<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   -----------

                                    Form 10-Q

(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the quarterly period ended June 30, 2001

                                       OR

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


                        Commission file number 333-85141


                           HUNTSMAN INTERNATIONAL LLC
             (Exact name of registrant as specified in its charter)


              Delaware                                          87-0630358
-------------------------------                             -------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


                                500 Huntsman Way
                           Salt Lake City, Utah 84108
                                 (801) 584-5700
          (Address of principal executive offices and telephone number)


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

Yes  _X_    No   ___

On August 14, 2001, 1,000 member equity units of Huntsman International LLC were
outstanding.

================================================================================
<PAGE>

                           HUNTSMAN INTERNATIONAL LLC
                       FORM 10-Q FOR THE QUARTERLY PERIOD
                               ENDED JUNE 30, 2001

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION.................................................2
         Item 1.  Financial Statements.........................................2
                  Consolidated Balance Sheets..................................2
                  Consolidated Statements of Operations and
                    Comprehensive (Loss) Income................................3
                  Consolidated Statements of Equity............................4
                  Consolidated Statements of Cash Flows........................5
                  Notes to Consolidated Financial Statements...................6
         Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.......................20
         Item 3.  Quantitative and Qualitative Disclosures About Market Risk..28
PART II - OTHER INFORMATION...................................................29
         Item 6.  Exhibits and Reports on Form 8-K............................29




                                       1
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.       Financial Statements

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

<TABLE>
<CAPTION>
                                                                                                June 30, 2001      December 31, 2000
                                                                                               ---------------     ----------------
<S>                                                                                            <C>                  <C>
                     ASSETS
Current assets:
     Cash and cash equivalents                                                                 $          67.3      $          66.1
     Accounts and notes receivable (net of
         allowance for doubtful accounts of
         $14.0 and $10.6, respectively)                                                                  636.0                553.9
     Inventories                                                                                         538.0                496.4
     Prepaid expenses                                                                                     25.1                 15.2
     Deferred income taxes                                                                                 0.9                  0.9
     Other current assets                                                                                 58.9                 69.6
                                                                                               ---------------      ---------------
         Total current assets                                                                          1,326.2              1,202.1

Property, plant and equipment, net                                                                     2,744.9              2,703.9
Investment in unconsolidated affiliates                                                                  152.3                156.7
Intangible assets, net                                                                                   455.0                434.7
Other noncurrent assets                                                                                  267.9                318.0
                                                                                               ---------------      ---------------

         Total assets                                                                          $       4,946.3      $       4,815.4
                                                                                               ===============      ===============

             LIABILITIES AND EQUITY
Current liabilities:
     Accounts payable                                                                          $         322.2      $         313.3
     Accrued liabilities                                                                                 537.1                517.0
     Current portion of long-term debt                                                                    66.2                  7.5
     Other current liabilities                                                                            35.6                 32.4
                                                                                               ---------------      ---------------
         Total current liabilities                                                                       961.1                870.2

Long-term debt:                                                                                        2,479.6              2,343.0
Deferred income taxes                                                                                    309.1                332.1
Other noncurrent liabilities                                                                             130.6                131.8
                                                                                               ---------------      ---------------
         Total liabilities                                                                             3,880.4              3,677.1
                                                                                               ---------------      ---------------

Minority interests                                                                                        10.0                  9.6
                                                                                               ---------------      ---------------

Equity:
     Member's equity, 1,000 units                                                                      1,026.1              1,026.1
     Retained earnings                                                                                   253.8                223.3
     Accumulated other comprehensive loss                                                               (224.0)              (120.7)
                                                                                               ---------------      ---------------
         Total equity                                                                                  1,055.9              1,128.7
                                                                                               ---------------      ---------------

         Total liabilities and equity                                                          $       4,946.3      $       4,815.4
                                                                                               ===============      ===============
</TABLE>

           See accompanying notes to consolidated financial statements


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        Three Months   Three Months     Six Months      Six Months
                                                                           Ended          Ended           Ended           Ended
                                                                       June 30, 2001   June 30, 2000   June 30, 2001   June 30, 2000
                                                                       -------------   -------------   -------------   -------------
<S>                                                                    <C>             <C>             <C>             <C>
Revenues:
     Trade sales and services                                          $    1,164.5    $    1,025.6    $    2,207.0    $    1,957.3
     Related party sales                                                      110.6           121.0           216.1           232.0
     Tolling fees                                                               9.0             8.1            12.6            20.3
                                                                       ------------    ------------    ------------    ------------
Total revenues                                                              1,284.1         1,154.7         2,435.7         2,209.6
Cost of goods sold                                                          1,113.5           948.9         2,099.1         1,822.5
                                                                       ------------    ------------    ------------    ------------
Gross profit                                                                  170.6           205.8           336.6           387.1

Expenses:
     Selling, general and administrative                                       73.6            58.1           154.4           126.1
     Research and development                                                  15.5            17.9            31.9            35.8
                                                                       ------------    ------------    ------------    ------------
         Total expenses                                                        89.1            76.0           186.3           161.9
                                                                       ------------    ------------    ------------    ------------
Operating income                                                               81.5           129.8           150.3           225.2

Interest expense, net                                                          54.6            54.7           114.2           109.0
Loss on sale of accounts receivable                                             3.2            --               5.4            --
Other (income) expense                                                          0.9             1.3            (5.5)            1.7
                                                                       ------------    ------------    ------------    ------------
Income before income taxes                                                     22.8            73.8            36.2           114.5
Income tax expense                                                              0.5             9.0             3.2            12.9
Minority interests in subsidiaries                                              0.3             0.8             1.0             1.3
                                                                       ------------    ------------    ------------    ------------
Income before accounting change                                                22.0            64.0            32.0           100.3
Cumulative effect of accounting change                                         --              --              (1.5)           --
                                                                       ------------    ------------    ------------    ------------
Net income                                                                     22.0            64.0            30.5           100.3
Other comprehensive loss -
     Foreign currency translation
             adjustments                                                      (31.2)          (37.1)          (91.5)          (82.0)

Cumulative effect of accounting change                                         --              --              (1.1)           --
 Net unrealized loss on derivative
         instruments                                                           (3.0)           --             (10.7)           --
                                                                       ------------    ------------    ------------    ------------
Comprehensive income (loss)                                            $      (12.2)   $       26.9    $      (72.8)   $       18.3
                                                                       ============    ============    ============    ============
</TABLE>

           See accompanying notes to consolidated financial statements



                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            Accumulated
                                  Member's Equity                             Other
                             --------------------------     Retained       Comprehensive
                                Units         Amount        Earnings           Loss              Total
                             -----------    -----------    ----------     ---------------    -------------
<S>                             <C>         <C>            <C>            <C>                <C>
Balance, January 1, 2001        1,000       $  1,026.1     $   223.3      $       (120.7)    $   1,128.7
Net income                                                      30.5                                30.5
Other comprehensive loss                                                          (103.3)         (103.3)
                             --------       ----------     ---------      --------------     -----------
Balance, June 30, 2001          1,000       $  1,026.1     $   253.8      $       (224.0)    $   1,055.9
                             ========       ==========     =========      ==============     ===========
</TABLE>

           See accompanying notes to consolidated financial statements


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                  Six Months         Six Months
                                                                    Ended               Ended
                                                                 June 30, 2001      June 30, 2000
                                                                 -------------      -------------
<S>                                                              <C>                <C>
Cash flows from operating activities:
Net income                                                       $       30.5       $      100.3
Adjustments to reconcile net income to net cash
     from operating activities:
     Equity in earnings of investment in
      unconsolidated affiliates                                          (0.1)              (0.1)
     Minority interests in subsidiaries                                   1.0                1.3
     (Gain) loss on foreign currency transactions                        (2.2)               1.7
     Depreciation and amortization                                      116.8              107.3
     Deferred income taxes                                              (11.7)               3.3
     Changes in operating assets and liabilities--
           net of effects of acquisitions:
         Accounts and notes receivables                                 (23.8)             (43.6)
         Inventories                                                    (29.6)             (13.6)
         Prepaid expenses                                               (10.1)              (0.5)
         Other current assets                                            (1.4)              (6.1)
         Accounts payable                                               (40.1)               2.3
         Accrued liabilities                                             37.9               40.5
         Other current liabilities                                        7.1              (36.7)
         Other noncurrent assets                                         24.5              (20.4)
         Other noncurrent liabilities                                    (0.5)              (4.1)
                                                                 ------------       ------------
Net cash provided by operating activities                                98.3              131.6
                                                                 ------------       ------------

Investing activities:
Acquisition of businesses                                              (209.5)             (26.8)
Capital expenditures                                                   (113.4)             (73.8)
Cash received from unconsolidated affiliates                              4.9                5.2
Advances to unconsolidated affiliates                                    (1.3)              (8.5)
                                                                 ------------       ------------
Net cash used in investing activities                                  (319.3)            (103.9)
                                                                 ------------       ------------

Financing activities:
Borrowings under senior credit facilities                                 5.4               --
Repayments of senior credit facilities                                   --                (36.9)
Issuance of senior subordinated notes                                   233.2               --
Debt issuance costs                                                      (4.6)              --
                                                                 ------------       ------------
Net cash provided by (used in) financing
     activities                                                         234.0              (36.9)
                                                                 ------------       ------------

Effect of exchange rate changes on cash                                 (11.8)              (7.5)
                                                                 ------------       ------------
Increase (decrease) in cash and cash equivalents                          1.2              (16.7)
Cash and cash equivalents at beginning of period                         66.1              138.9
                                                                 ------------       ------------
Cash and cash equivalents at end of period                       $       67.3       $      122.2
                                                                 ============       ============
</TABLE>

           See accompanying notes to consolidated financial statements




                                       5
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

1.   BASIS OF PRESENTATION

     Huntsman International LLC ("Huntsman International" or the "Company") is a
global manufacturer and marketer of specialty and commodity chemicals through
three principal businesses: Specialty Chemicals, Petrochemicals and Titanium
Dioxide ("Tioxide"). The Company is a wholly-owned subsidiary of Huntsman
International Holdings LLC ("Holdings").

