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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

Form 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                to


Commission
File Number

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

State of Incorporation

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




Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Huntsman Corporation


YES ý


NO oHuntsman International LLC


YES ý


NO o


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 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 definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

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
April 28, 2009, 237,438,754 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interests of Huntsman International LLC
were outstanding. There is no established trading market for Huntsman International LLC's units of membership interests. All of Huntsman International LLC's units of membership interests
are held by Huntsman Corporation.



This
Quarterly Report on Form 10-Q 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 Quarterly Report on
Form 10-Q 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 H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure
format.



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HUNTSMAN CORPORATION AND SUBSIDIARIES  HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES  QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD  ENDED MARCH 31, 2009

TABLE OF CONTENTS



PagePART I

FINANCIAL INFORMATION

1ITEM 1.

Financial Statements:

1Huntsman Corporation and Subsidiaries:Condensed Consolidated Balance Sheets (Unaudited)

1Condensed Consolidated Statements of Operations and
Comprehensive (Loss)
        Income (Unaudited)

2Condensed Consolidated Statements of Cash Flows
(Unaudited)

4Condensed Consolidated Statement of Equity (Unaudited)

6Huntsman International LLC and Subsidiaries:Condensed Consolidated Balance Sheets (Unaudited)

7Condensed Consolidated Statements of Operations and
Comprehensive (Loss) Income (Unaudited)

8Condensed Consolidated Statements of Cash Flows
(Unaudited)

9Condensed Consolidated Statement of Equity (Unaudited)

10Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries:Notes to Condensed Consolidated Financial Statements
(Unaudited)

11ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

57ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

73ITEM 4.

Controls and Procedures

74PART II

OTHER INFORMATION

75ITEM 1.

Legal Proceedings

75ITEM 1A.

Risk Factors

75ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

75ITEM 6.

Exhibits

76


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PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

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

March 31,
2009

December 31,
2008ASSETSCurrent assets:Cash and cash equivalents

$
470

$
657Restricted cash


3


5Accounts and notes receivables (net of allowance for doubtful accounts of $47 each)


820


905Accounts receivable from affiliates


7


8Inventories, net


1,333


1,500Prepaid expenses


37


45Deferred income taxes


21


21Other current assets


94


99Total current assets


2,785


3,240Property, plant and equipment, net


3,471


3,649Investment in unconsolidated affiliates


265


267Intangible assets, net


144


153Goodwill


92


92Deferred income taxes


154


284Notes receivable from affiliates


9


9Other noncurrent assets


350


364Total assets

$
7,270

$
8,058LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
575

$
731Accounts payable to affiliates


9


16Accrued liabilities


525


617Deferred income taxes


35


36Current portion of debt


161


205Total current liabilities


1,305


1,605Long-term debt


3,613


3,677Notes payable to affiliates


5


6Deferred income taxes


129


117Other noncurrent liabilities


980


1,021Total liabilities


6,032


6,426Commitments and contingencies (Notes 14 and 15)Huntsman Corporation stockholders' equity:Common stock $0.01 par value, 1,200,000,000 shares authorized, 237,438,884 and 234,430,334 issued and 233,959,105 and 233,553,515 outstanding in 2009 and
2008, respectively


2


2Additional paid-in capital


3,151


3,141Unearned stock-based compensation


(18
)

(13
)Accumulated deficit


(1,344
)

(1,031
)Accumulated other comprehensive loss


(571
)

(489
)Total Huntsman Corporation stockholders' equity


1,220


1,610Noncontrolling interests in subsidiaries


18


22Total equity


1,238


1,632Total liabilities and equity

$
7,270

$
8,058


See accompanying notes to condensed consolidated financial statements (unaudited).

1

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

Three Months Ended
March 31,2009

2008Revenues:Trade sales, services and fees

$
1,686

$
2,515Related party sales


7


25Total revenues


1,693


2,540Cost of goods sold


1,548


2,173Gross profit


145


367Operating expenses:Selling, general and administrative


197


227Research and development


36


39Other operating (income) expense


(8
)

10Restructuring, impairment and plant closing costs


14


4Total operating expenses


239


280Operating (loss) income


(94
)

87Interest expense, net


(55
)

(65
)Loss on accounts receivable securitization program


(4
)

(4
)Equity in income of investment in unconsolidated affiliates


1


3Expenses associated with the Merger and related litigation


(7
)

(5
)(Loss) income from continuing operations before income taxes


(159
)

16Income tax expense


(138
)

(4
)(Loss) income from continuing operations


(297
)

12Income (loss) from discontinued operations, net of tax


3


(1
)Net (loss) income


(294
)

11Less net loss (income) attributable to noncontrolling interests


4


(4
)Net (loss) income attributable to Huntsman Corporation

$
(290
)
$
7Net (loss) income

$
(294
)
$
11Other comprehensive (loss) income


(82
)

130Comprehensive (loss) income


(376
)

141Less comprehensive loss (income) attributable to noncontrolling interests


4


(6
)Comprehensive (loss) income attributable to Huntsman Corporation

$
(372
)
$
135


(continued)

2

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

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

(In Millions, Except Per Share Amounts)

Three Months Ended
March 31,2009

2008Basic (loss) income per share:(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders

$
(1.25
)
$
0.04Income (loss) from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax


0.01


(0.01
)Net (loss) income attributable to Huntsman Corporation common stockholders

$
(1.24
)
$
0.03Weighted average shares


233,706,663


227,069,575Diluted (loss) income per share:(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders

$
(1.25
)
$
0.04Income (loss) from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax


0.01


(0.01
)Net (loss) income attributable to Huntsman Corporation common stockholders

$
(1.24
)
$
0.03Weighted average shares


233,706,663


233,840,739Dividends per share

$
0.10

$
0.10Amounts attributable to Huntsman Corporation common stockholders:(Loss) income from continuing operations

$
(293
)
$
8Income (loss) from discontinued operations, net of tax


3


(1
)Net (loss) income

$
(290
)
$
7


See
accompanying notes to condensed consolidated financial statements (unaudited).

3

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

Three Months Ended March 31,2009

2008Operating Activities:Net (loss) income

$
(294
)
$
11Adjustments to reconcile net (loss) income to net cash used in operating activities:Equity in income of unconsolidated affiliates


(1
)

(3
)Depreciation and amortization


126


94Provision for losses on accounts receivable


4


1(Gain) loss on disposal of assets


(1
)

1Noncash interest expense


2


2Noncash restructuring, impairment and plant closing costs


4


1Deferred income taxes


131


(5
)Net unrealized loss on foreign currency transactions


2


15Stock-based compensation


5


6Other, net


(1
)

(7
)Changes in operating assets and liabilities:Accounts and notes receivable


57


28Inventories, net


114


(124
)Prepaid expenses


7


6Other current assets


1


(8
)Other noncurrent assets





(51
)Accounts payable


(113
)

42Accrued liabilities


(71
)

(5
)Other noncurrent liabilities


(10
)

(14
)Net cash used in operating activities


(38
)

(10
)Investing Activities:Capital expenditures


(61
)

(109
)Proceeds from sale of assets, net of adjustments


(1
)

(22
)Other, net





1Net cash used in investing activities


(62
)

(130
)


(continued)

4

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

(Dollars in Millions)



Three Months Ended March 31,2009

2008Financing Activities:Net (repayments) borrowings under revolving loan facilities

$
(8
)
$
178Net repayments of overdraft facilities


(1
)

(4
)Repayments of short-term debt


(73
)

Proceeds from short-term debt


47


Repayments of long-term debt


(17
)

(1
)Proceeds from long-term debt





17Repayments on notes payable


(23
)

(13
)Proceeds from notes payable


14


Dividends paid to common stockholders


(23
)

(23
)Dividends paid to preferred stockholders





(4
)Other, net





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


(84
)

149Effect of exchange rate changes on cash


(3
)

3(Decrease) increase in cash and cash equivalents


(187
)

12Cash and cash equivalents at beginning of period


657


154Cash and cash equivalents at end of period

$
470

$
166Supplemental cash flow information:Cash paid for interest

$
38

$
52Cash paid for income taxes


17


2


During
the three months ended March 31, 2009 and 2008, the amount of capital expenditures in accounts payable (decreased) increased by $(24) million and $19 million,
respectively. The value of share awards that vested during the three months ended March 31, 2009 and 2008 was $11 million and $13 million, respectively.

See
accompanying notes to condensed consolidated financial statements (unaudited).

5

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HUNTSMAN CORPORATION AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)        (Dollars in Millions)

Huntsman Corporation StockholdersCommon Stock







Accumulated
other
comprehensive
lossAdditional
paid-in
capital

Unearned
stock-based
compensation

Accumulated
deficit

Noncontrolling
interests in
subsidiaries

Total
equityShares

AmountBalance, January 1, 2009


233,553,515

$
2

$
3,141

$
(13
)
$
(1,031
)
$
(489
)
$
22

$
1,632Net loss














(290
)




(4
)

(294
)Other comprehensive loss

















(82
)




(82
)Issuance of nonvested stock awards








8


(8
)










Vesting of stock awards


538,225




















Recognition of stock-based compensation








2


3











5Repurchase and cancellation of stock awards


(132,635
)



















Dividends declared on common stock














(23
)







(23
)Balance, March 31, 2009


233,959,105

$
2

$
3,151

$
(18
)
$
(1,344
)
$
(571
)
$
18

$
1,238


See accompanying notes to condensed consolidated financial statements (unaudited).

6

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

March 31,
2009

December 31,
2008ASSETSCurrent assets:Cash and cash equivalents

$
470

$
87Restricted cash


3


5Accounts and notes receivables (net of allowance for doubtful accounts of $47 each)


820


905Accounts receivable from affiliates


21


15Inventories, net


1,333


1,500Prepaid expenses


34


45Deferred income taxes


21


21Other current assets


94


99Total current assets


2,796


2,677Property, plant and equipment, net


3,295


3,466Investment in unconsolidated affiliates


265


267Intangible assets, net


147


157Goodwill


92


92Deferred income taxes


262


392Notes receivable from affiliates


9


9Other noncurrent assets


350


364Total assets

$
7,216

$
7,424LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
572

$
728Accounts payable to affiliates


13


16Accrued liabilities


501


560Deferred income taxes


35


35Note payable to affiliate


427


423Current portion of debt


158


205Total current liabilities


1,706


1,967Long-term debt


3,378


3,442Notes payable to affiliates


530


6Deferred income taxes


93


69Other noncurrent liabilities


976


1,021Total liabilities


6,683


6,505Commitments and contingencies (Notes 14 and 15)Huntsman International LLC members' equity:Members' equity, 2,728 units issued and outstanding


2,866


2,865Accumulated deficit


(1,718
)

(1,414
)Accumulated other comprehensive loss


(633
)

(554
)Total Huntsman International LLC members' equity


515


897Noncontrolling interests in subsidiaries


18


22Total equity


533


919Total liabilities and equity

$
7,216

$
7,424


See accompanying notes to condensed consolidated financial statements (unaudited).

7

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

Three Months Ended
March 31,2009

2008Revenues:Trade sales, services and fees

$
1,686

$
2,515Related party sales


7


25Total revenues


1,693


2,540Cost of goods sold


1,543


2,169Gross profit


150


371Operating expenses:Selling, general and administrative


192


229Research and development


36


39Other operating (income) expense


(8
)

10Restructuring, impairment and plant closing costs


14


4Total operating expenses


234


282Operating (loss) income


(84
)

89Interest expense, net


(55
)

(65
)Loss on accounts receivable securitization program


(4
)

(4
)Equity in income of investment in unconsolidated affiliates


1


3(Loss) income from continuing operations before income taxes


(142
)

23Income tax expense


(146
)

(6
)(Loss) income from continuing operations


(288
)

17Income (loss) from discontinued operations, net of tax


3


(1
)Net (loss) income


(285
)

16Less net loss (income) attributable to noncontrolling interests


4


(4
)Net (loss) income attributable to Huntsman International LLC

$
(281
)
$
12Net (loss) income

$
(285
)
$
16Other comprehensive (loss) income


(79
)

131Comprehensive (loss) income


(364
)

147Less comprehensive loss (income) attributable to noncontrolling interests


4


(6
)Comprehensive (loss) income attributable to Huntsman International LLC

$
(360
)
$
141


See
accompanying notes to condensed consolidated financial statements (unaudited).

