, results of operations or liquidity will be material.

While
additional Discoloration Claims may be made in the future, the Company cannot reasonably estimate the amount of loss related to such claims. Although the Company may incur
additional costs as a result of future claims (including settlement costs), based on its history with Discoloration Claims to date, the fact that substantially all of the titanium dioxide that has
been the subject of these Discoloration Claims was manufactured and sold more than five years ago, and the fact that it has rights under contract to indemnity, including from ICI, the Company does not
believe that any unasserted possible Discoloration Claims, if any, will have a material impact on its financial condition, results of operations or liquidity. Based on this conclusion and the
Company's inability to reasonably estimate its expected costs with respect to these unasserted possible claims, the Company has made no accruals in its financial statements as of December 31,
2004 for costs associated with unasserted possible Discoloration Claims, if any.

Certain
insurers have denied coverage with respect to certain Discoloration Claims. The Company brought suit against these insurers to recover the amounts it believes are due to it. The
court found in favor of the insurers, and the Company lodged an application for leave to appeal that decision. Leave to appeal was granted in December 2004. The Company expects the appeal to be
heard during the third quarter of 2005.

F-59

---



Vantico
concluded that certain of the products of its former Electronics division may have infringed patents owned by Taiyo and it entered into a license agreement in October 2001
with Taiyo to obtain the right to use the Taiyo patents. This license agreement required payment of approximately $4.2 million in back royalties and agreement to pay periodic royalties for
future use. The Company believes that Ciba Specialty Chemicals Holdings Inc. ("Ciba") is liable under the indemnity provisions of certain agreements in connection with the leveraged buy out
transaction in 2000 involving Ciba and Vantico for certain payments made under the license agreement and related costs and expenses, and the Company initiated an arbitration proceeding against Ciba.
In July 2004, the Company entered into a settlement agreement with Ciba with respect to this matter. In general, the settlement agreement provided that Ciba would pay the Company
$10.9 million in 2004 and provide it with approximately $11 million of credits over the next five years against payments for certain services provided by Ciba at one of the Company's
Advanced Materials facilities. The Company received additional consideration in the form of modifications to certain agreements between the Company's Advanced Materials business and Ciba. In
August 2004, the Company received payment of the $10.9 million settlement. As of December 31, 2004, the Company has incurred approximately $2.2 million in costs in
connection with the arbitration proceedings against Ciba.

The
Company is a party to various lawsuits brought by persons alleging personal injuries and/or property damage based upon alleged exposure to toxic air emissions. For example, since
June 2003, a number of lawsuits have been filed in state district court in Jefferson County, Texas against several
local chemical plants and refineries, including the Company's subsidiary, Huntsman Petrochemical Corporation. Generally, these lawsuits allege that the refineries and chemical plants located in the
vicinity of the plaintiffs' homes discharged chemicals into the air that interfere with use and enjoyment of property and cause health problems and/or property damages. None of these lawsuits includes
the amount of damages being sought. Because these cases are still in the initial stages, the Company does not have sufficient information at the present time to estimate the amount or range of
reasonably possible loss. The following table presents information about the number of claims asserting damages based upon alleged exposure to toxic air emissions for the periods indicated. Claims
include all claims for which service has been received by the Company, and each such claim represents a plaintiff who is pursuing a claim against it.

Year ended
December 31, 2004

Year ended
December 31, 2003Claims filed during period

153

721Claims resolved during period

51

0Claims unresolved at end of period

823

721


The
Company believe that the Company has valid defenses to these claims and, to the extent that it is not able to otherwise reach an appropriate resolution of these claims, the Company
intends to defend them vigorously.

F-60

---



In addition, the Company has been named as a "premises defendant" in a number of asbestos exposure cases, typically a claim by a non-employee of exposure to asbestos while at
a facility. These cases typically involve multiple plaintiffs bringing actions against multiple defendants, and the complaint does not indicate which plaintiffs are making claims against which
defendants, where or how the alleged injuries occurred, or what injuries each plaintiff claims. These facts, which are central to any estimate of probable loss, can be learned only through discovery.

Where
the alleged exposure occurred prior to the Company's ownership or operation of the relevant "premises," the prior owners and operators generally have contractually agreed to retain
liability for, and to indemnify the Company against, asbestos exposure claims. This indemnification is not subject to any time or dollar amount limitations. Upon service of a complaint in one of these
cases, the Company tendered it to the prior owner or operator. None of the complaints in these cases state the amount of damages being sought. The prior owner or operator accepts responsibility for
the conduct of the defense of the cases and payment of any amounts due to the claimants. In the Company's ten-year experience with tendering these cases, the Company has not made any
payment with respect to any tendered asbestos cases. The Company believes that the prior owners or operators have the intention and ability to continue to honor their indemnities, although the Company
cannot provide assurance that they will continue to do so or that the Company will not be liable for these cases if they do not.

The
following table presents for the periods indicated certain information about cases for which service has been received that the Company has tendered to the prior owner or operator,
all of which have been accepted.

Year ended
December 31, 2004

Year ended
December 31, 2003

Year ended
December 31, 2002Tendered during the period

82

91

70Resolved during the period

65

51

46Unresolved at end of the period

360

343

303


The
Company has never made any payments with respect to these cases. As of December 31, 2004, the Company had an accrued liability of $12.5 million relating to these cases and a
corresponding receivable of $12.5 million relating to the Company's indemnity protection with respect to these cases. The Company cannot assure you that its liability will not exceed its
accruals or that its liability associated with these cases would not be material to its financial condition, results of operations or liquidity.

Certain
cases in which the Company is a "premises defendant" are not subject to indemnification by prior owners or operators. The following table presents for the periods indicated
certain information about these cases. Cases include all cases for which service has been received by the Company.

Year ended
December 31, 2004

Year ended
December 31, 2003

Year ended
December 31, 2002Filed during period

22

28

15Resolved during period

39

6

2Unresolved at end of period

31

48

26


The
Company paid gross settlement costs for asbestos exposure cases that are not subject to indemnification of approximately $1.1 million in 2002, approximately $0.25 million in 2003 and
approximately $0.9 million in 2004.

As
of December 31, 2004, the Company had accrued reserves of $0.9 million relating to three of these 31 cases. The Company cannot assure you that its liability will not
exceed its accruals or that its

F-61

---



liability
associated with these cases would not be material to its financial condition, results of operations or liquidity.

The
Company is a party to various other 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, the Company does not believe that the outcome of any of these matters will have a material adverse
effect on its financial condition, results of operations or liquidity.

21.   Fair Value of Financial Instruments

|                                                |  | As of December 31,
|----------------------------------------------- |  | ------------------
|
|
|
|Non-qualified employee benefit plan investments |  | $                 
|Long-term debt                                  |  |                   
|Notes receivable from affiliates                |  |                   



Interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities are used to estimate fair value for
debt issues that are not quoted on an exchange.



The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximates fair value because of the
immediate or short-term maturity of these financial instruments.

The
fair value estimates presented herein are based on pertinent information available to management as of December 31, 2004 and 2003. Although management is 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 that date, and current
estimates of fair value may differ significantly from the amounts presented herein.

22.   Environmental, Health and Safety Matters



The Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment
and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In the ordinary course of business, the Company is subject to
frequent environmental inspections and monitoring and occasional investigations by governmental enforcement authorities. In addition, the Company's production facilities require operating permits that
are subject to renewal, modification and, in certain circumstances, revocation. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions
on plant operations, substantial civil or criminal sanctions, as well as, under some environmental laws, the assessment of strict liability and/or joint and several liability. Moreover, changes in
environmental regulations could inhibit or interrupt the Company's operations, or require it to modify its facilities or operations. Accordingly, environmental or regulatory matters may cause the
Company to incur significant unanticipated losses, costs or liabilities.

F-62

---





The Company is committed to achieving and maintaining compliance with all applicable environmental, health and safety ("EHS") legal requirements, and the Company
has developed policies and management systems that are intended to identify the multitude of EHS legal requirements applicable to its operations, enhance compliance with applicable legal requirements,
ensure the safety of its employees, contractors, community neighbors and customers and minimize the production and emission of wastes and other pollutants. Although EHS legal requirements are
constantly changing and are frequently difficult to comply with, these EHS management systems are designed to assist the Company in its compliance goals while also fostering efficiency and improvement
and minimizing overall risk to the Company.



The Company may incur future costs for capital improvements and general compliance under EHS laws, including costs to acquire, maintain and repair pollution
control equipment. For the years ended December 31, 2004, 2003 and 2002, the Company's capital expenditures for EHS matters totaled $55.4 million, $47.8 million and
$30.3 million, respectively. Since capital expenditures for these matters are subject to evolving regulatory requirements and depend, in part, on the timing, promulgation and enforcement of
specific requirements, the Company cannot provide assurance that its recent expenditures will be indicative of future amounts required under EHS laws.



On occasion, the Company receives notices of violation, enforcement and other complaints from regulatory agencies alleging non-compliance with
applicable EHS law. By way of example, the Company is aware of the individual matters set out below, which it believes to be the most significant presently pending matters and unasserted claims.
Although the Company may incur costs or penalties in connection with the governmental proceedings discussed below, based on currently available information and its past experience, the Company
believes that the ultimate resolution of these matters will not have a material impact on its results of operations, financial position or liquidity.

In
May 2003, the State of Texas settled an air enforcement case with the Company relating to its Port Arthur plant. Under the settlement, the Company is required to pay a civil
penalty of $7.5 million over more than four years, undertake environmental monitoring projects totaling about $1.5 million in costs, and pay $375,000 in attorney's fees to the Texas
Attorney General. As of December 31, 2004, the Company has paid $1.8 million toward the penalty and $375,000 for the attorney's fees. The monitoring projects are underway and on
schedule. The Company does not anticipate that this settlement will have a material adverse effect on its results of operations, financial position or liquidity.

In
the third quarter of 2004, the Company's Jefferson County, Texas facilities received notification from the Texas Commission on Environmental Quality ("TCEQ") of potential air emission
violations relating to the operation of cooling towers at two of its plants, alleged nuisance odors, and alleged upset air emissions. The Company has investigated the allegations and responded in
writing to TCEQ. TCEQ has proposed a penalty of $9,300 for the alleged nuisance odor violations, $174,219 for the alleged upset violations and $83,250 for the alleged cooling tower violations.
Negotiations are anticipated between the Company and TCEQ with respect to the resolution of these alleged violations. The Company does not believe that the final cost to resolve these matters will be
material.

The
Company's subsidiary Huntsman Advanced Materials (U.K.) Ltd is tentatively scheduled to appear in Magistrates Court in the U.K. in July 2005 with regard to charges
filed following an investigation by the U.K. Health and Safety Executive. The charges arise from alleged failures to follow applicable regulations for the management of asbestos contamination caused
by construction activity at the Duxford, U.K. Advanced Materials facility between November 2002 and January 2003. The

F-63

---



Company
believes that some or all of the alleged violations arise from conduct by a third party contractor occurring before the Company assumed responsibility for the Duxford facility. The Company's
subsidiary has been in discussions with the prosecution in an effort to settle this matter. As a result, the Company's subsidiary has entered pleas of guilty to two of the five charges, and the
prosecution has agreed to drop the remaining three. The Company expects that a monetary fine will be imposed with regard to the two charges on which pleas were entered. Based on penalties imposed in
the United Kingdom for similar alleged violations by other companies, the Company does not believe this matter will result in the imposition of costs material to its results of operations, financial
position or liquidity.

By
letter dated November 29, 2004, the TCEQ notified the Company that it intends to pursue an enforcement action as a result of approximately 25 separate upset emission events
occurring at the Company's Port Arthur facility between August 2003 and September 2004. TCEQ alleges that each upset event is a separate violation of its air emission rules. TCEQ has not
yet proposed a penalty associated with these alleged violations. In a similar vein, the TCEQ issued a Notice of Enforcement to the Company on February 16, 2005 for alleged violations at the
Company's Port Neches plants arising out of upset emission events on various dates in 2004. TCEQ has not yet proposed a penalty in this second matter, although the Company anticipates that it will.
The Company will seek to negotiate a settlement with TCEQ on all of the alleged violations. The Company does not believe that the resolution of these matters will result in the imposition of costs
material to its results of operations, financial position or liquidity.

See
"Legal Proceedings" for a discussion of environmental lawsuits brought by private party plaintiffs.



The Company has incurred, and it may in the future incur, liability to investigate and clean up waste or contamination at its current or former facilities or
facilities operated by third parties at which it may have disposed of waste or other materials. Similarly, the Company may incur costs for the cleanup of wastes that were disposed of prior to the
purchase of the Company's businesses. Under some circumstances, the scope of the Company's liability may extend to damages to natural resources. Specifically, under the U.S. Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and similar state laws, a current or former owner or operator of
real property 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. In addition, under the U.S. Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), and similar state laws, the Company may be required to remediate contamination originating from its properties as a condition to its hazardous waste permit. For example, the Company's
Odessa, Port Arthur, and Port Neches facilities in Texas are the subject of ongoing remediation requirements under RCRA authority. In many cases, the Company's potential liability arising from
historical contamination is based on operations and other events occurring prior to the Company's ownership of the relevant facility. In these situations, the Company frequently obtained an indemnity
agreement from the prior owner addressing remediation liabilities arising from pre-closing conditions. The Company has successfully exercised its rights under these contractual covenants
for a number of sites, and where applicable, mitigated its ultimate remediation liability. The Company cannot provide assurance, however, that all of such matters will be subject to indemnity or that
its existing indemnities will be sufficient to cover its liabilities for such matters.

Some
of the Company's manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste disposal. The Company is aware of
soil, groundwater and surface water contamination from past operations at some of its sites, and it may find

F-64

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contamination
at other sites in the future. For example, the Company is aware that there is significant contamination, largely related to a landfill and lagoons, at its McIntosh, Alabama plant site.
Further, soil and groundwater contamination have been identified at the Company's plants in Duxford, U.K. and Monthey, Switzerland. Pursuant to certain agreements with respect to these Advanced
Materials sites, the Company expects that Ciba will have primary financial responsibility for such matters, although the Company may be required to contribute to the costs of remediation in certain
instances, and the Company believes that Ciba has the intention and ability to honor these agreements. Based on available information and the indemnification rights the Company believes are likely to
be available, it believes that the costs to investigate and remediate known contamination will not have a material adverse effect on its financial condition, results of operations or cash flows, and
therefore the Company has made no accrual for such liabilities as of December 31, 2004. However, if such indemnities are unavailable or do not fully cover the costs of investigation and
remediation or the Company is required to contribute to such costs, and if such costs are material, then such expenditures may have a material adverse effect on its financial condition, results of
operations or cash flows. At the current time, the Company is unable to estimate the full cost, exclusive of indemnification benefits, to remediate known contamination sites.

The
Company has been notified by third parties of claims against it or its subsidiaries for cleanup liabilities at approximately 12 former facilities and other third party sites,
including but not limited to sites listed under CERCLA. Based on current information and past experience at other CERCLA sites, the Company does not expect any of these third-party claims to result in
material liability to it.

One
of these sites, the North Maybe Canyon CERCLA site, includes an abandoned phosphorous mine located in a U.S. National Forest in Idaho. The North Maybe Canyon mine may have been
operated by one of the Company's predecessors for approximately two out of the eight years (1964 to 1972) during which it held mining leases in the area. In 2004, the Company received from the Forest
Service a notice of potential liability for the mine under CERCLA. According to information from the U.S. government, North Maybe Canyon was actively mined for a total of about 20 years. The
current owner, NuWest Industries, Inc., a subsidiary of Agrium, Inc., operated the mine for at least six of those years. Under an administrative order with the Forest Service and other
governmental agencies, NuWest is currently undertaking an investigation of the site, with a specific focus on the release of selenium-contaminated surface water into streams in the area. To date, no
emergency removal action or other high priority cleanup has been proposed. One of the previous operators of the site, Washington Group International, Inc., has been the subject of bankruptcy
proceedings in which the U.S. Department of Justice asserted a claim for investigation and remediation costs at North Maybe Canyon and South Maybe Canyon (which the Company did not own or operate), a
similar nearby mine that also is currently under investigation. The government claimed $15.7 million in investigation and remediation costs for South Maybe Canyon and $3 million in
investigation costs for North Maybe Canyon. The government stated that cleanup costs at North Maybe Canyon had not yet been estimated. The Company does not currently have sufficient information to
estimate actual remediation costs or its actual liability, if any, for investigation and cleanup of the North Maybe Canyon site.



The Company has established financial reserves 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. The Company's liability estimates are based upon available facts, existing
technology and past experience. On a consolidated basis, the Company has accrued approximately $35.1 million, $34.9 million and $18.3 million for environmental liabilities as of
December 31, 2004, 2003 and 2002, respectively. Of these amounts, approximately $7.7 million, $8.6 million and $4.8 million are classified as accrued liabilities on the
Company's consolidated balance sheets as of December 31, 2004, 2003 and 2002,

F-65

---



respectively,
and approximately $27.4 million, $26.3 million and $13.5 million are classified as other noncurrent liabilities on the Company's consolidated balance sheets as of
December 31, 2004, 2003 and 2002, respectively. These accruals include approximately $13.9 million, $6.5 million and $6.9 million, respectively, for environmental
remediation liabilities. In certain cases, the Company's remediation liabilities are payable over periods of up to 30 years. The Company may incur losses for environmental remediation in excess
of the amounts accrued; however, the Company is not able to estimate the amount or range of such losses.



Under the European Union ("EU") Integrated Pollution Prevention and Control Directive ("IPPC"), EU member governments are to adopt rules and implement a
cross-media (air, water and waste) environmental permitting program for individual facilities. While the EU countries are at varying stages in their respective implementation of the IPPC permit
program, the Company has submitted all necessary IPPC permit applications required to date, and in some cases received completed permits from the applicable government agency. The Company expects to
submit all other IPPC applications and related documents on a timely basis as the various countries implement the IPPC permit program. Although the Company does not know with certainty what each IPPC
permit will require, it believes, based upon its experience with the permits received to date, that the costs of compliance with the IPPC permit program will not be material to its results of
operations, financial position or liquidity.

In
October 2003, the European Commission adopted a proposal for a new EU regulatory framework for chemicals. Under this proposed new system called "REACH" (Registration,
Evaluation and Authorization of Chemicals), companies that manufacture or import more than one ton of a chemical substance per year would be required to register such manufacture or import in a
central database. The REACH initiative, as proposed, would require risk assessment of chemicals, preparations (e.g., soaps and paints) and articles (e.g., consumer products) before those materials
could be manufactured or imported into EU countries. Where warranted by a risk assessment, hazardous substances would require authorizations for their use. This regulation could impose risk control
strategies that would require capital expenditures by the Company. As proposed, REACH would take effect in three primary stages over the eleven years following the final effective date (assuming final
approval). The impacts of REACH on the chemical industry and on the Company are unclear at this time because the parameters of the program are still being actively debated.



The use of MTBE is controversial in the U.S. and elsewhere and may be substantially curtailed or eliminated in the future by legislation or regulatory action. The
presence of MTBE in some groundwater supplies in California and other states (primarily due to gasoline leaking from underground storage tanks) and in surface water (primarily from recreational
watercraft) has led to public concern about MTBE's potential to contaminate drinking water supplies. Heightened public awareness regarding this issue has resulted in state, federal and foreign
initiatives to rescind the federal oxygenate requirements for reformulated gasoline or restrict or prohibit the use of MTBE in particular. For example, California, New York and Connecticut have
adopted rules that prohibit the use of MTBE in gasoline sold in those states as of January 1, 2004. Overall, states that have taken some action to prohibit or restrict the use of MTBE in
gasoline account for a substantial portion of the "pre-ban" U.S. MTBE market. Thus far, attempts by others to challenge these state bans in federal court under the reformulated gasoline
provisions of the federal Clean Air Act have been unsuccessful.

The
U.S. Congress has been considering legislation that would eliminate the oxygenated fuels requirements in the Clean Air Act and phase out or curtail MTBE use over a period of several
years. To date, no such legislation has become law. If it were to become law it could result in a federal

F-66

---



phase-out
of the use of MTBE in gasoline in the U.S., but it would not prevent the Company from manufacturing MTBE in its plants. In addition, in March 2000, the EPA announced its
intention, through an advanced notice of proposed rulemaking, to phase out the use of MTBE under authority of the federal Toxic Substances Control Act. EPA has not yet acted on this proposal, however.
In Europe, the EU issued a final risk assessment report on MTBE in September 2002. No ban of MTBE was recommended, though several risk reduction measures relating to storage and handling of
MTBE-containing fuel were recommended.

The
Company currently markets approximately 95% of its MTBE to customers located in the U.S. for use as a gasoline additive. Any phase-out or other future regulation of MTBE
in other jurisdictions, nationally or internationally, may result in a significant reduction in demand for the Company's MTBE and in a material loss in revenues or material costs or expenditures. In
the event that there should be a complete phase-out of MTBE in the U.S., the Company believes it will be able to export MTBE to Europe, Asia or South America, although this may produce a
lower level of cash flow than the sale of MTBE in the U.S. The Company may also elect to use all or a portion of its precursor TBA to produce saleable products other than MTBE. If the Company opts to
produce products other than MTBE, necessary modifications to its facilities may require significant capital expenditures and the sale of the other products may produce a materially lower level of cash
flow than the sale of MTBE.

In
addition to the use limitations described above, a number of lawsuits have been filed, primarily against gasoline manufacturers, marketers and distributors, by persons seeking to
recover damages allegedly arising from the presence of MTBE in groundwater. While it has not been named as a defendant in any litigation concerning the environmental effects of MTBE, the Company
cannot provide assurances that it will not be involved in any such litigation or that such litigation will not have a material adverse effect on its results of operations, financial position or
liquidity.

23.   Other Operating Income

Other operating income consists of the following (dollars in millions):

Year ended December 31,2004

2003

2002Foreign exchange (gains) losses

$
(118.8
)
$
(67.8
)
$
3.2Bad debts


2.0


11.3


(1.8
)Legal and contract settlementsnet


6.6


2.0


Other


29.3


(0.5
)

(2.4
)Total other operating income

$
(80.9
)
$
(55.0
)
$
(1.0
)


24.   Other Expense

Other expense consists of the following (dollars in millions):

Year ended December 31,2004

2003

2002Loss on early extinguishment of debt

$
(25.6
)
$


$
(6.7
)Other


(0.2
)




(0.9
)Total other expense

$
(25.8
)
$


$
(7.6
)


F-67

---



25.   Operating Segment Information

The Company derives its revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. The
HIH Consolidation Transaction and the AdMat Transaction have caused changes in the Company's operating segments. Prior to the HIH Consolidation Transaction, the Company reported its operations through
three principal operating segments. The Company reports its operations through six segments: Polyurethanes, Advanced Materials, Performance Products, Pigments, Polymers and Base Chemicals.

