Use these links to rapidly review the documentTABLE OF CONTENTS TABLE OF CONTENTS2

Table of Contents



UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




Commission
File Number

Exact Name of Registrant as Specified in its Charter,
Principal Office Address and Telephone Number

State of
Incorporation/Organization

I.R.S. Employer Identification No.001-32427

Huntsman Corporation
500 Huntsman Way
Salt Lake City, Utah 84108
(801) 584-5700


Delaware


42-1648585333-85141

Huntsman International LLC
500 Huntsman Way
Salt Lake City, Utah 84108
(801) 584-5700


Delaware


87-0630358




Securities registered pursuant to Section 12(b) of the Exchange Act:

Registrant

Title of each class

Name of each exchange on which registeredHuntsman Corporation

Common Stock, par value $0.01 per share

New York Stock ExchangeHuntsman International LLC

None

None


Securities registered pursuant to Section 12(g) of the Exchange Act:

Registrant

Title of each classHuntsman Corporation


NoneHuntsman International LLC


None




Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Huntsman Corporation

YES o

NO ýHuntsman International LLC

YES o

NO ý


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Huntsman Corporation

YES o

NO ýHuntsman International LLC

YES o

NO ý


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Huntsman Corporation

YES ý

NO oHuntsman International LLC

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 registrants' 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).

Huntsman Corporation

YES o

NO oHuntsman International LLC

YES o

NO o




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Huntsman Corporation

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o

Smaller reporting company oHuntsman International LLC

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý

Smaller reporting company o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Huntsman Corporation

YES o

NO ýHuntsman International LLC

YES o

NO ý


On June 30, 2009, the last business day of the registrants' most recently completed second fiscal quarter, the aggregate market value of voting and
non-voting common equity held by nonaffiliates was as follows:

Registrant

Common Equity

Market Value Held by NonaffiliatesHuntsman Corporation

Common Stock

$
931,158,052
(1)Huntsman International LLC

Units of Membership Interest

$
0
(2)


(1)Based
on the closing price of $5.03 per share of common stock as quoted on the New York Stock Exchange.(2)All
units of membership interest are held by Huntsman Corporation, an affiliate.


On
February 11, 2010, the number of shares outstanding of each of the registrant's classes of common equity were as follows:

Registrant

Common Equity

OutstandingHuntsman Corporation

Common Stock


237,303,674Huntsman International LLC

Units of Membership Interest


2,728




This Annual Report on Form 10-K presents information for two registrants: Huntsman Corporation and Huntsman
International LLC. Huntsman International LLC is a wholly owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information
reflected in this Annual Report on Form 10-K is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated.

Huntsman
International LLC meets the conditions set forth in General Instructions (I)(1)(a) and (b) of Form 10-K and, to the extent applicable,
is therefore filing this form with a reduced disclosure format.

Documents Incorporated by Reference

Part III: Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed within 120 days of
Huntsman Corporation's fiscal year ended December 31, 2009.



---





Table of Contents



HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

2009 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS



PagePART IITEM 1.

BUSINESS


1ITEM 1A.

RISK FACTORS


35ITEM 1B.

UNRESOLVED STAFF COMMENTS


46ITEM 2.

PROPERTIES


46ITEM 3.

LEGAL PROCEEDINGS


49ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


54EXECUTIVE OFFICERS OF THE REGISTRANT


54PART IIITEM 5.

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


58ITEM 6.

SELECTED FINANCIAL DATA


60ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


62ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


96ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


99ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


99ITEM 9A.

CONTROLS AND PROCEDURES


99ITEM 9B.

OTHER INFORMATION


106PART IIIITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


106ITEM 11.

EXECUTIVE COMPENSATION


106ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


106ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


106ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


106PART IVITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


107


i

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES    HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES    2009 ANNUAL REPORT ON FORM 10-K

Certain information set forth in this report contains "forward-looking statements" within the meaning of the federal securities laws.
Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or
intentions relating to acquisitions or dispositions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as
"believes," "expects," "may," "will," "should," "anticipates" or "intends" or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional
forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary
statements.

All
forward-looking statements, including without limitation management's examination of historical operating trends, are based upon our current expectations and various assumptions. Our
expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them,
but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no
obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

There
are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report.
Any forward-looking statements should be considered in light of the risks set forth in "Part I. Item 1A. Risk Factors" and elsewhere in this report.

This
report includes information with respect to market share, industry conditions and forecasts that we obtained from internal industry research, publicly available information
(including industry publications and surveys), and surveys and market research provided by consultants. The publicly available information and the reports, forecasts and other research provided by
consultants generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy and completeness of such
information. We have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, our internal
research and forecasts are based upon our management's understanding of industry conditions, and such information has not been verified by any independent sources.

For
convenience in this report, the terms "Company," "our," "us," or "we" may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and
predecessors. Any references to our "Company," "we," "us" or "our" as of a date prior to October 19, 2004 (the date of our formation) are to Huntsman Holdings, LLC and its subsidiaries
(including their respective predecessors). In this report, "Huntsman International" refers to Huntsman International LLC (our 100% owned subsidiary) and, unless the context otherwise requires,
its subsidiaries; "HPS" refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd); and "SLIC" refers to
Shanghai Liengheng Isocyanate Investment BV (our unconsolidated manufacturing joint venture with BASF AG and three Chinese chemical companies).

In
this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or
products. Many of these terms are defined in the Glossary of Chemical Terms found at the conclusion of "Part I. Item 1. Business" below.

ii

---





Table of Contents

PART I

ITEM 1.    BUSINESS

GENERAL

We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our Company, a Delaware
corporation, was formed in 2004 to hold the Huntsman businesses. Jon M. Huntsman founded the predecessor to our Company in the early 1970s as a small polystyrene plastics packaging company. Since
then, we have grown through a series of significant acquisitions and now own a global portfolio of businesses. In 2005, we completed an initial public stock offering.

We
operate all of our businesses through Huntsman International, our 100% owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.

Our
principal executive offices are located at 500 Huntsman Way, Salt Lake City, Utah 84108, and our telephone number at that location is (801) 584-5700.

TERMINATION OF MERGER AGREEMENT AND SETTLEMENT OF RELATED LITIGATION

On July 12, 2007, we entered into an Agreement and Plan of Merger with Hexion and one of its subsidiaries (the "Hexion Merger
Agreement"). On June 18, 2008, Hexion, Apollo and certain of their affiliates filed an action in Delaware Chancery Court seeking to terminate the proposed merger (the "Terminated Merger" or
"Hexion Merger"). We countersued Hexion and Apollo in the Delaware Chancery Court and filed a separate action against Apollo and certain of its affiliates in the District Court of Montgomery County,
Texas. On December 13, 2008, we terminated the Hexion Merger Agreement and, on December 14, 2008, we entered into a settlement agreement with Apollo, Hexion and certain of their
affiliates (the "Apollo Settlement Agreement"). Pursuant to the Apollo Settlement Agreement, Hexion and certain Apollo affiliates have paid us an aggregate amount of $1 billion,
$250 million of which was for the purchase of our 7% convertible notes due 2018 (the "Convertible Notes"). See "Recent DevelopmentsRepurchase of Convertible Notes" below and
"Note 26. Income (Expenses) Associated with the Terminated Merger and Related Litigation" to our consolidated financial statements.

On
September 30, 2008, we filed suit in the 9th Judicial District Court in Montgomery County, Texas (the "Texas Bank Litigation") against affiliates of Credit Suisse
Securities (USA) LLC and Deutsche Bank Securities Inc. (collectively, the "Banks"). On June 22, 2009, we entered into an Agreement of Compromise and Settlement with the Banks (the
"Texas Bank Litigation Settlement Agreement"). The Texas Bank Litigation was dismissed with prejudice on June 23, 2009. In accordance with the Texas Bank Litigation Settlement Agreement, the
Banks paid us a cash payment of $632 million, purchased
$600 million aggregate principal amount of 5.5% senior notes due 2016 from Huntsman International (the "2016 Senior Notes") and provided Huntsman International with term loan C in the principal
amount of $500 million ("Term Loan C"). See "Note 13. DebtConvertible Notes" to our consolidated financial statements.

DISPOSITION OF COMMODITY CHEMICAL BUSINESSES

Beginning in 2006, we completed a series of transactions pursuant to which we have disposed of our former commodity chemicals
businesses:



1

---



Table of Contents



RECENT DEVELOPMENTS



On January 11, 2010, we repurchased the entire $250 million principal amount of our outstanding Convertible Notes for
approximately $382 million from Apollo and its affiliates. The Convertible Notes were issued to Apollo in December 2008 as part of the Apollo Settlement Agreement. The Convertible Notes, which
would have matured on December 23, 2018, bore interest at the rate of 7% per year and were convertible into approximately 31.8 million shares of our common stock at any time by the
holders. As a result of the repurchase of the Convertible Notes, we will record a loss on early extinguishment of debt in the first quarter of 2010 in the amount of approximately $146 million.



On August 28, 2009, we entered into an asset and equity purchase agreement (the "Tronox Purchase Agreement"), to acquire certain
assets of Tronox Incorporated and its subsidiaries ("Tronox") under Section 363 of Chapter 11 of the United States Bankruptcy Code. The Tronox Purchase Agreement was subject to approval
by the United States Bankruptcy Court for the Southern District of New York. Under the Tronox Purchase Agreement, we were a "stalking horse" bidder and the proposed transaction was subject to Tronox's
solicitation of higher or otherwise better offers pursuant to specified bidding procedures and an auction process to be conducted under supervision of the bankruptcy court. On December 23,
2009, Tronox delivered a notice of termination of the Tronox Purchase Agreement to us after it received an order from the bankruptcy court authorizing it to replace its existing senior secured
financing and an interim order authorizing it to enter into certain agreements as part of a plan to pursue an alternative transaction. The new alternative transaction is sponsored by an ad hoc group
of Tronox's unsecured bondholders.

Under
the Tronox Purchase Agreement, we made a $12 million refundable deposit toward the purchase price and, in connection with the proposed transaction, we incurred
$13 million in costs. Prior to December 31, 2009, the deposit of $12 million was refunded to us, we received an additional $12 million as a break-up fee, and we
received $3 million for partial reimbursement of our costs.



On September 8, 2009, we announced the closure of our styrenics facility located at West Footscray, Australia. We ceased
operation of the West Footscray styrene plant on January 5, 2010, and we expect to complete the subsequent closure of our polystyrene and expandable polystyrene plants during the first quarter
of 2010. During 2009, we recorded closure costs of approximately $63 million ($25 million primarily in severance, $8 million of contract termination costs and a $30 million
preliminary estimate of environmental remediation costs) and expect to incur other closure related costs of approximately $7 million in 2010. We can provide no assurance that the eventual

2

---



Table of Contents

environmental
remediation costs will not be materially different from our current estimate. Products produced at the site represent less than 2% of our 2008 global sales. Our other operations in
Australia, including RMAX® expandable polystyrene business, Performance Products, Polyurethanes, Textile Effects and Advanced Materials divisions, are not affected by the announcement and
will continue to operate in Australia. We expect to treat the Australian styrenics business as a discontinued operation beginning in the first quarter of 2010 when operations cease.

OVERVIEW

Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and
industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non-durable
consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of
our key product lines, including MDI, amines, surfactants, epoxy-based polymer formulations, textile chemicals, dyes, maleic anhydride and titanium dioxide. Our administrative, research and
development and manufacturing operations are primarily conducted at the facilities listed in "Item 2. Properties" below, which are located in 27 countries. As of
December 31, 2009, we employed approximately 11,000 associates worldwide. We had revenues for the years ended December 31, 2009, 2008 and 2007 of $7,763 million,
$10,215 million and $9,651 million, respectively.

During
the first quarter of 2009, we reorganized our operating segments to divide our former Materials and Effects segment into two different segmentsour Advanced Materials
segment and our Textile Effects segment. All segment information in this report has been restated to reflect this change. We operate in five segments: Polyurethanes, Advanced Materials, Textile
Effects, Performance Products and Pigments. In a series of transactions beginning in 2006, we have sold or shutdown
substantially all of our Polymers and Base Chemicals operations. We report the results of our former Polymers and Base Chemicals segments as discontinued operations in our statements of operations.
See "Note 27. Discontinued Operations" to our consolidated financial statements.

Our Products

We produce differentiated organic chemical and inorganic chemical products. Our Polyurethanes, Advanced Materials, Textile Effects and
Performance Products segments produce differentiated organic chemical products and our Pigments segment produces inorganic chemical products. Our former Polymers and Base Chemicals operations, which
have been sold, produced commodity organic chemical products. See "Note 27. Discontinued Operations" to our consolidated financial statements.

Growth
in our differentiated products has been driven by the substitution of our products for other materials and by the level of global economic activity. Accordingly, the profitability
of our differentiated products has been somewhat less influenced by the cyclicality that typically impacts the petrochemical

3

---



Table of Contents

industry.
Our Pigments business, while cyclical, is influenced largely by seasonal demand patterns in the coatings industry.

2009 Segment Revenues(1)

2009 Segment EBITDA from Continuing Operations(1)GRAPHIC


(1)Percentage
allocations in this chart do not give effect to Corporate and Other unallocated items, eliminations and EBITDA from discontinued operations. For
a detailed disclosure of our revenues, total assets and EBITDA by segment, see "Note 29. Operating Segment Information" to our consolidated financial statements. For a discussion of EBITDA by
segment and a reconciliation of EBITDA to net income attributable to Huntsman Corporation and cash provided by operating activities, see "Part II. Item 7. Management's Discussion and
Analysis of Financial Condition and Results of OperationsResults of Operations."


4

---



Table of Contents

The following table identifies the key products, their principal end markets and applications and representative customers of each of our segments:

Segment

Products

End Markets and
Applications

Representative CustomersPolyurethanes

MDI, PO, polyols, PG, TPU, aniline and MTBE

Refrigeration and appliance insulation, construction products, adhesives, automotive, footwear, furniture, cushioning, specialized engineering applications and fuel additives

BMW, Certainteed, Electrolux, Firestone, GE, Haier, Louisiana Pacific, Recticel, WeyerhauserAdvanced Materials

Basic liquid and solid epoxy resins; specialty resin compounds; cross-linking, matting and curing agents;
epoxy, acrylic and polyurethane-based formulations

Adhesives, composites for aerospace, automotive, and wind power generation;
construction and civil engineering; industrial coatings; electrical power transmission; consumer electronics

ABB, Akzo, BASF, Boeing, Bosch, Cytec, Dow, Hexcel, Kansai, Omya, PPG, Samsung, Sanarrow, Schneider, Sherwin Williams, Siemens, Sika, Speed Fair, Syngenta, TorayTextile Effects

Textile chemicals and dyes

Apparel, home and technical textiles

Russell, Sara Lee, Sherwin Williams, Wellspun, Hanes brands, MillikenPerformance Products

Amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licenses

Detergents, personal care products, agrochemicals, lubricant and fuel additives, adhesives, paints and coatings, construction, marine and automotive products and PET fibers and resins

Chevron, Henkel, The Sun Products Corporation, Monsanto, Procter & Gamble, Unilever, Lubrizol, Reichhold, Dow, L'Oreal, AftonPigments

Titanium dioxide

Paints and coatings, plastics, paper, printing inks, fibers and ceramics

Akzo, Sigma Kalon, Clariant, Jotun, PolyOne


Polyurethanes

General

We are a leading global manufacturer and marketer of a broad range of polyurethane chemicals, including MDI products, PO, polyols, PG
and TPU. Polyurethane chemicals are used to produce rigid and flexible foams, as well as coatings, adhesives, sealants and elastomers. We focus on the higher-margin, higher-growth markets for MDI and
MDI-based polyurethane systems. Growth in our Polyurethanes segment has been driven primarily by the continued substitution of MDI-based products for other materials across a
broad range of applications. We operate five primary Polyurethanes

5

---



Table of Contents

manufacturing
facilities in the U.S., Europe and China. We also operate 13 Polyurethanes formulation facilities, which are located in close proximity to our customers worldwide.

Our
customers produce polyurethane products through the combination of an isocyanate, such as MDI or TDI, with polyols, which are derived largely from PO and EO. While the range of
TDI-based products is relatively limited, we are able to produce over 2,000 distinct MDI-based polyurethane products by modifying the MDI molecule by varying the proportion and
type of polyol used and by introducing other chemical additives to our MDI formulations. As a result, polyurethane products, especially those derived from MDI, are continuing to replace traditional
products in a wide range of end-use markets, including insulation in construction and appliances, cushioning for automotive and furniture, adhesives, wood binders, footwear and other
specialized engineering applications.

We
are a leading North American producer of PO. We and some of our customers process PO into derivative products, such as polyols for polyurethane products, PG and various other chemical
products. End uses for these derivative products include applications in the home furnishings, construction, appliance, packaging, automotive and transportation, food, paints and coatings and cleaning
products industries. We also produce MTBE as a co-product of our PO manufacturing process. MTBE is an oxygenate that is blended with gasoline to reduce harmful vehicle emissions and to
enhance the octane rating of gasoline. See "Environmental, Health and Safety MattersMTBE Developments" below and "Part I. Item 1A. Risk Factors" for a
discussion of legal and regulatory developments that have resulted in the curtailment and potential elimination of MTBE in gasoline in the U.S. and elsewhere. Also, see "Manufacturing
and Operations" below and "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of material changes concerning sales
of MTBE. We sold our U.S. butadiene and MTBE business operated in our Base Chemicals segment in June 2006; however, the PO/MTBE operations in our Polyurethanes segment were not included in this
transaction.

In
1992, we were the first global supplier of polyurethane chemicals to open a technical service center in China. We have since expanded this facility to include an integrated
polyurethanes formulation facility. In January 2003, we entered into two related joint ventures to build MDI production and finishing facilities near Shanghai, China. Production at our MDI finishing
plant near Shanghai, China operated by HPS, our consolidated subsidiary, was commissioned on June 30, 2006. Production at the MNB, aniline and crude MDI plants operated by SLIC, our
unconsolidated joint venture, commenced on September 30, 2006. These world-scale facilities strengthen our ability to service our customers in the critical Chinese market and will support the
significant demand growth that we believe this region will continue to experience.

Products and Markets

MDI is used primarily in rigid foam applications and in a wide variety of customized, higher-value flexible foam and coatings,
adhesives, sealants and elastomers. Polyols, including polyether and polyester polyols, are used in conjunction with MDI and TDI in rigid foam, flexible foam and other

6

---



Table of Contents

non-foam
applications. PO is one of the principal raw materials for producing polyether polyols. The following chart illustrates the range of product types and end uses for polyurethane
chemicals.

GRAPHIC

Polyurethane
chemicals are sold to customers who combine the chemicals to produce polyurethane products. Depending on their needs, customers will use either commodity polyurethane
chemicals produced for mass sales or polyurethane systems tailored for their specific requirements. By varying the blend, additives and specifications of the polyurethane chemicals, manufacturers are
able to develop and produce a breadth and variety of polyurethane products.

MDI.MDI has a substantially larger market size and a higher growth rate than TDI. This is primarily because MDI can be used to
make polyurethanes
with a broader range of properties and can therefore be used in a wider range of applications than TDI. We believe that future growth of MDI is expected to be driven by the continued substitution of
MDI-based polyurethane for fiberglass and other materials currently used in rigid insulation foam for construction. We expect that other markets, such as binders for reconstituted wood
board products, specialty cushioning applications and coatings will further contribute to the continued growth of MDI.

With
the recent rapid growth of the developing Asian economies, the Asian markets have now become the largest market for MDI.

There
are four major global producers of MDI: Bayer, our Company, BASF and Dow. While there are also some regional producers in Asia and Europe, we believe it is unlikely that any new
global producers of MDI will emerge in the foreseeable future due to the substantial requirements for entry, such as the limited availability of licenses for MDI technology and the substantial capital
commitment and integration that is required to develop both the necessary technology and the infrastructure to manufacture and market MDI.

TPU.TPU is a high-quality, fully formulated thermal plastic derived from the reaction of MDI or an aliphatic isocyanate with
polyols to
produce unique qualities such as durability, flexibility, strength, abrasion-resistance, shock absorbency and chemical resistance. We can tailor the performance characteristics of TPU to meet the
specific requirements of our customers. TPU is used in injection molding and small components for the automotive and footwear industries. It is also extruded into films, wires and cables for use in a
wide variety of applications in the coatings, adhesives, sealants and elastomers markets.

7

---



Table of Contents

Polyols.Polyols are combined with MDI, TDI and other isocyanates to create a broad spectrum of polyurethane products. Demand
for specialty polyols
has been growing at approximately the same rate at which MDI consumption has grown.

Aniline.Aniline is an intermediate chemical used primarily to manufacture MDI. Generally, most aniline is either consumed
internally by the
producers of the aniline or is sold to third parties under long-term supply contracts. We believe that the lack of a significant spot market for aniline means that in order to remain
competitive, MDI manufacturers must either be integrated with an aniline manufacturing facility or have a long-term, cost-competitive aniline supply contract.

PO.PO is an intermediate chemical used mainly to produce a wide range of polyols and PG. Demand for PO depends largely on
overall economic demand,
especially that of consumer durables. The following chart illustrates the primary end markets and applications for PO.

GRAPHIC

MTBE.MTBE is an oxygenate that is blended with gasoline to reduce harmful vehicle emissions and to enhance the octane rating of
gasoline. The use of
MTBE is controversial, and it has been effectively eliminated in the U.S. market. See "Environmental, Health and Safety MattersMTBE Developments" below and "Part I.
Item 1A. Risk Factors." We continue to sell MTBE for use as a gasoline additive, substantially all of which is sold for use outside the U.S. See "Manufacturing and Operations"
below and "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

Sales and Marketing

We manage a global work force which sells our polyurethane chemicals to over 3,000 customers in more than 90 countries. Our sales and
technical resources are organized to support major regional markets, as well as key end-use markets which require a more global approach. These key end-use markets include the
appliance, automotive, footwear, furniture and coatings, construction products, adhesives, sealants and elastomers industries.

We
provide a wide variety of polyurethane solutions as components (i.e., the isocyanate or the polyol) or in the form of "systems" in which we provide the total isocyanate and
polyol formulation to

8

---



Table of Contents

our
customers in ready-to-use form. Our ability to deliver a range of polyurethane solutions and technical support tailored to meet our customer's needs is critical to our long
term success. We have strategically located our polyurethane formulation facilities, commonly referred to in the chemicals industry as "systems houses," close to our customers, enabling us to focus on
customer support and technical service. We believe this customer support and technical service system contributes to customer retention and also provides opportunities for identifying further product
and service needs of customers. We manufacture polyols primarily to support our MDI customers' requirements.

We
believe that the extensive market knowledge and industry experience of our sales teams and technical experts, in combination with our strong emphasis on customer relationships, have
facilitated our ability to establish and maintain long-term customer supply positions. Due to the specialized nature of our markets, our sales force must possess technical knowledge of our
products and their applications. Our strategy is to continue to increase sales to existing customers and to attract new customers by providing innovative solutions, quality products, reliable supply,
competitive prices and superior customer service.

Manufacturing and Operations

Our MDI production facilities are located in Geismar, Louisiana, Rozenburg, Netherlands and, through our joint ventures, Shanghai,
China. These facilities receive aniline, which is a primary material used in the production of MDI, from our facilities located in Geismar, Louisiana; Wilton, U.K.; and Shanghai, China. We believe
that this relative scale and product integration of our large facilities provide a significant competitive advantage over other producers. In addition to reducing transportation costs for our raw
materials, integration helps reduce our exposure to cyclical prices.

The
following table sets forth the annual production capacity of polyurethane chemicals at each of our polyurethanes facilities:

MDI

Polyols

TPU

Aniline

Nitrobenzene

PO

PG

MTBE(millions of pounds)

(millions
of gallons)Geismar, Louisiana


970


160





715
(2)

953
(2)Osnabrück, Germany





26


57Port Neches, Texas

















525


145


260Ringwood, Illinois








18Caojing, China


250
(1)Rozenburg, Netherlands


880


130Wilton, U.K.











715


953Total


2,100


316


75


1,430


1,906


525


145


260


(1)Represents
our 50% share of capacity from SLIC, our unconsolidated Chinese joint venture.(2)Represents
our approximately 78% share of capacity under our Rubicon LLC manufacturing joint venture with Chemtura Corporation.


At
both our Geismar and Rozenburg facilities we utilize sophisticated proprietary technology to produce our MDI. This technology, which is also used in our Chinese joint venture,
contributes to our position as a low cost MDI producer. In addition to MDI, we use a proprietary manufacturing process to manufacture PO. We own or license all technology and know-how
developed and utilized at our PO facility. Our process combines isobutane and oxygen in proprietary oxidation (peroxidation) reactors, thereby forming TBHP and TBA, which are further processed into PO
and MTBE, respectively. Because our PO production process is less expensive relative to other technologies and allows all of our PO co-products to be processed into saleable or useable
materials, we believe that our PO production technology possesses several distinct advantages over its alternatives.

9

---



Table of Contents

We operate polyurethane systems houses in Buenos Aires, Argentina, Deerpark, Australia; Shanghai, China; Cartagena, Colombia; Deggendorf, Germany; Thane
(Maharashtra), India; Ternate, Italy; Tlalnepantla, Mexico; Mississauga, Ontario; Kuan Yin, Taiwan; Samuprakam, Thailand; Osnabrück, Germany and Dammam, Saudi Arabia.

Joint Ventures

Rubicon Joint Venture.We and Chemtura Corporation own Rubicon LLC, which owns aniline, nitrobenzene and DPA manufacturing
facilities in
Geismar, Louisiana. We are entitled to approximately 78% of the nitrobenzene and aniline production capacity of Rubicon LLC, and Chemtura Corporation is entitled to 100% of the DPA production.
In addition to operating the joint venture's owned aniline, nitrobenzene and DPA facilities, Rubicon LLC also operates our wholly owned MDI and polyol facilities at Geismar and is responsible
for providing other auxiliary services to the entire Geismar complex. As a result of this joint venture, we are able to achieve greater scale and lower costs for our products than we would otherwise
have been able to obtain. Rubicon LLC is consolidated in our financial statements.

Chinese MDI Joint Ventures.In January 2003, we entered into two related joint venture agreements to build MDI production
facilities near Shanghai,
China. SLIC, our manufacturing joint venture with BASF AG and three Chinese chemical companies, built three plants that manufacture MNB, aniline and crude MDI. We effectively own 35% of SLIC and it is
our unconsolidated affiliate. HPS, our splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd, has constructed a plant to manufacture pure MDI, polymeric MDI and MDI variants.
We own 70% of HPS and it is our consolidated affiliate. These projects have been funded by a combination of equity invested by the joint venture partners and borrowed funds. SLIC and HPS commenced
operations during 2006. The total production capacity of the SLIC facilities is 530 million pounds per year of MDI and the production capacity of the HPS facility is 270 million pounds
per year of MDI finished products.

Russia MDI Coatings and Systems Joint Venture.In 2006, we purchased a 45% interest in NMG, a leading Polyurethanes company
headquartered in Obninsk,
Russia. This joint venture, now Huntsman NMG, manufactures and markets a range of polyurethane systems in adhesives, coatings, elastomers and insulation using Huntsman MDI Products.

Raw Materials

The primary raw materials for MDI-based polyurethane chemicals are benzene and PO. Benzene is a widely available commodity
that is the primary feedstock for the production of MDI and aniline. Historically, benzene has been the largest component of our raw material costs. We purchase benzene from third parties to
manufacture nitrobenzene and aniline, almost all of which we then use to produce MDI.

A
major cost in the production of polyols is attributable to the costs of PO. The integration of our PO business with our polyurethane chemicals business gives us access to a
competitively priced, strategic source of PO and the opportunity to develop polyols that enhance our range of MDI products. The primary raw materials used in our PO production process are
butane/isobutane, propylene, methanol and oxygen, which accounted for 58%, 29%, 11% and 2%, respectively, of total raw material costs in 2009. We purchase our raw materials primarily under
long-term contracts. While most of these feedstocks are commodity materials generally available to us from a wide variety of suppliers at competitive prices in the spot market, all the
propylene used in the production of our PO is produced internally and delivered through a pipeline connected to our PO facility.

10

---



Table of Contents

Competition

Our major competitors in the polyurethane chemicals market include BASF, Bayer, Dow, Yantai Wanhua and LyondellBasell. While these
competitors and others produce various types and quantities of polyurethane chemicals, we focus on MDI and MDI-based polyurethane systems. Our polyurethane chemicals business competes in
two basic ways: (1) where price is the dominant element of competition, our polyurethane chemicals business differentiates itself by its high level of customer support, including cooperation on
technical and safety matters; and (2) elsewhere, we compete on the basis of product performance and our ability to react quickly to changing customer needs and by providing customers with
innovative solutions to their needs.

The
market in which our Polyurethanes segment operates is highly competitive. Among our competitors in this market are some of the world's largest chemical companies and major integrated
petroleum companies that have their own raw material resources. Some of these companies may be able to produce products more economically than we can. In addition, some of our competitors in this
market have greater financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development. If any of our current or future
competitors in this market develops proprietary technology that enables them to produce products at a significantly lower cost, our technology could be rendered uneconomical or obsolete.

Advanced Materials

General

Our Advanced Materials segment is a leading global manufacturer and marketer of technologically advanced epoxy, acrylic and
polyurethane-based polymer products. We
focus on formulations and systems that are used to address customer-specific needs in a wide variety of industrial and consumer applications. Our products are used either as replacements for
traditional materials or in applications where traditional materials do not meet demanding engineering specifications. For example, structural adhesives are used to replace metal rivets and advanced
composites are used to replace traditional aluminum panels in the manufacture of aerospace components. Our Advanced Materials segment is characterized by the breadth of our product offering, our
expertise in complex chemistry, our long-standing relationships with our customers, our ability to develop and adapt our technology and our applications expertise for new markets and new
applications.

We
operate synthesis, formulating and production facilities in North America, Europe, Asia, South America and Africa. We market over 3,000 products to more than 3,000 customers in the
following end-markets: civil engineering, shipbuilding and marine maintenance, consumer appliances, food and beverage packaging, industrial appliances, consumer/do it yourself ("DIY"),
aerospace, DVD, LNG transport, electrical power transmission and distribution, printed circuit boards, consumer and industrial electronics, wind power generation, automotive, recreational sports
equipment, medical appliances, design studios and prototype manufacturers.

Products and Markets

Our product range spans from basic liquid and solid resins, to specialty components like curing agents, matting agents, accelerators,
cross-linkers, reactive diluents, thermoplastic polyamides and additives. In addition to these components, which we typically sell to formulators in various industries, we also produce and sell ready
to use formulated polymer systems.

Base Resins and Specialty Component Markets.Our products are used for the protection of steel and concrete substrates, such as
flooring, metal
furniture and appliances, buildings, linings for storage tanks and food and beverage cans, and the primer coat of automobile bodies and ships. Epoxy-based

11

---



Table of Contents

surface
coatings are among the most widely used industrial coatings due to their structural stability and broad application functionality combined with overall economic efficiency.

Base
resins and specialty components are also used for composite applications. A structural composite is made by combining two or more different materials, such as fibers, resins and
other specialty additives, to create a product with enhanced structural properties. Specifically, structural composites are lightweight, high-strength, rigid materials with high resistance
to chemicals, moisture and
high temperatures. Our product range comprises basic and advanced epoxy resins, curing agents and other advanced chemicals, additives and formulated polymer systems. The four key target markets for
our structural composites are aerospace, windmill blades for wind power generation, general industrial and automotive applications, and recreational products (mainly sports equipment such as skis).
Structural composites continue to substitute for traditional materials, such as metals and wood, in a wide variety of applications due to their light weight, strength and durability.

Formulated Systems.The structural adhesives market requires high-strength "engineering" adhesives for use in the manufacture
and repair
of items to bond various engineering substrates. Our business focus is on engineering adhesives based on epoxy, polyurethane, acrylic and other technologies which are used to bond materials, such as
steel, aluminum, engineering plastics and composites in substitution of traditional joining techniques. Our Araldite® brand name has considerable value in the industrial and consumer
adhesives markets. In many countries, Araldite® branded products are known as high-performance adhesives, and we generally believe that this is the value-added segment of the
market where recognition of our long-standing Araldite® brand is a key competitive advantage. Packaging is a key characteristic of our adhesives products. Our range of
adhesives is sold in a variety of packs and sizes, specifically targeted to three specific end-markets and sold through specifically targeted routes to market:



Our
electrical materials are formulated polymer systems, which make up the insulation materials used in equipment for the generation, transmission and distribution of electrical power,
such as transformers,
switch gears, ignition coils, sensors, motors and magnets, and for the protection of electrical and electronic devices and components. The purpose of these products is to insulate, protect or shield
either the environment from electrical current or electrical devices from the environment, such as temperature or humidity. Our electrical insulating materials target two key market segments: the
heavy electrical equipment market and the light electrical equipment market.

Products
for the heavy electrical equipment market segment are used in power plant components, devices for power grids and insulating parts and components. In addition, there are
numerous devices, such as motors and magnetic coils used in trains and medical equipment, which are manufactured using epoxy and related technologies. Products for the light electrical equipment
market segment are used in applications such as industrial automation and control, consumer electronics, car electronics and electrical components. The end customers in the electrical insulating
materials market encompass the

12

---



Table of Contents

relevant
original equipment manufacturer ("OEM") as well as numerous manufacturers of components used in the final products. We also develop, manufacture and market materials used in the production of
printed circuit boards. Our products are ultimately used in industries ranging from telecommunications and personal computer mother board manufacture to automotive electronic systems manufacture.
Soldermasks are our most important product line in printed circuit board technologies, particularly in Europe. Sales are made mainly under the Probimer®, Probimage®, and
Probelec® trademarks. Our Probimer® trademark is a widely recognized brand name for soldermasks.

We
produce mainly polyurethane-based and epoxy formulated polymer systems used in the production of models, prototypes, patterns, molds and a variety of related products for design,
prototyping and short-run manufacture. Our products are used extensively in the automotive, aerospace and industrial markets as productivity tools to quickly and efficiently create
accurate prototypes and develop experimental models, and to lower the cost of manufacturing items in limited quantities primarily using computer-aided-design techniques. We separate the overall
tooling and modeling materials market into two distinct groupsstandard tooling and modeling materials and stereolithography technology.

Our
standard tooling and modeling materials are polymer-based materials used by craftsmen to make the traditional patterns, molds, models, jigs and fixtures required by the foundry,
automotive, ceramics and other such industries. Stereolithography is a technology that is used to accurately produce physical three-dimensional models directly from computer-aided-design data without
cutting, machining or tooling. The models are produced by selectively curing a light-sensitive liquid resin with a laser beam. We sell our stereolithography products to customers in the aerospace,
appliance, automotive, consumer, electronics and medical markets.

Sales and Marketing

We maintain multiple routes to market to service our diverse customer base. These routes to market range from using our own direct
sales force for targeted, technically-oriented distribution to mass general distribution. Our direct sales force focuses on engineering solutions decision-makers at major customers who purchase
significant amounts of product from us. We use technically-oriented specialist distributors to augment our sales effort in niche markets and applications where we do not believe it is appropriate to
develop direct sales resources. We use mass general distribution channels to sell our products into a wide range of general applications where technical expertise is less important to the user of the
products to reduce our overall selling expenses. We believe our use of multiple routes to market enables us to reach a broader customer base at an efficient cost.

We
conduct sales activities through dedicated regional sales teams in the Americas; Europe, Africa and the Middle East ("EAME"); and Asia. Our global customers are covered by key account
managers who are familiar with the specific requirements of these clients. The management of long-standing customer relationships, some of which are 20 to 30 years old, is at the
heart of the sales and marketing process. We are also supported by a strong network of distributors. We serve a highly fragmented customer base.

For
our consumer adhesives, we have entered into exclusive branding and distribution arrangements with, for example, Bostik in Europe and Shelleys in Australia. Under these arrangements,
our distribution partners fund advertising and sales promotions, negotiate and sell to major retail chains, own inventories and provide store deliveries (and sometimes shelf merchandising) in exchange
for a reliable, high-quality supply of Araldite® branded, ready-to-sell packaged products.

Manufacturing and Operations

We are a global business serving customers in three principal geographic regions: EAME, the Americas, and Asia. To service our
customers efficiently, we maintain manufacturing plants around the

13

---



Table of Contents

world
with a strategy of global, regional and local manufacturing employed to optimize the level of service and minimize the cost to our customers. The following table summarizes the plants that we
operate:

Location

Description of FacilityBad Saeckingen, Germany(1)

Formulating FacilityBergkamen, Germany

Synthesis FacilityChennai, India(2)

Resins and Synthesis FacilityDuxford, U.K.

Formulating FacilityEast Lansing, Michigan, U.S.

Formulating FacilityIstanbul, Turkey(1)

Formulating FacilityLos Angeles, California, U.S.

Formulating FacilityMcIntosh, Alabama, U.S.

Resins and Synthesis FacilityMonthey, Switzerland

Resins and Synthesis FacilityPamplona, Spain

Resins and Synthesis FacilityPanyu, China(1)(3)

Formulation and Synthesis FacilitySadat City, Egypt

Formulating FacilityTaboão da Serra, Brazil

Formulating Facility


(1)Leased
land and/or building.(2)76%-owned
manufacturing joint venture with Tamilnadu Petroproducts Limited.(3)95%-owned
manufacturing joint venture with Guangdong Panyu Shilou Town Economic Development Co. Ltd.


Our
facilities in Asia are well-positioned to take advantage of the market growth that is expected in this region. Furthermore, we believe that we are the largest producer of
epoxy resin compounds in India.

Raw Materials

The principal raw materials we purchase for the manufacture of basic and advanced epoxy resins are epichlorohydrin, bisphenol A and
BLR. We also purchase amines, polyols, isocyanates, acrylic materials, hardeners and fillers for the production of our formulated polymer systems and complex chemicals and additives. Raw material
costs constitute a sizeable percentage of sales for certain applications. We have supply contracts with a number of suppliers. The terms of our supply contracts vary, but, in general, these contracts
contain provisions that set forth the quantities of product to be supplied and purchased and formula-based pricing.

Additionally,
we produce some of our most important raw materials, such as BLR and its basic derivatives, which are the basic building blocks of many of our products. We are the fourth
largest producer of BLR in the world. Approximately 50% of the BLR we produce is consumed in the production of our formulated polymer systems. The balance of our BLR is sold as liquid or solid resin
in the merchant market, allowing us to increase the utilization of our production plants and lower our overall BLR production cost. We believe that manufacturing a substantial proportion of our
principal raw material gives us a competitive advantage over other epoxy-based polymer systems formulators,

14

---



Table of Contents

most
of whom must buy BLR from third-party suppliers. This position helps protect us from pricing pressure from BLR suppliers and aids in providing us a stable supply of BLR in difficult market
conditions.

We
consume certain amines produced by our Performance Products segment and isocyanates produced by our Polyurethanes segment, which we use to formulate Advanced Materials products.

Competition

The market in which our Advanced Materials segment operates is highly competitive, and is dependent on significant capital investment,
the development of proprietary technology, and maintenance of product research and development. Among our competitors in this market are some of the world's largest chemical companies and major
integrated companies that have their own raw material resources.

Competition
in our basic liquid and solid epoxy resins group is primarily driven by price, and is increasingly more global with industry consolidation in the North American and European
markets and the emergence of new competitors in Asia. Our major competitors include Dow, Hexion, BASF, Kukdo, Leuna and NanYa.

Competition
in our specialty components and structural composites product group is primarily driven by product performance, applications expertise and customer certification. Our
competitive strengths include our strong technology base, broad range of value-added products, leading market positions, diverse customer base and reputation for customer service. Major competitors
include Air Products, Arizona, Hexion, Cognis, Cray Valley, Evonics, DIC, Dow, Mitsui, Sumitomo and NanYa.

Competition
in our formulation product group is primarily based on technology, know-how, applications and formulations expertise, product reliability and performance,
process expertise and technical support. This product group covers a wide range of industries and key competition factors vary by industry. Our competitive strengths result from our focus on defined
market needs, our long-standing customer relationships, product reliability and technical performance, provision of high level service and recognition as a quality supplier in our chosen
sectors. We operate dedicated technology centers in Basel, Switzerland, The Woodlands, Texas, and Panyu, China in support of our product and technology development. Our major competitors can be
summarized as follows:

Formulation Product Group

CompetitionAdhesives applications

Henkel/Loctite, ITW, National Starch, Sika, 3MElectrical insulating materials

Altana, Hexion, Schenectady, Wuxi, Dexter-Hysol, Hitachi Chemical, Nagase Chemtex, Toshiba ChemicalPrinted circuit board materials

Coates, Goo, Peters, Taiyo Ink, TamuraTooling and modeling solution.

Axson, DSM, Sika


Textile Effects

General

Our Textile Effects segment is the leading global market share provider for textile chemicals and dyes. Our textile solutions enhance
the color of finished textiles and improve such performance characteristics as wrinkle resistance and the ability to repel water and stains. Our Textile Effects segment is characterized by the breadth
of our product offering, our long-standing relationships with our customers, our ability to develop and adapt our technology and our applications expertise for new markets and new
applications.

15

---



Table of Contents

We operate synthesis, formulating and production facilities in North America, Europe, Asia and South America. We market multiple products to customers in multiple
end-markets, including the following: consumer fashion apparel, sportswear, career and uniform apparel, military, automotive, home textiles and furnishings, carpet and other functional
textiles.

In
December 2008, we announced restructuring programs for our Textile Effects segment. These restructuring programs were necessary to allow our Textile Effects segment to adapt to the
dynamic business shifts that have occurred in the textile market. During 2009, we have spent approximately $46 million to significantly expand resources and capacity in Asia, while refocusing
and consolidating resources in Europe and North America and to transition from a regional to a global, market-focused organization. Other elements of our plan include simplifying global distribution
networks, enhancing research and development activities and continuing investments in EH&S projects to ensure that all of our acquired manufacturing units are operating in accordance with our
standards. We expect to spend approximately $60 million over approximately the next year to complete these projects. We have targeted approximately $100 million in annual savings when
all phases of the restructuring are fully completed.

Products and Markets

Textiles generally involve a complex matrix of fibers, effects and functionality, and the resulting products range from fashion apparel
to bulletproof vests, home linens to air and water filters, and upholstery to automotive interiors. Our broad range of dyestuffs and chemicals enhance both the aesthetic appearance of these products
and the functionality needed to ensure that they perform in their end-use markets. Since the requirements for these markets vary dramatically, our business strategy focuses on the two
major marketsapparel and technical textiles. We work to provide the right balance of products and service to meet the technical challenges in each of these markets.

The
apparel market, which also includes our home interiors products, focuses on products that provide an aesthetic effect and/or improve the processing efficiency within the textile
mill. We offer a complete range of colors for cotton, polyester and nylon that cover the range of shades needed for sportswear, intimate apparel, towels, sheeting and casual wear. Our dyes have been
developed to ensure that they offer the highest levels of wash fastness currently available in the market. Optical brighteners and other pretreatment products provide "bright white" effects for
apparel, towels and sheeting. Pretreatment and dyeing auxiliaries ensure that these fabrics are processed efficiently and effectivelycleaning the fabrics with fewer chemicals, less energy
and less water and thereby minimizing the environmental footprint and reducing the processing costs. Silicone softeners may be used to enhance the feel of products.

Technical
textiles include automotive textiles, carpet, military fabrics, mattress ticking and nonwoven and other technical fabrics. Though the product groups may differ in their
end-uses, the articles must provide a high-level of functionality and performance in their respective markets. High-lightfast dyes and UV absorbers are used in
automotive interiors and outdoor furnishings to provide colors that don't fade when exposed to sunlight and heat. Powerful stain repellent and release technology imparts durable protection for
upholstery, military and medical fabrics, without affecting the color, breathability or feel of the fabric. Specialized dyes and prints create unique camouflage patterns for military uniforms,
backpacks and tarps that won't fade through wash and wear or during exposure to the elements.

Sales and Marketing

For our textile effects products, we focus on providing effect competence and process competence to our customers. Effect
competencedelivering value-added effects to our customer's productsenables us to capitalize on new and innovative technologies and to assist our customers in their efforts

16

---



Table of Contents

to
differentiate themselves from competitors. Process competenceapplying know-how and expertise to improve customers' processesallows us to utilize our technical
service to reduce cost and enhance efficiency.

Manufacturing and Operations

We are a global business serving customers in three principal geographic regions: EAME, the Americas, and Asia. To service our
customers efficiently, we maintain manufacturing plants around the world with a strategy of global, regional and local manufacturing employed to optimize the level of service and minimize the cost to
our customers. The following table summarizes the plants that we operate:

Location

Description of FacilityAtotonilquillo, Mexico

Synthesis FacilityBaroda, India

Synthesis FacilityBasel, Switzerland(1)

Synthesis Facility and Technology CenterBogota, Colombia(1)

Formulating FacilityCharlotte, North Carolina, U.S.(1)

Formulating FacilityFraijanes, Guatemala(1)

Formulating FacilityGandaria, Jakarta, Indonesia

Formulating FacilityLangweid am Leich, Germany(1)

Formulating FacilityPanyu, China(1)(2)

Formulating and Synthesis Facility and Technology CenterQingdao, China

Synthesis FacilitySamutsakorn (Mahachai), Thailand(1)

Synthesis FacilitySchweizerhalle, Switzerland(1)

Formulating Facility


(1)Leased
land and/or building.(2)95%-owned
manufacturing joint venture with Guangdong Panyu Shilou Town Economic Development Co. Ltd.


Raw Materials

The manufacture of textile effects products requires a wide selection of raw materials (approximately 3,000 different chemicals),
including amines, fluorochemicals and sulfones. No one raw material represents greater than 2% of our textile effects raw material expenditures. Raw material costs constitute a sizeable percentage of
sales for certain applications. We have supply contracts with a number of suppliers, including, for example, Dow. The terms of our supply contracts vary, but, in general, these contracts contain
provisions that set forth the quantities of product to be supplied and purchased and formula-based pricing.

Competition

We are the leading global market share provider for textile chemicals and dyes. Competition within the textile chemicals and dyes
markets is generally fragmented with few competitors who offer complete solutions for both markets. Our major competitors are Dystar, Clariant, BASF and Longshen. We believe that our competitive
strengths include our product offering, which is characterized by its broad range; high quality; significant integration between products and service; reliable technical expertise;
long-standing relationships with customers; and strong business infrastructure in Asia. We believe that we have more customer service capability and account management capability than any
of our competitors worldwide.

17

---



Table of Contents

Performance Products

General

Our Performance Products segment is organized around three market groups, performance specialties, performance intermediates and maleic
anhydride and licensing, and serves a wide variety of consumer and industrial end markets. In performance specialties, we are a leading global producer of amines, carbonates and certain specialty
surfactants. Growth in demand in our performance specialties market tends to be driven by the end-performance characteristics that our products deliver to our customers. These products are
manufactured for use in a growing number of niche industrial end uses and have been characterized by growing demand, technology substitution and stable profitability. For example, we are one of two
significant global producers of polyetheramines, for which our sales volumes have grown at a compound annual rate of over 6% in the last 10 years due to strong demand in a number of industrial
applications, such as epoxy curing agents, oil drilling, agrochemicals, fuel additives and civil construction materials. In performance intermediates, we consume internally produced and
third-party-sourced base petrochemicals in the manufacture of our surfactants, LAB and ethanolamines products, which are primarily used in detergency, consumer products and industrial applications. We
also produce EG, which is primarily used in the production of polyester fibers and PET packaging. We believe we are North America's largest and lowest-cost producer of maleic anhydride.
Maleic anhydride is the building block for UPRs, mainly used in the production of fiberglass reinforced resins for marine, automotive and construction products. We are the leading global licensor of
maleic anhydride manufacturing technology and are also the largest supplier of butane fixed bed catalyst used in the manufacture of maleic anhydride. Our licensing group also licenses technology on
behalf of other Huntsman businesses. We operate 16 Performance Products manufacturing facilities in North America, Europe, Asia and Australia.

We
have the annual capacity to produce approximately 1.2 billion pounds of more than 250 amines and other performance chemicals. We believe we are the largest global producer of
polyetheramines, propylene carbonates, ethylene carbonates, DGA® agent and morpholine, the second-largest global producer of ethyleneamines and the third-largest North American producer of
ethanolamines. We also produce substituted propylamines. We use internally produced ethylene, EO, EG and PO in the manufacture of many of our amines. Our products are manufactured at our Port Neches,
Conroe and Freeport, Texas facilities and at our facilities in Llanelli, U.K. Petfurdo, Hungary and Jurong Island, Singapore. Starting in the second quarter of 2010 we will also manufacture
ethyleneamines through our 50/50 joint venture with Zamil Group (the "Arabian Amines Company") located in Jubail, Saudi Arabia. The joint venture will have the capacity to produce 60 million
pounds of ethyleneamines per annum. Our amines are used in a wide variety of consumer and industrial applications, including personal care products, polyurethane foam, fuel and lubricant additives,
paints and coatings, composites, solvents and catalysts. Our key amines customers include Akzo, Chevron, Cognis, Hercules, Afton, Unilever, Monsanto and PPG.

We
have the capacity to produce approximately 2.5 billion pounds of surfactant products annually at our eight facilities located in North America, Europe and Australia. We are a
leading global manufacturer of nonionic, anionic, cationic and amphoteric surfactants products and are characterized by our breadth of product offering and market coverage. Our surfactant products are
primarily used in consumer detergent and industrial cleaning applications. In addition, we manufacture and market a diversified range of mild surfactants and specialty formulations for use in baby
shampoos and other personal care applications. We are also a leading European producer of components for powder and liquid laundry detergents and other cleaners. We continue to strengthen and
diversify our surfactant product offering into formulated specialty surfactant products, for use in various industrial applications such as leather and textile treatment, foundry and construction,
agrochemicals, fuels and lubricants, polymers and coatings. We are growing our global agrochemical surfactant technology and product

18

---



Table of Contents

offerings.
Our key surfactants customers include The Sun Products Corp, L'Oreal, Monsanto, Nufarm, Clorox, Henkel, Colgate, Procter & Gamble and Unilever.

We
are North America's second-largest producer of LAB, with alkylation capacity of 375 million pounds per year at our plant in Chocolate Bayou, Texas. LAB is a surfactant
intermediate which is converted into LAS, a major anionic surfactant used worldwide for the production of consumer, industrial and institutional laundry detergents. We also manufacture a
higher-molecular-weight alkylate which is used as an additive to lubricants. Our key customers for LAB and specialty alkylates include Colgate, Lubrizol, Henkel, Procter & Gamble, Unilever and
The Sun Products Corp.

We
believe we are North America's largest producer of maleic anhydride, a highly versatile chemical intermediate that is used to produce UPRs, which are mainly used in the production of
fiberglass reinforced resins for marine, automotive and construction products. Maleic anhydride is also used in the production of lubricants, food additives and artificial sweeteners. We have the
capacity to produce approximately 340 million pounds annually at our facilities located in Pensacola, Florida and Geismar, Louisiana. We also own a 50% interest in Sasol-
Huntsman GmbH & Co. KG, which is accounted for using the equity method. This joint venture owns and operates a facility in Moers, Germany with an annual capacity of
137 million pounds. We also license our maleic anhydride technology and supply our catalysts to licensees and to worldwide merchant customers. As a result of our long-standing
research and development efforts aided by our pilot and catalyst preparation plants, we have successfully introduced six generations of our maleic anhydride catalysts. Patent applications have been
recently filed for our seventh generation catalyst which should be commercially available in 2010. Revenue from licensing and catalyst comes from new plant commissioning, as well as current plant
retrofits and catalyst change schedules. Our key maleic anhydride customers include AOC, Chevron, Oronite, Cook Composites, Dixie, Lubrizol, Infineum and Reichhold.

We
also have the capacity to produce approximately 945 million pounds of EG annually at our facilities in Botany, Australia and Port Neches, Texas.

Products and Markets

Performance Specialties.The following table shows the end-market applications for our performance specialties products:

Product Group

ApplicationsSpecialty Amines

liquid soaps, personal care, lubricant and fuel additives, polyurethane foams, fabric softeners, paints and coatings, refinery processing, water treatingPolyetheramines

polyurethane foams and insulation, construction and flooring, paints and coatings, lubricant and fuel additives, adhesives, epoxy composites, agrochemicals, oilfield chemicals, printing inks, pigment
dispersionEthyleneamines

lubricant and fuel additives, epoxy hardeners, wet strength resins, chelating agents, fungicidesMorpholine/DGA® agent and Gas Treating

hydrocarbon processing, construction chemicals, synthetic rubber, water treating, electronics applications, gas treatment and agricultureCarbonates

lubricant and fuel additives, agriculture, electronics applications, textile treatment, solar panelsSpecialty Surfactants

agricultural herbicides, construction, paper de-inking, lubricants


19

---



Table of Contents

Our
performance specialties products are organized around the following end markets: coatings, polymers and resins; process additives; resources, fuels and lubricants; and agrochemicals.

Amines.Amines broadly refers to the family of intermediate chemicals that are produced by reacting ammonia with various ethylene and
propylene
derivatives. Generally, amines are valued for their properties as a reactive, emulsifying, dispersant, detergent, solvent or corrosion inhibiting agent. Growth in demand for amines is highly
correlated with GDP growth due to its strong links to general industrial and consumer products markets. However, certain segments of the amines market, such as polyetheramines, have grown at rates
well in excess of GDP growth due to new product development, technical innovation, and substitution and replacement of competing products. For example, polyetheramines are used by customers who demand
increasingly sophisticated performance characteristics as an additive in the manufacture of highly customized epoxy formulations, enabling the customers to penetrate new markets and substitute for
traditional curing materials. As amines are
generally sold based upon the performance characteristics that they provide to customer-specific end-use application, pricing does not generally fluctuate with movements in underlying raw
materials.

Morpholine/DGA® Agent.Morpholine and DGA® agent are produced as co-products by reacting ammonia with DEG.
Morpholine is used in a number of niche industrial applications including rubber curing (as an accelerator) and flocculants for water treatment. DGA® agent is primarily used in gas
treating, electronics, herbicides and metalworking end-use applications.

Carbonates.Ethylene and propylene carbonates are manufactured by reacting EO and PO with carbon dioxide. Carbonates are used as
solvents and as
reactive diluents in polymer and coating applications. They are also increasingly being used as a photo-resist solvent in the manufacture of printed circuit boards, solar panels, LCD screens and the
production of lithium batteries. Also, propylene carbonates have recently received approval by the U.S. Environmental Protection Agency for use as a solvent in certain agricultural applications. We
expect these solvents to replace traditional aromatic solvents that are increasingly subject to legislative restrictions and prohibitions.

20

---



Table of Contents

Performance Intermediates.The following table sets forth the end markets for our performance intermediates products:

Product Group

End MarketsSurfactantsAlkoxylates

household detergents, industrial cleaners, anti-fog chemicals for glass, asphalt emulsions, shampoos, polymerization additives, de-emulsifiers for petroleum productionSulfonates/Sulfates

powdered detergents, liquid detergents, shampoos, body washes, dishwashing liquids, industrial cleaners, emulsion
polymerization, concrete superplasticizers, gypsum wallboardEsters and Derivatives

shampoo, body wash, textile and leather treatmentNitrogen Derivatives

bleach thickeners, baby shampoo, fabric conditioners, other personal care productsFormulated Blends

household detergents, textile and leather treatment, personal care products, pharmaceutical
intermediatesEO/PO Block Co-Polymers

automatic dishwasher detergentsEthanolamines

wood preservatives, herbicides, construction, gas treatment, metalworkingLAB

consumer detergents, industrial and institutional detergents, synthetic lubricantsEG

polyester fibers and PET bottle resins, antifreeze


Surfactants.Surfactants or "surface active agents" are substances that combine a water-soluble component with a water insoluble
component in the
same molecule. While surfactants are most commonly used for their detergency in cleaning applications, they are also valued for their emulsification, foaming, dispersing, penetrating and wetting
properties in a variety of industries.

Demand
growth for surfactants is relatively stable and exhibits little cyclicality. The main consumer product applications for surfactants can demand new formulations with improved
performance characteristics, which affords considerable opportunity for innovative surfactants manufacturers like us to provide surfactants and blends with differentiated specifications and
properties. For basic surfactants, pricing tends to have a strong relationship to underlying raw material prices and usually lags raw material price movements.

Ethanolamines.Ethanolamines are a range of chemicals produced by the reaction of EO with ammonia. They are used as intermediates in
the production
of a variety of industrial, agricultural and consumer products. There are a limited number of competitors due to the technical and cost barriers to entry. Growth in this sector has typically been
higher than GDP and has benefited from higher demand for agrochemical products. We believe the ethanolamines market in North America is balanced.

LAB.LAB is a surfactant intermediate which is produced through the reaction of benzene with either normal paraffins or linear alpha
olefins. Nearly
all the LAB produced globally is converted into LAS, a major anionic surfactant used worldwide for the production of consumer, industrial and institutional laundry detergents.

Three
major manufacturers lead the traditional detergency market for LAB in North America: Procter & Gamble, Henkel and The Sun Products Corp. We believe that
two-thirds of the LAB global capacity lies in the hands of seven producers, with two or three major players in each of the three

21

---



Table of Contents

regional
markets. Although the North American market for LAB is mature, we expect Latin America and other developing countries to grow as detergent demand grows at a faster rate than GDP. However,
growth in demand for specialty alkylates for use in lubricants is expected to be higher than GDP. We have developed a unique manufacturing capability for a high molecular weight alkylate for this
market. With a significant technical barrier to entry, our specialty alkylate capability has allowed us greater diversity in our portfolio and strengthened our competitive position versus
LAB-only producers.

EG.We consume our internally produced EO to produce three types of EG: MEG, DEG and TEG. MEG is consumed primarily in the polyester
(fiber and
bottle resin) and antifreeze end markets and is also used in a wide variety of industrial applications including synthetic lubricants, plasticizers, solvents and emulsifiers. DEG is consumed
internally for the production of Morpholine/DGA® agent and polyols. TEG is used internally for the production of polyols and is sold into the market for dehydration of natural gas. We
continue to optimize our EO and EG operations depending on the fundamental market demand for EG.

Maleic Anhydride and Licensing.The following table sets forth the end markets for our maleic anhydride products:

Product Group

End MarketsMaleic anhydride

boat hulls, automotive, construction, lubricant and fuel additives, countertops, agrochemicals, paper, and food additivesMaleic anhydride catalyst and technology licensing

maleic anhydride, BDO and its derivatives, and PBT manufacturers


Maleic
anhydride is a chemical intermediate that is produced by oxidizing either benzene or normal butane through the use of a catalyst. The largest use of maleic anhydride in the U.S.
is in the production of UPRs, which we believe account for approximately 47% of U.S. maleic anhydride demand. UPR is the main ingredient in fiberglass reinforced resins, which are used for marine and
automotive applications and commercial and residential construction products.

Our
maleic anhydride technology is a proprietary fixed bed process with solvent recovery and is characterized by low butane consumption and an energy-efficient,
high-percentage-recovery solvent recovery system. This process competes against two other processes, the fluid bed process and the fixed bed process with water recovery. We believe that
our process is superior in the areas of feedstock and energy efficiency and solvent recovery. The maleic anhydride-based route to BDO manufacture is currently the preferred process technology and is
favored over the other routes, which include PO, butadiene and acetylene as feedstocks. As a result, the growth in demand for BDO has resulted in increased demand for our maleic anhydride technology
and catalyst.

Total
U.S. demand for maleic anhydride in 2009 was approximately 475 million pounds. Over time, demand for maleic anhydride has generally grown at rates that slightly exceed GDP
growth. However, given its dependence on the UPR market, which is heavily influenced by construction end markets, demand for this application can be cyclical. Pricing for maleic anhydride in North
America over the past several years has been increasing but has recently declined with the drop in feedstock costs. Generally, changes in price have resulted from changes in industry capacity
utilization as opposed to changes in underlying raw material costs.

On
April 1, 2008, we announced that Sasol-Huntsman GmbH KG, our 50/50 maleic anhydride joint venture located in Moers, Germany, would be expanding its manufacturing
capacity by approximately 100 million pounds per year. The new capacity is expected to be available in the first

22

---



Table of Contents

quarter
of 2011. The joint venture has received committed nonrecourse financing that together with its cash flows from operations will be used to fund the expansion.

Sales and Marketing

We sell over 2,000 products to over 4,000 customers globally through our Performance Products marketing groups, which have extensive
market knowledge, considerable chemical industry experience and well established customer relationships.

Our
performance specialties markets are organized around end-use market applications, such as coatings, polymers and resins and agrochemical. In these end uses, our marketing
efforts are focused on how our product offerings perform in certain customer applications. We believe that this approach enhances the value of our product offerings and creates opportunities for
ongoing differentiation in our development activities with our customers. Our performance intermediates and maleic anhydride markets organize their marketing efforts around their products and
geographic regions served. We also provide extensive pre- and post-sales technical service support to our customers where our technical service professionals work closely with
our research and development functions to tailor our product offerings to meet our customers unique and changing requirements. Finally, these technical service professionals interact closely with our
market managers and business leadership teams to help guide future offerings and market approach strategies.

In
addition to our focused direct sales efforts, we maintain an extensive global network of distributors and agents that also sell our products. These distributors and agents typically
promote our products to smaller end use customers who cannot be served cost effectively by our direct sales forces.

Manufacturing and Operations

Our Performance Products segment has the capacity to produce more than seven billion pounds annually of a wide variety of specialty,
intermediate and commodity products and formulations at 16 manufacturing locations in North America, Europe, Asia and Australia.

These
production capacities are as follows:

Current capacityProduct Area

North
America

EAME

APAC

Total(millions of pounds)Performance SpecialtiesAmines


667


124
(1)

33


824Carbonates


69








69Specialty surfactants


100


175


70


345Performance IntermediatesEG


890





55


945EO


1,000





100


1,100Ethanolamines


400








400Ethylene


400








400LAB


375








375Propylene


300








300Surfactants


470


1,675


30


2,175Maleic anhydride


340


137
(2)




477


(1)Includes
up to 30 million pounds of ethyleneamines that are made available from Dow's Terneuzen, Netherlands facility by way of a
long-term supply arrangement.