8

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

Three Months
Ended
March 31,2009

2008Operating Activities:Net (loss) income

$
(285
)
$
16Adjustments to reconcile net (loss) income to net cash used in operating activities:Equity in income of unconsolidated affiliates


(1
)

(3
)Depreciation and amortization


120


89Provision for losses on accounts receivable


4


1(Gain) loss on disposal of assets


(1
)

1Noncash interest expense


5


2Noncash restructuring, impairment and plant closing costs


4


1Deferred income taxes


143


(2
)Net unrealized loss on foreign currency transactions


2


15Noncash compensation


1


6Other, net





(7
)Changes in operating assets and liabilities:Accounts and notes receivable


57


28Inventories, net


114


(124
)Prepaid expenses


10


8Other current assets


1


(11
)Other noncurrent assets





(51
)Accounts payable


(128
)

42Accrued liabilities


(39
)

(2
)Other noncurrent liabilities


(10
)

(13
)Net cash used in operating activities


(3
)

(4
)Investing Activities:Capital expenditures


(61
)

(109
)Proceeds from sale of assets, net of adjustments


(1
)

(22
)Investment in affiliates, net





1Decrease (increase) in receivable from affiliate


7


(29
)Other, net





(4
)Net cash used in investing activities


(55
)

(163
)Financing Activities:Net (repayments) borrowings under revolving loan facilities


(8
)

178Net repayments of overdraft facilities


(1
)

(4
)Repayments of short-term debt


(73
)

Proceeds from short-term debt


47


Repayments of long-term debt


(17
)

(1
)Proceeds from long-term debt





17Repayments of notes payable


(22
)

(13
)Proceeds from notes payable


11


Issuance of note payable to affiliate


529


Dividends paid to parent


(23
)

Other, net


1


(1
)Net cash provided by financing activities


444


176Effect of exchange rate changes on cash


(3
)

3Increase in cash and cash equivalents


383


12Cash and cash equivalents at beginning of period


87


154Cash and cash equivalents at end of period

$
470

$
166Supplemental cash flow information:Cash paid for interest

$
38

$
52Cash paid for income taxes


17


2


During the three months ended March 31, 2009 and 2008, the amount of capital expenditures in accounts
payable (decreased) increased by $(24) million and $19 million, respectively. During the three months ended March 31, 2009 and 2008, Huntsman Corporation contributed $1 million
and $6 million, respectively, related to stock-based compensation.

See accompanying notes to condensed consolidated financial statements (unaudited).

9

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Unaudited)        (Dollars in Millions)

Huntsman International LLC MembersMembers' equityAccumulated
deficit

Accumulated other
comprehensive loss

Noncontrolling
interests in
subsidiaries

Total
equityUnits

AmountBalance, January 1, 2009


2,728

$
2,865

$
(1,414
)
$
(554
)
$
22

$
919Net loss








(281
)




(4
)

(285
)Other comprehensive loss











(79
)




(79
)Contribution from parent, net of distributions





1











1Dividends paid to parent








(23
)







(23
)Balance, March 31, 2009


2,728

$
2,866

$
(1,718
)
$
(633
)
$
18

$
533


See
accompanying notes to condensed consolidated financial statements (unaudited).

10

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Table of Contents

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

1. GENERAL

CERTAIN DEFINITIONS

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); "SLIC" refers to Shanghai Liengheng Isocyanate Company (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.

INTERIM FINANCIAL STATEMENTS

Our interim condensed consolidated financial statements (unaudited) and Huntsman International's interim condensed consolidated
financial statements (unaudited) were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP" or "U.S. GAAP") and in management's opinion,
reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, financial position and cash flows for the periods presented.
Results for interim periods are not necessarily indicative of those to be expected for the full year. These condensed consolidated financial statements (unaudited) should be read in conjunction with
the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2008
for our Company and Huntsman International.

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
currently 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 these businesses as discontinued operations. For more information, see "Note 20.
Discontinued Operations."

11

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HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

1. GENERAL (Continued)

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 packaging company. Since then, we have grown through a series of 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.

HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS

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



PRINCIPLES OF CONSOLIDATION

Our condensed consolidated financial statements (unaudited) and Huntsman International's condensed consolidated financial statements
(unaudited) include the accounts of our wholly-owned and majority-owned and controlled subsidiaries and any variable interest entities for which we are the primary beneficiary. All intercompany
accounts and transactions have been eliminated.

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

1. GENERAL (Continued)

RECLASSIFICATIONS

Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform with the current
presentation. 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 for prior periods has been restated to reflect this change.

RECENT DEVELOPMENTS

Senior Credit Facilities Waiver

On April 16, 2009, Huntsman International obtained a waiver (the "Waiver") to the agreement (the "Credit Agreement") governing
our senior secured credit facilities ("Senior Credit Facilities"). Under the Waiver, a majority of the revolving lenders under our $650 million revolving facility (the "Revolving Facility")
agreed to conditionally waive Huntsman International's compliance with its sole financial covenant, a senior secured leverage ratio covenant calculated by dividing senior secured debt by EBITDA as
defined in the Credit Agreement (the "Leverage Covenant"). The Waiver is effective from April 16, 2009 through June 30, 2010. For more information, see "Note 7.
DebtTransactions Affecting our DebtSenior Credit Facilities."

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In April 2009, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("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. 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. This FSP is effective for interim and annual reporting periods ending after June 15, 2009 and will be applied prospectively.
We are evaluating this FSP to determine its impact on our consolidated financial statements.

In
April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments, which amends Statement of Financial Accounting Standards ("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.
This FSP is effective for interim and annual reporting periods ending after June 15, 2009. We are evaluating this FSP to determine its impact on our consolidated financial statements.

We
adopted SFAS No. 141 (R),Business Combinations, which replaced SFAS No. 141,Business
Combinations,and SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No.51 on January 1, 2009. These statements significantly change the accounting for

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

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 pending 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, 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. 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.

We
adopted Emerging Issues Task Force ("EITF") Issue No. 08-6,Equity Method Investment Accounting Considerations, 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.

In
December 2008, the FASB issued FSP No. FAS 132(R)-1,Employers' Disclosures about Postretirement Benefit Plan
Assets. This FSP provides guidance on an employers' disclosures about plan assets of a defined benefit pension or other postretirement plan. The disclosures about plan assets
required by this FSP are to be provided for fiscal years ending after December 15, 2009. We are evaluating FSP No. FAS 132(R)-1 to determine its impact on our consolidated
financial statements.

We
adopted SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activitiesan Amendment of FASB Statement
133on 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 8. Derivative Instruments and Hedging Activities."

3. BUSINESS COMBINATIONS

PENDING BARODA ACQUISITION

On June 29, 2007, we signed an agreement to acquire the Baroda division of Metrochem Industries Limited ("MCIL"),
a manufacturer of textile dyes and intermediates in India. Under the terms of the agreement, either party may terminate the agreement since the transaction was not consummated by April 30,
2008. As of March 31, 2009, this agreement had not been terminated. On

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

3. BUSINESS COMBINATIONS (Continued)

February 6,
2009, we entered into a non-binding agreement in principle with MCIL under which the purchase price was revised to be approximately $29 million (U.S. dollar
equivalents). This purchase price excludes from working capital the receivables existing on the closing date due to MCIL from our affiliates, which will be settled in the ordinary course. We
anticipate that the majority of the purchase price will be funded through local financing. We expect to complete this acquisition before the end of the second quarter of 2009. However, there can be no
assurances that this transaction will be consummated or, if consummated, that it will be consummated on the terms set forth above.

4. INVENTORIES

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

March 31,
2009

December 31,
2008Raw materials and supplies

$
270

$
282Work in progress


86


88Finished goods


1,021


1,192Total


1,377


1,562LIFO reserves


(44
)

(62
)Net

$
1,333

$
1,500


As
of March 31, 2009 and December 31, 2008, approximately 10% and 9%, respectively, of inventories were recorded using the last-in, first-out cost
method.

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 payable by us as of March 31, 2009
and December 31, 2008 were $11 million and $19 million, respectively. 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 March 31, 2009 and December 31, 2008 were nil and $5 million, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of March 31, 2009 and December 31, 2008, accrued restructuring 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, 2009

$
58

$
1

$
3

$
13

$
752009 charges for 2008 initiatives


2











22009 charges for 2009 initiatives


9











9Reversal of reserves no longer required


(1
)










(1
)2009 payments for 2006 initiatives


(10
)

(1
)







(11
)2009 payments for 2008 initiatives


(3
)










(3
)Foreign currency effect on reserve balance


(6
)










(6
)Accrued liabilities as of March 31, 2009

$
49

$


$
3

$
13

$
65


---

March 31,
2009

December 31,
20082003 initiatives & prior

$
9

$
92004 initiatives


6


62006 initiatives


15


262008 initiatives


22


242009 initiatives


9


Foreign currency effect on reserve balance


4


10Total

$
65

$
75


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. 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

Corporate
&
Other

TotalAccrued liabilities as of January 1, 2009

$
3

$
1

$
63

$
1

$
7

$


$
752009 charges for 2008 initiatives


1











1





22009 charges for 2009 initiatives














8


1


9Reversal of reserves no longer required








(1
)










(1
)2009 payments for 2006 initiatives








(11
)










(11
)2009 payments for 2008 initiatives








(3
)










(3
)Foreign currency effect on reserve balance


(1
)




(5
)










(6
)Accrued liabilities as of March 31, 2009

$
3

$
1

$
43

$
1

$
16

$
1

$
65Current portion of restructuring reserve

$
2

$
1

$
43

$
1

$
15

$
1

$
63Long-term portion of restructuring reserve


1











1





2Estimated additional future charges for current restructuring projects:Estimated additional charges within one year(1)

$


$


$


$


$
36

$
2

$
38Estimated additional charges beyond one year(1)














1


1


2


---

Details
with respect to cash and non-cash restructuring charges by initiative are provided below (dollars in millions):

Three months ended
March 31, 2009Cash charges:2009 charges for 2008 initiatives

$
22009 charges for 2009 initiatives


9Reversal of reserves no longer required


(1
)Non-cash charges


4Total Restructuring, Impairment and Plant Closing Costs

$
14


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS (Continued)



Three months ended
March 31, 2008Cash charges:2008 charges for 2004 initiatives

$
12008 charges for 2008 initiatives


2Non-cash charges


1Total Restructuring, Impairment and Plant Closing Costs

$
4


During
the three months ended March 31, 2009, our Polyurethanes segment recorded charges of $1 million for an initiative related to our U.K.-based Global Expatriation
Services department that will be completed in 2009.

During
the three months ended March 31, 2009, our Pigments segment recorded charges of $9 million primarily related to severance costs associated with the closure of our
Grimsby, U.K. plant and central cost reduction projects. Our Pigments segment also recorded a non-cash charge of $4 million primarily related to a write down of engineering spare
parts at our Grimsby, U.K. plant. In addition, we accelerated the depreciation of the long-lived assets associated with our Grimbsy, U.K. plant. We expect to incur additional charges of
$37 million related to the closure of our Grimbsy, U.K. plant through June 30, 2010.

During
the three months ended March 31, 2009, we recorded charges of $1 million in Corporate and Other related to our 2009 fixed cost reduction project announced in the
fourth quarter of 2008.