The
major products of each reportable operating segment are as follows:

|Segment              |  | Products                                                                                                                                                                   
|-------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Polyurethanes        |  | MDI, TDI, TPU, polyols, aniline, PO and MTBE                                                                                                                               
|Advanced Materials   |  | Epoxy resin compounds, cross-linkers, matting agents, curing agents, epoxy, acrylic and polyurethane-based adhesives and tooling resins and sterolithography tooling resins
|Performance Products |  | Amines, surfactants, linear alkylbenzene, maleic anhydride, other performance chemicals, and glycols                                                                       
|Pigments             |  | Titanium dioxide                                                                                                                                                           
|Polymers             |  | Ethylene (produced at the Odessa, Texas facilities primarily for internal use), polyethylene, polypropylene, expandable polystyrene, styrene and other polymers            
|Base Chemicals       |  | Olefins (primarily ethylene and propylene), butadiene, MTBE, benzene, cyclohexane and paraxylene                                                                           

F-68

---



Sales
between segments are generally recognized at external market prices.

|                                       |                        | Year Ended December 31, |       
|-------------------------------------- | ---------------------- | ----------------------- | ------
|
|Revenues:                              |                        |                         |       
|                                       | Polyurethanes          |                         | $     
|                                       | Advanced Materials     |                         |       
|                                       | Performance Products   |                         |       
|                                       | Pigments               |                         |       
|                                       | Polymers               |                         |       
|                                       | Base Chemicals         |                         |       
|                                       | Eliminations           |                         |       
|                                       |                        |                         |       
|                                       |                        | Total                   |       
|                                       |                        |                         |       
|Segment EBITDA(1):                     |                        |                         |       
|                                       | Polyurethanes          |                         | $     
|                                       | Advanced Materials     |                         |       
|                                       | Performance Products   |                         |       
|                                       | Pigments               |                         |       
|                                       | Polymers               |                         |       
|                                       | Base Chemicals         |                         |       
|                                       | Corporate and other(2) |                         |       
|                                       |                        |                         |       
|                                       |                        | Total                   |       
|                                       |                        |                         |       
|Segment EBITDA(1)                      |                        | $                       | 892.6 
|Interest expense, net                  |                        |                         | (612.6
|Income tax benefit (expense)           |                        |                         | 29.1  
|Cumulative effect of accounting change |                        |                         |      
|Depreciation and amortization          |                        |                         | (536.8
|                                       |                        |                         |       
|                                       | Net loss               |                         | $     
|                                       |                        |                         |       
|Depreciation and Amortization:         |                        |                         |       
|                                       | Polyurethanes          |                         | $     
|                                       | Advanced Materials     |                         |       
|                                       | Performance Products   |                         |       
|                                       | Pigments               |                         |       
|                                       | Polymers               |                         |       
|                                       | Base Chemicals         |                         |       
|                                       | Corporate and other(2) |                         |       
|                                       |                        |                         |       
|                                       |                        | Total                   |       
|                                       |                        |                         |       
|Capital Expenditures:                  |                        |                         |       
|                                       | Polyurethanes          |                         | $     
|                                       | Advanced Materials     |                         |       
|                                       | Performance Products   |                         |       
|                                       | Pigments               |                         |       
|                                       | Polymers               |                         |       
|                                       | Base Chemicals         |                         |       
|                                       | Corporate and other(2) |                         |       
|                                       |                        |                         |       
|                                       |                        | Total                   |       
|                                       |                        |                         |       
|Total Assets:                          |                        |                         |       
|                                       | Polyurethanes          |                         | $     
|                                       | Advanced Materials     |                         |       
|                                       | Performance Products   |                         |       
|                                       | Pigments               |                         |       
|                                       | Polymers               |                         |       
|                                       | Base Chemicals         |                         |       
|                                       | Corporate and other(2) |                         |       
|                                       | Eliminations           |                         |       
|                                       |                        |                         |       
|                                       |                        | Total                   |       
|                                       |                        |                         |       

---

F-69

---



December 31,2004

2003

2002By Geographic AreaRevenues:United States

$
6,444.5

$
4,390.2

$
2,491.5United Kingdom


2,718.5


1,296.7


8.1Netherlands


1,274.6


709.7


Other nations


2,004.5


866.9


161.4Eliminations


(956.3
)

(182.6
)Total

$
11,485.8

$
7,080.9

$
2,661.0Long-lived assets(1):United States

$
2,392.8

$
2,280.8United Kingdom


1,121.8


1,164.8Netherlands


402.6


583.8Other nations


1,233.7


1,049.9Total

$
5,150.9

$
5,079.3


---

F-70

---





HMP EQUITY HOLDINGS CORPORATION (PARENT ONLY)        Schedule ICondensed Financial Information of Registrant

HMP Equity Holdings Corporation (Parent Only)
Balance Sheets
(Dollars in Millions)

|                                                   |                             | December 31, |         
|-------------------------------------------------- | --------------------------- | ------------ | --------
|
|ASSETS                                             |                             |              |         
|Investments in unconsolidated affiliates           |                             | $            | (382.0  
|                                                   |                             |              |         
|                                                   | Total Assets                |              | $       
|                                                   |                             |              |         
|STOCKHOLDERS' EQUITY (DEFICIT)                     |                             |              |         
|Preferred members' interest                        |                             | $            | 195.7   
|Common members' interest                           |                             |              |        
|Additional paid-in capital                         |                             |              | 712.5   
|Accumulated other comprehensive income             |                             |              | 181.0   
|Accumulated deficit from unconsolidated affiliates |                             |              | (1,471.2
|                                                   |                             |              |         
|                                                   | Total stockholders' deficit |              | $       
|                                                   |                             |              |         

This
statement should be read in conjunction with the notes to the consolidated financial statements included in the Company's 2004 Form 10-K.

HMP EQUITY HOLDINGS CORPORATION (Parent Only)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Dollars in Millions)

|                                                             |  | Year ended December 31, |       
|------------------------------------------------------------ |  | ----------------------- | ------
|
|Equity in losses of investments in unconsolidated affiliates |  | $                       | (227.7
|                                                             |  |                         |       
|Net loss                                                     |  |                         | (227.7
|Preferred members' interest dividend                         |  |                         | (87.7 
|                                                             |  |                         |       
|Net loss available to common stockholders                    |  | $                       | (315.4
|                                                             |  |                         |       
|Net loss                                                     |  | $                       | (227.7
|Other comprehensive income from unconsolidated affiliates    |  |                         | 70.5  
|                                                             |  |                         |       
|Comprehensive loss                                           |  | $                       | (157.2
|                                                             |  |                         |       

This
statement should be read in conjunction with the notes to the consolidated financial statements included in the Company's 2004 Form 10-K.

F-71

---



HMP EQUITY HOLDINGS CORPORATION (Parent Only)
STATEMENTS OF CASH FLOWS
(Dollars in Millions)

|                                                             |  | Year ended December 31, |       
|------------------------------------------------------------ |  | ----------------------- | ------
|
|Net loss                                                     |  | $                       | (227.7
|Equity in losses of investments in unconsolidated affiliates |  |                         | 227.7 
|                                                             |  |                         |       
|Cash provided by operating activities                        |  |                         |      
|Cash provided by investing activities                        |  |                         |      
|Cash provided by financing activities                        |  |                         |      
|                                                             |  |                         |       
|Increase in cash                                             |  |                         |       
|Cash at beginning of period                                  |  |                         |      
|                                                             |  |                         |       
|Cash at end of period                                        |  | $                       |      
|                                                             |  |                         |       

HMP
Equity Holdings Corporation did not receive any dividends from its subsidiaries during 2004, 2003 or 2002.

This
statement should be read in conjunction with the notes to the consolidated financial statements included in the Company's 2004 Form 10-K.

F-72

---



HMP EQUITY HOLDINGS CORPORATION AND SUBSIDIARIES        Schedule IIValuation and Qualifying Accounts        (Dollars in Millions)

|Column A                        |                              | Column B |   | Column C |  | Column D |      | Column E
|------------------------------- | ---------------------------- | -------- | - | -------- |  | -------- | ---- | --------
|
|
|Allowance for Doubtful Accounts |                              |          |   |          |  |          |      |         
|                                | Year Ended December 31, 2004 |          | $ | 26.5     |  | $        | 2.0  |         
|                                | Year Ended December 31, 2003 |          |   | 7.5      |  |          | 11.3 |         
|                                | Year Ended December 31, 2002 |          |   | 5.8      |  |          | (1.8 | )       

---

F-73

---





HUNTSMAN INTERNATIONAL HOLDINGS, LLC AND SUBSIDIARIES        CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in Millions)

|                                                |                                                                                                          | March 31,
2003               |         | December 31,
2002 |        
|----------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ----------------- | -------
|ASSETS                                          |                                                                                                          |                              |         |                   |        
|Current assets:                                 |                                                                                                          |                              |         |                   |        
|                                                | Cash and cash equivalents                                                                                |                              | $       | 49.3              |        
|                                                | Accounts and notes receivables (net of allowance for doubtful accounts of $16.3 and $14.5, respectively) |                              |         | 548.9             |        
|                                                | Inventories                                                                                              |                              |         | 600.2             |        
|                                                | Prepaid expenses                                                                                         |                              |         | 16.7              |        
|                                                | Deferred income taxes                                                                                    |                              |         | 31.2              |        
|                                                | Other current assets                                                                                     |                              |         | 71.5              |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total current assets         |         |                   | 1,317.8
|Property, plant and equipment, net              |                                                                                                          |                              | 3,049.8 |                   |        
|Investment in unconsolidated affiliates         |                                                                                                          |                              | 135.3   |                   |        
|Intangible assets, net                          |                                                                                                          |                              | 259.3   |                   |        
|Other noncurrent assets                         |                                                                                                          |                              | 338.9   |                   |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total assets                 |         | $                 | 5,101.1
|                                                |                                                                                                          |                              |         |                   |        
|LIABILITIES AND EQUITY                          |                                                                                                          |                              |         |                   |        
|Current liabilities:                            |                                                                                                          |                              |         |                   |        
|                                                | Accounts payable                                                                                         |                              | $       | 324.5             |        
|                                                | Accrued liabilities                                                                                      |                              |         | 482.2             |        
|                                                | Current portion of long-term debt                                                                        |                              |         | 1.3               |        
|                                                | Other current liabilities                                                                                |                              |         | 29.4              |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total current liabilities    |         |                   | 837.4  
|Long-term debt                                  |                                                                                                          |                              | 3,639.6 |                   |        
|Deferred income taxes                           |                                                                                                          |                              | 207.9   |                   |        
|Other noncurrent liabilities                    |                                                                                                          |                              | 148.8   |                   |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total liabilities            |         |                   | 4,833.7
|                                                |                                                                                                          |                              |         |                   |        
|Commitments and contingencies (Notes 15 and 16) |                                                                                                          |                              |         |                   |        
|Equity:                                         |                                                                                                          |                              |         |                   |        
|                                                | Members' equity, 1,000 units                                                                             |                              |         | 565.5             |        
|                                                | Retained earnings                                                                                        |                              |         | (155.8            | )      
|                                                | Accumulated other comprehensive loss                                                                     |                              |         | (142.3            | )      
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total equity                 |         |                   | 267.4  
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total liabilities and equity |         | $                 | 5,101.1
|                                                |                                                                                                          |                              |         |                   |        

See
accompanying notes to consolidated financial statements.

F-74

---





HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND  COMPREHENSIVE LOSS (UNAUDITED) (Dollars in Millions)

|                                         |                                       | Three Months
Ended
March 31, 2003 |         | Three Months
Ended
March 31, 2002 |        
|---------------------------------------- | ------------------------------------- | --------------------------------- | ------- | --------------------------------- | -------
|Revenues:                                |                                       |                                   |         |                                   |        
|                                         | Trade sales and services              |                                   | $       | 1,188.8                           |        
|                                         | Related party sales                   |                                   |         | 100.5                             |        
|                                         | Tolling fees                          |                                   |         | 8.4                               |        
|                                         |                                       |                                   |         |                                   |        
|                                         |                                       | Total revenues                    |         |                                   | 1,297.7
|Cost of goods sold                       |                                       |                                   | 1,162.3 |                                   |        
|                                         |                                       |                                   |         |                                   |        
|Gross profit                             |                                       |                                   | 135.4   |                                   |        
|Expenses:                                |                                       |                                   |         |                                   |        
|                                         | Selling, general and administrative   |                                   |         | 88.6                              |        
|                                         | Research and development              |                                   |         | 12.2                              |        
|                                         | Restructuring and plant closing costs |                                   |         | 17.1                              |        
|                                         |                                       |                                   |         |                                   |        
|                                         |                                       | Total expenses                    |         |                                   | 117.9  
|                                         |                                       |                                   |         |                                   |        
|Operating income                         |                                       |                                   | 17.5    |                                   |        
|Interest expense                         |                                       |                                   | (90.0   | )                                 |        
|Interest income                          |                                       |                                   | 0.8     |                                   |        
|Loss on sale of accounts receivable      |                                       |                                   | (9.6    | )                                 |        
|Other income (expense)                   |                                       |                                   | (2.2    | )                                 |        
|                                         |                                       |                                   |         |                                   |        
|Loss before income taxes                 |                                       |                                   | (83.5   | )                                 |        
|Income tax benefit                       |                                       |                                   | 7.9     |                                   |        
|Minority interests in subsidiaries' loss |                                       |                                   |        |                                   |        
|                                         |                                       |                                   |         |                                   |        
|Net income (loss)                        |                                       |                                   | (75.6   | )                                 |        
|Other comprehensive income (loss)        |                                       |                                   | 5.1     |                                   |        
|                                         |                                       |                                   |         |                                   |        
|Comprehensive loss                       |                                       | $                                 | (70.5   | )                                 | $      
|                                         |                                       |                                   |         |                                   |        

See
accompanying notes to consolidated financial statements.

F-75

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HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS' EQUITY (UNAUDITED)  (Dollars in Millions)

|                           |  | Members' Equity |  |   |       |  |   |        |  
|-------------------------- |  | --------------- |  | - | ----- |  | - | ------ | -
|
|
|Balance, January 1, 2003   |  | 1,000           |  | $ | 565.5 |  | $ | (80.2  | )
|Net loss                   |  |                 |  |   |      |  |   | (75.6  | )
|Other comprehensive income |  |                 |  |   |      |  |   |       |  
|                           |  |                 |  |   |       |  |   |        |  
|Balance, March 31, 2003    |  | 1,000           |  | $ | 565.5 |  | $ | (155.8 | )
|                           |  |                 |  |   |       |  |   |        |  

See
accompany notes to consolidated financial statements.

F-76

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HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)  (Dollars in Millions)

|                                                 |                                                | Three Months
Ended
March 31, 2003 |        | Three Months
Ended
March 31, 2002 |  
|------------------------------------------------ | ---------------------------------------------- | --------------------------------- | ------ | --------------------------------- | -
|Net cash used in operating activities            |                                                |                                   | (133.2 | )                                 |  
|                                                 |                                                |                                   |        |                                   |  
|Investing Activities:                            |                                                |                                   |        |                                   |  
|Capital expenditures                             |                                                |                                   | (21.8  | )                                 |  
|Net cash received from unconsolidated affiliates |                                                |                                   |       |                                   |  
|Advances to unconsolidated affiliates            |                                                |                                   | (2.0   | )                                 |  
|Proceds from sale of fixed assets                |                                                |                                   | 1.2    |                                   |  
|                                                 |                                                |                                   |        |                                   |  
|Net cash used in investing activities            |                                                |                                   | (22.6  | )                                 |  
|                                                 |                                                |                                   |        |                                   |  
|Financing Activities:                            |                                                |                                   |        |                                   |  
|                                                 | Net borrowings under revolving loan facilities |                                   | $      | 134.2                             |  
|                                                 | Issuance of senior notes                       |                                   |        |                                  |  
|                                                 | Repayment of long-term debt                    |                                   |        | (1.4                              | )
|                                                 | Debt issuance costs                            |                                   |        |                                  |  
|                                                 |                                                |                                   |        |                                   |  
|                                                 | Net cash provided by financing activities      |                                   |        | 132.8                             |  
|                                                 |                                                |                                   |        |                                   |  
|Effect of exchange rate changes on cash          |                                                |                                   | (3.1   | )                                 |  
|                                                 |                                                |                                   |        |                                   |  
|Decrease in cash and cash equivalents            |                                                |                                   | (26.1  | )                                 |  
|Cash and cash equivalents at beginning of period |                                                |                                   | 75.4   |                                   |  
|                                                 |                                                |                                   |        |                                   |  
|Cash and cash equivalents at end of period       |                                                | $                                 | 49.3   |                                   | $
|                                                 |                                                |                                   |        |                                   |  
|Supplemental cash flow information:              |                                                |                                   |        |                                   |  
|                                                 | Cash paid for interest                         |                                   |        | 83.5                              |  
|                                                 | Cash paid for income taxes                     |                                   |        | 3.4                               |  

See
accompanying notes to consolidated financial statements.

F-77

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HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    General



Huntsman International Holdings LLC and its subsidiaries (collectively, the "Company") are global manufacturers and marketers of differentiated and commodity
chemicals. The Company is a Delaware limited liability company and its membership interests are owned 60% by Huntsman Specialty Chemicals Corporation ("Huntsman Specialty") and 40% by HMP Equity
Holdings Corporation ("HMP"). The Company's direct wholly-owned operating subsidiary is Huntsman International LLC, a Delaware limited liability company ("HI").

Huntsman
Specialty, a Delaware corporation, is owned 100% by Huntsman Specialty Chemicals Holdings Corporation, a Utah corporation ("HSCHC"), and HSCHC is owned 100% by Huntsman LLC.
Huntsman LLC, a Utah limited liability company, is owned 100% by HMP. HMP is a Delaware corporation and is owned 100% by Huntsman Group Inc., a Delaware corporation. Huntsman Group Inc.
is owned 100% by Huntsman Holdings, LLC ("Huntsman Holdings"), a Delaware limited liability company. The voting membership interests of Huntsman Holdings are owned by the Huntsman family,
MatlinPatterson Global Opportunities Partners, L.P., MatlinPatterson Global Opportunities Partners, L.P. and MatlinPatterson Global Opportunities Partners B, L.P. (together, "MatlinPatterson"),
Consolidated Press (Finance) Limited ("CPH") and certain members of the Company's senior management. In addition, Huntsman Holdings has issued certain non-voting preferred units to
Huntsman Holdings Preferred Member LLC, which, in turn, is owned by MatlinPatterson
(indirectly), CPH, the Huntsman Cancer Foundation, certain members of the Company's senior management and certain members of the Huntsman family. The Huntsman family has board and operational control
of the Company.

The
Company operates through four principal operating segments: Polyurethanes, Performance Products, Pigments and Base Chemicals.



The accompanying consolidated financial statements of the Company are unaudited. However, in management's opinion, all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of results of operations, financial position and cash flows for the periods shown, have been made. Results for interim periods are not
necessarily indicative of those to be expected for the full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to
consolidated financial statements for the year ended December 31, 2002 included elsewhere herein.

2.    Summary of Significant Accounting Policies



The consolidated financial statements of the Company include its majority-owned subsidiaries. Intercompany transactions and balances are eliminated.



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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

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date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents.



The Company securitizes certain trade receivables in connection with a revolving securitization program. The Company retains the servicing rights which are a
retained interest in the securitized receivables. Losses are recorded on the sale and are based on the carrying value of the receivables as allocated between the receivables sold and the retained
interests and their relative fair value at the date of the transfer. In accordance with the agreements governing the securitization program, an unconsolidated special purpose entity enters into
certain foreign exchange forward contracts for periods aligned with the average maturity of receivables sold into the program. The periodic gains and losses associated with such contracts are recorded
by the Company as part of the loss on sale of receivables. Retained interests are carried at fair value which is estimated based on the present value of expected cash flows, calculated using
management's best estimates of key assumptions, including credit losses and discount rates commensurate with the risks involved. For more information, see "Note 13Securitization of
Accounts Receivable."



Inventories are stated at the lower of cost or market value using the weighted average method.



Property, plant and equipment is stated at cost. Depreciation is provided utilizing the straight line method over the estimated useful lives of the assets ranging
from 3 to 20 years. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in income.

Periodic
maintenance and repairs applicable to major units of manufacturing facilities are accounted for on the prepaid basis by capitalizing the costs of the turnaround and amortizing
the costs over the estimated period until the next turnaround. Normal maintenance and repairs of all other plant and equipment are charged to expense as incurred. Renewals, betterments and major
repairs that materially extend the useful life of the assets are capitalized, and the assets replaced, if any, are retired.

Interest
costs are capitalized as part of major construction projects. Interest expense capitalized as part of plant and equipment was $1.2 million and $2.9 million for the
three months ended March 31, 2003 and 2002, respectively.



Investments in companies in which the Company exercises significant influence, generally ownership interests from 20% to 50%, are accounted for using the equity
method.



Intangible assets, which consist of patents, trademarks, technology and certain other agreements, are stated at their fair market values at the time of
acquisition, and are amortized using the straight line method over their estimated useful lives of five to fifteen years or over the life of the related agreement.

F-79

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The Company evaluates the carrying value of long-term assets based upon current and anticipated undiscounted cash flows and recognizes an impairment
when such estimated cash flows will be less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the difference between carrying value and fair value.



The Company enters into derivative contracts, from time to time, such as (1) interest rate swaps, collars and options, (2) short-term
foreign currency derivative instruments, and (3) commodity futures and swaps in an attempt to manage downside risks of interest rates, foreign currency rates, and commodity prices. Interest
rate contracts that are designated as cash flow hedges for future interest payments and commodity price contracts that are designated as cash flow hedges for future inventory purchases are recorded at
fair value in the balance sheet, and accumulated other comprehensive income (loss) to the extent of the effective portions of the hedging instruments. Gains and losses related to interest rate and
commodity contracts will be reclassified from other comprehensive income (loss) into earnings in the periods in which the related hedged instrument payments are made, and are reflected as interest
expense and cost of goods sold, respectively, in the statement of operations. Commodity price contracts that are designated as fair value hedges for future inventory sales are recorded at fair value
in the balance sheet. Changes in the fair value of these hedges are matched against the changes in the fair value of the underlying hedged inventory and reflected in cost of goods sold in the
statement of operations. Interest rate, commodity, and foreign currency contracts that have not been designated as a hedge are recorded at fair value in the balance sheet with changes in fair value
and realized gains (losses) recognized in interest expense, cost of goods sold, and selling, general and administrative expenses, respectively, in the statement of operations.