23

---



Table of Contents

(2)Represents
total capacity of a facility owned by Sasol-Huntsman GmbH & Co. KG, of which we own a 50% equity interest and Sasol owns the
remaining 50% interest. On April 1, 2008, we announced that Sasol-Huntsman GmbH KG would be expanding its manufacturing capacity by approximately 100 million pounds per year. The
new capacity is expected to be available in the first quarter of 2011 and is not included in the production capacity table noted above.


Our
surfactants and amines facilities are located globally, with broad capabilities in amination, sulfonation and ethoxylation. These facilities have a competitive cost base and use
modern manufacturing units that allow for flexibility in production capabilities and technical innovation. Through the major restructuring of our surfactant operations, we have significantly improved
the competitiveness of our surfactants business.

Our
primary ethylene, propylene, EO, EG and ethanolamines facilities are located in Port Neches, Texas alongside our Polyurethanes' PO/MTBE facility. The Port Neches, Texas facility
benefits from extensive logistics infrastructure, which allows for efficient sourcing of other raw materials and distribution of finished products.

Our
LAB facility in Chocolate Bayou, Texas and our maleic anhydride facility in Pensacola, Florida are both located within large, integrated petrochemical manufacturing complexes
operated by Ascend. We believe this results in greater scale and lower costs for our products than we would be able to obtain if these facilities were stand-alone operations.

Our
unconsolidated ethyleneamine joint venture is currently constructing a plant in Jubail, Saudi Arabia. The plant will have approximate capacity of 60 million pounds per year
with production expected early second quarter of 2010.

Raw Materials

We have the capacity to use approximately 850 million pounds of ethylene each year produced in part at our Port Neches, Texas
facility in the production of EO and ethyleneamines. We consume all of our EO in the manufacture of our EG, surfactants and amines products. We also use internally produced PO and DEG in the
manufacture of these products. We have the capacity to produce 400 million pounds of ethylene and 300 million pounds of propylene at our Port Neches, Texas facility. All of the ethylene
is used in the production of EO and substantially all of the propylene is consumed by the PO unit at Port Neches operated by our Polyurethanes business. We purchase or toll the remainder of our
ethylene and propylene requirements from third parties.

In
addition to internally produced raw materials, our performance specialties market purchases over 250 compounds in varying quantities, the largest of which includes ethylene
dichloride, caustic soda, synthetic alcohols, paraffin, nonyl phenol, ammonia, hydrogen, methylamines and acrylonitrile. The majority of these raw materials are available from multiple sources in the
merchant market at competitive prices.

In
our performance intermediates market, our primary raw materials, in addition to internally produced and third-party sourced EO and ethylene, are synthetic and natural alcohols,
paraffin, alpha olefins, benzene and nonyl phenol. All of these raw materials are widely available in the merchant market at competitive prices.

Maleic
anhydride is produced by the reaction of n-butane with oxygen using our proprietary catalyst. The principal raw material is n-butane which is purchased
pursuant to long-term contracts and delivered to our Pensacola, Florida site by barge and to our facility in Geismar, Louisiana via pipeline. Our maleic anhydride catalyst is
toll-manufactured by BASF under a long-term contract according to our proprietary methods. These raw materials are available from multiple sources at competitive prices.

24

---





Table of Contents

Competition

In our performance specialties market, there are few competitors for many of our products due to the considerable customization of
product formulations, the proprietary nature of many of our product applications and manufacturing processes and the relatively high research and development and technical costs involved. Some of our
global competitors include BASF, Air Products, Dow, Tosoh, and Akzo. We compete primarily on the basis of product performance, new product innovation and, to a lesser extent, on the basis of price.

There
are numerous global producers of many of our performance intermediates products. Our main competitors include global companies such as Dow, Sasol, BASF, Petresa, Clariant, Shell,
Cognis, Stepan and Kao, as well as various smaller or more local competitors. We compete on the basis of price with respect to the majority of our product offerings and, to a lesser degree, on the
basis of product availability, performance and service with respect to certain of our more value-added products.

In
our maleic anhydride market, we compete primarily on the basis of price, customer service and plant location. Our competitors include Lanxess, Flint Hills Resources, Marathon, Polynt
and BASF. We are the leading global producer of maleic anhydride catalyst. Competitors in our maleic anhydride catalyst
market include Scientific Design and Polynt. In our maleic anhydride technology licensing market, our primary competitor is Scientific Design. We compete primarily on the basis of technological
performance and service.

The
market in which our Performance Products segment operates is highly competitive. Among our competitors in this market are some of the world's largest chemical companies and major
integrated petroleum companies that have their own raw material resources. Some of these companies may be able to produce products more economically than we can. In addition, some of our competitors
in this market have greater financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development. If any of our current
or future competitors in this market develops proprietary technology that enables them to produce products at a significantly lower cost, our technology could be rendered uneconomical or obsolete.

Pigments

General

We are a leading global manufacturer and marketer of titanium dioxide, which is a white pigment used to impart whiteness, brightness
and opacity to products such as paints, plastics, paper, printing inks, fibers and ceramics. We operate seven titanium dioxide manufacturing facilities located in North America, Europe, Asia and
Africa. The global titanium dioxide market is characterized by a small number of large, global producers and a growing compliment of smaller regional producers.

We
offer an extensive range of products, under the Tioxide® and Deltio® brand names, to approximately 1,500 customers in all major titanium dioxide end markets
and geographic regions. The geographic diversity of our manufacturing facilities allows our Pigments segment to service local customers, as well as global customers that require delivery to more than
one location. Our diverse customer base includes Ampacet, A. Schulman, Akzo Nobel, BASF, Cabot, Clariant, Jotun, PolyOne and PPG. Our pigments business has an aggregate annual nameplate capacity of
approximately 560,000 tonnes at our seven production facilities. Four of our titanium dioxide manufacturing plants are located in Europe, one is in North America, one is in Asia, and one is in South
Africa. Our North American operation consists of a 50% interest in a manufacturing joint venture with Kronos Worldwide, Inc.

Our
Pigments segment is focused on improving our competitive position and providing customers with innovative products and solutions. To further our competitive position we expanded our
Greatham, U.K. chloride-based facility by 50% to 150,000 tonnes per annum capacity in 2008 and, during the first quarter of 2009, closed our Grimsby, U.K. sulphate-based facility. We continue to
pursue other projects

25

---



Table of Contents

to
improve manufacturing costs at each of our facilities. We are also introducing a number of innovative new products to the market, including our Deltio® range of free-flowing
pigments.

Products and Markets

Historically, global titanium dioxide demand growth rates tend to closely track global GDP growth rates. However, the demand growth
rate and its relationship with the GDP growth rate varies by region. Developed markets such as the U.S. and Western Europe exhibit higher absolute consumption but lower demand growth rates, while
emerging markets such as Asia exhibit much higher demand growth rates. The titanium dioxide industry experiences some seasonality in its sales reflecting the high exposure to seasonal coatings end use
markets. Coating sales generally peak during the spring and summer months in the northern hemisphere, resulting in greater sales volumes during the second and third quarters of the year.

There
are two manufacturing processes for the production of titanium dioxide, the sulfate process and the chloride process. Most recent capacity additions by the five major producers
have employed the chloride process technology while those by smaller producers have generally used the sulphate process technology. We currently believe that the chloride process accounts for
approximately 60% of global production capacity. However, the global distribution of sulfate- and chloride-based titanium dioxide capacity varies by region, with the sulfate process being predominant
in Europe, our primary market. The chloride process is the predominant process used in North America, and both processes are used in Asia. While most end-use applications can use pigments
produced by either process, regional market preferences typically favor products that are locally available. We believe the chloride and sulfate manufacturing processes compete effectively in the
marketplace.

The
titanium dioxide industry currently has five major producers and a large number of small regional or local producers. Titanium dioxide supply has historically kept pace with
increases in demand as producers increased capacity through low cost incremental debottlenecks and efficiency improvements. During periods of low titanium dioxide demand, the industry experiences high
stock levels and consequently reduces production to manage working capital. Pricing in the industry is driven primarily by supply/demand balance. Based upon current price levels and the long lead
times for planning, governmental approvals and construction, we do not expect significant additional greenfield capacity in the near future.

Sales and Marketing

Approximately 85% of our titanium dioxide sales are made through our direct sales and technical services network, enabling us to
cooperate more closely with our customers and to respond to our increasingly global customer base. Our concentrated sales effort and local manufacturing presence have allowed us to achieve our leading
market shares in a number of the countries where we manufacture titanium dioxide.

In
addition, we have focused on marketing products to higher growth industries. For example, we believe that our pigments business is well-positioned to benefit from the
projected growth in the plastics sector which we expect to grow faster than the overall titanium dioxide market over the next several years.

26

---



Table of Contents

Manufacturing and Operations

Our pigments business has eight manufacturing sites in seven countries with a total capacity of approximately 560,000 tonnes per year.
Approximately 72% of our titanium dioxide capacity is located in Western Europe. The following table presents information regarding our titanium dioxide facilities:

Region

Site

Annual
Capacity
(tonnes)

ProcessWestern Europe

Greatham, U.K.


150,000

ChlorideCalais, France


95,000

SulfateHuelva, Spain


80,000

SulfateScarlino, Italy


80,000

SulfateNorth America

Lake Charles, Louisiana(1)


70,000

ChlorideAsia

Teluk Kalung, Malaysia


60,000

SulfateSouthern Africa

Umbogintwini, South Africa


25,000

SulfateTotal




560,000


(1)This
facility is owned and operated by Louisiana Pigment Company, L.P., a manufacturing joint venture that is owned 50% by us and 50% by Kronos
Worldwide. The capacity shown reflects our 50% interest in Louisiana Pigment Company L.P.


In
2008, we completed the expansion of our Greatham, U.K. facility by 50,000 tonnes. We are also well positioned to selectively invest in new plant capacity based upon our ICON chloride
technology. ICON technology allows for the construction of new capacity with world-scale economics at a minimum nameplate size of 65,000 tonnes. We believe competing chloride technologies typically
require a minimum capacity of 100,000 tonnes to achieve comparable economics. Our chloride additions can be more easily absorbed into the market, which provides higher investment returns than larger
capacity additions.

During
the first quarter of 2009, we closed our Grimsby, U.K. sulphate-based manufacturing facility.

Joint Venture

We own a 50% interest in Louisiana Pigment Company L.P., a manufacturing joint venture located in Lake Charles, Louisiana. The
remaining 50% interest is held by our joint venture partner, Kronos Worldwide. We share production offtake and operating costs of the plant equally with Kronos Worldwide, though we market our share of
the production independently. The operations of the joint venture are under the direction of a supervisory committee on which each partner has equal representation. Our investment in Louisiana Pigment
Company L.P. is accounted for using the equity method.

Raw Materials

The primary raw materials used to produce titanium dioxide are titanium-bearing ores. We purchase the majority of our ore under
long-term supply contracts with a number of ore suppliers. The majority of titanium-bearing ores are sourced from Australia, South Africa and Canada. Ore accounts for approximately 45% of
pigment variable manufacturing costs, while utilities (electricity, gas and steam), sulfuric acid and chlorine collectively account for approximately 30% of our variable manufacturing costs.

27

---



Table of Contents

The
world market for titanium bearing ores is characterized by a small number of large suppliers (Rio Tinto, Iluka and Exxaro) which account for approximately 60% of global supply and
from which we purchase approximately 75% of our needs. However, the choice of producers has increased in recent years with a number of emerging suppliers based in India and Africa and we have
broadened our supply base by purchasing increasing amounts of our ores from these suppliers. Over 80% of our ore purchases are made under agreements with terms of three or more years.

Titanium
dioxide producers extract titanium from ores and process it into pigmentary titanium dioxide using either the chloride or sulfate process. Once an intermediate titanium dioxide
pigment has been produced, it is "finished" into a product with specific performance characteristics for particular end-use applications. The finishing process is common to both the
sulfate and chloride processes and is a major determinant of the final product's performance characteristics.

The
sulfate process generally uses less-refined ores that are cheaper to purchase but produce more co-product than the chloride process. Co-products
from both processes require treatment prior to disposal in order to comply with environmental regulations. In order to reduce our disposal costs and to increase our cost competitiveness, we have
developed and marketed the co-products of our pigments business. We sell over 50% of the co-products generated by our business.

Competition

The global markets in which our pigments business operates are highly competitive. Competition is based primarily on price. In
addition, we also compete on the basis of product quality and service. The major global producers against whom we compete are DuPont, Tronox, Kronos and Cristal, each of which has a global presence
and the ability to service all global markets. Some of our competitors may be able to produce products more economically than we can. In addition, some of our competitors in this market have greater
financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development. If any of our current or future competitors in this
market develops proprietary technology that enables them to produce products at a significantly lower cost, our technology could be rendered uneconomical or obsolete. Moreover, the sulphate-based
titanium dioxide technology used by our Pigments business is widely available. Accordingly, barriers to entry, apart from capital availability, may be low and the entrance of new competitors into the
industry may reduce our ability to capture improving profit margins in circumstances where capacity utilization in the industry is increasing.

RESEARCH AND DEVELOPMENT

For the years ended December 31, 2009, 2008 and 2007, we spent $145 million, $154 million and $145 million,
respectively, on research and development.

We
support our business with a major commitment to research and development, technical services and process engineering improvement. Our research and development centers are located in
The Woodlands, Texas, Everberg, Belgium, and Shanghai, China. Other regional development/technical service centers are located in Billingham, England (pigments); Auburn Hills, Michigan (polyurethanes
for the automotive industry); Derry, New Hampshire, Shanghai, China, Deggendorf, Germany and Ternate, Italy (polyurethanes); Melbourne, Australia (surfactants); Port Neches, Texas (process engineering
support); and Basel, Switzerland (textile effects).

INTELLECTUAL PROPERTY RIGHTS

Proprietary protection of our processes, apparatuses, and other technology and inventions is important to our businesses. We own
approximately 590 unexpired U.S. patents, approximately 175 patent applications (including provisionals) currently pending at the U.S. Patent and Trademark Office, and approximately 3,850 foreign
counterparts, including both issued patents and pending patent

28

---



Table of Contents

applications.
While a presumption of validity exists with respect to issued U.S. patents, we cannot assure that any of our patents will not be challenged, invalidated, circumvented or rendered
unenforceable. Furthermore, we cannot assure the issuance of any pending patent application, or that if patents do issue, that these patents will provide meaningful protection against competitors or
against competitive technologies. Additionally, our competitors or other third parties may obtain patents that restrict or preclude our ability to lawfully produce or sell our products in a
competitive manner.

We
also rely upon unpatented proprietary know-how and continuing technological innovation and other trade secrets to develop and maintain our competitive position. There can
be no assurance, however, that confidentiality agreements into which we enter and have entered will not be breached, that they will provide meaningful protection for our trade secrets or proprietary
know-how, or that adequate remedies will be available in the event of an unauthorized use or disclosure of such trade secrets and know-how. In addition, there can be no
assurance that others will not obtain knowledge of these trade secrets through independent development or other access by legal means.

In
addition to our own patents and patent applications and proprietary trade secrets and know-how, we are a party to certain licensing arrangements and other agreements
authorizing us to use trade secrets, know-how and related technology and/or operate within the scope of certain patents owned by other entities. We also have licensed or
sub-licensed intellectual property rights to third parties.

We
have associated brand names with a number of our products, and we have approximately 175 U.S. trademark registrations (including applications for registration currently pending at the
U.S. Patent and Trademark Office), and approximately 5,100 foreign counterparts, including both registrations and applications for registration. However, there can be no assurance that the trademark
registrations will provide meaningful protection against the use of similar trademarks by competitors, or that the value of our trademarks will not be diluted.

Because
of the breadth and nature of our intellectual property rights and our business, we do not believe that any single intellectual property right (other than certain trademarks for
which we intend to maintain the applicable registrations) is material to our business. Moreover, we do not believe that the termination of intellectual property rights expected to occur over the next
several years, either individually or in the aggregate, will materially adversely affect our business, financial condition or results of operations.

EMPLOYEES

As of December 31, 2009, we employed approximately 11,000 people in our operations around the world. Approximately 2,000 of
these employees are located in the U.S., while approximately 9,000 are located in other countries. We believe our relations with our employees are good.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

General

We are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to safety, 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, we are subject to frequent environmental inspections and monitoring and occasional investigations by governmental enforcement authorities. In addition, our production facilities require
operating permits that are subject to renewal, modification and, in certain circumstances, revocation. Actual or alleged violations of safety laws, 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.

29

---



Table of Contents

Moreover,
changes in environmental regulations could inhibit or interrupt our operations, or require us to modify our facilities or operations. Accordingly, environmental or regulatory matters may
cause us to incur significant unanticipated losses, costs or liabilities.

Environmental, Health and Safety Systems

We are committed to achieving and maintaining compliance with all applicable environmental, health and safety ("EHS") legal
requirements, and we have developed policies and management systems that are intended to identify the multitude of EHS legal requirements applicable to our operations, enhance compliance with
applicable legal requirements, ensure the safety of our 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 us in our compliance goals while also fostering efficiency
and improvement and minimizing overall risk to us.

EHS Capital Expenditures

We 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, 2009, 2008 and 2007, our capital expenditures for EHS matters totaled $54 million, $58 million and
$69 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, we cannot provide assurance that our recent
expenditures will be indicative of future amounts required under EHS laws.

Remediation Liabilities

We have incurred, and we may in the future incur, liability to investigate and clean up waste or contamination at our current or former
facilities or facilities operated by third parties at which we may have disposed of waste or other materials. Similarly, we may incur costs for the cleanup of wastes that were disposed of prior to the
purchase of our businesses. Under some circumstances, the scope of our liability may extend to damages to natural resources. The extent of damage may not be fully known and the processes and cost of
remediation may change as new information is obtained or technology for remediation is improved. Our process for estimating the expected cost for remediation considers the information available,
technology that can be utilized and estimates of the extent of damage.

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. We have been notified by third parties of claims against us for cleanup liabilities at approximately
10 former facilities or third party sites, including, but not limited to, sites listed under CERCLA. Based on current information and past experiences at other CERCLA sites, we do not expect any of
these third party claims to result in material liability to us. Outside the U.S., analogous contaminated property laws, such as those in effect in France and Australia, can hold past owners and/or
operators liable for remediation at former facilities.

In
addition, under the U.S. Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and similar state laws, we may be required to remediate contamination originating from
our properties as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste
disposal. We are aware of soil, groundwater or surface contamination from past operations at some of our sites, and we

30

---



Table of Contents

may
find contamination at other sites in the future. For example, our Port Neches, Texas, and Geismar, Louisiana, facilities are the subject of ongoing remediation requirements under RCRA authority.
Similar laws exist in a number of locations in which we currently operate manufacturing facilities, such as Australia, Switzerland, and Italy.

In
June of 2006, an agreement was reached between the local regulatory authorities and our Advanced Materials site in Pamplona, Spain to relocate our manufacturing operations in order to
facilitate new urban development desired by the city. Subsequently, as required by the authorities, soil and groundwater sampling was performed and followed by a quantitative risk assessment. Although
unresolved at this time, some level of remediation of site contamination may be required in the future, but the estimated cost is unknown because the remediation approach and timing has not been
determined.

By
letter dated March 7, 2006, our Base Chemicals and Polymers facility in West Footscray, Australia, was issued a clean-up notice by the Australian (Victorian) EPA
due to concerns about soil and groundwater contamination emanating from the site. The agency revoked the original clean-up notice on September 4, 2007 and issued a revised
clean-up notice due to "the complexity of contamination issues" at the site. On March 31, 2009, we submitted the required Site Remediation Action Plan to the agency which proposed
additional investigation and remediation method trials. We can provide no assurance that the EPA will agree with our proposed plan, will not seek to institute additional requirements for the site or
that additional costs will not be associated with the clean up. Additionally, on September 8, 2009, we announced a decision to close this facility in early 2010. In the third quarter of 2009,
we recorded a $30 million liability related to estimated environmental remediation costs at this site.

In
many cases, our potential liability arising from historical contamination is based on operations and other events occurring prior to our ownership of a business or specific facility.
In these situations, we frequently obtained an indemnity agreement from the prior owner addressing remediation liabilities arising from pre-closing conditions. We have successfully
exercised our rights under these contractual covenants for a number of sites and, where applicable, mitigated our ultimate remediation liability. We cannot assure you; however, that all of such
matters will be subject to indemnity, that the prior owner will honor its indemnity or that our existing indemnities will be sufficient to cover our liabilities for such matters.

Based
on available information and the indemnification rights we believe are likely to be available, we believe that the costs to investigate and remediate known contamination will not
have a material adverse effect on our financial condition, results of operations or cash flows. However, if such indemnities are unavailable or do not fully cover the costs of investigation and
remediation or we are required to contribute to such costs, and if such costs are material, then such expenditures may have a material adverse effect on our financial condition, results of operations
or cash flows. At the current time, we are unable to estimate the full cost, exclusive of indemnification benefits, to remediate any of the known contamination sites.

Environmental Reserves

We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known
penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are based upon requirements placed upon
us by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued
$41 million and $7 million for environmental liabilities as of December 31, 2009 and 2008, respectively. Of these amounts, $5 million and $4 million were classified
as accrued liabilities in our consolidated balance sheets as of December 31, 2009 and 2008, respectively, and

31

---



Table of Contents

$36 million
and $3 million were classified as other noncurrent liabilities in our consolidated balance sheets as of December 31, 2009 and December 31, 2008, respectively.
In certain cases, our remediation liabilities may be payable over periods of up to 30 years. We may incur losses for environmental remediation in excess of the amounts accrued; however, we are
not able to estimate the amount or range of such potential excess.

Regulatory Developments

In December 2006, the EU parliament and EU council approved a new EU regulatory framework for chemicals called "REACH" (Registration,
Evaluation and Authorization of Chemicals). REACH took effect on June 1, 2007, and the program it establishes will be phased in over 11 years. Under the regulation, companies that
manufacture in or import into the European Economic Area ("EEA") more than one metric tonne of a chemical substance per year will be required to register such chemical substances and isolated
intermediates in a central database. Use authorizations will be granted for a specific chemical if the applicants can show that the risks in using the chemical are adequately controlled; and for
chemicals where there are no suitable alternatives substances or technologies available and the applicant can demonstrate that the social and economic benefits of using the chemical outweigh the
risks. In addition, specified uses of some hazardous substances may be restricted. Furthermore, all applicants will have to study the availability of alternative chemicals. If an alternative is
available, an applicant will have to submit a "substitution" plan to the regulatory agency. The regulatory agency will only authorize persistent bio-accumulative and toxic substances if an
alternative chemical is not available. The registration, evaluation and authorization phases of the program will require expenditures and resource commitments in order to, for example, participate in
mandatory data-sharing forums; acquire, generate and evaluate data; prepare and submit dossiers for substance registration; obtain legal advice and reformulate products, if necessary. We
have established a cross-business European REACH team that is working closely with our businesses to identify and list all substances we purchase or manufacture in, or import into, the EEA. Our
pre-registration REACH compliance
began on June 1, 2008, utilizing internal resources at nominal expense and we met all chemical pre-registration requirements by the November 30, 2008 regulatory deadline. We
are currently proceeding with the registration of the high-volume and high-priority chemicals under the program, which must be registered no later than November 30,
2010. Although the total long-term cost for REACH compliance is not estimable at this time, we spent approximately $3 million, $2 million and $3 million during the
years ended December 31, 2009, 2008 and 2007, respectively, on REACH compliance.

Greenhouse Gas Regulation

In the EU and other jurisdictions committed to compliance with the Kyoto Protocol to the United Nations Framework Convention on Climate
Change (the "Kyoto Protocol"), there is an increasing likelihood that our manufacturing sites will be affected in some way over the next few years by regulation or taxation of greenhouse gas ("GHG")
emissions. For example, Australia recently proposed its Carbon Pollution Reduction Scheme, which may impact our Australian operations, and program implementation is currently scheduled for 2011. In
addition, although the U.S. is not a signatory to the Kyoto Protocol, several states are implementing their own GHG regulatory programs and a federal program in the U.S. is likely for the future.
Draft U.S. federal legislation and the recent U.S. EPA Clean Air Act endangerment findings for carbon dioxide have focused corporate attention on the eventuality of measuring and reporting of GHG
emissions for operations in the U.S. The U.S. EPA also recently mandated GHG reporting requirements for U.S. sources in excess of 25,000 tons beginning in 2010. Final details of a comprehensive U.S.
GHG management approach is, as yet, uncertain. Nevertheless, we are already managing and reporting GHG emissions, to varying degrees, as required by law for our sites in locations subject to Kyoto
Protocol obligations and/or EU emissions trading scheme requirements. Although these sites are subject to existing GHG legislation, few have

32

---



Table of Contents

experienced
or anticipate significant cost increases as a result, although it is likely that GHG emission restrictions will increase over time. Potential consequences of such restrictions include
capital requirements to modify assets used to meet GHG restriction and/or increases in energy costs above the level of general inflation, as well as direct compliance costs. Currently, however, it is
not possible to estimate the likely financial impact of potential future regulation on any of our sites.

Chemical Facility Anti-terrorism Rulemaking

The Department of Homeland Security ("DHS") issued the final rule of their "Chemical Facility Anti-Terrorism Standard" in
2007. The initial phase of the rule required all chemical facilities in the U.S. to evaluate their facilities against the DHS Appendix A list of
"Chemicals of Interest." Facilities which have specified chemicals in designated quantities on the Appendix A list were required to submit a "Top Screen" to DHS in 2008. A Top Screen is a
questionnaire completed by a facility having Chemicals of Interest in designated threshold quantities. In early 2008, we submitted Top Screens for all of our covered facilities. After reviewing the
Top Screens, DHS determined that some of our sites were "High Risk" facilities. As a result, we were required to perform security vulnerability assessments at the High Risk sites. The security
vulnerability assessments were completed and sent to DHS during the fourth quarter of 2008. Based on their assessment of the security vulnerability assessments, we received notice from DHS that one of
our sites was elevated to a higher security tier. The DHS determined the other three sites to be low security tiers. The three sites will be required to develop site security plans based on a list of
18 risk-based performance standards, but security improvements recommended from the site security plans are not anticipated to be material. We believe that security upgrades to the
tier-elevated site will be required; however we do not know what these required updates will be and thus cannot reasonably estimate associated costs at this time, but they could be
material. Additionally, on November 26, 2008, the Transportation Safety Administration of the DHS published a final rule regarding "rail security sensitive materials" that are received at or
shipped from facilities. We have three sites that are subject to this new rule, but at this time do not anticipate that the costs to comply will be material.

MTBE Developments

We produce MTBE, an oxygenate that is blended with gasoline to reduce vehicle air emissions and to enhance the octane rating of
gasoline. Litigation or legislative initiatives restricting the use of MTBE in gasoline may subject us or our products to environmental liability or materially adversely affect our sales and costs.
Because MTBE has contaminated some water supplies, its use has become controversial in the U.S. and elsewhere, and its use has been effectively eliminated in the U.S. market. We currently market MTBE,
either directly or through third parties, to gasoline additive customers located outside the U.S., although there are additional costs associated with such outside-U.S. sales, which may
result in decreased profitability compared to historical sales in the U.S. We may also elect to use all or a portion of our precursor tertiary butyl alcohol to produce saleable products other than
MTBE. If we opt to produce products other than MTBE, necessary modifications to our facilities will require significant capital expenditures and the sale of such other products may produce a lower
level of cash flow than that historically produced from the sale of MTBE.

Numerous
companies, including refiners, manufacturers and sellers of gasoline, as well as manufacturers of MTBE, have been named as defendants in more than 150 cases in U.S. courts that
allege MTBE contamination in groundwater. Many of these cases were settled after the parties engaged in mediation supervised by a court-appointed special settlement master. Beginning in March 2007 and
continuing through June 24, 2009, we have been named as a defendant in 18 of these lawsuits pending in New York state and federal courts. For more information, see "Item 3. Legal
ProceedingsMTBE Litigation." The plaintiffs in the MTBE groundwater contamination cases generally seek compensatory damages, punitive damages, injunctive relief, such as monitoring and
abatement, and attorney fees.

33

---



Table of Contents

While
we currently have insufficient information to meaningfully assess our potential exposure in these cases, we have joined with a larger group of defendants in an effort to mediate the plaintiffs'
claims. Mediation in late 2008 and early 2009 was unsuccessful. A further mediation session was held February 3, 2010 which resulted in a tentative settlement in each of the cases in which we
have been named. Our allocated portion of the total settlement amount is not material and we have accrued a liability for the claims equal to our allocated portion of the settlement. It is possible
that we could be named as a defendant in additional existing or future MTBE contamination cases. We cannot provide assurances that adverse results against us in existing or future MTBE contamination
cases will not have a material adverse effect on our business, results of operations and financial position.

AVAILABLE INFORMATION

We maintain an internet website at http://www.huntsman.com. Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to these reports are available free of charge through our website as soon as reasonably practicable after we
file this material with the SEC. We also provide electronic or paper copies of our SEC filings free of charge upon request.

GLOSSARY OF CHEMICAL TERMS

DEGdi-ethylene
glycol

BDObutane
diol

DGA®
AgentDIGLYCOLAMINE® agent

EGethylene
glycol

EOethylene
oxide

EPSexpanded
polystyrene

LABlinear
alkyl benzene

LASlinear
alkylbenzene sulfonate

LDPElow
density polyethylene

LERliquid
epoxy resins

LLDPElinear
low density polyethylene

LNGliquefied
natural gas

MEGmono-ethylene
glycol

MDImethyl
diphenyl diisocyanate

MTBEmethyl
tertiary-butyl ether

PGpropylene
glycol

POpropylene
oxide

Polyolsa
substance containing several hydroxyl groups. A diol, triol and tetrol contain two, three and four hydroxyl groups respectively

TBAtertiary-butyl
alcohol

TBHPtert-butyl
hydroperoxide

TDItoluene
diisocyanate

34

---



Table of Contents

TEGtri-ethylene
glycol

TiO2titanium
dioxide pigment

TPUthermoplastic
polyurethane

UPRunsaturated
polyester resin

ITEM 1A.    RISK FACTORS

Any of the following risks could materially and adversely affect our business, results of operations and financial condition.

RISKS RELATED TO OUR BUSINESS

Our industry is affected by global economic factors including risks associated with declining economic conditions.

Our financial results are substantially dependent upon overall economic conditions in the United States, the European Union and Asia.
Declining economic conditions in all or any of these locationsor negative perceptions about economic conditionscould result in a substantial decrease in demand for our
products and could adversely affect our business. Indeed, as a result of the current economic downturn, we have experienced decreased demand for many of our products.

Uncertain
economic conditions and market instability make it difficult for us, our customers and our suppliers to forecast demand trends. Renewed declines in demand would place
additional pressure on our results of operations. The timing and extent of any changes to currently prevailing market conditions is uncertain and supply and demand may be unbalanced at any time. As a
consequence, at present, we are unable to accurately predict future economic conditions or the effect of such conditions on our financial condition or results of operations, and we can give no
assurances as to the timing, extent or duration of the current or future economic cycles impacting the chemical industry.

Significant price volatility or interruptions in supply of our raw materials may result in increased costs that we may be unable to pass on to our customers, which could
reduce our profitability.

The prices of the raw materials that we purchase from third parties are cyclical and volatile. We purchase a substantial portion of
these raw materials from third party suppliers, and, following the dispositions of our base chemicals and polymers businesses in 2007 and 2006, respectively, our purchases of certain products from
third party suppliers have significantly increased. The cost of these raw materials represents a substantial portion of our operating expenses. The prices for a number of these raw materials generally
follow price trends of, and vary with market conditions for, crude oil and natural gas feedstocks, which are highly volatile and cyclical.

The
feedstocks and other raw materials we consume are generally commodity products that are readily available at market prices. We frequently enter into supply agreements with particular
suppliers, but disruptions of existing supply arrangements could substantially impact our profitability. If certain of our suppliers are unable to meet their obligations under present supply
agreements, we may be forced to pay higher prices to obtain the necessary raw materials from other sources and we may not be able to increase prices for our finished products to recoup the higher raw
materials costs. In addition, if any of the raw materials that we use become unavailable within the geographic area from which they are now sourced, then we may not be able to obtain suitable or cost
effective substitutes. Any interruption in the supply of raw materials could increase our costs or decrease our revenues, which could reduce our cash flow.

35

---



Table of Contents

Our supply agreements typically provide for market-based pricing and provide us only limited protection against price volatility. While we attempt to match cost
increases with corresponding product price increases, we are not always able to raise product prices immediately or at all. Timing differences between raw material prices, which may change daily, and
contract product prices, which in many cases are negotiated only monthly or less often, have had and may continue to have a negative effect on our cash flow. Any cost increase that we are not able to
pass on to our customers could have a material adverse effect on our business, results of operations, financial condition and liquidity.

Financial difficulties and related problems at our customers, vendors, suppliers and other business partners could have a material adverse effect on our business.

The recent economic downturn has caused financial problems at some customers, vendors, suppliers and business partners. We rely on
numerous vendors and suppliers and collaborations with other industry participants to provide us with chemicals, feedstocks and other raw materials, along with energy sources and, in certain cases,
facilities, that we need to operate our business. If the economic downturn were to continue or worsen, some of these companies may be forced to reduce their output, shut down their operations or file
for bankruptcy protection. If this were to occur, it could materially adversely affect their ability to provide us with the raw materials, energy sources or facilities that we need, which could
disrupt our operations, including the production of certain of our products. In addition, it could be difficult to find replacements for certain of our business partners without incurring significant
delays or cost increases.

In
addition, if the economic downturn were to continue or worsen, some of our customers may experience financial difficulties, including bankruptcies, restructurings and liquidations,
which could affect our business by reducing sales, increasing our risk in extending trade credit to customers and reducing our profitability. A significant adverse change in a customer relationship or
in a customer's financial position could cause us to limit or discontinue business with that customer, require us to assume more credit risk relating to that customer's receivables or limit our
ability to collect accounts receivable from that customer, all of which could have a material adverse effect on our business, results of operations, financial condition and liquidity.

Our available cash and access to additional capital may be limited by our significant leverage, which could restrict our ability to grow our businesses.

We have a significant amount of indebtedness outstanding. As of December 31, 2009, we had total consolidated outstanding
indebtedness of approximately $4,212 million (including the current portion of long-term debt) and a debt to total capitalization ratio of approximately 69%. This balance does not
reflect approximately $254 million under our U.S. accounts receivable securitization program ("U.S. A/R Program") and our European accounts receivable securitization program ("EU A/R
Program," and, collectively with the U.S. A/R Program, our "A/R Program" or "A/R Programs") at December 31, 2009. Our outstanding debt could have important consequences for our businesses,
including the following:



36

---



Table of Contents



We
require substantial capital to finance our operations and continued growth, and we may incur substantial additional debt from time to time for a variety of purposes, including
acquiring additional businesses. However, our existing debt instruments contain restrictive covenants. Among other things, these covenants limit or prohibit our ability to incur more debt; make
prepayments of other debt; pay dividends, redeem stock or make other distributions; issue capital stock; make investments; create liens; enter into transactions with affiliates; enter into sale and
leaseback transactions; merge or consolidate; and transfer or sell assets.

Our
debt instruments also require us to comply with certain financial covenants under certain circumstances. For example, after entering into a waiver on April 16, 2009, the
leverage covenant applicable to our $650 million revolving facility (the "Revolving Facility") under our senior secured credit facilities (the "Senior Credit Facilities") requires us to
maintain a maximum senior secured debt to EBITDA ratio of 5.00 to 1 when loans or letters of credit are outstanding under the Revolving Facility. We may consent to terminating the waiver in
conjunction with a proposed amendment to the Revolving Facility that we are currently seeking. In that event, the required maximum senior secured debt to EBITDA ratio would return to 3.75 to 1.00. As
of December 31, 2009, we were in compliance with the covenant. However, if we violate this covenant, it could lead to an event of default under the Senior Credit Facilities, which could require
us to pay off the balance of the Senior Credit Facilities in full and result in a loss of such facilities. Given the current credit environment, it may not be possible for us to replace the Senior
Credit Facilities with a substitute facility on terms acceptable to us, or at all.

We
also must comply with certain financial covenants under our $250 million U.S. A/R Program and our €225 million (approximately $323 million) EU A/R
Program. Failure to meet such covenants could lead to an event of default and could require us to cease use of such facilities, thus prohibiting us from borrowing against our receivables. A default
under our A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and result in
a loss of such facilities. In summary, if debt under one or more of our facilities is accelerated, cross-default provisions in our debt instruments would likely be triggered, which would likely have a
material adverse impact on our financial condition.

Also,
if we undergo a change of control, our debt instruments may require us to make an offer to purchase certain of our notes. Under these circumstances, we may also be required to
repay indebtedness under our Senior Credit Facilities prior to our notes. In this event, we may not have the financial resources necessary to purchase such notes, which would result in an event of
default under the indentures governing such notes.

As
of December 31, 2009, the current portion of our long term debt to affiliates totaled approximately $431 million. As of December 31, 2009, we had combined
outstanding variable rate borrowings of approximately $2.2 billion. Assuming a 1% increase in interest rates, without giving effect to any interest rate hedges or our cash balances, our annual
interest rate expense would increase by approximately $22 million. If we are unable to generate sufficient cash flow or are otherwise unable to obtain the funds required to meet payments of
principal and interest on our indebtedness, or if we otherwise fail to comply with the various covenants in the instruments governing our indebtedness, we could be in default under the terms of those
instruments. In the event of a default, a holder of the indebtedness could elect to declare all the funds borrowed under those instruments to be due and payable together with accrued and unpaid
interest, the creditors under our Senior Credit Facilities could elect to terminate their commitments thereunder, and we or one or more of our subsidiaries could be forced into bankruptcy or
liquidation. Any of the foregoing consequences could have a material adverse effect on our business, results of operations and financial condition.

37

---



Table of Contents

We may not be able to obtain funding because of the deterioration of the credit and capital markets. This may hinder or prevent us from meeting our future capital needs and
from refinancing our existing indebtedness when it comes due.

Global financial markets and economic conditions continue to be volatile, which has resulted in substantial deterioration in the credit
and capital markets. These conditions, along with significant write-offs in the financial services sector and the re-pricing of credit risk, may make it difficult to obtain
funding for our ongoing capital needs.

In
particular, the cost of raising money in the debt and equity capital markets has increased substantially while the availability of funds from those markets generally has diminished.
Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets generally has
increased as many lenders and institutional investors have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at maturity on terms that are similar to
existing debt, and reduced, or in some cases ceased, to provide funding to borrowers.

Due
to these factors, we cannot be certain that additional funding for our capital needs from credit and capital markets will be available if needed and, to the extent required, on
acceptable terms. In addition, we may be unable to refinance our existing indebtedness when it comes due on terms that are acceptable to us or at all. If we cannot meet our capital needs or refinance
our existing indebtedness, it could have a material adverse effect on our financial position and results of operations.

A downgrade in the ratings of the securities of our Company or our subsidiaries could result in increased interest and other financial expenses related to future borrowings
of our Company or our subsidiaries and could restrict our access to additional capital or trade credit.

Standard and Poor's Ratings Services and Moody's Investors Service maintain credit ratings for our Company. Each of these ratings is
currently below investment grade. Any decision by these or other ratings agencies to downgrade such ratings in the future could result in increased interest and other financial expenses relating to
our future borrowings and could restrict our ability to obtain additional financing on satisfactory terms. In addition, any downgrade could restrict our access to, and negatively impact the terms of,
trade credit extended by our suppliers of raw materials.

The industries in which we compete are highly competitive, and we may not be able to compete effectively with our competitors that have greater financial resources, which
could have a material adverse effect on our business, results of operations and financial condition.

The industries in which we operate are highly competitive. Among our competitors are some of the world's largest chemical companies and
major integrated petroleum companies that have their own raw material resources. Changes in the competitive landscape could make it difficult for us to retain our leadership position in various
products and markets throughout the world. In addition, some of the companies with whom we compete may be able to produce products more economically than we can. Furthermore, some of our competitors
have greater financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development. While we are engaged in a range of
research and development programs to develop new products and processes, to improve and refine existing products and processes, and to develop new applications for existing products, the failure to
develop new products, processes or applications could make us less competitive. Moreover, if any of our current or future competitors develops proprietary technology that enables them to produce
products at a significantly lower cost, our technology could be rendered uneconomical or obsolete.

In
addition, certain of our businesses use technology that is widely available. Accordingly, barriers to entry, apart from capital availability, may be low in certain product segments of
our business, and

38

---



Table of Contents

the
entrance of new competitors into the industry may reduce our ability to capture improving profit margins in circumstances where capacity utilization in the industry is increasing. Further,
petroleum-rich countries have become more significant participants in the petrochemical industry and may expand this role significantly in the future. Increased competition in any of our
businesses could compel us to reduce the prices of our products, which could result in reduced profit margins and loss of market share and have a material adverse effect on our business, results of
operations, financial condition and liquidity.

Future acquisitions, partnerships and joint ventures may require significant resources and/or result in unanticipated adverse consequences that could have a material adverse
effect on our business, results of operations and/or financial condition.

In the future we may seek to grow by making acquisitions or entering into partnerships and joint ventures. Any future acquisition,
partnership or joint venture may require that we make a significant cash investment, issue stock or incur substantial debt. In addition, acquisitions, partnerships or investments may require
significant managerial attention, which may be diverted from our other operations. These capital, equity and managerial commitments may impair the operation of our businesses. Any future acquisitions
of businesses or facilities could entail a number of additional risks, including:



We
have incurred indebtedness to finance past acquisitions. We may finance future acquisitions with additional indebtedness. We could face financial risks associated with incurring
additional indebtedness, such as reducing our liquidity and access to financial markets and increasing the amount of cash flow required to service indebtedness, which could have a material adverse
effect on our business, results of operations and financial condition.

Our results of operations may be adversely affected by international business risks, including fluctuations in currency exchange rates, legal restrictions and taxes.

We conduct a majority of our business operations outside the U.S., and these operations are subject to risks normally associated with
international operations. These risks include the need to convert currencies that may be received for our products into currencies in which we purchase raw materials or pay for services, which could
result in a gain or loss depending on fluctuations in exchange rates. In addition, we translate our local currency financial results into U.S. dollars based on average exchange rates prevailing during
the reporting period or the exchange rate at the end of that period. During times of a strengthening U.S. dollar, our reported international sales and earnings may be reduced because the local
currency may translate into fewer U.S. dollars. Because we currently have significant operations located outside the U.S., we are exposed to fluctuations in global currency rates which may result in
gains or losses on our financial statements.

Other
risks of international operations include trade barriers, tariffs, exchange controls, national and regional labor strikes, social and political risks, general economic risks and
required compliance with a variety of U.S. and foreign laws, including tax laws. Furthermore, in foreign jurisdictions where process of law may vary from country to country, we may experience
difficulty in enforcing agreements. In jurisdictions where bankruptcy laws and practices may vary, we may experience difficulty collecting foreign receivables through foreign legal systems. The
occurrence of these risks, among others, could

39

---



Table of Contents

disrupt
the businesses of our international subsidiaries, which could significantly affect their ability to make distributions to us.

We
operate in a significant number of jurisdictions, which contributes to the volatility of our effective tax rate. Changes in tax laws or the interpretation of tax laws in the
jurisdictions in which we operate may affect our effective tax rate. In addition, generally accepted accounting principles in the U.S. ("GAAP" or "U.S. GAAP") has required us to place valuation
allowances against our net operating losses and other deferred tax assets in a significant number of tax jurisdictions. These valuation allowances result from a cumulative history of
pre-tax operating losses in specific tax jurisdictions. Valuation allowances have resulted in material fluctuations in our effective tax rate. Economic conditions may dictate the continued
imposition of the current valuation allowances and
potentially the establishment of new valuation allowances. While significant valuation allowances remain, our effective tax rate will likely continue to experience significant fluctuations.

The
current administration has announced several proposals to reform U.S. tax laws, including a proposal to further limit foreign tax credits and a proposal to defer tax deductions
allocable to non-U.S. earnings until earnings are repatriated. It is unclear whether these proposed changes will be enacted, or, if enacted, what the scope of the reforms will be.
Depending on their content, such reforms, if enacted, could have a material adverse effect on our operating results and financial condition.

Demand for many of our products is cyclical, and we may experience depressed market conditions for such products.

Historically, the markets for many of our products have experienced alternating periods of tight supply, causing prices and profit
margins to increase, followed by periods of capacity additions, resulting in oversupply and declining prices and profit margins. The volatility these markets experience occurs as a result of changes
in the supply and demand for products, changes in energy prices and changes in various other economic conditions around the world. This cyclicality and volatility of our industry results in
significant fluctuations in profits and cash flow from period to period and over the business cycle.

Natural or other disasters could disrupt our business and result in loss of revenue or in higher expenses.

Any serious disruption at any of our facilities due to hurricane, fire, earthquake, flood, terrorist attack or any other natural or
man-made disaster could impair our ability to use our facilities and have a material adverse impact on our revenues and increase our costs and expenses. If there is a natural disaster or
other serious disruption at any of these facilities, it could impair our ability to adequately supply our customers and negatively impact our operating results. In addition, many of our current and
potential customers are concentrated in specific geographic areas. A disaster in one of these regions could have a material adverse impact on our operations, operating results and financial condition.

While
we maintain business recovery plans that are intended to allow us to recover from natural disasters or other events that could disrupt our business, we cannot provide assurances
that our plans would fully protect us from all such disasters or events that might result due to climate change. In addition, insurance may not adequately compensate us from any losses incurred as a
result of natural or other disasters. Furthermore, in areas prone to frequent natural or other disasters, insurance may become increasingly expensive or not at all available.

Our operations involve risks that may increase our operating costs, which could reduce our profitability.

Although we take precautions to enhance the safety of our operations and minimize the risk of disruptions, our operations are subject
to hazards inherent in the manufacturing and marketing of differentiated and commodity chemical products. These hazards include: chemical spills, pipeline leaks

40

---



Table of Contents

and
ruptures, storage tank leaks, discharges or releases of toxic or hazardous substances or gases and other hazards incident to the manufacturing, processing, handling, transportation and storage of
dangerous chemicals. We are also potentially subject to other hazards, including natural disasters and severe weather; explosions and fires; transportation problems, including interruptions, spills
and leaks; mechanical failures; unscheduled downtimes; labor difficulties; remediation complications; and other risks. Many potential hazards can cause bodily injury and loss of life, severe damage to
or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties and liabilities. Furthermore, we are
subject to present and future claims with respect to workplace exposure, exposure of contractors on our premises as well as other persons located nearby, workers' compensation and other matters.

We
maintain property, business interruption and casualty insurance policies which we believe are in accordance with customary industry practices, but we are not fully insured against all
potential hazards and risks incident to our business. We maintain property damage and business interruption insurance policies and products liability insurance policies, as well as insurance policies
covering other types of risks, including pollution legal liability insurance. Each of these insurance policies is subject to customary exclusions, deductibles and coverage limits, in accordance with
industry standards and practices. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance may
become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our
business, results of operations, financial condition and liquidity.

In
addition, we are subject to various claims and litigation in the ordinary course of business. We are a party to various pending lawsuits and proceedings. It is possible that judgments
could be rendered against us in these cases or others in which we could be uninsured or not covered by indemnity and beyond the amounts that we currently have reserved or anticipate incurring for such
matters.

We are subject to many environmental and safety regulations that may result in unanticipated costs or liabilities, which could reduce our profitability.

We are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection
of the environment and human health, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. 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.

Continually
increasing concerns regarding the safety of chemicals in commerce and their potential impact on the environment constitute a growing trend. Governmental, regulatory and
societal demands for continuously increasing levels of product safety and environmental protection could result in continued pressure for more stringent regulatory control with respect to the chemical
industry. In addition, these concerns could influence public perceptions, the viability of certain products, our reputation, the cost to comply with regulations, and the ability to attract and retain
employees. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require us to modify our facilities or operations. Accordingly, environmental or regulatory
matters may cause us to incur significant unanticipated losses, costs or liabilities, which could reduce our profitability.

We
could incur significant expenditures in order to comply with existing or future environmental or safety laws. Capital expenditures and costs relating to environmental or safety
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 our operations. Capital
expenditures and costs

41

---



Table of Contents

beyond
those currently anticipated may therefore be required under existing or future environmental or safety laws.

Furthermore,
we may be liable for the costs of investigating and cleaning up environmental contamination on or from our properties or at off-site locations where we disposed
of or arranged for the disposal or treatment of hazardous materials or from disposal activities that pre-dated our purchase of our businesses. We may therefore incur additional costs and
expenditures beyond those currently anticipated to address all such known and unknown situations under existing and future environmental laws.

Existing or future litigation or legislative initiatives restricting the use of MTBE in gasoline may subject us or our products to environmental liability, materially reduce
our sales and/or materially increase our costs.

We produce MTBE, an oxygenate that is blended with gasoline to reduce vehicle air emissions and to enhance the octane rating of
gasoline. Litigation or legislative initiatives restricting the use of MTBE in gasoline may subject us or our products to environmental liability or materially adversely affect our sales and costs.
Because MTBE has contaminated some water supplies, its use has become controversial in the U.S. and elsewhere, and its use has been effectively eliminated in the U.S. market. We currently market MTBE,
either directly or through third parties, to gasoline additive customers located outside the U.S., although there are additional costs associated with such outside-U.S. sales which may
result in decreased profitability compared to historical sales in the U.S. We may also elect to use all or a portion of our precursor tertiary butyl alcohol to produce saleable products other than
MTBE. If we opt to produce products other than MTBE, necessary modifications to our facilities will require significant capital expenditures and the sale of such other products may produce a lower
level of cash flow than that historically produced from the sale of MTBE.

Numerous
companies, including refiners, manufacturers and sellers of gasoline, as well as manufacturers of MTBE, have been named as defendants in more than 150 cases in U.S. courts that
allege MTBE contamination in groundwater. Many of these cases were settled after the parties engaged in mediation supervised by a court-appointed special settlement master. Beginning in March 2007 and
continuing through June 24, 2009, we have been named as a defendant in 18 of these lawsuits pending in New York state and federal courts. For more information, see "Item 3 Legal
ProceedingsMTBE Litigation." The plaintiffs in the MTBE groundwater contamination cases generally seek compensatory damages, punitive damages, injunctive relief, such as monitoring and
abatement, and attorney fees. While we currently have insufficient information to meaningfully assess our potential exposure in these cases, we have joined with a larger group of defendants in an
effort to mediate the plaintiffs' claims. Mediation in late 2008 and early 2009 was unsuccessful. A further mediation session was held February 3, 2010 which resulted in a tentative settlement
in each of the cases in which we have been named. Our allocated portion of the total settlement amount is not material and we have accrued a liability for the claims equal to our allocated portion of
the settlement. It is possible that we could be named as a defendant in additional existing or future MTBE contamination cases. We cannot provide assurances that adverse results against us in existing
or future MTBE contamination cases will not have a material adverse effect on our business, results of operations and financial position.

Failure to adequately protect critical data and technology systems could materially affect our operations

Information technology system failures, network disruptions and breaches of data security could disrupt our operations by causing
delays or cancellation of customer orders, impeding the manufacture or shipment of products, processing transactions and reporting financial results, resulting in the unintentional disclosure of
customer or our information, or damage to our reputation. While management has taken steps to address these concerns by implementing network security and internal control measures, there can be no
assurance that a system failure or data security breach will not have a material adverse effect on our financial condition and operating results.

42

---



Table of Contents

Our business is dependent on our intellectual property. If our patents are declared invalid or our trade secrets become known to our competitors, our ability to compete may
be adversely affected.

Proprietary protection of our processes, apparatuses and other technology is important to our business. Consequently, we may have to
rely on judicial enforcement of our patents and other proprietary rights. While a presumption of validity exists with respect to patents issued to us in the U.S., there can be no assurance that any of
our patents will not be challenged, invalidated, circumvented or rendered unenforceable. Furthermore, if any pending patent application filed by us does not result in an issued patent, or if patents
are issued to us, but such patents do not provide meaningful protection of our intellectual property, then our ability to compete may be adversely affected. Additionally, our competitors or other
third parties may obtain patents that restrict or preclude our ability to lawfully produce or sell our products in a competitive manner, which could have a material adverse effect on our business,
results of operations, financial condition and liquidity.

We
also rely upon unpatented proprietary know-how and continuing technological innovation and other trade secrets to develop and maintain our competitive position. While it
is our policy to enter into confidentiality agreements with our employees and third parties to protect our intellectual property, these confidentiality agreements may be breached, may not provide
meaningful protection for our trade secrets or proprietary know-how, or adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and
know-how. In addition, others could obtain knowledge of our trade secrets through independent development or other access by legal means. The failure of our patents or confidentiality
agreements to protect our processes, apparatuses, technology, trade secrets or proprietary know-how could have a material adverse effect on our business, results of operations, financial
condition and liquidity.

Loss of key members of our management could disrupt our business.

We depend on the continued employment and performance of our senior executives and other key members of management. If any of these
individuals resigns or becomes unable to continue in his or her present role and is not adequately replaced, our business operations and our ability to implement our growth strategies could be
materially disrupted. We generally do not have employment agreements with, and we do not maintain any "key person" life insurance for, any of our executive officers.

Conflicts, military actions, terrorist attacks and general instability throughout the world, and in particular in certain energy-producing nations, along with increased
security regulations related to our industry, could adversely affect our business.

Conflicts, military actions and terrorist attacks have precipitated global economic instability and turmoil in world financial markets.
Current regional tensions and conflicts in energy-producing nations, including continuing instability in Iran, ongoing military action in Iraq, and other conflicts have caused, and may cause further,
increases in raw material costs, particularly natural gas and crude oil based feedstocks, which are used in our operations. The uncertainty surrounding the threat of further armed hostilities,
military action or acts of terrorism may impact any or all of our physical facilities and operations, which are located in North America, Europe, Australia, Asia, Africa, South America and the Middle
East, or those of our suppliers or customers. Furthermore, the resulting economic disruption caused by such events may result in reduced demand from our customers for our products.

A
military action or terrorist attack that impacts any of our facilities, or the facilities of our suppliers or customers, could have a material adverse effect on our business. In
addition, a number of governments have begun regulatory processes that could lead to new regulations impacting the security of chemical plant locations and the transportation of hazardous chemicals,
which could result in higher operating costs. These developments will subject our worldwide operations to increased risks and,

43

---



Table of Contents

depending
on their magnitude, could have a material adverse effect on our business, results of operations, financial condition and liquidity.

If our subsidiaries do not make sufficient distributions to us, then we will not be able to make payment on our debts.

Our debt is generally the exclusive obligation of Huntsman International and our guarantor subsidiaries. Because a significant portion
of our operations are conducted by non-guarantor subsidiaries, our cash flow and our ability to service indebtedness, including our ability to pay the interest on our debt when due and
principal of such debt at maturity, are dependent to a large extent upon cash dividends and distributions or other transfers from such non-guarantor subsidiaries. Any payment of dividends,
distributions, loans or advances by our non-guarantor subsidiaries to us could be subject to restrictions on dividends or repatriation of earnings under applicable local law, monetary
transfer restrictions and foreign currency exchange regulations in the jurisdictions in which our subsidiaries operate, and any restrictions imposed by the current and future debt instruments of our
non-guarantor subsidiaries. In addition, payments to us by our subsidiaries are contingent upon our subsidiaries' earnings.

Our
subsidiaries are separate and distinct legal entities and, except for our guarantor subsidiaries, have no obligation, contingent or otherwise, to pay any amounts due on our debt or
to make any funds available for those amounts, whether by dividends, loans, distributions or other payments, and do not guarantee the payment of interest on, or principal of, our debt. Any right that
we have to receive any assets of any of our subsidiaries that are not guarantors upon the liquidation or reorganization of any such subsidiary, and the consequent right of holders of notes to realize
proceeds from the sale of their assets, will be structurally subordinated to the claims of that subsidiary's creditors, including trade creditors and holders of debt issued by that subsidiary.

Climate change poses both regulatory and physical risks that could adversely impact our results of operations.

In addition to the possible direct economic impact that climate change could have on us, climate change mitigation programs and
regulation could significantly increase our costs. Energy costs are a significant component of our overall costs, and climate change regulation may result in significant increases in energy costs.
Specifically, our costs could increase if energy companies pass on increased costs to their customers, such as costs resulting from carbon taxes, emission cap and trade programs or renewable portfolio
standards. For specific details, see individual risk factors listed above.

44

---





Table of Contents

RISKS RELATED TO OUR COMMON STOCK AND DEBT SECURITIES

Our stock price has been and may continue to be subject to large fluctuations.

We have experienced significant fluctuations in our stock price and share trading volume in the past and may continue to do so. The
trading price of our common stock has been and may continue to be subject to wide fluctuations in response to a variety of issues, including broad market factors that may have a material adverse
impact on our stock price, regardless of actual performance. The following factors could affect our stock price:



Shares available for future sale may cause our common stock price to decline, which may negatively impact the trading price of our common stock.

Sales of substantial numbers of additional shares of our common stock, or the perception that such sales could occur, may cause
prevailing market prices for shares of our common stock to decline.

We have the ability to issue additional equity securities, which would lead to further dilution of our issued and outstanding common stock.

The issuance of additional equity securities would result in dilution of then-existing stockholders' equity interests in
us. Our certificate of incorporation authorizes our Board of Directors, without stockholder approval, to establish one or more series of preferred stock and to determine, with respect to any series of
preferred stock, the number of shares in that series and the terms, rights and limitations of that series. If we issue convertible notes or convertible preferred stock, a subsequent conversion may
dilute the current common stockholders' interest. Our Board of Directors has no present intention of issuing any such convertible instruments,
but reserves the right to do so in the future. In addition, we may issue additional shares of common stock under our equity incentive plans.

Certain provisions contained in our certificate of incorporation and bylaws could discourage a takeover attempt, which may reduce or eliminate the likelihood of a change of
control transaction and, therefore, limit your ability to sell our common stock at a price higher than the current market value.

Certain provisions contained in our certificate of incorporation and bylaws, such as a classified Board of Directors, limitations on
stockholder proposals at meetings of stockholders and the inability of stockholders to call special meetings and certain provisions of Delaware law, could make it more difficult for a third party to
acquire control of our Company, even if some of our stockholders considered such a change of control to be beneficial. Our certificate of incorporation also authorizes our Board of Directors to issue
preferred stock without stockholder approval. Therefore, our Board of Directors could elect to issue preferred stock that has special voting or other rights that could make it even more difficult for
a third party to acquire us, which may reduce or eliminate your ability to sell our common stock at a price higher than the current market value.

45

---



Table of Contents

The declaration of dividends by our Company is subject to the discretion of our Board of Directors and limitations under Delaware law, and there can be no assurance that we
will continue to pay dividends.

Over the past three years we have paid quarterly dividends on our common stock. The declaration of dividends by our Company is subject
to the discretion of our Board of Directors. Our Board of Directors takes into account such matters as general business conditions, our financial results, expected liquidity and capital expenditure
requirements, contractual, legal or regulatory restrictions on the payment of dividends, the effect on our debt ratings and such other factors as our Board of Directors may deem relevant, and we can
provide no assurance that we will continue to pay dividends on our common stock. In addition, Delaware law contains certain restrictions on a company's ability to pay cash dividends and we can provide
no assurance that those restrictions will not prevent us from paying a dividend in future periods.

Jon M. Huntsman, through direct and indirect ownership of our common stock and through certain voting arrangements, may be deemed to control approximately 20% of our
outstanding common stock, and he may have the ability to substantially impact the outcome of matters voted on by our stockholders.

Jon M. Huntsman, through direct and indirect ownership of our common stock and through certain voting arrangements, may be deemed to
control approximately 20% of our outstanding common stock. Through his interests, he may have the ability to substantially impact:



We may purchase a portion of our debt securities.

We may from time to time seek to repurchase or redeem a portion of our debt securities in open market purchases, privately negotiated
transactions, tender offers or otherwise. Any such repurchases or redemptions and the timing and amount thereof would depend on prevailing market conditions, liquidity requirements, contractual
restrictions and other factors. Such transactions could impact the market for our debt securities and negatively affect our liquidity.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

As of December 31, 2009, we did not have any unresolved comments from the staff of the SEC.

ITEM 2.    PROPERTIES

We own or lease chemical manufacturing and research facilities in the locations indicated in the list below which we believe are
adequate for our short-term and anticipated long-term needs. We own or lease office space and storage facilities throughout the U.S. and in many foreign countries. Our
principal executive offices are located at 500 Huntsman Way, Salt Lake City, Utah 84108. The following is a list of our material owned or leased properties where manufacturing, research and main
office facilities are located.

Location

Business Segment

Description of FacilitySalt Lake City, Utah

Corporate and Other

Executive OfficesThe Woodlands, Texas(1)

Various

Operating Headquarters, Global Technology Center


46

---



Table of Contents

Location

Business Segment

Description of FacilityGeismar, Louisiana(2)

Polyurethanes and Performance Products

MDI, Nitrobenzene(4), Aniline(4), Polyols and Maleic Anhydride Manufacturing Facilities and Polyurethanes Systems HouseRozenburg, Netherlands(1)

Polyurethanes

MDI Manufacturing Facility, Polyols Manufacturing Facilities and Polyurethanes Systems HouseShanghai, China

Polyurethanes

MDI Finishing Facilities, Global Technology CenterCaojing, China(3)

Polyurethanes

Precursor MDI Manufacturing FacilityDeerpark, Australia

Polyurethanes

Polyurethane Systems HouseCartagena, Colombia

Polyurethanes

Polyurethane Systems HouseDeggendorf, Germany

Polyurethanes

Polyurethane Systems HouseTernate, Italy

Polyurethanes

Polyurethane Systems HouseShanghai, China(1)

Polyurethanes

Polyurethane Systems House, Global Technology CenterThane (Maharashtra), India(1)

Polyurethanes

Polyurethane Systems HouseBuenos Aires, Argentina(1)

Polyurethanes

Polyurethane Systems HouseSamuprakam, Thailand(1)

Polyurethanes

Polyurethane Systems HouseKuan Yin, Taiwan(1)

Polyurethanes

Polyurethane Systems HouseTlalnepantla, Mexico

Polyurethanes

Polyurethane Systems HouseMississauga, Ontario(1)

Polyurethanes

Polyurethane Systems HouseObninsk, Russia(4)

Polyurethanes

Polyurethanes Systems HouseDammam, Saudi Arabia(5)

Polyurethanes

Polyurethane Systems HouseAuburn Hills, Michigan(1)

Polyurethanes

Polyurethane Research FacilityEverberg, Belgium

Polyurethanes and Performance Products

Polyurethane and Performance Products Regional Headquarters, Global Technology CenterDerry, New Hampshire(1)

Polyurethanes

TPU Research FacilityRingwood, Illinois(1)

Polyurethanes

TPU Manufacturing FacilityOsnabrück, Germany

Polyurethanes

TPU Manufacturing Facility/ Polyurethane Systems HouseWilton, U.K.