     The accompanying consolidated financial statements of the Company are
unaudited. However, in management's opinion, all adjustments, consisting only of
normal recurring adjustments necessary for a fair presentation of results of
operations, financial position and cash flows for the periods shown, have been
made. Results for interim periods are not necessarily indicative of those to be
expected for the full year. These consolidated condensed financial statements
should be read in conjunction with the audited consolidated financial statements
and notes to consolidated financial statements included in the Company's annual
report on form 10-K for the year ended December 31, 2000.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

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

     Use of Estimates

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

     Reclassifications

     Certain 2000 amounts have been reclassified to conform to the 2001
presentation.

3.   INVENTORIES

     Inventories consist of the following (dollars in millions):

<TABLE>
<CAPTION>
                                         June 30, 2001       December 31, 2000
                                         -------------       -----------------
<S>                                        <C>                 <C>
     Raw materials                         $      152.7        $      149.5
     Work in progress                              17.4                22.8
     Finished goods                               345.6               302.5
                                           ------------        ------------
          Subtotal                                515.7               474.8
     Materials and supplies                        22.3                21.6
                                           ------------        ------------
          Net                              $      538.0        $      496.4
                                           ============        ============
</TABLE>

4.   LONG-TERM DEBT

     On May 2, 2001, Huntsman International completed an offering of its 10-1/8%
Senior Subordinated Notes due 2009, resulting in net proceeds of approximately
(euro)52.0 million, including (euro)1.7 million of interest accrued from January
1, 2001 paid by the purchasers. The terms of these notes are substantially
similar to the terms of the Company's outstanding senior subordinated notes.



                                       6
<PAGE>

5.   DERIVATIVES AND HEDGING ACTIVITIES

     Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments and hedging activities. It requires that an entity
recognize all derivative instruments as assets or liabilities in the balance
sheet and measure those instruments at fair value. The accounting for changes in
the fair value of a derivative instrument depends on the use of the instrument.

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

     Interest Rate Hedging

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

     As of June 30, 2001, the Company maintained interest rate swaps and collars
with a fair value of approximately $8.5 million which have been designated as
cash flow hedges of variable rate debt obligations. These amounts are recorded
as other current liabilities in the accompanying balance sheet. For the six
months ended June 30, 2001, the effective portion of unrealized losses of
approximately $8.1 million were recorded as a component of other comprehensive
income, with the ineffective portion of approximately $0.4 million recorded as
additional interest expense in the accompanying statement of operations.

     For the six months ended June 30, 2001, swaps and collars not designated as
hedges are also recorded at fair value on the balance sheet and resulted in an
increase in interest expense and other current liabilities of approximately $4.5
million in the accompanying financial statements.

     Foreign Currency Rate Hedging

     The Company enters into foreign currency derivative instruments to minimize
the short-term impact of movements in foreign currency rates. These contracts
are not designated as hedges for financial reporting purposes and are recorded
at fair value. As of June 30, 2001, the Company maintained forward contracts
with a fair value of $0.4 million. These amounts are recorded as other current
assets in the accompanying balance sheet.

     Commodity Price Hedging

     Because feedstocks used by the Company are subject to price volatility, the
Company uses commodity futures and swaps to reduce the risk associated with
certain of these feedstocks. These instruments are designated as cash flow
hedges of future inventory purchases, fair value hedges of inventory currently
held and trading activities. The mark-to-market gains and losses of qualifying
cash flow hedges are recorded as a component of other comprehensive income. The
mark-to-market gains and losses of non-qualifying, excluded and ineffective
portions of hedges are recorded in cost of goods sold in the accompanying
statement of operations. For the six months ended June 30, 2000, contracts
designated


                                       7
<PAGE>

as cash flow hedges had a fair value of approximately $3.8 million. These
amounts are recorded as other current liabilities in the accompanying balance
sheet. Contracts designated as fair value hedges were not material to the
accompanying financial statements for the periods presented. Contracts not
designated as hedges had a fair value of approximately $4.0 million recorded as
other current assets and $2.1 million recorded as other current liabilities. The
net impact of $1.9 million was recorded as a reduction of cost of goods sold in
the accompanying statement of operations.

     Net Investment Hedging

     The Company hedges its net investment position in euro functional currency
entities. To accomplish this, a portion of the Company's debt is euro
denominated and designated as a hedge of net investments. Currency effects of
these hedges produced a net gain in other comprehensive income (foreign currency
translation adjustments) of approximately $44.3 million for the quarter ended
June 30, 2001, with an ending net balance of approximately $90.3 million.

6.   COMMITMENTS AND CONTINGENCIES

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

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

7.   ENVIRONMENTAL MATTERS

     The Company's business of manufacturing and distributing chemical products
and its related production of by-products and wastes, entails risk of adverse
environmental effects. The Company is subject to extensive federal, state, local
and foreign laws, regulations, rules and ordinances relating to pollution, the
protection of the environment and the generation, storage, handling,
transportation, treatment, disposal and remediation of hazardous substances and
waste materials. In the ordinary course of business, the Company is subject to
frequent environmental inspections and monitoring by governmental enforcement
authorities. The Company may incur substantial costs, including fines, damages
and criminal or civil sanctions, or experience interruptions in its operations
for actual or alleged violations arising under environmental laws. In addition,
production facilities require operating permits that are subject to renewal,
modification and, in some circumstances, revocation. Violations of permit
requirements can also result in restrictions or prohibitions on plant
operations, substantial fines and civil or criminal sanctions. Changes in
regulations regarding the generation, handling, transportation, use and disposal
of hazardous substances could inhibit or interrupt the Company's operations and
have a material adverse effect on its business. From time to time, these
operations may result in violations under environmental laws, including spills
or other releases of hazardous substances to the environment. In the event of a
catastrophic incident, the Company could incur material costs as a result of
addressing and implementing measures to prevent such incidents. Given the nature
of the Company's business, there can be no assurance that violations of
environmental laws will not result in the imposition of restrictions on the
Company's operating activities, substantial fines, penalties, damages or other
costs. In addition, potentially significant expenditures could be necessary in
order to comply with existing or future environmental laws. In management's
opinion, after consideration of indemnification arrangements, there are
currently no environmental matters which are material to the Company's financial
condition or results of operations.

     MTBE Developments

     Denmark has recently proposed to the European Union (EU) that a directive
be issued, taking effect in 2005, allowing individual EU countries to ban the
use of MTBE. Currently no other EU member countries have supported Denmark
officials on the issue. Denmark has entered into a voluntary


                                       8
<PAGE>

agreement with refiners that will significantly reduce the sale of MTBE in
Denmark. The agreement calls for refiners to cease using MTBE in 92- and
95-octane gasoline by May 1, 2002; MTBE will still be an additive in a limited
amount of 98-octane gasoline sold in 100 selected service stations in the
country.

     In the U.S., a federal court in New York has denied plaintiffs' motion for
summary judgment in a case brought by the Oxygenated Fuel Association ("OFA"),
an organization representing MTBE producers. In the motion, OFA asserted that
the state of New York was precluded by the doctrine of federal preemption from
banning MTBE sales in the state because of the federal oxygenate requirement
under the federal Clean Air Act. Although this ruling was based on the court's
view that there are factual issues precluding summary judgment, the ruling tends
to provide some support for the theory that an individual state can act
unilaterally to preclude MTBE from being sold within its jurisdiction. Several
states have promulgated such bans, which are scheduled to take effect variously
over the next several years. OFA will continue to pursue the aforementioned New
York case, as well as a similar case in California. The possibility of
Congressional action to ban the sale of MTBE in the future, and the pendency of
EPA's administrative process to ban the manufacture and sale of the chemical in
the United States, remain.

     North Tees

     The U.K. Environmental Agency (EA) issued an Enforcement Notice on March
30, 2001, following an investigation into an alleged leak of benzene heartcut
into the River Tees, allegedly following a dewatering procedure at the Company's
North Tees site. The Company has complied with this Enforcement Notice. The EA
investigations into the incident are continuing and if the EA finds the Company
legally responsible, the Company could face legal action and possible penalties.
Management does not believe that, even if such action is initiated and the
Company is ultimately found to be legally responsible, the probable penalties
would be material to the financial position or results of operations of the
Company.