6. INVESTMENT IN UNCONSOLIDATED AFFILIATES

During 2008, we contributed $44 million as our 50% equity contribution to our ethyleneamines manufacturing joint venture in Jubail Industrial City, Saudi Arabia (the "Saudi Joint
Venture") with Zamil Group. 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 (U.S. dollar equivalents), of which $60 million was drawn under a
short-term bridge loan facility as of March 31, 2009. 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT

Outstanding debt consisted of the following (dollars in millions):

Huntsman Corporation

March 31,
2009

December 31,
2008Senior Credit Facilities:Term Loans

$
1,524

$
1,540Secured Notes


295


295Senior Notes


198


198Subordinated Notes


1,238


1,285Australian Credit Facilities


30


41HPS (China) debt


170


196Other


84


92Convertible Notes


235


235Total debt

$
3,774

$
3,882Current portion

$
161

$
205Long-term portion


3,613


3,677Total debt

$
3,774

$
3,882


Huntsman International

March 31,
2009

December 31,
2008Senior Credit Facilities:Term Loans

$
1,524

$
1,540Secured Notes


295


295Senior Notes


198


198Subordinated Notes


1,238


1,285Australian Credit Facilities


30


41HPS (China) debt


170


196Other


81


92Total debt

$
3,536

$
3,647Current portion

$
158

$
205Long-term portion


3,378


3,442Total debt-excluding affiliates

$
3,536

$
3,647Total debt-excluding affiliates

$
3,536

$
3,647Notes payable to affiliates


957


429Total debt

$
4,493

$
4,076


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

DIRECT AND SUBSIDIARY DEBT

Our direct debt and guarantee obligations consist of our Convertible Notes, our guarantees of certain debt of HPS and SLIC, our Chinese
MDI joint ventures, our Saudi Joint Venture, and certain indebtedness incurred from time to time to finance certain insurance premiums. 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.

TRANSACTIONS AFFECTING OUR DEBT

Senior Credit Facilities

As of March 31, 2009, our Senior Credit Facilities consisted of (i) a $650 million Revolving Facility and
(ii) a $1,524 million term loan B facility (the "Dollar Term Loan"). As of March 31, 2009, we had no borrowings outstanding under our Revolving Facility, and we had
approximately $31 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 and the Dollar Term Loan matures in 2014; provided, however, that the maturities of the Revolving Facility and the Dollar Term Loan will accelerate if we do not repay or refinance
all but $100 million of our outstanding debt securities on or before three months prior to the maturity dates of such debt securities (the next maturity date of such debt securities is
October 15, 2010).

Our
Senior Credit Facilities are subject to a single financial covenant, the Leverage Covenant, which applies only to the 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
Waiver is effective from April 16, 2009 through June 30, 2010. The Leverage Covenant requires that the maximum senior secured leverage ratio does not exceed 5.00 to
1.00. Prior to the Waiver, the maximum permitted ratio was 3.75 to 1.00. In addition, the Waiver modifies the calculation used to determine compliance with the Leverage Covenant as
follows:



As
consideration for the Waiver, Huntsman International agreed to increase the interest paid on the Revolving Facility by 225 basis points from LIBOR plus 1.75% to LIBOR plus 4.00% and
to

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

increase
the applicable unused fee by 25 basis points from 0.50% to 0.75%. In addition, during the Wavier period, Huntsman International agreed as follows:



At
the present time, borrowings under the Revolving Facility and Dollar Term Loan bear interest at LIBOR plus 4.0% and LIBOR plus 1.75%, respectively. However, the applicable interest
rate of the Dollar Term Loan is subject to a reduction to LIBOR plus 1.50% upon achieving certain secured leverage ratio thresholds.

During
the three months ended March 31, 2009, we paid the annual scheduled repayment of $16 million on our Dollar Term Loan. Inclusive of this repayment, we made net
repayments on our debt of approximately $61 million during the three months ended March 31, 2009, excluding our off-balance sheet accounts receivable securitization program (the "A/R
Securitization Program").

Intercompany Note

As of March 31, 2009, under an existing promissory note (the "Intercompany Note"), we have loaned $952 million to our
subsidiary, Huntsman International. Huntsman International used a portion of such funds to repay borrowings outstanding under the Revolving Facility and the remainder was temporarily held in cash. The
Intercompany Note is unsecured and $427 million of the outstanding amount is classified as current as of March 31, 2009 on the accompanying condensed consolidated balance sheets
(unaudited). As of March 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 Securitization Program for U.S. dollar outstandings, 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 referenced above, 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. Subsequent to
March 31, 2009, Huntsman International has reduced its borrowings on the Intercompany Note with available cash.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

7. DEBT (Continued)

COMPLIANCE WITH COVENANTS

We are in compliance with the financial covenants contained in the agreements governing our debt instruments, including our Senior
Credit Facilities, our A/R Securitization Program and the indentures governing our notes.

8. 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.

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. To the extent applicable, we perform
effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.

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 (loss) income.

Our
cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in various currencies. From time to time, we may 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.

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 three months ended March 31, 2009, any remaining
contracts matured and the realized gains (losses) recorded in the accompanying condensed consolidated statements of operations (unaudited) were not considered significant. For the three months ended
March 31, 2008, the effective portion of the changes in fair value of $2 million was recorded in other comprehensive income.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

three
months ended March 31, 2008, we recorded a foreign currency loss on this swap of $14 million in the condensed consolidated statement of operations (unaudited).

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 three months ended March 31, 2008, the effective portion of the changes in the fair value of $8 million were recorded
in other comprehensive income.

As
of and for the three months ended March 31, 2009, the changes in fair value of the realized gains (losses) recorded in the accompanying condensed consolidated statements of
operations (unaudited) of
our other outstanding foreign currency rate hedging contracts and derivatives were not considered significant.

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 (loss) income. From time to time, we review such designation of intercompany loans.

From
time to time, we review our non-U.S. dollar denominated debt and swaps to determine the appropriate amounts designated as hedges. As of March 31, 2009, we have
designated approximately €225 million ($299 million) of euro-denominated debt as a hedge of our net investments. For the three months ended March 31,
2009, the amount of gain recognized on the hedge of our net investments was $15 million and was recorded in other comprehensive (loss) income. As of March 31, 2009, we had approximately
€929 million ($1,235 million) in net euro assets.

9. SECURITIZATION OF ACCOUNTS RECEIVABLE

Under our A/R Securitization Program, we grant an undivided interest in certain of our trade receivables to a qualified off-balance sheet entity (the "Receivables Trust") at
a discount. This undivided interest serves as security for the issuance by the Receivables Trust of commercial paper. The A/R Securitization Program currently provides for financing through various
commercial paper conduit programs (in both U.S. dollars and euros). The A/R Securitization Program
consists of commercial paper conduit programs with a committed amount of approximately $575 million (U.S. dollar equivalents). Because of various factors such as market demand, lower pricing
and changes in foreign currency rates, the underlying effective capacity of the program has declined. As of March 31, 2009, the Receivables Trust had $328 million in U.S. dollar
equivalents (comprised of $116 million and approximately €160 million ($212 million)) in commercial paper outstanding.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

9. SECURITIZATION OF ACCOUNTS RECEIVABLE (Continued)

The
A/R Securitization Program matures on November 12, 2009. We have already begun discussions with the program providers to extend this program beyond its current maturity.
Although we can make no assurances, we intend to extend the A/R Securitization Program beyond its stated term.

10. FAIR VALUE MEASUREMENTS

The following assets and liabilities are measured at fair value on a recurring basis (dollars in millions):

Fair Value Amounts UsingDescription

March 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)

$
9

$
9

$


$
Retained interest in securitized receivables(2)


163








163Total assets

$
172

$
9

$


$
163


---

Fair Value Measurements Using Level 3

Three months ended
March 31, 2009Balance at beginning of period

$
147Total net losses (realized/unrealized) included in earnings


(11
)Purchases, issuances, and settlements


27Balance at end of period

$
163The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at
March 31, 2009

$
(7
)


24

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

10. FAIR VALUE MEASUREMENTS (Continued)

Gains
and losses (realized and unrealized) included in earnings (or changes in net assets) for the three months ended March 31, 2009 are reported in loss on accounts receivable
securitization program and other operating income (expense) as follows (dollars in millions):

Loss on accounts
receivable securitization
program

Other operating
income (expense)Total net losses included in earnings (or changes in net assets)

$
(6
)
$
(5
)Changes in unrealized losses relating to assets still held at March 31, 2009

$
(2
)
$
(5
)


11. EMPLOYEE BENEFIT PLANS

Components of the net periodic benefit costs for the three months ended March 31, 2009 and 2008 were as follows (dollars in millions):

Huntsman Corporation

Defined Benefit Plans

Other Postretirement
Benefit PlansThree Months Ended
March 31,

Three Months Ended
March 31,2009

2008

2009

2008Service cost

$
16

$
19

$
1

$
1Interest cost


35


39


2


2Expected return on assets


(35
)

(48
)




Amortization of prior service cost


(1
)

(2
)

(1
)

(1
)Amortization of actuarial loss


9


1


1


1Special termination benefits


1








Net periodic benefit cost

$
25

$
9

$
3

$
3


25

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

11. EMPLOYEE BENEFIT PLANS (Continued)

Huntsman International

Defined Benefit Plans

Other Postretirement
Benefit PlansThree Months Ended
March 31,

Three Months Ended
March 31,2009

2008

2009

2008Service cost

$
16

$
19

$
1

$
1Interest cost


35


39


2


2Expected return on assets


(35
)

(48
)




Amortization of prior service cost


(1
)

(2
)

(1
)

(1
)Amortization of actuarial loss


10


3


1


1Special termination benefits


1








Net periodic benefit cost

$
26

$
11

$
3

$
3


During
the three months ended March 31, 2009 and 2008, we made contributions to our pension and other postretirement benefit plans of $30 million and $33 million,
respectively. During the remainder of 2009, we expect to contribute an additional amount of $90 million to these plans.

12. STOCKHOLDERS' EQUITY

5% 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 attributable to Huntsman Corporation common stockholders during the year ended December 31, 2005. We paid the final dividend in cash on
February 16, 2008. Also on February 16, 2008, the mandatory convertible preferred stock converted, pursuant to its terms, into 12,082,475 shares of our common stock.

COMMON STOCK DIVIDENDS

On March 31, 2009 and March 31, 2008, we paid cash dividends of $23 million each, or $0.10 per share each, to
common stockholders of record as of March 16, 2009 and March 14, 2008, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. OTHER COMPREHENSIVE (LOSS) INCOME

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

Huntsman Corporation

Other comprehensive
income (loss)Accumulated other
comprehensive income (loss)Three Months EndedMarch 31, 2009

December 31, 2008

March 31, 2009

March 31, 2008Foreign currency translation adjustments, net of tax of $21 and $16 as of March 31, 2009 and December 31, 2008, respectively

$
119

$
204

$
(85
)
$
131Pension and other postretirement benefits adjustments, net of tax of $157 and $158 as of March 31, 2009 and December 31, 2008,
respectively


(706
)

(713
)

7


Other comprehensive income (loss) of unconsolidated affiliates


6


9


(3
)

Other, net


3


4


(1
)

(1
)Total


(578
)

(496
)

(82
)

130Less amounts attributable to noncontrolling interests


7


7





(2
)Amounts attributable to Huntsman Corporation

$
(571
)
$
(489
)
$
(82
)
$
128


Huntsman International

Other comprehensive
income (loss)Accumulated other
comprehensive income (loss)Three Months EndedMarch 31, 2009

December 31, 2008

March 31, 2009

March 31, 2008Foreign currency translation adjustments, net of tax of $8 and $3 as of March 31, 2009 and December 31, 2008, respectively

$
119

$
202

$
(83
)
$
131Pension and other postretirement benefits adjustments, net of tax of $191 and $193 as of March 31, 2009 and December 31, 2008,
respectively


(764
)

(771
)

7


1Other comprehensive income (loss) of unconsolidated affiliates


6


9


(3
)

Other, net


(1
)

(1
)




(1
)Total


(640
)

(561
)

(79
)

131Less amounts attributable to noncontrolling interests


7


7





(2
)Amounts attributable to Huntsman International LLC

$
(633
)
$
(554
)
$
(79
)
$
129


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

13. OTHER COMPREHENSIVE (LOSS) INCOME (Continued)

Items
of other comprehensive (loss) income of our Company and our unconsolidated 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 that have been recorded.

14. COMMITMENTS AND CONTINGENCIES

Texas Bank Litigation

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 and Deutsche Bank AG (the "Lenders"), alleging, among other things, that the Lenders had conspired to tortiously interfere with our merger agreement
with Basell AF. Our petition against the Lenders
includes claims of common law fraud, civil conspiracy, and tortious interference with contract. We are seeking to recover damages measured by the benefit of the bargain, our
out-of-pocket losses, restitution, or the amount by which the Lenders were unjustly enriched as a result of the injuries we believe they inflicted on us. Discovery, including
depositions, is ongoing. A court ordered mediation is scheduled to begin May 13, 2009. Trial is currently set for June 8, 2009. We intend to prosecute our claims vigorously.