The
Company is exposed to credit losses in the event of nonperformance by a counterparty to the derivative instrument. The Company anticipates, however, that the counterparties will be
able to fully satisfy their obligations under the contracts.

The
Company hedges its net investment position in euro functional currency entities. To accomplish this, a portion of the Company's debt is euro denominated and designated as a hedge of
net investments. Currency effects of these hedges produce net gains (losses) in other comprehensive income loss (foreign currency translation adjustments).



The Company and its U.S. subsidiaries are organized as limited liability companies. These entities are treated similar to a partnership for U.S. income tax
purposes, and therefore are not subject to U.S. federal tax on their income. Subsidiaries outside the U.S. are generally taxed on the income generated in the local country.

Deferred
income taxes are provided for temporary differences between financial statement income and taxable income using the asset and liability method in accordance with SFAS
No. 109, "Accounting for Income Taxes." The Company does not provide for income taxes or benefits on the undistributed earnings of its
international subsidiaries as earnings are reinvested and, in the opinion of management, will continue to be reinvested indefinitely.



Environmental related restoration and remediation costs are recorded as liabilities and expensed when site restoration and environmental remediation and cleanup
obligations are either known or considered probable and the related costs can be reasonably estimated. Other environmental

F-80

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expenditures,
which are principally maintenance or preventative in nature, are recorded when incurred and are expensed or capitalized as appropriate.



Generally, the accounts of the Company's subsidiaries outside of the United States consider local currency to be functional currency. Accordingly, assets and
liabilities are translated at rates prevailing at the balance sheet date. Revenues, expenses, gains and losses are translated at a weighted average rate for the period. Cumulative translation
adjustments are recorded to equity as a component of accumulated other comprehensive income. Transaction gains and losses are recorded in the statement of operations and were net gains of
$0.7 million and net losses of $2.1 million for the three months ended March 31, 2003 and 2002, respectively.



The Company generates revenues through sales in the open market, raw material conversion agreements and long-term supply contracts. The Company
recognizes revenue when it is realized or realizable and earned, which is when the product is shipped to the customer.



Research and development costs are expensed as incurred.



Earnings per member equity unit is not presented because it is not considered meaningful information due to the Company's ownership by affiliates.



Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform with the current presentation.



On January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach. Upon adoption of SFAS
No. 142, the Company was required to reassess the useful lives of all acquired intangibles and perform an impairment test on goodwill. In the first quarter of 2002, the Company completed the
assessment of useful lives and concluded that no adjustment to the amortization period of intangible assets was necessary.

The
Company has completed its initial assessment of goodwill impairment as of January 1, 2002 and has concluded that there is no indication of impairment. The Company has elected
to test goodwill for impairment annually as of April 1 as required by SFAS No. 142. The annual assessment has been completed as of April 1, 2002 and the Company has concluded that
there is no indication of impairment. As of December 31, 2002, the Company had no goodwill on its balance sheet.

On
January 1, 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." This statement establishes a single accounting model for the impairment or disposal of long-lived assets. The impact of adopting this pronouncement was not
material.

In
August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived assets and the
associated

F-81

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asset
retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred by capitalizing it as part of
the carrying amount of the long-lived assets. As required by SFAS No. 143, the Company adopted this new accounting standard on January 1, 2003. The Company believes this
statement's impact will not be significant; however, standard-setters continue to debate the statement's applicability to assets where the timing of any ultimate obligation is indefinite.

In
April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Other Technical Corrections." In addition to amending or rescinding pronouncements to make various technical corrections, clarify meanings or describe applicability, SFAS
No. 145 precludes companies from recording gains or losses from extinguishment of debt as an extraordinary item. The Company was required to adopt this statement as of January 1, 2003.
The adoption of SFAS No. 145 did not have a material effect on the Company's consolidated financial statements.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated With Exit or Disposal Activities." SFAS
No. 146 requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. Under previous guidance, certain exit costs were accrued
upon management's commitment to an exit plan, which is generally before an actual liability has been incurred. We adopted this pronouncement in the first quarter of 2003. The adoption of SFAS
No. 146 did not have a material effect on the Company's consolidated financial statements.

In
January 2003, the FASB issued Financial Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Guarantees of Indebtedness of Others." FIN No. 45 requires recognition of a liability for the obligation undertaken upon issuing a guarantee. This liability
would be recorded at the inception date of the guarantee and would be measured at fair value. The disclosure provisions of the interpretation are effective for the financial statements as of
December 31, 2002. The liability recognition provisions apply prospectively to any guarantees issued or modified after December 31, 2002. The adoption of FIN No. 45 did not have a
material effect on the Company's consolidated financial statements.

3.    Inventories

Inventories as of March 31, 2003 and December 31, 2002 consisted of the following (dollars in millions):

March 31,
2003

December 31,
2002Raw materials

$
128.4

$
130.2Work in progress


22.5


25.9Finished goods


429.6


385.8Total


580.5


541.9Materials and supplies


19.7


19.4Net

$
600.2

$
561.3


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4.    Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions):

March 31,
2003

December 31,
2002Land

$
43.2

$
42.9Buildings


177.0


157.7Plant and equipment


3,459.7


3,446.3Construction in progress


181.5


172.7Total


3,861.4


3,819.6Less accumulated depreciation


(811.6
)

(748.5
)Net

$
3,049.8

$
3,071.1


5.    Investments in Unconsolidated Affiliates

The Company's ownership percentage and investments in unconsolidated affiliates, primarily manufacturing joint ventures, are as follows (in millions):

March 31,
2003

December 31,
2002Louisiana Pigment Company, L.P. (50%)

$
132.7

$
131.4Rubicon, Inc. (50%)


1.3


1.3Others


1.3


1.2Total

$
135.3

$
133.9


6. Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets as of March 31, 2003 were as follows (dollars in millions):

|                                    |  | March 31, 2003 |       | December 31, 2002 |   |      
|----------------------------------- |  | -------------- | ----- | ----------------- | - | -----
|
|Patents, trademarks, and technology |  | $              | 313.1 |                   | $ | 95.8 
|Non-compete agreements              |  |                | 49.1  |                   |   | 32.9 
|Other intangibles                   |  |                | 29.4  |                   |   | 3.6  
|                                    |  |                |       |                   |   |      
|Total                               |  | $              | 391.6 |                   | $ | 132.3
|                                    |  |                |       |                   |   |      

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7. Other Noncurrent Assets

Other noncurrent assets consist of the following (in millions):

March 31,
2003

December 31,
2002Prepaid pension assets

$
148.9

$
146.2Debt issuance costs


66.0


60.7Capitalized turnaround expense


46.9


48.3Receivables from affiliates


16.3


18.6Spare parts inventory


48.6


46.2Other noncurrent assets


12.2


19.5Total

$
338.9

$
339.5


8. Accrued Liabilities

Accrued liabilities consist of the following (in millions):

March 31,
2003

December 31,
2002Raw materials and services

$
209.0

$
217.7Interest


39.6


61.3Taxes (income, property and VAT)


40.0


41.4Payroll, severance and related costs


75.7


67.4Volume and rebates accruals


42.9


52.5Restructuring and plant closing costs


20.0


7.1Other miscellaneous accruals


55.0


76.4Total

$
482.2

$
523.8


9. Other Noncurrent Liabilities

Other noncurrent liabilities consist of the following (in millions):

March 31,
2003

December 31,
2002Pension liabilities

$
82.1

$
82.3Other postretirement benefits


11.8


10.8Environmental accruals


9.2


19.3Payable to affiliate


38.1


37.9Other noncurrent liabilities


7.6


8.1Total

$
148.8

$
158.4


10. Restructuring and Plant Closing Costs

As of December 31, 2002, the Company had a reserve for restructuring costs and plant closing costs of $7.1 million recorded in accrued liabilities.
The entire amount was related to workforce reductions.

On
March 11, 2003, the Company announced that, in its Polyurethanes segment, it is integrating its global flexible products division into its global derivatives division, and it
recorded a charge of $17.1 million in the first quarter 2003. This charge relates to a portion of an overall corporate cost

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reduction
program that is expected to be implemented and recorded throughout 2003. This $17.1 million charge represents severance and is included in accrued liabilities.

During
the three months ended March 31, 2003, the Company made cash payments of approximately $4.2 million. At March 31, 2003 there was $20.0 million
remaining in accrued liabilities.

11. Long-term Debt

Long-term debt outstanding as of March 31, 2003 and December 31, 2002 is as follows (dollars in millions):

March 31,
2003

December 31,
2002Senior Secured Credit Facilities:Revolving loan facility

$
201.2

$
67.0Term A dollar loan


109.7


109.7Term A euro loan (in U.S. dollar equivalent)


142.6


138.5Term B loan


526.3


526.3Term C loan


526.3


526.3Senior Notes


300.0


300.0Senior Subordinated Notes


1,090.9


1,076.8Senior Discount Notes


394.6


381.8Senior Subordinated Discount Notes


320.8


308.9Other long-term debt


28.5


29.2Subtotal


3,640.9


3,464.5Less current portion


(1.3
)

(43.9
)Total

$
3,639.6

$
3,420.6




The revolving loan facility of up to $400 million matures on June 30, 2005 with no scheduled commitment reductions. Both the term A dollar loan and
the term A euro loan facilities mature on June 30, 2005, with the next semi-annual payment due in the fourth quarter of 2004. The term B loan facility matures on June 30,
2007 and the term C loan facility matures on June 30, 2008. The term B and term C loan facilities require payments in annual installments of $5.48 million each, with the next payments
occurring in the second quarter 2005 and the remaining unpaid balances due on final maturity. See "Senior Notes and Senior Subordinated Notes" below for discussion of the HI Senior Note
offering of $150 million, the proceeds of which were primarily used to prepay the next 16 months of scheduled amortization due under the HI Credit Facilities.

Interest
rates for the HI Credit Facilities are based upon, at HI's option, either a eurocurrency rate (LIBOR) or a base rate (prime) plus the applicable spread. The applicable spreads
vary based on a pricing grid, in the case of eurocurrency based loans, from 1.50% to 4.50% per annum depending on the loan facility and whether specified conditions have been satisfied, and, in the
case of base rate loans, from 0.25% to 3.25% per annum. As of March 31, 2003 and December 31, 2002, the average interest rates on the HI Credit Facilities were 6.0% and 5.8%,
respectively.

The
obligations under the HI Credit Facilities are supported by guarantees of HI's domestic and certain foreign subsidiaries (collectively the "Guarantors") and the Company, as well as
pledges of substantially all their assets, including 65% of the voting stock of certain non-U.S. subsidiaries.

The
HI Credit Facilities contain covenants relating to incurrence of debt, purchase and sale of assets, limitations on investments, affiliate transactions, change in control provisions
and maintenance

F-85

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of
certain financial ratios. The financial covenants include a leverage ratio, interest coverage ratio, minimum consolidated net worth level and a limit on capital expenditures. The HI Credit
Facilities also limit the payment of dividends generally to the amount required by the members to pay income taxes. On February 7, 2003, HI amended the HI Credit Facilities. The amendments
resulted in, among other things, changes to certain financial covenants, including the interest coverage ratio and leverage ratio covenants, through the second quarter of 2004. Management believes
that HI is in compliance with the covenants of the HI Credit Facilities as of March 31, 2003.

On
April 9, 2003, HI amended the HI Credit Facilities to allow prepayment of the next 16 months of amortization with proceeds raised in its $150 million note
offering.



In March 2002, HI issued $300 million 9.875% Senior Notes (collectively with the 2003 Senior Notes, the "Senior Notes"). Interest on the Senior
Notes is payable semi-annually and the Senior Notes mature on March 1, 2009. The Senior Notes are fully and unconditionally guaranteed on a joint and several basis by the
Guarantors. The Senior Notes may be redeemed, in whole or in part, at any time by HI prior to March 1, 2006 at 100% of the face value plus a "make whole" premium, as defined in the applicable
indenture. After March 1, 2006, the Senior Notes may be redeemed, in whole or in part, at a redemption price that declines from 104.937% to 100% after March 1, 2008.

On
April 11, 2003, HI sold an additional $150 million in aggregate principal amount of 9.875% Senior Notes due 2009 (the "2003 Senior Notes") in a transaction exempt from
the registration requirements of the Securities Act of 1933. The offering was priced at 105.25% plus accrued interest from March 1, 2003. HI used approximately $26 million of the net
proceeds to repay part of the revolving portion of the HI Credit Facilities. The balance of the net proceeds was used primarily to prepay the next 16 months of scheduled amortization due under
the term portion of the HI Credit Facilities.

HI
also has outstanding $600 million and €450 million 10.125% Senior Subordinated Notes (the "Subordinated Notes"). Interest on the Subordinated Notes is
payable semi-annually and the Subordinated Notes mature on July 1, 2009. The Subordinated Notes are fully and unconditionally guaranteed on a joint and several basis by the
Guarantors. The Subordinated Notes are redeemable (1) on or after July 1, 2004 at 105.063% of the principal amount thereof, declining ratably to par on and after July 1, 2007, and
(2) prior to July 1, 2004 at 105.063% of the principal amount thereof, discounted to the redemption date using the treasury rate (for the dollar
denominated notes) or the bond rate (for the euro denominated notes) plus 0.50%, plus, in each case, accrued and unpaid interest to the date of redemption.

The
Senior Notes and the Subordinated Notes contain covenants relating to the incurrence of debt, limitations on distributions, asset sales and affiliate transactions, among other
things. They also contain a change of control provision requiring HI to offer to repurchase the Senior Notes and the Subordinated Notes upon a change of control. Management believes that HI is in
compliance with the covenants of the Senior Notes and the Subordinated Notes as of March 31, 2002.



On June 30, 1999, the Company issued Senior Discount Notes and Senior Subordinated Discount Notes (collectively, the "Discount Notes") to ICI with initial
stated values of $242.7 million and $265.3 million, respectively. The Discount Notes are due December 31, 2009. Interest on the Senior Discount Notes will accrue at 13.375% per
annum. The Senior Discount Notes are redeemable prior to July 2004 for an amount equal to the net present value of 106.688% of the projected July 1, 2004 accreted value and thereafter at
stipulated redemption prices declining to 100% of accreted value in 2007. The Senior Subordinated Discount Notes had a stated rate of 8% that originally was to reset to a

F-86

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market
rate in June 2002 and can be redeemed at 100% of accreted value at any time until June 30, 2004. On December 21, 2001, the Company and ICI agreed to modify the terms of the
Senior Subordinated Discount Notes, including deferring the reset date until September 2004. For financial reporting purposes, the Senior Subordinated Discount Notes were initially recorded at
their estimated fair value of $224 million based upon prevailing market rates at June 30, 1999. Interest on the Discount Notes is paid in kind. The Senior Discount Notes contain limits
on the incurrence of debt, restricted payments, liens, transactions with affiliates, and merger and sales of assets.

On
December 21, 2001, the Company and ICI agreed to modify the terms of the Senior Subordinated Discount Notes. The interest rate reset date was deferred until
September 2004. The modification of the terms resulted in a significant decrease in the present value of the future cash flow of the debt and, as a result, the debt was treated effectively as
an extinguishment and reissuance of the debt. The debt was recorded using a 16% interest rate, the estimated market rate for the debt as of December 20, 2001. On May 9, 2003, HMP
completed the purchase of the Senior Subordinated Discount Notes from ICI. For more information, see "Note 18Recent EventsMembership Interest Transactions."

12. Derivatives and Hedging Activities



Interest rate contracts with a fair value of $20.8 million and $23.4 million were recorded as a component of other noncurrent liabilities as of
March 31, 2003 and December 31, 2002, respectively. The fair value of the cash flow hedges and the interest rate contracts not designated as a hedge are $14.0 million and
$6.8 million as of March 31, 2003 and $15.6 million and $7.8 million as of December 31, 2002. The changes in fair value of the cash flow hedges resulted in a
$0.1 million and a $2.8 million decrease in interest expense and a $1.5 million and a $0.3 million decrease in other comprehensive income (loss) for the three months ended
March 31, 2003 and 2002, respectively. The changes in fair value of the interest rate contracts not designated as a hedge resulted in a $1.0 million and a $2.1 million decrease in
interest expense for the three months ended March 31, 2003 and 2002, respectively.



As of March 31, 2003 the fair value of cash flow commodity price hedging contracts recorded in other current liabilities and other comprehensive income
(loss) is $1.9 million. As of December 31, 2002, the fair value of cash flow commodity price hedging contracts was not material.

As
of March 31, 2003 commodity price hedging contracts designated as fair value hedges are included in the balance sheet as an increase of $2.2 million to other current
assets and a decrease to inventory of $3.1 million. As of December 31, 2002 commodity price hedging contracts designated as fair value hedges are included in the balance sheet as an
increase of $0.8 to other current liabilities and an increase to inventory of $0.8 million.

Commodity
price contracts not designated as hedges as defined by SFAS No. 133 are reflected in the balance sheet as $2.2 million and $0.5 million in other current
assets and liabilities, respectively, as of March 31, 2003 and, $0.8 million and $0.2 million other current assets and liabilities, respectively, as of December 31, 2002.

During
the three months ended March 31, 2003 and 2002, the Company recorded a decrease of $0.9 million and an increase of $0.8 million in cost of goods sold related
to net gains and losses from settled contracts, net gains and losses in fair value price hedges, and the change in fair value on commodity price hedging contracts not designated as hedges as defined
in SFAS No. 133.

F-87

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As of March 31, 2003 and December 31, 2002 and for the three months ended March 31, 2003 and 2002, the fair value, change in fair value, and
realized gains (losses) of outstanding foreign currency rate hedging contracts is not material.



Currency effects of net investment hedges produced net losses of approximately $18.4 million and $9.4 million in other comprehensive loss (foreign
currency translation adjustments) for the three months ended March 31, 2003 and 2002, respectively. As of March 31, 2003 and December 31, 2002, there was a cumulative net loss of
approximately $51.1 million and $32.7 million, respectively.

13.    Securitization of Accounts Receivable

On December 21, 2000, the Company initiated a five-year revolving securitization program under which certain trade receivables were and will be
transferred to an off balance sheet special purpose entity at a discount. Under the terms of the agreements, the Company and its subsidiaries continue to service the receivables in exchange for a 1%
fee of the outstanding receivables, and the Company is subject to recourse provisions. At March 31, 2003, the special purpose entity had outstanding $183 million in
medium-term notes ("MTNs") and $100 million in commercial paper.

For
the three months ended March 31, 2003 and 2002, new sales totaled approximately $1,002 million and $606 million, respectively, and cash collections reinvested
totaled approximately $892 million and $571 million, respectively. Servicing fees received during the first three months of 2003 and 2002 were approximately $1.2 million and
$0.7 million, respectively, and are recorded as a reduction in the loss on sale of accounts receivable in the statements of operations. The retained interest in the receivables was
approximately $108 million and $112 million, and as of March 31, 2003 and December 31, 2002, respectively. The value of the retained interest is subject to credit and
interest rate risk.

The
key economic assumptions used in valuing the residual interest at March 31, 2003 are presented below:

Weighted average life (in months)

2Credit losses (annual rate)

Less than 1%Discount rate (annual rate)

5%


A
10% and 20% adverse change in any of the key economic assumptions would not have a material impact on the fair value of the retained interest. Total receivables over 60 days
past due as of March 31, 2003 and December 31, 2002 were $8.8 million and $11.2 million, respectively.

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14.    Other Comprehensive Income (loss)

The components of other comprehensive income (loss) are as follows (in millions):

|                                                                |  | March 31, 2003 |        | December 31, 2002 |  
|--------------------------------------------------------------- |  | -------------- | ------ | ----------------- | -
|
|Foreign currency translation adjustments                        |  | $              | (37.3  | )                 | $
|Additional minimum pension liability                            |  |                | (86.6  | )                 |  
|Additional minimum pension liability  unconsolidated affiliate |  |                | (5.4   | )                 |  
|Unrealized loss on securities                                   |  |                | (0.9   | )                 |  
|Net unrealized loss on derivative instruments                   |  |                | (11.0  | )                 |  
|Cumulative effect of accounting change                          |  |                | (1.1   | )                 |  
|                                                                |  |                |        |                   |  
|Total                                                           |  | $              | (142.3 | )                 | $
|                                                                |  |                |        |                   |  

15.    Commitments and Contingencies

The Company has various purchase commitments for materials and supplies entered into in the ordinary course of business. These agreements extend up to ten years
and the purchase price is generally based on market prices subject to certain minimum price provisions.

The
Company is involved in litigation from time to time in the ordinary course of its business. In management's opinion, after consideration of indemnification arrangements, none of such
litigation is material to the Company's financial condition or results of operations.

16.    Environmental Matters



The operation of chemical manufacturing plants, the distribution of chemical products and the related production of by-products and wastes entails
risk of adverse environmental effects. As a result, the Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of
the environment and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In the ordinary course of business, the Company
is subject to frequent environmental inspections and monitoring by governmental enforcement authorities. In addition, the Company's production facilities require operating permits that are subject to
renewal, modification and, in certain circumstances, revocation. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant
operations, substantial fines and civil or criminal sanctions. Moreover, changes in environmental regulations could inhibit or interrupt the Company's operations, or require it to change its equipment
or operations, and any such changes could have a material adverse effect on its businesses. Accordingly, given the Company's businesses, environmental or regulatory matters may cause significant
unanticipated losses, costs or liabilities.

Under
some environmental laws, the Company may be jointly and severally liable for the costs of environmental contamination on or from its properties and at off-site
locations where it disposed of or arranged for the disposal or treatment of hazardous wastes. For example, in the United States under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and similar state laws, a current owner or operator of real property may be liable for such costs regardless of whether the owner or operator owned or operated the
real property at the time of the release of the hazardous substances and regardless of whether the release or disposal was in compliance with law at the time it occurred. In addition, under the United
States Resource

F-89

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Conservation
and Recovery Act of 1976, as amended, and similar state laws, as the holder of permits to treat or store hazardous wastes, the Company may, under some circumstances, be required to
remediate contamination at its properties regardless of when the contamination occurred. Similar laws are being developed or are in effect to varying degrees in other parts of the world, most notably
in the European Union ("EU"). For example, in the U.K., the contaminated land regime now provides a detailed framework for the identification, management and remediation of contaminated sites. This
law will likely increase governmental scrutiny of the Company's U.K. facilities.