Polyurethanes

Aniline and Nitrobenzene Manufacturing FacilitiesPort Neches, Texas

Polyurethanes and Performance Products

Olefins, EO, EG, Surfactants, Amines and PO Manufacturing FacilitiesBergkamen, Germany

Advanced Materials

Synthesis FacilityMonthey, Switzerland

Advanced Materials

Resins and Synthesis FacilityPamplona, Spain

Advanced Materials

Resins and Synthesis FacilityMcIntosh, Alabama

Advanced Materials

Resins and Synthesis FacilityChennai, India(6)

Advanced Materials

Resins and Synthesis FacilityBad Saeckingen, Germany(1)

Advanced Materials

Formulating FacilityDuxford, U.K.

Advanced Materials

Formulating FacilitySadat City, Egypt

Advanced Materials

Formulating FacilityTaboão da Serra, Brazil

Advanced Materials

Formulating FacilityPanyu, China(1)(7)

Advanced Materials

Formulating and Synthesis FacilityEast Lansing, Michigan

Advanced Materials

Formulating FacilityIstanbul, Turkey(1)

Advanced Materials

Formulating FacilityLos Angeles, California

Advanced Materials

Formulating FacilityBasel, Switzerland(1)

Advanced Materials and Textile Effects

Technology Center, Advanced Materials headquarters and Textile Effects Synthesis FacilityPanyu, China(1)(7)

Textile Effects

Formulating and Synthesis Facility and Technology CenterLangweid am Leich, Germany(1)

Textile Effects

Formulating FacilitySchweizerhalle, Switzerland(1)

Textile Effects

Formulating FacilityCharlotte, North Carolina(1)

Textile Effects

Formulating FacilitySamutsakorn (Mahachai), Thailand(1)

Textile Effects

Synthesis FacilityAtotonilquillo, Mexico

Textile Effects

Synthesis Facility


47

---



Table of Contents

Location

Business Segment

Description of FacilityHigh Point, North Carolina(1)

Textile Effects

Technology CenterBaroda, India

Textile Effects

Synthesis FacilityGandaria, Indonesia

Textile Effects

Formulating FacilityQingdao, China

Textile Effects

Synthesis FacilityFraijanes, Guatemala(1)

Textile Effects

Formulating FacilityBogota, Colombia(1)

Textile Effects

Formulating FacilityGateway West, Singapore(1)

Textile Effects and Performance Products

Textile Effects Headquarters and Performance Products Regional HeadquartersConroe, Texas

Performance Products

Amines Manufacturing FacilityPetfurdo, Hungary(1)

Performance Products

Amines Manufacturing FacilityLlanelli, U.K.

Performance Products

Amines Manufacturing FacilityFreeport, Texas(1)

Performance Products

Amines Manufacturing FacilityJurong Island, Singapore(1)

Performance Products

Amines Manufacturing FacilityChocolate Bayou, Texas(1)

Performance Products

LAB Manufacturing FacilityPensacola, Florida(1)

Performance Products

Maleic Anhydride Manufacturing FacilityDayton, Texas

Performance Products

Surfactant Manufacturing FacilityBotany, Australia

Performance Products

Surfactant/EG Manufacturing FacilitySt. Mihiel, France

Performance Products

Surfactant Manufacturing FacilityLavera, France(1)

Performance Products

Surfactant Manufacturing FacilityCastiglione, Italy

Performance Products

Surfactant Manufacturing FacilityPatrica/Frosinone, Italy

Performance Products

Surfactant Manufacturing FacilityBarcelona, Spain(1)

Performance Products

Surfactant Manufacturing FacilityMelbourne, Australia

Performance Products

Research FacilityGreatham, U.K.

Pigments

Titanium Dioxide Manufacturing FacilityCalais, France

Pigments

Titanium Dioxide Manufacturing FacilityHuelva, Spain

Pigments

Titanium Dioxide Manufacturing FacilityScarlino, Italy

Pigments

Titanium Dioxide Manufacturing FacilityTeluk Kalung, Malaysia

Pigments

Titanium Dioxide Manufacturing FacilityUmbogintwini, South Africa

Pigments

Titanium Dioxide Manufacturing FacilityLake Charles, Louisiana(8)

Pigments

Titanium Dioxide Manufacturing FacilityWest Footscray, Australia(9)

Corporate and Other

Styrenics Manufacturing Facility


(1)Leased
land and/or building.(2)The
Geismar facility is owned as follows: we own 100% of the MDI, polyol and maleic anhydride facilities, and Rubicon LLC, a consolidated
manufacturing joint venture with Chemtura Corporation in which we own a 50% interest, owns the aniline and nitrobenzene facilities. Rubicon LLC is a separate legal entity that operates both the
assets that we own jointly with Chemtura Corporation and our wholly-owned assets at Geismar.(3)50%
interest in SLIC, our unconsolidated manufacturing joint venture with BASF AG and three Chinese chemical companies.(4)45%-owned
unconsolidated manufacturing joint venture with NMG.(5)51%-owned
manufacturing joint venture with Basic Chemicals Industries Ltd.(6)76%-owned
manufacturing joint venture with Tamilnadu Petroproducts Limited.(7)95%-owned
manufacturing joint venture with Guangdong Panyu Shilou Town Economic Development Co. Ltd.(8)Owned
by Louisiana Pigment Company, L.P. which is owned 50% by us and 50% by Kronos Worldwide.(9)Closure
of this facility was announced September 2009. All operations on site are expected to cease during the first quarter of 2010.


48

---



Table of Contents




ITEM 3.    LEGAL PROCEEDINGS

Discoloration Claims

Certain claims have been filed against us relating to discoloration of unplasticized polyvinyl chloride products allegedly caused by
our titanium dioxide ("Discoloration Claims"). Substantially all of the titanium dioxide that is the subject of these claims was manufactured prior to our acquisition of the titanium dioxide business
from ICI in 1999. Net of amounts we have received from insurers and pursuant to contracts of indemnity, we have paid an aggregate of approximately $16 million in costs and settlement amounts
for Discoloration Claims through December 31, 2009.

During
the year ended December 31, 2009, we settled one Discoloration Claim for which we were fully indemnified. During the year ended December 31, 2008, we paid an
insignificant amount in partial settlement of a claim. The one remaining Discoloration Claim unresolved as of December 31, 2009 asserted aggregate damages of approximately
€1 million (approximately $1 million). An appropriate liability has been accrued for this claim. Based on our understanding of the merits of this claim and our rights
under contracts of indemnity and insurance, we do not believe that the net impact on our financial condition, results of operations or liquidity will be material.

In
addition, while we can give no assurance that additional Discoloration Claims will not be made in the future, we believe such claims are unlikely. If additional Discoloration Claims
were to be made, we have rights under contract to indemnity, including from ICI, and therefore do not believe such claims would have a material impact on our financial condition, results of operations
or liquidity. Based on this conclusion and our inability to reasonably estimate our expected costs with respect to these unasserted claims, we have made no accruals in our financial statements as of
December 31, 2009 for costs associated with unasserted Discoloration Claims.

Environmental Enforcement Proceedings

On occasion, we receive notices of violation, enforcement or other complaints from regulatory agencies alleging
non-compliance with applicable EHS laws. Based on currently available information and our past experience, we do not believe that the resolution of any pending or threatened environmental
enforcement proceedings will have a material impact on our financial condition, results of operations or cash flows.

In
May 2007, our operation in Wilton, U.K., allegedly caused a discharge of wastewater effluent to be made to Northumbrian Water's Bran Sands treatment facility that contained elevated
levels of nitrobenzene. Northumbrian Water alleges that this discharge caused a disruption of its treatment facility which, in turn, exceeded its discharge consent from the U.K. Environmental Agency.
The Environmental Agency is investigating a possible prosecution against Northumbrian Water and/or us for the breach. Northumbrian Water has threatened to prosecute our subsidiary in the U.K. To date,
however, no charges have been filed.

Asbestos Litigation

We have been named as a "premises defendant" in a number of asbestos exposure cases, typically claims by non-employees of
exposure to asbestos while at a facility. In the past, these cases typically have involved multiple plaintiffs bringing actions against multiple defendants, and the complaints have not indicated which
plaintiffs were making claims against which defendants, where or how the alleged injuries occurred or what injuries each plaintiff claimed. These facts, which would be central to any estimate of
probable loss, generally have been learned only through discovery.

Where
a claimant's alleged exposure occurred prior to our ownership of the relevant "premises," the prior owners generally have contractually agreed to retain liability for, and to
indemnify us against, asbestos exposure claims. This indemnification is not subject to any time or dollar amount limitations.

49

---



Table of Contents

Upon
service of a complaint in one of these cases, we tender it to the prior owner. None of the complaints in these cases state the amount of damages being sought. The prior owner accepts
responsibility for the conduct of the defense of the cases and payment of any amounts due to the
claimants. In our fourteen-year experience with tendering these cases, we have not made any payment with respect to any tendered asbestos cases. We believe that the prior owners have the
intention and ability to continue to honor their indemnity obligations, although we cannot assure you that they will continue to do so or that we 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 we have tendered to the prior owner, all of which have
been accepted.

Year ended
December 31,
2009

Year ended
December 31,
2008

Year ended
December 31,
2007Unresolved at beginning of period


1,140


1,192


1,367Tendered during period


18


21


21Resolved during period(1)


20


73


196Unresolved at end of period


1,138


1,140


1,192


(1)Although
the indemnifying party informs us when tendered cases have been resolved, it generally does not inform us of the settlement amounts relating to
such cases, if any. The indemnifying party has informed us that it typically manages our defense together with the defense of other entities in such cases and resolves claims involving multiple
defendants simultaneously, and that it considers the allocation of settlement amounts, if any, among defendants to be confidential and proprietary. Consequently, we are not able to provide the number
of cases resolved with payment by the indemnifying party or the amount of such payments.


We
have never made any payments with respect to these cases. As of December 31, 2009, we had an accrued liability of $16 million relating to these cases and a corresponding
receivable of $16 million relating to our indemnity protection with respect to these cases. We cannot assure you that our liability will not exceed our accruals or that our liability associated
with these cases would not be material to our financial condition, results of operations or liquidity; however, we are not able to estimate the amount or range of loss in excess of our accruals.
Additional asbestos exposure claims may be made against us in the future, and such claims could be material. However, because we are not able to estimate the amount or range of losses associated with
such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of December 31, 2009.

Certain
cases in which we are 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 us, other than a number of cases that were erroneously filed against us due to a clerical error. The cases
filed in error have been dismissed.

Year ended
December 31,
2009

Year ended
December 31,
2008

Year ended
December 31,
2007Unresolved at beginning of period


43


39


42Filed during period


3


8


52Resolved during period


7


4


55Unresolved at end of period


39


43


39


We
paid gross settlement costs for asbestos exposure cases that are not subject to indemnification of nil, nil and $3 million during the years ended December 31, 2009, 2008
and 2007, respectively. We

50

---



Table of Contents

cannot
assure you that our liability will not exceed our accruals or that our liability associated with these cases would not be material to our financial condition, results of operations or
liquidity; however, we are not able to estimate the amount or range of loss in excess of our accruals. Additional asbestos exposure claims may be made against us in the future, and such claims could
be material. However, because we are not able to estimate the amount or range of losses associated with such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of
December 31, 2009.

Antitrust Matters

We have been named as a defendant in civil antitrust suits alleging that between 1999 and 2004 we conspired with Bayer, BASF, Dow, and
Lyondell to fix the prices of MDI, TDI, polyether polyols, and related systems ("polyether polyol products") sold in the United States in violation of the federal Sherman Act. These cases are
consolidated as the "Polyether Polyols" cases in multidistrict litigation known as In re Urethane Antitrust Litigation, MDL No. 1616, Civil
No. 2:04-md-01616-JWL-DJW, pending in the United States District Court, District of Kansas. The Kansas court has ruled that plaintiffs may
prosecute the Polyether Polyols cases on behalf of a class of all direct purchasers of polyether polyol products in the United States. Bayer has entered into a settlement with the plaintiffs' class
and has been dismissed as a defendant. Merits discovery is underway, and trial has been set for May 3, 2011.

We
and the other Polyether Polyol defendants (excluding Bayer) have also been named as defendants in two civil antitrust suits brought by certain direct purchasers of polyether polyol
products that opted out of the class certified in MDL No. 1616. These cases have been brought by 12 groups of affiliated companies, 73 plaintiffs in all, who allege that between 1994 and 2006
inclusive the Polyether Polyol defendants conspired to fix the prices of polyether polyol products sold in the U.S. and abroad in violation of the Sherman Act, similar laws of several U.S. states, and
the laws of the European Union and certain of its member states. We and the other defendants moved to dismiss the opt-out complaints. The Court partially granted the motion to dismiss
state law claims and the claims outside the class period. Subsequently, the plaintiffs filed amended complaints and we and the other defendants again filed motions to dismiss their claims outside the
class period. On January 25, 2010, the Court granted the defendants' motion to dismiss claims under the laws of the European Union and its member states, but denied our motion to limit the
opt-out claims to the class period.

On
November 3, 2009, another group of four direct purchasers that opted out of the class certified in MDL No. 1616 filed an action in the United States District Court,
District for New Jersey making nearly identical claims as those made by the other direct purchasers. We expect that it will be consolidated for discovery purposes with the other direct actions in MDL
No. 1616.

Along
with Flexsys, Crompton (now Chemtura), Uniroyal, Rhein Chemie Rheinau, and the other Polyether Polyol defendants, we also have been named as a defendant in a civil antitrust suit
pending in the Superior Court of California, County of San Francisco, filed on February 15, 2005, that alleges that between 1994 and 2004 the defendants conspired to fix the prices of certain
rubber and urethane products sold in California in violation of antitrust and unfair competition laws of California. This case purports to be brought on behalf of a class of all California purchasers
of products containing rubber and urethanes products. By agreement of the parties this case has been stayed pending the resolution of MDL No. 1616.

Along
with Dow, BASF, and Lyondell, we have also been named as a defendant in a third amended complaint proposed for filing in an existing civil antitrust suit pending against Bayer and
Chemtura in federal district court in Massachusetts. The proposed amended complaint alleges that beginning around 1990 we and the other defendants conspired to fix the prices of MDI, TDI, polyether
polyols, and polyester polyols sold throughout the United States in violation of the federal Sherman Act and the laws of various states. The proposed amended complaint seeks to sue on behalf of all

51

---



Table of Contents

indirect
purchasers of such products in the United States. The Massachusetts action has been stayed pending plaintiffs' settlement of the previously asserted claims against Bayer and Chemtura. We have
filed papers opposing the motion for leave to file the proposed amended complaint adding us as a defendant in that action.

The
plaintiffs' pleadings in these various antitrust suits provide few specifics about any alleged illegal conduct on our part, and we are not aware of any illegal conduct by us or any
of our employees. For these reasons, we cannot estimate the possibility of loss or range of loss relating to these claims, and therefore we have not accrued a liability for these claims. Nevertheless,
we could incur losses due to these claims in the future and those losses could be material.

Huntsman
International has been named as a defendant in a purported class action civil antitrust suit alleging that it and its co-defendants and other
co-conspirators conspired to fix the prices at which titanium dioxide was sold in the U.S. between at least March 1, 2002 and the present. Plaintiffs are seeking injunctive relief,
treble damages, costs of suit and attorneys fees. The case was filed February 9, 2010 and isHaley Paint Company v. E.I. Dupont De Nemours and
Company, Case No. 1:10-cv-00318-RDB, pending in the United States District Court for the District of Maryland. While we have not yet
been served, we intend to defend the case vigorously.

MTBE Litigation

We are named as a defendant in 18 lawsuits pending in litigation filed between March 23, 2007 and June 24, 2009 in New
York federal and state courts alleging liability related to MTBE contamination in groundwater. Numerous other companies, including refiners, manufacturers and sellers of gasoline, as well as
manufacturers of MTBE, were named as defendants in these and many other cases that were pending in U.S. courts. The plaintiffs in the 18 cases in which we are named are municipal water districts, a
regional water supply authority, and municipal corporations that claim that defendants' conduct has caused MTBE contamination of their groundwater. Four cases are pending in the U.S. District court
for the Southern District of New York and 14 are pending in the Supreme Court of the state of New York, nine in Nassau county and five in Suffolk county. The plaintiffs seek injunctive relief, such as
monitoring and abatement, compensatory damages, punitive damages and attorney fees. Together with other defendants, we have filed motions to dismiss all of the
state court cases. At this time, while we currently have insufficient information to meaningfully assess our potential exposure in these cases, we have joined with a larger group of defendants in an
effort to mediate the plaintiffs' claims. Mediation in late 2008 and early 2009 was unsuccessful. A further mediation session was held February 3, 2010 and resulted in a tentative settlement in
each of the cases in which we have been named. Our allocated portion of the total settlement amount is not material. We have accrued a liability for these claims equal to our allocated portion of the
settlement.

Shareholder Litigation

From July 5 to July 13, 2007, four putative shareholder class action complaints were filed against our Company and our
directors alleging breaches of fiduciary duty in connection with our then-proposed sale to Basell and the receipt of a superior proposal from Hexion. Three actions were filed in Delaware:
Cohen v. Archibald, et al., No. 3070, in the Court of Chancery for the State of Delaware (filed July 5, 2007); Augenstein v. Archibald, et al., No. 3076, in the Court of Chancery
for the State of Delaware (filed July 9, 2007); and Murphy v. Huntsman, et al., No. 3094, in the Court of Chancery for the State of Delaware (filed July 13, 2007). Another action
was filed in Texas: Schwoegler v. Huntsman Corporation, et al., Cause No. 07-07-06993-CV, in the 9th Judicial District Court of Montgomery County,
Texas (filed July 6, 2007). As subsequently amended, these lawsuits together allege that we and our directors breached fiduciary duties to the stockholders by, among other things, engaging in
an unfair sales process, approving an unfair price per share for the Merger with Hexion, and making inadequate disclosures to stockholders, and that Basell, Hexion and MatlinPatterson entities aided
and abetted these breaches of fiduciary duty. The lawsuits sought to enjoin the stockholder vote on the Merger.

52

---





Table of Contents

On September 20, 2007, the parties entered into a Memorandum of Understanding with plaintiffs' counsel in the Delaware and Texas actions to settle these
four lawsuits. As part of the proposed settlement, the defendants deny all allegations of wrongdoing, but we agreed to make certain additional disclosures in the final proxy statement that was mailed
to our stockholders on or about September 14, 2007. In connection with the settlement, the parties also reached an agreement with respect to any application that the plaintiffs' counsel will
make for an award of customary attorneys' fees and expenses to be paid following the completion of the Merger.

The
Memorandum of Understanding is now null and void and of no force and effect because the Merger was not consummated. The Texas action has been voluntarily dismissed, but there has
been no further developments in the Delaware actions at this time.

Port Arthur Plant Fire Insurance Litigation

On August 31, 2007, an action was brought against our Company and International Risk Insurance Company ("IRIC"), our captive
insurer, in the United States District Court for the Southern District of Texas, by seventeen reinsurance companies (the "Reinsurers") that reinsure risks under the property insurance policy issued by
IRIC to our Company (the "Policy") for
the period covering the April 29, 2006 fire at our manufacturing facility in Port Arthur, Texas. The action sought to compel our Company and IRIC to arbitrate with the Reinsurers to resolve
disputes related to the claim for losses caused by the fire or, in the alternative, to declare judgment in favor of the Reinsurers. On September 26, 2008, the court denied motions to dismiss
filed by our Company and IRIC, ordering the parties to engage in a short period of discovery on the issue of arbitrability. In a second and related action filed by our Company against IRIC in state
court in Jefferson County, Texas, IRIC filed a third party petition against the Reinsurers, who then removed that action to the United States District Court for the Eastern District of Texas. Some of
the Reinsurers filed answers and motions to compel arbitration, to stay these proceedings, and to change venue to the United States District Court for the Southern District of Texas in order to
consolidate the two actions. We filed a motion to remand that action to the state court and opposition to the Reinsurers' motions in that action. On April 23, 2008, the United States District
Court for the Eastern District of Texas transferred the case to the United States District Court for the Southern District of Texas. On September 26, 2008, the court denied our motion to remand
that suit to the state court in which it was filed.

Pursuant
to a December 29, 2008 agreement among the parties to the actions referenced above: (1) a mediation was scheduled for February 24-25, 2009,
(2) if the disputes were not fully resolved in mediation, the parties would submit all coverage and quantum issues to a three-arbitrator panel in the second half of 2009, with a binding award
to be entered by September 30, 2009 (see current status in paragraph below), (3) the Reinsurers paid an additional $40 million on our claim on December 29, 2008 and agreed
that all monies paid by the participating Reinsurers on the claim to date are nonrefundable, (4) we waived our noncontractual claims against the Reinsurers, (5) the first action
referenced above is stayed pending final resolution and entry of judgment, and (6) the second action referenced above has been dismissed.

Because
the non-binding mediation was not successful, we and the Reinsurers are now participating in binding arbitration which began on November 2, 2009. The binding
arbitration is ongoing and further oral arguments have been scheduled in March 2010. Reinsurers responsible for a small percentage of our remaining claim were not parties to the two lawsuits and are
not parties to the agreement; thus we may need to pursue actions against them separately for their pro rata shares of the unpaid claim. We have paid our deductible on the claim of $60 million
and have been paid $365 million to date by the Reinsurers. Prior to the commencement of the arbitration proceedings, we had claimed an additional approximately $242 million plus interest
as presently due and owing and unpaid under the Policy for losses caused by the fire. The arbitration panel has made a preliminary ruling disallowing our claim for interest. In addition, the
arbitration panel has made certain preliminary

53

---



Table of Contents

rulings
on some of the discrete issues that so far effectively reduce the overall amount we have claimed by approximately $40 million. A final ruling on these and the various other outstanding
issues under the claim are not expected until after the oral arguments scheduled in March 2010. For more information, see "Note 25. Casualty Losses and Insurance RecoveriesPort
Arthur, Texas Plant Fire" to our consolidated financial statements.

Other Proceedings

We are 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, we do not believe that the outcome of any of these
matters will have a material adverse effect on our financial condition, results of operations or liquidity.

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

Our annual meeting of stockholders was held on November 4, 2009. At that meeting, Peter R. Huntsman, Wayne A.
Reaud and Alvin V. Shoemaker were re-elected to serve as Class II directors on our Board of Directors for three-year terms to expire at our annual meeting in 2012 and
the appointment of Deloitte & Touche LLP as independent registered public accounting firm for 2009 was ratified. In addition, the amendment and restatement of the Huntsman Stock
Incentive Plan to, among other things, increase the number of shares reserved for issuance under such plan by 11,000,000 shares and maintain the plan's compliance with Section 162(m) of the
Internal Revenue Code of 1986, as amended, was approved.

The
following table gives a brief description of each matter voted upon at our 2009 annual meeting and, as applicable, the number of votes cast for, against or withheld, as well as the
number of abstentions.

Description of Matter

For

Against

Withheld

Abstentions1.

Election of Class II Directors:Peter R. Huntsman


209,934,670

N/A


2,048,499

N/AWayne A. Reaud


208,523,481

N/A


3,459,688

N/AAlvin V. Shoemaker


208,236,671

N/A


3,746,498

N/A2.

Ratification of the appointment of Deloitte & Touche LLP as independent registered public accounting firm for 2009


208,901,785

2,920,827


N/A

160,5573.

Approval of the amendment and restatement of the Huntsman Stock Incentive Plan to, among other things, increase the number of shares reserved for issuance under the plan by 11,000,000 shares and maintain the plan's
compliance wth Section 162(m) of the Internal Revenue Code of 1986, as amended


141,129,941

14,496,320


N/A

3,214,137


---

N/ANot
applicable

EXECUTIVE OFFICERS OF THE REGISTRANT

The following is information concerning our executive officers and significant employees as of the date of this report.

54

---



Table of Contents

Jon M. Huntsman, age 73, is the Executive Chairman of the Board of Directors of our Company. Prior to appointment as Executive Chairman
effective February 2009, Mr. Huntsman served as Chairman of the Board of Directors of our Company, a position he had held since our Company was formed. Mr. Huntsman also serves on our
Litigation Committee. He has been Chairman of the Board of all Huntsman companies since he founded his first plastics company in 1970. Mr. Huntsman served as Chief Executive Officer of our
Company and our affiliated companies from 1970 to 2000. Mr. Huntsman is a director or manager, as applicable, of Huntsman International and certain of our other subsidiaries. In addition,
Mr. Huntsman serves or has served as Chairman or as a member of numerous corporate, philanthropic and industry boards, including the American Red Cross, The Wharton School, University of
Pennsylvania, Primary Children's Medical Center Foundation, the Chemical Manufacturers Association and the American Plastics Council. Mr. Huntsman was selected in 1994 as the chemical
industry's top CEO for all businesses in Europe and North America. Mr. Huntsman formerly served as Special Assistant to the President of the United States and as Vice Chairman of the U.S.
Chamber of Commerce. He is the Chairman and Founder of the Huntsman Cancer Institute.

Peter R. Huntsman, age 46, is President, Chief Executive Officer and a Director of our Company. Mr. Huntsman also serves on our
Litigation Committee. Prior to his appointment in July 2000 as Chief Executive Officer, Mr. Huntsman had served as President and Chief Operating Officer since 1994. In 1987, Mr. Huntsman
joined Huntsman Polypropylene Corporation as Vice President before serving as
Senior Vice President and General Manager. Mr. Huntsman has also served as President of Olympus Oil, as Senior Vice President of Huntsman Chemical Corporation and as a Senior Vice President of
Huntsman Packaging Corporation, a former subsidiary of our Company. Mr. Huntsman is a director or manager, as applicable, of Huntsman International and certain of our other subsidiaries.

J. Kimo Esplin, age 47, is Executive Vice President and Chief Financial Officer. Mr. Esplin has served as Chief Financial Officer
of all of the Huntsman companies since 1999. From 1994 to 1999, Mr. Esplin served as our Treasurer. Prior to joining Huntsman in 1994, Mr. Esplin was a Vice President in the Investment
Banking Division of Bankers Trust Company, where he worked for seven years. Mr. Esplin also serves as a director of Nutraceutical International Corporation, a publicly traded nutrition
supplements company.

James R. Moore, age 65, is Executive Vice President and General Counsel and Secretary. Prior to his appointment to this position in
January 2010, Mr. Moore served as our Vice President and Deputy General Counsel since 2003. Prior to that, Mr. Moore served as Vice President and Chief Environmental Counsel from 2002 to
2003 and Senior Environmental Counsel from 1998 to 2002. From 1989 until joining our Company in 1998, Mr. Moore was a partner at the Seattle law firm of Perkins Coie. Mr. Moore also
previously served as a trial attorney with the U.S. Department of Justice, an assistant U.S. Attorney and Regional Counsel, Region 10, of the U.S. Environmental Protection Agency.

Daniele Ferrari, age 48, is Division President, Performance Products. Mr. Ferrari was appointed to this position in June 2009.
Prior to this appointment, Mr. Ferrari served as Vice President, Performance Products EMEA from 2003 to June 2009. He also served as European Business Director, Performance Products
Intermediates and Managing Director, Huntsman Surface Sciences Italy from 2001 to 2003 and Business Manager, Polyurethanes Intermediates from 1997 to 2001. Prior to joining Huntsman in 1997,
Mr. Ferrari worked for ICI and Agip Petroli (Eni group).

Andre Genton, age 50, is Division President, Advanced Materials. Prior to his appointment to this position in February 2009,
Mr. Genton served as Vice President & Global Operating Officer for our Advanced Materials business since November 2006. From January 2005 to November 2006, he served as Vice President
Design & Composites Engineering for our Advanced Materials business. From June 2003 to January 2005 he served as Vice President Global Structural Composites for our Advanced

55

---



Table of Contents

Materials
business. Prior to joining Huntsman in 2003, Mr. Genton held a variety of positions with Vantico (formerly a part of Ciba).

Anthony P. Hankins, age 52, is Division President, Polyurethanes. Mr. Hankins was appointed to this position in March 2004. From
May 2003 to February 2004, Mr. Hankins served as President, Performance Products, from January 2002 to April 2003, he served as Global Vice President, Rigids
Division for our Polyurethanes business, from October 2000 to December 2001, he served as Vice PresidentAmericas for our Polyurethanes business, and from March 1998 to September 2000, he
served as Vice PresidentAsia Pacific for our Polyurethanes business. Mr. Hankins worked for ICI from 1980 to February 1998, when he joined our Company. At ICI, Mr. Hankins
held numerous management positions in the plastics, fibers and polyurethanes businesses. He has extensive international experience, having held senior management positions in Europe, Asia and the U.S.

Paul G. Hulme, age 53, is Division President, Textile Effects. Mr. Hulme was appointed to this position in February 2009. From June
2003 to February 2009, Mr. Hulme served as Division President, Materials and Effects. From February 2000 to May 2003, Mr. Hulme served as Vice President, Performance Chemicals, and from
December 1999 to February 2000 he served as Operations Director, Polyurethanes. Prior to joining Huntsman in 1999, Mr. Hulme held various positions with ICI in finance, accounting and
information systems roles. Mr. Hulme is a Chartered Accountant.

Simon Turner, age 46, is Division President, Pigments. Prior to his appointment to this position in November 2008, Mr. Turner
served as Senior Vice President, Pigments since April 2008. From September 2004 to April 2008 Mr. Turner served as Vice President of Global Sales and from July 1999 to September 2004, he held
positions including General Manager Co-Products and Director Supply Chain and Shared Services. Prior to joining Huntsman in July 1999, Mr. Turner held various positions with ICI.

Ronald W. Gerrard, age 50, is Senior Vice President, Environmental, Health & Safety and Manufacturing Excellence.
Mr. Gerrard was appointed to this position in June 2009. Prior to this appointment, Mr. Gerrard served as Vice President, Global Operations and Technology in our Polyurethanes business
from May 2004 to June 2009. From 1999 to May 2004, Mr. Gerrard served as Vice President, Asia; Business Director, Flexible Foams; and Director, EHS and Engineering, also within our
Polyurethanes business. Prior to joining Huntsman in 1999, Mr. Gerrard had worked for ICI and for EVC, a joint venture between ICI and Enichem. Mr. Gerrard is a Chartered Engineer.

Brian V. Ridd, age 52, is Senior Vice President, Purchasing. Mr. Ridd has held this position since July 2000. Mr. Ridd
served as Vice President, Purchasing from December 1995 until he was appointed to his current position. Mr. Ridd joined Huntsman in 1984.

R. Wade Rogers, age 44, is Senior Vice President, Global Human Resources. Mr. Rogers has held this position since August 2009. From
May 2004 to August 2009, Mr. Rogers served as Vice President, Global Human Resources, from October 2003 to May 2004, Mr. Rogers served as Director, Human ResourcesAmericas
and from August 2000 to October 2003, he served as Director, Human Resources for our Polymers and Base Chemicals businesses. From the time he joined Huntsman in 1994 to August 2000, Mr. Rogers
served as Area Manager, Human ResourcesJefferson County Operations. Prior to joining Huntsman, Mr. Rogers held a variety of positions with Texaco Chemical Company.

Russ R. Stolle, age 47, is Senior Vice President and Deputy General Counsel. Mr. Stolle was appointed to this position in January
2010. From October 2006 to January 2010, Mr. Stolle served as our Senior Vice President, Global Public Affairs and Communications, from November 2002 to October 2006, he served as Vice
President and Deputy General Counsel, from October 2000 to November 2002 he served as Vice President and Chief Technology Counsel and from April 1994 to October 2000 he served as Chief Patent and
Licensing Counsel. Prior to joining Huntsman in 1994, Mr. Stolle had been an attorney with Texaco Inc. and an associate with the law firm of Baker & Botts.

56

---



Table of Contents

L. Russell Healy, age 54, is Vice President and Controller. Mr. Healy has served in this capacity since April 2004. From August
2001 to April 2004, Mr. Healy served as Vice President, Finance, from July 1999 to July 2001, he served as Vice President and Finance Director for Huntsman International, and from October 1995
to June 1999, he served as Vice President, Tax. Prior to joining Huntsman in 1995, Mr. Healy was a partner with the accounting firm of Deloitte & Touche, LLP. Mr. Healy is
a Certified Public Accountant and holds a master's degree in accounting.

Sean Douglas, age 45, is our Vice President, Corporate Development since December 2009. Mr. Douglas served as Vice President and
Treasurer from 2002 to December 2009, Vice President, Finance from July 2001 to 2002 and Vice President, Administration from January 1997 to July 2001. Mr. Douglas is a Certified Public
Accountant and, prior to joining Huntsman in 1990, worked for the accounting firm of Price Waterhouse.

Kevin C. Hardman, age 46, is Vice President, Tax. Mr. Hardman served as Chief Tax Officer from 1999 until he was appointed to his
current position in 2002. Prior to joining Huntsman in 1999, Mr. Hardman was a tax Senior Manager with the accounting firm of Deloitte & Touche, LLP, where he worked for
10 years. Mr. Hardman is a Certified Public Accountant and holds a master's degree in tax accounting.

John R. Heskett, age 41, is Vice President, Treasury and Planning. Mr. Heskett has held this position since December 2009. From
September 2008 until October 2009, Mr. Heskett served as a Vice President at Boart Longyear Limited, a publicly-listed exploration drilling services and products company. Mr. Heskett
previously served as Vice President, Corporate Development and Investor Relations for our Company from August 2004 until September 2008 and was appointed Vice President, Corporate Development in 2002.
Mr. Heskett also served as Assistant Treasurer for our Company and several of our subsidiaries. Prior to joining Huntsman in 1997, Mr. Heskett was Assistant Vice President and
Relationship Manager for PNC Bank, N.A., where he worked for a number of years.

Steven C. Jorgensen, age 41, is Vice President of Internal Audit and Controls. Mr. Jorgensen was appointed to this position
effective May 2007. Mr. Jorgensen joined Huntsman in May 2004 as Director of Internal Controls and in May 2005 was appointed as Director of Internal Audit and Controls. Prior to joining
Huntsman, Mr. Jorgensen was Vice President and Audit Manager with General Electric Consumer Finance, and prior to that he was an audit Senior Manager with the accounting firm of
Deloitte & Touche LLP. Mr. Jorgensen is a Certified Public Accountant and holds a masters degree in accounting.

Kurt D. Ogden, age 41, is Vice President, Investor Relations. Prior to his appointment to this position in February 2009, Mr. Ogden
served as Director, Corporate Finance since October 2004. Prior to joining Huntsman in 2004, Mr. Ogden held various positions with Hillenbrand Industries, Pliant Corporation and Huntsman
Chemical Corporation. Mr. Ogden is a Certified Public Accountant and holds a master's degree in business administration.

Maria Csiba-Womersley, age 52, is Vice President and Chief Information Officer. Ms. Csiba-Womersley was appointed to this position
effective September 2006. Ms. Csiba-Womersley served as Global eBusiness Director from 2004 to 2006 and also served as our Director of Global IT Planning and Security. Previously,
Ms. Csiba-Womersley was a Regional Polymer Sales Manager, a Business Director for Polypropylene and Director of Polymer Logistics. Ms. Csiba-Womersley joined Huntsman in 1997.

57

---



Table of Contents

PART II

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

MARKET INFORMATION AND HOLDERS

Our common stock is listed on the New York Stock Exchange under the symbol "HUN." As of February 11, 2010, there were
approximately 180 stockholders of record and the closing price of our common stock on the New York Stock Exchange was $11.87 per share.

The
reported high and low sale prices of our common stock on the New York Stock Exchange for each of the periods set forth below are as follows:

Period

High

Low2009First Quarter

$
3.82

$
2.04Second Quarter


7.30


3.06Third Quarter


9.85


4.95Fourth Quarter


11.57


7.68




Period

High

Low2008First Quarter

$
25.71

$
22.35Second Quarter


23.95


9.81Third Quarter


14.48


7.01Fourth Quarter


14.50


2.82


DIVIDENDS

The following tables represent dividends on common stock for our Company for the years ended December 31, (dollars in millions,
except per share payment amounts):

2009Payment date

Record date

Per share
payment amount

Total amount
paidMarch 31, 2009

March 16, 2009

$
0.10

$
24June 30, 2009

June 15, 2009


0.10


24September 30, 2009

September 15, 2009


0.10


24December 31, 2009

December 15, 2009


0.10


24Total






$
96




2008Payment date

Record date

Per share payment amount

Total amount
paidMarch 31, 2008

March 14, 2008

$
0.10

$
23June 30, 2008

June 16, 2008


0.10


23September 30, 2008

September 15, 2008


0.10


23December 31, 2008

December 15, 2008


0.10


24Total






$
93


58

---



Table of Contents



2007Payment date

Record date

Per share payment amount

Total amount
paidMarch 30, 2007

March 15, 2007

$
0.10

$
22June 29, 2007

June 15, 2007


0.10


22September 28, 2007

September 14, 2007


0.10


22December 31, 2007

December 14, 2007


0.10


22Total






$
88


On
February 8, 2010, our board of directors declared a $0.10 per share cash dividend, payable on March 31, 2010, to stockholders of record as of March 15, 2010.

PURCHASES OF EQUITY SECURITIES BY THE COMPANY

The following table presents shares of restricted stock granted under our Stock Incentive Plan that we withheld upon vesting to satisfy
our tax withholding obligations during the three months ended December 31, 2009. We have no publicly announced plans or programs to repurchase our common stock.

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number
of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased Under the Plans or ProgramsOctober




$






November











December


79,799


11.49





Total


79,799

$
11.49








STOCK PERFORMANCE GRAPH

Information relating to our stock performance graph will be contained in the definitive proxy statement for the annual meeting of our
stockholders and is incorporated herein by reference.

59

---





Table of Contents

ITEM 6.    SELECTED FINANCIAL DATA

The selected historical financial data set forth below presents our historical financial data and the historical financial data of our
predecessor Huntsman Holdings, LLC as of and for the dates and periods indicated. 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.

Huntsman Corporation
(in millions, except per share amounts)

Year ended December 31,2009

2008

2007

2006

2005Statements of Operations Data:Revenues

$
7,763

$
10,215

$
9,651

$
8,731

$
8,446Gross profit


1,068


1,264


1,540


1,422


1,413Restructuring, impairment and plant closing costs


152


36


42


15


107Operating (loss) income


(71
)

165


537


645


554Income (expenses) associated with the Terminated Merger and related litigation(a)


835


780


(210
)




Income (loss) from continuing operations


115


479


43


310


(129
)(Loss) income from discontinued operations, net of tax(b)


(9
)

117


(217
)

(133
)

124Extraordinary gain (loss) on the acquisition of a business, net of tax of nil(c)


6


14


(7
)

56


Cumulative effect of changes in accounting principle, net of tax(d)














(28
)Net income (loss)


112


610


(181
)

233


(33
)Net income (loss) attributable to Huntsman Corporation


114


609


(172
)

230


(35
)Basic income (loss) per common share(e):Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders

$
0.50

$
2.06

$
0.23

$
1.39

$
(0.79
)(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax(b)


(0.04
)

0.50


(0.98
)

(0.60
)

0.57Extraordinary gain (loss) on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax(c)


0.03


0.06


(0.03
)

0.25


Cumulative effect of changes in accounting principle attributable to Huntsman Corporation common stockholders, net of tax(d)














(0.13
)Net income (loss) attributable to Huntsman Corporation common stockholders

$
0.49

$
2.62

$
(0.78
)
$
1.04

$
(0.35
)


60

---



Table of Contents

Year ended December 31,2009

2008

2007

2006

2005Diluted income (loss) per common share(e):Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders

$
0.49

$
2.04

$
0.22

$
1.32

$
(0.79
)(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax(b)


(0.04
)

0.50


(0.93
)

(0.57
)

0.57Extraordinary gain (loss) on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax(c)


0.03


0.06


(0.03
)

0.24


Cumulative effect of changes in accounting principle attributable to Huntsman Corporation common stockholders, net of tax(d)














(0.13
)Net income (loss) attributable to Huntsman Corporation common stockholders

$
0.48

$
2.60

$
(0.74
)
$
0.99

$
(0.35
)Other Data:Depreciation and amortization

$
442

$
398

$
413

$
465

$
501Capital expenditures


189


418


665


550


339Dividends per share


0.40


0.40


0.40





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

$
8,626

$
8,058

$
8,166

$
8,445

$
8,871Total debt


4,217


3,888


3,574


3,645


4,458Total liabilities


6,761


6,426


6,313


6,679


7,330


---

61

---



Table of Contents

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

OVERVIEW

We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our products comprise a
broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those
in the adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining,
synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, epoxy-based polymer formulations, textile
chemicals, dyes, maleic anhydride and titanium dioxide. Our administrative, research and development and manufacturing operations are primarily conducted at the facilities listed in
"Item 2. Properties" above, which are located in 27 countries. We employed approximately 11,000 associates worldwide at December 31, 2009.

We
operate in five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products and Pigments. Our Polyurethanes, Advanced Materials, Textile Effects and Performance
Products segments produce differentiated organic chemical products and our Pigments segment produces inorganic chemical products. In a series of transactions beginning in 2006, we have sold or
shutdown substantially all of our Polymers and Base Chemicals operations. We report the results from our former
Polymers and Base Chemicals businesses as discontinued operations. See "Note 27. Discontinued Operations" to our consolidated financial statements.

Growth
in our Polyurethanes, Advanced Materials and Textile Effects segments has been driven by the continued substitution of our products for other materials across a broad range of
applications, as well as by the level of global economic activity. Historically, demand for many of these products has grown at rates in excess of GDP growth. In Polyurethanes, this growth,
particularly in Asia, has in recent years resulted in improved demand and higher industry capacity utilization rates for many of our key products, including MDI. However, new capacity combined with
slower global demand has reduced capacity utilization in 2009. In January 2010, we idled our PO/MTBE production facility at Port Neches, Texas for turnaround and inspection. This planned shutdown is
expected to last until the end of the first quarter of 2010 and we expect the reduced capacity to negatively impact results of our Polyurethanes segment during the first quarter. Timely startup of
this facility is subject to construction and weather delays.

In
our Performance Products segment, demand for our performance specialties has generally continued to grow at rates in excess of GDP as overall demand is significantly influenced by new
product and application development. Demand for most of our performance intermediates has grown in line with GDP growth. Over time, demand for maleic anhydride has generally grown at rates that
slightly exceed GDP growth. However, given its dependence on the UPR market, which is heavily influenced by construction end markets, maleic anhydride demand can be cyclical.

Historically,
demand for titanium dioxide pigments has grown at rates approximately equal to global GDP growth. Pigment prices have historically reflected industry-wide
operating rates but have typically lagged behind movements in these rates by up to twelve months due to the effects of product stocking and destocking by customers and producers, contract arrangements
and seasonality. The industry experiences some seasonality in its sales because sales of paints, the largest end use for titanium dioxide, generally peak during the spring and summer months in the
northern hemisphere. This results in greater sales volumes in the second and third quarters of the year.

62

---



Table of Contents

For
further information regarding sales price and demand trends, see "Results of OperationsSegment AnalysisCurrent Year vs. Prior Year Decrease" and "Results of
OperationsSegment AnalysisFourth Quarter 2009 vs. Third Quarter 2009 Increase (Decrease)" below.

OUTLOOK

Sales volumes decreased 6% for the year ended December 31, 2009 compared with 2008, but increased 13% in the fourth quarter of
2009 compared to the prior year. We are encouraged by recent trends in underlying demand. We expect demand in Asia to continue to be robust. Furthermore, we expect demand in the U.S. to recover in
conjunction with the construction and automotive markets. We are uncertain as to demand recovery in certain of our markets in Europe. We expect that raw materials and energy costs could rise in the
future but we expect to pass those costs increases on to our customers. However, in certain product lines it could take up to 90 to 120 days to do so. We will continue to make efforts to
exercise operational discipline and maximize the manufacturing efficiency of our facilities. We also have a number of innovative products in our current portfolio and in development that address
energy concerns that we expect to provide long term benefits.

RECENT DEVELOPMENTS

For a discussion of recent developments, see "Item 1. BusinessRecent Developments" above

63

---



Table of Contents

RESULTS OF OPERATIONS

For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations for
the years ended December 31, 2009, 2008 and 2007 (dollars in millions):

Huntsman Corporation

Percent ChangeYear Ended December 31,2009 vs 2008

2008 vs 20072009

2008

2007Revenues

$
7,763

$
10,215

$
9,651


(24
)%

6
%Cost of goods sold


6,695


8,951


8,111


(25
)%

10
%Gross profit


1,068


1,264


1,540


(16
)%

(18
)%Operating expenses


987


1,063


961


(7
)%

11
%Restructuring, impairment and plant closing costs


152


36


42


322
%

(14
)%Operating (loss) income


(71
)

165


537


NM


(69
)%Interest expense, net


(238
)

(263
)

(286
)

(10
)%

(8
)%Loss on accounts receivable securitization program


(23
)

(27
)

(21
)

(15
)%

29
%Equity in income of investment in unconsolidated affiliates


3


14


13


(79
)%

8
%Loss on early extinguishment of debt


(21
)

(1
)

(2
)

NM


(50
)%Income (expenses) associated with the Terminated Merger and related litigation


835


780


(210
)

7
%

NMOther income





1





NM


NMIncome from continuing operations before income taxes


485


669


31


(28
)%

NMIncome tax (expense) benefit


(370
)

(190
)

12


95
%

NMIncome from continuing operations


115


479


43


(76
)%

NM(Loss) income from discontinued operations (including gain (loss) on disposal of $1 in 2009, $11 in 2008 and ($340) in 2007), net of tax


(9
)

117


(217
)

NM


NMExtraordinary gain (loss) on the acquisition of a business, net tax of nil


6


14


(7
)

(57
)%

NMNet income (loss)


112


610


(181
)

(82
)%

NMNet loss (income) attributable to noncontrolling interests


2


(1
)

9


NM


NMNet income (loss) attributable to Huntsman Corporation


114


609


(172
)

(81
)%

NMInterest expense, net


238


263


286


(10
)%

(8
)%Income tax expense (benefit) from continuing operations


370


190


(12
)

95
%

NMIncome tax (benefit) expense from discontinued operations


(6
)

69


(140
)

NM


NMDepreciation and amortization


442


398


413


11
%

(4
)%EBITDA(1)

$
1,158

$
1,529

$
375


(24
)%

308
%Net cash provided by (used in) operating activities

$
1,104

$
767

$
(52
)

44
%

NMNet cash (used in) provided by investing activities


(205
)

(489
)

200


(58
)%

NMNet cash provided by (used in) financing activities


184


230


(269
)

(20
)%

NM


64

---



Table of Contents

Huntsman International

Percent ChangeYear Ended December 31,2009 vs 2008

2008 vs 20072009

2008

2007Revenues

$
7,763

$
10,215

$
9,651


(24
)%

6
%Cost of goods sold


6,678


8,934


8,095


(25
)%

10
%Gross profit


1,085


1,281


1,556


(15
)%

(18
)%Operating expenses


976


1,062


961


(8
)%

11
%Restructuring, impairment and plant closing costs


152


36


42


322
%

(14
)%Operating (loss) income


(43
)

183


553


NM


(67
)%Interest expense, net


(240
)

(264
)

(287
)

(9
)%

(8
)%Loss on accounts receivable securitization program


(23
)

(27
)

(21
)

(15
)%

29
%Equity in income of investment in unconsolidated affiliates


3


14


13


(79
)%

8
%Loss on early extinguishment of debt


(21
)

(1
)

(3
)

NM


(67
)%Other income





1





NM


NM(Loss) income from continuing operations before income taxes


(324
)

(94
)

255


245
%

NMIncome tax (expense) benefit


(85
)

2


(41
)

NM


NM(Loss) income from continuing operations


(409
)

(92
)

214


345
%

NM(Loss) income from discontinued operations (including gain (loss) on disposal of $1 in 2009, $11 in 2008 and ($351) in 2007), net of tax


(9
)

117


(228
)

NM


NMExtraordinary gain (loss) on the acquisition of a business, net of tax


6


14


(7
)

(57
)%

NMNet (loss) income


(412
)

39


(21
)

NM


NMNet loss (income) attributable to noncontrolling interests


2


(1
)

9


NM


NMNet (loss) income attributable to Huntsman International LLC


(410
)

38


(12
)

NM


NMInterest expense, net


240


264


287


(9
)%

(8
)%Income tax expense (benefit) from continuing operations


85


(2
)

41


NM


NMIncome tax (benefit) expense from discontinued operations


(6
)

69


(140
)

NM


NMDepreciation and amortization


420


374


391


12
%

(4
)%EBITDA(1)

$
329

$
743

$
567


(56
)%

31
%Net cash provided by operating activities

$
420

$
39

$
57


977
%

(32
)%Net cash (used in) provided by investing activities


(212
)

(314
)

8


(32
)%

NMNet cash provided by (used in) financing activities


619


213


(169
)

191
%

NM


65

---



Table of Contents

For
each of our Company and Huntsman International, the following tables set forth certain items of income (expense) included in EBITDA (dollars in millions):

Huntsman Corporation

Year ended December 31,2009

2008

2007Foreign exchange gains (losses)unallocated

$
16

$
(31
)
$
(12
)Loss on early extinguishment of debt


(21
)

(1
)

(2
)Loss on accounts receivable securitization program


(23
)

(27
)

(21
)Legal and contract settlement expense, net








(6
)Amounts included in discontinued operations


(15
)

186


(324
)Gain on sale of businesses/assets, net


1


1


73Income (expenses) associated with the Terminated Merger and related litigation


835


780


(210
)Extraordinary gain (loss) on the acquisition of a business


6


14


(7
)Restructuring, impairment and plant closing costs:Polyurethanes


(2
)




Advanced Materials


(13
)

(1
)

(1
)Textile Effects


(6
)

(24
)

(24
)Performance Products





(1
)

(1
)Pigments


(53
)

(4
)

(3
)Corporate and Other


(78
)

(6
)

(13
)Total restructuring, impairment and plant closing costs


(152
)

(36
)

(42
)Total

$
647

$
886

$
(551
)


Huntsman International

Year ended December 31,2009

2008

2007Foreign exchange gains (losses)unallocated

$
16

$
(31
)
$
(12
)Loss on early extinguishment of debt


(21
)

(1
)

(3
)Loss on accounts receivable securitization program


(23
)

(27
)

(21
)Legal and contract settlement expense, net








(6
)Amounts included in discontinued operations


(15
)

186


(335
)Gain on sale of businesses/assets, net


1


1


73Extraordinary gain (loss) on the acquisition of a business


6


14


(7
)Restructuring, impairment and plant closing costs:Polyurethanes


(2
)




Advanced Materials


(13
)

(1
)

(1
)Textile Effects


(6
)

(24
)

(24
)Performance Products





(1
)

(1
)Pigments


(53
)

(4
)

(3
)Corporate and Other


(78
)

(6
)

(13
)Total restructuring, impairment and plant closing costs:


(152
)

(36
)

(42
)Total

$
(188
)
$
106

$
(353
)


---

NMNot
meaningful

66

---



Table of Contents





67

---



Table of Contents



Percent changeYear Ended December 31,2009 vs 2008

2008 vs 20072009

2008

2007EBITDA(1)

$
1,158

$
1,529

$
375


(24
)%

308
%Depreciation and amortization


(442
)

(398
)

(413
)

11
%

(4
)%Interest expense, net


(238
)

(263
)

(286
)

(10
)%

(8
)%Income tax (expense) benefit from continuing operations


(370
)

(190
)

12


95
%

NMIncome tax benefit (expense) from discontinued operations


6


(69
)

140


NM


NMNet income (loss) attributable to Huntsman Corporation


114


609


(172
)

(81
)%

NMNet (loss) income attributable to noncontrolling interests


(2
)

1


(9
)

NM


NMNet income (loss)


112


610


(181
)

(82
)%

NMExtraordinary (gain) loss on the acquisition of a business, net of tax


(6
)

(14
)

7


(57
)%

NMEquity in income of investment in unconsolidated affiliates


(3
)

(14
)

(13
)

(79
)%

8
%Depreciation and amortization


442


398


413


11
%

(4
)%(Gain) loss on disposal of businesses/assets, net


(2
)

6


269


NM


(98
)%Noncash restructuring, impairment and plant closing costs


13


7


15


86
%

(53
)%Loss on early extinguishment of debt


21


1


2


NM


(50
)%Noncash interest expense


22


2


5


NM


(60
)%Deferred income taxes


231


202


(203
)

14
%

NMNet unrealized (gain) loss on foreign currency transactions


(26
)

4


(9
)

NM


NMNoncash gain on partial fire insurance settlement





(135
)




NM


NMOther, net


41


40


28


3
%

43
%Changes in operating assets and liabilities


259


(340
)

(385
)

NM


(12
)%Net cash provided by (used in) operating activities

$
1,104

$
767

$
(52
)

44
%

NM


68

---



Table of Contents



Percent changeYear Ended December 31,2009 vs 2008

2008 vs 20072009

2008

2007EBITDA(1)

$
329

$
743

$
567


(56
)%

31
%Depreciation and amortization


(420
)

(374
)

(391
)

12
%

(4
)%Interest expense, net


(240
)

(264
)

(287
)

(9
)%

(8
)%Income tax benefit (expense) from continuing operations


(85
)

2


(41
)

NM


NMIncome tax benefit (expense) from discontinued operations


6


(69
)

140


NM


NMNet (loss) income attributable to Huntsman International LLC


(410
)

38


(12
)

NM


NMNet (loss) income attributable to noncontrolling interests


(2
)

1


(9
)

NM


NMNet (loss) income


(412
)

39


(21
)

NM


NMExtraordinary (gain) loss on the acquisition of a business, net of tax


(6
)

(14
)

7


(57
)%

NMEquity in income of investment in unconsolidated affiliates


(3
)

(14
)

(13
)

(79
)%

8
%Depreciation and amortization


420


374


391


12
%

(4
)%(Gain) loss on disposal of businesses/assets, net


(2
)

6


269


NM


(98
)%Noncash restructuring, impairment and plant closing costs


13


7


15


86
%

(53
)%Loss on early extinguishment of debt


21


1


3


NM


(67
)%Noncash interest expense


39


2


5


NM


(60
)%Deferred income taxes


68


26


(150
)

162
%

NMNet unrealized (gain) loss on foreign currency transactions


(26
)

4


(9
)

NM


NMNoncash gain on partial fire insurance settlement





(135
)




NM


NMOther, net


37


41


28


(10
)%

46
%Changes in operating assets and liabilities


271


(298
)

(468
)

NM


(36
)%Net cash provided by operating activities

$
420

$
39

$
57


977
%

(32
)%




NMNot
Meaningful

69

---



Table of Contents

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

For the year ended December 31, 2009, net income attributable to Huntsman Corporation was $114 million on revenues of
$7.8 billion compared with a net income attributable to Huntsman Corporation of $609 million on revenues of $10.2 billion for 2008. For the year ended December 31, 2009,
the net loss attributable to Huntsman International LLC was $410 million on revenues of $7.8 billion compared with net income attributable to Huntsman International LLC of
$38 million on revenues of $10.2 billion for 2008. The decrease of $495 million in net income attributable to Huntsman Corporation and the increase of $448 million in net
loss attributable to Huntsman International LLC was the result of the following:



70

---



Table of Contents



Segment Analysis

During the first quarter of 2009, we reorganized our operating segments to divide our former Materials and Effects segment into two
different segmentsour Advanced Materials segment and our Textile Effects segment. All segment information in this report has been restated to reflect this change.

71

---



Table of Contents

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

The following table sets forth the revenues and EBITDA for each of our operating segments (dollars in millions):

Year ended
December 31,Percent
Change2009

2008RevenuesPolyurethanes

$
3,005

$
4,055


(26
)%Advanced Materials


1,059


1,492


(29
)%Textile Effects


691


903


(23
)%Performance Products


2,090


2,703


(23
)%Pigments


960


1,072


(10
)%Corporate and Other


99


159


(38
)%Eliminations


(141
)

(169
)

(17
)%Total

$
7,763

$
10,215


(24
)%Huntsman CorporationSegment EBITDAPolyurethanes

$
384

$
382


1
%Advanced Materials


59


149


(60
)%Textile Effects


(64
)

(33
)

94
%Performance Products


260


278


(6
)%Pigments


(24
)

17


NMCorporate and Other


558


550


1
%Subtotal


1,173


1,343


(13
)%Discontinued Operations


(15
)

186


NMTotal

$
1,158

$
1,529


(24
)%Huntsman InternationalSegment EBITDAPolyurethanes

$
384

$
382


1
%Advanced Materials


59


149


(60
)%Textile Effects


(64
)

(33
)

94
%Performance Products


260


278


(6
)%Pigments


(24
)

17


NMCorporate and Other


(271
)

(236
)

15
%Subotal


344


557


(38
)%Discontinued Operations


(15
)

186


NMTotal

$
329

$
743


(56
)%


72

---



Table of Contents



Average
Selling
Price

Sales
VolumesCurrent Year vs. Prior Year DecreasePolyurethanes(1)


(22
)%

(5
)%Advanced Materials


(6
)%

(25
)%Textile Effects(1)


(5
)%

(20
)%Performance Products(1)


(21
)%

(3
)%Pigments(1)


(5
)%

(6
)%Fourth Quarter 2009 vs. Third Quarter 2009 Increase (Decrease)Polyurethanes(1)


9
%

(11
)%Advanced Materials


3
%

(2
)%Textile Effects(1)


2
%

7
%Performance Products(1)


5
%

1
%Pigments(1)


6
%

(12
)%


---

NMNot
Meaningful

Polyurethanes

The decrease in revenues in our Polyurethanes segment for the year ended December 31, 2009 as compared to 2008 was primarily due
to overall lower average selling prices and lower MDI sales volumes. Average MDI selling prices decreased primarily due to competitive pressures, lower raw material costs and the effects of the
movement of the U.S. dollar against the Euro. MDI sales volumes decreased due to lower demand in major European and Americas markets as a result of the worldwide economic slowdown. MTBE sales volumes
increased relative to 2008, which
was impacted by the 2008 U.S. Gulf Coast storms, while average selling prices decreased in response to lower raw material costs. The slight increase in EBITDA in the Polyurethanes segment was
primarily the result of higher MTBE sales volumes and margins as well as the negative effects in 2008 from the U.S. Gulf Coast storms which were offset somewhat by lower MDI sales volumes and margins.

Advanced Materials

The decrease in revenues in our Advanced Materials segment for the year ended December 31, 2009 compared to 2008 was due to
lower sales volumes and lower average selling prices. Sales volumes decreased across all regions as a result of the worldwide economic slowdown. In addition, customers in our formulations and
specialty components businesses depleted inventory over several quarters. Average selling prices in our base resins business decreased in response to lower raw material costs while average selling
prices in our formulations and specialty components markets decreased as a result of changes in product mix, competitive pressures in our structural components for the ski, automotive and wind
generation businesses, and the strength of the U.S. dollar against major European currencies. The decrease in EBITDA was primarily due to lower sales volumes and higher restructuring costs, partially
offset by lower raw material and operating costs. During the years ended December 31, 2009 and 2008, our Advanced Materials segment recorded restructuring and plant closing charges of
$13 million and $1 million, respectively. For more information concerning restructuring activities, see "Note 10. Restructuring, Impairment and Plant Closing Costs" to our
consolidated financial statements.

Textile Effects

The decrease in revenues in our Textile Effects segment for the year ended December 31, 2009 compared to 2008 was due to lower
sales volumes and lower average selling prices. Sales volumes

73

---



Table of Contents

decreased
primarily due to lower demand for apparel and home textile products in all regions, as well as specialty textiles products in the Americas and Europe as a result of the worldwide economic
slowdown. Average selling prices decreased primarily as a result of a shift in sales mix from Europe to Asia and the Middle East. The decrease in EBITDA was primarily due to lower sales volumes and
lower contribution margins as selling prices decreased more than the reduction in raw material and energy costs, offset in part by lower selling, general and administrative costs and lower
restructuring costs. During the years ended December 31, 2009 and 2008, our Textile Effects segment recorded restructuring and plant closing charges of $6 million and $24 million,
respectively. For more information concerning restructuring activities, see "Note 10. Restructuring, Impairment and Plant Closing Costs" to our consolidated financial statements.

Performance Products

For the year ended December 31, 2009, Performance Products segment revenues decreased due to lower sales volumes and lower
selling prices when compared to 2008. Sales volumes decreased primarily from lower demand for almost all product lines as a result of the worldwide economic slowdown. The decrease in average selling
prices was driven principally by lower raw material costs and the strengthening of the U.S. dollar against major European currencies and the Australian dollar. Performance Products segment EBITDA
decreased mainly due to the fall in sales volumes and lower equity income partially offset by higher contribution margins as average selling prices fell more slowly than raw material and energy costs.

Pigments

The decrease in revenues in our Pigments segment for the year ended December 31, 2009 compared to 2008 was due to lower sales
volumes and lower average selling prices. Sales volumes decreased primarily due to lower demand in Europe, North America and Asia as a result of the worldwide economic slowdown. Average selling prices
decreased primarily as a result of the strength of the U.S. dollar against major European currencies, and due to lower average selling prices in Europe, Africa, Latin America and the Middle East in
response to weaker demand, partially offset by higher average selling prices in Asia and North America. The decrease in EBITDA in our Pigments segment was primarily due to higher restructuring,
impairment and plant closing costs as the impact of lower sales volumes and average selling prices was offset by lower raw materials and operating costs. During the years ended December 31,
2009 and 2008, our Pigments segment recorded restructuring, impairment and plant closing charges of $53 million and $4 million, respectively. For more information concerning
restructuring activities, see "Note 10. Restructuring, Impairment and Plant Closing Costs" to our consolidated financial statements.