8.   INDUSTRY SEGMENT AND GEOGRAPHIC AREA INFORMATION

     The Company derives its revenues, earnings and cash flows from the
manufacture and sale of a wide variety of specialty and commodity chemical
products. The Company has three reportable operating segments: Specialty
Chemicals, Petrochemicals and Tioxide.

     The major products of each operating segment are as follows:

<TABLE>
<CAPTION>
                  Segment                                           Products
       ----------------------------------------------------------------------------------------------------
<S>                                   <C>
       Specialty Chemicals            MDI, TDI, TPU, polyols,  aniline, PO, TBA, MTBE,  ethyleneamines and
                                      surfactants

       Petrochemicals                 Ethylene, propylene, benzene, cyclohexane and paraxylene

       Tioxide                        TiO2
</TABLE>

     Sales between segments are generally recognized at external market prices.
For the six months ended June 30, 2001 and 2000, sales to Imperial Chemical
Industries PLC ("ICI") and its affiliates accounted for approximately 7% and 8%,
respectively, of consolidated revenues.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                           Three Months       Three Months        Six Months         Six Months
                                              Ended              Ended              Ended              Ended
                                           June 30, 2001      June 30, 2000      June 30, 2001      June 30, 2000
                                           -------------      -------------      -------------      -------------
<S>                                        <C>                <C>                <C>                <C>
Net sales:
     Specialty Chemicals                   $       724.7      $       549.0      $     1,305.6      $     1,040.2
     Petrochemicals                                353.9              376.0              721.5              721.3
     Tioxide                                       230.4              255.7              458.4              497.2
     Sales between segments,
     Petrochemicals sales to Specialty
     Chemicals                                     (24.9)             (26.0)             (49.8)             (49.1)
                                           -------------      -------------      -------------      -------------
         Total                             $     1,284.1      $     1,154.7      $     2,435.7      $     2,209.6
                                           =============      =============      =============      =============

Operating income:
     Specialty Chemicals                   $        53.2      $        67.1      $        75.0      $       129.0
     Petrochemicals                                 (4.2)              21.7                9.7               21.4
     Tioxide                                        32.5               41.0               65.6               74.8
                                           -------------      -------------      -------------      -------------
         Total                             $        81.5      $       129.8      $       150.3      $       225.2
                                           =============      =============      =============      =============

EBITDA (1):
     Specialty Chemicals                   $        86.9      $        97.2      $       150.5      $       188.3
     Petrochemicals                                  6.1               33.5               29.2               44.8
     Tioxide                                        42.9               51.8               87.5               97.7
                                           -------------      -------------      -------------      -------------
         Total EBITDA                              135.9              182.5              267.2              330.8

     Depreciation & amortization                   (58.5)             (54.0)            (116.8)            (107.3)
     Interest expense, net                         (54.6)             (54.7)            (114.2)            (109.0)
                                           -------------      -------------      -------------      -------------
     Income before income taxes            $        22.8      $        73.8      $        36.2      $       114.5
                                           =============      =============      =============      =============
</TABLE>

(1)  EBITDA is defined as earnings from continuing operations before interest
     expense, depreciation and amortization, and taxes.

9.   RECENT EVENTS

     Proposed Investment by Bain and Blackstone

     Huntsman Corporation and certain of its subsidiaries have entered into
letter agreements with Bain Capital, L.L.C. ("Bain") and Blackstone Capital
Partners III Merchant Banking Fund, L.P. ("Blackstone") relating to a proposed
investment by Bain and Blackstone in a newly-formed Huntsman affiliate (the
"Proposed Transaction"). The letter agreements contemplate, among other things,
that Bain and Blackstone would invest up to $555 million in the Huntsman
affiliate which would become the majority owner of Huntsman International
Holdings. If the parties complete the Proposed Transaction, a substantial
portion of the proceeds received from Bain, Blackstone and our Company is
intended to be used to finance the purchase of the membership interests of
Huntsman International Holdings that are held by ICI and by other minority
interest holders. After the Proposed Transaction, Huntsman Corporation, Huntsman
Corporation affiliates and members of the Huntsman family collectively would
have a majority indirect interest in Huntsman International Holdings. The
consummation of the Proposed Transaction is subject to certain conditions,
including the execution of definitive agreements and the completion by Bain and
Blackstone of due diligence to their satisfaction. The letter agreements
supersede the February 2001 letter agreement between Bain and Huntsman
Corporation. There can be no assurance that such definitive agreements will be
entered into or that the transactions contemplated under such agreements will be
consummated.

     Issuance of (euro)50 Million Senior Subordinated Notes

     On May 2, 2001, Huntsman International completed an offering of its 10-1/8%
Senior Subordinated Notes due 2009, resulting in net proceeds of approximately
(euro)52 million. The terms of these notes are substantially similar to the
terms of the Company's previously outstanding senior subordinated notes.



                                       10
<PAGE>

     Acquisition of Surfactants Business

     Effective April 1, 2001 and pursuant to the terms of a definitive agreement
dated February 27, 2001, the Company completed its planned purchase of the
European surfactants business of Albright & Wilson, a subsidiary of Rhodia,
S.A., for an aggregate purchase price of approximately (euro)205 million.
Albright & Wilson's surfactants business participates in the anionic surfactants
and non-ionic surfactants markets.

     Recently Issued Accounting Pronouncements

     On July 20, 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." The statements will change the accounting for business combinations and
goodwill in two significant ways. SFAS No. 141 requires that the purchase method
of accounting be used for all business combinations initiated after June 30,
2001. Use of the pooling-of-interests method will be prohibited. SFAS No. 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach. Thus, amortization of goodwill, including goodwill
recorded in past business combinations, will cease upon adoption of that
statement, which for the Company will be January 1, 2002. The Company is
currently evaluating the effects of adopting these pronouncements.

10.  CONSOLIDATING CONDENSED FINANCIAL STATEMENTS

     The following consolidating condensed financial statements present, in
separate columns, financial information for: Huntsman International (on a parent
only basis), with its investment in subsidiaries recorded under the equity
method; the guarantors, under the June 30, 1999 Indenture, on a combined, or
where appropriate, consolidated basis, with its investment in the non-guarantors
recorded under the equity method; and the non-guarantors on a consolidated
basis. Additional columns present eliminating adjustments and consolidated
totals as of June 30, 2001 and December 31, 2000 and for the three months ended
June 30, 2001 and 2000. There are no contractual restrictions limiting transfers
of cash from guarantor and non-guarantor subsidiaries to Huntsman International.
The combined guarantors are wholly-owned subsidiaries of Huntsman International
and have fully and unconditionally guaranteed the senior subordinated notes on a
joint and several basis. The Company has not presented separate financial
statements and other disclosures concerning the combined guarantors because
management has determined that such information is not material to investors.



                                       11
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
JUNE 30, 2001 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       Parent Only                                                            Consolidated
                                         Huntsman                             Non-                              Huntsman
                                      International       Guarantors       Guarantors       Eliminations      International
                                      -------------      ------------     ------------      ------------      ------------
<S>                                   <C>               <C>               <C>               <C>               <C>
            ASSETS
Current assets:
     Cash and cash equivalents        $        0.1      $       --        $       67.2      $       --        $       67.3
     Accounts and notes
           receivable, net                    71.8              96.0             574.7            (106.5)            636.0
     Inventories                              52.4              84.1             401.5              --               538.0
     Other current assets                     47.0              82.8              71.7            (116.6)             84.9
                                      ------------      ------------      ------------      ------------      ------------
         Total current assets                171.3             262.9           1,115.1            (223.1)          1,326.2

Property, plant and equipment,
     net                                     587.3             368.4           1,789.2              --             2,744.9
Investment in unconsolidated
     affiliates                            2,717.1             894.5               1.4          (3,460.7)            152.3
Other noncurrent assets                      431.0           1,223.0             269.5          (1,200.6)            722.9
                                      ------------      ------------      ------------      ------------      ------------
         Total assets                 $    3,906.7      $    2,748.8      $    3,175.2      $   (4,884.4)     $    4,946.3
                                      ============      ============      ============      ============      ============

     LIABILITIES AND EQUITY
Current liabilities:
     Accounts payable and
           accrued liabilities        $      155.2      $      121.5      $      716.4      $     (133.8)     $      859.3
     Current portion of long-term
           debt                               56.2              --                10.0              --                66.2
     Other current liabilities                80.6               9.3              35.0             (89.3)             35.6
                                      ------------      ------------      ------------      ------------      ------------
         Total current                       292.0             130.8             761.4            (223.1)            961.1
         liabilities

Long-term debt                             2,502.6              --             1,177.6          (1,200.6)          2,479.6
Other current liabilities                     56.2               4.2             379.3              --               439.7
                                      ------------      ------------      ------------      ------------      ------------
         Total liabilities                 2,850.8             135.0           2,318.3          (1,423.7)          3,880.4
                                      ------------      ------------      ------------      ------------      ------------

Minority interests                            --                --                10.0              --                10.0
                                      ------------      ------------      ------------      ------------      ------------