In
connection with the Texas Bank Litigation, pursuant to the Settlement Agreement with respect to the Merger-related litigation, we agreed to indemnify and hold harmless Hexion, Apollo
and certain related parties from any claim for indemnification or contribution or any other claim asserted against such parties by the Lenders or their affiliates that in any way arises out of any
claims made by us and our affiliates against the Lenders, including claims for contribution asserted by the Lenders against Apollo and its affiliates. Our indemnification obligation does not cover
legal fees and expenses incurred by the Lenders or the attorneys' fees and expenses of the indemnified parties in defending the Lenders' claims. The aggregate amount we must pay pursuant to
indemnification will not exceed the amount of our recovery collected, if any, in the Texas Bank Litigation net of attorney fees, costs and expenses related to the Texas Bank Litigation.

In
addition, we, together with certain of our affiliates, have entered into a letter agreement with Hexion and certain of its affiliates and Apollo and certain of its affiliates,
pursuant to which we agreed to pay Apollo and certain of its affiliates an amount of cash equal to 20% of the value of cash and non-cash consideration that is in excess of
$500 million that we may obtain or receive in settlement in connection with any claims we made against the Lenders arising from or relating to the Merger Agreement, the transactions
contemplated thereby and related matters, including the Texas Bank Litigation, after we first recover our attorneys' fees, costs and expenses in making the claim. In no circumstance will the aggregate
amount of payments owed by us to the Apollo parties under the letter agreement exceed $425 million. Moreover, in the event trial commences in the Texas Bank Litigation, any interest on the part
of the Apollo parties will terminate immediately and we will not owe any portion of any subsequent recovery to the Apollo parties.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. COMMITMENTS AND CONTINGENCIES (Continued)

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 March 31, 2009.

During
each of the three months ended March 31, 2009 and March 31, 2008, we did not settle any Discoloration Claims. The two Discoloration Claims unresolved as of
March 31, 2009 asserted aggregate damages of €36 million (approximately $48 million). An appropriate liability has been accrued for these claims. Based on our
understanding of the merits of these claims 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.

While
additional Discoloration Claims may be made in the future, we cannot reasonably estimate the amount of loss related to such claims. Although we may incur additional costs as a
result of future claims (including settlement costs), based on our history with Discoloration Claims to date, the fact that substantially all of the titanium dioxide that has been the subject of these
Discoloration Claims was manufactured and sold more than nine years ago, and the fact that we have rights under contract to indemnity, including from ICI, we do not believe that any unasserted
Discoloration Claims will 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 March 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 nearly 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. COMMITMENTS AND CONTINGENCIES (Continued)

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.

Three months ended March 31,2009

2008Unresolved at beginning of period


1,140


1,192Tendered during period


6


5Resolved during period(1)


10


24Unresolved at end of period


1,136


1,173


---

We
have never made any payments with respect to these cases. As of March 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 March 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.

Three months ended March 31,2009

2008Unresolved at beginning of period


43


39Filed during period


0


1Resolved during period


2


1Unresolved at end of period


41


39


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. COMMITMENTS AND CONTINGENCIES (Continued)

We
paid gross settlement costs for asbestos exposure cases that are not subject to indemnification of nil during both the three months ended March 31, 2009 and 2008. 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
March 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 U.S. 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 U.S. 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 have moved to dismiss the opt-out complaints.

We,
along with the other Polyether Polyols defendants and Rhodia, have also been named as defendants in civil antitrust suits alleging a conspiracy to fix the prices of polyether polyol
products sold in Canada in violation of Canadian competition law. These cases, filed in the Superior Court of Justice, Ontario, Canada on May 5, 2006 and in Superior Court, Quebec, Canada on
May 17, 2006, purport to be brought on behalf of various classes of Canadian direct purchasers of polyether polyol products. There has been little activity in these cases since they were filed.

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. 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 U.S. 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 U.S. 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 such losses could be material.

In
addition, on February 16, 2006, the Antitrust Division of the U.S. Department of Justice served us with a grand jury subpoena requesting production of documents relating to our
sale of polyether polyol products. The other defendants in the Polyether Polyols cases have confirmed that they were also served with subpoenas in this matter. We cooperated fully with the
investigation, and by letter dated December 16, 2007, the U.S. Department of Justice notified us that its investigation of possible antitrust violations by manufacturers of polyether polyol
products has been closed.

MTBE Litigation

We are named as a defendant in 16 lawsuits pending in multidistrict litigation filed between March 23, 2007 and March 31,
2009 in the U.S. District Court for the Southern District of New York and New York state court 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 16
cases in which we were 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. We were dismissed from eight of these cases without prejudice for lack of federal court jurisdiction over the claims, and two other dismissals are pending. Seven of the eight dismissed
cases, as well as three additional new actions, were re-filed or filed on March 31, 2009: six in the Supreme Court of the State of New York, County of Nassau and four in the Supreme
Court of the State of New York, County of Suffolk, leaving 16 cases now pending against us. The other action that was dismissed could also be re-filed in state court in New York, which
would bring the total number of cases to 17. The plaintiffs seek injunctive relief, such as monitoring and abatement, compensatory damages, punitive damages and attorney fees. At this time, we have
insufficient information to meaningfully assess our potential exposure in these cases and therefore we have not accrued a liability for these claims. We believe that our liability in these cases, if
any, would likely be covered, at least in part, by insurance and/or by indemnity agreements with prior owners.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. COMMITMENTS AND CONTINGENCIES (Continued)

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.

On
September 20, 2007, we 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 denied 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 would have made 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 have
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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. COMMITMENTS AND CONTINGENCIES (Continued)

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 August of 2009, with a binding award to be
entered by September 30, 2009, (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 will
participate in binding arbitration which is expected to occur in the latter half of 2009. 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. As of March 31, 2009, we have claimed an additional approximately $243 million as presently due and
owing and unpaid under the Policy for losses caused by the fire, and we anticipate filing additional claims. For more information, see "Note 17. 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

On September 19, 2003, SLIC obtained secured financing for the construction of production facilities. SLIC obtained various
committed loans in the aggregate amount of approximately $230 million in U.S. dollar equivalents. As of March 31, 2009, there were $68 million and RMB 840 million
(approximately $123 million) in outstanding borrowings 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. The loans are secured by substantially all the assets of SLIC and will be paid in 16 semiannual installments (of which 12 installments remain), which began on
June 30, 2007. We unconditionally guarantee 35% of any amounts due and unpaid by SLIC under the loans described above (except for the value added tax facility which is not guaranteed). Our
guarantee remains in effect until SLIC has met certain conditions. The conditions outstanding include completion

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

14. COMMITMENTS AND CONTINGENCIES (Continued)

of
the building and equipment mortgage registrations, which are progressing, and maintaining a debt service coverage ratio of at least 1:1 at the time such registrations are completed. We have
estimated that the fair value of this guarantee is nil as of the closing of the transaction and, accordingly, no amounts have been recorded.

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

15. 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.

EHS 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 three months ended March 31, 2009 and 2008, our capital expenditures for EHS matters totaled $8 million and

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

$14 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, liabilities 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
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.

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 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.

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 21, 2009, we submitted the required Site Remediation Action Plan to the agency which proposed
additional investigation and remediation method trials. We

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

can
provide no assurance that the EPA will agree with our proposed plan or will not seek to institute additional requirements for the site. However, we do not believe the costs to us associated with
this issue will be material.

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, 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
the company by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued
$8 million and $7 million for environmental liabilities as of March 31, 2009 and December 31, 2008, respectively. Of these amounts, $5 million and $4 million
were classified as accrued liabilities in our condensed consolidated balance sheets (unaudited) as of March 31, 2009 and December 31, 2008, respectively, and $3 million each were
classified as other noncurrent liabilities in our condensed consolidated balance sheets (unaudited) as of March 31, 2009 and December 31, 2008. 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 AuthoriSation 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

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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 purchased or manufactured in or imported 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. Although the
total long-term cost for REACH compliance is not estimable at this time, we spent approximately $2 million and $3 million during the years ended December 31, 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, 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. In addition,
although the U.S. is not a signatory to the Convention, 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 has also recently proposed mandatory GHG reporting requirements for U.S. sources in excess of 25,000 tons. 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 obligations and/or
EU emissions trading scheme requirements. Although these sites are subject to existing GHG legislation, but 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.

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

CHEMICAL SECURITY

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 several of our 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 ("SVAs") at the High Risk sites. The SVAs were completed and sent to DHS during the fourth
quarter of 2008. We are currently awaiting the final risk ranking from the DHS, based on their assessment of the SVAs. Any of the sites which are still considered High Risk after the DHS assessment
will be required to develop site security plans based on a list of DHS risk-based performance standards. We are unable to determine the cost of security enhancements at our High Risk sites
until the site security plans are developed. We anticipate this phase of the rule to be completed by mid-2009. 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 two 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 March 31, 2009, we have been named as a defendant in 16 of these lawsuits, and an additional suit dismissed by the federal court could be re-filed in state court.
For more information, see "Note 14. Commitment and ContingenciesLegal MattersMTBE Litigation." The plaintiffs in the MTBE groundwater contamination cases generally
seek compensatory damages, punitive damages,

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

injunctive
relief, such as monitoring and abatement, and attorney fees. We currently have insufficient information to meaningfully assess our potential exposure in these cases. We believe that some of
our liability in these cases, if any, is likely covered by insurance and/or indemnity agreements with prior owners. 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.

16. STOCK-BASED COMPENSATION PLANS

Under the Huntsman Stock Incentive Plan (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 and directors and to employees and directors 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. We were authorized to grant up to 21,590,909 shares under the Stock Incentive
Plan. As of March 31, 2009, we had 1,915,371 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 for the three months ended March 31, 2009 for the Stock Incentive Plan was $5 million and $1 million for our company and Huntsman
International, respectively. During the three months ended March 31, 2008, the compensation cost for the Stock Incentive Plan was $6 million each for us and Huntsman International. The
total income tax benefit recognized in the statements of operations for us and Huntsman International for stock-based compensation arrangements was $2 million each for each of the three months
ended March 31, 2009 and 2008.

STOCK OPTIONS

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 are based on the historical volatility of our common stock through the grant date. 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

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16. STOCK-BASED COMPENSATION PLANS (Continued)

within
the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant.

Three Months
Ended March 31,2009

2008Dividend yield


15.4
%
NAExpected volatility


70.4
%
NARisk-free interest rate


2.5
%
NAExpected life of stock options granted during the period


6.6 years

NA


During
the three months ended March 31, 2008, no stock options were granted.

A
summary of stock option activity under the Stock Incentive Plan as of March 31, 2009 and changes during the three months 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


6,510


2.59Exercised





Forfeited


(103
)

21.18Outstanding at March 31, 2009


12,542


11.60


8.5

$
4Exercisable at March 31, 2009


5,315


21.44


6.8





The
weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2009 was $0.49 per option. As of March 31, 2009,
there was $6 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 2.4 years.

During
the three months ended March 31, 2009 and 2008 no stock options were exercised.

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16. STOCK-BASED COMPENSATION PLANS (Continued)

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 because it can be settled in either stock or cash. A summary of the status of our nonvested shares as of March 31, 2009 and changes
during the three months 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


3,317


2.59


1,842


2.59Vested


(471
)(1)

20.09


(69
)

22.45Forfeited


(13
)

22.58





Nonvested at March 31, 2009


3,763
(1)

5.28


1,944


3.66


---

As
of March 31, 2009, there was $24 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 2.7 years. The value of share awards that vested during the three months ended March 31, 2009
and 2008 was $11 million and $13 million, respectively.

17. CASUALTY LOSSES AND INSURANCE RECOVERIES

PORT ARTHUR, TEXAS PLANT FIRE

On April 29, 2006, our 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 is 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.