The
Company may also incur future costs for capital improvements and general compliance under environmental laws, including costs to acquire, maintain and repair pollution control
equipment. Capital expenditures are planned, for example, under national legislation implementing the EU Directive on Integrated Pollution Prevention and Control. Under this directive, the majority of
the Company's European plants will, over the next few years, be required to obtain governmental authorizations which will regulate air and water discharges, waste management and other matters relating
to the impact of operations on the environment, and to conduct site assessments to evaluate environmental conditions. Although the implementing legislation in most Member States is not yet in effect,
it is likely that additional expenditures may be necessary in some cases to meet the requirements of authorizations under this directive. In particular, the Company believes that related expenditures
to upgrade its wastewater treatment facilities at several sites may be necessary and associated costs may be material. Wastewater treatment upgrades unrelated to this initiative also are planned at
certain facilities. In addition, the Company may also incur material expenditures, beyond currently anticipated expenditures, in complying with EU Directives, including the Directive on Hazardous
Waste Incineration, the Seveso II Directive, which governs major accident hazards, as well as the Water Framework Directive. It is also possible that additional expenditures to reduce air emissions at
two of the Company's U.K. facilities may be material. Capital expenditures and, to a lesser extent, costs and operating expenses relating to environmental matters will be subject to evolving
regulatory requirements and will depend on the timing of the promulgation and enforcement of specific standards which impose requirements on the Company's operations. Therefore, the Company cannot
assure you that material capital expenditures beyond those currently anticipated will not be required under environmental laws.



The Company's operations involve the handling, transportation and use of numerous hazardous substances. From time to time, these operations may result in
violations under environmental laws including spills or other releases of hazardous substances into the environment. In the event of a catastrophic incident, the Company could incur material costs or
experience interruption in its operations as a result of addressing the incident and implementing measures to prevent such incidents in the future. Currently, the Company is aware of the following
matters:

The
Texas Commission on Environmental Quality (the "TCEQ," formerly the Texas Natural Resource Conservation Commission or TNRCC) has issued certain notices of violation relating to air
emissions and wastewater issues at the Company's Port Neches, Texas facility. The Company and the TCEQ have reached a tentative settlement on penalties totaling $352,250, less than $100,000 of which
is allocable to the Company's PO/MTBE facility at Port Neches. The settlement will be reviewed by the TCEQ on May 29, 2003, and it is anticipated that it will be approved. Although management
does not anticipate it, it is possible that the terms of an air permit, which the Company applied for as a result of the settlement, may cause it to incur costs related to equipment serving this plant
and others in the vicinity that could be material.

On
October 6, 2002, a leak of sulphuric acid from two tanks located near the Company's Whitehaven, U.K. plant was discovered. About 342 to 347 tonnes of acid were released onto
the ground and into the soil near the tanks. Although the Company took immediate steps to contain the

F-90

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spillage
and recover acid, a quantity of acid reached a nearby beach via a geological fault. The Company believes the tanks were not owned by the Company; however, it did own the acid in the tanks.
The EA and the Health and Safety Executive (the "HSE") are investigating the incident, and the HSE has issued three Improvement Notices requiring corrective action. Although the Company can give no
assurances, based on currently available information and its understanding of similar investigations and penalties in the past, the Company believes that, if any charges are brought or additional
corrective action orders issued and the Company is ultimately found to be legally responsible, the probable penalties would not be material to its financial position or results of operations.

The
Company is aware that there is or may be soil or groundwater contamination at some of its facilities resulting from past operations. Based on available information and the
indemnification rights (including indemnities provided by Huntsman Specialty, ICI, Rhodia S.A. and The Dow Chemical Company, for the facilities that each of them transferred to the Company), the
Company believes that the costs to investigate and remediate known contamination will not have a material adverse effect on its financial condition, results of operations or cash flows; however, it
cannot give any assurance that
such indemnities will fully cover the costs of investigation and remediation, that it will not be required to contribute to such costs or that such costs will not be material.

By
letter dated March 6, 2003, the Company's subsidiary, Huntsman Ethyleneamines Ltd., was notified by the TCEQ of a probable enforcement action arising out of the
inspection of the Freeport, Texas facility on December 16-19, 2002. Seven types of violations relating to Texas Clean Air Act requirements were cited. No penalty demand has yet been
made by the TCEQ, although penalties are expected.

The
Company has established financial reserves relating to environmental restoration and remediation programs, which the Company believes are sufficient for known requirements.
Liabilities are recorded when site restoration and environmental remediation and clean-up obligations are either known or considered probable and can be reasonably estimated. These
liabilities are based upon all available facts, existing technology, past experience and cost-sharing arrangements (as to which, the Company considers the viability of other parties). A
total of approximately $24 million has been accrued related to environmental matters as of March 31, 2003. The Company does not anticipate that, as a result of compliance with current
environmental laws and regulations, any future costs in excess of those that have been accrued by the Company will be material to its results of operations or financial position. However, given the
nature of the Company's business, violations of environmental laws may result in restrictions imposed on its operating activities, substantial fines, penalties, damages or other costs, any of which
could have a material adverse effect on its business, financial condition, results of operations or cash flows.



The presence of MTBE in some groundwater supplies in California and other states (primarily due to gasoline leaking from underground storage tanks) and in surface
water (primarily from recreational watercraft) has led to public concern about MTBE's potential to contaminate drinking water supplies. Heightened public awareness regarding this issue has resulted in
state, federal and foreign initiatives to rescind the federal oxygenate requirements for reformulated gasoline or restrict or prohibit the use of MTBE in particular. For example, the California Air
Resources Board adopted regulations that would prohibit the addition of MTBE to gasoline as of January 1, 2004. Certain other states have also taken actions to restrict or eliminate the future
use of MTBE. In connection with the proposed ban, the State of California requested that the U.S. Environmental Protection Agency (the "EPA") waive the federal oxygenated fuels requirements of the
federal Clean Air Act for gasoline sold in California. The EPA denied the State's request on June 12, 2001. Certain of the state bans have been challenged in court as

F-91

---



unconstitutional
(in light of the Clean Air Act). The Company is unable to predict what the short- and long-term effects of these matters will be.

Bills
have been introduced in the U.S. Congress to accomplish similar goals of curtailing or eliminating the oxygenated fuels requirements in the Clean Air Act, or of curtailing MTBE
use. To date, no such legislation has become law. Whether a ban or substantial restrictions on MTBE use will become law in the future is unknown at this time.

In
addition, on March 20, 2000, the EPA announced its intention, through an advanced notice of proposed rulemaking, to phase out the use of MTBE under authority of the federal
Toxic Substances Control Act. In its notice, the EPA also called on the U.S. Congress to restrict the use of MTBE under the Clean Air Act. Any phase-out of or future regulation of MTBE in
California (in which a significant amount of MTBE is consumed), in other states, or nationally may result in a significant reduction in demand for MTBE and may result in a material loss in revenues or
material costs or expenditures.

In
Europe, the European Union (the "EU") issued a final risk assessment report on MTBE on September 20, 2002. While no ban of MTBE was recommended, several risk reduction measures
relating to storage and handling of MTBE-containing fuel were recommended. Separate from EU action, Denmark entered into a voluntary agreement with refiners to reduce the sale of MTBE in
Denmark. Under the agreement, use of MTBE in 92- and 95-octane gasoline in Denmark ceased by May 1, 2002; however, MTBE will still be an additive in a limited amount of
98-octane gasoline sold in about 100 selected service stations in Denmark.

In
the event that there should be a phase-out of MTBE in the United States, the Company believes it will be able to export MTBE to Europe or elsewhere or use its
co-product tertiary butyl alcohol ("TBA") to produce saleable products other than MTBE. The Company believes that its low production costs at its PO/MTBE facility will put it in a
favorable position relative to other higher cost sources (primarily, on-purpose manufacturing). If the Company opts to produce products other than MTBE, necessary modifications to its
facilities may require significant capital expenditures and the sale of the other products may produce a materially lower level of cash flow than the sale of MTBE.

Furthermore,
the Company cannot give any assurance that it will not be named in litigation relating to the environmental effects of MTBE or that such litigation will not have a material
adverse effect on the Company's business, financial condition, results of operations or cash flows.

17.    Operating Segment Information

The Company derives its revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. The
Company has four reportable operating segments: Polyurethanes, Performance Products, Pigments and Base Chemicals.

The
major products of each reportable operating segment are as follows:

Segment

ProductsPolyurethanes

MDI, TDI, TPU, polyols, aniline, PO, TBA and MTBEPerformance Products

Surfactants, ethyleneamines and other performance chemicalsPigments

Titanium dioxideBase Chemicals

Ethylene, propylene, benzene, cyclohexane and paraxylene


Sales
between segments are generally recognized at external market prices. For the three months ended March 31, 2003 and 2002, sales to Imperial Chemical Industries PLC ("ICI")
and its affiliates accounted for approximately 6% and 6%, respectively, of consolidated revenues.

F-92

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The
net sales, operating income and EBITDA for each of the Company's reportable operating segments are as follows (dollars in millions):

Three Months
Ended
March 31, 2003

Three Months
Ended
March 31, 2002Net SalesPolyurethanes

$
554.9

$
463.7Performance Products


161.1


136.4Pigments


246.1


202.2Base Chemicals


372.2


213.6Eliminations


(36.6
)

(18.0
)Total

$
1,297.7

$
997.9Operating Income (Loss)Polyurethanes

$
4.3

$
54.5Performance Products


(0.6
)

4.7Pigments


13.1


(0.1
)Base Chemicals


14.5


(16.2
)Unallocated and other


(13.8
)

(15.0
)Total


17.5


27.9Non-operating expense


(11.8
)

(3.2
)Depreciation and amortization


69.0


59.2EBITDA(1)

$
74.7

$
83.9Segment EBITDAPolyurethanes

$
40.2

$
87.2Performance Products


2.3


6.9Pigments


28.9


10.9Base Chemicals


26.5


(7.5
)Unallocated and other(2)


(23.2
)

(13.6
)Total

$
74.7

$
83.9


---

18.    Recent Events



On May 9, 2003, HMP issued senior discount notes (the "HMP Senior Discount Notes"), with warrants to purchase 12% of HMP's fully diluted common stock as of
such date. HMP used the proceeds to exercise an option that it held and purchased the 30% membership interest in the Company held indirectly by ICI. HMP also used the proceeds to complete the purchase
of the senior subordinated reset discount notes due 2009 of the Company that were originally issued to ICI (the "B Notes"). The B Notes held by HMP will remain outstanding. In addition, HMP used such
proceeds to acquire the approximately 9% of the membership interests in the Company from institutional investors. Accordingly, HMP directly owns 40% of the membership interests of the Company and the
B Notes.

F-93

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HMP
indirectly owns the remaining 60% of the Company through its ownership of all of the equity of Huntsman LLC.

As
a result of HMP's purchase of the Company's membership interests from ICI, the put option arrangements between Huntsman Specialty and ICI have been effectively terminated.

Huntsman
Specialty has pledged a total of 60% of the memberships interests in the Company as collateral under the Huntsman LLC senior secured credit facilities. HMP has separately
pledged all of its assets, including the remaining 40% membership interests in the Company, the B Notes and the 100% interest in Huntsman LLC, as collateral under the HMP Senior Discount Notes.



On February 7, 2003, HI amended the HI Credit Facilities. The amendments resulted in, among other things, changes to certain financial covenants, including
the "Interest Coverage Ratio" and "Leverage Ratio" covenants, through the second quarter of 2004.

On
April 9, 2003, HI amended the HI Credit Facilities to allow prepayment of the next 16 months of amortization with proceeds raised in its $150 million note
offering.



On April 11, 2003, HI sold $150 million in aggregate principal amount of 9.875% Senior Notes due 2009 in a transaction exempt from the registration
requirements of the Securities Act of 1933. The offering was priced at 105.25% plus accrued interest from March 1, 2003. HI used approximately $26 million of the net proceeds to repay
part of the revolving portion of the HI Credit Facilities. The balance of the net proceeds was used primarily to prepay the next 16 months of scheduled amortization due under the term portion
of the HI Credit Facilities.



On March 11, 2003, the Company announced that, in its Polyurethanes segment, it is integrating its global flexible products division into its global
derivatives division and recorded a charge of $17.1 million in the first quarter 2003. This charge relates to a portion of an overall corporate cost reduction program that is expected to be
implemented and recorded throughout 2003. This $17.1 million charge represents severance and is included in accrued liabilities.



The Company's parent companies, HMP and Huntsman Holdings, and MatlinPatterson are involved in a proposed restructuring of Vantico Group S.A. and its subsidiaries
(collectively, "Vantico"), a leading European based global epoxy resin producer providing solutions in the fields of innovative coatings, structural composites, adhesives, tooling materials, and
electric and electronic insulation. If the proposed restructuring occurs, Vantico would become an affiliate of the Company, but the Company will not own any securities of Vantico and will not be
required to make any cash contributions to Vantico. The Company and its affiliates (including HI) may enter into arms-length contractual arrangements with Vantico regarding management,
technology and commercial matters, and certain of the current employees of the Company and its affiliates may assume senior positions at Vantico.



In January 2003, the Company entered into a joint venture agreement to build an MDI manufacturing plant near Shanghai, China with BASF and three Chinese
chemical companies. A feasibility study for the project has been approved by the appropriate Chinese authorities, preliminary engineering work has commenced and a business license was issued on
March 7, 2003.

F-94

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Members of
Huntsman International Holdings LLC

We have audited the accompanying consolidated balance sheets of Huntsman International Holdings LLC and subsidiaries (the "Company") as of December 31,
2002 and 2001, and the related consolidated statements of operations and comprehensive loss, members' equity, and cash flows for each of the three years in the period ended December 31, 2002.
These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial
statement schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Huntsman International Holdings LLC and subsidiaries at
December 31, 2002 and 2001 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States of America.

As
discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards, No. 142 effective January 1, 2002
and changed its method of accounting for derivative financial instruments effective January 1, 2001, to conform to Statement of Financial Accounting Standards No. 133, as amended.

As
discussed in Note 23, the accompanying consolidated statements of cash flows have been restated.

/s/
DELOITTE & TOUCHE LLP

Salt
Lake City, Utah
February 28, 2003,
November 23, 2004 as to Note 23

F-95

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HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        Consolidated Balance Sheets        (Millions of Dollars)

|                                                |                                                                                                          | December 31,
2002            |         | December 31,
2001 |        
|----------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ----------------- | -------
|ASSETS                                          |                                                                                                          |                              |         |                   |        
|Current assets:                                 |                                                                                                          |                              |         |                   |        
|                                                | Cash and cash equivalents                                                                                |                              | $       | 75.4              |        
|                                                | Accounts and notes receivables (net of allowance for doubtful accounts of $14.5 and $15.2, respectively) |                              |         | 467.9             |        
|                                                | Inventories                                                                                              |                              |         | 561.3             |        
|                                                | Prepaid expenses                                                                                         |                              |         | 22.0              |        
|                                                | Deferred income taxes                                                                                    |                              |         | 31.2              |        
|                                                | Other current assets                                                                                     |                              |         | 75.4              |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total current assets         |         |                   | 1,233.2
|Property, plant and equipment, net              |                                                                                                          |                              | 3,071.1 |                   |        
|Investment in unconsolidated affiliates         |                                                                                                          |                              | 133.9   |                   |        
|Intangible assets, net                          |                                                                                                          |                              | 273.3   |                   |        
|Other noncurrent assets                         |                                                                                                          |                              | 332.6   |                   |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total assets                 |         | $                 | 5,044.1
|                                                |                                                                                                          |                              |         |                   |        
|LIABILITIES AND EQUITY                          |                                                                                                          |                              |         |                   |        
|Current liabilities:                            |                                                                                                          |                              |         |                   |        
|                                                | Accounts payable                                                                                         |                              | $       | 314.8             |        
|                                                | Accrued liabilities                                                                                      |                              |         | 523.8             |        
|                                                | Current portion of long-term debt                                                                        |                              |         | 43.9              |        
|                                                | Deferred income taxes                                                                                    |                              |         |                  |        
|                                                | Other current liabilities                                                                                |                              |         | 29.6              |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total current liabilities    |         |                   | 912.1  
|Long-term debt                                  |                                                                                                          |                              | 3,420.6 |                   |        
|Deferred income taxes                           |                                                                                                          |                              | 215.1   |                   |        
|Other noncurrent liabilities                    |                                                                                                          |                              | 158.3   |                   |        
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total liabilities            |         |                   | 4,706.1
|                                                |                                                                                                          |                              |         |                   |        
|Minority interests                              |                                                                                                          |                              | 0.1     |                   |        
|                                                |                                                                                                          |                              |         |                   |        
|Commitments and contingencies (Notes 17 and 18) |                                                                                                          |                              |         |                   |        
|Equity:                                         |                                                                                                          |                              |         |                   |        
|                                                | Members' equity, 1,000 units                                                                             |                              |         | 565.5             |        
|                                                | Retained earnings                                                                                        |                              |         | (80.2             | )      
|                                                | Accumulated other comprehensive loss                                                                     |                              |         | (147.4            | )      
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total equity                 |         |                   | 337.9  
|                                                |                                                                                                          |                              |         |                   |        
|                                                |                                                                                                          | Total liabilities and equity |         | $                 | 5,044.1
|                                                |                                                                                                          |                              |         |                   |        

See
accompanying notes to consolidated financial statements.

F-96

---



HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        Consolidated Statements of Operations and Comprehensive Income (Loss)        (Millions of Dollars)

|                                                  |                                       | Year Ended
December 31,
2002 |         | Year Ended
December 31,
2001 |         | Year Ended
December 31,
2000 |        
|------------------------------------------------- | ------------------------------------- | ---------------------------- | ------- | ---------------------------- | ------- | ---------------------------- | -------
|Revenues:                                         |                                       |                              |         |                              |         |                              |        
|                                                  | Trade sales                           |                              | $       | 4,159.9                      |         | $                            | 4,178.2
|                                                  | Related party sales                   |                              |         | 333.7                        |         |                              | 376.0  
|                                                  | Tolling fees                          |                              |         | 24.5                         |         |                              | 21.0   
|                                                  |                                       |                              |         |                              |         |                              |        
|                                                  |                                       | Total revenues               |         |                              | 4,518.1 |                              |        
|Cost of goods sold                                |                                       |                              | 3,902.7 |                              |         | 3,990.1                      |        
|                                                  |                                       |                              |         |                              |         |                              |        
|Gross profit                                      |                                       |                              | 615.4   |                              |         | 585.1                        |        
|Expenses:                                         |                                       |                              |         |                              |         |                              |        
|                                                  | Selling, general and administrative   |                              |         | 325.0                        |         |                              | 302.9  
|                                                  | Research and development              |                              |         | 54.6                         |         |                              | 62.5   
|                                                  | Restructuring and plant closing costs |                              |         | 7.7                          |         |                              | 46.6   
|                                                  |                                       |                              |         |                              |         |                              |        
|                                                  |                                       | Total expenses               |         |                              | 387.3   |                              |        
|                                                  |                                       |                              |         |                              |         |                              |        
|Operating income                                  |                                       |                              | 228.1   |                              |         | 173.1                        |        
|Interest expense                                  |                                       |                              | (335.6  | )                            |         | (323.4                       | )      
|Interest income                                   |                                       |                              | 1.6     |                              |         | 3.4                          |        
|Loss on sale of accounts receivable               |                                       |                              | (5.5    | )                            |         | (12.8                        | )      
|Other income (expense)                            |                                       |                              | 1.3     |                              |         | (2.0                         | )      
|                                                  |                                       |                              |         |                              |         |                              |        
|Income (loss) before income taxes                 |                                       |                              | (110.1  | )                            |         | (161.7                       | )      
|Income tax benefit (expense)                      |                                       |                              | 41.5    |                              |         | 26.0                         |        
|Minority interests in subsidiaries' income (loss) |                                       |                              | 0.1     |                              |         | (2.2                         | )      
|                                                  |                                       |                              |         |                              |         |                              |        
|Income (loss) before accounting change            |                                       |                              | (68.5   | )                            |         | (137.9                       | )      
|Cumulative effect of accounting change            |                                       |                              |        |                              |         | (1.5                         | )      
|                                                  |                                       |                              |         |                              |         |                              |        
|Net income (loss)                                 |                                       |                              | (68.5   | )                            |         | (139.4                       | )      
|Other comprehensive income (loss)                 |                                       |                              | 53.4    |                              |         | (80.1                        | )      
|                                                  |                                       |                              |         |                              |         |                              |        
|Comprehensive income (loss)                       |                                       | $                            | (15.1   | )                            | $       | (219.5                       | )      
|                                                  |                                       |                              |         |                              |         |                              |        

See
accompanying notes to consolidated financial statements.