Equity:
     Member's equity, 1,000 units          1,026.1              --                --                --             1,026.1
     Subsidiary equity                        --             2,412.4             770.6          (3,183.0)             --
     Retained earnings                       253.8             513.2             186.6            (699.8)            253.8
     Accumulated other
           comprehensive loss               (224.0)           (311.8)           (110.3)            422.1            (224.0)
                                      ------------      ------------      ------------      ------------      ------------
         Total equity                      1,055.9           2,613.8             846.9          (3,460.7)          1,055.9
                                      ------------      ------------      ------------      ------------      ------------
Total liabilities and equity          $    3,906.7      $    2,748.8      $    3,175.2      $   (4,884.4)     $    4,946.3
                                      ============      ============      ============      ============      ============
</TABLE>



                                       12
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2000 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                      Parent Only                                                             Consolidated
                                       Huntsman                               Non-                              Huntsman
                                     International       Guarantors        Guarantors       Eliminations      International
                                     -------------      ------------      ------------      ------------      -------------
<S>                                   <C>               <C>               <C>               <C>               <C>
             ASSETS
Current assets:
     Cash and cash equivalents        $        5.7      $       --        $       60.4      $       --        $       66.1
     Accounts and notes
           receivable, net                    71.8              66.2             509.1             (93.2)            553.9
     Inventories                              61.9              63.3             371.2              --               496.4
     Other current assets                     37.8              88.7              88.3            (129.1)             85.7
                                      ------------      ------------      ------------      ------------      ------------
         Total current assets                177.2             218.2           1,029.0            (222.3)          1,202.1

Property, plant and equipment,
     net                                     592.3             358.2           1,753.4              --             2,703.9
Investment in unconsolidated
     affiliates                            2,631.2             842.1               1.2          (3,317.8)            156.7
Other noncurrent assets                      415.8           1,254.1             313.0          (1,230.2)            752.7
                                      ------------      ------------      ------------      ------------      ------------
         Total assets                 $    3,816.5      $    2,672.6      $    3,096.6      $   (4,770.3)     $    4,815.4
                                      ============      ============      ============      ============      ============

     LIABILITIES AND EQUITY
Current liabilities:
     Accounts payable and
           accrued liabilities        $      189.4      $      114.5      $      653.9      $     (127.5)     $      830.3
     Current portion of long-term
           debt                                0.2              --                 7.3              --                 7.5
     Other current liabilities                73.4              30.0              23.8             (94.8)             32.4
                                      ------------      ------------      ------------      ------------      ------------
         Total current
           liabilities                       263.0             144.5             685.0            (222.3)            870.2

Long-term debt                             2,368.1              --             1,205.1          (1,230.2)          2,343.0
Other current liabilities                     56.7               4.0             403.2              --               463.9
                                      ------------      ------------      ------------      ------------      ------------
         Total liabilities                 2,687.8             148.5           2,293.3          (1,452.5)          3,677.1
                                      ------------      ------------      ------------      ------------      ------------

Minority interests                            --                --                 9.6              --                 9.6
                                      ------------      ------------      ------------      ------------      ------------

Equity:
     Member's equity, 1,000 units          1,026.1              --                --                --             1,026.1
     Subsidiary equity                        --             2,331.4             726.6          (3,058.0)             --
     Retained earnings                       223.3             361.7             123.9            (485.6)            223.3
     Accumulated other
           comprehensive loss               (120.7)           (169.0)            (56.8)            225.8            (120.7)
                                      ------------      ------------      ------------      ------------      ------------
         Total equity                      1,128.7           2,524.1             793.7          (3,317.8)          1,128.7
                                      ------------      ------------      ------------      ------------      ------------
Total liabilities and equity          $    3,816.5      $    2,672.6      $    3,096.6      $   (4,770.3)     $    4,815.4
                                      ============      ============      ============      ============      ============
</TABLE>



                                       13
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED JUNE 30, 2001 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    Parent Only                                                             Consolidated
                                      Huntsman                              Non-                              Huntsman
                                   International       Guarantors        Guarantors       Eliminations      International
                                   -------------      ------------      ------------      ------------      -------------
<S>                                 <C>               <C>               <C>               <C>               <C>
Revenues:
     Trade sales and services       $      160.2      $      193.3      $      811.0      $       --        $    1,164.5
     Related party sales                    39.1              44.9             101.9             (75.3)            110.6
     Tolling fees                           --                 8.8               0.2              --                 9.0
                                    ------------      ------------      ------------      ------------      ------------
         Total revenue                     199.3             247.0             913.1             (75.3)          1,284.1
Cost of goods sold                         153.7             206.0             829.1             (75.3)          1,113.5
                                    ------------      ------------      ------------      ------------      ------------
Gross profit                                45.6              41.0              84.0              --               170.6

Expenses:
     Selling, general and
           administrative                   29.0               6.9              37.7              --                73.6
     Research and development               11.0               1.0               3.5              --                15.5
                                    ------------      ------------      ------------      ------------      ------------
         Total expenses                     40.0               7.9              41.2              --                89.1
                                    ------------      ------------      ------------      ------------      ------------
Operating income                             5.6              33.1              42.8              --                81.5

Interest expense (income), net              56.8             (27.7)             25.5              --                54.6
Loss on sale of accounts
     receivable                              0.8               1.3               1.1              --                 3.2
Equity in earnings of
     unconsolidated affiliates              74.0              14.5              --               (88.5)             --
Other expense                               --                --                 0.9              --                 0.9
                                    ------------      ------------      ------------      ------------      ------------
Income before income taxes                  22.0              74.0              15.3             (88.5)             22.8
Income tax expense                          --                --                 0.5              --                 0.5
Minority interests in
     subsidiaries                           --                --                 0.3              --                 0.3
                                    ------------      ------------      ------------      ------------      ------------
Net income before accounting
     change                                 22.0              74.0              14.5             (88.5)             22.0
Cumulative effect of accounting
     change                                 --                --                --                --                --
                                    ------------      ------------      ------------      ------------      ------------
Net income                                  22.0              74.0              14.5             (88.5)             22.0
Other comprehensive loss                   (34.2)            (60.3)            (26.5)             86.8             (34.2)
                                    ------------      ------------      ------------      ------------      ------------
Comprehensive income (loss)         $      (12.2)     $       13.7      $      (12.0)     $       (1.7)     $      (12.2)
                                    ============      ============      ============      ============      ============
</TABLE>



                                       14
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    Parent Only                                                             Consolidated
                                      Huntsman                              Non-                              Huntsman
                                   International       Guarantors        Guarantors       Eliminations      International
                                   -------------      ------------      ------------      ------------      -------------
<S>                                 <C>               <C>               <C>               <C>               <C>
Revenues:
     Trade sales and services       $      294.9      $       51.2      $      679.5      $       --        $    1,025.6
     Related party sales                    47.0              11.8             121.0             (58.8)            121.0
     Tolling fees                            8.1              --                --                --                 8.1
                                    ------------      ------------      ------------      ------------      ------------
         Total revenue                     350.0              63.0             800.5             (58.8)          1,154.7
Cost of goods sold                         270.8              51.0             685.9             (58.8)            948.9
                                    ------------      ------------      ------------      ------------      ------------
Gross profit                                79.2              12.0             114.6              --               205.8

Expenses:
     Selling, general and
           administrative                   25.8               4.8              27.5              --                58.1
     Research and development               15.0              --                 2.9              --                17.9
                                    ------------      ------------      ------------      ------------      ------------
         Total expenses                     40.8               4.8              30.4              --                76.0
                                    ------------      ------------      ------------      ------------      ------------
Operating income                            38.4               7.2              84.2              --               129.8

Interest expense (income), net              56.1             (32.7)             31.3              --                54.7
Loss on sale of accounts
     receivable                             --                --                --                --                --
 Equity in earnings of
      unconsolidated affiliates             81.7              41.8              --              (123.4)              0.1
Other expense                               --                --                 1.4              --                 1.4
                                    ------------      ------------      ------------      ------------      ------------
Income before income taxes                  64.0              81.7              51.5            (123.4)             73.8
Income tax expense                          --                --                 9.0              --                 9.0
Minority interests in subsidiaries          --                --                 0.8              --                 0.8
                                    ------------      ------------      ------------      ------------      ------------
Net income                                  64.0              81.7              41.7            (123.4)             64.0
Other comprehensive loss                   (37.1)            (37.2)             (8.4)             45.6             (37.1)
                                    ------------      ------------      ------------      ------------      ------------
Comprehensive income                $       26.9      $       44.5      $       33.3      $      (77.8)     $       26.9
                                    ============      ============      ============      ============      ============
</TABLE>



                                       15
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
SIX MONTHS ENDED JUNE 30, 2001 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    Parent Only                                                             Consolidated
                                      Huntsman                              Non-                              Huntsman
                                   International       Guarantors        Guarantors       Eliminations      International
                                   -------------      ------------      ------------      ------------      -------------
<S>                                 <C>               <C>               <C>               <C>               <C>
Revenues:
     Trade sales and services       $      315.3      $      350.3      $    1,541.4      $       --        $    2,207.0
     Related party sales                    87.0              83.2             211.9            (166.0)            216.1
     Tolling fees                           --                12.4               0.2              --                12.6
                                    ------------      ------------      ------------      ------------      ------------
         Total revenue                     402.3             445.9           1,753.5            (166.0)          2,435.7
Cost of goods sold                         320.5             390.5           1,554.1            (166.0)          2,099.1
                                    ------------      ------------      ------------      ------------      ------------
Gross profit                                81.8              55.4             199.4              --               336.6