Through
March 31, 2009, we received partial recovery advances on this loss totaling $365 million. We have claimed an additional approximately $243 million as of
March 31, 2009 as presently due and owing and unpaid under the insurance policy for losses caused by the fire. On December 29, 2008, we reached a partial settlement with certain of the
Reinsurers whereby we received a partial claim

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17. CASUALTY LOSSES AND INSURANCE RECOVERIES (Continued)

reimbursement
of $40 million (which is included in the total partial recovery advances of $365 million) and we and the Reinsurers agreed to dismiss all legal suits arising from this
insured loss and to participate in non-binding mediation in February 2009. Because the non-binding mediation was not successful, we and the Reinsurers will participate in
binding arbitration targeted to occur in the latter half of 2009. Future collections on this insured loss, if any, will represent additional income for us upon final settlement and will be used to
repay secured debt in accordance with relevant provisions of our debt agreements. For more information, see "Note 14. Commitments and ContingenciesPort Arthur Plant Fire Insurance
Litigation."

18. EXPENSES ASSOCIATED WITH THE MERGER AND RELATED LITIGATION

On July 12, 2007, we entered into an agreement and plan of merger (the "Merger Agreement") with Hexion. On June 18, 2008, Hexion, Apollo and certain of their affiliates
filed an action in Delaware Chancery Court seeking to terminate the 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 Merger Agreement and, on December 14, 2008, we entered into the Settlement
Agreement with Hexion, Apollo and certain of their affiliates to settle the Merger-related litigation and certain other related matters. Pursuant to the Settlement Agreement, Hexion and certain Apollo
affiliates have paid us an aggregate amount of $1 billion.

Expenses
associated with the Merger and related litigation incurred during the three months ended March 31, 2009 were $7 million related principally to legal fees incurred
in connection with the Texas Bank Litigation. During the three months ended March 31, 2008, we incurred $5 million of expenses associated with the Merger related primarily to
professional fees and board of directors fees. For more
information regarding the Texas Bank Litigation, see "Note 14. Commitments and ContingenciesTexas Bank Litigation."

19. 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 jurisdictional 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 for each jurisdiction. As of March 31, 2009, we established a valuation allowance of $146 million on our U.K. net deferred tax assets, primarily as a result of a recent history of
operating results that became a cumulative loss in the current period.

On
April 12, 2007, we received a Revenue Agent Report from the Internal Revenue Service ("IRS") related to the examination of our federal income tax returns for the years 2002
through 2004. The IRS initially proposed a decrease to our net operating losses of approximately $387 million related to transactions completed in 2002. However, on January 5, 2008, we
were notified by the IRS that no adjustment would be made to our net operating loss for this disputed item. As a result of the

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19. INCOME TAXES (Continued)

settlement
of this audit cycle and the effective settlement of two uncertain tax positions in other countries, during the three months ended March 31, 2008, we recorded a decrease in
unrecognized tax benefits with a corresponding income tax benefit of approximately $18 million.

HUNTSMAN CORPORATION

We recorded a valuation allowance of $146 million as of March 31, 2009 against the net deferred tax assets in the U.K. We
recorded a discrete tax benefit of $18 million during the three months ended March 31, 2008 due to a decrease in unrecognized tax benefits for the effective settlement of examinations.
Excluding these items, we recorded an income tax benefit of $8 million for the three months ended March 31, 2009 and income tax expense of $22 million for the three months ended
March 31, 2008. The decrease in income tax expense, exclusive of the discrete items, was primarily due to a decrease in pre-tax earnings including amounts in jurisdictions where we
do not record a tax benefit due to valuation allowances.

HUNTSMAN INTERNATIONAL

Huntsman International recorded a valuation allowance of $156 million as of March 31, 2009 against the net deferred tax
assets in the U.K. Huntsman International recorded a discrete tax benefit of $18 million during the three months ended March 31, 2008 due to a decrease in unrecognized tax benefits for
the effective settlement of examinations. Excluding these items, Huntsman International recorded an income tax benefit of $10 million for the three months ended March 31, 2009 and income
tax expense of $24 million for the three months ended March 31, 2008. The decrease in income tax expense, exclusive of the discrete items, was primarily due to a decrease in
pre-tax earnings including amounts in jurisdictions where we do not record a tax benefit due to valuation allowances.

20. DISCONTINUED OPERATIONS

On November 5, 2007, we completed the sale of our former U.S. base chemicals business (the "U.S.
Base Chemicals Disposition"). This disposition included our former olefins manufacturing assets located at Port Arthur, Texas. The captive ethylene unit at the retained Port Neches, Texas site of our
former 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 EBITDA of the former U.S. base chemicals business was reported in our former
Base Chemicals segment and has been presented as discontinued operations in the accompanying condensed consolidated statements of operations (unaudited).

On
August 1, 2007 we completed the sale of our former North American polymers business assets (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 EBITDA of the North American polymers business was

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20. DISCONTINUED OPERATIONS (Continued)

reported
in our former Polymers segment and has been presented as discontinued operations in the accompanying condensed consolidated statements of operations (unaudited).

On
December 29, 2006, we completed the sale of our European base chemicals business. This transaction involved the sale of the outstanding equity interests of Huntsman
Petrochemicals (UK) Limited. The EBITDA of our former European base chemicals business was reported in our former Base Chemicals segment and has been presented as discontinued operations in the
accompanying condensed consolidated statements of operations (unaudited).

During
the three months ended March 31, 2009, we recorded after tax income from discontinued operations of $3 million related primarily to the revaluation of outstanding
product exchange liabilities. During the three months ended March 31, 2008, we recorded an after-tax loss from discontinued operations of $1 million related principally to a
pension levy at our former European base chemicals business, $1 million of post-closing adjustments to the loss recorded on the U.S. Base Chemicals Disposition, and a net
$1 million of income from an insurance recovery on our former North American polymers business.

21. NET (LOSS) INCOME PER SHARE

Basic (loss) income per share excludes dilution and is computed by dividing net (loss) income attributable to Huntsman Corporation common stockholders by the weighted average number of
shares outstanding during the period. Diluted income per share reflects potential dilution and is computed by dividing net income available to 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 if the potential dilutive units had been exercised or converted. On
December 23, 2008, we issued the Convertible Notes in an aggregate principal amount of $250 million that are convertible into common stock at a conversion price of $7.857 per share,
subject to certain anti-dilution adjustments. On February 16, 2008, our previously outstanding mandatory convertible preferred stock converted into 12,082,475 shares of our common
stock.

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21. NET (LOSS) INCOME PER SHARE (Continued)

Basic
and diluted (loss) income per share is determined using the following information:

Three Months Ended March 31,2009

2008Numerator:Basic and diluted (loss) income from continuing operations:(Loss) income from continuing operations attributable to Huntsman Corporation

$
(293
)
$
8Convertible notes interest expense, net of tax





(Loss) income from continuing operations attributable to Huntsman Corporation and assumed conversion

$
(293
)
$
8Basic and diluted net (loss) income:Net (loss) income attributable to Huntsman Corporation

$
(290
)
$
7Convertible notes interest expense, net of tax





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

$
(290
)
$
7Shares (denominator):Weighted average shares outstanding


233,706,663


227,069,575Dilutive securities:Stock-based awards





530,765Convertible notes conversion





Preferred stock conversion





6,240,399Total dilutive shares outstanding assuming conversion


233,706,663


233,840,739


Additional
stock-based awards of 10,793,708 and 2,417,673 weighted average equivalent shares of stock were outstanding during the three months ended March 31, 2009 and 2008,
respectively. In addition, the convertible notes would have converted into 31,818,750 shares of common stock and interest expense, net of tax, of $5 million would have been included as an
adjustment to the numerator of the diluted (loss) income per share calculation. However, these stock-based awards and the assumed conversion of the convertible notes were not included in the
computation of diluted earnings per share because the effect would be anti-dilutive.

22. 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 separate segmentsour Advanced Materials segment and our Textile Effects segment. All segment
information for prior periods has been restated to reflect this change. We have reported our operations through five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products
and Pigments. In a series of transactions completed in 2006 and 2007, we sold substantially all of our Polymers and Base

46

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

22. OPERATING SEGMENT INFORMATION (Continued)

Chemicals
operations and have reported the results from these businesses on discontinued operations. For more information, see "Note 20. Discontinued Operations." We have organized our business
and derived our operating segments around differences in product lines.

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, tooling resin formulations and APAOTextile Effects

textile chemicals and dyesPerformance Products

amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licensesPigments

titanium dioxideCorporate and Other

Styrene


47

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

22. OPERATING SEGMENT INFORMATION (Continued)

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):

Three Months Ended March 31,2009

2008Net Sales:Polyurethanes

$
600

$
1,002Advanced Materials


257


379Textile Effects


152


243Performance Products


500


631Pigments


196


285Corporate and Other


14


40Eliminations


(26
)

(40
)Total

$
1,693

$
2,540Huntsman Corporation:Segment EBITDA(1):Polyurethanes

$
26

$
132Advanced Materials


10


40Textile Effects


(11
)

(1
)Performance Products


81


53Pigments


(29
)

10Corporate and Other(2)


(51
)

(63
)Subtotal


26


171Discontinued operations(3)


4


(1
)Total


30


170Interest expense, net


(55
)

(65
)Income tax expensecontinuing operations


(138
)

(4
)Income tax expensediscontinued operations


(1
)

Depreciation and amortization


(126
)

(94
)Net (loss) income attributable to Huntsman Corporation

$
(290
)
$
7


48

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

22. OPERATING SEGMENT INFORMATION (Continued)

March 31,
2009

December 31,
2008Total Assets:Polyurethanes

$
4,236

$
4,442Advanced Materials


1,269


1,308Textile Effects


677


750Performance Products


2,287


2,313Pigments


1,253


1,474Corporate and Other(2)


(2,452
)

(2,229
)Total

$
7,270

$
8,058




Three Months Ended March 31,2009

2008Huntsman International:Segment EBITDA(1):Polyurethanes

$
26

$
132Advanced Materials


10


40Textile Effects


(11
)

(1
)Performance Products


81


53Pigments


(29
)

10Corporate and Other(2)


(40
)

(61
)Subtotal


37


173Discontinued operations(3)


4


(1
)Total


41


172Interest expense, net


(55
)

(65
)Income tax expensecontinuing operations


(146
)

(6
)Income tax expensediscontinued operations


(1
)

Depreciation and amortization


(120
)

(89
)Net (loss) income attributable to Huntsman International LLC

$
(281
)
$
12


49

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

22. OPERATING SEGMENT INFORMATION (Continued)

March 31,
2009

December 31,
2008Total Assets:Polyurethanes

$
4,236

$
4,442Advanced Materials


1,269


1,308Textile Effects


677


750Performance Products


2,287


2,313Pigments


1,253


1,474Corporate and Other(2)


(2,506
)

(2,863
)Total

$
7,216

$
7,424


---

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED)

The following condensed consolidating financial information (unaudited) of Huntsman International presents, in separate columns, financial information for the following: Huntsman
International (on a parent only basis), with its investment in subsidiaries recorded under the equity method; the guarantors of Huntsman International's debt on a combined, and where appropriate,
consolidated basis; and non-guarantor subsidiaries on a combined, and where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as
of March 31, 2009 and December 31, 2008 and for the three months ended March 31, 2009 and 2008. There are no contractual restrictions limiting transfers of cash from Huntsman
International's guarantors to Huntsman International. Each Huntsman International guarantor is 100% owned by Huntsman International and has fully and unconditionally guaranteed Huntsman
International's debt on a joint and several basis.