F-97

---





HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        Consolidated Statements of Equity        (Millions of Dollars)

|                                                                                         |  | Members' Equity |  |   |       |  |   |        |  
|---------------------------------------------------------------------------------------- |  | --------------- |  | - | ----- |  | - | ------ | -
|
|
|Balance, January 1, 2000                                                                 |  | 1,000           |  | $ | 518.1 |  | $ | 49.7   |  
|Distribution to Holdings                                                                 |  |                 |  |   |      |  |   | (8.0   | )
|Net income                                                                               |  |                 |  |   |      |  |   | 82.0   |  
|Other comprehensive loss                                                                 |  |                 |  |   |      |  |   |       |  
|                                                                                         |  |                 |  |   |       |  |   |        |  
|Balance, December 31, 2000                                                               |  | 1,000           |  |   | 518.1 |  |   | 123.7  |  
|Refund of distribution                                                                   |  |                 |  |   |      |  |   | 4.0    |  
|Capital contribution due to modification of senior subordinated discount notes (Note 12) |  |                 |  |   | 47.4  |  |   |       |  
|Net loss                                                                                 |  |                 |  |   |      |  |   | (139.4 | )
|Other comprehensive loss                                                                 |  |                 |  |   |      |  |   |       |  
|                                                                                         |  |                 |  |   |       |  |   |        |  
|Balance, December 31, 2001                                                               |  | 1,000           |  |   | 565.5 |  |   | (11.7  | )
|Net loss                                                                                 |  |                 |  |   |      |  |   | (68.5  | )
|Other comprehensive income                                                               |  |                 |  |   |      |  |   |       |  
|                                                                                         |  |                 |  |   |       |  |   |        |  
|Balance, December 31, 2002                                                               |  | 1,000           |  | $ | 565.5 |  | $ | (80.2  | )
|                                                                                         |  |                 |  |   |       |  |   |        |  

F-98

---





HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        Consolidated Statements of Cash Flows        (Millions of Dollars)

|                                                                                         |                                       | Year Ended
December 31, 2002 |        | Year Ended
December 31, 2001 |   | Year Ended
December 31, 2000 |       
|---------------------------------------------------------------------------------------- | ------------------------------------- | ---------------------------- | ------ | ---------------------------- | - | ---------------------------- | ------
|
|Cash Flows From Operating Activities:                                                    |                                       |                              |        |                              |   |                              |       
|Net income (loss)                                                                        |                                       | $                            | (68.5  | )                            | $ | (139.4                       | )     
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                       |                              |        |                              |   |                              |       
|Depreciation and amortization                                                            |                                       |                              | 256.2  |                              |   | 227.1                        |       
|Provision for losses on accounts receivable                                              |                                       |                              | 4.1    |                              |   | 2.8                          |       
|Noncash restructuring and plant closing charges                                          |                                       |                              | 6.1    |                              |   | 7.8                          |       
|Noncash interest expense                                                                 |                                       |                              | 101.5  |                              |   | 91.7                         |       
|Deferred income taxes                                                                    |                                       |                              | (59.8  | )                            |   | (43.1                        | )     
|Gain on foreign currency transactions                                                    |                                       |                              | (29.5  | )                            |   | 7.6                          |       
|Loss on disposals of fixed assets                                                        |                                       |                              |       |                              |   | 6.6                          |       
|Minority interests in subsidiaries                                                       |                                       |                              | (0.1   | )                            |   | 2.2                          |       
|Equity in earnings of investment in unconsolidated affiliates                            |                                       |                              | (0.2   | )                            |   | (0.1                         | )     
|Changes in operating assets and liabilitiesnet of effects of acquisitions:              |                                       |                              |        |                              |   |                              |       
|                                                                                         | Accounts receivables                  |                              |        | 1.6                          |   |                              | 84.9  
|                                                                                         | Change in receivables sold, net       |                              |        | 99.7                         |   |                              | 5.1   
|                                                                                         | Inventories                           |                              |        | (12.6                        | ) |                              | 17.3  
|                                                                                         | Prepaid expenses                      |                              |        | (9.1                         | ) |                              | 4.5   
|                                                                                         | Other current assets                  |                              |        | (15.0                        | ) |                              | 1.7   
|                                                                                         | Other noncurrent assets               |                              |        | (9.4                         | ) |                              | 10.3  
|                                                                                         | Accounts payable                      |                              |        | (0.5                         | ) |                              | (106.7
|                                                                                         | Accrued and other current liabilities |                              |        | (70.2                        | ) |                              | 21.3  
|                                                                                         | Other noncurrent liabilities          |                              |        | (16.2                        | ) |                              | (10.5 
|                                                                                         |                                       |                              |        |                              |   |                              |       
|Net cash provided by operating activities                                                |                                       |                              | 178.1  |                              |   | 191.1                        |       
|                                                                                         |                                       |                              |        |                              |   |                              |       
|Investing Activities:                                                                    |                                       |                              |        |                              |   |                              |       
|Capital expenditures                                                                     |                                       |                              | (190.5 | )                            |   | (291.0                       | )     
|Acquisition of businesses and minority interest                                          |                                       |                              | (9.0   | )                            |   | (209.5                       | )     
|Net cash received from unconsolidated affiliates                                         |                                       |                              | 8.0    |                              |   | 11.3                         |       
|Advances to unconsolidated affiliates                                                    |                                       |                              | (3.3   | )                            |   | (2.5                         | )     
|Proceds from sale of fixed assets                                                        |                                       |                              | 5.9    |                              |   |                             |       
|                                                                                         |                                       |                              |        |                              |   |                              |       
|Net cash used in investing activities                                                    |                                       |                              | (188.9 | )                            |   | (491.7                       | )     
|                                                                                         |                                       |                              |        |                              |   |                              |       
|                                                                                         |                                       |                              |        |                              |   | (continued)                  |       

F-99

---



|Financing Activities:                            |                                                     |   |      |        |   |      |       |   |       |       
|------------------------------------------------ | --------------------------------------------------- | - | ---- | ------ | - | ---- | ----- | - | ----- | ------
|                                                 | Net borrowings under revolving loan facilities      |   | $    | (43.6  | ) | $    | 79.5  |   | $     | 8.0   
|                                                 | Issuance of senior and senior subordinated notes    |   |      | 300.0  |   |      | 233.2 |   |       |      
|                                                 | Proceeds from other long-term debt                  |   |      |       |   |      | 4.4   |   |       |      
|                                                 | Repayment of long-term debt                         |   |      | (245.0 | ) |      | (2.4  | ) |       | (131.0
|                                                 | Debt issuance costs                                 |   |      | (10.3  | ) |      | (6.5  | ) |       |      
|                                                 | Refund of distribution from Holdings                |   |      |       |   |      | 4.0   |   |       |      
|                                                 | Cash distribution to Holdings                       |   |      |       |   |      |      |   |       | (8.0  
|                                                 |                                                     |   |      |        |   |      |      
|                                                 | Net cash provided by (used in) financing activities |   |      | 1.1    |   |      | 312.2 |   |       | (131.0
|                                                 |                                                     |   |      |        |   |      |      
|Effect of exchange rate changes on cash          |                                                     |   | 1.2  |        |   | 6.2  |       |   | 2.3   |       
|                                                 |                                                     |   |      |        |   |      |      
|Increase (decrease) in cash and cash equivalents |                                                     |   | (8.5 | )      |   | 17.8 |       |   | (72.8 | )     
|Cash and cash equivalents at beginning of year   |                                                     |   | 83.9 |        |   | 66.1 |       |   | 138.9 |       
|                                                 |                                                     |   |      |        |   |      |      
|Cash and cash equivalents at end of year         |                                                     | $ | 75.4 |        | $ | 83.9 |       | $ | 66.1  |       
|                                                 |                                                     |   |      |        |   |      |      
|Supplemental cash flow information:              |                                                     |   |      |        |   |      |       |   |       |       
|                                                 | Cash paid for interest                              |   |      | 235.0  |   |      | 222.2 |   |       | 234.6 
|                                                 | Cash paid for income taxes                          |   |      | 12.3   |   |      | 15.0  |   |       | 22.0  

Supplemental non-cash financing activities:

The Company partially finances its property and liability insurance premiums. During the year ended December 31, 2002, the Company issued notes payable for
approximately $2.6 million and recorded prepaid insurance for the same amount, which will be amortized over the period covered.

See
accompanying notes to consolidated financial statements.

F-100

---





HUNTSMAN INTERNATIONAL HOLDINGS LLC AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Basis of Presentation

Huntsman International Holdings LLC ("Holdings" or the "Company"), through its wholly owned subsidiary Huntsman International LLC ("Huntsman International"), is a
global manufacturer and marketer of differentiated and commodity chemicals through its four principal businesses: Polyurethanes, Performance Products, Pigments and Base Chemicals.

Effective
June 30, 1999, pursuant to a contribution agreement and ancillary agreements between Holdings, Huntsman Specialty Chemicals Corporation ("Huntsman Specialty"), Imperial
Chemicals Industries PLC ("ICI") and Huntsman International, the Company acquired assets and stock representing ICI's polyurethane chemicals, selected petrochemicals (including ICI's 80% interest in
the Wilton olefins facility) and titanium dioxide businesses and Huntsman Specialty's propylene oxide business. In addition, the Company also acquired the remaining 20% ownership interest in the
Wilton olefins facility from BP Chemicals, Limited ("BP Chemicals").

Holdings
is owned 60% by Huntsman Specialty, 30% by ICI and its affiliates, approximately 9% by institutional investors and approximately 1% by HMP Equity Holdings Corporation ("HMP").



On March 31, 2001, the Company closed a definitive purchase agreement with an affiliate of Rhodia S.A. for the acquisition of the European surfactants
business of Albright & Wilson, a subsidiary of Rhodia S.A., for approximately $180 million.



On August 31, 2000, the Company acquired the Morton global thermoplastic polyurethanes business from Rohm and Haas Company for an aggregate purchase price
of $120 million.

2.     Summary of Significant Accounting Policies



The consolidated financial statements of the Company include its majority owned subsidiaries. Intercompany transactions and balances are eliminated.



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.



Highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents.

F-101

---





In September 2000, Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," was issued. SFAS No. 140 provides consistent standards for distinguishing transfers of financial assets that are
sales from those that are secured borrowings. The Company adopted SFAS No. 140 during the year ended December 31, 2001 as required. Adoption of the accounting requirements of this
standard did not have a material impact on the statement of operations or financial position.

The
Company securitizes certain trade receivables in connection with a revolving securitization program. The Company retains the servicing rights which are a retained interest in the
securitized receivables. Losses are recorded on the sale and are based on the carrying value of the receivables as allocated between the receivables sold and the retained interests and their relative
fair value at the date of the transfer. Retained interests are subsequently carried at fair value which is estimated based on the present value of expected cash flows, calculated using management's
best estimates of key assumptions including credit losses and discount rates commensurate with the risks involved. For more information, see "Note 11Securitization of Accounts
Receivable" below.



Inventories are stated at the lower of cost or market using the weighted average method.



Property, plant and equipment is stated at cost. Depreciation is provided utilizing the straight line method over the estimated useful lives of the assets ranging
from 3 to 20 years. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in income. Of the total plant
and equipment, approximately $458 million is depreciated using the straight-line method on a group basis at a 5% composite rate. When capital assets representing complete groups of
property are disposed of, the difference between the disposal proceeds and net book value is credited or charged to income. When miscellaneous assets are disposed of, the difference between asset
costs and salvage value is charged or credited to accumulated depreciation.

Periodic
maintenance and repairs applicable to major units of manufacturing facilities are accounted for on the prepaid basis by capitalizing the costs of the turnaround and amortizing
the costs over the estimated period until the next turnaround. Normal maintenance and repairs of all other plant and equipment are charged to expense as incurred. Renewals, betterments and major
repairs that materially extend the useful life of the assets are capitalized, and the assets replaced, if any, are retired.

Interest
costs are capitalized as part of major construction projects. Interest expense capitalized as part of plant and equipment was $10.5 million, $9.3 million, and
$10.3 million for the years ended December 31, 2002, 2001 and 2000, respectively.



Investments in companies in which the Company exercises significant influence, generally ownership interests from 20% to 50%, are accounted for using the equity
method.

F-102

---





Intangible assets, which consist of patents, trademarks, technology and certain other agreements, are stated at their fair market values at the time of
acquisition, and are amortized using the straight line method over their estimated useful lives of five to fifteen years or over the life of the related agreement.



The Company evaluates the carrying value of long-term assets based upon current and anticipated undiscounted cash flows and recognizes an impairment
when such estimated cash flows will be less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the difference between carrying value and fair value.



The carrying amount reported in the balance sheet for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the
immediate or short-term maturity of these financial instruments. The carrying value of the Company's senior credit facilities approximates fair value since they bear interest at a floating
rate plus an applicable margin. The fair value of the Company's senior notes and senior subordinated discount notes approximate book value. The fair value of the Company's senior subordinated notes
and senior discount notes was approximately $893.7 million and $212.6 million, respectively, at December 31, 2002. The fair value of the Company's senior subordinated and senior
discount notes was approximately $963.0 million and $236.3 million, respectively, at December 31, 2001. The Company's senior discount notes are thinly traded.



Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 requires that an entity recognize all derivative instruments as assets or liabilities in the balance sheet and measure those instruments at
fair value. The accounting for
the change in the fair value depends on the use of the instrument. The adoption of SFAS No. 133 resulted in a cumulative increase in net loss of $1.5 million and a cumulative increase to
accumulated other comprehensive loss of $1.1 million. For more information, see "Note 13Derivative Instruments and Hedging Activities."



The Company and its U.S. subsidiaries are organized as limited liability companies. These entities are treated similar to a partnership for U.S. income tax
purposes, and therefore are not subject to U.S. federal tax on their income. Subsidiaries outside the U.S. are generally taxed on the income generated in the local country.

Deferred
income taxes are provided for temporary differences between financial statement income and taxable income using the asset and liability method in accordance with SFAS
No. 109, "Accounting for Income Taxes." The Company does not provide for income taxes or benefits on the undistributed earnings of its
international subsidiaries as earnings are reinvested and, in the opinion of management, will continue to be reinvested indefinitely.

F-103

---





Environmental related restoration and remediation costs are recorded as liabilities and expensed when site restoration and environmental remediation and cleanup
obligations are either known or considered probable and the related costs can be reasonably estimated. Other environmental expenditures, which are principally maintenance or preventative in nature,
are recorded when incurred and are expensed or capitalized as appropriate.



Generally, the accounts of the Company's subsidiaries outside of the United States consider local currency to be functional currency. Accordingly, assets and
liabilities are translated at rates prevailing at the balance sheet date. Revenues, expenses, gains and losses are translated at a weighted average rate for the period. Cumulative translation
adjustments are recorded to equity as a component of accumulated other comprehensive income. Transaction gains and losses are recorded in the statement of operations and were net gains of
$48.3 million, $4.8 million and $8.2 million for the years ended December 31, 2002, 2001 and 2000, respectively.



The Company generates revenues through sales in the open market, raw material conversion agreements and long-term supply contracts. The Company
recognizes revenue when it is realized or realizable and earned, which is when the product is shipped to the customer.



Research and development costs are expensed as incurred.



Earnings per member equity unit is not presented because it is not considered meaningful information due to the Company's ownership by a single equity holder.



Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform with the current presentation.



On January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach. Upon adoption of SFAS
No. 142, the Company was required to reassess the useful lives of all acquired intangibles and perform an impairment test on goodwill. In the first quarter of 2002, the Company completed the
assessment of useful lives and concluded that no adjustment to the amortization period of intangible assets was necessary.

The
initial adoption of SFAS No. 142 had no impact on the Company's financial statements for the year ended December 31, 2002, as the Company has no goodwill.

On
January 1, 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." This statement establishes a single accounting model for the impairment or disposal of long-lived assets. The impact of adopting this pronouncement was not
material.

F-104

---





In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived assets and the
associated asset retirement costs. This statement requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred by capitalizing it as part of the carrying amount of the long-lived assets. As required by SFAS No. 143,
the Company will adopt this new accounting standard on January 1, 2003. The Company is currently evaluating the effects of adopting this pronouncement.

In
April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Other Technical Corrections." In addition to amending or rescinding pronouncements to make various technical corrections, clarify meanings or describe applicability, SFAS
No. 145 precludes companies from recording gains or losses from extinguishment of debt as an extraordinary item. The Company was required to adopt this statement as of January 1, 2003.
The adoption of SFAS No. 145 is not expected to have a material effect on our consolidated financial statements.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated With Exit or Disposal Activities." SFAS
No. 146 requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. Under previous guidance, certain exit costs were accrued
upon management's commitment to an exit plan, which is generally before an actual liability has been incurred. We will adopt this pronouncement in the first quarter of 2003. The adoption of SFAS
No. 146 is not expected to have a material effect on the consolidated financial statements.

In
January 2003, the FASB issued Financial Interpretation No. ("FIN") 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Guarantees of Indebtedness of Others." FIN No. 45 requires recognition of a liability for the obligation undertaken upon issuing a guarantee. This liability would be
recorded at the inception date of the guarantee and would be measured at fair value. The disclosure provisions of the interpretation are effective for the financial statements as of
December 31, 2002. The liability recognition provisions apply prospectively to any guarantees issued or modified after December 31, 2002. The Company is currently evaluating the effects
of adopting this statement.

3.     Inventories

Inventories consist of the following (in millions):

December 31,
2002

December 31,
2001Raw materials

$
130.2

$
132.5Work in progress


25.9


20.4Finished goods


385.8


328.7Total


541.9


481.6Materials and supplies


19.4


19.8Net

$
561.3

$
501.4


In
the normal course of operations, the Company exchanges raw materials with other companies. No gains or losses are recognized on these exchanges, and the net open exchange positions
are valued

F-105

---



at
the Company's cost. The Company did not owe any inventory under open exchange agreements at December 31, 2002. The amount deducted from inventory under open exchange agreements owed by the
Company at December 31, 2001 was $4.4 million (16.7 million pounds of feedstock and products), which represented the amount payable by the Company under open exchange agreements.

4.     Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment are as follows (in millions):

December 31,
2002

December 31,
2001Land

$
42.9

$
36.3Buildings


157.7


129.9Plant and equipment


3,446.3


2,919.0Construction in progress


172.7


231.4Total


3,819.6


3,316.6Less accumulated depreciation


(748.5
)

(477.1
)Net

$
3,071.1

$
2,839.5


5.     Investments in Unconsolidated Affiliates

The Company's ownership percentage and investments in unconsolidated affiliates, primarily manufacturing joint ventures, are as follows (in millions):

December 31,
2002

December 31,
2001Louisiana Pigment Company, L.P. (50%)

$
131.4

$
139.8Rubicon, Inc. (50%)


1.3


5.7Others


1.2


1.5Total

$
133.9

$
147.0


Summarized
approximate financial information of such affiliated companies as a group as of December 31, 2002 and 2001 and for the years then ended is presented below (in
millions):

December 31,
2002

December 31,
2001Assets

$
488.3

$
533.1Liabilities


222.5


229.3Revenues


651.3


681.4Net income


0.4


0.5The Company's equity in:Net assets


133.9


147.0Net income


0.2


0.1


F-106

---



6.     Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2002 and 2001 were as follows (dollars in millions):

|                                    |  | December 31, 2002 |       | December 31, 2001
|----------------------------------- |  | ----------------- | ----- | -----------------
|
|Patents, trademarks, and technology |  | $                 | 312.3 |                  
|Non-compete agreements              |  |                   | 49.1  |                  
|Other intangibles                   |  |                   | 38.0  |                  
|                                    |  |                   |       |                  
|Total                               |  | $                 | 399.4 |                  
|                                    |  |                   |       |                  

Amortization
expense for intangibles for the years ended December 31, 2002, 2001 and 2000 was $33.9 million, $33.0 million and $26.3 million,
respectively. Estimated future amortization expense for intangible assets through December 31, 2007 is as follows (dollars in millions):

Annual
Expense2003 through 2004

$
46.72005 through 2007

$
38.1


7.     Other Noncurrent Assets

Other noncurrent assets consist of the following (in millions):

December 31,
2002

December 31,
2001Prepaid pension assets

$
146.2

$
198.4Debt issuance costs


54.5


57.2Capitalized turnaround expense


47.6


33.0Receivables from affiliates


18.6


16.7Spare parts inventory


46.2


36.2Other noncurrent assets


19.5


21.4Total

$
332.6

$
362.9


8.     Accrued Liabilities

Accrued liabilities consist of the following (in millions):

December 31,
2002

December 31,
2001Raw materials and services

$
217.7

$
212.7Interest


61.3


59.1Taxes (income, property and VAT)


41.4


18.4Payroll, severance and related costs


67.4


49.7Volume and rebates accruals


52.5


50.1Restructuring and plant closing costs


7.1


31.3Other miscellaneous accruals


76.4


75.4Total

$
523.8

$
496.7


F-107

---



9.     Other Noncurrent Liabilities

Other noncurrent liabilities consist of the following (in millions):

December 31,
2002

December 31,
2001Pension liabilities

$
82.3

$
54.6Other postretirement benefits


10.8


10.4Environmental accruals


19.3


22.9Payable to affiliate


37.9


37.5Other noncurrent liabilities


8.0


6.5Total

$
158.3

$
131.9


10.   Restructuring and Plant Closing Costs

The Company has incurred restructuring and plant closing costs totaling $7.7 million and $46.6 million for the years ended December 31, 2002
and 2001, respectively.



During 2002, the Performance Products segment recorded $4.6 million in charges which relate to restructuring and the write-down of fixed
assets. Property, plant and equipment was reduced by $3.0 million as a charge of $1.4 million was recorded to write-down the assets at the surfactants plant in Alcover, Spain
which was closed during 2002, and an additional $1.6 million was recorded to write-down the assets of the Italy ETO plant and various closed sales offices. The remaining
$1.6 million are for other costs related to the restructuring.

In
2002, the Pigments segment recorded $3.1 million in asset write-downs related to the closure of the Company's titanium dioxide manufacturing facility in Greatham, UK.



During 2001, the Polyurethanes segment announced a cost reduction program which included closure of the Shepton Mallet, U.K. polyols manufacturing facility by the
end of 2002 resulting in a charge of $44.7 million. The program included reduction in workforce of approximately 270 employees at the Shepton Mallet facility and other locations. Approximately
$7.8 was recorded to write-down the fixed assets, $36.1 for employee termination benefits and $0.8 for other exit costs.

The
Pigments segment recorded $1.9 million in restructuring charges which related to a workforce reduction of approximately 50 employees.

The
restructuring and plant closing costs were recorded in the following accounts: $7.8 million in property, plant, and equipment, and $38.8 million in accrued liabilities.
At December 31, 2002 there remained $7.1 million of these costs in accrued liabilities for workforce reductions and other exit costs.

11.   Securitization of Accounts Receivable

On December 21, 2000, the Company initiated a five-year revolving securitization program under which certain trade receivables were and will be
transferred to an off balance sheet special purpose entity at a discount. Under the terms of the agreements, the Company and its subsidiaries continue to service the receivables in exchange for a 1%
fee of the outstanding receivables and is subject to recourse provisions. In 2000, proceeds from initial sales totaled approximately $175 million. In October 2002, the Company expanded
its accounts receivable securitization program by $25 million. At

F-108

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December 31,
2002, the special purpose entity had outstanding $180 million in mid-term notes and $100 million in commercial paper.

For
the years ended December 31, 2002 and 2001, new sales totaled approximately $3,220 million and $3,132 million, respectively, and cash collections reinvested
totaled approximately $3,160 million and $3,180 million, respectively. Servicing fees received were approximately $3 million each year for the years 2002 and 2001, and are
recorded as a reduction in the loss on sale of accounts receivable in the statements of operations. The retained interest in the receivables was approximately $112 million and
$60 million, and as of December 31, 2002 and 2001, respectively. The value of the retained interest is subject to credit and interest rate risk.