Expenses:
     Selling, general and
           administrative                   55.0              16.1              83.3              --               154.4
     Research and development               27.2               2.1               2.6              --                31.9
                                    ------------      ------------      ------------      ------------      ------------
         Total expenses                     82.2              18.2              85.9              --               186.3
                                    ------------      ------------      ------------      ------------      ------------
Operating income                            (0.4)             37.2             113.5              --               150.3

Interest expense (income), net             118.3             (54.4)             50.3              --               114.2
Loss on sale of accounts
     receivable                              1.1               2.8               1.5              --                 5.4
Equity in earnings of
      unconsolidated affiliates            151.6              62.7              --              (214.2)              0.1
Other expense (income)                      (0.2)             --                (5.2)             --                (5.4)
                                    ------------      ------------      ------------      ------------      ------------
Income before income taxes                  32.0             151.5              66.9            (214.2)             36.2
Income tax expense                          --                --                 3.2              --                 3.2
Minority interests in
      subsidiaries                          --                --                 1.0              --                 1.0
                                    ------------      ------------      ------------      ------------      ------------
Net income before accounting
change                                      32.0             151.5              62.7            (214.2)             32.0
Cumulative effect of accounting
     change                                 (1.5)             --                --                --                (1.5)
                                    ------------      ------------      ------------      ------------      ------------
Net income                                  30.5             151.5              62.7            (214.2)             30.5
Other comprehensive loss                  (103.3)           (142.8)            (53.5)            196.3            (103.3)
                                    ------------      ------------      ------------      ------------      ------------
Comprehensive income (loss)         $      (72.8)     $        8.7      $        9.2      $      (17.9)     $      (72.8)
                                    ============      ============      ============      ============      ============
</TABLE>


                                       16
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    Parent Only                                                             Consolidated
                                      Huntsman                              Non-                              Huntsman
                                   International       Guarantors        Guarantors       Eliminations      International
                                   -------------      ------------      ------------      ------------      -------------
<S>                                 <C>               <C>               <C>               <C>               <C>
Revenues:
     Trade sales and services       $      539.9      $       97.8      $    1,319.6      $       --        $    1,957.3
     Related party sales                    87.6              20.8             239.6            (116.0)            232.0
     Tolling fees                           20.3              --                --                --                20.3
                                    ------------      ------------      ------------      ------------      ------------
         Total revenue                     647.8             118.6           1,559.2            (116.0)          2,209.6
Cost of goods sold                         494.2              98.3           1,346.0            (116.0)          1,822.5
                                    ------------      ------------      ------------      ------------      ------------
Gross profit                               153.6              20.3             213.2              --               387.1

Expenses:
     Selling, general and
           administrative                   54.0               7.4              64.7              --               126.1
     Research and development               28.1              --                 7.7              --                35.8
                                    ------------      ------------      ------------      ------------      ------------
         Total expenses                     82.1               7.4              72.4              --               161.9
                                    ------------      ------------      ------------      ------------      ------------
Operating income                            71.5              12.9             140.8              --               225.2

Interest expense (income), net             111.4             (64.5)             62.1              --               109.0
Loss on sale of accounts
     receivable                             --                --                --                --                --
 Equity in earnings of
      unconsolidated affiliates            140.2              62.8              --              (202.9)              0.1
Other expense                               --                --                 1.8              --                 1.8
                                    ------------      ------------      ------------      ------------      ------------
Income before income taxes                 100.3             140.2              76.9            (202.9)            114.5
Income tax expense                          --                --                12.9              --                12.9
Minority interests in subsidiaries          --                --                 1.3              --                 1.3
                                    ------------      ------------      ------------      ------------      ------------
Net income                                 100.3             140.2              62.7            (202.9)            100.3
Other comprehensive loss                   (82.0)           (106.2)            (30.0)            136.2             (82.0)
                                    ------------      ------------      ------------      ------------      ------------
Comprehensive income                $       18.3      $       34.0      $       32.7      $      (66.7)     $       18.3
                                    ============      ============      ============      ============      ============
</TABLE>



                                       17
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED JUNE 30, 2001 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    Parent Only                                                             Consolidated
                                      Huntsman                              Non-                              Huntsman
                                   International       Guarantors        Guarantors       Eliminations      International
                                   -------------      ------------      ------------      ------------      -------------
<S>                                 <C>               <C>               <C>               <C>               <C>
Net cash provided by (used in)
     operating activities           $      (90.8)     $       79.1      $      110.0      $       --        $       98.3
                                    ------------      ------------      ------------      ------------      ------------

Investing activities:
Acquisition of businesses                   --               (29.1)           (180.4)             --              (209.5)
Capital expenditures                       (12.3)             (2.2)            (98.9)             --              (113.4)
Cash received from
     unconsolidated affiliates               4.9              --                --                --                 4.9
Advances to unconsolidated
     affiliates                             (1.3)             --                --                --                (1.3)
                                    ------------      ------------      ------------      ------------      ------------
Net cash used in investing
     activities                             (8.7)            (31.3)           (279.3)             --              (319.3)
                                    ------------      ------------      ------------      ------------      ------------

Financing activities:
Borrowings under senior credit
     facilities                              1.5              --                 3.9              --                 5.4
Issuance of senior subordinated
     notes                                 233.2              --                --                --               233.2
 Debt issuance costs                        (4.6)             --                --                --                (4.6)
Cash contributions by parent                --               585.9           1,783.5          (2,369.4)             --
Cash distributions from
     subsidiaries                        2,192.5              --                --            (2,192.5)             --
Cash distributions to parent                --              (484.9)         (1,707.6)          2,192.5              --
Cash distributions to
     subsidiaries                       (2,318.2)            (51.2)             --             2,369.4              --
Intercompany advances - net of
     repayments                             (1.7)            (93.4)             95.1              --                --
                                    ------------      ------------      ------------      ------------      ------------
Net cash provided by (used in)
     financing activities                  102.7             (43.6)            174.9              --               234.0
                                    ------------      ------------      ------------      ------------      ------------

Effect of exchange rate changes
     on cash                                (8.8)             (4.2)              1.2              --               (11.8)
                                    ------------      ------------      ------------      ------------      ------------
Increase (decrease) in cash and
     cash equivalents                       (5.6)             --                 6.8              --                 1.2
Cash and cash equivalents at
     beginning of period                     5.7              --                60.4              --                66.1
                                    ------------      ------------      ------------      ------------      ------------
Cash and cash equivalents at
     end of period                  $        0.1      $       --        $       67.2      $       --        $       67.3
                                    ============      ============      ============      ============      ============
</TABLE>



                                       18
<PAGE>

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED) (Dollars in Millions)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    Parent Only                                                             Consolidated
                                      Huntsman                              Non-                              Huntsman
                                   International       Guarantors        Guarantors       Eliminations      International
                                   -------------      ------------      ------------      ------------      -------------
<S>                                 <C>               <C>               <C>               <C>               <C>
Net cash provided by (used in)
     operating activities           $      (40.8)     $       68.2      $      104.2      $       --        $      131.6
                                    ------------      ------------      ------------      ------------      ------------

Investing activities:
Acquisition of other businesses            (12.8)             --               (14.0)             --               (26.8)
Cash expenditures                          (16.8)             (0.2)            (56.8)             --               (73.8)
Cash received from
     unconsolidated affiliates              --                 5.2              --                --                 5.2
Advances to unconsolidated
     affiliates                             (8.5)             --                --                --                (8.5)
                                    ------------      ------------      ------------      ------------      ------------
Net cash provided by (used in)
     investing activities                  (38.1)              5.0             (70.8)             --              (103.9)
                                    ------------      ------------      ------------      ------------      ------------

Financing activities:
Repayment of senior credit
     facilities                            (35.7)             --                (1.2)             --               (36.9)
Cash contributions by parent                --                97.8               5.1            (102.9)             --
Cash distributions from
     subsidiaries                          156.4              --                --              (156.4)             --
Cash distributions to parent                --              (156.4)             --               156.4              --
Cash distributions to
     subsidiaries                          (97.8)             (5.1)             --               102.9              --
Intercompany advances - net of
     repayments                             55.9              (9.7)            (46.2)             --                --
                                    ------------      ------------      ------------      ------------      ------------
Net cash provided by (used in)
     financing activities                   78.8             (73.4)            (42.3)             --               (36.9)
                                    ------------      ------------      ------------      ------------      ------------

Effect of exchange rate changes
     on cash                                --                --                (7.5)             --                (7.5)
                                    ------------      ------------      ------------      ------------      ------------
Decrease in cash and cash
     equivalents                            (0.1)             (0.2)            (16.4)             --               (16.7)
Cash and cash equivalents at
     beginning of period                     9.0               0.2             129.7              --               138.9
                                    ------------      ------------      ------------      ------------      ------------
 Cash and cash equivalents at
      end of period                 $        8.9      $       --        $      113.3      $       --        $      122.2
                                    ============      ============      ============      ============      ============
</TABLE>