Corporate and OtherHuntsman Corporation

Corporate and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, loss on the early extinguishment of debt, income (expenses) associated with the Terminated Merger and related
litigation, net income (loss) attributable to noncontrolling interests, unallocated restructuring impairment and plant closing costs, extraordinary gain on the acquisition of a business and
non-operating income and expense. For the year ended December 31, 2009, EBITDA from Corporate and Other items increased by $8 million to income of $558 million from
income of $550 million for 2008. The increase in EBITDA from Corporate and Other for the year ended December 31, 2009 resulted primarily from a $55 million increase in income
associated with the Terminated Merger and related litigation ($835 million in 2009 compared to $780 million in 2008). See "Note 26. Income (Expenses) Associated with the
Terminated Merger and Related Litigation" to our consolidated financial statements. Additionally, the increase in EBITDA was due to a $47 million

74

---



Table of Contents

increase
in unallocated foreign exchange gains ($16 million of gains in 2009 versus $31 million of losses in 2008), a $3 million decrease in net income attributable to
noncontrolling interests, and a $4 million reduction in costs associated with our A/R Program ($23 million of costs in 2009 versus $27 million of costs in 2008). These increases
to EBITDA were partially offset by higher restructuring charges of $72 million ($78 million in 2009 versus $6 million in 2008) primarily related to the announced closure of our
styrenics operations at West Footscray, Australia. For more information concerning restructuring activities, see "Note 10. Restructuring, Impairment and Plant Closing Costs" to our consolidated
financial statements. Additionally, EBITDA decreased due to a $20 million increase in costs associated with the early extinguishment of debt ($21 million loss in 2009 compared to
$1 million loss in 2008) and an $8 million decrease in the extraordinary gain on the Textile Effects Acquisition ($6 million gain in 2009 compared to $14 million gain in
2008). For more information regarding the extraordinary gain associated with the Textile Effects Acquisition, see "Note 3. Business CombinationsTextile Effects Acquisition" to our
consolidated financial statements.

Corporate and OtherHuntsman International

Corporate and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, loss on the early extinguishment of debt, net income (loss) attributable to noncontrolling interests, unallocated
restructuring, impairment and plant closing costs, extraordinary gain on the acquisition of a business and non-operating income and expense. For the year ended December 31, 2009,
EBITDA from Corporate and Other items decreased by $35 million to a loss of $271 million from a loss of $236 million for 2008. The decrease in EBITDA primarily resulted from
higher restructuring charges of $72 million ($78 million in 2009 versus $6 million
in 2008) primarily related to the announced closure of our styrenics operations at West Footscray, Australia. For more information concerning restructuring activities, see "Note 10.
Restructuring, Impairment and Plant Closing Costs" to our consolidated financial statements. Additionally, EBITDA decreased due to a $20 million increase in costs associated with the early
extinguishment of debt ($21 million loss in 2009 compared to $1 million loss in 2008) and an $8 million decrease in the extraordinary gain on the Textile Effects Acquisition
($6 million gain in 2009 compared to $14 million gain in 2008). For more information regarding the extraordinary gain associated with the Textile Effects Acquisition, see "Note 3.
Business CombinationsTextile Effects Acquisition" to our consolidated financial statements. These decreases in EBITDA were partially offset by higher EBITDA resulting from a
$47 million increase in unallocated foreign exchange gains ($16 million of gains in 2009 versus $31 million of losses in 2008), a $3 million decrease in net income
attributable to noncontrolling interests, and a $4 million reduction in costs associated with our A/R Program ($23 million of costs in 2009 versus $27 million of costs in 2008).

Discontinued Operations

The operating results of our former polymers and base chemicals businesses are classified as discontinued operations, and, accordingly,
the revenues of these businesses are excluded from revenues for all periods presented. The EBITDA of our polymers and base chemicals businesses are included in discontinued operations for all periods
presented.

During
the year ended December 31, 2009, we recorded an after tax loss from discontinued operations of $9 million related primarily to legal costs in connection with the
fire insurance claim on our former base chemicals business and the revaluation of product exchange liabilities. During the year ended December 31, 2008, we recorded after tax income from
discontinued operations of $117 million related principally to a $175 million gain on partial fire insurance settlement and to sales and use tax settlements and post-closing
adjustments associated with our former base chemicals and polymers businesses. See "Note 27. Discontinued Operations" and "Note 25. Casualty Losses and Insurance Recoveries" to our
consolidated financial statements.

75

---



Table of Contents

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

For the year ended December 31, 2008, net income attributable to Huntsman Corporation was $609 million on revenues of
$10.2 billion, compared with a net loss attributable to Huntsman Corporation of $172 million on revenues of $9.7 billion for 2007. For the year ended December 31, 2008 net
income attributable to Huntsman International LLC was $38 million on revenues of $10.2 billion compared with a net loss attributable to Huntsman International LLC of
$12 million on revenues of $9.7 billion for 2007. The increase of $781 million in net income attributable to Huntsman Corporation and the increase of $50 million in net
income attributable to Huntsman International LLC was the result of the following:



76

---



Table of Contents



Segment Analysis

During the first quarter of 2009, we reorganized our operating segments to divide our former Materials and Effects segment into two
different segmentsour Advanced Materials segment and our Textile Effects segment. All segment information in this report has been restated to reflect this change.

77

---



Table of Contents

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

The following table sets forth the revenues and EBITDA for each of our operating segments (dollars in millions):

Year ended December 31,Percent Change2008

2007RevenuesPolyurethanes

$
4,055

$
3,813


6
%Advanced Materials


1,492


1,434


4
%Textile Effects


903


985


(8
)%Performance Products


2,703


2,310


17
%Pigments


1,072


1,109


(3
)%Corporate and Other


159


155


3
%Eliminations


(169
)

(155
)

9
%Total

$
10,215

$
9,651


6
%Huntsman CorporationSegment EBITDAPolyurethanes

$
382

$
592


(35
)%Advanced Materials


149


158


(6
)%Textile Effects


(33
)

41


NMPerformance Products


278


202


38
%Pigments


17


51


(67
)%Corporate and Other


550


(342
)

NMSubtotal


1,343


702


91
%Discontinued Operations


186


(327
)

NMTotal

$
1,529

$
375


308
%Huntsman InternationalSegment EBITDAPolyurethanes

$
382

$
592


(35
)%Advanced Materials


149


158


(6
)%Textile Effects


(33
)

41


NMPerformance Products


278


202


38
%Pigments


17


51


(67
)%Corporate and Other


(236
)

(150
)

57
%Subtotal


557


894


(38
)%Discontinued Operations


186


(327
)

NMTotal

$
743

$
567


31
%


78

---



Table of Contents



Average Selling Price

Sales VolumesCurrent Year-Over-Prior Year Increase (Decrease)Polyurethanes(1)


8
%

(1
)%Advanced Materials


8
%

(3
)%Textile Effects(1)


13
%

(19
)%Performance Products(1)


29
%

(11
)%Pigments(1)


10
%

(12
)%


---

NMNot
Meaningful

Polyurethanes

For the year ended December 31, 2008, Polyurethanes segment revenues increased as a result of higher average selling prices,
offset in part by reduced sales volumes. Average MDI selling prices increased by 4%, despite a significant decline in average selling prices in Asia during the fourth quarter of 2008, primarily due to
global price increase initiatives early in the year in response to higher raw materials costs. Prices also benefited from foreign exchange movements as the U.S. dollar weakened against other relevant
currencies. Average selling prices for MTBE increased by 20% due to improved market demand as well as in response to higher raw materials costs, again, despite a significant decline in average selling
prices during the fourth quarter of 2008. The decrease in Polyurethanes segment sales volumes was primarily driven by slower growth in the U.S. related to slower construction-related demand and
production outages caused by the recent U.S. Gulf Coast storms. Lower sales volumes were also due to lower than expected sales volumes in Asia with Olympic-related production restrictions and a sharp
drop in global demand in the fourth quarter of 2008 related to the overall economic slowdown. Segment EBITDA decreased principally on lower margins related to sharply higher raw material and energy
costs and the overall effects of the recent U.S. Gulf Coast storms and also on a significant write-down of certain inventories to the lower of cost or market values, all of which more than
offset improved average selling prices.

Advanced Materials

For the year ended December 31, 2008, Advanced Materials segment revenues increased primarily as a result of higher average
selling prices, offset in part by lower sales volumes. Average selling prices in our Advanced Materials segment increased mainly as a result of price increase initiatives in certain markets and
regions in response to higher raw materials costs and from foreign exchange movements as the U.S. dollar weakened against other relevant currencies. Sales volumes for our Advanced Materials segment
decreased primarily as a result of lower demand, mainly in Europe and the U.S., as a consequence of the worldwide economic slowdown. Segment EBITDA decreased primarily as a result of lower
contribution margins as lower sales volumes and higher raw materials, energy and manufacturing costs more than offset higher average selling prices, offset in part by lower general and administrative
expenses.

Textile Effects

For the year ended December 31, 2008, Textile Effects segment revenues decreased primarily as a result of lower sales volumes,
offset in part by higher average selling prices. Sales volumes for our Textile Effects segment decreased primarily as a result of lower demand for dyes and chemicals in all regions related to the
worldwide economic slowdown. Average selling prices increased mainly as a result of price increase initiatives in certain markets and regions in response to higher raw materials

79

---



Table of Contents

costs
and from foreign exchange movements as the U.S. dollar weakened against other relevant currencies. EBITDA from our Textile Effects segment decreased due principally to lower sales volumes and
lower margins, as higher raw material and energy costs more than offset higher average selling prices. During each of the years ended December 31, 2008 and 2007, our Textile Effects segment
recorded restructuring and plant closing charges of $24 million. For more information concerning restructuring activities, see "Note 10. Restructuring, Impairment and Plant Closing
Costs" to our consolidated financial statements.

Performance Products

For the year ended December 31, 2008, Performance Products segment revenues increased primarily due to an increase in average
selling prices and higher toll manufacturing revenues, offset by lower sales volumes. Average selling prices rose in response to higher raw material costs and as a result of foreign exchange movements
as the U.S. dollar weakened against other relevant currencies. The reduction in sales volumes was primarily due to the conversion of most of our ethylene glycol business to a toll manufacturing
operation in 2008 and lower olefin by-product sales. Segment EBITDA increased principally due to expanded margins, as higher average selling prices more than offset increases in raw
material and energy costs. The higher margins more than offset increases in plant fixed costs resulting from additional planned maintenance and hurricane repairs.

Pigments

For the year ended December 31, 2008, Pigments segment revenues decreased primarily as a result of lower sales volumes, offset
in part by higher average selling prices in local currencies in all markets and foreign exchange movements as the U.S. dollar weakened against
other relevant currencies. Sales volumes were lower primarily due to lower worldwide demand related to the global economic downturn. The positive effect on revenues of the U.S. dollar weakness was
substantially offset by its effect on our costs. Segment EBITDA decreased principally due to lower sales volumes and reduced margins resulting from higher raw material and energy costs. During the
years ended December 31, 2008 and 2007, our Pigments segment recorded restructuring and plant closing charges of $4 million and $3 million, respectively. For more information
concerning restructuring activities, see "Note 10. Restructuring, Impairment and Plant Closing Costs" to our consolidated financial statements.

Corporate and OtherHuntsman Corporation

Corporate and Other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, loss on accounts receivable
securitization program, loss on the early extinguishment of debt, other non-operating income and expense, net income (loss) attributable to noncontrolling interests, extraordinary gain
(loss) on the acquisition of a business, gain on the sale of our former U.S. butadiene and MTBE business, income (expense) associated with the Terminated Merger and related litigation and the
operating results of our Australian styrenics business. The increase in EBITDA from Corporate and Other for the year ended December 31, 2008 resulted primarily from a $990 million
increase in the income associated with the Terminated Merger and related litigation ($780 million of income recorded in 2008 compared to $210 million of expenses in 2007). See
"Note 26. Income (Expenses) Associated with the Terminated Merger and Related Litigation" to our consolidated financial statements. Additionally, for the year ended December 31, 2008,
EBITDA was higher by $21 million due to favorable adjustments to the extraordinary gain on acquisition of our Textile Effects business (a $14 million gain recorded in 2008 compared to a
$7 million loss in 2007). For more information regarding the extraordinary gain associated with our Textile Effects Acquisition, see "Note 3. Business CombinationsTextile
Effects Acquisition" to our consolidated financial statements. These increases in EBITDA were offset somewhat by a $19 million increase in unallocated foreign exchange losses (a loss of
$31 million in 2008 compared to a loss of $12 million in 2007), an increase of $14 million in losses

80

---



Table of Contents

from
our Australian styrenics business, and a $10 million decrease in net loss attributable to noncontrolling interests. In addition, the increase in Corporate and Other segment EBITDA was
offset by an $11 million gain recorded in 2007 in connection with the U.K. Petrochemical Disposition and a $69 million gain recorded in 2007 in connection with the sale of our former
U.S. butadiene and MTBE business. See "Note 24. Other Operating (Income) Expense" to our consolidated financial statements.

Corporate and OtherHuntsman International

Corporate and Other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, loss on accounts receivable
securitization program, loss on the early extinguishment of debt, other non-operating income and expense, net income (loss) attributable to noncontrolling interests, extraordinary gain
(loss) on the acquisition of a business, gain on the sale of our former U.S. butadiene and MTBE business and the operating results of our Australian styrenics business. The decrease in EBITDA from
Corporate and Other for the year ended December 31, 2008 resulted primarily from a $19 million increase in unallocated foreign exchange losses (a loss of $31 million in 2008
compared to a loss of $12 million in 2007), an increase of $14 million in losses from our Australian styrenics business, and a $10 million decrease in net loss attributable to
noncontrolling interests. In addition, Corporate and Other segment EBITDA was lower due to an $11 million gain recorded in 2007 in connection with the U.K. Petrochemical Disposition and a
$69 million gain recorded in 2007 in connection with the sale of our former U.S. butadiene and MTBE business. See "Note 24. Other Operating (Income) Expense" to our consolidated
financial statements. These decreases in EBITDA were offset somewhat by a $21 million favorable adjustment to the extraordinary gain on acquisition of our Textile Effects business (a
$14 million gain recorded in 2008 compared to a $7 million loss in 2007). For more information regarding the extraordinary gain associated with the Textile Effects Acquisition, see
"Note 3. Business Dispositions and CombinationsTextile Effects Acquisition" to our consolidated financial statements.

Discontinued Operations

The operating results of our former polymers and base chemicals businesses are classified as discontinued operations, and, accordingly,
the revenues of these businesses are excluded from revenues for all periods presented. The EBITDA of our polymers and base chemicals businesses are included in discontinued operations for all periods
presented. The income (loss) from discontinued operations represents the operating results, partial fire insurance settlement gains, and impairment and gain (loss) on disposal with respect to each of
our U.S. base chemicals business, our North American polymers business, our European base chemicals and polymers business and our TDI business. See "Note 27. Discontinued Operations" and
"Note 25. Casualty Losses and Insurance Recoveries" to our consolidated financial statements.



The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect
to Huntsman International in accordance with General Instruction I of Form 10-K.



Net cash provided by operating activities for the years ended December 31, 2009 and 2008 was $1,104 million and
$767 million, respectively. The increase in cash provided by operating activities was primarily attributable to settlement proceeds received in connection with the Texas Bank Litigation
Settlement Agreement and by a $599 million favorable variance in operating assets and liabilities changes for the year ended December 31, 2009 as compared with 2008. These increases to
cash provided by operating activities were offset in part by a decrease in operating income as described in "Results of Operations" above.

81

---



Table of Contents

Net cash used in investing activities for the year ended December 31, 2009 and 2008 was $205 million and $489 million, respectively. During
the years ended December 31, 2009 and 2008, we paid $189 million and $418 million, respectively, for capital expenditures. This reduction in capital expenditures was largely
attributable to higher 2008 spending on various projects, including $84 million spent on our maleic anhydride expansion at the Geismar, Louisiana site in 2008 as compared to $26 million
in 2009; and $32 million spent on our MDI facility at the Geismar, Louisiana site in 2008. In addition, during 2008, we spent $29 million at our Greatham, U.K. titanium dioxide facility.
During the year ended December 31, 2009, we paid $31 million for the Baroda acquisition. See "Note 3. Business CombinationsBaroda Acquisition" to our consolidated
financial statements. During the years ended December 31, 2009 and 2008, we received $5 million and $3 million, respectively, from the sale of assets. During the year ended
December 31, 2008, we made payments of $29 million related to certain expenditures for the rebuild of our former Port Arthur, Texas facility, resulting in an adjustment to the sales
proceeds received in connection with the 2007 U.S. Base Chemicals Disposition. See "Note 27. Discontinued Operations" to our consolidated financial statements. During the year ended
December 31, 2008, we contributed $44 million to our ethyleneamines joint venture in Saudi Arabia.

Net
cash provided by financing activities for the years ended December 31, 2009 was $184 million as compared with $230 million of net cash provided by financing
activities in 2008. During the year ended December 31, 2009 we issued the 2016 Senior Notes and obtained Term Loan C in connection with the Texas Bank Litigation Settlement Agreement. During
this period, we also redeemed in full the $296 million outstanding principal amount 11.625% senior secured notes due October 2010 and the $198 million outstanding principal amount 11.5%
senior notes due July 2012. During the year ended December 31, 2008, we issued the Convertible Notes in connection with the Apollo Settlement
Agreement. For more information regarding the Convertible Notes, see "Convertible Notes" below.



Net cash provided by (used in) operating activities for the years ended December 31, 2008 and 2007 was $767 million and
$(52) million, respectively. The increase in cash provided by operations was primarily attributable to $765 million of net cash received in connection with the Apollo Settlement Agreement and
to a $45 million favorable year-over-year variance in operating assets and liabilities changes, offset in part by lower operating income as described in
"Results of Operations" above.

Net
cash (used in) provided by investing activities for the years ended December 31, 2008 and 2007 was $(489) million and $200 million, respectively. During the
years ended December 31, 2008 and 2007, we paid $418 million and $665 million, respectively, for capital expenditures. The capital expenditures for the year ended
December 31, 2007 included $157 million spent on our former Port Arthur, Texas facility that was previously damaged by fire and has been sold to Flint Hills Resources. In addition,
during 2007, we spent $72 million on our Greatham, U.K. expansion for our Pigments segment as compared with $29 million in 2008. During the years ended December 31, 2008 and 2007,
we received $3 million and $850 million, respectively, from the sale of assets. On August 1, 2007, we completed the North American Polymers Disposition for $354 million and
on November 5, 2007 we completed the U.S. Base Chemicals Disposition for $415 million. In 2006, we sold the assets comprising our former U.S. butadiene and MTBE business and received the
final payment of $70 from that sale in November 2007. During the year ended December 31, 2008, we made $29 million of payments related to certain expenditures to rebuild our former Port
Arthur, Texas facility, resulting in an adjustment to the sales proceeds. See "Note 27. Discontinued OperationsU.S. Base Chemicals Business" to our consolidated financial
statements. During the year ended December 31, 2008, we contributed $44 million to our ethyleneamines joint venture in Saudi Arabia. During the year ended December 31, 2007, we
finalized our post-closing adjustments with respect to the Textile Effects Acquisition, resulting in a reduction to the purchase price of $27 million.

82

---



Table of Contents

Net
cash provided by financing activities for the year ended December 31, 2008 was $230 million as compared with a use of cash of $269 million in 2007. This increase
in net cash provided by financing activities was primarily due to the issuance of the Convertible Notes in connection with the Apollo Settlement Agreement and lower net repayments of debt in 2008 as
compared to 2007. For more
information regarding the issuance of the Convertible Notes, see "Convertible Notes" below.

Changes in Financial Condition

The following information summarizes our working capital (dollars in millions):

December 31,Increase
(Decrease)

Percent
Change2009

2008Cash and cash equivalents

$
1,745

$
657

$
1,088


166
%Restricted cash


5


5





Accounts receivable, net


1,019


913


106


12
%Inventories


1,184


1,500


(316
)

(21
)%Prepaid expenses


42


45


(3
)

(7
)%Deferred income taxes


36


21


15


71
%Other current assets


109


99


10


10
%Total current assets


4,140


3,240


900


28
%Accounts payable


755


747


8


1
%Accrued liabilities


623


617


6


1
%Deferred income taxes


2


36


(34
)

(94
)%Current portion of long-term debt


431


205


226


110
%Total current liabilities


1,811


1,605


206


13
%Working capital

$
2,329

$
1,635

$
694


42
%


Our
working capital increased by $694 million as a result of the net impact of the following significant changes:



Debt and Liquidity

Our direct debt and guarantee obligations consist of the following: our Convertible Notes; our guarantees of certain debt of HPS (our
Chinese MDI joint venture); our guarantee of certain debt of the Arabian Amines Company; certain indebtedness incurred from time to time to finance certain insurance premiums; and our guarantee of
certain obligations of Huntsman International in its capacity as a contributor and servicer guarantor under our U.S. A/R Program.

83

---



Table of Contents

Substantially
all of our other debt has been incurred by our subsidiaries (primarily Huntsman International); such subsidiary debt is nonrecourse to us and we have no contractual
obligation to fund our subsidiaries' respective operations.

Senior Credit Facilities

All of our Senior Credit Facilities are obligations of Huntsman International. As of December 31, 2009, our Senior Credit
Facilities consisted of (i) the $650 million Revolving Facility; (ii) a $1,524 million term loan B facility ("Term Loan B"); and (iii) the $500 million
($444 million carrying value) Term Loan C (collectively with Term Loan B, the "Dollar Term Loans").

As
of December 31, 2009, we had no borrowings outstanding under our Revolving Facility, and we had approximately $33 million (U.S. dollar equivalents) of letters of credit
and bank guarantees issued and outstanding under our Revolving Facility. The Revolving Facility matures in August 2010, Term Loan B matures in 2014 and Term Loan C matures in 2016; provided, however,
that the maturities of the Revolving Facility and the Dollar Term Loans will accelerate if we do not repay or refinance all but $100 million of Huntsman International's outstanding debt
securities on or before three months prior to the maturity dates of such debt securities.

Our
Senior Credit Facilities are subject to a single financial covenant (the "Leverage Covenant"), which applies only to the Revolving Facility and is tested at the Huntsman
International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the
Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). On April 16, 2009, Huntsman International entered into a waiver (the "Waiver") with respect
to the Leverage Covenant. The Leverage Covenant, as amended pursuant to the Waiver, requires that the maximum senior secured leverage ratio does not exceed 5.00 to 1.00.

In
addition, the Waiver modified the calculation used to determine compliance with the Leverage Covenant as follows:



The
Waiver is effective from April 16, 2009 through June 30, 2010. However, we may consent to terminate the Waiver in conjunction with a proposed amendment to the Revolving
Facility we are currently seeking. In that event, the senior secured leverage ratio would return to 3.75 to 1.00.

As
consideration for the Waiver, Huntsman International agreed to increase the interest paid on borrowings under the Revolving Facility by 225 basis points from LIBOR plus 1.75% to LIBOR
plus 4.00% and to increase the applicable unused fee by 25 basis points from 0.50% to 0.75%. In addition, during the wavier period, Huntsman International agreed not to:



84

---



Table of Contents



At
the present time, borrowings under the Revolving Facility, Term Loan B and Term Loan C bear interest at LIBOR plus 4%, LIBOR plus 1.75% and LIBOR plus 2.25%, respectively. However,
the applicable interest rate of Term Loan B is subject to a reduction to LIBOR plus 1.5% upon achieving certain secured leverage ratio thresholds.

As
of December 31, 2009, the weighted average interest rate on the Senior Credit Facilities was approximately 2.1%. Our obligations under the Senior Credit Facilities are
guaranteed by our guarantor subsidiaries (each a "Guarantor" and collectively the "Guarantors"), which consist of substantially all of our domestic subsidiaries and certain of our foreign
subsidiaries, and are secured by a first priority lien on substantially all of our domestic property, plant and equipment, the stock of all of or our material domestic subsidiaries and certain foreign
subsidiaries and pledges of intercompany notes between various of our subsidiaries.

Secured Notes

On July 23, 2009, we redeemed in full all of our $296 million 11.625% senior secured notes due October 2010. The total
redemption payment, excluding accrued interest, was $305 million, which included principal of $296 million and a call premium of approximately $9 million. In connection with this
redemption, we recognized a loss on early extinguishment of debt of $11 million.

Senior Notes

On August 3, 2009, we redeemed in full all of our $198 million 11.5% senior notes due July 2012. The total redemption
payment, excluding accrued interest, was $204 million, which included principal of $198 million and a call premium of $6 million. In connection with this redemption, we recognized
a loss on early extinguishment of debt of $10 million.

2016 Senior Notes

Pursuant to the Texas Bank Litigation Settlement Agreement, we entered into the Note Purchase Agreement with the Banks, pursuant to
which the Banks purchased $600 million aggregate principal amount of the 2016 Senior Notes.

The
2016 Senior Notes are senior unsecured obligations and are guaranteed by certain subsidiaries named as Guarantors.

As
of December 31, 2009, we had outstanding $600 million ($434 million carry value) of the 2016 Senior Notes with an effective interest rate at issuance of 11.73%.
In June 2009, these liabilities were measured at fair value upon initial recognition. We used primarily the income approach to determine the fair value of these instruments. Fair value represents the
present value of estimated future cash flows calculated using interest rates that were available to us for issuance of debt with similar terms, adjusted for differences in remaining maturity using
relevant debt yield curves.

The
2016 Senior Notes bear interest at the rate of 5.5% per year payable semi-annually in June and in December of each year. The 2016 Senior Notes will mature on
June 30, 2016. We may redeem the 2016 Senior Notes in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days' notice, at a redemption price equal to
the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of redemption. The 2016 Senior Notes are governed by an indenture imposing certain limitations on Huntsman
International's ability to, among other things, incur additional indebtedness; pay dividends or make certain other restricted payments; enter into certain transactions with affiliates; create dividend
or other payment restrictions affecting restricted

85

---



Table of Contents

subsidiaries;
merge or consolidate with any other person; sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of their assets; or adopt a plan of liquidation.

Upon
the occurrence of certain change of control events, holders of the 2016 Senior Notes will have the right to require that we purchase all or a portion (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of such holder's 2016 Senior Notes in cash pursuant to the offer described by us, at a purchase price equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase.

Subordinated Notes

As of December 31, 2009, we had outstanding $175 million of 7.375% senior subordinated notes due 2015 and
€135 million (approximately $194 million) of 7.5% senior subordinated notes due 2015 (the "2015 Subordinated Notes"). The 2015 Subordinated Notes are redeemable on or
after January 1, 2010 at 103.688% and 103.750%, respectively, of the principal amount plus accrued interest, declining ratably to par on and after January 1, 2013.

As
of December 31, 2009, we had outstanding €400 million (approximately $574 million) of 6.875% senior subordinated notes due 2013 (the "2013
Subordinated Notes") and $347 million aggregate principal amount ($351 million book value) of our 7.875% senior subordinated notes due 2014 (the "2014 Subordinated Notes"). The 2013
Subordinated Notes are currently redeemable at 105.156% of the principal amount plus accrued interest, declining ratably to par on or after November 15, 2012. The 2014 Subordinated Notes are
redeemable on or after November 15, 2010 at 103.938% of the principal amount plus accrued interest, declining ratably to par on or after November 15, 2012.

Interest
on the 2015 Subordinated Notes is payable semiannually in January and July of each year. Interest on the 2013 Subordinated Notes and the 2014 Subordinated Notes is payable
semiannually in
November and May of each year. All of our subordinated notes are unsecured. The indentures governing our subordinated notes contain covenants relating to, among other things, the incurrence of debt
and limitations on distributions, certain restricted payments, asset sales and affiliate transactions. Our subordinated notes are guaranteed by the Guarantors. The indentures also contain provisions
requiring us to offer to repurchase the notes upon a change of control.

Convertible Notes

As of December 31, 2009, we had outstanding $250 million of Convertible Notes ($236 million carrying value). On
January 11, 2010, we repurchased the entire $250 million principal amount of the Convertible Notes from Apollo and its affiliates for approximately $382 million. The Convertible
Notes were issued to Apollo in December 2008 as part of the Apollo Settlement Agreement. The Convertible Notes, which would have matured on December 23, 2018, bore interest at the rate of 7%
per year and were convertible into approximately 31.8 million shares of our common stock at any time by the holders. As a result of the repurchase of the Convertible Notes, we will record a
loss on early extinguishment of debt in the first quarter of 2010 in the amount of approximately $146 million. The carrying value of $236 million relating to the Convertible Notes was
classified as current as of December 31, 2009.

Other Debt

We maintain a $25 million European overdraft facility that is a demand facility used for the working capital needs of our
European subsidiaries. As of December 31, 2009 and 2008, we had nil and $16 million U.S. dollar equivalents, respectively, in borrowings outstanding under the European overdraft
facility. We also maintain other foreign overdraft facilities used for working capital needs.

86

---



Table of Contents

HPS
obtained secured loans for the construction of its MDI production facility. This debt consists of various committed loans. As of December 31, 2009, HPS had $20 million
outstanding in U.S. dollar borrowings and 606 million in RMB borrowings (approximately $89 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, 2009, the interest rate was approximately 1% for U.S. dollar borrowings, 5.3% for RMB
term loan borrowings and 4.9% for RMB
working capital loans. The term loans are secured by substantially all the assets of HPS and will be repaid in 16 semiannual installments (which began on June 30, 2007). We have guaranteed 70%
of any amount due and unpaid by HPS under the loans described above (except for the VAT facility, which is not guaranteed). Our guarantees remain in effect until HPS has met certain conditions. The
conditions outstanding include completion of the building and equipment mortgage registrations, which are progressing as planned, and maintaining a debt service coverage ratio of at least 1.5:1 at the
time such registrations are completed. Our Chinese MDI joint ventures are unrestricted subsidiaries under the Senior Credit Facilities and under the indentures governing our outstanding notes.

As
of December 31, 2009, HPS has a loan facility for the purpose of discounting commercial drafts with recourse. The facility has a stated capacity for discounting up to
CNY700 million (approximately $103 million) and drafts are discounted using a discount rate of the three-month SHIBOR plus 2.2%. As of December 31, 2009 the all-in
discount rate was 4.0%. As of December 31, 2009, HPS has discounted with recourse CNY363 million (approximately $53 million) of commercial drafts, all of which is included in
current portion of long-term debt. While the facility has a maturity of July 2010, the lender has the right to accept or reject drafts presented for discounting.

Our
Australian subsidiaries maintain credit facilities that had an aggregate outstanding balance of A$38 million (approximately $34 million) as of December 31, 2009,
all of which is included in the current portion of long term debt. These facilities are nonrecourse to us and bear interest at the Australian index rate plus a margin of 2.4%. As of
December 31, 2009, the interest rate for these facilities was 6.5%. The Australian credit facilities mature in May 2010.

We
finance certain insurance premiums and, as of December 31, 2009 and 2008, we had outstanding notes payable in the amount of $18 million and $23 million,
respectively. Insurance premium financings are generally secured by the unearned premiums under such policies.

In
connection with the Baroda acquisition, a portion of the purchase price was funded through local financing and from liquidity available from our subsidiaries located in India. See
"Note 3. Business Combinations." As of December 31, 2009, our Indian entities had combined debt outstanding of approximately $20 million (U.S. dollar equivalents). This debt is
comprised of various facilities including approximately $9 million (U.S. dollar equivalents) in working capital facilities that are callable on demand and a five year term loan facility of
approximately $11 million (U.S. dollar equivalents). See "Note 3. Business Combinations."

On
June 30, 2008, our subsidiary, Huntsman (UK) Limited, entered into a $125 million short term committed revolving credit facility maturing on June 28, 2009. In
connection with an amendment to our prior accounts receivable securitization program ("Prior A/R Program") on November 13, 2008, we terminated this short term revolving credit facility of which
nothing was drawn. See "Note 16. Securitization of Accounts Receivable."

Notes Payable from Huntsman International to Huntsman Corporation

As of December 31, 2009, under an existing promissory note (the "Intercompany Note"), we have loaned $550 million to our
subsidiary, Huntsman International. The Intercompany Note is unsecured and $25 million of the outstanding amount is classified as current as of December 31, 2009 on the accompanying
consolidated balance sheets. As of December 31, 2009, under the terms of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal

87

---



Table of Contents

amount
at a rate per annum based on the previous monthly average borrowing rate obtained under our A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis
points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility). Subject to the conditions of the Waiver, with our consent, the principal
and accrued interest outstanding under the Intercompany Note may also be forgiven, capitalized or satisfied with any alternate form of consideration.

Compliance with Covenants

Our management believes that we are in compliance with the covenants contained in the agreements governing our debt instruments,
including Huntsman International's Senior Credit Facilities, Huntsman International's A/R Programs and the indentures governing Huntsman International's notes.

We
have only one financial covenant under Huntsman International's Senior Credit Facilitiesthe Leverage Covenant which applies to Huntsman International's
$650 million Revolving Facility. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized
letters of credit or guarantees are not deemed outstanding). On April 16, 2009, Huntsman International entered into the Waiver with respect to the Leverage Covenant. The Leverage Covenant, as
amended pursuant to the Waiver, requires that the Secured Leverage Ratio does not exceed 5.00 to 1.00. Huntsman International may consent to terminating the Waiver in conjunction with a proposed
amendment to the Revolving Facility we are currently seeking. In that event, the Secured Leverage Ratio would return to 3.75 to 1.00.

If
in the future Huntsman International is not able to meet the Secured Leverage Ratio, unless we obtain an amendment or waiver (as to which we can provide no assurance), then, for so
long as we did
not meet the Secured Leverage Ratio, we would not have access to the liquidity otherwise available under our Revolving Facility. If we fail to meet the Secured Leverage Ratio at a time when we had
loans or letters of credit outstanding under the Revolving Facility, we would be in default under Huntsman International's Senior Credit Facilities, and, unless we obtain a waiver or forbearance with
respect to such default (as to which we can provide no assurance), we could be required to pay off the balance of the Senior Credit Facilities in full and would not have further access to such
facilities.

Our
A/R Programs consist of two facilities: the $250 million U.S. A/R Program and the €225 (approximately $323 million) EU A/R Program. The
agreements governing the U.S. A/R Program and the agreements governing the EU A/R Program also contain certain financial covenants. Any material failure to meet the applicable A/R Programs covenants
in the future could lead to an event of default under the A/R Programs, which could require us to cease our use of such facilities. Under these circumstances, unless any default was remedied or
waived, we would likely lose the ability to obtain financing with respect to our trade receivables. A material default under the A/R Programs would also constitute an event of default under Huntsman
International's Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of the Senior Credit Facilities.

Short-Term and Long-Term Liquidity

We depend upon our cash, credit facilities, A/R Programs and other debt instruments to provide liquidity for our operations and working
capital needs. As of December 31, 2009, we had $2,510 million of combined cash and unused borrowing capacity, consisting of $1,750 million in cash and restricted cash,
$617 million in availability under our Revolving Facility, $25 million in availability under our European overdraft facility and $118 million in availability under our A/R
Programs.

During
2009, we received settlement proceeds pursuant to the Texas Bank Litigation Settlement Agreement, including $632 million of cash (that included reimbursement of
$12 million of our litigation costs). In addition, Huntsman International received $600 million for the 2016 Senior Notes and

88

---



Table of Contents

$500 million
pursuant to the Term Loan C financing. See "Note 26. Income (Expenses) Associated with the Terminated Merger and Related litigation" to our consolidated financial
statements.

On
July 23, 2009, Huntsman International redeemed in full all of its $296 million 11.625% senior secured notes due October 2010. The total redemption payment, excluding
accrued interest was $305 million, which included principal of $296 million and a call premium of $9 million. On August 3, 2009, Huntsman International redeemed in full all
of its $198 million 11.5% senior notes due July 2012. The total
redemption payment, excluding accrued interest was $204 million, which included principal of $198 million and a call premium of $6 million. The total redemption payments,
excluding accrued interest, were a combined total of $509 million, including principal of $494 million and call premiums of approximately $15 million.

For
the year ended 2009, we paid cash taxes in the amount of $155 million primarily related to the Texas Bank Litigation settlement.

Excluding
the impact of the Texas Bank Litigation settlement, related taxes and the resulting redemptions of our notes in 2009, our liquidity as of December 31,
2009comprised of cash and unused borrowing capacityincreased $136 million compared to December 31, 2008 in spite of the impact of the worldwide recession on
earnings. This was largely due to effective working capital management, reduced capital expenditures and minimal scheduled debt maturities.

During
2010, we expect to spend between $250 million and $275 million for capital expenditures. We expect to fund capital expenditures through a combination of available
cash and cash flows from operations.

Our
liquidity can be significantly impacted by various factors. Concerning changes in working capital components for the year ended December 31, 2009, our accounts receivable and
inventory, net of accounts payable, decreased by approximately $298 million, as reflected in our consolidated statement of cash flows. Our inventories decreased by $351 million largely
as a result of improved inventory management efforts and reduced inventory costs. In addition, during the year ended December 31, 2009, amounts outstanding under the A/R Program decreased by
$192 million (from $446 million as of December 31, 2008 to $254 million as of December 31, 2009). The reduction in amounts outstanding under the A/R Program was
largely due to our decreased need to utilize the program as a result of our significant cash balances. We expect volatility in our working capital components to continue.

On
September 8, 2009, we announced the closure of our styrenics facility located at West Footscray, Australia. We ceased operation of the West Footscray styrene plant on
January 5, 2010 and we expect to complete the subsequent closure of our polystyrene and expandable polystyrene plants during the first quarter of 2010. During 2009, we recorded closure costs of
approximately $63 million ($25 million primarily in severance, $8 million of contract termination costs and a $30 million preliminary estimate of environmental remediation
costs) and expect to incur other closure related costs of approximately $7 million in 2010. We can provide no assurance that the eventual environmental remediation costs will not be materially
different from our current estimate. The closure costs are expected to be funded as they are incurred over the next several years, with severance costs to be paid primarily in 2010. For a discussion
of restructuring, impairment and plant closing costs, see "Note 10. Restructuring, Impairment and Plant Closing Costs" to our consolidated financial statements.

On
April 29, 2006, we experienced fire damage at our Port Arthur, Texas facility. This facility has been subsequently rebuilt and sold. In connection with this fire damage, we
have received partial insurance proceeds to date of $365 million. Binding arbitration to settle this claim began on November 2, 2009. The binding arbitration is ongoing and further oral
arguments have been scheduled in March 2010. Prior to the commencement of the arbitration proceedings, we had claimed an additional approximately $242 million plus interest as presently due and
owing and unpaid under the

89

---



Table of Contents

Policy
for losses caused by the fire. The arbitration panel has made a preliminary ruling disallowing our claim for interest. In addition, the arbitration panel has made certain preliminary rulings on
some of the discrete issues that so far effectively reduce the overall amount we have claimed by approximately $40 million. A final ruling on these and the various other outstanding issues
under the claim are not expected until after the oral arguments scheduled in March 2010. Collections on this insured loss, if any, will represent additional income from discontinued operations for us
upon final settlement, and will be used to repay secured debt in accordance with relevant provisions of our debt agreements. See "Note 19. Commitments and ContingenciesPort Arthur
Plant Fire Insurance Litigation" and "Note 25. Casualty Losses and Insurance RecoveriesPort Arthur, Texas Plant Fire" to our consolidated financial statements.

During
the year ended December 31, 2009, we made contributions to our pension and postretirement benefit plans of $152 million. During 2010, we expect to contribute
approximately $124 million to these plans.

As
of December 31, 2009, we currently have $431 million classified as current portion of debt which consists of certain scheduled term payments and various short term
facilities, including but not limited to our HPS draft discounting facility in China with $53 million outstanding, our Australian credit facilities with $34 million outstanding and
certain other short term facilities totaling $48 million. Although we cannot provide assurances, we intend to renew, repay or extend the majority of these short-term facilities in
the current period. In addition, on January 11, 2010 we redeemed the entire $250 million principal amount ($236 million carrying value) of our outstanding Convertible Notes for
approximately $382 million. The carrying value of $236 million relating to the Convertible Notes was classified as current as of December 31, 2009. See "Note 13.
DebtConvertible Notes" to our consolidated financial statements.

Our
$650 million Revolving Facility matures in August 2010. As of December 31, 2009, we had no borrowings outstanding under our Revolving Facility, and we had approximately
$33 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Facility. We are currently seeking to amend our Revolving Facility to,
among other things, reduce the committed availability to $300 million and extend the maturity to four years from the date of the amendment. No assurance can be given that we will obtain these
amendments.

Due
to our ample liquidity in 2009, the effect of the current credit environment has been limited with regards to our need to access the credit markets. In addition, we have actively
managed our credit exposure to ensure minimal credit losses during the recent economic environment.

90

---





Table of Contents

Contractual Obligations and Commercial Commitments

Our obligations under long-term debt (including the current portion), lease agreements and other contractual commitments as
of December 31, 2009 are summarized below (dollars in millions):

2010

2011 - 2012

2013 - 2014

After 2014

TotalLong-term debt, including current portion

$
431

$
102

$
2,450

$
1,229

$
4,212Interest(1)


201


383


301


101


986Operating leases


46


77


63


63


249Purchase commitments(2)


582


332


138


74


1,126Total(3)(4)

$
1,260

$
894

$
2,952

$
1,467

$
6,573


---

2010

2011 - 2012

2013 - 2014

5-Year
Average
AnnualPension plans

$
112

$
317

$
295

$
119Other postretirement obligations


12


24


23


10


Off-Balance Sheet Arrangements

Receivables Securitization

For a discussion of our A/R Programs, see "Note 15. Securitization of Accounts Receivable" to our consolidated financial
statements. Upon adoption of new accounting guidance in 2010, we believe that the receivables transferred into the A/R Programs will no longer meet the criteria for derecognition and amounts
outstanding will be accounted for as secured borrowings.

Guarantees

Our unconsolidated Saudi Joint Venture obtained various loan commitments in the aggregate amount of approximately $195 million
(U.S. dollar equivalents) of which $181 million, including bridge

91

---



Table of Contents

loans,
was drawn and outstanding as of December 31, 2009. We have provided certain guarantees of approximately $14 million for these commitments and our guarantees will terminate upon
completion of the project and satisfaction of certain other conditions. We have estimated that the fair value of such guarantees was nil as of the closing date of this transaction and, accordingly, no
amounts have been recorded.

We
also guarantee certain obligations of Huntsman International in its capacity as a contributor and servicer guarantor under the U.S. A/R Program.

Restructuring, Impairment and Plant Closing Costs

For a discussion of restructuring, impairment and plant closing costs, see "Note 10. Restructuring, Impairment and Plant Closing
Costs" to our consolidated financial statements.

Legal Proceedings

For a discussion of legal proceedings, see "Note 19. Commitments and ContingenciesLegal Matters" to our
consolidated financial statements.

Environmental, Health and Safety Matters

For a discussion of environmental, health and safety matters, see "Note 20. Environmental, Health and Safety Matters" to our
consolidated financial statements.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For a discussion of recently issued accounting pronouncements, see "Note 2. Summary of Significant Accounting
PoliciesRecently Issued Accounting Pronouncements" to our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the U.S.
requires management to make judgments, estimates and assumptions that affect the reported amounts in the consolidated financial statements. Our significant accounting policies are summarized in
"Note 2. Summary of Significant Accounting Policies" to our consolidated financial statements. Summarized below are our critical accounting policies:

Fair Value

Pursuant to the Texas Bank Litigation Settlement Agreement, on June 22, 2009, Huntsman International entered into an amendment
of its Senior Credit Facilities that created Term Loan C with a $500 million principal amount and also issued $600 million aggregate principal amount of 2016 Senior Notes. In accordance
with accounting guidance regarding fair value measurements, we recorded the Term Loan C and the 2016 Senior Notes in our accounting records at fair values of $439 million and
$425 million, respectively, upon initial recognition in June 2009.

We
primarily used the income approach to determine the fair value of these instruments. Fair value represents the present value of estimated future cash flows calculated using interest
rates that were available to us for issuance of debt with similar terms, adjusted for differences in remaining maturity using relevant debt yield curves.

92

---



Table of Contents

Management
used judgment with respect to assumptions used in estimating the fair values of the Term Loan C and the 2016 Senior Notes. The effect of the following changes in certain key
assumptions is summarized as follows (dollars in millions):

Assumptions

Balance Sheet
Impact(1)Effective market yield1% increase

$
(45
)1% decrease


47


(1)Estimated
increase (decrease) to June 2009 fair values of Term Loan C and 2016 Senior Notes


Pursuant
to the Apollo Settlement Agreement, on December 23, 2008, we issued $250 million of our Convertible Notes to Apollo affiliates under the Note Purchase Agreement.
In accordance with accounting guidance regarding fair value measurements, we recorded these Convertible Notes in our accounting records at a fair value of $235 million upon initial recognition
in December 2008. As previously noted, we repurchased these notes on January 11, 2010.

We
primarily used the income approach to determine the fair value of the Convertible Notes. Fair value is based on the present value of estimated future cash flows, calculated using
management's best estimates of key assumptions including relevant interest rates, expected share volatility, dividend yields, and the probabilities associated with certain features of the Convertible
Notes. We also used the market approach to assess comparables and corroborate the fair value determined using the income approach.

Management
used judgment with respect to assumptions used in estimating the fair value of the Convertible Notes. The effect of the following changes in certain key assumptions is
summarized as follows (dollars in millions):

Assumptions

Balance Sheet
Impact(1)Expected volatility10% increase

$
610% decrease


(7
)Effective market yield1% increase


(6
)1% decrease


6


(1)Estimated
increase (decrease) to December 31, 2008 fair value of Convertible Notes


Revenue Recognition

We generate substantially all of our revenues through sales in the open market and long-term supply agreements. We
recognize 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. The transfer of risk and title to the product to the customer usually occurs at the time shipment is made.

Revenue
arrangements that contain multiple deliverables, which relate primarily to the licensing of technology, are evaluated in accordance with ASC 605-25, Revenue RecognitionMultiple-Element Arrangements, to determine whether the arrangements
should be divided into separate units of accounting and how the arrangement consideration should be measured and allocated among the separate units of accounting.

93

---



Table of Contents

Inventories

Inventories are stated at the lower of cost or market, with cost determined using last-in first-out ("LIFO"),
first-in first-out, and average cost methods for different components of inventory. Market is determined based on net realizable value for finished goods inventories and
replacement cost for raw materials and work-in-process inventories. In periods of declines in the selling prices of our finished products, inventory carrying values may exceed
the net realizable value upon sale, resulting in a lower of cost or market charge. We evaluate the need for a lower of cost or market adjustment to inventories based on the period-end
selling prices of our finished products.

Long-Lived Assets

The useful lives of our property, plant and equipment are estimated based upon our historical experience, engineering estimates and
industry information and are reviewed when economic events indicate that we may not be able to recover the carrying value of the assets. The estimated lives of our property range from 3 to
33 years and depreciation is recorded on the straight-line method. Inherent in our estimates of useful lives is the assumption that periodic maintenance and an appropriate level of
annual capital expenditures will be performed. Without on-going capital improvements and maintenance, the productivity and cost efficiency declines and the useful lives of our assets would
be shorter.

Management
uses judgment to estimate the useful lives of our long-lived assets. At December 31, 2009, if the estimated useful lives of our property, plant and
equipment had either been one year greater or one year less than their recorded lives, then depreciation expense for the year ended December 31, 2009 would have been approximately
$27 million less or $31 million greater, respectively.

We
are required to evaluate our plant assets whenever events indicate that the carrying value may not be recoverable in the future or when management's plans change regarding those
assets, such as idling or closing a plant. We evaluate impairment by comparing undiscounted cash flows of the related asset groups that are largely independent of the cash flows of other asset groups
to their carrying values. Key assumptions in determining the future cash flows include the useful life, technology, competitive pressures, raw material pricing and regulations. In connection with our
asset evaluation policy, we reviewed all of our long-lived assets for indicators that the carrying value may not be recoverable and determined that such indicators did not exist as of
December 31, 2009.

Goodwill

We test our goodwill for impairment at least annually (at the beginning of the third quarter) and when events and circumstances change
that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill has been assigned to reporting units for purposes of impairment testing. Currently,
substantially all of our goodwill balance relates to our Advanced Materials reporting unit.

Fair
value is estimated using the market approach, as well as the income approach based on discounted cash flow projections. The estimated fair values of our reporting units are
dependent on several significant assumptions including, among others, market information, operating results, earnings projections and anticipated future cash flows.

We
tested goodwill for impairment at the beginning of the third quarter of 2009 as part of the annual impairment testing procedures and determined that no goodwill impairment existed.
The results of our annual impairment testing indicated the excess of fair value of our Advanced Materials reporting unit over its carrying value was approximately $600 million.

In
the first half of 2009, our market capitalization was below the net book value of our Company. We have evaluated the movement in our stock price as it relates to the fair values of
our reporting

94

---



Table of Contents

units.
Based on this evaluation, we determined that we did not have a triggering event that would require an interim goodwill impairment test. As of December 31, 2009, our market capitalization
was well in excess of the net book value of our Company.

Restructuring and Plant Closing Costs

We have recorded restructuring charges in recent periods in connection with closing certain plant locations, workforce reductions and
other cost savings programs. These charges are recorded when management has committed to a plan and incurred a liability related to the plan. Also in connection with the Textile Effects Acquisition,
we recorded liabilities for workforce reduction, non-cancelable lease termination costs and demolition, decommissioning and other restructuring costs. Estimates for plant closing costs
include the write-off of the carrying value of the plant, any necessary environmental and/or regulatory costs, contract termination and demolition costs. Estimates for workforce reductions
and other costs savings are recorded based upon estimates of the number of positions to be terminated, termination benefits to be provided and other information, as necessary. While management
evaluates the estimates on a quarterly basis and will adjust the reserve when information indicates that the estimate is above or below the initial estimate, management's estimates on a
project-by-project basis have not varied to a material degree. For further discussion of our restructuring activities, see "Note 10. Restructuring, Impairment and Plant
Closing Costs" to our consolidated financial statements.

Income Taxes

We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax
assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed each period on a tax jurisdiction by tax jurisdiction basis to analyze whether
there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. Uncertainties regarding expected future income in certain
jurisdictions could affect the realization of deferred tax assets in those jurisdictions.

We
do not provide for income taxes or benefits on the undistributed earnings of our non-U.S. subsidiaries as earnings are reinvested and, in the opinion of management, will
continue to be reinvested indefinitely.

We
adopted new accounting guidance regarding uncertainty in income taxes on January 1, 2007, the cumulative effect of which was not significant. This new accounting guidance
clarified the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. The application of income tax law is inherently complex. We are required to determine if an income tax position meets the criteria of
more-likely-than-not to be realized based on the merits of the position under tax law, in order to recognize an income tax benefit. This requires us to make many
assumptions and judgments regarding the merits of income tax positions and the application of income tax law. Additionally, if a tax position meets the recognition criteria of
more-likely-than-not we are required to make judgments and assumptions to measure the amount of the tax benefits to recognize based on the probability of the amount
of tax benefits that would be realized if the tax position was challenged by the taxing authorities. Interpretations and guidance surrounding income tax laws and regulations change over time. As a
consequence, changes in assumptions and judgments can materially affect amounts recognized in the consolidated financial statements.

95

---



Table of Contents

Employee Benefit Programs

We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the
U.K., the Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the
assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and life insurance benefits covering certain employees in the U.S. and Canada. Amounts recorded
in the consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding
expected return on assets, discount
rates, compensation increases, mortality rates and health care costs trends. These assumptions are disclosed in "Note 17. Employee Benefit Plans" to our consolidated financial statements.

Management,
with the advice of its actuaries, uses judgment to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The
effect of a 1% change in three key assumptions is summarized as follows (dollars in millions):

Assumptions

Statement of
Operations(1)

Balance Sheet
Impact(2)Discount rate1% increase

$
(25
)
$
(391
)1% decrease


29


457Expected return on assets1% increase


(10
)

1% decrease


10


Rate of compensation increase1% increase


20


1161% decrease


(18
)

(110
)


(1)Estimated
increase (decrease) on 2009 net periodic benefit cost(2)Estimated
increase (decrease) on December 31, 2009 pension and postretirement liabilities and accumulated other comprehensive (loss) income


Environmental Reserves

Environmental remediation costs for our facilities are accrued when it is probable that a liability has been incurred and the amount
can be reasonably estimated. Estimates of environmental reserves require evaluating government regulation, available technology, site-specific information and remediation alternatives. We
accrue an amount equal to our best estimate of the costs to remediate based upon the available information. The extent of environmental damage may not be fully known and the processes and costs of
remediation may change as new information is obtained or technology for remediation is improved. Our process for estimating the expected cost for remediation considers the information available,
technology that can be utilized and estimates of the extent of environmental damage. Adjustments to our estimates are made periodically based upon additional information received as remediation
progresses. For further information, see "Note 20. Environmental, Health and Safety Matters" to our consolidated financial statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to
time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in

96

---



Table of Contents

certain
European operations. Changes in the fair value of the hedge in the net investment of certain European operations are recorded in accumulated other comprehensive income (loss).

All
derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as 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 as a cash flow hedge, changes in the fair value of the derivative are recorded in
accumulated other comprehensive (loss) income, to the extent effective, and will be recognized in the income statement when the hedged item affects earnings. Changes in the fair value of the hedge in
the net investment of certain international operations are recorded in other comprehensive income, to the extent effective. The effectiveness of a cash flow hedging relationship is established at the
inception of the hedge, and after inception we perform effectiveness assessments at least every three months. A derivative designated as a cash flow hedge is determined to be effective if the change
in value of the hedge divided by the change in value of the hedged item is within a range of 80% to 125%. Hedge ineffectiveness in a cash flow hedge occurs only if the cumulative gain or loss on the
derivative hedging instrument exceeds the cumulative change in the expected future cash flows on the hedged transaction. For a derivative that does not qualify or has not been designated as a hedge,
changes in fair value are recognized in earnings.

INTEREST RATE RISKS

Through our borrowing activities, we are exposed to interest rate risk. Such risk arises due to the structure of our 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 derivative instruments.

From
time to time, we may purchase interest rate swaps and/or interest rate collars to reduce the impact of changes in interest rates on our floating-rate
long-term debt. Under interest rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated by reference to an agreed notional principal amount. The collars entitle us to receive from the counterparties (major banks) the amounts, if any, by which our interest
payments on certain of our floating-rate borrowings exceed a certain rate, and require us to pay to the counterparties (major banks) the amount, if any, by which our interest payments on
certain of our floating-rate borrowings are less than a certain rate.

On
December 9, 2009, we entered into a five-year year interest rate contract to hedge the variability caused by monthly changes in cash flow due to associated changes
in LIBOR under our Senior Credit Facilities. The notional value of this contract is $50 million and was designated as a cash flow hedge. The effective portion of the changes in the fair value
of the swap were recorded in accumulated other comprehensive (loss) income. We will pay a fixed 2.6% on the hedge and receive the one-month LIBOR rate. As of December 31, 2009, the
fair value of the hedge was $1 million and is recorded in other noncurrent assets.

In
addition, on January 14, 2010 we entered into five-year interest rate contract to hedge the variability caused by monthly changes in cash flow due to associated
changes in LIBOR under our Senior Credit Facilities. The notional value of this contract is $50 million and was designated as a cash flow hedge. The effective portion of the changes in the fair
value of the swap were recorded in accumulated other comprehensive (loss) income. We will pay a fixed 2.8% on the hedge and receive the one-month LIBOR rate.

Interest
rate contracts were recorded as a component of other noncurrent assets and liabilities as of December 31, 2009. The effective portion of the changes in the fair value of
the swap were recorded in accumulated other comprehensive (loss) income. As of December 31, 2009, the fair value was not

97

---



Table of Contents

considered
significant. As of December 31, 2009 and 2008, we had contracts with an aggregate notional amount of $61 million and $13 million, respectively.

For
the years ended December 31, 2009 and 2008, the changes in accumulated other comprehensive (loss) income associated with cash flow hedging activities were not considered
significant.

During
2010, interest expense of nil is expected to be reclassified to earnings. The actual amount that will be reclassified to earnings over the next twelve months may vary from this
amount due to changing market conditions. We are exposed to credit losses in the event of nonperformance by a counterparty to the derivative financial instruments. We anticipate, however, that the
counterparties will be able to fully satisfy their obligations under the contracts. Market risk arises from changes in interest rates.

A
one-percentage-point change in interest rates would not have a significant impact on our outstanding interest rate hedge.

FOREIGN EXCHANGE RATE RISK

Our cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in
various currencies. We enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net
multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market
transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our currency exposures in a manner that
would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of December 31, 2009, we had approximately $100 million notional amount (in U.S. dollar
equivalents) outstanding in foreign currency contracts with a term of approximately one month. A one-percentage-point change in foreign exchange rates would not have a significant impact on these
foreign exchange contracts.

On
January 15, 2008, we entered into a series of forward foreign currency contracts in our Pigments segment to partially hedge the impact, for up to one year, of movements in
foreign currency rates associated with the purchases of raw materials and sales of pigment in non-functional currencies. During the first quarter of 2009, any remaining contracts matured
and the realized gains (losses) recorded in the consolidated statements of operations were not considered significant. As of December 31, 2008, these contracts had a notional amount of
approximately $9 million and were designated as cash flow hedges. As of December 31, 2008, the fair value of these contracts was not considered significant. For the year ended
December 31, 2008, the effective portion of the changes in the fair value was not significant with ineffectiveness of $1 million recorded as a decrease in sales, $1 million
recorded as a reduction in cost of sales and a foreign currency loss of $1 million.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we had swapped $153 million of LIBOR floating rate debt payments for
€116 million of EURIBOR floating rate debt payments. This swap was not designated as a hedge for financial reporting purposes. For the years ended December 31, 2008 and
2007, we recorded a foreign currency gain (loss) on this swap of $21 million and ($17) million, respectively, in the consolidated statements of operations.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we had swapped $96 million of LIBOR floating rate debt payments for
€71 million of EURIBOR floating rate debt payments. This swap was designated as a hedge of a net investment for financial reporting purposes. We received a cash benefit from the
unwind of $3 million in the fourth quarter of 2008. For the years ended December 31, 2008 and 2007, the effective portion of the changes in the fair value of

98

---



Table of Contents

$14 million
and ($8) million, respectively, was recorded as income (loss) in other comprehensive (loss) income, with ineffectiveness of $2 million and nil, respectively, recorded in
interest expense in our consolidated statements of operations.

On
July 12, 2007, we unwound a cross currency interest rate swap pursuant to which we had swapped $31 million of 11.0% fixed rate debt for
€25 million of 9.4% fixed rate debt. The swap was not designated as a hedge for financial reporting purposes. We recorded an unrealized foreign currency loss on this swap of
$2 million in our consolidated statements of operations for the year ended December 31, 2007.

A
significant portion of our debt is denominated in euros. We also finance certain of our non-U.S. subsidiaries with intercompany loans that are, in many cases, denominated
in currencies other than the entities' functional currency. We manage the net foreign currency exposure created by this debt through various means, including cross-currency swaps, the designation of
certain intercompany loans as permanent loans because they are not expected to be repaid in the foreseeable future ("permanent loans") and the designation of certain debt and swaps as net investment
hedges.

Foreign
currency transaction gains and losses on intercompany loans that are not designated as permanent loans are recorded in earnings. Foreign currency transaction gains and losses on
intercompany loans that are designated as permanent loans are recorded in other comprehensive income. From time to time, we review such designation of intercompany loans.

We
review our non-U.S. dollar denominated debt to determine the appropriate amounts designated as hedges. As of December 31, 2009, we have designated approximately
€325 million (approximately $466 million) of euro-denominated debt as a hedge of our net investment. For the years ended December 31, 2009, 2008 and
2007, the amount of (loss) gain recognized on the hedge of our net investment was $(5) million, $31 million and $(58) million, respectively, and was recorded in other comprehensive income
(loss). As of December 31, 2009, we had approximately €957 million (approximately $1,373 million) in net euro assets.

COMMODITY PRICES RISK

Our exposure to changing commodity prices is somewhat limited since the majority of our raw materials are acquired at posted or market
related prices, and sales prices for many of our finished products are at market related prices which are largely set on a monthly or quarterly basis in line with industry practice. Consequently, we
do not generally hedge our commodity exposures.

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

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act") as of
December 31,

99

---



Table of Contents

2009.
Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2009, our disclosure controls and procedures were effective, in
that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to
allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes to our internal control over financial reporting occurred during the quarter ended December 31, 2009 that have
materially affected, or are 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).

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
framework and processes for our Company and Huntsman International are designed to provide reasonable assurance to management, Huntsman International's Board of Managers and our Board of Directors
regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America.

Our
internal control over financial reporting for our Company and Huntsman International includes those policies and procedures that:



Because
of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further,
because of changing conditions, effectiveness of internal control over financial reporting may vary over time.

Our
management assessed the effectiveness of our internal control over financial reporting for our Company and Huntsman International and concluded that, as of December 31, 2009,
such internal control is effective. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal ControlIntegrated
Framework("COSO").

Our
independent registered public accountants, Deloitte & Touche LLP, with direct access to our Board of Directors through our Audit Committee, have audited the
consolidated financial statements prepared by our Company and Huntsman International and have issued attestation reports on internal control over financial reporting for our Company and Huntsman
International.

100

---



Table of Contents

MANAGEMENT'S PROCESS TO ASSESS THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING

To comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we completed a comprehensive compliance
process to evaluate our internal control over financial reporting for our Company and Huntsman International. We involved employees at all levels of our Company during 2009 in training, performing and
evaluating our internal controls.

Our
management's conclusion on the effectiveness of internal control over financial reporting is based on a comprehensive evaluation and analysis of the five elements of COSO. Our
management considered information from multiple sources as the basis its conclusionincluding self-assessments of the control activities within each work process, assessments
of entity-level controls and internal control attestations from significant nonconsolidated joint ventures and external service providers, as well as from key management. In addition, our internal
control processes contain self-monitoring mechanisms, and proactive steps are taken to correct deficiencies as they are identified. We also maintain an internal auditing program that
independently assesses the effectiveness of internal control over financial reporting within each of the five COSO elements.

/s/ PETER R. HUNTSMAN Peter R. Huntsman President and Chief Executive Officer

/s/ J. KIMO ESPLIN J. Kimo Esplin Executive Vice President and Chief Financial Officer/s/ L. RUSSELL HEALY L. Russell Healy Vice President and Controller


February 19,
2010

101

---



Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
Huntsman Corporation and subsidiaries

We
have audited the internal control over financial reporting of Huntsman Corporation and subsidiaries (the "Company") as of December 31, 2009, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our
audit.