The
key economic assumptions used in valuing the residual interest at December 31, 2002 are presented below:

Weighted average life (in months)

2Credit losses (annual rate)

Less than 1%Discount rate (annual rate)

5%


A
10% and 20% adverse change in any of the key economic assumptions would not have a material impact on the fair value of the retained interest. Total receivables over 60 days
past due as of December 31, 2002 and 2001 were $11.2 million and $15.6 million, respectively.

12.   Long-term Debt

Long-term debt outstanding as of December 31, 2002 and 2001 is as follows (in millions):

December 31,
2002

December 31,
2001Senior Secured Credit Facilities:Revolving loan facility

$
67.0

$
110.6Term A dollar loan


109.7


195.6Term A euro loan (in U.S. dollar equivalent)


138.5


208.6Term B loan


526.3


553.7Term C loan


526.3


553.7Senior Notes


300.0


Senior Subordinated Notes


1,076.8


1,003.1Senior Discount Notes


381.8


335.5Senior Subordinated Discount Notes


308.9


266.3Other long-term debt


29.2


12.6Subtotal


3,464.5


3,239.7Less current portion


(43.9
)

(5.3
)Total

$
3,420.6

$
3,234.4




The revolving loan facility of up to $400 million matures on June 30, 2005 with no scheduled commitment reductions. Both the term A dollar loan and
the term A euro loan facilities mature on June 30, 2005 and are payable in semi-annual installments commencing December 31, 2003 with the amortization increasing over time.
The term B loan facility matures on June 30, 2007 and the term C loan facility matures on June 30, 2008. The term B and term C loan facilities require payments in annual installments of
$5.48 million each, commencing June 30, 2004, with the remaining unpaid balances due on final maturity.

F-109

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Interest
rates for the Company's senior secured credit facilities (the "Senior Secured Credit Facilities") are based upon, at the Company's option, either a eurocurrency rate (libor) or
a base rate (prime) plus the applicable spread. The applicable spreads vary based on a pricing grid, in the case of eurocurrency based loans, from 1.25% to 4.25% per annum depending on the loan
facility and whether specified conditions have been satisfied and, in the case of base rate loans, from zero to 3.00% per annum. As of December 31, 2002, 2001 and 2000 the average interest
rates on the Senior Secured Credit Facilities were 5.8%, 7.6% and 9.2%, respectively.

The
obligations of Huntsman International under the Senior Secured Credit Facilities are supported by guarantees of the Company and Huntsman International's domestic and certain foreign
subsidiaries (collectively the "Guarantors") as well as pledges of 65% of the voting stock of certain non-U.S. subsidiaries.

The
Senior Secured Credit Facilities contain covenants relating to incurrence of debt, purchase and sale of assets, limitations on investments, affiliate transactions, change in control
provisions and maintenance of certain financial ratios. The financial covenants include a leverage ratio, interest coverage ratio, minimum consolidated net worth level and a limit on capital
expenditures. The Senior Secured Credit Facilities also limit the payment of dividends generally to the amount required by the members to pay income taxes. Management believes that the Company and
Huntsman International are in compliance with the covenants of the Senior Secured Credit Facilities as of December 31, 2002.

Huntsman
Specialty has an obligation to purchase ICI's 30% interest in Holdings (the "ICI 30% Interest") on or before July 1, 2003. In addition, HMP has an option to acquire the
ICI 30% Interest on or before May 15, 2003, which was originally granted pursuant to an agreement with ICI (the "Option Agreement"). Concurrently, $160 million was paid to ICI for the
Company's senior subordinated discount notes due 2009 that were originally issued to ICI (the "B Notes"), subject to certain conditions including the obligation to make an additional payment of
$100 million plus accrued interest to ICI. The B Notes have been pledged to ICI as collateral security for such additional payment. The Huntsman Specialty obligation is secured by a lien
on 30% of the outstanding membership interests in Holdings held by Huntsman Specialty (the "HIH Pledged Interest"). The Option Agreement does not terminate Huntsman Specialty's obligations to ICI.
However, if HMP exercises the option, Huntsman Specialty's obligation would be effectively terminated. If HMP does not exercise the option, Huntsman Specialty would continue to be obligated to ICI.
Accordingly, if neither HMP exercises its option nor Huntsman Specialty otherwise satisfies its obligation to ICI with respect to ICI's put right, ICI could foreclose on the Holdings Pledged Interest.
Such a foreclosure would constitute a "change of control" and an event of default under the HI Credit Facilities and would give certain put rights to the holders of the HI Notes and the holders of the
HIH Notes.



In March 2002, Huntsman International issued $300 million 9.875% Senior Notes (the "Senior Notes"). Interest on the notes is payable
semi-annually and the Senior Notes mature on March 1, 2009. The Senior Notes are fully and unconditionally guaranteed on a joint and several basis by the Guarantors. The Senior
Notes may be redeemed, in whole or in part, at any time by Huntsman International prior to March 1, 2006 at 100% of the face value plus a "make whole" premium, as defined in the applicable
indenture. After March 1, 2006, the Senior Notes may be redeemed, in whole or in part, at a redemption price decline from 104.937% to 100% after March 1, 2008.

The
Company also has outstanding $600 million and €450 million 10.125% Senior Subordinated Notes (the "Notes"). Interest on the Notes is payable
semi-annually and the Notes mature on July 1, 2009. The Notes are fully and unconditionally guaranteed on a joint and several basis by the Guarantors. The Notes may be redeemed, in
whole or in part, at any time by the Company on or after

F-110

---



July 1,
2004, at percentages ranging from 105% to 100% at July 1, 2007 of their face amount, plus accrued and unpaid interest.

The
Senior Notes and the Notes contain covenants relating to the incurrence of debt, limitations on distributions, asset sales and affiliate transactions, among other things. They also
contain a change of control provision requiring Huntsman International to offer to repurchase the Senior Notes and the Notes upon a change of control. Management believes that Huntsman International
is in compliance with the covenants of the Senior Notes and the Notes as of December 31, 2002.



On June 30, 1999, the Company issued Senior Discount Notes and Senior Subordinated Discount Notes (collectively, the "Discount Notes") to ICI with initial
stated values of $242.7 million and $265.3 million, respectively. The Discount Notes are due December 31, 2009. Interest on the Senior Discount Notes will accrue at 13.375% per
annum. The Senior Discount Notes are redeemable prior to July 2004 for an amount equal to the net present value of 106.688% of the projected July 1, 2004 accreted value and thereafter at
stipulated redemption prices declining to 100% of accreted value in 2007. The Senior Subordinated Discount Notes had a stated rate of 8% that originally was to reset to a market rate in
June 2002 and can be redeemed at 100% of accreted value at any time until June 30, 2004. On December 21, 2001, the Company and ICI agreed to modify the terms of the Senior
Subordinated Discount Notes, including deferring the reset date until September 2004. For financial reporting purposes, the Senior Subordinated Discount Notes were initially recorded at their
estimated fair value of $224 million based upon prevailing market rates at June 30, 1999. Interest on the Discount Notes is paid in kind. The Senior Discount Notes contain limits on the
incurrence of debt, restricted payments, liens, transactions with affiliates, and merger and sales of assets. As of December 31, 2002 and 2001, the Senior Discount Notes include
$139.1 million and $92.8 million of accrued interest, respectively. As of December 31, 2002 and 2001, the Senior Subordinated Discount Notes include $83.8 million and
$57.4 million of accrued interest, respectively, and $40.2 million and $56.4 million of discount, respectively.

On
December 21, 2001 the Company and ICI agreed to modify the terms of the Senior Subordinated Discount Notes. The interest rate reset date was deferred until
September 2004. The modification of the terms resulted in a significant decrease in the present value of the future cash flow of the debt and, as a result, the debt was treated effectively as
an extinguishment and reissuance of the debt. The debt was
recorded using a 16% interest rate, the estimated market rate for the debt as of December 20, 2001. The reduction in the debt of $47.4 million has been reflected as a capital
contribution as the debt was held by a related party.

The
scheduled maturities of long-term debt are as follows (in millions):

December 31,
20022003


43.92004


148.62005


156.22006


12.92007


517.1Later Years


2,585.8$
3,464.5


F-111

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13.   Derivative Instruments and Hedging Activities

The Company is exposed to market risks, such as changes in interest rates, currency exchange rates and commodity pricing. As a result, the Company enters into
transactions including derivative instruments to manage these risks. The overall risk management philosophy of the Company is to manage the downside risks of these activities. Primary goals of the
Company's risk management activities include: (1) reducing the impact of fluctuations in variable interest rates and meeting the requirements of certain credit agreements; (2) reducing
the short-term impact from certain movements in foreign exchange rates on earnings; (3) reducing the variability in the purchase price of certain feedstocks; and (4) hedging
the net investment position in euro functional currency entities.



Through the Company's borrowing activities, it is exposed to interest rate risk. Such risk arises due to the structure of the Company's debt portfolio, including
the duration of the portfolio and the mix of fixed and floating interest rates. The Company's senior credit facilities require that a certain portion of debt be at fixed rates through either interest
rate hedges or through other means that provide a similar effect. Actions taken to reduce interest rate risk include managing the mix and rate characteristics of various interest bearing liabilities
as well as entering into interest rate swaps, collars and options.

As
of December 31, 2002 and 2001, the Company had entered into various types of interest rate contracts to manage its interest rate risk on its long-term debt as
indicated below (in millions):

December 31, 2002

December 31, 2001Pay fixed swapsNotional amount

$
202.4

$
319.2Fair value

$
(11.8
)
$
(12.7
)Weighted average pay rate


5.72
%

5.84
%Maximum weighted average pay rate


6.62
%

6.55
%Maturing


2004


2002-2004Interest rate collarsNotional amount

$
150.0

$
275.0Fair value

$
(11.6
)
$
(8.3
)Weighted average cap rate


7.00
%

7.00
%Weighted average floor rate


5.08
%

5.35
%Maximum weighted average floor rate


6.25
%

6.12
%Maturing


2004


2002-2004


The
Company purchases both interest rate swaps and interest rate collars to reduce the impact of changes in interest rates on its floating-rate long-term debt.
Under interest rate swaps, the Company agrees 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. The collars entitle the Company to receive from the counterparties (major banks) the amounts, if any, by which the Company's interest
payments on certain of its floating-rate borrowings exceed a certain rate, and require the Company to pay to the counterparties (major banks) the amount, if any, by which the Company's
interest payments on certain of its floating-rate borrowings are less than a certain rate.

The
majority of the interest rate contracts have been designated as cash flow hedges of future interest payments on its variable rate debt. The fair value of these interest rate
contracts designated as hedges as of December 31, 2002 and 2001 was a loss of approximately $15.6 million and $13.4 million, respectively, which is recorded in other noncurrent
liabilities and in accumulated other comprehensive income (loss) to the extent of the effective portions of the hedging instruments. Gains and losses related to these contracts will be reclassified
from other comprehensive income (loss) into earnings in

F-112

---



the
periods in which the related hedged interest payments are made. As of December 31, 2002, losses of approximately $9.8 million are expected to be reclassified into earnings over the
next twelve months. Gains and losses on these agreements, including amounts recorded related to hedge ineffectiveness, are reflected as interest expense in the statement of operations. A net loss of
$4.2 million was recorded in interest expense in the year ended December 31, 2002. A net gain of $2.9 million was recorded in interest expense in the year ended
December 31, 2001.

As
of December 31, 2002 and 2001 swap agreements with a fair value liability of $7.8 million and $7.6 million, respectively have not been designated as a hedge for
financial reporting purposes. Accordingly, $0.2 million and $7.6 million for the years ended December 31, 2002 and 2001 is recognized in interest expense.

The
Company is exposed to credit losses in the event of nonperformance by a counterparty to the derivative financial instruments. The Company anticipates, however, that the
counterparties will be able to fully satisfy their obligations under the contracts. Market risk arises from changes in interest rates.



The Company may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. These
contracts are not designated as hedges for financial reporting purposes and are recorded at fair value. As of December 31, 2002, there was a notional amount of $1.8 million outstanding
for such contracts. At December 31, 2001, there were no outstanding contracts. During the years ended December 31, 2002 and 2001, the Company recognized losses of $0.1 million and
$3.0 million, respectively, from these activities.



Because feedstocks used by the Company are subject to price volatility, the Company uses commodity futures and swaps to reduce the risk associated with certain of
these feedstocks. These instruments are designated as cash flow hedges of future inventory purchases and fair value hedges of inventory currently held and trading activities. The
mark-to-market gains and losses of qualifying cash flow hedges are recorded as a component of other comprehensive income until the underlying transactions are recognized in
earnings. The mark-to-market gains and losses of non-qualifying, excluded and ineffective portions of hedges are recorded in cost of goods sold in the accompanying
statement of operations. For the year ended December 31, 2002, there were no gains or losses on derivatives qualifying as cash flow hedges. As of December 31, 2002, the fair value of all
commodity derivatives included in other current liabilities was $0.8 million. For the year ended December 31, 2001, the net losses on derivatives qualifying as cash flow hedges were
$0.9 million and were recorded in other comprehensive income. As of December 31, 2001 the fair value of all commodity derivatives included as other current assets and current liabilities
was $1.0 million and $1.1 million, respectively.

During
the year ended December 31, 2002 and 2001, the Company recorded $3.5 million and $11.1 million, respectively, as an increase in cost of goods sold related to
net losses from settled contracts and the change in fair value (unrealized gains and losses) on the contracts that are effective
economic hedges of commodity price exposures, but do not meet the SFAS No. 133 definition of hedging instruments. As of December 31, 2002, $0.8 million and $0.2 million,
were included in other current assets and liabilities, respectively. As of December 31, 2001, $2.0 million and $1.0 million were included in other current assets and liabilities,
respectively.

F-113

---







The Company hedges its net investment position in euro functional currency entities. To accomplish this, a portion of the Company's debt is euro denominated and
designated as a hedge of net investments. Currency effects of these hedges produced net losses of approximately $95.9 million and net gains of approximately $19.5 million, in other
comprehensive income (foreign currency translation adjustments) for the years ended December 31, 2002 and 2001, respectively. As of December 31, 2002 and 2001, there was a cumulative net
loss of approximately $32.7 million and a cumulative net gain of approximately $63.2 million, respectively.

14.   Income Taxes

The income (loss) before income tax consists of the following (in millions):

|                      |  | Year Ended December 31, 2002 |        | Year Ended December 31, 2001 |   | Year Ended December 31, 2000 |  
|--------------------- |  | ---------------------------- | ------ | ---------------------------- | - | ---------------------------- | -
|U.S. income (loss)    |  | $                            | 12.2   |                              | $ | (116.0                       | )
|Foreign income (loss) |  |                              | (122.3 | )                            |   | (45.7                        | )
|                      |  |                              |        |                              |   |                              |  
|Total                 |  | $                            | (110.1 | )                            | $ | (161.7                       | )
|                      |  |                              |        |                              |   |                              |  

The
provision (benefit) for income taxes consists of the following (in millions):

|         |          | Year Ended
December 31,
2002 |       | Year Ended
December 31,
2001 |   | Year Ended
December 31,
2000
|-------- | -------- | ---------------------------- | ----- | ---------------------------- | - | ----------------------------
|U.S.:    |          |                              |       |                              |   |                             
|         | Current  |                              | $     | 1.4                          |   | $                           
|         | Deferred |                              |       |                             |   |                             
|Foreign: |          |                              |       |                              |   |                             
|         | Current  |                              |       | 16.9                         |   |                             
|         | Deferred |                              |       | (59.8                        | ) |                             
|         |          |                              |       |                              |   |                             
|Total    |          | $                            | (41.5 | )                            | $ | (26.0                       
|         |          |                              |       |                              |   |                             

The
following schedule reconciles the differences between the United States federal income taxes at the United States statutory rate to the Company's provision (benefit) for income taxes
(in millions):

|                                                            |  | Year Ended
December 31,
2002 |       | Year Ended
December 31,
2001 |   | Year Ended
December 31,
2000 |  
|----------------------------------------------------------- |  | ---------------------------- | ----- | ---------------------------- | - | ---------------------------- | -
|Income taxes at U.S. federal statutory rate                 |  | $                            | (38.6 | )                            | $ | (56.6                        | )
|Income not subject to U.S. federal income tax               |  |                              | 8.0   |                              |   | 40.5                         |  
|State income taxes                                          |  |                              | 0.4   |                              |   | 0.4                          |  
|Foreign country incentive tax benefits                      |  |                              | (17.0 | )                            |   | (14.5                        | )
|Foreign country currency exchange gain (loss)               |  |                              | 0.8   |                              |   | 0.3                          |  
|Foreign income tax rate in excess of federal statutory rate |  |                              | 8.8   |                              |   | 4.4                          |  
|Other                                                       |  |                              | (3.9  | )                            |   | (0.5                         | )
|                                                            |  |                              |       |                              |   |                              |  
|Total                                                       |  | $                            | (41.5 | )                            | $ | (26.0                        | )
|                                                            |  |                              |       |                              |   |                              |  
|Effective income tax rate                                   |  |                              | 38    | %                            |   | 16                           | %

F-114

---



The
components of deferred tax assets and liabilities are as follows (in millions):

|                                                         |  | December 31, 2002 |       | December 31, 2001 |  
|-------------------------------------------------------- |  | ----------------- | ----- | ----------------- | -
|
|Deferred income tax assets:                              |  |                   |       |                   |  
|Net operating loss carryforwards                         |  | $                 |      |                   | $
|Tax basis of plant and equipment in excess of book basis |  |                   |      |                   |  
|Employee benefits                                        |  |                   |      |                   |  
|Other accruals and reserves                              |  |                   | 45.2  |                   |  
|Valuation allowance                                      |  |                   |      |                   |  
|                                                         |  |                   |       |                   |  
|Total                                                    |  |                   | 45.2  |                   |  
|Deferred income tax liabilities:                         |  |                   |       |                   |  
|Book basis of plant and equipment in excess of tax basis |  |                   |      |                   |  
|Employee benefits                                        |  |                   |      |                   |  
|Other accruals and reserves                              |  |                   | (14.0 | )                 |  
|                                                         |  |                   |       |                   |  
|Total                                                    |  |                   | (14.0 | )                 |  
|                                                         |  |                   |       |                   |  
|Net deferred tax asset (liability)                       |  | $                 | 31.2  |                   | $
|                                                         |  |                   |       |                   |  

The
Company has net operating loss carryforwards ("NOLs") of approximately $622 million in various foreign jurisdictions. Most of the NOLs have no expiration date. The remaining
NOLs begin to expire in 2006. If the valuation allowance is reversed, substantially all of the benefit will be allocated to reduce other noncurrent intangible assets. During 2002 and 2001,
respectively, the Company reversed $19.1 million and $18.2 million of the valuation allowance and reduced goodwill by $17.5 million and $18.2 million, respectively.

The
Company does not provide for income taxes or benefits on the undistributed earnings of its international subsidiaries as earnings are reinvested and, in the opinion of management,
will continue to be reinvested indefinitely. In consideration of the Company's corporate structure, upon distribution of these earnings, certain of the Company's subsidiaries would be subject to both
income taxes and withholding taxes in the various international jurisdictions. It is not practicable to estimate the amount of taxes that might be payable upon distribution.

The
Company is treated as a partnership for U.S. federal income tax purposes and as such is generally not subject to U.S. income tax, but rather such income is taxed directly to the
Company's owners. The net difference of the book basis of the U.S. assets and liabilities over the tax basis of those assets and liabilities is approximately $377 million.

F-115

---



15.   Other Comprehensive Income (loss)

The components of other comprehensive income (loss) are as follows (in millions):

|                                                                  |  | December 31, 2002 |        | December 31, 2001 |   | December 31, 2000 |   | January 1, 2000 |       
|----------------------------------------------------------------- |  | ----------------- | ------ | ----------------- | - | ----------------- | - | --------------- | ------
|
|Foreign currency translation adjustments                          |  | $                 | (38.5  | )                 | $ | 147.2             |   | $               | (185.7
|Additional minimum pension liability, net of tax of $37.7 million |  |                   | (88.1  | )                 |   | (88.1             | ) |                 |      
|Additional minimum pension liabilityunconsolidated affiliate     |  |                   | (5.4   | )                 |   | (5.4              | ) |                 |      
|Unrealized loss on securities                                     |  |                   | (2.7   | )                 |   | (2.7              | ) |                 |      
|Net unrealized loss on derivative instruments                     |  |                   | (11.6  | )                 |   | 2.4               |   |                 | (14.0 
|Cumulative effect of accounting change                            |  |                   | (1.1   | )                 |   | 0.0               |   |                 | (1.1  
|                                                                  |  |                   |        |                   |   |                   |   |                 |       
|Total                                                             |  | $                 | (147.4 | )                 | $ | 53.4              |   | $               | (200.8
|                                                                  |  |                   |        |                   |   |                   |   |                 |       

16.   Employee Benefit Plans



The Company sponsors various contributory and non-contributory defined benefit pension plans covering employees in the U.S., the U.K., Netherlands,
Belgium, Canada and a number of other countries. The Company funds the material plans through trust arrangements (or local equivalents) where the assets of the fund are held separately from the
employer. The level of funding is in line with local practice and in accordance with the local tax and supervisory requirements. The plan assets consist primarily of equity and fixed income
securities.

The
Company also sponsors unfunded post-retirement benefit plans other than pensions which provide medical and life insurance benefits covering certain employees in the U.S.
and Canada. In 2002, the healthcare trend rate used to measure the expected increase in the cost of benefits was assumed to be 11% per annum decreasing to 5.0% per annum after five years. In 2001, the
healthcare trend rate used to measure the expected increase in the cost of benefits was assumed to be 8% per annum decreasing to 5% per annum after seven years.