                                       19
<PAGE>

Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations

General

     Huntsman International LLC ("Huntsman International" or the "Company") is a
global manufacturer and marketer of specialty and commodity chemicals through
three principal businesses: specialty chemicals, petrochemicals, and titanium
dioxide. The Company's global specialty chemicals business produces and markets
propylene oxide, which is commonly referred to in the chemicals industry as
"PO," and a complete line of polyurethane chemicals, including methylene
diphenyl diisocyanate, commonly referred to in the chemicals industry as "MDI";
toluene diisocyanate, commonly referred to in the chemicals industry as "TDI";
polyols; thermoplastic polyurethane, commonly referred to in the chemicals
industry as "TPU"; ethyleneamines; surfactants; polyurethane systems and
aniline, with an emphasis on MDI-based products. Customers of the Company use
polyurethane products in a wide variety of polyurethane applications, including
automotive interiors, refrigeration and appliance insulation, construction
products, footwear, furniture cushioning and adhesives. PO is used in a variety
of applications, the largest of which is the production of polyols sold into the
polyurethane chemicals market. The Company's petrochemicals business produces
olefins and aromatics at its integrated facilities in northern England. Olefins
and aromatics are the key building blocks for the petrochemical industry and are
used in plastics, synthetic fibers, packaging materials and a wide variety of
other applications. The Company's titanium dioxide business operates under the
trade name "Tioxide." Titanium dioxide is a white pigment used to impart
whiteness, brightness and opacity to products such as paints, plastics, paper,
printing inks, synthetic fibers and ceramics.

Recent Events

     Proposed Investment by Bain and Blackstone

     Huntsman Corporation and certain of its subsidiaries have entered into
letter agreements with Bain Capital, L.L.C. ("Bain") and Blackstone Capital
Partners III Merchant Banking Fund, L.P. ("Blackstone") relating to a proposed
investment by Bain and Blackstone in a newly-formed Huntsman affiliate (the
"Proposed Transaction"). The letter agreements contemplate, among other things,
that Bain and Blackstone would invest up to $555 million in the Huntsman
affiliate which would become the majority owner of Huntsman International
Holdings. If the parties complete the Proposed Transaction, a substantial
portion of the proceeds received from Bain, Blackstone and our Company is
intended to be used to finance the purchase of the membership interests of
Huntsman International Holdings that are held by ICI and by other minority
interest holders. After the Proposed Transaction, Huntsman Corporation, Huntsman
Corporation affiliates and members of the Huntsman family collectively would
have a majority indirect interest in Huntsman International Holdings. The
consummation of the Proposed Transaction is subject to certain conditions,
including the execution of definitive agreements and the completion by Bain and
Blackstone of due diligence to their satisfaction. The letter agreements
supersede the February 2001 letter agreement between Bain and Huntsman
Corporation. There can be no assurance that such definitive agreements will be
entered into or that the transactions contemplated under such agreements will be
consummated.

     Change in Accounts Receivable Securitization Funding

     On June 22, 2001, Huntsman International Asset-Backed Securities Ltd.
issued $85 million and (euro)90.5 million in floating rate Series 2001-1 notes
due 2007. Huntsman International Asset-Backed Securities Ltd. is a
special-purpose, bankruptcy-remote unconsolidated entity which was created to
facilitate the ongoing securitization of certain of the Company's trade accounts
receivable. Net proceeds from the issue were used to reduce commercial paper
outstanding under the existing securitization arranged by JPMorgan Chase.




                                       20
<PAGE>

     Issuance of (euro)50 Million Senior Subordinated Notes

     On May 2, 2001, Huntsman International completed an offering of its 10-1/8%
Senior Subordinated Notes due 2009, resulting in net proceeds of approximately
(euro)52.0 million, including (euro)1.7 million of interest accrued from January
1, 2001 paid by the purchasers. The terms of these notes are substantially
similar to the terms of its outstanding senior subordinated notes.

     Acquisition of Surfactants Business

     Effective April 1, 2001 and pursuant to the terms of a definitive agreement
dated February 27, 2001, the Company completed its planned purchase of the
European surfactants business of Albright & Wilson, a subsidiary of Rhodia,
S.A., for an aggregate purchase price of approximately (euro)205 million. This
acquired surfactants business manufactures, develops and markets a wide range of
surfactants and surfactant intermediates used primarily in consumer detergents,
toiletries, baby shampoos and personal care products. The business is also a
major producer of surfactants and specialty products for industrial uses
including leather and textile treatment, foundry and construction, agriculture,
polymers and coatings. The business includes seven manufacturing facilities: one
in the U.K., and two sites in each of Italy, France and Spain.

     MTBE Developments

     Denmark has recently proposed to the European Union (EU) that a directive
be issued, taking effect in 2005, allowing individual EU countries to ban the
use of MTBE. Currently no other EU member countries have supported Denmark
officials on the issue. Denmark has entered into a voluntary agreement with
refiners that will significantly reduce the sale of MTBE in Denmark. The
agreement calls for refiners to cease using MTBE in 92- and 95-octane gasoline
by May 1, 2002; MTBE will still be an additive in a limited amount of 98-octane
gasoline sold in 100 selected service stations in the country.

     In the U.S., a federal court in New York has denied plaintiffs' motion for
summary judgment in a case brought by the Oxygenated Fuel Association ("OFA"),
an organization representing MTBE producers. In the motion, OFA asserted that
the state of New York was precluded by the doctrine of federal preemption from
banning MTBE sales in the state because of the federal oxygenate requirement
under the federal Clean Air Act. Although this ruling was based on the court's
view that there are factual issues precluding summary judgment, the ruling tends
to provide some support for the theory that an individual state can act
unilaterally to preclude MTBE from being sold within its jurisdiction. Several
states have promulgated such bans, which are scheduled to take effect variously
over the next several years. OFA will continue to pursue the aforementioned New
York case, as well as a similar case in California. The possibility of
Congressional action to ban the sale of MTBE in the future, and the pendency of
EPA's administrative process to ban the manufacture and sale of the chemical in
the United States, remain.

     North Tees

     The U.K. Environmental Agency (EA) issued an Enforcement Notice on March
30, 2001, following an investigation into an alleged leak of benzene heartcut
into the River Tees, allegedly following a dewatering procedure at the Company's
North Tees site. The Company has complied with this Enforcement Notice. The EA
investigations into the incident are continuing and if the EA finds the Company
legally responsible, the Company could face legal action and possible penalties.
Management does not believe that, even if such action is initiated and the
Company is ultimately found to be legally responsible, the probable penalties
would be material to the financial position or results of operations of the
Company.


                                       21
<PAGE>

     Recently Issued Accounting Pronouncements

     On July 20, 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." The statements will change the accounting for business combinations and
goodwill in two significant ways. SFAS No. 141 requires that the purchase method
of accounting be used for all business combinations initiated after June 30,
2001. Use of the pooling-of-interests method will be prohibited. SFAS No. 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach. Thus, amortization of goodwill, including goodwill
recorded in past business combinations, will cease upon adoption of that
statement, which for the Company will be January 1, 2002. The Company is
currently evaluating the effects of adopting these pronouncements.


                                       22
<PAGE>

Three and Six Months Ended June 30, 2001 Compared to Three and Six Months Ended
June 30, 2000 (unaudited) (in millions).

<TABLE>
<CAPTION>
                                             Three Months        Three Months         Six Months          Six Months
                                                Ended               Ended               Ended               Ended
                                            June 30, 2001       June 30, 2000       June 30, 2001        June 30, 2000
                                           ---------------     ---------------     ---------------      ---------------
<S>                                        <C>                 <C>                 <C>                  <C>
Specialty Chemicals sales                  $           725     $           549     $         1,305      $         1,040
Petrochemicals sales                                   329                 350                 672                  673
Tioxide sales                                          230                 256                 458                  497
                                           ---------------     ---------------     ---------------      ---------------
Total revenues                                       1,284               1,155               2,435                2,210
Cost of goods sold                                   1,113                 949               2,099                1,823
                                           ---------------     ---------------     ---------------      ---------------
Gross profit                                           171                 206                 336                  387
Expenses of selling, general,
     administrative, research and
     development                                        89                  76                 186                  162
                                           ---------------     ---------------     ---------------      ---------------
Operating income                                        82                 130                 150                  225
Interest expense, net                                   55                  55                 114                  109
Loss on sale of accounts receivable                      3                --                     5                 --
Other (income) expense                                   1                   1                  (5)                   1
                                           ---------------     ---------------     ---------------      ---------------
Net income before income taxes and
     minority interest                                  23                  74                  36                  115
Income tax expense                                       1                   9                   3                   13
Minority interests in subsidiaries                    --                     1                   1                    2
                                           ---------------     ---------------     ---------------      ---------------
Net income before accounting change                     22                  64                  32                  100
Cumulative effect of accounting
     change                                           --                  --                     1                 --
                                           ---------------     ---------------     ---------------      ---------------
Net income                                 $            22     $            64     $            31      $           100
                                           ===============     ===============     ===============      ===============

Depreciation and amortization              $            58     $            54     $           117      $           107
                                           ===============     ===============     ===============      ===============

EBITDA (1)                                 $           136     $           183     $           267      $           331
Loss on sale of accounts receivable(2)                   3                --                     5                 --
                                           ---------------     ---------------     ---------------      ---------------
Adjusted EBITDA                            $           139     $           183     $           272      $           331
                                           ===============     ===============     ===============      ===============
</TABLE>

(1)  EBITDA is defined as earnings from continuing operations before interest
     expense, depreciation and amortization, and taxes. EBITDA is included in
     this report because it is a basis on which we assess our financial
     performance and debt service capabilities, and because certain covenants in
     our borrowing arrangements are tied to similar measures. However, EBITDA
     should not be considered in isolation or viewed as a substitute for cash
     flow from operations, net income or other measures of performance as
     defined by accounting principles generally accepted in the United States
     ("US GAAP") or as a measure of a company's profitability or liquidity.
     While EBITDA is frequently used by securities analysts, lenders and others
     in their evaluation of companies, EBITDA as used herein is not necessarily
     comparable to other similarly titled captions of other companies due to
     potential inconsistencies in the method of calculation.