We
conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement
schedules as of and for the year ended December 31, 2009 of the Company and our report dated February 19, 2010 expressed an unqualified opinion on those financial statements and
financial statement schedules and included an explanatory paragraph regarding the Company's retrospective

102

---



Table of Contents

application
of new accounting guidance related to the presentation of noncontrolling interests in the consolidated financial statements effective January 1, 2009, and for changes in reportable
segments that occurred in the first quarter of 2009.

/s/
DELOITTE & TOUCHE LLP

Houston,
Texas
February 19, 2010

103

---



Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Manager and Members of
Huntsman International LLC and subsidiaries

We
have audited the internal control over financial reporting of Huntsman International LLC and subsidiaries (the "Company") as of December 31, 2009, based on criteria
established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The
Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting
based on our audit.

We
conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement
schedule as of and for the year ended December 31, 2009 of the Company and our report dated February 19, 2010 expressed an unqualified opinion on those financial statements and financial
statement schedule and included an explanatory paragraph regarding the Company's retrospective application of new

104

---



Table of Contents

accounting
guidance related to the presentation of noncontrolling interests in the consolidated financial statements effective January 1, 2009, and for changes in reportable segments that
occurred in the first quarter of 2009.

/s/
DELOITTE & TOUCHE LLP

Houston,
Texas
February 19, 2010

105

---





Table of Contents

ITEM 9B.    OTHER INFORMATION

None.

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information relating to our Directors (including identification of our Audit Committee's financial expert(s)) and executive officers is
contained in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference. See also the information regarding executive officers of the registrant set
forth in Part I under the caption "Executive Officers of the Registrant" in reliance on General Instruction G to Form 10-K.

Code of Ethics

Our Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K under the Exchange Act,
that applies to our principal executive officer, principal financial officer and principal accounting officer or controller. A copy of the code of ethics is posted on our website, at www.huntsman.com.
We intend to disclose any amendments to, or waivers from, our code of ethics on our website.

ITEM 11.    EXECUTIVE COMPENSATION

Information relating to executive compensation and our equity compensation plans is contained in the definitive Proxy Statement for our
Annual Meeting of Stockholders and is incorporated herein by reference.

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

Information with respect to beneficial ownership of our common stock by each Director and all Directors and officers of our Company as
a group is contained in the definitive Proxy Statement for our Annual Meeting of Stockholders and is incorporated herein by reference.

Information
relating to any person who beneficially owns in excess of 5 percent of the total outstanding shares of our common stock is contained in the definitive Proxy Statement
for our Annual Meeting of Stockholders and is incorporated herein by reference.

Information
with respect to compensation plans under which equity securities are authorized for issuance is contained in the definitive Proxy Statement for our Annual Meeting of
Stockholders and is incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to certain relationships and related transactions is contained in the definitive Proxy Statement for our
Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to principal accountant fees and services is contained in the definitive Proxy Statement for our Annual
Meeting of Stockholders and is incorporated herein by reference.

106

---



Table of Contents

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES







Exhibit Index

Please see the Exhibit Index at the conclusion of this Annual Report on Form 10-K for exhibits filed with this
Annual Report on Form 10-K or incorporated by reference. The following exhibits, also listed on the Exhibit Index, are filed with this Annual Report on Form 10-K:

Number

Description21.1

Subsidiaries of the Company23.1

Consent of Independent Registered Public Accounting Firm31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


107

---





Table of Contents

SIGNATURES

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

Dated:
February 19, 2010

HUNTSMAN CORPORATION
HUNTSMAN INTERNATIONAL LLCBy:

/s/ J. KIMO ESPLIN J. Kimo Esplin Executive Vice President and Chief Financial Officer


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Huntsman Corporation in the capacities
indicated on the 19th day of February 2010.

/s/ JON M. HUNTSMAN Jon M. Huntsman Executive Chairman of the Board and Director/s/ J. KIMO ESPLIN J. Kimo Esplin Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)/s/ H. WILLIAM LICHTENBERGER H. William Lichtenberger Chairman of the Nominating and Corporate
Governance Committee and Director/s/ RICHARD MICHAELSON Richard Michaelson Chairman of the Audit Committee and Director/s/ MARSHA J. EVANS Marsha J. Evans Director/s/ PETER R. HUNTSMAN Peter R. Huntsman President, Chief Executive Officer and Director
(Principal Executive Officer)/s/ L. RUSSELL HEALY L. Russell Healy Vice President and Controller
(Principal Accounting Officer)/s/ WAYNE A. REAUD Wayne A. Reaud Chairman of the Compensation Committee,
Chairman of the Litigation Committee
and Director/s/ NOLAN D. ARCHIBALD Nolan D. Archibald Director/s/ ALVIN V. SHOEMAKER Alvin V. Shoemaker Director


108

---



Table of Contents

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Huntsman International in the capacities
indicated on the 19th day of February 2010.

/s/ JON M. HUNTSMAN Jon M. Huntsman Chairman of the Board of Managers and Manager/s/ J. KIMO ESPLIN J. Kimo Esplin Executive Vice President, Chief Financial
Officer and Manager
(Principal Financial Officer)/s/ JAMES R. MOORE James R. Moore Executive Vice President, General Counsel,
Secretary and Manager/s/ PETER R. HUNTSMAN Peter R. Huntsman President, Chief Executive Officer and Manager
(Principal Executive Officer)/s/ L. RUSSELL HEALY L. Russell Healy Vice President and Controller
(Principal Accounting Officer)


109

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



PageHuntsman Corporation and Subsidiaries:Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets as of December 31, 2009 and 2008

F-3Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2009,
 2008 and 2007

F-4Consolidated Statements of Equity for the Years Ended December 31, 2009, 2008 and 2007

F-6Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007

F-7Huntsman International LLC and Subsidiaries:Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm

F-9Consolidated Balance Sheets as of December 31, 2009 and 2008

F-10Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended December 31,
2009, 2008 and 2007

F-11Consolidated Statements of Equity for the Years Ended December 31, 2009, 2008 and 2007

F-12Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007

F-13Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries:Notes to Consolidated Financial Statements

F-15Schedules to Consolidated Financial StatementsSchedule to Consolidated Financial Statements, Schedule ICondensed Financial Information of
Registrant

F-118Schedule to Consolidated Financial Statements, Schedule IIValuation and Qualifying Accounts

F-122


F-1

---



Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
Huntsman Corporation and subsidiaries

We
have audited the accompanying consolidated balance sheets of Huntsman Corporation and subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related
consolidated statements of operations and comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the
financial statement schedules listed in the Index 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 the financial statements and financial statement schedules 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 Corporation and subsidiaries as of December 31,
2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, 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 17 to the consolidated financial statements, the Company adopted new accounting guidance related to the measurement date of defined benefit pension and other
postretirement plans effective January 1, 2008.

As
discussed in Notes 2 and 29 to the consolidated financial statements, such statements have been adjusted for the retrospective application of new accounting guidance related to
the presentation of noncontrolling interests in the consolidated financial statements effective January 1, 2009, and for changes in reportable segments that occurred in the first quarter of
2009.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2009, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 19, 2010 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
DELOITTE & TOUCHE LLP

Houston,
Texas
February 19, 2010

F-2

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (In Millions, Except Share and Per Share Amounts)

December 31,2009

2008ASSETSCurrent assets:Cash and cash equivalents

$
1,745

$
657Restricted cash


5


5Accounts and notes receivable (net of allowance for doubtful accounts of $56 and $47, respectively)


1,018


905Accounts receivable from affiliates


1


8Inventories


1,184


1,500Prepaid expenses


42


45Deferred income taxes


36


21Other current assets


109


99Total current assets


4,140


3,240Property, plant and equipment, net


3,516


3,649Investment in unconsolidated affiliates


250


267Intangible assets, net


125


153Goodwill


94


92Deferred income taxes


138


284Notes receivable from affiliates


8


9Other noncurrent assets


355


364Total assets

$
8,626

$
8,058LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
730

$
731Accounts payable to affiliates


25


16Accrued liabilities


623


617Deferred income taxes


2


36Current portion of debt


431


205Total current liabilities


1,811


1,605Long-term debt


3,781


3,677Notes payable to affiliates


5


6Deferred income taxes


289


117Other noncurrent liabilities


875


1,021Total liabilities


6,761


6,426Commitments and contingencies (Notes 19 and 20)EquityHuntsman Corporation stockholders' equity:Common stock $0.01 par value, 1,200,000,000 shares authorized, 237,225,258 and 234,430,334 issued and 234,081,490 and 233,553,515 outstanding as of
December 31, 2009 and 2008, respectively


2


2Mandatory convertible preferred stock $0.01 par value, 100,000,000 shares authorized





Additional paid-in capital


3,155


3,141Unearned stock-based compensation


(11
)

(13
)Accumulated deficit


(1,015
)

(1,031
)Accumulated other comprehensive loss


(287
)

(489
)Total Huntsman Corporation stockholders' equity


1,844


1,610Noncontrolling interests in subsidiaries


21


22Total equity


1,865


1,632Total liabilities and equity

$
8,626

$
8,058


See accompanying notes to consolidated financial statements.

F-3

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS AND  COMPREHENSIVE INCOME (LOSS)        (In Millions, Except Per Share Amounts)

Year ended December 31,2009

2008

2007Revenues:Trade sales, services and fees, net

$
7,667

$
10,051

$
9,465Related party sales


96


164


186Total revenues


7,763


10,215


9,651Cost of goods sold


6,695


8,951


8,111Gross profit


1,068


1,264


1,540Operating expenses:Selling, general and administrative


860


882


871Research and development


145


154


145Other operating (income) expense


(18
)

27


(55
)Restructuring, impairment and plant closing costs


152


36


42Total expenses


1,139


1,099


1,003Operating (loss) income


(71
)

165


537Interest expense, net


(238
)

(263
)

(286
)Loss on accounts receivable securitization program


(23
)

(27
)

(21
)Equity in income of investment in unconsolidated affiliates


3


14


13Loss on early extinguishment of debt


(21
)

(1
)

(2
)Income (expenses) associated with the Terminated Merger and related litigation


835


780


(210
)Other income





1


Income from continuing operations before income taxes


485


669


31Income tax (expense) benefit


(370
)

(190
)

12Income from continuing operations


115


479


43(Loss) income from discontinued operations (including gain (loss) on disposal of $1 in 2009, $11 in 2008 and ($340) in 2007), net of tax


(9
)

117


(217
)Income (loss) before extraordinary gain (loss)


106


596


(174
)Extraordinary gain (loss) on the acquisition of a business, net of tax of nil


6


14


(7
)Net income (loss)


112


610


(181
)Net loss (income) attributable to noncontrolling interests


2


(1
)

9Net income (loss) attributable to Huntsman Corporation

$
114

$
609

$
(172
)Net income (loss)

$
112

$
610

$
(181
)Other comprehensive income (loss)


203


(749
)

321Comprehensive income (loss)


315


(139
)

140Comprehensive loss attributable to noncontrolling interests


1


2


6Comprehensive income (loss) attributable to Huntsman Corporation

$
316

$
(137
)
$
146(continued)


F-4

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (Continued)

(In Millions, Except Per Share Amounts)

Year ended December 31,2009

2008

2007Basic income (loss) per share:Income from continuing operations attributable to Huntsman Corporation common stockholders

$
0.50

$
2.06

$
0.23(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax


(0.04
)

0.50


(0.98
)Extraordinary gain (loss) on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax


0.03


0.06


(0.03
)Net income (loss) attributable to Huntsman Corporation common stockholders

$
0.49

$
2.62

$
(0.78
)Weighted average shares


233.9


232.0


221.0Diluted income (loss) per share:Income from continuing operations attributable to Huntsman Corporation common stockholders

$
0.49

$
2.04

$
0.22(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax


(0.04
)

0.50


(0.93
)Extraordinary gain (loss) on the acquisition of a business attributable to Huntsman Corporation common stockholders, net of tax


0.03


0.06


(0.03
)Net income (loss) attributable to Huntsman Corporation common stockholders

$
0.48

$
2.60

$
(0.74
)Weighted average shares


238.3


234.3


232.8Amounts attributable to Huntsman Corporation common stockholders:Income from continuing operations

$
117

$
478

$
52(Loss) income from discontinued operations, net of tax


(9
)

117


(217
)Extraordinary gain (loss) on the acquisition of a business


6


14


(7
)Net income (loss)

$
114

$
609

$
(172
)Dividends per share

$
0.40

$
0.40

$
0.40


See
accompanying notes to consolidated financial statements.

F-5

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in Millions)

Huntsman Corporation StockholdersSharesAccumulated
other
comprehensive
(loss) incomeCommon
Stock

Mandatory
convertible
preferred stock

Common
stock

Mandatory
convertible
preferred stock

Additional
paid-in
capital

Unearned
stock-based
compensation

Accumulated
deficit

Noncontrolling
interests in
subsidiaries

Total equityBalance, January 1, 2007


220,652,429


5,750,000

$
2

$
288

$
2,798

$
(13
)
$
(1,278
)
$
(61
)
$
29

$
1,765Net loss




















(172
)




(9
)

(181
)Other comprehensive income























318


3


321Issuance of nonvested stock awards














10


(10
)










Vesting of stock awards


393,555


























Stock options exercised


99,332











2














2Recognition of stock-based compensation














13


11











24Repurchase and cancellation of stock awards


(109,126
)
















(2
)







(2
)Dividends declared on common stock




















(88
)







(88
)Reversal of valuation allowance on deferred tax assets related to previous equity transactions














8














8Increase in noncontrolling interest resulting from acquisition of a business


























4


4Balance, December 31, 2007


221,036,190


5,750,000


2


288


2,831


(12
)

(1,540
)

257


27


1,853Net income




















609





1


610Other comprehensive loss























(746
)

(3
)

(749
)Issuance of nonvested stock awards














12


(12
)










Vesting of stock awards


594,908











1














1Recognition of stock-based compensation














9


11











20Repurchase and cancellation of stock awards


(160,058
)
















(4
)







(4
)Preferred stock conversion


12,082,475


(5,750,000
)




(288
)

288














Effect of adoption of SFAS No. 158, (currently included in ASC 715-20-55) net of tax




















(3
)







(3
)Dividends declared on common stock




















(93
)







(93
)Dividends paid to noncontrolling interest shareholders


























(3
)

(3
)Balance, December 31, 2008


233,553,515





2





3,141


(13
)

(1,031
)

(489
)

22


1,632Net income (loss)




















114





(2
)

112Other comprehensive income























202


1


203Issuance of nonvested stock awards














8


(8
)










Vesting of stock awards


742,565


























Recognition of stock-based compensation














6


10











16Repurchase and cancellation of stock awards


(214,590
)
















(2
)







(2
)Dividends declared on common stock




















(96
)







(96
)Balance, December 31, 2009


234,081,490




$
2

$


$
3,155

$
(11
)
$
(1,015
)
$
(287
)
$
21

$
1,865


See accompanying notes to consolidated financial statements

F-6

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        (Dollars in Millions)

Year ended December 31,2009

2008

2007Operating Activities:Net income (loss)

$
112

$
610

$
(181
)Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Extraordinary (gain) loss on the acquisition of a business, net of tax


(6
)

(14
)

7Equity in income of investment in unconsolidated affiliates


(3
)

(14
)

(13
)Dividends received from unconsolidated affiliates


11


11


Depreciation and amortization


442


398


413Provision for losses on accounts receivable


9


6


3(Gain) loss on disposal of businesses/assets, net


(2
)

6


269Loss on early extinguishment of debt


21


1


2Noncash interest expense


22


2


5Noncash restructuring, impairment and plant closing costs


13


7


15Deferred income taxes


231


202


(203
)Net unrealized (gain) loss on foreign currency transactions


(26
)

4


(9
)Stock-based compensation


20


20


26Noncash gain on partial fire insurance settlement





(135
)

Other, net


1


3


(1
)Changes in operating assets and liabilities:Accounts and notes receivable


(88
)

263


56Inventories


351


(119
)

(74
)Prepaid expenses


5


(9
)

3Other current assets


(6
)

(1
)

53Other noncurrent assets


(32
)

41


(158
)Accounts payable


35


(186
)

(148
)Accrued liabilities


(34
)

(64
)

(87
)Other noncurrent liabilities


28


(265
)

(30
)Net cash provided by (used in) operating activities


1,104


767


(52
)Investing Activities:Capital expenditures


(189
)

(418
)

(665
)Acquisition of business, net of cash acquired and post-closing adjustments


(31
)

(2
)

13Proceeds from sale of businesses/assets, net of adjustments


5


(26
)

850Investment in unconsolidated affiliates





(44
)

(17
)Cash received from unconsolidated affiliates


7


10


4Proceeds from maturity of government securities, restricted as to use





4


14Change in restricted cash





(8
)

Other, net


3


(5
)

1Net cash (used in) provided by investing activities


(205
)

(489
)

200(continued)


F-7

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in Millions)

Year ended December 31,2009

2008

2007Financing Activities:Net (repayments) borrowings under revolving loan facilities

$
(14
)
$
11

$
(17
)Net (repayments) borrowings on overdraft facilities


(12
)

8


15Net (repayments) borrowings on short-term debt


(13
)

73


Repayments of long-term debt


(542
)

(11
)

(422
)Proceeds from issuance of long-term debt


880


263


266Repayments of notes payable


(66
)

(55
)

(60
)Borrowings on notes payable


67


48


56Debt issuance costs paid


(5
)

(5
)

(5
)Call premiums related to early extinguishment of debt


(14
)




(1
)Dividends paid to common stockholders


(96
)

(93
)

(88
)Dividends paid to preferred stockholders





(4
)

(14
)Repurchase and cancellation of stock awards


(2
)

(4
)

Other, net


1


(1
)

1Net cash provided by (used in) financing activities


184


230


(269
)Effect of exchange rate changes on cash


5


(5
)

12Increase (decrease) in cash and cash equivalents


1,088


503


(109
)Cash and cash equivalents at beginning of period


657


154


263Cash and cash equivalents at end of period

$
1,745

$
657

$
154Supplemental cash flow information:Cash paid for interest

$
227

$
265

$
301Cash paid for income taxes


155


34


73


During
the years ended December 31, 2009, 2008 and 2007, the amount of capital expenditures in accounts payable (decreased) increased by $(13) million, $9 million,
$72 million, respectively. The value of share awards that vested during the years ended December 31, 2009, 2008 and 2007 was $12 million, $13 million and $9 million,
respectively.

See
accompanying notes to consolidated financial statements.

F-8

---



Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We
have audited the accompanying consolidated balance sheets of Huntsman International LLC and subsidiaries (the "Company") as of December 31, 2009 and 2008, and the
related consolidated statements of operations and comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included
the financial statement schedule listed in the Index on page F-1. These financial statements and financial statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the 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 LLC and subsidiaries as of
December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set forth therein.

As
discussed in Note 17 to the consolidated financial statements, the Company adopted new accounting guidance related to the measurement date of defined benefit pension and other
postretirement plans effective January 1, 2008.

As
discussed in Notes 2 and 29 to the consolidated financial statements, such statements have been adjusted for the retrospective application of new accounting guidance related to
the presentation of noncontrolling interests in the consolidated financial statements effective January 1, 2009, and for changes in reportable segments that occurred in the first quarter of
2009.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2009, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 19, 2010 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
DELOITTE & TOUCHE LLP

Houston,
Texas
February 19, 2010

F-9

---





Table of Contents

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        (Dollars in Millions)

December 31,2009

2008ASSETSCurrent assets:Cash and cash equivalents

$
919

$
87Restricted cash


5


5Accounts and notes receivable (net of allowance for doubtful accounts of $56 and $47, respectively)


1,018


905Accounts receivable from affiliates


32


15Inventories


1,184


1,500Prepaid expenses


42


45Deferred income taxes


33


21Other current assets


109


99Total current assets


3,342


2,677Property, plant and equipment, net


3,357


3,466Investment in unconsolidated affiliates


250


267Intangible assets, net


129


157Goodwill


94


92Deferred income taxes


158


392Notes receivable from affiliates


8


9Other noncurrent assets


355


364Total assets

$
7,693

$
7,424LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
715

$
728Accounts payable to affiliates


41


16Accrued liabilities


613


560Deferred income taxes


2


35Note payable to affiliate


25


423Current portion of debt


195


205Total current liabilities


1,591


1,967Long-term debt


3,781


3,442Notes payable to affiliates


530


6Deferred income taxes


79


69Other noncurrent liabilities


865


1,021Total liabilities


6,846


6,505Commitments and contingencies (Notes 19 and 20)EquityHuntsman International LLC members' equity:Members' equity, 2,728 units issued and outstanding


3,021


2,865Accumulated deficit


(1,847
)

(1,414
)Accumulated other comprehensive loss


(348
)

(554
)Total Huntsman International LLC members' equity


826


897Noncontrolling interests in subsidiaries


21


22Total equity


847


919Total liabilities and equity

$
7,693

$
7,424


See accompanying notes to consolidated financial statements

F-10

---





Table of Contents

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

Year Ended December 31,2009

2008

2007Revenues:Trade sales, services and fees, net

$
7,667

$
10,051

$
9,465Related party sales


96


164


186Total revenues


7,763


10,215


9,651Cost of goods sold


6,678


8,934


8,095Gross profit


1,085


1,281


1,556Operating expenses:Selling, general and administrative


849


881


871Research and development


145


154


145Other operating (income) expense


(18
)

27


(55
)Restructuring, impairment and plant closing costs


152


36


42Total expenses


1,128


1,098


1,003Operating (loss) income


(43
)

183


553Interest expense, net


(240
)

(264
)

(287
)Loss on accounts receivable securitization program


(23
)

(27
)

(21
)Equity in income of investment in unconsolidated affiliates


3


14


13Loss on early extinguishment of debt


(21
)

(1
)

(3
)Other income





1


(Loss) income from continuing operations before income taxes


(324
)

(94
)

255Income tax (expense) benefit


(85
)

2


(41
)(Loss) income from continuing operations


(409
)

(92
)

214(Loss) income from discontinued operations (including gain (loss) on disposal of $1 in 2009, $11 in 2008 and ($351) in 2007), net of tax


(9
)

117


(228
)(Loss) income before extraordinary gain (loss)


(418
)

25


(14
)Extraordinary gain (loss) on the acquisition of a business, net of tax of nil


6


14


(7
)Net (loss) income


(412
)

39


(21
)Net loss (income) attributable to noncontrolling interests


2


(1
)

9Net (loss) income attributable to Huntsman International LLC

$
(410
)
$
38

$
(12
)Net (loss) income

$
(412
)
$
39

$
(21
)Other comprehensive income (loss)


207


(744
)

337Comprehensive (loss) income


(205
)

(705
)

316Comprehensive loss attributable to noncontrolling interests


1


2


6Comprehensive (loss) income attributable to Huntsman International LLC

$
(204
)
$
(703
)
$
322


See
accompanying notes to consolidated financial statements

F-11

---





Table of Contents

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF EQUITY        (Dollars in Millions)

Huntsman International LLC MembersMembers' equity



Accumulated
other
comprehensive
(loss) incomeAccumulated
deficit

Noncontrolling
interests in
subsidiaries

Total equityUnits

AmountBalance, January 1, 2007


2,728

$
2,812

$
(1,131
)
$
(147
)
$
29

$
1,563Net loss








(12
)




(9
)

(21
)Other comprehensive income











334


3


337Contribution from parent, net of distributions





26











26Reversal of valuation allowance on deferred tax assets related to previous equity transactions





7











7Increase in noncontrolling interest resulting from acquisition of a business














4


4Balance, December 31, 2007


2,728


2,845


(1,143
)

187


27


1,916Net income








38





1


39Other comprehensive loss











(741
)

(3
)

(744
)Effect of adoption of SFAS No. 158 (currently included in ASC 715-20-55), net of tax








(3
)







(3
)Contribution from parent, net of distributions





20











20Dividends paid to parent








(306
)




(3
)

(309
)Balance, December 31, 2008


2,728


2,865


(1,414
)

(554
)

22


919Net loss








(410
)




(2
)

(412
)Other comprehensive income











206


1


207Contribution from parent, net of taxes of $96 and distributions





156











156Dividends paid to parent








(23
)







(23
)Balance, December 31, 2009


2,728

$
3,021

$
(1,847
)
$
(348
)
$
21

$
847


See
accompanying notes to consolidated financial statements

F-12

---





Table of Contents

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

Year Ended December 31,2009

2008

2007Operating Activities:Net (loss) income

$
(412
)
$
39

$
(21
)Adjustments to reconcile net (loss) income to net cash provided by operating activities:Extraordinary (gain) loss on the acquisition of a business, net of tax


(6
)

(14
)

7Equity in income of investment in unconsolidated affiliates


(3
)

(14
)

(13
)Dividends received from unconsolidated affiliates


11


11


Depreciation and amortization


420


374


391Provision for losses on accounts receivable


9


6


3(Gain) loss on disposal of businesses/assets, net


(2
)

6


269Loss on early extinguishment of debt


21


1


3Noncash interest expense


39


2


5Noncash restructuring, impairment and plant closing costs


13


7


15Deferred income taxes


68


26


(150
)Net unrealized (gain) loss on foreign currency transactions


(26
)

4


(9
)Noncash compensation


16


20


26Noncash gain on partial fire insurance settlement





(135
)

Other, net


1


4


(1
)Changes in operating assets and liabilities:Accounts and notes receivable


(88
)

263


56Inventories


351


(119
)

(74
)Prepaid expenses


5


(9
)

3Other current assets


(6
)

(5
)

43Other noncurrent assets


(32
)

41


(162
)Accounts payable


4


(193
)

(148
)Accrued liabilities


5


(17
)

(177
)Other noncurrent liabilities


32


(259
)

(9
)Net cash provided by operating activities


420


39


57Investing Activities:Capital expenditures


(189
)

(418
)

(665
)Acquisition of business, net of cash acquired and post-closing adjustments


(31
)

(2
)

13Proceeds from sale of businesses/assets, net of adjustments


5


(26
)

850(Increase) decrease in receivable from affiliate


(7
)

179


(178
)Investment in unconsolidated affiliates





(44
)

(17
)Cash received from unconsolidated affiliates


7


10


4Change in restricted cash





(8
)

Other, net


3


(5
)

1Net cash (used in) provided by investing activities


(212
)

(314
)

8(continued)


F-13

---



Table of Contents

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in Millions)



Year Ended December 31,2009

2008

2007Financing Activities:Net (repayments) borrowings under revolving loan facilities

$
(14
)
$
11

$
(17
)Net (repayments) borrowings on overdraft facilities


(12
)

8


15Net (repayments) borrowings on short-term debt


(13
)

73


Repayments of long-term debt


(542
)

(11
)

(422
)Proceeds from issuance of long-term debt


880


28


266Repayments of notes payable to affiliate


(403
)




Proceeds from notes payable to affiliate


529


423


Repayments of notes payable


(63
)

(55
)

(57
)Borrowings on notes payable


64


48


53Debt issuance costs paid


(5
)

(5
)

(5
)Call premiums related to early extinguishment of debt


(14
)




(1
)Contribution from parent


236





Dividends paid to parent


(23
)

(306
)

Other, net


(1
)

(1
)

(1
)Net cash provided by (used in) financing activities


619


213


(169
)Effect of exchange rate changes on cash


5


(5
)

12Increase (decrease) in cash and cash equivalents


832


(67
)

(92
)Cash and cash equivalents at beginning of period


87


154


246Cash and cash equivalents at end of period

$
919

$
87

$
154Supplemental cash flow information:Cash paid for interest

$
221

$
265

$
303Cash paid for income taxes


27


34


73


During
the years ended December 31, 2009, 2008 and 2007, the amount of capital expenditures in accounts payable (decreased) increased by $(13) million, $9 million,
$72 million, respectively. During the years ended December 31, 2009, 2008 and 2007, Huntsman Corporation contributed $16 million, $20 million and $26 million,
respectively, related to stock based compensation.

See
accompanying notes to consolidated financial statements

F-14

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES        HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

DEFINITIONS

Each capitalized term used without definition in these notes to consolidated financial statements has the meaning specified in the
Annual Report on Form 10-K to which these notes to consolidated financial statements are included.

DESCRIPTION OF BUSINESS

We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our products comprise a
broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those
in the adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining,
synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, epoxy-based polymer formulations, textile
chemicals, dyes, maleic anhydride and titanium dioxide.

We
operate in five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products and Pigments. Our Polyurethanes, Advanced Materials, Textile Effects and Performance
Products segments produce differentiated organic chemical products and our Pigments segment produces inorganic chemical products. In a series of transactions completed in 2006 and 2007, we sold
substantially all of our former Polymers and Base Chemicals operations. We report the results of our former Polymers and Base Chemicals businesses as discontinued operations. See "Note 27.
Discontinued Operations."

COMPANY

Our Company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses. Jon M. Huntsman founded the predecessor
to our Company in the early 1970s as a small polystyrene plastics packaging company. Since then, we have grown through a series of significant acquisitions and now own a global portfolio of
businesses.

We
operate all of our businesses through Huntsman International, our 100% owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.

RECENT DEVELOPMENTS



On January 11, 2010, we repurchased the entire $250 million principal amount of our outstanding Convertible Notes for
approximately $382 million from Apollo and its affiliates. The Convertible Notes were issued to Apollo in December 2008 as part of the Apollo Settlement Agreement. The Convertible Notes,
which would have matured on December 23, 2018, bore interest at the rate of 7% per year and were convertible into approximately 31.8 million shares of our common stock at any time by the
holders. As a result of the repurchase of the Convertible Notes, we will record a loss on early extinguishment of debt in the first quarter of 2010 in the amount of approximately $146 million.

F-15

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. GENERAL (Continued)



On August 28, 2009, we entered into the Tronox Purchase Agreement, to acquire certain assets of Tronox under Section 363
of Chapter 11 of the United States Bankruptcy Code. The Tronox Purchase Agreement was subject to approval by the United States Bankruptcy Court for the Southern District of New York. Under the
Tronox Purchase Agreement, we were a "stalking horse" bidder and the proposed transaction was subject to Tronox's solicitation of higher or otherwise better offers pursuant to specified bidding
procedures and an auction process to be conducted under supervision of the bankruptcy court. On December 23, 2009, Tronox delivered a notice of termination of the Tronox Purchase Agreement to
us after it received an order from the bankruptcy court authorizing it to replace its existing senior secured financing and an interim order authorizing it to enter into certain agreements as part of
a plan to pursue an alternative transaction. The new alternative transaction is sponsored by an ad hoc group of Tronox's unsecured bondholders.

Under
the Tronox Purchase Agreement, we made a $12 million refundable deposit toward the purchase price and, in connection with the proposed transaction, we incurred
$13 million in costs. Prior to December 31, 2009, the deposit of $12 million was refunded to us, we received an additional $12 million as a break-up fee, and we
received $3 million for partial reimbursement of our costs. The break-up fee and the partial reimbursement of our costs, net of the costs incurred, are included in other operating income in our
consolidated statements of operation for the year ended December 31, 2009.



On September 8, 2009, we announced the closure of our styrenics facility located at West Footscray, Australia. We ceased
operation of the West Footscray styrene plant on January 5, 2010, and we expect to complete the subsequent closure of our polystyrene and expandable polystyrene plants during the first quarter
of 2010. During 2009, we recorded closure costs of approximately $63 million ($25 million primarily in severance, $8 million of contract termination costs and a $30 million
preliminary estimate of environmental remediation costs) and expect to incur other closure related costs of approximately $7 million in 2010. We can provide no assurance that the eventual
environmental remediation costs will not be materially different from our current estimate. Products produced at the site represent less than 2% of our 2008 global sales. Our other operations in
Australia, including RMAX® expandable polystyrene business, Performance Products, Polyurethanes, Textile Effects and Advanced Materials divisions, are not affected by the announcement and
will continue to operate in Australia. We expect to treat the Australian styrenics business as a discontinued operation beginning in the first quarter of 2010 when operations cease.

F-16

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. GENERAL (Continued)

HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS

Except where otherwise indicated, these notes relate to the consolidated financial statements for both our Company and Huntsman
International. The differences between our financial statements and Huntsman International's financial statements relate primarily to the following:



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

Our consolidated financial statements include the accounts of our wholly-owned and majority-owned subsidiaries and any variable
interest entities for which we are the primary beneficiary. All intercompany accounts and transactions have been eliminated, except for intercompany sales between continuing and discontinued
operations.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform with the current
presentation. Specifically, during the first quarter of 2009, we reorganized our operating segments to divide our former Materials and Effects segment into two separate segmentsthe
Advanced Materials segment and the Textile Effects segment. All segment information for prior periods has been restated to reflect this change. In addition, effective January 1, 2009, we
retroactively applied, and information in this report reflects, the presentation and disclosure requirements of Accounting Standards Codification
("ASC") 810-10-65-1,Transition Related to FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51. See "Note 2. Summary of Significant Accounting PoliciesRecently Issued Accounting Pronouncements."

F-17

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

SUBSEQUENT EVENTS

We have evaluated material subsequent events through the time these financial statements were issued on February 19, 2010. See
"Note 2. Summary of Significant Accounting PoliciesRecently Issued Accounting Pronouncements."

REVENUE RECOGNITION

We generate substantially all of our revenues through sales in the open market and long-term supply agreements. We
recognize 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. The transfer of risk and title to the product to the customer usually occurs at the time shipment is made.

Revenue
arrangements that contain multiple deliverables, which relate primarily to licensing of technology, are evaluated to determine whether the arrangements should be divided into
separate units of accounting and how the arrangement consideration should be measured and allocated among the separate units of accounting.

COST OF GOODS SOLD

We classify the costs of manufacturing and distributing our 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 also include, among other things, plant site operating costs and overhead (including
depreciation), 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.

CASH AND CASH EQUIVALENTS

We consider cash in checking accounts and cash in short-term highly liquid investments with remaining maturities of three
months or less at the date of purchase, to be cash and cash equivalents. Cash flows from discontinued operations are not presented separately in the accompanying consolidated statements of cash flows.

ALLOWANCE FOR DOUBTFUL TRADE RECEIVABLES

An allowance for doubtful trade receivables is estimated based on a combination of write-off history, aging analysis and
any specific, known troubled accounts.

SECURITIZATION OF ACCOUNTS RECEIVABLE

In connection with our A/R Programs we securitize certain trade receivables. The A/R Programs are structured so that we grant a
participating undivided interest in certain of our trade receivables to bankruptcy remote special purpose entities. We retain 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 fair

F-18

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. See "Note 15. Securitization of Accounts Receivable" and "Note 2. Recently
Issued Accounting Pronouncements."

INVENTORIES

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

PROPERTY, PLANT AND EQUIPMENT

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 - 33 yearsPlant and equipment


3 - 25 yearsFurniture, fixtures and leasehold improvements


5 - 20 years


Interest
expense capitalized as part of plant and equipment was $3 million, $17 million and $17 million for the years ended December 31, 2009, 2008 and 2007,
respectively.

Periodic
maintenance and repairs applicable to major units of manufacturing facilities (a "turnaround") are accounted for on the deferral 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.

INVESTMENT IN UNCONSOLIDATED AFFILIATES

Investments in companies in which we exercise significant management influence, but do not control, are accounted for using the equity
method. Investments in companies in which we do not exercise significant influence are accounted for using the cost method.

INTANGIBLE ASSETS AND GOODWILL

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


F-19

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill
represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill is not subject to any method of amortization, but is tested for
impairment annually (at the beginning of the third quarter) and when events and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying
amount. When the fair value is less than the carrying value of the related reporting unit, we are required to reduce the amount of goodwill through a charge to earnings. Fair value is estimated using
the market approach, as well as the income approach based on discounted cash flow projections. Goodwill has been assigned to reporting units for purposes of impairment testing.

OTHER NONCURRENT ASSETS

Other noncurrent assets consist primarily of spare parts, deferred debt issuance costs, the overfunded portion related to defined
benefit plans for employees and capitalized turnaround costs. Debt issuance costs are amortized using the interest method over the term of the related debt.

CARRYING VALUE OF LONG-LIVED ASSETS

We review long-lived assets and all amortizable intangible assets, other than goodwill, for impairment whenever events or
changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based upon current and anticipated undiscounted cash flows, and we recognize 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, Impairment and Plant
Closing Costs" and "Note 27. Discontinued Operations".

FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable and accounts payable approximate
fair value because of the immediate or short-term maturity of these financial instruments. The fair value of non-qualified employee benefit plan investments is estimated using
prevailing market prices. The estimated fair values of our long-term debt other than the Convertible Notes are based on quoted market prices for the identical liability when traded as an
asset in an active market. The estimated fair value of our Convertible Notes is based on the present value of estimated future cash flows, calculated using management's best estimates of key
assumptions including relevant interest rates, expected share volatility, dividend yields and the probabilities associated with certain features of the Convertible Notes. See "Note 16. Fair
Value."

INCOME TAXES

We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they
will be realized. Valuation allowances have been established against 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 tax jurisdiction basis to analyze

F-20

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

whether
there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. Uncertainties regarding expected future income in
certain jurisdictions could affect the realization of deferred tax assets in those jurisdictions.

We
do not provide for income taxes or benefits on the undistributed earnings of our non-U.S. subsidiaries as earnings are reinvested and, in the opinion of management, will
continue to be reinvested indefinitely.

We
adopted new accounting guidance regarding uncertainty in income taxes on January 1, 2007, the cumulative effect of which was not significant. This new accounting guidance
clarified the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. The application of income tax law is inherently complex. We are required to determine if an income tax position meets the criteria of
more-likely-than-not to be realized based on the merits of the position under tax law, in order to recognize an income tax benefit. This requires us to make many
assumptions and judgments regarding the merits of income tax positions and the application of income tax law. Additionally, if a tax position meets the recognition criteria of
more-likely-than-not we are required to make judgments and assumptions to measure the amount of the tax benefits to recognize based on the probability of the amount
of tax benefits that would be realized if the tax position was challenged by the taxing authorities. Interpretations and guidance surrounding income tax laws and regulations change over time. As a
consequence, changes in assumptions and judgments can materially affect amounts recognized in the consolidated financial statements.

DERIVATIVES AND HEDGING ACTIVITIES

All derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative
is designated as 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 as a cash flow hedge, changes in
the fair value of the derivative are recorded in accumulated other comprehensive (loss) income, to the extent effective, and will be recognized in the income statement when the hedged item affects
earnings. Changes in the fair value of the hedge in the net investment of certain international operations are recorded in other comprehensive income, to the extent effective. The effectiveness of a
cash flow hedging relationship is established at the inception of the hedge, and after inception we perform effectiveness assessments at least every three months. A derivative designated as a cash
flow hedge is determined to be effective if the change in value of the hedge divided by the change in value of the hedged item is within a range of 80% to 125%. Hedge ineffectiveness in a cash flow
hedge occurs only if the cumulative gain or loss on the derivative hedging instrument exceeds the cumulative change in the expected future cash flows on the hedged transaction. For a derivative that
does not qualify or has not been designated as a hedge, changes in fair value are recognized in earnings.

ENVIRONMENTAL EXPENDITURES

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

F-21

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 incurred and are
expensed or capitalized as appropriate. See "Note 20. Environmental, Health and Safety Matters."

ASSET RETIREMENT OBLIGATIONS

We accrue for asset retirement obligations, which consist primarily of landfill closure costs and asbestos abatement costs, in the
period in which the obligations are incurred. Asset retirement obligations are accrued at estimated fair value. When the liability is initially recorded, we capitalize 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, we will recognize a
gain or loss for any difference between the settlement amount and the liability recorded. See "Note 11. Asset Retirement Obligations."

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred.

FOREIGN CURRENCY TRANSLATION

The accounts of our operating subsidiaries outside of the U.S., unless they are operating in highly inflationary economic environments,
consider the functional currency to be the currency of the economic environment in which they operate. 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 (loss).

If
a subsidiary operates in an economic environment that is considered to be highly inflationary (100% cumulative inflation over a three-year period), the U.S. dollar is
considered to be the functional currency and gains and losses from remeasurement to the U.S. dollar from the local currency are included in the statement of operations. Where a subsidiary's operations
are effectively run, managed, financed and contracted in U.S. dollars, such as certain finance subsidiaries outside of the U.S., the U.S. dollar is considered to be the functional currency.

Foreign
currency transaction gains and losses are recorded in other operating (income) expense in the consolidated statements of operations and were net gains and (losses) of
$13 million, $(12) million, and $(14) million for the years ended December 31, 2009, 2008 and 2007, respectively.

STOCK-BASED COMPENSATION

We account for stock-based compensation in accordance with ASC Topic 718, which 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. See "Note 22. Stock-Based Compensation Plan."

F-22

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO HUNTSMAN CORPORATION

Basic income (loss) per share excludes dilution and is computed by dividing net income (loss) attributable to Huntsman Corporation
common stockholders by the weighted average number of shares outstanding during the period. Diluted income (loss) per share reflects all potential dilutive common shares outstanding during the period
and is computed by dividing net income (loss) available to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period increased by the number of
additional shares that would have been outstanding as dilutive securities.

On
December 23, 2008, we issued the Convertible Notes in an aggregate principal amount of $250 million. Prior to their repurchase, the Convertible Notes were convertible
into common stock at a conversion price of $7.857 per share, subject to certain anti-dilution adjustments. On January 11, 2010, we repurchased the entire $250 million
principal amount of the Convertible Notes for approximately $382 million. See "Note 13. DebtConvertible Notes."

On
February 16, 2005, we issued 5,750,000 shares of 5% mandatory convertible preferred stock. On February 16, 2008, the mandatory convertible preferred stock converted into
12,082,475 shares of common stock.

Basic
and diluted income (loss) per share is calculated as follows (in millions):

Year Ended December 31,2009

2008

2007Numerator:Basic and diluted income from continuing operations:Income from continuing operations attributable to Huntsman Corporation

$
117

$
478

$
52Convertible notes interest expense, net of tax








Income from continuing operations attributable to Huntsman Corporation and assumed conversion

$
117

$
478

$
52Basic and diluted net income (loss):Net income (loss) attributable to Huntsman Corporation

$
114

$
609

$
(172
)Convertible notes interest expense, net of tax








Net income (loss) attributable to Huntsman Corporation and assumed conversion

$
114

$
609

$
(172
)Shares (denominator):Weighted average shares outstanding


233.9


232.0


221.0Dilutive securities:Stock-based awards


4.4


0.1


0.3Convertible notes conversion





0.7


Preferred stock conversion





1.5


11.5Total outstanding and dilutive shares assuming conversion


238.3


234.3


232.8


Additional
stock-based awards of 6.4 million, 7.1 million and 5.7 million weighted average equivalent shares of stock were outstanding during the
years ended December 31, 2009, 2008 and 2007,

F-23

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

respectively.
In addition, the Convertible Notes would have converted into 31.8 million shares of common stock and interest expense, net of tax, of $19 million would have been included
as an adjustment to the numerator of the diluted income per share calculation for the year ended December 31, 2009. However, these stock-based awards and the assumed conversion of the
Convertible Notes were not included in the computation of diluted earnings per share for the respective periods mentioned because the effect would be anti-dilutive.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted During 2009:

We adopted Accounting Standards Update ("ASU") No. 2009-01, Topic 105Generally Accepted Accounting Principlesamendments based on Statement
of Financial Accounting Standards No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, as of September 30, 2009. Statement of Financial Accounting
Standards ("SFAS") No. 168 replaces SFAS No. 162,The Hierarchy of Generally Accepted Accounting Principles, and establishes the FASB
Accounting Standards Codification as the source of authoritative accounting principles recognized by the Financial Accounting Standards Board ("FASB") to be applied by nongovernmental
entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants as a result of this statement. As a result of our adoption of this ASU, we have included references, where applicable, to the FASB Accounting Standards
Codification in this report.

We
adopted ASU No. 2009-12,Fair Value Measurement and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset
Value per Share (or its Equivalent)as of December 31, 2009. This ASU provides guidance on measuring the fair value of certain alternative investments and offers
investors a practical expedient for measuring the fair value of investments in certain entities that calculate net asset value per share. The adoption of this ASU did not have a significant impact on
our consolidated financial statements.

We
adopted FASB Staff Position ("FSP") No. FAS 132(R)-1,Employers' Disclosures about Postretirement Benefit Plan
Assets(currently included in ASC 715-20-65-2) as of December 31, 2009. This FSP provides guidance on an employers'
disclosures about plan assets of a defined benefit pension or other postretirement plan. See "Note 17. Employee Benefit Plans."

We
adopted ASU No. 2009-05,Fair Value Measurements and Disclosures (Topic 820): Measuring Liabilities at Fair
Valueas of September 30, 2009. This ASU provides amendments to ASC Subtopic 820-10,Fair Value Measurements and
DisclosuresOverall, for the fair value measurement of liabilities. It provides clarification that in circumstances in which a quoted price in an active market for
the identical liability is not available, a reporting entity is required to
measure fair value using (a) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities and/or (b) an
income approach valuation technique or a market approach valuation technique, consistent with the principles of Topic 820. The adoption of this ASU did not have a significant impact on our
consolidated financial statements.

We
adopted SFAS No. 165,Subsequent Events(currently included in ASC 855-10), as of June 30, 2009. This
statement requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or

F-24

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

were
available to be issued. We evaluate subsequent events through the date the financial statements are issued.

We
adopted FSP No. FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly(currently included in ASC 820-10-65-4) as of June 30, 2009. This
FSP provides guidance for estimating the fair value of an asset or liability when the volume and level of activity for the asset or liability have significantly decreased, as well as guidance on
identifying circumstances that indicate a transaction is not orderly. It also requires disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair value and a
discussion of changes in valuation techniques and related inputs, if any, during the period. The adoption of this statement did not have a significant impact on our consolidated financial statements.

We
adopted FSP No. FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments(currently included in ASC 825-10-65-1), as of June 30, 2009. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to
require disclosures about fair value of financial instruments for interim reporting periods as
well as in annual financial statements. This FSP also requires disclosure about the methods and significant assumptions used to estimate the fair value of financial instruments and changes in those
methods and significant assumptions, if any, during the period. See "Note 16. Fair Value."

We
adopted SFAS No. 141 (R),Business Combinations(currently included in ASC 805), which replaced SFAS
No. 141,Business Combinations,and SFAS No. 160 on January 1, 2009. These statements significantly change the accounting for
business combinations and noncontrolling interests. Among other things, these statements require more assets acquired and liabilities assumed to be measured at fair value as of the acquisition date,
liabilities related to contingent consideration to be remeasured to fair value each subsequent reporting period, an acquirer in preacquisition periods to expense all acquisition-related costs, and
noncontrolling interests in subsidiaries initially to be measured at fair value and to be presented separately in the financial statements. Upon adoption of this standard, we recorded a charge of
$1 million in the first quarter of 2009 to selling, general and administrative expenses to write off previously deferred acquisition costs related to our Baroda acquisition. See
"Note 3. Business Combinations." We retroactively applied the presentation and disclosure requirements of SFAS No. 160 to all prior periods presented.

We
adopted FSP No. FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from
Contingencies(currently included in ASC 805), on January 1, 2009. This FSP requires assets acquired and liabilities assumed in a business combination that arise
from contingencies to be recognized at fair value if fair value can be reasonably estimated. If fair value of such assets and liabilities cannot be reasonably estimated, the assets or liabilities
would generally be recognized in accordance with SFAS No. 5,Accounting for Contingencies, and FASB Interpretation No. ("FIN") 14, Reasonable Estimation of the
Amount of a Loss. Further, this FSP requires contingent consideration arrangements of an acquiree assumed by the acquirer
in a business combination to be initially recognized and subsequently measured at fair value in accordance with SFAS 141(R). The adoption of this FSP did not have a significant impact on our
consolidated financial statements.

F-25

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

We adopted Emerging Issues Task Force ("EITF") Issue No. 08-6,Equity Method Investment Accounting Considerations(currently included in ASC 323-10), on January 1, 2009. EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving
equity method investments. The adoption of this standard did not have a significant impact on our consolidated financial statements.

We
adopted SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activitiesan Amendment of FASB
Statement 133(currently included in ASC 815-10-65-1) on January 1, 2009. SFAS No. 161 requires enhanced
disclosures regarding the effect of an entity's derivative instruments and related hedging activities on its financial position, financial performance and cash flows. See "Note 14. Derivative
Instruments and Hedging Activities."

Accounting Pronouncements Pending Adoption in Future Periods:

In January 2010, the FASB issued ASU No. 2010-06,Fair Value Measurements and Disclosures
(Topic 820)Improving Disclosures about Fair Value Measurements. This ASU clarifies existing disclosure requirements to provide a greater level of disaggregated
information and to provide more information regarding valuation techniques and inputs to fair value measurements. It requires additional disclosure related to transfers between the three levels of
fair value measurement, as well as information about purchases, sales, issuances, and settlements in the roll forward of activity for Level 3 measurements. The enhanced disclosures required by
this ASU are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity for Level 3 measurements, which is effective for interim and annual reporting periods beginning after December 15, 2010. We are evaluating this ASU to determine its
impact on our consolidated financial statements.

In
December 2009, the FASB issued ASU No. 2009-17,Consolidations (Topic 810)Improvements to Financial Reporting by Enterprises
Involved with Variable InterestEntities, which codified SFAS No. 167,Amendments to FASB Interpretation
No. 46(R). This statement amends FIN 46(R),Consolidation of Variable Interest Entities, to replace the
quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with a qualitative approach. This new approach
focuses on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and (1) the
obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. It also requires ongoing assessments of whether an enterprise is the primary beneficiary of a
variable interest entity, and it requires additional disclosures about an enterprise's involvement in variable interest entities. This statement is effective for the first annual reporting period
beginning after November 15, 2009. We do not expect the adoption of this statement to have a significant impact on our consolidated financial statements.

In
December 2009, the FASB issued ASU No. 2009-16,Transfers and Servicing (Topic 860)Accounting for Transfers of
FinancialAssets, which codified SFAS No. 166,Accounting for Transfers of Financial Assetsan amendment of FASB Statement
No. 140. This statement removes the concept of a qualifying special-purpose entity ("QSPE") from SFAS No. 140 and removes the exception from applying
FIN 46(R) to QSPEs. SFAS No. 166 modifies the derecognition provisions in SFAS No. 140 and requires that a transferor recognize and initially measure at fair value all assets
obtained (including

F-26

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

a
transferor's beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. It also requires additional disclosures regarding the transferor's
continuing involvement with transferred financial assets and the related risks retained. This statement is effective for the first annual reporting period beginning after November 15, 2009. We
have evaluated this statement, as well as SFAS No. 167, and we believe sales of accounts receivable under our new securitization programs will no longer meet the criteria for derecognition upon
adoption of this standard. Accordingly, we believe the amounts outstanding under our new accounts receivable securitization programs will be accounted for as secured borrowings beginning in January
2010. See "Note 15. Securitization of Accounts Receivable."

In
October 2009, the FASB issued ASU No. 2009-13,Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangementsa
consensus of the FASB Emerging Issues Task Force. This ASU provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. The amendments
in this ASU replace the term "fair value" in the revenue allocation guidance with "selling price" to clarify that the allocation of revenue is based on entity-specific assumptions rather than
assumptions of a marketplace participant, and they establish a selling price hierarchy for determining the selling price of a deliverable. The amendments in this ASU will eliminate the residual method
of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, and they significantly expand the
required disclosures related to multiple-deliverable revenue arrangements. The amendments in this ASU will be effective prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning after June 15, 2010. We are evaluating this ASU to determine its impact on our consolidated financial statements.

3. BUSINESS COMBINATIONS

BARODA ACQUISITION

On June 23, 2009, we announced the acquisition of the Baroda Division ("Baroda") of Metrochem Industries Limited
("MCIL"), a manufacturing facility for the production of intermediates and specialty dyes for textiles, located in Baroda, India. Baroda had been a significant supplier to our Textile
Effects division and this acquisition strengthens the Textile Effects division's competitiveness and supports its development in Asia. We initially entered into an agreement to acquire Baroda on
June 29, 2007. The initial agreement provided either party with the right to terminate the agreement if a transaction was not consummated by April 30, 2008. On February 6, 2009,
we entered into a non-binding agreement in principle with MCIL under which the purchase price was revised to be approximately $35 million (U.S. dollar equivalents), which included
receivables existing on the closing date due to MCIL from our affiliates, which were also settled at acquisition. Payment of the acquisition cost was phased in various tranches. The first tranche of
$7 million was paid during 2008; additional tranches were paid during 2009; and a final payment of $2 million, subject to adjustment, will be made upon completion of the audit of net
working capital acquired. In addition, $5 million of accounts payable by us to MCIL were forgiven in connection with this acquisition. A majority of the purchase price was funded through local
financing.

We
have accounted for the Baroda acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The
preliminary

F-27

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. BUSINESS COMBINATIONS (Continued)

allocation
of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):

Acquisition cost:Cash payment made in 2008

$
7Cash payments made in 2009


31Forgiveness of amounts payable from us to MCIL


(5
)Amounts payable as of December 31, 2009


2Total acquisition cost

$
35Fair value of assets acquired and liabilities assumed:Accounts receivable

$
3Inventories


4Other current assets


2Property, plant and equipment


31Intangible assets


2Deferred tax asset


1Accounts payable


(3
)Accrued liabilities


(1
)Short-term debt


(3
)Deferred tax liability


(1
)Total fair value of net assets acquired

$
35


The
acquisition cost allocation is preliminary pending finalization of the net working capital acquired. The acquisition cost allocation is also preliminary pending finalization of the
determination of the fair value of assets acquired and liabilities assumed, including final valuation of property, plant and equipment, intangible assets, and determination of related deferred taxes.
For purposes of this preliminary allocation of fair value, we have assigned any excess of acquisition cost over historical carrying values to amortizable intangible assets and no amounts have been
allocated to goodwill. We expect that it is reasonably possible that changes to this allocation could occur.

TEXTILE EFFECTS ACQUISITION

On June 30, 2006, we acquired Ciba's textile effects business and accounted for the Textile Effects Acquisition using the
purchase method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed and we determined the excess of fair value of net assets over cost. Because the
fair value of the acquired assets and liabilities assumed exceeded the purchase price, the valuation of the long-lived assets acquired was reduced to zero. Accordingly, no basis was
assigned to property, plant and equipment or any other non-current nonfinancial assets and the remaining excess was recorded as an extraordinary gain, net of taxes (which were not
applicable because the gain was recorded in purchase accounting). During 2007, we adjusted the purchase price for, among other things, the finalization of restructuring plans, estimates of asset
retirement obligations, the determination of related deferred taxes and finalization of post-closing working capital adjustments, resulting in a reduction to the extraordinary gain of
$7 million. During the years ended December 31, 2009 and 2008,

F-28

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. BUSINESS COMBINATIONS (Continued)

we
recorded an additional extraordinary gain on the acquisition of $6 million and $14 million, respectively, related to the reversal of accruals for certain employee termination costs
recorded in connection with the Textile Effects Acquisition and a reimbursement by Ciba of certain costs pursuant to the acquisition agreements.

4. INVENTORIES

Inventories consisted of the following (dollars in millions):

December 31,2009

2008Raw materials and supplies

$
240

$
282Work in progress


77


88Finished goods


917


1,192Total


1,234


1,562LIFO reserves


(50
)

(62
)Net

$
1,184

$
1,500


As
of December 31, 2009 and 2008, approximately 10% and 9%, respectively, of inventories were recorded using the LIFO cost method. For the year ended December 31, 2009,
inventory quantities were reduced, resulting in a liquidation of certain LIFO inventory layers carried at costs that were higher than the cost of current purchases, the effect of which increased cost
of sales by approximately $1 million. For the year ended December 31, 2007, 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 cost of sales by approximately $10 million, of which $9 million
related to discontinued operations. During 2009, 2008 and 2007, we recorded charges of $2 million, $38 million and nil, respectively, to write our inventories down to the lower of cost
or market.

In
the normal course of operations we, at times, exchange raw materials and finished goods with other companies for the purpose of reducing transportation costs. The net
non-monetary open exchange positions are valued at cost. The amounts included in inventory under non-monetary open exchange agreements receivable by us at December 31,
2009 were $3 million. The amounts included in inventory under non-monetary open exchange agreements payable by us as of December 31, 2008 were $19 million. Other open
exchanges are settled in cash and result in a net deferred profit margin. The amounts under these open exchange agreements receivable by us at December 31, 2009 and 2008 were nil and
$5 million, respectively.

F-29

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. PROPERTY, PLANT AND EQUIPMENT

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

Huntsman Corporation

December 31,2009

2008Land

$
146

$
122Buildings


579


549Plant and equipment


5,543


4,993Construction in progress


174


440Total


6,442


6,104Less accumulated depreciation


(2,926
)

(2,455
)Net

$
3,516

$
3,649


Depreciation
expense for the years ended December 31, 2009, 2008 and 2007 was $394 million, $359 million and $377 million, respectively, of which
$32 million related to discontinued operations in 2007.

Huntsman International

December 31,2009

2008Land

$
146

$
122Buildings


579


549Plant and equipment


5,650


5,100Construction in progress


174


440Total


6,549


6,211Less accumulated depreciation


(3,192
)

(2,745
)Net

$
3,357

$
3,466


Depreciation
expense for the years ended December 31, 2009, 2008 and 2007 was $371 million, $334 million and $354 million, respectively, of which
$32 million related to discontinued operations in 2007.

Property,
plant and equipment includes gross assets acquired under capital leases of $15 million each at December 31, 2009 and 2008; related amounts included in accumulated
depreciation were $13 million and $11 million at December 31, 2009 and 2008, respectively.

F-30

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. INVESTMENT IN UNCONSOLIDATED AFFILIATES

Our ownership percentage and investment in unconsolidated affiliates were as follows (dollars in millions):

December 31,2009

2008Equity Method:Sasol-Huntsman GmbH and Co. KG (50%)

$
26

$
34Arabian Amines Company (50%)


40


44Louisiana Pigment Company, L.P. (50%)


100


110BASF Huntsman Shanghai Isocyanate Investment BV (50%)(1)


63


58International Polyurethanes Investments (45%)


15


15Others


1


1Total equity method investments


245


262Cost Method:Gulf Advanced Chemicals Industry Corporation (4.35%)


5


5Total investments

$
250

$
267


(1)We
own 50% of BASF Huntsman Shanghai Isocyanate Investment BV. BASF Huntsman Shanghai Isocyanate Investment BV owns a 70% interest in SLIC,
thus giving us an indirect 35% interest in SLIC.


Summarized
applicable financial information of our unconsolidated affiliate Sasol-Huntsman GmbH and Co. KG. as of December 31, 2009 and 2008 and for the years ended
December 31, 2009, 2008 and 2007 is presented below (dollars in millions):

2009

2008

2007Current assets

$
47

$
58Noncurrent assets


79


46Current liabilities


19


10Noncurrent liabilities


31


2Revenues


68


123

$
108Gross profit


9


23


30Net income


3


13


13


Summarized
applicable financial information of our other unconsolidated affiliates as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007
is presented below (dollars in millions):

2009

2008

2007Assets

$
939

$
879Liabilities


472


406Revenues


593


718

$
539Net income


3


15


9


F-31

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. INVESTMENT IN UNCONSOLIDATED AFFILIATES (Continued)

During the year ended December 31, 2008, we contributed $44 million as our 50% equity contribution to the Arabian Amines Company, our ethyleneamines manufacturing joint
venture in Jubail, Saudi Arabia. This joint venture's funding requirements will be satisfied through a combination of debt and equity, with the equity already provided on a 50/50 basis by us and Zamil
Group. The joint venture obtained various loan commitments in the aggregate amount of approximately $195 million in U.S. dollar equivalents, of which $181 million, including bridge
loans, was drawn as of December 31, 2009. The plant will have approximate annual capacity of 60 million pounds with production expected in early second quarter of 2010. We have provided
certain guarantees of approximately $14 million for these commitments which will terminate upon completion of the project and satisfaction of certain conditions. We have estimated that the fair
value of these guarantees was nil as of the closing date of this transaction and, accordingly, no amounts have been recorded. This joint venture is accounted for under the equity method.

7. INTANGIBLE ASSETS

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

Huntsman Corporation

December 31, 2009

December 31, 2008Carrying
Amount

Accumulated
Amortization

Net

Carrying
Amount

Accumulated
Amortization

NetPatents, trademarks and technology

$
345

$
244

$
101

$
355

$
255

$
100Licenses and other agreements


17


11


6


33


12


21Non-compete agreements


1


1





19


19


Other intangibles


49


31


18


47


15


32Total

$
412

$
287

$
125

$
454

$
301

$
153


During
2008, we reversed certain valuation allowances on deferred tax assets related to prior acquisitions and recorded a corresponding reduction to intangible assets of approximately
$1 million.

Amortization
expense was $34 million, $27 million and $27 million for the years ended December 31, 2009, 2008 and 2007, respectively, of which
$1 million related to discontinued operations in 2007.

Estimated
future amortization expense for intangible assets over the next five years is as follows (dollars in millions):

Year ending December 31:2010

$
292011


252012


202013


172014


11


F-32

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. INTANGIBLE ASSETS (Continued)

Huntsman International

December 31, 2009

December 31, 2008Carrying
Amount

Accumulated
Amortization

Net

Carrying
Amount

Accumulated
Amortization

NetPatents, trademarks and technology

$
345

$
244

$
101

$
355

$
255

$
100Licenses and other agreements


17


11


6


33


12


21Non-compete agreements


1


1





19


19


Other intangibles


58


36


22


55


19


36Total

$
421

$
292

$
129

$
462

$
305

$
157


During
2008, we reversed certain valuation allowances on deferred tax assets related to prior acquisitions and recorded a corresponding reduction to intangible assets of approximately
$1 million.

Amortization
expense for Huntsman International was $35 million, $28 million and $28 million for the years ended December 31, 2009, 2008 and 2007,
respectively, of which $1 million related to discontinued operations, in 2007.

Huntsman
International's estimated future amortization expense for intangible assets over the next five years is as follows (dollars in millions):

Year ending December 31:2010

$
302011


262012


212013


182014


11


8. OTHER NONCURRENT ASSETS

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

December 31,2009

2008Pension assets

$
31

$
2Debt issuance costs


16


25Capitalized turnaround costs


98


104Spare parts inventory


82


78Catalyst assets


18


25Deposits


56


49Other noncurrent assets


54


81Total

$
355

$
364


Amortization
expense of catalyst assets for the years ended December 31, 2009, 2008 and 2007 was $14 million, $12 million and $9 million, respectively.