50

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)        AS OF MARCH 31, 2009        (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International LLCASSETSCurrent assets:Cash and cash equivalents

$
380

$
3

$
87

$


$
470Restrictred cash








3





3Accounts and notes receivables, net


20


96


704





820Accounts receivable from affiliates


347


1,823


24


(2,173
)

21Inventories, net


85


214


1,043


(9
)

1,333Prepaid expenses


8


15


20


(9
)

34Deferred income taxes


9





21


(9
)

21Other current assets


68


2


87


(63
)

94Total current assets


917


2,153


1,989


(2,263
)

2,796Property, plant and equipment, net


466


924


1,902


3


3,295Investment in affiliates


4,583


1,102


110


(5,530
)

265Intangible assets, net


97





50





147Goodwill





87


9


(4
)

92Deferred income taxes


188


9


122


(57
)

262Notes receivables from affiliates


323


1,455


9


(1,778
)

9Other noncurrent assets


44


138


168





350Total assets

$
6,618

$
5,868

$
4,359

$
(9,629
)
$
7,216LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
25

$
136

$
411

$


$
572Accounts payable to affiliates


1,547


250


389


(2,173
)

13Accrued liabilities


103


123


347


(72
)

501Deferred income taxes





35


10


(10
)

35Note payable to affiliate


427











427Current portion of debt


27





131





158Total current liabilities


2,129


544


1,288


(2,255
)

1,706Long-term debt


3,240


12


126





3,378Notes payable to affiliates


525


285


1,498


(1,778
)

530Deferred income taxes


2


25


66





93Other noncurrent liabilities


207


176


594


(1
)

976Total liabilities


6,103


1,042


3,572


(4,034
)

6,683Huntsman International LLC members' equity:Members' equity


2,866


4,712


1,729


(6,441
)

2,866Subsidiary preferred stock





1


1


(2
)

(Accumulated deficit) retained earnings


(1,718
)

306


(408
)

102


(1,718
)Accumulated other comprehensive loss


(633
)

(194
)

(547
)

741


(633
)Total Huntsman International LLC members' equity


515


4,825


775


(5,600
)

515Noncontrolling interests in subsidiaires





1


12


5


18Total equity


515


4,826


787


(5,595
)

533Total liabilities and equity

$
6,618

$
5,868

$
4,359

$
(9,629
)
$
7,216


51

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)        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 receivables, net


19


114


772





905Accounts receivable from affiliates


350


1,819


38


(2,192
)

15Inventories, net


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 taxes





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
)

6,505Huntsman 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


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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)        THREE MONTHS ENDED MARCH 31, 2009        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International LLCRevenues:Trade sales, services and fees

$
136

$
489

$
1,061

$


$
1,686Related party sales


33


74


125


(225
)

7Total revenues


169


563


1,186


(225
)

1,693Cost of goods sold


158


457


1,153


(225
)

1,543Gross Profit


11


106


33





150Selling, general and administrative


32


31


129





192Research and development


12


7


17





36Other operating (income) expense


(22
)

12


2





(8
)Restructuring, impairment and plant closing costs


1





13





14Operating (loss) income


(12
)

56


(128
)




(84
)Interest (expense) income, net


(47
)

11


(19
)




(55
)Loss on accounts receivable securitization program


(2
)

(1
)

(1
)




(4
)Equity in (loss) income of investment in affiliates and subsidiaries


(244
)

(248
)

3


490


1Loss from continuing operations before income taxes


(305
)

(182
)

(145
)

490


(142
)Income tax benefit (expense)


24


(23
)

(147
)




(146
)Loss from continuing operations


(281
)

(205
)

(292
)

490


(288
)Income from discontinued operations, net of tax





2


1





3Net loss


(281
)

(203
)

(291
)

490


(285
)Less net loss attributable to noncontrolling interest








4





4Net loss attributable to Huntsman International LLC

$
(281
)
$
(203
)
$
(287
)
$
490

$
(281
)


53

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)        THREE MONTHS ENDED MARCH 31, 2008        (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International LLCRevenues:Trade sales, services and fees

$
211

$
648

$
1,656

$


$
2,515Related party sales


119


98


276


(468
)

25Total revenues


330


746


1,932


(468
)

2,540Cost of goods sold


264


669


1,704


(468
)

2,169Gross Profit


66


77


228





371Selling, general and administrative


15


33


181





229Research and development


13


7


19





39Other operating expense (income)


32


(32
)

10





10Restructuring, impairment and plant closing costs








4





4Operating income


6


69


14





89Interest (expense) income, net


(56
)

24


(33
)




(65
)Gain (loss) on accounts receivable securitization program


3


(3
)

(4
)




(4
)Equity in income (loss) of investment in affiliates and subsidiaries


23


(5
)

3


(18
)

3(Loss) income from continuing operations before income taxes


(24
)

85


(20
)

(18
)

23Income tax benefit (expense)


36


(34
)

(8
)




(6
)Income (loss) from continuing operations


12


51


(28
)

(18
)

17Income (loss) from discontinued operations, net of tax





1


(2
)




(1
)Net income (loss)


12


52


(30
)

(18
)

16Less net income attributable to noncontrolling interests








(4
)




(4
)Net income (loss) attributable to Huntsman International LLC

$
12

$
52

$
(34
)
$
(18
)
$
12


54

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)        THREE MONTHS ENDED MARCH 31, 2009        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
Guarantors

Eliminations

Consolidated
Huntsman
International LLCNet cash (used in) provided by operating activities

$
(72
)
$
54

$
15

$


$
(3
)Investing activities:Capital expenditures


(2
)

(27
)

(32
)




(61
)Proceeds from sale of assets, net of adjustments





(1
)







(1
)Investment in affiliates, net


(32
)

(27
)




59


Decrease in receivable from affiliate


7











7Other, net





(2
)

2





Net cash used in investing activities


(27
)

(57
)

(30
)

59


(55
)Financing activities:Net repayments under revolving loan facilities








(8
)




(8
)Net repayments of overdraft facilities








(1
)




(1
)Repayments of short-term debt








(73
)




(73
)Proceeds from short-term debt








47





47Repayments of long-term debt


(16
)




(1
)




(17
)Intercompany borrowings








27


(27
)

Repayments on notes payable


(11
)




(11
)




(22
)Proceeds from notes payable








11





11Issuance of note payable to affiliate


529











529Contribution from parent, net





3


29


(32
)

Dividends paid to parent


(23
)










(23
)Other, net








1





1Net cash provided by financing activities


479


3


21


(59
)

444Effect of exchange rate changes on cash








(3
)




(3
)Increase in cash and cash equivalents


380





3





383Cash and cash equivalents at beginning of period





3


84





87Cash and cash equivalents at end of period

$
380

$
3

$
87

$


$
470


55

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

23. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF HUNTSMAN INTERNATIONAL LLC (UNAUDITED) (Continued)

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)        THREE MONTHS ENDED MARCH 31, 2008        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
Guarantors

Eliminations

Consolidated
Huntsman
International LLCNet cash (used in) provided by operating activities

$
(27
)
$
188

$
(165
)
$


$
(4
)Investing activities:Capital expenditures


(12
)

(41
)

(56
)




(109
)Proceeds from sale of assets





(22
)







(22
)Investment in affiliates, net


(107
)

1





107


1Increase in receivable from affiliates


(30
)

(230
)




231


(29
)Other, net





(4
)







(4
)Net cash used in investing activities


(149
)

(296
)

(56
)

338


(163
)Financing activities:Net borrowings (repayments) under revolving loan facilities


180





(2
)




178Net repayments of overdraft facilities








(4
)




(4
)Repayments of long-term debt








(1
)




(1
)Proceeds from long-term debt








17





17Intercompany borrowings








231


(231
)

Repayments on notes payable


(13
)










(13
)Contribution from parent, net





108





(108
)

Other, net





(1
)

(1
)

1


(1
)Net cash provided by financing activities


167


107


240


(338
)

176Effect of exchange rate changes on cash








3





3(Decrease) increase in cash and cash equivalents


(9
)

(1
)

22





12Cash and cash equivalents at beginning of period


11


6


137





154Cash and cash equivalents at end of period

$
2

$
5

$
159

$


$
166


56

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Table of Contents

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

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 and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as "believes," "expects,"
"may," "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 referenced in "Part I. Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2008.

OVERVIEW

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 had revenues for the three months ended March 31, 2009 and 2008 of $1,693 million and $2,540 million, respectively.

We
currently 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 from
these businesses as discontinued operations. For more information, see "Note 20. Discontinued Operations" to our condensed consolidated financial statements (unaudited) included elsewhere in
this report.

57

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RECENT DEVELOPMENTS

Senior Credit Facilities Waiver

On April 16, 2009, Huntsman International obtained the Waiver to the Credit Agreement governing our Senior Credit Facilities.
Under the Waiver, a majority of the Revolving Facility lenders agreed to conditionally waive Huntsman International's compliance with its sole financial covenant, the Leverage Covenant (a senior
secured leverage ratio covenant calculated by dividing senior secured debt by EBITDA as defined in the Credit Agreement). The Waiver is effective from April 16, 2009 through June 30,
2010. For more information, see our current report on Form 8-K filed on April 16, 2009 and "Note 7. DebtTransactions Affecting our DebtSenior
Credit Facilities" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

RESULTS OF OPERATIONS

For each of our Company and Huntsman International, the following tables set forth the unaudited condensed consolidated results of
operations (dollars in millions):

Huntsman Corporation

Three Months
Ended March 31,Percent Change2009

2008Revenues

$
1,693

$
2,540


(33
)%Cost of goods sold


1,548


2,173


(29
)%Gross profit


145


367


(60
)%Operating expenses


225


276


(18
)%Restructuring, impairment and plant closing costs


14


4


250
%Operating (loss) income


(94
)

87


NMInterest expense, net


(55
)

(65
)

(15
)%Loss on sale of accounts receivable


(4
)

(4
)

Equity in income of investment in unconsolidated affiliates


1


3


(67
)%Expenses associated with the Merger and related litigation


(7
)

(5
)

40
%(Loss) income from continuing operations before income taxes


(159
)

16


NMIncome tax expense


(138
)

(4
)

NM(Loss) income from continuing operations


(297
)

12


NMIncome (loss) from discontinued operations, net of tax


3


(1
)

NMNet (loss) income


(294
)

11


NMLess net loss (income) attributable to noncontrolling interests


4


(4
)

NMNet (loss) income attributable to Huntsman Corporation


(290
)

7


NMInterest expense, net


55


65


(15
)%Income tax expense from continuing operations


138


4


NMIncome tax expense from discontinued operations


1





NMDepreciation and amortization


126


94


34
%EBITDA(1)

$
30

$
170


(82
)%Net cash used in operating activities

$
(38
)
$
(10
)

280
%Net cash used in investing activities


(62
)

(130
)

(52
)%Net cash (used in) provided by financing activities


(84
)

149


NM


58

---



Table of Contents

Huntsman International

Three Months
Ended March 31,Percent Change2009

2008Revenues

$
1,693

$
2,540


(33
)%Cost of goods sold


1,543


2,169


(29
)%Gross profit


150


371


(60
)%Operating expenses


220


278


(21
)%Restructuring, impairment and plant closing costs


14


4


250
%Operating (loss) income


(84
)

89


NMInterest expense, net


(55
)

(65
)

(15
)%Loss on sale of accounts receivable


(4
)

(4
)

Equity in income of investment in unconsolidated affiliates


1


3


(67
)%(Loss) income from continuing operations before income taxes


(142
)

23


NMIncome tax expense


(146
)

(6
)

NM(Loss) income from continuing operations


(288
)

17


NMIncome (loss) from discontinued operations, net of tax


3


(1
)

NMNet (loss) income


(285
)

16


NMLess net loss (income) attributable to noncontrolling interests


4


(4
)

NMNet (loss) income attributable to Huntsman International LLC


(281
)

12


NMInterest expense, net


55


65


(15
)%Income tax expense from continuing operations


146


6


NMIncome tax expense from discontinued operations


1





NMDepreciation and amortization


120


89


35
%EBITDA(1)

$
41

$
172


(76
)%Net cash used in operating activities

$
(3
)
$
(4
)

(25
)%Net cash used in investing activities


(55
)

(163
)

(66
)%Net cash provided by financing activities


444


176


152
%


---

NMNot
Meaningful

59

---



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

Three Months
Ended
March 31,2009

2008Foreign exchange gains (losses)unallocated

$
2

$
(4
)Loss on accounts receivable securitization program


(4
)

(4
)Amounts included in discontinued operations


4


(1
)Acquisition expenses


(1
)

Expenses associated with the Merger and related litigation


(7
)

(5
)Restructuring, impairment and plant closing (costs) credits:Polyurethanes


(1
)

Advanced Materials





Textile Effects


1


(1
)Performance Products





Pigments


(13
)

(1
)Corporate and other


(1
)

(2
)Total restructuring, impairment and plant closing costs


(14
)

(4
)Total

$
(20
)
$
(18
)


Huntsman International

Three Months
Ended
March 31,2009

2008Foreign exchange gains (losses)unallocated

$
2

$
(4
)Loss on accounts receivable securitization program


(4
)

(4
)Amounts included in discontinued operations


4


(1
)Acquisition expenses


(1
)

Restructuring, impairment and plant closing (costs) credits:Polyurethanes


(1
)

Advanced Materials





Textile Effects


1


(1
)Performance Products





Pigments


(13
)

(1
)Corporate and other


(1
)

(2
)Total restructuring, impairment and plant closing costs


(14
)

(4
)Total

$
(13
)
$
(13
)


---

60

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Table of Contents



We
believe that net (loss) income is the performance measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and that cash provided by
operating activities is the liquidity measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA.