F-116

---



The
following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet at December 31, 2002 and 2001 (in millions):

|                                              |                                                                                  | Year Ended
December 31, 2002                                                    |         | Year Ended
December 31, 2001 |       
|--------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ------- | ---------------------------- | ------
|
|Change in benefit obligation                  |                                                                                  |                                                                                 |         |                              |       
|                                              | Benefit obligation as of beginning of year                                       |                                                                                 | $       | 959.0                        |       
|                                              |                                                                                  | Service cost                                                                    |         |                              | 34.1  
|                                              |                                                                                  | Interest cost                                                                   |         |                              | 56.4  
|                                              |                                                                                  | Plan losses                                                                     |         |                              | 1.8   
|                                              |                                                                                  | Foreign exchange impact                                                         |         |                              | 124.3 
|                                              |                                                                                  | Benefits paid                                                                   |         |                              | (42.1 
|                                              |                                                                                  | Employee contributions                                                          |         |                              | 2.4   
|                                              |                                                                                  | Plan amendments                                                                 |         |                              | 4.3   
|                                              |                                                                                  | Acquisitions                                                                    |         |                              |      
|                                              |                                                                                  | Other                                                                           |         |                              | 4.2   
|                                              |                                                                                  |                                                                                 |         |                              |       
|Benefit obligation as of end of year          |                                                                                  | $                                                                               | 1,144.4 |                              | $     
|                                              |                                                                                  |                                                                                 |         |                              |       
|Change in plan assets                         |                                                                                  |                                                                                 |         |                              |       
|                                              | Market value of plan assets as of beginning of year                              |                                                                                 | $       | 930.8                        |       
|                                              |                                                                                  | Actual return on plan assets                                                    |         |                              | (129.3
|                                              |                                                                                  | Company contributions                                                           |         |                              | 34.4  
|                                              |                                                                                  | Foreign exchange impact                                                         |         |                              | 110.3 
|                                              |                                                                                  | Benefits paid                                                                   |         |                              | (41.8 
|                                              |                                                                                  | Employee contributions                                                          |         |                              | 2.4   
|                                              |                                                                                  | Acquisitions                                                                    |         |                              | 0.5   
|                                              |                                                                                  | Other                                                                           |         |                              | 0.6   
|                                              |                                                                                  |                                                                                 |         |                              |       
|Market value of plan assets as of end of year |                                                                                  | $                                                                               | 907.9   |                              | $     
|                                              |                                                                                  |                                                                                 |         |                              |       
|Funded status                                 |                                                                                  |                                                                                 |         |                              |       
|                                              | Funded status                                                                    |                                                                                 | $       | (236.5                       | )     
|                                              | Unrecognized net actuarial loss                                                  |                                                                                 |         | 427.1                        |       
|                                              | Unrecognized prior service cost                                                  |                                                                                 |         | 5.8                          |       
|                                              | Adjustment to recoginize minimum pension liability in other comprehensive income |                                                                                 |         | (131.5                       | )     
|                                              |                                                                                  |                                                                                 |         |                              |       
|                                              | Accrued benefit cost                                                             |                                                                                 | $       | 64.9                         |       
|                                              |                                                                                  |                                                                                 |         |                              |       
|Change in funded status                       |                                                                                  |                                                                                 |         |                              |       
|                                              | Prepaid (accrued) expense as of beginning of year                                |                                                                                 | $       | 171.7                        |       
|                                              |                                                                                  | Net periodic pension cost                                                       |         |                              | (34.8 
|                                              |                                                                                  | Employer contributions                                                          |         |                              | 34.4  
|                                              |                                                                                  | Foreign exchange impact                                                         |         |                              | 27.9  
|                                              |                                                                                  | Benefits paid                                                                   |         |                              | 0.6   
|                                              |                                                                                  | Other items                                                                     |         |                              | (3.4  
|                                              |                                                                                  | Adjustment to recognize minimum pension liability in other comprehensive income |         |                              | (131.5
|                                              |                                                                                  |                                                                                 |         |                              |       
|Prepaid (accrued) expense as of end of year   |                                                                                  | $                                                                               | 64.9    |                              | $     
|                                              |                                                                                  |                                                                                 |         |                              |       
|Components of net periodic benefit cost       |                                                                                  |                                                                                 |         |                              |       
|                                              | Service cost                                                                     |                                                                                 | $       | 36.4                         |       
|                                              | Employee contributions                                                           |                                                                                 |         | (2.4                         | )     
|                                              | Interest cost                                                                    |                                                                                 |         | 56.4                         |       
|                                              | Return on plan assets                                                            |                                                                                 |         | (67.5                        | )     
|                                              | Unrecognized gains                                                               |                                                                                 |         | 11.9                         |       
|                                              |                                                                                  |                                                                                 |         |                              |       
|                                              | Net periodic cost                                                                |                                                                                 | $       | 34.8                         |       
|                                              |                                                                                  |                                                                                 |         |                              |       

F-117

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The following assumptions were used in the above calculations:

|                                                     |                                | Year Ended
December 31, 2002 |      | Year Ended
December 31, 2001 |     
|---------------------------------------------------- | ------------------------------ | ---------------------------- | ---- | ---------------------------- | ----
|
|Weighted-average assumptions as of December 31, 2002 |                                |                              |      |                              |     
|                                                     | Discount rate                  |                              | 5.51 | %                            | 6.62
|                                                     | Expected return on plan assets |                              | 7.00 | %                            | N/A 
|                                                     | Rate of compensation increase  |                              | 3.39 | %                            | 4.00

The
following table sets forth the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit plans as of December 31, 2002
and 2001:

December 31,
2002

December 31,
2001Defined benefit plans with accumulated benefit obligations in excess of plan assets:Projected benefit obligation

$
765.4

$
65.2Accumulated benefit obligation


616.3


48.6Fair value of plan assets


544.8


25.1Defined benefit plans with plan assets in excess of accumulated benefit obligations:Projected benefit obligation

$
379.0

$
893.9Accumulated benefit obligation


341.7


781.3Fair value of plan assets


363.1


904.7


In
addition to the benefit plans described above, certain employees of Huntsman International participate in pension plans of Huntsman LLC. As of December 31, 2002 and 2001, an
allocation of the pension liability of $3.1 million and $2.8 million, respectively, was recorded as other noncurrent liabilities.



The Company has defined contribution plans covering its domestic employees and employees in some foreign subsidiaries who have completed at least two years of
service.

The
Company's total combined expense for the above defined contribution plans for the years ended December 31, 2002, 2001 and 2000 were approximately $6.1 million,
$6.3 million, and $2.9 million, respectively.

17.   Commitments and Contingencies

The Company has various purchase commitments for materials and supplies entered into in the ordinary course of business. These agreements extend from three to ten
years and the purchase price is generally based on market prices subject to certain minimum price provisions.

The
Company is 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. Based in part on the indemnities provided to the Company by ICI and Huntsman Specialty in connection with the transfer of businesses to the Company
and insurance

F-118

---



coverage,
management does not believe that the outcome of any of these matters will have a material adverse effect on financial condition or results of operations.

18.   Environmental Matters

The operation of any chemical manufacturing plant and the distribution of chemical products and their related production of by-products and wastes,
entails risk of adverse environmental effects. As a result, the Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution,
protection of the environment and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In the ordinary course of
business, the Company is subject to frequent environmental inspections and monitoring by governmental enforcement authorities. In addition, the Company's production facilities require operating
permits that are subject to renewal, modification and, in certain circumstances, revocation. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or
prohibitions on plant operations, substantial fines and civil or criminal sanctions. Moreover, changes in environmental regulations could inhibit or interrupt the Company's operations, or require it
to change its equipment or operations, and any such changes could have a material adverse effect on its businesses. Accordingly, given the Company's businesses, environmental or regulatory matters may
cause us significant unanticipated losses, costs or liabilities.

Under
some environmental laws, the Company may be jointly and severally liable for the costs of environmental contamination on or from its properties and at off-site
locations where it disposed of or arranged for the disposal or treatment of hazardous wastes. For example, in the United States under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and similar state laws, a current owner or operator of real property may be liable for such costs regardless of whether the owner or operator owned or operated the
real property at the time of the release of the hazardous substances and regardless of whether the release or disposal was in compliance with law at the time it occurred. In addition, under the United
States Resource Conservation and Recovery Act of 1976, as amended, and similar state laws, as the holder of permits to treat or store hazardous wastes, the Company may, under some circumstances, be
required to remediate contamination at its properties regardless of when the contamination occurred. Similar laws are being developed or are in effect to varying degrees in other parts of the world,
most notably in the EU. For example, in the U.K., the contaminated land regime now provides a detailed framework for the identification, management and remediation of contaminated sites. This law will
likely increase governmental scrutiny of the Company's U.K. facilities.

The
Company may also incur future costs for capital improvements and general compliance under environmental laws, including costs to acquire, maintain and repair pollution control
equipment. Capital expenditures are planned, for example, under national legislation implementing the EU Directive on Integrated Pollution Prevention and Control. Under this directive the majority of
the Company's European plants will, over the next few years, be required to obtain governmental authorizations which will regulate air and water discharges, waste management and other matters relating
to the impact of operations on the environment, and to conduct site assessments to evaluate environmental conditions. Although the implementing legislation in most Member States is not yet in effect,
it is likely that additional expenditures may be necessary in some cases to meet the requirements of authorizations under this directive. In particular, the Company believes that related expenditures
to upgrade its wastewater treatment facilities at several sites may be necessary and associated costs may be material. Wastewater treatment upgrades unrelated to this initiative also are planned at
certain facilities. In addition, the Company may also incur material expenditures, beyond currently anticipated expenditures, in complying with EU Directives, including the Directive on Hazardous
Waste Incineration, the Seveso II Directive, which governs major accident hazards, as well as the Water Framework Directive. It is also possible that additional expenditures to reduce air emissions at
two of

F-119

---



the
Company's U.K. facilities may be material. Capital expenditures and, to a lesser extent, costs and operating expenses relating to environmental matters will be subject to evolving regulatory
requirements and will depend on the timing of the promulgation and enforcement of specific standards which impose requirements on the Company's operations. Therefore, the Company cannot assure you
that material capital expenditures beyond those currently anticipated will not be required under environmental laws.

The
Company's operations involve the handling, transportation and use of numerous hazardous substances. From time to time, these operations may result in violations under environmental
laws including spills or other releases of hazardous substances into the environment. In the event of a catastrophic incident, the Company could incur material costs or experience interruption in its
operations as a result of addressing the incident and implementing measures to prevent such incidents in the future. Currently, the Company is aware of the following matters:

The
Texas Commission on Environmental Quality (the "TCEQ," formerly the Texas Natural Resource Conservation Commission or TNRCC) has issued certain notices of violation relating to air
emissions and wastewater issues at the Company's Port Neches, Texas facility and filed an amended administrative petition with respect to certain of these violations on January 12, 2001. The
Company met with the TCEQ on several occasions in 2001 and early 2002 and reached a tentative settlement with the agency on penalties totaling $100,000. Although management does not anticipate it, it
is possible that the terms of an air permit, which the Company applied for as a result of the settlement, may cause it to incur costs related to equipment serving this plant and others in the vicinity
that could be material.

On
October 6, 2002, a leak of sulphuric acid from two tanks located near the Company's Whitehaven, U.K. plant was discovered. About 342 to 347 tonnes of acid were released onto
the ground and into the soil near the tanks. Although the Company took immediate steps to contain the spillage and recover acid, a quantity of acid reached a nearby beach via a geological fault. The
Company believes the tanks were not owned by the Company; however, it did own the acid in the tanks. The EA and the Health and Safety Executive are investigating the incident. Whether charges will be
brought or other actions taken by the regulatory authorities is unknown at this time. Although the Company can give no assurances, based on currently available information and its understanding of
similar investigations and penalties in the past, the Company believes that, if any charges are brought or actions taken and the Company is ultimately found to be legally responsible, the probable
penalties would not be material to its financial position or results of operations.

The
Company is aware that there is or may be soil or groundwater contamination at some of its facilities resulting from past operations. Based on available information and the
indemnification rights (including indemnities provided by Huntsman Specialty, ICI, Rhodia S.A. and The Dow Chemical Company, for the facilities that each of them transferred to the Company), the
Company believes that the costs to investigate and remediate known contamination will not have a material adverse effect on its financial condition, results of operations or cash flows; however, it
cannot give any assurance that such indemnities will fully cover the costs of investigation and remediation, that it will not be required to contribute to such costs or that such costs will not be
material.

By
letter dated March 6, 2003, the Company's subsidiary, Huntsman Ethyleneamines Ltd., was notified by the TCEQ of a probable enforcement action arising out of the
inspection of the Freeport, Texas facility on December 16-19, 2002. Seven types of violations relating to Texas Clean Air Act requirements were cited. No penalty demand was made,
although penalties are expected.

Given
the nature of the Company's business, violations of environmental laws may result in restrictions imposed on its operating activities, substantial fines, penalties, damages or
other costs, any of which could have a material adverse effect on its business, financial condition, results of operations or cash flows.

F-120

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19.   Related-party Transactions

The Company shares numerous services and resources with Huntsman LLC (the 60% owner of Holdings), ICI, and subsidiaries of both companies. In accordance with
various agreements Huntsman LLC and ICI provide management, operating, maintenance, steam, electricity, water and other services to the Company. The Company also relies on Huntsman LLC, ICI and their
subsidiaries to supply certain raw materials and to purchase products. Rubicon, Inc., and Louisiana Pigment Company are unconsolidated 50 percent owned affiliates of the Company. The
amounts which the Company purchased from or sold to related parties are as follows (in millions):

|                              |  | Year Ended
December 31, 2002 |       | Year Ended
December 31, 2001 |   | Year Ended
December 31, 2000
|----------------------------- |  | ---------------------------- | ----- | ---------------------------- | - | ----------------------------
|
|Huntsman LLC and subsidiaries |  | $                            | 226.6 |                              | $ | 57.7                        
|ICI and subsidiaries          |  |                              | 188.6 |                              |   | 252.6                       
|Unconsolidated affiliates     |  |                              | 392.7 |                              |   | 23.4                        

Included
in purchases from Huntsman LLC and its subsidiaries for the years ended December 31, 2002, 2001 and 2000 is $65 million, $54 million, and
$64 million, respectively, of allocated management costs which are reported in selling, general and administrative expenses. The amounts which the Company is owed or owes to related parties are
as follows (in millions):

|                              |  | December 31, 2002 |      | December 31, 2001
|----------------------------- |  | ----------------- | ---- | -----------------
|
|Huntsman LLC and subsidiaries |  | $                 | 16.3 |                  
|ICI and subsidiaries          |  |                   | 39.9 |                  
|Unconsolidated affiliates     |  |                   | 9.0  |                  

20.   Lease Commitments

The Company leases a number of assets which are accounted for as operating leases. The lease obligation reflected in the Company's statement of operations as
rental expense, totaled $15.8 million, $18.5 million and $23.7 million for the three years ended December 31, 2002, 2001and 2000, respectively. The minimum future rental
payments due under existing agreements are by year (in millions):

Year

Amount2003

$
16.82004


12.52005


8.72006


6.12007


5.3Later years


51.0


The
Company also has lease obligations accounted for as capital leases which are included in other long term debt. The present value of the future net minimum lease payments is
$13.7 million at December 31, 2002.

F-121

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21.   Industry Segment and Geographic Area Information

The Company derives its revenues, earnings and cash flows from the manufacture and sale of a wide variety of specialty and commodity chemical products. The
Company has four reportable operating segments: Polyurethanes, Performance Products, Pigments and Base Chemicals. During 2002 the Company realigned its principal operating segments. The most
significant change was the split of the former Specialty Chemicals segment into two segments: Polyurethanes and Performance Products. The former Tioxide segment was renamed Pigments and the former
Petrochemicals segment was renamed Base Chemicals.

The
major products of each reportable operating segment are as follows:

Segment

ProductsPolyurethanes

MDI, TDI, TPU, polyols, aniline, PO, TBA and MTBEPerformance Products

Surfactants, ethyleneamines and other performance chemicalsPigments

Titanium dioxideBase Chemicals

Ethylene, propylene, benzene, cyclohexane and paraxylene


Sales
between segments are generally recognized at external market prices. For the years ended December 31, 2002, 2001 and 2000, sales to ICI and its affiliates accounted for
approximately 6%, 6%, and 8% of consolidated revenues, respectively.

F-122

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Financial
information for each of the Company's reportable operating segments is as follows (dollars in millions):

|                               |                                               | Year Ended
December 31,
2002 |   | Year Ended
December 31,
2001 |         | Year Ended
December 31,
2000 |         
|------------------------------ | --------------------------------------------- | ---------------------------- | - | ---------------------------- | ------- | ---------------------------- | --------
|Net Sales:                     |                                               |                              |   |                              |         |                              |         
|                               | Polyurethanes                                 |                              | $ | 2,066.0                      |         | $                            | 2,073.7 
|                               | Performance Products                          |                              |   | 574.3                        |         |                              | 455.3   
|                               | Pigments                                      |                              |   | 880.3                        |         |                              | 872.1   
|                               | Base Chemicals                                |                              |   | 1,097.5                      |         |                              | 1,268.6 
|                               | Eliminations                                  |                              |   | (100.0                       | )       |                              | (94.5   
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Total                        |   | $                            | 4,518.1 |                              | $       
|                               |                                               |                              |   |                              |         |                              |         
|Segment Income (Loss)(1):      |                                               |                              |   |                              |         |                              |         
|                               | Polyurethanes                                 |                              | $ | 230.4                        |         | $                            | 132.7   
|                               | Performance Products                          |                              |   | 16.6                         |         |                              | 16.4    
|                               | Pigments                                      |                              |   | 14.0                         |         |                              | 95.6    
|                               | Base Chemicals                                |                              |   | (33.4                        | )       |                              | (23.0   
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Total                        |   |                              | 227.6   |                              |         
|                               | Unallocated administrative and other items(3) |                              |   | 0.5                          |         |                              | (48.6   
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Operating income             |   | $                            | 228.1   |                              | $       
|                               |                                               |                              |   |                              |         |                              |         
|EBITDA(2):                     |                                               |                              |   |                              |         |                              |         
|                               | Polyurethanes                                 |                              | $ | 365.1                        |         | $                            | 262.7   
|                               | Performance Products                          |                              |   | 27.2                         |         |                              | 21.1    
|                               | Pigments                                      |                              |   | 68.3                         |         |                              | 139.4   
|                               | Base Chemicals                                |                              |   | 13.8                         |         |                              | 20.4    
|                               | Unallocated administrative and other items(3) |                              |   | 5.7                          |         |                              | (58.2   
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Total                        |   | $                            | 480.1   |                              | $       
|                               |                                               |                              |   |                              |         |                              |         
|Depreciation and Amortization: |                                               |                              |   |                              |         |                              |         
|                               | Polyurethanes                                 |                              | $ | 134.7                        |         | $                            | 130.1   
|                               | Performance Products                          |                              |   | 10.6                         |         |                              | 4.6     
|                               | Pigments                                      |                              |   | 54.2                         |         |                              | 43.8    
|                               | Base Chemicals                                |                              |   | 47.3                         |         |                              | 43.4    
|                               | Unallocated administrative and other items(3) |                              |   | 9.4                          |         |                              | 5.2     
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Total                        |   | $                            | 256.2   |                              | $       
|                               |                                               |                              |   |                              |         |                              |         
|Capital Expenditures:          |                                               |                              |   |                              |         |                              |         
|                               | Polyurethanes                                 |                              | $ | 58.3                         |         | $                            | 77.6    
|                               | Performance Products                          |                              |   | 11.5                         |         |                              | 5.9     
|                               | Pigments                                      |                              |   | 97.4                         |         |                              | 161.4   
|                               | Base Chemicals                                |                              |   | 23.3                         |         |                              | 29.3    
|                               | Unallocated administrative and other items(3) |                              |   |                             |         |                              | 16.8    
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Total                        |   | $                            | 190.5   |                              | $       
|                               |                                               |                              |   |                              |         |                              |         
|Total Assets:                  |                                               |                              |   |                              |         |                              |         
|                               | Polyurethanes                                 |                              | $ | 3,489.4                      |         | $                            | 3,217.4 
|                               | Performance Products                          |                              |   | 307.7                        |         |                              | 316.2   
|                               | Pigments                                      |                              |   | 1,415.3                      |         |                              | 1,386.6 
|                               | Base Chemicals                                |                              |   | 1,052.6                      |         |                              | 939.3   
|                               | Unallocated administrative and other items(3) |                              |   | 3,337.0                      |         |                              | 3,246.1 
|                               | Eliminations                                  |                              |   | (4,557.9                     | )       |                              | (4,279.1
|                               |                                               |                              |   |                              |         |                              |         
|                               |                                               | Total                        |   | $                            | 5,044.1 |                              | $       
|                               |                                               |                              |   |                              |         |                              |         

---

F-123

---



|                   |                              | Year Ended
December 31,
2002 |   | Year Ended
December 31,
2001 |         | Year Ended
December 31,
2000 |        
|------------------ | ---------------------------- | ---------------------------- | - | ---------------------------- | ------- | ---------------------------- | -------
|
|By Geographic Area |                              |                              |   |                              |         |                              |        
|Net Sales:         |                              |                              |   |                              |         |                              |        
|                   | United States                |                              | $ | 1,742.4                      |         | $                            | 1,573.1
|                   | United Kingdom               |                              |   | 1,537.9                      |         |                              | 1,628.5
|                   | Netherlands                  |                              |   | 894.6                        |         |                              | 929.8  
|                   | Other nations                |                              |   | 1,457.6                      |         |                              | 1,344.5
|                   | Adjustments and eliminations |                              |   | (1,114.4                     | )       |                              | (900.7 
|                   |                              |                              |   |                              |         |                              |        
|                   |                              | Total                        |   | $                            | 4,518.1 |                              | $      
|                   |                              |                              |   |                              |         |                              |        
|Long-lived Assets: |                              |                              |   |                              |         |                              |        
|                   | United States                |                              | $ | 1,172.0                      |         | $                            | 1,251.4
|                   | United Kingdom               |                              |   | 1,153.2                      |         |                              | 1,022.2
|                   | Netherlands                  |                              |   | 396.3                        |         |                              | 338.3  
|                   | Other nations                |                              |   | 714.3                        |         |                              | 611.7  
|                   | Corporate                    |                              |   | 3.1                          |         |                              | 18.6   
|                   |                              |                              |   |                              |         |                              |        
|                   |                              | Total                        |   | $                            | 3,438.9 |                              | $      
|                   |                              |                              |   |                              |         |                              |        

22.   Selected Quarterly Financial Data (Unauditedin millions)

|                  |  | Three Months
Ended
March 31,
2002 |       | Three Months
Ended
June 30,
2002 |   | Three Months
Ended
September 30,
2002 |  | Three Months
Ended
December 31,
2002 |         | Year Ended
December 31,
2002 |  
|----------------- |  | --------------------------------- | ----- | -------------------------------- | - | ------------------------------------- |  | ------------------------------------ | ------- | ---------------------------- | -
|Revenues          |  | $                                 | 997.9 |                                  | $ | 1,175.0                               |  | $                                    | 1,195.2 |                              | $
|Gross profit      |  |                                   | 125.5 |                                  |   | 157.6                                 |  |                                      | 174.9   |                              |  
|Operating income  |  |                                   | 24.5  |                                  |   | 81.8                                  |  |                                      | 67.9    |                              |  
|Net income (loss) |  |                                   | (31.4 | )                                |   | 7.3                                   |  |                                      | (13.3   | )                            |  

|                        |  | Three Months
Ended
March 31,
2001 |         | Three Months
Ended
June 30,
2001 |   | Three Months
Ended
September 30,
2001 |  | Three Months
Ended
December 31,
2001 |         | Year Ended
December 31,
2001 |  
|----------------------- |  | --------------------------------- | ------- | -------------------------------- | - | ------------------------------------- |  | ------------------------------------ | ------- | ---------------------------- | -
|Revenues                |  | $                                 | 1,151.6 |                                  | $ | 1,284.1                               |  | $                                    | 1,133.4 |                              | $
|Gross profit            |  |                                   | 166.0   |                                  |   | 170.6                                 |  |                                      | 139.6   |                              |  
|Operating income (loss) |  |                                   | 71.6    |                                  |   | 84.7                                  |  |                                      | 49.5    |                              |  
|Net income (loss)       |  |                                   | (4.4    | )                                |   | 0.5                                   |  |                                      | (28.0   | )                            |  

|                  |  | Three Months
Ended
March 31,
2000 |         | Three Months
Ended
June 30,
2000 |   | Three Months
Ended
September 30,
2000 |  | Three Months
Ended
December 31,
2000 |         | Year Ended
December 31,
2000
|----------------- |  | --------------------------------- | ------- | -------------------------------- | - | ------------------------------------- |  | ------------------------------------ | ------- | ----------------------------
|Revenues          |  | $                                 | 1,054.9 |                                  | $ | 1,154.7                               |  | $                                    | 1,136.9 |                             
|Gross profit      |  |                                   | 181.3   |                                  |   | 205.8                                 |  |                                      | 195.4   |                             
|Operating income  |  |                                   | 98.5    |                                  |   | 132.9                                 |  |                                      | 110.4   |                             
|Net income (loss) |  |                                   | 19.7    |                                  |   | 47.3                                  |  |                                      | 23.3    |                             

During
the three months ended December 31, 2002 and 2001, the Company incurred $7.7 million and $44.7 million of restructuring and plant closing
costs, respectively (see Note 10).