F-33

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. ACCRUED LIABILITIES

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

Huntsman Corporation

December 31,2009

2008Payroll and related costs

$
168

$
101Interest


33


42Volume and rebate accruals


77


82Income taxes


20


37Taxes other than income taxes


72


72Restructuring and plant closing costs


71


73Environmental accruals


5


4Pension liabilities


13


12Other postretirement benefits


13


13Self-insured casualty loss reserves


22


21Other miscellaneous accruals


129


160Total

$
623

$
617


Huntsman International

December 31,2009

2008Payroll and related costs

$
168

$
101Interest


24


41Volume and rebate accruals


77


82Income taxes


20


22Taxes other than income taxes


72


72Restructuring and plant closing costs


71


73Environmental accruals


5


4Pension liabilities


13


12Other postretirement benefits


13


13Self-insured casualty loss reserves


22


21Other miscellaneous accruals


128


119Total

$
613

$
560


F-34

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of December 31, 2009, 2008 and 2007, accrued restructuring, impairment and plant closing costs by type of cost and initiative consisted 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 January 1, 2007

$
76

$


$
9

$
17

$
102Adjustment to Textile Effects opening balance sheet liabilities


8


14


(2
)

(1
)

192007 charges for 2003 initiatives


1











12007 charges for 2004 initiatives


4





1





52007 charges for 2007 initiatives


1








25


26Reversal of reserves no longer required


(4
)




(1
)




(5
)2007 payments for 2003 initiatives


(3
)




(1
)




(4
)2007 payments for 2004 initiatives


(5
)

(1
)

(1
)




(7
)2007 payments for 2005 initiatives


(3
)










(3
)2007 payments for 2006 initiatives


(17
)

(1
)




(2
)

(20
)2007 payments for 2007 initiatives


(1
)







(25
)

(26
)Net activity of discontinued operations


(1
)










(1
)Reimbursable workforce reduction cost


1











1Foreign currency effect on reserve balance


8











8Accrued liabilities as of December 31, 2007


65


12


5


14


96Adjustment to Textile Effects opening balance sheet liabilities


(13
)




(1
)




(14
)2008 charges for 2004 initiatives


1





1





22008 charges for 2008 initiatives


27








1


28Reversal of reserves no longer required


(1
)










(1
)2008 payments for 2003 initiatives


(2
)




(1
)




(3
)2008 payments for 2004 initiatives


(3
)




(1
)




(4
)2008 payments for 2006 initiatives


(19
)

(11
)




(1
)

(31
)2008 payments for 2008 initiatives


(3
)







(1
)

(4
)Net activity of discontinued operations


(1
)










(1
)Foreign currency effect on reserve balance


7











7Accrued liabilities as of December 31, 2008


58


1


3


13


75Adjustment to Textile Effects opening balance sheet liabilities


(5
)










(5
)2009 charges for 2006 initiatives





1








12009 charges for 2008 initiatives


5











52009 charges for 2009 initiatives


81


8





22


111Reversal of reserves no longer required


(8
)










(8
)2009 payments for 2003 initiatives


(2
)










(2
)2009 payments for 2004 initiatives


(3
)










(3
)2009 payments for 2006 initiatives


(28
)

(1
)







(29
)2009 payments for 2008 initiatives


(17
)










(17
)2009 payments for 2009 initiatives


(33
)

(8
)




(12
)

(53
)Foreign currency effect on reserve balance


2








(2
)

Accrued liabilities as of December 31, 2009

$
50

$
1

$
3

$
21

$
75


(1)Of
the total workforce reduction reserves of $50 million, $2 million relates to restructuring programs recorded in connection with business
combinations and are expected to be paid through 2010. The total workforce reduction reserves of $50 million relate to the termination of 524 positions, of which 454 positions had not been
terminated as of December 31, 2009.


F-35

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

(2)Accrued
liabilities by initiatives were as follows (dollars in millions):


December 31,2009

20082005 initiatives and prior

$
3

$
82006 initiatives


5


402008 initiatives


7


272009 initiatives


60


Total

$
75

$
75


F-36

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative (dollars
in millions):

Polyurethanes

Advanced
Materials

Textile
Effects

Performance
Products

Pigments

Discontinued
Operations

Corporate
& Other

TotalAccrued liabilities as of January 1, 2007

$
7

$
2

$
76

$
7

$
8

$
2

$


$
102Adjustment to Textile Effects opening balance sheet liabilities








19














192007 charges for 2003 initiatives














1








12007 charges for 2004 initiatives














5








52007 charges for 2007 initiatives





1


25














26Reversal of reserves no longer required





(1
)

(1
)




(3
)







(5
)2007 payments for 2003 initiatives


(2
)










(2
)







(4
)2007 payments for 2004 initiatives


(1
)







(4
)

(2
)







(7
)2007 payments for 2005 initiatives


(1
)







(2
)










(3
)2007 payments for 2006 initiatives








(20
)













(20
)2007 payments for 2007 initiatives





(1
)

(25
)













(26
)Net activity of discontinued operations

















(1
)




(1
)Reimburable workforce reduction cost














1








1Foreign currency effect on reserve balance


1





6


1











8Accrued liabilities as of December 31, 2007


4


1


80


2


8


1





96Adjustment to Textile Effects opening balance sheet liabilities








(14
)













(14
)2008 charges for 2004 initiatives














2








22008 charges for 2008 initiatives








24





3





1


28Reversal of reserves no longer required














(1
)







(1
)2008 payments for 2003 initiatives


(1
)




(1
)




(1
)







(3
)2008 payments for 2004 initiatives











(1
)

(3
)







(4
)2008 payments for 2006 initiatives








(31
)













(31
)2008 payments for 2008 initiatives








(3
)










(1
)

(4
)Net activity of discontinued operations

















(1
)




(1
)Foreign currency effect on reserve balance








8





(1
)







7Accrued liabilities as of December 31, 2008


3


1


63


1


7








75Adjustment to Textile Effects opening balance sheet liabilities








(5
)













(5
)2009 charges for 2006 initiatives








1














12009 charges for 2008 initiatives


1





2





2








52009 charges for 2009 initiatives





12


10





45





44


111Reversal of reserves no longer required








(7
)




(1
)







(8
)2009 payments for 2003 initiatives


(2
)



















(2
)2009 payments for 2004 initiatives











(1
)

(2
)







(3
)2009 payments for 2006 initiatives








(29
)













(29
)2009 payments for 2008 initiatives








(13
)




(4
)







(17
)2009 payments for 2009 initiatives





(6
)

(4
)




(35
)




(8
)

(53
)Foreign currency effect on reserve balance








(1
)




(1
)




2


Accrued liabilities as of December 31, 2009

$
2

$
7

$
17

$


$
11

$


$
38

$
75Current portion of restructuring reserves

$
2

$
7

$
17

$


$
7

$


$
38

$
71Long-term portion of restructuring reserves














4








4Estimated additional future charges for current restructuring projects:Estimated additional charges within one year

$


$


$


$


$
7

$


$
7

$
14Estimated additional charges beyond one year


























F-37

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

Details with respect to cash and non-cash restructuring charges for the years ended December 31, 2009, 2008 and 2007 by
initiative are provided below (dollars in millions):

Cash charges:2009 charges for 2006 initiatives

$
12009 charges for 2008 initiatives


52009 charges for 2009 initiatives


111Reversal of reserves no longer required


(8
)Environmental remediation accrual recorded in connection with the Australian styrenics closure


30Non-cash charges


13Total 2009 Restructuring, Impairment and Plant Closing Costs

$
152Cash charges:2008 charges for 2004 initiatives

$
22008 charges for 2008 initiatives


28Reversal of reserves no longer required


(1
)Non-cash charges


7Total 2008 Restructuring, Impairment and Plant Closing Costs

$
36Cash charges:2007 charges for 2003 initiatives

$
12007 charges for 2004 initiatives


52007 charges for 2007 initiatives


26Reversal of reserves no longer required


(5
)Non-cash charges


15Total 2007 Restructuring, Impairment and Plant Closing Costs

$
42


2009 RESTRUCTURING ACTIVITIES

As of December 31, 2009, our Polyurethanes segment restructuring reserve consisted of $2 million related to restructuring
initiatives at our Rozenburg, Netherlands site (as announced in 2003).

As
of December 31, 2009, our Advanced Materials segment restructuring reserve consisted of $7 million related to workforce reductions in connection with a reorganization
designed to implement a regional management structure. During 2009, we recorded charges of $12 million related to this reorganization project.

As
of December 31, 2009, our Textile Effects segment restructuring reserve consisted of $17 million, of which $5 million related to opening balance sheet liabilities
from the Textile Effects Acquisition, $5 million related to the streamlining of the textile effects business into two global strategic business units as announced during the fourth quarter of
2008, and $7 million related to workforce reductions at our production facility in Langweid, Germany. During 2009, we recorded charges of $13 million primarily related to workforce
reductions at our Germany production facility. We also reversed accruals of $7 million primarily related to the streamlining of the textile effects business

F-38

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

and
$5 million related to certain employee termination costs recorded in connection with the Textile Effects Acquisition.

As
of December 31, 2009, our Pigments segment restructuring reserve consisted of $11 million primarily related to workforce reductions at our Huelva, Spain plant. During
2009, we recorded charges of $47 million, of which $29 million primarily related to the closure of our Grimsby plant and $18 million primarily related to workforce reductions at
our Huelva, Spain plant. Of the $29 million of charges at our Grimsby plant, $14 million related to contract terminations, $7 million related to workforce reductions and
$8 million related to decommissioning. We also recorded non-cash charges of $4 million primarily related to a provision against engineering spare parts at our Grimsby plant.
We expect to incur additional charges of $7 million primarily related to the closure of our Grimsby, U.K. plant through 2010.

As
of December 31, 2009, our Corporate and Other segment restructuring reserve consisted of $38 million, of which $34 million related to the closure of our styrenics
operations in West Footscray, Australia and $4 million related to our 2009 fixed cost reduction project announced in the first quarter of 2009. During 2009, we recorded charges of
$74 million in Corporate and Other, of which $25 million related to workforce reductions, $30 million related to estimated environmental remediation costs and $8 million
related to contract termination costs associated with the closure of our styrenics operations and $11 million related to other aspects of our 2009 fixed cost reduction project. We expect to
incur additional charges of $7 million related to the West Footscray closure through 2010. For more information regarding the closure of our West Footscray, Australia styrenics operations, see
"Note 1. GeneralRecent DevelopmentsClosure of Australian Styrenics Operations." We also recorded non-cash charges of $3 million related to our 2009
fixed cost reduction project and a non-cash impairment charge of $1 million primarily related to capital expenditures and turnaround costs associated with our Australian styrenics
business. The long-lived assets of our Australian styrenics business were previously determined to be impaired. Capital expenditures and turnaround costs in this business, which are
necessary to maintain operations, are also considered to be impaired immediately after they are incurred.

2008 RESTRUCTURING ACTIVITIES

As of December 31, 2008, our Polyurethanes segment restructuring reserve consisted of $3 million related to restructuring
initiatives at our Rozenburg, Netherlands site (as announced in 2003).

As
of December 31, 2008, our Advanced Materials segment restructuring reserve consisted of $1 million related to various restructuring programs. During 2008, our Advanced
Materials segment recorded a non-cash impairment charge of $1 million related to our Deer Park, Australia and Germany fixed assets.

As
of December 31, 2008, our Textile Effects segment restructuring reserve consisted of $63 million, of which $40 million related to opening balance sheet
liabilities from the Textile Effects Acquisition and $23 million related to our 2008 restructuring initiatives. During 2008, our Textile Effects segment recorded cash charges for 2008
initiatives of $24 million primarily related to the streamlining of the Textile Effects business into two global strategic business units, Apparel & Home Textiles and Specialty Textiles,
as announced during the fourth quarter of 2008. We also reversed

F-39

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)

accruals
of $14 million for certain employee termination costs recorded in connection with the Textile Effects Acquisition.

As
of December 31, 2008, our Performance Products segment reserve consisted of $1 million related to various restructuring programs across our European surfactants
business. During 2008, we recorded a non-cash charge of $1 million related to the closure of our Guelph, Canada plant.

As
of December 31, 2008, our Pigments segment reserve consisted of $7 million related to the restructuring of commercial and business support activities and workforce
reductions in connection with our Huelva, Spain operations. During 2008, our Pigments segment recorded charges of $5 million related to the restructuring of commercial and business support
activities.

During
2008, we recorded a non-cash impairment charge of $5 million in Corporate and Other primarily related to capital expenditures and turnaround costs associated
with our Australian styrenics business that was previously impaired.

2007 RESTRUCTURING ACTIVITIES

As of December 31, 2007, our Polyurethanes segment restructuring reserve consisted of $4 million related to restructuring
initiatives at our Rozenburg, Netherlands site (as announced in 2003).

As
of December 31, 2007, our Advanced Materials segment restructuring reserve consisted of $1 million related to various restructuring programs.

As
of December 31, 2007, our Textile Effects segment restructuring reserve consisted of $80 million primarily relating to opening balance sheet liabilities from the Textile
Effects Acquisition. During 2007, our Textile Effects segment recorded cash charges for 2007 initiatives of $20 million related to redundant service contracts and integration costs for
information technology services and $4 million related to supply chain integration processes.

As
of December 31, 2007, our Performance Products segment reserve consisted of $2 million related to various restructuring programs across our European surfactants
business.

As
of December 31, 2007, our Pigments segment reserve consisted of $8 million related to the reorganization of business support activities following the reduction of our
TiO2 production capacity announced in 2004 and workforce reductions in connection with our Huelva, Spain operations.

During
2007, we recorded a non-cash impairment charge of $13 million in Corporate and Other related to capital expenditures and turnaround costs associated with our
Australian styrenics business that was previously impaired.

F-40

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations consist primarily of landfill capping, closure and post-closure costs and asbestos abatement costs. We are legally required to perform capping
and closure and post-closure care on the landfills and asbestos abatement on certain of our premises. For each asset retirement obligation we recognized the estimated fair value of a
liability and capitalized the cost as part of the cost basis of the related asset.

The
following table describes changes to our asset retirement obligation liability (dollars in millions):

December 31,2009

2008Asset retirement obligation at beginning of year

$
20

$
19Accretion expense


1


2Revisions in timing and estimated cash flows





1Foreign currency effect on reserve balance





(2
)Asset retirement obligation at end of year

$
21

$
20Amounts included in accrued liabilities

$


$
1Amounts included in other noncurrent liabilities


21


19Total asset retirement obligations

$
21

$
20


12. OTHER NONCURRENT LIABILITIES

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

Huntsman Corporation

December 31,2009

2008Pension liabilities

$
534

$
713Other postretirement benefits


122


136Environmental accruals


36


3Restructuring and plant closing costs


4


2Asset retirement obligations


21


19Other noncurrent liabilities


158


148Total

$
875

$
1,021


F-41

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. OTHER NONCURRENT LIABILITIES (Continued)

Huntsman International

December 31,2009

2008Pension liabilities

$
534

$
713Other postretirement benefits


122


136Environmental accruals


36


3Restructuring and plant closing costs


4


2Asset retirement obligations


21


19Other noncurrent liabilities


148


148Total

$
865

$
1,021


13. DEBT

Outstanding debt consisted of the following (dollars in millions):

Huntsman Corporation

December 31,2009

2008Senior Credit Facilities:Term loans

$
1,968

$
1,540Secured notes





295Senior notes


434


198Subordinated notes


1,294


1,285Australian credit facilities


34


41HPS (China) debt


163


196Convertible notes


236


235Other


83


92Total debtexcluding debt to affiliates

$
4,212

$
3,882Current portion

$
431

$
205Long-term portion


3,781


3,677Total debtexcluding debt to affiliates

$
4,212

$
3,882Total debtexcluding debt to affiliates

$
4,212

$
3,882Notes payable to affiliates-noncurrent


5


6Total debt

$
4,217

$
3,888


F-42

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

Huntsman International

December 31,2009

2008Senior Credit Facilities:Term loans

$
1,968

$
1,540Secured notes





295Senior notes


434


198Subordinated notes


1,294


1,285Australian credit facilities


34


41HPS (China) debt


163


196Other


83


92Total debtexcluding debt to affiliates

$
3,976

$
3,647Current portion

$
195

$
205Long-term portion


3,781


3,442Total debtexcluding debt to affiliates

$
3,976

$
3,647Total debtexcluding debt to affiliates

$
3,976

$
3,647Notes payable to affiliates-current


25


423Notes payable to affiliates-noncurrent


530


6Total debt

$
4,531

$
4,076


DIRECT AND SUBSIDIARY DEBT

Our direct debt and guarantee obligations consist of the following: our Convertible Notes; our guarantees of certain debt of HPS (our
Chinese MDI joint venture); our guarantee of certain debt of the Arabian Amines Company; certain indebtedness incurred from time to time to finance certain insurance premiums; and our guarantee of
certain obligations of Huntsman International in its capacity as a contributor and servicer guarantor under the U.S. A/R Program.

Substantially
all of our other debt has been incurred by our subsidiaries (primarily Huntsman International); such subsidiary debt is nonrecourse to us and we have no contractual
obligation to fund our subsidiaries' respective operations.

Senior Credit Facilities

All of our Senior Credit Facilities are obligations of Huntsman International. As of December 31, 2009, our Senior Credit
Facilities consisted of (i) the $650 million Revolving Facility; (ii) the $1,524 million Term Loan B; and (iii) the $500 million ($444 million carrying
value) Term Loan C.

As
of December 31, 2009, we had no borrowings outstanding under our Revolving Facility, and we had approximately $33 million (U.S. dollar equivalents) of letters of credit
and bank guarantees issued and outstanding under our Revolving Facility. The Revolving Facility matures in August 2010, Term Loan B matures in 2014 and Term Loan C matures in 2016; provided, however,
that the maturities of

F-43

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

the
Revolving Facility and the Dollar Term Loans will accelerate if we do not repay or refinance all but $100 million of Huntsman International's outstanding debt securities on or before three
months prior to the maturity dates of such debt securities.

Our
Senior Credit Facilities are subject to a single financial covenant, the Leverage Covenant, which applies only to the Revolving Facility and is tested at the Huntsman International
level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not
deemed outstanding). On April 16, 2009, Huntsman International entered into the Waiver with respect to the Leverage Covenant. The Leverage Covenant, as amended pursuant to the Waiver, requires
that the maximum senior secured leverage ratio does not exceed 5.00 to 1.00.

In
addition, the Waiver modified the calculation used to determine compliance with the Leverage Covenant as follows:



The
Waiver is effective from April 16, 2009 through June 30, 2010. However, we may consent to terminate the Waiver in conjunction with a proposed amendment to the Revolving
Facility we are currently seeking. In that event, the senior secured leverage ratio would return to 3.75 to 1.00.

As
consideration for the Waiver, Huntsman International agreed to increase the interest paid on borrowings under the Revolving Facility by 225 basis points from LIBOR plus 1.75% to LIBOR
plus 4.00% and to increase the applicable unused fee by 25 basis points from 0.50% to 0.75%. In addition, during the waiver period, Huntsman International agreed not to:



At
the present time, borrowings under the Revolving Facility, Term Loan B and Term Loan C bear interest at LIBOR plus 4%, LIBOR plus 1.75% and LIBOR plus 2.25%, respectively. However,
the applicable interest rate of Term Loan B is subject to a reduction to LIBOR plus 1.5% upon achieving certain secured leverage ratio thresholds.

F-44

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

As
of December 31, 2009, the weighted average interest rate on the Senior Credit Facilities was approximately 2.1%. Our obligations under the Senior Credit Facilities are
guaranteed by our Guarantor subsidiaries, which consist of substantially all of our domestic subsidiaries and certain of our foreign subsidiaries, and are secured by a first priority lien on
substantially all of our domestic property, plant and equipment, the stock of all of or our material domestic subsidiaries and certain foreign subsidiaries and pledges of intercompany notes between
various of our subsidiaries.

Secured Notes

On July 23, 2009, we redeemed in full all of our $296 million 11.625% senior secured notes due October 2010. The total
redemption payment, excluding accrued interest, was $305 million, which included principal of $296 million and a call premium of approximately $9 million. In connection with this
redemption, we recognized a loss on early extinguishment of debt of $11 million.

Senior Notes

On August 3, 2009, we redeemed in full all of our $198 million 11.5% senior notes due July 2012. The total redemption
payment, excluding accrued interest, was $204 million, which included principal of $198 million and a call premium of $6 million. In connection with this redemption, we recognized
a loss on early extinguishment of debt of $10 million.

2016 Senior Notes

Pursuant to the Texas Bank Litigation Settlement Agreement, we entered into the Note Purchase Agreement with the Banks, pursuant to
which the Banks purchased $600 million aggregate principal amount of the 2016 Senior Notes.

The
2016 Senior Notes are senior unsecured obligations and are guaranteed by certain subsidiaries named as Guarantors.

As
of December 31, 2009, we had outstanding $600 million ($434 million carry value) of the 2016 Senior Notes with an effective interest rate at issuance of 11.73%.
In June 2009, these liabilities were measured at fair value upon initial recognition. We used primarily the income approach to determine the fair value of these instruments. Fair value represents the
present value of estimated future cash flows calculated using interest rates that were available to us for issuance of debt with similar terms, adjusted for differences in remaining maturity using
relevant debt yield curves.

The
2016 Senior Notes bear interest at the rate of 5.5% per year payable semi-annually in June and in December of each year. The 2016 Senior Notes will mature on
June 30, 2016. We may redeem the 2016 Senior Notes in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days' notice, at a redemption price equal to
the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of redemption. The 2016 Senior Notes are governed by an indenture imposing certain limitations on Huntsman
International's ability to, among other things, incur additional indebtedness; pay dividends or make certain other restricted payments; enter into certain transactions with affiliates; create dividend
or other payment restrictions affecting restricted subsidiaries; merge or consolidate with any other person; sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of
their assets; or adopt a plan of liquidation.

F-45

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

Upon
the occurrence of certain change of control events, holders of the 2016 Senior Notes will have the right to require that we purchase all or a portion (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of such holder's 2016 Senior Notes in cash pursuant to the offer described by us, at a purchase price equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase.

Subordinated Notes

As of December 31, 2009, we had outstanding $175 million of 7.375% senior subordinated notes due 2015 and
€135 million (approximately $194 million) of 7.5% senior subordinated notes due 2015. The 2015 Subordinated Notes are redeemable on or after January 1, 2010 at
103.688% and 103.750%, respectively, of the principal amount plus accrued interest, declining ratably to par on and after January 1, 2013.

As
of December 31, 2009, we had outstanding €400 million (approximately $574 million) of 6.875% senior subordinated notes due 2013 and
$347 million aggregate principal amount ($351 million book value) of our 7.875% senior subordinated notes due 2014. The 2013 Subordinated Notes are currently redeemable at 105.156% of
the principal amount plus accrued interest, declining ratably to par on or after November 15, 2012. The 2014 Subordinated Notes are redeemable on or after November 15, 2010 at 103.938%
of the principal amount plus accrued interest, declining ratably to par on or after November 15, 2012.

Interest
on the 2015 Subordinated Notes is payable semiannually in January and July of each year. Interest on the 2013 Subordinated Notes and the 2014 Subordinated Notes is payable
semiannually in November and May of each year. All of our subordinated notes are unsecured. The indentures governing our subordinated notes contain covenants relating to, among other things, the
incurrence of debt and limitations on distributions, certain restricted payments, asset sales and affiliate transactions. Our subordinated notes are guaranteed by the Guarantors. The indentures also
contain provisions requiring us to offer to repurchase the notes upon a change of control.

Convertible Notes

As of December 31, 2009, we had outstanding $250 million of Convertible Notes ($236 million carrying value). On
January 11, 2010, we repurchased the entire $250 million principal amount of the Convertible Notes from Apollo and its affiliates for approximately $382 million. The Convertible
Notes were issued to Apollo in December 2008 as part of the Apollo Settlement Agreement. The Convertible Notes, which would have matured on December 23, 2018, bore interest at the rate of 7%
per year and were convertible into approximately 31.8 million shares of our common stock at any time by the holders. As a result of the repurchase of the Convertible Notes, we will record a
loss on early extinguishment of debt in the first quarter of 2010 in the amount of approximately $146 million. The carrying value of $236 million relating to the Convertible Notes was
classified as current as of December 31, 2009.

F-46

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

Other Debt

We maintain a $25 million European overdraft facility that is a demand facility used for the working capital needs of our
European subsidiaries. As of December 31, 2009 and 2008, we had nil and $16 million U.S. dollar equivalents, respectively, in borrowings outstanding under the European overdraft
facility. We also maintain other foreign overdraft facilities used for working capital needs.

HPS
obtained secured loans for the construction of its MDI production facility. This debt consists of various committed loans. As of December 31, 2009, HPS had $20 million
outstanding in U.S. dollar borrowings and 606 million in RMB borrowings (approximately $89 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, 2009, the interest rate was approximately 1% for U.S. dollar borrowings, 5.3% for RMB
term loan borrowings and 4.9% for RMB working capital loans. The term loans are secured by substantially all the assets of HPS and will be repaid in 16 semiannual installments (which began on
June 30, 2007). We have guaranteed 70% of any amount due and unpaid by HPS under the loans described above (except for the VAT facility, which is not guaranteed). Our guarantees remain in
effect until HPS has met certain conditions. The conditions outstanding include completion of the building and equipment mortgage registrations, which are progressing as planned, and maintaining a
debt service coverage ratio of at least 1.5:1 at the time such registrations are completed. Our Chinese MDI joint ventures are unrestricted subsidiaries under the Senior Credit Facilities and under
the indentures governing our outstanding notes.

As
of December 31, 2009, HPS has a loan facility for the purpose of discounting commercial drafts with recourse. The facility has a stated capacity for discounting up to
CNY700 million (approximately $103 million) and drafts are discounted using a discount rate of the three-month SHIBOR plus 2.2%. As of December 31, 2009 the all-in
discount rate was 4.0%. As of December 31, 2009, HPS has discounted with recourse CNY363 million (approximately $53 million) of commercial drafts, all of which is included in
current portion of long-term debt. While the facility has a maturity of July 2010, the lender has the right to accept or reject drafts presented for discounting.

Our
Australian subsidiaries maintain credit facilities that had an aggregate outstanding balance of A$38 million (approximately $34 million) as of December 31, 2009,
all of which is included in the current portion of long term debt. These facilities are nonrecourse to us and bear interest at the Australian index rate plus a margin of 2.4%. As of
December 31, 2009, the interest rate for these facilities was 6.5%. The Australian credit facilities mature in May 2010.

We
finance certain insurance premiums and, as of December 31, 2009 and 2008, we had outstanding notes payable in the amount of $18 million and $23 million,
respectively. Insurance premium financings are generally secured by the unearned premiums under such policies.

In
connection with the Baroda acquisition, a portion of the purchase price was funded through local financing and from liquidity available from our subsidiaries located in India. See
"Note 3. Business Combinations." As of December 31, 2009, our Indian entities had combined debt outstanding of approximately $20 million (U.S. dollar equivalents). This debt is
comprised of various facilities including approximately $9 million (U.S. dollar equivalents) in working capital facilities that are callable on demand and a five year term loan facility of
approximately $11 million (U.S. dollar equivalents). See "Note 3. Business Combinations."

F-47

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

On June 30, 2008, our subsidiary, Huntsman (UK) Limited, entered into a $125 million short term committed revolving credit facility maturing on June 28, 2009. In
connection with an amendment to our Prior A/R Program on November 13, 2008, we terminated this short term revolving credit facility, of which nothing was drawn. See "Note 15.
Securitization of Accounts Receivable."

Notes Payable from Huntsman International to Huntsman Corporation

As of December 31, 2009, under the Intercompany Note, we have loaned $550 million to our subsidiary, Huntsman
International. The Intercompany Note is unsecured and $25 million of the outstanding amount is classified as current as of December 31, 2009 on the accompanying consolidated balance
sheets. As of December 31, 2009, under the terms of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal amount at a rate per annum based on the
previous monthly average borrowing rate obtained under our A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average
borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility). Subject to the conditions of the Waiver, with our consent, the principal and accrued interest outstanding
under the Intercompany Note may also be forgiven, capitalized or satisfied with any alternate form of consideration.

COMPLIANCE WITH COVENANTS

Our management believes that we are in compliance with the covenants contained in the agreements governing our debt instruments,
including our Senior Credit Facilities, our A/R Programs and the indentures governing our notes.

We
have only one financial covenant under our Senior Credit Facilitiesthe Leverage Covenant, which applies to our $650 million Revolving Facility. The Leverage
Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed
outstanding). On April 16, 2009, Huntsman International entered into the Waiver with respect to the Leverage Covenant. The Leverage Covenant, as amended pursuant to the Waiver, requires that
the Secured Leverage Ratio does not exceed 5.00 to 1.00.

If
in the future we are not able to meet the Secured Leverage Ratio, unless we obtain an amendment or waiver (as to which we can provide no assurance), then, for so long as we did not
meet the Secured
Leverage Ratio, we would not have access to the liquidity otherwise available under our Revolving Facility. If we fail to meet the Secured Leverage Ratio at a time when we had loans or letters of
credit outstanding under the Revolving Facility, we would be in default under our Senior Credit Facilities, and, unless we obtain a waiver or forbearance with respect to such default (as to which we
can provide no assurance), we could be required to pay off the balance of our Senior Credit Facilities in full and would not have further access to such facilities.

Our
A/R Programs consist of two facilities: A $250 million U.S. accounts receivable securitization program and a €225 (approximately $323 million) European
accounts receivable securitization program. The agreements governing our U.S. A/R Program and the agreements governing our EU A/R Program also contain certain financial covenants. Any material failure
to meet the applicable A/R Programs

F-48

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. DEBT (Continued)

covenants
in the future could lead to an event of default under the A/R Programs, which could require us to cease our use of such facilities. Under these circumstances, unless any default was remedied
or waived, we would likely lose the ability to obtain financing with respect to our trade receivables. A material default under the A/R Programs would also constitute an event of default under
Huntsman International's Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.

MATURITIES

The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31, 2009 are as follows (dollars in
millions):

Huntsman Corporation

Year ending December 31:2010

$
4312011


582012


442013


6152014


1,835Thereafter


1,229$
4,212


Huntsman International

Year ending December 31:2010

$
1952011


582012


442013


6152014


1,835Thereafter


1,229$
3,976


As
of December 31, 2009, we had lease obligations accounted for as capital leases totaling $2 million which are included in debt. These capital lease obligations mature in
2010.

F-49

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity pricing risks. From time to time, we enter into transactions, including
transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. Changes in the fair value of the hedge in the net
investment of certain European operations are recorded in accumulated other comprehensive income (loss).

INTEREST RATE RISKS

Through our borrowing activities, we are exposed to interest rate risk. Such risk arises due to the structure of our 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 derivative instruments.

From
time to time, we may purchase interest rate swaps and/or interest rate collars to reduce the impact of changes in interest rates on our floating-rate
long-term debt. Under interest rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated by reference to an agreed notional principal amount. The collars entitle us to receive from the counterparties (major banks) the amounts, if any, by which our interest
payments on certain of our floating-rate borrowings exceed a certain rate, and require us to pay to the counterparties (major banks) the amount, if any, by which our interest payments on
certain of our floating-rate borrowings are less than a certain rate.

On
December 9, 2009, we entered into a five-year year interest rate contract to hedge the variability caused by monthly changes in cash flow due to associated changes
in LIBOR under our
Senior Credit Facilities. The notional value of this contract is $50 million and was designated as a cash flow hedge. The effective portion of the changes in the fair value of the swap were
recorded in accumulated other comprehensive (loss) income. We will pay a fixed 2.6% on the hedge and receive the one-month LIBOR rate. As of December 31, 2009, the fair value of the
hedge was $1 million and is recorded in other noncurrent assets.

In
addition, on January 14, 2010 we entered into five-year interest rate contract to hedge the variability caused by monthly changes in cash flow due to associated
changes in LIBOR under our Senior Credit Facilities. The notional value of this contract is $50 million and was designated as a cash flow hedge. The effective portion of the changes in the fair
value of the swap were recorded in accumulated other comprehensive (loss) income. We will pay a fixed 2.8% on the hedge and receive the one-month LIBOR rate.

Interest
rate contracts were recorded as a component of other noncurrent assets and liabilities as of December 31, 2009. The effective portion of the changes in the fair value of
the swap were recorded in accumulated other comprehensive (loss) income. As of December 31, 2009, the fair value was not considered significant. As of December 31, 2009 and 2008, we had
contracts with an aggregate notional amount of $61 million and $13 million, respectively.

For
the years ended December 31, 2009 and 2008, the changes in accumulated other comprehensive (loss) income associated with cash flow hedging activities were not considered
significant.

F-50

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

During
2010, interest expense of nil is expected to be reclassified to earnings. The actual amount that will be reclassified to earnings over the next twelve months may vary from this
amount due to changing market conditions. We are exposed to credit losses in the event of nonperformance by a counterparty to the derivative financial instruments. We anticipate, however, that the
counterparties will be able to fully satisfy their obligations under the contracts. Market risk arises from changes in interest rates.

FOREIGN EXCHANGE RATE RISK

Our cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in
various currencies. We enter into foreign currency derivative instruments to minimize the short-term impact of movements in
foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may
be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We
do not hedge our currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of December 31, 2009, we had approximately
$100 million notional amount (in U.S. dollar equivalents) outstanding in foreign currency contracts with a term of approximately one month.

On
January 15, 2008, we entered into a series of forward foreign currency contracts in our Pigments segment to partially hedge the impact, for up to one year, of movements in
foreign currency rates associated with the purchases of raw materials and sales of pigment in non-functional currencies. During the first quarter of 2009, any remaining contracts matured
and the realized gains (losses) recorded in the consolidated statements of operations were not considered significant. As of December 31, 2008, these contracts had a notional amount of
approximately $9 million and were designated as cash flow hedges. As of December 31, 2008, the fair value of these contracts was not considered significant. For the year ended
December 31, 2008, the effective portion of the changes in the fair value was not significant with ineffectiveness of $1 million recorded as a decrease in sales, $1 million
recorded as a reduction in cost of sales and a foreign currency loss of $1 million.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we had swapped $153 million of LIBOR floating rate debt payments for
€116 million of EURIBOR floating rate debt payments. This swap was not designated as a hedge for financial reporting purposes. For the years ended December 31, 2008 and
2007, we recorded a foreign currency gain (loss) on this swap of $21 million and ($17) million, respectively, in the consolidated statements of operations.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we had swapped $96 million of LIBOR floating rate debt payments for
€71 million of EURIBOR floating rate debt payments. This swap was designated as a hedge of a net investment for financial reporting purposes. We received a cash benefit from the
unwind of $3 million in the fourth quarter of 2008. For the years ended December 31, 2008 and 2007, the effective portion of the changes in the fair value of $14 million and ($8)
million, respectively, was recorded as income (loss) in other comprehensive (loss) income, with ineffectiveness of $2 million and nil, respectively, recorded in interest expense in our
consolidated statements of operations.

F-51

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

On
July 12, 2007, we unwound a cross currency interest rate swap pursuant to which we had swapped $31 million of 11.0% fixed rate debt for
€25 million of 9.4% fixed rate debt. The swap was not designated as a hedge for financial reporting purposes. We recorded an unrealized foreign
currency loss on this swap of $2 million in our consolidated statements of operations for the year ended December 31, 2007.

A
significant portion of our debt is denominated in euros. We also finance certain of our non-U.S. subsidiaries with intercompany loans that are, in many cases, denominated
in currencies other than the entities' functional currency. We manage the net foreign currency exposure created by this debt through various means, including cross-currency swaps, the designation of
certain intercompany loans as permanent loans because they are not expected to be repaid in the foreseeable future ("permanent loans") and the designation of certain debt and swaps as net investment
hedges.

Foreign
currency transaction gains and losses on intercompany loans that are not designated as permanent loans are recorded in earnings. Foreign currency transaction gains and losses on
intercompany loans that are designated as permanent loans are recorded in other comprehensive income. From time to time, we review such designation of intercompany loans.

We
review our non-U.S. dollar denominated debt to determine the appropriate amounts designated as hedges. As of December 31, 2009, we have designated approximately
€325 million (approximately $466 million) of euro-denominated debt as a hedge of our net investment. For the years ended December 31, 2009, 2008 and
2007, the amount of (loss) gain recognized on the hedge of our net investment was $(5) million, $31 million and $(60) million, respectively, and was recorded in other comprehensive income
(loss). As of December 31, 2009, we had approximately €957 million (approximately $1,373 million) in net euro assets.

COMMODITY PRICES RISK

Our exposure to changing commodity prices is somewhat limited since the majority of our raw materials are acquired at posted or market
related prices, and sales prices for many of our finished products are at market related prices which are largely set on a monthly or quarterly basis in line with industry practice. Consequently, we
do not generally hedge our commodity exposures.

15. SECURITIZATION OF ACCOUNTS RECEIVABLE

On October 16, 2009, we entered into a Termination and Release Agreement, pursuant to which we terminated our Prior A/R Program and replaced it with a new U.S. A/R Program and a
new EU A/R Program. At that time, the receivables trust repaid the entire balance of commercial paper outstanding under our Prior A/R Program using proceeds received from the new programs. Under our
A/R Programs, we grant an undivided interest in certain of our trade receivables to bankruptcy-remote special purpose entities. This undivided interest serves as security for the issuance of
commercial paper. The A/R Programs provide for financing through a commercial paper conduit program (in both U.S. dollars and euros).

Upon
adoption of new accounting guidance in 2010, sales of accounts receivable under our new A/R Programs will no longer meet the criteria for derecognition. Accordingly, the amounts
outstanding

F-52

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SECURITIZATION OF ACCOUNTS RECEIVABLE (Continued)

under
our new A/R Programs will be accounted for as secured borrowings beginning in January 2010. See "Note 2. Summary of Significant Accounting Policies."

U.S. ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM

On October 16, 2009, Huntsman International entered into the U.S. A/R Program, a new accounts receivable securitization program
using Huntsman Receivable Financing II LLC, a bankruptcy-remote special purpose entity (the "U.S. SPE"). The maximum funding availability under the U.S. A/R Program is
$250 million, which is divided between two facilities: a $125 million three-year facility and a $125 million two-year facility. The amount of actual
availability under the U.S. A/R Program is subject to change based on the level of eligible receivables sold. Availability is further subject to changes in the credit ratings of Huntsman
International's customers, customer concentration levels, and certain characteristics of the accounts receivable being transferred. The yield on the three-year facility is based on the
LIBOR rate (as defined in the applicable agreement) plus a margin rate of 3.75% per annum and, in the case of the two-year facility, if funded by commercial paper, the CP Rate (as defined
in the applicable agreement) plus a margin rate of 3.50% per annum. In addition, the U.S. SPE is obligated to pay commitment fees to the lenders based on the amount of each lender's commitment.

The
U.S. A/R Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of
amounts owed under the U.S. A/R Program upon the occurrence of certain specified events, including, but not limited to, failure by the U.S. SPE to pay interest and other amounts due, defaults on
certain indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable, bankruptcy and insolvency events, and
failure of our Company to maintain a minimum liquidity level of $400 million (the "Liquidity Requirement"). We guarantee certain obligations of Huntsman International in its capacity as
contributor and servicer guarantor under the U.S. A/R Program.

Receivables
transferred under the U.S. A/R Program qualified as sales through December 31, 2009.

EUROPEAN ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM

Also on October 16, 2009, Huntsman International entered into the EU A/R Program, a second new accounts receivable
securitization program using Huntsman Receivables Financial LLC, a bankruptcy-remote special purpose entity (the "EU SPE"). The maximum funding availability under the EU A/R Program is
€225 million (approximately $323 million). The amount of actual availability under the EU A/R Program is subject to change based on the level of eligible receivables
sold. Availability is further subject to changes in the credit ratings of the originators' customers and country, customer concentration levels, and certain characteristics of the accounts receivable
being transferred. The yield is based on GBP LIBOR, USD LIBOR or EURIBOR (each as defined in the applicable agreement) plus a margin rate of 3.75% per annum if funded by commercial paper. In addition,
the EU SPE is obligated to pay a commitment fee to the lender based on the amount of the lender's commitment.

F-53

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SECURITIZATION OF ACCOUNTS RECEIVABLE (Continued)

The
EU A/R Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of amounts
owed under the EU A/R Program upon the occurrence of certain specified events, including, but not limited to, failure by the EU SPE to pay interest and other amounts due, defaults on certain
indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable and bankruptcy and insolvency events and a cross
acceleration provision tied to the Liquidity Requirement.

Receivables
transferred under the EU A/R Program qualified as sales through December 31, 2009.

As
of December 31, 2009, the A/R Programs had $254 million in U.S. dollar equivalents in commercial paper outstanding (consisting of $55 million and approximately
€139 million (approximately $199 million)).

As
of December 31, 2008, our prior Receivables Trust had $446 million in U.S. dollar equivalents in commercial paper outstanding (consisting of $175 million and
approximately €191 million (approximately $271 million)) and held $25 million of cash collateral that was used subsequent to year-end to redeem
outstanding commercial paper.

As
of December 31, 2009 and 2008, the fair value of our retained interest in receivables (including servicing assets) subject to the program was approximately $262 million
and $147 million, respectively. Our retained interest is reported in accounts and notes receivable in the consolidated balance sheets. The value of the retained interest is subject to credit
and interest rate risk. For the years ended December 31, 2009, 2008 and 2007, new sales of accounts receivable under the program totaled approximately $4,285 million,
$5,187 million and $5,466 million, respectively, and cash collections from receivables under the program that were reinvested totaled approximately $4,344 million,
$5,117 million and $5,580 million, respectively. Servicing fees received during the years ended December 31, 2009, 2008 and 2007 were approximately $5 million,
$7 million and $7 million, respectively.

We
incur losses on the A/R Programs for the discount on receivables under the program and fees and expenses associated with the program. For the years ended December 31, 2009,
2008 and 2007, losses on our Prior A/R Program and A/R Programs were $23 million, $27 million and $21 million, respectively.

F-54

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SECURITIZATION OF ACCOUNTS RECEIVABLE (Continued)

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

US Accounts Receivable Securitization Program

December 31, 2009Weighted average life (in days)


30 - 37Credit losses (annual rate)


Less than 1
%Discount rate (weighted average life)


Less than 1
%




European Accounts Receivable Securitization Program

December 31, 2009Weighted average life (in days)


48 - 54Credit losses (annual rate)


Less than 1
%Discount rate (weighted average life)


Less than 1
%




Accounts Receivable Securitization (2008)

December 31, 2008Weighted average life (in days)


38 - 46Credit losses (annual rate)


Less than 1
%Discount rate (weighted average life)


Less than 1
%


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, 2009 and 2008 were $17 million and $21 million, respectively.

16. FAIR VALUE

The fair values of our financial instruments were as follows (dollars in millions):

Huntsman Corporation

December 31,2009

2008Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair ValueNon-qualifed employee benefit plan investments

$
10

$
10

$
10

$
10Long-term debt (including current portion)


4,212


4,390


3,882


2,537


Huntsman International

December 31,2009

2008Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair ValueNon-qualifed employee benefit plan investments

$
10

$
10

$
10

$
10Long-term debt (including current portion)


3,976


3,951


3,647


2,302


The
carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or
short-term

F-55

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. FAIR VALUE (Continued)

maturity
of these financial instruments. The fair value of non-qualified employee benefit plan investments is estimated using prevailing market prices. The estimated fair values of our
long-term debt other than the Convertible Notes are based on quoted market prices for the identical liability when traded as an asset in an active market. The estimated fair value of our
Convertible Notes is based on the present value of estimated future cash flows, calculated using
management's best estimates of key assumptions including relevant interest rates, expected share volatility, dividend yields and the probabilities associated with certain features of the Convertible
Notes.

The
fair value estimates presented herein are based on pertinent information available to management as of December 31, 2009 and 2008. 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 December 31, 2009,
and current estimates of fair value may differ significantly from the amounts presented herein.

The
following assets are measured at fair value on a recurring basis (dollars in millions):

Fair Value Amounts UsingDescription

December 31, 2009

Quoted prices
in active
markets for
identical
assets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)Assets:Available-for-sale securities(1)

$
10

$
10

$


$
Retained interest in securitized receivables(2)


262








262Derivatives(3)


1





1


Total assets

$
273

$
10

$
1

$
262


(1)Using
the market approach, the fair value of these securities represents the quoted market price multiplied by the quantity held.(2)The
income approach is used to value these assets. Fair value is 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.(3)We
use the income approach to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows
calculated using relevant interest rates, exchange rates and yield curves at stated intervals.


During
the year ended December 31, 2009, no changes were made to the valuation techniques used to measure fair value.

F-56

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. FAIR VALUE (Continued)

The
following table shows a reconciliation of beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
(dollars in millions):

Fair Value Measurements Using Level 3

Year ended
December 31, 2009Balance at beginning of period

$
147Total net losses (realized/unrealized) included in earnings


(13
)Purchases, issuances and settlements


128Balance at end of period

$
262The amount of total gains for the period included in earnings attributable to the changes in unrealized gains or (losses) relating to assets still held
at December 31, 2009

$
2


Gains
and (losses) (realized and unrealized) included in earnings (or changes in net assets) for the year ended December 31, 2009 are reported in loss on accounts receivable
securitization program and other income (expense) as follows (dollars in millions):

Loss on accounts receivable
securitization program

Other incomeTotal net (losses) gains included in earnings (or changes in net assets)

$
(20
)
$
7Changes in unrealized (losses) gains relating to assets still held at December 31, 2009

$
(5
)
$
7


17. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT AND OTHER POSTRETIREMENT BENEFIT PLANS

Our employees participate in a trusteed, non-contributory defined benefit pension plan (the "Plan") that covers
substantially all of our full-time U.S. employees. Effective July 1, 2004, the 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. For participating employees, benefits accrued under the prior
formula were converted to opening cash balance accounts. The new
cash balance benefit formula provides 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.

We
sponsor defined benefit plans in a number of countries outside of the U.S. The availability of these plans, and their specific design provisions, are consistent with local competitive
practices and regulations.

F-57

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

We
also sponsor two unfunded postretirement benefit plans other than pensions, which provide medical and life insurance benefits.

Our
postretirement benefit plans provide a fully insured Medicare Part D plan including prescription drug benefits affected by the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the "Act"). We cannot determine whether the medical benefits provided by our postretirement benefit plans are actuarially equivalent to those provided by the Act. We do not
collect a subsidy and our net periodic postretirement benefits cost, and related benefit obligation, do not reflect an amount associated with the subsidy.

In
September 2006, the FASB issued SFAS No. 158,Employers' Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment
of FASB Statements No. 87, 88, 106, and 132(R)(currently included in ASC 715-20-65-1). SFAS No. 158 requires us to recognize
the overfunded or underfunded status of our defined benefit postretirement plan(s) (other than multiemployer plans) as an asset or liability in our statement of financial position and to recognize
changes in the funded status in the year in which the changes occur through comprehensive income. We adopted certain provisions of SFAS No. 158 on January 1, 2008. Beginning with our
fiscal year ended December 31, 2008, SFAS No. 158 requires that the assumptions used to measure our benefit obligations and annual expenses be determined as of the balance sheet date and
all plan assets be reported as of that date. We used the second approach as described in paragraph 19 of SFAS No. 158 to transition our measurement date from November 30 to
December 31. Under this approach, we recorded a charge to beginning retained earnings, net of tax, of $3 million, as of January 1, 2008.

F-58

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

The following table sets forth the funded status of the plans for us and Huntsman International and the amounts recognized in the consolidated balance sheets at December 31, 2009
and 2008 (dollars in millions):

Defined Benefit Plans

Other Postretirement Benefit Plans2009

2008

2009

2008U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
PlansChange in benefit obligation:Benefit obligation at beginning of year

$
654

$
2,009

$
660

$
2,257

$
146

$
3

$
144

$
5Elimination of early measurement date








1


8











Service cost


20


43


24


50


3


3


3


Interest cost


41


102


40


113


8





8


Participant contributions





13





12


4





3


Plan amendments





1





1


(3
)







Foreign currency exchange rate changes





86





(257
)




1





(1
)Settlements/transfers





(5
)




(35
)










Other











(2
)










Curtailments





(12
)
















Special termination benefits





2





1











Actuarial loss (gain)


35


1


(16
)

(47
)

(14
)

2


5


Benefits paid


(45
)

(88
)

(55
)

(92
)

(17
)

(1
)

(17
)

(1
)Benefit obligation at end of year

$
705

$
2,152

$
654

$
2,009

$
127

$
8

$
146

$
3Change in plan assets:Fair value of plan assets at beginning of year

$
348

$
1,592

$
519

$
2,230

$


$


$


$
Elimination of early measurement date








7


42











Actual return on plan assets


83


230


(159
)

(415
)










Foreign currency exchange rate changes





75





(210
)










Participant contributions





14





12


4





3


Other





(1
)




(1
)










Administrative expenses











(1
)










Company contributions


75


63


36


62


13


1


14


1Settlements/transfers





(5
)




(35
)










Benefits paid


(45
)

(88
)

(55
)

(92
)

(17
)

(1
)

(17
)

(1
)Fair value of plan assets at end of year

$
461

$
1,880

$
348

$
1,592

$


$


$


$
Funded status:Fair value of plan assets

$
461

$
1,880

$
348

$
1,592

$


$


$


$
Benefit obligation


705


2,152


654


2,009


127


8


146


3Accrued benefit cost

$
(244
)
$
(272
)
$
(306
)
$
(417
)
$
(127
)
$
(8
)
$
(146
)
$
(3
)Amounts recognized in balance sheet:Noncurrent asset

$


$
31

$


$
2

$


$


$


$
Current liability


(6
)

(7
)

(5
)

(7
)

(12
)

(1
)

(13
)

Noncurrent liability


(238
)

(296
)

(301
)

(412
)

(115
)

(7
)

(133
)

(3
)$
(244
)
$
(272
)
$
(306
)
$
(417
)
$
(127
)
$
(8
)
$
(146
)
$
(3
)


F-59

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

Huntsman Corporation

Defined Benefit Plans

Other Postretirement Benefit Plans2009

2008

2009

2008U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
PlansAmounts recognized in accumulated other comprehensive loss:Net actuarial loss

$
276

$
429

$
292

$
592

$
22

$
1

$
37

$
1Prior service cost


(31
)




(36
)

(2
)

(16
)




(15
)

Transition obligation


1





1


1











Total

$
246

$
429

$
257

$
591

$
6

$
1

$
22

$
1


Huntsman International

Defined Benefit Plans

Other Postretirement Benefit Plans2009

2008

2009

2008U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
PlansAmounts recognized in accumulated other comprehensive loss:Net actuarial loss

$
279

$
513

$
295

$
682

$
22

$
1

$
37

$
1Prior service cost


(31
)




(36
)

(2
)

(16
)




(15
)

Transition obligation


1





1


1











Total

$
249

$
513

$
260

$
681

$
6

$
1

$
22

$
1


The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during the next
fiscal year are as follows (dollars in millions):

Huntsman Corporation

Defined Benefit Plans

Other Postretirement
Benefit PlansU.S. Plans

Non-U.S.
Plans

U.S. Plans

Non-U.S.
PlansActuarial loss

$
11

$
15

$
1

$
Prior service cost


(5
)

(1
)

(3
)

Total

$
6

$
14

$
(2
)
$



F-60

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

Huntsman International

Defined Benefit Plans

Other Postretirement
Benefit PlansU.S. Plans

Non-U.S. Plans

U.S. Plans

Non-U.S. PlansActuarial loss

$
11

$
20

$
1

$
Prior service cost


(4
)

(1
)

(3
)

Total

$
7

$
19

$
(2
)
$



Components
of net periodic benefit costs for the years ended December 31, 2009, 2008 and 2007 were as follows (dollars in millions):

Huntsman Corporation

Defined Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2007

2009

2008

2007Service cost

$
20

$
24

$
30

$
43

$
50

$
50Interest cost


41


40


40


102


113


113Expected return on plan assets


(41
)

(42
)

(40
)

(104
)

(148
)

(158
)Amortization of transition obligation





1


1


1





1Amortization of prior service cost


(5
)

(5
)

(6
)

(1
)

(1
)

(1
)Amortization of actuarial loss (gain)


7


5


7


27


(1
)

7Curtailment gain








(14
)







Settlement loss (gain)


2











1


(5
)Special termination benefits











2


1


Net periodic benefit cost


24


23


18


70


15


7Less discontinued operations








11








11Net periodic benefit cost from continuing operations

$
24

$
23

$
29

$
70

$
15

$
18


F-61

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)



Other Postretirement Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2007

2009

2008

2007Service cost

$
3

$
3

$
4

$
3

$


$
Interest cost


8


8


9








Amortization of prior service cost


(4
)

(2
)

(2
)







Amortization of actuarial loss


1


2


2








Curtailment gain








(4
)







Net periodic benefit cost


8


11


9


3





Less discontinued operations








1








Net periodic benefit cost from continuing operations

$
8

$
11

$
10

$
3

$


$



Huntsman International

Defined Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2007

2009

2008

2007Service cost

$
20

$
24

$
30

$
43

$
50

$
50Interest cost


41


40


40


102


113


113Expected return on plan assets


(41
)

(42
)

(40
)

(104
)

(148
)

(158
)Amortization of transition obligation





1


1


1





1Amortization of prior service cost


(5
)

(5
)

(6
)

(1
)

(1
)

(1
)Amortization of actuarial loss


7


5


7


33


5


14Curtailment gain








(14
)







Settlement loss


2











1


5Special termination benefits











2


1


Net periodic benefit cost


24


23


18


76


21


24Less discontinued operations








11








Net periodic benefit cost from continuing operations

$
24

$
23

$
29

$
76

$
21

$
24


F-62

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)



Other Postretirement Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2007

2009

2008

2007Service cost

$
3

$
3

$
4

$
3

$


$
Interest cost


8


8


9








Amortization of prior service cost


(4
)

(2
)

(2
)







Amortization of actuarial loss


1


2


2








Curtailment gain








(4
)







Net periodic benefit cost


8


11


9


3





Less discontinued operations








1








Net periodic benefit cost from continuing operations

$
8

$
11

$
10

$
3

$


$



The
amounts recognized in net periodic benefit cost and other comprehensive income (loss) as of December 31, 2009 and 2008 were as follows (dollars in millions):

Huntsman Corporation

Defined Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2009

2008Current year actuarial (gain) loss

$
(7
)
$
185

$
(124
)
$
517Amortization of actuarial (gain) loss


(7
)

(5
)

(27
)

1Current year prior service cost








1


1Amortization of prior service cost


5


5


1


1Amortization of transition asset





(1
)

(1
)

(1
)Curtailment effects








(12
)

Settlements


(2
)







(1
)Total (income) loss recognized in other comprehensive income (loss)


(11
)

184


(162
)

518Net periodic benefit cost


24


23


70


15Total loss (income) recognized in net periodic benefit cost and other comprehensive income (loss)

$
13

$
207

$
(92
)
$
533


F-63

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

Other Postretirement Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2009

2008Current year actuarial (gain) loss

$
(14
)
$
7

$


$
Amortization of actuarial (gain)


(1
)

(2
)




Current year prior service cost


(5
)







Amortization of prior service cost


4


2





Total (income) loss recognized in other comprehensive income (loss)


(16
)

7





Net periodic benefit cost


8


11


3


Total (income) loss recognized in net periodic benefit cost and other comprehensive income (loss)

$
(8
)
$
18

$
3

$



Huntsman International

Defined Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2009

2008Current year actuarial (gain) loss

$
(7
)
$
185

$
(124
)
$
517Amortization of actuarial (gain) loss


(7
)

(5
)

(33
)

(5
)Current year prior service cost








1


1Amortization of prior service cost


5


5


1


1Amortization of transition asset





(1
)

(1
)

(1
)Curtailment effects








(12
)

Settlements


(2
)







(1
)Total (income) loss recognized in other comprehensive income (loss)


(11
)

184


(168
)

512Net periodic benefit cost


24


23


76


21Total loss (income) recognized in net periodic benefit cost and other comprehensive income (loss)

$
13

$
207

$
(92
)
$
533


F-64

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)



Other Postretirement Benefit PlansU.S. plans

Non-U.S. plans2009

2008

2009

2008Current year actuarial (gain) loss

$
(14
)
$
7

$


$
Amortization of actuarial (gain)


(1
)

(2
)




Current year prior service cost


(5
)







Amortization of prior service cost


4


2





Total (income) loss recognized in other comprehensive income (loss)


(16
)

7





Net periodic benefit cost


8


11


3


Total (income) loss recognized in net periodic benefit cost and other comprehensive loss

$
(8
)
$
18

$
3

$



The
following weighted-average assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost for the year:

Defined Benefit PlansU.S. plans

Non U.S. plans2009

2008

2007

2009

2008

2007Projected benefit obligation:Discount rate


5.90
%

6.47
%

6.21
%

4.94
%

5.04
%

5.09
%Rate of compensation increase


3.88
%

3.77
%

3.89
%

3.23
%

3.21
%

3.24
%Net periodic pension cost:Discount rate


6.47
%

6.21
%

5.67
%

5.04
%

5.09
%

4.39
%Rate of compensation increase


3.77
%

3.89
%

3.89
%

3.21
%

3.24
%

3.22
%Expected return on plan assets


8.25
%

8.25
%

8.25
%

6.62
%

6.89
%

6.75
%




Other Postretirement Benefit PlansU.S. plans

Non U.S. plans2009

2008

2007

2009

2008

2007Projected benefit obligation:Discount rate


5.59
%

6.39
%

6.05
%

7.47
%

7.60
%

5.25
%Net periodic pension cost:Discount rate


6.39
%

6.05
%

5.63
%

7.60
%

5.25
%

5.00
%


In
both 2009 and 2008, the health care trend rate used to measure the expected increase in the cost of benefits was assumed to be 8.5% decreasing to 5% after 2016. Assumed health care
cost trend rates can have a significant effect on the amounts reported for the postretirement benefit plans. A

F-65

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

one-percent-point
change in assumed health care cost trend rates would have the following effects (dollars in millions):

Asset category

Increase

DecreaseEffect on total of service and interest cost

$


$
Effect on postretirement benefit obligation


2


(2
)


The
projected benefit obligation and fair value of plan assets for the defined benefit plans with projected benefit obligations in excess of plan assets as of December 31, 2009
and 2008 were as follows (dollars in millions):

U.S. plans

Non U.S. plans2009

2008

2009

2008Projected benefit obligation in excess of plan assetsProjected benefit obligation

$
705

$
654

$
1,669

$
2,005Fair value of plan assets


461


348


1,366


1,587


The
projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit plans with an accumulated benefit obligation in excess of plan
assets as of December 31, 2009 and 2008 were as follows (dollars in millions):

U.S. plans

Non U.S. plans2009

2008

2009

2008Accumulated benefit obligation in excess of plan assetsProjected benefit obligation

$
705

$
654

$
685

$
1,337Accumulated benefit obligation


674


628


599


1,233Fair value of plan assets


461


348


460


957


Expected
future contributions and benefit payments are as follows (dollars in millions):

U.S. Plans

Non-U.S. PlansDefined
Benefit
Plans

Other
Postretirement
Benefit
Plans

Defined
Benefit
Plans

Other
Postretirement
Benefit
Plans2010 expected employer contributions:To plan trusts

$
34

$
11

$
78

$
1Expected benefit payments:2010


41


11


93


12011


42


12


93


12012


45


11


100


12013


46


11


97


12014


49


11


100


12015 - 2019


276


49


533


3


F-66

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

Our
investment 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. Additionally, our investment strategy is to achieve returns on plan assets, subject to a
prudent level of portfolio risk. Plan assets are invested in a broad range of investments. These investments are diversified in terms of domestic and international equities, both growth and value
funds, including small, mid and large capitalization equities; short-term and long-term debt securities; real estate; and cash and cash equivalents. The investments are further
diversified within each asset category. The portfolio diversification provides protection against a single investment or asset category having a disproportionate impact on the aggregate performance of
the plan assets.

Our
pension plan assets are managed by outside investment managers. The investment managers value our plan assets using quoted market prices, other observable inputs or unobservable
inputs. We have established target allocations for each asset category. Our pension plan assets are periodically rebalanced based upon our target allocations.

The
fair value of plan assets for the pension plans was $2.3 billion at December 31, 2009. The following plan assets are measured at fair value on a recurring basis
(dollars in millions):

Fair Value Amounts UsingCategory

December 31,
2009

Quoted prices in active
markets for identical
assets (Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable inputs
(Level 3)U.S. pension plans:Large cap equities

$
126

$
75

$
51

$
Small/mid cap equities


63


21


42


International equities


68


42


26


Fixed income


144


93


51


Real estate/other


52


34





18Cash and cash equivalents


8


8





Total U.S. pension plan assets

$
461

$
273

$
170

$
18Non-U.S. pension plans:Equities

$
804

$
410

$
394

$
Fixed income


594


20


574


Real estate/other


458


200


258


Cash and cash equivalents


24


24





Total Non-U.S. pension plan assets

$
1,880

$
654

$
1,226

$



F-67

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

The
following table reconciles the beginning and ending balances of plan assets measured at fair value using unobservable inputs (Level 3) (dollars in millions):

Fair Value Measurements of Plan Assets Using Level 3

Year ended
December 31, 2009Balance at beginning of period

$
27Return on pension plan assets


(9
)Purchases, sales and settlements


Transfers in and/or out of Level 3


Balance at end of period

$
18


Based
upon historical returns, the expectations of our investment committee and outside advisors, the expected long term rate of return on the pension assets is estimated to be between
6.62% and 8.25%. The asset allocation for our pension plans at December 31, 2009 and 2008 and the target allocation for 2010, by asset category are as follows:

Asset category

Target Allocation
2010

Allocation at
December 31, 2009

Allocation at
December 31, 2008U.S. pension plans:Large Cap Equities


27
%

27
%

27
%Small/Mid Cap Equities


13
%

14
%

15
%International Equities


14
%

15
%

14
%Fixed Income


32
%

31
%

29
%Real Estate/Other


14
%

11
%

15
%Cash and cash equivalents





2
%

Total U.S. pension plans


100
%

100
%

100
%Non-U.S. pension plans:Equities


43
%

43
%

42
%Fixed Income


44
%

32
%

44
%Real Estate/Other


12
%

24
%

12
%Cash and cash equivalents


1
%

1
%

2
%Total non-U.S. pension plans


100
%

100
%

100
%


Equity
securities in our pension plans did not include any equity securities of our Company or our affiliates at the end of 2009.