61

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Table of Contents

For each of our Company and Huntsman International, the following tables reconcile EBITDA to net (loss) income attributable to Huntsman Corporation or Huntsman
International LLC, as appropriate, and to net cash used in operations (dollars in millions):

Huntsman Corporation

Three Months Ended
March 31,Percent
Change2009

2008EBITDA

$
30

$
170


(82
)%Depreciation and amortization


(126
)

(94
)

34
%Interest expense, net


(55
)

(65
)

(15
)%Income tax expense from continuing operations


(138
)

(4
)

NMIncome tax expense from discontinued operations


(1
)




NMNet (loss) income attributable to Huntsman Corporation


(290
)

7


NMNet (loss) income attributable to noncontrolling interests


(4
)

4


NMNet (loss) income


(294
)

11


NMEquity in income of investment in unconsolidated affiliates


(1
)

(3
)

(67
)%Depreciation and amortization


126


94


34
%(Gain) loss on disposal of assets


(1
)

1


NMNoncash interest expense


2


2


Noncash restructuring, impairment and plant closing costs


4


1


300
%Deferred income taxes


131


(5
)

NMNet unrealized loss on foreign currency transactions


2


15


(87
)%Other, net


8





NMChanges in operating assets and liabilites


(15
)

(126
)

(88
)%Net cash used in operating activities

$
(38
)
$
(10
)

280
%


62

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Table of Contents

Huntsman International

Three Months Ended
March 31,Percent
Change2009

2008EBITDA

$
41

$
172


(76
)%Depreciation and amortization


(120
)

(89
)

35
%Interest expense, net


(55
)

(65
)

(15
)%Income tax expense from continuing operations


(146
)

(6
)

NMIncome tax expense from discontinued operations


(1
)




NMNet (loss) income attributable to Huntsman International LLC


(281
)

12


NMNet (loss) income attributable to noncontrolling interests


(4
)

4


NMNet (loss) income


(285
)

16


NMEquity in income of investment in unconsolidated affiliates


(1
)

(3
)

(67
)%Depreciation and amortization


120


89


35
%(Gain) loss on disposal of assets, net


(1
)

1


NMNoncash interest expense


5


2


150
%Noncash restructuring, impairment and plant closing costs


4


1


300
%Deferred income taxes


143


(2
)

NMNet unrealized loss on foreign currency transactions


2


15


(87
)%Other, net


5





NMChanges in operating assets and liabilites


5


(123
)

NMNet cash used in operating activities

$
(3
)
$
(4
)

(25
)%


---

NMNot
Meaningful

Three Months Ended March 31, 2009 Compared with Three Months Ended March 31, 2008

For the three months ended March 31, 2009, the net loss attributable to Huntsman Corporation was $290 million on revenues
of $1,693 million, compared with net income attributable to Huntsman Corporation of $7 million on revenues of $2,540 million for the 2008 period. For the three months ended
March 31, 2009, the net loss attributable to Huntsman International LLC was $281 million on revenues of $1,693 million, compared with net income attributable to Huntsman
International LLC of $12 million on revenues of $2,540 million for the 2008 period. The decrease of $297 million in net income attributable to Huntsman Corporation and the
decrease of $293 million in net income attributable to Huntsman International LLC was the result of the following items:



63

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64

---



Table of Contents



Segment Analysis

Three Months Ended March 31,Percent
Change2009

2008RevenuesPolyurethanes

$
600

$
1,002


(40
)%Advanced Materials


257


379


(32
)%Textile Effects


152


243


(37
)%Performance Products


500


631


(21
)%Pigments


196


285


(31
)%Corporate and Other


14


40


(65
)%Eliminations


(26
)

(40
)

(35
)%Total

$
1,693

$
2,540


(33
)%Huntsman CorporationSegment EBITDAPolyurethanes

$
26

$
132


(80
)%Advanced Materials


10


40


(75
)%Textile Effects


(11
)

(1
)

NMPerformance Products


81


53


53
%Pigments


(29
)

10


NMCorporate and Other


(51
)

(63
)

(19
)%Subtotal


26


171


(85
)%Discontinued operations


4


(1
)

NMTotal

$
30

$
170


(82
)%Huntsman InternationalSegment EBITDAPolyurethanes

$
26

$
132


(80
)%Advanced Materials


10


40


(75
)%Textile Effects


(11
)

(1
)

NMPerformance Products


81


53


53
%Pigments


(29
)

10


NMCorporate and Other


(40
)

(61
)

(34
)%Subtotal


37


173


(79
)%Discontinued operations


4


(1
)

NMTotal

$
41

$
172


(76
)%




Year-Over-Year Decrease

Average
Selling
Price

Sales
VolumesPolyurethanes


(27
)%

(18
)%Advanced Materials


(8
)%

(27
)%Textile Effects


(4
)%

(34
)%Performance Products(1)


(13
)%

(10
)%Pigments


(2
)%

(30
)%


---

NMNot
meaningful

65

---



Table of Contents

Polyurethanes

The decrease in revenues in the Polyurethanes segment for the three months ended March 31, 2009 as compared to the same period
in 2008 was primarily due to lower MDI sales volumes and overall lower average selling prices. MDI sales volumes decreased primarily due to lower demand in all regions and across all major markets as
a result of the worldwide economic slowdown. MDI average selling prices decreased primarily due to competitive pressures, lower raw material costs and the strength of the U.S. dollar against major
European currencies. PO and MTBE sales volumes increased due to stronger demand, while average selling prices decreased with lower raw material costs. The decrease in EBITDA in the Polyurethanes
segment was primarily the result of lower MDI sales volumes and margins, partially offset by lower general and administrative costs.

Advanced Materials

The decrease in revenues in the Advanced Materials segment for the three months ended March 31, 2009 compared to the same period
in 2008 was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily due to lower demand in all regions and across all major markets as a result of the worldwide
economic slowdown. Average selling prices decreased primarily as a result of increased competition in our base resins market and the strength of the U.S. dollar against major European currencies. The
decrease in EBITDA was primarily due to lower sales volumes, partially offset by lower raw material and fixed costs.

Textile Effects

The decrease in revenues in the Textile Effects segment for the three months ended March 31, 2009 compared to the same period in
2008 was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily due to lower demand for apparel and home textile products, as well as specialty textiles
products, in all regions 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 relevant currencies, as local
currency selling prices were higher in Asia and the Americas. The decrease in EBITDA was primarily due to lower sales volumes, partially offset by lower raw material and fixed costs.

Performance Products

The decrease in revenues in the Performance Products segment for the three months ended March 31, 2009 compared to the same
period in 2008 was due to a decrease in both average selling prices and sales volumes. Average selling prices decreased in response to lower raw material costs. Sales volumes decreased across most
product lines primarily due to the worldwide economic slowdown. The increase in EBITDA in the Performance Products segment was mainly due to higher contribution margins resulting from lower raw
material costs. Also, in the 2008 period, EBITDA was negatively impacted by an extended turnaround and inspection at our Port Neches, Texas facility.

Pigments

The decrease in revenues in the Pigments segment for the three months ended March 31, 2009 compared to the same period in 2008
was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily due to lower demand in all regions 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, as local currency selling prices were higher. The decrease in EBITDA in the Pigments
segment was primarily due to lower sales volumes and higher restructuring and plant closing costs. During the three months ended March 31, 2009 and 2008, our Pigments segment recorded
restructuring and plant closing charges of $13 million and $1 million, respectively.

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Table of Contents

For
more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included
elsewhere in this report.

Corporate and OtherHuntsman Corporation

Corporate and Other includes the results of our Australia styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, expenses associated with the Merger and related litigation, income (loss) attributable to noncontrolling interests,
unallocated restructuring costs, gain and loss on the disposition of assets and non-operating income and expense. For the three months ended March 31, 2009, the total of these items
was a loss of $51 million compared to a loss of $63 million in the 2008 period. The increase in EBITDA from Corporate and Other for the three months ended March 31, 2009 resulted
primarily from an $8 million increase in income attributable to noncontrolling interests and a $6 million increase in unallocated foreign exchange gains ($2 million in gains in
the 2009 period versus $4 million in losses in the 2008 period). The increase to EBITDA was partially offset by a $2 million increase in expenses associated with the Merger and related
litigation ($7 million in the 2009 period compared to $5 million in the 2008 period). For more information regarding expenses associated with the Merger and related litigation, see
"Note 18. Expenses Associated with the Merger and Related Litigation" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Corporate and OtherHuntsman International

Corporate and Other includes the results of our Australia styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, income (loss) attributable to noncontrolling interests, unallocated restructuring costs, gain and loss on the
disposition of assets and non-operating income and expense. For the three months ended March 31, 2009, the total of these items was a loss of $40 million compared to a loss
of $61 million in the 2008 period. The increase in EBITDA from Corporate and Other for the three months ended March 31, 2009 resulted primarily from an $8 million increase in
income attributable to noncontrolling interests, a $6 million increase in unallocated foreign exchange gains ($2 million in gains in the 2009 period versus $4 million in losses in
the 2008 period) and a $5 million decrease in administrative fees charged to Huntsman International from Huntsman Corporation.

LIQUIDITY AND CAPITAL RESOURCES

The following is a discussion of our liquidity and capital resources and does not include separate information with respect to Huntsman
International in accordance with General Instructions H(1)(a) and (b) of Form 10-Q.

Cash

Net cash used in operating activities for the three months ended March 31, 2009 and 2008 was $38 million and
$10 million, respectively. The increase in cash used in operations was primarily attributable to a decrease in operating income as described in "Results of Operations" above,
offset in part by a $111 million favorable variance in operating assets and liabilities changes for the three months ended March 31, 2009 as compared with the same period in 2008.

Net
cash used in investing activities for the three months ended March 31, 2009 and 2008 was $62 million and $130 million, respectively. During the three months
ended March 31, 2009 and 2008, we paid $61 million and $109 million, respectively, for capital expenditures. This reduction of $48 million in capital expenditures is
largely attributable to higher 2008 spending on various projects,

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Table of Contents

including
the maleic anhydride expansion at our Geismar, Louisiana site, as well as the expansion at our Greatham, U.K. titanium dioxide facility.

Net
cash used in financing activities for the three months ended March 31, 2009 was $84 million as compared with $149 million of net cash provided by financing
activities in the 2008 period. This increase in net cash used in financing activities was primarily due to higher net repayments of debt in the 2009 period as compared to the 2008 period. During the
three months ended March 31, 2009, we utilized excess cash to keep our borrowings under the Revolving Facility at zero.

Changes in Financial Condition

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

March 31,
2009

December 31,
2008

Decrease

Percent
ChangeCash and cash equivalents

$
470

$
657

$
(187
)

(28
)%Restricted cash


3


5


(2
)

(40
)%Accounts receivable, net


827


913


(86
)

(9
)%Inventories, net


1,333


1,500


(167
)

(11
)%Prepaid expenses


37


45


(8
)

(18
)%Deferred income taxes


21


21





Other current assets


94


99


(5
)

(5
)%Total current assets


2,785


3,240


(455
)

(14
)%Accounts payable


584


747


(163
)

(22
)%Accrued liabilities


525


617


(92
)

(15
)%Deferred income taxes


35


36


(1
)

(3
)%Current portion of debt


161


205


(44
)

(21
)%Total current liabilities


1,305


1,605


(300
)

(19
)%Working capital

$
1,480

$
1,635

$
(155
)

(9
)%


Our
working capital decreased by $155 million as a result of the net impact of the following significant changes:



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Direct and Subsidiary Debt

Our direct debt and guarantee obligations consist of our Convertible Notes, guarantees of certain debt of HPS and SLIC, our Chinese MDI
joint ventures, guarantees of certain debt of our Saudi Joint Venture and certain indebtedness incurred from time to time to finance certain insurance premiums. We have no other direct debt or
guarantee obligations, and all of the additional debt discussed below 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.