During
the quarter ended March 31, 2001, the Company adopted SFAS No. 133 and recorded a $1.5 million loss.

F-124

---



23.   Restatements

In the course of preparing a registration statement in October 2004 for the proposed initial public offering of the common stock of the company's ultimate
parent, the company determined to reclassify certain amounts in its consolidated statements of cash flows for the year ended December 31, 2002 and 2001, to accurately reflect the effects of
foreign currency exchange gains and losses and investments in unconsolidated affiliates. As a result, the company restated the accompanying consolidated statements of cash flows for the years ended
December 31, 2002 and 2001. There was no change to the line "Cash or Cash Equivalents" due to this restatement. A summary of the significant effects of this restatement is provided below
(dollars in millions):

|                                          |  | Year Ended December 31, 2002 |       | Year Ended December 31, 2001
|----------------------------------------- |  | ---------------------------- | ----- | ----------------------------
|
|Net cash provided by operating activities |  | $                            | 157.5 |                             
|Effect of exchange rate changes on cash   |  |                              | 21.8  |                             

F-125

---



EXHIBIT INDEX

|Number |  | Description                                                                                                                                                                                                                                                                                                                                                                      
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Certificate of Incorporation of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.1 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                                       
|3.2    |  | First Certificate of Amendment of the Certificate of Incorporation of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.2 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                 
|3.3    |  | Amended and Restated Bylaws of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.3 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                                        
|3.4    |  | First Amendment to the Amended and Restated Bylaws of HMP Equity Holdings Corporation (incorporated by reference to Exhibit 3.4 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                 
|3.5    |  | Certificate of Incorporation of ICI Alta Inc. (now known as Alta One Inc.) (incorporated by reference to Exhibit 3.5 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                            
|3.6    |  | Certificate of Amendment of Certificate of Incorporation of ICI Alta Inc. (now known as Alta One Inc.) (incorporated by reference to Exhibit 3.61 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                               
|3.7    |  | Bylaws of ICI Alta Inc. (now known as Alta One Inc.) (incorporated by reference to Exhibit 3.7 to our registration statement on Form S-4 (File No. 333-116100))                                                                                                                                                                                                                  
|4.1    |  | Indenture, dated as of June 30, 1999, among Huntsman International LLC (f/k/a Huntsman ICI Chemicals LLC), the Guarantors party thereto and Bank One, N.A., as Trustee, relating to the 101/2% Senior Subordinated Notes
due 2009 (incorporated by reference to Exhibit 4.1 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-85141))        
|4.2    |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in dollars (included as Exhibit A-3 to Exhibit 4.10)                                                                                                                                                                                                                                                                
|4.3    |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in euros (included as Exhibit A-4 to Exhibit 4.10)                                                                                                                                                                                                                                                                  
|4.4    |  | Form of Guarantee relating to the 101/8% Senior Subordinated Notes due 2009 (included as Exhibit E of Exhibit 4.10)                                                                                                                                                                                                                                                              
|4.5    |  | First Amendment, dated January 5, 2000, to Indenture, dated as of June 30, 1999, among Huntsman International LLC (f/k/a Huntsman ICI Chemicals LLC), as Issuer, each of the Guarantors named therein and Bank One, N.A., as Trustee
(incorporated by reference to Exhibit 4.6 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-85141))     
|4.6    |  | Indenture, dated as of March 13, 2001, among Huntsman International LLC, as Issuer, the Guarantors named therein and The Bank of New York, as Trustee, relating to 101/8% Senior Subordinated Notes due 2009 (incorporated
by reference to Exhibit 4.6 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)
|4.7    |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in dollars (included as Exhibit A-3 to Exhibit 4.6)                                                                                                                                                                                                                                                                 
|4.8    |  | Form of 101/8% Senior Subordinated Note due 2009 denominated in euros (included as Exhibit A-4 to Exhibit 4.6)                                                                                                                                                                                                                                                                   
|4.9    |  | Form of Guarantee relating to the 101/8% Senior Subordinated Notes due 2009 (included as Exhibit E of Exhibit 4.6)                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                                                  

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|4.10 |  | First Supplemental Indenture, dated as of January 11, 2002, among Huntsman International LLC, as Issuer, the Guarantors named therein and The Bank of New York, as Trustee, relating to 101/8% Senior Subordinated Notes
due 2009 (incorporated by reference to Exhibit 4.7 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)         
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.11 |  | Indenture, dated as of March 21, 2002, among Huntsman International LLC, as Issuer, the Guarantors named therein and Wells Fargo Bank Minnesota, National Association, as Trustee, relating to the 97/8% Senior Notes due
2009 (incorporated by reference to Exhibit 4.8 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)            
|4.12 |  | Form of 97/8% Senior Note due 2009 denominated in dollars (included as Exhibit A-3 to Exhibit 4.11)                                                                                                                                                                                                                                                                                                            
|4.13 |  | Form of 97/8% Senior Note due 2009 denominated in euros (included as Exhibit A-4 to Exhibit 4.11)                                                                                                                                                                                                                                                                                                              
|4.14 |  | Form of Guarantee relating to the 97/8% Senior Notes due 2009 (included as Exhibit E of Exhibit 4.11)                                                                                                                                                                                                                                                                                                          
|4.15 |  | Amended and Restated Guarantee, dated as of April 11, 2003, among the Guarantors named therein and Wells Fargo Bank Minnesota, National Association, as Trustee, relating to the 97/8% Senior Notes due 2009 (incorporated
by reference to Exhibit 4.15 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-106482))                                                         
|4.16 |  | Exchange and Registration Rights Agreement, dated as of March 21, 2002, among Huntsman International LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to the 97/8% Senior Notes due
2009 (incorporated by reference to Exhibit 4.9 to amendment no. 1 to the annual report on Form 10-K/A of Huntsman International LLC for the year ended December 31, 2001)           
|4.17 |  | Exchange and Registration Rights Agreement, dated as of April 11, 2003, among Huntsman International LLC, the Guarantors, as defined therein, and the Purchasers as defined therein, relating to the 97/8% Senior Notes due
2009 (incorporated by reference to Exhibit 4.17 to the registration statement on Form S-4 of Huntsman International LLC (File No. 333-106482))                                     
|4.18 |  | Amended and Restated Indenture, dated as of June 14, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $200,000,000
91/2% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.27 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279)) 
|4.19 |  | Form of Amended and Restated $200,000,000 91/2% Senior Subordinated Note due 2007 (included as Exhibit A to Exhibit 4.18)                                                                                                                                                                                                                                                                                      
|4.20 |  | First Supplemental Indenture, dated as of July 11, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $200,000,000
91/2% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.29 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))   
|4.21 |  | Second Supplemental Indenture, dated as of August 15, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $200,000,000
91/2% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 4.30 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                

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|4.22 |  | Amended and Restated Indenture, dated as of June 14, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $275,000,000
91/2% Senior Subordinated Notes due 2007 and the $125,000,000 Senior Subordinated Floating Rate Notes due 2007 (incorporated by reference to Exhibit 4.31 to the registration statement on Form S-4 of Huntsman LLC
(File No. 333-112279)) 
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.23 |  | Form of Amended and Restated Fixed Rate Note due 2007 (included as Exhibit A to Exhibit 4.22)                                                                                                                                                                                                                                                                                                                                                                                        
|4.24 |  | Form of Amended and Restated Floating Rate Note due 2007 (included as Exhibit B to Exhibit 4.22)                                                                                                                                                                                                                                                                                                                                                                                     
|4.25 |  | First Supplemental Indenture, dated as of July 11, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $275,000,000
91/2% Senior Subordinated Notes due 2007 and the $125,000,000 Senior Subordinated Floating Rate Notes due 2007 (incorporated by reference to Exhibit 4.34 to the registration statement on Form S-4 of Huntsman LLC
(File No. 333-112279))   
|4.26 |  | Second Supplemental Indenture, dated as of August 15, 2002, among Huntsman Corporation (now known as Huntsman LLC), as Issuer, each of the Guarantors party thereto and Wilmington Trust Company, as Trustee, relating to the $275,000,000
91/2% Senior Subordinated Notes due 2007 and the $125,000,000 Senior Subordinated Floating Rate Notes due 2007 (incorporated by reference to Exhibit 4.35 to the registration statement on Form S-4 of Huntsman LLC
(File No. 333-112279))
|4.27 |  | Indenture, dated as of September 30, 2003, among Huntsman LLC, the Guarantors party thereto and HSBC Bank USA, as Trustee, relating to the 115/8% Senior Secured Notes due 2010 (incorporated by reference to
Exhibit 4.36 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                                                                                                          
|4.28 |  | Form of unrestricted 115/8% Senior Secured Note due 2010 (included as Exhibit A-2 to Exhibit 4.27)                                                                                                                                                                                                                                                                                                                                                                                   
|4.29 |  | Form of guarantee relating to the 115/8% Senior Secured Notes due 2010 (included as Exhibit E to Exhibit 4.27)                                                                                                                                                                                                                                                                                                                                                                       
|4.30 |  | Exchange and Registration Rights Agreement, dated as of September 30, 2003, among Huntsman LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to $380,000,000 aggregate principal amount of the
115/8% Senior Secured Notes due 2010 (incorporated by reference to Exhibit 4.39 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                
|4.31 |  | Exchange and Registration Rights Agreement, dated as of December 12, 2003, among Huntsman LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to $75,400,000 aggregate principal amount of the
115/8% Senior Secured Notes due 2010 (incorporated by reference to Exhibit 4.40 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                  
|4.32 |  | Indenture, dated as of June 30, 2003, among Huntsman Advanced Materials LLC, as Issuer, each of the Guarantors named therein and Wells Fargo Bank Minnesota, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the
registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                                                                                                                          
|4.33 |  | Form of Unrestricted Fixed Rate Note (included as Exhibit A-3 to Exhibit 4.32)                                                                                                                                                                                                                                                                                                                                                                                                       
|4.34 |  | Form of Unrestricted Floating Rate Note (included as Exhibit A-4 to Exhibit 4.32)                                                                                                                                                                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|4.35 |  | Form of Guarantee (included as Exhibit E to Exhibit 4.32)                                                                                                                                                                                                                                                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.36 |  | Registration Rights Agreement, dated as of June 30, 2003, among Huntsman Advanced Materials LLC and the Guarantors named therein, as Issuers, and Deutsche Bank Securities Inc. and UBS Securities LLC, as Initial Purchasers (incorporated by
reference to Exhibit 4.5 to the registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                                
|4.37 |  | Indenture, dated as of May 9, 2003, among HMP Equity Holdings Corporation, as Issuer, ICI Alta Inc. (now known as Alta One Inc.), as Guarantor, and Wells Fargo Bank Minnesota, National Association, as Trustee, relating to the 15%
Senior Secured Discount Notes due 2008 (incorporated by reference to Exhibit 4.46 to the registration statement on Form S-4 of HMP Equity Holdings Corporation (File No. 333-116100))
|4.38 |  | Form of 15% Senior Secured Discount Note due 2008 (included as Exhibit A-2 to Exhibit 4.37)                                                                                                                                                                                                                                                                                                                                
|4.39 |  | Form of Guarantee (included as Exhibit E to Exhibit 4.37)                                                                                                                                                                                                                                                                                                                                                                  
|4.40 |  | Exchange and Registration Rights Agreement, dated as of May 9, 2003, among HMP Equity Holdings Corporation, ICI Alta Inc. (now known as Alta One Inc.), Credit Suisse First Boston LLC, and CIBC World Markets Corp (incorporated by
reference to Exhibit 4.49 to the registration statement on Form S-4 of HMP Equity Holdings Corporation (File No. 333-116100))                                                         
|4.41 |  | Indenture, dated August 1, 2000, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the registration statement on Form F-4 of Vantico Group S.A. (File
No. 333-13156))                                                                                                                                                                               
|4.42 |  | First Supplemental Indenture, dated as of April 10, 2003, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to the registration statement of Form S-4 of Huntsman
Advanced Materials LLC (File No. 333-115344))                                                                                                                                        
|4.43 |  | Second Supplemental Indenture, dated as of June 17, 2003, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.8 to the registration statement of Form S-4 of Huntsman
Advanced Materials LLC (File No. 333-115344))                                                                                                                                        
|4.44 |  | Third Supplemental Indenture, dated as of June 30, 2003, between Vantico Group S.A., as issuer, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.51 to the registration statement on Form S-4 of HMP Equity
Holdings Corporation (File No. 333-116100))                                                                                                                                        
|4.45 |  | Indenture, dated as of June 22, 2004, among Huntsman LLC, the Guarantors party thereto and HSBC Bank USA, as Trustee, relating to the 111/2% Senior Notes due 2012 and Senior Floating Rate Notes due 2011 (incorporated by
reference to Exhibit 4.1 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended June 30, 2004)                                                                        
|4.46 |  | Form of Restricted Fixed Rate Note due 2012 (included as Exhibit A-1 to Exhibit 4.45)                                                                                                                                                                                                                                                                                                                                      
|4.47 |  | Form of Restricted Floating Rate Note due 2011 (included as Exhibit A-2 to Exhibit 4.45)                                                                                                                                                                                                                                                                                                                                   
|4.48 |  | Form of Guarantee relating to the 111/2% Senior Notes due 2012 and Senior Floating Rate Notes due 2011 (included as Exhibit E to Exhibit 4.45)                                                                                                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                            

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|4.49 |  | Exchange and Registration Rights Agreement, dated of June 22, 2004, among Huntsman LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to $300,000,000 111/2% Senior Notes due 2012 and
$100,000,000 Senior Floating Rate Notes due 2011 (incorporated by reference to Exhibit 4.5 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended June 30, 2004)              
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.50 |  | Indenture, dated as of December 17, 2004, among Huntsman International LLC, as Issuer, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, relating to the 73/8% Senior Subordinated Notes
due 2015 and the 71/2% Senior Subordinated Notes due 2015 (incorporated by reference to Exhibit 4.1 to the current report on Form 8-K of Huntsman International LLC filed December 23, 2004)           
|4.51 |  | Form of 73/8% Senior Subordinated Note due 2015 (included as Exhibit A-1 to Exhibit 4.50)                                                                                                                                                                                                                                                                                                                                          
|4.52 |  | Form of 71/2% Senior Subordinated Note due 2015 (included as Exhibit A-2 to Exhibit 4.50)                                                                                                                                                                                                                                                                                                                                          
|4.53 |  | Form of Guarantee (included as Exhibit E to Exhibit 4.50)                                                                                                                                                                                                                                                                                                                                                                          
|4.54 |  | Exchange and Registration Rights Agreement, dated as of December 17, 2004, among Huntsman International LLC, the Guarantors as defined therein, and the Purchasers as defined therein, relating to the 73/8% Senior
Subordinated Notes due 2015 and the 71/2% Senior Subordinated Notes due 2015 (incorporated by reference to Exhibit 4.2 to the current report on Form 8-K of Huntsman International LLC filed December 23,
2004)
|10.1 |  | Business Consulting Agreement, dated as of June 3, 2003, between Huntsman International LLC and Jon M. Huntsman (incorporated by reference to Exhibit 10.41 to the registration statement on Form S-4 of Huntsman International LLC
(File No. 333-106482))                                                                                                                                                                         
|10.2 |  | Aircraft Dry Lease, dated as of September 14, 2001, between Jstar Corporation and Airstar Corporation (incorporated by reference to Exhibit 10.10 to the registration statement on Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                                                                                                                                 
|10.3 |  | Amended and Restated Subordinated Promissory Note, dated as of July 2, 2001, by Huntsman Corporation (now known as Huntsman LLC) in favor of Horizon Ventures, L.C. (incorporated by reference to Exhibit 10.11 to the registration statement on
Form S-4 of Huntsman LLC (File No. 333-112279))                                                                                                                                   
|10.4 |  | Credit Agreement, dated as of June 30, 2003, among Huntsman Advanced Materials LLC, certain subsidiaries from time to time party thereto and various lending institutions with Deutsche Bank AG, New York Branch, as Administrative Agent
(incorporated by reference to Exhibit 10.1 to the registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))                                           
|10.5 |  | Intercreditor and Collateral Agency Agreement, dated as of June 30, 2003, among Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank Minnesota, National Association, as trustee, Huntsman Advanced Materials LLC and the
subsidiaries listed therein (incorporated by reference to Exhibit 10.2 to the registration statement on Form S-4 of Huntsman Advanced Materials LLC (File No. 333-115344))       
|10.6 |  | Pledge Agreement, dated as of May 9, 2003, by HMP Equity Holdings Corporation, as Issuer and Pledgor, and Huntsman Holdings, LLC, Huntsman Group Inc. and ICI Alta Inc. (now known as Alta One Inc.), as Pledgors, and Wells Fargo
Bank Minnesota, National Association, as Trustee (incorporated by reference to Exhibit 10.28 to the registration statement on Form S-4 of HMP Equity Holdings Corporation (File No. 333-116100))
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|10.7  |  | Amended and Restated Credit Agreement, dated as of July 13, 2004, among Huntsman International LLC, as the borrower, Huntsman International Holdings LLC, as the guarantor, Deutsche Bank Trust Company Americas, as administrative agent, Deutsche
Bank Securities Inc., as co-lead arranger and joint book runner, JP Morgan Securities Inc., as co-documentation agent and joint book runner, UBS Securities LLC, as co-syndication agent, Credit Suisse First Boston, as co-documentation agent,
Merrill Lynch, Pierce Fenner & Smith Inc., as co-documentation agent, and various lending institutions party thereto (incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Huntsman International LLC for
the three months ended June 30, 2004)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8  |  | First Amendment to Amended and Restated Credit Agreement, dated as of December 21, 2004, among Huntsman International LLC, Huntsman International Holdings LLC and the various agents and lending institutions party thereto (incorporated by
reference to Exhibit 10.1 to the current report on Form 8-K of Huntsman International LLC filed December 23, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.9  |  | Revolving Credit Agreement dated as of October 14, 2004, among Huntsman LLC, Huntsman Petrochemical Corporation, Huntsman Expandable Polymers Company, LC, Huntsman Polymers Corporation, Huntsman Fuels, L.P., and Huntsman International Trading
Corporation, as borrowers, the financial institutions party thereto, including Deutsche Bank Trust Company Americas, in their capacities as lenders thereunder, and Deutsche Bank Trust Company Americas, as administrative agent and as collateral agent
(incorporated by reference to Exhibit 10.1 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                                      
|10.10 |  | Term Credit Agreement dated as of October 14, 2004, among Huntsman LLC, the financial institutions party thereto, including Deutsche Bank Trust Company Americas, in their capacities as lenders thereunder, and Deutsche Bank Trust Company Americas,
 as agent for the lenders (incorporated by reference to Exhibit 10.2 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                                                                                                                                                                                                                                                                  
|10.11 |  | Security Agreement (Revolving) dated as of October 14, 2004, among Huntsman LLC, certain subsidiaries of Huntsman LLC, and Deutsche Bank Trust Company Americas, as collateral agent (incorporated by reference to Exhibit 10.3 to the quarterly
report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.12 |  | Security Agreement (Term) dated as of October 14, 2004, among Huntsman LLC, certain subsidiaries of Huntsman LLC, and Deutsche Bank Trust Company Americas, as collateral agent (incorporated by reference to Exhibit 10.4 to the quarterly
report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.13 |  | Second Amended and Restated Intercreditor Agreement dated as of October 14, 2004, among Deutsche Bank Trust Company Americas, as administrative agent, collateral agent, and mortgagee, and HSBC Bank USA, National Association, as trustee, and
consented to by Huntsman LLC (incorporated by reference to Exhibit 10.5 to the quarterly report on Form 10-Q of Huntsman LLC for the three months ended September 30, 2004)                                                                                                                                                                                                                                                                                                                                                     
|10.14 |  | Huntsman Cost Reduction Incentive Plan and Form of Participation Agreement (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K of HMP Equity Holdings Corporation filed on November 23, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|21.1* |  | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|31.1* |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|31.2* |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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|32.1* |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                               
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------
|32.2* |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                               
|99.1* |  | Huntsman Corporation's Annual Report on Form 10-K for the year ended December 31, 2004, filed March 15, 2005 (File No. 001-32427)

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