DEFINED CONTRIBUTION PLANS

We have a money purchase pension plan covering substantially all of our domestic employees who were hired prior to January 1,
2004. Employer contributions are made based on a percentage of employees' earnings (ranging up to 8%).

We
also have a salary deferral plan covering substantially all U.S. employees. Plan participants may elect to make voluntary contributions to this plan up to a specified amount of their
compensation. We

F-68

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

contribute
an amount equal to one-half of the participant's contribution, not to exceed 2% of the participant's compensation.

Along
with the introduction of the cash balance formula within our defined benefit pension plan, the money purchase pension plan was closed to new hires. At the same time, the company
match in the salary deferral plan was increased, for new hires, to a 100% match, not to exceed 4% of the participant's compensation, once the participant has achieved six years of service with the
Company.

Our
total combined expense for the above defined contribution plans for the years ended December 31, 2009, 2008 and 2007 was $12 million, $12 million and
$16 million, respectively of which $4 million in 2007 related to discontinued operations.

SUPPLEMENTAL SALARY DEFERRAL PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Huntsman Supplemental Savings Plan ("SSP") is a non-qualified plan covering key management employees and allows
participants to defer amounts that would otherwise be paid as compensation. The participant can defer up to 75% of their salary and 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. The SSP was
amended and restated effective as of January 1, 2005 to allow eligible executive employees to comply with Section 409A of the Internal Revenue Code of 1986 ("Section 409A").

The
Huntsman Supplemental Executive Retirement Plan (the "SERP") is an unfunded non-qualified pension plan established to provide certain executive employees with benefits that could not
be provided, due to legal limitations, under the Huntsman Defined Benefit Pension Plan, a qualified defined benefit pension plan, and the Huntsman Money Purchase Pension Plan, a qualified money
purchase pension plan.

Assets
of these plans are included in other noncurrent assets and as of December 31, 2009 and 2008 were $10 million each. During each of the years ended December 31,
2009, 2008 and 2007, we expensed a total of nil, $1 million and $1 million, respectively, as contributions to the SSP and the SERP.

STOCK-BASED INCENTIVE PLAN

In connection with the initial public offering of common and preferred stock on February 16, 2005, we 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, nonvested stock,
phantom stock, performance awards and other stock-based awards ("Awards") to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive
stock options may be granted solely to employees. As of December 31, 2009 we are authorized to grant up to of 32.6 million shares under the Stock Incentive Plan. See "Note 22.
Stock-Based Compensation Plans."

F-69

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. EMPLOYEE BENEFIT PLANS (Continued)

INTERNATIONAL PLANS

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.

18. INCOME TAXES

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

Huntsman Corporation

Year ended
December 31,2009

2008

2007Income tax (expense) benefit:U.S.Current

$
(115
)
$
(22
)
$
1Deferred


(159
)

(190
)

(16
)Non-U.S.Current


(18
)

(36
)

(53
)Deferred


(78
)

58


80Total

$
(370
)
$
(190
)
$
12


Huntsman International

Year ended December 31,2009

2008

2007Income tax (expense) benefit:U.S.Current

$
6

$
(6
)
$
1Deferred


14


(10
)

(63
)Non-U.S.Current


(17
)

(36
)

(53
)Deferred


(88
)

54


74Total

$
(85
)
$
2

$
(41
)


F-70

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate to our (provision) benefit for income taxes (dollars in millions):

Huntsman Corporation

Year ended
December 31,2009

2008

2007Income from continuing operations before income taxes

$
485

$
669

$
31Expected tax expense at U.S. statutory rate of 35%


(170
)

(234
)

(11
)Change resulting from:State tax (expense) benefit net of federal benefit


(7
)

(7
)

3Effects of non-U.S. operations and tax rate differentials


(42
)

5


(15
)Australia styrenics closure


73





Income (expenses) associated with the Terminated Merger





73


(73
)U.K. exchange gains and losses





24


1Tax authority dispute resolutions


6


68


3Tax benefit of losses with valuation allowances as a result of other comprehensive income


38





Change in valuation allowance


(251
)

(117
)

110Other, net


(17
)

(2
)

(6
)Total income tax (expense) benefit

$
(370
)
$
(190
)
$
12


Huntsman International

Year ended
December 31,2009

2008

2007(Loss) income from continuing operations before income taxes

$
(324
)
$
(94
)
$
255Expected tax benefit (expense) at U.S. statutory rate of 35%


113


33


(89
)Change resulting from:State tax benefit (expense) net of federal benefit


1


(7
)

3Effects of non-U.S. operations and tax rate differential


(42
)

2


(18
)Australia styrenics closure


73





U.K. exchange gains and losses





24


1Tax authority dispute resolutions


6


68


3Tax benefit of losses with valuation allowances as a result of other comprehensive income


39





Change in valuation allowance


(258
)

(115
)

63Other, net


(17
)

(3
)

(4
)Total income tax (expense) benefit

$
(85
)
$
2

$
(41
)


F-71

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

On
September 8, 2009, we announced the closure of our Australia styrenics operations. U.S. tax law, under our relevant facts, provides for a deduction on investments that are
"worthless" for U.S. tax purposes. Therefore, during 2009, we recorded a tax benefit of $73 million related to the closure of and the cumulative U.S. investments in our Australia Styrenics
business.

Included
in the non-U.S. deferred tax expense is a $38 million and $39 million income tax benefit for us and Huntsman International, respectively, for losses from
continuing operations for certain jurisdictions with valuation allowances to the extent income was recorded in other comprehensive income. An offsetting income tax expense was recognized in
accumulated other comprehensive income.

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

Huntsman Corporation

Year ended
December 31,2009

2008

2007U.S.

$
901

$
805

$
33Non-U.S.


(416
)

(136
)

(2
)Total

$
485

$
669

$
31


Huntsman International

Year ended
December 31,2009

2008

2007U.S.

$
92

$
42

$
257Non-U.S.


(416
)

(136
)

(2
)Total

$
(324
)
$
(94
)
$
255


F-72

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

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

Huntsman Corporation

December 31,2009

2008Deferred income tax assets:Net operating loss carryforwards

$
779

$
739Pension and other employee compensation


220


278Property, plant and equipment


107


110Intangible assets


65


81Foreign tax credits


56


67Other, net


107


106Total

$
1,334

$
1,381Deferred income tax liabilities:Property, plant and equipment

$
(484
)
$
(474
)Pension and other employee compensation


(8
)

(1
)Other, net


(117
)

(85
)Total

$
(609
)
$
(560
)Net deferred tax asset before valuation allowance

$
725

$
821Valuation allowance


(842
)

(669
)Net deferred tax (liability) asset

$
(117
)
$
152Current deferred tax asset

$
36

$
21Current deferred tax liability


(2
)

(36
)Non-current deferred tax asset


138


284Non-current deferred tax liability


(289
)

(117
)Net deferred tax (liability) asset

$
(117
)
$
152


F-73

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

Huntsman International

December 31,2009

2008Deferred income tax assets:Net operating loss carryforwards

$
937

$
819Pension and other employee compensation


218


278Property, plant and equipment


107


110Intangible assets


64


80Foreign tax credits


55


71Other, net


108


103Total

$
1,489

$
1,461Deferred income tax liabilities:Property, plant and equipment

$
(467
)
$
(455
)Pension and other employee compensation


(8
)

(1
)Other, net


(43
)

(15
)Total

$
(518
)
$
(471
)Net deferred tax asset before valuation allowance

$
971

$
990Valuation allowance


(861
)

(681
)Net deferred tax asset

$
110

$
309Current deferred tax asset

$
33

$
21Current deferred tax liability


(2
)

(35
)Non-current deferred tax asset


158


392Non-current deferred tax liability


(79
)

(69
)Net deferred tax asset

$
110

$
309


We
have net operating loss carryforwards ("NOLs") of $2,674 million in various non-U.S. jurisdictions. While the majority of the non-U.S. NOLs have no
expiration date, $925 million have a limited life (of which $866 million are subject to a valuation allowance) and $155 million are scheduled to expire in 2010 (of which
$151 million are subject to a valuation allowance). We had $98 million of NOLs expire unused in 2009 that had been previously subject to a full valuation allowance. As of
December 31, 2008, we fully utilized all of our U.S. federal regular tax NOLs.

Included
in the $2,674 million of non-U.S. NOLs is $1,088 million attributable to our Luxembourg entities. As of December 31, 2009, there is a valuation
allowance against these net tax-effected NOLs of $311 million. Due to the uncertainty surrounding the realization of the benefits of these losses that may result from future
dissolution or restructuring of the Luxembourg entities, including potential ruling requests from Luxembourg authorities, we have reduced the related deferred tax asset with a valuation allowance.

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. During 2009, we established valuation allowances of

F-74

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

$149 million
on certain net deferred tax assets, principally in the U.K., primarily as a result of a cumulative history of operating losses. During the fourth quarter of 2008, we established
valuation allowances of $35 million on certain net deferred tax assets, principally in Switzerland. During 2007, we released valuation allowances of $123 million on certain net deferred
tax assets, primarily in the United States.

Uncertainties
regarding expected future income in certain jurisdictions could affect the realization of deferred tax assets in those jurisdictions.

The
following is a summary of changes in the valuation allowance (dollars in millions):

Huntsman Corporation

2009

2008

2007Valuation allowance as of January 1

$
669

$
496

$
572Valuation allowance as of December 31


842


669


496Net change


(173
)

(173
)

76Foreign currency movements


14


(19
)

17(Decrease) increase to deferred tax assets with an offsetting (decrease) increase to valuation allowances


(92
)

76


27Reversal of valuation allowances on deferred tax assets related to prior acquisitions, with a corresponding credit to equity








(8
)Reversal of valuation allowances on deferred tax assets related to prior acquisitions, with a corresponding reduction to goodwill and intangible
assets





(1
)

(2
)Change in valuation allowance per rate reconciliation

$
(251
)
$
(117
)
$
110Components of change in valuation allowance affecting operating tax expense:Pre-tax income and pre-tax losses in jurisdictions with valuation allowances resulting in no tax expense or benefit

$
(106
)
$
(82
)
$
(10
)Releases of valuation allowances in various jurisdictions


4





123Establishments of valuation allowances in various jurisdictions


(149
)

(35
)

(3
)Change in valuation allowance per rate reconciliation

$
(251
)
$
(117
)
$
110


F-75

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

Huntsman International

2009

2008

2007Valuation allowance as of January 1

$
681

$
510

$
536Valuation allowance as of December 31


861


681


510Net change


(180
)

(171
)

26Foreign currency movements


14


(19
)

17(Decrease) increase to deferred tax assets with an offsetting (decrease) increase to valuation allowances


(92
)

76


30Reversal of valuation allowances on deferred tax assets related to prior acquisitions, with a corresponding credit to equity








(8
)Reversal of valuation allowances on deferred tax assets related to prior acquisitions, with a corresponding reduction to goodwill and intangible
assets





(1
)

(2
)Change in valuation allowance per rate reconciliation

$
(258
)
$
(115
)
$
63Components of change in valuation allowance affecting operating tax expense:Pre-tax income and pre-tax losses in jurisdictions with valuation allowances, resulting in no tax expense or benefit

$
(103
)
$
(80
)
$
(8
)Releases of valuation allowances in various jurisdictions


4





74Establishments of valuation allowances in various jurisdictions


(159
)

(35
)

(3
)Change in valuation allowance per rate reconciliation

$
(258
)
$
(115
)
$
63


The
following is a reconciliation of our unrecognized tax benefits (dollars in millions):

2009

2008Unrecognized tax benefits as of January 1

$
64

$
141Gross increases and decreasestax positions taken during a prior period


(5
)

(77
)Gross increases and decreasestax positions taken during the current period


23


11Decreases related to settlement of amounts due to tax authorities





(2
)Reductions resulting from the lapse of statutes of limitation


(10
)

(4
)Foreign currency movements


2


(5
)Unrecognized tax benefits as of December 31

$
74

$
64


As
of December 31, 2009 and 2008, the amount of unrecognized tax benefits which, if recognized, would affect the effective tax rate was $59 million and $44 million,
respectively.

In
accordance with our accounting policy, we continue to recognize interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended
December 31, 2009

F-76

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. INCOME TAXES (Continued)

and
2008, we recognized approximately $3 million of tax expense and $7 million of tax benefit, respectively, in income tax expense related to interest and $1 million each of tax
expense related to penalties. We had approximately $7 million and $5 million accrued for the payment of interest and approximately $2 million and $1 million accrued for the
payment of penalties as of December 31, 2009 and 2008, respectively.

We
conduct business globally and, as a result, we file income tax returns in the U.S. federal, various U.S. state and various non-U.S. jurisdictions. The following table
summarizes the tax years that remain subject to examination by major tax jurisdictions:

Tax Jurisdiction

Open Tax YearsBelgium

2007 and laterChina

2002 and laterGermany

2005 and laterIndia

2003 and laterItaly

2005 and laterSwitzerland

2005 and laterThe Netherlands

2005 and laterUnited Kingdom

2007 and laterUnited States federal

2007 and later


Certain
of our U.S. and non-U.S. income tax returns are currently under various stages of audit by applicable tax authorities and the amounts ultimately agreed upon in
resolution of the issues raised may differ materially from the amounts accrued.

We
estimate that it is reasonably possible that certain of our unrecognized tax benefits (both U.S. and non-U.S.) could change within 12 months of the reporting date
with a resulting decrease in the unrecognized tax benefits within a reasonably possible range of $12 million to $32 million. For the 12-month period from the reporting date,
we would expect that a substantial portion of the decrease in our unrecognized tax benefits would result in a corresponding benefit to our income tax expense.

During
2009, we concluded and settled tax examinations in the U.S. (both Federal and various states) and various non-U.S. jurisdictions including, but not limited to, Belgium
and Italy. During 2008, we concluded and settled tax examinations in the U.S. (both Federal and various states) and various non-U.S. jurisdictions including, but not limited to, Germany,
Italy and the U.K.

For
non-U.S. entities that were 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 approximately $275 million at December 31, 2009. It is not practicable to determine the unrecognized deferred tax liability on those earnings.

19. COMMITMENTS AND CONTINGENCIES

PURCHASE COMMITMENTS

We have various purchase commitments extending through 2023 for materials, supplies and services entered into in the ordinary course of
business. Included in the purchase commitments table

F-77

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

below
are contracts which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed for 2010. Certain contracts allow for changes in minimum
required purchase volumes in the event of a temporary or permanent shutdown of a facility. To the extent the contract requires a minimum notice period, such notice period has been included in the
table below. The contractual purchase price for substantially all of these contracts is variable based upon market prices, subject to annual negotiations. We have estimated our contractual obligations
by using the terms of our 2009 pricing for each contract. We also have a limited number of contracts which require a minimum payment even if no volume is purchased. We believe that all of our purchase
obligations will be utilized in our normal operations. During the years ended December 31, 2009, 2008 and 2007, we made minimum payments under such take or pay contracts without taking the
product of $6 million, nil and nil, respectively.

Total
purchase commitments as of December 31, 2009 are as follows (dollars in millions):

Year ending December 31:2010

$
5822011


2402012


922013


722014


66Thereafter


74$
1,126


OPERATING LEASES

We lease certain railcars, aircraft, equipment and facilities under long-term lease agreements. The total net expense
recorded under operating lease agreements in the accompanying consolidated statements of operations is approximately $52 million, $48 million and $46 million for the years ended
December 31, 2009, 2008 and 2007, respectively, of which $9 million in 2007 related to discontinued operations.

Future
minimum lease payments under operating leases as of December 31, 2009 are as follows (dollars in millions):

Year ending December 31:2010

$
462011


412012


362013


332014


30Thereafter


63$
249


F-78

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

LEGAL MATTERS

Discoloration Claims

Certain claims have been filed against us relating to discoloration of unplasticized polyvinyl chloride products allegedly caused by
our titanium dioxide. Substantially all of the titanium dioxide that is the subject of these claims was manufactured prior to our acquisition of the titanium dioxide business from ICI in 1999. Net of
amounts we have received from insurers and pursuant to contracts of indemnity, we have paid an aggregate of approximately $16 million in costs and settlement amounts for Discoloration Claims
through December 31, 2009.

During
the year ended December 31, 2009, we settled one Discoloration Claim for which we were fully indemnified. During the year ended December 31, 2008, we paid an
insignificant amount in partial settlement of a claim. The one remaining Discoloration Claim unresolved as of December 31, 2009 asserted aggregate damages of approximately
€1 million (approximately $1 million). An appropriate liability has been accrued for this claim. Based on our understanding of the merits of this claim and our rights
under contracts of indemnity and insurance, we do not believe that the net impact on our financial condition, results of operations or liquidity will be material.

In
addition, while we can give no assurance that additional Discoloration Claims will not be made in the future, we believe such claims are unlikely. If additional Discoloration Claims
were to be made, we have rights under contract to indemnity, including from ICI, and therefore do not believe such claims would have a material impact on our financial condition, results of operations
or liquidity. Based on this conclusion and our inability to reasonably estimate our expected costs with respect to these unasserted claims, we have made no accruals in our financial statements as of
December 31, 2009 for costs associated with unasserted Discoloration Claims.

Asbestos Litigation

We have been named as a "premises defendant" in a number of asbestos exposure cases, typically claims by non-employees of
exposure to asbestos while at a facility. In the past, these cases typically have involved multiple plaintiffs bringing actions against multiple defendants, and the complaints have not indicated which
plaintiffs were making claims against which defendants, where or how the alleged injuries occurred or what injuries each plaintiff claimed. These facts, which would be central to any estimate of
probable loss, generally have been learned only through discovery.

Where
a claimant's alleged exposure occurred prior to our ownership of the relevant "premises," the prior owners generally have contractually agreed to retain liability for, and to
indemnify us 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, we tender it to the prior owner. None of the complaints in these cases state the amount of damages being sought. The prior owner accepts
responsibility for the conduct of the defense of the cases and payment of any amounts due to the claimants. In our fourteen-year experience with tendering these cases, we have not made any
payment with respect to any tendered asbestos cases. We believe that the prior owners have the intention and ability to continue to honor their indemnity obligations, although we cannot assure you
that they will continue to do so or that we will not be liable for these cases if they do not.

F-79

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

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

Year ended
December 31,
2009

Year ended
December 31,
2008

Year ended
December 31,
2007Unresolved at beginning of period


1,140


1,192


1,367Tendered during period


18


21


21Resolved during period(1)


20


73


196Unresolved at end of period


1,138


1,140


1,192


(1)Although
the indemnifying party informs us when tendered cases have been resolved, it generally does not inform us of the settlement amounts relating to
such cases, if any. The indemnifying party has informed us that it typically manages our defense together with the defense of other entities in such cases and resolves claims involving multiple
defendants simultaneously, and that it considers the allocation of settlement amounts, if any, among defendants to be confidential and proprietary. Consequently, we are not able to provide the number
of cases resolved with payment by the indemnifying party or the amount of such payments.


We
have never made any payments with respect to these cases. As of December 31, 2009, we had an accrued liability of $16 million relating to these cases and a corresponding
receivable of $16 million relating to our indemnity protection with respect to these cases. We cannot assure you that our liability will not exceed our accruals or that our liability associated
with these cases would not be material to our financial condition, results of operations or liquidity; however, we are not able to estimate the amount or range of loss in excess of our accruals.
Additional asbestos exposure claims may be made against us in the future, and such claims could be material. However, because we are not able to estimate the amount or range of losses associated with
such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of December 31, 2009.

Certain
cases in which we are 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 us, other than a number of cases that were erroneously filed against us due to a clerical error. The cases
filed in error have been dismissed.

Year ended
December 31,
2009

Year ended
December 31,
2008

Year ended
December 31,
2007Unresolved at beginning of period


43


39


42Filed during period


3


8


52Resolved during period


7


4


55Unresolved at end of period


39


43


39


We
paid gross settlement costs for asbestos exposure cases that are not subject to indemnification of nil, nil and $3 million during the years ended December 31, 2009, 2008
and 2007, respectively. We cannot assure you that our liability will not exceed our accruals or that our liability associated with these cases would not be material to our financial condition, results
of operations or liquidity; however,

F-80

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

we
are not able to estimate the amount or range of loss in excess of our accruals. Additional asbestos exposure claims may be made against us in the future, and such claims could be material. However,
because we are not able to estimate the amount or range of losses associated with such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of December 31,
2009.

Antitrust Matters

We have been named as a defendant in civil antitrust suits alleging that between 1999 and 2004 we conspired with Bayer, BASF, Dow, and
Lyondell to fix the prices of MDI, TDI, polyether polyols, and related systems ("polyether polyol products") sold in the United States in violation of the federal Sherman Act. These cases are
consolidated as the "Polyether Polyols" cases in multidistrict litigation known as In re Urethane Antitrust Litigation, MDL No. 1616, Civil
No. 2:04-md-01616-JWL-DJW, pending in the United States District Court, District of Kansas. The Kansas court has ruled that plaintiffs may
prosecute the Polyether Polyols cases on behalf of a class of all direct purchasers of polyether polyol products in the United States. Bayer has entered into a settlement with the plaintiffs' class
and has been dismissed as a defendant. Merits discovery is underway, and trial has been set for May 2011.

We
and the other Polyether Polyol defendants (excluding Bayer) have also been named as defendants in two civil antitrust suits brought by certain direct purchasers of polyether polyol
products that opted out of the class certified in MDL No. 1616. These cases have been brought by 12 groups of affiliated companies, 73 plaintiffs in all, who allege that between 1994 and 2006
inclusive the Polyether Polyol defendants conspired to fix the prices of polyether polyol products sold in the U.S. and abroad in violation of the Sherman Act, similar laws of several U.S. states, and
the laws of the European Union and certain of its member states. We and the other defendants moved to dismiss the opt-out complaints. The Court partially granted the motion to dismiss
state law claims and the claims outside the class period. Subsequently, the plaintiffs filed amended complaints and we and the other defendants again filed motions to dismiss their claims outside the
class period. On January 25, 2010, the Court granted the defendants' motion to dismiss claims under the laws of the European Union and its member states, but denied our motion to limit the
opt-out claims to the class period.

On
November 3, 2009, another group of four direct purchasers that opted out of the class certified in MDL No. 1616 filed an action in the United States District Court,
District for New Jersey making nearly identical claims as those made by the other direct purchasers. We expect that it will be consolidated for discovery purposes with the other direct actions in MDL
No. 1616.

Along
with Flexsys, Crompton (now Chemtura), Uniroyal, Rhein Chemie Rheinau, and the other Polyether Polyol defendants, we also have been named as a defendant in a civil antitrust suit
pending in the Superior Court of California, County of San Francisco, filed on February 15, 2005, that alleges that between 1994 and 2004 the defendants conspired to fix the prices of certain
rubber and urethane products sold in California in violation of antitrust and unfair competition laws of California. This case purports to be brought on behalf of a class of all California purchasers
of products containing rubber and urethanes products. By agreement of the parties this case has been stayed pending the resolution of MDL No. 1616.

Huntsman
International has been named as a defendant in a purported class action civil antitrust suit alleging that it and its co-defendants and other
co-conspirators conspired to fix the prices at which titanium dioxide was sold in the U.S. between at least March 1, 2002 and the present. Plaintiffs are seeking injunctive relief,
treble damages, costs of suit and attorneys fees. The case was filed February 9, 2010 and isHaley Paint Company v. E.I. Dupont De Nemours and
Company, Case No. 1:10-cv-00318-RDB, pending in the United States District Court for the District of Maryland. While we have not yet
been served, we intend to defend the case vigorously.

F-81

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

Along with Dow, BASF, and Lyondell, we have also been named as a defendant in a third amended complaint proposed for filing in an existing civil antitrust suit pending against Bayer and
Chemtura in federal district court in Massachusetts. The proposed amended complaint alleges that beginning around 1990 we and the other defendants conspired to fix the prices of MDI, TDI, polyether
polyols, and polyester polyols sold throughout the United States in violation of the federal Sherman Act and the laws of various states. The proposed amended complaint seeks to sue on behalf of all
indirect purchasers of such products in the United States. The Massachusetts action has been stayed pending plaintiffs' settlement of the previously asserted claims against Bayer and Chemtura. We have
filed papers opposing the motion for leave to file the proposed amended complaint adding us as a defendant in that action.

The
plaintiffs' pleadings in these various antitrust suits provide few specifics about any alleged illegal conduct on our part, and we are not aware of any illegal conduct by us or any
of our employees. For these reasons, we cannot estimate the possibility of loss or range of loss relating to these claims, and therefore we have not accrued a liability for these claims. Nevertheless,
we could incur losses due to these claims in the future and those losses could be material.

MTBE Litigation

We are named as a defendant in 18 lawsuits pending in litigation filed between March 23, 2007 and June 24, 2009 in New
York federal and state courts alleging liability related to MTBE contamination in groundwater. Numerous other companies, including refiners, manufacturers and sellers of gasoline, as well as
manufacturers of MTBE, were named as defendants in these and many other cases that were pending in U.S. courts. The plaintiffs in the 18 cases in which we are named are municipal water districts, a
regional water supply authority, and municipal corporations that claim that defendants' conduct has caused MTBE contamination of their groundwater. Four cases are pending in the U.S. District court
for the Southern District of New York and 14 are pending in the Supreme Court of the state of New York, nine in Nassau county and five in Suffolk county. The plaintiffs seek injunctive relief, such as
monitoring and abatement, compensatory damages, punitive damages and attorney fees. Together with other defendants, we have filed motions to dismiss all of the state court cases. At this time, while
we currently have insufficient information to meaningfully assess our potential exposure in these cases, we have joined with a larger group of defendants in an effort to mediate the plaintiffs'
claims. Mediation in late 2008 and early 2009 was unsuccessful. A further mediation session was held February 3, 2010 and resulted in a tentative settlement in each of the cases in which we
have been named. Our allocated portion of the total settlement is not material to our ongoing operations. We have accrued a liability for these claims equal to our allocated portion of the settlement.

Shareholder Litigation

From July 5 to July 13, 2007, four putative shareholder class action complaints were filed against our Company and our
directors alleging breaches of fiduciary duty in connection with our then-proposed sale to Basell and the receipt of a superior proposal from Hexion. Three actions were filed in Delaware:
Cohen v. Archibald, et al., No. 3070, in the Court of Chancery for the State of Delaware (filed July 5, 2007); Augenstein v. Archibald, et al., No. 3076, in the Court of Chancery
for the State of Delaware (filed July 9, 2007); and Murphy v. Huntsman, et al., No. 3094, in the Court of

F-82

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

Chancery
for the State of Delaware (filed July 13, 2007). Another action was filed in Texas: Schwoegler v. Huntsman Corporation, et al., Cause
No. 07-07-06993-CV, in the 9th Judicial District Court of Montgomery County, Texas (filed July 6, 2007). As subsequently amended, these
lawsuits together allege that we and our directors breached fiduciary duties to the stockholders by, among other things, engaging in an unfair sales process, approving an unfair price per share for
the Merger with Hexion, and making inadequate disclosures to stockholders, and that Basell, Hexion and MatlinPatterson entities aided and abetted these breaches of fiduciary duty. The lawsuits sought
to enjoin the stockholder vote on the Merger.

On
September 20, 2007, the parties entered into a Memorandum of Understanding with plaintiffs' counsel in the Delaware and Texas actions to settle these four lawsuits. As part of
the proposed settlement, the defendants deny all allegations of wrongdoing, but we agreed to make certain additional disclosures in the final proxy statement that was mailed to our stockholders on or
about September 14, 2007. In connection with the settlement, the parties also reached an agreement with respect to any application that the plaintiffs' counsel will make for an award of
customary attorneys' fees and expenses to be paid following the completion of the Merger.

The
Memorandum of Understanding is now null and void and of no force and effect because the Merger was not consummated. The Texas action has been voluntarily dismissed, but there has
been no further developments in the Delaware actions at this time.

Port Arthur Plant Fire Insurance Litigation

On August 31, 2007, an action was brought against our Company and IRIC, our captive insurer, in the United States District Court
for the Southern District of Texas, by
seventeen reinsurance companies that reinsure risks under the property insurance policy issued by IRIC to our Company for the period covering the April 29, 2006 fire at our manufacturing
facility in Port Arthur, Texas. The action sought to compel our Company and IRIC to arbitrate with the Reinsurers to resolve disputes related to the claim for losses caused by the fire or, in the
alternative, to declare judgment in favor of the Reinsurers. On September 26, 2008, the court denied motions to dismiss filed by our Company and IRIC, ordering the parties to engage in a short
period of discovery on the issue of arbitrability. In a second and related action filed by our Company against IRIC in state court in Jefferson County, Texas, IRIC filed a third party petition against
the Reinsurers, who then removed that action to the United States District Court for the Eastern District of Texas. Some of the Reinsurers filed answers and motions to compel arbitration, to stay
these proceedings, and to change venue to the United States District Court for the Southern District of Texas in order to consolidate the two actions. We filed a motion to remand that action to the
state court and opposition to the Reinsurers' motions in that action. On April 23, 2008, the United States District Court for the Eastern District of Texas transferred the case to the United
States District Court for the Southern District of Texas. On September 26, 2008, the court denied our motion to remand that suit to the state court in which it was filed.

Pursuant
to a December 29, 2008 agreement among the parties to the actions referenced above: (1) a mediation was scheduled for February 24-25, 2009,
(2) if the disputes were not fully resolved in mediation, the parties would submit all coverage and quantum issues to a three-arbitrator panel in the second half of 2009, with a binding award
to be entered by September 30, 2009 (see current status in paragraph below), (3) the Reinsurers paid an additional $40 million on our claim on December 29,

F-83

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. COMMITMENTS AND CONTINGENCIES (Continued)

2008
and agreed that all monies paid by the participating Reinsurers on the claim to date are nonrefundable, (4) we waived our noncontractual claims against the Reinsurers, (5) the first
action referenced above is stayed pending final resolution and entry of judgment, and (6) the second action referenced above has been dismissed.

Because
the non-binding mediation was not successful, we and the Reinsurers are now participating in binding arbitration which began on November 2, 2009. The binding
arbitration is ongoing and further oral arguments have been scheduled in March 2010. Reinsurers responsible for a small percentage of our remaining claim were not parties to the two lawsuits and are
not parties to the agreement; thus we may need to pursue actions against them separately for their pro rata shares of the unpaid claim. We have paid our deductible on the claim of $60 million
and have been paid $365 million to date by the Reinsurers. Prior to the commencement of the arbitration proceedings, we had claimed an additional approximately $242 million plus interest
as presently due and owing and unpaid under the Policy for losses caused by the fire. The arbitration panel has made a preliminary ruling disallowing our claim for interest. In addition, the
arbitration panel has made certain preliminary rulings on some of the discrete issues that so far effectively reduce the overall amount we have claimed by approximately $40 million. A final
ruling on these and the various other outstanding issues under the claim are not expected until after the oral arguments scheduled in March 2010. See "Note 25. Casualty Losses and Insurance
RecoveriesPort Arthur, Texas Plant Fire."

Other Proceedings

We are 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, we do not believe that the outcome of any of these
matters will have a material adverse effect on our financial condition, results of operations or liquidity.

GUARANTEES

Our unconsolidated joint venture, the Arabian Amines Company, obtained various loan commitments in the aggregate amount of
approximately $195 million (U.S. dollar equivalents) of which $181 million, including bridge loans, was drawn and outstanding as of December 31, 2009. We have provided certain
guarantees of approximately $14 million for these commitments and our guarantees will terminate upon completion of the project and satisfaction of certain other conditions. We have estimated
that the fair value of such guarantees was nil as of the closing date of this transaction and, accordingly, no amounts have been recorded.

We
also guarantee certain obligations of Huntsman International in its capacity as a contributor and servicer guarantor under the U.S. A/R Program.

F-84

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

General

We are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to safety, 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, we are subject to frequent environmental inspections and monitoring and occasional investigations by governmental enforcement authorities. In addition, our production facilities require
operating permits that are subject to renewal, modification and, in certain circumstances, revocation. Actual or alleged violations of safety laws, 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 our operations, or require us to modify our facilities or operations. Accordingly, environmental or
regulatory matters may cause us to incur significant unanticipated losses, costs or liabilities.

Environmental, Health and Safety Systems

We are committed to achieving and maintaining compliance with all applicable EHS legal requirements, and we have developed policies and
management systems that are intended to identify the multitude of EHS legal requirements applicable to our operations, enhance compliance with applicable legal requirements, ensure the safety of our
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 us in our compliance goals while also fostering efficiency and improvement and minimizing overall risk to us.

EHS Capital Expenditures

We 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, 2009, 2008 and 2007, our capital expenditures for EHS matters totaled $54 million, $58 million and
$69 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, we cannot provide assurance that our recent expenditures will be indicative of future amounts required under EHS laws.

Remediation Liabilities

We have incurred, and we may in the future incur, liability to investigate and clean up waste or contamination at our current or former
facilities or facilities operated by third parties at which we may have disposed of waste or other materials. Similarly, we may incur costs for the cleanup of wastes that were disposed of prior to the
purchase of our businesses. Under some circumstances, the scope of our liability may extend to damages to natural resources.

Under
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

F-85

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

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. We have
been notified by third parties of claims against us for cleanup liabilities at approximately 10 former facilities or third party sites, including, but not limited to, sites listed under CERCLA. Based
on current information and past experiences at other CERCLA sites, we do not expect any of these third party claims to result in material liability to us. Outside the U.S., analogous contaminated
property laws, such as those in effect in France and Australia, can hold past owners and/or operators liable for remediation at former facilities.

In
addition, under RCRA, and similar state laws, we may be required to remediate contamination originating from our properties as a condition to our hazardous waste permit. Some of our
manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste disposal. We are aware of soil, groundwater or surface contamination from
past operations at some of our sites, and we may find contamination at other sites in the future. For example, our Port Neches, Texas, and Geismar, Louisiana, facilities are the subject of ongoing
remediation requirements under RCRA authority. Similar laws exist in a number of locations in which we currently operate manufacturing facilities, such as Australia, Switzerland, and Italy.

In
June of 2006, an agreement was reached between the local regulatory authorities and our Advanced Materials site in Pamplona, Spain to relocate our manufacturing operations in order to
facilitate new urban development desired by the city. Subsequently, as required by the authorities, soil and groundwater sampling was performed and followed by a quantitative risk assessment. Although
unresolved at this time, some level of remediation of site contamination may be required in the future, but the estimated cost is unknown because the remediation approach and timing has not been
determined.

By
letter dated March 7, 2006, our Base Chemicals and Polymers facility in West Footscray, Australia, was issued a clean-up notice by the Australian (Victorian) EPA
due to concerns about soil and groundwater contamination emanating from the site. The agency revoked the original clean-up notice on September 4, 2007 and issued a revised
clean-up notice due to "the complexity of contamination issues" at the site. On March 31, 2009, we submitted the required Site Remediation Action Plan to the agency which proposed
additional investigation and remediation method trials. We can provide no assurance that the EPA will agree with our proposed plan, will not seek to institute additional requirements for the site or
that additional costs will not be associated with the clean up. Additionally, on September 8, 2009, we announced a decision to close this facility in early 2010. In the third quarter of 2009,
we recorded a $30 million liability related to estimated environmental remediation costs at this site.

In
many cases, our potential liability arising from historical contamination is based on operations and other events occurring prior to our ownership of a business or specific facility.
In these situations, we frequently obtained an indemnity agreement from the prior owner addressing remediation liabilities arising from pre-closing conditions. We have successfully
exercised our rights under these contractual covenants for a number of sites and, where applicable, mitigated our ultimate remediation liability. We cannot assure you, however, that all of such
matters will be subject to indemnity, that the prior owner will honor its indemnity or that our existing indemnities will be sufficient to cover our liabilities for such matters.

F-86

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

Based
on available information and the indemnification rights we believe are likely to be available, we believe that the costs to investigate and remediate known contamination will not
have a material adverse effect on our financial condition, results of operations or cash flows. However, if such indemnities are unavailable or do not fully cover the costs of investigation and
remediation or we are required to contribute to such costs, and if such costs are material, then such expenditures may have a material adverse effect on our financial condition, results of operations
or cash flows. At the current time, we are unable to estimate the full cost, exclusive of indemnification benefits, to remediate any of the known contamination sites.

Environmental Reserves

We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known
penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value
techniques and are based upon requirements placed upon us by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as
asset retirement obligations. We had accrued $41 million and $7 million for environmental liabilities as of December 31, 2009 and 2008, respectively. Of these amounts,
$5 million and $4 million were classified as accrued liabilities in our consolidated balance sheets as of December 31, 2009 and 2008, respectively, and $36 million and
$3 million were classified as other noncurrent liabilities in our consolidated balance sheets as of December 31, 2009 and December 31, 2008, respectively. In certain cases, our
remediation liabilities may be payable over periods of up to 30 years. We may incur losses for environmental remediation in excess of the amounts accrued; however, we are not able to estimate
the amount or range of such potential excess.

REGULATORY DEVELOPMENTS

In December 2006, the EU parliament and EU council approved a new EU regulatory framework for chemicals called "REACH" (Registration,
Evaluation and Authorization of Chemicals). REACH took effect on June 1, 2007, and the program it establishes will be phased in over 11 years. Under the regulation, companies that
manufacture in or import into the EEA more than one metric tonne of a chemical substance per year will be required to register such chemical substances and isolated intermediates in a central
database. Use authorizations will be granted for a specific chemical if the applicants can show that the risks in using the chemical are adequately controlled; and for chemicals where there are no
suitable alternatives substances or technologies available and the applicant can demonstrate that the social and economic benefits of using the chemical outweigh the risks. In addition, specified uses
of some hazardous substances may be restricted. Furthermore, all applicants will have to study the availability of alternative chemicals. If an alternative is available, an applicant will have to
submit a "substitution" plan to the regulatory agency. The regulatory agency will only authorize persistent bio-accumulative and toxic substances if an alternative chemical is not
available. The registration, evaluation and authorization phases of the program will require expenditures and resource commitments in order to, for example, participate in mandatory
data-sharing forums; acquire, generate and evaluate data; prepare and submit dossiers for substance registration; obtain legal advice and reformulate products, if necessary. We have
established a cross-business European REACH team that is working closely with our businesses to identify and list all substances we purchase or manufacture in,

F-87

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

or
import into, the EEA. Our pre-registration REACH compliance began on June 1, 2008, utilizing internal resources at nominal expense and we met all chemical
pre-registration requirements by the November 30, 2008 regulatory deadline. We are currently proceeding with the registration of the high-volume and
high-priority chemicals under the program, which must be registered no later than November 30, 2010. Although the total long-term cost for REACH compliance is not
estimable at this time, we spent approximately $3 million, $2 million and $3 million during the years ended December 31, 2009, 2008 and 2007, respectively, on REACH
compliance.

GREENHOUSE GAS REGULATION

In the EU and other jurisdictions committed to compliance with the Kyoto Protocol, there is an increasing likelihood that our
manufacturing sites will be affected in some way over the next few years by regulation or taxation of GHG emissions. For example, Australia recently proposed its Carbon Pollution Reduction Scheme,
which may impact our Australian operations, and program implementation is currently scheduled for 2011. In addition, although the U.S. is not a signatory to the Kyoto Protocol, several states are
implementing their own GHG regulatory programs and a federal program in the U.S. is likely for the future. Draft U.S. federal legislation and the recent
U.S. EPA Clean Air Act endangerment findings for carbon dioxide have focused corporate attention on the eventuality of measuring and reporting of GHG emissions for operations in the U.S. The U.S. EPA
also recently mandated GHG reporting requirements for U.S. sources in excess of 25,000 tons beginning in 2010. Final details of a comprehensive U.S. GHG management approach is, as yet, uncertain.
Nevertheless, we are already managing and reporting GHG emissions, to varying degrees, as required by law for our sites in locations subject to Kyoto Protocol obligations and/or EU emissions trading
scheme requirements. Although these sites are subject to existing GHG legislation, few have experienced or anticipate significant cost increases as a result, although it is likely that GHG emission
restrictions will increase over time. Potential consequences of such restrictions include capital requirements to modify assets used to meet GHG restriction and/or increases in energy costs above the
level of general inflation, as well as direct compliance costs. Currently, however, it is not possible to estimate the likely financial impact of potential future regulation on any of our sites.

CHEMICAL FACILITY ANTI-TERRORISM RULEMAKING

The DHS issued the final rule of their "Chemical Facility Anti-Terrorism Standard" in 2007. The initial phase of the rule
required all chemical facilities in the U.S. to evaluate their facilities against the DHS Appendix A list of "Chemicals of Interest." Facilities which have specified chemicals in designated
quantities on the Appendix A list were required to submit a "Top Screen" to DHS in 2008. A Top Screen is a questionnaire completed by a facility having Chemicals of Interest in designated
threshold quantities. In early 2008, we submitted Top Screens for all of our covered facilities. After reviewing the Top Screens, DHS determined that some of our sites were "High Risk" facilities. As
a result, we were required to perform security vulnerability assessments at the High Risk sites. The security vulnerability assessments were completed and sent to DHS during the fourth quarter of
2008. Based on their assessment of the security vulnerability assessments, we received notice from DHS that one of our sites was elevated to a higher security tier. The DHS determined the other three
sites to be low security tiers. The three sites will be required to develop site security plans based on a list of 18 risk-based performance standards, but security improvements
recommended from the site security plans

F-88

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

are
not anticipated to be material. We believe that security upgrades to the tier-elevated site will be required; however we do not know what these required updates will be and thus cannot
reasonably estimate associated costs at this time, but they could be material. Additionally, on November 26, 2008, the Transportation Safety Administration of the DHS published a final rule
regarding "rail security sensitive materials" that are received at or shipped from facilities. We have three sites that are subject to this new rule, but at this time do not anticipate that the costs
to comply will be material.

MTBE DEVELOPMENTS

We produce MTBE, an oxygenate that is blended with gasoline to reduce vehicle air emissions and to enhance the octane rating of
gasoline. Litigation or legislative initiatives restricting the use of MTBE in gasoline may subject us or our products to environmental liability or materially adversely affect our sales and costs.
Because MTBE has contaminated some water supplies, its use has become controversial in the U.S. and elsewhere, and its use has been effectively eliminated in the U.S. market. We currently market MTBE,
either directly or through third parties, to gasoline additive customers located outside the U.S., although there are additional costs associated with such outside-U.S. sales which may
result in decreased profitability compared to historical sales in the U.S. We may also elect to use all or a portion of our precursor tertiary butyl alcohol to produce saleable products other than
MTBE. If we opt to produce products other than MTBE, necessary modifications to our facilities will require significant capital expenditures and the sale of such other products may produce a lower
level of cash flow than that historically produced from the sale of MTBE.

Numerous
companies, including refiners, manufacturers and sellers of gasoline, as well as manufacturers of MTBE, have been named as defendants in more than 150 cases in U.S. courts that
allege MTBE contamination in groundwater. Many of these cases were settled after the parties engaged in mediation supervised by a court-appointed special settlement master. Beginning in March 2007 and
continuing through June 24, 2009, we have been named as a defendant in 18 of these lawsuits pending in New York state and federal courts. See "Note 19. Commitment and
ContingenciesLegal MattersMTBE Litigation." The plaintiffs in the MTBE groundwater contamination cases generally seek compensatory damages, punitive damages, injunctive
relief, such as monitoring and abatement, and attorney fees. While we currently have insufficient information to meaningfully assess our potential exposure in these cases, we have joined with a larger
group of defendants in an effort to mediate the plaintiffs' claims. Mediation in late 2008 and early 2009 was unsuccessful. A further mediation session was held February 3, 2010 which resulted
in a tentative settlement in each of the cases in which we have been named. Our allocated portion of the total settlement amount is not material and we have accrued a liability for the claims equal to
our allocated portion of the settlement. It is possible that we could be named as a defendant in additional existing or future MTBE contamination cases. We cannot provide assurances that adverse
results against us in existing or future MTBE contamination cases will not have a material adverse effect on our business, results of operations and financial position.

21. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY

On February 16, 2005, we completed an initial public offering of 55,681,819 shares of our common stock sold by us and 13,579,546 shares our common stock sold by another selling
stockholder, in each case at a price to the public of $23 per share, and 5,750,000 shares of our mandatory convertible

F-89

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

21. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY (Continued)

preferred
stock sold by us at a price to the public of $50 per share. On February 16, 2008, the mandatory convertible preferred stock converted into 12,082,475 shares of our common stock. See
"Note 2. Summary of Significant Accounting PoliciesNet Income (Loss) per Share Attributable to Huntsman Corporation."

DIVIDENDS ON COMMON STOCK

The following tables represent dividends on common stock for our Company for the years ended December 31, (dollars in millions,
except per share payment amounts):

2009Payment date

Record date

Per share
payment amount

Total amount
paidMarch 31, 2009

March 16, 2009

$
0.10

$
24June 30, 2009

June 15, 2009


0.10


24September 30, 2009

September 15, 2009


0.10


24December 31, 2009

December 15, 2009


0.10


24Total






$
96




2008Payment date

Record date

Per share
payment amount

Total amount
paidMarch 31, 2008

March 14, 2008

$
0.10

$
23June 30, 2008

June 16, 2008


0.10


23September 30, 2008

September 15, 2008


0.10


23December 31, 2008

December 15, 2008


0.10


24Total






$
93




2007Payment date

Record date

Per share
payment amount

Total amount
paidMarch 30, 2007

March 15, 2007

$
0.10

$
22June 29, 2007

June 15, 2007


0.10


22September 28, 2007

September 14, 2007


0.10


22December 31, 2007

December 14, 2007


0.10


22Total






$
88


On
February 8, 2010, our board of directors declared a $0.10 per share cash dividend, payable on March 31, 2010, to stockholders of record as of March 15, 2010.

F-90

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

21. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY (Continued)

DIVIDENDS ON MANDATORY CONVERTIBLE PREFERRED STOCK

In connection with the initial public offering of our 5% mandatory convertible preferred stock on February 16, 2005, we declared
all dividends that will be payable on such preferred stock from the issuance through the mandatory conversion date, which was February 16, 2008. Accordingly, we recorded dividends payable of
$43 million and a corresponding charge to net loss available to common stockholders during the year ended December 31, 2005. We paid the final dividend in cash on February 16,
2008.

22. STOCK-BASED COMPENSATION PLAN

Under the Stock Incentive Plan, a plan approved by stockholders, we may grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted
stock, phantom stock, performance awards and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock
options may be granted solely to employees. The terms of the grants are fixed at the grant date. As of December 31, 2009 we were authorized to grant up to 32.6 million shares under the
Stock Incentive Plan. As of December 31, 2009, we had 14.0 million shares remaining under the Stock Incentive Plan available for grant. Option awards have a maximum contractual term of
10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Stock-based awards generally vest over a
three-year period.

The
compensation cost from continuing operations under the Stock Incentive Plan for our Company and Huntsman International were as follows (dollars in millions):

Year ended
December 31,2009

2008

2007Huntsman CorporationCompensation cost

$
20

$
20

$
25Huntsman InternationalCompensation cost

$
16

$
20

$
25


The
total income tax benefit recognized in the statement of operations for stock-based compensation arrangements was $6 million, $6 million and $8 million for the
years ended December 31, 2009, 2008 and 2007, respectively.

The
fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected
volatilities for the year ended December 31, 2009 are based on the historical volatility of our common stock through the grant date. Expected volatilities for the year ended December 31, 2007 are
based on implied volatilities from the shares of comparable companies and other factors. The expected term of options granted was estimated based on the contractual term of the instruments and
employees' expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S.
Treasury yield curve in effect at the time of grant.

F-91

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22. STOCK-BASED COMPENSATION PLAN (Continued)

The
assumptions noted below represent the weighted averages of the assumptions utilized for all stock options granted during the year.

Year ended December 31,2009

2008

2007Dividend yield


15.4
%
NA


1.9
%Expected volatility


70.4
%
NA


20.8
%Risk-free interest rate


2.5
%
NA


4.7
%Expected life of stock options granted during the period


6.6 years

NA


6.6 years


During
the year ended December 31, 2008, no stock options were granted.

STOCK OPTIONS

A summary of stock option activity under the Stock Incentive Plan as of December 31, 2009 and changes during the year then ended
is presented below:

Option Awards

Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value(in thousands)



(years)

(in millions)Outstanding at January 1, 2009


6,135

$
21.33Granted


6,554


2.63Exercised





Forfeited


(1,012
)

15.98Outstanding at December 31, 2009


11,677


11.30


7.8

$
54Exercisable at December 31, 2009


5,206


20.05


6.3


3


The
weighted-average grant-date fair value of stock options granted during the years ended December 31, 2009 and 2007 was $0.51 and $5.15 per option, respectively. As
of December 31, 2009, there was $3 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the Stock Incentive Plan. That cost is
expected to be recognized over a weighted-average period of approximately 1.7 years.

The
total intrinsic value of stock options exercised during the year ended December 31, 2007 was not significant. During the years ended December 31, 2009 and 2008 no stock
options were exercised.

NONVESTED SHARES

Nonvested shares granted under the Stock Incentive Plan consist of restricted stock, which is accounted for as an equity award, and
phantom stock, which is accounted for as a liability award

F-92

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22. STOCK-BASED COMPENSATION PLAN (Continued)

because
it can be settled in either stock or cash. A summary of the status of our nonvested shares as of December 31, 2009 and changes during the year then ended is presented below:

Equity Awards

Liability AwardsShares

Weighted
Average
Grant-Date
Fair
Value

Shares

Weighted
Average
Grant-Date
Fair
Value(in thousands)



(in thousands)Nonvested at January 1, 2009


930

$
22.62


171

$
22.82Granted


3,336


2.64


1,869


2.66Vested


(669
)(1)

15.99


(73
)

22.31Forfeited


(169
)

7.76


(87
)

5.30Nonvested at December 31, 2009


3,428


5.20


1,880


3.61


(1)As
of December 31, 2009, a total of 263,399 restricted stock units were vested, of which 249,333 vested during the year ended December 31,
2009. These shares have not been reflected as vested shares in this table because, in accordance with the restricted stock unit agreements, shares of common stock are not issued for vested restricted
stock units until termination of employment.


As
of December 31, 2009, there was $25 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the Stock
Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.1 years. The value of share awards that vested during the years ended
December 31, 2009, 2008 and 2007 was $12 million, $13 million and $9 million, respectively.

F-93

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23. OTHER COMPREHENSIVE INCOME (LOSS)

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

Huntsman Corporation

December 31,2009

2008

2007Accumulated
income (loss)

Income
(loss)

Accumulated
income (loss)

Income
(loss)

Income
(loss)Foreign currency translation adjustments, net of tax of $15 and $16 as of December 31, 2009 and 2008, respectively

$
274

$
70

$
204

$
(176
)
$
134Pension and other postretirement benefits adjustments, net of tax of $102 and $158 as of December 31, 2009 and 2008, respectively


(580
)

133


(713
)

(569
)

184Other comprehensive income of unconsolidated affiliates


7


(2
)

9





2Other, net


6


2


4


(4
)

1Total


(293
)

203


(496
)

(749
)

321Amounts attributable to noncontrolling interests


6


(1
)

7


3


(3
)Amounts attributable to Huntsman Corporation

$
(287
)
$
202

$
(489
)
$
(746
)
$
318


Huntsman International

December 31,2009

2008

2007Accumulated
income (loss)

Income
(loss)

Accumulated
income (loss)

Income
(loss)

Income
(loss)Foreign currency translation adjustments, net of tax of $2 and $3 as of December 31, 2009 and 2008, respectively

$
273

$
71

$
202

$
(176
)
$
136Pension and other postretirement benefits adjustments, net $134 and $193 as of December 31, 2009 and 2008, respectively


(635
)

136


(771
)

(564
)

198Other comprehensive income of unconsolidated affiliates


7


(2
)

9





2Other, net


1


2


(1
)

(4
)

1Total


(354
)

207


(561
)

(744
)

337Amounts attributable to noncontrolling interests


6


(1
)

7


3


(3
)Amounts attributable to Huntsman International LLC

$
(348
)
$
206

$
(554
)
$
(741
)
$
334


F-94

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)

Items
of other comprehensive income (loss) of our Company and our consolidated affiliates have been recorded net of tax, with the exception of the foreign currency translation
adjustments related to subsidiaries with earnings permanently reinvested. The tax effect is determined based upon the jurisdiction where the income or loss was recognized and is net of valuation
allowances.

24. OTHER OPERATING (INCOME) EXPENSE

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

Year ended
December 31,2009

2008

2007(Gain) loss on sale of businesses/assets, net

$
(2
)
$
6

$
(70
)Foreign exchange (gains) losses


(13
)

12


14Bad debt expense


9


6


3Legal and contract settlements








6Insurance recoveries








(11
)Other, net


(12
)

3


3Total other operating (income) expense

$
(18
)
$
27

$
(55
)


During
2006, we sold our U.S. butadiene and MTBE business. During 2007, we received $70 million of additional proceeds relating to the sale of that business upon satisfaction of
certain obligations and recognized a gain of $70 million.

25. CASUALTY LOSSES AND INSURANCE RECOVERIES

PORT ARTHUR, TEXAS PLANT FIRE

On April 29, 2006, our former Port Arthur, Texas olefins manufacturing plant (which we sold in November 2007) experienced a
major fire. With the exception of cyclohexane operations at the site, which were restarted in June 2006, the operations at the site were shutdown until the fourth quarter of 2007. The Port Arthur
manufacturing plant was covered by property damage and business interruption insurance. With respect to coverage for this outage, the deductible for property damage is $10 million and business
interruption coverage does not apply for the first 60 days, subject to a combined deductible for property damage and business interruption of $60 million. See "Note 19.
Commitments and ContingenciesPort Arthur Texas Plant Fire Litigation." Future collections on this insured loss, if any, will represent additional income from discontinued operations for
us upon final settlement and will be used to repay secured debt in accordance with relevant provisions of our credit agreement.

2005 U.S. GULF COAST STORMS

On September 22, 2005, we sustained property damage at our Port Neches and Port Arthur, Texas facilities as a result of a
hurricane. We maintain customary insurance coverage for property damage and business interruption. With respect to coverage of these losses, the deductible for property damage was $10 million,
while business interruption coverage does not apply for the first 60 days.

F-95

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

25. CASUALTY LOSSES AND INSURANCE RECOVERIES (Continued)

Through
December 31, 2009 we have received $41 million in payments in connection with our insurance claim for property damage and business interruption losses from the 2005 Gulf
Coast storms. On July 29, 2009, the reinsurers filed a declaratory judgment action asking the Court to compel arbitration between the parties or to declare that the reinsurers owed nothing
further from the storm damage. We filed a counterclaim asking the Court to declare that the reinsurers owed us the remaining amount of our claim. Subsequently, the parties participated in mediation on
February 8-9, 2010 and resolved the remainder of our insurance claim for a total of $7 million. The reinsurers are required to pay that amount within 30 days following
the execution of a proof of loss and settlement agreement. This future collection will represent income from discontinued operations for us upon final settlement.

26. INCOME (EXPENSES) ASSOCIATED WITH THE TERMINATED MERGER AND RELATED LITIGATION

Total income (expenses) associated with the Terminated Merger and related litigation were as follows (dollars in millions):

Year ended
December 31,2009

2008

2007Gain recognized pursuant to the Texas Bank Litigation Settlement Agreement

$
868

$


$
Gain recognized pursuant to the Apollo Settlement Agreement





765


Basell Termination Fee





100


(200
)Investment banking fees





(25
)

Directors' fees





(17
)

Legal fees and other


(33
)

(43
)

(10
)Total

$
835

$
780

$
(210
)


On
July 12, 2007, we entered into the Hexion Merger Agreement. On June 18, 2008, Hexion, Apollo and certain of their affiliates filed an action in Delaware Chancery Court
seeking to terminate the Hexion Merger. We countersued Hexion and Apollo in the Delaware Chancery Court and filed a separate action against Apollo and certain of its affiliates in the District Court
of Montgomery County, Texas. On December 13, 2008, we terminated the Hexion Merger Agreement and, on December 14, 2008, we entered into the Apollo Settlement Agreement. Pursuant to the
Apollo Settlement Agreement, Hexion and certain Apollo affiliates have paid us an aggregate amount of $1 billion.

On
September 30, 2008, we filed suit in the 9th Judicial District Court in Montgomery County, Texas against the Banks that had entered into a commitment letter to provide
funding for the Hexion Merger. On June 22, 2009, we entered into the Texas Bank Litigation Settlement Agreement with the Banks. The Texas Bank Litigation was dismissed with prejudice on
June 23, 2009. In accordance with the Texas Bank Litigation Settlement Agreement, the Banks paid us a cash payment of $632 million, purchased from Huntsman International the 2016 Senior
Notes in the aggregate principal amount of $600 million, and provided Huntsman International with Term Loan C in the principal amount of $500 million. The 2016 Senior Notes and Term Loan
C borrowings were at favorable rates to us and

F-96

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26. INCOME (EXPENSES) ASSOCIATED WITH THE TERMINATED MERGER AND RELATED LITIGATION (Continued)

were
recorded at a combined fair value of $864 million. Accordingly, we recognized a gain of $868 million in connection with the Texas Bank Litigation Settlement Agreement.

27. DISCONTINUED OPERATIONS

U.S. BASE CHEMICALS BUSINESS

On November 5, 2007, we completed the U.S. Base Chemicals Disposition. This disposition included our former olefins
manufacturing assets located at Port Arthur, Texas. A captive ethylene unit at the retained Port Neches, Texas site of our Performance Products segment operations was not included in the sale. This
asset, along with a long-term post-closing arrangement for the supply of ethylene and propylene from Flint Hills Resources to us, will continue to provide feedstock for our
downstream derivative units.

The
following results of our former U.S base chemicals business have been presented as discontinued operations in the accompanying consolidated statements of operations (dollars in
millions):

Year ended
December 31,2009

2008

2007Revenues

$


$


$
181Costs and expenses








(206
)Loss on disposal








(146
)Adjustment to loss on disposal


2


8


(Loss) gain on partial fire insurance settlement


(17
)

175


Operating (loss) income


(15
)

183


(171
)Income tax benefit (expense)


6


(68
)

62(Loss) income from discontinued operations, net of tax

$
(9
)
$
115

$
(109
)


In
connection with the U.S. Base Chemicals Disposition, we recognized a pretax loss on disposal of $146 million in 2007, which included a pension curtailment gain of
$4 million. During 2008, we recognized an adjustment to the loss on disposal of $8 million related to a sales and use tax settlement, and post-closing adjustments. In
addition, during 2008, we recognized a $175 million gain from the partial settlement of insurance claims related to the fire at our former Port Arthur, Texas facility. During 2009, we recorded
legal fees of $17 million related to the ongoing arbitration of the fire insurance claim and recorded a gain of $2 million on the settlement of product exchange liabilities. Any future
proceeds from our fire insurance claim will be classified in discontinued operations. See "Note 25. Casualty Losses and Insurance Recoveries."

The
EBITDA of our former U.S. base chemicals business is included in discontinued operations for all periods presented.

F-97

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

27. DISCONTINUED OPERATIONS (Continued)

NORTH AMERICAN POLYMERS BUSINESS

On August 1, 2007 we completed the North American Polymers Disposition. The disposition included our former polymers
manufacturing assets located at four U.S. sites: Odessa and Longview, Texas; Peru, Illinois; and Marysville, Michigan. In accordance with the amended and restated asset purchase agreement with Flint
Hills Resources, we also shut down our Mansonville, Quebec expandable polystyrene manufacturing facility in June 2007.

The
following results of our former North American polymers business have been presented as discontinued operations in the accompanying consolidated statements of operations (dollars in
millions):

Year ended
December 31,2008

2007Revenues

$


$
882Costs and expenses





(873
)Loss on disposal





(233
)Adjustment to loss on disposal


3


Operating income (loss)


3


(224
)Income tax (expense) benefit


(1
)

78Income (loss) from discontinued operations, net of tax

$
2

$
(146
)


In
connection with the North American Polymers Disposition, we recognized a pretax loss on disposal of $233 million in 2007. During 2008, we recorded an adjustment to the loss on
disposal in connection
with the North American Polymers Disposition of $3 million primarily related to property tax settlements and post-closing adjustments.

The
EBITDA of our former North American polymers business is included in discontinued operations for all periods presented.

In
connection with the U.S. Petrochemicals Disposition, we agreed to indemnify Flint Hills Resources with respect to any losses resulting from (i) the breach of representations
and warranties contained in the amended and restated asset purchase agreement, (ii) any pre-sale liabilities related to certain assets not assumed by Flint Hills Resources, and
(iii) any unknown environmental liability related to the pre-sale operations of the assets sold. We are not required to pay under these indemnification obligations until claims
against us, on a cumulative basis, exceed $10 million. Upon exceeding this $10 million threshold, we generally are obligated to provide indemnification for any losses up to a limit of
$150 million. We believe that the possibility that we will be required to pay any significant amounts under the indemnity provision is remote.

EUROPEAN BASE CHEMICALS AND POLYMERS BUSINESS

On December 29, 2006, we completed the U.K. Petrochemicals Disposition. This transaction involved the sale of the outstanding
equity interests of Huntsman Petrochemicals (UK) Limited. The

F-98

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

27. DISCONTINUED OPERATIONS (Continued)

final
sales price was subject to adjustments relating to working capital, investment in the LDPE plant in Wilton, U.K. and unfunded pension liabilities.

In
connection with the U.K. Petrochemicals Disposition in 2007, we and Huntsman International recorded an adjustment to the loss on disposal of $39 million and $28 million,
respectively, related primarily to a pension funding accrual and post-closing adjustments.

The
EBITDA of our former European base chemicals business is included in discontinued operations for all periods presented.