(2)  For purposes of the Company's senior credit facility covenants, loss on
     sale of accounts receivable related to the securitization program is
     excluded from the computation of EBITDA.

Results of Operations

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

     Revenues

     Revenues for the three months ended June 30, 2001 increased by $129
million, or 11%, to $1,284 million from $1,155 million during the same period in
2000.

     Specialty Chemicals - Total MDI sales volumes increased by 1% from the 2000
     -------------------
period. A strong recovery in the Asian economies led to an increase in sales
volumes of 37% in that region, while in Europe, sales volumes grew by 9%. In the
Americas, sales volumes decreased by 15% from the prior year due to weaker
demand resulting from economic slowdown. Polyol sales volumes grew by 3% with
the increase attributable to the Asian region. This gain was partially offset by
a 3% decrease in average selling prices for polyols compared to the same period
in 2000, a substantial portion which was due to a weakening in the value of the
euro versus the U.S. dollar. PO sales revenue was relatively unchanged


                                       23
<PAGE>

with a 4% increase in sales volumes which offset a 4% decrease in average
selling price. MTBE sales revenue grew by 3% due to a 5% increase in average
selling price for MTBE. The increase in average selling price for MTBE is
primarily attributable to reduced supply of MTBE and the continued strong demand
for MTBE in reformulated gasoline. Sales of TPU, ethyleneamines, surfactants and
performance chemicals products purchased from Huntsman Corporation were $166
million. These products were not present in the comparable period in 2000.

     Petrochemicals - Sales volumes of ethylene fell by 7% while sales volumes
     --------------
of propylene decreased by 2%. Ethylene production increased by 4% but the
reduction in sales was due to material on exchange with another producer to be
returned during our 2002 scheduled turnaround. In aromatics, sales volumes of
benzene and paraxylene rose by 31% and 1%, respectively, while sales volumes of
cyclohexane fell by 26% due to production limitations. Ethylene, propylene,
benzene and cyclohexane average selling prices were 11%, 19%, 5% and 5% lower,
respectively, primarily due to weaker supply/demand fundamentals.

     Tioxide - Sales volumes decreased by 8% compared to the 2000 period due to
     -------
weakening of demand, particularly in the European and American markets. Average
selling prices decreased by 3% as higher local currency selling prices were more
than offset by the weakness of the euro against the U.S. dollar.

     Gross Profit

     Gross profit for the three months ended June 30, 2001 decreased by $35
million, or 17%, to $171 million from $206 million in 2000.

     Specialty Chemicals - Gross profit on MDI and polyols decreased 11% and
     -------------------
15%, respectively. While MDI and polyols benefited from increased sales volumes,
this benefit was more than offset by higher natural gas, energy costs and lower
selling prices. Improved average selling prices for MTBE were more than offset
by a significant increase in the cost of our key PO/MTBE raw materials including
isobutane, methanol and higher energy costs. Gross profit from TPU,
ethyleneamines, surfactants and performance chemicals was $20 million. These
products were not present in the comparable period in 2000.

     Petrochemicals - Petrochemicals gross profit decreased by 87% due to lower
     --------------
average selling prices discussed above and the higher prices of our main raw
material, naphtha.

     Tioxide - Gross profit decreased by 22% for the period as lower revenues
     -------
and increased raw material and utility costs more than offset cost reductions
from our on-going manufacturing excellence program.

     Selling, General and Administrative Expenses (including Research and
Development Expenses)

     Selling, general and administrative expenses (including research and
development expenses) ("SG&A (including R&D)") in the three months ended June
30, 2001 increased by $13 million, or 17%, to $89 million from $76 million in
2000.

     Specialty Chemicals - SG&A (including R&D) in 2001 increased by 30% largely
     -------------------
due to the SG&A expenses associated with businesses acquired since June 30,
2000.

     Petrochemicals - SG&A (including R&D) in 2001 was relatively unchanged as
     --------------
compared to 2000.

     Tioxide - SG&A (including R&D) in 2001 decreased by 17% primarily due to
     -------
restructuring activities, including personnel reductions within selling
organizations in Europe, Asia Pacific and the U.S.


                                       24
<PAGE>

     Interest Expense

     Net interest expense in the three months ended June 30, 2001 remained
relatively unchanged compared to the same period in 2000.

     Other Expense

     Other expense in the three months ended June 30, 2001 remained relatively
unchanged compared to the same period in 2000.

     Income Taxes

     Income taxes in the three months ended June 30, 2001 decreased by $8
million, to $1 million from $9 million in 2000. The effective income tax rate
decreased from the 2000 period because a greater proportion of income was earned
inside the U.S. and was not subject to income tax.

     Net Income

     Net income in the three months ended June 30, 2001 decreased by $42 million
to $22 million from $64 million during 2000 as a result of the factors discussed
above.

Six Months Ended June 30, 2001 Compared to the Six Months Ended June 30, 2000.

     Revenues.

     Revenues for the six months ended June 30, 2001 increased by $225 million,
or 10%, to $2,435 million from $2,210 million during the same period in 2000.

     Specialty Chemicals -Total MDI sales volumes increased by 5% from the 2000
     -------------------
period. A strong recovery in the Asian economies led to an increase in sales
volumes of 51% in that region, while in Europe, sales volumes grew by 10%. In
the Americas, sales volumes decreased by 11% from the prior year due to weaker
demand resulting from economic slowdown. Polyol sales volumes grew by 5% with
the increase attributable to the Asian region. These gains were partially offset
by a 2% decrease in average selling prices for MDI and a 3% decrease in average
selling prices for polyols compared to the same period in 2000, a substantial
portion which was due to a weakening in the value of the euro versus the U.S.
dollar. PO sales revenue decreased 13% due to a 9% decrease in sales volumes and
a 5% decrease in average selling price. MTBE sales revenue grew by 9% due to a
14% increase in average selling price for MTBE. The increase in average selling
price for MTBE is primarily attributable to reduced supply of MTBE and the
continued strong demand for MTBE in reformulated gasoline. Sales of TPU,
ethyleneamines, surfactants and performance chemicals products purchased from
Huntsman Corporation were $226 million. These products were not present in the
comparable period in 2000.

     Petrochemicals - Sales volumes of ethylene fell by 8% while sales volumes
     --------------
of propylene was relatively unchanged. Ethylene production increased by 5% but
the reduction in sales was due to material on exchange with another producer to
be returned during our 2002 scheduled turnaround. In aromatics, sales volumes of
benzene rose by 21% while sales volumes of cyclohexane and paraxylene fell by 9%
and 2% respectively. Ethylene and propylene average selling prices were 5% and
4%, lower, respectively. Benzene, cyclohexane and paraxylene average selling
prices were 3%, 2% and 5% higher, respectively. Average selling prices for all
products rose reflecting increases in feedstock prices since June 30, 2000.

     Tioxide - Sales volumes decreased by 7% compared to the 2000 period due to
     -------
weakening of demand, particularly in the American market. Average selling prices
decreased by 1% as higher local currency selling prices were more than offset by
the weakness of the euro against the U.S. dollar.


                                       25
<PAGE>

     Gross Profit

     Gross profit for the six months ended June 30, 2001 decreased by $51
million, or 13%, to $336 million from $387 million in 2000.

     Specialty Chemicals - Gross profit on MDI and polyols decreased 11% and
     -------------------
14%, respectively. While MDI and polyols benefited from increased sales volumes,
this benefit was more than offset by higher raw material, energy costs and lower
selling prices. The price of benzene increased by 4% in the European market
compared to the 2000 period. Improved average selling prices for MTBE were more
than offset by a significant increase in the cost of key PO/MTBE raw materials
including isobutane, methanol and higher energy costs. Gross profit from TPU,
ethyleneamines, surfactants and performance chemicals was $29 million. These
products were not present in the comparable period in 2000.

     Petrochemicals - Petrochemicals gross profit decreased by 29% due to lower
     --------------
average selling prices of ethylene and propylene. The weakness of the euro
against the U.S. dollar has also contributed to the decrease.

     Tioxide - Gross profit decreased by 12% for the period as cost reductions
     -------
from our on-going manufacturing excellence program were more than offset by
lower revenues and increased raw material and utility costs.