Transactions Affecting our Senior Credit Facilities

As of March 31, 2009, our Senior Credit Facilities consisted of (i) a $650 million Revolving Facility and
(ii) a $1,524 million Dollar Term Loan. As of March 31, 2009, we had no borrowings outstanding under our Revolving Facility, and we had approximately $31 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 and the Dollar Term Loan matures in
2014; provided, however, that the maturities of the Revolving Facility and the Dollar Term Loan will accelerate if we do not repay or refinance all but $100 million of our outstanding debt
securities on or before three months prior to the maturity dates of such debt securities (the next maturity date of such debt securities is October 15, 2010).

Our
Senior Credit Facilities are subject to a single financial covenant, the Leverage Covenant, which applies only to the 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
Waiver is effective from April 16, 2009 through June 30, 2010. The Leverage Covenant requires that the maximum senior secured leverage ratio does not exceed 5.00 to
1.00. Prior to the Waiver, the maximum permitted ratio was 3.75 to 1.00. In addition, the Waiver modifies the calculation used to determine compliance with the Leverage Covenant as
follows:



As
consideration for the Waiver, Huntsman International agreed to increase the interest paid on the Revolving Facility by 225 basis points from LIBOR plus 1.75% to LIBOR plus 4.00% and
to

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Table of Contents

increase
the applicable unused fee by 25 basis points from 0.50% to 0.75%. In addition, during the Wavier period, Huntsman International agreed as follows:



At
the present time, borrowings under the Revolving Facility and Dollar Term Loan bear interest at LIBOR plus 4.0% and LIBOR plus 1.75%, respectively. However, the applicable interest
rate of the Dollar Term Loan is subject to a reduction to LIBOR plus 1.50% upon achieving certain secured leverage ratio thresholds.

During
the three months ended March 31, 2009, we paid the annual scheduled repayment of $16 million on our Dollar Term Loan. Inclusive of this repayment, we made net
repayments on our debt of approximately $61 million during the three months ended March 31, 2009, excluding our off-balance sheet A/R Securitation Program.

COMPLIANCE WITH COVENANTS

We are in compliance with the financial covenants contained in the agreements governing our debt instruments, including our Senior
Credit Facilities, our A/R Securitization Program and the indentures governing our notes.

Short-Term and Long-Term Liquidity

We depend upon our cash, credit facilities and other debt instruments to provide liquidity for our operations and working capital
needs. As of March 31, 2009, we had $1,115 million of combined cash and unused borrowing capacity, consisting of $473 million in cash and restricted cash, $619 million in
availability under our Revolving Facility, $8 million attributable to our European overdraft facility and $15 million in availability under our A/R Securitization Program.

Our
liquidity can be significantly impacted by various factors. Concerning changes in working capital components, for the three months ended March 31, 2009, our accounts
receivable and inventory, net of accounts payable, decreased by approximately $58 million, as reflected in our condensed consolidated statement of cash flows (unaudited) included elsewhere in
this report. In addition, during the three months ended March 31, 2009, amounts outstanding under our A/R Securitization Program decreased by $118 million (from $446 million as of
December 31, 2008 to $328 million as of March 31, 2009). These changes in working capital components and the A/R Securitization Program were a result of various factors such
market demand, changes in foreign currencies, seasonality, global economic weakness, and the effects of such factors on sales prices and inventory costs.

We
expect volatility in our working capital components to continue in 2009. We have implemented, and plan to implement, various restructuring programs under which we expect to spend
approximately $125 million through 2009. During the three months ended March 31, 2009, we spent $14 million related to current restructuring initiatives. For a discussion of
restructuring, impairment and plant closing costs, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included
elsewhere in this report.

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We
currently have $161 million classified as current portion of debt. For more information see "Note 7. Debt" to our condensed consolidated financial statements (unaudited)
included elsewhere in this report. As of March 31, 2009, our current portion of debt includes various short term facilities, including but not limited to our HPS draft discounting facility in
China that had amounts outstanding of $47 million, our Australian credit facilities of $30 million and our insurance premium financings of $11 million. Although we can make no
assurances, we currently intend to extend or renew these debt instruments beyond their stated maturities.

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. We have claimed an additional approximately $243 million as of March 31, 2009 as presently due and owing and
unpaid under our insurance policies. Binding arbitration to settle this claim is targeted to occur in the latter half of 2009. Collections on this insured loss, if any, will represent additional
income for us upon final settlement, and will be used to repay secured debt in accordance with relevant provisions of our debt agreements. See "Note 14. Commitments and
ContingenciesPort Arthur Plant Fire Insurance Litigation" and "Note 17. Casualty Losses and Insurance RecoveriesPort Arthur, Texas Plant Fire" to our condensed
consolidated financial statements (unaudited) included elsewhere in this report.

During
the first half of 2009, we expect to complete our acquisition of the Baroda division of MCIL, subject to certain conditions being met. We estimate the purchase price, including
certain working capital positions, to be approximately $29 million (U.S. dollar equivalents), pursuant to a non-binding agreement in principle between MCIL and our Company. This
purchase price excludes from working capital the receivables existing on the closing date due to MCIL from our affiliates, which will be settled in the ordinary course. We anticipate that the majority
of the purchase price will be funded through local financing. See "Note 3. Business Combinations" to our condensed consolidated financial statements (unaudited) included elsewhere in this
report.

As
of March 31, 2009, the amount outstanding under our A/R Securitization Program was $328 million compared with $446 million at December 31, 2008. Because of
various factors such as market demand, lower pricing and changes in foreign currency rates, the underlying effective capacity of the program has declined. This program was amended in November 2008 and
was extended through November 12, 2009. We have already begun discussions with the program providers to extend this program beyond its current maturity. This facility fluctuates in capacity
depending on the program's eligible receivables base which is influenced by such factors as market demand, pricing and foreign currency rates. Although we can make no assurances, we intend to extend
the A/R Securitization Program beyond its stated term. See "Note 9. Securitization of Accounts Receivable" to our condensed consolidated financial statements (unaudited) included elsewhere in
this report.

We
continue to incur costs associated with the Texas Bank Litigation. Any settlement of or judgment in the Texas Bank Litigation may impact our liquidity. For more information, see
"Note 14. Commitments and ContingenciesTexas Bank Litigation" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

During
the three months ended March 31, 2009, we made contributions to our pension and postretirement benefit plans of $30 million. During the remainder of 2009, we expect
to contribute an additional amount of $90 million to these plans.

Capital Expenditures

We incurred capital expenditures of $61 million for the three months ended March 31, 2009 as compared with
$109 million in the 2008 period. This decrease of $48 million is largely attributable to higher 2008 spending on various projects including the maleic anhydride expansion at our Geismar,
Louisiana site, as well as the expansion at our Greatham, U.K. titanium dioxide facility.

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We
expect to finance our capital expenditure commitments through a combination of cash flows from operations and financing arrangements. We expect to spend, in total, approximately
$230 million on capital projects in 2009.

Off-Balance Sheet Arrangements

Receivables Securitization

For a discussion of our A/R Securitization Program, see "Note 9. Securitization of Accounts Receivable" to our condensed
consolidated financial statements (unaudited) included elsewhere in this report.

Guarantees

On September 19, 2003, SLIC obtained secured financing for the construction of production facilities. SLIC obtained various
committed loans in the aggregate amount of approximately $230 million (U.S. dollar equivalents). As of March 31, 2009, there were $68 million and RMB 840 million
(approximately $123 million) in outstanding borrowings 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. The loans are secured by substantially all the assets of SLIC and will be paid in 16 semiannual installments (of which 12 installments remain), which began on
June 30, 2007. We unconditionally guarantee 35% of any amounts due and unpaid by SLIC under the loans described above (except for the VAT facility which is not guaranteed). Our guarantee
remains in effect until SLIC 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 1:1 at the time such registrations are completed. We have estimated that the fair value of this guarantee is nil as of the closing of the
transaction and, accordingly, no amounts have been recorded.

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

Restructuring, Impairment and Plant Closing Costs

For a discussion of restructuring, impairment and plant closing costs, see "Note 5. Restructuring, Impairment and Plant Closing
Costs" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Legal Proceedings

For a discussion of legal proceedings, see "Note 14. Commitments and ContingenciesLegal Matters" to our condensed
consolidated financial statements (unaudited) included elsewhere in this report.

Environmental, Health and Safety Matters

For a discussion of environmental, health and safety matters, see "Note 15. Environmental, Health and Safety Matters" to our
condensed consolidated financial statements (unaudited) included elsewhere in this report.

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Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see "Note 2. Recently Issued Accounting Pronouncements" to our
condensed consolidated financial statements (unaudited) included elsewhere in this report.

Critical Accounting Policies

Our critical accounting policies are presented in Management's Discussion and Analysis of Financial Condition and Results of Operations
included in our Annual Report on Form 10-K for the year ended December 31, 2008.

ITEM 3.    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.

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. To the extent applicable, we perform
effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a hedge, changes in fair value are recognized in earnings.

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 (loss) income.

Our
cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in various currencies. From time to time, we may 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.

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 three months ended March 31, 2009, any remaining
contracts matured and the realized gains (losses) recorded in the accompanying condensed consolidated statements of operations (unaudited) included elsewhere in this report were not considered
significant. For the three months ended March 31, 2008, the effective portion of the changes in fair value of $2 million was recorded in other comprehensive income.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we 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 three months ended March 31, 2008,
we recorded a foreign currency loss on this swap of $14 million in the condensed consolidated statement of operations (unaudited).

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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 three months ended March 31, 2008, the effective portion of the changes in the fair value of $8 million were recorded
in other comprehensive income.

As
of and for the three months ended March 31, 2009, the changes in fair value of the realized gains (losses) recorded in the accompanying condensed consolidated statements of
operations (unaudited) included elsewhere in this report of our other outstanding foreign currency rate hedging contracts and derivatives were not considered significant.

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 (loss) income. From time to time, we review such designation of intercompany loans.

From
time to time, we review our non-U.S. dollar denominated debt and swaps to determine the appropriate amounts designated as hedges. As of March 31, 2009, we have
designated approximately €225 million ($299 million) of euro-denominated debt as a hedge of our net investments. For the three months ended March 31,
2009, the amount of gain recognized on the hedge of our net investments was $15 million and was recorded in other
comprehensive (loss) income. As of March 31, 2009, we had approximately €929 million ($1,235 million) in net euro assets.

ITEM 4.    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
March 31, 2009. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of March 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 Commission'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.

No
changes to our internal control over financial reporting occurred during the three months ended March 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). However, we can only give
reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal controls over financial reporting could
cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL 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.

By
letter dated November 26, 2008, the Texas Commission on Environmental Quality ("TCEQ") combined the alleged air emission-related violations and proposed penalties associated
with two previously issued draft orders for our Port Neches, Texas facility. The proposed penalty for the combined order is $120,000. However, we entered into an expedited penalty settlement of
$100,000, half of which will be paid through a Supplemental Environmental Project agreed to with the agency. This order has been approved by the TCEQ commissioners and we consider this matter now
resolved.

OTHER LEGAL PROCEEDINGS

For
a discussion of other legal proceedings, see "Note 14. Commitments and ContingenciesLegal Matters" and "Note 15. Environmental,
Health and Safety MattersRemediation Liabilities" to our condensed consolidated financial statements (unaudited) included elsewhere in this report and incorporated herein by reference.

ITEM 1A.    RISK FACTORS

For information regarding risk factors, see "Part I. Item 1A. Risk Factors," in our Annual Report on
Form 10-K for the year ended December 31, 2008.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

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 March 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
ProgramsJanuary











February


89,305

$
2.32





March


37,718


2.64





Total


127,023

$
2.41








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ITEM 6.    EXHIBITS

31.1

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


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SIGNATURES

Pursuant to the requirements 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:
May 8, 2009

HUNTSMAN CORPORATION
HUNTSMAN INTERNATIONAL LLCBy:

/s/ J. KIMO ESPLIN J. Kimo Esplin Executive Vice President and Chief Financial Officer
(Authorized Signatory and Principal Financial Officer)By:

/s/ L. RUSSELL HEALY L. Russell Healy Vice President and Controller
(Authorized Signatory and Principal Accounting Officer)


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EXHIBIT INDEX

31.1

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


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