In
connection with the sale, we agreed to indemnify the buyer with respect to any losses resulting from any environmental liability related to the pre-sale operations of the
assets sold. These
indemnities have various payment thresholds and time limits depending on the site and type of claim. Generally, we are not required to pay under these indemnification obligations until claims against
us exceed £0.1 million (approximately $0.2 million) individually or £1 million (approximately $2 million) in the aggregate. We also agreed to
indemnify the buyer with respect to certain tax liabilities. Our maximum exposure generally shall not exceed $600 million in the aggregate. We believe that the possibility that we will be
required to pay any significant amounts under any of the indemnity provisions is remote.

TDI BUSINESS

On July 6, 2005, we sold our TDI business. The sale involved the transfer of our TDI customer list and sales contracts. We
discontinued the use of our remaining TDI assets. Our former TDI business has been accounted for as a discontinued operation. In 2007, we incurred $1 million of expenditures related to the exit
from this business.

28. RELATED PARTY TRANSACTIONS

Our accompanying consolidated financial statements include the following transactions with our affiliates not otherwise disclosed (dollars in millions):

Year ended
December 31,2009

2008

2007Sales to:Unconsolidated affiliates

$
96

$
164

$
186Inventory purchases from:Unconsolidated affiliates


273


299


224


An
agreement was reached prior to the initial public offering of our common stock in February 2005 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 we will donate our Salt Lake City office building and our option to acquire
an adjacent undeveloped parcel of land to the foundation free of debt. We believe this donation will occur in the first quarter of 2010. Under certain circumstances, after we make this donation we
will have the right, but not the obligation, to lease space in the Salt Lake City office building from the foundation. As of December 31, 2009, our Salt Lake City office building had a net book
value of nil.

F-99

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

28. RELATED PARTY TRANSACTIONS (Continued)

On April 28, 2009, we and Mr. Jon M. Huntsman mutually terminated an agreement we had entered into with Mr. Huntsman on June 3, 2003, pursuant to which
Mr. Huntsman provided consulting services to us at our request. Pursuant to this agreement, Mr. Huntsman provided advice and other business consulting services at our request regarding
our products, customers, commercial and development strategies, financial affairs and administrative matters based upon his experience and knowledge of our business, the industry and the markets
within which we compete. Mr. Huntsman's services were utilized both with respect to the conduct of our business in the ordinary course and with respect to strategic development and specific
projects. Under the terms of the agreement, which renewed automatically for successive one-year terms, Mr. Huntsman received $950,000 annually for his services. Following the
agreement's termination, we re-established an employment relationship with Mr. Huntsman.

Through
May 2002, we paid the premiums on various life insurance policies for Jon M. Huntsman. These policies have been liquidated, and the cash values have been paid to
Mr. Huntsman. Mr. Huntsman is indebted to us in the amount of approximately $2 million, which represents the insurance premiums paid on his behalf through May 2002. This
amount is included in other noncurrent assets on the accompanying consolidated balance sheets.

Wayne A.
Reaud, a member of our board of directors, is of counsel to the law firm of Reaud, Morgan & Quinn. We pay the firm $200,000 per year for legal services.
Mr. Reaud has no interest in the firm or in the proceeds for current work done at the firm. As of counsel, the law firm provides Mr. Reaud with an office and certain secretarial
services.

29. OPERATING SEGMENT INFORMATION

We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. During the first quarter of 2009, we
reorganized our operating segments to divide our former Materials and Effects segment into two different segmentsour Advanced Materials segment and our Textile Effects segment. All
segment
information in this report has been restated to reflect this change. We have reported our operations through five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products and
Pigments. We have organized our business and derived our operating segments around differences in product lines.

F-100

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

29. OPERATING SEGMENT INFORMATION (Continued)

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

Segment

ProductsPolyurethanes

MDI, PO, polyols, PG, TPU, aniline and MTBEAdvanced Materials

epoxy resin compounds and formulations; cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-based adhesives and tooling resin formulationsTextile Effects

textile chemicals and dyesPerformance Products

amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licensesPigments

titanium dioxideCorporate and Other(1)

Styrene


(1)On
September 8, 2009, we announced the closure of our styrenics facility located at West Footscray, Australia. We ceased operations of the West
Footscray styrene plant on January 5, 2010, and we expect to complete the subsequent closure of our polystyrene and expandable polystyrene plants during the first quarter of 2010. We expect to
treat the Australian styrenics business as a discontinued operation beginning in the first quarter of 2010 when operations cease.


Sales
between segments are generally recognized at external market prices and are eliminated in consolidation. We use EBITDA to measure the financial performance of our global business
units and for reporting the results of our operating segments. This measure includes all operating items relating
to the businesses. The EBITDA of operating segments excludes items that principally apply to our Company as a whole. The revenues and EBITDA for each of our reportable operating segments are as
follows (dollars in millions):

Year ended December 31,2009

2008

2007Net Sales:Polyurethanes

$
3,005

$
4,055

$
3,813Advanced Materials


1,059


1,492


1,434Textile Effects


691


903


985Performance Products


2,090


2,703


2,310Pigments


960


1,072


1,109Corporate and Other(2)


99


159


155Eliminations


(141
)

(169
)

(155
)Total

$
7,763

$
10,215

$
9,651


F-101

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

29. OPERATING SEGMENT INFORMATION (Continued)

Year ended December 31,2009

2008

2007Huntsman Corporation:Segment EBITDA(1):Polyurethanes

$
384

$
382

$
592Advanced Materials


59


149


158Textile Effects


(64
)

(33
)

41Performance Products


260


278


202Pigments


(24
)

17


51Corporate and Other(2)


558


550


(342
)Subtotal


1,173


1,343


702Discontinued Operations(3)


(15
)

186


(327
)Total


1,158


1,529


375Interest expense, net


(238
)

(263
)

(286
)Income tax (expense) benefitcontinuing operations


(370
)

(190
)

12Income tax benefit (expense)discontinued operations


6


(69
)

140Depreciation and amortization


(442
)

(398
)

(413
)Net income (loss) attributable to Huntsman Corporation

$
114

$
609

$
(172
)Depreciation and Amortization:Polyurethanes

$
160

$
153

$
150Advanced Materials


38


39


41Textile Effects


19


8


2Performance Products


78


69


62Pigments


104


91


90Corporate and Other(2)


43


38


35Subtotal


442


398


380Discontinued Operations(3)








33Total

$
442

$
398

$
413




Year ended December 31,2009

2008

2007Capital Expenditures:Polyurethanes

$
55

$
109

$
120Advanced Materials


14


31


34Textile Effects


19


50


55Performance Products


70


149


148Pigments


23


69


104Corporate and Other(2)


8


10


15Subtotal


189


418


476Discontinued Operations(3)








189Total

$
189

$
418

$
665


F-102

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

29. OPERATING SEGMENT INFORMATION (Continued)



December 31,2009

2008Total Assets:Polyurethanes

$
4,837

$
4,442Advanced Materials


1,446


1,308Textile Effects


717


750Performance Products


2,155


2,313Pigments


1,274


1,474Corporate and Other(2)


(1,803
)

(2,229
)Total

$
8,626

$
8,058




Year ended December 31,2009

2008

2007Huntsman International:Segment EBITDA(1):Polyurethanes

$
384

$
382

$
592Advanced Materials


59


149


158Textile Effects


(64
)

(33
)

41Performance Products


260


278


202Pigments


(24
)

17


51Corporate and Other(2)


(271
)

(236
)

(150
)Subotal


344


557


894Discontinued Operations(3)


(15
)

186


(327
)Total


329


743


567Interest expense, net


(240
)

(264
)

(287
)Income tax (expense) benefitcontinuing operations


(85
)

2


(41
)Income tax benefit (expense)discontinued operations


6


(69
)

140Depreciation and amortization


(420
)

(374
)

(391
)Net (loss) income attributable to Huntsman International LLC

$
(410
)
$
38

$
(12
)Depreciation and Amortization:Polyurethanes

$
160

$
153

$
150Advanced Materials


38


39


41Textile Effects


19


8


2Performance Products


78


69


62Pigments


104


91


90Corporate and Other(2)


21


14


13Subtotal


420


374


358Discontinued Operations(3)








33Total

$
420

$
374

$
391


F-103

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

29. OPERATING SEGMENT INFORMATION (Continued)



Year ended December 31,2009

2008

2007Capital Expenditures:Polyurethanes

$
55

$
109

$
120Advanced Materials


14


31


34Textile Effects


19


50


55Performance Products


70


149


148Pigments


23


69


104Corporate and Other(2)


8


10


15Subtotal


189


418


476Discontinued Operations(3)








189Total

$
189

$
418

$
665




December 31,2009

2008Total Assets:Polyurethanes

$
4,837

$
4,442Advanced Materials


1,446


1,308Textile Effects


717


750Performance Products


2,155


2,313Pigments


1,274


1,474Corporate and Other(2)


(2,736
)

(2,863
)Total

$
7,693

$
7,424


(1)Segment
EBITDA is defined as net income (loss) attributable to Huntsman Corporation or Huntsman International LLC, as appropriate, before interest,
income tax, depreciation and amortization.(2)Corporate
and Other items includes unallocated corporate overhead, loss on accounts receivable securitization program, unallocated foreign exchange gains or
losses, step accounting impacts, our Australian styrenics business, results of our former U.S. butadiene and MTBE business, loss on the early extinguishment of debt, net income (loss) attributable to
noncontrolling interests, unallocated restructuring, impairment and plant closing costs, extraordinary gain (loss) on the acquisition of a business, income (expenses) associated with the Terminated
Merger and related litigation (for Huntsman Corporation only) and other non-operating income (expense).(3)The
operating results of our polymers and base chemicals businesses are classified as discontinued operations, and, accordingly, the revenues of these
businesses are excluded for all periods presented. The EBITDA of our polymers and base chemicals businesses are included in discontinued operations for all periods presented. See "Note 27.
Discontinued Operations."


F-104

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

29. OPERATING SEGMENT INFORMATION (Continued)




Year ended December 31,2009

2008

2007By Geographic AreaRevenues(1):United States

$
2,299

$
3,071

$
2,979China


605


648


560Germany


432


599


506Mexico


432


565


470Italy


415


560


513Other nations


3,580


4,772


4,623Total

$
7,763

$
10,215

$
9,651




December 31,2009

2008Long-lived assets(2):Huntsman CorporationUnited States

$
1,524

$
1,601Netherlands


364


390United Kingdom


347


367Switzerland


212


210Spain


201


219Other nations


868


862Total

$
3,516

$
3,649Huntsman InternationalUnited States

$
1,365

$
1,418Netherlands


364


390United Kingdom


347


367Switzerland


212


210Spain


201


219Other nations


868


862Total

$
3,357

$
3,466


(1)Geographic
information for revenues is based upon countries into which product is sold.(2)Long
lived assets are made up of property, plant and equipment.


30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL

The following condensed consolidating financial statements present, in separate columns, financial information for the following: Huntsman International LLC (on a parent only
basis), with its investment in subsidiaries recorded under the equity method; the Guarantors on a combined, and where appropriate, consolidated basis; and the non-guarantors on a combined,
and where appropriate,

F-105

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

consolidated
basis. Additional columns present eliminating adjustments and consolidated totals as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.
There are no contractual restrictions limiting transfers of cash from Guarantor subsidiaries to Huntsman International. Each of the Guarantors is 100% owned by Huntsman International and has fully and
unconditionally guaranteed Huntsman International's outstanding notes on a joint and several basis.

F-106

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING BALANCE SHEETS  AS OF DECEMBER 31, 2009  (Dollars in Millions)

Parent
Company

Guarantors

Non-guarantors

Eliminations

Consolidated
Huntsman
International
LLCASSETSCurrent assets:Cash and cash equivalents

$
688

$
24

$
207

$


$
919Restricted cash








5





5Accounts and notes receivable, net


17


85


916





1,018Accounts receivable from affiliates


1,040


2,178


83


(3,269
)

32Inventories


78


205


908


(7
)

1,184Prepaid expenses


11


27


21


(17
)

42Deferred income taxes


10





28


(5
)

33Other current assets


120


1


100


(112
)

109Total current assets


1,964


2,520


2,268


(3,410
)

3,342Property, plant and equipment, net


439


913


2,003


2


3,357Investment in affiliates


4,314


1,139


106


(5,309
)

250Intangible assets, net


82


3


44





129Goodwill


(19
)

84


33


(4
)

94Deferred income taxes


236





118


(196
)

158Notes receivable from affiliates


63


988


8


(1,051
)

8Other noncurrent assets


40


129


186





355Total assets

$
7,119

$
5,776

$
4,766

$
(9,968
)
$
7,693LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
36

$
177

$
502

$


$
715Accounts payable to affiliates


1,702


744


863


(3,268
)

41Accrued liabilities


86


210


447


(130
)

613Deferred income tax





7


2


(7
)

2Note payable to affiliate


25











25Current portion of debt


39





156





195Total current liabilities


1,888


1,138


1,970


(3,405
)

1,591Long-term debt


3,675


12


94





3,781Notes payable to affiliates


525





1,056


(1,051
)

530Deferred income taxes


11


82


68


(82
)

79Other noncurrent liabilities


194


144


527





865Total liabilities


6,293


1,376


3,715


(4,538
)

6,846EquityHuntsman International LLC members' equity:Members' equity


3,021


4,464


1,986


(6,450
)

3,021Subsidiary preferred stock








1


(1
)

Accumulated deficit


(1,847
)

(125
)

(636
)

761


(1,847
)Accumulated other comprehensive (loss) income


(348
)

61


(315
)

254


(348
)Total Huntsman International LLC members' equity


826


4,400


1,036


(5,436
)

826Noncontrolling interests in subsidiaries








15


6


21Total equity


826


4,400


1,051


(5,430
)

847Total liabilities and equity

$
7,119

$
5,776

$
4,766

$
(9,968
)
$
7,693


F-107

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING BALANCE SHEETS  AS OF DECEMBER 31, 2008  (Dollars in Millions)

Parent
Company

Guarantors

Non-guarantors

Eliminations

Consolidated
Huntsman
International
LLCASSETSCurrent assets:Cash and cash equivalents

$


$
3

$
84

$


$
87Restricted cash








5





5Accounts and notes receivable, net


19


114


772





905Accounts receivable from affiliates


350


1,819


38


(2,192
)

15Inventories


103


198


1,207


(8
)

1,500Prepaid expenses


14


29


21


(19
)

45Deferred income taxes


9





21


(9
)

21Other current assets


61


2


92


(56
)

99Total current assets


556


2,165


2,240


(2,284
)

2,677Property, plant and equipment, net


477


924


2,062


3


3,466Investment in affiliates


4,883


1,367


118


(6,101
)

267Intangible assets, net


103





54





157Goodwill





87


9


(4
)

92Deferred income taxes


168


9


273


(58
)

392Notes receivable from affiliates


319


1,470


9


(1,789
)

9Other noncurrent assets


47


145


172





364Total assets

$
6,553

$
6,167

$
4,937

$
(10,233
)
$
7,424LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
20

$
175

$
533

$


$
728Accounts payable to affiliates


1,567


265


375


(2,191
)

16Accrued liabilities


91


155


389


(75
)

560Deferred income tax





35


10


(10
)

35Note payable to affiliate


423











423Current portion of debt


39





166





205Total current liabilities


2,140


630


1,473


(2,276
)

1,967Long-term debt


3,303


12


127





3,442Notes payable to affiliates





282


1,513


(1,789
)

6Deferred income taxes


2


2


65





69Other noncurrent liabilities


211


175


635





1,021Total liabilities


5,656


1,101


3,813


(4,065
)

6,505EquityHuntsman International LLC members' equity:Members' equity


2,865


4,685


1,716


(6,401
)

2,865Subsidiary preferred stock





1


1


(2
)

(Accumulated deficit) retained earnings


(1,414
)

499


(111
)

(388
)

(1,414
)Accumulated other comprehensive loss


(554
)

(119
)

(499
)

618


(554
)Total Huntsman International LLC members' equity


897


5,066


1,107


(6,173
)

897Noncontrolling interests in subsidiaries








17


5


22Total equity


897


5,066


1,124


(6,168
)

919Total liabilities and equity

$
6,553

$
6,167

$
4,937

$
(10,233
)
$
7,424


F-108

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS  YEAR ENDED DECEMBER 31, 2009  (Dollars in Millions)

Parent
Company

Guarantors

Non-guarantors

Eliminations

Consolidated
Huntsman
International
LLCRevenues:Trade sales, services and fees

$
654

$
2,106

$
4,907

$


$
7,667Related party sales


178


373


644


(1,099
)

96Total revenues


832


2,479


5,551


(1,099
)

7,763Cost of goods sold


676


1,983


5,085


(1,066
)

6,678Gross profit


156


496


466


(33
)

1,085Selling, general and administrative


154


123


572





849Research and development


51


30


64





145Other operating (income) expense


(24
)

(31
)

37





(18
)Restructuring, impairment and plant closing costs


9


2


141





152Operating (loss) income


(34
)

372


(348
)

(33
)

(43
)Interest (expense) income, net


(214
)

40


(66
)




(240
)Loss on accounts receivable securitization program


(15
)

(2
)

(6
)




(23
)Equity in (loss) income of investment in affiliates and subsidiaries


(317
)

(514
)

6


828


3Loss on early extinguishment of debt


(21
)










(21
)Other expense


(33
)







33


Loss from continuing operations before income taxes


(634
)

(104
)

(414
)

828


(324
)Income tax benefit (expense)


224


(148
)

(105
)

(56
)

(85
)Loss from continuing operations


(410
)

(252
)

(519
)

772


(409
)(Loss) income from discontinued operations, net of tax





(11
)

2





(9
)Extraordinary gain on the acquisition of a business, net of tax








6





6Net loss


(410
)

(263
)

(511
)

772


(412
)Net loss attributable to noncontrolling interests





1


2


(1
)

2Net loss attributable to Huntsman International LLC

$
(410
)
$
(262
)
$
(509
)
$
771

$
(410
)


F-109

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS  YEAR ENDED DECEMBER 31, 2008  (Dollars in Millions)

Parent Company

Guarantors

Non-
guarantors

Eliminations

Consolidated Huntsman International
LLCRevenues:Trade sales, services and fees

$
869

$
2,778

$
6,404

$


$
10,051Related party sales


337


442


1,146


(1,761
)

164Total revenues


1,206


3,220


7,550


(1,761
)

10,215Cost of goods sold


1,006


2,869


6,806


(1,747
)

8,934Gross profit


200


351


744


(14
)

1,281Selling, general and administrative


109


132


641


(1
)

881Research and development


53


31


70





154Other operating (income) expense


(15
)

55


(13
)




27Restructuring, impairment and plant closing costs








36





36Operating income


53


133


10


(13
)

183Interest (expense) income, net


(231
)

106


(139
)




(264
)Gain (loss) on accounts receivable securitization program


6


(10
)

(23
)




(27
)Equity in income (loss) of investment in affiliates and subsidiaries


106


(45
)

14


(61
)

14Other (expense) income


(14
)




1


13


(Loss) income from continuing operations before income taxes


(80
)

184


(137
)

(61
)

(94
)Income tax benefit (expense)


119


(77
)

16


(56
)

2Income (loss) from continuing operations


39


107


(121
)

(117
)

(92
)(Loss) income from discontinued operations, net of tax


(1
)

119


(1
)




117Extraordinary gain on the acquisition of a business, net of tax








14





14Net income (loss)


38


226


(108
)

(117
)

39Net income attributable to noncontrolling interests








(1
)




(1
)Net income (loss) attributable to Huntsman International LLC

$
38

$
226

$
(109
)
$
(117
)
$
38


F-110

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS  YEAR ENDED DECEMBER 31, 2007  (Dollars in Millions)

Parent Company

Guarantors

Non-
guarantors

Eliminations

Consolidated Huntsman International
LLCRevenues:Trade sales, services and fees

$
934

$
2,420

$
6,111

$


$
9,465Related party sales


484


450


1,022


(1,770
)

186Total revenues


1,418


2,870


7,133


(1,770
)

9,651Cost of goods sold


1,084


2,528


6,247


(1,764
)

8,095Gross profit


334


342


886


(6
)

1,556Selling, general and administrative


140


120


612


(1
)

871Research and development


45


33


67





145Other operating expense (income)


36


(121
)

30





(55
)Restructuring, impairment and plant closing (credits) costs





(1
)

43





42Operating income


113


311


134


(5
)

553Interest expense, net


(64
)

(95
)

(128
)




(287
)Gain (loss) on accounts receivable securitization program


9


(9
)

(21
)




(21
)Equity in (loss) income of investment in affiliates and subsidiaries


(79
)

51


13


28


13Other (expense) income


(6
)

6


2


(5
)

(3
)(Loss) income from continuing operations before income taxes


(27
)

264





18


255Income tax benefit (expense)


29


(93
)

23





(41
)Income from continuing operations


2


171


23


18


214(Loss) income from discontinued operations, net of tax


(12
)

(231
)

15





(228
)Extraordinary loss on the acquisition of a business, net of tax


(2
)




(5
)




(7
)Net (loss) income


(12
)

(60
)

33


18


(21
)Net loss attributable to noncontrolling interests








9





9Net (loss) income attributable to Huntsman International LLC

$
(12
)
$
(60
)
$
42

$
18

$
(12
)


F-111

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  YEAR ENDED DECEMBER 31, 2009  (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCNet cash provided by operating activities

$
288

$
48

$
84

$


$
420Investing activities:Capital expenditures


(7
)

(70
)

(112
)




(189
)Acquisition of business net of cash acquired and post-closing adjustments








(31
)




(31
)Proceeds from sale of assets, net of adjustments





2


3





5Increase in receivable from affiliate


(7
)










(7
)Cash received from affiliate


(258
)

(62
)

18


309


7Other, net








3





3Net cash used in investing activities


(272
)

(130
)

(119
)

309


(212
)Financing activities:Net repayments under revolving loan facilities








(14
)




(14
)Net repayments of overdraft facilities








(12
)




(12
)Net repayments of short-term debt








(13
)




(13
)Repayments of long-term debt


(510
)




(32
)




(542
)Proceeds from long-term debt


864





16





880Repayments of notes payable to affiliate


(403
)










(403
)Proceeds from notes payable to affiliate


529











529Intercompany repayments








(50
)

50


Repayments of notes payable


(43
)




(20
)




(63
)Borrowings on notes payable


42





22





64Debt issuance costs paid


(5
)










(5
)Call premiums related to early extinguishment of debt


(14
)










(14
)Contribution from parent, net


236


103


256


(359
)

236Dividends paid to parent


(23
)










(23
)Other, net


(1
)










(1
)Net cash provided by financing activities


672


103


153


(309
)

619Effect of exchange rate changes on cash








5





5Increase in cash and cash equivalents


688


21


123





832Cash and cash equivalents at beginning of period





3


84





87Cash and cash equivalents at end of period

$
688

$
24

$
207

$


$
919


F-112

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS  YEAR ENDED DECEMBER 31, 2008  (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCNet cash (used in) provided by operating activities

$
(320
)
$
649

$
(290
)
$


$
39Investing activities:Capital expenditures


(50
)

(154
)

(214
)




(418
)Acquisition of business, net of cash acquired and post-closing adjustments








(2
)




(2
)Proceeds from sale of assets, net of adjustments





(28
)

2





(26
)Decrease in receivable from affiliate


406


46





(273
)

179Investment in affiliate


(164
)

(426
)




546


(44
)Cash received from affiliate





10








10Change in restricted cash








(8
)




(8
)Other, net





(3
)

(2
)




(5
)Net cash provided by (used in) investing activities


192


(555
)

(224
)

273


(314
)Financing activities:Net borrowings under revolving loan facilities


8





3





11Net borrowings on overdraft facilities








8





8Net borrowings on short-term debt








73





73Repayments of long-term debt


(1
)




(10
)




(11
)Proceeds from long-term debt


1


10


17





28Issuance of note payable to affiliate


423











423Intercompany repayments





(227
)

(46
)

273


Repayments of notes payable


(44
)




(11
)




(55
)Borrowings on notes payable


41





7





48Debt issuance costs paid


(5
)










(5
)Contribution from parent, net





120


426


(546
)

Dividends paid to parent


(306
)










(306
)Other, net








(1
)




(1
)Net cash provided by (used in) financing activities


117


(97
)

466


(273
)

213Effect of exchange rate changes on cash








(5
)




(5
)Decrease in cash and cash equivalents


(11
)

(3
)

(53
)




(67
)Cash and cash equivalents at beginning of period


11


6


137





154Cash and cash equivalents at end of period

$


$
3

$
84

$


$
87


F-113

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONHUNTSMAN INTERNATIONAL (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW  YEAR ENDED DECEMBER 31, 2007  (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCNet cash (used in) provided by operating activities

$
(1,378
)
$
1,356

$
85

$
(6
)
$
57Investing activities:Capital expenditures


(42
)

(313
)

(310
)




(665
)Acquisition of business, net of cash acquired and post-closing adjustments


(8
)




21





13Proceeds from sale of businesses/assets, net of adjustments


348


486


16





850Decrease (increase) in receivable from affiliate


1,234


(83
)




(1,329
)

(178
)Investment in affiliate





(16
)

(12
)

11


(17
)Cash received from affiliate


19





4


(19
)

4Other, net








1





1Net cash provided by (used in) investing activities


1,551


74


(280
)

(1,337
)

8Financing activities:Net repayments under revolving loan facilities








(17
)




(17
)Net borrowings on overdraft facilities








15





15Repayments of long-term debt


(413
)




(9
)




(422
)Proceeds from long-term debt


249





17





266Intercompany (repayments) borrowings





(1,412
)

83


1,329


Repayments of notes payable


(57
)










(57
)Borrowings on notes payable


47





6





53Debt issuance costs paid


(5
)










(5
)Call premiums related to early extinguishment of debt


(1
)










(1
)Dividends paid





(6
)




6


Other, net





(6
)

(3
)

8


(1
)Net cash (used in) provided by financing activities


(180
)

(1,424
)

92


1,343


(169
)Effect of exchange rate changes on cash








12





12(Decrease) increase in cash and cash equivalents


(7
)

6


(91
)




(92
)Cash and cash equivalents at beginning of period


18





228





246Cash and cash equivalents at end of period

$
11

$
6

$
137

$


$
154


F-114

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

31. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA

A summary of selected unaudited quarterly financial data for the years ended December 31, 2009 and 2008 is as follows (dollars in millions):

Huntsman Corporation

Three months endedMarch 31,
2009

June 30,
2009

September 30,
2009

December 31,
2009Revenues

$
1,693

$
1,866

$
2,108

$
2,096Gross profit


145


237


337


349Restructuring, impairment and plant closing costs


14


63


62


13(Loss) income from continuing operations


(297
)

409


(66
)

69(Loss) income before extraordinary gain


(294
)

406


(68
)

62Net (loss) income


(294
)

406


(68
)

68Net (loss) income attributable to Huntsman Corporation


(290
)

406


(68
)

66Basic (loss) income per share:(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders


(1.25
)

1.75


(0.28
)

0.29(Loss) income before extraordinary gain attributable to Huntsman Corporation common stockholders


(1.24
)

1.74


(0.29
)

0.26Net (loss) income attributable to Huntsman Corporation common stockholders


(1.24
)

1.74


(0.29
)

0.28Diluted (loss) income per share:(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders


(1.25
)

1.53


(0.28
)

0.27(Loss) income before extraordinary gain attributable to Huntsman Corporation common stockholders


(1.24
)

1.51


(0.29
)

0.24Net (loss) income attributable to Huntsman Corporation common stockholders


(1.24
)

1.51


(0.29
)

0.26


F-115

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

31. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA (Continued)



Three months endedMarch 31,
2008

June 30,
2008

September 30,
2008

December 31,
2008Revenues

$
2,540

$
2,896

$
2,731

$
2,048Gross profit


367


382


350


165Restructuring, impairment and plant closing costs


4


1


3


28Income (loss) from continuing operations(a)(b)


12


13


(22
)

476Income (loss) before extraordinary gain


11


18


(21
)

588Net income (loss)


11


27


(20
)

592Net income (loss) attributable to Huntsman Corporation


7


24


(20
)

598Basic income (loss) per share:Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders(a)(b)


0.04


0.04


(0.10
)

2.06Income (loss) before extraordinary gain attributable to Huntsman Corporation common stockholders


0.03


0.06


(0.10
)

2.55Net income (loss) attributable to Huntsman Corporation common stockholders


0.03


0.10


(0.09
)

2.56Diluted income (loss) per share:Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders(a)(b)


0.04


0.04


(0.10
)

2.04Income (loss) before extraordinary gain attributable to Huntsman Corporation common stockholders


0.03


0.06


(0.10
)

2.52Net income (loss) attributable to Huntsman Corporation common stockholders


0.03


0.10


(0.09
)

2.53


F-116

---



Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

31. SELECTED UNAUDITED QUARTERLY FINANCIAL DATA (Continued)

Huntsman International

Three months endedMarch 31,
2009

June 30,
2009

September 30,
2009

December 31,
2009Revenues

$
1,693

$
1,866

$
2,108

$
2,096Gross profit


150


240


342


353Restructuring, impairment and plant closing costs


14


63


62


13(Loss) income from continuing operations


(288
)

(126
)

(39
)

44(Loss) income before extraordinary gain


(285
)

(129
)

(41
)

37Net (loss) income


(285
)

(129
)

(41
)

43Net (loss) income attributable to Huntsman International LLC


(281
)

(129
)

(41
)

41




Three months endedMarch 31,
2008

June 30,
2008

September 30,
2008

December 31,
2008Revenues

$
2,540

$
2,896

$
2,731

$
2,048Gross profit


371


386


355


169Restructuring, impairment and plant closing costs


4


1


3


28Income (loss) from continuing operations(b)


17


20


8


(137
)Income (loss) before extraordinary loss


16


25


9


(25
)Net income (loss)


16


34


10


(21
)Net income (loss) attributable to Huntsman International LLC


12


31


10


(15
)


(a)Included
in our income from continuing operations for the three months ended December 31, 2008, was pretax income of $815 million associated
with the Terminated Merger. See "Note 26. Income (Expenses) Associated with the Terminated Merger and Related Litigation."(b)Included
in our and Huntsman International's income from continuing operations for the three months ended December 31, 2008, was a pretax gain of
$175 million resulting from a partial fire insurance settlement. See "Note 25. Casualty Losses and Insurance Recoveries."


F-117

---





Table of Contents

HUNTSMAN CORPORATION (PARENT ONLY)  Schedule ICondensed Financial Information of Registrant

HUNTSMAN CORPORATION (Parent Only)  BALANCE SHEETS  (Dollars in Millions)

December 31,2009

2008ASSETSCash and cash equivalents

$
826

$
570Receivable from affiliate


16


Note receivable from affiliate


25


423Total current assets


867


993Note receivable from affiliate-long-term


525


Investment in and advances to affiliates


772


903Total assets

$
2,164

$
1,896LIABILITIES AND STOCKHOLDERS' EQUITYAccounts payable

$
15

$
4Payable to affiliate


31


7Accrued liabilities


10


40Current portion of debt


236


Total current liabilities


292


51Long-term debt





235Other long term liabilities


28


Total liabilities


320


286STOCKHOLDERS' EQUITYCommon stock, $0.01 par value, 1,200,000,000 shares authorized, 237,225,258 and 234,430,334 issued and 234,081,490 and 233,553,515 outstanding as of
December 31, 2009 and 2008, respectively


2


2Mandatory convertible preferred stock, $0.01 par value, 100,000,000 shares authorized





Additional paid-in capital


3,155


3,141Unearned stock-based compensation


(11
)

(13
)Accumulated deficit


(1,015
)

(1,031
)Accumulated other comprehensive loss


(287
)

(489
)Total stockholders' equity


1,844


1,610Total liabilities and stockholders' equity

$
2,164

$
1,896


This
statement should be read in conjunction with the notes to the consolidated financial statements.

F-118

---



Table of Contents

HUNTSMAN CORPORATION (Parent Only)  STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)  (Dollars in Millions)

Year ended December 31,2009

2008

2007Selling, general and administrative

$
(2
)
$
(3
)
$
(4
)Interest (expense) income


(2
)




1Equity in (loss) income of subsidiaries


(431
)

(474
)

41Dividend incomeaffiliate


23


306


Income (expenses) associated with the Terminated Merger and related litigation


835


780


(210
)Income tax expense


(309
)




Net income (loss)

$
114

$
609

$
(172
)Net income (loss)

$
114

$
609

$
(172
)Other comprehensive income (loss) from subsidiaries


202


(746
)

318Comprehensive income (loss)

$
316

$
(137
)
$
146


This
statement should be read in conjunction with the notes to the consolidated financial statements.

F-119

---





Table of Contents

HUNTSMAN CORPORATION (Parent Only)  STATEMENTS OF STOCKHOLDERS' EQUITY  (Dollars in Millions)

SharesAccumulated
other
comprehensive
(loss) incomeCommon
Stock

Mandatory
convertible
preferred stock

Common
stock

Mandatory
convertible
preferred stock

Additional
paid-in
capital

Unearned
stock-based
compensation

Accumulated
deficit

Total
equityBalance, January 1, 2007


220,652,429


5,750,000

$
2

$
288

$
2,798

$
(13
)
$
(1,278
)
$
(61
)
$
1,736Net loss




















(172
)




(172
)Other comprehensive income























318


318Issuance of nonvested stock awards














10


(10
)







Vesting of stock awards


393,555























Stock options exercised


99,332











2











2Recognition of stock-based compensation














13


11








24Repurchase and cancellation of stock awards


(109,126
)
















(2
)




(2
)Dividends declared on common stock




















(88
)




(88
)Reversal of valuation allowance on deferred tax assets related to previous equity transactions














8











8Increase in noncontrolling interest resulting from acquisition of a business


























Balance, December 31, 2007


221,036,190


5,750,000


2


288


2,831


(12
)

(1,540
)

257


1,826Net income




















609





609Other comprehensive loss























(746
)

(746
)Issuance of nonvested stock awards














12


(12
)







Vesting of stock awards


594,908











1











1Recognition of stock-based compensation














9


11


`





20Repurchase and cancellation of stock awards


(160,058
)
















(4
)




(4
)Preferred stock conversion


12,082,475


(5,750,000
)




(288
)

288











Effect of adoption of SFAS No. 158, (currently included in ASC 715-20-55) net of tax




















(3
)




(3
)Dividends declared on common stock




















(93
)




(93
)Dividends paid to noncontrolling interest shareholders


























Balance, December 31, 2008


233,553,515





2





3,141


(13
)

(1,031
)

(489
)

1,610Net income




















114





114Other comprehensive income























202


202Issuance of nonvested stock awards














8


(8
)







Vesting of stock awards


742,565























Recognition of stock-based compensation














6


10








16Repurchase and cancellation of stock awards


(214,590
)
















(2
)




(2
)Dividends declared on common stock




















(96
)




(96
)Balance, December 31, 2009


234,081,490




$
2

$


$
3,155

$
(11
)
$
(1,015
)
$
(287
)
$
1,844


This statement should be read in conjunction with the notes to the consolidated financial statements.

F-120

---





Table of Contents

HUNTSMAN CORPORATION (Parent Only)  STATEMENTS OF CASH FLOWS  (Dollars in Millions)

Year ended December 31,2009

2008

2007Operating Activities:Net income (loss)

$
114

$
609

$
(172
)Equity in loss (income) of subsidiaries


431


474


(41
)Stock-based compensation


4





Non cash interest income


(17
)




Changes in operating assets and liabilities


175


(49
)

104Net cash provided by (used in) operating activities


707


1,034


(109
)Investing Activities:Loan to affiliate


(529
)

(423
)

Repayments of loan to affiliate


403





Investment in affiliate


(236
)




Proceeds from maturity of government securities (restricted as to use)





4


14Net cash (used in) provided by investing activities


(362
)

(419
)

14Financing Activities:Proceeds from issuance of Convertible Note





235


Dividends paid to preferred stockholders





(4
)

(14
)Dividends paid to common stockholders


(96
)

(93
)

(88
)Repurchase and cancellation of stock awards


(2
)

(4
)

Stock options exercised








2Increase (decrease) in payable to affiliates


7


(179
)

178Other, net


2





Net cash (used in) provided by financing activities


(89
)

(45
)

78Increase (decrease) in cash and cash equivalents


256


570


(17
)Cash and cash equivalents at beginning of period


570





17Cash and cash equivalents at end of period

$
826

$
570

$



This
statement should be read in conjunction with the notes to the consolidated financial statements.

F-121

---





Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES  Schedule IIValuation and Qualifying Accounts  (Dollars in Millions)

Column A

Column B

Column C



Column D

Column EAdditionsDescription

Balance at
Beginning
of Period

Charged
to cost and
expenses

Charged
to other
accounts

Deductions

Balance at
End of
PeriodAllowance for Doubtful Accounts:Year ended December 31, 2009

$
47

$
9

$


$


$
56Year ended December 31, 2008


43


6


(2
)




47Year ended December 31, 2007


39


3


1





43


HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  Schedule IIValuation and Qualifying Accounts  (Dollars in Millions)

Column A

Column B

Column C



Column D

Column EAdditionsDescription

Balance at
Beginning
of Period

Charged
to cost and
expenses

Charged
to other
accounts

Deductions

Balance at
End of
PeriodAllowance for Doubtful Accounts:Year ended December 31, 2009

$
47

$
9

$


$


$
56Year ended December 31, 2008


43


6


(2
)




47Year ended December 31, 2007


39


3


1





43


F-122

---





Table of Contents

EXHIBIT INDEX

Number

Description1.1

Underwriting Agreement, dated as of August 2, 2007, by and among the Company, MatlinPatterson Global Opportunities Partners L.P., MatlinPatterson Global Opportunities Partners B, L.P., MatlinPatterson
Global Opportunities Partners (Bermuda) L.P. and Credit Suisse Securities (USA) LLC (incorporated by reference to Exhibit 1.1 to our current report on Form 8-K filed on August 6, 2007)2.1

Asset Purchase Agreement, dated February 15, 2007 among Flint Hills Resources, LLC, Huntsman International LLC, Huntsman Petrochemical Corporation, Huntsman International Chemicals Corporation, Huntsman
Polymers Holdings Corporation, Huntsman Expandable Polymers Company, LLC, Huntsman Polymers Corp. and Huntsman Chemical Company of Canada, Inc. (incorporated by reference to Exhibit 2.1 to our current report on Form 8-K filed on
February 20, 2007)2.2

Amended and Restated Asset Purchase Agreement dated June 22, 2007 among Flint Hills Resources, LP, Flint Hills Resources, LLC, Huntsman International LLC, Huntsman Petrochemical Corporation,
Huntsman International Chemicals Corporation, Huntsman Polymers Holdings Corporation, Huntsman Expandable Polymers Company, LC, Huntsman Polymers Corp. and Huntsman Chemical Company of Canada, Inc. (incorporated by reference to Exhibit 2.1
to our current report on Form 8-K filed on June 25, 2007)2.3

Agreement and Plan of Merger, dated as of June 26, 2007, among the Company, Basell AF and BI Acquisition Holdings Limited (incorporated by reference to Exhibit 2.1 to our current report on Form 8-K
filed on June 27, 2007)2.4

Agreement and Plan of Merger, dated as of July 12, 2007, among the Company, Hexion Specialty Chemicals, Inc. and Nimbus Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to our current
report on Form 8-K filed on July 13, 2007)3.1

Certificate of Designations, Preferences and Rights of 5% Mandatory Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K filed on February 16,
2005)3.2

Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to our registration statement on Form S-1/A filed on February 9, 2005 (File
No. 333-120749)3.3

Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1(ii) to our current report on Form 8-K filed on November 26, 2008)4.1

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 Huntsman LLC's registration statement on Form S-4 filed on January 29, 2004 (File No. 333-112279))4.2

Form of Unrestricted 115/8% Senior Secured Note due 2010 (included as Exhibit A-2 to Exhibit 4.1)4.3

Form of Guarantee relating to the 115/8% Senior Secured Notes due 2010 (included as Exhibit E to Exhibit 4.1)4.4

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 Huntsman LLC's quarterly report on Form 10-Q for the three months ended June 30, 2004, filed on August 16, 2004)4.5

Form of Restricted Fixed Rate Note due 2012 (included as Exhibit A-1 to Exhibit 4.4)


---



Table of Contents

Number

Description4.6

Form of Restricted Floating Rate Note due 2011 (included as Exhibit A-2 to Exhibit 4.4)4.7

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 4.4)4.8

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 Huntsman International LLC's current report on
Form 8-K filed on December 23, 2004)4.9

Form of Restricted 73/8% Senior Subordinated Note denominated in dollars due 2015 (included as Exhibit A-1 to Exhibit 4.8)4.10

Form of Restricted 71/2% Senior Subordinated Note denominated in euros due 2015 (included as Exhibit A-2 to Exhibit 4.8)4.11

Form of Unrestricted 73/8% Senior Subordinated Note denominated in dollars due 2015 (included as Exhibit A-3 to Exhibit 4.8)4.12

Form of Unrestricted 71/2% Senior Subordinated Note denominated in euros due 2015 (included as Exhibit A-4 to Exhibit 4.8)4.13

Form of Guarantee (included as Exhibit E to Exhibit 4.8)4.14

Registration Rights Agreement dated as of February 10, 2005, by and among the Company and the stockholders signatory thereto (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K
filed on February 16, 2005)4.15

Form of stock certificate of Huntsman Corporation (incorporated by reference to Exhibit 4.68 to amendment No. 3 to our registration statement on Form S-1 filed on February 8, 2005 (File
No. 333-120749))4.16

Form of mandatory convertible preferred stock certificate of Huntsman Corporation (incorporated by reference to Exhibit A to Exhibit 3.01 to our current report on Form 8-K filed February 16,
2005)4.17

Supplemental Indenture, dated as of July 11, 2005, among Huntsman LLC, the Guarantors named therein and HSBC Bank USA, National Association, as Trustee, relating to the 111/2%
Huntsman LLC Senior Notes due 2012 and Huntsman LLC Senior Floating Rate Notes due 2011 (incorporated by reference to Exhibit 4.1 to Huntsman LLC's current report on Form 8-K filed on July 15, 2005)4.18

Supplemental Indenture, dated as of July 13, 2005 among Huntsman LLC, the Guarantors named therein and HSBC Bank USA, National Association, as Trustee, relating to the 115/8%
Huntsman LLC Senior Secured Notes due 2010 (incorporated by reference to Exhibit 4.2 to Huntsman LLC's current report on Form 8-K filed on July 15, 2005)4.19

Supplemental Indenture dated August 16, 2005 to Indenture dated as December 17, 2004 by and among Huntsman International LLC, the guarantors named therein, and Wells Fargo Bank, National Association (as
successor by consolidation to Wells Fargo Bank Minnesota, National Association), as trustee, relating to Huntsman International LLC's dollar denominated 73/8% Senior Subordinated Notes due 2015 and euro denominated
71/2% Senior Subordinated Notes due 2015 (incorporated by reference to Exhibit 4.4 to Huntsman International LLC's current report on Form 8-K filed on August 22, 2005)


---



Table of Contents

Number

Description4.20

Supplemental Indenture dated August 16, 2005, to Indenture dated as of September 30, 2003 by and among Huntsman International LLC (as successor to Huntsman LLC), the guarantors named therein, and HSBC
Bank USA, National Association, as trustee, relating to Huntsman International LLC's 115/8% Senior Secured Notes due 2010, originally issued by Huntsman LLC (incorporated by reference to Exhibit 4.7 to
Huntsman International LLC's current report on Form 8-K filed on August 22, 2005)4.21

Supplemental Indenture dated August 16, 2005, to Indenture dated as of June 22, 2004 by and among Huntsman International LLC (as successor to Huntsman LLC), the guarantors named therein, and HSBC
Bank USA, National Association, as trustee, relating to Huntsman International LLC's 111/2% Senior Notes due 2012 and Senior Floating Rate Notes due 2011, originally issued by Huntsman LLC (incorporated by
reference to Exhibit 4.10 to Huntsman International LLC's current report on Form 8-K filed on August 22, 2005)4.22

Form of Restricted Stock Agreement for Outside Directors, effective for grants prior to February 6, 2008 (incorporated by reference to Exhibit 4.7 to our registration statement on Form S-8 filed on
February 10, 2006 (File No. 333-131729))4.23

Form of Restricted Stock Unit Agreement for Outside Directors effective for grants prior to February 6, 2008 (incorporated by reference to Exhibit 4.8 of our registration statement on Form S-8 filed on
February 10, 2006 (File No. 333-131729))4.24

Indenture, dated as of November 13, 2006, among Huntsman International LLC, as Issuer, the Guarantors party thereto, and Wells Fargo Bank, National Association, as Trustee, relating to the $200,000,000
77/8% Senior Subordinated Notes due 2014 and the €400,000,000 67/8 Senior Subordinated Notes due 2013 (incorporated by reference to Exhibit 4.1 to our quarterly report on Form 10-Q
for the three months ended September 30, 2006, filed on November 14, 2006)4.25

Form of Restricted 77/8% Senior Subordinated Note denominated in dollars due 2014 (included as Exhibit A-1 to Exhibit 4.24)4.26

Form of Restricted 67/8% Senior Subordinated Note denominated in euros due 2013 (included as Exhibit A-2 to Exhibit 4.24)4.27

Form of Unrestricted 77/8% Senior Subordinated Note denominated in dollars due 2014 (included as Exhibit A-3 to Exhibit 4.24)4.28

Form of Unrestricted 67/8% Senior Subordinated Note denominated in euros due 2013 (included as Exhibit A-4 to Exhibit 4.24)4.29

Exchange and Registration Rights Agreement, dated as of November 13, 2006, among Huntsman International LLC, as Issuer, the Guarantors party thereto, and the Purchasers as defined therein, relating to
$200,000,000 aggregated principal amount of the 77/8% Senior Subordinated Notes due 2014 (incorporated by reference to Exhibit 4.2 to our quarterly report on Form 10-Q for the three months ended September 30,
2006, filed on November 14, 2006)4.30

Amended and Restated Registration Rights Agreement dated July 12, 2007, among the Company, Huntsman Family Holdings Company LLC, MatlinPatterson Global Opportunities Partners, L.P., MatlinPatterson
Global Opportunities Partners B, L.P., MatlinPatterson Global Opportunities Partners (Bermuda), L.P. and the other stockholders party thereto (incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed
on July 13, 2007)4.31

Form of Restricted Stock Agreement for Outside Directors (incorporated by reference to Exhibit 4.31 to our annual report on Form 10-K filed on February 22, 2008)4.32

Form of Restricted Stock Unit Agreement for Outside Directors (incorporated by reference to Exhibit 4.32 to our annual report on Form 10-K filed on February 22, 2008)


---



Table of Contents

Number

Description4.33

Indenture, dated as of July 6, 2009, by and among Huntsman International LLC, the subsidiary guarantors named therein and Wilmington Trust FSB, a federal savings bank, as trustee (incorporated by reference to
Exhibit 4.1 to our current report on Form 8-K filed on July 8, 2009)4.34

Form of 51/2% Senior Note due 2016 (incorporated by reference to Exhibit 4.2 to our current report on Form 8-K filed on July 8, 2009)4.35

Form of Guarantee (incorporated by reference to Exhibit 4.3 to our current report on Form 8-K filed on July 8, 2009)4.36

Amended and Restated Indenture, dated as of September 10, 2009, by and among Huntsman International LLC, the subsidiary guarantors named therein and Wilmington Trust FSB, a federal savings bank, as trustee
(incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed on September 14, 2009)10.1

Aircraft Dry Lease, dated as of September 14, 2001, between Jstar Corporation and Airstar Corporation (incorporated by reference to Exhibit 10.10 to amendment No. 1 to the registration statement on
Form S-4 of Huntsman LLC filed on February 11, 2004 (File No. 333-112279))10.2

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 amendment No. 1 to the
registration statement on Form S-4 of Huntsman International LLC (File No. 333-106482))10.3

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)10.4

Gift Agreement by and among Huntsman Group Inc. and the Jon and Karen Huntsman Foundation (incorporated by reference to Exhibit 10.17 to amendment No. 4 to our registration statement on Form S-1
filed on February 8, 2005 (File No. 333-120749))10.5

Pledge, Assignment and Collateral Agency Agreement dated February 16, 2005 between the Company and Citibank, N.A. (incorporated by reference to Exhibit 10.18 to amendment No. 4 to our registration
statement on Form S-1 filed on February 8, 2005 (File No. 333-120749))10.6

Huntsman Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.19 to amendment No. 4 to our registration statement on Form S-1 filed on February 8, 2005 (File
No. 333-120749))10.7

Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.20 to amendment No. 4 to our registration statement on Form S-1 filed on February 8, 2005 (File
No. 333-120749))10.8

Form of Restricted Stock Agreement, effective for grants prior to February 6, 2008 (incorporated by reference to Exhibit 10.21 to amendment No. 4 to our registration statement on Form S-1 filed on
February 8, 2005 (File No. 333-120749))10.9

Form of Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.22 to amendment No. 4 to our registration statement on Form S-1 filed on February 8, 2005 (File
No. 333-120749))10.10

Form of Phantom Share Agreement, effective for grants prior to February 6, 2008 (incorporated by reference to Exhibit 10.23 to amendment No. 4 to our registration statement on Form S-1 filed on
February 8, 2005 (File No. 333-120749))


---



Table of Contents

Number

Description10.11

Form of Executive Severance Plan (as amended and restated) (incorporated by reference to Exhibit 10.24 to amendment No. 4 to our registration statement on Form S-1 filed on February 8, 2005 (File
No. 333-120749))10.12

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.25 to amendment No. 4 to our registration statement on Form S-1 filed on February 8, 2005 (File No. 333-120749))10.13

Employment Agreement with Paul Hulme (incorporated by reference to Exhibit 10.24 to amendment No. 1 to our registration statement on Form S-1 dated January 6, 2005 (File No. 333-120749))10.14

Employment Agreement with Anthony Hankins (incorporated by reference to Exhibit 10.27 to amendment No. 2 to our registration statement on Form S-1 filed on January 28, 2005 (File
No. 333-120749))10.15

Huntsman Supplemental Executive Retirement Plan, as amended through the sixth amendment, April 21, 2005 (incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the
three-months ended March 31, 2005, filed on May 11, 2005)10.16

Credit Agreement dated August 16, 2005 among Huntsman International LLC, Deutsche Bank AG New York Branch as Administrative Agent and the other financial institutions named therein (incorporated by reference
to Exhibit 10.1 to Huntsman International LLC's current report on Form 8-K filed August 22, 2005)10.17

Intercreditor Agreement dated August 16, 2005 among Deutsche Bank AG New York Branch as collateral agent and administrative agent under the above referenced credit agreement, and HSBC Bank USA, National
Association as trustee under the indenture governing Huntsman International LLC's 115/8% Senior Secured Notes (incorporated by reference to Exhibit 10.2 to Huntsman International LLC's current report on
Form 8-K filed August 22, 2005)10.18

Second Amendment to Amended and Restated Pooling Agreement, dated August 16, 2005, among Huntsman Receivables France LLC, Huntsman (Europe), BVBA and J.P. Morgan Bank (incorporated by reference to
Exhibit 10.4 to Huntsman International LLC's current report on Form 8-K filed on August 22, 2005)10.19

Fourth Amendment to 2000-1 Supplement, dated August 16, 2005, among Huntsman Receivables Finance LLC, Huntsman (Europe), BVBA and J.P. Morgan (Ireland) Plc (incorporated by reference to
Exhibit 10.5 to Huntsman International LLC's current report on Form 8-K filed on August 22, 2005)10.20

Form of Non-qualified Stock Option Agreement for Outside Directors (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed November 8, 2005)10.21

Amended and Restated Huntsman Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed December 30, 2005)10.22

Huntsman Supplemental Executive MPP Plan (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed December 30, 2005)10.23

Amended and Restated Huntsman Supplemental Savings Plan (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K filed December 30, 2005)10.24

Huntsman Outside Directors Elective Deferral Plan (incorporated by reference to Exhibit 10.4 to our current report on Form 8-K filed December 30, 2005)10.25

Second Amended and Restated Pooling Agreement, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA and J.P. Morgan Bank (Ireland), as trustee, dated as of April 18, 2006 (incorporated by
reference to Exhibit 10.1 to our quarterly report on Form 10-Q for the three months ended March 31, 2006, filed on May 9, 2006)


---



Table of Contents

Number

Description10.26

Amended and Restated 2000-1 Supplement to Second Amended and Restated Pooling Agreement, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, Jupiter Securitization Corporation, the several financial
institutions party thereto as funding agents, the Series 2000-1 Conduit Purchasers party thereto, the several financial institutions party thereto as Series 2000-1 APA Banks, J.P.Morgan Securities Ltd., JPMorgan Chase Bank, N.A., and
J.P.Morgan (Ireland) plc, as trustee, dated as of April 18, 2006 (incorporated by reference to Exhibit 10.2 to our quarterly report on Form 10-Q for the three months ended March 31, 2006, filed on May 9, 2006)10.27

Amended and Restated Contribution Agreement, between Huntsman International LLC and Huntsman Receivables Finance LLC, dated as of April 18, 2006 (incorporated by reference to Exhibit 10.3 to our
quarterly report on Form 10-Q for the three months ended March 31, 2006, filed on May 9, 2006)10.28

Second Amended and Restated Servicing Agreement, dated as of April 18, 2006, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, the various affiliates of Huntsman International LLC party
thereto as local servicers, J.P.Morgan Bank (Ireland), as Trustee, PricewaterhouseCoopers LLP, and Huntsman International LLC (incorporated by reference to Exhibit 10.4 to our quarterly report on Form 10-Q for the three months
ended March 31, 2006, filed on May 9, 2006)10.29

Consent and Second Amendment to Credit Agreement and Amendment to Security Documents, dated June 30, 2006, by and among Huntsman International LLC, as Borrower, Deutsche Bank AG New York Branch, as
Administrative Agent and Collateral Agent, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on July 7, 2006)10.30

Withdrawal of Originator, dated November 28, 2006, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, the various affiliates of Huntsman International LLC party thereto as local servicers,
J.P.Morgan Bank (Ireland), as Trustee, PricewaterhouseCoopers LLP, and Huntsman International LLC (incorporated by reference to Exhibit 10.30 to our annual report on Form 10-K filed on March 1, 2007)10.31

Third Amendment to Credit Agreement dated April 19, 2007 by and among Huntsman International LLC, as Borrower, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, and the other
financial institutions party thereto (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on April 23, 2007)10.32

First Amendment to Huntsman Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.32 to our annual report on Form 10-K filed on February 22, 2008)10.33

First Amendment to Huntsman Supplemental Executive MPP Plan (incorporated by reference to Exhibit 10.33 to our annual report on Form 10-K filed on February 22, 2008)10.34

First Amendment to Huntsman Supplemental Savings Plan (incorporated by reference to Exhibit 10.34 to our annual report on Form 10-K filed on February 22, 2008)10.35

Second Amendment to Huntsman Supplemental Savings Plan (incorporated by reference to Exhibit 10.35 to our annual report on Form 10-K filed on February 22, 2008)10.36

First Amendment to Huntsman Outside Directors Elective Deferral Plan (incorporated by reference to Exhibit 10.36 to our annual report on Form 10-K filed on February 22, 2008)10.37

Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.37 to our annual report on Form 10-K filed on February 22, 2008)10.38

Form of Phantom Share Agreement (incorporated by reference to Exhibit 10.38 to our annual report on Form 10-K filed on February 22, 2008)


---



Table of Contents

Number

Description10.39

Huntsman Corporation's Acceptance of Backstop Commitment dated October 26, 2008, among the Company and certain stockholders (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed
on October 28, 2008)10.40

Second Amendment to the Second Amended and Restated Pooling Agreement, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, the Series 2000-1 conduit purchasers party thereto, the several
financial institutions party thereto as Series 2000-1 APA banks, the several financial institutions party thereto as funding agents, JPMorgan Chase Bank, N.A. as administrative agent and BNY Financial Services plc, the successor to
J.P. Morgan Bank (Ireland) plc, as trustee, The Bank of New York Mellon, and JPMorgan Chase Bank, N.A., dated as of November 13, 2008 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on
November 19, 2008)10.41

Second Amended and Restated 2000-1 Supplement to Second Amended and Restated Pooling Agreement, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, the several financial institutions party thereto as
funding agents, the Series 2000-1 Conduit Purchasers party thereto, the several financial institutions party thereto as Series 2000-1 APA Banks, J.P.Morgan Securities Ltd., JPMorgan Chase Bank, N.A., and BNY Financial Services plc,
 the successor to J.P.Morgan (Ireland) plc, as trustee, dated as of November 13, 2008 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed on November 19, 2008)10.42

Amendment to the Second Amended and Restated Servicing Agreement, among Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, the various affiliates of Huntsman International LLC party thereto as local
servicers, Huntsman International LLC, as servicer guarantor, BNY Financial Services plc, the successor to J.P.Morgan Bank (Ireland), as trustee, and PricewaterhouseCoopers LLP, as liquidation servicer, dated as of November 13,
2008 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K filed on November 19, 2008)10.43

Settlement Agreement and Release, dated December 14, 2008, among Huntsman Corporation, Jon M. Huntsman, Peter R. Huntsman, Hexion Specialty Chemicals, Inc., Hexion LLC, Nimbus Merger Sub,
 Inc., Craig O. Morrison, Leon Black, Joshua J. Harris and Apollo Global Management, LLC and certain of its affiliates (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on
December 15, 2008)10.44

Letter Agreement, dated December 14, 2008, among Huntsman Corporation, Jon M. Huntsman, Peter R. Huntsman, Hexion Specialty Chemicals, Inc., Hexion LLC, Nimbus Merger Sub, Inc.,
Craig O. Morrison, Leon Black, Joshua J. Harris and Apollo Global Management, LLC and certain of its affiliates (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed on December 15,
2008)10.45

Note Purchase Agreement, dated December 23, 2008, by and among Huntsman Corporation and Apollo Investment Fund VI, L.P. and certain of its affiliates (incorporated by reference to Exhibit 10.1 to
our current report on Form 8-K filed on December 23, 2008)10.46

Registration Rights Agreement, dated December 23, 2008, by and among Huntsman Corporation and Apollo Investment Fund VI, L.P. and certain of its affiliates (incorporated by reference to
Exhibit 10.2 to our current report on Form 8-K filed on December 23, 2008)10.47

Voting and Standstill Agreement, dated December 23, 2008, by and among Huntsman Corporation and Apollo Investment Fund VI, L.P. and certain of its affiliates (incorporated by reference to
Exhibit 10.3 to our current report on Form 8-K filed on December 23, 2008)10.48

Waiver to Credit Agreement dated April 16, 2009 among Huntsman International LLC and the Revolving Lenders party thereto (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K
filed on April 17, 2009)


---



Table of Contents

Number

Description10.49

Letter Agreement, dated June 15, 2009, among Huntsman Polyurethanes (UK) Ltd. and Paul G. Hulme (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on June 17,
2009)10.50

Agreement of Compromise and Settlement, dated as of June 22, 2009, by and among Huntsman Corporation and Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. (incorporated by reference
to Exhibit 10.1 to our current report on Form 8-K filed on June 23, 2009)10.51

Form of Note Purchase Agreement, dated as of June 22, 2009, by and among Huntsman International LLC and Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. (incorporated by
reference to Exhibit 10.2 to our current report on Form 8-K filed on June 23, 2009)10.52

Fourth Amendment to Credit Agreement, dated as of June 22, 2009, by and among Huntsman International LLC and Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. (incorporated by
reference to Exhibit 10.3 to our current report on Form 8-K filed on June 23, 2009)10.53

Form of Registration Rights Agreement dated as of June 23, 2009, by and among Huntsman International LLC, the subsidiary guarantors party thereto and Credit Suisse Securities (USA) LLC and Deutsche Bank
Securities Inc. (incorporated by reference to Exhibit 10.4 to our current report on Form 8-K filed on June 23, 2009)10.54

Voting Agreement, dated as of June 22, 2009, by and among Huntsman International LLC, Deutsche Bank AG New York Branch and Credit Suisse, Cayman Islands Branch (incorporated by reference to Exhibit 10.5
to our current report on Form 8-K filed on June 23, 2009)10.55

Asset and Equity Purchase Agreement dated as of August 28, 2009 by and among Tronox Incorporated, a Delaware corporation, Tronox LLC, a Delaware limited liability company, Tronox Pigments (Savannah)
 Inc., a Georgia corporation, Tronox Worldwide LLC, a Delaware limited liability company, Tronox Western Australia Pty. Ltd., a Western Australia company, Tronox Pigments (Netherlands) B.V., a Dutch limited liability company,
Huntsman Pigments LLC, a Delaware limited liability company, Huntsman Australia R&D Company Pty. Ltd., an Australian company and Huntsman Corporation, a Delaware corporation (incorporated by reference to Exhibit 10.1 to our current
report on Form 8-K filed on August 31, 2009)10.56

U.S. Receivables Loan Agreement dated as of October 16, 2009 among Huntsman Receivables Finance II LLC, Huntsman (Europe) BVBA, the several entities party thereto as lenders, the several financial
institutions party thereto as funding agents, the several commercial paper conduits party thereto as conduit lenders, the several financial institutions party thereto as committed lenders, Wachovia Bank National Association, as administrative agent,
and Wachovia Bank National Association, as collateral Agent (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on October 22, 2009)10.57

U.S. Contribution Agreement dated as of October 16, 2009 between Huntsman International LLC and Huntsman Receivables Finance II LLC (incorporated by reference to Exhibit 10.2 to our current
report on Form 8-K filed on October 22, 2009)10.58

European Receivables Loan Agreement dated as of October 16, 2009 between Huntsman Receivables Finance LLC, Huntsman (Europe) BVBA, the several entities party thereto as lenders, the several financial
institutions party thereto as funding agents, Barclays Bank Plc, as administrative agent, and Barclays Bank Plc, as collateral agent (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K filed on
October 22, 2009)


---



Table of Contents

Number

Description10.59

European Contribution Agreement dated as of October 16, 2009 between Huntsman International LLC and Huntsman Receivables Finance LLC (incorporated by reference to Exhibit 10.4 to our current report on
Form 8-K filed on October 22, 2009)10.60

Separation and Release Agreement, dated December 28, 2009, between Huntsman Corporation and Samuel D. Scruggs (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on
December 28, 2009)21.1
*
Subsidiaries of the Company23.1
*
Consent of Independent Registered Public Accounting Firm31.1
*
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
*
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
*
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
*
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


---