     Selling, General and Administrative Expenses (including Research and
Development Expenses).

     SG&A (including R&D) in the six months ended June 30, 2001 increased by $24
million, or 15%, to $186 million from $162 million in 2000.

     Specialty Chemicals - SG&A (including R&D) in 2001 increased by 27% largely
     -------------------
due to the SG&A expenses associated with businesses acquired since June 30,
2000.

     Petrochemicals - SG&A (including R&D) in 2001 was relatively unchanged as
     --------------
compared to 2000.

     Tioxide - SG&A (including R&D) in 2001 decreased by 12% primarily due to
     -------
restructuring activities, including personnel reductions within selling
organizations in Europe, Asia Pacific and the U.S.

     Interest Expense

     Net interest expense in the three months ended June 30, 2001 increased by
$5 million, or 5% to $114 million from $109 million in 2000. The increase was
due to the decreased fair value of the Company's interest rate derivative
contracts.

     Other Income/Expense

     Other income increased by $6 million to $5 million income from $1 million
expense in 2000, principally as a result of the Company's interest in Nippon
Polyurethane Industry Co. Limited being sold.

     Income taxes

     Income taxes in 2001 decreased by $10 million, to $3 million from $13
million in 2000. The effective income tax rate in 2001 decreased from the 2000
period because a greater proportion of income was earned inside the U.S. and was
not subject to income tax.

     Net income

     Net income in 2001 decreased by $69 million to $31 million from $100
million during 2000 as a result of the factors discussed above.



                                       26
<PAGE>

Changes in Financial Condition

     As of June 30, 2001, the Company's working capital (excluding current
portion of long-term debt) increased by approximately $92 million to $431
million from $339 million at December 31, 2000. Approximately $54 million of the
increase was attributable to acquisitions completed during the six months ended
June 30, 2001. The balance of the increase was substantially due to lower levels
of accounts payable and accrued liabilities partially offset by reductions in
accounts receivable.

Liquidity and Capital Resources

     Net cash provided by operating activities for the six months ended June 30,
2001 was $98.3 million, as compared to net cash provided by operating activities
of $131.6 million in the same period in 2000. The decrease in cash provided was
attributable to lower net income partially offset by a net decrease in working
capital during the 2001 period as compared to 2000.

     Net cash used in investing activities for the six months ended June 30,
2001 was $319.3 million, as compared to $103.9 million for the same period in
2000. The increase in cash used was attributable to increased capital
expenditures and increased spending on acquisitions during the 2001 period. See
"Acquisition of Surfactants Business."

     Net cash provided by financing activities for the six months ended June 30,
2001 was $234.0 million, as compared to net cash used in financing activities of
$36.9 million for the same period in 2000. During the 2001 period, the Company
issued (euro)250 million of additional senior subordinated notes which were
used, together with cash flows from operations, to fund acquisitions, capital
expenditures and a portion of net working capital investment.

     Capital expenditures for the six months ended June 30, 2001 were $113.4
million, an increase of $39.6 million as compared to the same period in 2000.
The increase was primarily attributable to spending associated with the ongoing
expansion of the Company's Greatham, UK titanium dioxide plant. The Company
expects to spend approximately $140.0 to $170.0 million during the balance of
2001 on capital projects.

     As of June 30, 2001 the Company had $43.2 million of outstanding borrowings
under our $400 million revolving credit facility and had approximately $67.3
million in cash balances. We also maintain $80 million of short-term overdraft
facilities, of which $69.1 million was available on June 30, 2001. We anticipate
that borrowings under the credit facilities and cash flow from operations will
be sufficient for us to make required payments of principal and interest on our
debt when due, as well as to fund capital expenditures.

     As of June 30, 2001, the Company had outstanding variable rate borrowings
of approximately $1,318, (euro)236 million and (pound)20 million. For the six
months ended June 30, 2001, the weighted average interest rate of these
borrowings was 8.84%, 6.91% and 7.48%, respectively.

     On May 2, 2001, the Company completed an offering of its 10-1/8% Senior
Subordinated Notes due 2009, resulting in net proceeds of approximately
(euro)52.0 million, including (euro)1.7 million of interest accrued from January
1, 2001 paid by the purchasers. The terms of these notes are substantially
similar to the terms of its outstanding senior subordinated notes.

     On January 1, 1999, eleven European countries established fixed conversion
rates between their existing sovereign currencies ("legacy currencies") and
adopted the euro as their common legal currency. The euro and the legacy
currencies are each legal tender for transactions now. Beginning January 1,
2002, the participating countries will issue euro-denominated bills and coins.
By July 1, 2002 each country will withdraw its sovereign currency and
transactions thereafter will be conducted solely in euros. The Company currently
believes that the conversion to the euro will not have a material effect on the
Company's operations, financial condition or liquidity.



                                       27
<PAGE>

Cautionary Statement for Forward Looking Information

     Certain information set forth in this report contains "forward-looking
statements" within the meaning of 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," "will," "should," or "anticipates," 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. Except as required by law, 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.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

     The Company is exposed to market risk, including changes in interest rates,
currency exchange rates and certain commodity prices. The Company's exposure to
foreign currency market risk is limited since sales prices are typically
denominated in euros or U.S. dollars. To the extent the Company has material
foreign currency exposure on known transactions, hedges are put in place monthly
to mitigate such market risk. The Company's exposure to changing commodity
prices is also limited (on an annual basis) since the majority of raw materials
are acquired at posted or market related prices, and sales prices for finished
products are generally at market related prices which are set on a quarterly
basis in line with industry practice. To manage the volatility relating to these
exposures, the Company enters into various derivative transactions. The Company
holds and issues derivative financial instruments for economic hedging purposes
only.

     The Company's cash flows and earnings are subject to fluctuations due to
exchange rate variation. Short-term exposures to changing foreign currency
exchange rates at certain foreign subsidiaries are managed through financial
market transactions, principally through the purchase of forward foreign
exchange contracts (with maturities of six months or less) with various
financial institutions, to reflect the currency denomination of its cash flows.
The Company does not hedge its currency exposures in a manner that would
entirely eliminate the effect of changes in exchange rates on its cash flows and
earnings. As of June 30, 2001, the Company had outstanding foreign exchange
forward contracts with third party banks of approximately $24 million.
Predominantly, the Company's hedging activity is to sell forward the majority of
its surplus non-U.S. dollar receivables for U.S. dollars. Using sensitivity
analysis, the foreign exchange loss due to these derivative instruments from an
assumed 10% unfavorable change in year-end rates, when considering the effects
of the underlying hedged firm commitment, is not material.

     Under the terms of the Company's senior secured credit facilities, the
Company is required to hedge a significant portion of its floating rate debt. As
of June 30, 2001, the Company had entered into approximately $642 million
notional amount of interest rate swap, cap and collar transactions, which have
terms ranging from approximately nine months to thirty-nine months. The majority
of these transactions hedge against movements in U.S. dollar interest rates. The
U.S. dollar swap transactions obligate the Company to pay fixed amounts ranging
from approximately 5.80% to approximately 7.00%. The U.S. dollar collar
transactions carry floors ranging from 5.00% to 6.25% and caps ranging from
6.60% to 7.50%. The Company has also entered into a euro-denominated swap
transaction that obligates it to pay a fixed rate of approximately 4.30%. The
Company does not hedge its interest rate exposure in a manner


                                       28
<PAGE>

that would entirely eliminate the effects of changes in market interest rates on
its cash flow and earnings. Assuming a 1% (100 basis point) increase in U.S.
dollar interest rates, the effect on the annual interest expense would be an
increase of approximately $15.0 million. This increase would be reduced by
approximately $3.0 million as a result of the effects of the interest rate swap,
cap and collar transactions described above.

     In order to reduce the Company's overall raw material costs, the
petrochemical business enters into various commodity contracts to hedge its
purchase of commodity products. The Company does not hedge its commodity
exposure in a manner that would entirely eliminate the effects of changes in
commodity prices on its cash flows and earnings. At June 30, 2001, the Company
had forward purchase and sales contracts for 50,000 and 190,000 tonnes (naphtha
and other hydrocarbons), respectively, which do not qualify for hedge
accounting. Assuming a 10% increase or a 10% decrease in the price per tonnes of
naphtha, the change would result in gains or losses of approximately $3.2
million, respectively.

PART II - OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

     (a)  The following exhibits are filed with this report:

     10.1 Purchase Agreement dated July 9, 2001 between Tioxide Europe Limited
          and Imperial Chemical Industries PLC.

     (b)  The Company filed no reports on Form 8-K for the quarter ended June
          30, 2001.




                                       29
<PAGE>

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                      HUNTSMAN INTERNATIONAL LLC



                                       /s/ L. Russell Healy
                                      ------------------------------------------
                                      L. RUSSELL HEALY
                                      Senior Vice President and Finance Director
                                      (Authorized Signatory and Principal
                                      Financial and Accounting Officer)




Date:  August 14, 2001


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                                INDEX TO EXHIBITS


Exhibits

10.1      Purchase Agreement dated July 9, 2001 between Tioxide Europe Limited
          and Imperial Chemical Industires PLC.























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